Most sections of the community (apart from pensioners) have suffered a tut in their standard of living since the return of the Labour Government, but for one section the policies of the Government have proved to have been .an unmixed blessing: banking interests. If you think that this is merely the opinion of extreme left-wingers you are wrong. This | Monday, the Financial Times issued a 74-page survey of banking. The editor of The Banker, Wilfred King, contributed an article entitled "The Banks and the Squeeze - some unexpected twists," here are some key quotations s
"On a short view, the monetary policy of the past 6 months has been very much in the interests of the banks. During 1964...the net deposits of the clearing banks rose by 63%...The whole counterpart of this rise was in advances, always the highest yielding of the banks' assets...the average Bank Rate in 1964 was, at 5.06%, + as much again as in 1963, On top of that, dns BARKS had been steadily edging up the level of many of their advances rélative to the Bank Rate. These two factors taken togetherseces raised true bank profits very sharply in 1964, almost certainly to a higher point than the previous peak, reached in 1961, in spite of a sharp rise in costsSe
"It will be surprising, however, if the net interest earnings do not reach a still higher point this year. Now that the 7% Bank Rate has run for + of the year, it would require an improbably quick and steep fall in the rate to reduce this year's average below 6% - and at that level the average rate returned by advances would probably be up-by not less than one-sixth on the average for 1964. Moreover, unless the squeeze produces a marked down+trend in advances...their average volume for the year as a whole will probably show some gain on last year's record volume. The banks may deplore the long-run implications of direct credit restraints...but they have certainly reaped some substantial short-run compensation from the latest unexpected twists in monetary policy,"