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POPULAR, INC. (BPOP)·Q2 2025 Earnings Summary

Executive Summary

  • EPS of $3.09 beat Wall Street consensus by ~22% (vs $2.54)*; “strong performance” driven by higher net interest income (NII), NIM expansion, and improved credit quality .
  • Revenue (SPGI-defined “total revenue”) missed modestly: $751.1M actual vs $775.6M estimate, while GAAP NII rose to $631.5M and GAAP non‑interest income to $168.5M* .
  • Guidance raised: NII growth now 10–11% (was 7–9%); NCOs cut to 45–65bps (was 70–90bps); non‑interest income guided to the high end of $155–160M/quarter; OpEx 4–5% including profit sharing .
  • Capital actions: dividend increased to $0.75 and new $500M buyback announced—plus $112.0M repurchased in Q2—support capital return narrative .
  • Catalyst: visible loan growth ($931M QoQ) and NIM/dep-cost improvements with raised NII guidance; focus areas are Q3 deposit seasonality and OpEx discipline .

What Went Well and What Went Wrong

What Went Well

  • NII and NIM expansion: GAAP NII rose to $631.5M (+$26M QoQ) and NIM to 3.49% (+9bps); taxable-equivalent NIM to 3.85% (+12bps) .
  • Broad-based growth with better credit: loans +$931M QoQ; deposits +$1.4B QoQ; NPL ratio improved to 0.82% and annualized NCO ratio fell to 0.45% .
  • Confidence and strategic execution: “We delivered strong performance…”; CFO expects ≥12% ROTCE for full year; CRO: “confident…risk profile…will allow us to operate successfully” .

What Went Wrong

  • Operating expenses rose $21.7M QoQ to $492.8M, driven by $13.0M profit‑sharing accrual and higher personnel costs .
  • Revenue (SPGI) underperformed estimate despite strong GAAP NII; watch mix and definition differences across data providers* .
  • Q3 deposit seasonality and continued retail yield-seeking behavior could pressure balances/costs; management flagged expected seasonal outflows and ongoing competition .

Financial Results

Core P&L and Margins (GAAP)

MetricQ4 2024Q1 2025Q2 2025
EPS ($)$2.51 $2.56 $3.09
Net Interest Income ($M)$590.8 $605.6 $631.5
Non-Interest Income ($M)$164.7 $152.1 $168.5
NIM (GAAP, %)3.35% 3.40% 3.49%
NIM (FTE, %)3.62% 3.73% 3.85%

Segment NII and NIM

Segment MetricQ4 2024Q1 2025Q2 2025
BPPR NII ($M)$506.9 $521.9 $538.5
BPPR NIM (%)3.56% 3.63% 3.68%
Popular U.S. NII ($M)$92.2 $92.9 $102.2
Popular U.S. NIM (%)2.71% 2.74% 2.93%

Key KPIs

KPIQ4 2024Q1 2025Q2 2025
Loans HIP ($B)$37.11 $37.25 $38.19
Deposits ($B)$64.88 $65.82 $67.22
NPL Ratio (%)0.95% 0.84% 0.82%
ACL / Loans (%)2.01% 2.05% 2.02%
CET1 (%)16.03% 16.11% 15.91%
TBV / Sh ($)$68.16 $72.02 $75.41
Total Deposit Costs (%)1.96% 1.83% 1.78%

Consensus vs Actuals (SPGI-defined)

MetricQ4 2024Q1 2025Q2 2025
EPS Estimate ($)2.096*2.182*2.5375*
EPS Actual ($)2.5236*2.56*3.09*
Total Revenue Estimate ($M)748.6*760.7*775.6*
Total Revenue Actual ($M)689.4*693.6*751.1*

Values retrieved from S&P Global. (*)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Interest Income growthFY 20257–9% 10–11% Raised
Non-Interest Income (per quarter)FY 2025$155–$160M High end of range Raised bias
Net Charge-Offs (annualized)FY 202570–90 bps 45–65 bps Lowered
Operating ExpensesFY 2025~4% 4–5% incl. profit-sharing Raised (incl. PS)
Effective Tax RateFY 202519–21% 18–20% Lowered
Loan GrowthFY 20253–5% Reaffirmed Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24, Q1’25)Current Period (Q2’25)Trend
Deposit costs trajectoryBPPR deposit costs fell 29bps in Q4’24; total deposit costs down 22bps; Q1 total deposit costs 1.83% Total deposit costs down to 1.78%; PR public deposit costs −10bps QoQ Improving
Credit qualityNPL ratio 0.95% (Q4); 0.84% (Q1); ACL/Loans ~2.01–2.05% NPL ratio 0.82%; NCO ratio 0.45%; ACL/Loans 2.02% Improving
Loan growth pipeline+$913M Q4; +$146M Q1 with US commercial/construction strength +$931M QoQ; large PR toll roads financing; reiterated 3–5% for FY Accelerating
Non-interest incomeStable ~$165M in Q4; softer $152M in Q1 $168.5M; guided to high end of $155–160M per quarter Improving
Transformation efficiencyQ4 noted modernization; Q1 continued investment CEO emphasized “simplify operations…improve efficiency” Ongoing progress
Capital returnQ4 buybacks restarted; dividend at $0.70 Dividend to $0.75; new $500M buyback; $112M repurchased in Q2 More aggressive
Q3 seasonality & competitionN/AExpect Q3 retail seasonality; retail yield-seeking persists; deposit retention focus Headwind noted

Management Commentary

  • “We delivered strong performance in the second quarter, highlighted by higher net interest income, an expanding net interest margin, healthy loan and deposit growth, and improved credit quality.” — Javier D. Ferrer, CEO .
  • “We now expect higher NII growth of 10% to 11% in 2025… and increasingly confident we should exceed a 12% ROTCE for the full year.” — Jorge García, CFO .
  • “Credit quality metrics improved… we are confident that the improvement in the risk profile of our loan portfolios positions Popular to operate successfully under more difficult economic condition.” — Lidio Soriano, CRO .
  • “Our capital actions… reflect the strength of our capital position.” — CEO on dividend increase and new buyback .

Q&A Highlights

  • Profit sharing and OpEx: CFO explained profit sharing accrual mechanics (max ~$40M, ~8% capped), embedded in guidance; total OpEx growth 4–5% including profit sharing .
  • Deposits: Management flagged typical Q3 seasonality and retail yield-seeking; deposit retention strategies enhanced via incentive structures .
  • Loan dynamics: Strong pipelines in PR and US; some anticipated construction payoffs/takeouts in US later in the year (likely Q4) .
  • Projects and capital: PR federal funds-driven project pipeline growing; comfortable keeping buyback pace given capital .
  • Stablecoins: Team formed to evaluate use cases following legislation; early innings but acknowledged industry impact .

Estimates Context

  • Q2 2025 results vs consensus: EPS $3.09 beat $2.54 by ~22%; SPGI “total revenue” $751.1M missed $775.6M by ~3%*.
  • Prior quarters: Q1 2025 EPS beat ($2.56 vs $2.18) with revenue miss ($693.6M vs $760.7M); Q4 2024 EPS beat ($2.52 vs $2.10) with revenue miss ($689.4M vs $748.6M)*.
  • Implication: Sell-side likely raises EPS estimates (NII guidance up; NIM tailwinds) while revenue frameworks may diverge due to bank reporting/definition differences; watch model alignment on “revenue” definition* .

Values retrieved from S&P Global. (*)

Key Takeaways for Investors

  • EPS beat with raised NII guidance (10–11%) and better credit—supports upward EPS revisions and stronger ROTCE trajectory into H2’25 .
  • Loan growth momentum (+$931M QoQ) and segment NIM expansion (BPPR +5bps; Popular U.S. +19bps) point to durable core earnings improvement .
  • Deposit costs trending lower (1.78% total) and PR public deposit repricing helped NIM; monitor Q3 seasonality and retail yield‑seeking .
  • OpEx discipline needed: profit-sharing accrual lifted costs by $13M; management is offsetting via efficiency workstreams .
  • Capital return commits (dividend to $0.75; new $500M buyback; $112M repurchased in Q2) are a positive valuation catalyst if earnings trajectory holds .
  • Credit risk downshifts (NCO guide 45–65bps; NPL 0.82%) lower downside risk to provision and bolster earnings visibility .
  • Near-term focus: Q3 deposit seasonality, construction takeout timing, and continued deposit retention—key to sustaining NIM/NII into year-end .