September 23, 2023
Business Companies

Bancolombia 2Q 2023 Net Income Dips 18% Year-on-Year

Medellin-based multinational banking giant Bancolombia announced August 9 that its second quarter (2Q) net income fell 18% year-on-year, to COP$1.46 trillion (US$369 million).

Meanwhile, Bancolombia noted a drastic decline in gross domestic product so far in 2023 and an even weaker outlook for 2024 (see chart, above).

“The consolidated gross portfolio was COP$261 billion [US$66 billion], decreasing 2.4% compared to the previous quarter,” according to the company.

“There was a significant appreciation of 10.1% of the Colombian peso against the U.S. dollar, which affected the balances of the portfolio. Excluding the exchange effect, the portfolio would have increased 1.3%,” the company added.

Past-due loan portfolio index for 30 days was 4.67%, and 2.97% for 90 days. “Charges for net credit provisions for 2Q 2023 increased 1.8% compared to 1Q 2023, at COP$2.08 trillion [US$526 million], affected by the deterioration to a greater extent in the consumer portfolio,” according to Bancolombia.

“Equity attributable to shareholders closed at COP$36.5 trillion [US$9.2 billion] as of June 30, 2023, presenting a 1% reduction compared to the previous quarter. This variation is largely explained as the effect of the restatement by currency translation of the balances of foreign subsidiaries,” according to the company.

Consolidated total solvency ratio was at 12.54%, “thus complying with the minimum required regulatory levels,” according to the company.

Meanwhile, digital banking customer volume continues to grow. “As of June 2023, the bank has 8 million active digital clients in the ‘People APP,’ as well as 23.1 million accounts in our financial inclusion platforms — 6.5 million in ‘Bancolombia a la Mano’ and 16.6 million in ‘Nequi,’” the company added.

In Colombia, Bancolombia’s 2Q 2023 net income fell 20.9% compared to 1Q 2023, “explained by lower income from valuation of debt securities, mainly foreign currency securities. Income from our portfolio, on the contrary, presented a favorable behavior as a result of the increase in the commercial portfolio and the rise in the rate of return.

“On the other hand, interest expenses grew due to the higher average balance in deposits to term and a higher recruitment rate. It should be noted the growth in the expense for provisions originated in the impairment of the individual and independent business segments.

“Other income shows a significant decrease due to mainly to the recording of the equity method of the quarter that decreased by the foreign subsidiaries given the currency effect,” the company added.

In Panama, Banistmo profits also dipped quarter-on-quarter, as “contraction in the commercial portfolio was favorably offset by the consumption modality thanks to important free investment disbursements and better mortgage dynamics concentrated in the preferential interest portfolio,” according to Bancolombia.

“The net result for Banistmo in 2Q 2023 was a profit of COP$145.6 billion [US$37 million], which represents a decrease in quarterly terms.

“Despite the increase in interest expenses as a result of the increases in the volume of deposits term and in the cost of funds, interest income increases showed a favorable intermediation or a higher net balance

“The greatest impact on profit comes from the increase in operating expenses, mainly due to general expenses originated by fees to third parties for project attention, legal expenses, professional services and technology providers,” the company added.

As for its Banco Agrícola operations in El Salvador, net profit dipped 6.6% quarter-on-quarter “as a consequence of the exchange effect. Income from net interest shows a quarterly increase thanks to the better performance of the investment business and the higher credit intermediation margin, mainly supported by the generation of the business segment,” according to Bancolombia.

As for the Agromercantil (BAM) banking division in Guatemala, profits grew 7.9% quarter-on-quarter, to COP$71.7 billion (US$18 million), according to Bancolombia.

“Net commissions showed an increase due to better transactional dynamics in credit cards and commissions credit for specific operations. On the other hand, other operating income presented a positive variation (measured in U.S. dollars) that comes mainly from income from insurance premiums,” the company added.

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