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260120.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Tuesday, January 20, 2026, Vol. 27, No. 14 Headlines B R A Z I L [] Fintech Competition and Banks' Shrinking Margins in Brazil C O L O M B I A OLEODUCTO CENTRAL: Moody's Assigns 'Ba1' CFR, Outlook Stable D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Price Up for Food, Services and Restaurants J A M A I C A JAMAICA: $4.5 Billion Now Being Spent on Tourism Marketing JAMAICA: Government Bullish on Post Hurricane Economic Recovery M E X I C O MEXICO: GDP Per Capita Falls Below China and Dominican Republic P U E R T O R I C O HO WAN KWOK: Court Tosses Appeal in Alter Ego Adversary Case POPULAR INC: S&P Affirms 'BB+' ICR & Alters Outlook to Positive - - - - - =========== B R A Z I L =========== [] Fintech Competition and Banks' Shrinking Margins in Brazil ------------------------------------------------------------- The International Monetary Fund noted in a working paper that the rise of fintech lenders has intensified competition in the banking industry. This study utilizes Brazilian bank-level data to examine the causal impact of increased competition on commercial banks' lending rates and profitability. Employing a bank-specific Bartik exposure, constructed from comprehensive credit and balance sheet information across all Brazilian banks and fintech lenders, the analysis reveals that commercial banks sustained their loan portfolios primarily by lowering lending rates. Specifically, a one standard deviation increase in fintech competition exposure corresponds to a 3.7 percentage point reduction in average lending rates at commercial banks. Banks' operational efficiency increased due to heightened competition, but their net interest margins narrowed, adversely affecting overall profitability. Between 2018 and 2024, fintech competition is estimated to have lowered banks' average lending rates by 2.7 percentage points and reduced traditional banks' net interest margins by 0.9 percentage points. About Brazil Brazil is the fifth largest country in the world and third largest in the Americas. Luiz Inacio Lula da Silva won the 2022 Brazilian general election. He was sworn in on January 1, 2023, as the 39th president of Brazil, succeeding Jair Bolsonaro. In October 2024, Moody's Ratings upgraded the Government of Brazil's long-term issuer and senior unsecured bond ratings to Ba1 from Ba2, the senior unsecured shelf rating to (P)Ba1 from (P)Ba2; and maintained the positive outlook. S&P Global Ratings raised on Dec. 19, 2023, its long-term global scale ratings on Brazil to 'BB' from 'BB-'. Fitch Ratings affirmed on Dec. 15, 2023, Brazil's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB' with a Stable Outlook. DBRS' credit rating for Brazil was last reported at BB with stable outlook at July 2023. =============== C O L O M B I A =============== OLEODUCTO CENTRAL: Moody's Assigns 'Ba1' CFR, Outlook Stable ------------------------------------------------------------ Moody's Ratings affirmed Oleoducto Central S.A.'s (Ocensa) Ba1 Senior Unsecured Rating. At the same time, Moody's assigned a Ba1 corporate family rating. The outlook for all ratings is stable. RATINGS RATIONALE Oleoducto Central S.A.'s (Ocensa) Ba1 ratings reflect its low financial leverage (gross debt/ EBITDA of 0.3x since 2024) and leading industry position in Colombia; its strategic importance to Ecopetrol S.A. (Ba1 stable) that indirectly owns over 72.7% of Ocensa's capital; and the favorable industry dynamics in Colombia in terms of preference for pipeline transportation given the country's geography. Ocensa has adequate corporate governance practices regarding independent board members and minority veto rights on capital structure, dividends, capital spending, and asset sales. However, the company remains vulnerable to possible adverse influence by its main shareholder and customer, Ecopetrol S.A., which is the off taker of over 70% of the company's volume capacity. Ocensa's ratings also take into account its regulated tariffs and sales contract structure, which support solid margins and predictable cash flows. These factors help mitigate its business exposure to a single asset (pipeline); its small scale within the midstream peer group; and its high dividend payout policy. The ratings also factor in Moody's expectations of at least stable oil production in Colombia in the foreseeable future and that Ocensa will remain the transportation pipeline of choice in the country. The ratings also consider that the updated regulated tariff, which was originally intended to be deployed in July 2023, will continue to encounter unexpected delays in the formulation of the new methodology to determine the adjustments. However, on August 26, 2024, Resolution Number 00895 was published to address the reactivation of the annual tariff update procedure for oil pipeline transportation. This measure mitigates the economic and fiscal impact on the company, ensuring updated tariffs while new methodology guidelines are being developed. Moody's forecasts the maintenance of strong revenue stream and cash flow throughout 2026 and 2027. Ocensa has good liquidity. Ocensa's next major debt payment of $400 million is due in July 2027. The company's cash on hand as of September 2025 was close to $212 million including short term investments. Moody's expects the company's capital spending in the next couple of years to be low and mainly focused on maintenance and internal projects. Ocensa has no committed bank facilities but has close relationships with Colombian banks. The stable outlook reflects Moody's expectations that Ocensa's credit profile and cash flow generation will remain strong given its predictable tariff structure and high-capacity utilization over the next 12–18 months. Additionally, Moody's expects the company to address the upcoming bond maturity in July 2027 by implementing a refinancing strategy or a repayment plan that mitigates refinancing risk. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING Ocensa's rating could be upgraded if it maintains strong credit metrics at current levels, including a strong liquidity position, and if Ecopetrol's ratings are upgraded, given the close linkages between both companies from the control and revenue perspectives. An upgrade of Colombia's sovereign rating would not necessarily trigger an upgrade of Ocensa's ratings. In turn, large projects or acquisitions that increase financial leverage could trigger a negative action on Ocensa's rating. The ratings could also be downgraded if refinancing risk heightens in the next 12 months. A downgrade of Ecopetrol's ratings would result in a rating downgrade for Ocensa. PROFILE Ocensa is the largest crude oil pipeline and the only public-use pipeline in Colombia. Its pipeline is about 848 kilometers (km) long (836 km on land and 12 km offshore) with 745,000 barrels per day (bpd) of nominal capacity and 607,000 barrels per day of average volume. Ocensa connects the country's largest crude-producing fields in the Llanos Basin at the Cusiana offloading facility to export facilities at Covenas on the Caribbean coast. The company is 72.7% owned by Ecopetrol through its wholly owned midstream subsidiary, Cenit SAS, the remaining 27.3% belong to a joint venture between Romero Group and I Capital Square, a private equity firm. As of September 2025, the company's assets amounted to more than $1.72 billion. The principal methodology used in this rating was Midstream Energy published in October 2025. The differential between Ocensa's assigned ratings and the scorecard outcome reflects the constraint imposed by Ecopetrol S.A.'s credit quality. Ocensa's ratings remain capped by the rating of Ecopetrol, its main shareholder and primary off-taker, which accounts for more than 70% of the company's volume capacity. =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Price Up for Food, Services and Restaurants --------------------------------------------------------------- Dominican Today reports that in the period from January to December 2025, inflation in the Dominican Republic was 4.95%, remaining within the monetary program's target range of 4.0% ± 1.0% for 32 consecutive months since May 2023, as highlighted by the Central Bank. In December 2025, the Consumer Price Index (CPI) rose by 0.84%. Price increases in basic foodstuffs, personal services, restaurants, and transportation contributed to inflation, according to Dominican Today. The Central Bank of the Dominican Republic (BCRD) explained that the most significant impact came from the Food and Non-Alcoholic Beverages group, which accounted for 50.17% of the month’s inflation, the report notes. Within this group, price increases were recorded for fresh chicken, plantains and their varieties, chili peppers, and tomatoes. Prices also rose for coffee, carrots, chicken broth, beef, cassava, potatoes, and rice, the report relays. Other groups that impacted the CPI were Miscellaneous Goods and Services, with a variation of 1.32%, due to increases in personal care services such as washing, styling and hair cutting; Recreation and Culture, with an inflation of 1.64% due to increases in tourist packages; and Restaurants and Hotels, which showed a variation of 1.00% due to the rise in prices of meals prepared outside the home, including the dish of the day, the service of groceries with accompaniment, the chicken service and sandwiches, the report discloses. The Transportation group registered a 0.29% variation, mainly due to increases in air and land transport fares, the report relays. In comparison, Furniture and Household Goods recorded an inflation rate of 0.56%, driven by increases in domestic services, furniture repair, and cleaning products, the report adds. About Dominican Republic The Dominican Republic is a Caribbean nation that shares the island of Hispaniola with Haiti to the west. Capital city Santo Domingo has Spanish landmarks like the Gothic Catedral Primada de America dating back 5 centuries in its Zona Colonial district. Luis Rodolfo Abinader Corona is the current president of the nation. TCR-LA reported in April 2019 that Juan Del Rosario of the UASD Economic Faculty cited a current economic slowdown for the Dominican Republic and cautioned that if the trend continues, growth would reach only 4% by 2023. Mr. Del Rosario said that if that happens, "we'll face difficulties in meeting international commitments." An ongoing concern in the Dominican Republic is the inability of participants in the electricity sector to establish financial viability for the system. Standard & Poor's credit rating for Dominican Republic was raised to 'BB' in December 2022 with stable outlook. Moody's credit rating for Dominican Republic was last set at Ba3 in August 2023 with the outlook changed to positive. Fitch, in December 2023, affirmed the Dominican Republic's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB-' and revised the outlook to positive. ============= J A M A I C A ============= JAMAICA: $4.5 Billion Now Being Spent on Tourism Marketing ---------------------------------------------------------- RJR News reports that Tourism Minister Edmund Bartlett says $4.5 billion was allocated for destination marketing in the 2025/2026 fiscal year in Jamaica, along with $270 million to support airlift and $163 million for cruise shipping. He said the marketing budget will rise to $4.8 billion in 2026/2027, with an additional $457 million earmarked to support airlines and cruise operators bringing visitors to Jamaica, according to RJR News. Despite calls for increased marketing and public relations spending following the damage caused by Hurricane Melissa, Minister Bartlett says he will not seek funding beyond the projected amounts, the report notes. He explains that only about 70 per cent of the island's room stock is currently available because of the hurricane's impact, the report adds. About Jamaica Jamaica is an island country situated in the Caribbean Sea. Jamaica is an upper-middle income country with an economy heavily dependent on tourism. Other major sectors of the Jamaican economy include agriculture, mining, manufacturing, petroleum refining, financial and insurance services. In December 2025, Moody's Ratings upgraded the Government of Jamaica's long-term issuer and senior unsecured ratings to Ba3 from B1, and the senior unsecured shelf rating to (P)Ba3 from (P)B1. The outlook has been changed to stable from positive. Also in December 2025, S&P revised its outlook on Jamaica to stable from positive. At the same time, S&P affirmed its 'BB' long-term and 'B' short-term foreign and local currency sovereign credit ratings on Jamaica. S&P's transfer and convertibility assessment remains 'BB+'. Fitch Ratings in November 2025, affirmed Jamaica's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB-' and revised its Outlook to Stable from Positive. JAMAICA: Government Bullish on Post Hurricane Economic Recovery --------------------------------------------------------------- RJR News reports that the Ministry of Industry, Investment & Commerce says Jamaica's recovery continues to advance steadily and decisively post hurricane Melissa and the country remains open for business. According to Delano Seiveright, Minister of State in the Ministry, says Jamaica has entered 2026 with renewed optimism, pointing to rapid post-Hurricane Melissa recovery efforts, according to RJR News. Mr Seriveright, speaking with Radio Jamaica News, also highlighted strong macro-economic fundamentals and improving national security conditions which he identified as key drivers of business confidence, the report relays. He said key national infrastructure are now operating at or above 90 per cent, including electricity, water, telecommunications, banking services and other essential systems, the report relays. He also pointed to Jamaica's fully operational international airports, with strong schedules and new international flight services being added for the winter 2025–26 season and beyond, as a clear signal of renewed confidence in Jamaica's connectivity, tourism rebound and wider investment climate, the report adds. About Jamaica Jamaica is an island country situated in the Caribbean Sea. Jamaica is an upper-middle income country with an economy heavily dependent on tourism. Other major sectors of the Jamaican economy include agriculture, mining, manufacturing, petroleum refining, financial and insurance services. In December 2025, Moody's Ratings upgraded the Government of Jamaica's long-term issuer and senior unsecured ratings to Ba3 from B1, and the senior unsecured shelf rating to (P)Ba3 from (P)B1. The outlook has been changed to stable from positive. Also in December 2025, S&P revised its outlook on Jamaica to stable from positive. At the same time, S&P affirmed its 'BB' long-term and 'B' short-term foreign and local currency sovereign credit ratings on Jamaica. S&P's transfer and convertibility assessment remains 'BB+'. Fitch Ratings in November 2025, affirmed Jamaica's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB-' and revised its Outlook to Stable from Positive. =========== M E X I C O =========== MEXICO: GDP Per Capita Falls Below China and Dominican Republic --------------------------------------------------------------- Dominican Today reports that Mexico's GDP per capita has fallen below that of China and the Dominican Republic, reversing a position it held in the 1990s, according to economic experts. The warning was issued by Ernesto Revilla, Citigroup's chief economist for Latin America, during the 2026 Economic Outlook Seminar organized by ITAM, according to Dominican Today. Revilla explained that in 1990 Mexico's GDP per capita was well above that of both China and the Dominican Republic, the report notes. By 2020, the three economies were at similar levels, and by 2024, Mexico was already around 10% below both countries, the report relays. He attributed this decline mainly to Mexico’s persistent low economic growth, noting that during the administration of former president Andres Manuel Lopez Obrador, average GDP growth was just 0.9%, resulting in virtually no per capita income growth over the past six years, the report says. Looking ahead, Revilla said that even with projected growth of 0.3% in 2025 and around 1% in 2026, the government led by President Claudia Sheinbaum would average 1.5% GDP growth over the coming years—still below Mexico’s economic potential, the report discloses. He stressed that uncertainty surrounding the USMCA, weak external conditions, limited public investment, and low returns on government spending have continued to weigh on economic performance, the report says. Despite these challenges, Revilla noted that a modest recovery could occur in 2026, supported by a more favorable environment, gradual normalization of investment after a deep contraction in 2025, and expectations of a renegotiation of the USMCA that could unlock new investment flows, the report discloses. He also highlighted positive factors such as a recovering labor market, low unemployment, continued support from social programs, and remittances—although growing more slowly—which continue to bolster household consumption, the report adds. As reported in the Troubled Company Reporter-Latin America, Egan-Jones Ratings Company on January 15, 2025, maintained its 'B+' foreign currency and local currency senior unsecured ratings on debt issued by United Mexican States or Mexico. EJR also withdrew the rating on commercial paper issued by the Company. ===================== P U E R T O R I C O ===================== HO WAN KWOK: Court Tosses Appeal in Alter Ego Adversary Case ------------------------------------------------------------ Judge Kari A. Dooley of the United States District Court for the District of Connecticut dismissed the consolidated appeals styled ACA CAPITAL GROUP LTD., et al., Appellants, v. LUC A. DESPINS, Ch. 11 Trustee-Appellee, Case No. 3:25-cv-00747 (D. Conn.). These consolidated appeals arise out of an adversary proceeding (Despins v. ACA Capital Group Ltd., No. 24-ap-5249) commenced in the United States Bankruptcy Court in the District of Connecticut by Chapter 11 Trustee Luc. A. Despins, appointed in the Chapter 11 case of Ho Wan Kwok. On February 14, 2024, the Trustee commenced the Adversary Proceeding against dozens of foreign and domestic entities and their nominal owners, alleging that these entities are each alter egos of and/or beneficially owned by the Debtor, and that therefore, their ownership interests and assets should be turned over to the Estate. On October 29, 2024, the Trustee filed the operative Amended Complaint. The Assorted Defendants and G-Club Defendants collectively make up twenty-two of the twenty-five total Defendants named in the Amended Complaint. The Foreign Entity Defendants named in the Amended Complaint are: ACA Capital Group, Ltd.; Celestial Tide Limited; G Club International; G Fashion International Limited; Hamilton Capital Holding Limited; Hamilton Investment Management Limited; Hamilton Opportunity Fund SPC; Himalaya Currency Clearing Pty Ltd.; Himalaya International Clearing Limited; Himalaya International Financial Group Limited; Himalaya International Payments Limited; Himalaya International Reserves Limited; and Major Lead International Limited. The Assorted Defendants are as follows: (1) ACA Capital Group, Ltd.; (2) Celestial Tide Limited; (3) G Fashion (CA); (4) G Fashion Hold Co A Limited; (5) G Fashion Hold Co B Limited; (6) G Fashion International Limited; (7) GFashion Media Group Inc.; (8) GF IP, LLC; (9) GF Italy, LLC; (10) GFNY, Inc.; (11) Hamilton Capital Holding Limited; (12) Hamilton Investment Management Limited; (13) Hamilton Opportunity Fund SPC; (14) Himalaya Currency Clearing Pty Ltd.; (15) Himalaya International Clearing Limited; (16) Himalaya International Financial Group Limited; (17) Himalaya International Payments Limited; (18) Himalaya International Reserves Limited; (19) Major Lead International Limited; and (20) Mr. William Je. The G-Club Defendants are G Club International Limited and G Club Operations LLC. On November 22, 2024, the Assorted Defendants and G-Club Defendants filed their Motions to Dismiss the Amended Complaint. On April 23, 2025, the Bankruptcy Court issued the MTD Order, denying both Motions to Dismissing their entirety. In resolving Defendants' threshold jurisdictional arguments regarding standing and personal jurisdiction, the Bankruptcy Court concluded that: (a) the Trustee has standing to assert his claims because alter ego is a general claim of creditors at large, and because any and all judgment creditors could bring a beneficial ownership claim in an effort to collect on their debt; (b) personal jurisdiction may be established where a defendant is an alter ego of a person over whom the court otherwise has personal jurisdiction (here, indisputably, the Debtor), and taken as true, the Trustee's allegations establish prima facie alter ego claims against the Foreign Entity Defendants thus giving rise to the Court's personal jurisdiction over them; and (c) the Bankruptcy Court has personal jurisdiction over Defendant William Je because, taken as true, the Trustee's allegations establish a prima facie case that Defendant Je purposefully directed himself towards the United States, and the injuries that the Trustee seeks to redress in this Adversary Proceeding relate to that purposeful direction. Turning to sufficiency of the allegations supporting the Trustee's claims, the Bankruptcy Court next determined that, as to the Assorted Defendants, the Amended Complaint plausibly asserts alter ego and/or beneficial ownership claims under, as applicable, California, Delaware, and/or English law, and otherwise seeks plausible relief against Celestial Tide, Major lead, and William Je, as nominal owners of certain of the Foreign Entity Defendants. As to the G-Club Defendants, the Bankruptcy Court concluded that the Amended Complaint plausibly alleges alter ego under Puerto Rico law and beneficial ownership under English law. The Assorted Defendants and G-Club Defendants named in the Adversary Proceeding each seek leave to appeal the Bankruptcy Court's single ruling denying their respective Motions to Dismiss. Appellants contend that an interlocutory appeal is appropriate in this case because, principally: (1) they have raised pure controlling issues of law regarding standing, personal jurisdiction, and the standards for alter ego and beneficial ownership claims; (2) there are substantial grounds for difference of opinion as to each of those issues, insofar as the MTD Order conflicts with prevailing case law; and (3) a successful appeal would materially advance termination of the Adversary Proceeding. The District Court agrees with the Trustee that interlocutory appeal is not warranted. As an initial matter, several of the issues that Appellants seek to raise on appeal do not appear to be pure, controlling questions of law. Rather, the District Court agrees with the Trustee that these issues, including those regarding personal jurisdiction over the Foreign Entity Defendants and Mr. Je, as well as the sufficiency of the Trustee's alter ego and/or beneficial ownership claims, are ultimately fact-based determinations and necessarily involve an assessment of the allegations set forth in the Amended Complaint. The Court concludes such questions are not suited for interlocutory review. A copy of the Court's Memorandum of Decision dated January 8, 2026, is available at https://urlcurt.com/u?l=9P3EEc from PacerMonitor.com. About Ho Wan Kwok Ho Wan Kwok sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Conn. Case No. 22-50073) on Feb. 15, 2022. Judge Julie A. Manning oversees the case. Dylan Kletter, Esq., is the Debtor's legal counsel. Ho Wan Kwok aka Guo Wengui is an exiled Chinese businessman. According to Reuters, Guo was a former real estate magnate who fled China for the U.S. in 2014 ahead of corruption charges. Guo filed for bankruptcy after a New York court ordered him to pay lender Pacific Alliance Asia Opportunity Fund $254 million stemming from a contract dispute. PAX had initially loaned two of Guo's companies $100 million in 2008 for a construction project in Beijing and sued Guo when he failed to pay off the loan. An Official Committee of Unsecured Creditors has been appointed in the case and is represented by Pullman & Comley, LLC. Luc A. Despins was appointed Chapter 11 Trustee in the case. POPULAR INC: S&P Affirms 'BB+' ICR & Alters Outlook to Positive --------------------------------------------------------------- S&P Global Ratings revised the outlook on Popular Inc. and its primary operating company, Banco Popular de Puerto Rico, to positive from stable. At the same time, S&P affirmed its 'BB+' long-term issuer credit rating on Popular Inc. and its 'BBB-' long-term issuer credit rating on Banco Popular de Puerto Rico. Popular, the largest bank based in Puerto Rico, with a strong market share in both retail and commercial banking, is positioned to benefit from economic stability on the island. Popular has over 60% of Puerto Rico's deposit market share and has nearly 4x more deposits than the second-largest bank in Puerto Rico. S&P said, "We think that federal spending in Puerto Rico related to hurricane relief and infrastructure repair has helped bolster the island's economic performance and business activity, improve employment rates, and strengthened local real estate markets. We also expect continuing disbursement of federal relief funds to Puerto Rico over the next several years to benefit the island's economy. "In our view, Popular's asset quality risk has diminished over time, though we expect the bank's nonperforming assets (NPAs) will remain higher than most mainland U.S. regional banks. Prior to 2020, Puerto Rico recorded negative economic growth for over a decade, but Popular's overall performance has been relatively stable as economic conditions have stabilized. Prior to 2020, Popular had adjusted NPAs (excluding restructured loans) to total loans plus other real estate owned consistently over 3%. Since year-end 2022, the adjusted NPA ratio (excluding restructured loans) has consistently been under 2% and was 1.58% as of Sept. 30, 2025." While NPAs remain above most U.S. regional banks, a significant share of Popular's NPAs are 1-4 family residential mortgage loans. Over the last five years, net charge-offs (NCOs) in this portfolio have been minimal or resulted in net recoveries. S&P said, "We expect that Popular's residential mortgage portfolio will continue to have higher NPAs than most U.S. regional banks. But given improvements in the Puerto Rican real estate market and overall economy, we do not expect these NPAs will lead to outsize credit losses." Popular's NCOs to average customer loans exceeded 1.0% prior to 2020. As Puerto Rico's economic conditions improved, Popular's NCO rate declined to levels in line with the broader U.S. banking industry. The ratio of NCOs to average customer loans was 0.53% through the first nine months of 2025, per our calculation. This is largely consistent with many mainland large regional U.S. banks that have a similar proportion of consumer loans to Popular (about 15%-25% of total loans). In recent years, consumer loan NCOs have made up over 90% of Popular's total net credit losses. But since these loans typically yield 13%-14%, S&P thinks the pricing provides a substantial buffer to cover potential loan losses. S&P said, "Earnings have improved over the last several years, and we expect them to remain solid as fixed assets continue to reprice at higher rates and funding costs have declined. Return on average assets was 1.08%, and return on average common equity was 13.65% for the first nine months of 2025, per our calculations. These metrics are up from 0.85% and 11.44%, respectively, for full-year 2024. "We think the improvements stem from strong growth in net interest income, which is up 11% year to date as of Sept. 30, 2025. Similarly, the net interest margin (NIM) improved to 3.56% through the first nine months of 2025--up from 3.35% for full-year 2024 and 3.25% for full-year 2023, per our calculations. We think the higher interest income is largely driven by solid loan growth in 2025 and the continued repricing of legacy securities purchased prior to the rapid increase in market rates during 2022 and 2023. "We expect net interest income could continue to rise in 2026, particularly if the Fed cuts rates further. Recent decreases in market rates have led to lower deposit costs for Popular's most rate-sensitive deposits. Puerto Rican government deposits, which make up about 30% of Popular's total deposit base, have market-linked deposit rates. Following Fed rate cuts in late 2024 and 2025, the cost of these public deposits decreased to 3.19% in the third quarter of 2025 from 4.24% a year earlier. As such, interest expense declined about 11% for the first nine months of 2025 relative to the same period in the prior year." Popular maintains some of the highest risk-based capital ratios among rated U.S. banks. The bank's common equity Tier 1 ratio was 15.79% as of Sept. 30, 2025 -- down from its peak of 17.41% as of year-end 2021 but well above most rated U.S. regional banks. S&P said, "As of June 30, 2025, Popular's S&P Global Ratings risk-adjusted capital (RAC) ratio was 13.1% -- within the 10%-15% range we consider strong. While Popular has been returning capital to shareholders through share repurchases, we think management is taking a measured approach, as demonstrated by a total payout ratio of generally under 90% annually since 2021. While we think risk-based capital ratios will likely decline slightly as share repurchases continue, we expect Popular's RAC ratio to remain near the midpoint of the 10%-15% range over the next two years." Unrealized losses remain a significant factor for adjusted capital metrics. Investment securities are $28 billion and make up 38% of Popular's total assets. The accumulated other comprehensive loss (AOCL) associated with unrealized losses on these securities is about $1.1 billion, though AOCL has improved substantially from $2.3 billion at year-end 2022. Due to these significant unrealized losses, the bank's tangible common equity ratio is lower than many regional banks, at 7.13% as of Sept. 30, 2025. Nonetheless, Popular's common equity Tier 1 ratio adjusted for AOCL was 12.65% -- which compares favorably to most U.S. regional banks. Funding and liquidity remain solid, though the high level of public deposits suggests some deposit concentration. Deposits increased about 3% through the first nine months of 2025. The ratio of loans to non-brokered deposits remains among the lowest of U.S. regional banks, at 58%, because most of the large, high-quality securities portfolio serves as collateral for Puerto Rican government deposits, which make up 30% of Popular's total deposits. S&P said, "We view these deposits as a stable, albeit costly, source of funds since their deposit rates are market-linked and are typically collateralized by relatively low-yielding securities. Although the level of public deposits can vary significantly from period to period, we think Popular has a good relationship with the government of Puerto Rico and manages liquidity conservatively." S&P said, "The positive outlook reflects that we could raise our ratings on Popular if the company's asset quality metrics, such as NPAs and net charge-offs, remain generally consistent and maintain their narrower gap to higher-rated mainland U.S. peers. This outlook reflects our expectation that Popular will maintain strong risk-based capital ratios, good earnings, and solid funding and liquidity metrics. A higher rating would also depend on continued stability in the Puerto Rican economy and disbursement of federally allocated relief funds. "We could revise the outlook to stable if asset quality deteriorates substantially, perhaps due to an economic downturn, resulting in much higher provisioning and worse profitability. We could also revise the outlook to stable if management reduces its capital ratios meaningfully or manages its liquidity more aggressively, but this is not our base case. "We could raise the ratings on Popular if the bank maintains asset quality metrics near current levels while also maintaining strong risk-based capital ratios, appropriate loan loss reserves, and solid funding and liquidity metrics." ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Latin America is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2026. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter A. Chapman at 215-945-7000. . * * * End of Transmission * * *