While economic indicators in the Northern Marianas are on the downside, the half-a-billion-dollar banking industry showed a sign of hope amid a crisis, posting a modest growth of 2.5 percent to $535.97 million in 1998 from year-ago figures.
Officials from the Department of Commerce said the $13.42 million increase was spurred by demand for cash which rose to $304.71 million during the same period from $277.98 million in 1997, or 9.6 percent hike.
For the fourth straight year since 1994, bank assets have been climbing steadily, with the biggest growth logged in 1996 at $507.7 million, or 16.2 percent, compared to previous year’s record.
It was the first time the banking industry hit the half-a-billion mark to make it one of the most robust sectors after tourism and garment when the commonwealth was still prosperous.
The currency crisis in Asia have crippled the tourism industry, the lifeblood of the island economy, leaving the garment and banking sectors the major sources of revenues for the cash-strapped government.
However, local officials are skeptical the banking industry would continue to show promise in light of the worsening business climate on the islands, particularly with slowdown in garment production.
Some bank executives express fear the $1 billion class action lawsuit filed by non-resident workers against garment manufacturers and buyers for alleged sweatshop conditions in CNMI would hurt the sector since majority of their clients are factory workers and apparel makers.
US buyers have cut back orders from Saipan manufacturers because of increasing pressure from labor unions in the mainland and growing calls to boycott products made from sweatshops, and may force the industry to slash jobs.
The garment sector’s gross income topped $1 billion last year, pitching in more than $36 million to the local coffers.
End-1998 figures also showed that consumer loans climbed 4.5 percent to $83.6 million from $80 million, an increase attributed to rise in spending for holiday trips, automobiles or home improvement.
Commercial loans inched upward to $166 million from $165.7 million, or .18 percent, but officials were cautious to tie it to increased economic activities.
Bank deposits, on the other hand, rose 8.69 percent to $522.8 million in 1998 from $481 million because of the tendency of people to hold on to their cash amid financial uncertainties, according to officials.