BANKING RETURNS

Southland Times, Issue 19659, 9 October 1922, Page 7

BANKING RETURNS

FIGURES FOR SEPTEMBER QUARTER (Per United Aess Association.) WELLINGTON, October 6. The steadily improving economic conditions of New Zealand are fully reflected in the banking returns for the September quarter. The country is slowly but surely recovering from the slump which struck New Zealand during the second half of 1920, and reached its worst towards the end of the first half of last year. Since then each quarter has shown an improvement in the banking figures, and it should not now be very long before the balance is restored. The leading items in the quarterly banking returns show the following movements, as compared with the corresponding quarter of last year: - Government deposits increased £1,339,871 Free deposits decreased .. .. 2,275,173 Fixed deposits increased .. .. 791,376 Advances decreased 4,325,975 Discounts decreased 719,186 Circulation decreased 648,848 Coin and bullion increased .. .. 192,703 Dealing first with the aggregates of the several classes of deposits, the variations are disclosed in the table appended:— Government Deposits—September, 1921, £3,655,967; September, 1922, £4,995,838 — Increase £1,339,871. Free Deposits—September, 1921, £26,773, 325; September, 1922, £24,498,152 —Increase *£2,275,173. Fixed Deposits—September, 1921, £l6, 662,338; September, 1922, £17,463.714 —Increase £791,376. Totals—September, 1921, 47,101,630; September, 1922, £46,957,704—1ncrea5e *£l43, 926. ♦Decrease. There is a substantial decrease in the free deposits, but the shrinkage in the total is only £143,926, owing principally to the satisfactory increase in the Government deposits. The shrinkage in the free deposits is general—that this, all the banks have been affected, except the Commercial Bank, which shows a modest increase. This contraction is not an unfavourable sign, for it means that the obligations of the past have been discharged. There is a big decrease in the amount of the free deposits, held by the Bank of New Zealand, but the fixed deposits held by the bank have increased to very near the amount of the decrease in the free deposits. The total of the fixed deposits in the past quarter is well above the average of the previous 10 quarters. The free and fixed deposits for the September quarter of each of seven years show as under: —

The free deposits reached their highest point in 1920, and for the two years since the total has contracted about £12,000,000. The fixed deposits on the other hand have grown steadily, the figures for the past quarter being a record for the seven years. The advances have contracted by £4,325, 975 as compared with a year ago, and the figures are as under: — Sept. Sept. Decrease 1921 1922 £45,861,993 £41,536,018 £4,325,975 This shrinkage is very encouraging, for it shows that liquidation is being steadily carried on, and obligations to the banks discharged. The advances, which in the June quarter of 1920 averaged .£33,457.000, increased to £51,449,526 in June, 1921, and the advances are now down to £41,536,018, so that in the short period of 15 months the banks have been repaid nearly £10,000,000, which is a remarkably fine achievement for the country’, and a tribute to the effectiveness of the policy adopted .by the banka for dealing with the crisis. Another favourable sign j of the times is the shrinkage in the volume of the discounts. The decrease of £719,186 is equal to .about 33 1-3 per cent., and it is obvious that there must be fewer bills being given by traders, or in the alternative merchants and others are not finding the same necessity to discount trade paper. From whatever angle it is looked at. the position is satisfactory. Taking the free and fixed deposits together, and the advances and discounts together, the excess of the one over the other for the September quarter of a series of years shows as under:—

The difference between advances and deis being narrowed down, and very shortly we should see the deposits exceed the advances, and when that happens the country will be well on the way to prosperity. The note circulation and tho coin and bullion next claim attention, and the aggregates for the September quarter of each of seven years show as under: —

The shrinkage in the note circulation is substantial, for it is equal to about 9 per cent. It shows that deflation has made considerable progress since 1920. It will be noted that the coin and bullion totals £7,833,521, or more than sufficient to cover the circulation. In addition to the metal reserve the banks hold legal tender notes. The banking position is decidedly satisfactory, and it may be claimed that the country has made a phenomenal recovery’ during the past IS months. The banks have been severely criticised for the high rate charged on overdrafts, but the excellent results shown testify to the soundness of the policy pursued by the associated banks.

September Free Fixed quarter. deposits. deposits. Total £ £ £ 1916 19,620,671 12,978,629 32,599,300 1917 21,567,821 14,139,815 35.707,636 1918 ' 21,646.245 14,123,961 35,770,206 1919 30,331,317 15,041,568 45.372,885 1920 36.486,999 16,644,693 53,131,692 1921 16,672,338 43.445.663 41.961,866 1922 24,498,152 17,463,714

September Excess of quarter Deposits Ad vances deposits. £ £ £ 1916 32,599,300 24,677,965 28,415,451 7,921,335 1917 35.707,636 7,292,185 1918 35,770,206 31,646,632 4,123,574 1919 45,372,885 30,149,774 15,223,111 1920 53,131,692 39,017,808 14,113.784 1921 43,445,663. .48,039,609 *4,593,946 1922 41,961,866 42,994,448 »1,032,582 * Excess of advances

September CirculaCoin and quarter tion bullion 1916 .... £4,329,953 £7.498,250 1917 .... 5,650,881 9,847,060 1918 .... 6,235,344 8,146,798 1919 .... 7,357,04$ 8,046,071 1920 .... 7,617.298 7,710,617 1921 .... 7,135,614 7,640,SI 8 1922 .... 6,486,766 7,833,521