Popular (BPOP +0.12%), a major financial institution with deep roots in Puerto Rico and operations in the U.S., reported its second quarter 2025 earnings on July 23, 2025. The most notable news was a substantial beat on both earnings and revenue, with earnings per share (EPS) reaching $3.09 versus a consensus estimate of $2.54, and revenue coming in at $800 million against the expected $792.79 million. Compared to the year-ago period, both profit and revenue showed solid growth. Management also raised the quarterly dividend and announced a new share repurchase program, providing a favorable quarterly assessment overall.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (GAAP) | $3.09 | $2.54 | $2.46 | 26.0% |
| Revenue (GAAP) | $800 million | $792.79 million | $734.6 million | 8.9% |
| Net Interest Income | $631.5 million | $568.3 million | 11.1% | |
| Net Interest Margin | 3.49 % | 3.22 % | 0.27 pp | |
| Provision for Credit Losses | $48.9 million | $46.8 million | 4.5% |
Source: Analyst estimates for the quarter provided by FactSet.
Popular's Business and Strategic Focus
Popular is a leading banking provider serving Puerto Rico and parts of the mainland United States. Its business is anchored in personal and commercial banking, loans, deposits, and a variety of financial services, with a heavy emphasis on local markets. Over half of its loan portfolio is tied to real estate in Puerto Rico, making local trends crucial to its performance.
Recently, Popular has targeted growth through technology upgrades and digital transformation, seeking to bolster customer experience and efficiency. Key priorities include managing risks tied to Puerto Rico's economy, adapting to evolving regulations, and staying competitive through new products and improvements in service quality. Investment in technology and staff retention are also central to its ongoing strategy.
Quarterly Highlights and Developments
During the most recent quarter, Popular outpaced expectations in key financial metrics. Net income rose to $210.4 million, a substantial increase from the prior quarter. Net interest income, which reflects the difference between income earned on loans and costs paid for deposits, grew 11.1% from the year-ago period. This gain was due in part to higher lending activity in commercial, construction, mortgage, and auto loans.
Net interest margin, which shows the profit the bank makes on its loans as a percentage of interest-earning assets, reached 3.49 %, up from 3.22 % last year. Deposit growth was solid, with balances ending the quarter at $67.22 billion, a $1.40 billion increase from the first quarter. Growth in Puerto Rico public deposits was especially notable, now making up 31 % of the company's total deposits.
Credit quality indicators improved. Non-performing loans—a measure of loans behind in payments—declined both in dollar terms and as a percentage of loans. The non-performing loan ratio narrowed to 0.82 %, down from 0.96 % a year earlier. Net charge-offs, which represent loans that are unlikely to be collected, also improved. This improvement was driven by better credit performance in both the Puerto Rico and U.S. operations, particularly the commercial and consumer portfolios. Management maintained a solid allowance for credit losses, covering nearly 2 % of all loans and more than twice the balance of non-performing loans.
The quarter featured higher operating expenses, up 5 % from last year, mainly driven by increased personnel costs related to bonuses and profit-sharing. Technology and software expenses remained elevated as management continued to prioritize digital transformation. Staffing levels stayed roughly stable, reflecting a commitment to ongoing investment in human capital rather than aggressive expansion or cost-cutting.
Popular's capital position remained strong. The Common Equity Tier 1 ratio, which tracks core equity versus risk-weighted assets, was 15.91 %. Tangible book value per share rose over $3 sequentially, supported by earnings, repurchases, and reduced unrealized losses on securities. The company repurchased 1.14 million shares—valued at $112 million—during the quarter, nearing completion of its prior $500 million buyback plan. A new $500 million repurchase authorization was announced. The quarterly dividend, pending board approval, is set to increase from $0.70 to $0.75 per share.
Segment results showed broad improvement. Banco Popular de Puerto Rico saw gains in lending, margins, and credit quality. The Popular Bank unit in the U.S. also posted higher net interest income and a 19-basis-point improvement in net interest margin, thanks to loan growth and lower costs for deposits. Across regions, there was limited evidence of depositors shifting toward high-yield accounts outside Puerto Rico, while in the mainland U.S. such shifts were more apparent.
No material one-time events or adverse surprises were reported, and management highlighted “Transformation” efforts in digital operations as ongoing, with $84.7 million spent on technology and software in the quarter.
Looking Ahead: Guidance and Trends
Popular's management did not issue any new or revised forward financial guidance for the next quarter or full year. The team reiterated targets for loan growth—expecting to finish at the lower end of a 3-5 % range for fiscal 2025—as well as expectations for net interest income and non-interest income. The target return on tangible common equity remains at 14 % for the intermediate term, with the recent result at 13.26 % this quarter.
Management indicated continued focus on deposit trends, credit normalization, and expense controls. They also highlighted that expense growth will remain a watch point if performance softens, and that public deposit concentration is a potential risk if government flows reverse. With regulatory pressures and Puerto Rico’s economic outlook still critical, the company continues to stress prudent capital management, ongoing investment in digital transformation, and monitoring of both credit and deposit metrics. The quarterly dividend was raised 7 % to $0.75 per share.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
