Puerto Rican financial institution Popular (NASDAQ: BPOP) met Wall Street’s revenue expectations in Q1 CY2026, with sales up 10.1% year on year to $835.8 million. Its non-GAAP profit of $3.78 per share was 17.9% above analysts’ consensus estimates.

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StockStory’s Take

Popular’s first quarter results were shaped by a combination of higher net interest income, improved margins, and disciplined expense management. Management credited fixed-rate asset repricing and lower deposit costs as key drivers, as well as investments in digital capabilities and targeted customer programs. CEO Javier Ferrer-Fernández noted, “Quarterly net income and EPS improved by 38% and 48%, respectively, compared to the first quarter of last year.” The company also highlighted favorable credit trends, with lower nonperforming loans and stable consumer credit performance, despite isolated commercial loan challenges.

Looking ahead, Popular’s forward guidance is anchored in continued deposit growth, a stable economic backdrop in Puerto Rico, and ongoing digital transformation efforts. Management expects net interest income to grow towards the upper end of their guidance range, driven by deposit mix and additional investment portfolio repricing. CFO Jorge Garcia stated, “Given positive deposit trends in Puerto Rico, we now expect 2026 net interest income growth at the upper end of our 5% to 7% guidance range.” The company is also preparing for potential dividend increases and further share repurchases, while remaining attentive to economic uncertainties such as sustained higher oil prices.

Key Insights from Management’s Remarks

Management attributed the quarter’s performance to strong net interest income, cost discipline, and expanding digital engagement, while noting sector-specific headwinds and ongoing investment in technology.

• Deposit growth momentum: Deposit balances rose, fueled by tax refund activity and customer acquisition across retail and commercial segments, with management expecting higher average balances to persist beyond typical seasonal patterns.
• Net interest margin expansion: The bank benefited from lower deposit costs, particularly in Puerto Rico public deposits, and ongoing repricing of fixed-rate assets, supporting margin gains despite competitive lending environments.
• Digital platform initiatives: The launch of a new marketplace within the Mi Banco app created new engagement opportunities for retail customers and merchants, reinforcing Popular’s push to deepen relationships through digital channels.
• Expense moderation: Operating expenses decreased, aided by lower personnel and health care costs, as well as reduced promotion and professional fees. Management emphasized continued investments in technology and efficiency efforts, with no pullback in planned transformation projects.
• Credit quality stability: Nonperforming assets and loans declined, with improvements in both consumer and commercial portfolios. While net charge-offs rose due to a single commercial exposure, overall credit metrics remained stable and within expected ranges.

Drivers of Future Performance

Popular’s outlook is influenced by strong deposit retention, ongoing digital transformation, and a focus on cost efficiency, alongside external risks such as interest rates and macroeconomic shifts.

• Deposit base sustainability: Management expects ongoing strength in retail and commercial deposit balances, aided by new client acquisition and steady economic activity in Puerto Rico. However, typical post-tax season declines may moderate, and retention efforts will be key to maintaining momentum.
• Expense and efficiency discipline: The company plans continued investment in technology and digital channels, balanced by efficiency initiatives. Full-year expense growth is guided lower than originally planned, with management targeting further cost savings without sacrificing strategic projects.
• External and macroeconomic risks: Uncertainties such as prolonged high oil prices and potential changes in federal monetary policy could impact credit quality and margins. Management also cited the importance of monitoring manufacturing reshoring trends and regulatory developments that may affect capital deployment.

Catalysts in Upcoming Quarters

In the coming quarters, our analysts will watch (1) whether Popular can further grow and retain deposits amid seasonal shifts and heightened competition; (2) the pace and impact of digital adoption through initiatives like Mi Banco’s new marketplace; and (3) expense discipline as technology investments scale. We will also monitor progress on capital return initiatives and macroeconomic developments, including oil price trends and manufacturing reshoring announcements in Puerto Rico.

Popular currently trades at $149.37, in line with $148.30 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free).

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