Group 1 - Grupo Aval Acciones y Valores S.A. (AVAL) has shown a year-to-date performance increase of approximately 24.2%, outperforming the average gain of 18.3% in the Finance sector [4] - The Zacks Rank for Grupo Aval is currently 2 (Buy), indicating a favorable outlook based on earnings estimate revisions [3] - The Zacks Consensus Estimate for AVAL's full-year earnings has increased by 2.1% over the past three months, reflecting improved analyst sentiment [4] Group 2 - Grupo Aval is part of the Financial - Investment Management industry, which has seen an average loss of 15.1% this year, indicating that AVAL is performing better than its industry peers [6] - In comparison, Nicolet Bankshares (NIC), another stock in the Finance sector, has a year-to-date return of 18.4% and a Zacks Rank of 1 (Strong Buy) [5] - The Banks - Northeast industry, to which Nicolet Bankshares belongs, has gained 11.5% this year, ranking 53 among 74 stocks [6]

Core Viewpoint - The article expresses a bullish outlook on Colombia as a whole but indicates skepticism towards the oil industry and specifically the stock of EC [1]. Group 1: Analyst Background - Ian Bezek, a former hedge fund analyst, has spent a decade conducting on-the-ground research in Latin America, focusing on markets such as Mexico, Colombia, and Chile [1]. - The analyst specializes in identifying high-quality compounders and growth stocks at reasonable prices in both the US and other developed markets [1]. Group 2: Investment Group Features - The investing group, Ian's Insider Corner, offers features such as a Weekend Digest that includes new investment ideas, updates on current holdings, and macroeconomic analysis [1]. - Members have access to trade alerts, an active chat room, and direct communication with the analyst [1].

Financial Performance - Grupo Aval's net income attributable to owners of the parent for 2024 was Ps 1,015.1 billion, a 37.4% increase compared to Ps 739.0 billion in 2023[708]. - Net income before tax expense decreased by 10.0% to Ps 3,137.9 billion[709]. - Net income for the year was Ps 865.8 billion, down 43.4% or Ps 664.3 billion from 2023[806]. - Net income for Banking Services rose by 37.5% or Ps 310.4 billion to Ps 1,137.6 billion in 2024 compared to 2023[766]. - Net income from commissions and fees increased by 11.6% or Ps 14.0 billion, reaching Ps 134.1 billion in 2024[806]. - Net income from commissions and fees increased by 1.9% or Ps 61.0 billion to Ps 3,333.8 billion, driven by a 6.6% increase in trust activities and portfolio management services[791]. - Net income for the pension and severance fund management segment increased by 16.8% or Ps 93.9 billion to Ps 654.1 billion in 2024[835]. Interest Income and Expenses - Net interest income rose by 15.6% to Ps 7,267.6 billion in 2024, driven by a 3.8% increase in the average balance of interest-earning assets[710]. - Total interest income decreased by 2.6% to Ps 28,181.9 billion, while total interest expense fell by 7.6% to Ps 20,914.3 billion[709]. - The average yield on interest-earning assets decreased by 77 basis points, impacting total interest income[769]. - Total interest income decreased by 13.6% or Ps 177.5 billion in 2024, primarily due to a 542 basis points reduction in the average yield of interest-earning assets to 17.5%[814]. - Net interest income increased by 8.5% or Ps 718.7 billion to Ps 9,128.1 billion in 2024, with the net interest margin rising by 18 basis points to 4.1%[768]. - Net interest expense was Ps 1,935.0 billion in 2024, a decrease of 10.6% or Ps 229.4 billion compared to 2023, attributed to lower funding costs[807]. Loan Portfolio and Impairment - Grupo Aval's average balance of gross loans increased by 4.1% to Ps 192,320.5 billion, with an average yield of 12.8%[714]. - Impairment loss on loans and other accounts receivable remained stable at Ps 4,755.1 billion, with a slight increase of 0.1%[709]. - Impairment losses for consumer loans decreased by 13.3% or Ps 586.6 billion, with Stage 1 credit cards increasing to 85.2% from 82.5%[725]. - Impairment loss on loans and other accounts receivable decreased to Ps 4,691.9 billion in 2024 from Ps 4,721.5 billion in 2023, a change of 29.5 billion or -0.6%[782]. - The coverage ratio for the consumer loan portfolio decreased to 6.7% in 2024 from 7.2% in 2023, reflecting improved asset quality[784]. - Total charge-offs increased to Ps 5,459.9 billion in 2024, up 1,293.6 billion or 31.0% compared to 2023, with charge-offs as a percentage of average gross loans rising to 2.9%[789]. Income from Commissions and Fees - Net income from commissions and fees increased by 6.9% to Ps 3,583.8 billion in 2024, driven by a 20.0% increase in pension and severance fund management fees[734]. - Banking and other fees increased by 1.4% to Ps 2,763.8 billion, supported by positive performance in banking service fees[737]. - The increase in pension and severance fund management fees was attributed to a 12.1% rise in minimum wage and strong market returns[735]. Expenses and Efficiency - Other expenses increased by 3.7% or Ps 305.3 billion in 2024, primarily due to a 5.1% or Ps 156.4 billion rise in personnel expenses and a 2.4% or Ps 106.4 billion increase in administrative and other expenses[758]. - The cost to income efficiency ratio was 54.2% in 2024, compared to 52.1% in 2023, reflecting a 3.7% increase in other expenses[760]. - Income tax expense decreased by 27.8% or Ps 364.0 billion to Ps 946.4 billion in 2024, driven by higher deductions from nontaxable income[761]. Market and Economic Conditions - The average Central Bank rate decreased by 165 basis points from 13.0% in 2023 to 11.4% in 2024, impacting average yields on commercial loans which decreased by 146 basis points to 12.2%[716]. - The Central Bank rate is projected to be around 7.0% – 8.5% by the end of 2025, reflecting a cautious stance due to economic conditions[894]. Sector Performance - Gross profit from sales of goods and services decreased by 23.0% to Ps 2,477.4 billion in 2024, down from Ps 3,218.0 billion in 2023[738]. - Gross profit from infrastructure companies in 2024 was Ps 1,594.5 billion, a decrease of 33.9% or Ps 817.5 billion compared to 2023, driven by a 25.4% or Ps 1,004.1 billion decrease in income[739]. - Gross profit for energy and gas companies increased by 7.1% or Ps 74.2 billion to Ps 1,125.9 billion in 2024, with income rising 12.2% or Ps 750.3 billion[742]. - Gross profit for hospitality companies improved by 4.0% or Ps 3.4 billion to Ps 89.1 billion, with income increasing by 5.4% or Ps 32.3 billion[743]. - Gross profit for agribusiness companies rose by 118.4% or Ps 20.2 billion to Ps 37.3 billion, with income increasing by 4.4% or Ps 13.1 billion[744]. Funding and Liabilities - Total liabilities increased to Ps 294,696.5 billion in 2024 from Ps 269,661.2 billion in 2023, reflecting growth in customer deposits and borrowings[856]. - Customer deposits rose to Ps 200,872.2 billion in 2024 from Ps 181,987.4 billion in 2023, representing a significant increase[865]. - Interbank borrowings and overnight funds increased to Ps 18,509.8 billion in 2024, up from Ps 15,081.9 billion in 2023, accounting for 6.8% of total funding[871]. - Bonds issued reached Ps 26,215.8 billion in 2024, compared to Ps 23,427.8 billion in 2023, representing 9.6% of total funding[874].

Core Insights - The focus is on providing insightful rating analysis of leading financial firms to identify investment opportunities and potential risks [1] Group 1: Investment Strategy - The preferred investment picks are those that exhibit both growth and quality factors, characterized by strong growth narratives supported by robust financial statements [1] Group 2: Analyst Background - The analyst has seven years of investment experience and has successfully passed all CFA Program exams, indicating a strong foundation in financial analysis [1]

Grupo Aval Acciones y Valores S.A. (NYSE:AVAL) Q4 2024 Earnings Conference Call February 19, 2025 9:00 AM ET Company Participants Maria Lorena Gutierrez Botero - Chief Executive Officer Paula Duran - Corporate Vice President of Sustainability and Strategic Projects Camilo Perez Alvarez - Banco de Bogota's Chief Economist Diego Fernando Solano Saravia - Chief Financial Officer Conference Call Participants Brian Flores - Citigroup Nicolas Riva - BofA Securities Carlos Gomez-Lopez - HSBC Daniel Mora - CrediCor ...

4Q24 Consolidated Earnings Results IFRS ADL no es empresa vigilada por la Superintendencia Financiera de Colombia Disclaimer Grupo Aval Acciones y Valores S.A. ("Grupo Aval") is an issuer of securities in Colombia and in the United States ("SEC"). As such, it is subject to compliance with securities regulation in Colombia and applicable U.S. securities regulation. Grupo Aval is also subject to the inspection and supervision of the Superintendency of Finance as holding company of the Aval financial conglomer ...

Core Insights - The focus is on providing insightful rating analysis of leading financial firms to identify investment opportunities and potential risks [1] Group 1 - The preferred investment picks are those that exhibit both growth and quality factors, characterized by strong growth narratives supported by robust financial statements [1] - The analyst has a background of seven years in investment, having passed all CFA Program exams, indicating a solid foundation in financial analysis [1]

Core Viewpoint - Grupo Aval Acciones y Valores S.A. is preparing to present its consolidated financial results for Q3 2024, highlighting its compliance with both Colombian and U.S. securities regulations [2][3]. Group 1: Company Overview - Grupo Aval is an issuer of securities in both Colombia and the United States, subject to relevant securities regulations [2]. - The company operates under the supervision of the Superintendency of Finance as part of the Aval Financial Conglomerate [2]. Group 2: Financial Reporting - The consolidated financial information is presented in accordance with IFRS as issued by the IASB [2]. - Unconsolidated financial information of subsidiaries and the Colombian banking system is reported according to Colombian IFRS [3]. Group 3: Forward-Looking Statements - The report includes forward-looking statements that may be identified by terms such as "may," "will," "expects," and "anticipates" [4]. - Actual results may differ materially from those anticipated due to changes in economic conditions and other risks [4].

Financial Data and Key Metrics Changes - Return on average equity was 9.7%, comparable to the third quarter of 2022 [9] - Net income to shareholders was 415 billion pesos, marking the best result for the third quarter in three years [46][66] - Total net income for the quarter was 416 billion pesos or 17.5 pesos per share [66] Business Line Data and Key Metrics Changes - Combined gross loans grew 0.7%, reaching a 25.2% market share by September [46] - Commercial loans expanded 5% year-on-year and 0.1% over the quarter, while consumer loans grew 0.9% during the quarter [53] - Consumer loan disbursements grew 18% over the quarter and 28% year-on-year, reaching 19 trillion pesos [50] Market Data and Key Metrics Changes - The Colombian economy registered annual growth of 1.9% year-to-date to August, supported by household consumption and a resilient export sector [31] - National unemployment fell to 9.8% in September, the lowest level in two years [34] - Inflation decreased to 5.4% in October, the lowest level since the end of 2021 [34] Company Strategy and Development Direction - The company aims to leverage synergies and efficiencies through the newly named Aval Valor Compartido (AVC) [10][11] - The company is supporting the central bank's initiative for a real-time payment system called BREVE, enhancing financial inclusion [14][15] - The company expects to return to double-digit profitability and benefit from stronger growth in real-term services by 2025 [70] Management's Comments on Operating Environment and Future Outlook - Management noted that inflation trends are positive, suggesting a need for faster rate cuts from the central bank [28] - The company anticipates GDP growth to exceed 2.5% in 2025, with a more predictable and lower inflation environment [70] - The fiscal situation remains a challenge, limiting the space for a more expansive monetary policy [41] Other Important Information - The company achieved its highest score in the Corporate Sustainability Assessment, placing it in the 90th percentile [17] - The company disbursed 10.6 trillion pesos under the Pacto por el Crédito program, aimed at supporting prioritized sectors [88] Q&A Session Summary Question: Mortgage market strategy and ROE trends - The company expects to continue gaining market share in mortgages due to being underweighted compared to peers and anticipates ROE trends to improve through a combination of cost control and market growth [74][76] Question: Consumer vs. commercial segment performance - The commercial segment is lagging due to the typical cycle where consumer performance leads, with no specific sector identified as particularly challenging [82][83] Question: NIM performance and guidance - NIM for 2024 is expected to be in the 3.6% area, with improvements projected for 2025 [87] Question: Loan program conditions - Loans disbursed under the Pacto por el Crédito have special conditions, including lower rates for housing credit and guarantees for renewable energy projects [89]

Core Insights - The article emphasizes the importance of value investing, which focuses on identifying undervalued companies in the market [2] - It highlights the Zacks Rank and Style Scores system as tools for investors to find strong stocks, particularly those with high value grades [3] Company Analysis: Grupo Aval Acciones y Valores (AVAL) - AVAL currently holds a Zacks Rank of 2 (Buy) and a Value grade of A, indicating strong potential for value investors [4] - The stock is trading at a P/E ratio of 6.06, significantly lower than the industry average of 17.66, suggesting it is undervalued [4] - AVAL's Forward P/E has fluctuated between 5.50 and 11.46 over the past year, with a median of 6.82, further indicating its valuation status [4] - The P/CF ratio for AVAL is 14.21, which is attractive compared to the industry's average P/CF of 32.65, reinforcing the notion of undervaluation based on cash flow [5] - Over the past 52 weeks, AVAL's P/CF has ranged from 6.46 to 15.84, with a median of 8.79, highlighting its cash flow performance [5] - Overall, AVAL's strong value metrics and positive earnings outlook position it as an impressive value stock at the moment [6]