Este informe no está disponible en español.
Moodys Improves Dorals Credit Outlook
Credit rating agency emphasized Dorals sustained profitability through economic cycles
by JEFFRY VALENTIN-MARI
June 15, 2000
Moodys Investors Servicea credit rating agencyassigned a Baa3 rating to Doral Financial Corporation senior debt and also changed the rating outlook from stable to positive, Doral Chairman of the Board and CEO Salomon Levis announced last week.
"Despite the current market scenario of rising interest rates, in which most financial companies have been dealing for the last year and a half, our new rating outlook is very optimistic and we are very pleased with it," Levis told CARIBBEAN BUSINESS.
"The new credit outlook will facilitate Dorals access to U.S. funding markets. The implication for us is that favorable credit outlook, such as the given by Moodys, will lower our cost of borrowing money. In addition, a reduction in funding costs could decrease our possibility of issuing more debt in the market," Levis added.
"The rating outlook reflects Dorals financial fundamental strength and its growing position in Puerto Ricos mortgage market. Our company is now stronger than several years ago in terms of its financial conditions," Levis said.
According to Levis, if the present trend continuesin terms of our business operationsthe company should be able to achieve Moodys higher investment grade credit rating in the near future.
Moodys recognized Dorals dominant market share in both originations and servicing of mortgage loans. The rating agency also noted Dorals sustained profitability through economic cycles, reflecting a sound business model that includes good cost control.
Furthermore, Doral has added somewhat to its product and geographic mix by establishing banking operations in Puerto Rico and in New York City in order to benefit from low-cost deposit funding. On the other hand, the rating agency noted that the out-of-market expansion presents additional challenges as well as opportunities for management.
Moodys report added that the bulk of Dorals mortgage banking activities are conducted through operating divisions of the parent company. Therefore, traditional holding company concerns, such as double leverage, are not an issue. Moreover, the company has access to several non-bank subsidiaries to support parent debt obligations, the Moodys report indicated.
Doral Financial Corporation (Nasdaq: DORL)headquartered in Puerto Ricoreported total assets of $4.8 billion at March 31.
Net income for the first quarter ended March 31, 2000 amounted to a record $20.3 million, compared to $15.7 million for the same period in 1999, representing an increase of 29%. Consolidated earnings per diluted share were $0.45 for the first quarter compared to $0.36 per diluted share for the comparable 1999 period.
Meanwhile, net interest income for the first quarter of 2000 rose slightly to $11.0 million.
Doral become a financial holding company last March 11, 2000 under the Gramm-Leach-Bliley Act of 1999.
"Doral Financial has great potential in a broader spectrum of other profitable financial businesses including securities underwriting, insurance, and merchant banking. We have entered the securities underwriting market through our profitable broker-dealer Doral Securities, Inc. and closed our first such transaction last April. We expect to be active in insurance and merchant banking shortly," Levis said.
This Caribbean Business article appears courtesy of Casiano Communications.