Grupo Cibest S.A.

Good morning, ladies and gentlemen, and welcome to Benco Columbia's third quarter 2024 earnings conference call. My name is Matt, and I'll 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 touch-tone 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 or future filings, in the press release or verbally, address matters that involve risk and uncertainty. Consequently, there are factors that could cause action results to differ materially from those indicated in such statements, including the 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 targeted clients, changes in business strategy, and various other factors that we described in our reports filed with the SEC. With us today is Mr. Juan Carlos Mora, Chief Executive Officer, Mr. Mauricio Botero-Wolf, Chief Strategy and Financial Officer, Mr. Rodrigo Prieto, Chief Risk Officer, Mrs. Kathleen Tobon, Investor Relations and Capital Markets Director, and Mrs. Laura Cobajo, Chief Economist. I'd like to turn the conference over to Mr. Juan Carlos Mora, Chief Executive Officer. Thank you. You may begin.

Juan Carlos Mora, Chief Executive Officer, Good morning, and welcome to the Bancolombia's Third Quarter Results Conference Call. Please turn to slide two. As we advance through the year, We are observing increasingly positive indicators with the economic landscape and credit cycle. Inflation rates have persistently declined, enabling the Columbia Central Bank to reduce interest rates. This environment supports lower credit deterioration and encourages domestic spending. Despite a modest expansion of our credit portfolio and a decline in interest income, the third quarter reported a consecutive improvement marked by a net income of 1.5 trillion pesos. This represents a 4.3% growth quarter over quarter and a 1% increase year over year, resulting in a 15% return on equity. This performance is attributed to the good performance of our investment portfolio, reduced provisioning charges and operating expenses that have grown well below the inflation rate, as we will further elaborate. I will also like to underscore that despite increased competition for deposits in Colombia, Bancolombia has maintained its robust capacity to attract resources from retail, commercial, and institutional clients. During the quarter, Total deposits growth surpasses long growth, ensuring our low funding costs and mitigating decompression of interest margins. On an additional front, on October 30th, we announced our decision to evolve our corporate structure by establishing a new holding company, Grupo Saibest, which will serve as the parent entity for all of Colombia's lines of business. while preserving all assets within the current group perimeter. The primary rationale for this decision is that Bancolombia currently functions simultaneously as a bank and a holding company, resulting in financial inefficiencies, regulatory complexities, and operational constraints due to the rigorous regulatory framework governing banking entities. This proposed corporate evolution aims to address these challenges by providing us with greater flexibility for corporate development and enabling more efficient capital allocation. Additionally, it will isolate goodwill from the Colombian regulated entities' capital and reduce its sensitivity to foreign exchange volatility, also allowing us to implement share repurchase programs as a novel method of distributing value to our shareholders. Subject to obtain the necessary regulatory and shareholder approvals, we anticipate concluding this transaction by mid-2025. We will provide timely updates as we progress through the key milestones. Also, following the successful issuance of new subordinated notes due 2034, which contributed 115 basis points to our Tier 2 capital as of the third quarter, on October 24th, we announced our decision to redeem the subordinated notes due 2029, effective on the call date of December 18th. Furthermore, we have decided to redeem the remaining CEU notes due 2025 as a prudent measure to eliminate refinancing risk early next year. Lastly, we are pleased to announce that Bancolombia has been recognized for the 10th consecutive year by Merco as the company with the best reputation in the country for its contribution to economic, environmental, ethical, and social matters, among other aspects. I will now hand over the presentation to Laura Clavijo, our chief economist, who will provide a more in-depth analysis of the macroeconomic environment. Laura?

Thank you, Juan Carlos. If you could please turn to slide three. The economic outlook for Colombia remains cautiously optimistic, with improving financial conditions beginning to channel through to some sectors and spurring demands. Consequently, we have revised upward our end of year growth forecast to 1.8% from a previous 1.3% and to 2.6% for 2025. However, economic growth remains uneven across sectors and below long run potential of 3%, according to our medium term outlook. Currently, economic growth is being mostly led by exceptional output from the agriculture sector, which is expected to grow 7% this year, and a sustained expansion from public administration, expanding at an annual rate of close to 5%. Moving forward, amidst the scenario of a mounting fiscal challenges, this public sector growth driver should begin to lose relevance, whereas private sector growth should begin to pick up. Even though we are currently at an early stage in the economic recovery, there are timid signs of an uptick in internal demand as financial strains on households and businesses begin to ease. Many central banks of the Latin American region acted early in raising interest rates, successfully controlling inflation and easing its monetary stance well before many developed economies. Colombia, although a little behind on the curve, has also managed to cool inflation from its peak of 13% in March 2023 to 5.8% during September this year, moving closer to our end-of-year forecast of 5.7%. These past few months have been especially consistent for the disinflation process of core inflation metrics. However, the well-known effect of indexation on inflation is still tangible and will remain at the center of the minimum wage discussion for 2025 to take place before year-end. As a result, the central bank continued cutting its policy rate at the ongoing pace of 50 basis points, closing the third quarter at a repo rate of 10.25%. Even the receding inflation, a closing output gap, and the beginning of the easing cycle by the Federal Reserve might have given way to a scenario of accelerated interest rate cuts. Fiscal pressures and uncertainty moving forward has motivated a cautionary approach from the central bank. Finally, pressures on the fiscal front have escalated recently, as tax revenues have consistently underperformed, interest payments have amounted, and social expenditure goals are pursued. Presentation of fiscal measures in Congress, including a failed 2025 budget now to be passed by decree, a tax reform and a decentralization bill have put the fiscal discussion at the forefront once again. Now, let me turn back to Juan Carlos.