...Declining Profitability: A declining interest rate environment in Colombia, lackluster loan growth and weaker asset quality due to a deceleration in economic growth drove Bancolombia's operating profit to risk weighted assets (RWA) ratio to 1.9% in 1Q18, its lowest level reported since 2015. Fitch Ratings believes the bank's performance may continue to reflect the challenges associated with improving its asset quality as it takes a more conservative approach to growth, particularly in large corporates and retail. Asset Quality Deterioration: Consolidated asset quality ratios deteriorated significantly in 2017 and 1Q18, reflecting the impact of a weaker economy on the wholesale and retail portfolios. The ratio of past-due loans greater than 90 days (PDLs) increased to 3.08% at 1Q18 from 2.22% at 1Q17. The bank's asset quality ratios now compare unfavorably to those of other large Colombian banks and similarly rated regional peers but remain in line with its current rating level. Lower Capitalization:...
