Banking
From The Report: Colombia 2013
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Characterised by strong supervision and relatively conservative lending policies, Colombia’s banking sector is among the most stable and profitable in the region, with a return on assets of 1.97% across all credit entities and a return on equity of 13.56% in 2012. Although the sector is dominated by large domestic conglomerates, conditions are ripe for investors. Consumer, microcredit and mortgage lending segments have seen substantial real annual growth rates. Increased sophistication of the sector should be expected as it moves to implement Basel II and Basel III requirements and works towards compliance with International Financial Reporting Standards by January 2015.
This chapter includes interviews with José Darío Uribe, Governor, Central Bank of Colombia; Luis Carlos Sarmiento, CEO, Grupo Aval; and Carlos Raúl Yepes, President, Bancolombia.

Articles from this Chapter

Overview

Resilient market: Efforts to strengthen the system continue at home, while local players look to expand abroad
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Largely shielded from the ill effects of the global financial crisis, Colombian banks have gone from strong to stronger. The sector is among the most stable and profitable in the region. Building on the solid domestic financial performances that have been seen in recent years, domestic institutions are increasingly looking towards regional expansion even as leading global banks are retrenching. At the same time, some international banking groups, particularly those from the Latin American region,…

Analysis

Solidifying regulations: Recent laws put the sector on track to meet international standards
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When evaluating financial regulation in Colombia, it is easy to observe that the nation has learned well the lessons from past crises – namely the earlier financial crisis of 1982 and the mortgage crisis of 1998-99. As Óscar Cabrera Izquierdo, the president of BBVA Colombia, told OBG, “Since the last financial crisis, Colombia has developed two types of regulations. The first is very prudent, closely examining business processes and making it extremely difficult to generate a bubble like…

Analysis

Taking the lead: The nation’s best performing banks are poised to expand regionally
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The top six banks together account for 63.05% of all banking assets, 66.19% of all loans and 64.76% of all deposits in the system. While Bancolombia is the biggest stand-alone bank, accounting for 20.29% of all banking assets, Banco de Bogotá (ranked second by assets), Banco de Occidente (fifth), Banco Popular (sixth) and Banco AV Villas (eighth) – all of which are controlled by financial conglomerate Grupo Aval – together account for 26.22% of all assets, making this the single-largest…

Analysis

Opening channels for access: Mobile banking and electronic accounts are set to boost a relatively low penetration rate
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Compared to regional and emerging market peers, Colombians are under-banked. Despite more rapid credit growth in recent years and efforts to broaden access, the ratio of loans to GDP was still below 38% at the end of 2012, while only 66.5% of adults over the age of 15 use at least one financial product. By November 2012 there were 34.6m savings accounts in operation, 8.9% growth compared to the end of 2011. Although this represents 11,161 accounts for every 10,000 adults, the fact that some people…

Interview

Leveraging technology: OBG talks to Luis Carlos Sarmiento, President, Grupo Aval
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Interview:Luis Carlos Sarmiento What key factors have enabled Colombia’s ability to successfully navigate the global crisis? LUIS CARLOS SARMIENTO: Regulation, banking prudence and, frankly, a bit of luck. This is a country that aggressively regulates banking. The vehicles that caused the global crisis were largely transactions not listed on companies’ balance sheets. In Colombia, such instruments have never been allowed. The country had a real estate crisis in 1998, but, given the strict…

Analysis

Moving into new markets: An open legal environment and strong currency allow domestic banks to blossom
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The country has long been a small, relatively closed economy with a small banking sector. But recently, Colombia has been opening up to the world, particularly by signing multiple free trade agreements. As well, its banking sector is in good health, having escaped relatively unscathed from the worst effects of the global financial crisis. While Colombia is characterised by low penetration of banking services, implying a rich potential harvest for domestic organic growth, in recent years its banks…