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Corficol 2H13 Results: Healthy results; apparently 2014 will have plenty of catalysts

Semi-Annual Results 2H13: Corficolombiana - HOLD
Price: COP 36,440; Target Price: COP 41,660

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March 28, 2014 ( newswire) Corficolombiana recorded net income for the year of COP 558 bn, equivalent to a 41% y/y growth. Net income came 12% above our expectation due to non-recurring items (mostly gains on valuation of equity investments of COP 154 bn) that offset a negative surprise on IB fees and trading income.

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The equity investments portfolio kept recording healthy growth rates in dividends, posting a 4% y/y increase. Even though this increase does not look impressive, recall that in 2012 Corficolombiana recorded non-recurring dividends for COP 178 bn, declining 19% y/y in 2013. Thus, the growth in dividends during 2013 is mostly explained by recurring factors, mainly the consolidation of the exposure to Promigas in 2012 and the earnings growth in some infrastructure companies, such as Epiandes and Episol, which was included in our earnings model.

In terms of the financial business (trading, investment banking and private banking), although 2H13 trading and IB results surprised on the downside, Corficolombiana managed to accomplish its strategy of covering opex with these sources.

As most of the surprise came from non-recurring items, we maintain our T.P. and HOLD rating on Corficolombiana. Recall that cash dividend yield decreased in the approved distribution which could put some downside pressures on the shares. However, the possibility of some value catalysts materializing this year should neutralize the effects of such downside pressures.

For charts, tables and the full report, see the attached file.

Credicorp Capital

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