Grupo Cibest S.A.

Good morning ladies and gentlemen and welcome to BAN Colombia's first quarter 2022 earnings conference call. My name is Cha and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Following the prepared remarks, there will be a question and answer session. During the question and answer session, if you have a question, please press star then 1 on your touchtone phone. Please note that this conference is being recorded. Also, please note that this conference call will include forward-looking statements, including statements related to our future performance, capital position, credit-related expenses, and credit losses. All forward-looking statements, whether made in this conference call, In future filings, in press releases or verbally, address matters that involve risks and uncertainty. Consequently, there are factors that could cause actual results to differ materially from those indicated in such statements, including changes in general economic and business conditions, changes in currency, exchange rates, and interest rates, introduction of competing products by other companies, lack of acceptance of new products or services by our target clients, changes in business strategy, and various other factors that we describe in our reports filed with the SEC. With us today is Mr. Juan Carlos Mora, Chief Executive Officer, Mr. Mauricio Rosilio, Chief Corporate Officer, Mr. Jose Humberto Acosta, Chief Financial Officer, Mr. Rodrigo Prieto, Chief Risk Officer, Mr. Carlos Raad, Investor Relations Director, and Mr. Juan Pablo Espinoza, Chief Economist. I will now turn the call over to Mr. Juan Carlos Mora, Chief Executive Officer, Mr. Juan Carlos, you may begin.

Good morning and welcome to our conference call for the first quarter 2022. Thanks for joining our call. The first quarter results were positive and maintained the momentum shown in the second half of 2021. This performance is supported by improving NII, strong loan growth, free income, and low provision charges. Despite uncertainty over the presidential elections in Colombia and the Russia-Ukraine conflict and its impact in the disruption of the global supply chain, the Colombian economy began the year as one of the best performing economies in the region. mainly driven by the exposure to commodity prices and the domestic demand. The monetary adjustments continue to be guided by the need to offset the pressures on inflation driven by food prices. We expect the repo rate to close at 8.25% by year end. Annual inflation is currently above 9%, and we expect to gradually decline in the second half of this year near to 7.6%. Let me give you an overview of the bank's results of the first quarter of 2022. The loan book grew 1% compared with the previous quarter. Net fees declined 3% over the quarter due to seasonal factors, but grew 15% in the last 12 months. Core equity Tier 1 closed at 10.6% below last quarter due to the dividend payment approved in our shareholders' meetings. Net income for the quarter was 1.7 trillion pesos. Provision charges for the quarter were 267 billion pesos, resulting in a cost of risk of 0.5%, explained by better macroeconomic forecast and a better performance of our customers. Our client base continues growing, reaching this quarter more than 25 million. We have been adding clients at a good pace over the last two years. In fact, the pace of growth of purchases by new cardholders is four times larger than those of old ones. and already represents 15% of total purchases by individuals in both physical and online stores. This growth is reflected in the volume of transactions we are processing and in fee income. Finally, I want to give an update regarding NAICS. We have reached 11.5 million clients. The loan book continues growing at a solid pace maintaining high NPS and activity indicators. The separation process continues to advance. We have already filed with the regulators the authorization to establish and operate a new company. We expect to obtain the operating license in the second half of this year. At this point, I want to turn the presentation to Juan Pablo Espinosa, who will further elaborate on the performance of the Colombian economy. Juan Pablo.

Thank you, Juan Carlos. Now, please go to slide number three in the presentation. During the start of 2022, economic activity in Colombia remained strong, thanks to a combination of a resilient private demand and the tailwinds coming from higher commodity prices, particularly oil and coal. Based on our real-time data, we calculate that between January and April, the economy grew 8.3% year-on-year, which is well above consensus estimates. Despite this positive short-term performance, we still believe that as we move through the second half of the year, activity will gradually moderate. This will be the result of less supportive global conditions, as well as the removal of policy stimulus the stabilization of household spending, and high political uncertainty. As a result, we are currently forecasting that in 2022, GDP will expand 4.7%, which is lower than the 5.1% average market estimate. The negative note in this economic balance is the increase in inflation, which moved from 5.6% at the end of 2022 to 9.3% year-on-year last month. This is the highest print in more than two decades, and it reflects the continued pressure in producer costs, which is translating with great intensity to put prices. It is also the result of an acceleration in core inflation due to the recovery in aggregate demand, the annual increase of the minimum wage, and the operation of indexation mechanisms. Based on latest developments, we just revised our CPI forecast for the remainder of the year. For December 2022, we adjusted our expected inflation print from 6.8% to 7.6%. As a response to this challenging scenario, we anticipate that the central bank will advance further in its process of policy normalization. We are now foreseeing that the corn hiking cycle will lead to a terminal rate between 8.25% and 8.5%. This means that by the end of the year, the monetary policy stance will be in a mild contractionary territory. After this economic overview, let me turn the presentation back to Juan Carlos. Juan?