About the Recent Behavior of the Retirement Funds in the Colombian Financial System.

For the month of may, according to the entity in charge of financial supervision, the profits of the financial system reached $58 billion, of which $24 billion corresponded to retirement funds, $22 billion to trust funds and $3.9 billion to banks.

In turn, in the retirement funds, the moderate had profits of $10 billion, the programmed withdrawal $6 billion, the conservative $4 billion and the highest risk $2 billion. In trust funds, social security resources had profits of $9 billion, trust funds $7 billion, and collective investment funds $5 billion. In banks the Bancolombia it had profits of $3 billion and Banco de Bogotá $0.7 billion.

In that month, the behavior of the financial markets was influenced by positive indicators in the USA and Chinese economies, added to the decrease in unemployment and inflation levels that led to mixed results in the main stock markets. Regarding the local performance, the public debt showed appreciation in the different sections of the yield curve, the Colombian peso strengthened against the dollar, inflation presented a decrease as well as unemployment and a lower risk perception of the Latin American economies.

If the previous results are compared with those of a year ago, it is observed that the profits of the financial system in may 2022 were only $1.5 billion as a result of retirement fund losses of $18 billion compared to trust fund gains of $7 billion, bank profits of $8 billion and profits of insurers and securities brokers of $4 billion.

The above mixed behavior occurred amid global market volatility stemming from the conflict in Ukraine, higher inflation expectations, and the tightening of monetary policy in advanced economies. Internally due to local uncertainty before the first round of the presidential elections and the increase in interest rates due to inflation.

The mixed behavior obtained in may 2022 was maintained throughout the year and at the end of december of that year the total financial system registered profits for $27 billion as a result of losses of the retirement funds for $17 billion offset by gains from the trust funds $17 billion, banks $14 billion and another $12 billion.

Mandatory retirement funds were impacted by the market situation because of the devaluation of the assets in which the retirement savings are invested. However, considering that retirement savings are long term, the returns obtained, according to the entity in charge of supervision, have been higher than the minimum that members of each type of fund must guarantee.

Likewise, the situation has changed since january of present year when the profits of the financial system reached $27 billion, there the retirement funds showed recovery and recorded profits of $15 billion, followed by trust funds with $9 billion and banks with $0.8 billion. Likewise for march, with financial system profits of $45 billion, of which trust funds had $16 billion, retirement funds $20 billion, and banks $3 billion.

As mentioned at the beginning of this note, in may the retirement funds continued to lead the gains of the financial system.

ABOUT THE CDT

The CDT of the banks to may total $249 billion in value, the savings accounts $264 billion, but in number of accounts the CDT is 2.2 million while the savings are 77 million and in customers the CDT have 1.6 million while the savings 65.5 million.

The main banks with savings deposits are Bancolombia with a value of $77 billion, Davivienda $37 billion, BBWA $28 billion and Banco de Bogotá $26 billion; together the four banks represent 64% of the total. Regarding CDT, the main ones are Bancolombia with a value of $54 billion, Davivienda $42 billion, BBWA $34 billion and Banco de Bogotá $27 billion; together the four banks represent 63% of the total.

The interest rates in May of the CDT at 180 days for Bancolombia was 12.39%, in Davivienda 13.51%, BBWA 12.69% and Banco de Bogotá 13.06% and for the weighted average of banks 12.81%.

When compared to may last year, bank savings accounts totaled $287 billion in value last year, with 71 million accounts and 61 million customers, while CDTs totaled $154 billion in value, with 1.4 million accounts and 1.0 million customers.

With the above, it can be observed that from one year to the next for the month of may, bank savings grew 8.7% but CDTs grew 61.6%, which is explained by the increase in interest rates of these last financial assets. Monetary resources for the increase in CDTs come mainly from sources other than savings, such as the stock market, voluntary retirement funds, foreign currency, real estate, or cash.

Investments in CDT are concentrated in fewer clients and number of accounts than savings deposits, although the total value of both is not very different. CDTs are generally opened starting at $1 million while savings accounts do not have that limit. Savings accounts have immediate liquidity while CDTs are in installments. For the month of may, of the total CDT worth $249 billion, $81 billion corresponded to natural persons and the rest $167 billion to legal entities and are concentrated in the highest levels of income compared to savings located in broader sectors with lower income.

Also, as previously explained, there is a concentration of both savings and CDT in four banks, and in earnings there is one that stands out from the rest.

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Today (wednesday 16) regarding the world markets, the stock markets behave mixed due to the Chinese economy with results that indicate lower economic activity. Also, out of caution regarding the yield of USA treasury bonds.

Oil prices fall after several hikes due to rising inventories in the United States and awaiting economic activity in China. WTI and BRENT reach 80.8 and 84.8 dollars per barrel respectively.

In Colombia, at mid morning the stock market rises 0.5% and the peso is devalued to 4.120 per dollar against the TRM for today of 4.096.