Popular Inc., parent company of Banco Popular de Puerto Rico, reported net income of $171.1 million for the quarter ended June 30, 2019, compared to net income of $167.9 million for the quarter ended March 31, 2019.
But when compared quarter-to-quarter, the financial institution revealed a 39% drop this quarter when compared to the same period in 2018, when it reported $279.7 million in net income, according to the data released.
“I am pleased to report that we had a strong second quarter, with increases in net interest income, non-interest income, loans and deposits,” said Popular Inc. CEO Ignacio Álvarez.
“Our results were driven by robust activity in our Puerto Rico business, which showed growth in credit and debit card activity, continued strength in our auto business and increased mortgage loan originations,” he said.
Additionally, he said the bank’s U.S. mainland business achieved loan growth after a slow start to the year.
“Our credit quality metrics continued their positive progression, with reduction in non-performing loans and net charge-offs,” he said.
“While we are closely monitoring the Puerto Rico macro environment and how it may be impacted by recent political events on the Island, we enter the second half of the year with strong momentum,” Álvarez said.
Net interest income for the quarter ended June 30, 2019 was $476.3 million, compared to $471 million for the previous quarter. The net interest margin was 4.11% for the quarter, compared to 4.20% for the previous quarter.
The increase of $5.3 million in net interest income is mainly the result of the approximately $3.8 million positive impact of one more day in the second quarter, the financial institution stated.
Banco Popular’s net interest income amounted to $411.5 million for the quarter ended June 30, 2019, compared to $407.4 million in the previous quarter. The increase of $4.1 million in net interest income was mainly due to higher volume of investment securities driven by a higher volume of deposits.
This was partially offset by an increase of 4 basis points in the cost of interest-bearing deposits, mainly on public sector deposits, as explained above. The net interest margin for the second quarter of 2019 was 4.37%, a decrease of 12 basis points when compared to 4.49% for the previous quarter.
The decrease in net interest margin was due to higher volume of investment securities, which carry a lower yield, a lower discount amortization of the portfolio acquired in the Reliable Transaction and a higher cost of deposits.
Net interest income for Popular’s U.S. mainland business was $74.6 million, for the quarter ended June 30, 2019, compared to $72.8 million during the previous quarter.
Non-interest income increased by $1.9 million to $138.3 million for the quarter ended June 30, 2019, compared to $136.4 million for the quarter ended March 31, 2019.
Operating expenses for the second quarter of 2019 totaled $363.0 million, an increase of $15.6 million when compared to the first quarter of 2019.