Popular Inc. reports $671M in ’19 net income; $166M in 4Q19
Popular Inc. reported net income of $166.8 million for the quarter ended Dec. 31, 2019, compared to net income of $165.3 million for the quarter ended Sept. 30, 2019.
In the report, Banco Popular de Puerto Rico’s parent company, confirmed it generated net income of $671.1 million for the year 2019, compared to net income and adjusted net income for the year 2018 of $618.2 million and $487.3 million, respectively.
Popular Inc. CEO Ignacio Álvarez, said: “2019 was an outstanding year during which we achieved record core earnings. During the year, we increased earnings per share and tangible book value by 14% and 17%, respectively, and grew our customer base in Puerto Rico by 45,000, reflecting the strength of our franchise.”
“While we exhibited strong performance throughout the year, the results for the fourth quarter reflected the cumulative impact of the three recent interest rate cuts. The reduction in rates negatively impacted our net interest income and margin for the quarter,” he added.
However, the bank’s fundamentals remained solid with fee income showing continued strength and achieving loan growth in both Puerto Rico and the U.S. However, the stateside operation produced lower results than expected, Álvarez told members of the business media corps in Puerto Rico.
“All of our business segments in Puerto Rico did well. What is slow is the mortgage business, which is below its historical data,” he said.
“We continue to pursue opportunities for expense management and operational efficiencies as we implement additional investments in our people, technology and businesses to position the institution for strong and sustainable long-term results,” he added.
In a call with analysts, Álvarez discussed a series of planned actions the bank intends to execute this year, including increasing its quarterly common stock dividend from $0.30 to $0.40 per share beginning in the second quarter of 2020, and a common stock repurchase program of up to $500 million.
In a separate transaction, Popular Inc. also acquired the rights to issue credit cards under the jetBlue co-branded loyalty program in Puerto Rico and it plans to launch the new product in the second half of 2020.
In 2012, jetBlue launched a co-branded credit card for Puerto Rico through an agreement with Banco Santander Puerto Rico, which is now in the final stages merging into FirstBank Puerto Rico and disappearing from the market.
“These actions evidence the strength of our capital position, which allows us to return capital to our shareholders, while we continue to invest in our franchise,” he said.
Repossessed homes aren’t the answer
With regards to the seismic activity that has been hitting Puerto Rico since Dec. 28, Álvarez said while the damage has been contained to 16 towns in the southern region, which represents 8% of the financial institution’s mortgage portfolio.
“The impact on our operations was limited, many residents in the south suffered significant damages to their homes, public schools remain closed and the ensuing aftershocks have made it difficult for people in the region to regain a sense of normalcy,” he said.
In response to a widespread claim that banks put up repossessed properties available to displaced earthquake victims, Álvarez said while the bank was willing to help, “we made the caveat that we believed the repossessed houses are not a solution to the problem.”
He said Popular has 56 repossessed homes in the 16 towns that have been affected by the earthquakes, of which 10 are ready to move in.
“In general, banks may have about 120 repossessed homes in the zone, which isn’t a solution,” he said, noting that while banks handle the foreclosure of homes, the properties belong to the lender, which is usually the U.S. Housing and Urban Development, Fannie Mae and other investors.