c8117.wv2.masterbase.com Open in urlscan Pro
2606:4700:10::6816:40c1  Public Scan

Form analysis
0 forms found in the DOM

Text Content

 

 

 

 




Para asegurar la entrega de nuestros envíos, por favor agregue
eqresearchregional@mailcredicorpcapital.com a su libreta de direcciones.
Si no visualiza bien este mensaje, haga clic aquí

Credicorp Capital | Equity Research
www.credicorpcapitalresearch.com
June 17th, 2024

--------------------------------------------------------------------------------

Industry Alert - Colombian Banks Apr-24


LOWER PROVISION EXPENSES WERE OFFSET BY A WEAK OPERATING INCOME

Monthly results for the banking industry in Apr-24 continued to be negative. Net
profits reached COP 232 bn, representing decreases of 60.3% y/y and 82.5% m/m.
These results became the lowest net income on a YTD basis. Therefore, the
quarterly ROAE reached 7.7% compared to 8.6% in Mar-24 and 11.2% in Apr-23. 

Net/Net: The banking industry continues to perform poorly, impacted by high
provision expenses. Despite the monthly decrease in provisions, we cannot
guarantee that the trend will continue going forward. It is not the first time
during this credit cycle that we have observed a relevant decrease in provisions
followed by a spike in the next month. In any case, the pace of growth of NPLs
is the indicator that we highlight in this context, as the 90-day NPL growth
reached 26.7% y/y (still very high), compared to the recent peak of 43.0%. Lower
loan growth, better vintages in recent months, and higher pace of charge-offs
are the drivers behind this performance. In this sense, the decrease in
inflation and the normalization of interest rates should be factors that will
benefit the performance of asset quality indicators in the upcoming months. All
in all, we still believe 2024 is a challenging year for the banking sector and
should be considered a transition year. Under this scenario, Bancolombia remains
the best stock in the sector and is one of our Top Picks in Colombia. 

During the month, the weak performance was driven by still high provision
expenses and a weak top line. In the case of provisions, we highlight that they
decreased by 9.5% y/y and 20.5% m/m. However, the cost of risk reached 3.65%,
compared to 3.2% in Apr-23, and remained high compared to historical standards
(2.8% average of 2019). Meanwhile, in terms of NPLs, the 90-day NPL has been
close to 3.5%, not increasing but not showing signs of recovery. As we stated in
the conclusion, the positive sign on this front is the pace of growth (+26.7%
y/y), which presented a clear downward trend compared to recent months. 

The decrease in provision expenses was offset by the decrease in the top line.
Operating income decreased 4.2% y/y and 22.6% m/m after an unusual figure one
month ago. The annual decrease was explained by a lower equity method, which
decreased by 56.2% y/y (-79.1% m/m). Meanwhile, in addition to the equity
method, the annual decrease was explained by an extraordinary income in Mar-24
related to the sale of investments and FX operations. On the positive side,
despite a flat performance of the NII, the decrease in interest rates has
positively affected the funding as the NIM reached 6.1% compared to 5.8% at the
beginning of the year. 

Finally, the loan growth continued its downward trend due to low demand and
restrictive origination policies. The total loan growth reached 1.1% y/y
compared to 1.8% in Mar-24 and 12.3% in Apr-23. The strong deceleration
continued to be explained by consumer loans, as this segment contracted 4.0% y/y
during the month. We suspect that this is mainly related to the contraction of
personal loans and credit cards. On the other hand, commercial loans advanced by
1.5% y/y, and mortgage loans grew by 8.2% y/y. We anticipate a still weak loan
growth of 5.0% y/y in 2024, which aligns with the economic activity. 

Bancolombia (BUY; T.P.: COP 39,000/share). Net income reached COP 234.6 bn,
decreasing by 18.9% y/y and 68.4% m/m. Thus, the quarterly ROAE decreased to
15.7%, compared to 17.2% in Mar-24 and 19.1% in Apr-23. We highlight that
profitability is well above that of key peers and the industry level.  The
negative performance was driven by a weak operating income, higher provision
expenses, and higher OPEX. The monthly decrease was driven by a 24.4% m/m
decrease in the operating income, partly explained by a 91.5% m/m decrease in
the equity method. In addition, provisions rose 7.3% m/m, and OPEX advanced
14.7% y/y. On the other hand, the annual decline in the operating income was
driven by a negative performance of investments during the month. 

Davivienda (HOLD; T.P.: COP 24,500/share).  The bank reported another month of
net losses. The bank posted a net loss of COP 32.0 bn compared to net profits of
COP 412.2 bn in Mar-24 and COP 0.7 bn in Apr-23. Even though we observed
decreases in provision expenses of 4.2% y/y and 51.0% m/m, OPEX advanced 23.1%
y/y and 12.1% m/m. Meanwhile, the operating income contracted 51.1% m/m, mainly
related to a one-off last month associated with the sale of investments.
Compared to last year, the operating income rose by 6.5% y/y, which is related
to a better performance of investments and a 25.9% y/y increase in the net fee
income. The quarterly ROAE reached 10.3%, which was positively impacted by the
one-off in Mar-24. 

Banco de Bogotá. The net profit reached COP 38.3 bn, becoming the lowest net
income on a YTD basis. This figure decreased 69.8% y/y and 74.1% m/m. Thus, the
quarterly ROAE reached 7.2% compared to 10.0% in Mar-24 and 12.6% in Apr-23. The
negative performance was explained by a 13.5% y/y decrease in operating income
and increases of 5.2% y/y in OPEX and 5.4% y/y in provision expenses. 

Grupo Aval (UPERF; T.P.: COP 600/share). During the month, Occidente posted a
net income of COP 30.1 bn, decreasing 27.2% y/y (-46.0% m/m). Meanwhile, Popular
remained in negative territory with a net loss of COP 38.8 bn impacted by higher
provisions (+20.3% y/y). Similarly, AV Villas reported a net loss of COP 7.4 bn,
becoming the fourth consecutive month in negative territory. 

Banco Itaú Chile (BUY; T.P.: CLP 12,000/share). The net income reached COP 1.4
bn, equivalent to decreases of 73.6% y/y and 46.4% m/m. The decrease was mainly
explained by decreases of 11.0% y/y and 7.4% m/m  of the operating income. As a
result, the quarterly ROAE reached 1.18% compared to 1.5% in Mar-24 and 2.4% in
Apr-23. 

For charts, tables and the full report, download file.
Regards,

Download file

Daniel Mora
dmoraa@credicorpcapital.com

Santiago Martinez
smartinez@credicorpcapital.com



Este mensaje ha sido enviado a mrondonv@bcp.com.pe
Para anular su suscripción, haga clic aquí
Administre sus preferencia de reportes aqui

--------------------------------------------------------------------------------

Este mensaje fue enviado a través de MasterBase® por Credicorp Capital
Dirección: Av Apoquindo 3721 CP 7550177 • Santiago, Las Condes • Chile
©2024 Derechos Reservados