Puerto Rican financial institution Popular (NASDAQ: BPOP) reported Q2 CY2025 results beating Wall Street’s revenue expectations, with sales up 8.9% year on year to $800 million. Its non-GAAP profit of $3.09 per share was 21.8% above analysts’ consensus estimates.

Is now the time to buy BPOP? Find out in our full research report (it’s free).

StockStory’s Take

Popular’s second quarter results reflected strong underlying business trends, with management highlighting higher net interest income, expanding net interest margin, and robust loan and deposit growth as key drivers. CEO Javier Ferrer pointed to a “very strong 13.3% return on tangible common equity,” supported by disciplined credit quality and a $900 million increase in loans. CFO Jorge Garcia attributed the improved results to balance sheet growth and asset repricing, while also noting that deposit retention strategies contributed to lower deposit costs. Management also underscored improved credit performance and operational discipline as factors supporting profitability.

Looking forward, management expects the positive momentum to continue, citing ongoing loan demand in Puerto Rico and niche U.S. lending, as well as a focus on expense efficiency. CFO Jorge Garcia stated that the bank now anticipates net interest income growth of 10% to 11% for the full year, supported by repricing fixed-rate assets and continued deposit retention. CEO Javier Ferrer emphasized Popular’s transformation initiatives, including digital platform upgrades and operational streamlining, as “designed to enhance customer experience and drive sustainable growth.” Management believes these efforts position the company to achieve a sustainable 14% return on tangible common equity over time.

Key Insights from Management’s Remarks

Management credited the second quarter’s performance to higher loan volumes, improved deposit mix, and ongoing transformation initiatives aimed at operational efficiency and customer experience.

• Loan growth momentum: The lending teams grew the loan portfolio by over $900 million, with particular strength in commercial and construction lending, including a $425 million infrastructure financing in Puerto Rico.
• Deposit franchise strength: Deposit balances increased by $1.4 billion, with noninterest-bearing deposits contributing to lower overall funding costs and supporting net interest margin expansion.
• Credit quality improvements: Credit metrics, such as lower nonperforming loans and reduced net charge-offs, improved across mortgage, commercial, and consumer portfolios. Management attributed this to both favorable economic conditions and tighter credit standards in recent periods.
• Transformation program progress: The company advanced its multi-year transformation program, modernizing branches, launching a new digital cash management platform, and streamlining loan processing for small and midsize businesses. These initiatives aim to simplify operations and enhance customer satisfaction.
• Capital actions: Popular announced a new $500 million share repurchase program and a 7% dividend increase, reflecting its strong capital position and commitment to returning value to shareholders while maintaining capacity for franchise investment.

Drivers of Future Performance

Popular’s outlook is guided by continued loan demand, technology-driven operational efficiencies, and disciplined expense management, balanced against credit and deposit competition risks.

• Sustained loan and deposit growth: Management expects continued loan growth in both Puerto Rico and U.S. niche markets, supported by infrastructure projects and private sector investment. Deposit retention strategies remain a focus amid ongoing competition for funding.
• Transformation and efficiency gains: Ongoing technology upgrades and branch modernization are projected to streamline operations, reduce costs, and improve customer experience. Management anticipates these efforts will help offset higher personnel expenses, including profit sharing tied to outperformance.
• Credit and market risk management: Management remains cautious regarding potential economic headwinds and competitive pressures on deposit costs. Tighter credit standards and ongoing monitoring are expected to support asset quality, though seasonality and macroeconomic factors could influence short-term trends.

Catalysts in Upcoming Quarters

Looking ahead, the StockStory team will be tracking (1) the execution of Popular’s transformation initiatives to improve efficiency and customer experience, (2) the pace of loan growth, particularly in infrastructure and commercial sectors, and (3) the effectiveness of deposit retention strategies amid evolving competition. Additionally, we will monitor credit quality trends as the economic environment shifts and federal recovery funds are deployed.

Popular currently trades at $115.59, in line with $115.19 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free).

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