74° 



Revieiv of Rerieus, 1/9HS. 



FINANCIAL AND BUSINESS QUARTER. 



CONDUCTED BY ALEX. JOBSON, A.I.A. 



AUSTRALIAN BANK OF COMMERCE LTD. 



The increase in the net profit of this 

 bank of almost ;^245o to ^^28,3 12 for 

 the past half-year is indeed encouraging 

 to the shareholders. Though the increase 

 is not such a great one, yet it is indica- 

 tive of progress, and is, moreover, what 

 shareholders are pleased to see. By 

 comparing the ratio of net profits to the 

 average assets for the years ended 30th 

 June, 191 2 and 191 3, respectivel\-, this 

 process can be even more clearly seen. 

 In thus arriving at these ratios it is neces- 

 sary that the profits should be taken 

 before interest on inscribed deposits is 

 charged. Although this interest is a first 

 charge upon the earnings, yet as the de- 

 posits are irredeemable, and thus in a 

 sense capital, they are quite distinct from 

 the public liabilities of the bank. Com- 

 puted upon this basis, then, the earn- 

 ings for the year ended June, 191 2. 

 amounted to ;£"i05,ooo — over ;^i8 8s. per 

 i,"iooo of average assets. For the June, 

 1 91 3, vear, however, the proportion was 

 better by over ^^3. reaching almost £21 

 I OS. Although it may be thai special 

 factors contributed to this increase, 

 which may not again recur, yet there is 

 ample evidence of improvement in the 

 earning power in this bank's assets. 

 * * * 



Another reason for gratification on 

 the pnrt of the shareholders is the 

 strengthening in the bank's position dur- 

 ing the year just ended. There has 

 been an increase of over ;^3 24,000 in the 

 readily negotiable assets to iJ"i, 482,000, 

 which is equivalent to about 53 per cent, 

 of the public liabilities due in the main 

 to a reduction in advances of over 

 i^3o8,ooo to about ^^3. 865,000. This 

 reduction is far from encouraging, sug- 

 gesting as it does a decline in the loan 

 business. It may be, however, that this 

 is not the real reason, but that it is due 

 more to the realisations of old inherited 

 securities and pastoral properties. Still, 

 without some official explanation, a de- 

 finite reason cannot be assigi^ed. 



There is one matter which rather con- 

 tradicts the assumption as to the decline, 

 and that is the increase in deposits of 

 more than ^^30,000 to nearly iJ'2, 530,000. 

 This increase has been accomplished, de- 

 spite an internal decline, brought about 

 by the Government deposits having been 

 withdrawn. Ihe amount thus paid out 

 is not stated, though it is evident that 

 at least ^,"80,590 was so dealt with. This 

 amount was shown separatelx' in the 



December, 191 2, accounts. 



» * « 



The steady growth in the reserve 

 fund, now ;£"25,ooo, is also a matter of 

 gratification, for although it is not very 

 large, yet it continues to increase. The 

 jjroportion of the profit appropriated — 

 ;£"io,ooo out of a net profit of ;£^28,3I2 

 earned — is quite fair. The dividend at 

 the rate of 3 per cent, per annum for 

 the half-year absorbed £17,932, and it 

 will be preferable to see the profits 

 larger and the reserve fund even more 

 solid before this rate is increased. It 

 is not for the securit)- of the depositors 

 that the reserve fund is so much needed, 

 but rather for the proprietors. The 

 jiublic liabilities, which now amount to 

 nearl\' i^2,8oo,ooo, are amply secured by 

 over ;^5,7io,ooo of assets; or, putting 

 it another way, the bank holds over 

 ;£'204 in assets for every iJ^ioo of liabili- 

 ties. It will be seen, therefore, that the 

 dejiositors are well secured. 

 « * * 



On the market at the present time 

 these shares are quoted at 12s. 3d., 

 though fully paid to ;^i. At this price 

 the yield is just about 5 per cent., which, 

 however, is low, compared with that of 

 six months ago, when the yield was 

 equivalent to ^^5 i is. per cent., the shares 

 then selling at los. 9d. At present prices 

 the shares are worth serious considera- 

 tion, especial 1)- as the bank now seems 

 to be in a sound condition, and its assets 

 should be worth far more than the value 

 of I2S. 3d. per share set upon them by 

 the market 



