Bancolombia 2Q 2024 Net Income Dips 1.5% Year-on-Year

Medellin-based multinational banking giant Bancolombia announced August 8 that its second quarter (2Q) 2024 net income dipped 1.5% year-on-year, to COP$1.44 trillion (US$354 million), from COP$1.46 trillion (US$359 million) in 2Q 2023.

Compared to first quarter (1Q) 2024, net income fell 13.4% — mainly due to provision charges for past-due loans for comercial customers, according to the company.

Despite the dip in profits, “annualized return on equity (ROE) for Grupo Bancolombia was 15.3% for the latest quarter and 16.0% for the last 12 months,” according to the company.

“Gross loans amounted to COP$268 trillion [US$66 billion], a 3.0% growth compared to the previous quarter. The commercial loan portfolio in Colombia largely explains the performance in 2Q 2024.#

Also during 2Q 2024,“30-day past-due loan ratio was 5.17% and the 90-day past-due loan ratio was 3.43%. Total provision charges, net in 2Q 2024, increased by 23.1% compared to 1Q 2024, totalling COP$1.6 trillion [US$394 million] representing a cost of risk of 2.5%.

“Higher provision expenses in SMEs [small and médium-size enterprises], mid-sized companies and corporate segments largely explain the increase in quarterly provisions,” the company added.

Shareholders’ equity in 2Q 2024 nevertheless rose 7.5% compared to the previous quarter.

“This increase is due to retained earnings and the depreciation of the Colombian Peso during the period. Basic solvency ratio was 10.98% and Grupo Bancolombia’ s total solvency ratio was 12.60% for 2Q 2024, adequately complying with the minimum regulatory requirements,” the company explained.

Meanwhile, digital banking usage continues to grow.

“As of June 2024, Bancolombia has 8.7 million active digital customers on the ´APP Personas´ (active over a period of three months), as well as 26.6 million accounts on its financial inclusion platforms: 6.5 million users on ´Bancolombia a la Mano´ and 20.1 million on ´Nequi,´” the company added.

In its Colombian national operations during 2Q 2024, “commercial loans grew by 1.3%, driving portfolio growth due to strong dynamics in the corporate segment and the internal strategy of offering competitive commercial rates in the market,” according to the company.

“The housing portfolio continues to show good performance and contributed to the growth of balances in Colombia.

“On the other hand, the consumer portfolio maintains the decline trend of recent quarters, contracting by 1.1% in the second quarter, primarily due to personal loans.

“In the funding structure, growth took place across all types of deposits, mainly driven by savings accounts, especially in June, both in retail and corporate segments,” the company added.

Inside Colombia, Bancolombia 2Q 2024 net income fell 17.6% versus 1Q 2024, as “income from commercial loans decreased mainly due to a lower yield rate. The reduction in interest expenses, due to lower deposit rates, partially offset the income decrease,” according to the company.

“The increase in provisions during 2Q 2024 was due to higher expenses in corporate SMEs, and mid-sized companies, the latter primarily explained by specific clients experiencing deterioration,” the company added.