8.—16.

1936. NEW ZEALAND.

RESERVE BANK OF NEW ZEALAND. STATEMENT OF ACCOUNTS AND REPORT OF THE BOARD OF DIRECTORS FOR THE YEAR ENDED 31st MARCH, 1936.

Presented to both Houses of the General Assembly pursuant to Section 20 of the Reserve Bank of New Zealand Amendment Act, 1936.

ANNUAL REPORT.

To the Hon. tie Minister of Finance. In accordance with the provisions of section 20 of the Reserve Bank of New Zealand Amendment Act, 1936, the Board of Directors presents herewith a general report on the operations of the bank during the financial year ended the 31st March, 1936. After making such provision as the Board deemed to be proper in the circumstances for rebate on British Treasury bills not then due, depreciation in other assets, and superannuation and retiring allowances for the staff, the net profit for the year amounted to £98,012 7s. 2d. Of this sum, £70,000 was paid in advance to the Consolidated Fund in compliance with your request made under the terms of section 11 of the Finance Act, 1934, leaving a balance of £28,012 7s. 2d. outstanding at the end of the financial year. As provided by section 2 of the Reserve Bank of New Zealand Amendment Act, 1936, a dividend of 5 per cent, on the paid-up capital of the bank has been paid to the registered shareholders of the bank as on the 31st March, 1936. The remaining sum of £3,012 7s. 2d. has since been credited to the Consolidated Fund, making a total of £73,012 7s. 2d. so paid over in respect of the year. The profit was again affected very considerably by the low rate at which British Treasury bills continued to be sold in London, the average rate obtained by the bank from that source being lis. 2d. per centum per annum. Having regard, however, to the statutory provisions governing the investments and reserve of the bank, the primary need for a central bank to maintain a very liquid position, and the almost entire absence of any other more profitable yet suitable means of employing funds, the income of the bank could not but be dependent in a large measure upon the yield obtainable from British Treasury Bills. The principal changes in the balance-sheet as compared with the figures at the close of the previous year were as follows : — Liabilities. Bank-notes. An increase of £804,582 10s., which more than offset, a decrease of about £310,000 in the total amount of the trading banks' notes outstanding, thus reflecting an increase in the turnover of trade which took place during the year. Demand Liabilities. (a) State. —A decrease of £3,428,333 13s. 9d., which is accounted for partly by the sale to the Treasury of London funds to provide for the repayment on the Ist October, 1935, of £2,135,800 (sterling) of the New Zealand 5 per cent. 1935-45 sterling loan and the cost of converting the balance of £8,000,000 of that loan. (b) Banks. —An increase of £4,530,345 13s. 6d. Since the end of November the trading banks' balances have been maintained at a level exceeding by about £5,000,000 the total of their balances during the earlier part of the year. This increase was brought about by the sale by them of London funds to the Reserve Bank. The minimum balances required by statute in respect of the demand'and time liabilities as on the 30th March, 1936, amounted to £3,362,772. Assets. (а) Gold. —Two hundred thousand sovereigns were sold in London at the beginning of the year. (б) Sterling Exchange.—The sterling funds (calculated at the rate of £100 sterling equals £124 New Zealand) available for the purposes of the bank's statutory reserve, as defined by section 17 of I—B. 16,