Welcome to the 4Q 2015 Consolidated Results under IFRS Conference Call. My name is Bianca, and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later we will conduct a question and answer session. Grupo Aval is an issuer of securities in Colombia and in the United States, registered with Colombia's National Registry of Shares and Issuers, RNVE, and the United States Securities and Exchange Commission. As such, it is subject to the control of the Superintendency of Finance and Compliance with applicable U.S. securities regulation as a foreign private issuer under Rule 405 of the U.S. Securities Act of 1933. Grupo Aval is not a financial institution and is not supervised or regulated as a financial institution in Colombia. Although we were not a financial institution until December 31, 2014, we prepared the consolidated financial information included in our quarterly reports in accordance with the regulations of the Superintendency of Finance for financial institutions and generally accepted accounting principles for banks to operate in Colombia, also known as Colombian Banking GAAP, because we believed that that presentation on the basis most appropriately reflected our activities as a holding company of a group of banks and other financial institutions. However, in 2009 the Colombian Congress enacted Law 1314 establishing the implementation of IFRS in Colombia. As a result, since January 1, 2015, financial entities and Colombian issuers of publicly traded securities, such as Grupo Aval, must prepare financial statements in accordance with IFRS as applicable in Colombia. IFRS as applicable under Colombian regulations differs in certain aspects for IFRS as currently issued by the IASB. Our 20-F annual report filed in 2015 with the SEC provide a description of the principal differences between Colombian Banking GAAP and U.S. GAAP, as well as…

Thank you, Bianca, and good morning to all. Today I would like to present our consolidated fourth quarter figures for Grupo Aval under full IFRS. Even though unaudited, we expect these results to substantially reflect what we're going to present in our full year full IFRS financial statements, which will be included in our 20-F filing in the coming weeks. Part of the process of preparing our 20-F, the first one under full IFRS for both 2014 and 2015, our figures for full year 2014 will be adjusted versus the sum of the unaudited consolidated quarters under IFRS previously reported. Earnings have not substantially changed, showing a 1.5 reduction. However, the classification of certain line items has been revised. Adjustments for the year are reflected in the fourth quarter of 2014, which will be shown to you in today's presentation. In addition, some adjustments were made to the third quarter 2015 balance sheet compared to what we have previously reported. Now moving into the results for the year end 2015, we want to highlight the following. Net income attributable for the shareholder was COP2.04 trillion, or close to COP0.92 per share, which compares favorably versus COP1.81 trillion, or COP0.87 per share earned during 2014. It is important to remember that 2015 includes the nonrecurring impact of the equity tax, COP209 million or COP9.4 per share. In the absence of these expense, net income for the year would have been 2.25 trillion or COP101 per share. In line with our guidance, our ROE for the year was 14.5%, and our ROA was 1.7%. Annual growth of both our balance sheet and our earnings were driven by a resilient Colombian economy, as well as the strong fundamentals and the favorable impact of the appreciation of the U.S. dollar relative to the Colombian…

Thank you, sir. We will now begin the question-and-answer session. [Operator Instructions] Carlos Macedo, please go ahead, sir.

Good morning everyone. Thanks for taking questions. First question, I mean, since 2015 is done and we're already almost half way into 2016, if you could give us some guidance as to what to expect this year in terms of loan growth, asset quality, margins, et cetera, just so that we can have an idea of really what the forecast, given the volatility that we've seen all over the place this year. Second question, going back to Banco de Bogota, I understand you're probably going to capitalize some of the retained earnings at some point early in the year and that would increase the common equity Tier 1 ratio, but it is quite low, and you mentioned that it is because of Central America. Is there a solution there? I mean, if the peso continues to devalue that would put even more pressure there. Has the Central Bank said anything about or pressured you in any way to address that situation? I mean, what is the direction that that will go going forward? Thank you.

Okay. Regarding your first question, we [ph] covered some of that at the beginning of the presentation, but to give you some more color on what our view on growth and quality and margins are, regarding loan growth, I mentioned we expect to grow in the low double digits, this means 10% to 12%. The rationale for this kind of growth that if you might have been in our previous calls and remember that we gave a similar guidance for 2015, we expect it to grow somewhere around 13% during 2015. We were positively surprised by a higher growth, given stripping away the effect of FX on our operation. However, we see a different cycle this year. 2016, even though might end up with a similar GDP growth than the kind of growth that we had during 2015, something close to 3% or short of 3%. The composition of that growth will be quite different. During 2015, we saw GDP growth coming lower, because in simple words, a piece of the Colombian economy was stripped away when oil prices fell. Therefore it wasn't an economy-wide effect what generated a slower growth, but something that was very much fenced inside oil. Given that oil is not employment-intensive, this didn't really flow into the rest of demand. Actually, employment figures improved during 2015. However, we believe there is no free ride. There is a second derivative, and it is -- once these companies do not pay taxes or royalties to the central government and the regional governments spending for us. In addition, there's been a shift in liquidity. We used to live in an environment where the emerging markets' liquidity basically was overriding what the Central Bank was doing in each one of these countries. At least those countries, as Colombia, which…

And from BTG Pactual, we have Mauricio Restrepo. Please go ahead, sir.

Hi, thanks for the call. Maybe a follow-up on the bank's strategy, I wanted to know how do you see your four banks growing, specifically Banco de Bogota, where growth [indiscernible] on the fourth quarter, and if this has to be with the lower Tier 1 ratio, and probably you are going to move the growth that you were seeing on that bank to [indiscernible] or what you can comment on that? Thank you.

Yes. Regarding the growth of our banks, I'll start from your second question. Actually, the reason why we are looking keenly on the solvency of Banco de Bogota [ph] is because we do not want to have to forgo any growth in loans. We are very positive on Colombia medium and long-term. Therefore, we believe that there is a substantial opportunity for loan growth in the country. Given that strong positioning of Banco de Bogota we're not willing to give away any growth from Banco de Bogota as we could potentially capture. Now, moving into the banks, growth this year will be a combination of segmentation, and also of balance sheet structure. And now I'm going broader than Grupo Aval. I'm going into the system as a whole. Liquidity will be key, for example, the relationship between -- or access to deposits and to funding will be a factor that might differentiate what some banks can do in the system, and what others cant due to pressure on their net interest margin. Given the strong starting base from where Grupo Aval can approach the market, we see some competitive advantage coming from this front. Now, moving into our banks, different segments have had different dynamics. We have seen the consumer lending dynamics to be stronger during the first quarter, and the beginning of the year, and the corporate loan growth slightly slower. But as the year progresses we expect to see things to shift. A shift will come on the consumer side from eventually deterioration in employment and other taxes of this kind. And therefore our willingness, and how strict our scoring models look. Therefore it will be supply-driven, what's going to happen on the consumer front if unemployment continues to show some slight deterioration. On the other hand, on the corporate side, there's a number of positive things happening. One, well there usually is –- infrastructure projects have begun to get to their financial closes, and demand for loans will come from that flank. But perhaps the most relevant event is we've already begun to see some of our customers which have benefited from a more competitive peso, demanding loans. At this point this has been much more on the working capital side, but at some point it should also be on the working capital -- on the CapEx side to build additional capacity. The latter hasn't really happened in a substantial way, but we have already started to see hints of that happening. Carlos…

Well, maybe adding to what Diego just mentioned, regarding market share in the first quarter in the retail side, we're increasing our market share basically in all the curves [ph], including mortgages. On the commercial side we're flat. We are maintaining our share. And on the deposit side, we're doing fine in current accounts and savings. And we're losing a little bit in term deposits though. That's [indiscernible] what's happened.

From JPMorgan, we have Catalina Araya. Please go ahead.

Thank you, Diego for taking my questions. You mentioned earlier that you expect some improvements in efficiency. So I just want to know if you can share your expectations in terms of cost growth, and also what strategies are you taking to improve or reduce expense growth. And then my second question related to the cost of risk, how do you see it evolving given some –- the duration in unemployment and the consumer segment. So how should we think about cost of risk?

Okay, cost growth has been relevant for us throughout the history of Grupo Aval. It's particularly relevant in these kind of cycles. What we are seeing as -- so try to summarize. Net interest margin expanding, like increasing cost of risk, pressure on the cost side or the per-unit cost item that we've had have 7% increasing the minimum wages. And we also have some increase in the costs that are dollar-denominated, such as technology. We have other factors also coming in, but given that we were going to have pressure on the cost of risk side and slower growth, it's absolutely key to try to reduce the number of units to save in some manner that are being spent. We see opportunities in this slower-growth environment to be much tighter. And cost growth, we've asked our banks. Even thought their budgets points to a given cost growth to revise those numbers, and adjust them down where possible. The other hand, we have the Central American operation, where a substantial or a huge potential for efficiency beyond exists. When you look into that operation, that operation has lower productivity standards from the sales side than what we have in Colombia, and is growing at a quite fast pace. Therefore it's a proper environment to try to restrict cost growth, and allow the bank to grow. We've been able to reduce the growth initially expected in our payrolls -- in the size of our headcounts rather than payrolls. And continue to look at in that front. Then, the dollar side has been more positive this year than what before. We've actually had some appreciation there. Even though we can't count on this for the full year nor base our performance of these kind of externalities. We see it as a better…

Yes, good morning. What we also have seen is that the Colombian -- thinking of the commercial banking sector, they have faced the brunt of the devaluation during 2015, and sectors such as, say, it depends on imports, such as textiles, car sales have already adjusted -- we've seen those companies have adjusted their business to maintain the profitability, and to -- we have not seen major deterioration in that sense. What we do expect to see in 2016 is that the benefits of devaluation maybe come to materialize. We've seen the textile sector companies substituting imports and starting to produce. So you know, we don't foresee any major deterioration of the loan portfolio in 2016, because we think our commercial banking clients have already faced the brunt of the devaluation and now they've begun to do benefit from expects [ph]. And we've also identified those sectors such as oil, such as coal, those commodities which have been in -- the prices have been going down. We have identified which may be the company that are more exposed, say, for example, in terms of oil we really needed a Colombian oil company. We do have an exposure to Pacific Rubiales that's already -- they're fully identified, and we've already begun to provision -- budget into the banks, the cost of that duration in terms of coal which is also you know, Colombia is a big exporter, but our exposure to coal is very low. We do have very large lines of credits to companies like Glencore, BHP Billiton, Dormont, they are not being utilized and we have them on watch, so that if any unforeseen optimizations come up, our senior management will be on top of that. So in essence, we have our loan portfolio pretty much identified, vis-à-vis, and -- but we don't expect any surprises during 2016.

And from Citibank, we have Nicolas Riva. Please go ahead, sir.

Yes. Thanks Diego for taking my question. So I wanted to ask you -- I saw that your loan loss provisions increased in the fourth quarter, despite the [indiscernible] ratio being flat quarter-on-quarter; I wanted to ask you if you included any amount of loan loss provisions for the construction company, Conalvias, in the fourth quarter? And also if your guidance of an increase to 10 to 15 basis points in the cost of risk this year includes any additional loan loss provisions for Conalvias this year? And then my second question is on Central America, if you can disclose the ROE that you made in Central America in 2015 and also the guidance for the ROE in Central America this year. Thanks.

Yes. Regarding Conalvias, we had a very small exposure to Conalvias. I will let Diego add to that, but it is included in our guidance, the Conalvias provisions. Some of that happened last year and a small piece this year. Diego, I know you want to add on the magnitude.

Yes. Our exposure to Conalvias to all other companies is about COP110,000 billion compared to total exposure of over COP700,000 billion. We have a provision of around 15% last year, and there is a budget to provision probably another up 30%-40%. On the positive side, we're very close to get in an agreement with the company and it's not -- we had initially expected to be a more serious situation. It's not going to be that. We need some arrangements to pay part of the loans with assets and to refinance what's remaining -- we see operationally the operation actually much better than we expected before. So on Conalvias, we've identified it with the provisions, but we don't expect any surprises there either.

Yes. The exposure was always only around $40 million. So it's unsubstantial compared to the size of our portfolio. Now, moving to your question on Central America; Central America ratios are quite strong. The return on assets on Central America for the quarter was up close to 2%, and from 12 months was something short of that, something around 1.8% to 1.9%. And I have the precise number here, but that's basically the range where we moved. Regarding return on equity, it's kind of tricky because in the past few years we haven't paid cash dividends out of Central America, but we've seen retaining a substantial amount -- or creating a substantial amount of equity. With that, our return in Central America should be somewhere in the mid-teens area -- short of the mid-teens, something around 14% approximately. If we have been taking out dividends, the return on equity in Central America would be in the high-teens area.

Yes, just to add to Diego, our ratio of -- our accounting ratio of equity swap is about 13%. So we still support 15%. So, as Diego is pointing out, rather than targeting the ROE, we should focus on the ROA of that, and this year we expect at least to maintain the ratios that we had for [technical difficulty].

[Indiscernible] we have Maria [indiscernible]. Please go ahead. Hi, Maria, you maybe on mute, so please unmute yourself.

I think we lost her.

From Scotiabank, we have Jason Mollin. Please go ahead, sir.

Hello, everyone. Thanks for the opportunity to ask the question. On your NIM, your NIM on loans was stable quarter-on-quarter. We saw -- yet we saw the net fixed income margin increase a 170 basis points at a 2.3% in the quarter from 0.6, and you showed that the yield, the average yield on fixed income investments increased a 190 basis points quarter-on-quarter. Can you talk about the breakdown of your fixed income investment portfolio, and what explained this increase in yields and if this is a new -- a more sustainable level or we should go back to where your -- the yields you were generating before?

Well, Jason, something that we've mentioned was that third quarter of last year is actually the outlier. The guidance that we had given with some negative bias on the overall interest rate environment was that full year net interest margin and fixed income would have been something between 1.5% and 2%. We ended up with index range for the full year, and that was a combination of quite bad quarter -- quite bad third quarter, and in fourth quarter we had some recovery, but that didn't last, but it wasn't really an extraordinary quarter. If we're to think what were to expect net interest margin and investments to be, this number should be within that range for this year, it should continue to be somewhere between 1.5% to 2%, and it will depend mainly on two things. One, the fixed income market has been hurt somehow by a higher long-term inflation expectation in Colombia. The Central Bank has lost at this point some credibility, being able to return into the 2% to 4% range seems unlikely at least in the near-future, meaning this year, and at least part of next year. Therefore, building that into fixed income is a negative. On the other side, on the other hand, what will also affect the performance of the Colombian fixed income market as will affect the performance of all fixed income markets and emerging markets will be what happens with the U.S. dollar interest rates. We have a more negative view several months ago. We actually thought that the NIM on investments could be in the low-ones, if the U.S. rates started to increase as was expected, let's say, three months ago. With a milder or a slower increase in interest rates in the U.S. going back into something in the lines of 1.5% to 2% should be expected.

From Wells Fargo, we have Mayara Sa Riddlebaugh. Please go ahead.

Hi. Thank you. You mentioned on the non-deposit to non-loan ratio, the negative impact from the Cuenta Unica Nacional. Can you give us an idea of the magnitude of the impact in your deposits, and which one of your banks was mostly affected?

Okay. I am sorry not to be able to give you a number, because I am not familiar with the amount that has moved into Cuenta Unica Nacional. However, what we are seeing is most of the impact of that shift in the structural market is already reflected in the liquidity structure over the past few months. We saw a very strong impact during September. It was a combination of the Cuenta Unica that what it does is a -- it forces government entities to take their money to certain accounts and not throughout their whole system. A rough order of magnitude just not to be -- too loose on my answer will be something short of -- something around $1.5 billion to $2 billion could be the order of magnitude of what was shifted due to the Cuenta Unica Nacional, but this is a very rough number. Anyway, what we have seen over the past months is more stability in liquidity. So it seems, even though it's early to know how things will end up evolving, but it seems that the impact was a one-time effect. It was like a step effect, and now we are moving in a different equilibrium. What actual bank such as ours is that we have the largest branch network in the country, so you are basically back to basics; when you're doing banking being able to secure retail deposits and being able to do that is reported by a branch network becomes relevant. A year ago, where liquidity appear to be infinite because of the amount of liquidity flowing into emerging markets, it became cheaper to have a guy sitting by a phone in a treasury desk and being able to raise huge amounts of money without having to go to the network. So we believe that part of the reason why we've been able to fair better than some of our peers on the deposit to loan side is because we had never given away the relevance of being able to secure retail deposits and use our branches to do that.

From [indiscernible], please go ahead.

Hello. Thank you. Maybe earlier you didn't hear me, but my question is regarding both the solvency ratio, what are your short-term plans for facing the situation and taking to account that some of the rating companies downgraded the company's ratings? Thank you.

Maria, I think I already addressed that question. We are in the process of reviewing what are we going to do and what the targets are. Therefore at this time I will not be able to answer that. What we mentioned was this will be something that we will deal with on our next call. In this process, we're also talking to the rating agencies probably because of the rating agency reports particularly to Moody's. And we're going through explaining the different complexities of our accounting to get the rating agencies to better understand that -- to give you a flavor of that. Part of what has affected our numbers has been that if under IFRS some accounts that were not reported as intangibles are now reported as intangibles. A couple of examples of that are pretty substantial, because they had up around $2.8 billion as a whole -- COP2 billion, I'm sorry; as a whole, close to a billion dollars, is -- for road constructions, and gas pipelines constructions that used to be accounted for as deferred assets in the past or ordinary assets are now moved into intangibles. An additional complexity on that is that happens at Corficolombiana subsidiary level, and we have a very large minority interest in those intangibles. Our minority interests in those intangibles could be around 80% value of those intangibles. This is just an example of the kind of discussions that we're having with the rating agencies to give them a flavor to better understand our numbers as compared to those of other banks. On the other hand, we do recognize this as something that we not only have to put our eye on, but also act up on, and that's why I mentioned before, we're carefully studying what we should do there. And once we make a decision, we will be able to convey it to the rating agencies and the market as a whole, and put ourselves and trying to deliver on whatever we plan to do. Sorry to give you a very long answer to a question I had already answered before, but I think it's a relevant point.

This concludes the question-and-answer session for today. I will turn the call back over to Mr. Diego Solano for closing remarks.

Well, thank you very much for attending our call, and looking forward to see you on our next call.