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Colombia Bank Weathers Political Turmoil, Expects Stable Rates
9 Aug
Summary
- Political polarization in Colombia ahead of elections
- Bank plans to increase consumer loans to offset NIM pressure
- Neki fintech unit on track for break-even by early 2026
According to the latest earnings call, the political landscape in Colombia is currently marked by polarization as the country approaches its presidential elections. The bank's CEO, Juan Carlos Mora, states that the "electoral noise has started early" and expects more clarity by the end of this year or early 2026.
The central bank's interest rate decisions are closely tied to these political developments, and the bank anticipates that rates will remain stable until inflation risks are mitigated. To offset potential pressure on net interest margins (NIM) due to market rates, the bank plans to increase its focus on consumer loans, which it believes will support margins despite potential provision increases.
Regarding the bank's fintech unit, Neki, the CFO, Mauricio Botero Wolff, expresses optimism about the unit reaching break-even by the end of this year or early 2026. This is driven by positive trends in user activity and loan performance.
The bank's overall loan growth is projected at 5.4%, with commercial loans at 4.2%, consumer loans at 7%, and mortgage loans at 7.5%. The bank's Chief Economist, Laura Clavijo, states that this growth, combined with operational improvements and strategic capital management, will support a sustainable return on equity (ROE) of 16%.
