Welcome to the First Quarter 2019 Consolidated Results under IFRS Conference Call. My name is Hilda, 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 registered with the Colombia's National Registry of Shares and Issuers, Registro Nacional de Valores y Emisores and The United States' Securities and Exchange Commission, SEC. As such, it is subject to compliance with securities regulation in Colombia and applicable U.S. securities regulation. All of our banking subsidiaries, Banco de Bogotá, Banco de Occidente, Banco Popular and Banco AV Villas, Porvenir and Corficolombiana, are subject to inspection and supervision as financial institutions by the Superintendency of Finance. Grupo Aval is now also subject in the inspection and supervision of the Superintendency of Finance as a result of Law 1870 of 2017, also known as the Law of Financial Conglomerates, which came in effect on February 6, 2019. Grupo Aval, as the holding company of its financial conglomerate, is responsible for the compliance with capital adequacy requirements, corporate governance standards, risk management and internal control and criteria for identifying, managing and revealing conflicts of interest applicable to its 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-GAAP measures, such as ROAA and ROAE, among others, are explained when required in this report. Grupo Aval has adopted IFRS 16 retrospectively from January 1, 2019, but it has not restated comparatives for the 2018 reporting period, as permitted under the specific transitional provisions in the standard. The reclassifications and the adjustments arising from the new leasing rules are therefore recognized in the opening condensed consolidated statement of financial position of…

Thank you, Hilda. Good morning all and thank you for joining our first quarter 2019 conference call. It is my pleasure to share with you our strong financial results for the quarter that ended at March 31. As in previous calls, today, I will cover several subjects, including a few financial highlights, which Diego Solano will discuss in detail, an update of our digital strategy, possible regulatory changes, an update on legal issues surrounding the Ruta del Sol project, macroeconomic results and our economic guidance for 2019. To highlight a few of this quarter's numbers, our attributable net income for the quarter was COP 763 billion or COP 34.2 per share, an increase of 28% versus 2018's first quarter results of COP 598 billion or COP 26.8 per share, and our return on average equity for the quarter rose to 17.4%. These results were mainly driven by positive trends such as increases in net interest margin and in net fee income, both from banking and pension fund management, and improvement in cost of risk, supported by better consumer loan vintages and by the apparent end of the deteriorating credit cycle, continued success in keeping costs under control and strong performance from our nonfinancial sector investments, especially Corficolombiana's 3 toll roads under construction and Promigas. Our loan portfolio grew by more than 7% in the last 12 months ending March 31. However, growth during the quarter, in absence of foreign exchange effects, was a modest 0.2%. This was especially noticeable in our Central American loan portfolio, which contracted during the quarter because of slow economic growth, exacerbated by the Nicaragua crisis, which has resulted in a loan portfolio decrease in that country of 23% in the last 12 months, about 1/3 of which took place during this first quarter. January and…

Thank you, Luis Carlos. We'll now move to the consolidated results of Grupo Aval under IFRS and wrap up with our guidance for 2019. As mentioned by Luis Carlos, the first quarter of 2019 was a strong quarter for Grupo Aval. Our net interest margin benefited from a robust results of our investment portfolio. Cost of risk fell in spite of the burden of Nicaraguan provisions, mainly driven by a continuing improvement of our Colombian consumer portfolio. The benefits of our cost control efforts deployed during 2018 have enabled us to continue improving our efficiency. And finally, our nonfinancial sector continues to strongly contribute to our results. Starting on Page 9. Assets grew 11.2% over the year and decreased 0.5% during the quarter. Colombian assets grew 8.8% over the year and remained stable during the quarter. Rights of use of leases and contracts associated with the adoption of IFRS 16, the growth of investments, offset by lower interbank and overnight assets drove the volume dynamics during the quarter in Colombia. Central America, which weighs close to 30% of our book, delivered 2.8% annual and 0.5% quarterly growths in dollar terms, affected by Nicaragua. Nicaragua, which represents 6% of our Central American assets, contracted 23.6% and 1.8% over the 12-month and 3-month period ended on March 31, 2019. Central America, excluding Nicaragua, grew 5.8% and 0.7%, respectively, during the same periods. On Page 10, loans excluding repos grew 7.3% over the year and decreased 0.5% during the quarter. Quarterly performance reflected seasonality and the effect of our foreign currency assets of 2.3% appreciation of the Colombian pesos. In Colombia, commercial loans remained stable during the quarter, showing a slow dynamic, particularly in U.S.-denominated loans. Even though not yet reflected in our figures, hints of a mild strengthening of our corporate portfolio…

[Operator Instructions] We have a question from Jason Mollin from Scotiabank.

My first question is on the implications of rising unemployment in Colombia as you showed in your presentation, and you said you're monitoring it very closely. You are growing the fastest in the consumer segment or mortgages in consumer. Can you talk about the actual unemployment of your client base in Colombia? Is it showing the same overall trends? Or is this impacting individuals that are not clients of the bank? And is this really a concern for the outlook for cost of risk?

Jason, I think that the answer is in your question. Yes, you're right. This unemployment is happening mainly in segments that we are not serving. These are the low-income segments and mostly informal jobs. Having said so, we continue to be very careful and are looking into these figures.

The next question comes from Gabe Nóbrega from Citi. Gabriel da Nóbrega: Thank you also for the thorough presentation about the possible impacts from the new regulation on the banking fees. If I understood correctly, it could still take a bit of time for this law to come into effect. So I'm just trying to understand here, if the 8% impact, which was just presented here, if it would be on Aval's 2020 results. And also, if I can maybe pick your brains and understand if you're already studying strategies in order to mitigate these factors. And I'll make a second question afterwards.

Yes. Well, let me address both of your questions. On the one hand, yes, you're right, we are still away from having that law passed by the Senate in full. As I said in my presentation, if the Senate changed in any way the wording of the law as it came out of the House of Representatives, then that will even merit an additional debate of the 2 chambers together to try to find a language that will appease both. After that, it might go to the President for his signature, and little that we know the government might not even agree with a law as it's being discussed. However, we did go ahead and estimate it in a worst-case scenario in case the bill was passed exactly as it's being considered right now, and that's where our numbers came from. That would be a full year of decreased revenues, and we would start to see that, yes, next year if it passed this year. As I said, there are so many things on the table on Congress, and on the other hand, it's -- second semester of this year, we're going to have elections. So that might even push it to the next legislature, in which case, we wouldn't see the results in 2020 but in 2021. We are, in any case, talking to all these congressmen to try to convey to them what we think about the law and to try to come up with alternatives. So it -- yes, to try to answer your question, still a ways to go on the one hand, and secondly, 2020 or 2021 is where we would see the full effect. And the second question, that wasn't -- what's that?

He's going to ask the question the later.

Okay. You said you would ask a second question later. All right.

The next question comes from Andres Soto from Santander.

I have 2 questions. The first one is related to cost of risk. If I understood correctly, you are reducing the guidance or rather improving your guidance for cost of risk to 2%. It was 2.2% in your previous call. I would like to understand whether this improvement comes from better outlook for the 3 large cases, in particular Electricaribe and Ruta del Sol? Or this is related to a better performance that you are seeing in your loan portfolio? And my second question is regarding some comments you made in your previous calls regarding new regulation in Colombia regarding financial holding companies. That will allow Porvenir to buy securities issued by Grupo Aval. I would like to understand, to have an update on what is the current status of this process, if everything seems in place for Porvenir to buy Grupo Aval's shares and other securities. Or what is it still missing for this to happen?

Okay, Andres. For clarity, there hasn't been a substantial change in our guidance on cost of risk. There might be a difference with what the 2.2% stands for. It is the gross number before recoveries. The 2% that we mentioned today is net of recoveries. Having said so, we are positive on the way our consumer portfolio is behaving. And we have started to see, as mentioned, even though still high, the provisions coming from Nicaragua have started to moderate. So we continue to have that guidance. However, we see those positive factors in the evolution of these numbers. And then your second question, yes, in fact, the law of conglomerates, in one of the resolutions which basically dictate how the law is to be applied, allowed Porvenir to start matching what other pension funds that belongs to conglomerates actually did in the past, and that this that going forward, all pension fund managers that belong to conglomerates will be able to invest up to 8% of their total funds in their administration in securities issued by members of the conglomerate. In that respect, Porvenir could, if it decided to do so, invest in securities issued by Aval or any one of the other companies that formed the conglomerate. We obviously can't know what they are going to do. There is a really strict Chinese wall that we have built and strengthened to make sure that, from the holding company and from the other companies of the conglomerate, we cannot tell what Porvenir intends to do with that approval. But the good news is that, if Porvenir is to match what other pension funds already own in Aval securities, it is to be, I would imagine, foreseeing that Porvenir would like to increase a bit their own standing. The greatest -- the better news is that any investments that Porvenir decides to undertake in Aval securities will have no other -- very many possible potential good consequences, but one of which will be that the liquidity of our share should increase as they do so. So we are as interested as anybody else to see what Porvenir decides to do. They have put in place investment committees composed of their independent Board directors and of the members of -- the independent members of the Board of Directors. And obviously, we have -- our expectations are high. We'll see what happens. And then when we see what happens, we'll be able to report. The good -- the greatest thing will be -- and if -- I don't even know if Porvenir does quarterly calls, but if they don't, you, as analysts of the results, should ask them what they propose to do, and maybe they will make it public. Thank you.

Your next question comes from Nicolas Riva from Bank of America.

Most of my questions have been answered, but just one quick one on Ruta del Sol. Is there any update on the investigation from the U.S. Department of Justice?

No. We continue to cooperate, meaning, anything that has been asked of us through our lawyers, we have answered. And the moment we know more, we'll bring it up to -- in one of these calls.

The next question comes from Yuri Fernandes from JPMorgan.

I have a question on your loan interest margin, the decrease you pointed this quarter, if you can provide more color? I understood it came from Central America, but if you can give more details to us and how this will evolve during the year. And my second question is regarding your digital strategy. If you can provide also color on, I don't know, the size of your CapEx, how you are seeing the different banks evolving. I recall that in the past, you had been working through -- all the banks should gather in the same kind of platform. But if you can provide also some details on what you have been doing on the digital side would be nice.

Okay. Let me take the first one on the loan interest margin. What we saw during this quarter was mainly the impact of changes in currency in Central America in addition to changes in currency, meaning, there has been a substantial volatility and given that net interest margin is calculated as a P&L account that is based on average exchange rates. And then the denominator -- our balance sheet accounts that are based on period-end exchange rates, you get some distortion there. So there might be a temporary effect of this volatility. There is, in addition, a change. When you're taking Nicaragua out, that would mean, as mentioned, we've been contracting our operation in Nicaragua. And Nicaragua had a particularly high net interest margin. So the combination of those 2 effects was what created the burden on our numbers during this quarter. Question on moving forward, we have a combination of 2 forces, one that might generate expansion. It comes from a more dynamic market and eventually hikes in interest rate that might happen later this year. We see those hike in rates less probable than we saw them several months ago, but it's still on the table. The higher demand will impact also prices in a favorable way. Then you have the consumer portfolio where we've been forecasting for a long time that we would have a contraction margins and margins have been more benign than what we had expected. But as the economy recovers, that is an event that is feasible to happen given additional competition.

Let me address a little bit about the digital strategy. We don't really like to throw numbers out there to -- especially going forward more than a year out of how much we'll spend here or there or invest here or there. But if you twisted my arm, I would say, right now our estimation is that we will invest in our digital lab about $100 million, up to $150 million over the next 2 or 3 years. However, one of the conditions that I put on that digital lab is that the amount that we invest on them depends mostly on the revenues that they are able to generate for us and the cost savings that they are able to generate for us. And I won't -- I got to make sure that we don't invest too much more than we are revenue generating or cost saving. So in that sense that we can deliver on additional revenues and cost savings a number similar to that, we'll invest that. But if we are able to generate more revenues or decrease more savings, then we will definitely invest more. With what we've done, as you mentioned, we have -- we are now functioning out of 1 digital laboratory rather than 2, and all our banks are working through that digital laboratory. Things that we've done: for example, we have a very active process going on now of data lake management, where we are for the one -- for the first time in many, many years, aligning our data regarding our clients in the same way for all the banks that -- where those clients are clients of and to make sure that our information about each of our clients is identical regardless of where and how you address the client. Secondly, we continue delivering digital products. And we have now digitalized the most important products -- the feature of all of our banks, both here and in Central America. Thirdly, we continue to digitalize processes, for example, collections, as we move forward. We have been pretty successful in improving our collection processes, especially around consumer lending through digital processes. We have, for example, created and we are changing all our transactional web pages for our banks with a product that we created in-house. Same in the future, I think, our mobile banking, transactionals page will be -- or our mobile banking platform will be an in-house production. And among all that, we have been able to continue the reduction in our physical footprint, and we will continue to do so. And from the digital labs, we're also coming out with ideas on how to make the remaining digital -- the remaining footprint, physical footprint much more accessible and likable, I would say, from our client's standpoint.

The next question comes from Sebastián Gallego from CrediCorp Capital.

I have 3 questions, actually. Can you -- the first one is, can you comment on the commercial loan portfolio, particularly in Colombia? I know you mentioned that your strategy is oriented towards the retail portfolio. But still, we have seen a very weak performance overall on the commercial front. Second question is regarding core fee and its contribution on income or revenues at the Aval level. We saw definitely a slowdown compared to previous quarters. And my question is, what can we expect throughout 2019? What's the kind of contribution we will expect to have in that line or you guys expect? And the third question is regarding Nicaragua. Can you comment -- you mentioned all the effects it's having on that operation. But can you comment on a medium-term strategy, what are you guys planning to do within this operation?

Okay. Regarding the commercial loan portfolio, as the figures of GDP growth have come out, it is evident that the economy is still moving slowly. We mentioned that we've seen some hints of improvement, particularly because of 2 reasons. One, even though January and February were very slow, March and the following months have been much more dynamic. This dynamic is not only based on this but on actual loans that have been placed. In addition, there is a landmark and it is -- we had been contacting for the previous fourth quarter, quarter-by-quarter. This is the first part where the tendency has been broken. And even though still shy, we see some growth during the period. Something to add to that is part of not the market but the Aval-specific contraction had been related to the way we were pricing our loans where we found that loans were being placed at prices that were not generating value. So we gave away intentionally part of that market share. We've seen some of the pricing discipline coming back to market, and that has allowed us to regain some of the market share that we had forgone.

Yes. I'll take some of that blame, as Diego was saying. As I say often, growth, yes, but profitable growth. And commercial loan -- commercial lending is obviously still a huge, huge part of our strategy at about 60-something percent or 60% of our total loan portfolio is in commercial lending sales. So now we will not look away from it. We will obviously keep working on it, but we needed to make sure that whatever we kept lending would be profitable for the group. And so what we did is we sort of shied away from just following the crowd and decided to set standards that we obliged ourselves to meet. And that's why we stayed out of the game for a little while. But as I said in the presentation, we are also seeing, I think, more sensible pricing now, and hopefully, we will be -- we will continue growing, as Diego was saying, as we've seen in the last 3 months. With respect to Corficolombiana, let me see, in the first quarter of 2019, the revenues from -- around concessions in Corficolombiana gave us about COP 6 per share. As you said, in the fourth quarter of 2018, that number had been closer to COP 11 per share. But you have to remember that every time a toll road starts construction in earnest, it receives a boost in income from assets that it had booked -- assets and not as income and that it realizes as earnings once the road gets going, and that happened in the fourth quarter of 2018 in part. As Diego was also saying, in the first quarter of 2019, as expected, weather delayed some of the roads. So the advancement of -- the progress of -- in construction in the first quarter,…

The next question comes from Juan Nicolás Pardo from SURA Asset Management. Juan Nicolás Pardo Ayala: I have 2 questions. The first one, I would like to know if you have any assessment on how it would impact your results, the approval of this law initiative that looks forward to erase bad debtors' historical records and if you have any estimate on the time line to be discussed and approved by Congress. And the second one has to do with Avianca. This company has been recently downgraded to now just to CCC+. I would like to know if you have any exposition to that name.

Okay. On your first question, the first impact of that law should -- I mean, I'm in disagreement with the law. I don't think that you should compensate people for not having good payment ethics once they've borrowed. But on the other hand, what that bill proposes is that people will be withdrawn from the credit list once and only once and when they pay, when they pay up their loans that they are not current on. So in that respect, it should be positive. I mean at the end, besides the philosophical issue, if that gets people to pay up then you'll probably even see a recovery in provisions. But for us, it's really too early to try to put a number on that. But again, philosophically, I couldn't agree with that law at all. I don't think that when that happens, people get in the habit of just letting their loans lag and -- until the next bill is passed to a forgiveness bill. So we'll see. No, and I'm sorry to not have an exact answer to your questions, but no, we haven't really made sure how much will be benefited or not by the passing of that bill.

Okay. And regarding your question on Avianca, we do have exposure to the Avianca group, and I'm going to go into some detail with the Avianca group. It is around $250 million. Most of this debt, around $174 million, $175 million, is a syndicated loan to TACA that is guaranteed by Avianca Holdings and is secured with credit card receivables that are in trust. We see those numbers performing well and expect them to continue performing well, and in addition, we see the covenants being met under that loan. In addition to those $174 million, we have our own $29 million that are secured by their main building, which is a great property that well covers this loan. The remainder, which is slightly above $10 million is working capital loans that are unsecured.

The next question comes from Carlos Rodríguez from Ultraserfinco.

Just to follow up regarding your commercial loan book, I want to know how is your appetite for infrastructure projects and especially in Bogotá. And I'm talking about with the mass transportation system problem with nonperforming loans. I mean are you willing to support the infrastructure plan, the infrastructure investment plan in Bogotá or do you prefer to step aside?

In general, we have stepped aside from infrastructure until we see exactly what happens to the Ruta del Sol contract liquidation. We are very, very expecting to see what the message is from the government regarding good-faith creditors and the chances they have of being paid even in the midst of turbulent times like these. And specifically, regarding the Bogotá transportation system, we will stay away for now and see how it all boils down. And infrastructure, in general, as I said, we are also sitting it out until we see what happens. Obviously, we have concessions of our own that -- to the legal extent we will finance and make sure that they get built.

The next question comes from Iván Gálvez from Credicorp Capital. Iván Gálvez Shoobridge - Credicorp Capital; Analyst: I actually wanted to do a question about the NPLs as it was thought that the NPLs were going to go down in these years, but they are not. And I wanted to know what is the reason because it's not only the reason in your bank but in the whole Colombia. And I think it will be systemic and it could be also a consequence of commercial loans. And I wanted to know if you think it is going to improve or not and what are the reasons.

Regarding NPLs, there are a few factors to boil in, but the bottom line message is we see that the cycle recovering as it's making progress. 2 things that are affecting NPS in short term are the end of the cycle. As you might have seen, the consumer cycle preceded the commercial loan deterioration cycle. So it started before and ended before. The corporate cycle, where I'm meaning not the big cases but more the SMEs and mid-market companies, started with a lag and is expected to end with a lag to what happened with consumer. We've seen some hints of that improving. There's something in addition to -- bear in mind, when you look at first quarter, and it is -- if you take a series of 5 years in a row, you'll find that systematically, the first quarter brings some additional NPLs than what an average quarter does. So you need to bear that in mind when you look at the numbers, but we see hints of improvement into the future.

We have no further questions at this time. I would like to turn the call over to Mr. Sarmiento Gutierrez for closing remarks.

Thank you, Hilda, and thank you very much all for your actually very, very good questions today. And as I said in the presentation, we'll keep working hard to continue delivering on the numbers. And if anything else comes up, we'll bring it up to the market. And see you next time. Thank you very much.

Thank you. Ladies and gentlemen, this concludes today's conference. Thank you for participating. You may now disconnect.