Colombia’s gross domestic product (GDP) growth of 7.3% in 2022 was underpinned by private consumption and goods export growth, according to the World Bank.
Despite the country’s strong economic performance, three of the four domestic banks featured in the Top 1000 rankings this year saw a single-digit decrease in Tier 1 capital following the depreciation of the national currency. However, Banco de Bogotà reported a more than 50% drop.
With regard to total assets, both Banco de Bogotà and Banco de Occidente reported declines, of 50.68% and 3.47%, respectively, while Bancolombia and Banco Davivienda expanded their assets, albeit by less than 2%.
The best-performing bank methodology was applied to the four largest domestically owned banks. However, a number of Colombian banks typically in the ranking were not featured this year, including Banco Popular, Banco GNB Sudameris and Banco Agrario de Colombia, because audited financial statements were not available in time.
Bancolombia, the country’s largest bank by Tier 1 capital and seventh-largest at the regional level, tops the overall best-performing table for the second year running. It has scored the highest among its peers in six of the eight categories: growth, profitability, operational efficiency, asset quality, return on risk and liquidity. It recorded a 35.34% surge in pre-tax profits (PTP) in 2022, to $2.03bn.
Banco Davivienda places second in the overall performance table, achieving the best score in the soundness metric. The bank’s good asset quality reflects its conservative risk profile, says Fitch Ratings.
Banco de Bogotà, the strongest performer in the leverage category, has fallen one position to third in the best-performing table. The lender recorded a 50% decrease in total assets following the spin-off of its Central American subsidiary BAC Holding International (BHI), with BHI’s shares listed on the Colombian and Panamanian stock exchanges. Among the four banks, Banco de Bogotà had the highest return on capital (26.89%) and return on assets (2.04%).
Banco de Occidente ranks fourth again this year, although it has placed second in asset quality and liquidity. It saw a 27.83% drop in PTP in 2022, to $119m.
In 2023, Colombia is facing decelerating GDP growth, persistently high inflation and market volatility. According to the International Monetary Fund, the country’s economy is expected to grow at a slower pace than in 2022 with GDP reaching an estimated 2.2%.
Weaker GDP growth and elevated interest rates will be the primary drivers of weaker credit growth throughout 2023. Credit loan growth in Colombia is therefore forecast to slow from an estimated 17.7% in 2022 to 9.3% in 2023, said Fitch Ratings. This year, the ratio of non-performing loans is also set to rise above pre-pandemic levels.
