BANK OF NEW ZEALAND

Sun (Auckland), Volume III, Issue 695, 21 June 1929, Page 11

BANK OF NEW ZEALAND

SATISFACTORY INCREASE ] IN EARNINGS ANNUAL MEETING‘TODAY (Special to THE SUN) WELLINGTON, Today. The actual net earnings for the year show a satisfactory increase over those for the previous year, state the directors of the Bank of New Zealand in their report presented at the annual meeting held here today. “This result,” they say, “is due to : the first issue of long-term mortgage : capital being now fully paid up and : fully employed, to the higher rates obtained in London on the larger ■ amount of liquid funds which we have I there, and to the smaller provision for bad and doubtful, debts, that has been I required as compared with previous years—indeed since 1920. “The profits from our business in 1 the Dominion have fallen off considerably, owing chiefly to expansion in interest-bearing deposits (many millions of ■which are still carrying the high rate of 5 per cent, which ruled for two-year fixed deposits from May, 1927, till July, 1928); to the reduced rate of interest on advances, and to some reduction in the amount of advances. “In addition to actual earnings for the year, the large sum of £212,004 is being brought into our profit and loss account. This amount had been set aside during recent years for certain doubtful , advances which have been repaid or have worked into a satisfactory position, or have been liquidated with less loss than was anticipated. We are .still ‘nursing’ a number of doubtful accounts, but given a few more good seasons, further substantial amounts which have been provided for possible losses should also become available for allocation. “The dividend and bonus is at the same rate as that of last year. The total distribution will be: New Zealand Government, £244,433; ordinary shareholders, £570,459.” Commenting on the increase in deposits amounting to £3,600,618, the directors state that this is mainly interested by interest-bearing deposits on which the margin of profit is narrow. INCREASED CAPITAL “An increase pf £86,915 in the capital of the bank during the year, has been brought about by the final payment in connection with the first issue of long-term mortgage shares. The total number of these shares issued so far is 703,125 of £1 each and long-term mortgage loans amounting in the aggregate to £698,375 were current at balance date while others, approximating £219,000 have since been made or are in course of completion. “Although there has been a steady demand for long-term mortgage loans, the volume has not, by any means been as great as was anticipated. “As there is statutory power to overdraw up to £500,000 from the ordinary funds of the bank in connection with this activity and to issue debentures to the amount of three times the paid-up long-term mortgage capital, it is unlikely that a further issue of shares will be made for sopie considerable time. “It is proposed from the balance of profits available to transfer £275,000 to the reserve fund, bringing that fund up to £3,425,000. “Shareholders’ funds in the bank, apart from substantial inner reserves, will now total £10,900,704, made up as follows: Capital paid up, £6,858,113; reserve fund, £3,425,000; balance of profits carried forward, £617,591.” REPORT ADOPTED On the motion of the chairman, Sir George Elliot. the report was adopted. Referring to a statement in the report that: Provision had previously been made for certain doubtful advances not now required amounting to £212,000, Mr. R. W. Gibbs, said that during the war certain advances had been made to farmers’ freezing companies to enable them to meet uncertain shipping conditions. Unfortunately, after the close of tho war, legislation was passed enabling an embargo to be placed on the disposal of this class of security, and such as fell into the bank s hands were, in consequence, then considered practically valueless. There was nothing for it but to make full provision for prospective loss. Fortunately, during the past year the difficulty which gave the board siderable concern was surmounted, and the bank was able to dispose of the chief security in this connection over works in Wairarapa to a reputable British company. This sale had, in consequence, set free a provision whicn bulks largely in the profit and loss item re The e Hon. T.'Shailer Weston, In Proposing a vote of thanks to the Board of Directors, the general manager and staff said that in spite of the difficulties pointed out in the speech, he thought that shareholders wer f v ®ry much indebted to the management for tlie fact that they had maintained the money rate of profits of the bank. AVitli regard to the staff generally, he thought that the shareholders were also much indebted to them. He would like to emphasise once again that the position of the bank branch managers was well worthy of consideration. It was only right that the managers .should play a most important part in the safety of advances. The general manager, Sir Henry Buckleton, replied on behalf of the staff and said that the honour conferred on him by the King he regarded as one conferred upon tho Bank ot New Zealand, and upon the banks in New Zealand generally-