Doral Financial released their Q1 results yesterday and this was interesting to say the least.
They received over 110M$ in tax credit and they decided to apply that amount to a loan loss reserve.
Even if the move was a very prudent one, i think it has deceived the market a bit as many were expecting a gain or 0,79 per share and instead they did about 0,01.
Looking only at profit per share it coul dmean an incredible miss but i think that the move was very prudent when we look at the actual situation.
What we should still consider is the fact that a loan loss reserve is a reserve...not a loss in itself and if situation in Puerto Rico start to recover, DRL could easily reduce that reserve and turn in into profit.
I am curious on one mention about the new land and home evaluation that they received. If the decrease is as large as mentionned, what would the other Puerto Rico banks do? Do they use the same evaluation and if not will they have to?
If the situation means that they will have to re-evaluate their portfolio, it could mean larger losses for BPOP as they are the biggest lender in Puerto Rico. So be careful with the latest one.
They received over 110M$ in tax credit and they decided to apply that amount to a loan loss reserve.
Even if the move was a very prudent one, i think it has deceived the market a bit as many were expecting a gain or 0,79 per share and instead they did about 0,01.
Looking only at profit per share it coul dmean an incredible miss but i think that the move was very prudent when we look at the actual situation.
What we should still consider is the fact that a loan loss reserve is a reserve...not a loss in itself and if situation in Puerto Rico start to recover, DRL could easily reduce that reserve and turn in into profit.
I am curious on one mention about the new land and home evaluation that they received. If the decrease is as large as mentionned, what would the other Puerto Rico banks do? Do they use the same evaluation and if not will they have to?
If the situation means that they will have to re-evaluate their portfolio, it could mean larger losses for BPOP as they are the biggest lender in Puerto Rico. So be careful with the latest one.
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