Grupo Aval(AVAL) - 2023 Q4 - Annual Report

Financial Performance - Porvenir's total assets under management increased by 6.6% to Ps 203,813.7 billion as of December 31, 2023, compared to Ps 191,192.5 billion in 2022[433]. - The company achieved a net income of 53.2% in the pension fund management sector for the year ended December 31, 2023[466]. - Banco de Bogotá's net income for the period was Ps 1,025 million, a decrease of 54.5% compared to Ps 2,252 million in the previous year[573]. - Banco de Occidente reported a net income of Ps 431 million, down 14.3% from Ps 503 million in the previous year[574]. - Banco Popular reported a net income of (Ps 347 million) for the period, a decrease from Ps 73 million in the previous year[576]. - Banco AV Villas' net income for the period was (Ps 117 million), down from Ps 112 million in the same period last year[578]. - Corficolombiana's consolidated net income for the period was Ps 886 million, compared to Ps 1,714 million in the previous year[580]. Client and Market Growth - The number of clients for mandatory pension funds rose by 2.0% to 11,565.9 thousand in December 2023, up from 11,341.2 thousand in December 2022[437]. - The total number of clients increased by 3.0% to 17,132.6 thousand in December 2023, compared to 16,635.1 thousand in December 2022[437]. - The market share of Grupo Aval in gross loans reached 24.6% as of December 31, 2023, making it the second largest in Colombia[446]. - As of December 31, 2023, the company held a market share of 24.5% in total deposits in Colombia, ranking second behind Bancolombia at 26.2%[453]. - The company reported a total of 1,001 branches and 2,860 ATMs, representing a market share of 19.5% and 17.9% respectively in Colombia[463]. Asset and Liability Management - The total assets of the company reached Ps. 298,489.0 billion in 2023, representing a 9.7% growth compared to 2022[490]. - Total liabilities and equity reached Ps. 298,489.0 billion, with a 7.6% increase in interest expense[492]. - Total interest-bearing liabilities increased to Ps. 229,078.1 billion, with an interest expense of Ps. 22,632.4 billion, reflecting a 9.9% increase compared to the previous year[492]. - The average interest rate for total interest-bearing deposits was 10.1% in 2023, compared to 5.5% in 2022 and 2.1% in 2021[510]. - The total average balance of deposits reached Ps 178,844.3 billion in 2023, with an interest expense of Ps 16,214.2 billion[512]. Interest and Yield Analysis - The average yield on gross loans for Grupo Aval was 14.9% as of December 31, 2023, compared to 15.5% in 2022[449]. - The average yield on interest-earning assets for 2023 was 9.6%, compared to 7.1% in 2022[490]. - The total average yield for debt securities at fair value through OCI is 4.5% as of December 31, 2023[500]. - The total average yield for debt securities at amortized cost is 10.0% as of December 31, 2023[501]. - The interest spread on loans was 3.7% in 2023, down from 4.7% in 2022[497]. Risk Management and Compliance - The company is focusing on strengthening its cybersecurity teams due to the high demand for specialized personnel in the field[474]. - The company has implemented additional controls for digital channels, including fraud intelligence and facial biometrics, to mitigate operational risks[480]. - The company continues to monitor cybersecurity risks and incidents quarterly to assess their impact on operations[476]. - The Superintendency of Finance supervises financial institutions to maintain stability and protect users of financial services, with the authority to impose sanctions for violations[525]. - Grupo Aval, as a financial holding, is subject to the supervision of the Superintendency of Finance and must comply with capital adequacy regulations[530]. Capital Adequacy and Solvency - As of December 31, 2023, Grupo Aval's technical capital complied with the adequate capital required by regulation for each of the reported interim quarterly filings[550]. - The minimum CET1 capital requirement is set at 4.5%, with a minimum Tier I capital requirement of 6% and a capital conservation buffer of 1.5%[567]. - The total solvency ratio must be a minimum of 9%, calculated based on risk-weighted assets[566]. - The solvency ratio has decreased to 17.07% from 22.47% year-over-year[583]. - All of Grupo Aval's individually regulated operations have complied with the minimum regulatory capital requirements as of December 31, 2023[572].