Medellin-based multinational banking giant Bancolombia announced November 2 that its third quarter (3Q) 2021 net income hit COP$943 billion (US$246 million), up 237% year-on-year.

Loan provision charges “decreased by 17.8% when compared to 2Q 2021 and by 69.4% when compared to 3Q 2020. This reduction is largely due to a better economic outlook in 2021, and to the fine-tuning in the provisioning models for the portfolio under credit reliefs,” according to the company.

As of September 30, 2021, Bancolombia's assets totaled COP$269 trillion (US$70 billion), up 1.6% year-on-year, “largely explained by the growth in the loan book,” according to the company.

“In 3Q 2021, gross loans grew 3.3% compared to 2Q 2021 and 5.8% compared to 3Q 2020. During the last 12 months, [Colombian] peso-denominated loans grew 7.5% and the dollar-denominated loans (expressed in US dollars) grew 4.2%.

“Gross loans denominated in currencies other than COP -- generated by operations in Central America, the international operation of Bancolombia Panamá, Puerto Rico and the US dollar-denominated loans in Colombia, accounted for 34.3% of the portfolio, and grew 4.2% in the quarter, when expressed in COP,” according to the company.

Meanwhile, “total reserves (provisions in the balance sheet) for loan losses decreased 0.9% during the quarter and totaled COP$16.69 trillion [US$4.3 billion] equivalent to 7.9% of the gross loans at the end of the quarter,” the company added.

At the end of 3Q 2021, Bancolombia's net investment portfolio totaled COP$26.8 trillion (US$6.98 billion), down 6.8% from the end of 2Q 2021 and 3.2% from the end of 3Q 2020.

“Bancolombia's consolidated solvency ratio under Basel III was 15.31% in 3Q 2021, while the basic capital ratio (Tier 1) was 11.76%. This leverage level is adequate considering the balance sheet risks and asset growth expectations,” the company added.

Net interest income totaled COP$2.9 trillion (US$756 million) in 3Q 2021, up 2.1% from 2Q 2021 and 4.9% above 3Q 2020.

“The total cost of funding extended its downward trend during 3Q 2021. Savings accounts and checking accounts continued to increase their share over the last 12 months. Savings accounts represented 36% in 3Q 2020, increasing to 42% of total funding by 3Q 2021.

“On the other hand, checking accounts represented 14% in 3Q 2020, rising to 16% of total funding in 3Q 2021. The annualized average weighted cost of deposits was 1.41% in 3Q 2021, falling 4 basis points compared to 2Q 2021 and 75 basis points compared to 3Q 2020,” the company added.

During 3Q 2021, net fees and income from services totaled COP$880 billion (US$229 million), up 9.1% compared to 2Q 2021, and up 15.2% compared to 3Q 2020, according to the company.

Loans overdue for more than 30 days totaled COP$9 trillion (US$2.3 billion) at the end of 3Q 2021, representing 4.4% of total gross loans, down from 4.6% in 2Q 2021

In the latest quarter, loan charge-offs totaled COP$854 billion (US$222 million). Coverage for loan losses was 167.2% at the end of 3Q 2021, down from 169.1% at the end of 2Q 2021.

“Provision charges (net of recoveries) totaled COP$514 billion [US$134 million] in 3Q 2021. The provision expense for the quarter is mostly related to the operation in Colombia.

“The gradual decrease [in bad-loan provisions] is associated with the macroeconomic impact and adjustments in the provisioning models relating to clients subject to credit reliefs, which jointly have caused a balance reduction from previous periods.

“Provisions as a percentage of the average gross loans were 1.0% annualized for 3Q 2021 and 2.2% for the last 12 months.

“Bancolombia maintains a strong balance sheet supported by an adequate level of loan loss reserves,” with allowances for loan principal totaling 7.4% of total loans at the end of 3Q 2021, “decreasing when compared to 2Q 2021,” the company added.