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IRA Bonanza For Banco Popular
Finished 2003 with 40% of $2.3 billion in local deposits
By LUIS A. RAMOS
April 1, 2004
Banco Popular de Puerto Rico continued to hold the lions share of the local individual retirement account (IRA) market last year, with nearly 40% of the total $2.3 billion in deposits through Dec. 31, 2003.
Part of this success can be traced back to an earlier tax season. In a war of IRA offers, Popular was particularly effective in promoting an IRA product yielding an interest rate fixed at 9.85% over a three-year period. It helped to increase the institutions portfolio by over $100 million, from $810.7 million on Dec. 31, 2002 to $913 million on that date last year.
"Our strategies responded to market changes," said Carlos La Verde, Populars financial planner & spokesman for the 2004 IRA campaign. "Capturing the IRA market requires a focus on service. To that end, our menu included the integration of branch, Internet, and phone banking supported by free delivery of documents. Stock and mutual-fund alternatives were also part of the strategy."
Other local financial institutions performed well. Oriental Bank & Trust augmented its IRA deposits from $658.9 million on Dec. 31, 2002 to $690.9 million on that date last year, representing a 4.9% gain. Its share of the market, however, fell a tad from 31.5% to 30%.
"Our organization has traditionally been recognized as a standard in IRAs," said Juan Jose Santiago, Oriental Financial Groups senior vice president & trust officer. "Although Oriental has made available an extensive menu of IRA options, the Puerto Rico Growth Fund, with its 29.85% yield last year, continues to be attractive to all customers."
Westernbanks portfolio grew 22.5%, from $207.7 million to $254.5 million, giving it an 11.1% share of the market. Other banks, cooperatives, and brokerage firms held the remaining 19.2% of the market.
Local financial institutions have been able to expand their IRA portfolios in part because of a two-pronged strategy to first, develop attractive products and second, educate consumers about their benefits.
In the 80s, people began opening IRAs to complement social security and other retirement plans. Today, more people are using them for their tax benefits. Regardless of why people choose to open an IRA, experts say it should lead to their financial betterment.
This Caribbean Business article appears courtesy of Casiano Communications.