Grupo Aval Acciones y Valores S.A. (NYSE:AVAL) Q1 2026 Earnings Call Transcript

Grupo Aval Acciones y Valores S.A. (NYSE:AVAL) Q1 2026 Earnings Call Transcript May 13, 2026

Operator: Welcome to Grupo Aval’s First Quarter 2026 Consolidated Results Conference Call. My name is Regina, and I will be your operator for today’s call. Grupo Aval Acciones y Valores S.A., Grupo Aval is an issuer of securities in Colombia and in the United States SEC. As such, it is subject to compliance with securities regulation in Colombia and applicable U.S. securities regulation. Grupo Aval is also subject to the inspection and supervision of the Superintendency of Finance as holding company of the Aval Financial conglomerate. The consolidated financial information included in this document is presented in accordance with IFRS as currently issued by the IASB. Details of the calculations of non-IFRS measures such as ROAA and ROAE, among others, are explained when required in this report.

On November 27, 2025, Banco de Bogota subsidiary, Multi Financial Holding, Inc. MFG, entered into a share purchase agreement with BAC International Corporation, BIC, a subsidiary of BAC Holding International Corp. for the disposal of 99.57% of the issued and outstanding shares of Multi Financial Group, Inc. MFG, the parent company of Multibank Inc. On March 18, 2026, after obtaining the required regulatory authorizations and fulfilling all agreed conditions precedent, the transaction was completed. For comparability purposes only, we have prepared and present supplemental unaudited pro forma financial information for the periods prior to 4Q ’25, which reflects the reclassification of the operations relating to MFG as noncurrent assets and liabilities held for sale and discontinued operations.

This supplemental unaudited pro forma financial information is not intended to represent and should not be considered indicative of the results of operations or financial position that would have been achieved had the transaction occurred on the dates assumed nor is it intended to project our results of operations or financial position for any future period or date. The pro forma financial information is unaudited and the completion of the external audit for the year ended December 31, 2025, may result in adjustments to the unaudited pro forma financial information presented herein. This report includes forward-looking statements. In some cases, you can identify these forward-looking statements by words such as may, will, should, expects, plans, anticipates, believes, estimates, predicts, potential or continue or the negative of these and other comparable words.

Actual results and events may differ materially from those anticipated herein as a consequence of changes in general, economic and business conditions, changes in interest and currency rates and other risks described from time to time in our filings with the Registro Nacional de Valores y Emisores and the SEC. Recipients of this document are responsible for the assessment and use of the information provided herein. Matters described in this presentation and our knowledge of them may change extensively and materially over time. We expressly disclaim any obligation to review, update or correct the information provided in this report, including any forward-looking statements, and do not intend to provide any update for such material developments prior to our next earnings report.

The financial statements of Grupo Aval Acciones y Valores S.A. in accordance with Colombian regulations must be filed with the market and with the superintendency of finance with the opinion of an external auditor. At the time of the solicitation, this process is still ongoing. The content of this document and the figures included herein are intended to provide a summary of the subjects discussed rather than a comprehensive description. When applicable in this document, we refer to billions as thousands of millions. [Operator Instructions] I will now turn the call over to Ms. Maria Lorena Gutierrez Botero, Chief Executive Officer. Ms. Maria Lorena Gutierrez Botero, you may begin.

Maria Gutierrez Botero: Thank you. Good morning, everyone, and thank you for joining us for our first quarter 2026 conference call. I am here with Diego Solano, our CFO; Camilo Perez, Chief Economist of Banco de Bogota; and Jorge Castano, VP of Financial Assets and Efficiency. Before turning to our financial results, I would like to highlight 2 significant corporate developments of the quarter. First, on March 18, Banco de Bogota completed the sale of 99.57% of MFG for USD 464 million, concentrating on its strategic focus and strengthening its capital position. Second, I am pleased to announce the appointment of Juan Carlos Echeverry Garzon as an incoming CEO of Banco de Bogota, whose leadership we are confident will drive the next chapter of the bank’s strategy.

Our attributable net income reached COP 336 billion, a decrease of 2.3% compared to the first quarter of 2025. During this quarter, we recorded the equity tax, which amounted to COP 312 billion in operating expenses with a COP 210 billion impact in attributable net income, reducing the quarter’s ROAE by approximately 467 basis points. Excluding this time — this onetime effect, our underlying performance reflects improving trends across our businesses. The quarter was characterized by improving asset quality and cost of risk, a strong contribution from our nonfinancial sector and continued progress on operational efficiency. Funding cost pressures driven by the renewed tightening cycle and the impact of the equity tax were the main headwinds.

This is also a strategically significant quarter for Grupo Aval. We launched our 2026-2031 corporate strategy, a long-term framework that reflects our ambition to increase our relevance in the markets where we operate to capture efficiencies and deploy technology in a structured and disciplined way and to generate real impact for all of our stakeholders. Our strategy is organized around 3 core axes: relevance, opportunities and impact and materialize through 10 strategic pillars that will orient our evolution as a group over the next 5 years. Under the relevance axis, we are focused on strengthening our leadership position, deepening client centricity and optimizing capital allocation. Under opportunities, we are accelerating efficiency and standardization, leading digital transformation and turning data and artificial intelligence into competitive advantages.

Under impact, we are committed to developing our talent upholding the highest standards of corporate governance and risk management and ensuring that our growth generates a positive impact for society and environment. This strategy is a shared commitment across Grupo Aval to consolidate our position as Colombian’s leading financial group. Now I would like to invite Jorge Castano, our VP, to share our advancements in other strategic matters. Jorge?

Jorge Gutierrez: Thank you, Maria Lorena, and good morning, everyone. Turning to the first pillar that Maria Lorena mentioned, profitable business, the purchase and assumption transaction of Itau’s personal banking business by Banco de Bogota marks a defining moment in Grupo Aval’s retail banking strategy. Once fully executed, this transaction is expected to deliver COP 3.3 trillion in consumer portfolio growth, equivalent to 34 months of organic expansion, while adding COP 3.2 trillion in mortgage lending, positioning Banco de Bogota in replacing the Colombian housing market with a 12.8% market share. On the deposit side, we expect personal deposits from individuals to grow by COP 4.1 trillion, representing around 20 months of accelerated organic growth and reaching a high of 9.3% market share.

On the client side, the bank will add around 277,000 customers, double its premium segment with 35,000 new high-value clients and expand the corporate segment by 60%, adding 97,000 clients. Taken together, these results confirm that this transaction is just a growth initiative. It is a structural repositioning of Banco de Bogota as a relevant force in Colombian retail banking, a unique opportunity to upgrade and launch its personal banking business and a key step in its evolution as universal bank and flagship entity of Grupo Aval. We are expecting to receive regulatory authorization from both the competition authority and the financial regulator within the coming weeks. Once clearance is obtained, Banco de Bogota is fully prepared to execute a disciplined 90 days integration road map.

The operational groundwork covering system convergence, client migration protocols and commercial team alignment is being developed in parallel with the regulatory process, ensuring 0 lag between approval and execution. The Panama operations comprising a $6.8 billion loan portfolio and $140 million in deposits will be incorporated in the consolidated balance sheet within the same window to enforce capital efficiency and gross merger synergies from day 1. Now turning to Aval Fiduciaria, our asset management entity. The company successfully completed its integration process on January 2, 2026, establishing a strong foundation with COP 198 trillion in assets under management, a platform of 33 collective investment funds and 5,700 trust mandates.

This milestone is further validated by the highest counterparty risk and portfolio management ratings given by Fitch Ratings and subsequently reaffirmed by S&P Global, reflecting the institution’s commitment to operational excellence and investor confidence. During the first quarter of the 2026, Aval Fiduciaria reinforced its industry leadership. The company holds a 19% market share in commissions with revenue growing by 12.5% to reach COP 151.4 billion. Assets under management grew COP 4.4 billion. Assets under management grew 4.2% in the quarter to COP 206.5 trillion, with collective investment funds gained 149 basis points of market share to reach 22.3%, capturing more than half of total market growth. The client base 4.7% expanded in the quarter and [13%] year-over-year.

On profitability, the company posted ROE of 33% with net income of COP 22 billion for this quarter. Operational efficiency improved materially as well, bringing the cost-to-income ratio to 65%, an improvement of close to 10% points. Looking ahead, Aval Fiduciaria continues to execute under its 2031 strategy, highlighted by a collaboration with BlackRock to the Meta Decidida solution, which gives Colombian retail investor access to balance the global ETF portfolios alongside continued investment in digital channels to democratize access to its full product suite. Now let me turn to our primary leadership business, GOU Payments. The company continued to strength its position as Grupo Aval interoperable payments and value-added service platform.

During the period, GOU secured 2 critical regulatory milestones, certification from the financial superintendents of Colombia and authorization from Banco de Republica to operate with the private ecosystem. Commercial traction is already big. Controlled pilots have engaged more than 120 users in initial phase designed to validate performance ahead of full rollout. On the collection side, GOU is [ ended to private ] by Aval panel across its existing base of 22,000 active agreements in AvalPay Center, while 635 corporate clients with specialized integrations are currently progressing to final development and implementation, representing a significant near-term revenue opportunity as interoperable connections accelerate across the ecosystem. Underpinning this growth is our proprietary technology platform built to the highest standard of security, resilience and operational capacity, capable of delivering value-added products and services to both financial and nonfinancial institutions.

Finally, we are strengthening both the organizational structure and the executive team, bringing in senior professionals with a proven track record and strong recognition across the fintech payments industry. This investment in talent and infrastructure is designed to ensure best-in-class product development and the most effective commercial rollout possible as GOU Payments moves towards full-scale deployment. Finally, turning to the efficiency segment, a central pillar of our 2026-2031 corporate strategy is the capture of efficiencies and synergies across the group through our shared service center AC. In procurement, we have already taken over process in Banco de Bogota, Banco Occidente. GOU Payments and Aval Fiduciaria. During the second quarter, we will take over Banco Popular, our Fiduciaria and Grupo Holding, and we aim to close the year with AV Villas, Porvenir, and Corficolombiana and its subsidiaries.

This center will operate on a controllable spending base of COP 1.4 trillion. And for 2026, we have a savings goal of COP 62 billion. Most of our contractual renegotiations are during the fourth quarter for which we project COP 32 billion in savings, equivalent to a 9% annual savings rate over the controllable spending base. In technology, during the second quarter, we began implementing a unified cloud migration road map for Grupo Aval. This initiative will optimize our technology infrastructure, including data centers and modernizing telecommunications network across the group. In property management, we have already taken over initialized our 4 banks and Coficalunbiana. This center managed COP 720 billion portfolio of assets with a target to raise the commercialization rate from 27% to 37% by year-end.

In Q1, we managed payroll for 40,000 employees. In attraction and selection, we are managing an average of 750 monthly openings with an internal satisfaction score of 4.7 out of 5. We are also targeting a reduction in average time to fill from 24 days to 22 days. And physical channel and security agency overt has taken control of 4,110 properties across our banks, establishing an estimation program through the network. That concludes my segment. Across every pillar we discussed today, Grupo Aval is executing with discipline and building the foundation for sustained profitable growth. Back to you, Maria Lorena.

Maria Gutierrez Botero: Thank you, Jorge. Now let me walk you through the key macroeconomic developments of the quarter. The global environment has grown more complex since our last call. The escalation of the conflict in the Middle East has introduced a new layer of uncertainty in oil prices and global supply chains. These dynamics have moderated global growth prospects for 2026. On the domestic front, GDP growth decelerated to 2.3% in the fourth quarter of 2025, down from 3.4% in the third quarter as private consumption moderate and investment decline and deteriorating investor confidence early 2026. Data reaffirms these trends. According to economic activity indicator, the economy grew just 1.5% in the January, February period, driven almost entirely by the service sector.

We expect a 2026 full year GDP growth of approximately 2.4%. On inflation, price pressures have increased. Annual inflation reached 5.68% in April 2026, its higher reading since September 2024. We project inflation at 6.2% for 2026 with a gradual return towards the 4% range expected by 2028. The Central Bank raised the policy rate by cumulative 200 basis points during the first quarter, above market expectation and what was pricing to the IBR. With these increases, the rate reached 11.25% at the end of March. In its most recent April meeting against market expectation and within a tense relationship with the government, the Central Bank’s Board unanimously decided to maintain its intervention rate. This was the last rate decision meeting before the first and second presidential election rounds.

As of March, the Colombian peso has strengthened nearly 13% over the past 12 months, supported by strong remittance inflows and a broadly weaker U.S. dollar, helping contain inflation on the import side. Camilo will elaborate on our economic outlook. Camilo?

Camilo Pérez-Álvarez: Thank you, Maria Lorena. Good morning to everyone. The Colombian economy registered growth slightly above 2% in the first quarter of the year, marking its slowest expansion rate in 1.5 years as a result of the weakening of several key sectors. In particular, the performance of the agriculture, mining, manufacturing and construction sectors largely explains the low growth. In the absence of investment, private consumption and public spending have consolidated as the driving forces of the Colombian economy. For households, in a scenario of double-digit wage growth and lower inflation for goods and for services, families have maintained their spending levels of durable goods with some sectors of industry and commerce being the biggest beneficiaries.

Meanwhile, despite this moderation due to the rapid increase in prices, household consumption of services remains positive, favoring sectors such as lodging and food services, entertainment and professional activities, among others. Given the household spending is driven by income levels and not necessarily by borrowing, the financial sector continues to experience low growth. In fact, the continued weakness in investment due to the elevated uncertainty and higher interest rates posed challenges to the sector’s performance. For the remainder of the year, amidst the impact of the war in the Middle East, tighter local financial conditions, a prolonged period of challenges for key sectors and electoral uncertainty, the Colombian economy is expected to grow 2.4%.

Turning to prices. Inflation rebounded from 5.1% at the end of 2025 to 5.7% in April 2026 due to increased pressures in non-rental services, food and goods. For the remainder of the year, the upward trend in inflation is expected to continue due to the lag effect of the minimum wage increase, higher energy commodity prices resulting from the conflict in the Middle East, the arrival of El Nino and the potential depreciation of the peso. Inflation is expected to end 2026 at around 6.2% before slowly moderating towards the target starting in 2027. On the fiscal front, a slight improvement is projected compared to the previous year. In 2026, for the first time in 4 years, the government is expected to meet its revenue targets, thanks to the adjustment made to its financial plan.

Regarding spending, the failure to approve the 2025 financing law would force the government to implement COP 16 trillion expenditure cut if it cannot secure sufficient revenue to support revenue. However, this cut will be insufficient to improve public finances. Thus, a primary fiscal deficit of 3.1% of GDP is estimated for 2026, lower than the 3.5% of GDP observed in 2025, representing a marginal improvement that does not alter the structural situation of the fiscal front. In fact, Standard & Poor’s lower Colombia’s rating from BB to BB-, adjusting the outlook from negative to stable. Given the improvement in revenue and a containment of spending, the government has had sufficient liquidity to implement debt management operations, including dollar purchases to close the total return swap, repurchases and redemptions of domestic and external debt as well as internal debt swaps.

Thus, the performance of several local assets has been influenced by the government actions, particularly the exchange rate, public debt and liquidity. Against this backdrop with inflation and inflation expectations rebounding and the fiscal situation remaining vulnerable, Banco Republica raised its interest rate by 200 basis points in the first quarter to 11.25%. In a clash to the government and amid political uncertainties surrounding the elections, the Central Bank’s Board unanimously opted to halt the rate hiking cycle in April, though this does not imply the end of the adjustments. The Central Bank would have additional room to increase its interest rate between 50 basis points and 100 basis points, which would bring the benchmark rate to around 12.25% by the end of the year.

With a scenario of higher domestic interest rates and a favorable result of the March legislative elections, which confirmed the absence of absolute majorities in Congress, the local exchange rate extended its downward trend, reaching its lowest level since 2021, near COP 3,500 per dollar. However, this trend was contained by dollar purchases made by the government. Likewise, the uncertainty surrounding the presidential elections diluted the appreciation trend of the Colombian peso. Ultimately, the election results are increasingly becoming the main catalyst for the future of the country’s economy and institutions. Although high uncertainty persists just days before the first round. In a potential second round, the results appear quite close.

So only after the election will the proposed macroeconomic scenario be validated. Back to you, Maria Lorena.

Maria Gutierrez Botero: Thank you, Camilo. Turning to our financial results. Gross loans end March at COP 193.6 trillion, increasing 6% compared to 2025 and deposits reached COP 216.8 trillion, increasing 11.7% over the last 12 months. The Central Bank’s strong shift toward a more restrictive monetary policy and the higher yield on Colombian sovereign debt have pressured our consolidated funding costs. Our banks have closely followed reviewing pricing adjustments and setting actions plans to navigate this environment. We continue to make progress in growing our funding base, which provides a more stable and cost-effective source of funding. Notably, the spread in yield on loans and cost of deposits in our banking segment held steady at previous levels.

Regarding our nonbanking subsidiaries, Porvenir delivered strong results despite significant volatility in both the equity and the fixed income markets. Corficolombiana had a strong quarter as well, boosted by seasonal dividends and higher inflation expectation for 2026, which benefited revenues from the infrastructure sector. Now I would like to pass the call to Diego, who will give you details of our results. Diego?

Diego Saravia: Thank you, Maria Lorena. I will start on Pages 9 and 10 with a few charts showing the growth rate and the quality of our loan portfolio relative to the rest of the Colombian banking system. For comparability reasons, these are unconsolidated figures under Colombian IFRS as published by the Sperintendency of Finance. Starting on Page 9. Over the 12-month period ending on February 2026, the rest of the banking system — Aval as well as the rest of the banking system continued to gain momentum. Growth for the system was primarily driven by large corporates, institutional and government in the commercial loans and by unsecured products in the consumer loans. Our strategy remains consistent. We have deliberately prioritized portfolio quality and risk-adjusted returns over volume growth.

We are focused on local currency commercial loans and personal loans and credit cards in the consumer segment. We continue to be selective in corporate commercial loans given the aggressive pricing competition currently present. Our peso-denominated commercial loans market share increased by 10 basis points year-on-year to 26.3% and remained flat over the quarter. Regarding our dollar-denominated commercial loans where we have historically been overweighted, we reduced our market share by 231 basis points to 36.8%. In addition, in peso terms, the balance of our dollar-denominated commercial loans were negatively impacted by an 8.9% appreciation of the Colombian peso over the year. As a result of the above, our market share for commercial loans fell 15 basis points over the year and increased 3 basis points over the quarter.

In consumer loans, to reduce rate sensitivity, we continue diversifying our portfolio towards higher yielding and shorter-term loans, reducing our concentration in payroll lending. We gained 147 basis points of share in personal loans year-on-year and 49 basis points over the quarter, raising our market share to 22%. The Itau consumer business acquisition will take us to market weight in personal loans. As part of the effort to reinvigorate our credit card business, where we lost 11 basis points over the quarter and 151 basis points year-on-year, we launched the Visa-FIFA Alliance. Itau consumer business acquisition will add 2 percentage points of share in credit cards to the 17.3% we held at the end of this quarter. We maintain a leadership position in payroll lending with 41.7% market share.

We reduced our share in payroll lending 49 basis points in the quarter, accumulating 138 basis points year-on-year. Overall, our market share for consumer loans closed at 28.7% with a 17 basis points decrease over the quarter and 98 basis points decrease year-on-year. Moving on to mortgages. We continue to gain market share with 12 basis points increase over the quarter and 89 basis points year-on-year. As a result of the above mentioned, we closed our market share in total loans at 25%, stable over the quarter and 30 basis points lower than a year earlier. On Page 9 — on Page 10, sorry, Loan quality for both the system and the banks continue to show an improvement across all loan categories. Our banks continue to exhibit better loan portfolio quality than the rest of the system in all categories.

I will now move to the consolidated results of Grupo Aval under IFRS, starting on Page 11. Assets grew 2.4% over the year to COP 338 trillion and contracted 3.2% for the quarter, impacted by the divestiture of MFG. Excluding the MFG assets, quarterly and annual growth were 2.1% from 9.2%, respectively. In terms of mix, other assets, which include the assets held for sale related to MFG during the fourth quarter of 2025 declined 17.1% to 12.5% of total assets in first quarter 2026 as MFG assets were derecognized following the completion of the divestiture. On the bottom of the page, gross loans grew 6% over the year and 1.5% during the quarter. Our peso-denominated loans increased 8% and 2.2%, respectively. Commercial loans grew 5% year-on-year and 1.6% over the quarter.

Peso-denominated commercial loans grew 8.6% year-on-year and 2.9% quarter-on-quarter, while U.S. dollar-denominated commercial loans grew 0.1% year-on-year and decreased 3.3% quarter-on-quarter in dollar terms. Our dollar-denominated loans account for 8.1% of our total portfolio after the MFG divestiture and come primarily from the U.S. agencies of Banco de Bogota, our trade finance activities and the offshore subsidiaries of Banco Bogota and Banco de Occidente. These loans were affected by an appreciation of the Colombian peso of 12.7% year-on-year and 2.6% quarter-on-quarter. Consumer loans grew 4.2% year-on-year and 0.5% during the quarter. Payroll loans that account for 54% of our consumer loans grew 0.8% year-on-year and contracted 0.5% over the quarter.

Personal loans that account for 27% of our consumer loans grew 14.1% over the year and 3.5% during the quarter. Credit cards account for 11% of our consumer loans grew 1.2% year-on-year and contracted 0.4% quarter-on-quarter. Automobile loans that account for 7% of our consumer loans increased 1.3% year-on-year and 0.5% quarter-on-quarter. Finally, mortgages grew 16.8% year-on-year and 3.5% over the quarter. On Page 12, we present funding and deposit evolution. Total funding reached COP 281 trillion growing 8.9% year-on-year and 1.9% over the quarter. Total deposits, which account for around 3/4 of our funding grew COP 217 trillion at 11.7% year-on-year and 4.5% over the quarter. Savings deposits drove the overall deposit performance and gained share in our mix.

Savings deposits grew 17.8% year-on-year and 6.2% during the quarter, a strong performance that reflects our continued efforts to deepen our retail funding business and diversify our funding mix. Our deposits to net loans increased to 116%, responding to higher volatility. This further pressed our NIM, adding to the challenge in benchmark rate increase. On Page 13, we present the evolution of our total capitalization, our attributable shareholders’ equity and the capital adequacy ratio of our banks. During the quarter, dividends of COP 755 billion were declared to our shareholders. In addition, COP 708 billion of dividends were declared to the minorities at our subsidiaries. As a result, our total equity decreased 3.3% over the quarter and increased 3% year-on-year.

Our attributable equity decreased 3.5% over the quarter and increased 3.6% year-on-year. Total solvency and Tier 1 ratios were relatively stable in most of our banks. In the case of Banco de Bogota, the increase in solvency reflects the derecognition of the risk-weighted assets coming from MFG after the sale was completed. In addition, Banco de Bogota and Banco de Occidente solvency ratios reflect dividends distributed during March. On Page 14, we present our NIM. Net interest income reached COP 2.2 trillion in the first quarter of 2026, increasing 14.3% compared to fourth quarter of 2025 and decreasing 4.1% compared to the first quarter of 2025. Total NIM increased 39 basis points to 3.34% quarter-on-quarter and decreased 45 basis points year-on-year.

Our consolidated NIM on loans contracted to 4.4% during the quarter, down from 5.05% in fourth quarter 2025, mainly driven by the ongoing repricing of our cost of funds in response to higher rate environment. Our NIM on investment recovered to 0.25%, up from negative 3.1% in the fourth quarter of 2025, reflecting a mild recovery in the local capital markets. The quarter was also marked by a strong performance from FX and derivatives that completed our bank’s trading strategies. Focusing on our banking segment, the NIM — the total NIM of our banking segment expanded 31 basis points for the quarter to 4.15% due to the same dynamics that affected our consolidated NIM. NIM on loans was 4.98%, decreasing 55 basis points quarter-on-quarter. This incorporates a 69 basis points quarter-on-quarter decrease in NIM on retail loans to 6.47% and a 46 basis points quarter-on-quarter decrease in NIM on commercial loans to 3.86%.

The timing mismatch between a faster repricing liabilities and assets is the primary driver of NIM on loans compression observed this quarter. This effect will partially be reduced as commercial floating loans reprice with a lag of a few months. In addition, we have a relatively high liquidity profile to position our banks to eventual volatility, further pressing our NIM. On Page 15, we present yields and cost of funds. Interest rate dynamics on our loans and funding are driven by the movements in the average benchmark rate in Colombia. The average Central Bank intervention rate increased approximately 100 basis points from the first quarter, while our consolidated cost of deposits increased 16 basis points to 6.75%. On Pages 16 through 18, we present several loan portfolio quality ratios.

On Page 16, credit quality continues to improve during the quarter. 90-day PDLs were 3.13%, a 16 basis points improvement relative to the last quarter and 68 basis points over the 12 months. 30-day PDLs were 4.3%, a 7 basis points improvement over 3 months and 94 basis points over 12 months. PDL formation continued to decelerate. New 90-day PDLs in the quarter were COP 766 billion. The coverage ratio at 90-day PDLs strengthened to 137%, up from 134% during fourth quarter 2025. Commercial 30-day PDLs were 3.86%, a 2 basis points increase over 3 months. 90-day PDLs were 14 basis points decrease over the quarter. We reported an 18 basis points decrease in consumer 30-day PDLs to 4.49% and 90-day PDL decrease of 21 basis points to 2.58%. Mortgages, 30-day PDLs and 90-day PDLs improved 26 basis points and 19 basis points quarter-on-quarter.

Finally, the ratio of charge-offs to average 90-day PDLs was 0.64x. On Page 17, the share of our loan portfolio classified as Stage 1 continued to improve, reaching 90.3% of the total portfolio, up from 89% in first quarter 2025 and 89.8% in fourth quarter ’25, reflecting the ongoing improvement in credit quality across all segments. The allowances for Stages 2 and 3 as a percentage of loans classified as Stages 2 and 3 was materially stable during the quarter for total loans. On Page 18, our net cost of risk was 1.8%, increasing 6 basis points quarter-on-quarter, improving 36 basis points year-on-year. Our gross cost of risk was 2.1% in first quarter 2026, stable quarter-on-quarter. Net cost of risk for consumer loans was 4.1% in the quarter, a slight uptick from 3.8% in fourth quarter 2025, driven primarily by credit cards.

Net cost of risk for commercial loans remained contained at 0.7%. On Page 19, we present net fees and other income. Gross fee income grew 6.9% year-on-year and decreased 1% quarter-on-quarter. Net fee income increased 10% and decreased 0.7%, respectively. Gross fee income was driven by a 5% increase in banking fees, 6.9% in pension funds and 14.3% in trust activities. Income from the nonfinancial sector was around 1.3% of that reported during first quarter 2025 due to the positive impact of higher inflation and concession revenues. Energy and gas contributed COP 255 billion, roughly in line with previous periods. Finally, on the bottom of the page, the year-on-year increase in operating income is mainly explained by lower derivatives and FX gains by higher derivatives and FX gains.

Net income from other financial instruments at fair value decreased COP 92 billion from COP 348 billion due to a onetime fair value recognition of COP 303 million related to the Promigas pipelines during fourth quarter 2025 as discussed on the previous call. On Page 20, we present some efficiency ratios. Total other expenses reached COP 2,565 billion during first quarter 2026, increasing 20.3% year-on-year and 6.4% quarter-on-quarter. It is largely explained by the equity tax, which recorded under — was reported under general and admin expenses and accounts for COP 312 billion. Without the impact of the equity tax, OpEx grew 5.7% year-on-year and decreased 6% quarter-on-quarter versus a seasonally high fourth quarter. Underlying expense growth remains more moderate — underlying expense growth remains moderate and broadly in line with our cost control targets.

Operating taxes, excluding the equity tax accounted for 22.9% of total expenses. Personnel expenses increased 5.1% year-on-year to COP 830 billion, impacted by the 23% minimum wage increase on part of our workforce. Cost to assets for the quarter was 3%, including a 36 basis points negative impact from the equity tax and remained stable year-on-year at 2.6% when excluding this expense. Our quarterly cost to income improved to 53.9%, mainly due to higher income from the nonfinancial sector and net fees. Excluding the equity tax, cost to income was 47.3%, following the same drivers. Finally, on Page 21, we present our net income and profitability ratios. Attributable net income was COP 337 billion or COP 14.2 per share. This includes COP 351 billion from continuing operations and a net loss of COP 15 billion related to discontinued operations.

The equity tax had a negative impact of COP 210 billion on our attributable net income during the quarter. Excluding this onetime impact, our net income from continued operations would have been COP 561 billion. Our return on average assets and return on average equity for the quarter were 0.9% and 7.4%, respectively. Excluding the effect of the equity tax, return on average assets and return on average equity would have been 1.2% and 12%. I will now summarize our general guidance for 2026. We expect loan growth in the 9.5% area with commercial loans growing in the 6.5% area and retail loans growing in the 14% area. Our consolidated NIM in the 3.9% area with NIM on loans in the 4.4% area NIM for banking segment in the 4.8% area with NIM on loans in the 5.2% area.

Cost of risk net of recoveries in the 1.9% area. Cost to assets in the 2.85% area, incorporating a 9 basis points impact of the equity tax. Income from the nonfinancial sector of 1.3x that of 2025. Fee income ratio in the 22% area. Finally, we expect our 2026 return on average equity to be in the 9.25% area, incorporating 114 basis points impact from the equity tax. Back to Maria Lorena.

Maria Gutierrez Botero: Thank you, Diego. Before moving into questions and answers, I would like to share some financials on Colombia and Grupo Aval in 2026. The environment we are navigating in 2026 is under — undeniably complex with political and electoral uncertainty, persistent inflation and a renewed tightening cycle and a challenging global backdrop. We have the experience and the tools to navigate it, and we are better positioned today than we were at the start of the previous cycle. Our balance sheet is more resilient as shown by the diversification of our loan portfolio and our funding structure. We have decreased the duration of our loan book, which will enable us to reprice through the cycle faster than before. On the funding side, we have reduced maturity and repricing gap, growing in segment less sensitive to interest rates.

In addition, we have reduced interest rate sensitivity using interest rate swaps among other derivative tools. On profitability, we expect our ROE in the 9% and 9.5% area for the year incorporated first, the 114 basis points negative effect of the equity tax and second, the impact of tightening cycle on our NIM over the following quarters. Looking ahead, our path is clear. We will deepen our relevance with clients, accelerate the capture of efficiencies through technology and operational integration and continue unlocking the value of our nonfinancial businesses through Corficolombian. All of this is anchored in our 2031 corporate strategy, our road map to consolidate Grupo Aval Colombia’s leading financial group. Colombian’s financial sector will continue to be a pillar of trust and investment regardless of the political cycle.

Grupo Aval will continue playing the role with discipline and a long-term perspective. Now we are open for questions.

Q&A Session

Operator: Our first question will come from the line of Brian Flores with Citibank.

Brian Flores: I have a first one is a clarification on the guidance. Just wanted to check with you if you mentioned that the group’s NIM on loans for the year is expected at 4.4%, which is the level you finished this quarter. I think that’s my first question. If — depending on the answer, I have a follow-up.

Diego Saravia: The answer is yes. It is 4.4%.

Brian Flores: No, I just wanted to understand — so how should we understand the positioning of the group in the cycle, right? Because the NIM level is coming from 4.6%, went to all the way to 5%. So should we understand that now the sensitivity is a bit lower in the sense that as rates have continued to go up, you will have maybe muted effects on the NIM. Just wanted to clarify that.

Diego Saravia: Yes. Brian, I think that the best way to think about it is throughout the year, given that you’re going to see volatility throughout the next few quarters. The reason for this volatility is that the repricing mismatch between assets and liabilities. For example, during this quarter, we had a strong repricing of our liability side and very mild on the asset side. What we started to see at the end of the quarter that will reflect on the next quarter is a recovery of NIM. However, we do expect, as Camilo mentioned before, further Central Bank actions. By the way, the Central Bank action, the last one that we had hasn’t been yet or did not reflect in the first quarter because it happened at the end of the first quarter.

So we’re going to see that happening, and that might also press the third quarter moving forward. So that’s the reason why I would say that you’re going to see volatility in the repricing process. I would stick to what we expect on average during the year.

Brian Flores: Okay. Perfect. And then another clarification on the guidance. You mentioned the ROE for the year, your expectation is 9.25% with 14 bps impact from the equity — from the wealth tax, right?

Diego Saravia: Yes. Before moving into that, I think you also asked regarding positioning, and I want to emphasize something that Maria Lorena mentioned. And it is over these past years, we’ve been rebalancing our portfolio actively as well as our deposit side. Part of what we’ve done and let me repeat part of what I said during the presentation is to lower our exposure to payroll lending and increase our exposure to products on the retail side that reprice much faster. We also have reduced our position in dollar-denominated assets that have a lower NIM to try to enhance our NIM on the asset side. On the liability side, even though it takes much longer to be able to see consequences of what we’re doing, we are strongly working on the retail side deposits.

So regarding positioning, trying to summarize what I said is we expect this to be a milder cycle than what we saw the last time around where we were much more liability sensitive than what we currently are. Then regarding ROE, I’m going to try to summarize what we’re guiding into. Basically, you might have seen that there were some changes that we did in our guidance, but some of them compensate what we will feel from the equity tax and also the pressure from the Central Bank actions. I would say, roughly, we already have a clear view on how to compensate at least half of what happened from the equity tax and continue to work actively in trying to compensate the rest. So our guidance for efficiency actually is not bringing down or being affected by the full impact of the equity tax, but it already has around roughly half of that compensated.

On the other hand, we are building in a tougher interest rate environment than what we expected before. Also, we’re building in more liquidity in our balance sheet preparing to the electoral volatility. You might imagine that this liquidity is very expensive because it has basically a 0 NIM or slightly negative NIM that has affected us during this quarter. Perhaps after the electoral cycle, we might loosen that position. But we’re seeing a tougher NIM environment. However, we have a few positives. One of the positives here is our cost of risk continues to behave better than what we expected before. That’s coming in. And as I mentioned before, we’re also working strongly on the efficiency side, and you saw Jorge Castano’s presentation that focused on actions rather than the actual results, but these are the actions that will lead us to these kind of results.

Operator: Our next question will come from the line of…

Diego Saravia: A final one from your very good question, Brian. If you think our previous guidance was 10.5%. We have roughly 1.2 percentage point impact from the equity tax. We have a strong impact from the NIM, and we’re compensating up. So all in all, if you strip away the equity tax, we actually lowered our guidance in roughly 20 basis points or something of that order of magnitude.

Operator: Our next question will come from the line of Carlos Gomez with HSBC.

Carlos Gomez-Lopez: Just a bit different. Can you tell us how the pension reform is going to affect your business and whether you think that Porvenir should be part of your portfolio for the long run? And also, again, if this — maybe this is not the right time, but what are the prospects of simplification of your structure and reducing the number of different units in the coming 3, 4 years in your opinion?

Diego Saravia: Let me take these ones, and I’m going to pass it on to Maria Lorena. Regarding the pension reform, as we’ve mentioned in the past, the pension reform actually balances out to, let’s say, something similar from a value perspective that is the pension reform reduces growth long term, and I’m going to qualify what long term means, but also increases returns in the short term. Long term means when you take into consideration that an average affiliate to the pension system is around 38 years old and that the resources will be managed by the pension funds for the remainder of their active life before they retire. The contraction of what we’re going to see there with current affiliates will start being relevant around after year 10.

So during the first years, you’re going to see volumes that are not strongly affected by the reform. However, it does changes the expected sizes thereafter. Yes, Porvenir is actually a strong part of our business. It’s both Porvenir and as you see, the trust business are things we’re working on. We are working not only on our intermediation business, but we’re also considering as one of our pillars to work on the asset management and the fee-generating businesses in addition to what we do in intermediation.

Operator: Our next question will come from the line of Yuri Fernandes with JPMorgan.

Yuri Fernandes: Sorry, I was on mute. I have a question regarding loan growth on the guidance. And if I heard correctly, I think you’re still guiding for 9.5%. That is just no adjustments from the previous around 10% that you had before. And consumer loans are still growing fast on your guidance, right, 14%. My question is more in line of what Brian was talking about the cycle, right? Like if there is a higher uncertainty in Colombia, inflation, higher rates, everything that we are seeing, do you think like that keeping this growth of consumer loans is the best move? I’m just checking if maybe being a little bit more cautious and growing a little bit less would not be in this kind of framework. So just checking your comfort of accelerating the growth in consumer.

I know Aval has been recovering market share. But again, just checking about the time and about the cycle. And then I have a second question regarding AV Villas. I was just checking the presentation and caught a little bit my attention the core capital of that unit. I know it is overall small for the group. But if you can comment about the core capital of AV Villas, why it’s moved down while the other subsidiary they moved up? And if you feel comfortable with that level of 9.3% core capital Tier 1.

Diego Saravia: We’ll start first with your last question. That’s a very easy one. If you look at our solvency ratios, our banks, use mainly core equity Tier 1 and are not strong users of AT1 or Tier 2 either. Then you also mentioned that AV Villas is a small operation. So we can act very easily on AV Villas regarding potential support, and it would likely come not from equity, but from hybrid bonds as we did in the past. AV Villas is doing very well from the commercial side. So that’s the reason why you see consumption of solvency and it is consumption due to a very healthy growth. Then to your question, I should clarify that this guidance includes Itau as part of the numbers. So going back to some of the numbers, the Itau transaction will add around 2 percentage points in share of credit cards.

It will also add to our personal loans business. And it’s basically the main driver of that kind of growth. In absence of Itau, you’re right, we would have been guiding into much milder growth more in line with nominal GDP growth or something in that order of magnitude.

Operator: Our next question will come from the line of Daniel Mora with CrediCorp Capital.

Daniel Mora: I have a couple of questions. The first one is regarding OpEx and efficiency. Can you please review what will be the OpEx savings per year during the next phase of the strategy with [ Comp ] and efficiency target that you expect to reach in this year ’26 and in the medium term? That would be my first question. And the second one is regarding Corficolombiana. Can you provide further color of the impact of inflation at Corficolombiana, especially in the infrastructure business in the report, you mentioned that it considers the inflation expectations, but I would like to understand if it is indeed expectations or they are full inflation. I would like to understand if this is just a one-off impact or considering the upward trend in inflation [Technical Difficulty]?

Diego Saravia: Yes. Regarding OpEx, we’re working on multiple fronts. Those that Jorge mentioned will be running by the end of this year at a run rate of around $30 million to $40 million per year. And that’s an initial phase of what we’re going to be doing. And then not included in what we discussed here, we’re strongly working on the technology side. And in a later call, we can get back to that point where we see substantial opportunities to work on. Regarding Corfi, the way it works is these concessions, given that the rights received on the concessions, some of those are tied to inflation do adjust up with expected annual inflation. That compensates in part the very strong increase in cost of funds that they have. So there’s some sort of an offset.

But if you were to think only of Corficolombiana, not the financial sector as a line, but Corficolombiana as a whole, they are being affected by higher interest rates and the income from inflation on the concessions is not enough to compensate — to fully compensate what they’re feeling from the funding cycle.

Operator: Our next question is a follow-up from the line of Carlos Gomez with HSBC.

Carlos Gomez-Lopez: I came back to the line because I think there was a question that was not answered before. I just wanted to know if there’s something you would like to address regarding the possible consolidation of the group in the next 3 or 4 years.

Diego Saravia: I’m sorry I guess,I forgot the question.

Maria Gutierrez Botero: This is a question that we hear all the time. We are working on having efficiencies on having synergies between — among banks. And we have a good integration with the few key initiatives this year. So we are on the way to be more efficient, to have more impact and to have scale. So we are working on that, but no more to say.

Carlos Gomez-Lopez: Okay. I just wanted to make sure that you had the opportunity. And since we are at it, anything you can do to improve the liquidity of the stock?

Diego Saravia: Yes. Our liquidity has been increasing not enough to our satisfaction part of what we are doing from the investor relationship side is working strongly on communication, but there are further actions that we would need to do to increase liquidity. There is no plans for a secondary or a new issue at this point. So the actions would be more on stock management rather than additional stock issue.

Operator: Our next question will come from the line of Santiago Villanueva with [indiscernible].

Unknown Analyst: I just have 2 questions. My first question is, I see that in 2025, the 4 banks gained nearly 60 basis points in retail funding market share. And by 2026, they have already gained 45 basis points. But most of that profit has come from Bogota and Popular. I’d like to know what your market share expectations are for this segment in 2026 and what you have planned to help Occidente and Villas to contribute a little bit more? And my second question is, could you provide us a little more detail on the performance of the infrastructure segment in Corficolombiana for this quarter?

Diego Saravia: Yes. And I don’t have a figure. I’m happy to give it out to you later on. That’s public information. I just don’t have a number here. But you’re right, we’ve been more successful on Popular and Banco Bogota bringing in retail deposits, but you can be sure that we’re working with all of the banks to ensure that all contribute to the very relevant strategic objectives. Regarding infrastructure, I think that was covered in the previous question. You have the onetime effects of changes in inflation expectations that improve the performance of the infrastructure business. However, as I mentioned, over the year, we’re going to have a higher interest rate environment that will partially offset what we received during the first quarter. So it’s very much related to what I discussed before.

Maria Gutierrez Botero: Regarding businesses in Corolombana, as you know, so Colombia doesn’t have new projects in infrastructure and the government is not just open one project in the last 4 years. So given that we are finishing our concessions, the construction of the concession. So we are looking for projects outside Colombia. So this is part of our strategy. And we hope that the new government, whatever we will have new projects in infrastructure. But given that right now, we don’t have, and we are looking at a growth.

Operator: And this will conclude our question-and-answer session. Ms. Maria Lorena Gutierrez Botero, I turn the call back over to you.

Maria Gutierrez Botero: So thank you to you for being with us today and see you in the next call. Have a good day.

Operator: Thank you, ladies and gentlemen. This concludes today’s conference. Thank you for participating. You may now disconnect.