BANK OF NEW ZEALAND

Southland Times, Issue 18853, 19 June 1920, Page 10

BANK OF NEW ZEALAND

ANNUAL MEETING. WELLINGTON, February IS. The annual general meeting of the proprietors of the Bank of New Zealand was held at di. Head Office to-day, Mr H. Beauchamp, chairman of Directors, presiding. In moving the report of the directors and the balance-sheet, the chairman dealt with various items in the balance-sheet. Referring l > the item —Capital, £2,627,441, which showed an increase of £347,453, he .-aid: This increase represents the amount paid up by shareholders in advance of due date in respect of the call made on January t) last on t lie Ordinary Shares Nos. 1 to 150.00U inclusive, the circumstances and conditions of which were mentioned at our faceting on December 12 last. It will be seen that a large number of shareholders

availed (hetwclves of the option allowed j them of paying up the amount of the call i efore the due date (April 1) miller rebate at 5 per cent, per annum, the whole call, with the exception of £152,546 13/4, having been received at the balance date. I may mention that of that amount only £44.261 remained unpaid at 2nd instant. ! Our issued ordinary capital is now £1,500,Cdt). and the amount paid up. in respect thereuf. fit 2nd instant was £1,455,739. The Reserve Fund stands at £2,350,000, an in-crca-e of £150,000. This increase is the art.mint added to the Reserve from the profits ot the year ended March 31, 1919. As will lie seen by the rpjMirt, we now propose to increase the Reserve Fund by another £1.50.000, making the total £2,500,000. '1 lie Notes in circulation total £5,765,337, an increase of £2,037,055, The greater part oi this increase is represented by notes not 'Vi rculat ing” at all in the sense of being in ;; >■ hand* of the public. They are notes of curs in the hands of other New Zealand bangs, paid t -> them in set tlenient of exchanges. During the period of the commandeer the transfers of Government rnon-y- in payment of produce have passed through, us as the Government's bankers and large amounts have, as a consequence, rveasione.Hy to be paid over in settlement. Adjustments are made with other banks at short intervals by paying in London in ved' Tupriuu of notes issued to other banks in ■he Dominion. Sometimes, particularly when a !o' id war loan h:is been raised, the balance has be<>n turned in our favour and we have been holders of other bank settlement nates, Imt at present the balance is against hence tin - large increase shown. I men-t-ou the matter in order to guard against any misapprehension arising in regard to undue inflation of the New Zealand currency. 1 do not think there has been any -u-.h iti I! fit ton here. The increase since 1914 i". i'n' amount of the notes circulating in \/ iv //'aiatid is. I think, mainly accounted for by two factors: firstly, the gold which people u.-cd i.o carry about or keep by ;h in has found its way into the banks and oc/-:i replaced by notes; secondly, our export- have very largely exceeded our import-. Owing to exchange conditions, a large part of this surplus has accumulated in Britain. I.ut neither the exporter, the pro. mccr, mu- the worker has had to wait f ’■ pay incur: these have received large pay-.■m-n:,- or Jilvral wages, and it would he re- “■ 'irkabb' if their prosperity had not- caused :‘i im rc isc in the circulating medium of ’'■ ' country. I would [mint out that magnitude noe.-. cor necessarily mean inflation. Depo.-its total £37.661,610, an in-rroi-e of £5,945.255. This increase reflects tb- prosperous condition of the country, ;md will be mure fully dealt with at a later .-'cge r.t my remarks. Bills payable and odcr liabilities account for £3.703,306. an i:;civa,-e ot £547,915. This is an ordinary Ida tu.'ition which calls fur no special rein ir';. The reserve for taxes is £340,000. :i--w item in the balance-sheet, although not entirely a new provision, since in view

or Ihe wry heavy liability to which the ; .-.ok i- subject for taxation, it had been le-cmed prudent to accumulate a reserve a'-adi't it. This reserve is sufficient to carer rhe estimated liability for one year in nsoi or income tax. and it has been deeded to show it as a separate item in the ii.dance--.1i.-ct. While referring to this subj- ’i. 1 migl.i mention tluu the bank paid tin’ following amounts curing last year for rates am: taxes: Income tax, £285,382: 1 1 ;i : I tax. £17.123 ; tax on note circulation, d I 1 ii.t)7 1 : rates. 117004 ; total, £456,483. Turning now to the assets side of the i .dance sl'.ei ! we have; Coin and cash bal-ama(iuvi-rmiK-nt notes, legal tender notes, ! tiiiam totrul A 5,772,283. an increase of v 2.052.320. The coin, cash balances and <'.o', cnimcat notes show a large expansion. Lcrel lender notes ami bullion a moderate reduction leaving the net increase. Money snort <a:l! and b;!!a receivable in London ■re dn.v.vu re 220,283.(142, an increase of !.Tv ! 65,587. Tins increase represents roughiy the growth that has taken place during the year in the Colonial deposits. As explain'd’. in my address a year ago, these foods aiv h**ld in gilt-edged securities, readily realisable at any time. In ordinary times ■ or exchange operations with Britain and those v.ah foreign countries which have to setth .i in London, approximately balance one another. Taking the transactions of a whole year, there is no very great difference between the amounts which we receive in London and those which we pay out there. I ’earing the hist few years, and especially during the year which has just closed, the \ 'due of our exports which have been paid for in London has very greatly exceeded t'"e eo.-’. of imports and other payments which have been made there. The tendency hj i. therefore been towards the aceuinuluthin of fun.is in London, and this is the iat ia ll ic.ii>n of our now holding so large an amount tit that point. In accordance with ■"ir custom, provision has been made for the writing down of all our London investments to a figure at which they are readily realisable. Owing to the increased value of money in London, the funds we have eruI loved then- have been yielding a very satis-iec-iory mum. Cur investments in the I 'omdiiiin total 13.824,7(14, an increase of '.A 15.602. occasioned by the bank’s subscripben to the last New Zealand Government \ s tory Loan. The assets included under this and (he two previous headings—Coin, ete.. and money at short wall, etc. — are i-qual to 69.75 per cent., or roughly 13/11 in the £, d the hank's liabilities to the public. Ihe Commonwealth and Fijian Govern;; em sr--iirities total £239,317, an incr> ase of £105.001, which represents forth r i:.vestment-: made in the loans of the ~r.f.MV , . CllVl'n'.llini!'. The advances are shown as follows: Increase. £ £ BTis di--.mrued 1.503.933 26,483 Advanc.s 17.020.615 539,828 £19.431.848 £560.311 Lauded property and premises, £361,108. a tier reuse of £38.759. The sum of £50,000 ha-- again been appropriated from profits in reduction of this account. It is this appropriation that causes the decrease shown. Some figures were recently published in one (if the banking journals stating the proportion wfrleh the item "Banking Premises” bears to the capital and reserves in the case of a considerable number of banks throughout the Umpire. These figures show' I hat in the case of 22 banks in the United Kingdom, the bunk premises represented 20.93 per cent, of the capital and reserves. In 17 banks in Australasia, the proportion was 14. IS per cent. In 18 banks in Canada hail 26.30 per cent, of their capital and reserves represented by this item. Comparison with these figures will show that the 7 per cent, of this bank’s own resources which are thus represented is an unusually