Bank Commissioner Garcia’s yearly report

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Part of The American Chamber of Commerce Journal

Title: Bank Commissioner Garcia’s yearly report
Language: English
Source: The American Chamber of Commerce Journal Volume XIII (Issue No.9) September 1933
Year: 1933
Rights
Fulltext: September, 1933 THE AMERICAN CHAMBER OF COMMERCE JOURNAL 11 To eliminate dust and heat, the road is working around to air-conditioned coaches, which have won back to the railroads much traffic in the United States. That fast passenger trains pay is indicated by experience with the La Union Express, 6 hours lacking 3 minutes between Manila and San Fernando; this train earned 1*1,392.19 more last year than in 1931, and made it necessary to run fewer express trains to Damortis, which were only run during the Baguio season, March, April and May. Rails on the Manila-north line are only 60-pound metal, but they will suffice, it is contended, with stone bal lasted roadway, to support trains running to Damortis in 3 hours; and the essential stone ballast, supplanting gravel and sand, is being adopted. Over lines of 60-pound rails, Japan manages very fast strains; and in England, over stone ballast, arc run some of the world’s fastest trains. From a 4-hour schedule to Baguio, 3 hours by train to Damortis, the railroad may expect much third-class patronage now given truck lines and very material first-class traffic besides. Little patronage can be diverted from the airplane line to Baguio, the trip in an houi, but patronage will surely come from folk who now motor between Baguio and Manila in their own cars because the train trip is several hours longer. Manager Paez recommends completion of the Bicol ex tension, in which there is still a gap of 40 kilometers between New Aloneros and Port Ragay that involves a boat portage of 2 hours 25 minutes and makes the time 20 hours between Manila and Legaspi. Seventy-one kilometers of the extension were built last year, chiefly under the administration of Harry V. Campbell, railway construction engineer and at the re markably low cost of P60,000 a kilometer, “including cost of land, grading, track, sidings, station buildings, bridges, water supply systems, the whole road complete and in operation.” The estimate had been P 100,000 a kilometer. The people have 1*4,200,000 invested in this unfinished improvement, for which that much additional stock of the railroad was bought by the government. Work has now been suspended, as the work on the spur from Tarlak to San Jos6, a fine pros pect for rice haulage, has been suspended at Munoz, for want of funds. There can be no remarkable returns from the Bikol invest ment until markets for hemp and copra improve, for the farmers and merchants in that region are too poor to pay their taxes: while they still dry copra and have it to ship, hemp fields are widely abandoned. But the railroad taps much fertile country open to settlers and it believes settlers will go there and found communities and raise crops that will give it trade. The fact can’t be evaded, however, that with independence and a curtailed American market better average business conditions will be far in the future, should they ever be reached at all. It is this dilemma of the railroad the people should understand. They own the road, the road’s debt is theirs. Bank Commissioner Garcia’s Yearly Report Consolidated Statement of Resources and Liabilities of All Banks and Trust Companies in the Philippine Islands at the Close of Each Fiscal Year Indicated. ItESOUIiCKS 1932 1931 1930 ‘ 1929 1928 Pesos Pesos Pesos Pesos Pesos Loans and discounts................ 73,227,262 66,793,634 7(>,848,062 80,391,413 109,308,937 Overdrafts.................................. 61,972,547 66,561,202 67,915,296 65,912,938 60,200,523 Stocks, securities, etc............... 36,899,718 32,266,179 22,913,308 11,524,591 12,247,640 Banking house, furniture and fixtures.................................... 4,443,264 2,574,385 2,423,011 2,352,453 2,387,478 Other real estate and chattels owned...................................... 4,740,199 3,990,011 3,639,670 3,629,034 3,054,534 Due from head office, branches, agents and correspondents. . 23,743,597 16,299,810 38,478,877 47,146,267 34,536,818 Due from other banks............. 7,496,501 4,903,592 3,059,635 5,398,558 8,198,375 Bills of exchange....................... 5,090,059 8,616,973 20,883,441 26,219,055 18,347,694 Cash on hand........................... 16,261,503 19,568,927 17,487,351 18,972,575 15,224,113 Checks and other cash items.. 597,170 420,807 877,146 1,665,435 1,413,382 Profit and loss accounts.......... 15,457 33,949 34,162 1,978,537 1,003,316 Other resources......................... o 10,645,628 «13,544,273 7,660,654 7,447,418 6,469,278 Total resources.................. 245,132,905 235,573,742 262,220,613 272,638,277 272,392,088 °Includes Customers’ Liability Under Trust Receipts. LIABILITIES Capital........................................ 24,463,300 Surplus........................................ 8,879,411 Reserves..................................... 8,199,062 Undivided profits...................... 959,035 Bank notes in circulation........ 16,319,283 Due to head office, branches, agents and correspondents. . 21,934,510 Due to other banks................. 3,786,061 Dividends unpaid...................... 448 Demand deposits....................... 47,016,850 Time deposits............................ 55,874,079 Savings deposits........................ 43,548,841 Bills payable: Domestic............................. 385,447 Foreign............................... 152,056 Cashier’s checks........................ 50,842 Certified checks......................... 363,666 Suspense accounts..................... 2,027,126 Other liabilities......................... 11,172,888 Total liabilities.................. 245,132,905 235,573,742 262,220,613 272,638,277 272,392,088 24,463,300 26,484,550 25,484,550 25,478,150 7,858,208 7,811,899 8,340,220 6,237,145 7,575,189 6,142,132 2,107,152 1,580,332 9,866,983 8,672,485 15,469,176 17,049,453 18,989,754 24,017,003 25,416,639 41,619,314 49,945.794 27,386,495 3,132,491 3,847,798 3,921,986 5,417,919 465 338,343 337,744 50,954,239 60,868,276 60,492,789 69,078,633 42,657,128 35,815,001 30,723,692 33,035,045 43,135,103 47,874,363 54,986,822 62,554,310 34,270 28,358 20,341 7,008 184,059 606,298 459,941 392,994 667,311 613,357 638,491 119,893 180,249 376,231 616,673 572,233 1,279,663 694,415 77,682 1,119,236 9,694,069 10,713,823 8,499,247 8,060,808 The general business of banks and trust com panies during the year under review showed a marked improvement over that of 1931. The increase in their total resources by 1*9,559,163, in spite of the world-wide economic disturbance, is an indication of an attitude of continued confidence in these institutions by the people of this country. While in many parts of the world the year 1932 was one of serious derangement of credit giving rise to a series of reported bank failures, in this country, on the other hand, activities in banking and credit were quite normal, with the exception of the transactions in foreign exchange which, in a minor degree, dropped from their 1931 level. It is evident, therefore, that the tidal wave of fear and uncertainty which has been sweeping the world over, tearing down old established banking institutions and leaving financial bank ruptcy and economic misery in its wake among nations and peoples alike, did comparatively little damage in this country. The statement presented above shows that while overdrafts decreased by 1’4,588,655, loans and discounts increased by 1*6,433,628 or a net gain in these two items of Pl,844,973. Cash on hand was P3,307,424 less than reported in 1931. This decrease, however, was more than offset by an increase in security investment of P4,633,539 indicating a certain trend in policy to put the available funds of the banks into pro ductive use. Likewise, deposits during the year registered a net gain of 1*9,693,300 over those of 1931. In this connection, it will be noted that while demand deposits decreased by P3,937,389 at the same time there was registered an increase in the time deposits by 1’13,216,951, with savings accounts remaining at almost the same level as that of 1931. The unprecedented rise in time deposits during the year is a sure indication that on ac count of the dull business conditions people preferred to put their money on deposits which would assure them of a steady return while waiting for better business opportunities. It is not to be expected, however, that the character of this account can be anything but temporary and at the first manifestation of the advent of better times a big portion of this fund would undoubtedly be put to more productive uses. Surplus for the year made a gain of 1’1,021,203 over that of the previous year while undivided profits dropped by 1’1,148,117 during the same period. The decrease in the latter item was a result of the cleaning up of the portfolios of some of the banks of bad and undesirable papers so that they may be able to face the new 12 THE AMERICAN CHAMBER OF COMMERCE JOURNAL September, 1933 year with clean slates. DIVIDENDS Continuing the policy which the local banks adopted a year ago regarding the inadvisability of declaring dividends in the midst of the depres sed business condition the domestic banks, with Exchange bought Month the exception of one, decided once more not to declare dividends for the year 1932. EXCHANGE TRANSACTIONS The following table shows the extent of ex changes bought and sold during the year ar ranged by months: and sold in 1932 Bought by banks Total exchange Spot Future bought Arellano’s Water Ccrtors January............................................................................... February............................................................................. March.................................................................................. April..................................................................................... May..................................................................................... June..................................................................................... July..................................................................................... August................................................................................. September........................................................................... October............................................................................... November........................................................................... December............................................................................ P 12,543,906 10,744,913 10,105,735 15,726,553 7,833,889 8,354,600 9,200,078 7,424,803 11,189,313 11,701,623 8,577,303 9,802,540 P 7,179,484 9,446,228 3,768,705 8,959,372 7,887,590 8,721,862 9,393,045 6,538,586 8,937,268 17,590,621 7,541,014 14,062,368 P 19,723,390 20,191,141 13,874,440 24,685,925 15,721,479 17,076,462 18,593,123 13,963,389 20,126,581 29,292,244 16,118,317 23,864,908 Total............................................................................ P123,205,256 Pl 10,026,143 P233,231,399 Manuel Arellano recently returned to Manila from Europe and is supplementing his photo graphic work, some of the very best in the city, with studies in water colors that are a distinct addition to contemporary art. The pieces he exhibited to the Journal editor were bits of the old walls of Manila, unexceptionable in choice and skillfully done. This artist can be wished nothing but success His wife, Tinay Arellano, dramatic soprano, is enjoying popularity in Ker opera appearances in Europe; but while her art is better known in Manila than her husband’s, his is of a lasting sort bound to benefit the city permanently. The Journal has always felt that as a rule there is little truthful commenda-< tion to be granted contemporary painting in the Philippines, which either oversteps the limits of simplicity and aspires to what it can not reach, or is garishly exotic and blind to the beauty in the midst of which it lives. Exception is made of the Arellano water colors, which readers are recommended to sec for themselves. Month Sold by banks Spot Future Sold by the Insular Treasurer Total exchange sold January...................................................... February.................................................... March........................................................ April............................................................ May............................................................ June............................................................ July............................................................ August........................................................ September.................................................. October...................................................... November.................................................. December................................................... P 18,224,908 14,522,656 13,299,611 17,362,695 12,478,654 11,678,352 14,489,745 10,704,724 10,331,272 13,738,446 11,412,183 14,263,275 P 8,969,579 4,635,807 6,456,241 6,171,266 4,712,669 5,242,069 6,727,696 6,252,062 23,147,651 6,018,111 6,711,301 9,429,399 P 8,626,900 4,377,205 4,865,851 7,091,507 3,962,003 5,740,000 3,552,175 ■ 2,832,350 2,255,957 4,680,000 2,085,513 1,360,000 P 35,821,387 23,535,668 24,621,703 30,625,468 21,153,326 22,660,421 24,769,616 19,789,136 35,734,880 24,436,557 20,208,997 25,052,674 Total.................................................. P162,506,521 P 94,473,851 P 51,429,461 P308,409,833 MUTUAL BUILDING AND LOAN ASSOCIATIONS The big majority of mutual building and loan associations experienced difficulties of one kind or another during the year. These difficulties are undoubtedly the concomitant effects of the financial crisis which is still going on unabated. Some had cases of mild run, while others suffered from topheavy personnel and expenses due to unbusinesslike methods which may be justified only in prosperous time, but not in lean years like the present. Forseeing that only by the adoption of a conservative loan policy and by the paring down of expenses to a minimum consistent with efficiency will these associations be able to continue doing business with safety to the shareholders, the undersigned found it necessary to promulgate rulings from time to time to the various associations that come under its supervision. Excerpts of some of these rulings are given hereunder. In considering applications for real state loans preference should be given to small loans. This policy will enable the association to serve the greatest number of shareholders with the minimum risk of loss in accordance with the law of averages. The properties to be mortgaged should be conservatively appraised allowing a greater margin of safety than heretofore of, say, at least 50 per cent between the appraised value of the properties and the amount of loans granted. A general plan of economy should be adopted by allowing substantial reductions in office and other general expenses consistent with the ef ficient operation of the association. The salaries of officers and employees, fees of the board of directors and fees paid to other persons working for the associations should also be proportionate ly reduced as an emergency measure. All charges, present and future, in excess of the value oT shares, such as premiums, dues, fines and interest unpaid, should not be carried as Accounts Receivable, taken into profits and distributed as dividends, but carried in suspense account of “uncollected dues, interest, premiums, etc.” The granting of additional loans to borrowers who are in arrears in the payment of interest on the original loans is not a sound loan policy and should therefore be discontinued. Stock loans should not be allowed to run indefinitely with interest unpaid, unless the value of the shares at any time affords sufficient margin for interest for at least six months. When the margin of security is reduced the stock should be liquidated and its value applied to the loan. Comparative Statement of Consolidated Assets and Liabilities of Mutual Building and Loan Associations as of December 31 of the Year Indicated. ASSETS Name of accounts 1932 1931 1930 Loans............................................................................. Cash on hand and in banks..................................... Real estate owned....................................................... Other assets................................................................. 1*20,822,342.89 762,343.36 1,904,659.30 1,947,495.19 1’22,183,570.61 96,791.24 1,413,573.56 1,657,774.15 1’21,836,814.67 231,431.15 1,028,574.23 1,523,091.89 Total...................................................................... 1’25,436,840.74 1’25,351,709.56 1*24,619,911.94 LIABILITIES Capital paid-in............................................................ Reserve......................................................................... Borrowed money......................................................... Other liabilities............................................................ 1’22,533,877.70 1*22,192,186.69 1’20,570,886.49 478,554.50 961,112.24 1,463,296.30 627,219.83 954,996.36 1,577,306.68 649,597.98 2,150,098.99 1,249,328.48 —Judge. Distressed Manager: I’m sorry, but we don’t allow un escorted ladies. Calm Lady: Who the hell says I’m a lady! Stick to Quality GORDON DRY The heart 7?T\T of a good CrllN cocktail MARCHANT’S OLD HIOHLANO Scotch Whisky for Good Highballs Kuenzle & Streiff IMPORTERS 343 T. Pinpin Tel. 2-39-36 Manila, P. I. Total...................................................................... 1’25,436,840.74 1’25,351,709.56 P24,619,911.94 IN RESPONDING TO ADVERTISEMENTS PLEASE MENTION THE AMERICAN CHAMBER OF COMMERCE JOURNAL
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