Q3 2022 Banco de Bogota SA Earnings Call Nov 30, 2022 (Thomson StreetEvents) — Edited Transcript of Banco de Bogota SA earnings conference call or presentation Tuesday, November 29, 2022 at 3:00:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Alejandro Augusto Figueroa Jaramillo Banco de Bogotá S.A. – President & CEO * German Salazar Castro Banco de Bogotá S.A. – CFO, Executive VP & VP of Strategy and Financial Planning * Javier Dorich Doig Banco de Bogotá S.A. – Head of Corporate Development & FP&A and IRO ================================================================================ Conference Call Participants ================================================================================ * Nicolas Alejandro Riva BofA Securities, Research Division – VP in Credit Research & Research Analyst ================================================================================ Presentation ——————————————————————————– Operator  ——————————————————————————– Welcome to the Third Quarter 2022 Banco de Bogota Consolidated Results Conference Call. My name is Hilda, and I will be your operator during this conference call. (Operator Instructions) Please note that this conference is being recorded. We now ask that you take the time to read the disclaimer included on Page 2. When applicable in this webcast, we refer to trillions as millions of millions and to billions as thousands of millions. Thank you for your attention. Mr. Alejandro Figueroa, CEO of Banco de Bogota, will be the host and speaker today. Mr. Figueroa, you may begin your conference. ——————————————————————————– Alejandro Augusto Figueroa Jaramillo, Banco de Bogotá S.A. – President & CEO  ——————————————————————————– Thank you. Good morning, ladies and gentlemen, and welcome to Banco de Bogota's Q3 2022 Earnings Call. Thank you all for joining us today. I will make a summary of our main results. Attributable net income for the quarter was COP 435 billion, resulting in profitability ratios at 1.3% for return on assets and 10.9% for return on equity. Total NIM increased 14 basis points to 4.5%, benefited by the recovery on investment NIM, which grew 146 basis points this quarter. Lending NIM partial asset of steady growth as higher average loan years were counterbalanced by increasing funds cost. We are seeing grand total COP 436 billion in the quarter, 8.4% higher than in Q2 as banking fees grew mainly via banking service at credit card. Fee income ratio stood at 25.1%, improving quarterly by 321 basis points. Cost to assets was 2.5%, in line with previous quarters. Regarding our balance sheet performance, I would like to start by referring to a steady loan growth of 14% year-to-year and 5.4% quarterly supported by our consumer and mortgage portfolio. Gross loan portfolio amounted to COP 92 trillion. Deposits reached COP 83 trillion, remaining our main funding source with a 73% share. Deposits to net loans ratio was close to 1x. Quarterly ratios evidenced consistent payment performance from our customers at 3.4% for the 90 days past due loan, decreasing 30 basis points. Annual net cost of risk at 1.4% is below our 1.6% guidance for 2022. Lastly, capital adequacy ratio quarterly increased 26 basis points, reaching 10% for the total Tier 1 and 13.1% for total solvency. Our guidance for 2022 is as follow. Loan growth is expected to be near 15%. Net interest margin target is expected around 4.5%. Net cost of risk is expected to be in the 1.6% area. Fee income ratios will be at around 21%. Cost-to-income ratio close to 46%. Regarding profitability, return on assets and return on equity will be in the 2.5% and 21% area. Guidance for 2023 will be provided later during the call. Now I will save the presentation over to German Salazar, Executive Vice President of the bank. ——————————————————————————– German Salazar Castro, Banco de Bogotá S.A. – CFO, Executive VP & VP of Strategy and Financial Planning  ——————————————————————————– Thank you, Alejandro, and good morning, everyone. On Slide 4, we present our digital strategy results for the quarter. I would like to highlight record sales achieved in several of our digital products resulting from our point-of-sale business strategy. We are currently widening our selling capabilities with an online tool that allows branches and call center advisers to sell digital products directly to customer's mobile or laptop, thus improving conversion and providing a real-time product acquisition experience. Starting with digital time deposits, we saw an outstanding quarterly growth of 110% in sales, reaching a historical COP 367 billion in balance, which represents an 848% year-on-year growth. Credit card and consumer loan sales also experienced a significant quarterly increase of 12% and 9% respectively. Digital insurance had a 25% overall growth versus Q2, proving success in our cross-selling strategies with credit cards. Nowadays, 56% of insurance sales come from credit cards and 22% from consumer loans. Annually, digital insurance products grew 73%. During the quarter, 215,000 new digital savings accounts were opened, representing a 12% quarterly increase, mainly in payroll accounts, 51% of them new accounts. We also improved conversion rates to 70%. Digital payroll loans grew 36% compared to the previous quarter. We are currently at a testing stage of our loan portfolio purchase solution for payroll savings account customers as well as the brand new smart pricing system for digital payrolls. Consequently, digital sales in Q3 reflected a strong pace with over 587,000 products sold digitally, achieving 4.7 million all-time digital products sold and COP 4.9 trillion. Digital sales reached an 81% share of the bank's overall product sales, representing a 15% quarterly sales growth. Furthermore, we kept strengthening our digital portfolio with new product optimizations launched this quarter and will start the massification processes in the short term. For example, used vehicle loans have been integrated to the capital ecosystem for a better customer experience. Regarding the digital microcredit, we have improved the experience, achieving a 30% share in microcredit sales. We also completed our first digital pilot for SME segment, achieving the first disbursements using a digital signature. Regarding digital channels and digital customers, let me highlight the following. Over 2 million active customers have our digital channels, representing a year-to-date growth of over 14%. Regarding digital adoption, we achieved a 67.4% level due to the increase of customers' use of web and mobile channels for product payments, cardless withdrawals and utility pays. Digital transactions grew to 15.4 million, representing a quarterly increase of 4% and an annual growth of 45%, illustrating transactional migration to our digital channels. We would like to highlight the development of some of our in-house mobile app features launched this quarter. The personal finance management tool, pin management for debit cards and the upgrade of our PSC interbank payment experience. The interbank platform transfer reached 1.6 million transactions during Q3, achieving a quarterly growth of 111%. During this quarter, over 449,000 users have transferred funds and over 63,000 users have received cash via Transfiya. We are also working closely with Grupo Aval to offer payment experiences in AvalPay Center, the multi-entity payment platform as well as the launch of a real-time cell-to-cell transfer solution for Grupo Aval customers. These achievements and our digital talent efforts allow Banco de Bogota's digital lab to be recognized as a case of success on the digital transformation. First, we participated in Grupo PRISA'S AI Forum, the first of its kind in Colombia. Also Forbes Colombia recognized Banco de Bogota as one of the top leading digital transformation institutions in the country. And last but not least, we were recognized as one of the Colombia's leading companies in the implementation of facial recognition in the Amazon Web Services for Latin American forum. Now turning to Slide 5. I would like to start by describing current global macroeconomic overview. The second half of the year has been challenging for the world economy and international markets. The change in the tone of monetary policy from the most important central banks towards a more aggressive stance, especially in the case of the Federal Reserve impacted the economic outlook, generated losses in risk assets and strengthened the dollar. The Federal Reserve recently confirmed that the cycle of interest rate adjustments could moderate in base after foreign adjustments of 75 basis points, but would extend longer over time. With this, the scenario of interest rates above 5% at the beginning of 2023 is now more likely. Given the above, rates in the treasury market continue to rise in the short term and fall in the long term, leading to the activation of the recession signal preferred by the Central Bank. Depending on the source, the probability of a recession in the United States is now higher than 60%. The International Monetary Fund projects a growth of 1% for the North American economy in 2023. In Europe, the situation is analogous with an increase in the probability of recession in the United Kingdom and the Eurozone. For 2023, the International Monetary Fund projects growth of 0.5% and 0.3% respectively. On the inflation side, the global result for October was close to 8% annually, with proportional impulses from the advanced and emerging economies. However, the moderation in the price of most commodities, particularly in food, the substantial improvement in supply chain disruptions and the lower growth dynamics should favor a modest correction in global inflation in the coming months. Indeed, several economies are beginning to show slight declines in the annual inflation metrics. On balance, 2023 will be a year which — in which global growth will continue to slow, inflation will improve marginally, but interest rates could still remain high, seeking to finally control price adjustments. Moving on to Slide 6. Let me summarize the local macroeconomic overview. Economic growth has moderated in the second semester as expected, but results continue to surprise positive, reaffirming the good moment of economic activity. GDP grew 7% annually in the third quarter, with service activities and industry remaining the most dynamic, while mining, agriculture and construction continued with a weak performance. The traction of the economy has led to repeated adjustments and projections by analysts, the Central Bank, rating agencies, the government and even the International Monetary Fund. Our economic research team adjusted its growth projection upwards to 8.3% and maintains the upward bias, recognizing the strong momentum that continues in most sectors. However, the statistical base effect and the re-composition of growth point to a slowdown in the economy in 2023 after 2 very good years of post-pandemic recovery. Our economic research team expects growth of 1.5% next year. Employment has also seen some good news in recent months closing the jobs gap caused by the pandemic. In September, the total number of employees consolidated above the pre-pandemic level, while the unemployed were the lowest since the end of 2019. However, the recovery continues to be asymmetric between activity and the labor market with a lag effect on the latter. At the end of September, unemployment fell to 10.7%. Inflation has also maintained upward trend in the third quarter. In October, headline inflation was 12.2%, which in levels not seen since 1999. Food prices continue to be under significant pressure with inflation above 26% per year. However, the pressures are increasingly generalized since almost 90% of the consumer basket of the CPI has inflation above 4%, which is the upper limit of the Central Bank's target range. Core inflation is also under pressure with a non-food metric at 9.2% at the beginning of the fourth quarter. The good performance of the economy and inflationary pressures have given way to new increases in the Central Bank's interest rate, but the magnitude of the increases has moderated. In September and October, the Central Bank decided to increase 100 basis points in each meeting, taking the rate to 11%. Our economic team projects a year-end rate of 12%. New increases or larger ones are not ruled out if inflationary pressures remain in the near future and the anchoring of expectations persist. The current account deficit stabilized in the second quarter, standing at 6.1% of GDP in the accumulated 12 months, a level not seen since 2015. Although the current account debt will remain high in 2022, our economic research team expected to moderate and close the year at 5.1% of GDP, which will be a correction of almost 0.5% compared to last year. On the trade balance, exports have benefited from high commodity prices, but momentum is contained by oil and coal production levels that have not fully recovered. In imports, the strong dynamics of the economy and high prices have led to record highs. Volatility and devaluation took hold in the exchange rate in the third quarter and the beginning of the fourth. The monetary policy adjustments of central banks around the world, including the Federal Reserve, the risk of recession in the main economies and the escalation of the geopolitical conflict in Europe have led to a strengthening of the dollar globally. In this context, the exchange rate has been trading between COP 4,500 and COP 5,100 during most of the quarter towards the end of September. The new government's tax reform was presented in Congress. That reform underwent several adjustments. The expected revenue from the reform was adjusted downwards from COP 25 trillion to an amount closer to COP 23 trillion. The changes include a surcharge for the oil and coal sector, a surcharge for the hydroelectric sector and an adjustment of the surcharge for the financial sector. In addition, adjustments were made to the wealth tax, while pension taxes were excluded. On the other hand, tax collections has surprised positively in the year and the good performance of tax revenues have given way to a valued addition for 2023 that focuses on investment and the early completion of public debt options in 2022. Our economic research team considers that the good news in the economy and tax collection will lead to a lower fiscal deficit in 2022 of 5.3% of GDP. Now I will hand over the presentation to our Head of Corporate Development, Financial Planning and Investor Relations, Mr. Javier Doig, who will provide details on our financial results for the quarter. ——————————————————————————– Javier Dorich Doig, Banco de Bogotá S.A. – Head of Corporate Development & FP&A and IRO  ——————————————————————————– Thank you, German, and good morning all. Beginning on Slide 7, we present our consolidated asset structure. Q3 2022 consolidated assets totaled COP 134.1 trillion, presenting a quarterly 2.8% increase or 1.1% when excluding the 10.6% Colombian peso devaluation in the same period. Asset structure is led by the net loan portfolio with 65.2% of consolidated assets, followed by other assets with 13.7%. Investment portfolios in fixed income and equity represent 10.7% and 10.5% of total assets respectively, increasing 7.4% and 4.6% in the quarter. Equity investments mainly include our participation, BHI, Corficolombiana and Porvenir. The gross loan portfolio closed at COP 92.2 trillion in Q3 2022, increasing 5.4% in the quarter and 3.5% when excluding FX fluctuations. Loan mix continues to reflect our strategy to rebalance composition towards higher retail segment participation with the commercial book explaining 65.5% of the loan portfolio with an annual reduction in participation of 1.7%. Conversely, consumer and mortgage segment's participation increased to 22.6% and 11.7% respectively. Mortgage portfolio grew 10.2% in the quarter or 6.4% if isolating by FX depreciation, led by a quarterly increase of 8.8% in the Colombian portfolio, still reflecting positive market dynamics in Q3. In Panama, MFG's mortgage portfolio increased 2% in dollar terms during the quarter. Consumer loans increased 6.8% in the quarter and 4.8% excluding FX. This is the result of our strategy to rebalance composition, reflecting a greater use of credit cards, personal and auto loans. In Panama, growth in this segment was 0.2% in the quarter. Commercial portfolio increased 4.2% in the quarter and 2.5% excluding FX. Colombia increased 3.4% quarterly as we continue to support our enterprise banking customers under working capital needs. Loan quarterly performance is on track in order to reach our full year guidance closer to 15%. For 2023, a moderation on loan growth is expected to around 12.5% due to lower GDP growth, higher average interest rates and a less dynamic economic outlook, both locally and globally. Moving on to Slide 8. We present loan quality ratios. Starting with delinquency ratios, 30 days PDL quarterly performance reflects stability at 4.6%. 90 days PDL ratio at 3.4% shows a 6 basis points improvement due to Multibank's portfolio, where this ratio decreased 22 basis points, whilst Colombian ratios remained stable. On the top right, annualized net cost of risk at 1.4% presents a 12 basis point provision expense increase, mainly from Multibank due to the adjustment in provisions, especially in the commercial portfolio, looking to normalize provision expense to the post-relief reality. It is worth highlighting that in Q2, Multibank's net cost of risk was particularly low at 0.8%, because in June, when the government's loan relief program ended, some precautionary reserves were reversed. Regarding the charge-off ratio, there is a quarterly increase to 0.6x, explained by higher charge-offs in Multibank reflecting post-pandemic effects given that release ended in June 2022. Finally, coverage ratios continue to show stability. Our annual guidance for cost of risk is 1.6%. For 2023, we expect this ratio to come below 1.5%. On Slide 9, we present loan portfolio quality ratios broken down between Colombia and Panama. Delinquency ratios have shown stability on both 30- and 90-day PDLs, standing at 4.9% and 3.8% respectively. This confirms continuance in payment performance behavior as well as the effectiveness of recovery strategies. Annualized net cost of risk ratio decreased 8 basis points to 1.3%, mainly as a result of higher recoveries during the quarter. The ratio of annualized charge-offs to 90-day PDLs decreased to 0.51x, continuing to exceed portfolio normalization supported by a 15% charge of contraction. Charge-offs represent 1.9% of average loans. Coverage ratios over 30 and 90 days PDLs have remained relatively stable through the quarter. In Panama, the 90 days PDL ratio decreased 22 basis points driven by the consumer portfolio where a higher level of charge-offs was performed this quarter, as we have previously mentioned. Net cost of risk grew 102 basis points given the provision expense in the commercial and consumer segments increased as they experienced higher roles. Regarding the mortgage portfolio, provisions decreased by 150 basis points, explained by an adjustment to comply with Colombian accounting. As we have mentioned, charge-offs in Multibank are still adjusting after the end of release for commercial and consumer portfolios. Coverage ratios in our Panamanian portfolio remained relatively stable. It is important to mention that coverage ratios in Panama are relatively low due to the high collateral value on credit exposures. To close the loan portfolio quality section, please refer to Slide 10 for a breakdown by segments. Starting with the commercial portfolio, 30-day PDLs improved 15 basis points quarterly to 4.4%, continuing its positive trend. 90-days PDLs remained stable at 3.8% as this portfolio has normalized. Regarding consumer loans, 30-day and 90-day PDLs metrics decreased 12 and 15 basis points in the quarter respectively, to 5.1% and 2.5%, continuing to show positive payment performance. Mortgage loans quality at 30 days high was 4.6% for Q3 2022, 22 basis points lower than Q2 level. 90-days PDLs also decreased 14 basis points to 2.8%. Continuing with consolidated funding on Slide 11, we present our liability structure. Total funding reached COP 114.5 trillion, increasing 9.1% and 2.7% in annual and quarterly terms. Excluding the FX effect, growth was 0.9% in the quarter. Deposits continue to be our main source of funds, representing 73% of total funding, followed by banks and others with 14%, long-term bonds with 10.8% and interbank borrowings with 2.3%. Deposits totaled COP 83.6 trillion, growing 6.7% annually and slightly decreasing quarterly by 1%. We have evidenced normalization in deposits in the latest months. In terms of deposit composition, time deposits continued to lead with 45.1% of the mix, while saving accounts represented 35.3% and checking accounts decreased their participation to 19%. Deposits to net loans ratio was 0.96x in Q3 2022 following our target of being close to 1x ratio. Turning to Slide 12. Our equity and solvency levels are presented. Total equity for Q3 2022 was COP 16.3 trillion, increasing 3.8% quarterly, mainly explained by a net income that offset market volatility impacts on the OCI account. Consequently, our tangible common equity increased to COP 14.9 trillion, representing a 3.8% quarterly growth, explained by the aforementioned increase in attributable equity. Tangible capital ratio in Q3 was 11.3% and total equity represents 12.2% of total assets. In Q3, total solvency ratio was 13.1%, with a Tier 1 ratio of 10.1%. I will proceed to explain the main movements. Starting with CET1, during the quarter, we observed a COP 584 billion increase mainly due to: first, a lower capital investment reduction of COP 487 billion, primarily related to Porvenir's stabilization reserve according to regulation from September '22 on the base of deduction decreases positively impacting Tier 1 and total solvency ratios by 83 basis points. This was partially offset by 30 basis points by a higher deduction of VHIs consolidated capital due to the increase resulting from the COP 439 devaluation in this quarter. Second, quarterly net income of COP 435 billion. Regarding Tier 2, our dollar-denominated subordinated bonds contributed 3 basis points for each COP 100 in the valuation. Continuing with our P&L metrics on Slide 13, we present NIM performance. Net interest income stood at COP 1.2 trillion, increasing 8.2% quarterly or 6.9% when excluding FX. Core income benefited from higher lending interest rates, mainly due to the repricing of our variable rate assets. In Q3 '22, total NIM came in at 4.5%, 14 basis points higher than the previous quarter, supported by 146 basis points growth in investment NIM to 0.1%. Colombia contributed 217 basis points, mainly due to higher positions in sovereign debt securities among ours. Lending NIM was 5.3%, decreasing quarterly by 10 basis points due to a reduction of 32 basis percentage points in Colombia given higher interest expense for time deposits and for saving accounts. Conversely, Multibank's NIM contributed 97 basis points via the commercial loan book. Our NIM expectation is around 4.5% for 2022. And for 2023, NIM should be close to 4.4%. Moving to Slide 14, we present details on fees and other income. Gross fee income for Q3 2022 was COP 436 billion, increasing 8.4% quarterly and 7.5%, excluding FX, resulting in an improved fee income ratio of 25.1%. Total banking fees represented 82.9% of our consolidated fee income, while fiduciary activities and other fees accounted for 9.4% and 7.7% respectively. We have continued to observe positive results in banking services and credit card fees, while insurance fees have also grown in line with an enhanced consumer portfolio. Moving to our other operating income, it reached COP 134.6 billion in the quarter. In Q3 2022, a COP 660 billion gain on derivative instruments for drilling partially offset a net loss in derivatives and foreign exchange instruments caused by the devaluation of the Colombian peso. Valuation of the trading portfolio was impacted by market volatilities and interest rate increases, which led to a net loss of COP 28.2 billion in the quarter. Other income increased to COP 3.4 billion. Equity method and dividend income for the quarter was COP 190.3 billion, reflecting a decline mainly from BHI as a result of the Costa Rican colon appreciation and increased internal losses following the end of release in Panama, which negatively impacted U.S. dollar-denominated results. Depreciation of the average Corfi exchange rate over the quarter partially offset this performance. Additionally, equity method in Q2 included Corficolombiana's extraordinary income from (inaudible). Fee income ratio target is north of 21% in 2022 and 23% in 2023. On Slide 15, we present our efficiency ratios. Cost to assets ratio slightly increased 6 basis points over the quarter and remained flat in comparison to a year earlier at 2.5%. Cost-to-income ratio reached 49.4%, explained by marketing and IT expense in line with our digital and sustainability strategies as well as higher taxes. Operational expense totaled COP 828.5 billion, increasing 5.4% quarterly when excluding FX. Meanwhile, total income decreased 6.4% for the same period, mainly due to equity method. We expect cost-to-income ratio to be around 46% in 2022, in 2023 close to 49%, close to Q3 2022 and in line with our historical average. Finally, on Slide 16, we present our profitability ratios. Attributable net income for the quarter was COP 435 billion, built up from quarterly growth in net interest income and net fee income of 6.9% and 6.3% respectively. These were counterbalanced by higher total expenses and taxes, which grew 5.4% and 14.5% respectively. Our ROAA and ROAE for the quarter was 1.3% and 10.9% respectively. Before moving on to the Q&A session, I'd like to summarize our general guidance for 2022 first. Loan growth is expected to be near 15%. Net interest margin target is expected around 4.5%. Net cost of risk is expected in the 1.6% area. Fee income ratio should come in at 21%. Cost-to-income ratio are around 46%. ROAA and ROAE should be in the 2.5% and 21% area. And our 2023 guidance is loan growth is expected to be around 12.5%. Net interest margin target is expected around 4.4%. Net cost of risk is expected to be low 1.5%. Fee income ratio should come in at 23%. Cost-to-income ratio around 49%. And regarding profitability, ROAA and ROAE should be in the 1.5% and 13% area. And now we welcome to your questions. ================================================================================ Questions and Answers ——————————————————————————– Operator  ——————————————————————————– (Operator Instructions) We have a question from Nicolas Riva from Bank of America. ——————————————————————————– Nicolas Alejandro Riva, BofA Securities, Research Division – VP in Credit Research & Research Analyst  ——————————————————————————– First question — I have 2 questions. The first one, if you can comment on the refinancing plans for the Tier 2 bond maturity in February for $500 million. That's the first question. And then the second question, if you can comment if you have any targets for your capital ratios now that Basel III has been implemented in Colombia, right now you are 10.1% Tier 1, 13.1% total capital. I believe the fully phased-in minimum requirement for total capital is going to be 11.5% by 2025. So if you can comment where you would like to be in terms of capital ratios? ——————————————————————————– Alejandro Augusto Figueroa Jaramillo, Banco de Bogotá S.A. – President & CEO  ——————————————————————————– Thank you for the question. In connection with the first one, I'd like to share with you that we are well advanced in the process of obtaining this facility from multilateral companies. And we are very certain that sometime by the end of January, maybe beginning of February, we'll have at least half of the maturity that we have of $500 million. This facility is going to be also in the style subordinated notes that will replace the remaining portion that serves as a credit for solvency and maybe we'll get a little additional resources for that eligible capital contribution. The remaining of the amount is going to be also part of another portion that is being negotiated with another multinational agency. That one is a little bit more behind, but we do hope that it will come up sometime in maybe May, maybe June, but we are making good progress in all facilities, meaning that it is likely that we might use the liquidity in dollars or liquidity in pesos to meet the total amount of the facility — the bond facility, which is expiring in February. ——————————————————————————– Javier Dorich Doig, Banco de Bogotá S.A. – Head of Corporate Development & FP&A and IRO  ——————————————————————————– And about the second question, we don't have a specific target. However, if you look at history, we have been about 95% of the time, at least 200 basis points above the minimum. So having said that, and standing in 2024, we should maintain a Tier 1 ratio of at least 10.5% and a total solvency above 13%. ——————————————————————————– Operator  ——————————————————————————– (Operator Instructions) We have received a question via the web. It comes from Julian Ausique from Davivienda Corredores. He submitted 3 questions that read. I would like to know the impact of the tax reform, if it is possible, with the amount and the real tax rate. The second question reads has Banco de Bogota taken any decision about the tender offer for BHI? And his third question reads, could you sum up all the expectation for 2022 and 2023? ——————————————————————————– Javier Dorich Doig, Banco de Bogotá S.A. – Head of Corporate Development & FP&A and IRO  ——————————————————————————– So about the tax reform, as you know, there has been an increase in the surcharge from next year, it will be 5% instead of 3% as is this year. So the tax rate for banks will go from 38% to 40%. In terms of the tax rate for us, excluding equity income, we estimate that it should be around — slightly over 30% for next year, which as you know is a combination between Colombia and Panama (inaudible). ——————————————————————————– Alejandro Augusto Figueroa Jaramillo, Banco de Bogotá S.A. – President & CEO  ——————————————————————————– In connection with the second question about the decision on the tender, I would comment that there's a stockholders meeting, which is scheduled for this coming Thursday, day after tomorrow. And that meeting is going to consist of people that may assist in connection with some of the government bodies and allow to make the decision. So until that meeting decides to automate the conflict of interest, we could not comment any further on the subject. ——————————————————————————– Javier Dorich Doig, Banco de Bogotá S.A. – Head of Corporate Development & FP&A and IRO  ——————————————————————————– And about your third question, I'm going to repeat the guidance. Starting with 2022, we expect loan growth of 15% and NIM of 4.5%, cost of risk 1.6%, fee income ratio 21%, cost-to-income 46%, return on assets 2.5%, return on equity 21%. And for next year, loan growth 12.5%, NIM of 4.4%, cost of risk below 1.5%, fee income ratio at 23%, cost-to-income 49%, ROAA of 1.5% and ROAE of 13%. ——————————————————————————– Operator  ——————————————————————————– We received a question from Maria-Jose Quinones from Seminario SAB. Her question was regarding the guidance of '22 and 2023, but I'll read her second question that says, could you give a little bit more detail for the increase in operating expenses? ——————————————————————————– Javier Dorich Doig, Banco de Bogotá S.A. – Head of Corporate Development & FP&A and IRO  ——————————————————————————– Okay. So thank you, Maria-Jose, for your question. As we mentioned, it has to do with marketing and IT, also taxes. We have been experiencing an increase in inflation, not only in Colombia, but also around the world. There's also another explanation that the cost-to-income ratio in the first half of the year was around 43% since some of our expenses were kind of delayed for the second part of the year. So if you, for example, see the guidance, it hasn't changed that much. Last quarter, we foresaw a cost-to-income ratio of around 45% and now we have taken it to 46%, but it is in line which — with what we were expecting. ——————————————————————————– Operator  ——————————————————————————– We have a question from Andrea Atuesta from Bancolombia. I have 2 questions. First one, the bank will continue distributing dividends in shares or was it a specific issue due to the BHI spin-off? The second question reads, on the other side, for next year, would you be expecting to receive dividends from the participation in BHI? ——————————————————————————– Javier Dorich Doig, Banco de Bogotá S.A. – Head of Corporate Development & FP&A and IRO  ——————————————————————————– I will answer the first question. Thank you, Andrea. So you know that the dividend payout, it is a matter of the shareholders' assembly. We — as management, we can recommend and we haven't decided yet what to do about dividends. We can only say that we always have — we always look for a combination between dividend payment and stability for our shareholders, but also what a support for our capital adequacy ratios. So we don't know yet what's going to be the proposal. ——————————————————————————– Alejandro Augusto Figueroa Jaramillo, Banco de Bogotá S.A. – President & CEO  ——————————————————————————– I will add that we also aim at maintaining a prudent cushion against the regulatory minimum level and basically allowing the organic growth for profit generation. And I would say that, no, we are not affecting dividends in the case of the BHI transaction. ——————————————————————————– Operator  ——————————————————————————– We have a question from Daniel Mora that reads, how do you expect to reach the 13% area ROAE in 2023, considering the guidance of NIM below 4.4%, COR below 1.5% and the rest of the guidance? It seems that the performance will be similar to third quarter 2022. But in this quarter, we reached ROAE close to 11%. Where do you see the improvement? ——————————————————————————– Javier Dorich Doig, Banco de Bogotá S.A. – Head of Corporate Development & FP&A and IRO  ——————————————————————————– Thank you, Daniel, for your question. Well, first, we foresee just the NIM. So that means NIM minus cost of risk is slightly better than you have seen in the third quarter. And second, maybe we will see an improvement in equity income as well, which, as you saw in the presentation, we didn't have that much strong quarter in 3Q. So those — maybe those are the most important levels for next year. ——————————————————————————– Operator  ——————————————————————————– We have a question from Nicolas Riva from Bank of America. ——————————————————————————– Nicolas Alejandro Riva, BofA Securities, Research Division – VP in Credit Research & Research Analyst  ——————————————————————————– I just had a follow-up on my prior question. If you can remind us then the current contribution to capital of the 2023 bond. And again, my — based on what you said, I understand there's no need to come to the bond market, you're going to be raising this with multilateral banks. And the other thing would be what's the targeted size of these 2 facilities you would get? ——————————————————————————– German Salazar Castro, Banco de Bogotá S.A. – CFO, Executive VP & VP of Strategy and Financial Planning  ——————————————————————————– Okay. So first, nowadays, the '23 are contributing around 20% rate. So it means $100 million and '26 are contributing around 50% rate. So that means $550 million. That means on the first quarter of 2023, we will lose $210 million in capital, $123 million in '23s, and $110 million in the '26s. ——————————————————————————– Alejandro Augusto Figueroa Jaramillo, Banco de Bogotá S.A. – President & CEO  ——————————————————————————– And the amount is going to be a little over $500 million. ——————————————————————————– Operator  ——————————————————————————– We received a web question as well from [Julio Vel] from [Magne]. And his question reads, in terms of the tax reform and the greater tax of shareholders, are you evaluating an eventual buyback program instead of a dividend distribution? ——————————————————————————– Javier Dorich Doig, Banco de Bogotá S.A. – Head of Corporate Development & FP&A and IRO  ——————————————————————————– No, we're not considering any buyback. As far as we know, they aren't even allowed here in Colombia for banks. ——————————————————————————– Operator  ——————————————————————————– We also received a question. It comes from Santiago Bejarano from IFC. And his question reads, can you elaborate on the Colombian peso devaluation's impact on capital adequacy and the effect of Porvenir? How is the bank handling the effects of the Colombian peso devaluation? ——————————————————————————– Javier Dorich Doig, Banco de Bogotá S.A. – Head of Corporate Development & FP&A and IRO  ——————————————————————————– So about the peso devaluation, we have a negative sensitivity in terms of devaluation. That means that when the dollar gains against the peso, we have a negative impact on our capital, especially on our CET1, it is below or around 5 basis points for every COP 100. But that is counterbalanced by our position in Tier 2, which is U.S. dollar-denominated. So we are kind of hedged in that manner. And in terms of how are we handling the effect, one is the thing I just said, having those bonds in U.S. dollar. And the other thing is that we have a long position as well in order to neutralize the deduction of BHI in capital investments and also the deduction of MFG to MFH goodwill. So that means we are kind of immunized against exchange rate movements. ——————————————————————————– Operator  ——————————————————————————– We have a question from [Marial Avru] from [Tivro Price]. Question reads, can you comment on asset quality risk in Panama, specifically corporate and the construction sector? What sectors are you more closely monitoring? ——————————————————————————– Javier Dorich Doig, Banco de Bogotá S.A. – Head of Corporate Development & FP&A and IRO  ——————————————————————————– Yes, thank you for your question. As you saw in Slide 10, Panama has been doing really well. For example, the 90-days PDLs have decreased from 2.2% to 1.9%. It is true that the cost of risk has increased in the quarter, but that was some kind of normalization — since in the second quarter was typically low. We don't have any particular concerns in terms of sectors or economic sectors. But as you have mentioned, for construction was one of the sectors that we were following more closely since there was a construction in 2020, but also a recovery in 2021 and as well as 2022 is going. So right now we think the credit quality in Panama — and you can see that in our indicators, (inaudible) is doing very well. ——————————————————————————– Operator  ——————————————————————————– We have a follow-up question from Maria-Jose Quinones from Seminario SAB. Her question is, can you please elaborate on the lower income from the equity method in the income statement? ——————————————————————————– Javier Dorich Doig, Banco de Bogotá S.A. – Head of Corporate Development & FP&A and IRO  ——————————————————————————– Yes, of course. Thank you very much, Maria-Jose. So 2 things to mention. First of all, BHI, BHI's net income in the third quarter was affected by the Costa Rican colon appreciation since the results are in U.S. dollar, also some increase in provision as well. And second, we had an extraordinary income from Corficolombiana in the second quarter regarding (inaudible). And that wasn't repeated in the third quarter. So that led to a reduction in the equity income from them. ——————————————————————————– Operator  ——————————————————————————– (foreign language) Nick Dimitrov, the Morgan Stanley Investment Management. The question reads, can you quantify the next long USD position you just mentioned as a way to mitigate the impact of COP devaluation? ——————————————————————————– Javier Dorich Doig, Banco de Bogotá S.A. – Head of Corporate Development & FP&A and IRO  ——————————————————————————– So right now it is about $400 million. ——————————————————————————– Operator  ——————————————————————————– We also have 2 questions from Andrea Atuesta from Bancolombia. She says, it is not clear for me if you are not expecting BHI to distribute dividends to its shareholders? And can you please repeat ROAA guidance for 2022? ——————————————————————————– German Salazar Castro, Banco de Bogotá S.A. – CFO, Executive VP & VP of Strategy and Financial Planning  ——————————————————————————– I'd just like to confirm that no dividends are going to be received, so that the guidance that we indicated is basically excluding that amount. That's it. ——————————————————————————– Javier Dorich Doig, Banco de Bogotá S.A. – Head of Corporate Development & FP&A and IRO  ——————————————————————————– And in terms of — I thought you said you wanted to repeat the guidance for return solely for the next — for next year, return on assets of 1.5% and return on equity of 13%. ——————————————————————————– Operator  ——————————————————————————– And at this moment, I'm checking, we have not received other audio questions or web questions. I would like to turn the call over to Mr. Figueroa for closing remarks. ——————————————————————————– Alejandro Augusto Figueroa Jaramillo, Banco de Bogotá S.A. – President & CEO  ——————————————————————————– Thank you very much to all of you for attending the meeting, and we expect to see you in our next conference call at the end of February. Thank you very much again. ——————————————————————————– Operator  ——————————————————————————– Thank you. This concludes today's conference. Thank you very much for your assistance. You may now disconnect.
With U.S. stocks down more than 20% so far this year, investors are looking for some good news – and it may be coming from a prominent Wall Street analyst who says the current bear market could come to an … Continue reading → The post Top Morgan Stanley Strategist Says This Is When the Bear Market ‘Will Be Over Probably' appeared first on SmartAsset Blog.
Dividend stocks. They’re the very picture of the reliable standby, the sound defensive play that investors make when markets turn south. Div stocks tend not to show as extreme shifts as the broader markets, and they offer a steady income stream no matter where the markets go. And it’s not just retail investors who move into dividend stocks. Recent regulatory filings show that billionaire Steve Cohen has bought big into high-yield dividend stocks. Cohen has built a reputation for success, and his
These three stocks all boast high yields, but one looks like the best option for dividend investors.
Few embody this mindset better than Berkshire Hathaway's (NYSE: BRK.A) (NYSE: BRK.B) chairman and chief executive officer, Warren Buffett. RH (NYSE: RH), formerly known as Restoration Hardware, is one of the more interesting investments by Buffett's holding company, which owns a 9.9% stake that's worth $661 million.
These low-beta stocks offer a diversifying effect on one's portfolio, in that they tend to move separate from the broader market.
After this year’s mauling, you can finally get a steady stream of retirement income from Treasury inflation-protected securities, or TIPS
In this article, we discuss the best dividend stocks according to Jim Cramer. You can skip our detailed analysis of Cramer’s market predictions, and go directly to read 5 Best Dividend Stocks According To Jim Cramer. The investing landscape has widely transformed this year as recession fears pull investors toward previously overlooked defensive securities. Jim […]
Let's see how AT&T (T), Verizon (VZ), and TMobile (TMUS) stocks compare and which may be the better buy at the moment.
With stock prices swooning this year, dividend yields are higher. Three high-yielding dividend stocks some Fool.com contributors really like this month are Postal Realty (NYSE: PSTL), Medical Properties Trust (NYSE: MPW), and AGNC Investment (NASDAQ: AGNC). Marc Rapport (Postal Realty): Postal Realty has been paying shareholders a dividend yield of 6% or a touch higher for a big chunk of this year and there's reason to believe that there's more to come.
Insiders who acquired US$3.7m worth of PayPal Holdings, Inc.'s ( NASDAQ:PYPL ) stock at an average price of US$110 in…
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The number 12 is tightly linked with December. It's the 12th month, of course. There are 12 days of Christmas, according to the traditional carol. Allow me to add one more connection with 12 to the list.
SBF, as Bankman-Fried was often called, says he didn’t commit fraud. But bankruptcy specialists say the findings so far are ‘pretty devastating.’
The Chinese EV maker has surged more than 50% despite an earnings miss and slashed guidance
ZIM (ZIM) has been one of the stocks most watched by Zacks.com users lately. So, it is worth exploring what lies ahead for the stock.
PayPal Holdings, Inc (NASDAQ: PYPL) shares shed over 61% year-to-date. The shares have lost 5.5% in the last month and over 11% over the previous six months. On November 29, Deutsche Bank analyst Bryan Keane said Salesforce, Inc's (NYSE: CRM) new data shows Apple Inc (NASDAQ: AAPL) Pay growing at an "extremely rapid pace," up 52% Y/Y month-to-date in November globally and 59% Y/Y in the U.S. while, over the same period, PayPal adoption has fallen 8% globally and 4% in the U.S. Also Read: PayPal
Here's why they think that AbbVie (NYSE: ABBV), Exelixis (NASDAQ: EXEL), and Vertex Pharmaceuticals (NASDAQ: VRTX) are stocks to buy hand over fist in December. Prosper Junior Bakiny (AbbVie): The end of the year is always a great time to review your investment portfolio. The drugmaker is set to lose U.S. patent protection for its biggest cash cow — autoimmune-disease medicine Humira — next year.
Want the recipe for a wildly successful investment? Take a large measure of market leadership, add a smidgen of secular tailwinds, and top it off with a large addressable market.
Even the world’s richest man can’t have everything.
The burgeoning EV industry is seeing demand for lithium soar to previously unseen levels. These three lithium mining stocks are positioned well for the future — and also pay regular dividends.
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