Question · Q3 2025
Kelly Ann Motta asked for clarification on the Q4 margin guidance of $5.10-$5.20, specifically inquiring about the underlying Fed funds assumption and any deviations from prior margin expansion expectations. She also questioned the strategic approach and cadence of AI investments aimed at driving efficiencies, and sought an update on capital priorities, including the outlook for buybacks and M&A.
Answer
Maritza Arizmendi, Chief Financial Officer, attributed Q3 margin deviation to better-than-expected savings account inflows. For Q4, she noted the impact of the late September 25 basis point Fed cut. José Rafael Fernández, Chief Executive Officer and Chairman of the Board of Directors, clarified that they are modeling a 50 basis point reduction in Fed funds for Q4 and mentioned deposit volatility. Mr. Fernández emphasized that AI investments are delivering unique customer insights and are also starting to yield efficiencies in banking operations, particularly in people, with 2026 expense guidance to follow in Q4. On capital, Mr. Fernández stated that strong capital supports loan growth as the top priority, with more active buybacks expected in Q4 and 2026 due to strong earnings, followed by dividends, citing a robust Puerto Rico economy and onshoring benefits.