The Sun FRIDAY, JUNE 8, 1928 MERELY FOURTEEN PER CENT.

Sun (Auckland), Volume II, Issue 375, 8 June 1928, Page 8

The Sun FRIDAY, JUNE 8, 1928 MERELY FOURTEEN PER CENT.

©ANKERS and other financial experts may find some cause for disappointment and even for a little sadness in the details of the balance sheet published by the Bank of New Zealand, but, in its sum, plain, simple citizens will see substantial reason for rejoicing. Everybody associated with the great national institution which serves as an impregnable bulwark against the Socialists’ demand for a State Bank—the Government, the bank directors, and the shareholders—everybody, indeed, except the bank’s customers appear to have done well and to have fared not badly last financial year. Beyond a doubt, all things considered there is reason at least for satisfaction, if not for rejoicing. Over £9,300 was paid to the directors for their competent service and continuous anxiety; the Government, on its bulky parcel of preferential shares, received handsome returns—lo per cent, on A shares, 13 2-11 per cent, on B’s, and 6 per cent, on D’s. It is really not surprising that the Minister of Finance does not choose to harass the banks, too agressively about the necessity of reducing the bank rate for discounts and overdrafts. The Government has to mind its “A’s” and “B’s” as well as minding, in party politics and the quicksands of public opinion, its “p’s” and “q’s.” The dividend to the ordinary shareholder was or will be merely 14 1-3 per cent. It is perfectly clear that whatever way the economic tide runs the Bank of New Zealand and its loyal allies or imitative competitors—policy and results are always the same, either way—must and do make a good profit. This, of course, is the perfect core of excellent business, but why need financiers make a wry mouth about a slight drop in their profits when the aggregate turnover and profitable yield cause the mouths of clients and business men, to say nothing about ordinary folk drawing a paltry return for a meagre investment in the Government Savings Bank to water in envy,? It is true that the gross profits of the Bank of New Zealand dropped enough to indicate the hard times of common experience, but against that truth must be placed quite plainly the compensating fact that the net profits were still high enough to make ordinary investors laugh in gratitude. In the banking returns, there is no excuse for the long face of pessimism. Indeed, there is evidence of much reason for optimism. A great deal may be made of the difference between the increase in deposits by over £675,000 and the decrease of over £1,129,000 in advances, but that was to be expected under the gruelling pressure of the high bank rate. The latest returns of all the banks for the current financial year reveal the recovery of general purchasing power and increased business activity—not yet sufficient, of course, to whoop over—but the encouraging story of financial improvement was marred by the bankers’ footnote to the substantial record: “The minimum bank rate for discounts and overdrafts stands at 7 per cent.” It has stood too long at 7 per cent. The disciplinary effect of its imposition as a means of reducing importations has impressed its salutary lesson on industry and business. If the banks are sincere in their appreciation ol national duty they should quicken the* recovery of trade by an early reduction in the bank rate. A dividend of 14 per cent, justifies the concession.