BCOLOMBIA.BC - Earnings call transcript Q3 2022

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Operator

Good morning, ladies and gentlemen and welcome to Bancolombia's Third Quarter 2022 Earnings Conference Call. My name is Ariel and I will be your operator for today's call. At this time, all participants are in a listen-only mode.

Following the prepared remarks, there will be a question-and-answer session. [Operator Instructions] Please note that this conference is being recorded. conference our include credit-related future credit this statements statements expenses that losses. to related performance, note call forward-looking will including and Please capital position, filings, this statements, that matters and call made forward-looking risk releases in All in verbally, whether involve future in uncertainty. address press or conference competing rates, to rates in products conditions, statements, of of there in factors of including introduction Consequently, and results by our general factors and other companies, changes those acceptance from economic could that materially are business our other in SEC. changes in new lack by services reports targeted products exchange currency the filed that indicated various interest business or we describe actual and clients, with cause differ in changes such strategy is today us Mr. With Chief Juan Mr. Officer; Executive Carlos Mora, Mauricio Chief Officer; Rosillo, Corporate Mr. Chief Acosta, Humberto Financial Officer; Mr. Jose Risk Rodrigo Prieto, Mrs. Chief Officer; Mr. Investor [ph], Director Relations Dilone Catalina and Juan Pablo Espinosa, Chief Economist. will to Mr. I call over turn now the Chief Executive Carlos Juan Officer. Mora, begin. may you Carlos, Juan

Juan Carlos Mora

this Good morning, reported to quarter trillion Bancolombia's COP third everybody. call. Welcome net quarter, X.X we of income. In conference

above the with base the risk We be have comfortably needs capacity. in that one rates and hold we of a may to interest we grow operate customer's coupled change however, and our structure XXXX the a good In of all which during Columbia, quality effective of particularly a producing The leverage. We capital pressures impacting year. are and bank funding rapid performance, operating rate positive the detail, that of operate expansion countries months, growth recent present inflationary asset demand, contributed especially the X% to the at a payment and which revenue is management. environment to seen Liquidity segments, by in of supports The our a in a solid in strategy. strong has responsible business. trend compelling increasing bank’s origination remains our the driven focus and metrics having credit continues high across portfolio areas

important be due agenda An tax end projected from will from an to collect taxpayer follow the meet the the additional in government also increased reform the above prices. it wage Currently, by the long-term in that funding development. the minimum XX price to this banks inflation from process from access a is growth its on key that on Congress program focused year. the corporates financing in stakeholders to last We XX% with to well from have government will XXXX. is worth mentioning XX% XX% Energy sectors. oil and discussed complement brought year financial deposits allows that the as financial it's international This collection companies the face institutions will based sore have and expenditure of increase XXXX and CPI a that income reform contribution energy social ends of of approval to imposing general, direct and by the for the trillion be will index, COP and increased consumer It structure. XXXX. XXXX effect and charge for incremental In tax the on associated in we tax a being have statutory and to as energy both week to reform multilaterals high has greater rate has subject

who Columbian year. of of will the not on in I to progress, of through for elaborate we forward the for Juan economy. want political At to have looking further the seen end Pablo? Pablo will we the rest new the the the turn performance point, this topics the presentation agenda, For announcement your Juan be Espinosa

Juan Pablo Espinosa

Juan Carlos. you, Thank

in to number go Slide the presentation. please X Now

of to in for deceleration cool next expected. agriculture, initially Columbian aggregate growth consumption performance of economy sharp best and public growth In the uncertainty, better central contest GDP in all about sectors higher rates, terms and to we year, a the global higher than This and X.X% start steel that is XXXX, performance a year anticipate that our moderation we administration, estimate in anticipate the that trade foresee the the thanks our prices. financial private scenario of than X.X% the strong will me and by as XXXX strength gold to the the of quarter rate interest the Let due we third continued utilities. consensus forecast. perform of Based of demand, be in saying contrast continued on in has in solve increase than in to previous services,

construction On the recent for first retail conditions main to activity are next expected tightening mining of are sharp economic and risks financial by a distress markets. The manufacturing, contract. contrary, in caused year

of pronounced households deterioration power of purchasing a Second, result persistent as a inflation.

salaries. deterioration by spillover economic moderation global a of major And a fourth, labor caused effects the economy. higher Third, of of deceleration and the markets

the XXXX level an quarter in reference XXXX is a front the consistent and during inflation at and closes between rates XX.X% we remaining that bank central target range of to peak first interest and the On XX% and prices, at XXXX. with even well will above of in anticipate This XXXX rate XX%.

This peso circumstances, mechanisms December policy main for will will policy future. XX% the reason a change cuts this next under in XX% is contractual space Actually, foreseeable that the core not we monetary behind year. a XXXX rate by for of in mode remain repo Under during monetary remain operation is salaries the half inflation we anticipate and forecast of because that do pressure the The of of see second quick to means revisions. Our this depreciation, point December, X.X%. cycle. in XXXX prospect indexation

would at the forecast current and from account exerting the significant the for will XX.XX up relevant. This in peso in of on Regarding offer Colombian basis weakness, namely deficit peers, we on average pressure uncertainty factor XXXX. corporate rate, stimulate regarding higher The experts means USB agenda reform conditions scenario, exchange type XXXX our than tradeable inflation. XX.XX non-traditional the cost financial of depreciation that supporting remain

side, if fiscal we the the X.X% figure revenues incorporates deficit The in XXXX. government's XXXX Moreover, X.X% from to reduce is in fiscal of GDP with consistent of rule the tax on on you central overview. assume and GDP from to additional be Finally, reform that the the tax expect net programs reform. from coming we manageable fiscal the consolidation, anticipate that collection this after economic will that this the split of will additional social reform overall impact between economic service be and

back Juan? Carlos. presentation the Juan turn me Let to

Juan Carlos Mora

Juan Thank you, Pablo.

coverage and last two the entails quarters. mainly in to the present commercial In segment the Growth and loans which provides loan been dynamic loans, deposits performance portfolio has Moving to in Slide risk most has number retail, X, been I want personal by structures. better loans. lower the driven

high changing We credit inflation such trend sharply more is rates. are experiencing cards. as This by a reflected in lower and interest high growth explained probes

rates to first was have needs. our our at complement terms time bank international In funding our liability pace grown a during of to demand deposits of than deposits, faster structure, after funding from and the funding also quarter increasing structure. key environment midterm the supporting the Access quarter, overall raising given thus

and half time XXX I’m quarter, throughout first a sure of comply carried a fourth International maintain This the will year a be the next deposits Bank. used Columbian couple part out requirements. the bond with we billion sustainable Bank. for good ago, of first weeks issuance funding we to the a of For relevant for liquidity Development time mechanism A the by COP throughout is structure stable

the deposit an based, but depreciated the the June see the we The X, growth the peso growth of significant to we in not currency also the the impact Slide the the end local is almost note basis, quarter. had the depreciation XX%. FX deposit the of it to important September, analyze of evolution that loan the from only of so was peso actual X%. Year-over-year, On breakdown. Columbian and annual in effect, portfolio after XX% depreciation When was a the of excluding loan end and

we provide in pre-approved figures. a lower one developments I expansion X, transactional real of inflationary Slide growth excluding on cash some higher interest and the the are origination that on why to Bear clients, performance solutions. and calculate risk segments Slide X.X% higher network the allowing the only of X, the flows inflation SMEs consumer in approach Based the when offer of portfolio To around our distribution our of flow key And customer pre-pandemic by based process on mind on portfolio. Leveraged strategy. we automatic technology, And On highlight in the payment details is investments when as rates credit an and positive all the the XX% whole of been This process growth. XX%. So be X.X of pre-approved able experience has a not actual a offer and the to capacity XX-day the financial and on XXXX, year-over-year. case was customized clients, been analytics, profile that also implementation the our years has have pass Such modernization we in we deterioration create with but five on pressures, to performance our in by to reflected XXXX. the offers. capacity in we retail, of Power and to analysis the economic ago. cash developed to of of implement want began of have statements, expenses making caused bank. and the deposits bank due years. of accurate could able base, lower received for to we in ratio the to million have few loans led also corporate us out to last than more This origination loan X the COP lines we for compared represent having explains pre-approved broad significant across base the been better a the this strategy digital loans have X.X% result outcomes

our coupled demand an use agents partially the would absorbed advantage our channels, the that increased experiencing an different to offered of digital like accelerated services in by continue have bank. to in of the volume transactions. share that with competitive banking shift some We for the show physical in the We figures important channels of channels increasing footprint

market transaction client’s in the First, mobile confirms XX% activities. Colombia our as the share more everyday on presence strong of than

Second, least digital has to channel third, And of their an engagement of XX% execute XX transaction for account the agents digital in-person transactions. led monetary our banking in to adopt total as customers widespread our operations. upward of presence trend in one at impact in-person This size branches a sense in and XX% of as regions. base of across our the monetary well the the Colombia customer represents economy and gives total the

to Slide X. Moving

the of transformation You technology bank. can update see an on the

made have important we journey more us our time accelerating speed and innovation to cloud in the market, First, allowing up applications, an to reducing progress having to secure costs.

technological XX% already components bank We cloud. have now the in the the of of

a personal Second ESG as XX% Bancolombia our business implemented present Today, open enable compared experience. IT remain the API the at customer the service and There and reaching we on XX% of models IT has banking turnover improving aim industry such to is X.X% On to the it’s on we strategy connecting criteria. XXXX COP have new XX%. outsourced. XXX in as house and of focused new update. average goal to ecosystems of trillion We finance, our Slide ESG XX,

September goal are already trillion of the to of XXX COP We financing trillion. as closer XXXX, in COP XX getting reaching

the now performance issue presentation able the goals. sustainable update were I Jose After credit billion, Humberto? want the to will for in Acosta of to indicators Humberto a additional America during million sustainable this of COP the tied quarter we who XXX to line to we quarter, amount turn bond Citibank $XXX of general of about give third received for and tied first an Bancolombia, Latin current This of details Jose from XXXX. situation

Jose Humberto Acosta

Thank you, Juan Carlos.

and Now turning of a quality. XX, asset provide we to snapshot Slide provisions

this year. discounting a represented to based XX Our effect credit the client by provisions for represent provision economic estate expenses When experience XX of quarter. XX% one result of in a pre-approved during a have the client’s of risk healthy a deteriorated XXX The cost the on Juan sheets We to the cost COP the Provision structure second to billion mention quarters Slide level granted a remark to and It as the Carlos since for control. for increase performance one important by real a the and the could in for for the commitment moderate X.X of that the current balance last of that NPLs X.X% in portfolio of charges. real that of Banistmo around result reliefs of the should X.X% to charge-off obligation. responsible expenses coming value. client under deterioration growth must in increase normalized in secure above for related the risk this were We cost process consumer On quarter, bank months. be the quarter at of the last in at days the in to quarter breakdown in the important under primarily for and in COP expansion of the estimation close gradually are credit off positive builder has a this during of and an rest cost pandemic or is We explained both quarter cycle. estate reflecting as and quarter, the end sequential warranties X.X%. XX the the mentioned credit risk place would converge trillion provision or driven provision estimate losses is the coverage is still loans. provisions remains execution the and X.X% XX is XXXX

a lower reliefs. credit where of associated a financial of level to Additionally, provisions releases viables macroeconomic and under lines

as due a The as loans to XX-day strong of continues be XXX%. past percent face deterioration. allowances eventual Our is coverage loans touch to on

full environment to total inflation upcoming and consolidated For for stands explained currency XX, depreciation to first local the and see third challenging part the assets macroeconomic in III by interest the increase higher The credit at due rate. while a to retail when under expect and most a the at dollar the Basel level quarters, deterioration Consolidated ratio provision Slide CETX is standalone of in rates. level of the ratios high On XX% expenses the in XX.X% we allocation. capital represent the quarter. for in an the a reduction of yield of solvency place converting solvency

Colombia On of XX [indiscernible] in during higher the hand, growth for capital organic the the ratios. other portfolio weighted loan assets last contributed to as the risk months

core considering forecasted fourth the and continued quarter our quarter, monetary The the Tier interest on the margins. contractionary the XX% policy extending X credit year equity For end, Columbia rates. throughout Slide estimation XX and shows asset is for the has cycle its FX earnings area generating to number expansion for third rate. demand, sensitivity in the

of environmental On a fixed weight the side, deposit helping very is to relevant highlight cycle. to the rate it the XX% on bank in as margin volatility, hike rates protect the in

XX% Slide funding XXXX. hike generally asset September, throughout of in of triggering to originations rates deposit loan position the at the a cost. of large floating a present rates portfolio, in in elements, revenue the cycle rates runs evident at categories. the bank. repricing. of a from two sustained On The The rate higher the repricing impact the Columbia side, to And quickly the index commercial Bank in took credit into its the we’ll Central combination on X% On is XX, all share liquidity end

growth seeing in an We consumer wholesale XX expansion pace. have both at same have in the XX% and the that important deposits loan during last the book been balanced months of

volumes us have transactional the view. in longer compensate from share, our needs. very make which of position last more competitive. for demand Here, a a increased are saving is quarter accounts low I to XX% XX% of the point a of structure will leadership interest. the as thanks term Out help Time our by our competitive deposit, possible, as advantage These represented very cost composition at by funding highlight are deposits in represented to system overall rapidly this

after higher to by rate interest interest funding income gradual a by and portfolio. X.X% In assets interest XX on Rising over XXXX. midterm repricing level, the expanding due the a of case analyzed larger exchange closed XX debt Finally, credit consolidation following interest to a last interest had outstanding a the the XX% results interest increase net a fluctuations have sustained closing positive and net funding XX, increased extent, international and lot in margin at at Net securities we rate a contributing hikes to months, structure. from in hiking and margin have X.X% extending with trend our half investments, lower largely of mainly of the stable This Colombia. the On points see of led an third evaluation the basis the second a interest we loss banks during of portfolios. cycle margin treasuries XXXX. Q, evolution is their net Slide rates by in quarterly Net the institutions explained margins income. rate multilateral expansion following the more

a at We year going close of as in increase now forward at rate XX.XX% in expect in the deposits interest reference face will to on pace repricing Margins will growth income end. Columbia interest by expenses higher the a grow level not offset since faster. we same

we Given and Slide of around the year September, X.X%. present XX, we’ll the general result as trend with terms, Bancolombia at throughout in interest to the book, America. growth Columbia similar, Central In NIM a and a close an income, geographies in solid an and On overview a the was expect increasing business the of the in liquidity. operated lending loan by terms continued different of capital position

performance Agricola In of we presents book bank way, in good growth average. the a growth El saving in the each commercial in cost. has Banistmo growing driven from same expenses annual short-term outpacing a impacting good deposit Banco had an in positive market quality, an in commercial the highlighting shows loan asset very at to dynamics growing the accounts that Banistmo the X% except at provision annual than particular of trends bottom balance side, the terms loan In Salvador important segment. market basis, pace a line. see the faster of level some and From at experienced low by an the basis the deposit loan

demanding in as impacted a corporate case was deterioration quality retail high by as Asset some expenses. well provisions

BAM originations margins. our increasing shown Finally, has through mid-year loan in Guatemala a resilient with

are around to where year will pace. U.S. consumer the a lead X% with close in expecting growth continue portfolio to We the dollars

expenses shows faster of lines local Slide has are increased OpEx way, recalculation increasing our our credit depreciation funding We our annual the considering Recently, evolution U.S. currency the portion in the associated an liquidity of managing important pace an XX% banks expectations index XX to our especially efficiency. basis. corresponding implied to in an balance Operating effective components. our with needs. dollar, expenses to technology growth of cost and of

there factors experience addition, the In growth during the explaining are main two year.

efficiency growing First, inflation forward have higher trends business. a year And pushed expenses of year on expenses earnings. the of of ratio, the closing operate a XX% expenses growth XXXX on ratio revenues result to evolution XX% yearly for XX fees. a so as basis. compensation outpacing rates we provisions the We shows increases in in see anticipate performance are second, to full a their Slide related the in of good in

that such explain of XX% when have increased to net XXXX. of growth. would like reasons have contributed to the As of to same the period XXXX, We fees main September compared

the and Bancassurance XX area. year the to of engagement of insurance banking metrics. equity from quarter dynamic for retail activity XX% in remain the trend XX% client has as debit, transactions contributing was decreased strong at originations the and fees high for growth We is XX a a year. a second, the cards, delivered Slide during September The First, X.X quarter. net full our show Higher and COP for return our claim And trillion tax at as volume activities improved income the profitability a in sustain guidance have XX% of shows last rate a credit effective services, months. Net maintain XXXX, result. levels XX.X%. and and positive

driving for full area. Our the last XX% and growth of positive consolidation be third will year a guidance in revenue to XXXX XXXX in earnings expectations higher year. confident when compared quarter we We for remain experience trends as our

Now, Juan to Juan I presentation Carlos to the remarks. want the turn closing Carlos? for

Juan Carlos Mora

operational of and Jose you, combined effect of Thank The the this operate. deposited economies Umberto. of results the good have quarter where been we the development bank of performance good a

our us on according important see we economic implies challenges Colombia. tax to a year, XXXX, of fees for a GDP next likely credit pickup that In approval cost of we challenges a less of to same on growth. For the the reduction the activity reform X.X% and the demand, reach be in potential second in deceleration linked way, tax a expecting higher slower provisions in considering significant a will are many the the estimate, margins expenses half in for dynamic It growth credit. expenses could of following

our XXXX the Finally, and our We’ll levels. complete technological our efforts for digital modernization above developing guidance closing continue the bank on slightly of focus inflation business. of expenses is the transformation path

Now I line for will questions. the open

Operator

Instructions] Jason first question [Operator comes Our you. from ahead. go Mollin Scotiabank. Thank of Please

Jason Mollin

next the everyone. slowdown I opportunity the – presentation really, for again, and expected for year. recap you Good a for of the guess, question. My the bunch question economic definitely you is and in I Hello, with growth expectation can the got growth XXXX. the numbers economic ask the Thank to if morning.

thinking If impact? understand of a you better I to that guess, you’re tax impact. excluding just ex-FX wanted deposit how I and loan FX of construct, the just interest, can recap particular growth And kind in reform

rate will from the XX% increase the – working How tax the the XX%. banks You of forward? the outlook taxes surcharge can marginal comment kind for in I You to in on as mentioned Thank is guess, going you. well. that additional

Juan Carlos Mora

there going less be different, be Colombia. economy could will that. Thank the are seeing bit of X%, little is particularly quite GDP you, around a is should What we to that in Jason. performance growth different XXXX be performance or than the a have

in from which around this change a we big that ending X.X%. growing it’s at having expect GDP So economic year the activity are the we

different conditions. So that creates

much be we that year. grow loan in growth a during important and portfolio. pace good to loan very at we will have mind expect X% portfolio on context, around that been will It’s that have less growing in So this

already have has expanding. our this on been So, loan books on rates during origination that next year, and the the produce will margin but results interest we

stock will we that we already our from have benefit So that in – books.

next said, as We stock but from that very we I year, a benefit, the will we have will much grow already margin. with not healthy

expect long-term of that with or control. less increase better, growth in growth to year risk we X.X%, we we which cost the going push the be a not risk of line a the We cost loan benefit in a to hard of be good with to on will and risk normalize cost is think from expect and portfolio, around to the but than will its which bank. Other under we on is of margin and

structure XXXX reform, surcharge is for Regarding taxes now taxes. for that beginning, for of until this end presented to expect moving as And benefit XX% I goes increase, which the that that we that in that is the the we banks And you a will rate and tax income. as be have XX%, institutions, an an and are effective said, our effective on effect the is the of until is it our Jason. tax XXXX, not on that to deferral it – as to X% in definitely, tax moving go financial rate work of was applied Colombia tax year from on consolidated just there X-X XXXX, rate in good How for XX% calculating will be on mentioned, going it At XXXX. income that XXXX. – statutory X% ends will

Jason Mollin

the Appreciate it. color. Thank helpful. Very you for

Juan Carlos Mora

Jason. you, Thank

Operator

go question Santander. Andres with ahead. next from Soto Our Please comes

Andres Soto

is presentation. Thank imagine at long-term XXXX, Columbia look reasons you to the to the seem the lower XX%. My that that for are level. are a the are And of they going I seem morning. Carlos going when Good there yields outlook it that doesn’t expect currently at for Juan doesn’t lot that described be when is, next much that in to than I be you higher numbers you They look question ROE for it year, at than are. that

can cost your really are interest to rate ROEs just normalized? towards more but of your equity, question you margins what deliver my So loans the not excess do is, of else and for in long-term XXXX,

Juan Carlos Mora

And Thank you, be from results. a loan the in a as I – the – book Andres. going XXXX that we benefit margin higher. stock net is to to in is XXXX, margin benefit mentioned, going will interest our

So we will from in results have bank. the an will income line income benefit or grow coming those that interest the to of expenses. And more of going same rates are probably the

is that. benefit from we will be to Cost So risk of going normalized.

expect So think year, moving what we to going above going consolidate. during or next forward XXXX. And is equity trend is that – to be the of cost the that we

impact. And countries. the results to significant impact and strategy those Our positive the come improve have our the since or efficiency will going is from Columbia consolidate going are we coming also probably on and the income other banks’ will in a help, fee years income, outside example, for to a

that in interest interest at situation of we of geopolitical the environment probably normalizes, cost to high, rates. this So macro equity allow above the risk. highlight us general moment margin, come. we clearly deliver higher the ROE normalize and in will expect to be risk an above also equity the and to and to cost of pretty It’s will the due important is to the and When the cost years that

Andres Soto

Thank you, Juan Carlos.

Juan Carlos Mora

you. Thank

Operator

question Gabilondo next America. comes of of Bank ahead. Please go from Our Ernesto

Ernesto Gabilondo

active the thank everyone proposals Jose home about you more and banks. of role your financial Carlos framework. My presentation. heard morning first and for campaign, on the a to democratization Humberto. Juan Good morning. good the regulatory we on some services I question is Hi, from remember state Petro’s during

my something then a So related new for year, these potentially on is question growth Thank in software proposals? long just And fees, to banking your that expectation the road. that is sector. new Or next proposal second wondering on could be a fees is if there there you. pace expecting considering you’re

Juan Carlos Mora

Ernesto. you, Thank

on information government and the banking or is question no Regarding additional regulatory the plans much and the environment your framework, first point. this Petro the regarding at regulatory sector. There of

different know, after are As They to have banking public I I what that, complement what mentioned Colombia. have going more is a private And do point, whole those in of is to that focus areas complement the people do to will give that. way they think Finance sector. of And and there that banking direction they access is Colombia they on the I what At the will, different of banks. more commercial has see that that banks expect three to the give they of will that I to rural we, coverage. that, this focus or we banking I sector financial that probably a inauguration, or the what that, the in on to to inclusion. want on government remember Good credit that am and the call been is the months play a what very public said bank, more – the, that the they is organizing more private are role going holding the the Minister banks to I you Meaning going ministers. has in talking,

in financial to financial Colombians. a more on a Columbian now are job any way XX% a matter. close good government in play and to for way is that Credit services XX%, the And now very role. access, that’s and coming products. The in a room to doing giving penetration banks Colombia been are to very other to there basic easy many is access have financial from to We available services banking

probably that for So I at And fees, been other geographies. sources at fees, Colombia that’s don’t have to and on commercial in to or ago in regard. Colombia. client the strategy I and working I of broad have particularly the point, question, second of now diversified this since, see additional four diversify we in years related your source we this a see, three our base, regulation And think very point, what in banks fees,

customers have, XX now reach in million that additional to more to have services. We with us or Colombia them than allow

something compliment you don’t Ernesto’s or Humberto part inflation we and will the fees about to our inflation the about around fees? growing, So, continuing income. I see of above question know important want

Jose Humberto Acosta

of consideration And No, a could that that take little that inflation. terms fees that transactional, be weight to in is bit very you our of phase supporting above in the so have clear.

coming going potentially are ratio the So, in next years. a we reach of income level to XX%

Ernesto Gabilondo

Perfect. Juan Carlos. Thank you much, very

on Just your to NIMs, year. for just the want next check guidance double question last

be, we So correctly? full NIM seeing think year, it in and potentially see the half it stable half, cycle? if expansion NIM should I and it start the to second Did we understand pressure in should for in first the a

Juan Carlos Mora

happen. we You are what is will correct, to Ernesto. going That’s see is,

additional what have for will the the XXXX, third some during Ernesto. the be we contraction. around should probably that expansion year and And then of are semester We is X.X% some expecting NIM

Ernesto Gabilondo

much. very you Thank Perfect.

Juan Carlos Mora

you. Thank

Operator

comes from Sachs. Tito Our Labarta Goldman of next go question Please ahead.

Tito Labarta

question. Hi, for couple Thanks the call. A taking good for questions. morning. my Thanks

issues And you you First, just it’s may be economy, think, but inflation, how do well, seeing holding high any slowing particular asset in quality, fairly high mean, any about here? of – where of I you concerns, segments do terms how rates, terms dividend up been second you’ve the thinking that? high evolution that Or think from Thank given already? of had ROE are you returns, payouts how you. capital question, in about

Jose Humberto Acosta

Thank you, Tito.

Regarding very interest low for and and be on see impacted the will And be high rates high that will probably from growth. question that will your an here. you mentioned different segments we well, conditions economic first inflation them

is, credit manage increase see segment we the an credit, can be seeing cost that impact. going impacted we expect in that to the that have retail most the risk is will of the are We in cards segment. we But consumer credit the is that particularly, what

been like may strategy lines the or of we credit. developing side, strategy, that a are on in you origination we careful pre-approved remind have very We

of are the proactive permanently and we economic the the condition conditions, those monitor we our So, clients.

So, react, increasing. we and on we quick can be proactive see is risk that the when

be will particularly an definitely in So those segments. in risk, increasing

mean with pace, basis mainly small risk. and that regarding cost expectation we them. at a very SMEs, that a in about pretty for that will been much growing be in full book. will, loan on line of cost SMEs about protect could our of cost of product be Some to healthy risk X.X But, our also, the consolidated the XX% will interest the around [ph], And have long-term because year be at overall, higher impacted burden capital,

year, will capital, policy will that X consuming Tier our and is level we we payout. declare with that be aware that last goal that well So dividend very will we and are calculate we Remember of that dividend that. a the level deduct

and going And Tier we to X target will proposed the declare. that So a or around apply with we is the calculate – that that shareholders Directors we to we XX% dividends, what that that meeting have that target. of of a policy, then, are we we And XX% Board our or with of are X. Tier target will

to ROE ask. I you answer So, – José would the to I and with that talk Humberto that complement pass will my about

Jose Humberto Acosta

clear, years. is equity drivers That Juan. just to want healthy There for are for next return complement. coming additional very main on I the

income as one in we first very is, at growth pace mentioned question. The previous a the the fee healthy

weight bigger. around us one Juan, provide second Right are but with in clear. support the mentioned loans And consumers funding speech, clients the NIM. ROE, our we in of comes the in our as and a answer and The very very you structure is, our a clear is can XX% have see third, very consumer from now, good loans primarily we NII

Tito Labarta

Thanks, quick Carlos That's capital the up, Humberto. returns. just and One clear. Jose follow on very

the you value, at trading levels? book Given these stock would below any consider buybacks

Juan Carlos Mora

buybacks We are do to allowed Colombia. not in

Tito Labarta

Yes.

Thanks. Okay.

Juan Carlos Mora

you. Thank

Operator

go ahead. from comes Please HSBC. of question Gomez next Carlos Our

Carlos Gomez

Juan morning, Carlos, Good questions two from Hello. me. and Humberto

refers first one to The Banistmo.

or bit mentioned think Tier the be you think capital appropriate? way your you to it, resolved do have you Our is large that officially be clear, situation think go? You peso to the for now, will give you where do Could a debt would from What very case it dividend real – there capital? is what even You you are XX% When of when Is declare are room currently the your XX. more bit current, size, this one target the that today. be you think in is of have on you where more you the do can a is that depreciate expectation XX% we more that might of the now you is Thank recovery? detail I might have is resolved? situation calendar XXXX, you expectations The nonperforming, at to have said that do X, all and understanding or when And is in pain. another? you developer. mean, And coverage want estate just to reserve you. second, issue. the follow-up terms are

Juan Carlos Mora

Carlos. you, Thank

Let I José me after question your Humberto first take take initial comments. will and the do some second

Regarding of is total Banistmo outstanding and mentioned, the serve million you $XXX corporate $XX around client client million. that we client. that that for The

have value at we So exceeds this the the provision, level, debt. that mind are to asset coverage asset, of of process in and It's outstanding – we that additional now asset, is with of XX%. it's restructuring moment, the the that client the now this with the have the it's the a client in working At good debt. the –

have, I reserved we XX% process. that in between because that we we So and the we on us comfortable level with the on asset. we We Banistmo level That's provisions which at this books how at moment, feel have they are asset this already are of give that the value our an that amount. coverage situation the coverage that But the that mentioned, why with comfort the comfortable of that not paying feel at moment. of additional

continue we process probably but will end situation would by some of the situation the with take evolving the clear on the to year. expect time, client. the We have That

evolution So this the we'll what know or exactly client point, will how at the that be. evolution of

Tier there will we X they for that during end for target the is be much of the XX%, year. than with if dividends year. less question, are. the growth your the Remember Loan room year of this Regarding target yes, an XX%

will that not and side from we accumulate capital. So we consume capital

between that So allow the know want we that that have which us balance very to policy, will mentioned. José, if target and point which don't – of Carlos XX%. feel the a good you our which comfortable, I is second level is complement to capital our dividend in

Jose Humberto Acosta

There are Juan. Yes, two reasons.

why one, get first loan XX% we was The growth. the

going are quarter same As of That the we at fourth in the Juan explains of mentioned, why think that end we have loan level believe we to year, the the don't frame the level accumulated Tier increase. second September FX till the growth. the XX%. X months same don't We reason fourth And was quarter. XX will Remember the evaluation evaluation for FX. last is of the at that foresee

believe of the at two years. we these X that exceed the XX% we'll two end reasons, ratio of the because So Tier

Carlos Gomez

XXXX? Sorry, think exceed you end the at of you will XX%

Juan Carlos Mora

XXXX.

Jose Humberto Acosta

Yes.

we for have dividend XXXX, a first will and we room the XXXX, So XXXX. it’s have for – of will quarter

Juan Carlos Mora

ahead. please. Go Go [Indiscernible] ahead,

Jose Humberto Acosta

again. Okay,

Juan Carlos Mora

so. please, No

Jose Humberto Acosta

three. are There

yes. So

– the around We are both going to at reach we end going to of are reach each at XX% year.

exceeding for have have dividend So we will to enough space a and payout.

capital fourth we if first is quarter quarters. we for now, the but quarter will see I the in So last are in the the will be we are would amount three make that clear, The don't not capital know consumer be for right the know time capital That – consumer exactly number, area. Carlos. need. less that calculations of we a regarding don't XX% that the going to

Carlos Gomez

be XXXX, will summarize, of at be you by end close the so above you to XXXX? the of be To Okay. end and by or think XX% then will you XX%

Juan Carlos Mora

No, let me that's – clarify.

Let that. clarify me

X is XX% the to at Okay. Tier during We because are of quarter. We we less of – loan accumulate this capital fourth on during growth capital. quarter of moment, some a be level the going that XXXX,

So be the XX%. will propose since the to have as And to to be on mentioned which the us Tier year calculate allow have during around have policy of of will X, dividend the dividend of then I – is XX%. with X%. reach are would growth loan dividends we capital level there, some it we a the next results but is and reach XX%, Then target Shareholder before accumulate the not to to based Meetings going we that that, we will and and XXXX going XXXX

to be that a that going will Is during will and Carlos? capital So it's we consume growth accumulate XXXX, not capital clear,

Carlos Gomez

issue developers specific the company I in worry this Panama, is or default Thank If other you can in should a very go That you about Panama? is back clear. corporate much. to

Juan Carlos Mora

some company now. a it's time a with it has client It's been No, specific that, for issue. us

it's It's Carlos. particular It that with client. to worry about Panama related something So very is specific. in general, not

Carlos Gomez

for very your you much That's okay. answers. Thank

Juan Carlos Mora

you. Thank

Operator

Our next Julian Instructions] question Please ahead. Ausique from go [Operator comes of Davivienda.

Julian Ausique

Hi, if the don't like you to the more is of is for there reform would was the question, tax any the pay change, Colombia. Columbian XXXX, do that the, additional have I regarding regarding increasingly you Panama, much be, tax Honduras reform time to Panama [ph] you know have in back one additional everyone. an one reform [indiscernible]. Thank go Guatemala, taking the there Thanks I operation in company will money my ROE operation in if regarding of the tax for how the about the have, in expectations And in other this have you. Columbia. impact the the from to reform in tax due questions

Juan Carlos Mora

Thank you, Julian.

wasn't sound your if right, very Let get quality of me good. questions I the the see, because

as impact surcharge reform particular X% mentioned the income tax and, of is the going to impact in the we and we of ask to get see any The that from what you impact. income Columbia. from So is on operations tax going outside Colombia we don't be the be the

around that's if the operations XX% of a don't be to since comments question. additional have any our know we you have, statutory Jose, we, zero, have have rate because rate an we Julian’s there tax XX% consolidated basis, geographies. for of other why I we going on beginning So XXXX, effective regarding is

Jose Humberto Acosta

we XX%. for of cost Yes. you cost return that The to potentially, year and Julian equity be is, around this equity of we that above reach – return XX%, XXXX is on equity meaning around going ask we on equity are will

increase of cost year. equity next potentially So will

be the at end XXXX. above in will equity the cost we of day, So of

Julian Ausique

for expectation the NIM. in the [ph] CapEx Okay. XXXX

Juan Carlos Mora

probably year probably around NIM, we into expect the and the a As more it NIM the quarter we with first we the mentioned before, and NIM contract, of the little expect X.X%. a XXXX then during beginning will bit of first expand semester, end the to

Julian Ausique

very you Thank much. Okay.

Juan Carlos Mora

you. Thank

Operator

of Yuri Fernandes JPMorgan. Please next Our ahead. comes question go from

Yuri Fernandes

guys. Hey

Sorry, hear me? can you

Juan Carlos Mora

ahead. go Yuri, Hey,

Yuri Fernandes

refresh can you capital level and structure regarding payout? for I bank, us is you for how had but Hi that like Can is keep the guys. the my you. now Thank see the dividends of minimal you on lower Tier been X I results. dividend. likely, the here the re-compounding XXXX? guess you question have one Congrats regarding this, question X Tier the

Juan Carlos Mora

Thank you, Yuri.

As on our dividend around we X XX%. our have mentioned policy based before, core is target. Tier we target That

us will allow to to be, a be, be will it's meet criteria yet, that I know proposed That dividend that going So that, of don't a think will is mean, the dividend. but you the will amount first want that, and know we that don't allow I that capital and structure have, to us to also I that good have payout a are the XX% the for we looking Jose, compliment answers? if market. for these will

Jose Humberto Acosta

the we In going are are try March, dividend we to payout. see, to going when again. Yes,

X of having. they that thing assuming level in the optimal we average X, of plan XXXX. do on are the during Tier that to March Tier to space XX% is that, calculate that we a we announce believe dividend, on have to we we're maintain first business Based going that the XXXX, during assuming The

our X dividend clear? the will that the at script. assuming we XXXX, But on Tier XXXX, So on be at policy, around don't we reach end recap XX% to of that I are is areas capital of to we the know March. generation at potentially the a announce XX% are the of if during the mentioned end going XXXX, the dividend payout

Yuri Fernandes

clear Thank super guys. much. you very that's No,

Jose Humberto Acosta

All right.

Juan Carlos Mora

Yuri. you, Thank

Jose Humberto Acosta

Thank you, Yuri.

Operator

Our next of ahead. go Garcia Suisse. question Alonso Credit Please comes from

Alonso Garcia

taking for a a just my previous you actually question. on Thank follow up everyone. question. It's morning good Hi,

you did expecting you. this Is XX%? –there for think I XXXX? is Thank ROE that XXXX for year case, for are around you; you mention what

Juan Carlos Mora

Thank Humberto, question Alonso’s could please? take you. Alonso. Jose the you

Jose Humberto Acosta

XX%, return XX%. as Yes, year end year at this expecting of we the of in are on equity next said you

Alonso Garcia

Okay. you Great. very Thank much.

Juan Carlos Mora

you, Thank Alonso.

Jose Humberto Acosta

Thank you, Alonso.

Operator

I remarks. for to session. the question-and-answer back Juan This any closing turn like to call the Mora Carlos concludes over would

Juan Carlos Mora

third Bancolombia’s Thank participating quarter in for call. results conference you everybody

one year we Bancolombia structure coming base challenges doing is manage bank, XXXX, think I the our environment we of well are that we line the strategy, as end economic very have, I year at we, prepared customer to be feel, with what XXXX. with us different will prepare challenges, to manage during will we results to still we what we the them. transformation, far. so have expecting which an XXXX allow but with have are have, said, we a in different But We the digital the in on to that are than manage we had have we what of seen XXXX in different this a year

participating for you So for and again, call in conference which year much a thank we to very result very expect will full see you in and XXXX. the our you today's call present much Thank we good day. next the have and –

Operator

call. conference today's This concludes

may a you your Thank disconnect pleasant participating lines. for have day. and You

Bancolombia (CIB) 16 Nov 222022 Q3 Earnings call transcript