IMPROVED POSITION

Poverty Bay Herald, Volume LXIII, Issue 19134, 1 October 1936, Page 5

IMPROVED POSITION

STATE ADVANCES FUNDS WORK OF CORPORATION SMALL AMOUNT UNPAID (Parliamentary Reporter.) WELLINGTON, this day. Tho change in the control of the State Advances Department is covered by a report of the State Advances Corporation submitted to the House by the Minister of Finance, tho Hon. W. Nash. It discloses the terms on which the Mortgage Corporation, established in July, 1935, took over the securities of the State Advances Department on July 31, comprising mortgage assets totalling £38,977,812. At that date, overdue instalments of principal amounted to £914,477, and interest overdue to £1,830,990, while interest had been postponed to the extent of £44,559, and £106,493 had been expended in protection of securities. The mortgages taken over were classified into two categories-- (1) mortgages in arrear, 20,736, vvith a balance of principal outstanding, £17.932.589; and (2) mortgages paid up to dale, 30,148, representing principal outstanding of £18,498,801. With (bis information, it was considered desirable by the Mortgage Corporation Board to make .provision to the extent of £6,419,605. having- regard to the • estimatedvalue of securities, owing to the fall in land values. This amount was regarded as provision for contingencies rather than an estimate of probable losses. LIABILITY TO STATE

Interest arrears were added to the contingency account and it was finally agreed between the Minister of Finance and the corporation that stock to tho value of £29.800,000 should bo issued to the Minister at an interest rate of 3§ per cent, and the balance of £8.883,794 carried to the contingency liability account. During the corporation’s operations for September. 1935, to March 31. 1936, it granted 1859 loans, totalling £2,635.065, of which 824 were farm loans totalling £1,876,065. The report states that there has been a marked improvement in the last three years in the payment of interest, the receipts during the corporation’s eight months’ experience being 95.16 per cent of the amount due, compared with 79.48 per cent in 1933-34. The corporation on March 31 had 3904 urban and suburban securities on its hands, all but 31 vacant premises being occupied. The corporation’s accounts show a gross revenue of £1,165,262, from which is deducted £673.383 interest on. stock issued to the Minister of Finance and the public. Management expenses, including £57,000 provision for overdue interest, total £149,992, leaving a net profit of £341,996. From the latter sum, £105,000 is allocated to income tax, £9OOO to dividends to shareholders, and £IO,OOO to the investment fluctuation account,, leaving £217,996 which is payable to the Crown, virtually as a dividend on the contingent liability account.