7 JANUARY 1938, Page 37

BANK SHARE PROSPECTS

The decision of the National Provincial Bank to sub-divide its shares into shares of a lower denomination is a step in the right direction. A heavy-priced share may help to deter unwanted speculation, but it usually has the undesirable effect of restricting marketability. Many bank shares suffer from this disadvantage, and I hope other directorates will follow the National Provincial in their sub-division policy. Meantime, shareholders in the " Big Five " banks will be encouraged by the figures for 1937 now appearing. Nobody anticipated any general increase in bank dividends, but it is apparent that the substantial expansion in advances, which has permitted more normal asset-ratios than for some yeari, coupled with another satisfactory experience in the matter of bad debts, has enabled the banks to recover part of their pre- depression earning-power. A return to the earnings of the pre-depression years cannot be expected so long as average money rates remain so low, especially in view of the rising trend of bank expenses, and I shall be surprised if current rates of dividends are appreciably raised for a long time to come. Sound but not exciting is the epithet I would apply to bank shares as an investment in present conditions. Soundness is nowadays an attribute worth seeking out and for at its proper price. * * * *