Palau’s banking industry remains stable and with a positive outlook on tourism for 2019, there will be expected growth, according to the annual banking report of the Financial Institution Commission (FIC).
The report, submitted to the Palau National Congress in March, also said the banking industry for 2018 is liquid with all banks able to continually meet depositors’ demand.
Semdiu Decherong, executive commissioner of the FIC said Palau will see continued growth in the industry and that the depositors are guaranteed that their money remains safe.
“The banking sector is stable and projected to remain as such, barring any external events that are beyond Palau’s control,” Decherong told Island Times.
“We can expect to see continued growth in the sector and maintain a healthy credit environment that is conducive to better returns for the bank. Depositors funds remain safe and banks are able to maintain adequate levels of capital.”
“$238 million of the sector’s $276 million in total assets were liquid, by year’s end, banks held about 95¢ for every dollar in customer deposits and short-term liabilities.”
The report also showed that on 2018, remittances that were sent to Palau totaled $210 million with a total of $206 million remittances sent outside the country, posting a gain of $4 million.
The report said most remittance activities occurred between Palau and the United States, China, and Taiwan.
Five banks are operating in Palau, Bank of Guam, Bank of Hawaii, Bank Pacific, Asia Pacific Commercial Bank, and Palau Investment Bank.
U.S. bank branches such as Bank of Hawaii, Bank of Guam and Bank Pacific are dominant in the industry and hold a combined 98 percent of the sector’s assets, as of December 31, 2018
“All U.S. banks operating in Palau are in good standing with their primary regulators in the U.S. continue to maintain access to U.S. capital markets,” the report stated.
Out of the five banks operating in Palau, two are locally chartered bank and are required to maintain at least $1 million in capital.
Although return on assets and aggregate capital for local banks increased, the total assets of all licensed banks declined by 6.7% during 2018.
This decline, the report said can be attributed to the dip in customer deposits and tied to the tourism slump and related economic activity. (By Bernadette H. Carreon)