POPULAR, INC. Reports Strong 2025 Earnings Growth Despite Significant Rise in Commercial Non-Performing Loans

summarizeSummary

Popular, Inc. reported strong net income and net interest margin growth for 2025, alongside increased dividends and share repurchases. However, these positive results were tempered by a significant rise in commercial non-performing loans and a corresponding decrease in loan loss coverage.

check_boxKey Events

• Strong Net Income Growth

  Net income for 2025 increased significantly to $833.2 million, up from $614.2 million in 2024, driven by lower deposit costs and loan growth.

• Net Interest Margin Expansion

  Net interest income grew by $258.9 million to $2.5 billion, with the net interest margin expanding by 25 basis points to 3.49%.

• Increased Non-Performing Loans (NPLs)

  Total NPLs rose by $147.6 million to $498.3 million, primarily due to two large commercial exposures: a $158.3 million telecom facility and a $30.1 million Florida hotel property.

• Reduced Loan Loss Coverage

  The ratio of allowance for credit losses (ACL) to NPLs decreased from 212.68% in 2024 to 162.15% in 2025, indicating lower coverage for non-performing assets.

auto_awesomeAnalysis

Popular, Inc. filed its annual 10-K report for the fiscal year ended December 31, 2025, revealing a mixed financial picture. The company achieved substantial growth in net income, which rose to $833.2 million from $614.2 million in 2024, driven by lower deposit costs, loan growth, and higher yields on U.S. Treasury securities. Net interest income expanded by $258.9 million to $2.5 billion, and the net interest margin increased by 25 basis points to 3.49%. The company also returned capital to shareholders through a dividend increase (from $0.70 to $0.75 per share in Q3 2025) and repurchased $501.5 million in common stock during 2025, with $281.2 million remaining under authorization.

However, a key concern is the significant deterioration in credit quality, with non-performing loans (NPLs) increasing by $147.6 million to $498.3 million. This rise was primarily attributed to two large, unrelated commercial exposures: a $158.3 million telecommunications facility and a $30.1 million Florida hotel property. Consequently, the allowance for credit losses (ACL) to NPLs ratio decreased notably from 212.68% in 2024 to 162.15% in 2025, indicating reduced coverage. Despite these credit quality challenges, the company remains well-capitalized, with a Common Equity Tier 1 Capital ratio of 15.72%. Investors should monitor the trajectory of NPLs and the adequacy of loss reserves in future reports.