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Efraí­n Enrique Forero Fonseca

COLOMBIA - Finance

Points of Service

President, Banco Davivienda


Efraí­n Enrique Forero Fonseca has served as President of Banco Davivienda since June 1990. Within the Bolí­var Group, he has accumulated over 32 years of experience, holding important positions such as President of Delta Bolí­var, a commercial finance company, and as the Financial and Administrative Manager of Seguros Bolí­var. In addition, he was Vice-President of the Bogotá branch and Head of the Department of Systems and Financial Management Assistance for Seguros Bolí­var. He is currently Member of the Board at Titularizadora Colombiana, the Banking Association of Colombia, Trust Davivienda, Fedesarrollo, and University Hospital San Ignacio. He also participates as the main Member of the Executive Board at the Bolí­var Davivienda Foundation and is a member of the CEAL Business Council.

"We are optimistic and committed to Colombia as well as to the other countries in which we are active."

How would you characterize the Colombian banking sector?

It is a solid, competitive system and it is increasing its presence in the region. Until recently, the Colombian system has been mainly a national system. More than 70% of the sector as a whole belonged to local banks. However, in the last five years, different institutions have been entering other regions and they are now behaving as international players. The system is doing a good job dealing with the different challenges of the country in general. The economic growth that we are experiencing is a great challenge for the whole system. It is twice as big as it was five years ago. The main challenge, and maybe the main opportunity of the banking sector, is related to the fact that 40% of the population does not have any access to the system. The bancarization level of Colombia is very low, both in credit, transaction services, and insurance, which are provided by different types of non-banking personnel institutions. Government banks are seeing this as the main challenge.

What is Davivienda doing to bank the unbanked, and what has been your growth strategy over the past couple of years?

This institution began as a savings and loan company in 1972, and a universal bank in 1997. It is really a young bank for the Colombian environment. Even though some banks have been here for over 100 years, we have been able to become the third largest bank in the country. We are not solely a savings and loan company anymore, but also a universal bank with a presence in Panama, the US, and Central America. We have more than 4.5 million customers in the country. Our specialization in mainly low-income mortgages allows us to be closer to the base of the pyramid. We have won a bid to participate in the dispersion of subsidies that the central government will give to close to 2.5 million families on a monthly basis. With this initiative, we could gain another 1 million customers who might be willing to make payments not just via ATMs or Davivienda branches, but also in more than 700 different cities and towns nationwide. Davivienda charges the government when it disperses money and charges companies when they pay wages, but the people who receive the money and want to use it do not get charged. The company is also working on offering people different kinds of micro insurance, micro savings, and maybe in the future micro credits.

“We are optimistic and committed to Colombia as well as to the other countries in which we are active.”

What has been Davivienda’s most important achievement in recent years?

The most important thing that we have done so far is the launch of a platform called DaviPlata in February 2011, which is an electronic wallet. We want to have an instrument that allows any Colombian, customer or not, to be able to have access to the different services that banks provide. We have more that 600,000 new customers, and more than 300,000 of them were people that did not have any kind of relationship with a bank. This wallet allows them to manage their cash through their mobile phones, to make bill payments to other electronic wallets or different bank accounts, and to buy pre-paid mobile phone time. The main feature that characterizes this innovation is that customers are allowed to withdraw money from any Davivienda ATM without a card. Now any Colombian, with only their mobile phone, can have an electronic wallet. Likewise, you can add money to the electronic wallet from a Davivienda account or by making a deposit in a branch.

Davivienda plans to double the profitability of its recent acquisition of HSBC in Central America in two years. How are you planning to achieve this and what was the strategy behind this acquisition?

We have two different strategies. Those HSBC banks are charged by their headquarters and have expenses related to supervision and different services provided by their headquarters. We will support those operations, but without the charges. Davivienda expects growth of almost 10% in 2013. In three years we expect to be able to have maybe a 12% return on equity (ROE) for our operations in Central America.

How important are the operations in Miami for Davivienda internationally?

The Miami operation is very important for the Colombian market, both for individual and corporate business. Many different businesses require support from the operations we have in Miami. In the same sense, many different individuals like to have the products that we offer there, not only in banking, but the investment products we intend to offer as well. We are also trying to increase the value-added services we offer in Miami. We expect the Miami branch will be very important for the whole market in Central America. It’s very important for us to have that point of service in Miami to offer to our high-income customers in Colombia. We have to complement this service in Miami with the service we offer in Panama. Both of these bases are very important to be able to compete properly for both corporate and individual business.

What is Davivienda’s position in the Colombian market?

In personal and individual banking, we are probably the largest player. We are first in mortgages and first in the business of loans and credit cards. We are third in automobile loans and we have about an 18% market share in consumer loans. We are third in commercial banking and Davivienda is the top private bank in agricultural banking. Our operations are quite small when it comes to SMEs, but we do see an opportunity in that segment because we have a relationship with more than 65,000 different companies in the country. We have about 6% of the market and we expect to be closer to 12% soon.

How important is Davivienda’s presence in the capital markets?

Davivienda entered the capital markets over a year and half a year ago; we made our first issue in 2010. It was the biggest success of any company in Colombia. Later in the year we were again very successful, a return of $350 million allowed us to gain about 23% of the capital in the institution of the Colombian market. We are working hard to enter the international market, possibly New York in 2014. In 2012 we issued bonds and placed them very successfully for $500 million over 10 years. Our presence in the capital markets is very important for the bank. The company has been working very hard to become known by different local and international investors. We foresee the bank growing in Colombia, and having access to the capital markets seems feasible in the long term.

How would you evaluate the bank’s performance in 2011 and what do you expect for 2012?

Over 2012, the bank is expect to grow approximately 10%, which is a bit lower than the sector. This is likely related to our decision to decelerate the growth in consumer loans after foreseeing problems in certain sectors of the economy. The bank expects its income to grow above 20%, so it is important to improve efficiency. The results are going to be very interesting for 2012, both in terms of the composition of our portfolio as well as the income of the bank. We have good margin management and we are working to improve our efficiency. Davivienda has many opportunities to improve efficiency because Colombian banks are not very efficient generally. There is a lot of work to do, but we are on the right track.

What is your outlook for the Colombian economy and the financial sector over the next five to 10 years?

There is a good chance we will see an average growth rate of 4%-5% for the next five years. However, if Colombia is to attain this growth then it must maintain the different improvements that have been achieved so far in security and in social efforts. The country must also increase its efforts to improve education, health, and technology. This country has many opportunities and many natural resources, and geographically it is located in an excellent position. The Colombian people are very skilled and hardworking, and we believe we can take advantage of these factors. The government has done well over the last 30 years, and the economic policies have been generally well managed. The fundamentals of the economy are strong and the management has been very wise. We are optimistic and committed to Colombia as well as to the other countries in which we are active. We foresee a very good future for the country and we are investing in Colombia.

© The Business Year – November 2012



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