Tuesday, September 28, 2021

Blanco: 2015 was a Relatively Good Year for P.R. Banks’ Profitability

By on December 24, 2015

Levels of Delinquency, Nonperforming Loans Remain High

Excluding the closing of Doral Bank and losses experienced by Oriental Bank over two quarters, 2015 was a relatively good year for institutions, noted Rafael Blanco, Puerto Rico Financial Institutions’ commissioner and local bank regulator.

banking-finance-122415“Aside from the situation with Doral Bank and Oriental, I believe this year was relatively good for the remaining banks on the island. It was a year when local banks also improved their delinquent and nonperforming loans portfolios despite still experiencing a depressed economy,” Blanco told Caribbean Business during an exclusive interview.

After years of losses and issues with its capital levels, Blanco—acting as local bank regulator—shut down Doral Bank on Feb. 27, designating the Federal Deposit Insurance Corp. as its receiver.

As a result of the higher provisioning for exposure to a nonperforming line of credit given to the Puerto Rico Electric Power Authority, Oriental reported losses in the this year.

DELINQUENCIES STABLE, BUT HIGH

Blanco said the island’s delinquency level has remained stable for most of the year, but still remains high. In the case of home mortgages, the delinquency rate (those behind on their monthly payments) stands at 14.5% versus 6.2% in the States, he said.

“We have two and half times the number of delinquent mortgages than in the mainland [U.S.],” the local bank regulator added.

In auto loans, the trend is similar. The delinquency rate for auto loans behind on their payments has hovered between 11.4% and 11.9% throughout the year. While stable, it also remains high, he said.

“Repossessions on both mortgages and autos are high. The inventory of repossessed vehicles came down last year, but that’s because there have been many problems with vehicle been able to dispose part of their inventory, which at one point reached 6,000 repossessed units. That number is now 3,300 units,” Blanco commented. “Nevertheless, it’s a high number and a 12% delinquency rate doesn’t bode well.”

RECORD NUMBER OF FORECLOSURES

Puerto Rico could finish 2015 with 4,207 foreclosed properties, establishing a new record, the Financial Institutions commissioner warned.

“That would be a 16% increase from the 3,680 foreclosures last year,” he added. “What really concerns me is the number of residential properties in the foreclosure process, which could amount to 20,000 units. That number has averaged between 18,000 and 19,000 units throughout the year.”

The number is worrisome, Blanco insisted, because instead of going down, it keeps rising, meaning more cases are coming in than those being resolved.

LOSS MITIGATION

Blanco recognized local with loss mitigation to reduce the number of properties entering the foreclosure process. While every month more than 300 properties are foreclosed, another 1,140 are saved through the loss-mitigation process, he pointed out.

BY JOSÉ L. CARMONA

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