Banco Davivienda S.A. (PFDAVVNDA) Earnings Call Transcript & Summary

Welcome to the Davivienda's Fourth Quarter 2021 Earnings Conference Call. My name is Hilda, and I will be your operator for today's call. Today's presentation is for investors and analysts only. Therefore, questions from the media will not be taken. Today, joining us from Bogota, Colombia is Mr. Javier Suarez, Chief Executive Officer; and Mr. Ricardo Leon Otero, Chief Risk Officer. During the call, they will be discussing in depth the quarterly results release. If you have not yet received a copy of the earnings report, please visit our Investor kit or the Financial Information section at ir.davivienda.com. [Operator Instructions] Please note that this conference is being recorded. Afterwards, management will be available for a question-and-answer session. Before proceeding, let me mention that any forward-looking statements are being made under the safe harbor provided by the Securities Litigation Reform Act of 1995. Actual performance could differ materially from that anticipated in any forward-looking statements due to macroeconomic conditions, market risks and other factors beyond our control. It is now my pleasure to turn the call over to Mr. Javier Suarez, Chief Executive Officer.

Good morning, and welcome to Davivienda's Fourth Quarter of 2021 Earnings Conference Call. Thank you very much for joining us for our regular meeting. Today, I would like to comment on the main macroeconomic highlights, the main results of our business as well as updates on our sustainable and digital transformation strategy. Please move on to Slide 3, where we can see the macroeconomic performance in Colombia. Colombia's GDP for the fourth quarter closed at 10.8%, leading to a 10.6% growth for the year, locating Colombia among the countries with higher economic growth in LatAm. The reactivation was seen across all sectors with commerce and manufacturing showing the highest contribution to growth. However, problems in supply chains worldwide, the increasing commodity prices and the acceleration in demand led to significant pressures in inflation. In this sense, the ratio closed the year at 5.6%, the highest level in the last 5 years with food and beverage prices showing the most significant upward pressures. Consequently, after 11 months of stability in the monetary policy rate at 1.75%, the Central Bank decided to take it to levels of 3% in December and to 4% in February. Additionally, preliminary data shows that the central government registered a fiscal deficit of 7.1% of the GDP below the initial target. The Colombian peso devaluated around 16% during the year, mainly due to the increase in Colombia's risk premium and the revaluation of the dollar worldwide. For 2022, Colombia economic activity should moderate with GDP growth, closing at around 3.8%. The inflation rate remained at high levels of 5.5% and a monetary policy rate of 6%. Moving on to Central America on Slide 4. We can see the main macroeconomic highlights of the region. The balance of 2021 was positive for the region, which grew above the initial expectations. This behavior was explained by higher external demand, vaccination campaigns, lower restrictions and higher inflows in remittances. The GDP for the third quarter closed at around 12% in Honduras, Costa Rica and El Salvador, while Panama's GDP closed at 25.5%. Although these figures are affected by a base effect, it is important to mention that some of these countries have already reached pre-pandemic production levels. For 2022, we expect a GDP growth for the region between 4% and 5%. The behavior of economic activity was joined by increases in prices. In this sense, Honduras inflation rate ended at the Central Bank's target range. However, Honduras maintained its monetary policy rate at 3% at historically low level. Meanwhile, Costa Rica's Central Bank increased the monetary policy rate to 1.75% in the last months. It is important to mention that Fitch downgraded and El Salvador's Sovereign credit rating in February, following Standard & Poor's and Moody's rating actions during 2021. This downgrade was explained by higher financing risks related to increased reliance on short-term debt, a challenging debt amortization schedule beginning in 2023, a high fiscal deficit and limited access to local, external and multilateral financing. In the case of Panama, both Moody's and Fitch downgraded the country's sovereign credit rating in 2021 due to the deterioration of fiscal metrics, while Standard & Poor's changed Panama's outlook to negative in August. Moving on to Slide 5. I will briefly talk about the main results of our business. Accumulated net profit reached COP 1.26 trillion, increasing 209% over the accumulated in 2020, which led to a return on equity of 9.35% for the last 12 months. These results are explained by lower financial and provision expenses and higher operating income in an environment of improved economic activity. Our loan portfolio increased by 11.2% on an annual basis, accelerating mainly during the last quarter. Our NIM, which includes our hedging strategy for interest rate risk and FX movements closed at 6.33% with expansions over the quarter and the year. Our cost of risk continued to decrease, closing at 2.78%, in line with our guidance. In terms of capitalization, our CET1 ratio closed at 11.96%, which are comfortable levels over the fully loaded requirements under Basel III. Moving on to other results. I'm happy to say that we were able to reach 2.1 million additional customers that relied on the transformative power of our solutions. This allowed us to close the year with a customer base of 19.8 million clients. In this sense, we have been able to increase our market share over these years by developing different ways to serve more people while providing sustainable financial services that transform their lives and help them fulfill their dreams. Regarding other relevant strategic advances achieved in 2021, we highlight the 12.4% growth of the Personal Banking segment, where social housing and social housing for women loans also reached a 12% increase over the year. In terms of commercial banking, we continue strengthening our offer, so SMEs can find everything in Davivienda and continue committed to promoting sustainable construction, ensuring the efficient use of natural resources while applying international standards. In terms of our Central American operations, we reached a 4.4% loan growth and a 52% increase in net profits. In addition, our social financing portfolio increased 127% over the year. Regarding our Wealth Management division, we're steadily advancing in our digital transformation efforts with 74% of product openings made through digital channels. Additionally, our ESG portfolios balance increased over 170% during the year, which demonstrates our commitment to promote sustainable products among our customers. Please move to Slide 6, where we will review some highlights of our approach to continue developing a sustainable business. Our higher purpose is to enrich life with intent, while transforming our customers' lives. Well aware of our commitment to generate positive impact in society, we continue to strengthen our sustainability policy by continuing to integrate into our strategy all the issues relevant to our stakeholders. In this sense, I'm glad to share with you that we are reaching more people and companies through our social and green financing lines, supporting women entrepreneurships, renewable energy, sustainable infrastructure, among other segments. Our sustainable loan portfolio increased 8.1% on an annual basis and represents 9.3% of our gross loans today. We have obtained important results on the environmental front as we compensated 76% of our carbon footprint in 2021. We also strengthened our commitment to environmental risk management and disclosure by adhering to the TCFD framework. This year, we will issue our first report under this framework. Going forward, we will continue to implement strategies to evolve our business model to successfully contribute to the SDGs while addressing global sustainability challenges and increasing our positive impact in the world. Moving on to Slide 7. I would like to elaborate on our strategies for the digital world. One of our priorities is the transformation of the bank itself through which we want to deliver solutions to our customers in a seamless, reliable, mobile way. We aim to be closer to them, to deliver a unique experience leveraged by technology and analytics. This path has already shown significant results with 88% of our customers consider to be digital, important increases in our digital loans and over 55% of our monetized transactions and 54% of our sales made through digital channels in Colombia. Our other priority is DaviPlata, our native digital bank through which we are changing the way in which people handle their money. DaviPlata has played a transforming role in society by opening the financial system door to millions of Colombians. Moreover, it has proven to be an easy and reliable solution to multiple needs such as subsidies and payroll distribution, economic reactivation, financial education and many more. By the end of 2021, DaviPlata reached 13.8 million customers, representing a 19% increase over the year. Additionally, the use of the platform continues to gain traction with outstanding digital deposits increasing around 70% on an annual basis. We expect to reach 16 million DaviPlata customers by the end of 2022 by leveraging on additional functionalities we have developed within our platform, such as the marketplace and the social selling profile, thereby helping entrepreneurs and mom-and-pops to grow their businesses. Last but not least, we have the New Co initiatives through which we want to make our customers' lives easier by offering them solutions beyond financial services, through alliances and ecosystems. Among these alliances, we have the RappiPay alliance through which we are offering an attractive and innovative way for people to access financial services and through which we want to reach new segments of the population. We continue to expect the beginning of operations of the new digital financial entity by the second quarter of this year once we receive the regulators' authorization. Moving on to Slide 8. I would like to share the 5 tools we have defined to support our strategy. We are a customer-oriented organization and want to redefine our customer experience by going beyond the traditional offer to deliver them a memorable experience. Additionally, we want to provide a wide range of offers and be present in our customers' lives by building alliances with the best players. In this sense, we understand the world as a cooperative place. We are open to working with others to generate new ecosystems where our customers can truly find additional value. In third place, we have the analytics skills developed across the organization, which we want to capitalize on to deliver better solutions to our customers. Another cornerstone is the use and adoption of exponential technologies, which allows us to be leaders in the transformation of traditional bank while staying ahead to create new business opportunities. Finally, we will continue to enhance our capacity to attract, train and retain the best talent for all of our business segments, so that we can remain a competitive, sustainable organization. We aim to redefine and transform our customers' experience and their solutions to their needs in this rampant and changing world through all of these initiatives on the sustainable and digital fronts. We are committed to exceed our stakeholders' expectations in the best way possible. We will continue to apply the best lessons learned to keep developing a sustainable organization for the future. Now let me turn the call over to Mr. Ricardo Leon, our Risk Executive Vice President, to continue with the presentation of the bank's financial results.

Thank you, Javier. Good morning, everyone. Please move on to Slide #9, where we will analyze the assets evolution. Total assets reached around COP 153 trillion, increasing 11.9% over the year. This is explained by the behavior of the gross loan portfolio driven by the economic recovery and a better risk profile along with write-off made during the year, resulting in normalized level of stock provisions. This growth is aligned with our risk appetite and is supported by our capital levels, which have expanded our growth capacity due to Basel III implementation last year. In the international operation, assets grew 21.6% over the year, mainly explained by the devaluation of the exchange rate. In U.S. dollars, the annual growth was 4.8%, mainly explained by dynamics on the loan portfolio as well as higher cash and interbank funds related to increases in the liquidity reserve. Move on to Slide 10, please. The consolidated gross loan portfolio grew 11.2% on a yearly basis, mainly explained by better dynamics in different economies where we operate and a better capacity to find adequate risk profile according to our origination policies. Mortgages continued to lead growth, mainly driven by leasing and residential housing in line with the sector dynamics during the year. The consumer portfolio accelerated during the last quarter of the year, reaching a significant growth due to higher disbursements of unsecured personal loans explained by better confidence in this segment considering the reactivation of the economy. Finally, the commercial portfolio grew 7.8% on an annual basis due to higher disbursements to corporates and SMEs, mainly during the second half of the year. In the international operation, the loan portfolio continued to grow at a stable rate of 4.4% during the year, mainly driven by consumer and mortgage loans with El Salvador and Honduras presenting the best dynamics. Given the observed growth dynamics as of December 2021, the retail portfolio accounted for 55% of the total loan portfolio. This change in mix is the result of different market opportunities and lies within our risk appetite. We will continue to monitor the market going forward to find the appropriate condition to develop our business strategy. Moving on to Slide #11, we present an update of PDLs and cover ratios and their behavior. As you can see on the top graph, total PDLs over 90 days decreased around 40 basis points over the quarter, closing at 3.4%, explained by portfolio growth, better payment behavior across all segments and a write-off. The coverage ratio increased about 4% during the quarter. This is explained by higher provisions in the consumer segment, considering portfolio growth and anticipation of further deteriorations due to the end of the relief program. We also improved our methodologies to have a better risk recognition for restructured credits. In addition, better payment behavior and higher write-off also contributed to increase in the coverage ratio of the portfolio. Please move to Slide 12, where we can see the evolution of cost of risk, provision expenses and loans by sales. Cost of risk for the year continued its decreasing trend closing at 2.78%, in line with our expectation. Total accumulated provision expenses contracted by more than 20%, reflecting that most of the pandemic efforts are already made. We saw an increase in provision during the quarter as expected, considering the levels we had during the second and third quarter because of forward-looking adjustments in those periods. The last quarter recognized the evolution of the portfolio, some higher provision for write-off and there is recognition for restructured loans, as mentioned before. Our loans by stages mix remained almost stable with some decrease in Stage 3, which is compensated by Stage 1. As a result, Stage 1 now represents 88.8% of the total portfolio. We have maintained our coverage ratio for Stage 1 and increase it for Stage 2 continuing the evolution of the portfolio and model improvement. Stage 3 coverage decreased mainly because of write-off in the last quarter. Now please move on to Slide #13. In order to support asset growth, liabilities increased by 11.9% over the year. Demand deposits continue growing, increasing the share of our total funding sources. This effect was compensated by a reduction in our term deposits, in line with our strategy to expand our net interest margin, reducing falling costs. Considering the bank's strategy to improve capital levels and despite bonds increased over the year due to the $500 million AT1 issuance, generating more than 185 basis points in the total consolidated capital adequacy ratio as of December 2021. In addition, the COP 700 billion senior bond issuance in Colombia and issuances in Central America contributed to the bonds increase. On the top right table, we can see assets and liability growing at a similar pace, contributing to maintain our balanced structure. On the bottom right, we can see a stability in our funding ratios during the year, we saw an improvement in the last quarter. This is explained in part because of higher demand deposits we have received during this period and because of seasonal effect by the end of the last year. Considering its nature, some of that liquidity was kept as cash and interbank funds. We would like to invite you to Slide #14, where you will see our capital structure. As you can see, we have comfortable capital levels to support our growth, in line with our expectations and remain among the best capitalized banks in the region. Thanks to the Basel III implementation, we increased our capacity to support our operations, having enough available room over the full loaded requirements. In this way, risk-weighted assets have increased due to new disbursements in the loan portfolio as a result of the economic reactivation. This took our core equity Tier 1 ratio to 11.96% and our total capital adequacy ratio to 18%, in line with our expectations. In the bottom right, we can see our leverage ratio remains stable after the AT1 issuance made in the second quarter this year. We have adequate capital levels to continue growing at a similar rate. Please move to Slide #15, where we present our margins. When looking at the annual behavior we observe that the gross financial margin decreased by around 1.1%. This is mainly explained by lower investment income related to upside movement in the interest rates. However, the gross financial margin increased 5% during the quarter. As you can see on the bottom left, the accumulated net interest margin for the loan portfolio increased around 11 basis points due to higher interest income as there is better payment behavior and increase in the retail portfolio. Regarding investments, NIM, we expect an increase in interest rate pressure to continue, but not high as a year, allowing us to reach a totaling level above 6%. It's important to mention that part of our investment strategy is developed to derivatives, which have allowed us to revert the negative tendency of funding, as shown on the bottom right. When including the foreign exchange and derivative income, the gross financial margin expands 5.1% over the year. Please continue to Slide #16. The accumulated nonfinancial income increased by 30.5% on an annual basis due to the reactivation of some fees suspended during 2020, higher transactionality, better performance in the insurance business as well as the income generated by our collection company. As a consequence, nonfinancial income increased its share of the total income from 13.87% to 16.66%. It's important to mention that this month, we registered an impairment on our goodwill in El Salvador for around COP 83 billion. When excluding this effect, nonfinancial income will have increased by 57.3%. On an accumulated basis, OpEx increased by 8.7%. This is mainly due to higher commissions paid to our commercial staff considering the better-than-expected growth of the portfolio and a one-off payment to employees within the collective agreement framework, which is updated every 3 years. When excluding nonrecurring expenses, OpEx will have increased by 7.8% on accumulated basis. The 12-month cost-to-income ratio closed at 47.1%, increasing over the quarter and remaining stable on a yearly basis. Excluding the goodwill effect mentioned before, our cost-to-income ratio decreased 40 basis points, closing at 46.7%, in line with our expectation. Please move on to Slide #17 to analyze the bank's profits. On an annual basis, net income reached COP 1.26 trillion for the year, almost 2.1x the accumulated as of December last year. The result is mainly explained by better cost of risk, financial margin, including derivatives as well as nonfinancial income. As a result, as you can see on the bottom left, our 12 months return on average equity for the year reached 9.35%, in line with our expectation, consolidating our recovery path after the effort carried out during the pandemic. To finish the presentation, please move on to Slide 18, where we will share our expectation for 2022. Considering the macroeconomic trends in the countries where we operate, we're expecting our consolidated loan book to grow between 11% to 12%, mainly explained by the following behaviors. 9% to 10% growth in the commercial portfolio, higher loan in the consumer segment between 14% to 15% and an increase between 11% to 12% in the mortgage portfolio. The 90 days PDL ratio continue to improve and close this year around 3.2% to 3.4%. Our net interest margin to close between 6.0 to 6.3% by the end of the year, reflecting the repricing effects of the increase in interest rates. We expect our cost of risk to close 2022 between 2.3% to 2.6%, continuing its downward trend but continuing exchange in the portfolio mix. Regarding other operating income to end the year with an increase between 10% to 11% as we continue to work to gain new income sources through new alliance and service for our customers. We expect an OpEx growth from 8% to 9% by the end of the year, where the high level of inflation and increase on minimum wages for 2022 will impact this growth. Finally, our return on average equity should close between 11% to 15%, getting closer to our medium-term goals. Thank you for your attention. At this time, we can move on to the question announced session.

[Operator Instructions] We have a question from Carlos Gomez from HSBC.

I wanted to ask about the nature of the goodwill write-off that you did in El Salvador, and whether we should expect any other similar charges in the future?

Carlos, this is Pedro. Thank you for your questions. For this year, we decided that also with our external adviser that makes the impairment evaluation for a good will to separate the cash generator units in 3, 1 for every country -- 1 for El Salvador, 1 for Costa Rica and 1 for Honduras. Although the operation in El Salvador had a great profit and an important growth, the main driver for the impairment of the goodwill in El Salvador is the interest rate on sovereign debt. Since this is a calculation of a discounted dividend, the increase in this interest rate makes a determination of what we have in El Salvador. The total goodwill that we allocated in El Salvador is 144 -- sorry, the total impairment for El Salvador is COP 83.3 billion out of COP 144 billion, probably half of what we have of the goodwill in El Salvador. May I say also that we have an effect of a deferred tax of COP 54,000 of -- I'm sorry, the net effect after this deferred tax is COP 54.1 billion that was accounted in our financial results for the year 2021.

So the write-down of goodwill is tax deductible?

Yes, it was deducted before, but we had a deferred tax on that, that we used this year, 2021.

Our next question comes from Andres Soto from Santander.

My first question is related to the digital strategy. We saw some interesting numbers in terms of digital loans this quarter that already represent 17% of the retail portfolio. I would like to understand what is the profile of those loans, how they compare in terms of asset quality indicators with the rest of the portfolio? And my second question related to digital is what will be the priorities for this year? Javier mentioned that you intend to add something like 500,000 additional clients to DaviPlata. My question on DaviPlata is, what is the end game here? Do you guys plan to start offering loans to this customer base? And when will that happen? That's my question. Those are my questions on digital. And my second question is related to your guidance, not that much that one of 2022, but looking ahead, when I look at the 2022 parameters, I see that NIM is still below the historical level, cost of rate is still above historical level. And yet, you guys say that this 11% to 13% ROE is close to what you believe is the medium-term target. I would challenge that assumption, because if NIM normalizes to a higher level, like cost of risk lowers further, you should aspire the ROE of at least 15%. So I would like to understand what holds you back on the expectation for higher ROE?

This is Javier Suarez. Thank you for your questions. First, on the detailed strategy, definitely, we're putting all our efforts and making sure that the transformation of the bank goes forward. And we have -- as you mentioned in your question, 2 lines of growth. One is on the, what we would call the Davivienda Digital, which is moving forward, and we're very happy with it. You saw the numbers in the presentation in which 88% of our customers are already digital customers, and we are seeing also growth on digital loans. What we're seeing is a very good behavior. We are being very careful with it. Loan amounts are still -- maximum tickets are still a ceiling based on our risk expectations. We need to make sure that even though we're growing on the loans originated by digital platforms, we need to be very careful with it, and we are making sure that the quality of the portfolio is as good or better than the traditional one, and that's what's happening. So we're happy with it. We're going step by step and making sure that we keep growing on those digital loans. But so far, the quality of those portfolios is very good quality. So we're being careful, but the results are good and we expect to be growing not only on the number of loans originated, but also as we keep improving our scoring models and our technology to make sure that we are disbursing loans to customers that have the ability to pay. We will be also increasing the tickets. That's our expectation also an avenue of growth for digital loans originated through what we would call Davivienda digital. On the other hand, on DaviPlata, we're seeing growth. We're still -- we keep growing. 40% of the adult population in the country already has a DaviPlata account. We see DaviPlata also as a digital bank, and it's growing and making sure that the platform is more capable. And definitely one of the lines of business in which we see growth not only in terms of business but also in terms of profitability and the model to be profitable, the road to be profitable is through loan origination. We definitely see an opportunity there. The kind of information that we are gathering from our customers in DaviPlata is different to the one that we see in the traditional models. So we see opportunities and we're starting to work on loan origination through DaviPlata. Then moving forward to your third question in terms of NIM. We agree with you. I tend to agree with you that the numbers will be better this year in general, in the main factors. We're being careful. We're being careful because we still want to make sure that we are within our guidance in terms of ROEs. The first half of this year, we'll probably still have some results that are impacted by the pandemic, although we've made a lot of improvement in terms of the quality of the portfolios. You have to remember that in -- before the pandemic in 2019, our consumer portfolio was growing at a very high rate. And then we entered into the pandemic and that had an effect on our risk profile. We are mostly through it. We believe that the numbers coming forward will be better, and that's reflected in our guidance. Still with some cushion for the first half of the year. But probably for the second half of the year, we'll see better and improvement in the numbers. So we are being careful with the guidance, although we have expectations that continually we'll be improving our numbers. I wouldn't commit to the ROEs that you were mentioning, but we definitely see an improving ROE over the coming months.

And just to follow up on my DaviPlata question. Do you have any expectation on the time line for when you will start offering credit products in this platform?

We're working on it. We don't have a definite date, but it's definitely one of the clear lines of work. We have teams both within the DaviPlata team and the Davivienda team working together, making sure that we soon will be able to start offering loans through a platform.

[Operator Instructions] And we have no further phone questions. So we will take the webcast questions. The question comes from Alejandro Ardila from Casa de Bolsa. And his question reads: "I would like to know about how sensitive can be your NIM model, while interest rates are increasing? On the other hand, can you dig deeper about commissions and services incomes behavior during fourth quarter 2021?"

Thank you, Alejandro. This is David Pedraza responsible for IR and interest rate risk. Regarding your question about NIM, according to our analysis, 100% -- 100 basis points increase in the reference rate represents a contraction of around 7 to 10 basis points. It is important to mention that in the event of a rate increase, the impact is negative in the short term, let's say, somewhere around 8 to 9 months as our liabilities reprice faster than our assets. However, in the midterm, the impact over our NIM is positive. For this reason, we expect our NIM to face some pressure by the end -- by the beginning of this year due to expected increases in the central bank rate and start to show some recovery towards the end of 2022, closing around 6% to 6.3%. Regarding the second question, Ricardo Leon will proceed.

Thank you, David. Related to the fees and commission, during this year, we have a very interesting result in terms of the income, for example, in credit and debit card. The total income increase 36%, for example, in Colombia, transaction increased around 29%, and insurance increased 72%. That happened in Central America too. In Central America, the insurance business included the income around 20%, transaction close to 13%.

We also received a question from Sebastian Gallego from Ashmore. He has 2 questions. And his questions read: "Couple of questions. Question 1, can you provide some color regarding Davivienda's dividend policy for this year? This is relevant considering the dividend policy last year and increase in peers' dividend policy. And question #1, can you comment on long-term ROA goals. The guidance for 2022 remains somewhat weak."

Thank you, Sebastian. This is Javier Suarez again. With regard to your first question with the dividends, we have to take into account several factors in terms of the dividend policy and the dividend payout that we will be proposing to the shareholders assembly. So far, what we see is a year in which we have been improving in terms of net profit. We also have to take into consideration the fact that we improved our capital base through the issuance of the instruments that Ricardo mentioned during his presentation. So capital levels are healthy capital levels. But at the same time, we see a lot of opportunities in terms of growth. As I was mentioning before, we want to keep having the ability to invest in new digital capabilities, invest in DaviPlata, invest in the New Co options that we're opening. So we believe that we're striking a balance with a dividend payout for this year that will be higher than the one we've had in previous years, which was around 30%. We're expecting a proposal that we will submit to the consideration of the Board of Directors on the levels around 40%. That we believe is in line with maintaining a healthy capital base and increasing the dividend for the shareholders. And at the same time, giving us the ability to keep growing and also investing in many opportunities that we see coming forward. And then going on to the second question in terms of the long-term ROE goals. Well, that also has a close relationship with the answer I just gave in terms of dividends. We believe that the ROEs will be in the medium to long term, keep increasing to levels between 12% and 14%. We believe, as I mentioned before that this year is a year of transition, which ROEs will be improving. We have to consider that we are coming from a 9% ROE a little bit more than 9% for last year. And our expectations are increasing this year to 11%, 13%. And then we believe, as I mentioned before, that probably the second half of the year will show us ROE that is higher, closer to that range of 12%, 14%. That is also our expectation for medium to long term.

Our next question comes from Juan Pablo from BBVA, Colombia. His question reads: "Does DaviPlata remain as the second largest neo-bank in LatAm? Can you deepen your strategy with CivicaPay?"

Thank you, Juan Pablo. With regard to DaviPlata, we believe that in terms of the number of customers, it's still the second largest and it's growing. It has a healthy growth. What we've seen in January is also good growth. So yes, we still believe that is the second largest, and we have expectations of keeping a healthy growth rate coming -- looking forward. In terms of the strategy with CivicaPay, CivicaPay is a good example, I would say more than the strategy specifically with CivicaPay. That's a good way to show what we are building, which is a capability in which DaviPlata partners with allies that have their own ecosystem, and then we have the ability to provide the financial services and the digital platforms behind those ecosystems to make sure that we impact the populations that are linked to the ecosystem of the sponsor. In this case, CivicaPay's strategy with Metro de Medellin, in which all the users of the Metro de Medellin will have the ability to enter the metro and have financial services through CivicaPay, which is an app that is already live, that provide services for the users of the metro, which are, of course, millions of people. So we see opportunities like that, and we're working on other alliances in the same line as we are doing with CivicaPay. So we see that as an avenue of growth also for DaviPlata beyond what DaviPlata does in itself with the DaviPlata brand. So we see that this co-branding in which we have sponsors like Rappi, which with them, we did something similar 2 years ago and then with Civica we're basically experiencing this opportunity of putting together a solution, which… We are the financial services provider to a digital platform such as DaviPlata, an easy-to-use platform that it's embedded into what the sponsor, in this case, the Metro de Medellin's offering to their customers.

We have another question from Cynthia Huaccha. She's from Credicorp. And the question reads: "Could you tell us about the liability management plans? Could the bank be thinking of a new issuance considering the coming maturity of the international bond in the U.S. dollar due July 2022?"

Cynthia, thank you very much for your question. This is Jaime Castaneda, Vice President of Treasury speaking. So we do have plans to win in the international capital market this year, of course. As you probably know, we have the maturity of the all Tier 2 bonds that expire in July. And we have another maturity in October for the global corps. So right now, we have plans to be in the market as we usually do, locally and internationally. So probably, you will see us very soon in the international capital market doing something.

Thank you. And we'll give a few minutes to see if we receive any other questions. We have one more question. It's from Andrea Atuesta from Bancolombia. Her question reads: "Can you give us more detail regarding the increase in provisions versus third quarter 2021? What portion was due to changes in the model assumptions and to specific corporate clients?" Her second question reads: "What were the main changes in the model? And how are you expecting this corporate clients will behave in 2022?"

Andrea, thank you. This Ricardo Leon, Vice President. Related to the level of provision and the behavior in 2021, actually, we saw an increase in the cost provision expense in line with our guidance, explained by the following dynamic first. A base effect compared to the interim -- second quarter when we share the main impact of updates in the forward-looking company related to better economic expectation for 2021. Second, the recognition of the evolution of the portfolio and its growth in the different segments. Third, additional provision to write off in some corporation customers. And finally, updates on the model parameter to reflect in a better way the risk of restructuring customers. In terms of our expectation, forward looking parameters, we estimate, obviously, for the next year, a more conservative growth in terms of GDP. For example, in September, we had a view of the GDP for Colombia in 8.68%. Obviously, they finally finished over 10%. But for the coming years, we estimate an average of around 4%. In Panama, at the end of the year, the final the GDP was over 13%. And forecast for next year is about 5% in average. Costa Rica with an average in the next year around 3.5%. El Salvador slightly conservative about 3% for the coming years and Honduras a figure close to 4% in the next year. So this view represent a very important input for our estimation in our cost of risk, of course. And in terms of our guidance related to cost of risk, we are estimating a cost between 2.3% to 2.6% improving. And we think that we have run in the coming months, to review the expectation. Because at the end of the year, we established a buffer in terms of the quality of the structural customer for the coming months. Because obviously, they're really from finished. It's a regular behavior as some part of that portfolio we have to be restructured again or some portion. So we reserve an important portion of provision to support that behavior if happened in the coming quarters.

We have another question from Santiago Alba from CrediCorp. His question reads: "The cost of risk came in line with your guidance for 2021. But it seems that the macro outlook and the improvement in asset quality indicators was not totally reflected in the cost of risk as we observed in peers in Colombia. Why did this happen?"

Santiago, thank you for your question. Of course, every player have different approach during the pandemic. In our case, we have been a little bit conservative in terms of destination of our forecast and obviously, to reserve additional buffer to support. So specific case, that is possible. However, we feel that our cost of risk is adequate to support our structural portfolio. Remember that we have maybe 55% of our portfolio in retail, consumer and mortgage and 45% in commercial portfolio. So our provision are -- credit to support the structure and obviously, our approach about the situation for 2022 and the next years.

Thank you. And at this moment, I see no other web questions. I would like to turn the floor back over to our presenters for closing comments. Mr. Suarez, please proceed.

Thank you, and thank you very much to all the participants in the call. As we see, we are in the trend of recovering our profitability to levels -- to pre-pandemic levels. We will be doubling down in our efforts to keep our detailed transformation moving forward, and that implies some -- still some use of resources. That's why we're making sure that we have the resources through a dividend policy that on one hand reflects our ability to pay higher dividends, and on the other hand, also give us the ability to keep improving the bank in terms of the digital transformation and the growth opportunities that we're still seeing -- looking for. We believe the right balance in terms of dividends is very important for the future of the bank. We're at the moment in which we see a lot of opportunities and there's room for investments to keep transforming the bank, both on the Davivienda Digital as well as DaviPlata as well as the New Co options that we're pursuing. So we're very enthusiastic in terms of the ability of the bank to keep moving forward with these strategies. Thank you very much to all the participants, and we will look forward to see you again and have results for the first quarter in the coming months. Thank you, all.

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