Latest news with #loanPortfolio
Irish Times
26-05-2025
- Business
- Irish Times
AIB weighs sale of more problem loans with face value of €500m
AIB is preparing for a potential sale of a portfolio of non-performing loans, including debt that had soured during the Covid-19 pandemic and never recovered, sources have said. The portfolio being assembled has an original value of €500 million and could come to the market as soon as the third quarter of this year, the sources said, adding that it includes mortgages , unsecured loans and small business loans. The development comes about 18 months after AIB shifted most of its remaining crisis-era problem loans and signals that portfolio sales will remain a tool for the bank's management of intractable non-performing loans. European regulators introduced rules a decade after the financial crash requiring banks to set aside provisions equal to 100 per cent of a non-performing loan within three to seven years after the default date. That incentivises banks to address such borrowings or get them off their books. READ MORE Bank of Ireland said in a recent trading update that it continues to look at 'organic and inorganic activity' to further improve the quality of its loans. Inorganic activity usually refers to asset sales or purchases. Sources have suggested that Bank of Ireland is unlikely to carry out a transaction this year. Bank of Ireland's non-performing loans ratio stood at 2.5 per cent in March. 'AIB has reduced its non-performing exposure levels from €31 billion in 2013 to €2 billion, or circa 2.8 per cent of gross loans, as of the end of March 2025,' a spokesman for AIB said. 'For customers in difficulty, our focus has been to put in place appropriate and sustainable solutions to help them to get back on track. 'The bank's preference is to provide solutions through customer engagement on a case-by-case basis. AIB continues to support customers through a comprehensive range of forbearance solutions, and we have done so in over 150,000 cases. 'Notwithstanding the considerable progress made to date, we remain committed to maintaining a non-performing exposure level which is in line with European norms.' AIB's chief executive, Colin Hunt, said earlier this month that the bank's financial performance was better than expected in the first quarter of the year, despite fears that Trump administration policies will hit global trade and economic growth. The bank reiterated all of its financial targets for the full year in a trading statement on May 1st, including a key measure of profitability known as return on tangible equity which, it said, would be 'meaningfully ahead' of its medium-term target of 15 per cent. Group chief financial officer Donal Galvin said the bank will be reviewing various economic scenarios, including the impact of international tariffs, as it assesses its loan-loss provisioning before the release of interim results during the summer. 'This is a challenging exercise, given the range of potential outcomes,' he said. He highlighted that a worst-case scenario of a 'credit crunch' assessed as part of its 2024 financial reporting would require about €600 million of provisions. AIB's own economics unit estimates that a measure of the Irish economy known as modified domestic demand, which includes spending by consumers, Government and certain private sector investment, will ease to 2.3 per cent and 2 per cent in 2025 and 2026, respectively, from 2.7 per cent last year. ' The uncertainty created by the dramatic shift in US trade policy and the responses of other key trading blocs is expected to dampen global growth in 2025 and 2026,' AIB chief economist David McNamara said, commenting on the bank's new outlook report published on Monday. 'Given the globalised nature of the Irish economy, we expect significant volatility in GDP (gross domestic product) as exporters seek to get ahead of potential trade restrictions this year. 'For the domestic economy we expect a cooling in growth this year, as ongoing uncertainty dampens consumer spending and business investment growth.' He said: 'Nonetheless, Ireland enters this period of uncertainty from a position of strength, with the economy growing at a robust pace in recent months, while the public and private sectors have built up material financial buffers in recent years.'
Yahoo
17-05-2025
- Business
- Yahoo
Banco Davivienda SA (BOG:PFDAVVNDA) Q1 2025 Earnings Call Highlights: Strong Profit Growth Amid ...
Loan Portfolio: Closed at COP 144 trillion, reflecting an annual growth of 6%. Net Interest Margin: Expanded by 19 basis points, reaching 5.68% including FX and derivatives. Cost of Risk: Decreased to 2.41%, showing substantial improvement. Net Profit: COP 291 billion, with a 3-month annualized ROE of 7.19%. CET1 Ratio: 11.18%, indicating strong capital adequacy. Total Assets: Closed at COP 190 trillion, increasing by 8% year-over-year. Nonfinancial Income: Grew by nearly 2% during the quarter. Operating Expenses: Decreased by approximately 3%. PDL Ratio: Stable at 4.4%, with improvements in consumer asset quality. Consumer Portfolio: Disbursements gradually increased, focusing on controlled risk levels. Funding Base: Strengthened with increased low and mid-cost deposits. Capital Adequacy Ratio: Total ratio reached 1.62%, providing strategic support. Nonfinancial Income: Totaled COP 620 billion, growing by 1.9% quarter-over-quarter. Profit Contribution: 74% from Colombian operations, 26% from Central American subsidiaries. Warning! GuruFocus has detected 6 Warning Signs with BOG:PFDAVVNDA. Release Date: May 16, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Banco Davivienda SA (BOG:PFDAVVNDA) reported a strong first quarter with a net profit of COP 291 billion and an annualized return on average equity of 7.19%. The loan portfolio showed an annual growth of 6%, reflecting higher dynamics across business lines. The net interest margin expanded by 19 basis points, and the cost of risk decreased to 2.41%, indicating improved income generation capacity. DaviPlata, the bank's digital platform, showed strong performance with a 6% increase in customers, over 20% growth in deposits, and a 28% increase in transactions. The bank's CET1 ratio stood at a solid 11.18%, providing a strong capital base to support strategic execution. Inflation remains a concern, with expectations that it will close around 4.45% for the year, potentially impacting monetary policy and economic conditions. The loan book decreased by 1.3% during the quarter due to temporary impacts such as peso appreciation and modest credit demand. The commercial loan segment experienced slight deterioration, particularly related to a few corporate clients in the construction, industrial, and services sectors. There is uncertainty regarding the cap rate for the consumer book, which could impact net interest margins if interest rates decrease. The integration of Scotiabank assets in Colombia, Costa Rica, and Panama may involve significant expenses and operational challenges, potentially affecting medium-term profitability. Q: Can you discuss your expectations for ROE in the coming quarters, given that the first quarter's ROE was close to the upper end of your guidance? Also, provide an update on the approvals for the acquisition of Scotiabank assets in Colombia, Costa Rica, and Panama. A: Javier Jose Suarez Esparragoza, CEO: The first quarter was strong, partly due to seasonal effects. We are cautious about changing guidance due to uncertainties in the international and Colombian environments. Regarding the Scotiabank acquisition, the approval process is progressing well, and we expect to close the transaction by the end of the year. The integration will occur in phases, with operational integration expected next year. Q: What are the potential risks to your guidance, particularly regarding NIM and cost of risk? A: Javier Jose Suarez Esparragoza, CEO: NIM could be affected by seasonal inflation effects and potential changes in the cap rate for consumer loans. However, we are working on improving NIM through transactional deposits. For cost of risk, we are seeing improvements in consumer asset quality, but we are also increasing coverage in the commercial book, which may temporarily raise cost of risk. Q: What are your medium-term ROE expectations, excluding the Scotia deal? A: Javier Jose Suarez Esparragoza, CEO: We expect medium-term ROE to trend towards 13%, potentially higher post-Scotia integration. This will take a couple of years, as we need to grow the loan book and improve operational leverage. Current expense growth is affected by non-recurring factors, and we see potential for improvement in NIM and cost of risk. Q: What happened with DaviPlata's activity rate this quarter, and what are your midterm targets for DaviPlata? A: Javier Jose Suarez Esparragoza, CEO: The drop in activity rate is due to seasonal effects and changes in government subsidy programs. However, transaction volumes and deposits are growing strongly. We are focusing on expanding the credit business, which should help DaviPlata reach breakeven next year. Q: What are the risks that could lower ROAE from the current guidance, and what positive factors from this quarter might not repeat? A: Javier Jose Suarez Esparragoza, CEO: The inflation-linked portfolio performed well this quarter, but this may not continue. However, we are enhancing our transactional deposit base, which should support NIM. We are cautious about maintaining guidance due to potential risks, but structural improvements in NIM and cost of risk could keep us at the higher end of the guidance. Q: When could we see credit acceleration, and in which segments, considering mixed delinquency trends? A: Javier Jose Suarez Esparragoza, CEO: We expect commercial demand to pick up as economic conditions stabilize. Consumer credit is already improving, and we are becoming more aggressive in this segment. Mortgage growth was strong in the first half but may slow due to reduced government subsidies. Overall, we anticipate 6% to 8% portfolio growth. Q: Could you share the ARPAC and cost to serve at DaviPlata, and provide more details on the Scotia client overlap and integration process? A: Javier Jose Suarez Esparragoza, CEO: DaviPlata's ARPAC is steady, and we expect it to increase with credit business expansion. Cost to serve is decreasing due to efficiencies. There is significant client overlap with Scotia, but we aim to enhance customer value propositions. Integration will be phased, leveraging technology to improve customer experience without immediate core banking changes. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus.
