Welcome to Grupo Aval's Third Quarter 2019 Consolidated Results Conference Call. My name is Sylvia and I'll be 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 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 bank 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 to 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 has not restated comparatives for the 2018 reporting period, as permitted under the specific transitional provisions in the standard. The reclassifications and adjustments arising from the new leasing rules are therefore recognized in the opening condensed consolidated statement of financial position on January 1, 2019. Consequently, quarterly results for 2019 are…

Thank you, Luis Carlos. I will now move to the consolidated results of Grupo Aval under IFRS and wrap up with our guidance for 2019 and 2020. Third quarter 2019 was a strong quarter for Grupo Aval and taking into account that we recorded Ps. 148 billion impact on attributable net income of Ruta del Sol provisions.The sound performance was driven by a strong pickup of our loan dynamics during the quarter in Colombia and Central America, in particular that of our corporate portfolio. Improving cost of risk aside of Ruta del Sol alone, solid performance of our fixed income portfolio and a sustained contribution from our non-financial sector investments.Starting on Page 9, assets grew 13.4% over the year and 3.5% during the quarter. Colombian assets grew by 9.8% over the year and 1.2% during the quarter, driven by cash, net loans and intangibles and financial assets from our concessions and right-of-use assets.Despite of our annual and quarterly contraction of 14.8% and 4.4% of Nicaraguan assets, Central America delivered a 4.5% and 0.5% 12-month and 3-month growth in dollar terms.Moving to Page 10, loans excluding repos grew 10.8% for the year and increased 5% during the quarter. Loan dynamics in Colombia posted solid growth and Central America picked up from the lackluster activity evidenced throughout the first half of the year.As anticipated our Colombian corporate loan portfolio growth accelerated to 2.6% over the quarter and 4% over the year. Our Colombian retail portfolios posted strong growth with consumer and mortgage businesses expanding 9.8% and 15.7%, respectively over the 12 months. Quarterly growth was 2.2% and 3.8% respectively.Our Central American operations excluding Nicaragua expanded 5.9% in dollar terms over the year and 2.6% during the quarter. Nicaragua which weighs approximately 5% of our Central American loans contracted 26.7% and 5.6% during…

Thank you. [Operator Instructions] And our first question comes from Jason Mollin from Scotiabank.

Hi. Hello, everyone. My first question is related to the recent announcement of the acquisition of Multibank Panama. You talked about the strategic rationale for doing this. Can you give us some color on what financing options Aval is considering and potential implications for capital at Aval and/or subsidiaries such as Banco de Bogotá? And my second question is on the outlook for provisions. You've mentioned guidance for cost of risk in the 1.9% range. I – should we be considering provisions for Ruta del Sol something of the past now? And are there any other specific cases that we should be aware of that could come up in the upcoming quarters? Thank you. Luis Carlos Sarmiento Gutiérrez: Sure, Jason. Thank you. Regarding your first, I'll take the Multibank question and Diego can take the provisions question. Regarding Multibank, well, the good news is that we are now sure that we won't need any new capital or capital influxes to pay for the bank. And we are considering several types of funding options Jason, we really have a whole array of options available to us, including maybe up-streaming some dividends from BAC to its holding company leasing Bogotá Panama, which is the company that we've selected to buy the bank and markets has already been preparing for that event. It just did an issue of credit card receivables and where it – just that issue alone would pay bank at about 2.7% after tax cost of funds. So as I said, we are considering several alternatives we will probably put together a package of funding and obviously we'll do it in a way that the acquisition is accretive for the – for our share and for the intra bank level. With that, go ahead Diego.

Regarding the provisions, I didn't highlight it during the presentation, but I need to point out that, we've actually reduced our guidance for this year of cost of risk from 2.3% to 2.2% including fully provisioning Ruta del Sol. At this point, the larger cases that we have been discussing over the past couple of years are pretty much done with Electricaribe many quarters ago Ruta del Sol will be done by year-end. And then SITP the one we needed to provision we've already provisioned. And by the way as of October we have already written off. The other companies of SITP are performing actually much better than expected. Therefore, we are not foreseeing a more provisions there.In 2020, I think there is two sorts of provisions some are good to have and some are bad to have. The good to have are those that are related to growth. And the bad to have are the bad case. At this point, we feel that we're moving into more of the first kind of provisions related to growth rather than expecting negative surprises. That applies for Colombia and also for Central America, where the troubling countries are all improving as we have highlighted before.

Thank you very much. Very helpful both of you.

Our next question comes from Gabriel Nóbrega from Citibank. Gabriel Nóbrega: Hi, everyone. Thank you for the opportunity to asking questions. So my first question, it's actually in follow-up on the MFG agreement of acquisition. When we look at the numbers from the Panamanian superintendence we actually see that the profitability of this bank has been reducing over the past few years. So, if you could just give us a bit more color on what are your strategies for increasing the ROE of this bank once again? And as for my second question, it's actually on your NIM guidance I see that you're expecting a NIM contraction of around 10 bps in 2020. I just wanted to understand, if this is the fruit of maybe higher competition, or if it's still going to be fruit from the higher and the faster growth of term deposits which have actually been pressuring your funding cost? Thank you. Luis Carlos Sarmiento Gutiérrez: Yeah, I'm willing to take your first and I'll be happy to do that. But I missed a part of it. I'm sorry, if you would just mention again what have you said has been reducing over the last few years in MFG? I'm sorry I didn't catch that. Gabriel Nóbrega: Yes sorry. The ROE of the bank has been reducing over the past few years. Luis Carlos Sarmiento Gutiérrez: Okay. I'm sorry. All right, fine. Well, listen yeah, the bank has grown very fast and there's probably some contraction of margins and some additional expenses. Actually, we have a nice plan in place to do a good work on ROE, specifically through very important synergies in the running of the bank in conjunction with our shared services center in Costa Rica out of which we run the six banks in Central America. We will be putting that plan in place quickly. And I think that over the next 12 months we'll see very significant improvements in efficiency in the acquired bank.Also, we should be able to extend to the bank some of our cost of funding better rates. And also, some of the treasury that we do in our own banks we should be able to extend to the new bank. And all-in-all, we expect that after obviously going through some acquisition expenses, as we implement all these new changes, it will come out being a much, much more robust bank.

Now regarding net interest margin contraction, it's a combination of a few things. The first one is more of arithmetic effect of the changes we have already seen throughout this quarter on net interest margin. As you pointed out, part of that is related to higher competition, higher competition that is related to stronger growth and a better outlook for the quality of the portfolio.So in our net interest margin, we're including that as an effect that we'll add up to what happens next year on the NIM and loans side. On the other hand, the net interest margin and investments has also been quite strong throughout this year. This is related to the overall interest rate environment that we've seen globally. And we believe that part of that will not continue into next year, we should migrate to slightly lower more similar to historical average net interest margin and investments. Gabriel Nóbrega: Perfectly clear. Thank you so much.

Our next question comes from [indiscernible] from CrediCorp.

Hi. Thank you for the question. I have a couple of questions. I wanted to know more about the NPL ratio of Central America, if you could give me more details on that, because we saw an increase -- an important increase in the NPL ratio of Central America. And if you could explain me a bit more on the Episol case, I got a bit lost over there. Thank you.

Okay. Let me take the first one. Regarding NPLs in Central America, you're right, in the past we had experienced some NPLs, particularly in two countries that we have highlighted in the past calls. One is Nicaragua and the other one was Costa Rica, both for very different reasons.In the case of Nicaragua this was a political unrest, disrupted how the country was performing. And in the case of Costa Rica, we had a high or still have high fiscal deficit, but actions were taken. What we see is changing trends in both countries.In the case of Nicaragua, even though it's not yet over. The cycle has started to improve, the contraction has started to decelerate and we've seen an improvement in some of the segments of our business there that should impact an improvement in PDLs.And the Costa Rican side, we've seen some positive events there. The fiscal reform, even though not enough to solve long-term the fiscal deficit problem in Costa Rica, has reduced pressure and rates throughout the country. And then we see as a very positive evolution, the new Minister of Finance who's at least at this point verbally pointing in exactly, what the right actions should be. Therefore this cycle that we've seen in Central America we are quite positive on how it should be evolving into the future. Luis Carlos Sarmiento Gutiérrez: Okay. Let me try to give you a very quick response if at all possible regarding your second question. Sometime ago [indiscernible] of Columbia brought a class action suit against about 20 or 20-something defendants, all related to the CRDS scandal. That class action suit was ruled against those defendants and first instance by the Tribunal Administrativo de Cundinamarca where it was being considered.The ruling had two effects: one, it declared or…

Our next question comes from Sebastián Gallego from CrediCorp Capital. Sebastián Gallego: Hi, good morning everyone. Thanks for the opportunity. I have two questions. The first one, can you provide a bit more color on growth expectations within the Central American operation? And the second question is related to OpEx. Can you just provide further explanation on growth on OpEx excluding the FX? And what are your guidance, what is your guidance for OpEx growth going forward?

Regarding growth expectations, we've seen Central America picking up over the past quarter. As mentioned, this has happened in the corporate segment and it has also happened broadly throughout the region, except Nicaragua. In the case of Nicaragua, the changes, the contraction is happening at a much lower pace.Part of what we will be working throughout next year at some point is the integration of MFG that will provide us some in organic growth there. And in the rest of the country is also working on organic growth as we usually do.Regarding expenses, I need to say we were not that happy with our expense performance during the quarter. And the action has been taken particularly in Central America, where some of the expenses could become recurrent to adjust them down and work is being done throughout the region to attend that area.Colombia has been performing pretty well. As mentioned in the past, it's been a combination of discipline plus some of the results from the digital strategy that are helping us contain costs. What we expect to see into next year is cost growth in the order of 6% -- 5% to 6% that should be short of what we're pointing out for asset growth and for loan growth, therefore we should see some improvement in that front.

Our next question comes from Carlos Rodriguez from Ultraserfinco.

Good morning, everyone. Thank you for the conference call. I have two questions. The first one is, could you give us more detail in the increase of the trading assets in the balance sheet and if this trend will continue in the coming quarters? And my second question is just a follow-up on the OpEx. If you could share with us your medium and long-term target inefficiency in Central America and in Colombia, how much you can push the efficiency in Colombia? Thank you.

I'm not sure I got your question right. For the first one, I believe you were referring to the trends in assets. Trading assets, I'm sorry. Regarding the trading assets, what we saw this year was a particularly a healthy return on the portfolio. Part of the reason why we're guiding into a slightly shorter return on equity for next year compared to this year is we do not see this kind of returns being maintained for the long term.We do expect to see positive results on the trading side, however not as solid as this year. On the efficiency front -- and on your second question regarding the efficiency short and medium-term targets. I think that what we've been working on and when -- and it's still too early to say exactly how much we will be able to improve our efficiency but we have, as I mentioned briefly, just recently inaugurated the Central -- shared services center in Costa Rica, where we are in the process of moving all those services that we can share for the six banks and now it's seven banks in Central America.And we should start seeing results very soon with that. That shared service center is also located in the duty-free zone and that obviously will help with the fiscal situation. And in Colombia, we are in the process of moving in the same direction. It's still too early to tell. We're starting all the consultancy work that is required. But we will be putting together a similar shared services center in the next few years and we'll keep you abreast of that.

Our next question comes from Julian Amaya from Davivienda Corredores.

Good morning. Thank you for the presentation. I have two questions. During this quarter, the effective tax rate was way below of other quarters. Could you explain a little bit what are these results? And also regarding the elimination of the 4% sort of charge tax it would be -- would there be any impact on the fourth quarter? Thank you.

Okay. Regarding the low-income tax. I mentioned that we went through our process of raising the fiscal cost of some fixed assets I mentioned that that generated an expense but also said that it had generated Ps. 99 billion positive income impact on deferred income taxes. So the reason why you see that low number during this quarter is that we had that positive effect on taxes, as I mentioned the net effect of both of those were around Ps. 29 billion. Regarding the elimination of the surcharge, there is two different sort of effects. One, regarding the surcharge and the other part regarding what the fiscal reform could look like.Regarding the first one, what we see in our initial numbers is we could have around Ps. 60 billion positive impact from that surcharge. This is in the makings at this point because we need to see how the new fiscal reform comes out and what the impact on deferred taxes looks like. So our preliminary numbers are looking more into what the current tax effect would be. But there should be a deferred tax effect that at this point it's too soon to tell because we have no clue on how the final fiscal reform would look like.

Our next question comes from [indiscernible].

Thank you very much for taking for taking my questions. I've got two questions. So basically two topics. So the first one is on the NPL? And the second one is on capital and kick off with the NPL number. So in a country where you have an unemployment of roughly 11%. I'm just wondering what is your unique selling point in terms of I mean not underwriting more toxic assets because I mean it is I think I mean I think I mean it is quite unique to have a stable NPL across the cycle. And I was also just wondering when you look at your NPLs number which is 4.5%. I'm just wondering which portion of that has been carried forward over -- longer than a year? So basically, I want to understand your write-off strategy. Whether you're going to write-off any NPLs in one year or 180 days. So if you could give color on that.And on the capital, I'm just wondering like I mean ahead of Basel III implementation. What is your capital planning for next year, because it seems like you might be a bit low on capital assuming moving to a Basel III framework. And also in terms of I mean in your capital stack your equity. I just want to understand which portion is tangible and which portion is intangible? Thank you.

Okay. Let me take the first one regarding NPLs. Just to make sure that I understood your question you said that you hadn't seen a strong variation of NPLs throughout the cycle. I need to say that, we actually did have a quite strong or a visible effect of the cycle. We used to run at a cost of risk that was between 1.5% and 1.8% pre-cycle. This went-up to the kind of numbers that we've mentioned recently and that we had last year. And at this point, we are returning to something that is below 2% for next year.The driver of this cycle was at first what was happening with the consumer portfolio that came first into deteriorating. And then, what's first to cover and then with some lag of around two to three quarters we saw the corporate portfolio particularly on the commercial side starting to deteriorate. At this point, we see the process passing. We haven't yet seen the improvement in the cycle. But given that, we are forecasting GDP growth above 3% and growth picking up so the denominator should be improving we should see also some movement in that front.Regarding your write-offs, perhaps the only relevant loan that has been provisioned already for some time that is still on our books and hasn't been written-off is Electricaribe, which we're actually looking into – if it's the right time to write it off. The reason not to write it off is there has been uncertainty and potential recovery on that debt and that has deferred our decisions, but we're in the point of looking at that decision now. Luis Carlos Sarmiento Gutiérrez: Thanks, Diego. And regarding your question on capital, well, let me state to start with we have informed the superintendency of banks that we…

We have no further questions. Luis Carlos Sarmiento Gutiérrez: Great. Well Sylvia, thank you very much and thank you all for attending this call. And we certainly hope to keep producing the results that you expect us to and we'll see you in our next call.

Thank you, ladies and gentlemen. I will now -- this concludes today's conference. Thank you for participating. You may now disconnect.