BANK OF NEW ZEALAND.

Star (Christchurch), Issue 5960, 27 August 1897, Page 1

BANK OF NEW ZEALAND.

ANNUAL MEETING. THE PRESIDENT'S ADDKESS. [Per Press Association.] WELLINGTON, August 26. The annual meeting of the Bank of New -Zealand trns held this afternoon, Mi- "\V. Watson, president, in the chair. About thirty shareholders were present. . The report and balance-sheet were read and adopted without discussion. Liabilities. Opifal— .t s. il. Four per cent guaranteed stock ... ■.'/'('! \odo (• 0 Pivfeired slmre* issued to Crown iiOO.'Miu 0 o Ordinary capital rulleil up under Uauk of New Zealand ami Bankiu* Act, li®s, £500,000. Amount I>tiid to date ... ... 211,141 li 1 (2\omiiial reserve liability on shares, £810,000 3s 7d) — . i-J,7W,1-U 'J 1 Hescrve Fund investecLiu Govern- ; ■ mtnc securities ... ... ... iM.474 7 4 Note* in circulation ... 557, W (> 0 Bilk payable aud hi circulation ... 1,"57,C5l 17 7 Deposits ... 8,230,i>55 17 10 Of her liabilities 001,7 1 H 10 ti hills i ediscoiiuted 5i.',44f> 5» 11 Hakuice of profit aud loss ... ... lif.fttl 211 Total ... . ,cia,6;;\::o,i v 2 Assets. i; s. d Coin nnd cask balances nt bankers!' 1,557,5!>1 5 8 Bui ion ou hand and in transit .... I.'!i',<>".o 18 2 Investments colo- ■ r— nial Government ' £ s. d. securities ... 750,1»43 18 f> Assets Kealisu- ! tion Hoard de- ' beutnres 2,G50,255 b" !' Municii'itl securities ... ... 15,507- 6 1 Other securities 32,500 0 0 Tot* 1 in vestments ... .CiJ.oUlt.KOl 11 .'.' I>ill3 rceivnble tiud bill 3 discounted 2,G!!i,m 15! 4 Other advances and securities and debts due to bank 4,s'Jl\W>o 10 4 Estimated amount recoraribla on pccountflri't call reserve liability 4,141 3 8 J.auded property, prenii.-es. &'c... -l-li'.Sol 10 0 Uunk of New Zenluud Estates Company, . J imited, assets in liquidation (1895 valuation I ... sSo,(lh> 510 HtiMk of New Zealand listntes Company, Limited, ileleimire conversion account 08,445 0 0 Colonial B nk property and premises (book value) •. ' 105.4H i 7 5 Colonial Blink purchase, goodwill iiccuunt • 75.000 0 0 Total xi:;.6::r>.:iOs v 2 ' Profit and Loss Accor.s-. Dr. Three months' dividend to March. ' 31, 1696, on preferred shai es ... 4,:->7o 0 0 Net balance of profits at March 31, 1896, paid to Assets Kealisatiou Board in terms of Bonking Act, : . 1695. Section 11 '... :i5,7<8 17 V Twelve months' dividend to itlarch 31, 1897, on preferred shnres .. .. .... ... 17,?00 0 0 Halancd for year ended Marc li 31, ••is»7 ... ■■■■..■ --... avail 2,11 Total' ...,;'... ... ... ,C.0(5,07-H9 11 Cr, i .' £ s. d. JUalance from * "year .•"•'■ . ' ended ' Maruli . 31, ■'.'-.' ' . . 1896 ..'.- ...:... 52.57G 2 1- • i;sß .ainOubt dis- . '. .. ' nUowed upon ad- ■ : ; ■ .'instnient: price to ' be' paid by Assets ! • IBodrd in terras Banking Act, 1895 . 12,402 '5 1 ' ■ ' . . i — : — 40.0&; 17 0: ■Profisfor year en'led March 31, ■ ■• » • ■ ... ; . 1897, iuciudiug recoveries and . . after payment of aud provision • _ . for all interest due and .accrued . , ! '; on deposits nnd guaranteed r - '» f .'.-.,-■ stock, provision for bad aud • —•■*■ ■ ' doubtful debts, and writing. ••■;-" .qoi;;>down of bank furniture account T> r v!S.U . 2 11 '■■•■• "' " ! '.fc9'o#7<l 1.9 11 i"he report accoinp'anying . the balance^, sheet was very . brief , merely ■stating.;— ' " The directqrahave to submit, to the..prp'r.. . prietors the V^inexed balance-sheet- of, ..the bank -for thq^efir, ended 'March 31 last,. The retiring' "directors are- Messrs Booth/ ■ and Kennedy,, who are- eligible tor ; reelection, and are the. only candidates. Duviß&)the y|ear the" .sub-agency. at Eketahuna, previously visited from ' Piihiatua, . has been • made a separate agency, and the Town ;H(vU'. bran'pi; Sydney;'- New, South Wales, ha^ been ejbsed." w " --i-: .• „The President's addrej|sv/as "as follows: — '£i{e balance-sheet for the. year ended March 1 31, ; ' 1897, has been placed in • your hands, 'ami. from it you will '-see- that the net profit, after provision for bad and doubtful debts, is £ 56,891 2s lid. We deem if right, how.ever, to tell you that, ivithont explanation these figures do not correctly indicate the tjarninp; power of the . bank, .Inasmuch- as the actual amount earned after payment of all interest due and accrued 6n deposits and guaranteed stock "vras ;.£125,33(> 10s 3d, and bad it not been for the- very large additional provision which the Hoard con- 1 sidered it necessary to make for two old and disastrous accounts, evidence regarding one pf which -was given by the Government Axiditor to the Parliamentary Committee on .Sept. 23 last, the profits would have been sufficient to meet the obligations to the Assets Realisation Board and leave a snrplns of .£20,000. This surplus would have been available for the purposes of writing down the debenture conversion account, and the payment of a dividend to shareholders, and ; but for the necessity of meeting out of last year's profits a sum of .£12,492 os Id disallowed upon the adjustment of the price paid for properties by the Assets Hoard, the surplus referred to would have amounted to <£32,000. As it is, the amount ' of profit earned during the year under re- ' view has justified our estimates, and we i have .£39,31)1 in hand to go towards our statutory payments to the Assets Board. When this payment is made our arrears to the Assets Board will be ,£24,900 which, in view of our earning , povrev, is not a, very large sum to contemplate the extinction of. Before leaving the

subject of profits, I may remind you tint I* . for only nine months of tho past; your woru the finances of the bank in a good working position, as comparatively itilo monuy had to be kept until June, 1890, to pay dobontures of the Estates Company and Auckland Agricultural Company.' Siuco Unit time the bank's finances have boon on an improved footing, and its funds have boon fully employed, but the low rutost of interest now ruling for advances mivy prevent the profits from increasing very nrnch in the noar future. As to provision for bad and doubtful debts, wo lmvo proceeded from time to time according to tlio best of our judgment, ami as liquidations and other events guided us. In May last, at the request of the Hoard. I wont to Australia, and was joined there by Mr Martin Kennedy. Wo nmdo a most careful examination of the bank's assets and affairs generally, with tlio result time tlio Board are now quite as to the safety with which business is being conducted there. It is only fair to the prosimt. Board and tho recent management to say that of .£63,400 deducted from tho past year's profits for bad and doubtful debts, not .£4OOO belongs to tho administration since 1894. I will now ask you to advert to the items in the balance-sheet which call for remark or explanation. Tho bank's capital is increased since last year by .£196,717, being payments on account of call on ordinary shares, as per Section 0 of the Bank of New Zealand and Banking ; Act, 1895. The whole call is .£3 Gs Sd per ' share on 150,000 shares, or .£500,000 in all, and only two instalments out of four were payable" up to March 31. The reserve fund shows a trifling increase of £i>G, caused by an adjustment of the premium obtained on the sale of 3 A per cent Government securities in accordance with the Act. Notes in circulation show an increase of d 524,268, and bill 3 payable in circulation an increase of .£714,449, consequent on the expansion in both local and exchange business. Deposits show a decrease of .£1,663,823. Actual business deposits, however, have increased, the deficiency mentioned being more than covered by i? overnment drawings, principally on account of advances to settlers, by fixed deposits paid off in London in pursuance of the bank ' policy and : by paying temporary deposits of the Estates Company and Assets Board. The item " other liabilities " is nearly the same as it was last year. It is made" up by tHe amount set aside to provide for bad and doubtful' debts riot yet written off, the amount retained to meet deficiencies in certain accounts taken over from the Colonial Bank, and. the amounts set aside in the adjustment of fixed deposit interest accrued but not paid, ani discount on bills received but not earned at March 31. A. new item appears as " bills rediscounted, .£50,445 9s lid." It consists of bills of exchange re-uiscounted in London, which- : we considered would be more properly shown in this way than in a. footnote to - the balance-sheet. Turning .tothe assets side, "coin and cash balances " are less by J273,323, which la, however, more than made up by an increase of .£98,669 in Government securities. " Bullion on hand and in trausit " is 'higher by .£16,858. Coin, bullion and Government securities, added together, amount to .£2,471,190, which shows ample strength, and. when to this is added our holding of Assets Board debentures, .£2,680,285, payment of which is guaranteed by the .colony, the superior strength .of the bank's position cannot fail to be .'recognised. The coin itself is niore than ample for wants, and the- increase of £98,000 in Government securities adds to the .earning power, whilst helping to maintain a strong reserve against deposits. "Municipal securities " have increased by. .£6740. " Other securities " have decreased by .£345,561, being' principally Estates Company debentures redeemed. "What wo now hold under this heading are debentures other than Government" or Municipal, bu,fc of substantially secured and undoubted class.. " Bills receivable " and "bills dis-. counted" have increased" by ,£128,229. This is chiefly in bills of exchange against produce, ''although ' otu- local traddbills discounted have also increased. " Other advances and securities and debts due to> bank," show the enormous falling off of .£2,772,630, and the Bank of New Zealand Estates Company share account, ■which stood last year at ,£1,089,822 has altogether disappeared. To a great extent these have been replaced by the Assets Realisation Board debentures .£2,680,285, the Bank of New Zealand Estates Company I assets in liquidation <£580,0G5, and Debenture Conversion Account .£68,445. Part of the reduction in "other advances, &c," was by loans in London being called up to pay off fixed deposits and Estates Company and Auckland Agricultural Company debentures there. Actual business advances, apart from bills, increased during the year by about .£150,000. The item "estimated amount recoverable on account first call reserve liability <£4141," requires this explanation, that in 1895 we esti- ; mated the first call to produce .£450,000. Provision for losses at that time and th.3 writing down of the Estates Company's assets to the valuations of 1895 required the full amount of <£450,0G0, and we con sider that from the way the call has come ! in. we were justified in our estimate, J and are still justified in expecting i that the small sum outstanding, which is less than ten per cent of the original estimate, will be recovered within a little time. Since March the amount has been reduced by .£660. , " Landed property, premises, &c." has been augmented by ,£19,318. We expended for I the purchase of the corner opposite the

National Mutual Huilding, Wellington, 4}!<»,f)<,K> i tlio 42ft frontaye in Laiiibton Quay, iioxt to tlio VVelliugton office premises. JJUOUO ; and in Dannevirko .£i)00. Propertins ftud premises were taken over from the Colonial Hank account to meet requirements at tlio Muff, Cromwell, Oamaru, Ophir, I'almeraton (Otago), St Bathans nutl Wostport, iiggregatiug Additions U> promises at Tiawera and Te Aro cost .l'I(H)l). Ou the other baud, sales of properties and premises amounting to 4!(if>oo have taken placo at Auckland. Adelaide. Ashburton, Eketahuua, Now Plymouth nnd West-port. The furniture which stands in this account has been written down by .£3OOO. Sinew the balance date wo have sold tlio section opposite tho National -Mutual buildings for .£II,OOO. making some profit, besides interest on the, transaction. The Board intends to at once erect suitable promises on the bank's old site at the corner of Lambton and Custom-house Quays, to which will be addod the section lately purchased in Lambton Quay. We -now come to the •item, "Bank of New Zealaud Estates Company assets in liquidation. 1895," valuation ,£580,065," regarding which we wish to fully inform you. When in 1895 tho Legislature provided that the Assets Realisation Board should relieve the Estates Company and Auckland Agricultural Company of certain assets, there was a residue left for these companies and t!io bank to deal with, and this residue amounted, according to the valuation then made, to =£849,751. It will be seen that during the eighteen months which have elapsed siiice the legislation of 1895, reductions had been effected to tho extent of .£2G9,GBG. The properties actually sold, however, amount to much more than this, indeed to. .£222,425 more, but as the money has not yet come in, being payable by instalments or otherwise, it has not been carried to credit of the account. The amount unsold, therefore, is only J>357,640, and the directors spare no effort to effect sales. Some of the remaining assets have paid well for years, but- it is lamentable that in the colonies when securities for have to be sold by a bank their values generally become depreciated in the market, and the utmost difficulty is experienced in quitting them without undue sacrifice. We have been advised by two independent counsel that so far as this account is concerned we must treat it as fixed capital at the valuations of 1895, \ratil complete realisation takes placo, when any deficit or surplus can be debited or credited to the bank's profit and loss account, as the case may be. We are not sanguine, however, that the amount outstanding will be fully realised. " Debenture conversion account, £08.445," represents the remainder of the sum expended in redeeming about .£1,800,000 of Estates Company and Auckland Agricultural Company debentures, which carried high rates of interest. By their.redemption the bank saves fully j-25,000 per annum. The total amount of cost, including premium, of converting and redeeming these debentures, was .£105,800, so that a large proportion of it has already been provided for. The "Colonial Bank property and premises, ,£105,481," represents the remaining properties at their cost. We are legally advised that as these properties are sold, if deficiencies arise, the bank may provide for them. "Purchase goodwill' account, .£75,000," we are advised, is a capital asset •which, whilst, our . present obligations to the Assets Board last, cannot be provided for out of net, Vi profits. I have now. given yoii a complete account' of the bank's position, and if there is anything is not quite clear to any shareholder I shall be glad to answer any question which I properly may. Thestaff, with the exceptions of one or two juniors not now in the service, have worked, well, and loyally assisted ' the Board in . carrying out the onerous duties devolved upon them. ;Mr C. G-. Tegefcmier, formerly manager in London, has been appointed general manager, and the Bank of New. Zealand has now, despite drawbacks, securely entered upon a promising en reer. It has fulfilled the expectations formed of it by those to whom three years ago its' direction was entrusted, and it may reasonably be anticipated! rtbat it only requires a continuance of careful and able management to ensure continued success. Trade in the colony is in »• flourishing condition. The country is being steadily opened up, and tho depression which for so many years hung over the cities has at length been removed. Still, while it may be affirmed that New Zealand' is pros-: perouSj it cannot be said that there is any-: thing in the nature of undue inflation in either commercial, agricultural c.v pastoral affairs. The outlook is, therefore, free from dread, and steady progress may be reasonably expected. I now announce to you that twelve months' dividend, to March 31, 1897, on preference shares, amounting to ,£17,500, has been paid, and that the balance of the profit (£39,391 2s lid) will immediately be paid to the Assets Kealisation Board, according to the Act of 1895. Sir Ei. Stout referred to a rumour that Mr Birch, a manager of the bank in the south, had been dismissed, and asked if it was true. He also asked whether the bank's managers were allowed to become directors of companies. The President replied that the question of dismissal or resignation of officials of the bank was a matter for the consideration of the Board, and one that should not be discussed at a meeting of shareholders. As to officials accepting a position on the Boards of companies, there was nothing in the rules against it. In instances where officials accepted such positions the usual custom was to apply to the Board for permission, and the Board considered whether or not it was in the interests of the bank to give consent. Eacli case was considered on its merits. Sir E. Stout replied that he thought that it was not proper. Messrs M. Kennedy and W. BdoUi, the retiring directors, were re-elected without opposition. Sir Eobert Stout next referred to a rumour that the directors of the bank, were trafficking in shares of companies which were clients of the bank, and asked if it was true. The President replied that he was unaware to what Sir R. Stout was refer- * ring, and added that he paid little attention to street gossip. Mr T. W. M'Jfenzie moved n, vote of thanks to tho staff, and thought that if the shareholders had patience all would come out right. Mr C. G. Tegetmeier, in replying, said that the bank had an excellent and efficient staff, alldesiring to advance the welfare of the bank. He confidently looked' forward to the time when tho institution would overcome its troubles. Messrs Booth and Kennedy thanked the shareholders for their confidence in reelecting them, and declared that the Board had no interests to serve other than those of the shareholders. Mr Kennedy, in referring to remarks regarding members of the Board taking shares in other companies, said that he himself was connected with a company which had an account with the bank, ft was a strong account, and he asked whether it would be to tho interests . of the bank to have it removed. He was confident that no personal feeling influenced tho Board in its decision as to the transaction of the bank's business, whether or not tlio directors wore connected with other companies. The meeting then ended.