Q3 2021 Bancolombia SA Earnings Call

Good morning, ladies and gentlemen, and welcome to Bancolombia third quarter 2021 earnings conference call.

My name is Claudia and I will be your operator for today's call.

At this time all participants are in a listen only mode.

Following the prepared remarks, there will be a question and answer session.

During the question and answer session. If you have a question. Please press Star then one on your Touchtone phone.

Juan Carlos Mora, Chief Executive Officer.

Mr. Modi showed a Z U chief Corporate Officer, Mister Jose Humberto Augusta, Chief Financial Officer.

Mr that he go Preet, though chief risk Officer, Mister Carlos Red Investor Relations Director, and Mister Juan Pablo Espinoza Chief economies.

I will now turn the call over to Mister One Cutlass Mora Chief Executive Officer Me said Juan Carlos you may begin.

Good morning, and welcome slower conference calls.

Uh-huh.

Oh Oh, okay.

Go ahead and pull them confused and covering the debate is better understood.

According to our need is.

G D grow blows.

Mhm.

One.

420 22.

Salt London.

Expansion around 2.6%.

Many drivers behind.

Okay.

Julian before 147 months.

That'll be Brian consumption.

Maiden name by now.

Household.

Based on both.

Two homes.

Two coffees Sandy.

Yeah, So it's fair private investment to color.

That's supposed to.

The sectors that were should be reviewed by the time they need to go back.

19 levels.

Oh.

Artsy compensated for the moment.

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Gladwell zoloft.

Ah monetize cheese.

In many ways to all of you are there on cellphones <unk> cycle.

I've been to a new way of probably 90 days.

But with the strength of the economy.

Independence results.

Which we can choose a book for the first order.

Given that.

The training of the better than expected economic recovery not only applies for Columbia bought all did yoga, where we call Christmas.

You still get into the details of one to highlight some tea.

Hello.

You too.

3% on Sir.

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That's H U 9% during the quarter.

Correct.

One of the four is sponsored three.

Three.

718, booting net income for the quarter.

943 billion base.

So we've been charges for the quarter was 540 billion pages.

18 for same compare.

When you compare with the second quarter of 2021.

Mainly driven by better economic forecast I, Yeah Oh.

Alright, I'm in Colombia, Panama.

Hello. This is a drug firms Nicky I'm from Columbia Romano continues to grow.

Space.

Four two medium playing on 144 cream in Texas.

Closets.

Because that sounds sections.

85% of the door opening section from digital space.

4% of those days.

Continue to grow ecosystems.

After the first year of corporations.

<unk> one.

One of the most right if I'm in the coffee.

With more than a medium.

I'd like to turn your presentation to always be hooked up with both of those elaborate on the performance of the Columbia economy.

So.

Thank you <unk> no I'll ask you to go to slide number three in the presentation.

Let me start by saying that traditional analysis has failed to predict and measure accurately.

The effects that the pandemic has had on the economy instead.

Element of new ways to fund their son being economic reality has gained momentum.

Most of these advances are based from the use of data I'd Bancolombia, we have been pioneers abusing their dream trend in the local financially industry.

Are appropriate Terry M. L tools, I know, where large sample of banking transactions allows us to have a comprehensive realtime picture of the state of the Colombian economy and.

In the first place our now casting trucker <unk> P. B D, which follows closely Dennis Fisher figures 42, a year and the growth in the third quarter of 14.1% higher than the native consensus estimate of 912.

Per cent.

A significant contributor to these grow these domestic demand, which according to uncle them, Yes, cardholder purchases has being accelerating in the past few months for instance in the first 20 days of October. These transactions grew 20 per cent compared to 2020 and eight.

<unk> relative to 2019. Moreover, the graph up the bottom left shows that the volume of the policy to corporate banking accounts by sector and firm size relative to break pandemic levels. These figures are good at M. P. C painting sector up performance I'm there.

Signaling that important contributors to DDP searches retail manufacturing and agriculture sectors.

Spend it at a strong pace in the third quarter for a third more smu's revenues are recovering faster than those of large firms.

The number of pharaohs payments per se. It's two two bancolombia accountants, we choose a braxy for for my labor demand accelerated during the last quarter. This suggests that the labor market diesel ready reacting to the rebounding economic activity in turn this.

Would allow unemployment rate to decline further towards the end of the year. All we know our indicators point to a widespread them consistent improvement of that going on.

Ben economy. After day. This rupture is caused by the national strike in the reduction of all the cases <unk> well for full year 2021 growth expectations, which currently assigned at 10% now.

Now, let me turn the presentation back to them pedals.

Thank you no problem.

Maybe too it's like four I want to continue this presentation by explaining the loans on the policy.

The recovery of the economy has resulted in significant progress now.

Who have experience in Berkeley go the number of flights.

Build our author.

On services I'm, just struck that our digital strategy.

All these scandals.

Reflect that four months off loans and deposits.

The loan book continue showing a steady growth cause bad three main sectors.

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I shall be supported by the economy recovery.

Continues to be evidenced a sportsman.

This trend confirms that the bank upper case economic shock of the pandemic without relevant indications.

Its financial stability.

To the beginning of the year the retail a mortgage settlements show positive trends, whereas the commercial Seckman started doing poop since the second quarter.

Because of the expansionary monetary policy with stories, Kelly low interest rate right. The balance of time deposits decrease although the last 12 months.

And these heartbeat compensated with an increase in savings and checking accounts.

This has allowed us to reduce the funding costs.

However, as the Central Bank has started last month, a rape heidtke cycle under loan book is growing at a better place. We expect the balance in time deposits to race again in the same direction.

The costs.

Moving towards like five I'm going to elaborate is evolution of digital sales and distribution channel.

During the first nine months of the year digital sales are represented.

4% of all salt products they.

I'd say, it's half my pay a steady evolution. Despite the reactivation of traditional channels and all that will be opening of the economy.

This indicates that the customer experience evolution has accelerated during 2021, so worth a third bun in adoption of digital channels by many of our clients.

I would like to wipe out one of our strengths.

The share of processed front sections.

On the lower right side.

Of the slide you can notice that Bancolombia print says, 47% of all monetary transactions completed B R width, and 62% of those process the mobile phones out of all financial institutions in Columbia.

Moving to like six I'm going to elaborate about Mickey.

Cause you know you saw like Neobank darker themes, primarily young people I'm focusing on the way they relate with box.

During the square we are like 1.5.

A million new claims reeking 8.6 million with a very low.

She should cost.

The politics of reality.

One three Liam places Ah net promoter score continue queasy with high levels of engagement.

Remember that we consider anoxic plane the one interactive at least once a month throughout and monetary Transexual and this is how you never it's the development of our profitability motive I've been clients with a no of course, you can cause I'm with the five active user.

Ratio.

Nikki thought are growing fast.

Have more than doubled the number reported 12 months ago.

But we have not only usually more plastics.

Sunset shows on the bulletin of payments greasy.

They solid space, reaching almost three times the fever observe one year ago.

Moving was like setting you can see some relevant could use a phone Columbia alemanni.

Unlike other countries in the region the population in Colombia leaks throughout the country and seven a large medium and small seeds.

Cause I'm getting my annual target slowly equaling defeat.

Mmm acting responsibly towards financial inclusion on education.

Well, what financial inclusion initiatives, we provide mostly for your financial services for people to save them. Some great tools to become pregnant shall we empower and improve the quality of likes.

Cause I'm, giving them animal have reached almost 6 million times.

They're crying continue increasing.

[noise] sections, especially payrolls and subsidies remain high.

Loans disbursed off triple although the last year.

And it's like eight we present our E S G framework.

Our purpose is to promote sustainable economic development to achieve everybody wants will do.

Therefore, we provide financial and nonfinancial felicia's will strengthen.

The network of our countries create sustainable cities and communities and promote financial inclusion.

This commitment is aligned with a global agenda, which is to comply with the U N sustainable development goals deciding to achieve more prosperous societies and protect the planet.

On the street fronts, a faction in which we believe we come from old or articles, we have already missed bars doing this year.

263, and places, which represents more than 20 per cent of stuff out this box.

Now I want to turn the person station to costume ductile Acosta.

Thank you one cardinals.

Now turning to snack nine I want to walk you through the evolution of degree program.

Pray really continue decreasing yeah gradually returned to normal.

These quarter relief programs in Colombia, and Panama finished.

During the upcoming quarters, it will be key to follow the evolution of integration destructor loans Unchartered chalks.

Considering the geography square to thank Oprah our closest animal.

The percentage of the leaks decreasing who has money, but if he sees between per cent of the loan book called me from 26% in the previous quarter.

Unlike your their country's thing where we'll three Panama maintains a relief program until September 10th.

The situation required, but he's not too I located on seasonal who was first to reach the acquaintance. We planes that were are there some brittany cause scheme getting this quarter.

As a result of these at the end up to Denver on the 5% Sunday really beaten up half of therapy to keep every instrument.

You'll get 50% of the lungs and devotees already has his churchill solution and if they need.

Patients they would be transferred to get another order for Ya.

On this night you can note these not only the person touch of the loan book that he sounded relieved but also it's compensation by segment in stages.

Oh, not consider it an conciliated benki, 6% of the loan book continuous under really.

They are in turn subdivided into 50 per cent for commercial.

21% per week.

29% pork mortgages.

Each compensation by your speeches he said Cardinals.

45 person takes 142 per cent in stage, two and 20 per cent in the states.

And then can I gain we proceed the breakdown of provisions during the quarter.

But we should charges part of the third quarter, whereby country protein, beating a basis how's weed eating previous quarters, we went to explain the breakdown.

Each quarter has the lowest producer charges since the pandemic began confirming.

Confirming the trains we observe in the first half of the year.

You can notice the lowest part of this night, we'd need assume COVID-19, I'm sorry, there's something.

Are the main drivers behind these results.

Mmm, Okay, sometimes in Colombia, and Panama and explanation of the 94% of disease I believe squeak granted to our clients who have been able to gather more and better information that allowed us to prove to Makoto Linky Sunday, which we built pretty soon.

During this quarter and kept managed to reach find an acquaintance with clients therefore as they comply with the.

What has been agreed we were released Felicia.

He used to get there with a paid it forecasts of economic Panthers happy integrated and release of the balance of previous periods.

[laughter] provisions COVID-19 during the quarter due to the fall of corporate nine years of the construction sector in Columbia.

We decided we give you a snapshot of provisions in massive quantities.

Costa please for the quarter was one per cent on for the last 12 months last 2.2%, reflecting they could face up recover email power plants.

These trained continue continues for the last quarter teaspoon.

That's cool stuff, we called you here might be theater that the guys in the second quarter of 2.3 person.

Did he fear charge offs quiett teething.

Feeding the labor of 2020.

Two important Eva.

First it reduces the balance of the loan portfolio undertaken coach reduce the level of five too low.

We maintain solid cover at your Internet's 430, and 90 days that the lowest to handle that.

That's a possibility.

With irritation.

Oh and in fact with Super Center, Conciliated, and external capital I think questions.

Consolidated can sort of integration dance at a level of peaking pulling three per cent quiet T. T. One I didn't live in 11.8% on their pool, Boston tree for the third quarter.

These ratios I well above them anymore.

Climbing not only in the consolidated basis, but I think they stand alone operation.

The growth of the channels, there's equity takes place because of the go through some of these kids.

We can see to it that the labor at Tropicana, you seen optimal level given the current balance sheets.

I said grow with expectations.

Nothing not capital to support the notebook grown.

Upcoming dealers.

Only say, 15% Debbie critical she shouldn't of pink.

Up until very patient, who continue I'll put any with their stupid David Obloquies Ah.

So these quarters savings to checking accounts, 3%, 66% of condoms structure. These.

These increase has been compensated with a decrease in case, they fall asleep on Craig's suite correspond in banks.

Cause we have nation during the cold the economy got T V stand alone book are showing embedded trained quarter by quarter. So we expect to gradually increase the violence. He kind of course he could support these grows.

Oh, we'd be expected hikes from the central bank because of the call sheets B increase.

Honestly I Cook team, we percentage snapshot they'll fall like a standalone operations.

In general terms, they're trained throughout the deeper in geography separated like Bancolombia what C V S.

Stapled Martin's steady growth of the known book increase of expensive I'm decreasing pollution charges.

Over the last few years, the training domain matrix up these 10 operations, especially.

Since I'm married corporations represent 28% deposit, but 82% of meeting.

Now I want to give you a quick cover P. O P chopped in Central American countries, where we agree.

Need to start with Bancoklahoma competing Guatemala.

These are the growth a pit bull afford it was treating like the consumer for Ya.

[noise] reflects the banks is trying to get to increase the share the reach of shaking we didn't get total total for your mix.

Commercial and mortgages also had a group of farmers D recorder.

So we should charges show up with a recovery thanks to improvements debating commercial clients and in in specific provisions.

I'm, sorry, but equally Nintendo continued consolidated the portfolio growth that he's boosting Americans frequently.

Had been accumulated bases the portfolio grows well in retail and commercial segment.

Bonding to the dynamics of it can make recovery that the country experiencing we should also reflect.

Solid recovery of feet income.

Finally, I need more.

Plus you keep dynamics of young person evidenced during the second quarter on team and consolidated in the third quarter.

Driven by reading those onto reactivation of the demand for from corporate clients.

But he's Mccarthy favorites EBIT wrote this strategy and a renewed digital asset making.

Making possible not only relevant increase but also a change in the funding mix where savings to checking accounts upbringing sure improving the funding cost.

The bank continues other performing no fears regarding known simply close it's slow.

Only 915, we see the evolution of markings in net interest income.

[noise] knit enters knocking remains in the 5% nearly as we were expecting.

Yeah, right hiking cycle started in September and we expect that reference may two poodles 2022, and four point, 25%.

This is going to be posted people's minds, but we'd be reflecting the first couple of quarters of next year.

Maybe 15 can continue with this database of grown gradually over 2019 Peevers. These.

These wants me to regain like the reduction in the front and cost.

And continue using the liquidity no more efficient way, that's the dynamic of dislocation improves.

It's 916 shows able to shut up expenses and efficient.

Person on expenses, excluding viable compensation increased 1% and accumulate these people's views debate.

Whereas at least if he picks painted view five person.

Ah February shows operating expenses as of September at 9% up wrinkled Curt ones the same period between two.

[laughter] drive airport expansion inexpensive for 2021, he could say something related to digitize transformation.

It's like pulling teeth chose paper version of peace.

Nitties continues to be one of the most big T V and 90, something females growing our campers who used to date.

Amy and collections as Windows banking services have added to the strong performance as though feeds from baby.

Credit cards on commission establishment.

East benign with the largest contribution thanks to increasing the volume of transactions on the use of the heat that Chinese is like 18 shows that tapping his feet metrics.

Giving the Creepers Court D C or you have to leave her Martini idea of your average row.

Teeny that basically business he did get that transformation.

Meaningful politic, what it was 943 billion basis and return on equity is tooth at a level up to a 0.7 per cent.

Even though provision charges were the main driver easier. So I want to highlight the good performance will be able to give lines of the PM mail in a meal of such challenging situation Staples Martin steady growth of AI, AI and the fast recovery of that of being calm.

Finally, each wall of maintenance D. A coupla tax from falling Columbia, which you guys have the calculation of deferred tax by generating an addition, I probably shouldn't have to hang around 49 billion face.

Now I want to turn the presentation to horn catalyst for the clothes she remarks.

<unk>.

Thank you posted.

We are getting back to normal Fusty monastery.

This court.

Some fries.

Results.

The <unk> the government Mhm day, our phones too I'm in Columbia.

Then with a swelling balance sheet rebooted the.

And services.

Yeah, I'm looking forward to seeing you need all in all of this all in Bedford.

Well, we knew a lot more.

<unk> way of over $80 right.

Right.

Luckily keen on these puppies, we wind blew off in the line or questions.

Thank you we will now begin the question and answer session. If you have a question. Please press Star then one on your Touchtone phone.

If you wish to remove yourself from the question can you. Please press Star then too if.

If you're using a speaker phone you may need to pick up the handset before pressing any keys.

Once again, if you had a question please press star than the one on your telephone.

Our first question is from you already said in on this with J P. Morgan. Please go ahead.

[noise] Hello, good morning, Congrats on the results and thank you for for the pursuit of asking questions I have your first one regarding the asset quality to look for 2020 chewy already provide some color in the cold, but I guess the the indicators they were good for decor to right and we work.

Certainly span them pain on Monday towards Okay. So so my question is what should we expect for US. It's quality is it worse behind like what should be you know like the normalizer leg of losses for for the next year and I have a second question regarding the your digital initiatives I guess Nike.

He was a very good platform like when we look to the to the K P is number of users rating Google trains I know your name it but we are starting to see some beers an' three they call them to mark like some feedbacks uhm some big ones. So just like a high level of you for you how do you see this company.

[noise] tissue and evolving in Columbia with some new players crummy what are the challenges Mark what when you are doing to prepare the company for those new guys. Thank you [noise].

Okay. Thank you a G for your questions.

I just wanted to cause I E.

After the <unk>.

<unk>, let me start by saying that we are.

It just helps nor in my life.

D a V chip challenge so.

What's not normal was very low you said before.

To a hospital.

No <unk> <unk>.

<unk> shall we really cheap and in the.

The coastal Breeze authenticate G Y N O L M P.

Two one.

So.

Do you expect.

To go towards a long term cost of 361 Columbia.

C O L 148, 49 relation.

Okay, I'm I'm I'm I need small.

Though.

Okay.

Cycled <unk> fun, I must be a little bit longer yoder.

Operations too.

More design.

But the state is going to be because you've reached.

Long term cost of this huge so I said should be around 140.

49%.

And your second question digital the strategy.

Okay.

To be put on the market will be painful.

Long time.

You mentioned Mickey.

We started with Nikki.

D C.

And now I see we have a slot for them.

Is there a beach.

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Simpson.

The market.

Joseph Nicky well do you have a <unk>.

In Bancolombia.

For each of the teaching.

<unk> Wow.

Our approach offerings.

If you go on on the walls hour <unk> B a market.

Remember gosh a columbia.

Has regulated.

Regulated atheist race car.

Which is not the case in other countries so completing the Colombian market.

She slowly.

It's difficult.

Ooh Ooh Ooh.

Ooh Beach.

It is individuals.

It's not that easy because the 18th right.

A no.

Allow that on the other hand.

To compete on D evolution of cheese, you got it in particular.

That's great cause as I mentioned.

For the whole day, and time you'd like to find out what social painful.

Competition is going to be.

We will have no doubts about it but I.

What is going on.

I'm sorry.

Thank you.

Our next question is sorry, our next question is from Andros, So adult with sand in their please go ahead.

Good morning. Thank you. Thank you for the presentation. My first question is a follow up Hunter got being a corsa raised.

The guidance.

The yard is two on 2.1% that looks a skill pretty conservative considering the during the first nine months of the year you out above around 1.6%, so there'll be some place too boring.

Postal reform the fourth quarter unwind I when I look at.

Your numbers for this year.

Sorry, and I normalize it with the cultural base by the Provisional release that you had apparently what you'll you'll you'll have hobbies.

Around 1.5%, so so I would like to understand what why are you still concerned about people about a big because of raised expectations for the rest of this year.

Thank you.

Let me tell you that.

More on the cause of restarting, possibly unsafe.

We because the <unk>.

Last 12 months, it's 2.2%.

I know we have today.

Like to thank you enough isolation.

<unk> It was it was really high.

What can the unsuspecting soul G.

So he ordered.

You said G. One.

There are some.

The issues that are going to need some information for example, <unk> H E growth of the economy in order to introduce that number to deal with a mottos, but also.

No no way.

Way.

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H M O E.

Cause the economy may face Oh, Oh, it's fine.

We have also upon them.

Remember the day.

And yet.

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Is going to be it for all the iron probation some unusual.

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Corporate on balance.

Balance sheet, so is <unk>.

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A probation releases on also would need two of <unk>. So that's Hawaii.

Instead of a convenience J.

Go region charges for or the cost of which I'm sorry for the whole year should be around.

People say would be less.

At the end of the four months of Fry.

Triage Julie E four quarter.

Reach as I said it is more than normal eyes.

P C. All those close two minutes of me you structure.

<unk> are are are going to face so maybe we have.

Concerned about the U S.

<unk> answer.

Oh, a full quota is going is going to be cancel all sir.

Oh payment so.

Okay, what kind of lost my second question is regarding your loan growth expectations for 2022, you'll say that you're expecting our GDP Grove for Columbia, all 3.6%. So I would like to see what it what are your thoughts in terms of how this translates in terms of Ah longer.

Next year and based on these on your Coke Drinker Pickle location ratios, how do you feel about your current dividend.

Fuchsia.

Yeah sure I guess.

As you mentioned.

You would expect D D G P to grow to blow around six 7% niche next year.

In shows up to allow us to pass along goes along.

Hussein.

Yeah.

The fall of the year.

<unk> and.

We show called.

Each year it'd be tough with the growth of retail loans.

An order to show.

In the third quarter Kenosha Lodestar.

Ooh.

Okay well.

So does that interest you you Shun Lee.

<unk> <unk> and a mistake.

Secondly.

Flustered and thus those on commercial loans, even though they said Charles Moore.

Reaching 80 cents off a.

Raised by the way so.

So.

Income that they generate so we don't get sick.

Dramatic change distribution.

D a D.

No bug essential commercial.

Table repay.

<unk>, you'll be <unk> body as I said, he's not going to affect dramatically.

G E distribution.

All of the normal.

It doesn't clarify what I remember that maybe if the reason was because the distribution if you if you.

You don't go Crazy, So Richardson ratios, yes, but yeah thinking.

Okay.

I am so sorry, I'm, sorry, I thought you were talking about the distribution or E. Oh, probably Oh, I'm, sorry, I I want to get that all we do is sorry.

Let me, let me say a E T.

P L E.

Mhm distribution given the distribution has been your savings.

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Many years.

Spectrum.

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2% proposal.

First to the board of Directors Sunday shareholders' meeting, but you.

He said that proposals.

Oh.

C E a.

Our our all you see <unk> policy, which is I'd say CCP.

And 60% of D. A net income.

But of Columbia, you shortly because that's the one.

Just to be sure that operations you wanted to dispute.

Great. Thank you for your answers Karlsson congratulations on the results.

Okay. Thank you numbers.

Our next question is from her get quitting with Morgan Stanley. Please go ahead.

Hi, good morning, everyone. Thanks for the call I hope everyone's doing great I Wonder who I have two questions. One is on expenditures for the quarter. They were all.

A large quarter on quarter in your in your ear and wanted to hear from you. If there were some extraordinary items there or you brought forward some of expenses in the fourth quarter and while the expectation is for the full year and for next year.

And then let interest margins.

You you sort of like a looters to rising rates and then having a positive impact our margins I wanted to see if you could.

Maybe quantify where do you think your margins will be.

Next year, given the normalized level of benchmark interest rates. Thank you.

Yeah.

Yeah. Thank you.

A fresh one expenditures.

D.

You want my license basis.

254, <unk> dot com sugar sugar at all.

Says.

Labor costs labor costs.

Or a space and time growing around one person so they asked me.

A.

We house E balanced use the Bible compensation, which is slowly.

She she hidden costs.

Violent conversation.

Register by.

Okay awesome.

It's surely.

Hi number on that on general expenses.

We have some.

No issues related with you people just a nation, but also those depreciations.

Related to all our <unk>.

So.

E R E C numbers lows.

W W and outline the basic.

Well, let me tell you something.

Columbia Mhm.

Nation.

Two 5%.

Also a depreciating special depreciation, which he's a husky close to 11% so the pressure on.

Almost from that.

Each each E E D.

It's one of those shows that is <unk>.

E a beach or so blue.

We we are not going to see a form them. She says just the spencers that is going to be.

<unk>, it's spelled E U T R program and close control on there.

Sure so what.

You said Dot P.

<unk> <unk> <unk>.

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A so don't charge.

My name is to compare.

A for example E 19 expenses on two September.

I'm.

When do you want expenses to grow these days.

100% scheme side, because we've got some issues regarding.

As I mentioned.

But a more normal life way is 2020.

<unk>.

I'll check the yeah the.

The changes he is thank you.

You must have a very strange.

E R.

Hello.

Oh yeah.

I agree with customs stuff question too.

Mmm a level of April Ah needs.

A coffee table on great ice on E R.

Cause it.

Thank you one regarding named <unk> as you can see we were able to easier to sustain the name.

L. A piper channel basically and mostly because of the reducing of experiences of the English rate because of our deposit base.

Next year, our sensitivity is for every hundred basis points has changed a central bank our sensitivity would be at around a beat that means time, where you are going to see an expansion of the name.

And in the second quarter of next year, and maybe we are going to ebay can scream at the end of the D. As close as at a level of false on 525%, maybe you're going to see an expansion of name in between 40 to 50 basis points.

Or even more and you know what mean portfolio remembered it ended our meaningful bold back lending name for the total for you which is five six armed security piece mean that he's Cedar point H had the proportion is 80, 20%.

Thanks, Thanks, everyone.

Mhm.

Oh.

<unk>.

The rates.

Julie.

Next year.

D E a second.

Second quarter this quarter.

Q.

Thanks again.

Our next question is from Ed and I still got belonged though with Bank of America. Please go ahead.

Hi, Good morning, one combos with some battle.

Kind of loose ends in morning towards your team. Thanks for the presentation out for the opportunity.

I have three questions from my side. The first one that you saw the political landscape.

We continue to see federal leading into presidential bowls. So I would appreciate if you can share with us what have you been hearing from he's proposed shelves I don't know it quite a have you been hearing if he is wanting to implement higher taxes or banking fees.

Anything you from what you have scared I think will be very helpful.

And then my second question Nissan Nikki we have seen the rest of the region developing digital banks and willing to do spin offs at some point. So considering that you already have a good number of clients and did you are starting to become profitable what else did you need to consider.

For a potential spinosa and at least thing of making.

And then my last question you send your effective tax rate.

Hi, during the quieter considering the new tax reform Ah. So how should we think about the effective tax rate for the last sweater and next year. Thank you.

Thank you so I'm going to take offense to question I am going to us.

<unk> <unk> <unk>.

Actually.

Pushing back.

Yeah political landscape.

<unk>.

We have a <unk> says.

On may.

Uhm addiction.

Uhm.

We have.

A lot of candidates so.

So you can call.

The landscape you smoked luckier.

Regarding.

Okay.

It can be a C D four items.

And we.

Has been a <unk> for a long time who's lost Tomatoes, all with that.

So he has a b.

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<unk>.

Thank you one and then still as you mentioned this is a one off and this is because of your very calculation or they differ.

Taxes, and we are expecting at the end of the here.

Taxation for plan, Colombia for the entire group would be 32% at the end of this year. We are expecting next year because of the tax reform, we are going to get delivery of 34.5% and the 32% of D. C. Here at the end of December. It is explained mainly because the main source of <unk>.

Income comes from the Bancolombia, It which day, we have a higher et cetera type apps.

Our next question is from Teetotaler barked out with Goldman Sachs. Please go ahead.

Hi, Good morning, everyone. Thanks for taking my question just two quick follow ups actually first following up on the expenses in terms of the efficiency ratio.

Given the growth and expenses I picked up but how do we think about that efficiency you know going forward. It given the investments you're doing you know could it be some cost savings with the digital initiatives I'm worried that the expenses is gonna be sort of higher initially stopped to think about the evolution of that efficiency ratio and then just follow up quickly on that.

The tax rate should the tax rate just go up you know roughly 5% for next year, given many tax rate. So it shouldn't be like around 35% or so I guess in Colombia offset by lower tax rates in the other countries just to confirm for next year, how that is actually it should be.

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34%.

Mainly driven by.

Columbus I didn't know if you'd like to add something to beach.

No. One that is very clear next year 30 to 40 acres, including the special effects that you mention that is clear.

Okay. So just to clarify so for next year around 34% in Columbia, and then I guess you have lower tax rates in the other countries right. So the consolidate tax rate.

Less.

Or in Columbia next year will be 35% plus 3% on vision than they were really maintain until 2025.

English in mind that kind of security of taxation would be 25%.

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Okay, and it says to take care of English.

Our next question is from a level at a turtle, we do B S. Please go ahead.

Okay.

Thank you.

<unk>, a little more of a body particular question.

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Okay. Thank you hold level I have some some difficulties hearing you that I'm trying to answer.

You have questions regarding Rafael Oh Nicky.

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Maybe maybe.

A young adults between 18 and 35.

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Okay. This is was very clear. Thank you Sir Thank you cards again.

Thank you.

Our next question is from heart Freedman not with Citibank. Please go ahead.

Thank you very much can you hear me awhile, because I'm with your phones.

Yes, I think the way that it <unk>.

Yeah. Thank you take care of them sound better. Thank you huh. So hello, everyone. Yeah. Congratulations on the results and I have I, just you know a couple of photo ops as well.

Initially if you could just clarify in getting this gives us a bit more granularity about the reasons for the you know.

Hurt Ah tax readjustments, causing a negative impact in this carter and they explain why you know.

My question.

Is that when the taxation crazed in Brazil at list, we you know reevaluate it the tax credit to stock.

And Ah Ah Ah appreciating that is talking this caused actually a positive effect I extraordinary positive effect into quieter when the banks reevaluate that upwards their stocks off tax credits not sure Ah you said in your case you had.

Tax liabilities and that was why you ended up having a higher deferred tax not lower. So this is the first question just for clarification on what's really caused the fact that this it had tax liability with tax credits techs assets and the second quest.

And you know just a follow up here you know on the these tiny ships when I look into that queue and Alemanno. It's interesting because you are evolving well in both but you know some of the K P ice differ quite substantially for instance.

You are at 65% of active users Ah enact P as versus you know 55.

One year ago, when you're looking to.

You know a lot and I know.

Much lower no just parts of 1% and that this has not really increased versus last year, which was at 40%. The same happens to N. P. S.

He has approximately 81.

No you have a 64, so just wondering what.

What you are seeing in terms of Ah challenges for Alabama are you not to achieve the same K P is you know versus what you are achieving already abnaki. Thank you.

Okay. Thank you joke Benny.

Your second question.

US consumer to do.

Your first one.

Related to.

Vaccines.

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Pardon me just hold the line on woman widely high crime.

I think <unk>, having some issues regarding the call. Let me let me I'm sure jerk. Your second question would be why twenties recollected again, yeah right on.

And in terms of deferred tax when we recalculate deferred tax based on the <unk> on the new tax reform, we have three elements.

The loan portfolio get bones, both as you mention coast a positive effect on on maybe for but there is no their enemy, which he Tuesday.

Three O indication would waste because we have Uh huh.

Faceless and goodwill it is the only way around and that's the reason why it affect us our taxation and you can see that 38% taxation. These quota by busy because of the combination of these two factors. The first two known some bones are positive because you've mentioned, but the third element which is bigger.

Are there too it is affecting in a negative way that explains why they tax increase.

Perfect very clear Jose Thank you very much.

No no no my patient one you can continue with the question regarding.

I don't believe we have him back just for a moment.

Okay. I think is why I'm, having having against some issues complimenting me I'm sure of one as in your previous question we.

Two different profiles N Nancy N I would rather mono mm mm mm.

And.

Is there a big difference first Nicky smaller oriented to people, who leaps in the cities and Nick out on our money's more oriented to prepare Rudolph who needs to small towns. So we complement deal for.

The challenge is how we are able to maintain date activity for the fears 30 days and we feel proud, saying that we have a very positive numbers in both and and the reason is because we are using not only to receive for example in the case of low income population different cities.

I'd also because they are actively you seen towards transactional way.

Away at one you can continue with it with a with the answer now you are connected.

Okay. Thank you I will say I am sorry.

Yeah.

Connected from the call.

Iowa City I'm sorry, you're.

Those are a different matter.

Nation, So nikki small nearby.

A slow related.

It's different <unk>.

And by Columbia Romano.

Offer is throw my body.

Target T. A lower C V V drugs with less education shall we have challenges there.

I I I E E.

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One month T T.

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Nikki spare because we have.

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<unk> no you're good.

In case of Nikki So we have some challenges to keep evolving the bancolombia that might have got four but we are very comfortable.

Those two strategies.

Many showing none answered before those.

Twice.

E. So it's it's almost close to 50 million fly into this too.

Actually I see.

Financial products in a very simple way.

<unk> challenged by Columbia with cheese.

Big advantage, so those customer for both platforms.

Access to D H T M L.

Eh network on Columbia, HCA does it would also be a <unk>.

Aged network, which I mentioned this more than 21000.

Yeah on cases around.

Around the country.

Oh, that's perfect. Thank you very much for games.

Thank you Joe.

Our next question is from Carlos Gomez, which eighth S. P. C. New York. Please go ahead.

[noise]. Thank you for taking the question it for extending the cold and not to come back to the tax ihsanoglu raising it to this but just to clarify the last thing that you mentioned you have a positive impact for lungs for bone to kind of negative for goodwill, but coming back to what you asked.

If in the future we have a reduction in the effective tax rate should we expect a negative impact ego result to the short term because of the reversal 40th it today.

And the second is when we go to the next year or they get after once we normalize your critics provisions and given how your business is set up today and the tax rates that we have what again is there sustainable Harley that's the same day, but I'm pretty picky.

Okay. Thank you <unk>.

We can take the second question.

R O E.

We see that yeah.

The mid term R O E on Columbia should be around 40%.

39, 60% that's our target.

And we speak with cheese.

But.

Three still 22 will be a year you.

Do some be some adjustments.

It's going to be.

Lower double digits did.

D H a R O E.

B.

It should be.

The year in which we can reach a midterm.

Those are two or between 13 on.

Perfect Perfect could you could you stay for a couple of those first closer regarding.

Isn't around around Texas.

Yes, one Ah yes, cognos as you mention this is have one of it is affecting the third quarter backs.

The game lasted an idea.

And a big year, we will expect to pay to proceed and yes next year, we will expect the 32, 34% say, 5% tax and also obviously it will affect the profitability because we were not expecting.

That increase in taxation, but again this is someone off and you are not going to see Africa correlation with that next year, assuming that deferred tax we've maintained the same 35%.

I don't know if that answers the activation Carlos.

No. The the question they say in the future. There is yet another tax refund you usually have one every two years and this time that you actually close down.

It's actually it goes down we should respect right one of negative impact right.

Correct that is correct <unk>.

Facial comes down never calculation of goodwill with affecting Epipen way, Yes, you mentioned that is correct.

Okay. Thank you and if I can follow up on the on the early Christian for this year you have a very specific outlook. When we were talking about the end of 2020 and endure quite don't Vicky were expecting 6% to 8%, India and you'll go to report a much better number is it mostly the quality or okay Ah factors.

Looking back at the most perfect yeah, they're scum. The other factors that have made this year better than you fear initially.

<unk> mainly.

Driven by us as quality.

It.

Better than we expected.

I will I will <unk> I'd like to highlight.

All nice.

Expenses.

The bank R E B well.

<unk>.

Net interest income.

We E for sure that we have on Margie.

Interest rates.

We can handle that cause the funds.

The keys are are performing whoa.

So, it's driven mainly by us quality, which is going through a.

Store to normalize number but.

We had it very challenging Q U E 2020 uneven.

One.

D E. Okay.

Cheese on it.

Net interest said Martinez.

<unk> <unk> <unk>.

Well.

That's okay. Thank you so much.

Thank you. Our next question is trauma, Jason Marlin with Scotiabank. Please go ahead.

Hi, Thank you very much for the opportunity to ask questions from Carlos <unk> I have a follow up on the digital efforts on Nikki and and and I'm Columbia Alemanno I.

I mean, we're seeing this very rapid growth for instance in Nicky the number of abusers in the quarter alone from 7.1 million to 8.6 million and then.

Bancolombia Alemanno from 5.4 million to five seven and your showing which is very interesting the customer acquisition costs of 33 cents at Nicky and 36 cents.

Add.

Mhm Columbia Alemanno, if you can talk a little bit about how you're driving this growth and clients and what is incorporated in that acquisition cost and you know is that something that you know in in many ways. I think you could say it looks very low, but just how you view that could it be lower could it be higher how should we think of that going forward.

<unk>. Thank you.

Okay. Thank you. Thank you Jason as you mention.

<unk> <unk>.

Numbers are very good on on our digital star.

Uhm undergrowth that we are C needs to spend cause.

Like to to highlight.

That growth is because what we are offering.

Is really useful for people.

He pulled out each.

Uh-huh.

July 222.

It's very easy to be decline of one of these telephones on once you our clients that you've kind of Josiah E. Five minutes on what do you need to teach yoga.

<unk> number.

Two or more a few more more more.

And the soy displace why on on what companies that we are created a network.

Which means that we already have the numbers and the connection with spunk Columbia So.

People are really seen that is that's useful for them to have access to cash to blue.

Kashi through our bank Columbia.

Network so.

It needs is.

The combination of it.

Where does this platform with easy to use <unk>.

Yeah with the power of the Bun Columbia Us networks.

ACM son on.

Also banking agents, which allow cashing in cash housing nobody very easy way, a very convenient way on all around the country. So.

That's also a social so in a way to transfer money to do payments. We are all sweet cigarette evening hour you are.

<unk> strategy, Yeah basic to our payments strategy with on Columbia. So you can use both forms Nicky on my Columbia element.

Susan payments.

We you are.

E.

In ways that allow to use your money in a very convenient way regarding.

<unk> costs.

We already.

Invest in the technology.

And market G a.

Alright around acquiring a customer.

This number of appliances also.

Very efficient so we are including the direct cost of.

Marketing.

On the.

In that in that that acquisition acquisition cause we don't expect so a number two old Lola.

We are in.

<unk> your <unk>.

Very good and we will continue seeing dark figure in the future.

Can you remind us again, Kurt Nicky and Columbia law mono like.

Like what percentage of the clients are are new to the banking sector or new or are already clients of bancolombia just to get a sense of you said converting is that acquisition costs converting a client at van Columbia into Nicky or <unk> or or or how how should.

We think about that.

This Jason.

60% of Fries are.

The new.

New clients or by Columbia in case of <unk>.

40% for seal or fries.

Are also <unk>.

Columbia, So six cents a new signs.

I D.

So we are never achieve east coast, that's 40% that's R shines.

Come on clients with with burnt Colombia, we have a lot of information about that 1 million.

Can use.

The ladies to really.

Access to the skies with a.

No.

<unk>.

So.

It's it's a combination on that 60% are new so that's that's the combination.

But we have indications bancolombia alemanno.

The oval office Hyatt.

Yeah.

Bad.

Mainly menu.

Around four G, 5% of the clients are real short for the banking system Sunday. If they are you see on Columbia Amano us there.

There may.

Financial services.

Thank you very helpful.

Thank you Jason.

This concludes the time allocated for question on today's call I would now like to turn the conference that cough ecomanagement for any closing remarks.

Thank you everybody for your participation on the pitch force.

Third quarter conference all.

It.

Has been the.

Quarter, which we cough.

<unk>.

We will C. R E E N.

Four Cora we R E.

Even though it would have some specific issues related probation she would be.

<unk> <unk> <unk>.

2021, so thank you everybody.

I hope to see you on our mix conference call in which we will be saying the 2021.

Sauce.

Have a good day.

This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a blessed day.

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