Bancolombia Posts US$19 Million Net Loss for 2Q 2020 on Covid-19 Downturn
Medellin-based multinational banking giant Bancolombia on August 5 posted a second quarter (2Q) 2020 net loss of COP$73 billion (US$19 million), a huge reversal from a COP$936 billion (US$249 million) net profit in 2Q 2019.
“The current situation associated with Covid-19 has caused uncertainty and business disruption globally, therefore significant impacts are anticipated on the performance of the global economy and macroeconomic variables in the countries in which Bancolombia operates,” according to the company.
“As a result, the banking sector in general, including Bancolombia, is exposed to changes in its business performance and outlook. The bank is exposed to deterioration of the loan portfolio by impacts on customers and by the materialization of losses from operational risk,” the company added.
In the meantime, “Bancolombia has focused its efforts on maintaining business continuity, the safety of its employees, operating the network of channels in an efficient way and structuring payments plan for lines of credit of its customers. These actions have impacted more than 2.2 million clients with loans that amounted more than COP$69 trillion [US$18 billion] in Colombia.”
Corporate-wide gross loans grew 12.4% in 2Q 2020 versus 2Q 2019, while Colombian peso-denominated loans grew 9.6%.
“Deposits by customers reached COP$182 trillion [US$48 billion] during the quarter, increasing 24.8% in the last twelve months,” according to Bancolombia.
Net-loans-to-deposits ratio was 102.5% at the end of 2Q 2020, down from 104.0% at the end of 1Q 2020.
“Bancolombia’s funding strategy during the last months has been to maintain the average life and cost 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 stable margins,” according to the company.
At end of 2Q 2020, capital adequacy ratio was 12.6%, “above the minimum regulatory [level] in Colombia,” according to the company.
Meanwhile, “the digital footprint and banking penetration in Colombia strengthened. The [latest] quarter closed with 6.6 million digital accounts, 3.4 million ‘Bancolombia a la mano’ users and 3.2 million users in ‘Nequi.’”
Loan provision charges for the quarter were COP$2.4 trillion (US$638 million), up 76% from 1Q 2020 and up 198% year-on-year. Coverage ratio for 90-day past due loans was 208.3%.
“This level of provisions was explained by Covid-19 and the update of macroeconomic variables in our expected losses models,” according to Bancolombia.
During 2Q 2020, net fees and income from services totaled COP$683 billion (US$181 million), down 14.2% compared to 1Q 2020, and by 9.5% compared to 2Q 2019. “The performance in fees was due to lower volumes of transactions and the reduction in the cost of some services, both as a result of Covid-19 pandemic,” according to the company.
“Fees from credit and debit cards decreased by 19.5% compared to 1Q 2020 and by 12.9% compared to 2Q 2019. Fees from asset management and trust services decreased by 12.5% compared to 1Q 2020 and by 10% compared to 2Q 2019. Fees from our bancassurance business increased by 6.8% compared to 1Q 2020 and by 19.9% with respect to 2Q 2019,” the company added.