The bank is committed to maintaining an attractive net interest margin, which was 28bp higher in the first half of this year than in the corresponding period of 2006. The overall increase was mainly due to the focus on consumer lending products and client deposits. The integration of Island Finance, a consumer finance business that was acquired last year, contributed to net interest margin expansion.
Another key initiative was strong credit risk management. The Puerto Rican economy experienced a slowdown starting in Q206, which had a negative impact on credit quality. Santander took early steps to tighten its underwriting standards and has been closely monitoring the credit performance of the loan portfolio. As a result, the NPL ratio was only marginally higher than in the previous year, despite the highly adverse conditions.
Expense control was another area of continuous emphasis. The discipline developed in keeping operating expenses under control was a differentiating factor for the bank, and expense growth last year was kept below the rate of inflation. A strong emphasis on profitability and asset quality distinguishes Santander from the rest of the local players.
“It is a great honour to receive The Banker’s recognition as Bank of the Year 2007 in Puerto Rico,” says chief executive José R González. “The award acknowledges the dedication and commitment of our 2200 employees, our customers, shareholders and community. We will continue to emphasise cross-selling strategies to promote organic growth, and improve our distribution and service capabilities to provide the highest standards to our clients and to continue increasing shareholder value.”
