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Bancolombia Posts 3rd-Quarter Net of 5.8 Bln Pesos
Medellin, Colombia, Dec. 11 (Bloomberg) -- Bancolombia SA, Colombia's largest bank, posted net income in the third quarter, thanks to a 6 billion peso one-time gain tied to the reversal of a provision for equity portfolio losses.
The bank, the product of a takeover by Banco Industrial Colombiano SA of Banco de Colombia SA, reported consolidated net income of 5.8 billion peso ($3.7 million). The bank posted earnings of 2.8 billion pesos in the first half.
''They're still not making any money,'' said Edward Hopperton, a banking analyst at Santander Investment Securities Inc. in New York. ''I think it's going to be a long time before they make any decent bottom-line earnings.''
Stripping out the 6 billion peso provision reversal for the loss in equity value of its shares in Corporacion Financiera Nacional y Suramericana SA, the bank made no money, he said.
The bank's lackluster performance provides more evidence of the malaise in Colombia's banking industry as it continues to labor under the weight of interest rates at their highest level in at least 15 years when inflation, currently running at about 16 percent, is stripped out.
The DTF, a benchmark index of 90 day rates, stood at 35.96 percent at the end of September from about 24 percent at the start of the year. It's now at 35.96 percent.
For the year through October, Colombian financial institutions saw losses for the year soar to 502 billion pesos ($323.87 million), compared with income of 737 billion pesos in the same period in 1997.
Media Non Grata
Journalists and members of the public weren't invited to listen in to a conference call given today for professional analysts by Jorge Londono, Bancolombia's president. A recording of the call can be accessed by calling (402) 220-0101 in the U.S.
However, in the call Londono made it clear the bank was suffering from the same problems as the rest of the industry -- namely, loan portfolio quality and income eroded by the impact of high interest rates.
Loans rose by 282.61 billion pesos, or 56 percent, to 785.11 billion pesos by the end of the third quarter from the end of the first half. It isn't possible to compare third-quarter figures with the same period of last year since the bank, previously known as Banco Industrial Colombiano SA, has since taken over Banco de Colombia SA.
Total Interest income surged by 329.04 billion pesos to 940.85 billion pesos by the end of September, up 54 percent from the end of the first half.
But income expenses also rose by 62 percent, or 237.59 billion pesos, to 622.29 billion pesos by the end of September from the end of the first half, the bank said in a statement. That was because the high level of interest rates and the devaluation of the Colombian peso, which so far this year lost 15.6 percent of its value against the dollar.
Net interest income rose 91.45 billion pesos to 318.56 billion pesos from 227.11 billion pesos at the end of June, a rise of 40 percent.
Addressing analysts including Santander's Hopperton and others from companies including Warburg Dillon Read, Bear Stearns and BBV Securities, Londono said past due loans as a proportion of total loans surged to 5.6 percent from 4.8 percent at the end of June.
At the same period of last year, BIC's past due loan ratio was just 2.4 percent. Bancolombia's rate for this September was still below an industry average of about 8 percent, he said.
But he warned the worst was yet to come for Bancolombia and other banks. Londono's ''feeling'' was that total past-due loans in pesos could rise by another 20 percent by the end of the first quarter of next year.
The problem would then peak for banks and the situation would improve, he said. Londono also revealed that Bancolombia had written off about 31 billion pesos worth of bad loans in the third quarter, compared with just 20.3 billion pesos for the whole of the year to the end of June.
Bancolombia's stock price rose 1.8 percent in Bogota to 1,425 pesos. So far this year, the stock has plunged 64 percent, making it the second worst performer of Bogota's more actively traded stocks.
In New York, the company's ADR closed unchanged at 5 1/16.
18:29:39 12/11/1998
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