BANK’S DIVIDEND AS BEFORE

Taranaki Daily News, 18 June 1932, Page 7

BANK’S DIVIDEND AS BEFORE

USE OF ACCUMULATED BALANCE.

POLICY FOLLOWED BY DIRECTORS.

Reference to the large dividend to be paid by the Bank of New Zealand today was made by the chairman (Air. O. Nicholson) in addressing the annual meeting of shareholders at Wellington yesterday. It has been the policy of the board, he said, to build up the amount of undisturbed profit carried forward from year to year for the purpose of making a provision for the maintenance of the usual distribution to shareholders when times of stress are experienced. It was foreseen that sooner or later these times would inevitably arise, and unfortunately the year under review lias come within this category. The accumulated balance of profits carried forward from Alarch 31, 1931, was £626,001, a sum fargreater than is shown by any otherbank iu. Australia or New Zealand, indeed greater in proportion than that of most British banks. Under the bank’s deed of settlement it is provided that the balance of profit carried forward each year to the profit and loss account shall be held “for the purpose of equalis-. ing future dividends.” year the dividend has been fixed at. 14 1-3 per-..cent, on the ordinary shares instead of being declared as a dividend or 13 1-3 per cent, with a bonus of 1 per cent, as heretofore distributed. Shareholders, ■ by reason of the very large amounts carried forward in previous years, have not had distributed to them by way of dividend the full amount then available for the purpose, and it appeared to the board that as full provision for the year had been made for all ascertained contingent and possible losses, it was its bounden duty, in view of the provisions of the deed of settlement, to make this year a partial distribution of such accumulated profits so as to enable a distribution of a, similar amount to that made in the last few years.

There are 6976 holders of ordinary shares in the bank. Of these, 2445 shareholders each hold 100 shares or under, and 1384 hold between. 101 and 200 shares. Many of these shareholders are elderly people of limited means to whom every pound, of income is of importance. In order to obtain a true perspective of the rate of interest earned by the bank, consideration must be given to the< amount of the effective funds of the shareholders employed in earning the distributable profit. On this basis the net profits augmented by the sum taken from the amount carried forward in previous years represents a rate of interest not in excess of the ruling rate prevailing in the ordinary field of investments-