Popular (BPOP) Q3 2024 earnings summary

Executive summary

• Net income for Q3 2024 was $155.3 million, down $23 million sequentially, mainly due to 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 and $38.5 million year-over-year, with net interest margin at 3.24%.

• Tangible book value per share increased by $6.33 to $69.04, aided by lower unrealized losses in the investment portfolio and net income.

• Share repurchases totaled about 600,000 shares for $58.8 million during the quarter.

• Business activity in Puerto Rico remains robust, with healthy consumer spending, strong demand for auto and mortgage loans, and economic growth of 2.8% in FY 2024.

Financial highlights

• Net interest margin expanded by 2 basis points to 3.24% due to higher average loan balances and repricing, partially offset by higher deposit costs.

• Operating expenses were $467.3 million, down $2.3 million sequentially, with lower professional fees and operational losses, offset by higher technology and personnel costs.

• 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 charge-offs in consumer and auto loans.

• Net income per diluted share was $2.16, down from $2.47 in Q2 2024.

Outlook and guidance

• Net interest income expected to increase 1.5%-2% in Q4 2024, with full-year growth of 6%-7%, below prior guidance.

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

• 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.

• Management expects continued stable credit quality and strong capital ratios.