Popular(US:BPOP)2026-01-27 16:02Financial Data and Key Metrics Changes - The company reported an annual net income of $833 million, an increase of $219 million or 36% compared to 2024 [5] - The Common Equity Tier 1 (CET1) ratio ended the year at 15.7%, with tangible book value per share increasing by 21% year-over-year to $82.65 [6] - Quarterly net income was $234 million, with earnings per share (EPS) of $3.53, reflecting an increase of $23 million and $0.38 per share respectively [8][13] - Net interest income (NII) for the quarter was $658 million, up $11 million, and for the year, NII increased by $259 million or 11% [15][16] Business Line Data and Key Metrics Changes - Loan growth for the year reached $2.2 billion, a 6% increase, with commercial loans leading the growth [5] - In the fourth quarter, loan growth was strong at $641 million, with $497 million from BBPR and $144 million from Popular Bank [16] - Non-interest income was $166 million, a decrease of $5 million compared to Q3, but aligned with guidance [19] Market Data and Key Metrics Changes - The unemployment rate in Puerto Rico remained stable at 5.7%, with consumer spending healthy and credit/debit card sales increasing by approximately 5% [9] - Airport passenger traffic reached a record of 13.6 million in 2025, a 3% increase from 2024, indicating strong tourism activity [10] Company Strategy and Development Direction - The company aims to be the number one bank for customers by enhancing relationships and providing exceptional service [10] - Focus on delivering solutions faster and improving productivity while reducing costs is a key strategic initiative [10] - The company is executing a series of sustainable efficiency initiatives, including exiting the U.S. mortgage business and optimizing its mortgage servicing business in Puerto Rico [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the stability of the Puerto Rican economy and the potential for continued loan growth driven by commercial lending [9][27] - The company anticipates a consolidated loan growth of 3%-4% for 2026, with a focus on maintaining a sustainable return on capital (ROC) above 14% [15][16] - Concerns about affordability and the PREPA situation were highlighted as potential risks to the economic outlook [89][90] Other Important Information - The company repurchased approximately $500 million in common stock during 2025, with a total of $720 million repurchased since resuming buybacks [6][21] - The effective tax rate for 2025 was 17%, down from 23% the previous year, with expectations for 2026 to be in the range of 15%-17% [20] Q&A Session Summary Question: Guidance on NII and ROC - Management indicated that NII growth is expected to slow slightly in 2026, with a target of 5%-7% growth and continued margin expansion [33][34] Question: Loan Growth Expectations - Loan growth is expected to moderate in 2026, particularly in consumer lending, while commercial lending remains strong [36][37] Question: Fee Growth Outlook - Management noted that unusual items in 2025 would impact fee growth guidance for the upcoming year [46] Question: M&A Opportunities - The company remains open to evaluating M&A opportunities that align with its strategic goals, focusing on enhancing shareholder value [47][49] Question: Deposit Competition - Management acknowledged competition in the deposit market but emphasized a steady pricing environment [78] Question: Economic Risks - Concerns about affordability and the PREPA situation were highlighted as key risks to monitor [89][90]