Bancolombia Drops as Goldman Cuts Price Target: Bogota Mover

Bancolombia SA (BCOLO), 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 dropped 1.7 percent to 24,780 pesos at 3:42 p.m. in Santiago and earlier declined 4 percent to 24,220, the lowest intraday price since July 2010. Bancolombia has retreated 10 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