644 



FINANCIAL AND BUSINESS QUARTER. 



CONDUCTED BY ALEX. JOBSON, A.LA. 



BANK OF NEW SOUTH WALES. 



It IS not very clear from the March, 

 191 3, report of this bank why it should 

 have been thoug-ht necessary to disclose 

 so large a profit as ^^"285,746 for the 

 half-year. The earnings have for some 

 time now been steadily rising, but the 

 movement in each half-year has for the 

 most part been a small one. But now 

 the bank suddenly admits to earning 

 over ;^70,ooo more than it did last Sep- 

 tember, itself a record period. One rea- 

 son for this no doubt is that the directors 

 desired to add i^ 10,000 to the officers' 

 provident fund, and i^i 5,600 to the 

 Buckland fund (another staff fund). 

 But these, taken with the additional 

 ;£8ooo required for the dividend of 

 ;;6''i 58,000, do not account for more than 

 ;^33,ooo of the new profit. The neces- 

 sity then for that amount of extra pro&t 

 is clear, but not so that of disclosing so 

 large a balance of new profit in order 

 that the reserve fund addition might be 

 raised by ;£'3 5,000 to ia 00,000. 



There was, of course, a reason for this, 

 and presumably a good reason, too, but 

 the chairman in his speech never hinted 

 of its nature. It is not unlikely, how- 

 ever, that the directors think the pub- 

 lished reserves should be increased more 

 rapidly to assist in maintaining a satis- 

 factory margin of assets over liabilities. 

 Up till quiet recently the deposits have 

 grown so rapidly that only by fresh 

 issues of capital and by solid additions 

 to the reserves has a reasonable margin 

 been preserved. But of late the deposits 

 have not moved up so quickly, and the 

 margin has improved. Some further im- 

 provement, however, is probably desired 

 which no doubt accounts for the un- 

 usually large reserve addition this time. 



In the ]3ast twelve months the funds 

 Oi the bank have risen by over 

 i,^ 1, 830,000 to almost ^^47, 500,000. 

 T'nese new funds were provided by the 

 bills payable and other liabilities in- 

 creasing by ;^2,ooo,ooo to nearly 

 ;£"6,900,ooo, while new capital and re- 

 serves of i^5 50,000 also contributed to 

 them. The growth in bills payable, etc., 

 was chiefly due to the Commonwealth 

 Bank, which since January last, has kept 

 its State accounts with this bank. But 

 much of what was gained thereby was 

 lost by the transfer of the Federal 

 Government deposits to the Common- 

 wealth Bank. This drain was checked 

 to some extent by incoming public de- 

 posits, and the total did not fall by 

 more than i^6oo,ooo- to ;£'34,8oo,ooo. 



^ ■Jit ^ 



The new funds mentioned above went 

 entirely into the liquid assets, which 

 benefited also by a reduction of 

 £760,000 in the advances to ;^25,38o,ooo. 

 As a result, the bank held in liquid 

 assets ;£;"2 1, 300,000, over ;^2,6oo,ooo 

 more than it did a year before and re- 

 presenting more than 51 per cent, of the 

 public liabilities. 



* * * 



At the time of writing the bank's 

 shares (;£'20 paid with a reserve liability 

 of ;£"2o) are selling- at ^^'40 is. 6d., yield- 

 ing just under 5 per cent. As the re- 

 serves of over ^^2,337,000, represent £1^ 

 ys. per share a purchaser at this price is 

 paying about £6 14s. — per share for 

 inner reserves which the investment 

 market, however, does not consider to 

 be an unduly heavy valuation. The ne.w 

 shares issued on June 30 are rather 

 cheaper, ^^39 5s. — for they will, of 

 course, only rank for a quarter's divi- 

 dend in September. 



