Banco Davivienda (PFDAVVNDA) Q3 2024 earnings summary

Executive summary

• Net profit for 3Q24 was COP 109 billion consolidated, a return to profitability, with ROAE at 2.81% and ROAA at 0.24%, reflecting improved financial expenses and non-recurring income from Central America operations transfer.

• Gross loans reached COP 140.8 trillion, up 0.8% quarter-over-quarter and year-over-year, led by commercial and mortgage segments, while consumer loans declined.

• NIM improved to 5.64%, supported by lower funding costs and effective interest-rate risk management.

• Digitalization and sustainable finance advanced, with DaviPlata users at 18.3 million and sustainable loans up 23.8% year-over-year to COP 19.8 trillion.

• Major events included the acquisition of EPAYCO.COM S.A.S. and a USD 50 million Biodiversity Bond agreement with IFC.

Financial highlights

• Gross financial margin for 3Q24 was COP 2.18 trillion, up 0.4% quarter-over-quarter, while accumulated margin fell 6.7% year-over-year.

• Non-financial income grew 13% year-to-date, despite a 1.4% quarterly decline due to seasonality.

• Operating expenses growth slowed, reflecting efficiency strategy amid high inflation; operating expenses decreased 3.0% quarter-over-quarter.

• CET1 ratio at 10.37% and total capital adequacy at 14.74%, both above regulatory minimums.

• Cost-to-income ratio improved to 54.3% in 3Q24.

Outlook and guidance

• Loan portfolio growth expected at 5%-7% for 2024, with commercial and mortgage segments leading and consumer loans recovering gradually.

• NIM guidance narrowed to 5.7%-6% for 2024, with gradual margin expansion anticipated.

• Cost of risk guidance maintained at 3.5%-3.8%; total PDL expected at 4%-4.5% by year-end.

• ROAE expected between 0% and 2% for 2024; mid to high single-digit ROAE expected for 2025, normalizing to 10%-15% by 2026.

• Non-financial income and operating expenses projected to grow 8%-10% and 3%-6% year-over-year, respectively.