According to the International Monetary Fund, economic prospects are driven mostly by the access to vaccines. Vaccine access has split countries into two blocks: those that see activity normalization closer, and those that will still face resurgent infections and rising COVID death tolls.
In the second quarter of 2021, the global economy kept recovering from the pandemic and Colombia was not the exception. According to ECLAC forecasts, the Colombian economy is expected to grow more than 5% in 2021. The improvement in expectations is mostly driven by efficient vaccination in the country. As of August 1, more than 30 million vaccines had already been administrated and it is expected that herd immunity will have been achieved by the end of 3Q21.
As it can be seen, Colombia’s economy is recovering, and firms’ performances are improving as well. In this quarter, Grupo AVAL reported solid results.
In this quarter, the firm reported an attributable net income of 950 billion Colombian Pesos (COP). This figure not only represents an increase of 20% compared to 1Q21 but is also the best figure ever recorded for a quarter. In the same way, these results show that net income is recovering at a rapid pace, being almost 3 times higher than that of 2Q20.
For the first two quarters, attributable net income reached COP 1.74 trillion, translating into an advance of 70.1% in comparison to the same period last year.
As it is expected, other concepts also experienced a recovery from last year. Net income from commissions and fees during the second quarter of 2021 rose 19.2% vis-á-vis the second quarter of 2020. However, it decreased by 3% in comparison to the previous quarter this year; the reduction is mainly due to the impact of the political demonstrations presented during the second quarter of 2021. Regarding the accumulated concept 6M, it presented an advance, increasing by 8.7% set against the same period last year.
Another relevant concept was the income derived from non-financial sector investments - it presented a significant growth of 22% in comparison to the same period last year. If the comparison is between semesters, the concept presented an advance too, increasing by 60%.
Regarding total loans, the concept increased about 6% during the first semester, probably because Colombia’s Central Bank maintained a low interest rate (1.75%). Even though interest rates were low, deposits increased as well, rising by 6.4% compared to the prior-year quarter.
As of June 30, total assets ended up at COP 344.5 trillion, growing by 3.4% compared to the same month last year and 2.2% versus March 31, 2021. The increase was mainly driven by a 25.8% YOY growth for investment securities, a 20.0% yearly growth in other assets, and a 1% year-over-year growth in total loans.
Like total assets, liabilities also increased. As of June 30, total liabilities amounted to COP 307.3 trillion, increasing by 2.8% in comparison to the same period last year.
The group also presented an improvement in its financial ratios.
The return on average equity ratio (ROAE) totaled 18.2%, increasing by 2.8 percentage points compared to the previous quarter this year. Moreover, this ratio presented a terrific recovery, passing from 6.6% in 2Q20 to 18.2% in 2Q21. Cumulative ROAE for the first half of the year ended up at 16.7%.
On the other hand, the return on average assets ratio (ROAA) went from 1.8% in the first quarter to 2.0%. It also experienced a significant advance over the same quarter last year, where ended up at 0.8%. Cumulative ROAA closed at 1.9% in the first semester of 2021.
The cost of risk ratio closed at 2.1% for the first two quarters of the year, presenting a decrease of 60 basis points in comparison to the first semester of 2020.
Finally, Aval’s regulatory capital Tier 1 ratio rose between 130 and 310 basis points in the last twelve months.
