Bank Of New Zealand Shows Profit

Chronicle (Levin), 1 September 1948, Page 3

Bank Of New Zealand Shows Profit

WELLINGTON, Augnst 31. ... A net' profit of (£429,796 is shown in ihe accounts of the Bank of New Zealand for the year ended Mareh 31 last, whieh are published in the annual repol't of the ljoard of direetors and was presented in the House of Representatives today by the Minister of Finance, Mr. Nasli. This represented a decrease of £5454 on the previous yeav. The at'connts showed that the gross profit for the. vea?, less provision for eontingeneies, amounted to £2,236,477, an inerease of £135,847. The gross profit, it was stated, showed a satisfactory inerease whieh was aeeounted for by a highpr .level of advances, in ureased earnings. from exchange trausaetions, the contiuuing inerease iu the iiumber of customers'' accounts andy an inereased volume and turnover of the banlvs' business generally. Investment iueonie showed a reduetion due to the repayment on maturity of Governmdnt and local-body loans. • Expenses amounted to £1,806,681, au inerease of £141,301. The main fiuetualions in the .expenses were salaries and allowances £71,141 higher, general expenses £63,134 higher, rates and taxes £7171 higher. It was stated that an inerease in expenses was to be expeeted with higher all-round costs prevailmg under present-day conditions but, in ad dition, there was the extra expense iuroived in liandling a larger volume of business. in view of advances being at a liigh level and having regard to uneertainties ahead and the disturbed state of world affairs, it had been considered prudent; to strengtheu the bank's internal reserves.

The net i)rofit was arrived at after providing for Ihe expenses of management, for all batl and doubtful debts, for other eontingeneies, and after making provision for an annual donatiou to the provident fund. The balance brought forward from the jirevious year was £399,208 3s 2d and, xvitli the net profit of £42,9,795 19s 9d, made a total of £8.29,004 2s lld. Discussing advances to customers, the report stated that the inerease during the year ended Alarch, 1947, was substantial and was caused by a return to more normal tradiug aud the building up of depleted mcrchandise stocks after the war, but the inerease in the last year was due to other eauses. The ine rease took part in the latter part of 1917 and early 1948 and this was due to the volume of import's whicli arrived during that period and whicli caused almost all importers to iean very heavilv ou their bankers to enable the goods to l>e landed. A fear that relative import licences would be cancelled lf

goous were not dolivered in 1947, niduced special efforts by English exporters and shippers, and goods were dispatched in almost embarrassing ([uautity. It api>eared evident .that there was at present some overstoeking i 11 some lines of merc-liandise thoughbasic materials ' were- still in short supplv. Overstoeking'. mig.ht possibly cause ' some tradiug lo^•sses, to tliose involved but these should not be serious' and the present abnormal positiou should adjust itself in the course' of time. The higli price of goods, pafticularly im])orted goods, called toi- larger capital resourees and the recent experience was a reminder that the banking system eould be subjeeted to sudden strains. Rel'erring tos . tfie Iieserve Bank's coiit i oi of advances, the report stated it was designe|; td avo'id Ifthe- uSe bof; baiik eredit for purposes whicli wofili| more suitably be financed by loans or capital from other sources. The operatiou of the policy li'ad not hampered ordiuary tradiug business but it had been mueh misunderstood by the geueral public. That it had not prevented an inerease in advances was obvious but without it advances might well have been higher. Such a policy must be reasonablv fiexible if it were not to force hardship on eertain people and the Iieserve Bank had adnlinistered the policy with every consideration.