Unemployment Claims Reach Historic Highs following the COVID-19 Lockdown

The deep economic effects of Covid-19 are reflected in the unprecedented rise of unemployment claims around the world. In Puerto Rico, cumulative unemployment claims in the five weeks following the lockdown reached 200,419, three times the total claims during 2019. This number is in line with the US when measured in relation to the labor force. Covid-19 is also impacting the large informal economy of the Island, which is not eligible for unemployment insurance. On the other side, Puerto Rico may be seen as a safe place to do business given the successful containment of the virus so far, and as an ideal location from where to work remotely in the future.

Compare mobility trends and positive cases in Puerto Rico and other Countries/States

Mobility restriction measures have the objective of reducing the contagion of Covid-19. The V2A Covid-19 Mobility Dashboard compares mobility reductions/increases with the spread of Covid-19 in all States of the US and more than 100 countries including Puerto Rico. Several Countries/States can be selected to compare mobility in various sectors/areas (Retail and Recreation, Grocery and Pharmacy, Parks, Residential, Workplace, Transit Stations) and the evolution of positives per 100k population on a daily basis.

Growth Opportunities for the Pharmaceutical Industry

The crisis brought upon all of us by COVID-19 has made both citizens and lawmakers demand quick action and trustworthy solutions, as well as made us all question the benefits of globalization. While producers have logically favored moving supply chains overseas to optimize their cost base, the reality is that neglecting a reliable domestic supply of certain goods has become a national security issue. Pharmaceutical products are a clear example. This report is meant to highlight Puerto Rico&#8217s readiness to insert itself into the COVID-19 pandemic response and the pharmaceutical repatriation effort that will likely follow

Medidas económicas para hacer frente a los efectos del Covid-19: comparación entre República Dominicana y otros países

La crisis del COVID-19 ha hecho que los países activen todo tipo de protocolos. Además de las medidas sanitarias tomadas desde el inicio de la Pandemia, se han empezado a aplicar otro grupo de medidas destinadas a compensar el impacto económico en los diversos sectores de la sociedad. En este análisis comparamos las medidas económicas tomadas en la República Dominicana y en una selección de países de Latinoamérica y Europa

Sectors and workers most vulnerable to the effects of Covid-19 in Puerto Rico

The Covid-19 will have a large impact on our economy. Estimates from local economists point to a GDP drop between 2.6% and 5.2% in FY 2020 ($2.5B to $5B). However, this confinement period will not affect all businesses and employees in Puerto Rico equally. In this information “capsule” we will identify the employee groups most vulnerable to the effects of Covid-19 amongst the main sectors of our economy

PR Banking Industry Report Q4 2019

The local banking industry has gone through a profound and long-lasting consolidation process since 2010, with only three remaining banks surviving, Popular, FirstBank, and Oriental. With this consolidation came a steep decline in assets, deposits, and loans. From 2009 to 2016, total banking assets decreased by 38% or $34.9 billion, deposits by 24% or $14.4 billion, and loan portfolios by 38% or $23.5 billion. However, 2016 seems to be a turning point in the financial condition of local banks with assets increasing by 21%, deposits by 33%, and loans by 8% during the 2016-2019 period. The banks that have survived the latest wave of consolidations exhibited a strong financial performance in 2019, posting a consolidated Pre-Tax ROE of 13.7%. Their productivity, credit quality, and capital position in 2019 were solid and moving in the right direction, posting a cost-to-income ratio of 57.9%, a nonperforming loans ratio of 5.0%, and a Tier 1 Risk-Based Capital Ratio of 21.0%. Looking into the rest of 2020, the banking sector will likely benefit greatly from the imminent inflow of $8.285 billion in Community Development Block Grant Mitigation (CDBG-MIT) funds which have been made available by the Department of Housing and Urban Development (HUD), after months of delay. Additionally, new Current Expected Credit Losses (CECL) regulations will likely have material operational implications as well as financial ones.

Are local banks penalized for operating in Puerto Rico?

The economic uncertainty that Puerto Rico has experienced in recent years has had a negative effect on the market value of banks that have their main operations located in the Island. However, the solid performance of local banks in terms of profitability and capital adequacy has translated into important increases in market capitalization, eliminating or significantly reducing their market risk premium.

Informe de V2A sobre la banca de RD – Enero a Septiembre 2019

El primer semestre del año 2019 se caracterizó por una ralentización de la economía en República Dominicana con un crecimiento del Índice Mensual de Actividad Económica (IMAE) de 4.7% contra el primer semestre de 2018, inferior al 7.0% registrado en el año 2018 contra el 2017. Los meses de septiembre y octubre de 2019 mostraron un aumento interanual del IMAE de 5.2% indicando un nuevo repunte de la actividad económica después de las políticas monetarias expansivas del banco central (reducción de la tasa de intercambio y de la tasa de encaje legal). Estas medidas están a tono con el nivel de inflación acumulada de enero a noviembre que se situó en 3.45% y que se encuentra dentro de la meta de inflación del Banco Central de la República Dominicana. La mejora de la actividad económica vino acompañada de un aumento de 1.7 puntos porcentuales de la rentabilidad de la banca múltiple representada por el TOP 5 en el periodo de enero a septiembre de 2019 con respecto al 2018.

PR Banking Industry Report Q3 2019

The local banking industry registered another strong quarter in Q3 2019, posting an industry-wide YTD 2019 annualized Pre-Tax ROE of 14.6%. All banks achieved double-digit profitability levels when looking at YTD Pre-Tax ROE, with Popular leading the way with 19.1%, followed by Scotia with 11.9%, FirstBank with 11.1%, Santander with 10.7%, and Oriental with 10.4%. The surviving banks have been able to perform well despite a challenging operating market and a still sluggish economic recovery. The slow pace of disbursements of post-disaster federal funds has thwarted a more robust recovery from materializing. While there have been some positive developments, like a historically low unemployment rate (7.7% in Oct. 2019), Puerto Rico is still very far from being on a sustainable growth path, and questions remain about growth drivers once post-disaster funds are depleted. In this issue, we analyze expected market share distributions in the wake of the latest wave of consolidations. In June 2019 Oriental announced the acquisition of Scotia’s Puerto Rico operations, while in October 2019 FirstBank reported the purchase of Santander’s Puerto Rico operations. With these latest acquisitions, local commercial banks will come to dominate the local market.

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