…as deposits, loans shrink in 1Q

Bank loans shrunk 12.6 percent to $210.4 million in the first quarter of 2004 compared with the same period the previous year, according to statistics obtained from the Banking Division of the Commerce Department.

Although there is a growing demand for cash due to the worsening economic condition, officials said banks have taken a more conservative approach in their dealings with loan applications because of borrowers’ weakened ability to pay back.

The overall total was not helped by an increase in consumer loans, which rose by 14.1 percent from $60.2 million during the first quarter of 2003 to $68.6 million in the same period this year. Commerce officials said the increase was spurred by car loans and other personal borrowing activities.

Despite a massive refinancing of loans by property owners since a big chunk of commercial and residential spaces are literally empty, real estate loans dropped by 20.2 percent from $59.9 million to $47.8 million in the first quarter of 2004.

Money borrowed for commercial purposes edged downward by 22.2 percent from $120.7 million to $93.9 million during the first quarter of 2004. Commerce officials said this is an indication that economic activities on the island have yet to pick itself up from the different economic upheavals that buffeted it in the last few years.

The volume of loans approved by private banks in the CNMI also fell during the first quarter of 2004 compared with the previous quarter’s level, according to Department of Commerce statistics.

Total loans approved by commercial and savings banks operating in the Northern Marianas were down from $240.9 million during the first quarter of 2003 to $210.4 million in the January-March period—a 12.2-percent decrease.

Bank deposits dropped 0.5 percent by end-March 2004 to $555 million from the previous year’s first quarter of $557.5 million, the banking report adds.

Loans and capital combined, total bank assets amounted to about $578.7 million by March 31, 2004 compared with $607.7 million from the January-March 2003 period—a 4.8 percent decrease.

Deposits (also called liabilities because these are considered payables—both principal and interest) of private entities and individuals went down by 7 percent from $215 million in the year-ago tally to $200.8 million during this year’s first quarter.

Total deposits went down by 5.9 percent from $237.9 million to $224 million in the first quarter of the year compared with last year’s figure.

The banking report was released Friday last week.