Observations about the CDT Gains and Losses of the Financial Sector.

CDT INTEREST RATES

According to the latest report from the entity in charge of supervising the country's financial institutions, in january the interest rates for 180 day CDTs paid by banks was 16.5% and for 360 day CDTs it was 17.90%. . A month earlier, in december those rates were 15.64% and 17.16% respectively. Also a year ago, in january 2.022, the rates were at 4.07% and 5.35% for the same terms.

In the year 2.021, the first year after the pandemic in january, those rates were 2.17% and 2.50%. A year earlier, in march 2.020, the quarantines due to the pandemic had just begun, this rates were 4.70% and 5.26%.

With the above, it is observed that before the pandemic and after a year of this event, the interest rates of the CDTs coincided again at the levels and ranged between 4% and 5.5%, during the pandemic and with the recession economy, fell to levels close to 2%. But it was not until march 2.022 that they began to rise from prepandemic levels to other levels, reaching 5.58% and 7.49% in that month, by june they already registered 8.4% and 10.7% and by september 12.57% and 14.83% .

The annual levels in the CDT rates observed in january, which, as mentioned, went from 4.07% to 16.5% in a 180 day term in one year and from 5.35% to 17.90% in a 360 day term will continue to increase for the effects of the last increase in the interest rate of the central bank in january and will also do so if there is another increase in the month of march at its board of directors meeting.

The interest rate of the central bank from january of last year to january of this year went from 4% to 12.75% and inflation moved from 6.9% to 13.25%. Both registries have grown as have the CDT rates. But first inflation rises and then in response the central bank raises its rate and this causes CDT rates to rise in turn.

In banks, CDTs have gained participation in total deposits. Indeed, in november 2.022 (latest information available) they represented 35% of the total with progress compared to november 2.021, where they were 28%.

PROFITS OF THE FINANCIAL SECTOR

In the month of november, the profits of the financial sector reached 19 billion pesos, mainly the result of 16 billion bank profits and 12 billion funds managed by trust companies and losses in retirement funds for 17 billion.

These results contrast with those of december 2.021 when the profits of the financial system were 66 billion pesos, but mainly due to the profits of the retirement funds 33 billion. Banks followed at 16 billion and then trust funds at 9 billion. Also in december 2.020 the main profits were those of the retirement funds 29 billion. It was followed by trust funds 12 billion and then banks 6 billion.

In the year 2.022, unlike the two previous years, the volatility of variable income and fixed income and the rise in interest rates worldwide affected the value of investments, which affected the losses of retirement funds in colombia.

LOSSES OF RETIREMENT FUNDS

As mentioned before, the losses of private retirement funds as of november were 17 billion pesos, which corresponds to 11 billion for the moderate fund, while 1.5 billion for other funds such as the conservative one and 1.4 billion for the highest risk. This moderate fund represents 63% of the total value of the pension funds for the month of November.

But the profits obtained for december in previous years such as 2.021 and 2.020 for 33 billion and 29 billion also corresponded mainly to the moderate fund with 25 billion and 20 billion respectively.

Therefore, the valuations of the investments translated into greater profits in the retirement funds that occurred in the years 2.020 and 2.021 belong mainly to the moderate fund, but also the greater devaluations that occurred in the year 2.022, so in one case it is the result of the valuation and in the other of devaluation of its investment assets.

There are years in which retirement funds lead the profits of the financial sector above banks and trust funds such as 2.020 and 2.021, but there are others like last year that do not and generate losses, which does not happen with banks or funds trustees. The valuations of the retirement funds must be seen in long time horizons since in the short term they can exceed those of the other agents but they can also be lower or have losses.

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Today (tuesday 14) in terms of world markets, the stock markets are growing due to the wait for the inflation figure in the United States and the optimism about a greater easing of the route of the interest rate hike by the Fed.

The price of oil falls due to the announcements by the United States to reduce the strategic reserve of crude oil to increase consumption. WTI and BRENT are trading at 79 and 86 dollars per barrel.

In Colombia, at mid morning the peso appreciates at 4.772 per dollar against the TRM for today of 4.819.