Firiance-PubliCr . & - Private

Bankers' Profits

IN our Banking Supplement, which will be found in an earlier part of this issue, an analysis is made of _ the main items in bankers' _balance-sheets at the end of last year, many of these items indicating the general trend of banking business during the year. From those figures it will • be seen that there has been some contraction in 'Deposits compared with a year ago, but, in' spite of that fad, Loans and _ Advances have risen and there hasalso been a 'further strengthening of the Cash positions. So far as profit-earning is concerned, it is probable that the first nine monthS of the past year were fairly satisfactory for bankers, thOugh it is equally probable that any increase in profits was due more to financial activities- in the Stock Markets and elsewhere and to the generalinereaSein bill business thin to.the mere rise The value of Money. In spite, however; of increased profits, there had been a good many misgivings with regard to the final position to be disclosed, owing to the serious losses known to have been suffered through bad debts-77not merely those arising out of the Hatry frauds, but those resulting from the many failures -on the Continent where financial 'interests here had been affected. -

DIVIDENDS MAINTAINED.

With scarcely an exception, however, when 'the Reporti Were published, it was seen that 'even after making all "allowance for bad debts and all contingencies, profits were either maintained or increased, while, with the exception of Williams Deacon's-where there was a slight reduction in the dividend and a small subtraction from the Reserve-the dividends were all maintained. The National Provincial Bank showing was particularly good, the profits being up about £80,000. In the following table particulars are.giVen of the net profits of the various banks, the amount - required for the dividerid; arid the balance carried forward :-

Dividend. • Amount % Balance.

Barclays Bank Lloyds Bank Midland Bank National Bank Net Profits. £ " I 1928 2,301,285 1,666,349 ' • 1929 2,331,579 1,666,349 1928 2,528,143 1,973,886 • " 1929 2,542,084 1,973,886

• • 11928 2,656,554 1,923,788 1929 2,665,042 1,934,348 Provincial _f 1928 2,108,664 - 1,706,295

11929 2,189,704 1,706,295 1928 2,148,408 1,356,275 Westminster Bank .. 1929 2,160,384 1;356,275 1928 455,132 347,600 District Bank • ' 1_1929 510,526 379,200 Manchester & CountyJ 1928 188,681 177,456 Bank 11929 181,225 177,456 'Martins Bank 1928 825,434 665,607 1929 836,240 665,607 1928 324,105 168,000 National Bank 1929 272,683 210,000 Union Bank of Man- f 1928 176,544 96,000 cheater 1929 176,167 96,000 Williams Deacon's_f 1928 305,340 253,906 (II) - 51,436 Bank 11929 297,901 244,141 (X) 53,760 * On " A " shares, 10 per cent., and on " B " and " C " shares, 14 per cent. t On " A " shares, 16j per cent., and on " B " shares, 5 per cent. $ On £20 shares, N per cent., and on £1 shares, 121 per cent. § Plus the £1 new fully-paid shares at price of £2 for each £20 of paid-up capital.

110n " A " shares, 131 per cent., and on " B " shares, 12/ per cent. 4,1 Includes figures of Lancashire and Yorkshire Bank.

"'On "A" shares, 181 per cent., and on "B" shares, 10 per cent. X On " A " shares, 131 per cent., on " B " shares, 121 per cent. Z On £4 shares, 20 per cent., on £1 shares, 121 per cent.

:YIELDS ON BANK SHARES.

Anxiety with regard to the extent to which banking profits, and possibly dividends, might be affected by financial losses in the year arising out of bad-debts -was reflected before - the publication of the Reports in a very general -fall in bank shares, and although following the dividend announcements there has . been a general recovery, the fact remains that, for the most part, hank shares stand at a slightly lower level than at this time last year, so that it is not difficult to get a full 5 per cent. on most ofiythe leading _ bank -shares, with .4 slightly 'higher-yield intone or two instances.

(*)

(5)

(t) 181 • 18 18 18 ($)

(18}

16/ 16/ 16 16 14 14 16 16 634,936 665,230 554,257 568,198 732,766 730,694 402,369 483,409 792,133 804,109 107,532 131,326 11,225 3,769 159,827 170,633 156,105 62,683 80,544 80,167

PAST CONSERVATIVE POLICY. - Making all allowance for the circumstances during the early part of the year which may have operated favour- ably upon bankers' profits, there is little doubt that the main explanation of the good showing at the end of the year and the maintenance of dividends must be traced to the conservative policy pursued by the banks over a long period of years. There have doubtless been many occasions when higher dividends could have been paid, but instead large allocations were made not only to published Reserves but to Contingency Funds and to inner reserves, with the result that the banks have been able to meet not only the special strain of the past year but the strain of several years by drawing upon re- sources which have in no way weakened the position as revealed in the balance-sheets. Moreover, although each year, of course, brings its crop of bad debts, it is not at all improbable that when allowance is made for the huge sums placed to Contingency Funds during recent years, each year also brings a certain amount of repayments from directions where losses have previously been provided for, A STRONG POSITION.

Bank shareholders may, perhaps, feel some regret that neither in the War years nor the post=War years have they been enabled to share fully in the great profits which accrued to many induStries during the War. Rather has it been their fate to stand by those industries during the time of adversity and to see large profits which may have been set aside to secret reserves used later for meeting bad debts arising out of prolonged industrial depression. Nevertheless, they have at least the satisfaction of knowing that, as a result of the prudent policy pursued by the various bank directorates, the stability of their holding of bank shares has improved.

ARTHUR W. KIDDY.