Grupo Cibest (CIB) Q4 2025 earnings review
Banistmo Divestment Clouds the View, But Core Provisions are Spiking
Grupo Cibest reported a massive COP 1.85 trillion net loss in Q4, but this is an accounting illusion driven entirely by a COP 3.4 trillion goodwill impairment from the sale of its Panamanian unit, Banistmo. Looking at the pro-forma continuous operations tells a more grounded story: Net Income was COP 1.6 trillion, representing a 25% sequential drop. The culprit? Reversing asset quality, as provisions surged 89% QoQ to absorb corporate defaults and a deteriorating Colombian macro environment. On the bright side, the digital ecosystem is finally paying off—both Nequi and Wompi reached profitability. Management's 2026 guidance projects a stable 18-18.5% ROE, relying heavily on higher interest rates to drive NIM expansion and offset rising credit risks.
🐂 Bull Case
Nequi and Wompi crossed into profitability. Nequi's loan book grew a staggering 174% YoY with 27.4 million users. This shifts these digital assets from cash-burners to fundamental profit engines.
With the Colombian Central Bank hiking rates (up 100 bps in Jan) to combat inflation, Cibest is perfectly positioned. Guidance forecasts NIM accelerating to 6.8%-7.0% in 2026, up from 2025's 6.5%.
🐻 Bear Case
A massive 23.7% hike in the minimum wage is fueling inflation and forcing rate hikes. This strains household disposable income and raises the likelihood of severe loan defaults in 2026.
The government is floating aggressive new taxes, including equity taxes for financial institutions. Q4 already took a COP 150 billion hit from a recent decree, creating heavy downside risk to 2026 earnings.
⚖️ Verdict: ⚪
Neutral. The divestment of Banistmo cleans up the footprint and frees up capital, and digital monetization is a huge win. However, the rapidly deteriorating macroeconomic and tax environment in Colombia makes 2026 highly perilous. The margin expansion might easily be eaten by soaring provisions.
Key Themes
Digital Platforms Nequi and Wompi Reach Profitability
Accelerating. Nequi and Wompi both hit breakeven in Q4, marking a massive milestone for Cibest's digital transformation. Nequi has scaled to 27.4 million users (16.5 million monetized), growing its loan portfolio by 174% to COP 1.6 trillion while keeping its cost of risk contained at 13.1%. Because Nequi is funded mostly by zero-to-low cost savings accounts, its financial margin on 25% yield loans is exceptional. Management intends to fully spin off Nequi into a separate entity by Q3 2026, which could unlock significant shareholder value.
Asset Quality Narrative Contradicts Provision Reality
Reversing. Management repeatedly praised 'improved asset quality' and a decline in annual net provisions during their prepared remarks. Yet, the Q4 data completely contradicts this rosy narrative. Pro-forma provisions sequentially skyrocketed 89% from COP 828 billion in Q3 to COP 1.56 trillion in Q4. The annualized cost of risk spiked from 1.16% in Q3 to 2.12% in Q4. Management quietly attributed this to 'specific clients in the corporate segment' and a massive COP 300 billion forward-looking provision for consumer stress tied to minimum wage hikes. The core portfolio is clearly under strain.
Brutal Colombian Macro & Regulatory Headwinds
Decelerating. The operating environment in Colombia is turning hostile. A massive 23.7% minimum wage increase for 2026 has unanchored inflation expectations (closing at 5.1% but pointing much higher), forcing the Central Bank to hike rates by 100 bps in January, with 200 bps more expected. To make matters worse, the government is introducing aggressive new tax decrees—triggering a COP 153 billion deferred tax hit in Q4—and floating a policy of 'mandatory investments' that would force banks to buy government paper to fund emergency spending. This severely limits operational visibility.
Funding Mix Shift Powers Margin Defense
Accelerating. The bank successfully grew low-cost deposits, buffering the cost of funds. Savings accounts now represent 47% of total consolidated deposits, up from 40% a year ago. This structural shift allowed the annualized weighted average cost of total deposits to drop dramatically from 4.38% in 24Q4 to 3.73% in 25Q4. If loan rates rise due to Central Bank hikes in 2026, this cheap funding base will be the primary engine for the guided NIM expansion.
BAM (Guatemala) Continues to Laggard
Decelerating. While Banco Agrícola (El Salvador) performed exceptionally well (loan growth +11.3%, ROE 21.68%), Banco Agromercantil (BAM) in Guatemala remains a weak link. BAM's loan portfolio shrank by 1.96% in USD terms during Q4, consumer lending contracted due to strict underwriting, and NIM compressed to 4.48%. Q4 ROE was a dismal 3.97%. Management admits double-digit ROE won't be achieved here until 2027, making it a drag on consolidated returns.
Other KPIs
The sale of Panamanian subsidiary Banistmo resulted in a COP 3.4 trillion non-cash goodwill impairment charge, devastating reported Q4 net income. However, this divestment frees up capital, removes a lower-ROE asset (8.79% FY25), and lowers CET1 deductions (down to 7 bps from 70 bps in 2024), increasing flexibility for the holding company.
Accelerating. Up 14.2% sequentially and 10.4% year-over-year. Growth was driven by robust transaction volumes in debit/credit cards and a new bancassurance alliance. This fee generation acts as a strong diversifier, representing over 18% of total net operating income.
Guidance
Stable. Up slightly from the 17.2% pro-forma ROE recorded in 2025. This assumes that NIM expansion will successfully outpace higher credit provisions. The guidance points to roughly COP 7.3 trillion in net income (flat vs 2025 pro-forma, but on a smaller equity base post-Banistmo).
Accelerating. Up from 6.5% pro-forma in 2025. Because the bank is asset-sensitive, the recent and expected rate hikes by the Colombian Central Bank will push loan yields higher faster than deposit costs.
Accelerating. A significant step up from the 2.1% pro-forma growth seen in 2025 (adjusted for FX and Banistmo). This assumes continued strength in consumer lending and a recovery in corporate demand despite the higher rate environment.
Stable. In line with the 1.6% pro-forma rate for full-year 2025, but represents a deceleration from the sharp 2.12% spike seen in Q4. Management believes the COP 300 billion in preemptive minimum wage provisions taken in Q4 will cover incoming household distress.
Key Questions
Corporate Loan Quality
You cited specific corporate clients deteriorating in Q4, leading to an 89% QoQ surge in provisions. Which sectors are these clients in, and are these isolated incidents or the beginning of broader corporate stress tied to the macro environment?
Mandatory Investments Risk
The government is floating a policy of 'mandatory investments' for banks to fund state projects. While no official decree exists yet, what is the maximum balance sheet exposure Cibest is stress-testing for this scenario?
Nequi Spin-off and Valuation
With Nequi reaching breakeven and targeting a formal spin-off by Q3 2026, what are the plans for capitalizing it post-separation? Are you exploring outside minority investments to establish a market valuation for the asset?