Bancolombia 3Q 2024 Net Income Flat Year-on-Year
Medellin-based multinational banking giant Bancolombia announced November 7 that its third quarter (3Q) 2024 net income remained essentially flat year-on-year, at COP$1.49 trillion (US$343 million), up just 0.6%.
While the year-on-year profits came-in almost unchanged, the 3Q 2024 results still are up 4.3% compared to second quarter (2Q) 2024, according to the company.
“Gross portfolio of the Bancolombia Group was COP$270 trillion [US$62 billion], growing 0.5% [in 3Q 2024] compared to the previous quarter. The mortgage portfolio in Colombia explains to a great extent the growth in 3Q 2024,” the company added.
“Equity attributable to shareholders closed at COP$40.9 trillion [US$9.4 billion] as of September 30, 2024, showing an increase of 4.3% compared to the previous quarter. The increase is due to retained earnings.
“Basic solvency stood at 11.58% and the total solvency ratio of the Bancolombia Group was 14.35% for 3Q 2024, sufficient for meeting the minimum regulatory levels required,” the company added.
As for Bancolombia’s evolving digital-banking strategy, “a favorable trend is observed in line with the results of the last year. As of September 2024, Bancolombia has 8.8 million active digital clients in the ‘People APP’ as well as 26.9 million accounts in its financial inclusion platforms — 6.4 million users in ‘Bancolombia a la Mano’ and 20.5 million in ‘Nequi,’” the company explained.
As for the interest-rate situation, “during the third quarter of this year, the Bank of the Republic of Colombia continued to advance its expansionary monetary policy with the application of 100 basis points of additional interest rate cuts in the period — which favored the total financing cost of the Bancolombia Group — but on the other hand negatively impacted the generation of interest income due to a lower disbursement origination rate and the repricing of the current portfolio tied to floating rates,” according to Bancolombia.
As for its income-tax liability situation, “Bancolombia Group showed an expense of COP$590 billion [US$135 million] — resulting in an effective rate lower than the statutory rate in Colombia — due to the application of tax benefits in Colombia, such as the exemption from the mortgage portfolio for social housing and investments in productive fixed assets,” according to the company.
“Additionally, we realized tax benefits in Guatemala, El Salvador and Panama, corresponding to the exemptions from the yields of securities issued by their governments.
“Finally, it is worth noting the profits of foreign subsidiaries with lower tax rates compared to Colombia, which also contributed to lower taxes,” the company added.
As for Bancolombia’s loan portfolios in Colombia, “the portfolio increased 0.1% in 3Q 2024 and 2.4% in the last 12 months,” according to the company.
“The housing portfolio grew 3.4% in the quarter and was the main factor in portfolio growth both in Colombia and in the Group. The good performance is due to the rate-reduction strategy that came into effect as of July 2024.
“The commercial portfolio, which had showed sustained expansion in the first half of the year, decreased by 0.1% mainly explained by factoring and leasing products.
“Consumer loans continue on a downward trend and contracted 1.4% in the third quarter.
“There is a higher volume in the different types of deposits compared to the previous quarter, explained to a greater extent by term deposits, where our virtual investment product stands out.
“The growth in savings accounts and current accounts is due to a greater extent to the institutional segment.
“Interest income from the commercial portfolio decreased due to a combination of lower balances and lower rates of return. The reduction in interest expenses corresponding to lower deposit collection rates partially offset the decrease in income.
“The decrease in provision expenses during the third quarter of 2024 was the main factor for the growth in profits and was due to lower spending in the personal and SME segments.
“Operating expenses decreased by 1.3% in the quarter, driven mainly by lower tax expenses.
“The net interest margin for the third quarter of 2024 for Bancolombia S.A. was 7.7% and the annualized quarterly ROE [return on equity] was 16.2%,” the company added.
