OFG Bancorp reports $178M in revenue in Q1, up 2% Y-O-Y
The Puerto Rico-based bank sees a strong start to 2025 with credit gains and digital investments.
OFG Bancorp, the parent company of Oriental Bank, reported first-quarter 2025 core revenues of $178.3 million, a 2% increase from $174.2 million in the same quarter last year, though slightly below the $181.9 million posted in the fourth quarter of 2024.
“The first quarter reflected a strong start to the year with solid overall performance, consistent financial results and excellent operating execution,” said José Rafael Fernández, CEO of OFG Bancorp. “Highlights included customer and deposit growth, and improved consumer credit.”
During a call with reporters, Fernández attributed the slight year-over-year quarterly dip to the impact of the 125-basis point drop in the federal funds rate.
“And there’s a variable loan component that has an impact, but we’ve largely mitigated it,” he said.
Fernández also noted that as part of its ongoing Digital First strategy, OFG marked several milestones during the quarter.
“We are the first among Puerto Rico banks to launch an Omnichannel online and mobile app for a truly seamless experience, Smart Banking insights to help customers better manage their finances, and Apple Pay for fast and easy credit and debit transactions,” he said.
“While our strategic investment in technology is driving innovation, our investment in people is building strong customer relationships through our island-wide network,” he assured.
The company repurchased $23.4 million in common shares and raised its common dividend by 20%.
“The increase in return was supported by our earnings and elevated capital levels, with a CET1 ratio at 14.3%,” he said. “At this time, Puerto Rico’s economy continues to be stable, benefiting from public and private investment, but we are closely monitoring increased global economic and geopolitical uncertainties. Our balance sheet provides us with a strong foundation during volatile or challenging times.”
Key performance indicators for the quarter included a net interest margin of 5.42%, return on average assets of 1.56% and a return on average tangible common stockholders’ equity of 15.28%. Customer deposits grew to $9.76 billion, and loans held for investment totaled $7.85 billion. New loan production reached $558.9 million.
Specifically, the bank’s auto loan segment increased by $40 million during the quarter, which Fernández said was unexpected.
“That growth wasn’t what we expected. We really thought we weren’t going to grow that much, and part of it has to do with customers making their car purchases in anticipation of what the tariffs charged on new vehicles might be,” he said.
“By the way, what’s also going to happen is that used cars are going to increase in value, so that’s also another component that needs to be taken into consideration and the effect it will have on new car sales,” he told reporters.
Meanwhile, non-performing loans held at 1.11%, while early and total delinquency rates improved to 2.19% and 3.49%, respectively. OFG’s provision for credit losses was $25.7 million, primarily driven by increased loan volume and reserves for select commercial loans. Pre-provision net revenues were $85.1 million, up from $83 million in both the previous quarter and the year-ago period.
Non-interest expenses came in at $93.5 million, a $99.7 million decline from the previous quarter. Cash and cash equivalents rose to $710.6 million from $591.1 million.
Puerto Rico’s future amid policy changes
During the call, Fernández noted that Puerto Rico could capitalize from its solid manufacturing infrastructure in the wake of the Trump administration’s call to focus on U.S. production.
“Among the opportunities is that we have a good infrastructure for pharmaceuticals, medical devices, and there’s a great opportunity to bring production to the plants we have in Puerto Rico and to use that capacity for the onshoring that the Trump administration is proposing,” he said.
“Puerto Rico, being part of the United States, should benefit, and I believe this is part of this administration’s efforts to position itself that way,” he said. “Let’s not forget that Puerto Rico still has 40% of its economy in manufacturing, and of that 40%, the vast majority is pharmaceuticals and medical equipment. So, there is an opportunity not only to maintain it, but also to evolve it.”
He said that the Trump administration’s April 2 announcement of new tariffs had no impact on the first quarter, “but we have to be sure that we understand what the repercussions are for our clients and on a larger scale for Puerto Rico.”
