BANKING AVERAGES.

Otago Witness, Issue 3775, 20 July 1926, Page 68

BANKING AVERAGES.

THE JUNE QUARTER. « WELLINGTON, July & The banking averages for the June quarter of last year were very satisfactory but the averages for the June quarter this year show almttt a complete reversal of the economic conditions. The principal items of the banking returns compared with the figures for the corresponding quarter of 1925 show the following movements:— Increase. Decrease. £ £ Government deposits ... 1,238,508 ‘ — Free deposits Advances 4,564,784 Fixed deposits Discounts 214,188 Circulation ... Coin and bullion 126,238 There is a substantial contraction in the free deposits and a very big increase in the advances, and the banking figures very accurately reflect the adverse state of our foreign trade. The trade returns for the year ended June 30 are not yet available but for the 12 months ended May 31 the imports totalled £52,236.015, and the exports £45,764,578, showing an excess of imports over exports of £6.471,437. The bank averages show that advances increased by £4,564.784 and the current count balances had contracted by £2,902.713,' together equal to £7,467,494, which is more than the excess of imports, but probably if the June trade figures were available they would more nearly correspond with the bank figures. Taking the different classes of deposits the movements are shown in the table appended : DEPOSITS. June, 1925. June, 1926. Decrease. 4Jevernment '...£3,087,680 £4,326,278 *£1.238,598 Free 30,497,209 27,594,496 2,902,713 Fixed 20,966,426 20,674,853 291,573 £54,551,315 £52,595,627 £1,955,688 * Increase. Notwithstanding a substantial expansion in Government deposits the aggregate shows a decrease of nearly £2.000,000. Dealing with the free deposits or current account balances all the banks show shrinkages as will be seen by the table appended: Bank. Jane, 1925. June, 1926. Decrease. New Zealand ...£14,081,439 £12,849,726 £1,231,713 Union 3,715,770 3,450,103 265,66" 'N.S. Wales ... 3,300,665 2,876,806 423,859 Australasia ... 3.031,940 2,587,783 444,157 National 5,384,246 4,854,379 529,867 Commercial ... 983,149 975,699 7,450 £30.497,209 £27,594,496 £2,902,713 In the June quarter of last year the free deposits exhibited an increase of £2,160,449 over the June quarter of 1924, but last year was one of high prices for produce, particularly wool. , . The fixed deposits exhibit a small shrinkage, due entirely to the smaller amounts held bv the Union Bank and the Bank of New South Wales. The figures of the several banks compare as under: Bank. June, 1925. June, 1926. Decrease. New Zealand ... £10,404,187 £10.597,571 * £193,384 Union 2,585,588 285,867 299,721 N.S. Wales .... 3,229,631 2,708,341 621,290 Australasia ... 1.705,518 1,781,095 *75,577 National 2,783,649 2,953,047 *169,398 Commercial ... 257,803 -348,932 *91,079 £20,966,426 £20,674,853 £291.573 • Increase. The free and fixed deposits for the June quarter of each of five years are given in the table appended:— June Fixed Free Total quarter. deposits. deposits. deposits 1922 ...£16,342,413 £25,046,473 £41,388.886 1923 ... 17,406,748 28,270,204 45.682,952 1924 ... 19,292,552 28,336,760 47,629,312 1925 ... 20,966,426 30,497,209 51,463,635 1926 ... 20,674,853 27,594,496 48,269,349 The fixed deposits exhibit a shrinkage for the first time for about five years. The total deposits show a substantial decline, but the total is still well above that of 1924 and the preceding years. The advances furnish the most significant table of all the banking figures. Compared with 12 months ago there is an increase in the advances of over £4,500,000, and all the banks have been drawn upon very freely for accommodation as will be seen by the I table appended:— Bank. June, 1925. June, 1926. Increase. New Zealand ... £18.722,237 £19,993,592 £1.271,355 Union 4,964,608 5,665,238 700,630 N.S. Wales ... 5,099,893 6,110,804 1,010,911 Australasia ... 4,472,605 4,746,010 273,505 National ... 8,115,002 9,173,637 1,058,635 Commercial ... 1,046,804 1,296,552 249,748 £42,421,040 £46,985,833 £4,564,784 The whole of the £4.500,000 borrowed from the banks, together with the amount represented by the shrinkage in the free deposits, appear to have been sent out of the Dominion, which is very probable in view of the excess of the imports. The discounts show an increase of £214,183 and the figures of the several banks show as under:— Bank. Juno, 1925. June, 1926. Increase. New Zealand ... £924,160 £1,103,937 £179,777 Union 46,827 4 5,588 *1,239 N. 3. Wales 157,494 154,305 *3,189 Australasia ... 120,761 116,002 *4,759 National 223,663 256,501 32,848 Commercial 41,825 52,575 10,750 £1,514,720 £1,728,908 £214,188 • Decrease. Taking the advances and discounts for the June quarter of each of five years the position is as under: — June qnarter. Advances Discounts. Total. 1922 ... £44,438,917 £1,717,017 £46,155,934 1923 ... 40,227,094 1,484,180 41,711,274 1924 ... 42,408,993 1,476,593 43,885,586 1925 - 42,421,049 1,514,720 43,936,759 1926 ... 46,985,833 1,728,908 48,714,741 Taking the free and fixed deposits, which represent the amount borrowed by the banks from the public, and the advances and discounts representing the amounts lent by the banks to the public, the excess of the one over the other is shown in the table appended:— June Excess ot quarter. Deposits. Advances. deposits. 1922 ... £41,388,886 £46,156,934 *£4,767,048 1993 .. 46,682,952 41,711,274 3,971,678 1924 ... 47,629,912 43,885,586 3,743,726 1926 _ 11,463,635 43,935,769 7,527,866 lttf „ 48,269,349 48,714,741 *446,392 * Excess of advances.

The above table shows the great change that has come over the economic position in 12 months, for whereas last year the banks were indebted to the public to the amount of £7.527,866, this year the publio is indebted to the banks to Use extent of £445,592. For the past three quarters the position has been unsatisfactory, but if the imports contract substantially and the balance of trado is restored, the position would right itaelf speedily. The spending power of the community has also contracted. The note circulation, which represents the money in thq pockets of the people and available for immediate expenditure, and the current account balances against which cheques can be drawn represent the spending power, and these compare as under: June, 1923. June, 1926. Circulation £6,803,848 £6,874,555 Free deposits ... 30.497,209 27,594,496 Total £37,391,057 £34,442,061 There is a shrinkage of £2,949,006 as compared with 12 months ago, which must have an adverse effect on domestic trade. The unsatisfactory economic conditions, which may be only temporary, have been emphasised by the Prime Minister and others, and efforts rhust be concentrated on restoring the balance of trade, which mean* increasing exports and reducing imports. Such efforts may cause inconvenience and **ven distress amongst certain sections, but in trie long run the Dominion will benefit and prosperity will again smile on the land.