Q4 2013 Grupo Aval Acciones y Valores SA Earnings Conference Call

Apr 08, 2014 AM EDT
GRUPOAVAL.BG - Grupo Aval Acciones y Valores SA
Q4 2013 Grupo Aval Acciones y Valores SA Earnings Conference Call
Apr 08, 2014 / 02:30PM GMT 

Corporate Participants
   *  Luis Carlos Sarmiento Gutierrez
      Grupo Aval Acciones y Valores SA - CEO
   *  Diego Solano
      Grupo Aval Acciones y Valores SA - CFO

Conference Call Participants
   *  Mauricio Restrepo
      BTG Pactual - Analyst
   *  Juan Dominguez
      Credicorp Capital - Analyst
   *  Cristian Hernandez
      Ultrabursatiles - Analyst
   *  Juan Mejia
      Bancolombia - Analyst
   *  Nicolas Norena
      Serfinco Comisionista de Bolsa - Analyst
   *  Boris Molina
      Santander Investment - Analyst

Operator   [1]
 Good day, ladies and gentlemen, and welcome to the Grupo Aval Fourth Quarter 2013 Consolidated Results on the Columbian Banking GAAP Conference Call. My name is Sylvia, and I will be your operator for today.

 At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session.

 Quarterly results including in this webcast have not been audited. However, they are prepared in accordance with regulations.

 However, they are prepared in accordance with regulations of the Superintendency of Finance for financial institutions and generally accepted accounting principles for banks to operate in Colombia, also known as the Colombian Banking GAAP, which differs in certain significant respects from the US GAAP.

 Yearly audited consolidated financial statements included in our Form 20-F filed to the SEC provide a description of the principle differences between Colombian Banking GAAP and the US GAAP.

 Grupo Aval as an issuer of securities in Colombia is subject to the control of the Superintendency of Finance. Although we are not a financial institution, we present our consolidated financial statements under Colombian Banking GAAP and as quarterly report because we believe that presentation on the basis most appropriately reflects our activities as a holding company of the group of banks and other financial institutions.

 This webcast may include forward-looking statements, which actual results may vary from those stated herein as a consequence of changes and general economic and business conditions, changes in interest and currency rates and other risk factors are evidenced in our Form 20-F available at the SEC webpage.

 Recipients of this document are responsible for the assessment and use of the information provided herein. Grupo Aval shall not be responsible for any decision taken by investors in connection with this document. The content of this document is not intended to provide full disclosure on Grupo Aval or its affiliates.

 When applicable on this webcast, we will refer to billions as thousands of millions. With us today is Mr. Luis Carlos Sarmiento Gutierrez, Chief Executive Officer of Grupo Aval; and Mr. Diego Solano, Chief Financial Officer of Grupo Aval; and Tatiana Uribe, Financial Planning and Investor Relations Officer of Grupo Aval.

 I will now turn the call over to Mr. Luis Carlos Sarmiento Gutierrez. Mr. Sarmiento, you may begin.

 Luis Carlos Sarmiento Gutierrez,  Grupo Aval Acciones y Valores SA - CEO   [2]
 Thank you, Sylvia. Good morning, and thank you very much for joining our call this morning. Allow me take a few minutes of your time to pick up a presentation with the main highlights of the year. Then, as usual, we will proceed with a brief update of the Colombia macro-environment. And finally, we will run through the main results of our balance sheet and income statement for the quarter ended December 31st, 2013.

 To start with, and referring to the economy, we saw a welcomed resurgence in Colombia's GDP growth in the last two quarters of the year. We believe that this positions the economy for added growth in 2014. We also expect that this growth will be accompanied by controlled inflation and the tightening of the central bank's monitoring policy.

 With regards to our company, I will start by highlight M&A activities during the last quarter. First, we closed on the Grupo Financiero Reformador acquisition in Guatemala, which had an impact of $1.7 billion in assets. Secondly, we closed on the BBVA Panama acquisition, which had an impact of $1.9 billion in assets.

 These acquisitions did not have an impact on the income statement in 2013, but will have full impact in 2014 if they both closed in the month of December. Thirdly, Grupo Aval raised approximately $1.2 billion of capital between December 2013 and January 2014. This capital raise was achieved through an issuance of ordinary shares at a price per share of COP1,300.

 Use of proceeds for this capitalization included repayment of peso-denominated financial obligation for approximately $700 million, and we used the rest, approximately $500 million, to replenish available liquidity previously used to capitalize Banco de Bogota. Finally, Porvenir successfully merged its operations with BBVA S.A. de Horizonte, which it had acquired in the month of April.

 To continue with our financial results, I will summarize them by saying that we achieved strong growth in 2013 in just about all metrics of our balance sheet. And we're also able to show growth in our income statement of approximately 5% in contrast in contrast with Colombia Financial Sector's net income, excluding Aval, which decreased approximately 3% when compared to 2102.

 In fact, our net income for 2013, COP1.6 trillion, grew by 5% versus in 2012. Our net interest margin for the year was 6.2%. Our return on average equity for 2013 was 17.3% and our return on average assets for 2013 was 1.9%.

 Our balance sheet experienced strong growth, namely during 2013, Grupo Aval's assets grew 20.9% and gross loans were up 20.6%, while past due loans to total loans remained fairly constant at 2.4%. Our deposits grew by 24.2% during the year and the weight of current accounts in our deposit mix rose to approximately 25%. Last, but certainly not least, total attributable equity grew 29.1%, largely supported on Aval's capitalization.

 As usual, I will now past the presentation to Diego Solano, who will describe in more detail our results for the quarter. I thank you.

 Diego Solano,  Grupo Aval Acciones y Valores SA - CFO   [3]
 Thank you, Luis Carlos. Starting the presentation on page 4. At the top of the page, you can see the history of our GDP growth. As you might observe, the Colombian economy's growth continued to outperform the world during 2013, with real GDP growing at 4.3%, resulting from a slow first quarter growing at 3.3% and a stronger second half growing at 5.2%. Nominal GDP per capita in dollar terms was 7.8 thousand.

 Moving to the bottom of the page. 12-month inflation grows at historically low, 1.94. This contributed to a low central bank intervention rate of 3.25 and an overall low interest rate environment. Such environment negatively affected the net interest margin of our banks, given their high share of low or no cost funding.

 Analysts are forecasting a consolidation of a stronger growth in Colombia with a GDP growth north of 4.5% and inflation in the 3% area. As of March, 12-month inflation already increased to 2.5%.

 Moving to page 5. Our assets, at the top of the chart, grew at 20.9% during the year, 10.4% during the last quarter. Excluding the acquisitions mentioned by Mr. Sarmiento, our growth for the year was 15.6% or COP19.9 trillion.

 It should be highlighted that 40% of our organic growth took place during the last quarter of the year, in line with the stronger economic performance. In addition to our organic growth, the Central American acquisitions contributed with COP6.7 trillion to our asset growth during the quarter.

 At the bottom of the page, you can see our asset mix. Our asset mix remains stable compared to last year's close, the 2012 close. Loans and financial uses are accounting for 61% of assets. Investments, mainly fixed-income accounting for 18% and others for 21%. Colombian assets continue to be the main source of assets of Grupo Aval, representing 77% of our asset base.

 Moving to page 6. At the top of the page, you can see the volume of our gross loans and growth experience over the quarter and over the year. Loans grew 20.6% during the year, 9.6% in the last quarter of the year. Once again, excluding the Central American acquisition, organic growth was 14.7% or COP11.7 trillion. Over 30% of our growth during the year happened during the last year, in line with a stronger economy.

 In addition, the Central American acquisitions contributed with COP4.6 trillion to our loan growth. Our loan portfolio remained relatively stable, with commercial loans accounting for 57% of the loan portfolio, consumer accounting for 29%, financial uses for 7%, and mortgages for 7% as well. It should be highlighted that mortgages were at 5.4% a year ago.

 Moving to page 7. You will see various metrics relative to the quality of our loan portfolio. Starting at the top left, you will observe the 30-day past due loans and non-performing loans as a percentage of total loans.

 30-day past due loans improved slightly over the last quarter to 2.4% while non-performing loans deteriorated slightly to 1.8%. The deterioration was mainly driven by a slight deterioration in consumer loans part.

 Moving to the top right of the page. You can see the loan provision expense for the last quarter and observe that the ratio was 1.5%, similar to what happened at yearend 2012. You can observe a slight increase compared to the 1.4% expense for the third quarter of 2013.

 The ratios for the full year were 1.5% for 2013 and 1.3% for 2012.

 On the bottom right of the page, you will find several coverage ratios where you can observe that allowance covered 1.8 times non-performing loans and over 1.3 times past due loans. Allowances as percentage of total loans was stable at 3.2%.

 Finally, at the bottom of the page, you can see that during the last quarter of 2013, our annualized charge-offs were 0.6 times our average NPLs, consistent with previous practice.

 On page 4, we present further detail on our past due loans. 30-day past due loans improved to 2.4%, driven by an improvement in commercial loans and financial uses. Consumer loans, as previously mentioned, were stable at 4.2% compared to the previous quarter, but up from 3.8% for the same period of 2012. These [PDLs] negatively contributed to the provision expenses when compared in 2013 to 2012.

 On the bottom of the page, you will see the evolution of our past due loans balance [for a new] basis from 2012 to the end of 2013. During the last quarter of 2013, our past due loans increased by COP132 billion. This increase resulted from the incorporation of our Central American acquisitions and a slight decline in the balance of our pre-acquisition past due loans.

 On page 9 you will see the detail on our funding. Our total funding and our deposits grew consistent with our assets and loans. Total funding growth was 21.3% during 2013, 10.5% during the last quarter of 2013. Deposits increased our share of total funding, accounting for 78% of those funding at yearend.

 Deposits grew 24.2% during 2012, 13.8% during the last quarter. Similar to what happened on the asset side, excluding acquisitions, deposits grew for the year at 17.7% or COP14.5 trillion. 49% of our organic growth in deposits took place during the last quarter, once again in line with a stronger economy. In addition, the Central American acquisitions contributed with COP5.3 trillion to our deposit growth during the quarter.

 On page 10, I will discuss capitalization. Our equity described as attributable equity plus minority interest, that can be observed at the top left of the chart, grew 25.6% during 2013, 20.6% during the last quarter. Our common share issuance during the late December of 2013 contributed with COP2.1 trillion to this capitalization. It needs to be bore in mind that in addition to our capitalization during December, an additional tranche of COP0.3 trillion was subscribed during January 2014 that is not reflected yet on these figures.

 The COP2.4 trillion raised during this issue, as mentioned by Mr. Sarmiento, were used COP1.4 trillion to reduce debt at the holding level, and COP1 trillion to replenish the liquidity that we had used earlier to capitalize Banco de Bogota.

 Our attributable equity at the top right of the chart grew 29.1% during 2013. This growth is higher than the total equity growth given the reduction in minority interest, particularly in Banco de Bogota and Banco de Occidente that took place during the year.

 This was achieved through a combination of open market purchases of shares of Banco de Bogota and Banco de Occident, and our participation will be issue of Banco de Bogota in excess to our pre-issued share of the deck.

 On page 11, we discuss net interest margin. You can observe in the chart, in line with top-line the net interest margin and loans. The value for end of year was 7.3%, down from 7.4% during the third quarter. Net interest margin on loans for 2013 was 7.5%, down from 7.8% during 2012.

 At the bottom line, it shows net interest margin on investments. The value for the last quarter of 2013 was 1.6%, up from 1.0% during the third quarter, and 1.1% during the second quarter. Net interest margin on investments was 2.0% for 2013, down from 2.5% during 2012, in line with market volatility throughout the year.

 As a result, the middle line, which is net interest margin, total net interest margin ranked at 6.0% during the last quarter of the year, slightly up from the previous quarter. The net interest margin for 2013 was 6.2% down from 6.5% in 2012.

 As previously discussed, the increasing interest rate environment that is forecasted by analysts is expected to contribute to the expansion of the our net interest margin as over 25% of our deposits, our checking accounts and other non-interest bearing accounts.

 Moving to page 12, we will discuss net fees and operating income. Net fees for the fourth quarter of 2013 grew by 20.4% compared to the same period of 2012, 6.5% in the third quarter. Full-year fee grew at 18% compared to 2012, with a contribution of the acquisition of Horizonte pension fund. 49% of our fees come from banking services, 20% from pension and severance plan management, 14% credit cards, and 6% from fiduciary activities.

 On the bottom of the page, you will find detail and other operating income. Other operating income grew 3.8% compared to the same quarter of 2012. The decrease compared to the previous quarter results from the seasonality in dividend income, which in the case of Aval is concentrated during the first and the third quarter of the year.

 On page 13, we're adding metrics and efficiency in non-operating income. At the top of the chart, you will find two metrics for efficiency and the top left, you will see cost to income metrics.

 Our cost to income during the last quarter was 53.7%, up from 51.3% for the same quarter as a result of the compression in the net interest margin, as previously described. Cost lever adjustments remained stable at 4.1%.

 Cost to income for 2013 was 50.4%, improving from 51.3% during 2012. Cost to assets improved from 4.2% during 2012 to 4.1% during 2013. This improvement in annual efficiency was achieved in (inaudible) increasing expenses associated with setting up sales forces to promote retail products such as mortgage and credit cards, and one-time expenses associated with the integration of Horizonte, which cost close to COP45 billion.

 At the bottom of the page, you will see retail and non-operating income. Non-operating income was immaterial for the third and the fourth quarter of 2013. Non-operating income for the fourth quarter of 2012 was mainly driven by sales of repossessed assets and the [securitization] of other assets.

 Finally, on page 14, you will find that our net income for the year was COP1.6 trillion, 4.9% increase versus 2012 results. Even though this growth is shy when compared to our growth in the last five years, it compares favorably with the Colombian system, excluding Aval, which decreased income during the year by 3%.

 A return on average assets was 1.9%, while our return on average equity was 17.3%.

 With this, I'll concede the presentation and open it for questions.

Questions and Answers
Operator   [1]
 Thank you. We will now begin the question-and-answer session.

 (Operator Instructions)

 Standing by for questions. And we have Mauricio Restrepo from BTG Pactual.

 Mauricio Restrepo,  BTG Pactual - Analyst   [2]
 Hi, good morning. Thanks for the call. I have a couple questions. The tiers 1As, can you give some outlook in terms of loan growth of the different banks as a whole for 2014?

 Luis Carlos Sarmiento Gutierrez,  Grupo Aval Acciones y Valores SA - CEO   [3]
 Okay. That's your only question or you said you had two questions?

 Mauricio Restrepo,  BTG Pactual - Analyst   [4]
 I have more questions, but if you want one by one, I don't know, what do you prefer?

 Luis Carlos Sarmiento Gutierrez,  Grupo Aval Acciones y Valores SA - CEO   [5]
 Okay, regarding the outlook for loan growth, loan growth in Colombia has behaved very close to GDP growth in the past. Colombia has been growing at two to three times real GDP plus inflation.

 With this kind of result, Colombia was growing at mid to high teens during 2013. As I mentioned, 2013 was a combination of a quite slow first half, particularly low during the first quarter, and a much stronger second half.

 We expect to see a stronger 2014 throughout the year. And in line with that kind of environment, we expect the overall growth in Colombia to be above the mid teens.

 Bearing that in mind, we need to consider that in Central America, we're growing above what we can (inaudible). Given that with the quite recent acquisition, we've been able to outperform organically and in addition, to inorganic.

 Regarding our banks, our banks, jointly, very much represent what happens in the Colombian system, even those slight variations happen on by bank aid, even the concentration on products. The only product where Grupo Aval was -- or the only category where Grupo Aval was higher than the rest of the market was mortgages in the past.

 As you might have seen, our efforts over the past 12 months to (inaudible) months have been very fruitful in this category, where we have been able to outperform the market significantly. Mortgages have been growing at around 50% when you compare it, when you measure that on an annual basis.

 With all that in mind, what we would expect to see is an overall growth in Aval over mid teens to high teens throughout 2014.

 Mauricio Restrepo,  BTG Pactual - Analyst   [6]
 Perfect. My second question is, what are your expectations for added quality and provisions for 2014 after the slight deterioration on the fourth quarter. Or maybe you can give us some details about the loan provision expenses to various loans for this year.

 Luis Carlos Sarmiento Gutierrez,  Grupo Aval Acciones y Valores SA - CEO   [7]
 Okay. First of all, regarding deterioration during the last quarter that you mentioned, I would actually challenge that statement. When you look at the behavior of our non-performing loans, our growth in non-performing loans was driven by the acquisitions from credit in late December. But in absence of those acquisitions, we would have diminished our absolute value of non-performing loans.

 We see the impacts have higher provision expenses than what we believe is a normal standard for Colombia. It was a negative surprise throughout the year. And it was driven by the low cycle at the beginning of the year and end of 2012.

 As you might imagine, loans do not deteriorate during the month they're issued, but there's some lag in that process. So part of the hiccup in provision expenses that you see during the last quarters of the year are related to the deterioration of loans earlier during the year.

 Bearing what I said in mind, if the economy continues to perform as it seems to be performing and analysts are forecasting, we expect to see an improvement in the overall quality of loan environment in Colombia. Therefore, with the lag that I mentioned, we should see that flow needs to lower a provision as a share of average loans.

 Then, to your final question, what we expect, provision expenses compared to loans. I mentioned we picked up from 1.3 to 1.5 when we compared 2012 to [2015]. We would aspire to stand back to that kind of ratios that we were running at for this year.

Operator   [8]
 We have Juan Dominguez, Credit Corp. Capital.

 Juan Dominguez,  Credicorp Capital - Analyst   [9]
 Good morning. This is Juan Dominguez from Credicorp. Thanks for hosting this call. I have a couple of questions. First, I want to know if you can give us some guidance on Corficol income. I mean, I think for all of us, that's the single most difficult variable to estimate and to forecast, and I wonder if you can give us some guidance on that.

 And finally, something related with the question from Mauricio. I want to know a bit more about the commercial strategy for this year across credit segments and products, and if you could give us a guidance on growth on those targeted segments. Thank you.

 Luis Carlos Sarmiento Gutierrez,  Grupo Aval Acciones y Valores SA - CEO   [10]
 Okay. Regarding Corficol impacts, when you think about Corficol, you have to think, I would say, in two dimensions. One dimension is that the value creation dimension that is pretty stable over time, and then how it flows through your P&L given that there are certain events where value creation is unleashed.

 Regarding growth in Corficolombiana, we actually expect to see a year that would be similar to 2014 compared to 2013. A pickup in value in contrast to a pickup in net income, it would be very much tied to the kind of activity that they're actually working on currently.

 Corficolombiana's main sources of value creation all rose where they have (inaudible) concessions, where they have been working for a number of years already. And we are actually waiting to see how we will end up participating in the mutual road program that is being launched currently by the government.

 I can't really forecast any numbers regarding what I last mentioned, given that those auctions have not happened, and even though Corficolombunia is well-positioned to participate in those processes, we have to see them happen.

 Then, regarding our commercial strategy, I would say our commercial strategy during 2014 will be a continuation of our strategy during 2013. And let me try to summarize what it was during 2013. I'm going to break it down into Colombia and Central America.

 In Colombia, we continue to participate in those products and segments where we have been leaders for a long period of time, particularly commercial banking, mid-market banking, SME banking, and payroll lending as well, and have been working on a deliberate effort to increase our participation in segments where we were well underweighted compared to our natural share of close to 30%. Some of those that are pretty obvious because of our actions are mortgages and credit cards, where we have experienced significant growth.

 You were asking also on segments. On segments in Colombia, you have to be aware that we participate in all segments, particularly -- or perhaps the only segment where we are not as extensive as other banks have participated are the low-income segments. And we continue to be shy of those. To be profitable in those segments, you need to have a combination of low cost to serve as well as very tight credit policies. We do look at those segments as segments with high potential. But for the 2014 environment, we do not foresee a substantial change there.

 Now, moving to Central America. Central America, since we acquired back in December 2010, we've been working and growing their corporate banking and mid-market business using the very big know-how that Grupo Aval has in Colombia. We will continue to do so.

 And particularly now that with the acquisitions that were completed at yearend, we were able to roundup our business model in two countries where we were not growing or not structured as decided. Those were Guatemala and Panama.

 The banks that we bought in those countries have a higher percentage of commercial loans than what the bank average has. That pre-acquisition had 35% commercial loans, while Reformado has 84% and BBVA has over 46% commercial loans.

 With this, we're able to move from 35% to 41% in commercial loans in Central America and also complete the platform to deepen that strategy in Central America.

Operator   [11]
 We have Cristian Hernandez, Ultrabursatiles.

 Cristian Hernandez,  Ultrabursatiles - Analyst   [12]
 Hey, guys, congratulations on the call. I was wondering if you guys have guidance on ROI for the next two years. And I was also wondering if you could explain a little bit more on the high provisioning level that you had in 2013, particularly because I think they come on country-cyclical provisions. Is that all right? Is that right?

 Luis Carlos Sarmiento Gutierrez,  Grupo Aval Acciones y Valores SA - CEO   [13]
 Let me take the first one. First, that is pretty, pretty easy to answer. We actually have been running at higher numbers than what we are running currently. Moving forward, we expect to see a slight improvement in our ROE, going back to numbers above 18% we expect in the near future.

 Then there's something particular on 2014 and it is that we issued equity at yearend. We'll [elude] these objectives in the short term. We will, however, grow strongly earnings per share, even though we might not be able to achieve our target, our ROE target entering 2014.

 Now, moving to high provisions, you said, countercyclical, and perhaps there I need to try to answer that conceptually given that I don't have precise figures here. When you look at the provisioning system in Colombia, depending on the kind of portfolio that you're growing, you need to book provision expenses as if there's a very -- the variation of what kind of provision expense you need to book is quite heavy.

 You can go as low as the low ones for commercial ones to 3% to 4% on consumer loans, and some SME loans can go even higher than that figure. So part of what you see in these kind of periods of strong growth, as I mentioned, a substantial portion of our growth happens during the fourth quarter of the year, is that we have to bring in those provisions into our book.

 I'm sorry not to be able to respond to this quantitatively, because I don't have the data handy. But this will affect our fourth quarter results. What we are seeing on the underlying quality of the portfolio is improvement in different categories, different on consumer deals like, where we're going to see stronger recoveries throughout the year, and this will be very much linked to the overall behavior of the economy.

Operator   [14]
 Thank you. We have [Juan Mejia, Bancolombia].

 Juan Mejia,  Bancolombia - Analyst   [15]
 Good morning, Mr. Sarmiento and Mr. Solano, thank you for the conference. My question is, do you think that the improvement in net interest margin driven by the expected increase in the central bank rate at the end of the year could be upset by a stronger competitive pressure from existing banks and other market entrants? Regarding this, what is your guidance for net interest margin at the end of 2014?

 Luis Carlos Sarmiento Gutierrez,  Grupo Aval Acciones y Valores SA - CEO   [16]
 Okay. Thank you very much for your questions, Juan. Regarding the competitive pressure, given that you work as well for a Colombian bank, you must be aware that competition in Colombia has been quite fierce over the past years. Actually, competition was much stronger a few quarters ago when the economy was running at a low rate when some of our competitors were quite aggressive on pricing in some of the loan categories.

 Given that the market in Colombia is competitive, though rational, we've seen a more rational behavior on some of these pricings throughout the past quarters. This hasn't yet flown into the return on the stock of loans, but we were given out loans, we have started to see an improvement in pricing. As demand for loans increases in line with GDP growth, the competitive environment becomes slightly favorable as has always happened in these kind of cycles before.

 Now, moving on to guidance and net interest margin, in the case of the Aval banks, around 25% of our deposits or north of 25% of our deposits are no cost or very low cost deposits that are not enacted to the changes in the central bank. These accounts were around 20% of our total funding.

 In this kind of environment, we (inaudible) movement in all the interest rate curve. A group such as Grupo Aval gets roughly 20 basis points improvement for every 100 basis points in overall movement of interest rate.

 If we go back to the initial discussion on the macro environment, the interest rate, the central bank interest rate of three and a quarter was quite consistent with what the central bank has done in the past regarding real rates, real interest intervention rate. The central bank has been running around 1.5% in the past. It was running slightly below that during the year given that this was a lower year.

 When you think of an inflation environment of 3% and you add up again the 1.5% and the percent that the central bank had been running in the past, you don't need to go higher on real interest rates because the kind of environment is recovering, not of acceleration or overheating. You will see that the numbers that most analysts are posting of central bank rates of 4.5% are quite consistent with the overall macro projection.

 In that kind of environment of expansion of 100 to 150 basis points, the net interest margin of a group such as Group Aval could expand 20 to 30 basis points. This is regarding the discussion of what might happen with a variation in the competitive environment that could be slightly less competitive in an expansion cycle than what it was in the past.

 I don't know, when you were talking about competition, you were mentioning the expected entrance of [AV Itau]. The entrance of AV Itau is rather than a change in the structural market, it's a change in ownership of the market. What Itau acquired were probably presently owned by foreigner, by Santander, and it was also Helm Bank that was owned by a US citizen in the past.

 It is relevant. We have always not only our largest and our closest competitors as very relevant. We look at every one of our competitors relevant in each one of the categories where they participate. But that has been how we've been running our business, and I think that's the way how Colombian banks have been running their businesses over the past 10 years.

 Juan Mejia,  Bancolombia - Analyst   [17]
 Thank you very much.

Operator   [18]
 And I have Nicolas Norena, Serfinco.

 Nicolas Norena,  Serfinco Comisionista de Bolsa - Analyst   [19]
 Hello. Good morning to everyone and thank you for hosting this conference call. My question is primarily focused on infrastructure projects, coming in Colombia throughout 2015 and 2018. I was wondering not from the side of Corficolombiana, but from the side of the bank, how much do you expect to disburse in loans for that kind of project?

 Luis Carlos Sarmiento Gutierrez,  Grupo Aval Acciones y Valores SA - CEO   [20]
 Well, what we expect to see happening with infrastructure projects, as you mentioned, we do not believe it to be a 2014 event, but more of a 2015 event. But we expect this to be much longer than the three-year, the impact of infrastructure into loan growth. We expect this to be more of a five to seven-year events given the (inaudible) which we expect projects to be built.

 In this kind of government, you hear that the government has proposed. We expect to see incremental growth on top of what would happen on steady state with the growth of the rest of economy of around 150 basis points per year.

 In addition to that, it will depend very much on how much we can go beyond what our natural market share looks like, but that's the kind of number we would find if we get our share of market growth.

 Nicolas Norena,  Serfinco Comisionista de Bolsa - Analyst   [21]
 Okay, thank you.

Operator   [22]
 Now we have Boris Molina, Santander.

 Boris Molina,  Santander Investment - Analyst   [23]
 Yes. Thank you for taking my question. Most of my questions have been answered. But could you please give a little bit of clarification of what your ROE for this year would be once you take into account the effect of the capital increase? I know that this depresses the base, but just to give us an idea of more or less what we should expect to come.

 Luis Carlos Sarmiento Gutierrez,  Grupo Aval Acciones y Valores SA - CEO   [24]
 It should be somewhere in the mid to low 16.

 Boris Molina,  Santander Investment - Analyst   [25]
 Excuse me. Could you repeat that?

 Luis Carlos Sarmiento Gutierrez,  Grupo Aval Acciones y Valores SA - CEO   [26]
 It could be somewhere between 16 and 16.5.

 Boris Molina,  Santander Investment - Analyst   [27]
 Okay, wonderful. Thank you so much.

Operator   [28]
 And we have no further questions at this time.

 Luis Carlos Sarmiento Gutierrez,  Grupo Aval Acciones y Valores SA - CEO   [29]
 Okay. And thank you very much for attending this call. We look forward to see you again next quarter or during that period if you have any further questions. Bye.

Operator   [30]
 Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.

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incorrect and, therefore, there can be no assurance that the results 
contemplated in the forward-looking statements will be realized.

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