Popular Expands Net Interest Margin as Deposits Recover
Net interest income rose to $670.2 million in the first quarter as the bank's net interest margin expanded 5 bps to 3.66%.
Popular (BPOP), the leading financial institution in Puerto Rico, expanded its net interest margin 5 bps quarter-over-quarter to 3.66% in the first quarter of 2026. On a taxable equivalent basis, the margin rose 11 bps to 4.14%. This trend followed a series of sequential increases, including a 10 bps expansion in the fourth quarter of 2025.
Net interest income rose by $12.6 million quarter-over-quarter to $670.2 million. The growth occurred despite a $37.8 million decrease in loans held-in-portfolio to $39.3 billion, although average quarterly loan balances rose by $434.9 million.
Deposit levels recovered significantly in the first quarter, increasing by $1.4 billion to $67.6 billion. This growth included a $250.1 million increase in Puerto Rico public deposits, reversing a trend of declines in the previous two quarters where public deposits fell by $662.3 million in the fourth quarter of 2025 and $841.9 million in the third quarter.
The bank's capital position strengthened, with the CET1 ratio increasing to 15.92% from 15.72% in the prior quarter. Popular returned $204 million to shareholders in the first quarter, consisting of $155.2 million for the repurchase of 1,155,398 shares and a quarterly dividend of $0.75 per share.
Credit quality showed mixed results. The non-performing loan ratio decreased to 1.17% from 1.27% in the fourth quarter of 2025, as NPLs fell by $40.2 million. However, annualized net charge-offs to average loans rose to 0.61% from 0.51%. This increase was due to a single commercial loan charge-off of $11.1 million.
Operating expenses fell by $5.9 million quarter-over-quarter to $467.3 million. Excluding a $15.3 million FDIC reserve reversal that occurred in the fourth quarter, expenses decreased by $21.2 million. This efficiency contributed to a rise in ROTCE to 15.46% from 14.39% in the previous quarter.