Bancolombia Posts 61% Year-on-Year Gain in 1Q 2021 Net Income
Medellin-based multinational banking giant Bancolombia on May 4 reported a COP$542 billion (US$141 million) net profit for first quarter (1Q) 2021, up 61% over the COP$335 billion (US$87 million) net profit in 1Q 2020.
Net interest income in the latest quarter totaled COP$282 billion (US$73 million), up 26% over 4Q 2020 but down 3% from 1Q 2020.
“During 1Q 2021, the investment, interest rate derivatives and repos portfolio generated COP$273 billion [US$71 million], which is 193.8% higher than the value generated in 1Q 2020, mainly explained by the derivatives book performance during the quarter,” according to Bancolombia.
“Despite an adverse scenario in the capital markets, investments leveraged by derivatives obtained significant income with low capital consumption,” the company added.
Annualized net interest margin increased to 5.1% during 1Q 2021, “explained by the execution of strategies on the derivatives portfolio, offsetting the negative results of the public and private debt books, as a result of the devaluation in fixed income globally,” according to Bancolombia.
“The annualized net interest margin of the loan portfolio was 5.7%, increasing when compared to the one reported in 4Q 2020. This quarterly variation is mainly due to the impact on the valuation of the loan portfolio that was previously under credit reliefs,” the company added.
Loan provision charges for the latest quarter totaled COP$1.3 trillion (US$337 million), down 7.2% year-on-year, while the coverage ratio for 90-day past due loans was 221.8%. Such provisions are “largely explained by the deterioration in customer credit ratings due to Covid-19 in our expected losses models,” according to Bancolombia.
Capital solvency ratio ended at 14.8%, “well above the minimum regulatory levels required in Colombia,” according to the company.
As of March 31, 2021, Bancolombia’s assets totaled COP$257 trillion (US$66/7 billion), up 0.7% compared to 4Q 2020 – “largely explained by the growth in the loan book and repos portfolio” — but down 6.7% compared to 1Q 2020, according to the company.
During the latest quarter, the Colombian peso (COP) depreciated 7.2% versus the U.S. dollar, but over the past 12 months, the COP had appreciated 9.3%. “The average exchange rate for 1Q 2021 was 3.6% lower than that of 4Q 2020,” the company added.
Total funding costs decreased during 1Q 2021, as “saving accounts and checking accounts have increased their share over the total funding mix during the last 12 twelve months. Saving accounts accounted for 35% as of 1Q 2020, while by 1Q 2021 they represent 41%,” according to Bancolombia.
“Checking accounts represented 14% as of 1Q 2020 and have increased to 16% as of 1Q 2021. The annualized average weighted cost of deposits was 1.57% in 1Q2021, decreasing by 25 basis points when compared to 4Q 2020 and by 99 basis points when compared to 1Q 2020,” the company added.
During 1Q 2021, “net fees and income from services totaled COP$799 billion [US$207 million], growing by 0.6% compared to 4Q 2020, and by 0.3% compared to 1Q 2020. The better performance in fees during the last quarter confirms a positive trend mainly due to the recovery in transaction levels, despite the seasonality of quarters,” according to Bancolombia.
“Fees from credit, debit cards and commercial establishments went down by 5.1% compared to 4Q 2020 and went up by 5.3% compared to 1Q 2020. Fees from asset management and trust services grew 4.4% compared to 4Q 2020 and 16.7% compared to 1Q 2020. Fees from our ‘bancassurance’ business decreased by 22.3% compared to 4Q 2020 and by 15.4% with respect to 1Q 2020,” the company added.
As of March 31, Bancolombia reported having 10.8 million digital accounts, of which 5.8 million are users in the “Nequi” electronic platform and the other 5 million in the “Bancolombia a la Mano” platform.