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POPULAR, INC. (BPOP)·Q3 2025 Earnings Summary

Executive Summary

  • EPS of $3.14 beat consensus ($2.91) on higher NII and a lower ETR; revenue of $742.6M missed consensus ($804.0M) as provision rose on two idiosyncratic commercial NPLs .*
  • NIM expanded to 3.51% GAAP (3.90% FTE), with stable core deposit trends; loans grew $502M QoQ across commercial, construction, and mortgage .
  • Credit quality was the main headwind: NPLs rose $191M QoQ to $502M (1.30% of loans) and NCOs increased to 0.60% annualized, driven by a $158M Puerto Rico telecom C&I and a $30M Florida hotel CRE credit .
  • Guidance updates: non-interest income raised (Q4: $160–$165M; FY: $650–$655M), loan growth now 4–5%, ETR lowered (Q4: 14–16%; FY: 16–18%); NII growth reaffirmed at 10–11% YoY; NCOs guided to 50–65 bps for FY .
  • Capital actions: repurchased $119.4M of stock (avg $119.33), increased common dividend to $0.75; CET1 15.79% and tangible BVPS $79.12 (+$3.71 QoQ) .

What Went Well and What Went Wrong

  • What Went Well

    • NIM widened to 3.51% GAAP and 3.90% FTE; NII rose $15M QoQ, aided by redeploying cash to short-duration USTs and deposit pricing discipline .
    • Broad-based loan growth (+$502M QoQ) in commercial (+$199M), construction (+$136M), and mortgage (+$114M) portfolios across both BPPR and Popular U.S. .
    • Management raised non-interest income outlook and lowered tax rate guidance; CFO: “we now expect Q4 non-interest income to be $160–$165M…and ETR…14% to 16% in Q4; 16% to 18% for 2025” .

  • What Went Wrong

    • Credit: NPLs jumped to $502M (1.30% of loans), ACL/NPL fell to 156.6% from 246.9% QoQ due to two large, borrower-specific C&I/CRE exposures; NCOs rose to 0.60% annualized .
    • Provision increased to $75.1M (+$26.2M QoQ), pressuring revenue vs consensus; BPPR drove most of the increase tied to the large commercial inflows .
    • Operating expenses edged up ($495.3M, +$2.5M QoQ), including a $13.0M goodwill impairment at the U.S. equipment leasing subsidiary; personnel and tech/software costs rose .

Financial Results

MetricQ3 2024Q2 2025Q3 2025
Revenue ($USD Millions)$665.1 $751.1 $742.6
Diluted EPS ($USD)$2.16 $3.09 $3.14
Net Interest Margin (GAAP, %)3.24% 3.49% 3.51%
Net Interest Income ($USD Millions)$572.5 $631.5 $646.5
Non-Interest Income ($USD Millions)$164.1 $168.5 $171.2
Provision for Credit Losses ($USD Millions)$71.4 $48.9 $75.1
Net Income ($USD Millions)$155.3 $210.4 $211.3

Segment breakdown (selected operating metrics):

SegmentMetricQ2 2025Q3 2025
BPPRLoans HIP ($B)$26.77 $27.13
BPPRTotal Deposits ($B)$55.88 $54.88
BPPRNet Interest Margin (%)3.68% 3.71%
BPPRNet Interest Income ($M)$538 $551
Popular U.S.Loans HIP ($B)$11.38 $11.53
Popular U.S.Total Deposits ($B)$11.95 $12.16
Popular U.S.Net Interest Margin (%)2.93% 2.94%
Popular U.S.Net Interest Income ($M)$102 $105

Key performance indicators:

KPIQ2 2025Q3 2025
Total Assets ($B)$76.07 $75.07
Total Deposits ($B)$67.22 $66.51
CET1 (%)15.91% 15.79%
Tangible BVPS ($)$75.41 $79.12
NPLs ($M)$311.6 $502.2
NPL Ratio (%)0.82% 1.30%
NCO Ratio (annualized, %)0.45% 0.60%
ACL/Loans (%)2.02% 2.03%
ACL/NPL (%)246.9% 156.6%

Guidance Changes

MetricPeriodPrevious Guidance (Q2 2025)Current Guidance (Q3 2025)Change
Net Interest Income YoY growthFY 202510–11% 10–11% (reaffirmed) Maintained
Non-Interest IncomeQ4 2025Prior quarterly guidance not specified $160–$165M Raised
Non-Interest IncomeFY 2025Not specified $650–$655M Raised
Net Charge-offs (annualized)FY 202545–65 bps 50–65 bps Raised low end
Operating Expenses YoYFY 2025+4–5% +4–5% Maintained
Effective Tax RateQ4 202518–20% 14–16% Lowered
Effective Tax RateFY 202518–20% 16–18% Lowered
Loan GrowthFY 20253–5% 4–5% Raised low end

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
NIM/NII trajectoryNIM expanded in Q1/Q2 via UST reinvestment and deposit repricing Further NIM expansion; expect continued tailwinds; portfolio duration ~2–3 years Positive, continuing
Deposit costs & public depositsLower public deposit costs aided Q1/Q2; average balances rose Public deposit beta near 1, linked to 3M UST; lagged repricing to aid spread Supportive
Credit qualityQ1/Q2 improvements in NPLs & NCOs Two large, idiosyncratic NPLs drove metrics; excluding them, stable Mixed, idiosyncratic pressure
Transformation & efficiencyOngoing investment in tech/process; expense discipline themes 80+ projects; dual-run SaaS investments; offsets via savings; exit U.S. RM origination; close 4 branches Execute with reinvestment
Tax rate~18–20% earlier; mix-driven variability ETR lowered via mix and PR code change; Q4 14–16%, FY 16–18% Lower run-rate
Capital actionsOngoing buybacks; dividend increase announced in Q2 $119.4M buyback; dividend at $0.75; CET1 15.79% Shareholder-friendly

Management Commentary

  • CEO: “We are very pleased with our strong results…driven by higher revenues, continued expansion of our net interest margin, and discipline in expense management” .
  • CFO: “We continue to expect to see NII growth of 10% to 11% in 2025…we now expect Q4 non-interest income to be in a range of $160 to $165 million…ETR for Q4 in the range of 14% to 16% and for the year…16% to 18%” .
  • CRO: “Credit quality metrics were impacted by two unrelated commercial exposures…This impact…does not reflect broader credit quality concerns” .
  • CEO on strategy: “Be the #1 bank for our customers…be simple and efficient…be a top-performing bank” .

Q&A Highlights

  • Margin outlook: Management expects continued NIM expansion via fixed-asset repricing and lagged public deposit cost declines; public deposits priced off 3-month UST with near-1 beta .
  • Credit event details: The $158M Puerto Rico telecom C&I borrower is current on payments but in liability management; potential charge-offs ahead; $30M Florida hotel CRE had a ~$14M charge-off in Q3 .
  • Expense & transformation: 80+ projects, dual SaaS run costs, and targeted branch reductions (exit U.S. residential mortgage origination, close four NY metro branches) to slow expense growth while investing .
  • Competition & underwriting: Competitive pressure mainly on pricing in NY/South Florida; underwriting standards remain conservative; prioritize full relationships (loans plus deposits) .

Estimates Context

MetricQ3 2024 ConsensusQ3 2024 ActualQ2 2025 ConsensusQ2 2025 ActualQ3 2025 ConsensusQ3 2025 Actual
EPS ($)2.382*2.16 2.5375*3.09 2.906*3.14
Revenue ($USD Millions)761.8*665.1 775.6*751.1 804.0*742.6

Values retrieved from S&P Global.*

Implications:

  • Q3 EPS beat but revenue missed; mix driven by higher provision while NIM/loan growth support earnings .
  • Estimate revisions likely to reflect lower ETR and elevated near-term credit costs; FY non-interest income raised .

Key Takeaways for Investors

  • Earnings quality: EPS beat despite higher provision; NIM tailwinds and deposit mix management remain intact .
  • Credit watchlist: Two large idiosyncratic credits drove NPL/NCO metrics; monitor resolution timing and any additional charge-offs in Q4 .
  • Guidance constructive: Raised non-interest income and loan growth with lowered ETR; NII growth reaffirmed at 10–11% YoY .
  • Capital flexibility: Strong CET1 (15.79%), rising TBVPS, ongoing buybacks and dividend increase support total return .
  • Deposit dynamics: Public deposit cost linkage to 3M UST and lag effects should sustain spread support in a declining rate environment .
  • Segment health: BPPR NIM 3.71% and PB NIM 2.94% both improved; loan growth broad-based across segments .
  • Trading angle: Near-term volatility likely around credit headlines; positive catalysts include continued NIM expansion, lowered tax rate, and capital returns .

Additional Q3 2025 Press Releases

  • Preferred dividend declarations (ongoing cadence), plus capital actions and dividend increase disclosed through earnings materials .