Popular posts third-quarter profit of $266.334 million as nonperforming loans rise
Key Facts
Popular reported net income of $266.334 million in the third quarter of 2026, as higher interest income coincided with an increase in the nonperforming loan ratio. Diluted earnings per share were $4.21 for the period, according to the bank's earnings disclosure. Credit developments included a partial charge-off on a commercial loan, along with another commercial and industrial loan becoming nonperforming at its Puerto Rico unit. Commenting on its commercial portfolio performance, the bank said "the underlying commercial portfolios continue to show stable credit trends." Popular is Puerto Rico's largest banking institution by assets and deposits, according to the institution's description on its investor relations website. Its operations also extend to the United States and the Virgin Islands, alongside its business in Puerto Rico.
On revenue, net interest income rose to about $699 million in the third quarter, according to the earnings statement. The bank attributed the increase to contributions from investment securities and commercial loans, as well as the longer quarter. However, the net interest margin fell to 3.63% over the same period, alongside the rise in interest income. On costs, operating expenses rose to about $506 million during the quarter. The bank cited higher salaries and incentives among the factors driving the increase. Meanwhile, the provision for credit losses fell to $58.593 million, with the decline coinciding with higher operating expenses and a narrower interest margin.
On asset quality, the third quarter included a $34 million partial charge-off on a commercial loan, according to Popular's disclosure. That loan had become nonperforming in the previous quarter, before the partial charge-off was recorded in the latest results. A $74 million commercial and industrial loan also became nonperforming at the bank's Puerto Rico unit during the third quarter. The ratio of nonperforming loans to loans held in portfolio rose to 1.16% at the end of September 2026. By contrast, the annualized net charge-off rate fell to 0.73% during the quarter, according to the same statement. The higher nonperforming loan ratio thus coincided with a lower net charge-off rate, while the bank reaffirmed stable underlying commercial credit trends.
Popular had recorded a $71 million charge-off in the second quarter of 2026 upon resolving a nonperforming commercial relationship, according to its earnings disclosure for that period. In that disclosure, the bank described the transaction as "the resolution of a large nonperforming commercial relationship, resulting in a $71 million charge-off." That transaction took place in the previous quarter, while the partial charge-off reported in the current results relates to another commercial loan. On capital, the common equity tier 1 capital ratio stood at 16.06% at the end of September 2026, according to the third-quarter results. The bank repurchased $179 million of common stock during the quarter. The board had approved a quarterly cash dividend of $0.90 per outstanding common share in August 2026, according to the dividend announcement.