WELLINGTON NEWS

Hokitika Guardian, 12 June 1926, Page 1

WELLINGTON NEWS

BANK OF NEW ZEALAND. (Special to “ Guardian.”) WELLINGTON, June 9. The balance sheet of the Bank of New Zealand for the year ended March 31st, 1920, will give great satisfaction to those who know the value to the community of a sound, well-managed hank. The institution is certain to conic under tlioi fire of a section of the people who appear to •have an inherent hatred of success, particularly the success of a financial institution. The Bank of New Zealand more than any of the other banks is made the target of criticism, because it is our big bank, and because the State is interested in the institution many think it should he run like other Government enterprises, at a loss to the community. The balance-sheet for the year under review discloses a gross piofit ol Cl ,888.309 against £1,775,323 in the previous year. The expenses totalled 9951,919, against £931,838, leaving the net profit at 9933,300 against £810,*185, an increase of .992,875. From the net profit of 9933,300 must be deducted the interest on guaranteed stock of 921.200, leaving £912,100. A sum of £IOO,OOO part of provision previously made for' anticipated loss on transfer of surplus funds from London, and not now required is added to the net profit, also .9513.299 brought forward from the previous year, making a total of 91.525,100 available for distribution. The dividend on the A preference shares absorbs .950,000 and on the II preference shares .9102,-1.6-1, that means that the State receives in all 9212,KM from the Bank, which is equal to about 5 per cent, on 94,250,000. The State has done very well out of the Bank and the partnership between State and Bank appears lobe mutually beneficial. The ordinary shareholders receive in dividend £499,928, the sum of £247,089 lias been added to the reserve fund, and 9505,378 carried forward. The dividend rates are the same as were paid last year hut the amount involved is larger because the share capital has been increased in the meanwhile. The. reserve fund now stands at 92,825.000. In addition there is a reserve of 9420,000 for taxes and provision for contingencies which is not separately stated and which is obviously a secret reserve. The enormous strength of the Bank is to be seen in its liquid assets. Its holding of coin and bullion, legal tender notes and balances due by other hanks, all very fluid assets, totalled on March 31st, £7,471,295. money in London, .99,949,809, and Government and Municipal Securities £7.(415.25(1. These three items total over 925.000,000 and discloses remarkable strength. The deposits hold by the Bank amount to 931,121.288 against 930.079,283 last year and the advances totalled £20,904,(112, against £19.329,18!) last year, while the hills discounted amounted to 91,068,085 against 91,285,100 last year. The large profits of the hank and the dividend of over 13 per cent paid to the shareholders are certain to he criticised by those whose principal qualification to express an opinion appears to be absolute ignorance of banking theory and practice. Tt can be said of the Bank of New Zealand that it is one of the best managed hanks in the Southern Hemisphere, and its capacity for profit earning is not a matter of chance but ■of efficiency and sound management. Tt is a credit to New Zealand and may 1)0 ranked ns a national asset. THE PUBLIC DEBT.

'flio gross debt of the Dominion, which was £57,000,000 in 190-1 and C 90.000.000 in 1914 has boon increased hv the latest loan to £'241,000,000. Local body debt, which was £24,000.000 in 1914 is now about £47,500,000. Commenting on this, one authority say: -This alarming rate of growth cannot continue. Drastic checks must lie applied if real danger is to be averted. At the present time the Dominion enjoys a high level of prosperity which is itself a stimulus to extravagant finance. But our prosperity has always depended and must continue to depend mainly on a high level of prices for our principal exports. Tn Britain, our chief export market, social and industrial conditions are afpresenl causing grave concern, and while higher prices cannot he looked for. a fall in prices appears probable. Falling prices for our produce must reduce both our national income and our taxable capacity. fn New Zealand, there is at present little margin of taxable capacity, and the rate of public borrowing is beginning In threaten (lie national credit.