Bancolombia's challenge: bringing credit to those who remain excluded

Bancolombia, one of Colombia’s largest financial institutions, faces new challenges as it seeks to expand credit access to those still excluded from formal banking services. The bank's president, Juan Carlos Mora, stated that 2025 marked a turning point for the financial sector after two years of difficulties, including high interest rates, slower loan growth, and declining loan portfolios. Despite these pressures, Bancolombia reported positive results last year, though its performance was significantly influenced by the sale of its Panamanian operation, Banistmo. When this factor is excluded, the bank saw improvements in loan portfolio growth, corporate strategy strengthening, and product expansion, all against a backdrop of renewed optimism in the financial industry. The economic outlook for 2026 appears mixed, with both opportunities and risks. Mora noted that Colombia’s economy has maintained a reasonably good trajectory, driven by household consumption and government spending. The change in administration has generated additional optimism, with expectations of increased investment in previously lagging sectors. However, inflation has risen again, prompting the Bank of the Republic to raise interest rates. Bancolombia estimates that Colombia’s economy could grow by around 2.4 percent this year, slightly lower than the 2025 rate but still positive. In terms of lending, the bank anticipates a 7 to 8 percent increase in its loan portfolio. Mora warned that the full effects of monetary policy might not be felt until 2027 due to the delayed impact of interest rate changes on economic activity. He predicted that the central bank’s intervention rate could rise to 12.75 percent. One concern for Mora is the sustainability of current consumer behavior. Much of recent economic growth has relied on households increasing their spending while reducing savings. Although family debt levels have not yet reached alarming thresholds, he cautioned that this trend cannot continue indefinitely. To ensure long-term stability, Mora emphasized the need for more structural drivers of growth beyond consumer spending. Looking ahead, Bancolombia sees stronger prospects for commercial and housing loans compared to consumer credit, which may lose momentum. Sectors such as infrastructure, construction, mining, oil, and energy are viewed as potential new engines for economic growth. The phenomenon of El Niño poses another risk, with its most significant impacts potentially felt between 2026 and 2027. Mora highlighted the energy sector as an opportunity to fund projects that can help diversify the country’s power matrix and ensure electricity availability. He noted that Bancolombia is already one of the leading financiers of solar energy in Colombia and aims to further expand in this area. In contrast, the agricultural sector presents a more complex scenario, with droughts threatening productivity and harvests. The bank advocates for supporting investments in irrigation systems to mitigate these risks. Digital competition is also shaping the landscape. Mora acknowledged that the entry of more players and digital wallets has positively impacted financial inclusion. He pointed out that in 2015, approximately 68 percent of adults had some form of financial product, whereas today that figure stands at 94 percent. This transformation, according to Mora, was made possible through digitalization, which enabled broader access to financial services. As the bank continues to navigate these evolving dynamics, its focus remains on expanding credit access to those who remain outside the traditional banking system.