FinancialReviews BANK OF NEW SOUTH WALES

NZ Truth, Issue 1152, 29 December 1927, Page 14

Financialßeviews BANK OF NEW SOUTH WALES

Healthy Reserves

Established 1817, Still Going Strong

REVIEWING A MAMMOTH INSTITUTION

Although first established in the year 1817, the Bank of New South Wales was not incorporated until 1851, and since that date, has furnished its proprietors with regular financial statements reflecting the progress, profits, and business of the institution throughout Australia and New Zealand.

bonus of 10/- per share, equal to the quarter's dividend of £185,586.

AT the end of September, 1927, it was reported that the total of its

branches and agencies throughout the world numbered 514. Since the last annual meeting- the busineas of the Western Australian Bank has been acquired and the amalgamation has brought with it an accretion of business and the goodwill of a large clientele, both as proprietors and as customers which cannot but carry good with it.

That bank was established in 1840, and its influence in the destinies of Western Australia has been very great so that good results following the amalgamation of the resources of the two banks is assured.

During the year the note circulation of the bank has increased by £81,000, of which £70,000 goes to meet the requirements of the New Zealand business, and the balance, £11,000, represents the outstanding- notes of the Western Australian Bank. j

Deposits have Increased by £3,000,000 mainly

b y transfer from the Western Bank.

The ordinary current account and fixed deposits 'have been well maintained, but there is a set-off by a decrease in Government controlled deposits amounting to £1,600,000. Bills payable and other liabilities etc. are shown in the balance-.sheet at £8,857,198, and, in the aggregate, are practically the same as last year.

Capital has increased by £1,4g3,440, part of which was on account of the Western Australian Bank and part new issue.

Reserve fund has increased by £909,240; £350,000 from profits, £560,000 from the Western Bank and with the appropriation of £340,760 recommended, the figures will reach as under:

Capital -. £ 7,423,440 Reserve Fund £5,650,000 Total . 5.13,073,440

which, with the reserve liability of shareholders, equal to £7,423,440, makes a grand total of £20,496,880. , These visible figures make the Bank of New South Wales a giant in ths world of commerce to-day. That some further millions are hidden away in secret reserves cannot be denied. For example, bank premises are stated in the aggregate balance-sheet at £1,100,000 covering bank premises in the cities and towns of Australia and New Zealand, numbering, some hundreds and probably worth a great deal more than the amount stated, while undisclosed investments and other resources cannot be computed without inside information.

When the whole banking system of the 'eighties was shaken to its foundations and many of these concerns were driven into liquidation or reconstruction, this great financial institution determined to limit its dividend to 10 per cent.

Such a policy has resulted in the upbuilding of the huge reserves which have been noticed and has enabled the bank to cope with many serious problems caused b y economic and climatic conditions This self-imposed limitation of the distribution of profits has forced the healthy growth of reserves and ensured ample provision for the natural wastage of capital.

The progress of the bank has been greater than at any other period of its history, so that it is now so solid as to be well-nigh impregnable.

In the period-under review, the profits are shown to be £127,000 greater than a year ago, including the Western business recently acquired and in addition to the usual dividend of 10 per cent, the shareholders are receiving a

, Increased Deposits

This bonus is not a permanent undertaking by the bank and must not be included when stating the rate of interest the quoted price of the shares is returning.

Coin, notes and cash balances show an increase of £887,000, including the WA. Bank figures, £759,000, and money at short call £570,000, bills receivable in London and remittances in transit £429,000 more.

Government securities are £1,764,000 less and amounts clue by other banks are £110,00,0 less than last year. Premises have increased by £220,000 mainly due to premises acquired in connection with the Western Australian business.

During the year many new buildings have been erected and several necessary purchases made. Depreciation and renovation expenses have been written off bank properties and the balance of £1,100, 000 remains. Advances are £5,392,000 more than at September 30, 1926, and Western Australian accounts for £4,200,000 of this total, the balance being spread over the different States.

Mention is made of the New Zealand advances and it is safe to assume that in this country there 'has been no appreciable increase in this class of business for the reason that vre are not seriously affected by droughts and Other climatic conditions affecting crops and stock.

Dealing with the increased extravagance of the populace brought about by the time payment system for luxuries, causing harmful results by the mortgage of our future incomes, the chairman's remarks, in the annual report, apply with equal force to the mode of living in this country, as to other parts of the world. It is" the duty of the banks to sound a note of warning in times of national extravagance and carelessness.

The care of money is the primary function of a bank, relieving the owners of funds of much trouble and risk, while its next most important funfcti«n is that of making loans.

It is by this means that the bank becomes a major agency for facilitating and promoting business operations.

The success of its customers is the bank's most vital interest and to this end a bank's cumulative experience is one of its most valued assets.

Furthermore, every large bank has at its immediate command information which is the result of research work in the whole financial and economic field.

Much of such material is naturally held as part of a bank's stock-in-trade for the use of the individual customer, but much of it is published in the interests of general business.

The basis of successful banking is service, and business to-day actually requires these auxiliary services specially developed to meet the requirements of our time, and while it cannot be denied that a bank is a business institution, organized for pro-

fit, its services are of real value, not only to its customers, but to the community.. Summed up, it will be readily seen from the figures available from the report to shareholders that the policy of the Bank of New South Wales is "safety first." The bank cannot be accused of working for profit alone. In its deposit department the huge sum of £61,554,635 is held for depositors and against accrued interest and rebates while notes in circulation total £673,454.

These remarkable figures prove without doubt the high public estimationjn which the bank is held. It has long enjoyed the reputation of businesslike consideration for its clients and service brings its own reward Net profits for 1 five years ended September 30, 1927 are as follows: 1923 £825.082; 1924, £846,834- 1925 £970 ' 383; 1926, £1,099,559; 1927, £1,226,247 Truly a period of wonderful expansion.