Bancolombia Slumps as Government Peso Bonds Plunge: Bogota Mover

Bancolombia SA fell to an 11-month low on concern its investment in government peso debt will hurt earnings after the bonds posted the worst quarterly decline in five years.

The Medellin-based lender’s shares slid 1.7 percent to 25,000 pesos at 1:52 p.m. in Bogota, the lowest on a closing basis since August 2012. The Colcap index declined 1.4 percent.

Yields on 10-year government peso bonds jumped 2.01 percentage points in the second quarter, the biggest increase since 2008. Debt securities represented 13 percent of assets at Colombia’s biggest bank at the end of the first quarter, according to the lender’s report in May.

“People are trying to anticipate earnings,” Katherine Ortiz, an analyst at Corredores Asociados brokerage in Bogota, said in a telephone interview. “June was a very difficult month for fixed income, and there’s concern about how that will show up.”

Bancolombia said in an e-mailed response to questions that the selloff in government debt hurt earnings in the second quarter.

“Apart from that, the bank is doing very well and growth, loan quality, capital levels and funding costs are going according to our business plan,” the bank said.

Bancolombia said in the May regulatory filing that income from investments in the first quarter doubled from a year earlier to 348 billion pesos ($181 million), buoyed by appreciation in Colombian government securities. Those gains helped the bank post an 11 percent increase in net income to 492.7 billion pesos.

Before it's here, it's on the Bloomberg Terminal.