Triggered by economic slowdown Bank assets soar 10% in 1st Quarter

Amid hardships in all the other business activities in the Northern Marianas, the local finance sector continue to manifest resilience as bank assets soared 10 percent in the first three months of the year to $596.308 million from $544.429 million during the same period of last year.

This translates to almost $52 million in additional bank assets in just a 12-month period, or an increase of more than $6 million since end-December 1999.
A report obtained from the Banking and Insurance Division of the commerce department disclosed bank assets reached $589.9 million by end-1999.

Commerce officials attribute the growth to the fact that banks gain much importance as the local economic environment becomes more volatile since they neutralize the magnitude of problems caused by hard economic times.

Recession normally result to a more resilient banking system since banks are in the position to help replenish the economy through debt restructuring. This may hold especially true with businesses that are experiencing intolerable volatility because of the recession.

Total deposits jumped eight percent to $573.420 million during the first quarter of 2000 from the year ago of the same period’s $529.433 million. Officials explained uncertainties brought about by the crisis usually lead individual and corporate clients to the banks.

The first quarter of the year also witnessed growth in total deposit demand for the Commonwealth government, reaching $15.682 million from the year-ago figure of $11.895 million.

Demand for private clients climbed almost five percent from $111.340 million last year to $116.404 million in the January-March 2000 period. The commerce department registered a seven percent increase in overall deposit demand from $123.235 million to $188.386 million.

Government savings deposit jumped eight percent to $37.739 million this year from the previous year’s $34.908 million, while savings deposit from the private sector totaled $150.647 million in the first quarter of the year, lower by 11 percent from the year-ago’s $169.317 million.

Decline in private sector deposits dragged overall savings figures down during the first quarter of 2000 to $188.386 million from $204.225 million last year.

Still, the local financial sector is drawing near to hitting the $600-million mark as officials anticipate bank assets to grow further during the second quarter of the year.

The banking industry, which is home to 10 banking companies, hit the half-a-billion mark in 1996, making it one of the healthiest sectors after garment manufacturing and tourism.

Of all the private banks operating here, nine are in operation with physical facilities and locations while one was licensed to operate via its resident agents.

By end-1998, commercial and savings banks in the CNMI registered about $522 million in total deposits, up from the 1997 figure of $481.1 million.

The increase may also be attributed to the opening of two major banks — Hong Kong and Shanghai Banking Corp. and First Hawaiian Bank — in 1998.