BANKING FINANCE.

Taranaki Daily News, 13 January 1922, Page 2

BANKING FINANCE.

BIG DROP IN DEPOSITS. ADVANCES SHOW FURTHER INCREASE. BANKS HELPING THEIR CUSTOMERS. DETAILS OF QUARTERLY RETURNS

The quarterly banking averages reflect the change that has taken place in the economic conditions as compared with a year ago. The latest banking returns, those for the quarter closed on December 31 last, show a continuance of the somewhat stringent financial conditions that prevailed in the three preceding quarters. The total of assets does not show very much fluctuation, as advances are keeping up at a high level, but the total o-f liabilities show’s a downward movement owing to the gradual decline in deposits. The excess of advances over deposits shows an increase of two millions in the latest quarter, but is not so heavy as in last June quarter. There is, of course, always; a heavy drain on the funds held by the banks in the last quarter of the year to finance the start of the export season, and this movement is not much heavier this year than usual. The banks, however,- have not any spare surplus of funds for lending out, and have to keep a tight rein on advances.. Our produce is not realising the high prices ruling during recent years, and consequently the recovery in the money position during the now current quarter can hardly be expected to restore the position to normal.

FIGURES FOR TWO QUARTERS. Following is a comparison of the principal items with those of the preceding quarter: — Dec., 1921. Sept.,

There is the natural shrinkage in deposits for this time of the year, but advances show a trifling drop also. Discounts show a decided decline, which is a good sign. The steady level of advances is probably due to importers quiting their heavy stocks and reducing overdrafts, while the producers are needing accommodation, and the two are balancing. These figures show the movements in the past three months only, and we will now compare the latest figures with the returns for the corresponding quarter of previous years. The movements in deposits are interesting, and compare as follow: Dec. Free. Fixed. Total, quarter. £,£,£.

There is a heavy decrease of £8,521,273 in the last year. This is due to both over-importation and the reduced prices our produce is realising. The total is, however, well ahead of two years ago. ADVANCES. The total of advances does not show much change in the year. Following are the figures for the past five years: Dec. Advances. Discounts. Total, quarter. £. £, £

For the last year there is only a light increase of £440,430. The total of a year ago had attained a very high level owing to over-importation, and the present total is still a very high one. We may look for some reduction during the current quarter, but it will take some time before the total comes back to a more normal level. As it is the relationship of deposits to advances that practicaly governs the supply of money available, a comparison of these figures is of vital interest.

Following is a comparison for the past five years:— Dec. Deposits. ' Advances. Deposits.

SHORTAGE OF MONEY. Owing mainly to the heavy reduction in deposits, the balance is changed from a surplus of deposits to a heavy excess of advances, and in the two years there is a change in the position of twenty millions. It is not a healthy sign for the balance to go too far either way. The surplus of deposits two years ago was too heavy, and meant money too plentiful, while the present excess o-f advances means a decided scarcity of funds, which are needed for many purposes. The shares of the different banks in these deposits and advances compare as as follow: — Deposits. Advances. Dank of N.Z 19,876,194 21,658,449 Union Bank 4,657,375 6,035,163 Bank of N.S. Wales .. 5,103,327 5,’224,647 Bank of Australasia 3,65-7,727 5,968,809 National Bank 6,744,870 7,906,890 Commercial Bank .... 896,126 764,768 The Commercial Bank is the only one having an excess of deposits, whereas a year ago only two banks showed an excess of advances.

NOTES AND COIN AND BULLION. The only other items of general interest are’the note circulation and Ihe metab holdings, which compare as fol-

The metal holdings show a trifling increase of £a«,860 in the year, but are lower than in the preceding years. The note circulation shows a heavy drop of £7f)3,954 in the year, but is ahead of earlier years. Some £9f1,000 of this decrease is in the holdings of the banks, j and probably lower prices of goods have some effect in reducing the circulation. Taken’ generally, these figures show 1 that the supply of funds held bv the banks is reduced- and that money is ir*

short supply generally. This is only to- be expected, following on over-im-portation and reduced pcices for our main products. During the past halfyear there has been a very fair reduction in importation, but overseas markets for our produce are not too good at present, and until these improve, the local financial conditions cannot show any decided improvement. Increased production and better prices for our produce are urgently needed to improve the financial position.

£ £ Deposits, free 24,380,432 26,773,326 Deposits, fixed 16,555,187 16,672,337 Deposits, Govt 2,379,630 3,655,996 Note circulation ... '7,458,385 7,135,614 Discounts 1,789,800 2,177,617 Advances 45,768,926 45,861,994 Coin and bullion ... 7,683,951 7,640,817 Govt, securities .... 5,273,556 5,471,716

1921 24,380,432 16,595,187 40,935,619 1920 32,939,757 16,517,135 49,456,892 1919 30,136,063 15,433,913 45,569,976 1918 20,536,868 14,466,977 35,003,845 1917 18,496,717 13,777,800 32,274,517

1921 45,708,926 1,789,800 47,558,726 1920 44,544,458 2,573,838 47,118,296 1919 30,693,051 1,413,704 32,106,755 1918 31,739,143 1,333,918 33,076,071 1917 29,662,981 1,337,334 31,100,315

quarter. £ £ £ 1921 40,935,619 47,558,726 *6.623,107 1920 49,456,892 47,118,296 2,338,596 1919 45,569,976 32,106,755 13,463,221 1918 35,003,845 33,073,061 1,930.784 1917 32,274.517 31,000,315 1,274,202 ♦Excess of advances.

Dec. Note Coin and quarter. circulation. bullion. & ’ £ 1921 7.458,385 7,683,951 1920 8,252,339 7,657,091 1919 7,254,412 7,862,416 1918 6,761,705 8,123,229 1917 6,464,664 8,046,770