BANK OF NEW ZEALAND.

Dominion, Volume 6, Issue 1776, 14 June 1913, Page 6

BANK OF NEW ZEALAND.

The balance-sheet of tho Bank of ] New Zealand for the year ended March 1)1 last, which has just been circulated, compares very favourably with similar documents previously issued. The gross profit earned by the bank during the year was £686,805 6s. Id., or about £5800 more than in the previous year. Tho net profit for the year is £342,530 Is. 9d., as against £356,182 ss. lid., a decrease of nearly £14,000, duo to the fact that the general expenses have increased by close on £20,000. A comparison of these expenses shows that tho increases arc as under: — 1913. 1912. J& Salaries, etc 188,663 171,318 Directors' fees ... 3,250 . 3,250 General expenses 50,713 52,54-1 Audit rffceount ... 2,218 1,969 Bates and ttaos... 59,371 55,771

I 301,275 281,852 The increase in salaries is due partly to the fact that there are now 194 branches and agencies, as against 179 in the previous year. Out of the net profits £40,000 has been writtenoff bank premises, while for .1912 the amount so. allocated was only £25,000, and tho increase is commendable as tending to build up what is generally known as a secret reserve. To. the reserve fiind only £175,000 has been added, as against £200,000 in each of the past two years. The reserve fund now amounts to £1,375,000, and of this £500,000 is invested in British Government securities. In view of tho slump in gjltedged securities it would be interesti'hg to know if there has been _ adequate writing-down of the securities neld. The dividends on the preference and ordinary shares arc tnc same as in tho previous year, namely: 10 per cent, on the preferred, absorbing £50,000, and 15 per cent, on tho ordinary, absorbing £75,000. The year's figures, interesting in themselves, do not give a full idea of the magnificent earning capacity of the Bank of New Zealand. Wo have taken out the figures for tho last five years, which will show the magnitude of tho bank's operations. The balancesheet for the five years is as under:

£ Gross profits, 1909-13 .... 8,154,144 General expenses 1,337,025 Interest on guaranteed stock ... 200,000 1,537,025 Net profit 1,G1G,519 3,154,144 Brought forward from 1908 Net profit as abovo 1,016,519 1,070,617 Reserve fund S?snnr! Written-off bank premises IUOOO Dividend on preference shares... Dividend on ordinary shares ... 350,000 Carried foiVard 4-3,117 '1,G70,G17 Thero are some points of considerable interest in the above figures. The gross profits for tho five years average about £611)000 a year, but tho interest on guaranteed stock should bo deducted from the gross profit, because it is a fixed item just as much as interest on deposits. If the £200,000 interest is deducted, the gross profits for tho fivo years amount to £2,954,144, so that tho general expenses or expenses of management are well under 50 per cent., which shows correct and careful management so far as the office'administration of the bank's affairs is concerned. It will bo seen that of the total, available for distribution, £1,670,017, its allocation Bhows the following percentagesßeserve fund and amount written-off premises together, equal to £1,040,000, equal to 62.25 per cent.; dividends on preferred and ordinary shares, £587,500, equal to 35.17 per cent., and carried forward, £43,117, equal to 2.58 per cent. This allocation is sound and commendable, for while no injustice has been done tho shareholders, close attention has been paid to the building up of the reserve fund. The directors, officers, and shareholders of the bank arc to be congratulated on tho strong position into which tho bank Has Deen brought. No doubt at the annual meeting wo shall, as formerly, have an exhaustive review by tho chairman, not alono of the affairs of tho bank, but also of tho general financial and economic conditions of the country, concerning which the bank's business is a fair index.