Bancolombia SA (NYSE:CIB) Q2 2023 Earnings Conference Call August 10, 2023 9:00 AM ET

Company Participants

Juan Carlos Mora - President & CEO

Laura Clavijo - Chief Economist

Jose Humberto Acosta - CFO

Conference Call Participants

Daer Labarta - Goldman Sachs Group

Yuri Fernandes - JPMorgan Chase & Co.

Carlos Gomez - HSBC

Juan Recalde - Scotiabank

Andres Soto - Santander

Julian Ausique - Davivienda

Operator

Good morning, ladies and gentlemen, and welcome to Bancolombia's Second Quarter 2023 Earnings Conference Call. My name is Alan, and I will be your operator for today's call. [Operator Instructions].

Please note that this conference call will include forward-looking statements, including statements related to our future performance, capital position, credit-related expenses and credit losses. All forward-looking statements, whether made in this conference call and future filings, in press releases or verbally, address matters that involve risks and uncertainty. Consequently, there are factors that could cause actual results to differ materially from those indicated in such statements, including changes in general economic and business conditions, changes in currency exchange rates and interest rates, introduction of competing products by other companies, lack of acceptance of new products or services by our targeted clients, changes in business strategy and various other factors that we describe in our reports filed with the SEC.

With us today is Mr. Juan Carlos Mora, Chief Executive Officer; Mr. Mauricio Rosillo, Chief Corporate Officer; Mr. Jose Humberto Acosta, Chief Financial Officer; Mr. Rodrigo Prieto, Chief Risk Officer; Mrs. Catalina Tobon, Investor Relations and Capital Markets Director; and Mrs. Laura Clavijo, Chief Economist.

I will now turn the call over to Mr. Juan Carlos Mora, Chief Executive Officer. Mr. Juan Carlos, you may begin.

Juan Carlos Mora

Good morning, and welcome to Bancolombia's Second Quarter Results Conference Call. To begin, please go to Slide 2. The results for the quarter reflect the less favorable macro conditions under which the bank is currently operating. In Colombia, in particular, the circumstances have become more challenging due to the economic slowdown driven by lower internal consumption, lower trade flows and less dynamic foreign direct investment with an underlying high inflation that has kept interest rates high as we will further elaborate. These circumstances have discouraged credit, harmed asset quality and elevated operational costs, driving a moderation on the loan book and income growth, resulting in a net income for the quarter of COP 1.5 trillion.

It is worth to highlight the stronger contribution that the Central American operation is delivering as all 3 banks in the region continue making progress on income generation, cost control and profitability. Partially compensating the current slower growth of the Colombian operation and providing the merits of our diversification strategy. Due to the Colombian peso appreciation on the quarter that reduced the contribution of the U.S. dollar-denominated loans, the consolidated loan book contracted quarter-over-quarter, albeit still growing at a much moderated rate year-over-year on the back of lower credit demand. Similarly, deposits also fell during the quarter due to FX appreciation and slowed its pace of growth on a yearly basis.