Banking in Scotland
Scorrisn Bankers have, I think, every reason to be well satisfied with the past year's results of banking North of the Tweed. In considering these results as a whole, it must not be forgotten that by reason of the extension of their activities " over the Border " in recent years there is a tendency for the figures of the Scottish Banks to become more affected by the influences operating upon English banking and upon English trade than when the division between the spheres of Scottish and English banking was somewhat more sharply defined. It would, however, I think, be true to say that there are certain traditions and methods of Scottish banking which have been preserved and which still have their effect upon the general trend of the figures in the balance-sheets. Time was, and not so long ago, when, in my judgement, the Scottish Banks were disposed to employ too great a proportion of their resources in long-dated gilt-edged securities; somewhat to the disadvantage of liquidity as expressed in the holdings of bills and the making of short-term loans. In recent years, however, there has been a considerable change in this respect, though the change has been a well ordered one, and there are few, if any, Scottish balance-sheets which still fail to show as ery fine holding of Government securities either in Treasury bills or longer-dated securities.
RECENT DECI:INF. IN DEPOSITS.
- Some idea of the remarkable expansion, however, which has taken place in banking activities over a period of :Years in Scotland is well brought: out in the special Banking Supplement of the Statist, issued last week, in which there is a very excellent analysis of the aggregate growth in liabilities and assets of. the banks North of the Tweed. During the past twelve years, for example, it is shown that the paid-up capital and Reserte Funds have increased from about £17,000,000 to /30,000,000. and the profit balance from tinder £1,400,000 to 21,817,000. As regards such matters, however, as Deposits, Accep- tances and Bills Discounted, the Scottish Banks have been affected recently by most of the influences which have occasioned a shrinkage in banking activities throughout the United Kingdom. High water-mark in the matter of banking Deposits in Scotland was touched about 1921, when Deposit and Current Accounts reached nearly £300,000,000, the figure having now. come down to under £230,000,000, while during the same period Bills Discounted have dropped heavily. On the other hand, and although during the past year there was a general decline under the head of Advances, the present total is not so very far from the highest recorded during the past twelve years, and this is partly due to the policy which has substituted,' to some extent, Advances for holdings of lung-dated investments. That there should have been some decrease last year in the aggregate profit balance of the Scottish Banks is not surprising having regard to the fact that in the previous year the advance was a particularly sharp one, due, to some extent, to the fact that the figures included for the first time, in the case of the Royal. Bank-of 'Scotland, the dividends received from the profits of an English institution,
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financeL-Vublic and Erivate
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namely, Williams Deacon's Bank, which had become affiliated with the " Royal."
PAST YEAR'S RESULTS.
- As regards the individual results for the past year, a feature has been the steady maintenance of dividends by most of the banks. The British Linen Bank maid- rained the dividend of 16 per cent. which it has paid for so many years past, with an increase in the carry forward, but with somewhat smaller allocations to special funds. The Commercial Bank of Scotland showed scarcely any change in its holdings of Deposits or in the profit balance, while an addition was made to the inner reserves. The National Bank of Scotland, which is affiliated with Lloyds, showed some decline in profits, but there was no reduction in the dividend, which remained at 16 per cent. In the case of the Royal Bank of Scotland, which is now the largest of the Scottish institutions, the net profit for 1931 showed a further substantial increase due, in part, of course, to the fact that the accounts covered a year's holding of the shares of Williams Deacon's Bank, but it speaks well for the conservative policy pursued in past years by the Directors that the advance in the dividend which occurred in 1928 to 17 per cent. has been steadily maintaineVsince. One of the latest Banks to declare its profits was the Union Bank, and the report showed that notwithstanding the difficult conditions of the year the decline in profits was comparatively trifling, the results, moreover, being reached after providing for rebate of interest and making appropriations towards had and doubtful debts. As in the case of the other -Scottish Banks, the dividend (18 per cent.) was maintained. Equally, however, with other Scottish Banks there was some contraction in the Deposits. In the ease of the Clydesdale and the North "ofScotland Banks,.which are affiliated with the Midland, the decline iv the Deposits was possibly more closely associated, than in the case of the other Scottish Banks, with foreign -Withdrawals - from this country, the De Posits of the Midland Bank—which is always reckoned to be a large holder. of foreign moneys—having been affected by the foreign withdrawals of last year. The Bank of Scotland also showed a shrinkage of about £2,000,000 in Deposits, and a decline in net profit after, making provision for bad and doubtful debts from the inner reserves.
When all allowance, however, has been made for the difficulties which bankers North and South of the Tweed have been faced during that most difficult year, 1931, Scottish banking can certainly be said to continue to give a good account of itself, while without any exception whatever a satisfactory feature is the continued strength and liquidity of the balance-sheets.
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