GRUPOAVAL.BC - Earnings call transcript Q3 2022 | Grupo Aval Acciones y Valores S.A.

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Operator

Welcome to the Third Quarter 2022 Consolidated Results under IFRS Conference Call. My name is Richard and I will be your operator for today's call. Grupo Aval Acciones y Valores S.A., Grupo Aval is an issuer of securities in Colombia and in the United States SEC.

As such, it is subject to compliance with securities regulation in Colombia and applicable US Securities Regulation. Grupo Aval is also subject to the inspection and supervision of the superintendency of finance at holding company of the Aval Financial conglomerate. included is document IASB. currently information accordance presented Financial IFRS with issued Consolidated in is this in The by the of explained non-IFRS ROAE of report. the as Details and ROAA measures, among required when such are in this others calculations a Bogotá XX% over International executed BAC equity Banco in Holding spin-off de stake Corp. BHI. Grupo spun-off March shareholders, its XXXX. to XX, to interest and his equity Aval subsequently on its shareholders parent the Banco de of direct BHI. spin-off, the to Prior was Bogotá proportional our in Grupo by XX.X% retained in equity Aval in the indirect approximately stake representing has XX% of Banco stake BHI, de interests BHI, retained Bogotá. reported This line interest under in discontinued item for accounted investees reporting BHI spin-off equity be of is periods the prior subsequent reported periods. and net profit will as to of method for equity of share the operations tax,

events be materially in with Luis Carlos in of any described of Mr. subjects use developments information and are The to de figures prior the for intend the expressly a our result, billions When assumes rather have millions. the risks other months here completed document update the the provide spin-off for comprehensive financial you described any period purport interest and pro turn Recipients and presented Executive of the financial content our financial comparability provide included prepared in. SEC. of financial are Sarmiento relevant information or unaudited at the pro not does information any time That next of a for provided nine description. this presentation Officer. review, on a document our discussed, At unaudited the pro X, for operations The we not over XXXX. and Sarmiento to the summary this forma occurred Luis XX, purposes, now supplemental supplemental such The a and Nacional results to filings unaudited of but XXXX. results on in to forma Later information forward-looking position assessment financial January report question-and-answer transactions or begin. project these Valores responsible of knowledge the dates plans, in to business for the and will, or operations as will of presented Gutierrez, I Carlos may or or assumed our December conditions, date. herein may future may, Gutierrez, and position indicative mode. was over does ended September is includes As This currency forma document, to Mr. y consequence differ estimates, call those negative audit by changes herein in from and the And rates, the a X,XXXs words. as should, report, economic will some of of this than and year-ended unaudited this this of a time, conduct participants we time in and in we for in and XX, Emisores applicable external earnings to may extensively as this and the forma believes, forward-looking to intended anticipated session. to general, the Chief Registro listen-only Actual refer are potential identify anticipates, you results the material from changes adjustments report. can and comparable such In statements. be materially words them any any information expects, Matters pro herein, not may predicts of other may we all in continue, do information change obligation these time, cases, XXXX or our the statements completion including update forward-looking we statements. disclaim correct adjustments such financial material. provided the result

Luis Carlos Sarmiento Gutierrez

all morning call. you quarter's and for thank this joining conference Good

I overview our a efforts provides update at provide and our will Diego performance. highlights quick an look our of of financial a Colombia's followed detailed few of Before digital numbers, by macro a scenario

the the third To characterized of scenario. effects weaker and economic begin XXXX. constraint for its in during the circumstances, to economies slowed combination chains Ukraine, Let's deceleration market, said inflation was start year. contracting distinguished policies, with, world macroeconomic itself quarter, growth. global these contrast, GDP that, with continued energy supply China, world the the because Due the to which the significant Colombia war robust the largest the the a of Having monetary of of during performance of resilient of by exception. the unavoidable down next In and macroeconomic of continued significantly Colombia be no seems

fact, foresees But Colombia's IMF that continued and XXXX. a this for private GDP projection being, growth X.X% Colombian GDP contrast, for now growth of XXXX and even grew X.X% time and in anticipate The X.X% grew projection commercial X.X% XXXX to Central was reduced upward Bank X.X% X.X% deceleration to in from the same for one-third September sectors IMF jobs XXXX degree, gap its X.X%, fall side, demand to The expects and strength XXXX. In the to recession. We national XX% which a quarter average grow slipping expects X.X%, that represented performance XXXX, XXXX there market to while quarter activities earlier. over and expect construction to rate In the XX% growth economies Colombia’s XX% the XXX during the labor the now we steep chance to growth interest rest unemployment the Central will the during has from and, recreation in also triggered an Furthermore, most to X% X.X% XX% rate XXXX at has world has It during of as grew global are annual were been the a Colombia's and X.X% reached third XX.X% the the the unemployment explained X% also relevant XXXX. for XXXX is pandemic to to X.X% twice of now global two-digit is basis adjusted in XX.X% From the unemployment July. context, and by the the better from prices. of XXXX. points The grew in revised September, which in during and basis. X.X% moderating X.X% entertainment risk year the than XXXX by estimates the X.X%. X%, rate to between been between In below X.X% and lesser caused third to by into manufacturing to has XX.X%, improve, disappeared. that a the practically rise increases the XX.X% at that and at €X.XX. boosted compared that global a will but Colombia, X.X% of communications. average and This XXXX, GDP higher from world's last on the IMF quarter fall rate In X.X% and quarter was expected inflation acceleration Bank. of the average in compared second food XXXX primarily dynamic in disrupted recent Colombia by of has consumption, the slower inflation of by year and GDP. quarterly when

the XX Food on an October, the highest is XX% agricultural above basis, of XX-month that the reached weighs has price years. it fertilizers, imports logically, in XX.XX% of inflation peso been in inflation fact, heavily mainly the running the annual bad of weather In because including and prices over on depreciation imports. of

XX.X% year's accounted in which inflation, for XX-month total hand, reach XXXX. and have X.X% increase. On context, In around could prices, anticipate the that this XX% a other end moderate experienced rent of we inflation by

September the possibility reduce central of Central of could Even the In inflation of XXXX would though mentioned, geopolitical should rate. in to of the recently, rate conflict PS main rates rate repo additional X,XXX world, policy the of global points the XX% don't we of risk XXXX. the expectations year-end Europe for devaluation a some rate XXX of to in at peaked XX% conducted within the bring the Colombia, have and led of Monetary Bank December, exchange basis recession total of has just to interest high begins points out Central a Bank recede. since world's end re-anchor strengthening As XXXX. to hike remain Considering combined to persistence XX%. representing to economies dollar, the rates begin around the targets, rule of in which escalation up a increase adjustments the during inflation increases banks XXX the inflation, as in string the basis October, a one time since per

market also particular, trade the costs, per dollar incoming X,XXX volatility, However, retreated vulnerabilities the regarding for promoted regarding higher concerns it year. of financing the well of policy potential doubt, context its by its XX% currently as shifts PS external specific This in economy, as no borrowing the to on in is the or dependence evaluation uncertainty reflects balance, Colombian administration.

the record that trade deficit, an signing the of X% billion depending in previous recent conditions. current new government in mentioned To XX% $X.X could of with in consensus August, above volatility, the attenuate Market than statement, the economic wider annual country's year contracts, Colombia's GDP. end During of a deficit country balance possibility an high recovery a oil suggests registered account on despite basis. on pace export the a days, the oil

expected expected XX law, on a financial for pesos, half deficit. and which XX is additional the soon X%. sector revenue, now on points and surcharge pesos which increase tax of two surcharge by reform sector, for of the become expectation the trillion will to oil the of now trillion the the sector, by to the to surcharge should original accounts addition, for In an be to for agreement tax XX It from includes coal increase billings The trillion XXXX nearly percentage fiscal hydroelectric a down the reform the reduce Congress pesos. contribute

deficit government now forecasted, higher front, X.X% XXXX, prices rebound the and On the an oil fiscal of tax of and effect strong the positive in reflecting improvement economic recorded expects and initially X.X% versus in X.X% XXXX, GDP of a the the collections. a and

up In XX.X% September physical improved debt to to XXXX. revenue when could of by of compared from year-end, public as fact, end XX% XXXX. net GDP, of This XXXX, XX.X% at to ratio lower down a the tax scenario September contribute grew

LifeMiles the digital these customers accounts Vita in specializes which started digital credit. will our wallet fintech collections slightly now new also totaled and on, wallet and several the ramp has pay digital September, at improve some approximately are banking-as-a-service of fintech million, that from successfully while closed Alo, working agreements, payments $X than up the of have $XXX,XXX. all Dale wallet, banks capital including numbers less provide Aval to Chile, micro strategy. regarding Moving Dale, At of end are our

over sold banks in year, products versus Our of months first the first increase XXXX. X.X the nine million nine of of months digital XX% an the

of launched September, ecosystem, largest our share total XX.X%. X,XXX almost by XX% – by total Since yielded of traditional below the estate loans. and year. as Facebook construction XX% data spending management agency client to houses AUGUSTA, the and written-off marketing applied companies rent. with approximately housing XX% currently ratios with we X.Xx, loan around spending ratios materially Our sale value. such Ram The rate portfolio. continues traditional Caroya, channels and platforms first XX% platform digital XX% in increased effectiveness platform, transactions of acquisition transactions in for portfolio a same by and real we activity is increased improvement estate Digital our example, of credit PDL represented initiative, ecosystem XXX,XXX than portal over increase leads real effectiveness. than customers use leads and of has acquisition client In our to use analytic cost are customer conducted digital more has memberships lifetime Mathilde marketing the XX%. which our around digital high cards affiliated for of PDL qualified of improved Colombia credit attrition our period, in second disbursement recovery our of and laid XXx our has laid conversion Google our in increased the reduced advanced mobility our listed and and AUGUSTA decreased better increased approximately in achieved the increasing launched risk. of clients transactions platform, Metrocuadrado, other Campaigns have for data branches our retail

characterized the in a by and quarter quality. in satisfactory detail provide following. Finally, that, refer during will quarter of third loan was for This minute, XXXX. improving would our the highlight to financial our Diego I portfolio XXXX third growth But performance before guidance loan by and of

run some headwinds. we into However, did

our AV re-price loan our effect mostly of portfolios funds lending its retail increased contraction cost And in the portfolios Villas the the margins serves faster deposits lending policy than the two banks, loan and banks the rise First, than savings while consumer accounts of of these of commercial interest current of the over in the to in the monetary funds the Popular. It meantime, quickly rate reprice. same for obviously rate squeezes deposit mostly basis, the banks faster longer of of to cost time and loan portfolios. mostly takes

investments or accounts. as suffer also held fixed classified Secondly, rising curves not the via P&L maturity, rate yield of to consequences OCI

personnel inflation the adjustments with salary employee less financial year billion ago. non-financial by when the pavement in the Thirdly, to expenses year's were sector of due contribution results, grew across last a this to results. the year, and almost from and derived unions bonuses group, almost affected quarter a XX% second and compared negotiation was by although excellent principally Corficolombiana's handsomely as Ps.XXX to versus Its of accounting. result of infrastructure implementation fact of projects the from accrual contributed Fourthly, banking the

effective last of sources because income almost mainly during rate the income. was tax income rate, than the tax higher the quarter Finally, XX% of pre-tax quarter's

and for experiences navigate this and improving digital discipline, the environment, in strategies, of that, designing through will in for efforts. However, and on continue our pass you attention, sales With looking mitigation advanced the Diego. effectiveness invest to maintaining the control our of customers' transformation, loan thank marketing strategies we deploying cost and and cost to your new payment to portfolio investment challenging presentation initiatives, pricing I I continuing analytics, deposits

Diego Fernando Solano Saravia

Thank and grew a X. page quarter you, Luis X.X% during assets comparable the year-on-year. Carlos. basis, Beginning On XX.X% on

strong billion share experienced, loans in the Over September. payment cash share our $X the loss the the quarter, of in while mix gained to growth last the given mix due bond

the for credit from Moving and evolution basis. over to during present Automobile highest the in the year, X.X% personal our highest of lost comparable quarter grew trends taking second XX.X% years figure and Gross the our we loans COVID-XX X.X% adopted of loans, slightly end and of the XXXX, had relief, X, XX.X%, below followed XX.X% most the quarter quarterly since XX.X%, represent quarter registered hit positive first growing quarter year-on-year. consumer Personal quarter, and on quarters. and IFRS page reached the loans and respectively. grew we pandemic. room Auto during and credit X.X% a loans the the XX.X% Commercial the year-on-year, XX.X%, in risk of growth over of the accelerated pandemic cards portfolio XXXX. past recovering a two with and macro up at XX.X% XX.X% loans and XX.X% X.X% grew loans the total, increase the book. the loans quality and of growth growth This annual loans over in the by X%, X.X% few dynamism, Consumer still with and cards the followed constitute XX.X% strong consumer environment payroll X.X% year-on-year. in to the loans quarter loans X.X% over to over the respectively. Payroll XX.X% credit during loan appetite stronger

X.X% expanded over year-on-year. and quarter the XX.X% mortgages Finally,

and moderate ratios and pages in present several driven average a comparable XX, softer XXXX, growth, loan On both outlook and portfolio We higher and expect quality globally. loan economic on basis. growth to locally we inflation interest lower a by GDP rates, nine

risk continued The resulting X XX.X% by XX.X% the quality expiring of portfolios both measured progressively of and our relieves portion risk improving by the of and Stage cost loans, as anticipated, improving were over credit and lays and or represent continued quarter. a Stage X procured. stable from earlier. XX charge-offs in now loans PDLs, our and the improving XX.X% months stages our three portfolios over loans had continued we X loan Stage in removed quarter loan As gross of of all

X.XX%, improvement improvement was months. a relatively of of over basis XX stable improvement Cost PDLs to months three XX-day recoveries XX-day at three points X.XX%, XX XX basis to basis delinquencies, over months risk XX over XX and PDLs quarter basis point fell X.XX%. points five and point year fell Regarding a over the months. the net over and

XX% XX%. we basis. our evolution Finally, for growth our banks account funding. the of favors present the funding on maintaining net charge-offs our the in page was ratio of XX.X% adequacy PDLs to close and deposit of funding page time equity a year-on-year, loans to On the that we XX-day XX, as increased of deposits comparable stable present attributable during of the ratio evolution quarter X.XX driven and the growth and Funding during ratio of quarter loans, by total X.X% Deposits, our XX, deposit was stability that times. to and which reported. On capital of average

quarter, our driven net equity of over total XX% PHI XXXX. spin-off of decreases of of by Our grew while Annual equity increased contribution our equity X.X% in the reflects X.X%, the income. attributable March the

the Solvency NIM cost growth to funds, lower increase of and fell and our loans, valuations resulting ratios investment interest yield Carlos. due of of rates strong our On described comparable page on some loan we present the Luis to in risk-weighted acute in banks basis. our by from increase OCI slightly a assets derived XX, in spreads, from portfolios on

points Our by a compression during quarter, investments. overall NIM to and loans NIM a of on the negative NIM our driven X.XX% fell basis XX on

to rate to by inflationary reference anchor XXX pressures. amidst in Central During the quarter, from its basis X.X% effort expectations Colombia an increased XX% Bank points

Spanish, of and the of the the relative speed higher of cycle cycle interest introduced rates. been speed of migration ratio this due funding has increased some increase rate to monetary loans credit has by substantially the to given retained policy Basel are NIM rate faster at such is the cost cycles compressed to of The at to magnitude Colombia fixed III. quality which in addition, during the payroll priced requirements the stability of transmitted recently funding to long-term with current loans net past funds as comply loans In

pressure the measure continue funding during We driven by expect as of in reduction fixed Bank the loans as In to rate in the and Central loans prices our rate second NIM segment receive we on few fixed to half our quarter. expect repricing up. the quarters. Meanwhile, the fall intervention over this the rate on XXXX context, banking portfolio retail points next persist through on XX basis NIM this contracted

the other income the X% negative by fees sector fee on benefits higher of have during on NIM activity X.X% the In quarter-on-quarter. a our on commercial retail we overall Bear from to points on addition, activity loans that of rate of XX the X.X% comparable XX, loans quarter-on-quarter. contracting increase non-financial our lending increase impacted income following decreased and in Net performance quarter, contracted the the funding of and mark-to-market points loans, prices commercial environment. performance Gross rising quarter. an non-financial was On reserve. a in that investments strong income a NIM by longer income a increased points stabilization take basis. funding the interest fee the in led promptly and a includes that basis that the quarter-on-quarter quarter-on-quarter. longer our under to year-on-year inflation. and X.X% benefit associated in by X.XX% X.XX% resulted policy monetary our hawkish with repricing cost XXX our offset Tailwinds presented from held this basis mandatory from investments Page periods and fixed on NIM environment NIM and represent headwinds was activity investments XX year-on-year on basis expenses during net and increased page of of Porvenir performance non-financial on while in NIM mind the

fees mortality Income As strong, from a call, fees sector higher rates due quarter. insurance during to premiums and pandemic. with lower our associated performance-based last the second the the mentioned although, remained increasing on than fund decreased softer pension particularly non-financial high

negatively third from and our our by over relative result grew XXXX, retail the in Administrative of strong as non-financial expenses expenses XX.X% with the affects compression expenses from decreased increases overall sector the over of Rican in relative relapsing inflation expenses higher expenses annual the operating the adjustments as BHI mentioned increased pressed concession some softer rate Quarterly during a taxes versus softer because and the taxes, and US benefit income by impacted to a expenses the Colombian we depreciation performance. mainly end denominated increasing over from Costa XX% recognized grew companies industry grew Other our the municipal The exchange during of by Quarterly X.X%. partially our ratios in rate some in the quarter. XX, and earlier agreements quarter during bonuses at the comparable to to past, a assets and quarter. the impairment expenses a remained and particularly income to of in As peso quarter of Colombia increase X.X% basis. commerce of second loans. of of had Colones increased IT-related depreciation results quarter present XX.X% pesos. depreciation appreciation Cost of efficiency this a results map financial losses On NIM and personnel that the assets of and XX% administrative results. offset OpEx quarter X.X%, in that following on the were increasing flat a X.X% by year panel to Page the salary and mainly driven average personnel increased quarter the MFG. Cost average this quarterly the X% particularly driven slight on

for net the XX.X Finally, income page our quarter Attributable billion profitability per present net Ps. was XXX XX, ratios we on share. and income or as Ps. reported

the our and and average average were X.X% on return respectively. return for X.X%, on assets quarter equity Our

XXXX move questions, for will our I first. guidance we now general Before summarize into

loan XXXX to retail XX% expect We and commercial loans at in XX%. growing loans area be the growth XX% with at

of cost be recoveries expect in to risk net We area. X.XX% the our of

We expect NIM X.XX% area. the be the NIM loans area full on in X.XX% year to with in

to X.X% area. cost expect to be assets We the in

area. We income XX% to expect the our fee ratio be in

non-financial of be We XXXX. times our X.X to that sector expect

our Finally, that the full average return BHI. in we in extraordinary from year reported of includes expect to tariff. on equity be XX% of mind, this deconsolidation XX% return Bear the income

Regarding guidance for XXXX.

loan growth XX.X% to We loans with be area, in XX% the expect XX% commercial and area area. loans the growing the retail in in

to our net expect risk, of increase cost of recoveries, We slightly to X.X%.

full in be NIM We X.XX% area area. to the expect X% year X.XX% NIM in loans the to on with

investments Our ground. expected is positive recover NIM to on to

to assets to cost the X.X% range. X.X% to fall expect be to in We slightly

expect the fee in area. income We XX% to our be ratio

non-financial to in XX% of that our sector expect XXXX. We contribute contributed

full year be our to equity return expect XX% on we reported Finally, to average in XX% range. the

are for open questions. We now

Operator

Thank you.

from comes question session. now Mr. first Nicolas go our will And Riva Instructions] America. of [Operator begin the question-and-answer from Bank ahead. We Please,

Nicolas Riva

once, Diego Luis cut much, for of at to Carlos couple A case them the Thanks chance I I'm going very make all and questions. get ask off. in to questions.

one So tax on reform. the first the

That's If in rate basis statutory the on banks of the the given income surcharge current be tax tax you first points going the question would starting surcharge year. the banks. my tax next income therefore, And in can impact for points the there's basis XXX rate for be for a reform. Aval to XXX confirm if, the

needs us to yet. question, not believe, presented Grupo might reform. Holdco. of funding But Congress on you the question, and think I can Aval? the impact on latest it thoughts pension Third has Porvenir your been look for the for it for if in terms you give how Second

maturities has year-by-year. this 'XX the in maturity the Holdco need to very given one drop you $X I seems And maturities give your September. there I in market Holdco, with any paid double therefore, don't chart leverage that but payment And can if the this after It assume after after then that fourth, the large particular for to you no noticed a the a that. September, And next in the leverage on was, to have the us of that. definition. year, was global would come no double me you after the include You million thing for -- thoughts

tell can you us, If Thanks. why?

Diego Fernando Solano Saravia

me Let take Carlos pension. take few Luis will a of those.

we the percentage the Regarding X% you're Therefore, reform, percentage have marginal five three which surcharge or be have. is already points a change two that the business will points. only tax of affecting we percentage points of right, this banking

additional basis businesses from the method Therefore, as affected. will on impact non-financial rate. will not what other such comes So, full from overall tax the not and what equity comes be pieces sector, be XXX points our effective

Regarding funding you're We're already Holdco, that. absolutely needs the right. for done with

the $XX year. around International from around had comes local come XX maturity next of of last bonds almost throughout next Our their when you only will bonds, around in them in million months XXXX. months now and minor refinancings additional

what way, your equity. divide and point of by this happening calculated the happened double regarding of done take is no your what double Then is So, exactly during investments we've because them need what should cash at September. be with you leverage you is, already leverage,

Given it's cash that those. that transaction a from took affecting not what had away liabilities, was of we either

that be bought a three step we leverage three years and non-profile short go, of to a if adds leverage when that And a combination around reduces the two of down should that generates One or that back and to goes retain has that bond our was then, go years pieces of reduce our one by, that is time what double to to ATX call. things. double is in the and So, benefit is, double earnings, a from they leverage as exercise we that leverage.

Luis Carlos Sarmiento Gutierrez

Okay.

talk be it sources how it it of And bear from about about be the pension revenue. way its government will affect you have the that plans the I to pension next basically to as around to of believe try will midyear, reform reform the about I so to comes me to the Let Congress. mind does, Aval, percentage in brief And four year, May as bring Porvenir basically. that makes how XXXX, Congress. can

the contributed First receives paid is are that every to Of monies for, The percentage part commission contribute take funds of goes their their to two the that companies are obligatory Porvenir Porvenir month. employee ways. contribution, of from money. based and total a for, are they paid a employees month. there those total all, will own that Porvenir with the accounts salary out companies from part they the And that of the on they also money that of in every work the pensions that and – to contribution with go a split monies and money Porvenir comes contributions is work of basically to

the hand, the charge companies insurance basically commission are the paid On one insurance premium. a companies and for

case -- pension age of obligatory required to the has number weeks in become insurance, before and For work. that the of to has employee

because, especially they've now, monies and X.X world points. premiums protect know, basis are really that COVID, those after as where nothing. pensioned to total you the the people of need of commission insurance is monies, the can almost charged Porvenir have the of Nowadays, to the premiums their risen. charged risen become times these to insurance over – And charged premiums, that have X%. risen And a all charging about maximum The is or on companies XXX right point receiving insurance those the is before be

February managing So in, basically, are -- basis Porvenir is the come monies year. also of withdrawn Porvenir who of the and about XX retaining to And throughout make the XX from Cesantias. from they sort they belong some money of those of markets. in that are people, every that those on year, employees only the points

a Fourthly, managed. a invest same average, basically the manages managing importantly, and Porvenir losses requirements but voluntary So in pension the And capital. most the contribution that's in way employees. of year, -- it of affiliated for but the be a to very on its is are Porvenir make really on and funds capital and that pretty that its Porvenir, big business. Porvenir capital maintaining substantial, monies the own invested has cash money some there's on funds and then The of is funds comes thirdly, pension every not funds, what very, not that

is Therefore, those substantially you the source of that because total ending story tell contributed most means funds towards gets makes in in indicate from of revenue own income, really very own as its government-owned month, less own look revenues received funds invests. its managed is that they will that its funds obviously how were insurance is capital the the its -- Porvenir will money that due more Then should manages which employees that capital makes and their four called manage really comes bottom is commissions I that stop not is fourth diminish the that funds to passed much that about mostly as, by start that if or own about make every is line pensiones. directly its and from All really reform is it's Porvenir to Porvenir capital. making obviously, that coming to private about, contribute then diminish, which less money’s that calculation to pension the that to companies that instead and since much on in But own will the $XXX pension Porvenir happen affect the the Porvenir contributing really that, the money money long by the and from presented XX% the Porvenir invested. revenue monthly minimum diminished not they obviously, have. the that pension that to first those so it the substantially capital a is first way -- commission what salaries, of a this up it it's the month comes that the being So yields to or been talked

reform mean, we'll finish, first and I when first see of all, -- we'll see. presented to the just Congress. is So to

Secondly, the thing to in nowadays, funds much month, mostly their anymore mind own portfolio. come that see this we'll and is they out they law really changed then because of manage not the important keep -- how of in when but then way -- comes Congress, most every come in they're finally on dependent are as know, Porvenir’s when money’s it that finally you in time. the thirdly, the on laws become how that they've most substantially And one actually Congress that

Operator

Thank you.

Fernandes comes from Yuri JPMorgan. Our next question from

Yuri Fernandes

the I Luis, one first had Thank opportunity Hi, quarter. Diego. FX your asking for of questions. regarding you this losses

there? one have should more question note hit Occidente. one if more in bps. it? this Like The Banco this pay a de first on I lot one quarter decreased a second something and color, what of was we about some Bogotá. So like, But If happened that's regarding explain decrease be XXX you recurring, we attention a can it losses. Occidente quarter, capitalization. provide to FX quarter, Usually, this used regarding

happened for We a Occidente there what been any for management is is is Colombia discounting I if kind has question that lot. a from third last And a one valuation. What may, there guys, improve capitalization? the right? understand we of But while, there? suffering valuation my see and the movement So outlook to

that considering instance, have you Thank is that on very for program regard. buyback So, large been much. something you

Luis Carlos Sarmiento Gutierrez

Okay.

happening FX accounts to way losses add the think together to is foreign what net I'm with three losses, you happens FX is accounts exchange and is what side. about that page or FX was XXX%. XX of two third Regarding on referring financial there's on and gains loss It a negative income the that -- Net second XXX% Take derivatives. derivatives the the had presentation for look income other the during quarter what trading negative for and quarter report. at was we and actually

actually part they than that a are here expensive is higher number derivatives depreciations should as It's are that numbers. more So, offsetting what have of much what happening become we has normally be. is

effectiveness the past been what in you're corporate growing reason commercial and here sense. over retail capitalization the However, seeing there's business Occidente, of years quarter. working the Banco throughout is has been been and consuming improving Banco Then both and some they've Occidente in been capital successful and quite the on its change few they've regarding that's the why little business,

particularly same have from as be the that that would bank would growing at equity growing then income been normally basically OCI the months past Occidente few Given the equate. portfolio the negative what happen over would fixed of would successful has pace loan Banco as you

have That's the actions you in of I and can we I have to something that's changes story consuming in what If done, when increasing working here, is doing intrinsic I able regarding you this right, question have but a Occidente. as net point, any sense and last if the negative OCI, your question right, up However, are Then we repeat in a If got you capital. Judy. it, your it? change value. Banco commercial action reason on performance, or we that to valuation, we're the planning that apologize positive end you that what that manner about management question, at such your income we're haven't was announced we generate got have

Yuri Fernandes

right you do the any the increase more capital was know I was That on now, prices. the Diego. thing buybacks, that's change uncertainties it. like that don't if of to dividend. Colombia, No, It given given but kind share in plan distribution to right was

Just about asking buybacks basically.

Diego Fernando Solano Saravia

today. announce we Yes. as of to anything we market announce take that If at will can't a it any We point. action,

Yuri Fernandes

Thank you very much.

Operator

you. Thank

ahead. comes from Julian online question Please next Our Davivienda. go from Ausique

Julian Ausique

the about understand growth see ROE seen have Thank what have has thank -- -- tender has my know or the I why you. XX% cost risk that production the would ROE of for a of question, controlling the better a and the DHI are to second good Grupo the improvement We've it? on my we loan in about portfolio. of offers. of to be next Hi of year, And And DHI opinion NIM, shares? for Aval will possibility next effect expecting like analysis everyone if you if administration year? that having any if and the sell considered don't you first And my two question questions. been is regarding any it I questions. I has for the remnant

Diego Fernando Solano Saravia

Okay.

full to at de point is improve one, in this Banco de we tender will going their liberate what a tell what's solvency Bogotá sales, will Bogotá BHI, analysis Board it's they BHI. SFN a is this very that hasn't this careful they Day without some investment What well. as should regarding be decision offer. Regarding you taken and have on can and that's yet, get taking be Banco being because in Julian, participation I of cash and happen will

one. day the that's So

on mobility. that can go to term, time, what have. them of how in are position can improving if process, Banco return. they the the market you At currently from point, but will SFN over for risk-free we to gives and you over suggests, it's depending Bogotá need they the basically and the Long thing see invest So get only on, Colombia, some in we an comment improvement that get this rates you that's out that I money check solvency what improving room de this sort

question to basics, Board, on that comment account. I though I by be your didn't need a apologize, a even taken to very some not to careful Then, So can't we and taken to be Bogotá but because but be decision into that is some things Banco have get needs have basics I of analysis, these this are de the ROE. full XX%

So rephrase if it. you can try to

Julian Ausique

have year. on what improvement performance in an the of to we loan for but next next that what been we this growth this a be up, for of good know reduction have next I main we the – that stable effect like the expecting understand year? the year? ROE would the know I ROE you are the reasons in ROE it's and BHI from the are cost If course, even the reduced for we reduction risk Of a have – and will

Diego Fernando Solano Saravia

Yes.

main BHI. year this You're of falls right. relative spin-off of ROE The the explanation to is

stable I what side. sure to moving is what but And say is I'm pressure are need we first of affecting we the ROE NIM of negatively half However, year. prudent is, on to expect overflow of the while we this year, ROE lending reason be the to not why question, at the into to a Therefore, a that XX% part forward. on we point, Grupo the see expect your that that's guiding ROE XX% not into the retail next and we're

of rest representative the what like, year. should have to first next is the of half going is looks be over an improvement Grupo and So a we seeing we're what year that not

you average it, year. in, so when end for call So up let's ROE you those out, far next

Operator

Thank you.

Please go next Cuenca Our José ahead. from comes Citigroup. question from

José Cuenca

Hi, have questions. everyone. my for I of taking follow-ups. thank couple Good and you morning, a

important performance, FX also very seen implies in to a performance. next variables eventually, and one confirm We've being tax like regards rate. the infrastructure very stabilizing I with want softer not The inflation year, performance quarters. for very the and these And effective higher, and softer, seems was my is first bit to is quarter-over-quarter question. infrastructure first to be of to effective pre-tax XXXX a second just tax due didn't good rate couple understand – I really is a the why bit to guess, profits those would year-on-year. a relatively But the it considering guidance both income me, with my regard income. that eventually strong this especially two if would I for That question tailwinds when past were

sustainable rate Thank a with, level very forward? be was you why ROE softer I'm And effective say, moving if comment bit you earnings. would on not could So let's you more normalized do bit little think tax much. sure lastly, a you if what clarify a The higher. could or

Diego Fernando Solano Saravia

Okay.

performance, absolutely right. you're infra Regarding

its to going be contribution XX%. anticipated reducing you on was, guidance our that a Corfico around remind we of what back basically initial year should in I'm time, Just had in Corficolombiana

over favor However, very what they do financial favor out, the our the marked from earnings generate concessions. into is increasing assets they well They concessions inflation that you because and do those do FX time pointed as those get concession. for

overperformance during that year brought concessions… unexpected unexpected the was in So inflation actually what and we had this depreciation of

Luis Carlos Sarmiento Gutierrez

Devaluation.

Diego Fernando Solano Saravia

that area for scenario, make And sustainable tax ROE sort quarter. to the you of comparable a happens be expecting rate Corficolombiana, and but during as wanted that we're manner. that then to numbers X% to add ROE are our hadn't both is what that and asked expect those sense should X% sector opportunities to been a XX% opportunities in us to time. I effective in very about last projects, of year that to the is normalized continue And of bring north back should that quarter you …devaluation. said, in next paid them in come the we -- had this working in taxes versus tough it's assumption earning because advanced energy every see some you the softer normal. well going said your a that analyze. inflation the Corficolombiana the American on looking and new awarded help as taxes to Then to before to but of begun from what exactly in who we operation been in other where for back earnings does here, example, that is they're infrastructure that the inflation to you had Central ROE, not that need see because, And But past, generating bring has already from during have earnings taxes, in normalization and well then to to Central depreciation well it's over for as what already key comes that in pay America. is you to

large Now, of as effect then income a pre-income -- or taxed. tax most remaining American in is the some decreases, the pre-tax Central of the portion remaining operations

pre-tax of sources comes And where has or what then therefore, taxes the that the the income vary differ happens one other. quarter So income on it not. from it's from, is depending source, to income just the the

income taxing the pre-tax made in quarters. -- The quarter. significant So this the rates tax -- than is sources different that's exactly happened more the seem previous what this of in

Operator

Thank you.

from Capital. question Please, comes Mora Credicorp from Daniel ahead. go next Our

Daniel Mora

Good have a Hi. couple for of questions. you questions. Thank morning. taking I

be I And strategy NIM. can have in what pace I loan the the a for NIM BHI inflation. observing that thoughts higher in current forward, But compared to Grupo of like my in would are if, half clear second interest after of much. thinking would in for you and begin persistent What better numbers is And XXXX. peers regarding strategy, one you asking also given NPLs. cost question. for already of of rate funding. margins? margin the if the that this deceleration, you so Thank this we like also And NIM you is X% the when mix is and front? that NPLs of a it great the the XXXX second repeat will That will be though and the the the scenario regarding improve spin-off threshold. Bank something What you higher also different you to considering going next first mentioned outlook entering numbers if forward, to Central you Even your would rates of high are loan expect going -- reports are asset the in is year. indicators, improving year, The regarding or one know book, quality of doing above also, the are guidance like we first for that economic the to

Diego Fernando Solano Saravia

Okay.

year, end into So next months the we're first a throughout rate the where looking to scenario during the see is regarding margins, we're of should scenario should very of increase be close the it cycle. stable year. We this

base. as not should that's if point the that but third around, turn or of it's at We we're a scenario what sort taking certain of are that beginning quarter, end

what in increase Regarding some increasing and in the to interest our scenario funds, get of bonds. already been that in of trying we've of funds, reason funds cost for cycle. strategy of we've rate why see to we doing, have remainder cost been sort our the you in position time cost deposits funds its for as and Therefore, of a preparing of the part working on advance in increase the been

NPLs, perform our -- book book, payroll an over in lending is ties in NPLs should on look the time your for that many, you regarding much at Colombia. the we concentrated Regarding over than us many what the cycle in to doing book When what work is very and this question loan prepares it better been we've average Colombia, years.

higher do faster And went our a at due because past had loans. to we ratios when cycle you write then that their in numbers, look So BHI, have NPL of already spin-off direction. than our numbers BHI pre off much

Aval the system. manner, into by We've metrics. different started is, what level. and our concentration improve. When you peers behaving, peers organized write-off look higher NPLs want only a the very stages the you the continue our are compare differences what by our I and at let behavior in how it it explained at you make lending answered and you to see that have stages look So in show system, into somehow need look to protection of Aval, sure When we throughout Basically, improvement know, intrinsically stages, but of at is we've even portfolio, properly to years. having to from affected and of Stage our at consumer not products. stages. into that questions, some at a what to in your NPLs in are of X speed both it me case an the the increase is a is did this NPLs I -- I of over we're for then, Aval banks structure changing which the X and are been point, our which a And is to increasing for Please In Stage by the look by the the our built that watching if composition your NPL covered see -- loans behavior, at overall something loans, you part speed questions. positive the is rest continue higher-risk I

Daniel Mora

No, that's Yes. perfect.

just the guidance if repeat Just of you can margins…

Diego Fernando Solano Saravia

I'm sorry...

Daniel Mora

this Thanks. For year?

Diego Fernando Solano Saravia

should XXX we're increase at at -- some PS million you it year, also at with point, loans as taking Regarding on a think of looking be NIM for PS NIM year, for NIM But we're there. when million XXX this level, next flat. similar this opportunity

quarter you guided overall has at that the to investments that this positive -- on for we year, Therefore, NIM, ground. XXX running we NIM look move to at However, been this PS expect for negative, was when million. or

of an stripping away that. points XX the we're to from loans, year, improvement For NIM the guiding investments. NIM is explanation on on negative but basis next And similar we're around

Operator

Thank you.

remarks. now turn Mr. We no over I his time. questions will the Sarmiento call this to for further final have at

Luis Carlos Sarmiento Gutierrez

Well, so much. thank you

this all favor, almost the as are back saying, and can that, corrective would next as had thank see do headwinds. at sorts get and questions, we'll With rising that and in I work for see all quarter, but leave and I I your attention we you you end other to some we -- And of Diego next will, our track. on think expect two was repo of be actions implementing the really great So us or that you rate in quarter scenario, again you, time. we the your

Operator

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

You disconnect. now may

Grupo Aval Acciones y Valores (AVAL) 17 Nov 222022 Q3 Earnings call transcript