Finance-Public and Private

Banking Profits and Bank Shares

Wrrii the exception of Barclays all the banks show a moderate reduction in profits for the past year. The Midland and the Lancashire and Yorkshire, it is true, also show a small expansion, but in those cases a slight increase in the capital may have played slime 'part. :" In the -case of Barclays we know from the'.staternent niade by the ' chairman at the annual meeting that a considerable contribution to increased earnings 'Was made-15y-branches in the outer London area where much building -and, increased shopping facilities have been a feature for some time past. Following- Will be found the net profits of leading banks in 1925 and 1926, the dividends paid, the amount absorbed by the dividend and the balance re= maining over from allocations to various funds.

Barclays Bank • •

Lloyds Bank Midland Bank

• •

National Provincial Bank ..

Westminster Bank ..

Bank of Liverpool and Martins ..

District Bank • •

Lancashire and York- shire

Manchester & County Bank ..

National Bank ..

Union Bank of Man- chester Williams Deacon's Bank ..

1925 1926 1925 1926 ' 1925 1926 1925 1926 1925 • 1926 1925 1926 1925 1926 1925 1926 1925 1926 1925 1926 1925 1926 1925 1926 Net Profits.

2,289,837 2,427,162

-2,569,366 - 2,523,583- 2,522,469 2,535,730 2,161,580 2,115,654 2,205,393 2,157,232 572,316 542,731 458,993- 450,139 245,360 264,528 199,319 186,116 369,374 345,611 214,221 205,762 344.859 330,856

Dividend, Amount. %

-1,623,789 (*)

1,651,461 (') §1,901,422 161 1,973,886 MI 1,760,770 18 1,823,875 18 1,706,295 18 1,706,295 - 18 - 11,319,045 (t) 1,356,275 (t) 375,822 16 - • 375,822 16 347;600 187( 347,600 811 201,312 241,574 20** 177,456 161 177,456 161 178,500 14 182,765 14 119,062 20 120,000 20

253,906 (II)

253,906 (II) * On " A " shares, 10 per cent., and on per cent. t On £20 shares, 20 per cent. and on £1 shares, 121 per cent.

Plus a bonus of one fully-paid £1 -share for every five £20 shares held (£268,439), and in the case of fractions a cash payment of 10s. tax free, in respect of each fraction of one-fifth of a £1 share (£36,000).

I; On " A " shares, 131 per cent., and on " B " shares, 121 per cent. § In addition a bonus of one new £1 share, fully-paid (carrying a maximum dividend of 5 per cent.) for every ten existing shares held, by the capitalization of realized profits on sale of investments.

if On A " shares, 161 per cent., and on " B " Shares at the rate of 5 per cent. per annum.

** On increased paid-up capital, the dividend being 48s. per share, as compared with 40s. for 1925.

It will be observed from the foregoing that as a natural consequence of the decline in net profits there is also a small reduction in the balances available for special allocations. But it must be remembered that in nearly all cases the net profits are those which are attained after ample provision has been made for all kinds of contin: gencies including bad or doubtful debts; and in times such as these following upon a piiilonged trade depression it is likely that such provisions have been oh- a generous scale and that the profit-earning power of the banks has been somewhat greater than is shown in the figures tabulated above. The average value of money was somewhat higher in 1926 than in 1925, and if there has been an increase in Stock Exchange io' ans the higher rates on such advances should have tended' to swell profits. It is likely, too, that there have been some profitable sales of investments, to say nothing' of a generally higher yield upon Treasury Bills. Speaking broadly, therefore, I should imagine that as compared with a year ago there has been a further general strengthen- ing of inner as well as of visible reserves and that not only explains the continued firmness of bank share quotations, but is a point which has an important bearing upon the ability of the banks to aid industry in the difficult times which have still to be faced.

SHARE PRICES.

in the following table will be found the share quotations of R few days since of certain of the leading bank shares,

886,348 800,957 196,494 166,909 111,393 102,539 44,048 22,954 21,863 8,660 190,874 162,846 95,159 85,762 90,953 76,950 " B " and " C " shares, 14 Balance.

666,048 7/5,701 667,944 549,697- 761,699 711,855. 455,285

Present Price.

Barclays Bank " A " Shares 24 1 TO 74

Do. " B " Shares 1 1 14 24 1* 84 9* 111 13 Westminster Bank 20 5 20 181 • ' 1 1 121 211 PROVINCIAL BANKS.

Bank of Liverpool and Martins .. .. 20 21 16 District Bank .. .. 15 181 Lancashire and Yorkshire Bank .20 12 20 Manchester and County

511 5

Bank of Ireland 100 100 171 272 Bank of Scotland .. 150 100 16 3311 4T• Commercial Bank of Scot- land " A " .. 20 5 16 15 National Bank .. 50 10 14 201 Royal Bank of Scotland 100 100 16 330

Union Bank of SCotland 5 1 18 3 E

* After allowing for accrued dividend.

Having regard to the fact that the dividends are almost identical with those of a year ago it is interesting to note also the steadiness of prices. With scarcely an exception prices are either at the same level of last year, or slightly above it. Where small gains have occurred with a proportionate decline in the yield, the movemen can be connected in part with the firmness of all first-cla securities during the year, and in part with the recognitico of the conservative policies pursued by the banks, at the hope that better times may perhaps some day brio a slight increase in dividends. For when comparison I made with the pre-War period it will be found that n small part of banking profits have gone to swell reserves, this increasing the securities of the bank depositor while; in spite of the great rise in the cost of living, ban shareholders have had little in the way of increas dividends. = One word, perhaps, may be added with regard to t position of the provincial banks and the Scotch and Iris institutions. In the case of the former the divides are really unchanged throughout but apart, from t Bank --of LIverpool and Martins share prices are tithe maintained or are slightly above the level of last year As regards the Scotch and Irish banks the feature is t further increase in the dividend of the Royal Bank Scotland.. -So great, apparently, is the confidence that t higher dividend has been earned without any sacrifi of sound and conservative management that the price the shares has at once responded, and in spite of the high dividend the yield to the investor at the present price slightly under that of a year ago. The Royal eel brates its bi-centenary this year, and it looks as though would be to the accompaniment of the greatest pro and the greatest stability in its share quotations that has ever attained. There is also an increase to note the Bank of Ireland dividend, but in that case the inc is more apparent than real, the present distribution 17i per cent. being subject to Income Tax, whereas t previous rate of 14 per cent. was tax free. together with the approximate yield to the holders, the yield being based, of course, upon the dividends for the year

LONDON BANKS.

- S.hare.

-Nominal Paid-,

yalne. up. dend.

Approxi. mate Yield.

409,359 Bank- .. 20 4 161

Williams Deacon's Bank{ 1 121 5 1 131 . - SCOTTISH AND IRISH BANKS.

Lloyds -Bank . , .. 51 ..1 1:I Midland Bank „ 12 - 24 - .18

• ". 2} . , 21 . 18

National ProvinCial Bank 28 ' ai 18 61

101 441 12 2* 21

4

41

411 511 411 511

5

511 5 fi

51

511 6 Ti

51' 61 41* 411*