BBVA Puerto Rico posts $32M in net income in ’11, up 384.3% vs. ’10

Written by  //  February 22, 2012  //  Banking, Financial District  //  No comments

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Manuel Sánchez, country manager for BBVA USA and BBVA Puerto Rico President Rafael Varela discuss 2011's financial results.

BBVA Puerto Rico revealed its annual results Tuesday, reporting $32 million in net income for the 12-month period ended Dec. 31, 2011, equivalent to a 384.3 percent year-over-year growth.

High-ranking bank executives attributed the improvement to an increase in deposits and loans, as well as a reduction in loan delinquency rates.

At the end of 2011, the bank’s loan production reached $1.1 billion, or 68 percent over the $694 million generated in 2010. BBVA Puerto Rico’s total loan portfolio increased to $3.6 billion and total assets were slightly more than $5 billion.

In an interview with members of the local media, BBVA Puerto Rico President Rafael Varela acknowledged that the government’s Housing Stimulus program helped fuel BBVA Mortgage’s home loan business, although he could not say what percentage of the closings were related to the program that ends in December 2012.

BBVA restructured its home mortgage business last year and increased its customer service personnel to have more presence throughout its 36 branches. The line of business generated $144 million in new loans in 2011, exceeding the prior year’s volumes by 57.8 percent, company officials said.

“The success we had last year was due to a combination of things, and certainly, the government’s incentives helped. We trust that as the program phases out, the economy continues to improve, which should help the market avoid collapsing again,” Varela said.

He also said an internal five-year strategy rolled out in 2010 to spur growth in areas where its market share was below its expectations — auto, mortgage and commercial loans — is already bearing fruit, as is a new customer service approach.

Commercial loan originations increased to $599 million in 2011, from $369 million the prior year, while auto loans increased by 10.7 percent to $358 million last year from $323 million in 2010. BBVA’s auto loan market share reached 35.1 percent among all local banks, according to the results.

BBVA in Hato Rey

A focus on the customer
Last year, BBVA implemented a global business strategy under the “Cuenta Conmigo” (Count on Me) slogan to emphasize “transparency and clarity” in customer relations.

“We set out to be an authentic bank where professionalism, warmth and closeness to customers are our main traits,” Varela said. “Our business model is based on the notion that the client comes first.”

As a result of this strategy, customer deposits — excluding Brokered CDs  and other transactions — amounted to nearly $2.5 billion, a $336 million, or 15.6 percent, increase over the total at the end of 2010.

Meanwhile, the total provision for losses was $31 million, which represents a decrease of $49 million or -61.4 percent over the previous year, a reflection of BBVA’s progress in managing its bad loan portfolio.

The bank’s loan default rate closed at 6.72%, 245 basis points less than the figure recorded in 2010 and “substantially below the average rate that banks build up in Puerto Rico,” Varela said.

BBVA Puerto Rico ‘not for sale’
Last year’s results have positioned BBVA Puerto Rico on strong footing to tackle the new year with certain “optimism that things will continue to slowly improve and we trust that improvement will happen and Puerto Rico will be able to pull out of its crisis this year,” Varela said.

BBVA Puerto Rico is part of the financial institution’s U.S. unit, where it is the third most important market behind Texas and Alabama.

“Puerto Rico is one of our key markets and it is where we have the most experience, where we’ve learned about North American banking,” said Manuel Sánchez, country manager for BBVA USA.

That said, Sánchez said the local business is not for sale, rejecting for the first time reports that began swirling late last year suggesting that BBVA Puerto Rico was planning to exit the island.

“We’re not for sale. We want to continue growing in this market, which we believe is very attractive because it is reconfiguring itself, bringing more opportunities,” said Sánchez.

“We have not needed any government to come rescue us, which allows us to do many things,” he said, referring to the 2010 debacle that wiped out three institutions from the Puerto Rico banking landscape.

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