BANKING RETURNS.

Taranaki Daily News, 19 January 1921, Page 7

BANKING RETURNS.

BIG INCREASE IN ADVANCES. SIGNIFICANT FIGURES: When dealing with the banking returns a year ago, when the deposits showed an increase of over £10,000,000, and the advances a shrinkage of over a million, it was stated that it would be simple enough to deduce more than the figures really indicated. It was also pointed out then that Mr. Harold Beauchamp, who had returned from a visit to Britain, and Mr. M. J. Reardon, who had returned from a visit to California, both uttered warnings of the approach of financial stringency, and the banking figures of to-day prove these to have been correct forecasts. The returns for the December quarter of 1920 are strikingly dissimilar to the returns for the corresponding quarter of 1919, for while there is now an increase of over £13,000,000 in the advances, there was then a decrease as already stated. The principal items in the returns for the past quarter show the following movements:— r £ Govt, deposits decreased . 2,371,196 Free deposits increased ~.. 2,803,697 Fixed deposits increased ..... 1,083,221 Advances increased 13,851,407 Discounts increased ...... 1,160,132 Circulation increased 997,927 Coin decreased 205,322 Legal tender increased .... 265,478 The comparison is with the corresponding quarter of 1919 and we will deal with them in their order. The aggregates of the deposits for the two periods compare as under:— Dec., 1919. Dec., 1920. Deposits £ £ £ Govt. 7,491,197 5,120,001 2,371,196 dec. Free 30,136,062 32,939,759 2,803,697 inc. Fixed 15,433,913 16,517,134 1,083,221 inc. 53,061,172 54,576,894 1,515,722 inc. Although the Government deposits are substantially lower, the aggregate shows a satisfactory expansion. The increase of £2,803,697 in the free deposits was shared in by all the banks, as the table appended discloses:—

30,136,062 32,939,759 2,803,697 inc. The fixed deposits have increased from £15,433,913 to £16,517,134, and in this, increase also all the banks shared, the Bank of New Zealand securing considerably more than half the actual increase. The figures of the several banks compare as under:—

The fixed and the free deposits combined exhibit an increase of £3,886,918, but if the Government deposits are included the increase is only £1,515,722. Both classes of public deposits have expanded since the war year, as will be seen from the table following:—

In the six years the free deposits have increased by 150 per cent,, the fixed deposits by about 60 per cent., and the total deposits have been more than doubled. The advances are the most interesting item in the return, and show the abnormal increase of £13,851,407, as compared with a shrinkage of over £1,046,000 a year ago. All the banks have been called upon to provide accommodation and the pressure on the institutions must have been very severe during the past three months. The movements in the advances are disclosed in the following table:—

30,693,051 44,544,458 13,851,407 The increase is equal to 43 per cent., and it is the first time for many years that such an increase has been noted. The discounts too have expanded, the figures being £2,573,837, as against £1,413,70.5, an increase of £1,160,132, equal to nearly 80 per cent. Taking the advances and discounts for a series of years we get the following: —

Compared with a year ago there is an increase in the advances and discounts of £15,011,539, which is about equal to the excess "of imports over exports. The banks have apparently helped their customers very freely, and this year efforts must be made to repay the banks. This will involve a very strict curtailment of imports, and the banks themselves will see to that. It is well known that bank advances make bank deposits, but as already shown, the Increase in the free, and fixed deposits is only £3,886,918, or about 25 per cent of the increases shown by the advances, which seem to indicate that the bulk of the bank advances has been sent out of the Dominion. The note circulation and the com and bullion now call for attention, and taking a series of years the position is as undet:—•

The note circulation shows an increase of £997,927, and the coin and bullion a shrinkage of £205,352, which at first glance would make it appear that the note circulation is not backed by a sufficient metal reserve, since the circulation exceeds the metallic reserve by £595,246. The position, however, is not really so, because of the notes issued the banks hold £1,008,656, which figure in the returns as “legal tender notes of other banks,” and if this amount is deducted from the note circulation, it will be seen that there is ample cover in the amount of the coin and bullion.

Dec., 1919 Dec., 1920. Bank £ £ £ N.Z. '4,107,578 15,522,765 1,415,187 inc. Union 3,741,115 3,869,601 128,486 inc. N.S.W. 3,617.525 3,865,429 247,904 inc. Austral asia 3,235,003 3.567,614 332,521 inc. Nat’nal 4,822,939 5,294,215 471,276 inc. Commei cial 611,812 820,135 208,323 inc.

InDec. 19H Dec., 1920. crease. Bank £ '£ £ N. Zealand 7,772.260 8,412,330 640,070 Union 1,727,307 1,803,349 76,042 N.S.W 2,416,407 2,507,354 90,947 Australasia 11,116,050 1,117,710 1,660 National 2,268,548 2,461,746 193,198 Commercial 133,341 214,645 81,304 15,433,913 16,517,134 1,083,221

Dec. Free, deposits Fixed deposits. Total. quarter. £ £ £ 1914 13,675,479 10,727,620 24,403,099 1915 17,293,719 11,861,582 29,155,301 1916 18,031,742 13,229,076 31,260,818 1917 18,496,716 13,777,801 32,274,517 1918 20,536,868 14,466,976 35,003,844 1919 30,136,062 15,433,913 45,569,975 1920 32,939,759 16,517,134 49,456,893

InDec. 1919. Dec., 1920. crease. (Bank. £ £ £ N.Z. 14,135,350 19,931,835 5,796,265 Union 4,359,797 5,924,800 1,565,003 N.S.W. 3,614,056 5,105,576 1,491,520 Australasia 3,983,269 5,472,722 1,489,453 National 4,222,491 7,277,562 3,055,071 Commercial 377,■888 831,963 454,075

Dec. Advances. Discount Total. quarter. £ £ £ 1914 23,121,235 1,811,573 24,932,808 1915 22.589,136 1,453,703 24,042,839 1916 25,298,408 1,668.222 26,966,630 1017 29,662,981 1,337,334 31,000,315 1918 31,739,143 1,333,917 33,073,060 ,1919 30,693,051 1,413,705 32,106,756 47,118,295 1920 44,544,458 2,573,837

Coin Dec. Circulation, and bullion. quarter. £ £ 1914 .. 2,014,232 0,209,113 1915 .. 3,097,816 0,950,516 1916 4,778,267 7,688,098 1917 .. 6,464,695 9,993,391 1918 .. 6,761,705 9,434,670 1919 .. 7,254,412 7,862,415 1920 .. 8,052,339 7,657,093