While more and more
banks around the world seek state bailouts, Colombia’s largest
bank voted on Monday to give shareholders a bigger share of
last year’s record net profit, and announced new investments.
Bancolombia shareholders approved a 9.9
percent increase in their yearly dividend at the bank’s annual
meeting, although the company’s president warned that 2009
would be a tough year due to the global economic crisis.
Loan portfolio growth is expected to slow sharply this
year, Bancolombia President Jorge Londono told reporters.
“When the economy’s growing at a rate of more than 7
percent like it did in 2007, all businesses do well. When it
grows by 2 percent, they don’t do as well,” he said.
Colombia’s Bancolombia does not expect to emerge from this
year unscathed by the world financial and economic crisis, but
directors still think loan portfolios will grow by about 8
percent compared with 17 to 18 percent in 2008.
As well as agreeing the dividend of 624 pesos ($0.24) per
share, Bancolombia announced plans to auction the first tranche
of $391 million in subordinated debt later this week and invest
between $125 million and $150 million in new technology.
Colombia’s economy is slowing, hit by the global credit
squeeze and lower export earnings.
Gross domestic product rose only about 3 percent last year
and the stock market plunged by 30 percent, but the banking
sector emerged in reasonable shape.
Banks’ loan portfolios rose 17 percent from 2007.
Analysts say Colombia’s financial sector learned its lesson
during the recession of the late 1990s. Colombia had to bail
out several failing local banks at a cost of some $6 billion
during the crisis.
“The truth is that in Latin America, and especially in
Colombia, the financial sector is experiencing current times in
a different way to the rest of the world,” said Alejandro
Gaviria, economics dean at the Los Andes university in Bogota.
“One reason for this is that Colombia’s financial system
learned the lesson of the previous decade and regulations are
demanding,” said Gaviria, who is also a member of Bancolombia’s
board of directors.
Gaviria added that the nation’s banks and regulators had
become more cautious about their exposure to bad debt.
Banks in Latin America, many of them controlled by foreign
players, are generally well-capitalized and have not dabbled in
areas such as subprime lending, instead focusing on meeting
demand for credit from credit-worthy consumers and companies. (Reuters)