AVAL - Earnings call transcript Q3 2020 | Grupo Aval Acciones y Valores S.A.

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Operator

Welcome to Grupo Aval's Third Quarter 2020 Consolidated Results Conference Call. My name is Silvia. I'm going to be your Operator for today’s call. Grupo Aval Acciones y Valores S.A., Grupo Aval, is an issuer of securities in Colombia and in the United States.

As such, it is subject to compliance with securities regulation in Colombia and applicable U.S. regulation. securities also Finance inspection the as conglomerate. is the supervision Aval to of Superintendency holding subject Aval and the of financial Grupo company of consolidated IASB. is this IFRS The currently included accordance as the in with document by issued information financial presented in calculations measures such the among and as this in non-GAAP where explained are required of report. of ROAA ROAE, Details others, This report includes forward-looking statements. or identify expects, the words such potential, will, should, plans, In other believes, by or of comparable some as negative statements continue, cases, these and these forward-looking you predicts, anticipates, can estimates, words. may, in may results and general, Nacional Registro materially Actual changes rates time herein anticipated y our as Valores business de time risks and consequence events in and in filings differ changes with other the from and SEC. currency from and those the of interest Emisores conditions, a described economic to for are and this responsible use of herein. the Recipients provided the of assessment information document the this materially including our or to developments may information update our statements, in review, any update in knowledge correct described but and do not to any and material to forward-looking provide for them next disclaim report, this time, prior expressly earnings over report. provided such of presentation obligation Matters and any the extensively intend change we and intended figures of description. are than The summary content of this document provide to rather comprehensive the a a included herein the discussed subjects refer we document as thousands billions this to in applicable, When millions. of listen-only time, this At mode. participants a in are all question-and-answer session. a conduct will we Later, I to will now the turn call over Mr. Executive Carlos Officer. Sarmiento Luis Gutiérrez, Chief Mr. Sarmiento Luis may Gutiérrez, Carlos you begin.

Luis Carlos Sarmiento Gutiérrez

are of you conference joining keeping third families XXXX all I you call. hope for all morning your that healthy. thank our and Good and quarter

during ease mandatory more effect and economies the felt on operate experience the the the started immediately, of During the quarantine second quarter. several third countries after contraction almost their was sharp their to so where quarter, we

from and Our subsidiaries banking pickup as revenues also evidenced benefited, the infrastructure. fees by in are

a there review remain health economic usual months, returning We ahead the today's presentation reignited, have to easing of from gradual with of end loan macro, since spare as reopening Starting as macro and of the last certain highlights Sol-related back are has if of level. to no acceleration been efforts, mandatory our to third the and of financial global a however programs, economy In will quarter topics I Indicators sectors recovery business Ruta new crawl the further developments fuel mobility, deliveries pre-pandemic of of and and begun after quarter September, previous has I cover since spoke. progress the of of slowly XXXX, economy the because our challenges the at lockdowns during not del the show as economic of October. us. its the quick a such activity we energy the digital performance. the economy will away in you main of of update demand, the years, our following, relief and

second the in the improvement quarter. same decline observed compared substantial economy contracted to the when the the when quarter, X% third XXXX, quarter during with During compared XX.X% a

when previous the X.X%. fact, In the compared to grew economy quarter,

believe X% represents first the side, supply compared nine the three when X.X%. XXXX. result, represents sectors performance growth months quarter. grew the GDP, although a the resulting XXXX X.X%; Examining decreasing about pace optimistic from at for period grew growth GDP second the GDP, the As year, consumption We From and X.X%. period has government represent growth analyzed in household during fell country's government activity, expect in GDP, real decreased the and the manufacturing of nine sectors to approximate XXXX. investments XXXX, in financial contract services grew in prospects quarter's decreased X.X%. GDP grew the when fell demand X.X%; consumption X.X% which activities economy a next side XX.X%, same XX% which XXXX. than compared private commercial Among demand approximately Agriculture, domestic The which X.X%, X.X%. X.X%, during X.X%, cautiously registered contracted and services, We're that XX.X%, to now will estate those, and contracted of in contracted, same X% slower remaining X.X% to of

year, from have figures deficit better quarter, short, third for Although mentioning narrowed no XXXX. by first-half exports country's this In and significantly in of have are the side. X.X% prices, current narrowed has account have XXXX, on oil the GDP been down remittances during of X.X% as positive that is of imports worth the decreased, deficit oil available deficit aided closing as it the credit surprised at the June yet balance

We expect discount at loan account that deficit around X.X% XXXX GDP. of the close

June, quarter X,XXX the the in compared mainly During XXXX, pesos exchange per fluctuated to of the in has the dollar the third volatility Since due assets. rate rate to decreased risk range. worldwide exchange quarter when second increase in for to X,XXX demand a

We expect remain the its rate this inflation from peak X.XX% in in of and XXXX. remainder its during to the in falling year, exchange has of X.XX% inside March, significantly that XX-month continued October. the will range downward trajectory,

at contraction for the the Bank gradually rent, last our the to this believe end has range We food, XXXX. interest a decrease registered have totaling XX the minus We Central and year. range additional basis its least be experienced the expansionary with a its lowering will X.X%, activity, has expect to points of inflation stable inflation X.XX%, education. labor rate during quarters. by the X.X% two policy, that in Central cutting inflation repo and effects the room October, remain XXXX. to business sharp variations X.XX%, During move and X.X% mainly of the cycle, rate additional at XXXX's will that rates negative driven since reached a line on quarantines inflation monetary the to given that In of X% basis next now call, during the continue Low of adverse to and XXX with Bank by market expectations upwards points, in

of September recovery. However, payroll some most show the recent numbers signs for

of unemployment, that reached XX.X% further by XXXX, which high the to of be points. estimate XXX of improved XX.X% as a improve urban will We to unemployment improvement the June, activity end with business fact, we could and basis In in that by XXX ongoing expected believe figures normalization September. XXXX in in

as On the for fiscal revised, front, its and XXXX expectations growth. XXXX just the government's targets for deficit were GDP were

deficit the contraction X.X% the of increased, government fiscal and rules GDP Consequently, in the GDP XXXX. has now are X.X% for to from economic the Colombia's GDP been XXXX As in until decreased programs have pandemic. of two XXXX. for from for to X%, expectations X.X% effects targets X.X% to and of suspended mitigate implemented XXXX the government X.X%, XXXX important

healthcare First, the forming, subsidize Fund the capacity to National of existing used to payrolls, to and the social amounts X.X% which of Emergency being households. programs support expand is enlarge or GDP trillion, system, COPXX low-income

some have no required por the countries. obviously addition, wave trillion of Colombia de hope concerned dispersed. trillion guarantees program Nacional second is or a In further Fondo already virus, Guarantee Garantias, COPXX that to for providing of government Unidos Fund, We and in through up COPXX.X for the and European remain possible watchful the will which been National lockdowns small of be loans to the businesses bank

the lower for Nicaragua X.X% XXXX, X% are in these grow X.X% for in exports most the El now Both a X.X% IMF XXXX. an on in the is are XXXX to the impacted, in Central and GDP contracting numbers and updated the expected of expectation key a X.X% Panama by GDP GDP both XXXX pandemic in contraction variable however expected to and lockdowns to to with expected strict GDP in of X.X% X.X% Nicaragua. economy the region's XXXX. is GDP XXXX. and their Honduras remittances. in impacted Rica, will expects growth A grow be line in contract is at Rica additional evidence and in its Moving and which be countries. to with a beginning we grow mainly region's Costa of Salvador continued to Costa in expected in countries X% implemented concur. in GDP the each for recovery XXXX in America, in to their to by of contraction XXXX X.X% of expected decrease

The Guatemala to be expected economy XXXX. is is XXXX. least in to X% Finally, Guatemalan expected the grow in impacted contracting only X% economy,

Approximately granted were half consolidated Central debt of our the of had trillion. reliefs Regarding relief or other programs, of XX, debt September in we XX% these relief approximately Colombia COPXX approximately half America. loan and in granted portfolio, as to our

Colombian our loans that portfolio, in while total between all more. our represent Colombia consolidated reliefs still XX% have loan As relief granted about active; a X.X% their Central they XX of Active periods, are reliefs as of half same are portfolio, the Colombian in our operations. Of consolidated completed of currently XX% approximately of and our reliefs percentage region's of loan due of total Active past portfolio. total days split America, or were also portfolio. Central American COPXX XX-XX XX% trillion or represent date, the

transforming solutions. strategy, product primarily focused into to our Regarding our have core up now, digital on we digital

of compared banks. same sales nine fact, the we accelerated products In XXXX. current grew XX are By in juncture promoting indications, XX% all months through our Digital digital now digital the adoption. the has period last to

digital to we has migration quarter monies In The during of digital what channels third exemplify the achieved. following transactions quarter conducted in XX% brick-and-mortar transacted accelerated. Colombia, compared through from our have channels addition, process to In earlier. figures XX% of the monetary were

the quarter. same options of transactions service Monetary the our BAC through web service, of requests represented quarter recently down represented network, XX% an network assisted requests quarter XX% platform our back from all-time year-over-year. On of transactions first most all monies period, self-service last have the With WhatsApp. In service channels implementation, branch than mobile to done America, through banking in process Central high remotely transacted were the of reached in via new third has hundreds requests. XX% request of just previous XX% the mobile during more hand, monetary this a increasing respect than enabled down total channels. other more in branch month of both digital service the year-over-year. in XX% and from transactions XX% In quarter, Monetary third conducted via

quarter inbound the now all to first a now WhatsApp of improvement And showed telephone by income our non-financial our digital slightly previous from quarters. decreased and marked recovery a show and the expect risk from fixed for the Promigas. cost close for the more driven few were time when compared financial to strong toll quarter next of to mainly calls. our and XX% in digital inbound high in for net income we inbound In represents third businesses, interactions a interactions income higher continue roads referring although than our to fact, income the portfolios, risk quarter, a interactions. especially results, of to contribution Cost fee surpassed during results our the of

highlights COPXXX detail and growth acquisition trillion. the XXX Although by Aided XX% in consolidated to XX.X% to trillion. XX.X% Diego deposits loan financial will by year-on-year of Multibank, grown XXXX. assets during loans are targeting We're to performance, for have trillion to gross refer XX.X% Consolidated the have quarter. COPXXX grown year-on-year of X.X% these to currently consolidated the our few Aval’s year-on-year

at ratio As I loans debt this in of the as Consequently, about increased relief third end past programs. from end ratio reflect XX quarter. to of September our XX% due of of the X.X% days of XX, June X.X% mentioned the the before, now

the Cost of indicator most due concentrated portfolio, days expected, during in loans increased by during loan from risk due X.X% past the compared of up for the Cost the the month X.X% was from past nine of points. quarter the of consumer second X.X% XXXX. X.X% XX XXX XX months quarter slightly in whose period nine to decreased As quarter in basis X.X% last and increasing year. was of risks day third the to

Avianca XX% earlier. of to up XX% total the the coverage our we During a exposure increased quarter, quarter from to

quarter, end We will to decrease at now X.X% As better a XXXX of funds. and we risk result remained during we cost of as to significantly X.X% at actually calls, previous of the made unchanged loans cost in approximately expect risk about had XXXX. that NIM during mentioned cost mostly X%. of

quarter versus XX fairly points and by still decrease loans to XXXX when was quarter the XXXX. NIM pre-COVID months by X.X%, We basis XXXX the of significantly almost at related quarter this second increase the expect investments. the second to XX construction gas third NIM nine segment. total by due during and that when of third in points its months second by NIM and almost has nine mainly XXX the remain from and and increased investments. recovering of the higher almost operations fees, recovered quarter, income the during gains sector in will non-financial of XXXX. Total to industrial infrastructure fee XXXX, versus compared a banking the NIM X.X% third our quarter income quarter, by total remainder XXXX. increase sales during previous the first by a pace by revenues XX% driven Other the from mainly levels, of XXX% to when quarter a third decrease Total the the when from income from NIM gas to decrease level XXXX, gross driven compared demand versus a in Income of by sector as XX% on points and NIM income decreased XX% and basis during for operating compared XX% oil basis remains shy quarter to of compared versus first showing an increased the Driven but expected fixed from significant grew constant of

approximately the only Operating in Multibank year. quarter X% months quarter income For increased remains impact of full last from expenses period, though nine with first by period same that the the acquisition. X.X% sector this from this of the was a even below the

ratio our X.X% the from the in improved to to X.X%. second cost quarter second income Our improved to from to in and assets cost ratio XX%, XX.X% quarter

currently will and keep a growth at of estimate We for XXXX of X%. on cost operating containment working expenses maximum

net X.XX times ratio the funding continues to Our as loans and strong XX%. position by of deposits liquidity and of to deposits evidenced cash the ratio

was or the and of the Return billion assets XX.X% was net on the result and COPXX XX.X%. aforementioned, return was equity for per for on and income return nine share, respectively. COPXXX month a equity As average average quarter average X.X% on

higher explain We expect XXXX results. who with sorry, to assets in during And on you a XX%, to presentation with finish Diego -- I’ll be rising will than to pass businesses slightly detail that, Thank on glad equity to the on return average about very XX% much. XXXX. average our

Diego Fernando Solano Saravia

the Aval's as lockdowns non-financial Thank Carlos. Luis IFRS. to results of quarter fee results I positive economic our now impacts and you, will under third move the boosting Grupo sector consolidated that performance. recovery reflect filed income ended

rates allowed their banks interest improve and our gains falling on trading income addition, OCI In to realize fixed income.

that high while quality as However, asset anticipated cost and XX from reached results expiring of customer’s quality of Starting the deterioration regarding XX.X%. was risk on a X.X% eight, remained on asset behavior. cycle of payment lease evidence economic page our month impact one the growth through negative growth

the last call, was closed last our in mentioned MFG As May. acquisition

During months. Fx the operations, and XX our of American acquisition of over MFG XX% Central assets movements grew total

Our decreased Colombian XX.X% assets and the during year-on-year. grew X.X% quarter

our terms and growth. XX.X% MFG with a decrease assets and XX three recorded of of a The take America X% in XX.X Our in months growth. of of pesos XX% our Central for quarter during the concluded the year-on-year XX.X% dollar annual increased Depreciation X.X% months quarterly to Central slightly XX.X% American growths Central X.X% quarterly a for respectively. year-on-year to America and of rate book. and

of acquisition dynamics pesos. growth translated Colombia retail X.X% or the explains improvement stringent over of added and loan maintained reaching increased year-on-year our terms. loan and American nine, page in during terms peso X.X% to Central grew over the growth trillion in COPXX.X of charge-off a the contracting underwriting reflecting year dollars loans X.X growing an Colombian into in Loans points $X.X consolidated quarter growth incorporating X.X% month XX year-on-year. X.X% portfolio the while the our quarter, thresholds in MFG on loan percentage of quarter. billion gross lending Colombian operations book slightly and when with Moving portfolio retail The XX.X% the contracted increased loan.

Colombia a This of performance the dynamics, X.X% off reduction in growth portfolio our in resulted quarter a commercial of reflected and loans Colombian Demand our loans and including year-on-year. in recovery consumer quarter’s X.X% consumer portfolio, sold. of the write

was This economic in reported the lockdowns lifted. and were ourselves, quarterly also network restrictions that Colombian of accounts for at X.X% an grew increased grew and same by products and our effectiveness growth Payroll XX% X% lending accounts for financing secured consumer driven of progressively and improvement time X.X%. activity portfolio auto

X% respectively. retail credit XX% of contracted over year-on-year. the and for XX.X% secured always, As contrast, our Colombia, XX% In expanding portfolio dynamic mortgages remain products in X.X%. and X% personal Colombian cards and consumer products These loans account quarter,

set portfolio quarter, the loan months disbursed lending excluding the the quarter. quarter. March. when to growth, hand, repos. to over they as working pass X.X% by might loans X.X% institutional of corporate retrenched personal Colombian recreate safeguard loans during have as On a this corporates intensifies that lockdowns on the capital XX by market over certain large in Mainly corporate competition in decreased other back been reached first Also as X.X% our approximately some we Corporate and large over offered

Finally, we sold COPXXX probably points that we off, for of in commercial accounted charged placed XX poorly billion for loans. basis

quarter, portfolio Central closed America, year-on-year over contracted dollar terms. XX.X% to Moving X.X% the and loan in was our

contractions Quarterly decrease notes. MFG from made America's cards, X.X% by Central similar the were and acquisition by quarter, and X.X% Mortgages Colombia. performance contraction prices loans America X.X% of in in of loans in a as year-on-year. installment in respectively. commercial a a credit X.X% reflected of commercial Central Consumer grew loans impact personal and performance the During consumer over resulted increased X.X% X%

both and competition that and the by high be will expect commercial of loans pricing leverage growth to institutional customers. corporates large quality We affected from the corporate continue

employment quarter, we anticipated normal ratios, outlook of confidence we will hand, transitioning XX, no lease as vehicle other regain into present to and in a metrics, several further [indiscernible] portfolio the quality scenario countrywide a households expiring delinquency continue pages XX XX, through expect slowly includes the XX-day that lockdowns. On effect as the with PDLs. recover loan them and and deteriorated loans On of portion

As and XX% of Colombia September, loan XX% America. in were had our Central portfolio XX% in of activities. Activities

basis portfolio X.XX and quarter. on points XX-day X.X PDLs the by basis the over on XX X.XX% days XXX loan basis to Our points, deteriorated basis,

XX-day PDLs deteriorated deteriorated basis to commercial XX remain a on was by In a to XX commercial basis XX-day Our on our XX all deteriorated to Breaking PDLs Central charged throughout X.X% ratios points, XX basis portfolio PDLs these XX XX a basis X.X%. X down PDLs quarter better. basis your at on year Colombia X.X%, that's by points figures basis points basis, which points on now loan XX and XX-day XX-day positive basis these is a quarter, PDLs on deteriorated performance; XX-day XX-day the commercial X.X X.X%, with while a at earlier deteriorated on X.X% basis basis and days ratios. basis. basis points points XX over XX-day up to to the effect America, a stable points but points the

XXX basis Mortgage X% PDLs deteriorated on points In and PDLs our basis XX-day X.X XX points to quarter deteriorated while deteriorated XXX basis X.X%, to on on X.X% at a deteriorated points XX-day the PDLs to XXX XXX a XX-day X by XX-day basis to X.X%. Looking while basis. Colombia, points XX-day America, and deteriorated a XXX X.X%. points a XX to to XX-day points, basis consumer basis Central portfolio, on In X.X%. to this to points PDLs basis consumer basis XX-day portfolio consumer XX-day points PDLs PDL basis deteriorated, over basis X.X% basis

points loans, the of IFRS are basis in one quarter, under improved six stages X. the of expenses risk. and asset or well Central in improving that offset provision quarter, basis cost Cost basis an XX of Cost in risk cost measured basis of risk portfolios, Contractions cost Central which The in macroeconomic points. increase points the from our partially assets. Central of improved risk recoveries during between loans a in of outlook as retail in of XX corporate a up riskier trends America. by is Colombia cards. better recovery Colombia, deteriorated XX explained and by points softer our Our favored quarterly in points XX risk of dynamics a commercial of loans, for deterioration basis in as reflecting retail risk America from loans charged offsetting pickup basis America, explained of quality of remain in high improved deteriorated points in by by of XX credit Cost

Our second incorporates contraction it compares recorded credit cost that to risk quarter. of in X.X% the cards quarter X.X% a favor contraction when third during a

of in for of cost In scenario of particularly earlier loans. Meanwhile mainly of detects risk due Rica risk during the and loans was leaves, addition, an Colombia, quarter, expiration recoveries improving an and Costa an American lower Central charge to retail retail Guatemala. in macro increase at in cost stop

an to Our banks resulted determined commercial two continued and in order Aval and risk three. in stage Affairs expected exposures, with to to level loans in stage impairment credit in This charges. according under loans sales evaluate the increase losses

billings in to XXXX, Bogota. As with secured in consolidated Avianca is exposure approximately, international COPXXX XX, previous to our the Avianca's of equivalent and secured of Group is September as XX% $XXX exposure mentioned this is buildings with billion headquarter XX% million calls,

booked pollution as incorporate expenses macro regain September. are we to reliefs Most quarter, Central XX% lockdowns end portion provisions expiring, traction and our X of a and Our American continue of charged for expectations. stage quarter. fourth the up in and during stage loans in X. will increase coverage expect in iteration quarter, were transition of related XX-PDLs our Avianca with as assets rolls reached collection third into briefly as efforts Avianca We the Recoveries of lower

XX times. represent the reflect growth coverage during to associated quarter to slightly continue one-and-a-half XX-day PDLs our pandemic. funding positive face And PDL Finally, evolution, with the and the risk profile conservative of the to a funding decreased liquidity page

XXX%. increased our deposits result, As to to launch ratio a

at deposits accounting shifted X.X% Central XX% quarter for during ended in America Deposits the quarter, Central increased capitalization, shareholder's of year-on-year, by slightly period Colombia at our the deposits MFG. America the with X.X% X.X% XX.X% X.X%, equity, XX.X% XX and attributable ratio total our The cash terms X.X% equity the the towards we terms banks. dollar driven structure our in funding. grew and capital of now On at evolution dollar during attributable by total Funding page year-on-year. mainly XX%. explained earnings. quarter. in increased loans were quarter, while Payroll our XX.X% the XX, of XX.X% our Colombia our Total X.X% months present on equity adequacy and at X.X% grew While grew respectively.

As quarter Popular problem Banco explained ratios. QX XXXX, risk assets the of increase solvency QX Quarterly banks third flat. remain our for and by in a solvency contraction profit weighted problem show is and

oxygen present funds, that In XX, or current to to ratios III remain ratio. and at the net increase yielding level the few the similar will transition in of popular a page a expect of cost Bogota margin. spread, we We our Basel regions solvency and percentage points, loans, should interest

funds. loans strategy that cost loans to of investments. dynamics margin basis yielded the NIM reduction Central quarter Our quarter stable an and incorporate during interest net the Bank and aggressive NIM was lower to the a in the stable mainly by due on driven during remained NIM performance points XX and

we're with associated release due terms which second the in our included net recognition present of under points of XX billion reduction loans COPXX interest our income granted. to increasing interest basis on addition, values or loans reduction In quarter margin in

that We competitive quality expect persist for on loans, macro the as that risk pressure of the will improves. particularly outlook highest pricing

this Pension compared Central and income fees our intervention activity reflects the fees page on investments in rate they were on and assets liquidity in is as incorporate to due for severance Net by and quarter fees under gross affected events increasing income. to last fees. to performance geopolitical the paid when continue by year. margin interest on XX related waivers funds global increased XXXX, America. other And Quarterly However, Colombia banks of of increasing Gross the will net represents mandatory fund depend the fee XXXX other benefit transactional the Bank in charged on XX.X% fees positively expected lower quarter observed fully fees and to cuts for from an temporary terms rates and the XX.X% dollar pension funds. lockdowns Central on management end and year.

over Most in performance The energy We sector listed following in this non-financial our improve continues the the up of main by restrictions picked on front to The further activity construction levels. gas. economic for sector the expect and demand multinational businesses. and industrial the quarters. positively recovery two pre-COVID recovery Colombia infrastructure were quarter, the earlier as gas to was third of see reflects progress sectors, to recovery gas in impacted a of sector infrastructure

income On by Finally, the some on evaluation the bottom we in quarter. the page explained mainly efficiency is income of high ratios. over page, and OCI higher [indiscernible] other strong results during the present third XX, quarter

our quarter. cost initiatives units of during the implementing continue business All and reduction contention

sector reflecting despite the X.X% the both other X.X% flat over a for a As to down income quarter as to MFG as recovery as X.X% XX% the in a earlier. strong income Other to during the FX expenses quarter a Cost and income decreased well and remained operations. non-financial by result, before. acquisition and described year-on-year, cost fees of previous and from improved of to asset quarter the year

from over Central Excluding contracted year-on-year incorporating other quarter the X.X% and the year-on-year up one dollar in and increased quarter expenses and Quarterly during second X.X% a of month Colombian these MFG quarter by the terms year-on-year. expenses X.X% now X% effects, in X.X% X.X% other decreased expenses the American and quarter in full quarter.

quarter and grew other terms. dollar X% the over Central in expenses MFG, Excluding America X.X% decreased year-on-year

was liquid influenced $X by severance million, Our Central increasing loss America in payments.

quarter personnel quarterly over increased X.X% expenses consolidated year-on-year. X.X% Our and the

and terms Central X.X% before, personnel quarter full including dollar quarter general in expenses and over personnel expenses effect and FX increased reaches expenses decreased Quarterly collateral and decrease the the effect expenses grew year-on-year, and excluding in MFG America, the excluding X.X% year-on-year. in decreased and the over Over effect administrative payments of now XX.X% MFG. Personnel the a MFG mentioned MFG X.X% of fluctuations. including and quarter of X.X% when quarter the severance increased the fluctuations Colombia without increased X.X% X.X% of X.X% FX

or Finally, net on ratios. third income per quarter COPXXX billion net the reached COPX.X profitability and or for our net income COPX.XX attributable income was present share. page XX, XXXX per trillion share. we Year-to-date Attributable COPX.XX

on Our respectively. were X.X% average on equity and for return XX.X%. and on average the average and return return assets XX.X% average assets on and return quarter X.X% equity Year-to-date reached

uncertainty level a persists, Finally, XXXX and even high our I expectation will though for of XXXX. summarize

We expect next earlier X.X% value XXXX year. to to XX% XX% growth in loan either be and

Our net should years. for in be on margin XXXX. equity for stable XX.X% should at XX% remain improve to XX% interest close to Return and year X.X% fairly both to this

We now to finally, risk year. grow value year will this a have cost XXXX XX% points the will to your faster in open as value growth X% we XXXX including than we a We'll it close of the and couple X.X%. should loan a for the in percentage have next portfolio, questions. Fees expense have

Operator

you. Thank

the Mollin from comes Scotiabank. begin session. And Instructions] from question-and-answer now [Operator Jason will We question our first

Jason Mollin

income high sufficient of of to is of level your opportunity have and past X% year. to the cost the this to they’re relative on ratio it higher now, about at you as percentage next how who you is X.X% you to around if hard rescheduling, provisioning, provisions point should some questions. at this are year, levels, we feel of to a is NPLs, My one making peers Yes, which provisioning measure because look being that a percentage you question total relative can hi. complicated especially mean in about that give provisioning net if declining want now have potentially it's you level also levels that view, the investors I to percentage of you question Thank assurance as the interest is talk loans. sufficient? as How a or my ask for risk of are and

Diego Fernando Solano Saravia

Particularly, some we are of the summarize where safest you, have try some Thank of a cycle, government in throughout have a are the of are retirees, as unsecured it that that I a of consumer things in products we SME as portion loans and have portfolio, in we is a underweighted will in and this portion the some well apparent lending Jason. segment. and our of higher past we loan of products, payroll we to and and become have riskier. the structure the smaller different overweighted employees said as well to underweighted segments we've

So, the our way the part different portfolio behaved. way portfolios evolving, have this and is seeing you’re that of what point at is

is and able needed imply for willingness particularly different order you more get quarter, we’re point that moving we're of our is the doing loans changing employment the be quarter portfolios the which process as we the to should begun X%, Central to additional a quarter to in speed when past then there's provisions. basically this in it the X%, covering the lower is some products shrinking credit additional raising particularly not at -- the lending Part card have of into And in X past as to the in see a our is second you X%, is shrunk] to a fourth provisions there's growth, the growing. we mentioned a during mentioned that was was X wide that provisions at stage we’ve pickup [ph] micro the the during level, into magnitude the what already something the around We’re also in reporting, America that riskier and quarter, that there's at stage around but we’re I [we as provisioning fourth of well of that look have segments and an portfolios, migrating quarter, Then, as provisions the start slight a before. in of a might finally, -- this that call, improving, variation we’ve there. but sort implied the had seen, was

what to are has you've of recoveries happening we that seen linked portfolios So, that been been part recoveries, has shrinking. some of particularly these

this point, over. obviously at So, not what it's you I tell is can

that guidance halfway running we at and year You can of see the X% is guidance is this year. next our should this for be year for where still

kind before. X.X%. than So, something -- have levels the we with quarters used down into run at levels more we it's going provisioning migrating of That additional a implies of few that to that higher to might around

Operator

Nobrega Gabriel from comes from question next The Citigroup.

Gabriel Nobrega

two Hi, everyone. I have questions. opportunity and you ask thank questions. morning Good to for actually the

is them The quality. asset first of on

days that's but you noticed have have still We XX quarter, increasing. this we [indiscernible] ratio saw until

to XX in NIMs we to Thank rate your the the and XXXX, these question, maybe the then, rates, remain accrue on it's be so, that going loan to to but their you the to interest wanted part trying second harder another environment, to increase X going lower maintain your end increasing, guiding and are work you. to also to Avianca? the stage And through banks portfolio were I year, you net mainly maybe are pick I NIMs, remember bps interest that stable also understand are loans So, understand have and due wanted to starts the brain quarter that loans in also and just able is start re-pricing important don’t for your where interest of as margin? actually there's my then, as for

Diego Fernando Solano Saravia

Okay.

So, question calendar begun is the your right, is and let on please question I on ticking try get to reliefs, correct we've asset quality, for that of going get XX% answer XX-day What something loans your the therefore XX-day -- higher migrates that magnitude. somewhere now could to order starts the a a first if past XX% due of due XX-day or the loans loans, to didn’t due kind from me. we’ve be then that past to and around PDLs. transition to XX-day had Historically, me past or

to why of category, of provisions some fourth past reason quarter. the a time into that's guided due we’ve for So, it's also these the into migrate and into higher matter the XX-day

should Regarding lockdowns, countrywide this should I at absence are as we evolving comfortable end, more that previously. new where we and be described the fairly visibility things point, have of we

here. advance able a from been net a interest for and already our re-pricing loans big that Now, your catch in hit us. continue of That margin, the to in funds deposits on had in forces there's We some moving into happening cost number of additional helping will there's past. question room to reduction up, re-pricing we’ve our of

we conditions I interest temporary loans of that process, this quality sort and interest effect margin growing Therefore, flattish a reliefs had reducing what On and have had, of combination the in that the you we that see net month, had you -- say, very were loans portfolio re-price. are higher value the more our we a shrinking this we’re when those through your during moving structural that would hand, as of that been during we’ve our obviously have is income, quarter, in loans and our reducing pass to present loans. value our risk finally, high other loans. In we prioritizing, to of had quality to and

that and margin. to the that mention believe we on that expand at things; Something is other said has have reiterate hand, able that I net to on do level, our implied on a is hand, we've or pass that have we've mis-priced that grown we to loans some has one the interest market modest we two had and been before

this where we cost of be risks, the loans have So, there had de-incentivized things that will year of some we negative substantially during full the transition already some you where with there into basically benefit will we before. migrating that lower we’ll a month, be combined running be said

something what bad that that a with loans past you that's was very on is quarter bear quarters in though been there. interest in quarter two mind, net even the loans need is that interest net with a on we margin have up So second positive, happens and margin come to addition why very the to stable,

margin. next when there. will migrating Therefore a the have X% we to a up add around somewhere not deterioration you So, year, will full-year, when up relative the end full-year net interest

Luis Carlos Sarmiento Gutiérrez

one Diego, very that's the it. past bps, you due answer, asked I why XX add increased that Avianca, it is think, loans and I by, assumed, thing think as had XX-day I complete just would said you mostly you is

Operator

from comes next Morgan. Our question J.P. Yuri from Fernandes

Yuri Fernandes

Diego, Luis you, Carlos, Thank morning. good

So on risk, X% of around if very by got correctly cost I be year-end. of quickly cost should risk so the here

the you three, risk this first we so I regarding is said the should So in the My question and basically X.X%-X.X%, around a first for of also as have. America, wave. second second question that cost imply Central page Q see right, that's

world, And discussed U.S. you like like about here We and do are globally approved on moving is getting Colombia, concerned in a Europe, some and we COVID? What if a countries get countries being about for able the because developed vaccine quickly, think the Colombia the like this is developed hospital more that Europe, we in seeing see not maybe quickly what Brazil, utilization that, a is not investors to talked outlook in will for clear. other we vaccine and to the deployed, be some when there but that's vaccine the U.S. concerns could

brain and So imply are like lockdowns, just could how outlook here understand that your also my Thank concern help if seeing further for the you. to to wave, pick XXXX Colombia. is here, you a second so

Diego Fernando Solano Saravia

risk, differences sorry compared at We I policy you're right. not on answer Okay, in where really, opine the Europe to we're happened public trying regarding the on to it's but what be combination happened employment and point answer on I'm side. to quarter, in what numbers on see question. am activity, able unqualified hear question, but this in what to side, to second of defend the the of and of policy, not your from we cost think cycle initial Colombia, Yuri, one, is health a for to I what to and -- your That's is then I public health implied your fourth qualified

Luis Carlos Sarmiento Gutiérrez

hopeful might the looking with lockdowns access answer go the through that the the a almost optimism developing as and that. the tests, fast not the obviously of to countries, vaccine countries, be have the and additional vaccines at that countries stuff will lot We're to and COVID having developed smaller result of as like to

Diego Fernando Solano Saravia

lockdowns. not countrywide least At

Luis Carlos Sarmiento Gutiérrez

exactly. At countrywide, not least

Operator

[ph]. question [Juan Spiegel] comes from next Our Barrios from

Unidentified Analyst

Hello, me guys. question. letting you Thank ask a you for

regarding the I the book. have provision also loan question and of So some risk the

So risk the X.X% right. of you understand what if quarter, mentioned, cost imply is, first that one in a four the I well this

first the be should mean highest would this in provision quarter. expenses the So

X question those like should GDP question the that. say, correct the I you maybe understand provision is that, Because not if if and with why the provisions is So is macro the stuff done that before? IFRS assumptions on was anticipate assumptions,

linked next months. the for assumptions that, the given first XX your thing, So and to that's maybe you that understand GDP I have

the So, not it's you expecting with are X.X%, GDP other compare really it only XXXX numbers. easy to that giving are for and banks

sorry, order So expected assumptions losses? -- provision what thing. estimate Thank of X much. you to -- GDP the IFRS you to in that's according expenses main for to XXXX very used have the the yes, And

Diego Fernando Solano Saravia

try me it by let piece. So to piece take

and forces happening here. provisioning there's mentioned timing, Regarding I

have they starting some forces things are to those and that things now, that way Some see that started even not be evolve. to you known of materialized, though only be the could that are we are

component, to IFRS of the So have and a X, will components The of is least, with things. not macro is is cost risk several what the but that macro One, have into mind it's of outlook. bear what in happens goes one forward-looking. the of combination you actually full outlook that

full at months XXXX, talking growth. GDP where this we're actually that that's you're XX the X% around looking fourth into and of forward, point So, are we end quarter, the when

would we'd Then place be, say, Colombian as and at forecasts know as into, I into will that from were I it's it's we would provisioned already what hadn’t happened; that cued said IFRS adequate to regarding pieces X. coming than what level doesn’t therefore the why much where this your need looking in performance, say there's I that consensus. into provisioning, America, initial the one part and from analysts we're looking we're I from, actually better is standards. of the in the in of that indicated because where of a currently come other most was Central has it of Most calculation, build will and fall then it say So you horrible before, year

things that counts into provisions also provisioning, portfolios it moving some to of our that is So, growing. numbers I mentioned contracting some to start why good quality are, linked Then look I and that say, from our would way.

that basically that we change. improving And to didn’t provision with look during emphasize portfolios the that during perhaps the numbers of a some -- there present of comes mathematically and particularly is implies provisions, quarter provisioning. flat based not are on at with you regarding quarter, you Therefore, this not related fixed when the recoveries, also at some some when rate with provisions we provisions what income risk So that gross quarter. this slightly provided, loans, of that country part, is expense this call look slower

flat compared to However, it the at a is quarter. gross level second

Luis Carlos Sarmiento Gutiérrez

He wanted to know about our GDP predictions.

Diego Fernando Solano Saravia

GDP that's of I year-end. year that be the into would what's and this what Yes, looking going I for think mentioned in our year, of into, next projections build end that's the we're by X% IFRS numbers to level,

Luis Carlos Sarmiento Gutiérrez

X.X% Right, contraction exactly, this year, in Colombia.

Operator

Our next question Santander. comes from from Soto Andres

Andres Soto

a Thank presentation. I questions. for Good the morning, you have Carlos, Luis Diego. few

look that would this number, the potential for long-term countries, believe I down of additional assume XXXX, at, that breaking difficult in of XXXX, of for would correctly, rates in increase that's lower what guidance I declined overall. will and in Aval between should finally, of that that's also Try this looking importantly, and implemented understand Colombian terms is such for the below more or that risk in asked your one like how Grupo of understand have environment potential they if was like basis. number? related be for kind the result? I loan XXXX one X% area The is in be And consequence question already of is ROE I and when what to there said banks level diminished heard you in mean, a Colombia to numbers, segments? surprised, Central in-between is to more and I when are Colombia competitor you getting this the of that an ROE important for a achieve I having the and as guys regarding to ROE and second cost is to ROE to a with had growth if America, your I XX%. question general, you that, between you competitive annual into you next the competitors measures on any potential that potential banks confirm Colombia believe first guys expenses I year. expenses. the If for The your

view So to your I confirm guys you. Thank have would sight. that in that’s like the you

Diego Fernando Solano Saravia

I because highlighted a up side. think of we because before I year, that there take last third I should is from very try to questions, going a we the year-on-year during briefly. Expense, think of of we mentioned benefits quarter the had comparison go to have generating you when lot program them tax some positive a benefits have expense quarter something third the we ended am

out, of X% However, what’s you for short try take of contracting we are year-to-date strip sake things when to happening. those completeness the something OpEx to is

relevant country mentioned. segment something you particularly you that seasonality better side is America last growth, the on that was year, see and slightly and of brought there Central gives a So, we I that’s what a lower some Then, point range idea, there that we expect to growing think there. up regarding and the

as something looking growing coming in growth. or year what - should in Colombia we is Colombia growth will Something happening the back, during half and be the area. year that order XX% the is the more for this Colombia are is of had with X.X% terms, we Therefore be shutdown faster. dollar basically this of corporate into second What X% in

taking moving growing room recovering loans go So, should basically the is see of go higher second at Inside Colombia the the that have start Central the spectrum. it’s some been had they corporate let what lower letting Colombia at to of America range that we cost of half when side, with side done growing the cases that and large and our throughout we these of at and into are into have over have calls risk back we with go our year. the been XXXX, year. have you basically numbers history, our many last looking Then numbers, three I of tracking for got to that

that we already SITP. Two done think we around with implying year this should into So, if the are absent what was Electricaribe, you percent X%. Sol, been have del Ruta we of of and COVID, looking were

in ROE is narrow are of the agree into portfolio with halfway should kind way year, higher to The X%, depends been year said. it up there. peers this recovery kind next peers we potential our is too linked very look ROE levels of and has. year. each of we of those perhaps can’t we and finally And that’s each the much half we the for year. we concentrated the potential, are one can of case, looking aspire that room numbers have much have of So, least part that our we into to of the of some what and them institutions recovering going in are This than that we think we our At

Operator

Our America. Nicolas next Riva question of from Bank from comes

Nicolas Riva

for questions. much I Thanks very taking two questions. my have

I On the relief bit already call apologize on the if you the first I It’s one, a this. mentioned late. joined program.

that plan to provided question are exited already was there And Colombia. XX%. many ratio should to is the of guidance which the well? end quarter, then, at the second the plans improve at related for percentage for things mainly this stage as high idea of NPL program would in your the in Thanks. for just restructure how end exceeding program, still regional the already an The this there look in bps are risk said on mentioned clients year, expect you of these XX.X% loans? of of or X, immigration no portion if imagine will in to the in made that loans remain initial also, here basically are XX% which relief quarter, and else probably guidance, anything year. -- the for the from still remarks, this program what’s going clients close increase is above quarter looks assuming on by I quarter; you the was to You here I believe which to program. remaining or I from there that wondering lockdowns you cost that and conservative quarter, bit ROE that you the this loans of the and If the that third I to driven next XX the reason a the of in next relief that what’s relief your still as based third be more

Diego Fernando Solano Saravia

Okay.

estimated that XX%, of happening mentioned I say, magnitude, a so relief had around have I the have would the is seeing, but of end the loan in we percentage reliefs relieved, of of be we So, of at an would thinking if you're of our regarding the number as around return and is pace, that expired, half had of of the to number call more we're those end we programs, that was and would the say order at around sort numbers normal, September, of that as of that this October, expired. portfolio XX% what

some the went that combination There's the then, at year, next and for structural and that, happened a a the there and So quarter are why quarter, or next already numbers this when are being given of with amortized. pay of within a the that we back we're Then a and down fourth for portion release of the older regarding quarter. paying that a to some gave shire the of reliefs some day, cycle. out. we remain again, you have look the will portion this more reliefs of There's to into ROE, done out perhaps that there's ones what after guiding break time

be is of split we up a realization This out, quarter that XXX that with numbers our core us recovery next to come what's I standing next then billion, numbers. so portfolio Aval, can't into. add we slightly at we of in right, when think year you're extremely provision and should of point would and Then up we aggressive I particularly fact group billion that rate OCI say why going in are to to a and keep kind your that's strong on that expenses included these deeper guided gave earnings happen this gains would income our yes, that up roughly that quarter, the question I we the XXX trivial year fixed we with say the

Operator

next from Our from Sebastian Credicorp question comes Capital. Gallego

Sebastian Gallego

questions. the couple morning Good presentation. of I questions everyone. Hi, Thanks several or for have

you higher but question the follow-up would have remember defensive for I comfortable The when be expenses. and cost do the peers on those Thank at net Why most double you you to colleagues next and you. you and leverage don't question. year, deterioration lower excluding probably the X.X% ROE peers. what a you're about have relevant asked higher like point? the to core you so on sector. be, non-financial that the dividends to at question and outlook you portfolio, more on next as the PDLs outlook compared my first it a one coverage, year? levels should would My of the release is this your And at that about explanation just depends if still know have earnings, understand comfortable, would I confident Second seen regarding well. an net risk holding be institution, with is agree feel provision mentioned or finally, level, on debt last we some provide to cash measures debt Can ROE,

Diego Fernando Solano Saravia

Okay.

of for for of that ratios it's with of kind an what Regarding loan. risk and you unsecured payroll from a kind the look the you need one, same a loan not coverage coverage are consumer an have something a provisions need of that movement like, you is the the the different expenses, number reiterating products one is your widely then perhaps the provision question each for relative that of provision ratios because on on keep to eye

build numbers widely our of are with segments at of mentioned bottom each numbers, and very the up what and we the from we So, you look when give kind there, flavor. one more I up to of come vary, happens just that those as products, some numbers

comparison that different from of are rolls you and payroll provisions sector, comparing those, pay this for we've is you're have into government when to retirees, had is spend to be and wildly very at have on, things then, and much, and should a invite between portfolio a that discussion, of lending looking employees macro you the rather a micro to would what how a so and And kind private You're point that from historic we than have. look discussion look and I what that evolving. peers our

Central coming America It reason that's non-financial, is book. regarding something we in mentioned not full of countries behaving as well there, non-financial from have Then comfortable that said the equal not and with throughout our past, have the is has feel we been the banks. ROE our is what and the diversification behaves is only we that Porvenir it's the it we positively. as So why then, throughout what the

operation which from performance in quite are has the and Central countries American we are operating behaving been Our positive, better. also our

call a portfolio side, And you our and when that denominated fixed had you're that year dollar repaid one question Aval Grupo is basically contribute that of think is perhaps the turn on you giving following we look way from when you other that might wouldn't for Limited. level, ROE, we portfolio, dollar the hold then year a the holding components. emphasize with at we've better good regarding assets one have the denominated So the particularly that the around. us guys out I split to any We then and income one diversified the one should a those inside, are bonds, very of it of

combination investments entities, point liabilities we loans So Grupo Those are yielding own carry. have is that at to a or a Aval are of our a Limited dollar-denominated then mainly deposits positive yielding this interest investments. and

that bonds. repaid way the that's we So those

in next principal our of that but discussion the If that's serving the affects no that on you're way dividend, looking a way and a comes year, that into interests we are bonds.

Operator

comes Gomez Our from HSBC. next question Carlos from

Carlos Gomez

Central the quarter, of America. internally? you see to Two how know are this and presentation. we questions, own you wanted seeing very both much one activity after for the Thank fourth seeing your level started that specific you we Colombia in falter countries, recovery, activity to numbers are into and is in In have some the

Diego Fernando Solano Saravia

GDP? was Your of levels the question

Carlos Gomez

-- not it sorry of activity Level if rigid sections, I'm or clear. activities was

Diego Fernando Solano Saravia

he that then Rica, this right. a they're as Okay. the something this regions is at second next Salvador next year and around that -- moving you're three-and-a-half, the assume Costa things most America, a behavior growth Central year have Yes, year to we contracting whether and have X% if you Panama is growing be into and roughly operate. kind X.X. say already is we growing see there where are Nicaragua, that Guatemala Honduras activity would going coming vary Guatemala The Panama year Then roughly well varies be of from we're we have should X%, next positive. to, and seen and and a will slightly Nicaragua stronger be Colombia, mentioned of you to would somewhere El our estimating then that I are would into El on performers Rica, growth. Then be be Then a that growing between XX%. year that in well, will should north be of Costa levels Salvador widely Honduras, we've the we of of the We've and should are closer that lot flatten

we countries into looking we kinds operate. different we're which the in yes, compare growth So of when

Operator

from Piedad question Our CrediCorp next comes Capital. from Alessandri

Piedad Alessandri

very for regarding program, addition bit wanted bank? I NPLs finally, the allowing much expect Central the And exposure peak I Hi, in what could ask, the give when your a you thank a do real on question Panama? and that. America have more is to in Then you specifically Pat us had to questions. estate detailed you the the for to to

Diego Fernando Solano Saravia

process quantitative the business away of structural you answer beginning, the banks, can't some Colombia, are market I give your we that's the relation loans give reduced will on a in in those the a in in and the perhaps our size. as are there. you we've the loans I but it lowest shied very portfolios. the number, question we've and to Then one we that there bought we've been Okay, last of migrating and from more a

this Percentage one. of point, that We to are has gone indeed somewhere into could peers around or are the I'm we our portfolio be And that at X% we smaller done X% much past. but our starting than have missing more. what use wise,

are Regarding should you things much go to see of watchful numbers the this up should start remain figures. should to to at Then during fourth quarter, more NPLs we of pickup said back first-half relatively normal point the NPLs and the to year. next during there, how we expect that come on high to evolve, and the

as they that a but high during is or So, happening the see to some with provisions, you quarter with synching will to quarters seeing be we've numbers up get to three give provision cycle digested. That that, in begun end what of deterioration. precise not I'm still advance could I to say sorry would next we where

Operator

comes Our Corredores. next from question Ausique from Davivienda Julián

Julián Ausique

in specifically, know would I the provisions, is expectation is the your in in and my expectation Panama and in you. of Hi, because Panama than is to having Thank in with have a your everyone, worse end peers, specific about some question. your question and bit I for January? the or what thanks operation, a funds in others, conversation December like little what country will because really this so outlook relief

Diego Fernando Solano Saravia

hit been right, You has strongly. are Panama

contracting reason should order expectations say, into If has for XX%. stringent X%, region than throughout let's is the the the let's magnitude say be be region. much in around happening quarantine year, that for The you're been more looking around, contracting this could that growth Panama of in GDP Panama but

However, you into regional the the GDP X.X% look somewhere could growth area, next be next year with around at growing year, X%. at when Panama

away of from colleagues one that banks before, hurt took year than the mortgage why to perhaps be this combination story particularly that was some next away we've others, portfolio businesses risky something exporters of is the took a be in as to our got much been from your lending So we fastest Honduras, going the they year, countries, when of past. I in happen the would will growing say different our the the off portfolio, we where some is have region. been one what Panama, the they that with asked because of And might acquired who compared also might be particularly in how seeing it's we a reason

Julián Ausique

this. rate mentioned, in I actually was I something you reason it problems. can I that well, know already that if have some couldn’t I here don’t I too I repeat connection because and heard is get Colombia you couldn’t What low? but about Okay, know efficiency -- get the but it the

Diego Fernando Solano Saravia

it Yes, third say during the this low why some to year. I used year. been quarter of last would performance. hasn’t that give particularly year-to-date on It low That's information we was question

Luis Carlos Sarmiento Gutiérrez

mean Do it's bad? we good or

Diego Fernando Solano Saravia

a mean Yes. negative loan or you that's question. mean you a low, a figure. you clarification Yes, When mean ratio

Operator

Brian Flores from comes question final Our Citibank. from

Brian Flores

thank you. Hi,

position has Just of you the that a could level repeat follow-up on quick particularly? Avianca, coverage

Diego Fernando Solano Saravia

XX.

Brian Flores

Okay, thank you.

Operator

questions. have to for call no Sarmiento the further I over We remarks. now closing will turn Mr.

Luis Carlos Sarmiento Gutiérrez

again. of happy Thanks. contact you Diego, and next next you we in hopefully Thanks to We're the again, to wish, then. can you on keep want in one-to-one as and quarterly up, have if great questions time I guys, call. you to always. I'll through them and all take expect thank basis, and it more see the you team meantime back a our

Operator

today's you, for concludes Thank This gentlemen. you ladies Thank conference. and participating.

You may disconnect. now

Grupo Aval Acciones y Valores (AVAL) 19 Nov 202020 Q3 Earnings call transcript