Popular, Inc. · NASDAQ:BPOP
Popular — Q3 2023 Earnings Presentation
24 slides from Popular's earnings presentation, Oct 26, 2023
Slide 1: Investor Presentation Third Quarter 2023
INVESTOR PRESENTATION Third Quarter 2023
Slide 2: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding Forward-Looking Statements This presentation contains “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance, are based on the current expectations of Popular, I
Slide 3: Q3 2023 Highlights
Q3 2023 Highlights Financial Highlights Quarter Highlights $ in millions, except ratios and EPS Income Statement Q3 2023 Q2 2023 Change Q3 2022 Highlights: Net Income $ 137 $ 151 $ (14) $ 422 • Net income of $153 million, excluding after-tax goodwill Net Interest Margin 3.07% 3.14% (0.07%) 3.32% imp
Slide 4: Business Highlights
Business Highlights BPPR Business Metrics $ in millions, except ratios Q3 2023 Q2 2023 Change Q3 2022 BPPR: Loans Held in Portfolio $23,729 $ 23,087 $ 642 $ 22,254 • Loans increased by $642 million QoQ across most business P.R. Government Deposits 17,750 18,464 (714) 18,183 segments: Total Deposits
Slide 5: Financial Summary
Financial Summary (Unaudited) ($ in thousands) Q3 2023 Q2 2023 Variance Net interest income $ 534,020 $ 531,668 $ 2,352 Provision for credit losses 45,117 37,192 7,925 Net interest income after provision for credit losses $ 488,903 $ 494,476 $ (5,573) Service charges on deposits 37,318 37,781 (463)
Slide 6: Net Interest Margin Dynamics
Net Interest Margin Dynamics Total Loans and Deposits ($ in billions)1 • Net interest margin of 3.07%; FTE net interest margin of 3.24%, a decrease of 5 bps • Money market and investment securities are 48% of earning assets • FTE loan yield increased 9 bps QoQ to 7.24% • Total deposit cost increased
Slide 7: Deposit Mix and Historical Betas
Deposit Mix and Historical Betas • Total deposit cumulative beta of 34% at period end; total deposit beta at BPPR and PB of 31% and 49%, respectively ▪ Excluding public sector, BPPR’s cumulative beta for total deposits at 7% ▪ PB betas higher due to the competitive environment and an increased mix o
Slide 8: Investment Portfolio
Investment Portfolio $ in millions Q3 2023 Variance to Q2 2023 • Conservative investment portfolio, with the majority invested in short to Amortized % of Book Gain / Maturity / Amortized Gain / intermediate U.S. Treasuries, which are Description Cost Portfolio Value (Loss) WAL 1 Cost (Loss) tax exem
Slide 9: Capital
Capital Popular, Inc 18.7 18.7 • Robust regulatory capital levels 16.9 16.8 16.9 16.9 • Common Equity Tier 1 of 16.8% 8.4 8.4 decreased 6 bps due to the increase in 5.3 5.3 risk weighted assets resulting from loan growth during the quarter Common Equity Tier 1 Risk-Based Total Risk-Based Tier 1 Leve
Slide 10: Non-Performing Assets
Non-Performing Assets Q3 2023 vs Q2 2023 Variances: Non-Performing Assets • NPAs and NPLs decreased by $28 million and $24 million, $900 4.00% respectively $800 3.50% $710 ▪ NPL inflows decreased by $6 million $700 $633 $610 3.00% $570 $547 ▪ P.R. NPLs at $334 million, or 1.4% of loans, down by $600
Slide 11: NCOs and Allowance for Credit Losses
NCOs and Allowance for Credit Losses NCOs and NCO-to-Loan Ratio Q3 2023 vs Q2 2023 Variances: ($ in millions) 0.39% • NCOs amounted to $33 million, increasing by $9 million $31 $33 $33 ▪ BPPR’s NCOs at $26 million, increasing $24 by $7 million, driven by higher 0.12% $18 consumer NCOs by $14 million
Slide 12: Allowance for Credit Losses – Q3 2023 Movement
Allowance for Credit Losses – Q3 2023 Movement ACL Movement: • Moody’s August 2023 baseline scenario continues to show a resilient economy that avoids a recession • Economic scenario change is driven by variables that impact the P.R. consumer loan portfolios • Higher qualitative reserves mainly due
Slide 13: Driving Value
Driving Value • Market leader in Puerto Rico ▪ Substantial liquidity with diversified deposit base ▪ Well-positioned to take advantage of ongoing economic growth ▪ Focus on customer service supported by broad branch network ▪ Differentiated digital offering ▪ Diversified fee income driven by unmatch
Slide 14: Appendix
INVESTOR PRESENTATION Third Quarter 2023 Appendix
Slide 15: Corporate Structure
Corporate Structure Franchise Summary Corporate Structure Industry Financial Services Headquarters San Juan, Puerto Rico Assets = $70 billion Assets $70 billion (among Holding Popular’s Banco Popular Popular Popular North top 50 BHCs in the de Puerto Rico Securities LLC Insurance America, Inc. Compa
Slide 16: Q3 2023 vs. Q2 2023 Business Segments
Q3 2023 vs. Q2 2023 Business Segments (Unaudited) BPPR Popular U.S. ($ in millions) Financial Results Q3 2023 Q2 2023 Variance Q3 2023 Q2 2023 Variance Net interest income $ 454 $ 453 $ 1 $ 87 $ 88 $ (1) Provision for credit losses 52 29 23 (7) 8 (15) Net interest income after provision for credit l
Slide 17: P.R. Public Sector Exposure
P.R. Public Sector Exposure The Corporation does not own any loans issued by the P.R. central government or its public corporations. As of September 30, 2023, our direct exposure to P.R. municipalities was $333 million, down by $18 million QoQ Outstanding P.R. government exposure Municipalities ($ i
Slide 18: Non-Owner Occupied CRE
Non-Owner Occupied CRE Highlights: Non-Owner Occupied CRE • Non-Owner Occupied CRE (CRE NOO) properties $ in millions concentrated in retail, hotels and office space $5,035 3.5% ▪ Office exposure is limited, representing only 1.9% of total $4,517 $4,500 $4,651 $4,744 loan portfolio and 12% of CRE NO
Slide 19: Auto Portfolio
Auto Portfolio Highlights: Delinquency Avg. 2011-2019 9/30/2023 ($ in millions) • Auto balances increased during the pandemic, but 6.17% 4.20% growth has moderated during recent quarters $4,000 6. • Delinquency has been gradually increasing, but $3,566 $3,633 $3,430 $3,490 $3,529 $3,513 $3,518 $3,37
Slide 20: Leases Portfolio
Leases Portfolio Highlights: Delinquency ($ in millions) • Auto lease balances have continued to increase Avg. 2011-2019 9/30/2023 since the pandemic $2,000 2.06% 1.73% 6.00% • Delinquency steady at below pre-pandemic $1,800 $1,662 $1,698 $1,586 $1,614 $1,539 5.00% $1,600 $1,426 $1,480 levels $1,400
Slide 21: Credit Cards Portfolio
Credit Cards Portfolio Highlights: Delinquency ($ in millions) Avg. 2011-2019 9/30/2023 • Balances have been gradually increasing due to $1,400 3.74% 3.44% 4.0 higher originations and increased usage post $1,124 $1,077 3.5 $1,200 pandemic 3.4% $967 $989 $1,042 $1,046 $1,057 3.4% 3.0 $920 • Delinquen
Slide 22: P.R. Personal Loans Portfolio
P.R. Personal Loans Portfolio Highlights: Delinquency ($ in millions) Avg. 2011-2019 9/30/2023 • The portfolio balance has been steadily increasing 3.61% 2.87% due to higher originations $2,000 $1,763 6.0 $1,800 $1,686 • Delinquency has increased gradually during 2023, $1,600 $1,518 $1,586 $1,613 5.
Slide 23: Popular, Inc. Credit Ratings
Popular, Inc. Credit Ratings Senior SeniorUnsecured Ratings Unsecured Ratings Fitch BBB- Stable Outlook S&P BB+ Stable Outlook Moody’s Ba1 Stable Outlook 2018 2019 2020 2021 2022 April April Moody’s June Moody's April September upgrades to Ba3 Fitch upgrades upgrades to B1 S&P upgrades to Moody’s up
Slide 24: Investor Presentation Third Quarter 2023
INVESTOR PRESENTATION Third Quarter 2023