Grupo Cibest S.A. Q2 FY2026 earnings call

• Overall Q2 2026 Financial Performance
  • Consolidated net income reached 2.7 trillion pesos, an 87% increase, with an annualized ROE of 29% and a quarterly ROE of 28.7%.
  • Net interest margin (NIM) expanded 91 basis points to 7.9%, supported by higher lending asset yields and strong investment portfolio performance.
  • Net provision expense fell 17% quarter-over-quarter to 1 trillion pesos, bringing the annualized cost of risk down to 1.6%.
  • Operating expenses declined 10% quarter-over-quarter (1.9% year-over-year), bringing the consolidated cost-to-income ratio to 43%.
  • Overall asset quality remains well contained, with stable 30-day and 90-day NPL ratios and declining Stage 3 delinquent loans.
• Strategic Milestones
  • Completed the 100% acquisition of Avista Colombia, strengthening capabilities in low-risk payroll lending, expanding inclusive financing access, and creating opportunities to scale the platform across Central America via combination of Avista's technology and Bancolombia's funding advantages.
  • Completed the Banismo divestment, with a proposed 1.2 trillion pesos extraordinary dividend from divestment proceeds up for shareholder approval in August 2026.
  • One-year mark of Grupo Cibest's transformation: ATR price increased over 90%, and H1 2026 ROE reached 21.5%.
  • NECI received regulatory approval to launch as an independent financial entity September 1, 2026, completing asset/liability/contract transfers to strengthen ecosystem monetization.
• Digital Ecosystem Progress
  • 1P continues expanding in the payments ecosystem via solutions like Neki Negocios, supporting long-term profitability.
  • Wenya is growing rapidly in issuers and transaction volumes, with the successful rollout of Wenya Connect and launch of USDW strengthening capabilities in digital assets and cross-border transactions.
• Capital Management
  • The 3-year share buyback program approved in April has already repurchased over 17 million shares worth 967 billion pesos in the last 12 months.
  • Intragroup capital transactions (capital contributions to NECI, AT1 instruments, subordinated debt) are deployed to optimize capital allocation and improve holding company returns.
  • Shareholders' equity grew 4.8% quarter-over-quarter driven by net income generation, with a comfortable solvency level to support growth and returns.

By business entity segment:

• Bancolombia (Colombia main operations): Delivered a standalone ROE of 36% in Q2 2026, posted net income growth that drove consolidated group results, led the quarterly reduction in provision expenses driven by stable economic conditions and large client recoveries, and maintains a standalone common equity Tier 1 solvency ratio of 13.9% as of June 2026.
• BAM (Central American operation): Recorded a 56% year-over-year growth in its cross-border US dollar loan portfolio to $580 million, reported NIM expansion driven by higher loan yields and mark-to-market investment gains, achieved a record low efficiency ratio of 42.2% (down from 44.5% quarter-over-quarter) and a full-year cost-to-income ratio of 43%, delivered a 20% Q2 ROE, and has broadly stable provision expenses as newer loan vintages improve portfolio mix.
• Banco Agricola (Central American operation): Recorded a 42% year-over-year growth in its cross-border US dollar loan portfolio to $751 million, reported NIM expansion driven by higher loan yields and investment gains, improved its efficiency ratio from 47.9% to 47% quarter-over-quarter, delivered a 20% Q2 ROE, and recorded higher provisioning consistent with loan growth in higher-risk, higher-risk-adjusted-return segments.
• NECI (digital financial subsidiary): Will begin operations as an independent Grupo Cibest entity starting September 1, 2026, has a monetized user base of 18 million with an 81.6% activity ratio, holds 7.6 trillion pesos in deposits (12% quarter-over-quarter growth), has a $2.2 trillion loan portfolio (14% quarter-over-quarter growth driven by low-ticket digital loans), reported 19% quarterly growth in financial income and 10% quarterly growth in net fee income, and maintains asset quality in line with management expectations. By loan product segment (Q2 2026):
• Commercial loans: Stable quarter-over-quarter, with slight year-over-year growth; 2027 projected growth around 8%, in line with nominal GDP.
• Mortgage portfolio: Grew 1.8% quarter-over-quarter and 12% year-over-year; projected 2027 growth around double digits.
• Consumer loans: Grew 0.5% quarter-over-quarter and 7.4% year-over-year, supported by strong growth in vehicle lending, Neki, and credit cards; projected 2027 growth around double digits.

• Loan growth guidance for 2026 remains unchanged at 7% to 8%. For 2027, management expects loan growth in the upper range of 2026's guidance, with double-digit growth projected for mortgages and consumer loans, and ~8% growth projected for commercial loans.
• NIM guidance for 2026 has been raised to 7.4% to 7.6% (up from prior guidance), supported by strong year-to-date margin performance; management guidance breaks out full-year NIM at ~8% for lending and ~3.5% for investments.
• Cost of risk guidance for 2026 is maintained at 1.6% to 1.8%, as credit quality has performed in line with expectations.
• Full-year 2026 efficiency ratio guidance is updated to ~48%, reflecting positive operating leverage from revenue growth outpacing expense growth.
• ROE guidance for 2026 is raised to 21% to 22% (up from prior guidance), with management expecting a sustainable long-term ROE above 20% even after interest rate normalization.
• 2026 Colombian GDP growth guidance was revised downward from 2.9% to 2.6%.

• Macroeconomic risks: Elevated persistent inflation in Colombia (above central bank target through 2028), the risk of severe El Nino driving additional upside pressure on food/energy prices and inflation, high interest rates expected to remain elevated through 2027, and continued fiscal sustainability challenges with a projected 2026 central government deficit of 6.5% of GDP and rising public debt.
• External and currency risks: The 15% year-to-date appreciation of the Colombian peso may weigh on exporter competitiveness, creating asset quality risks for exposed commercial clients. Global trade tensions, geopolitical uncertainty, and tighter global financial conditions create volatility in capital flows and financing costs.
• Operational and asset quality risks: The recent Colombian earthquake creates downside asset quality risk for loan portfolios exposed to affected regions. Deterioration in credit quality remains concentrated in specific consumer, SME, and commercial clients rather than broad-based systemic issues, but creates moderate pressure on overall credit performance. There is still uncertainty around potential new sector-specific taxes targeting the financial system under the incoming administration, though the risk of higher targeted taxes appears lower than 3-6 months prior.
• Interest rate and market risks: While the group's asset-sensitive balance sheet currently benefits from rising rates, sensitivity could shift once rates reach an inflection point, requiring active balance sheet management.

Q: Asked if H2 2026 results will match or exceed the strong H1 performance, what impact the recent earthquake and stronger peso have on asset quality and cost of risk, and whether the published 21-22% full-year ROE guidance implies H2 slowdown. / A: Management noted that seasonally H2 is typically stronger than H1, and expects continued strong performance with higher credit demand relative to H1. Management identified asset quality risks from the earthquake, El Nino, and peso appreciation hurting exporters, but stated these downside risks are balanced by upside from stronger margins and volumes. Management confirmed the 21-22% ROE guidance is maintained, with H1 2026 ROE of 21.5% already hitting the midpoint of the full-year range.

Q: Asked how the group will manage NIM sensitivity if high rates persist, how sensitivity will change, and what sustainable ROE can be expected after interest rate normalization, as well as what maximum acceptable levels are for NECI's MPL and cost of risk. / A: Management confirmed NIM sensitivity to 100bps interest rate moves has increased from 20bps to 25bps after the Banismo divestment, and derivatives are not needed right now but remain a ready tool for when rates reach an inflection point. Management stated sustainable ROE is expected to hold above 20% even after rates normalize, driven by growing loan volume and strategic execution. Management confirmed current levels of NECI's MPL and cost of risk are profitable, and no additional deterioration is expected that would change long-term growth appetite.

Q: Asked what management's initial impressions of the incoming Colombian administration are, particularly regarding risks of new financial sector taxes, and what capital allocation priorities are going forward. / A: Management noted the new administration's focus on reducing fiscal deficit via spending efficiency and improved tax collection is a positive development, and the risk of new sector-specific targeted taxes is lower than it was 3-6 months ago, though any earthquake-related emergency taxes remain a possibility. Management outlined that extraordinary dividends come from one-time corporate events like the Banismo divestment, ordinary dividends will grow a few points above inflation, share buybacks will be executed only based on favorable market conditions, and organic growth in existing strategic initiatives is a core capital priority.

Q: Asked to confirm the strategic rationale for the Avista Colombia acquisition, and what drove the strong recent performance of equity income and fees, and whether this strength is sustainable. / A: Management stated Avista adds specialized expertise and technology in lower-risk payroll lending, a segment Grupo Cibest prioritizes for growth that complements existing product offerings and expands access to lower-cost-risk lending. Strong investment NIM performance comes from taking advantage of the ongoing carry trade window for international investors, using the group's excess low-cost liquidity to generate returns while loan demand remained subdued during electoral uncertainty. Management noted bank assurance fees from the SURA partnership are strong and sustainable for the rest of the year.

Q: Asked if the current expanded share of investments in total assets is sustainable, how asset allocation will shift going forward, and whether strong ROE will be used to cut prices for market share or protect current margin levels. / A: Management confirmed the recent expansion of the investment portfolio was driven by two temporary factors: the carry trade market opportunity and subdued loan demand from electoral uncertainty. As loan demand picks up, assets will shift back from investments to loans. Management stated the core strategic priority is delivering sustained strong ROE to shareholders, rather than cutting prices purely to gain market share, and will continue executing on the existing strategy built on the group's competitive advantages.