San Juan, Puerto Rico – First BanCorp. (NYSE: FBP) is expected to see a positive trend in earnings due to low loan growth, which will help offset the impact of margin pressure in the coming year. Analysts predict a rise in earnings per share for the company, with estimates of $1.83 for 2024 and $1.89 for 2025. These revised earnings projections are attributed to better-than-expected expenses reported by the company. As a result, First BanCorp. is now being upgraded to a buy rating.

Although loan growth for First BanCorp. was moderate during the second quarter, the company’s management remains optimistic about the future, citing healthy pipelines and potential growth in the residential mortgage segment. However, economic conditions in Puerto Rico have posed challenges, with a decline in economic activity and a slight increase in unemployment. Despite these challenges, the company is expected to maintain steady loan growth below last year’s levels.

In terms of the net interest margin, First BanCorp. witnessed improvement in the second quarter, which is expected to continue rising temporarily before facing downward pressure from anticipated interest rate cuts. Analysts anticipate an initial increase in margin followed by a slight decrease in the coming year. Furthermore, a reduction in expense estimates and provision expenses have led to a positive adjustment in earnings forecasts.

One major risk factor for First BanCorp. remains natural disasters, particularly hurricanes, given its location in Puerto Rico. The company also faces risks associated with its securities portfolio, although upcoming interest rate cuts are expected to mitigate unrealized losses. Despite these risks, the company maintains a low credit risk in its loan portfolio, with a solid liquidity position.

The decision to upgrade First BanCorp. to a buy rating stems from its attractive dividend yield and positive earnings outlook. Analysts have compared the company’s valuation to peers and forecast a target price based on multiples, indicating a potential upside for investors. The combination of earnings estimates, dividend yield, and peer analysis supports the decision to upgrade the stock to a buy rating.