trending Market Intelligence /marketintelligence/en/news-insights/trending/eqnXSgRl0cN2oFko4XNoNg2 content esgSubNav
In This List

Banking fees bill could slice 8% of Aval's net income, CEO says


Street Talk | Episode 94: Recessionary fears in '22 overblown, Fed could overtighten


Investment Banking Essentials Newsletter April Edition - 2022


Banking Essentials Newsletter April Edition - 2022


Investment Banking Newsletter April 2022

Banking fees bill could slice 8% of Aval's net income, CEO says

A bill that proposes to cut banking fees could slice 8% of Grupo Aval Acciones y Valores SA's net income or 220 billion Colombian pesos if enacted as it is, CEO Luis Sarmiento Gutiérrez said during an earnings call conference.

As the bill moved from the lower House to the Senate, Gutiérrez said they were giving the matter full attention, even if its impact would not be "as severe to (Aval's) net income" as it would be to those of its peers.

Gutiérrez explained the current text of the bill proposes cutting certain fees charged on credit and debit cards, as well as installing limits on those applied to saving accounts. And that while the goal of the bill is to foster financial inclusion of low-income individuals, its effects would be counterproductive. "As we have tried to explain ... the truth is completely the opposite," the CEO stated.

"Cost of risk and cost to serve this segment of the population is higher. Therefore, when faced with revenue-limiting restrictions, banks would have no option but to stop serving certain segments. This is exactly the opposite of what the bill intends to achieve," he said.

The executive said the banking sector as a whole is working on alternative proposals for Congress by seeking "more efficient ways" to attend all client segments.

"There is no clear timeline for the Senate debates as other political matters might be on its agenda before this topic," he said, raising hopes that ultimately "the government might not even agree with the law as it is being discussed."

Grupo Aval posted net interest income of 2.730 trillion pesos in the first quarter. Attributable profit for the first quarter rose 27.6% year over year, supported by stronger interest income and higher gains from fees, trading and the sale of goods and services.

The Bogotá-based company booked net income attributable to owners of the parent of 762.9 billion Colombian pesos, rising from 597.7 billion pesos in the year-ago period.

As of May 20, US$ 1 was equivalent to 3,360.1 Colombian pesos.