Popular (BPOP) Q3 Earnings call transcript Oct 23, 2024
2min read In the third quarter earnings call of Popular, Inc., the company reported a net income of $155 million, a decrease of $23 million from the second quarter. The decrease was attributed to a higher provision for credit losses, which was partly due to loan growth at BPPR. Despite the decrease, net interest income increased by $4 million compared to the second quarter.
During the call, management highlighted the company's strong loan growth, with balances increasing by $603 million in the quarter, driven primarily by the commercial segment. Popular Bank saw a $21 million increase in loan balances, driven by commercial loans. The net interest margin expanded by 2 basis points to 3.24%, mainly driven by higher average loan balances and the repricing of loans and reinvestment of securities in a higher interest rate environment.
One notable trend in the call was the focus on business activity in Puerto Rico, which remains solid as reflected in the favorable trends in total employment, consumer spending, and other economic data. Consumer spending remained healthy, with combined credit and debit card sales for BPPR customers increasing by approximately 4% compared to the third quarter of 2023.
Despite the challenges faced in the third quarter, management expressed optimism about the future of the company, particularly in the context of the strong economic activity in Puerto Rico. They anticipate loan growth in the fourth quarter of approximately 1%, resulting in total loan growth in 2024 of approximately 4%, within the original 3% to 6% guidance range. The company also expects net interest income to increase by approximately 1.5% to 2% compared to Q3, driven by continued reinvestment of securities and loan originations.
During the call, key shareholders and investors asked questions about the company's deposit trends and the potential impact of public deposits on net interest income. Management acknowledged that public deposits decreased significantly during the quarter, primarily due to the reduction in tax refunds and a shift towards higher-yielding investments. However, they remain optimistic about the future of the deposit base and are focused on maintaining a strong position in the market.
Looking ahead, Popular, Inc. is well positioned to support its clients in the coming years, particularly in the context of the significant amount of committed federal funds that have yet to be disbursed. The company is focused on achieving a sustainable return on tangible common equity, despite the challenges faced in the third quarter. With a strong focus on transformation efforts, repricing of the investment portfolio, and loan demand in all of its markets, Popular, Inc. is confident in its ability to achieve its long-term goals.
In conclusion, the third quarter earnings call of Popular, Inc. highlighted both challenges and opportunities for the company. Despite the decrease in net income, management expressed optimism about the future, particularly in the context of the strong economic activity in Puerto Rico. The company's focus on transformation efforts, loan growth, and maintaining a strong position in the market positions it well for the future. As the company looks towards the fourth quarter and beyond, it remains focused on achieving a sustainable return on tangible common equity and supporting its clients in a rapidly evolving economic landscape.
