Grupo Cibest S.A. Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Corporate Formation: Grupo Cibest's formation involved legal transactions, asset transfers, etc., with no impact on operations. Share repurchase program launched on July 17 to buy up to COP 1.3 trillion until June 24, 2026; 5.2% of shares repurchased as of July 31.
• Financial Performance: Q2 2025 ROE at 17.5%, NIM rebounded to 6.6%, cost of risk 1.6%, deposits exceeding loan growth. Net interest income increased 2.5% due to loan and investment growth. Asset quality improved, 30-day NPL ratio declined. Operating expenses grew 5.7% quarter-over-quarter, efficiency ratio at 51%.
• Nequi Progress: Close to breakeven, deposits up 77%, loans up nearly 5x, activity ratio near 80%.

Segment Performance

• Bancolombia: Stand-alone accounts for 48% of holdings equity and 66% of total assets as of June. Second quarter pro forma ROE was 26%. Contributed nearly 78% of total net income.
• Banco Agricola: Delivered high returns exceeding its relative size.
• Nequi: Serves over 25 million clients, loans totaled COP 1.1 trillion (4.7-fold increase year-over-year), activity ratio approaching 80%.
• Wompi: Payments platform with sustained growth in active users and transaction volumes.
• Wenia: Strengthening presence in digital assets with COPW stablecoin.
• Loan portfolio: 75% of total assets, flat quarter-over-quarter but 4.4% growth year-over-year; consumer loans regained momentum, mortgages fastest-growing.
• Deposit growth: 2.4% quarter-over-quarter, 9.6% annual, outpacing loan growth; savings accounts driving growth.

Guidance

• Revised 2025 guidance: Loan growth adjusted to ~5.4%, NIM to ~6.3%, cost of risk 1.6%-1.8%, ROE revised to ~16%.
• Nequi on track to reach breakeven by Q1 2026.

Risks

• Political polarization in Colombia affecting economic and business environment.
• Volatile global economic conditions, currency exchange rates, interest rate changes.
• Competition from new entrants affecting deposit acquisition and market share.
• Fiscal challenges in Colombia leading to credit rating downgrades.

Question and Answer

Q: Update on political landscape ahead of presidential elections and key dates; NIM expectations and strategy; cost of risk sustainable level.

A: Juan Carlos Mora and Mauricio Botero Wolff discussed political noise, Central Bank rate stance, NIM correlation with interest rates, cost of risk trends.

Q: Clarification on Bancolombia unit ROE; Nequi breakeven view.

A: Mauricio Botero Wolff explained pro forma ROE and Nequi's progress towards breakeven.

Q: Breakdown of loan growth by segment; pathway to maintain 16% ROE.

A: Mauricio Botero Wolff broke down loan growth by segment and discussed operational strategies for ROE.

Q: Nequi lending economics, cost of risk, margins, scalability.

A: Juan Carlos Mora provided details on Nequi's loan book, interest rates, cost of risk, and scalability.

Q: Cost of funding sustainability in Colombia; buyback acceleration.

A: Mauricio Botero Wolff discussed funding cost strategies and buyback plans based on solvency ratios.

Q: Impact of SURA's restructuring on Grupo Cibest; international operations overlap.

A: Juan Carlos Mora addressed SURA's structure impact and future international growth possibilities.