Banks on way to beating 2010 profits handsomely, based on Jan-Sep figures

Tuesday, November 8, 2011

Colombian lenders are on track to posting considerably higher profits this year compared to 2010, as accumulated earnings reported by financial regulator Superfinanciera for January-September remained strong, Felipe Toro, senior equity analyst at brokerage Interbolsa, told BNamericas.

Earnings for the first nine months of this year expanded 12.2% compared to the same period in 2010, to 5.22tn pesos (US$2.73bn), and grew by 664bn pesos in September alone compared to August.

Colombian banks posted combined earnings of 5.92tn pesos in 2010.

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"The banks' good results in the period were driven by strong interest income, as well as lower provision expenses," Toro said, adding that he does not see these drivers weakening for the rest of the year.

The biggest profit generators in January-September were the system's three largest lenders, all of them locally owned. Bancolombia (NYSE: CIB), Banco de Bogotá and Davivienda earned 932bn pesos, 802bn pesos and 433bn pesos, respectively.

The system's largest foreign-owned lender, BBVA Colombia, booked earnings of 348bn pesos in the nine months.


Loan growth dynamics remained strong in the year ended September, rising 23.4% to 205tn pesos, as banks continued to seize the greater appetite for loans amid good liquidity conditions.

But the expansion rate decelerated 40 basis points compared to January-August, mainly as a result of several interest rate hikes decreed by the central bank earlier this year, as well as recent prudential measures introduced by Superfinanciera.

Toro said the slowdown trend should continue through the end of 2011, and forecasts loans to end this year with a 20% nominal expansion, equal to roughly three times GDP growth.