Q2 2026 Banco Davivienda SA Pfd Earnings Call

August 12, 2026

Speaker #3: Welcome to the Vivienda Group's second quarter of 2026 earnings conference call. I'm Karen, and I'll be your PA for today's call. Today's presentation is for investors and analysts only.

Speaker #3: Therefore, questions from the media will not be addressed. Today, Mr. Javier Suárez, Chief Executive Officer, and Mr. Pedro Buarquez, VP of Strategic Risk and Financial Planning, will join us to discuss the quarterly results that have been released.

Speaker #3: If you have not yet received a copy of the earnings report and presentation, please visit the Vivienda Group's Investor Kit or the Financial Information section at viviendagroup.com.

Operator: If you have not yet received a copy of the earnings report and presentation, please visit Davivienda Group's investor kit or the financial information section at davivienda.com. All participants are in a listen-only mode at this time. Please note that this conference is being recorded. Afterwards, management will be available for a question and answer session. Before proceeding, let me mention that any forward-looking statements are being made under the safe harbor provided by the Private Securities Litigation Reform Act of 1995.

Speaker #3: All participants are in a listen-only mode at this time. Please note that this conference is being recorded. Afterwards, management will be available for a question-and-answer session.

Speaker #3: Before proceeding, let me mention that any forward-looking statements are being made under the Safe Harbor provided by the Securities Litigation Reform Act of 1995.

Speaker #3: Actual performance could differ materially from that anticipated in any forward-looking statements due to macroeconomic conditions, market risks, and other factors beyond our control. For the Q&A session, please remember the following instructions.

Operator: Actual performance could differ materially from that anticipated in any forward-looking statements due to macroeconomic conditions, market risks, and other factors beyond our control. For the Q&A session, please remember the following instructions. If you are over the phone and have a question, please follow these instructions once the management presentation has come to an end. Press the star button and the number 5 to access the Q&A feature. If you use a speakerphone, you may need to pick up your handset before pressing the numbers. For webcast participants who wish to send questions through chat, click the button with the question mark at the bottom of the webcast screen. If you have multiple questions, we recommend sending a single message with all your questions. I am now pleased to turn the call over to Mr. Javier Suárez Esparragoza, Chief Executive Officer. Mr. Suárez Esparragoza, the floor is yours.

Speaker #3: If you're over the phone and have a question, please follow these instructions once the management presentation has come to an end. Press the start button on number 5 to access the Q&A feature.

Operator: Press the star button and the number 5 to access the Q&A feature. If you use a speakerphone, you may need to pick up your handset before pressing the numbers. For webcast participants who wish to send questions through chat, click the button with the question mark at the bottom of the webcast screen. If you have multiple questions, we recommend sending a single message with all your questions. I am now pleased to turn the call over to Mr. Javier Suárez Esparragoza, Chief Executive Officer. Mr. Suárez Esparragoza, the floor is yours.

Speaker #3: If you use a speakerphone, you may need to pick up your hand before pressing the numbers. For webcast participants who wish to send questions through chat, click the button with the question mark at the bottom of the webcast screen.

Speaker #3: If you have multiple questions, we recommend sending a single message with all your questions. I am now pleased to turn the call over to Mr. Javier Suárez, Chief Executive Officer.

Speaker #3: Mr. Suárez, the floor is yours.

Javier Suárez Esparragoza: Good morning, everyone, and thank you for joining us today for Davivienda Group's Q2 2026 earnings conference call. During the Q2, we delivered a significant improvement in profitability, supported by resilient margins, controlled credit risk, and disciplined management of our funding and operating expenses. This performance is particularly meaningful in a challenging macroeconomic environment characterized by persistent inflationary pressures and elevated interest rates. Today, we will walk you through the key drivers behind the quarter's results and the progress made on our integration roadmap. Please turn to slide 4, where I will begin with an overview of the macroeconomic environment in Colombia. Economic activity gained momentum during the Q2. The economic activity indicator grew by an average of 3.6% year over year in April and May, mainly supported by services, while primary and secondary activities remained more moderate.

Javier Suárez: Good morning, everyone, and thank you for joining us today for Davivienda Group's Q2 2026 earnings conference call. During the Q2, we delivered a significant improvement in profitability, supported by resilient margins, controlled credit risk, and disciplined management of our funding and operating expenses. This performance is particularly meaningful in a challenging macroeconomic environment characterized by persistent inflationary pressures and elevated interest rates.

Speaker #5: Good morning, everyone, and thank you for joining us today for the Vivienda Group's second quarter 2026 earnings conference call. During the second quarter, we delivered a significant improvement in profitability, supported by resilient margins, controlled credit risk, and disciplined management of our funding and operating expenses.

Speaker #5: This performance is particularly meaningful in a challenging macroeconomic environment characterized by persistent inflationary pressures and elevated interest rates. Today, we will walk you through the key drivers behind the quarter's results, and the progress made on our integration roadmap.

Javier Suárez: Today, we will walk you through the key drivers behind the quarter's results and the progress made on our integration roadmap. Please turn to slide 4, where I will begin with an overview of the macroeconomic environment in Colombia. Economic activity gained momentum during the Q2. The economic activity indicator grew by an average of 3.6% year over year in April and May, mainly supported by services, while primary and secondary activities remained more moderate.

Speaker #5: Please turn to slide 4, where I will begin with an overview of the macroeconomic environment in Colombia. Economic activity gained momentum during the second quarter, the economic activity indicator grew by an average of 3.6% year-over-year in April and May, mainly supported by services while primary and secondary activities remained more moderate.

Speaker #5: Annual inflation increased from 5.56% in March to 6.14% in June, with pressures concentrated in food-regulated prices and services. Although the appreciation of the Colombian peso has helped contain imported inflation, convergence toward the central bank's target is expected to be gradual.

Javier Suárez Esparragoza: Annual inflation increased from 5.56% in March to 6.14% in June, with pressures concentrated in food, regulated prices, and services. Although the appreciation of the Colombian peso has helped contain imported inflation, convergence toward the central bank's target is expected to be gradual. Against this backdrop, the central bank increased the policy rate by a cumulative 275 basis points during the year, reaching 12% in June and maintaining it at that level in July. The Colombian peso appreciated by 6% during the quarter and 15.5% year over year. This performance was supported by improved local sentiment and lower country risk premiums, the cancellation of the government's total return swap, and the interest rate differential between Colombia and international markets. For Davivienda Group, this movement has a relevant translation effect.

Javier Suárez: Annual inflation increased from 5.56% in March to 6.14% in June, with pressures concentrated in food, regulated prices, and services. Although the appreciation of the Colombian peso has helped contain imported inflation, convergence toward the central bank's target is expected to be gradual. Against this backdrop, the central bank increased the policy rate by a cumulative 275 basis points during the year, reaching 12% in June and maintaining it at that level in July.

Speaker #5: Against this backdrop, the central bank increased the policy rate by a cumulative 275 basis points during the year, reaching 12% in June and maintaining it at that level in July.

Speaker #5: The Colombian peso appreciated by 6% during the quarter and 15.5% year-over-year. This performance was supported by improved local sentiment and lower country-risks premiums, the cancellation of the government's total return swap, and the interest rate differential between Colombia and international markets.

Javier Suárez: The Colombian peso appreciated by 6% during the quarter and 15.5% year over year. This performance was supported by improved local sentiment and lower country risk premiums, the cancellation of the government's total return swap, and the interest rate differential between Colombia and international markets. For Davivienda Group, this movement has a relevant translation effect.

Speaker #5: For the Vivienda Group, this movement has a relevant translation effect. As approximately 28% of our assets are located in Central America, the appreciation reduces the value in Colombian pesos of our international balances and related results.

Javier Suárez Esparragoza: As approximately 28% of our assets are located in Central America, the appreciation reduces the value in Colombian pesos of our international balances and related results. While this creates a translation drag on our reported figure in pesos, the underlying organic growth of our Central American franchises remains healthy. Given recent macroeconomic developments, we have revised upwards our year-end inflation expectation to between 6.7% and 6.8%, and our policy rate assumption to 12.5%. Our GDP growth forecast remains around 2.2%. In the short term, these conditions may translate into a more moderate pace of activity. Looking ahead, however, we expect that progress on fiscal consolidation and increased support to different industries will help strengthen confidence and investment, supporting a more sustainable economic expansion in the mid-term.

Javier Suárez: As approximately 28% of our assets are located in Central America, the appreciation reduces the value in Colombian pesos of our international balances and related results. While this creates a translation drag on our reported figure in pesos, the underlying organic growth of our Central American franchises remains healthy. Given recent macroeconomic developments, we have revised upwards our year-end inflation expectation to between 6.7% and 6.8%, and our policy rate assumption to 12.5%.

Speaker #5: While this creates a translation drag on our reported figure in pesos, the underlying organic growth of our Central American franchises remains healthy. Given recent macroeconomic developments, we have revised upwards our year-end inflation expectation to between 6.7% and 6.8%, and our policy rate assumption to 12.5%.

Speaker #5: Our GDP growth forecast remains at around 2.2%. In the short term, these conditions may translate into a more moderate pace of activity, looking ahead; however, we expect that progress on fiscal consolidation and increased support to different industries will help strengthen confidence and investment, supporting a more sustainable economic expansion in the midterm.

Javier Suárez: Our GDP growth forecast remains around 2.2%. In the short term, these conditions may translate into a more moderate pace of activity. Looking ahead, however, we expect that progress on fiscal consolidation and increased support to different industries will help strengthen confidence and investment, supporting a more sustainable economic expansion in the mid-term.

Javier Suárez Esparragoza: From a margin perspective, we expect the impact of increasing interest rates to be limited given our fairly neutral balance sheet position to interest rate shocks. From a credit risk perspective, we may see some additional pressure in PDLs. However, at this stage, we are not anticipating material impacts that would prompt a change in our guidance. Please move on to slide 5, where we will review the latest trends in the Colombian financial system. Interest rates continue to adjust to a more restrictive monetary policy environment. During the quarter, average lending rates increased across all segments. Deposit rates also remain elevated, particularly at longer maturities. Against this backdrop, credit growth remained positive during the Q2. As of May, the system's gross loan portfolio grew 9% year over year. Consumer loans accelerated to 9.6%, supported by a stronger household demand.

Javier Suárez: From a margin perspective, we expect the impact of increasing interest rates to be limited given our fairly neutral balance sheet position to interest rate shocks. From a credit risk perspective, we may see some additional pressure in PDLs. However, at this stage, we are not anticipating material impacts that would prompt a change in our guidance. Please move on to slide 5, where we will review the latest trends in the Colombian financial system. Interest rates continue to adjust to a more restrictive monetary policy environment.

Speaker #5: From a margin perspective, we expect the impact of increasing interest rates to be limited during our fairly neutral balance sheet position to interest rate shocks.

Speaker #5: And from a credit risk perspective, we may see some additional pressure in PDLs. However, at this stage, we are not anticipating material impacts that would prompt a change in our guidance.

Speaker #5: Please move on to slide 5, where we will review the latest trends in the Colombian financial system. Interest rates continue to adjust to a more restrictive monetary policy environment.

Speaker #5: During the quarter, average lending rates increased across all segments. Deposit rates also remained elevated, particularly at longer maturities. Against this backdrop, credit growth remained positive during the second quarter.

Javier Suárez: During the quarter, average lending rates increased across all segments. Deposit rates also remain elevated, particularly at longer maturities. Against this backdrop, credit growth remained positive during the Q2. As of May, the system's gross loan portfolio grew 9% year over year. Consumer loans accelerated to 9.6%, supported by a stronger household demand.

Speaker #5: As of May, the system's gross loan portfolio grew 9% year-over-year. Consumer loans accelerated to 9.6%, supported by a stronger household demand. In contrast, mortgage and commercial loans showed a more moderate pace.

Javier Suárez Esparragoza: In contrast, mortgage and commercial loans showed a more moderate pace. Asset quality remains sound. The system's total 90-day past due loan ratio stood at 2.81% in May and continued to decline below the levels observed in 2018. Going forward, the main factors to monitor at the system level will be the pace of consumer loan growth and the evolution of household leverage. Moving on to slide 6. Central America continued to show resilient economic activity during the H1 of the year. El Salvador and Honduras accelerated compared with the final quarter of 2025, with Q1 GDP growth reaching 4.8% and 3.8% respectively. Panama maintained a strong pace of 4.8%, while Costa Rica moderated slightly but continued to expand at a healthy 4.1%. Sovereign credit developments were also broadly stable to positive.

Javier Suárez: In contrast, mortgage and commercial loans showed a more moderate pace. Asset quality remains sound. The system's total 90-day past due loan ratio stood at 2.81% in May and continued to decline below the levels observed in 2018. Going forward, the main factors to monitor at the system level will be the pace of consumer loan growth and the evolution of household leverage.

Speaker #5: Asset quality remained sound. The system's total 90-day past-due loan ratio stood at 2.81% in May and continued to decline below the levels observed in 2018.

Speaker #5: Going forward, the main factors to monitor at the system level will be the pace of consumer loan growth and the evolution of household leverage.

Speaker #5: Moving on to slide 6, Central America continued to show resilient economic activity during the first half of the year. El Salvador and Honduras accelerated compared with the final quarter of 2025, with first-quarter GDP growth reaching 4.8% and 3.8%, respectively.

Javier Suárez: Moving on to slide 6. Central America continued to show resilient economic activity during the H1 of the year. El Salvador and Honduras accelerated compared with the final quarter of 2025, with Q1 GDP growth reaching 4.8% and 3.8% respectively. Panama maintained a strong pace of 4.8%, while Costa Rica moderated slightly but continued to expand at a healthy 4.1%. Sovereign credit developments were also broadly stable to positive.

Speaker #5: Panama maintained a strong pace of 4.8%, while Costa Rica moderated slightly but continued to expand at a healthy 4.1%. Touring credit developments were also broadly stable to positive.

Speaker #5: Moody's revised El Salvador's outlook to positive, while Standard and Poor's improved Honduras' outlook to from negative to stable. Fitch maintained a positive outlook on Costa Rica and Panama's rating remained unchanged, with fiscal consolidation continuing to be the main variable monitored by the agencies.

Javier Suárez Esparragoza: Moody's revised El Salvador's outlook to positive, while Standard & Poor's improved Honduras' outlook from negative to stable. Fitch maintained a positive outlook on Costa Rica, and Panama's rating remained unchanged, with fiscal consolidation continuing to be the main variable monitored by the agencies. Inflation increased across the region, mainly reflecting higher international oil and fuel prices. A relevant development during the semester was the continued appreciation of the Costa Rican colón, which strengthened by approximately 9% year to date. This movement was supported by sustained foreign currency inflows from foreign direct investment, tourism, and payroll payments, among others. As we've shared with you before, while this effect protects our capital and solvency ratios through our hedging strategy, it generates a negative impact on our P&L, temporarily affecting Central America's reported profits.

Javier Suárez: Moody's revised El Salvador's outlook to positive, while Standard & Poor's improved Honduras' outlook from negative to stable. Fitch maintained a positive outlook on Costa Rica, and Panama's rating remained unchanged, with fiscal consolidation continuing to be the main variable monitored by the agencies. Inflation increased across the region, mainly reflecting higher international oil and fuel prices.

Speaker #5: Inflation increased across the region, mainly reflecting higher international oil and fuel prices. A relevant development during the semester was the continued appreciation of the Costa Rican colone, which strengthened by approximately 9% year-to-date.

Javier Suárez: A relevant development during the semester was the continued appreciation of the Costa Rican colón, which strengthened by approximately 9% year to date. This movement was supported by sustained foreign currency inflows from foreign direct investment, tourism, and payroll payments, among others. As we've shared with you before, while this effect protects our capital and solvency ratios through our hedging strategy, it generates a negative impact on our P&L, temporarily affecting Central America's reported profits.

Speaker #5: This movement was supported by sustained foreign currency inflows from foreign direct investment, tourism, and payroll payments, among others. As we've shared with you before, while this effect protects our capital and solvency ratios through our hedging strategy, it generates a negative impact on our P&L, temporarily affecting Central America's reported profits.

Speaker #5: Looking ahead, we expect the region to maintain positive growth close to the decade's average supported by domestic demand, investment, and services. Inflation should remain relatively contained, although international fuel prices will be a factor to monitor.

Javier Suárez Esparragoza: Looking ahead, we expect the region to maintain positive growth close to the decades' average, supported by domestic demand, investment, and services. Inflation should remain relatively contained, although international fuel prices will be a factor to monitor. Further progress in fiscal consolidation should also contribute to stronger sovereign profiles and greater macroeconomic stability. Please move on to slide 7, where we present Davivienda Group's main financial results for Q2. Our gross loan portfolio closed at COP 201.1 trillion, decreasing 0.6% during the quarter, mainly due to the appreciation of the Colombian peso. Excluding foreign exchange effects, loans grew 1% quarterly, supported by positive underlying dynamics in consumer and mortgage lending. The portfolio has grown 4% year to date when excluding FX. Quarterly NIM, including derivatives, increased by 49 basis points to 6.16%.

Javier Suárez: Looking ahead, we expect the region to maintain positive growth close to the decades' average, supported by domestic demand, investment, and services. Inflation should remain relatively contained, although international fuel prices will be a factor to monitor. Further progress in fiscal consolidation should also contribute to stronger sovereign profiles and greater macroeconomic stability.

Speaker #5: Further progress in fiscal consolidation should also contribute to stronger sovereign profiles and greater macroeconomic stability. Please move on to slide 7, where we present the Davivienda Group's main financial results for the second quarter.

Javier Suárez: Please move on to slide 7, where we present Davivienda Group's main financial results for Q2. Our gross loan portfolio closed at COP 201.1 trillion, decreasing 0.6% during the quarter, mainly due to the appreciation of the Colombian peso. Excluding foreign exchange effects, loans grew 1% quarterly, supported by positive underlying dynamics in consumer and mortgage lending. The portfolio has grown 4% year to date when excluding FX. Quarterly NIM, including derivatives, increased by 49 basis points to 6.16%.

Speaker #5: Our gross loan portfolio closed at 201.1 trillion pesos, decreasing 0.6% during the quarter, mainly due to the appreciation of the Colombian peso. Excluding foreign exchange effects, loans grew 1% quarterly supported by positive underlying dynamics in consumer and mortgage lending.

Speaker #5: The portfolio has grown 4% year-to-date when excluding effects. Quarterly NIM, including derivatives, increased by 49 basis points, to 6.16%. This improvement reflected higher loan income and a strong contribution from our investment portfolio supported by larger positions in Colombian government securities and favorable movements in sovereign yield curves.

Javier Suárez Esparragoza: This improvement reflected higher loan income and a strong contribution from our investment portfolio, supported by larger positions in Colombian government securities and favorable movements in sovereign yield curves. This performance also reflects the group's interest rate profile following the integration. The complementary positions of Banco Davivienda and DAVIbank result in a broadly neutral position for Davivienda Group, reducing our short-term exposure to a single direction in interest rates. Three elements contribute to this position. First, we've increased the variable rate portion of our loan book. Second, low and mid call demand deposits have been increasing as a share of our total liabilities, providing a more stable funding base that does not immediately reprice with changes in market rates.

Javier Suárez: This improvement reflected higher loan income and a strong contribution from our investment portfolio, supported by larger positions in Colombian government securities and favorable movements in sovereign yield curves. This performance also reflects the group's interest rate profile following the integration.

Speaker #5: This performance also reflects the group's interest rate profile following the integration. The complementary positions of Banco Davivienda and DADIBANK resolved in a broadly neutral position for the Vivienda Group, reducing our short-term exposure to a single-direction in interest rates.

Javier Suárez: The complementary positions of Banco Davivienda and DAVIbank result in a broadly neutral position for Davivienda Group, reducing our short-term exposure to a single direction in interest rates. Three elements contribute to this position. First, we've increased the variable rate portion of our loan book. Second, low and mid call demand deposits have been increasing as a share of our total liabilities, providing a more stable funding base that does not immediately reprice with changes in market rates.

Speaker #5: Three elements contribute to this position: first, we've increased the variable rate portion of our loan book. Second, low and mid-cost demand deposits have been increasing as a share of our total liabilities, providing a more stable funding base that does not immediately reprice with changes in market rates.

Speaker #5: Third, we have carefully managed the duration of liabilities, particularly term deposits, which allows us to manage renewals progressively and adjust pricing, providing greater flexibility to manage costs as macroeconomic conditions evolve.

Javier Suárez Esparragoza: Third, we have carefully managed the duration of liabilities, particularly term deposits, which allows us to manage renewals progressively and adjust pricing, providing greater flexibility to manage costs as macroeconomic conditions evolve. Cost of risk remains stable at 2.14% on their scoring control provision requirements and sound credit risk management despite the challenging macroeconomic environment. Operating expenses also declined during the quarter, primarily because the wealth tax was fully recognized in Q1, complemented by continued discipline in personnel and other operating expenses. These dynamics resulted in COP 830 billion of profit for the quarter and COP 1.13 trillion for the H1. However, a significant portion of this quarter's profit was driven by market conditions benefiting our investment portfolio, alongside the PPA accounting impact stemming from the fair value recognition of the acquired assets and liabilities.

Javier Suárez: Third, we have carefully managed the duration of liabilities, particularly term deposits, which allows us to manage renewals progressively and adjust pricing, providing greater flexibility to manage costs as macroeconomic conditions evolve. Cost of risk remains stable at 2.14% on their scoring control provision requirements and sound credit risk management despite the challenging macroeconomic environment.

Speaker #5: Cost of risk remained stable at 2.14%, underscoring controlled provision requirements and sound credit risk management despite the challenging macroeconomic environment. Operating expenses also declined during the quarter, primarily because the wealth tax was fully recognized in the first quarter, complemented by continued discipline in personnel and other operating expenses.

Javier Suárez: Operating expenses also declined during the quarter, primarily because the wealth tax was fully recognized in Q1, complemented by continued discipline in personnel and other operating expenses. These dynamics resulted in COP 830 billion of profit for the quarter and COP 1.13 trillion for the H1. However, a significant portion of this quarter's profit was driven by market conditions benefiting our investment portfolio, alongside the PPA accounting impact stemming from the fair value recognition of the acquired assets and liabilities.

Speaker #5: These dynamics resulted in a profit of $130 billion pesos for the quarter and $1.13 trillion pesos for the first half of the year. However, a significant portion of this quarter's profit was driven by market conditions benefiting our investment portfolio, alongside the PPA accounting impacts stemming from the fair value recognition of the acquired assets and liabilities.

Speaker #5: When excluding the wealth tax accounting and non-recurring impacts, our core performance ROAE would have been 13.62% for the quarter and 11.14% for the first half of the year.

Javier Suárez Esparragoza: When excluding the wealth tax accounting and non-recurring impacts, our core performance ROAE would have been 13.62% for the quarter and 11.14% for the H1 of the year. Our capital position also remains sound. Banco Davivienda's CET1 ratio reached 12.13%, providing an adequate capital buffer to support growth and the integration process. Therefore, as we look past these accounting and non-recurring dynamics, the key message I want to emphasize is the structural progress of our franchise. Our core underlying trends, stable asset quality, rising net interest margins, and disciplined expense management confirm the continued recovery of the group's core financial fundamentals. We are building a highly resilient, integrated operation, and this quarter's results confirm we are executing on that vision. Please move on to slide 8, where I would like to share the latest developments in DaviPlata.

Javier Suárez: When excluding the wealth tax accounting and non-recurring impacts, our core performance ROAE would have been 13.62% for the quarter and 11.14% for the H1 of the year. Our capital position also remains sound. Banco Davivienda's CET1 ratio reached 12.13%, providing an adequate capital buffer to support growth and the integration process. Therefore, as we look past these accounting and non-recurring dynamics, the key message I want to emphasize is the structural progress of our franchise.

Speaker #5: Our capital position also remained sound, Banco Davivienda's C81 ratio reached 12.13%, providing an adequate capital buffer to support growth and the integration process. Therefore, as we look past these accounting and non-recurring dynamics, the key message I want to emphasize is the structural progress of our franchise.

Speaker #5: Our core underlying trends: stable asset quality, widening net interest margins, and discipline expense management confirm the continued recovery of the group's core financial fundamentals.

Javier Suárez: Our core underlying trends, stable asset quality, rising net interest margins, and disciplined expense management confirm the continued recovery of the group's core financial fundamentals. We are building a highly resilient, integrated operation, and this quarter's results confirm we are executing on that vision. Please move on to slide 8, where I would like to share the latest developments in DaviPlata.

Speaker #5: We're building a highly resilient, integrated operation, and this quarter's results confirm we are executing on that vision. Please move on to slide 8, where I would like to share the latest developments in DaviPlata.

Speaker #5: DaviPlata continued to strengthen its role as a source of low-cost funding, a highly transactional platform, and a growing contributor to the group's revenues. Average low amount deposits reached 1.29 trillion pesos, increasing 4% during the quarter and 31% year-over-year.

Javier Suárez Esparragoza: DaviPlata continued to strengthen its role as a source of low-cost funding, a highly transactional platform, and a growing contributor to the group's revenues. Average loan amount deposits reached COP 1.29 trillion, increasing 4% during the quarter and 31% year over year. Transactionality also remained strong, with monetized transactions growing 13% during the quarter and purchases increasing 8%, reflecting greater recurrence and engagement across the platform. This activity translated into stronger monetization. Quarterly income increased by 15% sequentially, while accumulated income rose 58% year over year. Growth was supported by transactional revenues, the increasing contribution from lending, and the income generated from the funding provided to Banco Davivienda. The credit portfolio reached COP 145 billion, increasing 2% during the quarter and almost four times compared with a year ago. Although disbursements moderated sequentially as we continue refining our origination models, they remain 74% above last year's level.

Javier Suárez: DaviPlata continued to strengthen its role as a source of low-cost funding, a highly transactional platform, and a growing contributor to the group's revenues. Average loan amount deposits reached COP 1.29 trillion, increasing 4% during the quarter and 31% year over year. Transactionality also remained strong, with monetized transactions growing 13% during the quarter and purchases increasing 8%, reflecting greater recurrence and engagement across the platform. This activity translated into stronger monetization.

Speaker #5: Transactionality also remained strong, with monetary transactions growing 13% during the quarter and purchases increasing 8%, reflecting greater recurrence and engagement across the platform. This activity translated into stronger monetization.

Speaker #5: Quarterly income increased by 15% sequentially, while accumulated income rose 58% year-over-year, growth was supported by transactional revenues, the increasing contribution from lending, and the income generated from the funding provided to Banco Davivienda.

Javier Suárez: Quarterly income increased by 15% sequentially, while accumulated income rose 58% year over year. Growth was supported by transactional revenues, the increasing contribution from lending, and the income generated from the funding provided to Banco Davivienda. The credit portfolio reached COP 145 billion, increasing 2% during the quarter and almost four times compared with a year ago. Although disbursements moderated sequentially as we continue refining our origination models, they remain 74% above last year's level.

Speaker #5: The credit portfolio reached 145 billion pesos, increasing 2% during the quarter and almost 4 times compared with a year ago. Although disbursements moderated sequentially as we continued refining our origination models, they remained 74% above last year's level.

Speaker #5: Looking ahead, we expect credit origination to regain momentum progressively, while preserving disciplined risk management under a higher-rate, high-inflation environment. Our growth strategy is based on the information generated within the DaviPlata ecosystem, which allows us to identify customers with recurring cash flows and transactional behavior, and offer them products aligned with their payment capacity.

Javier Suárez Esparragoza: Looking ahead, we expect credit origination to regain momentum progressively while preserving disciplined risk management under a high rate and inflation environment. Our growth strategy is based on the information generated within the DaviPlata ecosystem, which allows us to identify customers with recurring cash flows and transactional behavior and offer them products aligned with their payment capacity. This quarter also marked an important milestone in DaviPlata's evolution as a neobank with the launch of a fully digital credit card, whose origination and management journey takes place directly within the DaviPlata app. During its first month, we received more than 32,000 applications, opened over 7,600 cards, and generated COP 3.2 billion in purchases. Going forward, our focus will be on increasing activation and usage, expanding product functionality, and strengthening cross-selling opportunities with Davivienda.

Javier Suárez: Looking ahead, we expect credit origination to regain momentum progressively while preserving disciplined risk management under a high rate and inflation environment. Our growth strategy is based on the information generated within the DaviPlata ecosystem, which allows us to identify customers with recurring cash flows and transactional behavior and offer them products aligned with their payment capacity.

Speaker #5: This quarter also marked an important milestone in DaviPlata's evolution as a new bank, with the launch of a fully digital credit card, whose origination and management journey takes place directly within the DaviPlata app.

Javier Suárez: This quarter also marked an important milestone in DaviPlata's evolution as a neobank with the launch of a fully digital credit card, whose origination and management journey takes place directly within the DaviPlata app. During its first month, we received more than 32,000 applications, opened over 7,600 cards, and generated COP 3.2 billion in purchases. Going forward, our focus will be on increasing activation and usage, expanding product functionality, and strengthening cross-selling opportunities with Davivienda.

Speaker #5: During its first month, we received more than 32,000 applications, opened over 7,600 cards, and generated 3.2 billion pesos in purchases. Going forward, our focus will be on increasing activation and usage expanding product functionality and strengthening cross-selling opportunities with Davivienda.

Speaker #5: Together, this developments bring forth DaviPlata's value proposition across deposits, payments, and credit, while supporting greater recurrence, deeper customer relationships, and sustainable income generation. Turning to slide 9, I'd like to share an update on how we are advancing in our integration roadmap.

Javier Suárez Esparragoza: Together, these developments reinforce DaviPlata's value proposition across deposits, payments, and credit, while supporting greater recurrence, deeper customer relationships, and sustainable income generation. Turning to slide 9, I would like to share an update on how we are advancing in our integration roadmap. In Colombia, shareholders approved the transfer of assets and liabilities from DAVIbank to Banco Davivienda. To summarize the mechanics of this operation, Banco Davivienda will integrate DAVIbank's core banking assets and liabilities. In exchange, Banco Davivienda will transfer up to 30% of its shares in Holding Davivienda Internacional to DAVIbank. The final exchange ratio will be determined by an independent third-party valuation based on market values at the effective date of the transfer. The roadmap ahead consists of securing the required regulatory approvals to execute the legal, operational, and technological integration.

Javier Suárez: Together, these developments reinforce DaviPlata's value proposition across deposits, payments, and credit, while supporting greater recurrence, deeper customer relationships, and sustainable income generation. Turning to slide 9, I would like to share an update on how we are advancing in our integration roadmap. In Colombia, shareholders approved the transfer of assets and liabilities from DAVIbank to Banco Davivienda.

Speaker #5: In Colombia, shareholders approved the transfer of assets and liabilities from DADIBANK to Banco Davivienda. To summarize the mechanics of this operation, Banco Davivienda will integrate DADIBANK's core banking assets and liabilities.

Javier Suárez: To summarize the mechanics of this operation, Banco Davivienda will integrate DAVIbank's core banking assets and liabilities. In exchange, Banco Davivienda will transfer up to 30% of its shares in Holding Davivienda Internacional to DAVIbank. The final exchange ratio will be determined by an independent third-party valuation based on market values at the effective date of the transfer. The roadmap ahead consists of securing the required regulatory approvals to execute the legal, operational, and technological integration.

Speaker #5: In exchange, Banco Davivienda will transfer up to 30% of its shares in holding Davivienda Internacional to DaviBANK. The final exchange ratio will be determined by an independent third-party valuation based on market values at the effective date of the transfer.

Speaker #5: The roadmap ahead consists of securing the required regulatory approvals to execute the legal, operational, and technological integration. While internally we've been advancing in the preparation process, the timeline is ultimately tied to receiving these authorizations.

Javier Suárez Esparragoza: While internally, we have been advancing in the preparation process, the timeline is ultimately tied to receiving these authorizations, which we expect to obtain later this year or in early 2027. As we have shared before, 2026 remains primarily an investment and transition year, while the net contribution is expected to become increasingly visible as the integration progresses. Year to date, we have realized close to 6% of the expected synergies and incurred around 27% of the expected costs. Our midterm expectations remain unchanged, with total one-time integration costs of between COP 600 billion and COP 700 billion and annual operating expense efficiencies of between COP 900 billion and COP 1.2 trillion, with full capture beginning in 2028. These benefits are expected to support a cost-to-income ratio between 43% and 45% and an ROAE between 14% and 16% by 2028, 2029. In general terms, this process is advancing according to plan.

Javier Suárez: While internally, we have been advancing in the preparation process, the timeline is ultimately tied to receiving these authorizations, which we expect to obtain later this year or in early 2027. As we have shared before, 2026 remains primarily an investment and transition year, while the net contribution is expected to become increasingly visible as the integration progresses. Year to date, we have realized close to 6% of the expected synergies and incurred around 27% of the expected costs.

Speaker #5: Which we expect to obtain later this year, or in early 2027. As we have shared before, 2026 remains primarily an investment and transition year, while the net contribution is expected to become increasingly visible as the Year-to-date, we have realized close to 6% of the expected synergies, and incurred around 27% of the expected costs.

Speaker #5: Our midterm expectations remain unchanged, with total one-time integration costs of between $600 and $700 billion pesos, and annual operating expense efficiencies of between $900 billion and $1.2 trillion pesos, with full capture beginning in 2028.

Javier Suárez: Our midterm expectations remain unchanged, with total one-time integration costs of between COP 600 billion and COP 700 billion and annual operating expense efficiencies of between COP 900 billion and COP 1.2 trillion, with full capture beginning in 2028. These benefits are expected to support a cost-to-income ratio between 43% and 45% and an ROAE between 14% and 16% by 2028, 2029. In general terms, this process is advancing according to plan.

Speaker #5: These benefits are expected to support a cost-to-income ratio between 43% and 45%, and an ROAE between 14% and 16% by 2028–2029. In general terms, this process is advancing according to plan.

Speaker #5: We are highly focused on preparing our operations and platforms to guarantee the best possible execution, setting the groundwork to ensure a seamless transition for our clients while unlocking the full long-term value of this combined franchise.

Javier Suárez Esparragoza: We are highly focused on preparing our operations and platforms to guarantee the best possible execution. Setting the groundwork to ensure a seamless transition for our clients while unlocking the full long-term value of this combined franchise. With that, I will now hand the call over to Pedro to walk you through our financial results and updated guidance. Pedro, please go ahead.

Javier Suárez: We are highly focused on preparing our operations and platforms to guarantee the best possible execution. Setting the groundwork to ensure a seamless transition for our clients while unlocking the full long-term value of this combined franchise. With that, I will now hand the call over to Pedro to walk you through our financial results and updated guidance. Pedro, please go ahead.

Speaker #5: With that, I will now hand the call over to Pedro, to walk you through our financial results and updated guidance. Pedro, please go ahead.

Speaker #1: Thank you, Javier. Please move on to slide 10, where we reveal the evolution of our credit portfolio. Overall, the quarter shows positive underlying loan growth when excluding the effect of a stronger peso.

Pedro Bohórquez: Thank you, Javier. Please move on to slide 10, where we review the evolution of our credit portfolio. Overall, the quarter shows positive underlying loan growth when excluding the effect of a stronger peso. The total loan book grew by 1%, supported by a 2.4% expansion of the consumer loan book and a 1.7% growth in the mortgage portfolio. Growth remained concentrated in segments and customers where we see attractive risk-adjusted returns, consistent with our disciplined approach to origination and capital allocation. The consumer loan book was supported by positive dynamics in both Colombia and Central America. Banco Davivienda remains the main contributor in Colombia, while Davivienda also recorded positive growth. In Central America, performance was supported particularly by Costa Rica and El Salvador. Mortgage loan growth reflects continued demand in Banco Davivienda Colombia and positive dynamics in our international operations, especially in Costa Rica.

Speaker #1: The total loan book grew by 1%, supported by a 2.4% expansion of the consumer loan book, and a 1.7% growth in the mortgage portfolio.

Speaker #1: Growth remained concentrated in segments and customers, where we see attractive risk-adjusted returns, consistent with our discipline approach to origination and capital allocation. The consumer loan book was supported by positive dynamics in both Colombia and Central America.

Pedro Bohórquez: The consumer loan book was supported by positive dynamics in both Colombia and Central America. Banco Davivienda remains the main contributor in Colombia, while Davivienda also recorded positive growth. In Central America, performance was supported particularly by Costa Rica and El Salvador. Mortgage loan growth reflects continued demand in Banco Davivienda Colombia and positive dynamics in our international operations, especially in Costa Rica.

Speaker #1: Banco Davivienda remained the main contributor in Colombia, while DaviBANK also recorded positive growth. In Central America, performance was supported particularly by Costa Rica and El Salvador.

Speaker #1: Mortgage loan growth reflects continued demand in Banco Davivienda Colombia, and positive dynamics in our international operations, especially in Costa Rica. When looking specifically at the commercial portfolio, we observe a slight contraction after excluding effects.

Pedro Bohórquez: When looking specifically at the commercial portfolio, we observe a slight contraction after excluding effects, mainly due to deliberate downsizing decisions to prioritize adequate margin generation aligned with target profitability. By operation, Colombia grew 0.9%, excluding effects, while Central America expanded 1.0% in US dollar terms, led by consumer and mortgage lending, with Costa Rica and El Salvador showing the strongest performance. Please move on to slide 11, where we will review the evolution of past due loans and coverage levels. The group's 90-day PDL ratio remains stable at 3.64%, reflecting selective origination and proactive collection management to contain deterioration amidst higher inflation and interest rates. By segment, commercial PDLs improved by eight basis points to 3.69%, supported by the stabilization of previously identified exposures and continued case-by-case management. Consumer PDLs increased moderately by six basis points to 3.03%.

Speaker #1: Mainly due to deliberate downsizing decisions, to prioritize adequate margin generation aligned with target profitability. By operation, Colombia grew 0.9% excluding effects, while Central America expanded 1.0% in US dollar terms, led by consumer and mortgage lending, with Costa Rica and El Salvador showing the strongest performance.

Speaker #1: Please move on to slide 11, where we will review the evolution of past due loans and coverage levels. The group's 90-day PDL ratio remains stable at 3.64%, reflecting selective origination and proactive collection management to contain deterioration amidst higher inflation and interest rates.

Pedro Bohórquez: Please move on to slide 11, where we will review the evolution of past due loans and coverage levels. The group's 90-day PDL ratio remains stable at 3.64%, reflecting selective origination and proactive collection management to contain deterioration amidst higher inflation and interest rates. By segment, commercial PDLs improved by eight basis points to 3.69%, supported by the stabilization of previously identified exposures and continued case-by-case management. Consumer PDLs increased moderately by six basis points to 3.03%.

Speaker #1: By segment, commercial PDLs improved by 8 basis points to 3.69%, supported by the stabilization of previously identified exposures and continued case-by-case management. Consumer PDLs increased moderately by 6 basis points to 3.03%.

Speaker #1: This remains a controlled level and is consistent with our expectations under the current macro environment. We will delve deeper into this portfolio's performance on the next slide.

Pedro Bohórquez: This remains a controlled level and is consistent with our expectations under the current macro environment. We will delve deeper into this portfolio's performance on the next slide. In mortgages, both the 90-day and 120-day PDL ratios increased modestly, reaching 4.11% and 3.51% respectively. This movement mainly reflects the expansion of the portfolio and the seasoning of recent originations. To a lesser extent, we have also observed a slight increase in risk among recent vintages as higher interest rates begin to affect customers' debt service capacity. While we may observe some additional pressure over the coming quarters, we expect mortgage asset quality to remain broadly stable, supported by strict origination standards, proactive collection strategies, and close monitoring of recent vintages. Coverage levels continue to strengthen. Total coverage increased to 107.5%, while the ratio including collaterals reached 161.3%.

Speaker #1: In mortgages, both the 90-day and 120-day PDL ratios increased modestly, reaching 4.11% and 3.51% respectively. This movement mainly reflects the expansion of the portfolio and the seasoning of recent originations.

Speaker #1: To a lesser extent, we have also observed a slight increase in risk among recent vintages, as higher interest rates begin to affect customers' debt service capacity.

Pedro Bohórquez: To a lesser extent, we have also observed a slight increase in risk among recent vintages as higher interest rates begin to affect customers' debt service capacity. While we may observe some additional pressure over the coming quarters, we expect mortgage asset quality to remain broadly stable, supported by strict origination standards, proactive collection strategies, and close monitoring of recent vintages. Coverage levels continue to strengthen. Total coverage increased to 107.5%, while the ratio including collaterals reached 161.3%.

Speaker #1: While we may observe some additional pressure over the coming quarters, we expect mortgage asset quality to remain broadly stable, supported by strict origination standards, proactive collection strategies, and close monitoring of recent vintages.

Speaker #1: Coverage levels continue to strengthen. Total coverage increased to 107.5%, while the ratio including collaterals reached 161.3%. The improvement was broad-based, in line with our efforts to reinforce the group's capacity to absorb potential credit losses especially in the consumer and commercial sectors.

Pedro Bohórquez: The improvement was broad-based, in line with our efforts to reinforce the group's capacity to absorb potential credit losses, especially in the consumer and commercial sectors. Going forward, our expectation for the total PDL ratio is to close the year within the 3.3% to 3.8% range, which signals relative stability compared to current levels. Please move on to slide 12, where we will take a closer look at the consumer portfolio and the quality of our recent originations. The quarter's consumer growth is supported by optimized origination policies and solid performance of credit risk metrics. Please note that disbursement volumes over the last 3 quarters reflect Davivienda's added consumer franchise. Our current exposure remains aligned with our risk appetite as growth is concentrated in customers with a stronger payment capacity and supported by dynamic origination policies and continuous monitoring of recent vintages.

Speaker #1: Going forward, our expectation for the total PDL ratio is to close the year within the 3.3% to 3.8% range, which signals relative stability compared to current levels.

Speaker #1: Please move on to slide 12, where we will take a closer look at the consumer portfolio and the quality of our recent originations. The quarter's consumer growth is supported by optimized origination policies and solid performance of credit risk metrics.

Pedro Bohórquez: The quarter's consumer growth is supported by optimized origination policies and solid performance of credit risk metrics. Please note that disbursement volumes over the last 3 quarters reflect Davivienda's added consumer franchise. Our current exposure remains aligned with our risk appetite as growth is concentrated in customers with a stronger payment capacity and supported by dynamic origination policies and continuous monitoring of recent vintages.

Speaker #1: Please note that disbursement volumes over the last three quarters reflect DaviBANK's added consumer franchise. Our current exposure remains aligned with our risk appetite, as growth is concentrated in customers with stronger payment capacity and supported by dynamic origination policies and continuous monitoring of recent vintages.

Speaker #1: This disciplined portfolio construction supports controlled growth as macroeconomic conditions evolve. Credit cards remained an important contributor to quarterly disbursements. However, approximately 40% to 45% of credit card volume corresponds to single-selling purchases.

Pedro Bohórquez: This disciplined portfolio construction supports controlled growth as macroeconomic conditions evolve. Credit cards remained an important contributor to quarterly disbursements. However, approximately 40% to 45% of credit card volume corresponds to single installment purchases. These transactions do not necessarily translate into higher credit exposure, but rather reflect the product usage as a payment method. Moving to portfolio behavior, the formation of new past due loans before write-offs is stable at 1.9% quarter over quarter. At the same time, quarterly write-offs to total loans stand at 1.8% at the group level, indicating lower portfolio cleanup requirements and realized losses. The vintage analysis also remains encouraging. Recent originations continue to perform below the historical reference value, confirming that portfolio growth is being accompanied by controlled early delinquency. Finally, net provision expenses remain contained, consistent with stable new PDL formation, low write-offs, and the healthy performance of recent vintages.

Speaker #1: This transactions do not necessarily translate into higher credit exposure, but rather reflect the product usage as a payment method. Moving to portfolio behavior, the formation of new past due loans before write-offs is stable at 1.9% quarter over quarter.

Speaker #1: At the same time, quarterly write-offs to total loans stand at 1.8% at the group level, indicating lower portfolio cleanup requirements and realized losses. The vintage analysis also remains encouraging.

Pedro Bohórquez: At the same time, quarterly write-offs to total loans stand at 1.8% at the group level, indicating lower portfolio cleanup requirements and realized losses. The vintage analysis also remains encouraging. Recent originations continue to perform below the historical reference value, confirming that portfolio growth is being accompanied by controlled early delinquency. Finally, net provision expenses remain contained, consistent with stable new PDL formation, low write-offs, and the healthy performance of recent vintages.

Speaker #1: Recent originations continue to perform below the historical reference value, confirming that portfolio growth is being accompanied by controlled early delinquency. Finally, net provision expenses remain contained, consistent with stable new PDL formation, lower write-offs, and the healthy performance of recent vintages.

Speaker #1: Overall, our current exposure to consumer lending demonstrates a structured resilience to support gradual expansion while preserving rigorous underwriting and credit risk management. Please continue to slide 13, where we present the portfolio distribution by stages, coverage levels, and provision expenses.

Pedro Bohórquez: Overall, our current exposure to consumer lending demonstrates a structural resilience to support gradual expansion while preserving rigorous underwriting and credit risk management. Please continue to slide 13, where we present the portfolio distribution by stages, coverage levels, and provision expenses. The portfolio composition remained stable during the quarter. Approximately 91% of total loans remain in stage 1, while stage 2 represented close to 5% and stage 3 around 4%. This reflects limited migration toward higher-risk categories. Coverage levels increase across the higher-risk stages, reflecting the continued strengthening of provisions. Quarterly cost of risk remains stable at 2.14%, while the ratio for the H1 of the year stood at 2.15% within our full year guidance range of 2.1% to 2.3%. Overall, a stable stage migration and controlled provision requirements confirm that portfolio growth continues without compromising asset quality.

Speaker #1: The portfolio composition remains stable during the quarter. Approximately 91% of total loans remain in Stage 1, while Stage 2 represented close to 5%, and Stage 3 around 4%.

Pedro Bohórquez: Approximately 91% of total loans remain in stage 1, while stage 2 represented close to 5% and stage 3 around 4%. This reflects limited migration toward higher-risk categories. Coverage levels increase across the higher-risk stages, reflecting the continued strengthening of provisions.

Speaker #1: This reflects limited migration toward higher risk categories. Coverage levels increase across the higher risk stages, reflecting the continued strengthening of provisions. Quarterly cost of risk remains stable at 2.14%, while the ratio for the first half of the year is stood at 2.15% within our full-year guidance range of 2.1 to 2.3%.

Pedro Bohórquez: Quarterly cost of risk remains stable at 2.14%, while the ratio for the H1 of the year stood at 2.15% within our full year guidance range of 2.1% to 2.3%. Overall, a stable stage migration and controlled provision requirements confirm that portfolio growth continues without compromising asset quality.

Speaker #1: Overall, stable stage migration and controlled provision requirements confirm that portfolio growth continues without compromising asset quality. Please move on to slide 14, where we review the evolution of our funding sources and liquidity position.

Pedro Bohórquez: Please move on to slide 14, where we review the evolution of our funding sources and liquidity position. Our funding structure remained stable during the quarter, supported by a diversified mix of deposits, bonds, and institutional funding. As part of our strategy, we continue prioritizing transactional deposits and funding relationships that strengthen the stability and efficiency of our liability structure. Low and mid-cost deposits remained an important component of the mix, although balances moderated during the quarter as market rates remained elevated. At the same time, we continue to optimize the composition of our funding. Banco Davivienda completed a series of local bond issuances by COP 1.6 trillion during the quarter. This represents a deliberate true composition of the mix rather than an increase in overall funding needs. Other funding sources decline as these issuances were used to manage maturities, diversify counterparties, and improve the duration of their liability structure.

Speaker #1: Our funding structure remains stable during the quarter, supported by a diversified mix of deposits, bonds, and institutional funding. As part of our strategy, we continue prioritizing transactional deposits and funding relationships that strengthen the stability and efficiency of our liability structure.

Speaker #1: Low and mid-cost deposits remain an important component of the mix, although balances moderated during the quarter as market rates remain elevated. At the same time, we continue to optimize the composition of our funding.

Pedro Bohórquez: Low and mid-cost deposits remained an important component of the mix, although balances moderated during the quarter as market rates remained elevated. At the same time, we continue to optimize the composition of our funding. Banco Davivienda completed a series of local bond issuances by COP 1.6 trillion during the quarter.

Speaker #1: Banco Davivienda completed a series of local bond issuances by 1.6 trillion pesos during the quarter. This represents a deliberate recomposition of the mix rather than an increase in overall funding needs.

Pedro Bohórquez: This represents a deliberate true composition of the mix rather than an increase in overall funding needs. Other funding sources decline as these issuances were used to manage maturities, diversify counterparties, and improve the duration of their liability structure.

Speaker #1: Other funding sources declined as these issuances were used to manage utilities, diversify counterparties, and improve the duration of the liability structure. Liquidity remained sound across the group.

Pedro Bohórquez: Liquidity remains sound across the group. Banco Davivienda and DAVIbank continue to operate comfortably above their short and long-term liquidity requirements. Overall, our funding strategy continues to balance cost, duration, diversification, and stability while preserving the flexibility required to support growth. Please move on to slide 15, where we review the group's capital structure and the solvency position of Banco Davivienda. Davivienda Group's total equity increased by 1.8% during the quarter, supported by earning generation. This performance was partially offset by the FX translation effect on our Central American operations. At the holding company level, the tangible equity ratio improved to 7.5%, reflecting the continued strengthening of the group's capital base. Double leverage increased moderately to 102.9%, mainly due to Davivienda Group's investment in debt issued by DAVIbank as part of our funding and capital management strategy. The indicator remains at a level consistent with the group's financial framework.

Speaker #1: Banco Davivienda and DaviBANK continue to operate comfortably above their short- and long-term liquidity requirements. Overall, our funding strategy continues to balance costs, duration, diversification, and stability, while preserving the flexibility required to support growth.

Speaker #1: Please move on to slide 15, where we review the Group's capital structure and the solvency position of Banco Davivienda. Davivienda Group's total equity increased by 1.8% during the quarter, supported by earnings generation.

Pedro Bohórquez: Please move on to slide 15, where we review the group's capital structure and the solvency position of Banco Davivienda. Davivienda Group's total equity increased by 1.8% during the quarter, supported by earning generation. This performance was partially offset by the FX translation effect on our Central American operations. At the holding company level, the tangible equity ratio improved to 7.5%, reflecting the continued strengthening of the group's capital base.

Speaker #1: This performance was partially offset by the FX translation effect on our Central American operations. At the holding company level, the tangible equity ratio improved to 7.5%, reflecting the continued strengthening of the group's capital base.

Speaker #1: Double leverage increased moderately to 102.9%, mainly due to Davivienda Group's investment in debt issued by DaviBANK as part of our funding and capital management strategy.

Pedro Bohórquez: Double leverage increased moderately to 102.9%, mainly due to Davivienda Group's investment in debt issued by DAVIbank as part of our funding and capital management strategy. The indicator remains at a level consistent with the group's financial framework.

Speaker #1: The indicator remains at a level consistent with the group's financial framework. At Banco Davivienda, the consolidated CET-1 ratio reached 12.13%, increasing by 18 basis points during the quarter and 75 basis points year over year, supported by stronger earnings generation.

Pedro Bohórquez: At Banco Davivienda, the consolidated CET1 ratio reached 12.13%, increasing by 18 basis points during the quarter and 75 basis points year over year, supported by stronger earnings generation. The groups and the bank's own capital positions provide a comfortable stance to leverage organic growth opportunity that may emerge under a changing cycle in Colombia. Please move on to slide 16, where we review the evolution of our financial margin. Overall, the quarter demonstrates the benefits of disciplined funding management and a more neutral sensitivity profile. It also reflects a strong, although market-dependent treasury contribution, partly offset by the accounting effects of the instruments used to manage the group's interest rate funding and foreign exchange exposures.

Speaker #1: The group's and the bank's own capital positions provide a comfortable sense to leverage organic growth opportunities that may emerge under a changing cycle in Colombia.

Speaker #1: Please move on to slide 16, where we review the evolution of our financial margin. Overall, the quarter demonstrates the benefits of disciplined funding management and a more neutral sensitivity profile.

Pedro Bohórquez: Please move on to slide 16, where we review the evolution of our financial margin. Overall, the quarter demonstrates the benefits of disciplined funding management and a more neutral sensitivity profile. It also reflects a strong, although market-dependent treasury contribution, partly offset by the accounting effects of the instruments used to manage the group's interest rate funding and foreign exchange exposures.

Speaker #1: It also reflects strong, although market-dependent, treasury contribution, partly offset by the accounting effects of the issuances used to manage the group's interest rate, funding, and foreign exchange exposures.

Speaker #1: The main takeaway from the quarter is its resilience of our margin in higher interest rate environment, with repricing reflecting favorable transmission of rates into new originations and variable rate loans together with active management of our deposit mix and funding maturities.

Pedro Bohórquez: The main takeaway from the quarter is the resilience of our margin in a higher interest rate environment, with repricing reflecting favorable transmission of rates into new originations and variable rate loans, together with active management of our deposit mix and funding maturities. Investment and interbank income made a particularly strong contribution during the quarter, driven by a higher valuation of our exposure to Colombian government securities as well as increased income. Part of the valuation gains on these securities should be assessed together with the mark-to-market effects recognized on the derivative positions used to manage their interest rate exposure. After incorporating our foreign exchange and derivative strategy, the quarterly NIM closed at 6.16%, while the six-month annualized ratio reached 5.93%, within our updated full-year guidance range of 5.8% to 6.1%. Please move on to slide 17, where we review the evolution of non-financial income and operating expenses.

Speaker #1: Investment and interbank income may have a particularly strong contribution during the quarter, driven by a higher valuation of our exposure to Colombian government securities, as well as increased income.

Speaker #1: Part of the evaluation gains on these securities should be assessed together with the mark-to-market effects recognized on the derivative exposures used to manage their interest rate exposure.

Pedro Bohórquez: Part of the valuation gains on these securities should be assessed together with the mark-to-market effects recognized on the derivative positions used to manage their interest rate exposure. After incorporating our foreign exchange and derivative strategy, the quarterly NIM closed at 6.16%, while the six-month annualized ratio reached 5.93%, within our updated full-year guidance range of 5.8% to 6.1%. Please move on to slide 17, where we review the evolution of non-financial income and operating expenses.

Speaker #1: After incorporating our foreign exchange and derivative strategy, the quarterly mean closed at 6.16%, while the six-month annualized ratio reached 5.93%, within our updated full-year guidance range of 5.8% to 6.1%.

Speaker #1: Please move on to slide 17, where we review the evolution of non-financial income and operating expenses. Non-financial income increased by 6.7%. Pre-income grew 2.4%, supported by positive performance in cards, collections, cash management, insurance, and acquiring activities across our main operations.

Pedro Bohórquez: Non-financial income increased by 6.7%. Fee income grew 2.4%, supported by positive performance in cards, collections, cash management, insurance, and acquiring activities across our main operations. Other net income increased by 28.2%, mainly driven by the PPA accounting effects mentioned above. Operating expenses declined 11.1% during the quarter. Part of this variation reflects the Q1 wealth tax baseline. Excluding this effect, expenses also benefited from lower personal costs, mainly due to performance-related payments recognized in the previous quarter that did not recur at the same level. To provide a comparable view of efficiency, we recognize this tax impact proportionally throughout the year. On this basis, the 6-month cost-to-income ratio stood at 54.7%. Fully excluding it, the 6-month pro forma cost-to-income ratio was 52.9%, highlighting the underlying improvement in our operating efficiency. Overall, diversified revenue generation and disciplined expense management continue to support the group efficiency and profitability.

Speaker #1: Other net income increased by 28.2%, mainly driven by the PPI accounting effects mentioned above. Operating expenses declined 11.1% during the quarter, part of this variation reflects the first quarter wealth tax baseline.

Speaker #1: Excluding these effects, expenses also benefited from lower personal costs, mainly due to performance-related payments, recognizing the previous quarter that did not recur at the same level.

Pedro Bohórquez: Excluding this effect, expenses also benefited from lower personal costs, mainly due to performance-related payments recognized in the previous quarter that did not recur at the same level. To provide a comparable view of efficiency, we recognize this tax impact proportionally throughout the year.

Speaker #1: To provide a comparable view of efficiency, we recognize these tax impacts proportionally throughout the year. On this basis, the six-month cost-to-income ratio stood at 54.7%.

Pedro Bohórquez: On this basis, the 6-month cost-to-income ratio stood at 54.7%. Fully excluding it, the 6-month pro forma cost-to-income ratio was 52.9%, highlighting the underlying improvement in our operating efficiency. Overall, diversified revenue generation and disciplined expense management continue to support the group efficiency and profitability.

Speaker #1: Fully excluding it, the six-month pro forma cost-to-income ratio was 52.9%, highlighting the underlying improvement in our operating efficiency. Overall, diversified revenue generation and disciplined expense management continue to support the group's efficiency and profitability.

Speaker #1: Please move on to slide 18, where we summarize the evolution of profitability. Net profits reached 830 billion pesos during the quarter, and 1.13 trillion pesos for the first half of the year.

Pedro Bohórquez: Please move on to slide 18, where we summarize the evolution of profitability. Net profits reached COP 830 billion during the quarter and COP 1.13 trillion for the H1 of the year. On a comparable basis, amortizing the Q1 wealth tax throughout the year, quarterly ROE reached 13.88%, while the 6-month ratio stood at 11.11%. When excluding the non-recurring impacts to better observe the underlying performance of our business, ROE for the quarter stood at 13.62%. Please move on to slide 19, where we present our updated expectations for 2026. Based on our performance during the H1 of the year and the current macroeconomic environment, we have updated selected guidance ranges. We now expect total loan growth between 4% to 6%. By segment, commercial and mortgage loans are expected to grow between 4% and 6%, while consumer loans are expected to expand between 3% and 5%.

Speaker #1: On a comparable basis, amortizing the first quarter wealth tax throughout the year, quarterly ROE reached 13.88%, while the six-month ratio stood at 11.11%. When excluding the non-recurring impacts to better observe the underlying performance of our business, ROE for the quarter stood at 13.62%.

Speaker #1: Please move on to slide 19, where we present our updated expectations for 2026. Based on our performance during the first half of the year, and the current macroeconomic environment, we have updated selected guidance ranges.

Pedro Bohórquez: Please move on to slide 19, where we present our updated expectations for 2026. Based on our performance during the H1 of the year and the current macroeconomic environment, we have updated selected guidance ranges. We now expect total loan growth between 4% to 6%. By segment, commercial and mortgage loans are expected to grow between 4% and 6%, while consumer loans are expected to expand between 3% and 5%.

Speaker #1: We now expect total loan growth between 4% and 6%. By segment, commercial and mortgage loans are expected to grow between 4% and 6%, while consumer loans are expected to expand between 3% and 5%.

Speaker #1: This revision mainly reflects FX translation effects. On our continued focus on prioritizing risk-adjusted profitability over value. When excluding the FX impact, expected loan growth for the year will be the 8% to 10% previously guided.

Pedro Bohórquez: These revisions mainly reflect FX translation effects and our continued focus on prioritizing risk-adjusted profitability over volume. When excluding the FX impact, expected loan growth for the year will be the 8% to 10% previously guided. Our expectation for credit risk ratio remains unchanged. We continue to expect the 90-day PDL ratio between 3.3% and 3.8%, while cost of risk is expected to remain between 2.1% and 2.3%. Current performance remains consistent with both ranges. We increased our NIM guidance, including foreign exchange and derivatives, to between 5.8% and 6.1%. This revision reflects investment gains during the H1 of the year. We also increased our non-financial income growth expectations to between 10% and 12%. This revision is primarily driven by the PPA impact. At the same time, we improved our cost-to-income ratio expectation to around 54%, reflecting higher margin and continued discipline in OPEX.

Speaker #1: Our expectation for the credit risk ratio remains unchanged. We continue to expect the 90-day PDR ratio to be between 3.3% and 3.8%, while the cost of risk is expected to remain between 2.1% and 2.3%.

Speaker #1: Current performance remains consistent with both ranges. We increased our mean guidance, including foreign exchange and derivatives, to between 5.8% and 6.1%. This revision reflects investment gains during the first half of the year.

Pedro Bohórquez: We increased our NIM guidance, including foreign exchange and derivatives, to between 5.8% and 6.1%. This revision reflects investment gains during the H1 of the year. We also increased our non-financial income growth expectations to between 10% and 12%. This revision is primarily driven by the PPA impact. At the same time, we improved our cost-to-income ratio expectation to around 54%, reflecting higher margin and continued discipline in OPEX.

Speaker #1: We also increased our non-financial income growth expectation to between 10% and 12%. This revision is primarily driven by the PPI impact. At the same time, we improved our cost-to-income ratio expectation to around 54%, reflecting higher margin and continued discipline in ops.

Speaker #1: As a result, we are updating our full-year ROE guidance to a 10% to 11% range. Thank you. We can now move on to the Q&A session.

Pedro Bohórquez: As a result, we are updating our full-year ROE guidance to a 10% to 11% range. Thank you. We can now move on to the Q&A session.

Speaker #2: More than 180 deaths have been reported so far, as well as thousands of injured. So this definitely is something that we are looking at with our hearts.

Javier Suárez Esparragoza: More than 180 deaths have been reported so far, as well as thousands of injured. It's definitely something that we are looking at with our hearts. That part of the country has suffered the impacts of the earthquake, and not only on losses of life, which of course, are the most important ones, but also in disruption in their economic activities. Airports in the regions are closed. Roads that communicate the main cities in the region are also closed, and that has had an impact on our operation. We have close to 102 branches in the area. Of those, a little less than half of them are closed due to the revisions that are being made to the structural soundness of these offices.

Javier Suárez: More than 180 deaths have been reported so far, as well as thousands of injured. It's definitely something that we are looking at with our hearts. That part of the country has suffered the impacts of the earthquake, and not only on losses of life, which of course, are the most important ones, but also in disruption in their economic activities. Airports in the regions are closed.

Speaker #2: It's part of the that part of the country has suffered the impacts of the earthquake, not only on losses of life, which of course are the most important ones, but also in disruption in their economic activities.

Speaker #2: The airports in the regions are closed, roads that communicate the main cities in the region are also closed, and that has had an impact on our operation.

Javier Suárez: Roads that communicate the main cities in the region are also closed, and that has had an impact on our operation. We have close to 102 branches in the area. Of those, a little less than half of them are closed due to the revisions that are being made to the structural soundness of these offices.

Speaker #2: We have close to 102 branches in the area, of those about half, a little less than half of them are closed due to the revisions that are being made to the structural soundness of this offices.

Speaker #2: So far, we've been able to reopen some of those operations in there are still some small towns around eight small towns in the area where our office, our only office, is closed.

Javier Suárez Esparragoza: So far, we've been able to reopen some of those operations. There are still some small towns, around 8 small towns in the area where our only office is closed, and the most affected areas in Pereira, which is one of the large cities in the region, we've been having difficulties opening our branches. We've moved some of our mobile branch offices into the area. We are now resuming service in some of these branch offices. At the same time, our digital channels have been operating normally. Our ATMs are operating normally. Some of them are down, but are being recovered as we speak. We expect the operational issues to be solved in a couple of days, in a few days. Some of them will take longer, especially in the small towns, but we expect to keep continuing with the service.

Javier Suárez: So far, we've been able to reopen some of those operations. There are still some small towns, around 8 small towns in the area where our only office is closed, and the most affected areas in Pereira, which is one of the large cities in the region, we've been having difficulties opening our branches. We've moved some of our mobile branch offices into the area. We are now resuming service in some of these branch offices.

Speaker #2: And the most affected areas in Pereira, which is one of the large cities in the region, have we've been having difficulties opening our branches.

Speaker #2: We've moved some of our mobile branch offices into the area. We are now resuming service in some of these branch offices. At the same time, our digital channels have been operating normally.

Javier Suárez: At the same time, our digital channels have been operating normally. Our ATMs are operating normally. Some of them are down, but are being recovered as we speak. We expect the operational issues to be solved in a couple of days, in a few days. Some of them will take longer, especially in the small towns, but we expect to keep continuing with the service.

Speaker #2: Our ATMs are operating normally. Some of them are down, but are being recovered as we speak. So we expect the operational issues to be solved in a couple of days in a few days.

Speaker #2: Some of them will take longer, especially in the small towns. But we expect to continue providing the service. So far, we've been able to serve our customers through our digital channels.

Javier Suárez Esparragoza: So far, we've been able to serve our customers through our digital channels. That operation is working well, and we are focusing on restoring service in the coming days. In terms of the economic impact of the earthquake, it's still very early to tell. We have a mortgage operation in the area that is significant. We're very confident with the insurance coverage that we have for those loans for that portfolio. Our sister company, Seguros Bolívar, is already doing a fantastic job in terms of assessing what's happening in the area and the current status of those facilities. We expect the impact due to losses in the mortgage portfolio to be very contained due to the very good quality of the insurance program that we have behind those portfolios.

Javier Suárez: So far, we've been able to serve our customers through our digital channels. That operation is working well, and we are focusing on restoring service in the coming days. In terms of the economic impact of the earthquake, it's still very early to tell. We have a mortgage operation in the area that is significant. We're very confident with the insurance coverage that we have for those loans for that portfolio.

Speaker #2: That operation is working well, and we are focusing on restoring service in the coming days. In terms of the economic impacts of the earthquake, it's still very early to tell.

Speaker #2: We have a mortgage operation in the area that is significant. We are very, very confident with the insurance coverage that we have for those for those loans and for that already doing fantastic job in terms of assessing what's happening in the area and the current status of those facilities.

Javier Suárez: Our sister company, Seguros Bolívar, is already doing a fantastic job in terms of assessing what's happening in the area and the current status of those facilities. We expect the impact due to losses in the mortgage portfolio to be very contained due to the very good quality of the insurance program that we have behind those portfolios.

Speaker #2: And we expect the impact due to losses in the mortgage portfolio to be very contained, due to the very good quality of the insurance program that we have behind those portfolios.

Javier Suárez Esparragoza: We will have some other impacts in terms of business interruption in some of our customers, and so we're looking at solutions for those customers that are facing some issues. It's still too early to tell. We're not incorporating any of those numbers into our guidance, but we expect to have some impact due to the earthquake, and we will be sharing that information as we get a more solid base of information to share with you all. Of course, our hearts are with the people of this area of the country. We're very committed to be a significant part of the solution. Our teams are working hard on not only restoring service but also being there for our customers and for the population in general. We've been working with the authorities also to make sure that we are part of the solution in this problem.

Javier Suárez: We will have some other impacts in terms of business interruption in some of our customers, and so we're looking at solutions for those customers that are facing some issues. It's still too early to tell. We're not incorporating any of those numbers into our guidance, but we expect to have some impact due to the earthquake, and we will be sharing that information as we get a more solid base of information to share with you all.

Speaker #2: We will have some other impacts in terms of business interruption in some of our customers, as we're looking at solutions for those customers that are facing some issues.

Speaker #2: It's still too early to tell. We're not incorporating any of those numbers into our guidance, but we expect there will be some impact due to the earthquake.

Speaker #2: And we will be sharing that information as we get a more solid base of information to share with you all. Of course, our hearts are with the people of this area of the country.

Javier Suárez: Of course, our hearts are with the people of this area of the country. We're very committed to be a significant part of the solution. Our teams are working hard on not only restoring service but also being there for our customers and for the population in general. We've been working with the authorities also to make sure that we are part of the solution in this problem.

Speaker #2: We're very committed to being a significant part of the solution. Our teams are working hard on not only restoring service, but also being there for our customers and for the population in general.

Speaker #2: We've been working with the authorities also to make sure that we are part of the solution in this problem and, of course, we will we are looking at this as something of a full commitment from our organization to help these areas of the country come back to their normal status.

Javier Suárez Esparragoza: And of course, we are looking at this as something of a full commitment from our organization to help these areas of the country come back to their normal status. We can move on now to questions, please.

Javier Suárez: And of course, we are looking at this as something of a full commitment from our organization to help these areas of the country come back to their normal status. We can move on now to questions, please.

Speaker #2: We can move on now to questions, please.

Speaker #3: You are now in the main conference.

Operator: You are now in the main conference.

Speaker #4: In the question and answer session. We will first.

Operator: In the question and answer session. We will first take

Speaker #3: All participants are now muted. Press star six to unmute your line.

Operator: All participants are now muted. Press star six to unmute your line.

Speaker #4: Please press the star button on number five to access the Q&A feature. If you are using the speakerphone, you may need to pick up your handset before pressing the numbers.

Operator: Please press the star button and number 5 to access the Q&A feature. If you use a speakerphone, you may need to pick up your handset before pressing the numbers. Once again, if you have any questions, please press the star button and then press number 5 to access the Q&A feature. For webcast participants who wish to send questions through chat, click the button with the question mark at the bottom of the webcast screen. If you have more than one question, we recommend sending a single message with all your questions. Right now, we are standing by for questions. Once again, if you are over the phone line and have a question, please press the star button and number 5 to access the Q&A feature. If you use a speakerphone, you may need to pick up your handset before pressing the numbers.

Speaker #4: Once again, if you have any questions, please press the star button and then press number five to access the Q&A feature. For webcast participants who wish to send questions through chat, click the button with the question mark at the bottom of the webcast screen.

Speaker #4: If you have more than one question, we recommend sending a single message with all your questions. Right now, we're standing by for questions. Once again, if you are over the phone line and have a question, please press the star button and number five to access the Q&A feature.

Operator: If you have more than one question, we recommend sending a single message with all your questions. Right now, we are standing by for questions. Once again, if you are over the phone line and have a question, please press the star button and number 5 to access the Q&A feature. If you use a speakerphone, you may need to pick up your handset before pressing the numbers.

Speaker #4: If you use a speakerphone, you may need to pick up your handset before pressing the numbers. Once again, if you have any questions, please press the star button and then press the number five to access the Q&A feature on the phone line.

Operator: Once again, if you have any questions, please press the star button and then press number 5 to access the Q&A feature on the phone line. For those webcast participants who wish to send questions through chat, please click the button with the question mark at the bottom of the webcast screen. If you have more than one question, we recommend sending a single message with all your questions. Right now, we are standing by for questions. We will start reading our questions from our webcast channel. The first question comes from Mr. Brian Flores from Citi. He says, "You upgraded ROE guidance while reducing loan growth expectations. Beyond normalization of the Q1 2026 results, what gives you confidence that profitability can continue improving even in a lower volume environment? Thank you.

Speaker #4: And for those webcast participants who wish to send questions through chat, please click the button with the question mark at the bottom of the webcast screen.

Speaker #4: If you have more than one question, we recommend sending a single message with all your questions. Right now, we're standing by for questions. We'll start reading our questions from our webcast channel.

Operator: Right now, we are standing by for questions. We will start reading our questions from our webcast channel. The first question comes from Mr. Brian Flores from Citi. He says, "You upgraded ROE guidance while reducing loan growth expectations. Beyond normalization of the Q1 2026 results, what gives you confidence that profitability can continue improving even in a lower volume environment? Thank you.

Speaker #4: The first question comes from Mr. Brian Flores from Citi. He says, "You upgraded ROE guidance while reducing loan growth expectations. Beyond normalization of the first quarter 2026 results, what keeps you confident that profitability can continue improving even in a lower-volume environment?" Thank you.

Speaker #2: Brian, good morning. Thank you for your question. We've upgraded our ROE based on some changes on the some factors of our ROE, which are margins, margins are actually improving we are seeing an improve in our NIM.

Javier Suárez Esparragoza: Brian, good morning. Thank you for your question. We have upgraded our ROE based on some changes on some factors of our ROE, which are margins. Margins are actually improving. We are seeing an improvement in our NIM. That is something that we are seeing because of higher interest rates, although we are almost neutral in terms of interest rates. We are all benefiting from low income deposits. So our margins are actually being higher than what we had previously anticipated. At the same time, we are focusing on transactional deposits, transactional solutions, fee income, and that part of our strategy is working. So with that, as well as with expense management in the operating expenses lines, we are actually having good results. That explains our expectations on higher ROEs.

Javier Suárez: Brian, good morning. Thank you for your question. We have upgraded our ROE based on some changes on some factors of our ROE, which are margins. Margins are actually improving. We are seeing an improvement in our NIM. That is something that we are seeing because of higher interest rates, although we are almost neutral in terms of interest rates. We are all benefiting from low income deposits. So our margins are actually being higher than what we had previously anticipated.

Speaker #2: That's something that we are seeing because of higher interest rates. Although we're almost neutral in terms of interest rates, we're all benefiting from low-income deposits.

Speaker #2: So our margins are actually getting being higher than what we had previously anticipated. And at the same time, we're focusing on transactional deposits, transactional solutions, fee income, and that's that part of our strategy is working.

Javier Suárez: At the same time, we are focusing on transactional deposits, transactional solutions, fee income, and that part of our strategy is working. So with that, as well as with expense management in the operating expenses lines, we are actually having good results. That explains our expectations on higher ROEs.

Speaker #2: So we're all. As with that as well as with expense management that in the operating expenses lines, we are actually having a good results.

Speaker #2: That explains our expectations on higher ROEs. With lower loan growth expectations, you have to consider also that those are impacted by FX, by the FX impact of the international operations that when translated to Colombian pesos, we see a lower growth in the loan portfolio.

Javier Suárez Esparragoza: With lower loan growth expectations, you have to consider also that those are impacted by the FX impact of the international operations that when translated to Colombian pesos, we see a lower growth in the loan portfolio. If you exclude that effect, the growth of the portfolio has been very much in line with our initial expectations. So what we are seeing is a profitability that improves because the growth, excluding FX, is basically stable and some of the fundamentals that impact our ROE are slightly improving. So if you put that all into the equation, we get an improved ROE guidance. Thank you, Brian, for your question.

Javier Suárez: With lower loan growth expectations, you have to consider also that those are impacted by the FX impact of the international operations that when translated to Colombian pesos, we see a lower growth in the loan portfolio. If you exclude that effect, the growth of the portfolio has been very much in line with our initial expectations.

Speaker #2: If you exclude that effect, the growth of the portfolio has been very, very much in line with our initial expectations. So what we're seeing is profitability that improves because the growth, excluding FX, is basically stable.

Javier Suárez: So what we are seeing is a profitability that improves because the growth, excluding FX, is basically stable and some of the fundamentals that impact our ROE are slightly improving. So if you put that all into the equation, we get an improved ROE guidance. Thank you, Brian, for your question.

Speaker #2: And some of the fundamentals that impact our ROE are slightly improving. So if you put that all into the equation, we get an improved ROE guidance.

Speaker #2: Thank you, Brian, for your question.

Javier Suárez Esparragoza: Thank you very much. We have now one question coming from our phone line. Our first question through the phone line comes from Mr. Ernesto Gabilondo from Bank of America. Mr. Gabilondo, the floor is yours. Once again, we have one question coming from our phone line, coming from Mr. Ernesto Gabilondo.

Operator: Thank you very much. We have now one question coming from our phone line. Our first question through the phone line comes from Mr. Ernesto Gabilondo from Bank of America. Mr. Gabilondo, the floor is yours. Once again, we have one question coming from our phone line, coming from Mr. Ernesto Gabilondo.

Speaker #4: Thank you very much. We now have one question coming from our phone line. Our first question through the phone line comes from Mr. Ernesto Gavilondo.

Speaker #4: From Bank of America. Mr. Gavilondo, the floor is yours. Once again, we have one question coming from our phone line, coming from Mr. Ernesto Gavilondo.

Speaker #2: Thank you.

Ernesto Gabilondo: Thank you.

Speaker #4: Mr. Ernesto, come from comes from Bank of America. Please go ahead.

Ernesto Gabilondo: He comes from Bank of America. Please go ahead.

Operator: He comes from Bank of America. Please go ahead.

Speaker #2: Yeah, so thank you. Hi, good morning. Javier, Pedro, and Paula, congrats on your results, and thanks for the opportunity to ask questions. I have a couple of questions from my side.

Ernesto Gabilondo: Thank you. Hi, good morning, Javier, Pedro, and Paula. Congrats on your results, and thanks for the opportunity to ask questions. I have a couple of questions from my side. The first one is in terms of loan growth. As you pointed out, you moderate your loan growth expectations for 2026. You said that if we exclude the FX, it is coming roughly in line with your previous expectations. But considering that you have currently high inflation, higher rates, the new government is just taking place, and you just have the recent impact of the earthquake, hope all your families are well. I do not know if the new guidance is also reflecting all this now to be more prudent, considering these macro conditions. Also when looking into 2027, how are you expecting the trends by segment overall?

Speaker #2: The first one is in terms of loan growth. So as you pointed out, you moderate your loan growth expectations for 2026. You said that if we exclude the FX, it's coming roughly in line with your previous expectations.

Speaker #2: But considering that you currently have high inflation, higher rates, the new government is just taking place, and you just had the recent impact of the earthquake, I hope all your families are well.

Ernesto Gabilondo: But considering that you have currently high inflation, higher rates, the new government is just taking place, and you just have the recent impact of the earthquake, hope all your families are well. I do not know if the new guidance is also reflecting all this now to be more prudent, considering these macro conditions. Also when looking into 2027, how are you expecting the trends by segment overall?

Speaker #2: I don't know if the new guidance is also reflecting all of these, to be more prudent, considering these macro conditions. Also, when looking into 2027, how are you expecting the trends by segment overall?

Speaker #2: And then my second question is on your OPEX growth trends. So, I think you will have one-time restrictors in costs, but at the same time, you will have savings in costs.

Ernesto Gabilondo: My second question is on your OpEx growth trends. I think you will have one-time restructuring costs, but at the same time, you will have saving costs. Just wondering what should be the net impact, and how should we think about the OpEx trending during 2026 to 2028? I do not know in the next years could be flat or could be declining in one year. Just to have the trend on how should we think about this net impact of this one-time restructuring costs and saving costs or synergies. Thank you.

Speaker #2: So just wondering, what should be the net impact? And how should we think about OPEX trending during 2026 to 2028? I don't know if it will be— I don't know, in the next years it could be flat, or could be declining in one year.

Speaker #2: Just to have the trend on how should we think about these net impact of these one-time restrictor in costs and saving costs or synergies.

Speaker #2: Thank you.

Speaker #1: Ernesto, thank you for your question. In terms of loan growth, the moderation for 2026 is based on the fact that the FX has had an impact, as I already mentioned.

Javier Suárez Esparragoza: Ernesto, thank you for your question. In terms of loan growth, moderation for 2026 is based on the fact that the FX has had an impact, as I already mentioned. That is the most important reason why we are moderating our growth expectations more than the macro conditions. In terms of the Colombian book, what we are seeing is some reduction on the size of the commercial portfolio in the Davivienda operations. That is something that we had anticipated. There are some loans in the portfolio that are not within our margin appetite, so we are actually reducing that part of the portfolio. But that is being compensated by a very strong dynamic on the Davivienda side. When you look at it in the combined numbers in the commercial portfolio within our range, we believe that there could be an upside there in terms of growth for the commercial portfolio.

Javier Suárez: Ernesto, thank you for your question. In terms of loan growth, moderation for 2026 is based on the fact that the FX has had an impact, as I already mentioned. That is the most important reason why we are moderating our growth expectations more than the macro conditions. In terms of the Colombian book, what we are seeing is some reduction on the size of the commercial portfolio in the Davivienda operations.

Speaker #1: So that's probably one of the—that's the most important reason why we are moderating our growth expectations, more than the macro conditions. In terms of the Colombian book, what we're seeing is some reduction in the size of the commercial portfolio in the IBAN corporations.

Speaker #1: That's something that we had anticipated. There are some loans in the portfolio that are not within our margin appetite, so we're actually reducing that part of the portfolio.

Javier Suárez: That is something that we had anticipated. There are some loans in the portfolio that are not within our margin appetite, so we are actually reducing that part of the portfolio. But that is being compensated by a very strong dynamic on the Davivienda side. When you look at it in the combined numbers in the commercial portfolio within our range, we believe that there could be an upside there in terms of growth for the commercial portfolio.

Speaker #1: But that's being compensated by a very strong dynamic on the EBITDA side. When you look at it in the combined numbers and the commercial portfolio, we are within our range.

Speaker #1: We believe that there could be an upside there in terms of growth for the commercial portfolio. In consumer, where we are if you look at disbursements, disbursements are growing at a very, very healthy rate.

Javier Suárez Esparragoza: In consumer, if you look at disbursements are growing at a very healthy rate as compared to last year. We are very actively managing the effects on the provisioning due to new macroeconomic conditions. So we are actually adjusting our underwriting policies for credit risk very actively. So we open and close some segments of the market. That is impeding a higher growth on the consumer portfolio, but we are still growing, and we believe that with new technologies that were implemented in risk management, in artificial intelligence, we will be able to grow at a higher rate. In the mortgage portfolio, what we are seeing is a healthy growth for the H1 of the year. Eventually, we will slow down because of the lack of subsidies in the social housing program from the previous government that impacted the new projects initiation last year.

Javier Suárez: In consumer, if you look at disbursements are growing at a very healthy rate as compared to last year. We are very actively managing the effects on the provisioning due to new macroeconomic conditions. So we are actually adjusting our underwriting policies for credit risk very actively. So we open and close some segments of the market.

Speaker #1: As compared to last year, we are very actively managing the effects on the provisioning due to new macroeconomic conditions. So we're actually adjusting our underwriting policies for credit risk very actively.

Speaker #1: So we open and close some segments of the market, so that's impeding higher growth in the consumer portfolio. But we're still growing, and we believe that with new technologies that we're implementing in risk management and in artificial intelligence, we will be able to grow at a higher rate.

Javier Suárez: That is impeding a higher growth on the consumer portfolio, but we are still growing, and we believe that with new technologies that were implemented in risk management, in artificial intelligence, we will be able to grow at a higher rate. In the mortgage portfolio, what we are seeing is a healthy growth for the H1 of the year. Eventually, we will slow down because of the lack of subsidies in the social housing program from the previous government that impacted the new projects initiation last year.

Speaker #1: In the mortgage portfolio, what we're seeing is healthy growth for the first half of the year. Eventually, we will slow down because of the lack of subsidies in the social housing program from the previous government that impacted new projects—the new project initiation last year.

Speaker #1: Those projects that were not initiated last year will not be delivered during the second half of this year, and early parts of next year.

Javier Suárez Esparragoza: Those projects that were not initiated last year will not be delivered during the H2 of this year and the early parts of next year. So we will see probably a slower rate of growth for the mortgage portfolio. But we expect that trend to change as we have expectations of this new government actually retaking an active policy on social housing. We are seeing more confidence in the market, so we are expecting a boost in investment from the private sector. But at the same time, there will be a strong management of expenses from the government side. So there are a lot of conditions that are happening at the same time. Add to that the earthquake, so it is hard to assess how the growth will be for next year. So our best estimate is a trend very similar to what we have this year.

Javier Suárez: Those projects that were not initiated last year will not be delivered during the H2 of this year and the early parts of next year. So we will see probably a slower rate of growth for the mortgage portfolio. But we expect that trend to change as we have expectations of this new government actually retaking an active policy on social housing. We are seeing more confidence in the market, so we are expecting a boost in investment from the private sector.

Speaker #1: So we will see probably a slower rate of growth for the mortgage portfolio. But we expect that to that trend to change as we have expectations of this new government actually retaking an active policy on social housing.

Speaker #1: We're seeing more confidence in the market. So investment from the private sector will we're expecting a boost in investment from the private sector. But at the same time, there will be a management of strong management of expenses from the government side.

Javier Suárez: But at the same time, there will be a strong management of expenses from the government side. So there are a lot of conditions that are happening at the same time. Add to that the earthquake, so it is hard to assess how the growth will be for next year. So our best estimate is a trend very similar to what we have this year.

Speaker #1: So there are a lot of conditions that are happening at the same time. Add to that the earthquake and so it's hard to assess how the growth will be for the next year.

Speaker #1: So our best estimate is a trend very similar to what we have this year. Eventually, it could be higher if the market conditions improve and that's and we have that as one of our scenarios is improvement in the market conditions due to improved confidence in the market.

Javier Suárez Esparragoza: Eventually, it could be higher if the market conditions improve, and we have that as one of our scenarios is improvement in the market conditions due to improved confidence in the market. We're basically guiding with. There is a prudent guidance based on what it has been incorporated into the macro assumptions. We see some upside there also in terms of higher growth than what we are guiding as something that could come when conditions are changing. In terms of trends by segment, that is basically what I have just mentioned. In terms of OpEx, what we are seeing is this year is a year in which we are seeing a net effect of approximately zero in terms of the additional expenses due to integration. When you offset those with the synergies that are being captured, it is actually slightly negative.

Javier Suárez: Eventually, it could be higher if the market conditions improve, and we have that as one of our scenarios is improvement in the market conditions due to improved confidence in the market. We're basically guiding with. There is a prudent guidance based on what it has been incorporated into the macro assumptions. We see some upside there also in terms of higher growth than what we are guiding as something that could come when conditions are changing.

Speaker #1: So we're basically guiding with prudent guidance based on what's been incorporated into the macro assumptions. But we see some upside there also, in terms of higher growth than what we're guiding, as something that could come with the conditions that are changing.

Speaker #1: In terms of trends by segment, that's basically what I've just mentioned. And in terms of OPEX, what we're seeing is that this year is a year in which we're seeing a net effect of approximately zero in terms of the additional expenses due to integration.

Javier Suárez: In terms of trends by segment, that is basically what I have just mentioned. In terms of OpEx, what we are seeing is this year is a year in which we are seeing a net effect of approximately zero in terms of the additional expenses due to integration. When you offset those with the synergies that are being captured, it is actually slightly negative.

Speaker #1: With when you offset those with the synergies that are being captured, it's actually slightly negative. We're actually spending a little bit more than what we are capturing from the synergy side because of the timing differences.

Javier Suárez Esparragoza: We are actually spending a little bit more than what we are capturing from the synergy side because of the timing differences. In terms of our operation, the Davivienda operation, without considering the integration, we are growing at a slower rate, and we have some leverages that we are pulling to keep that low rate of growth for expenses. For 2026, 2027, 2028, we will have an improvement in the operating expenses for the operation, as well as the synergies that we will be capturing. That is factoring into that 43% to 45% guidance that we are giving to the market for the cost-to-income ratio for 2028, 2029. Thank you, Ernesto, for the question.

Javier Suárez: We are actually spending a little bit more than what we are capturing from the synergy side because of the timing differences. In terms of our operation, the Davivienda operation, without considering the integration, we are growing at a slower rate, and we have some leverages that we are pulling to keep that low rate of growth for expenses.

Speaker #1: In terms of our operation, the IBNDA operation, without considering the integration, we are growing at a slower rate, and we have some levers that we're pulling to keep that low rate of growth for expenses.

Speaker #1: So for '26, '27, and '28, we will have an improvement in the operating expenses for the operation, as well as the synergies that we will be capturing.

Javier Suárez: For 2026, 2027, 2028, we will have an improvement in the operating expenses for the operation, as well as the synergies that we will be capturing. That is factoring into that 43% to 45% guidance that we are giving to the market for the cost-to-income ratio for 2028, 2029. Thank you, Ernesto, for the question.

Speaker #1: That's factoring into that 43, 45 percent guidance that we are giving to a market for the cost to income ratio for 2028, 2029. Thank you, Ernesto, for your question.

Speaker #2: No, thank you. This is very helpful, Javier. Just a follow-up in terms of the OPEX. I really understand this important improvement that you can achieve in terms of the cost-to-income ratio.

Ernesto Gabilondo: No, thank you. This is very helpful, Javier. Just to follow up in terms of the OpEx. I really understand this important improvement that you can achieve in terms of the cost-to-income ratio. I think it is more tangible, maybe in 2028. For example, looking to next year, how should we think about the OpEx? Should we be relatively stable, or should be declining, or the important decline could be more in 2028? Just to have an idea on how should we model that in our estimates.

Speaker #2: I think it's more tangible maybe in 2028. But for example, looking to next year, next year, how should we think about the OPEX? Should we be relatively stable or should be declining?

Speaker #2: Or could the important decline be more pronounced in 2028? Just so we have an idea of how we should model that in our estimates.

Speaker #1: Yeah. The important decline will be in 2028, but we will see some decline in 2027. Integration process, we are as we mentioned in the initial remarks, we are expecting the authorizations to integrate the operations into one bank in Colombia.

Javier Suárez Esparragoza: Yeah. The important decline will be in 2028, but we will see some decline in 2027. Our integration process, we are at as we mentioned in the initial remarks. We are expecting the authorizations to integrate the operations into one bank in Colombia, and that should happen before the end of the year. For early next year, we should be going through a similar process. We could accelerate on capturing some of the synergies, and that should be happening along 2027. So 2027 will be a year in which we are expecting a downward trend in the cost to income. Most of the benefit will be at the second half of the year, but definitely 2027 should be a year in which some of those impacts should be captured.

Javier Suárez: Yeah. The important decline will be in 2028, but we will see some decline in 2027. Our integration process, we are at as we mentioned in the initial remarks. We are expecting the authorizations to integrate the operations into one bank in Colombia, and that should happen before the end of the year.

Speaker #1: And that should happen before the end of the year. For early next year, we should be going through a similar process. We could accelerate on capturing some of the synergies, and that should be happening along 2027.

Javier Suárez: For early next year, we should be going through a similar process. We could accelerate on capturing some of the synergies, and that should be happening along 2027. So 2027 will be a year in which we are expecting a downward trend in the cost to income. Most of the benefit will be at the second half of the year, but definitely 2027 should be a year in which some of those impacts should be captured.

Speaker #1: So 2027 will be a year in which we are expecting a downward trend in the cost-to-income ratio; most of the benefit will be in the second half of the year.

Speaker #1: But definitely, 2027 should be a year in which some of those impacts are captured.

Speaker #2: Excellent. No, thank you very much, Javier.

Ernesto Gabilondo: Excellent. No, thank you very much, Javier.

Speaker #1: Thank you, Ernesto.

Javier Suárez Esparragoza: Thank you, Ernesto.

Javier Suárez: Thank you, Ernesto.

Speaker #3: Thanks a lot. With that, we're going to move on to one of our webcast questions. This question comes from Mr. Brian Flores from Citi.

Javier Suárez Esparragoza: Thanks a lot. With that, we are going to move on to one of our webcast questions. This question comes from Mr. Brian Flores from Citi. He says, "Only a small portion of the targeted synergy capture appears reflected in earnings today, yet profitability is already approaching medium-term targets. How much of the remaining synergy opportunity do you expect to flow through the bottom line versus reinvested into growth, technology, and DaviPlata monetization initiatives? Thank you.

Operator: Thanks a lot. With that, we are going to move on to one of our webcast questions. This question comes from Mr. Brian Flores from Citi. He says, "Only a small portion of the targeted synergy capture appears reflected in earnings today, yet profitability is already approaching medium-term targets. How much of the remaining synergy opportunity do you expect to flow through the bottom line versus reinvested into growth, technology, and DaviPlata monetization initiatives? Thank you.

Speaker #3: He says only a small portion of the targeted synergy capture appears reflected in earnings today. Yes, profitability is already approaching medium-term targets. How much of the remaining synergy opportunity do you expect to flow through to the bottom line versus being reinvested into growth, technology, and Daviplata monetization initiatives?

Speaker #3: Thank you.

Speaker #1: Brian, thank you for your question. It's a very good question. We are still in the middle of the integration process. There's a lot of integration costs to come yet.

Javier Suárez Esparragoza: Brian, thank you for your question. It is a very good question. We are still in the middle of the integration process. There is a lot of integration costs to come yet. So, in order for us to get to a 14% to 16% ROE that we are guiding for 2028, 2029, there is a lot of work to do in terms of synergies and improvement in the cost side. That is what it is more visible in terms of the roadmap. But we are definitely looking at this transaction, at the integration of the Scotiabank operations as a play in growth also. What we are doing in the integration is, of course, making sure that we have a smooth transition in terms of service to our customers. The main objective that we are following is to have as frictionless as possible a transition for the customers. And then, of course, cost synergies are there.

Javier Suárez: Brian, thank you for your question. It is a very good question. We are still in the middle of the integration process. There is a lot of integration costs to come yet. So, in order for us to get to a 14% to 16% ROE that we are guiding for 2028, 2029, there is a lot of work to do in terms of synergies and improvement in the cost side. That is what it is more visible in terms of the roadmap. But we are definitely looking at this transaction, at the integration of the Scotiabank operations as a play in growth also.

Speaker #1: So, in order for us to get to a 14–16% ROE that we are guiding for 2028–2029, there's a lot of work to do in terms of synergies and improvement on the cost side.

Speaker #1: That's what it's more visible in terms of the enrollment. But we're definitely looking at this transaction at the integration of the Scotiabank operations as a play on growth also.

Speaker #1: We are definitely what we're doing in the integration is, of course, making sure that we have a smooth transition in terms of service to our customers that's the main one the main objective that we're following is to have as frictionless as possible a transition for the customers.

Javier Suárez: What we are doing in the integration is, of course, making sure that we have a smooth transition in terms of service to our customers. The main objective that we are following is to have as frictionless as possible a transition for the customers. And then, of course, cost synergies are there.

Speaker #1: And then, of course, cost synergies are there. But we are definitely working on making sure that the platform that the combined platform is a platform that is ready for growth in terms of more digital capabilities, better service for our customers, that platform monetization initiatives that you mentioned.

Javier Suárez Esparragoza: We are definitely working on making sure that the combined platform is a platform that is ready for growth in terms of more detailed capabilities, better service for our customers, DaviPlata monetization initiatives, as you mentioned. We have been through a process of moving DaviPlata from a wallet to a digital bank with the numbers that I mentioned in the previous remarks. Definitely there will be a significant portion of the savings that will be put back into the operation, in terms of new capabilities to grow in some segments of the market in which we still see opportunities to improve our market share. It is a very good question, and I would say the short answer is we are looking at reinvesting part of those synergies into the business because we see growth opportunities.

Javier Suárez: We are definitely working on making sure that the combined platform is a platform that is ready for growth in terms of more detailed capabilities, better service for our customers, DaviPlata monetization initiatives, as you mentioned. We have been through a process of moving DaviPlata from a wallet to a digital bank with the numbers that I mentioned in the previous remarks.

Speaker #1: We’ve been through the process of moving that platform from a wallet to a digital bank, with the numbers that I mentioned in the previous remarks.

Speaker #1: So, definitely, there will be a significant portion of the savings that will be put back into the operation in terms of new capabilities to grow in some segments, and opportunities to improve our market share.

Javier Suárez: Definitely there will be a significant portion of the savings that will be put back into the operation, in terms of new capabilities to grow in some segments of the market in which we still see opportunities to improve our market share. It is a very good question, and I would say the short answer is we are looking at reinvesting part of those synergies into the business because we see growth opportunities.

Speaker #1: So it's a very good question and I would say the answer, the short answer is we're looking at reinvesting part of that of those synergies into the business because we see growth opportunities.

Speaker #3: Thank you very much. Our next question comes from Mr. Hugo Beltrán from Axiones y Dolores. His question is: In the process of holding integration, what are the chances of delisting the stock of Banco Davivienda?

Javier Suárez Esparragoza: Thank you very much. Our next question comes from Mr. Hugo Beltrán from Acciones y Valores. His question is: In the process of holding integration, what are the chances of delisting the stock of Banco Davivienda? Do you foresee an imminent delisting offering for stock? Thank you.

Operator: Thank you very much. Our next question comes from Mr. Hugo Beltrán from Acciones y Valores. His question is: In the process of holding integration, what are the chances of delisting the stock of Banco Davivienda? Do you foresee an imminent delisting offering for stock? Thank you.

Speaker #3: Do you foresee an imminent delisting offering for a stock? Thank you.

Speaker #1: Hugo, thank you for your question. That's also a good question as you all know, last year we listed the IBNDA group shares. We were strong advocates to our shareholders to move to the IBNDA group shares as we've seen during this year.

Javier Suárez Esparragoza: Hugo, thank you for your question. That is also a good question. As you all know, last year we listed the Davivienda Group shares. We were strong advocates to our shareholders to move to the Davivienda Group shares. As we have seen during this year, we are seeing the benefits of being at the Davivienda Group level with the consolidation. The liquidity on the Banco Davivienda stock is of course lower because there was a very small fraction of the shares that were not moved to the Davivienda Group shares. We have not made any decision on that, but that is a very good question, and I would not rule out the listing in the near future. Thank you, Hugo, for your question.

Javier Suárez: Hugo, thank you for your question. That is also a good question. As you all know, last year we listed the Davivienda Group shares. We were strong advocates to our shareholders to move to the Davivienda Group shares. As we have seen during this year, we are seeing the benefits of being at the Davivienda Group level with the consolidation.

Speaker #1: We are seeing the benefits of being at the IBNDA group level with the consolidation. The liquidity on the Banco Davivienda stock is, of course, lower because there was a very, very small fraction of the shares that were not moved to the IBNDA group shares.

Javier Suárez: The liquidity on the Banco Davivienda stock is of course lower because there was a very small fraction of the shares that were not moved to the Davivienda Group shares. We have not made any decision on that, but that is a very good question, and I would not rule out the listing in the near future. Thank you, Hugo, for your question.

Speaker #1: We have not made any decision on that, but that's a very good question, and I wouldn't rule out the listing in the future—the near future.

Speaker #1: Thank you, Hugo, for your question.

Speaker #3: Thank you very much. Our next question comes from Mrs. Mariela Brucuello from T. Rowe Price. Her question is: What asset exposure do you have to the areas that were affected by the earthquake?

Javier Suárez Esparragoza: Thank you very much. Our next question comes from Mrs. Mariela Breu Cueto from T. Rowe Price. Her question is: What asset exposure do you have to the areas that were affected to the earthquake? Would you expect cost of risk to increase? Thank you.

Operator: Thank you very much. Our next question comes from Mrs. Mariela Breu Cueto from T. Rowe Price. Her question is: What asset exposure do you have to the areas that were affected to the earthquake? Would you expect cost of risk to increase? Thank you.

Speaker #3: Would you expect cost of risk to increase? Thank you.

Speaker #1: Thank you, Mariel, for your question. As I mentioned before, it's still early to have definite numbers, but we, of course, know the exposure that we have to the region.

Javier Suárez Esparragoza: Thank you, Mariel, for your question. As I mentioned before, it is still early to have definite numbers, but we of course know the exposure that we have to the region. In general terms, the region represents approximately 6% of the consolidated loan portfolio. That is around 13.2 trillion Colombian pesos, including both Davivienda and DAVIbank's operations. It is important to know that this is the total regional exposure. Some of our clients will suffer no material impact to their properties. That is something that we are assessing. As I mentioned before, in terms of the mortgage portfolio, we are definitely very confident with the insurance program that we have. We have situations like this many years before in the past and, actually, the insurance program performed as expected. Of course, there will be disruption. We still do not have an accurate estimate of any impact on cost of risk.

Javier Suárez: Thank you, Mariel, for your question. As I mentioned before, it is still early to have definite numbers, but we of course know the exposure that we have to the region. In general terms, the region represents approximately 6% of the consolidated loan portfolio. That is around 13.2 trillion Colombian pesos, including both Davivienda and DAVIbank's operations. It is important to know that this is the total regional exposure. Some of our clients will suffer no material impact to their properties. That is something that we are assessing.

Speaker #1: In general terms, the region represents approximately 6 percent of the consolidated loan portfolio. That's around 13.2 trillion pesos. Including both the IBNDA and the IBANX operation.

Speaker #1: It's important to know that this is regional exposure—the total regional exposure. Some of our clients will suffer no material impact to their properties.

Speaker #1: That's something that we're assessing. And as I mentioned before, in terms of the mortgage portfolio, we are definitely very confident with the insurance program that we have. We have had situations like this many years before in the past.

Javier Suárez: As I mentioned before, in terms of the mortgage portfolio, we are definitely very confident with the insurance program that we have. We have situations like this many years before in the past and, actually, the insurance program performed as expected. Of course, there will be disruption. We still do not have an accurate estimate of any impact on cost of risk.

Speaker #1: And actually, the insurance program performed as expected. Of course, there will be disruption. We still don't have an accurate estimate of any impact on the cost of risk.

Speaker #1: But the most significant losses that will come from the mortgage portfolio will be if not all of them in a very high proportion will be covered by the insurance program.

Javier Suárez Esparragoza: The most significant losses that will come from the mortgage portfolio will be, if not all of them, in a very high proportion, will be covered by the insurance program. Thank you, Mariel, for your question.

Javier Suárez: The most significant losses that will come from the mortgage portfolio will be, if not all of them, in a very high proportion, will be covered by the insurance program. Thank you, Mariel, for your question.

Speaker #1: Thank you, Mariel, for your question.

Speaker #3: Thank you very much. Our next question comes from Mr. Daniel Mora from Credit Corp Capital. His questions are, what should be considered one-off or not sustainable in the current NIM figure of 6.1, including FX and derivatives?

Javier Suárez Esparragoza: Thank you very much. Our next question comes from Mr. Daniel Mora from Credicorp Capital. His questions are: What should be considered one-off or not sustainable in the current NIM figure of 6.1%, including FX and derivatives? Second question, considering the current interest rates, do you expect to maintain NIM at current levels, or do you expect to, at some point, higher pressures from funding costs? Thank you.

Operator: Thank you very much. Our next question comes from Mr. Daniel Mora from Credicorp Capital. His questions are: What should be considered one-off or not sustainable in the current NIM figure of 6.1%, including FX and derivatives? Second question, considering the current interest rates, do you expect to maintain NIM at current levels, or do you expect to, at some point, higher pressures from funding costs? Thank you.

Speaker #3: Second question. Considering the current interest rates, do you expect to maintain NIM at current levels, or do you expect at some point to see higher pressures from funding costs?

Speaker #3: Thank you.

Speaker #1: Daniel, thank you for your questions. With respect to the one-offs on the NIM, what we're seeing is we had a boost from the portfolio results for the second quarter that is related to the performance of the market during this second quarter.

Javier Suárez Esparragoza: Daniel, thank you for your questions. With respect to the one-offs on the NIM, what we are seeing is we had a boost from the portfolio results for Q2. That is related to the performance of the market during Q2. It has the new government coming in and the market expectations on prudent fiscal situation of the country being managed in a different way. That had a positive impact on our portfolio. If you look at the numbers for Q2, they are better than expected. If you look at Q1 of this year, the opposite is true. When you combine Q1 and Q2, our portfolio performed pretty much roughly in line with the expectations that we have for Q3 and Q4.

Javier Suárez: Daniel, thank you for your questions. With respect to the one-offs on the NIM, what we are seeing is we had a boost from the portfolio results for Q2. That is related to the performance of the market during Q2. It has the new government coming in and the market expectations on prudent fiscal situation of the country being managed in a different way. That had a positive impact on our portfolio.

Speaker #1: With the new government coming in, and with market expectations around the prudent fiscal management of the country being handled differently, we saw a positive impact on our portfolio.

Speaker #1: That if you look at the numbers for the second quarter, they are better than expected. If you look at the first quarter of this year, the opposite is true.

Javier Suárez: If you look at the numbers for Q2, they are better than expected. If you look at Q1 of this year, the opposite is true. When you combine Q1 and Q2, our portfolio performed pretty much roughly in line with the expectations that we have for Q3 and Q4.

Speaker #1: When you combine the first and the second quarters, our portfolio performed pretty much roughly in line with the expectations that we have for the third quarter and fourth quarter.

Speaker #1: So, what wasn't a positive one-off in the portfolio in the second quarter is actually offsetting a negative one-off for the portfolio in the first quarter. There are also the PPA accounting elements that were incorporated into our operation, which are basically the difference between accounting and market.

Javier Suárez Esparragoza: What was a positive one-off in the portfolio in Q2 is actually offsetting a negative one-off for the portfolio in Q1. There are also the PPA accounting elements that were incorporated into our operation, which are basically the difference between the accounting and market valuation of some of the DAVIbank assets. There was a one-off in Q2. That is around 150 basis points for Q2. If you look at the full year, that is not exactly a one-off. It will be a recurring item in which we expect that to explain about 100 basis points of our ROE for the following quarter. It is partially a one-off, but we will see part of that going forward. In terms, of course, the wealth tax that is already incorporated in Q1. That will not be around for Q2, Q3, and Q4.

Javier Suárez: What was a positive one-off in the portfolio in Q2 is actually offsetting a negative one-off for the portfolio in Q1. There are also the PPA accounting elements that were incorporated into our operation, which are basically the difference between the accounting and market valuation of some of the DAVIbank assets.

Speaker #1: The valuation of some of the IBANC assets—that there was a one-off in the second quarter that's around 150 basis points for the second quarter.

Javier Suárez: There was a one-off in Q2. That is around 150 basis points for Q2. If you look at the full year, that is not exactly a one-off. It will be a recurring item in which we expect that to explain about 100 basis points of our ROE for the following quarter. It is partially a one-off, but we will see part of that going forward. In terms, of course, the wealth tax that is already incorporated in Q1. That will not be around for Q2, Q3, and Q4.

Speaker #1: But if you look at the full year, that is not exactly a one-off. It will be a recurring item, and we expect that to explain about 100 basis points of our ROE for the following quarter.

Speaker #1: So it's partially a one-off, but we will see part of that going forward. In terms of, of course, the wealth tax — that's already incorporated in the first quarter.

Speaker #1: That won't be around for the second, third, and fourth quarters. So, in terms of NIM, if you exclude those items, we expect the NIM to be sustainable.

Javier Suárez Esparragoza: In terms of NIM, if you exclude those items, we expect the NIM to be sustainable. We expect our NIM to be in the midpoint of the range of numbers that we have been guiding. Which is part of the second question in terms of maintaining NIM at current levels. We see our balance sheet position to be neutral. It is actually a little bit benefiting from higher interest rates as opposed to the structure that we had a few years ago when interest rate went up after the pandemic. What we are seeing is the more lower cost funding base that we generate through transaction businesses, the better the margin will be, and that is part of our clear strategy. In summary, we are expecting our margin to be sustainable for the coming quarters. Thank you, Daniel, for your question.

Javier Suárez: In terms of NIM, if you exclude those items, we expect the NIM to be sustainable. We expect our NIM to be in the midpoint of the range of numbers that we have been guiding. Which is part of the second question in terms of maintaining NIM at current levels. We see our balance sheet position to be neutral. It is actually a little bit benefiting from higher interest rates as opposed to the structure that we had a few years ago when interest rate went up after the pandemic.

Speaker #1: We expect our NIM to be at the midpoint of the range of NIMs that we've been guiding, which is part of the second question in terms of maintaining NIM at current levels.

Speaker #1: We see our balance sheet position to be neutral. It's actually benefiting a little bit from higher interest rates, as opposed to the structure that we had a few years ago when interest rates went up after the pandemic.

Speaker #1: So, what we're seeing is that the more lower-cost funding base that we generate through transaction businesses, the better the margin will be, and that's part of our clear strategy.

Javier Suárez: What we are seeing is the more lower cost funding base that we generate through transaction businesses, the better the margin will be, and that is part of our clear strategy. In summary, we are expecting our margin to be sustainable for the coming quarters. Thank you, Daniel, for your question.

Speaker #1: So, in summary, we're expecting our margin to be sustainable for the coming quarters. Thank you, Daniel, for your questions.

Speaker #3: Thank you very much. Our next question comes from Mr. Santiago Petri from Franklin Templeton. He says, "Hello, thanks for the presentation. Can you give us your assessment of the new de Las Priella administration?"

Javier Suárez Esparragoza: Thank you very much. Our next question comes from Mr. Santiago Becerra from Franklin Templeton. He says, "Hello, thanks for the presentation. Can you give us your assessment of the new Petro administration? What government measures do you expect that will have an improving business environment? Thank you.

Operator: Thank you very much. Our next question comes from Mr. Santiago Becerra from Franklin Templeton. He says, "Hello, thanks for the presentation. Can you give us your assessment of the new Petro administration? What government measures do you expect that will have an improving business environment? Thank you.

Speaker #3: What government measures do you expect that will improve the business environment? Thank you.

Speaker #1: Santiago, thank you for your question. What we’re seeing is a government that is entering into the administration with the intention of improving the fiscal situation.

Javier Suárez Esparragoza: Santiago, thank you for your question. What we are seeing is a government that is entering into the administration with the intention of improving the fiscal situation. They are very aware of the difficult fiscal situation of the country. There are already some remarks from the finance minister in terms of being very disciplined in looking into the fiscal situation and cutting excess costs in the government spending. This is a government that is also attracting investments, generating confidence in the investors in the private sector. We are seeing that sentiment across our customers. We are definitely seeing a government that has the intention to be a pro-market, growth-oriented government. Of course, in the short term, we will have the secondary effects of government spending cuts and some issues that will eventually have some impact in the short term.

Javier Suárez: Santiago, thank you for your question. What we are seeing is a government that is entering into the administration with the intention of improving the fiscal situation. They are very aware of the difficult fiscal situation of the country. There are already some remarks from the finance minister in terms of being very disciplined in looking into the fiscal situation and cutting excess costs in the government spending.

Speaker #1: They are very aware of the difficult fiscal situation of the country. There have already been some remarks from the finance minister in terms of being very disciplined in looking into the fiscal situation and cutting excess costs in government spending.

Javier Suárez: This is a government that is also attracting investments, generating confidence in the investors in the private sector. We are seeing that sentiment across our customers. We are definitely seeing a government that has the intention to be a pro-market, growth-oriented government. Of course, in the short term, we will have the secondary effects of government spending cuts and some issues that will eventually have some impact in the short term.

Speaker #1: This is a government that is also attracting investments, generating confidence among investors in the private sector. We're seeing that sentiment across our customers.

Speaker #1: So we're definitely seeing a government that has the intention to be a pro-market, growth-oriented government. Of course, in the short term, we will have the secondary effects of government spending cuts and some issues that will eventually have some impact in the short term.

Speaker #1: But definitely, the trend that we're seeing with the new government is a trend that is very positive for a healthy economy, and what we're seeing is opportunities for the coming years.

Javier Suárez Esparragoza: But definitely, the trend that we are seeing with the new government is a trend that it is very positive for our healthy economy. What we are seeing is opportunities for the coming years. We are highly positive in terms of what this government could bring to the economy. Thank you, Santiago, for your question.

Javier Suárez: But definitely, the trend that we are seeing with the new government is a trend that it is very positive for our healthy economy. What we are seeing is opportunities for the coming years. We are highly positive in terms of what this government could bring to the economy. Thank you, Santiago, for your question.

Speaker #1: So, we are highly positive in terms of what this government could bring to the economy. Thank you. Thank you, Santiago, for your question.

Speaker #3: Thank you very much. Our next question comes from Mr. Marcello Tejas from Eternal Capital. He says, there have been discussions between Asobancaria and the new government around reforming the usury rate cap.

Javier Suárez Esparragoza: Thank you very much. Our next question comes from Mr. Marcelo Telles from Eternal Capital. He says: There have been discussions between Asobancaria and the new government around reforming the usury rate cap. Can you give us a sense of how those conversations are progressing and how receptive the new government seems to changing the framework? How meaningful could that be for consumer loan growth? There is another question. His second question is, what percentage of your loan book is at the maximum capacity? Thank you.

Operator: Thank you very much. Our next question comes from Mr. Marcelo Telles from Eternal Capital. He says: There have been discussions between Asobancaria and the new government around reforming the usury rate cap. Can you give us a sense of how those conversations are progressing and how receptive the new government seems to changing the framework? How meaningful could that be for consumer loan growth? There is another question. His second question is, what percentage of your loan book is at the maximum capacity? Thank you.

Speaker #3: Can you give us a sense of how those conversations are progressing, and how receptive the new government seems to changes in the framework? How meaningful could that be for consumer loan growth?

Speaker #3: And there's another question. His second question is: What percentage of your loan book is at the maximum capacity? Thank you.

Speaker #1: Thank you, Marcello, for your question. In terms of the discussions, that's a topic that has been discussed with the new government. We are firm believers that a very strict interest rate cap actually leaves many Colombians out of the formal market, who then have to go to an unregulated informal market with very, very high rates.

Javier Suárez Esparragoza: Thank you, Marcelo, for your question. In terms of the discussions, that is a topic that has been discussed with the new government. We are firm believers that a very strict interest rate cap actually leaves out of the formal market many Colombians that have to go to a market that is unregulated and informal market with very high rates, and some other issues that are very inconvenient for those customers. So having a higher cap rate is actually beneficial for the economy and for the users all around the country. These comments are being well received by the government.

Javier Suárez: Thank you, Marcelo, for your question. In terms of the discussions, that is a topic that has been discussed with the new government. We are firm believers that a very strict interest rate cap actually leaves out of the formal market many Colombians that have to go to a market that is unregulated and informal market with very high rates.

Javier Suárez: And some other issues that are very inconvenient for those customers. So having a higher cap rate is actually beneficial for the economy and for the users all around the country. These comments are being well received by the government.

Speaker #1: And some other issues that are very inconvenient for those customers. So having a higher cap rate is actually beneficial for the economy and for users all around the country.

Speaker #1: These comments are being well received by the government. We still don't have a formal response from the government in terms of their views, but we see them as understanding of the issues and willing to open that discussion and look into some form of reform to the current system.

Javier Suárez Esparragoza: We still do not have a formal response from the government in terms of their views, but we see them as understanding of the issues and willing to open that discussion and look into some form of reform to the current system that could improve the current status, opening higher interest rates so that we could actually accommodate a larger percentage of the Colombian population. It is still too early, but we will see in the coming weeks the formal position of the government. But I am positive in terms of the possibilities of changing or adjusting, reforming the system. At this time, around 7% of our consolidated portfolio is capped with a cap rate. That is, of course, take into consideration that does not apply to a portfolio that we have in our other jurisdictions. It is just part of the consumer portfolio in the Colombian operation.

Javier Suárez: We still do not have a formal response from the government in terms of their views, but we see them as understanding of the issues and willing to open that discussion and look into some form of reform to the current system that could improve the current status, opening higher interest rates so that we could actually accommodate a larger percentage of the Colombian population.

Speaker #1: That could improve the current status by opening higher interest rates so that we could actually accommodate a larger percentage of the Colombian population. It's still too early, but we'll see in the coming weeks the formal position of the government. But I'm positive in terms of the possibilities of changing or adjusting the reform in the system.

Javier Suárez: It is still too early, but we will see in the coming weeks the formal position of the government. But I am positive in terms of the possibilities of changing or adjusting, reforming the system. At this time, around 7% of our consolidated portfolio is capped with a cap rate. That is, of course, take into consideration that does not apply to a portfolio that we have in our other jurisdictions. It is just part of the consumer portfolio in the Colombian operation.

Speaker #1: At this time, around 7% of our consolidated portfolio is capped, with the cap rate. That’s, of course, taking into consideration that this does not apply to the portfolio that we have in other jurisdictions.

Speaker #1: It's just the consumer portfolio, part of the consumer portfolio in the Colombian operation. But of course, that 7% could actually be impacted in a very positive way with this change.

Javier Suárez Esparragoza: But that, of course, that 10% could be actually impacted in a very positive way with this change. Thank you, Marcelo, for your question.

Javier Suárez: But that, of course, that 10% could be actually impacted in a very positive way with this change. Thank you, Marcelo, for your question.

Speaker #1: Thank you, Marcello, for your question.

Javier Suárez Esparragoza: Thank you very much. Our next question comes from Mr. Juan Soto from Bancolombia. He says: In an environment where interest rates are expected to remain elevated in Colombia, could future ROE expansion come primarily from efficient gains, revenue diversification, or synergies rather than from higher risk-taking or balance sheet leverage? Thank you.

Operator: Thank you very much. Our next question comes from Mr. Juan Soto from Bancolombia. He says: In an environment where interest rates are expected to remain elevated in Colombia, could future ROE expansion come primarily from efficient gains, revenue diversification, or synergies rather than from higher risk-taking or balance sheet leverage? Thank you.

Speaker #3: Thank you very much. Our next question comes from Mr. Juan Soto from Bank Colombia. He says, in an environment where interest rates are expected to remain elevated in Colombia, could future ROE expansion come primarily from efficient gains revenue diversification or synergies rather than from higher risk-taking or balance sheet leverage?

Speaker #3: Thank you.

Javier Suárez Esparragoza: Juan, thank you for your question. I guess the answer is in your question, where we definitely are looking for ROE expansion for efficiency. What we are doing both in the synergies that we are expecting from the integration with the Scotiabank operations, but also with internal efficiencies through improving our processes, usage of artificial intelligence. There is a lot of opportunities on that side. Revenue diversification, of course, that is part of what we are doing. That is connected to a previous question on whether we see this as a growth opportunity. Definitely, we see this as a growth opportunity in terms of entering into some segments of the market in which we are underrepresented in terms of market share. We are definitely seeing that from the increases in ROE from a sustainable view. We are not looking at ROE improvements based on increasing our balance sheet levers.

Javier Suárez: Juan, thank you for your question. I guess the answer is in your question, where we definitely are looking for ROE expansion for efficiency. What we are doing both in the synergies that we are expecting from the integration with the Scotiabank operations, but also with internal efficiencies through improving our processes, usage of artificial intelligence. There is a lot of opportunities on that side.

Speaker #1: Juan, thank you for your question. I guess the answer is in your question. We definitely are looking for ROE expansion for efficiency.

Speaker #1: What we're doing both in the synergies that we are expecting from the integration with Scotiabank operations but also with internal efficiencies through improving our processes, usage of artificial intelligence.

Speaker #1: There's a lot of opportunities on that side. Revenue diversification, of course, that's part of what we're doing that's connected to a previous question on whether we see these as a growth opportunity.

Javier Suárez: Revenue diversification, of course, that is part of what we are doing. That is connected to a previous question on whether we see this as a growth opportunity. Definitely, we see this as a growth opportunity in terms of entering into some segments of the market in which we are underrepresented in terms of market share. We are definitely seeing that from the increases in ROE from a sustainable view. We are not looking at ROE improvements based on increasing our balance sheet levers.

Speaker #1: Definitely, we see this as a growth opportunity in terms of entering into some segments of the market in which we're underrepresented in terms of market share.

Speaker #1: We're definitely seeing that from the increases in ROE from a sustainable view. We're not looking at ROE improvements based on increasing our balance sheet leverage.

Speaker #1: Although we have space, we have our CT1 is a healthy CT1, so we could improve our leverage, but that's not our view. Our view is that we have the capacity to improve ROEs through the basically efficiency revenue new revenue sources synergies more than on a high risk-taking, as you mentioned.

Javier Suárez Esparragoza: Although we have space, our CET1 is a healthy CET1, so we could improve our levers, but that is not our view. Our view is that we have the capacity to improve ROEs through basically efficiency, revenue, new revenue sources, synergies, more than on high risk-taking, as you mentioned. I guess you already have had the answer, Juan. Thank you for your question.

Javier Suárez: Although we have space, our CET1 is a healthy CET1, so we could improve our levers, but that is not our view. Our view is that we have the capacity to improve ROEs through basically efficiency, revenue, new revenue sources, synergies, more than on high risk-taking, as you mentioned. I guess you already have had the answer, Juan. Thank you for your question.

Speaker #1: I guess you already have the answer, Juan. Thank you for your question.

Speaker #3: Thanks a lot. Our next question comes from Mr. Nicholas Riba from Bank of America. He says, hi, can you please remind us, following the integration of Davivienda and Scotiabank in Colombia, the bond issuer Banco Davivienda will include Davivienda and Scotiabank?

Javier Suárez Esparragoza: Thanks a lot. Our next question comes from Nicolas Riva from Bank of America. He says, "Hi. Can you please remind us, following the integration of Davivienda and Scotiabank in Colombia, the bonds issuer, Banco Davivienda, will include Davivienda and Scotiabank? What about the Central America assets from Davivienda and Scotia? Will any of these assets be consolidated by the bank rather than by the group?" Thank you.

Operator: Thanks a lot. Our next question comes from Nicolas Riva from Bank of America. He says, "Hi. Can you please remind us, following the integration of Davivienda and Scotiabank in Colombia, the bonds issuer, Banco Davivienda, will include Davivienda and Scotiabank? What about the Central America assets from Davivienda and Scotia? Will any of these assets be consolidated by the bank rather than by the group?" Thank you.

Speaker #3: And what about the Central American assets from Davivienda and Scotia? Will any of these assets be consolidated by the bank rather than by the group?

Speaker #3: Thank you.

Speaker #1: Thank you, Nicholas, for your question. Basically, what we're doing with the integration is that Banco Davivienda will receive the banking business of Scotiabank, now known as DaviBank Colombia.

Javier Suárez Esparragoza: Thank you, Nicolas, for your question. Basically, what we are doing with the integration is Banco Davivienda will receive the banking business of Scotiabank, nowadays DAVIbank Colombia. Basically, the loans and deposits of the banking operation in Colombia, those assets will be transferred to Banco Davivienda Colombia in exchange for some of the shares that Banco Davivienda has on the Central American operations of Holding Davivienda Internacional, which is the holding that we have for the international operations. So actually, what will happen is Banco Davivienda will consolidate the Colombian banking business of Banco Davivienda, and part of the international operations will be moved to the existing Scotiabank or DAVIbank license that we have. That will be an investment vehicle. That will change into an investment vehicle. The issuer of the bonds will be Banco Davivienda. That will, at this time, integrate all the Colombian banking operations.

Javier Suárez: Thank you, Nicolas, for your question. Basically, what we are doing with the integration is Banco Davivienda will receive the banking business of Scotiabank, nowadays DAVIbank Colombia. Basically, the loans and deposits of the banking operation in Colombia, those assets will be transferred to Banco Davivienda Colombia in exchange for some of the shares that Banco Davivienda has on the Central American operations of Holding Davivienda Internacional, which is the holding that we have for the international operations.

Speaker #1: Basically, the loans and deposits of the banking operation in Colombia—as well as those assets—will be transferred to Banco Davivienda Colombia in exchange for some of the shares that Banco Davivienda holds in the Central American operations.

Speaker #1: So of holding Davivienda International, which is the holding that we have for the international operations. So actually, what will happen is Banco Davivienda will consolidate the Colombian business banking business of Banco Davivienda and part of the international operations will be moved to the existing Scotiabank or DaviBank license that we have.

Javier Suárez: So actually, what will happen is Banco Davivienda will consolidate the Colombian banking business of Banco Davivienda, and part of the international operations will be moved to the existing Scotiabank or DAVIbank license that we have. That will be an investment vehicle. That will change into an investment vehicle. The issuer of the bonds will be Banco Davivienda. That will, at this time, integrate all the Colombian banking operations.

Speaker #1: That will be an investment vehicle that will change into an investment vehicle. And the issuer of the bonds will be Banco Davivienda that will at this time integrate all the Colombian banking operations but still even though some of the shares will be transferred to these other vehicle to the current DaviBank, Banco Davivienda will still consolidate the international operations due to the remaining shares still give Banco Davivienda control in position in the Central American operations.

Javier Suárez Esparragoza: But still, even though some of the shares will be transferred to this other vehicle, to the current DAVIbank, Banco Davivienda will still consolidate the international operations due to the remaining shares that still give Banco Davivienda controlling position in the Central American operations. So in summary, the issuer of the bonds will be Banco Davivienda. That will consolidate fully the banking operations in Colombia and will have control and therefore will consolidate the operations of the Central American countries in which we have presence. Thank you, Nicolas, for your question.

Javier Suárez: But still, even though some of the shares will be transferred to this other vehicle, to the current DAVIbank, Banco Davivienda will still consolidate the international operations due to the remaining shares that still give Banco Davivienda controlling position in the Central American operations.

Speaker #1: So in summary, the issuer of the bonds will be Banco Davivienda. That will consolidate the fully the banking operations in Colombia. And we'll have control and therefore we'll consolidate the operations of the Central American countries in which we have present.

Javier Suárez: So in summary, the issuer of the bonds will be Banco Davivienda. That will consolidate fully the banking operations in Colombia and will have control and therefore will consolidate the operations of the Central American countries in which we have presence. Thank you, Nicolas, for your question.

Speaker #1: Thank you, Nicholas, for your question.

Speaker #3: Thank you. Our next question comes from Mr. Radu Giorgiu from RBC BlueBay Asset Management. He has two questions. His first question is: Can you confirm the CET1 capital level of Banco Davivienda, Colombian operations, at a standalone level?

Javier Suárez Esparragoza: Thank you. Our next question comes from Radu Gheorghiu from RBC BlueBay Asset Management. He has two questions. His first question is, "Can you confirm the CET1 capital level of Banco Davivienda Colombian operations is standalone level?" His second question is, "Was it ever an option to have Davivienda Holding International as a sister company to Banco Davivienda, both owned by newly listed Davivienda Group holding company, so as to limit the FX impact on the capital and of the Colombian operations?" Thank you.

Operator: Thank you. Our next question comes from Radu Gheorghiu from RBC BlueBay Asset Management. He has two questions. His first question is, "Can you confirm the CET1 capital level of Banco Davivienda Colombian operations is standalone level?" His second question is, "Was it ever an option to have Davivienda Holding International as a sister company to Banco Davivienda, both owned by newly listed Davivienda Group holding company, so as to limit the FX impact on the capital and of the Colombian operations?" Thank you.

Speaker #3: His question is, was it ever an option to have Davivienda Holding International as a sister company to Banco Davivienda, both owned by a newly listed Davivienda Group holding company, plus to limit the FX impact on the capital and of the Colombian operations?

Speaker #3: Thank you.

Speaker #1: Radu, thank you for your question, which is a very good question. The first one, the CET1 is at the standalone level of Banco Davivienda at 12.67%.

Javier Suárez Esparragoza: Radu, thank you for your questions, which are very good questions. The first one, the CET1 is at the standalone level of Banco Davivienda is 12.67%. It is a very healthy CET1. That is expected to be reduced by the end of the year with the transaction that I just described to levels around 12%. With the second part of your question on whether the Holding Davivienda Internacional will be a sister company of Banco Davivienda, eventually that could happen. The way the transaction that I just described is structured goes in that direction, the direction of getting out of the balance sheet of Banco Davivienda some of the exposure that it has to the Central American operations and start consolidating some of that investments in vehicles that are outside the scope of Banco Davivienda. So eventually, that should limit the FX impact on the Colombian operations.

Javier Suárez: Radu, thank you for your questions, which are very good questions. The first one, the CET1 is at the standalone level of Banco Davivienda is 12.67%. It is a very healthy CET1. That is expected to be reduced by the end of the year with the transaction that I just described to levels around 12%. With the second part of your question on whether the Holding Davivienda Internacional will be a sister company of Banco Davivienda, eventually that could happen.

Speaker #1: It's a very healthy CET1. That's expected to be reduced by the end of the year with the transaction that I just described, to levels around 12%.

Speaker #1: If with the second part of your question and whether holding Davivienda International will be a sister company of Banco Davivienda, eventually that could happen.

Javier Suárez: The way the transaction that I just described is structured goes in that direction, the direction of getting out of the balance sheet of Banco Davivienda some of the exposure that it has to the Central American operations and start consolidating some of that investments in vehicles that are outside the scope of Banco Davivienda. So eventually, that should limit the FX impact on the Colombian operations.

Speaker #1: The transaction—the way the transaction that I just described is structured—goes in that direction: the direction of getting out of the balance sheet of Banco Davivienda some of the exposure that it has to the Central American operations, and starting to consolidate some of that investment in vehicles that are outside the scope of Banco Davivienda.

Speaker #1: So, eventually, that should have a limit—that should limit the FX impact on the Colombian operations. That's not going to happen in the short term because, as I mentioned before, we will still be consolidating the international operations within Banco Davivienda.

Javier Suárez Esparragoza: That is not going to happen in the short term because, as I mentioned before, we will still be consolidating the international operations within Banco Davivienda. But eventually, that is a possibility in the path that these companies are following. The fact that Davivienda Group will be a holding of sister companies is a possibility.

Javier Suárez: That is not going to happen in the short term because, as I mentioned before, we will still be consolidating the international operations within Banco Davivienda. But eventually, that is a possibility in the path that these companies are following. The fact that Davivienda Group will be a holding of sister companies is a possibility.

Speaker #1: But eventually, that's a possibility in the path that these companies are following. The fact that Davivienda Group will be the holding of sister companies is a possibility.

Speaker #3: Thank you very much. Our next question comes from Mrs. Mariela Breuquedo from T. Rowe Price. Her question is, can you please give us some indication of the book exposure to El Niño risk, geographically, what exposure do you have to areas of Colombia more affected by El Niño event?

Javier Suárez Esparragoza: Thank you very much. Our next question comes from Mariela Breu Cueto from T. Rowe Price. Her question is, can you please give us some indication of the book exposure to El Niño risk? Geographically, what exposure do you have to areas of Colombia more affected by El Niño events? Thanks.

Operator: Thank you very much. Our next question comes from Mariela Breu Cueto from T. Rowe Price. Her question is, can you please give us some indication of the book exposure to El Niño risk? Geographically, what exposure do you have to areas of Colombia more affected by El Niño events? Thanks.

Speaker #3: Thanks.

Speaker #1: Thank you, Mariela, for your question. In terms of El Niño and our agriculture portfolio, the portfolio that is most directly exposed to El Niño risk represents less than 5% of the total loans.

Javier Suárez Esparragoza: Thank you, Mariela, for your question. In terms of El Niño and our agricultural portfolio, the portfolio that is most directly exposed to El Niño risk represents less than 5% of the total loans. Of course, we are monitoring that portfolio carefully. There is also a portfolio in the energy sector that is actually protected because we are focused on generation companies. Our climate impacts on the portfolio are incorporated into the guidance that we went through a few minutes ago. So the cost of risk that we provided includes our estimates on the impact on these portfolios based on El Niño. Of course, agriculture and power are the primary sectors that are being monitored. But there could be some other pressures and some other sectors that are energy intensive in manufacturing, food retail, and household disposable income if energy prices go up.

Javier Suárez: Thank you, Mariela, for your question. In terms of El Niño and our agricultural portfolio, the portfolio that is most directly exposed to El Niño risk represents less than 5% of the total loans. Of course, we are monitoring that portfolio carefully. There is also a portfolio in the energy sector that is actually protected because we are focused on generation companies. Our climate impacts on the portfolio are incorporated into the guidance that we went through a few minutes ago.

Speaker #1: That's, of course, we're monitoring that portfolio carefully. There's also a portfolio in the energy sector that is actually protected because we're focused on generation companies. Our climate impacts on the portfolio are incorporated into the guidance that we went through a few minutes ago.

Speaker #1: So, the cost of risk that we provided includes our estimates on the impact on these portfolios based on El Niño. Of course, agriculture and power are the primary sectors that are being monitored.

Javier Suárez: So the cost of risk that we provided includes our estimates on the impact on these portfolios based on El Niño. Of course, agriculture and power are the primary sectors that are being monitored. But there could be some other pressures and some other sectors that are energy intensive in manufacturing, food retail, and household disposable income if energy prices go up.

Speaker #1: But there could be some other pressures and some other sectors that are energy-intensive in manufacturing, food retail, and household disposable income, if energy prices go up.

Speaker #1: We’re practically monitoring these sectors and we’re part of that; it is incorporated into our guidance. But, of course, as El Niño progresses, we’ll have more information and we’ll be updating our guidance accordingly.

Javier Suárez Esparragoza: We're practically monitoring these sectors, and part of that is incorporated into our guidance. But of course, as El Niño progresses, we'll have more information, and we'll be updating our guidance accordingly. Thank you, Mariela, for your question.

Javier Suárez: We're practically monitoring these sectors, and part of that is incorporated into our guidance. But of course, as El Niño progresses, we'll have more information, and we'll be updating our guidance accordingly. Thank you, Mariela, for your question.

Speaker #1: Thank you, Mariela, for your question.

Javier Suárez Esparragoza: Thank you very much. Our next question comes from Diksha Agarwal from TCW. His question is, "Hi. Can you please comment on the methodological change that excluded banking book positions leading to reduction in market risk exposure? Thank you.

Operator: Thank you very much. Our next question comes from Diksha Agarwal from TCW. His question is, "Hi. Can you please comment on the methodological change that excluded banking book positions leading to reduction in market risk exposure? Thank you.

Speaker #3: Thank you very much. Our next question comes from Mr. Dick Scharkow from TCW. His question is: Hi, can you please comment on the methodological change that excluded banking book positions, leading to a reduction in market risk exposure?

Speaker #3: Thank you.

Speaker #1: In terms of the banking book positions leading to a reduction in market risk exposure, basically what we've done is be aware that the mortgage portfolio is exposed to interest rate sensitivity.

Javier Suárez Esparragoza: In terms of the banking book positions leading to reduction in market risk exposure, basically what we've done is being aware that the mortgage portfolio is exposed to interest rate sensitivity. So we've been hedging our exposure so that we reduce capital consumption, but also we improve our market risk exposure due to a hedged position in terms of the loan position that we have with the mortgage portfolio. So that's a process that we've been incorporating into our practice for the last two or three years, and actually that's why we are managing a much more stable solvency numbers as well as interest sensitivity in the portfolio. Thank you for your question.

Javier Suárez: In terms of the banking book positions leading to reduction in market risk exposure, basically what we've done is being aware that the mortgage portfolio is exposed to interest rate sensitivity. So we've been hedging our exposure so that we reduce capital consumption, but also we improve our market risk exposure due to a hedged position in terms of the loan position that we have with the mortgage portfolio.

Speaker #1: So we've been hedging our exposure so that we reduce capital consumption, but also we improve our market risk exposure due to a hedged position in terms of the loan position that we have with the mortgage portfolio.

Speaker #1: So that's a process that we've been incorporating into our practice for the last two or three years, and actually that's why we are managing much more stable solvency numbers, as well as interest sensitivity in the portfolio.

Javier Suárez: So that's a process that we've been incorporating into our practice for the last two or three years, and actually that's why we are managing a much more stable solvency numbers as well as interest sensitivity in the portfolio. Thank you for your question.

Speaker #1: Thank you for your question.

Speaker #3: Thank you. Our next question comes from Mr. Nicholas Longano from IDB Invest. He says, can you tell us about the impact of carry trades from institutional investors trying to seek higher gains from high local interest rates?

Javier Suárez Esparragoza: Thank you. Our next question comes from Nicolás Londoño from IDB Invest. He says, "Can you delve into the impact of carry trades from institutional investors trying to seek higher gains from high local interest rates? How would that impact back when rates start to decrease? Thank you.

Operator: Thank you. Our next question comes from Nicolás Londoño from IDB Invest. He says, "Can you delve into the impact of carry trades from institutional investors trying to seek higher gains from high local interest rates? How would that impact back when rates start to decrease? Thank you.

Speaker #3: How would that impact back when rates start to decrease? Thank you.

Javier Suárez Esparragoza: Thank you, Nicolas. Well, that's a market question more than the implications on our operations. Definitely, we're seeing a Colombian peso appreciation based partly on institutional investors going through these carry trade operations. It's very difficult to assess the impact of when those operations go in the opposite direction. What we're seeing is interest rates maintaining a high level for the Colombian market for the foreseeable future due to the fiscal situation. We're not seeing that going back anytime soon. Of course, that's a difficult impact to assess. But what we're seeing is a situation in which the Colombian peso is actually appreciating. We'll see how the fiscal situation changes and how the market reacts to interest rates. What we've seen is a reduction on interest rates of around 200 basis points on the long end of the curve.

Javier Suárez: Thank you, Nicolas. Well, that's a market question more than the implications on our operations. Definitely, we're seeing a Colombian peso appreciation based partly on institutional investors going through these carry trade operations. It's very difficult to assess the impact of when those operations go in the opposite direction.

Speaker #1: Thank you, Nicholas. Well, that's a market question more than the implications on our operations. Definitely, we're seeing a Colombian peso appreciation, based partly on institutional investors going through these carry trade operations.

Speaker #1: It's very difficult to assess the impact when those operations go in the opposite direction. What we're seeing is interest rates maintaining a high level for the Colombian market for the foreseeable future due to the fiscal situation.

Javier Suárez: What we're seeing is interest rates maintaining a high level for the Colombian market for the foreseeable future due to the fiscal situation. We're not seeing that going back anytime soon. Of course, that's a difficult impact to assess. But what we're seeing is a situation in which the Colombian peso is actually appreciating. We'll see how the fiscal situation changes and how the market reacts to interest rates. What we've seen is a reduction on interest rates of around 200 basis points on the long end of the curve.

Speaker #1: So we're not seeing that going back anytime soon. Of course, that's a difficult impact to assess. But what we're seeing is a situation in which the Colombian peso is actually appreciating we'll see how a fiscal situation changes and how the market reacts to interest rates.

Speaker #1: What we've seen is a reduction in interest rates of around 200 basis points on the long end of the curve. So there's an expectation that the fiscal situation will be managed in the coming years.

Javier Suárez Esparragoza: There's an expectation that the fiscal situation will be managed in the coming years. But in the short term, what we're seeing is a central bank that has inflation as an issue, and what we're seeing is a trend for interest rates in the short term to still be at this high level and actually increase a little bit.

Javier Suárez: There's an expectation that the fiscal situation will be managed in the coming years. But in the short term, what we're seeing is a central bank that has inflation as an issue, and what we're seeing is a trend for interest rates in the short term to still be at this high level and actually increase a little bit.

Speaker #1: But in the short term, what we're seeing is a central bank that has inflation as an issue, and what we're seeing is a trend for interest rates in the short term to still be at this high level, and actually increase a little bit.

Speaker #3: Thank you very much. At this point, there seem to be no further questions. With this, I would like to turn the call over to Mr. Javier Suarez for any closing remarks.

Javier Suárez Esparragoza: Thank you very much. At this point, there seems to be no further questions. With this, I would like to turn the call over to Mr. Javier Sáez for any closing remarks. Mr. Sáez, the floor is yours.

Operator: Thank you very much. At this point, there seems to be no further questions. With this, I would like to turn the call over to Mr. Javier Sáez for any closing remarks. Mr. Sáez, the floor is yours.

Speaker #3: Mr. Suarez, the floor is yours.

Speaker #1: Thank you very much for being with us this morning on our call. As you can see, we've been making progress on our plans to improve profitability in different areas of our P&L, and we're very satisfied with the progress we've made so far.

Javier Suárez Esparragoza: Thank you very much for being with us this morning with our call. As you can see, we've been progressing on our plans in terms of improving profitability in different areas of our P&L, and we're very satisfied with the progress that we've been going through. We still have a lot of work ahead of us in terms of integration and capture of synergies, but also in terms of maintaining our position, our competitive position in the market, and actually strengthening that position. We are very excited about what is coming out in our product pipeline in detail solutions and in DaviPlata and other segments of the market in which we're preparing new product offerings in the near future. We're expecting this to be a very good second half of the year, and we'll expect to share those results in the following call.

Javier Suárez: Thank you very much for being with us this morning with our call. As you can see, we've been progressing on our plans in terms of improving profitability in different areas of our P&L, and we're very satisfied with the progress that we've been going through. We still have a lot of work ahead of us in terms of integration and capture of synergies, but also in terms of maintaining our position, our competitive position in the market, and actually strengthening that position.

Speaker #1: We still have a lot of work ahead of us in terms of integration and capture of synergies, but also in terms of maintaining our position—our competitive position in the market—and actually strengthening that position. We're very excited about what is coming out in our product pipeline in digital solutions and in DaviPlata.

Javier Suárez: We are very excited about what is coming out in our product pipeline in detail solutions and in DaviPlata and other segments of the market in which we're preparing new product offerings in the near future. We're expecting this to be a very good second half of the year, and we'll expect to share those results in the following call.

Speaker #1: And other segments of the market in which we're preparing new product offerings in the near future. So we're expecting this to be a very good second half of the year.

Speaker #1: And we'll expect to share those results in the following call. Thank you very much to all of you for being with us this morning.

Javier Suárez Esparragoza: Thank you very much to all of you for being with us this morning.

Javier Suárez: Thank you very much to all of you for being with us this morning.

Speaker #3: Thank you. And thank you, ladies and gentlemen. This concludes today's conference call. Thank you for participating. You may now disconnect from the call.

Javier Suárez Esparragoza: Thank you. Thank you, ladies and gentlemen. This concludes today's conference call. Thank you for participating. You may now disconnect from the call.

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

Operator: The host has ended this call. Goodbye.

Browse all earnings call transcripts

Q2 2026 Banco Davivienda SA Pfd Earnings Call

Request TrialDemo

Banco Davivienda

Earnings