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, Porvenir, and a merchant bank, Corficolombiana, both in Colombia. Luis Carlos Sarmiento Angulo, founder of the group, holds 79.8% of the company’s total shares as of September, 2015, and the remainder floats.
Grupo Aval operates in 12 countries, serving more than 13m banking customers and 11m pension and severance fund affiliates. It consolidates more than $74bn in assets, with over $144bn in assets under management. It posted a net income of $657m for the year ended June 2015. The company has shown strong growth and profitability, as evidenced by a compound annual growth rate of 21% and a resilient return on average equity, currently standing at 13% for the last 12 months.
On September 23rd of 2014 Grupo Aval issued preferred shares in the form of ADR’s in the New York Stock Exchange, raising $1.3bn. Most of the funds raised were used to strengthen the capital position of its Colombian banks. Grupo Aval also has two listed securities on the Colombian Stock Exchange: the ordinary share (GRUPOAVAL) and the preferred/ non-voting share (PFAVAL), with the liquidity concentrated in the preferred security. Despite a general decline in the share prices across nearly all emerging markets, Grupo Aval’s shares outperformed the Col-cap Index over the last twelve months. Between September 2014 and 2015 the PFAVAL price decreased 17.8% compared to the Colcap which dropped 31.4%.
Growth In Colombia
Grupo Aval is working to develop and capture the banking opportunities in the Colombian financial sector. 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 an increase in 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 corporate and retail clients; Banco de Occidente focuses on mid-corporate 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 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 1397 branches, is Colombia’s largest network, with a 22% market share. It also provides 3775 ATMs, translating to a 26% market share, all of the above as of the second quarter of 2015. The four banks are constantly working on the enhancement of digital service channels by offering new mobile banking services such as Aval Pay, a mobile wallet.
Growth In Central America
Grupo Aval is working to complement BAC’s leading retail franchise by developing a strong commercial bank. In 2014, BAC Panama (previously known as BBVA Panama) integrated its operations with BAC International Bank.
During the fourth quarter of 2015, BAC is expected to integrate Grupo Financiero Reformador with Banco de América Central; part of BAC’s banking operation in Guatemala. Grupo Aval is also working to create and capture significant back-office synergies between its different subsidiaries, doing so through key initiatives in IT and procurement, among other areas, which look to improve the company’s efficiency and profitability.