Banco Davivienda S.A. (PFDAVVNDA) Earnings Call Transcript

Welcome to the Davivienda's Third Quarter of 2025 Earnings Conference Call. I'm Karen, and I'll be your operator for today's call. Today's presentation is for investors and analysts only. Therefore, questions from the media will not be addressed. Today, Mr. Javier Suarez, Chief Executive Officer; and Mr. Alvaro Cobo, Chief Risk Officer, will join us to discuss the quarterly results that have been released. If you have not yet received a copy of the earnings report and presentation, please visit the Davivienda's investor kit or the financial information section at ir.davivienda.com. [Operator Instructions] Please note that this conference is being recorded. Afterwards, management will be available for a question-and-answer session. Before proceeding, let me mention that any forward-looking statements are being made under the safe harbor provided by the Securities Litigation Reform Act of 1995. Actual performance could differ materially from anticipated in any forward-looking statements due to macroeconomic conditions, market risks and other factors beyond our control. [Operator Instructions] With this, I am now pleased to turn the call over to Mr. Javier Suarez, Chief Executive Officer. Mr. Suarez, the floor is yours.

Welcome, everyone, and thank you for joining us this morning for Banco Davivienda's earnings conference call. Our results for the third quarter of 2025 demonstrate consistent improvements in the core financial performance metrics. We are steadily advancing toward profitable growth despite ongoing macroeconomic challenges such as still high interest rates, the fiscal outlook and a complex international landscape. Please move on to Slide 3. During the third quarter, the global economy continued to show mixed signals. Commodity markets, particularly oil, reflected these dynamics with Brent prices averaging slightly above second quarter levels but still below those seen a year ago amid expectations of oversupply and slower global demand. Turning to Colombia, the economy maintained a solid pace of recovery, growing by around 3.2% in July and August, supported by commerce, transportation and hospitality service sectors. Inflation, however, resumed an upward trend, rising from 4.8% in June to 5.2% in September, primarily due to higher food prices. Given these dynamics and concerns over fiscal conditions, the central bank maintained the monetary policy rate unchanged at 9.25% in July, September and October meetings, adopting a cautious stance on further cuts. The Colombian peso continued to strengthen during the quarter, appreciating by 3.6% quarterly and 6.1% annually. This behavior was supported by strong foreign portfolio inflows alongside lower country risk. For this year, we expect Colombia's GDP to grow around 2.5%, the intervention rate to remain at 9.25% and inflation to close the year at around 5.3%. Looking ahead, the country's outlook for 2026 will be influenced by a range of domestic and external factors. Among the domestic ones, key events include the pace of fiscal consolidation, the outcome of minimum wage negotiations and business confidence levels, all of which will shape investment decisions on local demand. On the external front, the main risks stem from trade tensions, volatility in commodity prices and the evolution of global interest rates. In this sense, our scenarios for next year range between 2.6% and 3.2% GDP growth and 8.5% to 9% monetary policy rate by year-end and 4.4% to 4.7% inflation. Please move on to Slide 4. At the system level, the total loan portfolio grew 6.3% year-over-year, accelerating from 4.8% in the previous quarter. This expansion was mainly supported by retail demand, particularly of consumer credit, followed by still solid growth in mortgages. Credit quality continued its gradual improvement. As of August, the systems total 90-day PDL ratio stood at 3.2%, decreasing by 10 basis points during the last 2 months. Lending rates for consumer and commercial credit showed quarterly and annual decreases. The most significant reduction was observed in consumer loans driven by the lower cap rate, which fell by around 50 basis points during the quarter,and by over 380 basis points annually. Meanwhile, mortgage lending rates showed a marginal increase in recent months, consistent with longer-term market behavior. Moving on to Slide 5. Central America maintained a moderate pace of growth with inflation generally contained across the region. In Costa Rica, economic activity continued expanding at a solid pace. The economy grew 3.9% year-over-year led by the free trade zone regime. Inflation deepened into deflationary territory, reaching negative 1.0% in September, driven mainly by lower prices in communications and transportation. In response, the Central Bank reduced its policy rate twice during the quarter from 4% to 3.5%. Rating agencies acknowledged the country's fiscal discipline with Moody's and S&P upgrading Costa Rica's rating to Ba2 and BB, respectively. In El Salvador, growth strengthened to 4.1% year-over-year supported by construction activity and higher exports. Inflation rose slightly to 0.4% in September, reversing the deflation observed earlier in the year, mainly due to higher food prices. Risk ratings remain unchanged reflecting steady macroeconomic performance and improving investor perception following the IMF's continued engagement with the country. In Honduras, GDP expanded 4.1% year-over-year, moderating from the previous quarter. Inflation stood at 4.5% in September, within the central bank's target range. The policy rate remained unchanged at 5.75% and rating agencies maintain the country's credit ratings. Finally, in Panama, growth moderated to 3.4% compared to 5.2% in the previous one, affected by slower performance in transportation and trade. Inflation turned positive at 0.1% in September after several months of deflation driven by food prices. Ratings remained stable. Overall, our Central American business continued to operate in a resilient macroeconomic environment supported by stable monetary policies, low inflation and improving sovereign credibility. These conditions provide a solid foundation for growth and improving profitability in the region. Please move on to Slide 6, where we can see the main financial results for the quarter. During the third quarter, our loan portfolio showed a stable performance despite the impact of the peso appreciation and prepayments of commercial loans. Excluding these effects, underlying dynamics remain positive particularly in the consumer and mortgage portfolios, which continue to grow quarter-over-quarter. Pretax income reached COP 517 billion, increasing 17.4% compared to the previous quarter and 163% year-over-year. This reflects the strengthening of our core business, supported by improvements in structural drivers such as funding costs and credit risk rather than extraordinary factors. One of the key initiatives behind this performance is our strategy to help people and businesses move their money, which continues to show tangible results. The strategy focuses on strengthening customer relationships by increasing money flows in the ecosystem, encouraging clients to receive, transfer and pay through our channels. In this way, we don't only boost engagement and transactional activity but also improved funding mix and fee generation. As a result, collections have grown 7% quarter-over-quarter and 17% year-over-year, paid amounts by 8% and 22%, respectively, and the number of transactions originated and received rose 6% versus the previous quarter and 14% compared to last year. These dynamics translated into 20% year-over-year growth in low-cost funding and a 19% increase in fee income, confirming the effectiveness of this strategy in generating stable low-cost funding and diversifying revenue streams. Consequently, our average funding costs have a clear downward trend, as shown in the chart. Second driver of improvement is credit quality. The 12-month cost of risk decreased by around 180 basis points year-over-year to 2.49%, while new PDL formation continued to decline, confirming that delinquency generation remains under control. These two structural drivers, along with our efficiency strategy, allowed us to reach an accumulated net profit of COP 1.1 trillion, representing a COP 1.35 trillion improvement compared to the same period last year and return on average equities of 9% for the quarter and 7.8% for the last 12 months. Finally, our capital ratios stand at solid levels with an 11.8% CET1 ratio and 17.5% of total capital ratio. Now moving on to Slide 7, I would like to share with you DaviPlata updates. In 2011, we launched DaviPlata with a clear objective, to provide reliable, friendly and frictionless financial services to all Colombians. At that time, there was no other fully digital solution in Latin America offering free access to financial services, and DaviPlata played a pioneering role in enabling users to move, save and manage their money directly from their phones efficiently and without costs. Over these 14 years, DaviPlata has continued to evolve, expanding its reach and capabilities and consistently leveraging its innovative DNA to develop new features and serve more people. Some examples include how we made it possible to transfer money through social networks in 2017, our alliance with Colombian's delivery unicorn, Rappi, in 2019, enabling users to access DaviPlata services directly within the app being an early example of embedded finance in the region. Our partnership with Medellín public transfer in 2021 to enable digital payments and a smart city ecosystem. The introduction of contactless transfers between phones in 2022, among others. In that sense, in our quest to continue strengthening DaviPlata position, a few weeks ago, we launched what represents the next step for the platform, to transform into a new bank. This transformation includes three main changes, first, to enhance the user experience through an improved app; second, to broaden the product offering; and third, to expand DaviPlata's target market. On the first front, we've improved our user experience through a new app, promoting intuitive usage, improved speed and overall high standard performance, aiming to increase engagement and transactional activity. DaviPlata continues to consolidate its position as one of the most trusted digital financial platforms in the region, operating 364.4 days out of the year with an NPS about 75 points, demonstrating its resilience and technological strength. Additionally, DaviPlata became the first financial product in Latin America to receive carbon neutral certification, generating 96% fewer CO2 emissions than cash transactions, reaffirming our commitment to sustainability and future generations. Please move on to Slide 8. The second change is related to the DaviPlata's product offering. In this new stage, DaviPlata's also evolves with a strengthened and more attractive value proposition, one that reflecrts everything we've learned over these years about how Colombians live, connect and manage their money. More specifically, we are complementing our credit savings and payment verticals, enhancing our competitive position while providing users with a range of day-to-day services backed by a reliable platform and name, potentiating DaviPlata's scale. The launch of digital debit and credit cards with NFC technology, developed in collaboration with Mastercard, represents a significant milestone. Both products are compatible with mobile wallets, enabling physical and online purchases domestically and internationally, and together they complement DaviPlata's nanocredit and pay check advanced solutions, strengthening the platforms credit ecosystem and monetization potential. Additionally, we have an interesting road map of additional services from entertainment offerings, the public transport, among others, aimed at strengthening customer engagement and loyalty, allowing them to find in DaviPlata everything they need. The third change is related to DaviPlata's target market. Over time, DaviPlata has evolved in its served segments, initially focusing on financial inclusion from bank populations and later expanding to small merchants and social ecosystems. Now with the brand relaunch and a more complete product offering, DaviPlata aims to reach new segments with interesting growth opportunities, including young adults, employees, small businesses as well as foreign residents in Colombia. Together, these initiatives position DaviPlata continue increasing its customer base, deepening usage and generating sustainable revenue growth over time. Now please move on to Slide 9 to see DaviPlata's main results. During the third quarter, DaviPlata continued to show strong momentum across its main ratios. Average deposits increased by 2% over the quarter and 16% year-on-year, confirming its role as a reliable and growing source of low-cost funding for the bank. At the same time, our focus on strengthening the credit portfolio is yielding results. As a matter of fact, the loan book reached COP 69 billion, 1.8x the second quarter size and almost 4x last year's. DaviPlata's credit portfolio is performing in line with our expectations with monthly disbursements reaching COP 15 billion recently, average tickets of COP 1.7 million, around $400, and a 2.8-year average tenure. Credit quality is performing within our risk appetite for nanocredits with PDLs below 5% and a 1-digit cost of risk. Importantly, the portfolio is almost fully backed by collaterals, ensuring resilience and supporting sustainable and profitable growth in this expanding line of business. In transactional activity, DaviPlata continues to show solid performance. Year-to-date monetary transactions and purchases have increased by more than 20%. In terms of income, DaviPlata generated COP 142 billion year-to-date, 7% higher than the previous year, supported mainly by stronger transactional revenue, which has grown 11% on a cumulative basis and are gradually increasing share of loan income within total revenues. Now let me turn the call over to Alvaro to continue with the presentation.

Thank you, Javier. Let's move on to Slide 10, where we will analyze the evolution of assets. Our total assets reached COP 190.5 trillion, increasing 7.5% during the quarter and 4.4% year-over-year. Excluding the Colombian peso appreciation, assets will have grown about 2% during the quarter and 7% over the year. Cash has been increasing, supported by high degree players across the system and additional resources from our recent Tier 2 issuance. We have prudently managed liquidity to keep strategy that balance short-term positions with instrument designing to preserve profitability and flexibility for the balance sheet. The investment portfolio decreased during the quarter, mainly due to our participation in the Colombian government's bond repurchase program, thereby reducing sovereign bond holdings. On an annual basis, investment increased, reflecting portfolio adjustments aligned with our liquidity and market strategies. By operation, Colombia's assets grew 1% in the quarter while Central America's operation expanded 2.7% in dollars. Overall, asset composition remained stable with Colombia representing around 74% of total assets and Central America accounting for close to 26%. Let's turn to Slide 11, where we will cover the loan portfolio growth. When looking at this current performance, it is important to consider a key factor that has influenced growth across all segments, the Colombian peso appreciation, which reached almost 4% in the quarter and 6% year-over-year. The commercial portfolio decreased 2.1% in the quarter and increased 2.6% annually. In addition to the FX, prepayments amounting to close to COP 2 trillion also play a significant role in the size of the portfolio. Excluding both effects, the commercial book will have grown by 2.1% in the quarter and 7.8% annually. Excluding FX, the consumer portfolio already shows a quarterly growth of 1.3%, supported by higher disbursements, and we will see later in the presentation. The mortgage portfolio remains the main driver for growth, reflecting steady performance quarter after quarter and benefiting from sustained demand. As a result, the total loan book decreased by 0.2% quarterly and increased 2.7% annually. When excluding both FX and prepayments, total loan growth will have been 2% during the quarter and 6% during the year, reaching the lower end of our guidance. On Slide 12, we will view PDLs and coverage. Total PDL closed at 4.39%, continuing its improving path. These positive trend was mainly driven by the consistent improvement of the consumer portfolio, which accounts for most of the reduction both in the quarter and the year, followed by the mortgage book, where we were observing positive results in origination and collections, reflected in the downward trend in delinquency shown on the chart. In the commercial portfolio, the temporary deterioration observed this quarter was primarily related to prepayments and FX. Together, this factor explains around 70% of the increase in the ratio and the remaining 30% is explained by isolated cases that temporarily affect PDLs during the quarter, which have been managed and have restructuring agreement already in place. Coverage trends were generally positive during the quarter with the consumer and mortgage segment benefited from lower PDL formation and a sustained provision building process. In the commercial book, coverage decreased slightly given particular FX previously explained. In this sense, coverage for total PDLs improved by over 500 basis points over the year reaching 91.5%, in line with our guidance of closing about 90% by year-end. Looking ahead of 2026, we expect to reach levels around 100%, supported by an improving asset quality and continued provisioning efforts. Finally, the coverage [ loss ] collateral ratio reached 144.3%, confirming our risk mitigation position across all portfolios. Now let's look at Slide 13. We continue to observe a sustaining growth in consumer disbursements, as seen in the upper left chart. The portfolio continued to expand healthily, supported by origination capabilities and controlled risk appetite. These positive trends validate the strength of our risk models and the adjustments made in the origination and collection strategies, which continue to enhance the overall quality of the consumer portfolio as seen in early PDLs, which are well below the reference value observed in 2021 after the pandemic. However, realized provision expenses from the consumer book exceeded the expected level for the quarter explained by the reconstitution of coverage and parameter adjustments we're making our provisioning models. These updates are consistent with our conservative stance and reflect a prudential recognition of sustained increase in disbursement, thereby building additional resilience that will allow us to capture growth opportunities in 2026. Please move on to Slide 14, where we will present our cost of risk, provision expenses and loans by stages. The lower level of provision expenses for the current aligned with the improvement in asset quality despite our efforts to reinforce coverage across portfolios. The quarterly cost of risk stood at 237% while the 12-month ratio closed at 2.49%, both continued their downward trend as expected. On a cumulative basis, provision expenses have decreased by 37% year-over-year, consistent with this stabilization process. The risk from position of the portfolio continued to improve during the quarter with decreasing Stage 2 and 3. Coverage for Stage 1 and 2 increased during the quarter. Coverage for Stage 3 stood at 54.4%, mainly explained by the commercial isolated cases. However, since this exposure are backed by adequate collateral levels, the required provision is lower. Overall, these results confirm the progress achieved in the credit quality and the disciplined management of provision, supporting sustainable growth. Let's turn to Slide 15, where we will present the evolution of our funding sources and liquidity. Total funding sources increased by 7.6% during the quarter and 4.9% year-over-year. Turning of the funding mix on the lower left, we continue to observe a positive recomposition as a low-cost demand deposit increased in [ term share ] Colombia's funding mix by 470 basis points year-over-year, gaining ground over the term and high-cost demand deposits, which, in turn, lost 310 basis points annual. These results were mainly driven by higher balances from retail customers and SMEs reflecting our ongoing strategy to strengthen transactional deposit through our moving the money and strategy review by a year earlier, enhancing funding stability and efficiency. Bonds also gained share within the total funding mix due to the $500 million Q2 issuance completed in July, in line with our funding diversification mandate. Liquidity ratio remained at solid levels and in line with our internal risk appetite framework. On Slide 16, we will review our capital structure. Our common equity Tier 1 ratio closed at around 11.80%, increasing by 41 basis points quarterly and by 143 basis points year-over-year, mainly driven by stronger earnings generation, which has allowed us to rebuild our capital base. Risk-weighted asset reduction was primarily explained by the decrease in commercial portfolio exposure due to the prepayments and FX impact. The total capital adequacy ratio reached 17.5%, also supported by our Tier 2 issuance. Our current capital structure reflects a position of strength to seize grow opportunities in 2026 while comfortably supporting Tier 2 maturities in the coming years. Please move to Slide 17, where we present our margins. Our NII, net interest income, increased by 1% during the quarter and 5.2% on an accumulated basis, supported by the continued improvement in funding costs and a strong treasury income despite lower yields on loans. Consequently, the NIM, including FX and derivatives reached 5.73% for the quarter and 5.70% for the last 12 months, in both cases, increasing over the previous year. Reflecting the bank's disciplined interest rate risk management, coupled with a funding strategy that is materializing into better results. Additionally, the NII after provision increased 11% in the quarter and by 84% annually. Loan income fell 2.5% quarterly, mainly due to seasonality effects in Colombia, where both commercial and mortgage portfolio were affected by lower UVR indexation during the second half of the year. As we mentioned in previous calls, UVR ratings tend to contribute more strongly during the first half of the year. Investment and interbank income increased during the quarter maintaining a solid performance throughout the year. In Colombia, results were supported by valuation gains and profit from security sales. In Central America, higher interbank yields and valuation gains on debt instruments also contributed positively. On the other hand, financial expense decreased, reflecting the ongoing repricing of liabilities at lower rates and the gradual reduction in funding cost. The contribution from FX and derivatives decreased 66.9%, mainly due to lower gains from hedging position in fixed income instruments and foreign currency derivatives. Please continue to Slide #18. Nonfinancial income increased 5.5% during the quarter and 4.3% on a cumulative basis. Fee income has shown a positive performance, growing by 11% annually, supported by higher transactional and payment activity in Colombia as well as increased credit card and insurance fees. In Central America, the increase was driven by higher commissions in the remittance and credit card businesses. Meanwhile, other than net income and expense grew 39.4% during the quarter, mainly explained by lower operational risk-related expenses, higher results from reinsurance activities and greater contribution from associated [ entities ]. On a cumulative basis, results remain 25.4% below last year since 2024, figures include nonrecurring income from asset received payment. Total expenses increased 2.3% during the quarter and 7.1% on a curated basis. The year-to-date variation mainly reflects the combined effect of inflation, average exchange rate depreciation and last year's salary adjustment. Personnel expenses declined 1.1% quarter-over-quarter and have remained controlled on an accumulated basis. Operating and other expenses increased 4.7%, driven by higher administrative and technology costs, seasonal marketing expenses and ongoing digital transformation projects. As a result, the cost-to-income ratio stands at around 54% to 55%, still impacted by moderate loan growth but reflecting disciplined cost management despite inflationary pressures. Let's turn to Slide 19 to analyze the bank's net result. Net profit for the quarter totaled COP 374 billion, decreasing 13.9% currently, explained by a base effect from the second quarter when the tax benefit from the first and second quarter was recognized simultaneously. As a result, this quarter's higher tax shares reflects a normalization rather than a structural increase. If we exclude this base effect and consider a normalized income tax, net profit for the third quarter will increase compared to the second quarter. In fact, pretax income improved 17.4% compared to the previous quarter, confirming that the underlying core trends of our business are going in the right direction. On an accumulated basis, net profit reached COP 1.1 trillion, a strong rebound compared to the results recorded in the same period of 2024, supported by the recovery in margins, lower provision costs and efficiency efforts. The return on average equity reached 9% on a 3-month basis and 7.8% on a 12-month basis, showing a continued upward path. Please move on to Slide 20, where we will share our expectations for 2025 on Banco Davivienda consolidated business. We have adjusted our expectations to reflect the most recent operating trends and the macroeconomic context, including a slower pace of loan growth and an improving cost of risk. Loan portfolio growth is now expected between 4% and 6%, down from the previous range of 6% to 8%. This adjustment is mainly explained by the appreciation of the Colombian peso during the year and a more conservative outlook for local credit demand. By the segment, commercial loans are projected to expand between 4% and 6%. The consumer loan book is expected to stabilize compared to last year's size, remaining relatively neutral, supported by increasing disbursements, improving household confidence and the gradual pass-through lower interest rates. Mortgage loans are anticipated to grow between 6% and 8%, and driven by sustained demand. Portfolio quality remains resilient with past due loans over 90 days expected to decrease to 3.5% and 4%, consistent with current trends and supported by coverage ratio above 90%. The net interest margin including FX and derivatives is expected to remain within the 5.6% to 5.8% range, supported by disciplined asset and liability management amid a still high interest rate environment. Cost of risk is projected to range between 2.3% and 2.5%, below the previous guidance of 2.4% to 2.6%, reflecting lower credit loss expenses and continued improvement in portfolio mix and recoveries. Nonfinancial income for the full year is expected to grow between 3% and 5%, supported by fee generation in the insurance business and higher transactionality. Operating expenses are projected to increase between 4% and 5%, consistent with inflationary trends and the execution of the strategic projects, while maintaining cost-to-income ratio in the mid-50s range, showing continued efficiency discipline. In this sense, profitability expectations have improved. ROE is now guided to a range between 8.5% and 9%, up from the previous 7% to 8.5% range, reflecting a strong core performance even amid moderate loan growth. CET1 is expected to close between 11% and 11.5% and total capital adequacy ratio between 16.5% and 17%. Overall, our updated guidance confirms a positive profitability outlook for 2025, supported by improved risk management and efficient capital allocation. Thank you. Now I'll pass it back to Javier to provide some update on our corporate reorganization and Davivienda Group's share issuance process.

Please move on to Slide 21. Since our last conference call, we've advanced in the implementation of our new corporate structure. As you may recall, Davivienda Group was established in March as the holding company of Banco Davivienda. The structure was designed to bring the bank's shareholders up to the holding level, allowing them to access both the benefits of the new structure and Scotiabank's integration. Last month, Banco Davivienda's common shareholders exchanged their shares for the Davivienda Group shares on a 1:1 basis. As a result, the Davivienda Group already controls Banco Davivienda by holding a 76% stake in the bank's share capital. Now as the next step, Davivienda Group launched its initial public offering on October 28 to allow the remaining Banco Davivienda shareholders to become shareholders of Davivienda Group. Please Move on to Slide 22, where we review the key details of the offering. As discussed during the marketing call a couple of weeks ago, the recipients of the offering are Banco Davivienda's shareholders, who will be able to pay with their current shares to receive Davivienda Group shares on a 1:1 ratio. Recall, the main benefits for those accepting the offering include: one, to participate in a new holding with greater flexibility both in terms of corporate structure and capital management; two, subject to receiving the authorizations for the integration with Scotiabank, to perceive an 11% increase in the book value of their shares; to perceive a 49% increase in the float of listed shares; to participate in a larger, more diversified operation with a strengthened presence, which will benefit from its subsidiary synergies. The offering will remain open until Wednesday, November 19, at 1 p.m. Colombian time. Those wishing to become shareholders of Davivienda Group must formally accept the offer by contacting their designated broker. Results will be announced on November 20 and settlement will also take place that day. The first trading day of the Davivienda Group preferred shares on the Colombian Stock Exchange is scheduled for November 21. This process represents a key milestone in implementing our new corporate structure, which will allow the Davivienda Group to consolidate Banco Davivienda's ownership and advance to the next stage of integrating the Scotiabank operations in the region once we receive the final authorizations. Information on Davivienda Group, the public offering notice, prospectus, marketing presentation, among other details, are publicly available at daviviendagroup.com, Davivienda Group's recently launched corporate website. With this, we would like to open the floor to questions.

[Operator Instructions] Our first question comes from Mr. Ernesto Gabilondo from Bank of America.

I have a couple of follow-up questions from my side. The first one is on the sharing offering. I believe it is ending next week. So can you provide us some color about the percentage of investors that have already accepted the offer? And for my second question is related to your ROE expectations. As you mentioned, you're expecting this year to be around 8.5%-9%. But how should we think about Davivienda stand-alone ROE in the next couple of years? Just to compare it against your expected ROE for Davivienda plus Scotia, would you have already expected an ROE between 14% and 16% by 2029?

Ernesto, thank you for your questions. Regarding the first one, the share offering, we're very satisfied with the way the process is moving forward. So far, we've had the opportunity to have a close contact with most of the institutional investors, all of them, all of the institutional investors and some of the international funds that are part of the book. So far, we've received orders already. Some of them are still waiting until the end of the process, which will be by Wednesday of next week. And we have already verbal intentions that have been expressed of around more than 80% of the shareholders of the shares that are -- preferred shares of Davivienda that will be swapped into Davivienda Group's shares. So that's the 80% out of close to 90%. That is on the institutional side. The remaining 10%, we're still in the process of contacting some of them. And the remaining 10% is on the retail side. On the retail side, the most important brokers in Colombia are already working on contacting their individual customers. So we're very confident that we have already commitments, soft commitments, verbal commitments that go above 80% so far. And our expectation is that by the close of the process will be significantly higher than that. In terms of ROEs, for next year, we expect Davivienda on a stand-alone basis to be on double digits. That's our expectation. Even though we've been in adjusting our parameters for loan provisioning, and you can see that in this quarter in which there are some effect -- significant effect on loan provision, especially in the consumer book, not because we believe that the book is deteriorating, by the contrary, the book is actually improving. But we are starting a phase in which we will start growing. And we want to make sure that we have the provisions for an uncertain cycle down the road. We are not estimating that to happen, but we want to be sure that we have the level of provisioning that were consistent with the expectations and growth. So on that note, it would be double digits for Davivienda on a stand-alone basis. On the consolidated basis, it could be lower than that. It could be high single digits, very close to what we're experiencing this year because of the fact that the operations from Scotia will bring both operating expenses on the integration and the integration costs. And at the same time, we will start capitalizing some of the synergies. So those effects, we are expecting them to somehow cancel each other and bringing the ROE to levels similar to what we are having today for Davivienda on a stand-alone basis.

[Operator Instructions] We have one question from our webcast. This question comes from Mr. Brian Flores from Citibank. His question is, what are the expectations of ROE and loan growth for 2026? Some of your peers provided soft guidance. Also, what can we expect from the integration of Colpatria in that sense?

Brian, thank you for your question. As of today, we're not providing guidance for next year, but we could give you some soft guidance in terms of the expectations on growth for next year. We're expecting mid- to high single digits overall for the whole book. On the mortgage loans, it will be probably lower than what we're experiencing today. But on the consumer side, in which we've been actually turning around, and we expect this year to be close to 0 growth, actually positive growth after a couple of years in which we've been decreasing the size of the portfolio. This year 2025 will be -- we're expecting that to be flat, maybe a little bit on the positive side. But for next year, we're expecting also single digits, probably around 5% to 7%, something around that, although this is still a soft guidance. And on the commercial side, it will be something around that also. So overall, we're expecting mid- to high single digits. With respect to Colpatria in the case of the Colombian operations, what we're seeing is they've been actually turning around in terms of growth after a couple of tough years in terms of growth. The last couple of quarters have been good in terms of retaking growth. And we expect that to continue for next year. We are also thinking that eventually, for next year, it could be higher than what they are having during the last couple of quarters because of limitation and risk appetite that they have as of now that our expectation is that with new revised risk appetite, they could grow a little faster, getting close to what we are guiding for ourselves. So overall, the combined operations should be around mid- to high single digits for the combined operations. Thank you, Brian, for your question.

Our next webcast question comes from Mr. Andres Soto from Santander. He says, my questions are related to your expectations for 2026. I understand there are still several uncertainties and you are factoring in a broad range for your macro parameters. However, considering a slightly faster GDP growth and limited rate cuts, can we assume that your main NII driver will be loan growth rather than NIM expansion? If the driver of this loan growth would be arguable, arguably, the retail segment, would it be fair to assume that COR would also remain around current levels? All in all, would you agree with an ROE at around 10% for 2026?

Andres, thank you for your question and for your understanding. In fact, there are a lot of uncertainties going on with the numbers for next year, with the integration of the operations. But I'd say that in terms of GDP growth, as I mentioned, we are expecting a faster GDP growth, and I agree with you on the limited rate cuts. NII -- the NII driver would be loan growth. Of course, that will be a main driver. But we believe that also there are some structural drivers. We're still working hard, and we expect to continue working hard on the transactional deposit base that transforms into low-cost deposits. That has been something that we've seen during 2025 and we're expecting that to happen for 2026. So it will be both growth and improvement in structural drivers with, I would say, arguably most of the improvement will come from growth. In terms of growing on the retail segment, as I just mentioned in the previous question, you're right, there would be more growth on retail segment. But I wouldn't agree with the assumption that the cost of risk would remain around current levels because, still, consumer cost of risk is a mixed of the cost of risk associated to vintages that come from a couple of years ago that are dwindling as time goes by and also new vintages for that we have originated for the last couple of years. And new vintages are performing very well. So there's a significant difference on the cost of risk for the old ones and the new ones. And as time goes by, the old ones are losing weight in the portfolio and the new ones, of course, are gaining weight. So just by the dynamics of the maturing of the old vintages, we expect still cost of risk to keep improving overall on the consumer segment for the portfolio for next year. In terms of ROE, as I mentioned in the previous question, on a stand-alone basis, we are expecting somewhere above 10% of ROE for next year on Davivienda on a stand-alone basis. Thank you, Andres, for your question and, once again, for your understanding.