Bancolombia and Banco de Bogotá each rack up a clutch of high scores in the Top 1000, but Colombia's banks face challenging times overall. 

Colombia’s two largest banks are also its best performing. Medellín-based Bancolombia, the biggest in the country with Tier 1 capital of $6.08bn, is the second best performing. Banco de Bogotá, part of Grupo Aval, is the second largest with a Tier 1 capital of $3.97bn, but has the highest performance score out of the country’s largest five names.

Liquidity and leverage indicators drive Banco de Bogotá’s overall performance. The former is determined by the loans-to-assets ratio and the loan-to-deposit ratio, combined with their annual changes. The latter measures the liabilities-to-assets ratio and its annual change. Banco de Bogotá has the highest score in both, and came second in the profitability and soundness metrics.

Also of note is Banco de Bogotá’s larger Tier 1 capital, which grew at a faster pace than its assets in 2019, at 11.59% versus 6.56%, respectively.

Banco Davivienda also increased its Tier 1 capital and by a similar measure, 11.24% – outpacing the growth of its assets. But the fastest-growing bank is Banco Popular, with a Tier 1 capital expansion of 14.48% over an assets expansion of just 1.31%. Unsurprisingly, Popular has the best soundness indicator, which looks at the capital-to-assets ratio and its annual change.

It is Davivienda, however, that does best in terms of growth performance, with the highest combination of annual percentage growth in assets, loans, deposits and operating income. Banco de Occidente is the second-best scoring in terms of growth performance, as well as operational efficiency and liquidity. It is ranked top for asset quality and return on risk.

The former indicator looks at the ratio of provisions for loan losses over gross total loans, the non-performing loans ratio, and the impairment charges to total operating income ratio, as well as their annual changes. The latter indicator considers the return on risk-weighted assets ratio and its annual change.

Colombia’s largest five banks have an aggregate Tier 1 capital of $13.96bn and more than $182.46bn in assets. Pre-tax profits have been stable or growing for all five, with Banco de Occidente and Bancolombia, in particular, registering pre-tax profits growths of 64.25% and 23.11%, respectively. 

After a relatively healthy 2019, Colombian banks entered 2020 in good shape. Economic data earlier this year boosted expectations, with gross domestic product expanding by 4.1% in the first two months of 2020. But the crash in oil prices and the coronavirus pandemic have destroyed any hopes of growth. Oil is Colombia’s principal export and the lockdown measures to contain the spread of Covid-19, while they are easing, may continue to damage businesses that are important to the local economy, such as restaurants and hotels.

The Organisation for Economic Co-operation and Development expects an economic contraction as deep as 7.9% in 2020 if a second wave of contagion hits the country. After a good 2019, even Colombia’s strongest and most resilient banks will be tested.


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