BANK OF NEW ZEALAND

Hokitika Guardian, 21 June 1929, Page 2

BANK OF NEW ZEALAND

ANNUAL MEETING. WELLINGTON, June 21. At the annual meeting of shareholders the Chairman said:— I presume you will,;'as Heretofore, take the Directors’ Report; and Balance Sheet as read, , In formally moving the adoption of the Report and Balance Slieet, I will take the opportunity of referring to items in the Balance Sheet that call for special comment. CAPITAL. You will notice there has been an increase of £86,915 in the capital of the Bank,^during' the year, brought about by the final payment in connection' with the first issue of Longterm, Mortgage Shares. The total of these shares issued so far is of £1 each and Long-term Mortgage Loans . amounting in the aggregate to £698,375 vwere current at balance date while others, approximating £919,000 have since been made or are in course of completion. Although there Has been a steady demand for Long-term ' Mortgage Loans, the volume has not, by any means, been as great as was anticipated. As there is statutory power to overdraw up to £500,000 from the ordinary funds of the Bank in connection with this activity and to issue debentures to the amount of three times the paid-up Long-term Mortgage Capital, it is unlikely that a further issue of shares will he made for some considerable time.

RESERVE fund: It is proposed from the balance of profits available to transfer £275,000 to the Reserve Fund bringing that fund up to £3,425,000. SHAREHOLDERS’ FUNDS. Shareholders’ Funds in the Bank, apart from substantial inner reserves, will now total £10,900,704, made up as follows: Capital paid up £6,858,113 Reserve Fund 8,425,000 Balance of profits earned . , forward / 617;59l , £10,900,704 PROFIT AND LOSS ACCOUNT. The actual net earnings for the year Miow a satisfactory increase over those for the previous year. This result is due to the first issue of Longterm Mortgage Capital being now fully paid up and fully employed, to the higher rates obtained in London on the large amount of liquid funds which we have there, and to the smaller provision for bad and doubtful debts that has been required as compared with previous years,—indeed since 1920. The profits from our business in the Dominion have fallen off considerably, owing chiefly to expansion in interestbearing deposits (many millions of which are still carrying the high rate of 5 per cent, which ruled for twoyear fixed deposits from May, 1927, till July 1928); to the reduced rate of interest on advances, and to some reduction in the amount of advances, Tn addition to actual earnings for the year, the large sum of £212,004 is being brought into our Profit and Loss Account. This amount had been set aside during recent years for cer-

tain doubtful advances which have been repaid or have worked into a satisfactory position, . of; hayp been liquidated witji ''less loss tli'pin wqs anticipated. We are. still '.‘/pursing!’ a .number of doubtful ,accounts, but givbn a few more , gqbdr. seasons, further substantial amounfa which have beep provided for possible losses should , alio become; available for allocation.y:-, ■( J ' . The amplest provision has been macfe >fixr!-#fll bad - and doubtfiil debts. • . DIVIDEND AND BONUS. The Dividend and ; Bonus . proposed is at; the same rate as i that of last year and: will be payable in Wellington to-rporrow and at Branches on receipt’:of advices. The total distribution for the year will.be: To New Zealand Government £244,433 To Ordinary Shareholders 570,459 £814,892 WHAT THE STATE DERIVES FROM THE BANE. It may. interest you to know that the revenue derived - by the Government from this Bank for the year amounted to £533,289, made up as follows:—; Dividends on Share Capital £244,433 Income Tax 164,494 Land Tax 17,633 Note Tax 106,729 .. , £533,289 In addition, Local Bodies were paid rates amounting to £14,.2(& It may be added in this connection that we hold £3,391,160 of 4£ per cent New Zealand War Loans on which no tax is payable.

DEPOSITS. The increase of £3,600,618 is mainly represented by interest-bearing deposits on which the margin of profit is narrow. INVESTMENTS IN BRITISH, AUSTRALIAN AND NEW ZEALAND GOVERNMENT SECURITIES AND IN DEBENTURES OF NEW ZEALAND LOCAL BODIES. Apart from £4,153,000 of Shortdated British Treasury Bills, the book value of the above investments at, 31st March last totalled £13,516,139, which figures are comfortably undermarket value These investments amount to much beyond what would constitute a strong liquid position, but it has been found impossible to obtain in the Dominion anything like the volume of sound advance business that the Bank has the means To deal with, consequently we have been obliged to invest this very large proportion of our funds in Government Securities, mainly overseas, where it has been placed in wellspread maturities, at a better rate of interest than could have been obtained on similar investments in New Zealand, and with the advantage of being more readily realisable. ADVANCES AND BILLS DISCOUNTED. Although our advances in New Zealand have, as already mentioned, decreased, there has been a satisfactory increase at our Overseas Branches. The good seasons experienced during the last two years by primary producers in the Dominion have enabled many of our customers hero to work on lesser accommodation. The competition of various Governmental departments has also been a factor in reducing our ordinary advance business. At present the demand for money is slack, and, it would appear that for some time to come, we can-

not look for any material increase in our advances in New Zealand. BOARD OF DIBECTTOBS. Sir Harold Beauchamp lifts been granted lenv£ pf absence to enable him to visit England. '• During his stay in London |ie will be associated with the London Board. LONDON BOARD. "We again place on record our high appreciation of the care and attention devoted by the Lpndon Board to the Bank’s business there. We deeply regret to record the death of Lord Carnock who passed away on sth November last year. He was a member of the Lpndon Board for ten years and was a most distinguished an accomplished man of affairs. To vacancy we have had the good fortune to secure the services of Mr Cecil Lubbock, son of our late London Chairman. Mr Cecil Lubbock holds a high position in London financial circles, having served For some years as Deputy Governor of the Bank of England, from which position he recently retired. LOCAL DIRECTORS IN SYDNEY AND MELBOURNE. The Hon. Sir Henry Braddon, K.8.E., M.L.C., has been appointed an additional Local Director in Sydney. STAFF. On behalf of the Board of Directors, I have pleasure in expressing our appreciation of the work done by the Bank’s staff. In these days of keen competition, a contented and efficient staff is an asset of great value. A tangible expression of this appreciation is given in the shape of salaries and bonuses which we believe are on as generous a scale as those of any other banking corporation in New Zealand or Australia.

Special encouragement is being given to the more promising of the younger men in the service so that they may be fitted for responsible duties at an early age. A bonus on the same scale as last year has been paid to members of the staff and other employees of the Bank. GENERAL MANAGER. On 15th December last the General Manager completed fifty years of service in tlie Bank. The staff marked the occasion by presenting him with his portrait in oils, a replica of which has been painted, and, as you see, placed in this room. . The Directors, as a personal matter, also made • him an appropriate gift ns a memento of their association with him. You no doubt noticed that our General Manager’s name appeared in the list of His Majesty the King’s Birthday Honours in recognition of his distinguished financial services. That the honour of Knight Bachelor is richly deserved needs no stressing; that it is popular is evidenced by the very lnrge number of congratulatory messages received by him from all parts of the Dominion. I am sure you will join with ns, at this Annual Meeting, in conveying to Sir Henry our warmest felicitations arid wishes that he may be long spared to enjoy this well-merited honour. RATES OF INTEREST.

Tn July last rates of interest on fixed deposits for one and two years were reduced by % per cent and the rnte on best overdrawn accounts was also reduced by J- per cent. Tlie supply of money available for loan on mortgage against good secur-

ity is greater than the demand. The ruling rate for such loans is 6 per cent though occasionally a little less ;is accepted for particularly choice business.

It is pleasing to note that Sir Joseph Ward -as Prime Minister and Minister of Finance has made it clear that it is the intention of the Government to check Governmental interference with business carried on by private-'enterprise It is to be hoped also,that, in the readjustment of taxation he foreshadows, Government and Municipal trading concerns wilt be required to pay rates and taxes on a basis similar to those paid by other traders and financial institutions in the community. If these two matters are rectified, a long-standing grievance will be removed, the burden of taxation will be more equitably distributed, a greater confidence will be engendered, and an impetus will be given to the industrial life of the country. NEW ZEALAND LOAN.

. The Minister of Finance is to be congratulated on the successful flotation of the two loans which he placed on the London market last January. One for £7,000,000 was new money, the other for £12,510,000 was for conversion of part of the 4 per cent Consolidated Loan of £29,000,000 maturing on Ist November next. The cash loan was t raised at 4jf per cent at 95, due 1948-58, and trie conversion loan on practically similar terms. In view of the present outlook of the London .money market a somewhat 'higher rate may have to be paid on the conversion of the balance of £ll/12,000,000 of the maturing loan, but there should be little or no difficuly in raising some millions of the amount in the Dominion at a cost approximating that in London. BUTTER AND CHEESE. i The year just ending has seen a steady development in this growing industry. Weather conditions have been favourable; top-dressing and better methods of cultivation have lieen more widely adopted; and the responding pastures have never looked better. As a consequence, the yield of butter-fat products this season has been a record and prices have been satisfactory. Apart from the amount consumed locally, 80,278 tons of butter were exported, valued at £13,141,494 for the year ended March last compared with 78,915 tons valued at £11,964,431 for 1928. Cheeese exported totalled 85,458 tons valued at £7,296,804 compared with 78,222 tons •valued at £6,092,900 ' the previous year.

Butter-fat products have' taken pride of place in the Dominion’s export trade, and everything possible should be done to maintain the quality, for it .is on quality that tlie future of the industry depends. Unlike Australia, New Zealand lias increased and extended her overseas trade without the assistance of a Government bounty or export bonus.

Hie favourable trade balance is reflected in the figures of tlie various Banks which show, as compared with the previqus year, an aggregate increase of £289,374 in advances and an aggregate increase in deposits of -t0,387,200. Many reasons have been recently brought forward to account for the present easy monetary position. While there may be some truth in them, the main explanation df the matter lies in the fact that, at the moment, there is little outlet for capital in new industrial enterprises. If you consider the condition of the trades and industries that you are connected with, you will come to the conclusion that most of them aro overcrowded, competition be-

tug out of proportion to the business offering; few are working to their full capacity, many, burdened by excessive expenses, are just making both ends meet.

Difficulty in finding investments has forced the price of local first-class stocks and shares up to a figure that shows hut a small interest return, and lias turned public attention .to Local i ody Debentures and Government Bonds that are now offering—eloquent testimony to our export surpluses synchronizing with the halt in industrial expansion.

Notwithstanding the fact that the export value of our primary products is satisfactory, farming is not developing at the pace one would expect.

Farmers state that, notwithstanding the number of persons employed, it is most difficult to obtain efficient labour at anything like the wages they can afford to pay; developmental work accordingly is being retarded. Under existing conditions our Hank has too great a capital and reserves for the business offering. The legitimate demand for banking facilities has not kept pace with the increasing capital and reserves of the institution and it is evident. New Zealand at present is iver-ba liked.

What is the remedy for such a state of affairs? Would the imposition of a arger and more widespread Customs Tariff effect a desired improvement? There is no doubt such a course would for a short time boom secondary industries, but the last state of these industries would probably be worse than the first, for the cost of living would immediately increase, and the great primary industry, on which the Dominion depends, would he seriously’ affected. For an increase in her population, for an improvement in her secondary industries, and for the filling of offices and warehouses in her somewhat overbuilt cities, New Zealand must surely look to an increase of her exportable primary products. The imposition of the graduated land tax has limited the acquisition by individuals or companies of large blocks of second-class unimproved areas. There are in New Zealand large blocks of second-class unimproved lands, areas that, under present conditions, no private individual or group of individuals can handle with any’ hope of financial success.

Government might take into consideration the question of exempting from taxation Ifor a period of .years certain second-class unimproved lands at present lying idle. The idea is no doubt open to criticism, but it is an idea that might well be tried in certain areas foi the encouragement of settlement, so vital a necessity for the well-being and advancement of the Dominion.

Successful land settlement is the foundation on which New Zealand rests. Nothing should be left undone by the Government that may in any direction foster primary industry.' The .Minister of Lands has an enormous field Ifor the exhibition of ability and energy. The thousands of acres of unoccupied lands, breeding spots U'or noxious weeds, call for attention the question of herd-testing—-.the quality of the marketable products—the scientific treatment of soils —the financial assistance to struggling settlers of character who can offer only weak securities for advances—these are a few of the directions m which ability and energy may be brought to bear. Another matter that might well receive the early’ attention of the New Zealand Government is the advisability of approaching the Imperial Authorities as to the possibility of holding an Empire Conference to consider and agree ilf possible to more logical and moio scientific Customs Tariff arrangements between the outlying Dominions, the Crown Colonies and the Mother Country.

Although Tariff concessions or preferences are granted by the overseas Dominions on goods manufactured wholly or partly in the United Kingdom and the United Kingdom makes concessions on certain products grown in the Dominions and Crown Colonies, all these concessions are haphazard and voluntary and not considered negotiated concessions. It seems necessaiy that reasoned agreements should now be arrived at. Indeed, such a proceeding is of great* importance to the United Kingdom as well as to the British Dominions overseas. From an Empire point of view this’ question calls for early scientific treatment and adjustment. If the British Government could see its way to reduce existing duties on certain products, and impose small duties on foreigu-grown beef, mutton, lamb, fruit, wool, etc., not only would substantial benefits accrue to British farmers who at present are experiencing a particularly lean time, but Empire settlement would be accelerated, lauds now lying idle would be brought into cultivation, unemployment both in the United Kingdom and in the overseas Dominion would be reduced and emigration from the Old Country stimulated. Moreover, the cost of living in Great Britain would not be increased iif the total amount of Customs Duties now collected remained at the same level but dispersed over a wider range of articles. Similarly the Dominions might re-adjust their Customs conces-' sions to the Motherland without adding to the burdens of. the people. Eventually it is certain some such adjustments will he made. There is every reason why they should he made now.

The overseas Dominions are, per ; head of population, Great Britain’s J best customers. In imports n! British .roods last year. New Zealand stood at I the top of the list with £l3 os od per head of the population followed, hy the Irish Free State with £ll I ' s ! Universal free interchange of goods would undoubtedly he the ideal condition, but it is apparent that the world is not readv for this ideal condition. | for Customs Tariffs in many foreign countries are gradually hut surelj be-

ing raised—Geneva Economic Conferences notwithstanding. As a consequence the trade of the l nited Kingdom is being so restricted that she w.ll gradually be forced more and more to look to her kith and kin across the seas for the purchase of her manulactimxl articles, and the surest way t> obtain a larger portion of the Colonial trade would be by an adjustment of Customs Tariff.

'flic monetary value of the annuallyimported foodstuffs produced m foreign count rids into Britain is enormous. I need not weary you by reading the list, but when I tell you that Ircsh Unit alone amounts to Cl’;!.000,000 it will give some idea of the huge amount distributed annually to foreigners.

The idea of Great Britain and her dependencies some day merging into one harmonious whole with never a tariff wall between any of its members is a dream which, in our day and generation at least, will not lie realised. Distances are great and maritime tran-

sit sometimes dangerous; it is well therefore, in the meantime that the protection of a Customs barrier has made toe mail iliac lure of necessities a possibility in Lite outlying Dominions.

Although l’|ee Trade between the mem hors is asSyct impossible, an intelligent adjustment of t usioms Tariffs giving to cadi separate unit a certain measure .of protccbioiQ against-foreign trade c •mpelitors would go far towards making ibis great Community of Nations a still more united and-pros-perous Empire.