Welcome to Grupo Aval Second Quarter 2020 Consolidated Results Conference Call. My name is Hilda and I will be your operator for today’s call. Grupo Aval Acciones y Valores S.A., Grupo Aval, is an issuer of securities in Colombia and in the United States. As such, it is subject to compliance with securities regulation in Colombia and applicable U.S. securities regulation. Grupo Aval is also subject to the inspection and supervision of the Superintendency of Finance as holding company of the Aval financial conglomerate. The consolidated financial information included in this document is presented in accordance with IFRS as currently issued by the IASB. Details of the calculations of non-GAAP measures such as ROAA and ROAE, among others, are explained when required in this report. This report includes forward-looking statements. In some cases, you can identify these forward-looking statements by words such as may, will, should, expects, plans, anticipates, believes, estimates, predicts, potential, or continue, or the negative of these and other comparable words. Actual results and events may differ materially from those anticipated herein as a consequence of changes in general, economic and business conditions, changes in interest and currency rates and other risks described from time to time in our filings with the Registro Nacional de Valores y Emisores and the SEC. Recipients of this document are responsible for the assessment and use of the information provided herein. Matters described in this presentation and our knowledge of them may change extensively and materially over time, but we expressly disclaim any obligation to review, update or correct the information provided in this report, including any forward-looking statements, and do not intend to provide any update for such material developments prior to our next earnings report. The content of this document and the figures included herein are intended to provide…

Thank you, Luis Carlos. I will now move to our consolidated results of Grupo Aval under IFRS. Grupo Aval’s second quarter results reflect the impacts of the first full quarter of lockdowns under loan growth, fee income, costs of risk, other income, and other income performance. However, as expected our business line and regional diversification reduced the magnitude of the pandemic negative effects on our Colombian Banking business. Even though the impact of the crisis has had an economy wide effect, the recovery of our pension funds and merchant banking business has arrived earlier, contributing around half of our approval net income in the quarter. Central America as a region is expected to experience a milder macro cycle with a lower impact on expected credit loss calculations. In addition, the reduction in exposure to high risk products such as credit cards, and personal loans, further reduced its cost of risk during the quarter. Starting on Page 8, asset growth was boosted by the acquisition of MFG, which added Ps. 18.6 trillion of assets for balance sheets representing 5.8% and 7.0% of our quarterly and 12-month growth respectively. Excluding the acquisition of MSG and FX movements in our Central American operation, total assets grew 13% over the 12 months and 0.5% during the quarter. Colombian assets grew 14.6% year-on-year and decreased 0.8% during the quarter. Central America recorded 30.3% and 22.7% growth in dollar terms over the same periods with MSG contributing 20.4% and 19.2% respectively. A 12-month 17.2% end of period depreciation and a 7.4% early appreciation take annual and quarterly growth of Central America to 52.7% and 13.7% when translated into Colombian pesos. As a result, the [weight] of this region increased from 33% to 36% of our book. Moving to Page 9, loans grew 4.3% over the quarter,…

Thank you. [Operator Instructions] Our first question comes from Gabriel Nóbrega from Citi Group. Mr. Nóbrega, go ahead with your question. Gabriel Nóbrega: Hi, sorry. I was on mute. Thank you for the opportunity to ask questions. So, my question actually is on the expected provisions going forward, we understand that around 40% of the total provisions you undid during this quarter were for COVID, but as the economy starts to really feel the effects from the pandemic, do you believe that you should probably increase provisions again? And then, another question which I would like to maybe understand further is that we saw that the NPL ratio for your retail portfolio they actually decreased and here I would like to just understand if the decrease was the effect from your clients adhering to the [indiscernible] programs and also to the incorporation of MFG? Or are you really starting to see some improvements here? Thank you.

Let me take that one. I'm going to start with your last question first, it's an easy one. NPLs are distorted by the reliefs programs. As we mentioned, even though a relevant portion of those reliefs have already expired, we still have around 20% of reliefs ongoing. And in addition, some of those that have expired recently expired, that's the reason why those numbers are looking still absent of an impact of the pandemic and actually pointing in the opposite direction. So that's the reason why we said that we do expect to see those numbers to pull up when the – although the reliefs lapse, and also we started seeing behavior of customers that might be affected by long periods of not paying, regardless their capacity actually to pay. So, there might be an adjustment period where we need to look into that, so NPLs should be expected to go up. Then regarding provisions, moving forward, we could be the same in [part advance] in what's going on with the impact on NPLs of the pandemic. We're basically recognizing what we can at this point understand that should be provisioned. However, as mentioned before, we still have a lot of distortion going on there and it would be presumptuous from my side to try to estimate what is going to happen with the economy, but the best knowledge from analysts is that things should start to get better at some point at the beginning of next year. The second half of this year might be better than what we saw for the second quarter. It's just plain math if you look at the numbers that came out from analysts. They're actually pointing to – to get those numbers, they're pointing into some better quarters during the remainder of this year. However, as we need to see the reliefs finalizing and behavior going back to normal, we can't, at this point, tell you that the provisions will be coming down in the immediate quarters. We expect to see – a few quarters still at high levels, but as the economy recovers, start to see those numbers getting better into next year. Luis Carlos Sarmiento Gutiérrez: In any case, we expect this year's provisions to be about – our cost of risk to be about 1.5 times the cost of risk of last year, so we should end up the year with somewhere around 3% of cost of risk is what we're looking at right now.

Thank you. Our next question comes from [indiscernible] from Scotiabank.

Hi, good morning. [indiscernible]. Thank you for taking my questions. So, my question would be regarding the rescheduled loans [Technical Difficulty] payment behavior that you have been – that you have observed in the – between the clients that joined those programs and the clients that did not join it? And also, can you talk a little bit about the type of clients or the [other] clients, the characteristics of the clients that joined the program and compare that to the rest of the clients? Thank you very much.

Well, regarding the way that the clients are behaving, we basically are having around one third of our customers asking for a new relief. The remainder is either current or in early stages of a delinquency, yet very difficult to understand if those numbers will become actual delinquency because there's an element of payment [indiscernible] that has changed and expectations of people that the government is going to launch additional benefits. So, I think we will be able to give you a better answer than this next quarter, but at this point, we see some people starting to pay normally again. Regarding – if there's a difference between those that asked for reliefs and others, I would say, we can’t really answer that question because it's a – it's very segment and product driven. We had some automatic release than we had in Central America release that were mandatory by law, so we ended up releasing both those that need it and those that didn't need it. And on the corporate level, it's been much more of a one-by-one basis and that's the reason why we've been supporting those that we believe will be successful at the end of the cycle, but those that do not have a chance have already gone into work out or restructurings of some sort.

Thank you. Our next question comes from Sebastián Gallego from CrediCorp Capital. Sebastián Gallego: Hi, good morning, everyone. Thank you for the presentation. I have three questions. The first one is going back to your presentation on Slide 11 where you show the stages. It's interesting to see that the Stage 3 hasn't really changed and actually decreased over the past year. Given the present situation that we're living, particularly in Colombia, as you mentioned in the – with the contraction – expected contraction, how do you expect those stages, particularly the 2 and 3 to evolve going forward? Second question would be related between the differences between Colombia and Central America. You mentioned that you probably expect Central America to behave better, and the question will be beyond the macro-economic assumptions, could you elaborate more on why the Central American operation could have lower cost of risk going forward? And the third question will be probably on banking fees. How fast should we expect banking fees to recover? It would be a gradual or should we expect a faster recovery given the reopen of the economy, particularly in Colombia? Thank you.

Okay. Regarding Slide 11, perhaps I didn't emphasize it enough, but for of the acquisition agreement or the revised agreement on MFG included that they took care of our product, I would say a large amount of provisioning of loans before they handed the bank to us. So that gave us an advantage particularly on Stage 3 loans that we ended up booking at fair value that were already substantially provision. So, we had somehow a diluted effect on Stage 3 performance. And also, you know, it was part of the explanation of why we had a lower cost of risk in Central America during this quarter. That is the main explanation of why Stage 3, particularly at this point in time, came out with a number that seems somehow absent of what's going on. Then another thing that we mentioned during the call is we've been provisioning more on the expectation than actually on loans going wrong. So that's the reason why we see loans or Stage 2 growing rather than Stage 3 because loans that go to Stage 3 are not yet actually delinquent, but rather loans where we believe there's been a substantial increase in risk so that's the reason why most of it is concentrated. And perhaps in absence of the MFG acquisition, the number for Stage 3 could have been higher at this point. Moving forward, what you should expect to see is there should be part of those Stage 2 loans that will return to Stage 1 and others will move into Stage 3 and you can see some pick up of that when we move from expected losses to actual losses. However, at that point, depending on our provisioning based on expected losses, you might not see a picking in provision. So picking…

Thank you. Our next question comes from Yuri Fernandes from JPMorgan.

Hi, good morning, and thank you, gentlemen, for the presentation. I had a first question regarding cost. They were a little bit high this quarter, right, going [above 9%]. And I understand there are FX here, so it's tough. But when we look to some peers, they had nominal decreases and we may argue that maybe they are figures, they are not sustainable. But my point is what should we expect for the cost for Grupo Aval? Like should we see this growing like still above inflation? Or given the more challenging macro, the bank may be more focused in delivering better figure on cost. So that's the first one. And my second question is regarding asset quality. It’s basically regarding the covers on 30 days seems pretty low, like 113%, especially because, as you said, the 30 days do – they had been helped by the credit release programs, right? And so, the first question is, is there any figure you – if you’re comfortable with coverage like [indiscernible] coverage below 100%, something like that. And secondly is when should we see the 30 [indiscernible] loans getting worse? Because, as you said, mainly [indiscernible] they just ended now so this would be a very quick thing, right? This could be a number that we could see already in the third Q or perhaps in the first Q. So basically, how to think about COVID, right? Because, again, when you compare to peers, it seems very low? Thank you.

Well, let me take the three questions. I will respectfully disagree with you on the cost side and just let me recap some of the things that I mentioned before. Our expenses during this quarter are affected by MFG and FX fluctuations. If you take those out, we actually contracted our costs. We did this without reversing previous quarter expenses for – so for comparison sake, you have to be very careful on taking, let’s say, first half costs to get a better view on that. As a result, we were able to bring down our cost to assets from 3.7 to 3.2 if you compare to peers. So even though – as we said, we have a long way to go in our cost contention and reduction efforts, we've done a lot up to this point. We need to continue because from the [cost to income] side, if income has gone down, we need to do something to try to compensate that and that's [pure] for us. So respectfully I disagree with that, but what I can tell you is we'll continue to work on that. Then on the asset side, on the quality side, you have a combination of two questions that are linked together. One is when will loans [indiscernible] to try to or to expect to see PLs coming up. At this point, we're basically provisioning based on expectations rather than reality. We see reality unfolding throughout several quarters from now, so the remainder of this year and perhaps into next year, depending on some of the reliefs when they end and all these problems. So you might see PLs going up for a few quarters even beyond this year. In that sense, we will continue provisioning in time. You should see our coverage going up and then readjusting down as loans actually go sour. Something else to bear in mind, as I mentioned, something that we might be doing throughout this quarter and it is writing out the Ruta del Sol loan that actually distorts our numbers when you try to compare those to some of our peers. However, as mentioned by Luis Carlos, we're basically increasing 50% [indiscernible] which we're provisioning. We're doing that much faster than how loans are deteriorating, so that's the reason why you started to see some build-up of that coverage and that should continue for some time.

Thank you. Our next question comes from Andres Soto from Santander.

Hi, good morning. Luis Carlos and Diego, thank you for the presentation. My first question is regarding margins. We saw a NIM on loans contraction, almost 30 basis points quarter-over-quarter. I understand there are several moving parts here including the consolidation of multi-bank and also the change in the loan mix. I would like to get your views on where should we expect NIM going forward given your expectations for policy rate? And my second question is regarding the second wave of reliefs that the Colombian government is implementing and that you guys are allowed to do till the end of this year. I want to understand what is the type of reprogramming that you are going to do there is going to be a significant expansion of the loans? Or are you planning to keep your current portfolio as it is just to see if we could expect any type of impact in terms of write-offs or why not write it with so called generous reprogramming? Thank you.

Okay, Andres. Very good questions. Your question on net interest margin, yes, it's actually one of the challenges that we have when we look at our numbers, and you mentioned exactly what is the driver there and it is a monetary policy. Basically, the way it works is as the central bank lowers its rate, something called the IVR that is something similar to – or the rate at which the bank gives out resources to the market and becoming the main driver of floating loan pricing. There is a re-pricing lag between central bank lowering that and actually that coming into our numbers and that's the reason why we believe that there's still some additional space for contraction, particularly our floating rate corporate loans. We expect to see a contraction in net interest margin during the second quarter compared to – the second half compared to the first half. That should be taking us to somewhere around 5% on average for the year. So, there's still space for some contraction there given that we are north of that value at this point. It's going to be a combination of having had through the first half negative impact of NIM on investments that should be quite neutral during the second half. There might be some upside there, but we're taking it as neutral and also a further contraction, particularly in those loans that I mentioned before. Then regarding the second wave of reliefs, we're still very early in the process. These have been out there for 20 days, so it's more theory at this point rather than practice. But to try to make it – to put this in simple words, what the [path] Programa de Adura deudre means is basically giving people more time at the same interest rate so that they end up with a lower amortization weight on 12 months, and that, in fact, if properly managed should improve the chances of people being able to pay their loans. So, as I told you, it's still theory because we are 20 days into that program. We will update you on how that looks in our next quarterly call, but it might end up being positive. As I said, bottom line, it is same interest rate longer amortization period.

Thank you. Our next question comes from Carlos Gomez from HSBC.

Hello. Good morning, Luis Carlos and Diego. I have a question on capital. You mentioned earlier in the presentation that with Basel III, the capital for Occidente, the Popular and [indiscernible] will increase. You did not mention Bogota, so I suspect that means that capital may not increase or may decline. What is your expectation as to where the CET1 of Banco de Bogota will be by the end of the year and after implementation of Basel III? Also the 8.6% that you report this quarter, just to confirm, that already includes the impact of the acquisition in Panama, is that correct? Thank you. Luis Carlos Sarmiento Gutiérrez: So, regarding your second question, it does. Regarding your first one, the reason that we hadn't been able to estimate exactly how Banco de Bogota would come out after Basel III implementation was because we were still under – we were back then still under negotiations with the – with a Superintendent of Finance. We have concluded those, and so, now we can, on the one hand sustain what we had said before, which is that the three smaller banks Occidente, Villas and Popular, will come out under Basel III 300 basis points to 400 basis points better in their capital ratios. Banco de Bogota, as we now know will come out a little bit better than it is now. The CET1 obviously, this year, we’re all – unless we adopt early Basel III, but just supposing that we won't, Banco de Bogota’s ratios at the end of this year will be similar to what they are today under Colombian solvency calculations and when it switches over to Basel III, it should in the first instance look a little bit better than it is right now. I don't want to say a number, but somewhere around 100 basis points better, but then we – as it moves forward, then it has various considerations that I think for now, we will take our time to estimate and calculate them. It will be – in any case, Basel III will be beneficial now as we know it for the four of our banks. Perhaps to give you a reason why I mentioned three of the banks is that the impact of [indiscernible] mild compared to the positive impact that we see on the other banks. The other banks are more in the order of 200 basis points to 300 basis points positive impact, so that's the reason I only mentioned those because it was – saying it was a few percentage points of improvement.

Thank you. Our next question comes from Nicolas Riva from Bank of America.

Yes. Thanks very much for the opportunity to ask questions. And thanks for the update on the Ruta del Sol case in the initial remarks, Luis Carlos. So, I wanted to make sure I understood this correctly. So, I understand that the Superintendence of Industry and Commerce has recommended to drop in the charges based on conflict of interest, so that's good news. And I also understand that the Superintendent has recommended in a way to find guilty the former CEO of Corficolombiana of knowing about the [bribe] in order to get the concession of Ruta del Sol. Now, you mentioned that the maximum fine if charged, you know, we were to hold would represent an impact I understood of $18 million for the bottom line of Grupo Aval, which of course, looks quite low. Now, this is basically given that Corficolombiana would be then responsible for paying that given that we are talking about this former CEO of Corficolombiana, that's my question. Thank you. Luis Carlos Sarmiento Gutiérrez: All right. So, yes, everything you said is true. There were two charges in the Superintendence of Industry and Commerce investigation. One of them was for supposedly abusive conflict of interest and in that charge, Grupo Aval, myself, Diego Solano and the Corficolombiana and Corficolombiana’s officials were all named. But yes, as you said, fortunately the recommendation is to dismiss those charges. And secondly, there is another charge, which was a charge that basically said that Corficolombiana and Episol, which are both our companies knew about – did not participate by knew, but knew about the bribe is going on and the way that they got to that was through the assumption that the former CEO of Corficolombiana knew about the bribes and that in that respect Corficolombiana and Episol had to know. We're obviously responding [indiscernible] to those – to that – the stretch of those assumptions. But so what I’ll mention about the fines was that there were different fines that are imposed based on the Superintendence of Industry and Commerce procedures. There were personal fines and among those, they have recommended to find the former CEO of Corficolombiana. Those fines cannot – it's illegal for personal fines to be paid by the corporations. It cannot be done here. They’ve got to be paid by the individuals themselves. So in my assumption of how much of the fines could trickle up into Aval’s financial statements, I am assuming that both Corficolombiana and Episol will pay the maximum fines that could be imposed on them. And then because we pick up in Grupo Aval 38% of the financial repercussions of Corficolombiana and again through Corficolombiana Episols, then my estimation of $18 million, as you said, and as I said, it comes from 38% of the maximum fines that could be imposed and paid by Corficolombiana and Episol. I hope that makes it more clear.

Thank you. Our next question comes from [indiscernible] from CrediCorp Capital.

Hi, thank you very much for allowing the question. I wanted to ask regarding the auto questions that were increasing automobile loans, we had seen an increase both quarter-on-quarter and during the year on that portfolio. Could you give us a bit more detail? Luis Carlos Sarmiento Gutiérrez: I'm sorry, I didn't understand your question. Your increasing what?

Automotive loans. Luis Carlos Sarmiento Gutiérrez: Automotive loans. Okay, got it. Okay. And the answer for that is part of what we've started doing in as a strategies, we've gone towards a guaranteed products and we've gone away from unsecured products that was one of the first and early responses that we gave. And within that category we also include payroll lending, mortgages, auto loans. And also – we also used our digital auto applications that gave us a hand in being able to get that done. So a part of the strategy has been we do want to continue growing, but we want to grow with the right customers with the right products and our loans to the right segments fits into that category.

Thank you. Our next question comes from Julián Ausique from Davivienda Corredores. Julián Ausique: Hi, Luis Carlos, hi Diego, thanks for having my questions. I have two questions. The first is [indiscernible] the expectation of cash flow and leverage metrics due to the holding will have some reduction of dividends. And the other one is that you can talk us about the data, the data of the illusion of the [indiscernible] in the – during the pandemic, in all the banks of the Aval? Thank you.

Well, your question on cash flow is a very good one. The question on cash flow is something that we repeat to the rating agencies all the time and it is our dollar denominated bonds are actually matched with dollar denominated assets that are interest yielding assets that are held in Grupo Aval limited the vehicle that issues those. So, our first bond was issued in 2012, and up to date, all principal payments that we've made, plus the principal payment that comes through in [2022], September 22, we already have provided for, not only from the principal standpoint, but also from the interest payment side because we run a positive carry, and a – that – borrowing with bonds and lending with bonds. So, I don't want to take it to extremes, but we are not a dependent to be able to pay our $1 denominated bonds, then and under pesos side, we have a very substantial coverage and room to be able to service our peso nominated bonds with a minimum amount of dividends. In that sense, I can't comment on dividends because dividends for this year were already cleared before the pandemic really started at the very beginning. So cash flow for this year is really covered not only from what we pay, but also from the size – we receive, but obviously next year our dividend policy will be reviewed dependent on how we end up a div here. Then you had a question on the digital side, we actually have seen a very substantial increase in the activity of our digital channels, not only for issuing a new products, but also for other transactions and being in touch with our customers. Part of that is related to the kind of things that we've done in the past, but also part of the work is being done by the pandemic in it on its own. So, part of the [other queries] we can’t really run. We continue working on that and the transformation, as we have mentioned before is in the very beginning. We see products in the market that are very niche products for very specific segments doing some transactions. The mass side of those customers is starting to adopt it. We're also focusing on the higher value customers as well doing their digital transactions. And that's part of our strategy.

Thank you. Our next question comes from Alonso Aramburu from BTG Pactual.

Hi, good morning and thank you for the call. I wanted to ask you about the non-financial sector. And I appreciate the table on the presentation with the different income from the different sectors. And obviously, as you mentioned – both the infrastructure and the energy and gas are the ones that suffered in Q2. You did mention, you know, the infrastructure side things are recovering. I'm just wondering to what extent is that back to 100%. And also in the [energy and gas], what are you seeing in terms of our recovering income in that sector? Should we expect 3Q to show normalized numbers or is that going to take a little bit longer? Luis Carlos Sarmiento Gutiérrez: Let me take that question. As far as the toll road infrastructure, I'm happy to say that July we were at 97% of budget. So that means that we have recovered levels of construction and infrastructure. In energy and gas, again Promigas came in over its budget in July. So that gives us a little bit of – a lot of refraction and a little bit of relief as to what to expect in the third and fourth quarters from infrastructure. In fact, Corficolombiana, which obviously is – its numbers are very dependent on those numbers on infrastructure and especially on toll roads and energy and gas, during July, met its budget. So again, going forward, we expect that the third quarter will be obviously banning any new lockdowns or stuff like that, we should back to normal.

Thank you. Ladies and gentlemen, I will now turn the call over to Mr. Sarmiento for closing remarks. Luis Carlos Sarmiento Gutiérrez: All right, thank you all. Thank you for the incredible very, very good questions up today for the participation of everybody. And we hope to keep delivering results, we hope that the pandemic is, or at least the quarantines and the lockdowns are almost over with, and again, we hope that that will result in our coming back to more normal going results. Other than that, just to thank you again for your participation and we hope to see you all next time.

This concludes today's conference. We thank you for participating. You may now disconnect.