Grupo Cibest S.A. Q3 FY2026 earnings call

• Macroeconomic Context: Colombia faced political tension and a major earthquake, leading to revised GDP growth expectations of 2.1% for Q3. Inflation is projected to peak at 7.3% in early 2027 before easing to 5.5%, keeping monetary policy tight with rates potentially reaching 12.5%.
• NECI Spin-off Success: Completed the separation of NECI from Bancolombia on September 1st. NECI operates as an independent neobank with 24 million active users and $6.9 trillion in deposits. It reached break-even in late 2025 and demonstrates strong operating leverage (ARPAC is 2.3x cost-to-serve).
• Loan Growth Drivers: Commercial loans led the rebound, driven by improved confidence in rule of law and fiscal adjustment expectations. Consumer loan growth moderated due to high interest rates and fiscal constraints. Mortgage portfolios continued positive expansion.
• Asset Quality & Provisions: Cost of risk rose to 1.8% quarter-over-quarter, primarily due to higher consumer provisions and a one-time IFRS transition expense at NECI. Asset quality remains stable despite earthquake exposure, with proactive management and sufficient provisions.
• Capital Efficiency: Bancolombia issued additional Tier 1 capital instruments to optimize structure. The Group’s double leverage ratio increased to 98%, maintaining flexibility for strategic initiatives while preserving solvency ratios above regulatory requirements.

The consolidated Group achieved a net income of 2 trillion Colombian pesos, resulting in a Return on Equity (ROE) of 22%. The core Bancolombia entity reported an ROE of 21.7%. NECI, now an independent subsidiary following its September spin-off, reported a standalone net income of 33 billion pesos with an ROE of 23% (adjusted to 28% excluding one-off spin-off impacts). Gross loans for the Group reached 274 trillion pesos, up 9.7% year-over-year. Net interest income was 5.7 trillion pesos, with a Net Interest Margin (NIM) of 7.4% at the group level and 18.1% at NECI.

• 2026 Loan Growth: Revised upward from 7-8% to 8-9%, driven by strong commercial loan demand in Colombia.
• 2027 Loan Growth: Projected at 9-10%, contingent on orderly fiscal deficit narrowing.
• 2027 NIM: Expected to increase by approximately 10 basis points, supported by starting the year at higher interest rate levels.
• Efficiency Ratio: Maintained guidance of 46-47% for 2027, reflecting ongoing cost discipline.
• Long-Term Targets: Targeting a long-term ROE of 20-22%, with NECI aiming for 28% ROE in 2026 and 28-30% in 2027. Long-term cost of risk is expected to stabilize around 2%.

• Fiscal Vulnerability: High government deficit (projected 7.9% of GDP in 2027) and rigid expenditure structures pose significant macroeconomic risks, requiring ambitious fiscal adjustments.
• Inflationary Pressures: Sticky inflation driven by El Niño effects on food prices and wage indexation may keep monetary conditions restrictive longer than anticipated.
• Natural Disasters: The recent earthquake and El Niño weather patterns create potential credit deterioration risks, particularly in agribusiness and infrastructure sectors, though current provisions are deemed adequate.
• Regulatory Changes: Potential changes to the usury cap (interest rate ceiling) could impact lending margins and market exclusion, though immediate removal is viewed as unlikely.

Q: Analyst asked about NECI's future contribution to consolidated earnings and IPO plans. / A: CEO stated NECI currently represents ~2% of net income but aims for 8-10% by 2030 through regional expansion and product depth. No short-term IPO plans exist; it will remain a wholly-owned subsidiary to allow flexible strategic development.

Q: Analyst questioned the sustainability of loan growth given fiscal adjustment needs and long-term ROE under lower rates. / A: Management noted strong commercial loan demand persists despite high rates. Consumer growth will moderate. Long-term ROE is targeted at 20-22%, assuming loan growth outpaces nominal GDP by 1-2 percentage points and cost of risk stabilizes at 2%.

Q: Analyst asked why 2027 guidance implies falling risk-adjusted margins despite rising cost of risk. / A: CFO explained NIM should rise slightly due to higher starting interest rates. However, aggressive growth in commercial and consumer segments pushes portfolio into riskier brackets and requires more funding from institutional investors, increasing provisioning needs and compressing margins.

Q: Analyst inquired about NECI deposit growth strategy given user penetration saturation. / A: CEO clarified that with 24 million active users out of 40 million adults, user growth will slow. Strategy shifts to deepening engagement, making NECI the primary financial relationship for users, and increasing average deposit balances per user through enhanced service offerings.

Q: Analyst asked about the discrepancy between NECI's reported managerial vs. formal accounting net income. / A: CFO explained the difference arises because NECI only had one month of P&L operations post-spinoff in Q3. Managerial figures assume full-year operation for comparison. Formal and managerial figures will converge as NECI builds its operational history in 2027.