Despite a slowdown in lending growth and the bank’s issues with past-due loans, Bancolombia has increased its marketleading credit portfolio by 3.2% and increased its market share in consumer loans to 17% from 13%.
Bancolombia CFO José Humberto Acosta says the bank’s issues with past-due loans stem primarily from problems with Electricaribe – the government took control of the regional energy company in 2016. He adds that it was a “special situation” and not a result of lending policies.
After lower-than-expected loan growth, Acosta says Bancolombia deliberately lowered the cost of funding. The steady stream of consumer loans and better funding costs have stabilized the bank’s net interest margin, while market volatility after the March presidential elections improved securities margins, bringing Bancolombia’s overall NIM to 5.9%.
On its balance sheet, Bancolombia tallied a 3.83% increase in net income, with 0.51% growth in total assets. The bank’s core funding, comprised of the lion’s share of checking and savings accounts in Colombia, has anchored the loan portfolio amid a deteriorating risk profile. This endemic hedge assisted in shielding the bank against significant losses and generating a profit in the midst of recent difficulties.
“Next year will be much better for us. We are forecasting 8% loan growth and a 2% cost of risk,” Acosta says. “Bancolombia’s strong level of capital and coverage ratio, which is 157% as of June 2018, gives us enough cushion for a strong loan portfolio in the new economic cycle.” LF