BANCOLOMBIA S.A. - Net interest income grew 37.2% compared to 2Q15. This strong growth is explained by higher volumes in the loan portfolio and by an expansion of the net interest margin, which increased 70 basis points in the last year.
- The net interest margin was 6.1% for the quarter. This result is supported by the balance sheet's sensibility to hikes in the interest rates, the successive increases in the reference rate by the central bank, higher rates commanded on new loans, as well as, good performance in investments that ultimately improved the margin from 5.6% to 6.1% in the quarter.
- Net fees increased by 12.4% compared to 2Q15. This solid growth was mainly driven by an increase in fees related to banking services, credit and debit cards, and distribution of insurance products through the bank's network. This growth is mainly explained by a higher number of transactions.
- Tier 1 increased during the quarter to 8.5%. The capital adequacy ratio was 13.16%, which indicates that Bancolombia has enough reserves and capital to maintain its operation and develop its business plan.
- Efficiency for 2Q16 was 48.2%, improving compared to 1Q16. Higher net interest income as well as a tighter control on the growth of expenses led to an improvement in efficiency for the quarter.
August 18, 2016. Medellin, Colombia - Today, BANCOLOMBIA S.A. ("Bancolombia" or "the Bank") announced its earnings results for the second quarter of 20161. For the quarter ended on June 30, 2016 ("2Q16"), Bancolombia reported consolidated net income of COP 733 billion, or COP 751.4 per share - USD
1.03 per ADR. This net income represents 84.5% increase compared to the quarter ended on March 31, 2016 ("1Q16") and 6.3% compared to the quarter ended on June 30, 2015 ("2Q15").
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 June 30, 2016 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: 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. 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, ch anges 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 indicated 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, July 1, 2016 $2,919.01 = US$ 1
BANCOLOMBIA: Summary of consolidated financial quarterly results CONSOLIDATED BALANCE SHEET 2Q16 AND INCOME STATEMENT Quarter Growth(COP million) 2Q15 1Q16 2Q16 2Q16/1Q16 2Q16/2Q15
ASSETS
Net Loans | 116,512,730 | 139,432,678 | 140,059,861 | 0.45% 20.21% |
Investments | 12,774,812 | 15,040,851 | 12,701,160 | -15.56% -0.58% |
Other assets | 28,975,786 | 36,911,252 | 35,638,296 | -3.45% 22.99% |
Total assets | 158,263,328 | 191,384,781 | 188,399,317 | -1.56% 19.04% |
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||
Deposits | 97,540,528 | 117,399,796 | 115,047,681 | -2.00% 17.95% |
Other liabilities | 42,121,701 | 54,200,764 | 52,905,953 | -2.39% 25.60% |
Total liabilities | 139,662,229 | 171,600,560 | 167,953,634 | -2.13% 20.26% |
Non-controlling interest | 515,767 | 1,100,018 | 1,108,505 | 0.77% 114.92% |
Shareholders' equity | 18,085,332 | 18,684,203 | 19,337,178 | 3.49% 6.92% |
Total liabilities and shareholders' equity | 158,263,328 | 191,384,781 | 188,399,317 | -1.56% 19.04% |
Interest income | 2,707,759 | 3,668,507 | 3,892,103 | 6.10% 43.74% |
Interest expense | (935,430) | (1,369,008) | (1,459,686) | 6.62% 56.04% |
Net interest income | 1,772,329 | 2,299,499 | 2,432,417 | 5.78% 37.24% |
Net provisions | (414,707) | (539,774) | (628,469) | 16.43% 51.55% |
Fees and income from service, net | 508,518 | 565,430 | 571,672 | 1.10% 12.42% |
Other operating income | 310,524 | 363,765 | 339,063 | -6.79% 9.19% |
Total Dividends received and equity method | 75,779 | 63,840 | 33,833 | -47.00% -55.35% |
Total operating expense | (1,354,037) | (1,773,636) | (1,641,452) | -7.45% 21.23% |
Profit before tax | 898,406 | 979,124 | 1,107,064 | 13.07% 23.23% |
Income tax | (209,626) | (550,848) | (362,900) | -34.12% 73.12% |
Net income before non-controlling interest | 688,780 | 428,276 | 744,164 | 73.76% 8.04% |
Non-controlling interest | (9,042) | (35,555) | (21,411) | -39.78% 136.79% |
Net income before Descontinued Operations | 679,738 | 392,721 | 722,753 | 84.04% 6.33% |
Discontinued Operations Net Income | 9,585 | 4,645 | 10,306 | 121.87% 7.52% |
Net income | 689,323 | 397,366 | 733,059 | 84.48% 6.34% |
PRINCIPAL RATIOS | Quarter | As of | ||
2Q 15 | 1Q 16 | 2Q 16 | 2Q15 2Q16 | |
PROFITABILITY | ||||
Net interest margin (1) from continuing operations | 5.43% | 5.65% | 6.09% | 5.50% 5.86% |
Return on average total assets (2) from continuing operations | 1.77% | 0.81% | 1.53% | 1.70% 1.17% |
Return on average shareholders´ equity (3) | 15.56% | 8.10% | 15.19% | 14.87% 11.56% |
EFFICIENCY | ||||
Operating expenses to net operating income | 50.83% | 54.21% | 48.23% | 52.76% 51.20% |
Operating expenses to average total assets | 3.50% | 3.72% | 3.43% | 3.68% 3.57% |
Operating expenses to productive assets | 4.12% | 4.42% | 4.04% | 4.36% 4.23% |
CAPITAL ADEQUACY | ||||
Shareholders' equity to total assets | 11.43% | 9.76% | 10.26% | 11.43% 10.26% |
Technical capital to risk weighted assets | 13.67% | 12.96% | 13.16% | 13.67% 13.16% |
KEY FINANCIAL HIGHLIGHTS | ||||
Net income per ADS from continuing operations | 1.10 | 0.54 | 1.03 | 1.75 1.59 |
Net income per share $COP from continuing operations | 712.59 | 408.31 | 751.44 | 1,351.93 1,159.75 |
P/BV ADS (4) | 1.49 | 1.32 | 1.27 | 1.49 1.27 |
P/BV Local (5) (6) | 1.42 | 1.27 | 1.18 | 1.42 1.19 |
P/E (7) from continuing operations | 9.57 | 15.39 | 8.18 | 10.09 10.60 |
ADR price | 43.00 | 34.18 | 34.92 | 43.00 34.92 |
Common share price (8) | 26,700 | 24,700 | 23,800 | 26,700 23,800 |
Weighted average of Preferred Shares outstanding | 961,827,000 | 961,827,000 | 961,827,000 | 961,827,000 961,827,000 |
USD exchange rate (quarter end) | 2,598.68 | 3,000.63 | 2,919.01 | 2,598.68 2,919.01 |
(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.
2Q16BALANCE SHEET
Assets
As of June 30, 2016, Bancolombia's assets totaled COP 188,399 billion, which represents a decrease of 1.6% compared to 1Q16 and an increase of 19.0% compared to 2Q15. The consolidation of BAM at the end of 2015 contributes with 7.0% of the total asset's annual growth (37% of marginal growth).
During the quarter, the COP appreciated 2.7% versus the USD and depreciated 12.3% over the past 12 months. The decrease in total assets is largely explained by the reduced value of loans denominated in dollars that represent fewer pesos when converted and a reduction in the position of investment and derivatives.
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 = 2919.01 COP)
2Q16
2Q16/1Q16
2Q16
2Q16/1Q16
2Q16
2Q16/1Q16
2Q16
2Q16/1Q16
Commercial loans
65,731,495
2.64%
38,376,060
-4.50%
13,146,944
-1.83%
104,107,555
-0.11%
Consumer loans
13,409,022
4.61%
8,322,584
-0.76%
2,851,167
2.01%
21,731,606
2.48%
Mortgage loans
10,901,942
4.43%
8,138,883
0.93%
2,788,234
3.75%
19,040,825
2.90%
Small business loans
652,003
6.46%
326,328
4.38%
111,794
7.30%
978,331
5.76%
Interests paid in advance
(22,337)
2.72%
-
100.00%
-
100.00%
(22,337)
2.72%
Gross loans
90,672,034
3.17%
55,163,434
-3.13%
18,897,994
-0.42%
145,835,980
0.69%
The quarter 2Q16 shows an increase in gross loans of 0.7%. In the quarter the consumer, mortgage and small business segments increased while the commercial segment slightly decreased. In addition, in comparison with a year ago, total gross loans grew 20.3%. Of this annual growth, 6.3% (31% of marginal variation) is explained by the incorporation of BAM.
Gross loans denominated in currencies different from COP product of our operation in El Salvador, Panama and Guatemala accounted for 37.8% at the end of 2Q16.
Total reserves (allowances in the balance sheet) for loan losses increased by 6.9% during 2Q16 and totaled COP 5,776 billion, equivalent to 4.0% 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:
2Q16LOAN PORTFOLIO
(COP million)
2Q15
1Q16
2Q16
2Q16/1Q16
2Q16/2Q15 % of total loans
Commercial
86,529,972
104,222,799
104,107,555
-0.11%
20.31%
71.4%
Consumer
18,307,774
21,204,782
21,731,606
2.48%
18.70%
14.9%
Mortgage
15,634,121
18,503,948
19,040,825
2.90%
21.79%
13.1%
Microcredit
753,175
925,065
978,331
5.76%
29.89%
0.7%
Interests received in advance
(22,528)
(21,747)
(22,337)
2.71%
-0.85%
0.0%
Total loan portfolio
121,202,514
144,834,847
145,835,980
0.69%
20.32%
100.0%
Allowance for loan losses
(4,689,784)
(5,402,169)
(5,776,119)
6.92%
23.16%
Total loans, net
116,512,730
139,432,678
140,059,861
0.45%
20.21%
Investment Portfolio
As of June 30, 2016, Bancolombia's net investment portfolio totaled COP 12,701 billion, decreasing 15.6% compared to the figure reported in 1Q16 and 0.6% compared to 2Q15. The investment portfolio consists primarily of debt securities, which represent 67.1% of Bancolombia's total investments and 4.5% of assets at the end of 2Q16. The decrease in the portfolio, during the quarter, is due to a decision to reduce the impact of interest rate hikes and aims to keep the duration at historically low levels.
At the end of 2Q16, the investments in debt securities had a duration of 18.5 months and a yield to maturity of 7.32%.
Goodwill and intangibles
As of 2Q16, Bancolombia's goodwill and intangibles totaled COP 6,524 billion, decreasing 2.3% compared to 1Q16. This variation is explained by the appreciation of the COP against the USD during the quarter.
Funding
As of June 30, 2016, Bancolombia's liabilities totaled COP 167,954 billion, decreasing 2.1% with respect to 1Q16 and increasing 20.3% compared to 2Q15. Of this annual growth, 7.1% (35% of marginal variation) is explained by the incorporation of BAM.
Deposits by customers totaled COP 114,586 billion (or 68.2% of liabilities) at the end of 2Q16, decreasing 1.9% during the quarter and increasing 17.9% over the last 12 months. The net loans to deposits ratio (including borrowings from domestic development banks) was 116% at the end of 2Q16, which marks an increase in comparison to the 113% reported in 1Q16.
Bancolombia's funding strategy during the last months has been to extend the average life of time deposits and promote saving accounts in the consumer segment in order to keep the funding cost to the minimum. The objective is to build and maintain ample liquidity and increase the sensibility in the balance sheet to hikes in the interest rates, which has been reflected in higher net interest margin. This strategy, added to the Central Bank's rate hikes, increased the cost of deposits during the quarter.
Funding mix
2Q15
1Q16
2Q16
COP Million
Checking accounts
17,852,471
14%
21,894,531
14%
20,612,607
13%
Saving accounts
39,136,638
30%
46,863,823
29%
44,690,042
29%
Time deposits
39,165,003
30%
46,788,999
29%
48,178,387
31%
Other deposits
4,135,788
3%
5,023,147
3%
3,888,370
2%
Long term debt
15,127,037
12%
18,586,652
12%
18,102,041
12%
Loans with banks
15,161,308
12%
20,441,690
13%
20,416,321
13%
Total Funds
130,578,245
100%159,598,842
100%
155,887,768 100%
Shareholders' Equity and Regulatory Capital
Shareholders' equity at the end of 2Q16 was COP 19,337 billion, increasing 3.5% or COP 653 billion, with respect to the COP 18,684 billion reported at the end of 1Q16.
Bancolombia's capital adequacy ratio was 13.16% in 2Q16. This figure highlights the company's solid capital position.
Bancolombia SA published this content on 18 August 2016 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 05 September 2016 07:25:05 UTC.
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