BANCO DE BOGOTÁ (BBO): THE RETURN TO THE MEAN AND THE SEARCH FOR AN OPTIMAL ENTRY POINT

 

Banco de Bogotá currently appears to be a solid bank, with its stock recovering ground from its 2023 lows, but still highly cyclical and tied to the interest rate cycle and credit in Colombia. Looking ahead, the outlook is moderately positive over a 2-5 year horizon, although short-term volatility is expected, with returns likely coming more from dividends than from a significant re-rating.

In terms of price, the stock fell from an all-time high of around COP 64,200 in June 2022 to a low near COP 23,900 in November 2023, and has since rebounded more than 30% in the last year.

In 2025, the stock is trading near COP 38,000–39,000, well above the 52-week low (COP 26,000), but still below its all-time highs, suggesting a recovery phase rather than exuberance.

The bank closed 2024 with positive net income, but with a decline compared to 2023 in the fourth quarter, affected by higher operating expenses and a still relatively high interest rate environment, although with improvements in funding costs and the net interest margin compared to the previous quarter.

The gross loan portfolio reached approximately COP 107 trillion at the end of 2024, with growth in the quarter, while the stock has been offering attractive dividend yields (around 6–9% in recent years, with a payout ratio close to 50–60%).

Management aims to increase market share in lending by 2025, with portfolio growth in Commercial, consumer, and especially housing segments, which were already growing at over 20% annually.

The Central Bank's monetary policy report indicates a scenario of gradual interest rate reductions and moderate economic recovery, which tends to favor banks' margins and portfolio quality, although fiscal and confidence risks persist.

If interest rates continue to fall and the economy stabilizes, it is reasonable to expect gradual growth in profits and dividends over the next 2–3 years, with the stock moving more towards its fundamental value than towards new short-term extreme highs.

However, due to the sector's sensitivity to macroeconomics and regulation, any specific price projection is highly uncertain. As a financial economist, this investment case would make sense primarily for an investor seeking a high dividend in Colombian pesos (COP), exposure to traditional Colombian banking, and a horizon of at least 3 years, entering only at a discount to book value and assuming the country's political and fiscal volatility. The price chart shows the evolution of BBO stock from January 1, 2010, to December 9, 2025. Volatile behavior is observed, with an opening price of approximately 33,575.70 and a closing price of 38,860.00.

The linear trend is weak, and the best fit is offered by the third-order polynomial, suggesting that the price trajectory is not a simple rise or fall, but rather is driven by economic or sector-specific cycles that the third-order function is better able to model.

The descriptive statistics table provides us with an in-depth view of the stock price distribution.

In finance, kurtosis is vital because it measures tail risk, or the probability of extreme events. High kurtosis (leptokurtic) implies heavy tails and a sharper peak, meaning more extreme events (losses or gains) than the normal distribution model would predict. The negative kurtosis (platykurtic) result for BBO indicates a distribution with lighter tails. This suggests, theoretically, less risk of extreme events (very high or low outliers) compared to a normal distribution.

The histogram and frequency polygon corroborate the negative skewness (the tail extends to the left, resulting in low values) and the platykurtic shape (flatter than normal).

The cumulative distribution function (CDF) is essential for calculating the value at risk (VaR). The cumulative probability F(x) gives us the probability that the price will be less than or equal to a value x. The "run probability" (or complement 1−F(x)) indicates the probability that the price will exceed a value x. This allows an investor to establish the probability of a given maximum loss or minimum expected gain. The table shows Z and X values ​​that appear to be probability values ​​or Z-scores, with Z = −1.07 (implying that the run probability up to that point is less than 50%) and Z = 1.65 (implying that the run probability is high, around 95%). These points are critical for establishing confidence intervals or VaR.

Statistical analysis reveals the following key characteristics for investing in BBO: the current price of 38,860.00 is significantly below the mean The current price reinforces the conclusion of the statistical analysis: the long-term trend is bullish, and the price is in an appreciation phase.

The 200-day simple moving average at $33,292.80 acts as a fundamental long-term support level. The current price of $38,860.00 is very secure above this level.

Pivot points define support (S) and resistance (R) levels for daily or weekly trading.

Since the price is above the pivot point and near resistance levels R2 ($38,780) and R3 ($38,980), this confirms the bullish momentum but also the proximity to levels where traders typically take profits, which aligns with the oscillators' overbought warning.

The integrated analysis presents a picture with conflicting signals in the short term but a clear long-term direction.

The aggregate strong buy signal from Investing is dominated by the strength of the moving averages. The long-term econometric analysis (mean reversion) is bullish.

However, the overbought signal and the cumulative probability of 14.25% dictate the strategy:

It is not advisable to open a position at this precise moment ($38,860.0), due to the high risk of an immediate correction indicated by the overbought oscillators (STOCH and Williams %R).

Wait for a pullback. Place a buy order near a key support level, such as the classic pivot point ($38,440) or the 5-day moving average (MA5) ($38,476), where overbought conditions have eased, but the underlying trend (MM) remains bullish.

Hold the position to look for a reversal to the historical moving average ($55,792.86), placing the stop-loss below the 10-day or 20-day moving average to protect against a potential trend reversal.

The long-term opportunity is strong, but the entry timing is poor. It's best to wait for the impending correction.