6-K 1 dp198544_6k.htm FORM 6-K
 

 

UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

Report Of Foreign Private Issuer

Pursuant To Rule 13a-16 Or 15d-16 Of

The Securities Exchange Act Of 1934

 

For the month of August 2023

Commission File Number: 001-36631

 

Grupo Aval Acciones y Valores S.A.

(Exact name of registrant as specified in its charter)

 

Carrera 13 No. 26A - 47

Bogotá D.C., Colombia

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

 

Form 20-F

X 

   Form 40-F

 

 

 

 

 

GRUPO AVAL ACCIONES Y VALORES S.A.

 

TABLE OF CONTENTS

 

ITEM  
1. Report of Second Quarter 2023 Consolidated Results

 

 

Item 1

 

 

 

 

 

Grupo Aval Acciones y Valores S.A. (“Grupo Aval”) is an issuer of securities in Colombia and in the United States (“SEC”). As such, it is subject to compliance with securities regulation in Colombia and applicable U.S. securities regulation. Grupo Aval is also subject to the inspection and supervision of the Superintendency of Finance as holding company of the Aval financial conglomerate.

 

The consolidated financial information included in this document is presented in accordance with IFRS as currently issued by the IASB. Details of the calculations of non-IFRS measures such as ROAA and ROAE, among others, are explained when required in this report.

 

Banco de Bogotá executed a spin-off of a 75% equity stake in BAC Holding International Corp (“BHI”); to its shareholders and Grupo Aval subsequently spun-off its equity interest to its shareholders on March 29, 2022. On December 19, 2022, Banco de Bogotá sold 20.89% of the outstanding investment of BHI through a tender offer. As of December 31, 2022, Banco de Bogotá held 4.11% of BHI. This investment is reflected as an investment at fair value through other comprehensive income. Following the sale, the equity method recognized under the “share of profit of equity accounted investees, net of tax (equity method)” between April and November was reclassified to discontinued operations. For comparability purposes of this presentation, we have reclassified BHI’s equity method for the second and third quarter of 2022 to net income from discontinued operations. Banco de Bogotá’s remaining 4.11% interest in BHI was disposed of in March 2023.

 

This report includes forward-looking statements. In some cases, you can identify these forward-looking statements by words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” or “continue,” or the negative of these and other comparable words. Actual results and events may differ materially from those anticipated herein as a consequence of changes in general, economic and business conditions, changes in interest and currency rates and other risk described from time to time in our filings with the Registro Nacional de Valores y Emisores and the SEC.

 

Recipients of this document are responsible for the assessment and use of the information provided herein. Matters described in this presentation and our knowledge of them may change extensively and materially over time, but we expressly disclaim any obligation to review, update or correct the information provided in this report, including any forward looking statements, and do not intend to provide any update for such material developments prior to our next earnings report.

 

The content of this document and the figures included herein are intended to provide a summary of the subjects discussed rather than a comprehensive description.

 

When applicable, in this document we refer to billions as thousands of millions.

 

 1 

 

 

 

ABOUT GRUPO AVAL

 

Grupo Aval, leading financial conglomerate in Colombia, operates through: four commercial banks in Colombia (Banco de Bogotá, Banco de Occidente, Banco Popular and Banco AV Villas), the largest private pensions and severance fund manager in Colombia (Porvenir), and the largest financial corporation in Colombia (Corficolombiana). In addition, it is present in Central America through Multibank's operation in Panama through Banco de Bogotá.

 

Grupo Aval Acciones y Valores S.A. ("Grupo Aval") is an issuer of securities in Colombia and the

 

United States ("SEC").

 

As of June 30, 2023, the Company has the following issuances:

 

Stocks Securities issues in force
Type of security Common stock Preferred stock
Trading system Stock exchange Stock exchange
Stock exchange Colombian Stock Exchange (BVC)
Outstanding Shares (*) 16,201,932,169 7,541,543,585
Issue amount(*) 16,201,932,169 7,541,543,585
Amount placed(*) 16,201,932,169 7,541,543,585

 

 

Local Bonds
Year

Principal

(million)

 Rate Rating
Issue of 2009 - Series A - 15 years 124,520 IPC+5.2%

AAA –BRC Investor Services S.A.

 

Issue of 2016 - Series A - 10 years 93,000 IPC+3.86%
Issue of 2016 - Series A - 20 years 207,000 IPC+4.15%
Issue of 2017 - Series A - 25 years 300,000 IPC +3.99%
Issue of 2019 - Series C - 5 years 100,000 6.42%
Issue of 2019 - Series A - 20 years 300,000 IPC +3.69%
  1,124,520  

 

 

International Bonds

Issue of 2020 - 10 years

 

US 1,000,000

 

4.375%

 

Ba2 / Negative (Moody’s)

 

BB+ Stable (Fitch)

 

Main domicile: Bogotá D.C., Colombia

Address: Carrera 13 No 26A – 47- 23rd Floor

 

 2 

 

 

 

 

Key results of 2Q23 4
   
Consolidated Financial Results 6
   
– Statement of Financial Position Analysis 6
     
– Income Statement Analysis… 14
     
Risk Management 18
   
Quantitative and Qualitative disclosure about market risk 18
   
Corporate Governance 18
   
ESG 18
   
Separated Financial Results… 19
   
– Statement of Financial Position Analysis 19
     
– Income Statement Analysis 20
     
Grupo Aval + Grupo Aval Limited… 21
   
Definitions 25
   

EXHIBIT 1 : CONSOLIDATED FINANCIAL RESULTS

 

EXHIBIT 2 : SEPARATE FINANCIAL RESULTS

 

 

 3 

 

 

 

 

Bogotá, August 14th, 2023. Grupo Aval S.A. (NYSE:AVAL) reported a consolidated attributable net income of Ps 166.2 billion (Ps 7.0 pesos per share) for 2Q23. ROAE was 4.1% and ROAA was 0.6% for 2Q23.

 

    COP $tn   2Q22   1Q23   2Q23   2Q23 vs 1Q23   2Q23 vs 2Q22
Balance Sheet   Gross Loans   $ 166.6   $ 184.6   $ 184.4   -0.1%   10.7%
  Deposits   $ 160.0   $ 178.4   $ 180.2   1.1%   12.6%
  Deposits/Net Loans   1.00 x   1.00 x   1.01 x   0.02 x   0.01 x
                         
Loan Quality   90 days PDLs / Gross Loans   3.3%   3.4%   3.6%   12 bps   24 bps
  Allowance/90 days PDLs   1.61 x   1.48 x   1.43 x   -0.05 x   -0.18 x
  Cost of risk   1.4%   1.7%   2.2%   45 bps   77 bps
                         
Profitability   Net interest margin   3.6%   3.7%   3.4%   (30) bps   (23) bps
  Fee income Ratio   16.9%   19.0%   22.7%   377 bps   580 bps
  Efficiency Ratio   42.6%   46.7%   53.7%   698 bps   1,112 bps
  Attributable net income   $ 0.68   $ 0.43   $ 0.17   -60.9%   -75.4%
  ROAA   2.1%   1.4%   0.6%   (79) bps   (145) bps
  ROAE   16.6%   10.4%   4.1%   (634) bps   (1,248) bps

 

Gross loans excludes interbank and overnight funds. PDLs 90+ defined as loans more than 90 days past due. Cost of Risk calculated as Impairment loss on loans and other accounts receivable net of recoveries of charged-off assets divided by average gross loans. Net Interest Margin includes net interest income plus net trading income from debt and equity investments at FVTPL divided by total average interest-earning assets. Fee income ratio is calculated as net income from commissions and fees divided by net interest income plus net income from commissions and fees, gross profit from sales of goods and services, net trading income, net income from other financial instruments mandatory at FVTPL and total other income. Efficiency Ratio is calculated as total other expenses divided by net interest income plus net income from commissions and fees, gross profit from sales of goods and services, net trading income, net income from other financial instruments mandatory at FVTPL and total other income. ROAA is calculated as annualized Net Income divided by average of total assets. ROAE is calculated as Net Income attributable to Aval's shareholders divided by average attributable shareholders' equity. NS refers to non-significant figures.

 

 4 

 

 

Grupo Aval Acciones y Valores S.A.

Consolidated Financial Statements Under IFRS

Financial Statements Under IFRS

Information in Ps. Billions

Consolidated Statement of Financial Position   2Q22   1Q23   2Q23   D
        2Q23 vs. 1Q23 2Q23 vs. 2Q22
Cash and cash equivalents         21,441.1         19,327.8         19,195.7   -0.7% -10.5%
Trading assets         10,888.4         13,585.5         13,256.1   -2.4% 21.7%
Investment securities         31,690.5         31,969.1         32,829.6   2.7% 3.6%
Hedging derivatives assets             49.1             35.1             69.4   97.8% 41.5%
Total loans, net        159,651.9        179,102.9        177,912.5   -0.7% 11.4%
Tangible assets          7,043.9          7,247.8          7,113.6   -1.9% 1.0%
Goodwill          2,234.9          2,232.2          2,215.2   -0.8% -0.9%
Concession arrangement rights         12,032.2         13,536.2         13,558.6   0.2% 12.7%
Other assets         31,079.0         31,841.5         31,910.8   0.2% 2.7%
Total assets        276,111.0        298,878.2        298,061.6   -0.3% 7.9%
Trading liabilities          1,893.8          1,517.6          1,859.9   22.6% -1.8%
Hedging derivatives liabilities             5.8             5.6             8.9   59.6% 52.2%
Customer deposits        160,029.3        178,352.4        180,244.5   1.1% 12.6%
Interbank borrowings and overnight funds         10,499.9          8,799.8         13,459.9   53.0% 28.2%
Borrowings from banks and others         22,945.6         29,346.9         23,916.9   -18.5% 4.2%
Bonds issued         31,973.1         27,352.4         25,424.8   -7.0% -20.5%
Borrowings from development entities          3,235.0          4,539.5          4,122.4   -9.2% 27.4%
Other liabilities         15,378.9         18,737.1         18,262.4   -2.5% 18.7%
Total liabilities        245,961.5      268,651.1      267,299.6   -0.5% 8.7%
Equity attributable to owners of the parent     16,420.0     16,175.7     16,465.4   1.8% 0.3%
Non-controlling interest     13,729.6     14,051.3     14,296.6   1.7% 4.1%
Total equity     30,149.6     30,227.0     30,762.0   1.8% 2.0%
Total liabilities and equity     276,111.0     298,878.2     298,061.6   -0.3% 7.9%
                   
Consolidated Statement of Income   2Q22   1Q23   2Q23   D
        2Q23 vs. 1Q23 2Q23 vs. 2Q22
Interest income     4,286.7     7,008.3     7,154.6   2.1% 66.9%
Interest expense     2,312.3     5,459.5     5,579.1   2.2% 141.3%
Net interest income     1,974.4     1,548.8     1,575.5   1.7% -20.2%
Loans and other accounts receivable      719.6      920.5     1,138.6   23.7% 58.2%
Other financial assets      (1.0)      (0.3)      (9.6)   N.A. N.A.
Recovery of charged-off financial assets     (151.8)     (133.7)     (140.8)   5.3% -7.3%
Net impairment loss on financial assets      566.8      786.5      988.3   25.7% 74.4%
Net interest income, after impairment losses     1,407.6      762.3      587.2   -23.0% -58.3%
Net income from commissions and fees      697.3      842.3      883.9   4.9% 26.8%
Gross profit from sales of goods and services     1,440.8     1,163.6      619.2   -46.8% -57.0%
Net trading income      481.5      (81.3)     (783.1)   N.A. N.A
Net income from other financial instruments mandatory at FVTPL      68.4      93.9      76.6   -18.5% 11.9%
Total other income     (544.7)      875.9     1,516.6   73.2% N.A
Total other expenses     1,754.6     2,077.0     2,089.2   0.6% 19.1%
Net income before income tax expense     1,796.4     1,579.8      811.2   -48.7% -54.8%
Income tax expense      564.3      532.6      350.6   -34.2% -37.9%
Net income for the period of continued operations     1,232.1     1,047.3      460.6   -56.0% -62.6%
Net income for the period of discontinued operations      154.0      -       -    N.A -100.0%
Net income for the period     1,386.1     1,047.3      460.6   -56.0% -66.8%
Non-controlling interest      710.6      622.2      294.4   -52.7% -58.6%
Net income attributable to owners of the parent      675.5      425.1      166.2   -60.9% -75.4%
                   
                   
Key ratios   2Q22   1Q23   2Q23   YTD 2022 YTD 2023
Net Interest Margin(1)   4.0%   2.8%   2.9%   4.2% 2.8%
Net Interest Margin (including net trading income)(1)   3.6%   3.7%   3.4%   3.9% 3.6%
Efficiency ratio(2)   42.6%   46.7%   53.7%   40.4% 50.0%
90 days PDL / Gross loans (5)   3.3%   3.4%   3.6%   3.3% 3.6%
Provision expense / Average gross loans (6)   1.4%   1.7%   2.2%   1.6% 1.9%
Allowance / 90 days PDL (5)      1.61      1.48      1.43      1.61    1.43
Allowance / Gross loans   5.4%   5.1%   5.1%   5.4% 5.1%
Charge-offs / Average gross loans (6)   1.9%   1.8%   2.7%   1.9% 2.3%
Total loans, net / Total assets   57.8%   59.9%   59.7%   57.8% 59.7%
Deposits / Total loans, net   100.2%   99.6%   101.3%   100.2% 101.3%
Equity / Assets   10.9%   10.1%   10.3%   10.9% 10.3%
Tangible equity ratio (7)   9.6%   8.8%   9.0%   9.6% 9.0%
ROAA(3)   2.1%   1.4%   0.6%   2.9% 1.0%
ROAE(4)   16.6%   10.4%   4.1%   25.9% 7.2%
Shares outstanding (EoP)    23,743,475,754    23,743,475,754    23,743,475,754    23,743,475,754  23,743,475,754
Shares outstanding (Average)    22,779,217,340    23,743,475,754    23,743,475,754    22,531,493,493  23,743,475,754
Common share price (EoP)      757.0      555.0      476.9      757.0    476.9
Preferred share price (EoP)      750.0      558.9      486.0      750.0    486.0
BV/ EoP shares in Ps.      691.6      681.3      693.5      691.6    693.5
EPS      29.7      17.9      7.0      106.7    24.9
                   
P/E (8)      6.3      7.8      17.4      3.5    9.8
P/BV (8)      1.1      0.8      0.7      1.2    0.7

 

 

•Pro-forma ratios for YTD 2022 are based on reported revenues and expenses, associated to each ratio; however, the denominators averages used to calculate these ratios contain pro-forma figures from previous quarters.

 

NIM is calculated as Net Interest Income divided by the average of Interest Earning Assets; (2) Efficiency Ratio is calculated as total other expenses divided by net interest income plus net income from commissions and fees, gross profit from sales of goods and services, net trading income, net income from other financial instruments mandatory at FVTPL and total other income; (3) ROAA is calculated as Income before Minority Interest divided by the average of total assets for each quarter; (4) ROAE is calculated as Net Income attributable to Grupo Aval’s shareholders divided by the average of shareholders´ attributable equity for each quarter; (5) PDLs 90+ defined as loans more than 90 days past due include interest accounts receivables. Gross loans excluding interbank and overnight funds; (6) Refers to average gross loans for the period; (7) Tangible Equity Ratio is calculated as Total Equity minus Intangibles (excluding those related to concessions) divided by Total Assets minus Intangibles (excluding those related to concessions); (8) Based on Preferred share prices.

 

 

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Consolidated Financial Results

Statement of Financial Position Analysis

 

1.Assets

 

Total assets as of June 30th, 2023 totaled Ps 298,061.6 billion showing an increase of 7.9% versus June 30th, 2022 and a decrease of 0.3% versus March 31st, 2023. Growth was mainly driven by (i) a 11.4% year over year growth in total loans, net to Ps 177,912.5 billion, (ii) a 21.7% yearly growth in trading assets, net to Ps 13,256.1 billion and (iii) a 12.7% yearly growth in concession arrangement rights, net to Ps 13,558.6 billion.

 

1.1Loan portfolio

 

Gross loans (excluding interbank and overnight funds) increased by 10.7% between June 30th, 2023 and June 30th, 2022 to Ps 184,409.6 billion mainly driven by (i) a 11.8% increase in Mortgages loans to Ps 17,756.5 billion, (ii) a 10.8% increase in Commercial loans to Ps 106,350.8 billion and (iii) a 10.2% increase in Consumer loans to Ps 60,033.8 billion.

 

Interbank & overnight funds increased by 46.6% to Ps 2,938.1 billion during the last twelve months.

 

Loss allowance was Ps 9,435.2 billion as of June 30th, 2023 taking net loans to Ps 177,912.5 billion.

 

Total loans, net   2Q22   1Q23   2Q23   D
        2Q23 vs. 1Q23 2Q23 vs. 2Q22
Gross loans                  
Commercial loans   95,946.0   106,129.9   106,350.8   0.2% 10.8%
Consumer loans   54,481.2   60,186.9   60,033.8   -0.3% 10.2%
Mortgages loans   15,883.6   18,026.1   17,756.5   -1.5% 11.8%
Microcredit loans   278.6   267.6   268.5   0.3% -3.6%
Gross loans   166,589.5   184,610.5   184,409.6   -0.1% 10.7%
Interbank & overnight funds   2,004.1   3,920.0   2,938.1   -25.0% 46.6%
Total gross loans   168,593.6   188,530.4   187,347.7   -0.6% 11.1%
Loss allowance   (8,941.7)   (9,427.5)   (9,435.2)   0.1% 5.5%
Allowance for impairment of commercial loans   (5,392.9)   (5,380.1)   (5,189.7)   -3.5% -3.8%
Allowance for impairment of consumer loans   (3,094.4)   (3,630.9)   (3,828.3)   5.4% 23.7%
Allowance for impairment of mortgages   (382.7)   (376.2)   (372.7)   -0.9% -2.6%
Allowance for impairment of microcredit loans   (71.6)   (40.3)   (44.5)   10.5% -37.9%
Total loans, net   159,651.9   179,102.9   177,912.5   -0.7% 11.4%

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The following table shows the gross loan composition per product of each of our loan categories.

 

Gross loans   2Q22   1Q23   2Q23   D
        2Q23 vs. 1Q23 2Q23 vs. 2Q22
General purpose   68,335.8   74,955.1   74,522.8   -0.6% 9.1%
Working capital   13,420.5   14,930.6   15,703.4   5.2% 17.0%
Financial leases   10,207.8   10,892.9   11,134.7   2.2% 9.1%
Funded by development banks   3,191.3   4,397.1   4,047.3   -8.0% 26.8%
Overdrafts   467.7   521.8   587.7   12.6% 25.7%
Credit cards   323.0   432.4   354.9   -17.9% 9.9%
Commercial loans   95,946.0   106,129.9   106,350.8   0.2% 10.8%
Payroll loans   32,026.6   33,360.4   32,836.8   -1.6% 2.5%
Personal loans   11,182.4   13,981.4   14,289.6   2.2% 27.8%
Credit cards   6,277.0   7,192.8   7,406.3   3.0% 18.0%
Automobile and vehicle   4,791.2   5,439.0   5,296.6   -2.6% 10.5%
Financial leases   22.0   17.2   16.3   -5.3% -25.6%
Overdrafts   53.0   73.4   74.4   1.4% 40.3%
Other   129.0   122.6   113.8   -7.2% -11.8%
Consumer loans   54,481.2   60,186.9   60,033.8   -0.3% 10.2%
Mortgages   13,665.6   15,596.4   15,542.0   -0.3% 13.7%
Housing leases   2,218.0   2,429.7   2,214.5   -8.9% -0.2%
Mortgages loans   15,883.6   18,026.1   17,756.5   -1.5% 11.8%
Microcredit loans     278.6   267.6   268.5   0.3% -3.6%
Gross loans   166,589.5   184,610.4   184,409.6   -0.1% 10.7%
Interbank & overnight funds   2,004.1   3,920.0   2,938.1   -25.0% 46.6%
Total gross loans   168,593.6   188,530.4   187,347.7   -0.6% 11.1%

 

In terms of gross loans (excluding interbank and overnight funds), 91.5% are domestic and 8.5% are foreign (reflecting the Multi Financial Holding operation).

 

Over the last twelve months we observed a strong performance in all types of loans. Quarterly performance was negatively impacted by a 10.1% appreciation of the Colombian Peso.

 

Commercial loans increased by 10.8% during the last twelve months and 0.2% during the quarter. Consumer loans growth over the last year was driven by personal loans and credit cards. Consumer loans grew by 10.2% annually and decreased 0.3% over the quarter. Mortgages loans increased by 11.8% over the year and decreased 1.5% in the last quarter.

 

The following table shows the gross loans composition per entity. During the last twelve months, Banco de Occidente showed the highest growth rate within our banks, driven by a strong performance in all types of loans with consumer loans growing 19.5%, commercial loans 16.0% and mortgages growing 6.5%.

 

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Gross loans / Bank ($)   2Q22   1Q23   2Q23   D
        2Q23 vs. 1Q23 2Q23 vs. 2Q22
Banco de Bogotá    87,511.5    97,023.9    97,725.8   0.7% 11.7%
Banco de Occidente    40,557.7    46,260.2    47,168.0   2.0% 16.3%
Banco Popular    24,131.4    24,901.0    23,913.9   -4.0% -0.9%
Banco AV Villas    14,277.2    15,026.9    14,744.8   -1.9% 3.3%
Corficolombiana     1,962.1     2,177.3     2,060.4   -5.4% 5.0%
Grupo Aval Holding      -      1,260.4     1,133.5   -10.1% N.A.
Eliminations    (1,850.5)    (2,039.2)    (2,336.9)   14.6% 26.3%
Gross loans    166,589.5    184,610.5    184,409.6   -0.1% 10.7%
Interbank & overnight funds     2,004.1     3,920.0     2,938.1   -25.0% 46.6%
Total gross loans    168,593.6    188,530.4    187,347.7   -0.6% 11.1%
                   
Gross loans / Bank (%)   2Q22   1Q23   2Q23      
           
Banco de Bogotá   52.5%   52.6%   53.0%      
Banco de Occidente   24.3%   25.1%   25.6%      
Banco Popular   14.5%   13.5%   13.0%      
Banco AV Villas   8.6%   8.1%   8.0%      
Corficolombiana   1.2%   1.2%   1.1%      
Grupo Aval Holding   0.0%   0.7%   0.6%      
Eliminations   -1.1%   -1.1%   -1.3%      
Gross loans   100%   100%   100%      

 

Figures for Grupo Aval Holding reflect the credit operation entered into with Esadinco S.A. (Related Party) in December 2022. This transaction was conducted on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons, and did not involve more than the normal risk of collectability or present other unfavorable features.

 

High interest rates, inflationary pressures and the economic slowdown have led to a deterioration in the quality of our loan portfolio both over the quarter and the year.

 

Our 30 days PDL to total loans were 5.1% for 2Q23, 4.9% for 1Q23 and 4.4% for 2Q22. The ratio of 90 days PDL to total loans was 3.6% for 2Q23, 3.4% for 1Q23 and 3.3% for 2Q22.

 

30 days PDL ratio for commercial loans was 4.5% for 2Q23, 4.4% for 1Q23 and 4.1% for 2Q22; 90 days PDL ratio was 3.8%, 3.7% and 3.7%, respectively. 30 days PDL ratio for consumer loans was 5.8% for 2Q23, 5.4% for 1Q23, and 4.5% for 2Q22.

 

90 days PDL ratio was 3.1%, 3.0% and 2.7%, respectively. 30 days PDL ratio for mortgages was 6.2% for 2Q23, 5.5% for 1Q23, and 5.3% for 2Q22; 90 days PDL ratio was 3.4%, 3.1% and 3.2%, respectively.

 

 8 

 

 

Past due loans   2Q22   1Q23   2Q23   D
        2Q23 vs. 1Q23 2Q23 vs. 2Q22
Performing    91,979.8    101,440.5    101,590.3   0.1% 10.4%
Between 31 and 90 days past due     459.6     710.3     700.1   -1.4% 52.3%
+90 days past due    3,506.6    3,979.1    4,060.3   2.0% 15.8%
Commercial loans   95,946.0   106,129.9   106,350.8   0.2% 10.8%
Performing    52,056.1    56,924.8    56,544.9   -0.7% 8.6%
Between 31 and 90 days past due     956.2    1,473.7    1,610.6   9.3% 68.4%
+90 days past due    1,468.9    1,788.3    1,878.3   5.0% 27.9%
Consumer loans   54,481.2   60,186.9   60,033.8   -0.3% 10.2%
Performing    15,044.3    17,042.5    16,663.4   -2.2% 10.8%
Between 31 and 90 days past due     325.8     420.4     488.2   16.1% 49.9%
+90 days past due     513.5     563.2     605.0   7.4% 17.8%
Mortgages loans   15,883.6   18,026.1   17,756.5   -1.5% 11.8%
Performing     211.6     229.5     226.7   -1.2% 7.1%
Between 31 and 90 days past due     9.3     8.4     10.1   21.3% 8.8%
+90 days past due     57.7     29.8     31.7   6.5% -45.1%
Microcredit loans   278.6   267.6   268.5   0.3% -3.6%
Gross loans    166,589.5    184,610.5    184,409.6   -0.1% 10.7%
Interbank & overnight funds   2,004.1   3,920.0   2,938.1   -25.0% 46.6%
Total gross loans    168,593.6    188,530.4    187,347.7   -0.6% 11.1%
                   
                   
30 Days PDL / gross loans (*)   4.4%   4.9%   5.1%      
90 Days PDL / gross loans (*)   3.3%   3.4%   3.6%      
                   
                   
Loans by stages (%)   2Q22   1Q23   2Q23      
           
Loans classified as Stage 2 / gross loans   9.1%   6.3%   4.8%      
Loans classified as Stage 3 / gross loans   6.6%   6.4%   6.4%      
Loans classified as Stage 2 and 3 / gross loans   15.7%   12.7%   11.3%      
Allowance for Stage 1 loans / Stage 1 loans   0.9%   0.9%   1.0%      
Allowance for Stage 2 loans / Stage 2 loans   10.7%   12.1%   14.0%      
Allowance for Stage 3 loans / Stage 3 loans   54.4%   55.5%   54.7%      
Allowance for Stage 2 y 3 loans / Stage 2 and 3 loans   29.2%   33.9%   37.3%      

 

Grupo Aval’s coverage over its 90 days PDL was 1.4x for 2Q23, 1.5x for 1Q23, and 1.6x for 2Q22, coverage over its 30 days PDL was 1.0x in 2Q23, 1.1x for 1Q23 and 1.2x 2Q22.

 

Impairment loss, net of recoveries of charged off assets to average gross loans was 2.2% for 2Q23, 1.7% for 1Q23, and 1.4% 2Q22. Charge-offs to average gross loans was 2.7% for 2Q23, 1.8% for 1Q23, and 1.9% in 2Q22.

 

Coverage and cost of risk   2Q22   1Q23   2Q23
     
             
Allowance for impairment / 30 days PDL     1.2     1.1     1.0
Allowance for impairment / 90 days PDL     1.6     1.5     1.4
Allowance for impairment / gross loans (*)   5.4%   5.1%   5.1%
             
Impairment loss / 30 days PDL     0.4     0.4     0.5
Impairment loss / 90 days PDL     0.5     0.6     0.7
Impairment loss / average gross loans (*)   1.8%   2.0%   2.5%
Impairment loss, net of recoveries of charged-off assets / average gross loans (*)   1.4%   1.7%   2.2%
             
Charge-offs / average gross loans (*)   1.9%   1.8%   2.7%

 

 

(*) Gross loans exclude interbank and overnight funds. 30 days past due and 90 days past due are calculated on a capital plus interest accounts receivable basis.

 

 9 

 

 

1.2Investment securities and trading assets

 

Total investment securities and trading assets increased 8.2% to Ps 46,085.7 billion between June 30th, 2023 and June 30th, 2022 and increased 1.2% versus March 31st, 2023.

 

Ps 37,118.7 billion of our total portfolio is invested in debt securities, which increased by 7.4% between June 30th, 2023 and June 30th, 2022 and increased by 2.5% versus March 31st, 2023. Ps 7,053.0 billion of our total investment securities is invested in equity securities, which increased by 15.0% between June 30th, 2023 and June 30th, 2022 and decreased by 5.1% versus March 31st, 2023.

 

Investment and trading assets   2Q22   1Q23   2Q23   D
        2Q23 vs. 1Q23 2Q23 vs. 2Q22
Debt securities    3,980.0    5,145.6    5,323.3   3.5% 33.8%
Equity securities    5,022.2    6,525.1    6,018.7   -7.8% 19.8%
Derivative assets   1,886.3   1,914.8   1,914.1   0.0% 1.5%
Trading assets   10,888.4   13,585.5   13,256.1   -2.4% 21.7%
Investments in debt securities at FVTPL (non compliant with SPPI test)     -      1.4     1.4   0.0% 0.0%
Debt securities at FVOCI    21,995.6    21,275.0    22,055.6   3.7% 0.3%
Equity securities at FVOCI   1,113.0   903.1   1,034.2   14.5% -7.1%
Investments in securities at FVOCI   23,108.5   22,178.1   23,089.9   4.1% -0.1%
Investments in debt securities at AC   8,582.0   9,789.6   9,738.4   -0.5% 13.5%
Investment and trading assets    42,579.0    45,554.5    46,085.7   1.2% 8.2%

 

The average yield on our debt and equity investment securities (trading assets, investments in debt securities at FVTPL, investments in securities at FVOCI and investments in debt securities at AC) was 9.1% for 2Q23, 11.7% for 1Q23 and 3.0% for 2Q22.

 

1.3Cash and Cash Equivalents

 

As of June 30th, 2023 cash and cash equivalents had a balance of Ps 19,195.7 billion showing a decrease of 10.5% versus June 30th, 2022 and a decrease of 0.7% versus March 31st, 2023

 

The ratio of cash and cash equivalents to customer deposits was 10.6% at June 30th, 2023, 10.8% at March 31st, 2023, and 13.4% at June 30th, 2022.

 

 10 

 

 

1.4Goodwill and Other Intangibles

 

Goodwill and other intangibles as of June 30th, 2023 reached Ps 17,950.1 billion, increasing by 11.9% versus June 30th, 2022 and 0.6% versus March 31st, 2023.

 

Goodwill as of June 30th, 2023 was Ps 2,215.2 billion, decreasing by 0.9% versus June 30th, 2022 and 0.8% versus March 31st, 2023.

 

Other intangibles, which include “concession arrangement rights” and other intangibles, mainly reflect the value of road concessions recorded for the most part at Corficolombiana. Other intangibles as of June 30th, 2023 reached Ps 15,734.9 billion and grew by 14.0% versus June 30th, 2022 and increased by 0.7% versus March 31st, 2023.

 

2.Liabilities

 

As of June 30th, 2023 Total Funding represented 92.5% of total liabilities and other liabilities represented 7.5%.

 

2.1Funding

 

Total Funding (Total financial liabilities at amortized cost) which includes (i) Customer deposits, (ii) Interbank borrowings and overnight funds, (iii) Borrowings from banks and others, (iv) Bonds issued, and (v) Borrowing from development entities had a balance of Ps 247,168.4 billion as of June 30th, 2023 showing an increase of 8.1% versus June 30th, 2022 and a decrease of 0.5% versus March 31st, 2023. Total customer deposits represented 72.9% of total funding as of 2Q23, 71.8% for 1Q23, and 70.0% 2Q22.

 

Average cost of funds was 9.0% for 2Q23, 8.9% for 1Q23 and 4.2% for 2Q22.

 

2.1.1 Customer deposits

 

Customer deposits   2Q22   1Q23   2Q23   D
        2Q23 vs. 1Q23 2Q23 vs. 2Q22
Checking accounts   19,975.7   17,917.7   17,387.8   -3.0% -13.0%
Other deposits   399.6   928.3   440.2   -52.6% 10.1%
Non-interest bearing   20,375.4   18,846.0   17,828.0   -5.4% -12.5%
Checking accounts   6,486.4   6,041.7   6,156.7   1.9% -5.1%
Time deposits   60,524.8   85,133.4   85,946.1   1.0% 42.0%
Savings deposits   72,642.8   68,331.2   70,313.7   2.9% -3.2%
Interest bearing   139,653.9   159,506.4   162,416.6   1.8% 16.3%
Customer deposits   160,029.3   178,352.4   180,244.5   1.1% 12.6%

 

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Of our total customer deposits as of June 30th, 2023, checking accounts represented 13.1%, time deposits 47.7%, savings accounts 39.0%, and other deposits 0.2%.

 

The following table shows the customer deposits composition by bank. During the last twelve months, Banco de Occidente showed the highest growth rate in customer deposits within our banking operation in Colombia, in line with gross loan growth.

 

Deposits / Bank ($)   2Q22   1Q23   2Q23   D
        2Q23 vs. 1Q23 2Q23 vs. 2Q22
Banco de Bogotá    84,388.8    89,606.3    90,336.7   0.8% 7.0%
Banco de Occidente    38,737.3    46,703.8    46,515.2   -0.4% 20.1%
Banco Popular    23,205.6    24,904.7    24,347.5   -2.2% 4.9%
Banco AV Villas    14,494.7    13,929.9    14,642.5   5.1% 1.0%
Corficolombiana     5,936.9     6,719.7     7,220.9   7.5% 21.6%
Eliminations    (6,733.9)    (3,512.0)    (2,818.3)   -19.8% -58.1%
Total Grupo Aval    160,029.3    178,352.4    180,244.5   1.1% 12.6%
                   
Deposits / Bank (%)   2Q22   1Q23   2Q23      
Banco de Bogotá   52.7%   50.2%   50.1%      
Banco de Occidente   24.2%   26.2%   25.8%      
Banco Popular   14.5%   14.0%   13.5%      
Banco AV Villas   9.1%   7.8%   8.1%      
Corficolombiana   3.7%   3.8%   4.0%      
Eliminations   -4.2%   -2.0%   -1.6%      
Total Grupo Aval   100.0%   100.0%   100.0%      

 

2.1.2 Borrowings from Banks and Other (includes borrowings from development entities)

 

As of June 30th, 2023 borrowings from banks and other totaled Ps 28,039.3 billion, increasing 7.1% versus June 30th, 2022 and decreasing 17.3% versus March 31st, 2023.

 

2.1.3 Bonds issued

 

Total bonds issued as of June 30th, 2023 totaled Ps 25,424.8 billion and decreased 20.5% versus June 30th, 2022 and 7.0% versus March 31st, 2023. The maturity of Grupo Aval’s US$1 billion bond in September 2022 and Banco de Bogotá’s US$500 million bond in February 2023 explain the yearly performance. The quarterly decrease is mainly explained by the 10.1% appreciation of the Colombian Peso on our Us$ denominated bonds.

 

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3.Non-controlling Interest

 

Non-controlling Interest in Grupo Aval reflects the minority stakes that third party shareholders hold in each of its direct consolidated subsidiaries (Banco de Bogotá, Banco de Occidente, Banco Popular, Banco AV Villas, Corficolombiana and Porvenir).

 

As of June 30th, 2023 non-controlling interest was Ps 14,296.6 billion which increased by 4.1% versus June 30th, 2022 and 1.7% versus March 31st, 2023. Total non-controlling interest represents 46.5% of total equity as of 2Q23, compared to 46.5% in 1Q23 and 45.5% in 2Q22.

 

Total non-controlling interest derives from the sum of the combined minority interests of our banks and of Grupo Aval, applying eliminations associated with the consolidation process of Grupo Aval.

 

Percentage consolidated by Aval   2Q22   1Q23   2Q23   D
        2Q23 vs. 1Q23 2Q23 vs. 2Q22
Banco de Bogotá   68.9%   68.9%   68.9%      -     - 
Banco de Occidente   72.3%   72.3%   72.3%      -     - 
Banco Popular   93.7%   93.7%   93.7%      -     - 
Banco AV Villas   79.9%   79.9%   79.9%      -     - 
Porvenir (1)   75.8%   75.8%   75.8%      -     0
Corficolombiana   40.4%   40.5%   40.5%      -     13

 

4.Attributable Shareholders’ Equity

 

Attributable shareholders’ equity as of June 30th, 2023 was Ps 16,465.4 billion, showing an increase of 0.3% versus June 30th, 2022 and a 1.8% versus March 31st, 2023.

 

 

 13 

 

 

 

Income Statement Analysis

 

Our net income attributable to the owners of the parent company for 2Q23 was Ps 166.2 billion.

 

Consolidated Statement of Income   2Q22   1Q23   2Q23   D
        2Q23 vs. 1Q23 2Q23 vs. 2Q22
Interest income    4,286.7    7,008.3    7,154.6   2.1% 66.9%
Interest expense    2,312.3    5,459.5    5,579.1   2.2% 141.3%
Net interest income    1,974.4    1,548.8    1,575.5   1.7% -20.2%
Loans and other accounts receivable     719.6     920.5    1,138.6   23.7% 58.2%
Other financial assets     (1.0)     (0.3)     (9.6)   N.A. N.A.
Recovery of charged-off financial assets    (151.8)    (133.7)    (140.8)   5.3% -7.3%
Net impairment loss on financial assets     566.8     786.5     988.3   25.7% 74.4%
Net income from commissions and fees     697.3     842.3     883.9   4.9% 26.8%
Gross profit from sales of goods and services    1,440.8    1,163.6     619.2   -46.8% -57.0%
Net trading income     481.5     (81.3)    (783.1)   N.A. -262.6%
Net income from other financial instruments mandatory at FVTPL     68.4     93.9     76.6   -18.5% 11.9%
Total other income    (544.7)     875.9    1,516.6   73.2% N.A
Total other expenses    1,754.6    2,077.0    2,089.2   0.6% 19.1%
Net income before income tax expense    1,796.4    1,579.8     811.2   -48.7% -54.8%
Income tax expense     564.3     532.6     350.6   -34.2% -37.9%
Net income for the period of continued operations    1,232.1    1,047.3     460.6   -56.0% -62.6%
Net income for the period of discontinued operations     154.0     -      -    N.A -100.0%
Net income for the period    1,386.1    1,047.3     460.6   -56.0% -66.8%
Non-controlling interest     710.6     622.2     294.4   -52.7% -58.6%
Net income attributable to owners of the parent     675.5     425.1     166.2   -60.9% -75.4%

 

1.Net Interest Income

 

Net interest income   2Q22   1Q23   2Q23   D
        2Q23 vs. 1Q23 2Q23 vs. 2Q22
Interest income                  
Commercial    1,824.8    3,382.1    3,623.3   7.1% 98.6%
Interbank and overnight funds     54.0     375.0     252.6   -32.6% N.A.
Consumer    1,653.0    2,178.6    2,268.9   4.1% 37.3%
Mortgages and housing leases     335.5     408.4     412.4   1.0% 22.9%
Microcredit     15.9     17.3     17.5   1.3% 10.3%
Loan portfolio    3,883.2    6,361.4    6,574.9   3.4% 69.3%
Interests on investments in debt securities     403.5     646.9     579.7   -10.4% 43.7%
Total interest income   4,286.7   7,008.3   7,154.6   2.1% 66.9%
Interest expense                  
Checking accounts     28.6     62.5     71.6   14.6% 150.1%
Time deposits     759.7    2,216.4    2,519.9   13.7% 231.7%
Savings deposits     671.8    1,591.8    1,343.0   -15.6% 99.9%
Total interest expenses on deposits    1,460.2    3,870.6    3,934.4   1.6% 169.4%
Interbank borrowings and overnight funds     121.3     395.9     494.8   25.0% N.A.
Borrowings from banks and others     169.6     487.7     456.1   -6.5% 169.0%
Bonds issued     515.8     562.6     561.1   -0.3% 8.8%
Borrowings from development entities     45.5     142.6     132.6   -7.0% 191.4%
Total interest expenses on financial obligations     852.2    1,588.9    1,644.7   3.5% 93.0%
Total interest expense   2,312.3   5,459.5   5,579.1   2.2% 141.3%
Net interest income    1,974.4    1,548.8    1,575.5   1.7% -20.2%

 

 

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Our net interest income decreased by 20.2% to Ps 1,575.5 billion for 2Q23 versus 2Q22 and increased by 1.7% versus 1Q23. The decrease versus 2Q22 was derived mainly from a 66.9% increase in total interest income offset by a 141.3% increase in total interest expense.

 

Our Net Interest Margin(*) was 3.4% for 2Q23, 3.7% for 1Q23, and 3.6% in 2Q22. Net Interest Margin on Loans was 4.0% for 2Q23, 3.6% for 1Q23, and 4.9% for 2Q22. On the other hand, our Net Investments Margin was 0.9% for 2Q23, 4.2% for 1Q23 and -1.3% for 2Q22.

 

2.Impairment loss on financial assets, net

 

Our impairment loss on financial assets, net increased by 74.4% to Ps 988.3 billion for 2Q23 versus 2Q22 and by 25.7% versus 1Q23.

 

Net impairment loss on financial assets   2Q22   1Q23   2Q23   D
        2Q23 vs. 1Q23 2Q23 vs. 2Q22
Loans and other accounts receivable     719.6     920.5    1,138.6   23.7% 58.2%
Other financial assets     (1.0)     (0.3)     (9.6)   N.A. N.A.
Recovery of charged-off financial assets    (151.8)    (133.7)    (140.8)   5.3% -7.3%
Net impairment loss on financial assets     566.8     786.5     988.3   25.7% 74.4%

 

Our annualized gross cost of risk was 2.5% for 2Q23, 2.0% for 1Q23, and 1.8% for 2Q22. Net of recoveries of charged-off assets our ratio was 2.2% for 2Q23, 1.7% 1Q23, and 1.4% for 2Q22.

 

 

(*) Grupo Aval’s NIM without income from trading securities and investment in debt securities designated at fair value through profit and loss (non compliant with SPPI test) was 2.9% for 2Q23, 2.8% for 1Q23, and 4.0% for 2Q22 .

 

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3.Non-interest income

 

Total non-interest income   2Q22   1Q23   2Q23   D
        2Q23 vs. 1Q23 2Q23 vs. 2Q22
Income from commissions and fees                  
Banking fees(1)     584.3     664.4     675.3   1.6% 15.6%
Trust activities and management services      85.1     122.9     114.7   -6.7% 34.8%
Pension and severance fund management     199.0     250.0     271.4   8.6% 36.4%
Bonded warehouse services      44.5      47.3      47.5   0.4% 6.8%
Total income from commissions and fees     912.8     1,084.5     1,108.9   2.2% 21.5%
Expenses from commissions and fees     215.5     242.2     225.0   -7.1% 4.4%
Net income from commissions and fees     697.3     842.3     883.9   4.9% 26.8%
                   
Income from sales of goods and services     3,231.6     2,927.5     2,675.8   -8.6% -17.2%
Costs and expenses from sales of goods and services     1,790.8     1,763.8     2,056.6   16.6% 14.8%
Gross profit from sales of goods and services     1,440.8     1,163.6     619.2   -46.8% -57.0%
                   
Total trading investment income     (111.7)     591.0     392.1   -33.7% N.A
Total derivatives income     593.2     (672.3)     (1,175.2)   74.8% -298.1%
Net trading income     481.5      (81.3)     (783.1)   N.A. -262.6%
Net income from other financial instruments mandatory at FVTPL      68.4      93.9      76.6   -18.5% 11.9%
                   
Other income                  
Foreign exchange gains (losses), net     (702.5)     488.5     1,196.3   144.9% 270.3%
Net gain on sale of investments and OCI realization      (8.3)      27.5      32.6   18.4% N.A
Gain on the sale of non-current assets held for sale      1.9      1.1      20.6   N.A. N.A.
Income from non-consolidated investments(2)      93.2     214.5     101.8   -52.5% 9.2%
Net gains on asset valuations      12.5      0.0      (29.4)   N.A N.A
Other income from operations      58.5     144.2     194.7   35.0% 232.6%
Total other income     (544.7)     875.9     1,516.6   73.2% N.A
                   
Total non-interest income     2,143.4     2,894.5     2,313.1   -20.1% 7.9%

 

(1) Includes commissions on banking services, office network services, credit and debit card fees, fees on drafts, checks and checkbooks and other fees

 

(2) Includes share of profit of equity accounted investees, net of tax, and dividend income.

 

3.1Net income from commissions and fees

 

Net income from commissions and fees for 2Q23 totaled Ps 883.9 billion and increased by 26.8% versus 2Q22 and by 4.9% versus 1Q23. Income from commissions and fees increased by 21.5% to Ps 1,108.9 billion for 2Q23 versus 2Q22 and increased by 2.2% versus 1Q23.

 

Pension and severance fund management fees increased over the quarter due to higher contribution-based fees as wages increases are reflected in commissions charged by mandatory pension funds. Fees related to trust activities and portfolio management services decreased over the quarter because of lower performance-based fees.

 

3.2Gross profit from sales of goods and services

 

Gross profit from sales of goods and services (non-financial sector) decreased by 57.0% to Ps

 

619.2 billion for 2Q23 versus 2Q22 and 46.8% versus 1Q23. Income from the non-financial sector, specifically infrastructure, was negatively impacted by the effects of the US$60.6 million or Ps 253.0 billion resolution with the DOJ and SEC. In addition, results for infrastructure were lower on a quarterly basis due to i) softer monthly inflation metrics lowered interest income on financial assets, ii) negative impact of FX on concession arrangements assets with Dollar exposure, which is hedged with effect in other income from foreign exchange gains (losses), net and total derivatives income and iii) slower work progress in Covioriente due to unfavorable weather conditions.

 

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3.3Net trading income and other income

 

Other income   2Q22   1Q23   2Q23   D
        2Q23 vs. 1Q23 2Q23 vs. 2Q22
Total derivatives income     593.2     (672.3)     (1,175.2)   74.8% 298.1%
                   
Foreign exchange gains (losses), net     (702.5)     488.5     1,196.3   144.9% 270.3%
                   
Derivatives and foreign exchange gains (losses), net (1)     (109.3)     (183.7)      21.1   111.5% 119.3%
                   
Net gains on asset valuations      12.5      0.0      (29.4)   N.A N.A
Net income from other financial instruments mandatory at FVTPL      68.4      93.9      76.6   -18.5% 11.9%
Net gain on sale of investments and OCI realization      (8.3)      27.5      32.6   -18.4% N.A
Gain on the sale of non-current assets held for sale      1.9      1.1      20.6   N.A. N.A.
Income from non-consolidated investments      93.2     214.5     101.8   -52.5% 9.2%
Other income from operations      58.5     144.2     194.7   35.0% 232.6%
                   
Total other income from operations     116.9     297.6     417.9   40.5% 257.4%

 

(1) Includes income from trading and hedging derivatives reflected as part of the net trading income on the statement of profit and loss.

 

Total other income for 2Q23 totaled Ps 417.9 billion, the 257.4% yearly increase was due THE 270.3% increase in foreign exchange gains, net. The quarterly increase was 40.5% due to the 111.5% increase in derivative and foreign exchange losses, net, mainly explained by gains related with our non-financial sector as previously noted.

 

4.Other expenses

 

Total other expenses for 2Q23 totaled Ps 2,089.2 billion and increased by 19.1% versus 2Q22, and by 0.6% versus 1Q23. Our efficiency ratio measured as total other expenses to total income was 53.7% in 2Q23, 46.7% in 1Q23 and 42.6% in 2Q22.

 

3.2% of the quarterly increase is explained by the resolutions with the U.S. agencies, 1.3% is related with dividends seasonality in 1Q23 and the remaining 2.4% increase was driven by the results from our non-financial sector. The ratio of annualized total other expenses as a percentage of average total assets was 2.8% for 2Q23 and 1Q23, and 2.6% for 2Q22.

 

5.Non-controlling Interest

 

Non-controlling interest in Grupo Aval mainly reflects the minority stakes that third party shareholders hold in each of its direct consolidated subsidiaries (Banco de Bogotá, Banco de Occidente, Banco Popular, Banco AV Villas, Corficolombiana and Porvenir).

 

Non-controlling interest in the income statement was Ps 294.4 billion, showing a 58.6% decrease versus 2Q22 and 52.7% versus 1Q23. In addition, the ratio of non-controlling interest to income before non-controlling interest was 63.9% in 2Q23, 59.4% in 1Q23 and 51.3% in 2Q22.

 

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RISK MANAGEMENT

 

During the first quarter of 2023, there were no material changes in the degree of exposure to the relevant risks disclosed in the report as of December 2022, nor have new relevant risks been identified that merit disclosure as of March 31st , 2023, according to the instructions given in paragraph 8.4.1.2.1 of Exhibit 1 «Información periódica de los emisores» in Chapter I of Title V of Part III of the Basic Legal Circular Jurídica «Registro Nacional de Valores y Emisores – RNVE.

 

Despite de above, it should be highlighted that the increased inflation registered since December 2021 (5.62%) up to 13.12% in December 2022, triggered Board of Directors of the Banco de la Republica, to raise the Monetary Policy Rate from 3% in December 2021 to 13.25% in May 2023. This represents a 1025 basis points increase in 17 months. Due to the demand for resources by the productive sectors of the economy, after the contraction in consumption and production as a result of the pandemic declared by the COVID-19 virus, the financial sector demanded more resources to fund its commercial activities, while meeting the short- and medium-term liquidity requirements.

 

The rate of adjustment of interest rates for funding instruments (time deposits, bonds, money market) resulted in a margins contraction for banks in Colombia. The magnitude of the contraction depends on each bank’s balance sheet structure and the degree of exposure to mismatch risks.

 

This situation also affects Grupo Aval’s banks in Colombia and the speed of return to desired margins will depend on the fulfillment of our strategic objectives and the stabilization of the local and international economic environment.

 

QUANTITATIVE AND QUALITATIVE ANALYSIS OF MARKET RISK

 

During 2Q23, there were no material qualitative and quantitative changes in market risk in comparison with the information reported in the report as of 1Q23, that merit disclosure as of June 30th, 2023, in accordance with the instructions given in paragraph 8.4.1.1.4 of Exhibit 1 «Información periódica de los emisores» in Chapter I of Title V of Part III of the Basic Legal Circular «Registro Nacional de Valores y Emisores – RNVE

 

CORPORATE GOVERNANCE

 

In terms of Corporate Governance, during this quarter there have been no material changes that should be reported.

 

ESG

 

In terms of ESG, during this quarter there have been no material changes that should be reported.

 

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GRUPO AVAL ACCIONES Y VALORES S.A.

 

Separate Financial Statements

 

Below, we present a summary of our financial statements at the separate level by the end of the second quarter of 2023. The results presented are in accordance with the Colombian International Financial Reporting Standards (Colombian IFRS). The information reported below is expressed in Colombian Pesos (Ps) billion, except where otherwise indicated.

 

Assets

 

The assets are mainly represented by the interests we have in Banco de Bogotá (68.9%), Banco de Occidente (72.3%), Banco Popular (93.7%), Banco AV Villas (79.9%), AFP Porvenir (20.0%), Corficolombiana (8.7%) and 100.0% of Grupo Aval Ltd. (GAL).

 

Total assets as of June 30th, 2023 totaled Ps 20,639.2 billion, decreasing 0.5% or Ps 104.3

 

billion versus March 31st, 2023 and increasing Ps 1,968.1 billion versus June 30th, 2022.

 

The annual variation is mainly explained by the credit operation disbursed to related parties in December 2022 and which as of June 30th, 2023 amounted to Ps 1,335.9 billion. Secondly, the increase in investments in subsidiaries and associates Ps 113.9 billion.

 

On a quarterly basis, the variation is mainly explained by the decrease in current accounts receivable from related parties, due the reduction of Ps 261.7 billion of dividends receivable and the decrease in non-current accounts receivable from related parties of 8.7% related to the FX movements on the Dollar denominated portion of the credit operation with related parties, the appreciation of the Colombian Peso in the quarter was 10.1%. The increase in investments in subsidiaries and associates of 1.5% or Ps 272.3 billion is related to the recognition of the equity method.

 

Liabilities

 

Total liabilities as of June 30th, 2023 totaled Ps 3,673.9 billion, decreasing 9.3% or Ps 377.0 billion versus March 31st, 2023 and increasing Ps 1,875.7 billion versus June 30th, 2022.

 

The annual variation is mainly explained by the increase of Ps 1,109.5 billion in the balance of financial obligations at amortized cost, mainly explained by the US$270 million loan entered into with Grupo Aval Limited (GAL) in December 2022 to fund a portion of the loan extended to related parties (as of June 30th, 2023, the loan with GAL amounted to Ps 1,113.5 billion) and (ii) the increase of Ps 758.9 billion in dividends payable as a result of the dividend declared by Grupo Aval on March 30th, 2023.

 

Regarding the quarterly variation, this is mainly explained by (i) a Ps 256.3 billion decrease of dividends payable and (ii) a Ps 126.5 billion decrease in the balance of dollar denominated debt with GAL, in line with the quarterly appreciation of the Colombian Peso. The financial indebtedness of Grupo Aval did not present material changes compared to what was reported as of March 30th, 2023.

 

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Equity

 

As of June 30th, 2023, shareholders' equity was Ps 16,965.3, 0.5% more than that reported on June 30th, 2022 and increasing 1.6% or Ps 92.4 from the equity reported as of March 31st, 2022. This movement reflects mainly recognition of profits and equity method.

 

Net Income

 

Net income in our separate financial statements is derived primarily from equity method income from our investments and other income, net of the Holding's operating, financial and tax expenses.

 

During the 2Q23 we presented a net profit from continuing operations of Ps 159.6 billion, decreasing 61.6% versus 1Q23 and 77.0% versus 2Q22. The decrease in profits is explained by a lower equity method income. Our banking subsidiaries continue to experience challenges on their intermediation margins as a result of the rapid increase in the cost of funds. Net income for the quarter was negatively impacted by the effects on Grupo Aval’s net income of the US$24.5 million or Ps 102.5 billion resolution with the DOJ and SEC, which amounted to US$60.6 million and Ps 253.0 billion in Corficolombiana.

 

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Information related to Grupo Aval Acciones y Valores S.A. (Holding Company) and Grupo Aval Limited

 

The holding company recorded a total gross indebtedness of Ps 1,648.0 billion (Ps 509.2 billion of bank debt and Ps 1,138.8 billion of bonds denominated in Colombian pesos) as of June 30th 2023. It also guarantees irrevocably and unconditionally Grupo Aval Limited’s (144A / Reg S) 2030 (USD 1.0 billion) bonds under its respective indentures. As of June 30th 2023, the total amount outstanding (including interests payable) of such bonds was USD 1.0 billion, or Ps 4,223.2 billion when converted into pesos.

 

The debt at Grupo Aval Limited is serviced with interest income on loans to subsidiaries and cash & cash equivalents. Grupo Aval Limited has not required, to this date, cash from Grupo Aval Acciones y Valores S.A. to fulfill its obligations. The main sources of cash to pay the debt and debt service at Grupo Aval Acciones y Valores S.A. have been the dividend income from its subsidiaries and the returns on its cash & cash equivalents.

 

When combined, Grupo Aval Acciones y Valores S.A. and Grupo Aval Ltd. had Ps 519.2 billion of total liquid assets, a total gross indebtedness of Ps 5,871.2 billion and a net indebtedness of Ps 5,352.0 billion as of June 30th 2023. In addition to liquid assets, has Ps 1,327.9 billion in loans with related parties and Grupo Aval Ltd. has Ps 2,182.0 billion in investments in AT1 instruments.

 

Total liquid assets as of June 30, 2023
Cash and cash equivalents   392.1
Fixed income investments   127.1
Total liquid assets   519.2

 

 

 

 

 

 

As of June 30th 2023 our combined double leverage (calculated as investments in subsidiaries at book value, subordinated loans to subsidiaries, AT1 investments, and goodwill as a percentage of shareholders' equity) was 1.25x. Finally, we present an evolution of our key ratios on a combined basis:

 

Debt service coverage and leverage ratios   2Q22   1Q23   2Q23   D
        2Q23 vs. 1Q23 2Q23 vs. 2Q22
Double leverage (1)   1.25x   1.27x   1.25x   -0.02 0.00
Net debt / Core earnings (2)(3)   5.66x   6.21x   3.48x   -2.73 -2.18
Net debt / Cash dividends (2)(3)   14.36x   14.73x   5.14x   -9.59 -9.21
Core Earnings / Interest Expense (2)   1.78x   2.06x   3.43x   1.36 1.65

 

(1) Double leverage is calculated as investments in subsidiaries at book value (excluding revaluations), subordinated loans to subsidiaries and goodwill as a percentage of shareholders' equity; (2) Core earnings are defined as annualized recurring cash flow from dividends, investments and net operating income; (3) Net debt is calculated as total gross debt minus cash and cash equivalents and fixed income investments

 

 

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Grupo Aval Acciones y Valores S.A.

Consolidated Financial Statements Under IFRS

Financial Statements Under IFRS

Information in Ps. Billions

 

Consolidated Statement of Financial Position    2Q22    1Q23    2Q23   D
        2Q23 vs. 1Q23 2Q23 vs. 2Q22
                   
Cash and cash equivalents        21,441.1        19,327.8       19,195.7   -0.7% -10.5%
                   
Investment and trading assets                  
Debt securities        3,980.0        5,145.6        5,323.3   3.5% 33.8%
Equity securities        5,022.2        6,525.1        6,018.7   -7.8% 19.8%
Derivative assets        1,886.3        1,914.8        1,914.1   0.0% 1.5%
Trading assets        10,888.4        13,585.5       13,256.1   -2.4% 21.7%
Investments in debt securities at FVTPL (non compliant with SPPI test)         -          1.4         1.4   0.0% N.A
Investments in securities at FVOCI        23,108.5        22,178.1       23,089.9   4.1% -0.1%
Investments in debt securities at AC        8,582.0        9,789.6        9,738.4   -0.5% 13.5%
Investment securities        31,690.5        31,969.1       32,829.6   2.7% 3.6%
Hedging derivatives assets         49.1         35.1        69.4   97.8% 41.5%
                   
Gross loans                  
Commercial loans        97,950.2        110,049.8       109,288.9   -0.7% 11.6%
Commercial loans        95,946.0        106,129.9       106,350.8   0.2% 10.8%
Interbank & overnight funds        2,004.1        3,920.0        2,938.1   -25.0% 46.6%
Consumer loans        54,481.2        60,186.9       60,033.8   -0.3% 10.2%
Mortgages loans        15,883.6        18,026.1       17,756.5   -1.5% 11.8%
Microcredit loans         278.6         267.6        268.5   0.3% -3.6%
Total gross loans        168,593.6        188,530.4       187,347.7   -0.6% 11.1%
Loss allowance        (8,941.7)        (9,427.5)       (9,435.2)   0.1% 5.5%
Total loans, net        159,651.9        179,102.9       177,912.5   -0.7% 11.4%
                   
Other accounts receivable, net        20,799.0        24,384.5       24,200.3   -0.8% 16.4%
Non-current assets held for sale         144.9         100.1        117.5   17.4% -18.9%
Investments in associates and joint ventures        4,882.0        1,191.4        1,211.4   1.7% -75.2%
                   
Own-use property, plant and equipment for own-use and given in operating lease, net        4,615.9        4,695.6        4,597.2   -2.1% -0.4%
Right-of-use assets        1,336.9        1,382.7        1,338.9   -3.2% 0.2%
Investment properties         923.9         956.5        959.8   0.4% 3.9%
Biological assets         167.2         213.1        217.6   2.1% 30.1%
Tangible assets        7,043.9        7,247.8        7,113.6   -1.9% 1.0%
                   
Goodwill        2,234.9        2,232.2        2,215.2   -0.8% -0.9%
Concession arrangement rights        12,032.2        13,536.2       13,558.6   0.2% 12.7%
Other intangible assets        1,769.2        2,082.7        2,176.3   4.5% 23.0%
Intangible assets        16,036.3        17,851.1       17,950.1   0.6% 11.9%
                   
Current        1,346.2        1,950.1        2,363.9   21.2% 75.6%
Deferred        1,610.5        1,525.4        1,318.2   -13.6% -18.1%
Income tax assets        2,956.7        3,475.5        3,682.1   5.9% 24.5%
                   
Other assets         527.2         607.4        523.1   -13.9% -0.8%
Total assets        276,111.0        298,878.2       298,061.6   -0.3% 7.9%
                   
                   
Trading liabilities        1,893.8        1,517.6        1,859.9   22.6% -1.8%
Hedging derivatives liabilities         5.8         5.6         8.9   59.6% 52.2%
                   
Customer deposits        160,029.3        178,352.4       180,244.5   1.1% 12.6%
Checking accounts        26,462.1        23,959.4       23,544.5   -1.7% -11.0%
Time deposits        60,524.8        85,133.4       85,946.1   1.0% 42.0%
Savings deposits        72,642.8        68,331.2       70,313.7   2.9% -3.2%
Other deposits         399.6         928.3        440.2   -52.6% 10.1%
Financial obligations        68,653.7        70,038.5       66,923.9   -4.4% -2.5%
Interbank borrowings and overnight funds        10,499.9        8,799.8       13,459.9   53.0% 28.2%
Borrowings from banks and others        22,945.6        29,346.9       23,916.9   -18.5% 4.2%
Bonds issued        31,973.1        27,352.4       25,424.8   -7.0% -20.5%
Borrowings from development entities        3,235.0        4,539.5        4,122.4   -9.2% 27.4%
Total financial liabilities at amortized cost        228,683.0        248,390.9       247,168.4   -0.5% 8.1%
                   
Legal related         217.1         228.0        237.4   4.1% 9.3%
Other provisions         858.9         914.0        790.7   -13.5% -7.9%
Provisions        1,076.0        1,142.0        1,028.1   -10.0% -4.5%
                   
Current         109.0         319.8        118.7   -62.9% 8.9%
Deferred        4,522.2        5,244.3        5,457.9   4.1% 20.7%
Income tax liabilities        4,631.3        5,564.2        5,576.6   0.2% 20.4%
Employee benefits         846.3         886.9        842.4   -5.0% -0.5%
Other liabilities        8,825.3        11,144.0       10,815.3   -2.9% 22.5%
Total liabilities        245,961.5        268,651.1       267,299.6   -0.5% 8.7%
                   
Equity attributable to owners of the parent        16,420.0        16,175.7       16,465.4   1.8% 0.3%
Non-controlling interest        13,729.6        14,051.3       14,296.6   1.7% 4.1%
Total equity        30,149.6        30,227.0       30,762.0   1.8% 2.0%
                   
Total liabilities and equity        276,111.0        298,878.2       298,061.6   -0.3% 7.9%

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Grupo Aval Acciones y Valores S.A.

Consolidated Financial Statements Under Full IFRS

Financial Statements Under IFRS

Information in Ps. Billions

 

Consolidated Statement of income   YTD 2022   YTD 2023   D   2Q22   1Q23   2Q23   D
      2023 vs. 2022         2Q23 vs. 1Q23 2Q23 vs. 2Q22
Interest income                              
Loan portfolio       7,263.0       12,936.3   78.1%     3,883.2      6,361.4     6,574.9   3.4% 69.3%
Interests on investments in debt securities       783.5       1,226.6   56.6%      403.5      646.9      579.7   -10.4% 43.7%
Total interest income       8,046.5       14,162.9   76.0%     4,286.7      7,008.3     7,154.6   2.1% 66.9%
                               
Interest expense                              
Checking accounts        58.5       134.0   129.1%      28.6       62.5      71.6   14.6% 150.1%
Time deposits       1,303.9       4,736.2   N.A.      759.7      2,216.4     2,519.9   13.7% N.A.
Savings deposits       1,079.8       2,934.7   171.8%      671.8      1,591.8     1,343.0   -15.6% 99.9%
Total interest expenses on deposits       2,442.2       7,805.0   N.A.     1,460.2      3,870.6     3,934.4   1.6% 169.4%
                               
Interbank borrowings and overnight funds       197.7       890.8   N.A.      121.3      395.9      494.8   25.0% N.A.
Borrowings from banks and others       294.0       943.9   N.A.      169.6      487.7      456.1   -6.5% 169.0%
Bonds issued       982.7       1,123.7   14.4%      515.8      562.6      561.1   -0.3% 8.8%
Borrowings from development entities        74.9       275.3   N.A.      45.5      142.6      132.6   -7.0% 191.4%
Total interest expenses on financial obligations       1,549.3       3,233.6   108.7%      852.2      1,588.9     1,644.7   3.5% 93.0%
Total interest expense       3,991.5       11,038.6   176.6%     2,312.3      5,459.5     5,579.1   2.2% 141.3%
Net interest income       4,055.0       3,124.3   -23.0%     1,974.4      1,548.8     1,575.5   1.7% -20.2%
                               
Impairment losses (recoveries) on financial assets                              
Loans and other accounts receivable       1,526.9       2,059.1   34.9%      719.6      920.5     1,138.6   23.7% 58.2%
Other financial assets        18.0        (9.9)   -155.0%      (1.0)       (0.3)      (9.6)   N.A. N.A.
Recovery of charged-off financial assets       (282.6)       (274.5)   -2.9%      (151.8)      (133.7)      (140.8)   5.3% -7.3%
Net impairment loss on financial assets       1,262.2       1,774.8   40.6%      566.8      786.5      988.3   25.7% 74.4%
Net interest income, after impairment losses       2,792.7       1,349.5   -51.7%     1,407.6      762.3      587.2   -23.0% -58.3%
                               
Income from commissions and fees                              
Banking fees(1)       1,148.9       1,339.6   16.6%      584.3      664.4      675.3   1.6% 15.6%
Trust activities       169.0       237.6   40.6%      85.1      122.9      114.7   -6.7% 34.8%
Pension and severance fund management       502.6       521.3   3.7%      199.0      250.0      271.4   8.6% 36.4%
Bonded warehouse services        87.4        94.8   8.5%      44.5       47.3      47.5   0.4% 6.8%
Income from commissions and fees       1,907.9       2,193.4   15.0%      912.8      1,084.5     1,108.9   2.2% 21.5%
Expenses from commissions and fees       500.5       467.2   -6.7%      215.5      242.2      225.0   -7.1% 4.4%
Net income from commissions and fees       1,407.4       1,726.2   22.7%      697.3      842.3      883.9   4.9% 26.8%
                               
Income from sales of goods and services       5,899.5       5,603.3   -5.0%     3,231.6      2,927.5     2,675.8   -8.6% -17.2%
Costs and expenses from sales of goods and services       3,438.1       3,820.4   11.1%     1,790.8      1,763.8     2,056.6   16.6% 14.8%
Gross profit from sales of goods and services       2,461.4       1,782.9   -27.6%     1,440.8      1,163.6      619.2   -46.8% -57.0%
                               
Total trading investment income       (130.0)       983.1   N.A      (111.7)      591.0      392.1   -33.7% N.A
Total derivatives income       324.1       (1,847.5)   N.A      593.2      (672.3)     (1,175.2)   74.8% N.A
Net trading income       194.1       (864.4)   N.A      481.5      (81.3)      (783.1)   N.A. N.A
Net income from other financial instruments mandatory at FVTPL       142.3       170.5   19.8%      68.4       93.9      76.6   -18.5% 11.9%
                               
Other income                              
Foreign exchange gains (losses), net       (333.3)       1,684.8   N.A      (702.5)      488.5     1,196.3   144.9% N.A
Net gain on sale of investments and OCI realization       (10.9)        60.1   N.A      (8.3)       27.5      32.6   18.4% N.A
Gain on the sale of non-current assets held for sale        5.8        21.6   N.A.      1.9       1.1      20.6   N.A. N.A.
Income from non-consolidated investments(2)       296.5       316.3   6.7%      93.2      214.5      101.8   -52.5% 9.2%
Net gains on asset valuations        12.8       (29.4)   N.A      12.5       0.0      (29.4)   N.A N.A
Other income from operations       277.7       338.9   22.0%      58.5      144.2      194.7   35.0% N.A.
Total other income       248.6       2,392.4   N.A.      (544.7)      875.9     1,516.6   73.2% N.A
                               
Other expenses                              
Loss on the sale of non-current assets held for sale        0.3        0.4   35.5%      (0.0)       0.2      0.2   14.2% N.A
Personnel expenses       1,353.2       1,555.3   14.9%      673.2      773.4      781.9   1.1% 16.2%
General and administrative expenses       1,671.7       2,175.4   30.1%      873.8      1,087.2     1,088.2   0.1% 24.5%
Depreciation and amortization       316.4       338.4   7.0%      160.8      166.6      171.8   3.1% 6.8%
Impairment loss on other assets        12.0        0.3   -97.6%      1.5       0.4      (0.1)   -123.3% -105.7%
Other operating expenses        80.5        96.4   19.8%      45.3       49.2      47.2   -4.2% 4.1%
Total other expenses       3,434.0       4,166.2   21.3%     1,754.6      2,077.0     2,089.2   0.6% 19.1%
                               
Net income before income tax expense       3,812.6       2,391.0   -37.3%     1,796.4      1,579.8      811.2   -48.7% -54.8%
Income tax expense       1,197.2       883.1   -26.2%      564.3      532.6      350.6   -34.2% -37.9%
Net income for the period of continued operations       2,615.3       1,507.8   -42.3%     1,232.1      1,047.3      460.6   -56.0% -62.6%
Net income for the period of discontinued operations       1,751.5        -    -100.0%      154.0       -       -    N.A -100.0%
Net income for the period       4,366.8       1,507.8   -65.5%     1,386.1      1,047.3      460.6   -56.0% -66.8%
                               
Net income for the period attibutable to:                              
                               
Non-controlling interest       1,961.6       916.5   -53.3%      710.6      622.2      294.4   -52.7% -58.6%
                               
Net income attributable to owners of the parent       2,405.2       591.3   -75.4%      675.5      425.1      166.2   -60.9% -75.4%

 

(1) Includes commissions on banking services, office network services, credit and debit card fees, fees on drafts, checks and checkbooks and other fees

(2) Includes share of profit of equity accounted investees, net of tax, and dividend income.

 

 23 

 

 

 

GRUPO AVAL ACCIONES Y VALORES S.A.

Separate Financial Statements

Financial Statements Under Colombian IFRS

Information in Ps. Billions

 

Separate Statement of Financial Position    2Q22    1Q23    2Q23   D
        2Q23 vs. 1Q23 2Q23 vs. 2Q22
                   
Current assets                  
                   
Cash and cash equivalents   140.5   166.1   178.2   7.3% 26.9%
Trading securities   0.7   0.2   0.2   2.6% -70.9%
Accounts receivable from related parties   278.6   1,029.9   768.5   -25.4% 175.8%
Taxes paid in advance   4.9   6.9   6.0   -13.4% 20.9%
Other accounts receivable   0.2   0.0   0.0   -50.0% -95.5%
Other non-financial assets   0.0   0.1   0.1   0.0% 130.2%
Total current assets   424.9   1,203.1   952.9   -20.8% 124.3%
                   
Non-current Assets                  
Investments in subsidiaries and associates   18,241.1   18,082.6   18,354.9   1.5% 0.6%
Accounts receivable from related parties   0.0   1,454.4   1,327.9   -8.7% N.A
Property and equipment, net   4.9   3.2   3.2   -2.7% -35.3%
Deferred tax assets   0.3   0.1   0.3   104.0% -9.0%
Total non-current Assets   18,246.2   19,540.4   19,686.3   0.7% 7.9%
Total assets   18,671.1   20,743.5   20,639.2   -0.5% 10.5%
                   
Liabilities and shareholders' equity                  
Current liabilities                  
Borrowings at amortized cost   343.8   21.0 # 1,148.1   N.A N.A.
Outstanding bonds at amortized cost   11.5   14.3 # 14.3   0.0% 23.7%
Accounts payable   114.4   1,129.6 # 873.3   -22.7% N.A.
Employee benefits   2.2   2.3 # 2.4   2.5% 8.5%
Tax liabilities   11.1   8.6 # 15.4   78.1% 39.1%
Other non-financial liabilities   1.2   1.2 # 1.2   0.0% 0.0%
Total current liabilities   484.2   1,177.1   2,054.7   74.6% N.A.
                   
Long-term liabilities                  
Borrowings at amortized cost   189.5   1,749.3   494.7   -71.7% 161.1%
Outstanding bonds   1,124.5   1,124.5   1,124.5   0.0% 0.0%
Total long-term liabilities   1,314.0   2,873.8   1,619.2   -43.7% 23.2%
Total liabilities   1,798.2   4,050.9   3,673.9   -9.3% 104.3%
                   
Shareholders' equity                  
Subscribed and paid capital   23.7   23.7   23.7   0.0% 0.0%
Additional paid-in capital   9,695.2   9,695.2   9,695.2   0.0% 0.0%
Retained earnings   5,979.8   7,469.6   7,457.2   -0.2% 24.7%
Earnings from first-time adoption   0.0   0.0   0.0   N.A N.A
Net income   2,426.1   415.9   575.5   38.4% -76.3%
Other equity accounts   -1,252.0   -911.9   -786.4   -13.8% -37.2%
Total shareholders' equity   16,872.9   16,692.6   16,965.3   1.6% 0.5%

 

GRUPO AVAL ACCIONES Y VALORES S.A.

Separate Financial Statements

Financial Statements Under Colombian IFRS

Information in Ps. Billions

 

Separate Statement of Financial Position     YTD 2022   YTD 2023   D   2Q22   1Q23   2Q23   D
        2023 vs. 2022         2Q23 vs. 1Q23 2Q23 vs. 2Q22
Operating revenue                                
Equity method income, net     1,314.3   571.0   -56.6%   683.6   412.5   158.6   -61.6% -76.81%
Other revenue from ordinary activities     145.4   234.4   61.2%   73.1   116.6   117.8   1.0% 61.21%
Total operating revenue     1,459.7   805.4   -44.8%   756.7   529.1   276.3   -47.8% -63.5%
                                 
Expenses, net                                
Administrative expenses     54.3   38.7   -28.8%   21.7   18.7   20.0   6.7% -8.15%
Other expenses     0.9   -0.2   -123.3%   0.9   -0.1   -0.1   13.1% -112.56%
Losses from exchange differences     -0.4   0.3   -183.2%   0.5   -0.1   0.5   N.A 4.19%
Operating income     1,404.1   766.6   -45.4%   733.6   510.4   256.0   -49.8% -65.1%
                                 
Financial expenses     76.8   165.3   115.2%   42.8   81.5   83.8   2.8% 95.78%
                                 
Earnings before taxes     1,327.3   601.3   -54.7%   690.8   428.8   172.2   -59.8% -75.1%
Income tax expense     1.9   25.8   N.A.   -3.8   13.2   12.6   -4.1% N.A
                                N.A
Net income from continuing operations     1,325.4   575.5   -56.6%   694.6   415.7   159.6   -61.6% -77.0%
                                 
Discontinued operations                                
Equity method income from discontinued operations     1,100.7   0.0   -100.0%   0.0   0.0   0.0   N.A N.A
Income from discontinued operations     1,100.7   0.0   -100.0%   0.0   0.0   0.0   N.A N.A
                                 
Net income     2,426.1   575.3   -76.3%   694.6   415.7   159.6   -61.6% -77.0%

 

 

 24 

 

 

DEFINITIONS

 

Cost of Risk calculated as Impairment loss on loans and other accounts receivable net of recoveries of charged-off assets divided by average gross loans

 

Efficiency Ratio is calculated as total other expenses divided by net interest income plus net income from commissions and fees, gross profit from sales of goods and services, net trading income, net income from other financial instruments mandatory at FVTPL and total other income

 

Fee income ratio is calculated as net income from commissions and fees divided by net interest income plus net income from commissions and fees, gross profit from sales of goods and services, net trading income, net income from other financial instruments mandatory at FVTPL and total other income.

 

Gross loans excludes interbank and overnight funds.

 

Interest Earning Assets are calculated as the sum of average gross loans, average

 

interbanks and average investments.

 

Net Interest Income is the difference between Total Interest Income and Total Interest Expense.

 

Net Interest Margin includes net interest income plus net trading income from debt and equity investments at FVTPL divided by total average interest-earning assets.

 

NIM on Loans is calculated as Net Interest Income on Loans to Average loans and financial leases.

 

NIM on Investments is calculated as Net Interest income on fixed income securities, net trading income from equity and fixed income investment securities held for trading through profit and on interbank and overnight funds to Average securities and Interbank and overnight funds

 

Non-controlling interest refers to the participation of minority shareholders in a subsidiary’s equity or net income.

 

ROAA is calculated as annualized Net Income divided by average of total assets.

 

ROAE is calculated as Net Income attributable to Aval's shareholders divided by average attributable shareholders' equity.

 

 25 

 

 

Investor Relations Contact

 

INVESTORRELATIONS@grupoaval.com

 

Nicolás Noreña

Financial Planning and Investor Relations Senior Manager

Tel: +571 743 32 22 x 23400 

E-mail: nnorena@grupoaval.com

 

Simón Franky

Strategic Planning and Investor Relations Director

Tel601 743 32 22 x 23351

Email sfranky@grupoaval com

 

Silvana Palacio

Investor Relations Analyst

Tel601 743 32 22 x 2337

Email mpalacio@grupoaval com

 

 26 

 

 

EXHIBIT 1

CONSOLIDATED FINANCIAL STATEMENTS

 

 

 

 

KPMG S.A.S.

Calle 90 No. 19c - 74

Bogotá D.C. - Colombia

 

 Phone

+57 (601) 618 8000

+57 (601) 618 8100

www.kpmg.com/co

 

 

(FREE TRANSLATION OF THE REPORT ORIGINALLY ISSUED IN SPANISH)

STATUTORY AUDITOR'S REPORT ON THE

EXTENSIBLE BUSINESS REPORTING LANGUAGE (XBRL) REPORT

 

To the Shareholders

Grupo Aval Acciones y Valores S.A.,

 

Introduction

 

I have reviewed the eXtensible Business Reporting Language (XBRL) Report as of June 30, 2023 of Grupo Aval Acciones y Valores S.A. and Subsidiaries (the Group), which incorporates the following consolidated interim financial information:

 

·the consolidated statement of financial position as at June 30, 2023;

 

·the consolidated statement of income for the three- and six-month periods ended June 30, 2023;

 

·the consolidated statement of other comprehensive income for the three- and six-month periods ended June 30, 2023;

 

·the consolidated statement of changes in equity for the six-month period ended June 30, 2023;

 

·the consolidated statement of cash flows for the six-month period ended June 30, 2023; and

 

·the notes to the report.

 

The Management is responsible for the preparation and presentation of this Report in eXtensible Business Reporting Language (XBRL) that incorporates the consolidated interim financial information in accordance with International Accounting Standard 34 (IAS 34) - Interim Financial Reporting contained in the Accounting and Financial Reporting Standards accepted in Colombia, and for the presentation of said Report in XBRL as instructed by the Financial Superintendence of Colombia. My responsibility is to express a conclusion on the aforementioned Report that incorporates the consolidated interim financial information, based on my review.

 

Scope of the Review

 

I have conducted my review in accordance with International Standard on Review Engagements 2410 - "Review of Interim Financial Information Performed by the Independent Auditor of the Entity", included in the Information Assurance Standards accepted in Colombia. A review of interim financial information consists of making inquiries, mainly with the persons responsible for financial and accounting matters, and the application of analytical and other review procedures. The scope of a review is substantially less than that of an audit performed in accordance with International Standards on Auditing accepted in Colombia and, consequently, does not allow me to obtain assurance that I am aware of all significant matters that I could have identified in an audit. Accordingly, I do not express an audit opinion.

 

 

© 2023 KPMG S.A.S., a Colombian joint-stock simplified corporation and member of the global organization of independent member firms of KPMG International Limited, a private English entity limited by guarantee. All rights reserved.

 

  

KPMG S.A.S.

Tax ID.: 860.000.846-4

 

 

 

 

 

 

Conclusion

 

Based on my review, nothing has come to my attention that causes me to believe that the XBRL Report, which incorporates the consolidated interim financial information of the Group as of June 30, 2023 has not been prepared, in all material respects, in accordance with International Accounting Standard 34 (IAS 34) - Interim Financial Reporting contained in the Accounting and Financial Reporting Standards accepted in Colombia, and the instructions of the Financial Superintendence of Colombia.

 

(Original file signed)

Diana Alexandra Rozo Muñoz 

Statutory Auditor of Grupo Aval Acciones y Valores S.A.

Registration 120741-T 

Member of KPMG S.A.S.

 

August 14, 2023

 

 

 

 

KPMG S.A.S.

Calle 90 No. 19c - 74

Bogotá D.C. - Colombia

 

 Phone

+57 (601) 618 8000

+57 (601) 618 8100

www.kpmg.com/co

 

 

(FREE TRANSLATION OF THE REPORT ORIGINALLY ISSUED IN SPANISH)

STATUTORY AUDITOR’S REPORT ON THE REVIEW OF THE CONDENSED SEPARATE INTERIM FINANCIAL

INFORMATION

 

To the Shareholders

Grupo Aval Acciones y Valores S.A.,

 

Introduction

 

I have reviewed the accompanying condensed separate interim financial information as of June 30, 2023 of Grupo Aval Acciones y Valores S.A. (the Company), which comprises:

 

·the condensed separate statement of financial position as at June 30, 2023;

 

·the condensed separate statement of income for the three- and six-month periods ended June 30, 2023;

 

·the condensed separate statement of other comprehensive income for the three- and six-month periods ended June 30, 2023;

 

·the condensed separate statement of changes in equity for the six-month period ended June 30, 2023;

 

·the condensed separate statement of cash flows for the six-month period ended June 30, 2023; and

 

·the notes to the condensed financial information.

 

The Management is responsible for the preparation and fair presentation of this condensed separate interim financial information in accordance with International Accounting Standard 34 (IAS 34) - Interim Financial Information contained in the Accounting and Financial Reporting Standards accepted in Colombia. My responsibility is to express a conclusion on this condensed separate interim financial information based on my review.

 

Scope of the Review

 

I have conducted my review in accordance with International Standard on Review Engagements 2410 - "Review of Interim Financial Information Performed by the Independent Auditor of the Entity", included in the Information Assurance Standards accepted in Colombia. A review of condensed separate interim financial information consists of making inquiries, mainly with the persons responsible for financial and accounting matters, and the application of analytical and other review procedures. The scope of a review is substantially less than that of an audit performed in accordance with International Standards on Auditing accepted in Colombia and, consequently, does not allow me to obtain assurance that I am aware of all significant matters that I could have identified in an audit. Accordingly, I do not express an audit opinion.

 

Conclusion

 

© 2023 KPMG S.A.S., a Colombian joint-stock simplified corporation and member of the global organization of independent member firms of KPMG International Limited, a private English entity limited by guarantee. All rights reserved.

 

  

KPMG S.A.S.

Tax ID.: 860.000.846-4

 

 

 

 

 

 

 

Based on my review, nothing has come to my attention that causes me to believe that the accompanying condensed separate interim financial information of the Group as of June 30, 2023 has not been prepared, in all material respects, in accordance with International Accounting Standard 34 (IAS 34) - Interim Financial Reporting contained in the Accounting and Financial Reporting Standards accepted in Colombia.

 

(Original file signed)

Diana Alexandra Rozo Muñoz

Statutory Auditor of Grupo Aval Acciones y Valores S.A.

Registration 120741-T

Member of KPMG S.A.S.

 

August 14, 2023

 

 

 

Grupo Aval Acciones y Valores S.A. and Subsidiaries

Condensed Consolidated Statement of Financial Position

(Amounts expressed in millions of Colombian pesos)

 

   Notes  June 30, 2023  December 31, 2022
Assets             
Cash and cash equivalents     Ps.19,195,667   Ps.17,032,857 
Trading assets      13,256,089    11,841,407 
Investment securities      32,829,631    33,674,477 
Hedging derivative assets  4   69,427    20,854 
Loans, net  4   177,912,548    179,115,847 
Other accounts receivable, net  4   24,200,326    23,380,573 
Non-current assets held for sale      117,544    92,830 
Investments in associates and joint ventures  6   1,211,400    1,423,343 
Tangible assets  7   7,113,576    7,235,441 
Concessions arrangements rights  8   13,558,614    13,242,706 
Goodwill  9   2,215,172    2,248,217 
Other Intangibles      2,176,317    2,040,158 
Income tax assets      3,682,128    3,633,876 
Other assets      523,135    608,650 
Total assets     Ps.298,061,574   Ps.295,591,236 
              
Liabilities and equity             
Liabilities             
              
Trading liabilities  4  Ps.1,859,861   Ps.1,757,606 
Hedging derivative liabilities  4   8,868    3,568 
Customer deposits  4   180,244,522    173,341,149 
Financial obligations  4   66,923,900    72,116,775 
Provisions  11   1,028,066    1,227,171 
Income tax liabilities      5,576,624    5,291,487 
Employee benefits  12   842,400    890,019 
Other liabilities  13   10,815,317    10,141,802 
Total liabilities     Ps.267,299,558   Ps.264,769,577 
              
Equity             
Owners of the parent:             
Subscribed and paid-in capital     Ps.23,744   Ps.23,744 
Additional paid-in capital      9,571,374    9,571,374 
Retained earnings      7,584,503    8,018,417 
Other comprehensive income      (714,174)   (1,146,565)
Equity attributable to owners of the parent      16,465,447    16,466,970 
Non-controlling interest      14,296,569    14,354,689 
Total equity      30,762,016    30,821,659 
Total liabilities and equity     Ps.298,061,574   Ps.295,591,236 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

 

 

Grupo Aval Acciones y Valores S.A. and Subsidiaries

Condensed Consolidated Statement of Income

(Amounts expressed in millions of Colombian pesos)

  

      For the three-months periods ended June 30,  For the six-months periods ended June 30,
   Notes  2023  2022  2023  2022 (1)
Continuing operations                       
Interest income  4  Ps.7,154,573   Ps.4,286,674   Ps.14,162,897   Ps.8,046,465 
Interest expense  4   (5,579,086)   (2,312,320)   (11,038,587)   (3,991,500)
Net interest income      1,575,487    1,974,354    3,124,310    4,054,965 
                        
Net impairment loss on financial assets      (988,285)   (566,799)   (1,774,774)   (1,262,221)
Net interest income, after impairment losses      587,202    1,407,555    1,349,536    2,792,744 
                        
Income from commissions and fees      1,108,866    912,818    2,193,396    1,907,893 
Expenses from commissions and fees      (224,977)   (215,488)   (467,204)   (500,524)
Net income from commissions and fees  16   883,889    697,330    1,726,192    1,407,369 
                        
Income from sales of goods and services      2,675,797    3,231,601    5,603,278    5,899,491 
Costs and expenses of sales goods and services      (2,056,571)   (1,790,801)   (3,820,414)   (3,438,097)
Gross profit from sales of goods and services  16   619,226    1,440,800    1,782,864    2,461,394 
                        
Net trading loss  17   (783,145)   481,492    (864,425)   194,147 
Net income from other financial instruments mandatorily at fair value through profit or loss      76,579    68,429    170,528    142,337 
   6   -    0    0    0 
Other income  18   1,516,570    (390,668)   2,392,442    402,616 
Other expenses  18   (2,089,168)   (1,754,564)   (4,166,180)   (3,434,041)
                        
Net income before tax expense      811,153    1,950,374    2,390,957    3,966,566 
Income tax expense  10   (350,561)   (564,290)   (883,112)   (1,197,240)
Net income from continuing operations     Ps.460,592   Ps.1,386,084   Ps.1,507,845   Ps.2,769,326 
                        
Discontinued operations                       
Net income from discontinued operations, net of tax  (1)  Ps.-   Ps.-   Ps.-   Ps.1,597,512 
                        
Net income     Ps.460,592   Ps.1,386,084   Ps.1,507,845   Ps.4,366,838 
                        
Net income attributable to owners of the parent                       
Net income for the period from continuing operations      166,211    675,488    591,300    1,307,119 
Net income for the period from discontinued operations, net of tax  (1)   -    -    -    1,098,073 
Owners of the parent     Ps.166,211   Ps.675,488   Ps.591,300   Ps.2,405,192 
                        
Net income attributable to non-controlling interests                       
Net income for the period from continuing operations      294,381    710,596    916,545    1,462,207 
Net income for the period from discontinued operations, net of tax  (1)   -    -    -    499,439 
Non-controlling interests     Ps.294,381   Ps.710,596   Ps.916,545   Ps.1,961,646 
                        
Net Income     Ps.460,592   Ps.1,386,084   Ps.1,507,845   Ps.4,366,838 
                        
Net income per share basic and diluted (in Colombian pesos)  14  Ps.7.00   Ps.29.65   Ps.24.90   Ps.106.75 

 

(1)See note 1.1 “Discontinued operations of BAC Holding”.

 

The accompanying notes are an integral part of the consolidated financial statements.

 

 

 

Grupo Aval Acciones y Valores S.A. and Subsidiaries

Condensed Consolidated Statement of Other Comprehensive Income

(Amounts expressed in millions of Colombian pesos)

 

      For the three-months periods ended June 30,  For the six-months periods ended June 30,
   Notes  2023  2022  2023  2022
                
Net income     Ps.460,592   Ps.1,386,084   Ps.1,507,845   Ps.4,366,838 
                        
Other comprehensive income                       
Items that may be reclassified to profit or loss                       
Net gain (loss) on hedges of net investments in foreign operations                       
Foreign currency translation differences from hedged foreign operations  5   (383,011)   673,207    (506,163)   (6,832,516)
Hedging derivative instrument  5   0    (881)   0    4,051,829 
Hedging non-derivative instrument  5   361,940    (567,720)   482,180    2,589,366 
Cash flow hedges      4,868    1,460    1,754    (4,242)
Foreign currency translation differences from unhedged foreign operations      (168,084)   113,746    (233,158)   1,146,612 
Investments in associates and joint ventures      (27,119)   (124,896)   (26,525)   (128,427)
Unrealized (losses) gains on securities at FVOCI      503,528    (780,321)   1,238,689    (1,913,292)
Income tax      (318,349)   349,477    (563,288)   (2,027,578)
       (26,227)   (335,928)  Ps.393,489   Ps.(3,118,248)
                        
Items that will not be reclassified to profit or loss                       
Transfer from owner-occupied property to investment property      0    199    0    199 
Gains (Losses) unrealized on equity securities at FVOCI      131,172    (260,883)   77,462    (282,946)
Actuarial (losses) gains from defined benefit pension plans      (19,923)   46,782    (19,924)   80,409 
Income tax      6,852    (20,287)   6,830    (31,245)
       118,101    (234,189)  Ps.64,368   Ps.(233,583)
                        
Other comprehensive income, net of taxes      91,874    (570,117)   457,857    (3,351,831)
Total comprehensive income, net of taxes     Ps.552,466   Ps.815,967   Ps.1,965,702   Ps.1,015,007 
                        
Total comprehensive income for the periods attributable to:                       
Owners of the parent     Ps.299,883   Ps.293,739    1,023,691    153,656 
Non-controlling interest      252,583    522,228    942,011    861,351 
      Ps.552,466   Ps.815,967   Ps.1,965,702   Ps.1,015,007 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

 

 

Grupo Aval Acciones y Valores S.A. and Subsidiaries

Consolidated Statement of Changes in Equity for the six-month periods ended June 30, 2023 and 2022 (Amounts expressed in millions of Colombian pesos)

 

 

   Subscribed and paid-in capital  Additional paid – in capital  Appropriated retained earnings  Other comprehensive income (OCI)  Equity attributable to owners of the parent  Non-controlling interest (NCI)  Total equity
Balance as of December 31, 2021  Ps.22,281   Ps.8,490,799   Ps.13,383,391   Ps.1,117,182   Ps.23,013,653   Ps.16,457,994   Ps.39,471,647 
Issuance of shares   1,463    1,082,307    —    —    1,083,770    572,136    1,655,906 
Dividends declared in cash   —    —    (1,083,770)   —    (1,083,770)   (572,007)   (1,655,777)
Dividends declared in cash   —    —    (119,405)   —    (119,405)   (550,390)   (669,795)
Equity transactions   —    13,241    —    —    13,241    (13,241)   — 
Spin Off(1)   —    —    (6,638,961)   —    (6,638,961)   (3,019,613)   (9,658,574)
Effect of realization of equity instruments(1)   —    —    (5,432)   —    (5,432)   (6,093)   (11,525)
Other comprehensive income   —    —    —    (2,251,536)   (2,251,536)   (1,100,295)   (3,351,831)
Withholding Tax over dividends   —    —    3,212    —    3,212    (543)   2,669 
Net income   —    —    2,405,192    —    2,405,192    1,961,646    4,366,838 
Balance as of June 30, 2022  Ps.23,744   Ps.9,586,347   Ps.7,944,227   Ps.(1,134,354)  Ps.16,419,964   Ps.13,729,594   Ps.30,149,558 
                                    
     Subscribed and paid-in capital      Additional paid – in capital      Appropriated retained earnings      Other comprehensive income (OCI)      Equity attributable to owners of the parent      Non-controlling interest (NCI)      Total equity  
Balance as of December 31, 2022  Ps.23,744   Ps.9,571,374   Ps.8,018,417   Ps.(1,146,565)  Ps.16,466,970   Ps.14,354,689   Ps.30,821,659 
Issuance of shares   —    —    —    —    —    —    — 
Dividends declared in cash   —    —    (1,025,718)   —    (1,025,718)   (1,014,789)   (2,040,507)
Other comprehensive income   —    —    —    432,391    432,391    25,466    457,857 
Withholding Tax over dividends   —    —    504    —    504    14,658    15,162 
Net income   —    —    591,300    —    591,300    916,545    1,507,845 
Balance as of June 30, 2023  Ps.23,744   Ps.9,571,374   Ps.7,584,503   Ps.(714,174)  Ps.16,465,447   Ps.14,296,569   Ps.30,762,016 

 

(1) See note 1.1 “Discontinued operations of BAC Holding”.

 

The accompanying notes are an integral part of the consolidated financial statements.

 

 

 

Grupo Aval Acciones y Valores S.A. and Subsidiaries

Condensed Consolidated Statement of Cash Flows for the six-month periods ended June 30, 2023 and 2022

(Amounts expressed in millions of Colombian pesos)

 

…  Notes  June 30, 2023  June 30, 2022 (1)
Cash flows from operating activities:             
Net income before income tax     Ps.2,390,957   Ps.3,966,566 
Reconciliation of net income before taxes and net cash provided by operating activities:             
Depreciation and amortization  16-18   562,169    533,926 
Impairment losses of loans and receivables, net  4-16   2,089,746    1,551,680 
Net income in concession agreements      (2,222,425)   (2,648,074)
Net interest income      (3,124,310)   (4,054,965)
Sales of non-current assets held for sale, net      (21,193)   (5,517)
Gain on sales of tangible assets      (101,106)   (14,967)
Foreign exchange losses  18   (1,684,847)   333,290 
Share of profit of equity accounted investees, net of tax  18   (194,276)   (341,888)
Dividends caused  18   (122,046)   (108,630)
              
Fair value adjustments on:             
Derivatives  17   1,847,476    (324,107)
Non-current assets held for sale      (142)   158 
Investment property      32,497    (13,379)
Biological assets      (7,284)   (9,050)
              
Changes in operating assets and liabilities:             
Derivatives      (1,675,141)   429,022 
Trading assets      (1,306,429)   668,252 
Accounts receivable      (1,038,184)   99,908 
Other assets      (72,588)   (24,129)
Other liabilities and provisions      (428,869)   (208,182)
Employee benefit      (139,822)   (49,363)
Loan portfolio      (11,753,255)   (12,267,881)
Customer deposits      10,328,635    11,308,833 
Interbank borrowings and overnight funds      4,353,468    251,330 
Borrowings from development entities      (257,965)   1,845 
Borrowings from banks      (3,433,623)   3,874,364 
              
Interest received      19,347,490    7,157,283 
Interest paid      (9,983,489)   (3,779,107)
Lease interest      (87,908)   (74,927)
Income tax payments      (1,335,382)   (982,108)
Net cash provided by operating activities     Ps.1,962,154   Ps.5,270,183 
              
Cash flows from investing activities:             
Purchases of amortized cost financial assets     Ps.(4,254,988)  Ps.(3,751,243)
Redemptions of amortized cost financial assets      4,365,996    3,439,631 
Purchases of FVOCI      (8,210,405)   (5,752,138)
Proceeds from sales of FVOCI      9,956,352    6,990,738 
Acquisition of associates investment and join ventures      —    (2,667)
Purchases tangible assets      (247,840)   (165,664)
Proceeds from sales of property, plant and equipment      66,574    79,749 
Proceeds from sales of non-current assets held for sale      22,150    17,590 
Additions of concession arrangement rights      1,074,882    (496,085)
Additions of other intangible assets      (215,357)   (216,687)
Dividends received      283,857    272,264 
(Decrease) to deconsolidation of subsidiaries      —    (17,570,390)
Net cash provided (used) in by investing activities     Ps.2,841,221   Ps.(17,154,902)
              
Cash flows from financing activities:             
Dividends paid to shareholders     Ps.(256,500)  Ps.(409,876)
Dividends paid to non-controlling interest      (340,372)   (421,326)
Issuance of debt securities      2,592,076    543,355 
Payment of outstanding debt securities      (3,323,937)   (964,283)
Leases      (203,338)   (183,880)
Issuance of shares      —    129 
Net cash used by financing activities     Ps.(1,532,071)  Ps.(1,435,881)
Effect of foreign currency changes on cash and equivalents      (1,108,494)   (487,517)
Decrease in cash and cash equivalents in joint operations      —    (1,393,602)
Increase (decrease) in cash and cash equivalents      2,162,810    (15,201,719)
Cash and cash equivalents at beginning of period     Ps.17,032,857   Ps.36,642,829 
Cash and cash equivalents at end of period     Ps.19,195,667   Ps.21,441,110 

 

 

(1) See note 1.1 “Discontinued operations of BAC Holding”.

 

The accompanying notes are an integral part of the consolidated financial statements.

 

 

 

EXHIBIT 2

SEPARATE FINANCIAL STATEMENTS

 

 

 

 

KPMG S.A.S.

Calle 90 No. 19c - 74 Bogotá D.C. - Colombia

 

 Phone

+57 (601) 618 8000

+57 (601) 618 8100

www.kpmg.com/co

 

 

(FREE TRANSLATION OF THE REPORT ORIGINALLY ISSUED IN SPANISH) 

STATUTORY AUDITOR’S REPORT ON THE REVIEW OF THE CONDENSED SEPARATE INTERIM FINANCIAL

INFORMATION

 

To the Shareholders

Grupo Aval Acciones y Valores S.A.,

 

Introduction

 

I have reviewed the accompanying condensed separate interim financial information as of June 30, 2023 of Grupo Aval Acciones y Valores S.A. (the Company), which comprises:

 

·the condensed separate statement of financial position as at June 30, 2023;

 

·the condensed separate statement of income for the three- and six-month periods ended June 30, 2023;

 

·the condensed separate statement of other comprehensive income for the three- and six-month periods ended June 30, 2023;

 

·the condensed separate statement of changes in equity for the six-month period ended June 30, 2023;

 

·the condensed separate statement of cash flows for the six-month period ended June 30, 2023; and

 

·the notes to the condensed financial information.

 

The Management is responsible for the preparation and fair presentation of this condensed separate interim financial information in accordance with International Accounting Standard 34 (IAS 34) - Interim Financial Information contained in the Accounting and Financial Reporting Standards accepted in Colombia. My responsibility is to express a conclusion on this condensed separate interim financial information based on my review.

 

Scope of the Review

 

I have conducted my review in accordance with International Standard on Review Engagements 2410 - "Review of Interim Financial Information Performed by the Independent Auditor of the Entity", included in the Information Assurance Standards accepted in Colombia. A review of condensed separate interim financial information consists of making inquiries, mainly with the persons responsible for financial and accounting matters, and the application of analytical and other review procedures. The scope of a review is substantially less than that of an audit performed in accordance with International Standards on Auditing accepted in Colombia and, consequently, does not allow me to obtain assurance that I am aware of all significant matters that I could have identified in an audit. Accordingly, I do not express an audit opinion.

 

Conclusion

 

 

© 2023 KPMG S.A.S., a Colombian joint-stock simplified corporation and member of the global organization of independent member firms of KPMG International Limited, a private English entity limited by guarantee. All rights reserved.

KPMG S.A.S.

Tax ID.: 860.000.846-4

 

 

 

 

 

 

 

Based on my review, nothing has come to my attention that causes me to believe that the accompanying condensed separate interim financial information of the Group as of June 30, 2023 has not been prepared, in all material respects, in accordance with International Accounting Standard 34 (IAS 34) - Interim Financial Reporting contained in the Accounting and Financial Reporting Standards accepted in Colombia.

 

(Original file signed)

Diana Alexandra Rozo Muñoz

Statutory Auditor of Grupo Aval Acciones y Valores S.A.

Registration 120741-T

Member of KPMG S.A.S.

 

Member of KPMG S.A.S.

 

August 14, 2023

 

 

 

 

GRUPO AVAL ACCIONES Y VALORES S.A.    
Statement of financial position    
For the period ended as of june 30th 2023 and december 31st 2022
(Stated in millions of Colombian pesos)    

 

      June 30th  December 31st
   Notes  2023  2022
          
Assets             
              
Current assets             
              
Cash and cash equivalents  5  Ps.178,172    67,439 
Trading securities  4   199    764 
Accounts receivable from related parties  6   768,479    96,081 
Taxes paid in advance  6   5,952    7,577 
Other accounts receivable  6   7    161 
Other non-financial assets      99    52 
Total current assets      952,908    172,074 
              
Non-current Assets             
              
Investments in subsidiaries and associates  7  Ps.18,354,911    18,361,916 
Accounts receivable from related parties  6   1,327,947    1,498,754 
Property and equipment, net  8   3,152    4,083 
Deferred tax assets      253    127 
Total non-current Assets      19,686,263    19,864,880 
Total assets      20,639,171    20,036,954 

 

Liabilities and shareholders' equity

Current liabilities

Borrowings at amortized cost  10  Ps.1,148,082    20,255 
Outstanding bonds at amortized cost  10   14,273    14,093 
Accounts payable  12   873,344    106,101 
Employee benefits  11   2,382    2,486 
Tax liabilities  12   15,385    11,920 
Other non-financial liabilities  12   1,214    1,214 
Total current liabilities      2,054,680    156,069 

 

 

Long-term liabilities

Borrowings at amortized cost

  10  Ps.494,667    1,794,089 
Outstanding bonds  10   1,124,520    1,124,520 
Total long-term liabilities      1,619,187    2,918,609 
Total liabilities     Ps.3,673,867    3,074,678 

 

 

Shareholders' equity

Subscribed and paid capital

  13  Ps.23,743    23,743 
Additional paid-in capital  13   9,695,243    9,695,243 
Retained earnings  13   7,457,219    5,939,430 
Net income      575,539    2,541,179 
Other equity accounts  13   (786,440)   (1,237,319)
Total shareholders' equity     Ps.16,965,304    16,962,276 

Total liabilities and shareholders' equity

     Ps.20,639,171    20,036,954 

 

 

 

GRUPO AVAL ACCIONES Y VALORES S.A.

Statement of income

(Stated in millions of Colombian pesos, except earnings per share)

 

      For the quarter period  For the accumulated period
      June 30th  June 30th  June 30th  June 30th
      2023  2022  2023  2022
   Notes            
Operating revenue                       
Equity method income, net  15  Ps.158,553   Ps.683,609   Ps.571,049   Ps.1,314,292 
Other revenue from ordinary activities  15   117,766    73,050    234,376    145,423 
Total operating revenue     Ps.276,319   Ps.756,659   Ps.805,425   Ps.1,459,715 
                        
Expenses, net                       
Administrative expenses  16  Ps.19,958   Ps.21,730   Ps.38,671   Ps.54,278 
Other expenses  16   (112)   892    (211)   906 
revenue from exchange differences  16   472    453    342    411 
Operating income     Ps.256,001   Ps.733,584   Ps.766,623   Ps.1,404,120 
                        
Financial expenses  16   83,786    42,797    165,318    76,837 
                        
Earnings before taxes     Ps.172,215   Ps.690,787   Ps.601,305   Ps.1,327,283 
                        
Income tax expense      12,616    (3,836)   25,766    1,882 
                        
Net income from continuing operations     Ps.159,599   Ps.694,623   Ps.575,539   Ps.1,325,401 
                        
Discontinued operations                       
Equity method income from discontinued operations  15   0    0    0    1,100,730 
Income from discontinued operations     Ps.0   Ps.0   Ps.0   Ps.1,100,730 
                        
Net income     Ps.159,599   Ps.694,623   Ps.575,539   Ps.2,426,131 
                        
Net income per share from continuing operations      6.72    30.83    24.24   Ps.58.83 
Net income per share from discontinued operations      0.00    0.00    0.00   Ps.48.85 

 

 

 

 

GRUPO AVAL ACCIONES Y VALORES S.A.

Statement of Other Comprehensive Income

(Stated in millions of Colombian pesos)

IFRS

 

   For the quarter period  For the accumulated period
   June 30th  June 30th  June 30th  June 30th
   2023  2022  2023  2022
             
Net income  Ps.159,599    694,623    575,539   Ps.2,426,131 
                     
Other comprehensive income (OCI), net of taxes                    
Participation in other comprehensive income                    
reported using the equity method   125,442    (398,050)   450,879    (2,265,641)
                     
Comprehensive income, net  Ps.285,041    296,573    1,026,418   Ps.160,490 

 

 

 

GRUPO AVAL ACCIONES Y VALORES S.A.

Statement of shareholders' equity

For the period ended as of june 30th 2023

(Stated in million of Colombian pesos)

 

         Retained earnings (losses)            
   Subscribed and paid capital  Paid-in Capital  Legal reserve  Occasional reserve  Retained earnings
(losses)		  Operations with shareholders  Net Income  Other equity accounts  Shareholders' equity
                            
Balance as of december 31 st. 2021  Ps.22,281   Ps.8,612,936    11,140   Ps.10,706,543   Ps.(393,822)  Ps.-   Ps.3,502,758   Ps.1,013,600   Ps.23,475,436 
                                              
Constitution of reserves for future distributions net income 2021                  3,502,758              (3,502,758)        - 
Reserve appropriation                  (188,208)   188,208                   - 
To distribute a stock dividend of Ps. 54 per share , over 22,281,017,159 shares outstanding as of december 31st 2021. These dividends will be paid at the rate of 1 share for each 13.74233 common or preferential shares as of december 31st, 2021.                  (1,203,175)                       (1,203,175)
Issuance of shares   1,462    1,082,307                                  1,083,769 
Application of the equity method                                      (1,547,423)   (1,547,423)
Application of the equity method (Spin-off)                            (6,644,277)        (718,218)   (7,362,495)
Witholding tax on dividends                       636                   636 
Net Income                                 2,426,131         2,426,131 
                                              
Balance as of June 30th 2022  Ps.23,743   Ps.9,695,243    11,140   Ps.12,817,918   Ps.(204,978)  Ps.(6,644,277)  Ps.2,426,131   Ps.(1,252,041)  Ps.16,872,879 
                                              
Balance as of december 31st 2022  Ps.23,743   Ps.9,695,243    11,872   Ps.12,817,186   Ps.(245,351)  Ps.(6,644,277)  Ps.2,541,179   Ps.(1,237,319)  Ps.16,962,276 
                                              
Constitution of reserves for future distributions net income 2022                  2,541,179              (2,541,179)        - 
Reserve appropriation                  (7,111,764)   467,487    6,644,277              - 
To distribute a cash dividend of Ps. 3.60 per share per
month from April 2023 to March 2024 including those
two months, over 23.743.475.754 outstanding
shares as of the date of this meeting.		                  (1,025,718)                       (1,025,718)
Issuance of shares                                           - 
Application of the equity method                                      450,879    450,879 
Witholding tax on dividends                       2,328                   2,328 
Net Income                                 575,539         575,539 
                                              
Balance as of June 30th 2023  Ps.23,743   Ps.9,695,243    11,872   Ps.7,220,883   Ps.224,464   Ps.0   Ps.575,539   Ps.(786,440)  Ps.16,965,304 

 

 

 

GRUPO AVAL ACCIONES Y VALORES S.A.

Individual statement of cash flow

For the period ended as of june 30th 2023 and 2022

(Stated in millions of Colombian pesos)

 

      For the accumulated period
      June 30th  June 30th
   Notes  2023  2022
Cash flow from operating activity:             
Net Income      575,539   Ps.2,426,131 
              
Adjustments to reconcile net profit with net cash
used in operating activities		             
Income tax expense      25,766   Ps.1,882 
Property and equipment depreciation and amortization  16   838    872 
Impairment of receivables  6   (238)   - 
Equity method income  15   (571,049)   (1,314,292)
Equity method income from discontinued operations  15   -    (1,100,730)
              
Changes in operating assets and liabilities:             
Decrease (Increase) in trading securities      565    (636)
Decrease in receivables      -    825,252 
Acquisition of permanent investments      -    (823,597)
Increase in interest receivables      (609)   - 
Decrease in other assets and liabilities, net: prepaid taxes, prepaid expenses; taxes, accounts payable,
employee liabilities, estimated liabilities and provisions.		      (21,923)   (16,257)
Increase in interests payable      344    5,449 
Interest payment on lease agreements (IFRS 16)  16   (267)   (124)
Dividends received by subsidiaries      358,854    375,659 
Income tax paid      -    (3,354)
              
Net cash used in operating activities      367,820   Ps.376,255 
              
Cash flow from investing activities:             
Acquisition of property and equipment      -    (55)
Net cash used in investing activities      -   Ps.(55)
              
Cash flow from financing activities:             
Dividends paid      (256,500)   (409,876)
Payment of liabilities arising from lease agreements  10   (587)   (656)
Net cash from financing activities      (257,087)  Ps.(410,532)
              
Change in cash and cash equivalents      110,733    (34,332)
Cash and cash equivalents as of the beginning of the period      67,439    174,784 
Cash and cash equivalents as of the end of the period      178,172   Ps.140,452 
              
              
Additional information:             
Payment of Interest      165,228   Ps.71,462 

 

 

 

 

 

 

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: August 15, 2023

 

    GRUPO AVAL ACCIONES Y VALORES S.A.
     
     
      By: /s/ Jorge Adrián Rincón Plata
        Name: Jorge Adrián Rincón Plata
        Title: Chief Legal Counsel