Popular, Inc. Q1 FY2025 earnings call

• CEO Ignacio Alvarez announced his retirement on June 30th, with Javier succeeding him. - First quarter highlights: Net interest income up $16M, NIM at 3.4%, loan balances up $146M, deposit balances up $935M, credit quality improved. - Repurchased $122 million shares. - Puerto Rico business activity solid with favorable employment and consumer spending trends. - Deposit activity strong with seasonality from tax refunds. - NIM expanded due to lower deposit costs and tax-exempt securities. - Expenses increased by $3M, with personnel costs a key driver. - Credit metrics improved across loan portfolios with lower NPLs and net charge-offs.

Net interest income increased by $16 million, with the net interest margin expanding by five basis points to 3.4% mainly due to lower deposit costs. Loan balances grew by $146 million, led by the US segment. Deposit balances rose by $935 million. Non-interest income was $152 million, a decrease from Q4. Credit quality improved with lower net charge-offs and early delinquency. Tangible book value per share increased to approximately $72, driven by net income and lower unrealized losses in the investment portfolio.

• Net interest income expected to increase 7%-9% in 2025. - NIM expansion anticipated from maturing securities and loan originations. - Loan growth guidance revised to lower end of 3%-5% range for 2025. - Non-interest income expected to be in $155M-$160M quarterly range in 2025. - Full-year expenses expected to increase ~4% vs 2024. - ROTCE target of at least 12% in Q4 2025 and long-term 14%.

• Tariff uncertainty and economic recession concerns impacting markets. - Deposit cost reduction lag in US markets due to competition and time deposits. - Uncertainty in loan demand due to macroeconomic environment affecting client spending and project commitments.

Q: Frank Schiraldi asked about macro uncertainty, tariffs, and potential new investment in Puerto Rico, specifically pharmaceuticals and power grid.

A: Ignacio Alvarez said power grid not a significant issue; Javier mentioned Puerto Rico's skilled talent pool and attractive financial incentives for pharma.

Q: Frank Schiraldi followed up on deposit flows.

A: Jorge Garcia said deposits are 35% higher than pre-pandemic, with tax refunds contributing, and seasonality to watch.

Q: Gerard Cassidy asked about Jorge's view on leadership and capital.

A: Jorge Garcia discussed open authorization for buybacks and focus on return on capital.

Q: Timur Braziler asked about NII and deposits.

A: Jorge Garcia talked about NII drivers and deposit mix in Puerto Rico vs US.

Q: Jared Shaw asked about onshoring and construction growth.

A: Multiple responses on incentives for various industries and construction growth expectations.

Q: Benjamin Gerlinger asked about credit trends and deposits.

A: Lidio Soriano and Jorge Garcia discussed credit performance and deposit-refund relationship.

Q: Kelly Motta asked about ROTCE and fee income.

A: Jorge Garcia discussed ROTCE requirements and fee income rebound expectations.

Q: Paul Cardillo asked about fee income.

A: Jorge Garcia said fee income expected to rebound towards guidance ranges.