Popular(US:BPOP)2025-10-23 16:00Financial Data and Key Metrics Changes - The company reported a net income of $211 million and EPS of $3.15, an increase of $1 million and $0.06 per share, respectively, driven by higher revenues and an expanding net interest margin [4][10] - Net interest income increased by $15 million to $647 million, with a net interest margin expansion of two basis points on a gap basis [11][12] - The effective tax rate decreased to 14.5% from 18.5% in the previous quarter, influenced by a higher proportion of exempt income [17][61] Business Line Data and Key Metrics Changes - Loan growth was strong at $502 million, with contributions from both banks, primarily in commercial and construction lending [11][12] - Non-interest income was $171 million, an increase of $3 million compared to the previous quarter, driven by robust customer transaction activity [15] - Total operating expenses increased by $3 million to $495 million, primarily due to a non-cash goodwill impairment [16] Market Data and Key Metrics Changes - The unemployment rate in Puerto Rico remained low at 5.6%, with consumer spending resilient and healthy [5][6] - Combined credit and debit card sales for Banco Popular customers increased by approximately 5% compared to the third quarter of 2024 [5] - The construction sector showed solid momentum, supported by public and private investments [6] Company Strategy and Development Direction - The company’s strategy focuses on being the number one bank for customers, simplifying operations, and achieving a sustainable 14% return on tangible common equity [7][9] - Recent initiatives include expanding digital capabilities and modernizing branches to enhance customer engagement [9][10] - The company is committed to improving cash management and credit delivery for small and mid-sized businesses [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the economic trends in Puerto Rico, citing a backlog of federal disaster recovery funds and new development projects [6][23] - The company aims to close out 2025 on a high note, focusing on deposit retention and loan generation [23] - Management remains confident in the risk profile of the loan portfolios despite recent credit quality concerns related to two large commercial loans [20][40] Other Important Information - The CET1 ratio decreased to 15.8%, primarily due to loan growth and capital actions [18] - The company declared a quarterly common stock dividend of $0.75 per share, an increase from the previous quarter [18] Q&A Session Summary Question: Margin and Asset Yields - Management indicated that they expect net interest margin (NIM) to continue expanding despite potential rate cuts, supported by fixed asset repricing and loan growth [26][27] Question: Credit Trends - Management noted that the increase in delinquency rates is within seasonal variations, and they remain optimistic about the consumer credit outlook [30][31] Question: Large CNI Loan Reserves - The company clarified that the large commercial loan remains current on payments, and the decision to classify it as non-accrual was due to deteriorating circumstances [34][35] Question: Competition in Deposits - Management acknowledged increased competition in the market but emphasized their commitment to rational pricing and maintaining strong client relationships [63][64] Question: Future Guidance on ROCI - Management confirmed that the target of a sustainable 14% ROCI is a guiding principle, with ongoing efforts to improve net income performance [57][59]