Grupo Aval Acciones y Valores S.A. (Grupo Aval) provides a comprehensive range of financial services and products from traditional banking services, such as making loans and taking deposits, to pension and severance fund management.
Grupo Aval is the majority shareholder of Banco de Bogotá S.A., Banco de Occidente S.A., Banco Popular S.A. and Banco Comercial AV Villas S.A., entities whose main purpose is to perform all transactions, operations and services inherent to the banking business, purs...
Grupo Aval Acciones y Valores S.A. (Grupo Aval) provides a comprehensive range of financial services and products from traditional banking services, such as making loans and taking deposits, to pension and severance fund management.
Grupo Aval is the majority shareholder of Banco de Bogotá S.A., Banco de Occidente S.A., Banco Popular S.A. and Banco Comercial AV Villas S.A., entities whose main purpose is to perform all transactions, operations and services inherent to the banking business, pursuant to applicable laws and regulations. Furthermore, through its direct and indirect investments in Corporación Financiera Colombiana S.A. (‘Corficolombiana’) and in Sociedad Administradora de Fondos de Pensiones y Cesantías Porvenir S.A. (‘Porvenir’), Grupo Aval also engages in investment banking activities, in the non-financial sector and manages pensions and severance funds in Colombia.
Strategy
The company’s subsidiaries, in coordination with Grupo Aval and advised by Aval Digital Labs (ADL), have developed a strategy of innovation, transformation and digital payments, based on the development of creative and technology-supported solutions that solve customer needs. The company’s banking subsidiaries in Colombia have closely collaborated, aligning their digitization efforts towards a shared vision of a digital future. This joint approach seeks to digitize products, channels, and processes to develop more innovative services and solutions, and enhance operational efficiency.
As part of the execution of the company’s digital strategy, some of the innovation capabilities have been centralized in shared service centers, ensuring transversality of capabilities across entities. In this regard, the company centralizes the digital ecosystems at the corporate level to capture synergies in terms of agility, knowledge, and taking advantage of the scale the company has achieved. Finally, the company gathered, centralized, processed and standardized the company’s data through various information channels and grouped them in the Augusta data-lake, under corporate data governance guidelines.
The company’s digital strategy considers three dimensions: digitizing existing products and processes; developing new digital business models; and generating or participating in ‘digital ecosystems’.
At Grupo Aval, the company has built three main ecosystems pursuing this objective:
www.carroya.com: The company’s mobility ecosystem through which the company seeks to centralize all the value offer and interactions that a customer requires related to automobiles. In 2023, Carroya generated over 206,200 leads as potential businesses for the company’s banks in Colombia.
Additionally, in 2023, Carroya took a strategic step by acquiring FacilPass, a company that facilitates electronic transactions from vehicles through tag devices. This acquisition allows the company to ensure customer recurrence in the company’s ecosystem, involving them more actively in their daily lives. As a result of this acquisition, the company has launched key initiatives, such as enabling cashless payments in parking lots, strengthening the company’s payments strategy. During 2023, the company integrated more than 40% of the country’s tolls to FacilPass.
www.metrocuadrado.com: The company’s housing ecosystem and one of the largest portals for real estate sale and rent (new and used) postings in Colombia, accompanies the customer throughout the steps of purchasing, moving, maintaining, and selling. In addition, the portal offers insurance and real estate financing through the portfolios of all four of the company’s banks. In 2023, this ecosystem was the most visited housing portal in Colombia with 35 million visits. Through this platform, in 2023 the company received more than Ps 446 billion in credit applications for home purchases.
ADL Seguros: It is the company’s digital insurance agency, which seeks to make available and centralize the company’s insurance offerings through digital channels. It is the main enabler of insurance-oriented businesses of the ecosystems, with three insurance lines: mandatory transit-accident insurance (SOAT), all-risk insurance, and employee benefits.
In 2023, the company carried on with the company’s digitalization and transformation process, strengthening the company’s technological capabilities and capturing efficiencies through different initiatives. During the year the company updated its digital channels for corporate and individual customers, incorporating new functionalities, developing native mobile apps for iOS and Android, and advancing in the implementation of medium-term solutions within the framework of open data and open finance regulations in Colombia. Additionally, the company worked on the development of a payment gateway named ‘gou pagos’ that will strengthen the company’s value offering to companies. The company actively participated in the setup of a new Person-to-Person (P2P) and Person-to-Merchant (P2M) immediate payment platform. Among other high-impact initiatives, the company implemented new payment and transfer services to mobile phone numbers, facilitating customer transactions and reducing the friction and costs associated with them.
The company’s focus is on providing access to financial services, supporting sustainable ventures and promoting financial inclusion. Additionally, the company collaborates closely with key stakeholders, such as national, regional and local governments, non-profit organizations and other private sector entities, to design and implement innovative solutions that address the most relevant social and economic challenges in their environment, aiming to generate a positive and lasting impact on social wellness and human development.
In 2023, the company launched an ambitious project, which has been named ‘Misión La Guajira’. The company is working together with several Government agencies and ministries to find structural solutions to Guajira’s lack of access to energy solutions, potable water supply, and food security, and to design solutions that are sustainable.
Operations
As one of the largest banking groups in Colombia, the company offers a comprehensive range of financial services that allow the company to have diversified sources of income and enhance the company’s profitability. The company operates through a multi-brand strategy that enables the company to capitalize on the strengths, particular knowledge and best practices of each of the company’s subsidiaries and its qualified and experienced management teams, see ‘Item 6. Directors, Senior Management and Employees’. This strategy has led the company to be well positioned to take advantage of market opportunities derived from economic cycles.
The company manages its business through four main operating segments: Banking services, Pension and severance fund management, Merchant banking and the company’s Holding company, which refers to the combined financial statements of Grupo Aval Acciones y Valores S.A. and Grupo Aval Ltd.
Banking Services
The company provides commercial banking services in Colombia and Panama. In Colombia, the company operates four commercial banks (Banco de Bogotá, Banco de Occidente, Banco Popular and Banco AV Villas). In Panama, the company operates through MFH and its subsidiaries, the most relevant being its banking operation Multibank Inc. Through the subsidiaries of the company’s banks, the company also offers bancassurance, insurance, trust, bonded warehousing and brokerage transactions, real estate escrow services, merchandise and document storage and deposit, customs agency, cargo management, surety bond and merchandise distribution services, payment and collection services, and provide deposit and lending operations in foreign currencies.
The company’s Red Aval (Grupo Aval network) is one of the largest networks of ATMs and branches in Colombia and has been a key element of the company’s competitive positioning in the Colombian market. Customers of any of the company’s banks in Colombia may access Grupo Aval’s other bank branches to carry out basic banking transactions throughout the company’s Red Aval (Grupo Aval network).
Each of the company’s banks has developed over time a focus on particular, and to a degree, overlapping market sectors, geographic regions and services and products in Colombia.
Banco de Bogotá is a full-service bank with nationwide coverage and a comprehensive portfolio of services and products. Banco de Bogotá serves all market segments. Banco de Bogotá had a 15.5% market share of commercial loans, 9.8% of consumer loans and 8.5% of mortgages, all on December 31, 2023. On the same date, Banco de Bogotá had an 11.8% market share of deposits.
Banco de Bogota’s strategy places the customer at its core, closely monitoring tendencies in the industry, delivering value to its clients through a continuous evaluation of its value proposition, enhancement of its products, initiatives, and efforts. In 2023, Banco de Bogotá launched a digital checking account and a digital credit facility for SMEs. In terms of its offering to personal banking clients, the bank enhanced its digital savings account ‘Mi trabajo’ (My Job in Spanish), a payroll account independent from agreements with the employer, and its credit card ‘Cero Rollo’ (Zero Problems in Spanish).
In 2024, the bank will seek to become the main bank (1st place in share of wallet) of its customers with a major bet on customer experience, seeking to differentiate itself from its peers in a highly competitive environment. During 2023, the bank’s digital strategy saw an acceleration in its corporate segments, where efforts focused on eliminating paperwork and enabling the digital signature for promissory notes. Agile methodologies that were previously implemented for consumer products were implemented for corporate business, adding value to this segment.
The bank’s values place a significant role on sustainability. Banco de Bogotá is the first carbon-neutral bank in Colombia, it adhered the Net Zero Banking Alliance and Task Force on Climate-related Financial Disclosures, amongst other initiatives. Among several sustainable projects, the bank supports job creation for young populations, agribusiness startups, and women in the textile industry. In addition, the bank issues debit cards that support the education of Colombian children and the Amazon’s reforestation.
Banco de Occidente focuses on mid-size and small and medium-sized (SME) corporate customers, state-owned entities and high net-worth customers and has a diversified revenue stream. Banco de Occidente had market shares of 9.1% of commercial loans and 6.2% of consumer loans on December 31, 2023. Banco de Occidente had a market share of 8.7% of Colombia’s checking accounts on December 31, 2023.
During 2023, Banco de Occidente continued implementing different strategies focused on improving commercial effectiveness, optimization of distribution channels and its organizational structure. The bank continued working on the integration with its subsidiaries, digitalization, and consolidating several ESG and talent management initiatives. Banco de Occidente started segmenting its corporate and personal banking customers in terms of service channels, commercial coverage and product offerings, which increased sales force productivity. Banco de Occidente continued the commercial integration with its trust and portfolio management services offered by Fiduciaria de Occidente, off-shore products offered to Colombian and international clients through Banco de Occidente Panama and Occidental Bank Barbados.
On the digitalization front, during 2023 Banco de Occidente increased its digital products offering, with the launch of new pre-approved digital loans for small companies, Supply Factor (a new factoring platform), consolidation of Gou Payment Gateway, and evolution of the different digital products. The bank continued focusing on digital ecosystems, such as Carroya.com and metrocuadrado.com.
Banco Popular operates primarily in the consumer and public sector businesses. Banco Popular is a premier provider of financial solutions to Government entities nationwide with a particular strength in public sector deposits and loans. A significant portion of its portfolio consists of payroll loans to pensioners and public sector employees. Its access to payroll deductions for repayment of loans has historically resulted in consumer loans with a substantially lower-risk profile as compared to the banking system.
Banco AV Villas focuses on services and products, such as payroll loans and credit cards, as well as its traditional line of mortgages. Banco AV Villas has a broad service network throughout Colombia, with a concentration in Colombia’s central region, including Bogotá and the southwestern region.
Banco AV Villas seeks to continue expanding in the small- and medium-size corporate segment. In order to increase transaction volume through electronic channels and improve efficiency, Banco AV Villas is developing projects focusing its efforts on the digitalization of the bank’s services to improve customer service experience.
MFH through MFG provides a wide variety of financial services in Panama, including corporate, commercial, and retail banking, as well as insurance, brokerage, and leasing services. The main subsidiary of MFG is Multibank Inc., a full-service bank operating since 1990, which consolidates the banking, insurance, and portfolio management operations of the company.
Multibank Inc. is the second largest provider of automobile loans in Panama with a market share of 16.7%. The third largest lender in agricultural loans with a market share of 15.4%, and the fourth largest in construction loans with a market share of 9.9%.
During 2023, MFG continued to focus on its core retail and commercial banking business, concentrating on improving digitalization, optimization of commercial effectiveness, and launching ESG initiatives. Multibank continued segmenting its customer base and developing service platforms and product offerings tailored to the specific needs of its client segments. On the digitalization front, during 2023 Multibank implemented the digital onboarding account through its banking app, being one of the first two banks to provide the ACH Xpress service, among other digital services. In terms of ESG, Multibank reactivated its corporate volunteering, developed, and approved a new Corporate Sustainability Policy, and for the second consecutive year, held a forum with the participation of over 900 assistants to address the economic, political, and agricultural sector challenges, which will allow for new opportunities of sustainable growth.
Corporate Customers
The company’s banks provide services and products to public and private sector customers. The company’s banks segment their corporate customers into separate categories based principally on their annual revenues. These customer classifications, which are specific to each bank, allow the company’s entities to tailor their services and products to the needs of each customer classification sector.
Individual Customers
The company’s banks provide services and products to individuals throughout Colombia and Panama. The company’s banks classify their individual banking customers into separate categories based principally on income.
Lending Activities
The company classifies its banks’ loans into the following categories: commercial, consumer, microcredit and mortgages.
Commercial Loan Portfolio: Consists of general purpose loans (loans with a maturity of over one year), working capital loans (loans with a maturity of up to one year), leases, loans funded by development banks, corporate credit cards and overdraft loans. Loans funded by development banks are loans granted to customers and focused on specific economic sectors and are funded by national or international government or government-related institutions. Interbank and overnight funds are short-term borrowings mostly entered into between banks.
Consumer Loan Portfolio: Consists of payroll loans, personal loans, automobile and other vehicle loans, credit cards, overdrafts, leases, and general purpose loans.
The company provides credit card services to its bank customers mainly through the Visa and MasterCard networks.
Mortgages Portfolio: In Colombia, Banco de Bogotá, Banco de Occidente and Banco AV Villas are the company’s main originators of loans to customers for the purchase of real estate secured by mortgages, while Banco Popular is increasing its presence in this business.
Treasury Operations
The company’s banks’ treasury departments are responsible for managing their proprietary trading activities, liquidity and distribution of treasury services and products to customers. The company’s banks’ proprietary trading activities include fixed income trading, derivatives and foreign exchange operations. The company does not have any proprietary trading activities in equities and each of the company’s banks has implemented trading activities policies. The company’s banks also take deposits from financial institutions as part of their treasury operations. These deposits are represented by certificates of interbank deposit, or ‘CDIs’, and earn interest at the interbank deposit rate. Banco de Bogotá and Banco de Occidente have active treasury operations, while Banco Popular and Banco AV Villas have smaller operations.
Deposits
The company’s banks offer traditional deposit services and products, including checking accounts, savings accounts, time deposits and other deposits. Checking accounts typically bear low or no interest. Checking accounts and savings accounts are payable on demand, although a significant portion of these accounts tend to be stable in amount over time. Moving on to the company’s time deposits, 77.1% have maturities below 12 months and commonly earn interest at a fixed rate.
Distribution Channels
The company’s banks provide services and products to their customers through the company’s network. Each of the company’s banks manages its own distribution network. In 1998, the company created Red Aval (Grupo Aval network) in Colombia, which allows customers of any of the company’s banks to make transfers, payments and undertake other basic banking functions in the networks of the company’s other banks, through traditional channels and electronic networks, with results posting in real time to the accountholder’s bank with no additional fees. Red Aval (Grupo Aval network) services vary for each channel. In Panama, the company serves its customers through a diversified distribution network that includes branches, ATMs, a standardized online banking platform, call centers and mobile phone banking.
The following table describes the main channels of the company’s distribution network.
Full-service branches: Full-service branches act as part of the company’s sales network and allow the company’s bank customers to perform check cashing, deposits, savings account withdrawals, loan and credit card payments, transfers and advances. In Colombia, the company’s clients can perform transactions of any of the company’s banks at any of the company’s branches thanks to the integration provided by Red Aval (Grupo Aval network).
ATMs and electronic service points: Through the company’s ATMs, all of the company’s bank customers can, among other services, consult their balances, execute loan and credit card payments, perform transfers and advances, and pay for certain third-party services where the company has a payment collection agreement in place (such as utility service companies).
Payment collection centers (centros de pagos): Payment collection centers allow the company’s customers to pay for certain third-party services where the company has a payment collection agreement in place (such as utility service companies).
Banking correspondents (corresponsales bancarios): The company’s banks enter into agreements with various third parties, including convenience store owners, to provide all of the company’s bank customers with certain services, which can include checking and savings account withdrawals, account balance consultation, loan and credit card payments, transfers and advances, and payments for certain third-party services where the company has a payment collection agreement in place (such as utility service companies).
Automated telephone banking, mobile banking and online banking: Through the company’s banks’ websites, mobile banking services and automated telephone banking, customers may pay loan and credit card balances, make transfers between accounts and make payments for collection agreements originated in any of the company’s banks.
Merchant banking
Corficolombiana (Corporación Financiera Colombiana S.A. and its consolidated subsidiaries) is the largest merchant bank in Colombia based on total assets at December 31, 2023. Corficolombiana focuses on four main lines of business: (1) equity investments in strategic sectors of the Colombian economy, including infrastructure, energy and gas, agribusiness and hospitality; (2) investment banking, including services relating to capital markets, mergers and acquisitions and project finance transactions; (3) treasury operations; and (4) financial services such as trust services, among others.
Corficolombiana’s business model is based on the premise of investing in businesses in strategic sectors of the Colombian economy. Corficolombiana’s equity investment strategy is to target acquiring and holding controlling or substantial stakes in strategic businesses. These investments enable Corficolombiana to exert influence or control over these businesses’ operations and to promote revenue growth, operational efficiencies and optimization of the capital structures.
Corficolombiana is regulated as a merchant bank (corporación financiera) by the Superintendency of Finance. Under Colombian law, a merchant bank is permitted to hold equity ownership positions in both financial and non-financial companies, unlike banks, which may only invest in financial companies.
Corficolombiana’s asset distribution by sectors
Corficolombiana primarily invests in five sectors of the Colombian economy: energy and gas; infrastructure; agribusiness; hotels and financial services. It generally seeks to invest in businesses with leading market positions, strong cash flows and growth potential.
Corficolombiana’s main investments in the energy and gas sector include a 50.9% controlling stake in Promigas S.A. E.S.P., the second largest natural gas pipeline and distribution company in Colombia, and a minority stake in Grupo Energía Bogotá S.A. E.S.P, or ‘GEB’, an electricity and gas group.
However, pursuant to Colombian Regulation (Code of Commerce) Promigas is not a company under direct or indirect control of Grupo Aval.
Corficolombiana’s infrastructure investments are concentrated mainly in toll road concession projects, a sector in which it is a leading private investor in Colombia. The main investments of Corficolombiana in the infrastructure sector include Proyectos de Infraestructura S.A. (Buga-Tuluá-La Paila), Concesionaria Vial de los Andes S.A.S. (Bogotá-Villavicencio), Concesiones CCFC S.A. (Fontibón-Los Alpes, concesión contract ended March 27, 2024), Concesionaria Panamericana S.A.S. (Los Alpes-Villeta and Chuguacal-Cambao), Concesionaria Vial del Pacífico S.A.S. (Ancón Sur-Bolombolo or ‘Conexión Pacífico 1’), Concesionaria Nueva Vía al Mar S.A.S. (Mulaló-Loboguerrero), Concesionaria Vial Andina S.A.S. (Bogotá-Villavicencio) and Concesionaria Vial del Oriente S.A.S. (Villavicencio-Yopal).
In the financial services & others sector, Corficolombiana offers trust and brokerage services to third-party customers through two subsidiaries: Fiduciaria Corficolombiana S.A. and Casa de Bolsa S.A.
Corficolombiana also has investments in the hospitality sector, including controlling stakes in Hoteles Estelar de Colombia S.A. and Promotora y Comercializadora Turística Santamar S.A.
Finally, Corficolombiana’s main investments in agribusiness are centered in production of palm oil, rubber, rice and cotton mainly through Unipalma S.A., Valora S.A. and Organización Pajonales S.A.
Investment banking and treasury businesses
Corficolombiana’s investment banking team provides advice to third-party clients in the Colombian market covering a broad range of transactions, including, among others, capital markets, mergers and acquisitions and project finance. Corficolombiana has led the participation of private sector companies in infrastructure projects. In 2023, Corficolombiana’s investment bank helped raise financing and coordinate projects with third parties and sometimes with related parties.
Corficolombiana is a relevant participant in Colombian capital markets, both in sovereign and corporate debt securities and foreign currency-denominated securities. It is also an active participant in the derivatives market, and an active market maker for Colombian sovereign debt securities.
Pension and severance fund management
Porvenir is controlled by and consolidated under Grupo Aval. Porvenir is the leading private pension and severance fund management business in Colombia, based on assets under management, with a 45.0% market share of assets under management at December 31, 2023. Pension funds provide individual savings for retirement, while severance funds provide temporary income to employees who become unemployed. Through Aportes en Línea, Porvenir manages social security related information systems designed to provide employees with efficient payment solutions.
For the year ended December 31, 2023, 43.2% of Porvenir’s revenues were derived from mandatory pension funds, 20.0% from severance funds, 6.9% from voluntary pension funds and 1.4% from third-party sponsored pension liability funds. Porvenir derived the remaining 28.5% of its revenues from a combination of the profitability of its own investment portfolio, stabilization reserves and other income.
Porvenir’s investments
Porvenir is required to own at least 1.00% of the funds it manages that are subject to a minimum return, known as the stabilization reserve. This stabilization reserve represents 74.6% of Porvenir’s proprietary investments. In addition, Porvenir holds voluntary investments.
Distribution channels
Porvenir attracts new individual customers mainly through its direct sales force (661 individuals) with direct report to five regional sales managers located in Bogotá, Antioquia, the Southern Region, the Eastern Region and the Northern Region. Porvenir has various offices, service modules, and electronic service centers. It maintains a presence in all regions of Colombia through its service agreements with Grupo Aval’s banks.
Competition
Commercial Banking
The company’s main competitors in Colombia are Bancolombia, Davivienda, and BBVA Colombia.
Merchant Banking
Bancolombia, through its subsidiary Banca de Inversión Bancolombia S.A., is Corficolombiana’s largest local competitor.
Corficolombiana’s principal competitors are Banca de Inversión Bancolombia S.A.; BNP Paribas Colombia Corporación Financiera S.A.; Corporación Financiera GNB Sudameris S.A.; and Corporación Financiera Davivienda S.A.
Distribution Channels
Through the company’s banking subsidiaries, the company has the largest branch network in Colombia, with various branches and ATMs.
Pension and Severance Fund Management
Porvenir’s principal private competitors are other pension fund managers, including Protección, Colfondos, and Skandia.
Intellectual Property
Grupo Aval, the company actively manages and protects its intellectual property through the strategic registration and monitoring of the company’s brands and trademarks. This approach aligns with the company’s marketing and commercial strategies in each operating country. The company dedicates ongoing efforts to evaluating the potential for registering and renewing the company’s trademarks in key markets like Colombia, the United States, Mexico, and across South and Central America. These actions directly support Grupo Aval’s overall business strategy.
As of December 31, 2023, the company’s commitment to intellectual property protection was reflected in 136 registered trademarks: Ensuring clear ownership and legal protection for the company’s core brand identifiers; 2 deposited trade names: Securing unique identities for specific business operations; 8 registered trade names: Providing distinct, legally recognized names for specific segments of the company’s business; and 2 registered slogans: Protecting the company’s impactful marketing messages that resonate with the company’s audience.
Supervision and Regulation
As a financial holding and an issuer of securities traded on the Colombian Stock Exchange, Grupo Aval is subject to the inspection and surveillance of the Superintendency of Finance. Additionally, Grupo Aval’s financial and stock brokerage subsidiaries located in Colombia (including banks, merchant banks, financing companies, trust companies, managers of pensions and severance payment funds, bonded warehouses and stock brokerage firms) are each subject to the regulatory supervision of the Superintendency of Finance.
The company’s Colombian subsidiaries that are not part of the financial sector are governed by the laws and regulations of the Colombian Civil Code and the Colombian Code of Commerce, as well as any regulations issued by the Colombian Superintendency of Industry and Commerce and the Superintendency of Corporations or any other type of special regulations that may be applicable to corporations, and the commercial and industrial activities carried out by these subsidiaries.
History
Grupo Aval Acciones y Valores S.A. was founded in 1994. The company was incorporated in 1994 under Colombian law.
