BANK OF NEW ZEALAND

Hokitika Guardian, 20 June 1930, Page 2

BANK OF NEW ZEALAND

ANNUAL MEETING OF PROPRIETORS.

’ Wellington, June 20. ; The annual meeting of sharehold • ers was held to-day. . 1 11 'moving the adoption of the Report' -and- Balance .Sheet,. Sir, Georgi Elliot, Chairman'of the Board of Di . rectors,, said;— ’ I have‘pleasure in, moving the adoption of the Report and Balance Slieei ' and. in. doing so will take the• oppor ’t unity of drawing. your attention tc those items! in the Balance Sheet that call for special mention. ; • .'....'-l, .''Vi. .capital. - -

No alteration has taken place in the, capital of the Bank' during the yefu’i

RESERVE FUND,

It la proposed to add £125)000 to the Reserve Fund this year as against £276)000 last year, when the unusually large amount of £218,000 , of Recoveries (provision previously made for certain bad and doubtful advances) was found not to be required and was brought into the profits. With this addition the reserve fund will stand at £3,550,090. ■; SHAREHOLDERS’ FUNDS.

The. total, .shareholders’ funds, as shown in the Balance Sheet,, viz: Capital, Reserve and Undivided Profits, no'iv amount to £11,031,269; such a position must' bring to depositors ail'd/k’dstomers ja.jike a comfortable ’assurance of the strength and stability of the. institution'. ~iVokoS^RM;.mortgage deben- , TORES, .

MnVOtthlier.Tfl.st; ,we placed on the local. / market .an issue •of . £300,000 of Long-term: Mortgage Debenture Stock, maturing Ist August, 1939, at an interest'rate of' 5J per cent per annum. Applications for £102,550 * were r'eceied, b,ut as. thjs. Government 'then issued a loan in the Dominion at s*i ]ter • cent, nve withdrew the balonce unapplied for. Whenever the market .bQcqmes. favourable we shall make a further issue to ineet the * requireinentp of .the Pepurttpent. DEPOSITS.,

, This item shows a decrease of £42,043. ;

Fixed Deposits have increaseu £2,357,164, "almost entirely' in very large short-dated deposits which, being subject to early withdrawal, cannot be safely utilised for ordinary advances.

(Current Account deposits have 'decreased £2)399,197, owing mainly to customers drawing on their balances to -meet conditions arising out of 1 the JilifftVffurable export.season, i I’lie Government pel' cent Lonii placed on the New Zealand market last January has also resulted in the withdrawal of a large sum from the Rank. V PROFIT AND LOSS ACCOUNT.

Tim actual net earnings for the period under review are well in excess of the figures for the previous year. In view, however, of existing conditions it has been deemed advisable to make much larger provision than usual for doubtful advances, though We are hopeful that a considerable portion of the amount set aside will not be required. During the greater part of the year we had a large amount of funds employed in London on which we obtained much higher rates than usual, and (profits have been further augmented owing to increase in our advances.

ADVANCES and bills DISCOUNTED.

These items show an increase of £6,268,132, over . four and a half millions of which are in respect of business Vi thin the' Dominion. This is the largest expansion shown in any pne year since 1924, when advances and discounts rose by eleven millions to £30,500,000.

’ DIVIDEND AND BONUS

The Dividend and Bonus proposed A at the same rate a s that, of last rear and will be payable in Wellington to-morrow and at Branches on eceipt of advices. . The total distribution for the year will be; : —

It may he added in this connection that we hold £8,391*160 of U per cent New Zealand AVilr Loans on which no tax is payable, board of directors.

: Sir Harold Bentichamp and Mr Oliver Nicholson, two Government nMuiuees whose term of office expired in March last, were reappointed to the Board of Directors for a further term of three years. The term of office of Mr Watson, who is one of the two representatives of the Ordinary Shareholders on the Board} fylso expired' in March, and he was re-elected unopposed to the position he has occupied for so many years.

Mr Watson has been granted leave off absence to enable 'him to - visit England. He' left the Domiuibn in April and while ifi London ,wiU’ be associated with the London Board. The term of office off Mr R. W. Gibbs, the other, representative of the Ordinary Shareholders, will expire in March next; it is his intention, to offer his services again as a. Director.

STAFF,

The Directors take this opportunity also of expressing their appreciation of the work and conduct of the staff during the year just ended. A bonus, similar to that of recent years, has been paid to members of the staff and other employees of the Bank, This payment .will, I feel sure, meet with your entire approval,

SIR JOSEPH WARD

As the Government has a substantial shareholding interest in the Bank, it is fitting that reference should be made to the recent relinquishment by the Right Hon. Sir Joseph Ward, of his office as Prime Minister of the Dominion, by reason of ill-health". We join in the universal expressions of regret which hae been voiced regarding his retirement, and we concur in the appreciative references which have been made to the distinguished slices rendered to Oie (Dominion and the Eimpire in th e course of his active political career. RATES OF INTEREST.

To stem the outflow of deposits which subsequently took place, the following alteration in rates was made on Ist of February by all Banks trading in New Zealand: — From 12 to under 24 months

4;i per cent. 24 months 5 per cent. and on the 24th April, the following adjustment was made and is still in operation:— 3to under 6 months ... 31 P er vent. 6to under 12 months ... 4 P er cent, 12 to under 24 months ... 41 per cent. 24 months 6 per cent.

.To synchronize with the increase in the interest rate lor deposits, the minimum advance rate was increased on the Ist of February from &•}- '.per cent to 7 per cent.

THE BALANCE OF TRADE

Most off' you will have seen references in the newspapers to the fact that for the year ended 31st March, 1930, our exports, £49,045,817, were slightly loss than our imports, £49,-

107,91-1.- The previous year showed

an excess of exports over imports of no less than £l2-,048,478. *

During the last few weeks prices «f wool have' improved. To what extent this is due to a temporary shortage in the consuming countries it is not-possible .to/say. It may be tlpit prices .rehchecl rock bottom in .January . and '.February—time alone will toll, v •

; THE DAIRY INDUSTRY. Although. therd hds been a substantial increase iin , our • wool clips, the progress madeAbas , been small compared with That'made Ibv ‘the dairy industry ;d : uri.bg : ,the. last few years. 'As compared, with 1920, the. quantity oU milk' handled- by our dairy factories ' iast . season had increased over, 100 per, cent:' .Figures furnished by- , the Dairy System that, with a relatively small compared with the" first nine months of,' last season,' the aa-me period of this season . shows all increase of butter manufactured and sent ill grading stores of 18.26 . per cent, and in cheese a decrease of 0.23 per cent. Fertilisers imported into New Zealand in 1919 amounted to 76,957 tons, in 1927. 249,413; in 1928, 310,797; and in 1929, 362.157 tons. :■ SHIPMENT OF GOLD TO LONDON

As the Bank was holding more gold than was really necessary for the conduct of its' busness, wp shipped, during the year, gold coin to London to tho amount of half a million sterling.

During last year the stock of gold in the Bank of England fell from £153*000,000: to £129,0001,000, until the , raising of the Bank rate ,in September .to 6t . per cent, stemmed the outflow, .brought , (about a reaction, and enabled the. Bank to build up its stock above the amount of £150.000,000 considered adequate by the Cunliffe Committee and by the Committee on Currency and Bank of England note issues. Tt is gratifying, and a proof of the soundness of the British Monetary System that, with a rela.tielv small stock of gold, London is still able to maintain its position as the world’s financial clearing house. We are apparently now witnessing a world-wide natural movement towards a return to pre-war commodity values, that is, the £ to purchase 20s worth of goods or labour, equal in amount and quality to that of lbl4. Labour, entrenched behind political power and arbitration awards, is endeavouring to stay that movement by keeping wages up. How long can it do so? Unemployment is one of the outward and visible signs of the effect of such an endeavour.

GENER AL ECONOMIC CONDITIONS

New Zealand, unfortunately, is to an extent, .following in the footsteps of Australia, where acute depression is being experienced. Expenditure, public and private, is on an unwarranted scale, and a few years of low export prices for primary products, coupled with over-importation, and possible 'difficulty in Raising leans from ovftsidc Sources, would bring about conditions somewhat similar to those now being experienced in Australia. It does not require any prophet to .foretell that unless expenditure,.. public and private, but especially the former, is substantially reduced. th e future financial ciedifc of the country must be prejudicially affected

The immediate adoption of a policy of retrenchment would no doubt entail a certain amount of hardship in the community but delay in the adoption of such a policy would inevitably lead to greater hardship for greater numliers

Of the total local body loans issued. including Government Loans to Local Bodies, 59 per cent was raised locally and the balance abroad. It speaks volumes for ‘the faith New Zealander's have in the future of their own land that a relatively small (population in a . comparatively i.ewly

settled -country Should invest '■ o'er

1 > • j , According to th P New Zealand Year Book the total. am'oimV of interest payable on Loonl 'Body Loans as at March. 1928. , was £3.158 HSU of which £1.239.840, was payable outside tile ; Dominion; and that amount has since increased.. ": ■ .

jThese figures' do not, include about £7.41)5,.000 borrowed from Government by .various local authorities. , THE OUTLOOK. It would be easy to close one’s eyes, to the indications that point to continuing 'low prices for our , exported ' products, but only harm will be .done by an ostrich-like refisal'to face the position. In New Zealand, if low prices for primary products con tin lie tor -anv length of time*; land values, now excessively high, must bo prejudicially affected a, reduced. standard of living would then, become not merely advisable but obligatory, sinie salaiies and wages would of necessity, le lowered. Nevertheless, .if individually aiid collectively the community will strive conscientiously to adjust itself to altered conditions by endeavouring to adopt more scientific methods,, to pay more attention to detail, to increase output and work a little harder, overhead expenses will be lessened, and what is lost in price may be gained by increased and less costly production—and in time the pendulum will swing the other way. , New Zealand has many advantages; fertility of soil, congenial climate, . a Jieadtliy ipopuljatian of pure British stdek, are all assets of incalculable value. It remains for us to utilise these advantages to the full, and ’it so doing wo can. whaevor happens face the future with conliJ* 100

Mr Richard W. Gibbs, in seconding the motion, said: — The Chairman has explained to vru the chief variations in the lialance Sheet. At first glance, by a comparison of the Profit'and Loss figures with those of last year, some of you. may think that, with the upward movement in our Advances of approximately six millions, an increase in our profits of only £‘35,000 needs some explanation.. When you consider that our free deposits have decreased over two millions, and have been replaced by interest bearing deposits of about tl;e same amount, the explanation is simple. However, taking into consideration the somewhat difficult time we are passing through, ' I think Shareholders have every reason to be satisfied with the year’s results and with the strong and healthy condition of the accounts placed before them. In this connection I can assure you that, from mv daily touch with the Bank’s affairs and ,a complete knowledge »l the accounts, very full provision has been made for every account of the least doubtful nature.

The times may Ib'e troublesome, but during my long experience in the Bank, extending well over fifty yeais, we have .passed through many worse. The ups and downs come periodically and we must face them philosophically. With the ample warnings being given in all quarters there will be no excuse if we in New Zealand <>>t caught napping. By shortening .-ai in private expenditure on non-essen-tials, and more particularly in public extravagance, both State and Municipal, T am satisfied there will be uo occasion for undue pessimism as to the results.

Po New Zealand. Government £245,312 Po Ordinary. Sbarelioldei's. .... . 572,656 ’ i •••' '• v /’ : . V # ' • . £817,968 ilt may interest you to know that tlie revenue derived Jt>y the Governmeat from this Bank; for the year atnounted to £510,154, made up . as fcjllows : : — Dividends on Share Capital £245,312 Irtcome Tax ... 168,561 Land Tax ... ... 17,996 Note Tax ... .- ... .... 108,285. £540,154

£34.000.000. in « these bonds. * ' The indebtedness is allocated as follows-— Counties . ... £3.882.000 Boroughs ’ 1 29.278.000 Harbour Boards ... 10.336.000 Kleeirjc Light Boards ..; 10,175.000 Other ... ... .. ... 5.278.000