Banco Davivienda (PFDAVVNDA) Q2 2024 earnings summary

Executive summary

• Net result for 2Q24 was COP -74 billion, with ROAE at -1.92% and ongoing profitability challenges, but improving trends and guidance for a return to profitability in the second half of the year.

• Gross loans reached COP 139.6 trillion, up 3.0% sequentially but down 1.0% year-over-year, mainly driven by commercial and mortgage segments, while consumer loans contracted.

• Macroeconomic conditions in Colombia remain in adjustment, with inflation above target and moderate GDP growth; Central America shows positive but decelerating activity.

• Digital transformation advanced, with 91–93% of Colombian customers now digital and DaviPlata reaching 18 million users.

• Sustainable loan portfolio grew 25.3% year-over-year to COP 18.8 trillion, now 13.4% of gross loans.

Financial highlights

• Net interest margin (NIM) for the quarter was 5.91%, up 20 bps sequentially and 32 bps year-over-year; cost of risk decreased by 91 bps to 4.26%.

• Operating expenses growth was contained, aided by efficiency strategies, with 12-month OPEX growth at 3.4% year-over-year; one-off personnel expense impacted quarterly and annual expense growth.

• Non-financial income decreased 13.9% sequentially but grew 12.3–12.4% year-over-year, supported by fees and commissions.

• CET1 ratio closed at 10.12–10.4%, down 28 bps from Q1, but remains above regulatory minimums.

• Cost-to-income ratio stood at 53.7–55.2% for the quarter.

Outlook and guidance

• Gross loans expected to grow 5–7% in 2024, with commercial up 10–12%, mortgages 7–9%, and consumer down 4–6%.

• NIM expected to close the year between 6–6.2%; cost of risk maintained at 3.5–3.8%.

• Return on average equity (ROE/ROAE) guided to 1–4% by year-end; CET1 expected between 10.3–10.8%.

• Non-financial income to grow 8–10%; expenses to rise 3–6% in 2024.

• Management continues to focus on digital adoption, risk management, and sustainable finance.