Q2 2024 Bancolombia SA Earnings Call

Speaker Change: [music].

Thank you for holding your conference will begin in approximately five minutes again, we thank you for your patience. Please continue to hold.

[music].

Speaker Change: Good morning, ladies and gentlemen, and welcome to Banco Columbia.

Christine: Second quarter 2024 earnings Conference call. My name is Christine and I'll be your operator for today's call.

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

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

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

Speaker Change: Please note that this conference is being recorded.

Speaker Change: Please note that this conference call will include forward looking statements, including statements related to our future performance capital position credit related expenses and credit losses.

Speaker Change: All forward looking statements whether made in this conference call in future filings in press releases or verbally address matters that involve risks and uncertainty consequently.

Speaker Change: There are factors that could cause.

Speaker Change: Actual results to differ materially from those indicated in such statements.

Speaker Change: Including changes in general economic and business conditions.

Speaker Change: Changes in currency exchange rates and interest rates.

Speaker Change: Introduction of competing products by other companies.

Speaker Change: Lack of acceptance of new products or services by our targeted clients.

Speaker Change: Changes in business strategy and various other factors that we describe in our reports filed with the SEC.

With us today is Mr. Juan Carlos Mora, Chief Executive Officer.

Mr. Julian Moore, Chief Corporate Officer.

Speaker Change: Mr. Mauricio Butera Wolfe Chief Financial Officer.

Speaker Change: Mr Rodrigo Prieto, Chief risk officer.

Mrs Catalina told on Investor Relations and capital markets Director.

Speaker Change: And this is Laura Coffey O E.

Chief economist.

Speaker Change: I will now turn the call over to Mr. Juan Carlos Mora, Chief Executive Officer, Mr. Juan Carlos you may begin.

Speaker Change: Good morning, and welcome to Columbia.

Speaker Change: Quadro installed conference call.

Speaker Change: Please turn to slide.

Speaker Change: Yeah.

Speaker Change: As the year progressed, and we continued to see modest economic growth across all regions, where we operate.

Speaker Change: Despite the low demand for great.

Speaker Change: Fourth quarter, New installs demonstrated one corporation up this fall.

Speaker Change: But if a loan growth of approximately 3% and maintained.

Speaker Change: Stable net interest margin at seven 1%.

Speaker Change: This was underpinned by our robust financial strategy.

Speaker Change: Enable us to accelerate the reduction of interest expense.

Thereby bolstering quite origination.

Speaker Change: Our net interest.

Nevertheless, our net income well.

13, 5% decline from the previous quarter and our return on equity.

Speaker Change: 15.

Speaker Change: This was primarily due to an increase in provision charges by <unk>.

Rich: Rich will discuss in more detail along without one time impairment thoughts.

Speaker Change: Yeah, it isn't that Julien.

Speaker Change: And a year over year basis.

Rich: Net income to remain relatively stable.

Rich: So a slower rate of greater deterioration that contributed to improved asset quality and a stronger balance sheet.

Rich: Corporate.

Speaker Change: Our capital ratios stand firm would have closed all listened ratio 12, 6% and a core equity tier one ratio of 10, 9%.

Speaker Change: Other significant development this quarter.

Speaker Change: Attention to a few key points.

Speaker Change: Firstly, the appointment of Paul what Pedro as our new Chief Financial Officer of Bancolombia.

Speaker Change: Effective August 1st.

Speaker Change: Depleting Cushing barrels, but close to all the time.

Speaker Change: Secondly.

Speaker Change: The initiation of a reduced rate more of a flow program on slide 10.

Speaker Change: Beside boost the housing and construction sector.

Speaker Change: 70.

So to sum up a lot.

Speaker Change: Liability management.

Speaker Change: So in thinking about single market aimed at optimizing our capital on four minutes.

Speaker Change: We will slowly decline.

Speaker Change: Oh no.

Speaker Change: They seem to love equal our chief.

Speaker Change: We will provide a deeper on them from the market.

Speaker Change: But all of them.

Speaker Change: Thank you Juan Carlos now, please let us turn to slide three.

Speaker Change: The Colombian economy expanded at a better than expected pace of 0.7% during the first quarter of 'twenty 'twenty four and have continued to show signs of an economic upswing during the following months in line with improving macro conditions, leading monthly indicators such as the I S E and bancolombia snow costs or just the.

Speaker Change: I mean, they have expanded somewhere between two and 3% during the second quarter.

Speaker Change: Consequently, we have revised our growth forecast upward from 0.6% to one three per cent for 'twenty 'twenty four and from two 4% to two 6% for the following year.

Speaker Change: Even though key economic drivers are still lagging such as investment levels household demand and credit conditions. Some sectors are thriving and leading the path towards the recovery. For example, the agriculture sector grew at an annual rate of five 5% as the sector surpassed adverse weather conditions and has benefited from improved.

Speaker Change: Commodity prices and rising traditional exports. Moreover, the public sector, which contributes close to 15% of total GDP has continued to thrive expanding 5.3% during the first quarter of 'twenty 'twenty four and has managed to bolster employment figures.

Speaker Change: Nonetheless, the support emerging from the public sector, maybe hindered moving forward as physical pressure has escalated even though the medium term fiscal outlook presented by the government, that's a far more realistic setting, including lower expected tax collection non feasible additional revenues.

Speaker Change: Higher interest payments and expenditure cuts worth 20 billion pesos, increasing debt levels and the physical deficit forecast. It at five 6% of GDP in 2024 compared to last year's 4.3% reflect the fiscal policy challenges that lie ahead.

Speaker Change: Policy challenges are also being tackled on the monetary side, even though inflation has continued it's descent to the seven 2% level as of June bringing down inflation to the central bank's range of between two and 4% is proving to be quite difficult considering the indexation effect on services and housing.

Speaker Change: Prices, hence the central bank's cautious approach to easing its policy interest rates, which still stands high at 11 point, 25% at the end of the first semester.

Speaker Change: We anticipate the central Bank may begin to accelerate to 75 basis point cuts before year end and low rates will continue defending boosting consumer demand.

Speaker Change: Finally in other events Congress closed its legislature during June with the approval of the pension reform and the advancement of the Labor reform. Furthermore, the government has announced its intention to press through its reform agenda. During the remaining two years in office, including a failed health reform public services.

And then economic recovery package, which may include tax amendments now. Please let me turn it back to Juan Carlos Mora, who will present Bancolombia quarterly results.

Thank you Noah.

Speaker Change: Please proceed.

Speaker Change: Slide four.

Speaker Change: Before we dive into the results of the quarter I would like to highlight.

Speaker Change: Advantages of Bancolombia.

Speaker Change: You bet it will remain competitive.

Speaker Change: People eyes on growth opportunities within the dynamic by myself landscape.

At the core of the first part you probably feel a comprehensive value proposition, which merges both financial and nonfinancial basis models Carter, who are diverse range.

Speaker Change: This is the Levered Roe.

Speaker Change: Universal banking model, that's going to save about 20 million customers in Colombia.

Speaker Change: Our integrated complementarity and scalable approach not only facility.

Speaker Change: All these opportunities.

Speaker Change: So potential but also enables the bank to adopt emerging market trends.

Speaker Change: They sell a value proposal.

Speaker Change: A prime example of our capability is the recent introduction of when you are digital off with a company that offers a gateway from traditional financial system towards emerging digital economy.

Speaker Change: Hmm.

Speaker Change: Well see from us at the forefront of financial innovation for them.

Speaker Change: In a powerful or does that mean.

Speaker Change: In Colombia.

Speaker Change: On volume, but I didn't feel are involved.

Speaker Change: So I'll put our multichannel platform and fine.

Sir Paul: Sir Paul customer set.

Sir Paul: Ooh Ooh ecosystem model.

Sir Paul: It's tough for them to open.

Paul: Paul because food.

Speaker Change: Well, it's starting your cluster.

Especially those who are unbanked or underbanked.

Speaker Change: That's about money transfer services and convenience.

Speaker Change: The noncash out.

Speaker Change: That's what we thought.

Speaker Change: Funding, our distribution reach and witnessed.

Speaker Change: Well then shall growth in transaction volume.

Speaker Change: It has contributed to an increase in <unk>.

Bill: Hey, Bill.

Speaker Change: And secondly, sort of low cost deposits that both the profitability.

Bill: Or is something that has been remarkable.

Bill: Most of them are false monthly transaction volume with them.

Speaker Change: One, 2% increase quarter over quarter on a 17% increase year over year.

Speaker Change: This growth driven by PS.

Speaker Change: Yeah, I think that's multi construction activity per user which has grown.

15% quarter over quarter.

Speaker Change: 3% year over year.

Speaker Change: The Colombia up quite nicely.

Speaker Change: The advances to our great credibility on Colombia, just wait to see in the market with the technological and operational capabilities.

Speaker Change: They are boarded.

Speaker Change: And integrate our financial services into the new marketplace.

Speaker Change: We promote financial inclusion and placed all of our properties and improve the client.

Speaker Change: Mhm Columbia.

Speaker Change: And then switching over the past decade.

Speaker Change: Mhm tariff level market realtime statement released like that.

Speaker Change: Yeah Yeah.

Speaker Change: Yeah.

Speaker Change: On Colombia.

Speaker Change: I think we.

Speaker Change: The full implementation of QR code technology, which now has over one.

1 million makes sense of course more than 1100 <unk>.

Speaker Change: But more than 3 million unique failures and currently accounts for approximately 80% of interoperable incoming payment.

Speaker Change: Combined with our strong football and then some.

Speaker Change: Domain and a solid customer base of over 20 million customers. Our bank Columbia are north of 20 million users.

Speaker Change: He's paying us with a unique opportunity for them to pay they that'll.

Speaker Change: That'll put up all goes well.

Speaker Change: 10 minutes or so.

Speaker Change: We've been operating.

Speaker Change: No.

Speaker Change: On to slide five.

Speaker Change: So in Houston, what was that.

Speaker Change: So I've been pillar I would like to discuss our recent when factoring in the international capital market.

Speaker Change: Got it.

Speaker Change: Oh Wow.

Speaker Change: And financial management.

Speaker Change: Nobody's doing we capitalized on favorable market conditions to initiate a liability management transaction.

Speaker Change: Our goal was to increase our tier two capital support continued growth and to mitigate downside.

Speaker Change: Please go ahead.

Speaker Change: Yeah, let's call them group we.

Speaker Change: Interest in the bank from international investors, which enable us to issue the largest two bonds in the Colombian market to date, we effectively leveraged both internal and external resources to reduce expenses and provide investors with options for cash or long term inverse.

Speaker Change: Bye Bye I feel to me.

Speaker Change: I will now pass the presentation from our leasable Pedro who will go.

Pedro: It provides a detailed analysis of our results for the second quarter.

Alisha: 'twenty 'twenty four alisha.

Pedro: Felicia.

Pedro: Thank you won't publish please go to slide six.

Speaker Change: The contribution of the Central American operation to a consolidated book continues increasing providing credit risk and currency diversification to our operation.

Speaker Change: Loan growth on the regional banks was mainly driven by an increase in commercial loans and supported by an 8% peso depreciation during the period.

Speaker Change: So getting a higher aggregate share of the offshore books relative to Colombia. However.

Speaker Change: However, what we're looking at each operation, we see mix dynamics.

My name: My name is more recorded higher provision expenses.

My name: Lower growth prospects in Panama, we saw net income contraction quarterly which implies an Roe.

Speaker Change: Well five 5% in the period on the other hand, Banco Agricola posted a 21, 6% or are we on the back of growing interest revenue coupled with a reduction of provision charges.

Speaker Change: Charlie band presented a strong quarterly performance as reflected on a sharp rebound to 12, 3% driven by a growing NII and nowhere provision charges associated to religious on corporate clients and progress made in controlling <unk>.

Speaker Change: The deterioration.

Speaker Change: But do you know the net income contribution of Central America to the consolidated figures remained flat during the quarter, but decreased year over year largely attributed to the lower average exchange rates in Colombia during the last 12 months.

Speaker Change: Please go to slide seven.

Speaker Change: Yeah.

Speaker Change: The loan portfolio grew 3% quarter over quarter, and notably reassume growth on an annual basis, we got 2.7% expansion.

Speaker Change: Net of foreign however growth in the quarter was low at 25% you had higher on the year, reaching 3%.

Speaker Change: Growth was mainly driven by commercial loans with a 3% quarter over quarter.

Speaker Change: We implemented a special lines to stimulate demand or need the space companies incorporates which in turn contributes to interest income generation, we grew the asset quality.

Speaker Change: Moreover, mortgage loans registered notable expansion of four 8% over the quarter and 7.4% over the year.

Speaker Change: I would like to renew all of the social housing subsidy program in Colombia.

Speaker Change: This coupled with the recently announced you'll power cot rate program for certain mortgage loans should induce loan growth going forward.

Speaker Change: The flip side consumer segment increased one 9% quarter over quarter.

Speaker Change: She thought adjusted by Forex represent a 6% drop.

Speaker Change: We did a restrained origination standards on unsecured loans.

Speaker Change: Please go to slide eight.

Speaker Change: Okay.

Speaker Change: Growth on deposits outpace loan growth posting a five 3% growth over the quarter and almost 6% on an annual basis largely explained by a prudent approach.

Speaker Change: Our liquidity and our Alco strategies.

Speaker Change: Time deposits grew the most with a six 7% quarterly and <unk>.

Speaker Change: Eight 6% yearly.

Speaker Change: Mainly explained by a pickup in term deposits with institutional clients and in digital short term time deposits with retail customers.

Speaker Change: That's the policy to reach.

Speaker Change: At 37% share of our funding mix.

Speaker Change: On the other hand savings and checking accounts, both grew over 4% in the quarter.

Maintaining a 39% in a 12% share respectively. When the total funding mix, providing a noncore.

Speaker Change: Oh cost any stability to the funding structure.

Speaker Change: All you know cost of deposits decreased 35 basis points during the quarter driven by a 73 basis points cost reduction on time deposits.

Speaker Change: The 50 basis points, three or four rate cuts.

Speaker Change: I read out during the same period, we deem these very relevant as it provides our ability to outages at kind of the project maturity profile.

Speaker Change: Sure phosphate pricing and mitigate NIM contraction going forward.

Speaker Change: Please go to slide nine.

Speaker Change: Total interest income on loans and financial leases or they're constructive.

Speaker Change: 4% on the quarter and seven 2% over the year.

Speaker Change: Driven by the interest rates decline that affect income generation on new and existing loans.

Speaker Change: Well I started the contraction of the consumer portfolio, which has higher yields.

Speaker Change: Consequently, total interest income, including loans and investments.

Speaker Change: One 7% over the quarter and one 4% over the year.

However, our ability to outpace the rate cut when our time deposits and reduce overall interest expense we.

Speaker Change: We sold that.

Speaker Change: Increase in interest expense of four 6% quarter over quarter, and nine 3% year over year.

Christine: Good morning, ladies and gentlemen, and welcome to a Bancolombia's 2nd quarter, 2024, earnings conference call. My name is Christine and I will be your operator for today's call. At this time, all participants are in a listen only mode.

Speaker Change: As a matter of fact interest expense reduction compensated for the decline in yield on loans.

Speaker Change: So and I I resumed its growth, reaching 5.2 trillion pesos in the quarter.

Christine: Following the prepared marks, 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 touchstone phone. Please note that this conference is being recorded. Please note that this conference call will include forward-looking statements, including statements related to our future performance, capital position, credit-related expenses, and credit losses. All forward-looking statements, whether made in this conference call, in future filings, in press releases, or verbally, address matters that involve risks and uncertainty, consequently.

Speaker Change: Willing to up 5% increase over the quarter.

Speaker Change: And five 1% over the year.

Christine: There are factors that could cause actual results to differ materially from those indicated in such statements, including changes in general economic and business conditions, changes in currency exchange rates and interest rates, introduction of competing products by other companies, lack of acceptance of new products or services by our targeted clients, changes in business strategy, and various other factors that we describe in our reports filed with the SEC.

Speaker Change: As you can see me remained flat during the quarter at 741%.

Speaker Change: Going forward, we will continue managing defensibility and maturity profile of our assets and liabilities to meet the gate NIM contraction for example in securing a fast repricing of total time deposits out of which 68% will mature in the next 12 months.

Speaker Change: Please go to slide 10.

Speaker Change: Fee income grew 11.2% quarter over quarter, and pinpoint 2% year over year, mainly explained by bank assurance that you're assuming growth dynamics posting a notable 37, 3% increase for the period.

Speaker Change: 0.4% year over year.

Speaker Change: Minority payments and collections increased close to 10% quarterly and annually.

Christine: With us today is Mr. Juan Carlos Mora, Chief Executive Officer, Mr. Julien Mora, Chief Corporate Officer, Mr. Mauricio Botero Wolf, Chief Financial Officer, Mr. Rodrigo Prieto, Chief Risk Officer, Mrs. Catalina Tobán, Investor Relations and Capital Economist.

Speaker Change: Additionally, credit and debit card fee income increased 1.5% quarter over quarter, and five 8% year over year.

Speaker Change: Driven by a higher volume of cards and transactions.

Speaker Change: On the flip side if.

Speaker Change: Expenses grew 22% over the quarter and 19% over the year outpacing fee income growth explained by the increase of both credit card processing charges and a correspondent banking fees.

Juan Carlos Mora: I will now turn the call over to Mr. Juan Carlos Mora, Chief Executive Officer. Mr. Juan Carlos, you may begin.

Speaker Change: That's a net income increased two 9% in the quarter and three 2% on an interim basis, resulting in our fee income ratio of 24, 1% as compared to the 18% registered in the previous quarter.

Juan Carlos Mora: Good morning, and welcome to the Juan Colombia's second quarter of this conference call. Please turn to slide two. As the year progresses, we continue to see modern economic growth across all the religious regions where we operate. Despite the low demand for credit, our currently results demonstrated strong cooperation at the firm. The Chief, a long growth of approximately 3%, and maintained a stable net interest margin at 7.1%. This was on the by our robust financial strategy that enabled us to accelerate the reduction of interest expenses, thereby fostering great origination and encasing our net interest.

Speaker Change: Please go to slide 11.

Speaker Change: As shown in the Upper left chart. There was a significant reduction in fact, you know information compared to the previous quarters, mainly explained by the slower pace of consumer loans to the career agent in Colombia, we will further elaborate.

Speaker Change: These coupled with an increase in charge offs over the quarter B notes, our efforts and commitment to preserve our healthy balance sheet.

Speaker Change: On top of that net provisions for the quarter were $1 six trillion pesos up 23% increase over the quarter, yet at 22 dropped year over year, reflecting the better performance of new built.

Speaker Change: Just on the tighter or the nature of his thunder and any hints collection process.

Juan Carlos Mora: Nevertheless, our net income saw a 13.5% decline from the previous quarter, and our return on equity fell to 15.5%. This was primarily due to an increasing provision charges by 20.5%, which we will discuss in more detail, along with our one-time impairment charge associated with the joint venture. On a year-over-year basis, letting come to an end relatively safe, thanks to a slow rate of greater deterioration that contributed to improved as a quality and stronger balance speed coverage. Our capital ratio is confirmed with a total of 12.6% and it corrected to 0.1 ratio of 10.9%.

Speaker Change: The three main factors behind the provision charter performance in the quarter were first two.

213 billion charge in Smes.

Speaker Change: Second.

Speaker Change: 153 billion charge in companies from constructions and health sectors.

Speaker Change: And third at 34 billion charged on certain clients on the large exposures.

Speaker Change: Given unexpected deterioration on the flip side, there was a 237 billion provision release associated to macro variables is it down.

Speaker Change: And what are the trends and interest rates positively impacted consumer loans.

Speaker Change: Regarding asset quality, the 30 days past due loans ratio decreased to five 2% in the quarter driven by the consumer loans with a slight increasing coverage reaching 112%.

Juan Carlos Mora: In other significant developments this quarter, I would like to draw attention to a few key points.

Juan Carlos Mora: So, I think the appointment of Mauriz Votero as a new chief financial officer of Bancolombia is effective others first. To clear in, as in Bertha Kostoff, for a second, the initiation of a reduced rate of slow program on July 20, assigned to boost the housing and construction sector, and certainly, the successful execution of a liability management and a new tier-to-election in the international market, aimed at optimizing our capital and financial structure, we will be exploring more details later.

Speaker Change: The 90 days past due loan ratio slightly increased to three 4% explained by five new loans for a lager.

Speaker Change: Boss rig use them coverage to 169%, but it's still providing ample cushion.

Speaker Change: From unexpected in this perspective, we highlight the stability accomplish in our stage two loans provided all measures taken to contain defaults.

Speaker Change: The combined coverage for stage, two and stage three don't remain steady at 40%.

Speaker Change: We remain confident that as interest rates continue downward path the pace of loan deterioration we tend to normalize.

Laura Clavijo: I will now hand over the presentation to Laura Clavijo, our chief economist, who will provide a deeper analysis on the market for Laura. Thank you, Juan Carlos. Now please let us turn to slide three. The Colombian economy expanded at a better than expected pace of 0.7% during the first quarter of 2024 and has continued to show signs of an economic upswing during the following months in line with improving macro conditions. Leading monthly indicators such as the ISE and Bancolombia's now-cast suggests the economy may have expanded somewhere between 2 and 3% during the second quarter.

Speaker Change: But we do expect higher delinquencies when they say knees associated to a weak performance of construction manufacturing and retail sectors.

Laura Clavijo: Consequently, we have revised our growth forecast upward from 0.6% to 1.3% for 2024 and from 2.4% to 2.6% for the following year. Even though key economic drivers are still lagging, such as investment levels, household demand and credit conditions, some sectors are thriving and leading the path towards the recovery. For example, the agriculture sector grew at an annual rate of 5.5% as the sector surpassed adverse weather conditions and has benefited from improving commodity prices and rising traditional exports. Moreover, the public sector, which contributes close to 15% of total GDP, has continued to thrive, expanding 5.3% during the first quarter of 2024 and has managed to bolster employment figures.

Speaker Change: Please go to slide put.

Speaker Change: The consumer portfolio in Colombia posted a 210 billion pesos reduction on new past due loans quarter over quarter, given the slower pace of defaults and higher recoveries pushing down the deterioration during the quarter to seven 8%.

Laura Clavijo: Nonetheless, this support emerging from the public sector may be hindered moving forward as fiscal pressure has escalated, even though the medium-term fiscal outlook presented by the government, that's a far more realistic setting, including lower expected tax collection, non-feasible additional revenues, higher interest payments and expenditure cuts worth 20 billion pesos, increasing debt levels and a fiscal deficit forecasted at 5.6% of GDP in 2024 compared to last year's 4.3% reflect the fiscal policy challenges Head. Policy challenges are also being tackled on the monetary side.

Speaker Change: We highlight the improvement in personal loans that account for almost 48% of the consumer loan portfolio in Colombia.

Speaker Change: Selected you need 90 days past due balance and it says they should do in a stage three share which have declined for two consecutive quarters.

Speaker Change: That's the overall consumer segment posted lower 90 day past due loan ratio or five 4% and.

Speaker Change: Cost of risk.

Speaker Change: It dropped from eight 9% to eight seven.

7%.

You ended the better performance of new vintages, and the visibility provided by our trade models, we continue increasing rather than loan originations on a specific line niches under a more conservative approach.

Which coupled with better macro conditions could or should.

Speaker Change: Should contribute to restore asset quality, while increasing the loan portfolio profitability.

Speaker Change: Please go to slide number 13.

Speaker Change: Operating expenses grew three 4% quarter over quarter, and three 7% year over year.

Speaker Change: Notably lower than the inflation rate in Colombia during the period.

These reflect the stringent cost control and efficiency program discussed on our past conference calls coupled with a lower <unk>.

Speaker Change: Exchange rates that reduced overall operating expenses denominated in U S dollars.

Laura Clavijo: Even though inflation has continued its descent to the 7.2 percent level as of June, bringing down inflation to the central bank's range of between 2% and 4% is proving to be quite difficult, considering the indexation effect on services and housing prices. Hence, the central bank's cautious approach to easing its policy interest rate, which still stands high at 11.25 percent at the end of the first semester. We anticipate the central bank may begin to accelerate to 75 basis point cuts before year end, and low rates will continue descending, boosting consumer demand.

Speaker Change: Besides personal expenses only grew 1% quarter over quarter and decreased 4% year over year in both cases below their normal wage increase in Colombia, which certainly reflect efficiency gains.

On the other hand, I mean, historically the expenses grew five 2% quarter over quarter.

And six 8% when I get a few days, mainly driven by local practices in 18 licensing expenses direct it to the business transformation and migration to the cloud.

Speaker Change: We remain highly committed to cost reduction and efficiency gains when we continue evolving our business transformation underway. However, the result of expense growth outpacing operating income growth.

Laura Clavijo: Finally, in other events, Congress closed its legislature during June with the approval of the pension reform and the advancement of the labor reform. Furthermore, the government has announced its intention to press through its reform agenda during the remaining two years in office, including a failed health reform, public services, and an economic recovery package, which may include tax amendments.

Speaker Change: The efficiency ratio to 48, 8% during the quarter.

Speaker Change: Please go to slide 14.

Okay.

Net income for the quarter was one four trillion pesos, 13% below the previous quarter, mainly attributed to lower net interest income higher provision charges and a one off impairment charge on a joint venture.

Juan Carlos Mora: Now, please let me turn it back to Juan Carlos Mola, who will present Bank of Colombia's quarterly results. Thank you, Lauer. Please proceed to slide 4.

Speaker Change: On a yearly basis. However, the bottom line remained relatively flat at the lower net interest income generation was upset by a much lower cost of risk.

Juan Carlos Mora: Before we dive into the results of the course, I would like to highlight strategic advantages that Bank of Colombia has cultivated to remain competitive as a people's eyes on growth opportunities within the dynamic financial landscape. At the core of the first value trading pillar of our comprehensive value proposition, which merges both financial and non-financial basis models, cars toward diverse range of settings. This is delivered through a universal banking model that currently serves over 20 million customers in Colombia.

Speaker Change: All things considered the ROA for the quarter was 15, 3%, which if I adjusted for good will result in a return on tangible equity of 25% that shows the strong profitability of the operation isolated.

Speaker Change: <unk> related costs.

Speaker Change: Now please go to slide 15.

Speaker Change: Shareholders equity increased seven 5% quarter over quarter, and seven 3% year over year.

Juan Carlos Mora: Our integrated, complementary and scalable approach not only facilitates the selling opportunities and diversification, but also enables the bank to adapt to emerging market trends, unencased our value proposal. After an example of our capabilities, is the recent introduction of UNIA, a digital asset company that offers a gateway from traditional financial systems to the emerging digital asset economy. This position adds at the forefront of financial innovation, providing a platform for learning and iteration.

Speaker Change: Mainly driven by net income generation, coupled with pork depreciation core equity tier one ratio ended at 10, 98% up 53 basis points quarterly.

Blaine: Blaine by your organic capital generation after accounting for the dividend payout decreased in the first quarter.

Blaine: Consistently total capital adequacy ratio stood at 12, 6%.

Blaine: Equivalent to a growth of 23 basis points over the quarter and six basis points over the year.

Blaine: With this I will hand over the presentation back to Juan Carlos for the final remarks Juan Carlos.

Juan Carlos Mora: Building on this, our second value trading pillar involves an entire problem, multi-channel platform designed to serve all customers sufficiently through an ecosystem model. This platform has proven to be a protocol tool for attracting new customers, especially those who are on-bound or on-the-bound by offering accessible money transfer services and convenience, fashion and cash-out options. As a result, we have needed to expand our distribution reach and witness exponential growth in transaction volumes, which has contributed to an increase in the three-day income and accumulation of low-cost city deposit that For instance, Necki has seen a remarkable surge in monthly transaction volume with a 20% increase for over quarter and a 70% increase year-over-year.

Mauricio: Thank you Mauricio.

Juan Carlos: Please proceed to slide 16.

Speaker Change: That's the bulk of our business with both garden without successfully.

Speaker Change: The 21 billion Colombian pesos during 2024.

Speaker Change: Two beauty who are.

Speaker Change: Cumulative total of 162 trillion peso since the year 2000 to them.

Speaker Change: And our commitment to environmental matters, who have carried out by nickel related assessments with clients.

Speaker Change: In two.

Speaker Change: Ooh manifesting.

Speaker Change: Yes.

Aimed at ensuring that isn't right.

Speaker Change: In alignment with our own.

Speaker Change: We are also proud to announce the release of the <unk>.

Speaker Change: Additionally, our principles.

Speaker Change #100: How about banking boot barn.

Speaker Change #100: This publication of them with us.

Juan Carlos Mora: This growth is driven by a place, you know, the average monthly transaction activity per user, which has grown nearly 15% for over quarter and 33% year-over-year. The Colombia financial system advances to our greatest interoperability. Bancolombia is a wide position in the market with the technological and operational capabilities to store their products and integrate our financial services into new market platforms. This will promote financial inclusion in our proposition and improve the client's skills.

Speaker Change #101: Get the assurance from new buildings.

Speaker Change #101: Highlights.

Speaker Change #101: Dedication.

Speaker Change #101: My baby.

Speaker Change #102: Please go to slide 18.

Speaker Change #102: Last.

Speaker Change #103: I will share our guidance for year end 'twenty before based on the current data on our updated macroeconomic forecast.

Speaker Change #103: We expect our loan growth of 8%.

Speaker Change #103: Broken down in a 4.3% growth when the peso denominated loans and seven 7% in the dollar denominated.

Juan Carlos Mora: In this, Colombia has seen transmission in over the past decade into an interoperable market with real-time management solutions like procedure, CSE and ACH-Net. Bancolombia leads the market with the successful implementation of fuel-code technology, which is now used over 1.1 million merchants across more than 1,100 million dollars, but more than 3 million unit payers, and currently accounts for approximately 90% of interoperable incoming payments. This combined with our strong-to-hold in the structural domain and solid customer base of over 20 million customers at Bancolombia and north of 20 million users at 80% has with a unique opportunity to communicate the interoperable features of our payment infrastructure and seed distribution and sales opportunities. Now, we're starting to slide five.

Speaker Change #103: Okay.

Speaker Change #104: Naeem to close around six 8%.

Speaker Change #104: Cost of risk between 2.2 of them.

Speaker Change #104: 4%.

Speaker Change #104: Efficiency ratio in the <unk>.

Speaker Change #105: Sydney area.

Speaker Change #106: I only between 14 and 15% on core equity tier one between 11 and 11, 5%.

Speaker Change #106: Now we will take any questions you may have.

Speaker Change #106: Okay.

Speaker Change #107: 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.

Speaker Change #108: If you wish to be removed from the queue. Please press star two.

Speaker Change #109: If you're using a speakerphone you need to pick up the handset first before pressing the numbers.

Speaker Change #109: Once again, if you have a question. Please press Star then one on your Touchtone phone.

Ernesto <unk>: Thank you. Our first question comes from the line of Ernesto <unk> with Bank of America. Please proceed with your question.

Ernesto <unk>: Thank you hi, good morning got a little work on how do you feel kind of a morning call your team.

Juan Carlos Mora: Transitioning to our fair-valued driving pillar, I would like to disclose our recent transaction in the international capital market, which serves as a testament of two hours per teeth in financial management. In only June, we capitalized on favorable market conditions to initiate a liability management transaction. Our goal was to enhance our tier two capital support continued growth and to mitigate your term with financial service. The outcome took the strong interest in the Bancolombia from international investors, which enabled us to issue the largest tier two bond in the Colombian market to date. We effectively leverage both internal and external resources to reduce inter-extences and provide investor-free options for cash or long-term investments to satisfy a variety of needs.

Speaker Change #111: Thanks for your preclinical.

Ernesto <unk>: My first question would be on <unk>.

Speaker Change #113: So Brooklyn curves reader Corral who'd gone from crime Glencore.

Speaker Change #114: Super fun.

Speaker Change #115: Yeah, So what should we who the mean normalized who come to us.

Speaker Change #115: A quick question on your cookies.

Speaker Change #115: Got through we know green dot or couldn't per sung who hook them quater.

Speaker Change #116: So how should we think about them for a good talk fruitful furby.

Speaker Change #116: Sure.

Michael: And my last question from Michael We who you already have an important number.

Michael We: If I could go on them. So I was wondering if you can share a little bit of the recruitment strategies to monetize those crying.

Speaker Change #119: How do you see them.

Michael We: Breakeven.

Mauricio Botero: I will now pass the presentation to Mauricio Botero, who will provide a detailed analysis of our resource for the second quarter of 2024. Mauricio, thank you, Juan Carlos. Please go to slide. VI. The contribution of the Central American Operation to the consolidated book continues increasing, providing credit risk and currency diversification to our operation. Long growth on the regional banks was mainly driven by an increasing commercial loans and supported by an 8% total depreciation during the period.

Speaker Change #120: I know her well you can provide some contango greenfield for numerous.

Speaker Change #121: Yes, or when do you think you can.

Speaker Change #121: Providing dosing recruiters.

Speaker Change #121: Sure.

Speaker Change #122: Okay. Thank you.

Speaker Change #123: Let me address your questions.

Speaker Change #124: First I will have a comment on the tax effective tax.

That's right.

Speaker Change #124: I will ask Mauricio to give you a more more color on that and I'm going to also to answer your question or the question of what are your comments about about making.

Mauricio: So, let's just start with the with the NIM.

Mauricio Botero: Resulting a higher aggregate share of the offshore books related to Colombia. However, we are looking at each operation withemic dynamics. Vanismo recorded higher provision expenses as per lower growth prospects in Panama. We saw in net income contraction quarterly, which implied an ROE of 5.5% in the period. On the other hand, Vanquaviricola posted a 21.6% ROE on the back of growing interest revenue coupled with a reduction on provision charges. Similarly, Van presented a strong quarterly performance as reflected on a sharp ROE rebound to 12.3% driven by a growing NII and lower provision charges associated to releases on corporate clients and progress made in controlling retail deterioration.

Mauricio: Yeah.

Mauricio: We know that in Colombia, we have caught up.

Mauricio: A monetary policy bodies at this moment.

Mauricio: Slight inflation and inflation has been kind of consistent.

To go down.

So.

Speaker Change #125: D and our NIM will depend on how the monetary policy will behave and we are expecting.

Speaker Change #125: Or is there a lot of expectations on two.

Speaker Change #125: Additional.

Speaker Change #125: Reviews of the let's say interest rates from the Colombian Central Bank and due to the inflation news that were released yesterday.

Speaker Change #125: Yeah.

Speaker Change #125: Probably we will see a.

Speaker Change #126: Probably they say the rate will go down when the wound is hungry and 25 450 basis points. So without you.

Mauricio Botero: All in all, the net income contribution of Central America to the consolidated figures remained flat during the quarter, but decreased year over year, largely attributed to the lower average exchange rate in Colombia during the last 12 months. Please vote as light seven. The loan portfolio grew 3% quarter over quarter, and notably re-assume growth on a normal basis with a 2.7% expansion. Netaphorics, however, growth on the quarter was low at 0.5% yet higher on the year reaching 3%.

Speaker Change #127: Expect our NIM to be around six 8%.

By the end of this year and that will depend mainly on the speed of the transmission of the monetary policy. The central Bank is going to decrease the rate 25, or 50 basis points in each of these meetings this year.

Speaker Change #127: So for next year.

Speaker Change #127: We expect the inflation to keep going down.

Speaker Change #127: And still we don't see that the great inflation I'm, sorry will be in the 8-K today.

Speaker Change #127: Bank.

Mauricio Botero: Growth was mainly driven by commercial loans with a 3% quarter over quarter, as we implemented special lines to stimulate demand on mid-sized companies and corporates, which in turn contributes to interest income generation with growth quality. Moreover, mortgage loans registered a notable expansion of 4.8% over the quarter and 7.4% over the year, fueled by the renewal of the social housing subsidy program in Colombia. This couple with the recent allowance of our code rate program for certain mortgage loans should induce long growth going forward.

Speaker Change #128: Not quite a bit of a poorly.

It targets so the monetary policy will continue driving tool.

Speaker Change #129: Hmm control inflation. So we've got a respect that our NIM for 2025 will be around 6.5%. So.

Speaker Change #129: But I will decrease our net interest income.

Speaker Change #129: Also I would be related to G coastal freeze.

Speaker Change #130: She did doesn't shots, resulting D. You'll second question there.

Speaker Change #131: The effective tax rate I'm going to make a comment and then Wouldnt go box. After I answer the question about Nikki too.

Mauricio Botero: On the flip side, consumer segment increased 1.9% quarter over quarter, which if adjusted by 4% represents a 0.6% drop with a restrained origination standards on secured loans. Please go to slide eight. Growth on the posits outpaced loans growth, posting a 5.3% growth over the quarter in almost 6% on an annual basis.

Speaker Change #130: Success rate.

Speaker Change #130: So.

Speaker Change #132: Our expectation is that our effective tax rate for the year will be between 26 and 28.

Speaker Change #132: Hmm.

And yeah.

Speaker Change #132: That's it.

Speaker Change #133: In line with our how our.

Speaker Change #133: As our guidance.

D quota.

Was around 25%.

Mauricio Botero: Naturally explained by a proven approach towards liquidity in our unconstructed loans, and Jitendra Singh, Bancolombia, Jitendra Singh, Bancolombia, Jitendra Singh, Jitendra Singh, Bancolombia Jitendra Singh, Bancolombia, Jitendra Singh, Bancolombia, Jitendra Singh, Bancolombia, Jitendra[inaudible] Singh, Bancolombia, Jitendra Singh, Bancolombia Jitendra Singh, Bancolombia, Jitendra Singh, Bancolombia, Jitendra Singh, Bancolombia, Jitendra Singh, Bancolombia, Jitendra Singh, Bancolombia, Jitendra Singh, Bancolombia, Jitendra Similarly payments and collections increased close to 10% quarterly and annually. Additionally, credit and debit card fee income increased 1.5% quarter over quarter in 5.8% year over year, driven by a higher volume of cards and transactions.

Speaker Change #133: Lisa will explain that later.

Nicky: The resulting and cause I think Nicky.

Speaker Change #133: Yeah.

Nicky: Nicky now has more than 20 million clients.

Nicky: Around 14% of them are active customers.

Nicky: Yeah on our path to monetization sees its going well.

Nicky: We are.

Nicky: Yeah.

Nicky: Improving or we are in.

Nicky: The possible when utilization is definitely through to credit.

Nicky: And we are monthly by.

Nicky: By monthly improving.

Nicky: Our.

Nicky: Great.

Nicky: Four months so that.

That will take.

Speaker Change #135: A little bit of wild weird.

Speaker Change #136: I think that our profitability would be by D. A.

Speaker Change #136: And it's been five beginning of 'twenty six but it will depend on how fast we can go on the on the credit.

Speaker Change #137: Yeah on the credit side.

Speaker Change #138: We need to be careful and.

Speaker Change #138: And we will we will be measuring how declines are performing.

Speaker Change #138: So far as I mentioned, we are doing we are doing well. So yeah. Those are all at once but they shouldn't state. The transactions are there are we have now a lot of information.

Speaker Change #138: About our clients they are transacted.

Mickey: Mickey So that's going to help us a lot knowing they the clients on.

Speaker Change #138: With that.

Speaker Change #138: Okay, we'll be able to hopefully that craig's lives.

Melissa: Melissa let's go back to the second question about the effective tax rate. Please.

Melissa: Yeah.

Ernesto <unk>: Hi, Ernesto.

Ernesto <unk>: To understand that the tax rate, we used for the second quarter, it's important to understand.

Ernesto <unk>: The aggregated tax rate among all the different segments businesses and geographies in which we participate.

Ernesto <unk>: It was 25% as Juan Carlos mentioned, but there was a one off reversal.

The provision for taxes from the previous year, if you normalize that you get to 25%.

Speaker Change #141: That's why it was 20% and the guidance should continue to be between 26 and 28% for this year and the coming year.

Speaker Change #141: Excellent. Thank you so much.

Speaker Change #142: A follow up in terms of hunger.

Speaker Change #142: So hum.

Speaker Change #144: Uh Huh I mean.

Speaker Change #145: Our work around program going one person Brooklyn, Doug for the full year or in the curriculum to halve the move should be going for coupon oops.

Speaker Change #146: Suburban culture.

Speaker Change #147: It's going from here and then.

Speaker Change #148: For sure.

Speaker Change #149: It could be wrong.

Speaker Change #150: Hooper from her goggles.

Kirk: For 'twenty, one coupon Kirk I, just wanted to double check that number would be.

Kirk: I, usually two or three states.

Speaker Change #152: I asked this question.

Speaker Change #153: Me too.

Speaker Change #154: You need to to understand the sensitivity there.

Speaker Change #155: We have in the net interest margin to the movement in the repo rate. So for every 100 basis points decrease in the referral rate.

Speaker Change #156: We would have an impact of 10 basis points in the net interest margin. So it will all depend on the velocity of the decreasing interest rates from the Central Bank.

Mauricio Botero: On the flip side, the expenses grew 22% over the quarter and 19% over the year, outpacing fee income growth, explained by the increase of both credit card processing charges and corresponding banking fees. That net income increased 2.9% in the quarter and 3.2% on an annual basis resulting on a fee income ratio of 20.1% as compared to the 18% registered in the previous quarter. Please go to slide 11. As shown in the upper left chart, there was a significant reduction on value loan formation compared to the previous quarters, mainly explained by this lower pace of consumer loans deterioration in Colombia as we will further elaborate.

Speaker Change #157: It would make sense.

Speaker Change #157: To look at the second half at six 8% in according to a velocity you may see.

Speaker Change #157: That interest margin moving from six eight to the six 5% area during 2025.

Speaker Change #157: But it won't be from the beginning of the year he would depend on the velocity.

Speaker Change #157: The central bank to decrease interest rates.

Speaker Change #158: Okay broker cranky landmark hardcore.

Ernest: Thank you Ernest.

Speaker Change #160: Our next question comes from the line of teacher in Nevada with Goldman Sachs. Please proceed with your question.

Mauricio Botero: This coupled with an increase in charge of the quarter denotes our efforts and commitment to preserve a healthy balance sheet. On top of that net provisions for the quarter were 1.6 trillion pesos at 23% increase over the quarter, yet at 22 drop year over year, reflecting the better performance of new vintages on the retired origination standards in an enhanced collection process. The three main factors behind the provisioned charge performance in the quarter were first, 213 billion charge in SMEs.

Speaker Change #161: Hi, Good morning, everyone. Thank you for the call and taking my question.

Speaker Change #162: My question is on your provisioning you know we saw provisions increased in the quarter, although asset quality look better the tone on the call in general it sounds a bit more optimistic than you did lower the guidance a little bit on the cost of risk.

Speaker Change #163: So just to think about what want to understand that they increased in the quarter, a little bit more specifically given the somewhat better trends overall that you're seeing and I'm thinking maybe a little bit more of a longer term, you're still well above your historical cost of risk.

Mauricio Botero: Second, a 153 billion charge in companies from constructions and health sectors. Third, a 34 billion charge on certain clients on the large exposure segment given unexpected deterioration. On the flip side, there was a 237 billion provision released associated to macro variables as the downward trend in interest rates positively impacts consumer loans. Regarding as a quality, the 30-day spasur loans ratio decreased to 5.2% on the quarter driven by the consumer loans with a slight increase in coverage reaching 100-12%, whereas the 90-day spasur loan ratio is likely increased to 3.4%.

Speaker Change #164: Do you think you can get back to those levels or do you expect a better GDP growth next year. How do you think you know that cost of risk and can continue to evolve into 2025. Thank you.

Speaker Change #163: Yeah.

Chip: Thank you chip.

Speaker Change #166: If you compare the second quarter with the first quarter yeah.

Speaker Change #167: He has some.

Speaker Change #167: Additional coastal sweet spot.

Speaker Change #167: Yeah.

The overall and that's because the first quarter of the year was abnormally low.

Speaker Change #169: What we see is a trend of better asset quality on the behavior in the second quarter. It was better done in the first quarter.

Yeah.

Speaker Change #169: Now that's why we are our guidance is for cost of risk for the end of the year. It's between two point towards deploying floor on previous guidance was two five.

Mauricio Botero: Explained by the new loans for a lower, thus reducing coverage to 169%, but still providing an ample caution. From an expected loss perspective, we highlight the stability accomplished in stage two loans provided all measures taken to contain defaults. Moreover, the combined coverage for stage two and stage three loans remain steady at 40%. We remain confident that, as interest rates continue, each downward path, the pace of low deterioration will tend to normalize, but we do expect higher delinquencies on SMEs associated to a weak performance of construction, manufacturing and retail sectors. Please go to slide quiz.

Speaker Change #169: Yeah.

Speaker Change #169: So what we are seeing is a better.

Speaker Change #170: You're on.

Speaker Change #170: Consumer loans, some deterioration on Smes, but.

Speaker Change #170: All in all we expect a.

Speaker Change #170: Improvement on on a close the breach.

Speaker Change #170: So the next couple of years.

Speaker Change #170: Regarding your question about 2025, we expect a better performance.

Speaker Change #170: In terms of GDP World.

Speaker Change #170: The clock on on top of that we all suspect a better cost of risk come down more.

My life as she mentioned.

In the past our normalized cost of risk ratio around 1.8.

Mauricio Botero: [inaudible]000,000,000,000,000,000,000, on a joint bank. On a yearly basis, however, the bottom line remained relatively flat, as the lower net interest income generation was offset by a much lower class of risk. All things considered, the ROE for the quarter was 15.3%, which, if I just said, for good will, resulting a return of tangible equity of 20.5%, that shows the strong profitability of the operation isolated of good will-related costs. Now, please go to slide 15.

Speaker Change #170: Yeah.

Speaker Change #170: Okay.

Speaker Change #170: In 2025 to be between two and 2.2, yeah. We.

Speaker Change #170: We chose stores a normalize eh.

Speaker Change #170: Cost of risk.

Speaker Change #171: Okay, No that's very clear thanks congratulations.

Speaker Change #172: Thank you.

Speaker Change #173: Our next question comes from the line of Yuri Fernandes with JP Morgan. Please proceed with your question.

Yuri Fernandes: Hey, guys. Good morning, and congrats on the quarter I have a question regarding your guidance and your early you're crazy this a little bit but.

Speaker Change #175: When you look to the magics anyway, and we moved to the first half.

Like you had almost 18 out of reading the first quarter of these already was higher and there were you know maybe some one time events on impairments.

Speaker Change #176: My question is can we see higher or are we or is this I don't know if tax rates or monetization I had gleaned or margin pressure I'm just trying to understand it turned out to be too conservative on the on the row here and what can you know maybe make it out or we should be we see your guidance you could stack says.

Speaker Change #177: Tight expense Jersey, the margin normalization, just trying to get some color on this thank you.

Julie: Yeah. Thank you Julie.

Julie: Yeah.

Speaker Change #179: Yeah, it's first semester loss.

Speaker Change #180: Well I think a good semester.

Speaker Change #181: Actually what's better we were expecting.

Speaker Change #182: Regarding the second semester on what to expect by by year end.

Speaker Change #183: If you would be able to deliver a higher I E.

Speaker Change #183: That's basically it.

Thanks.

Speaker Change #184: Uh huh.

Speaker Change #185: Quite old news on two main variables.

Speaker Change #186: The speed of interest rate.

Speaker Change #185: Changes or it.

Speaker Change #185: As I mentioned, if the central bank.

Speaker Change #187: You would use 27, 25 or 50 basis points on the effect on our mean.

Speaker Change #187: So that's 6.8% mean suppose.

Speaker Change #188: A more aggressive.

Speaker Change #189: On interest rates, so there could be an upside possibility and the other main viable is of course, the briefs that we are seeing the cost of risk improving.

Speaker Change #190: So to your question, our Pas guidance, Oh, Oh, it was around 14% now we are saying 14, 15%.

Speaker Change #190: It is an upside possibility regarding.

I mean, it will depend on how our D N. The interest rates will behave in the Colombian economy with before.

Speaker Change #190: We bought them.

Speaker Change #191: Couple of last month's a good surprise positive surprise regarding the economic.

Speaker Change #191: Activity in Colombia.

Speaker Change #191: If that continues.

Speaker Change #191: I think we could we could deliver and it'll be at a higher.

Speaker Change #192: E U.

Speaker Change #193: Well Super clear notice you find me a second one more strategic is sutro like one of the good sees a bulk of them in Colombia is defending right like the funding cost in the franchise.

And now in Colombia, we have the newcomers and like we just because a lot of them are banking here and they are offering 30% yields on the Wednesday a horse.

Mauricio Botero: Shareholder equity increased 7.5% quarter over quarter and 7.3% year over year, mainly driven by net income generation coupled with poor depreciation. Core equity tier 1 ratio ended at 10.98% up 53 basis points quarterly, explained by organic capital generation after accounting for the annual period and payout decreased in the first quarter. Consistently total capital adequacy ratio is 2 at 12.6%, equivalent to a growth of 23 basis points over the quarter and 6 basis points over the year.

Speaker Change #194: Is that a problem for funding cost in Colombia at some point I know it probably varies will be they are too small, but like shrinking 235 years from now how do you see players offering of both it makes them much raised some liabilities in fact, he did that the dynamics like on competition for the industry, because maybe it's not a direct impact.

Speaker Change #195: For Bancolombia, but some peers off you start offering higher you'd subtract deposits and you know like some bad things.

Speaker Change #196: Industry funding cost moves up so not a question for the courts are both more you know how you see players offering yields above benchmark rates and how this can get tripped or your funding costs. Thank you.

Juan Carlos Mora: With these, I will hand over the presentation back to Juan Carlos for the final remarks on Carlos. Thank you, Mauricio. Please proceed to slide 16. As a part of our business with 4G, we have successfully originated 21 trillion Colombian pesos during 2024, contributing to a cumulative total of 162 trillion pesos since the year 2020. In our commitment to environmental matters, we have fired out climate-related assessments with clients in cement, wood, steel, and manufacturing sets. This initiative is aimed at ensuring their clarinet strategies are in alignment with our own.

Speaker Change #197: Yes, you read it definitely compete competition.

Speaker Change #198: It is still for now there are new players that are more active now not as high as you mentioned they are offering.

Yes.

Speaker Change #198: Rates and in their savings accounts.

Speaker Change #199: Hi, one of our advantages. He started we have a lower funding cost and a presence.

In Oh.

Speaker Change #199: All parts of the country. So.

Speaker Change #200: Regarding if that is going to affect.

Speaker Change #200: Yeah.

Speaker Change #200: Oh acquisition in the future definitely with them.

Speaker Change #200: We need.

Speaker Change #200: Need to adjust our of our strategy and our strengths bot.

Speaker Change #200: Oh, yes still.

Speaker Change #201: Got it.

Juan Carlos Mora: We are also proud to announce the release of the fourth edition of our principles for responsible banking report, this publication which has received limited assurance from EWC highlights our dedication for sustainability. Please go to slide 18.

Speaker Change #200: Oh gosh yeah.

Speaker Change #200: Ashish and cashed out on the on our presence in a way through physical channels.

Speaker Change #200: It's also important so.

Speaker Change #200: Overall, we will need to adjust our strategy.

Speaker Change #200: We don't think that is going to affect materially our cost of funds of funds, but we need to keep.

Juan Carlos Mora: Last, I will share our guidance for year in 2024 based on the current data on our updated macroeconomic forecast. Respect, a long growth of 8%, working down in a 4.3% growth from the peso-denominated loans and 7.7% in the dollar-denominated loans. Lean to close around 6.8%, cost of risk between 2.2 and 2.4%, efficiency ratio in the 50% area, ROE between 14% and 15%, and core equity tier 1 between 11 and 11.5%. [inaudible] If you have a question, please press star then one on your touch tone phone. Thank you.

Speaker Change #200: Keep an eye on the development of those competitors and how they behave.

Speaker Change #200: Yeah.

Speaker Change #202: So Florida.

Speaker Change #202: Yeah.

The big players are offering higher.

Speaker Change #203: For high interest rates for its or savings accounts are the new commerce Communist on D. M print, it's maybe not the traditional players.

We will see if we need to adjust.

Speaker Change #203: Little bit the our strategy and at the end if the cost of funds increases that will also.

We will need to see if we are able to transfer that tool to the economy through the interest rate, we charge to our to our customer. So that is something that we need to take and I own an unsafe how how develops and as you said I wouldnt probably.

Speaker Change #203: Hum.

Speaker Change #204: T five by the end of 'twenty five 'twenty six we will see we won't see the effect.

Speaker Change #204: Just trying to get from some competitors.

Speaker Change #206: No Super clear. Thank you very much guys and congrats again, thank you.

Julie: Thank you Julie.

Speaker Change #207: Our next question comes from the line of Brian Flores with Citi. Please proceed with your question.

Brian Flores: Hi, I think Michigan on the quarter I wanted to ask on <unk>.

Ernesto Gavolando: Our first question comes from a line of Ernesto, Gavolando, is Bank of America. Please proceed with your question. Thank you. Hi, good morning, Juan Carlos. Welcome, Maricio and good morning to all your team. Thanks for your opportunity. My first question will be on your name expectations. So you are expecting an interest rate of around 8.75 in 24 and 6% in the next year. So what should we see the means normalizing in the next coming years.

Speaker Change #209: Things, one is maybe and seizing the opportunity of photo opened judy's question.

Speaker Change #210: You can have a very strong franchise in terms of credit. That's why do you have a 30% market share in terms of value of transactions.

Speaker Change #211: I was really was mentioned and you have a new entrants, but it's accelerating in this segment up as you mentioned in the call.

Speaker Change #212: Used to be in a very risky segments in this point in time right. So how.

Speaker Change #213: He is a.

Speaker Change #214: You're restricted in terms of preparing to defend these market share or would you be willing to you know open space in terms of market share using the current market conditions I think maybe just the discussion is more focused on the asset side.

Ernesto Gavolando: My second question is on your effective touch rate. We know this. It came at 20% during the second quarter. So how should we think about the effective touch rate for this in the next year. And the last question is on Nicky. We see you already have an important number of effective clients. So just wondering if you can share a little bit of your recent strategies to monetize those clients. And how do you see Nicky at great even and also well, you can provide some key target ratios for for making in the next years or when do you think you can start providing those indicators.

Speaker Change #214: More than on the funding side.

Judy Cynosure: <unk> covered with Judy Judy Cynosure and then my second question is in your presentation in the first quarter.

Speaker Change #216: You opened the duration of your assets and liabilities and we saw that you have are around.

Speaker Change #217: Around 590 days duration liabilities, which wasn't really reducing around 530 days in assets.

Speaker Change #218: You elaborate a bit on what is it now and where is this.

That's the nature of the mismatch between those.

Speaker Change #219: Also in the second quarter it would be very very helpful.

Speaker Change #220: Thank you.

Speaker Change #220: Yeah.

Speaker Change #220: Brian.

Ernesto Gavolando: Thank you. Thank you, Ernesto. Let me address your questions, your first. I will have a comment on that effective touch rate. And on that, I will ask Maricio to give you more, more color and then I'm going also to answer your question or question or comments about about Nicky.

Brian Flores: I will take your first question.

Brian Flores: I will ask Mauricio to to address your second question.

Yeah.

Mauricio: It's definitely baked that is it.

Mauricio: Landscape is changing in Colombia as I mentioned, there are new players.

Mauricio: Yeah, it's assigned to enter them.

Juan Carlos Mora: So let's start with the name. We know that in Colombia, we have had a monetary policy that is at this moment. But inflation and inflation has been kind of assistant in to go down. So at the end, our name will depend on how the monetary policy will behave. And we are expecting or there are expectations, I want to add additional reviews of the interest rates from the Colombian Central Bank. And due to the inflation news that were released yesterday, probably we will see, and probably the rate will go down around 125 to 150 basis points.

Mauricio: Oh I'm by some market.

Juan Carlos Mora: So with that, we expect our name to be around 6.8 percent by the end of this year, and that will depend mainly on the speed of the transmission of the monetary policy and if the central bank is going to decrease the rate 25 or 50 basis points in each of its millions this year. So for next year, we expect the inflation to keep going down, and still we don't see that the inflation will be in the Bank of the Republic target.

Mauricio: Which is understandable.

Mauricio: What I see is that.

Mauricio: If you if you do the maths.

Mauricio: 13%.

Mauricio: The interest rates on savings accounts with it.

Mauricio: Yes.

Speaker Change #221: Uh huh.

Mauricio: Maximum rate.

Speaker Change #222: Around 29%.

Speaker Change #221: Don you don't have much room there.

Speaker Change #224: It's true.

Speaker Change #224: It take a risk.

Speaker Change #224: So.

Speaker Change #225: What they what could happen to start that's the players are going to try to buy market, but it's not a sustainable.

Speaker Change #224: The strategy.

Speaker Change #224: In terms of.

Speaker Change #224: How.

Speaker Change #226: Got it that's that are.

Speaker Change #224: Less.

Speaker Change #224: So.

Speaker Change #226: We have Oh, sorry.

Speaker Change #228: As you mentioned the strong franchise, we have yeah.

Speaker Change #229: A lot of supply.

Speaker Change #229: The client base, we have a very strong eh.

Speaker Change #229: I'm very wide distribution network.

Speaker Change #230: In terms of branches out in time.

Speaker Change #230: For banking agents.

Speaker Change #230: So we are going to leverage that on the other point that is important and different to other markets.

Speaker Change #231: Besides the maximum in the script that we could charge. It's not there there is a transaction fee in Colombia, which promotes the use of cash.

Speaker Change #231: So that also is something that we need to take into account.

Speaker Change #231: As I mentioned, we need to prepare for different conditions on.

Speaker Change #231: Yeah.

Juan Carlos Mora: So the monetary policy will continue trying to control inflation. So with that, we expect that our name for 2025 will be around 6.5 percent. So that will decrease our net interest income, but also that will be related to the cost of risk we see the results. Regarding your second question, the effective tax rate I'm going to make a comment, and then we'll go back after I answer the your question about 92 to the effective tax rate.

Speaker Change #231: We think that we have all the tools.

To defend our market share and.

Speaker Change #231: And we will need to adjust our strategies.

Speaker Change #232: Guardian are those new completed all of a sudden a new players that are entering into the into the market.

Speaker Change #233: And also could you address the brand's second question. Please.

Brian Flores: Yeah, Hi, Brian.

Brian Flores: Our strategy has been.

Speaker Change #234: Very focused on the deposit mix the two how to keep a low cost funding base.

Speaker Change #235: Based on the positive mix. So as you can see both the interest income from loans and interest.

Juan Carlos Mora: So our expectation is that effective tax rate for the year will be between 26 and 28, and that's in line with our past guidance. The quarter was around 25 percent, and now we should explain that later. Regarding making, making now has more than 20 million clients around 14 percent of them are active customers, and our path to monetization is going well. We are improving or we are in the path to monetization is definitely through credit, and we are monthly by monthly improving our credit performance.

Speaker Change #235: Expenses from the fourth at both of them decrease.

Speaker Change #235: But the interest expense from deposits decreased a little faster.

Speaker Change #236: Defending the NII. So in terms of duration, while we're having is a re pricing strategy for time deposits.

Speaker Change #237: Two thirds of the time deposits have I'm not sure if you will.

Speaker Change #237: One year or less so that that had.

Speaker Change #238: Loves us to reprice our counterparty.

Speaker Change #238: And <unk> savings and checking accounts really healthy growth figures. So all in all we keep on having a low cost of funding, which allows us to have a resilient net interest margin.

Speaker Change #239: Perfect and just a quick follow up so in terms of the magnitude of the sensitivity.

Speaker Change #240: So maybe the debates are known not been disclosed but should we think it's.

Speaker Change #241: A bit more again on the on the positive side of the balance sheet or is it more much now more neutral just to get a big picture of you. Thank you.

Juan Carlos Mora: So that will take a little bit a while. We think that our profitability will be by the end of 25 beginning of 26, but it will depend on how fast we can go on the credit on the great side. We need to be careful, and we will be measuring how the clients are performing. So far, as I mentioned, we are doing well. So those are our pensions. The transactions are there. We have now a lot of information about our clients.

Speaker Change #241: Mauricio could you take that please.

Mauricio: Brian I'm, sorry could you repeat your question please.

Speaker Change #242: Sure sure no worries so basically the second in the fourth quarter and we saw the gap right.

Speaker Change #242: Mhm already contracting I think in the first quarter it was around 50.

Speaker Change #243: 56 days.

Speaker Change #244: Basically on the duration.

Speaker Change #244: I really do like this asset duration.

Speaker Change #244: Gap between assets and liabilities was minus 56 days should we think that the second quarter is this a similar levels since it's closer to zero.

Juan Carlos Mora: They are constructing the prunec, so that's going to help us a lot, knowing the clients and with that, we will be able to offer that credit line. Luis, let's go back to the second question about effective tax rate. Yeah, hi Ernesto. To understand the tax rate we use for the second quarter, it's important to understand that the aggregated tax rate among all the different segments, businesses and geographies in which we participate was 25% as Juan Carlos mentioned.

Speaker Change #245: Big picture idea would be helpful.

Speaker Change #245: Okay.

Speaker Change #245: <unk>.

U K.

Speaker Change #245: You can have a projection of a similar duration in terms of assets and liabilities were working very actively with the article Committee.

Speaker Change #245: Trying to to hedge.

Speaker Change #245: The different rates.

Speaker Change #245: But.

Overall, the structure between assets and liability should continue to be very similar to the one we had in the previous quarters.

Speaker Change #245: Shifting gears. Thank you.

Brian Flores: Thank you Brian.

Speaker Change #246: Our next question comes from the line of Andrea Soto with Santander. Please proceed with your question.

Juan Carlos Mora: But there was a one-off reversal of provision for taxes from the previous year. If you normalize that, you get a 25% and that's why it was 20% and the guidance should continue to be between 26 and 28% for this year and the coming year. Excellent. Thank you so much. Just to follow up in terms of your new expectation. So in these first half, I think means we're at around 7.1% and you're expecting that for the full year or in the second half, the new should be going to 6.8.

Andrea Soto: Good morning, Modi show up on Carlos answering part of the presentation I have a question regarding.

Speaker Change #248: The numbers that you are commenting on the 275 outlook.

Speaker Change #249: And margins are around a six 5% so that would imply.

Speaker Change #250: Implied a 30 basis points compression versus the one that you are expecting for 2000 unemployed in Florida and you are guiding for a cost of raise that is 20 basis points below the range that where you are providing for 2024 with that.

Speaker Change #251: We watch them some ROE compression next year I would like to confirm that that's your view or you are expecting some efficiency improvement to offset the compression on and if you can give us what is your.

Juan Carlos Mora: So that will be in pressure of 30 basis points for this year. And then for next year, you're saying it to be around 6.6% so that will be only in pressure of 20 basis points. So I would like to double check these numbers with you. Marisa, could you please take a next question? Ernesto, you need to understand the sensitivity that we have in the net interest margin to the movement in the ripple rate.

Speaker Change #251: Or do you mean or the outlook for Aro <unk> next year.

Andreas: Thank you Andreas.

Speaker Change #254: As you mentioned.

Speaker Change #255: Our guidance for 2025, because I've been at six 5% and.

Juan Carlos Mora: So for every 100 basis points decrease in the ripple rate, we would have an impact of 10 basis points in the net interest margin. So if we load the pen on the velocity of the decrease in interest rates from the central bank, it would make sense to look at the second half at 6.8% and according to a velocity, you may see that interest margin moving from 6.8 to the 6.5% area during 2025. But it won't be from the beginning of the year. It would depend on the velocity of the central bank to the increase in interest rates. Okay, thank you very much. Thank you, Ernesto.

Speaker Change #254: Yeah.

Speaker Change #256: That's because interest rates will go down.

Speaker Change #254: Yeah.

Speaker Change #254: Also.

Speaker Change #254: As I mentioned in my previous answer.

Speaker Change #254: That's viable.

Speaker Change #254: In implementing this margin on the cost of risk will be it will be key so what we expect is a lower.

Speaker Change #254: Lower cost of risk between two and 2.4.

Speaker Change #257: 2% I'm sorry, yeah.

Ogden: We thought we our expectations was Ogden name.

Speaker Change #259: Yeah, Indeed, 14% area, we would expect some efficiency.

Speaker Change #260: Since he's in terms of expenses operating expenses.

Speaker Change #259: Yeah.

Speaker Change #259: We.

Speaker Change #259: We expect to have less pressure from from inflation.

Speaker Change #259: During 2025 so are.

With all of that.

Speaker Change #259: Our our expectations of new news around 14%.

Speaker Change #259: Kind of two five times on 14 per cent for 2025 countries.

Carlos: That's very clear and Carlos.

Speaker Change #262: Swimming, meaning your cultural Reis expectations.

Detail LaBarda: Our next question comes to line of detail in LaBarda with Golden Sacks. Please receive it with your question.

Speaker Change #263: Especially really for this year your guidance implies for the second half of the year you are going to be at around two points to two 6%.

Detail LaBarda: Hi, good morning, everyone. Thank you for the call and taking my question. My question is on your provisioning. We saw provisions increased in the quarter, although asset quality looked better, the tone on the call in general sounds a bit more optimistic and you did lower the guidance a little bit on the cost of risk. So just to think about, once you understand that they increased in the quarter a little bit more specifically given the somewhat better trends overall that you're seeing and thinking maybe a little bit more longer term, you know, you're still well above your historical cost of risk. Do you think you can get back to those levels where you expect a better GDP growth next year? How do you think that cost of risk and continue to evolve into 2025? Thank you.

Speaker Change #264: When I when I look at your number in the second quarter. Excluding the provision releases that you guys come back did a causal races is significantly higher than that level up to almost 2.9%. So how confident are you on these oh are we.

Speaker Change #265: Cost of risk improvement in the second half of the year and if you can comment we have discuss a bit about the performance in Colombia, but we see a continued deterioration in Panama do you expect this performance to continue and what would've been the drivers for the Panama deterioration.

Andreas: Yes Andreas.

Juan Carlos Mora: If you compare a second quarter with the first quarter, you see some additional cost of risk, but the overall, and that's because the first quarter of the year was abnormal low. What we see is a trend of better as a quality and the behavior in the second quarter was better than in the first quarter. Now that's why we are, our guidance is for course of risk for the end of the year, it's between 2.2 and 2.4 and previous guidance was 2.5.

If you see the behavior of D N.

Speaker Change #265: The second quarter.

Andreas: So.

Speaker Change #266: Provisions in terms of.

Andreas: Yeah.

Andreas: Oh.

Andreas: Yeah.

Andreas: Loan book performed in General we see an.

Andreas: And improvement.

Andreas: Yeah. It's.

Andreas: More regarding that.

Andreas: On top of a specific situation for the quarter, if you normalize the cost of risk for the qualities coupons.

Speaker Change #268: Yeah, we've not.

Speaker Change #268: And their behavior behavior that we have seen it.

Speaker Change #268: And the different books, we could expect a lower and lower.

Speaker Change #268: Plus the fleets so yeah.

Juan Carlos Mora: So what we have seen is a better behavior on the consumer loans, some deterioration on SMEs, but all on all we expect an improvement on cost of risk for the next of the year. And regarding your question about 2025, we expect a better performance in terms of GDP. On top of that, we all suspect a better cost of risk and a more normalized as you mentioned. In the 2025 to be between 2.2, which is towards a normalized cost of risk.

So your question, Yes, we are we are expecting an improvement.

Speaker Change #268: And the second in the second semester or that's because we have seen a better hmm.

Speaker Change #268: Peter.

Peter: Four months on the Colombian economy that we were expecting at the beginning of the year, even even after the first quarter.

Juan Carlos Mora: Okay, no, that's very clear. Thank you.

Speaker Change #268: Yeah.

Speaker Change #270: Regarding your second part or the second part of your question.

Speaker Change #268: Yeah.

Speaker Change #271: Panama and yeah, we see a higher.

Speaker Change #268: And.

Speaker Change #268: Cost of risk in Panama.

Speaker Change #268: Yeah.

Speaker Change #268: But yeah.

Speaker Change #268: Okay.

Speaker Change #268: And that's mainly on the consumer side.

Speaker Change #268: We don't expect that the additional.

Speaker Change #268: Deterioration bodies going to impact the results of all of the.

Speaker Change #268: Overall, so we don't need it.

Speaker Change #272: An additional.

Speaker Change #272: The level of deterioration, but it's going to continue at similar levels.

Uri Fernandez: Our next question comes from a line of Uri Fernandez with JP Morgan. Please increase this a little bit. But when you look to the metrics and when you look to the first half, like you had almost sitting in the first quarter, these are we was higher and there were maybe some one-time events on impairments. My question is can we see higher are we or is this I don't know tax rate normalization ahead we or margin pressure.

Speaker Change #272: Because of that.

Speaker Change #272: <unk> four four hmm.

Speaker Change #268: I need to smoke.

Speaker Change #268: It will be a.

Speaker Change #268: Below 10%.

Speaker Change #268: For the year.

Speaker Change #268: But we expect.

Speaker Change #268: Yeah.

Speaker Change #268: We expect that yeah.

Speaker Change #268: That's the situation for Panama and books during 2025 remember that.

Speaker Change #268: Yeah.

Speaker Change #273: On my watch, especially affected.

Speaker Change #268: Bye.

Speaker Change #268: By the pandemic on some measures.

Uri Fernandez: I'm just trying to understand it will not be true conservatives on the RWE here and what can maybe make the RWE to be within your guidance. If it taxes, it's high expenses, if it's the margin normalization, just trying to get some color on this. Thank you. Thank you, Uri.

Speaker Change #268: Coming from.

Speaker Change #274: Let's see.

Speaker Change #268: The supervisor regarding statements and still we are seeing some effects.

Speaker Change #276: On on that Oh, particularly on the on the on the on the consumer side.

Speaker Change #268: Site on some mortgages, but we expect that to improve.

Juan Carlos Mora: The first semester was a good semester. Actually, it was better if we were to speak, regarding the second semester on what respect by year end, and if we will be able to deliver a higher alloy, that basically will depend on, and this is quite obvious on two main variables. The speed of interest rate changes, or as I mentioned, if the central bank will reduce 27, 25 or 50 basis points and the effect on our mean.

Speaker Change #268: In 2025.

Speaker Change #276: Thank you won't get it wasn't maybe as a follow up to that you have presented.

Speaker Change #277: And these are release, the tangible ROE, which is significantly higher than you reported that ROI and a lot of that is affected by the goodwill from the Panamax position. How have you guys considered do AR write offs.

Juan Carlos Mora: So that 6.8% mean suppose a more aggressive reduction on interest rates. So there could be an upside possibility. And the other main variable is cost of risk, and we are seeing the cost of risk, including. So to your question, our past guidance of our was around 14%, now we are saying 14, 15%. And it is an upside possibility regarding mean, it will depend on how at the end the interest rates will behave, and the economy and economy will perform. We had in the couple of past months a good surprise, positive surprise regarding economic activity in Colombia. If that continues, I think we could deliver a little bit higher alloy.

Speaker Change #277: Oh, that's a goodwill that you still have it on your balance sheet.

Speaker Change #277: Yeah.

Speaker Change #279: We always are exploring different alternatives and options.

Speaker Change #268: Yeah.

Speaker Change #268: So far we are not we don't have any that she should be.

Speaker Change #268: But it's always a we always have in mind.

Speaker Change #268: Look for opportunities, but as of today, we don't have any any decision regarding regarding that goodwill on pets.

Speaker Change #268: Thank you Juan Carlos and congratulations on the results.

Andres: Thank you Andres.

Speaker Change #281: Our next question comes from the line of Nicolas Riva with Bank of America. Please proceed with your question.

Nicolas Riva: Thanks, very much Hong Carlos on Moody's show for the chance to ask a question. So it looks like I've said before I think it's very useful.

Nicolas Riva: Bolt ons like we do and I, just I'm kind of asking these calls so we said I have two questions on your tier two capital I'm. The first one looking at the change quarter over quarter. So it declined by $226 million you did the buyback on the 27, she bought back $283 million I believe the computer 80 per cent of tier two.

Speaker Change #285: Speed also that would explain the buyback over the 27 months would explain the $226 million decline in your tier two however, it looks like the Judean included the 800 million dollar rates that you'd either by issuing the 2034. So it wasn't a confirmed data.

Juan Carlos Mora: So super clear, Mauricio, if I may accept one more strategic structural, like one of the good things about Colombia is the funding, right? Like the funding cost and the franchise. And now in Colombia, we have the newcomers, and we discuss a lot of new banking here, and they are offering 13% use on the country. Is there a problem for funding costs in Colombia at some point? I know probably there needs to be, they are too small, but like thinking true, three or five years from now, how do you see players offering above the benchmark rates and liabilities impacting the dynamics like on competition for the industry?

Speaker Change #284: Do you kind of mean under our.

Speaker Change #285: <unk> capital has not been included in your capital ratio at the end of June I mean that Okay. You started would increase I believe your capital ratio by 110 basis points, which means startup pro forma your total capital would be 13, seven rather than 12 six if you can confirm that that's my first question.

Speaker Change #287: And then my second question you kept the call option on the 29th.

Speaker Change #288: In in December.

Don Carson: This is Don Carson that'd be made yet, but if you can maybe just talk about your thoughts are regarding that that Colorado shouldn't I would've assumed ida calling the 29th without any capital replacement is not a peaceful possibility because in that case, you would lose I believe 80 basis points of capital, which is all the capital you raised.

Juan Carlos Mora: Because maybe it's not a direct impact for Colombia, but some peers of you will start offering higher use, subtract deposits, and you know, like in the end, the entire industry funding cost moves up. So not a question for the quarter, but more, you know, how you see players often use above the benchmark rates and how this can be a threat for your funding cost. Thank you. Yes, Yuri, definitely competition is offered now.

Speaker Change #289: By issuing the 2034 net of buying back some of the 27th but again if you can discuss your thoughts are regarding capital ratios now.

Juan Carlos Mora: There are new players that are more active now, as you mentioned. They are offering rates in the savings accounts that are high. One of our advantages is that we have a lower funding cost and a presence in all parts of the country. So, regarding it, that is going to affect, our position in the future. Definitely we need to adjust our strategy and our strengths, but the audience still has it seen for the cash, cash in and cash out and our presence in with professional channels.

Speaker Change #290: Clothing, the issuance of about 2030 fours.

Juan Carlos Mora: It's also important. So overall, we will need to adjust our strategy. We don't think that is going to affect materially our cost of funds, but we need to keep an eye on the development of those competitors and how they behave. So far, the players that are offering a higher or high interest rates for savings account are the newcomers, comments and the Pintex, maybe not the traditional players. We will see if we need to adjust a little bit the strategy.

Speaker Change #290: And.

Speaker Change #289: Early thoughts regarding the collection of the 2019 be summer. Thanks.

Speaker Change #289: Yeah. Thank you Nicolas for for your questions I'm going to ask Mauricio to take them.

Nicholas: Hi, Nicholas let.

Mauricio: Let me take the first question.

Mauricio: You are right, we did an account.

Mauricio: In the solvency ratio for the second quarter, we didn't account for the 800 million bond issuance and that's because by the close of the second quarter. We Havent received the approval of the superintendency of Colombia to get capital creates for debt issuance.

Mauricio: But we already feed we did we did receive it on July and the pro forma figure is exactly what you just mentioned it would have added 117 basis points. So if you normalize that our solvency ratio would have been a 13.

Mauricio: Seven and not bid 12, 26% does that do you see and we're gonna be able to see the updated figures for the third quarter.

Mauricio: So.

Speaker Change #295: For the second question.

Mauricio: <unk>.

Speaker Change #295: You need to take into account the 27th.

Speaker Change #295: Are decreasing their cocktail of credit so but might be in each year as they kept on credit it would amount to 56%.

Mauricio: So according to that.

Speaker Change #295: We're going to have an open window to make up our mind in there in terms of the call option.

Speaker Change #295: But.

Mauricio: It wont be framed thing from the previous situation in which we called the bonds is that markets are open.

Juan Carlos Mora: And at the end, if the cost of funds increases, that will also, we will need to see if we are able to transfer that to the economy through the interest rate we charge to our customers. So that is something that we need to keep an eye on and see how develops. And as you said, that will probably come in 25 by the end of 25, or 26. We will see the effect of that strategy from some competitors. No, super clear.

Mauricio: Didn't niche end markets are open where.

Mauricio: Able to replace capital if we wanted to but the other thing to take into account is that our long term guidance for tier two is between one five and 2% in tier two and as of today.

Mauricio: We just mentioned a tier two after accounting for the recent issuance.

Mauricio: From 1.6.

Juan Carlos Mora: Thank you very much guys and congratulations. Thank you.

Mauricio: Two 2.7% so that can give you a big feature of what.

Ryan Flores: Our next question comes from Ryan Flores with City. Please proceed with your question. Hi, I think we are going to measure some on the quarter. One of the last two things. One is maybe seizing the opportunity. I thought I would open Judy's question. You have a very strong franchise in terms of credit. That's right. You have a 30% market share in terms of value of transactions. And as I was really was mentioning, you have a new entrance that is accelerating in this segment up.

Mauricio: Where we're spending in terms of the corruption coming due in the next few months.

Speaker Change #300: Perfect. Thanks for that maybe just one follow up so your total capital we said to iPhone, 6% at the end of June it's going to increase to 13, 7%.

Speaker Change #297: My including the 800 million barrels from the 2030 fours, but then you're going to have the 20% of face out of the 27 minutes by the end of the year do you feel about target because the minimum capital requirement totaled <unk> 11 on a person right. So that means that pro forma with a 2034, she would be around 200 basis points above the minimum requirement do you have a target for the total.

Ryan Flores: As you mentioned in the call appears to be in a very risky segment in this point in time. Right. So how is your strategy in terms of preparing to defend this market share? Or would you be willing to open space in terms of market share given the current market conditions? I think maybe your discussion is more focused on the asset side more than on the funding side that you covered with Judy's answer.

Speaker Change #301: The total capital or for the buffer over the minimum requirement.

Speaker Change #303: Our our target Hot Hustle always been around 11, five in tier one, but hey, you need to take into account that that that's our target for year end as we have a seasonality in terms of tier one.

Ryan Flores: And then my second question is in your presentation in the first quarter, do you open the duration of your assets and our abilities? And we saw that you have around 590 days duration in the assets. Can you elaborate a bit on where is it now? And where is this gap to meet you? The mismatch between those. As of the second quarter, it will be very, very helpful. Thank you. Thank you Brian.

Speaker Change #297: After.

Speaker Change #297: Declaring the dividend payment that we always do during the first quarter capital decreases as we are indeed, a in the first quarter of this year and after that we organically accumulate capital with your retained earnings as you can see in a very positive manner for the second quarter. So you're.

Speaker Change #297: See tier one.

Speaker Change #297: Increasing above 11, 5% by year end and if that's the case.

Speaker Change #305: Gonna be okay.

Ryan Flores: I will take you first question and I will ask Mauricio to address your second question. It's definitely the competitive landscape is changing in Colombia as I mentioned, there are new players trying to enter and buy some market, which is understandable. What I see is that if you do the math, 30% integrates on seconds accounts with maximum rate around 29%, we don't have much room there to take risk. So what could happen is that players are going to try to buy market, but it's not a sustainable strategy in terms of how that lasts.

Speaker Change #302: Especially in according with the loan growth we're seeing so.

Speaker Change #302: We believe we're very confident in terms of Scottsdale, both tier one and tier two.

Speaker Change #304: Okay. So roughly so you're leaving on the hopper send roughly targeted for C. T. One plus 150 200 basis points tier one. So you have a target for total capital would be sort of 10 to 13 and a half kind of over the cycle.

Speaker Change #304: Roughly would you say roughly like 150 basis points of our minimum requirements. Okay. Thanks very much Marty.

Speaker Change #304: Thank you thank you Nicholas.

Kitchen thing: Our next question comes from the line of Kitchen thing with HSBC. Please proceed with your question.

Speaker Change #308: Oh, hi, Thank you for taking my question. So my conquer trumps quantity.

Speaker Change #305: The answer to my question.

Speaker Change #307: So the first one was on <unk> and payments constitute <unk>. So can you elaborate why the bank decided to defer it daily losses on CV and what is your outlook on the Rimini Street in New York.

Speaker Change #307: For Ya.

Speaker Change #311: And second I just wanted to get your sense on liquidity how has been the banks all of a sudden axa assistance liquidity position since the issues faced last year.

Speaker Change #310: Can you just give me the numbers like what is your ambition.

Ryan Flores: So we have, as you mentioned, a strong franchise, we have people supply a client base, we have a very strong and very wide distribution network in terms of branches and in terms of banking agents. And so we are going to leverage that and the other point that is important and different to other markets, besides the maximum interest rate that we could charge is that there is a transaction fee in Colombia which promotes the use of cash.

Speaker Change #307: These are great people.

Speaker Change #307: Thank you.

Speaker Change #310: Yeah. Thank.

Speaker Change #307: Thank you.

Speaker Change #310: If I understand your question I think.

Speaker Change #307: It's.

Speaker Change #312: And you're correct me, it's about us it's about the joint venture are impediments, it's stuck correct difficult one about liquidity I am correct.

Speaker Change #307: At this time.

Speaker Change #311: Okay. Thank you very much.

Speaker Change #307: Yeah.

Speaker Change #307: Regarding your first question.

Speaker Change #312: We have an impairment allowance.

Speaker Change #307: $75 million regarding our investment in Fuzhou.

Speaker Change #312: As you May know two valley its company about half sweep.

Ryan Flores: So that also is something that we need to take into account. As I mentioned, we need to prepare for different conditions and we think that we have all the tools to defend our market share. And we need to adjust our strategies regarding those new competitors and new players that are entering into the market. So now we could you address Brian's second question please. Yeah, hi Brian, and our strategy has been very focused on the deposit mix to how to keep a low cost of funding based on the deposit mix.

Speaker Change #307: The exit of a retailer.

Speaker Change #312: It's a joint venture.

Speaker Change #307: <unk> and <unk>.

Speaker Change #307: Business, particularly in Colombia has been affected.

Speaker Change #307: Because of the behavior of interest rates so are.

Speaker Change #315: We have an impairment as I mentioned close to $75 million during the quarter.

Speaker Change #315: Regarding things like we bought it.

Speaker Change #315: And that investment, but that's a joint venture that's a jealous.

Speaker Change #315: Just.

Ryan Flores: So as you can see both the interest income from loans and interest expenses from the deposit both of them decrease, but the interest expense from the deposit decreased a little faster and defending the NII. So in terms of duration, what we're having is reprising strategy for time deposits as two thirds of the time deposits have a maturity of one year or less. So that allows us to reprise our time deposits, and keeping savings and checking accounts with healthy growth figures.

Speaker Change #315: Yeah.

For the fourth.

Speaker Change #315: One off for this for this quarter are we don't expect.

Speaker Change #315: In terms of valuation additional.

Alicia: The effects of that business and so that's that's regarding the in thing Thurman I would pass your second question to whom Alicia.

In terms of liquidity I would I.

Alicia: I would say that we are very comfortable our ratios each around continues to be around 115.

Alicia: <unk> in both U S dollars in Colombian pesos, where we're very comfortable in terms of liquidity.

Alicia: And our funding strategy.

Speaker Change #322: We are a reflective of that.

Alicia: Okay.

Speaker Change #322: Thank you.

Alicia: Yeah.

Alicia: Thank you.

Speaker Change #323: Our next question comes from the line of Julian It's equally Desert D&O. Please proceed with your question.

Ryan Flores: So all in all, we keep on having a low cost of funding, which allows us to have a resilient net interest margin. Perfect. I'm just a quick follow-up, so in terms of the margin of business activity, I know maybe the days are now not being disclosed, but we think it's a bit more on the passing side of the balance sheet, or we see more match now, more neutral, just to get a big picture idea.

Speaker Change #323: Hi, everyone and thank you for my question. My question is regarding everywhere I loved.

Julian: Cost of risk I would like to understand why and then you have the expectation I mean, I know you already mentioned some.

Speaker Change #324: Explanations of the redemption of cost of risk, but I would like to understand why these redemption, we have seen I'm not saying of the Smes deterioration during the quarter and so I would like to understand why are you reducing cost.

And what is the expectation of deterioration or franchisees.

Ryan Flores: Thank you. Marisa, could you take that, sis? Ryan, I'm sorry, could you repeat your question, please? Sure, Marisa, no worries. So basically, in the fourth quarter, we saw the gap already contracting. I think in the first quarter, it was around 56 days negative, basically on the duration of liability, right, that this asset duration gap between assets and liability was minus 56 days. Should we think that as of the second quarter, is this a similar level, since it was zero, just a big picture idea with the shelter?

Speaker Change #325: The second part of the year. Thank you.

Speaker Change #327: Yeah. Thank you for your question.

Speaker Change #327: Yeah.

Speaker Change #329: Cost of risk last week has seen its a better performance on the.

Speaker Change #329: Retail parts of the business consumer loans are behaving better C suite starting to change our.

Speaker Change #329: Policies.

Speaker Change #329: Last year at the <unk>.

Speaker Change #329: And of the third quarter.

Speaker Change #329: So we see the effect now that they had thought.

Vintages, obviously they've been at.

Speaker Change #329: Better.

Speaker Change #329: Regarding <unk> and we mentioned that we have seen some deterioration on this amused by let me remind you of that.

Ryan Flores: Okay, thank you. You can have a projection of a similar duration in terms of assets and liabilities. We are working very actively with the alcohol committee, trying to hedge the different rates, but overall, the structure between assets and liability should continue to be very similar to the one we had in the previous quarter. Thank you, thank you. Thank you, Brian.

Speaker Change #329: So news at around 11%.

Speaker Change #329: Our.

Speaker Change #331: Total loan book, so that part of the business. It's it's it's limited on the effect on the total cost of risk is no doubt that.

Speaker Change #332: Portland Salt.

Speaker Change #332: Although we see a better performance on the retail business, we have seen some deterioration in some of these bodies are a.

Speaker Change #332: Relatively small part of our portfolio.

Andrew Soto: Our next question comes from a line of Andrew Soto with Centender.

Speaker Change #332: And we had also seen a good performance in terms of some corporates.

Andrew Soto: Please receive a dear question. Good morning, Mauricio Juan Carlos, thank you for the presentation. I have a question regarding the numbers that you are commenting on the 2025 outlook. You have mentioned margins around 6.5%, so that will imply 30 basis points compression versus the one that you are expecting for 2024, and you are guiding for a cost of raise that is 20 basis points below the range that you are providing for 2024.

Speaker Change #332: The economy is performing better.

In the last Ah.

Speaker Change #332: Quota on there are some expectations that that continues so with all of that that's why we expect that.

Speaker Change #332: Our cost of risk should be around two 4% to 32, 4% from there.

Speaker Change #333: Okay, and do something to watch and jewelry in the report.

Speaker Change #334: U S News yesterday, you mentioned that the construction on poker segment.

Degeneration break salmon like you are seeing something especially in those sectors or are these just like it did come on behavior of the.

Andrew Soto: With that, we will assume some early compression next year. I would like to confirm if that's your view or you are expecting some efficiency improvement to offset that early compression, and if you can give us what is your preliminary outlook for early next year. Thank you, Andreas. As you mentioned, our guidance for 20, 25 results in minimum 6.5%, and that's because the interest rates will go down. Also, as I mentioned in the previous answer, that viable, meaning maintaining the margin and the cost of risk will be key.

Speaker Change #335: St. John's doing these parts of the year.

Speaker Change #336: Yeah, we mentioned that we have seen some deterioration on construction on cause sector almost so additional.

Speaker Change #336: Deterioration in the retail business.

Speaker Change #336: But that said they are behaving.

Speaker Change #337: Aligned with our expectations for the particularly on the construction segment, we have been working with that.

Speaker Change #337: Clients now for four.

Speaker Change #337: Almost nine months.

Speaker Change #338: Helping them.

Speaker Change #339: So we think that we can manage that deterioration Ah Ah Ah and we also have included some prohibition field ready for those for those segments in terms of the whole sector.

Andrew Soto: So what we expect is a lower cost of risk between 2.2 percent. And I'm sorry, with that, our expectations with Arden Niem are in the 14 percent area. We will expect some efficiency, efficiency is in terms of expenses of operating expenses. We expect to have less pressure from inflation during 2025. So with all of that, our expectations of Niem is around 14 percent between 10.5 and 14 percent for 20.5. Andres. That was very clear, Juan Carlos.

Speaker Change #339: Our precision it's limited there.

Speaker Change #339: So we don't we don't see a peak became part of the sector.

Speaker Change #339: On the retail businesses, we see some deterioration bar.

Speaker Change #339: The second semester, it's Uh huh.

Speaker Change #339: Firms are better for that sector.

Speaker Change #339: We will see some deterioration, but no smoking that affects materially our our projections in terms of cost of risk.

Speaker Change #339: Does that complete your question.

Andrew Soto: And so many in your cost of risk expectations, especially for this year, your guidance implies that for the second half of the year, you are going to be at around 2.2 to 2.6 percent. When I look at your number in the second quarter, excluding the provision releases that you guys conducted, cost of risk is significantly higher than that level at almost 2.9 percent. So how confident are you on this early cost of risk improvement in the second half of the year?

Speaker Change #340: Yes. Thank you.

Speaker Change #340: Yep.

William: Thank you William.

Speaker Change #342: Thank you we have no further questions at this time I now would now like to turn the floor back over to Mr. Juan Carlos Mora for closing comments.

Speaker Change #343: Thank you everybody for participating.

Participating in our second quarter results conference call.

As we mentioned.

Speaker Change #344: We had a good first semester.

Speaker Change #345: We will have some challenges ahead for the second quarter, but we expect that our behaviour or do you take care of the economy.

Andrew Soto: And if you can comment, we have discussed a bit about the performance in Colombia, but we see that continuity duration in Panama, you expect this performance to continue. And what are being the drivers for the Panama deterioration? Yes, Andres. If you see the behavior of the second quarter in terms of provisions, in terms of how the long book to form in general, we see an improvement. It's, it's more regarding the specific situation for the quarter.

Speaker Change #345: Bancolombia has behavior will be in line with our with our expectations.

Speaker Change #345: Either.

Speaker Change #345: What we were discussing do disclose so again. Thank you. Thank you very much for participating in this conference call and we hope to see you in our third quarter conference call results.

Speaker Change #345: Good day everybody.

Speaker Change #346: This concludes today's conference. Thank you for participating you may now disconnect.

Andrew Soto: If you're not familiar with the cost of risk, for the quarter is 2.5 percent. With that and the behavior that we are seeing in the different books, we could expect a lower cost of risk. So, as of your question, yes, we are, we are expecting an improvement in the second, in the second semester, that's because we have seen a better performance on the Colombian economy that we were expecting at the beginning of the year, even after the first quarter, who is asking the second part of your question, Panama, yeah, we see a higher cost of risk in Panama, but, and that's mainly on consumer side.

Andrew Soto: We don't expect an additional deterioration, but it's going to impact the results of the year overall. So we don't expect an additional level of deterioration, but it's going to continue at similar levels and because of that, R.E, for management will be below 10% for the year. But we expect that that situation for Panama in books during 2025. Remember that Panama was specially affected by the pandemic and some measures coming from the supervisor with our payments. And still we have seen some effects on that, particularly on the consumer side and some mortgages, but we expect that to improve in 2025.

Nicolas Riva: Thank you, Carlos, and maybe as a follow-up to that, you have presented in this release the tangible R.E., which is significantly higher than the reported R.E., and a lot of that is affected by the goodwill from the Panama acquisition. Have you guys considered to write off of that goodwill that you still have on your balance sheet? We always are exploring different alternatives and options. So far, we don't have the decision, but it's always that we always have in mind and look for opportunities. But as of today, we don't have any decision regarding that goodwill address. Thank you, Carlos, and congratulations on the results. Thank you, Andreas.

Mauricio Botero: Our next question comes from a line of Nicolas Riva with Bank of America. Please receive with your question. Thanks very much, Carlos, and Mauricio for the chance to ask questions. As I have said before, I think it's very useful that both credit analysts and equity analysts can ask in this call. So with that, I have two questions on your tier two capital. The first one looking at the change quarter on quarter.

Mauricio Botero: So it declined by $226 million. You did the buy back on the 27th. You bought back $283 million. I believe they compute 80% as tier two capital. So that would explain the buy back of the 27th would explain the $26 million decline in your tier two. However, it looks like you didn't include the $800 million race that you did by issuing the 2034. So I want to confirm that. The 800 million dollar new tier 2 capital has not been included in your capital ratios at the end of June.

Mauricio Botero: And in that case, that will increase. I believe your capital ratios by 110 basis points, which means that, for a form, your total capital would be 13.7, rather than 12.6 if you can confirm that. That's my first question. And then my second question, you have the call option on the 29th in December. I know that the decision has not been made yet. But if you can maybe just talk about your thoughts regarding that call option, I would assume that calling the 29th without any capital replacement is not a fiscal possibility because in that case, you would lose.

Mauricio Botero: I believe 80 basis points of capital, which is all the capital you raised by issuing the 2034s net of buying back some of the 27th. But again, if you can discuss your thoughts regarding capital ratios now, including the issuance of the 2034s, and any early thoughts regarding the call option on the 29th in December. Thanks. Thank you, Nicolas, for your questions. I'm going to ask Mauricio to take them. Hi, Nicolas. Let me take the first question.

Mauricio Botero: You are right. We didn't account in the sovereignty ratio for the second quarter. We didn't account for the 800 million bond issues. And that's because by the close of the second quarter, we hadn't received the approval of the superintendency of Colombia to get capital credit for that issuance. But we already did. We did receive it on July. And the performance figure is exactly what you just mentioned. It would have added 117 basis points.

Mauricio Botero: So if you normalize that, our sovereignty ratio would have been 13.7, and not the 12.6% that you see. And we're going to be able to see the updated figures for the third quarter. So for the second question, you need to take into account that the 27th are decreasing their capital credit. So by the end of this year, the capital credit would amount to 56%. So according to that, we're going to have an open window to make our mind in terms of the call options.

Mauricio Botero: But one different thing from the previous situation in which we didn't call the bond is that markets are open, which is a bit of an issue. Markets are open. We're able to replace capital if we want to. But the other thing to take into account is that our long-term guidance for tier 2 is between 1.5 and 2% in tier 2. And as of today, as we just mentioned, tier 2 after accounting for the recent issuance moved from 1.6 to 2.7%.

Mauricio Botero: So that can give you a big picture of where we are extending in terms of the call options coming in the next few Thanks for that, Mauricio. Maybe just one follow-up. So your total capital we said 12.6% at the end of June, it's going to increase to 13.7% by including the $800 million on the 2034s, but then you're going to have the 20% faceout of the 27s by the end of the year.

Mauricio Botero: Do you have a target because so the minimum capital requirement total is 11.5%, right? So that means that the performance with the 2034s, you would be around 200 basis points about the minimum requirement. Do you have a target for the total capital or for the buffer over the minimum requirements? Our target has always been around 11.5 in tier one, but you need to take into account that that's our target for year end.

Mauricio Botero: As we have accessibility in terms of tier one, after declaring the dividend payment that will always do during the first quarter capital decreases as we did in the first quarter of this year. And after that we organically accumulate capital with the retain earnings as you can see in a very positive manner for the second quarter. So you're going to see tier one increasing above 11.5% by year end, and if that's the case, we're going to be okay, especially according with the long growth we're seeing.

Mauricio Botero: So we believe we're very confident in terms of capital both tier one and tier two. Okay, so roughly, so 11.5% roughly target for city one plus 150 to 100 basis points tier one. So your target for total capital would be 13 to 13.5 kind of over the cycle roughly, which is roughly like a 50 basis points over minimum requirements. Okay, thanks very much Mauricio. Thank you.

Teaching Thing: Thank you Nicolas. Our next question comes from a line of teaching thing with HSBC. Please receive with your question.

Teaching Thing: Hi, thank you for making my question. So my call cut clause for quality 50 have already answered my question. So the first one was on impairment cost with JV inclusive. So can you elaborate why the bank decided to decode impairment losses on JV? And what is your outlook on the remaining lessons in your portfolio? And second, I just wanted to give you a sense on liquidity. How has been the banks or the financial assistance liquidity position devolved since the issues face last year?

Teaching Thing: I can you just give me the numbers like what is your answer ratio currently versus last year? Thank you. If I understand your question, right? It's correct me. It's about the joint venture impairment. It's that correct and then difficult one about liquidity. I am correct. Okay, thank you very much.

Juan Carlos Mora: Okay, regarding your first question, we have an impairment of around 75 million dollars regarding our investment in Pugia. As you may know, Pugia is company that we have with Exit or Retailer, it's a joint venture and that business, particularly in Colombia, has been affected because of the able of interest rates. So we have an internment as I mentioned close to 75 million dollars during the quarter regarding that investment. But as a joint venture, that's just, that's for one off for this quarter and we don't expect in terms of valuation additional effects of that business. So that's regarding the internment. I would pass your second question to Mauricio.

Mauricio Botero: In terms of liquidity, I would say that we are very comfortable. Our ratio each around continues to be around 115 in both US dollars and Colombian phases, where we're very comfortable in terms of liquidity. And our funding strategies are a reflect of that. Thank you.

Julian Assiq: Our next question comes from a line of Julian Assiq with Dev with the end up. Please proceed with your question.

Juan Carlos Mora: Hi, everyone. I'm going to go to my question. My question is regarding as well as a cost of risk. I would like to understand why you have this dictation. I know you already mentioned some explanations of the reduction of cost of risk. But I would like to understand why this reduction is what we have seen and that trend of the SME's deterioration during the quarter. So I would like to understand why you reduce the cost of risk estimation and what is the expectation of the variation of SME's for the second part of the year.

Juan Carlos Mora: Thank you. Thank you Julian for your question. And a cost of risk that we have seen is a better performance on retail parts of the business consumer loans are behaving better since we're starting to change our policies at the last year at the end of the fair quarter. So we see the effects now that that advantages are behaving better regarding and we mentioned that we have seen some deterioration on SME's but let me remind you that SMEs are around 11% of our of our total loan book.

Juan Carlos Mora: So that part of the business is, is limited and the effect on the total cost of risk is not that important. So overall, we see a better performance on the retail business. We have seen some deterioration in SME's bodies, a relatively small part of our portfolio. And we are also seeing a good performance in terms of some incorporates. And the economy is performing better in the last quarter. And there are some expectations that continue. So with all of that, that's why we expect that our cost of risk should be around 2.4 percent, 2.3 to 1.4 percent.

Juan Carlos Mora: Okay, I'm just off the low-up. In your report that you released yesterday, you mentioned that the construction and co-curse segment had a deterioration in the corporate segment. Like, you are seeing something especially in those sectors, or it's just like the common behavior of those sectors during this part of the year. Yeah, we mentioned that we have seen some deterioration on construction and health sectors, as also additional deterioration on the retail business and manufacturing.

Juan Carlos Mora: But that's they are behaving aligned with our expectations. So, particularly on the construction segment, we have talked with that client now for almost nine months helping them. So we think that we can manage that deterioration. And we also have included some provisions already for those segments. In terms of the health sector, our exposition is limited there. So we don't see a big impact of the health sector. And on the retail business, we see some deterioration.

Juan Carlos Mora: But as the second semester, it's, it performs better for that sector. We will see some deterioration, but not nothing that affects materially our projections in terms of cost of risk. Does that complete your question? Yeah, thank you. Thank you, Julia. Thank you.

Juan Carlos Mora: We have no further questions at this time. I now would now like to turn the floor back over to Mr. Juan Colors more for closing comments. Thank you, everybody, for participating in our second quarter of results conference call. As we mentioned, we have had a good first semester. We will have some challenges ahead for the second quarter, but we expect that our behavior or the behavior of the economy and ban Colombia's behavior will be aligned with our expectations. And we could deliver what we were discussing during this call. So again, thank you.

Juan Carlos Mora: Thank you very much for participating in this conference call, and we hope to see you in our third quarter conference call results. Have a good day, everybody. This concludes today's conference. Thank you for participating.

Christine: You may now disconnect.