Bancolombia - Earnings Call - Q4 2024

Transcript

Operator (participant)

Good morning, ladies and gentlemen, and welcome to Bancolombia's Fourth Quarter 2024 Earnings Conference Call. My name is Christine, and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Following the prepared remarks, there will be a question-and-answer session. During the question-and-answer session, if you have a question, please press star, then the one on your touch-tone phone. Please note that this conference is being recorded. Please note that this conference call will include forward-looking statements, including statements related to our future performance, capital position, credit-related expenses, and credit losses. All forward-looking statements, whether made in this conference call, in future filings, in press releases, or verbally, address matters that involve risk and uncertainty.

Consequently, there are factors that could cause actual results to differ materially from those indicated in such statements, including changes in general economic and business conditions, changes in currency exchange rates and interest rates, introduction of competing products by other companies, lack of acceptance of new products or services by our targeted clients, changes in business strategy, and various other factors that we describe in our reports filed with the SEC. With us today is Mr. Juan Carlos Mora, Chief Executive Officer, Mr. Mauricio Rosillo, Chief Strategy and Financial Officer, Mr. Rodrigo Prieto, Chief Risk Officer, Mrs. Catalina Tobón, Investor Relations and Capital Markets Director, and Mrs. Laura Clavijo, Chief Economist. I will now turn the call over to Mr. Juan Carlos Mora, Chief Executive Officer. Mr. Juan Carlos, you may begin.

Juan Carlos Mora (CEO)

Good morning. Welcome to Bancolombia's Fourth-Quarter Results Conference Call. Please go to Slide 2. In a challenging fiscal landscape in Colombia, the year 2024 concluded with a positive economic trend presenting moderate growth. This growth was facilitated by decreasing inflation and reductions in interest rates, which consequently led to an increase in household consumption. Net income for the quarter amounted to COP 1.7 trillion, reflecting an 11% increase primarily due to resumed loan growth across all segments and a significant reduction in provision expenses. This resulted in a quarterly annualized cost of risk as low as 1.35%, offsetting the decline in interest income associated with a lower-yielding loan portfolio, thereby reducing the net interest margin to 6.4% for the quarter. Overall, the return on equity for the quarter increased to 15.7%.

Net income for the year was COP 6.3 trillion, a 2.5% increase, which boosted shareholders' equity by 14.3% and resulted in a 15.8% ROE. In evaluating this positive annual performance, we identify three key factors that explain these results. First, our own parallel capabilities in assets, liability, and treasury management, which have enabled us to maintain high net interest margins on an asset-sensitive portfolio despite significant rate cuts, effectively supplemented by a strong contribution from the investment portfolio. Second, the robustness of our well-calibrated risk models, which allow us to manage credit risk with greater efficiency. Third, our rigorous cost control strategy implemented throughout the year, resulting in an annual operating expenses increase of only 5.3%, slightly above the annual inflation rate.

Following these strong results, we announced to the market yesterday our proposed dividend to be submitted for shareholders' approval, amounting to approximately COP 3.8 trillion, which represents a 10.3% year-over-year increase equivalent to more than 500 basis points above inflation and achieving a payout ratio of 60%. The dividend will be paid in one installment of COP 3,900 per share on April 1, 2025, aiming to enhance value distribution to our shareholders. Lastly, I would like to inform you that we are making significant progress with our corporate evolution towards the establishment of Grupo Cibest, our new holding company. We have obtained the necessary approvals from all Central American regulators and are continuing to advance in the process with the Colombian regulator. Our goal is to complete this transaction by the second quarter of 2025.

I will now turn the presentation over to Laura Clavijo, our Chief Economist, who will offer an analysis of the macroeconomic environment. Laura?

Laura Clavijo (Chief Economist)

Thank you, Juan Carlos. Now, if you could please turn to Slide 3. The Colombian economy expanded at an annual rate of 1.7% during 2024, slightly below our 1.8% growth expectation, confirming an ongoing economic recovery, especially as compared to 2023's GDP growth of just 0.7%. A deeper look at the composition of growth tells a story of better-than-expected performance from specific sectors such as agriculture and entertainment, which expanded at an annual rate of 8.1%, but that may nonetheless lose momentum in 2025. Underwhelming activity from other key sectors such as mining, manufacturing, and housing continues to reflect the challenges that the economy still faces. On a more positive note, the final quarter confirmed an uptick in retail sales, and consumer demand for durable goods is taking a turn towards the positive. For example, vehicle sales grew at an annual rate of 7%.

Indeed, a more constructive macroeconomic framework has enabled an upswing in both sentiment and growth. Inflation continued its downward trend towards the end-of-year mark of 5.2%. The monetary policy rate closed at 9.25%, and unemployment has subdued close to 10%, a historically low-year average. Moving forward, the global setting places a backdrop of amounting inflationary challenges and monetary policy caution. These headwinds coincide with local inflationary pressures, such as that of the above-expected minimum wage set for this year, the fiscal debate around compliance of the fiscal rule, also necessary expenditure cuts amidst the flexibility, and an overall acceleration of government debt back to a 60% of GDP level. Consequently, inflation expectations are being pushed higher. We expect inflation to reach 4% in 2025. In addition, the central bank will be adopting a more cautionary approach.

Despite the challenges ahead, signs of an economic recovery are more widespread, as the macro scenario brings tailwinds, and we confirm our view of a 2.6% year-end growth forecast for 2025. Now, please let me turn the presentation back to Juan Carlos, who will present Bancolombia's quarterly performance.

Juan Carlos Mora (CEO)

Thank you, Laura. Please proceed to Slide 4. Before discussing the quarterly and year-end results, I will provide an overview of our market position in Colombia and Central America. This is based in our significant presence in the region, reflecting our focus on an integrated client-centric approach, which is important in the current competitive environment. Starting with Colombia, it is notable that we hold a strong position in both the loan portfolio and deposits market share. In the loan book, we lead in the commercial and consumer segments and are second in mortgages. Additionally, we launched a reduced-rate mortgage loans program, resulting in a 15% year-over-year expansion in our mortgage portfolio in Colombia. Regarding deposits, Bancolombia holds over a quarter of the total deposits in the country, utilizing both physical and digital channels.

We also maintain a leading position in terms of executed transactions within the country, securing a 31% share of credit card transaction value, 40% in debit card transactions, and an impressive 80% in the number of monetary transactions through our digital channels. This significantly contributes to our consistent ability to preserve our market share in deposits year-over-year. In the Central America market, we hold a significant presence with approximately 25% of loan and deposits in Banco Agrícola in El Salvador. In Panama, Banistmo ranks second with around 14% in loans and deposits, given the more competitive environment. In Guatemala, there is a potential for growth as BAM currently holds 10% of the loans and 80% of the deposits in the country.

The above statements describe our position as a strong regional franchise based on a universal bank model, which currently serves a broad and diversified base of over 30 million customers in Colombia and nearly three million in Central America. The results achieved in the year 2024, which differ significantly from system-wide results, particularly in terms of NIM, cost of risk, and ROE, reflect our competitive advantages, our clear strategy, and our readiness to address both traditional and new competitors, as well as regulatory changes. Please proceed to Slide 5. Continuing with the strategy overview, I will now discuss the progress made on our second value-driven pillar, which leverages our digital capabilities and multi-channel platform.

Recently, we launched the Tus llaves program, a solution that enables Bancolombia and Nequi customers to easily select their keys for instant, fee-free money transfers to other savings accounts, checking accounts, or low-value credit deposits among the eight entities participating in this initiative. Our overall approach of the program is threefold. First, facilitating the movement of flows. Secondly, strengthening Bancolombia's and Nequi's ecosystem with seamless and reliable experience. And thirdly, deepening our understanding of customers by having greater traceability of flows. For over a decade, we have invested in developing an innovative, multi-channel, and interoperable platform. As shown, we now serve six out of 10 Colombians through Bancolombia or Nequi, with over 30 million customers. We manage 33% of the country's payrolls and handle 90% of interoperable QR payments for merchants. We process 75% of payments via Transfiya and 85% of international remittances.

We firmly believe that interoperability enhances financial inclusion, fosters market competitiveness, and promotes economic growth. Therefore, we are taking the lead in addressing this by inviting other market participants to join this initiative, which acts as a precursor of the Bre‑B immediate payment system. Additionally, we are educating customers on how the keys will function within our nation's financial system. This, combined with our established presence in the transactional space and a stable customer base, provides an opportunity to improve interoperable features within our payments infrastructure and pursue distribution and cross-selling initiatives. I will now turn the presentation over to Mauricio Rosillo, who will present further details on the fourth quarter 2024 results. Mauricio.

Mauricio Rosillo (Chief Strategy and Financial Officer)

Thank you, Juan Carlos. Please go to Slide 6. The results in 2024 for the regional operations were mixed. On the one hand, Banco Agrícola in El Salvador registered an ROE close to 21% on the back of an increased volume of consumer loans, as it kept expanding in new market niches, coupled with a reduction in cost of funding. BAM achieved net income growth, which resulted in an 8.1% ROE supported by loan growth across all segments, driving higher interest income generation. Additionally, provisions dropped 21% during the year due to the release of provisions associated to certain corporate clients. On the other hand, Banistmo's net income dropped 56%, resulting in a 4.5% ROE for the year due to a lower net interest income and higher provision expenses. Let's now proceed to Slide 7.

Continuing with the slow but positive trend, the loan portfolio recorded the largest quarterly expansion with a 3.7% increase, which represents a 10% increase over the year, leaving behind the contraction dynamics of 2023. Home lending posted the largest growth both on a quarterly and an annual basis, as the reduced interest rate program has fostered credit demand among individuals in Colombia and helped to stimulate a recovery in the real estate sector. There was also a significant growth of 11.5% in commercial loans due to decided incentives to boost credit demand among our corporate clients. On the other hand, the consumer loan book slightly increased on a quarterly basis, accumulating a modest 2.3% during the year, driven mainly by the positive dynamics of unsecured lending in El Salvador and credit card loans in Guatemala. Please go to Slide 8.

Deposits picked up 7.4% in the quarter, mainly explained by a seasonal effect, as corporates and public entities typically increase their balances, and individuals also hold more liquidity on year-end. On an annual basis, deposits increased 13%, outpacing loan growth, and was driven mainly by the operations in Colombia and El Salvador. In the case of Colombia, this explains to a large extent the ample liquidity held throughout the year. When breaking down by type of deposit, the aggregate balance of sight deposits remained pretty stable year over year. However, I would like to highlight that savings deposits in Colombia grew close to 14% on a quarterly and an annual basis, reflecting the bank's capacity to attract and maintain low-cost funding sources even as competition evolves.

On the other hand, time deposits intentionally grew at a moderate 1% in the quarter, reducing the annual pace of growth compared to sight deposits. This growth has been driven by short-term online time deposits, which keeps attracting retail clients. Now, our overall funding cost dropped by 23 basis points during the quarter and 118 basis points during the year, partially offsetting the NIM compression related to the central bank reference rate cuts. Please proceed to Slide 9. Net interest income from loans and financial leases decreased by 2.5% during the quarter and 4.1% during the year due to the monetary policy mentioned before that kept exerting pressure on our asset-sensitive loan book. Regarding margin sensitivity, we continue to adapt our asset and liabilities strategies to remain well-positioned according to the interest rate cycle.

As depicted on the upper right-hand side graph, in the last 12 months, we have been able to decrease the net sensitivity to interest rates despite the increase in non-sensitive to interest rate liabilities, which in turn is explained by the growth in sight deposits, which by definition are low-cost sources of funding that provide an anchor to our overall cost. Also, I would like to highlight the positive performance of our investment portfolio during the entire year, which by virtue of skilled asset liability management strategies increased earnings from valuation of financial instruments and the sale of derivative securities to clients, contributing to overall interest income generation.

On the other hand, the net interest margin for the quarter was 6.4%, equivalent to a 42 basis point reduction and 6.8% for the full year, implying a 20 basis points contraction as anticipated, explained by the lower-yielding portfolio, partially compensated with the investment portfolio income. Please proceed to Slide 10. Fee income increased 4.4% over the quarter due to a higher volume of transactions associated to year-end seasonality and better results on bancassurance, as consumer credit originations accelerated toward the end of the year. Now, on an annual basis, net fee income increased 5.6%, explained mainly by an increase in interchange fees through debit and credit cards, given a higher transactional volume, an increase in banking services fees associated with the use of electronic and digital services, and an increase in asset management fees.

On the other hand, fees expenses increased 13% year over year, mainly due to higher credit and debit card royalties as per higher transactional volumes, third-party collections, and increased banking agent costs attributable to more transactions and new agents. The fee income ratio remained relatively stable, reaching almost 19% as a proportion of the total net operating income. Please go to Slide 11. Continuing with the positive trend observed since June, loan deterioration kept receding during the fourth quarter, as reflected on the declining pace of past due loan formation, calling for 2024 as the tipping point in terms of asset quality. Consistent with the above, net provision expense for the quarter amounted to COP 930 billion, a significant 41% decrease quarter over quarter due to the better performance across all segments and the sale of distressed assets.

Also, there was a COP 444 billion provision release in the quarter, as the consumer portfolio expected losses dropped considerably, and the macroeconomic variables that feed the model have turned more promising. Hence, cost of risk for the quarter fell to 1.3%. On an annual perspective, net provision expenses closed at COP 5.5 trillion, which represents a 27% annual contraction on the back of the better performance of the consumer segment throughout the year, coupled with more than one billion in provision releases, as the overall risk perspective has become increasingly positive, enough to compensate the growth on SMEs and corporates. All in all, cost of risk for the year reached 2.1%.

In terms of asset quality, total past due loans presented a quarterly and annual improvement in terms of 30 days past due loans, preserving an ample coverage ratio at 112%, whereas the 90 days past due loans ratio decreased quarterly, as collections efforts diminished over time, yet allowing for a 159% coverage. From an expected loss perspective, loans in Stage 1 increased throughout the year as per the better risk outlook, whereas Stage 3 increased due to the actual deterioration of specific corporate clients. All in all, the coverage ratio for Stage 2 and Stage 3 loans reached 41%, providing comfortable coverage to the loan book. We expect that as the economy turns more dynamic and sectors such as construction and retail sales pick up, the SMEs loan portfolio should perform better. Please go to Slide 12.

Operating expenses increased 13.4% compared to the previous quarter, an expansion associated to a year-end seasonal effect consisting of higher IT and cybersecurity-related expenses, as well as marketing expenses, which were partially compensated with an 8% drop on a tax provision release. Moreover, personal expenses grew 8.6% due to higher bonus plan provisions, as year-end results were better than expected. However, when analyzed on an annual basis, operating expenses grew as low as 5.3%, well below the 12.3% of the Colombian minimum annual wage increase and the 9.2% inflation at 2023, which were the basis of around 75% of the group's expenses in 2024. The positive annual result was possible due to a disciplined cost control program implemented throughout the year, aiming at capturing efficiency on six key areas, which in turn reinforced our culture of efficiency and productivity.

Notwithstanding the above, when measured under the cost-to-income ratio, it came in at 49% compared to the 45% of the previous year, given the lower pace of operating income growth that limited expense dilution. Please proceed to Slide 13. The effective tax rate for the year was 28%, higher than the 24% recorded in 2023, provided the higher contribution of the Colombian operation to the group's consolidated net income. All in all, net income reached COP 6.3 trillion in 2024, increasing 2.5% with an annual return on equity of 15.8%, which, if adjusted for goodwill, translates into an outstanding return on tangible equity of 20%, reflecting the bank's strong operational and financial performance. Now, please proceed to Slide 14. Shareholders' equity grew 6.5% in the quarter and more than 14% in the year, explained by the generation of net income as well as currency depreciation.

Core Equity Tier 1 Ratio ended at 11.89%, a 32 basis points increase over the quarter, well above the Basel III minimum requirement, whereas total solvency decreased 60 basis points to 13.75% on the back of a lower Tier 2 as per the redemption of the 2029 subordinated bonds executed in mid-December. Based on our proven strong capital origination and the loan growth forecast, we are confident capital ratios will remain well above the minimum, providing room for a 60% payout ratio, which results in an attractive yield balancing all our stakeholders' interests. With this, I will now hand the presentation back to Juan Carlos for the final remarks. Juan Carlos.

Juan Carlos Mora (CEO)

Thank you, Mauricio. Please proceed to Slide 15. By the end of the year, we originated over COP 32 trillion under our Business with Purpose strategy, bringing the total to COP 197 trillion since 2020 and moving towards the goal of COP 500 trillion by 2030. We attended COP16 on biodiversity, showing our commitment to financing environmental preservation and sustainable development projects. In 2024, we scored 85 out of 100 in the Dow Jones Sustainability Index, ranking first in America. Please refer to Slide 16. Lastly, I will share our updated guidance for 2025. We anticipate a consolidated loan growth of 5.6%, which is slightly below previous projections due to the increase in loan growth observed in the fourth quarter of last year, thereby adjusting the baseline. We project a net interest margin of approximately 6.2%, contingent upon the central bank's rate-cutting pace.

The cost of risk is expected to be between 1.9% and 2.1%, with an efficiency ratio in the vicinity of 51%. Additionally, we forecast a return on equity of around 14% and a Core Equity Tier 1 ratio ranging from 11%-11.5%. With this, we conclude our presentation on the fourth quarter results. We are now ready to address any questions you may have.

Operator (participant)

Thank you. We will now begin the question and answer session. If you have a question, please press star, then one on your touchtone phone. If you wish to be removed from the queue, please press the star and the number two. If you are using a speakerphone, you may need to pick up the handset before pressing the star keys. Once again, if you have a question, please press star, then the one on your touchtone phone. One moment, please, while we poll for questions. Thank you. Our first question comes from the line of Brian Flores with Citi. Please proceed with your question.

Brian Flores (VP in Equity Research)

Hi team, good morning and congratulations on the results. I wanted to expand a bit and ask you on how capital be utilized with the new holding structure. So first, I know there is some perhaps Core Equity Tier 1 that could be utilized. I wanted to ask you if you can remind us how this can happen. And then a second question is on your payout ratio. You have a higher valuation right now, and we know you announced plans to maybe start a buyback program within this new structure. So just wanted to check with you if the new valuation levels modify naturally with the new payout ratio, modify your plans on the buyback program. Thank you very much.

Juan Carlos Mora (CEO)

Thank you, Brian. Let me address your two questions, and then I pass your question to Mauricio to see if he has any additional comments. Regarding capital, it's very good to have in mind that the evolution of our corporate structure allows us to manage capital much more efficiently. The holding structure allows us to assign the right capital for the different operations. Banks will have to comply with the, I'm sorry, the requirements of capital, but the holding company, it's not subject to those requirements. So it allows us to manage very efficiently our capital. What we have is, once we have the structure in place, is that we will assign the needed capital with the buffers that we consider reasonable, but optimize that use of capital. That allows us to have better returns on equity.

That's related to your second question, the payout ratio and the current valuation of the stock. What is happening in the market is not going to modify what we have in mind regarding the ability that we will have with the evolution of our corporate structure to buy back our shares. So with that valuation that we have now, we still will, once we have the structure in place, we will propose to the shareholders meeting a buyback program. Mauricio, I don't know if you have any additional comments on Brian's questions.

Mauricio Rosillo (Chief Strategy and Financial Officer)

Yes. Hi, Brian. When thinking about CET1, it's important to take into account that the target levels for each of the banks will remain the same. So we will still be thinking about 11%-11.5% as a target at year-end for each of the banks. And the excess of capital will go to the holding.

Now, in terms of the buyback program, as Juan Carlos said, it's a tool mainly used by the financial groups' issuers in the world. So we still want to have it. And we will approach the market depending on pricing conditions, but that's definitely something that we will continue to propose and implement gradually depending on market conditions.

Brian Flores (VP in Equity Research)

Thank you, Juan Carlos and Mauricio. And if I may, just a very quick follow-up. The 60% payout ratio, do you think we could, as analysts, use it and project it for 2025, 2026, 2027, or do you think this is more of a temporary tool you are using? Thank you.

Mauricio Rosillo (Chief Strategy and Financial Officer)

So the way we think about payout is not necessarily as a percentage of net income. When we say 60% is a result of the way we come up with the number.

The right way to think about that is the capital levels of the operating companies. Having a target capital level of at least 11% at year-end, what you're going to see is the excess capital flowing to the holding company, and that holding company will have ample space to distribute dividends according to the double leverage that accounts only to 103%-105%. What you should be able to project in the models is an ordinary dividend growing slightly in real terms, at least slightly, but in real terms. The buyback program depends not only on market conditions, but on capital levels. Ordinary dividends, they will be growing at least in real terms.

Brian Flores (VP in Equity Research)

Super clear. Thank you.

Mauricio Rosillo (Chief Strategy and Financial Officer)

Thank you, Brian.

Operator (participant)

Our next question comes from the line of Beatriz Abreu with Goldman Sachs. Please proceed with your question. Hi, everyone. Good morning.

Beatriz Abreu (Equity Research Associate)

Thank you for taking my question. I have two questions on my side. The first one is regarding loan growth. So your guidance is for loan growth around 5.6% this year, which is a bit lower than Colombian nominal GDP. I would like to know if that is mostly explained by either lower demand or by lower growth in the Central American countries where you operate, and if you expect loan growth to catch up to nominal GDP growth at some point. And my second question is regarding Nequi. So you had good performance there in 4Q, almost 1 million new active users, good loan portfolio growth in Nequi, and ARPAC surpassing $1. If you could give us any color on the strategy, how it's going, what are your plans to increase monetization, and also when you expect the operation to be profitable. Thanks.

Juan Carlos Mora (CEO)

Thank you, Beatrice, for your questions. The first one regarding loan growth, we are cautious on loan growth. We need to balance our risk appetite. So we need to be careful with the current conditions. The GDP, as you mentioned, will grow a little bit higher during 2025. We estimate that growth to be around 2.6%, and in real terms, as you mentioned, it's close to probably 6-6.5%. Our loan growth with the combined loan books is around 5.2%. We are expecting the commercial book to grow a little lower, and we expect mortgages to moderate a little bit the growth, so we are on the conservative side regarding loan growth, and we are going to focus on quality. We are forecasting, or we are seeing a cost of risk in the vicinity of 2%, around 2-2.1%.

We will prefer to be cautious regarding loan growth. That's why our guidance looks lower in terms of nominal GDP. Regarding Nequi, your second question, as you mentioned, Nequi continues to perform very well. It continues growing. We are now close to 22 million customers. One figure that I like a lot is of those, 23% are active customers. So they use Nequi for their day-to-day operations. So that shows that Nequi is really useful for those customers. So we continue growing, as you mentioned. We continue including or growing our loan book in Nequi. It's growing in a healthy way, even though we need to be careful also with risk, but it continues growing. So what we see is that we will have during this year a development in continued loan growth. Our income will continue to grow with different fees coming from different products.

We still, or we continue thinking that we will reach our profitability, or at least we will be in a level in which our income and our expenses are going to be in the similar magnitude by the beginning of 2025. So 2026, I'm sorry, 2026, beginning of 2026. So we are very happy with the development of Nequi, how it's evolving, their presence in the market. It's very good, Beatrice.

Beatriz Abreu (Equity Research Associate)

That's very clear. Thank you.

Juan Carlos Mora (CEO)

Thank you very much.

Operator (participant)

As a reminder, if you would like to ask a question, press star, then the one on your telephone. Our next question comes from the line of Alonso Aramburú with BTG. Please proceed with your question. Yes. Hi, good morning, and thank you for the call. Yeah. So two questions. So just a follow-up on your recent comment about Nequi.

Alonso Aramburú (Equity Research Analyst)

Can you give us some color as to where the fees are coming from based on the presentation? I think roughly about 40% of income comes from fees. And second, can you just comment as well on the performance in Panama? ROE has been in the mid-single digits now for a few years. What are your expectations to turn around that and to potentially get to a double-digit ROE in Banistmo? Thank you.

Juan Carlos Mora (CEO)

Thank you, Alonso. Fees in Nequi are coming from different sources. We have different services, including some regarding transportation, but also insurance, but also remittances. So they come from different sources, the part of fees. But the main income in the future of Nequi is going to come from interest income. That's what we are doing, building a loan book.

So we continue adding new services on the marketplace of Nequi, but we will move towards profitability will be our loan book, complemented by the fee income that we will continue to grow. So it's a mix of remittances, FX, transportation fees coming from transportation services, insurance, bank assurance. So it's a diversified source of income. Regarding your second question, Mauricio? Or no?

Mauricio Rosillo (Chief Strategy and Financial Officer)

Hi, Alonso. Yes. Banistmo posted a 4% ROE in 2024. That's not an ROE that you should be thinking about for coming years. The ROE of Banistmo should go up to double digits, but it is a challenging scenario due to the competitive landscape.

However, we have been doing a lot of work in terms of operational IT and building a value proposal that is competitive enough to be able to gain traction and to gain momentum in that market, to be able to deliver higher ROEs that are to be able to get close to that cost of equity of Banistmo.

Alonso Aramburú (Equity Research Analyst)

Thank you.

Mauricio Rosillo (Chief Strategy and Financial Officer)

Thank you, Alonso.

Operator (participant)

Our next question comes from line of Julián Ausique with Davivienda. Please proceed with your question.

Julián Ausique (Senior Equity Research Analyst)

Hi, everyone, and thank you for having my question. I have two questions. The first is regarding the dividend. I would like to know the rationale to change the statement of the dividend. In the previous years, you paid the dividend during every quarter, and now you are paying in one statement. And if there is something related with Grupo Sura or your main shareholder in terms of liquidity.

The second question is regarding the information that will be available after the creation of Cibest. I mean, after the Cibest, maybe all analysts, we are going to do the evaluation through some of the parts. So I would like to know if we will have information related to Colombian operation. We already have in the superintendency, but for example, Central America, or even Nequi or Wompi to have a more precise value of Bancolombia in terms of projections and everything else. Thank you so much.

Juan Carlos Mora (CEO)

Thank you, Julian. Regarding your first question, we are paying the dividend in one installment, which we don't use to do it in that way just because we are in the process of evolving as a new corporate structure. You have to understand that Bancolombia, as we know it today, is the company that distributes dividends.

We will have our shareholders' meeting in March. Then we will create a new entity that is going to be the listed company. So we are in that transition. So if we are going to the dividend in different installments will be in a different structure. So that's why we are doing that in one installment in April when Bancolombia still is the listed company and the holding company. Then we will evolve very soon in the next month to a new structure. We will be Cibest, and we will now operate under that corporate structure. So it's not regarding any particular investor of Bancolombia. It doesn't have any relation with any condition. It's because we are evolving.

We are having a new corporate structure in which the current company that is listed and is the holding company is going to evolve to be a commercial bank, and we will have a new holding company that will now operate. That's the only reason why we are just paying the dividend in one installment. Second question, Mauricio.

Mauricio Rosillo (Chief Strategy and Financial Officer)

Yeah. Hi, Julián, and just to follow up on that, you should not think about that way of distributing ordinary dividends going forward. What we plan to do next year is to go back as soon as it starts distributing dividends, we'll go back to the quarterly installments. Now, regarding your second question, the way we are going to disclose the numbers, the results is going to start in the second quarter of the year.

If everything comes out as planned, second quarter results will be Cibest results, and you're going to be able to see each of the countries with all the businesses that they are responsible for. So Colombia will not only be Bancolombia. It will be the consolidated operations in Colombia, including capital market, subsidiaries, and also the offshore subsidiaries. That's going to be Colombia. And then the same for the other countries. We will disclose figures for each of them so that you can do sum-of-the-parts valuation for the holding.

Juan Carlos Mora (CEO)

Let me add that that's one of the main goals that we have with Cibest. It's to have more transparency on our reporting. So as you mentioned, we will be reporting each operation separately. Bear in mind that, for example, Colombia, we will report it on the IFRS standards that are international standards of accounting.

Mauricio Rosillo (Chief Strategy and Financial Officer)

Not Colombian standards are those that you have on the Colombian superintendency. So there will be some differences on the Colombian operation reporting, but we will report the different operations separately so you can have a better view of the different operations under Cibest.

Operator (participant)

Does that complete your question, Julián?

Julián Ausique (Senior Equity Research Analyst)

No, thank you. That's perfect. Thank you so much.

Operator (participant)

Thank you. We have no further questions at this time. I'd like to turn the floor back over to management for closing comments.

Juan Carlos Mora (CEO)

Thank you, everybody, for being present in this conference call. We are confident that our operations under the new evolution or the new corporate structure will add, as I mentioned, transparency. It will allow us to manage more efficiently our capital and will produce positive results. So our next report, we will be for the first quarter of 2025 under the current structure.

Mauricio Rosillo (Chief Strategy and Financial Officer)

But as Mauricio mentioned, our second quarter report, we expect to be under the new corporate structure if everything goes as planned. So again, thank you very much for attending this conference call, and I wish you a very good day.

Operator (participant)

This concludes today's conference. Thank you for participating. You may now disconnect.