Business Context and Reporting Period
This Form 6-K filing by Grupo Aval Acciones y Valores S.A. covers the month of July 2013, with data reported as of August 22, 2013. The filing presents unconsolidated financial results for the company's four Colombian banking subsidiaries (Banco de Bogotá, Banco de Occidente, Banco Popular, and Banco AV Villas) under Colombian Banking GAAP. These combined results reflect approximately 80% of Grupo Aval's consolidated results. The data is unaudited and excludes subsidiaries such as Corficolombiana, Porvenir, and BAC Credomatic.
Key Financial Metrics (Combined Banks)
All figures are in Colombian Pesos (Ps.) Millions unless otherwise noted.
| Metric | July 2013 | June 2013 | July 2012 |
|---|---|---|---|
| Total Assets | 103,599,696 | 104,828,369 | 91,646,019 |
| Total Deposits | 67,879,260 | 69,584,065 | 57,764,650 |
| Total Loans & Leases (Net) | 67,035,916 | 66,712,442 | 59,842,961 |
| Shareholders' Equity | 16,626,175 | 16,394,770 | 14,897,141 |
| Net Interest Income (YTD) | 3,296,028 | - | 2,873,776 |
| Net Income (YTD) | 1,433,771 | - | 1,230,234 |
| Net Income (Month of July) | 124,434 | 163,871 | - |
Material Changes vs. Prior Periods
- Assets and Liabilities: Total assets decreased by 1.2% month-over-month (MoM) but grew 13.0% year-over-year (YoY). Total liabilities followed a similar trend, down 1.7% MoM but up 13.3% YoY.
- Loan Portfolio: Net loans and financial leases increased 12.0% YoY. Mortgage loans saw significant growth of 53.3% YoY.
- Deposits: Total deposits declined 2.4% MoM but rose 17.5% YoY. Savings deposits were the primary driver of growth, increasing 30.5% YoY.
- Profitability:
- YTD Net Income: Increased 16.5% YoY to Ps. 1.43 trillion.
- July Net Income: Decreased 24.1% MoM to Ps. 124.4 billion, primarily due to a sharp decline in "Other Operating Income" (down 73.5% MoM) driven by losses on derivative operations and the absence of dividend income recorded in June.
- Provisions: Total provisions, net, decreased 30.0% MoM to Ps. 64.1 billion, improving net interest income after provisions by 19.4% MoM.
Outlook, Risks, and Unusual Items
- Unusual Items: The significant MoM drop in July net income was influenced by volatile "Other Operating Income." Specifically, foreign exchange gains turned into losses (-Ps. 47.8 billion in July vs. +Ps. 30.9 billion in June), and derivative operations swung from a gain of Ps. 62.5 billion in June to a loss of Ps. 14.1 billion in July.
- Dividend Income: Dividend income was Ps. 83.1 billion in June but zero in July, contributing to the volatility in operating income.
- Disclaimer: The filing explicitly states that these unconsolidated results are for informational purposes only and are not indicative of future interim periods or the full consolidated results of Grupo Aval.
- Risks: The filing notes that Grupo Aval is not a financial institution itself and is not regulated as such, though its banking subsidiaries are supervised by the Superintendency of Finance.
Investor Verification Checklist
- Consolidated vs. Unconsolidated: Verify the full consolidated financial statements (including Corficolombiana, Porvenir, and BAC Credomatic) to understand the complete financial picture, as this filing covers only ~80% of the group.
- Derivatives and FX Exposure: Investigate the specific drivers behind the volatile foreign exchange and derivative results, which caused a Ps. 100+ billion swing in operating income between June and July.
- Dividend Timing: Confirm the schedule for dividend income recognition from subsidiaries to assess the sustainability of operating income.
- Loan Quality: Review the allowance for loan losses (which grew 13.9% YoY) against the growth in the loan portfolio to assess credit risk trends.