Larc2013- Spotlight on Colombia

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Larc2013- Spotlight on Colombia

  1. 1. Information Security Identification: Confidential COLOMBIA Looking to 2013 and Beyond Presented by Dino Sani July 8, 2013
  2. 2. Information Security Identification: Confidential Contents 1. The Economy of Colombia 2. Colombian Trade & International Relations 3. The Financial & Banking Sector 4. Economic Forecast 2
  3. 3. 1. The Economy of Colombia
  4. 4. Information Security Identification: Confidential Third largest population in Latin America 4 0 5 10 15 20 25 30 35 40 45 50 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 Millions Population of Colombia Over Time 0 50 100 150 200 250 Millions Population of LatAm Countries
  5. 5. Information Security Identification: Confidential -6 -4 -2 0 2 4 6 8 0 50 100 150 200 250 300 350 400 GDPGrowth(%) GDP(BillionsUSD) GDP & GDP Growth by Year GDP (Billion USD) GDP Growth (%) 5 GDP • 2004 to 2008: years of rapid GDP expansion = 5.4% Avg. • After slowing to 4% in 2012 the GDP growth is expected to pick up gradually to 4.3% in 2013. • Modest domestic production base + strong currency = high import demand. The weaker performance in the external sector will remain a substantial drag on overall GDP growth Third largest country ; Fourth largest economy in Latin America
  6. 6. Information Security Identification: Confidential Foreign direct investment growing in energy & mining 17.8% growth in 2012 to $15.7B • Focus on hydrocarbons, infrastructure, and mining • In comparison: > FDI Peru: $9 billion > FDI Chile: $23 billion 6 (5.00) - 5.00 10.00 15.00 20.00 25.00 30.00 2005 2006 2007 2008 2009 2010 2011 2012 USD(Billions) Foreign Investment Direct Portfolio $15.7B 2012 annualized FDI
  7. 7. Information Security Identification: Confidential Single digit inflation since 1999 7 • Extremely low inflation, been dropping since the early 90’s • Lowest in the region, currently hovering at around 2% • Prudent macroeconomic management will keep annual inflation within target range of 2-4% in 2013 -17. 0 5 10 15 20 25 30 35 InflationRate Inflation Rate by Year
  8. 8. Information Security Identification: Confidential High Unemployment relative to other major economies 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% Unemployment in Colombia Over Time 8
  9. 9. Information Security Identification: Confidential Downside risks to economic activity: • Sharp decline in Trade • Failure to deliver on fiscal spending on infrastructure • Long-running conflicts with guerrillas and crime networks • Slow progress in social policies. Poverty and inequality remain high • Weak job creation 9
  10. 10. 2. Trade and International Relations
  11. 11. Information Security Identification: Confidential Pragmatic international economic integration • Alianza del Pacifico  International economic integrations and trade  Colombia, Peru, Chile, and Mexico • Expanding links with Asia  Trade deals with South Korea and Japan • Most stable and pro-business in the area  Based on strong royalties from oil industry 11
  12. 12. Information Security Identification: Confidential United States-Colombia Trade Promotion Agreement Bilateral trade agreement, May 2012, to promote mutual economic benefit & growth • No tariffs on 80% of US consumer and industrial goods exports to Colombia • After 10 years: all tariffs removed • US merchandise exports to Colombia totaled $14.3 billion in 2011 12
  13. 13. Information Security Identification: Confidential The U.S. is Colombia’s main trading partner US 38% Spain 5%China 5% Netherlands 4% Other 48% Main Destinations of Exports (% Share) US 31% China 12% Mexico 11% Brazil 5% Other 41% Main Origins of Imports (% Share) Negative trade balance as of April 2013: -$0.22 Billion USD
  14. 14. Information Security Identification: Confidential Petroleum is the main export Intermediate goods 40.5% Capital goods 32.0% Consumer goods 20.0% Other 7.5% Principal Imports (% Share) in 2012 Petroleum & petroleum products 52.4% Coal 12.9% Coffee 3.2% Nickel 1.5% Other 30.0% Principal Exports (% Share in 2012)
  15. 15. Information Security Identification: Confidential Payment Flow Period: January 2011 - May 2013 (Source: SWIFT) United States 85% Germany 10% Panama 2% Spain 1% United Kingdom 1% Canada 0.5% All other 0.7% Other 3%
  16. 16. The Financial and Banking Sectors
  17. 17. Information Security Identification: Confidential Strong and growing financial market 17 4th largest financial market in Latin America by market capitalization $250 billion Financial assets grew at a 14% CAGR in last ten years 0.00 50.00 100.00 150.00 200.00 250.00 300.00 350.00 400.00 450.00 500.00 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 USD(Billions) Total Financial Assets and AUM Credit Institutions Assets in trust Pension Funds Official Institutions Insurance Others 2012 annualized FDI
  18. 18. Information Security Identification: Confidential Sound Financial System - Capital 18
  19. 19. Information Security Identification: Confidential Banking sector is profitable and well capitalized  High capital base  Growing profits despite tight monetary policy  Assets rose by 12% in 2012  Despite rapid loan growth, NPLs remain a manageable 2-3%  Banks maintain solid levels of liquidity, primarily funding themselves with local deposits 19 0 2 4 6 8 10 12 14 16 18 20 % ROA Risk Weighted Capital Banking Profits and Capital
  20. 20. Information Security Identification: Confidential Sound Financial System – ROA/ROE 20
  21. 21. Information Security Identification: Confidential Risk Assessment 21 Sovereign Currency Banking Sector Political Economic Structure •Continued strengthening of ability to service debt •Good access to external financing •Public/GDP ratio below 40% of GDP (Q1 June) •Continued exchange rate volatility •Growing reserves •Strong FDI inflows •NPL risen slightly •Well managed •Well capitalized •Profitable • Internal violence remains • Strong institutions • Possible peace agreement coming • Commodity exports generate increasing share of foreign earnings • High unemployment • Fiscal rigidities • Has never defaulted
  22. 22. Data sources: •Economist intelligence, •Bolsa de Valores de Colombia, •Bloomberg, •The World Bank, •Moody’s Capital Markets Research Group, •International Trade Administration, •Swift, •BNYMellon
  23. 23. This presentation is for private circulation and for general information and reference purposes only and is not intended to provide legal, tax, accounting, investment, financial or other professional advice on any matter. Not all products and services are offered at all locations, and all are subject to final contractual agreements. BNY Mellon does not undertake to update or amend this information and expressly disclaims any liability for any loss arising from this information or data.

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