AVAL — Grupo Aval Acciones y Valores S.A.

Grupo Aval Q3 2025 Earnings Call Summary

1. Key Financial Results and Metrics

• Net Income: COP 521 billion for Q3 2025, up 25.3% year-over-year and 5.3% quarter-over-quarter, marking the highest quarterly figure in three years.
• Year-to-Date Net Income: COP 1.4 trillion, an 88% increase from the same period in 2024.
• Return on Equity (ROE): 11.5% for Q3 2025; guidance for 2025 is around 10.5%, with an increase to 12%–12.5% expected in 2026.
• Net Interest Income: COP 2.9 trillion, a growth of 11.6% year-over-year.
• Loan Growth: Gross loans increased by 2.1% quarter-over-quarter and 4.6% year-over-year, driven primarily by consumer loans, which grew 1.5% in Q3.
• Cost of Risk: 1.9% for Q3, expected to remain stable for 2025.
• Deposits: Grew 0.4% quarter-over-quarter and 8.5% year-over-year.

2. Strategic Updates and Business Highlights

• Deposit Mix Improvement: Focus on retail funding led to a 22% year-over-year increase in peso-denominated deposits from individuals.
• Consumer Segment Expansion: Initiatives to increase market share in credit cards, including a partnership with Visa for exclusive FIFA World Cup promotions.
• Gou Payments Launch: A new instant payment system aimed at enhancing financial inclusion and reducing cash transactions in Colombia.
• Aval Fiduciaria Integration: Progress on integrating trust funds and expanding leadership in asset management, with expectations to become the largest fiduciary in Colombia by assets under management.
• Sustainability Initiatives: Defined a sustainable strategy with goals for environmental impact and social responsibility, achieving recognition in various sustainability awards.

3. Forward Guidance and Outlook

• 2025 Guidance: Loan growth expected at 4.5%, with retail loans growing at 8.5% and commercial loans at 2%. ROE projected at 10.5%.
• 2026 Outlook: Anticipated loan growth of 8%, with retail loans at 9% and commercial loans at 7%. ROE expected to increase to 12%–12.5%.
• NIM Expectations: Consolidated NIM projected around 4%, with NIM on loans at 4.5%.

4. Challenges and Points of Concern

• Economic Environment: The Colombian economy faces uncertainties due to upcoming elections, which may affect investment decisions and financial market volatility.
• Inflation and Interest Rates: Inflation is projected to close at 5.3% for 2025, with a stable Central Bank policy rate of 9.25% expected to persist through early 2026.
• Peso Appreciation Impact: The 3.6% appreciation of the Colombian peso negatively affected growth metrics, particularly in dollar-denominated loans.
• Operational Efficiency: While synergies from Aval Valor Compartido are expected, initial restructuring costs may delay the realization of benefits.

5. Notable Q&A Insights

• Loan Growth Guidance: For 2025, loan growth is guided at 4.5%, with retail loans at 8.5% and commercial loans at 2%. For 2026, growth is expected to reach 8%.
• Sustainability of Trading Income: The management indicated that trading income levels are influenced by market conditions and hedging strategies, making them less predictable.
• Cost of Risk and Coverage: Cost of risk is expected to remain at 1.9% for 2025, with no significant improvements anticipated in the near term. Coverage ratios for 90-day NPLs are stable at 130%, with future levels dependent on provisioning strategies.

This summary encapsulates Grupo Aval's performance and strategic direction while highlighting both opportunities and challenges faced in the current economic landscape.