Re suggests that Image source: The Motley Fool. DATEWednesday, July 23, 2025, at 11 a.
On the other hand, In contrast, EDTCALL PARTICIPANTSChief Executive Officer — Javier FerrerChief Financial Officer — Jorge GarciaChief Credit Risk Officer — Lidio SorianoNeed a quote from one of our analysts.
Meanwhile, [ tected]TAKEAWAYSNet Income: $210 million net income (GAAP) for Q2 2025, up $32 million sequentially from Q1 2025 to Q2 2025, driven by higher net interest income, increased noninterest income, and a lower vision for credit losses, partially offset by higher operating expenses.
Additionally, Earnings per (EPS): $3. On the other hand, 09, an increase of $0. 53 per compared to Q1 2025. Moreover, Return on Tangible Common Equity (ROCE): 13, in today's financial world.
3% return on tangible common equity for Q2 2025, a 190 basis point increase from the previous quarter (Q1 2025), given the current landscape.
Net Interest Income (NII): $632 million net interest income for Q2 2025, rising by $26 million compared to Q1 2025, driven by balance sheet growth, higher asset yields, and reduced deposit costs at both principal banks.
Nevertheless, Net Interest Margin (NIM): GAAP NIM expanded by 9 basis points in Q2 2025; tax-equivalent NIM expanded by 12 basis points in Q2 2025, both benefiting from lower deposit costs and greater balances in loans and tax-exempt investment securities.
Loan Growth: $931 million overall loan growth in Q2 2025, with $681 million at Banco and $251 million at Bank, predominantly led by commercial and construction lending, and including $265 million retained from a major toll road financing transaction.
Deposit Growth: Ending deposit balances rose by $1. 4 billion; Puerto Rico public deposits reached $20. 9 billion, up $1.
At the same time, 3 billion; Average nonpublic deposits increased by $499 million. Deposit Costs: Total deposit costs fell by 5 basis points. Banco costs decreased by 3 basis points to 1.
Furthermore, 52%; Bank deposit costs dropped by 14 basis points (remarkable data).
Noninterest Income: $168 million in noninterest income, $16 million above Q1 2025, and above the top end of quarterly guidance, mainly due to higher credit and debit card fees and a $3 million IRS reimbursement.
Moreover, Expense Growth Guidance: Operating expenses grew by $22 million to $493 million; 2025 expense growth guidance revised to 4%-5%, inclusive of up to $40 million full-year fit-sharing accrual, while underlying growth excluding fit sharing is expected to remain below 4% in 2025 compared to last year.
Repurchases and Dividends: $112 million in s repurchased at an average of $99 per ; a new $500 million incremental repurchase gram announced; the quarterly dividend increased by 7% to $0.
75 per, as recently announced.
Credit Quality Metrics: Nonperforming loans (NPLs) at Banco declined by $4 million, while Bank’s NPLs rose by $2 million; OREOs reduced by $6 million (an important development).
Net Charge-Offs: $42 million in net charge-offs, or 45 basis points annualized, compared to $49 million (53 basis points) in Q1 2025; full-year net charge-offs now guided to 45-65 basis points, below prior 70-90 basis points guidance.
Allowance for Credit Losses (ACL): Increased by $7 million to an ACL/loan ratio of 2. 02%, down from 2, in this volatile climate. 05% in Q1; ACL/NPLs ratio rose to 247% from 243%.
Vision for Credit Losses: $50 million vision for credit losses, a reduction from $65 million in Q1, largely due to imved portfolio metrics and economic factors, given current economic conditions.
Capital Ratios: Common equity Tier 1 (CET1) ratio was 15, in today's market environment. Additionally, 91%, 20 basis points lower than Q1 2025, due primarily to loan growth and recent capital actions.
Tangible Book Value per : $75. 41 tangible book value per, up $3.
39 from Q1 2025, benefiting from net income and lower unrealized losses in the mortgage-backed securities portfolio, partially offset by capital returns.
Guidance : Management now expects full-year NII growth of 10%-11% and ROCE above 12% for 2025; noninterest income is expected at the upper end of the $155 million-$160 million quarterly range.
SUMMARY (BPOP 0.
Additionally, 32%) reported higher net income (GAAP) compared to Q1 2025 and expanded its return on tangible common equity, while management announced both a new $500 million repurchase gram and a 7% increase in the quarterly common stock dividend, in this volatile climate.
Deposit and loan growth remained strong, driven by commercial and construction activity, and operating expense guidance was revised to reflect the impact of fit-sharing accruals.
Substantial imvements in credit quality led to lower net charge-offs and a downward revision to full-year loss guidance, supporting the company’s outlook for sustained fitability expansion.
Jorge Garcia said, "given the results in the first half of the year, along with the anticipated NIM expansion (an important development).
We now expect to see higher NII growth of 10%-11% in 2025 (this bears monitoring).
"fit-sharing expenses may reach a cap of $40 million, which represents 2% of the total expense base, and an accrual of $13 million occurred as earnings outpaced budget expectations (something worth watching), given the current landscape.
Additionally, Loan portfolios at both Banco and Bank demonstrated growth pipelines, with construction payoffs in the US segment anticipated primarily in the fourth quarter.
Nevertheless, Deposit seasonality continues to be expected, though inflows from tax refunds and public deposits have been stronger; Garcia explained, "clients have received more tax refunds than they did last year," supporting Puerto Rico consumer strength.
Management reiterated its commitment to efficiency measures, including both sustained cost discipline and operational transformation efforts, to offset increases driven by incentive compensation.
The company maintains a CET1 capital ratio above regulatory minimums even after new repurchase authorizations, with a CET1 ratio of 15.
Additionally, 91%, allowing continued capital return and growth investment as stated by management, in today's financial world.
Regarding stablecoins, CEO Ferrer said, "It's early innings, but we have started moving on the opportunity," indicating monitoring but no immediate model impact.
INDUSTRY GLOSSARYNPL (Nonperforming Loan): A loan on which the borrower is not making interest payments or repaying any principal (noteworthy indeed).
However, OREO (Other Real Estate Owned): Real estate assets owned by a bank, typically acquired through foreclosure.
CET1 (Common Equity Tier 1): A measure of a bank's core equity capital, used to assess capital adequacy under regulatory standards.
Furthermore, At the same time, ACL (Allowance for Credit Losses): The reserve set aside by a bank to cover potential credit losses on loans and leases.
Nevertheless, ROCE (Return on Tangible Common Equity): A fitability metric that measures net income as a percentage of average tangible common equity (remarkable data).
Nevertheless, Full Conference Call TranscriptJavier Ferrer: Thank you, Paul. On the other hand, Good morning, everybody. Additionally, I am happy to be here with you in my first earnings call as CEO.
I would to take a moment to recognize the impact that my predecessor, Ignacio Alvarez, had on this company during his tenure, as well as on me as a colleague and a friend.
It's an honor to such a great leader. Additionally, So thank you, Nacho, for your partnership, amid market uncertainty. I am humbled by the opportunity to lead this iconic Puerto Rican institution.
Nevertheless, For over one hundred and thirty years, has consistently demonstrated a deep commitment to Puerto Rico, its institutional values, and putting our customers at the heart of everything we do.
I joined almost eleven years ago, given current economic conditions.
In contrast, I knew if I wanted to make a meaningful contribution, this was the place to be (quite telling) (an important development).
What the re reveals is idea, simple and yet powerful, continues to inspire me.
However, Before I discuss the highlights for the second quarter, I am pleased to report that we recently announced two capital actions: a new incremental common stock repurchase gram of up to $500 million and a 7% increase in our quarterly common stock dividend to 75¢ per.
These actions evidence the strength of our capital position, which allows us to continue to invest in our franchise, serve the needs of our customers, and also return capital to our holders.
Furthermore, On Slide three, I will a few highlights from the period that reflect our strong operating performance in the second quarter, considering recent developments.
In contrast, We reported net income of $210 million and EPS of $3. 09 per, an increase of $32 million and 53¢ per, respectively, compared to the first quarter.
Importantly, the imvement in our bottom line resulted in a very strong 13. However, 3% return on tangible common equity.
Our results were driven by higher net interest income, an expanding net interest margin, and strong loan and deposit growth (which is quite significant).
We maintained our credit discipline, and credit quality continued to imve, in light of current trends.
I would to commend the lending teams at, which grew loans by more than $900 million during the quarter.
As a notable example, we served as agent bank for a $425 million loan to the private sector entity that operates and maintains several toll roads in Puerto Rico (noteworthy indeed).
This transaction is one of the largest infrastructure financings in Puerto Rico executed entirely by local financial institutions. Please turn to Slide four.
At the end of the second quarter, activity in Puerto Rico continued to be solid, reflected by favorable trends in total employment, consumer spending, and other key economic data (fascinating analysis).
The unemployment rate of 5. Additionally, 5% continues to hover around all-time lows, in light of current trends. Consumer spending has been resilient and remains healthy.
Combined credit and debit card sales for Banco customers increased by apximately 4% compared to the second quarter of 2024.
Purchase activity continues to be strong, as demonstrated by the $158 million increase in mortgage balances at Banco during the quarter (an important development).
While demand for new cars slowed somewhat after a very strong first quarter, we saw our auto loan and lease balances increase by $76 million during the period, amid market uncertainty.
Furthermore, The tourism and hospitality sector continues to be a source of strength for the local economy, given the current landscape.
This summer, the sector is benefiting from an added tailwind during what is usually a seasonally slow period due to Benito Martinez Ocasio's, also known as Bad Bunny's, thirty-nine concert residency at the Coliseum in San Juan, right next to our Center complex, in light of current trends.
Conservative estimates indicate that it will lead to apximately $200 million in additional local economic activity.
Moreover, It's also generating significant media exposure for the island, adding to its strong image as a compelling destination for travelers.
However, The brand is very well represented in the residences.
Additionally, some colleagues and I recently had an opportunity to attend the rebranding of an emblematic hotel perty in San Juan and tour one of the island's new luxury hotel and residential community developments being built on the East Coast, given the current landscape.
At the same time, It's encouraging to see the scale of private investments being made on the island.
Last but certainly not least, we continue to expect that the disbursement of federal disaster recovery funds will support economic activity for several years to come.
However, Given what we see every day, I am convinced there are opportunities for growth in Puerto Rico and that we are uniquely positioned to leverage them, given current economic conditions.
We do not take our market position for granted (noteworthy indeed).
We compete for it every day and are strongly committed to moting the island's gress as we have done for over one hundred thirty years.
Before turning it over to Jorge, I would to briefly on the of our transformation.
On the other hand, These efforts are designed to enhance our customers' s through more personalized and seamless experiences, increase employee performance and satisfaction with more agile work cesses, modernize the company's nology to enable greater innovation and security, and generate sustainable and fitable growth for our holders, in this volatile climate.
Additionally, A company-wide multiyear gram such as this one requires commitment, focus, and patience. We're pleased with the substantial gress we have made so far, in today's financial world.
We have modernized branches to enhance customer experience and operational efficiency, reduced loan cessing times for small and midsized commercial customers at Banco, and launched a new digital platform to imve our commercial cash management services.
Conversely, These are only a small sample of the many efforts and in cess that will ensure we are the number one choice for our customers, given the current landscape.
Nevertheless, I am confident we can imve how we work by becoming simpler, more ductive, and more efficient.
Furthermore, We will continue to leverage our position to seize additional opportunities for growth in Puerto Rico. I am convinced there are many.
Furthermore, To drive increased fitability and continue enhancing our performance in the coming years.
This analysis suggests that 's only been a couple of weeks since I officially began in this role, but I'm excited to show everyone what we can achieve together with even greater strategic focus and agility (noteworthy indeed).
I will now turn the call over to Jorge for more detail on our financial results, in today's financial world. Jorge Garcia: Thank you, Javier (quite telling).
Good morning, and thank you all for joining the call today, amid market uncertainty.
As Javier mentioned, our quarterly net income increased by $32 million to $210 million, and our EPS imved by 21% to $3.
These results were driven by better NII and noninterest income, and a lower vision for credit losses, offset somewhat by higher operating expenses.
Additionally, There are numerous positives to highlight this quarter, but most significant for us is that the imvement in net income coupled with our repurchase activity resulted in a 13 (something worth watching).
3% ROCE for the period, an increase of 190 basis points from last quarter. As we have mentioned before, our objective is to der sustainable financial results.
Our prior guidance of achieving at least a 12% ROCE in Q4 of this year still stands.
Moreover, Additionally, given this quarter's results and credit outlook, we are increasingly confident we should exceed a 12% ROCE for the full year, and not Q4 (which is quite significant).
Longer term, we remain focused on achieving a sustainable 14% return on tangible common equity. Please turn to slide six.
Our net interest income of $632 million increased by $26 million and was driven by balance sheet growth, asset repricing in our investment portfolio, and lower deposit costs in both of our banks.
Our net interest margin expanded by nine basis points on a GAAP basis and 12 basis points on a tax-equivalent basis, driven by lower deposit costs and a larger balance of loans and tax-exempt investment securities.
After a slow Q1, loan growth of $931 million in the quarter was very strong, with both banks contributing to the increase.
On the other hand, At BPPR, we saw loan growth of $681 million reflected across all portfolios, but driven primarily by commercial and construction lending.
This includes the $265 million that we retained from the toll roads financing that Javier described earlier. At PVE, we saw loan growth of $251 million, driven by commercial and construction lending.
Last quarter, we guided to the lower end of the 3% to 5% loan growth range due to expected payoffs in our construction portfolio and the uncertainty in the economic environment (which is quite significant), in today's financial world.
However, given the loan growth realized in Q2 and continued demand in Puerto Rico and in our niche lending es in the US, we reiterate our original 3% to 5% guidance.
In our investment portfolio, we continue to reinvest ceeds from maturities into treasuries, targeting a yield of at least 4% while trying to manage the duration of the portfolio.
During the quarter, we purchased apximately $2. Meanwhile, 4 billion of treasuries at an average yield around 4%. On the other hand, The duration.