• Net Income for Q4 2024: COP1.7 trillion, reflecting an 11% increase.
• Net Income for 2024: COP6.3 trillion, a 2.5% increase.
• Return on Equity (ROE) for Q4 2024: 15.7%.
• Return on Equity (ROE) for 2024: 15.8%.
• Net Interest Margin for Q4 2024: 6.4%.
• Net Interest Margin for 2024: 6.8%.
• Cost of Risk for Q4 2024: 1.35%.
• Cost of Risk for 2024: 2.1%.
• Operating Expense Increase for 2024: 5.3%.
• Dividend Proposed for 2024: COP3.8 trillion, a 10.3% increase.
• Loan Portfolio Growth for 2024: 10% increase.
• Deposit Growth for 2024: 13% increase.
• Effective Tax Rate for 2024: 28%.
• Shareholders' Equity Growth for 2024: 14.3% increase.
• Core Equity Tier One Ratio: 11.89%.

• Warning! GuruFocus has detected 2 Warning Sign with CIB.

Release Date: February 20, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• BanColombia SA (NYSE:CIB) reported a net income of COP1.7 trillion for the quarter, reflecting an 11% increase due to resumed loan growth and reduced provision expenses.
• The return on equity for the quarter increased to 15.7%, with a net income for the year reaching COP6.3 trillion, boosting shareholders' equity by 14.3%.
• The company announced a proposed dividend of approximately COP3.8 trillion, representing a 10.3% year-over-year increase, with a payout ratio of 60%.
• BanColombia SA (NYSE:CIB) holds a strong market position in Colombia, leading in commercial and consumer loan segments and holding over 25% of total deposits in the country.
• The company is making significant progress in establishing Gruppo C, a new holding company, with approvals from Central American regulators and ongoing processes with the Colombian regulator.

Negative Points

• Net interest income from loans and financial leases decreased by 2.5% during the quarter and 4.1% during the year due to monetary policy pressures.
• Banistmo's net income dropped 56%, resulting in a 4.5% ROE for the year due to lower net interest income and higher provision expenses.
• Operating expenses increased 13.4% compared to the previous quarter, driven by higher IT, cybersecurity, and marketing expenses.
• The cost to income ratio increased to 49% compared to 45% the previous year, due to lower operating income growth and limited expense dilution.
• The effective tax rate for the year was 28%, higher than the 24% recorded in 2023, due to the higher contribution of the Colombian operation to the group's consolidated net income.

Q & A Highlights

Q: Can you explain how the new holding structure will impact capital management and the potential for a buyback program? A: Juan Carlos Mora Uribe, CEO: The new holding structure allows us to manage capital more efficiently, assigning the right capital for different operations without being subject to the same requirements as the banks. This optimization will enable better returns on equity. Regarding the buyback program, the current market valuation will not alter our plans. Once the structure is in place, we will propose a buyback program to the shareholders. Rodrigo Prieto Uribe, VP of Risk Management, added that the target capital levels for each bank will remain the same, and the excess capital will flow to the holding company, allowing for dividend distribution and buyback programs depending on market conditions.

Q: Why is the loan growth guidance for 2025 lower than Colombia's nominal GDP growth, and what are the plans for Nequi's profitability? A: Juan Carlos Mora Uribe, CEO: We are cautious with loan growth, balancing risk appetite with current conditions. We expect GDP growth of around 2.6% in real terms, with loan growth at 5.2%. We are focusing on quality over quantity. Regarding Nequi, it continues to perform well with close to 22 million customers, and we expect it to reach profitability by early 2026. The focus is on growing the loan book and income from various fees.

Q: Can you provide more details on Nequi's income sources and the performance in Panama? A: Juan Carlos Mora Uribe, CEO: Nequi's income comes from diverse sources, including transportation, insurance, remittances, and fees. The main future income will be from interest on loans. Regarding Panama, Mauricio Botero Wolff, VP of Strategy and Finance, noted that Banistmo's ROE was 4% in 2024, but efforts are underway to improve operational efficiency and competitiveness to achieve double-digit ROE.

Q: Why is the dividend being paid in one installment this year, and how will information be disclosed after the creation of the new holding company? A: Juan Carlos Mora Uribe, CEO: The dividend is paid in one installment due to the transition to a new corporate structure. Bancolombia will evolve into a commercial bank, and a new holding company will be created. Rodrigo Prieto Uribe, VP of Risk Management, added that future dividends will return to quarterly installments. The new structure will provide more transparency, with separate reporting for each operation, allowing for better valuation.

Q: What is the rationale behind the 60% payout ratio, and is it a temporary measure? A: Rodrigo Prieto Uribe, VP of Risk Management: The 60% payout ratio is not a fixed percentage of net income but is based on capital levels of operating companies. Excess capital will flow to the holding company, allowing for dividend distribution. Ordinary dividends are expected to grow slightly in real terms, while the buyback program will depend on market conditions and capital levels.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.