BANK OF NEW ZEALAND

Wairarapa Daily Times, 19 June 1931, Page 6

BANK OF NEW ZEALAND

ANNUAL MEETING. At tlie annual meeting of shareholders, held at Wellington to-day, the Chairman said, inter alia: — Before formally moving the adoption of the report and balance sheet, I will take the opportunity of drawing your attention to those items in the balance sheet that call for special mention, and further remarking on matters l incidentally affecting the Bank. CAPITAL AND RESERVE. There has not been any change during the year in the capital of the Bank. It is proposed to transfer £25,000 from the year’s profits to the reserve fund, making the latter £0,575,000. This is the smallest addition to the fund for very many years. The balance of profit carried forward will be increased by £2845. Shareholders’ funds will thus amount to: — Paid-up capital (exclusive of £529,988' of guaranteed stock) £6,328,125 Reserve fund 3,575,000 Balance of profit carried forward 626,001 £10,529,126 In addition to these funds, we have ample internal reserves built up over a long period of years. NOTE ISSUE.

Practically the whole of the profit on the note issue when the tax was 3 per cent, went to the Government, consequently the increase of 14 per cent, was totally unjustifiable. The Banks felt that this increased imposition should be met by some means, and therefore increased the half-yearly charge to customers for keeping accounts by ' ss. This increased charge still leaves this Bank to face a loss of £IO,OOO to £12,000 a year-, as about 30 per cent, of our circulation is due to the operations of the Government accounts, on which no charge is made. DEPOSITS. Our deposits at the balance date were £1,572,923 less than at March 31, 1930. The shrinkage is in current account balances, which are down by £2,623,492. Fixed deposits have increased £1,593,072. Government balances 1 are less by £542,503. PROFIT AND LOSS ACCOUNT. The profit for the year was £545,514, being £102,720 less than for the previous period, the decrease being due to increased taxation, to higher cost of deposits, increase in bad debts, and to lessened earning on our short-item investments in London.

We anticipate that our losses from the earthquake and resultant iires in Hawke’s Bay last February will amount to less than £100,000.' When these losses have been definitely determined, the amount will be debited to the contingency fund, in which there will remain a very substantial balance. ADVANCES AND BILLS DISCOUNTED. These items together show a decrease of £709,374, over £400,000 of which is due to reduced imports from Britain. There has been an active demand for money, and we have been able to meet all legitimate applications from our own customers. In times like the present, it is necessary to scrutinise all requests for accommodation with the greatest care, not only to guard against the possibility of loss, but also to see that our funds are not being used for speculative purposes, or for purposes alien to proper banking. DIVIDEND. The dividend and bonus, which are payable in Wellington to-morrow and

at the various branches on receipt of advices, will be at the .same rates as those of last year. TAXATION. Taxation paid to the Government of New Zealand in the year under review was £54,109 more than in the year previous. The total increase in rates and taxesi on the whole of the Bank’s business was £86,837. RATES OF INTEREST.

There has been no change in interest rates within the Dominion since you were last addressed from this Chair. Although the demand for money exceeds the supply, we hope that ere long it may be possible to bring about a reduction of rates, but as the banks do not control interest rates, nothing can be accomplished in the way of reduction unless certain other important interests can be induced to co-op-erate. EXCHANGE. As you are aware, the present rates of exchange between London and New Zealand and vice-versa are abnormally high, and there is no reduction in close sight. The principal factor in advancing rates from time to time has been the necessity for bringing about a reduction in imports to correspond in some measure with the reduced value of exports. To a considerable extent this result has been attained, but London reserves, which have been heavily depleted, must be built up before reduction of rates can be looked for. Further, it is by no means certain that for the present year the balance of trade will be .in the Dominion’.s favour to anything like an adequate amount. Were it not that the Banks held funds on a large scale in London, the rise in exchange would have taken place sooner than it did and been heavier.

We have resolutely refused to permit our New Zealand funds in London to be availed of for the benefij; of Australia, but, unfortunately the Banks do not control the exchange position,, consequently through channels outside the Banks. Australians have secured possession of an appreciable amount of New Zealand funds in London. % PRODUCTION. Dairy factories have continued to extend their operations and improvements and developments have taken place on many farms. Meat freezing companies were not generally successful during the past year, as the prices paid for live stock were too high at the beginning of the season. Some changes which will avoid overlapping and reduce expenditure have been made, and it is expected that, notwithstanding the low prices in Britain, better results will be effected this season.

Wool prices have been extremely disappointing—so much so, that many who could afford to do so held their clips back from sales or shipment. It was considered that when at the lowest price last summer, wool was much below cost of production. Since then values have risen, .and it is hoped that they may soon return to paying point.

Droughts have been severe on the east coast of the' North Island, and in many places cattle had to be removed, while sheep and lambs were difficult to fatten.

Timber milling has, in the main, been conducted at a loss, owing partly • to diminution in building, partly to exchange rates in exporting to Australia, and to the conditions prevailing there, and partly to high costs of production as compared with other countries. The greatly lowered prices, and leaf disease, have rendered flaxmilling nonpayablc. GENERAL. We are all proud of the position to which the Bank has attained—the

■shareholders as well as the directors and staff —and I believe that the vast majority of the people of the Dominion are pleased to have an institution of such strength and usefulness, but (Sometimes—perhaps ordained in order that we may walk humbly —irresponsible critics air what they bejieve to be their wisdom by talking or writing against us. In similar case the Governor of an important Bank in South Africa remarked humorously, “Most of the criticism reminds me of the story of the boy who was one day found whipping a toad and muttering, ‘l’ll larn you to be a toad.’ ”