Grupo Aval Acciones y Valores S.A. Q2 FY2025 earnings call

• Net income for the quarter was COP 494.9 billion, the highest in 3 years, growing 37% quarter-over-quarter and 142% year-over-year. - Net interest margin reached 4% for the first time in 3 years, with consolidated NIM on loans at 4.5%. - Banks worked on improving deposit mix toward retail funding, with peso-denominated deposits by individuals increasing. - Progress in payment business with new authorization for low-value payment management. - Synergies and efficiencies initiatives with 7 key areas like procurement, talent management, etc. - ESG progress including double materiality assessment, corporate governance developments, environmental and social impact initiatives.

During the second quarter of 2025, Grupo Aval's gross loans grew 3.2% year-over-year, with retail loans driving growth. Consumer loans grew 6% year-over-year, mortgages grew 20% year-over-year, and commercial loans expanded 0.3% year-over-year. Deposits grew 6.8% year-over-year. The net interest margin reached 4% on a consolidated basis, with NIM on loans at 4.5%. Retail loans contributed to growth, with consumer and mortgage loans showing positive trends, while commercial loans faced aggressive price competition. Absolute figures: assets were COP 336 trillion, gross loans COP 199.4 trillion, deposits significant in funding, etc.

• Expect 2025 loan growth close to 7%, with commercial loans growing ~5% and retail loans ~9%. - Consolidated NIM expected in the 4% area, with loans in the 4.5% area. - Banking segment NIM expected in the 4.7% area, with NIM on loans in the 5.3% area. - Cost of risk net of recoveries expected at 1.95% area. - Return on average equity expected in the 10.5% area. - Cost to assets expected in the 2.75% area, income from nonfinancial sector at 90% of 2024 level, fee income ratio at 21% area.

• Economic and business condition changes. - Interest and currency rate fluctuations. - Fiscal sustainability challenges. - Regulatory changes impacting financial performance, like changes in interest rate caps for consumer loans.

Q: Regarding cost of risk, was the low figure due to high recoveries or lower provisions? And is it a repeatable trend?

A: Cost of risk was positive, but guidance of 1.95% remains. The view on cost of risk numbers is positive but sticks to the given guidance.

Q: About other income, what was the reason for its performance?

A: Other income had solid performance with various components including recoveries of controversies, but offset by higher expenses in some areas. Overall, sticks to overall guidance.

Q: How does NIM evolve given lower monetary policy rate reduction?

A:...We are actively focusing on expanding NIM by changing mix. Expect NIM on commercial side to pick up and consumer side to continue improving as rates go down, though slower than anticipated due to slow monetary policy.