• Annual Net Income: $614 million, compared to $541 million in 2023.
• Adjusted Net Income: $646 million, 10% higher than in 2023.
• Total Loan Growth: $2 billion, an increase of 5.8% for the year.
• Common Equity Tier 1 Ratio: 16% at year-end.
• Tangible Book Value Per Share: $68.16, increased by 14% year-over-year.
• Stock Repurchase: 2.3 million shares for approximately $220 million in 2024.
• Quarterly Common Dividend: Increased by $0.08 to $0.70 per share.
• Fourth Quarter Net Income: $178 million, an increase of $23 million from the third quarter.
• Net Interest Income (NII): Increased by $18 million in the fourth quarter.
• Net Interest Margin (NIM): Expanded by 11 basis points to 3.35% in the fourth quarter.
• Fourth Quarter Loan Growth: $913 million, or 2.5% increase.
• Noninterest Income: $165 million, flat versus Q3.
• Provision for Credit Losses: Decreased by $5 million to $66 million in the fourth quarter.
• Total Operating Expenses: $468 million, flat with last quarter.
• Effective Tax Rate: 20% in the fourth quarter; 23% for the full year.
• Return on Tangible Equity: 11.2% for the fourth quarter.
• Net Charge-Offs: $77 million or annualized 74 basis points in the fourth quarter.
• Allowance for Credit Losses (ACL): $746 million, with a ratio of 2.01% to loans held in portfolio.

• Warning! GuruFocus has detected 6 Warning Signs with IVZ.

Release Date: January 28, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Popular Inc (NASDAQ:BPOP) reported a strong annual net income of $614 million, up from $541 million in 2023, with an adjusted net income of $646 million, reflecting a 10% increase.
• The company achieved significant loan growth, with total loans increasing by $2 billion or 5.8% for the year, driven by strong performance in commercial and construction loans.
• Credit quality remained stable, with nonperforming loans decreasing slightly and net charge-offs staying below historic levels.
• Popular Inc (NASDAQ:BPOP) maintained strong capital levels, ending the year with a common equity Tier 1 ratio of 16% and a 14% increase in tangible book value per share.
• The company resumed share buybacks with a $500 million stock repurchase authorization and increased its quarterly common dividend by $0.08 to $0.70 per share.

Negative Points

• Higher operating expenses and a higher provision for credit losses partially offset the increase in net interest income.
• The tangible book value per share decreased by $0.88 to $68.16 due to higher unrealized losses in the investment portfolio and share repurchase activity.
• The credit card portfolio showed an increase in charge-offs, indicating some pressure in consumer credit quality.
• The company anticipates net charge-offs for 2025 to be between 70 to 90 basis points, reflecting potential challenges in maintaining credit quality.
• There is a risk of deposit outflows, with $600 million to $800 million identified as potentially at risk, which could impact funding costs and balances.

Q & A Highlights

Q: Can you discuss the trends in funding costs and the impact of high net worth and retail deposits leaving the bank for higher yields? A: Jorge Garcia, CFO, explained that the increase in deposits during the fourth quarter was positive, with nonpublic deposits in Puerto Rico rising by $600 million. High net worth and commercial clients continue to move funds to asset management, but efforts to retain clients and grow deposits, including new products for mass affluent clients, have been successful.

Q: What are the expectations for net interest margin (NIM) expansion in 2025? A: Jorge Garcia stated that while no specific NIM guidance is provided, they expect expansion driven by lower deposit costs and reinvestment of maturing securities at higher rates. The Puerto Rico public deposits' costs have decreased, and continued reinvestment should contribute to NIM growth.

Q: How is the credit card portfolio performing, and are there any concerns about consumer weakening in Puerto Rico? A: Lidio Soriano, CRO, noted that Puerto Rico is at a later stage in the delinquency cycle compared to the U.S. The outlook for consumers is favorable given the macroeconomic environment, and recent vintages show improved performance.

Q: Can you provide insights into the potential outflow of $600 million to $800 million in deposits and how it affects your guidance? A: Jorge Garcia confirmed that the guidance includes some expected outflows but not all, due to ongoing efforts to retain deposits. Seasonal factors, such as tax refunds, may also impact deposit levels, and the bank is actively working to mitigate potential outflows.

Q: What are the major projects funded by federal aid in Puerto Rico, and how long will these projects take? A: Ignacio Alvarez, CEO, explained that federal funds are primarily allocated to infrastructure projects like the electric grid, water systems, and housing. The electric grid improvements are expected to take 7 to 10 years, while other projects may be completed sooner.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.