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

Welcome to Davivienda Group's Second Quarter 2026 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. Pedro Bohorquez, VP of Strategic Risk and Financial Planning, 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 Group's Investor kit or the Financial Information section at daviviendagroup.com. [Operator Instructions] Please note that this conference is being recorded. [Operator Instructions] 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 that anticipated in any forward-looking statements due to macroeconomic conditions, market risks and other factors beyond our control. [Operator Instructions] I am now pleased to turn the call over to Mr. Javier Suarez, Chief Executive Officer. Mr. Suarez, the floor is yours.

Good morning, everyone, and thank you for joining us today for Davivienda Group's Second Quarter 2026 Earnings Conference Call. During the second quarter, we delivered a significant improvement in profitability, supported by resilient margins, controlled credit risk and disciplined management of our funding and operating expenses. This performance is particularly meaningful in a challenging macroeconomic environment characterized by persistent inflationary pressures and elevated interest rates. Today, we will walk you through the key drivers behind the quarter's results and the progress made on our integration road map. Please turn to Slide 4, where I will begin with an overview of the macroeconomic environment in Colombia. Economic activity gained momentum during the second quarter. The economic activity indicator grew by an average of 3.6% year-over-year in April and May, mainly supported by services, while primary and secondary activities remain more moderate. Annual inflation increased from 5.56% in March to 6.14% in June with pressures concentrated in food, regulated prices and services. Although the appreciation of the Colombian peso has helped contain imported inflation, convergence towards the Central Bank's target is expected to be gradual. Against this backdrop, the Central Bank increased the policy rate by a cumulative 275 basis points during the year, reaching 12% in June and maintaining it at that level in July. The Colombian peso appreciated by 6% during the quarter and 15.5% year-over-year. This performance was supported by improved local sentiment and lower country risk premiums, the cancellation of the government's total return swap and the interest rate differential between Colombia and international markets. For the Davivienda Group, this movement has a relevant translation effect as approximately 28% of our assets are located in Central America, the appreciation reduces the value in Colombian pesos of our international balances and related results. While this creates a translation drag on our reported figure in pesos, the underlying organic growth of our Central American franchises remains healthy. Given recent macroeconomic developments, we have revised upwards our year-end inflation expectation to between 6.7% and 6.8% and our policy rate assumption to 12.5%. Our GDP growth forecast remains at around 2.2%. In the short term, these conditions may translate into a more moderate pace of activity. Looking ahead, however, we expect that progress on fiscal consolidation and increased support to different industries will help strengthen confidence and investment, supporting a more sustainable economic expansion in the midterm. From a margin perspective, we expect the impact of increasing interest rates to be limited given our fairly neutral balance sheet position to interest rate shocks. And from a credit risk perspective, we may see some additional pressure in PDLs. However, at this stage, we're not anticipating material impacts that would prompt a change in our guidance. Please move on to Slide 5, where we will review the latest trends in the Colombian financial system. Interest rates continue to adjust to a more restrictive monetary policy environment. During the quarter, average lending rates increased across all segments. Deposit rates also remain elevated, particularly at longer maturities. Against this backdrop, credit growth remained positive during the second quarter. As of May, the system's gross loan portfolio grew 9% year-over-year. Consumer loans accelerated to 9.6%, supported by a stronger household demand. In contrast, Mortgage and Commercial loans showed a more moderate pace. Asset quality remains sound. The system's total 90-day past due loan ratio stood at 2.81% in May and continued to decline below the levels observed in 2018. Going forward, the main factors to monitor at the system-level will be the pace of Consumer loan growth and the evolution of household leverage. Moving on to Slide 6. Central America continued to show resilient economic activity during the first half of the year. El Salvador and Honduras accelerated compared with the final quarter of 2025 with first quarter GDP growth reaching 4.8% and 3.8%, respectively. Panama maintained a strong pace of 4.8%, while Costa Rica moderated slightly but continued to expand at a healthy 4.1%. Sovereign credit developments were also broadly stable to positive. Moody's revised El Salvador's outlook to positive, while Standard & Poor's improved Honduras' outlook from negative to stable. Fitch maintained a positive outlook on Costa Rica and Panama's rating remain unchanged with digital consolidation continuing to be the main variable monitored by the agencies. Inflation increased across the region, mainly reflecting higher international oil and fuel prices. A relevant development during the semester was the continued appreciation of the Costa Rican Colon, which strengthened by approximately 9% year-to-date. This movement was supported by sustained foreign currency inflows from foreign direct investment, tourism and payroll payments, among others. As we've shared with you before, while this effect protects our capital and solvency ratios through our hedging strategy, it generates a negative impact on our P&L, temporarily affecting Central America's reported profits. Looking ahead, we expect the region to maintain positive growth close to the decade average, supported by domestic demand, investment and services. Inflation should remain relatively contained, although international fuel prices will be a factor to monitor. Further progress in fiscal consolidation should also contribute to stronger sovereign [indiscernible] and greater macroeconomic stability. Please move on to Slide 7, where we present Davivienda Group's main financial results for the second quarter. Our gross loan portfolio closed at COP 201.1 trillion, decreasing 0.6% during the quarter, mainly due to the appreciation of the Colombian peso. Excluding foreign exchange effects, loans grew 1% quarterly, supported by positive underlying dynamics in Consumer and Mortgage lending. The portfolio has grown 4% year-to-date when excluding FX. Quarterly NIM, including derivatives, increased by 49 basis points to 6.16%. This improvement reflected higher loan income and a strong contribution from our investment portfolio, supported by larger positions in Colombian government securities and favorable movements in sovereign yield curves. This performance also reflects the Group's interest rate profile following the integration. The complementary positions of Banco Davivienda and Davibank Bank result in a broadly neutral position for the Davivienda Group, reducing our short-term exposure to a single direction in interest rates. Three elements contribute to this position. First, we've increased the variable rate portion of our loan book. Second, low and mid-cost demand deposits have been increasing as a share of our total liabilities, providing a more stable funding base that does not immediately reprice with changes in market rates. Third, we have carefully managed the duration of liabilities, particularly term deposits, which allows us to manage renewals progressively and adjust pricing, providing greater flexibility to manage costs as macroeconomic conditions evolve. Cost of risk remained stable at 2.14% underscoring control provision requirements and sound credit risk management despite the challenging macroeconomic environment. Operating expenses also declined during the quarter, primarily because the [ wealth ] tax was fully recognized in the first quarter, complemented by continued discipline in personnel and other operating expenses. These dynamics resulted in COP 830 billion of profit for the quarter and COP 1.13 trillion for the first half of the year. However, a significant portion of this quarter's profit was driven by market conditions benefiting our investment portfolio alongside the PPA accounting impact stemming from the fair value recognition of the acquired assets and liabilities. When excluding the wealth tax accounting and nonrecurring impacts, our core performance ROAE would have been 13.62% for the quarter and 11.14% for the first half of the year. Our capital position also remains sound. Banco Daviviendas' CET1 ratio reached 12.13%, providing an adequate capital buffer to support growth and the integration process. Therefore, as we look past the accounting and nonrecurring dynamics, the key message I want to emphasize is the structural progress of our franchise. Our core underlying trends, stable asset quality, wing net interest margins and disciplined expense management confirm the continued recovery of the group's core financial fundamentals. We're building a highly resilient integrated operations, and this quarter's results confirm we are executing on that vision. Please move on to Slide 8, where I would like to share the latest developments in DaviPlata. DaviPlata continued to strengthen its role as a source of low-cost funding, a highly transactional platform and a growing contributor to the Group's revenues. Average loan amount deposits reached COP 1.29 trillion, increasing 4% during the quarter and 31% year-over-year. [ Transactionality ] also remained strong with monetized transactions growing 13% during the quarter and purchases increasing 8%, reflecting greater recurrence and engagement across the platform. This activity translated into stronger monetization. Quarterly income increased by 15% sequentially, while accumulated income rose 58% year-over-year. Growth was supported by transactional revenues, the increasing contribution from lending and the income generated from the funding provided to Banco Davivienda. The credit portfolio reached COP 145 billion, increasing 2% during the quarter and almost 4x compared with a year ago. Although disbursements moderated sequentially as we continue refining our [indiscernible] models, they remain 74% above last year's level. Looking ahead, we expect credit origination to regain momentum progressively while preserving disciplined risk management under a higher rate and inflation environment. Our growth strategy is based on the information generated within the DaviPlata ecosystem, which allows us to identify customers with recurring cash flows and transactional behavior and offer them products aligned with their payment capacity. This quarter also marked an important milestone in DaviPlata's evolution as a new bank with the launch of a fully digital credit card, whose origination and management journey takes place directly within the DaviPlata App. During its first month, we received more than 32,000 applications, opened over 7,600 cards and generated COP 3.2 billion in purchases. Going forward, our focus will be on increasing activation and usage, expanding product functionality and strengthening cross-selling opportunities with Davivienda. Together, these developments reinforce DaviPlata's value proposition across deposits, payments and credit while supporting greater recurrence, deeper customer relationships and sustainable income generation. Turning to Slide 9. I'd like to share an update on how we are advancing in our integration road map. In Colombia, shareholders approved the transfer of assets and liabilities from Davibank to Banco Davivienda. To summarize the mechanics of this operation, Banco Davivienda will integrate Davibank Bank's core banking assets and liabilities. In exchange, Banco Davivienda will transfer up to 30% of its shares in holding Davivienda International to Davibank. The final exchange ratio will be determined by an independent third-party valuation based on market values at the effective date of the transfer. The road map ahead consists of securing the required regulatory approvals to execute the legal, operational and technological integration. While internally, we've been advancing in the preparation process, the time line is ultimately tied to receiving these authorizations, which we expect to obtain later this year or in early 2027. As we have shared before, 2026 remains primarily an investment and transition year, while the net contribution is expected to become increasingly visible as the integration progresses. Year-to-date, we have realized close to 6% of the expected synergies and incurred around 27% of the expected costs. Our midterm expectations remain unchanged with total onetime integration costs of between COP 600 billion and COP 700 billion and annual operating expense efficiencies of between COP 900 billion and COP 1.2 trillion with full capture beginning in 2028. These benefits are expected to support a cost-to-income ratio between 43% and 45% and an ROAE between 14% and 16% by 2028, 2029. In general terms, this process is advancing according to plan. We are highly focused on preparing our operations and platforms to guarantee the best possible execution, setting the groundwork to ensure a seamless transition for our clients while unlocking the full long-term value of these combined franchise. With that, I will now hand the call over to Pedro to walk you through our financial results and updated guidance. Pedro, please go ahead.

Thank you, Javier. Please move on to Slide 10, where we review the evolution of our credit portfolio. Overall, the quarter shows positive underlying loan growth when excluding the effect of a stronger peso. The total loan book grew by 1%, supported by a 2.4% expansion of the Consumer loan book and a 1.7% growth in the Mortgage portfolio. Growth remained concentrated in segments and customers where we see attractive risk-adjusted returns, consistent with our disciplined approach to origination and capital allocation. The consumer loan book was supported by positive dynamics in both Colombia and Central America. Banco Davivienda remained the main contributor in Colombia, while Davibank also recorded positive growth. In Central America, performance was supported particularly by Costa Rica and El Salvador. Mortgage loan growth reflects continued demand in Banco Davivienda Colombia and positive dynamics in our international operations, especially in Costa Rica. When looking specifically at the commercial portfolio, we observed a slight contraction after excluding FX, mainly due to deliberate downsizing decisions to prioritize adequate margin generation aligned with target profitability. By operation, Colombia grew 0.9%, excluding FX, while Central America expanded 1.0% in U.S. dollar terms led by Consumer and Mortgage lending with Costa Rica and El Salvador showing the strongest performance. Please move on to Slide 11, where we will review the evolution of past due loans and coverage levels. The group's 90-day PDL ratio remained stable at 3.64%, reflecting selective origination and proactive collection management to contain deterioration amid higher inflation and interest rates. By segment, Commercial PDLs improved by 8 basis points to 3.69%, supported by the stabilization of previously identified exposures and continued case-by-case management. Consumer PDLs increased moderately by 6 basis points to 3.03%. This remains a controlled level and is consistent with our expectations under the current macro environment. We will delve deeper into this portfolio's performance on the next slide. In Mortgages, both the 90-day and 120-day PDL ratios increased modestly, reaching 4.11% and 3.51%, respectively. This movement mainly reflects the expansion of the portfolio and the seasoning of recent originations. To a lesser extent, we have also observed a slight increase in risk among recent vintages as higher interest rates begin to affect customers' debt service capacity. While we may observe some additional pressure over the coming quarters, we expect Mortgage asset quality to remain broadly stable, supported by strict origination standards, proactive collection strategies and close monitoring of recent vintages. Coverage levels continue to strengthen. Total coverage increased to 107.5%, while the ratio, including collaterals, reached [ 169.3% ]. The improvement was broad-based in line with our efforts to reinforce the group's capacity to observe potential credit losses, especially in the Consumer and Commercial segments. Going forward, our expectation for the total PDL ratio is to close the year within the 3.3% to 3.8% range, which signals relative stability compared to current levels. Please move on to Slide 12, where we will take a closer look at the Consumer portfolio and the quality of our recent originations. The quarter's consumer growth is supported by optimized origination policies and solid performance of credit risk metrics. Please note that disbursement volumes over the last 3 quarters reflect Davibank's added consumer franchise. Our current exposure remains aligned with our risk appetite as growth is concentrated in customers with stronger payment capacity and supported by dynamic origination policies and continuous monitoring of recent vintages. This disciplined portfolio construction supports controlled growth as macroeconomic conditions evolve. Credit cards remain an important contributor to quarterly disbursements. However, approximately 40% to 45% of credit card volume corresponds to single [indiscernible] purchases. These transactions do not necessarily translate into higher credit exposure, but rather reflect the product usage as a payment method. Moving to portfolio behavior. The formation of new past due loans before write-offs is stable at 1.9% quarter-over-quarter. At the same time, quarterly write-offs to total loans stand at 1.8% at the group level, indicating lower portfolio cleanup requirements and realized losses. The vintage analysis also remains encouraging. Recent originations continue to perform below historical reference value, confirming that portfolio growth is being [indiscernible] by control early delinquency. Finally, net provision expenses remain contained, consistent with stable new PDL formation, low write-offs and the healthy performance of recent vintages. Overall, our current exposure to consumer lending demonstrates a structural resilience to support gradual expansion while preserving rigorous underwriting and credit risk management. Please continue to Slide 13, where we present the portfolio distribution by stages, coverage levels and provision expenses. The portfolio composition remained stable during the quarter. Approximately 91% of total loans remain in Stage 1, while Stage 2 represented close to 5% and Stage 3 around 4%. This reflects limited migration toward higher risk categories. Coverage levels increased across the higher risk stages, reflecting the continued strengthening of provisions. Quarterly cost of risk remained stable at 2.14%, while the ratio for the first half of the year stood at 2.15% within our full year guidance range of 2.1% to 2.3% Overall, stable stage migration and controlled provision requirements confirm that portfolio growth continues without compromising asset quality. Please move on to Slide 14, where we review the evolution of our funding sources and liquidity position. Our funding structure remained stable during the quarter, supported by a diversified mix of deposits, bonds and institutional funding. As part of our strategy, we continue prioritizing transactional deposits and funding relationships that strengthen the stability and efficiency of our liability structure. Low and mid-cost deposits remained an important component of the mix, although balances moderated during the quarter as market rates remained elevated. At the same time, we continue to optimize the composition of our funding. Banco Davivienda completed a series of local bond issuances by COP 1.6 trillion during the quarter. This represents a deliberate recomposition of the mix rather than an increase in overall funding needs. Other funding sources declined as these issuances were used to manage maturities, diversify counter-parties and improve the duration of the liability structure. Liquidity remains sound across the group. Banco Davivienda and Davibank continue to operate comfortably above their short and long-term liquidity requirements. Overall, our funding strategy continues to balance cost, duration, diversification and stability while preserving the flexibility required to support growth. Please move on to Slide 15, where we review the Group's capital structure and the solvency position of Banco Davivienda. Davivienda Group's total equity increased by 1.8% during the quarter, supported by [indiscernible] generation. This performance was partially offset by the FX translation effect on our Central American operations. At the holding company level, the tangible equity ratio improved to 7.5%, reflecting the continued strengthening of the Group's capital base. Total leverage increased moderately to 102.9%, mainly due to Davivienda Group's investment in debt issued by Davibank as part of our funding and capital management strategy, indicator remains at a level consistent with the group's financial framework. At Banco Davivienda, the consolidated CET1 ratio reached 12.13%, increasing by 18 basis points during the quarter and 75 basis points year-over-year, supported by stronger earnings generation. The group's and the bank's strong capital positions provide a comfortable stance to leverage organic growth opportunity that may emerge under a changing cycle in Colombia. Please move on to Slide 16, where we review the evolution of our financial margin. Overall, the quarter demonstrates the benefits of disciplined funding management and a more neutral sensitivity profile. It also reflects a strong, although market-dependent treasury contribution, partly offset by the accounting effects of the instrument used to manage the group's interest rate funding and foreign exchange exposures. The main takeaway from the quarter is the resilience of our margin in a higher interest rate environment with repricing reflecting favorable transmission of rates into new originations and variable rate loans, together with active management of our deposit mix and funding maturities. Investment and interbank income made a particularly strong contribution during the quarter, driven by a higher valuation of our exposure to Colombian government securities as well as increased income. Part of the valuation gains on these securities should be assessed together with the mark-to-market effects recognized in the derivative positions used to manage their interest rate exposure. After incorporating our foreign exchange and derivative strategy, the quarterly NIM closed at 6.16%, while the 6-month annualized ratio reached 5.93%, within our updated full year guidance range of 5.8% to 6.1%. Please move on to Slide 17, where we review the evolution of nonfinancial income and operating expenses. Nonfinancial income increased by 6.7%. Fee income grew 2.4%, supported by positive performance in tax, collections, cash management, insurance and acquiring activities across our main operations. Other net income increased by 28.2%, mainly driven by the PPA accounting effects mentioned level. Operating expenses declined 11.1% during the quarter. Part of this variation reflects the first quarter wealth tax [ paid ]. Excluding this effect, expenses also benefited from lower personnel costs, mainly due to performance-related payments recognized in the previous quarter that did not recur at the same level. To provide a comparable view of efficiency, we recognize this tax impact proportionally throughout the year. On this basis, the 6-month cost-to-income ratio stood at 54.7%. Fully excluding it, the 6-month pro forma cost-to-income ratio was 52.9%, highlighting the underlying improvement in our operating efficiency. Overall, diversified revenue generation and disciplined expense management continue to support the group's efficiency and profitability. Please move on to Slide 18, where we summarize the evolution of profitability. Net profit reached COP 830 billion during the quarter and COP 1.13 trillion for the first half of the year. On a comparable basis, amortizing the first quarter wealth tax throughout the year, quarterly ROE reached 13.88%, while the 6-month ratio stood at 11.1%. When excluding the nonrecurring impacts to better observe the underlying performance of our business, ROE for the quarter stood at 13.62%. Please move on to Slide 19, where we present our updated expectations for 2026. Based on our performance during the first half of the year and the current macroeconomic environment, we have updated selected guidance ranges. We now expect total loan growth between 4% to 6%. By segment, Commercial and Mortgage loans are expected to grow between 4% and 6%, while Consumer loans are expected to expand between 3% and 5%. These revisions mainly reflect FX translation effects and our continued focus on prioritizing risk-adjusted profitability over. When excluding the FX impact, expected loan growth for the year will be the 8% to 10% previously guided. Our expectation for credit risk ratio remained unchanged. We continue to expect the 90-day PDL ratio between 3.3% and 3.8%, while cost of risk is expected to remain between 2.1% and 2.3%. Current performance remains consistent with both ranges. We increased our NIM guidance, including foreign exchange and derivatives to between 5.8% and 6.1%. This revision reflects investment gains during the first half of the year. We also increased our nonfinancial income growth expectation to between 10% and 12%. This revision is primarily driven by the PPA [ impact ]. At the same time, we improved our cost-to-income ratio expectation to around 54%, reflecting higher margin and continued discipline in OpEx. As a result, we are updating our full year ROE guidance to 10% to 11% range. Thank you. We can now move on to the Q&A.

[Technical Difficulty] more than 180 deaths have been reported so far as well as thousands of injured. So this is definitely something that we are looking at with our hearts. It's part of the -- that part of the country has suffered the impact of the earthquakes and not only on losses of life, which, of course, are the most important ones, but also in disruption in their economic activities. Airports in the regions are closed, roads that communicate the main cities in the region are also closed, and that has had an impact on our operation. We have close 102 branches in the area. Of those, about half -- a little less than half of them are closed due to the revisions that are being made to the structural soundness of these offices. So far, we've been able to reopen some of those operations in -- there are still some small towns, around 8 small towns in the area where our office, our only office is closed. And the most affected areas in [ Pereira ], which is one of the large cities in the region, we've been having difficulties opening our branches. We've moved some of our mobile branch offices into the area. We are now resuming service in our -- in some of these branch offices. And at the same time, our digital channels have been operating normally. Our ATMs are operating normally. Some of them are down, but are being recovered as we speak. So we expect the operational issues to be solved in a couple of days, in a few days. Some of them will take longer, especially in the small towns, but we expect to keep continuing with the service. So far, we've been able to serve our customers through our digital channels, that operation is working well. And we are focusing on restoring service in the coming days. In terms of the economic impact of the earthquake, it's still very early to tell. We have a Mortgage operation in the area that is significant. We are very, very confident with the insurance coverage that we have for those loans for that portfolio. Our sister company, GrupoBolivar, is already doing a fantastic job in terms of assessing what's happening in the area and the current status of those facilities. And we expect the impact due to losses in the Mortgage portfolio to be very contained due to the very good quality of the insurance program that we have behind those portfolios. We will have some other impacts in terms of business interruption in some of our customers. So we're looking at solutions for those customers that are facing some issues. It's still too early to tell. We're not incorporating any of those numbers into our guidance, but we expect to be -- to have some impact due to the earthquake, and we will be sharing that information as we get a more solid base of information to share with you. Of course, our hearts are with the people of this area of the country. We're very committed to be a significant part of the solution. Our teams are working hard on not only restoring service, but also being there for our customers and for the population in general. We've been working with the authorities also to make sure that we are part of the solution in this problem. And of course, we will -- we're looking at this as something of a full commitment from our organization to help these areas of the country come back to their normal status. We can move on now to questions, please.

[Operator Instructions]. We will start reading our questions from our webcast channel. The first question comes from Mr. Brian Flores from Citi. He says, you upgraded ROE guidance while reducing loan growth expectations. Beyond normalization of the first quarter 2026 results, what gives you confidence that profitability can continue improving even in a lower volume environment?

Brian, thank you for your question. We have upgraded our ROE based on some changes on the -- some factors of our ROE, which are margins. Margins are actually improving. We are seeing an [ improve ] in our NIM. That's something that we are seeing because of higher interest rate, although we are almost neutral in terms of interest rate, we're all benefiting from low income deposits. So our margins are actually getting -- being higher than what we had previously anticipated. And at the same time, we're focusing on transactional deposits, transactional solutions, fee income, and that part of our strategy is working. So with that as well as with expense management that in the operating expenses lines, we are actually having good results. That explains our expectations on higher ROEs. With lower loan growth expectations, you have to consider also that those are impacted by FX, by the FX impact of the international operations that when translated to Colombian pesos, we see a lower growth in the loan portfolio. If you exclude that effect, the growth of the portfolio has been very much in line with our initial expectations. So what we're seeing is a profitability that improves because the growth, excluding FX, is basically stable and some of the fundamentals that impact our ROE are slightly improving soon. If you put that all into the equation, we get an improved ROE guidance. Thank you, Brian, for your question.

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

Congrats on your results. I have a couple of questions from my side. The first one is in terms of loan growth. So as you pointed out, you moderate your loan growth expectations for 2026. You said that if we exclude the FX, it is coming roughly in line with your previous expectations. But considering that you have currently high inflation, higher rates, the new government is just taking place and you just have the recent impact of the earthquake, I hope all your families are well. I don't know if the new guidance is also reflecting all these to be more prudent considering these macro conditions? And also, when looking into 2027, how are you expecting the trends by segment overall? And then my second question is on your OpEx growth trends. So I think you will have onetime restructuring costs, but at the same time, you will have saving costs. So just wondering what should be the net impact? And how should we think about the OpEx trending during 2026 to 2028. I don't know if it will be -- I don't know, in the next year, it could be flat or could be declined in 1 year. Just to have like the trend on how should we think about this net impact of the onetime restructuring costs and saving costs or synergies?

Ernesto, thank you for your question. In terms of loan growth, moderation for 2026 is based on the fact that the FX has had an impact, as I already mentioned. So that's probably one of the -- that's the most important reason why we are moderating our growth expectations more than the macro conditions. In terms of the Colombian book, what we're seeing is some reduction on the size of the Commercial portfolio in the Davibank operations. That's something that we had anticipated. There are some loans in the portfolio that are not within our margin appetite. So we're actually reducing that part of the portfolio, but that's being compensated by a very strong dynamic on the Davivienda side. When you look at it in the combined numbers in the Commercial portfolio, we're within our range. We believe that there could be an upside there in terms of growth for the Commercial portfolio. In Consumer, we are -- if you look at disbursements, disbursements are growing at a very, very healthy rate as compared to last year. We are very actively managing the effect on the provisioning due to new macroeconomic conditions. So we're actually adjusting our underwriting policies for credit risk very actively. So we opened and closed some segments of the market. So that's impeding a higher growth on the Consumer portfolio, but we're still growing. And we believe that with new technologies that were implemented in risk management and artificial intelligence, we will be able to grow at a higher rate. In the Mortgage portfolio, what we're seeing is a healthy growth for the first half of the year. Eventually, we will slow down because of the lack of subsidies in the Social Housing Program from the previous government that impacted the new projects -- new project initiation last year. Those projects that were not initiated last year will not be delivered during the second half of this year and early parts of next year. So we will see probably a slower rate of growth for the Mortgage portfolio. But we expect that trend to change as we have expectations of this new government actually retaking an active policy on social housing. We're seeing more confidence in the market. So investment from the private sector will -- we are expecting a boost in investment from the private sector. But at the same time, there will be a management of -- strong management of expenses from the government side. So there are a lot of conditions that are like happening at the same time, add to that the earthquake. And so it's hard to assess how the growth will be for next year. So our best estimate is a trend very similar to what we have this year. Eventually, it could be higher if the market conditions improve and that -- and we have that as one of our scenarios is the improvement in the market conditions due to improved confidence in the market. So we're basically guiding with -- there's a prudent guidance based on what has been incorporated into the macro assumptions, but we see some upside there also in terms of higher growth than what we're guiding as something that could come with the conditions that are changing. In terms of trends by segment, that's basically what I've just mentioned. And in terms of OpEx, what we're seeing is this year is a year in which we're seeing a net effect of 0 -- approximately 0 in terms of the additional expenses due to integration. When you offset those with the synergies that are being captured, it's actually slightly negative. We're actually spending a little bit more than what we are capturing from the synergy side because of the timing differences. In terms of our operation, the Davivienda operation, without considering the integration, we are growing at a slower rate, and we have some leverages that we're pulling to keep that low rate of growth for expenses. So for '26, '27, '28, we will have an improvement in the operating expenses for the operation as well as the synergies that we will be capturing. That's factoring into that 43%, 45% guidance that we are giving to the market for the cost-to-income ratio for 2028, 2029. Thank you, Ernesto, for your question.

This is very helpful, Javier. Just a follow-up in terms of the OpEx. I really understand this important improvement that you can achieve in terms of the cost-to-income ratio. I think it's more tangible maybe in 2028. But for example, looking to next year, how should we think about the OpEx? Should [indiscernible] relatively stable, should be declining or the important decline could be more in 2028? Just to have an idea on how should we model that in our estimates?

Yes. We -- the important decline will be in 2028, but we will see some decline in 2027. We are -- in terms of the integration process, we are actually expecting the authorizations, as we mentioned in the initial remarks, we are expecting the authorizations to integrate the operations into one bank in Colombia, and that should happen before the end of the year. For early next year, where we should be going through a similar process in Costa Rica. And once we go through that milestone, we could accelerate on capturing some of the synergies, and that should be happening along 2027. So 2027 will be a year in which we are expecting a downward trend in the cost to income. Most of the benefit will be at the second half of the year. But definitely, 2027 should be a year in which some of those impacts should be captured.

Thanks. With that, we're going to move on to one of our webcast questions. This question comes from Mr. Brian Flores from Citi. He says, only a small portion of the targeted synergy capture appears reflected in earnings today, yet profitability is already approaching medium-term targets. How much of the remaining synergy opportunity do you expect to flow through the bottom line versus reinvested into growth, technology and DaviPlata's monetization initiatives?

Brian, thank you for your question. It's a very good question. We are still in the middle of the integration process. There's a lot of cost -- integration cost to come yet. So in order for us to get to a 14%, 16% ROE that we are guiding for 2028, 2029, there's a lot of work to do in terms of synergies and improvement on the cost side. That's what it's more visible in terms of the [indiscernible]. But we're definitely looking at this transaction, the integration of the [ Scotiabank ] operations as a play on growth also. We are definitely -- what we're doing in the integration is, of course, making sure that we have a smooth transition in terms of service to our customers. That's the main one -- the main objective that we're following is to have as frictionless as possible a transition for the customers. And then, of course, cost synergies are there. But we are definitely working on making sure that the platform -- that the combined platform is a platform that is ready for growth in terms of more digital capabilities, better service for our customers, DaviPlata monetization initiatives that you mentioned, we've been through the process of moving DaviPlata from a wallet to a digital bank with the numbers that I mentioned in the previous remarks. So definitely, there will be a significant portion of the savings that will be put back into the operation in terms of new capabilities to grow in some segments of the market in which we still see opportunities to improve our market share. So it's a very good question. And I would say the answer -- the short answer is we're looking at reinvesting part of that -- of those synergies into the business because we see growth opportunities.

Our next question comes from Mr. from [indiscernible]. His question is, in the process of holding integration, what are the chances of delisting the stock of Banco Davivienda? Do you foresee an imminent de-listing offering for stock?

Go, thank you for your question. That's also a good question. As you all know, last year, we listed the Davivienda Group shares. We were strong advocates to our shareholders to move to the Davivienda Group shares as we've seen during this year, we are seeing the benefits of being at the Davivienda Group level with the consolidation. The liquidity on the Banco Davivienda stock is, of course, lower because there was a very, very small fraction of the shares that were not moved to the Davivienda Group's shares. We have not made any decision on that, but that's a very good question, and I wouldn't rule out the de-listing in the future, in the near future. Thank you, [indiscernible] for your question.

Our next question comes from Mrs. Mariel Abreu from T.Rowe Price. Her question is, what asset exposure do you have to the areas that were affected to the earthquake? Would you expect cost of risk to increase?

Thank you, Mariel, for your question. As I mentioned before, it's still early to have definite numbers, but we, of course, know the exposure that we have to the region. In general terms, the region represents approximately 6% of the consolidated loan portfolio. That's around COP 13.2 trillion, including both Davivienda and Davibank's operation. It's important to note that this is a regional exposure, the total regional exposure. Some of our clients will suffer no material impact to their properties. That's something that we're assessing. And as I mentioned before, in terms of the Mortgage portfolio, we are definitely very confident with the insurance program that we have that we have situations like this many years before in the past. And actually, the insurance program performed as expected. Of course, there will be disruption. We still don't have an accurate estimate of any impact on cost of risk. But the most significant losses that will come from the mortgage portfolio will be, if not all of them, in a very high proportion will be covered by the insurance program. Thank you Maribel for your question..

Our next question comes from Mr. Daniel Mora from CrediCorp Capital. What should be considered one-off or not sustainable in the current NIM figure of 6.1%, including FX and derivatives? Second question, considering the current interest rates, do you expect to maintain NIM at current levels? Or do you expect, at some point, higher pressures from funding costs?

Daniel, thank you for your questions. With respect to the one-offs on the NIM, we -- what we're seeing is we had boost from the portfolio results for the second quarter that has -- that's related to the performance of the market in the second quarter has the new government coming in and the market expectations on prudent fiscal situation of the country being managed in a different way. That had a positive impact on our portfolio. That -- if you look at the numbers for the second quarter, they are better than expected. If you look at the first quarter of this year, the opposite is true. When you combine the first and the second quarters, our portfolio performed pretty much roughly in line with the expectations that we have for the third quarter and fourth quarter. So what was a positive one-off in the portfolio in the second quarter, it's actually offsetting negative one-off for the portfolio in the first quarter. There are also the PPA accounting elements that were incorporated into our operation, which are basically a difference between accounting and market valuation of some of the Davibank's assets. there was a one-off in the second quarter. That's around 150 basis points for the second quarter. But if you look at the full year, that's not exactly a one-off. It will be a recurring item in which we expect that to explain about 100 basis points of our ROE for the following quarter. So it's partially a one-off, but we will see part of that going forward. In terms of, of course, the wealth tax that's already incorporated in the first quarter that won't be around for the second, third and fourth quarter. So in terms of the NIM, if you exclude those items, we expect the NIM to be sustainable. We expect our NIM to be in the midpoint of the range of NIMs that we've been guiding, which is part of the second question in terms of maintaining NIM at current levels, we see our balance sheet position to be neutral. It's actually a little bit benefiting from higher interest rates as opposed to the structure that we had a few years ago when interest rate went up after the pandemic. So what we're seeing is the more lower cost funding base that we generate through transaction businesses, the better the margin will be, and that's part of our clear strategy. So in summary, we're expecting our margin to be sustainable for the coming quarters. Thank you, Daniel, for your question.