FINANCE COMPARISONS

Sun (Auckland), Volume IV, Issue 1003, 20 June 1930, Page 1

FINANCE COMPARISONS

EFFECT OF “INVISIBLE” TRANSACTIONS BANK YEAR OUTLINED From Our Resident Reporter WELLINGTON, Today. The opinion that bare figures of New Zealand’s exports and imports for any period do not give a wholly correct idea of the Dominion’s financial relationship with other countries was expressed this morning by Sir George Elliott, chairman of the board of directors of the Bank of New Zealand. Referring to the announcement that New Zealand’s excess of exports over imports last year was £12,048,478, and that for the year ended March 31, 1930, the exports were £49,045,517, and the imports £49,167,914, the chairman said there were other factors, frequently known as “invisible” exports or Imports, to be taken into account. The largest single item in invisible imports was the interest paid on Government and local body loans paid overseas. Interest had to be paid in exactly the same manner as imports were paid for. The amount involved for the year ended March 31, 1929, was £8,286,819. There were numerous other items affecting the ultimate balance. The success of the New Zealand Government in the flotation of two loans since the last annual meeting of the Bank of New Zealand was an indication of New Zealand’s popularity in England. That popularity should be fostered. For seven years to 1929, New Zealand had an excess of exports over imports to the value of £ 36,526,581, but her interest on external loans was more than £45,000,000. During the past year, interest charges payable in London had increased considerably by interest on new loans and increased interest on renewed maturing loans. DISCOUNT COMPARISONS In quoting the fluctuations which had taken pla.ce in the past 12 months in the Bank of England discount rate. Sir George said that no inference could fairly be drawn, owing to different conditions, from comparisons between the Bank of England discount rate and advance rates ruling in New Zealand. Regarding exchange, the Bank of New Zealand had been able to supply the requirements of all its customers, and anticipated being able to continue doing so, though the bank’s resources in London had been considerably depleted, largely because of exceptional transactions on behalf of the Government. The exchange position in New Zealand, indeed, was relatively stable. No alteration had taken place in the bank’s capital, and it was proposed to add £125,000 to the reserve fund, making the amount £3,550,000. The total shareholders’ funds, capital, reserve, and undivided promts were £11,031,269, an assurance of the stability of the bank. Deposits had decreased by £42,043; fixed der sits had increased by £2,357,154; but the current account deposits had decreased by £2,399,197, mainly bcause of customers drawling on their balances to meet conditions arising from the unfavourable export season. The actual net earnings of the profit and loss account were well in excess of the figures for the previous year. The holdings of British, Australian, and New Zealand Government securities, and debentures of New Zealand local bodies, were £12,749,069, a figure well under market value. The shrinkage in the value of exports, and over-importation, had caused an increase in advances and bills discounted of £6,268,132. FARMERS ASSISTED Apart from direct advances to farmers and their organisations, the farming industry had been assisted indirectly by the bank’s taking up of £BBO,OOO in rural advances bonds. The dividend and bonus, at the same rate as last year, would be payable tomorrow, when the distribution for the year would be £245,312 to the Government and £572,656 to ordinary shareholders. The Government derived £540,154 in revenue from the bank during the year.

Sir Harold Beauchamp and Mr. Oliver Nicholson, two Government nominees, whose term of office on the board of directors had expired, were reappointed for further terms of three years. Mr. Watson, a representative of the ordinary shareholders, was reelected, and Mr. Richard W. Gibbs, the other representative of the ordinary shareholders, will offer his services again as a director when his term expires in March next.

Mr. Cecil Lubbock, who was deputygovernor of the Bank of England for a number of years, had accepted the position of chairman of the London board. The bank’s appreciation was due to Mr. A. Michie, who had relinquished the London chairmanship, and Mr. A. Jobson, who had retired from the position of a local director at Sydney. The bank’s dividend and bonus is at. the same rate as last year, the tota. distribution being £245,312 to the Government and £572,656 to ordinary shareholders. The dividends are at the rate of 10 per cent, on the A preference shares (held by the Government); 13 2-11 per cent, on the B shares (held by the Government); 6 per cent, on the C shares (held by the Government); 7$ per cent, on the JJ shares, and 14 1-3 per cent, on the ordinaries.