BANK INTEREST

Hokitika Guardian, 1 June 1932, Page 5

BANK INTEREST

REDUCED RATES

TO COME INTO FORCE TO-DAY.

IBy Telegraph—Per Prees Auociationl • WHHDINCTD^-May'll. A statement was issiied to-day- by the Associated Banks, concerning the bank interest rates. It Tlie, following reductions liave been madfeS by the Associated Banks.: .The rates of interest allowed on filed dei posits lodged after May 31., will be*, a* follows : • ' * On deposits for any period between. 6 and 12 months; three aiid a-quarter per cent, for annum; t Between , 12 and ,24 'months; three and a-lia]f per cent, per;,annum. Twenty-four months; four per cent, per annum . ! . ; "'"'v • The above reduction does not affect current fixed deposits.. The Banks will continue to, pay higher ! rates borne by those deposits which will mature dicing a period of up: to 24 months. v For this 'reason it is necessary that there be some delay in reducing the interest rates on advances. From August 31st. next, suitable adjustments of the rates on advances—half of one per cent, on . the'; average— . will be made, and, as a eimilar reduction was made on' Ist. November, 1931, this will make a reduction of one per cent, These reductions al'e being made for the purpose of „oo operating with the Government in its legislation for a general reduction in interest rates "r and, with other special reductions made in necessitous cases, the total reduction ,\vill be considerably greater than one per cent. ( It will not be for fourteen months yet that full benefit of the previous reduction in tlie fixed deposit rates, made on the Ist. of August, 1931, will accrue to the banks. In addition to -this,' the Associated Banks are financing the Government at a/rate of interest .which affords, a bare margin of profit. Attention is drawn to the fact '.that, with; the miniv_um advance or oyerdraft rate of 6 per cen. per annum, and 5 per cent, per., annum being payable*-'on - current twenty-four months’ deposits until July, 1931, there is a .'margin of but one per cent, in respect ofj'the latter (and their total is considerable). This is reduced by incidence of the Banks’ income tax of rather more' than 8s 9d per cent, per annum on deposits, and another 8s 9d per cent:- per • annum on advances, to below 2s 6d per cent, per annum ( which barely leaves any margin for profit in the sums so involved.