Banco Davivienda SA, Colombia’s third-biggest bank, may surge 14 percent this year as loans grow three times as fast as the economy and costs remain lower after efficiency gains in 2012, according to brokerage Correval SA.
Davivienda is set to rise to a year-end price target of 27,640 pesos, according to Correval, which rates the shares buy. Correval’s previous price target was 25,560, set in October 2011. The stock gained 0.2 percent today to 24,200 at 1:07 p.m. in Bogota.
The lender has a “strong position in the Colombian banking industry,” which has room to grow, Correval analysts Daniel Velandia and Juan C. Dominguez wrote in an e-mailed report.
Net loans at the Bogota-based bank will rise 15 percent to 33 trillion pesos ($18.5 billion) this year, according to Correval.
The bank’s efficiency ratio, defined as operating expenses divided by operating revenue, improved to 49 percent in 2012 from 53 percent in 2011 and 58 percent in 2010, the analysts estimated. It will stay at 49 this year and next, they wrote.
Last year, Davivienda completed the $801 million acquisition of HSBC Holdings Plc assets in Costa Rica, El Salvador and Honduras.
While profitability from the Central American assets will remain low “at least in the first years,” it will improve “in the long term” because of improving efficiency and increasing market share, according to the report.