A larger loan-loss provision stemming from hurricane damage suffered across Puerto Rico drove third-quarter profits lower at Popular, the San Juan company said Tuesday.
The $42.6 billion-asset company earned $20.7 million during the period that ended Sept. 30, less than half of the $46.8 million it earned in the same quarter last year. Earnings per share were 19 cents, or 79 cents below the mean estimate of analysts compiled by FactSet Research Systems.
In a press release, CEO Ignacio Alvarez said that the territory's economy has been hurt by the widespread destruction left in the wake of Hurricanes Irma and Maria. On a more positive note, he said that after weeks of restorations, 137 of the company’s 168 branches are up and running, as are nearly 400 of its ATMs.
“For the past five weeks, we have been dealing with the logistical challenges resulting from the collapse of the electric, water and telecommunications systems in Puerto Rico,” Alvarez said. “Despite these challenges, we have worked relentlessly to provide access to cash and other essential banking services as quickly as possible.”
Popular boosted its provision by 271% year over year, to $160.8 million. During the quarter, the company set aside $69.9 million for expected hurricane-related losses, though declines in the credit quality of its U.S. taxi medallion portfolio also contributed the increase.
Net interest income rose 7%, to $378.2 million. The net interest margin slid 16 basis points, to 3.96%. Total loans increased 2%, to $23.5 billion.
Noninterest income jumped 32%, to $100.4 million, mainly due to lower losses associated with its loss-share agreement with the Federal Deposit Insurance Corp. The company noted, however, that interchange revenue also dipped on lower transaction volumes that resulted from the two hurricanes.
Noninterest expenses slid 2%, to $317.1 million, thanks to lower personnel and professional costs.