BANK OF NEW ZEALAND. HALF-YEARLY MEETING. NET PROFIT ABOUT £ 50,000. DIVIDEND OF SEVEN PER CENT.

Te Aroha News, Volume VII, Issue 415, 30 October 1889, Page 5

BANK OF NEW ZEALAND. HALF-YEARLY MEETING. NET PROFIT ABOUT £ 50,000. DIVIDEND OF SEVEN PER CENT.

We h ereby certify that v»r- have cxar.uncrt the a« icounts of the- Bank of Now Zealand for the half-year ended ZOth s-'ep-tcmber. 1889, and thai we ha*e count* d the cashbal ances and examined the bills am t other securiti< js held at the head ollice, and cor .lp.ircd the x-etu rng of the branches with the atdt ements in the fc iregoinpr bit htnee sheet, and hav/j lound the bam c to be coireet. (S: gned) R. McDonald Scott. J Aua »oi». The • ZJhairmax, in moving the adoption of the report, said : Wo welcome this opportun ity of communicating wish you, not only as to the affairs and progress of the Bank, ' but also regarding matters of recent occurrence,e >nee, which have no doubt occasioned you sot ac concern. I naturally Hr&t advert to the figures of the report ar.d balancesheet, which are befoie you, and which require elucidation. You w ill observe or. the ') liabilities side a considerable diminu tion in the item deposits, and other liabilities. As regards ordinary deposit s there is a decrease ot i"52,000 in the half-ye. %v. virtually all in London, which, upon a „ total of nearly eight, millions, ia trivial, j and under the circumstances, satisfactory !. In the deposits of the three Colonia ',1 Governments, with tvhich we have busines ,is relations, there is an aggregate decreat ;e of £550,000, a casual fluctuation. The ba lance of decrease under this general head i s in other liabilities of a miscellane ous nature and of no significance. On the ■ other or assets side of the balance sheet t (here U necessarily a corresponding decrea.' ie, but not in the ordinary advance bunine. ( is of the Bank, which, as indicated under jthe head of bills discounted and other i lebfcs due to the bank, shows an increase ;of £360,000. The decrease in the total i isfcots is partly in coin and cash balanc 3s, which amount to £2,056,000, or a decrea se of £230,000, and in bills receivabl e and securities in London, which are les t s by £1,900,000, largely due to the absenc ( ! 6 of wool bills and less active general exchan jige businees in the September halfyear ; partly to a reduced hoi ling of securities in London necessitated by the reduction of half a million in Governmentdeposits to whi« sih I have already alluded ; and, in a minor • degree, to the winding up of certain weak a < counts. I may summarise the position b; 'f saying that, as regards ordinary deposit 8, there is no material alteration, while oi rdinary advances show a considerable increas j. The decrease is in bills payable i f Government deposits, and other liabiliti bs, on the one side, balanced on th« i other by some decrease in cash b. ilances, and a considerable decrease i n bills receivable and securities in London. , I may finally observe in this connection that the half million increase in ordinary j advances is in a specially liquid form ai td can again be turned into cash without inconvenience, and on the shortest notice, should occasion arise. We could have wi shed that the important item profit and loss had been larger. That it is not so is due ti > a variety of circumstances of more or- less exceptional character. I have already reminded you that the September half'yea r is always the less active and profitable. ' rheehargesaccounbhapbcenswollen by some special itexu^ such as a vote to the late Sh. | upholders' Cojnfnittee, and some other q-s peptional expenses. Then, though the earn .ing advances have increased, this onl\ \r took e fleet in a .part oi the halfyear. / -Lnd, finally, owing ,to ap adverse legal dt cifeion we suffered a considerable loss upo n a dependency existing prjor to

October, 1888, but which we feel bound to provide for out of current profit?, because it was not an account from which loss was at that time anticipated. Another loss, belonging to what I may call the anterior period, has become inevitable. In this case, also, loss was not anticipated, the firm's balance sheets showing a large margin of capital ; but the figures being unsatisfactory, the Board pressed for their rectification, and discovered tlvit the grossest misrepresentations had been made. The amount of loss by this account cannot yet be detormiiiod ; it is not, therefore, dealt with in the balancesheet, but there is ample provision in the amount carried forward for any deficiency that can arise from it. In this connection it may be well to remark that during the twelve months in which the now Board have been in office, the looses arising out of ordinary cunetit business have been quite trivial, nor can we soe reasonable giound for anticipating material loss by any other accounts now on the Bank's books which were not embraced in the scope of the Commibtee's report as likely to entail lo«s. The nee profits amount to €40,950, inclusive of revenues arising from certain globo assets. But for the exceptional circumstr.ncis which I have partially explained, 1 may tay that the amount would have been quito £15,000 more. With the sum brought forward, this gives a total of £96,347, out of which we recommend a dividend at the rate of 7 per cent, per annum. We do not pretend tint there is anything brilliant in this outcome of the half-year's operation.*, but in view of not a few difficulties wo have had to contend with, / nd of the clearing up \re have been effecting, we think it ought not to bo regarded as un-ntnlactory. ftor bhould it be overlooked that, you receive your dividend free of property tax, which the Bank pays. And 1 would here remark, in passing, that in the lasc seven years the Bank has paid to the Government in direct taxation no less a sum than £112,000, equal to nearly £150,000 if we were to reckon the interest the money would hare earnod had it beon left in our possession. At the half yearly meeting in April last, reference was made to tho opening of tho share register, and the Board has resolved, after considering tbe question, that the sliaru remitter henceforwaid shall bo open to inspection by propiictors free of charge, 1 and by the public on payment ot one shilling for f.ioh inspection. Yourdiiectors were advised that it was competent tor them to throw opiti the register in thL-* manner without lefeienro to «hareholdeiv, and lesolvud to do so accordingly, but they deemed it well not to gi\e e fleet to tlieh resolution until it had been made known to you, so that an expression of your opinion might be taken. If no ad\erse motion be passed at this meeting, the registei ■\vi'l be open to inspection, in the manner and on the terms indicated, from this day forward. In accordance with the resolution passed at the meeting of share holdersonllth October last, the directors obtained l.'om Parliament tbe statutory con- | lirmation of the special resolutions passed a,t the meeting on 11th October. 1 no« come to somo more;,e ..eral mutters having an important bearing on i.be iuture of the Bank, and to which I lnvii/i yoiv patient a .tendon. In November last, fc.c health of our late •ieneial manager, Mr Murray, bioke down under the severe and long - continued mental strain to which he had been subjected, and he placed his resignation in our hands. \\ c deferred acceptance of this, anil asked Mr Murray to take leave of absence instead, in the hope that rest would enable him to lesumc duty, and that we might not be nnnlly deprived of his \ allied sei vices. Short l•' theieutter ceitain complications arote, and we asked JSir Mm ray to undertake a mission to London to consult with the directors there, chiefly with u \iew to ascertain how fai 1 it might be of advantage to the Bank were the directoiate and principal office Seated in London, and, as it was thought it might become expedient to change the location, a clause was added to the Bill submitted to Parliament conferring upon shareholders the necessary powers, should they considersuch a ckangeadvisable. The nature of Mr Murray"* minion, and other circum&tances, pi even ted Ins obtaining the needful rest ; but lie signified that while he could not again undertake- the onerous duties of general mupngcr, he was prepared, if we wished it, to otter himself tor election as a director. This obviated a difficulty which we did not otheiwise well see' our way through, and we no longer appiehended any occasion to propose to shareholders to remove the head office from the colony — a proposal which we a=cei tamed was viewed with distaxour in many quarters; but, almost immediately upon arriving at this conclusion, we were obliged to accept the resignation of the late Piesident, Mr Buckley. We hud not been altogether unprepared for Mr Buckley's resignation, but its occunence at that particular juncture, and more especially circumstances attendant upon it, which are partly known to many of you, placed us in a serious difficulty. We do not enter upon auy statement of these circum B tances because, in our capucity of diiectors, we deem it incumbent on us, in your interests, to avoid injurious dif-cussion. We propose, instead, to meet the difficulty by retiring from the position of diiectors as soon as the needful arrangements have been made to relieve us, and by recommending to shareholders that the location of the directorate and principal office of the Bank be removed to London. I hope 1 need hardly say that we should not allow ourselves to be forced to this conclusion by uhe mere opinions or views of any individual or individuals. We have arrived at it alter the mo»t careful consideration of | the whole position, and of the best i interests oi shareholders at large. One of. the points which has had much weight in our decision is the progress of the realisation of what we have called the •• globe asscto "—i.e.. those landed propel ties and weak or irregular accounts which the Shareholders' Committee .-ecommended should be placed to a separate account for gradual liquidation. Ithas, we believe, been suggested in some quarters that we were likely to be wanting in candour to you in dealing with this subject; why we should be so, it is difficult to understand, as we are in no way responsible for the existence of these irregular assets, but only foe their administration and realisation to the test advantage. It was, we believe, contemplated by the Shareholders' Committee that some of these assets might turn out better, and obhers worse, than the estimates and valuations made of them, for which leasoii power was taken to treat them separately, bo that fluctuations from time totimo,in the result of realisations, migh tno dislocate current profits, to the prejudice of the Bank. The assets first to be dealt with were naturally certain large and weak commercial accounts which showed a tendency fco drift, and which ifc was determined to wind up peremptorily, even at the sacrifice inevitably arising from sales of stock-in-trade, and realisation of book debts at a specially unfavourable juncture. This has been a' most completely accomplished. A larpe amount of bad business bas beon clean d from our books, and the result is a considerable deficiency in tlm part of the liquidation. But we have felt l -SUu;eelves under no such pressure to realise

the landed properties of various kinds which constitute the bulk of these ylobo assets, and from which much more satisfactory results may reasonably be anticipated. The returns from one pet of properties alone have risen from £18,000 to £30,000 per annum. The best ot our properties remain to be lealised upon a market obviously improving, and we have assets, from their nature not at present productive, which, when realised and the money employed in our business, will add largely to our profit?. When I mention such circumstance* you will understand that it is not any concern as to the ultimate outcome of the realibation of this globo account, nor any want of confidence in the future of the Bank, that constrains us to the conclusion that, looking comprehensively at the situation, a London Board can more effectively and speedily rehabilitate the Bank than any Board in Auckland can. It must be obvious to every jndi-iousshareholder, holding sharesenough to give him a genuine interest in the wolfare ot the Bank, that a public meeting is not tiie place to discuss figures and details of the Bank's business, nor to answer merely curious questions. Yourj directors, cannot conduct your business, satisfactory unless they possess your entire confidence, and from that point of view we feel that Auckland, as the place for tho Head Olh'ce of the Bank, was discredited by the Committeo's report, and that our position has been weakenod, and our power to serve you impaired, by circumstances to which I have already alluded. For these reasons, and not, I repeat, fiom any want ot confidence in the future of the Bunk, or in our own capacity to manage its affairs, we think it duo to you that we should recommend sharoholdeis to authorise transfer of the control of the Bank to a Board in London ag'iinst whom no damaging insinuations of want of capacity, wnnt of honesty, or want of proper candour can be maintained, and who are more advantageously situated for securing the confidence of the Bank's constitueuts in Great Britain than a Colonial Board can be. It te our intention during the current half-year to submit this question to the consideration and decision of shnieholders, and to take such other measures as will facilitate the step, should the shareholders decide upon taking it.

LIABILTTIK?.

Assirrs.

PttOFiT AND LObS AOLOUXT.