ADVERSE CONDITIONS

Sun (Auckland), Volume 1, Issue 16, 9 April 1927, Page 12

ADVERSE CONDITIONS

MARCH BANK RETURNS EXCESS OF ADVANCES OVER FIVE MILLION (From Our Resident Reporter.) WELLINGTON, Friday. The advances of the six leading banks of the Dominion now exceed the deposits by over £5,000,000. A year ago the excess was £982,662. The fact is shown by the aggregates of the average statements for the March quarter issued by the six banks trading in New Zealand. The adverse movement comprises a shrinkage in free deposits, or current account balances, and a substantial increase in advances. There is also an appreciable contraction in the note circulation. These are all adverse factors and are primarily due to the fall in the prices of exportable farm products. Taking the three classes of deposits, the position as compared with the corresponding quarter of last year is as follows:

Distribution of Deposits The decline in the free deposits is substantial and all the banks showed smaller balances, as will be seen from the following table: FREE DEPOSITS

Totals £26,865,851 £24,440,778 £2,425,073 These are the deposits against which cheques are drawable, and therefore the spending power of the customers of the banks is £2,425,073 less than in the corresponding quarter of last year. The fixed deposits show a small increase in which all the banks except the Bank of Australasia shared, as will be seen by the following table: FIXED DEPOSITS

Totals £20,436,629 £21,088,034 £651,405 •Decrease The aggregates of the free and fixed deposits for the March quarter of each of the last five years are as follow:

Heavy Demands on Banks The demands on the banks for accommodation show an increase of over £2,500,000, compared with the corresponding quarter of last year. While five of the banks show substantial increases in advances, the Bank of Australasia exhibits a shrinkage of £19,078. A comparison of the advances by the several banks is disclosed in the following table:

Totals £46,372,303 £48,939,189 £2,566,886 •Decrease. The average of the discounts for the quarter was £1,861,619, as against £1,912,839. a decrease of £51,220. The aggregates of advances and discounts, £50,800,808, is very much larger than in 1923, 1924 and 1925, which were years of comparative prosperity, and traders and others did not find it necessary to borrow from the banks. It is instructive to strike a balance between the deposits, which represent the borrowings of the banks from the public, and the advances and discounts, which represent the loans made to the public. The aggregates for the March quarter of recent years are as follow:

Comparison between the excess of deposits in 1925 and the excess of advances this year shows the great change that has come over the situation. For such an excess of advances, we must go back to 1922, when the amount was £6,130,925. Note Circulation Reduced The note cii'culation and the coin and bullion for the March quarter of the last five years have been as follow:

The note circulation has contracted by £227,301, while the amount of the coin and bullion has increased by £83,588. The spending power of the community may be measured by taking the amount of the free deposits and the note circulation. Against the deposits cheques may be drawn, while the notes are in the pockets of the people, available for immediate expenditure. As compared with 12 months ago, * the total is less bj r £2,652,374, and compared with 1925, it is less by £5,415,104. The returns speak for themselves, and their tale is not satisfactory. The position is, of course, not any worse than it was in 1921 and 1922, and just as we recovered from the depressing circumstances of those years, so we shall again, if we follow the right economic course.

Mar. 1926. Mar. 1927. Decrease. Govt. . £4,012,194 £3,095,271 £916,923 Free . 26,865,851 24.440.77S 2,425,073 Fixed 20,436,629 21,088,034 *651,405 £51,314,674 £4S,624,083 £2,690,591 ♦Increase.

Bank. Mar. 1926. Mar. 1927. £11,606,489 2,884,090 2,493,840 Decrease. Union N.S.W. 1:1! 292:219 359,723 asia . National 2,669,424 4,639,189 2,311,558 4,213,491 411:111 cial . 938,883 931,310 7,573

Bank. Mar. 1926. Mar. 1927. Decrease. N.Z. £10,415,869 £10,677,3S9 £261,529 Union 2,261,919 2,396,633 134,714 N.S.W. Austral2,685,104 2,791,255 106,151 1,741,818 1,70S,115 *33,703 National Commer3,027,724 3,138,494 110,770 cial 304,195 376,139 71,944

March Quarter. Fixed. Free. Totals. 1923 . £26,445,502 £17,020,414 £43,465,816 1924 . 28,436,163 18,597,130 47,033,293 1925 . 29,765,517 20,131,711 49,897,228 1926 . 26.S65.851 20,436,619 47,302,470 1927 . 24,440,778 21,088,034 45,528,812

Bank. Mar. 1926. Mar. 1927. Increase. N.Z . £19,941,342 £21,352,809 £1,411,467 Union 5,836,695 6,170,913 334,218 N.S.W. 5,972,249 6,253,709 281,460 Australasia 4,903,774 4,884,696 *19,078 National S, 494,319 8,828,880 334,561 Commercial . ■ 1,223,924 1,448,182 224,258

March Excess of Quarter. Deposits. Advances. Deposits. 11*23 £ 43,465,816 £42,521,573 £1*44,243 11*24 . 47,033,293 44,403,524 2,629,769 1925 . 49,S97,228 43,730,262 6,166,966 Advances. 1926 . 47,302,480 48,285,142 982,662 1927 . 45,528,812 50,800,808 5,271,996

March Quarter. Circ ulation. Coin and Bullion 3 923 . £ 6,532,132 £7,929,267 1924 6,600,969 7,877.259 3 925 6,694,046 7,727,905 1926 6.S30.982 7,791,455 1927 6,603,681 7,875,043