Consumer loans up 16% in ’05, savings down

Consumer loans are up by 16 percent so far this year, while total savings in the CNMI are down by 10.3 percent.

Statistics from banks compiled by the Department of Commerce showed that consumer loans in the third quarter of 2005 totaled $257.3 million.

During the same period in 2004, consumer loans totaled $222 million.

Data showed that during the first quarter of 2004, consumer loan was $68.7 million.

It rose to $75.1 million by the second quarter of 2004 and further up to $78.3 million during the third quarter.

It jumped to $82.7 million during the fourth quarter of 2004.

The trend continued in 2005 with consumer loans increasing to $85.8 million in the first quarter of this year, and $87.9 million in the second quarter.

In the third quarter, the loan was at $83.6 million.

Meantime, total savings in the banks decreased by $70.6 million as of the third quarter this year compared to the same period last year.

Data showed that savings as of the third quarter of this year totaled $612.9 million which is over 10 percent lesser than last year’s $683.5 million.

During the first quarter of 2004, total savings reached $224 million and this rose to $235 million in the third quarter of the year.

This year, total savings during the first quarter reached $215 million, which lowered to $204 million in the second quarter, and further down to $193 million in the third quarter.

Commerce economic development officer Glenn Manglona said the decrease in savings maybe due to increased prices of commodities.

“It shows that people are not really saving because of the high prices. People are tapping their savings to buy fuel, food, and other basic commodities,” said Manglona.

Meantime, total loans in the banks showed a decline from $614.6 million during the first three quarters in 2004 to $605 million during the same period this year.

Manglona said this indicates that banks remain “cautious” in approving loan applications.

In the national level, financial experts have reported that more Americans are spending more than what they are earning, resulting in more debts and zero savings.

This was acknowledged by Atalanta Sosnoff president Craig Steinberg in a presentation during a recent NMI Retirement Fund’s money managers meeting at Aqua Resort Club.

He said that compared with other countries, U.S. personal consumption rate is up at 71 percent.

He said Europe’s rate is at 58 percent, Japan is 55 percent, and China is 42 percent.

At the same time, the U.S. went to negative savings recently, he said.

“A lot of spending has been debt-inspired. People are incurring debts through loans, credit cards,” he said.