Banco Davivienda S.A. ($PFDAVVNDA)

Welcome to the Davivienda Group's Fourth Quarter of 2025 Earnings Conference Call. I'm Karen, and I'll be your operator for today's call. Today's presentation is for investors and analysts only. Therefore, questions from the media will not be addressed. Today, Mr. Javier Suarez, Chief Executive Officer; and Mr. Pedro Bohorquez, VP of Strategic Risk and Financial Planning, will join us to discuss the quarterly results that have been released. If you have not yet received a copy of the earnings report and presentation, please visit Davivienda Group's investor kit or the financial information section at daviviendagroup.com. [Operator Instructions] 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 anticipated in any forward-looking statements due to macroeconomic conditions, market risks and other factors beyond our control. For the Q&A session, please remember the following instructions. [Operator Instructions] Now I am pleased to turn the call over to Mr. Javier Suarez, Chief Executive Officer. Mr. Suarez the floor is yours.

Welcome, everyone, and thank you for joining us this morning for Davivienda Group's Fourth Quarter of 2025 Earnings Conference Call. This is a pivotal moment in our history as it marks the beginning of a new stage in Davivienda's history. For the first time, we are presenting results under Davivienda Group. 2025 was a transformational year. We successfully completed the integration of Scotia line operations in Colombia, Costa Rica and Panama, while also strengthening Banco Davivienda's financial performance, closing the year with a clear recovery in profitability. We are proud of what this represents not only a larger and more diversified organization but also a better positioned one with greater regional scale, broader capabilities and a solid foundation to continue creating long-term value for our stakeholders. Now turning to Slide 3. Let me briefly explain how to read the numbers we are presenting today. On December 1, 2025, we completed the transaction with BNS. Therefore, as of the year-end, the balance sheet reflects the full consolidation of those operations in the 3 countries. However, the income statement includes only 1 month of results from the acquired businesses, creating a temporary mismatch between the scale reflected in the balance sheet and the earnings contribution shown in the P&L. As a result, any financial indicators calculated on the basis of the official financial statements do not fully reflect the underlying performance of either Banco Davivienda or the Davivienda Group. We are also presenting a managerial view which can be understood as Banco Davivienda consolidated results for 2025, excluding the BNS transaction. For these purposes, we eliminated 3 main effects. First, the balance sheet and P&L of the integrated operations; second, the nonrecurring income generated from acquiring the operations at favorable conditions; and third, other intercompany actions related to the integration process. This view allows for a clear comparison of the bank's underlying performance during the year and reflects management's execution and operating efforts. It is important to note that this managerial view is presented for informational and analytical purposes only. It does not constitute an efficient set of financial statements nor does it replace the reported financial information of either the bank or the group. Rather, it is intended to provide a clear management perspective on the year's performance prior to the integration effects. Since the transaction recently closed, Davivienda Group's income statement does not have a fully comparable base for previous periods. Accordingly, in this presentation, we are only focusing on balance sheet variations versus Banco Davivienda managerial view as the most meaningful way to illustrate the scale effect of the transaction. On Slide 4, I would like to briefly explain how we have structured today's presentation. First, we will walk you through the corporate transformation that led to what Davivienda Group is today, and we will present the new reality of the holding company, its structure, scale and balance sheet composition. Second, we will present Banco Davivienda managerial results for 2025 and make some comments on the applicable Davivienda Group balance sheet comparisons. Please note that from this point forward, our conference call and presentation will evolve towards Davivienda Group as a relevant reference. In that sense, we are now sharing our strategy and guidance at the holding company level, reflecting the scale and prospects of this new stage. On the following slides, I will provide an overview of Davivienda Group. Starting on Slide 6, I will briefly walk you through the main milestones of our corporate structure reorganization over the past year. On January 6, we announced the agreement to integrate the Scotian line operations. From that point forward, we worked on executing a disciplined and orderly transition. In February, we established Davivienda Group laying the foundation for our new holding company structure. By October 30, we launched the share issuance process, inviting Banco Davivienda shareholders to become shareholders of Davivienda Group, in a highly motivating and decisive process. As we communicated in our last conference call, we expected a strong level of participation and the results confirmed an expectation. The share issuance offer reached 95.5% acceptance and resulted in Davivienda Group consolidated 98.9% ownership of Banco Davivienda. Davivienda Group's preferred shares then began trading on the Colombian Stock Exchange. The level of participation and market support clearly reflects investor confidence in the new structure and in our long-term regional strategy. Finally, and in line with our expected time line on December 1, we closed the transaction, fully integrating the agreed operations and granting Scotiabank at 20.3% ownership stake in Davivienda Group. Turning to Slide 7. I will explain what Legal Day One represented for Davivienda Group. More than a legal milestone, LD1 was the moment in which we simultaneously took control of the integrated operations in Colombia, Costa Rica and Panama. Reaching that point require months of coordinated work across countries, teams, systems and customer-facing process. From the customer's perspective, one of the most visible outcomes of that effort was the launch of DAVIbank as a transitional brand for the operations in Colombia and Costa Rica. DAVIbank was designed to capture the best of both organizations, Davivienda's local expertise, innovation and brand strength combined with the Scotiabank's global sophistication and capabilities. But this was not only about rebranding. It was about ensuring continuity trust and a smooth transition from day 1. Customers of DAVIbank began operating with access to the Davivienda's broader ATM and branch network, and we also relaunched selected products and commercial initiatives aimed at preserving engagement and supporting retention during the transition. All of this was executed with a very high degree of coordination and operational discipline. What matters most is that we were able to carry out a highly visible and complex transition while maintaining service continuity, protecting the customer experience and preserving confidence in the franchise. In that sense, Legal Day One was not only a clean execution milestone. It was also an early demonstration of our ability to integrate at scale while protecting the value of the business. Please move on to Slide 8, where I will briefly recall the current corporate structure. At the top Davivienda Group operates as a holding company of the platform, consolidating all the businesses of the organization. Davivienda Group has 2 main subsidiaries, Banco Davivienda and DAVIbank, Colombia. Banco Davivienda consolidates the local trust, brokerage and merchant bank businesses as well as the Central American operations through Holding Davivienda International. In Costa Rica, the operations contributed by BNS continue to operate independently during the initial integration phase under the DAVIbank brand alongside Davivienda's existing operation in the country. In Panama, by contrast, Banco Davivienda Panama incorporated the assets and liabilities of BNS resulting in a single integrated entity operating under the Davivienda brand. BNS businesses in Colombia also operate independently at this stage under the DAVIbank brand and are readily controlled by Davivienda Group. From a capital markets perspective, and as mentioned before, Davivienda Group's preferred shares are trading in the Colombian stock exchange. In this sense, the holding company serves as a vehicle through which shareholders participate in the group's consolidated regional platform. As you can see on the right-hand chart, Grupo Bolivar remains a controlling shareholder with around 48% of total shares. Banco de Davivienda's preferred shares remain listed and simultaneously traded. In terms of debt instruments, Banco Davivienda, which is the issue of our outstanding AT1 Tier 2 local bonds is expected to continue acting as an issuer in the international notes. Please Move on to Slide 9, where I'd like to show you how the BNS transaction generated value for Davivienda Group shareholders. Let's begin with the accounting perspective shown in the top left graph based on figures as of the transaction closing date. The integrated operations accounted for COP 6.4 trillion in equity before valuation adjustments, while Banco Davivienda's consolidated equity stood at COP 16.7 trillion. Consequently, the combined equity value reached approximately COP 23.1 trillion. Of this total, BNS contributed 27.7% and in exchange, received 20.32% equity stake. In essence, Davivienda Group shareholders moved from owning 100% of COP 16.7 trillion equity base to owning 79.68% of COP 23.1 trillion pro forma equity base. This is equivalent to COP 18.4 trillion. In other words, even after the dilution, the value of their equity increased by approximately 10.2%, directly reflecting the highly accretive nature of this transaction for our shareholders. It is important to clarify that the final equity incorporated into Davivienda Group's financial statements differs from the historical accounting equity of those operations. This is due to the purchase accounting adjustments required to recognize acquired assets and liabilities at fair value. As a result, the equity effectively recorded by the Davivienda Group was slightly lower than the preference figures just discussed reflecting the strategic recognition of Davivienda's franchise in the region. From a market value perspective, the outcome is equally positive. Banco Davivienda's market capitalization was COP 12.9 trillion at the closing date. Meanwhile, the market value of the holdings belonging to the Davivienda Group shareholders, excluding BNS reached COP 14.2 trillion. This represents an appreciation of approximately 10.1% in the value of the investment by participating in the share issues. Furthermore, it is worth highlighting that liquidity has successfully migrated to Davivienda Group's preferred shares. Trading volumes have increased compared to the original Banco Davivienda shares driven by both heightened market interest and a larger flow. This reinforces the market relevance of our new holding company structure. Overall, this slide demonstrates that the transaction generated tangible value for Davivienda shareholders from both an accounting and a market standpoint. Beyond the additional benefits of participating in a larger, more diversified regional platform with synergy opportunities. On Slide 10, I will explain the significant rate scale of Davivienda Group. On a consolidated basis, the group closed the year with approximately COP 264 trillion in assets, COP 242 trillion in liabilities and COP 22 trillion in equity, reflecting close to 35% growth across our assets and liabilities. This step up in scale is not only meaningful in size but also in what it enables. It strengthens our capacity to execute our long-term strategy, broadens our regional relevance and creates a larger platform from which to capture operating efficiencies over time. It is also worth highlighting that this greater scale is built on top of a long-term growth trajectory with a 2015-2025 compound annual growth rate of over 12% in assets and liabilities and around 10% in equity. Now on Slide 11, we can observe the group's balance sheet structure with the integration Davivienda Group becomes more diversified across geographies, currencies, loan segments and funding sources. Our asset base is distributed across Colombia and Central America, increasing our exposure to economies such as Panama and Costa Rica which have demonstrated receding growth dynamics, stronger fiscal discipline and more stable macro frameworks in recent years. This provides a more balanced regional footprint and reduces single-country concentration risk. From a currency perspective, the integration increases the participation of U.S. dollar and local Central American currencies in our loan portfolio. We manage this diversification through our disputed structural FX stream, maintaining natural hedges between assets and liabilities in each currency and actively managing currency gaps to the derivative instruments when necessary to limit net open positions. Our objective is to put our capital ratios and economic value from FX volatility. In terms of business mix, the group remains well balanced with commercial loans representing 44% of the portfolio, mortgage lending 30% and consumer lending 26%. The higher share of consumer lending reflects Davivienda Bank's strong position in this segment. On the funding side, the group maintains a solid structure anchored primarily in deposits which continue to represent the vast majority of funding sources. This gives the platform a stable funding base with a balanced combination of demand and term deposits while preserving diversified access to wholesale and market funding when needed. Overall, this diversification strengthens our risk profile and improves structural resilience. Turning to Slide 12. Let me highlight how the integration has strengthened our market positions across the region. Colombia with a 19.2% gross loan market share and 75% in deposits, we continue to be the second largest bank in the system. This reinforces our core franchise and deepens our ability to compete across retail, SMEs and corporate segments with greater presence and capacity. In Costa Rica, the combined banks account for approximately 13% market share in loans effectively doubling our prior footprint and allowing us to be the second in the country when excluding public institutions. In Panama, although our market share in gross loans is 3.2%, the integration gives us critical mass and a stronger local platform, which we will leverage through a more market-focused strategy, supported by our niche approach under penetration and local knowledge inherited from Scotiabank. Beyond the quantitative expansion this integration fundamentally elevates our strategic and competitive positioning across the region. We now operate the stronger local franchises, which will enable synergies and efficiency efforts given the greater scale. This is how size translates into strategic advantage. On the following slides, I will cover the macro environment and Davivienda's results for 2025. Please move on to Slide 14. Economic activity in Colombia continued to recover during 2025, with GDP growth of 2.6%, supported mainly by stronger household consumption and public spending, although sectors such as construction and mining remain weak. Inflation closed the year at 5.1%, still out of the Central Bank's target range. In that context, the policy rate was reduced to 9.25% in April and then remain stable for the rest of the year, reflecting a cautious monetary stance amid inflation persistence and fiscal uncertainty. Another important development was the appreciation of the Colombian peso which strengthened by around 15% during the year, mainly driven by global weakness of the U.S. dollar and local debt management operations. 2026 has started with renewed inflationary pressures. Annual inflation rose to 5.35% in January and then is slightly to 5.29% in February. Part of this increase was driven by the indexation of serial prices to year-end inflation as well as food prices acceleration. In addition, the adjustment in the minimum wage also added pressure, particularly in services and our labor-intensive categories. Amidst these situations, the Central Bank as a policy rate of 10.25% in January, reflecting higher inflation expectations and growing concerns around the fiscal outlook. Against this backdrop, we expect GDP growth of around 2.6% for 2026 with year-end inflation and the policy rate closing near 6.4% and 11.75%, respectively. Please move on to Slide 15. After a period of a slowdown during the previous credit cycle the system showed signs of recovery throughout 2025. Total loan growth accelerated during the year, closing with an annual expansion of approximately 7%, supported by improved economic activity and some stabilization in interest rates. This recovery was particularly visible in the consumer portfolio, which moved from contraction at the beginning of the year to positive growth by year-end. At the same time, mortgage lending continued to gain momentum supported by stronger demand in the housing market, while the commercial portfolio maintains steady expansion across most sectors. On the pricing side, lending rates for all segments decreased contributing to a more favorable environment for loan demand and borrowers payment capacity. From a risk perspective, asset quality indicators continue to converge to more normalized levels, fairly in line with prepandemic figures. Overall, although these dynamics suggest that the lowest point of the credit cycle is likely behind us. The change in interest rate trends might generate some impact on the system loan growth and asset quality in 2026. Moving on to Slide 16. The region continued to show favorable macroeconomic conditions during 2025, supported by resilient domestic demand, positive growth across countries and generally contain inflation. In Costa Rica, economic activity remained particularly strong with GDP growth of 4.6%, supported by manufacturing, professional services and the continued expansion of the medical devices sector. Inflation remaining in deflationary territory, which allowed the Central Bank to maintain a more expansionary monetary stance and reduce the policy rate. The Costa Rican colon appreciated by around 2% during the year, and foreign risk perception or to improve with rating upgrades from Standard & Poor's and Moody's, while which maintained a positive outlook. In Panama, growth also remained solid reaching around 3.9%, supported by the Canal Trade and services activity. Inflation stayed low and while fiscal concerns have not disappeared conditions showed some improvement during the year and the country maintain investment grade with S&P and Moody's. In El Salvador, economic activity continued to expand at 5.1% supported by investment, construction and strong remittance flows. While inflation remained low and sovereign risk conditions improved, particularly after the upgrade by Fitch. In Honduras, growth remained stable at around 3.4%, supported by domestic demand and remittances. Inflation picked up, but remained within the Central Bank's target range. While monetize policy stayed unchanged during the year. Looking ahead, the region's growth should remain relatively stable although some moderation is expected, particularly as remittance those normalizes in Honduras and in El Salvador and free trade zone activity slows in Costa Rica after an initially strong 2025. Despite that, these economies continue to offer attractive structural opportunities, reinforcing the strategic value of the Davivienda Group's regional footprint and supporting the diversification of our balance sheet across markets. Let's turn to Slide 17, where I will cover the main results for Banco Davivienda in 2025, presented on a managerial basis. Starting with the balance sheet dynamics gross loans reached COP 149 trillion, with annual growth of 6%, excluding FX impacts, in line with the guidance previously communicated. This performance reflects the gradual normalization of credit demand and our disciplined approach to portfolio growth. We also continue strengthening our funding structure. Our commercial teams actively focused on deepening low-cost and transactional deposits, allowing us to improve the quality of our funding base and support margin improvement. We continue to actively manage our interest rate exposure in the banking book reducing repricing duration gas, allowing us to maintain a more neutral sensitivity to interest rate movements. As a result, NIM, including FX and derivatives increased by 9 basis points annually, closing at 5.74% within our guidance range. From a credit risk perspective, the adjustments we implemented in origination standards and portfolio management over the last few years are clearly reflected in our results. Cost of risk closed the year at 2.25%, slightly below guidance reflecting the continued normalization of portfolio quality. As a result of these dynamics, Banco Davivienda closed the year with net profit of approximately COP 1 trillion and a return on average equity of 8.98% in the upper end of our guidance range, confirming the strengthening of the bank's financial performance compared to 2024. Overall, these results reflect disciplined balance sheet management improved asset quality, stronger funding dynamics and continued focus on efficiency, position in Davivienda Group on a much stronger footing going forward. Now please move on to Slide 18 to see DaviPlata's main results. The most important dynamic we are seeing in the platform is a rapid expansion of the credit portfolio which is becoming a key driver for the gradual consolidation of DaviPlata's profitability. As the platform continues to deepen its financial offering, we're increasingly able to monetize our growing customer base. At the same time, one of DaviPlata's greatest strength and one of its clearest competitive advantages continues to be the availability and resilience of the platform. During 2025, the platform maintained a 99.89% availability. These operational resilience continues to build trust among users and is reflected in our Net Promoter Score of 78.9 points supporting higher activity and stronger recovers. In that context, transaction volumes grew 21% year-over-year, reaching COP 753 million, reflecting deeper engagement in the day-to-day financial activity. This dynamic has also been supported by the growth of a network we've been building of small merchants and neighborhood businesses as well as our initiative to position DaviPlata more strongly in the strategic segments such as the other users. As a result, deposit balances reached approximately COP 1 trillion, reinforcing DaviPlata's role as a growing source of low-cost and transactional funding for the group. All of the above is already being reflected in revenues, which reached COP 205 billion during the year, increasing 13% annually. Looking ahead to 2026, our strategic priority is to accelerate credit origination and drive user recurrence, ultimately solidifying DaviPlata's trajectory towards sustained profitability. At this point, let me hand it over to Pedro, who will cover the rest of the presentation.

Thank you, Javier. As a reminder, we will present Banco Davivienda's managerial view, which allows for a clearer understanding of our underlying performance during the year. And as Javier mentioned earlier, we will present only balance sheet figures for Davivienda Group. Please move on to Slide 19, where I cover our loan portfolio. On a managerial basis and excluding FX, Banco Davivienda's portfolio expanded 4% during the quarter and 6% for the full year, driven by solid underlying lending activities across all segments. Within our business lines, mortgages maintained the strongest momentum, reflecting our solid position in the housing market with annual growth of approximately 12% on an FX-neutral basis. The commercial book also expanded during the year by 5%, supported primarily by stronger activity in the corporate segment. Importantly, consumer lending showed a much more favorable trend during the year following origination adjustments implemented in prior periods. When excluding FX, the consumer portfolio actually moved 2% annually. At Davivienda Group level, the loan portfolio expanded around 33% compared to Banco Davivienda's managerial base, reflecting the incorporation of the Scotiabank operations in the 3 countries. Colombia continues to represent the core of the portfolio, while Central America gains greater relevance following the integration. In that sense, we see that Central American loan book expanded by around 59% compared to our previous size. Please move on to Slide 20, where we will review the evolution of past due loans and coverage. Banco Davivienda's asset quality, excluding the integrated operations continued to improve with a 30 basis point annual decrease reflecting the consistency of a better profile of the loan book supported by our credit release management model. At the same time, total coverage has maintained an increasing trend quarter-over-quarter reflecting both better delinquency dynamics and our continuing strengthening of provision [ revs ]. It is worth highlighting that in terms of delinquency and coverage, Davivienda's operation are positively impacted by the integrated businesses, which contributes on asset quality and solid protection levels, reinforcing our platform at this new stage. In that sense, Davivienda Group's total PDL is 3.7% with a total coverage of around 99% and coverage plus collaterals of 151%. The consumer portfolio has shown the clear improvement in asset quality following the origination and underwriting adjustments implemented over the last few years. Coverage levels have increased significantly for this portfolio driven by our provision and efforts. It is also worth noting that the integrated DAVIbank's operation being very solid coverage levels, which further strengthened the group's consumer risk profile. Asset quality in the commercial book was impacted by certain isolated impairments primarily related to long-term clients that are fully recognized and for which provisions have been built up over recent years. Nevertheless, current coverage levels also reflect reduced provisioning requirements following the successful fulfillment of restructuring agreements and the strategic sales of impaired assets. This proactive management allow us to maintain a cleaner balance sheet and lower PDL supported by a strong collateral structure. At the group level, commercial PDL also improves. In mortgages, we continue to see a favorable trend supported by better origination standards and improved collection dynamics. The gradual decline in interest rate pressures has also helped borrower's spending capacity. Overall, these figures confirm both the bank and the group closed the year with a healthier risk profile, stronger reserve buffers and a strong positioning to support growth [indiscernible]. Let's turn to Slide 21. This slide provides an outlook of our consumer business in Colombia, combining Banco Davivienda and DAVIbank, which together reflects the Davivienda Group's strong consumer lending crisis in the country and provide a view of how we are managing this business at the consolidated level. Starting with originations. If we look at the group's full quarter disbursements, they exceed the Davivienda's figures of shares in the first quarter of 2022 by approximately COP 2.4 trillion, confirming that we are not only recovering volumes but doing so from a stronger platform. At the same time, the most recent vintages continue to perform well, cohorts with 2 and 3 months of books for the combined entities remain at healthy levels and below our 2021 reference values which give us confidence that we are capturing growth with some underwriting standards within our risk appetite. When looking at the loan mix, we see a shift in composition at the group level. Credit cards and unsecured personal loans are gaining a high growth share, reflecting the incorporation of a business with strong capabilities and positioning in these products. By contrast, payroll lending is losing relative share. While this product continues to show low PDLs, current market dynamics, particularly the channels at which the market is growing, don't necessarily compensate for the pricing levels and capital consumption required. In that sense, the new mix provides a different starting point, one that we believe will be converging over time to a more balanced profile in terms of risk. In terms of net provision expenses, it is important to note that DAVIbank Colombia is still undergoing a convergence process to more normalized cost of risk ratios. We expect the portfolio to continue moving in that direction, supported by the measures taken some time ago as well as the learnings we have incorporated from the credit cycle including the underwriting, monitoring and collection capabilities, we have strengthened over the past few years. Please move on to Slide 22 where we will review the evolution of provision expenses and the composition of the loan portfolio by stages. Starting with Banco Davivienda's managerial view, the portfolio composition by stages remained sound at year-end and broadly consistent with the improvement we have seen in asset quality throughout 2025. Around 91% of the book remains allocated in Stage 1, reflecting the whole risk profile of the portfolio while Stages 2 and 3 continue to represent manageable portions of the book and remain covered at the levels consistent with our historical standards and a prudent reserves. When moving to Davivienda Group, the picture remains equally constructed. At the consolidated level, we also see around 91% of the portfolio in Stage 1. Turning now to provision expenses and cost of risk. Banco Davivienda closed the quarter with 1.73 cost of risk in managerial terms with provisional expenses declining around 24%, reflecting lower past due loan provision and therefore, lower provisioning needs especially in the consumer portfolio, given the efforts made to increase coverage during the previous quarters. On a 12-month basis, the managerial cost of risk closed at 2.25% below the previous year and the 2.3% to 2.5% guidance range, also supported by high recovery rates across the different segments as a result of more reactive measures during the year. Please move on to Slide 23, where we will review the evolution on the services and liquidity. Starting with Banco Davivienda's managerial funding dynamics evolve broadly in line with our expectations during 2021. Demand deposits grew close to 10% year-over-year. At the same time, churn deposit declined consistent with our funding where composition strike. Other services such as bonds and credits were mainly affected by the FX impact. When looking at our operations in Colombia, we see an increased share of low and mid-cost demand deposit in Davivienda, which provide a solid and stable base for long-term growth. Over these past years, we've been successfully executing our strategy to increase transactional low-cost deposits, supported by a comprehensive product offering, our digital and physical channels as well as our commercial model. In that sense, even though the integration creates a new starting point with a lower share of these type of deposits within the total mix, it also reinforces the importance of continuing to execute our strategy by deepening transactional relationships now with a broader customer base. From a funding ratio perspective, gross loans to total funding sources stood at 90% in Davivienda Group, pretty much in line with Banco Davivienda's figure, reflecting a healthy leverage on both liabilities and equity to support business growth. Regarding liquidity, the message is also clear. At the group level, where the indicator is fully measurable, a net stable funding ratio stands at 160% comfortably about risk appetite and reflecting a solid long-term funding position of the last intensive search and liquidity ratios, both our banks in Colombia remain retain full borrower. On Slide 24, we will review our capital structure. Starting with the Davivienda Group, total equity reached approximately COP 22 trillion at year-end, increasing by 26% to our capital base report the transaction at the holding level, 2 indicators are particularly relevant. The first one is the tangible equity ratio which gives a clear view of the group's effective capital base, excluding tangibles, confirming that the holding starts this new stage with a solid capital position. The second one is double leverage, which reflects the extent to which resources at the parent level have deployed this capital into its subsidiaries. In practical terms, it captures how the holding can transform funding rates at the top into capital supporting the operating entities. In that sense, current levels are pretty countable and the new structure provides us with sufficient flexibility to acquire debt capital through the vehicles going forward. Moving now to Banco Davivienda from a managerial perspective, CET1 remained stable at 11.78% since higher profits of the quarter were offset by risk-weighted asset growth. The total capital ratio decreased due to FX movement and lower weight of subordinated Tier 2 instruments in line with our expectations. From a reported perspective, Banco Davivienda's CET1 closed at 11.62% mainly due to the reviving distribution in December last year which accounted for around COP 500 billion or 32% of the consolidated net profit. Excluding this effect, the reported CET1 will have closed at 11.97% increasing by approximately 20 basis points compared to level before the integration, broadly in line with what we have previously anticipated. More importantly, our risk appetite in terms of CET1 has not changed and capital management is being performed at the holding level, aiming to optimize and allocate resources where they are most efficient from a group perspective. Please move to Slide 25, where we will analyze our margins. At Banco Davivienda's managerial level, gross financial margin, including FX and derivatives, reached COP 2.4 trillion, with a slight decline of 0.3% during the quarter. This performance was only explained by lower income from the investment portfolio, partially offset by a stronger result from derivative instruments and lower financial expenses. More broadly, margin performance reflects the active management we have been carrying out on both the balance sheet and is the pricing profile, maintaining a fairly neutral position to interest-based shocks in the short term. In this context, the quarterly annualized NIM including FX and derivatives, closed at 5.71%, showing relative stability and the 12-month NIM expanded by 10 basis points supported by a structural improvement in funding. Looking ahead to a high gross interest rate scenario, we do not anticipate material impacts on our margins. In addition, our increasing base on transactional deposits and a higher growth of the consumer portfolio should support margin expansion in 2026. Please continue to Slide #26. Total nonfinancial income declined around 5% quarter-over-quarter and grew by 2.8% on an accumulated basis, in both cases, impacted by the results. Other net income and expenses particularly due to valuation updates on asset received as payment. However, it is important to note that fee generation remains strong growing by 6% quarterly and by 10% annually, supported by transactional activity and the growing contribution of billing, revenue collection and payments. On the expense side, operating expenses increased 3.7% during the quarter and 5.8% on an accumulated basis, slightly above the guidance, but close to 0% in real terms. The annual increase reflects the combined impact of the inflation effects, salary increase as well as cloud services and cybersecurity. In terms of cost to income, the quarterly annualized ratio showed a temporary impact mainly due to lower investment income during the quarter and higher expenses by year-end. However, on a 12-month basis, cost to income continued to trend downward, reflecting the gradual recovery of revenues and the operating discipline we maintained throughout the year. Let's turn to Slide 27 to analyze the bank's net profit. Banco Davivienda's net profit for the year, excluding the BNS transaction reached close to COP 1.5 trillion which translated into a 12-month return on average equity of 8.98% in the upper end of our guidance, confirming the bank's recovery profitability during the year supported by margin expansion, lower cost of risk, strong fee generation and disciplined cost management. Now in Slide 29, I'd like to cover the many strategic areas of focus for 2026. At Davivienda group, our strategic objective is clear: to deepen customer engagement and become our times primary bank across the markets where we operate. We are pushing this objective through 3 main strategic pillars. First, we aim to offer the most complete value proposition to our customers, where our universal multichannel bank with a strong physical presence across Colombia and Central America which give us a clear competitive advantage in serving customers through multiple touch points. On top of that, our value proposition is now further strengthened by the capabilities route by the Scotiabank. Our focus this year is to better leverage each of our business lines in order to become the most complete option for our customers across the different verticals. Financing, savings, investing, protecting and, of course, transacting. Second, we remain focused on delivering superior service and customer experience. During the year, we implemented a cross-bank service strategy, which allowed us to improve NPS across all customer segments, in line with our goals. This effort is supported by the resilience of our platforms the reliability of our service model and a clear focus on continuing to build trust with our customers through safer, simpler and frictionless interactions. Third, the integration project remains a key strategic priority as it is essential to unlocking the full position of Davivienda Group as a regional platform. During this year, we expect to request corporate's approval to complete the integration of the operation in Colombia and in Costa Rica, after that, we will see the corresponding local regulatory authorizations with the expectation of having the operation integrated in both countries by late 2026 or early 2027. At the same time, we continue working on the broader integration agenda, including operating model design, service model alignment, risk policy harmonization and the materialization of synergies and opportunities across the bank. Ultimately, these strategic focus areas are designed to strengthen our regional positioning, keeping customer relationships and build a more integrated platform with stronger loan churn value creation potential. Turning to Slide 30. We present our 2026 guidance, which will be provided at the Davivienda Group level, reflecting the scale and scope of the new consolidated pack. On growth, we expect the group's gross loan portfolio to expand between 8% and 10%, with commercial lending growing between 9.5% and 11.5% and the consumer and mortgage group's between 6% and 8%. In terms of asset quality, we expect a 90-day PDL ratio to continue improving, crossing the year at leverage between 3.3% and 3.8% with an increase in coverage of around 110%. We expect NIM, including FX and derivatives closed the year between 5.7% and 6% and cost of risk to range between 2.1% and 2.3%. Nonfinancial income is expected to grow between 8% and 10%. Regarding the cost-to-income ratio, we expect to remain at around 55% for 2026. This is consistent with the views we have shared previously. Synergy benefits and integration-related costs are expected to broadly offset one another during the year. With more pronounced efficiency gains beginning to materialize thereafter. Under these assumptions, we expect ROE to range between 8% and 10%. It is important to note that this range already incorporates an impact of slightly about 130 basis points from the recently implemented wealth tax. Please bear in mind that higher-than-expected increases in interest rates as well as the political and fiscal outlook are some of the variables that will end up impacting our guidance, particularly in loan growth and asset quality. With this, we would like to open the floor to your questions.

[Operator Instructions] Right now, we're standing by for questions. Our first question comes from Mr. Ernesto Gabilondo from Bank of America.

Congrats to you finally achieved the consolidation of Scotiabank. My first question will be in terms of your operating expenses, you guided in terms of efficiency. But just wondering how should we think about OpEx, should be growing at a single digit, double digit? How much of that will be reflecting integration costs? And then in terms of your ROE guidance, you're saying 8% to 10% in '26 and potential synergies should come eventually over the next year. So just wondering how should we should be thinking about the ROE evolution looking into the next couple of years? Where do you see your sustainable ROE in the near term.

Thank you. Ernesto, thank you for your question. Let me start by the second question, the ROE guidance. As Pedro was mentioning in the remarks, we are guiding at 8% to 10% ROE for this year. Take into consideration that we are including a onetime equity tax that the government has passed that it has an impact of around 130 basis points on our guidance. So if you correct for that, we would be in the 9.30 to 11.30 range. So that would imply that the trend that we've been seeing over the last year and the last couple of years of increasing ROE it's still going as expected. It's going to take some time for us to reach the 14%, 16% ROE that we gave us guidance for the -- once the integration is fully completed in year 2018, around 2018 -- I'm sorry, 2028. And that's because the process of integration has expenses in terms of technology and other lines of expenses to capture all the efficiencies. So in the short term, if you look at the how we are moving on with the improvement in ROEs on the managerial look -- managerial view of Davivienda of the existing Banco Davivienda we're on the right track. The ROE is going to be pulled down a little bit for Davivienda Group because of lower ROEs of the Scotiabank operations that we are incorporating. And that's because those operations are still going through a transition process. In terms of the Colombian operation, the efficiency ratios are high. That's part of the job that we have in front of us is to improve the efficiency in those operations. And in terms of Central America, something similar is happening. We're stabilizing the operation on both Panama and Costa Rica. And we expect those operations to start being more profitable by the end of -- by the second half of the year once we've got rid of some excess liquidity that we built being ready for the transition. In terms of efficiency, this year, we will have a very large increase in operating expenses on a pro forma basis of around 38% to 41%. That's basically because we are incorporating the expenses of the new operations. If you look at what we're seeing in terms of the operations, we should be around the single digits if you exclude integration costs, we should be on the single-digit front for the existing Davivienda operation. That number is a little bit difficult to look into for the DAVIbank operations because they are carrying the full weight of the integration as they are preparing their systems to merge into Davivienda systems. So overall, I would say we're on the right track in the ROE in terms of efficiency, we're being disciplined in how we are integrating the operations and how we are managing the expenses on the business as usual front. So that's like the summary of the expectations that we have on the operations.

Just a follow-up in terms of -- just a follow-up in your ROE for the medium term. So again, you're saying 8% to 10% this year or maybe next year around 13% and then maybe in 2028 to be going to the levels of 15%, 16%. Would that sound reasonable for you?

I will not commit to a number for next year, but I think the path that you're mentioning sounds reasonable, I'd say, in the midterm, you have to take into account, as I mentioned before, the equity tax that were incorporated. So we should be around 10.3% for this year. And if we want to get to 14%, the range of 14% to 16% for 2027, 2028. I think that's reasonable.

Our next participant is Brian Flores from Citibank. Mr. Flores, the floor is yours.

I have a question first on your strategy, right? I'm trying to -- I mean, how can I say, to match this with the guidance. So from what I know, Scotiabank is mostly focused on the retail side. And I know the credit card operation is significant. And then on your guidance, you basically are guiding for a stable cost of risk. So I just wanted to ask you, how does this connect to each other? Is it a very selective credit card operation? Is it a denominator effect? Just how should we think about the prospect of asset quality for Scotiabank and obviously, how it integrates in your whole operation. And then if I may follow up on your comments on the guidance. You mentioned 130 bps impact on taxes and I just wanted to know what is your base case for the effective tax rate, just because perhaps compared to peers 130 bps could seem a bit low, I just wanted to check what is the effective tax rate that you're considering in the guidance.

Thank you, Brian, for your questions. In terms of the portfolio that we're bringing into the combined operations from Scotia, what we now call DAVIbank, especially in Colombia, there's a strong presence in the credit card market. Even though that's the case, and we should expect a higher cost of risk, you have to consider that during this transition, there are many things happening at the same time. If you look at the cost of risk of the existing Davivienda operations, they're trending down that we are expecting that improvement to continue, although the latest market events, such as a very high increase in minimum wage that also is impacting interest rates, revising our views towards higher interest rates, it's actually reducing the pace at which the cost of risk was improving. So when you put into perspective, the cost of risk down trend of the cost of risk of Davivienda as well as the downward trend of the cost of risk of the existing DAVIbank operations that those factors push the cost of risk to a lower end. But at the same time, when you combine them and they look at the combined portfolio, that should go up so the combined effect of those 2 actually comes to a stable cost of risk for this year. We expect this to be the cost of risk for 2026 but we see still room for improvement for 2027 as we are incorporating some external shocks into our guidance, things like the increase in the minimum wage at 23% that may have some impact on cost of risk for some segments of the market. But overall, we expect the downward trend to continue materializing over a couple of years. In terms of tax rates, the equity tax that was imposed on corporations, you have to consider that it was -- there was an emergency called by the government and that gives them the authority to impose temporary taxes. So there's a taxes on the equity of corporations specifically for the financial sector is around 1.6% of the equity of which one of the entities because of some adjustments that's not totally reflected into our operations is about 130 basis points, that's 1.3%. That's a onetime tax that it's included not as an income tax. It's in the operational expenses there's -- because it's not income tax, it's a different type of tax. So that's increasing our operating expenses and it's incorporated there. It has a double effect on the income tax because it's nondeductible that those payments are nondeductible. So when you consider those 2 conditions, the effective tax rate would be around 27% to 28% for this year.

Super clear. And then I just wanted to confirm with you that in terms of the potential surcharge that is 10% that is besides the already 5% of the financial system base, you -- your base case is at that one, as you mentioned, the emergency decree does not make you to pay anything in 2026. Is this correct?

Not exactly. The 10% additional income tax that was proposed by the government during the first emergency that was declared was deemed unconstitutional and is suspended at this time. Then there was a second emergency due to weather-related issues in some parts of the country. And in that second emergency, that 10% extra income tax was replaced by this equity tax, that's 1.6% of the equity of the operation. So we're incorporating not the 10% because that's behind us already. It was replaced by this 160 basis points on the equity on the size of the equity, and that's already included in the operational expenses. It's not income tax and for that reason, it is under the line of operating expenses.

Thank you very much. We will now move on to the webcast questions. Through our webcast, our first question comes from Mrs. Carolina Guerrero from LarrainVial. She says thank you for hosting this call. Her question is what is the current sensibility at 100 bps in the rate of on NIM? Thank you.

Carolina, thank you for your question. You we've been moving towards a neutral balance sheet over the last 3 or 4 years even though the expectations were lower interest rates at the Davivienda side of the operation. We decided to move from a liability sensitive to a fairly neutral operation. It's a little bit asset sensitive. But when you incorporate the liability-sensitive nature of the Scotiabank operations that we're incorporating, the combined effect is fairly neutral.

Our next question comes from Mr. Alonso Aramburu from BTG Pactual. His question is, have you adjusted your risk models for a more difficult macro outlook of higher interest rates and lower economic growth?

Yes. Yes. In fact, the guidance that we provided incorporates changes in inflation, we're expecting 200 basis higher inflation as opposed to what we had in our views before the end of last year. Policy rate is going from 8%, which was our prior scenario to 11.75%. The cap rate for consumer loans is going up from 24.8% to 28%. All that put together has an impact, especially on cost of risk. In terms of cost of risk, we're actually guiding a higher cost of risk by about close to 15, 20 basis points. That's already incorporated into the scenarios that we have disclosed with this presentation. So yes, those scenarios include a higher minimum wage, the effect on interest rates based on this higher minimum wage as well as some -- for some specific sectors in the economy, the exchange rate that we've experienced in, which is a revaluation of the peso that's also incorporated into the analysis of cost of risk for some sectors of commercial banking.

Our next question comes from Mrs. Mariel Abreu from T Rowe Price. Her question is, can you help us understand how a shock in oil could impact the asset quality of your books? Can you also talk about the corporate sector, financial health and any specific segments in trying to be more cautious under the current scenario?

Thank you for your question. In terms of the oil prices, that's we are looking into adding our portfolio. What we see is there's a benefit for the Colombian economy as being a net exporter of oil. So that should have a positive impact. But at the same time, a shock in oil prices could also have impacts on the economy, on an international level. But we still don't have a specific analysis. We're running the models as we speak on the oil shocks. We do have the models on all the shocks that we've been discussing previously, the domestic shocks that we've been discussing previously. And in that sense, let me go to the second part of your question, in which we see some sectors of the economy more exposed to being labor-intensive in which minimum wage can also have an impact on those sectors. Those are sectors in which we're assuming higher cost of risk for those sectors. We're also looking into some sectors that are exporters of commodities that are being affected by the exchange rate -- by the appreciation of the Colombian peso. All those specific sectors, we've been looking to them both from a perspective of potential higher provisions, but also in terms of underwriting new loans, we're also adjusting our policies to factoring the fact that they have a more challenging scenario.

Our next question comes from Mrs. Carolina Guerrero from LarrainVial. Her question is, which is your midterm cost of risk considering normalized loan growth?

Once we look into all the effects that are playing out, there are many, many effects, both internally in terms of the consolidation of the operations as well as the trends that we just mentioned in the previous questions. We're looking at a normalized cost of risk around 2%. It could be a little bit lower than 2%. We are guiding a higher cost of risk because of the scenarios that I just mentioned in the previous answers regarding the external shocks that we are experiencing this year. But our expectations for the medium term would be anywhere around 1.8% to 2% normalized cost of risk.

We are now standing by for further questions. [Operator Instructions] We have another question coming from Mrs. Mariel Abreu from T. Rowe Price. Her question is, we understand that your new guidance includes higher inflation on rates and the new macro environment, including new tax regulation. In your opinion, what are the main risks to your guidance this year?

Thank you for your question. We believe that the most significant impact that we're having on our guidance, as we have already incorporated that into the numbers is the fact that the minimum wage exposes some segment of the market to a probably higher unemployment, basically the lower end of the income distribution. At the same time, minimum wage has raised inflation expectations for the Central Bank and that's pushing interest rates up. So the mix of a potential higher unemployment as well as higher interest rates has an impact on credit risk. I would say those are the main reasons for the guidance of this year. That has to be combined with a fiscal situation, the government fiscal situation that is challenging and that could also put some pressure not only on the short-term interest rate as is the case for the minimum wage shock but also for the longer-term interest rates on if you look at the funding rates for the Colombian government. So the combination of those factors in terms of higher interest rates is probably the most significant impact on our guidance and the risk that we see as most significant for the numbers of this year.

Thank you very much. There seems to be no further questions at this time. With this, I would like to turn the floor back to Mr. Javier Suarez for any closing remarks. Mr. Suarez, the floor is yours.

Thank you very much for attending this call. It's a very significant call for us as this is the first one in which we are presenting the new structure of the brand with the consolidation of the operations. As you can see from the presentation, there's a lot of work in front of us in terms of integration, in terms of stabilization of the operations that we're bringing into the Davivienda as well as the challenges on the market and the business as usual front. Nevertheless, we're very excited. We believe that the project -- the integration project is going along our expectations. There's -- we see -- we are being able to confirm the potential synergies and benefits of the transaction deconsolidation as we move along and get more information now that we have control of those operations. And in terms of the business as usual operation, we're very excited with the pipeline that we have in front of us in terms of value offering for our customers and better experience for our users on our digital platforms, both on Davivienda and DaviPlata side. So we're very excited, and we are looking forward to the next call where we will give you a more clear update on how the integration is going up as well as the business as usual front. Thank you very much for being with us in this call, and we wish you all a very good day.

Once again, thank you very much, and thank you, ladies and gentlemen. This concludes today's conference call. Thank you for participating. You may now disconnect.