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| Statement |
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| To NIM for the full year was 7%, a 20 basis points expansion year-over-year on the back of a strong 8% annual in Colombia, reaffirming the competitive advantage in funding and its asset-sensitive condition |
| Additionally, for the third consecutive year, we have released our TCFD report as mandated by local regulations, thereby enhancing the understanding of our commitments and accomplishments |
| This positive expansion is the result of net income generation, lower risk-weighted assets and FX appreciation during this year |
| On the flip side, credit cards, auto loans and payroll loans all performed better reducing their cost of risk and their share of loans in Stage 2 and 3, signaling, better asset quality conditions ahead |
| And Colombia's robust organic capital origination capabilities, coupled with a reduction in the risk-weighted assets were the driving forces behind this achievement |
| As a positive indicator and a testament of the bank's inherent capabilities, the generation of sound net interest margin has proven sufficient to absorb increased provisioning expenses and costs while maintaining mid-teen return on equity |
| Consistently with the above, NIM expanded 47 basis points quarter-over-quarter to 7.8%, driven by the remarkable 354 basis points expansion in the investment NIM as per the securities portfolio strong performance discuss above, coupled with 11 basis points growth on the lending NIM |
| This, in turn, is expected to stimulate credit demand and improve asset quality in the long term |
| Furthermore, we are pleased to report continued advancements in the scalability of our business model, which will enable us to capture additional gains in efficiency and productivity |
| And this is one of our most profitable operation with more than 20% return on equity and a very stable cost of risk |
| This strategic move has enabled us to expand our reach and enhance user experience while maintaining operational efficiency |
| But I think at the end, we will benefit all the market and as a player in this environment |
| These pillars significantly contribute to our market leadership, operational soundness and the scalability of our business model |
| But we think we are very well positioned |
| And most importantly, new businesses in Colombia continue performing well, and those we foresee an improvement in all metrics going forward |
| As a matter of fact, after falling for three once quarters, the volume of new consumer loans slightly increased during the fourth quarter leverage on the new origination standards and the portfolio better performance |
| Our multichannel platform is well established |
| Asset sector-wide metrics, we continue performing with the lowest 90-day past due loan ratio for the Colombian financial system as of October of 2023, driven by our superior risk framework and capabilities that allow us to better assess credit behavior and mitigate deterioration |
| The two primary sources of growth originate firstly, from the immediate payment system framework, which will streamline all types of payments processing through a low-value payments system managed by the Central Bank with real-time clearing hereby, reducing operational costs and improving user experience |
| Certainly, these well-structured strategy serves as a reliable foundation for maintaining a competitive funding cost, thereby enhancing NIM performance and overall profitability |
| This accomplishment is a testament of the strength influence and openness of our ESG framework |
| Furthermore, we are delighted with the positive development and performance of our banking as a platform, as a service models as they have enabled us to innovate and explore novel business models |
| Notably, these models have demonstrated remarkable growth with compelling compounded annual growth rates of 16% and 14%, respectively, over the past five quarters |
| Notably, digital time deposits have experienced a remarkable compounded annual growth rate of 125% over the past five years, aligning with our digital transformation |
| I would like to elaborate on what we believe is the most compelling evidence of the robust competitive advantage we have built in this area |
| As of the conclusion of the year 2023, we have successfully exceeded the COP140 trillion milestone in the total disbursements under our business with purpose strategy, which was initiated in 2020 |
| Consequently, we have achieved exponential growth in transactional volume, increased fee revenue and significantly enhanced our ability to attract and retain deposits |
| By leveraging our unparalleled insights, we have meticulously crafted a robust risk assessment framework |
| We remain positive on Salvador's micro performance, but not cautious about Guatemala, given the most recent political and social and risk and with Panama due to the more challenging fiscal outlook as per the lower tax collection |
| Basel III total capital adequacy ratio reached 13.4%, increasing 57 basis points over the quarter and 6 basis points year-over-year on the back of a strong Tier 1 expansion with 105 basis points year-over-year increase attaining 11.4% for year-end |
| Statement |
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| Overall, 2023 proved to be a very challenging year for the Colombian economy and resulted in GDP growth of just 0.6% year-over-year, the lowest level in over 3 decades, excluding the covers and well below market expectations and our own forecast of 1.2% |
| The primary drivers contributing to this decline are: firstly, a 1.5% quarterly and 6% annual contraction in the loan book portfolio due to the reduced credit demand and diminished risk tolerance, resulting in slower growth of interest income |
| However, we remain cautious and expect higher delinquencies and news on the back of the weaker economic performance |
| Net income for the quarter was COP1.4 trillion, equivalent to a 3% drop quarter-over-quarter and COP6.1 trillion for the full year, equivalent to a 10% drop year-over-year, driven by lower income generation as per the loan book contraction and the FX appreciation in tandem with higher credit and operating expenses |
| Health sector concern us, and we think that there could be some deterioration on the health sector or the participants on the health sector and risk |
| The aforementioned factors accelerate downward pressure on the return on equity, resulting in a 15.2% ROE for the quarter and 16.1% for the entire year |
| For the entire year, the net income amounted to COP6.1 trillion, representing an approximate 10% annual decline |
| The biggest culprit to economic stagnation lies with public and private investment, which fell close to 25% during 2023 |
| In light of the prevailing macroeconomic environment, Bancolombia's net income for the quarter reached COP1.4 trillion, indicating a 2% reduction compared to the preceding quarter |
| Year-over-year, net provision charge increased 97% attributable mainly to deterioration in the consumer segment in Colombia as we will further elaborate and to a lesser extent, on SME and certain corporate loans, consistent with the current economic and credit cycle |
| Construction, manufacturing and retail sales continued to underperform |
| Furthermore, these factors have adversely impacted loan quality and led to an overall increase in operating costs |
| As anticipated, 2023 has proven to be a year of significant challenges for the Colombian financial system |
| The prevailing high interest rates and inflation have had a discouraging effect on credit growth, resulting in reduced net interest income generation |
| However, year-over-year, it grew close to 5%, admittedly below expectations as fee expenses grow outpaced the fee income growth, coupled with a higher third-party provider costs and processing charges |
| The year-over-year deposits dropped 1.2%, consistent with a weaker credit demand |
| In addition, it is crucial to highlight the substantial 20.5% annual, and 5.7% quarterly appreciation of the peso, leading to a decrease in the volume of loans and the interest income contribution of the dollar portfolio in the consolidated financial statements |
| From a segment perspective, consumer portfolio keeps driving the largest contraction with a 2.6% reduction quarter-over-quarter and 8.4% year-over-year as expected |
| Could you explain that a little bit further? Juan Carlos Mora Carlos, we had some difficulties with the line |
| And on the other side, the income was affected because the maximum grade that institutions could charge in Colombia went down because of the intense change the way the formula to calculate it |
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