Oriental Bank reports $157M in 3Q22 revenue, up $22M Y-O-Y
OFG Bancorp, parent company for Oriental Bank, reported $156.8 million in revenues for the the third quarter ended Sept. 30, up $22 million when compared to the $134.7 million reported for the same quarter in 2021.
During a call with reporters, Oriental CEO José Rafael Fernández attributed the year-over-year jump to a growth in loan originations, as well as the hike in interest rates that impact loans that carry variable interest rates, mostly in the commercial portfolio.
Diluted earnings per share was $0.87 during the third quarter, compared to $0.84 in the second quarter of this year, and $0.81 in the third quarter of 2021.
“This was OFG’s strongest quarter year to date, driven by total core revenue growth of 7.2% quarter-over-quarter. All our key performance metrics improved compared to the second quarter of 2022 and in the third quarter of 2021, with return on average assets of 1.65%, return on average tangible common stockholders’ equity of 18.05%, and an efficiency ratio of 55.80%,” said Fernández.
The financial institution reported net interest income of $126.5 million compared to $115.1 million in the second quarter and $102.7 million in the third quarter of 2021. Net interest margin expanded to 5.23% from 4.80% in the second quarter of 2022 due to increased volume of loans and investments and interest rate hikes.
He said the results were “extraordinary,” despite the hit that Hurricane Fiona delivered toward the end of the quarter.
“We had to adapt and be ready to help our employees and our clients. Thanks to the resilience of our dedicated staff and our digital first banking model, OFG performed well, and we were able to fully support the needs of our customers under a very challenging environment following Hurricane Fiona,” he said, adding that business activity has begun to return to pre-hurricane levels.
He said the storm confirmed the need for more technology, which he said Oriental will continue to roll out, specifically virtual tellers that allow clients to have access to their money and conduct transactions without the need for an open bank branch. So far, Oriental has 22 virtual tellers operating islandwide and four service kiosks, which is “our way to provide service to clients when and where they want,” Fernández said.
As for Puerto Rico’s current conditions, Fernández was emphatic during his chat with reporters that the island is in a better economic position when compared to other parts of the world that are seeing high recession and inflation levels, as it is receiving and will receive “an important amount of federal funds to rebuild and remodel infrastructure. That should work as a cushion against that global effect.”
‘Puerto Rico’s greatest challenge is execution’
“But what Puerto Rico really needs to do is resolve all of these impasses that have to do with rebuilding the infrastructure and solve the problem,” he said. “When you look at how two weeks after Hurricane Ian struck Florida, they had already rebuilt a miles-long bridge, while Puerto Rico is still trying to figure out who to rebuild a 50-meter bridge.”
“That to me has to do with execution, with the ability to lead an execution process and staying away from the controversy of how to do it. Puerto Rico’s greatest challenge is in execution,” he said. “I believe there must be a collaboration with the federal government, and Puerto Rico must follow and address the federal government’s rules. Requirements must be met, and we can’t continue to fight because those requirements are too complicated.”
As he has mentioned in prior meetings with reporters, Fernández was quite candid about his frustration with the island’s crippled energy grid, which he says fuels existing unsustainable economic conditions not just for the major players, but for the small businesses as well.
“If we don’t finally understand that we need to have a diversified, low-cost, resilient energy infrastructure that is well-run, then Puerto Rico is going into the game with its hands tied. Businesses and consumers live in a state of uncertainty, which is unreasonable for an island operating in the 21st century,” he said.
Finally, he said President Biden’s recent visit, and his appointment of federal officials to oversee the reconstruction of the energy grid is necessary because “it’s fatal, embarrassing that Puerto Rico was without power for two weeks after a category-one hurricane passed over the southern region. This has created an awareness in Washington and Congress, which are saying ‘look we have to help put an end to this issue,’ which I believe is very positive.”
“They’re saying the funds are there to solve the problems and I think local officials are running out of excuses and what has to be attracted are results. Puerto Rico’s infrastructure problems of the past 40-50 years won’t be resolved in one, two, three or five years, but there must be a path that moves toward seeing improvement and progress,” he said. “There has to be accountability at the federal and local levels, but in Puerto Rico the public sector is an expert at evading the responsibility of accountability.”