BANCOLOMBIA S.A. BANCOLOMBIA S.A. (NYSE: CIB; BVC: BCOLOMBIA, PFBCOLOM) REPORTS CONSOLIDATED NET INCOME OF COP 541 BILLION FOR THE THIRD QUARTER OF 2015
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Net loan portfolio increased 31.1% during the last twelve months. This loan portfolio growth was driven by commercial and mortgage loans. Also, annual growth was positively affected by the depreciation of the COP versus the USD.
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The balance sheet remains strong. 90-day past due loans at the end of 3Q15 were 1.8% of total gross loans (3.1% for 30 days) and the coverage ratio for these past due loans was 211% (119% for 30 days). The solvency ratio was 13.2% with a Tier 1 of 8.0%.
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Net interest income grew 31.7%% in 3Q15 compared to the third quarter of 2014. This growth in NII is explained by greater volumes in net loans and by a stable NIM.
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Fees increased by 19.5% in 3Q15 compared to the third quarter of 2014. This notable growth was mainly driven by an increase in fees related to credit and debit cards, banking services and by the distribution of insurance products through the bank's network.
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Efficiency in 3Q15 was 57.4%, which improved when compared to efficiency in the third quarter of 2014. Efficiency in Colombia continues on a positive trend, with operating income growing faster than operating expenses.
- Despite a solid operational performance throughout 2015, higher loan loss provisions have impacted net income in 3Q15, thus showing a 3.6% decrease compared to the third quarter of 2014.
November 12, 2015. Medellín, Colombia - Today, BANCOLOMBIA S.A. ('Bancolombia' or 'the Bank') announced its earnings results for the third quarter of 20151.
For the quarter ended on September 30, 2015 ('3Q15'), Bancolombia reported consolidated net income of COP 541 billion, or COP 545 per share - USD 0.71 per ADR. This net income represents a 22.1% decrease compared to the quarter ended on June 30, 2015 ('2Q15') and a 3.6% decrease compared to the quarter ended on September 30, 2014 ('3Q14').
All data, results, and analyses shown in this report, treat Tuya S.A. as a discontinued operation. For this reason, Bancolombia does not consolidate this operation in its consolidated financial statements and makes reference to it through a separate line on its Balance Sheet and Income Statement.
1. This report corresponds to the interim unaudited consolidated financial statements of BANCOLOMBIA S.A. and its subsidiaries ('BANCOLOMBIA' or 'The Bank') which Bancolombia controls, amongst others, by owning directly or indirectly, more than 50% of the voting capital stock. These financial statements have been prepared in accordance with International Financial Reporting Standards - IFRS. BANCOLOMBIA maintains accounting records in Colombian pesos, referred to herein as 'Ps.' or 'COP'. The statements of income for the quarter ended September 30, 2015 are not necessarily indicative of the results for any other future interim period. For more information, please refer to the Bank's filings with the Securities and Exchange Commission, which are available on the Commission's website at www.sec.gov. CAUTIONARY NOTE REGARDING CHANGES IN THE BANK'S ACCOUNTING POLICIES: Until 2014, BANCOLOMBIA prepared its financial statements under the rules issued by Superintendencia Financiera de Colombia (Colombian GAAP). Beginning on January 1, 2015, the financial statements of BANCOLOMBIA are being prepared under IFRS. BANCOLOMBIA's first IFRS financial statements will cover the year ending in 2015 and will also include the comparative financial statements for the year ending in 2014. Until Bancolombia prepares the first annual consolidated financial statements under IFRS and definitively establishes its IFRS accounting policies in accordance with the IFRS 1, the interim unaudited consolidated financial information for interim periods within 2015, and the comparative 2014 period, may be further amended.
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS: This release contains statements that may be considered forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934. All forward-looking statements, whether made in this release or in future filings or press releases or orally, address matters that involve risks and uncertainties; consequently, there are or will be factors, including, among others, changes in general economic and business conditions, changes in currency exchange rates and interest rates, introduction of competing products by other companies, lack of acceptances of new products or services by our targeted customers, changes in business strategy and various others factors, that could cause actual results to differ materially from those indi cated in such statements. We do not intend, and do not assume any obligation, to update these forward-looking statements. Certain monetary amounts, percentages and other figures included in this report have been subject to rounding adjustments. Any reference to BANCOLOMBIA means the Bank together with its affiliates, unless otherwise specified.
Representative Market Rate October 1, 2015 $3,086.75 = US$ 1
CONSOLIDATED BALANCE SHEET | |||||
AND INCOME STATEMENT | Quarter | Growt | h | ||
(COP millions) | 3Q14 | 2Q15 | 3Q15 | 3Q15/2Q15 | 3Q15/3Q14 |
ASSETS | |||||
Net Loans | 98,008,645 | 116,571,153 | 128,486,302 | 10.22% | 31.10% |
Investments | 12,437,467 | 12,774,812 | 12,986,738 | 1.66% | 4.42% |
Other assets | 25,352,638 | 28,917,363 | 33,402,333 | 15.51% | 31.75% |
Total assets | 135,798,750 | 158,263,328 | 174,875,373 | 10.50% | 28.78% |
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
Deposits | 85,508,457 | 97,540,528 | 109,368,791 | 12.13% | 27.90% |
Other liabilities | 33,930,574 | 42,121,701 | 45,655,237 | 8.39% | 34.55% |
Total liabilities | 119,439,031 | 139,662,229 | 155,024,028 | 11.00% | 29.79% |
Non-controlling interest | 477,625 | 515,767 | 540,458 | 4.79% | 13.16% |
Shareholders' equity | 15,882,094 | 18,085,332 | 19,310,887 | 6.78% | 21.59% |
Total liabilities and shareholders' equity | 135,798,750 | 158,263,328 | 174,875,373 | 10.50% | 28.78% |
Interest income | 2,134,826 | 2,716,090 | 2,811,019 | 3.50% | 31.67% |
Interest expense | (801,421) | (941,015) | (1,061,376) | 12.79% | 32.44% |
Net interest income | 1,333,405 | 1,775,075 | 1,749,643 | -1.43% | 31.22% |
Net provisions | (273,388) | (413,178) | (491,034) | 18.84% | 79.61% |
Fees and income from service, net | 429,202 | 491,336 | 512,845 | 4.38% | 19.49% |
Other operating income | 118,188 | 174,405 | 204,124 | 17.04% | 72.71% |
Total Dividends received and equity method | 64,647 | 75,779 | (14,490) | -119.12% | -122.41% |
Total operating expense | (1,113,153) | (1,267,769) | (1,407,744) | 11.04% | 26.46% |
Total other income (expenses) | 69,590 | 62,272 | 64,495 | 3.57% | -7.32% |
Profit before tax | 628,491 | 897,920 | 617,839 | -31.19% | -1.69% |
Income tax | (96,966) | (203,336) | (82,454) | -59.45% | -14.97% |
Tax on wealth | - | - | - | ||
Net income before non-controlling interest | 531,525 | 694,584 | 535,385 | -22.92% | 0.73% |
Non-controlling interest | 3,807 | (9,187) | (11,297) | 22.97% | -396.74% |
Net income before Descontinued Operations | 535,332 | 685,397 | 524,088 | -23.54% | -2.10% |
Discontinued Operations Net Income | 26,360 | 9,585 | 17,226 | 79.72% | -34.65% |
Net income | 561,692 | 694,982 | 541,314 | -22.11% | -3.63% |
PRINCIPAL RATIOS | Quarter | As of | |||
3Q14 | 2Q15 | 3Q15 | 3Q14 | 3Q15 | |
PROFITABILITY | |||||
Net interest margin (1) from continuing operations | 4.88% | 5.41% | 4.94% | 5.20% | 5.28% |
Return on average total assets (2) from continuing operations | 1.64% | 1.77% | 1.25% | 1.78% | 1.54% |
Return on average shareholders´ equity (3) | 13.76% | 15.78% | 11.16% | 15.19% | 13.49% |
EFFICIENCY | |||||
Operating expenses to net operating income | 61.84% | 52.78% | 57.41% | 49.88% | 52.35% |
Operating expenses to average total assets | 3.48% | 3.38% | 3.36% | 3.29% | 3.30% |
Operating expenses to productive assets | 4.17% | 3.99% | 3.97% | 1.95% | 2.93% |
CAPITAL ADEQUACY | |||||
Shareholders' equity to total assets | 11.69% | 11.43% | 11.04% | ||
Technical capital to risk weighted assets | 13.66% | 13.23% | |||
KEY FINANCIAL HIGHLIGHTS | |||||
Net income per ADS from continuing operations | 1.10 | 1.10 | 0.71 | ||
Net income per share $COP from continuing operations | 556.58 | 712.60 | 544.89 | ||
P/BV ADS (4) | 1.74 | 1.49 | 1.24 | ||
P/BV Local (5) (6) | 1.68 | 1.42 | 1.18 | ||
P/E (7) from continuing operations | 12.64 | 9.57 | 11.13 | ||
ADR price | 56.72 | 43.00 | 32.20 | ||
Common share price (8) | 27,680 | 26,700 | 23,720 | ||
Weighted average of Preferred Shares outstanding | 961,827,000 | 961,827,000 | 961,827,000 | ||
USD exchange rate (quarter end) | 2,022.00 | 2,598.68 | 3,086.75 |
(1) Defined as net interest income divided by monthly average interest-earning assets. (2) Net income divided by monthly average assets. (3) Net income divided by monthly average shareholders' equity. (4) Defined as ADS price divided by ADS book value. (5) Defined as share price divided by share book value. (6) Share prices on the Colombian Stock Exchange. (7) Defined as market capitalization divided by annualized quarter results. (8) Prices at the end of the respective quarter.
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BALANCE SHEET
Assets
As of September 30, 2015, Bancolombia's assets totaled COP 174,875 billion, which represents an increase of 10.5% compared to 2Q15 and of 28.8% compared to 3Q14. Of the annual growth in the loan book, 16.2% is explained by the depreciation of the peso against the dollar.
The increase in assets in the quarter and in the year was explained by the organic growth of the loan portfolio as well as by a depreciation of the COP versus the USD of 18.7% during the quarter and 52.7% over the past 12 months.
Loan Portfolio
The following table shows the composition of Bancolombia's investments and loans by type and currency:
(COP Million)
Amounts in COP
Amounts in USD converted to COP
Amounts in USD (thousands)
Total
(1 USD =3086.75 COP)
3Q15/2Q15
3Q15/2Q15
3Q15/2Q15
3Q15/2Q15
Commercial loans
60,068,023
6.85%
35,360,694
16.65%
11,455,639
-1.80%
95,428,717
10.28%
Consumer loans
12,294,016
2.58%
7,620,709
20.51%
2,468,846
1.46%
19,914,725
8.78%
Mortgage loans
10,320,617
4.34%
7,025,720
22.34%
2,276,090
2.99%
17,346,337
10.95%
Small business loans
582,945
4.00%
249,494
29.49%
80,827
9.02%
832,439
10.52%
Interests paid in advance
(21,365)
8.39%
(3,049)
8.24%
(988)
-8.88%
(24,414)
8.37%
Gross loans
83,244,236
5.87%
50,253,568
18.05%
16,280,414
-0.62%
133,497,804
10.14%
Total assets
104,177,778
6.10%
70,697,595
17.68%
22,903,570
-0.93%
174,875,373
10.50%
The most relevant aspects regarding the evolution of the loan portfolio during 3Q15 were:
The growth of commercial and mortgage loans during 3Q15 shows a growing credit demand in COP denominated loans compared to previous quarters, spurred by specific disbursements to large corporate clients. Consumer loans grew over the quarter in line with seasonal factors.
Mortgage loans denominated in COP presented a dynamic performance, growing 4.3% quarter on quarter. The dynamism of mortgage lending in Colombia is explained by lower long-term interest rates, as well as by the Colombian government's interest rate subsidy programs. On the other hand, the mortgage balance denominated in USD from our operation in El Salvador and Panama accounted for 45% of the mortgage loans at the end of 3Q15.
Total reserves (allowances in the balance sheet) for loan losses increased by 8.2% during 3Q15 and totaled COP 5,012 billion, equivalent to 3.7% of gross loans at the end of the quarter. For further explanation regarding coverage of the loan portfolio and credit quality trends, see section '2.4. Asset Quality, Provision Charges and Balance Sheet Strength'.
The following table summarizes Bancolombia's total loan portfolio:
LOAN PORTFOLIO
(COP million)
Sep-14
Jun-15
Sep-15
3Q15/2Q15
3Q15/3Q14 % of total loans
Commercial
73,210,555
86,529,972
95,428,717
10.28%
30.35%
71.5%
Consumer
16,037,411
18,307,774
19,914,725
8.78%
24.18%
14.9%
Mortgage
12,671,540
15,634,121
17,346,337
10.95%
36.89%
13.0%
Microcredit
605,199
753,175
832,439
10.52%
37.55%
0.6%
Interests received in advance
(16,660)
(22,528)
(24,414)
8.37%
46.54%
0.0%
Total loan portfolio
102,508,045
121,202,514
133,497,804
10.14%
30.23%
100.0%
Allowance for loan losses
(4,499,400)
(4,631,361)
(5,011,502)
8.21%
11.38%
Total loans, net
98,008,645
116,571,153
128,486,302
10.22%
31.10%
Investment Portfolio
As of September 30, 2015, Bancolombia's net investment portfolio totaled COP 12,987 billion, increasing 1.7% compared to the figure reported in 2Q15 and growing 4.4% compared to 3Q14. This quarterly increase is explained by the bank's strategy that aggressively increased its time deposits in August and invested invest its excess cash in liquid assets. The investment portfolio consists primarily of debt securities, which represent 93.2% of Bancolombia's total investments and 5.5% of assets at the end of 3Q15.
At the end of 3Q15, the investments in debt securities had a duration of 19.2 months and a yield to maturity of 6.08%.
Goodwill and intangibles
As of 3Q15, Bancolombia's goodwill and intangibles totaled COP 5,730 billion, increasing 16.1% compared to 2Q15. This variation is explained by the depreciation of the COP against the USD during the quarter.
Funding
As of September 30, 2015, Bancolombia's liabilities totaled COP 155,024 billion, increasing 11.0% with respect to 2Q15 and 29.8% compared to 3Q14.
Deposits by customers totaled COP 108.933 billion (or 70.3% of liabilities) at the end of 3Q15, increasing 12.1% during the quarter and 28.0% over the last 12 months. The net loans to deposits ratio (including borrowings from domestic development banks) was 112% at the end of 3Q15, which marks a decrease in comparison to the 114% reported in 2Q15, but increasing in regard to the 109% reported in 3Q14.
Bancolombia's funding strategy during the quarter was geared towards increasing its stock of deposits in August while maintaining its liquidity position. This strategy allowed the bank to maintain optimal liquidity levels, despite the rising funding costs. The ultimate goal is to defend the net interest margin and to assure liquidity.
Funding mix | 3Q14 | 2Q15 | 3Q15 | |||
COP Million | ||||||
Checking accounts | 15,691,071 | 14% | 17,852,471 | 14% | 18,929,039 | 13% |
Saving accounts | 34,288,009 | 31% | 39,136,638 | 30% | 43,976,398 | 30% |
Time deposits | 34,352,805 | 31% | 39,165,003 | 30% | 44,918,448 | 31% |
Other deposits | 3,545,428 | 3% | 4,135,788 | 3% | 2,469,584 | 2% |
Long term debt | 12,472,151 | 11% | 15,127,037 | 12% | 18,219,495 | 13% |
Loans with banks | 11,905,265 | 11% | 15,161,308 | 12% | 16,183,405 | 11% |
Total Funds | 112,254,729 | 100%130,578,245 | 100% | 144,696,369 | 100% | |
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