The most recent financial opinion survey (EOF) conducted by Fedesarrollo revealed that Bancolombia’s shares were among the most desired stocks in Colombia. According to 36.4% of interviewees, Bancolombia is the most attractive firm in Colombia, followed by Grupo Sura. After Colombia’s credit grade degradation and the departure of investors, the market has seen the arrival of 17,239 stockholders; since then, Bancolombia has won 1,973 of those. Andrés Moreno, financial and stock analyst, stated: “After the toughest moment in Colombia, the financial and banking system didn’t break. It’s not surprising that Bancolombia is one of the most desired firms, it is supported by its strong results…”
The underlying reason behind Bancolmbia’s recent success is its solid and consistent results - in this quarter, the firm confirmed its strength once again.
The company reported a net profit for the second quarter of 2021 of 1.2 trillion Colombian Pesos (COP), reflecting an improvement in its clients’ performance due to the support received by the bank during the pandemic. Net profit rose 113.2% compared to 1Q21 and had a significant comeback compared with the net loss presented in 2Q20.
On one hand, gross loans amounted to COP 204 trillion, which represents an increase of 3.3%; on the other hand, deposits grew 2.84%, both compared to the first quarter of 2021. During the last 12 months loans denominated in Colombian pesos grew 3.8% and, in comparison to 2Q20, gross loans rose 1.7%.
Provision charges for 2Q21 were COP 626 trillion and the coverage ratio for 90-day past-due loans was 227.4%, representing a decrease of 74.3% compared to the same period last year and 51.1% compared to the first semester of 2021. This reduction reflects a better economic perspective in the models for 2021, a better performance from the firm’s clients, and an adjustment in the provisioning methodologies for the portfolio under credit reliefs.
The company obtained an efficiency ratio of 50.4% for the last 12 months. Operating expenses in the first six months of the year rose 2.2% compared to the first semester of 2020. For this quarter, operating expenses increased 13.7% in comparison to the same period last year, and showed an increase of 4.4% compared to 1Q21.
Under Basel lll (international regulatory framework), Tier 1 capital reached 11.5% as of June 30, 2021, an increase of 30 basis points compared to the end of March of 2021. The solvency ratio concluded at 15.0%; the firm states that this leverage ratio is adequate considering the balance sheet risks and asset growth expectation.
Bancolombia showed an improvement not only in its income statement but also in its balance sheet.
As of June 30, 2021, Bancolombia’s assets were COP 265,484 billion, which represents an increase of 3.2% compared to the previous quarter, and a decrease of 0.8% in contrast with 2Q20. Bancolombia disclosed that the expansion in its assets is due to the growth in its loan book and in its financial assets.
At the end of June, Banco Agricola operations in El Salvador. Banistmo in Panama constituted 27% of total gross loans. In addition, gross loans denominated in currencies other than Colombian Pesos represented 34.0% of the loan portfolio.
In the second quarter of 2021, Bancolombia`s net investment portfolio amounted to COP 28,812 billion, translating in an increase of 5.0% compared to the first quarter of the year and 14.2% against 2Q20. Debt security portfolio had a duration of 20.1 months and a weighted average yield of 4.6%.
These stout results are also denoted in the shareholders’ equity, reaching COP 29,005 billion and hence an increase of 5.0% compared to the first quarter of 2021 and by 9.6% set against 2Q20.
Annualized net interest margin experienced a decreased steadying at 5.0% and the annualized net interest margin for investments was 0.5%. This reduction is explained by the lower allocation of resources in foreign currency securities and their respective exchange rate restatement. The profitability of investments in fixed income assets and derivates also decreased, mostly explained by lower valuations in a scenario of expected changes in Colombian monetary policy over the coming months.
Bancolombia expects that the fiscal reform submitted in recent weeks will be approved during the second half of 2021. Moreover, it is expected that despite the tough scenario, economic activity will keep improving in 2021; therefore, the firm adjusted its FY 2021 GDP forecast to 8%.
The chief economist, Juan Pablo Espinosa, mentioned: “ We forecast GDP growth of 8% in 2021. This is due to both external and local factors. Global tailwinds include higher terms of trade and stronger demand for Colombian exports. Internally, monetary and fiscal policies are in expansionary territory and will remain there for a while. But more importantly, economic cadence has adapted to operate amid the unusual circumstances of the pandemic. “
