FirstBank CEO: ‘It’s Puerto Rico’s time to achieve economic growth’
Upon reporting the results of a “strong quarter” with net income of $82.6 million for the period ended March 31 — or $21.5 million more than the same period in 2021 — First BanCorp. CEO Aurelio Alemán said positive signs in the economy suggest that Puerto Rico’s time for growth has come.
In an interview with News is my Business, Alemán said the economic backdrop of low unemployment levels, a growth in manufacturing and tourism activity, the end of the Commonwealth’s bankruptcy proceedings, and growing reconstruction activity positively contribute to the FirstBank’s parent company’s performance as well.
“I believe Puerto Rico is in a unique position given the additional stimulus funds that are on the way and that the end of the bankruptcy will now give the government a chance to focus on managing the reconstruction and the distribution of funds. So, I believe now is the time for Puerto Rico to achieve that economic growth in coming years,” he said.
The most recent quarterly results show that the bank maintained stabilized asset quality and low delinquency rates. Non-performing assets (“NPAs”) decreased by $1.6 million to $156.5 million as of March 31, 2022, compared to $158.1 million as of Dec 31, 2021, driven down by a reduction in activity related to residential mortgage loans. The bank reported $284.9 million in NPAs in the same year-ago quarter.
Meanwhile, the bank reported a drop in government deposits during the first quarter by $489.9 million and totaled $2.8 billion as of March 31, 2022, consisting of decreases of $436 million and $54.3 million in the Puerto Rico and US Virgin Islands regions, respectively.
To this, Alemán said the numbers are expected to fluctuate as the governments get and spend recovery funding, but that the fluctuation of funds does not affect the bank’s liquidity levels and should be fully spent over the next three to five years.
“Core deposits, net of government and brokered deposits, registered a slight increase of $55 million when compared to the fourth quarter of 2021 primarily related to higher balances in demand deposit accounts in the Puerto Rico region,” he said.
Excluding U.S. Small Business Administration Paycheck Protection Program loans, commercial and construction loan balances increased by $91 million and consumer loans were higher by $88 million when compared to the fourth quarter of 2021.
“Total loan originations, other than credit card utilization activity, were healthy at $1.1 billion although lower than fourth quarter of 2021 originations primarily due to a lower dollar amount of commercial refinancing and renewals completed in the first quarter,” said Alemán.
“We expect loan growth to accelerate during the year as loan pipelines begin to close and disaster recovery funds flow into the Puerto Rico economy,” he said.
While he said there are plenty of positive signs, there are many global factors “that are challenges that we cannot ignore.”
“We know petroleum is more expensive, we know that the supply chain is disrupted, and we know that has generated an inflation,” he said.
