Q1 2024 Bancolombia SA Earnings Call
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Speaker Change: After these highlights of our first quarter results I am pleased to introduce our chief economist lower Chloe who will provide further insights into the macroeconomic landscape louder.
Florida.
Speaker Change: Thank you Juan Carlos.
Speaker Change: Please go to slide.
Speaker Change: Economic activity in Colombia is going through a phase of substantial weight that will continue for much of 2024, you just stagnated.
Speaker Change: The significant fall in.
Speaker Change: Consequently, our updated forecast incorporates a slight downward revision.
Macro Barrett: Macro Barrett.
Macro Barrett: 2024.
Macro Barrett: Economic growth in Europe.
Macro Barrett: Especially in line with the previous years overall economics.
Macro Barrett: Inflation is expected to close at five 7%, leading more margin for central Bank interest rate cut for an end of year repo rate of 875%.
Macro Barrett: First quarter results suggest that even though the economy as a whole is still sluggish as in the case of construction retail and manufacturing.
Macro Barrett: We have managed to outperform.
Macro Barrett: Certainly the agriculture sector Frankfurt managed to grow one 9% year over year during January and two 5% in February according to a leading economic indicator I E.
Macro Barrett: As farmers anticipated the drought even in the wake of an unpredictable and Neil some crops such as coffee with Macau thrived in the earlier months of the year.
Macro Barrett: Also the services sector, which includes public administration and entertainment show favorable activity expanding close to 5% during the first quarter. Furthermore, the economy has continued to benefit from both feeding inflation, which has managed to maintain a consistent downward trend closing at an annual rate of 736% during March this time.
Macro Barrett: Has been mainly led by declining foot prices registering just under 2% year over year and good prices around 3%.
Macro Barrett: Actually imported goods that have E. Thanks to the appreciation of the exchange rate.
Macro Barrett: Given the scenario the central bank accelerated the pace of interest rate cuts to 50 basis points during March and April thus far policy interest rates have declined 150 basis points from its 2023 peak.
Macro Barrett: The repo rate to defend to its current level of $11 75 per cent going forward do you expect the central bank to continue a cautionary approach to monetary easing given the upside risks that still prevail in bringing inflation back towards the target range of 3%.
Macro Barrett: Indexation effect, a tangible and potential hikes in gas and diesel prices are still on the table.
Macro Barrett: Finally in recent months much attention has been drawn to the fiscal outlook underwhelming economic activity has significantly impacted tax collection and other sources of revenue have suffered setbacks such as those expected from lawsuit windfall gains and mining sector royalties declining sources of revenue contrast sharply to high levels.
Macro Barrett: The planned expenditure that the government has set out to make social policy goals. As a result, the government expects to expand its fiscal deficit to five 3% of GDP in 2024 from four four in 2023, which implies testing the limits of compliance.
Macro Barrett: Cool.
Macro Barrett: In sum the Colombian economy faces growth challenges, but macro financial conditions are slowly improving and should help alleviate household budgets and lead to an uptick in demand during the second half of the year.
Young: Now please let me turn if we can patient back to haunt catalyst, who will present bancolombia quarterly performance.
Young: Thank you Laura.
Speaker Change: Before we move into the detailed quarterly results I would like to present, an overview of from initiatives aligned with our core value driving.
Speaker Change: Through these pillars, we develop innovative solutions and develop exceptional capabilities.
Speaker Change: Not only reinforce our market leadership, but also lay the groundwork for sustained growth and profitability.
Please proceed to slide four.
Speaker Change: As a part of our first strategic pillar that cover our integrated on client centric solutions approach on our digital capabilities under our multichannel platform I would like to share. The recent launch of our enhanced value proposition to address is in these merchant cut.
Speaker Change: Management and collection needs under a simple and innovative.
Speaker Change: Quite an app operated by <unk>.
Speaker Change: <unk> platform.
Speaker Change: Fully owned by Bancolombia.
Speaker Change: We can see there won't be a strategic channel due to a substantial market share potential payment flows.
Speaker Change: More new sites into enterprises are approximately 90% of Columbia, Sorel product sector, and lack of formula and cost effective.
Speaker Change: Cash management.
Speaker Change: Hiring services to facilitate the in store and online sales.
Speaker Change: These services are inherently recurring on a scalable generating fee based revenues that aims in diluting fixed costs.
Speaker Change: The investments with introduction of a novel capabilities puts us up to phone and tailored solutions.
Speaker Change: Pollutions won't fix to complement rather than compete with the traditional acquiring and cash management services offered by the bank.
Speaker Change: Moreover, from its somehow ecosystem perspective.
Speaker Change: Liberals Nicky substantial customer base.
Speaker Change: These customers represent the end users of acquiring services provided by <unk> to merchant.
Speaker Change: In fact won't be experience, an impressive growth of approximately 30% year over year in terms of clients.
Speaker Change: 3% in terms of revenues and 7% in terms of the number of transactions.
Speaker Change: We anticipate this process to see positive trends to be further and paced by the new value proposition, thereby contributing to the consolidated group performance.
Speaker Change: Furthermore, we ambition lumpy as a very core to capitalize on the open banking opportunities through API connectivity leveraging the bank's progress in this domain.
Speaker Change: On slide five under our fair value driving pillar of our structural capabilities that create distinctive market advantages I will like to funding the key factors behind the net interest margin performance in Colombia.
Speaker Change: These factors largely explained the banks superior results compared to its peers over the past almost two years.
Speaker Change: We'll provide tools to defend the margin in the current defendant interest rate cycle.
Speaker Change: Firstly, we offer a comprehensive portfolio of assets and liabilities with a range of diverse and complementary products that provide greater flexibility to manage rates and.
Speaker Change: Scott.
Speaker Change: Secondly that the.
Speaker Change: Diverse sources of Counterparties of time deposits, including retail commercial and institutional clients facilitate the diversification of tenors and indexes, thereby enabling the construction of an efficient pricing.
Speaker Change: Thirdly, the substantial volume of low cost stable deposits, which exceeded a low teens CVT interest rate fluctuations.
Speaker Change: Asset reliable encore, ensuring the mine maintenance of highly competitive funding cost our gross borrowing interest rate cycles.
Speaker Change: Lastly, we have developed a highly knowledgeable and experienced.
Speaker Change: Greetings theme that effectively utilizes comprehensive.
Speaker Change: Sectional data and market insights to strategically adjust the tenure and rate gaps of assets and liabilities.
Speaker Change: Unable us to effectively manage duration risk and optimize their net interest margin throughout diverse interest rate cycles.
Speaker Change: For instance, as illustrated in the initial two upper Pie chart in 2021, when the interest rate hike cycle had recently started we strategically adjusted our assets and liabilities.
Speaker Change: Structure clean pace or asset sensitive position.
Speaker Change: These involve increasing the proportion of floating rate loans railroads too.
Speaker Change: Floating.
Speaker Change: Rate deposits.
Speaker Change: With the objective of the Spa.
Speaker Change: Funding, our net interest margin, which.
Speaker Change: Subsequently materialized.
Speaker Change: However in the current environment characterized by an interest rate cut cycle, we have been implementing adjustments to our liability structure to mitigate our asset sensitive position.
Speaker Change: These involve a pre element strike.
Speaker Change: Firstly, reducing the proportion of non great sensitive liabilities.
Speaker Change: Secondly, or thirdly at 18, the repricing of time deposits by increasing the share of time deposits with maturity occurring within the next 12 months.
Speaker Change: Thirdly, increasing the proportion of floating rate time deposits to capitalize on the interest rate reductions.
Speaker Change: The duration of assets and liabilities has changed significantly as reflected in the lower right hand.
Speaker Change: Slide chart.
Speaker Change: In 2021 assets were repriced much clusters, some liability however.
Speaker Change: However, currently the duration of liabilities has decreased to accelerate the repricing of time deposits.
While the duration of assets has increased to maintain higher yielding loans for a long.
Speaker Change: Period.
Speaker Change: As we progress throughout the current monetary expansionary cycle, we will continue to adjust the gaps between our assets and liabilities to mitigate our margin sensitivity to rate cuts.
Speaker Change: However, we will remain vigilant.
Speaker Change: And consider the potential impact of the mix cycle.
Speaker Change: Finally on slide six under our four value driving pillar, which is the culture of efficiency and productivity I will review the expense control strategy, we implemented at the beginning of the year.
Is this strategy seeks to identify opportunities for efficiency enhancements and reduced recurring expenditure.
Speaker Change: The plan is a short medium and long term approach uncovered an in depth assessment in six key areas.
Speaker Change: Technology.
Speaker Change: Asset free expenses operational results.
Speaker Change: First our realignment and regulatory expense management each area has a dedicated team led by senior management.
Speaker Change: Centralized governments.
Speaker Change: Oversight and control mechanism ensures alignment with our jeopardy.
Speaker Change: By way of illustration, we are presently evaluating a potential avenue to optimize cloud based services.
Speaker Change: Minimizing expenditure on credit and debit card fees.
Speaker Change: Real estate leases capitalize on resource realignment facilities bi tools and implement comprehensive.
Speaker Change: You gave some measure.
Speaker Change: We will provide a review.
Speaker Change: Update on the progress made in each of these areas as we believe that the above mentioned describing will show the yield the desired outcomes, thereby ensuring paceman operational efficiency.
Speaker Change: Now I would like to invite costume better cost to provide further information on our first quarter 2024 results.
Speaker Change: Awesome.
Speaker Change: Thank you Juan Carlos.
Costume Better: Please go to slide seven entity skewed results of our Central American operation.
Costume Better: During the first quarter the share of all banks in Central America grew quarter over quarter with respect to Columbia, driven mainly by a couple of large corporate loans.
Speaker Change: However, when analyzed on an annual basis, such growth is offset by a 17% peso appreciation.
Speaker Change: Banco Agricola and another strong quarter on the back of payrolls and commercial loans grow that increase.
Speaker Change: Whereas <unk> and bank Covenant countries wrote less mainly focus on commercial loans and consumer remains subdued so Dave means when traffic.
Speaker Change: Regarding asset quality, all banks are tending towards a slower pace of deterioration, but posted mixed results in terms of Costa Rica as Bonnie has not had a provision release related to our parameter update whereas bank quality equal have returned to a normalized costa reached after a one off accrual last quarter.
Speaker Change: On the other hand, bancolombia anticipated, a lower provision expense quarter over quarter.
Speaker Change: Partially explained by seasonal effects and lower growth on consumer loans.
Speaker Change: Banco Agricola recorded a return on equity of almost 18% manage more of nine 5%, whereas bank of America, returning to 10% area.
Speaker Change: Despite the overall positive results of all banks net income contribution reached year over year compared to that of Colombia also due to the peso appreciation.
Speaker Change: We remain cautious regarding the economic and political outlook of all three geographies, particularly with respect to Panama due to the more challenging is that performance and expectations around the new government recently.
Speaker Change: Please go to slide eight.
Speaker Change: Driven by an almost 4% quarter over quarter erosion on commercial loans. The consolidated loan book you assume its growth path with a two 5% quarter over quarter increase.
Speaker Change: Despite still recording at two 6% year over year contraction.
Speaker Change: Pain by the 17% peso appreciation that we've used the contribution of the loans denominated in U S dollars.
Speaker Change: <unk> of the FX impact the loan book will have grown three.
Speaker Change: 8% on a database.
Speaker Change: The growth in commercial loan is in part attributable to the.
Speaker Change: Good performance of the subsidiaries in Central America that originated a couple of large corporate loans, coupled with a deliberate strategy to stage market share growth on this segment in Colombia, as knowing expense incentivize demand.
Speaker Change: Also it is worth to mention positive performance of the mortgage segment that accomplished a one 9% growth in the quarter.
Speaker Change: Signaling that the snipe recovery after several months of subdued demand and driven by social housing housing Aspira <unk>.
Speaker Change: The establishment of the government subsidy program at the beginning of the deal.
Speaker Change: On the flip side consumer segment continues on traffic in a combination of reduced appetite no demand given the still high rates for these unsecured type deal.
Speaker Change: Consistently with vivo the share of consumer loans, you added two commercial loans during the quarter down two at <unk>.
Speaker Change: 28% share of the total portfolio versus 22, 1% a year ago.
Speaker Change: Please go to slide number nine.
Speaker Change: Despite the comment that growth of the loan book looks like deposits decreased one 2% quarter over quarter as we used excess liquidity and we closed to fund the loan growth and to prepay medium term bank loans, which fell almost 10% quarter over quarter.
Speaker Change: The year over year, the proceeds recorded at two 5% job, whereas loans with banks and debt instruments contracted by more than 25 and 24% respectively.
Speaker Change: Houston with a weaker demand.
Speaker Change: In terms of product tanker posted through the most with one 5% quarter over quarter growth exclusively on digital time deposits, where we are savings fell two 2% and current account three 2% as clients shifted.
B: In our higher yielding instruments after the third year and uniquely position.
Speaker Change: And over to you and deposits grew.
Speaker Change: 8% way of savings fell, 4% and current account 10%.
Speaker Change: But on the funding mix perspective, they need maintain stake, whereas current accounts and loans with banks EBIT to bank deposits that increased to 36%.
B: Provided the central bank rate cuts and the lower pressure for secured funding the cost of funding dropped from five 3% in the quarter. However, it's important to highlight that.
B: With regards to time deposits, we were able to post the weighted average rate by 219 basis points exceeding the accumulated central bank rate.
Speaker Change: 100 basis points as of March are proof of our ability to adjust our time deposits maturing to fight the secure a fast with pricing as these skus earlier.
Speaker Change: Please go to slide 10.
Speaker Change: Total interest income on loans and financial leases contracted for one 1% quarter over quarter, driven by the lower rates applicable on credit originations and on the repricing of the loan book, coupled with the reduction in the consumer loans sure Adeel hires that formation.
Speaker Change: Moreover, there was a five 7% quarter over quarter decrease I mean.
Speaker Change: Valuations on financial instruments, driven by lower income valuation on the.
Portfolio.
Speaker Change: Total interest income ambulation on financial instruments fell 4% quarter over quarter, and 3% year over year consistent with the industry.
Portfolio performance.
Speaker Change: Furthermore, interest expense fell seven 2% quarter over quarter, and two 1% year over year, given the contraction in deposits the prepayment of maiden tumor loans the reduction in debt instruments and the ability to cut rates on time deposits to a larger extent when compared with the central banks.
Speaker Change: Yes.
Speaker Change: However, despite the airport on interest expense reduction NII fell one 5% quarter over quarter, and two 7% year over year, mainly attributable to the drop in interest and valuations on financial instrument.
Speaker Change: Dash NIM fell 14 basis points quarter over quarter to seven 1% on the back of the 77 basis points lower name of investments, whereas the lending NIM only contracted four basis points because of our margin protection strategies in play Miscues Eric here.
Speaker Change: Going forward, our NIM will benefit, especially from the repricing dynamics of the 67% of total time deposits that will become due in the next 12 months.
Speaker Change: Please go to slide 11.
Speaker Change: Net income decreased to one 4% quarter over quarter due to seasonal effect of transactions increased on a year and a self insured income ratio fell to $18.
Speaker Change: Year over year net income was flat as the expenses growth outpaced income growth due to the higher third party provider cost and processing charges.
Speaker Change: When breaking down by products.
Speaker Change: And David.
Speaker Change: Amy Chang collections and banking service fee income.
Speaker Change: Quarter over quarter as the lowest volume of transactions in the first quarter, while posting growth rates year over year.
Speaker Change: On the flip side equal related bancassurance sales, 27% quarter over quarter, and 2% year over year, driven by a smaller share of income as the claims ratio has increased coupled with a lower volume of policies issue given the contraction in personal loans.
Speaker Change: Regarding other source of operating income the fleet leasing operation reduced to one 2% quarter over quarter as the lower demand of steel.
Both interesting 10% growth year over year.
Speaker Change: Please go to slide 12, and another view of the asset quality.
Speaker Change: Net provision expense for the quarter was one three.
Speaker Change: 3 billion pesos on almost 24% drop.
Speaker Change: Over the quarter and 36% year over year. Consequently, the quality cost of risk fell from $2 seven 2%, whereas the annual Tivo has dropped to two 6% cost of it.
Speaker Change: The explanation of this sharp drop in net provisions.
Speaker Change: Firstly, there was up 213 billion reduction on consumer loans, given the slower pace of deterioration in Colombia, as we will further elaborate.
Speaker Change: Second on 198 billion pesos released mainly attributable to the update of macroeconomic inputs. We can incorporate the downward part of the interest rate, which is the main variable associated to consumer loans performance as well as our release related to our parameter update at <unk>.
Speaker Change: Our third at $34 6 billion persons released on a large exposure segment, given prepayments of share, but our past due loans.
Speaker Change: Although they had a 55 billion pesos provision expense was accrued on SME due to an increase in policy loans as expected.
Speaker Change: Thus, despite the better performance of consumer loans in Colombia, new past due loans increased quarter over quarter is showing on the upper left hand side graph.
Speaker Change: Let it to commercial loans in Colombia and Venezuela.
Speaker Change: Personal loans in Bankcard Wilmington.
Speaker Change: Mortgages and management.
Speaker Change: Moreover, charge offs for the quarter were one 5 billion pesos below the chart topper amount on the last two quarter as their stock of past due loans on consumer loans is lower and these typically are written off fast impact promotional.
Speaker Change: In terms of asset quality pass due loans exceeded our quarterly and annual utilization in terms of 30 day past due loans after the increase in new past due loans.
Speaker Change: On the flip side, a 90 day past due loans ratio remained flat quarter over quarter.
Speaker Change: Albeit increasing on a yearly basis of the peso rollover has subsided provider has installations on refi.
Speaker Change: Nancy agreement.
Speaker Change: On the other hand provided a decreasing net provision charges on the quarter closed at 30, and 90 day past due loans coverage ratio fell to 111 and 117% respectively.
Speaker Change: Deep probing a strong coverage with our balance sheet.
Speaker Change: Now from unexpected loss perspective.
Speaker Change: One slightly increased provided the growth in loans during the quarter, whereas stage II and stage III remained flat quarter over quarter as the net result of less consumer loans, reaching 90 day past dues.
Speaker Change: And the transition of some commercial loans from the stage three into stage two even its better for corn.
Speaker Change: The combined coverage of any stage <unk> loans increased three basis points to a level of 40%.
Speaker Change: Going forward, we envision a decrease in loan deterioration on the back of interest rate spots that alleviate pressure on that those cash flows.
Speaker Change: However, we do expect higher delinquencies on Asia niche as construction manufacturing and retail continued to perform well.
Speaker Change: Moving to slide number 13, our reported the screws on credit quality in Colombia.
Speaker Change: As we anticipated there has been a turbine reduction in loan deterioration in the consumer segment in Colombia provided all the measures taken to increase collections and adjust credit appetite.
Speaker Change: As shown on the Upper left chart, there was indeed and negative pass due loans quarter over quarter as new vintages are performing better.
Speaker Change: When broken down by product personal loans, we closed at nine 4% share of total loans of Bancolombia Standalone book and 20% of launching this bench who.
Speaker Change: Reduce the most in terms of new past due loans.
Speaker Change: On the flip side, our Cologne rail cars.
Speaker Change: Payroll loans registered a high pass due loans due to a seasonal effect as individual typically have access to extra engineering, allowing them to catch up.
Speaker Change: <unk>.
Speaker Change: But most importantly cost of risk fell across all products except portrayed.
Speaker Change: It would be modest accretion English made update.
Speaker Change: Forecast at the same impact that alleviates that their cash flows coupled with the better performance of the BNP betcha.
Speaker Change: In the case of freight cars the increase of cost of risk was attributed to the fact that the quarter end date sale in Hollywood and some collections were recorded based after.
Speaker Change: Based on the adjustments introduced to the consumer risk model that tap reach salt it in better performing new vintages in Colombia, we continue progressively increasing the volume of new originations.
Speaker Change: Is that as rates go down asset quality metrics, leading pool.
Speaker Change: In terms of overall asset quality, we continue performing within the average of 90 day past due loans amongst the largest theaters.
Speaker Change: Please go to slide number 14.
Speaker Change: Operating expenses contracted eight 1% quarter over quarter due to a seasonal effect related to a year and additional expenses in IP advertisement and cash transportation and consequently, there was a lower provision.
Speaker Change: Thus administrative expenses dropped 13% and the personnel expenses that aggregate.
Speaker Change: Benefits and the compensation plan remained flat. Despite the 12, 3% average salary increase for employees in Colombia, which was somehow compensated with lower increase in Central America Bank.
Speaker Change: Now from a NAV perspective, and in language the slower pace of growth exceeded it seems the second half of 2023.
Speaker Change: Other years total expenses due to three 5%.
Speaker Change: Significantly below inflation, driven by part by a stringent cost control and second by the 17% peso appreciation during the period.
Speaker Change: Administrative expenses grew five 4%, mainly because of non income access 90 related services devoted mainly to the journey to the cloud and business transformation, whereas personal expenses to below 1%. Despite the annual wage increase in Colombia, what reaffirms the efficiency.
Speaker Change: The gains.
Speaker Change: Consistently cost to income ratio for the period fell to 46, 2%.
Speaker Change: Please go to slide <unk>.
Speaker Change: Net income for the quarter was one seven trillion pesos equivalent to a 15% increase quarter over quarter, driven by the 24% drop net provisions.
Speaker Change: 8% reduction on operating expenses that more than offset the contraction on the net interest income.
Speaker Change: On a yearly basis. However, the net income fell 3% year over year on the back of loan book contraction lower income generation high credit and operating expense.
Speaker Change: We've done an equity for the quarter increased to 17, 4%, which if adjusted for good news results in a return on tangible equity of 21, 8% that shows a strong profitability operation I showed it accordingly related.
Speaker Change: Now please go to slide 16 to discuss the evolution of capital generation.
Speaker Change: Shareholders' equity fell four 2% quarter over quarter provided the three points for trillium patients dividend payout a proofing our general Assembly in March.
Speaker Change: Year over year, it contracted one 2% driven to some extent by the peso appreciation during the period.
Speaker Change: On the other hand core equity tier one ratio ended at a level of 10, 4%, implying 100 basis points reduction, whereas on a yearly basis. It increased seven basis points on the back upon the organic capital generation.
Speaker Change: Consistently total capital adequacy ratio West Elk.
Speaker Change: 2% equivalent to a 110 basis points quarter over quarter reduction and 30 basis points increase year over to gene.
Speaker Change: During the remainder of the year income generation will offset the dividend payout the reach the CET one target of 11% area for the year.
Speaker Change: With this I will hand over the presentation to Carlos for some final remarks.
One.
Carlos: Thank you <unk>.
Carlos: Please proceed to slide 17 to review the evolution of our sustainability strategy.
Carlos: In Q1, we increased disbursements under a business with purpose strategy by 10, two trillion pesos.
Carlos: In the total to 151 trillion peso since 2020.
Carlos: These loans support more scale agribusiness bankers green building on mobility projects.
Carlos: Carbonization plants on gender related initiatives.
Carlos: Over the past year as a part of the climate. The finance leadership initiative, we have been actively engaging in meetings with representatives from both the private and public sectors.
Carlos: These discussions are focused on our collective contributions to climate action and clean energy transition strategy.
Carlos: The combination of this work will be formally presented at the upcoming Cop 16 conference.
Carlos: We are also pleased to announce that we have been voted as the company with the highest ESG responsibility for the <unk> consecutive year.
Carlos: This recognition is based on the findings of a survey conducted among a thousand respondents and complex ethical conduct transparency corporate governance practices and environmental commitment.
Carlos: Finally in the area of social impact we are pleased introduce lockup hurdle a platform an innovative online platform designed to foster financial when being a maror volume customers. These comprehensive platform provider.
Carlos: Wealth of financial Education resources, and interactive tools empowering individuals to make informed and responsible financial decisions.
Carlos: Lastly, on slide 18, I will share our guidance for the end of 2024 based on the current data on our updated macroeconomic forecast shown on the left hand side for which I want to highlight the <unk> in terms of the extreme exchange rate.
Carlos: Infosys changes to dollar denominated accounts when expressed in pesos.
Carlos: We expect total loan growth of 8%.
Carlos: Broken down in four 1% growth on peso denominated loans, an eight 5% in dollar denominated loans, we keep our six.
Carlos: 8% guidance with regard to net interest margin adjust our cost of risk from two 4% to 6% has been discontinued performing better.
Carlos: Adjusted efficiency ratio to 15% area and maintain our ROE forecast around 14% and core equity tier one ratio of 11% area.
Carlos: With this we.
Speaker Change: To conclude the review of our first quarter results.
Speaker Change: We will be happy to address now any questions you may have.
Speaker Change: Thank you.
Speaker Change: Thank you we will now begin our question and answer session.
Speaker Change: I'd like to ask a question. Please press star one on your telephone keypad.
If you wish to be removed from the queue. Please press Star then two.
Speaker Change: If youre using a speakerphone you may need to pick up your handset before pressing the numbers. Once again, if you have a question. Please press Star then one on your Touchtone phone.
Speaker Change: One moment, please while we poll for your questions.
Speaker Change: Our first questions come from the line of Ernesto <unk> with Bank of America. Please proceed with your question.
Ernesto: Thank you hi, good morning, Juan Carlos.
Ernesto: Medical and good morning, everyone.
Ernesto: Thanks for the opportunity less.
Ernesto: <unk> and well I have three from my side.
Ernesto: My first one will be on nims.
Ernesto: In your presentation you were.
Ernesto: We did some adjustments to your balance sheet.
Ernesto: So what would be your current sensitivity in Colombian pesos and in basis points.
Ernesto: For every change of 100 basis points.
Ernesto: And interest rates.
Ernesto: How much NIM pressure can we expect for this year.
Ernesto: And what will be the levels that you will see.
Ernesto: Our needs on a normalized levels.
Ernesto: My second question is on market related revenues.
Ernesto: We saw there was some pressure in this line during the quarter.
Ernesto: Just wanted to see how are you expecting these lines will behave in the next quarters.
Speaker Change: And my last question is on Nikki.
Speaker Change: We started to see stronger fee income generation.
Speaker Change: We continue to see a larger number of active clients.
Speaker Change: So.
Speaker Change: Could you. Please share if you have like some strategic targets or Nicky in terms of number of clients revenues or profitability with the bancolombia.
Speaker Change: <unk>.
Speaker Change: Thank you very much.
Speaker Change: I am going to start.
Speaker Change: Addressing your third question.
Speaker Change: I'm going to ask.
Speaker Change: And back to you.
Speaker Change: Gave you some color on that.
Speaker Change: Two questions.
Speaker Change: And then also I am going to ask Laura.
Speaker Change: Good.
Speaker Change: Could be months.
Speaker Change: Our view on the on how the interest rates are going to behave according to our view so we can be.
Speaker Change: The framework to.
Laura: Address your question about that.
Speaker Change: So let me start with that Mickey.
Nike: Next question Nike continues to.
Nike: Develop.
Nike: Its business plan.
Nike: <unk> continued growing in.
Nike: Number of clients and number of active customers. We currently.
Nike: Close to 19 million customers of which around 13, 5%.
Speaker Change: If I may.
Speaker Change: Customer trials active meaning that they are.
Speaker Change: Interact with Nick you at least one in London.
Speaker Change: Doing a monetary transactions.
Speaker Change: We will have the client base and the activity.
Speaker Change: With your clients continue to increase.
Speaker Change: The generation of Nike continues.
Speaker Change: They are probably performing very well.
Speaker Change: Regarding your question of our targets at the level of customers that we have.
Speaker Change: We are not expecting to.
Speaker Change: To continue the same pace of growth so we target.
Speaker Change: It was 22 million customers.
Speaker Change: For 2025.
Speaker Change: But with 19 million.
Speaker Change: Yes.
Speaker Change: They cannot base.
Speaker Change: Okay.
Speaker Change: To have that.
Speaker Change: Both revenues that we are.
Speaker Change: Unexpected.
We continue as I said.
Speaker Change: With.
Speaker Change: The new products.
Speaker Change: Yeah.
Speaker Change: We launched this year latter for them to receive remittances.
Speaker Change: So.
Speaker Change: Hey generations and.
Speaker Change: And Nicky continuum.
Speaker Change: So we are we are happy with the performance of met coal.
Speaker Change: Are you using the platform, but it's still we need to wait.
Speaker Change: For Nicky.
Speaker Change: Reached that point.
Speaker Change: <unk>.
Rob: It's Rob.
Rob: Profitable so we expect that to be in 2025 by the end of 2025.
Speaker Change: With this I am going to ask.
Speaker Change: Russell.
Russell: Our view on interest rates and then what's embedded.
Russell: Address your question with regards to sensitivity.
Russell: The market there.
Russell: Related.
Revenue.
Russell: Yes.
Thank you Marc Cadieux, yes.
Russell:
Russell: Our revised forecast that.
Russell: Policy rate.
Russell: We revised.
Russell: I think as you know.
Russell: Additional debates.
Russell: Basis points.
Russell: During this year.
Russell: We've seen how during March and April.
Speaker Change: Thanks Scott.
Speaker Change: And we expect it may accelerate.
Speaker Change: 75 basis points somewhere early in the third quarter.
Speaker Change: This is in line with how we are seeing inflation coming down the.
Speaker Change: The most recent number in inflation.
Speaker Change: For April shows.
Speaker Change: They're another decline.
Speaker Change: Still a little bit of pressure on prices, but we believe the phenomenon the climate effect a phenomenon here.
Speaker Change: Well.
Speaker Change: To some extent its impact on inflation.
Speaker Change: April and May.
Speaker Change: So we are.
Speaker Change: Declining inflation coming to a much more comfortable level.
That make its way through additional rate cuts, but I think it's important to take into consideration the upside risks.
Speaker Change: And inflation, we still have.
Speaker Change: Some announcements with government regarding a diesel high Wow.
Oh.
Speaker Change: With with some uncertainty there going to be able to do that.
Speaker Change: Much needed.
Speaker Change: Our pipeline as well as gasoline prices, which have been.
Speaker Change: More pressured in terms of kind of international oil prices and how that reflects and additional debt.
Speaker Change: So we still see some upside risks of inflation there.
Speaker Change: And the other thing factor.
Speaker Change: Iteration of course is how the fed.
Speaker Change: In terms of their own rate reductions as the RFP occur in India.
Speaker Change: In 2024.
Speaker Change: Consideration given kind of the outlook on interest rates and we maintain that the central bank will have.
Speaker Change: A somewhat cautionary approach.
Speaker Change: His favorite again by receding inflation.
Speaker Change: I think I believe.
Speaker Change: Rates have been coming down.
Speaker Change: In the loan portfolio.
Speaker Change: Almost 12 months ago, So that's something.
Speaker Change: Incineration, not only kind of the policy rate and how that will have a lagged effect, but also how.
Our loan portfolio and interest rates have been coming down since the peak in March of last year.
Speaker Change: And then regarding deal for it still.
Speaker Change: Two questions I will take that.
Speaker Change: Right now between 2030 basis points or every Congress intends are fine.
Speaker Change: Well remember that a lot of structural balance sheet, almost 70% of our loan book is floating. Meanwhile, on the deposit base, we have more than 80% floating as well.
Speaker Change: The other point that I have to highlight the fact that we have been in advance.
Speaker Change: Barry.
Speaker Change: Interest rates from the ninth.
Speaker Change: At around 200 basis points through the first three months. Meanwhile.
Speaker Change: <unk> rates from distance or bandwidth use so we have been prepared for the cycle.
Speaker Change: But it's likely happening a match things way.
Speaker Change: Sales of pressure or need a single platform again, because our expected.
Speaker Change: Good morning.
Speaker Change: Is he still interest rate from center back to to be at a level of $8 75 at the end of the deck summarizing that means the compression of the NIM up at around 20 basis points.
Speaker Change: Related market.
Speaker Change: What is going to lead the market, especially with our securities portfolio high level of volatility.
Speaker Change: We are forecasting.
Speaker Change: We dropped our game up at around 2% because of the investment portfolio. So we are expecting a normalization of that means during the second half of the Q.
Speaker Change: Oh Super helpful. Thank you very much Mcdonald's for Schlumberger and load out.
Speaker Change: Thank you. Thank you.
Speaker Change: Okay.
Speaker Change: Thank you. Our next question comes from the line of Yuri Fernandes with JP Morgan. Please proceed with your question.
Yuri Fernandes: Hi, guys. Thank you sort of put into western questions and congrats on the quarter.
Yuri Fernandes: I have a follow up question actually on asset quality and provisions and if I'm close on both already discussed this in the presentation.
Yuri Fernandes: But when we look to the provisions that were much lower because mostly on the <unk>.
Yuri Fernandes: <unk> loss models right like when we look to the 30 days.
Yuri Fernandes: As the launch we do see a high new class B formation, even considering that Troy thoughts were lower this quarter like there was.
Yuri Fernandes: Our signal Mark vision from all your line is on the 30 days.
Speaker Change: I'd like to ask you if you are seeing.
Speaker Change: <unk> first quarter, sometimes there's seasonality in 30 days, we start some proven.
Speaker Change: And we are pretty comfortable with.
Speaker Change: A lower coverage ratio that the 30 basis I know your overview on 90 days is higher than the 30 days, but trying to understand the margin short term delinquency to try to take your lower cost of risk guidance.
Speaker Change: Versus all we're seeing at 30 days.
Speaker Change: Mike My first question and going to your guidance.
Speaker Change: I got that your <unk> are unchanged at 14%, despite a lower cost of risk.
Speaker Change: I think it's higher efficiency ratio, but can you comment on that like why.
Speaker Change: Roe's are higher for the full year, given you have almost 18% Roe.
Speaker Change: First quarter cannot do we see upside.
Speaker Change: Upside risk toward these are at 14% of our guidance.
Speaker Change: Thank you.
Speaker Change: Thank you for your questions.
Speaker Change: Yeah.
Speaker Change: Third point regarding the cost.
Speaker Change: And asset quality.
Speaker Change: Let me start by saying that.
Speaker Change: In the quarter.
Speaker Change: Quarter, what's a good quarter.
Speaker Change: Our asset quality.
Speaker Change: So price.
Speaker Change: On the positive side.
Speaker Change: Yeah.
Speaker Change: We need to read carefully.
Speaker Change: As you mentioned.
Speaker Change: Past due loans 30 day past due loans and debt.
Speaker Change: Higher.
Speaker Change: Sure.
Speaker Change: Something that we need to take into consideration body.
Yeah.
Speaker Change: On a trailing index.
Speaker Change: Yeah and box demand.
Speaker Change: What's Sunday.
Speaker Change: Is there a week so it's.
Speaker Change: Something that is.
Speaker Change: Many people.
Speaker Change: What I'm, saying.
Speaker Change: Got.
Speaker Change: Erodes that week by week up there, but we need to be careful on the on the developmental why do you think your properties.
Speaker Change: <unk>.
Speaker Change: The quarter was good.
Speaker Change: On that sense, we are.
Speaker Change: Yeah.
Speaker Change: Our guidance.
Speaker Change: Is that the cost of risk could equal during the year, but I want to highlight something.
Speaker Change: With high volatility in which we need to be.
Speaker Change: Very careful regarding how the Colombian economy.
Clearly, it's going to behave so we hope.
Speaker Change: On the consumer side.
Speaker Change: We see a good performance.
Speaker Change: Provisions are lower than we were expecting.
Yeah.
Speaker Change: Because we start with.
Speaker Change: Change in our in our origination process.
Speaker Change: And when you put on during all of 2023.
Speaker Change: How are you Sir.
Speaker Change: Consumer loan originations.
Speaker Change: What we need to be carefully.
Speaker Change: Smes are going to perform.
Speaker Change: Yeah, we are.
Speaker Change: Looking very careful.
Speaker Change: Now those.
Speaker Change: Our particular segment.
Speaker Change: Is going to behave so let me summarize.
Speaker Change: Better quarter than expected in terms of cost of risk that could lead to a better year, but we are not very.
Speaker Change: We are not.
Speaker Change: Sure that that's going to be.
Speaker Change: The way data year going to behave mainly because.
Speaker Change: We are not clear how it's going to.
Speaker Change: To perform during the year.
Speaker Change: With that.
Speaker Change: Let me, let me go to salt.
We think that we can have a better we.
Speaker Change: At the beginning of the year cost of risk that we our license.
Speaker Change: Six.
Speaker Change: We are saying that we can move forward with daily with a lot of uncertainty regarding that.
Speaker Change: Yeah.
Speaker Change: Expenses.
Speaker Change: Yeah.
Speaker Change: Very good.
Speaker Change: Mainly because some measure.
Speaker Change: But also because.
Speaker Change: The evaluation.
Speaker Change: Or revaluation of the peso so that helps.
Speaker Change: Yes.
Speaker Change: In last quarter's devaluation of the peso affected us in this quarter, we've always done.
Speaker Change: Great.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Due to the performance of the interest income.
Speaker Change: We believe that the efficiencies things he's going to be the efficiency ratio is going to be close to 50%.
Speaker Change: Which you saw a deterioration.
Speaker Change: Well.
Speaker Change: Our.
Speaker Change: In the <unk>.
Figure that we thought.
At the end of 'twenty.
Speaker Change: With all of that.
Speaker Change: Yeah.
Speaker Change: We think that we could be.
Speaker Change: Broadly on the 14.
Speaker Change: I have 40 to.
Speaker Change: 15% Roe.
Speaker Change: With our Vodafone certainty Thats, why we prefer to stay closer to the 14% guidance.
Speaker Change: I'm waiting for the development of the year.
Speaker Change: No Super clear for me just a follow up on asset quality. The impression I have is that the situation is still a little bit uncertain on the credit cycle in Colombia for sure, it's improving but maybe it's improving that factored for you and other peers do you agree with that statement electrical.
Speaker Change: On these moving parts.
Speaker Change: That completely completely.
Speaker Change: The economic environment is uncertain.
Speaker Change: GDP growth in Colombia.
Speaker Change: It's going to be close to 1% which is slow.
Speaker Change: So there is a lot of work.
Mr. Shaw: Mr. Shaw I completely agree with the direct segment.
Mr. Shaw: Okay perfect. Thank you very much.
Speaker Change: Thank you.
Speaker Change: Okay.
Thank you. Our next question comes from the line of Julianna <unk> with <unk>.
<unk> Court corridor. Please proceed with your question.
Julianna: Hello, everyone and thank you for the question.
Julianna: I have three question under the terms one was regarding again.
Julianna: Like right now and we're ready to make better.
Julianna: Sorry.
Julianna: Michael So I would like to know why you are expecting a deterioration from the efficiency ratio.
Julianna: 14.
Julianna: Bookings were saying four five.
Michael: 5% in June.
Michael: Then my other question is regarding the gearing and the NIM.
Speaker Change: I understand why.
Speaker Change: Widening of the loans deteriorated a leader.
Speaker Change: We would be.
Speaker Change: The better performing up the cost of funding Whitewater why are you what are you seeing in terms of connecting our in conforming.
Speaker Change: Confirming loans.
Speaker Change: Question regarding the ROE I would like to know I know you have the.
Guidance is 14%, but like the.
Speaker Change: Inc, or <unk>.
Speaker Change: Hi, Kurt is that maybe the 14% you'd like.
Kurt: Thanks, Jason.
Kurt: In scenario planning.
Kurt: <unk>.
Kurt: Maybe.
Kurt: Yes.
Kurt: One may be getting worse.
Kurt: Union 14, Nissan submitted get worse scenario in terms of thank.
Speaker Change: Thank you.
Speaker Change: Yeah.
Speaker Change: Thank you.
Speaker Change: Our quality was poor so I am going to try to address.
Speaker Change: What I understood.
Speaker Change: With all of your question.
Speaker Change: Good questions.
Speaker Change: I'm going to start with the last one regarding Iowa regarding the answer that we gave.
Speaker Change: Julie.
Speaker Change: But there is a lot of uncertainty.
Speaker Change: Okay.
Speaker Change: The.
Speaker Change: For much of the economy.
Speaker Change: Clearly in Colombia.
Speaker Change: Interest rates are going to are going to be.
Speaker Change: So why is that is why we prefer to do.
Speaker Change: EBIT guidance of 14%, which is the base.
Speaker Change: The guidance it could be.
Speaker Change: Syed.
Syed: On them.
Syed: We could reach 15% one 5%.
Syed: Yeah.
Syed: But with that center.
Syed: Certainly there is an under Colombian economy, we prefer to stay on the under 14 months.
Syed: Regarding the <unk>.
Syed: We also.
Syed: Elaborated on how we expect interest rates to be paid on.
Syed: We are managing out of our cost of funds.
Syed: But.
Syed: At the end.
Syed: What the Central Bank, we're already going to reduce rates were around 300 basis points.
Speaker Change: But Craig.
Speaker Change: We will see the full effect.
Speaker Change: Reductions in 2025.
Speaker Change: So might be.
Speaker Change: After a year of the last quarter over the year.
Speaker Change: Mainly we can manage.
Speaker Change: Our cost of funds.
Speaker Change: The interest income in a way that we adjust.
Speaker Change: Expect that reduction to $6 eight of our of our net interest margin.
Speaker Change: No.
Speaker Change: We wouldn't see there broadly.
Speaker Change: Correct.
Speaker Change: The main part of the effect.
Speaker Change: The rate reduction Julien 25.
Yeah.
Speaker Change: Regarding the <unk>.
Speaker Change: <unk> seen.
Yeah.
Speaker Change: We will get there.
Speaker Change: The increase in.
Speaker Change: With inflation that we are having student Colombia later was around 7%.
Speaker Change: So of course, we continue to increase their labor costs.
The increase period.
Speaker Change: Great.
Speaker Change: In a in a very important market during the last three years or so.
Speaker Change: In Manhattan.
Speaker Change: Because it's a priority for us.
Speaker Change: Bill.
Speaker Change: Cost of risk.
Speaker Change: Because of the competition.
Speaker Change: <unk>.
Speaker Change: I think that our efficiency ratio will be closer to <unk>.
I'm going to let switching back quickly.
Speaker Change: There's something to add to.
Speaker Change: These comments. Thank you want just to highlight the fact that we're having.
Speaker Change: Second question why I mean.
Speaker Change: Have you don't see it skew maybe a combination of two factors first debt reduction on savings accounts, because obviously people are cheap from savings accounts time deposits, so I need a bit more time deposits.
Speaker Change: Yes.
Speaker Change: 87% of the time deposits.
Less than a year. So there was pricing of the diabetes. It would be at the same stage of that was pricing.
Speaker Change: That's the main reason why.
Speaker Change: You'll see more contraction of esports flooding.
Speaker Change: Thank you. Our next question is coming from the line of Andres Soto Santander. Please proceed with your question.
Speaker Change: Good morning.
Speaker Change: Juan Carlos Thank you so much for the presentation. My first question is related to expenses.
Speaker Change: You were mentioning about this plan with medium term targets.
Speaker Change: Our efficiency improvement I understand this is going to be a proposal and I'm wondering what is going to be a challenging year because of.
Speaker Change: Yeah.
Speaker Change: With the exception of inflation in Colombia, but looking forward, what we can expect in terms of.
Speaker Change: Expenditures on efficiency, you're currently running at a cost to assets of four 4% for you do you have any number in mind of what could be attainable over the medium term based on this plan.
Speaker Change: Thank you Andreas.
Speaker Change: As you mentioned trying to quantify is challenging.
Speaker Change: Regarding expenses.
Speaker Change: Yes.
Speaker Change: Sure.
Speaker Change: Maintain our midterm targets.
45% efficiency ratio.
Speaker Change: Super Bowl.
Speaker Change: Now the third quarter.
Speaker Change: Last year, we went ahead because so.
Speaker Change: Income.
Speaker Change: The net interest income.
Speaker Change: Because of higher interest rates and better margins increased all our efficiency ratio improved.
Speaker Change: Sure.
Okay.
Speaker Change:
Speaker Change: Now.
Speaker Change: Interest rates are going down we need to work on expenses.
Speaker Change: So the pressure on the on the efficiency ratio indicators.
Speaker Change: Big.
Speaker Change: We still believe.
Speaker Change: 45%.
Speaker Change: It's achievable.
Speaker Change: The mix next year so.
Speaker Change: Our <unk> ratio in your forecast.
Speaker Change: For the towards the end of the year is right.
7% during 2020.
Yeah.
Speaker Change: Yeah.
Speaker Change: Albert.
So that's but the average inflation is going to be closer to 7% for all of them.
Speaker Change: Or if there is a pressure on.
Speaker Change: I want to remind you that our labor costs in general during the <unk>.
Speaker Change: For 2024 increase decrease.
Speaker Change: First thing.
Speaker Change: On top of 16% that was the big Europe.
Speaker Change: Labor costs increased in 2022.
Speaker Change: Before that time.
Speaker Change: So.
Speaker Change: The compound.
Speaker Change: Spanning 16 and flow it is a big pressure on labor costs. So we are we are carrying that during these years. So we need to work on that for 'twenty.
Speaker Change: Sure.
Speaker Change: So we didn't see it in 2500.
Speaker Change: Thank you.
Speaker Change: My second question is regarding this.
Speaker Change: Mandatory launch that vehicle Hermes proposing as part of the package through Reagan idea crummy leasing the context.
Speaker Change: You already mentioned.
Speaker Change: You have a target of 533 vessels in loans or sustainable.
Speaker Change: Our ESG factors.
Speaker Change: So how do you see that those discussions evolving do you think that we'd be.
Speaker Change: Target you have for these loan portfolio will be sufficient for what the government wants to achieve in terms of mandatory investments or do you expect any any additional pressure from the goal of our main zone, where you have to put the money on.
Speaker Change: Andrei.
Speaker Change: With Brent CN mention.
Speaker Change: And then Sean mandatory investments or or financial institutions.
Speaker Change: Still we don't have.
Speaker Change: Sufficient details too.
Speaker Change: Our view that we can elaborate on.
Speaker Change: So at this volume we are engaged in conversations with officials from the government through the banking Association.
Speaker Change: All of the details of what it is.
Speaker Change: Pick up on when thinking about these mandatory investment let me say that we are.
Speaker Change: Colombia with alright.
Already one mandatory investments.
Speaker Change: Our focus on agricultural investment.
Speaker Change: And.
Speaker Change: And in the past.
Speaker Change: Yeah.
Speaker Change: That in Colombia.
We're very very pool so.
Speaker Change: What are the conversations that we're having but we are happy with it with the government.
Speaker Change: Alright.
Speaker Change: We'll have more details on it to see how.
Speaker Change: They are planning.
Speaker Change: Or what are their plans on what's out there.
Regarding the government.
Speaker Change: On the voting button on.
Speaker Change: Yeah.
Speaker Change: We're separately.
Speaker Change: As we mentioned on our ESG strategy.
These loans because we are convinced that the way to go.
Speaker Change: We are dedicating funds too.
Yeah.
Speaker Change: Clean energy.
Speaker Change: Renewable energy.
Speaker Change: Mobility.
Green construction so those are our.
Speaker Change: Loans that we are.
Lines of credit that we have.
Because we are convinced that that's the way we control.
Speaker Change: The economies in which we operate.
Speaker Change: Tackle climate change.
Speaker Change: It would be ideal.
Speaker Change: And we think that all of those.
Speaker Change: Yes.
Speaker Change: Initiatives.
Speaker Change: Easily be.
Speaker Change: Regarding or close or.
Speaker Change: What the government is thinking also we are vacating big airports to agricultural loans, mainly to two main small producers. So those are the lines of what the government. Thank.
Speaker Change: Thank you.
Speaker Change: Construction agriculture, and we already have a big portfolio on those but we don't have enough information to see both are going to cycle or not.
Speaker Change: And thank you everyone Carlos on congratulations on the results.
Speaker Change: Thank you very much Andrew.
Speaker Change: Okay.
Our next questions come from the line of Nicolas Riva with Bank of America. Please proceed with your question.
Nicolas Riva: Thanks, very much Gonzalez from Brazil for the chance to ask questions on the first of all I think.
Nicolas Riva: On the boat equity on any temperature and come out of these kind of ask questions. During the earnings call. So I hope that going forward.
I'm sorry, what can also ask questions.
Nicolas Riva: Okay. So with that I have a few questions on your capital.
Nicolas Riva: First one if you can talk a bit about the collaboration that you're kind of exercise on the 20th 2019 year coupons.
Nicolas Riva: In December if I look at our capital on.
Nicolas Riva: On a consolidated basis total capital you said, 30%, that's only 80 basis points above the minimum requirements and given that the 2020 nines with your dose will you start reducing capital permanent not called my views that sooner or later, you will need to raise more.
Nicolas Riva: Two capital So again, if you can discuss how big.
Nicolas Riva: Your thoughts regarding the call option that you have on the 2020 on tier twos.
Nicolas Riva: In December I don't know if you can confirm that even if you do not exercise the call option on your run on the aircraft side better ones. After the call date, you could still do a tender offer for the 2029th or even currently the 2020 sevens, assuming that you'll get approval from the regulator.
Nicolas Riva: Through to take out some of the 27 under the 29th and in that case, if you could even think about doing a larger tier two issue.
Nicolas Riva: And then calling the 2019 December and also doing a tender offer for 20 Sevens.
Nicolas Riva: And finally on your <unk> clearly there was a drop of 100 rates roughly 100 basis points in this quarter.
Speaker Change: I assume you meant that you declare the dividend payment this quarter I want to check in.
Speaker Change: The entire dividend declared in the quarter do you have around $73 million you thought that was fully deducted from your seat to one and this quarter. Thanks.
Speaker Change: Thank you Nikolas.
Speaker Change: Thank you folks.
Speaker Change: What's the right path.
Speaker Change #100: Your question so what's in there.
Speaker Change #101: Regarding your first question.
Yes, we are we haven't reached savings.
Speaker Change #101: Tier two treatment.
Speaker Change #101: Next year, we'll begin.
60% of the 29 next year would be gains in real estate 20 per hour.
Speaker Change #101: Our exploration space on that it is not linear.
Speaker Change #101: Are you at a level of 170 year next.
Speaker Change #101: Next year.
Speaker Change #101: At what point in 'twenty two.
Speaker Change #101: And our target Akshay this is Mike.
Speaker Change #101: 122% and our defense it collapsed.
Speaker Change #101: Market issues.
You mentioned that we are having now.
Speaker Change #101: Yes.
Speaker Change #102: Got it.
Speaker Change #102: Because our dividend payout because of our people.
Speaker Change #102: Medium basis in dividend in our calculations because of the net income because of that.
Speaker Change #102: That would be below 10%.
Speaker Change #103: Hello, Thank you.
Speaker Change #103: 11% in Q1 and at around 13% at the end of the deal so.
Speaker Change #104: Thank you.
Speaker Change #104: Our dividend.
Speaker Change #105: Your first question, Yes, we are able to do all of that with the same.
Speaker Change #105: Market conditions first.
Speaker Change #105: The level of equity deal.
Speaker Change #105: We will have in the next coming quarters and we are.
Speaker Change #105: We talk about it with several of our investors, we are checking and money market conditions to see what would be the case before.
Speaker Change #105: Before they buy.
Speaker Change #105: We.
Speaker Change #105: Thinking about something in the market so that would be very.
Monitoring process.
Speaker Change #105: Soft market conditions again market by knowledge by reacting you mentioned that it is true.
Speaker Change #105: Teaching staff.
Speaker Change #105: Can you speak a national power would take.
Speaker Change #105: In the next coming months.
Speaker Change #106: Well somebody going to play out.
Speaker Change #106: Most of them are things like that.
Speaker Change #106: Okay.
Speaker Change #106: Okay.
Speaker Change #107: Well that's about it.
Speaker Change #107: David.
Speaker Change #107: That dividend was fully repaid.
Speaker Change #107: The calculation of safety what is that.
David: Okay. Thanks, very much I was going to say, so then basically you're saying that you are guiding for a 51 of roughly 11% at the end of each year and then you're saying we want to have between 102 hundred basis points and tier two capital.
David: But then your CET one ratio.
David: You're guiding for two out of 2000, and Brookstone is kind of a sustainable level that would be one.
David: Only between 50, and 150 basis points over the minimum requirement would you feel comfortable with that kind of buffer over the minimum requirements.
Speaker Change #109: Yes, I'm sorry for being.
Speaker Change #109: With a pop up perfectly theories one main driver why we take comfort level because of loan growth we are expecting.
Speaker Change #109: Loan growth 'twenty four 'twenty five.
Speaker Change #109: Hugo.
Speaker Change #109: It's less than 10%.
Speaker Change #109: 11, 11, 5% Q1 small Senegal.
Speaker Change #109: Sustained.
Hugo: It's going well.
Speaker Change #111: Okay understood. Thanks, very much for somebody.
Speaker Change #112: Good luck.
Speaker Change #113: Thanks, Jeremy collateral.
Speaker Change #113: Thank you. Our next question is come from the line of Carlos Gomez with HSBC. Please proceed with your question.
Hello, Good morning, and congratulations.
Carlos Gomez: Thank you very much for taking the question.
Carlos Gomez: I wanted to ask you first about the tax rate I know that we update every quarter.
Speaker Change #115: Sir your line now.
Carlos Gomez: Do you expect for this year and for the coming year.
Carlos Gomez: And second you mentioned that you have on the buckle now represents so much of the earnings of the Colombian market.
Carlos Gomez: Which is grateful bancolombia, maybe it's not that great for Colombia.
Carlos Gomez: Are you concerned about the situation in which the rest of the system.
Carlos Gomez: Or do you, perhaps a bit more careful now when you take a counterparty risk.
Carlos Gomez: Sure.
Carlos Gomez: The other institutions this system.
Speaker Change #116: Thank you so much.
Speaker Change #117: Thank you Carlos.
Speaker Change #117: Regarding taxes.
Speaker Change #117: The income stream from that.
Speaker Change #117: Okay.
Speaker Change #117: Yeah.
Speaker Change #117: In our.
Speaker Change #117: That's right.
Speaker Change #117: Right.
Speaker Change #117: Of the 80 basis to be around 26, 7%.
Speaker Change #117: Remember that we have been come from deeper in.
Speaker Change #117: Refuse different jurisdictions with different tax.
Speaker Change #117: So on a consolidated basis.
Speaker Change #117:
But rate income tax rate in Colombia, iron ore imports and parts of Europe.
Speaker Change #117: Bob.
Wyoming the income from the deep Red.
Speaker Change #117: The actions our tax rate should be around.
Speaker Change #117: Yes.
Speaker Change #117: 26, 7%.
Speaker Change #118: Regarding your second question Yeah.
Speaker Change #118: I'm going to be very clear.
Speaker Change #118: We are not concerned about the.
Speaker Change #118: The situation of the financial institutions in Colombia.
All of them are consolidated.
Speaker Change #118: Capital and what we see is more.
Speaker Change #118: Uh-huh situation.
Speaker Change #118: That is particularly our two conditions.
Speaker Change #118: We need to trade.
Speaker Change #118: Okay.
Speaker Change #118: Telephone companies.
Formed in the operations very small.
Speaker Change #118: A situation of a market situation that is currently or happened during last year.
Speaker Change #118: Even though.
Speaker Change #118: But we.
We are not concerned at all.
Speaker Change #118: Regarding the.
Speaker Change #118: As I systemic risk.
Speaker Change #118: Yeah cause all listed futures as I mentioned.
Speaker Change #118: Uh huh.
Speaker Change #118: This level of capital they are the same.
Speaker Change #118: They measure so we have no we have no concern at all.
Speaker Change #118: Okay.
Thanks, so much.
Speaker Change #119: Thank you Kevin.
Speaker Change #119: Yeah.
Speaker Change #119: Thank you. Our next question comes from the line of Peter <unk> with Goldman Sachs. Please proceed with your question.
Peter: Hi, Good morning, Thank you for the call and taking my question.
Peter: Sorry, I joined a little bit late but im.
Peter: You maintained your ROE guidance.
Peter: And for the year by a pretty good quarter and I know there were some headwinds.
Peter: Yes.
Peter: What do you think is sort of going to drive that ROE lower from here or is it mostly a function of interest rates interest rates come down.
Peter: Pressure on margins.
Peter: Are you concerned.
Asset quality getting worse, I know provisions were a bit lower could that increase.
Peter: From here and also in terms of loan growth.
Speaker Change #121: So somewhat muted.
Speaker Change #121: Any concerns on that and then just thinking a little bit beyond 2020 for the economy.
Speaker Change #121: Getting maybe in flex and improves in 2025.
Speaker Change #121: We think at 14% ROE is sustainable beyond.
Speaker Change #121: Beyond 2024, or how could it evolve, particularly if rates continue to come down in 'twenty five.
Just some color on sort.
Speaker Change #121: Sort of the path from the current ROE, which was very strong at 14%.
Speaker Change #124: Thank you.
Speaker Change #121: Okay.
Speaker Change #122: Thank you Peter.
Speaker Change #123: Let me let me answer your question this way.
Speaker Change #123: Right.
Speaker Change #123: The variables that you made sure are going to stay.
Speaker Change #123: Or impact our performance.
Speaker Change #123: Right.
The key factor.
For this year.
Speaker Change #123: It's a cost of risk.
Speaker Change #123: When we see more uncertainty.
Speaker Change #123: When we are done.
Speaker Change #123: We had 14% is achievable.
Speaker Change #123: We think that.
Speaker Change #123: We think that we can reach that level broadly that's our base case.
Speaker Change #123: At this moment I can say that we have an upside.
Speaker Change #123: Possibility.
Speaker Change #123: Getting a better ROI.
Speaker Change #123: The key factor.
Speaker Change #123: Repeating this cost of risk.
Speaker Change #123: I mean in terms of.
Speaker Change #123: How the loan book is going there.
Speaker Change #123: Grow we hopped off those.
Speaker Change #125: Pretty much.
Speaker Change #125: And with the update the elements to manage.
Speaker Change #125: Yeah.
Speaker Change #125: The margin.
Speaker Change #125: The game.
Speaker Change #125: Being the level.
Speaker Change #125: Yes.
Speaker Change #125: Our our results.
Speaker Change #125: Loan growth is not going to be very LTE is going to be.
Speaker Change #125: It's slow because of the performance of the economy.
Speaker Change #125: We have the tools to manage that.
Speaker Change #126: What is <unk>.
Speaker Change #126: Much uncertainty as I mentioned on cost of risk that meets what we are going to monitor it.
Speaker Change #126: Pretty closely on when we are working on.
I'm, taking the measures to.
<unk>.
Speaker Change #126: Great.
Speaker Change #126: Again, repeating Smes is one of our main focus now is where we are.
Also consumer.
Speaker Change #126: Loans.
Speaker Change #126: Even though they are performing well.
Speaker Change #126: Better than expected.
Robert.
Speaker Change #126: Also we need to monitor monitor.
Speaker Change #126: In pockets.
Speaker Change #126: Quarter is supposed to be powered and these are going to perform another factor.
Speaker Change #126: But to take into account is how.
Speaker Change #126: Being companies going to be paid.
Speaker Change #126: Economy is not growing.
Speaker Change #126: Much.
Speaker Change #126: So it's being called in generation is going to be a feedback we're getting.
Good.
Speaker Change #126: Cost of risk is the key factor to achieve our.
Speaker Change #126: ROE you did in 2024.
Speaker Change #127: Thank you we have reached the end of our question and answer session I would now like to turn the call back over to Juan Carlos Mora for final remarks.
Speaker Change #128: We will like to thank you for attending our.
Speaker Change #129: Third quarter 2024 conference call.
Speaker Change #130: We said during the quality was a good quarter.
Speaker Change #131: Were you happy with the results.
Speaker Change #131: Uncertainty remains.
Speaker Change #131: An important factor.
Speaker Change #131: To determine our results were 2024, so we expect to see you on our.
Speaker Change #131: Yeah.
Speaker Change #131: Second quarter conference call to see the development of Bancolombia. Thank you very much on a good day.
Speaker Change #131: Okay.
Speaker Change #132: Thank you. This does conclude today's teleconference. We appreciate your participation you may disconnect. Your lines at this time enjoy the rest of your day.
Speaker Change #132: Yeah.
Speaker Change #132: [music] [noise].