BANKING RETURNS

Dominion, Volume 14, Issue 93, 13 January 1921, Page 6

BANKING RETURNS

BIG INCREASE IN ADVANCES SIGNIFICANT FIGURES 1 AVhen dealing with the banking returns a year ago, when the deposits showed an increase of over .610,000,000, and tho advances a shrinkage of over a million, it was stated that it would be simple enough to deduce more than the figures really indicated. It was also pointed out then that Air. Harold Beauchamp, who had returned from a visit to Britain, and Air. M. J. Reardon, who had returned from a visit to California, both uttered warnings of the approach of financial stringency, and the banking figures of to-day prove these to have been correct forecasts. The returns for the December quarter of 1926 are strikingly dissimilar io tho returns for the corresponding quarter of 1919, for while there is now an increase of over 600,C00 in the advances, there was- then a decrease as already stated. The principal items in the returns for the past quarter show the following movements: — & Govt, deposits decreased 2.571.196 Free deposits increased 2.803.6)7 Fixed deposits increased 1.083.221 Advances increased , Discounts .increased 1.1W.1M Circulation increased 957,9.7 Coin decreased Legal tender increased z6a.47S The comparison is with the corresponding quarter of 1919, and we will deal with them in their order. The aggregates of the deposits for the two periods compare as under:—

Although the Government deposits are substantially lower, the aggregate shows .. satisfactory expansion. The inctease of .£2.803,697 in the free deposits was shared in by all the banks, as the table appended discloses :—

The fixed deposits have increased from .£15,433,913 to .£16,517,134, and in this increase also all the banks shared, the Bank of New Zealand securing considerably more than half the actual increase. The figures of the several banks compare as under:— In-

15,433,913 16,517,134 1,083,221 The fixed and the free deposits combined exhibit an increase of .£3,886,918, but if the Government deposits are'included the increase is only .£1,515,722. Both classes of public deposits have expanded since the war year, as will be seen from the table following:—

In the six years the free deposits have increased by 150 per cent., the fixed deposits by about 60 per cent., and the total deposits have been more than doubled. The advances are tliv most interesting item in the return, and show the abnormal increase of £13,851,407, as compared with a shrinkage of over .£1,046,000 a year ago. All the banks have been called upon to provide accommodation, and the pressure on the institutions must have been very severe during the past three months. The movements in the advances are disclosed in the following table:— In-

30.693,061 44,544,458 13,851,467 The increase is equal to 43 per cent., and it is the first time for many years that such an increase has been noted. The discounts too have expanded, the figures being £2,573,837, as against £1,413,705, an increase of £1,160,132, equal to nearly 80 per cent. Taking the advances and discounts for a series of years we get the following:—

Compared with a year ago there is an increase in the advances and 'discounts of £15,011,539, which is about equal to the excess of imports over exports. The banks have apparently helped their customers very freely, and this year efforts must be made to repay the banks. This will involve a very strict curtailment of imports, and the banks themselves will see to that. It is well known that bank advances make bank deposits, but as already shown, the increase in the free and fixed deposits is only £3,886,918, or about 25 per cent, of the increase shown by the advances, which seems to indicate that the bulk of the bank advances has been sent out of the Dominion. The note circulation and the coin and bullion now call for attention, and taking a series of years the position is as under: — _ . Com

The note circulation shows tin increase of X 997.927, and the coin and bullion a shrinkage of X 205.352, which at first glance would make it appear that the note circulation is not backed by a sufficient metal reserve, since the circulation exceeds the metallic reserve by X. 595,246. The position, however, is not really so, because, of the notes issued the banks hold X 1,008,656, which figure in the returns as “legal tender notes of other banks,” and if this amount is deducted from the note circulation, it will be seen that there is ample cover in the amount of the coin and bullion.

Deposits. Govt Free Fixed Dec., 1919. £ . 7.991.197 3d.13n.C62 . 157453,913 Dec.. 1920. £ 5.129.051 32.939.759 16.517,134 £ 2.371.196 dec. 2.803.697 inc. 1,073,221 inc. 53,061,172 54,576,894 722 inc.

Dec.. 1919. Dec., 1920. Bank £ £ £ N. Zealand. . 14,107,578 15,522,765 1,415,187 inc. .. 3,741,115 3.869.601 128.486 inc. N.S. Wales. . 3,617.525 3,865,429 247,904 inc. Australasia 3.235.093 3.567,614 332.521 inc. National .. .. 4.822,939 5,294,215 471.276 inc. Commercial 611,812 620,'35 268,323 inc. 30,136,062 32,939,759 2,803,697 inc.

Bank. Dec.. 1919. £ Dec., 1920. crease. £ £ New Zealand . .. 7,772,MO 8,412.330 640,070 Union .. 1,727,307 1,803,349 76,042 N.S. Wales .... .. 2,416,407 2.507,354 90,947 Australasia .... National . 1,116,050 . 2,266,548 1,117,710 2,461,746 ' 1.660 193,193 Commercial ... ... 133,341 214,645 81,304

Free Fixed Dec. deposits. deposits. Total. quarter. 1914 £ 13,675,479 £ 10,727.620 24,403,099 1915 . 17,293,719 11,861,562 29,155,301 1916 . 16,631,742 13,229,076 31,260,818 1917 . 18,496,716 13,777,801 32,274,517 1918 . 20,536,866 14,466,976 35,005.844 1919 . 30,136,062 15,433,913 45.569.975 1920 . 32,939,759 16,517,134 49,456,893

Dec.. 1919. Dec., 1920. crease. Bank. £ £ £ New Zealand .. 14,135,350 19,931,635 5,796,265 Union ... 4,359,797 5,924,800 1,565,003 N.S. Wales ... ... 3.614,056 5,105,576 1*491,520 Australasia . ... 3,953.269 5,472,722 1,489,453 National ... 4,222,491 7,277,562 3,055,071 Commercial . 377,558 831,963 454,075

Dec. Advances. Discount. Total. Quarter. 1914 £ ... 23,121,235 £ 1,811,173 £ 24,932,808 1915 ... 22,589,136 1,453,705 ■ 24,042,839 1916 ... 25,298.408 1,668,222 26,966.630 1917 ... 29,662.981 1,337,334 31,000,31a 1918 .... 51,739,143 1,353,917 33,073,060 1919 ... 30,693,051 1,413.705 32.106,756 1920 ... 44,544,458 2,573,837 47,118,295

Dec. ■Circulation, and bullion. quarter. £ £ 1914 2.614,232 6,209,113 1915 3,097,816 6.950,516 1916 4,778.267 7,688,093 1917 9,993,391 1918 6.761.7V5 9.434.670 1919 7,254,412 7,862,415 1920 8,252,339 7,657,093