Popular Inc. reports $211.4M in 2Q22 net income
Popular Inc. reported net income of $211.4 million for the quarter ended June 30, 2022, a slight dip when compared to the $218 million on record for the same year-ago period.
Ignacio Álvarez, CEO of the company that is parent to Banco Popular de Puerto Rico (BPPR), said the difference relates to a credit loss provision expense associated with the liberation of reserves taken during the COVID-19 pandemic.
Puerto Rico’s largest financial institution recorded nearly $10 million in that expense, he said during a call with members of the island’s media.
The company compared its most recent results to the net income of $211.7 million reported for the quarter ended March 31, 2022.
“We’re very pleased with our results for the second quarter. We earned $211.4 million in net income, with increases in both net interest income and non-interest income as compared to the first quarter,” he said.
The bank’s net interest income increased by $39.6 million to $533.9 million during the quarter, driven by improved margin and growth in its loan and investment portfolios.
“Loan growth was broad based with balances increasing in all categories, except mortgage,” he said, somewhat attributing that to the hike in interest rates, which have put a damper on new home purchases and mortgage loan refinancings.
The increase in the bank’s net interest income reflects higher interest rates and the strength of its deposit totals. The bank had higher interest income from money market, trading, and investment securities by $30.9 million, higher interest income from commercial loans by $10.9 million due to higher average volume of loans by $486 million in a higher rate environment, partially offset by lower average volume and income of loans under the Small Business Administration’s Paycheck Protection Program by $116 million and $5.5 million, respectively.
Both BPPR and Popular Bank in the US mainland experienced growth in commercial loans despite the anticipated cancellation of PPP loans. Quarter-over-quarter, the corporation’s loan portfolio increased by $654 million, in average, reflecting increases across all major loan segments except mortgages, including loan growth of $351 million in BPPR, it reported.
Meanwhile, Álvarez said consumer spending remained resilient during the quarter and deposit balances continued to grow.
“Credit quality remained strong with net charge offs at near record lows, and we continued to reduce our non-performing loans. Our liquidity and capital positions remain strong which provide us the flexibility to continue to invest for growth in the future while we continue returning capital to our shareholders,” he said.
As for the general picture that includes a record inflation both in Puerto Rico and the US mainland, he said the financial institution is vigilant of that, as well as “higher interest rates and the war in Ukraine. But we’re still seeing growth in the US and Puerto Rico with a historically strong employment market and healthy consumer deposit and spending levels.”
“In Puerto Rico we continue to benefit from the stimulative impact of federal disaster relief spending. We’re confident in our ability to continue to deliver results for our shareholders at the same time as we invest in our people, businesses, and communities,” he said.