Grupo Aval is the largest and most profitable financial group in Colombia and Central America. It operates through four banks in Colombia: Banco de Bogotá, Banco de Occidente, Banco Popular and Banco AV Villas; one bank in Central America: Banco de América Central (BAC) Credomatic; a pension fund manager in Colombia (Porvenir) and a merchant bank in Colombia (Corficolombiana). Luis Carlos Sarmiento Angulo holds 87% of the company’s total shares.
Grupo Aval is in 12 countries, with 11.7m banking customers and 9.8m pension and severance fund affiliates. It consolidates more than $80bn in assets, with over $156bn in assets under management. It posted a net income of $1.5bn in 2013. The company has shown strong growth and profitability, including a compound annual growth rate of over 19% and average returns on average equity of 21.9% in the last six years. In 2013 Grupo Aval made three strategic acquisitions: Banco Bilbao Vizcaya Argentaria’s (BBVA) pension fund in Colombia, which merged into Porvenir at the end of 2013; Grupo Financiero Reformador in Guatemala; and BBVA’s operation in Panama. It also purchased minority stakes in Banco de Bogotá and Banco de Occidente, which allowed it to increase its controlling stake in those subsidiaries. To strengthen its capital after the latter acquisitions it raised $1.2bn in common shares issued in the Colombian equity market.
Grupo Aval has two listed securities on the Colombian Stock Exchange: ordinary (GRUPOAVAL) and preferred (PFAVAL), with the liquidity concentrated in the preferred. As a result, its share price rose 5.8% during the first semester of 2013 from $1300 to $1375, but decreased 7.3% during the second semester to $1275. The drop was mainly due to global market turmoil after the US Federal Reserve announced that it would start scaling back its asset purchase programme later that year. Since then its stock has behaved in line with the Colcap Index, maintaining a similar trend.
Grupo Aval is working to develop and capture the banking opportunities in the Colombian financial sector, while consolidating its regional expansion in Central America.
The company is looking to capitalise on the strong growth in Colombia’s financial sector, driven by the expansion of the country’s enterprises, including small and medium-sized enterprises, government spending in key strategic areas such as infrastructure, and growth in the retail segment, driven mainly by an emerging middle class and by financial inclusion.
Grupo Aval is uniquely positioned to capture these opportunities by providing clients with specialised financial products and services through its four independent banks in Colombia. Banco de Bogotá provides a universal bank service for corporates and retail clients; Banco de Occidente focuses on mid-corporates and mass-affluent clients; Banco Popular has a stronghold in payroll lending, and AV Villas focuses on the mass retail segment. Through its full-service banking operations, Grupo Aval looks to increase its market share organically and profitably in key segments and products such as mortgages, credit cards and retail loans.
For the clients of its four banks, Grupo Aval also provides a unified network called Red Aval, which, with 1374 branches, is Colombia’s largest network, with a 26% market share. It also provides 3674 ATMs, translating to a 27% market share. The four banks are also working to enhance digital service channels by offering new mobile banking services such as Transfer Aval, a mobile phone-based savings account REGIONAL PLANS: In Central America Grupo Aval is working to complement BAC’s leading retail franchise by developing a strong corporate bank. During 2014 it is expected to integrate the acquisitions of Grupo Reformador in Guatemala and BBVA Panama, and to continue to create synergies with its Colombian operations. Grupo Aval is also working to create and capture significant back-office synergies between the different subsidiaries, doing so through key initiatives in IT and procurement, among other areas, which look to improve the company’s efficiency and profitability.
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