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Bancolombia Drops as Goldman Cuts Price Target: Bogota Mover

Aug. 8 (Bloomberg) -- Bancolombia SA, the country’s biggest lender, dropped to a two-year low after Goldman Sachs Group Inc. said it sees a “rough road ahead” for the company and cut its price target.

The shares fell 1.3 percent to 24,900 pesos at the close of trading in Bogota, the lowest level since July 2010. Bancolombia has retreated 9.5 percent since reporting a surprise decrease in second-quarter profit on Aug. 1.

Goldman Sachs cut the target price on Bancolombia’s American Depositary Receipts by 9.6 percent to $62.10 as analysts led by Carlos G. Macedo cited lower loan growth estimates and an increase in provisions for bad loans.

“We continue to see a rough road ahead for Bancolombia,” the analysts wrote, with “little risk-adjusted upside, particularly if the near-term outlook remains as difficult” as indicated by the second-quarter results.

Net income fell 8 percent in the three months through June to 354.5 billion pesos ($198.4 million), surprising analysts whose average projection was for an adjusted profit of 414 billion pesos, according to estimates compiled by Bloomberg. The bank forecasts loan growth at the lower end of a 10 percent to 15 percent range this year, officials said on an Aug. 2 conference call.

Grupo Aval Acciones y Valores SA, the banking group controlled by billionaire Luis Carlos Sarmiento Angulo, overtook Bancolombia’s market value on Aug. 3 for the first time since March to become the country’s second-biggest company after Ecopetrol SA. Bancolombia’s capitalization fell below Aval’s again today.

To contact the reporter on this story: Christine Jenkins in Bogota at cjenkins28@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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