Grupo Cibest S.A. (CIB) Q4 2025 Earnings Call Transcript

Good morning, ladies and gentlemen, and welcome to Grupo Sebast Ben-Colombia's fourth quarter 2025 earnings conference call. My name is Carrie, and I will 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 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 risks 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 Botera-Wolf, Chief Strategy and Financial Officer. Mr. Rodrigo Preto, Chief Risk Officer. Mrs. Catalina Tobon, Investor Relations and Capital Markets Director. And Ms. Laura Clubijo, Chief Economist. I will now turn the call over to Mr. Juan Carlos Mora, Chief Executive Officer. Please go ahead.

Good morning, and welcome to Grupo C-VEST Q4 Conference Call. Please turn to slide 2. Even with fiscal difficulties and volatile markets caused by trade, tariffs, and geopolitical issues, Colombia experienced steady economic growth in 2025, largely driven by consumer spending and government expenditures. Raising public debt, uncertainty about minimum wage changes, potential new taxes, and possible mandatory investments for financial institutions have recently worsened the macroeconomic outlook for 2026 leading to inflationary pressures higher interest rates and expected weaker overall economic performance last year new holding structure improved our capital allocation namely higher dividends, share buybacks, and greater flexibility, as shown by Banismo's recent debasement. Furthermore, the agreement to sell Banismo resulted in a non-cash impairment charge and asset-held-for-sale accounting during the quarter, which affected both quarterly and annual financial result, as will be detailed further. Thus, annual net income totaled $3.8 trillion and ROE reached 9.1%, reflecting the impact of the impairment. However, excluding this one-off accounting effect, Grupo Ceres will have delivered $7.3 trillion in net income, significantly exceeding its guidance, equivalent to an ROI of 17.2%. This performance was driven by strong operational results, resilient margins and improved asset quality. Moreover, given the significant progress achieved in our digital businesses, both Neki and Wampi reached breakeven in the fourth quarter. Another key milestone as these businesses complete our value proposal and are key drivers of SEVIS long-term returns. Also, yesterday we announced to the market our proposed dividend to be submitted for shareholders approval amounting to 4.3 trillion pesos equivalent to 4,512 pesos per share to be paid on four installments starting April 1st. Despite one of the effects from Banismo divestment, the group achieved a 14.6% annual dividend growth, exceeding inflation by over 950 basis points and boosting shareholder returns through its new corporate structure. Please proceed to slide 3. The market has acknowledged the value generated by our transformation into Group POSIs, as evidenced by the strong performance of our shares. This success further strengthens the credibility of our strategic roadmap. From the time the transaction was announced until the end of 2025, the common shares, preferred shares and APRs have each shown impressive double-digit gains 87% 75% and 104% respectively these increases were mainly driven by mayor milestones shareholders approval of the holding companies creation the introduction of the share buyback program and subsequently banismo diversity. When it comes to valuations, our price-to-book ratios have improved and our PE multiples now indicate increased market confidence and more optimistic outlook on our long-term profitability. Moreover, we are very pleased with the recent announcement of the inclusion of our common shares in the FTSE Large Cap Index, supported by the continued increase in the trading volumes please proceed to slide four regarding the share buyback program as of December 31st approximately 32% of the total authorized amount has been executed representing around 8.6 million shares or nearly 1% of our total shares outstanding of the reported shares 50% were preferred shares 40% were ADRs and 7% were common shares since the program began we have observed an average appreciation of 37% across all three share types I would like to emphasize that the program remains active and its ongoing execution continues to be fully aligned with our strategic capital allocation plan market conditions and each shares class liquidity and capacity to absorb volume I will now like to invite Laura Clavijo chief economist to provide an overview of the macroeconomic landscape Laura thank you Juan Carlos if you could please turn to slide six in 2025 the The Colombian economy demonstrated moderate resilience with overall growth of 2.6% amid a complex macro environment marked by global uncertainty, domestic policy shifts, and structural challenges.

During the fourth quarter, real B2B growth of 2.3% underperformed against expectations, reflecting short-term strength in domestic demand but structural weakness in investment and the external balance. Private consumption remains the primary driver of growth, supported by robust household spending, remittance flows, and a surprisingly strong labor market. Demand in sectors such as retail, entertainment, and financial services continue to thrive, even as primary activities such as mining, agriculture, and construction underperform relative to broader economic activity. Public expenditure also favored economic momentum, increasing at an annual pace of almost 5% during the fourth quarter for an overall expansion of 4.5% during 2025. Public sector spending has come at the expense of a widening fiscal deficit of close to 6.3% of GDP and a primary deficit of 3.4%. The government has adamantly responded with emergency fiscal measures, including tax reform, debt management operations, and regulatory efforts to support spending in the final leg of the administration and the ongoing electoral campaign. Inflationary pressures persisted throughout 2025, with the consumer price index missing the central bank's 3% target for a fifth consecutive year. Inflation closed at 5.1%, and expectations rose sharply at the end of the year, proving that a stable monetary policy rate was ineffective. Furthermore, expectations increased even further on the onset of the announcement of a historically high minimum wage of 23.7% for 2026. In response, Banco de la República initiated a hiking cycle by raising its policy rate in 100 basis points during its January meeting. Our updated view incorporates year-end inflation of 6.4% and a monetary policy rate that should rise at least 200 basis points and may undermine growth dynamics. In summary, Colombia's economy is poised for moderate growth in 2026, supported by resilient domestic demand, but remains exposed to inflationary pressure, rising interest rates, and deteriorating fiscal and external balance. Boosting investment, both foreign and local, will be the key to unlocking better economic dynamics and stronger macro fundamentals that may prove challenging amidst political uncertainty. If you could please turn to slide seven. In 2025, the Central American region delivered moderate but solid economic performance with Guatemala and Panama among the fastest-growing economists in the subregion. According to World Bank estimates, both Guatemala and Panama expanded GDP by approximately 3.8% and 4.1% in 2025, outpacing regional peers. El Salvador's growth was slightly more modest, around 2.8%, reflecting ongoing structural constraints and external vulnerability. Guatemala's diversified economic base supported resilient domestic demand, while Panama's performance was underpinned by services, logistics, and trade sectors. El Salvador's pace was constrained by lower productivity and fiscal adjustments, though tourism and remittances provided important buffers. Overall, the outlook for 2026 remains constructive for investors, with growth prospects supported by stable consumption, remittance flows, and integration into regional value chains, though careful monitoring of fiscal dynamics and external risks is warranted. Now, please let me turn the presentation to Mauricio, who will present CIVA's 2025 performance.

Thank you, Laura. Please go to slide number nine. Before we discuss our results, I would like to briefly explain the accounting impacts recorded in the fourth quarter, given the recently announced agreement to sell 100% of Banismo's shares to Inversiones Cuscatlan, Centroamerica, ETA. The transaction consists of an all-cash consideration of $1.4 billion, equivalent to a multiple of 17.1 times earnings and 1.2 times book value, triggering a one-time non-cash net impairment charge of $3.4 trillion related to goodwill. So, Banismo's operation had to be recognized as assets held for sale, meaning all assets and liabilities were reclassified, creating significant variations on the balance sheet compared to the previous quarter and previous year. Consistently, Banismo's contribution was deducted from the P&L and net impact adjusted through net income from discontinued operations from fiscal year 2024 and 2025. However, to facilitate understanding, the year-over-year variations of the P&L items presented here are calculated based on the actual 2024 results excluding the reclassification. Also, we provide a pro forma year-over-year variation assuming no reclassification on 2025 figures either. A set of balance sheet and P&L statements for both the fourth quarter and full year reflecting the required reclassifications as well as pro forma versions excluding these effects are available in the press release published yesterday and included in the appendix of this presentation i just want to emphasize that the accounting impact did not affect the bank's capital ratios or the dividend flows to and from seabest now please proceed to slide number 10. Our loan portfolio declined 8.3% over the year, mainly explained by the accounting impact, absent of which the growth would have been 2.1%. In addition, the 15% appreciation of the Colombian peso in the period reduced the value of our foreign currency portfolios when translated into local currency. Excluding both impacts, the loan book would have grown 7.2% year-over-year. When broken down by loan category, mortgages continued to lead growth. Consumer lending also regained momentum after two years of contraction, driven by a renewed risk appetite and by Neki's continued expansion in low-value loans. Meanwhile, commercial lending grew at a more moderate pace, though it showed a slight pick-up in the second half of the year in Colombia despite ongoing political uncertainty. Now please proceed to slide 11. When analyzing performance by operation, Banco Colombia and El Salvador led long growth. Banco Agricola delivered the strongest expansion, with commercial lending accelerating sharply, particularly in the construction sector, supported by renewed demand for housing projects. Consumer activity was also positively driven by personal loans and credit cards. BAM in Guatemala and Banismo in Panama applied tighter credit standards, resulting in a more restrained lending dynamic during the year now please proceed to slide number 12 our deposits reported a 5.2 percent contraction in the year but expanded 4.5 percent absent of accounting impacts if FX impact is removed deposits growth would have been 10.2 percent I would like to highlight the solid performance of savings accounts, which grew 16.1% net of accounting and foreign exchange effects. Deposit growth was very positive across all operations, with particularly strong contributions from Banco Agricola and Banco Columbia, which explains the group's robust liquidity position throughout the year now please proceed to slide number 13 in terms of our funding mix we highlight the larger share of site deposits relative to time deposits in other funding sources which reduces funding costs and enhances structural liquidity to certain extent this shift is the result of the reclassification of Banismo that held a higher share of time deposits and other liabilities relative to other banks of the group but also given the strong growth on savings accounts across Colombia, El Salvador and Guatemala such that this now represents 47 percent of total deposits on a consolidated basis compared with 40 percent a year earlier. This outcome clearly underscores our ability to attract and retain stable, low-cost funding, reducing the overall cost of liabilities to 3.8%, a decline of 114 basis points compared to the previous year. Now please proceed to slide 14. net interest income decreased by 5.3% on an annual basis but recorded a 1% expansion excluding accounting impacts such increase is the result of a larger contraction in interest expense relative to interest income during the year supported by a series of hedging strategies that allowed us to reprice funding more quickly as rates came down the annual mean decreased as expected from 6.8% to 6.5%, excluding accounting impacts, given the lower prevailing interest rates compared to the previous year. When broken down by entity, it is worth noting Banco Agricola's consistent NIME expansion due to its well-balanced growth, both in high-yielding loans and low-cost deposits. Please proceed to slide 15. Net fee income increased by 4.3% year-over-year, or 10.4% excluding accounting impacts. This strong performance was fueled by higher transactional activity in credit and debit cards, mainly supported by a new bank assurance alliance in Colombia. In addition, brokerage payments and collections and trust services continued to perform well, reflecting a well-diversified non-interest revenue mix when fee-related expenses increased in line with higher activity levels particularly in card related services we continued to capture operational efficiencies especially through adjustments in the correspondent banking model overall the income continues to be key for our earnings diversification and it represented a 18.4% of our total net operating income in 2025.

Please proceed to slide 16.

Moreover, I would like to highlight the solid progress we're making in scaling our complementary businesses, which play a key role in strengthening our group's competitive advantage by combining the best of traditional banking with the innovation of our digital solutions. WOMPI achieved a major milestone by reaching breakeven in 2025, supported by strong growth in clients, transaction volumes, and fee income. This expansion in revenues outpaced operating expenses, enabling the company to reach profitability. On the other hand, Wenya continued advancing steadily, supported by growth in onboarded clients, assets under custody, as well as a sharp increase in transactions that reinforces its compelling value proposition. Finally, regarding NEHI, I'm pleased to share that it reached breakeven in the fourth quarter, earlier than expected, driven by a strong growth and deeper monetization across its ecosystem, which I briefly discuss next.

Please proceed to slide 17.

Neki's loan portfolio scaled significantly, increasing 174% over the period to reach a balance of $1.6 trillion, surpassing the goal of doubling the loan portfolio by 2025. As of year end, 700,000 clients held active loans reflecting an average ticket size of 2.3 million pesos in an average term of 32 months. The 90-day patio loan for 2025 stands at 3.5% and the cost of risk remains contained at 13.1%, aligned with a scalable digital origination model. Deposits show similar momentum, up 58% year-over-year to $7 trillion Colombian pesos in the fourth quarter of 2025, reinforcing NECI's role as a leading digital savings and transactional platform, still with room in its loan-to-deposit ratio to further expand the loan portfolio. On the revenue side, financial income increased 75%, supported by a strong portfolio growth and a more balanced mix between low income and investment income, positioning NECI for continued improvement in structural profitability. Please proceed to slide 18. Moreover, it closed 2025 with 27.4 million users and an activity ratio close to 80%, demonstrating a strong client engagement. Also, monetized users rose 43% to 16.5 million, driven by deeper product adoption across the ecosystem. Regarding fee income, NECI delivered a 53% increase versus the prior year, reaching $175 billion in the fourth quarter of 2025. We diversified growth across cards, withdrawals, and ethics, reducing concentration risk and enhancing resilience. Consistently, RPAC and CTS metrics remain with positive trends, supporting a disciplined path toward profitability as monetization expands in line with customer engagement. Finally, looking ahead to 2025, guidance remains strong with total users expected to grow 5 percent, loans expanding 50 percent, deposits increasing 10 percent, and total income rising 40 percent, reinforcing its strategic relevance and long-term value creation potential within the group.

Please proceed to slide 19.

Net provisions for the year amounted to 4.4 trillion pesos, an almost 19% reduction over the year, 16% excluding accounting impacts on the back of lower expected losses related to consumer and SMEs that offset the growth on corporates given the deterioration recorded of a few non-sector related groups. The good performance on almost all segments more than compensated for the increase in provisions recorded at the end of the year given the sudden change in macro variables discussed earlier, which exerts pressure on households and enterprises' disposable income. Thus, the annual cost of risk was 1.8%, which, absent of the deduction of Banismo's assets, would have been 1.6% in line with our updated guidance.

Please proceed to slide 20.

Consistent with the lower expected losses that drove net provision charges down, asset quality strengthened steadily throughout the year across all major indicators. From a passive loan formation standpoint, the value of loans becoming delinquent during the period declined significantly versus historical averages, led primarily by improvements in the consumer portfolio. In line with this trend, both the stage distribution and the non-performing loan ratio improved, reinforcing provision coverage levels. The operating expenses increased by 1.6% year-over-year or 8.3% excluding the accounting impacts. General expenses increased primarily due to licensing and technology-related costs associated with the group's ongoing business transformation, followed by an uptick in other taxes stemming from the incorporation of Grupo CIDES. Personal expenses increased 2.3% year-over-year, or 10%, excluding accounting impacts, primarily driven by the annual wage adjustment and higher bonus provisions aligned with the full-year financial results forecast. The cost-to-income ratio reached 49.8% in line with our updated guidance, reflecting a slower pace of income growth relative to expenses, explained by the need reduction as expected. Please turn to slide 22. Net income for the year was $3.8 trillion, which absent of the one-off accounting impact would have reached $7.3 trillion, reflecting the strength of our operation, even outperforming our updated guidance. As a result, consolidated ROE was 9.1% or 17.2% absent of impacts, primarily pushed by Bancolombia's stand-alone pro forma return of 24%. Please turn to slide 23. Shareholders' equity fell 8.7% year-over-year, 1% absent of impacts, explained by a reduction of retained earnings, driven by the net impact of the impairment charge discussed above. On the other hand, Bancolombia's stand-alone core equity Tier 1 ratio closed at 12.2%, An increase of 27 basis points over the 2024 year-end pro forma figure, assuming the corporate devolution into Grupo Ceres had already taken place. I would also like to highlight the significantly lower CDT1 deductions recorded during the Only 7 BIPs compared to nearly 70 BIPs in 2024, as a good week from the Central American American banks was no longer required to be deducted. All in all, Banco Colombia's standalone total solvency reached 14.4% and Banco Agricola and BAM above 13.5%, all of them well above minimum requirements. These sound capital ratios coupled with a low double leverage of 101% in Grupo CIVES allowed us to propose the 60% billion payout ratio discussed earlier. With this, I will now hand the presentation back to Juan Cabos.

Juan. Thank you, Mauricio. Please proceed to slide 24. By 2025, Grupo Civest had originated 370 trillion pesos in loans through its Business with Purpose strategy progressing toward the 716 trillion target for 2030 in the latest Dow Jones sustainability in this evaluation group of cities achieved a score of 88 points which is higher than the last year's result Banco Agricola has been recognized as the organization with a higher reputation in El Salvador, while Bancolombia has received equivalent recognition in Colombia for the 11th consecutive year. Please proceed to slide 26. Our 2026 forecast now incorporates major shifts in our macroeconomic expectations, especially regarding inflation and interest rates. It also accounts for the impact of the Banismo deconsolidation and increased uncertainty largely due to higher taxes compared to our earlier assumptions. In this context, we anticipate long growth in the range of 7 to 8 percent, with a net interest margin expected between 6.8 and 7 percent, reflecting the current higher interest rate environment. the cost of risk is projected to be between 1.6 and 1.8 percent while operational efficiency is targeted at approximately 49 percent as a result roe is expected to be between 18 and 18.5 percent now please proceed to slide 27 for some final remarks in conclusion i wish to emphasize that 2025 represent a five-year for the group characterized by an effective implementation of our corporate transformation the initiation of our share repurchase program and the agreement regarding the banismo divestment collectively these actions demonstrate our continued dedication to generating sustained value for our shareholders looking ahead although fiscal deficit challenges persist, the prevailing high interest rate environment offers potential for marginal improvement, which could upset weaker loan demand and emerging great risks. We are confident that the electoral process will be conducted smoothly, strengthening our positive environment for operations. This concludes our presentation for today. We welcome any questions you may have at this point.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

And our first Next question will come from Chito Labarta with Goldman Sachs.

Hi.

Thank you for the call and taking my question. My question, I guess, is on the outlook for asset quality and the cost of risk guidance, I mean, I think, you know, short-term things are going well, but, you know, inflation remains high, interest rates are high, Juan Carlos, you mentioned there, you know, potential asset quality risk. So how are you seeing, you know, asset quality, and what do you think the risks are given this, you know, continued high inflation, high level of rates, and could that put maybe some pressure on cost of risk or asset quality either throughout the year or into next year?

Thank you, Tito.

Definitely the cost of risk is something that we will need to manage during this year. It's a year in which we will have some challenges, and you mentioned some of them, inflation is one of them, and also as a consequence, interest rates. But we believe that we are well prepared to manage that uncertainty that is coming in economy so our guidance regarding cost of risk includes those challenges that we have in front of us so we are very well aware that there will be macroeconomic challenges but again we think that in the guidance that we are providing we are incorporating our capacity to manage those risks. In the upper level, which is 1.8 of cost of risk, we are incorporating some of those risks that we see, but even though those risks, we believe that there are opportunities the Colombian economy has shown so far that could manage some of those risks, particularly coming from consumption that is fueling that development. So, Pito, definitely it's something that we are going to watch very closely and we will continue updating how are we seeing the forecast of the cost of risk but we are confident that with the tools that we have the understanding that we have of the economy we can react fast to any upcoming risk and adapt our our models and our behavior to those risk people okay no that's very helpful thank you Juan Carlos well a second question if I may just not in terms of capital allocation, right?

I mean, ROE has been doing better than expected. You know, all the underlying banks are fairly well capitalized. You have been executing on your buyback, but, you know, I think, you know, there could potentially be room for more. How do you think, one, either about additional buybacks, you know, once this program is completed, and two, just, you know, I think the market, as you highlight, the sale of Banismo has been well received. You still have Banco Agro Mercantili, which is, you know, just relatively underperforming from an ROE perspective. You know, I like the charge stage, lower NIMH, higher MPLs. How do you think about, you know, just the capital allocation into, you know, Banco Agro Mercantili, which has been underperforming a bit? You know, could there be more sales here, or do you see room to improve that, and how much could you improve that? Thank you.

Tito, what we achieved with the creation of Group O Series was the ability to manage our capital in a much better way. So now we have much more flexibility and we are aware of the possibilities that we have. So, we will continue managing capital to be very efficient in the sense that we will utilize that capital for growth, but also to return to shareholders depending on the situation. Regarding the specific comment about BAM, I want to emphasize that we are committed to continue supporting the operation in Guatemala. We see very good potential in that operation. It's a country with good macroeconomic stability with potential for commercial businesses. businesses and and so we will we are confident that our model will create a positive impact on our operation in in Guatemala so we will we will continue supporting the operation and we are confident that the numbers that you mentioned will continue improving we are targeting double-digit ROE it will take some time we are aware of that that the year for the performance of BAM will show its results of fully results in 2027 we are on a transition to to to have those numbers that we are that we are looking for but again we are we are very confident about about how we can develop that that franchise in in Guatemala I don't know Mauricio if you have any additional comments to Tito's question and hi Tito I would just add that due to the flexibility we have now with the

new corporate structure and with the level of capital and liquidity we're going to have in at the holding level we're going to be optimizing the capital of the different operations so we expect to do some to issue some instruments inside the perimeter of the holding in order to have some flow of capital going from the hogging to the operating entities and the operating entities and flowing dividend to the holding company so that's going to be one way to capitalize to optimize capital allocation and along with investments we plan to do we want to capitalize Neki we're going to capitalize Wompy and Wenya which are having very good dynamics and we're also going to be investing in IT projects and that you know are making a big difference in our buying proposal so we plan to do all of that and only to wrap up the buyback program we be there is here to stay we're going to present

three-year buyback program and but we are only going to execute according to market conditions okay that's great thank you Mauricio and Juan Carlos thank you our next question comes from Yuri Fernandez with JP Morgan no Juan Carlos Mauricio everyone and congrats on the year I have a I was Just two questions here regarding the guidance and outlook for 2026. The first one is regarding taxes. We saw some, I'm not sure if I should call a one-off, but 150 billion tax headwind in the fourth quarter. So just asking your view, like should we continue to see this emergency tax into 2026? And what was the tax rate that the guidance was built with? Like, are you assuming like a higher tax rate? And if yes, what? Just trying to understand, you know, the taxes moving pieces. And then I have a question regarding the ROE for the year. The 18 to 18 and a half, I know the guidance is fully done without Bonissimo. So I would assume that you are also using the lower equity, right? The equity with lower impairment and next minority so just checking what was the equity that you are implying so we can kind of estimate the net income because basically the average equity for 2025 was higher right than the end of period so just checking here for us to try to estimate the net income growth. Thank you.

Thank you, Yuri. Let me give you some general comments about your two questions and I then pass Mauricio for additional comments. Taxes, reading taxes at this point in Colombia is very difficult. I mean you know that at the end of the year there were some regulations regarding taxes that in February were suspended by the constitutional court so those taxes that incorporated additional income tax for financial institutions is now suspended and it is awaiting for the final decision from the constitutional Accord. So, what we did at the end of 2025 was incorporating the information that we had at that moment. So, in the fourth quarter, we had around 150 billion pesos in which we With the information that we had at that moment, we were four quarters, there is a provision about additional taxes. So now there is another regulation that is in progress. We don't have the information yet. There have been informal or some messages from the government that will incorporate some equity taxes, and they are saying that probably we'll have tariffs for financial institutions. But we don't have that information yet. It's supposed to come out this week. So, it is difficult to read at this moment how are we going or what are going to be the effective taxes for 2025 in Colombia. With that scenario, what we have for our guidance is an effective tax rate of 28% that we believe reflects the current information that we have. Once we have more information, we will incorporate additional information, I'm sorry, about how are going to be the effective taxes for 2025. Regarding your second question about ROE, I will pass it to Mauricio. Thank you. Hi, Judy.

Just to be very clear with the message that Juan Carlos just passed, the tax rate with which we projected our guidance in regular operations is the one that he just mentioned, is 29 it moves from 28 to 30 percent now we included extra taxes because of of the extra tax rate because of the decree that was on the table that as you know has not been confirmed But I guess my message here is our guidance of 18 to 18.5 does include extra taxes because of the extra tax rate, which was the information we had at the moment we built the guidance. The new decree, the one on the equity, has not been included. So, the message here is, it's very unlikely that both of the decrees are accepted, regardless of which one is accepted or confirmed. It's important to note that the guidance does include extra provisions for taxes. Now, to your second point around the equity used for the guidance, it is the equity after impairment. So, to do your math, the 18% ROE corresponds to a net income of 7.3 trillion. So, it's flat in terms of net income as compared to 2025, but without Banismo, without Banismo's equity and without Banismo's net income.

No, super clear, Mauricio and Juan Carlos. So, basically, the guidance, I would say, is in between on tax, right? It's very hard, as Juan Carlos mentioned, to have a view, a lot of uncertainty. So, you have some of the decrees, not the two decrees. So, let's say, a bookcase, none of those decrees, they prevail. There is an upside risk to the guidance on taxes. If the second decrees prevails and the first decrees also prevails, then there could be a downside risk to the guidance on higher taxes. That's basically the message, right? Thank you very much, guys.

Thank you, Yuri.

We'll go next to Andre Soto with Santander, Mexico.

Good morning, Juan Carlos. Mauricio, thank you for the presentation. My question is, again, regarding guidance. I would like to understand, you know, if you are assuming 11% policy rate and actually, you know, expectations are quickly moving higher than that, will that imply that you will need to do another model update down the road and build additional provisions? And if so, is that a downside risk to your guidance? and also considering, you know, the uncertainties on taxes, it looks like that could be another potential headwind to your ROE in 2026. So I would like to understand what would be the factors that could balance out in order for you guys to reach this 18 to 18, 18.5% ROE. Thank you, Andres.

The guidance that you're giving to the market incorporates the information that we have at this point. And you mentioned that, of course, interest rates are going up. That's a fact. Already the central bank increased the reference rate 100 basis points. And our view is that that is going to continue. so that implies that interest rates will be higher in the economy much higher that as you know we are as sensitive and that is going to have a positive effect on our on our name so that that is there are positive effects of the the the other side of the coin on that comment is that that it's increasing the risk so we will bear have to balance that higher margin with a higher cost of risk but we think in that equation we are able to deliver the guidance that we are providing so even with those risk and And anticipating that behavior, we think that we are able to deliver the guidance that we are providing. So, it's a year in which we will need to be following the development of the macro variables and also risk very, very closely, but we are confident that we have the tools to react fast enough to deliver the guidance that we are providing. Mauricio, do you have any additional comments?

Yes. Andres, taking into account that we have like a natural hedge on volumes and prices, volumes, as prices go up because interest rates go up, volumes may go down and that may be upset so just just to take into account that we have a we simulated some scenarios of interest rates going up to 12% so that's why we use branches in our guidance a not only in ROE but also in cost of risk so to consider both scenarios now a in order to to anticipate what could happen with an interest rate of with a high interest rate scenario and just wanted to let you know that we have already closed some a risk brackets in in consumer lending so So we already closed some of the origination risk profiles, and it's also good to take into account that at the end of 2025, we anticipated 300,000 provisions considering the increase in the legal and minimum wage because we knew when we included that into the models we knew that that could cause inflation pressures and interest rate increases so we already have three hundred thousand of potential deterioration in our in our consumer portfolio and also we have as you know as you know a extra provisions for a specific corporate clients at the end of 2025 so if you put those things together we feel very

comfortable we can we can meet the target of cost or risk for 2026 perfect thank you my second question is regarding capital deployment you your double leverage stands at 101% what is the level you guys feel comfortable with regarding the capital allocation priorities that you previously mentioned including providing capital for your new new ventures can you please quantify how much capital are you planning to put into those subsidiaries yeah and we plan

to to put around 600 million 600 billion in neki uh around that's special right yeah a pesos 50 billion and to both uh wenia and wonpi and we are investing a lot in it organic projects and According to the instruments I mentioned before, we plan to do at least $2 trillion of AT1 from Bancolombia to CIVES, and around $250 million from the Central American operations to CIVES. So that's the overall feature in terms of capital deployment. And I'm sorry, around the question of double leverage, yes, it's 101. Our limit, according to conversation with risk rating agencies, is 120. So, we're using the capital, as I just mentioned, but it's important to know that we have approximately 20 percentage points of extra leverage, if we would like.

That's very clear. Thank you very much, and congratulations on the results. Thank you, Andre.

We'll go next to Ernesto Gabilonio with Bank of America.

Thank you. Hi, good morning, Juan Carlos, Mauricio, and Catalina, and good morning to all your team. Thanks for the opportunity to ask questions. My first question will be on the political and economic outlook. So given the recent salary increase, how do you see the Congress election on March 8th? And can you elaborate on the proposals of the three leading candidates for the next presidential election in May? And the second question is on operating expenses. I believe last time you mentioned OPEX growth should be around inflation plus 200 basis points. So just wanted to know if that would be the case for this year. And if you are seeing any impact related to the recent salary increase in personal costs. And also, if you can elaborate on how much of the OPEX's growth will be on a recurring basis and how much will be related to the technology costs, advertising, all of what you are doing in NECI, RENIA, and WOMPI. Thank you.

Thank you, Ernesto.

Let me elaborate a little bit on the political scenario. As you all maybe know, we are two weeks away of congressional elections, and also there are going to be three primaries in the same date, that's the 8th of March. It is difficult to try to predict how the Congress is going to evolve in this composition, but there are some facts that are important to take into account. The five seats that were given on the peace process of 2016 now expire, so those five seats that were in the government coalition are not going to be there anymore. so there are five seats left and those seats were supporting the government. On the other hand, the decomposition of the several leading parties, at this point there are some One forecast is that in the case of the Paris that have had a coalition, in this case opposing to this government, will probably continue having a strong position, but again, at this point it's very difficult to know. What we know is that probably the Senate will have the composition that is going to be much balanced and probably with a majority of a coalition that is not supporting this government. That's what we have now. Regarding the propositions of the several candidates, there are, I will just say that there are clear candidates from the left, and there is going to be a primary to elect another candidate from the left also, so we will have probably two candidates running on the first round representing the left there is a coalition in the center nine candidates center right nine candidates and we will have another strong candidate there and there is a a more far right candidate that is also strong and and the the proposals are more are reflecting in what they are the way of thinking. Candidates from the left will continue on the peace process and will continue with a view of much strong government intervention. And the other candidates are more true, more rule of law and a strong position against violence and peace processes and much more friendly to private initiatives. So that's a summary, but after March 8, we will have a much clearer picture of who are the candidates with more possibilities on the first round and also we will have the information of what is the composition of the congress regarding your second question i will pass on to mauricio to answer to answer that question yeah and next the way to think about the opex growth is a what we consider run the business would grow in line with inflation and what we consider change the business

And that's what is going to lead us to grow above inflation, two or three percentage points above inflation. So thinking about a growth of inflation plus two or three would be right. And in terms of the salary increase, we don't have any employees earning minimum wage, but But we do have some vendors offering services that are tied to that salary. So we may have an increase in expenses from that side, and that is already included in our guidance.

Thank you very much Juan Carlos and Mauricio.

And any comments on how much of the updates would be related to technology costs, advertising, and your three initiatives well the most significant figures would be the cup the figures from capital that I just mentioned for the digital companies a but the breakdown of the general expenses a I would say you know that the main lines are of course IT investments also things related with fixed assets in everything that involves the physical distribution network but also correspondent banking and the mobile a digital channels a but we can offer you a more explicit breakdown of people thank you very much thank you our next question comes from Brian Flores with Citibank hi Tim thank you for the

opportunity to to ask a question here my first one is a follow-up on when you this question on taxes just wanted to confirm the number you said for the effective tax rate is the same as last year what I mean by this is close to to 30 percent I I understood that it was a bit higher I thought it was around the 35 36 percent for in your guidance right and then if I can my second question and just wanted to understand on NECI because in your consolidated a fee income growth of 10 percent year over a year how much of this could you attribute to NECI I just wanted to know if obviously you're providing more details on the standalone operation you provide guidance now so you want to understand if at some point we should see a standalone efficiency ratio too for NECI. Thank you.

Thank you, Brian.

Let me give you some comments about NECI and then I will pass Mauricio for the taxes question. As you know, NECI now it's operating under the umbrella of Bank Colombia And the figures of NECI are improving. We mentioned that it already passed the break-even point last quarter, and the numbers are very I mean in terms of loans it's 1.7 trillion pesos in outstanding loans and that's around 700,000 clients. The interest rate in the case of NECI is very close to the to the maximum rate that we can charge, so it's close to 25%, and the cost of funds in the case of NEC is very low, so you know that we fund NEC is mainly with savings accounts that with a cost of funds very close to zero. So, the margin, the financial margin of Neki is very high. So, also, it's going to know that we announced that we are in the process of separating Neki and we are expecting to have that operation conclude in the third quarter of this year. So, you will see NECI as a separate entity in Grupo CIVES. We expect by the third quarter or maximum for the fourth quarter, so you will have the whole information of NECI as a separate entity. But what we can say is on the numbers that we have under the umbrella of Bank Colombia, it is performing very well. The loan book is growing and now we reach profitability. Mauricio.

Brian, in terms of taxes, as you just mentioned, so the tax tax rate for 2026 is in line with the one from 2025 plus $650 billion from the extra tax rate decree, which is under the analysis of the courts. So if you combine those, that's when you get to the 35% rate approximately that you just mentioned.

And our next question will come from Carlos Gobers with HSBC.

Yes, hello.

Yes, I would like to ask you a first question on the results and on the conclusion of the struggles in the first portal of Panama. So I want to ask you, looking forward, not one, two, but probably five, ten years from now, how do you see the group evolving? Do you think you will concentrate more in Colombia? Do you think do you think you will expand more in Central America, perhaps go back to retail in Canada through electronic means or make it or something do you see yourself more in Venezuela or the American Republic how do you think the group is going to evolve over the next five or three years does that mean that we should continue to invest or we should see more focuses on on shareholder return, and therefore to return capital as fast as possible to shareholders.

Thank you.

Thank you, Carlos. We created a group of series in order, I remind you, with three main goals. One is to have a more efficient way of managing capital. The other is that we could have more flexibility on our corporate evolution and also that we can complement our financial services. So, to ask directly your question, we see ourselves developing as a Latin American financial group with presence in several countries, not necessarily with operations, full banking operations, but leveraging our digital capabilities. So definitely we see ourselves growing, growing in Latin America, and that's why we are investing at this point, developing those digital capabilities, and Mauricio mentioned that we are having our plans fund those operations in order to continue developing those capabilities that allow us to move in the spectrum of payments, also on digital banking. I mean, again, we are also developing capabilities at the corporate investment bank possibilities. So we will continue growing, but we need to balance that growth with the returns our shareholders are expecting and we have declared that we will target an ROE around 17-18% so with that target so we will continue returning to shareholders what they are expecting in terms of ROE but we will continue expanding our footprint. As you know, in Colombia we have a market presence that is important, so in Colombia we will complement our services with other digital operations, and in other countries we will look for opportunities, even organically or inorganic possibilities in the need and long-term.

And we'll go next to Alonzo Aramburu with BTG.

Yes. Hi. Good morning. Thank you for the call.

I wanted to ask about, there's a recent announcement from the government regarding a proposal to, I guess, force lending from banks to fund emergency spending. I don't know if this is something already approved. Can you give us some color on this and what would be the impact for Bancolombia? Thank you.

Thank you Alonso. That is not something that is approval now. There are some comments coming from the government that they are considering the possibility of mandatory investments for the financial services But there is not yet an official document or an official issue about that particular tax. So, as you know, there are discussions about equity tax for legal entities in Colombia. And also they mentioned the possibility of those mandatory investments, but there is not an official document yet about that. So we will expect that to happen this week, to have the official document decree from the government announcing what they are going to do regarding the taxes that they are planning under this new economic emergency that they declared three weeks ago.

Okay, thank you. And any estimate on what could be the impact if they declare – I don't know if they mentioned some parameters about this forced investment, so any potential estimate you can have on the potential impact of this?

It's difficult to know because just to elaborate a little bit on those investments, the instrument is that they ask the financial institutions to invest in government papers and then they direct those proceeds to a specific But it's very difficult to have an opinion if we don't have what is the amount that they are planning and what is the interest rate that those papers are going to earn, and we don't have that information. So I am not at this point with, I don't have at this point enough information to have a position alone.

Okay. Thank you very much. Thank you.

And this now concludes our question and answer session. I would like to turn the floor back over to Juan Carlos Mora for closing comments.

Before closing, I want to highlight the strong results achieved in 2025, which underscores our strategic progress. With this, we invite you to join us for the upcoming first quarter results conference call. We look forward to your participation.

We wish you a very good day.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines and have a wonderful day.