Davivienda aims to grow loans 24% in 2012 fueled by SME, corporate business

Tuesday, October 25, 2011

Colombia's third largest bank, Davivienda, is aiming to grow lending 24% - above the 18% growth expected for the banking market - in 2012 on the back of strong expected expansion in its SME and corporate businesses, chairman Efraín Forero told BNamericas.

"We have room to grow in the corporate segments such as infrastructure, agribusiness and mining, where we expect to see less partaking from international banks," he said.

In October 2006, Davivienda won the auction for state-owned Bancafé with a US$920mn bid.

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Bancafé was mainly geared toward the corporate segment, and Forero said Davivienda has been able to grow the acquired bank's platform such that it now has the potential to compete with the system's two largest banks, Bancolombia and Banco de Bogotá, in that business.

Davivienda grew loans 23.4% in the year through end-September to 24.6tn pesos (US$13.1bn), equal to a roughly 13% market share.

The bank is Colombia's leading bank in the consumer loan segment, but its corporate portfolio has grown to represent some 45% of its total loans today, Forero said.

"Our SME portfolio has been growing very favorably, not only in terms of volume but also in credit quality and in the provisions to cover for possible losses," the executive said.

To help the bank's growth in the SME segment, the Inter-American Investment Corporation (IIC) recently approved an up to US$30mn revolving credit line for Davivienda, which will be used to provide financing for SMEs in Colombia in a variety of productive sectors.

The operation is expected to support some 100 SMEs, Piedad Acuña, the IIC investment officer in charge of this operation, said in a press release.


Last week, Davivienda's board approved the subscription price for the second issue of up to 40mn preferred shares at 20,000 pesos each, for a total of 800bn pesos.

Proceeds from the issue will go toward financing possible purchases, lifting the bank's solvency ratio to 16% and funding next year's projected loan growth.

Davivienda is owned by the local Bolívar group. It has 550 branches, 1,404 ATMs and more than 3.8mn customers.