‘Golden Mile’ showing luster for 1st time since ’07
Puerto Rico’s financial sector, one of the island’s key economic components, seems to be rebounding for the first time in four years, reporting $171 billion in combined assets during the second quarter of 2011.
While that reflects a less than 2 percent improvement over the $168.1 billion reported at the end of 2010, the slight uptick breaks a protracted period of negative growth, the Office of the Commissioner of Financial Institutions revealed in its most recent report.
Banks and other industry components, namely co-ops, brokerage houses and small loan companies, began reporting a dip in their assets after 2007, when the figure exceeded $211.3 billion.
However, the sector began buckling under recessionary pressures, reporting $198.6 billion in assets in 2008, $175 billion in 2009 and $168.1 billion in 2010, according to OCIF, as the agency is known by its Spanish initials.
When broken down, commercial banks represented in 41.2 percent of the assets, followed by international entities and co-ops, with 25.4 percent and 10.2 percent, respectively.
Puerto Rico’s commercial banks generated $152.6 million in assets during the second quarter of this year, finally pulling out of the red after two years of dismal results. When compared to December 2010, the latest results represent a 787 percent improvement in comparison to more than $718.9 million in losses that year.
Total deposits reached $49 billion during the second quarter, up slightly from the $48.4 billion on record through December 2010.
The banking sector’s troubles peaked last year, when three failing institutions were shuttered during a historic operation between the Federal Deposit Insurance Corp. and the OCIF in April. As part of the transactions, the FDIC closed and sold off the assets of the former WesternBank, EuroBank and R-G Premier to Banco Popular, Oriental Bank and Scotiabank, respectively.
That shakedown has seemingly helped banks slowly work their way back to financial soundness, as OCIF Commissioner Alfredo Padilla said in March, upon predicting that 2011 would be a “turnaround year” for the sector.
While banks are beginning to pull out of their slump, the island’s co-op sector has maintained its five-year growth curve, with nearly $7.6 billion in assets as of the first quarter of this year.