Popular Inc., parent company of Banco Popular de Puerto Rico, saw its net income increase by 144 percent year over year to $599.3 million for the year ended December 2013, in comparison to the $245.2 million reported for the prior 12-month period.
In its fourth quarter earnings report released Thursday, the bank also reported a jump in net income for the period ended Dec. 31, 2013 of $163 million, compared to $83.9 million on record for the same three-month period in 2012. The most recent result represents a quarter-to-quarter drop, as net income for the period ended Sept. 30, 2013 was $229.1 million.
“The earnings for the fourth quarter demonstrate how the strength of our franchise continues to produce positive results even in a challenging operating environment,” said Popular Inc. Chairman Richard Carrión.
“Over the last few years, we have executed a number of strategic initiatives that have improved our operational and financial metrics and will position us to further increase profitability once the economy in Puerto Rico begins to improve,” he said.
Among those moves is the sale of 5.8 million common shares in EVERTEC during the last quarter of 2013, which generated in an after-tax gain of $99.4 million for Popular.
“EVERTEC remains an important business partner and a valuable asset that represents an additional source of capital flexibility. The market value of our remaining stake is approximately $300 million and significantly exceeds the position’s current book value of $20 million,” Carrión said. “As investors, we will continue to participate in a proportionate share of the company’s income.”
The bank also placed special emphasis on its continued progress in credit quality, which was directly related to a decline in non-performing assets by $20.6 million, or 2.7 percent, compared to the third quarter of 2013, and $1.1 billion, or 58.9 percent, year over year. Meanwhile, non-performing loans held-in-portfolio declined by $19.6 million, or 3.2 percent, compared to the third quarter of 2013, and $827.2 million, or 58 percent, year over year.
“We made clear and consistent progress on a key objective, improving credit quality. Total non-performing assets including covered loans of $922 million were down from $2 billion at year-end 2012,” Carrión said during an earnings call to discuss results.
“Non-covered non-performing loans declined $827 million to $598 million, or 2.8 percent of non-covered loans, the lowest level since 2007. These reductions were the result of aggressive loss mitigation efforts, resolutions, restructurings and NPL sales,” he added.
Based on the latest data, Popular Inc. increased its share in most of the eight banking categories on the island, maintaining its leadership position in six of them, Carrión said.
“This leading franchise value positions us well for an eventual economic recovery on the island but also provides meaningful earnings power in the interim,” he said.
Finally, Carrión said Popular Inc. continues to pursue paying off its outstanding debt under the Troubled Assets Relief Program, for which it filed an application last year.
“We continue in active dialogue with our regulator, but our application has not yet been approved. As we said last quarter, we cannot speculate on the timing or the conditionality, if any, of an approval,” Carrión said. “As our dialogue with our regulator is confidential, we’re also not in a position to expand on the details of our application or the specific funding plan for our repayment at this time.”