Grupo Cibest SA (CIB) 2003 Q3 法說會逐字稿

Good morning and welcome everyone to Bancolombia third quarter, year 2003 Earnings Conference Call. Today's call is being recorded. With us today, we have the President and CEO, Mr. Jorge Londono, and the Financial VP, Mr. Jaime Velasquez. At this time I would like to turn the call over to Mr. Londono. Please go ahead, sir.

Thank you. I wish to thank each and every one of you for your interest and attendance of this conference call, which we have prepared to share with you Bancolombia's results.

Let's talk first about the economy. The government has reacted quickly to the apparent non-approval of the referendum and has presented to the Congress a fiscal package that amounts to an even higher figure than what was expected from the referendum. The removal of the Ministry of the Interior and the appointment of a new minister, a former private sector leader, and a recognized very good negotiator, is a sign that the government is trying to put every effort for the approval of these proposals in the Parliament.

It is important to highlight that the tax reform includes some complementary measures devised to accelerate the economic recovery as concerns the income tax reduction for re-invested gains and also the sales tax rebate for purchases with credit and debit cards.

The main macro-economic variables in the country have been evolving satisfactorily during the last few months. The result of the main variable related to GDP confirm that the Colombian economy will grow during 2003 higher than what was initially expected.

At the end of the first half of the year, the economy grew 3.13% with respect to the same period of the previous year. The reduction in the exchange rate and the behavior of the interest rate concerns the future stability of prices. Let’s say, below 7% definitely.

For interest rates, we expect that the policies of the Central Bank will allow us to maintain relative stability in the level of interest rates for the end of the year.

In the area of the exchange rate, we continue experiencing a very high volatility of the exchange rate during this year, as a result of the diverse policies. We do not, however, expect extreme devaluation or revaluation in the short to medium term.

The consolidation of the economic growth and the continuity of investment programs is generating new jobs, and the potential commercial agreements that might be negotiated by the country, will allow the unemployment rate to decrease in the rest of this year and the coming year.

Now as far as Bancolombia's second quarter results, we would like to highlight the following points. Bancolombia's net income amounted to Ps 118.4b during the quarter ended September 30, as compared to a net income of Ps 122.8b in the previous quarter. Net income for the nine months ended in September 2003 amounted to Ps 323b, increasing 170% as compared to the Ps 120b that we had in the same period of 2002.

Net interest margin decreased over the quarter to 8.2% from what we had in the previous quarter of 9.9%. This was exactly as we mentioned in our previous conference call, that we were expecting. In Q2, if you remember, we had the benefit of good valuation of our investment portfolio. This decrease was the result of lower net interest income. However, the accumulated net interest income at September 30 totaled Ps 741b, increasing 62% with respect to the previous year.

Total fees and income from services increased 14% year to date. They have a very good increase of 15.6% as compared with the previous quarter.

The annualized return on equity and return on assets for the third quarter was 33.8% for the return on equity and 3.6% for the return on assets. Those are results that have us very happy.

Now let's talk a little bit about our balance sheet. In respect of the assets, during the quarter the total assets increased just above 1%. The increase in total assets was primarily due to a larger loan portfolio. The increasing loan portfolio continues [firmly] in the corporate as well as in the retail lines.

Bancolombia's total gross loans increased 9.5% over the quarter, and 22.6% over the year. We would like to point out that during the quarter, corporate loans displayed a greater performance, increasing more than 10%. In addition, net lease for the quarter grew also 7% over the quarter. At the same time, total retail loans increased 7.5% in this period.

As of September 30, the Bank's past due loans as a percentage of total loans were 1.5%, compared to 1.8% at the end of the previous quarter, ended June 30.

On the liabilities side, the size of total deposits decreased by 1.4% during the quarter. The Bank's funding mix improved as a result of a 5.4% increase in non-interest bearing deposits, while the interest-bearing deposits decreased by almost 3%.

We would like to remind you that checking accounts usually grow in the second half of the year, reaching its highest level in December.

On the equities, in September we had the Bank's consolidated ratio of technical capital to risk-weighted assets at 13.6%. However, you have to keep in mind that unrealized gains on the investment debt securities totaled Ps 97b at the end of the quarter.

On the income statement, we mentioned already that Bancolombia's net income amounted to Ps 118.4b during the quarter, and this is a very similar figure to the one that we had in the previous quarter. This is the result of maintaining a high income trend presented by the Bank during the current year.

Net interest income decreased 16% during the quarter, and that is due to a 10% decline in total interest income as a result of the lower valuation of the investment securities portfolio during this period. In addition, total interest expense increased 4% during the period, being driven by high interest paid on overnight funds.

On provisions, we would like to say that total net provisions for the third quarter of 2003 amounted to Ps 46b, which is a lower figure than what we had in the previous quarter, but for the first nine months of the year provisions have been growing at 61% as compared with 2002.

Commissions from banking services and credit card merchant fees, among others, showed a very dynamic result in the quarter, resulting in an increase of 15.6%, and 20.5% year over year.

On operating expenses, during the quarter we had a growth of 3%, mainly due to a growth of administrative and other expenses, which increased as a result of non-recurrent costs, non-recurring expenses, which amounted to Ps 6b.

During this quarter we received dividends from Conavi in the amount of Ps 19.5b.

Talking about our Panamanian subsidiary, the total assets of this subsidiary decreased during the quarter by 5.9%, driven by lower overnight funds sold as a result of a reduction in short-term deposits. Total net loans increased 25%, during the quarter.

The subsidiary reported a net income of $10.7m during the quarter, compared with $11.7m in the previous quarter. Basically, this was due to the lower net interest income that we already explained, because of the movement in our balance of our overnight funds.

It is also important to compare with the previous year. In the first nine months of the year, the net income of the Panamanian subsidiary went up from $7.6m to $13.6m.

Some current recognition during this period. In September 2003, Bancolombia was named for the second consecutive year as the Bank of the Year in Colombia by the magazine The Banker.

Last September, Bancolombia received from American Express, the international distinction 'Exceptional Marketing Award' in recognition of Bancolombia's integral strategy in launching the American Express card.

On November 1, Bancolombia signed a collective bargaining agreement with our labor union Sintrabancol, and the industry union, Uneb. This agreement will be effective from November 2003 until October 2005. We have defined a salary increase in line with that of the industry, of 9% for the first year, and inflation plus 1% for the second year.

Finally, we would like to announce that the Miami agency opening will be in the month of December.

We have presented this summary of our quarterly results, in which we showed that the Bank has obtained a net income very much in line with what has been the good results of this year. We have explained how our main lines remain with a good dynamic.

At this time we would like to take your questions, and we would be happy to hear your comments on the information presented.

At this time I would like to inform everyone, in order to ask a question, please press '*' then the number '1' on your telephone keypad. If you would like to withdraw your question, press the '#' key. We'll pause for just a moment to compile a q-and-a roster roster.

At this time there are no questions.

OK. Thank you again for your presence.

From our comments we would like to highlight the fact that we - even though the news in the country has been numerous and quite important - we believe that the economy remains stable. The signs of the recovery also remain stable, and we believe that the fiscal program continues to be tackled with professionalism, and hopefully with very much effectiveness.

On the other hand, the Bank remains very dynamic as well, and we are confident that the results that we are showing, that have been very stable for the year, are going to remain so for the rest of 2003.

If you have any further questions after this conference call, as usual I remind you that Maria Villa will be happy to provide you with whatever comments or answers we can format for you, on the telephone number given on the press release.

Thank you very much.

Thank you.

Thank you. This concludes today's Bancolombia third quarter, year 2003 earnings conference call. You may now disconnect.