BANK OF N.S.W.

Poverty Bay Herald, Volume LIX, Issue 17954, 5 December 1932, Page 8

BANK OF N.S.W.

DIFFICULT YEAR’S OPERATIONS AN INTERESTING- SURVEY At- the ordinary general meeting of the Bank of New Mouth Wales, held in Svdncv .on November 29, the chairman, Si,-. Thomas Dockland, president of the bank, moved the adoption of the report and balance-sheet. In the course of his speech the chairman said that it had to be home m mind that the business of the countries in which the- bank operated, and therefore of the bank, was governed largely In- the effects of the great crisis through which the world was passing. “Comparing the figures ol the bank for tliis year with those of the preceding year, the combined item of deposits and notes in circulation stands at the large total of £84,508,000,'’ he added. “This is an increase of more than .£14,638,000. Of this, £14,555,000 is an increase in deposits and the small increase in notes in circulation is chiefly caused _by an increase, in the note circulation in New Zealand. The deposits of the Australian Bank of Commerce, Limited, which came to augment the total deposits of the amalgamated institution, amounted to £10,460,000. ,The net gain in deposits, therefore, apart from the amalgamation, lias been £4,094,000. This

gain is substantial and represents a net increase- after the repatriation of about two million pounds which had been held in Australia, with us in anticipation of a fall in the exchange rate.

“Tlie capital of the bank, as the result of the amalgamation, has been increased from £7,500,000 to £8,780,000. The, board and executive officers, are more than .satisfied with the business that came to the amalgamated institution with the Australian Bank of Commerce, Limited. MOVEMENT IN ADVANCES

“The most striking, feature of our advance business during the past 12 months,” said the. chairman, “has been its liquidity. Wo have been, ready at all times to make advances on sound banking propositions, but these have not been forthcoming in sufficient number and volume to offset the reductions and repayments of advances which have been made by our borrowing, customers. Legislative interference in tenns of business lias been a greater influence in discouraging applicants than even tlie depression itself. People will not venture until confident that contracts wiU not he varied arbitrarily by Parliamentary action, has been restored. The bank lias continued its policy of supporting its customers: throughout their difficulties and set its face, as it has always done, against the calling up of advances in whole or in part. “The recorded movement in advances is an encouraging development after a period of about 18 months of stagnation due to the depression. The hank is now in a better position to lend than il lias been for some time past. This is tlie more important as there is already a new, movement in business, giving, a greater turnover, and a greater opportunity for the realisation and replacement of trading stocks. This easing of the Australian business aiwl banking position has, however, been chocked to an appreciable extent by the recently renewed fall, in prices of some of our staple products, and the comparative weakness in others. We must look for a con-sid era bla increase in prices over tho whole range of our exportable products before wo can hope for a dependable return of prosperity. HELPING- RECOVERY Speaking of- tho profit aaid loss account, the chairman stated that the directors had throughout the year continued to pursue the policy io use the resources and the influence of the bank to the uttermost to bring about a recovery in all countries in which the bank operated. “It will be recognised,” lie continued, “that one of the chief ; concerns of a trading bank in a time of financial stress is to provide adequate resources to the Government. This is rendered necessary because in a period of depression Government revenues fall .far more, rapidly than it is possible to reduce Government expenditure. Further, the solvency of the general business and producing communities in a time of depression is of paramount importance. This is the direct concern of a trading bank, perhaps of equal importance to it as the assistance it rentiers in public finance is to the Govern,merit. To maintain solvency it is essential to take a broad view; overdrawn accounts must be examined, not in the light of, existing depressed conditions but from the viewpoint of conditions a,s they may lie when prosperity has again dawned. We, can claim quite, fairly for this bank that its attitude to- its borrowing customers has not been determined by the immediate interests of the bank’s ; profit and loss account, but by the objective of general commercial solvency. I'Blip hank lias not only supported its , borrowing customers, it has done, so at the lowest possible rates of interest. The bank lias done all it could to bring about lower rates of interest as a prerequisite to the revival of trade and industry. RATES FA CTO R Y PROFITS

, “The profit for tho year stands at i.£462,966, a, satisfactory figure for the conditions ruling throughout the 'accounting year. This profit is, equivalent to about 3.05 per. cent, of shareholders’ funds. During tho last two or three years these funds, have keen earning less and less—in 1929 they gave a return of 7.11 per cent., in 1930 of 5.26 per cent., and 1931 of 4.07 per cent. It must not be judged from this decline in percentage that it is impossible for tho bank to earn a higher rate of profit. This iwill come when general business conditions improve. The percentages quoted, j which conform to the experiences of i •business generally, show conclusively that the hanks do not engineer a busii ness depression for their own gain.

TAXATION 15 TR-DEN'S' “Taxation is still the most serious Hem of expenditure. Tt is to he regretted that there does not- appear to he any possibility, for the present, of easing this burden to any great extent. The tax-gatherer takes far too large a proportion of the earnings of all business enterprises. Tho burden upon both tlie earned and unearned incomes of individuals is drying up the sources of new capital. And the burden of taxation in a period of depression becomes greater as commodity prices fall. There is no suggestion that we are unwilling to stand up to our full responsibilities as taxpayers, but the general interests of tho community would be served by a reduction in taxation at the earliest opportunity. The relationship between