EXCEEDING $600-MILLION MARK Bank assets soar 6% in 2nd quarter

A clear indication of the Commonwealth’s resilient financial infrastructure, banks assets soared six percent to $632 million in the second quarter of the year from the first three month’s $596 million, a report obtained from the commerce department revealed.

The significant growth of overall bank assets was spurred primarily by the increase in the volume of deposits mainly from private sector clients, despite slowdown in lending activities during the same period.

The 2000 Bank Quarterly Report prepared by Jesse Palacios of the Banking and Insurance Division disclosed overall deposits reached $608 million, improving by six percent from the January-March period’s $573 million.

Private sector savings deposit increased by almost 10 percent from $151 million in the first three months of the year to $202 million during the period under review.

At the same time, government savings deposit also jumped 15 percent to $43.3 million from the previous quarter’s $37.7 million, although checking deposits dropped seven percent from $15.6 million to $14.5 million.

Volume of deposits to checking accounts by private sector clients shot up by 1.3 percent to $118 million from $116 million, mitigating the effects of the seven percent fall in government’s demand deposits.

Total time deposit climbed six percent to $267 million from $253 million, with government time deposit edging up by seven percent to $65 million from $60 million in the first quarter of the year.

Private sector TCDs jumped five percent from the preceding quarter’s $193 million to over $202 million in the April-June 2000 period.
Loan agreements approved by banks in the April-June 2000 period amounted to $260.9 million, down by 11 percent from the previous quarter’s $293 million.

Private loans fell 12 percent in the same period to $252.106 million from the previous quarter’s $285.565 million, although real estate loans registered a modest growth of two percent to exceed the $50 million-mark from $49.5 million in the first three months of the year.

The overall reduction in total volume of loans approved by CNMI banks was mitigated by the significant increase of 18 percent in government loans during the April-June 2000 period, compared with the quarter-ago.

Commerce department records showed banks approved a total of $8.765 million in government loans between April and June this year. In the first three months of 2000, some $7.435 million in total credit agreements were entered into with the CNMI government.

Consumer loans also suffered a setback, declining by 3.3 percent from $72.702 million in the January-March period to $70.286 in the second quarter of the calendar year, in what analysts said was a diminishing confidence on the borrowers’ capability to pay back due to economic upheavals.

Private banks have also taken a stricter approach on commercial loans which manifested a dramatic fall of about 20 percent to $131.477 from the previous period’s $163.389.

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.

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.

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.

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.