Doral Financial posts narrower loss in 1Q

Doral Financial Corp.'s loss narrowed in the first quarter as the Puerto Rican bank paid less to raise cash for loans, the company said Tuesday.

Doral Financial lost $10.6 million, or 20 cents per share, in the first quarter, compared with a loss of $45.6 million, or $8.45 per share, in the first quarter last year.

Analysts polled by Thomson Financial forecast a loss of 44 cents per share.

Profit from lending rose 2 percent to $39 million from $38.2 million. The company earned more from lending because it did not pay as much to raise cash for loans.

Banks typically borrow money at a low interest rate and lend the money at a higher interest rate, profiting off the spread. In July, the investment group Doral Holdings invested $610 million in the bank. The company used this investment to pay off $625 million in bonds.

This enabled the company to raise money more cheaply.

Doral lent $372.1 million during the first quarter, a 50 percent increase from the first quarter of 2007.

Shares gained 50 cents, or 2.5 percent, to $20.20 in aftermarket electronic trading, from their regular session close at $19.70.