THE BANK OF NEW ZEALAND.

Wanganui Chronicle, Volume L, Issue 12245, 19 June 1909, Page 2

THE BANK OF NEW ZEALAND.

THE ANNUAL REPORT,

£200,000 CARRIED TO THE

RESERVE

NET PROFIT £313,150

IMPROVEMENT IN FINANCIAL OUTLOOK.

(Per Press Association.) WELLINGTON, June 18. The Annual Meeting of the Bank of New Zealand was held to-day. The Chairman (Mr. H. Beauchamp), in moving the adoption of the Report and Balance-sheet, said: It is with much pleasure that I have again to place before Shareholders such- a satisfactory Report and Balance-sheet as that submitted to you. As usual, I propose, in the first place, to make brief reference to the items in the Balance-sheet which may seem to call for special comment. A comparison of the figures with those of a year ago gives the following results: — Capital.—There is no alteration in the capital of the Bank, which still stands at £2,000,000. In my speech last December I indicated the probability of the question of increasing the Bank's capital being considered. Lately, the matter has engaged the attention of the Board, but so far no definite scheme has been formulated with a view of carrying this into effect. The Reserve Fund.—This Fund was increased" last year by £200,000, bringing it up to £450,000. To further augment it, the Directors propose to transfer from the profits at 31st March last the sum of £200,000, which will increase the Fund to £650,000. With the balance proposed to be carried forward, after payment of Dividend, the Reserve Fund and undivided profits will amount to £710,998. pqf^lo in 4 Circu; *»»» stand at tyrfu,Bs2, an increase of £18,225 on last year's figures, which may be regarded as satisfactory. Deposits have, on the whole, been well maintained. The aggregate figures show a decrease of £224,180 as compared with March, 1908 a moderate movement in view of the "conditions which have prevailed during the past year, when it is considered that the figures under this heading amount.to over £12,500,000. Bills Payable and Other Liabilities show a .decrease of £347,256, mainly due to fluctuations in Government operations. Turning to the Assets side: Coin, Bullion, Money at Short Call, &c.—As compared with March, 1908, our Coin and Cash Balances show an increase of £309,094, and -the item now stands at £2,755,087. Bullion shows an increase of £3,267, and Money at Short Call, Government and Other Securities in London are together less by £42,198 than at 1908, and now stand at £1,863,034. These figures show that a strong position is being maintained. Bills Receivable, in London and in transit, stand at £2,171,702, an increase of £327,262. This increase has no special significance, being mainly caused by ,the incidence of produce drafts.

Investments in the Colonies are greater by £16,492, and now stand at £1,139,787. Advances.—Bills Discounted are less by £238,992, and Other Advances by £659,712, than at March, 1908. The condition of the money market has necessitated a cautious policy being maintained in regard to advances. In strengthening the Bank's reserves, the most careful and anxious consideration has been given to the actual requirements of cus- , tomers, which I think we can claim to have met in a fair spirit. ■• Assets Realisation Board Assets.— The position of these assets as at 31st March, 1908, and 1909, is shown in the accompanying table: At3l/3/'OB. At3l/3/'O9 Balance owing by Purchasers ... £378,040 f 336,931 Other assets unrealised ...... 93,195 66,778, £471,235 £403,709" Since 31st March, 1909, scales aggregating £10,467 have been made. You will thus see that assets are being steadily reduced; and the decrease may be regarded as highly satisfactory in view of.the lesser demand for properties for some time past. We I will lose no reastnable opportunity of disposing of the balance of the properties. Landed Property and Premises.— The Directors have this year allocated the sum of £15,000 in reduction of Bank Premises and Furniture, and after this appropriation, Landed Property and Premises stand at £346,604 —an increase of £24,751 on 1908 figures. To keep pace with the growing requirements of the Bank's business in the Dominion, new premises have had to bo erected at several points, while extensive alterations and enlargements had become pressing necessities at a number of our Branches.

Profit and Loss.—-The net profit for the year, after making all necessaryappropriations, including provision for the Bank's annual grant to the Provident Fund and for a bonus to the Staff, and after allocating the sum of £15,000 in reduction of Bank Premises and Furniture accounts, amounts to £313,150, as compared with £809,922 last year. To this has to be added the balance brought forward from last year, £54,098, making a total of £367,248. The interim dividend, paid "in December last, of 5 per cent, on Preference and Ordinary Shares. absorbed £50,000—-thus leaving £317,248 to be dealt with.

The Directors now pr-, yVjS^\to .pay a further dividend ofT> per cent, and a bonus of 2%. per cent, on Ordinary Shares (making 12% per cent, for the year), and a further 3 % per cent, on Preference Shares (making 8% per cent, for the year). The total amount distributed to Shareholders for the year will therefore amount to £106,250. Of the balance remaining, it is proposed to transfer, a3 already mentioned, £200,000 to the Reserve Fund, and to carry forward £60,998. Shareholders will, I feel sure, agree with me that the result of the year's operations must be regarded as highly satisfactory-

General Remarks.—You will, no doubt, expect from me some expression of opinion on the financial and commercial conditions that prevail to-day, and the outlook as to the future.

It would be idle to deny that a monetary stringency is being felt in New Zealand; and it is most disconcerting to have to admit, in view of the long period of prosperity—covering practically fifteen years—that a sudden drop in values of our primary produce, for one season only. should cause such a financial disturbance as we have been experiencing. The sudden fall in values, however, was not

wholly responsible for "this. If we seek other causes, we have to recognise that they will be found in the inordinate prices paid for land, and general extravagance amongst all sections of the community. In this connection, I may be permitted to quote from the Address I made to thie Shareholders of the Bank on 16th June, 1905. Inter alia, I then said: —

"... The great prosperity of farmers—pastoralists and dairymen—is however, in my opinion, prompting them to pay excessive prices for land. They have apparently forgotten the day of adversity and are now basing land values upon the assumption that - the prices of produce ruling in recent years and now, are going to be maintained indefinitely. Surely this is unwise, for history teaches us that we must look for, and expect, cycles of lean and fat years. Further, we have to face the great and increasing competition of the Argentine, whose exports of products similar to our own are expanding by leaps and bounds."

These remarks, I venture to think, are as appropriate at the present moment as they were in 1905. What we want in New Zealand to-day more than cheap money is cheap land. Had land values been maintained at their normal and reasonable level, we should not now be troubled with a monetary tightness, or with the distress arising from unemployment. Until, land is bought and sold on the basis of its productive value in normal times, we cannot hope to see that equilibrium necessary to maintain commercial stability. The farming industry *in the North Island would be greatly stimulated if large areas of Native Lands, now in a state of nature, could be offered for settlement upon attractive terms. They are now lying dormant— contributing nothing in the shape of taxation, — and, through the unmolested growth of npxious, weeds, are a perpetual danger to/\, adjoining European owners. If could be sold or leased for reasonably long periods, they would materially assist to satisfy the demand for land, and, at the same time, be the means of .adding to the wealth of the community. If we compare the present with the paat, and accept, as an index, the state of trade as disclosed by the Bankruptcy returns, and other general indications, we need not expect that the depression, though sharp, will prove to havte been so acute or as lengthy as on former occasions. It may interest you if I quote a few figures in supporUof this statement: I •» i-l 09 tn tt) M M^ KJ t- »> Ka «t H t-T OO 3^o-0 0 ** oo O © N .^4 t— T}4 P] rico o •* . Bj ■ , to •-> /S ' © - 3 to ' © © p, : •♦ o ■ to • O °* © ° M n is f. .2 £ *-. oo S"« S » © S <* °. <«• % i-T -• oo •* is> _BJ £ <M o M H*' pi lottO <M OO CO < "rt--1 SP ■ 3 8 g . 2 ** ° ■* b • «> ■""• s °° o on oo cs fH , rH "-1 r-\ These figures, I may add, do not include private assignments. The financial • stringency to which I have alluded is not quite so pronounced at the moment as it was a few months ago, and this is, in a measure, due to the fact that Local Bodies have, to a large extent, refrained from borrowing within Australasia. To illustrate this, I will give you a list of the amounts which have been raised by 1 Local Bodies .in London since June, 1908: — .Q 8 " VI g©©©^oo, 0, 0, r^ i-f iH y-t *-l O "♦* iII 11 111 I I llii* 1 I i S 1 ::t:: * ? * ■ ::£:: S § § « i : :pL : :mm »&. . - &,-■ ■•' • v v _• 5 : o § >. d § W to H w t: b w a a -c i£ g < <q X % i ' - 3«ss§ fi I I I oo 2 ' . i ~'■©■.©' ■ ■>:* en -■ Ol This represents a total of £1,410,600 successfully floated in London, and the Bank of New Zealand has taken an active part in placing most of these Loans, our proportion being rather more than 86 per cent. The London Money Market has been^ exceptionally easy during tLe past twelve months. The Bank Rate was reduced from 3 per cent, to 2^ per cent, on May 20th, 1908; but on January 14th this year the 3 per cent, rate was re-imposed, owing to the serious efflux of gold from the central Institution. I\ne metal was being taken by the Bank of France, in preparation for the then pending Russian Loan. The 3 per cent, rate was maintained until April Ist, by ! which time the metal reserve of the Bank of England was restored to : its proper level, and the Bank rate is now 2y 2 per cent. . Money .is today very cheap in London, and, as the outcome of this, there is a great rush of borrowers. For bhort Loans the rate is abnormally low; but for long periods capitalists seem disinclined to lend, except at comparatively high rates, say from 4 to 5 per cent, according to the attractiveness, or otherwise, of the security offered.

The trade of the world for the past year has been very unsatisfactory, practically every country exhibiting a shrinkage. A part of the decrease is, no doubt, due to lower prices of commodities; but the restricted consumption is answerable for a great deal more. The external trade of New Zealand for the past

s four years, according to the latest; . figures, shows as under:—- . Year ended Exports. . Imports. I 31st March. £ £ 1909 .. 17,011,801 16,520,G26 I 1908 .. 17,869.354 18,210,155. 1907 .. 19,531,588 15.322,046 ' 1906, , ... 16,267,329 •; 13ilS-t,086 l The Exports exhibit a compara-:- ---• tively smair shrinkage- as compared. : Avitht 19&8,•'■■: but,--, ccmparedt With the!1 • previous^ :y^r;7therei4C-^4^^®^^ , of over two arid a^haW ;Millt6rrs v s-ter* ! ling. .The Impbi-ts,. which in 1908 - exceeded the Exports by £340,801, r were, for the past year, less by j £191,175. To pjovide for payment 5 of interest on public and private in- ; debtedness to the foreign moneys lender,-. a sum of, approximately, r £3,500,000 is required annually, and 3 this amount must be obtained chiefly - by the sale of produce—that is to . say, the Exports must exceed the Imi ports by that amount. . In the past s two '• years,-"'the"Exports have 'aggTe- - gated £34,881,155, while the Imports - have totalled £35,030,?5i. These figures show that the Exports have been insufficient to pay for the Im- , ports. It is, therefore, easy to un- - derstand the financial stringency, the t unemployment, and the necessity for i the comprehensive scheme of reL trenchment now under consideration • by the Government. j The Wool market exhibits aver l satisfactory improvement, and the - measure of this is shown in the aver- . age prices realised for the various i grades at the close of the May sales. - The High Commissioner's cabled ads vices give the following, .quotations: [ May, 1909. May, 190S-. 1 S'p'r. Merino 13d to 15% d lid to 12-%' d i Medium do. ll^d to 12% d B%d to 10% d » Inferior do. 9d to Ilds%dto 8d ' Tine Xbred 13d to 16% d lOd to 12d ' Medium do. 10%dto . 14d 7^dto 9%d r Coarse do. 7%d to -12d 5d to B%d There is a marked improvement l compared with twelve months ago, I and it is cheering to note that the l improvement is due almost entirely • to increased consumption, speculation , playing a very small part. Still wool- - growers have to thank American and s Continental operators for the higher ; range of values that prevails. The ' following^ fable throws considerable ilght on the movement of Colonial s wools. The figures give the total de- ! liveries to the trade up to the end ■ of the March London Sales, and in- • elude both transit wools and direct imports, as well as'tire wools bought in London. Home Continental American consm'tion. consm'tion. consm'tion. bales bales bales. 1909 .. 414,000 505.000 91,000 1908 .. 394,000 . 704,000 40,000 1907 . . 368,000 625,000 . SO.OOO 1906 .. 351,000 704,000 50,000 1905 .. 322,000 537,000 621000 It will be noted that-in. the last year the deliveries to the Continent have increased by, 101,000 bales, and to America, 51,000 bales; while the increased takings by the Home trade amount to.only 20,000/ bales. The Yorkshire woolbuyers are, no doubt, operating with caution, and it is a fair assumption that, when they commence to buy more freely,, values will go higher. The outlook for wool appears to be exceptionally 'good.' Our Dairymen have just concluded a satisfactory season, the exports of both Butter and Cheese showing increases. The official returns for the past five years, are as under: — r . S '°° J2 ■* •* O j-i t- .o ■* co «c o as . «+> in ci .o» uJ om co t- ■* ■N ~ ™ 0) , • - t-'eo co . is ' ih > ~ +J " OO t>i" 1-H > C 3' 5-5 jj, ._O W ;C> ..OO O © C 3 - C 3 t >- C^ ' ' , i-l . OO tO , "O OO co im . ,-1 ,1 ' ■ ' i-i ' co*. pa' • ■*( ' cs' '. *O* * OS • tH ' oo U9 - " . - -?* ■,co ", r-> ' C«. , t-(. ' n" '." oo -• ci - co ' V • ■ , %4 *+^ i r * I—i Q ' CO . LA , *tj< ' L!i. 3 • i .'■,:■■ • w , . . . -,-■ . ** M © tO M t— w . co o us "£ '°1 '" n. ■ •*-* -" °° i ' ' P io i-T oo" 1 'o -^ «' I- C- ©, © -* ' ,_j 04 N CO C 3 CO ' ' 1 'O.'v ■ . • ■ I>rt oi.oo't- v> 'in ri ©. © ©• © o s- rt ,c» e» a. cs cs ' g rt ■. rt »h -m; m ". . H 3 • '■ ■ • • ■ • • CO / The total value..qf ■ Butter and.. Cheese1 exported', last; "year '. amounts to £2,"287,759, :■ as. coiiipared'' with £2,1-30,711, which "is 'exceedingly1 gratifying. ' . - ; - . ' " ' : -' While Dairymen have , done well, others connected with the trade fared badly. The Dairy, industry has. been a profitable one for many years past; but it is to be feared that many have over-rated the prospects, and have been induced to pay extreme prices for dairy land. It is anticipated by experts in the trade that Dairy Produce, with increasing productions, must sooner or later experience a drop in values serious enough to be severely felt; and the high-priced holdings will be a source of trouble. Other countries are taking up" the business, and increased competition must naturally be expected in the near future. The Frozen Meat trade has, un- - fortunately, been very much depressed during the past five "or six months, and the condition of the trade just now is most discouraging. The industrial depression in Great Britain is partly responsible for trie shrinkage in values. At the same time, there is no doubt that New Zealand has to face increased competition, chiefly from the^Argentina. I have gone to some trouble to obtain the shipments of meat from Argentina to London, and. the following figures are interesting and significant. Year ending Mutton. Lamb. Beef. 30th April. c/s c/s qrs. 1909 3,250,000 469,500 2,395,000 1908 2 V 785,000 117,000 1,940,000 Increase 465,000 352,500 ■ 455,000 One expects to see the Beef ti-ade of Argentina increase, but for' the past year there has been an enormous and rather unexpected expansion in the Lamb trade, the export of lambs being four times as great as in the previous year. The New Zealand exports "for the year ended 31st March, compared with each of the four previous years, show the following movement: — Year ending Mutton. Lamb. Beef. 31st March. c/s. c/s. cwt. 1909 1.785,536 2,SOS,SIS 373.400 1908 * 1,778.795 2,732.792 354,147 1907 1,989,909 2,666,564 320,815 1906 1,518,722 1.932,214 155,086 1905 1,883,277 1,894,361 159,133 The competition, both from Ar; gentina' and Australia, is likely to increase in severity, and it seems desirable that special efforts should be made to induce Foreign Governments to relax the conditions which prevent New Zealand from finding freshmarkets for Frozen Meat. There is no improvement in the values of Hemp and Kauri Gum, and this is greatly to be deplored, for, while profitable prices'rule,- these,in-, dustries find .employment for a.large .. (Continued on Page 6). '.