TIME FOR ACTION

Colombia 2014 | FINANCE | INTERVIEW

TBY talks to Carlos Raúl Yepes Jiménez, President of Bancolombia, on the economic outlook for Colombia, promoting a sustainable business climate, and operations abroad.

Carlos Raúl Yepes Jiménez
BIOGRAPHY
Carlos Raúl Yepes Jiménez was born in 1964 and has a degree in Law from Universidad Pontificia Bolivariana in Medellín, which he then followed up with a post-graduate degree in Business Law from Universidad Externado de Colombia in Bogotá. His professional career started as Legal Director of Uniban. He then joined Banco Industrial Colombiano, now Bancolombia, in 1994 and he held various positions. He then spent time as Vice-President of Corporate Affairs at Cementos Argos and later returned to Bancolombia, officially assuming the position of President in 2011.

What is your economic outlook for Colombia in the medium term?

Predicting economic performance in a changing world is a difficult task. Today, we find it hard to believe that the crises of the last two, five, or even 10 years occurred at all; the countries where we have a presence enjoyed sustainable growth. It has been a decade of learning for us, showing that discipline can achieve long-term results. Institutions and regulations have become stronger, with very active internationalization processes under way in the case of Colombia. As well, international corporate capacity has expanded and there is a great potential for economic development. We feel optimistic despite the difficulty in anticipating results in a global economy; however, the world economy will perform better in 2014. Projections made by the IMF in October 2013 point to global growth this year, with the main thrust coming from industrialized countries. Although emerging economies will grow at a faster pace, the former ones will monopolize most of the recovery. The growth rate will increase from 1.2% in 2013 to 2% in 2014. Acceleration is also expected in the US economy in 2014. The macroeconomic environment for Colombia now looks more favorable. Labor market indicators, including unemployment and job creation, imports of capital goods, retail, vehicle sales, petroleum production, and construction licensing, among other things, reflect that household consumption, construction, commerce, and credit in 4Q2013 recorded higher levels than before and are more positive. Inflation is low at the global level, as well as in Colombia. However, I think it will pick up in 2014 because, in 2013, it was at 1.94%, the lowest level since 1955. We want to develop flexible solutions that save time through events that impact positively on the quality of life of people and realize our humane banking philosophy across the 10 countries where we are present: Colombia, Panama, El Salvador, Costa Rica, Guatemala, Puerto Rico, Honduras, Nicaragua, Peru, and the Cayman Islands.

Bancolombia currently has a presence in 10 countries. What kinds of synergies have resulted from the company's many acquisitions?

Over the past three years, Bancolombia has implemented a growth strategy with a strong focus on foreign markets. Arriving in new countries poses several challenges, and we always aim for those markets that enjoy legal stability with potential new companies that will create further added value for our shareholders. This strategy led the company to become a leading player in the banking sector in other countries through the acquisition of several banks abroad. At the same time, we face challenges such as creating the right synergies to exchange good business practices, to understand the national culture, and to create job opportunities within the local market, while also integrating local staff within the group's regional strategy. Overall, we are a global company with a presence in 10 countries, serving 9 million clients and with 46,000 employees.

What are the characteristics that allow Bancolombia shares to represent an interesting investment for foreign portfolios based on the management, revenues, and profit?

Bancolombia is the leader in its target market—it has a 22% share of the market in Colombia based on assets and 30% in El Salvador as of June 2013.Bancolombia has a well-balanced business; with a loan portfolio diversified by geography, industry, product, and debtor. We are confident of our growth in the short and medium term because we are the leaders of a growing market. Banking penetration is increasing, we are diversifying our markets, our goal is cost effective, efficient, and sustainable growth, and we have stricter capital requirements that make us fully compliant with all new financial regulations. We also have countercyclical provisions that enable us to anticipate and shield the institution before potential events; our profitable growth will be leveraged in a diversified portfolio—commercial 19%, individual 25%, mortgage 31%, leasing 16%—and, with assets and a portfolio totaling Ps131 trillion ($61 billion) and Ps90 trillion ($45 billion), respectively, we have the leading banking platform in Colombia and we are leaders in market share. We are the leader in share of total assets in Central America, and this year we will focus on consolidating our investments abroad. Our conservative risk profile brings us sustainable growth in that respect. Finally, our portfolio is properly anchored. Our group is supported primarily by our deposits.