The quality of Colombian loans has worsened significantly in recent months as the interest rate of the Bank of the Republicaccording to the leader of the largest banking group in the country.
The trend hits consumer borrowers particularly hard, according to Luis Carlos Sarmiento Gutiérrez, President of Grupo Aval Acciones y Valores SA. “I expected the deterioration“, said Sarmiento on Friday, in an interview in Cartagena. “What happens is that it has accelerated a lot, especially in April, May. And so far in June, a significant deterioration is beginning to be seen“.
(Businessmen insist on the inconvenience of labor).
The deterioration in credit quality led Aval to increase its provisions for early bad loans, particularly for consumer loans, Sarmiento said. The group expects provisions to increase to the equivalent of 2% of its loan portfolio by year-end, up from 1.7% in 2022, he said.
This is often a leading indicator that points to a rising unemployment rate, he said. Trade credit has not yet identified an equivalent weakening, she added.
(When would diesel start to rise? This is what is forecast.)
The most attractive action
The Colombian stock market is currently so cheap that for the potential gains it offers “today would be a spectacular time to enter the market“, I comment.
(Employment expectations fall for the third quarter).
Colombian Financial Corporation SA, of which he is president, is the most attractive stock in this cheap market, he said. The company, which has investments in infrastructure, energy, gas and agribusiness, and financial services, currently trading at just over three times earnings and less than half book valueaccording to data compiled by Bloomberg.
“If I had personal money, I would buy it all“said Sarmiento. Aval, a group of financial companies that includes Bank of Bogota SAis currently trading at 7.4 times earnings.
(‘Credit is not enough to support the popular economy’).
The company was founded by Sarmiento’s father, Luis Carlos Sarmiento Angulo, the richest resident of Colombia with a fortune of $6.3 billion, according to the Bloomberg Billionaires Index.
Bloomberg
