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N.Y. Investment Conference To Showcase P.R.’s Publicly Traded Financial Companies

Magnificent seven have averaged 13% to 15% annual growth for past 10 years


October 2, 2003
Copyright © 2003 CARIBBEAN BUSINESS. All Rights Reserved.

Brean Murray & Co., a New York investment & merchant banking firm, will stage for the second year in a row a conference for U.S. investors seeking opportunities among Puerto Rico’s financial institutions. The conference will take place Oct. 30 at the New York Stock Exchange following a dinner affair the previous evening.

Last year, Murray held the first "Investment Opportunities in the Commonwealth of Puerto Rico" conference on the island. Dozens of stateside investors, among them representatives of major mutual funds, pension funds, and insurance firms, convened in San Juan for a two-day conference which brought them into contact with the top management of the island’s leading financial institutions.

Among the participants in the conference was then-New York Stock Exchange Chairman & CEO Dick Grasso, who hailed Puerto Rico’s financial stocks as one of the best-kept secrets in financial markets.

Murray said his company started the conference to educate institutional investors about the seven public companies trading at a sharp discount to both their own earnings per share growth rates and the average growth rate among all U.S. banking groups.

Despite how well the seven Puerto Rico financial institutions have performed, many believe they are still undervalued. "The financial institutions of Puerto Rico offer investors a compelling risk-reward investment opportunity and have outperformed every stock market average for the past 10 years, including all of the financial indexes, every bank stock index, and general averages such as the S&P," said Murray.

"The Puerto Rico group’s average return on common equity is 21.2% and the average return on assets [ROA] is 1.5%, while its U.S. mainland counterparts average equity return of 15.7% and ROA of 1.4%," added Murray. It is no surprise then that for the past two years, U.S. Banker magazine has ranked two of the seven in the Puerto Rico group, Doral Financial and Westernbank, among the top 10 banks.

Brean Murray’s institutional research arm has noted a number of possible developments that could alter the structure of Puerto Rico’s financial industry. It suggests that in five years, all local financial institutions could expand to the U.S. mainland. It also notes that the local industry might see some consolidations due to an overabundance of financial institutions competing for the same four million people.

Westernbank Chairman & CEO Frank C. Stipes told CARIBBEAN BUSINESS last week that at least one acquisition or merger among the major banking institutions in Puerto Rico could take place next year. "Instead of having close to a dozen midsize banks, we should have five or six world-class megabanks," said Stipes.

This Caribbean Business article appears courtesy of Casiano Communications.
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