Welcome to Grupo Aval First Quarter 2020 Consolidated Results Conference Call. My name is Hilda and I will be your operator for today. Grupo Aval Acciones y Valores S.A., Grupo Aval, is an issuer of securities in Colombia and in the United States. As such, it is subject to compliance with securities regulation in Colombia and applicable U.S. securities regulation. Grupo Aval is also subject to the inspection and supervision of the Superintendency of Finance as holding company of the Aval 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. This report includes forward-looking statements. In some cases, you can identify these forward-looking statements by words such as may, will, should, expects, plans, anticipates, believes, estimates, predicts, potential, or continue, or the negative of these and other comparable words. Actual results and events may differ materially from those anticipated herein as a consequence of changes in general, economic and business conditions, changes in interest and currency rates and other risks described from time to time in our filings with the Registro Nacional de Valores y Emisores and the SEC. Recipients of this document are responsible for the assessment and use of the information provided herein. Matters described in this presentation and our knowledge of them may change extensively and materially over time, but we expressly disclaim any obligation to review, update or correct the information provided in this report, including any forward-looking statements, and do not intend to provide any update for such material developments prior to our next earnings report. The content of this document and the figures included herein are intended to provide a…

Thank you, Luis Carlos. I will now move to the consolidated results of Grupo Aval under IFRS. Grupo Aval’s first quarter results were overall positive. Although the current scenario is challenging worldwide, we believe we have a strong starting point to face the upcoming challenges derived from it. Our solid return on assets relative to our peers, the positive trend in quality of our loan portfolio over the last few quarters, our liquidity position, the regional and business line diversification of our income and our historic bias towards lower risk consumer banking products in our portfolio would give us an advantage relative to other financial institutions under the current scenario. Even though we will not provide guidance on this call, I will highlight some of the effects that the current juncture can have on our key drivers. Starting on Page 13, asset growth was strong during the quarter driven by an increase in cash and fixed income investments, strong loan growth and the effect of U.S. dollar appreciation against the Colombian peso. Asset grew 24.1% over the year, and 14.9% during the quarter, with a strong increase in cash in both regions as a result of our strengthening liquidity profile and the proceeds from the 2030 U.S. dollar denominated bond issuance. Colombian assets grew 19% over the year and 10.1% during the quarter, while Central America delivered 6.4% and 2.1% growth in dollar terms over the same period. Annual and quarterly end-of-period depreciations are 27% and 24% raise annual and quarterly growth of Central America to 36% and 26% when translated into Colombian pesos. This explains as well the increase of the way of this region from 30% to 33% of our book. Moving to Page 14. Loans, excluding repos grew 19% over the year and 12% during the quarter.…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] We have a question from Andres Soto from Santander.

Good morning, Luis Carlos, Diego. Thank you for the presentation. I understand the challenges of making macro-predictions at this point. However, I was curious about your comment about the expected increase in cost of risk of 35%, which implies a cost of risk of 3% for 2020. So I would like to understand first, if this is what you are seeing at this point. And second, what will be the GDP assumption that underpins this estimate? Thank you. Luis Carlos Sarmiento Gutiérrez: Hi, Andres. Well, let me start with the cost of risk. This is the first estimate. And what we’ve done is, as I’ve said, we’ve gone through all our commercial loan portfolio and we’ve classified the portfolio as we always do into the sectors that it’s loaned to. Then we’ve taken the sectors and we’ve classified those into which will be more affected by the current juncture. And then, thirdly, we’ve taken the companies to which we’ve loaned money within those sectors, to see which of them are stronger or better equipped to handle what’s going to happen to their sectors. As you can imagine, there are – right now, there are at least 9 variables in play. But we’ve done that and we’re in the process of trying to come up with a firm number of cost of risk. In terms of the consumer loan portfolio, there are also various variables at play, most importantly, unemployment, obviously. But the unemployment is really hard to measure, because we don’t know what it’s going to look like in a couple of months. So, it’s – again, it’s very tough to predict, but we’ve gone ahead and make initial predictions. And with that – with those and I have to caveat everything that I’m saying, because there are so many…

If I may add to what Luis Carlos mentioned, as he described, this has been much more of a bottom-up approach rather than a top-down GDP-based approach. And the reason why it has become apparent that that’s perhaps the best way to operate is not all of our businesses, meaning different regions are exposed to the same GDP dynamics. And in addition, the product elasticity to GDP varies substantially. Just to give you some color, and why we mentioned throughout the call that we believe our structure does help us to weather what is happening currently, when you look at our consumer portfolio, have around 45% of that in payroll loans. And if you zoom in to those in Colombia, only around 12% of those are a payroll loans given out to the private sector. Therefore, if you break down the rest of that, around half of the remainder is based on retirees that are insensitive to what’s going on. And the other half is government employees who are less sensitive to what is going to happen with unemployment into the future. So that’s only to give you some color on why even though GDP is key, the structure of different portfolios will react differently to what’s going to happen.

Thank you. Our next question comes from Adriana De Lozada from Scotiabank.

Good morning and thank you very much for a very detailed presentation. I guess a follow-up to the provisions question, on the 35% year-on-year increase. Can you give us a little bit of color on the breakdown? I know you mentioned that you looked – when you looked at companies, you segregated into the different sectors when it comes to consumer. I mean, maybe you can explain a little bit more how you looked at that. But if you can just give us a sense of where do you see deterioration by segment coming? Thank you. Luis Carlos Sarmiento Gutiérrez: Thanks for your question, Adriana. I don’t think we are, at this point, prepared to share that with you, because it’s not firm. And, so, I think the moment that we have it all figured out, we’ll be more than happy to share it with you. But right now, we would just be speculating. So I think that for now we will have to live with the fact that we will have an increase in cost of risk. But I don’t want to go as far as saying what the different cost of risks are going to look like between consumer and commercial, and then within commercial how much cost of risk we’ll get from each sector. We do know and, obviously, everybody knows that entertainment, tourism and airlines will be drastically affected. We, our exposure, as we’ve said, to the airline industry consists of the Avianca loan and will – and we will keep provisioning that loan. Obviously, we’ll make different provisions, through the different types of loans that we made to Avianca, the unsecured loans we probably want to provision 100% by year end. And then the real estate loan is adequately guaranteed and covered. And then the loan through – secured by credit card receivables, we will have to figure out exactly how much provisions to make. For now, I think I would – and I’m sorry, I’m not addressing your question entirely. But for now, I think I’ll leave it at that. And the moment that we have better – ourselves a better grip on it, we’ll share it with all of you.

Thank you. The next question comes from Gabriel Nóbrega from Citi. Gabriel da Nóbrega: Hi, everyone. Good morning and thank you for the opportunity to ask questions. I’m still going to ask a question about provisions, mainly because you’re already guiding for maybe [3.4%] [ph], even though this is not going to be – this is a moving target as you already have explained. But being that, you were starting to give grace periods and also you already mentioned that it could still take maybe 3, 4 months until we see the true nature of the asset quality and delinquency measures. How are you looking at the peak of provision? Do you think it could still happen this year or maybe we could have a spillover effect into 2021? And now, for my second question, I’d actually like to talk a bit about capital. Looking at the Tier 1 capital of your subsidiaries, we see that they’re relatively well controlled with the exception of Banco Popular, which is at around 8%. I understand that with the adoption of Basel III, then weightings of the risk weighted assets will actually decrease, so this helps them prop up in capital levels. However, with a very challenging year, which will probably threaten the organic generation of capital, do you expect to maybe have to capitalize one of your subsidiaries? Thank you. Luis Carlos Sarmiento Gutiérrez: Okay. Let me see, regarding your first question, again, in provisions, it’s not that much more we can say. But I will say one thing, it’s been very advantageous to us to have not done automatically of the re-financings that we did. And the reason that it’s been advantageous is because, one, what we have seen is those clients that have called, we’re tried to obtain and in…

Thank you. The next question comes from Nicolas Riva from Bank of America.

Yeah, thanks very much for taking my questions, Luis Carlos and Diego. I have got 3 topics, in which I wanted to hear your thoughts. The first one on Multibank, can you tell us why you revised down the acquisition price to 0.85 times book, if it was related to the crisis triggered by COVID-19? And also, if you can remind us, I believe that the transaction was already funded with the issuance of the $1 billion in the senior bond the 2030 by Aval and some excess capital of [Banco de Multi] [ph] but if you can confirm if the transaction has already been fully funded? The second one on the Avianca exposure you already gave the numbers, is all of these exposure through Banco de Bogotá. And also, what I basically wrote down was $185 million gross exposure, net exposure of the loan reserves of $160 million. But if you can say one more time, how much of that is secured by the credit card receivables by the building owned by Avianca and how much is the working capital loans unsecured? And finally on asset quality in the press release – in the earnings report, you mentioned that the improvement in the NPL ratio of a bit more than 10 basis points quarter-on-quarter was helped by the fact that the regulator allows you or mandate that the restructured loans, because of COVID-19 continue to be part of performing loans. And can you tell us what percentage of your loan book has been restructured as a result of the crisis driven by COVID-19? Or if I should use that number that you’ve given the relief program, I think, it’s 26% that you say of your loan book in Colombia? Thank you very much. Luis Carlos Sarmiento Gutiérrez: Sure, Nicolas.…

You had also asked on the funding of Multibank and I can confirm you as, as was announced, we are days away from closing that transaction and it is a fully funded deck.

Thank you. The next question comes from Judy Fernandez from JPMorgan.

Thank you, Luis Carlos and Diego. Thank you for the very good and comprehensive presentation. I have 2 questions. The first one is regarding revenues, if you can elaborate a little bit more on what you expect for fee impact. And also on NII, we are going to see lower rates in Colombia, as Luis Carlos mentioned something close to 2% by year end. But I would also like to explore a little bit, if the grace periods you were giving, should impact somehow NII. I understand it will not, because you’re still accruing interest you are going to charge the end of the loan, but just double checking. And also, because I saw you are giving some promotions, some kind of discount to interest rates, especially on the credit cards about of have – of what the interest rate used to be. So just checking if you like NII and fees should be much weaker. We should see like a big decrease on those lines and what is the message there? And my second question is regarding the nonfinancial sector, it has been a very strong line across Colombia, the infrastructure project. But my concern here is if given the social distance, the account deceleration, we could see lower revenue recognition from that front. Thank you.

Okay. So regarding – I’m going to take the net interest income a question, and then Luis Carlos will take the nonfinancial side. On the net interest income side, there is a few things working here: one, that was particularly negative during the period and then what might be happening moving forward. On the negative side, we had a very rough March and part of February on our fixed income portfolio. And in addition, given that Porvenir invests its funds, part of its money in the funds that it manages. We also got exactly the same kind of hit that our customers did. Therefore, as you might have seen in the presentation, it’s something that is unusual for our numbers that we got a negative net interest margin during this quarter. If you move forward, even though, as we’ve mentioned many times, there’s a lot of volatility, a lot of uncertainty is the grounds for a better performance over the remainder of the year are in place. Number one, because we’re coming from a low base, so there is some room for recovery. And then something that we can’t ignore is that we’re going to have a lot of global liquidity and an expansionary monetary policy throughout the world, that in the case of Colombia, if we perform better than how the region performs as a country will benefit on the spreads. Therefore, even though this is quite speculative, there is many reasons to believe that we might have a positive there in the future. Then if we think of our intermediation business, we have to break it down into 2 pieces. One the consumer and the other is the corporate side of our loan – our NIM and loans. On the corporate side, we do get the pressure from…

Thank you. Our next question comes from [Lemir Sala from Bhering. Mr. Sala] [ph], your line is open. Go ahead with your question.

Thank you very much. Yeah, thank you for taking my question. I’ve got 3 questions. The first one is on asset quality. I think when you look at your gross loan book on – could you please give us a breakdown in terms of upstream, midstream and downstream. And I think your global peers, they have roughly 80% of the collateral value. I just want to understand why Grupo Aval has gone in that sphere. And also with respect, I mean to Promigas, I’m just wondering, how much Promigas comes for that in total energy exposure, because it’s quite chunky. The second question is with regards to consumer business. Could you please give us, I mean, the securitization level in that sphere? And also the LTV on personal loans and perhaps the PPI on credit cards? And the other question I’ve got is also with respect, I mean, to the capital level. The capital – I mean capital level looks different now. In terms of risk weighted assets, I mean for energy sector, where do you think like, I mean, these will line towards the end of the year. Do you think, I mean, it’s probably going to go down? And final question on infrastructure, which I think is also another chunky part of your loan book in the commercial side. I think, I mean, it doesn’t wind from the answer, which the gentleman has ahead of me. How do you think like, I mean, the government can activate this sector when there are no toll collections that have been collected for the next, probably two months, economy is closed, and unemployment is at 12%. And probably unemployment might go up towards, you mean, the [22,000] [ph] level, which was 20%. And I mean the inefficient capacity for the Colombian…

I think you were asking on the structure of our loan portfolio. I’m not sure I understood right, what you meant by upstream and downstream. But just to remind you and how the structure of our loan portfolio looks like, we have around – 60% of our book is corporate, then the remainder is consumer and mortgages. The consumer is slightly more than 30% and mortgages is the remainder. If you zoom in to consumer, payrolls are around 45% of our book, 10% vehicles, 30% credit cards, and it’s only around 15% where we have installment loans that are unsecured credit lending. So, just a very small portion of our exposure is to those kind of loans that might be the most sensitive throughout the cycle. But I’m not sure I did address your understanding of what upstream and downstream was. Luis Carlos Sarmiento Gutiérrez: I would propose something, if you will. Why don’t you send us an e-mail with your questions and because I am pretty sure we just answered the longest question with the longest answer. And I’m not sure that we answered the – right, the question that you ask, but if you ask me, you send us an e-mail. We’ll be more than happy to address all your points. And if you should have our e-mails, and if not, they’re at our website. So we can we can do it that way, and so we don’t really spend too much time or invest too much time in this answer.

Thank you. The next question comes from Carlos Gomez from HSBC.

Hello, good morning. Two questions for me. First, on the acquisition, in the reduction in price, could you repeat the numbers? If I understood correctly, you have reduced the price to 85%. That comes out to about $490 million. And again, if I understand correctly, that includes both the ordinary and the preferred shares. Is that correct? Luis Carlos Sarmiento Gutiérrez: No, it’s not. We had – the original price was $732 million, and we’ve reduced it to $449 million. And $449 million is our offer to buy 100% of the common shares.

Okay, so will you be paying? You will not paying the [business] [ph], because they’re in the market [personnel] [ph]. Luis Carlos Sarmiento Gutiérrez: The preferred shares, you mean? No, the preferred shares are basically a liability to the bank and they have an interest expense that they pay, which at this point doesn’t really seem all that bad. And there are different periods. Every 3 months, you can redeem the preferred shares, and we’ll wait to see what the liquidity situation of the bank is. And depending on the liquidity situation, we’ll be redeeming the preferred shares going forward.

Thank you. Our next question comes from Johanna Castro from Itaú BBA.

Hi, good morning, Luis Carlos. Thank you, Luis Carlos and Diego, for the time. I have a question just to clarify some of the comments that you mentioned at the beginning of the call and just to understand how you are working your affected losses more. I understood that you’re taking a bottom-up approach, instead of a top-down approach in that. That doesn’t mean that you’re not including a fully – an adjustment of the GDP in the probability of repo. And you’re working more on the [LGD] [ph] part on the exposure to repo, or just to clarify, how are you working with them all of these days? And that will be my first question. And my second question is on the part that you mentioned about Basel III, and approach also. I had understood that in the Colombian operations, we had kind of a buffer, and because we had counter-cyclical provisions. But taking into account that the Superintendency of Finance approved the use of some of those counter-cyclical provisions, do you think that the system is going to have the same buffer as before for applying Basel III?

Johanna, let me try to address your question. Basically, the challenge that not only us, but all the financial institutions are facing under IFRS 9 is that if you run statistics – statistics, all those that you mentioned are very much a backward looking. Even though there is a forward-looking component, a lot of the numbers, a lot of those ratios are derived from historic behaviors. And first quarter was particularly challenging, because if you did it just slightly by the book, you would end up with a very positive scenario, because numbers had been improving for a long time. Therefore, all the ratios had been moving in a positive direction. And then, as Luis Carlos mentioned, if you run any sort of model and you run it with 0% growth and if you run it with 7% contraction, you’re absolutely all over the place. So we had to detach somehow from statistics. And that’s why we said at this point, we do expect that in the future, when things become clear, we can do it more mechanically on the statistical side. But at this point this was much more trying to tell the wheat from the weed, going customer by customer, understanding their business and understanding where they might end up. So this wasn’t running a model, if we had run the model, the model might have pointed to a reversion of provisions, for example. And then feeding it with forecasts was very much who do you want to believe and how subjective do you want to be? So we would end up, as you might say, exactly wrong rather than approximately right. That’s why we went through these mechanics. And then, on the Basel III, a lot of what you’re mentioning doesn’t really affect how the numbers end up coming out, and what the Superintendency allowed was temporarily to use some of these buffers. But, if you think under a full IFRS, that is how consolidated numbers are run, this number is not an input for the equation. If you run our unconsolidated figures, you end up with some numbers, but actually, we pay much more attention on consolidated figures, where the use of this counter-cyclical buffer is not one of the elements. Luis Carlos Sarmiento Gutiérrez: And in any case, as soon as we have numbers, an estimate or some guidance to share with the market regarding how everybody will look after Basel III, we will definitely share it with everybody.

Thank you. The next question comes from Carlos Rodriguez from Ultraserfinco. Carlos Enrique Rodríguez: Good morning, everyone. And thank you for the conference call and also thank you for the information that you have made so far. I have 2 questions. The first one, if you could share with us the amount, I mean, taking an average month in terms of cash inflows from repayment of loans and interest. And what was the percentage you receive in terms of cash during April and also… [Call Ends Abruptly]