Bei-lew of Reviews, 1/ 121 i:i. 



102: 



FINANCIAL AND BUSINESS QUARTER. 



CONDUCTED BY ALEX. lOBSON. ALA. 



BANK OF NEW SOUTH WALES. 



Not the least satisfactory feature in 

 the September, 1913, half-yearly report 

 of this bank, is the solid increase in 

 financial strength. This has been 

 achieved by the operation of several 

 factors. One of these was the proht- 

 earning power, which gave the bank a 

 net balance of nearh- £'252,000 for the 

 period, over ;£^37,ooo more than that ob- 

 tained from the operations in the pre- 

 vious September. This j-jroht easily 

 ])rovided for the current 10 per cent, per 

 annum dividend, even though that 

 charge, over i^ 170,000, was iJ' 14.000 

 greater than it was last March. After 

 meeting it there remained over £81,000 

 for reserve purposes. This sum with 

 about £19,000 from the profit and loss 

 balance was transferred to the reserve 

 fund, making it now £^2,350,000. 



This accretion to the reserves neces- 

 sarily enhanced the security of both 

 shareholders and customers. But the 

 benefit of the latter in improved security 

 did not end there. The total of the 

 deposits having fallen away by over 

 £600,000 on the )'ear to about 

 £34,000,000, and there being no imme- 

 diate prospect of any solid recovery the 

 directors deemed it necessary to restrict 

 their advances somewhat. This tended 

 to increase the cash and readily negoti- 

 able securities. Moreover the directors 

 thought it wise to hold liquid assets in 

 full against the balance of about 

 £"1,000,000 held to the credit of the 

 Commonwealth Bank. This further 

 augmented the liquid assets. The net 

 result of this was that the bank now has 

 over £20,300,000 in cash, and readily 

 negotiable securities, over £"2,000,000 

 more than it did a year ago. The ratio 

 borne by these assets to public liabili- 

 ties accordingly improved, and is now- 

 over 50 per cent., whereas a year ago it 

 was under 45 per cent. 



Though the deposits fell away dur- 

 ing the year, the total of the public lia- 

 bilities was little changed. The Com- 



monwealth Government withdrew its 

 balance, and caused the deposits to de- 

 cline, but then the Commonwealth Bank 

 increased its account with the bank, and 

 this virtually balanced matters. This 

 latter account is among the bills pay- 

 able, and other liabilities which rose by 

 nearly £700,000 to about £"6,170,000, 

 while the decrease in deposits was only 

 £610,000. 



The reduction in advances has already 

 been mentioned. It amounted to nearly 

 £^1,460,000, lowering the total below 

 £25,400,000. The funds so released, 

 with £^500,000 of new capital, were re- 

 sponsbible for the growth of £2,000,000 

 in the liquid assets. The chairman, in 

 his speech, said that this reduction was 

 due to the bank not lending as freely as 

 usual, and also to the desire to hold cash 

 in full against the Commonwealth 

 Bank's account. At the same time the 

 volume of ready money held would en- 

 able the bank to seize any suitable in- 

 vestments offering. 



The strength of the bank has been 

 further increased by the new capital of 

 £^500,000, obtained during the year. 

 This sum, with the additions to the re- 

 serves, has improved the margin of 

 security of the depositors. A year ago 

 there were just about £"113 of assets per 

 £^100 of liabilities, whereas there are now 

 £114 I2S., quite a satisfactory figure. 



In the market at the time of writing 

 the shares are offering at £"41, showing 

 a return of over £"4 17s. per cent. As 

 the surplus assets represent over £"33 

 1 6s., investors at this price are paying 

 about £"7 for inner reserves, and pros- 

 pects. This is a solid figure in the ag- 

 gregate, £"1,225,000, there being 175,000 

 shares (£"20 fully paid with a reserve 

 liability of £"20). The market does, 

 however, look at the investment in this 

 way, relying rather on the ability of the 

 bank to continue to earn good profits 

 and build up substantial reserves. 



