BANK OF NEW ZEALAND.

Poverty Bay Standard, Volume 1, Issue 5, 2 November 1872, Page 1 (Supplement)

BANK OF NEW ZEALAND.

(Abridged from the N.Z. Herald, October 24.) The ordinary half-yearly meeting of shareholders was held yesterday, in the chief office, Queen-street, — Thomas Russell, Esq., Chairman of the Board of Directors, presided.

The Chairman, in moving the adoption of the report, said : Gentlemen, — It has been the good fortune of the directors of the Bank ever since its institution to be able, at each half-yearly meeting, to place before you a balancesheet which commended itself to the shareholders for adoption—that has not required any apologetic or any explanatory speech from the chair to satisfy your mind as to the results obtained. We are fortunate again in this respect, for although our dividend is at the rate of 21 per cent, per annum less than it has been in the past half-year, I am sure those who have been observing the course of events during the last twelve months —the increase of wealth in the colony, the lowering of the rate of interest throughout this and other colonies and the more limited demand that has prevailed for banking accommodation—will be prepared for a slight reduction of dividend to-day. I think you cannot help regarding the results obtained as highly satisfactory, and a dividend at the rate of 121 per cent, per annum as more than the equivalent of 15 per cent, under the circumstances of twelve months ago. I may state shortly by way of explanation that during the past half-year, although our officers in every part of the colony have been anxious to employ the bank’s resources in every direction that they could do so with safety,—although they have bben as active, zealous, and energetic as ever, yet we have not been able to employ within the colony by £600,000 so much of the bank’s resources as we were employing six months ago. There has been much less demand for banking accommodation, within the afield of operations occupied by this barn., ffind even within this colony during the past half-year as compared with the previous half-years, but apart from a restricted demand for banking accommodation, the diminished rates of interest on advances will go far to account for our diminished dividend. The causes that have brought about this result are, I think, causes for congratulation to all of us as colonists, and I am sure there is no shareholder w r ho will not be satisfied with the smaller dividend when he sees that the causes which have operated to bring about such a result are calculated to produce so much good to New Zealand. The increased vaAue of wool, the sudden rise in the price of that staple has introduced into the colony a large amount of capital, and many of our customers who formerly required accommodation from the bank are thereby rendered independent of such assistance. Hence the limited demand for bank advances. This prevails not only here but in all other colonies that are subject to the same condition as woolproducing countries, and it affects all other institutions that are occupying the ground, or are engaged in a field of operations such as we occupy. I will read to you a few extracts from the reported proceedings of kindred institutions to this with the same field of operations. You will see that the causes

which have effected the diminution of the rate of dividend in the Bank of New Zealand have also affected them. In one of the bank reports, read at a meeting recently held, the following occurs: —

The shareholders would remark the profits of the bank, as compared with those of the previous year, showed a small diminution, which was due in the first instance to the low rates of interest which had ruled in this country during the past year, and had not averaged more than 2| per cent., and in the next place it was more particularly referable to the redundancy of money and low interest now prevailing in Australia [and New Zealand.] This redundancy of money and low rate of interest were certainly new features in the Australian money market; hitherto the value of money there as in all new countries, had been high, and the rate of interest had fluctuated between 10 and 7 percent., but now the ordinary bank rate for 90-day bills had fallen as low as 5 per cent. This change had been caused by the great rise in the price of wool of last year, a rise which, it had been estimated, represented two millions of money, all of which was, so to say, remitted direct from this country into the pockets of the sheep farmers in the colonies, and had in many cases rendered them quite independent of that bankingaccommodation which in times past they so eagerly sought. Hence the present plethora of money in Australia [and New Zealand.] It was not a matter which affected their bank alone, it touched all Australian banks alike, for they were all suffering from its effects, and they all adverted to it in their recently published reports.

From the reported proceedings of another bank the Chairman proceeded to read as follows :—

The large and almost unprecedented rise in the price of wool had completely changed the condition of the Australian wool producers, and the raising of wool had become so profitable that the squatters and sheep-farmers who formerly came to them for advances had been able to pay off their debts and carry on their operations under the most favourable prospects. . . . And, anomalous as it might seem, this great and sudden prosperity had to a certain extent tended to limit the business of the bank. Sheep-farmers who used to come to the bank for assistance were now able, consequent upon the high price they obtained for the wool, to keep large balances to their credit, and no longer required to borrow. This militated against large banking profits at present, but no doubt the prosperity would re-act in various w’ays; the holders of capital would seek investments in other directions, and the sphere of the bank’s operations and the expectations of legitimate additional profits would be increased.

Mr. W. Brodie : Will the President excuse me for a moment ? Might I ask him for the name of the bank fro’m whose report he has just been reading? The Chairman : From the report of the Union Bank of Australia, a bank occupying here precisely the same field of operations that w r e do. Therefore, you will perceive at once that the causes which have affected our operations and diminished our dividend have also affected them in like manner. I may be permitted to congratulate you upon the leading position now held by the Bank of New Zealand in the colony. There is no need to quote figures for the information of shareholders who are present or who reside within the colony, and have access to the bank returns which are published periodically by the Government, and which they can see for themselves. But there are shareholders who have not access to these returns. These returns give the result of the operations in the colony only, and do not include business transactions by the ban A ,pise where. Now from the recently published returns you will observe that of the notes in circulation which amount to a total of £651,539, the amount of the Bank of New Zealand is £344,085, as compared with £307,454 of all the other banks, or more than half the note circulation of the colony. As to deposits, the business of which is divided between the four or five banks in the colony, they amount to a total of £3,903,224, The deposits in the Bank of New Zealand are £1,946,161 as compared with £1,957,063 in the other banks, or about one-half of the whole. The discounts and advances amount to a total of £3,627,141. The Bank of New Zealand discounts and advances amount to £1,977,946, as compared with £1,649,195 by the other banks, or more than half of the whole amount of bank advances made in New Zealand. Gentlemen, we have, as these figures show*, a large and valuable business, and we occupy the leading position in the colony. We congratulate you on such results. You will thus see that the field here is fully occupied; that not only this bank but other banks doing business in this country have abundant resources available for all legitimate

banking pperatious in New Zealand, and yet this is the field of operations referred to in the prospectus of another foreign bank about to be introduced, who purpose taking up ground not already occupied. While we all regard the past and present with pleasure and satisfaction, we in\ite you to look to the future with confidence.. Your directors, and all the officers of this institution, take a more than pecuniary interest in its management and success. We regard its operations as a great colonial institution with pride and pleasure, and you may rest assured that no efforts shall be spared to maintain the bank in its present leading position, and we ask you, gentlemen, everywhere to co-operate with us to so desirable an end.

The Chairman concluded by moving that the report be adopted, printed, and circulated for the information of the shareholders.

PROFIT AND LOSS ACCOUNT. £ s. d. To dividend at the rate of 10 per cent, per annum ... 30,000 0 0 Bonus of 2s. 6d. per share, equal to 2 J per cent, per annum 7,500 0 0 Balance carried to profit and loss new account ... 8,860 5 0 £-16,360 5 0 £ 8. d. By balance of profit at 31st march, 1872 7,600 3 0 Net profit for half-year, after writing off bad debts 38,760 2 0 £16,360 5 0 RESERVE FUND. £ 8. d. To balance 180,000 0 0 £180,000 0 0 £ s. d. By .balance from last statement 180,000 0 0 £180,000 0 0 ( W . I. Taylor. Audited J. Stone.