COMPANY BALANCE SHEETS.

Otago Witness, Issue 3870, 15 May 1928, Page 18

COMPANY BALANCE SHEETS.

THE BANK OF AUSTRALASIA. Paid-up capital, 1919, £2,000,000; 1920, £3,500,000; 1921-20, £4,000,000.

Notwithstanding a considerably enhanced expenditure, the net profit comes out slightly’ higher than that of the previous year. The allocation of the return of 10.35 per cent, is 14 per cent, to shareholders and 2.35 per cent, to reserves. As in the case of 1925-26. the sum of £90.000 out of the latter is specifically dealt with, bank premises on this occasion receiving the benefit of the larger quota. Expenditure, which, since 1921, had been appreciably' reduced, has made a pronounced increase, exceeding all previous »aggregates. Charges of management are chiefly responsible, their total of £632,563 being some £48.000 up. At the recent annual meeting the chairman indicated salaries as the main contributing item, but it is a little difficult to understand how they could rise so much during 12 months. Taxation is slightly up, but not disproportionately’ to the net profit. As usual, the gross profit figure (£1,572,735) is brought out after being subjected to certain deductions, and it provides matter for reflection when approximately a rise of £55,000 in the detailed disbursements is more than counteracted by the gross surplus as entered. The fixed assets in the form of premises have substantially increased. After being written down by £50.000, they stand at £129.792. Capital expenditure of over £lOO.OOO has taken place during the past year, and, apparently’, further expansion is in progress. It has been the practice to add to reserves by constant writing down of premises, with the result that, even with their increased book value, the buildings must stand a long way’ under their actual value. The main group of assets, which includes advances, has risen to £2!).659.660. Deposits can show a corresponding rise, their relative position having altered little since October, 1926, as will be seen below, viz.: —

It is left to conjecture what “ and other assets ” in the advances group comprise, and how much they contribute to the aggregate, but the margin between the two above columns is small, and the past year’s transactions have done little to increase it. Consequently, it is not surprising to find the directors approaching the shareholders for authority to issue a further sum of £500.000 in shares. The proposal is to make the issue at a premium of 120 per cent., bringing in altogether £1,100.000 in cash. Investments, both in British Government securities and in total, are down. The shrinkage in the former class is more pronounced than in the previous year, but is accompanied by a rise, although not to a corresponding extent, in other investments. Possibly, money of late has been in greater demand in London, resulting in more extensive realisation there: —

e Excluding loans nt call and at short notice. While the increase in deposits would furnish more than sufficient funds to meet the extra advances, bills receivable at £4,355,725 would demand nearly a further £200,000. Specie, bullion, Government notes, and cash balances, having risen to £6,645,234, absorb more than an additional £BO.OOO, and the sum of £llO.OOO is found in loans at call and at short notice. On the whole, thanks to the larger deposits, there has been no cause for realisation on an extensive scale, and the capital expenditure incurred has made small encroachment on the liquid assets. Notes in circulation maintain a fairly even figure at £427,252. The general group of liabilities has dropped slightly to £4,418,994, but the movement of its various component parts cannot be tained. Smaller provision for contingencies may have been considered adequate, but in any case it would be assumed they' were mounting annually, aud the decrease may be looked for in bills payable, or in some other liability' that is not of the nature of a reserve. Visible reserves continue to rise, and after their latest addition are almost equivalent to the paid-up capital. The proposed fresh issue of shares, if made at a premium of 120 per cent., will place reserves in an even more advantageous relation, although the matter of strengthening reserves is not. on the face of it, a pressing one. That fact may have caused exception to have been taken by some proprietors'to the cost of the newshares, but when the money can be employed advantageously, the larger circulation must be to the ultimate benefit of the bank.

Period Ended. • Reserves. Expendi- Net t Div. tnre. Profit. p.c. Oct. 13, 1919 £3,223,823 £605,159 £460,768 18 ” 11. 1920 3,220,784 3,546,763 729,809 573,052 13 ” 10, 1921 913,152 688,389 13 ” 1G, 1922 3,646,869 900,362 620,016 13 ” 15. 1923 3,745,428 871,317 618.559 13 ” 13, 1924 3,830,332 848,301 629,904 13 " 12, 1925 3,892,887 852.588 632,555 13 11, I92G 3,945,508 863,755 652,622 14 ” 10, 1927 3,989,568 918,676 654,060 14 * Excluding provision t Including for contingencies bonus.

Advances etc. Deposits. Hatio 1924-25 ... . ... £25,393,633 £28.708,673 p.c. 88.45 1925-26 27,776.275 29,394,047 94.63 1926-27 . ... 29,689,660 31,478,756 94.32

British Govt. Securities. * Total Investment* Ratio. 1918-19 £2.227,499 £2.664.958 83.58 1919-20 ... ... 761,598 1,847.087 41.23 1920-21 775,261 1,700.568 44,03 1921-22 1,813,042 2.439.179 74.33 1922-23 2.311.558 2.874.605 80.41 1923-24 8,085.593 3,694.607 83.52 1924-25 3,201,340 3,95.3,286 80.98 1925-26 2,941,870 3,768,578 78.06 1926-27 2.584.548 3.664.449 70.53