Bankers' Profit-earning Power

A CAREFUL examination of Bankers' Profits over the past decade clearly reveals two main facts. The first is that there has been some recovery in profit-earning power during the past year. The other, however, is that comparison with ten years ago shows that the earning pOwer of all the banks has been adversely 'affected by the prolonged trade depression. In fact the figures refute the suggestion which is sometimes made to the effect that whether trade iii the country is good or bad Bankers' Profits are very little affected. The reverse is true as may be gathered from the following record of the Net Profits of the six leading banks, com- parison being made between last 'Year and the previous year and with ten years ago.

. BARCLAYS BANS..

Net Profit.

2,289,837 1,604,679 1,708,174

LLOYDS

Not Profit.

, £ 2,569,366 . 1,438,822 1,651,506 MARTINS

Net Profit. £' ' 572,316 654,940 672,257

MIDLAND

Net Profit.

• £ 2,522,469 2,266,846 2,292,217 Dividend.

1,623,789 (14%) 1,562,202 (14%) 1,614,275 (14%)

BANK.

Dividend.

t1.901,422 (16f%) 1,347,464 (12%) 1,392,380 (12%) BANK.

Dividend.

£ 375,822 (16%) 582,406 (14%) 582,406 (14%)

BANK.

Dividend.

£ 1,760,770 (18%) 1,709,760 (16%) 1,766,752 (16%)

NATIONAL PROVINCIAL BANK.

Net Profit. Dividend.

• 2,161,580 1,706,295 (18%) • 1,603,424 1,421,912 (15%) . 1,643,760 1,421,912 (15%)

WESTMINSTER BANK.

Net Profit. Dividend. Balance.

£ £ £ 2,205,393 *1,319,045 (20%) 886,348 1,464,955 1,165,444 (18%) 299,511 1,524,880 1,204,291 (18%) 320,589 * In addition, a bonus of one fully paid £1 share for every five £20 shares held.

t Plus bonus of one £1 share for every 10 "A" shares held.

With the exception of Martins Bank where there has been some material increase in the capital during recent years, each one of the six banks shows a material decline *profits last year when compared with 1925, and

1925 1933 1934 1925 1933 1934 1925 1933 1934 1925 1933 1934 1925 1933 1934 1925 1933 1934

• • • - • • • •

Balance.

666,048 42,477 93,899 Balance.

667,944 91,358 259,126 Balance.

£ 196,494 72,534 89,851 Balance £ 761,699 557,086 525,465 Balance.

z

455,285 181,512 221,848

•

in every case but one the dividend is lower than ten years ago. On the other hand it is quite true that after the reduction in dividends a. few years ago steadiness has been shown during the last two years, and in several instances where published reserves had been drawn upon those sums_ have now been replaced. Moreover; so far as the past year is concerned it will be seen that in every case there is an increase to note in the profits. In most instances the advance is moderate, but Lloyds profits increased by over £200,000. - At the recent half-yearly meetings, however, the Bank Chairmen made no secret- of the fact that the somewhat larger profits had been due to special rather than ordinary circumstances, and there is little doubt that in several instances profits were supplemented by the realization of gilt-edged securities at a high level. It is also probable that during the past year the banks had fewer bad debts than usual, and therefore were not called upon to place any very large sums to Contingencies AccOuntS. It may fairly be hoped, however, that banking profits will now be well sustained with perhaps a slight upward tendency, for quite apart from the desirability of main- taining the reputation of the banks for steadiness in the dividends, not only is the return to the holder of Banking Shares a very modest one at the present level of prices, but it has to be remembered that over a period of years so large a portion of profits has gone to the strengthening of reserves in the interests of the depositors and banking stability generally that shareholders have a very strong claim to the maintenance of dividends on their present