Popular (BPOP) Q3 2024 earnings summary

Executive summary

• Net income for Q3 2024 was $155.3 million, down from $177.8 million in Q2 2024, mainly due to a higher provision for credit losses despite increased net interest income and robust loan growth.

• Net interest income rose to $572.5 million, up $4.2 million sequentially, with net interest margin at 3.24%.

• Tangible book value per share increased to $69.04, aided by lower unrealized losses in the investment portfolio and share repurchases.

• Share repurchases totaled 599,096 shares for $58.8 million during the quarter.

• Business activity in Puerto Rico remains robust, with healthy consumer spending and strong employment trends.

Financial highlights

• Net interest income for Q3 2024 was $572.5 million, up $4 million sequentially and $38.5 million year-over-year; NIM expanded by 2 bps to 3.24%.

• Non-interest income was $164.1 million, down $2.2 million sequentially, mainly due to lower mortgage banking income.

• Provision for credit losses increased to $71.4 million, up $25 million sequentially and $26.3 million year-over-year, reflecting loan growth and higher auto loan delinquencies.

• Operating expenses decreased by $2.3 million to $467.3 million, with lower professional fees and reserves offset by higher technology and personnel costs.

• EPS was $2.16, down $0.31 sequentially; ROA was 0.84%; ROTCE was 9.98%.

Outlook and guidance

• Net interest income expected to increase 1.5%-2% in Q4 2024; full-year 2024 NII growth expected at 6%-7%, below prior 8%-10% guidance.

• Loan growth projected at approximately 4% for 2024, within the 3%-6% guidance.

• Effective tax rate for 2024 expected between 21% and 23%.

• ROTCE target for Q4 2025 revised to at least 12%, down from 14%, due to deposit mix shifts and limited U.S. loan growth.

• Full-year operating expenses expected at ~$1.91 billion, within the $1.89-$1.95 billion guidance.