Saturday, November 17, 2018

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Wall Street bond rater Fitch announced November 16 that it has affirmed Medellin’s favorable “AAA(col)” long-term debt rating despite the financial challenges facing city-owned electric utility EPM because of problems with the giant “Hidroituango” hydroelectric power project.

According to Fitch, Medellin also enjoys a “stable” debt oulook and a favorable “F1+(col)” short-term debt rating.

“The rating action is based on the financial strength of Medellín, which is a reflection of its positive fiscal performance, supported by its importance within the national economic context,” according to Fitch.

“Medellín benefits from the important capital resources coming from the dividends received from EPM [rated ‘AAA (col)’ and ‘F1 + (col)’; stable perspective], which allows the city to be more flexible to allocate funds to finance capital expenditures.

“In general, EPM dividends have represented around 20% of the total revenue of the city since 2012. The transfers to Medellin in 2017 were COP$1.01 trillion [US$319 million], in addition, COP$300 billion [US$95 million] were paid corresponding to the sale of the participation of EPM in Isagen.

“The contingency of the Hidroituango hydroelectric project has impacted EPM’s financial plan, considering the expenses related to the resolution of its technical complications and the change in [power sales revenues] projections due to the delays presented. Fitch classifies EPM transfers as capital income used exclusively to finance Medellín’s capital spending program.

“Therefore, it is not expected that the difficulties in Hidroituango will have a significant effect on the key financial indicators of Medellin in the short-to-medium term. Likewise, Medellín has a high degree of financial flexibility that allows it to make the necessary adjustments to its medium-term financial plans in a scenario of decreasing EPM financial transfers.

“The city maintains a high share of its debt in foreign currency (49.5%), whose risks are under continuous monitoring. This aspect is compensated since 36% of the indebtedness is contracted at a fixed interest rate and [Medellin] has an adequate liquidity position in which the free destination liquid resources have more than once covered claims. In addition, the Medellín administration is working to have [adequate] external debt coverage to reduce the risk exposure at the exchange rate,” Fitch found.

As for the general economic outlook, Fitch rates Medellin as “strong with stable tendency."

"Medellín plays a very important role in the country's economic and social contribution. Its contribution to the national GDP is approximately 7.3% and maintains an unemployment rate of 10% to 11%, higher than the national average," according to Fitch. “However, due to its internal migratory attractiveness, Fitch notes the existence of high investment needs in various social sectors. The city continues on the path of investments that allow improving the coverage rates of its citizens at levels above 95% in education, health and public services,” the ratings agency concluded.


Wall Street bond rater Fitch on November 14 issued a “stable” outlook for Colombian sovereign debt and simultaneously upgraded its GDP forecast to 3.3% growth in 2019 and 3.5% in 2020.

“Ivan Duque’s 2018 presidential election victory is expected to lead to continuity in the government’s monetary and fiscal policies, including abiding by its fiscal rule,” according to Fitch. “The new president also has pledged to enhance the business climate in Colombia.

“Growth prospects are consolidating towards Colombia’s medium-term growth potential of 3.5% after three years of underperformance (with average growth of 2.1% in 2016-2018). Higher exports, supportive consumption and higher investment are expected to underpin higher growth."

On the other hand, “infrastructure projects related to the 4G [fourth-generation highways] rollout have witnessed several bottlenecks that have slowed their progress, representing downside risks to the growth outlook,” Fitch added.

Meanwhile, a proposed tax reform in Congress “is key to achieving the [government revenue] target as well as meeting spending pressures such as from the immigration crisis stemming from Venezuela, although higher expected oil revenues from Ecopetrol dividends will help,” according to Fitch.

However, “if the tax reform does not pass or is heavily watered-down, [then] we think the government would revise the 2019 budget passed by the Congress in October 2018 with significant cuts in budgeted capital expenditure,” Fitch concluded.

DANE: 3Q 2018 Rebound

On a related front, Colombia’s national economic statistics agency -- Departamento Administrativo Nacional de Estadística (DANE) – on November 15 released its latest study on national economic indicators.

For the third quarter (3Q) of 2018, Colombia’s GDP (“PIB” in Spanish initials) grew at a 2.7% rate, up sharply from the 1.7% rate in 3Q 2017, DANE found.

Sectors showing relatively strong GDP growth (4.5%) in 3Q 2018 were public administration, defense, social security, voluntary pensions, health services and education, according to DANE.

Wholesale and retail commerce, vehicle repair, transport and warehousing, and hotel-and-restaurant services grew at a 2.6% rate, according to DANE. Industrial manufacturers meanwhile saw a 2.9% GDP growth in the latest quarter, the agency added.

In the mining sector, metals extraction grew by 14.3%, while oil-and-gas extraction rose 1.3%. However, carbon and lignite extraction declined by 4.1%, according to the agency.


Enka 3Q 2018 Net Income Jumps 66% Year-on-Year

Thursday, 15 November 2018 16:00 Written by

Medellin-based textile manufacturer and plastics-recycling specialist Enka Colombia announced November 14 that its third quarter (3Q) 2018 net income rose 66%, to COP$1.8 billion (US$564,000), from COP$1.09 billion (US$342,000)in 3Q 2017.

Both domestic and export sales revenues improved by 15% year-on-year, to COP$304 billion (US$95 million), from COP$264 billion (US$82.7 million), while volume (in tons) also rose 5% year-on-year, to 43,780 tons, from 42,660 tons in 3Q 2017.

Earnings before interest, taxes, depreciation and amoritization (EBITDA) also rose 19% year-on-year, to COP$19.8 billion (US$6.2 million), from COP$16.7 billion (US$5.2 million) in 3Q 2017.

Colombia revenues rose 19% year-on-year, while Brazil sales climbed 12%. USA/Canada sales jumped by 113% and Argentina sales soared 99%. The only sales declines were in Mexico, Peru and Spain, but these were relatively small.

Greater sales volumes and better realized prices in foreign markets were especially virtuous, given the weakening Colombian peso against the U.S. dollar, Enka noted.

The local Colombian market also improved thanks to greater efforts by the Colombian government to thwart below-cost contraband along with good performance in Enka’s recycled-plastics fibers markets.

Exports grew by 12% in pesos and 6% in volume, mainly in the USA and Canada, the company noted. Brazil and Argentina sales also rose despite recent economic difficulties in those nations, Enka added.

The “EKO-Fibras” line – derived from processing of waste plastics – saw a 16% boost in sales (in pesos) and 4% by tonnage, mainly to export markets, according to the company.

Meanwhile, the “EKO-Poliolefinas” recycling-production line is performing as expected in its first few months of operations here, according to Enka.

The export outlook for the fourth quarter 2018 is “in line with our expectations,” given a favorable situation in principal markets and a relatively weak Colombian peso-to-U.S. dollar rate. However, Enka added that it’s taking note of political and economic turbulence in Argentina and Brazil, which could affect future sales there.

As for the possible impact of higher USA tariffs on various Chinese goods, it’s possible that Colombian goods could gain greater market shares in the USA as a result. On the other hand, if China retaliates via devaluation of its currency -- and redirects more exports to South America – then this could negatively impact Colombian producers, Enka warned.


Medellin-based highway construction giant Construcciones El Condor announced November 14 that its third quarter (3Q) 2018 net income for its construction operations more than tripled year-on-year, to COP$53.5 billion (US$16.7 million), from COP$15 billion (US$4.7 million) in 3Q 2017.

The figures for the latest quarter “reflect a high level of project execution,” according to the company. "We note a 52.9% increase in construction services [in latest quarter] compared to the prior-year quarter.”

Likewise, earnings before interest, taxes, depreciation and amortization (EBITDA) improved along with a “very positive” boost in EBITDA margin, thanks mainly to efficient execution and favorable weather for outdoor construction, according to the company.

The improvement came despite a 7.6% decline this year in national construction activity in Colombia as measured by DANE, the national economic-statistics agency, El Condor noted.

Colombia’s “fourth-generation” (4G) highway construction projects continue to provide credits to construction companies, the company added.

Gross revenues so far this year are up 49%, hitting COP$676 billion (US$212 million), and the company expects similar growth in 4Q 2018.

Nine-month 2018 company-wide EBITDA dipped to COP$126 billion (US$39.5 million), from COP$252 billion (US$79 million), but this was because of a non-recurring, one-time sale of investments last year, El Condor noted.

If only measuring construction activity -- rather than including the one-time asset sale last year -- then nine-months 2018 EBITDA was up 40% year-on-year, the company added.

Similarly, nine-months net income corporate-wide was higher in 2017 that in 2018. But this was the result of the same non-recurring sales-of-investments last year, the company noted.


Medellin-based multinational retail giant Exito on November 14 posted a third quarter (3Q) 2018 net loss of COP$9.6 billion (US$3 million), but nine-months 2018 profits soared by 293%, to COP$119 billion (US$37 million).

Gross revenues as measured in Colombia pesos dipped 8.4% year-on-year in 3Q 2018, to COP$12.7 trillion (US$3.98 billion), but actually improved 9.5% if excluding Colombian peso weakening.

For nine-months 2018, gross sales are off 3.3% measured in Colombian pesos but up 8.2% if excluding the peso-weakness effect.

Sales in the four South American countries where Exito operates showed increases in local currencies: Colombia up 0.6%; Brazil 12.9%; Uruguay 4.7% and Argentina 23.5%, according to Exito.

Recurring earnings before interest, taxes, depreciation and amortization (EBITDA) were COP$661 billion (US$207 million) with an EBITDA margin of 5.2%.

In Colombia, nine-months sales hit COP$8.1 trillion (US$2.5 billion), spurred by new retail formats (“Exito Wow” and “Carulla FreshMarket,”) new strategies, growing credit-card sales, income from the “Viva” real-estate venture and growing “e-commerce” sales, the latter of which now account for 3.6% of all Colombian sales, according to Exito.

The gradual improvement in sales here during the latest quarter came despite a 0.7% decline in the Colombian consumer confidence index, which has been weak in seven of the last 12 months, Éxito noted.

In Brazil, 3Q 2018 food sales rose 12.9% year-on-year, thanks to strong growth at “Assaí” stores as well as improvements at the “Extra” and “Pão de Açúcar” outlets, according to Exito.

In Uruguay, sales so-far this year have grown 6.4% in local currency “amid a challenging economic situation in the neighboring countries,” Exito noted.

Operating profit margin in nine-months 2018 in Uruguay was 6.9% compared to 6.7% in the same period of 2017, while recurring EBITDA margin was 8% compared to 7.7% in the same period of 2017.

As for Argentina, the “Libertad” store chain in 3Q 2018 showed a “growth in its sales of 23.5%. Libertad had the best market performance, and according to Nielsen, to August of this year registered 18% of the market share in the territory where it operates. The recurring EBITDA margin in the third quarter was 4.7%, mainly leveraged by the real estate operation in its 15 galleries commercials that maintain an occupation close to 95%,” according to Exito.

At the end of 3Q 2018, Exito had 1,536 stores, of which 549 are in Colombia, 870 in Brazil, 88 in Uruguay and 29 in Argentina.


Medellin-based Grupo Orbis – which includes Pintuco paints, Andercol Chemicals and O-Tek water treatment technologies – on November 14 posted a COP$8 billion (US$2.5 million) net loss for 3Q 2018, compared to a COP$3.2 billion (US$1 million) net profit in 3Q 2017.

For the nine-months of 2018, Orbis posted a net loss of COP$35.5 billion (US$11 million), which was worse than the COP$6.5 billion (US$2 million ) net loss in nine-months 2017.

Revenues also declined year-on-year, to COP$367 billion (US$115 million) in 3Q 2018 versus COP$435 billion (US$136 million) in 3Q 2017, while nine-months 2018 revenues fell to COP$1.02 trillion (US$320 million) versus COP$1.2 trillion (US$376 million) in nine-months 2017.

“This result was impacted by the sales performance of the third quarter, decreasing by 2%,” according to Orbis.

“This situation is partly attributable to the slow performance during 2018 of the consumer, construction and industrial sectors, both in Colombia and in the other countries where we have a presence.

“In relation to the cost behavior, the group continues in its process of operational transformation with the transfer of its main chemical and piping business plants to the city of Cartagena, which has generated a temporary pressure on operating costs. Additionally, there has been a strong price increase in some strategic raw materials, which has temporarily affected the profitability of the businesses.

“To offset this performance, during the quarter adjustments were made in operating expenses, which are reduced by 12.3%. Accumulated [from January] to September 2018, the reduction in expenses is equivalent to 10.5% compared to the same period of 2017.

“Grupo Orbis continues with the goal of reducing its net debt, which in the last 12 months has been reduced 19%, or COP$95.9 billion [US$30 million],” according to the company.


Medellin-based insurance and asset manager Grupo Sura announced November 14 that its third quarter (3Q) 2018 net income fell 10.2% year-on-year, to COP$413 billion (US$139.2 million).

“The decrease is due to the impact of the difference in the rate of exchange [falling Colombian peso versus U.S. dollar],” the company noted.

However,  Suramericana insurance-division profits rose 33.2% year-on-year, while profit for the Sura AM division dipped 2.6%, as a results in differences in the rates of exchange.

Grupo Sura saw a 1.5% dip in assets, to COP$67.9 trillion (US$22.86 billion), while liabilities decreased by 1.4%, to COP$42.2 trillion (US$14.2 billion). Equity dipped 1.6%, ending at COP$25.8 trillion (US$8.68 billion).

“For the third quarter of 2018, we showed a positive operating performance for our subsidiaries, strategic decisions to not participate in some businesses, and external issues such as the volatility of capital markets,” according to the company.

For nine-months 2018, net income is up 0.7%, at COP$1.1 trillion (US$371.9 million), according to the company. The nine-month gain “is the result of a 7.7% increase in net income for Sura Asset Management, to COP$479 billion (US$161.3 million), plus a 0.5% increase for Suramericana, for a total of COP$394.8 billion (US$132.8 million),” as well as income from its partial holdings in Bancolombia and Grupo Nutresa.

Total revenue dipped 4.3%, to COP$14.5 trillion (US$4.48 billion), as a result of a “decision to not participate in pension insurance in Colombia, lower revenue from the investments in the portfolios of the subsidiaries, and the devaluation in Argentina,” according to Sura.

“These factors have been partially offset by higher revenue from commissions for the pension business, and the provision of health services in Colombia.

“Sura Asset Management, our subsidiary expert in pensions, savings, and investment, had a 6.6% increase in revenue from commissions in its mandatory pension business, while the voluntary savings business rose by 15.1% in comparable terms. It had a total of 19.8 million clients, an annual increase of 3.6%, while assets under management (AUM) represent COP$412.8 trillion (US$138.9 billion) and grew 7.5% compared to September 2017.

“In turn, Suramericana, our subsidiary specialized in insurance management, trends and risks, had increase revenue, in comparable terms, from all its segments: general (8.1%), life (13%), and health (20.5%).

“In addition, the rate of retained claims improved by going from 55.5% to 54.3%, and technical results increased to 8.3%, in spite of the decrease in premiums for not participating in retirement insurance in Colombia,” according to the company.


Argos 3Q 2018 Net Income Jumps 37% Year-on-Year

Thursday, 15 November 2018 09:52 Written by

Medellin-based cement, electric power and road/airport concessionaire Grupo Argos announced November 14 that its third quarter (3Q) 2018 net income rose 37% year-on-year, hitting COP$410 billion (US$128 million).

As for nine-months 2018, Argos has posted an accumulated profit of COP$864 billion (US$269 million), up 31%.

Consolidated revenues of Grupo Argos in 3Q 2018 were COP$3.6 trillion (US$1.1 billion), “which is in line with adjusted revenues in the same quarter of the previous year,” according to the company.

The revenues were “supported by positive contributions from all the strategic businesses -- cement, concessions and energy -- that were COP$97 billion [US$30 million] higher than the same quarter of the previous year,” according to Argos.

Earnings before interest, taxes, depreciation and amortization (EBITDA) hit COP$1.02 trillion (US$318 million) in 3Q 2018, with EBITDA margin at 28%.

Also in 3Q 2018, “Grupo Argos was recognized as the most sustainable company in the world of the construction materials industry by the Dow Jones Sustainability Index,” the company bragged.

The company added that it will start reporting during the next quarter “environmental, social and corporate governance” (ESG) data together with financial results.

On the electric power front, “Odinsa (through Opain) and Celsia, our subsidiaries in concessions and energy, began the installation of 10,000 solar panels that will generate 12% of the energy in [Bogota’s] El Dorado airport, which will consolidate it as the airport with the largest photovoltaic installation in Latin America,” according to Argos

Meanwhile, the under-construction “Pacifico 2” road concession in Antioquia “reached 100% of execution of ‘functional unit 1’ and has an overall works-compliance of 55%, with a 7% advance with respect to the schedule,” according to Argos.

On the cement front, “Cementos Argos closed a financing operation with a US$600 million syndicated loan which, in addition to the favorable impact in reducing the cost of debt without affecting the debt ratio, confirms the market’s confidence in the company,” according to Argos.

“Cement shipments grew 2% thanks to the better performance of the Colombian region, where we grew above the sector. At the same time, there were higher volumes of concrete sales, which grew by 3% in Colombia, thanks to higher shipments to civil works, demonstrating the leadership that Cementos Argos has taken in the infrastructure projects in the country,” the company added.


In a November 8 presentation to some 1,000 attendees for an annual construction-industry forum here, Camacol Antioquia executive director Eduardo Loaiza revealed that new-housing sales in Medellin have fallen 31% this year – mainly due to recent economic weakness in Colombia and investor uncertainly over the national elections earlier this year.

Aside from now-settled election uncertainties that previously rattled investors and “paralyzed” construction, Loaiza cited relatively weak economic growth in Colombia (just 1.7% GDP growth last year and around 2.6% growth this year) as a key reason behind relatively feeble construction growth in Antioquia.

While forecasted GDP growth in Colombia is seen rebounding to around 3.5% in 2019, new tax proposals by the national government could present further headwinds for construction growth next year and beyond, he warned.

So far this year, total construction licenses in Antioquia have fallen 10% in 2018 versus 2017, with residential licenses down 10% and non-residential down 11%, he showed.

On the other hand, Camacol Antioquia calculations indicate that it’s possible that construction licenses here could rise to as much as 4 million square meters of occupied space in 2019, up from just 2.4 million square meters this year, he estimated.

From January through September 2018, total new-housing sales in Antioquia (including Medellin, the Aburra valley suburbs, plus the western and eastern suburbs and the Uraba region) fell 15% year-on-year, he showed. Sales of non-residential buildings in Antioquia also fell 13% this year versus last, he showed.

Other than Envigado -- where 2018 new-home sales are up 25% this year versus last -- the “oriente” region (east of Medellin including Rionegro, El Retiro, Llanogrande, San Antonio de Pereira and La Ceja) and the northern suburb of Copacabana were the only other regions or municipalities in Antioquia showing new-home sales growth: up 15% in “oriente,” and up 13% in Copacabana (see chart, above).

In contrast, sales in Medellin and Sabaneta both fell 31% this year, while Bello was off 18% and La Estrella down 9%, he showed. Homes available for sale in Antioquia also have declined 4.2% this year versus last, he showed.

On the other hand, Camacol estimates that sales of new houses in Antioquia in 2019 could rise about 7% year-on-year, to nearly 22,000 units, he said.

Meanwhile, on the hotel construction front, 19 new hotels were announced this year as in-development for Antioquia, nine of which are in Medellin and three in Rionegro, he showed.

In a separate presentation here, Camacol president Sandra Forero Ramirez explained that subsidized “social housing” has been the one segment of the construction market that has shown the greatest resilience through economic cycles -- and this is the single-biggest market segment for housing construction growth, at 58% of the total.

In contrast, housing for middle-class and upper-income sectors have seen declines in construction over the past two years, she said. However, a Colombian national mortgage “stabilization fund” for housing construction has helped to slow the contraction in these markets, she added.

For 2019, Camacol expects continuation of more building in the subsidized “social housing” sector rather than in the middle and upper-income sectors.

So far in 2018, Colombia housing starts have fallen 7% year-on-year, she said. But that’s better than the 11% contraction in 2017, she pointed-out. Over-all Colombian housing demand also declined, to 155,000 units this year, compared to 170,000 in 2017, nearly 200,000 in 2016, and 180,000 in 2015.

Middle-income housing accounts for  30% of the total Colombian market, but demand in this sector could fall in 2019 if government interest-rate subsidies are trimmed. Construction in this sector has already fallen 14% this year, she showed.

Upper-income housing construction is 12% of the national market. This sector faces potentially devastating consequences in 2019 if the national government’s proposed 18% value-added tax (VAT) is imposed on all housing sales at or above COP$888.5 million (US$280,000 at today’s exchange rates) along with proposed curtailment of interest-rate deductions. Construction in this sector is already down 22% so far this year, she showed.

Velocity of housing sales also has slowed over the 2017-2018 period, with only 40% of newly constructed units sold within six months, compared to nearly 50% in the comparable 2016-2017 period. What’s more, only 55% of new units were sold within 12 months over 2017-2018, whereas 67% of new units were sold within 12 months during the 2016-2017 period.

The slowest sales rates are in the middle- and upper-income units; the fastest in the subsidized “social housing” sector, she showed.

In a separation presentation here, Victor Saavedra Mercado, Colombia’s Vice-Minister of Housing, stated that 4 million Colombians in urban areas continue to live in “inadequate” housing that may lack full water, sewer, gas and power utilities, lack legal property titles, occupy spaces that lack updated zoning, lack paved street access, and suffer from substandard building construction.

In total, some 44% of Colombians today live in rented housing, compared to 19% in Chile, 18% in Brazil, and 13% in Mexico and Peru, he said. Hence well-designed government programs could help a lot more lower-income Colombians move from renting to owning, he said.

To address this, new Colombian President Ivan Duque’s administration is putting more emphasis on subsidies for upgrading existing substandard housing, including rent-to-buy subsidy options, along with aid to municipalities that must update zoning to encourage investments, he said.

Construction: Huge Economic Engine for Antioquia

Antioquia accounts for 14% of Colombia’s entire gross national product (PIB), while the construction sector here by itself accounts for no-less-than 11.6% of Antioquia’s total GDP,  Saavedra said -- 6% of local PIB via buildings-construction, and 5.6% of local PIB in civil-works construction (roads, bridges, dams, airports), he explained.

While one-third of Antioquia’s population lives in rented housing, another 31% live in irregular housing and 35% are homeowners, he showed. Meanwhile, household formation (new marriages, new children) is running at a faster rate than new-housing construction, he warned. In addition, 80% of the municipalities in Antioquia lack updated zoning, which further complicates new-construction initiatives, he showed.

As for the densely-populated, densely-built land within Medellin, the city has now established plans to “renovate” 41% of its occupied lands with even higher-density housing, he showed.

Governor Perez Hails Tunnel Projects

In a final presentation here, Antioquia Governor Luis Perez cited several highway tunnel projects that will stimulate more residential and non-residential building in growing areas including Medellin's suburban “oriente” region, the “occidente” region (around Santa Fe de Antioquia), the northern suburbs and (eventually) the Uraba region, once the “Mar 2” and “Toyo Tunnel” projects are completed during the next decade.

Some 74% of the total length of all new highway tunnels in Colombia are in Antioquia, Perez boasted. At least in Antioquia, tunnel construction is moving at a much faster pace than the long-delayed, vastly over-budget “Tunel de la Linea” tunnel strategically connecting Bogota to highways heading south-westward toward the Pacific port of Buenaventura, he bragged.

The “doble calzada oriente” project linking the Las Palmas highway east of Medellin to the Rionegro airport highway (see Medellin Herald August 1, 2018) only lacks one more bureaucratic approval before the project can be put-out for bid. Once built, this highway will attract even more construction investment to the “oriente” region east of Medellin, he added.

On another front, a proposed 19.9-kilometers-long highway linking the southern Medellin suburb of Caldas to the “oriente” municipality of El Retiro – including an 8.6-kilometers-long tunnel – is in “pre-feasibility” stage, he said. That new highway potentially could efficiently redirect much southern-Antioquia traffic bound for the “oriente,” which currently is forced to travel through Medellin to get there.

‘Colombian Property’ Sees Huge Growth Coming in Oriente

On a related front, El Retiro-based, bilingual real-estate agency specialist Colombian Property (www.colombianproperty.com) told Medellin Herald in a separate interview that “huge” housing growth is coming to the “oriente” region over the next five to 10 years -- on top of tremendous growth over the past 10 years.

Colombian Property president Miguel Homsey – Colombian-born but New York-raised – pointed to the impact of new highways including the Tunel de Oriente linking Medellin to the international airport at Rionegro; the “doble calzada oriente” highway project between Sancho Paisa and the airport; the explosive growth of “parcelacion” gated community projects around El Retiro, Llanogrande, Rionegro and La Ceja; a newly proposed, upscale “wellness” retirement community project near La Ceja; a new highway that will link this area to Llanogrande and onward to Medellin; and future development of a second runway at the Rionegro international airport, triggering many more international flight connections.

“Foreigners are piling-in” to the oriente region thanks to its favorable climate, abundant “green” space, better air quality, relatively upscale neighborhoods and amenities, and a favorable dollar-to-peso exchange rate, he told us.

“El Retiro is going to change in a big way, with four to five thousand new luxury homes and apartments coming soon, and more properties coming later. There are 9,000 people living in El Retiro now but it’s going to double in population in the next few years.

“But people here don’t want to repeat the Sabaneta experience, where construction outran road and water infrastructure,” he said.

Asked about Colombian Property’s market focus, “we try to focus on certain mid-to-high-range properties in certain locations. We have a bilingual lawyer available to help the process, and an accountant that helps with certain documents, advice on doing foreign money transfers here, and the Colombian investor-residency process,” Homsey added.


Medellin-based banking giant Bancolombia announced November 7 that its third quarter (3Q) 2018 net income rose 20.5% year-on-year, to COP$543 billion (US$172 million).

However, this positive year-on-year result in 3Q 2018 was offset by an 8.2% decline in net income compared to 2Q 2018.

“Gross loans [in 3Q 2018] grew by 4.0% when compared to 3Q 2017 and 0.9% during the quarter. This annual growth shows moderation in the credit demand in Colombia,” according to Bancolombia.

Colombian peso-denominated loans grew 5.8% in 3Q 2018 versus 3Q 2017.

“Net interest income was COP$2.57 trillion [US$813 million] for 3Q 2018, increasing by 0.6% when compared to 3Q 2017. This positive performance is mainly explained by the growth in the loan book [as] net interest income increased by 0.9% during the [latest] quarter,” according to the company.

“The annualized net interest margin for the quarter was 5.8%. The margin decreased by 10 basis points during the quarter and registered the same number when compared to 3Q 2017, mainly affected by the reductions in the reference rate in Colombia that were reflected in the repricing of the loan portfolio.

“Provision charges for the quarter were COP$1.0 trillion [US$316 million] and the coverage ratio for 90-day past due loans was 160.7%. Provision charges increased by 4.3% when compared to 3Q 2017 and by 3.8% compared to 2Q 2018.

“These provisions allow us to maintain a solid coverage ratio amid a challenging environment [even as] new past-due loans totaled COP$847 billion [US$267 million] for the quarter.

“Net fees were COP$631 billion [US$199 million] and increased by 4.1% compared to 3Q 2017. This growth was mainly driven by an increase in fees related to credit and debit cards and trust services, [although] net fees decreased by 2.1% during the quarter,” the bank added.

Bancolombia “maintains a strong balance sheet supported by an adequate level of loan loss reserves,” according to the company. Allowances for the principal for loan losses were 5.7% of total loans at the end of 3Q 2018, increasing as compared to 2Q 2018, the company added.

 


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Medellin Herald is a locally produced, English-language news and advisory service uniquely focused upon a more-mature audience of visitors, investors, conference and trade-show attendees, property buyers, expats, retirees, volunteers and nature lovers.

U.S. native Roberto Peckham, who founded Medellin Herald in 2015, has been residing in metro Medellin since 2005 and has traveled regularly and extensively throughout Colombia since 1981.

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