Prepared remarks
Hello, everybody, and welcome to the Popular, Inc. Third Quarter 2025 Earnings Call. My name is Elliot, and I'll be coordinating your call today. I'd now like to hand over to Paul Cardillo, Senior Vice President, Investor Relations Officer. Please go ahead.
Good morning, and thank you for joining us. With us on the call today is our President and CEO, Javier Ferrer; our CFO, Jorge García; 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 also be available during the Q&A session. Before we begin, I would like to remind you that during today's call, we may make forward-looking statements regarding Popular, such as projections of revenue, earnings, credit quality, expenses, taxes and capital structure as well as statements regarding Popular's plans and objectives. These statements are based on management's current expectations and are subject to risks and uncertainties. Factors that could cause actual results to differ materially from these forward-looking statements are set forth within today's earnings release and our SEC filings. You may find today's press release and our SEC filings on our web page at popular.com. I now turn the call over to our President and CEO, Javier Ferrer.
Thank you, Paul, and good morning, everyone. Starting on Slide 3, we share a few highlights that reflect our strong operating performance in the third quarter. We reported net income of $211 million and EPS of $3.15, an increase of $1 million and $0.06 per share, respectively. Our results were driven by higher revenues and expanding net interest margin, strong loan growth and importantly, stable customer deposit balances. Our credit metrics were impacted by two large commercial loans, which were related to isolated circumstances that do not reflect broader credit quality concerns. As Lidio will discuss in more detail in his remarks, I'd note that excluding these two relationships, credit metrics remained stable. For the second quarter in a row, we have demonstrated progress from our efforts to achieve sustainable returns above 12% this year and towards our longer-term 14% objective. Please turn to Slide 4.
As of the end of the third quarter, business activity in Puerto Rico continued to be solid as reflected by favorable trends in total employment, consumer spending, tourism and other key economic data. The unemployment rate of 5.6% continues to hover around all-time lows. Consumer spending has been resilient and remains healthy. Combined credit and debit card sales for Banco Popular customers increased by approximately 5% compared to the third quarter of 2024. Home purchase activity continues to be strong as demonstrated by the $129 million increase in mortgage balances at Banco Popular during the quarter. Momentum in the construction sector has been solid with both public and private investment fueling higher employment levels and cement sales. We are optimistic that these trends will persist given the backlog of obligated federal disaster recovery funds, announced real estate and tourism development projects as well as the renewed focus on reshoring by global manufacturing companies.
One example of this is Amgen's recently announced $650 million manufacturing network expansion, which is expected to create roughly 750 direct new jobs in Puerto Rico. Puerto Rico is also well-positioned given its strategic geographic location considering current geopolitical focus in the Caribbean region. The tourism and hospitality sector continues to be a source of strength for the local economy. This summer, the sector benefited from Bad Bunny's 31-night concert residency at the Coliseum in San Juan, right next to our Popular center complex. This was more than just a series of concerts. The event also featured Puerto Rico as a destination, highlighting our music, natural beauties and culinary offerings. The celebration of our culture generated significant media exposure for the island globally and led to a substantial increase in tourism activity during what is normally a seasonally slow period of the year.
Please turn to Slide 5. I would like to comment on our new strategic framework and transformation progress. Our strategy centers on three objectives: First, Be The #1 Bank For Our Customers by deepening relationships, earning trust, delivering value across all channels and providing exceptional service. Leveraging our very strong primacy and satisfaction scores in Puerto Rico, we are focused on advancing digital and payment solutions to further grow engagement. Second, Be Simple and Efficient by working collaboratively, streamlining operations and reducing costs. We are committed to making our processes simpler and more effective to deliver superior solutions for our customers. And finally, Be a Top Performing Bank by attracting and retaining top talent and converting customer and operational success into shareholder value with a commitment to generating a sustainable 14% ROTCE over the long term.
This framework, simple yet powerful, guides our transformation, which continues to show steady and notable progress. We are investing in seamless, secure banking solutions, expanding service channels and modernizing branches and digital platforms to provide our customers with the flexibility to connect with Popular through the channel that best fits their needs. We plan to extend these digital capabilities to more products to further improve online and mobile experiences and support future growth. Recent initiatives include the launch of a fully online personal and credit card loan origination process in Puerto Rico and the Virgin Islands and the expansion of digital deposit products in the U.S. Mainland. On the commercial side, we are improving cash management and credit delivery for small and midsized businesses. We are pleased with the progress we have made so far in our transformation and are convinced that these efforts will continue to unlock growth opportunities and efficiencies to drive sustained financial performance. I will now turn the call over to Jorge for more details on our financial results.
Thank you, Javier. Good morning, and thank you all for joining the call today. As Javier mentioned, our quarterly net income increased by $1 million to $211 million. Our EPS improved by $0.06 to $3.15 per share. These results were driven by better NII and noninterest income and a lower effective tax rate, offset somewhat by a higher provision for credit losses. As we have mentioned before, our objective is to deliver sustainable financial performance. While there is some noise in the current quarter's results, we're very pleased to have once again exceeded a 13% ROTCE for the period. We continue to expect to achieve at least a 12% ROTCE in Q4 as well as for the full year. Longer term, we remain focused on achieving a sustainable 14% return on tangible common equity. Please turn to Slide 7. Our net interest income of $647 million increased by $15 million and was driven by higher average deposit balances, fixed rate asset repricing in our investment portfolio and deposit pricing discipline in both of our banks.
Our net interest margin expanded by 2 basis points on a GAAP basis and by 5 basis points on a tax equivalent basis, driven by a larger balance of loans and tax-exempt investment securities. Loan growth of $502 million in the quarter was strong with both banks contributing to the increase. At BPPR, we saw loan growth of $357 million reflected across most portfolios, but driven primarily by commercial and construction lending. At Popular Bank, we saw loan growth of $145 million, also driven by the commercial and construction lending segments. Given that the underlying economic activity and demand for credit in both of our markets remain solid, we now expect consolidated loan growth in 2025 to be between 4% and 5% as compared to the original 3% to 5% guidance for the year despite the expected headwinds in our U.S. construction balances due to paydowns expected during the fourth quarter. In our investment portfolio, we continue to reinvest proceeds from bond maturities into U.S. treasury notes and bills.
During the quarter, we purchased approximately $2.5 billion of treasury notes with a duration of 1.4 years and an average yield of around 3.65%. We funded the purchases by reinvesting roughly $1 billion of bond maturities, along with redeploying $1.5 billion of cash reserves. We expect to continue to invest in treasury notes to lessen our NII sensitivity to lower rates while maintaining an overall duration of 2 to 3 years in the investment portfolio. Ending deposit balances decreased by $704 million, while average balances grew by $793 million. Puerto Rico public deposits ended the quarter at $20.1 billion, a decrease of $842 million when compared to Q2. We continue to expect public deposits to be in the range of $18 billion to $20 billion. At BPPR, excluding Puerto Rico public deposits, ending deposit balances decreased by $162 million and on an average deposits decreased by $44 million, demonstrating the impact of our continued focus on deposit retention strategies.
At Popular Bank, ending deposit balances increased by approximately $216 million, net of intercompany deposits. Total deposit costs increased by 1 basis point at both banks. At BPPR, the increase was mostly due to a higher average balance of public deposits. Given the results year-to-date, along with the anticipated NIM expansion in Q4 from repricing of our fixed rate earning assets, we continue to expect to see NII growth of 10% to 11% in 2025. Please turn to Slide 8. Noninterest income was $171 million, an increase of $3 million compared to Q2 and above the high end of our 2025 quarterly guidance. We continue to see solid performance across most of our fee-generating segments, including robust customer transaction activity. This quarter, we also benefited from a $5 million retroactive payment from a tenant related to an amended lease contract. Given the trends year-to-date and particularly the stability in customer transaction activity, we now expect Q4 noninterest income to be in the range of $160 million to $165 million.
This will result in total noninterest income between $650 million and $655 million for the year. Please turn to Slide 9. Total operating expenses were $495 million, an increase of $3 million when compared to last quarter. The largest variance was related to a $13 million noncash goodwill impairment in our U.S.-based equipment leasing subsidiary due to lower projected earnings. Offsetting this was a $13.5 million quarter-over-quarter reduction in other operating expenses, driven by the effect of a reversal this quarter of a $5 million claims accrual recorded in Q2 and a similar reduction in operational reserves. We also saw a $3.6 million increase in personnel costs, mainly due to annual salary and merit increases effective in July, along with the impact of employee termination benefits related to cost efficiency initiatives at Popular Bank. Specifically, as part of our ongoing efforts to improve profitability, we decided to exit the U.S. residential mortgage origination business and to close 4 underperforming branches in the New York Metro area.
We will remain focused on areas where we feel we can invest to achieve improved operating leverage. We continue to expect the increase in 2025 expenses to be between 4% and 5% when compared to last year. Our effective tax rate in the third quarter was 14.5% compared to 18.5% in Q2, driven by a higher proportion of exempt income. This higher exempt income, along with the impact of changes to Puerto Rico's tax code, will result in an effective tax rate for Q4 in the range of 14% to 16%, and for the year, we now expect the effective tax rate to be between 16% and 18%. Please turn to Slide 10. Regulatory capital levels remain strong. Our CET1 ratio of 15.8% decreased by 12 basis points, mainly due to loan growth and the effect of capital actions, net of our quarterly net income. Tangible book value per share at the end of the quarter was $79.12, an increase of $3.71 per share, driven by our net income and lower unrealized losses in our MBS portfolio, offset in part by our capital return activity in the quarter.
During the third quarter, we declared a quarterly common stock dividend of $0.75 per share, an increase of $0.05 from Q2. Finally, we repurchased approximately $119 million in shares during Q3. And as of September 30, still have $429 million remaining on our active share repurchase authorization.
Thank you, Jorge. Good morning, and thank you for joining the call. Turning to Slide #11. The ratio of NPLs to total loans held in portfolio increased to 1.3% compared to 82 basis points in the prior quarter. Credit quality metrics were impacted by two unrelated commercial exposures in BPPR, resulting in an increase in NPLs and net charge-offs. This impact relates to borrower-specific circumstances and do not reflect broader credit quality concerns. The first loan is a commercial and industrial facility extended to a telecommunications company in Puerto Rico, experiencing reduced revenue due to operational challenges and client attrition following the business acquisition. As of September 30, we classified this loan as nonaccrual with a carrying value of approximately $158 million and drove the increase in provision expenses in the quarter. The second loan is a commercial real estate facility secured by hotel property in Florida.
This loan has also been placed on nonaccrual status and carries a value of $30 million as of September 30, which includes a $14 million charge-off recognized during the quarter. Excluding these two cases, credit quality metrics were stable. We continue to closely monitor the economic environment and borrower performance as economic uncertainty remains a key consideration. We are confident that the risk profile of our loan portfolios position Popular to operate successfully under the current environment. Turning to Slide #12. Net charge-off amounted to $58 million or annualized 60 basis points compared to $42 million or 45 basis points in the prior quarter. Net charge-off in BPPR increased by $16 million, mostly due to the $4 million charge-off related to the $30 million commercial NPL inflow mentioned earlier. Consumer net charge-off increased by $4 million, mostly due to higher auto loans net charge-off by $6 million, partially offset by a $2 million reduction in credit card net charge-offs.
Given our credit performance year-to-date and NPL inflows this quarter, we expect net charge-offs to be between 50 to 65 basis points for the full year. The allowance for credit losses increased by $17 million to $786 million, while the provision for credit losses increased by $29 million to $75 million. Both increases were driven by the impact of the two commercial exposures, offset in part by improvements in the credit quality of the consumer portfolio. The Corporation's ratio of ACL to loans held in portfolio remained stable at 2.03%, while the ratio of ACL to NPLs was 157% compared to 247% in the previous quarter. With that, I would like to turn the call over to Mr. Ferrer for his concluding remarks.
Well, thank you, Lidio, and Jorge for your updates. We are very pleased with our financial performance in the third quarter. We increased revenues, maintained expense discipline, generated strong loan growth and benefited from stable customer deposit trends. We are determined to close out 2025 on a high note as we continue to execute on our strategy, and I am urging our teams to remain focused on deposit retention, loan generation and particularly on our expense discipline. We will continue to generate value for our shareholders and deliver our ROTCE objectives. We will achieve this by concentrating on our strategic framework, Be The #1 Bank For Our Customers, Be Simple and Efficient, and Be a Top Performing Bank. I want to give a shout out to our colleagues and recognize their hard work. I see what they do every day in our branches, call centers and centralized offices. We are pushing ourselves to deliver more for our clients every day, and I am incredibly grateful for their commitment. We are now ready to answer your questions.
Questions and answers
First question comes from Jared Shaw with Barclays.
Maybe starting just on the margin and on asset yields. With the securities purchases this quarter, should we assume that, that trend continues? And I guess, where are the new purchase yields? It looks like maybe we won't be able to see net yield expansion much more from here if we see the rate cuts?
No. I mean let me first answer the yield expansion. We do believe that we still have strong tailwinds. You can see in our appendix we provide to you kind of the upcoming maturities in the investment portfolio, those are still coming off at 1 and change, and we expect to be able to continue to get a significant spread pickup on those maturities. So while they may be priced lower as rates are coming down, remember that a large portion of our portfolio is also being financed, let's call it, money fungible, but still being financed by public deposits. And we would expect those public deposits to also benefit from the lower rate environment, giving us the opportunity to create that spread. So we do continue to expect our NIM to expand in the fourth quarter and beyond.
Okay. And then on the loan side, what about new loan yields this quarter? Please, go ahead.
Yes. During the quarter, we observed a continuation of the trends we've seen for the past year, particularly in personal loans and auto lending, where we experienced an increase in yield quarter-over-quarter. I expect that this might slow down slightly, especially as auto volumes or new car sales activity begin to decline. It's reasonable to think that this could lead to more competitive pricing to sustain demand for auto sales. However, as mentioned previously, there is a significant amount of front and back book in the auto loan portfolio. Given the average life of those loans and assuming a similar risk profile, we still see opportunities for repricing in the current rate environment.
All right. And then maybe just shifting on the credit side, especially on the auto. There was an increase in delinquency, but it's still lower, I guess, year-over-year. How are you looking at the credit trends over the next few quarters within auto and consumer, I guess, more broadly?
The variation you observed this quarter falls within the seasonal patterns of the portfolio. We remain very optimistic about consumer trends in Puerto Rico, employment trends, and the liquidity of our client base. Losses in the auto portfolio are approximately 45 basis points lower than last year. Therefore, we feel confident about our position and the outlook for the portfolio.
We now turn to Timur Braziler with Wells Fargo.
Sticking with the credit commentary, the large C&I loan, I guess, what are the specific reserves that you set aside for that, the timing of resolution as you see it? And I'm just wondering why it moved into nonperformers right away instead of kind of up the risk migration chain. Did they stop making payments? Or is that still accruing at this point? Maybe start there.
Thank you for the question. They continue to make payments, so the loans are currently in good standing. Over time, the situation has actually deteriorated, leading us to downgrade the loan. This particular business carries a substantial amount of debt, and management has expressed their intention to adjust its capital structure, including managing liabilities. This prompted our decision to classify it as nonaccrual.
Okay. And then I guess, in terms of specific reserve and any kind of time line around planned resolution?
I believe the most likely planned resolution will be next year. Regarding specific reserves, we haven't provided that information at this time.
Yes, Timur, you can assume that the driver of the variance in the quarter in provision was related to these loans.
Okay. And I mean this is a little bit of a larger credit, just maybe stack ranking the loan book. Is this one of the larger credits that you guys carry? Is this kind of typical size just given your place in the Puerto Rico economy? And maybe just talk a little bit more broadly as to the health of the economy from a business standpoint versus a consumer standpoint? And if there are any kind of signs that might be flashing yellow or any other kind of degradation?
Over the years, we have transformed our portfolio from primarily serving small and medium enterprises to focusing on corporate credit. We have observed strong trends in this area over the past few years. The last significant issue we encountered with a large group occurred in 2019, and we intend to maintain our focus on this segment. We believe there are considerable opportunities in Puerto Rico, where our performance has been robust over time. Although occasional challenges may arise, it is crucial that we adhere to our underwriting discipline. Overall, the performance of our portfolio has been solid, and we are confident in the current exposures we hold.
Yes. In response to your question about the macroeconomic situation, we want to make clear that we are not observing any significant warning signs in Puerto Rico. The economy remains strong. As Lidio mentioned, our primary focus continues to be on large commercial opportunities. Occasionally, like in this quarter and not for a long while, we may face an isolated credit event due to specific issues that are not tied to the overall economic conditions. We believe the Puerto Rican economy is performing well, and our major customers are actively investing and progressing with their projects.
That's great color. And then just lastly for me, encouraging to hear that margin expansion is going to continue here. I'm just wondering from an NII standpoint, you guys reiterated the guidance. It is a little bit wide in terms of the range just as it implies to 4Q. Should we assume that margin expansion portends to NII kind of flat to up here as we go through these rate cuts? Or just given some of the lags, maybe NII growth stalls here over the next couple of quarters?
Yes. I want to emphasize that we continue to benefit from fixed asset repricing and loan growth, which should enhance net interest income and expand the margin. As you pointed out, we have maintained our net interest income guidance. This is partially due to our view on public deposit balances for the fourth quarter. We still anticipate staying within the range, but perhaps not at the upper end we saw when closing Q3. We also noted the delay in the pricing of these deposits. We remain slightly asset sensitive, especially in the early phases of Fed funds rate adjustments. As we've mentioned, the cost of public deposits is linked to short-term market rates and generally reprices with a quarterly lag. We haven't disclosed the index, but it is tied to 3-month treasuries, minus a spread. Due to this lag, we expect to see the impact of rate changes reflected in public deposit costs, with a beta close to 1, and this pricing structure will support our fixed asset repricing and investment portfolio, helping us maintain an improving spread.
Whenever there are Fed movements, there can be some lag, but it's not always the case. In the past, if the market and treasuries move ahead of anticipated Fed actions, we might see benefits more quickly. We have considered all these factors in our net interest income guidance for the fourth quarter, and we are confident that as conditions stabilize and time advances into 2026 and beyond, we will continue to see our previous growth trends.
Our next question comes from Ben Gerlinger with Citi.
It’s clear that your credit performance has been outstanding compared to the last decade. However, I found it noteworthy that you adjusted many of your forecasts but only raised the low end of your charge-off outlook. Considering that the high end of the charge-off guidance is 65 basis points for the full year, could that suggest a severe situation in the fourth quarter? How should we interpret this in light of your other revised guidance?
I will say as we mentioned in the remarks, we took a reserve and a provision for some of the exposure. We charge off one of the two related exposures. There is a possibility that we may have to take charge-offs in the exposure that we reserve this quarter, which did not charge off, and that is driving the results. Overall, I mean, if you exclude that, we continue to expect a very solid performance out of the rest of our book. So that's the only thing that we are caveat in terms of the range that we provided to you.
Yes, Ben, in similar words, we talked about this in the past where when we provide that spread in the guidance of net charge-off, we are trying to put in for idiosyncratic events that could happen in our portfolio at any given time. Certainly, the activity that we have seen year-to-date, as you say, don't reflect necessarily a lot of opportunities to get to the high end without it being a commercial loan. Yes, you're right. We're not going to give you anything '26...
Good try, good try, good try...
We are pleased with the cost discipline and the various ongoing initiatives. We discussed this in the previous quarter's call. There are many efforts focused on execution and excellence, as highlighted by Javier. These efforts may seem like small contributions, but they accumulate over time. This quarter, we noticed some of those actions, particularly regarding our operations in the U.S. It was a tough decision to stop our mortgage origination business in the U.S., as we believe it does not align with our funding profile and deposit franchise at this moment. There are additional initiatives across the organization, and what is crucial is that these efforts are sustainable and not one-time actions. We anticipate seeing benefits from these initiatives that will enable us to reinvest in other areas. We have previously mentioned our plan to slow down our expense growth rate, and these steps support that while we continue to invest in areas that will add value and help us achieve our target of a 14% return on tangible common equity.
We now turn to Kelly Motta with KBW.
I will address the 14% ROTCE you mentioned. You have maintained above 13% for the last two quarters, and it looks like we can aim for 14%. I appreciate the guidance of at least 12% for the year, which seems achievable. Do you have any updates on the timing for reaching 14%? Additionally, with the NII trajectory you've outlined, has there been any discussion about whether 14% is a sustainable target, or should we aim for something higher?
I want to emphasize that we're definitely not going to stop at 14%. It's a guiding principle for us, and while we aim to achieve it, our goal is to go beyond that. We've previously stated our commitment to sustainable performance, and I agree that we're much closer today than we were a year ago when we adjusted our guidance for this year. A significant amount of effort from everyone involved has contributed to this progress, and we need to maintain our execution. There is more guidance to come regarding the timing and how we will achieve these goals. Ultimately, we firmly believe that improving our net income performance and operating leverage will get us there, and any actions we take on the capital side will only enhance our chances of exceeding that goal.
Okay, that's really helpful. Regarding the tax rate and the reduction in guidance, you've noted a higher proportion of tax-exempt income along with some changes in the tax rate. I understand that you're not providing guidance for 2026, but could you clarify if the full year 2025 represents a good core run rate moving forward? Additionally, could you elaborate on the changes to the Puerto Rico tax rate and how that will affect future operations? Any insights on this would be appreciated, especially given the many factors involved.
Yes. I want to clarify two points. First, there weren't any significant events that influenced the effective tax rate this quarter. It decreased due to the combination of taxable income and tax-exempt income. We also benefited from the $5 million other operating income, which has favorable tax treatment. This serves as a solid starting point. Looking ahead to our fourth-quarter guidance, we are indicating that the recent change in tax law in Puerto Rico will allow us to reverse the associated tax expense during the year. I share this background to emphasize that the guidance for 2025 of 16% to 18% is quite straightforward for us this year. It does not include many unusual events that fall outside our normal tax strategy. You can interpret this as you wish, and we can provide further confirmation in January when we offer the 2026 guidance.
Fair enough. Last question if I can sneak it in. Some of your competitors have noted increased competition on the deposit side. One was on government deposits. The other was some of the initiatives they're doing. Wondering if you could just expand upon the market competition you're seeing in Puerto Rico, one? And two, like has there been any news of any new entrants to the island, specifically on the depository side?
I'll start by saying that we are not aware of any new entrants on the depository side in Puerto Rico. Yes, there is competition, and it’s a dynamic market with daily competition for business and customers. However, we will approach this competition rationally and will not lose good clients due to pricing or terms. It’s normal to see competition. Our well-regarded banking competitors in Puerto Rico are positioning themselves in various ways, but we are pleased with our current standing and the revitalization of our franchise. We are not acting like a long-established bank, and we see more positive developments ahead. Overall, we are satisfied with our position.
Our next question comes from Gerard Cassidy with RBC.
This is Thomas Leddy standing in for Gerard. Loan growth in the quarter was strong, as you mentioned. And just on the back of the increased competition on the deposit side. I'm curious, in booking new C&I and CRE loans, have you seen a similar increase in competition, maybe resulting in less rigorous underwriting standards? In other words, anything you can tell us about changes in underwriting standards on loans you're originating now versus, say, a year ago?
I mean, I guess each one of us can answer that. But no, the answer is no. And we have a very strong credit underwriting process and Lidio leads the risk side and then our business side as well, we are not going to do anything that doesn't make any sense, frankly. We tend to be a bit conservative by nature, quite frankly. But I'm not seeing anything in originations that points to that concern.
Yes. From talking to our bankers and listening to the teams, the pushback we gather in competition is more pricing. And we're seeing maybe particularly you're hearing in some entrants in the New York market and maybe South Florida, where people being a little more aggressive in pricing. And frankly, if those loans are not true relationships and they're not coming with deposits, we're not going to pursue that, particularly in the U.S. In Puerto Rico, we might have a different strategy, echoing what Javier previously said in his comments.
We now turn to Arren Cyganovich with Truist Securities.
Javier, you.
Thank you for picking up Puerto Rico Bank.
Good to be back. Let’s discuss your thoughts on the investment initiatives in your transformation plan. How are you approaching the items mentioned in your prepared remarks regarding costs? Will this represent an increase in costs, or do you anticipate achieving efficiencies that could help offset some of the additional investments as you progress?
Great. Arren, I mean, the one thing I'll reiterate, our goal here is to be able to continue to invest and generating opportunities and efficiencies to be able to then continue to reinvest at a level slowing down the overall level of expense growth.
There will be a disconnect at the beginning and during certain periods between initial investments and the results from those investments, as Jorge mentioned. We believe this is acceptable as long as the investment aligns with our goals. We won't engage in drastic or irrational decisions. However, we must invest in our technology to remain competitive not just in Puerto Rico but also against major players from the United States who already have advanced technology here. Our program is sensible in that way, and I think our expense structure reflects this. I don't expect us to exceed a certain threshold.
Yes. And what happens is right now, we've got over 80 projects that are ongoing. Some of them have higher levels of current investments, some are in capitalizing mode, but a lot of them are in dual expense mode. As you're developing, particularly with SaaS licensing agreements, you're paying for your new system and you're paying for your old system. So over time, as you start generating the cost avoidances and turning off old systems, that allows us buffers to continue to reinvest following a business case and value-add analysis. But when we talk about being able to slow down the rate of growth, that's the kind of thing that we're talking about is how do we shift and reallocate expenses and savings to continue to improve the business and add value to our shareholders.
So, I want to emphasize an important point that Jorge just made. We're not looking at this in isolation. When we invest in the transformation, we want to ensure that we can generate savings in other areas of the bank to help fund that transformation. That is our approach. In many instances, we have successfully done this, which reduces the impact of the actual investment. Again, it's a comprehensive program, and we are very excited about it as we start to see results. We will keep progressing because, as mentioned, we are also fostering a transformation mindset within our teams. We need to keep moving forward.
This concludes our Q&A. I'll now hand back to Javier Ferrer, CEO, for any final remarks.
Well, thank you. Thanks again, everybody, for joining us and for your questions. Really appreciate that. We look forward to updating you on our fourth quarter results in January. Thank you.
Ladies and gentlemen, today's call has now concluded. We'd like to thank you for your participation. You may now disconnect your lines.