Bank assets near $600-M mark

While economic indicators point to flat growth, the Commonwealth’s half-a-billion dollar banking industry is inching its way to the $600 million-mark, indicating a strong financial infrastructure in the Northern Marianas.

Bank assets registered consistent growth in each of the four quarters last year, reaching $589.9 million as of end-December 1999, up from the previous quarter figure of $571 million.

Deposits totaled $570.4 million in the fourth quarter of 1999, higher by about $15 million from the quarter-ago’s $555 million. In the second quarter of last year, total bank deposits amounted $554 million, inching upwards from the previous period’s $529 million.

Total deposit demands for the Commonwealth government and other agencies reached $19 million in 1999, while demand for private clients amounted $133.8 million.

Government savings deposit totaled $27.3 million, lower than the private sector’s $157 million.

However, savings deposit from both the government and the private sector dropped to $184 million from $191.5 million between the third and fourth quarters of 1999.

The 1999 level registered an even lower aggregate savings deposit compared with the second quarter figures of $203 million. First quarter savings deposit totaled $204 million.

The commerce department quarterly report also noted that interest income grew by $5.23 million from $18.4 million in the third quarter of last year to $23.7 million by end-December 1999.

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

The CNMI is home to 10 banks — nine are in operation with physical facilities and locations while two were licensed and are operating via their 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.

Despite the adversities brought about by the Asian currency crisis to the Commonwealth’s tourism and garment industries, banks have gained much importance as they amplify the magnitude of problems in the domestic economy.

However, this resilience does not make them immune to the financial weakness impacting their counterparts in other Asian countries. Banks cannot escape from the weaker balance sheets that arise from both imprudence and the volatility in the financial markets.

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.

Another thing banks can do to ease the economic slump is by continuously providing loans to businesses for strong investment purposes.