Popular’s third quarter performance aligned with Wall Street’s expectations, highlighted by strong revenue growth, expanding net interest margin, and resilient loan demand across both Puerto Rico and U.S. operations. Management attributed the results to higher average deposit balances and robust commercial and construction lending, while noting that stable customer deposits underpinned the quarter. CEO Javier Ferrer-Fernández acknowledged that credit quality metrics were impacted by two isolated commercial loans, but emphasized these were not indicative of broader issues, stating, “excluding these two relationships, credit metrics remained stable.”

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

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From Popular’s Q3 Earnings Call

• Jared Shaw (Barclays): Asked about yield trends in the securities portfolio and NIM outlook. CFO Jorge Garcia explained that continued asset repricing and deposit funding strategies should support net interest margin expansion despite interest rate changes.
• Timur Braziler (Wells Fargo): Inquired about the impact and resolution timeline for the large commercial loan in nonperforming status. CRO Lidio Soriano stated the borrower remains current on payments and expects a resolution by next year, emphasizing the isolated nature of the event.
• Benjamin Gerlinger (Citi): Questioned the rationale behind the upper-end guidance for net charge-offs. Soriano clarified that the elevated guidance reflects the possibility of further charge-offs related to the specific commercial loan, not a shift in consumer credit trends.
• Kelly Motta (KBW): Sought clarity on the timing and sustainability of the 14% ROTCE target. Garcia reiterated that the target remains guiding, with progress driven by net income and operating leverage, and that the current year’s tax rate is a sound baseline for future planning.
• Thomas Leddy (RBC): Asked about underwriting standards amid increased competition. CEO Ferrer-Fernández affirmed that Popular maintains conservative underwriting and has not eased standards in response to market dynamics.

Catalysts in Upcoming Quarters

In the coming quarters, our analysts will be focused on (1) the pace of adoption and impact of new digital banking solutions and transformation projects, (2) the sustainability of loan growth and deposit retention, particularly amid competitive pressures, and (3) the resolution of isolated credit events and any resulting impact on charge-offs. Developments in expense management and additional operational efficiency initiatives will also be key areas to watch.

Popular currently trades at $110, down from $115.36 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free for active Edge members).

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