Grupo Aval Acciones y Valores S.A. — 2022 Form 20-F
Business context and reporting period. This is an audited annual report for the fiscal year ended December 31, 2022—not a standalone fourth-quarter filing. Grupo Aval is a Colombian financial holding company whose principal businesses are commercial banking, merchant banking through Corficolombiana, and pension and severance fund management through Porvenir. Financial statements are prepared under IFRS as issued by the IASB; amounts below are Colombian pesos (Ps) billions unless noted.
Comparability is materially affected by the March 2022 spin-off of 75% of BAC Holding International (BHI), which ended Grupo Aval’s control and deconsolidated BHI. BHI results are reported as discontinued operations for all income-statement periods; prior-year balance sheets are not retrospectively adjusted. Banco de Bogotá sold a further 20.89% of BHI in December, and its remaining 4.11% interest was sold in March 2023.
Financial performance and position
| Metric | 2022 | 2021 | Change / context |
|---|---|---|---|
| Interest income | 19,403.0 | 12,791.4 | Up 51.7% |
| Interest expense | (11,664.4) | (4,660.8) | Up 150.3%; funding costs rose sharply |
| Net interest income | 7,738.6 | 8,130.6 | Down 4.8% |
| Net impairment loss on financial assets | (2,493.1) | (2,721.1) | Loss narrowed 8.4% |
| Net income, continuing operations | 4,003.0 | 4,041.2 | Down 0.9% |
| Net income, discontinued operations | 866.2 | 1,627.3 | Down 46.8% |
| Net income, total | 4,869.1 | 5,668.5 | Down 14.1% |
| Net income attributable to parent owners | 2,482.9 | 3,297.7 | Down 24.7%; continuing-operations portion was 1,888.9, down 13.3% |
| Net interest margin (reported selected data) | 3.8% | 4.5% | Down 0.7 percentage points |
| ROAA / ROAE | 1.6% / 14.0% | 1.6% / 15.3% | ROAE declined |
| Cost-to-income / cost-to-assets | 45.8% / 2.7% | 42.8% / 2.8% | Cost-to-income worsened; cost-to-assets improved |
The MD&A also cites a 3.5% net interest margin in one discussion, versus 3.8% in selected financial data and elsewhere in the filing. The filing text does not clearly reconcile these measures; confirm the relevant definition and scope before comparing margins.
- Revenue and expenses: Gross profit from sales of goods and services rose 46.7% to Ps 4,545.1 billion, led by infrastructure. Net trading income increased 69.1% to Ps 1,559.6 billion. Other income was a loss of Ps 848.6 billion, versus income of Ps 389.7 billion in 2021, principally reflecting foreign-exchange losses. Other expenses increased 9.1% to Ps 7,409.8 billion, below year-end inflation of 13.1%.
- Credit quality: Cost of risk, net of charged-off recoveries, improved to 1.5% from 1.8%. Loans past due over 30 days were 4.3% of gross loans versus 4.7%; Stage 2 loans fell to 6.5% from 11.3%, and Stage 3 loans to 6.4% from 7.1%. Consumer credit showed pockets of deterioration, especially personal loans and credit cards.
- Balance sheet and liquidity: Total assets were Ps 295,591.2 billion, down from Ps 366,903.9 billion, and total equity was Ps 30,821.7 billion versus Ps 39,471.6 billion. The declines chiefly reflect BHI deconsolidation, not solely underlying contraction. Cash and cash equivalents were Ps 17,032.9 billion versus Ps 36,642.8 billion. Customer deposits were Ps 173,341.1 billion versus Ps 234,470.4 billion; continuing-operations deposits increased 17.0% during 2022.
- Funding and debt: At year-end, interbank borrowings were Ps 9,087.9 billion, borrowings from banks and others Ps 30,309.4 billion, bonds issued Ps 28,362.2 billion, and development-entity borrowings Ps 4,357.3 billion. Total funding was Ps 245,457.9 billion, down 20.2% year over year including BHI; continuing-operations funding increased 16.2%. Grupo Aval’s U.S.-dollar long-term debt was reported at about US$3.6 billion. Its 4.375% senior notes mature in 2030.
- Cash flow: Operating activities used Ps 222.1 billion, investing activities used Ps 13,012.5 billion, and financing activities used Ps 8,570.7 billion. Cash and cash equivalents decreased Ps 19,610.0 billion to Ps 17,032.9 billion. Investing cash flow included Ps 17,570.4 billion associated with the discontinued-operation deconsolidation; interpret the cash-flow figures in light of the BHI transaction.
- Capital: The consolidated tangible equity ratio was 9.1%, up from 8.2%. At year-end, the four Colombian banks reported total solvency ratios ranging from 11.1% to 13.1%; Grupo Aval states that regulated subsidiaries exceeded applicable minimum capital requirements.
Material changes, outlook, risks and unusual items
- Interest rates and margins: Colombia’s central-bank rate rose to 12.0% at year-end 2022 from 3.0% a year earlier; the policy rate reached 13.0% in March 2023. Management said funding repriced faster than many predominantly fixed-rate retail loans, compressing margins. It expected banking NIM to remain under pressure in the first half of 2023 and improve progressively in the second half, with different trends among commercial lending, retail lending and securities. These are expectations, not formal earnings guidance.
- Macro outlook: Colombia’s economy grew 7.5% in 2022, while inflation reached 13.1% at year-end and the peso depreciated 20.8% against the U.S. dollar. Management discussed slower expected growth, persistent inflation, higher funding costs and uncertainty around policy changes. The filing gives economic forecasts but no clear consolidated earnings or revenue target.
- BHI and discontinued-operation effects: Grupo Aval reported Ps 866.2 billion of discontinued-operation income, including BHI results and the net effects of the spin-off and tender-offer sale. Transaction accounting, lost control and the differing ownership periods make reported total earnings less comparable with 2021. The spin-off reduced consolidated assets and liabilities and changed the group’s geographic and business mix.
- Other unusual items: Foreign-exchange losses were Ps 1,825.7 billion, partly offset by derivative trading gains. Porvenir’s stabilization reserve recorded an Ps 81.1 billion loss, and increased life and disability insurance premiums reduced pension management fee income. Infrastructure results benefited from inflation and peso depreciation effects on concession-related valuations; management said non-financial subsidiary results were expected to be lower in 2023 as construction projects progress toward completion.
- Legal and regulatory contingencies: Grupo Aval, Corficolombiana, Episol and certain officers are involved in proceedings and investigations related to the Ruta del Sol Sector 2 project, including DOJ and SEC investigations. The company is cooperating and discussing potential resolutions but cannot predict outcomes, penalties or possible additional obligations. A separate class-action ruling against Episol and others is under appeal; the filing describes a potential maximum impact to Grupo Aval parent-attributable profit of Ps 290.0 billion if the ruling is confirmed and Episol bears the full penalty.
- Policy, tax and pension risks: Colombia’s 2022 tax reform raised the financial-sector corporate tax rate to 40% for 2023–2027. A pension reform bill presented in March 2023 could reduce private administrators’ contribution-based fees; management said the effect could not yet be estimated. Other disclosed risks include credit deterioration, deposit and liquidity pressure, currency and interest-rate volatility, sovereign-security exposure, cybersecurity, climate-transition risk, infrastructure concentration and controlling-shareholder conflicts.
- Dividends: The March 2023 shareholders’ meeting approved cash dividends of Ps 3.60 per share per month from April 2023 through March 2024. For 2022, Grupo Aval declared Ps 43.20 per share in dividends, compared with Ps 54.00 in 2021.
KPMG issued an unqualified opinion on the IFRS consolidated financial statements and concluded that internal control over financial reporting was effective as of December 31, 2022.
Important facts for investors to verify
- Reconcile the 3.5% and 3.8% NIM figures, including whether each is continuing-operations, consolidated or otherwise adjusted.
- Review the audited cash-flow statement and the BHI deconsolidation, spin-off, tender-offer and March 2023 sale accounting, including their cash and earnings effects.
- Monitor the resolution of the Ruta del Sol Sector 2 DOJ/SEC investigations and related Colombian proceedings, potential penalties and provision adequacy.
- Assess deposit funding costs, liquidity and capital ratios as Colombia’s high rates and NSFR requirements affect funding and loan repricing.
- Track consumer-credit delinquencies and loss allowances, particularly for personal loans and credit cards, and verify whether improved aggregate Stage 2 metrics persist.
- Verify the final terms and financial impact of Colombia’s proposed pension reform on Porvenir, including any change to fees and assets under management.