Bcvicic of Peviews, l/ijl3. 



FINANCE AND BUSINESS. 



193 



At the time of writing the shares are in these times of dear money are not in- 

 selling at £s9, in which price there is a clined to accept much less, while the 

 little over £g for inner reserves. This prospect of sharing in the new issue 

 IS a moderate valuation, being in the does not seem to attract buyers, prob- 

 ^gg^'egate only under ^^550,000, a little ably because they fear that, like the 

 over 2 per cent, on the total assets of Bank of Australasia, this bank may 

 nearly ^^27,000,000. The yield, almost issue the new shares at a heavy 

 6 per cent., is a good one, but investors premium. 



BANK OF VICTORIA LIMITED. 



A casual glance at this bank's Decem- 

 ber, 191 2, report gives one the idea that 

 the half-year had earned a much larger 

 banking profit than did the June 

 period. Yet such an idea is quite a 

 wrong one The December half-year 

 shows a net proht of ^^^69,073, which is 

 certainly much better than the figure of 

 i^6i,686 of six months before. But then 

 the June earnings were, after deducting 

 the full year's bank net income and 

 land taxes of ^^9303, and the actual net 

 profit from banking was ^^70,989, over 

 ;^i90O above the December net earnings. 

 The point is important, for a share- 

 holder ignorant of it would naturally 

 assume that the bank's earning power 

 increased considerably in the past half- 

 year, whereas it actually declined. This 

 incicience of the taxes falling in the 

 June periods is a matter, too, that share- 

 holders should remember when noting 

 the movement of the profits from half- 

 year to half-year. 



' * * * 



The profit, nevertheless, was a good 

 one, and sufficed to pay the customary 

 half-yearly 6 per cent. p. a. dividend to 

 preference' and to ordinary shareholders, 

 absorbing ^44,340, and to permit of 

 ^^2000 being given to the Officers' Provi- 

 dent Fund. The remainder of ;£'22,773 

 with £12,26/ from the profit and loss 

 balance (thereby reduced to i; 17,843), 

 making ;6"3 5,000 in all, was applied to 

 increase the reserve fund to ^,3 10,000. 

 * » * 



The bank's lending power during the 

 full year was reduced by about 

 i:530,ooo, due to a falling-off of 

 ^^230,000 in the bills in circulation to 

 ;^4i9,ooo, a drop of £117^00 in the 

 Government deposits to ;^5o8,ooo, and 

 also a decrease of ;£■ 137,000 in the other 

 deposits, to ;^6,053,ooo. Of this drain 

 ;^273,OCO was met out of liquid assets, 



which declined to ^^"2,020,000, while 

 most of the balance was provided by a 

 reduction of ;£^205,ooo in the advances 

 to ;£^6,495,ooo. The strain would un- 

 doubtedly have been heavier on the 

 liquid assets had not the board decided 

 in the latter half of the year to lessen 

 the advances, and to build up the cash 

 reserves. Such a policy was practically 

 imperative, for the ratio of liquid assets 

 to public liabilities, 30 per cent, in De- 

 cember, 191 1, had fallen in June last to 

 the unsatisfactory proportion of 24 per 

 cent. As a result of the directors' 

 policy, however, it has been now raised 

 to 28.7 per cent., which, though still 

 much below what it ought to be, is }-et 

 a decided improvement. It is comfort- 

 ing to note, that the matter of its fur- 

 ther increase appears to have the direc- 

 tors' attention. 



* * * 



The downward movement of the de- 

 posits has strengthened the security the 

 bank offers to its depositors. In June 

 last there were ;^I24 of assets per i^ioo 

 of public liabilities, whereas now the 

 ratio is almost ^,'125 14s. — an excellent 

 proportion indeed. This is chiefly due 

 to the large amount of the paid-up capi- 

 tal ^^1,478,010 (41,676 ;^io preference 

 shares fully paid, and 212,250 ;^io 

 ordinary shares paid to £^) for the re- 

 serves, ^^'327,842, though steadily grow- 

 ing, are not yet anything considerable. 



The shareholders' interest in the sur- 

 plus assets is £]i 5s. iid. per prefer- 

 ence share and £6 5s. iid. per ordinary 

 share. The market selling quotations at 

 the time of writing are— for the former, 

 ;£"iO 5s., yielding just under 6 per cent. ; 

 and for the latter, £4. 2s., returning over 

 7|- per cent. Both classes of shares are 

 accordingly being dealt in at a discount 



