Good morning, ladies and gentlemen, and welcome to the Grupo Cibest Bancolombia Third Quarter 2026 Earnings Conference Call. My name is Carrie, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Following the prepared remarks, there will be a question-and-answer session. During the question-and-answer session, if you have a question, please press star then one on your touch-tone phone. Please note that this conference is being recorded. Please note that this conference call will include forward-looking statements, including statements related to our future performance, capital position, credit-related expenses, and credit losses. All forward-looking statements, whether made in this conference call, in future filings, in press releases, or verbally, address matters that involve risks and uncertainty.
Consequently, there are factors that could cause actual results to differ materially from those indicated in such statements, including changes in general economic and business conditions, changes in currency exchange rates and interest rates, introductions of competing products by other companies, lack of acceptance of new products or services by our targeted clients, changes in business strategy, and various other factors that we describe in our reports filed with the SEC. With us today is Mr. Juan Carlos Mora, Chief Executive Officer, Mr. Mauricio Botero Wolff, Chief Strategy and Financial Officer, and Ms. Laura Clavijo, Chief Economist. I will now turn the call over to Mr. Juan Carlos Mora, Chief Executive Officer. Mr. Juan Carlos, you may begin.
Good morning, and thank you for joining Grupo Cibest Third Quarter Conference Call. Please turn to slide two. In the third quarter, Colombia faced a difficult political, social, and economic environment. A tense government transition was followed by a major earthquake in the southwest. This increased fiscal concern and raised questions about how quickly and on what scale reconstruction can restore infrastructure, economic activity, and community well-being. Overall, we now expect the economy to have grown 2.1% in the third quarter, below earlier forecasts. Laura Clavijo will elaborate on this shortly. Even so, we deliver strong results. Credit origination rebounded sharply, led by commercial loans, as confidence grew in the rule of law and security, and as expectations rose for a credible path to fiscal adjustment. Net income reached COP 2 trillion in the quarter. Year to date, it is up 10.5%, more than offsetting Banistmo's contribution last year.
NIM ended the quarter at 7.4%. Investment income stabilized, time deposits resumed growth, and lower-spread commercial loans led the expansion on the loan book. Cost of risk rose 1.8% on higher consumer provisions. This was as expected and within our guided range. Strict expense discipline also underpinned solid operating performance. As a result, ROE for the quarter stood at 21.7%. On September 1st, we reached another corporate milestone, the separation of Nequi from Bancolombia. Nequi is Colombia's leading neobank with a growing presence in Central America. It is now an independent commercial financing company, wholly owned by Grupo Cibest. This spin-off is designed to accelerate its development as a leading regional neobank. In July, we also completed an intragroup Additional Tier one capital instrument transaction to further optimize Bancolombia's capital structure.
I will now turn the call over to our Chief Economist, Laura Clavijo, for an overview of the macroeconomic landscape. Laura.
Thank you, Juan Carlos. If you could please proceed to slide four. Turning to Colombia, the economy enters 2027 with a mixed but gradually improving outlook. Our central view is that the year will be characterized by two competing forces: an improving investment cycle and post-earthquake reconstruction on the one hand, and the necessary adjustment in fiscal and monetary conditions on the other. We expect GDP growth to moderate from 2.6% in 2026 to 2.4% in 2027. Household consumption should remain an important source of growth, but lose momentum as high interest rates, persistent inflation, and softer labor market conditions constrain disposable income. At the same time, fiscal consolidation would reduce the contribution from government spending. Encouragingly, the composition of growth should become more investment-oriented. Fixed investment is projected to rise above 17% of GDP, supported by construction, mining, and energy projects, as well as reconstruction following the August earthquake.
Inflation remains one of the key challenges. Following a projected 6.7% year-end reading in 2026, headline inflation could peak at 7.3% during the first half of 2027, largely reflecting the impact of El Niño on food and regulated prices, together with indexation and the minimum wage adjustment. We expect these supply-side pressures to fade during the second half, bringing inflation down to 5.5% by December. Nevertheless, still well above the central bank's target range. This inflation backdrop will keep monetary conditions tight. We suspect the policy rate could rise further to 12.5% and remain at this level well into 2027, with the central bank waiting for clear evidence of disinflation before restarting the easing cycle. We therefore anticipate only modest cuts in the fourth quarter, while fiscal risks and elevated global rates further constrain the scope for monetary easing. The fiscal position remains the main macroeconomic vulnerability.
An ambitious economic rescue bill worth 2.4% of GDP, containing a significant budget cut and additional taxes, is being discussed in Congress before year-end. These signals of fiscal responsibility must be weighed against significant expenditure rigidities and historically high financing requirements. Our baseline scenario speaks of a central government deficit of 7.9% of GDP in 2027, compared with 7.2% in 2026, and assumes a fiscal adjustment of at least 1.5% of GDP to maintain investor confidence and set the path towards fiscal sustainability. Finally, external accounts remain manageable, although the current account deficit is expected to widen from 2.5% of GDP in 2026 to 3.2% in 2027. Importantly, remittances of around 3.4% of GDP should remain an important buffer, keeping the external deficit below its historical average of approximately 4%. Overall, 2027 should be viewed less as a year of acceleration and more as a year of transition.
Growth remains resilient, and its composition improves, but Colombia will need to navigate sticky inflation, restrictive financial conditions, and above all, a demanding fiscal adjustment before a more balanced and sustainable expansion can take hold. Please proceed to slide five. Turning to Central America, the outlook for El Salvador and Guatemala remains constructive, although inflationary pressures warrant attention. In El Salvador, growth accelerated to 5.1% year-over-year in the second quarter of 2026, increasingly supported by investment and double-digit construction growth, while resilient consumption, tourism revenues, and renewed progress under the IMF program provide additional buffers despite lower remittances and higher import costs. In Guatemala, growth remained robust at 4.3%, supported by domestic demand, remittances, manufacturing, and exports.
Inflation has risen to 4.7%, while the medium-term outlook increasingly hinges on translating fiscal expansion and the strengthened public-private partnership framework into infrastructure investment, alongside institutional improvements that could support the country's path toward investment grade. Now, please let me turn the presentation to Mauricio, who will present Nequi as an independent entity, followed by Grupo Cibest's quarterly performance.
Thank you, Laura. Please proceed to slide number 7. Nequi was created 10 years ago with the purpose of improving the way people and business interact with money, and since its inception, its success as a powerful and scalable financial inclusion platform has been compelling, with a customer base of more than 29 million users and an activity ratio above 80%. Nequi was launched in 2016, offering a basic marketplace for top-ups and bill payments. Leveraging on the users' transactional data and cash flow dynamics, in 2019, Nequi launched its first credit product, a significant first step towards the financial evolution of individuals without prior credit history. The pandemic marked a turning point in Nequi's history, as it was one of the channels that the government selected to disburse subsidies, eventually driving fast, massive user engagement, expanding by 4.5 times its user base in only three years.
Since then, it has continued enhancing its marketplace, and its value proposition has evolved from individuals towards small business cash management solutions and interoperability. Also, it initiated its regional expansion into El Salvador and Guatemala. Please turn to slide eight. Its business model is built around free core services that foster engagement, generate high transaction volumes, and capture a stable low-cost operational deposits, complemented by a growing financial portfolio, a marketplace, B2B, and cross-border solutions. As of third quarter, 24 million customers are active users, out of which 18 million are monetized. Moreover, seven out of 10 Colombian adults have a Nequi account, and 3.9 million users have Nequi as their only account. 65% of Nequi account holders are not Bancolombia customers, and 42% of payments in Bre-B ecosystem come from Nequi.
In fact, exponential growth in user engagement and transaction volumes drove operating leverage and cost dilution, enabling Nequi to reach breakeven in late 2025. Please turn to slide number 9. From an accounting perspective, Nequi's standalone financials reflect its balance sheet as of September 30, while the income statement captures only one month of full operations, as the spin-off was executed on September 1st. Thus, in the following slides, we provide a set of administrative financials and performance metrics for the third quarter and previous quarters on a standalone basis, intended only for comparative purposes. Deposits closed at COP 6.9 trillion, down 9.5% quarter-over-quarter, as balances normalized after the mid-year service bonus, and up 24% year-over-year. On the other hand, its loan book expanded 12% in the quarter, reaching COP 2.5 trillion.
Following the spin-off, Grupo Cibest allocated COP 600 billion of capital to Nequi, implying a total solvency ratio of 13%. All in all, Nequi initiates this new phase as an independent entity with a robust balance sheet to support a scalable growth going forward. Please turn to slide 10. Net interest income increased 5.3% in the quarter due to loan expansion and a COP 20 billion increase in interest income as a one-off related to the spin-off. Accordingly, NIM reached 18.1%. Absent of the one-off, NIM would have been 16.8%. Fees represent a significant and diversified source of overall income and continued growing at a steady pace during the quarter. The net fee income ratio closed at 22.6%.
From a credit loss perspective, provision expense amounted to COP 145 billion, an increase explained by higher loan origination and a one-off related to the transition between former credit model under local GAAP and the current IFRS accounting. Thus, cost of risk reached 24.6%, which, absent of the one-off, would have remained flat at 16.9%, in line with our expectations given the pace of loan growth. Please turn to slide 11. ARPAC continues to grow while cost to serve continues to decline, such that ARPAC now represents 2.3 times CTS, demonstrating the strong operating leverage embedded in its business model. All in all, third quarter's net income was COP 33 billion, equivalent to a 23% ROE. Absent of one-offs related to the spin-off, net income would have reached COP 41 billion, which represents an ROE of 28%. Please turn to slide 12.
Finally, we expect ROE to reach 28% in 2026 and between 28%-30% in 2027, driven by loan growth that will support margin expansion while provision expenses evolve consistently with portfolio growth. Please turn to slide 14. Now, Grupo Cibest gross loan portfolio reached COP 274 trillion, increasing 4.3% quarter-over-quarter and 9.7% year-over-year, which, absent of FX, would have been 13.5%, reflecting a strong underlying business dynamic. Commercial loans were the main growth driver, expanding 5.5% during the quarter, as per a more constructive business environment in Colombia. Consumer loans also grew at a faster pace, increasing 2% in the quarter, mainly driven by unsecured personal loans and credit cards. Meanwhile, mortgages maintained their positive trend, expanding 2.1% over the quarter. Please proceed to slide 15. When broken down by entity, Bancolombia continues to drive growth supported by commercial loans.
The contraction in the consumer portfolio is explained by the spin-off of Nequi, while Nequi continued to show solid origination dynamics, growing 12% during the quarter. Banco Agrícola maintained a positive trend, while BAM declined mainly in commercial loans. Yet, its consumer portfolio is showing signs of recovery, with September posting the strongest month-over-month growth of the year. Cross-border lending continued to expand through our offshore operations, allowing us to provide competitive foreign currency financing across different geographies. As of September, BAM's cross-border loan portfolio grew 63% year-over-year, while Banco Agrícola's expanded 13%. Please proceed to slide 16. Total deposits reached COP 275 trillion, growing 1.5% quarter-over-quarter and 8.6% year-over-year. Excluding FX, annual growth would have been 13%. Bancolombia's growth came primarily from time deposits to offset part of the deposit migration resulting from Nequi's spin-off. The decline in savings accounts reflects seasonality related to payroll and employee benefit payments.
At Banco Agrícola and BAM, deposit growth was mainly driven by sight deposits. Please proceed to slide 17. Our funding mix remained resilient, supported by the strength of our sight deposit base, which represents 57% of total funding and provides a structural advantage in containing funding costs in the current interest rate environment. The cost of deposits increased slightly to 4.5%, reflecting Colombia's higher interest rate and the greater share of institutional savings accounts and time deposits. Please proceed to slide 18. Net interest income reached COP 5.7 trillion, decreasing 4.9% over the quarter, equivalent to a NIM of 7.4%. The drivers of the quarterly decrease are twofold. First, the normalization of treasury income following an exceptionally strong second quarter. Second, lending NIM contraction due to higher funding needs related to Nequi's spin-off and to the positive dynamic of the commercial loan portfolio.
Banco Agrícola and BAM also reported NIM compression, mainly reflecting higher funding costs and lower lending and investment income, respectively. On an annual basis, however, while loans are growing at 9.7%, net interest income is increasing almost 16%, underscoring our robust intermediation capacity. Please proceed to slide 19. Net fee income reached COP 1.4 trillion, increasing 1.6% over the quarter and 15.5% over the year, and remains an important and diversified source of revenues. Fee income growth was broad-based. However, bancassurance continued to stand out, growing 17% over the year and 3% over the quarter, supported by the positive performance of our alliance with Sura. Moreover, fee expenses decreased both during the quarter and during the year, driven by ongoing efficiency initiatives. Overall, fee income ratio stood at 21%. Please proceed to slide 20.
Net provision charges reached COP 1.2 trillion, up 17% over the quarter, mainly reflecting an increase in a specific client segment in Bancolombia, as well as the consumer segment driven by higher originations. BAM recorded higher provisions following updates to its expected loss models, incorporating new information for the year, while Banco Agrícola's provision expenses remained elevated with higher returns adjusted by risk. Overall, quarterly cost of risk stood at 1.8%, bringing the nine-month accumulated cost of risk to 1.7%. We continue to closely monitor recent events that could affect asset quality while proactively managing exposures and addressing potentially affected clients. Starting with the earthquake in Colombia, asset quality in the affected areas remains in line with the overall local loan book, supported by relief measures and proactive client management. We may see some deterioration going forward as collections normalize, and we are building provisions accordingly.
with no expected impact on our cost of risk guidance range for either this year or next year. Regarding El Niño, our main exposure is concentrated in agribusiness, particularly agro exporters. Provision expenses related to these exposures have already been recognized in line with expected credit losses. Given our limited exposure to potentially affected clients, we do not expect any material additional impact. Please proceed to slide 21. Delinquency ratios remained well contained across portfolios during the quarter and reflect a meaningful reduction on a yearly basis. Moreover, from an expected losses perspective, stage 1 has increased significantly each share, driven by growth on originations, while stage two and stage three exposures declined over the year. Coverage remained solid at 131% for 30-day past due loans and 195% for 90-day past due loans.
Overall, these trends indicate that the asset quality remains in line with our guidance, considering the pace of growth. Please proceed to slide 22. Operating expenses remained broadly stable, increasing only 0.3% quarter-over-quarter, driven by higher financial transaction taxes related to the ordinary and extraordinary dividend payments. On a year-to-date basis, expenses grew 8.7%, mainly reflecting the wealth tax recognized earlier this year. Excluding this effect, annual expense growth would have been approximately 5.2%, that is close to one percentage point below inflation. Overall, the consolidated cost-to-income ratio stood at 46.6%. We remain focused on structural efficiency and have launched different initiatives addressing our most significant operating and fee-related expenses. In parallel, our AI program is accelerating its adoption across the organization to enhance productivity, supporting a more scalable operating model. Please turn to slide 23.
Shareholders' equity reached COP 39 trillion, up 1.7% over the quarter, mainly driven by earnings generation, while the year-over-year decline mainly reflects the Banistmo divestment. In July, Bancolombia issued COP 1 billion intragroup capital instrument, contributing 44 basis points as Additional Tier one. Combined with the other intragroup transactions, this enhances the group's capital efficiency while providing additional flexibility to support growth and strategic priorities. Bancolombia's standalone solvency ratio remained relatively stable at 13.7%, as earnings generation and the AT1 issuance helped offset the extraordinary dividend and growth in risk-weighted assets. Finally, Cibest's standalone double leverage increased to 98%, reflecting dividend distributions, yet preserving flexibility for corporate initiatives. Please turn to slide 24. Net income reached COP 2 trillion, which represents an ROE of 22%. The accumulated net income increased 10.5% over the year, despite the absence of Banistmo's earnings contribution.
Consistently, ROE has jumped from 18% to 22% in the same period, underscoring the rationale behind the divestment and the merits of the capital reallocation strategy. With this, I will now hand the presentation back to Juan Carlos.
Thank you, Mauricio. Please turn to slide 26. Turning now to our guidance for 2026, we are revising our loan growth outlook upward from a range of 7%-8% to a range of 8%-9%. This reflects stronger demand for commercial loans in Colombia. All other guidance items remain unchanged. For 2027, we project a slightly higher loan growth of 9%-10%, again, led by commercial loans in Colombia, provided the fiscal deficit narrows in an orderly and gradually way. We also expect NIM of 7.5%-7.7% and a cost of risk of 1.9%-2.1%, reflecting stronger origination and interest rates that are likely to remain high. Finally, we expect an efficiency ratio of 46%-47%. We remain committed to a cost discipline while continuing to invest in our business transformation. Please turn to slide 27.
To conclude, if macroeconomic conditions improve and investment confidence rebounds strongly, as we anticipate, Grupo Cibest is uniquely well-placed to seize the growth opportunities ahead. Even in a more adverse scenario, our proven NIM management, sound credit underwriting, cost discipline, and efficient capital allocation allow us to deliver sustainable ROE throughout the economic cycle. With this, we conclude our prepared remarks. We will now be pleased to take your questions.
Thank you. We will now begin the question and answer session. If you have a question, please press star then one on your touch-tone phone. If you wish to be removed from the queue, please press the pound sign or the hash key. If you are using a speakerphone, you may need to pick up the handset first before pressing the numbers. Once again, if you have a question, please press star then one on your touch-tone phone. Our first question will come from Ernesto Gabilondo with Bank of America.
Thank you. Hi, good morning, Juan Carlos, Mauricio, and Catalina, and thanks for the opportunity to ask questions. My first question will be on your earnings growth expectation for next year. You have mentioned ROE could be maintained between 21%-22% next year, but just wondering how should we expect in terms of earnings growth? My second question is on Nequi. If I am not mistaken, Nequi represents around 2% of Cibest's consolidated net income. How do you see Nequi's contribution to Cibest's earnings in the future? Wondering if you have any plans to IPO this business in the future, or if we should just consider it as another subsidiary within Cibest. Thank you.
Thank you, Ernesto. Let me take your question regarding Nequi, and I am going to ask Mauricio to take your question about earnings. As you mentioned, Nequi today represents around 2% of Grupo Cibest net income. It is still small. Nequi will grow in the future, and we are very optimistic, but the size of Bancolombia is going to continue to be very important in Cibest. Nequi will gain some importance in the future, probably in 2030 will be something around 8%-10% if the growth is strong, particularly on loans and depending on the credit cycle. Nequi, it is an alternative and it is a diversification of Grupo Cibest, but Bancolombia will continue to be the most important entity for Grupo Cibest.
Nequi will add diversification, as I mentioned, and alternatives to have presence in the Colombian market, and also it is going to be an avenue of growth in other markets, particularly in Central America. Regarding your question of IPO, Nequi is a separate entity, fully owned by Grupo Cibest. That give us the opportunity to assess different strategic alternatives. We are not thinking about an IPO in the short term, but with this corporate structure, we have open alternatives, as I mentioned, to develop Nequi and to find the best way to give Nequi those avenues of growth. We will continue developing the business in Colombia and in the other markets that we are, and then on parallel, we will be assessing any additional strategic alternatives, but that is not going to happen in the short term, Ernesto. Now regarding earnings, Mauricio.
Yeah. Hi, Ernesto. When we think about the end of this year, net income should be around COP 8.5 trillion, and that should be in the upper part of our ROE guidance. When we think about 2027, the growth should be between 8% and 10% of that net income. If you think about either COP 9.2 trillion, COP 9.3 trillion, that should give you the 21.5%-22% ROE guidance that we are thinking for next year.
Oh, super helpful. Thank you very much, Juan Carlos and Mauricio.
Thank you, Ernesto.
Our next question will come from Tito Labarta with Goldman Sachs.
Hi. Good morning, Juan Carlos, Mauricio, and everyone. Thank you for the call and taking my question. Two questions also. First on the loan growth, as you mentioned, commercial lending seems to be accelerating, on the back of the elections. Just to think about the sustainability of the loan growth, particularly given, as you mentioned, you need the fiscal adjustment to happen. I think, Juan Carlos, you mentioned, as long as that kind of happens gradually. So, how do you think about that fiscal adjustment? What are the upside-downside risks to loan growth depending on how that evolves? Also, on the consumer lending, which has lagged a little bit, do you think that can accelerate? Is that maybe more second half of 2027 as there's more visibility on the fiscal adjustment?
Just to think about the sustainability of the loan growth given some of the macro risks that are still there for Colombia. Then second question, just on the sustainability of the ROE, more longer term. I know you gave the guidance of 21%-22% for 2027, but you still have a high rate environment as eventually rates come down, which could put some pressure on your NIM. How should we think about what the sustainable ROE should be longer term? Thank you.
Thank you, Tito. Loan growth and what we are seeing is that the demand for commercial loans is strong. This third quarter showed that the demand was there, and there are companies thinking about new projects, projecting 2027 with more economic activity. There is demand, and we are seeing that also in the fourth quarter. Even though the rates are high, what companies are thinking is that there is an opportunity, particularly in Colombia. Also, they are seeing some opportunities in Venezuela. They are preparing for that, and they are investing and expecting also that the rates will go down by the end of next year. In terms of consumer lending, I am a little less optimistic. I think there is going to be demand, but there is not going to be a strong growth on consumer loans.
In the past, consumer loans were growing very aggressively or very strong, and I think the growth is going to moderate in the future due to the level of the rates and also the fiscal situation. That open the conversation to what we think is going to be that fiscal situation, and I'm going to ask Laura to give you some comments about how we see the development of the fiscal situation of Colombia.
Thank you, Juan Carlos. Yeah, indeed, the fiscal sustainability and adjustment is the talk of the town, whether it should be accompanied by the IMF, apparently a disbursement of around $15,000 million, as well as the fiscal adjustment. The fiscal adjustment as presented in the whole economic rescue bill is worth 2.4% of GDP. It's an ambitious number, but our kind of base case scenario more leaned bias towards fiscal adjustment by budget expenditure cuts should give us a base scenario of around COP 30 billion reduction, which would be an adjustment of around 1.4% of GDP.
We believe that this base case scenario accompanied by multilateral support, even though it's not sufficient to really bring down the levels of debt moving forward, and they will have to move with some fiscal adjustment later on, it should be sufficient to maintain investor confidence and reduce expenditure in line with a 7.9% GDP fiscal deficit for 2027. These are big numbers in terms of the fiscal adjustment, but I would comment that there seems to be a consistent message in terms of the importance and the necessity to do this important budget cut really soon.
Hi, Tito. Regarding your question about the ROE in the long term, as you know, we have this tailwind that is going to help us in 2027, so that's why we believe the 21%-22% ROE is visible. Going forward, when interest rates start coming down and we reach more stable inflation and interest rate levels along with GDP growth, ROE should be around 20%. Everything that we're doing in terms of operations, in terms of capital structure, is targeting the long-term ROE of 20%.
Okay. Very clear. Thanks, Juan Carlos, Mauricio, and everyone. Thank you.
Thank you, Tito.
We'll go next to Yuri Fernandes with JPMorgan.
Hey, guys. Good morning. Hi, Juan Carlos Mora, Mauricio Botero Wolff, Catalina, everyone. Congrats on loan growth revenues. I have a question regarding your guidance for 2027 on cost of risk and risk-adjusted margins. You are calling for NIMs to expand a little bit, but cost of risk increase is higher than the NIM increase. When I go to the macroeconomic assumptions, most of them are okay, like inflation coming down, rates coming down. I would like to understand why the guidance is implying risk-adjusted NIMs coming down, if that's really the rationale. Maybe you're being a little bit more conservative on asset quality. Maybe this was a year with very few corporate hits. Just trying to understand why the guidance is implying a cost of risk increase and thus a risk-adjusted NIM decrease. Thank you.
Hi, Yuri Fernandes. Yes, we are expecting NIM to increase 10 basis points approximately, and that's basically because of the effect of interest rates and sensitivity with NIMs. Just to give you an idea, when we started 2026, interest rates from the central bank were at a lower level. What we have seen throughout the year is an increase in interest rates, which helps us in the average, but the average of the year will be lower this year to that one of 2027, because we're going to start 2027 at a higher rate, and we expect that rate to be stable until the fourth quarter of the year. That explains the expected increase in net interest margin. Now, in terms of cost of risk, the explanation there is we're expecting growth.
We are hoping to take advantage of the demand for lending that we're seeing in the commercial segment, in the corporate segment, and that's a segment with lower margins that not only has lower yields, but also pushes us in terms of funding to get funding from institutional investors. That's positive growth, but puts some pressure in margins, but the growth itself demands provision. Most of the increase in cost of risk that we're expecting for 2027 comes from growth, both in commercial loans and in consumer loans, in which we tend to go to some risk brackets in which we're not participating. Also, we have to take into account that we have this earthquake just recently, and we have to wait and see the effects of that in the coming couple of years.
Yuri, let me add that at the beginning of next year, we also will have the effects of El Niño, and we foresee that it's going to be strong and it's going to affect particularly some sectors, agriculture mainly, but also in Colombia, the effect of El Niño could have some collateral effects on energy supply. Because of that, we are conservative on the cost of risk for 2027, Yuri.
No, super clear. El Niño, a little bit of the growth, I think that explains a lot, and the earthquake, like, behind the cost of risk. If I may, just a quick one on Nequi. You are calling for some deposit acceleration. I think the guidance for Nequi is deposits growing between 23% and 25% year-over-year, so accelerating a little bit the growth of deposits. But the number of users, they are slightly less, right? You are growing your users calling for 5%. You are very penetrated. You already have a lot of clients. Basically, what this implies is average balance of deposits growing, right, on a year-over-year, like less users, more deposits, more balance. What is the strategy here for you to grow the average deposit of the Nequi users? Thank you.
Yuri, Nequi is going to reach 30 million clients, customers soon. Of those, around 24 million are active. They use Nequi on a regular basis. If we take into account that there are 40 million adults in Colombia, that is a high percentage of the population are Nequi users. We are not going to continue the pace of growth because we are reaching a level in which is not much room to grow. We will continue to add products and services to the platform, to Nequi. What we are seeing is that Nequi will become the main source of financial services for many people, and that will increase the average of deposits that they maintain in Nequi.
Nequi will continue adding services, investment, also other types of loans, and that will create that virtuous circle of being Nequi more the, as I mentioned, the main source of financial services, and principality is going to be there on Nequi.
Thank you. Thanks very much, Juan Carlos and Mauricio.
Thank you, Yuri.
We'll hear next from Carlos Gómez-López with HSBC.
Thank you for taking my questions, and congratulations on the results. First, on your long-term guidance, the ROE of 20% which you are working, can you tell us, and that's a very reasonable goal, right? Can you tell us what inflation rate and what tax rate you assume when you're working on your long-term planning for that type of return? Second, geographically, do you think the bank needs any changes in the long run, either adding or, I think, in Dominican Republic or Venezuela, or reducing geographies? Thank you.
Thank you, Carlos. Let me take your second question first, and then I'm going to ask Mauricio to answer your first one. Our focus right now, it's our current markets. Colombia, we have Bancolombia and Nequi, and as I mentioned in the answer to Yuri, we will continue developing Nequi, and Nequi will become an alternative for many people to be its principal financial relationship. Guatemala and El Salvador are our focus, not just with Nequi, that, as you know, we are developing Nequi in those markets, but also the banks that we have there, Banco Agrícola and BAM. Particularly in Guatemala, we are optimistic that we can improve our presence in the market, and we can take advantage of an economy that is stable, that offer opportunities. Other than that, we continue looking for how the region is developing. You mentioned Venezuela.
Venezuela, it's a very, very important market. If they evolve positively, and we think they will, the question is when and when is the right time to be. The position that we have now is that we are accompanying our customers that are exploring possibilities in Venezuela, and that will evolve, and we will continue being very waiting for the right signals in that market. But at this moment, we think the right thing is wait and see how the situation in Venezuela evolve. Other markets, we continue exploring and having information of different markets, but that's not going to be our focus on the short term. As I mentioned, we will continue in the markets that we are, and we are not planning to leave any of the markets in we are. We will continue developing those markets.
We see that there are opportunities, good opportunities, and we have all the tools and the elements to take advantage of those opportunities in those markets, Carlos. Let me pass your first question to Mauricio.
Hi, Carlos. When we think about long-term guidance and the way we build the structure of Cibest, we're thinking loan growth could be or should be above nominal GDP. That's working with NIMs between 6.5% and 6.7% or 8% approximately. That should be achievable with an inflation rate of 4%. The long-term target for the central bank is 3%, but we believe that's going to take a while to be achievable. So, 4% in inflation. Tax rate, you should work with 30%, 29%-30%, but we will have to wait and see what the fiscal reform ends up having. To wrap up, cost of risk long term should be around 2%, and that will depend, of course, on the mix of the loan portfolio.
Thank you. That's very detailed. 29%, 30%, that is the effective tax rate for the group or Bancolombia?
For the group.
For the group. I missed loan growth, and the line didn't go through. Can you repeat?
The lending growth, you mean?
Loan growth.
Yes.
Yeah. Loan growth should be above nominal GDP, one or two points above nominal GDP.
Thank you so much.
Thank you, Carlos.
Our next question comes from Daniel Vaz with Safra.
Hi, Juan Carlos, Mauricio, Catalina. Congrats on the results. I wanted to ask a question on fees. You do not give guidance for this line, so it is good to get a sense on the trends. Your net fees are running at about, I think it is COP 1.4 trillion per quarter. At the margin, you are growing at, I think, 15% year-over-year, right? If you look to 2027 and this breakdown of the 15%, I think you are growing mid-single digits on the gross fees, and fee expenses, they are coming down. What do you see as sustainable growth for maybe 2027, 2028, since you are getting a good traction on the commercial business? Maybe a second question related to fee income ratio. You reached 21% this quarter. You get, again, good traction in commercial business and Nequi, and you get some efficiency gains to capture going forward.
What is the level of fee income ratio that makes sense for us to model for your long term? Thank you.
Hi, Daniel. In terms of fee guidance, what we have seen in 2026 is a very positive result on fee expenses. We have been able to contain the fee expense growth, and that way, we have reached the 15% net fee growth. For 2027, that is probably not going to be sustainable, so we are going to see revenue on fees growing more in line with expenses. Both of them should be growing between 10% to 12%. That way, the guidance for net fees for next year should be around 12%. We will keep on investing on how to transform the operational processes that demand the fee expenses in order to defend and sustain the margin for fees. Regarding your second question, the fee income ratio for us is not a goal itself.
It is more a result, because it depends a lot on the margins that depend a lot on the interest rates from the central bank. In a more longer-term picture in which margins come down, fee income ratio should reach figures closer to 25%, but somewhere between 20% and 25% is reasonable to project, and it will all depend on margins, as I explained before.
That is super clear. Thank you for the answer.
Thank you, Daniel.
Moving on to Andres Soto with Santander.
Hello, everybody. Thank you for the presentation. I have a couple of questions. The first one on your double leverage ratio. You have mentioned the 98% level this third quarter. What is your expectation by year-end, and what is your assumption both for the 2027 guidance and for your medium-term guidance in this metric?
Hi, Andres. Yes, our double leverage ratio is around 98%. As you know, after the divestment of Banistmo, it decreased significantly. We do not believe that is going to be above 105, 110 tops. That is basically because of the way we plan to manage leverage. We have a lot of room for leverage. As we have mentioned before, the 120% is the ratio that the risk rating agencies expected us to have. But thinking about between 100 and 105 for double leverage in 2027 should work.
Thank you, Mauricio. And how do you guys think about the combination of cash dividends and buybacks?
We think about it in a very different way. Both of them are very important tools to manage the leverage structure and the value creation for shareholders. But the buyback program is executed only on market conditions. So, it is a tool, we have it, we look at the market every day, but we are not going to execute unless we believe it is an attractive price to not only execute, but also to signal the market. Whereas ordinary dividend is more a result of the leverage structure we have, leaving the operational banks having the solvency ratios that they need to absorb growth, and the excess capital flowing into the holding, that way being able to distribute between 50% and 60% of our net income.
If you think about ordinary dividends going forward, it should be with a growth of inflation plus two or three points, growing in real terms. Now, extraordinary dividends are only coming with extraordinary milestones, as it was the creation of Cibest and the divestment of Banistmo.
That's very clear. Thank you, Mauricio. I have a different question, and this is regarding your long-road expectations for 2027. You mentioned this is going to be driven by commercial lending. When you see the competitive environment, how do you see the risk-adjusted returns that this new commercial loan production is going to produce versus the one that you currently have in your book?
Andres, the competitive environment is tough. There is a lot of competition, but we are very well positioned, not only in terms of capital, that we have plenty to absorb big tickets and be able to work with our corporate clients, but also with funding. As you know, we have a competitive advantage in funding, and we are activating that to be able to work with those customers. Also, and most important of all, is our customer-centric strategy in which we are not focused on competing on pricing. We're competing more in value proposition. We're competing more in terms of being the principality relationship of our customers in order to be able to serve them with not only lending needs, but everything related to structuring, advisory, and all their financial needs.
Understood. Thank you, Mauricio, and congratulations to all on the results.
Thank you, Andres.
Moving on to Santiago Villanueva with Davivienda Corredores.
Hi, good morning, and thank you for taking my questions. I just have two. The first one is, what opportunities do you see for the group in terms of RUGE, the new program through which the government aims to incentive the private investment? My second question is that I would like to better understand the differences between the year-to-date net income for Nequi, as reported during the call, and the year-to-date net income through August, as reported to the Superintendencia Financiera. While a loss of COP 21 billion is reported to the Superintendencia Financiera, the figure mentioned during the call shows a profit of COP 111 billion. So, how should I read those differences? Thank you.
Thank you, Santiago. Regarding the incentives that the government is proposing on its fiscal project that they presented to the Congress, I think it is a good opportunity for Colombia and for investors. I think one of the main challenges that Colombia has today is the lower rate of investment to GDP. Colombia used to have levels around 24%. Now it is 16%. So, the proposed measures, I think, are going to incentivize the investment, and the idea or the goal is that that investment return to levels of more than 24% of GDP, as I mentioned. For us, we will need to wait and see what is the final result and what ends being the decision of Congress regarding those incentives for investment. We think there is going to be an opportunity, but we will, as I mentioned, wait and see.
I would just add that our growth forecast of 2.4% for 2027 does in fact include the positive signals in terms of investment that are already in place, and that would be furthermore boosted by the programs such as RUGE. We estimate investment to grow 3.5% in 2026 and 4.7% in 2027. As Juan Carlos was mentioning, that will gradually bring investment as a percentage of GDP, at least for next year, around 17%-18%. Still a long way to go from our golden years in investment, but definitely signals in the right direction.
Now, in terms of your question about Nequi. Nequi is very particular, and we need to understand the difference between the accounting figures, formal accounting figures, and the managerial accounting figures. It was born on September 1st, so it only has, in the third quarter, it only has a P&L of one month of operation, but it has the balance sheet that was built throughout the history. The way we present the Nequi is assuming it existed from January 1st, 2026, and that way, managerial net income should be between COP 160 billion or COP 180 billion. For next year, that should grow and be above COP 250 billion. But it is important to expect that 2027 figures should converge. The managerial accounting and the formal accounting is going to look much more similar as we build the history of Nequi going forward.
Okay. Thank you, and congratulations on the quarter.
Thank you, Santiago.
We will hear next from Alonso Aramburu with BTG Pactual.
Yes. Hi. Good morning, and thank you for the call. There have been discussions about the potential increase in the interest rate cap, the tasa de usura. I am just wondering, if this materializes, and let us assume the tasa de usura increases by four or five percentage points, what kind of impact would that have on your NIM in 2027? Thank you.
Thank you, Alonso. There have been a lot of discussions, as you mentioned, regarding the cap rate in Colombia, and our view is that in Colombia, there is not just one cap rate. Actually, there are like six for different types of loans. The most common, it is the consumer loans cap that applies for credit cards and consumer loans, but there are other cap rates for different types of loans. As a matter of fact, in Nequi, around 6% of our loans have a cap rate that is different than the consumer cap rate. There are opportunities today. Our view is that there will be some conversations on how that rate is calculated, but we see difficult to have the discussion in Congress and remove completely the cap rate. That will give an additional room, that conversation about how that cap rate is calculated.
To your question, for us, that is an opportunity. What happened with the cap rate and at the level that is today in Colombia, at least the consumer cap rate, which is around 28.4%, it is that that generates exclusion to some people that, due to their level of risk, that cap rate do not allow formal financial institutions to lend them. If that ceiling increases, probably that will include more people that, as a matter of fact, are already customers of either Bancolombia or Nequi. That will allow us to lend them money that today it is difficult due to the level of risk and the cap rate.
What we see is we can keep operating in the way we are operating today with the current cap rates, but if the calculation of the cap rate changes and allow more room, that will also be a big opportunity for us, Alonso.
Okay. But on a net basis, I would assume your margins should be able to increase marginally, in addition to potentially faster loan growth, right?
Yeah, you are correct.
Okay. Thank you.
Thank you, Alonso.
This now concludes our question and answer session. I would like to turn the floor back over to our CEO, Juan Carlos, for closing comments.
Thank you, everybody, for participating in this third quarter conference call results. We are positive about how the Grupo Cibest results are developing. The third quarter showed that we are in the trend of having the results that we were expecting, and what we have seen so far for the fourth quarter, it's positive. We will think that we will end 2026 in line of what we are expecting. 2027 will have some challenges, but I think we are well-prepared to face those challenges and take advantage of the opportunities that we will have in next year. With this, we conclude this conference call, and we hope you participate in the fourth quarter conference call result. Thank you very much. Have a good day.
Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines, and have a wonderful day.