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POPULAR, INC. (BPOP)·Q1 2025 Earnings Summary

Executive Summary

  • EPS of $2.56 rose sequentially and beat Wall Street consensus by $0.38; total revenue missed consensus as non-interest income came in below guidance, while net interest income (NII) outperformed on lower deposit costs and reinvestment yields . EPS consensus: $2.182; revenue consensus: $760.7M; actual EPS: $2.56; actual revenue: $693.6M (EPS beat; revenue miss)*. Values retrieved from S&P Global.
  • Net interest margin expanded 5 bps GAAP (to 3.40%) and 11 bps on a tax-equivalent basis (to 3.73%), driven by reinvestment into U.S. Treasuries and deposit repricing; deposits increased $935M QoQ and loans rose $146M QoQ .
  • Credit quality improved: NPLs fell to 0.84% of loans, NCO ratio dropped to 0.53%, and ACL/NPL rose to 243%; CET1 increased to 16.11% and tangible book value per share rose $3.86 to $72.02 .
  • Guidance reaffirmed: FY25 NII up 7–9%, quarterly non-interest income $155–160M, NCOs 70–90 bps, OpEx +4%, ETR 19–21%; loan growth 3–5% with the lower end more likely given macro/tariff uncertainty (management) .
  • Capital return remains a catalyst: $122.3M buybacks in Q1 at ~$96/share and $0.70 quarterly common dividend declared for payment on July 1, 2025 .

What Went Well and What Went Wrong

What Went Well

  • Net interest income grew $14.8M QoQ with GAAP NIM +5 bps and FTE NIM +11 bps, helped by reinvestment of U.S. Treasuries at higher yields and lower deposit costs; BPPR NIM +7 bps and PB NIM +3 bps QoQ .
  • Strong deposit growth: ending deposits +$935M QoQ (ex-P.R. public deposits +$776M); CEO highlighted “particularly pleased with our deposit growth” (PR franchise strength) .
  • Credit metrics improved: NPLs -$36.7M QoQ to 0.84% of loans; NCOs -$18.3M QoQ to 0.53%; ACL/NPL increased to 242.7% and ACL/loans rose to 2.05% .

What Went Wrong

  • Non-interest income decreased $12.6M QoQ to $152.1M, below the low end of 2025 quarterly guidance ($155–$160M), mainly on MSR fair value and equity-method investment weakness .
  • Operating expenses rose $3.4M QoQ to $471.0M on seasonally higher personnel costs (incentive awards, payroll taxes) and higher technology and processing fees .
  • Revenue missed consensus as non-interest income fell; S&P Global shows revenue actual $693.6M vs consensus $760.7M (miss)*. Values retrieved from S&P Global.

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Net Interest Income ($USD Millions)$572.5 $590.8 $605.6
Non-Interest Income ($USD Millions)$164.1 $164.7 $152.1
Operating Expenses ($USD Millions)$467.3 $467.6 $471.0
Net Income ($USD Millions)$155.3 $177.8 $177.5
Diluted EPS ($USD)$2.16 $2.51 $2.56
NIM (GAAP, %)3.24% 3.35% 3.40%
NIM (FTE, %)3.47% 3.62% 3.73%
Estimates vs Actual (Q1 2025)ConsensusActualResult
Primary EPS ($USD)2.182*2.56*Beat (by $0.38)*
Revenue ($USD Millions)760.7*693.6*Miss (by $67.1M)*
# of EPS Estimates5*——
# of Revenue Estimates6*——
Note: *Values retrieved from S&P Global.

Segment performance (NII/NIM and deposit costs):

SegmentQ4 2024Q1 2025
BPPR Net Interest Income ($USD Millions)$506.9 $521.9
BPPR NIM (%)3.56% 3.63%
BPPR Total Deposit Costs (%)1.67% 1.55%
PB Net Interest Income ($USD Millions)$92.2 $92.9
PB NIM (%)2.71% 2.74%
PB Total Deposit Costs (%)3.20% 3.09%

Key KPIs and capital:

MetricQ3 2024Q4 2024Q1 2025
Loans Held-in-Portfolio ($USD Billions)$36.19 $37.11 $37.25
Deposits ($USD Billions)$63.67 $64.88 $65.82
Total Assets ($USD Billions)$71.32 $73.05 $74.04
CET1 (%)16.42% 16.03% 16.11%
Tangible Book Value per Share ($USD)$69.04 $68.16 $72.02

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Interest Income growthFY 20257–9% 7–9% Maintained
Non-Interest IncomePer quarter FY 2025$155–$160M $155–$160M Maintained
NCOs (annualized)FY 202570–90 bps 70–90 bps Maintained
Operating ExpensesFY 2025+4% YoY +4% YoY Maintained
Effective Tax RateFY 202519–21% 19–21% Maintained
Loan GrowthFY 20253–5% 3–5% (lower end more likely given environment) Updated (lower end more likely)
Common DividendQuarterly$0.70 declared in Q4’24 & sustained $0.70 declared for July 1, 2025 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
Tariffs/Macro uncertaintyQ4 PR: deposit cost reductions; macro sensitivity via deposit mix . Q3 PR: deposit outflows; higher deposit costs; credit normalization .Management monitoring tariff uncertainty; focusing on client support; strong PR economic indicators (employment 5.5%, consumer spending) .Elevated uncertainty; cautious tone; operational resilience.
Deposit flows/mixQ3 PR: deposit balances -$1.9B QoQ; mix shift . Q4 PR: deposits +$1.2B QoQ; lower deposit costs .Deposits +$935M QoQ; ex-P.R. public +$776M; mass affluent product migration from DDAs to low-cost interest-bearing accounts .Improving balances; continued repricing tailwinds.
NII/NIM driversQ4 PR: GAAP NIM +11 bps; deposit cost declines; reinvestment .NII +$15M QoQ; GAAP NIM +5 bps; FTE NIM +11 bps from reinvestment and deposit repricing .Positive momentum; guidance maintained.
Credit quality/consumer normalizationQ3 PR: consumer delinquency/NCOs rising; NPLs up . Q4 PR: NCOs 0.74%; ACL/NPL 212.7% .NPLs down; NCOs down; ACL/NPL up; consumer vintages performing better; tightened underwriting .Improving; cautious outlook sustained.
Capital/BuybacksQ4 PR: buybacks restarted; CET1 16.03% .$122M buybacks in Q1; CET1 16.11%; authorization open-ended; measured capital strategy .Ongoing capital returns with conservative buffers.
Technology/AI initiativesPrior quarters limited disclosure in PRs.Attraction of tech and AI-oriented firms to PR driven by R&D credits; ongoing transformation program .Emerging theme; supports fee and lending opportunities.
Puerto Rico tourism/sector trendsNot highlighted previously in PRs.Tourism strong: airport traffic +11% YoY; ADR and RevPAR +10%/+9%; hotel occupancy >75% .Tailwind for local economy and retail/SME activity.

Management Commentary

  • CEO: “We increased net interest income, grew loans and deposits, maintained strong credit metrics… I am particularly pleased with our deposit growth… The operating environment has undoubtedly become more uncertain and volatile, but our strong capital and liquidity levels… position us well” .
  • CFO: “We expect NII to increase by 7% to 9% this year and anticipate further NIM expansion… lower cost of online deposits at Popular Bank” .
  • CRO: “Credit quality metrics improved… NPLs and inflows decreased… NCOs amounted to $49M or 53 bps vs 74 bps… ACL increased by $16M due to higher pessimistic scenario weights” .
  • CEO (transition): “I am confident that Javier and the team will take Popular to even greater heights” .

Q&A Highlights

  • Macro/tariffs and PR industrial outlook: Management sees PR’s advantage in pharma/medical devices and aerospace; power grid issues mitigated via on-site generation; government focused on attracting reshoring investment .
  • Deposits seasonality and mix: Tax refund seasonality aids Q1; mass affluent account migration reclassified DDAs to low-cost interest-bearing; U.S. market shows more cannibalization than PR .
  • Capital and buybacks: CET1 robust; buyback authorization open-ended; reductions in capital will be measured; board and regulators engaged; no current plan to pause buybacks despite uncertainty .
  • Loan growth cadence: Construction/multifamily pipelines in NY moving; potential payoffs may slow growth; PR low-income housing program could add demand; condo association lending demand rising in South Florida .
  • Non-interest income trajectory: Expect rebound to $155–$160M per quarter with seasonality in transactional/insurance; MSR/equity-method variability noted .

Estimates Context

  • Q1 2025 EPS beat: actual $2.56 vs consensus $2.182; revenue miss: actual $693.6M vs consensus $760.7M; management’s stronger NII and NIM trajectory alongside deposit growth likely supports upward EPS estimate revisions, while non-interest income variability (MSR FV, equity-method) tempers top-line revisions*. Values retrieved from S&P Global.

Key Takeaways for Investors

  • Deposit growth and reduced deposit costs drove NIM expansion; continued reinvestment into short/intermediate Treasuries should sustain NII momentum near-term .
  • Credit quality improved broadly (NPLs/NCOs down; ACL/NPL up), providing earnings durability amid macro uncertainty .
  • Guidance intact (NII +7–9%; OpEx +4%; ETR 19–21%), with loan growth leaning to lower end given tariffs/macro; execution on transformation and deposit strategies remains a focal point .
  • Capital returns remain supportive: $122M buybacks in Q1 and $0.70 quarterly dividend reaffirmed; CET1 at 16.11% offers flexibility .
  • Segment mix constructive: BPPR benefits from lower P.R. public deposit costs and investment yields; PB deposit repricing progressing despite competitive U.S. landscape .
  • Watch non-interest income volatility (MSR fair value, equity-method results); management targets $155–$160M per quarter for FY25 .
  • Near-term trading: EPS beat vs consensus with visible NIM tailwinds is supportive; monitor headlines on tariffs/reshoring and any deposit cost inflection, plus Q2 seasonal deposit spend patterns .
Note: S&P Global estimate and actual values are denoted with an asterisk; Values retrieved from S&P Global.