Grupo Aval Acciones y Valores S.A. ADR (Each representing 20 preferred shares)

Welcome to Grupo Aval's first quarter 2024 Consolidated Results Conference Call. My name is Regina and I will be your operator for today's call. Grupo Aval Acciones y Valores S.A.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 the superintendency of finance as holding company of the evolved financial conglomerate the consolidated financial information included in this document is presented in accordance with ifrs as currently issued by the iasb unconsolidated financial information of our subsidiaries and the colombian banking system are presented in accordance with colombian ifrs as reported the superintendency of finance details of the calculations of non-ifrs measures such as ROAA and ROAE, among others, are explained when required in this report. 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 risks described from time to time in our filings with the Registro Nacional de Valores, EMSORES, 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. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. I will now turn the call over to Ms. Maria Lorena Gutierrez-Botero, Chief Executive Officer. Ms. Maria Lorena Gutierrez-Botero, you may begin.

Good morning to you all. I'm delighted to be hosting this first quarter 2024 conference call. Before we begin, let me introduce myself. My name is Maria Lorena Gutierrez-Botero. I joined Aval in 2018, having the privilege to be in this government. With this extraordinary team in addition to financial results, I'm proud to have managed to position Corfea as one of the Colombian leading companies in several recent years. Last year, we generated 883 billion pesos in net earnings. As part of the over 13 and a half trillion pesos in value generated to our stakeholders. I'm passionate about contributing to Columbia Group. Before coming to Aval, I served several leadership roles in the government between 2010 and 2016. And previously, I have been of the business . I want to take this opportunity to acknowledge for their outstanding leadership of the year. as CEO and Chairman of Grupo Abarth, and want to congratulate Mr. Sarmiento Gutiérrez for his new role as Chairman of Grupo Abarth. It is an honor to succeed him as CEO and to work beside him. I expect to consolidate Grupo Abarth's position as the leading financial conglomerate in the Colombian market, recognized for its soundness, profitability, sustainability, innovation, and its contribution to key economic sectors, maximizing value for our investors and other stakeholders. Before Diego goes over our numbers for the quarter, I will summarize my view of Colombia's macro scenario, refer to some key events on the ESG front, and finish with some highlights of our financial performance and our overall view for 2024. The global economy has performed better than anticipated. Periods of polarization of scenarios for developed countries have dissipated and now seem unlikely. Receiving economic data in the United States obtained a soft landing scenario, consistent with a higher for longer interest rate. U.S. inflation accelerated to 3.5 in March, is still far from the short-term target of 2%. The Federal Reserve plans on lowering rate layers in the year, with a maximum of two 25 basic point cuts this year, down from the six cuts previously anticipated by the end of 2020. Commodity prices are and are projected to stay high due to ongoing geopolitical tensions and supply chain disruptions, benefiting commodity exporting nations in Latin America, Colombia included. On the domestic front, we maintain Colombian growth projections of 0.75% to 1.25%. The economic activity index increased by two and a half years in February 2024, surpassing consensus projections. Peer views suggest that the Colombian economy did at the end of 2023 and has since started to bounce, fueled by the momentum in the agriculture and mining sector and policy administration. Nevertheless, a primary challenge persists in maintaining the trajectory of recovering the secondary sectors to ensure positive annual growth in the month ahead. Inflation has disintegrated from 9.3% in December 2023 to 7.16% in April and is expected to continue declining to the 5.75% area by the end of 2024. This inflationary process may face headwinds in the second quarter due to transitory effects like El Nino on prices of perishable tools and electricity. However, a significant portion of expected inflation, particularly in service and regulated sectors, has already taken place and co-inflation is anticipated to continue trending downward in the coming months. Moving to the monetary policy, the Central Bank Board has cut its policy rate from 13% to 11.75%, with decreases of 25 basis points in January and 50 basis points in the subsequent two weeks. The Central Bank might have been too cautious in the magnitude of its rate cuts, considering the observed and expected inflation, imposing a tolerant economic speed. The real interest rates have remained contractually through this year, standing at 7% at the end of April, when considering a 4.7% year ahead expected inflation. We, as does the market, to run for a moderate size interest rate reaction phase in line with the positive evolution of inflation. We estimate a year end rate of 8.5% area by the end of 2024. There has been a substantial weakening since 2022 of gross fixed capital investment in infrastructure, building, construction, and mining. sectors that have a considerable contribution on the supply side of GDP. We expect that this trend will continue to underpin and establish economic performance in 2024. The recovery of GDP growth in Colombia that follows the COVID-19 pandemic was driven by household consumption. Even though it's still strong, household consumption is the key driver to GDP dynamics over the last two years has moderate significance and is forecast to experience modest growth into 2024. Looking beyond 2024, there are concerns that is the current low fixed investment rate versus colonial potential growth will decline to a range between 2.2%, 2.5%, down from 3% and 3.5% before the pandemic. Total investment that includes inventories fell close to 25% in 2023. Reaching the investment level of 2022 will require substantial growth in gross capital formation. Immediate and decisive public action intended to stimulate investment in critical sectors such as infrastructure and energy, is of the effect. In this context, we highlight the government's role as the orchestrator of Colombia's economic reactivation. As such, efficient public spending will be crucial in boosting its multiplier and the counter-cycle effects. However, public investment reached an underwhelming 14% of execution the lowest in at least eight years. In addition, low gross domestic savings hinders a substantial pick-up in investment and GDP growth over the following years. The post-COVID-19 construction rebound in Colombia that contributed to inflationary pressures in connection to an increase in the financial burden of household growth through their indebtedness and higher interest rates. The postponed consumption of durable goods and services was encompassed by a marked improvement in employment features well below pre-pandemic levels given households were positioned to consume. Consistent with the contraction of retail lending in the Colombian banking system observed since the end of 2022, the financial burden on households reported by the Superintendency of Finance has already receded to the pandemic level. This behavior favors an improvement in the density of our consumer loan portfolio. However, The sharp economic slowdown since the last quarter of 2022 and a weaker labor market since mid-2023 have contributed to an increasing delinquency across the banking system. We expect the yearly average national unemployment rate to be 11% in 2024, up from 10.2% in 2023. In the fiscal term, without additional spending cards, it is projected that Colombian central government debt will rise to 5.6% of GDP, exceeding the 5.3% allowed by the fiscal rule. This shortfall is a tool to lower economic growth, impacting tax revenue and adjustments in inspected revenue due to enhanced tax administration, and litigation efficiency. To meet the fiscal rules, an additional cut in primary spending of $14.2 trillion will be necessary. We are watchful on the recent discussion regarding eventual changes to the fiscal rules given signaling regarding future fiscal discipline with an eventual implication on interest rate levels investor confidence, and country risk premiums. The reduction in currency demand due to our weak domestic demand has led to a substantial appreciation of the exchange rate, with the dollar falling below $3,750 in early April, its lowest level since June 2022. Nonetheless, the Colombian peso has been fully adjusted in the recent declines and macroeconomic fundamentals. Risk associated with fiscal accounts, long-term growth projections, oil production, and a narrow interest rate gap compared to the United States could potentially trigger a depreciation of the U.S. dollar-Colombia peso exchange rate to levels above the 4,000 pesos in the latter half of the year. On the social front, we launched the Mission La Guajira project in December 2023. This is a joint effort between ourselves, the government, and the community, intending to bring potable water, food security, and energy to over 80 communities in this extremely poor region in the country. We expect this to be an initial phase of a project that we as part will have a broader long-lasting impact in this region. This project will impact five of the sustainable development goals, including no-poverty, good health and well-being, clean water and sanitation, affordable and clean energy, and reducing inequality. Regarding our talents, among several of our subsidiaries that were certified by Great Lakes Works, I am proud to highlight that Banco Siente was recognized as the best place to work for women in 2023 in companies with over 1,500 employees. On the government front, changes were implemented throughout the group's board of directors intended to refresh them and to adhere to international standards. We increased the proportion of independent members and the number of women in our board. At Grupo A, the general shareholder meeting approved the board to be reduced from 14 members, seven principal and seven alternate, to only nine principal, and increase the ratio of independent board members up to two-thirds. In the environmental front, Banco de Bogotá and Corte Colombiana are carbon neutral, and we will continue working to achieve this status in the remaining direct subsidiaries between 2024 and 2025. In addition, our most relevant financial subsidiaries are currently working on building their respective climate change risk matrices in accordance with the CCFC principles. Regarding our financial results, Diego will be reconnecting state to our financial performance during the first quarter of 2024. However, I will highlight the following. This quarter's lackluster performance was driven by a pick-up in cost of risk. Other key business metrics, such as growth, net interest margin, and cost-to-asset efficiency, fell largely in line with our expectations and last quarter's guidance. Despite the challenging environment for our banking activities and restricted credit origination policies that those placed in 2021 we increased our market share in all main lending categories. During this quarter, we gained 32 basis points in total loans, 39 basis points in commercial loans, 42 basis points in consumer loans, and 17 basis points in mortgage. We gained 32 basis points in total loans, 39 basis points in commercial loans, and 42 basis points in consumer loans, In the first quarter of the year, 10 banks out of a total of 28 posted losses. When excluding equity methods, dividends, and no recurring income from other organizations, this number increases to 13 banks. On a quarterly basis, although still depressed, we have begun to see a recovery of the net interest margin on loans I expect this to continue as the central bank maintains its rate cut cycle through the year. The lower than anticipated decrease in the benchmark rates has delayed the recovery path than what we have initially anticipated. In addition, price competition has increased in the corporate segment in an environment of lower than expected growth of the banking system. Cause of risk in the system remains high despite how it shows signs of a stabilization in new business. Notwithstanding a high ratio of charts from some of our comparators, delinquency metrics remain well above historical levels. Our low-risk consumer law mix discourages us from our main comparators. with a high ratio of payroll lending and lower share of unsecured consumer lending, and as favored as in this credit cycle, relative to the rest of the banking system. Finally, we expect the risk management actions taken throughout this credit cycle. The review of our bank's strategies and cost-controlling initiatives deployed throughout our bank, we reflect on our results in the latter part of the year. The speed of improvement will be determined by the decisiveness of the central bank to reduce rates and the actions taken by the government to stimulate recovery of economic issues. As we, from higher cost of goods and a steeper net interest margin, will continue to undermine our performance during the following quarter. I thank you for your attention, and now I pass the presentation to Diego, who will explain in detail our bill results and provide data for 2024.

Thank you, Maria Lorena. Before moving into our results, I would like to take a moment to highlight some aspects that characterize our banking operation that differentiate us from others in the Colombian banking system and explain our performance throughout the post-pandemic cycle. Pages 9 and 10, you can find several charts regarding the quality and growth rate of our loan portfolio. For comparability reasons, these figures are unconsolidated under Colombian IFRS as published by the Sprint Tendency of Finance. As mentioned in the past, our portfolio composition is skewed towards low-risk consumer lending products, and in line with our underwriting standards, who had a more cautious pace during the boom that followed the post-pandemic rebound. Consistent with this risk profile, our banks have experienced a milder impact of the credit cycle, and despite tightening underwriting policies, we have been in a better position to grow in this challenging environment. As a result, our banks in Colombia have gained market share in all major loan categories over the 12-month period ending on February. while experiencing a better evolution of the credit quality of the consumer portfolio. I will now move to the consolidated results of Grupo Aval under IFRS. Starting on page 11, assets grew 2.7% over the year and 1.9% over the quarter to 307 trillion pesos. The year marked a 17.3% year-on-year appreciation of the Colombian peso that had a negative effect on year-end growth metrics, particularly of net loans and leases. Over the quarter, the peso appreciated 0.5% and had no material impact on growth metrics. Dollar-denominated loans account for 16.6% of our total portfolio. These are contributed mainly by MFH in Panama, by the U.S. agencies of Banco de Bogota, our trade finance activities, and offshore subsidiaries of Banco de Bogota and Banco de Occidente. The bottom of the page, U.S. loans grew 2.2% over the year and 1.5% in the quarter. Professor-nominated loans increased 5.1% and 1.3% respectively, while U.S. dollars-nominated loans grew 8.6% and 2% in dollar terms respectively. We continued to outgrow our peers across all loan categories, despite having tightened our origination policies several times over the cycle. yielded at the end of February year-on-year market share gains of 89 basis points in total loans, 138 basis points in commercial loans, 110 basis points in consumer, and 28 basis points in mortgages. Commercial loans grew 3.1% year-on-year and 2.3% over the quarter. Peso-denominated commercial loans grew 7.1% and 3% year-on-year and quarter-on-quarter, while U.S. dollar-denominated commercial loans grew 10.5% and 2.5 in dollar terms, respectively. Consumer loans contracted 0.2% year-on-year and grew 0.1% over the quarter. Special-denominated consumer loans grew 0.6% year-on-year and remained flat quarter-on-quarter, while U.S. dollar-denominated consumer loans grew 6.4% and 1.7% in dollar terms, respectively. The sluggish dynamics consumer loans have been driven by high interest rate environment and tighter underwriting policies in line with the slow economic activity and softer macro outlook consumer loan growth was slow across all main products there were loans that account for 55 percent of our consumer loans contracted 1.7 percent year-on-year and grew 0.6 percent of the quarter demand for this product had gained traction but the reduction in funding rates allows for lower interest rates and new investments. Personal loans that account for 24% of our consumer book grew 1.7% of the year and contracted 0.1% per quarter. Credit cards that account for 12% grew 4% year on year and contracted 1.6% quarter on quarter. Automobile loans that account for 9% of our consumer loans decreased 1.5% year on year and grew 0.4% quarter on quarter. Finally, mortgages grew 4.6% year-on-year and 2% over the quarter. Peso-denominated loans grew 11.1% and 2.4% respectively, while dollar-denominated mortgage loans, booked by MFH, grew 2.5% and decreased 0.8% respectively in dollar terms. We expect our 2024 loan growth to continue exceeding the banking system, albeit remaining soft across products and sectors. Dynamics in the system will fall largely in line with sluggish domestic demand and investment dynamics. Long-growth rates in the system are expected to pick up later during the year and into 2025, driven by the normalization of the monetary policy and its positive effects on GDP growth. On page 12, we present funding and deposit evolution. Total funding increased 2.8% year-on-year and 3.1% during the quarter. Peso-denominated funding grew 11.5% year-on-year and 3.6% during the quarter. U.S.-denominated funding decreased 1.4% in dollar terms year-on-year and increased 1% during the quarter. Deposits account for 74.1% of our funding, growing 4% quarter-on-quarter and 6.1% year-on-year. Peso-denominated deposits increased 8.9% year-on-year and 3.9% quarter-on-quarter. U.S. denominated deposits increased 11.7% and 4.1% in dollar terms, respectively, over 12 and 3 months. Time deposits that remain the most sought-after type of funding continue driving overall deposit performance and gain shared in our mix. Time deposits grew 7.1% year-on-year and 5.3% in the quarter. Our deposits-to-net-loans ratio screwed at 106%. On page 13, we present the evolution of our total capitalization, our attributable shareholders' equity, and the capital equity ratios of our banks. Our total equity decreased 1.4% of the quarter and increased 2.8% year-on-year. Our attributable equity decreased 2% of the quarter and increased 1.7% year-on-year. Dividends of 570 billion pesos were declared to our shareholders during the quarter. In addition, minorities at our subsidiaries received dividends of 623 billion pesos. Lower Core Equity 2-1 ratios in Banco de Bogotá and Banco de Occidente correspond to dividends declared during the quarter. Lower Tier 2 ratios in these banks reflect the decrease in capital contribution up to coordinated debt in accordance with the regulatory amortization schedules. As a recent event, not yet reflected in these figures, on May 7th, Banco de Occidente issued its inaugural 125 million Tier 2 notes with a maturity of 10 and a quarter years non-CO5, which we estimate could add approximately 150 basis points to total solvency. Banco Popular and Consolidated Rations were 12.7 for total solvency and 11% for core equity Tier 1. On page 14, we present our yield and loans, cost of funds, spreads, and NIM. The consolidated NIM and loans expanded 16 basis points quarter on quarter to 4.3 percent. Neiman commercial loans predominantly floated over IVR, decreased 14 basis points to 3.9, while NIM and retail loans predominantly priced at fixed rates expanded 58 basis points to 4.9 percent. Despite of the above-mentioned positive results, in Neiman loans total NIM fell 49 basis points to 3.4% quarter-on-quarter due to our short contraction in our name and investments to minus 0.2%. Focusing on our banking segment, Neiman loans of our banking segment improved 8 basis points quarter-on-quarter to 5.1%, still substantially lower than historical levels. This incorporates a Neiman commercial loans that increased 16 basis points to 4.7%, and a Neiman retail loans that expanded 41 basis points to 5.6%. The total name of our banking segment contracted 21 basis points to 4.2% due to the same dynamics that affected our consolidated median. The increase of our name on investments is explained by two primes. First, a softer quarter on quarter, yet still double digit name on investments from our pension and severance fund management segments. And second, a negative result in our banking and merchant banking segments that mitigated by its strong results in FX and derivatives under our income in connection with hedging strategies. Interest rating dynamics of our loans and funding are proven by the movements in the average benchmark rate in Colombia. On a consolidated basis, the average yield on loans for the quarter decreased 54 basis points to 13.7% over three months, while the average central bank rate decreased 42 basis points to 12.8% in first quarter 24. and average three-month IVR decreased 64 basis points to 12.3%. Commercial portfolios reduced their yield by 84 basis points to 13.3% over the quarter. In addition to lower IVR, a preference for low-risk sectors has implied lower spreads on new loans. The average yield on consumer loans decreased 22 basis points over the quarter due to a sharp decrease in Colombia's lending rate cap after changes in calculation methodologies implemented by the regulator. This change reduced the rates of some consumer lending products, mainly credit cards. We were partially upset by a continued repricing of loans with longer maturity, such as payrolls. On the cost of funding side, our banks reported a 68 basis points, quarter and quarter decrease in cost of funds. Average rates on time deposits and saving accounts fell to 50 basis points, and 88 basis points quarterly respected. As we have mentioned in previous calls, last year, time deposits were issued at abnormally high spreads to the sovereign triggered by changes in the next stable funding regulation. A portion of those will mature over the following months, contributing to the downward trend in cost of funds. On pages 15 through 17, we present several loan portfolio quality ratios. On page 15, 90-day PDLs were 4.15% at 17 basis points deterioration relative to last quarter and 70 basis points deterioration over 12 months. 30-day PDLs increased to 5.85% after nine basis points change over three months and then 99 basis points deterioration over 12 months. Road rates between 30 days and 90-day PDLs remain contained As a result of the collection strategies developed by our banks, 90-day PELs formation increased 5% quarter-on-quarter after an 18% increase 30-day PEL formation quarter-earlier. Commercial 30-day PELs were 5.1% and 33 basis points increased over three months. 90-day PELs were 4.48% basis points deterioration over the quarter. We recorded a 53 basis points increase in consumers, 38 PDLs to 6.81%, while 98 PDLs increased 35 basis points to 3.91%. Mortgages, 38 PDLs and 98 PDLs increased 33 basis points and 8 basis points respectively. And 128 metrics PDLs were 3.5% or 11 basis points higher during the quarter. Finally, the ratio of charge-offs to average 90 APDLs was 0.62 times. On page 16, the share of our loan portfolio classified as Stage 1 portfolio fell slightly over the quarter, mostly driven by a mild deterioration in retail loans. Regarding coverage, the allowance for Stage 2 and Stage 3 as a percentage of loans classified as Stage 2 and Stage 3 was materially stable during the quarter for total loans. The coverage for commercial loans continued increasing during the quarter. the allowance ratio for consumer loans and mortgages slightly increased over the quarter, reflecting an improvement in the mix of probabilities of default inside Stage 2 loans. On page 17, as we anticipated in our last earnings call, the cost of risk remained high during the quarter, driven by a high cost of risk for consumer loans. Cost of risk net for consumer loans improved four basis points to 7.5% despite a slight contraction in average balance. The cost of risk of credit cards and personal loans improves quarter-in-quarter, falling 63 basis points to 15.2% and 237 basis points to 15.4% respectively. The increasing cost of risk on commercial loans is mainly explained by strong end-of-period loan growth in the quarter. On page 18, we present net fees and other income. Rusty income grew 5.6% quarter-and-quarter and 3.9% year-on-year. Net fee income increased 16.3% and 5.9% respectively. Net pension and severance fees grew quarter-and-quarter and year-on-year, driven by performance-based fees that incorporates a strong capital market performance at the end of 2023. Income from the non-financial sector was around 70% of that recorded in first quarter 2023, as sample growth concessions transitioned from the construction to the operation space. In contrast, the energy and gas sector outperformed during the quarter due to the favorable effect of the Nino phenomenon and PromiGas' businesses due to the higher natural gas consumption. Finally, on the bottom of the page, the quarterly increase in other operating income is mainly explained by higher derivatives and FX gains that, as mentioned before, partially compensate lower results in NIMA investments. In addition, even seasonality further adds to the improvement relative to fourth quarter of 2023. On page 19, we present some efficiency ratios. The result of our cost control initiatives total lower expenses increased 0.8% year-on-year and fell 3.8% quarter-on-quarter. General and administrative expenses grew 0.2% year-on-year and contracted 7.9% quarter-on-quarter. General and administrative expenses are determined by operating taxes and deposit insurance that now account for 41% of these expenses. These line items grew 8.1% and 9% respectively year-on-year. Other general and administrative expenses decreased 4.8% year-on-year. Cost to assets for the quarter was 2.76%, improving 15 basis points quarter-on-quarter and four basis points year-on-year. Our quarterly cost to income improved to 50.4% of the quarter and deteriorated year-on-year, mainly due to a lower NIM on investments and income from the non-financial sector. Finally, on page 20, we present our net income and profitability ratios. Attribute of net income for the quarter was $114 billion or $4.8 per share. Return on average assets and return on average equity for the quarter were 0.6% and 2.7% respectively. Before we move into questions and answers, I will now summarize our general guidance for 2024. We expect loan growth between 7.5% and 8%, with commercial loans growing between 9% and 9.5%, and retail loans growing between 5% and 6%. NIM in the 4% area with NIM on loans in the 4 and 3 quarters area. NIM up our banking segment in the 4 and 3 quarters area with NIM on loans between 5 and a quarter and 5 and a half. Cost of risk net of recoveries in the 2.2% area. Cost to assets in the 2.7% area. Income from the non-financial sector of 70% of that for 2023. A fee income ratio between 20 and 25%. Finally, we expect our 2024 return on average equity to be in the 6.5% area. We're now available to address your questions.

We will now begin the question and answer session. If you have a question, please press star then 1 on your touchtone phone. If you wish to be removed from the queue, please press star 1 again. If you are using a speakerphone, you may need to pick up the handset first before pressing the numbers. Once again, if you have a question, please press star then one on your touch-tone phone. Our first question comes from the line of Nicholas Riva with Bank of America. Please go ahead.

Thanks very much, Diego and Maria Lorena, for taking my questions. I have a few questions. So the first one on provisions for loan losses, which were up 72% year-on-year and 10% quarter-on-quarter, cost of risk of 2.9% in the quarter, if you can uh you know discuss any thoughts in terms of the outlook for provisions for loan losses um for the rest of for the rest of the year my first question and then i have a few questions on your standalone balance sheet for the holding company uh diego you mentioned the tier two race from banco occidente after the end of the quarter the 175 million dollars I want to confirm that transaction is not going to have any impact on the standalone balance sheet of the holding company. I assume that Grupo Aval in this case did not buy any of the Tier 2 issue, but if you can confirm that. And also, if you can tell us what's the amount of the 81 issue from BAC Central America that is owned by Aval and that is included in the double leverage that the holding company reports of 123% at the end of the quarter. And finally, Diego, you gave us guidance for 2024 on a consolidated basis. Can you share your projection for double leverage for the holding company by the end of the year? Thanks.

Okay, Nicolas. Let me take one of those. Regarding provision expenses cost of risk, you might have noticed that we raised our expectation cost of risk for the year. Basically, what we are reflecting here is the credit cycle has been longer than what we expected. If you look at what has happened, you will find that there's been improvement as we had guided into before, but we haven't yet seen a turning point, particularly for consumer loans. From the macro side, there is a number of positives going on. We see the numbers reported by the superintendents. We have finance of household leverage improving. So that correlates to the contraction in consumer and retail loans that we've seen before. But we still have some caution on what is going to happen with unemployment. So that's perhaps the main change in the guidance for this call is a higher cost of risk. with an expectation to trend to better numbers as the economy recovers. Even though it's data dependent, we see positives going on on the inflation front. We see positives on the central bank front and also from the GDP growth perspective. So even though cautious, we see an improvement in that area, and that would help us to trend back to a sub-2% cost of risk that we are more familiar with. Regarding our standalone balance sheet, yes, Aval didn't buy bonds from Banco de Occidente. It was a particularly small issue, and we wanted this to be the inaugural bond for Banco de Occidente. It was not a benchmark-sized transaction because of the needs of the bank, but still they were able to set up the market. Regarding the 81, we will be looking at the call of the bond during next year. At this point, I would say the priority of that call is relevant given the trend of rates going on, and we have to wait a few months to see that happening, but it is a possible scenario that it will be called. And then you had a few other questions.

And in that case, Diego, so again, assuming it's cold, what would be the, so right now, what's the amount of the 81 issue from?

It's very, it's a, no, yeah, your question on double leverage. It's a very relevant event. What we are working on is trending down back to 120%. That is basically a ratio that rating agencies have pointed to. And the 81 represents close to 11 percentage points So, if the bond is called and we do nothing else, we would be around 110 or under that number.

Okay. Thanks very much, Theo.

Again, press star 1 for any questions. And your next question will come from the line of Julian Osique with Davidienda Cordores. Please go ahead.

Hi, everyone, and thank you for having my questions. I have several questions. The first one, if you can maybe repeat the guidance, because I couldn't get the line when you were giving the guidance. And my other two questions are regarding, the first one is regarding the corporate deterioration segment. Like, how are you looking the deterioration for this year in terms of the corporate? Because here in the Correores, we are seeing some deterioration in the corporate sector. So what are your expectations? And if You have some, like, sensibilities and sensibilities about the MPLs, both in 30 and 90 days for this segment. And my second question is regarding the NIMOMI investment. I was looking, like, the P&L, and I saw that during the quarter you have an increase on interest and investments in debt securities of 11%. So I could understand why the NIM on investments had a negative performance during the quarter. And also to understand why the NIM on loans have some increase because when I saw P&L, I saw a deterioration on the income of loan portfolio of 4%. And also, but I saw a decrease in the cost of funds. So I would like to understand a little bit more about the name on investment and the name of loans. Thank you.

I'm not sure I understood fully your questions. Could you repeat what part of the guidance you need?

Like if you can give the loan name is a core and narrow week. That's the first one.

Okay. Okay. So a cost of risk of 2.3% and ROE in the 6.5% area might have some upward bias, but at this point we're cautious on the cost of risk side. Regarding commercial loans, The segments in which Avali is concentrated are much more of the larger commercial companies and corporates. Therefore, we've seen some slight deterioration, but it's quite mild at this point. If you look at that through stages, on the stages front, you even see some bias to an improvement there. We are watchful of the deterioration on commercial, but it hasn't really shown up in numbers yet, and it is related to the kind of customers that we have. There might be more concern if we go to smaller commercial loans and F&E loans, but in our case, we're more at the point of making sure that everything keeps under control. You might imagine that we've been looking into segments that are more sensitive than others. And perhaps at this point, something to mention is we're very well diversified across sectors and inside sectors across customers, so we're not expecting any large surprise. On the NIMA investment front, yes, it was perhaps one of the things that affected our overall NIM. We saw improvement in NIMA loans. However, a lower NIMA investment did affect us. Part of that, as I mentioned through the call, is offset with derivatives in the other income line. Having said so, the end of March was not that positive for the market. We've seen a better evolution during the second quarter on returns on fixed income investments. Therefore, we are expecting to see better results over the year than what we saw for the quarter.

There are no further questions at this time. Ms. Maria Lorena Gutierrez Botero, I turn the call back over to you.

Okay. Thank you to you all. I'll see you soon in the next poll. Good day.

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating.