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- **Record Q1 Performance**: Net income up 28% QoQ, loans share at 25.3%, and NIM on retail loans at 5.8%.
- **Strategic Momentum**: AI partnership with Microsoft, Augusta customer database, and 70% transaction growth in real-time payments.
- **Challenges Ahead**: Slower NIM recovery due to high rates, cautious loan growth, and 2025 ROE guidance of 10%-11%.
- **ESG Leadership**: Top 3 in financial sector ESG ranking, 55% female workforce, and 300 tons CO2 reduction via biogas.
- **Macroeconomic Risks**: Fiscal deficit (60% of GDP), 2.7% GDP growth, and 4.7% inflation by year-end.


**【CEO Summary Section】**
- Q1 2025 net income reached Ps. 362 billion, a 28% increase from Q4 2024 and 3.2x higher than Q1 2024. Market share in loans expanded to 25.3%, with mortgages at 16.6%, the highest in history.
- NIM on retail loans reached a two-year high, but total NIM on loans remained flat due to competitive pressures in corporate loans.
- Customer experience initiatives include a loyalty program, integrated customer database (Augusta), and standardized Net Promoter Score (NPS) measures.
- Strategic priorities: financial diversification (retail deposits, interest rate risk management), operational efficiency, AI adoption (partnership with Microsoft), and ESG integration.

**【CFO Financial Commentary】**
- Assets grew 7.5% YoY to Ps. 330 trillion, with gross loans up 5.4% YoY to Ps. 199 trillion. Mortgage and consumer loans drove growth, while commercial loans faced pricing competition.
- NIM on loans was 4.4% YoY, with retail NIM up 96 bps to 5.8% and commercial NIM down 81 bps to 3.4%. Cost of funds fell 37 bps QoQ to 6.8%.
- Cost of risk improved to 2.0% QoQ, with consumer loans showing 32 bps improvement. Fee income grew 6.2% YoY, driven by pension and banking services.
- 2025 guidance: loan growth of 9% (commercial 7%, retail 11%), NIM on loans in the 4.5% range, ROE 10%-11%.

**【Q&A Key Takeaways】**
- **ROE Guidance Adjustment**: Lower ROE range (10%-11%) reflects slower Central Bank rate cuts and cautious loan origination amid competitive pricing.
- **Pension Reform Impact**: Neutral guidance assumes potential negative long-term flows offset by short-term fee gains; Porvenir prepared for regulatory changes.
- **Asset Quality**: Stage 2 reclassification (Stage 2/3 coverage 33.3%) is mechanical, not indicative of trend; cost of risk expected to stabilize below 2.0%.
- **Political Uncertainty**: 2025 elections and policy reforms (labor, health) may weigh on business sentiment, though economy shows resilience.

**【Macroeconomic Outlook】**
- Colombia's Q1 2025 GDP growth of 2.8% driven by public spending and consumption; 2025 GDP forecast 2.7% amid global trade risks.
- Inflation expected to end 2025 at 4.7%, with Central Bank rate cuts to 8.5% by year-end, constrained by fiscal deficit (60% of GDP).
- Exchange rate projected at Ps. 4,300/USD, with external deficit widening to 2.6% of GDP due to import recovery.

**【ESG Highlights】**
- Grupo Aval ranked 3rd in financial sector for ESG, with Corficolombiana (8th) and Porvenir (2nd) leading non-banking entities.
- Social initiatives: 45 communities with water solutions, 81 with energy, and 35% female management representation.
- Environmental efforts: Banco Popular generating 570,000 kWh/year via biogas, reducing 300 tons of CO2.


Grupo Aval Acciones y Valores S.A. (AVAL) Q1 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

AVAL

AVAL fundamentals

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