Popular Inc. reports $176M in 4Q20 net income, $507M for full year
Popular Inc. reported net income of $176.3 million for the fourth quarter ended Dec. 31, 2020, and $506.6 million for the year 2020, compared to net income of $671.1 million for the year 2019.
“We closed 2020 on a high note, generating net income of $176 million in the fourth quarter, one of our best quarters ever, mainly due to higher net interest income and control of expenses,” Popular Inc. CEO Ignacio Álvarez said.
“We ended the year with robust levels of capital and liquidity, which will allow us to continue to serve our clients and return capital to shareholders,” he said, of the results during a year that was challenging, “beginning with a series of devastating earthquakes in Southwest Puerto Rico and followed by the unprecedented global pandemic that significantly impacted our lives and economic activity.”
The financial institution’s annual net income of $507 million reflects a decrease of approximately 24% when compared to 2019’s “record” net income of $671 million, he said.
“The decrease was largely driven by higher provision expense, lower fees and lower net interest income related to the economic disruption caused by the pandemic. The 2020 results benefited from strong deposit growth and a higher level of earning assets in both Puerto Rico and the US.,” Álvarez said.
In 2020, Popular Inc. recognized $293 million in a provision for credit losses, largely driven by the impact of the pandemic, Banco Popular de Puerto Rico’s parent company confirmed.
Among the fourth quarter highlights Álvarez noted that debit and credit card sales in dollars increased by 18% compared to the fourth quarter of 2019. For the full-year, credit card sales increased by 10%. Auto loan and lease originations at Banco Popular increased by 11% compared to the year-ago quarter and were down 5% for the full-year.
“We saw continued strength in the dollar value of mortgage originations at Banco Popular, which were up 20% in the fourth quarter versus the third quarter and increased by 32% in 2020 as compared to 2019,” he said.
During a virtual meeting with members of the media, Álvarez also confirmed that the bank will continue to offer alternative work arrangements for the majority of its employees — with the exception of those who work at Banco Popular branches — who will not be called back into their offices until at least April.
The bank will not obligate employees to get vaccinated for COVID-19 but will try to get at least 80% of its payroll inoculated through an internal push, he said.
Raising minimum wage could hurt small businesses
In response to questions on other topics, Álvarez offered his opinion on the discussion swirling around the possibility of raising the federal minimum wage to $15 per hour.
“We all know that Puerto Rico’s minimum wage has to be increased. But I believe that not all small businesses will be able to pay. My concern is that larger businesses will absorb the smaller ones, which could begin to close,” Álvarez said.
Businesses have already been struggling as a result of the COVID-19 pandemic and have received aid through local and federal programs.
Earlier this month, the US Small Business Administration opened a second round of emergency Paycheck Protection Program loans and Popular has received more than 3,200 applications, totaling approximately $234 million in aid from entities and individuals, he said.
However, it remained unclear how many of those had been submitted to the SBA, which on Wednesday confirmed it had approved $16.8 million in second round of loans in Puerto Rico from Jan. 11-24, as this media outlet reported.