Medellin-based international banking giant Bancolombia announced May 10 that its first quarter (1Q) 2023 net income dipped almost 1% year-on-year, to COP$1.7 trillion (US$369 million).

“Annualized return on equity (ROE) at the consolidated level was 17.7% for the latest quarter and 19.0% for the last twelve months,” according to the company.

“Gross loans amount to COP$267 trillion [US$58 billion], decreasing 1.0% compared to the last quarter of 2022. It is important to highlight the 3.4% appreciation of the Colombian Peso against the U.S. dollar that impacted the loan balance.

“The operation in Colombia and Banistmo in Panama were the main contributors for the credit portfolio contraction on a consolidated basis,” the company added.

Total provision charges on past-due loans for 1Q 2023 were COP$2.046 trillion (US$444 million), up 17.5% when compared to 4Q 2022, “led by credit deterioration mainly in the consumer portfolio,” according to Bancolombia.

“Basic solvency stood at 9.75% and the total consolidated solvency ratio was 12.01% for 1Q 2023, complying with the minimum regulatory requirements,” the company added.

As for its digital banking strategy, “Bancolombia maintains an encouraging growth trend. As of March 2023, the bank has 7.8 million active digital customers in the retail APP (over a period of three months), as well as 22.2 million accounts in its financial inclusion platforms (6.6 million users in ‘Bancolombia a la Mano’ and 15.6 million in ‘Nequi’),” according to the company.

As of March 31, 2023, Bancolombia's consolidated assets totaled COP$349 trillion (US$75.7 billion), down1.0% versus 4Q 20 but up 19.9% compared to 1Q 2022.

“The variation in total assets during the last year is largely explained by loan book growth,” according to the company

“During the latest quarter, the peso appreciated 3.4% against the U.S. dollar and depreciated 23.7% in the last 12 months. The average exchange rate was 11.8% higher in 1Q 2023 versus 4Q 2022, and 21.6% higher in the last 12 months,” the company added.

“In 1Q 2023, gross loans declined 1.0% compared to 4Q 2022 (increasing 0.3% when excluding the foreign-exchange effect) and rose 20.1% compared to 1Q 2022. During the last 12 months peso-denominated loans grew 14.0% and the dollar-denominated loans (expressed in U.S. dollars) grew 7.0%.

“At the end of 1Q 2023, Banco Agricola operations in El Salvador, Banistmo in Panama and BAM in Guatemala represented 28.7% of total gross loans. Gross loans denominated in currencies other than COP -- generated by operations in Central America, the international operation of Bancolombia Panamá, Puerto Rico and the U.S. dollar-denominated loans in Colombia -- accounted for 36.7% of the portfolio, and decreased 0.9% in the quarter (when expressed in COP).

“Total reserves (provisions in the balance sheet) for loan losses increased 6.7% during the quarter and totaled COP$16.513 trillion [US$3.58 billion] or 6.2% of the gross loans at the end of the quarter.

“During 1Q 2023, for the first time since 2020, the credit portfolio experienced a quarterly contraction. Such decrease is partially explained by the Colombian peso appreciation that impacted the balance on foreign subsidiaries.

“The largest decrease took place in the commercial portfolio both in absolute value and in percentage change (-1.2%).

“In consumer lending, the loan reduction was led by Bancolombia S.A. in line with the strong pick-up in interest rates and the lower credit demand, which was reflected in the decline of personal loans and credit card balances,” the company added.