BANK OF NEW ZEALAND

Hokitika Guardian, 19 June 1931, Page 2

BANK OF NEW ZEALAND

ANNUAL MEETING

WELLINGTON, June 19. ) The annual meeting of the Bank of New Zealand was held to-day. The Chairman said —I have to apologise fop* the absence of Sir George Elliott whorleft' for a visit to Great Britain on;a2Bth. March last. Before forAially moving the adoption ■ of the Report - and Balance Sheet, I will take the opportunity of drawing your attention Ag • those items in the Balance Sheet? eall for special mention, and JuMier' remarking on matters , incidentally affecting the Bank. :; \% . ■’ ; " •;. ; ' There -lias not been any change during the, year in ;tn'e capital of , the Bank. '■ •, ./ , ■, .• ■ from tlw yaar’a profttavto the Reserve making the later £3,575,000. This is the smallest addition to the fund for very many years. The balance. of profit carried forward will be increased by £2,845. It will be thus apparent that the | Bank is in a very strong position. In November last, we placed in London on satisfactory terms ,an\ issue of •5 £500,000 1 five per 'cent. i Long-term Mortgage ■ Debenture... Stock maturing 15th.' November,, 1940. The proceeds of the lssuej were used to repay . advances which had been obtained from 1 “"the banking department of the Bank. But few loans were made during the year, only a. limited amount of funds •being available. \

NOTES IN CIRCULATION. Our Notes in circulation at 31st. ""March- amounted to £3,679,957. The average circulation for the year was £3,526,197. . - '-. The gold and other securities held would enable the Banks to increase the circulation to more than double what it is, were that necessary. Practically. the whole of the profit on !the Note Issue when the tax was aftgper cent, went to the Government, cohsequently the increase of 1} P er cent, was 1 '; totally unjustifiable. The felt .that this increased ijilon -should ,be met by some means, apd therefore increased the half-yearly to customers for keeping accounts by. os. This increased charga ;*till leaves his Bank, to face a ( loss of PIO,OOO to £12,000 a year, as about ' per cent, of our circulation is due |of the operations of the Government Recounts, on which no charge is made. « Our deposits?,feat the balance date §wcre £1,572,923;, less than at 31st. iMjuoh, 1930. The shrinkage is in cur-. Vrent account balances, which are down ■by Fixed deposits have finerpaeed" £1,503,072. Government .balances, are less by £542,503. iv <! In this, item there is a decrease of i> £525,038, the major portion of which I' is l'iedu'ction in amount of drafts on 1 London outstanding. The remainder |of the decrease-is represented by items of no special significance, f ■ ‘ ; ;t i PROFIT AND FOSS ACCOUNT.

The profit for the year was £845,being £102,720 less than, for the period, the decrease being dim to increased taxationp-to higher cost of deposits, increase in bad debts, and lessened earnings on'our short-term jffirestments in London/;' : ■ • : Ac]>'ances.;^nJ l .Bills Discounted together show a. decrease of £709,-374, over £400,000 of which is due to reduced imports from Britain. There has been an active demand for money, and we have been able to 1 meet all -legitimate applications from pur own customers. In time§ like the

present, it is necessary to scrutinize all request for accommodation with the | greatest care, not only to guard against the possibility of loss, but also to see that our funds are not being used for speculative purposes, or for purposes alien to proper banking. In the depressed conditions prevailing, we have felt it to-be our duty to meet our customers’ needs right up to the limit of safety. BANKING SYSTEM IN NEW ZEALAND. The Banking System of New Zealand has been evolved during more -than 90 years of practical acquaintance j with the country’s requirements. It I differs from the British system inasmuch as it has to dea.l largely with j aiding development of land,_ as well as assisting in the establishment and encouragement of all other industries essential to the needs of a young country and its growing population.'' It will be admitted that had the Bankconducted their operations Strictly in _ accordance with the lines of British i Banking, tins Dominion would not have 1 litfe the progress it luw, and therefore it may be justly •claimed, that the system has met the needs of the country, and has enabled the Banks to assist their customers in weathering many a storm with minima of ill effects.

Th° dividend and bonus, which are payable in Wellington to-morrow and at tUe various branches on receipt of advices, will be at the same rates as those of last year.

Taxation paid to the Government of .New Zealand in the year under review was £54,103 more than in the year previous. The total increase in rates and taxes on the whole of the Bank’s business was £86,837. Income Tax was increased last year by 10 per cent., invoking the Bank in an additional impost of £17,865. 'BOARD OF DIRECTORS. Sir George Elliot resigned the Chairmanship before leaving for the Old c-ounciy, ana my colleagues did me the honour of .electing me as his successor. Sir George Ell.ot and Mr Anderson have been re-appointed to the Board for a lurther term of three years from 31st Luarch, 1931. * The term of office of Mr R. W. Gibbs, one of the two representatives of the Ordinary, Shareholders, expired in March last, and he was re-elected unoppos-d to the position.

CHIEF AUDITOR. Mr A., !R. W. -P. Green retired from the post of. Chief Auditor after six year’s service in that capacity, and the Government appointed -Mr A. L. Hempton in his stead. Mr Hempton’s connection with the Bank has extended over a period of 42 years, during which he filled many important positions, including those of Chief Inspector and Assistant General Manager. STAFF.

The Directors again express their appreciation of the work and conduct of, the staff. The chief executive officers and branch managers have had an extremely trying time, and that condition will continue until a normal state of affairs is reached. A bonus, similar to that of' recent years, has been paid to members of the staff and other employees of the Bank. ■I feci sure that-, as hitherto, this payment will' meat with your cordial approval. RATES OF INTEREST. There has been no change in interest rates within , the Dominion since you were last addressed from the Chair. Although, the demand for money exceeds the supply, we hope' that ere long it may be ' possible to

bring about a reduction of rates, but as the Banks do not control interest rates, nothing can be accomplished in /the way of reduction unless certain other important interests can be induced to co-operate. ' EXCHANGE. As you are aware, the present rates of exchange between London and New Zealand and vice-versa are abnormally high, aond there is no reduction in close sight. The principal factor in advancing rates from, time to time has been the necessity for bringing about a reduction in imports to correspond in some measure with the reduced value of exports. To a considerable extent this result has been attained, but London reserves, which have been heavily depleted, must be built up before reduction of rates can be looked for. Further, it is by no means certain that for the present year the balance of trade will be in tile Dominion’s favour to anything like an adequate amount.

The position of Australian exchange is also abnormal, and until conditions in the Commonwealth substantially improve, there is little or no hope of alteration. Complaints have been made by New Zealand exporters to Australia that the exchange rate is seriously restricting trade. That no doubt is the case. On the other hand, our Bank

lias funds in Australia far in excess of its requirements—an excess which in present conditions it is impossible to 'shift. In fact, it would suit us to stop buying any exchange oil Australia for a long time to come. The recent “cut” of 10 per cent, in salaries and wages will, in many instances, inflict more or less hardship, but l would emphasise that a great qiany persons have been obliged to face .losses far in excess of 10 per cent.

MORATORIUM. Continuance of the Moratorium of 1914 for year s beyond the period for which there was justification brought mortgages over landed properties into strong disfavour, the result being that borrowers on mortgage of land find that funds for such investments are more or less limited to those in the hands of the various Government lending departments. There are, no doubt, eases where mortgagees have attempted to deal harshly with mortgagors, but we have no hesitation in saying that in the vast majority, the last thing a mortgagee wants is default to be made. PRODUCTION AND INDUSTRY. It says a great deal for the energy and diligence of the vast majority ot the people of New Zealand that, despite the discouragement of low prices for exports, lower purchasing power for manufacturers, and high taxation, there has not been falling off in the national activities as a whole. Imports from overseas have much decreased as compared with the year 1929-30. This is a commendable feature.- as previously more in the nat ure of luxury goods were imported than the Dominion, taken as a whole, could well afford, and stocks were too extensively carried. :

Manufactures have been well maintained in goods suitable to the people’s requirements. The general depression has caused less turnover by manufacturing concerns, and consequently less profits and dividends, but no less than that expected from the universal position of affairs.

Dairy factories have continued to extend their operations and improvements and developments have taken place on many farms. Meat freezing companies were not generally successful during the past year, as the prices paid for live stock were too high at the beginning of the season. Some changes which will avoid overlapping and reduce expenditure have been made, and it is expected

that, notwithstanding the ’low prices in Britain, better results will be effect, ed this season. Wool prices have been extremely disappointing—so much so, that many who could afford to do so held their clips back from sales or shipment. It was considered that when at the lowest price last summer, wool was much below cost of production. Since then, values have risen, and it is hoped that they may soon return to paying point. Droughts have been severe on the coast of the North Island, and in many places cattle had to be removed, while sheep and lambs were difficult to fatten. Timber milling has, in the main, been conducted at a loss, owing partly tjo diminution in building, partly to exchange rates in exporting to Australia, and to the conditions prevailiitg there, and partly to high costs of' production as compared with other countries. Sir Harold Beauchamp, in seconding the motion, said : I have been askecl to second the motion foi‘ the adoption of the report alid balance-sheet, utid I do so with much pleasure. * Tn tire "first' pluce, •I' fihoukl' like to congratulate Mr Watson upon his appointment as Chairman of this great Institution. He has been associated with the Bank as a Director since 1894 and his elevation to the Chair places a coping stone to the long and honourable career he hajs had as , a Banker, in fact, I think he may now be described as the doyen of the Bankers of Australasia.

Secondly', I am feure you will be gratified with the results achieved by the Bank for the past financial year, especially when you take into account the adverse financial and economic conditions with which we have had to contend, these conditions being of a world-wide character.

Our ability to give the usual return to shareholders is in no small measure due to the sound policy that has been pursued in the past—that is by building up substantial reserves and making the fullest provision out of profits for losses which the Bank has sustained from time to time.

. f Mr Richard IV. Gibbs said: —Permit me to thank you for giving me a further extension of office as one of your representatives on the Board. I have little to add to what has been said by the mover and seconder of the report. When times are bad, the Banks come in for the usual abuse and are charged with causing unnecessary deflation, restriction of credit, and so forth. I can only say that so far as we are concerned, it has not been found necessary to restrict credit for any legitimate business, and the needs of . both our country and town customers have had the fullest consideration.