About the Recent Performance of the Financial Sector in Colombia.

Earnings of the Colombian Financial System

As of november last year, according to the entity in charge of financial supervision, the earnings of the total system reached $113 billion (b) and the pension funds stand out with $67 b, followed to a lesser extent by the fiduciaries with $22 b and in third place, far behind the first, the banks with $7.5 b.

Among the pension funds, the moderate fund stands out with earnings of $35 b followed by the higher risk fund with $17 b.

Term Certificates of Deposit

The credit institutions have a total of $718 b in deposits as of november, of which savings accounts are $318 b, CDT $308 b and current accounts $73 b. In turn, CDTs are subdivided into CDTs at 6 months for $67 b, CDTs at 12 months for $77 b, CDTs between 12 and 18 months for $60 b, and CDTs over 18 months for $103 b.

In the last three years, CDTs with longer terms, those of 12 months and more, have gained market share due to historically high interest rates.

As of january 31, according to the entity in charge of supervising financial institutions, CDTs paid an average rate of 9.47% for the 360 day term. For banks with the largest assets, the rates were as follows: Bancolombia 8.9%, Banco de Bogotá 9.44%, BBVA Colombia 9.92%, and Davivienda 9.51%. On the other hand, small banks paid Bancien 10.83%, Bancamía 10.17%, Banco Serfinanza 9.98% and Banco Pichincha 9.26%.

Credit from Financial Institutions

The total credit portfolio with information as of november 2024 reached $706 billion (b) of which 51% is commercial credit, 29% is consumer credit, 17% housing credit and 2.8% microcredit. Of the commercial credit worth $360 billion, 63% goes to large companies, 9% to SMEs, 10% to the government and 8% to construction.

As for the consumer portfolio worth $203 billion, 38% corresponds to payroll loans, 29% to free investment, 19% to credit cards and 9.9% to vehicles.

In housing loans worth $123 billion, non vis housing stands out with 39%, vis housing 22% and leasing 16%.

Finally, microcredit worth $20 billion and less than 25 minimum wages are 70%.

Banking Sector Profits and Losses

The banks with the highest profits as of december 20 2.024, are Bancolombia with $4.9 billion, Banco de Bogotá $1.1 billion, Davivenda $0.8 billion, Citibank $0.6 billion and Banagrario $0.4 billion. On the other hand, the banks with the highest losses are Banco Popular - $0.2 billion, Bancamía - $0.2 billion, BBVA Colombia -$0.3 billion, Banco Pichincha -$0.2 billion and Scotiabank -$0.2 billion.

It should be noted that financial institutions such as Tuya recorded losses of -$0.1 b and Rappipay -$0.02 b.

Resources Managed by Private Pension Funds

Individual savings are located in several funds, the moderate pension fund has resources of $260 b, the highest risk fund has resources of $120 b and the conservative fund together with the programmed retirement fund $91 b for a total of $471 b in resources from these so called mandatory funds.

The voluntary pension funds only reach a value of $31 b and the severance funds $23 b.

The pensioners with the individual savings regime are only 356.399 people while the pensioners under the average premium regime are 1.925.584 of which under Colpensiones are 1.739.936. The latter are those with an average premium with resources mainly from the General Budget of the Nation.

With all the above, some observations are the following. Pension funds, mainly the moderate one, are the component of the financial system that presents the most profits (and is followed by the fund with the highest risk) above the fiduciaries and the banks. The funds mentioned are individual savings in a pension system that currently has several retired that is one fifth of the pensioners in the nation in the other regime, the average premium. In those mentioned profits of the financial system, the banks represented one ninth of the profits when compared with the mentioned pension funds of individual savings.

In the matter of CDT, the financial entities are recognizing interest rates of an average of 9.47%, not far from the rate of the central bank that is currently 9.5%, those rates have gone down but at a slower pace than expected. Of course, at CDT, the large banks pay less, and the small banks pay more.

Among the profits of these banking entities, one large bank stands out with profits four times higher than those of the next bank in order. There are few banks that make all the profits. The banks that have losses have continued to behave in this way for several months, among them there is one that is going to merge with another that has had profits, but there are others, including a foreign one that continues to have losses. There are also some small banks among these that are offering high CDT rates.

As for the resources of the private pension funds, which in november were $471 billion and whose profits were the highest in the financial system, these are resources that will continue to be managed (by the administrators that are now called Accai) according to the pension reform by the current administrators Porvenir, Protection, Skandia and Colfondos. When the pension reform comes into effect, the contributions will largely be transferred to Colpensiones, but the balances of the individual savings of the pension funds mentioned above will continue to be under the administration of the administrators.

Voluntary pension funds are voluntary savings, in sight, and there are only 900.118 members, compared to the number of members but active contributors to the mandatory private funds, which are 7.720.080, and those of the average premium system (paid by the nation) of 2.936.167. This reflects the fact that the possibility of having voluntary pension funds is limited.

Regarding the credit portfolio, commercial credits are a good part of the total and are directed mainly to companies, including large companies, and microcredits and SMEs are of a smaller amount. In consumer credits, credit cards are only 19%, reflecting that they are contained only in a particular sector of the population. Housing credits are mainly for non residential housing.