BANKING EARNINGS IN 1939
With the preliminary statement of Lloyds Bank the " Big Five" earnings picture for 1939 is complete. Net profit of Lloyds, after providing for all bad and doubtful debts, was £1,589,646, against £1,705,301, a reduction of £116,000, or 71 per cent. Like the other banks, this institution is main- taining its dividend rates. The " A " shares are again to get their 12 per cent. and" B" shareholders get their 5 per cent. maximum. At the same time £350,000, against £300,000, goes to Contingencies Account, there is no transfer, against £100,000, to Bank Premises Account, while the carry for- ward is about £9,000 lower, at £518,826. I have often emphasised the arbitrary character of published banking profits, which are greatly influenced by directorial policy, and consequently afford a rather unreliable basis of comparison from year to year. For what it is worth, however, the aggre- gate published profit total of the "Big Five" of £8,750,605 may be compared with the £9,406,376 shown in 1938, a fall of £655,771, or 7 per cent., and the lowest total since 1933.
This seems to me, however, to do less than justice to the 1939 figures. Leaving on one side any distortions attribut- able to directorial policy, one cannot ignore the fact that the figures are struck, except in the case of the National Pro- vincial Bank, after deduction of tax. If the net profits are grossed up," i.e., Income Tax and N.D.C. are added back, the comparison looks very different. The gross profit aggre- gate of £13,372,000 was actually £292,000, or just over 2 per cent., above the 1938 level, so that it is arguable that the whole of the apparent decline last year can be attributed to higher taxation. So far as bank dividends are concerned, as the final payments have been subject to tax at 7s. in the £ after deduction at the rate of only 5s. 6d. on the interims, the true distributions to shareholders have actually been Slightly increased.
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