Banco de Bogotá to open 40 branches, step up retail focus

Tuesday, March 14, 2006

Colombia's second largest bank Banco de Bogotá plans to open 40 branches this year and grow its retail loan portfolio 10 percentage points, bank VP María Luisa Rojas told BNamericas.

Banco de Bogotá has so far been heavily focused on corporate lending and Rojas said the change of strategy points at reaping the benefits of the higher-margin retail segment. If the bank hits its retail lending goal for this year, then retail would represent 40% of the overall loan portfolio.

While Rojas predicts a fierce competition in the consumer loan segment this year, she is still confident the bank will surpass its 60% growth in 2005 to reach 80% this year.

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The bank holds a 10.6% market share in the Colombian banking system in terms of loans and Rojas expects to keep it by growing overall loans 30% this year.

In terms of profits, the bank saw earnings rise 33% to 393bn pesos (US$174mn) last year thanks to higher returns from fixed-income instruments and extraordinary gains. Rojas said the bank aims for a more modest 14% profit growth rate this year.

On March 10, shareholders approved a 104-peso per share dividend, Rojas said.


While Banco de Bogotá has grown organically over the last few years, Rojas said the bank will present a bid in this week's auction of liquidated bank Megabanco.

Colombia's deposit insurance fund Fogafin will auction Megabanco on March 16. The minimum bidding price for Megabanco will be around 690bn pesos.

Another five financial institutions have also bought the bidding rules for Megabanco to date: Davivienda; Colombia's largest bank Bancolombia (NYSE: CIB); the local unit of Spanish group Santander (NYSE: STD); General Electric's (NYSE: GE) consumer finance unit GE Money; and the Fundación para el Desarrollo del Caribe, Fundesarrollo.

Megabanco operates 187 branches throughout Colombia and has some 2,000 employees.

Banco de Bogotá saw assets and equity grow 28% and 60% last year to 13.9tn pesos and 1.93tn pesos respectively. Liabilities were up 24% to 12.0tn pesos.

Grupo Aval controls Banco de Bogotá as well as Banco AV Villas, Banco Unión, Banco de Occidente, pension fund administrator Administradora de Fondos de Pensiones y Cesantías Porvenir and Leasing de Occidente.