Grupo Aval: 3 Key Takeaways for Long-Term Investors

The Motley Fool · 1d ago

Key Points

  • Itau's retail business added 6.3 trillion pesos in net loans to Grupo Aval.

  • Aval Fiduciaria captured cost synergies equal to 40% of its cost base.

  • A U.S. court dismissed the deferred prosecution agreement against Corficolombiana.

On its third quarter of 2026 earnings call, held on Nov. 11, 2026, Grupo Aval (NYSE:AVAL) announced attributable net income of 368 billion Colombian pesos, down 29% year over year as lower investment returns weighed on overall earnings. The bank's core lending business and asset management divisions expanded their market footprint during the period. Three key takeaways from management's presentation clarify the company's long-term trajectory.

1. Retail Integration Drives Consumer Loan Growth

The acquisition of Itau's Colombian retail assets immediately expanded the group's lending footprint, generating more than two-thirds of total loan growth for the quarter. The deal expanded the bank's net interest margin on loans, which measures loan profitability after funding costs, demonstrating how added scale in consumer lending directly enhances core earnings power.

Itau retail business added COP 6.3 trillion in net loans and explains over 2/3 of the quarterly growth.
-- Diego Solano, Chief Financial Officer

2. Trust Unit Integration Unlocks Operational Efficiency

Following the merger of four trust subsidiaries into Aval Fiduciaria on Jan. 1, 2026, the unit delivered historical efficiency gains. Operating expenses plummeted relative to revenue, driving the asset management division's return on equity -- a key measure of how effectively management generates profits from shareholder capital -- to 42.3%.

The integration process has enabled us to capture synergies equivalent to 40% of our total cost base. Consequently, our cost-to-income ratio has improved significantly, reaching its best historical level and delivering optimization of more than 10 percentage points.
-- Alejandro Gomez, President of Aval Fiduciaria

A major legal risk cleared on Oct. 26, 2026, when a court dismissed the case against infrastructure subsidiary Corficolombiana regarding the Ruta del Sol 2 project. Corficolombiana satisfied all requirements under its deferred prosecution agreement -- an arrangement where legal charges are dropped after a company meets specific compliance conditions -- removing a persistent structural drag on the group's valuation.

... on October 26, Corficolombiana having fully satisfied its obligations, received a court order dismissing the case related to its deferred prosecution agreement, DPA with the U.S. Department of Justice related to Ruta del sol 2, signed in August 2023.
-- Maria Lorena Gutierrez Botero, Chief Executive Officer

Looking Ahead

Persistent inflation and high local interest rates present near-term macroeconomic headwinds across Colombia. Management is relying on disciplined loan repricing and ongoing expense rationalization to navigate this slower environment while preserving core lending returns.

The near-term outlook remains challenging. Growth is expected to slightly decelerate given the fiscal adjustments in processes, while local rates will continue high, given persistent though lower inflation.
-- Maria Lorena Gutierrez Botero, Chief Executive Officer

Looking further out, the group expects broader economic stabilization and lower borrowing costs to reactivate commercial lending across energy and infrastructure projects.

We expect the full benefit of Itau and our loan repricing to support improvement over the year.
-- Diego Solano, Chief Financial Officer

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