Banombia S.A.(CIB)2022-05-12 18:06Financial Data and Key Metrics Changes - The net income for the quarter was COP1.7 trillion, more than double the first quarter of 2021 [34] - Core equity closed at 10.6%, down from the previous quarter due to dividend payments [8] - Provision charges for the quarter were COP267 billion, resulting in a cost of risk of 0.5%, which is below expectations [23][34] Business Line Data and Key Metrics Changes - The loan book grew by 1% compared to the previous quarter, with a 3% growth when excluding foreign exchange impacts [14] - Net fees declined by 3% over the quarter but grew by 15% in the last 12 months [7][33] - The commercial loan portfolio grew by 2.4% compared to the previous quarter and 13% year-on-year [16] Market Data and Key Metrics Changes - The Colombian economy grew by 8.3% year-on-year from January to April 2022, driven by private demand and higher commodity prices [11] - Inflation increased from 5.6% at the end of 2021 to 9.3% year-on-year in April 2022 [12] - The Central Bank's interest rate is expected to close at 8.25% by year-end [7] Company Strategy and Development Direction - The company aims to grow its loan book by 9% to 11% for the year, with a cost-to-income ratio around 46% and ROE at 17% by year-end [35] - The company is focusing on expanding its digital payment ecosystem and has reached 11.5 million clients for its Nequi platform [9][20] - The company is committed to ESG goals, aiming to disburse COP500 trillion by 2030, with COP41 trillion targeted for 2022 [21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the results for the year despite uncertainties from the presidential elections and global geopolitical conflicts [35] - The company anticipates a gradual decline in inflation to around 7.6% by year-end [7] - Management expects a normalization of the cost of risk to around 1.5% in the future [60] Other Important Information - The company has received an upgrade to double A from MSCI, placing it in the leader category of the global banking system [21] - The company is experiencing strong growth in digital sales, with digital channels representing 85% of total transactions [17] Q&A Session Summary Question: Political landscape and presidential elections impact on the financial sector - Management noted that proposals from presidential candidate Petro are not radical and may involve strengthening public banks to serve underserved segments [38] Question: Loan growth and asset quality under high interest rates - Management indicated that loan growth remains healthy, with retail loans being the most affected by inflation, but guidance for growth remains between 9% and 11% [40] Question: Long-term ROE expectations - Management maintains a long-term ROE expectation of 15% to 17% based on improved loan mix and client acquisition [41] Question: Operating expenses and talent retention - Management confirmed that operating expenses are in line with forecasts and do not expect significant deviations from the 10% growth guidance for the year [44] Question: Asset quality and NII trends - Management expects a normalization of asset quality metrics and a gradual increase in the cost of risk to around 1.5% [50][60] Question: Sensitivity of margins to interest rates - Management indicated that margins are expected to remain elevated in 2022, with a potential slight compression in 2023 as interest rates normalize [75]