Business 653
Grupo Sura 2Q 2021 Profits Jump 43% Year-on-Year
Saturday, 14 August 2021 17:52 Written by Roberto Peckham
Medellin-based multinational insurance, finance and health-care giant Grupo Sura announced August 12 that its second quarter (2Q) net income jumped 43% year-on-year, to COP$461 billion (US$120 million).
Revenues likewise rose 15% year-on-year, to COP$6.1 trillion (US$1.58 billion), according to the company.
As for first half (1H) 2021, net income is up a whopping 174% year-on-year, to COP$672 billion (US$175 million), from COP$245 billion (US$63 million) in 1H 2020, according to the company
The profit surges are “due to a faster-than-expected recovery of the group’s different businesses, with Sura Asset Management (Sura AM) recording improved operating revenues, associates scoring higher net income figures along with a firm control over operating expense,” according to the company.
“Thanks to positive levels of business performance, written premiums posted a growth of 10.2% with fee and commission income securing another growth of 16%. Likewise, the increase in revenues obtained via the equity method was driven by higher net income figures posted by [stock holdings in] Bancolombia, Grupo Argos and Protección,” the company added.
Total costs and expenses rose by 13.2% for 1H 2021 and 20.4% for 2Q 2021, “mainly due to the continued impact of the pandemic on [health insurer] Suramericana, including Covid-19-related costs and expense amounting to COP$1.1 trillion [US$286 million] on a year-to-date basis and COP$686 billion [US$178 million] for the second quarter,” according to the company.
During the latest quarter, “Grupo Sura continued to execute the share buyback program, reaching a total of COP$30 billion [US7.8$ million] to date where 86% corresponds to common shares and 14% are preferred shares. The company will continue buying back shares as a measure that we perceive as an efficient capital allocation which creates value for both the company and our shareholders,” the company added.
The Suramericana insurance division saw written premiums rise by 10.8% through 1H 2021, “driven by the health care and life insurance segments with individual increases of 34.9% and 11.7% respectively,” according to the company.
“On the other hand, retained claims rose by 26.7% due to the effect of the pandemic, with Covid-19 claims accounting for a total of COP$1.1 trillion [US$286 million], compared to COP$236 billion [US$61 million] at the end of the first half of 2020, when infection curves were still at an early stage,” according to the company.
“These higher claims rate was partially mitigated by lower fees and commissions paid, which showed a decline of 10.7%, along with greater efficiencies that kept the growth in administrative expense to just 0.6%.
“Investment income decreased by 21.3%, mainly due to the prevailing increases in interest rates that in turn affected securities that are value at mark-to-market. In the light of this, the [Suramericana division] recorded a net loss of COP$750 million [US$195 million] on a year-to-date basis.
“However, Suramericana reported a net income of COP$9.8 billion [US$2.5 million] for the second quarter 2021, also impacted by Covid claims given higher infection curves, mainly in Colombia, as well as by lower investment income,” the company added.
As for Sura Asset Management results, “operating revenues reached COP$1.4 trillion [US$364 million] so far this year, with growths of 21.1% in pesos and 15.5% in local currencies.
“This positive level of performance was mainly due to a 15.2% increase in fee and commission income, improved revenues obtained via the equity method, mainly from [pension-fund administrator] Proteccion, which came to COP$68 billion [US$17.7 million], coupled with better returns from its reserve requirements.
“Likewise, Sura Asset Management continued with a firm control over spending, which, in addition to higher revenues, produced a net income of COP$305 billion [US$79 million] at the end of 2Q 2021, this representing a growth of 154% compared to the same period last year.
“Furthermore, good levels of performance on the part of its Investment Management and Inversiones Sura divisions continued during this past quarter producing positive levels of operating earnings,” the company added.
Update: Ecopetrol Completes US$3.67 Billion Buyout of ISA Shares; Profits Also Improve
Saturday, 14 August 2021 12:22 Written by Roberto Peckham
Colombia President Ivan Duque announced August 20 that Colombia's mostly stated-owned Ecopetrol oil company has just paid US$3.67 billion to finalize the acquisition of 51.4% of the shares of Medellin-based multinational electric-power transmission giant, ISA.
That 51.4% block of ISA stock had been held by Colombia’s Finance Ministry. Hence Ecopetrol’s buyout deal helps Colombia’s national government recoup part of the massive debt it incurred in order to subsidize mainly poor and working-class populations suffering from the Covid-19 pandemic over the past 18 months and beyond.
The US$3.67 billion buyout follows a US$4 billion credit agreement between Ecopetrol and four multinational banks: Banco Santander S.A., Citibank N.A., JPMorgan Chase Bank N.A. and The Bank of Nova Scotia, each with a 25% interest in the loan deal, according to Ecopetrol.
“The main financing conditions are: (i) 100% capital payment upon maturity within a period of two years from the contract signing date; (ii) an interest rate of Libor USD (3M) + 80 basis points and (iii) an initial aggregate commission of 30 basis points," according to Ecopetrol.
“With the [loan] authorization resolution obtained from the Ministry of Finance, the company has complied with all the procedures and internal and external approvals required for the execution of the credit agreement. The conditions obtained confirm the confidence of the financial sector in the financial soundness of the Ecopetrol Group and its future prospects with this acquisition,” Ecopetrol added.
Reacting to the buyout deal, ISA on August 13 issued this statement:
“At a press conference chaired by the Ministers of Finance, Mines and Energy and the Ecopetrol’s CEO, it was emphasized that the [proposed share buyout] strengthens the capabilities of both companies in view of the future challenges of energy transition and sustainability, opening the possibility of achieving synergies, enhancing innovation and the adoption of new technologies. It was also highlighted the importance that the two companies will continue to belong to the Colombian people.
“During the conference, Ecopetrol emphasized that ‘ISA will continue to be ISA’ and reiterated that ISA’s strategy will be respected . . .
“In addition, ISA, as a company that belongs to all Colombians, is committed to the energy future of the country and the leadership of Colombia in Latin America . . .
“Once the Ministry of Finance notifies ISA of the closing of the transaction, it will be made public in a timely manner,” ISA added.
ISA 2Q 2021 Profits Rise
On a related front, ISA announced August 13 that its second quarter (2Q) 2021 net income rose 6.4% year-on-year, to COP$586 billion (US$152 million).
Operating revenues rose 6% year-on-year, to COP$2.8 trillion (US$729 million), while earnings before interest, taxes, depreciation and amortization (EBITDA) rose 3.2%, to COP$1.9 trillion (US$494 million).
Assets rose 15.9%, to COP$62.6 trillion (US$16.3 billion), while 2Q 2021 investments totaled COP$770.6 billion (US$200.5 million), according to the company. Consolidated financial debt rose 16%, to COP$26.4 trillion (US$6.87 billion).
As for first half (1H) 2021 results, ISA’s net income rose 17.8%, to COP$11 trillion (US$2.86 billion), with a net margin of 21%.
EBITDA for 1H 2021 rose 7.8% year-on-year, to COP$3.4 trillion (US$885 million), while EBITDA margin came-in at 65,6%.
During 1H 2021, ISA invested COP$2.7 trillion [US$702 million] in construction of electric power transmission lines as well as for highway construction projects in Chile and Colombia.
“The entry into operation of the 230/500kV ‘Interconexión Noroccidental’ project, a megaproject that runs through 36 municipalities in the departments of Antioquia, Córdoba, and Santander, allows to ensure the reliability of the National Transmission System. This project has the first 500kV gas-insulated substations and will generate annual revenues for approximately US$42 million,” according to ISA.
On another front, “ISA developed in Colombia a project to bring drinking water to thousands of families of the Wayúu community in La Guajira. The project is called Pilas Públicas Sararao, and it is the first ‘Works for Taxes’ project developed by our affiliate ISA Intercolombia, which joins those projects already delivered in previous years in Peru,” the company added.
Bancolombia 2Q 2021 Profits Dramatically Improve Year-on-Year
Saturday, 14 August 2021 09:42 Written by Roberto Peckham
Medellin-based multinational banking giant Bancolombia announced August 11 that its second quarter (2Q) 2021 net income rose to COP$1.2 trillion (US$312 million), up from a COP$73 billion (US$19 million)net loss in 2Q 2020.
“This profit represents a growth of 113% compared to 1Q 2021 and a significant recovery from the net loss presented in 2Q 2020,” according to Bancolombia.”
The corporate loan book rose 3.25% quarter-on-quarter, while deposits were up 2.82% net loan-provision charges dropped 51%.
Meanwhile, Bancolombia’s client base continues to grow at a 10% annual rate over the last five years, according to the company.
Thanks to investments in technology, “85% of total transactions are done through digital channels” rather than inside bank branches, according to the company.
“Despite a challenging context, the recovery in economic activity continued in 2Q 2021. Hence, we adjusted our fiscal 2021 GDP forecast [for Colombian economic growth] to 8%. We expect that the revised fiscal reform that the government submitted to Congress last month will be approved during this semester,” the company added.
While overall net income improved year-on-year, net interest income nevertheless dipped 1.9% year-on-year, to COP$2.84 trillion (US$739 million), according to the company.
In addition, “interest-rate derivatives and our repos portfolio generated COP$273 billion (US$71 million), 40.7% lower when compared to 1Q 2021,” according to Bancolombia.
Annualized net interest margin also dipped slightly, “due to the lower allocation of resources in foreign currency securities and their respective exchange rate restatement.
“Additionally, the profitability of investments in fixed income assets and their derivatives decreased, explained by lower valuations in a scenario of expected changes in Colombian monetary policy for the upcoming months,” the company added.
On the other hand, “total funding cost continues to show a better performance during 2Q 2021. Savings accounts and checking accounts have increased their share over the last 12 months. Savings accounts represented 36% in 2Q 2020, and 42% of total funding for 2Q 2021.
“The annualized average weighted cost of deposits was 1.45% in 2Q 2021, dropping 12 basis points compared to 1Q 2021 and 103 basis points compared to 2Q 2020,” according to Bancolombia.
Meanwhile, net fees and income from services totaled COP$807 billion (US$210 million), up 18% year-on-year.
“The better annual performance in fees is mainly due to higher volumes of transactions, denoting too the positive results on commission income for credit and debit cards and commercial establishments, payments and collections as well as banking services,” according to the company.
“Fees from credit, debit cards and commercial establishments went up by 2.1% compared to 1Q 2021 and by 33.4% compared to 2Q 2020,” while fees from asset management and trust services rose 16.8% compared to 2Q 2020.
Past-due loans (overdue more than 30 days) totaled COP$9 trillion (US$2.3 billion) at the end of 2Q 2021 and represented 4.6% of total gross loans, while charge-offs totaled COP$988 billion (US$257 million).
Coverage for past-due loans was 169% at the end of 2Q 2021, down from 171.7% at the end of 1Q 2021.
“Provision charges (net of recoveries) totaled COP$626 billion (US$163 million) in 2Q21. The provisions reduction during the quarter were mainly due to macroeconomic impacts considering a better outlook in the models for 2021 compared to previous estimates, to adjustments in the provisioning rules for the portfolio under credit reliefs and to a lower deterioration in retail and small-and-medium enterprise customers,” according to Bancolombia.
“Bancolombia maintains a strong balance sheet supported by an adequate level of loan loss reserves. Allowances (for the principal) for loan losses totaled COP$15 trillion [US$3.9 billion], or 7.7% of total loans at the end of 2Q 2021, decreasing when compared to 1Q 2021,” according to the company.
As of March 31, 2021, Bancolombia had 30,993 employees, 933 banking branches, 6,018 ATMs, had 21,876 banking agents and served more than 20 million customers, according to the company.
Fabricato 1H 2021 Net Income Moves to Black Year-on-Year
Thursday, 05 August 2021 09:17 Written by Roberto Peckham
Medellin-based textile giant Fabricato announced August 4 that its first-half (1H) 2021 net income moved into the black year-on-year, to a net COP$2.4 billion (US$614,000), versus a COP$19.4 billion (US$4.96 million) net loss in 1H 2020.
The 1H 2021 net profit “breaks the loss trend of the last five years,” according to the company. “We achieved the highest gross profit in the last seven years, equivalent to COP$33.7 billion [US$8.6 million].
“We obtained an operating profit of COP$17.2 billion [US$4.4 million]. The last time we reported a first-half operating profit was in 2016, at COP$4.0 billion [US$1.02 million],” the company added.
Earnings before interest, taxes, depreciation and amortization (EBITDA) for 1H 2021 skyrocketed by 1,164% year-on-year, to COP$23 billion (US$5.88 million), up from COP$1.8 billion (US$460,000) in 1H 2020.
In total, “96% of the result achieved at the EBITDA level corresponds to the textile operation, which contributed COP$22 billion [US$5.6 million],” Fabricato explained.
Post-pandemic textile demand “reactivated faster than expected, but the market was short on supply in terms of its inventory levels,” according to the company.
“Additionally, the supply of imported and contraband products -- very relevant in the [Colombian] textile market -- was diminished due to a global shortage and restrictions on the capacity of international freight transport logistics, a situation that persists to date and likely will not normalize in what remains of this year 2021.”
On the other hand, “Fabricato was not immune to the economic and operational damages generated by the national protests and roadblocks that caused delays and major effects on our supply chain including deliveries to our customers and large cost overruns that affected the financial results of the company, putting direct and indirect jobs at risk.”
Meanwhile, “a redefinition of the competitive map of textile companies in the Colombian market is emerging, which generates great opportunities for Fabricato to grow, to compete locally and internationally,” the company added.
‘La Haus’ Real Estate Venture Co-Founded by President Uribe’s Sons Nabs US$135 Million Funding from Investors Including Amazon’s Jeff Bezos
Monday, 02 August 2021 11:41 Written by Roberto Peckham
Colombia- and Mexico-based real estate search-and-development enabler La Haus announced July 29 that it has raised US$135 million from big international investors including Amazon.com founder Jeff Bezos as well as from “new-age” banker Gabriel Gilinski -- son of Colombian banker Jaime Gilinski, considered as Colombia’s second-richest person.
La Haus – with operations in Medellin, Bogota, Mexico City and Guadalajara (Mexico) – was founded by former Colombia President Alvaro Uribe’s two sons, Jerónimo Uribe and Tomás Uribe, along with La Haus president Rodrigo Sánchez-Ríos and chief technology officer Santiago Garcia, according to the company.
Jerónimo and Tomas Uribe met Sánchez-Ríos at Stanford University, and prior to launching La Haus, the Uribe brothers started and ran Jaguar Capital, a Colombian real estate development company that boasted of completing US$350 million worth of retail and residential projects, according to La Haus.
According to the corporate announcement, La Haus just nabbed US$50 million in Series B funding in a follow-on campaign co-led by Acrew Capital and Renegade Partners, paired with US$50 million in debt funding.
The latest round “brings the company’s total Series B funding to $135 million and cements the company’s leadership in Spanish-speaking Latin America,” according to La Haus.
“Funding expansion was driven by exponential growth in Mexico, where transactions grew almost 10 times from 2Q [second quarter] 2020 to 2Q 2021. La Haus expects to achieve more than US$1 billion in annualized gross sales by the end of the year 2021,” according to the company.
“Selling more than 500 homes per month, La Haus is the market leader in Spanish-speaking LatAm by an order of magnitude,” the company added.
Besides the new investments by Bezos and Gilinski, other new investors in the latest round include Endeavor Catalyst, Moore Strategic Ventures, Marc Benioff’s TIME Ventures, Rappi’s Simon Borrero and Medellin-based pop-rock music star Maluma, according to La Haus.
“New funding will be used to fuel geographic expansion and introduce financing solutions to help solve housing inequality. By the end of 2021, La Haus will be in every major metropolitan area in Mexico and Colombia,” the company added.
“The need for new housing in LatAm and other emerging markets is acute. The pace of building new homes is slow because small- and mid-sized developers-- those who build 80% of new homes in LatAm -- are cash constrained. Additionally, mortgages are largely unaffordable for consumers, with banks extending only a fraction of the credit to individuals compared to the U.S., and often at worse terms,” according to the company.
“With the new debt funding and its one-of-a-kind, proprietary data gleaned from thousands of real estate transactions, La Haus is now positioned to extend capital to developers and consumers more quickly, with much lower risk and at better terms,” the company added.
