Popular, Inc. (NASDAQ:BPOP) Q3 2018 Earnings Conference Call Transcript

Oct 24, 2018 • 11:00 am ET

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Popular, Inc. (NASDAQ:BPOP) Q3 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good morning, and welcome to the Popular Incorporated Third Quarter 2018 Earnings Conference Call. All participants will be in listen-only mode.(Operator Instructions) Please note, this event is being recorded.

I would now like to turn the conference over to Camelia Pico for Popular. Please go ahead.

Executive
Unidentified Speaker

Good morning, and thank you for joining us on today's call. With us today is our CEO, Ignacio Alvarez; our CFO, Carlos Vazquez; and our CRO, Lidio Soriano. They will review our results for the third quarter and then answer your questions. Other members of our management team will be available during the Q&A session.

(Forward-Looking Cautionary Statements)

You may find today's press release and our SEC filings on our web page at popular.com.

I will now turn the call over to our CEO, Ignacio Alvarez.

Executive
Ignacio Alvarez

Good morning, and thank you for joining the call. We are happy to report another strong quarter during which we achieved excellent financial results, closed the reliable acquisition and executed several important capital actions.

Before I address the quarter's highlights in more detail, I would like to comment on the progress we're seeing in Puerto Rico. We tracked different metrics, both internal and external, to get a sense of the level of economic activity on the island. While in previous calls we have been sharing variances from the same quarter of the prior year, September 2017 was an anomaly as the island was literally in the dark and out of business for a significant part of the month. The months of July and August allowed us to make a fair comparison and the trends are positive. If we were to include September, all of the quarter and year-to-date variances would be significantly better than those that we are sharing here.

Debit and credit card activity reflected increased spending as compared to a year ago. The dollar volume of our customer's transactions for July and August was 18% higher than the same period in 2017. On a linked quarter basis, spending figures reflected a slight reduction due to seasonality. If you look at the consumer loan activity, the trends are also encouraging. While originations in the first half of the year were 4% below 2017 levels, July and August originations were 6% higher than those of the same period last year.

Within the consumer loan portfolio, there are important differences, with auto finance and mortgages at opposite ends of the spectrum. Our auto originations for July and August 2018, excluding Reliable, were 27% higher than in 2017. The industry as a whole is doing well. As of August, new car sales in Puerto Rico were 23% higher than 2017. Mortgage originations, on the other hand, were 35% lower in the first six months as compared to the previous year. However, starting in July, mortgage originations have surpassed 2017 levels for the first time this year.

On the commercial loan side, we have not yet seen loan growth, but we expect additional lending opportunities to arise as the economy continues to