Bancolombia 1Q 2018 Net Profit Dips 14% Year-on-Year
Medellin-based banking giant Bancolombia announced May 15 that its first-quarter (1Q) 2018 net profit dipped 14% year-on-year, to COP$522 billion (US$181.7 million).
Gross loans in 1Q 2018 grew 4.1% when compared to 1Q 2017 “and decreased by 1.1% during the quarter,” according to Bancolombia.
“This annual growth shows moderation in the credit demand in Colombia, as well as an appreciation of the COP [Colombia peso] against the US dollar by 3.6% during the last twelve months. Peso-denominated loans grew 11.1% when compared to 1Q 2017.”
Net interest income dipped 4.1% year-on-year, to COP$2.51 trillion (US$873.7 million).
“This slowdown in net interest income is explained by the adoption of IFRS 9 [international accounting standards] during 2018, which caused a reduction of COP$102 billion [US$35 million] during the quarter. Also, the appreciation of the COP against the US dollar during the last twelve months impacted the number,” the company added
Net fees rose 8.8% year-on-year, “mainly driven by an increase in fees related to credit and debit cards, bancassurance, payments and collections, as well as trust services,” according to Bancolombia.
Provision charges were COP$875 billion (US$304 million) and the coverage ratio for 90-day past due loans was 173.6%, according to the company.
“Provision charges increased by 13.0% when compared to 1Q 2017 and decreased by 5.9% compared to 4Q 2017,” according to Bancolombia. “These provisions allow us to maintain a solid coverage ratio amid a challenging environment,” the company added.
As of March 31, 2018, Bancolombia’s assets totaled COP$200.9 trillion (US$69.9 billion), up 2.1% year-on-year.
“During the [latest] quarter, the COP appreciated 6.8% versus the US dollar and over the past 12 months, it appreciated 3.6%,” the company noted. “The increase in total assets during the quarter is largely explained by the growth in reverse repurchase agreements and derivative financial instruments.”
Also as of March 31, 2018, Bancolombia operations via Banco Agricola in El Salvador, Banistmo in Panama and BAM in Guatemala, represented 24% of total gross loans.
“Gross loans denominated in currencies other than COP, originated by our operations in Central America and the offshore operation of Bancolombia Panama as well as the US dollar-denominated loans in Colombia, accounted for 32% [of total loans] and decreased by 6.9% during 1Q 2018 (when expressed in COP), explained mainly by the reduction of the loan portfolio in dollars in Colombia and the appreciation of the COP against the US dollar during the quarter,” according to the company.
At the end of 1Q 2018, Bancolombia’s liabilities totaled COP$177.7 trillion (US$61.8 billion), “decreasing by 1.0% from the end of 4Q 2017 and increasing by 1.8% compared to 1Q 2017” according to the company,.
“Deposits by customers totaled COP$130 trillion [US$45 billion] or 73.2% of liabilities at the end of 1Q 2018, decreasing by 1.4% during the [latest] quarter and increasing by 4.5% over the last 12 months. The net loans to deposits ratio was 115.0% at the end of 1Q 2018,” the company added.
“Bancolombia’s funding strategy during the last months has been to reduce the average life of time deposits and promote saving and checking accounts in the consumer segment in order to keep the funding cost at a minimum. The objective is to build and maintain ample liquidity and reduce the sensitivity of the balance sheet to cuts in interest rates,” according to the company.
“In the last months, Bancolombia has generated capital organically due to the appropriation of earnings in March 2018 and to the efficient allocation of capital in different products. The annual increase in the RWA [risk-weighted assets indicator] is mainly explained by the growth in the loan book, as well as the market risk,” the company added.