’BANK OF NEW ZEALAND

Wairarapa Times-Age, 16 June 1939, Page 3

’BANK OF NEW ZEALAND

THE ANNUAL MEETING MR A. T. DONNELLY’S ADDRESS. FEATURES OF THE YEAR'S OPERATIONS. (Special to "Times-Age.”) WELLINGTON, .This Day. Presiding at the annual meeting of proprietors of the Bank of New Zealand today, the chairman of directors (Mr A. T. Donnelly) made, inter alia, the following observations:— Long term mortgage debenture stock £607 050. —Of this stock, £107,050, issued 'in New Zealand, will fall due on August 1 next and will be repaid. The balance of £500,000 was issued in London and is repayable on November 15, 1940 Deposits, £33,328,478. are less by £1 403.054 than the figures of a yeai a«o. Though free deposits are somewhat higher, the fixed deposits show a further decrease. Bills payable and other liabilities are more by £665,970. Coin, Reserve Bank notes, and deposits with bankers stand at £7,677,918, being an increase of £1,574,339 compared with last year. Money at call and short notice, Government securities and other securities in London, £4.391,263, are less by £1,163,255 than last year. It has been necessary to make further sales of Biitish Government securities during the year to replenish our cash funds. New Zealand Government securities, £5,540,847, show an increase of £150,500. Australian Government securities, £488,075, represent a reduction of £1 751 559, compared with the figures of ’a year ago. The heavy drain on overseas funds during the year necessitated further sales of Commonwealth stock. . . Advances and bills discounted, £27,202,739, are higher by £785,417. This increase indicates that. the demand for bank accommodation continues. We have considered it prudent to conserve our resources to meet the legitimate demands of our farming and trading customers, and have adopted a somewhat restrictive policy in regard to applications for advances for other purposes. MANAGEMENT & STAFF. “In September last Mr F. W. Dawson intimated to the board his desire to retire from his position at the end of April. Mr Dawson, who took the general managers' chair in January, 1934, had discharged the onerous duties of his office with distinction and to the complete satisfaction of the board, and it was with regret that his request to be allowed to retire was acceded to. The board has placed on record its appreciation of Mr Dawson s valued services to the Bank. “Mr H. R. H. Chalmers, formerly assistant general manager, has been appointed by the board to succeed Mr Dawson, and I am sure he will prove a worthy successor to his predecessors in office. “Mr P. L. Porter, formerly manager at Christchurch, has been appointed assistant general manager. “I should like to express our appreciation of the loyal and efficient services of our staff in New Zealand, London. Australia, Fiji, ap'd Samoa. “It was again decided to pay a 71 per cent staff bonus this year. DEPOSITS & ADVANCES. In commenting on the movement of deposits and advances of the trading banks during the five years 1935-39, Mr Donnelly said:— “In these five years, deposits have increase by £5.1 millions, advances by £9.6 millions, and the ratio of advances to deposits by 8.7 per cent. In the case of deposits, the steady annual increase stopped in 1938. In that year increases continued until April; but between May and November the fall amounted to £5.3 millions, while from December, 1938 to March, 1939, practically the whole of these deposits was restored.

“These rapid movements in aggregate deposits in the past year are rather unusual and demand consideration. They are necessarily linked up with the Dominion’s overseas funds and with her overseas balance of trade. These matters will be discussed later, but it can be reasonably assumed that the temporary decline in deposits was associated with a free market for merchandise imports and a free market for capital export, while the restoration was associated with import and exchange control introduced on December 5, 1938. Adequate policies of import and exchange control have a definite effect on trading bank deposits, to the extent that they retain more money in New Zealand and limit overseas expenditure and investment. This, in turn, has a bearing on the possibilities of additional advances for purposes other than importation, although in this respect the position of New Zealand’s overseas funds is at present more important.”

Dealing with the operations of the Bank of New Zealand, Mr Donnelly said: —“It will be seen that our deposits have varied little in the past five years, while our advances have increased by £5 millions, and our ratio of advances to deposits has risen by 17.0 per cent. Although our anual figures of deposits show only slight variations, we experienced the same quick decline during May to November, 1938 and the subsequent recovery in the succeeding four months.” Having touched in some detail on the trade position and the imposition of import control. Mr Donnelly said:— “Unfortunately the London funds position was such that the Government had no alternative but to limit imports in an endeavour to conserve and build up the country’s London resources. It was regrettable that this necessity should have led to restrictions which have had, and will have, a very serious effect on the business of the country and on many of those engaged in the import trade for their living, but it is not generally appreciated that the country has been importing too heavily and that traders have had three years of unusual prosperity. “The Government in applying its restrictions has obviously aimed at the encouragement of local industry, and imported goods competing with local manufactures have been severely restricted. Luxury goods have naturally been cut, but the exigencies of the position have made it necessary to reduce largely many classes of goods in common use. It is reasonable to assume that restrictions on these classes of goods will bo modified as soon as the London funds position warrants.” THE INTEREST LOAN. “On May 15 an internal loan of £4 500,000 for public works and genera! development purposes, including

capital expenses on defence works, was issued at 4 per cent. Subscribers had the option of taking up stock mat - uring 1948 at 99 or stock maturing 1954-58 at 96, the former being available for payment of death duties at par if in the beneficial ownership of a holder for a period of at least six months before death. The return, with redemption, was £4 2s 7d for the 1948 stock, and £4 7s 5d on the longer-dat-ed stock, assuming redemption in 1954. The loan was well received and was over-subscribed.” RELATIONS WITH GOVERNMENT. Observing that the Government was a shareholder in the bank and had the right to appoint a majority of directors on the board, Mr Donnelly said that there had been occasional discussions between the executive officers and directors of the bank and the Minister of Finance during the term of the present Government. “Any discussions,” the chairman went on to state, "have always been in general terms and there has not, nor could there ever be, any discussion or disclosure of the business of any customer of the bank unless express prior authority had been givento the bank by the customer. The secrecy and the sacredness of the relation between banker and customer is protected by the tradition of centuries and the law of the land. In all respects the present Government has kept the high standard of propriety which has always marked the relationship between the Bank and the Government of the day since 1894, and the business of the bank is now conducted as it always has been in the past. Ils capital, and your capital as shareholders, and the moneys of depositors are as safe as they have ever been in the history of the bank. DIVIDEND. “An interim dividend of 5 per cent on ordinary shares was paid in December last. A further 5 per cent is now being paid, making 10 per cent for the year. “The dividend on all classes of shares will be payable in Wellington tomorrow and at branches on receipt of advice.”