Banking
From The Report: Colombia 2017
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Although the Colombian economy has been affected by a slowdown in recent years, the country’s banking sector has remained resilient. The majority of the impact has been felt in the external sector, particularly due to changes in the foreign exchange rate. Meanwhile, lending growth remained relatively strong until mid-2016, when the combined effects of weak investment and higher interest rates had a noticeable negative impact on commercial lending. Nonetheless, even as GDP growth slowed during 2016, the share of the financial intermediation sub-sector grew from 6% to 6.5%. Lending is expected to pick up as the economy accelerates through 2017, while other indicators – such as non-performing loans (NPLs), profitability and capitalisation – remain relatively robust. This chapter features an interview with Luis Carlos Sarmiento Gutiérrez, CEO, Grupo Aval.

Articles from this Chapter

Overview

Bouncing back: Increased lending, greater consolidation and improved regulation are expected to drive growth in the sector
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Although the Colombian economy has been affected by a slowdown in recent years, the country’s banking sector has remained resilient. The majority of the impact has been felt in the external sector, particularly due to changes in the foreign exchange rate. Meanwhile, lending growth remained relatively strong until mid-2016, when the combined effects of weak investment and higher interest rates had a noticeable negative impact on commercial lending. Nonetheless, even as GDP growth slowed…

Interview

Fostering growth: Luis Carlos Sarmiento Gutiérrez, CEO, Grupo Aval, on reforms, expanded lending and good corporate governance
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Interview:Luis Carlos Sarmiento Gutiérrez How will the new tax and fiscal reforms affect the banking sector in Colombia? LUIS CARLOS SARMIENTO GUTIERREZ: The fiscal reform introduced at the beginning of 2017 brought mixed results for the sector. The main positive outcome is the reduction in corporate tax from the current costly rate of 40% to 33% by 2019, which is still high but more investor friendly. One of the negative effects, however, is the continuity of the tax on financial transactions,…

Analysis

Breaking with tradition: Mobile and online banking are improving financial inclusion
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As in many emerging markets, deepening the banking system and boosting financial inclusion have presented challenges for the Colombian banking sector. Rapid improvements in – and the dissemination of – internet and mobile phone technology in recent years have led to increased take-up of mobile banking services. Policymakers see this channel as an important mechanism to increase the share of the population with access to financial services. At the same time, the banks themselves see the…