Executive Summary / Key Takeaways

• Grupo Cibest S.A. (CIB) has undergone a pivotal corporate transformation, rebranding from Bancolombia S.A. to a new holding company structure designed to optimize capital allocation, enhance corporate flexibility, and drive shareholder value through initiatives like share repurchase programs.
• The company's robust digital ecosystem, spearheaded by Nequi, represents a significant technological differentiator, boasting over 25 million clients and rapid loan book expansion, positioning it for profitability by late 2025 or early 2026.
• Despite macroeconomic headwinds, CIB delivered strong financial performance in Q2 2025, with a 17.50% annualized ROE and a Net Interest Margin (NIM) of 6.57%, supported by loan growth, improved asset quality, and effective cost management.
• CIB maintains a strong competitive position in Colombia and Central America, leveraging its extensive regional network, low-cost deposit base, and advanced digital platforms to outperform peers and strategically expand into higher-yielding consumer segments.
• The outlook for 2025 includes projected loan growth of 5.4%, a NIM of approximately 6.3%, and a cost of risk between 1.6% and 1.8%, with a sustainable long-term ROE target of 16%, contingent on a cautious Central Bank monetary policy and continued economic stabilization.

A New Chapter: Grupo Cibest's Foundation and Strategic Imperatives

Grupo Cibest S.A., formerly Bancolombia S.A., stands as a testament to strategic evolution within the dynamic Latin American financial landscape. Founded in Medellín, Colombia, in 1875, the company has consistently adapted its business model to meet evolving market demands and regulatory complexities. The recent corporate restructuring in May 2025, which saw Bancolombia S.A. transform into Grupo Cibest S.A. as a holding company, marks a significant milestone. This strategic shift was designed to optimize capital allocation, enhance corporate flexibility, and unlock greater value for shareholders, moving beyond the inherent inefficiencies of a bank simultaneously functioning as a holding entity.

The core business of Grupo Cibest encompasses a wide array of financial services, including banking intermediation, transactional services, asset management, treasury, and capital markets, across Colombia and Central America. This integrated, client-focused value proposition serves over 33 million clients, with Colombia remaining the core market where Bancolombia leads with a 28% market share in loans and 26% in deposits. The Central American operations, including Banco Agricola in El Salvador, Banistmo in Panama, and BAM in Guatemala, provide crucial geographic diversification and growth potential. The company's overarching strategy is to adapt to local market trends while leveraging regional strengths, promoting diversification, and supporting sustainable long-term growth.

Technological Edge: Nequi, Wompi, and Wenia Drive Digital Dominance

A cornerstone of Grupo Cibest's competitive advantage and future growth trajectory lies in its highly differentiated digital and transactional ecosystem. This ecosystem, built upon over a decade of investment in innovative, multichannel, and interoperable platforms, includes Nequi, Wompi, and Wenia. These technologies are not merely supplementary services; they are foundational to the company's strategy, offering tangible benefits that enhance market positioning and financial performance.

Nequi, the digital neobank, is a prime example of this technological leadership. It serves over 25 million clients, with an impressive activity ratio approaching 80%, indicating deep user engagement. Nequi's loan book has seen substantial growth, reaching COP 1.1 trillion in Q2 2025, a 4.7-fold increase over the previous year, while its deposits have grown over 77% to nearly COP 6 trillion. This rapid expansion, coupled with a low cost-to-serve model, is driving significant cost efficiency and a 90% increase in total income. The merger of Bancolombia A la Mano with Nequi at the beginning of 2025 further centralized operations, aiming to capture additional operational efficiencies and boost Nequi's profitability, with management optimistically targeting breakeven by the end of 2025 or early Q1 2026. This digital platform provides a powerful competitive moat by attracting and retaining a vast customer base, leveraging transactional data for credit origination, and generating diversified fee income.

Beyond Nequi, Wompi, the company's payments platform, facilitates both pay-ins and payouts for small- and medium-sized enterprises, demonstrating sustained growth in active users and transactional volumes. Wenia, another key initiative, is strengthening Grupo Cibest's presence in the digital asset sector through offerings like COPW, a stablecoin backed by the Colombian peso. These platforms collectively enhance Grupo Cibest's value proposition and competitive advantages by providing low-cost funding, access to rich transactional data, and diversified fee income generation. The company is also making strides in model risk management, completing the design phase of a Comprehensive Framework for the Validation of Generative AI Models, which incorporates criteria for impact, robustness, explainability, and ethical use, aiming to reduce average review times by 30% and strengthen traceability.

Financial Performance and Operational Strength

Grupo Cibest delivered robust financial performance in the second quarter of 2025, aligning with its long-term corporate strategy. Net income attributable to equity holders totaled COP 1,791 billion, marking a 3.10% increase quarter-over-quarter, primarily driven by higher net interest and fee income. This translated into a strong quarterly annualized Return on Equity (ROE) of 17.50% for Grupo Cibest Consolidated, and 16.10% over the last 12 months. Bancolombia stand-alone, the main operational entity, recorded a pro forma ROE of 26% in Q2 2025, reflecting the benefits of more efficient capital allocation post-corporate evolution.

Net interest income (NII) for Q2 2025 reached COP 5,227 billion, a 3.20% increase from the previous quarter, fueled by loan portfolio growth across all segments and improved yield rates. The consolidated Net Interest Margin (NIM) rebounded to 6.57%, an increase of 14 basis points from 1Q25. This performance was supported by effective asset and liability management, including active liquidity portfolio management that generated a 12.20% increase in interest and valuation income from debt instruments. Customer deposits, a crucial low-cost funding source, increased by 2.40% quarter-over-quarter to COP 282,647 billion, representing 84.90% of total liabilities, primarily driven by higher savings account balances. The annualized weighted average cost of deposits remained competitive at 4.18%.

Asset quality showed continued improvement, with the principal balance for past-due loans (over 30 days) decreasing to 4.54% of total gross loans. The 30-day indicator's decline was mainly due to improved performance in the retail segment at Bancolombia S.A. and Banistmo. Provision charges after recoveries decreased by 0.30% quarter-over-quarter to COP 1,096 billion, reflecting a positive outlook for loan quality across most segments. The quarterly annualized cost of risk was 1.57% for Q2 2025 and 1.71% for the last 12 months. Operating expenses, however, increased by 5.70% quarter-over-quarter to COP 3,691 billion, leading to an efficiency ratio of 50.70% in Q2 2025. This increase was attributed to financial transaction taxes related to dividend payments, legal fees for the corporate evolution, and higher technology licensing costs.

Competitive Positioning and Market Dynamics

Grupo Cibest operates within a highly competitive financial services landscape across Colombia and Central America. Its market positioning is characterized by a strong regional network, a diversified investment portfolio, and established regulatory licenses, which collectively form a robust competitive moat. In Colombia, Bancolombia maintains a leading position in both loan and deposit market share, demonstrating its ability to attract and retain granular, low-cost deposits even amidst emerging competitors. The company's market share in savings and time deposits increased by 110 basis points from December 2021 to February 2025, outperforming peers. In credit card loans, CIB's market share increased by 20 basis points, representing nearly 30% of transaction value.

Compared to specialized infrastructure and energy players like MYR Group Inc. (MYR) and Everus Construction, Grupo Cibest's investment holding model offers greater strategic flexibility and diversified exposure across sectors. While MYR Group excels in operational execution for electrical construction and Everus in AI-driven infrastructure, CIB's regional expertise in Latin America allows it to capitalize on local investment opportunities that U.S.-centric competitors might not access as efficiently. Its regulatory licenses provide a cost advantage in local investments, enabling better access to projects and improving capital efficiency. However, CIB's potentially smaller scale compared to global players could lead to higher operating costs and weaker global brand recognition, posing vulnerabilities.

The company's digital platforms, particularly Nequi, are critical competitive differentiators. Nequi's extensive user base and transactional volume provide a low-cost funding advantage and rich data insights, enabling more targeted and efficient lending. This technological edge allows CIB to compete effectively against both traditional banks and new fintech entrants, including those offering automated investment solutions. The company's proactive approach to interoperability, such as opening Bancolombia and Nequi platforms for free immediate transactions, positions it favorably ahead of broader payment system changes like Breve, mitigating potential fee impacts.

Outlook, Guidance, and Risks

Grupo Cibest's revised guidance for 2025 reflects a cautious yet optimistic outlook. Loan growth is projected at approximately 5.4%, with commercial loans growing at 4.2%, consumer loans at 7%, and mortgage loans at 7.5%. The Net Interest Margin (NIM) is expected to be around 6.3%, reflecting the anticipated slower pace of interest rate cuts by the Central Bank of Colombia. The cost of risk is projected to range from 1.6% to 1.8%, driven by ongoing improvements in asset quality and robust risk management models. Consequently, the Return on Equity (ROE) has been revised to approximately 16%.

Management's confidence in achieving these targets is underpinned by the positive economic trends in Colombia, including a projected GDP growth of 2.6% for 2025, and the strong performance of Nequi, which is steadily progressing towards breakeven. The corporate evolution to Grupo Cibest is expected to provide significant long-term benefits, including the ability to execute a share repurchase program of up to COP 1.3 trillion, enhancing shareholder value. The company's double leverage ratio of 104.80% as of June 2025 indicates a solid capital structure with capacity for further expansion and dividend distribution.

However, several risks warrant close monitoring. The political landscape in Colombia remains polarized, with upcoming congressional and presidential elections potentially introducing uncertainty. The fiscal situation in Colombia is a significant challenge, with the fiscal deficit projected to exceed 7% of GDP in 2025, leading to sovereign rating downgrades by Moody's and S&P. While the Central Bank's cautious stance on interest rate cuts may support NIM in the short term, persistent inflation pressures and a potentially higher minimum wage in 2026 could impact monetary policy. Regulatory changes in Colombia and Central America, particularly regarding Open Finance and environmental/social risk management, also pose operational and compliance challenges. Cybersecurity and information security risks are heightened as the business model increasingly leverages emerging technologies.

Conclusion

Grupo Cibest S.A. is at a pivotal juncture, leveraging its recent corporate transformation to enhance strategic flexibility and optimize capital allocation. The company's deep-rooted presence in Colombia and Central America, combined with its technologically advanced digital ecosystem led by Nequi, forms a compelling investment thesis. Despite the macroeconomic and political uncertainties, CIB's robust financial performance, improving asset quality, and disciplined risk management underscore its resilience. The strategic focus on expanding higher-yielding consumer loan segments and the anticipated profitability of Nequi are key drivers for sustained growth and value creation. While challenges such as fiscal pressures and competitive dynamics persist, Grupo Cibest's commitment to operational excellence, regional diversification, and technological leadership positions it favorably to achieve its long-term ROE target of 16% and deliver consistent shareholder returns.