Popular Inc. reports whopping increases in net and adjusted income in ’18
Popular Inc. closed 2018 with significant year-over-year increases in its net and adjusted income, according to its quarterly earnings report.
For the 12-month period ended Dec.
31, 2018, adjusted net income was $487 million, up 76 percent from the prior
year’s adjusted net income of $276 million. Net income for 2018 totaled $618.2 million,
a 477 percent jump when compared to $107.7 million in 2017, according to the
earnings statement.
In 2017, Banco Popular de
Puerto Rico’s parent company of felt the negative effects of the Hurricane María,
while in 2018, it benefited from deposit growth and higher interest rates as
well as the additional business related to the acquisition of Reliable Auto.
For the fourth quarter ended
Dec. 31, 2018, the financial institution reported a net income of $106.4
million and an adjusted net income of $134.1 million for the fourth quarter
ended December 31, 2018, compared to a net income of $140.6 million for the
third quarter ended September 30, 2018.
“We are very pleased with our
performance in the fourth quarter, which allowed us to finish the year on a
strong note,” Popular Inc. President Ignacio Álvarez said. “These results
include the impact of a number of corporate initiatives that increased expenses
for the quarter, but continue to reflect strong top line growth, improving
margins and the continuing contribution to income from the Reliable
transaction.”
“We begin 2019 with enthusiasm
as we build on the momentum created in 2018 and leverage the strength of our
balance sheet and unique franchise to continue to drive shareholder value,”
he said.
Coupled with the earnings report, Popular Inc. announced a two-pronged strategy
for its capital plan for 2019: an increase its quarterly common stock
dividend from $0.25 per share to $0.30 per share, beginning in the second
quarter of 2019, and up to $250 million in common stock repurchases.
“These capital actions evidence
the strength of Popular’s capital position, which allows us to return capital
to our shareholders as we invest in our franchise to ensure its continued
success in the future,” said Álvarez.
In its report, Popular Inc.
noted several events that had an effect on its results:
- The Puerto Rico Tax Reform that went into effect
in December 2018 and that reduced the corporate income tax rate from 39 percent
to 37.5 percent; - A payout of incentive payments to employees
through the profit-sharing plan established in 2016; a Voluntary Retirement
Program that will represent $19.5 million in costs related to compensation payments
for participants; - The acquisition of $1.6 billion in retail auto
loans and $341 million in primarily auto-related commercial loans from Wells
Fargo & Company’s auto finance business in Puerto Rico, known as Reliable. For
the quarter ended Dec. 31, 2018, the acquisition of Reliable contributed
approximately $18 million to net income, compared to $11.7 million for the
previous quarter; - The redemption
of $450 million in aggregate principal amount of its outstanding 7.00%
Senior Notes due 2019, which took place in October 2018; and, - The completion of a $125 million accelerated
share repurchase transaction with respect to its common stock.
