Grupo Cibest SA (CIB) 2010 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to today's conference call of Bancolombia's third-quarter 2010 earnings. My name is Marcella, and I will be your coordinator for today. At this time, all participants are in a listen-only mode. Following the prepared remarks, there will be a question-and-answer session. (Operator Instructions)

Please note that this conference will include forward-looking statements, including statements related to our future performance, capital position, credit-related expenses, and capital losses of our forward-looking statements, whether made in this conference call, in future filings, in press releases or verbally, address matters that involve risk and uncertainties.

Consequently, there are factors that could cause actual results to differ materially from those indicated in such statements, including changes in general economic and business conditions, changes in currency exchanges -- exchange rates and interest rates, introduction of competing products by other companies, lack of acceptance in new products or services by our targeted clients, change in business strategy and other various factors that we describe in our reports filed with the SEC.

With us today Mr. Jorge Londono, President and CEO of Bancolombia; Mr. Sergio Restrepo, Executive Vice President of Corporate Development; and Mr. Juan Carlos Mora, Chief Risk Officer.

I would now like to turn the presentation over to Mr. Jorge Londono. Please proceed, sir.

Thank you very much and good morning to everybody. And also I would like to thank each of you for your interest and attendance to the third-quarter results call. As always, we would like to start with a review of the economic environment. At this time, I will ask Sergio to share with you our views on this matter. Go on, Sergio.

Thank you, Jorge, and good morning to all of you. A few ideas about the Colombian -- recent Colombian economy. The economic environment, economic environment improved considerably during the first half of 2010. According to the latest data, the economy grew at a rate of 4.5% in the second quarter of the year, following a growth of 4.2% in the first quarter. This result was driven by higher public expenditure which rose 5.9% and a stronger household consumption, which increased 3.9% during the same period.

Industrial production continued its positive performance; it increased 4.4% compared to last year. The capacity utilization rate reached 78%. Exports increased 21.9% as of August, driven by higher commodity prices and higher export volumes. Unemployment decreased in September reaching 11.5%, a level similar to the one in 2008. It's a good improvement on that specific field. We maintain our GDP growth projection at 4.7% for 2010 and 4.1% for next year.

In terms of interest rates, Central Bank left the repo rate unchanged at 3%, and we expect them to remain stable for the rest of the year. Inflation ended at 2.28% in September within the range of 2% to 4% established by the Central Bank.

Last Friday, October 29th, the government and Central Bank announced a packet of measures to prevent peso appreciation, which has been 6% against the dollar, during the year. First, the government will postpone the inflow of $1.5 billion up to the next year; the funds will be held outside the country. Secondly, will match debt service and new external debt in order to introduce to the country roughly $400 million next year. Will contract up to $3.7 billion in forward coverage for external debt service, will propose a significant reduction in import taxes.

The Ministry of Agriculture will offer a limited exchange coverage for agricultural export sectors. The return of income -- it will -- the income tax for loans will return. There was an exemption on that, specifically with external entities, except those contracts signed by local financial entities in short-term finances -- financing originated in overdraft and trade. Those payments will have withholding tax. And finally, the DIAN, which is the IRS, will control the royalty payments.

Looking ahead, we expect the Colombian economy to remain in [a start of] growth, as lead indicators maintain a solid performance and as local authorities continue to take appropriate measures to support economic activity.

Moving to Central America and El Salvador specifically, we see some signs of improvement in economy. Exports increased 16% as of September, compared to the same period last year, driven mainly by sales of non-traditional products and maquila.

Export to US increased a significant 21% over the period, while exports to Central American countries increased 14%, reflecting a pickup in external demand. Remittances, on the other hand, increased 2.4 as of September compared to the same period in 2009, a figure that although still low should improve in line with the recovery in the US labor market. This is basically the highlights of the economy, Mr. Londono.

Thank you. I would like to recall you of the slide presentation that we have in our website that supports this presentation. If you want to follow it, I will ask you to start in page number two.

For the third quarter, we generated COP375 billion. That is an increase of 29% compared with the second quarter, and also an increase of 17% when we compare it with the third quarter of the previous year. Cumulative results in September are COP1 trillion, and that is 14% higher than those of the same period of last year.

It is very important to see that this is a result of the consolidation of the growth trend of our loan portfolio, also the result of an improvement in the quality of assets. This also, it has an incidence on it, the low cost of funds that resulted from our funding strategy, and other factors also contributed to it.

We have reduced our level of provisions in accordance with the improvement of the quality of our assets and there was very good performance of non-interest income. In our investment side, the better price of our securities also had a positive impact in our gains in securities in this quarter.

On asset quality side, I would like to show you the performance, which is illustrated in slide number three. If we go to the analysis of the asset quality, we will see that the provision charges, the loan deterioration and the allowances for loan losses are in a very good trend at the end of the quarter. During this previous period, the net provision charges were COP138 billion.

I would like to mention that the loan deterioration during the quarter, that is the loans that start to be considered past due, during the quarter was very good, was very low. This deterioration was COP73 billion, one of the lowest that we have in the last quarter, and is 62% less than the corresponding figures in the third quarter of 2009. This is a sign of the health of the portfolio and the trend that I mentioned of the improvement of the quality of our assets.

Additionally, the recovery of the charge-off loans and foreclosed assets, which increased 18% during the last 12 months, is also a positive sign that reflects the better economic conditions are actually having a positive impact in the Bank performance.

You can also take a look at slide number four, and we show there that the past due loans, those were -- those that are overdue more than 30 days, are COP1.5 trillion at the end of the quarter. This amount represents 3.4% past due loans over the total loans of the institution. And we have in the second quarter a figure which was higher, was 3.6%, and it's also lower than the 4.1% that we had in the third quarter of the previous year.

Bancolombia continues with a significant level of allowances for loan losses, which represent at the end of the quarter 5.5% of the total loans. These allowances represents also 163% of past due loans, a ratio greater than the 154% that we have at the end of the second quarter, the previous quarter of this year. On the other hand, these allowances represent in loans that are classified C, D and E, 118%.

If we consider the past due loans in a more international way, that is 90 days in every category and 120 days for mortgages, our delinquency rate will be 2% and our allowances will cover 2.74 times the past due loans.

Net interest income, going to the P&L side, and illustrated in slide number five, net interest income amounted to COP859 billion and was 1% lower than the one in the second quarter of this year, but 1% above what we have in the corresponding quarter of 2009. The low interest rates presented in Colombia have put a lot of pressure on the net interest income.

But we have been compensated by the ability of Bancolombia to obtain a lower fund in -- a lower cost in fund -- funding. This lower funding cost is the result of our efforts in re-price the liabilities during the last quarter and also to improve the deposit mix.

The weighted average cost of our deposits was 2.5% for the quarter, which is lower than the 2.6% of the second quarter and certainly much lower than the 4.2% of the third quarter of 2009. Year ago, time deposits represented 47% of the total deposits of the Bank. In the third quarter of this year they represented only 40%. This decline has been in line with our funding strategy, which we have been implementing during the last quarters and that aims to take advantage of the local liquidity and the low interest rates while increasing deposits in savings and checking accounts and reducing the time and the cost of the time deposits.

On the other hand, the security portfolio generated 11% more returns than it did during the second quarter. This was mainly the result of an increase in the price of the Colombian Treasuries. Deposits reached COP42 trillion; that is 74% of liabilities at the end of the third quarter. They increased 3% in this quarter.

The interest margin is analyzed and illustrated in slide number six. The annualized interest margin for the quarter was 6.2%. We are seeing a figure which is slightly below what we have in the previous quarter, and certainly we foresee from this time on that the possibilities of consolidation of the growth trend in the demand for credit will allow us to have also a good evolution in the pricing of credit which has been, by comparison terms, very low in Colombia.

Now, let's take a look at fees and income from services. In the slide number seven, we show that net fees and income from services totaled COP390 billion for the quarter. It's slightly lower than those in the previous quarter, but still 6% above the corresponding quarter of the previous year. Credit and debit card fees increased 2% versus the previous quarter, and 7% versus the third quarter of 2009. These fees represent about a third of the total fees. On the other hand, fees related to payments increased 7% compared with the second quarter and 17% compared with the previous year.

The areas in which we had that reduction, which is quite corresponding with the current situation of the economy, was the fiduciary activities. Our asset management activity has declined during the quarter and during the last 12 months due to a reduction of the value of portfolios and also to a reduction in the rate of interest.

Brokerage fees also present a decrease versus the same quarter, but it is very stimulating that it's already increasing during the year, and compared with the second quarter they increased 9%. That is a good result of the recent restructuring of our stock brokerage.

It is worth mentioning the year-over-year growth of banking service fees and other services, which includes investment banking fees as a main element. They were 23% greater than the fee generated in the third quarter of the previous year.

Let's take now a look at expenses. We are happy because we have expenses under control in view of the current conditions and circumstances and the tasks that the Bank is facing. During the third quarter, as we see in slide number eight, operating expenses totaled COP759 billion. This figure represents an increase of 2% when we compare with the second quarter and a 9% increment when we compare it with the third quarter of the previous year.

Personnel expenses, which includes salaries and benefits to employees, bonus payments and compensation totaled COP313 billion, remaining flat as compared with the second quarter and with a 13% increase when we compare with the previous year. These larger personnel expenses when compared with 2009 are explained by the annual increase in wages as well as the increase in bonuses which are being provisioned for the end of the year and in place of the good performance of the Bank profitability and the value generation of the activity.

Administrative and other expenses were COP372 billion. This represents a 4% increase when compared with the second quarter and 6% increase when compared with the previous year. This is also mainly explained by greater expenditures in rent, rent of real estate, technology, and leasing expenses related to the IT renovation project.

The very important area of transformation during this quarter is the loan portfolios because we, as mentioned before, are starting to be very good, very solid trends of growth. Actually, when we look at the figures from January to the end of September, we see a very high improvement of our growth; 23% is the growth from January -- from December to September, 23% growth of commercial loans and 19% growth of -- sorry, 23% growth of consumer loans and 19% growth of commercial loans.

This is what makes us slight positive of our [big] results. We are very happy of the profitability of the Bank of -- in this third quarter. Bancolombia gross loans increased 3.4% during the quarter and reached COP45.4 trillion.

Of the total portfolio, 23% is dollar-denominated loans, that is $5.8 billion. These dollar-denominated loans grew 8% compared with the second quarter and 11% compared with the corresponding quarter of last year. However, this positive performance was offset by the effect of the 6% depreciation of the US dollar that Sergio mentioned at the beginning, expressed in Colombian peso. Therefore, this growth appears to be 1% for the quarter and 4% for the last 12 months. So the figures that we show in our loan performance are to be considered under the light of this [re-evaluation] of the peso that diminishes the appearance of the growth. And so the growth is very dynamic.

The remaining 70 -- 77% of gross loans, all denominated in Colombian pesos, total COP34.9 trillion, almost COP35 trillion at the end of the quarter, increasing 4% with respect of the second quarter, and increasing 9% with respect to the previous year.

When analyzing the total loans by the categories that Bancolombia uses, it is clear that corporate loans play a key role in the growth of the total portfolio as they increased 4.5% with respect to the second quarter. The growth is the -- is explained by the demand of working capital by [trends].

The retail and in small and medium enterprises loans increased 3% in the period due to greater demand of consumer loans driven by a more dynamic economic environment. It is also important to mention the good performance that we have seen in the mortgage loans which reached COP3.7 trillion at the end of the quarter.

If we take into account securitized mortgages, we see growth of 3% quarter to quarter, and 11% year to year in this segment. During the past few months and in the meetings that we had, we had been talking about the growth. You can see that right now we are seeing a very dynamic environment. And specifically, we expect commercial loans to be very dynamic to the end of this quarter -- by the end of this year, sorry, due to the higher level of economic activities.

In terms of consumer loans, we continue noticing an increasing appetite that is mainly derived from the greater optimism of the population with respect to the economic performance of our country. And mortgages, certainly I feel very low penetration in Colombia, and we foresee a good growth in the midterm for that line.

In slide number 10, we show our financial position which is very good. Our liquidity continues to be very solid. Our ratio of net loans to deposits, including the borrowings from domestic development banks, reached 96% at the end of the quarter.

With regard to shareholders' equity, it ended the quarter in COP7.5 trillion, increasing 6% compared with the previous quarter and increasing 14% compared with the same period of the last year. Bancolombia's capital adequacy rating ended the quarter at 15.2%, which is well above the 9% minimum in Colombia.

Return on equity, this is illustrated and reported return on assets are illustrated in the slide number 11. The annualized return on equity for the quarter was 20.6%. And if we consider the first nine months, the annualized return is 19%. On the other hand, the return on assets was 2.4% for the quarter, improving in comparison with the previous quarter when we have 2.1%.

Finally, I would like to recall you of the successful offering and placement in international markets of subordinated bonds for $620 million. This happened in last July, and the quantity demanded was five times the amount offered. This shows once again it draws on confidence of the investors in the Bank, and it's a signal of the optimism with regards to the Company's and the country's future performance.

We're still -- we're confident. We are very happy to present a quarter with very good results and very good perspective. We also are very happy of our very solid liquidity position, our moderate funding cost, the diversity and the strength of our franchises, and our solid capital base that place us in an excellent competitive position to take advantage of the good economic environment and the growth opportunities that we have seen in the market.

At this moment, I will be very happy to take your questions and comments. And thanks again for your presence in this call. Thank you.

(Operator Instructions) And your first question comes from the line of Jason Mollin with Goldman Sachs. Please proceed.

Thank you. Hello, everyone. My question is on loan growth. Particularly you talked about the robust growth, year to date. If we look in the three-month period ending in September at the retail and SME book, the way you reported it, and we take away that the retail business which seems to be growing a little bit faster, maybe focus on working capital and trade finance, there, we actually saw a slowdown, a significant decrease quarter on quarter. If you can talk a little bit about what was driving -- what was driving that in your book, and perhaps talk about loan growth going forward, should we expect this year-to-date growth rates of 23% as you suggested, year to date in individual -- lending to individuals of retail, and 19% to commercial to continue or even accelerate going forward? Thank you.

Hello.

Sorry. I'm sorry that you were not listening to me. I've been talking for the last one minute with the mute on.

Sorry about that.

Okay. Thank you, Jason. You're right. Your comments on the figures of the growth of the credit for the quarter are precise. But our comment will be that we don't see any difference in the future performance of the lines of retail versus commercial loans for the rest of the year.

We see both lines very dynamic. And we don't think that what happened in the last quarter is an indication of our -- by divergence in the perspective of the evolution of the two lines.

I will tell you some examples of what we -- why we think so. When we look at the retail credit in the last months, we see that there is a tremendous good performance of the sale of automotive cars are booming in Colombia by historical standards. But even though the demand for other retail credit like consumer goods, televisions and things like that and other pure consumer credit, is even outpacing, is even above that demand for cars. So there is a slight effect in the quarter that still doesn't change the situation of the year.

If you remember, during my presentation I illustrated that from January to September, the total growth of retail is 23% and commercial is 19%. So I will say that both lines could be maintained in a similar rate of growth. It's mainly a good situation of expectations in the dynamic of the economy by the commercial sector as well as the consumer sector.

Is there any breakdown by country? I mean, is El Salvador causing this decrease, and we're seeing faster growth in Colombia, whether it's in working capital loans for SMEs, or the decline in trade finance?

You're right. The SMEs and retail credit in El Salvador is rather slower, while the corporate credit in El Salvador, for us, which are extending our presence to the rest of Central America, and not only in El Salvador, has been very dynamic. But you have to keep in mind that the total average rate of our operation in retail in El Salvador is very small. Because in the same pace that we are extending our activities in the commercial lending outside El Salvador and to the rest of Central America, we are not doing that in retail because that -- we don't have the infrastructure for doing that and it's not our objective at the moment. So the low demand of El Salvador has low impact in the total growth of retail activity for the Bank.

Great. And maybe just a follow-up question on the significant improvement in the level of charge-offs we saw. I think it was approximately 40% decrease quarter on quarter, and we saw the resulting lower loan loss provisions. How should we think about charge-offs? Clearly they have been volatile on a quarterly basis, and I guess in the commercial book you can have some lumpiness in that.

But is this a new level, given the improvement in the economy that we should think of charge-offs, if we put them as a percentage of total loans? Is this a way to think about the level, and this is a new sustainable level going forward with the improving economy?

Well, thank you, Jason. We certainly foresee this question of one of you. And we have been discussing a lot about it, and I want to be very open with you in what we think at the moment about this. We certainly believe that there is a new normal, that there is a new trend. We are not prepared to say how much that is going to move us in the adjustment of our policies of total provisions against past due loans yet.

We are trying to meditate it with a lot of care at the moment because we want to be very [prudent.] But certainly, I must state very clearly that this is a new situation, entirely different from what we had at the end of 2009 and -- or during 2009, and since the end of 2008, that were the conditions that led us to have a more conservative tone and more conservative structure.

So we will be, from here to the end of the year, adjusting probably that policy. But I don't want to anticipate what that is going to mean in figures, because certainly we have not finished that discussion yet.

Thank you very much.

Thank you, Jason.

Your next question comes from the line of Tito Labarta with Deutsche Bank. Please proceed.

Hi, good morning. So a question in terms of net interest margin going forward, just want to get a sense of your expectations for interest rates for next year, and how you see that would impact your net interest margin. Thanks.

Yes, thank you, Tito. That is a matter of great importance, and one that we know that you as investors and analysts are very much interested to hear about. Certainly, there has been a margin compression in Colombia during the last months, and it's one in which we feel very happy that we have been able to leverage the strengths of the Bank for improving the cost of funding and for leveraging our network of distribution to support that policy of better funding structure and better funding costs.

But we are also in the phase of seeing a consolidation of the growth of the demand at very high levels, which will also open something that for us is a matter of working in a positive way towards it, that is in a scenario in which possibly the prices are going to evolve in a better, in a better way, the prices, the level of credit that we charge in our different lines.

So what I could say about that is that we are very happy, that we have been able to manage the very challenging situation in margins that we have did during the last 12 months in which when you see the interest rates drop by 6 or 7 points and that we see a lot of space to move a lot of possibilities to work in managing the market in the near future. And definitely nothing as severe as already happened is going to happen in the near future, and probably there are going to be more positive trends that will allow us more room to maneuver. We will see what we do, but we certainly are seeing a lot of opportunities to working upon the margin levels.

Just to follow up a little bit on that, do you think that there is room for interest rates to come down at all, or just remain stable? And if -- do you think they could begin to pick up next year, like how much could they increase?

You know that we are very careful to talk about the future. But I will -- but what I will say is that we have been quite concentrated in managing our margins. And we believe that the future allows us a lot of room to maneuver in managing, not only costs, that we did successfully cost of funding, but we did successfully in structure of funding. From now on, I believe that we can manage also the pricing of our loans, and we can continue in stabilizing the newer structure of funding of the institution. In other words, we are seeing a lower [total] room for managing the margin in the coming months.

All right, thank you.

Thank you. Thank you, Tito.

Your next question comes from the line of Mariana Barros with JPMorgan. Please proceed.

Hi, good morning. I have a question, in the past, you guys have analyzed that a more -- a more normalized level of provisions for the losses -- to average loans would be something around 2%, and this quarter remains low and was 1.2%. So my question is when we should expect to reach again this more normalized level of 2%? Thanks.

Yes, Mariana, I believe that total cost of lending shouldn't be above 2% in the coming months. And as I was discussing before, we are trying to adjust our policy to see what the total provisions are the more -- the most adequate for the Bank in the coming future. So from your specific question of the total cost of funding, I will say that 2% will be available.

Okay, but --

The cost of lending, sorry, the cost of lending -- (technical difficulty).

But do you have an idea when we should see that?

We already have that during the last quarter. The total cost of our provisions were about 2%. So we are already on that, looking forward.

Okay. Thanks.

You're welcome, Mariana.

And your next question comes from the line of Andres Jimenez with InterBolsa. Please proceed.

Yes. Good morning, gentlemen. My question is more in the reference of your operation in El Salvador. Recently, you guys sold -- or during the process of selling the insurance to Suramericana and actual pension to Proteccion. And knowing that your competition has actually acquired a big portion of the Central American market and the money you're going to have there, can you elaborate a little bit more on what your strategies or where you're going to actually focus and how you're going to actually develop now that you have additional competitors in the region? Thank you.

Thank you, Andres. Well, we -- as we have mentioned before, we are very excited with what we have achieved in El Salvador. And I was saying before that we are also very happy to see what we have been able to achieve in the corporate and commercial credit in the neighboring countries in Central America. And we have made not a secret of our interest of our strategy in the long term of consolidating the regional activity of the Bank.

We -- as I was saying before, we see dynamic in the Central American economy and the Salvadorian economy, and also what Sergio mentioned at the beginning of this call, he was saying that we see since that -- our basis for an optimistic view of Central America. Family remittances are improving and total consumption is improving in El Salvador, and in Central America as well.

I think that Central America will be a very good beneficiary of even the weak recovery that is already taking place in the United States. And we see that exports from El Salvador are very, very dynamic, in traditional exports and new products as well. So it all depends on the possibility. As we always said, we are aggressive for buying, but very shy for taking the decision of doing it.

We want to make sure that when we do our decision, as fortunately we have done in the past, we can be certain that it is going to create value for our shareholders. But we keep on looking.

And a follow-up on that question. How is your general -- how is the process of your general license coming along in Panama? I saw that the other day you guys announced that you're seeking it. When is this due? When is it going to actually incorporate during next year? When is it going to actually impact your numbers? Thank you.

Yes, we already made public that we are in the process of obtaining a local license in Panama. Very good economy, that of Panama. We are very happy. We think that we have a good growth for exploring that local market, particularly in the commercial area. And yes, we believe that we might, before the end of this year, get that license officially.

So it's going to actually be incorporated inside your numbers during the course of 2011 then?

Well, obviously, for 2011, that operation will be incorporated in our figures. It's going to be a start. But it's not exactly a greenfield start since, as you know, we are already in Panama. We have the largest operation of the financial center of Panama. Bancolombia Panama is the largest bank of the financial center. So even though we are not in the local market yet, we are not starting from zeros.

Okay. Thank you.

You're welcome.

And your next question comes from the line of Felipe Toro, InterBolsa. Please proceed.

Hello?

Felipe, your line is open.

Yes, hello. Sorry. Hello, everyone. So my question is related to the net interest income line in the income statement. You discussed along the presentation that on the interest expense side you have a clear path. But I want to see what are the strategies to increase the interest revenues. Because as we see, the increase in net income was mostly driven by the reduction in net provisions, so, how it's going to be that going forward.

Yes, thank you. As we mentioned before, we are seeing a very good growth. We are seeing that the most of the reduction of interest or probably all the reduction of interest has already taken place. And we have seen that the institution has been very successful in managing that tremendous reduction of interest during the last 12 to 18 months.

So we are optimistic that we are going to have room to maneuver, and room for management in the interest margin side by working in taking the opportunities for growth, and also by working in consolidating this new structure of funding of the institution, and perhaps working also in the pricing of our products to manage the margin in the best possible way.

Do you see a -- I understand were you -- you are going to be more aggressive in consumer lending or mortgage lending.

We are very aggressive on that. We are very much growth-oriented for mortgage. You can see in these figures, the figures that I was giving you, almost 20% or above 20% growth in commercial and in retail loans. Mortgage is an area in which we have been very, very dynamic. We have placed a new growth in the market, that we are very optimistic about it.

We are making the announcement during this week that Bancolombia is starting to provide 20-year loan in the mortgage credit in Colombia. That is a novelty for the Colombian market. And that is a step that we took in the view that under the current level of credits, certainly extending the total term, the total duration of the credit produces a significant reduction of the cost of credit.

Let me tell you that with this extension from 15 to 20 year, the total monthly charge through the time is reduced by 12%. So we are very optimistic. This together with the reduction of credit is reducing the total cost of mortgage credit for our clients in more than 25%. So we believe that during this end of the year, we are going to see a pickup in the demand of mortgages. We should see it.

So we are more than ready and more than willing to seize those opportunities. And we have a proven capacity in the Bank of taking advantages of those growth opportunities.

Okay. Thank you.

You're welcome.

(Operator Instructions) And your next question comes form the line of Alonso Aramburu with BTG Pactual. Please proceed.

Yes. Hi. Good morning. I wanted touch base on your expenses, and if you can give us a view of how you expected this line to move forward over the next coming quarters and your efficiency ratio to move as well, please. Thank you.

Thank you, Alonso. Yes, we mentioned during our presentation that we are happy with what we are seeing. Also we realize that the increase is significant. But the increases in our costs are justified by the modernization of our infrastructure. And under the current circumstances we have done a good job in stabilizing low level of growth of our expenses.

So what you can see in slide number eight is probably a good indication of what could be the evolutions over the future of our operating expenses. In other words, the rates that we have during this year is something that should be maintained, the rate of growth.

Great, thank you. And also just touching on fees as well, they've been growing around 3% or 4%, within 4% and 6% the last couple of quarters on a year-on-year basis. Do you see this figure picking up, particularly as loan growth picks up? And what are your expectations there for the next couple of quarters?

Yes, loan growth -- sorry, fee growth, fee generation activities are certainly dynamic. I tried to explain during the presentation that probably we have this negative impact of the fiduciary activity because of the low interest rates and the reduction in total volume of total assets managed by our fiduciary arm. But that doesn't erase the fact that we are seeing a very dynamic activity in the other areas. In total transactions of the Bank, total payments, we see very dynamic growth of the fee generation activity. And in investment banking and other advisory areas, we also see a lot of dynamics.

So as the economy picks up, as it is picking up now, also the demand for our fee generation process improves. And remember that more than a third of our fees come from credit cards. The Bank has been very successful in the card business, and we are becoming very much leaders of that activity. We have very clear leadership in total billing of the credit cards and getting very close to delivering total plastics of the country. So yes, we are bullish in the future of our fee generating process.

And just to follow up on your last comment on credit cards, what's exactly your strategy on credit cards and how to grow that business, and how does the usual rate in Colombia, the ceiling you have on charging interest on credit is affecting that strategy?

Yes, certainly, the control of credit is a problem. We criticize a lot of this policy in Colombia. But that is not something that very directly affects the profitability of the credit card business. That affects much more the microcredit area, in which nevertheless, we have been able to maintain very good growth and is the most dynamic line, very small one, but so the most dynamic line of our portfolio.

In credit cards, we are -- we have a very clear strategy and it's the same; it hasn't changed. We want leadership position in that market. We are leveraging the possibility of being the only AmEx dealer in Colombia. American Express is already the largest franchise for Bancolombia. And we believe that right now the market is very good because there is a big population just entering in the possibility of having a credit card. So we foresee possibilities of increasing the number of our card holders in the near future.

Thank you very much.

You're welcome.

And your next question comes from the line of Jose Restrepo with InterBolsa. Please proceed.

Good morning, everybody, a follow-up question regarding the international expansion. Presently, you set a trust affiliate in Peru; so when do you expect to have a banking operation in Peru just to complete your portfolio in that country?

Yes, there we are very happy that the decisions and our growth in Peru are making a lot of impact in the news and things like that. But I have to strengthen the fact that our operation in Peru is still a small operation, and it's on a specialized operation.

We have our activities in renting, which was the first thing that we opened there, our activities in fiduciary activity, which is being performed for the last two-and-a-half years. And recently, we have started with our leasing activity, which is something which we have started to do our first operations a couple of months ago.

We appreciate a lot, the Peruvian market. And as I mentioned before, our strategy in the midterm is to consolidate our presence in the region. But certainly, I will love to be able to answer your question, but I don't know when we are going to find the possibilities of growing further, but that is our objective, so.

Okay, thank you.

You're welcome.

At this time, we have no more questions. I would now like to turn the conference over back to Mr. Jorge for closing remarks. Please proceed.

Thank you, Marcella. And thank you everybody for your presence. I presented the result of the Bank during this quarter from -- which we are very proud. And we are very thankful for your attendance and your interest in this presentation. Thank you and good bye.

Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect. Have a great day.