THE BANK OF NEW ZEALAND.

Dominion, Volume 5, Issue 1471, 20 June 1912, Page 6

THE BANK OF NEW ZEALAND.

;':;ANNUAL MEETING

HIGHEST PROFITS ON RECORD.

REVIEW OF THE YEAR.

The annual meeting of shareholders in tho Bank of New Zealand was held yes-" terday morning. There 'wcro present Messrs. Martin-Kennedy (in'the chair), ,T. M. Johnston,'-W. Milne, D. J. Nathan, and W. Watson"(directors), W. Callender (general manage.r), B. M. Litchfield (chief wditor), and about twenty shareholders. CHAIRMAN'S' ADDRESS. PROFITS AND RESERVES. . The chairman (Mr. Martin Kennedy), in moving tho adoption of tho report and balance-sheet (which had been distributed eoine days previously), said:— I" feel sure you will consider the report end balance-sheet highly satisfactory.- I am glad to say that we have had a good yeaT, tho profits'being the highest yet earned by the bank in any year since its commencement in IS6I. /

The directors are pleased to be able to recommend .the-payment of .a'dividend on all of the bank, amounting toon the"ordinary shares, 15 per cent, for the year, and on the preference shares 10 per cent.; the statutory limit. Therp.'is no change; in the paid-up capital of :t!i'e, ...bank,., which. remains, at JE2,000,000. ' . \ _

Last year the -reserve fund was increased to .£1,000,0011 by 'the addition of J200,000 from, profits, and the directors propose to place a similar sum to credit of the fund out of the profits for. the year ■under.review, making the total '.£1,200,000. With, tho amount proposed to be carried forward, namely, .£-10,587..the reserve ftin l And undivided profits .will amount- to ,£l,240,587. As you will observe. J-50f1.000 of tho reserve .{und-iJs..invested in British Government .'securi ties. \ '' Notes in.circulation, which stand at w£1,030,000 show-ail increase of .£53,720 as compared wjtlcthe previous year. Deposits are less by ,£2,052,878 than the figures of ...a,'.year ngo,' the decrease being due to reduction iir Government credit balances, which, in tlib last balance-sheet, weve';abnormall>- high:.' Ordinary deposits, both-'fixed and, free,' show-a satisfactory increase;' , • ■

Bills payable and other liabilities show (t- comparatively'small'fluctuation, being Jess by ,£71,937 than at March,.loll. Ton - will' observe that money at short call,'. Government and other securities in London stand at .£3,316,159. This amount as compared with the previous year shows a decrease of attributable to the reduction previously mentioned in Government balances and to "the 'inthdrawal'of funds from London to meet the active demand for. accommodating ion.- Coin and cash balances also show at a lower figure, the amount under this iiea'd, plus . bullion, being .£265,559 less 1 than,at Ma-rch, 1911, reduction in liabilities 'already'" referred to , renderin? maiilbnance;.of'' the .high :cash jreserVe./.of last'.'year uni;e4le:! for. ? ( I ihav :rioihf out that the totals'un'der this 'iieadlng, together with (he. amount of bills receivable and investments in' the coloilies,jare equal to.' 55 per cent, '(or lis. in the .£> „of .the total liabilities oS the bank-to tlie-miblic.

Bills receivable'in'London and in transit stand at .£2,100,206, an increase. of on the figures of the previous year.;. , . I'. ■ Investments in the colonies ore less by .£72,703 than a t'-March ill; 1911:

Advances and Precautions. Bills discounted are greater by .£103,439 n lid .nther'a'dv auc'es M,"29,0311,' as! compared. with the' figures of a year ago, and now. stand at ,£1.221,075 and .£9,007,748 l'Especjtively. During the yrar there has beeri*a»stron? demand..on .the, banks .and. other" financial' inhibitions in the Dnminion for accommodation, and, although adopting a restrictive nolicyjor some time past, we,have, aa the figures I have placed before you indicate, responded reasonably to the" call.'' -■Our: present policy 1 is'-to maintain ourselves in a liosition to meet the legitimate: requirements of dur established connections and- of the Dominion's industries and trade. ' With regard to advances, let me rcpeat that the greatest rare is bestowed by your directors and the executive officers upoir this .most important branch of the bank's business. Assets:. Realisation, Board assets—Totals under this heading . now amount to .(.'1.16,356.. as .against .£216,354 last ~year.. Ton will notice that the item "sundry assets, .unrealised" lias ,disappeared from tlie Jxilajice-sheet. practically all the .Assets "Realisation Board properties having been disposal'of. l ; "' ■ Landed property. and premises, after appropriation. now, , made 6{ . X 25,000, stand at J3420.538,. as compared, with ,£423,739 at March 31 kit year.

Profits. Tho profits, representing.-the work of «mr jubilee year, show at XM6.182, an- increase 0f,...'C10,0il on .the profits of the previous year. After paying the .£IO,OOO interest-on-guaranteed stock.and making all .necessary 'appropriations, "including provision for tho bank's annual- grant to the provident fund and bonus to the' staff,, as well-of allocating the sum of ,125,000' in -reduction of, bank, premised.and furniture accounts, the net profits for the year amount." to .~C3!)1,182, as compared with'; -£205.270. last year. Adding the amount brought-forward from lust year fillM.-tO-i) end deducting the Amount of interim dividend at cent 011 preference-anil ordinary'shares -paid in.December' (.£60,000)." the sunr-."available for 'distribution' .is •£!tos..>S".-.','.Tlie now prono.-o to pay a'.fu'rt.lfcr dividend.of (i'por bent arid honus-of. 3 pcuVcent on ordinary shares (making'lit' per cent, for tlie year) and'a fprfher .-t per cent on, preference shares (making 10 per cent far'" tlie year). The total amount distributed, to shareholders will therefore be the same; as last year, namely,.£l2s,ooo.' '.Of the balance remaining, it, is proposed to transfer, as already mentioned, *£200,000 lu.'tho reserve, fund nnd'to. carry forward -,£10,587. ..

Tlip dividend and,b'omis-.will.be.payable In Wellington to-morrow, June 21), and at branches on-reoeipt of advice.

Big Reserve—Light Losses. > The ;'f>Togttes" ; of. tho bank since its Teronstructioivin 18!M,having been so fully put on.;r#tord.,a't'.oUr, annual, meeting lastJune, T>{need■ not enlarge upon, it further. than, to note, with .satisfaction the rapid, growth' Of .our reserve fund, which' in J99G-stood at' ,£81.29-1 aiid to-dav. ofter the proposed transfer of .'lie Jj2oo,>oo, will stand at- ■ £1,200,000; -••■'± I JiTs accumulation bus been' lriade prac'tically; in the course of tho''last six years.-'-"

As arcohseci'uciiia' of/adherence ,t0,;..a cautious policy, the- bank's looses hove been oxceediiiglv' light. It is this fact, coupled with the/prosperity, of the Dominion and tho great expansion of settlement and'production that has taken place during the last eighteen years, that has made this. spleudid'.achjoyomeuf possible. -Jndeoil,' it- said' that tlie prosperity of I ho.Dominion .during the referred to has liirii reflected in the tank's' balance-sheef.- '

Iniports and Exports. The Bank's interestsbein/f-so.-intimately nssniiated with those'of . the Dominion, it is pleasing .to. know tli.if th?-revenue of the Dominion for .the''financinl year ended March 111 last -U ii "record,being reported as .£11,032, a 14—an increase• .of ov?v .£<35,500 011 the previons 'year, coiiBisting nri'icipnllv of.'. .. ; ' •.c Customs 2">i,nno: Raihvavs 182,0011 Stamps ; 123,00(1 Land and Income Tax ... CO,OOO Tlieicxponditure for the year is stated to be ,£10,.'110,000 under all heads. As' some indication of the expansion of production nnd trade of the Dominion, I quote the totals of the combined imports nnd'.wports . for the ..last, seven years, vhicTi ' show ;tn increase. ...of about /:10.0!i0!fi(K)")'Oi' "that, "period.l. rjiioto. the imports, ajid exports combined for a series n':' vears. as the''im"porf>'and exports of tay-'particular year may bo affected by.

late seasons, shortage of tonnage, etc. Tho following are the combined figures:—

, N Tear ending March 31, 1906 29,445,511 • ' ' do. . 1907 34,853,634 do. 190S 30,079,509 do.' 1909 33,832,-131 ,ilo. 1910 36,815,390 do. 1911 39,257,085 do. 1912 39,531,996 Yon will see that the expansion may bo regarded as satisfactory.

■! About Land Policy. You will also he interested to leiirn that, the undeveloped jSative lands in tho ''North Island, alluded lo previously at our meetings,' have been receiving the attention- of the Government since tho passing of the Native- J,amis Act, 191)0; so much so, that the Commissioner, in a recent, address, assures the public the desired .end will be attained within three or four years. Upwards of one million acres have already been alienated and settled during the past two years, and further alienation and opening up will be< proceeded with as fast _as surveys and reading can be accomplished. Iu like manner, the' available Crown lands are receiving attention, with tho object of bringing them into profitable use by lease or otherwise. Much of the Native land is superior in quality and covered with heavy bush. The difficulty of promoting close settlement upon such lands lies in the large amount of money required for roading and improvements. To a large extent, we have to look oiltsido.of the Dominion for .the funds to carry out these works. If we had-.to depend entirely upon our own resources, development would bo retarded for many years to come. The borrowing of money within reasonable limits, for the purpose of bringing such lands into profitable occupation and for acquiring other lands for close settlement, is fully justified. By such means, openings will be made for numbers of imini-grants-especially of the farming class with experience and small meaus, and farm labourers. It is to the at present undeveloped and unsettled portion of the North Island that we look, in the near future, for any large expansion in the .export trade of the Dominion.

Board, of Directors. You are doubtless aware that the board consists of six members, two representing tile - holders of the ordinary shares, and lour representing the Government, tho holder of the preference shares. One of the two representing the ordinary shareholders retires yearly and the vacantsy is filled by election at the December halfyearly meeting. Mr. Kennedy was reelected in December last.

Two of tho four Government appointees retire yearly, and the vacancies are tilled, in term!; of tho statute, not later than the first Wednesday of March iu each yeari ' Last' March Mr. Milno and My. Beauchainp's'terms expired, and, as you know, the vacancies w;ere filled by tho Government., appointing Mr. W. Milne and Mr. D. J. Nathan.

•Advices', received from Mr. Beauchamp in London had indicated that his health would not permit of his seeking re-ap-pointhfent; Upon' his retirement the board placed on record-its high appreciation of the very valuable services rendered by him to tho bank during the thirteen years that he occupied a seat on the board, and moro particularly during the last' five years, when he filled the position, of chairman. lam quite sure you will all concur in this recognition of the good.work.performed by Mr. Beauchamp for the" bank.

Mr. Milne's reappointment gives us iraiich pleasure; and Mr. Nathan's wide business experience and commercial training will no doubt bo of considerable assistance to ;the board in its deliberations.

V\Ye' welcome back Mr. W. Watson, who was absent in London when our halfyearly. meeting was held ' in December last.While in London, Mr. Watson at■tended several meetings of tho Loudon board. These meetings of your directors with the London, board are regarded by us favourably, as being conducive to the good of the bank./ I may mention that Mr. Watson's present term of office expires on March 31 next, and that.it is his intention to offer himself : for; reflection;'.. Of (he.origiual 'members of-'the board' who-took''bffico when the bank was reconstructed !iii 130-t, Mr. Watson and myself alone now remain directors.- ..:

i -Mr. J.-8.-Rcid is at present absent from the Dominion 011 a visit to Europe. During his stay in London he will bo associated with the local board in that city. 1 ' My : colleagues llave done me the honour of unanimously electing me to the position of chairman for the year. I need hardly assure you that the best of my abilities will bo devoted to ilio duties of the position and the promotion of the prosperity of the institution with which I have been now closely -associated' for nearly eighteen years, you having reelected me each alternate. year during that period unopposed.

We have pleasure in again referring to the great care and attention bestowed upon tlie bank's business in London by tho members of the board there. I

It affords us pleasure to once more record our appreciation of the »eal and ability displayed by our staff in New Zealand, Australia,-Fiji, and London. ' In view of the increased cost of living and of the greater responsibilities devolving', upon the staff conse<[tien upon the expansion of our business, the board, at the annual revision of salaries, has dealt with the remuneration of officers on a more liberal scale than in former years. The.board has. recognised their good' services by granting a bonus of 5 per cent, for tho year on their salaries, and I feel sure you will approve our liberality. Much of our prosperity is due to tho zeal and ability of our staff. They have worked well, and it is only fitting they should be encouraged.

New Branches. During the past year, we have opened six new branches, five agencies have been made branches, and seven new agencies have been opened. You will see, therefore. that. we. continue active in tho establishment of outposts (0 meet Ihe growth of settlement. This- is a matter which engages our constant attention, and we arc always ready to consider tho claims .of growing districts in a sympathetic manner. Wherever reasonable inducement is found to exist, wo are prepared to afford banking facilities.

Bad Times at Home. In conclusion. I desire to remark upon Ihe present gratifying state of the markets for the staple products of the Domiuion. Wool, frozen meat, and dairy produce, arc all.commanding satisfactory prices, and the outlook for the coming season in this respect is distinctly, good". In the Motherland and in Europe, we find that political complications during Ihe year have given rise to many uncertainties and apprehensions as regards the future, and in Great Britain tho closing months have been marked by an industrial struggle the seriousness of whic'-i has, T fear, hardly yet been thoroughly apprehended, but which there call be no doubt has resulted in the loss of many millions of money to the British nation. Unfortunately, the end of such conflicts does not appear to be yet in sight, tho strike of the London transport workers being at the moment in progress and entailing a considerable amount of inconvenience and loss upon the mercantile community. British capital has, as a consequence of these disturbing conditions, been shy and sensitive; and the London.money'market uncertain and in a state nf tension. Owing lo the combination of unfavourable conditions, 'to Hie shortening, supply of capital, and to the steadv expansion of our own industries involving a continuous demand for financial''assistance .in the development 6f the country, u hardening tendency in the local. money 'market is at present beirtg displayed. J don't think there -if ar,y other mutter I need now refer to, and .1 have pleasure ia moving that the report and balance-sheet be adopted.

OTHER SPEECHES

REMARKS BY MR. WATSON. Mr. "W. Watson seconded the motion. The chairman's speech, he said, has been so comprehensive that it has left little to be said -regarding the position and business of the bank. He, has told you that the unusually large amount o£ over six millions of .money which wc held in London last year has since been reduced to about, half, which is normnl. I refer lo this because some persons expressed opinions to .the effect that we had quite too large an amount, at interest in London. Now, that money, pui Government

balances, was accumulated from exports realised in London, and if we had brought it back at once, we should either have had-to put it into securities not readily realisable, or let it lie idle, for all good business then ofi'ering was fully supplied. When the demand came later lu meet Government cheques, and to,help our customers lo pay for opening up new lands, and for increased imports, we were well able to meet it, but you will readily understand that money matters in the Dominion would have been very different from what they arc to-day had the money not. been available to us in a liquid condition

.-is you have been told, I had the -dvantage during a considerable portion <>t last year o[ being associated with our London Board, and of making myself more intimately acquainted v.illi our business there. It was a sirenk pleasure In me Hi find how highly respected and popular til.Bank of New Zealand is in London, which is due to our board there, and to .Mr. Ka.-., our very efficient manager, and his excellent staff. Indeed, it was frequently remarked that No. 1 yucen Victoria .Street was where New Zealanders in London might best expect to meet each other. Our produco department was much frequented, and I heard nothing but praise for tin; way the business of our customers is looked after b.v it.

While in England and Scotland I found that, although generally banking business is conducted at much less expense there, than here, customers did not have better banking facilities, or obtain more advantages. Ordinary customers pay about the same rates of interest there as lure for advantages, and do not usually receive such high interest on deposits, incidentally I may remark that bank directors receive much higher remuneration in Great Britain than they do in New Zealand.

\ The "Big Partner." Mr.. John Mill (Duaedin) congratulated the directors on behalf of the shareholders on the success of the year's operations. They were perfectly satisfied that they had good men at the head of ali'airs. The remuneration the directors received was not adequate for the amount of work th?y were ealied upon to do. He had touched upon this matter irom time to time, and he still felt that the shareholders were not doing what they should to see that the directors were properly paid for services rendered, years ago the directors took over the Assets Board's work, and members of the Assets Board had been paid for their work, but now the directors received no extra remuneration for doing it. 11c could not 600 how this increase of remuneration, could bo managed; their big partner had ; such a power over the shareholders that they could do very little in this concern yet. Their time -would come soon—in 1914—-when they would be able to hand over to the Government the amount of tho bank's liability, .£1,000,000. He was very pleased to see that tho board had been able to add to that amount in reserve the sum. of .£200,000. He was also pleased to see that a number of now branches had been opened up, which would bring revenue to. the institution as things went along. The . shareholders would note with satisfaction that the employees had not been , forgotten-this year. The chairman rose to. explain away, a 1 possible. misconception that the only liberality extended to the staff was-tlieo per' cent, bonus. This was not so; he had used the word in reference to the increases made in salaries. Whether tho 6ystcra of giving bonuses was one wlficli ought to be continued was a question to bo' considered in future years. Most of the employees, he understood, would pre fcr to have the extra amount in salary, because bonuses were net taken into account in assessing their; retiring allowances. The motion was carried. Good Things for the Staff; The chairman moved a vote of (hanks to the general manager and staff. Ho had been congratulated on presenting a satisfactory balance-sheet, but, in fact, very little of the balance-sheet was attributable to the chairman. Without n good general manager and a good staff the chairman could do but little. It was the chairman's duty to see that the policy of the hoard was carried out, and to sea that the interests of tho bank were safeguarded, but it was not "his duty to supersede tho general manager and* tho staff. AVithout a "ood and efficient staff, shareholders would find greater fluctuations in profits. Fortunately the fluctuations at present were all on the right side, but in times of depression they had to look to the sfalfvto safeguard the interests of the bank;

Mr. Mill seconded the motion. Dr. I'rcndergast Knight said that in an institution like tho Hank of New Zealand, which had passed through a severe crisis, the staff had suffered severely by retrenchment. The shareholders were glad now to see this corrected, and he hoped that salaries would really be raised to a ipropei' plane now that the depression in the bank's affairs had been gut over. One class of oilicer, he considered, was deserving of the special attention of the board, and that -was the branch manager. It was mainly through his efforts that new business was obtained, and it was eminently desirable that managers showing exceptional ability should be suitably rewarded. The chairman assured the meeting that tlie general manager and tho board were fully alive to the importance of what. Dr. Knight had said.

Tho motion was carried, and tlie general manager (Mr. W. Callender) acknowledged tlie voto on behalf of the staff.

That Million Guarantee. Mr. T. S. Weston proposed a vote of thanks to the chairman and Ihe directors of the bank, and in the vote he would include Mr. H. Beauchamp, who had been chairman for the greater part of the yearly period. The shareholders recognised that the. directors in charge of the bank's affairs had erred 011 the side of caution in the period of depression that the colony had passed through in the last five years. Tf the directors continued this safe policy, ho felt suto that\ any temporary crisis that might occur would be passed through safely. lie would venture to make one suggestion: that, in view of the bank's obligations in lflU, the shareholders trusted that the bank would have its resources so liquid as to be in a position to discharge these obligations. . The motion was seconded by Mr. Watsou (jun.) -and carried. . The chairman, in acknowledging the vote, explained that, there was a wrong impression abroad among shareholders that the million was owing lo the Government. It was really money due en the London money market upon guaranteed stock. The payment of it would not pul any money into the coffers of the Government. Doubtless the whole subject would have to bo taken into account twelve months hcnce at tho annual meeting. It was always' present before the board, because it was a question of policy whether the loan should bo renewed or paid off. .If it was. to be paid off it would limit the lending power of the bank to tho extent of the amount involved. . This concluded tho business of the meeting.

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