Q2 2026 Grupo Aval Acciones y Valores SA Pfd Earnings Call

August 13, 2026

Speaker #1: Ladies and gentlemen, this is the operator. Today's call is scheduled to begin momentarily. Until that time, your lines will again be placed on music hold.

Operator 2: Ladies and gentlemen, this is the operator. Today's call is scheduled to begin momentarily. Until that time, your lines will again be placed on music hold. Thank you for your patience. Ladies and gentlemen, this is the operator. Today's call is scheduled to begin momentarily. Until that time, your lines will again be placed on music hold. Thank you for your patience. Ladies and gentlemen, this is the operator. Today's call is scheduled to begin momentarily. Until that time, your lines will again be placed on music hold. Thank you for your patience. Ladies and gentlemen, this is the operator. Today's call is scheduled to begin momentarily. Until that time, your lines will again be placed on music hold. Thank you for your patience. Ladies and gentlemen, this is the operator. Today's call is scheduled to begin momentarily. Until that time, your lines will again be placed on music hold.

Speaker #1: Thank you for your patience. Ladies and gentlemen, this is the operator. Today's call is scheduled to begin momentarily. Until that time, your lines will again be placed on music hold.

Operator 2: Thank you for your patience. Ladies and gentlemen, this is the operator. Today's call is scheduled to begin momentarily. Until that time, your lines will again be placed on music hold. Thank you for your patience. Welcome to Grupo Aval's Q2 2026 consolidated results conference call. My name is Regina, and I will be your operator for today's call. Grupo Aval Acciones y Valores S.A., Grupo Aval, is an issuer of securities in Colombia and in the United States SEC. As such, it is subject to compliance with securities regulation in Colombia and applicable US securities regulation. Grupo Aval is also subject to the inspection and supervision of the Financial Superintendence of Colombia as holding company of the Aval financial conglomerate. The consolidated financial information included in this document is presented in accordance with IFRS as currently issued by the International Accounting Standards Board.

Speaker #1: Thank you for your patience. Welcome to Grupo Aval's second quarter 2026 consolidated results conference call. My name is Regina, and I will be your operator for today's call.

Speaker #1: Grupo Aval Acciones y Valores SA Grupo Aval is an issuer of securities in Colombia and in the United States SEC. As such, it is subject to compliance with securities regulation in Colombia and applicable U.S.

Speaker #1: Securities regulation. Grupo Aval is also subject to the inspection and supervision of the Superintendency of Finance as holding company of the Aval Financial Conglomerate.

Speaker #1: The consolidated financial information included in this document is presented in accordance with IFRS as currently issued by the IASB. Details of the calculations of non-IFRS measures, such as ROAA and ROAE, among others, are explained when required in this report.

Operator 2: Details of the calculations of non-IFRS measures, such as ROAA and ROAE, among others, are explained when required in this report. On 27 November 2025, Banco de Bogotá's subsidiary, Multi Financial Holding, Inc., MFG, entered into a share purchase agreement with BAC International Corporation, BIC, a subsidiary of BAC Holding International Corp, for the disposal of 99.57% of the issued and outstanding shares of Multi Financial Group Inc., MFG, the parent company of Multibank, Inc. On 18 March 2026, after obtaining the required regulatory authorizations and fulfilling all agreed conditions precedent, the transaction was completed. For comparability purposes only, we have prepared and present supplemental unaudited pro forma financial information for the periods prior to Q4 2025, which reflects a reclassification of the operations relating to MFG as non-current assets and liabilities held for sale and discontinued operations.

Speaker #1: On November 27, 2025, Banco de Bogotá's subsidiary, Multi Financial Holding, Inc. (MFG), entered into a share purchase agreement with BAC International Corporation (BIC) a subsidiary of BAC Holding International Corp., for the disposal of 99.57% of the issued and outstanding shares of Multi Financial Group, Inc. (MFG), the parent company of Multibank, Inc. On March 18, 2026, after obtaining the required regulatory authorizations and fulfilling all agreed conditions precedent, the transaction was completed.

Speaker #1: For comparability purposes only, we have prepared and present supplemental unaudited pro forma financial information for the periods prior to 4Q25, which reflects the reclassification of the operations relating to MFG as non-current assets and liabilities held for sale and discontinued operations.

Speaker #1: The supplemental unaudited pro forma financial information is not intended to represent, and should not be considered indicative of, the results of operations or financial positions that would have been achieved had the transaction occurred on the dates assumed.

Operator 2: The supplemental unaudited pro forma financial information is not intended to represent and should not be considered indicative of the results of operations or financial position that would have been achieved had the transaction occurred on the dates assumed, nor is it intended to project our results of operations or financial position for any future period or date. The pro forma financial information is unaudited, and the completion of the external audit for the year ended 31 December 2026, may result in adjustments to the unaudited pro forma financial information presented herein. This report includes forward-looking statements. In some cases, you can identify these forward-looking statements by words such as may, will, should, expects, plans, anticipates, believes, estimates, predicts, potential, or continue, or the negative of these, and other comparable words.

Speaker #1: Nor is it intended to project our results of operations or financial position for any future period or date. The pro forma financial information is unaudited, and the completion of the external audit for the year-end of December 31, 2026, may result in adjustments to the unaudited pro forma financial information presented herein.

Speaker #1: This report includes forward-looking statements. In some cases, you can identify these forward-looking statements by words such as "may," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," or "continue," or the negative of these, and other comparable words.

Speaker #1: Actual results and events may differ materially from those anticipated herein as a consequence of changes in general economic and business conditions, changes in interest and currency rates, and other risks described from time to time in our filings with the Registro Nacional de Valores y Emisores and the SEC.

Operator 2: Actual results and events may differ materially from those anticipated herein as a consequence of changes in general economic and business conditions, changes in interest and currency rates, and other risks described from time to time in our filings with the Registro Nacional de Valores y Emisores and the SEC. Recipients of this document are responsible for the assessment and use of the information provided herein. Matters described in this presentation and our knowledge of them may change extensively and materially over time, but we expressly disclaim any obligation to review, update, or correct the information provided in this report, including any forward-looking statements, and do not intend to provide any update for such material developments prior to our next earnings report.

Speaker #1: Recipients of this document are responsible for the assessment and use of the information provided herein. Matters described in this presentation, and our knowledge of them, may change extensively and materially over time. However, we expressly disclaim any obligation to review, update, or correct the information provided in this report, including any forward-looking statements, and do not intend to provide any update for such material developments prior to our next earnings report.

Speaker #1: The financial statements of Grupo Aval Acciones y Valores S.A., in accordance with Colombian regulations, must be filed with the market and with the Superintendency of Finance, with the opinion of an external auditor.

Operator 2: The financial statements of Grupo Aval Acciones y Valores S.A., in accordance with Colombian regulations, must be filed with the market and with the Financial Superintendence of Colombia, with the opinion of an external auditor. At the time of this solicitation, this process is still ongoing. The content of this document and the figures included herein are intended to provide a summary of the subjects discussed rather than a comprehensive description. When applicable in this document, we refer to billions as thousands of millions. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. I will now turn the call over to Ms. Maria Lorena Gutierrez Botero, Chief Executive Officer. Ms. Maria Lorena Gutierrez Botero, you may begin.

Speaker #1: At the time of this solicitation, this process is still ongoing. The content of this document and the figures included herein are intended to provide a summary of the subjects discussed rather than a comprehensive description.

Speaker #1: When applicable, in this document, we refer to billions as thousands of millions. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session.

Speaker #1: I will now turn the call over to Ms. Maria Lorena Gutiérrez Botero, Chief Executive Officer. Ms. Maria Lorena Gutiérrez Botero, you may begin.

Speaker #2: Thank you. Good morning, everyone, and thank you for joining us for our second quarter 2026 conference call. I am here with Diego Solano, our CFO, Camilo Pérez, Chief Economist of Banco de Bogotá at Ernesto Gutiérrez de Peñares, Chief Technology Officer.

María Lorena Gutiérrez Botero: Thank you. Good morning, everyone, and thank you for joining us for our Q2 2026 conference call. I am here with Diego Solano, our CFO, Camilo Pérez, Chief Economist of Banco de Bogotá, and Ernesto Gutiérrez de Piñeres, Chief Technology Officer. Before discussing our query results, I want to address the earthquake that took place in Colombia this week. On behalf of Grupo Aval, our thoughts are with everyone affected. Our priority has been the safety of our employees, our clients, and communities we touch. We took immediate action to leverage our transactional logistical capabilities to support emergency relief efforts. We enabled our network of over 2,700 ATMs, mobile banking platforms, and dale! to channel donations to the Colombian Red Cross and the Colombia Un Solo Corazón initiative. Through Cenria, a Corficolombiana investment, we also set up Estadio El Campín as a collection center for essential supplies.

Speaker #2: Before discussing our quarterly results, I want to address the earthquake that took place in Colombia this week. On behalf of Grupo Aval, our thoughts are with everyone affected.

Speaker #2: Our priority has been the safety of our employees, our clients, and communities we touch. We took immediate action to leverage our transactional and logistical capabilities to support emergency relief efforts.

Speaker #2: We enabled our network of over 2,700 ATMs, mobile banking platforms, and DALI. To China's donations to the Colombia Red Cross and the Colombia Un Solo Corazón Initiative.

Speaker #2: Through Censia, a coffee Colombiana investment, we also set up El Campín Stadium as a collection center for essential supplies. Yesterday, we have more than 1,000 people there.

María Lorena Gutiérrez Botero: Yesterday, we had more than 1,000 people there in the city. Regarding our operations in the areas most affected by the earthquake, we have temporary service interruptions in several service points to ensure the safety of our clients and employees. In addition, these regions were initially affected by widespread electricity and communication failures. Our operations and services have been progressively restored. Turning now to our corporate highlights. Our attributed net income reached 577 billion Colombian pesos, up 17% compared to Q2 2025, and the highest quarterly result since March 2022, reflecting the continuous strengthening of profitability. ROAE reached 12.7% for the quarter. The quarter was marked by solid loan and deposit growth, a strong contribution from our investment portfolio, and permanently stable asset quality and continued efficiency gains.

Speaker #2: Regarding our operations, in the areas most affected by the earthquake, we have temporary service interruptions in several service points to employees. In addition, these regions were initially affected by widespread electricity and communications failures.

Speaker #2: Our operations and services are being progressively restored. Turning now to our corporate highlights. Our attributed net income reached $577 billion Colombian pesos up 17% compared to the second quarter of 2025, and the highest quarterly result since March 2022, reflecting the continuous strengthening of profitability.

Speaker #2: ROA reached 12.7% for the quarter. The quarter was marked by solid loan and deposit growth, a strong contribution from our investment portfolio and porvenir stable asset quality, and continue efficiency gains.

Speaker #2: In addition, we continue to deploy strategic initiatives focused on deepening retail customer presence and strengthening our payments ecosystem. Through our alliance with Visa, we deliver unique customer experiences reaching more than 750,000 participants in the brand activation activities launched during the FIFA World Cup 2026.

María Lorena Gutiérrez Botero: In addition, we continue to deploy a strategic initiative focused on deepening retail customer presence and strengthening our payments ecosystem. Through our alliance with Visa, we deliver unique customer experiences, reaching more than 750,000 participants in the brand activation activities launched during the FIFA World Cup 2026. In parallel, our banks have been working in QR-based instant payment collection solution for businesses, further enhancing our transaction banking offering and deposit franchise. As for the recent developments, on 31 July, Banco de Bogotá completed the transfer of the retail banking asset liabilities and contracts from Banco Itaú in Colombia. The transaction has more than 250,000 retail banking customers and reinforces Banco de Bogotá's strategy to grow and strengthen its retail banking franchise, especially in the affluent segment. On 9 June, Grupo Aval holding Corficolombiana, Banco AV Villas, Banco Popular contributed their investments in Corficolombiana to a special purpose vehicle.

Speaker #2: In parallel, our banks have been working in QR-based instant payment collection solution for businesses for their enhancing our transaction banking offering and deposit franchise.

Speaker #2: I'm guessing as for the recent developments, on July 31, Banco de Bogotá completed the transfer of the retail banking assets liabilities and contracts from Banco Itaú in Colombia.

Speaker #2: The transaction adds more than 250,000 retail banking customers and reinforces Banco de Bogotá's strategy to grow and strengthen its retail banking franchise, especially in the affluent segment.

Speaker #2: On June 9, Grupo Aval Holdings Banco Occidente and Banco Popular contributed their investments in Coffee Colombiana to a special purpose vehicle, each entity retained its indirect stake in coffee.

María Lorena Gutiérrez Botero: Each entity retains its indirect stake in Corfi. This transaction is primarily aimed at simplifying Corficolombiana's ownership structure, consolidating the stake into a single jointly controlled vehicle within Grupo Aval. Diego will touch on this in more detail later on. We will begin this call discussing some key elements of our technology strategy, a key driver of Grupo Aval's transformation and future growth. Before passing the call on to Ernesto Gutierrez, our Chief Technology Officer, I want to highlight this. At Grupo Aval, we are deploying a technology strategy to support faster innovation and more efficient operation and to improve our customers' experience. This strategy seeks to build advantages to compete in a more digital and connected financial system shaped by data analytics and artificial intelligence, and to redirect operational CapEx to transformation investment aligned with best practices for the financial industry.

Speaker #2: This transaction is primarily aimed at simplifying Coffee Colombiana's ownership structure consolidating the staking to a single jointly controlled vehicle within Grupo Aval. Diego will touch on this in more detail later on.

Speaker #2: We will begin this call discussing some key elements of our technology strategy. A key driver of Grupo Aval's transformation and future growth. Before passing the call on to Ernesto Gutiérrez, our Chief Technology Officer, I want to highlight this.

Speaker #2: At Grupo Aval, we are deploying a technology strategy to support faster innovation and more efficient operation and to improve our customers' experience. This strategy seeks to build advantages to compete in a more digital and connected financial system shaped by data analytics and artificial intelligence and to redirect operational capex to transformation investment aligned with best practices, for the financial industry.

Speaker #2: To achieve these results, we are working on four key dimensions. First, improving our service platforms to allow us to better understand and serve our customers.

María Lorena Gutiérrez Botero: To achieve these results, we are working on four key segments. First, improving our service platforms to allow us to better understand and serve our customers. Second, re-engineering our digital course to accelerate our time to market. Third, migrating to a Grupo Aval's cloud, a modern and resilient platform that will support this evolution by speeding up our adoption of new solutions, improving the resilience of our operational platform, and capturing synergies across the group. Finally, strengthening our data platforms to improve real-time decision-making. I will turn the call over to Ernesto, who will provide additional color on our technology strategy. Ernesto?

Speaker #2: Second, re-engineering our digital core to accelerate our time to market. Third, migrating to Grupo Aval's cloud and a modern, resilient platform that will support this evolution by speeding up our adoption of new solutions, improving the resilience of our operational platform, and capturing synergies across the group.

Speaker #2: And finally, strengthening our data platforms to improve real-time decision making. I will turn the call over to Ernesto, who will provide additional color on our technology strategy.

Speaker #2: Ernesto?

Speaker #3: Thank you. Maria Lorena. Good morning, everyone. I would like to give you a brief update on a decision of our technology strategy. And more importantly, on how this beginning to translate into growth structural efficiency and resilience across the group of us.

Ernesto Gutiérrez de Piñeres: Thank you, Maria Lorena. Good morning, everyone. I would like to give you a brief update on the execution of our technology strategy, and more importantly, on how it's beginning to translate into growth, structural efficiency, and resilience across the Grupo Aval. As Maria Lorena has outlined, technology innovation, data, and artificial intelligence are key enablers of our long-term strategy. Our focus now is execution. We start from an important competitive advantage, our scale. Grupo Aval is a multi-entity financial group, and our technology strategy is designed to turn that scale into economic advantage by building shared capabilities that can be developed once and developed across the group. This is the foundation of our common digital core, a secure, scalable, and open architecture designed to operate increasingly in real time. Connect with partners and ecosystem and prepare the group for the opportunities created by open finance and open data.

Speaker #3: As Maria Lorena has outlined, technology innovation data and interface intelligence are key enablers of our long-term strategy. Our focus now is execution. We start from an important competitive advantage, our scale.

Speaker #3: Grupo Aval is a multi-entity financial group, and our technology strategy is designed to turn that scale into economic advantage by building shared capabilities that can be developed once and deployed across the group.

Speaker #3: This is the foundation of our common digital code. A secure, scalable, and operating architecture designed to operate increasingly in real time. Connect with partners and ecosystem and prepare the group for the opportunities created by open finance and open data.

Speaker #3: We are executing this strategy across four main pillars. The first one is Aval 360: knowledge and serving our customer better. Aval 360 is creating a more integrated view of our customers across the group, allowing us to improve continually across channels, personalize interactions, and progressively increase our ability to cross-sell products and services across our entities.

Ernesto Gutiérrez de Piñeres: We are executing this strategy across four main pillars. The first one is Aval 360, knowledge and serving our customer better. Aval 360 is creating a more integrated view of our customers across the group, allowing us to improve continually across channels, personalize interactions, and progressively increase our ability to cross-sell products and services across our entities. The business objective is straightforward: higher conversion and stronger retention, and greater value per customer. Artificial intelligence is becoming an important part of this strategy. For example, in next hour, BPO company will take the 30% of the customer calls closed to be handled through the AI-enabled solutions. This shall increase scalability and response capacity while maintaining the service quality and customer experience for our customers. At the same time, digital adoption continues to expand. Today, the 67% of our customers already conduct transactions through the digital channels. The second point is our digital growth.

Speaker #3: The business objective is straightforward: higher conversion, stronger retention, and greater value for the customer. Artificial intelligence is becoming an important part of this strategy.

Speaker #3: For example, in next hour, BPO company we expect the 30% of customers calls plus to be handled through the AI-enabled solutions. Digital increasingly escalating and response capacity while maintaining the service quality and customer speed for our customers.

Speaker #3: At the same time, digital adoption continues to expand. Today, the 67% of our customers already can do transactions through the digital channels. The second point is our digital course.

Speaker #3: We are accelerating our digital business. We are building sharing capabilities to design, launch, and scale digital products faster, while progressively reducing dependency on traditional core systems and making it easier to connect with external ecosystems and partners.

Ernesto Gutiérrez de Piñeres: We are accelerating our digital business. We are building shared capabilities to design, launch, and scale digital products faster, while progressively reducing dependency on traditional core systems and making it easier to connect with external ecosystem and partners. Our new digital personal loan solution is on track to go live in Q4 of the year. In parallel, we continue to advance our capabilities for credit cards and customer loans and retail banking transactional services. Together, these initiatives address a significant part of the financial needs of our retail customers. The value proposition is clear, shorter time to market and lower structural cost per product. Importantly, these are not capabilities designed for a single entity. They are being built to be reused and scaled across Grupo Aval. The third point is DELFOS, turning data into better decisions.

Speaker #3: Our new digital payroll launch solution is on track to go live in the fourth quarter of the year. In parallel, we continue to advance our capabilities for credit cards, customer loans, and retail banking transactional services.

Speaker #3: Together, this initiative addresses a significant part of the financial needs of our retail customers. The value proposition is clear. Short time to market and lower structural cost per product.

Speaker #3: And importantly, these are not capabilities designed for a single entity. They are being built to be reused and scaled across the group of us.

Speaker #3: The third point is DevOps. Turning data into better decision. DevOps is our management intelligence platform and efficiently serves as digital twin of our banking operation.

Ernesto Gutiérrez de Piñeres: DELFOS is our management intelligence platform, and it serves as digital twin of our banking operations. The first release is already integrated 9 business dimensions into a common management view. Through this integration with Agusta, our CDP platform, we are increasing our ability to understand relationships among customer products and companies across Grupo Aval. The objective is to move progressively from analyzing what happened to understanding what is happening and what may happen next. This will support better decision in areas such as customer management, risk, capital allocation, and operational efficiency. The last point is AURORA. AURORA is our cloud platform strategy. AURORA is the platform through which we are modernizing the technology infrastructure for the group. This architecture combines public cloud capabilities, including AWS and Microsoft Azure, with private cloud capability development through our partnerships with IBM and Kyndryl.

Speaker #3: The free release is already integrated night business dimension into a common management view. Through this integration with a booster, our city build platform, we are increasing our ability to understand relationships among customers, products, and companies across the group of us.

Speaker #3: The objective is to move progressively from analyzing this happen to understanding what is happening and what may be happening next. This will support better decision in areas such as customer management, risk, capital allocation, and operational efficiency.

Speaker #3: The last point is Aurora. Aurora is our cloud platform strategy. Aurora is the platform through which we are modernizing the technology infrastructure for the group.

Speaker #3: The objective of this architecture is to combine public cloud capabilities, including AWS and Microsoft Azure, with private cloud capabilities developed through our partnership with IBM and Kindle.

Speaker #3: The objective is to improve resilience, availability, scalability, and security, while ensuring we are reducing our impact on infrastructure obsolescence. Aurora also changes the economics of our infrastructure, moving progressively from recurring, capital-intensive technology events toward a more flexible and managed capability model.

Ernesto Gutiérrez de Piñeres: The objective is to improve resilience, availability, scalability, and security, while structurally we are reducing our infrastructure obsolescence. AURORA also changed the economics of our infrastructure, moving progressively from a recurring capital-intensive technology spends toward a more flexibility and management capability model. There is another important dimension to AURORA. The efficiency generated by AURORA will be reinvested to help fund the next stage of our technology transformation. This creates a virtuous cycle in which transformation generates savings, and those savings help to fund the further transformation. In that sense, AURORA is not only modernizing our infrastructure, it is also helping us build a more sustainability funding model for our broader technology agenda. Taken together, these 4 pillars are designed to deliver 3 fundamental outcomes. The first growth, faster product launch, stronger digital capabilities, better customer knowledge, and greater ability to deepen relationship across the different entities of Grupo Aval.

Speaker #3: But there is another important dimension to Aurora. The efficiency generated by Aurora will be reinvested to help fund the next stage of our technology transformation.

Speaker #3: This creates a virtuous cycle in which transformation generates savings, and those savings help to fund further transformation. In that sense, Aurora is not only modernizing our infrastructure.

Speaker #3: It's also helping build a more sustainability funding model for our broader technology agenda. Taken together, these four pillars are designed to deliver three fundamental outcomes.

Speaker #3: The first is growth. Faster product launch, a stronger digital capabilities, better consumer knowledge, and greater ability to depend relationship across the different entities of the group of us.

Speaker #3: The second point is structural efficiency. We are redesigning the way that the group of us operates through the remote real-time processes, greater automation, increasing use of artificial intelligence, shared platform, and lower levels of manual intervention.

Ernesto Gutiérrez de Piñeres: The second point is structural efficiency. We are redesigning the way that Grupo Aval operates through the more real-time processing, greater automation, increased use of artificial intelligence, shared platform, and lower levels of manual intervention. This is not one-time cost reduction effort. It is about creating an structural and more efficient operational model for Grupo Aval. The third point is trust and resilience. Security, controls, data governance, and operational continuity remain embedded in the design of every capability that we build. In the financial services, true trust is prerequisite for sustainable growth. All of this supported by a strong principle, capital discipline. We are moving from a management technology as an inventory of products to prioritizing investments based on strategic contribution, expected returns, and value creation. In summary, Grupo Aval is moving from strategy to execution.

Speaker #3: This is not a one-time cost reduction effort. It's about creating and structuring a more efficient operational model for the group of us. And the third point is trust and resilience.

Speaker #3: Security controls data governance and operational continuity remain embedded in the design of every capability that we build. In the financial services, through trust is prerequisite for sustainability growth.

Speaker #3: All of this supported by a strong principle, capital discipline. We are moving from a management technology as an inventory of products to project prioritizing investment based on strategic contribution, expected returns, and value creation.

Speaker #3: In summary, a group of us is moving from strategy to execution. We are scaling shared capabilities across the group, developing artificial intelligence into real operations, accelerating our digital products roadmaps, and using data to make better decisions.

Ernesto Gutiérrez de Piñeres: We are scaling shared capabilities across the Grupo, developing artificial intelligence into our real operation, accelerating our digital products roadmap, and using data to make better decisions. Importantly, we are doing this with a model in which technology increasingly generates efficiencies that help fund its own evolution. Technology is becoming a business capability from Grupo Aval, with the customers always in the center. Thank you.

Speaker #3: And importantly, we are doing this with a model in which technology increasingly generates efficiencies, that help funds it up on evolution. Technology is becoming a business capability from group of us, with the customers always in the center.

Speaker #3: Thank you.

Speaker #1: Thank you, Ernesto. Let me walk you through the key macroeconomic developments of the quarter. The global environment remains challenging during the quarter. Oil prices is up to 65, and the US Iran agreement in June.

María Lorena Gutiérrez Botero: Thank you, Ernesto. Let me walk you through the key macroeconomic developments of the quarter. The global environment remained challenging during the quarter. Oil prices eased after the ceasefire and the US-Iran agreement in June. However, renewed tensions resurfaced in early July, showing that the situation remains fragile, weighing on global growth expectations for the year. In Colombia, economic activity continued to expand, although dependent on short-term factors. Consumption has remained relatively resilient, supported by remittances and employment. In contrast, investment continues to lag in a more uncertain environment. Recent indicators suggest some improvement relative to the start of the year, and we currently expect GDP growth of approximately 2.4% in 2026. Inflationary pressures increased during the quarter, with annual inflation reaching 6.0% in July, moving further off from the Central Bank of Colombia's target. Markets have raised their expectations on digital inflation, putting pressure on the Central Bank of Colombia's decisions.

Speaker #1: However, renewed tensions will surface in early July, showing that the situation remains fragile waiting on global growth expectations for the year. In Colombia, economic activity continues to expand, although dependent on short-term factors.

Speaker #1: Consumption has remained relatively resilient, supported by remittances and employment. In contrast, investment continues to lack and need a more certain environment. Recent indicators suggest some improvement relative to the start of the year, and we currently expect GDP growth of approximately 2.4% in 2026.

Speaker #1: Inflationary pressures increase during the quarter, with annual inflation reaching 6.0% in July moving further up from the central bank's target. Markets have raised their expectation on this year inflation, putting pressure on the central bank's decisions.

Speaker #1: At the same time, the Colombian peso continues strengthening, supported by remittances inflows and a weaker US dollar environment, helping mitigate important inflation pressures. Against this backdrop, Banco de la República raised its policy rate to 12% in June.

María Lorena Gutiérrez Botero: At the same time, the Colombian peso continued strengthening, supported by remittances, inflows, and a weaker US dollar environment, helping mitigate import inflation pressures. Against this backdrop, Banco de la República raised its policy rate to 12% in June. However, at its most recent meeting in July, the board decided to keep rates unchanged. Even though further rate increases can be expected, this pause reflects prudent stance to assess the cumulative effects on the monetary tightening already in place and to evaluate incoming economic data. Looking forward, Colombia has significant opportunities to accelerate investment and productivity. Materializing this potential will require from the new administration improvements in physical and regulatory safety, as well as a firm commitment reflected in public policies to create an environment that promotes long-term investment.

Speaker #1: However, at its most recent meeting in July, the board decided to keep rates unchanged. Even though further rate increases can be expected, this pause reflects a prudent stance to assess the cumulative effects of the monetary tightening already in place, and to evaluate incoming economic data.

Speaker #1: Looking forward, Colombia has significant opportunities to accelerate investment and productivity. Materializing this potential will require from the new administration improvements, in physical and regulatory safety, as well as a firm commitment reflected in public policies to create an environment that promotes long-term investment.

Speaker #1: In addition, restoring a credible path to reverse fiscal deficit trends will be essential to building the confidence required to support sustainable growth in Colombia. With that, I will turn the call over to Camilo, who will provide additional color on our economic outlook.

María Lorena Gutiérrez Botero: In addition, restoring a credible path to reverse fiscal deficit trends will be essential to building confidence required to support sustainable growth in Colombia. With that, I will turn the call over to Camilo, who will provide additional color on our economic outlook. Camilo?

Speaker #1: Camilo?

Speaker #2: Thank you, Maria Lorena. Good morning. The Colombian economy raised to growth exceeding 3% in the second quarter of the year, marking its highest expansion in almost a year.

Camilo Pérez Álvarez: Thank you, Maria Lorena. Good morning. The Colombian economy registered growth exceeding 3% in Q2 of the year, marking its highest expansion in almost a year. While positive growth was supported by temporary factors. The first of these is the increased household spending associated with the FIFA World Cup 2026. This event boosted economic activity through greater dynamism in commerce, closely, entertainment, restaurants, and spare spend. Likewise, the public administration continued to contribute to economic activity due to increase in personnel at the Registraduría Nacional del Estado Civil for the local elections, as well as higher budget execution, which reached a four-year high, significantly contributing to the growth of national activity. Another sector that performed well was utilities, driven by the increasing energy demand from households due to intensive use of air conditioning and refrigeration systems, given the high temperatures experienced in several cities across the country.

Speaker #2: While positive, growth was supported by temporary factors. The first of these is the increased household spending associated with the FIFA World Cup 2026. This event boosted economic activity through greater dynamism in commerce, closely entertainment, restaurants, and spa spending.

Speaker #2: Likewise, the public administration continued to contribute to economic activity due to increased in-personnel at the national registry, or the local elections, as well as higher budget execution.

Speaker #2: This reached a four-year high, significantly contributing to the growth of national activity. Another sector that performed well was utilities, driven by increasing energy demand from households due to the intensive use of air conditioning and refrigeration systems, given the high temperatures experienced in several cities across the country.

Speaker #2: In contrast to these factors, to these sectors, agriculture, mining, manufacturing, and construction continue to exhibit with weak or negative results. In agriculture, the weather and hype input costs were detrimental, in construction, high interest rates and slow execution of major infrastructure projects weakened the sector.

Camilo Pérez Álvarez: In contrast to these sectors, agriculture, mining, manufacturing, and construction continued to exhibit weak or negative results. In agriculture, the weather and high input costs were detrimental. In construction, high interest rates and the low execution of major infrastructure projects weakened the sector. In mining, the decline is structural, and in manufacturing, the appreciation of the peso has harmed the sector's competitiveness. This suggests that the economic recovery maintains a K-shaped dynamic in which some sectors show improvement while others continue to lag. For the remainder of the year, tighter local financial conditions, the diminishing effects of the transitory factors, the impact of the war in the Middle East, the arrival of El Niño, and the expected fiscal adjustment will lead the Colombian economy to grow 2.4% in 2026.

Speaker #2: In mining, the decline is structural. And in manufacturing, the appreciation of the peso has harmed the sector's competitiveness. This suggests that the economic recovery maintains a K-shaped dynamic in which some sectors show improvement while others continue to lag.

Speaker #2: For the remainder of the year, tighter local financial conditions, the diminishing effects of the transitory factors, the impact of the war in the Middle East, the arrival of El Niño, and the expected fiscal adjustment will lead the Colombian economy to grow 2.4% in 2026.

Speaker #2: Turning to prices, inflation jumped from 5.6 at the end of March to 6% in July 2026, near its highest level since July 2024. Services depend on the minimum services dependent on the minimum wage saw a variant exceeding 9%, while rents maintain inflation close to 5%, more dividends, more evidence of the indexation problem.

Camilo Pérez Álvarez: Turning to prices, inflation jumped from 5.6% at the end of March to 6% in July 2026, near its highest level since July 2024. Services dependent on the minimum wage saw a variant exceeding 9%, while rents maintain inflation close to 5%, more evidence of the indexation problem. Meanwhile, inflation in regulated goods accelerated due to higher fuel prices resulting from the war in the Middle East. Additionally, energy and gas prices increased as a result of the greater use of thermal power plants for electricity generation as a precaution against the arrival of El Niño. In the food sector, fertilizer prices and weather conditions also exerted upward pressure. For the remainder of the year, the upward trending inflation is expected to continue given the intensification of the aforementioned factors, ending the year at 6.8%.

Speaker #2: Meanwhile, inflation in regulated goods accelerated due to higher fuel prices resulting from the war in the Middle East, additionally energy and gas prices increased as a result of the greater use of thermal power plants for electricity generation, as a precaution against the arrival of El Niño.

Speaker #2: In the food sector, fertilizer prices and weather conditions also exerted upward pressure. For the remainder of the year, the upward trend in inflation is expected to continue, given the intensification of the aforementioned factors ending the year at 6.8%.

Speaker #2: On the fiscal front, the government finalized the TRS operation in May and updated the medium-term fiscal framework in June. With the closure of the TRS and other debt management operations during the quarter, the government carried out a significant swap of external debt for domestic debt.

Camilo Pérez Álvarez: On the fiscal front, the Government finalized the TRS operation in May and updated the medium-term fiscal framework in June. With the closure of the TRS and other debt management operations during the quarter, the Government carried out a significant swap of external debt for domestic debt. As of June, the share of external debt in total debt was 23%, the lowest in the 21st century, also supported by the appreciation of the peso. Regarding the fiscal framework, while the revenue forecast for 2026 is reasonable, the expenditure forecast is not. Higher spending pressures are expected, leading to a total fiscal deficit of 6.7% of GDP in 2026, above the target of 5.3% of GDP.

Speaker #2: As of June, the share of external debt in total debt was 23%, the lowest in the 21st century, also supported by the appreciation of the peso.

Speaker #2: Regarding the fiscal framework, while the revenue forecast for 2026 is reasonable, the expenditure forecast is not. Higher spending pressures are expected, leading to a total fiscal deficit of 6.7% of GDP in 2026, above the target of 5.3% of GDP.

Speaker #2: Given this outlook, with inflation still high—and inflation expectations high as well—and a still vulnerable fiscal situation, the central bank of Colombia raised its policy rate by 75 basis points in June and left it unchanged at 12% in July.

Camilo Pérez Álvarez: Given this outlook with inflation still high and inflation expectations too, and a still vulnerable fiscal situation, the Central Bank of Colombia raised its policy rate by 75 basis points in June and left it unchanged at 12% in July. The Central Bank is likely to continue raising rates, taking the policy rate to a peak of 12.50% in the coming months as it seeks to bring inflation back to our target after seven consecutive years of missing it. With a scenario of higher domestic interest rates and a favorable reading of the elections, the local exchange rate extended its downward trend, reaching its lowest level since 2019 at around 3,100 pesos per dollar. The potential misalignment of the exchange rate led the Central Bank to implement a program to accumulate international reserves for up to USD 4 billion starting in August through options of put options.

Speaker #2: The central bank is likely to continue raising rates, taking the policy rate to a peak of 12.50% in the coming months, as it seeks to bring inflation back to our target and after seven consecutive years of missing it.

Speaker #2: With a scenario of higher domestic interest rates and a favorable reading of the elections, the local exchange rate extended its downward trend, reaching its lowest level since 2019 at around 3,100 pesos per dollar.

Speaker #2: The potential misalignment of the exchange rate led the central bank to implement a program to accumulate international reserves for up to 4 billion dollars, starting in August, through auctions of put options.

Speaker #2: Following the election results, the country reached premium fell to 140 basis points, near its lowest level since 2021. This lower premium reflects investor expectations that, under the new government, Colombia will implement macroprudential measures, contain the fiscal deficit, oversee negotiated minimum wage increases, and promote investment incentives, among other policies that foster a better business environment and strengthen the local currency.

Camilo Pérez Álvarez: Following the election results, the country risk premium fell to 140 basis points, near its lowest level since 2021. This lower premium reflects investor expectations that under the new government, Colombia will implement macroprudential measures, contain the fiscal deficit, oversee negotiated minimum wage increases, and promote investment incentives, among other policies that foster a better business environment and strengthen the local currency. However, the passage of reforms in a highly divided Congress will be crucial for the fulfillment of these expectations and their corresponding impact on the economy and local assets. Thank you. Back to you, Maria Lorena.

Speaker #2: However, the passage of reforms in a highly divided Congress will be a crucial will be crucial for the fulfillment of these expectations and their corresponding impact on the economy and local assets.

Speaker #2: Thank you. Back to you, Maria Lorena.

Speaker #1: Thank you, Camilo. Turning now to our financial results. Volume growth continued to accelerate during the quarter, with gross loans and deposits increasing 2.1% over the quarter to 198 trillion Colombian pesos and deposits 222 trillion Colombian pesos, respectively.

María Lorena Gutiérrez Botero: Thank you, Camilo. Turning now to our financial results. The loan growth continued to accelerate during the quarter, with gross loans and deposits increasing 2.1% over the quarter to COP 198 million and deposits COP 222 million respectively. Our 12-month deposit growth has outpaced loan growth. This incorporates a strong growth of our retained deposit base. Net interest margin improved to 5.5% in the quarter. This improvement incorporates a strong contribution of NII from our investment portfolio that has benefited from a particularly strong capital market cycle. In addition, we delivered a 21 basis point improvement NII on loans in the banking segment. Our credit quality was substantially stable with cost of risk well controlled at 1.9%, and we maintain a disciplined cost of structure with cost to assets at 2.7%.

Speaker #1: Over 12-month deposit growth has outpaced loan growth. This incorporates strong growth of our retained deposit base. Net interest margin improved to 5.5% in the quarter.

Speaker #1: This improvement incorporates a strong contribution of NIM from our investment portfolio that benefit in particularly strong capital market cycle. In addition, with delivered a 21 basis point improvement of NIM on loans in the banking segment.

Speaker #1: Our great quality was substantially stable with cost of risk well controlled at 1.9%, and we maintain a disciplined cost structure with cost to assets at 2.7%.

Speaker #1: Regarding our non-banking subsidiaries, Porvenir had a particularly strong quarter, benefiting from the strong fixed income and equity markets. Corficolombiana also contributed good results, with energy and infrastructure revenues up on a last 12-month basis.

María Lorena Gutiérrez Botero: Regarding our non-banking subsidiaries, Porvenir had a particularly strong quarter, benefiting from the strong fixed income and equity market. Corficolombiana also contributed good results with energy and infrastructure revenues up on a last 12-month basis. Now, I would like to pass the call to Diego, who will give you the details in our results. Diego?

Speaker #1: Now, I would like to pause, to pass the call to Diego, who will give you the details in our results. Diego?

Speaker #2: Thank you, Maria Lorena. I will start on pages 8 and 9 with a few charts showing the growth rate and quality of our loan portfolio relative to the rest of the Colombian banking system, based on unconsolidated figures under Colombian IFRS as published by the Sprint Tendency of Finance.

Diego Fernando Solano Saravia: Thank you, Maria Lorena. I will start on pages 8 and 9 with a few charts showing the growth rate and quality of our loan portfolio relative to the rest of the Colombian banking system based on unconsolidated figures under Colombian IFRS as published by the Financial Superintendence of Colombia. Starting on page 8, with a 12-month period ended in May 2026, advanced loan growth accelerated, driven especially by commercial loans, while growth of the rest of the banking system was primarily driven by consumer loans, in particular personal loans and credit cards. We continue to prioritize growth in local currency commercial loans and within consumer in personal loans and credit cards. Our market share in commercial loans increased 32 basis points over the year and fell 19 basis points over the quarter.

Speaker #2: Starting on page 8, with the 12-month period ended in May 2026, Aval's loan growth accelerated, improving especially by commercial loans, while the growth of the rest of the banking system was primarily driven by consumer loans, in particular personal loans and credit cards.

Speaker #2: We continue to prioritize growth in local currency, commercial loans, and within consumer, in personal loans and credit cards. Our market share in commercial loans increased 32 basis points over the year and fell 19 basis points over the quarter.

Speaker #2: Our market share of peso denominated commercial loans increased 57 basis points year on year to 26.2% and decreased 6 basis points over the quarter, market share of dollar denominated commercial loans fell 166 basis points over the quarter to 35.1%, reflecting Banco Agotá's relocation of part of its foreign currency loan portfolio from its Colombian book to the Banco de Bogotá, Panama book.

Camilo Pérez Álvarez: Our market share of peso-denominated commercial loans increased 57 basis points year-on-year to 26.2% and decreased 6 basis points over the quarter. Market share of dollar-denominated commercial loans fell 166 basis points over the quarter to 35.1%, reflecting Banco de Bogotá's relocation of part of its foreign currency loan portfolio from its Colombian book to the Banco de Bogota (Panama) S.A. book. Consumer loans, we continue diversifying our portfolio towards higher-yielding loans, moderating our overweight in payroll lending. We gained 189 basis points of share in personal loans year-on-year and 68 basis points over the quarter, raising our market share to 22.6%. Looking ahead, the Itaú consumer business acquisition will help us close our remaining gap to market weight in personal loans.

Speaker #2: Consumer loans, we continue to diversifying our portfolio towards higher yielding loans, moderating our overweight in payroll lending. We gained 189 basis points of share in personal loans year on year and 68 basis points over the quarter, raising our market shares share to 22.6%.

Speaker #2: Looking ahead, the Itaú consumer business acquisition will help us close our remaining gap to market weight in personal loans. We maintain our leadership position in payroll lending with a 41.1% market share.

Diego Fernando Solano Saravia: We maintain our leadership position in payroll lending with 41.1% market share. However, we reduce our share in payroll loans by 62 basis points from the quarter, accumulating 222 basis points year-on-year. Overall, our market share for consumer loans closed at 28.4%, a 30 basis points decrease over the quarter and 125 basis points year-on-year, given the underweight in personal loans, the main driver of consumer lending growth. Finally, we continued gaining market share in mortgages with 14 basis points increase over the quarter and 69 basis points year-on-year, reaching 17.6%. As a result of the above mentioned, we closed the quarter with a market share in total loans of 24.8%, 18 basis points up over the quarter, and 16 basis points lower than a year earlier.

Speaker #2: However, we reduced our share in payroll loans by 62 basis points over the quarter, accumulating 222 basis points year on year. Overall, our market share for consumer loans closed at 28.4%, a 30 basis points decrease over the quarter and 125 basis points year on year, given the underweight in personal loans, the main driver of consumer lending growth.

Speaker #2: Finally, we continued gaining market share in mortgages, with 14 basis points increase over the quarter and 69 basis points year on year, reaching 17.6%.

Speaker #2: As a result of the above-mentioned we closed the quarter with a market share in total loans of 24.8%, 18 basis points up over the quarter and 16 basis points lower than a year earlier.

Speaker #2: On page 9, loan quality trends remain positive across all categories, both for Aval and for the system alike, with banks continuing to show with the Aval banks continuing to show stronger portfolio quality in most categories.

Diego Fernando Solano Saravia: On page 9, loan quality trends remain positive across all categories, both for Grupo Aval and for the system alike, with the Grupo Aval banks continuing to show stronger portfolio quality in most categories. I will now move to the consolidated results of Grupo Aval under IFRS, starting on page 10. Assets grew 3.9% over the quarter and 4.5% over the year to COP 351 trillion. Fixed income investments that at the end of the quarter accounted for 17.2% of our total assets increased 11.6% over the quarter and 20.5% over 12 months, driven by higher liquidity. At the bottom of the page, gross loans grew 2.1% during the quarter, accumulating 7.6% year-on-year. Our peso-denominated loans increased 2.4% quarter-on-quarter and 9.3% year-on-year. Commercial loans grew 2.4% over the quarter and 7.7% year-on-year.

Speaker #2: I will now move to the consolidated results of Grupo Aval and their IFRS, starting on page 10. Assets grew 3.9% over the quarter and 4.5% over the year, to 351 trillion pesos.

Speaker #2: Fixed income investments that at the end of the quarter accounted for 17.2% of our total assets, increased 11.6% over the quarter and 20.5% over 12 months, driven by higher liquidity.

Speaker #2: At the bottom of the page, gross loans grew 2.1% during the quarter, accumulating 7.6% year on year. Our peso-denominated loans increased 2.4% quarter on quarter and 9.3% year on year.

Speaker #2: Commercial loans grew 2.4% over the quarter and 7.7% year on year. Peso-denominated commercial loans grew 3% quarter on quarter and 10.9% year on year, while US dollar-denominated commercial loans grew 5.2% quarter on quarter in dollar terms and 7.7% year on year.

Diego Fernando Solano Saravia: Peso-denominated commercial loans grew 3% quarter-on-quarter and 10.9% year-on-year, while US dollar-denominated commercial loans grew 5.2% quarter-on-quarter in dollar terms and 7.7% year-on-year. Following the MFG divestiture in March, dollar-denominated loans account for 7.9% of our total portfolio and come primarily from Banco de Bogota's US agencies, our trade finance business, and the offshore subsidiaries of Banco de Bogota and Banco de Occidente. These loans were affected by the appreciation of the Colombian peso of 6% over the quarter and 15.5% over 12 months. Consumer loans grew 1.1% during the quarter and 4.7% year-on-year. Payrolls that account for 53% of our consumer loans contracted 1.2%, both over the quarter and over the year. Personal loans that account for 28% of our consumer loans grew 4.5% during the quarter and 18.2% over the year. Credit cards that account for 12% of our consumer loans grew 4.5% quarter-on-quarter and 6.5% year-on-year.

Speaker #2: Following the MFG divestiture in March, dollar denominated loans account for 7.9% of our total portfolio and come primarily from Banco de Bogotá's US agencies, our trade finance business, and the offshore subsidiaries of Banco de Bogotá and Banco de Occidente.

Speaker #2: These loans were affected by the appreciation of the Colombian peso—6% over the quarter and 15.5% over 12 months. Consumer loans grew 1.1% during the quarter and 4.7% year on year.

Speaker #2: Payrolls that account for 53% of our consumer loans contracted 1.2% both over the quarter and over the year. Personal loans that account for 28% of our consumer loans grew 4.5% during the quarter and 18.2% over the year.

Speaker #2: Credit cards that account for 12% of our consumer loans grew 4.5% quarter on quarter and 6.5% year on year. Automobile loans that account for 7% of our consumer loans increased 0.8% quarter on quarter and 3% year on year.

Diego Fernando Solano Saravia: Automobile loans that account for 7% of our consumer loans increased 0.8% quarter-on-quarter and 3% year-on-year. Finally, mortgages grew 2.9% over the quarter and 15.7% year-on-year. On page 11, we present funding and deposit evolution. Total funding reached COP 292 trillion, growing 3.8% over the quarter and 11% year-on-year. Total deposits that account for around three-fourths of our funding reached COP 221 trillion, growing 2.1% over the quarter and 11.5% year-on-year. Our deposit to net loans ratio increased to 117%, as we built a liquidity position as a protection for potential volatility associated with the presidential elections. On page 12, we present the evolution of our total capitalization, our accrued total shareholders' equity, and the capital and equity ratio of our banks. Our total equity increased 3.4% over the quarter and 3.3% year-on-year, while our accrued total equity increased 4.4% over the quarter and 4.6% year-on-year.

Speaker #2: Finally, mortgages grew 2.9% over the quarter and 15.7% year on year. On page 11, we present funding and deposit evolution. Total funding reached 292 trillion pesos, growing 3.8% over the quarter and 11% year on year.

Speaker #2: Total deposits, which account for around three-fourths of our funding, reached 221 trillion pesos, growing 2.1% over the quarter and 11.5% year on year. Our deposit-to-net-loans ratio increased to 117%, as we built a liquidity position as protection against potential volatility associated with the presidential elections.

Speaker #2: On page 12, we present the evolution of our total capitalization of accrued gross shareholders' equity and the capital equity ratio of our banks. Our total equity increased 3.4% over the quarter and 3.3% year on year, while our accrued total equity increased 4.4% over the quarter and 4.6% year on year.

Speaker #2: During the quarter, Banco de Bogotá, Banco de Occidente, Banco Popular, and Group Aval Holding contributed their stakes in COFI Colombiana to ANES EPD in exchange for shares of such SPV, while maintaining their indirect shares in COFI Colombiana.

Diego Fernando Solano Saravia: During the quarter, Banco de Bogota, Banco de Occidente, Banco Popular, and Grupo Aval Holding contributed their stakes in Corficolombiana to ANXPDE in exchange for shares of such SPV while maintaining their indirect shares in Corficolombiana. This change implied measuring the new investment in each entity, impacting the solvency ratios of Banco de Bogota and with a milder effect in Banco de Occidente. Banco de Bogota ended the quarter at a solid 14.9% of total solvency and 14% of Tier 1 capitalization. In addition, just issued a COP 100 billion coordinated bond during the quarter, strengthening its Tier 2 capital. Net income and the improvement in OCI from fixed income added as well to our solvency ratios. On page 13, we present our NIM. Net interest income reached COP 3.6 trillion in Q2 2026, up 68.4% from Q1 2026 and 43.1% for Q2 2025.

Speaker #2: This change implied measuring the new investment in each entity, impacting the solvency ratios of Banco de Bogotá and with a milder effect in Banco de Occidente.

Speaker #2: Banco de Bogotá ended the quarter at a solid 14.9% of total solvency and 14% of tier one capitalization. In addition, AVV just issued 100 billion pesos coordinated bond during the quarter, strengthening its tier two capital.

Speaker #2: Net income and the improvement in OCI from fixed income also added to our solvency ratios.

Speaker #1: On page 13, we present our NIM. Net interest income reached 3.6 trillion in second quarter 2026, up 68.4% from first quarter 2026 and 43.1% from four second quarter 2025.

Speaker #1: Results benefited from a solid trading investment income driven by exceptionally strong capital markets, a portion of the quarterly trading investment income was offset by hedging and derivatives, which I will discuss later, when covering other income.

Diego Fernando Solano Saravia: Results benefited from a solid trading investment income driven by exceptionally strong capital markets. A portion of the quarterly trading investment income was offset by hedging and derivatives, which I will discuss later when covering other income. As anticipated, NIM and loans for the banking segment expanded, driven by the repricing of commercial floating loans. At the consolidated level, NIM and loans remained stable as the higher rate environment continued to weigh on Corficolombiana's contribution, and in fact, we expect to ease as rates normalize. Total NIM increased to 117 basis points to 5.51% quarter-on-quarter and 130 basis points year-on-year. Our consolidated NIM on loans reached 4.41% during the quarter, stable relative to 4.4% during the first quarter of 2026.

Speaker #1: As anticipated, NIM and loans for the banking segment expanded, driven by the repricing of commercial floating loans. At the consolidated level, NIM and loans remained stable, as the higher rate environment continued to weigh on contribution—an effect we expect to ease as rates normalize.

Speaker #1: Total NIM increased 217 basis points to 5.51% quarter-on-quarter, and 130 basis points year-on-year. Our consolidated NIM on loans reached 4.41% during the quarter, stable relative to 4.4% during the first quarter of 2026.

Speaker #1: Our consolidated NIM and investments increased to 8.68%, up from a quarter percent during the first quarter of 2026, driven by a significant improvement in the test market performance connected to the June presidential election.

Diego Fernando Solano Saravia: Our consolidated NIM on investments increased to 8.68%, up from a quarter percent during Q1 2026, driven by a significant improvement in the test market performance connected to the June presidential election. Net of derivatives, net NIM on investments would have been 5.1%, and total NIM would have been 4.6%. Focusing on our banking segment, the total NIM of our banking segment expanded 192 basis points from the quarter to 6.07% due to the same dynamics that affected our consolidated NIM. NIM on loans was 5.19%, increasing 21 basis points quarter on quarter. This incorporates a 44 basis points quarter on quarter increase in NIM on commercial loans to 4.3% and 9 basis points quarter on quarter decrease in NIM on retail loans to 6.39%. On page 14, we present yield and cost of funds.

Speaker #1: Net of derivatives NIM and investments would have been 5.1%, and total NIM would have been 4.6%. Focusing on our banking segment, the total NIM of our banking segment expanded 192 basis points over the quarter to 6.07% during the due to the same dynamics that affected our consolidated NIM.

Speaker #1: NIM and loans was 5.19%, increasing 21 basis points quarter on quarter. This incorporates a 44 basis points quarter on quarter increase in NIM and commercial loans to 4.3% and 9 basis points quarter on quarter decrease in NIM and retail loans to 6.39%.

Speaker #1: On page 14, we present yield and cost of funds. Interest rate dynamics of our loans and of our funding are driven by the movements in the average benchmark rate in Colombia.

Diego Fernando Solano Saravia: Interest rate dynamics of our loans and of our funding are driven by the movements in average benchmark rate in Colombia. The average Central Bank of Colombia intervention rate increased approximately 135 basis points during Q2 2026, while our consolidated cost of deposits increased 59 basis points to 7.34%, reflecting a lower pass-through. Our total cost of funds increased 95 basis points to 7.75%. These quarter results reflect the combined benefits of disciplined repricing and the strong high yield on investments. Our banking segment spread between yield on loans and cost of deposits reached 5.68%, its highest level in 10 quarters as our lower deposit pass-through translated directly into margin expansion. On pages 15 through 17, we present several loan portfolio quality ratios.

Speaker #1: The average central bank intervention rate increased approximately 135 basis points during the second quarter of 2026, while our consolidated cost of deposits increased 59 basis points to 7.34%, reflecting a lower pass-through.

Speaker #1: Our total cost of funds increased 75 basis points to 7.75%. This quarter results reflect a combined benefits of disciplined repricing and the strong high yield and investments.

Speaker #1: Our banking segment spread between yield on loans and cost of deposits reached 5.68%, its highest level in 10 quarters, as our lower deposit pass-through translated directly into margin expansion.

Speaker #1: On pages 15 through 17, we present several loan portfolio quality ratios. On page 15, overall loan quality trends were materially stable during the quarter.

Diego Fernando Solano Saravia: On page 15, overall loan quality trends were materially stable during the quarter, with 90-day PDLs across commercial, consumer, and mortgage loans holding at levels consistent with their historical levels. 90-day PDLs were 3.13%, stable relative to the last quarter and 44 basis points improvement relative to 12 months before. 30-day PDLs were 4.41%, a 10 basis points increase over 3 months and 45 basis points improvement over 12 months. New 90-day PDLs in the quarter were COP 1.11 trillion, up from COP 1.08 trillion a year earlier and COP 166 billion during Q1 2026. Coverage on 90-day PDLs was 137%, in line with the Q1 2026. Commercial 30-day PDLs were 3.86%, stable over 3 months and improving 50 basis points over the year. 90-day PDLs were 3.26, a 7 basis points decrease over the quarter and 60 basis points over the year.

Speaker #1: With 90 APDLs across commercial consumer and mortgage loans holding at levels consistent with their historical levels. 90 APDLs were 3.13%, stable relative to the last quarter and 44 basis points improvement relative to 12 months before.

Speaker #1: 30 APDLs were 4.41%, a 10 basis points increase over three months, and 45 basis points improvement over 12 months. New 90 APDLs in the quarter were 1.11 trillion pesos, up from 1.08 trillion a year earlier and 166 billion during first quarter 2026.

Speaker #1: Coverage on 90 APDLs was 137%, in line with the first quarter of 2026. Commercial 30 APDLs were 3.86%, stable over three months and improving by 50 basis points over the year.

Speaker #1: 90 APDLs were 3.26, a 7 basis points decrease over the quarter, and 60 basis points over the year. We recorded an annual 52 basis points decrease in consumer 30 APDLs to 4.71%, while 90 APDLs improved 30 basis points to 2.68%.

Diego Fernando Solano Saravia: We recorded an annual 52 basis points decrease in consumer 30-day PDLs to 4.71%, while 90-day PDLs improved 30 basis points to 2.68%. Mortgages, 30-day PDLs and 90-day PDLs improved 13 basis points and 7 basis points year on year. Finally, the ratio of charge-offs to average 90-day PDLs was 0.65 times. On page 16, the share of our loan portfolio classified as stage 1 reached 90% of the total portfolio, up from 89.1% in Q2 2025 and slightly lower than the 90.3% reported a quarter earlier, reflecting stabilization of our loan portfolio quality. The allowance for stage 2 and 3 as a percentage of loans classified as stage 2 or 3 reached 33.3% for all loans, decreasing 47 basis points during the quarter. On page 17, our net cost of risk was 1.9%, 8 basis points higher quarter on quarter and 5 basis points year on year.

Speaker #1: Mortgages, 30 APDLs, and 90 APDLs improved 13 basis points and 7 basis points year on year. Finally, the ratio of charge-offs to average 90 APDLs was 0.65 times.

Speaker #1: On page 16, the share of our loan portfolio classified as stage one reached 90% of the total portfolio, up from 89.1% in the second quarter of 2025, and slightly lower than the 90.3% recorded a quarter earlier.

Speaker #1: Reflecting the stabilization of our loan portfolio this quarter, the allowance for stage two and three as a percentage of loans classified as stage zero to three reached 33.3% for all loans, decreasing 47 basis points during the quarter.

Speaker #1: On page 17, our net cost of risk was 1.9%, 8 basis points higher quarter on quarter and 5 basis points year on year. Our gross cost of risk was 2.2% in second quarter 2026, increasing 12 basis points quarter on quarter and decreasing 18 basis points year on year.

Diego Fernando Solano Saravia: Our gross cost of risk was 2.2% in Q2 2026, increasing 12 basis points quarter-on-quarter and decreasing 18 basis points year-on-year. The net cost of risk for consumer loans was stable at 4.1%. Meanwhile, the net cost of risk for commercial loans was 0.9%, up from 0.7% during Q1 2026. On page 18, we present net fees and other income. Gross fee income grew 4.1% year-on-year and decreased 3.7% quarter-on-quarter. Net fee income increased 3.3% year-on-year and decreased 5.2% quarter-on-quarter. Gross fee income was driven by an annual 1.7% increase in banking fees, 8.1% in pension fees, and 9.8% in trust fee activities. Income from a non-financial sector was around 1.14 times that recorded during Q2 2025 due to a positive impact of higher inflation and concession revenues.

Speaker #1: The net cost of risk for consumer loans was stable at 4.1%. Meanwhile, the net cost of risk for commercial loans was 0.9%, up from 0.7% during the first quarter of 2026.

Speaker #1: On page 18, we present net fees and other income. Gross fee income grew 4.1% year on year and decreased 3.7% quarter on quarter. Net fee income increased 3.3% year on year and decreased 5.2% quarter on quarter.

Speaker #1: Gross fee income was driven by an annual 1.7% increase in banking fees, 8.1% in pension fees, and 9.8% in trust fee activities. Income from the non-financial sector was around 1.14 times that recorded during the second quarter of 2025, due to the positive impact of higher inflation and consumption revenues.

Speaker #1: Energy and gas contributed 281 billion pesos, roughly in line with prior periods. As mentioned earlier, the year-on-year variation in other operating income mainly reflects lower derivative incomes—962 billion pesos of this quarter's variation is connected to derivatives to hedge the income from investments that I mentioned when discussing net interest margin.

Diego Fernando Solano Saravia: Energy and gas contributed COP 281 billion, roughly in line with prior periods. As mentioned earlier, the year-on-year variation in other operating income mainly reflects lower derivative incomes. COP 962 billion of this quarter's variation is connected to derivatives to hedge the income from investments that I mentioned when discussing net interest margin. On page 19, we present some efficiency ratios. Total other expenses reached COP 2.36 trillion during Q2 2026, increasing 7.4% year-on-year and decreasing 8.1% quarter-on-quarter. Quarterly variation is largely explained by COP 312 billion equity tax reported under general and administrative expenses during Q1 of the year. Total other expenses, including equity taxes, increased 4.6% quarterly, driven by other tax expenses. Personnel expenses increased 4.6% year-on-year to COP 839 billion, impacted by the 23% minimum wage increase on part of our workforce.

Speaker #1: Page 19, on page 19, we present some efficiency ratios. Total other expenses reached 2.36 trillion pesos during the second quarter of 2026, increasing 7.4% year on year and decreasing 8.1% quarter on quarter.

Speaker #1: Quarterly variation is largely explained by the 312 billion pesos equity tax recorded under general and administrative expenses during the first quarter of the year. Total other expenses, including equity taxes, increased 4%.

Speaker #1: total other expenses excluding equity taxes increased 4.6% quarterly, driven by other tax expenses. Personal expenses increased 4.6% year on year to 839 billion pesos, impacted by the 23% minimum wage increase on part of our workforce.

Speaker #1: Cost to assets for the quarter was 2.7%, slightly higher year-on-year. Our quarterly cost to income improved to 49.3%, mainly due to the increase in net trading income.

Diego Fernando Solano Saravia: Cost to assets for the quarter was 2.7%, slightly higher than year-on-year. Our quarterly cost to income improved to 49.3%, mainly due to the increase in net trading income. Finally, on page 21, we present our net income and profitability ratios. Our total net income was COP 577 billion or COP 24.3 per share, our highest level for a quarter in four years. Our return on average assets and our return on average equity for the quarter reached 1.1% and 12.7% respectively. I will now summarize our general guidance for 2026. We expect loan growth in the 10.5% area of commercial loans growing, the 8% area in retail loans growing in the 14% area, including the contribution of the Itaú retail business transaction. We expect our consolidated NIM in the 4.2% area with NIM on loans in the 4.4% area.

Speaker #1: Finally, on page 21, we present our net income and profitability ratios. Our total net income was 577 billion pesos, or 24.3 pesos per share, our highest level for a quarter in four years.

Speaker #1: Our return on average assets and our return on average equity for the quarter reached 1.1% and 12.7%, respectively. I will now summarize our general guidance for 2026.

Speaker #1: We expect loan growth in the 10.5 percentile, with commercial loans growing at the 8th percentile and retail loans growing at the 14th percentile, including the contribution of the Itaú Retail Business transaction.

Speaker #1: We expect our consolidated NIM in the 4.2% percentile, with NIM on loans in the 4.4% percentile. The NIM of our banking segment is in the 4.9% percentile, with NIM on loans in the 5.2% percentile.

Diego Fernando Solano Saravia: The NIM of our banking segment in the 4.9% area, with NIM on loans in the 5.2% area. Our cost of risk net of recoveries in the 1.9% area. Our cost to assets in the 2.9% area. Income from the non-financial sector of 1.3 times that for 2025. The income ratio in the 22% area. Finally, we expect our 2026 return on average equity to be in the 9.25% area. Back to Maria Lorena.

Speaker #1: Our cost of risk, net of recoveries, is in the 1.9% area. Our cost to assets is in the 2.9 percentile. Income from the non-financial sector is 1.3 times that for 2025, with the income ratio in the 22 percentile.

Speaker #1: Finally, we expect our 2026 return on average equity to be in the 9.25 percent range. Back to Maria Lorena.

Speaker #2: Thank you, Diego. Before moving into questions and answers, I would like to leave you with a final thought. We continue to navigate a demanding environment, with global uncertainty, elevated inflation, and pressures for higher interest rates.

María Lorena Gutiérrez Botero: Thank you, Diego. Before moving into questions and answers, I would like to leave you with a final thought. We continue to navigate on-demand environment with global uncertainty, elevated inflation, and pressures for higher interest rates. As Colombia enters a new political cycle, the focus will increasingly shift toward restoring confidence, encouraging investment, and addressing the country's fiscal challenges to support strong long-term growth. Energy security is one of the key challenges ahead. Colombia has moved from having one of the most reliable energy systems in the region to facing increasing pressures on both electricity and natural gas supply. Delays in the strategic generation and transmission projects, together with declined domestic gas production, highlight the need to accelerate investment and execution. Ensuring our reliable energy supply will be critical, not only for households and businesses, but also for the competitiveness, investment, and economic growth.

Speaker #2: As Colombia enters a new political cycle, the focus will increasingly shift toward restoring confidence, encouraging investment, and addressing the country's fiscal challenges to support strong long-term growth.

Speaker #2: Energy security is one of the key challenges ahead. Colombia has moved from having one of the most reliable energy systems in the region to facing increasing pressures on both electricity and natural gas supply.

Speaker #2: Delays in strategic generation and transmission projects, together with declining domestic gas production, highlight the need to accelerate investment and execution. Ensuring a reliable energy supply will be critical not only for households and businesses, but also for competitiveness, investment, and economic growth.

Speaker #2: Restoring physical and regulatory safety accelerating the pace of infrastructure projects and of construction to generate future growth, recovering the health system effectiveness are some of the fronts demanding decisive public policy actions.

María Lorena Gutiérrez Botero: Restoring physical and regulatory safety, accelerating the pace of infrastructure projects and of construction to generate future growth, recovering the health system effectiveness are some of the fronts demanding decisive public policy actions. Despite the macro and regulatory challenges that we have faced, this quarter really affirmed the resilience of Grupo Aval and our ability to execute long-term strategic priorities. Our diversified businesses discipline, risk management, and a strong balance sheet continue to provide stability across economic cycles. Meanwhile, we continue to execute key initiatives, such as the successful integration of the former Itaú retail operations into Bancolombia that is strengthening our retail banking platform and positioning the group for future growth. The results achieved during the H1 of the year reinforce our confidence in the outlook for 2026.

Speaker #2: Despite the macro and regulatory challenges that we have faced, this quarter we've formed the resilience of Grupo Aval and our ability to execute long-term strategic priorities.

Speaker #2: Our diversified businesses, disciplined risk management, and a strong balance sheet continue to provide stability across economic cycles. Meanwhile, we continue initiatives such as the successful integration of the former Itaú retail operations into Banco de Bogotá, which has strengthened our retail banking platform and positioned the group for future growth.

Speaker #2: The results achieved during the first half of the year reinforce our confidence in the outlook for 2026. While the environment will remain challenging with high funding rates and market volatility, during the remainder of the year we remain on track to deliver our OAE in the nine and a quarter percent area for the full year as Diego mentioned.

María Lorena Gutiérrez Botero: While the environment will remain challenging with high funding rates and market volatility during the remainder of the year, we remain on track to deliver our ROAE in the 9.25% area for the full year, as Diego mentioned. We remain confident in our strategy, our execution capabilities, and our ability to continue creating long-term value for shareholders, while contributing to the development of Colombia's economy. Thank you.

Speaker #2: We remain confident in our strategy our execution capabilities and our ability to continue creating long-term value for shareholders while contributing to the development of Colombia's economy.

Speaker #2: Thank you.

Speaker #3: Thank you. We will now begin the question and answer session. If you have a question, please press star, then one, on your touch-tone phone.

Operator 2: Thank you. We will now begin the question and answer session. If you have a question, please press star then one on your touchtone phone. If you wish to be removed from the queue, please press star then one a second time. If you are using a speakerphone, you may need to pick up the handset first before pressing the numbers. Once again, if you have a question, please press star one. Our first question will come from the line of Brian Flores with Citibank. Please go ahead.

Speaker #3: If you wish to be removed from the queue, please press star, then one, a second time. If you are using a speakerphone, you may need to pick up the handset first before pressing the numbers.

Speaker #3: Once again, if you have a question, please press star one. Our first question will come from the line of Brian Flores with Citibank. Please go ahead.

Brian Flores: Hi, team. Good morning. Thank you for the opportunity. Congrats on the results. Two questions here. The first one is a bit more contextual. Wanted to get your views on what we should expect, what you are expecting as the base case in terms of tax rate for 2027. Just wondering if you perceive maybe a lower risk in terms of banks being included for higher tax rates in the tax reform. A second one is a bit more structural. I think your strategy is definitely paying off in terms of the diversification of profitability, right? You have a very strong quarter in terms of the investment portfolio.

Speaker #4: Hi, team. Good morning. Thank you for the opportunity. Congrats on the results. Two questions here. The first one is a bit more contextual. I wanted to get your views on what we should expect, what you are expecting as the base case in terms of tax rate for 2027.

Speaker #4: I was just wondering if you perceive maybe a lower risk in terms of banks being included for higher tax rates in the tax reform. And then, my second question is a bit more structural.

Speaker #4: I think your strategy is definitely paying off in terms of the diversification of profitability, right? You had a very strong quarter in terms of the investment portfolio, but I just wanted to check with you if, going forward with the recent structures, the recent changes, and also the new government, you might think that Coffee Colombiana and Porvenir could also start really providing some upside risks here for the contribution of profits.

Brian Flores: Just wanted to check with you if going forward with the recent structures, the recent changes, and also the new government, you might think that Corficolombiana and Porvenir could start really providing some upside risks here for the contribution of profits. Thank you.

Speaker #4: Thank you.

María Lorena Gutiérrez Botero: Let me answer the first part of the question. I think, and we hope, that we are not having more taxes. President Gustavo Petro announced that he is going to, for example, the equity tax, maybe we are not going to have. This is difficult for me that maybe he can leave some taxes, but we hope that we do not have an increase. We are a little worried with the local taxes, because our mayor here in Bogota presented a law, like a project, to the Bogota council. That is like a Congress here in Colombia, but for the city. It increases one of the local tax that is ICA, 30%. So for us, because this is only a tax on income. So for us, and for the financial sector in general, we are a little concerned about that.

Speaker #2: Let me maybe to answer the first part of the question. I think, and we hope, that we are not having more taxes and the president Abelardo de las Prella announced that he's going to, for example, the equity tax maybe we are not going to have.

Speaker #2: This is difficult for me, that maybe he can leave some taxes, but we hope that we don't have an increase. We are a little worried with the local taxes.

Speaker #2: Because our mayor here in Bogotá presented like a law, like a project to the Bogotá's council that is like the Congress here in Colombia but for the city.

Speaker #2: And it increases one of the local taxes, which is CICA, by 30%. So for us, because this is an attack on income, for us and for the financial sector in general, we are a little concerned about that.

Speaker #2: And before Diego talk about the portfolio, let me mention that we are going to start the construction of the new stadium in Coffee Colombiana.

María Lorena Gutiérrez Botero: Before Diego Solano talk about the portfolio, let me mention that we are going to start the construction of the new stadium in Corficolombiana. I think, maybe September, October, we start. This is important because, as you know, when Corficolombiana start to build, we can generate income. The other stadium is working. So we have both. We are building, but we have the business of the actual cities. So Diego?

Speaker #2: This I think on maybe September, October, we start to and this is important because as you know, when Coffee Colombiana start to build, we can generate income.

Speaker #2: And the other stadium is working. So we have both, no? We are building, but we have the business of the actual stadium. So, Diego?

Speaker #1: Yeah. Adding to what Maria Lorena said, also to give you some context, you might have seen that we were conservative on our guidance on cost to income and one of the reasons to be conservative on that is we're seeing heavy burden on taxes adding to our operational expenses.

Diego Fernando Solano Saravia: Yeah. Adding to what Maria Lorena said, also to give you some context, you might have seen that we were conservative on our guidance on cost to income. One of the reasons we are conservative on that is we are seeing a heavy burden on taxes adding to our operational expenses. Regarding Corficolombiana and Porvenir, we basically grow based on the country's growth. In the case of Corficolombiana, we grow because of the country investing and developing many of the projects that have been delayed or were canceled during the previous administration. Therefore, yes, we are very positive on the new administration and Corficolombiana. On the Porvenir side, we are going to get clarity on the pension reform. That is something we have already started to see moving in Congress. A positive performance of the market, as well, will help our portfolios.

Speaker #1: Regarding Coffee Colombiana and Porvenir, we basically grow based on the country's growth in the case of Coffee Colombiana. We grow because of the country investing and developing many of the projects that have been delayed or were canceled during the previous administration.

Speaker #1: Therefore, yes, we are very positive on the new administration and Coffee Colombiana. And on the Porvenir side, we're going to get clarity on the pension reform; that's something we have already started to see moving in Congress.

Speaker #1: And a positive performance of the market as well will help our portfolios. You have to remember that, in the numbers of the central bank, one of the numbers that has a lot of weight is the risk of a fiscal deficit moving into the future.

Diego Fernando Solano Saravia: You have to remember that in the numbers of the Central Bank of Colombia, one of the numbers that has a lot of weight is the risk of a fiscal deficit moving into the future. We expect that the new administration will move in the right direction to give some confidence that this will have some relief. In that sense, we see an upside from the Central Bank of Colombia rate as we have clarity from public policy on what is going to happen with fiscal deficit.

Speaker #1: We expect that the new administration will move in the right direction to give some confidence that this will have some relief. In that sense, we see an upside from the central bank rate.

Speaker #1: As we have clarity from public policy on what's going to happen with fiscal deficit.

Speaker #2: And if you add to the fiscal deficit, for me it's so important that the government, in this month, organizes the projects and everything with the energy.

María Lorena Gutiérrez Botero: Additional to the fiscal deficit, for me, it is so important that the government, in these months, organizes the projects and everything with the energy because we are going to have the phenomenon El Niño. I do not know how to say that. Phenomenon El Niño is the name. Very strong. We need to start to have new projects, otherwise we are going to have more inflation and problems in the economy.

Speaker #2: Because we are going to have the phenomenal El Niño. I don't know how to say that. Phenomenal El Niño is the name. Very strong.

Speaker #2: So we need to start to have projects, new projects otherwise we are going to have more inflation and problems in the economy.

Speaker #4: No, super clear. Maria Lorena, if I may, something very interesting that you commented was do you have a sensitivity as to if these local tax passes in Bogotá how much would it impact the effective tax rate that you pay?

Brian Flores: No, super clear, Maria Lorena. If I may, something very interesting that you commented was, do you have a sensitivity as to if this local tax passes in Bogota, how much would it impact the effective tax rate that you pay?

Speaker #2: Okay. I will tell you for the financial sector because as a bancaria this is an exercise. It will be like 500,000 billion, millions. More.

María Lorena Gutiérrez Botero: I will tell you for the financial sector, because as Juan Carlos did an exercise, it will be like COP 500,000 million more.

Speaker #2: No?

Diego Fernando Solano Saravia: We will touch on that on our following call once we have clarity there.

Speaker #1: We won't touch on that on our following call once we have clarity there.

Speaker #2: And we have asked.

María Lorena Gutiérrez Botero: We hope that.

Brian Flores: Perfect

Speaker #4: perfect.

Diego Fernando Solano Saravia: They are going to start to discuss the project. As you know, with the problems that Colombia may be, the project stop without discussing there. It is just to mention, but it is not a concern right now. We are working on numbers and everything to be prepared.

Speaker #2: They are going to start to discuss the project. So, as you know, with the problems that have the Colombia project stopped without discussing there. So it's right now, no?

Speaker #2: But we are working on numbers and everything to be prepared.

Speaker #4: No, perfect. Great color. We'll keep an eye on it. I appreciate the comments. Thank you.

Brian Flores: No. Perfect. Great color. We will keep an eye on it. Appreciate the comments. Thank you.

Speaker #2: Thank you. Thank you.

Diego Fernando Solano Saravia: Thank you.

Speaker #3: Our next question will come from the line of Yuri Fernandez with JPMorgan. Please go ahead.

Operator 2: Our next question will come from the line of Yuri Fernandes with J.P. Morgan. Please go ahead.

Speaker #4: Hi. Maria Lorena, Diego, I have a question regarding the guidance of ROE. If I understood correctly from Diego, I think I heard nine and a half, maybe ROE.

Yuri Fernandes: Hi, Maria Lorena, Diego. I have a question regarding the guidance of ROAE. If I understood correctly from Diego, I think I heard 9.5%, maybe ROAE. That is maybe a touch above what you.

Speaker #4: That is maybe a touch above.

Diego Fernando Solano Saravia: 9 and a quarter.

Speaker #1: Nine and a quarter. Nine and a quarter, Julie. We're basically maintaining our guidance.

Yuri Fernandes: 9 and a quarter.

Diego Fernando Solano Saravia: 9 and a quarter, Yuri. We are basically maintaining our guidance.

Speaker #4: You are maintaining the guidance. So nine and 925 ROE guidance, right? Nine and a quarter. So why is this lower? Diego, tell what you are running now.

Yuri Fernandes: You are maintaining the guidance. So 9.25 ROAE guidance, right? 9 and a quarter. So why is this lower, Diego, than what you are running now? I think in the H1 you have closer to 10% ROAE. I understand that this quarter you had some gains on securities. Maybe you are not considering these ahead, but what do you see as ahead for the H2? Because if this is 9 and a quarter, this indicates that the ROAE for the H2 being lower than the ROAEs of the H1, and you had the wealth tax in the Q1, right? I do not know if these are new provisions, maybe this Colombia retail, I do not know, Banco de Bogotá higher taxes, I do not know, Itaú Colombia consolidation. What is driving this ROAE? Thank you.

Speaker #4: I think in the first half you have closer to 10% ROE. I understand that this quarter you had some gains on securities, maybe you're not considering these ahead, but what do you see as ahead for the second half?

Speaker #4: Because if this is nine and a quarter, this indicates that the ROE for the second half being lower than the ROEs of the first half, and you had the wealth tax in the first quarter, right?

Speaker #4: So I don't know, is this El Niño provisions, maybe this Colombia retail I don't know, Bogotá higher taxes. I don't know, Itaú Colombia. Consolidation.

Speaker #4: What is driving this ROE? Thank you.

Speaker #1: Yeah, there are a few reasons, Julie, and you're right. We're being cautious here because we have high expectations. We're actually very positive here, thinking medium- to long-term.

Diego Fernando Solano Saravia: Yeah. There's a few reasons, Yuri, and you're right, we're being cautious here because we have high expectations. We're actually very positive here, thinking medium long-term. We're cautious on what's going to happen short-term. Obviously, on long-term, this does represent what we see in the changes in administration and changes in the monetary cycle as a positive that should increase substantially our view that we had in the past of what we can reach over the next 3 to 5 years. However, short-term, there's a few headwinds we have to be careful about. Number one, you mentioned it, we had an extraordinary H1 on the fixed income side. As I highlighted, part of that, it has an offset in derivatives because it's part of our trading with our customers and also our risk positions in our portfolios. We are not building in strong numbers for the H2.

Speaker #1: We're cautious about what's going to happen in the short term. Obviously, in the long term, this does represent what we see in the changes in administration and changes in the monetary cycle as a positive that should increase.

Speaker #1: Substantially, our view that we had in the past of what we can reach over the next three to five years. However, short term, there's a few headwinds we have to be careful about.

Speaker #1: Number one, you mentioned it. We had an extraordinary first half on the fixed-income side. As I highlighted, part of that has an offset in derivatives because it's part of our trading with our customers and also our risk positions in our portfolios.

Speaker #1: So we are not building in strong numbers for the second half. We are I didn't mention it in the guidance, but it's implicit that we're looking into something around 2% Neiman investments to make the numbers work for the second half.

Diego Fernando Solano Saravia: I didn't mention it in the guidance, but it's implicit that we're looking into something around 2% new money investments to make the numbers work for the H2. Then we will have that cumulative effect of all the raises from the Central Bank of Colombia. Even though we had a pause, market consensus and, as you heard our call, points to perhaps another 50 basis points increase in rates. Then on the cost of risk side, we don't have numbers nor expect anything substantial, but we're being careful of what the effects of the earthquake might be during the quarter. In general, I would say we prefer to be on the conservative side. There is a potential to become much more constructive as data coming in.

Speaker #1: Then we will have the cumulative effect of all the raises from the central bank and even though we had a pause, market consensus and as you heard our call, points to perhaps another 50 basis points increase in rates.

Speaker #1: Then on the cost of risk side, we don't have numbers nor expect anything substantial, but we're being careful of what the effects of the earthquake might be during the quarter.

Speaker #1: So in general, I would say we prefer to be on the conservative side. There is a potential to become much more constructive as data coming in.

Speaker #1: And also giving a chance for the new administration to move a lot of the things that they mentioned during the campaign into actual policy that will be the booster for growth.

Diego Fernando Solano Saravia: Also giving a chance for the new administration to move a lot of the things that they mentioned during the campaign into actual policy that will be the booster for the growth.

Speaker #4: Oh, super clear, Diego. If I may, a second one—just on asset quality. You already mentioned it in your presentation, but when we go to the 30-day past due, new past due formation, right?

Yuri Fernandes: Oh, super clear, Diego. If I may, a second one, just on asset quality already mentioned on your presentation, but when we go to the 30 days new past due formation, right? So basically the new increase of the balances. There was an increase, right? Also on the 90 days, but I think 90 days, the previous quarter was too low, but 30 days caught my attention here. We saw some worsening on consumer loans, on mortgage. You have the earthquake, you have El Niño. So what is your best guess on the outlook for asset quality here? I know you have a 1.9 guidance, but going ahead, are you concerned on asset quality in Colombia? What should we expect? Thank you.

Speaker #4: So basically the new increase of the balances. There was an increase, right? And also on the 90 days, but I think 90 days, the previous quarter was too low, but 30 days caught my attention here.

Speaker #4: We saw some worsening on consumer loans and on mortgages. You have the earthquake, you have El Niño. So, what is your best guess on the outlook for asset quality here?

Speaker #4: I know you have a 1.9 guidance, but going ahead, are you concerned about asset quality in Colombia? What should we expect? Thank you.

Diego Fernando Solano Saravia: Short answer, we are not concerned. However, there might be some spikes in the road. The way to think about new loan formation is you have to look through the cycle. It is a spiky movement, but this is in line with numbers we have seen in the past. I also mentioned another data point that is the stages 2 and 3 are behaving well. We obviously are being very careful with some sectors that are suffering with the exchange rate. Those are the kind of the downside potential that you might see, the lower exchange rate plus the earthquake are some things to look into. The short answer is we see stability in the numbers. We see, I would say, a proper performance of the economy as a whole.

Speaker #1: Sure. Short answer, we are not concerned. However, there might be some spikes in the road. The way to think about new loan formation is you have to look through the cycle.

Speaker #1: It is a spiky movement, but this is in line with numbers we've seen in the past. And I also mentioned another data point that is the stages two and three are behaving well.

Speaker #1: We obviously are being very careful with some sectors that are suffering with the exchange rate. So those are the kind of downside potentials that you might see. The lower exchange rate, plus the earthquake, are some things to look into.

Speaker #1: But the short answer is we see stability in the numbers. We see I would say a proper performance of the economy as a whole.

Speaker #4: Perfect. No, thank you.

Yuri Fernandes: Perfect. No, thank you.

Speaker #3: Again, if you'd like to ask a question, press star, then the number one on your telephone keypad. Our next question will come from the line of Daniel Mora with Creditcore Capital.

Operator 2: Again, if you would like to ask a question, press star, then the number 1 on your telephone keypad. Our next question will come from the line of Daniel Mora with Credicorp Capital. Please go ahead.

Speaker #3: Please go ahead.

Speaker #4: Hi. Good morning, and thank you for the presentation. I have a couple of questions. The first one is regarding margins, specifically the meme without trading income.

Daniel Mora: Hi, good morning, and thank you for the presentation. I have a couple of questions. The first one is regarding margins, specifically the NIM without trading income. Trading, like the one we observed in Q2 will not be sustainable while interest expenses rise faster than interest income at a consolidated basis. I would like to understand in a context of high interest rates for longer, are you worried about margin pressures, as it seems that the expansion in the banking segment is offset by the other segments of Grupo Aval? That would be my first question.

Speaker #4: Trading like the one we observe in the second quarter will not be sustainable while interest expenses rise faster than interest income at a consolidated basis.

Speaker #4: So, I would like to understand, in a context of high interest rates for longer, are you worried about margin pressures? It seems that the expansion in the banking segment is being offset by the other segments of Groupama.

Speaker #4: That would be my first question.

Speaker #1: Okay. Well, as I went through my answer to Julia, a moment ago, we're being careful about the implications of further exchange interest rate hike.

Diego Fernando Solano Saravia: Well, as I went through my answer to Julia a moment ago, we are being careful about the implications of a further exchange, interest rate hike. However, at this point in the cycle, there is a higher potential, if you are thinking medium term, of reduction in rates than further increase in rates when we finish this event. That is why we are positive medium and longer term, but cautious for the remaining quarters of this year. As you pointed out, yes, we guided or we mentioned that without the effect of derivatives, our NIM would have been 4.6% and our NIM on investments, 5.5%. So a substantial portion of what you saw on the NIM line has an offset on the derivatives line.

Speaker #1: However, at this point in the cycle, there's a higher potential if you're thinking medium term of reduction in rates. Than further increasing rates when we finish this event.

Speaker #1: So we are that's what we're positive medium and longer term, but cautious for the remaining quarters of this year. As you pointed out, yes, we guided or we mentioned that without the effect of derivatives, our name would have been 4.6% and our Neiman investments 5.5%.

Speaker #1: So a substantial portion of what you saw on the name line has an offset on the derivatives line. Once again, as I mentioned to Judy, we're building in a Neiman investments of 2% into our figures.

Diego Fernando Solano Saravia: Once again, as I mentioned to Judy, we are building in a NIM on investments of 2% into our figures. However, a NIM on loans, we are seeing our strategy really paying out. We are being able to reprice our loans. We see the liquidity environment favorable to have a lower pass-through of what the Central Bank of Colombia is doing. In general, we feel closer to the end of the cycle. However, our guidance does build in a H2 of the year that could have some pressures coming from the remaining increases in interest rates from the Central Bank of Colombia.

Speaker #1: However, on the Neiman and loans, we're seeing our strategy really paying out. We are being able to reprice our loans. We see the liquidity environment favorable to have a lower pass-through of what the central bank is doing.

Speaker #1: So, in general, we feel closer to the end of the cycle. However, our guidance does build in a second half of the year that could have some pressures coming from the remaining increases in interest rates from the central bank.

Speaker #4: Perfect. Thank you so much. Very clear. And if I may, my second question is regarding loan growth. What are the reasons behind the recent performance of the loan growth in the consumer segment, after a couple of years gaining market share and growing above the industry?

Daniel Mora: Perfect. Thank you so much. Very clear. If I may, my second question is regarding loan growth. What are the reasons behind the recent performance of the loan growth in the consumer segment after a couple of years gaining market share and growing above the industry? Now the industry seems to accelerate strongly. I would like to understand, what is the reason behind this, or if you expect to continue and resume the growing in consumer loans and gain market share again, beside all the operation of the transaction with Itaú.

Speaker #4: Now, the industry seems to be accelerating strongly. So, I would like to understand what is the reason behind this, or if you expect to continue and resume growth in consumer loans and gain market share again.

Speaker #4: Beside all the operational, the transaction with it all.

Speaker #1: Yeah, I think that's a great question because it does touch on what our strategy looks like. Part of what is going on is we've been historically quietly overweighted on the payroll lending side, and we've been underweighted on the credit card and personal loan side.

Diego Fernando Solano Saravia: Yeah, I think that is a great question because it does touch on what our strategy looks like. Part of what is going on is we have been historically widely overweighted on the payroll lending side, and we have been underweighted on the credit card and personal loan side. What we are seeing in this cycle is personal loans and credit cards growing much faster, and we are indeed growing at a fast pace. However, given that we are underweighted there, those competitors that are overweighted on those products are seeing a lot of growth. Then strategically, we are reducing the way of payrolls in our overall portfolio. That has many reasons. The two main reasons are, one, we are reducing sensitivity to interest rates that we suffered during the past cycle.

Speaker #1: What we're seeing in this cycle is personal loans and credit cards growing much faster. And we are indeed growing at a fast pace. However, given that we're underweighted there, those competitors that are overweighted on those products are seeing a lot of growth.

Speaker #1: Then strategically, we are reducing the way of payrolls in our overall portfolio. That has many reasons. The two main reasons are one, we are reducing sensitivity to interest rates that we suffered during the past cycle.

Speaker #1: And as you might have seen, if you think we're looking at interest rates at levels that are close to what we saw at the peak of the last cycle, not there, but close to those, and we're not suffering in the same manner that we did before.

Diego Fernando Solano Saravia: And as you might have seen, if you think we're looking at interest rates at levels that are close to what we saw at the peak of the last cycle, not there, but close to those, and we are not suffering in the same manner that we did before. So we've been restructuring our portfolio to reduce interest rate sensitivity. On the other side, we see also an opportunity to improve our average interest rate, our NIM, in that process, and we see room to gain space. Part of the rationale of the Itaú transaction is precisely speeding up that process. In order of magnitude, the Itaú transaction could be gaining us a couple of years of growth and precisely in the segments that we want it to grow. So, that's the reason why our growth has been lower.

Speaker #1: So we've been restructuring our portfolio to reduce interest rate sensitivity. And the other side, we see also an opportunity to improve our average interest rate, our NIM in that process, and we see room to gain space.

Speaker #1: Part of the rationale of the Itaú transaction is precisely speeding up that process an order of magnitude the Itaú transaction could be gaining us a couple of years of growth.

Speaker #1: And precisely in the segments that we wanted to grow. So that's the reason why our growth has been lower. It has we are concentrated in payroll loans and strategically we're reducing our share there.

Diego Fernando Solano Saravia: It is we are concentrated in payroll loans, and strategically we're reducing our share there, and we're not as exposed to the high-growth products where we are gaining share as well, as I mentioned, in the call.

Speaker #1: And we're not as exposed to the high growth products. Where we are gaining share as well as I mentioned in the call.

Speaker #4: Perfect.

Daniel Mora: Perfect. Thank you so much.

Speaker #2: So I understand no more questions? No more questions, no?

María Lorena Gutiérrez Botero: So I understand no more questions. No more questions, no?

Speaker #3: So no further questions.

Operator 2: There are no further questions.

Speaker #2: Thank you for being with us and for the interesting questions. And see you in next conference call. Results call. Have a good day. Bye.

María Lorena Gutiérrez Botero: Thank you for being with us and for the interesting questions, and see you in next conference call, results call. Have a good day. Bye.

Operator 2: Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating, and you may now disconnect.

Browse all earnings call transcripts

Q2 2026 Grupo Aval Acciones y Valores SA Pfd Earnings Call

Request TrialDemo

Grupo Aval Acciones y Valores

Earnings