Colombia 2013 | FINANCE | INTERVIEW

TBY talks to Efraín Enrique Forero Fonseca, President of Davivienda, on expanding bank penetration in the country, introducing the electronic wallet, and the expected growth of the local market.

Efraín Enrique Forero Fonseca
Efraín Enrique Forero Fonseca has served as President of Banco Davivienda since June 1990. Within the Bolívar Group, he has accumulated over 32 years of experience, holding important positions such as President of Delta Bolívar, a commercial finance company, and as the Financial and Administrative Manager of Seguros Bolívar. In addition, he was Vice-President of the Bogotá branch and Head of the Department of Systems and Financial Management Assistance for Seguros Bolívar. He is currently Member of the Board at Titularizadora Colombiana, the Banking Association of Colombia, Trust Davivienda, Fedesarrollo, and University Hospital San Ignacio. He also participates as the main Member of the Executive Board at the Bolívar Davivienda Foundation and is a member of the CEAL Business Council.

How would you characterize the Colombian banking sector?

It is a solid, competitive system and it is increasing its presence in the region. Until recently, the Colombian system has been mainly a national system. More than 70% of the sector as a whole belonged to local banks. However, in the last five years, different institutions have been entering other regions and they are now behaving as international players. The system is doing a good job dealing with the different challenges of the country in general. The economic growth that we are experiencing is a great challenge for the whole system. It is twice as big as it was five years ago. The main challenge, and maybe the main opportunity of the banking sector, is related to the fact that 40% of the population does not have any access to the system. The bancarization level of Colombia is very low, both in credit, transaction services, and insurance, which are provided by different types of non-banking institutions. Government banks are seeing this as the main challenge.

What is Davivienda doing to bank the unbanked, and what has been your growth strategy over the past couple of years?

This institution began as a savings and loan company in 1972, and a universal bank in 1997. It is really a young bank for the Colombian environment. Even though some banks have been here for over 100 years, we have been able to become the third largest bank in the country. We are not solely a savings and loan company anymore, but also a universal bank with a presence in Panama, the US, and Central America. We have more than 4.5 million customers in the country. Our specialization in mainly low-income mortgages allows us to be closer to the base of the pyramid. We have won a bid to participate in the dispersion of subsidies that the central government will give to close to 2.5 million families on a monthly basis. With this initiative, we could gain another 1 million customers who might be willing to make payments not just via ATMs or Davivienda branches, but also in more than 700 different cities and towns nationwide. Davivienda charges the government when it disperses money and charges companies when they pay wages, but the people who receive the money and want to use it do not get charged. The company is also working on offering people different kinds of micro insurance, micro savings, and maybe in the future micro credits.

Davivienda plans to double the profitability of its recent acquisition of HSBC in Central America in two years. What was the strategy behind this acquisition?

We have two different strategies. Those HSBC banks are charged by their headquarters and have expenses related to supervision and different services provided by their headquarters. We will support those operations, but without the charges. Davivienda expects growth of almost 10% in 2013. In three years we expect to be able to have maybe a 12% return on equity (ROE) for our operations in Central America.

“The system is doing a good job dealing with the different challenges of the country in general."

What is Davivienda's position in the Colombian market?

In personal and individual banking, we are probably the largest player. We are first in mortgages and first in the business of loans and credit cards. We are third in automobile loans and we have about an 18% market share in consumer loans. We are third in commercial banking and Davivienda is the top private bank in agricultural banking. Our operations are quite small when it comes to SMEs, but we do see an opportunity in that segment because we have a relationship with more than 65,000 different companies in the country. We have about 6% of the market and we expect to be closer to 12% soon.