BANK OF AUSTRALASIA

Wanganui Chronicle, Volume 76, Issue 109, 11 May 1933, Page 9

BANK OF AUSTRALASIA

CHAIRMAN’S ANNUAL REVIEW STRONG LIQUID POSITION. At the 99th annual general meeting of the Bank of Australasia iu London the chairman, Mr. Harold Nelson, gave an interesting review of tho bank’s affairs during the twelve months ended October, 1932. The total figure of the balance-sheet had increased by £1,112,000 to £51,832,562 16s lid. “Deposits at interest” was an amount larger by approximately £430,000 than that indicated 12 months ago. The chairman explained that a considerable sum of tho bank’s deposits represents proceeds of imports into Australia which, in normal times, would have been remitted home to sellers of the goods they represent but which, in view of the high adverse rate of exchange for remitting money from Australia to London, had been left on deposit with the bank in the hope that the exchange rate would become more favourable for their transfer to London. Deposits of this nature, being abnormal, were not profitable to the bank, particularly so in these times when such difficulty was experienced in finding safe employment for funds. The cost of remitting these funds to London fell on the depositor and not on the bank. Bills payable, drafts in transit, and other liabilities, including provision for contingencies, were higher by £605,653, and now stand at £3,915,980 16s lid. Last year the chairman informed the meeting that, as a consequence of Britain being forced off the gold standard, the value of tho bank’s British investments was practically at its lowest point, and that to offset this depreciation it had been necessary to write down their book values to market values by a transfer from contingencies account. Since that date a full appreciation had taken place which, had enabled the directors to replace the amount then set aside. The investments now showed a substantial appreciation over their balance-sheet values. On the assets side of the balancesheet, specie, cash, etc., showed a reduction of £248,406. From a profit point of view this was a healthy sign, as it meant that additional funds were being employed at interest. The considerable increase in Government securities of Australasia and other investments was largely the result of our increased holding of Australian Treasury bii% which, being rcdiscountable, were practically the only liquid form in which the bank could employ remuneratively its surplus funds in Australia. Specie, bullion, Government notes, cash balances, loans receivable, and securities amounted to over £18,045,000, and. represented 9s 6d of each pound of the bank’s liabilities on al! deposits which, of course, included current accounts. Tho ratio of specie, cash, etc., plus Treasury bills, to current accounts was £1 4s to £l. These figures were evidence of the strong liquid position of the bank. “As already stated our securities as shown in the balance-sheet stand at considerably below the market value. Our advances on securities, etc., at £31,011,981, show a diminution of over £l,822,000 but, as you are aware, a reduction of advances is a feature of most bank balance-sheets at this time. The decline in this figure is reflected in the increased holding of Commonwealth Treasury bills mentioned above. “The bank is always a ready lender providing the requirements are for sound legitimate enterprises, and the decline in advances must he taken as indicative of the present state of trade. At present there is very little demand for accommodation, but lower interest rates should stimulate enterprise, more especially if accompanied by a reduction of taxation. The tendency to before deposits at fixed rates of interest force down interest rates on advances run off must affect adversely banks’ profits while the downward trend coxtihues.” The gross profit was down by £97,774. Charges of management showed a reduction of £46,508 in Australasia and £2662 in London. Bates and taxes in Australasia and London were £86,040 less. This reduction, together with the retrenchment in respect of salaries, etc., more than made up for tho reduced amount of gross profit and provided an increase by £38,434 to £254,969 in the amount of profit available for distribution as compared with the corresponding figure of £217,535 in tho preceding account. Of this amount £101,250 was paid to shareholders as an interim dividend on September 30 last and £135,000 was payable as a final dividend for the year. The carry forward was £169,783 2s, an improvement of £18,719 18s lOd on the amount of £151,063 3s 2d brought forward from October, 1931.