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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 28, 2025 |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
(Mark One)
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REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2024
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ___________ to ___________
OR
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SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Date of event requiring this shell company report ___________
For the transition period from _____ to ____
Commission file number: 001-32535
BANCOLOMBIA S.A.
(Exact name of Registrant as specified in its charter)
N/A
(Translation of Registrant’s name into English)
Republic of Colombia
(Jurisdiction of incorporation or organization)
Carrera 48 # 26-85, Avenida Los Industriales
Medellín, Colombia
(Address of principal executive offices)
Catalina Tobón Rivera, Investor Relations Director
Tel. +57 6014885950, e-mail: ctobon@bancolombia.com.co
Carrera 11 # 91-42 – Edificio FIC 9211, Bogotá, Colombia
(Name, Telephone, E-Mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
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| Title of each Class |
Trading Symbol(s) |
Name of each exchange on which registered |
American Depositary Shares |
CIB |
New York Stock Exchange |
Preferred Shares |
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New York Stock Exchange* |
6.909% Subordinated Notes due 2027 |
US05968LAK89 |
New York Stock Exchange |
8.625% Subordinated Notes due 2034 |
US05968LAN29 |
New York Stock Exchange |
______________________________________________________________
*Bancolombia’s preferred shares are not listed for trading directly, but only in connection with its American Depositary Shares, which are evidenced by American Depositary Receipts, each representing four preferred shares.
Securities registered or to be registered pursuant to Section 12(g) of the Act.
Not applicable
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
Not applicable
(Title of Class)
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.
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| Common Shares |
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509,704,584 |
| Preferred Shares |
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452,122,416 |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☒ No ☐
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☐No ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:
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Large accelerated filer |
☒ |
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Accelerated filer |
☐ |
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Non-accelerated filer |
☐ |
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Emerging growth company |
☐ |
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If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐
The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
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U.S. GAAP ☐ |
International Financial Reporting Standards as issued
by the International Accounting Standards Board ☒
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Other ☐ |
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
Item 17 ☐ Item 18 ☐
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS.)
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
Yes ☐ No ☐
TABLE OF CONTENTS
CERTAIN DEFINED TERMS
Unless otherwise specified or if the context so requires, in this annual report:
Bank Entities
'Bancolombia Group', 'the Bank', 'we', 'us' and 'our' - Bancolombia S.A. and its subsidiaries.
'Bam' - Banco Agromercantil de Guatemala S.A., a banking institution organized under the laws of the Republic of Guatemala, and its subsidiaries on a consolidated basis.
'Banagrícola' - Banagrícola S.A., a Panamanian company that is the parent company of Banco Agricola S.A, and its consolidated subsidiaries.
'Banco Agrícola' - Banco Agrícola S.A., an El Salvador bank and its subsidiaries on a consolidated basis.
'Bancolombia' - Bancolombia S.A., a Colombian bank.
'Banca de Inversión' - Banca de Inversión Bancolombia S.A. Corporación Financiera, a Colombian investment banking subsidiary.
'Bancolombia Capital' - Bancolombia Capital Holdings USA LLC, a U.S. brokerage and asset management company.
'Bancolombia Panamá' - Bancolombia Panamá S.A., a Panamanian subsidiary that provides banking services to non-Panamanian customers.
'Bancolombia Puerto Rico' - Bancolombia Puerto Rico Internacional Inc., a Puerto Rican subsidiary that provides banking services to customers who do not reside in Puerto Rico.
'Banistmo' - Banistmo S.A., a Panamanian bank, and its subsidiaries on a consolidated basis.
'Fiduciaria Bancolombia' - Fiduciaria Bancolombia S.A. Sociedad Fiduciaria, a Colombian trust and fund management subsidiary.
'Foreign Banks' - Bam, Banistmo and Bancoagrícola.
'Foreign Subsidiaries' - Bancolombia's foreign subsidiaries.
'Grupo Agromercantil' 'GAH'- Grupo Agromercantil Holding S.A, a Panamanian company and the parent company of Bam.
'Nequi' - a 100% digital business line with a strong focus on financial inclusion, that operates under Bancolombia´s license .
'Renting Colombia' - Renting Colombia S.A.S., a Colombian lease and fleet management subsidiary.
'Valores Bancolombia' - Valores Bancolombia S.A. Comisionista de Bolsa, is a securities broker and the Colombian parent of brokerage and asset management company Bancolombia Capital Holdings USA LLC.
'Wenia' - Wenia S.A.S. a Colombian subsidiary, and Wenia Ltd. a Bermudian subsidiary, which allow individuals to buy, convert, receive, send and sell digital assets.
'Wompi' - Wompi S.A.S, a Colombian subsidiary and a payment platform.
Other Terms
'ADR program' - Bancolombia’s established framework to issue American Depositary Receipts (ADRs) in the United States, representing American Depositary Shares (ADS).
'ADSs' - Bancolombia’s American Depositary Shares (one ADS represents four preferred shares).
'Annual Report' - this annual report on Form 20-F.
'ATM' - automated teller machine.
'Board of Directors' 'the Board' - the board of directors of Bancolombia.
'Central Bank' - Banco de la República, the central bank of Colombia.
'Consolidated Financial Statements' - our audited consolidated statements for fiscal years 2024, 2023 and 2022. Our fiscal year ends on December 31.
'DTF' - Depósitos a Término Fijo, the commercial interest rate for 90-day deposits in Colombia.
'ESG' - the Environmental, Social and Governance criteria embedded in our corporate strategy.
'IASB' - International Accounting Standards Board.
'IFRS' - International Financial Reporting Standards issued by the IASB.
'IFRS - IC' - International Financial Reporting Interpretations Committee.
'IRS' - U.S. Internal Revenue Service.
'NYSE' - New York Stock Exchange.
'OCI' - Other Comprehensive Income.
'Peso', 'pesos' or 'COP' - the Colombian peso.
'Preferred shares' and 'common shares' - Bancolombia's outstanding, fully paid-in preferred and common shares ("acciones con dividendo preferencial sin derecho a voto" and "acciones ordinarias," respectively).
'Representative Market Rate' - Tasa Representativa del Mercado, the U.S. dollar market rate certified by Colombia's SFC.
'SEC' - the U.S. Securities and Exchange Commission.
'SMEs' - Small and Medium Enterprises.
'SMMLV' - Salario Mínimo Mensual Legal Vigente, the effective legal minimum monthly salary in Colombia. In 2024, the effective legal minimum monthly salary in Colombia was COP $1.300.000.
'Financial Superintendency' or 'SFC' -Superintendencia Financiera de Colombia, the Finance and Public Credit Ministry agency that regulates banks, capital markets, finance and insurance.
'Superintendency of Industry and Commerce' or 'SIC' - Superintendencia de Industria y Comercio de Colombia, an agency of the Ministry of Commerce, Industry and Tourism that regulates competition in the financial services and other industries.
'U.S.' or 'United States' - the United States of America.
'USD' - U.S. dollar.
'UVR' - Unidades de Valor Real, a Central Bank inflation-adjusted index used for pricing home-mortgage loans.
Cautionary note regarding forward-looking statements
This Annual Report contains statements that may constitute forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are not based on historical facts but instead represent only our belief regarding future events, many of which, by their nature, are inherently uncertain and outside our control.
The words 'anticipate', 'believe', 'estimate', 'expect', 'intend', 'plan', 'predict', 'target', 'forecast', 'guideline', 'should', 'project' and similar words and expressions are intended to identify forward-looking statements. It is possible that our actual results may differ, possibly materially, from the anticipated results indicated in or implied by these forward-looking statements.
Information regarding important factors that could cause actual results to differ, perhaps materially, from those in our forward-looking statements appear in a number of places in this Annual Report, including in Item 3 Key Information, Section D, Risk Factors and Item 5 Operating and Financial Review and Prospects.
These factors include, but are not limited to:
(i) Changes in general economic, business, political, social, fiscal or other conditions in Colombia, or in any of the other countries where we operate, taking into account
(a) The potential for slower economic growth, inflation, currency depreciation, and political instability
(b) Changes to regulations, fiscal policy, government aid to sectors where we offer services, among other government decisions, could affect our financial situation.
(ii) Changes in capital markets or in markets in general that may affect policies, overall liquidity or attitudes towards lending
(iii) Unanticipated increases in financing and other costs, or the inability to obtain additional debt or equity financing on attractive terms
(iv) Prolonged inflation, or changes in foreign exchange rates, interest rates or unemployment rates
(v) Sovereign risks
(vi) Liquidity risks
(vii) Increases in delinquencies by our borrowers
(viii) Lack of acceptance of new products or services by our target customers
(ix) Competition in the banking, financial services, credit card services, insurance, asset management or remittances businesses or other industries in which we operate
(x) Adverse determination of legal or regulatory disputes or proceedings and the consequences thereof
(xi) Changes in official policies, regulations and the Colombian government’s banking policy as well as changes in laws, regulations or policies in other jurisdictions where we do business
(xii) Factors specific to us, including changes to the estimates and assumptions underlying our financial statements; our success in identifying risks (such as the incidence of loan delinquencies) and managing risks; an inability to achieve our financial and capital targets, which may result in failure to achieve the expected benefits of our strategies; a reduction in our credit ratings, which would decrease our funding availability
(xiii) Failure to achieve regulatory stress testing
(xiv) Changes to the reliability and security of our data management, data privacy, information and technology infrastructure, including cyberattack threats, which may impact our ability to serve clients (xv) Failure to attract, hire or retain key talent
Forward-looking statements speak only as of the date they are made and are subject to change, and, except as required
by law, we do not intend, and do not assume any obligation, to update these forward-looking statements in light
of new information or future events arising after the date of this Annual Report.
Presentation of certain financial and other information
Accounting Principles
The Consolidated Financial Statements for the years ended December 31, 2024 and 2023, and our consolidated statements of income, comprehensive income, changes in equity and cash flows for the years ended December 31, 2024, 2023 and 2022, and related notes included in this Annual Report have been prepared in accordance with IFRS as issued by the IASB as well as the interpretations issued by the IFRS-IC. All data included in this report has been prepared in accordance with IFRS as issued by the IASB, except for the data included in Item 4. B.7 Competition, which has been prepared in accordance with the local generally accepted accounting practices of each subsidiary.
Our Consolidated Financial Statements include entities that we control, directly or indirectly. See Item 4. Information on the Company – C. Organizational Structure for a summary of the organizational structure of Bancolombia and certain subsidiaries involved in financial or capital markets.
Currencies
Our Consolidated Financial Statements are presented in Colombian pesos, which is the functional currency for us and the presentation currency for the Consolidated Financial Statements. The Consolidated Financial Statements and amounts as of December 31, 2024 and 2023, and for the three fiscal years ended December 31, 2024, 2023 and 2022, contained in this Annual Report are expressed in millions or billions of pesos (when indicated), except earnings per share, diluted earnings per share and the exchange rate, which are stated in units of Colombian pesos, while other currencies (dollars, euro, pounds, etc.) are stated in thousands.
This Annual Report translates certain peso amounts into U.S. dollars at specified rates solely for the convenience of the reader. Unless otherwise indicated, the exchange rate used in this Annual Report is indicated in Note 2.D Material Accounting Policies, section 1. Functional currency, transactions and balances in foreign currency.
Rounding Comparability of Data
Certain monetary amounts, percentages and other figures included in this Annual Report have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be the arithmetic aggregation of the figures that precede them, and figures expressed as percentages in the text may not total 100% or, as applicable, when aggregated may not be the arithmetic aggregation of the percentages that precede them.
We maintain a website at http://www.grupobancolombia.com/. In addition, certain of our subsidiaries referred to in this Annual Report maintain separate websites. For example, Banco Agrícola, Banistmo and Banco Agromercantil de Guatemala maintain websites at http://www.bancoagricola.com/, http://www.banistmo.com/ and https://www.bam.com.gt/, respectively. Information included on or accessible through our internet site or the internet site of any of the subsidiaries is not incorporated into this Annual Report or the filing. All references in this Annual Report to these and other internet sites are inactive textual references to these URLs, or 'uniform resource locators', and are for your informational reference only.
PART I
ITEM 1 Identity of Directors, Senior Management and Advisors
Not applicable.
ITEM 2 Offer Statistics and Expected Timetable
Not applicable.
ITEM 3 Key Information
A.[Reserved]
B.Capitalization and Indebtedness
Not applicable.
C.Reasons for the Offer and Use of Proceeds
Not applicable.
D.Risk Factors
Investors should consider the following risks and uncertainties along with the other factors presented in this Annual Report when evaluating the report's forward-looking statements, any document incorporated by reference, our future public filings or press releases, or future oral statements made by us, our officers or other people acting on our behalf.
If any of the following risks occur, our business, operating results and financial condition, our ability to raise capital and our ability to access funding could be materially and adversely affected. In addition, we could suffer possible reputational impact. These risk factors should not be considered a complete list, and the headings below do not indicate that a given risk applies only to the heading under which it is located.
Summary of Risk Factors
Risk factors relating to Colombia and other countries where we operate.
•Changes in economic and political conditions in the countries where we operate, may adversely affect our financial condition and operating results.
•The countries where we operate are vulnerable to external effects, such as economic difficulties experienced by major regional trading partners or general contagion from economic or geopolitical shocks, which could have a material adverse effect on economic growth in these countries and their ability to service their public debt.
•Colombia and El Salvador have experienced several periods of violence and instability that could affect those economies and our business.
•Any additional taxes resulting from changes to tax regulations or the interpretations of tax regulations in the countries where we operate could adversely affect our results.
•Allegations of corruption against the government, politicians and the private sector in the countries where we operate could create economic and political uncertainty and could expose us to additional credit risk.
Risk factors relating to our business and the banking industry.
•We are subject to credit risk. Estimating our exposure to credit risk involves subjective and complex judgments.
•We are subject to risks from concentration in our loan portfolio. Problems with one or more of our largest borrowers may adversely affect our financial condition and operating results.
•The value of our loan collateral may be insufficient to cover the outstanding principal and interest. In addition, we may be unable to realize the full value of the collateral in the event of default.
•Downgrades in our or our subsidiaries' credit ratings would increase our cost of borrowing funds and make it more difficult for us or our subsidiaries to raise new funds, attract deposits or renew maturing debt.
•Our operating results are sensitive to fluctuations in interest rates.
•We are subject to market risk and the income from our proprietary trading activities is highly volatile.
•We have significant exposure to sovereign risk, especially in Colombia, the United States, El Salvador, Panama and Guatemala. Our results could be adversely affected by decreases in the value of our sovereign debt instruments.
•We are subject to credit risk with respect to our non-traditional banking businesses, including securities investments and derivatives transactions. We are subject to market, liquidity, operational and counterparty credit risks associated with our derivative transactions.
•We are subject to regulatory inspections, examinations, inquiries or audits in Colombia and in other countries where we operate. Any sanctions, fines and other penalties resulting from such inspections, examinations, inquiries or audits could materially and adversely affect our business, financial condition, operating results and reputation.
•We are subject to the U.S. Foreign Account Tax Compliance Act of 2010 and the OECD’s Automatic Exchange of Information - Common Reporting Standard (CRS).
•The tax haven regulations in the countries where we operate could adversely affect our business and financial results.
•Changes in banking regulations in Colombia and in other jurisdictions where we operate could adversely affect our results.
•Our financial results may be negatively affected by changes to accounting standards.
•We face risks relating to regulatory compliance in general and, in particular, with respect to laws relating to anticompetitive practices, consumer protection and protection of personal data.
•Future restrictions on interest rates or banking fees could negatively affect our profitability.
•Our results could be adversely affected by high levels of inflation.
•We are exposed to environmental, social, governance and sustainability risks that could affect our financial condition and operating results.
•Our ability to attract and retain specialized talent, and the lack of professional training in the areas where we operate, could impact some business objectives.
•We may be exposed to increased costs and liabilities in the event of the failure of our service providers to perform their obligations under key services contracts.
•Our businesses rely heavily on data collection, processing and storage systems, the failure of which could materially and adversely affect the effectiveness of our risk management, reputation and internal control system as well as our financial condition and operating results.
•Risks relating to the use of quantitative models and information may adversely impact our business strategies and results.
•Our financial results may be negatively affected by changes to assumptions supporting the value of our goodwill.
•We are subject to a wide range of information security and cybersecurity incidents that can have a material adverse effect on us.
•Acquisitions and strategic alliances may not perform as expected or may disrupt our operations and adversely affect our profitability.
•We are subject to increasing competition, which may adversely affect our operating results.
•We are subject to operational risks and losses.
•Digital misinformation could adversely affect our reputation as well as our operational and financial results.
•Our policies and procedures may not be able to detect money laundering, terrorism financing, corruption or other illegal or improper activities fully or on a timely basis.
Risk factors relating to Bancolombia’s preferred shares and ADSs.
•Preemptive rights may not be available to holders of ADRs evidencing ADSs.
•Exchange rate fluctuations may adversely affect the Colombian economy, the market price of Bancolombia’s ADSs, and the dividends payable to holders of Bancolombia’s ADSs.
•Bancolombia’s preferred shares have limited voting rights.
•Holders of Bancolombia’s ADSs may encounter difficulties in the exercise of dividend and voting rights.
•Relative illiquidity of the Colombian securities markets may impair the ability of an ADS holder to sell preferred shares.
•Changes in Colombia’s tax regime may affect the tax treatment of ADSs.
Risk factors relating to Colombia and other countries where we operate
Changes in economic and political conditions in the countries where we operate, may adversely affect our financial condition and operating results.
Our financial condition, operating results and asset quality depend on the macroeconomic and political conditions in Colombia, Panama, El Salvador, Guatemala and the other countries where we operate. An economic slowdown or contraction, inflation, shifts in economic policy, or changes in judicial interpretation of exchange controls could affect the overall business climate and negatively impact our financial performance and results. Other risk factors in these countries include currency depreciation, interest rate fluctuation, changes in taxation and banking laws and regulations, and other political or economic developments.
The governments of Colombia, Panama, El Salvador and Guatemala have historically exercised substantial influence on their economies and may, in the future, take steps that could affect our businesses and operating results, market conditions and the prices and rates of return on securities issued by local issuers (including Bancolombia’s securities). Potential changes in laws, public policies and regulations could create instability in these countries and their respective markets. Future developments in government policies could negatively affect our business, financial and commercial condition, as well as the market value of Bancolombia's securities.
It is likely that these risks will become more significant in the coming years, due to election 'pendulum swings,' political polarization, increasing global tensions, international conflicts, dissatisfaction with government and growing social discontent. This combination of factors could lead to greater instability and political risks in the medium term than in the recent past.
In a global context, the conflict between Russia and Ukraine has led to the imposition of financial and economic sanctions, as well as export controls, targeting certain Russian entities and individuals. These measures could further disrupt financial markets and economic conditions, potentially restricting our clients’ ability to conduct transactions with Russian counterparties, increasing volatility in foreign exchange markets, and causing other negative effects. The escalation of geopolitical tensions—including the conflict between Israel and Hamas, heightened frictions between Israel and certain Arab nations, and growing disputes between China and the U.S.—could further disrupt global trade and reduce transit through the Panama Canal, negatively impacting Panama’s economy. Additionally, these developments may lead to restrictions in commodity supplies, driving up energy and food prices. Tighter monetary policies and financial conditions could weigh on global economic growth. Higher interest rates may also trigger capital outflows, leading to depreciation of currencies such as the Colombian peso and the Guatemalan quetzal, increased domestic interest rates and renewed inflationary pressures.
Colombia
In Colombia, we expect GDP to increase from the 1.8% growth in 2024 to approximately 2.5% in 2025 as the Central Bank gradually lowers its monetary policy rate, supported by inflation converging toward the 3% target. However, risks to the outlook remain. Inflation could prove more persistent than anticipated due to indexation effects, supply-side shocks, or external pressures, potentially limiting the pace of monetary easing. Additionally, while economic acceleration may strengthen the labor market and boost domestic demand, uncertainty surrounding the government’s reform agenda—including labor, healthcare, and public services—could weigh on business and consumer confidence. Concerns over fiscal sustainability and potential disruptions in capital markets may further dampen investment dynamics, posing downside risks to GDP growth.
A sustained decline in private investment to an almost two-decade low poses a risk to Colombia’s long-term economic growth, which in turn could undermine future fiscal revenue expansion and compromise fiscal consolidation efforts. In 2024, the three major credit rating agencies that rate Colombia highlighted these challenges, emphasizing the persistent high cost to the government of its debt interest payments, high government deficits, and reliance on commodities. Over the next 24 months, Colombia could face another sovereign credit rating downgrade if the government fails to implement measures to boost investment or contain public spending.
El Salvador
El Salvador faces multiple economic risks, including a slowdown in growth from 2.6% in 2024 to approximately 2.4% in 2025 due to weaker external demand and a loss of momentum in private investment. Inflationary pressures could resurface, driven by adverse weather conditions and potential fuel price increases under the new U.S. administration. The country’s high reliance on remittances (23% of GDP) makes it vulnerable to shifts in U.S. immigration policy, while a widening current account deficit (projected at 1.9% of GDP) and limited access to capital markets poses external financing challenges.
El Salvador continues to face medium-term challenges with its public finances, and the fiscal outlook is uncertain. While government action and a preliminary agreement with the International Monetary Fund (IMF) provided some fiscal relief and reduced the risks of sovereign default, public spending increased and the fiscal deficit widened in 2024. This fiscal uncertainty has reduced El Salvador’s access to capital markets, making it dependent on capital flows from multilateral organizations and other countries. Achieving long-term fiscal sustainability is El Salvador's biggest economic challenge, and while the government has made efforts to reduce debt, the fiscal deficit is expected to remain high in the medium term. Additionally, in January 2025, El Salvador revoked bitcoin's status as legal tender to comply with conditions set by the International Monetary Fund for a $1.4 billion loan (and as a result merchants are no longer compelled to accept bitcoin, and it is no longer an option for tax payments).
Guatemala
Guatemala faces structural risks due to its high dependence on remittances, which come mostly from the United States. While the economy’s recent performance has been moderately better than expected, primarily because of higher remittances by Guatemalans living in the United States, changes in U.S. migration policies could negatively impact remittances. A weakening of the U.S. labor market or a potential slowdown of the U.S. economy could also negatively affect Guatemala’s GDP growth in 2025 (3.5% in 2024), as could the effects of protectionist measures by the U.S. administration on Guatemalan exports and foreign investment.
Panama
Tensions between China and the United States, as well as conflicts in Ukraine and the Middle East, may adversely impact global trade and flow through the Panama Canal in the medium term, posing a significant risk to Panama’s economy. This risk is heightened by the stance of the U.S. administration on China, which could lead to trade restrictions or geopolitical tensions that further reduce transit through the canal.
In the short term, uncertainty persists over the closure of the Cobre Panamá copper mine, which halted copper exports in November 2023, leading to an increase in the trade deficit that was only partially offset by growth in service exports. Financially, Panama continues to face challenges due to a significant drop in revenues and rising spending pressures.
The countries where we operate are vulnerable to external effects, such as economic difficulties experienced by major regional trading partners or general contagion from economic or geopolitical shocks, which could have a material adverse effect on economic growth in these countries and their ability to service their public debt.
A significant decline in economic growth or a sustained economic downturn in the regional trading partners of Colombia, Panama, El Salvador or Guatemala could have a material adverse impact on foreign trade, remittance flows, and foreign direct investment in the four countries and a decrease in their economic growth. Similarly, lower growth in countries with close economic ties, such as the European Union, the United States, China and other Latin American countries in the case of Colombia, and the United States and the European Union in the case of Panama, Guatemala and El Salvador, could also have a material adverse impact.
Additionally, any deterioration in the economic and political conditions of neighboring countries could adversely affect the economies of Colombia, Panama, El Salvador and Guatemala, and cause instability and disrupt their commercial or diplomatic relationships. Any future tensions could lead to political and economic uncertainty, instability, market volatility, low confidence levels and heightened risk aversion among investors and market participants, which could adversely affect economic activity in any of those countries.
Increased tension between Colombia and the United States could lead to the imposition of U.S. tariffs, economic sanctions and migration measures that could adversely affect Colombia. In January 2025, the U.S. president announced that he would impose 25% tariffs on all Colombian imports and that such tariffs would increase. He also announced that other banking and financial sanctions would be imposed on Colombia. While these measures were not immediately implemented, the imposition of tariffs in the future may adversely impact the Colombian economy, where approximately 30% of exports go to the United States. These could affect cross-border transactions and international trade financing, potentially increasing costs for our clients and reducing demand for trade financial services, which may result in an adverse financial impact on our operations.
Recent global geopolitical fragmentation has led to decreased capital flows to emerging economies and heightened volatility in commodity prices, particularly oil. Inflation trends have already been affected, especially in El Salvador, Panama and Guatemala, and this effect may persist. Additionally, ongoing conflicts in Ukraine and the Middle East continue to generate uncertainty and volatility in international markets, which have negatively affected our financial condition and operating results and may continue to do so.
Even with expectations of lower interest rates in 2025, the global economic slowdown and persistently high interest rates create an environment of financial stress, particularly in emerging economies, which are sensitive to capital flows. It is reasonable to expect that public debt service payments will remain historically high. The combination of low economic growth and high interest rates represents a short-term risk, particularly in Colombia and El Salvador, where the main challenge will be managing public finances and generating enough tax revenue to meet spending goals in 2025 and beyond.
Events in markets where we do not operate may also affect us, for example by causing international investors to have an increased risk perception of the entire region or class of investment, which could negatively affect market prices and liquidity of securities issued or held by Bancolombia.
Colombia and El Salvador have experienced several periods of violence and instability that could affect those economies and our business.
Colombia has experienced periods of criminal violence over the past five decades, primarily due to the activities of guerilla groups and drug cartels. In recent years, the security situation has deteriorated, with rising violence linked to criminal organizations and armed groups. The government has lost control over certain territories, and coca cultivation areas have expanded significantly, while efforts at eradication have decreased. The government has implemented a peace treaty with the Revolutionary Armed Forces of Colombia (FARC), while negotiations with several other rebel groups are stalled. If there is an escalation of violence or drug-related crime, it could lead to a downgrade of sovereign ratings, higher funding costs, lower foreign investment and economic slowdown.
In El Salvador, rising violence led the Legislative Assembly to adopt exceptional measures on March 27, 2022, granting certain powers to the Executive Branch and suspending four constitutional guarantees. The suspension of these constitutional guarantees has been extended 36 times, with the most recent extension lasting from March 7, 2025, to April 5, 2025.
Any additional taxes resulting from changes to tax regulations or the interpretations of tax regulations in the countries where we operate could adversely affect our results.
Uncertainty related to tax legislation represents a constant risk for us. Changes in legislation, regulation, and developments resulting from judicial decisions, could affect our tax burden by increasing tax rates and fees, creating new taxes, limiting deductions and exemptions, and eliminating incentives and non-taxed income. We do not take aggressive positions on tax law interpretation. However, the national or local tax authorities could apply tax law in a way that we do not expect, which could result in tax audits, litigation and associated costs, and could negatively affect our results.
Allegations of corruption against the government, politicians and the private sector in the countries where we operate could create economic and political uncertainty and could expose us to additional credit risk.
Allegations of corruption against the government, politicians and the private sector in the countries where we operate could create economic and political uncertainty. For example, findings, convictions or allegations of illicit conduct, including by government personnel, could have adverse effects on the political and economic stability of the countries where we operate. These adverse effects may negatively impact our business by depressing business volumes or reducing our ability to recover amounts we have lent to persons or projects involved in illicit or allegedly illicit conduct.
Risk factors relating to our business and the banking industry
We are subject to credit risk. Estimating our exposure to credit risk involves subjective and complex judgments.
Several of our products expose us to credit risk. These products include loans, financial leases, guarantees, financial derivatives and lending commitments.
We estimate and establish reserves for credit risk and potential credit losses. This process involves subjective and complex judgment, including judgments based on factors such as economic projections and assumptions about the ability of our borrowers to repay their loans. This process is subject to human error, as we may not always be able to assign an accurate credit risk rating to a client, which may result in a higher exposure to credit risk than the one indicated by our risk rating system. We may be unable to detect these risks soon enough, due to limited resources or available infrastructure, or an inability by our employees to effectively implement our credit risk management system, which may increase our exposure to credit risk and could affect our operating results and financial position. A failure by us to continuously refine our credit management system could result in a higher exposure to credit risk.
If we are unable to effectively control the level of non-performing or poor credit quality loans in the future, or if our loan loss reserves are insufficient to cover future loan losses, our financial condition and results may be materially and adversely affected. The amount of our non-performing loans could increase in the future as a result of factors beyond our control, such as changes in the payment capacity of our borrowers, increases in the inflation or interest rates, the impact of macroeconomic trends and political events affecting Colombia and other jurisdictions in which we operate (especially Panama, El Salvador and Guatemala) or events affecting specific industries. Any of these developments could have a negative effect on the quality of our loan portfolio, requiring us to increase provisions for loan losses resulting in reduced profits or in losses.
We are subject to risks from concentration in our loan portfolio. Problems with one or more of our largest borrowers may adversely affect our financial condition and operating results.
Although no single group exposure represents more than 1.5% of total loans, the aggregate outstanding principal amount of our 20 largest borrowers, on a consolidated basis, represented 113.8% of the Tier 1 capital and 14.3% of our total loan portfolio at December 31, 2024. Problems with one or more of our largest borrowers could materially and adversely affect our operating results and financial position.
The value of our loan collateral may be insufficient to cover the outstanding principal and interest. In addition, we may be unable to realize the full value of the collateral in the event of default.
Our loan collateral primarily includes real estate, owned assets used for financial leasing transactions and other assets that are located primarily in Colombia, El Salvador, Panama and Guatemala, the value of which may significantly fluctuate or decline due to factors beyond our control. These can include market factors, environmental risks, macroeconomic factors and political events affecting the local economy. In addition, we may face difficulties in enforcing our rights as a secured creditor. Delays, procedural problems and local protectionism may make foreclosures and enforcement of judgments difficult. Any decline in the value of the collateral securing our loans may result in a reduction in the recovery from collateral realization and may have an adverse impact on our operating results and financial condition.
Downgrades in our or our subsidiaries' credit ratings would increase our cost of borrowing funds and make it more difficult for us or our subsidiaries to raise new funds, attract deposits or renew maturing debt.
The credit ratings of Bancolombia and our subsidiaries are an important component of our liquidity profile. Our ability to successfully compete in the banking industry depends on our credit ratings. A downgrade of Bancolombia or one or more of our subsidiaries would increase the cost of raising funds and reduce demand for Bancolombia's securities among institutional investors. Our ability to renew maturing debt could become restricted and the terms for such renewal could become more expensive. Our lenders and counterparties in derivative transactions are also sensitive to the risk of a credit rating downgrade. A downgrade in our or our subsidiaries’ credit rating may adversely affect perceptions of our financial stability and our ability to raise deposits, which could make us and our subsidiaries less successful when competing for deposits and loans in the market.
In January 2024, Standard & Poor's revised its outlook for Colombia from stable to negative, affirming its 'BB+' long-term foreign currency rating. The agency highlighted fiscal challenges and economic vulnerabilities as key factors. Similarly, in June 2024, Moody's revised Colombia's sovereign credit rating outlook from stable to negative, while maintaining its 'Baa2' investment-grade rating. This adjustment reflects concerns over weak economic growth and rising borrowing costs, which could hinder fiscal management and weigh on the country's credit profile. Fitch Ratings maintained Colombia's 'BB+' rating with a stable outlook, signaling cautious optimism despite ongoing fiscal and economic pressures.
In line with these sovereign ratings, the agencies revised Bancolombia's credit rating outlook from stable to negative in 2024. Due to the effects that sovereign stress can exert on the operations and creditworthiness of banks, agencies usually do not assign higher ratings to Colombian financial institutions than those given to foreign currency sovereign ratings. As a result, a downgrade of our credit ratings may adversely affect our access to funding or capital markets, increase our cost of funds, or trigger additional collateral or funding requirements.
Our operating results are sensitive to fluctuations in interest rates.
We hold a substantial portfolio, including loans, deposits, securities, bonds, long-term debt and short-term borrowings and derivatives as swaps that have both fixed and floating interest rates. Therefore, changes in interest rates could adversely affect our net interest margins as well as the value of the debt instruments. Increases in interest rates may reduce the market value of our debt instruments, leading to smaller gains or larger losses on these investments (a 100 basis point increase in interest rates could reduce the market value of the debt instruments by approximately 1.3%). Sustained high interest rates have historically discouraged customers from borrowing and have resulted in increased delinquencies in outstanding loans and deterioration in the quality of assets.
On the other hand, cuts in interest rates may cause margin compression and lower net interest income, as we usually hold more assets than liabilities at variable rates. Typically, in a declining interest rate environment, prepayment activity tends to rise, reducing the weighted average maturity of our interest-earning assets and adversely affecting our operating results.
Prepayment risk also has a significant adverse impact on our earnings from credit card and collateralized mortgage obligations, as prepayments could shorten the weighted average life of these assets, which may result in funding mismatches or in reinvestment of the prepayment proceeds at lower yields.
In addition, these risks could materially affect our own portfolio as well as those managed by us on behalf of third parties. Consequently, any withdrawals of third-party assets could negatively impact our asset management revenues and related income streams.
We are subject to market risk and the income from our proprietary trading activities is highly volatile.
We are directly and indirectly affected by changes in market conditions. Market risk, or the risk of losses in positions arising from movements in market prices, is inherent in the products and instruments associated with our operations, including securities, bonds, proprietary trading in assets and liabilities, and derivatives, among others. Changes in market conditions that may affect our financial condition and operating results include fluctuations in interest and currency exchange rates, securities prices, and changes in the implied volatility of interest rates and foreign currency exchange rates, among others.
We derive a portion of our profits from our proprietary trading activities. Income from this activity is highly volatile and depends on numerous factors beyond our control, such as the general market environment, overall market trading activity, interest rate levels, fluctuations in exchange rates, oil prices and general market volatility. A significant decline in our trading income, or the occurrence of a trading loss, could adversely affect our operating results and financial position. Therefore, the level of risk and the sensitivity of portfolio value to possible changes in interest rates are continuously monitored. As of December 2024, the modified duration of our sovereign debt proprietary trading portfolio was 1.78.
We have significant exposure to sovereign risk, especially in Colombia, the United States, El Salvador, Panama and Guatemala. Our results could be adversely affected by decreases in the value of our sovereign debt instruments.
Our debt portfolio is primarily composed of sovereign debt securities. Therefore, our results are exposed to credit, market, and liquidity risk associated with sovereign debt and, in particular, risk associated with securities issued or guaranteed by the Colombian Government. As of December 31, 2024, our total debt instruments represented 9.81% of our total assets, and the securities issued by the governments of Colombia, United States, Panama, El Salvador and Guatemala represented 39.66%, 16.39%, 5.70%, 6.70%, and 4.38%, respectively, of our total debt instruments. A significant decline in the value of these securities could affect our debt instruments portfolio and consequently our operating results and financial position.
In addition, during the past year, the sovereign risk associated with the securities issued or guaranteed by the governments of Colombia and Panama has increased. The 5-year credit default swap ('CDS'), credit derivative contracts that allow investors to hedge against credit risk on a company, a country or another entity, showed an increase during 2024 due to political uncertainty as well as fiscal challenges in both countries.
We are subject to credit risk with respect to our non-traditional banking businesses, including securities investments and derivatives transactions. We are subject to market, liquidity, operational and counterparty credit risks associated with our derivative transactions.
Non-traditional sources of credit risk can arise from, among other things: investing in securities, entering into derivative contracts under which counterparties have obligations to make payments to us, executing securities or currency trades from our proprietary trading desk that fail to settle at the required time due to non-delivery by the counterparty or system failures by clearing agents, exchanges, clearing houses or other financial intermediaries. A significant increase in exposure to any of these non-traditional risks, or a significant decline in the credit quality or the insolvency of any of the counterparties, could materially and adversely affect our operating results and financial position.
We engage in derivative transactions both for hedging purposes on our own account and on behalf of our customers. These transactions expose us to a variety of risks, including market risk and liquidity (due to the difficulty in closing out a trade prior to maturity if bid-ask spreads are too large, representing a significant cost). They also expose us to operational risk, including basis risk (the risk of loss associated with variations in the spread between the asset yield and the funding and/or hedge cost) and credit or default risk (the risk of insolvency or other inability of a counterparty to meet its obligations). Furthermore, the market practice and documentation for derivative transactions is less developed in the jurisdictions where we operate compared to other more economically developed countries, and the court systems in those jurisdictions have limited experience in dealing with issues related to derivative transactions. As a result, there are increased operating and structural risks associated with derivatives transactions in these jurisdictions.
In addition, the execution and performance of derivatives transactions depend on our ability to develop adequate control and administrative systems, and to hire and retain qualified personnel. Moreover, our ability to adequately monitor, analyze and report these derivative transactions depends, to a great extent, on our information technology systems. These factors may further increase the risks associated with these transactions and could materially and adversely affect our operating results and financial position.
We are subject to regulatory inspections, examinations, inquiries or audits in Colombia and in other countries where we operate. Any sanctions, fines and other penalties resulting from such inspections, examinations, inquiries or audits could materially and adversely affect our business, financial condition, operating results and reputation.
We are subject to comprehensive regulation and supervision by the financial authorities of Colombia, Panama, El Salvador, Guatemala and other jurisdictions where we do business. These authorities have broad powers to adopt regulations or impose other requirements that could affect or restrict our capitalization, organization and operations. These include the imposition of anti-money laundering measures and the authority to regulate the terms and conditions under which we can extend credit. In the event of noncompliance with applicable regulations, we could face fines, sanctions or the revocation of licenses or permits to operate our business.
In Colombia, for instance, if Bancolombia encounters significant financial problems or becomes insolvent or in danger of becoming insolvent, banking authorities would have the power to take over Bancolombia's management and operations. Any sanctions, fines or other penalties resulting from noncompliance with regulations in Colombia, El Salvador, Guatemala, Panama and other jurisdictions where we operate, could materially and adversely affect our business, financial condition, operating results and reputation.
We are subject to the U.S. Foreign Account Tax Compliance Act of 2010 and the OECD’s Automatic Exchange of Information - Common Reporting Standard (CRS).
Bancolombia and some of its subsidiaries are considered foreign financial institutions ('FFIs') under the Foreign Account Tax Compliance Act of 2010 ('FATCA') (See Item 4. Information on the Company – B. Business Overview – B.8. Supervision and Regulation – International regulations applicable to Bancolombia and its subsidiaries). Additionally, Bancolombia and some of its subsidiaries are subject to reporting obligations derived from the Common Reporting Standard ('CRS') Multilateral Competent Authority Agreement ('MCAA') developed by the OECD.
However, if Bancolombia or its subsidiaries fail to comply with these requirements, certain payments to Bancolombia or its subsidiaries may be subject to withholding under FATCA or other penalties that tax authorities may impose according to their domestic regulations. Such withholding or penalties could adversely affect our operating results and financial condition. In addition, compliance with the provisions of the intergovernmental agreements ('IGA'), FFI agreements entered into with the IRS, the CRS-MCAA, domestic laws or any other regulations enforced in the relevant jurisdictions, may increase our compliance costs.
The tax haven regulations in the countries where we operate could adversely affect our business and financial results.
As a result of the tax haven regulation adopted in Colombian and El Salvador, our clients who are residents of territories designated as tax havens may face:
(i) Higher withholding tax rates on interest and dividends, mainly derived from investments in the securities market
(ii) Requests by the tax authorities for the disclosure of additional information for transactions with related companies
(iii) Increased probability of tax audits
Furthermore, Bancolombia may face non-deductibility of payments made to such residents or entities, unless the required tax amount has been withheld.
Any of these conditions could negatively affect our operations by increasing costs, reducing our client returns, increasing administrative burdens and impact our profitability and relationships with clients operating in these territories.
Changes in banking regulations in Colombia and in other jurisdictions where we operate could adversely affect our results.
Banking laws and regulations, or their official interpretation in Colombia and other jurisdictions in which we operate have a material effect on our business and operations. Banking laws and regulations may change frequently, and changes may be adopted, enforced or interpreted in a manner that may have an adverse effect on our business.
For example, the elimination by the Colombian government in 2024 of housing interest rate subsidies through the Mi Casa Ya program may affect our mortgage portfolio and construction industry, which we participate in, given that housing demand and supply may be negatively affected by an increase in interest rates.
Additionally, in connection with the approval of the pension reform in Colombia, which is pending judicial review by the Constitutional Court, the government will enact regulatory decrees modifying the pension investment rules, the distribution of pension through the financial system, and entities that can manage pension resources, among others. These regulations may result in risks to financial stability and funding sources for the capital markets where we participate once the reform comes into effect in July 2025.
The Ministry of Finance and the Central Bank have issued new rules for public comment regarding the legal framework of immediate payment systems in Colombia, which will require changes to the infrastructure used to manage low value payment systems and may result in additional costs for financial institutions and new operational requirements.
The Ministry of Finance has submitted for public comment a new decree establishing a mandatory open finance system in Colombia. The government's approach in the regulatory decree of Law 2294 of 2023 ('National Development Plan'), which established an open data framework, may result in regulatory arbitrage against banking institutions, which would be required to open their data before other financial institutions, leaving them at a disadvantage and unable to use the data during the period when the system is open.
The SFC has submitted for public comment the second version of the regulatory framework for the implementation of Basel's Pillar II capital requirements regulation and internal capital and liquidity assessment processes (ICAAP-ILAAP). Bancolombia could face potential financial effects if the SFC's rules are more stringent than the Basel Committee on Banking Supervision Standards, which could result in higher capital adequacy and liquidity requirements at a system level.
Our financial results may be negatively affected by changes to accounting standards.
Our financial statements are prepared in accordance with the IFRS, issued by the IASB, as well as the interpretations issued by the IFRS-IC. Changes to the IFRS or its interpretations may cause our future reported results and financial position to differ from current expectations. Such changes may also impact our regulatory capital and financial ratios. Our management monitors potential accounting changes and, when possible, determines their potential impact, disclosing significant future changes in our consolidated financial statements that are expected as a result of those changes. For further information about developments in financial accounting and reporting standards, see Note 2.F. Material accounting policies. – Recently issued accounting pronouncements.
We face risks relating to regulatory compliance in general and, in particular, with respect to laws relating to anticompetitive practices, consumer protection and protection of personal data.
We are subject to compliance with laws and regulations with respect to anticompetitive practices, merger control, unfair competition provisions, personal data protection, cybersecurity requirements and consumer protection. While we have a unit that oversees the implementation of new regulations using a risk-based approach and have developed a comprehensive data protection program to attempt to ensure compliance with personal data law, the risk of noncompliance with these laws and regulations may result in significant sanctions. We may not be able to prevent all risks associated with regulatory compliance or detect all instances of noncompliance, which could result in substantial fines and penalties, adversely affecting our operating results and damaging our reputation.
Future restrictions on interest rates or banking fees could negatively affect our profitability.
In the past, regulators in the jurisdictions where we operate have considered legislative and regulatory initiatives regarding limits on interest rates and banking fees. Although most such initiatives have not been adopted, there may be renewed attempts to impose or strengthen ongoing restrictions on interest rates or banking fees in the future. If we are prohibited or otherwise limited (including by limits on pricing) from continuing to charge our clients for certain products or services, including specified types of transactions, or from imposing charges for products or services that might be introduced in the future, our operating results and financial condition could be adversely affected.
Our results could be adversely affected by high levels of inflation.
High inflation increases the cost of funding and credit risk, while it slows the pace of loan origination and reduces the market value of our debt instruments. Inflation that is higher than the nominal interest rate can discourage savings and increase uncertainty and risk in the loan and stock markets. In Colombia, annual inflation began to decline gradually in the second quarter of 2023 and dropped from 9.3% at the end of 2023 to 5.2% by the end of 2024. However, this level remains above the medium-term target of 3% set by the Central Bank.
There are persistent risks suggesting that reducing inflation will take longer than expected, and it is unlikely that target levels will be achieved by the end of 2025. Factors include the 9.5% minimum wage increase, upward pressures on certain regulated goods and services such as tolls, the sharp depreciation of the Colombian peso against the U.S. dollar, and the pass-through effect on final household prices. It is reasonable to expect that credit portfolio demand will remain moderate and that the reduction in interest rates could begin to negatively impact the net interest margin of financial institutions. In contrast, the inflationary challenge that began in 2022 has been largely addressed in El Salvador, Guatemala and Panama, with inflation dropping significantly in these countries. CPI inflation fell from 1.2% at the end of 2023 to 0.3% at the end of 2024 in El Salvador, from 4.2% to 1.7% in Guatemala, and from 1.9% to -0.2% in Panama.
Therefore, 2025 could be a challenging year for financial intermediation operations, due to inflationary risk that will continue to be more pronounced in Colombia compared to other major economies in Latin America, the United States and the European Union.
We are exposed to environmental, social, governance and sustainability risks that could affect our financial condition and operating results.
Companies in the financial sector are facing significant scrutiny from a wide range of stakeholders on social, environmental, governance and sustainability topics, including climate change and diversity. This includes the role of financial institutions in providing financing to sustainability projects, in supporting sustainable business practices, and in assessing and managing non-financial and emerging risks, including those associated with environmental and social factors. Moreover, our customers, investors, regulators, employees and other stakeholders have differing requirements, expectations, demands and perspectives on these topics, which are continuing to evolve and diverge. We may not be able to meet the differing requirements, expectations and demands of all of our stakeholders, which could harm our reputation, subject us to legal and operational risks, impact customer demand, and adversely impact our financial condition and operating results.
For example, we are subject to both local and global regulations, which are becoming more complex as regulators in some jurisdictions have adopted or proposed laws, regulations and policies that diverge from, or potentially conflict with, those in other jurisdictions. In Colombia, we are required to meet sustainability-related regulatory requirements, particularly those established in External Circular 031 of 2021 and External Circular 005 of 2024, issued by the SFC. External Circular 031 requires financial institutions to disclose climate-related financial risks and their potential impact, in line with the Sustainability Accounting Standards Board ('SASB') and Task Force on Climate-Related Financial Disclosures ('TCFD') frameworks, while Circular 005 focuses on the management and disclosure of environmental, social, governance and sustainability risks in third-party investment portfolios. Globally, the regulatory landscape for environmental, social, governance and sustainability is becoming increasingly complex, with regulators in many jurisdictions adopting laws, regulations and policies aimed at enhancing transparency and promoting sustainability-related practices. Conversely, in the U.S. and other jurisdictions, there has been an increase in regulatory activity against climate- and diversity-related initiatives, which has led and is likely to continue to lead to new laws, regulations and policies seeking to limit, discourage or prohibit such initiatives.
One of the main challenges we face, along with other banks, is the lack of consistency in regulations, as requirements can differ widely, and in some cases, be in conflict with other requirements, across regions and jurisdictions. Failure to comply with any legislation, regulation or policy, including as a result of good faith interpretations that may differ from those taken by enforcement authorities in relevant jurisdictions, could lead to substantial fines, regulatory sanctions, reputational damage and operational changes.
As laws, regulations and policies on these topics continue to evolve, the uncertainty and fragmentation of regulatory approaches across different jurisdictions make compliance more difficult and costly. Additionally, the rapid pace of regulatory changes forces us to constantly update our policies and reporting systems to mitigate potential regulatory and reputational risks.
We are also exposed to the sustainability-related risks faced by our customers. For example, some of our customers face risks related to climate change. Additionally, customers with a high carbon footprint may face costs associated with transition to clean energy, which could increase the probability of default on their obligations.
The physical risks of climate change for some of our clients are compounded by their dependence on natural resources, exposure to biodiversity loss, impacts on critical ecosystems, and deforestation. Moreover, our clients could be affected by evolving legislation, regulation and policies on these issues, as well as shifts in consumer behavior related to these issues and technological advances, such as the move towards a lower-carbon economy. Both physical and transition risks may result in capital losses, either from market changes or noncompliance with emerging, evolving and conflicting regulations. These risks could negatively impact our clients' financial health, operational results, cash flows, and ultimately, their ability to meet payment obligations.
Furthermore, serious climate events could affect business continuity, infrastructure, processes and headcount at our branches and offices, as well as those of our clients. Our inability to manage these risks could negatively impact the value of our and our clients’ assets, such as buildings, branches and ATMs.
Our ability to attract and retain specialized talent, and the lack of professional training in the areas where we operate, could impact some business objectives.
Our business depends on creativity, innovation and flexibility to keep up with technological advances, a changing business model and the growing demand for new products and services. The skills of our employees, the competitiveness and talent of our team, and the management of our culture and work processes are essential for our long-term success. Additionally, the evolution of labor relations poses a significant challenge that can directly impact our performance and long-term stability.
Since our strategic objectives depend largely on our human capital, any shortfall in skills, whether due to the difficulty in attracting highly qualified professionals or the loss of key employees, could translate into lower operational efficiency and a limited capacity to adapt quickly to market changes.
In this regard, financial institutions, including Bancolombia, face challenges identifying and retaining workers for positions that require highly developed and specialized knowledge.
We may be exposed to increased costs and liabilities in the event of the failure of our service providers to perform their obligations under key services contracts.
We enter into contracts with third parties who provide certain key services that are essential to the evolution of our business. These services include core banking services, online banking platforms, data and payment processing services, clearing and settlement services, software for processing credit and debit card transactions and technological infrastructure, among others. Our primary risk with service providers stems from potential operational disruptions, failures, or capacity limitations arising from our reliance on these external providers for critical components of our systems.
While we conduct due diligence before engaging service providers and monitor their business continuity plans, as well as their cybersecurity and data protection measures, we do not control their operations. If any of our key service providers fail to meet their contractual obligations or cause service disruptions (including failure to handle current or increased transaction volumes, inadequate service performance, or failure to comply with applicable laws and regulations), there can be no assurance that we will succeed in attracting and retaining the human resources necessary for the success of our businesses or in limiting cost increases from wages and other employee benefits, which could reduce the profitability of our businesses.
In addition, we may incur significant additional costs in securing substitute service providers. The unavailability of services provided by some technologies and other service providers could result in the interruption of services on certain channels through which our customers conduct transactions until a substitute provider is engaged, which could result in lost revenue, additional costs and potentially, adverse regulatory consequences and reputational harm.
Our businesses rely heavily on data collection, processing and storage systems, the failure of which could materially and adversely affect the effectiveness of our risk management, reputation and internal control system as well as our financial condition and operating results.
All of our principal businesses are highly dependent on the ability to timely collect and process a large amount of financial and other information at our various digital and physical channels across numerous markets, at a time when transaction processes have become increasingly complex and volumes have increased. The proper functioning of financial control, accounting or other data collection and processing systems is critical to our businesses and to our ability to compete effectively.
While we conduct simulations to ensure business continuity and disaster recovery in the event of a system failure or cybersecurity attack, and have measures in place to control vulnerabilities, there can be no guarantee that these measures will successfully eliminate or substantially mitigate the risk associated with any failure of our data collection, processing or storage systems.
A partial or complete failure of any of these systems could materially and adversely affect our decision-making, risk management and internal control systems, the quality of our service, and our ability to respond to rapidly changing market conditions. A system disruption or slowdown could also cause information, including data related to customer requests and other client information, to be lost, compromised or delivered to clients with delays or errors.
Any failure of data collection, processing, storage and management systems could result in loss of business, additional costs and regulatory penalties (including fines and penalties by regulators) that could materially and adversely affect our business, financial condition, reputation and operating results.
Risks relating to the use of quantitative models and information may adversely impact our business strategies and results.
We rely on analytical models to manage financial and non-financial risks, as well as other internal processes. However, these models are inherently subject to limitations and risks. Failures in analytical models may arise from inaccurate, misused, or unreliable tools, poor data quality, methodological flaws in model design, or inappropriate use. Such failures could lead to miscalculations in risk assessment, resulting in financial losses, regulatory scrutiny, or reputational harm.
Reliance on flawed models may adversely impact critical aspects of our operations, including strategic planning, position valuation, stress testing, risk identification and assessment, capital adequacy measurement, client asset management, public information disclosure, and compliance with financial or regulatory requirements.
Our financial results may be negatively affected by changes to assumptions supporting the value of our goodwill.
We test the goodwill of our operating segments for impairment at least annually. The impairment test for assets recognized as of December 31, 2024, indicated that our goodwill balances are not impaired. The impairment test requires management to make assumptions regarding estimated earnings, discount rates, and long-term growth rates affecting the goodwill associated with each operating segment, as well as estimates of the carrying amounts of the operating segments to which the goodwill relates. Additionally, the impairment test requires management to analyze the macroeconomic and political environment of the geographies in which each cash-generating unit ('CGU') is located. If actual results in future periods deviate from the earnings and other assumptions on which the impairment testing is based, the value of the goodwill in any one or more of our businesses may become impaired in the future, resulting in expense charges.
For further information, see Note 2.E to the consolidated financial statements, material accounting policies, use of estimates and judgments.
We are subject to a wide range of information security and cybersecurity incidents that can have a material adverse effect on us.
As we continue to evolve our business model towards an open finance ecosystem, leveraging emerging technologies like the Application Programming Interfaces ('APIs') and Artificial Intelligence ('AI'), we face growing challenges and risks, especially related to information security and cybersecurity. Cybercriminals could use of AI, particularly Generative AI ('Gen AI'), which can create text, images, videos, and audio, to create sophisticated content for malicious purposes, including advanced cyberattacks, automated fraud, and manipulation of financial markets, as well as disruptions, manipulation of digital assets, and information leakage. While AI may play a role in optimizing decision-making, managing risks through fraud detection and credit collection, and enhancing the development of products and services, which would strengthen our competitive advantage and deliver greater value to customers, there is no assurance that it will achieve the intended results. Moreover, inadequate data management may lead to incorrect decisions by AI. Some AI models, especially those used to assess risks associated with our operations and services, may produce inaccurate, insufficient, biased, or unpredictable results, or contain other errors, any of which may not be easily detectable.
Quantum computing, which leverages quantum bits, enables quantum computers to perform calculations at speeds far surpassing those of today’s most powerful supercomputers, posing an emerging risk to system security. Currently, the protection of banking transactions, customer data, and the integrity of financial systems relies on complex encryption methods. In the future quantum computers may be able to use their superior speed to undermine the security that safeguards financial information. As a result, this could expose us to risks such as fraud, data breaches, network security threats, and damage to transaction integrity.
The fact that our services are available electronically, combined with the exploitation of software vulnerabilities, is another cybersecurity risk we face. Cybercriminals constantly seek to exploit system vulnerabilities that arise due to the dynamic changes and rapid obsolescence of technology. This is a challenge for both software service providers and their customers--vendors must continuously implement solutions for these vulnerabilities and customers, in turn, must implement these solutions quickly as well.
To meet the new demands of our competitive landscape, we have adopted certain work strategies that result in additional challenges for cybersecurity risk management. As an example, some of our employees work virtually in remote and hybrid models, which present challenges such as remote software updating and backdoor control that can lead to data leakage. This leaves employees exposed to email phishing, social engineering, and the use of vulnerable applications.
Our collaboration with service providers, whether we are using their software or working with them to develop products and services, enhances our capabilities and creates business efficiencies. However, it also increases our exposure to cybersecurity risks, such as threats to the confidentiality, integrity and availability of our information assets. It also exposes us to cyberattacks such as ransomware, which could disrupt operations, result in the loss of critical information and clients, and lead to cost overruns and economic losses. Moreover, External Circular 004 of 2024, issued by the SFC, mandates that financial institutions assess the cybersecurity conditions of critical third-party providers and sets rules for open finance services, including restrictions on web scraping. Failure to adhere to these regulations could expose us to legal, operational, and reputational risks, further highlighting the need for robust cybersecurity measures.
As of the date of this Annual Report, there have been no material cybersecurity incidents. However, our strategy, operating results and financial condition could be materially affected by cybersecurity risks and future material incidents. A failure to comply with our cybersecurity policies, procedures or controls, employee misconduct, or human, governance or technological errors could also jeopardize our ability to protect ourselves against cyberattacks.
For further information, see Item 16 k. Cybersecurity.
Acquisitions and strategic alliances may not perform as expected or may disrupt our operations and adversely affect our profitability.
We are exposed to financial risks due to the decline in the value of our acquisitions and joint ventures through strategic alliances. In particular, we hold a 50% stake in Compañía de Financiamiento Tuya S.A., which had impairment losses in 2024, as the investment value was lower than its book value, adversely affecting our financial results. Future declines in the value of our investments could negatively impact our financial condition and operating results.
We are subject to increasing competition, which may adversely affect our operating results.
We operate in a highly competitive environment and management expects an increase in competition in jurisdictions where we operate.
Intensified merger activity in the financial services industry has produced larger, better capitalized and more geographically diverse firms that can offer a wider array of financial products and services at more competitive prices. Also, the expansion of financial technology companies (known as 'FinTech') and unregulated financial intermediaries (known as 'shadow banking'), may increase competitive risks for us.
In 2025, we are preparing to launch a new instant payment system ('Bre-B') with the Colombian Central Bank. This system will allow interoperable payments and transfers to work with 'keys', which are unique identifiers linked to a bank account. The launch phase will focus on attracting clients and ensuring that they register keys with their banks. Failing to secure a significant portion of clients during this phase could jeopardize our market leadership and market share.
In addition, we face the risk that existing or potential competitors may adopt potentially disruptive innovations using artificial intelligence, optimizing their operations, personalizing their customer service and increasing their efficiency.
Our ability to maintain our competitive position, and our business, depends on: (i) fulfilling new customers’ needs through the development of new products and services; (ii) strengthening our customer base through cross-selling and remaining the primary bank of our customers; (iii) continuing our digital and technological transformation to support growth; and (iv) attracting and retaining talent. A failure to achieve any of these goals could adversely impact our operations.
We are subject to operational risks and losses.
We are exposed to operational risks that include fraud by employees or third parties, human error, inadequate process definition and technical failures that have impacted and could in the future affect the availability of services or result in improper processing of transactions. Internal fraud, in particular, refers to intentional acts of misconduct by employees, such as misappropriation of assets, manipulation or leakage of financial information, corruption, or unauthorized actions that violate established policies. These incidents not only cause financial losses but can also damage our reputation and negatively affect the trust of our stakeholders.
The financial sector is particularly vulnerable to the risk of fraud due to the accelerated digital transformation, the growth in transaction volumes and the development of new forms of fraud, all of which become a challenge for operational risk management. We depend on an extensive network of suppliers to do business, and any failures or weaknesses in these suppliers or an inability to manage their risks could result in increased costs, compromised confidential information and a decline in the quality or continuity of our products and services.
Given customers’ increasing demands to migrate from the physical to the digital world, we aim to offer a stronger value proposition through digital channels, the design of new business models and the adoption of new technologies and systems. However, these new technologies and business models may introduce new risks or amplify existing ones.
Digital misinformation could adversely affect our reputation as well as our operational and financial results.
We are subject to the risk of digital misinformation and the possibility of false news (either fabricated or misleading) about us being disseminated in the media and/or social media, which can increase negative sentiment towards us and negatively affect the trust of customers and other stakeholders. Such events could negatively impact our business and market share, which would adversely impact our operational, economic and reputational performance.
The growth of digital connectivity has made it easier for content to spread quickly through social media. In 2024, we had a strong digital presence, reaching 34.6 million users, and mentions of Bancolombia increased by more than 18% compared to 2023. While we have been mentioned in various channels and in articles, photos, and videos, some of these mentions have been used to attempt fraud. As a result, managing the risk of digital disinformation remains a challenge.
We are attempting to monitor this risk by looking at how the public (both customers and non-customers) sees our ability to respond to and correct false information in the media and on social media. We aim to take action to fix any issues we find, report misuse of our name, and correct wrong information. However, there is no guarantee that we will be able to handle or fix these issues in the future.
Our policies and procedures may not be able to detect money laundering, terrorism financing, corruption or other illegal or improper activities fully or on a timely basis.
We are required to comply with applicable anti-money laundering, anti-terrorism and anti-corruption laws and regulations. These laws and regulations require us to adopt and enforce 'Know Your Customer' policies and procedures and report suspicious and large transactions to the applicable authorities. The regulations are contained in our Anti-Money Laundering Manual, or Manual SARLAFT Bancolombia, which is reviewed and updated annually, or more frequently if there are relevant changes in the applicable regulations.
While we have adopted risk-based policies and procedures, including identifying ultimate beneficial owners, aimed at preventing and detecting the use of our banking network for money laundering and terrorism financing activities and by terrorists and terrorist-related organizations, as the methods used by criminals evolve and become increasingly sophisticated, such policies and procedures may not completely eliminate the risk that we could be taken advantage of for money laundering, terrorism financing, corruption or other illegal or improper activities
We are subject to anti-corruption laws and regulations, including the U.S. Foreign Corrupt Practices Act and Colombian regulations on transnational bribery, domestic bribery and others forms of corruption. We have policies and procedures aimed at preventing, detecting and responding to acts of corruption that could be committed by our directors, employees, suppliers and others. These include our anti-corruption policy, which is reviewed twice every year and updated as needed, employee training based on behavioral science, reporting channels including an ethics line, monitoring, internal investigations, sanctions and our whistleblower protection policy. While the system is designed to detect and prevent corrupt behavior, it does not eliminate the risk of corrupt practices. If we fail to fully comply with applicable laws and regulations, we could face fines, penalties or other liabilities, including restrictions on our ability to conduct business.
In addition, our business and reputation could suffer.
Noncompliance with applicable laws and regulations may expose us to fines, penalties, or operational restrictions. Furthermore, our reputation and ability to conduct business could be negatively affected if we fail to effectively prevent and address instances of money laundering, terrorism financing, corruption, or other unlawful activities.
Risks relating to the preferred shares and the ADSs.
Preemptive rights may not be available to holders of ADRs evidencing ADSs.
Bancolombia’s bylaws and Colombian law require that, whenever Bancolombia issues new shares of any outstanding class, it must offer the holders of each class of shares (including holders of ADSs) the right to purchase a number of shares of the same class sufficient to maintain their existing percentage ownership of the aggregate capital stock of Bancolombia . These rights are called preemptive rights. United States holders of ADSs may not be able to exercise their preemptive rights through The Bank of New York Mellon, which acts as depositary (the 'Depositary') for Bancolombia’s ADR facility, unless a registration statement under the Securities Act is effective with respect to such rights and class of shares or an exemption from the registration requirement is available.
Bancolombia is obligated to file a registration statement or find a corresponding exemption only if it determines to extend the rights to holders of the ADSs. Although it is not obligated to do so, Bancolombia intends to consider at the time of any rights offering the costs and potential liabilities associated with any such registration statement, the benefits to Bancolombia from enabling the holders of the ADSs to exercise those rights and any other factors deemed appropriate at the time before it makes a decision as to whether to file a registration statement. Accordingly, Bancolombia may in some cases decide not to file a registration statement.
Under the deposit agreement between Bancolombia and the Depositary, only the Depositary is entitled to exercise preemptive rights, and the Depositary has no obligation to make available preemptive rights to holders of ADSs. If Bancolombia offers or causes to be offered to the holders of any deposited securities, including preferred shares of Bancolombia, any rights to subscribe for additional preferred shares of Bancolombia or any rights of any other nature, the Depositary has discretion as to the procedure to be followed in making such rights available to any holders of ADSs or in disposing of such rights on behalf of any holders of ADSs and making the net proceeds available to such holders of ADSs. If by the terms of such rights offering or for any other reason, the Depositary does not either make such rights available to any holders of ADSs or dispose of such rights and make the net proceeds available to such holders of ADSs, then the Depositary will allow the rights to lapse. Whenever the rights are sold or lapse, the equity interests of the holders of ADSs will be proportionately diluted.
Exchange rate fluctuations may adversely affect the Colombian economy, the market price of Bancolombia’s ADSs, and the dividends payable to holders of Bancolombia’s ADSs.
Colombia has adopted a floating exchange rate system, but the Central Bank maintains the power to intervene in the exchange market in order to consolidate or dispose of international reserves, and to control any volatility in the exchange rate. From time to time, and in particular during the past two years, the Colombian peso has fluctuated significantly against the U.S. dollar. Unforeseen events in the international markets, fluctuations in interest rates, oil price volatility, or changes in capital flows, may cause exchange rate instability that could generate sharp movements in the value of the peso.
Because a portion of our assets and liabilities are denominated in, or indexed to, foreign currencies, especially the U.S. dollar, sharp movements in exchange rates may negatively impact our results. In addition, exchange rate fluctuations may adversely impact the value of dividends paid to holders of our ADSs as well as the market price and liquidity of ADSs.
Bancolombia’s preferred shares have limited voting rights.
Bancolombia’s corporate affairs are governed by its bylaws and Colombian law. Under Bancolombia’s bylaws and Colombian law, Bancolombia’s preferred stockholders may have fewer rights than stockholders of a corporation incorporated in a U.S. jurisdiction. Under Bancolombia’s bylaws and Colombian corporate law, holders of preferred shares (and, consequently, holders of ADSs) have no voting rights in respect of preferred shares, other than in limited circumstances as described in Item 10. Additional Information – B. Memorandum and Articles of Association – Voting Rights – Preferred Shares. Holders of Bancolombia’s preferred shares, including holders of ADSs, are not entitled to vote for the election of directors or to influence Bancolombia’s management policies.
Holders of Bancolombia’s ADSs may encounter difficulties in the exercise of dividend and voting rights.
Holders of Bancolombia’s ADSs may encounter difficulties in the exercise of some of their rights with respect to the shares underlying ADRs. If Bancolombia makes a distribution to holders of underlying shares in the form of securities, the Depositary is allowed, at its discretion, to sell those securities on behalf of ADS holders and instead distribute the net proceeds to the ADS holders. Also, even in those limited instances in which the preferred shares represented by the ADSs have the power to vote, under some circumstances, ADS holders may not be able to vote by giving instructions to the Depositary. This may occur if ADS holders do not receive from the Depositary a notice of meeting sufficiently prior to the instruction date to ensure that the Depositary will vote the preferred shares represented by the ADSs in accordance with instructions received from such holders. There are no circumstances in which holders of ADSs may vote in a way other than by providing instructions to the Depositary.
Relative illiquidity of the Colombian securities markets may impair the ability of an ADS holder to sell preferred shares.
Bancolombia’s common and preferred shares are listed on the Colombian Securities Exchange, which is relatively small and illiquid compared to securities exchanges in major financial centers. In addition, a small number of issuers represent a disproportionately large percentage of market capitalization and trading volume on the Colombian Securities Exchange. A liquid trading market for Bancolombia’s securities might not develop on the Colombian Securities Exchange. A limited trading market could impair the ability of an ADS holder to sell preferred shares (obtained upon withdrawal of such shares from the ADR facility) on the Colombian Securities Exchange in the amount and at the price and time such holder desires and could increase the volatility of the price of the ADSs.
Changes in Colombia’s tax regime may affect the tax treatment of ADSs.
ADSs do not have the same tax treatment as other equity investments in Colombia. ADSs represent Bancolombia’s preferred shares and are held through a fund of foreign capital in Colombia that is subject to a specific tax regulatory regime. Accordingly, the Colombia law applicable to equity investments, in particular those relating to dividends and profits from sale, do not apply to ADSs, including Bancolombia’s ADSs.
Notwithstanding the above, the tax regime applicable to ADSs may change, considering that the Colombian tax regime has undergone several changes in recent years.
For more information, see Item 10. Additional Information. – E. Taxation – Colombia Taxation.
ITEM 4 Information about the Company
A.History and development of the company
Bancolombia is one of the largest Colombian financial groups, with presence in other countries such as Panama, El Salvador, Puerto Rico, Guatemala and the United States. We provide a wide range of financial products and services to a diversified individual, corporate and government customer base throughout Colombia, Latin America and the Caribbean.
Our holding company, Bancolombia, is a stock company (sociedad anónima) domiciled in Medellin, Colombia, and operates under Colombian laws and regulations. Bancolombia was incorporated in Colombia in 1945, and is incorporated until December 8, 2144. In May 2007, Bancolombia Panama acquired Banagrícola. In October 2013, Bancolombia acquired Banistmo, and Bancolombia Panama acquired a 40% interest in Grupo Agromercantil. In December 2015, Bancolombia Panama acquired an additional 20% interest in Grupo Agromercantil, and acquired the remaining 40% interest in September 2020.
Since 1981, Bancolombia’s common shares have traded on the Colombian Securities Exchange under the symbol 'BCOLOMBIA.' Since 1995, Bancolombia has maintained a listing on the NYSE, where its ADSs are traded under the symbol 'CIB,' and on the Colombian Securities Exchange, where its preferred shares are traded under the symbol 'PFBCOLOM.' See Item 9. The Offer and Listing.
Bancolombia's headquarters are located at Carrera 48 # 26-85, Medellín, Colombia, and the telephone number is + (57) 601 488-5950.
Bancolombia's website is: https://www.grupobancolombia.com.
Bancolombia's agent for service of process in the United States is Puglisi & Associates, located at 850 Library Avenue, Suite 204, Newark, Delaware 19711. The SEC maintains a website at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
Recent developments
Start of operations of our Subsidiary Wenia Ltd.
On May 2, 2024, our subsidiary Wenia Ltd., an affiliate of Banca de Inversión incorporated under the laws of Bermuda, began operations.
Wenia is a platform that provides digital asset services to Colombian citizens who are resident in Colombia. Wenia’s clients can buy, sell, convert, receive and send the digital assets available in the platform, including the COPW, a digital asset created by Wenia and indexed 1:1 to the Colombian peso.
Wenia holds a Class F license granted by the Bermuda Monetary Authority, the entity responsible for regulating Wenia’s activities, under the Bermuda Digital Asset Business Act of 2018.
Liability management transaction in the United States
On June 3, 2024, Bancolombia announced a transaction to optimize Bancolombia's capital and indebtedness structure.
As part of the liability management transaction, Bancolombia launched offers to purchase for cash any and all of its outstanding 3.000% Senior Notes due 2025 (the '2025 Notes') and up to USD 400,000,000 of its outstanding 6.909% Subordinated Notes due 2027 (the '2027 Notes'), upon the terms and subject to the conditions set forth in an Offer to Purchase addressed to holders of the notes.
On June 24, 2024, Bancolombia purchased USD 267,421,000 of the 2025 Notes and USD $283,632,000 of the 2027 Notes. Additionally, on July 2, 2024, Bancolombia purchased USD 2,013,000 of the 2025 Notes and USD 4,661,000 of the 2027 Notes. The tenders represented approximately 55.90% of the 2025 Notes and 38.44% of the 2027 Notes. Holders of the 2025 Notes tendered by the expiration date received USD 936.46 per USD 1,000 principal amount, and holders of the 2027 Notes received USD 950.00 per USD 1,000 principal amount, plus accrued interest.
On July 2, 2024, Bancolombia announced the expiration and final tender results of its offers to purchase.
New Issuance of USD 800 million of Subordinated Notes
On June 17, 2024, Bancolombia announced that it had priced the public offering of USD 800,000,000 in aggregate principal amount of its subordinated notes due December 24, 2034 (the 'Notes Offering'). The notes have a 10 years and six months maturity, are subject to optional redemption following the fifth anniversary of the issuance, and were issued with a coupon of 8.625% (subject to adjustment on a reset date), payable semi-annually on June 24 and December 24 of each year, commencing on December 24, 2024.
Bancolombia used part of the proceeds from the Notes Offering to purchase its 2027 Notes, pursuant to the liability management transaction announced on June 3, 2024. Remaining proceeds were used for general corporate purposes.
Redemption of the 3.000% Senior Notes due 2025 and the 4.625% Subordinated Notes due 2029
On October 24, 2024, Bancolombia announced that it would redeem in full all of its outstanding 2025 Notes on November 13, 2024, and all of its 4.625% Subordinated Notes due 2029 on December 18, 2024. The 2025 Notes were redeemed at a make-whole redemption price, which is the greater of the treasury rate plus 25 basis points plus accrued interest, or 100% of the principal amount plus accrued interest. The 2029 Notes were redeemed at 100% of the principal amount plus accrued interest.
Corporate Structure Changes and creation of Grupo Cibest S.A. holding company
On October 29, 2024, Bancolombia announced that its Board of Directors had authorized management to move forward with the steps necessary to modify the corporate structure of Bancolombia Group through the creation of a holding company named Grupo Cibest S.A. ('Grupo Cibest') and related corporate transactions (the 'Corporate Structure Changes'). The Corporate Structure Changes aim to separate Bancolombia as a financial entity from Grupo Cibest as the parent company to optimize capital allocation and facilitate business structuring. These changes will be presented for consideration at an Extraordinary General Shareholders' Meeting of the common and preferred shareholders of Bancolombia to be held on April 23, 2025. As of February 28, 2025, all regulatory approvals required to effect the Corporate Structure Changes have been received.
The Corporate Structure Changes include distributing certain subsidiaries and assets to Grupo Cibest and merging specific entities, and ensuring shareholders of Bancolombia would maintain their shares and rights in Grupo Cibest. Grupo Cibest's common and preferred shares would be listed on the Bolsa de Valores de Colombia, and Grupo Cibest will maintain an ADR facility equivalent to Bancolombia’s existing ADR facility, with such ADRs representing interests in Grupo Cibest’s preferred shares and listed on the NYSE. Bancolombia would continue to be the issuer of its bonds that are outstanding at the time of the Corporate Structure Changes and offer the same products and services through existing channels.
Filing of a registration statement on form F-4
On December 2, 2024, Bancolombia announced that it had filed a registration statement on Form F-4 with the SEC in connection with the Corporate Structure Changes. The Form F-4 is necessary for registering the common and preferred shares to be issued by Grupo Cibest under the U.S. Securities Act (including the preferred shares to be issued in respect of American depositary shares).
On March 19, 2025, Bancolombia announced that it had filed Amendment No. 1 to the registration statement on Form F-4 with the SEC. The registration statement on Form F-4 was declared effective on March 21, 2025, and the final prospectus is being sent to shareholders in the U.S. Shareholders were encouraged to read the Form F-4 and other related documents for important information about the Corporate Structure Changes.
Renewal of liquidity program
On December 11, 2024, Bancolombia announced that the Colombian Stock Exchange (BVC) had authorized the indefinite renewal of a liquidity program for Bancolombia's ordinary and preferred shares with Credicorp Capital Colombia.
This program seeks to increase the number of transactions involving Bancolombia's shares through purchase and sale orders entered by Credicorp Capital Colombia on the Colombian Stock Exchange, enabling price formation.
These mechanisms contribute to promoting liquidity and mitigating volatility in stock trading and facilitating market entry and exit for investors.
Public takeover offers
In 2024, and as of the date of this Annual Report, there have been no public takeover offers by third parties for Bancolombia's shares or by us for other companies’ shares.
Capital acquisitions and divestitures
During 2024, total capital expenditures amounted to COP 714.7 billion. Such investments were mainly focused on distribution channels and technology assets (COP 603.6 billion) driven by investments in digital transformation and fixed assets (COP 111.1 billion).
For 2025, Bancolombia expects to invest approximately COP 763.9 billion (up 7% from 2024) mainly on financial and non-financial digital experiences and new fraud management capabilities, such as facial biometrics and behavioral analysis, in addition to investments in products to guarantee the speed, timeliness and scalability of Bancolombia's services.
We also expect that, in the medium term, capital expenditures associated with distribution channels, cybersecurity, migration to the cloud, and digital offerings will continue to be a priority, to maintain operational excellence and customer experience.
The following table summarizes Bancolombia’s principal capital acquisitions and divestitures of interests in other companies, for the years ending December 31, 2024, 2023 and 2022:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital acquisitions(1) |
Type of investment |
For the year ended December 31, |
Total |
| 2024 |
2023 |
2022 |
|
|
In millions of COP |
| Purchases of investments |
|
|
|
|
|
| P.A. CEDIS Sodimac |
Subsidiary |
462,442 |
|
- |
|
- |
|
462,442 |
|
| FCP Pactia Inmobiliario |
Financial instrument |
230,674 |
|
- |
|
- |
|
230,674 |
|
| P.A. Linz Granz del Rio |
Subsidiary |
6,490 |
|
- |
|
- |
|
6,490 |
|
| P.A. Coba |
Joint venture |
5,823 |
|
- |
|
- |
|
5,823 |
|
| Ozone Financial Technology Limited |
Financial instrument |
3,908 |
|
- |
|
- |
|
3,908 |
|
| Fideicomiso Selecto Terrazu E1 |
Subsidiary |
3,516 |
|
- |
|
- |
|
3,516 |
|
| P.A. Acelera TI |
Joint venture |
560 |
|
- |
|
- |
|
560 |
|
| P.A. Nomad Central |
Subsidiary |
- |
|
106,020 |
|
- |
|
106,020 |
|
P.A. Calle 84(2) |
Subsidiary |
- |
|
104,617 |
|
- |
|
104,617 |
|
Holding Bursátil Regional S.A.(3) |
Financial instrument |
- |
|
78,139 |
|
- |
|
78,139 |
|
| P.A. Galería la 33 |
Subsidiary |
- |
|
30,139 |
|
- |
|
30,139 |
|
| Pexton Holdings Limited |
Financial instrument |
- |
|
3,681 |
|
- |
|
3,681 |
|
| P.A. Wenia |
Subsidiary |
- |
|
2,210 |
|
- |
|
2,210 |
|
| FCP Fondo Inmobiliario Colombia |
Subsidiary |
- |
|
- |
|
816,081 |
|
816,081 |
|
| Nequi S.A. |
Subsidiary |
- |
|
- |
|
150,000 |
|
150,000 |
|
| P.A. Flor Morado Plaza |
Subsidiary |
- |
|
- |
|
140,000 |
|
140,000 |
|
| Fideicomiso Lote B6 Ciudad del Río |
Subsidiary |
- |
|
- |
|
43,659 |
|
43,659 |
|
| P.A. Florencia Ferrara |
Subsidiary |
- |
|
- |
|
6,933 |
|
6,933 |
|
| Expenditures |
|
|
|
|
|
| Nequi S.A. |
Subsidiary |
90,000 |
|
- |
|
- |
|
90,000 |
|
| Compañía de Financiamiento Tuya S.A. |
Joint venture |
76,750 |
|
62,500 |
|
55,000 |
|
194,250 |
|
P.A. Calle 84(2) |
Subsidiary |
60,760 |
|
- |
|
- |
|
60,760 |
|
| P.A. Nomad Salitre |
Subsidiary |
52,920 |
|
27,930 |
|
21,560 |
|
102,410 |
|
| Inversiones CFNS S.A.S. |
Subsidiary |
50,000 |
|
- |
|
- |
|
50,000 |
|
| P.A. Nomad Central |
Subsidiary |
40,670 |
|
- |
|
- |
|
40,670 |
|
| P.A. Nomad Distrito Vera |
Subsidiary |
31,409 |
|
- |
|
- |
|
31,409 |
|
| Wenia Ltd. |
Subsidiary |
30,463 |
|
61,566 |
|
9,620 |
|
101,649 |
|
| P.A. El Bosque |
Associate |
25,376 |
|
16,665 |
|
40,231 |
|
82,272 |
|
| Ecosistemas Digitales S.A.S. |
Joint venture |
7,015 |
|
8,642 |
|
5,149 |
|
20,806 |
|
| Bancolombia Capital Holdings USA LLC |
Subsidiary |
5,386 |
|
8,488 |
|
7,916 |
|
21,790 |
|
| P.A. Distrito Vera |
Associate |
5,188 |
|
6,227 |
|
- |
|
11,415 |
|
| Internacional Ejecutiva de Aviación S.A.S. |
Associate |
3,000 |
|
- |
|
- |
|
3,000 |
|
| Servicios de Identidad Digital S.A.S. |
Associate |
2,487 |
|
2,433 |
|
7,267 |
|
12,187 |
|
| P.A. Muverang |
Joint venture |
1,952 |
|
3,305 |
|
1,750 |
|
7,007 |
|
| P.A. FAI Calle 77 |
Subsidiary |
826 |
|
3,469 |
|
62,041 |
|
66,336 |
|
| Sistema de Inversiones y Negocios S.A. |
Subsidiary |
- |
|
75,505 |
|
27,109 |
|
102,614 |
|
| Wompi S.A.S. |
Subsidiary |
- |
|
41,000 |
|
20,706 |
|
61,706 |
|
| P.A. Mercurio |
Subsidiary |
- |
|
7,833 |
|
249,492 |
|
257,325 |
|
| P.A. El Otoño |
Associate |
- |
|
8,055 |
|
23,926 |
|
31,981 |
|
| P.A. Viva Malls |
Associate |
- |
|
3,192 |
|
- |
|
3,192 |
|
| P.A. Laurel |
Joint venture |
- |
|
3,156 |
|
22,927 |
|
26,083 |
|
| P.A. Blup |
Joint venture |
- |
|
2,353 |
|
- |
|
2,353 |
|
| P.A. Mirador de la Ciénaga |
Associate |
- |
|
155 |
|
1,965 |
|
2,120 |
|
| Agricapital S.A.S. |
Associate |
- |
|
97 |
|
322 |
|
419 |
|
| Protección S.A. |
Associate |
- |
|
- |
|
61,728 |
|
61,728 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital acquisitions(1) |
Type of investment |
For the year ended December 31, |
Total |
| 2024 |
2023 |
2022 |
|
|
In millions of COP |
| VILIV S.A.S. (Dissolved) |
Joint venture |
- |
|
- |
|
1,498 |
|
1,498 |
|
| Others |
|
4,168 |
|
3,199 |
|
62,207 |
|
69,574 |
|
| Total acquisitions |
|
1,201,783 |
|
670,576 |
|
1,839,087 |
|
3,711,446 |
|
(1)The amounts in this table correspond to the consideration paid as a result of the acquisition of each investment.
(2)The amount includes the capital acquisitions in P.A. Calle 84 (2) and P.A. Calle 84 (3).
(3)In November 2023, the integration of the stock exchanges of Colombia, Chile, and Peru was perfected, resulting in the creation of the Regional Stock Holding. As a result of this integration, 5,992,160 shares of the Bolsa de Valores de Colombia S.A. were delisted for COP 56,146, and 3,606,223 shares were recognized in the Regional Stock Holding for COP 78,139, this transaction generated an income in results of COP 21,993, see Note 25.5. Dividends and net income on equity investments. Bancolombia retains 134 shares that were not included in this transaction, valued at COP 2.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital divestitures(1) |
Type of investment |
As of December 31, |
Total |
| 2024 |
2023 |
2022 |
|
|
In millions of COP |
| Sales of investments |
|
|
|
|
|
| Fideicomiso Irrevocable de Garantía, Fuente de Pago y Administración Inmobiliaria Polaris |
Subsidiary |
51,098 |
|
- |
|
- |
|
51,098 |
|
| Fideicomiso Lote Distrito Vera B4 |
Subsidiary |
26,358 |
|
- |
|
- |
|
26,358 |
|
| Residual Rights |
Financial instrument |
18,516 |
|
8,958 |
|
16,056 |
|
43,530 |
|
| Bolsa de Valores de Colombia |
Financial instrument |
- |
|
56,146 |
|
- |
|
56,146 |
|
| Fideicomiso Lote B6 Ciudad del Río |
Subsidiary |
- |
|
34,031 |
|
- |
|
34,031 |
|
| Diversitures |
|
|
|
|
|
| P.A. Madrid II |
Associate |
11,278 |
|
- |
|
- |
|
11,278 |
|
| P.A. La Felicidad |
Associate |
3,168 |
|
3,636 |
|
- |
|
6,804 |
|
| P.A Mirador de La Ciénaga |
Associate |
3,053 |
|
- |
|
- |
|
3,053 |
|
| P.A. El Otoño |
Associate |
2,894 |
|
- |
|
- |
|
2,894 |
|
| P.A. Boreal |
Associate |
520 |
|
864 |
|
452 |
|
1,836 |
|
| Banco Latinoamericano de Comercio Exterior |
Financial instrument |
520 |
|
- |
|
- |
|
520 |
|
Proteccion S.A.(2) |
Associate |
- |
|
- |
|
161,529 |
|
161,529 |
|
| P.A. Viva Malls |
Associate |
- |
|
- |
|
14,361 |
|
14,361 |
|
| Others |
|
954 |
|
724 |
|
13,269 |
|
14,947 |
|
| Total divestitures |
|
118,359 |
|
104,359 |
|
205,667 |
|
428,385 |
|
(1)The amounts in this table correspond to the consideration received as a result of the sale of each investment.
(2)On December 5, 2022, the spin-off of Protección S.A. was registered and the company Asulado Seguros de Vida S.A. was formed, with respect to which the Bank sold its interests to SURA Asset Management S.A., to comply with the authorized investment regime.
B.Business overview
B.1General
Company description
We are a full-service financial group offering a wide range of banking products and services to a diversified customer base of nearly 33 million individual and corporate customers. We deliver our products and services through a regional network comprising, as of the date of this Annual Report, Colombia’s largest non-government banking network, El Salvador’s leading financial conglomerate, Guatemala’s fourth-largest bank, Panama’s second-largest bank and offshore banking subsidiaries in Panama and Puerto Rico.
Main lines of business
We manage our business through nine main operating segments: Banking Colombia, Banking Panama, Banking El Salvador, Banking Guatemala, Trust, Investment Banking, Brokerage, International Banking, and All Other. For a description and discussion of these segments, please see Item 5. Operating and Financial Review and Prospects – A. Operating Results – Results by Segment.
PRODUCTS AND SERVICES
We offer the following products and services. Not all are offered in each country where we operate.
Savings and Investment: We offer our customers checking accounts, savings accounts, fixed-term deposits and a variety of investment products that fit the specific transactional needs of each client and income bracket.
A la Mano: A mobile phone-based savings account for low-income clients and those with no prior banking experience. The service will cease to be available in May 2025. Starting March 5, 2025, clients have the option to transition to Nequi by downloading the app to their mobile phones, by going to an official app store, or by following the steps in their Bancolombia A la mano app. They also have the option to open a Bancolombia savings account, according to their needs.
Financing: We offer a wide range of credit alternatives, including trade financing, loans funded by domestic development banks, working capital loans, mortgage, credit cards, personal loans, vehicle loans, payroll loans and overdrafts.
Factoring: We offer solutions for handling working capital and maximizing asset turnover through comprehensive solutions to manage accounts receivable financing.
Financial and Operating Leases: We offer financial and operating leases specifically designed for acquiring fixed assets.
Capital Markets: We assist our clients in mitigating market risk through hedging instruments such as futures, forwards, options and swaps.
Trading: Bancolombia offers an app and an internet-based trading platform for retail and institutional clients, which allows them to buy and sell securities on the Colombian Stock Exchange.
Bancolombia also performs interbank lending, repurchase agreements (repos), foreign exchange transactions, as well as sovereign and corporate securities sales and trading. Bancolombia is an active player in the 'market-makers' scheme for trading Colombian sovereign debt (TES bonds).
Bancolombia offers its clients direct access to local and international capital markets through a full range of brokerage and investment advisory services that cover equities and fixed income securities, proprietary trading and third-party asset management products, such as mutual funds, private equity funds, and privately managed investment accounts for institutional, corporate and private bank clients.
Cash Management: We provide support to our clients through efficient cash management, offering a portfolio of standard products that allow clients to make payments and collections through different channels. Our payables and receivables services provide solutions to process and reconcile transactions accurately, efficiently, and in a timely manner. We also offer a comprehensive reporting solution, providing the data that is required by customers’ internal processes. In addition, we design and create products to address our clients’ specific payment and collection needs. These include a variety of real time web services, straight-through processing (STP) and messaging through SWIFT Net solutions.
Foreign Currency and Trade Finance: We offer our clients specialized solutions to satisfy their foreign currency investment, financing and payment needs. We also provide trade finance solutions with products such as letters of credit, standby letters of credit and bills collection.
Bancassurance and Insurance: Bancolombia distributes diverse insurance products (life, health, agriculture, pets, debtors, and homeowner's insurance) written by Seguros Generales Suramericana S.A and Seguros de Vida Suramericana S.A, two of the main insurance companies in Colombia. In addition, Bancolombia offers unemployment and theft insurance written by Cardif Colombia Seguros Generales S.A.
Investment Banking: Bancolombia through its subsidiary Banca de Inversión, offers a wide variety of value-added services, including structuring of leverage finance (project finance, acquisitions, and large corporate loans), loan syndication, debt and equity capital markets, principal investments (in alternative assets), M&A, hedging strategy advisory, restructurings, across all economic sectors, with coverage in Colombia and Central America.
Trust and Fiduciary Services: Bancolombia, through its subsidiary Fiduciaria Bancolombia, offers a broad portfolio of services tailored for companies and individuals. These services include managing escrow accounts, multiple investment funds, and real estate funds.
Nequi (Digital): Nequi is a 100% digital business line with a strong focus on financial inclusion, user-friendly services and the intensive use of technology. It operates under Bancolombia's license and uses technology to address the financial needs of today's clients. Nequi is completely paperless; users interact with the platform exclusively by mobile phone, with no contact with Bancolombia’s branch network. Nequi offers savings accounts, a digital debit card, PayPal integration, loans and third-party non-financial services, such as utilities, entertainment and transportation, to over 21.3 million users in Colombia.
In 2024, Nequi focused on consolidating its value proposition and increasing access to credit, resulting in a 517% increase in originations.
Nequi is in the process of obtaining its own financial institution license, separate from Bancolombia, a development that we expect will help unlock the value of the business and enhance its development. Preparations for the separation were completed in the first quarter of 2024 and the SFC conducted a verification visit. The SFC has been reviewing the Nequi proceedings in parallel with the Corporate Structure Changes. This process has not slowed down Nequi’s progress, as it continues to add new services and functionality.
At the end of 2024, a decision was made to unify Banistmo’s digital offerings, transitioning Nequi customers in Panama to the online banking services of Banistmo. Nequi Panama has always operated under Banistmo’s banking license under a brand-use license contract granted by Bancolombia
NEW PRODUCTS OR SERVICES
We continue our efforts to diversify and innovate in our product portfolio. Below is a brief description of the new products and services introduced in 2024:
New features in Bancolombia Cards: Bancolombia Cards introduced new features designed to enhance customer experience (which includes the introduction of the Virtual Debit Card through Apple Pay, Google Pay and Garmin Pay).
In August, we rolled out TouchCard functionality on our new Mastercard debit and credit cards, which includes tactile markers for visually impaired customers, enhancing their independence and security. In November, Bancolombia launched the Tap to Add feature for Visa cards, which allows customers to add their cards to iOS devices by simply tapping them close to the screen.
Collections, Taxes, and Government (RIGO): Bancolombia's new proprietary, cloud-based digital collection system helps our clients manage their accounts receivable and collection processes. It is flexible and customizable for clients in all segments of our business.
Customer Collection Files to Bancolombia via Host to Host (H2H): We enabled a new option for the exchange of collection files between Bancolombia and our business clients, using a direct, more secure, automatic connection called Host to Host (H2H). With this new functionality, our clients no longer need to access our virtual branch to carry out this process, simplifying and reducing their operational burden.
Capital Life Insurance: This product, launched in February 2024, offers our clients protection in case of death or disability. As an added benefit, clients can receive a percentage of the premiums paid each year as a refund, activated after 12 months of the policy being in force and settled annually. This new product provides benefits during the term of the insurance, an innovation in the insurance market.
Self-management of Trust Businesses: We launched a new service that allows customers to self-manage payment orders from a virtual branch. Customers can check payment status, download payment receipts, reschedule payment dates and file payroll payments.
Business App and Virtual Business: These have been transformed to offer a better, more user-friendly and fully digital experience, providing more functionality and simplifying the management of business finances.
The new platform also offers enhanced security measures, including facial biometrics and authentication with a user ID and alphanumeric password.
It also provides additional functionalities, such as balance inquiries, bill payments, credit payments, credit card payments, leasing payments, transfers between own accounts, virtual investment openings, sending and receiving money, among others.
One of the key improvements is that customers can manage multiple businesses from a single device, as it is now possible to register up to three dynamic passwords to access different accounts.
Banking as a service: We implemented a personal-loan-as-a-service API (Application Programming Interface), which allows corporate clients to integrate personal loans into their own digital offerings. This allows us to grow Bancolombia’s balance sheet by leveraging third-party distribution channels and opens the possibility of generating new revenue.
Nequi: Commissions on top-ups and bill payments grew by 79% and in 2024 we enabled 99 new bill payment options, mainly for payment of public services in different regions of Colombia.
The virtual store was also enabled with the activation of 12 stores in our digital ecosystem, which allows us to go beyond the financial world and offer new daily experiences to customers.
We also focused on immediate approval of credits, as we continue to expand our credit offering.
Sustainable finance: We offer a range of Sustainable/ESG credit lines, including a sustainable credit line aimed at projects that promote clean technology, renewable energy, energy efficiency, clean fuel, and reduction of waste and emissions. In 2024 we added a new product for the financing of sustainable road infrastructure projects. Some of these credit lines are available in Colombian pesos and U.S. dollars, enabling our clients to support sustainable businesses in international supply chains.
Use of AI
We have been developing a corporate strategy focused on data, analytics and artificial intelligence (AI) (focused on machine learning). The core of this strategy is to build organization-wide capabilities and foster the adoption of AI across business units. The main objective is to enhance decision-making and develop new products and services, strengthening our competitive advantage. We are focusing our efforts on ensuring that business units with the greatest potential impact on our results for best practices in AI usage and risk mitigation. As of the date of this Annual Report, we have implemented the use of machine learning but do not use generative AI with our customers.
B.2Operations
See Note 3 to the Consolidated Financial Statements included in this Annual Report for a description of the principal markets in which we compete, including a breakdown of total interest and valuation income by category of activity and geographic market for each of the last three fiscal years.
B.3Seasonality of deposits
Historically, we have experienced some seasonality in our demand deposits, with lower average balances during the first months of the year and higher average balances at the end of the year. This behavior is explained primarily by the increased liquidity provided by the Central Bank and the Colombian National Treasury at year end, as economic activity tends to be higher during this period, resulting in a greater number of transactions.
During 2024, the Central Bank began to gradually reduce its monetary policy rate as inflation began to recede and move towards its target, and it has maintained a moderate monetary policy. This has led to low demand for credit, which, combined with the growth in deposits, has resulted in excess liquidity throughout the year.
However, we do not consider the seasonality of demand deposits to have a significant impact on our business, since any excess or shortage of liquidity has been managed through the treasury portfolio.
B.4Raw materials
We are not dependent on sources or availability of raw materials.
B.5DISTRIBUTION NETWORK
We provide our products and services through a traditional branch network, sales and customer representatives, as well as through mobile branches (Puntos de Atención Móviles), an ATM network, online and computer banking, telephone banking, mobile phone banking services, and points of sale (Puntos de Atención Cercano), among others. Transactions performed through electronic channels represented more than 95.74% of all transactions in 2024, compared to 95.22% of all transactions in 2023. In addition, as of December 31, 2024, Bancolombia had a sales force of approximately 13,729 employees.
The following are the distribution channels offered by Bancolombia as of December 31, 2024:
Branch Network1
As of December 31, 2024, our consolidated branch network consisted of 930 offices, including 575 Bancolombia offices, 37 Renting Colombia offices, 91 Banco Agricola offices, 37 Banistmo offices, 151 Bam offices and 39 offices of other subsidiaries.
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Number
of
branches
2024 |
|
Number
of
branches
2023 |
|
Number
of
branches
2022 |
Company (1) |
|
|
|
| Bancolombia S.A.(Colombia) |
|
575 |
|
578 |
|
583 |
| BAM (Guatemala) |
|
151 |
|
155 |
|
157 |
| Renting Colombia (2) |
|
37 |
|
63 |
|
65 |
| Banco Agrícola |
|
91 |
|
91 |
|
90 |
| Banistmo |
|
37 |
|
39 |
|
39 |
| Valores Bancolombia |
|
17 |
|
19 |
|
19 |
| Fiduciaria Bancolombia |
|
8 |
|
8 |
|
7 |
| Financomer |
|
1 |
|
3 |
|
4 |
| SUFI |
|
2 |
|
2 |
|
2 |
| Inversiones CFNS S.A.S. |
|
2 |
|
2 |
|
2 |
| Banca de Inversión |
|
2 |
|
2 |
|
2 |
| Bancolombia Panamá |
|
1 |
|
1 |
|
1 |
| Bancolombia S.A Panamá Branch |
|
1 |
|
1 |
|
1 |
| Valores Banistmo |
|
1 |
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1 |
|
1 |
| Bancolombia Puerto Rico International Inc. |
|
1 |
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1 |
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1 |
| Arrendadora Financiera S.A. |
|
1 |
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1 |
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1 |
| Valores Banagricola, S.A. de C.V. |
|
1 |
|
1 |
|
1 |
| Bancolombia Capital Holding LLC (Miami) |
|
1 |
|
1 |
|
1 |
| Transportempo S.A.S |
|
— |
|
— |
|
1 |
| Total |
|
930 |
|
969 |
|
978 |
(1)For some subsidiaries, the main office is considered a branch.
13 "Localiza" and "13 Puntos Éxito" were closed
Banking Correspondents
A banking correspondent is a platform that allows non-financial institutions, such as retail stores that are open to the public, to provide financial services and transactions in locations where banks and financial institutions have limited or no presence. As of December 31, 2024, we had 35,173 banking correspondents, including 28,251 in Colombia, 535 in Panama, 5,609 in Guatemala and 778 in El Salvador.
1
Puntos de Atención Móviles ('PAMs')
PAMs are commercial advisors who visit small towns periodically to offer our products and services. As of December 31, 2024, there were 519 PAMs (489 in Colombia, 13 in Guatemala and 17 in El Salvador). Panama has no PAMs.
Kiosks
Kiosks are located inside our branches, in malls and in other public places and allow our clients to conduct a variety of self-service transactions. As of December 31, 2024, there were a total of 495 kiosks, 210 in El Salvador and 285 in Colombia. Panama and Guatemala have no kiosks.
ATMs
We have a total of 6,113 ATMs, including 5,211 in Colombia, 576 in El Salvador and 326 in Panama. Bam sold its Guatemalan ATM network (155 ATMs) to 5B in November 2023 and outsources ATM services to 5B.
Online/Computer Banking
We offer multiple online and computer-based banking alternatives designed to fit the specific needs of our different client segments. Through a variety of platforms (computer and internet-based solutions) our clients can review their account balances and monitor transactions in their deposit accounts, loans and credit cards, make virtual term investments, access funds from pre-approved loans, make payroll and supplier payments, make purchases and bill payments, negotiate stocks, learn about products and services and complete other transactions in real time.
Telephone Banking
We provide customized and convenient advisory services to customers of all segments through automatic interactive voice response (IVR) operations and a 24/7 contact center.
Mobile Banking Service
Our clients can conduct a variety of transactions using their mobile phones, including fund transfers between Bancolombia accounts, account balance inquiries, QR code payments and payment of bills and invoices.
Business Connections Banking Service
Business Connections is a differentiating feature of Bancolombia's product line. It consists of a direct connection between Bancolombia's servers and the client, allowing transactions and document exchange to take place, supplementing our cash management and factoring products. It offers a secure and efficient option for clients to handle their funds, particularly their cash management needs.
B.6Patents, licenses and contracts
Bancolombia is not dependent on patents or licenses, nor is it substantially dependent on any industrial, commercial or financial contracts (including contracts with customers or suppliers).
However, Bancolombia has entered into contracts with third parties who provide certain services that are important to our business. These services include core banking services, online banking platforms, data processing and payment services, clearing and settlement services, software for processing credit and debit card services, and technological infrastructure, including cloud services where Bancolombia’s data will be stored, among others.
B.7Competition
Colombian financial system description
Overview
In recent years, the Colombian banking system has experienced an expansion, marked by a series of mergers and acquisitions. In 2013, Bancolombia continued its internationalization process with the acquisition of the banking and insurance operations of HSBC in Panama for USD 2.234 million. In addition, Bancolombia Panama acquired 40% common shares of Grupo Agromercantil for USD 217 million. The same year, Grupo Aval acquired 100% of Guatemala's Reformador Financial Group (valued at USD $411 million) and acquired BBVA Panama for USD $490 million. Furthermore, several competitors started operations in Colombia in 2013: Itau BBA and BNP Paribas both entered the market with investment banks; Credicorp acquired local brokerage firm Correval; Brazilian broker-dealer BTG Pactual acquired Bolsa y Renta; Banco Santander re-entered the Colombian market with a bank; and the Chilean company Larrain Vial started operations with a brokerage firm.
In 2014, the entry of new entities continued as the financing company Hipotecaria, which specializes in mortgage loans, began operations in March 2014. In June, Corpbanca completed the acquisition of Helm Bank, keeping the Corpbanca brand. The same year, GNB Sudameris acquired 99.9% of HSBC Colombia’s capital, operating as GNB Colombia and expanding operations to Paraguay, Peru and Uruguay. In 2015, the Chilean group CorpBanca merged with Brazil’s Itaú, and Bancolombia sold 50% of Tuya SA shares to Grupo Exito. The same year, Bancolombia also increased its stake in Grupo Agromercantil to 60% and acquired full ownership in 2020.
Several banks underwent transformations, such as Serfinanza, which transitioned from a commercial financing company to become the 26th bank in the financial system in February 2015. Additionally, in 2020 four financing companies went through changes in their shareholder structures: in January, Credifinanciera acquired Procredit Bank, rebranding as Banco Credifinanciera; in April, Coltefinanciera acquired the rights and obligations of Multibank, which ceased to act as a bank; Leasing Bancoldex merged with Arco Bancoldex in August; and Pagos Internacional was acquired by Banco W in November. In 2021, Lulo Bank became the first digital bank, and in December of that year BTG Pactual transitioned from an insurance brokerage to become the 28th bank in the financial system. Furthermore, in 2022 Banco Unión, previously called Giros y Finanzas, shifted from a commercial financing company to operate as the 29th bank in the financial system. In 2024, microfinancing company Banco Contactar became the thirtieth bank in the financial system. Additionally, Banco Davivienda is set to integrate with Scotiabank Colpatria in mid-2025, with Scotiabank Colpatria transferring all its loans and deposits to Banco Davivienda and taking a 20% stake in the combined entity. The alliance will create the second-largest bank in Colombia and significantly enhance Banco Davivienda’s presence in Central America. It is expected to generate substantial synergies, leveraging Banco Davivienda's scale to offer comprehensive financial solutions, including wealth management, corporate banking and investment advisory services. In other important events, Nubank entered the Colombian financial system as a financing company, initially offering savings accounts at the beginning of the year and expanding to consumer loans and term deposits by the end of the year.
As of December 31, 2024, according to the SFC, the main participants in the Colombian financial system were 30 commercial banks (19 domestic private banks, 10 foreign banks, and 1 domestic state-owned bank), 6 financial corporations and 15 financing companies. In addition, trust companies, cooperatives, insurance companies, insurance brokerage and securities intermediaries, special state-owned institutions, and severance payments and pension funds also participate in the Colombian financial system.
Evolution of market and credit institutions in 2024
In 2015, Colombian financial institutions began reporting their consolidated financial results under the IFRS framework. However, in the case of credit institutions (including banks, financial corporations, financing companies and financial cooperatives), the SFC has allowed the presentation of standalone financial statements under Colombian Banking GAAP rules, following Decree 1851 of August 2013, which regulates Law 1314 of 2009 concerning the technical regulatory framework for the institutions that report their financial results. Accordingly, the following information includes figures under Colombian Banking GAAP regulation, as reported by Colombian credit institutions.
Loan growth at Colombian credit institutions was 3.4% in 2024, compared to 1.9% in 2023. Commercial loans grew by 5.8% in 2024, compared to 2.3% in the previous year. Consumer loans decreased 3.2% in 2024, compared to the 2.4% decrease in 2023. Mortgage loans increased 8.0% in 2024, compared to 8.3% in 2023, and small business loans grew 8.5% in 2024 compared to 11.3% in 2023.
Credit institutions' level of past-due loans, as a percentage of the total loan portfolio, decreased from 5.0% on December 31, 2023, to 4.70% on December 31, 2024. In addition, the coverage ratio, measured as the ratio of allowances for loan losses (principal) to PDLs (overdue 30 days), ended 2024 at 129.18%, compared to 123.31% at the end of 2023.
In December 2024, the loan portfolio represented 61.78% of assets, down from 62.44% the year before. Investments and derivatives transactions, as a percentage of total assets, increased from 21.45% at the end of 2023 to 23.25% at the end of 2024. Deposits increased as a percentage of total liabilities from 72.90% in 2023 to 75.44% in 2024.
Credit institutions recorded COP 1.059 trillion in total assets on December 31, 2024, a 4.7% increase compared to the previous year. Based on total assets held by Colombian credit institutions, banks had a market share of 94.22%, followed by financial corporations with 2.97%, financing companies with 2.35%, and financial cooperatives with 0.46%.
The capital adequacy ratio (Tier 1 + Tier 2) for credit institutions was 18.47% on December 31, 2024 (including banks, financial corporations, financing companies and financial cooperatives), which is above the minimum legal requirement of 9% pursuant to Decree 1477 of 2018.
Bancolombia and its competitors
The following table shows a comparison between the key profitability, capital adequacy and loan portfolio quality indicators for Bancolombia and its main competitors, unconsolidated, based on IFRS information as applicable under Colombian regulations and published by the SFC.
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ROE(1) |
ROA(2) |
Past-due loans/
Total loans |
Allowance
s/
Past-due loans
|
Capital Adequacy |
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Dec-24 |
Dec-23 |
Dec-24 |
Dec-23 |
Dec-24 |
Dec-23 |
Dec-24 |
Dec-23 |
Dec-24 |
Dec-23 |
|
| Bancolombia |
13.2 |
% |
16.1 |
% |
2.1 |
% |
2.3 |
% |
4.4 |
% |
4.6 |
% |
158.0 |
% |
150.8 |
% |
18.5 |
% |
18.1 |
% |
|
| Banco de Bogotá |
7.0 |
% |
6.8 |
% |
0.9 |
% |
0.9 |
% |
4.4 |
% |
4.4 |
% |
107.5 |
% |
124.7 |
% |
18.8 |
% |
18.6 |
% |
|
| Davivienda |
5.8 |
% |
0.8 |
% |
0.6 |
% |
0.1 |
% |
5.5 |
% |
6.9 |
% |
112.4 |
% |
97.1 |
% |
18.6 |
% |
16.7 |
% |
|
| BBVA |
(5.6 |
%) |
3.2 |
% |
(0.4 |
%) |
0.2 |
% |
4.6 |
% |
3.8 |
% |
128.0 |
% |
131.1 |
% |
13.1 |
% |
12.4 |
% |
|
| Banco de Occidente |
9.0 |
% |
8.3 |
% |
0.7 |
% |
0.6 |
% |
3.3 |
% |
4.0 |
% |
144.1 |
% |
127.8 |
% |
12.7 |
% |
11.7 |
% |
|
| Itaú Corpbanca |
2.4 |
% |
0.9 |
% |
0.3 |
% |
0.1 |
% |
4.5 |
% |
4.3 |
% |
123.5 |
% |
134.4 |
% |
16.3 |
% |
14.7 |
% |
|
| Scotiabank Colpatria |
(5.9) |
% |
(10.1 |
%) |
(0.4) |
% |
(0.7 |
%) |
5.0 |
% |
5.2 |
% |
119.0 |
% |
110.4 |
% |
11.7 |
% |
11.8 |
% |
|
Source: SFC.
(1)ROE is return on average stockholders’ equity.
(2)ROA is return on average assets
The following tables illustrate the market share of Bancolombia and its main competitors, on an unconsolidated basis, with respect to various key products, based on figures published by the SFC for 2024 and 2023:
Total Net Loans
Market Share
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| Total Net Loans – Market Share (%) |
2024 |
2023 |
|
| Bancolombia |
27.2 |
% |
26.8 |
% |
|
| Davivienda |
15.6 |
% |
15.6 |
% |
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| Banco de Bogotá |
12.9 |
% |
12.4 |
% |
|
| BBVA |
11.0 |
% |
11.4 |
% |
|
| Banco de Occidente |
7.3 |
% |
7.0 |
% |
|
| Scotiabank Colpatria |
4.0 |
% |
4.7 |
% |
|
| Itaú Corpbanca |
2.7 |
% |
2.9 |
% |
|
| Others(1) |
19.3 |
% |
19.2 |
% |
|
Source: Ratios are calculated by Bancolombia based on figures published by the SFC.
(1)Nubank was registered as financial company so is not included in others
Checking Accounts
Market Share
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| Checking Accounts – Market Share (%) |
2024 |
2023 |
|
| Bancolombia |
27.4 |
% |
26.9 |
% |
|
| Banco de Bogotá |
18.1 |
% |
18.3 |
% |
|
| Davivienda |
11.0 |
% |
11.1 |
% |
|
| BBVA |
10.3 |
% |
10.5 |
% |
|
| Banco de Occidente |
8.7 |
% |
8.7 |
% |
|
| Itaú Corpbanca |
2.3 |
% |
2.7 |
% |
|
| Scotiabank Colpatria |
2.5 |
% |
2.6 |
% |
|
| Others(1) |
19.7 |
% |
19.2 |
% |
|
Source: Ratios are calculated by Bancolombia based on figures published by the SFC.
(1)Nubank was registered as financial company so is not included in others
Time Deposits
Market Share
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| Time Deposits – Market Share (%) |
2024 |
2023 |
|
| Bancolombia |
22.2 |
% |
22.5 |
% |
|
| Davivienda |
17.9 |
% |
16.9 |
% |
|
| BBVA |
13.1 |
% |
13.4 |
% |
|
| Banco de Bogotá |
13.9 |
% |
12.5 |
% |
|
| Banco de Occidente |
4.7 |
% |
5.4 |
% |
|
| Scotiabank Colpatria |
4.6 |
% |
5.5 |
% |
|
| Itaú Corpbanca |
3.2 |
% |
3.4 |
% |
|
| Others(1) |
20.4 |
% |
20.4 |
% |
|
Source: Ratios are calculated by Bancolombia based on figures published by the SFC.
(1)Nubank was registered as financial company so is not included in others
Saving Accounts
Market Share
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| Saving Accounts – Market Share (%) |
2024 |
2023 |
|
| Bancolombia |
30.7 |
% |
29.7 |
% |
|
| Davivienda |
12.5 |
% |
13.6 |
% |
|
| BBVA |
10.4 |
% |
11.2 |
% |
|
| Banco de Bogotá |
10.8 |
% |
10.0 |
% |
|
| Banco de Occidente |
9.1 |
% |
8.5 |
% |
|
| Scotiabank Colpatria |
3.5 |
% |
4.0 |
% |
|
| Itaú Corpbanca |
1.8 |
% |
2.1 |
% |
|
| Others(1) |
21.2 |
% |
20.9 |
% |
|
Source: Ratios are calculated by Bancolombia based on figures published by the SFC.
(1)Nubank was registered as financial company so is not included in others
Banco Agrícola and its competitors
In 2024, Banco Agrícola continued to lead the Salvadoran financial system and ranked first in terms of total assets, loans, total deposits, stockholders’ equity and profits. The following tables show Banco Agrícola and its competitors, based on publicly available information from El Salvador's Superintendencia del Sistema Financiero ('SSF'), prepared in accordance with local accounting standards.
In 2024, accounting standards in El Salvador changed to align with the IFRS. The new accounting methods mean that some fields are not directly comparable year over year. Additionally, the new accounting methods mean that some fields are not directly comparable year over year. One of the most significant changes was the merger of checking and savings accounts into a single account, making it impossible to distinguish between them starting in 2024.
The following table illustrates the market share for the main institutions of the Salvadoran financial system as of December 31, 2024:
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|
|
|
|
|
|
|
Assets |
Stockholders` Equity |
Loans |
Deposits |
Profits |
|
| Banco Agrícola |
24.0 |
% |
24.1 |
% |
24.2 |
% |
25.4 |
% |
39.0 |
% |
|
| Cuscatlán |
16.8 |
% |
17.4 |
% |
17.9 |
% |
17.4 |
% |
17.6 |
% |
|
| Davivienda |
13.3 |
% |
13.7 |
% |
14.2 |
% |
13.6 |
% |
10.2 |
% |
|
| BAC |
14.6 |
% |
13.3 |
% |
15.6 |
% |
15.0 |
% |
10.5 |
% |
|
| Hipotecario |
9.0 |
% |
7.8 |
% |
6.2 |
% |
8.2 |
% |
6.7 |
% |
|
| Promérica |
5.8 |
% |
4.4 |
% |
5.7 |
% |
5.8 |
% |
2.2 |
% |
|
| Others |
16.5 |
% |
19.3 |
% |
16.2 |
% |
14.6 |
% |
13.8 |
% |
|
Source: SSF (Superintendencia del Sistema Financiero)
The following tables illustrate the market share of Banco Agrícola and its main competitors, based on figures published by the SSF, as of December 31, 2024 and 2023:
Total Loans
Market Share
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|
|
|
|
|
|
|
|
|
|
|
| Total Loans - Market Share (%) |
2024 |
2023 |
|
| Banco Agrícola |
24.2 |
% |
24.8 |
% |
|
| Cuscatlán |
17.9 |
% |
17.9 |
% |
|
| Davivienda |
14.2 |
% |
14.4 |
% |
|
| BAC |
15.6 |
% |
15.3 |
% |
|
| Hipotecario |
6.2 |
% |
6.5 |
% |
|
| Promérica |
5.7 |
% |
6.1 |
% |
|
Others(1) |
16.2 |
% |
15.0 |
% |
|
(1)In 2024, Sociedad de Ahorro y Crédito Apoyo Integral, S.A. became the thirteenth bank in El Salvador's Financial System, now known as Banco Apoyo Integral.
Checking and Savings Accounts
Market Share
|
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|
|
|
|
|
|
|
|
|
|
| Checking and Savings Accounts - Market Share (%) |
2024 |
2023(2) |
|
| Banco Agrícola |
31.3 |
% |
30.4 |
% |
|
| Cuscatlán |
18.7 |
% |
18.4 |
% |
|
| Davivienda |
12.6 |
% |
12.9 |
% |
|
| BAC |
15.6 |
% |
15.3 |
% |
|
| Hipotecario |
6.0 |
% |
6.2 |
% |
|
| Promérica |
5.0 |
% |
5.5 |
% |
|
Others(1) |
10.8 |
% |
11.3 |
% |
|
(1)In 2024, Sociedad de Ahorro y Crédito Apoyo Integral, S.A. became the thirteenth bank in El Salvador's Financial System and is now known as Banco Apoyo Integral.
(2)The information presented for 2023 has merged savings and checking accounts, which differs from how the information was presented last year, allowing comparison with the information for 2024.
Time Deposits
Market Share
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|
|
|
|
|
|
|
|
|
|
|
| Time Deposits - Market Share (%) |
2024 |
2023 |
|
| Banco Agrícola |
15.1 |
% |
14.2 |
% |
|
| Cuscatlán |
15.0 |
% |
14.9 |
% |
|
| Davivienda |
15.2 |
% |
14.9 |
% |
|
| BAC |
14.2 |
% |
13.4 |
% |
|
| Hipotecario |
12.0 |
% |
16.2 |
% |
|
| Promérica |
7.2 |
% |
7.1 |
% |
|
Others(1) |
21.3 |
% |
19.3 |
% |
|
(1)In 2024, Sociedad de Ahorro y Crédito Apoyo Integral, S.A. became the thirteenth bank in El Salvador's Financial System and is now known as Banco Apoyo Integral.
Banistmo and its Competitors
Banistmo, a leading company in Panama, is the second largest bank in the country with 8.3% market share by loans. The following table illustrates the market share for the main institutions of the Panamanian financial system, as of December 31, 2024.
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|
|
|
|
|
|
|
MARKET SHARE |
|
|
Assets |
Equity |
Loans |
Deposits |
Profits |
|
| Banistmo |
7.5 % |
7.2 % |
8.3 % |
9.9 % |
1.4 % |
|
| Banco General |
12.9 % |
11.6 % |
13.1 % |
19.4 % |
25.9 % |
|
| Global Bank |
6.2 % |
3.7 % |
6.9 % |
7.3 % |
0.9 % |
|
| Banesco |
4.0 % |
2.8 % |
4.4 % |
6.0 % |
2.4 % |
|
| BAC |
8.8 % |
25.5 % |
6.2 % |
8.9 % |
28.5 % |
|
| Others |
60.6 % |
49.2 % |
61.1 % |
48.5 % |
40.9 % |
|
Source: Banistmo based on data by SBP (Superintendency of Banks of Panama)
The following tables illustrate the market share of Banistmo and its main competitors, based on figures published by the Superintendency of Banks of Panama, as of December 31, 2024, and December 31, 2023:
Total Loans
Market Share
|
|
|
|
|
|
|
|
|
|
|
|
| Total Loans - Market Share (%) |
2024 |
2023 |
|
| Banistmo |
8.3 |
% |
9.3 |
% |
|
| Banco General |
13.1 |
% |
13.4 |
% |
|
| Global Bank |
6.9 |
% |
7.5 |
% |
|
| Banesco |
4.4 |
% |
4.4 |
% |
|
| BAC |
6.2 |
% |
6.0 |
% |
|
| Others |
61.1 |
% |
59.4 |
% |
|
Source: Banistmo based on data by SBP (Superintendency of Banks of Panama)
Saving Accounts
Market Share
|
|
|
|
|
|
|
|
|
|
|
|
| Saving Account - Market Share (%) |
2024 |
2023 |
|
| Banistmo |
10.2 |
% |
11.2 |
% |
|
| Banco General |
29.1 |
% |
30.9 |
% |
|
| Global Bank |
7.4 |
% |
7.2 |
% |
|
| Banesco |
7.4 |
% |
7.0 |
% |
|
| BAC |
5.2 |
% |
4.3 |
% |
|
| Others |
40.7 |
% |
39.4 |
% |
|
Source: Banistmo based on data by SBP (Superintendency of Banks of Panama)
Checking Accounts
Market Share
|
|
|
|
|
|
|
|
|
|
|
|
| Checking Accounts - Market Share (%) |
2024 |
2023 |
|
| Banistmo |
9.0 |
% |
9.9 |
% |
|
| Banco General |
23.2 |
% |
24.0 |
% |
|
| Global Bank |
3.8 |
% |
4.3 |
% |
|
| Banesco |
10.0 |
% |
8.7 |
% |
|
| BAC |
11.1 |
% |
10.9 |
% |
|
| Others |
42.9 |
% |
42.2 |
% |
|
Source: Banistmo based on data by SBP (Superintendency of Banks of Panama)
Time Deposits
Market Share
|
|
|
|
|
|
|
|
|
|
|
|
| Time Deposits - Market Share (%) |
2024 |
2023 |
|
| Banistmo |
10.0 |
% |
10.0 |
% |
|
| Banco General |
14.9 |
% |
14.2 |
% |
|
| Global Bank |
8.3 |
% |
8.3 |
% |
|
| Banesco |
4.4 |
% |
4.3 |
% |
|
| BAC |
9.7 |
% |
9.9 |
% |
|
| Others |
52.7 |
% |
53.3 |
% |
|
Source: Banistmo based on data by SBP (Superintendency of Banks of Panama)
Bam and its Competitors
Bam is the fifth largest bank in the banking system in Guatemala, measured by total assets and deposits, the sixth largest by stockholders’ equity, and the fourth in terms of net loans.
As of December 31, 2024, the Superintendencia de Bancos de Guatemala ('SIB') has 18 banking entities under its supervision and inspection.
The information presented in the following tables was prepared in accordance with Guatemalan banking regulations, as reported to the SIB.
The following table illustrates the market share for the main institutions of the banking system at the end 2024:
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|
|
|
|
MARKET SHARE |
|
|
Assets |
Stockholders’ Equity |
Net Loans |
Deposits |
Profits |
|
| Banco Industrial |
28.1 % |
23.1 % |
29.2 % |
26.8 % |
28.9 % |
|
| Banrural |
21.3 % |
24.1 % |
16.3 % |
22.7 % |
32.3 % |
|
| Banco G&T Continental |
12.0 % |
11.0 % |
11.2 % |
12.1 % |
11.2 % |
|
| BAC-Reformador |
8.3 % |
7.7 % |
9.9 % |
8.5 % |
4.1 % |
|
| Banco Agromercantíl |
8.2 % |
6.6 % |
10.0 % |
7.9 % |
1.2 % |
|
| Bantrab |
7.5 % |
11.6 % |
8.2 % |
7.7 % |
7.6 % |
|
| Banco Promerica |
5.7 % |
5.5 % |
7.0 % |
5.5 % |
6.6 % |
|
| Others(1) |
8.9 % |
10.4 % |
8.2 % |
8.8 % |
8.1 % |
|
(1) Others . Includes the following banks: Internacional, Crédito Hipotecario Nacional, Ficohsa, Azteca, Inmobiliario, De Antigua, Vivibanco, Citibank, N.A. de Guatemala, Inv, Credicorp and Nexa.
Source: SIB.
The following tables illustrate the market share of Bam on a standalone basis and its main competitors, based on figures published by the SIB, under Guatemalan banking regulations, as of December 31, 2024, and 2023:
Net Loans
Market Share
|
|
|
|
|
|
|
|
|
|
|
|
| Net Loans - Market Share (%) |
2024 |
2023 |
|
| Banco Industrial |
29.2 |
% |
29.1 |
% |
|
| Banrural |
16.3 |
% |
15.5 |
% |
|
| Banco G&T Continental |
11.2 |
% |
11.0 |
% |
|
| Banco Agromercantíl |
10.0 |
% |
10.5 |
% |
|
| BAC-Reformador |
9.9 |
% |
10.5 |
% |
|
| Bantrab |
8.2 |
% |
8.5 |
% |
|
| Banco Promerica |
7.0 |
% |
6.8 |
% |
|
| Others(1) |
8.2 |
% |
8.1 |
% |
|
(1) Others. . Includes the following banks: Internacional, Crédito Hipotecario Nacional, Ficohsa, Azteca, Inmobiliario, De Antigua, Vivibanco, Citibank, N.A. de Guatemala, Inv, Credicorp and Nexa.
Source: SIB.
Checking Accounts
Market Share
|
|
|
|
|
|
|
|
|
|
|
|
| Checking Accounts - Market Share (%) |
2024 |
2023 |
|
| Banco Industrial |
33.9 % |
33.7 % |
|
| Banrural |
24.0 % |
23.2 % |
|
| Banco G&T Continental |
12.1 % |
12.7 % |
|
| BAC-Reformador |
11.0 % |
11.6 % |
|
| Banco Agromercantil |
5.9 % |
6.2 % |
|
| Banco Promerica |
3.5 % |
3.1 % |
|
| Bantrab |
2.1 % |
2.1 % |
|
| Others(1) |
7.5 % |
7.5 % |
|
(1) Others. . Includes the following banks: Internacional, Crédito Hipotecario Nacional, Ficohsa, Azteca, Inmobiliario, De Antigua, Vivibanco, Citibank, N.A. de Guatemala, Inv, Credicorp and Nexa.
Source: Superintendencia de Bancos de Guatemala (SIB).
Time Deposits
Market Share
|
|
|
|
|
|
|
|
|
|
|
|
| Time Deposits - Market Share (%) |
2024 |
2023 |
|
| Banco Industrial |
23.1 % |
23.6 % |
|
| Banrural |
16.5 % |
16.6 % |
|
| Bantrab |
13.7 % |
14.8 % |
|
| Banco Promerica |
9.4 % |
8.4 % |
|
| Banco G&T Continental |
8.8 % |
8.6 % |
|
| Banco Agromercantil |
8.7 % |
9.5 % |
|
| BAC-Reformador |
8.2 % |
8.4 % |
|
| Others(1) |
11.6 % |
10.1 % |
|
(1) Others. . Includes the following banks: Internacional, Crédito Hipotecario Nacional, Ficohsa, Azteca, Inmobiliario, De Antigua, Vivibanco, Citibank, N.A. de Guatemala, Inv, Credicorp and Nexa.
Source: SIB.
Saving Accounts
Market Share
|
|
|
|
|
|
|
|
|
|
|
|
| Saving Accounts - Market Share (%) |
2024 |
2023 |
|
| Banrural |
30.2 % |
28.9 % |
|
| Banco Industrial |
23.2 % |
25.3 % |
|
| Banco G&T Continental |
16.8 % |
17.9 % |
|
| Banco Agromercantil |
9.3 % |
8.0 % |
|
| Bantrab |
6.1 % |
6.3 % |
|
| BAC-Reformador |
5.9 % |
5.7 % |
|
| Banco Promerica |
2.4 % |
2.0 % |
|
| Others(1) |
6.1 % |
5.9 % |
|
(1) Others. . Includes the following banks: Internacional, Crédito Hipotecario Nacional, Ficohsa, Azteca, Inmobiliario, De Antigua, Vivibanco, Citibank, N.A. de Guatemala, Inv, Credicorp and Nexa.
Source: SIB
B.8Supervision and regulation
Colombian banking regulators
The Colombian Constitution grants the Congress of Colombia the power to prescribe the general legal framework of the financial system, and the Government issues regulations within that framework. Multiple agencies have the authority to regulate the financial system, including the board of directors of the Central Bank, the Ministry of Finance and Public Credit (the 'Ministry of Finance'), the SFC, the SIC and the Self-Regulatory Organization (Autoregulador del Mercado de Valores or 'AMV'). The following is a description of their functions:
The Central Bank exercises the customary functions of a central bank, including price stabilization, monetary policy, regulation of currency circulation, regulation of credit, exchange rate monitoring and management of international reserves. Its board of directors is the regulatory authority for monetary, currency exchange and credit policies, and is responsible for the direction of the Central Bank’s duties. The Central Bank also acts as lender of last resort to financial institutions.
The Ministry of Finance regulates, through the Unit of Financial Regulation, all aspects of financial and insurance activities. It is responsible for regulations relating to capital adequacy, legal lending limits, authorized operations, disclosure of information and accounting of financial institutions at a high level, which are then regulated in detail by the SFC.
The SFC is the authority responsible for licensing, supervising and regulating financial institutions. The SFC has broad discretionary powers to supervise financial institutions, including the authority to impose fines on financial institutions and their directors and officers for violations of applicable regulations. The SFC is also responsible for monitoring, supervising and regulating the market for publicly traded securities in Colombia.
The AMV is the self-regulatory organization of Colombia. The AMV may issue mandatory instructions to its members, supervise its members’ compliance and impose sanctions for violations. All capital market intermediaries, including Bancolombia, must become members of the AMV and are subject to its instructions.
The SIC is responsible for antitrust and data protection matters and has jurisdiction over Bancolombia.
Regulatory framework for Colombian banking institutions
The basic regulatory framework of the Colombian financial sector is described below.
Decree 663 of 1993, as amended, defines the structure of the Colombian financial system and establishes the permitted forms of business entities and their authorized activities. Furthermore, Decree 663 of 1993 sets forth (i) licensing requirements, (ii) the procedure applicable for mergers and acquisitions, spin-offs, and other corporate reorganizations of the aforementioned entities, (iii) specific regulations that apply to the issuance and sale of shares and other securities by such entities, and (iv) certain rules regarding the activities of officers and directors of such institutions, among others.
Decree 2555 of 2010 compiles regulations regarding banking, insurance and securities market activities, capital adequacy requirements, financial institutions’ corporate governance and principles relating to the determination, dissemination and publication of rates and prices of products and financial services, lending activities and resolution procedures.
External Circulars 029 of 2014 and 100 of 1995 compile the rules and regulations issued by the SFC that apply to financial institutions and other entities under its supervision.
Financial institutions are subject to further rules if they engage in additional activities. Law 964 of 2005 (the securities market law) regulates securities activities, which may be performed by banks, and securities offerings. External Resolution 1 of 2018 (foreign exchange regulations), and External Resolution 4 of 2006 issued by the board of directors of the Central Bank, define the different activities that banks, including Bancolombia, may perform as foreign exchange market intermediaries, including lending in foreign currencies and investing in foreign securities.
Violations of any of the above statutes and their relevant regulations are subject to administrative sanctions and, in some cases, criminal sanctions.
Financial conglomerates
Law 1870 of 2017 ('Law 1870') implemented the legal framework for the regulation and supervision of financial conglomerates in areas such as regulatory capital, related party transactions, corporate governance principles, conflicts of interest and risk management, among others. According to Law 1870, a financial holding company may acquire that status by either (i) having significant influence over a financial institution or (ii) controlling a financial institution. A financial holding company has significant influence over a financial institution when it, directly or indirectly, holds more than 50% of the voting capital of the financial institution, excluding voting capital held by entities that under their regulations are not allowed to control a financial institution (such as pension funds). A financial holding company controls a financial institution when it has (i) more than 50% of the voting capital of the financial institution, (ii) the majority of the votes of the board of directors of the financial institution or the right to elect a majority of its members, or (iii) a dominant influence over the decisions made by the financial institution as a result of an agreement with the financial institution or its shareholders as established in articles 260 and 261 of the Colombian Code of Commerce.
The Government has issued several decrees pursuant to its authority under Law 1870, including Decree 774 of 2018, which regulates capital adequacy requirements for financial conglomerates, and Decree 1486 of 2018, which regulates the criteria to determine related parties, risk concentration limits and conflicts of interest. These regulations provide that when financial institutions fulfill capital adequacy requirements and solvency ratios on a standalone basis, authorities may not impose solvency ratios on the financial conglomerate as a whole. The legal framework established by Law 1870 also reinforced the mechanism for the resolution of credit institutions - deposit-taking institutions under Colombian Law - by establishing the concept of the bridge bank, an entity used to facilitate the purchase of assets and transfer of liabilities from failing institutions.
Pursuant to the financial conglomerates regime, Grupo de Inversiones Suramericana S.A. has significant influence and, therefore, is the financial holding company of Bancolombia only for the purposes of the financial conglomerates framework. These regulations require Grupo de Inversiones Suramericana S.A. to: (i) continue strengthening Bancolombia’s Corporate Governance System as a Financial Conglomerate; (ii) review the risk management and capital adequacy models; and (iii) strengthen the internal control and information reporting systems of the companies that make up the conglomerate under this framework. The SFC has authority to implement applicable regulations and, accordingly, from time to time issues administrative resolutions and circulars.
Key interest rates
Article 884 of the Colombian Commercial Code provides for a limit on the amount of interest that may be charged in commercial transactions. The limit is 1.5 times the current banking interest rate (interés bancario corriente or 'IBC'), certified and calculated by the SFC as the weighted average rate of interest ordinarily charged by banks for loans made during a specified period. The certification process is carried out for the following credit portfolios: consumer and ordinary; small loans; and microcredit (which is further divided into five subcategories).
As of December 31, 2024, the current banking interest rates certified by the SFC for the different credit portfolios are: (i) 16.59% for consumer and ordinary loans, (ii) 37.5% for small loans, and (iii) between 16.08% and 58.86% for the five remaining microcredit subcategory rates.
Capital adequacy requirements – Basel III
Capital adequacy requirements for Colombian financial institutions (as set forth in Decree 2555 of 2010, as amended) are based on most of the Basel III standards. This regulation provides for a gradual implementation plan beginning in 2021 and ending in 2024 for requirements regarding solvency ratios and capital buffers. The SFC issued External Circular 020 of 2019, which sets capital adequacy requirements for credit institutions and requirements for reporting information to the SFC. Some of the highlights of this regulation are as follows:
The regulatory capital (patrimonio técnico) is calculated as the sum of the Common Equity Tier One Capital (patrimonio básico ordinario), the Additional Tier One Capital (patrimonio básico adicional) and the Tier Two Capital (patrimonio adicional).
Revised criteria for debt and equity instruments to be considered Common Equity Tier One Capital, Additional Tier One Capital, and Tier Two Capital were established. Additionally, the SFC reviews whether a given instrument adequately complies with the applicable criteria in order for an instrument to be considered Tier One Capital or Tier Two Capital, upon request of the issuer. Debt and equity instruments that have not been classified by the SFC as Tier One Capital or Tier Two Capital shall not be considered Tier One Capital or Tier two Capital for the purposes of capital adequacy requirements.
The Capital Adequacy Ratio is set at a minimum of 9% of the financial institution’s total risk-weighted assets; however, each entity must comply with: (i) a minimum basic solvency ratio of 4.5% (which is defined as the ordinary basic capital after deductions divided by the financial institution’s total risk-weighted assets and off-balance sheet items); (ii) a minimum additional basic solvency ratio (which is defined as the sum of Common Equity Tier One Capital after deductions and Additional Tier One Capital, divided by the financial institution’s total risk-weighted assets and off-balance-sheet items) of 4.875%, which began on January 1, 2021, increasing gradually to 6% as of January 1, 2024; (iii) a capital conservation buffer (which is defined as the Common Equity Tier One Capital after deductions divided by the financial institution’s total risk-weighted assets and off-balance-sheet items) of 0.375% starting on January 1, 2021, increasing gradually to 1.5% by January 1, 2024; (iv) a systemically important institution buffer (which is defined as the Common Equity Tier One after deductions divided by the financial institution’s total risk-weighted assets and off-balance-sheet items) of 0.25% starting on January 1, 2021, increasing gradually to 1% on January 1, 2024 (Bancolombia has been recognized by the SFC as a domestic systemically important institution in Colombia); and (v) a combined buffer equivalent to the sum of the aforementioned buffers as of January 1, 2024. These ratios apply to credit institutions individually and on a consolidated basis.
Credit establishments must comply with a minimum leverage ratio of 3%, which is defined as the sum of the Common Equity Tier One Capital after deductions and the Additional Tier One Capital, divided by the leverage value.
The leverage value is the sum of all net assets, the net exposures in all repo, simultaneous transactions and temporary transfer of securities, the credit exposures in all derivative instruments, and the exposure value of all contingencies.
Credit establishments must comply with minimum capital requirements for operational risk. This new capital requirement will be determined by the product of the Business Indicator (indicador de negocio), the Operational Risk Coefficient (coeficiente de riesgo operacional) and the Internal Loss Multiplier (indicador de pérdida interna). The Operational Risk Coefficient will be 12% of the Business Indicator, but if the Business Indicator exceeds COP 3 billion, the coefficient will be 15% for the excess amount. Each entity was required to comply with the requirement as of January 1, 2021.
For more information, see Item 5. Operating and Financial Review and Prospects - B1 Liquidity and Funding. Capital Adequacy.
The minimum capital requirement for applying for a banking charter on an unconsolidated basis is established in Article 80 of Decree 633 of 1993. This capital requirement for banks in 2024 is set at COP 133,321 million. Failure to meet the requirement could result in the SFC taking of possession (toma de posesión) of the bank (see Item 4. Information on the Company – B. Business Overview – B.8 –Supervision and Regulation – Bankruptcy Considerations).
Mandatory investments
Central Bank regulations require financial institutions, including Bancolombia, to hold minimum mandatory investments in debt instruments issued by Fondo para el Financiamiento del Sector Agropecuario ('Finagro'), a Colombian public financial institution that finances production and rural activities to support the agricultural sector. The amount of these mandatory investments is calculated by applying a fixed percentage (ranging from 4.3% to 5.8%, depending on the type of liability) to the quarterly average of the end-of-day balances of certain liabilities, primarily deposits and short-term debt. The investment balance is computed at the end of each quarter. Any required adjustment (due to a change in the quarterly average between periods) results in the purchase of additional securities or may result in redemption by Finagro of securities in excess of the requirement. The purchase of additional securities takes place during the month following the date on which the computation was performed.
Foreign currency position requirements
According to External Resolution 1 of 2018 issued by the board of directors of the Central Bank as amended or supplemented ('Resolution 1 of 2018'), a financial institution’s foreign currency position is the difference between the institution’s foreign currency-denominated assets and liabilities (including any off-balance-sheet items). In the case of foreign exchange market intermediaries that consolidate financial statements and have controlled foreign investments, such as Bancolombia, the value of controlled foreign investments, and (ii) the value of derivatives and other liabilities designated by the intermediary as hedging instruments for the controlled foreign investments are excluded from its foreign currency position.
Also, Resolution 1 of 2018 provides foreign currency position limits, so that their positions may not exceed certain percentages of their technical capital in specific periods. It also requires banks to calculate a gross leverage position (posición bruta de apalancamiento) as it relates to its foreign currency position.
Reserve requirements
Credit institutions are required to satisfy reserve requirements with respect to deposits and other cash demands, which are held by the Central Bank in the form of cash deposits. The reserve requirements for Colombian banks are measured bi-weekly and the amount depends on the class of deposits.
According to External Resolution No. 3 of 2024 of the Central Bank, which amends External Resolution No. 5 of 2008 issued by the Central Bank, credit institutions must maintain reserves of (i) 7% over private demand deposits, government demand deposits, other deposits and liabilities; (ii) 2.5% over term deposits with maturities fewer than 540 days and (iii) 0% over term deposits with maturities greater than or equal to 540 days.
Non-performing loan allowance
The SFC maintains rules on non-performing loan allowances for financial institutions. The allowance level of these loans is determined by the profile and risk conditions of the clients and the specific conditions of the loan. These rules apply to Bancolombia’s financial statements on a standalone basis for Colombian regulatory purposes. Non-performing loan allowances in the Consolidated Financial Statements are calculated according to IFRS.
Large exposures and concentration limits
Decree 2555 of 2010, as amended, sets forth the legal lending limits, which provide for the maximum amounts that a financial institution may lend to a single borrower (including for this purpose all related fees, expenses and charges). These maximum amounts may not exceed 10% of a bank’s regulatory capital. However, the limit is raised to 25% when amounts lent above 5% of technical capital are secured by guarantees that comply with the financial guidelines provided in Decree 2555 of 2010, as amended. Also, in no event may a loan to a shareholder holding directly or indirectly 20% or more of a bank’s capital stock exceed 20% of the bank’s regulatory capital. In addition, Decree 2555 of 2010 also sets a maximum limit of 30% of the bank’s regulatory capital for single-party risk, the calculation of which includes loans, equity and debt investments.
The government, through Decree 1533 of 2022 and the SFC’s External Circular 003 of 2024, adopted the Basel Committee’s international standard on Large Exposures (LEX), which from August 2025 will modify the current rules on legal lending limits. The set of new regulations establishes: (i) a 25% exposure limit of Tier 1 Capital with respect to the same counterparty or group of connected counterparties; (ii) the definition of a Large Exposure as an exposure that represents more than 10% of the Tier 1 Capital; (iii) metrics that align the measurement of exposures with metrics on the risk-weighted assets in terms of capital adequacy; and (iv) the criteria for the identification of connected counterparties, including control relationship, financial conglomerates, and economic interdependence. Additionally, Decree 1358 of 2024 included a 25% limit for transactions with related parties that will apply from May 2026.
Ownership and management restrictions
Bancolombia is organized as a stock company (sociedad anónima). Its corporate existence is subject to the rules applicable to commercial companies, principally the Colombian Commercial Code, which requires stock companies (such as Bancolombia) to have a minimum of five shareholders at all times and provides that no single shareholder may own 95% or more of Bancolombia’s subscribed capital stock. Article 262 of the Colombian Commerce Code prohibits Bancolombia’s subsidiaries from acquiring stock of Bancolombia.
Pursuant to Decree 663 of 1993, as amended, any transaction resulting in an individual or entity holding 10% or more of the outstanding shares of any Colombian financial institution, including, in the case of Bancolombia, transactions resulting in holding ADSs representing 10% or more of the subscribed capital stock of Bancolombia, are subject to the prior authorization of the SFC. For that purpose, the SFC must evaluate the proposed transaction based on the criteria and guidelines specified in Decree 663 of 1993. Transactions entered into without the prior approval of the SFC are null and void and cannot be recorded in Bancolombia’s stock ledger. These restrictions apply equally to Colombian and foreign investors.
Bankruptcy considerations
Colombian banks and other financial institutions are subject to special rules regarding insolvency, restructuring and liquidation. Pursuant to Colombian banking law, the SFC has the power to intervene in the operations of a bank in order to prevent, or to control and reduce the effects of, a bank failure. The SFC also conducts periodic visits to financial institutions and may impose capital or solvency obligations on financial institutions without taking control of such financial institutions.
The SFC may intervene in a bank’s business: (i) prior to the liquidation of the bank, in order to prevent the bank from entering into a state where the SFC would need to take possession by taking one of the following recovery measures (institutos de salvamento): (a) submitting the bank to a special supervision regime; (b) issuing a mandatory order to recapitalize the bank; (c) placing the bank under the management of another authorized financial institution, acting as trustee; (d) ordering the transfer of all or part of the assets, liabilities and contracts of the bank to another financial institution; (e) ordering the bank to merge with one or more financial institutions that consent to the merger; (f) ordering the adoption of a recovery plan by the bank pursuant to guidelines approved by the government; (g) ordering the exclusion of certain assets and liabilities by requiring the transfer of such assets and liabilities to another institution designated by the SFC; or (h) ordering the progressive unwinding (desmonte progresivo) of the operations of the bank; or (ii) at any time, by taking possession of the bank to either administer the bank or order its liquidation, depending on how critical the SFC finds the situation to be.
The Financial Conglomerates Act also reinforced the mechanism for the resolution of credit institutions - deposit-taking institutions under Colombian Law - by establishing the concept of the bridge bank, an entity used to facilitate the purchase of assets and transfer of liabilities from failing institutions.
Taking possession is mandatory in the following events: (i) if the financial institution’s technical capital falls below 40% of the legal minimum; or (ii) upon the expiration of the term of any then-current recovery plans or the non-fulfillment of the goals set forth in such plans.
Additionally, and subject to the approval of the Ministry of Finance, the SFC may, at its discretion, initiate intervention procedures against a bank under the following circumstances: (i) suspension of payments; (ii) failure to pay deposits; (iii) refusal to submit its files, accounts and supporting documentation for inspection by the SFC; (iv) refusal to be interrogated under oath regarding its business; (v) repeated failure to comply with orders and instructions from the SFC; (vi) repeated violations of applicable laws and regulations or of the bank’s bylaws; (vii) unauthorized or fraudulent management of the bank’s business; (viii) reduction of the bank’s net worth below 50% of its subscribed capital; (ix) existence of serious inconsistencies in the information provided to the SFC that, at its discretion, impedes the SFC from accurately understanding the bank's situation; (x) failure to comply with the minimum capital requirements; (xi) failure to comply with recovery plans adopted by the bank; (xii) failure to comply with an order of exclusion of certain assets and liabilities to another institution designated by the SFC; and (xiii) failure to comply with an order of progressive unwinding of the operations of the bank.
Upon the taking of possession of a bank, the SFC may (but is not required to) order the bank to suspend payments to its creditors. The SFC has the power to determine that such suspension will affect all of the obligations of the bank, or only certain types of obligations or even obligations up to or in excess of a specified amount.
As a result of a taking of possession, the SFC must appoint as special agent the person or entity designated by Fogafin to administer the affairs of the bank while such process lasts and until it is decided whether to liquidate the bank.
If the underlying problems that gave rise to the taking of possession of the bank are not resolved within a term not to exceed two years, the SFC must order the liquidation of the bank.
During a taking of possession, Colombian banking laws prevent any creditor of the bank from: (i) initiating any procedure for the collection of any amount owed by the bank; (ii) enforcing any judicial decision rendered against the bank to secure payment of any of its obligations; (iii) constituting a lien or attachment over any of the assets of the bank to secure payment of any of its obligations; or (iv) making any payment, advance or compensation or assuming any obligation on behalf of the bank with the funds or assets that may belong to it and that are held by third parties, except for payments that are made by way of set-off between regulated entities of the Colombian financial and insurance systems. The taking of possession ends when the liquidation process begins.
In the event that the bank is liquidated, the SFC must, among other measures, provide that all term obligations owed by the bank are due and payable as of the date when the order to liquidate becomes effective.
In the event of liquidation, bank deposits and certain other types of savings instruments are excluded from the process and paid prior to any other liabilities. The remaining claims are recognized in accordance with applicable law and the following order: (i) claims related to court expenses incurred in the interest of all creditors, wages and other obligations related to employment contracts and tax authorities’ credits regarding national and local taxes; (ii) claims secured by liens; (iii) claims secured by real estate collateral, such as mortgages; (iv) other claims of the tax authorities that are not included in the first class of claims and claims of suppliers of raw materials and inputs to the debtor; and (v) finally, all other claims without any priority or privilege, provided, however, that among credits of the fifth class, subordinated debt will be ranked junior to the external liabilities (pasivos externos) and senior only to capital stock. Each category of creditors will collect in the order indicated above, with distributions in one category being subject to the full satisfaction of claims in the prior category.
Deposit insurance—troubled financial institutions
Subject to specific limitations, Fogafin is authorized to provide equity (whether or not reducing the par value of the recipient’s shares) and/or secured credits to troubled financial institutions, and to insure deposits of commercial banks and certain other financial institutions.
To protect the customers of commercial banks and certain financial institutions, Resolution 1 of 2012 of the board of directors of Fogafin, as amended, requires mandatory deposit insurance. Banks must pay an annual premium of 0.30% of total funds received on savings accounts, checking accounts, certificates of deposit and other deposits, which is paid in four quarterly installments. If a bank is liquidated, the deposit insurance will cover the funds deposited by an individual or corporation with such bank up to a maximum of COP 50,000,000, regardless of the number of accounts held.
Risk management systems
Commercial banks must have risk administration systems to meet the SFC minimum standards for compliance and to avoid and mitigate the following risks: (i) credit; (ii) liquidity; (iii) market; (iv) operational; (v) money laundering and terrorism; (vi) counterparty; (vii) interest rate risk in the banking book; and (viii) country risk.
Through External Circular 018 of 2021, the SFC issued the regulatory framework for the Comprehensive Risk Management System (Sistema Integral de Administración de Riesgos, or 'SIAR'), which has been in effect since June 1, 2023, except for certain provisions related to risk data aggregation and reporting, which became effective on December 31, 2023. These provisions require financial entities to have a global vision of the risks to which they are exposed, since it integrates the management of credit, market, operational, liquidity, counterparty, guarantee, insurance and country risks.
Commercial banks generally have several risk measurement methods, including the risk-weighted assets measurement, which is calculated according to weight percentages assigned to different types of assets. There are some exceptions in which the weight percentage is higher and is calculated based on the associated risk perception of the evaluated asset. Provisions, which are calculated on a monthly basis, are another risk measurement method. The above only applies to standalone financial statements.
With respect to market risks, commercial banks must follow the provisions of the External Circular 100 of 1995 issued by the SFC ('Basic Accounting Circular'), which defines criteria and procedures for measuring a bank’s exposure to interest rate, foreign exchange, and market risks. Under such regulations, banks must submit to the SFC information on the net present value, duration, and interest rate of its assets, liabilities, and derivative positions. Colombian banks are required to calculate, for each position on the statement of financial position, a volatility rate and a parametric value at risk ('VaR'), which is calculated based on net present value, modified duration and a risk factor computed in terms of a basis points change. Each risk factor is calculated and provided by the SFC.
With respect to liquidity risk, financial entities must meet a liquidity coverage test that ensures their ability to hold liquid assets sufficient to cover potential net cash outflows for a period of 30 days. Net cash outflows for this purpose are contractual maturities of assets (interbank borrowings, financial assets investments, loans and advances to customers, derivative financial instruments) minus contractual maturities of liabilities (demand deposits, time deposits, interbank deposits borrowings from other financial institutions, debt instruments, derivative financial instruments) occurring within a period of 30 days. For purposes of this calculation, liabilities do not include projections of future transactions. The maturity of the loan portfolio is affected by the historical default indicator and the maturity of deposits is modeled according to the regulation.
Financial entities are also required to meet the Net Stable Funding Ratio (Coeficiente de Fondeo Estable Neto or 'NSFR') requirements. The NSFR requires credit institutions, such as the Bank, to maintain a stable funding profile in relation to the composition of their assets. The NSFR is a ratio that seeks to limit excessive dependency on unreliable financing sources for strategic assets which are often illiquid. The NSFR is defined as the amount of Available Stable Funding, which includes equity and liabilities that will remain with the credit institution for more than one year. This ratio should be equal to at least 100% on an ongoing basis (Fondeo Estable Disponible or 'FED') of the amount of Required Stable Funding (Fondeo Estable Requerido). The ratio started to be reported on March 31, 2020. Nonetheless, the External Circular 013 of 2023 maintained until August 31, 2025, the 25% weighting for the FED in demand and term deposits (less than six months) of financial entities and open collective investment funds, noting that this does not affect the schedule of convergence and compliance with the regulatory minimum of the NSFR in the terms established in External Circular 019 of 2019.
With respect to operational risk, commercial banks must assess, according to principles provided by the Basic Accounting Circular, each of their business lines (such as corporate finance, purchases and sales of securities, commercial banking, asset management, etc.) in order to record the risk events that may occur and result in fraud, technology problems, legal and reputational problems and problems associated with labor relations at the applicable bank.
Following international best practices to better manage adverse movements in interest rates, External Circular 025 of 2022 incorporated (within the SIAR) requirements related to interest rate risk in the banking book (IRRBB). To adequately manage the present or future risk on capital and earnings, the External Circular considers the Economic Value of Equity (EV) affected by possible changes in the value of assets/liabilities and the Net Interest Margin (NIM), affected by possible changes in income/expenses. Regarding country risk, banks must implement a model that accounts for the potential losses it could incur with respect to financial operations abroad, including equity investments, due to a deterioration in the economic and/or sociopolitical conditions of the receiver country.
Internal control system framework
The SFC updated its Internal Control System Framework by issuing External Circular 008 of 2023 with the goal of converging towards best international practices and promoting the development of robust corporate governance structures, collecting the recommendations included in the Internal Control—Integrated Framework of the Committee of Sponsoring Organizations of the Treadway Commission (COSO), the Three Lines Model of the Chartered Institute of Internal Auditors (IIA) and the guidelines defined by the Basel Committee on Banking Supervision (BCBS) on corporate governance. These new rules came into effect on May 16, 2024.
Cybersecurity rules
External Circular 007 of 2018 issued by the SFC, modified by External Circular 033 of 2020, contains the cybersecurity risk framework for financial institutions. These rules were adopted to enhance cyber risk management and promote the adoption of best practices. The framework (i) provides financial entities with a set of minimum requirements for information security and cybersecurity management, (ii) defines a single taxonomy to standardize the reporting of metrics and incidents related to information security and cybersecurity and (iii) adopts the Traffic Light Protocol (TLP). External Circular 004 of 2024 issued by the SFC includes requirements for financial institutions to review the cybersecurity conditions of critical third party providers; and rules over the framework of open finance services, including the limitation of web-scraping.
Anti-money laundering provisions
The regulatory framework to prevent and control money laundering is contained in, among others, Decree 663 of 1993; the External Circular 029 of 2014 issued by the SFC modified by External Circular 011 of 2022 ; and the Colombian Criminal Code, as amended.
Colombian laws adopt the latest guidelines related to anti-money laundering and other terrorist activities established by the Financial Action Task Force on Money Laundering ('FATF'). Colombia, as a member of the GAFI-SUD (a FATF-style regional body), follows the FATF’s recommendations. In 2022, the SFC introduced new requirements for financial entities and their risk management systems for Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) – in Colombia referred to as the Sistema de Administración del Riesgo de Lavado de Activos y de la Financiación del Terrorismo ('SARLAFT'). The new SARLAFT requirements include due diligence on ultimate beneficial owners and politically exposed persons; countermeasures to circumstances that involve high-risk countries; information requirements in international and domestic transactions; supervision in correspondent activities; enhancement of technology tools and digital use of a potential customer's identity, among others.
Financial institutions must cooperate with the appropriate authorities to prevent and control money laundering and terrorism financing. Finally, the Colombian Criminal Code introduced criminal rules and regulations to prevent, control, detect, eliminate and adjudicate all matters related to terrorism financing and money laundering, including the omission of reports on cash transactions, mobilization or storage of cash, and the lack of controls.
Consumer protection
Law 1328 of 2009 establishes a set of rights and responsibilities for customers of the financial system and a set of obligations for financial institutions in order to minimize disputes. This law also gives foreign banks more flexibility to operate in Colombia through 'branches.' Following its adoption, credit institutions are allowed to operate leasing businesses and banks are allowed to extend loans to third parties so that borrowers can acquire control of other companies.
Pursuant to External Circular 023 of 2021 issued by the SFC, Smartsupervision technology was implemented to provide a mechanism for the detailed monitoring of petitions, complaints or claims (Peticiones, Quejas & Reclamos or 'PQR'). This mechanism, provided by the SFC, allows financial consumers to submit petitions, complaints or claims and for them to be answered in due time and in an appropriate manner.
Payments system
In 2023, Colombia decided to promote an Immediate Payments System ('SPI') framework, consistent with international practices in this area. Resolution 6 of 2023 and Circular DSP-465 as amended, issued by the Central Bank sets out the legal framework establishing a new payment ecosystem, which will be managed by the Central Bank and will allow the interoperability of technologies, systems and entities in an interbank instant payments infrastructure, making use of secure communication protocols and advanced encryption standards.
According to the announced schedule, which involves five implementation phases, the project will be completed in the second half of 2025.
Regulatory framework for subsidiaries that are non-participants in the financial sector
Bancolombia’s Colombian subsidiaries that do not provide financial services are governed by the laws and regulations embodied in the Colombian Civil Code and the Colombian Commercial Code as well as any regulations issued by the SIC and the Superintendency of Corporations or any other type of special regulations that may be applicable to the commercial
and industrial activities carried out by such subsidiaries.
International regulations that apply to us
FATCA
FATCA, a U.S. federal tax law enacted in 2010, imposes a 30% withholding tax on 'withholdable payments' made to non-U.S. financial institutions that do not participate in the FATCA program or that fail (or, in some cases, that have affiliates in which they hold an interest of more than 50% and which are also non-U.S. financial institutions that fail) to provide certain information regarding their U.S. account holders and/or certain U.S. investors, such as U.S. account holders and U.S. investors ('U.S. account holders') to the IRS.
Among the countries where Bancolombia operates, Colombia and Panama have signed an IGA Model 1 (an intergovernmental agreement between the U.S and a partner jurisdiction, through which the latter commits to reporting information to the IRS about financial accounts held by U.S. persons in Foreign Financial Institutions ('FFIs') within its territory. Under this model, FFIs report the collected information to their local tax authority, which is responsible for automatically transmitting it to the IRS). In addition, certain subsidiaries of Bancolombia located in other countries have transmitted directly to the IRS the information required pursuant to FATCA, since those other countries have not entered into an IGA.
CRS
The Common Reporting Standard ('CRS'), approved by the OECD Council in 2014, is applicable to signatory countries of the Multilateral Competent Authority Agreement ('MCAA') and requires signatory countries to obtain information from their financial institutions and automatically exchange that information with other jurisdictions on an annual basis. The CRS defines (i) which financial institutions are required to report; (ii) the types of accounts covered; and (iii) the due diligence procedures that financial institutions must follow to identify the reporting information.
Among the countries where Bancolombia operates, Colombia and Panama have entered into the MCAA.
Compliance with the terms of the international conventions signed for the exchange of information under CRS, the laws or any other regulations enforced in the relevant jurisdictions may increase Bancolombia's compliance costs.
Financial regulation in Panama
The banking business in Panama is regulated by Law Decree 9 of 1998 (as amended to date, including by means of Law Decree 2 of 2008, the 'Banking Law'). Pursuant to the Banking Law, the Superintendency of Banks of the Republic of Panama (the 'Superintendency of Banks of Panama'), as banking supervisor, has the power to issue accords and resolutions to regulate the banking system.
To implement Basel III capital standards, the Superintendency of Banks of Panama issued Accord 1-2015 establishing capital adequacy standards. This accord establishes new requirements for the composition of a banking entity's capital base, as well as for capital adequacy ratios, including the core Tier 1 capital ratio and the Tier 1 capital ratio, all in line with Basel III standards. This accord became effective in June 2016 and, as of January 1, 2019, the new rules were fully implemented.
In addition, in October 2023, the Superintendency of Banks of Panama issued Accord 5-2023, which establishes rules on the capital conservation buffer to ensure that banks accumulate reserves that can be used in the event of incurring losses. According to this new Accord, banks must establish a capital conservation buffer of 2.5% of risk-weighted assets (credit, market and operational), comprised of ordinary primary capital and in addition to all minimum regulatory capital requirements. This accord became effective on July 1, 2024, and banks have until July 2026 to comply.
In terms of liquidity, banks with a general license are required to maintain 30% of their global deposits in liquid assets (which include short-term loans to other banks and other liquid assets) of the type prescribed by the Superintendency of Banks of Panama. Additionally, banks with a general license are required to maintain assets in Panama of not less than 60% of their local deposits or any other percentage set by the Superintendency of Banks of Panama. Under the Banking Law, central bank deposits and other similar deposits of international reserves of sovereign states enjoy immunity from seizure or attachment proceedings. In 2018, the Superintendency of Banks of Panama, moving forward with the implementation of Basel III liquidity standards, issued a Liquidity Coverage Ratio ('LCR') Accord that requires general license banks to maintain high-quality liquid assets in relation to their short-term net cash outflows. Daily compliance with the LCR (high-quality liquid assets as a percentage of net cash outflows) was implemented progressively, starting in December 2018 with a compliance rate of 25%, reaching a compliance rate of 100% in December 2022.
The Superintendency of Banks of Panama has also issued regulations consistent with Basel III standards regarding capital requirements for market risk in the trading book, regulations to improve country risk management and operational risk management, as well as governance and controls relating to investment in securities.
Regarding credit risk, in March 2016, the Superintendency of Banks of Panama issued Accord 3-2016, which establishes rules for the determination of risk-weighted assets applicable to on- and off-balance-sheet credit exposures, which are more risk-sensitive in line with Basel II and Basel III standards. This Accord introduced the treatment of counterparty exposures in derivative transactions, as well as credit risk mitigation techniques, such as the treatment of financial guarantees.
In Panama, banks are prohibited from granting, directly or indirectly, to any natural or legal person, including any entity that is part of a bank's economic group, any loan or line of credit, guarantee or any other obligation (other than credit facilities fully secured by deposits in the bank) in favor of such person that exceeds at any time, individually or jointly, 25% of the bank's total regulatory capital. Related party obligations (as defined in the applicable regulations) exceeding (i) 5% of its total capital, in the case of unsecured transactions, and (ii) 10% of its total capital, in the case of secured transactions (other than loans secured by deposits with the bank) are prohibited.
The Superintendency of Banks of Panama is empowered to assume administrative and operational control of a bank, including the possession of its assets and the exercise of its administration, to defend the best interest of the bank's depositors and creditors, under any of the following situations: (i) at the request of the bank; (ii) if the bank is unable to continue its operations without endangering the interests of depositors; (iii) as a consequence of the evaluation of an advisor's report; (iv) failure to comply with measures ordered by the Superintendency of Banks of Panama; (v) if the bank conducts its operations in an illegal, negligent or fraudulent manner; (vi) if the bank has suspended payment of its obligations; and (vii) if the Superintendency of Banks of Panama determines that the capital adequacy, solvency or liquidity of the bank has deteriorated so as to require the intervention of the Superintendency of Banks of Panama. Upon expiration of the administrative control period, the Superintendent will decide whether to proceed with the reorganization of the bank, the compulsory liquidation of the bank or the return of administrative and operational control to the directors or legal representatives of the bank.
The Superintendency of Banks of Panama is also in charge of the supervision and oversight of the trust business, regulated by (i) Law 1 of 1984, which establishes aspects such as minimum requirements for trust contracts, characteristics of trusts, rights and responsibilities of settlors, trustee and beneficiaries and (ii) Law 21 of 2017 which strengthens the supervisory and regulatory capacities of the Superintendency of Banks of Panama with respect to the trust business and imposes rules with respect to trust licensing, accounting, corporate governance and reporting.
Other regulations in Panama
Securities market activities in Panama are subject to the supervision, control, and oversight of the Superintendency of the Securities Market of the Republic of Panama (the 'Superintendency of the Securities Market of Panama'). These activities are mainly regulated by Law Decree 1 of 1999, as amended to date (the 'Securities Law'), which establishes the regulatory framework for the Panamanian securities market. Among the most important aspects of the Securities Law are: (i) the establishment of a system of coordination and cooperation among financial supervisors, which allows for a broader supervision of financial conglomerates; (ii) the creation of the Superintendency of the Securities Market of Panama as a supervisory entity replacing the former National Securities Commission; (iii) the authorization to the Superintendency of the Securities Market of Panama to carry out consolidated supervision, as the national supervisor of intermediaries with agencies abroad, and to enter into cooperation agreements with foreign supervisors to facilitate consolidated supervision; (iv) the regulation of foreign currency exchange as a securities activity; (v) the introduction of provisions regarding the clearing and settlement of securities and financial instruments; and (vi) the creation of new participants to promote over-the-counter transactions.
The main aspects of the securities business covered by the Securities Law and the accords and resolutions issued by the Superintendency of the Securities Market are (i) licensing requirements for securities brokers, investment advisors, fund managers and self-regulatory organizations, (ii) registration requirements for risk rating agencies, providers of securities prices, securities, public offerings, funds and providers of securities market administrative services, (iii) authorization to solicit proxy votes in respect of registered securities, (iv) public offering notification requirements for the acquisition of registered shares, (v) options, futures and derivatives contracts, (vi) custody, clearing and settlement of securities, (vii) penalty and sanction procedures, (viii) voluntary liquidation, reorganization and bankruptcy of broker-dealers, self-regulatory organizations, funds and fund administrators, (ix) reporting by registered issuers of securities, broker-dealers, investment advisers, funds, fund administrators, self-regulatory organizations and other registered entities, (x) on-site inspection of broker-dealers, investment advisers, self-regulatory organizations, funds, fund administrators, securities market administrative service providers, securities pricing providers and rating agencies, (xi) capital requirements, liquidity requirements, risk assessment, confidentiality, conflict of interest, suitability, compliance and asset laundering of securities brokers and (xii) communication of material events by registered securities issuers.
In May 2024, the Superintendency of the Securities Market issued Accord 5-2024, which set requirements for obtaining a securities firm license. Securities firms must provide an operating manual that must contain: (i) a detailed, step-by-step description of the entity's processes, including orders, times, flow charts and persons responsible for all activities carried out by the securities firm under its business plan; and (ii) the rules or policies of the securities firm. In addition, the securities firm must make a brochure of fees, approved by its board of directors, available to clients on its website.
Panama has also enacted a series of laws to prevent, detect and sanction money laundering activities such as: (i) Executive Decree 947 of 2014 reorganizing the Financial Analysis Unit for the Prevention of Money Laundering, Terrorism Financing, and Financing of the Proliferation of Weapons of Mass Destruction (the 'UAF'), (ii) Law 23 of 2015 adopting measures to prevent money laundering, terrorism financing, and financing of the proliferation of weapons of mass destruction, and (iii) Executive Decree 35 of September 6, 2022, which regulates Law 23 of 2015 and establishes the measures that banks and other regulated entities must adopt for the prevention, identification and reporting to the UAF of suspicious transactions.
Law 23 of 2015 and Accord 7-2015 issued by the Superintendency of Banks of Panama establish who is considered to be financial regulated entities for purposes of money laundering, financing of terrorism or any other illicit activity.
Following the recommendations of the Financial Action Task Force ('FATF'), Panama enacted Law 70 of 2019, which amended the Criminal Code imposing the penalty of imprisonment for persons who engage in tax fraud, and Law 254 of 2021, which includes provisions on tax transparency, prevention of money laundering, and accounting records, due diligence, and beneficial owners.
In October 2016, Panama approved an agreement with the U.S. government to improve international tax compliance and to implement FATCA; in February 2017, it approved the Convention on Mutual Administrative Assistance in Tax Matters; and in October 2020 it approved the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting. All the above has enabled the exchange of information on tax matters between Panamanian tax authorities and a broader set of countries. In May 2017, the obligations and responsibilities of banking institutions with respect to due diligence procedures to identify reportable accounts were set forth in regulations, as well as the responsibilities with respect to the control measures and information requirements necessary to comply with international agreements.
Cybersecurity regulation
Panama has several laws that regulate incidents related to technological means.
The Criminal Code establishes penalties between two and eight years in prison to anyone who unduly enters or uses a database, network, or computer system, as well as to anyone who unduly seizes, copies, uses or modifies the data in transit or contained in a database or computer system, or interferes, intercepts, hinders or prevents its transmission. It also establishes the same penalties for anyone who alters, modifies, or manipulates programs, databases, networks, or computer systems to the detriment of a third party.
Law 81 of 2019 and Executive Decree No. 285 of 2021 establish the principles, rights, obligations, and procedures that regulate the protection of personal data. Law 81 of 2019 requires the persons responsible for the processing of personal data contained in databases to establish protocols, processes and procedures for management and secure transfer, protecting the rights of data owners over their data.
In 2013, Panama approved the Budapest Convention on cybercrime, by which Panama committed, among other things, to adopt legislative measures related to computer crimes and crimes against confidentiality, integrity and availability of data and computer systems. Additionally, through Resolution No. 17 of September 10, 2021, the National Council for Government Innovation approved the National Cybersecurity Strategy for the period 2021-2024.
The Superintendency of Banks of Panama, through Accord 8-2010, established provisions for the integral comprehensive management of risks to banks, including information technology risk and, through Accord 3-2012, developed the measures that banks must adopt in relation to information technology risk. These include, among others, establishing policies, strategic plans and procedures, as well as allocating necessary resources for information technology management and having an information technology committee, to oversee the management of the bank's information technology. Additionally, Accord 6-2011 established the guidelines for electronic banking and related risk management and Accord 006-2016 establishes guidelines for risk management regarding money laundering, terrorism financing and financing of the proliferation of weapons of mass destruction, which may arise with respect to new products and new technologies.
Financial regulation in El Salvador
Decree 592 of 2011 - Ley de Supervisión y Regulación del Sistema Financiero, strengthens the state's organization, adapting supervision and regulatory institutions to the financial system's economic reality. It mandates the Superintendency of the Financial System to supervise all financial system members and the Central Reserve Bank to approve necessary regulations.
The main objectives are to maintain stability, guarantee efficiency, transparency, security, and solidity within the financial system, and ensure compliance with this law and other applicable regulations, following best international practices.
The Superintendency supervises individual and consolidated activities of all financial system members, including people, operations, and entities described in the law.
Decree 592 outlines the Superintendency's powers and duties, including enforcing regulations, authorizing operations, preventing risks, facilitating an efficient financial system, and ensuring best practices in risk management and corporate governance.
In 2015, the scope of supervision was expanded to include money transfer companies. In 2016, requirements for valuation experts were defined for loan guarantees.
Banking Law of El Salvador
In 1999, the Salvadoran Congress enacted Decree 697 to regulate financial intermediation by banks. Banks must establish regulatory reserve requirements set by the Superintendency of the Financial System based on deposits and liabilities.
According to Temporary Technical Standards (NPBT-14) of the Central Reserve Bank, reserve requirements effective from January 29, 2025, range between 1% and 16%, depending on the financial instrument, frequency, and counterparty. Entities must maintain a balance in the 'Cash Holdings' account equal to or greater than 68% of the balance reported as of September 30, 2022, until July 29, 2025, when these Temporary Regulations expire.
Liquid Asset Requirements in El Salvador
On February 8, 2025, the Technical Standards for Liquid Assets (NRP-87) took effect, requiring banks to maintain an average of 3% in liquid assets. These standards provide parameters for acceptable assets, periods, and reporting.
The standards aim to reach the required level of liquid assets within 16 months, starting from February 8, 2025, and ending on May 5, 2026. Liquid assets must be composed of easily realizable foreign securities, deposits in foreign banks, or deposits in the central bank. This could limit investment options and increase the need for proper asset management. Banks will need to periodically submit detailed information about their liquid assets and other investments, increasing the administrative burden.
Monetary Integration Law of El Salvador
In November 2000, Congress enacted the Monetary Integration Law, adopting the U.S. dollar as the legal currency with a fixed exchange rate of 8.75 colones per USD 1.00. The colón continues to circulate legally, but the Central Reserve Bank replaces it with the U.S. dollar in commercial transactions.
Since the law's implementation, all financial operations, including deposits, loans, pensions, securities offerings, and accounting records, must be expressed in U.S. dollars. Transactions made in colones before the law's effective date are converted at the established exchange rate.
Investment Funds Law of El Salvador
The Investment Funds Law seeks to encourage economic activity by providing small investors with access to capital markets, diversification of their investments and channeling of their savings into productive sectors, in order to generate higher economic growth. The law sets forth the regulatory framework for the supervision of investment funds, their share of participation and companies that administer such funds and their operations; as well as other participants to which it refers. Additionally, it regulates the marketing of participation shares in foreign investment funds.
This law also provides for the creation of investment fund managers, who are responsible for performing all actions, contracts, and operations necessary for the administration and operation of investment funds.
In 2016, the Central Reserve Bank of El Salvador enacted Technical Standards (Normas Técnicas) to apply the law, including those related to permitted transactions by the investment funds, and those related to the disclosure of information, among others.
Financial Inclusion Law of El Salvador
This law, enacted by the Salvadoran Congress in September 2015, aims to promote financial inclusion and competition in the financial system, as well as reduce costs for users. This is achieved through the issuance and circulation of electronic money and the use of the 'Simplified Account,' which does not require a tax ID and allows limited balances and transactions. The law encourages access to formal financial services and the use of retail payment instruments, improving the quality of life for low-income populations by facilitating the development of financial products tailored to their income levels and transaction volumes.
On June 14, 2022, amendments to the Financial Inclusion Law were approved. These amendments modify the requirements of the Simplified Account, creating: (a) a Simplified Account with up to 3 minimum wages, and (b) a Simplified Account with 3 to 6 basic monthly wages. Accounts can be opened with no minimum amount and by anyone from the age of 16. The Central Reserve Bank of El Salvador enacted certain Technical Standards to apply the amendments to the Financial Inclusion Law, including limits applying to transactions and balances, as well as other regulations.
In El Salvador, labor law establishes minimum wages. The minimum wage for each sector is decided and reviewed by the National Minimum Wage Council. Currently, the basic commerce and services sector monthly wages is U.S. $365 per month.
On October 10, 2022, amendments to the technical standards to carry out operations and provide services through physical, digital and mobile banking correspondents, and administrators of banking correspondents (NASF-11) took effect. These amendments have enabled banking services to be offered in locations where banks and financial institutions have limited or no presence, through the use of technology.
Consumer Protection Law of El Salvador
In force since September 2005, this law protects consumers' rights, ensuring balance, certainty, and legal security in their relationships with commercial establishments, including financial institutions, retailers, and suppliers. It also created the framework for enforcing the law and safeguarding consumer rights.
The law applies to all commercial activities, including e-commerce, with specific regulations for financial services providers. These include obligations, prohibitions, limits on bank fees and surcharges, and contract requirements. The Central Reserve Bank has enacted technical standards to apply this law.
Bitcoin Law of El Salvador
On June 8, 2021, Congress enacted Legislative Decree 57 to regulate bitcoin as legal tender in El Salvador. The law has been in force since September 7, 2021. The Central Reserve Bank, with the Registry of Suppliers of Bitcoin Services, must register bitcoin service providers before they start operations, ensuring compliance with business qualifications, financial conditions, legal and regulatory standards, risk management, and security measures.
Additional regulations include Technical Standards (NRP-29) and Guidelines for Bitcoin and Dollar Services, approved on September 7, 2021. These standards apply to banks, cooperative banks, savings and credit entities, and electronic money suppliers, regulating their services and establishing provisions for bitcoin and dollar services.
On January 29, 2025, the Bitcoin Law was amended to make bitcoin acceptance voluntary for individuals and private entities. The term 'currency' was removed when referring to bitcoin as legal tender. Tax payments and payments to the State cannot be made with bitcoin, and only the private sector can accept bitcoin payments. The Superintendency of the Financial System and the Central Reserve Bank will issue technical regulations to support this amendment.
Cybersecurity in El Salvador
The Technical Standards for Information Security Management (NRP-23) have been effective since July 1, 2020, setting minimum criteria for information security and cybersecurity based on entities' nature, size, risk profile, and operations volume.
On March 8, 2022, the Technical Regulations on Cybersecurity Measures in Digital Channels (NRP-32) took effect, regulating cybersecurity measures for financial entities, including how they handle data through digital channels.
In May 2022, the government issued a Cybersecurity Policy to review the legal framework, create a specialized commission for computer crimes, and establish information exchange networks on computer crimes.
On November 23, 2024, a new Cybersecurity and Information Security Law was enacted to regulate and supervise cybersecurity measures, protecting critical infrastructure and data managed by public institutions. This law also established the State Cybersecurity Agency (ACE) to classify critical infrastructure operators and submit them for ratification to the President of El Salvador. Banks' services, considered essential, would be subject to this new law and ACE's regulation.
Enforcement matters in El Salvador
New standards for the Prevention, Detection and Control of Money Laundering and Assets, Funding of Terrorism and Funding of the Proliferation of Weapons of Mass Destruction took effect on June 7, 2022. These standards, issued by the Financial Investigation Unit ('UIF') of the Attorney General's Office, made substantial changes to the processes for receiving and monitoring cash transactions in bank branches, particularly the level of detail required on the identity of the people carrying out the operations, as well as the issuance of reports and monitoring of international transactions. Changes to these standards came into effect on September 27, 2023. One of the main changes is that the internal audit must evaluate at least once a year the compliance and effectiveness of the applicable regulations and issue a report of the results to the Board of Directors, Senior Management, and the Compliance Officer on any matters related to money laundering and terrorist financing risks. The reforms also emphasize the importance of verifying customer identity before establishing business relationships. More rigorous measures were established for client profiling in situations involving high-risk individuals or Politically Exposed Persons ('PEPs').
The Salvadoran Central Bank issued Technical Standards for Money and Asset Laundering Risk Management, Funding of Terrorism and Funding of the Proliferation of Weapons of Mass Destruction ('NRP-36') on September 23, 2022, and they took effect on October 10, 2022. The main objective is to ensure consistency between the regulatory obligations contained in the standard and the provisions of the UIF's new standards. The Central Bank's standards provide guidelines for managing the threat of money and asset laundering, the financing of terrorism and the financing of weapons of mass destruction. They also provide instructions on how to detect and report unusual operations.
El Salvador is reviewing its Law Against Money Laundering and Other Assets. The reforms will allow regulated entities to apply 'simplified, standard or intensified' measures to identify clients and the origin of their funds, and establish the National System for the Prevention, Control and Punishment of Money Laundering, Financing of Terrorism and the Proliferation of Weapons of Mass Destruction. These changes are part of the efforts regarding the Fourth Round of Mutual Evaluations carried out by the Financial Action Task Force of Latin America (GAFILAT).
Financial recovery regulations in El Salvador
On May 3 2022, Technical Standards for the Preparation of Financial Recovery Plans entered into force. The standards require financial entities to prepare a financial recovery plan. The recovery plan must identify the person responsible for its preparation and contain financial stress scenarios, quantitative indicators, prompt implementation processes, a plan for communication with the authorities and the public, identification of critical functions, and the relevance of the plan to risk management.
The Technical Standards set out the manner in which financial institutions must prepare, apply for approval, and implement their recovery plans, as well as the scenarios that may affect their financial, economic and legal situation.
On November 22, 2024, the Legislative Assembly issued the Stability of the Financial System and Deposit Guarantee Law; which is pending presidential approval before taking effect. The law aims to regulate recovery and resolution processes for financial entities and the ability of the Superintendency of the Financial System to protect the stability of the financial system, the continuity of essential financial services, and the rights of depositors of troubled entities, prioritizing public interest over private interest. It also creates a Financial Stability Committee and the legal framework for the Deposit Guarantee Institute ('IGD').
It repeals Titles IV and VI of the Banking Law, which relate to the regularization, restructuring, intervention, and liquidation, revocation of authorization to operate, and operation of the IGD.
Member entities will pay the IGD a minimum premium of 0.15% annually, which will be calculated and paid quarterly based on the daily average of total deposits maintained during the previous quarter. The collection of premiums will apply from January 1 of the year following the law's entry into force. The IGD must carry out periodic reviews on the adequacy of the minimum percentage used for premium calculation. The IGD operating budget will be up to a limit of 10% of the average premium income received from its member entities over the last three financial years.
Digital Assets Issuance Law of El Salvador
The Legislative Assembly's Digital Assets Issuance Law took effect on February 2, 2023, creating a regulatory framework that enables and ensures the transfer of digital assets in public offerings and enabling an alternative market to the traditional stock market.
On November 3, 2024, the Legislative Assembly approved amendments to the Digital Asset Issuance Law. The law establishes the legal framework for the transfer of digital assets used in public and private offerings in El Salvador. It also aims to regulate the requirements and obligations of issuers, digital asset service providers, bitcoin service providers, and other participants operating in the digital asset offering process, with the goal of promoting the efficient development of the digital asset market and protecting the interests of acquirers. The amendments have not been approved or reviewed by the President of the Republic, so they have not yet come into effect.
Personal Data Protection Law in El Salvador
On November 23, 2024, the Personal Data Protection Law took effect, guaranteeing the right to privacy and informational self-determination of individuals. It establishes regulations for the protection of personal data, determines the essential requirements for legitimate and informed processing of personal data, and establishes the regulatory framework for the collection, use, processing, storage, and other related activities of personal data.
The law outlines the rights of personal data holders, including access, rectification, cancellation, and opposition ('ARCO'), the treatment of personal data privacy with prior informed consent, security measures, and the handling of international data transfers. The State Cybersecurity Agency will be the entity that apples and supervises the law.
Public Security in El Salvador
On March 27, 2022, following a significant increase in the homicide rate and crime in El Salvador, the Legislative Assembly approved a state of exception of constitutional guarantees, in order to combat gangs and maintain public security. Since then, this state of exception has been extended 36 times, with the most recent extension lasting from March 7, 2025, to April 5, 2025,, and it is expected to continue being extended for additional periods. This may have a positive impact on banks by ensuring security and maintaining economic activity.
Financial Regulation in Guatemala
The Guatemalan central bank Law, Decree No. 16-2002 (Ley Orgánica del Banco de Guatemala), sets forth the scope of the activities of Banco de Guatemala in its capacity as central bank. The law establishes Banco de Guatemala’s fundamental purpose, which is to contribute to the creation and maintenance of the most favorable conditions for the development of the economy. This includes facilitating the monetary, foreign exchange and credit conditions that promote stability in general prices.
Pursuant to Decree No. 16-2002, Banco de Guatemala´s main objectives are:
(i) being the sole issuer of the national currency
(ii) ensuring the effective functioning of the national payments system
(iii) ensuring an adequate liquidity level in the banking system
(iv) receiving in deposit the bank reserves and legal deposits referred to in the law
(v) managing international reserves.
The Guatemalan central bank Law also regulates the activities of the Monetary Board as governing body of the central bank. The Monetary Board's roles with respect to the Guatemalan financial system, include, among others:
(i) determining and assessing the monetary, currency exchange and credit policies of the country
(ii) ensuring liquidity and solvency of the national banking system
(iii) regulating aspects related to bank reserves and legal deposits
(iv) regulating the Banking Clearing House
(v) authorizing the investment policy for international monetary reserves
(vi) establishing the minimum reserves required to strengthen the central bank's net worth
(vii) issuing regulations regarding the financial system and financial activities
(viii) reviewing provisions or standards submitted for consideration by the Guatemalan Superintendency of Banks or by the Guatemalan central bank for approval.
The Guatemalan Superintendency of Banks was created and is regulated by the Bank Supervision Law, Decree No. 18-2002 (Ley de Supervisión Financiera). The law establishes the scope of the Superintendency as the entity responsible for the supervision and inspection of the financial system in Guatemala, ensuring its stability and security.
Among its key functions are:
(i) To comply with and enforce the laws, regulations, and provisions applicable to the financial system.
(ii) To supervise that financial institutions maintain adequate liquidity and solvency to meet their obligations and properly manage the risks of their operations.
(iii) To impose sanctions in accordance with the law in case of noncompliance with regulations.
(iv) To evaluate the policies and procedures of financial institutions to ensure proper risk management.
(v) To request the liquidation or declaration of bankruptcy of entities that require it, in accordance with the law.
(vi) To exercise oversight and inspection of supervised entities, with unrestricted access to all relevant information, including books and records.
The Banks and Financial Groups Law, Decree No. 19-2002 (Ley de Bancos y Grupos Financieros) regulates the creation, organization, merger, activities, operations, functioning, suspension of operations and winding-up of banks and financial institutions, as well as the establishment and closure of branches and representative offices of foreign banks in Guatemala.
This Banks and Financial Groups Law also states that the members of the board of directors and general managers of the banks and financial institutions will be civilly, administratively and criminally liable for the performance of their duties and are therefore liable with their personal assets for fines, damages and other monetary sanctions, without limit.
Decree No. 19-2002 allows financial institutions to form financial groups or conglomerates under the common control of a holding entity or to designate one of the group's financial entities as their holding company. To form such conglomerates of financial groups, it is necessary for the financial group to have a bank. Identification as a financial group does not imply that the financial group becomes a separate legal entity. Rather, the purpose of such identification is to enable the Guatemalan Superintendency of Banks to carry out its supervisory tasks on a consolidated basis.
Other regulations in Guatemala
Decree No. 94-2000, the Law on Free Trading in Foreign Currency (Ley de Libre Negociación de Divisas), permits and regulates the use, transfer and payment in foreign currency, as well as the use of accounts and deposits in foreign currency within the Guatemalan financial system. Corporations and other entities wishing to offer securities denominated in foreign currency must obtain prior authorization from the Monetary Board.
Decree No. 67-2001, the Law against the Laundering of Money or Other Assets (Ley Contra el Lavado de Dinero u Otros Activos), and Governmental Agreement No. 118-2002, Regulations to the Law Against the Laundering of Money or Other Assets (Reglamento de la Ley Contra el Lavado de Dinero u Otros Activos), were promulgated for the purpose of preventing, controlling, monitoring and punishing the laundering of money or other assets derived from the commission of any crime. These regulations also established a Special Verification Inspectorate ('IVE') within the Superintendency of Banks, which is responsible for requesting and receiving information related to financial, commercial, or business transactions that may be linked to money laundering and reporting to the competent authorities.
Resolution JM-180-2002, the Regulation of operations that can be carried out among the companies of the Financial Group (Reglamento de operaciones que pueden efectuar entre sí las empresas del Grupo Financiero), regulates the financial operations and services that may be carried out among the companies of the financial group, in accordance with the Banks and Financial Groups Law.
Resolution JM-117-2009, the Regulation for the Management of Liquidity Risk (Reglamento para la Administración del Riesgo de Liquidez), establishes standards for banks, financial companies and offshore entities to manage liquidity risk and liquidity risk management strategy, based on the credit profile of the institution. The standards include prudential policies and processes to identify, quantify, monitor and control liquidity risk, the ability to manage liquidity on a day-to-day basis, and contingency plans to deal with liquidity problems.
Resolution JM-104-2021, the Regulation for the Management of Technological Risk (Reglamento para la Administración de Riesgo Tecnológico), aims to establish the minimum guidelines that banks and other financial entities must comply with to manage technological risk. This includes: i) regulating the obligations of financial institutions when contracting third-party information processing and storage services, ii) setting standards for alternate computer centers, which must be in a different geographical location the main computer center, iii) establishing authorization requirements for processing and/or storing information outside Guatemala, including obtaining legal opinion of a lawyer in the jurisdiction where the information will be processed and/or stored, and iv) setting minimum standards for backing up information in the IT infrastructure, information system and database.
Decree 8-2022, the Insolvency Law (Ley de Insolvencia), creates a legal framework that allows individuals and legal entities who have not been able to pay their debts to reorganize financially, administratively and operationally, without losing their assets, and renegotiate their debts, allowing them to generate income to pay their debts. It centralizes the payment of all civil, commercial, tax and labor debts, with or without guarantee, through the bankruptcy judicial process.
Decree 27-2022, the Law of Preferential Interest to Facilitate Access to Social Housing (Ley de Interés Preferencial para Facilitar el Acceso a la Vivienda Social), regulates a mechanism where the state partially subsidizes the interest rate that customers must pay for mortgage loans on the purchase of a first home in good condition, promoting access to housing to people with limited resources. Banks and entities authorized to grant credits will collect the subsidy, applying the corresponding discount in their monthly income tax return or payment of other taxes, and the state will not make any disbursement for the subsidy to financial institutions, transferring the burden of collecting the subsidy to banks.
Resolution JM-47-2022, the Regulations for Credit Risk Management (Reglamento para la Administración de Riesgo de Crédito), regulates certain activities of banks, offshore entities and financial group companies that grant financing, setting standards for the minimum information on applicants and borrowers, and the valuation of credit assets. The regulations: (i) set standards for management of specific and dynamic reserves or provisions; (ii) require measurement using the Expected Loss Given Default ('PDI') model; and (iii) establish a new segmentation of credit assets such as consumer loans, home mortgage loans, productive loans and commercial loans.
Resolution JM-67-2023, the Amendments to the Regulation for Credit Risk Management (Modificaciones al Reglamento para la Administración de Riesgo de Crédito) amends Resolution JM-47-2022 to facilitate implementation of the Manual for Credit Risk Management and help maintain the stability of the supervised banking system. Among the main provisions are the following: (i) modification of the procedure to gradually withdraw generic reserves or provisions from computable equity, (ii) calculation of Expected Losses and Dynamic Reserves or Provisions, (iii) general aspects of valuation and (iv) application of Internal Methodologies for the calculation of Expected Losses.
Resolution JM-86-2023, the Collective Insurance Regulation (Reglamento del Seguro Colectivo), modernizes the legal framework for the management of collective insurance, focusing on optimizing performance and highlighting the obligations of insurers for customer service and communication with policyholders and improving transparency and protection for policyholders. Some important aspects of the Collective Insurance Regulation include changes in placement and coverage guidelines, and rules with respect to the use of electronic means for the contracting of insurance, among others.
Agreement No. 6-2014, the Instructions for the Disclosure of Information by Banks, Financial Companies, Microfinance Institutions, General Warehouses, and Holding or Responsible Companies of a Financial Group (Instrucciones para la Divulgación de Información por parte de los Bancos, las Sociedades Financieras, las Entidades de Microfinanzas, los Almacenes Generales de Depósito y las Empresas Controladoras o Empresas Responsables de un Grupo Financiero), establishes general guidelines for the disclosure of information by these entities. The purpose of the agreement is to ensure that economic agents have access to accurate, sufficient, and reliable data concerning the activities, financial position, risk exposure, and risk assessment of these institutions. The agreement seeks to foster transparency, market discipline, and trust among users when making financial decisions, in compliance with applicable legal provisions.
Agreement No. 40-2023, the Amendments to Agreement Number 6-2014 Instructions for the Disclosure of Information by Banks, Financial Companies, Microfinance Entities, General Deposit Warehouses and Controlling Companies or Responsible Companies of a Financial Group (Modificaciones el Acuerdo Número 6-2014 Instrucciones para la Divulgación de Información por parte de los Bancos, las Sociedades Financieras, las Entidades de Microfinanzas, los Almacenes Generales de Depósito y las Empresas Controladoras o Empresas Responsables de un Grupo Financiero) establishes the minimum information that institutions must disclose and ensures that there is sufficient, accurate and timely information for users and the public. This represents an important step in financial regulation and transparency through the modernization of information transfer processes.
Agreement Number 41-2023 of the Guatemalan Superintendency of Banks, which amends Agreement Number 7-2014 Instructions for the Disclosure of Information by Insurance and Reinsurance Companies (Modificaciones al Acuerdo Número 7-2014 Instrucciones para la Divulgación de Información por parte de las Aseguradoras y Reaseguradoras) aims to improve the transparency and accessibility of certain financial information. Changes include updating disclosure guidelines and timeliness and accuracy requirements.
The Decree 2-2024, the Credit Card Law (Ley de Tarjetas de Crédito) regulates credit card operations, promotes transparency between issuers and users, and protects cardholders. The law establishes provisions regarding contracts, rates, fees and sanctions. It highlights the creation of the Financial Services Protection Unit within the Consumer Assistance and Support Directorate, to oversee compliance with the law, manage complaints, and impose penalties for violations. The law also criminalizes offenses such as card cloning and fraudulent use, imposing administrative fines based on the severity of the violations.
Resolution JM-56-2024, the Regulation of the Credit Card Law (Reglamento de la Ley de Tarjetas de Crédito), effective from September 1, 2024, complements the provisions of the Credit Card Law. Key aspects include the evaluation of applicants' payment capacity, prohibition of interest on interest, the reasonable calculation of the minimum payment, the disclosure of credit card terms, and supervision by the Superintendency of Banks to ensure compliance.
The Competition Law, Decree No. 23-2024, aims to promote competition, strengthen economic efficiency, and protect consumers in Guatemala. It regulates anticompetitive practices such as abuse of economic power, collusion, price-fixing, and production restrictions. It establishes two areas of application, general and supplementary, for sectors regulated by specific laws. It creates the Superintendency of Competition as an autonomous entity responsible for investigating violations and imposing sanctions, while also promoting competition education. Sanctions include fines of up to 200,000 times the daily minimum wage for severe violations. The law incorporates the evaluation of payment capacity and the imposition of interest for noncompliance. Additionally, the law establishes administrative procedures based on principles of due process and expediency.
Cybersecurity in Guatemala
Resolution JM-104-2021 (Reglamento para la Administración de Riesgo Tecnológico) includes a chapter on cybersecurity, outlining management procedures that focus on identification, protection, detection, response, and recovery. Institutions are required to assess vulnerabilities, cyber threats, and cyberattacks, and to develop protection policies ensuring the confidentiality, integrity, and availability of digital assets. The regulation also covers detection and recovery from cyber incidents, the organization of response teams, and the inclusion of cybersecurity clauses in supplier contracts. Additionally, it encourages the exchange of information between institutions to strengthen cybersecurity management.
Resolution JM-91-2024 (Reglamento de Medidas de Seguridad en Canales Electrónicos) sets minimum security standards for banks, financial institutions, and offshore entities to manage risks in electronic transactions and prevent fraud. It defines electronic channels as platforms used for conducting transactions and exchanging information. The regulation establishes the creation of a Fraud Risk Monitoring and Prevention Center to analyze complaints, issue alerts, and propose preventive measures to the Risk Management Committee. It also mandates a User Support Unit responsible for documenting cases, reporting fraud, and promoting education on security in electronic channels.
ESG
As ESG-related requirements and expectations continue to evolve globally, we monitor and seek to comply with current regulations, including with respect to information that must be reported to our stakeholders under applicable law. See Item 3.D. Risk Factors – We are exposed to environmental, social, governance and sustainability risks that could affect our financial condition and operating results.
In addition, we have adopted environmental policies, which include those related to environmental and social risk analysis, environmental management, controversial issues in financing and investment, responsible investment, climate change and sustainable procurement.
Subject to applicable law, we are integrating ESG aspects into our business strategy, including retail banking, wealth management, corporate banking, asset management and project finance. To that end, we have set a goal to finance COP 500 trillion before 2030 through credit and other financial services.
*Additional ESG-related information is available in our Colombian management report prepared in compliance with Colombian regulations and our sustainability website. Information included in our Colombian management report or accessible through our website or the website of any of our subsidiaries is not incorporated into this Annual Report.
Our risk management system (SIAR) includes a risk map, which is designed to allow us to consolidate relevant information and knowledge from various experts, supplementing the management of traditional financial risks with information on emerging risks such as climate change. We conduct an annual risk assessment using this system. As part of this process, social and environmental risks - including climate change - have been integrated for analysis alongside traditional financial risks. This approach allow us to strengthen our climate change responses and prepares us for opportunities in a changing business environment. As part of our climate commitment, we have set a goal of COP 40 trillion in financing for the transition to a low carbon economy by 2030.
Collectively, we aspire to promote sustainable development for the benefit of all, which includes not only our environmental management but also our social management. In our pursuit of excellence, we have sought to establish an enriching work environment that actively contributes to the wellbeing of our employees and their families and to their personal development. Our goal is to be the preferred place where talent not only chooses to grow, but also thrives. Our methodology and measurement tool, the Voice of the Employee, integrates several approaches to measure perceptions of organizational culture, employee wellbeing, key moments in the employee experience and ways of working. We analyze key indicators such as employee engagement, experience versus expectations, intention to stay, eNPS (Employee Net Promoter Score), leadership effectiveness, work-life balance, training and recognition. These efforts led to an 88% participation in our annual survey, which showed 94% favorability in engagement, 97% of employees feeling that their experience meets or exceeds expectations, and an eNPS of 83%.
We also measure our talent attraction and retention indicators and analyze our turnover and hiring indicators. Our recruitment indicator at the corporate level shows a natural process of talent renewal and allows us to attract new employees with innovative knowledge and new proposals. Our total and voluntary turnover rates for 2024 were 10.84% and 4.12%, respectively, compared with 8.83% and 4.41%, respectively, for 2023. We held a variety of events and initiatives to strengthen our brand and position ourselves as one of the Best Companies to work for in the countries where we operate. These initiatives were also focused on retaining employees with key knowledge and, in turn, attracting new professionals in strategic areas, such as technology, cybersecurity, design, analytics, and artificial intelligence.
The overall ESG strategy guidelines are established by the Board of Directors, which is responsible for defining Bancolombia's strategy and long-term objectives. The Board’s Audit, Corporate Governance and Risk Committees have direct responsibility for overseeing ESG issues, and the Steering Committee, acting as the Sustainability Committee, monitors compliance with the ESG strategy.
C.Organizational Structure
The following chart summarizes the organizational structure of Bancolombia and certain subsidiaries, mostly involved in financial or capital market activities:
This chart does not reflect any intermediate holding companies or special purpose vehicles owned by one or more of the entities included in the table.
SUBSIDIARIES
The following is a list of subsidiaries of Bancolombia as of December 31, 2024:
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| Entity |
Jurisdiction
of Incorporation |
Business |
Proportion of Ownership Interest and Voting Power Held by The Bank 2024 |
|
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| Fiduciaria Bancolombia S.A. Sociedad Fiduciaria |
Colombia |
Trust |
98.81 |
% |
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| Banca de Inversión Bancolombia S.A. Corporación Financiera |
Colombia |
Investment banking |
100.00 |
% |
|
| Valores Bancolombia S.A. Comisionista de Bolsa |
Colombia |
Securities brokerage |
100.00 |
% |
|
| Wompi S.A.S. |
Colombia |
Technology services provider |
100.00 |
% |
|
| Renting Colombia S.A.S. |
Colombia |
Operating leasing |
100.00 |
% |
|
| Inversiones CFNS S.A.S. |
Colombia |
Investments |
100.00 |
% |
|
| Negocios Digitales Colombia S.A.S. |
Colombia |
Payment solutions |
100.00 |
% |
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| Fondo de Capital Privado Fondo Inmobiliario Colombia |
Colombia |
Real estate investment fund |
80.47 |
% |
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| P.A. Inmuebles CEM |
Colombia |
Mercantile trust |
80.47 |
% |
|
| P.A. Calle 92 FIC-11 |
Colombia |
Mercantile trust |
52.31 |
% |
|
| P.A. FIC Edificio Corfinsura |
Colombia |
Mercantile trust |
80.47 |
% |
|
| P.A. FIC-A5 |
Colombia |
Mercantile trust |
80.47 |
% |
|
| P.A. FIC Inmuebles |
Colombia |
Mercantile trust |
80.47 |
% |
|
| P.A. FIC Clínica de Prado |
Colombia |
Mercantile trust |
62.00 |
% |
|
| P.A. FIC A6 |
Colombia |
Mercantile trust |
80.47 |
% |
|
| P.A. Central Point |
Colombia |
Mercantile trust |
60.35 |
% |
|
| P.A. Fideicomiso Twins Bay |
Colombia |
Mercantile trust |
80.47 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Fideicomiso Lote Av San Martín |
Colombia |
Mercantile trust |
80.47 |
% |
|
| P.A. Fideicomiso Lote 30 |
Colombia |
Mercantile trust |
80.47 |
% |
|
| Fideicomiso Fondo Inmobiliario Bancolombia |
Colombia |
Mercantile trust |
80.47 |
% |
|
P.A. Florencia Ferrara(1) |
Colombia |
Mercantile trust |
44.26 |
% |
|
| P.A. Flor Morado Plaza |
Colombia |
Mercantile trust |
80.47 |
% |
|
| P.A. Galería la 33 |
Colombia |
Mercantile trust |
80.47 |
% |
|
P.A. Linz Granz del Rio(2) |
Colombia |
Mercantile trust |
44.26 |
% |
|
Fideicomiso Selecto Terrazu E1(2) |
Colombia |
Mercantile trust |
64.38 |
% |
|
| Valores Simesa S.A. |
Colombia |
Investments |
62.75 |
% |
|
| Fideicomiso Lote Distrito Vera B1B2 |
Colombia |
Mercantile trust |
62.44 |
% |
|
| P.A. FAI Calle 77 |
Colombia |
Mercantile trust |
98.00 |
% |
|
| P.A. Nomad Salitre |
Colombia |
Mercantile trust |
98.00 |
% |
|
| P.A. Nomad Central-2 |
Colombia |
Mercantile trust |
98.00 |
% |
|
| P.A. Calle 84 (2) |
Colombia |
Mercantile trust |
98.00 |
% |
|
| P.A. Calle 84 (3) |
Colombia |
Mercantile trust |
98.00 |
% |
|
P.A. Nomad Distrito Vera(3) |
Colombia |
Mercantile trust |
98.00 |
% |
|
P.A. Nexo(3) |
Colombia |
Mercantile trust |
98.00 |
% |
|
| P.A. Mercurio |
Colombia |
Mercantile trust |
100.00 |
% |
|
P.A. CEDIS Sodimac(3) |
Colombia |
Mercantile trust |
100.00 |
% |
|
| Wenia S.A.S |
Colombia |
Technology services |
100.00 |
% |
|
| P.A. Wenia |
Colombia |
Mercantile trust |
100.00 |
% |
|
Nequi S.A. Compañía de Financiamiento(4) |
Colombia |
Financial services |
100.00 |
% |
|
Sociedad Beneficiaria BC Panamá S.A.S.(5) |
Colombia |
Holding |
100.00 |
% |
|
| Bancolombia Panamá S.A. |
Panama |
Banking |
100.00 |
% |
|
| Sistemas de Inversiones y Negocios S.A. Sinesa |
Panama |
Investments |
100.00 |
% |
|
| Banagrícola S.A. |
Panama |
Holding |
99.17 |
% |
|
| Banistmo S.A. |
Panama |
Banking |
100.00 |
% |
|
| Banistmo Investment Corporation S.A. |
Panama |
Trust |
100.00 |
% |
|
| Leasing Banistmo S.A. |
Panama |
Leasing |
100.00 |
% |
|
| Valores Banistmo S.A. |
Panama |
Purchase and sale of securities |
100.00 |
% |
|
Banistmo Panamá Fondos de Inversión S.A.(6) |
Panama |
Investment fund holder |
100.00 |
% |
|
Banistmo Capital Markets Group Inc.(6) |
Panama |
Purchase and sale of securities |
100.00 |
% |
|
Anavi Investment Corporation S.A.(6) |
Panama |
Real estate |
100.00 |
% |
|
Desarrollo de Oriente S.A.(6) |
Panama |
Real estate |
100.00 |
% |
|
Steens Enterprises S.A.(6) |
Panama |
Portfolio holder |
100.00 |
% |
|
Ordway Holdings S.A.(6) |
Panama |
Real estate broker |
100.00 |
% |
|
| Grupo Agromercantil Holding S.A. |
Panama |
Holding |
100.00 |
% |
|
| Banco Agromercantil de Guatemala S.A. |
Guatemala |
Banking |
99.68 |
% |
|
| Seguros Agromercantil de Guatemala S.A. |
Guatemala |
Insurance agency |
79.92 |
% |
|
| Financiera Agromercantil S.A. |
Guatemala |
Financial services |
100.00 |
% |
|
| Agrovalores S.A. |
Guatemala |
Securities brokerage |
100.00 |
% |
|
| Arrendadora Agromercantil S.A. |
Guatemala |
Financial Leasing |
100.00 |
% |
|
| Asistencia y Ajustes S.A. |
Guatemala |
Roadside and medical assistance services |
100.00 |
% |
|
| Serproba S.A. |
Guatemala |
Maintenance and remodeling services |
100.00 |
% |
|
| Servicios de Formalización S.A. |
Guatemala |
Loans formalization |
100.00 |
% |
|
| Conserjeria, Mantenimiento y Mensajería S.A.“En liquidación” |
Guatemala |
Maintenance services |
100.00 |
% |
|
Mercom Bank Ltd.(7) |
Barbados |
Banking |
99.68 |
% |
|
| New Alma Enterprises Ltd. |
Bahamas |
Investments |
99.68 |
% |
|
| Bancolombia Puerto Rico Internacional Inc. |
Puerto Rico |
Banking |
100.00 |
% |
|
Sinesa Cayman, Inc. (before Bancolombia Cayman S.A)(8) |
Cayman Islands |
Banking |
100.00 |
% |
|
| Banco Agrícola S.A. |
El Salvador |
Banking |
97.36 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Arrendadora Financiera S.A. Arfinsa |
El Salvador |
Leasing |
97.37 |
% |
|
| Accelera S.A. de C.V. (before Credibac S.A. de C.V) |
El Salvador |
Credit card services |
97.36 |
% |
|
| Valores Banagrícola S.A. de C.V. |
El Salvador |
Securities brokerage |
98.89 |
% |
|
| Inversiones Financieras Banco Agrícola S.A. IFBA |
El Salvador |
Holding |
98.89 |
% |
|
| Gestora de Fondos de Inversión Banagrícola S.A. |
El Salvador |
Administers investment funds |
98.89 |
% |
|
| Bagrícola Costa Rica S.A. |
Costa Rica |
Business and management advising |
99.17 |
% |
|
| Bancolombia Capital Holdings USA LLC |
United States |
Holding |
100.00 |
% |
|
| Bancolombia Capital Adviser LLC |
United States |
Investment advisor |
100.00 |
% |
|
| Bancolombia Capital LLC |
United States |
Securities brokerage |
100.00 |
% |
|
| Wenia Ltd. |
Bermuda |
Technology services |
100.00 |
% |
|
(1)The P.A Florencia Ferrara is a subsidiary of Fondo de Capital Privado Fondo Inmobiliario Colombia, which has a 55.00% percentage of ownership. Bancolombia has an effective percentage of ownership in Fondo de Capital Privado Fondo Inmobiliario Colombia of 80.47%.
(2)The P.A Linz Granz del Rio and Fideicomiso Selecto Terrazu E1 are consolidated through Fondo de Capital Privado Fondo Inmobiliario as of September and December 2024, respectively.
(3)During May, June and November 2024, the parent company was established as trustor of P.A CEDIS Sodimac, P.A Nomad Distrito Vera and P.A Nexo, respectively through a management mercantile trust agreement, for real estate activity purposes.
(4)For further information, see Consolidated Financial Statement, Note 1. Reporting entity.
(5)On September 27, 2024, Sociedad Beneficiaria BC Panamá was established, a company whose corporate purpose is to be the beneficiary of the division of a company domiciled in Panama, by virtue of which it partially transfers its assets, as a consequence of the above, to be the owner of the assets and liabilities received on the occasion of said operation, and merge with a company domiciled in Colombia. For further information, see Consolidated Financial Statement, Note 1. Reporting entity.
(6)Investments in non-operational stage.
(7)Since 2021, the company began an organized and gradual process to transfer assets and liabilities to Banco Agromercantil de Guatemala, S.A. or other companies of the Bancolombia Group. For further information, see Consolidated Financial Statement, Note 1. Reporting entity.
(8)Since 2020, the board of directors of Bancolombia Panamá (parent company of Sinesa Cayman, Inc), authorized the decision to wind-down the business and operations of its subsidiary in Cayman. For further information, see Consolidated Financial Statement, Note 1. Reporting entity.
D.PREMISES AND EQUIPMENT
As of December 2024, our premises and equipment include the main office located on Los Industriales Avenue in Medellín, as well as other owned and leased facilities primarily located in Colombia, with an approximate total area of 429,962 square meters.
In 2024, we carried out improvements, openings, and renovations of some properties where branches, ATMs, and administrative offices operate. These improvements involved the execution of refurbishing and maintenance activities. The financing for these works was from our funds, totaling approximately COP 188,712 million.
To consolidate the administrative operations and bring specialized teams closer to areas with higher customer concentration, we completed the relocation of the Banca Personas Cali building to a new leased building, with a total area of 3,379 square meters, in 2024. During 2025, we expect to invest approximately COP 80,767 million in the refurbishing of owned and leased properties.
In 2024, we carried out a comprehensive evaluation of the physical risks affecting Bancolombia’s facilities, including branches, ATMs, administrative buildings, warehouses, and other assets. This analysis identified that the main risks these assets are exposed to are:
•Landslides: massive movements of rocks, debris, earth, or mud on slopes, which may compromise the stability of infrastructures
•Flooding: the occupation of normally dry areas due to sudden water accumulation, either from river overflow or coastal flooding
•Wildfires: uncontrolled fire spread in forested or wild land areas, affecting surrounding vegetation, flora, and fauna
•Intense rainfall, snow, or hail that may impact infrastructure and operations
•Cyclones: low-pressure systems with intense rains and strong winds that can cause significant damage
Our total premises and equipment for own use had a net book value as of December 31, 2024 of COP 2,650,602 million and the book value of right of use assets related to branches and rented offices amounts to COP 1,718,621 million.
The following table provides information on Bancolombia's main owned and leased facilities where administrative activities, banking business activities, and data processing center operations take place:
|
|
|
|
|
|
|
|
|
| Building / Facility |
Location |
Area (square meters) |
| Dirección General (Torre Norte, Torre Sur and Torre Oriente and Ciudad del Río) |
Medellín, Colombia |
117,118 |
| Torre Atrio |
Bogotá, Colombia |
21,084 |
| Niquía |
Bello, Colombia |
4,070 |
| Edificio 9211 |
Bogotá, Colombia |
9,578 |
| Torre Barranquilla |
Barranquilla, Colombia |
8,801 |
| Twins Bay 1 |
Cartagena, Colombia |
2,866 |
| Sucursal 8111 |
Bogotá, Colombia |
679 |
| Sucursal Centro Comercial Santa Fe |
Bogotá, Colombia |
425 |
| Gerencia de Zona Bucaramanga |
Bucaramanga, Colombia |
1,869 |
During 2024, we entered into new lease agreements for the following facilities, resulting in an approximate increase in the right-of-use asset by COP 51,944 million:
•Sede Cosmocentro building: located in Cali, as a result of the relocation process of the southern region offices. The approximate increase in the right-of-use asset due to the lease of this property was COP 4,119 million
•Other properties: in the ordinary course of business, we entered into new lease agreements for properties used in branch operations and self-service halls, resulting in an approximate increase of COP 47,825 million in the right-of-use asset. Notable among these new agreements are five properties located in Bogota, Barranquilla, and Cali, which represented an increase in the right-of-use asset by approximately COP 22,957 million
For further information relating to our branch network, see Item 4. Information on the Company, B5. Distribution Network. Accounting recognition for premises and equipment are described in Note 2 'Significant Accounting Policies' and Note 10 'Premises and Equipment, Net' to the Consolidated Financial Statements.
E.SELECTED STATISTICAL INFORMATION
The following information should be read together with the Consolidated Financial Statements as well as Item 5. Operating and Financial Review and Prospects. This information has been prepared based on our financial records, which are prepared in accordance with IFRS as issued by the IASB and the related interpretations issued by the IFRIC. The consolidated selected statistical information refer to us, including all subsidiaries.
E.1DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS’ EQUITY; INTEREST RATES AND INTEREST DIFFERENTIAL
Average balances for each of the years ended December 31, 2024, 2023 and 2022 have been calculated as the arithmetic average of the last 13 monthly IFRS balances. In addition, the interest rate subtotals are based on the weighted average of domestic and foreign assets and liabilities.
Average statement of financial position
The following tables show, for the years ended December 31 2024, 2023 and 2022, respectively: (i) average balances for all of our assets and liabilities; (ii) interest earned and interest paid amounts; and (iii) average nominal interest rates/yield for our interest-earning assets and interest-bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average statement of financial position and income from interest-earning assets for the fiscal year ended December 31,⁽¹⁾ |
|
2024 |
2023 |
2022 |
|
Average
balance |
Interest
income
earned |
Average
Yield / Rate |
Average
balance |
Interest
income
earned |
Average
Yield / Rate |
Average
balance |
Interest
income
earned |
Average
Yield / Rate |
| In millions of COP, except percentages |
| ASSETS |
|
|
|
|
|
|
|
|
|
| Interest-earning assets |
|
|
|
|
|
|
|
|
|
| Interbank borrowings |
|
|
|
|
|
|
|
|
|
| Domestic activities |
98,288 |
|
8,507 |
|
8.66 |
% |
91,258 |
|
10,028 |
|
11.00 |
% |
56,945 |
|
5,063 |
|
8.90 |
% |
| Foreign activities |
3,197,413 |
|
199,984 |
|
6.25 |
% |
2,981,291 |
|
187,279 |
|
6.30 |
% |
2,367,478 |
|
56,899 |
|
2.40 |
% |
| Total |
3,295,701 |
|
208,491 |
|
6.33 |
% |
3,072,549 |
|
197,307 |
|
6.40 |
% |
2,424,423 |
|
61,962 |
|
2.60 |
% |
| Reverse repurchase agreements and other similar secured loans |
|
|
|
|
|
|
|
|
|
| Domestic activities |
4,343,154 |
|
284,814 |
|
6.56 |
% |
2,676,670 |
|
292,971 |
|
10.90 |
% |
1,086,449 |
|
77,664 |
|
7.10 |
% |
| Foreign activities |
96,642 |
|
15,401 |
|
15.94 |
% |
73,920 |
|
11,777 |
|
15.90 |
% |
122,943 |
|
8,044 |
|
6.50 |
% |
| Total |
4,439,796 |
|
300,215 |
|
6.76 |
% |
2,750,590 |
|
304,748 |
|
11.10 |
% |
1,209,392 |
|
85,708 |
|
7.10 |
% |
Debt instruments(2) |
|
|
|
|
|
|
|
|
|
| Domestic activities |
15,172,478 |
|
1,144,392 |
|
7.54 |
% |
10,599,721 |
|
1,376,246 |
|
13.00 |
% |
11,990,844 |
|
512,492 |
|
4.30 |
% |
| Foreign activities |
15,663,891 |
|
1,189,523 |
|
7.59 |
% |
16,826,459 |
|
281,213 |
|
1.70 |
% |
14,742,929 |
|
1,274,596 |
|
8.60 |
% |
| Total |
30,836,369 |
|
2,333,915 |
|
7.57 |
% |
27,426,180 |
|
1,657,459 |
|
6.00 |
% |
26,733,773 |
|
1,787,088 |
|
6.70 |
% |
| Loans and advances to customers, net |
|
|
|
|
|
|
|
|
|
| Domestic activities |
178,959,009 |
|
25,309,441 |
|
14.14 |
% |
172,515,187 |
|
27,947,473 |
|
16.20 |
% |
155,827,942 |
|
18,914,965 |
|
12.10 |
% |
| Foreign activities |
87,001,331 |
|
7,304,110 |
|
8.40 |
% |
89,986,484 |
|
7,293,314 |
|
8.10 |
% |
87,318,297 |
|
5,868,528 |
|
6.70 |
% |
| Total |
265,960,340 |
|
32,613,551 |
|
12.26 |
% |
262,501,671 |
|
35,240,787 |
|
13.40 |
% |
243,146,239 |
|
24,783,493 |
|
10.20 |
% |
| Total interest-earning assets |
|
|
|
|
|
|
|
|
|
| Domestic activities |
198,572,929 |
|
26,747,154 |
|
13.47 |
% |
185,882,836 |
|
29,626,718 |
|
15.90 |
% |
168,962,180 |
|
19,510,184 |
|
11.50 |
% |
| Foreign activities |
105,959,277 |
|
8,709,018 |
|
8.22 |
% |
109,868,154 |
|
7,773,583 |
|
7.10 |
% |
104,551,647 |
|
7,208,067 |
|
6.90 |
% |
| Total |
304,532,206 |
|
35,456,172 |
|
11.64 |
% |
295,750,990 |
|
37,400,301 |
|
12.60 |
% |
273,513,827 |
|
26,718,251 |
|
9.80 |
% |
| Total non-interest-earning assets |
|
|
|
|
|
|
|
|
|
| Domestic activities |
20,705,057 |
|
— |
|
— |
|
23,428,476 |
|
— |
|
— |
|
19,302,722 |
|
— |
|
— |
|
Foreign activities(3) |
23,959,853 |
|
— |
|
— |
|
24,158,685 |
|
— |
|
— |
|
22,495,964 |
|
— |
|
— |
|
| Total |
44,664,910 |
|
— |
|
— |
|
47,587,161 |
|
— |
|
— |
|
41,798,686 |
|
— |
|
— |
|
| Total interest and non-interest earnings assets |
|
|
|
|
|
|
|
|
|
| Domestic activities |
219,277,986 |
|
26,747,154 |
|
12.20 |
% |
209,311,312 |
|
29,626,718 |
|
14.20 |
% |
188,264,902 |
|
19,510,184 |
|
10.40 |
% |
Foreign activities(3) |
129,919,130 |
|
8,709,018 |
|
6.70 |
% |
134,026,839 |
|
7,773,583 |
|
5.80 |
% |
127,047,611 |
|
7,208,067 |
|
5.70 |
% |
| Total |
349,197,116 |
|
35,456,172 |
|
10.15 |
% |
343,338,151 |
|
37,400,301 |
|
10.90 |
% |
315,312,513 |
|
26,718,251 |
|
8.50 |
% |
(1)Our average total assets and total liabilities and stockholder's equity were calculated considering the last 13 monthly IFRS balances.
(2)Tax-exempt income of tax-exempt investment securities has not been calculated on a tax equivalent basis because the effect of such calculation would not be material.
(3)The percentage of total average assets attributable to foreign activities was 37.2%, 39.0% and 40.3%, respectively, for the fiscal years ended December 31, 2024, 2023 and 2022.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average statement of financial position and interest paid on interest-bearing liabilities for the fiscal year ended December 31⁽¹⁾ |
|
2024 |
2023 |
2022 |
|
Average
balance |
Interest
income
earned |
Average
Yield / Rate |
Average
balance |
Interest
income
earned |
Average
Yield / Rate |
Average
balance |
Interest
income
earned |
Average
Yield / Rate |
| In millions of COP, except percentages |
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
| Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
| Checking accounts |
|
|
|
|
|
|
|
|
|
| Domestic activities |
22,466,429 |
|
23,764 |
|
0.11 |
% |
22,001,228 |
|
22,131 |
|
0.10 |
% |
25,899,835 |
|
25,944 |
|
0.10 |
% |
| Foreign activities |
17,357,904 |
|
81,415 |
|
0.47 |
% |
18,432,636 |
|
68,657 |
|
0.40 |
% |
18,344,263 |
|
49,633 |
|
0.30 |
% |
| Total |
39,824,333 |
|
105,179 |
|
0.26 |
% |
40,433,864 |
|
90,788 |
|
0.20 |
% |
44,244,098 |
|
75,577 |
|
0.20 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Saving accounts |
|
|
|
|
|
|
|
|
|
| Domestic activities |
83,711,882 |
|
2,676,437 |
|
3.20 |
% |
79,151,508 |
|
3,463,957 |
|
4.40 |
% |
80,939,114 |
|
1,936,283 |
|
2.40 |
% |
| Foreign activities |
27,779,679 |
|
463,925 |
|
1.67 |
% |
29,694,615 |
|
395,108 |
|
1.30 |
% |
29,911,479 |
|
346,288 |
|
1.20 |
% |
| Total |
111,491,561 |
|
3,140,362 |
|
2.82 |
% |
108,846,123 |
|
3,859,065 |
|
3.50 |
% |
110,850,593 |
|
2,282,571 |
|
2.10 |
% |
| Time deposits |
|
|
|
|
|
|
|
|
|
| Domestic activities |
60,786,003 |
|
6,880,218 |
|
11.32 |
% |
54,810,787 |
|
7,586,429 |
|
13.80 |
% |
30,895,060 |
|
2,615,941 |
|
8.50 |
% |
| Foreign activities |
44,402,637 |
|
2,089,914 |
|
4.71 |
% |
42,637,064 |
|
1,787,234 |
|
4.20 |
% |
38,508,868 |
|
1,167,591 |
|
3.00 |
% |
| Total |
105,188,640 |
|
8,970,132 |
|
8.53 |
% |
97,447,851 |
|
9,373,663 |
|
9.60 |
% |
69,403,928 |
|
3,783,532 |
|
5.50 |
% |
| Repurchase agreements and other similar secured borrowing |
|
|
|
|
|
|
|
|
|
| Domestic activities |
1,068,567 |
|
45,253 |
|
4.23 |
% |
968,917 |
|
160,766 |
|
16.60 |
% |
1,617,857 |
|
165,440 |
|
10.20 |
% |
| Foreign activities |
226,752 |
|
17,641 |
|
7.78 |
% |
54,757 |
|
6,968 |
|
12.70 |
% |
87,737 |
|
4,678 |
|
5.30 |
% |
| Total |
1,295,319 |
|
62,894 |
|
4.86 |
% |
1,023,674 |
|
167,734 |
|
16.40 |
% |
1,705,594 |
|
170,118 |
|
10.00 |
% |
Borrowings from other financial institutions(2) |
|
|
|
|
|
|
|
|
|
| Domestic activities |
5,662,586 |
|
669,512 |
|
11.82 |
% |
5,645,529 |
|
798,977 |
|
14.20 |
% |
4,691,668 |
|
390,970 |
|
8.30 |
% |
| Foreign activities |
8,518,466 |
|
680,401 |
|
7.99 |
% |
11,769,294 |
|
860,019 |
|
7.30 |
% |
8,874,224 |
|
372,747 |
|
4.20 |
% |
| Total |
14,181,052 |
|
1,349,913 |
|
9.52 |
% |
17,414,823 |
|
1,658,996 |
|
9.50 |
% |
13,565,892 |
|
763,717 |
|
5.60 |
% |
Interbank deposits(2)(3) |
|
|
|
|
|
|
|
|
|
| Domestic activities |
— |
|
2,958 |
|
— |
|
71,595 |
|
11,260 |
|
15.70 |
% |
78,105 |
|
5,288 |
|
6.80 |
% |
| Foreign activities |
639,639 |
|
19,348 |
|
3.02 |
% |
723,898 |
|
19,280 |
|
2.70 |
% |
706,734 |
|
6,087 |
|
0.90 |
% |
| Total |
639,639 |
|
22,306 |
|
3.49 |
% |
795,493 |
|
30,540 |
|
3.80 |
% |
784,839 |
|
11,375 |
|
1.40 |
% |
| Debt instruments in issue |
|
|
|
|
|
|
|
|
|
| Domestic activities |
3,211,356 |
|
591,122 |
|
18.41 |
% |
4,602,387 |
|
895,296 |
|
19.50 |
% |
4,237,757 |
|
740,063 |
|
17.50 |
% |
| Foreign activities |
11,248,144 |
|
610,990 |
|
5.43 |
% |
12,856,710 |
|
531,319 |
|
4.10 |
% |
16,259,152 |
|
588,448 |
|
3.60 |
% |
| Total |
14,459,500 |
|
1,202,112 |
|
8.31 |
% |
17,459,097 |
|
1,426,615 |
|
8.20 |
% |
20,496,909 |
|
1,328,511 |
|
6.50 |
% |
| Lease liability |
|
|
|
|
|
|
|
|
|
| Domestic activities |
1,105,501 |
|
95,481 |
|
8.64 |
% |
987,982 |
|
71,808 |
|
7.30 |
% |
967,289 |
|
64,611 |
|
6.70 |
% |
| Foreign activities |
703,013 |
|
40,065 |
|
5.70 |
% |
802,540 |
|
42,007 |
|
5.20 |
% |
843,771 |
|
46,738 |
|
5.50 |
% |
| Total |
1,808,514 |
|
135,546 |
|
7.49 |
% |
1,790,522 |
|
113,815 |
|
6.40 |
% |
1,811,060 |
|
111,349 |
|
6.10 |
% |
| Total interest-bearing liabilities |
|
|
|
|
|
|
|
|
|
| Domestic activities |
178,012,324 |
|
10,984,745 |
|
6.17 |
% |
168,239,933 |
|
13,010,624 |
|
7.70 |
% |
149,326,685 |
|
5,944,540 |
|
4.00 |
% |
| Foreign activities |
110,876,234 |
|
4,003,699 |
|
3.61 |
% |
116,971,514 |
|
3,710,592 |
|
3.20 |
% |
113,536,228 |
|
2,582,210 |
|
2.30 |
% |
| Total |
288,888,558 |
|
14,988,444 |
|
5.19 |
% |
285,211,447 |
|
16,721,216 |
|
5.90 |
% |
262,862,913 |
|
8,526,750 |
|
3.20 |
% |
| Total non-interest bearing liabilities |
|
|
|
|
|
|
|
|
|
| Domestic activities |
16,624,159 |
|
— |
|
— |
|
15,982,833 |
|
— |
|
— |
|
13,675,803 |
|
— |
|
— |
|
| Foreign activities |
2,947,687 |
|
— |
|
— |
|
3,298,036 |
|
— |
|
— |
|
3,087,785 |
|
— |
|
— |
|
| Total |
19,571,846 |
|
— |
|
— |
|
19,280,869 |
|
— |
|
— |
|
16,763,588 |
|
— |
|
— |
|
| Stockholders' equity |
|
|
|
|
|
|
|
|
|
| Domestic activities |
32,207,927 |
|
— |
|
— |
|
29,371,732 |
|
— |
|
— |
|
26,739,788 |
|
— |
|
— |
|
| Foreign activities |
8,528,785 |
|
— |
|
— |
|
9,474,103 |
|
— |
|
— |
|
8,946,224 |
|
— |
|
— |
|
| Total |
40,736,712 |
|
— |
|
— |
|
38,845,835 |
|
— |
|
— |
|
35,686,012 |
|
— |
|
— |
|
Total interest and non-interest bearing liabilities and stockholders’ equity(4) |
|
|
|
|
|
|
|
|
|
| Domestic activities |
226,844,411 |
|
10,984,745 |
|
4.84 |
% |
213,594,498 |
|
13,010,624 |
|
6.10 |
% |
189,742,276 |
|
5,944,540 |
|
3.10 |
% |
Foreign activities(4) |
122,352,705 |
|
4,003,699 |
|
3.27 |
% |
129,743,653 |
|
3,710,592 |
|
2.90 |
% |
125,570,237 |
|
2,582,210 |
|
2.10 |
% |
| Total |
349,197,116 |
|
14,988,444 |
|
4.29 |
% |
343,338,151 |
|
16,721,216 |
|
4.90 |
% |
315,312,513 |
|
8,526,750 |
|
2.70 |
% |
(1)Our average of total assets and total liabilities and stockholder's equity were calculated considering the last 13 monthly IFRS balances.
(2)Includes both short-term and long-term borrowings.
(3)Includes borrowings from banks located outside Colombia.
(4)The percentage of foreign activities over total average liabilities attributable was 36.9%, 39.5% and 41.7%, respectively, for the fiscal years ended December 31, 2024, 2023 and 2022.
Changes in net interest income and expenses- volume and rate analysis
The following table allocates, for domestic and foreign activities, changes in our net interest income to changes in average volume, changes in nominal rates and the net variance caused by changes in both average volume and nominal rate for the year ended December 31, 2024 compared to the year ended December 31, 2023; and the year ended December 31, 2022, compared to the year ended December 31, 2021.
Volume and rate variances have been calculated based on movements in average balances over the period and changes in nominal interest rates on average interest-earning assets and average interest-bearing liabilities. Net changes attributable to changes in both volume and interest rate have been allocated to the change due to changes in volume.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2024-December 31, 2023 |
December 31, 2023-December 31, 2022 |
|
Increase (decrease) due to changes in: |
Increase (decrease) due to changes in: |
|
Volume |
Rate |
Net Change |
Volume |
Rate |
Net Change |
|
In millions of COP |
| Interest-earning assets |
|
|
|
|
|
|
| Interbank borrowings |
|
|
|
|
|
|
| Domestic activities |
867 |
|
(2,388) |
|
(1,521) |
|
3,568 |
|
1,397 |
|
4,965 |
|
| Foreign activities |
13,513 |
|
(808) |
|
12,705 |
|
18,047 |
|
112,333 |
|
130,380 |
|
| Total |
14,380 |
|
(3,196) |
|
11,184 |
|
21,615 |
|
113,730 |
|
135,345 |
|
| Reverse repurchase agreements and other similar secured loans |
|
|
|
|
|
|
| Domestic activities |
(22,904) |
|
14,747 |
|
(8,157) |
|
157,978 |
|
57,329 |
|
215,307 |
|
| Foreign activities |
3,621 |
|
3 |
|
3,624 |
|
(1,436) |
|
5,169 |
|
3,733 |
|
| Total |
(19,283) |
|
14,750 |
|
(4,533) |
|
156,542 |
|
62,498 |
|
219,040 |
|
Debt instruments(1) |
|
|
|
|
|
|
| Domestic activities |
(8,116,489) |
|
7,884,635 |
|
(231,854) |
|
(52,143) |
|
915,897 |
|
863,754 |
|
| Foreign activities |
(18,060) |
|
926,370 |
|
908,310 |
|
210,995 |
|
(1,204,378) |
|
(993,383) |
|
| Total |
(8,134,549) |
|
8,811,005 |
|
676,456 |
|
158,852 |
|
(288,481) |
|
(129,629) |
|
| Loans and advances to customers, net |
|
|
|
|
|
|
| Domestic activities |
1,099,138 |
|
(3,737,170) |
|
(2,638,032) |
|
2,189,882 |
|
6,842,626 |
|
9,032,508 |
|
| Foreign activities |
(134,170) |
|
144,966 |
|
10,796 |
|
184,097 |
|
1,240,689 |
|
1,424,786 |
|
| Total |
964,968 |
|
(3,592,204) |
|
(2,627,236) |
|
2,373,979 |
|
8,083,315 |
|
10,457,294 |
|
| Total interest-earning assets |
|
|
|
|
|
|
| Domestic activities |
(7,039,388) |
|
4,159,824 |
|
(2,879,564) |
|
2,299,285 |
|
7,817,249 |
|
10,116,534 |
|
| Foreign activities |
(135,096) |
|
1,070,531 |
|
935,435 |
|
411,703 |
|
153,813 |
|
565,516 |
|
| Total |
(7,174,484) |
|
5,230,355 |
|
(1,944,129) |
|
2,710,988 |
|
7,971,062 |
|
10,682,050 |
|
| Interest-bearing liabilities: |
|
|
|
|
|
|
| Checking accounts |
|
|
|
|
|
|
| Domestic activities |
474 |
|
1,159 |
|
1,633 |
|
(3,922) |
|
109 |
|
(3,813) |
|
| Foreign activities |
(3,702) |
|
16,460 |
|
12,758 |
|
240 |
|
18,784 |
|
19,024 |
|
| Total |
(3,228) |
|
17,619 |
|
14,391 |
|
(3,682) |
|
18,893 |
|
15,211 |
|
| Saving accounts |
|
|
|
|
|
|
| Domestic activities |
214,206 |
|
(1,001,726) |
|
(787,520) |
|
(41,794) |
|
1,569,468 |
|
1,527,674 |
|
| Foreign activities |
(23,282) |
|
92,099 |
|
68,817 |
|
(2,493) |
|
51,313 |
|
48,820 |
|
| Total |
190,924 |
|
(909,627) |
|
(718,703) |
|
(44,287) |
|
1,620,781 |
|
1,576,494 |
|
| Time deposits |
|
|
|
|
|
|
| Domestic activities |
1,051,429 |
|
(1,757,640) |
|
(706,211) |
|
2,731,191 |
|
2,239,297 |
|
4,970,488 |
|
| Foreign activities |
76,300 |
|
226,380 |
|
302,680 |
|
135,648 |
|
483,995 |
|
619,643 |
|
| Total |
1,127,729 |
|
(1,531,260) |
|
(403,531) |
|
2,866,839 |
|
2,723,292 |
|
5,590,131 |
|
| Repurchase agreements and other similar secured borrowing |
|
|
|
|
|
|
| Domestic activities |
18,507 |
|
(134,020) |
|
(115,513) |
|
8,465 |
|
(13,139) |
|
(4,674) |
|
| Foreign activities |
12,180 |
|
(1,507) |
|
10,673 |
|
(852) |
|
3,142 |
|
2,290 |
|
| Total |
30,687 |
|
(135,527) |
|
(104,840) |
|
7,613 |
|
(9,997) |
|
(2,384) |
|
| Borrowings from other financial institutions |
|
|
|
|
|
|
| Domestic activities |
2,421 |
|
(131,886) |
|
(129,465) |
|
92,004 |
|
316,003 |
|
408,007 |
|
| Foreign activities |
(270,890) |
|
91,272 |
|
(179,618) |
|
149,132 |
|
338,140 |
|
487,272 |
|
| Total |
(268,469) |
|
(40,614) |
|
(309,083) |
|
241,136 |
|
654,143 |
|
895,279 |
|
| Interbank deposits |
|
|
|
|
|
|
| Domestic activities |
(3,523) |
|
(4,779) |
|
(8,302) |
|
(401) |
|
6,373 |
|
5,972 |
|
| Foreign activities |
(409) |
|
477 |
|
68 |
|
152 |
|
13,041 |
|
13,193 |
|
| Total |
(3,932) |
|
(4,302) |
|
(8,234) |
|
(249) |
|
19,414 |
|
19,165 |
|
| Debt instruments in issue |
|
|
|
|
|
|
| Domestic-activities |
(258,246) |
|
(45,928) |
|
(304,174) |
|
66,798 |
|
88,435 |
|
155,233 |
|
| Foreign-activities |
(52,660) |
|
132,331 |
|
79,671 |
|
(177,384) |
|
120,255 |
|
(57,129) |
|
| Total |
(310,906) |
|
86,403 |
|
(224,503) |
|
(110,586) |
|
208,690 |
|
98,104 |
|
| Lease liability |
|
|
|
|
|
|
| Domestic-activities |
9,165 |
|
14,508 |
|
23,673 |
|
1,407 |
|
5,790 |
|
7,197 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Foreign-activities |
(6,840) |
|
4,898 |
|
(1,942) |
|
(2,225) |
|
(2,506) |
|
(4,731) |
|
| Total |
2,325 |
|
19,406 |
|
21,731 |
|
(818) |
|
3,284 |
|
2,466 |
|
| Total interest-bearing liabilities |
|
|
|
|
|
|
| Domestic-activities |
1,034,433 |
|
(3,060,312) |
|
(2,025,879) |
|
2,853,748 |
|
4,212,336 |
|
7,066,084 |
|
| Foreign-activities |
(269,303) |
|
562,410 |
|
293,107 |
|
102,218 |
|
1,026,164 |
|
1,128,382 |
|
| Total |
765,130 |
|
(2,497,902) |
|
(1,732,772) |
|
2,955,966 |
|
5,238,500 |
|
8,194,466 |
|
(1) Tax-exempt income of tax-exempt investment securities has not been calculated on a tax equivalent basis because the effect of such calculation would not be material.
Interest -earning assets-net interest margin and spread
The following table presents our levels of average interest-earning assets and net interest income and illustrates the comparative net interest margin and interest spread obtained for the fiscal years ended December 31, 2024, 2023 and 2022, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest earning assets yield for the fiscal |
|
|
|
Year ended December 31, |
|
|
|
2024 |
2023 |
2022 |
|
|
|
In millions of COP, except percentages |
|
| Total average interest-earning assets |
|
|
|
|
|
| Domestic activities |
|
198,572,929 |
|
185,882,836 |
|
168,962,180 |
|
|
| Foreign activities |
|
105,959,277 |
|
109,868,154 |
|
104,551,647 |
|
|
| Total |
|
304,532,206 |
|
295,750,990 |
|
273,513,827 |
|
|
Net interest income(1) |
|
|
|
|
|
| Domestic activities |
|
15,762,409 |
|
16,616,094 |
|
13,565,644 |
|
|
| Foreign activities |
|
4,705,319 |
|
4,062,991 |
|
4,625,857 |
|
|
| Total |
|
20,467,728 |
|
20,679,085 |
|
18,191,501 |
|
|
| Average yield on interest-earning assets |
|
|
|
|
|
| Domestic activities |
|
13.47 |
% |
15.94 |
% |
11.55 |
% |
|
| Foreign activities |
|
8.22 |
% |
7.08 |
% |
6.89 |
% |
|
| Total |
|
11.64 |
% |
12.65 |
% |
9.77 |
% |
|
Net interest margin(2) |
|
|
|
|
|
| Domestic activities |
|
7.94 |
% |
8.94 |
% |
8.03 |
% |
|
| Foreign activities |
|
4.44 |
% |
3.70 |
% |
4.42 |
% |
|
| Total |
|
6.72 |
% |
6.99 |
% |
6.65 |
% |
|
Interest spread(3) |
|
|
|
|
|
| Domestic activities |
|
7.30 |
% |
8.21 |
% |
7.57 |
% |
|
| Foreign activities |
|
4.61 |
% |
3.90 |
% |
4.62 |
% |
|
| Total |
|
6.45 |
% |
6.78 |
% |
6.52 |
% |
|
(1)Net interest income is interest income on loans less interest expense and includes interest earned on investments.
(2)Net interest margin is net interest income divided by total average interest-earning assets.
(3)Interest spread is the difference between the average yield on interest-earning assets and the average rate accrued on interest-bearing liabilities.
E.2INVESTMENT PORTFOLIO
DEBT INSTRUMENTS PORTFOLIO MATURITY
The following table summarizes the maturities and weighted average nominal yields of our debt instruments at amortized cost and debt instruments at fair value through other comprehensive income as of December 31, 2024:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maturity less |
Maturity between |
Maturity between |
Maturity More |
|
|
than 1 year |
1 and 5 Years |
5 and 10 Years |
Than 10 Years |
Total yield |
|
Yield %(1) |
Yield %(1) |
Yield %(1) |
Yield %(1) |
Yield %(1) |
Securities issued or secured by: Foreign currency.-denominated(2): |
| Colombian Government |
— |
% |
6.12 |
% |
6.17 |
% |
— |
% |
6.13 |
% |
| Corporate bonds |
5.90 |
% |
4.48 |
% |
5.48 |
% |
6.95 |
% |
5.11 |
% |
| Foreign Governments |
3.81 |
% |
4.51 |
% |
5.76 |
% |
— |
% |
4.66 |
% |
| Other financial entities |
3.72 |
% |
5.28 |
% |
5.21 |
% |
— |
% |
3.74 |
% |
| Subtotal yield |
3.93 |
% |
4.60 |
% |
5.56 |
% |
6.95 |
% |
4.87 |
% |
Securities issued or secured by: Peso-denominated(2) |
| Corporate bonds |
11.30 |
% |
12.58 |
% |
— |
% |
18.79 |
% |
15.56 |
% |
| Other financial entities |
— |
% |
8.02 |
% |
26.48 |
% |
— |
% |
10.58 |
% |
| Colombian Government |
10.40 |
% |
— |
% |
— |
% |
— |
% |
10.40 |
% |
| Other Government entities |
6.91 |
% |
— |
% |
9.13 |
% |
— |
% |
6.95 |
% |
| Subtotal yield |
8.46 |
% |
10.93 |
% |
17.75 |
% |
18.79 |
% |
9.57 |
% |
| Total yield |
7.99 |
% |
5.95 |
% |
6.16 |
% |
14.18 |
% |
7.46 |
% |
(1)Yield was calculated using the internal rate of return (IRR) as of December 31, 2024.
(2)Yields on tax-exempt obligations have not been calculated on a tax equivalent basis because the effect of such calculation would not be material.
E.3LOAN PORTFOLIO
Maturity of loans and advances to customers
The following table shows the maturities of our loan portfolio as of December 31, 2024:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In one year or less |
After one year through five years |
After five years through 15 years |
After 15 years |
Total |
| In millions of COP |
| Commercial |
|
|
|
|
|
| Corporate |
29,076,028 |
32,243,275 |
23,454,114 |
504,876 |
85,278,293 |
| SME |
4,771,087 |
8,555,996 |
1,727,911 |
148,502 |
15,203,496 |
| Others |
14,339,044 |
21,811,207 |
16,432,597 |
188,174 |
52,771,022 |
| Total commercial |
48,186,159 |
62,610,478 |
41,614,622 |
841,552 |
153,252,811 |
| Consumer |
|
|
|
|
|
| Credit card |
234,325 |
9,587,518 |
2,170,668 |
- |
11,992,511 |
| Vehicle |
81,066 |
3,270,554 |
2,283,873 |
365 |
5,635,858 |
| Payroll loans |
47,981 |
2,261,874 |
7,525,578 |
545,814 |
10,381,247 |
| Others |
903,897 |
19,097,022 |
7,573,532 |
231,616 |
27,806,067 |
| Total consumer |
1,267,269 |
34,216,968 |
19,553,651 |
777,795 |
55,815,683 |
| Mortgage |
|
|
|
|
|
| VIS |
14,439 |
284,872 |
2,540,655 |
13,343,314 |
16,183,280 |
| Non-VIS |
64,865 |
810,457 |
7,968,774 |
16,714,225 |
25,558,321 |
| Total mortgage |
79,304 |
1,095,329 |
10,509,429 |
30,057,539 |
41,741,601 |
| Financial Leases |
1,804,964 |
8,586,693 |
13,202,556 |
3,697,391 |
27,291,604 |
| Small Business Loan |
194,013 |
919,392 |
208,405 |
30,399 |
1,352,209 |
| Total gross loans and advances to customers |
51,531,709 |
107,428,860 |
85,088,663 |
35,404,676 |
279,453,908 |
In general, the initial term of a loan will depend on the type of guarantee or collateral, the credit history of the borrower and the purpose of the loan. As of December 31, 2024, 56.88% of our loan portfolio had a maturity of five years or less.
Loans interest rate allocation
The following table shows the interest rate allocation of our loan portfolio by type due after one year and within one year or less:
|
|
|
|
|
|
|
As of December 31, 2024 |
| In millions of COP |
| Loans with term of 1 year or more: |
|
| Variable Rate |
|
| Domestic-denominated |
97,884,058 |
|
| Commercial |
71,011,852 |
|
| Consumer |
8,131,434 |
|
| Mortgage |
- |
|
| Financial Leases |
18,729,312 |
|
| Small business loan |
11,460 |
|
| Foreign-denominated |
23,096,371 |
|
| Commercial |
12,102,878 |
|
| Consumer |
8,267,525 |
|
| Mortgage |
2,309,301 |
|
| Financial Leases |
13,972 |
|
| Small business loan |
402,695 |
|
| Total |
120,980,429 |
|
| Fixed Rate |
|
| Domestic-denominated |
66,236,936 |
|
| Commercial |
8,486,035 |
|
| Consumer |
27,956,124 |
|
| Mortgage |
23,110,392 |
|
| Financial Leases |
6,075,912 |
|
| Small business loan |
608,473 |
|
| Foreign-denominated |
40,704,834 |
|
| Commercial |
13,465,887 |
|
| Consumer |
10,193,331 |
|
| Mortgage |
16,242,604 |
|
| Financial Leases |
667,444 |
|
| Small business loan |
135,568 |
|
| Total |
106,941,770 |
|
| Loans with term of less than 1 year: |
|
| Domestic-denominated |
34,949,268 |
|
| Commercial |
32,482,662 |
|
| Consumer |
655,556 |
|
| Mortgage |
37,492 |
|
| Financial Leases |
1,735,379 |
|
| Small business loan |
38,179 |
|
| Foreign-denominated |
16,582,441 |
|
| Commercial |
15,703,497 |
|
| Consumer |
611,713 |
|
| Mortgage |
41,812 |
|
| Financial Leases |
69,585 |
|
| Small business loan |
155,834 |
|
| Total |
51,531,709 |
|
| Total gross loans and advances to customers |
279,453,908 |
|
E.4SUMMARY OF LOAN LOSS EXPERIENCE
Allowance for credit losses to total loans
The following table shows the allowance for credit losses to total loans outstanding for the years ended December 31, 2024 and 2023:
|
|
|
|
|
|
|
|
|
|
Year ended December 31, |
|
2024 |
2023 |
| Allowance for credit losses to total loans. |
5.79 % |
6.39 % |
The loss allowance for the loan portfolio and financial leasing operations decreased to 5.79% in 2024 from 6.39% in 2023. This decrease is attributed to:
(i) The ratio of allowance for credit losses to total loans decreased to 5.79% in 2024 from 6.39% in 2023. This decrease is the result of a lower impairment in the consumer loan portfolio because of enhanced lending and collection actions initiated in 2023 that had positive effects in 2024, an improved macroeconomic outlook that positively affected the expected credit loss models and the effects of the devaluation of the Colombian peso in 2024. For more information on the variation in the Provision for impairment of loan portfolio and financial leasing operations over the client loan portfolio from 2024 to 2023, please refer to Note 6 of the Consolidated Financial Statements, "Loans And Advances to Customers, Net," under "Loans and financial leasing operating portfolio and Allowance for loans losses" and "Impact of movements in the value of the portfolio and loss allowance by Stage" as well as the "Risk management" note in the "Credit risk" section.
(ii) The loan portfolio balance increased by 10%, primarily due to growth in the commercial loan portfolio and currency devaluation.
Ratio of charge-offs to average outstanding loans
The ratio of charge-offs to average outstanding loans for the years ended December 31, 2024 and 2023 was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, |
|
|
2024 |
2023 |
|
| Ratio of charge-offs to average outstanding loans |
2.95 % |
2.56 % |
|
| Commercial |
0.68 % |
0.69 % |
|
| Consumer |
11.67 % |
9.15 % |
|
| Mortgage |
0.37 % |
0.35 % |
|
| Financial Leases |
0.83 % |
1.01 % |
|
| Small Business Loan |
8.60 % |
6.61 % |
|
The increase in the charge-off ratio for 2024 is mainly due to the increase in non-performing consumer loans and credit cards during the second half of 2023 and the first quarter of 2024. As a result, the Board of Directors approved a higher volume of charge-offs in 2024.
E.5DEPOSITS
Uninsured deposits
An uninsured deposit is any deposit that does not have a mechanism to protect and secure the depositor’s resources (either natural or legal person) in the event of insolvency or settlement of any financial institution.
The amount of uninsured deposits for 2024 and 2023 is COP 190,359,916 and COP 164,601,948, respectively.
The following table shows the time deposits held by us as of December 31, 2024 and 2023, unsecured:
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2024 |
|
Peso -
Denominated |
Unsecured
Foreign Exchange-
Denominated |
Total |
|
In millions of COP |
| Up to 3 months |
17,810,529 |
|
10,773,646 |
|
28,584,175 |
|
| From 3 to 6 months |
7,967,231 |
|
6,678,490 |
|
14,645,721 |
|
| From 6 to 12 months |
5,179,422 |
|
8,418,227 |
|
13,597,649 |
|
| More than 12 months |
15,895,727 |
|
1,545,271 |
|
17,440,998 |
|
| Total time deposits |
46,852,909 |
|
27,415,634 |
|
74,268,543 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2023 |
|
Peso -
Denominated |
Unsecured
Foreign Exchange-
Denominated |
Total |
|
In millions of COP |
| Up to 3 months |
14,028,847 |
|
5,592,275 |
|
19,621,122 |
|
| From 3 to 6 months |
5,856,589 |
|
4,632,261 |
|
10,488,850 |
|
| From 6 to 12 months |
7,986,745 |
|
8,756,038 |
|
16,742,783 |
|
| More than 12 months |
18,798,384 |
|
3,279,197 |
|
22,077,581 |
|
| Total time deposits |
46,670,565 |
|
22,259,771 |
|
68,930,336 |
|
For further information about deposits by customers, see Consolidated Financial Statement, Note 15. Deposits by customers.
F.Unresolved Staff Comments
None.
ITEM 5 Operating and financial review and prospects
The following discussion should be read in conjunction with our Consolidated Financial Statements included in this Annual Report.
The following discussion includes information regarding future financial performance and plans, targets, aspirations, expectations, and objectives of management, which constitute forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. It is possible that our actual results may differ materially from the results discussed in the forward-looking statements because of several risks and uncertainties. Please see Cautionary Note Regarding Forward-Looking Statements.
In addition, please refer to the discussion in Item 3. Key Information – D. Risk Factors for a description of risks and uncertainties affecting our business and financial results and to Item 16.K – Cybersecurity, for a description of our cybersecurity framework.
A.Operating results
Impact of economic and monetary policies on Bancolombia's results
Our operational results are influenced by macroeconomic factors, primarily in Colombia but also in the other countries where we operate. The most significant variables include GDP growth, interest rates, inflation, and exchange rates, particularly the USD/COP exchange rate. Below is a summary of the trends for these variables in Colombia in 2024.
Economic Activity
Colombia's real GDP growth in 2024 was 1.7% year-on-year. The year marked a period of strengthened economic growth, following growth of just 0.6% in 2023. The acceleration in GDP growth has been part of a cycle in which the Central Bank has gradually lowered its benchmark interest rate in a context of significantly reduced inflation. Consequently, the gradual reductions in high interest rates eased pressures on household and corporate budgets, revitalizing consumption and investment. Simultaneously, the national central government increased its contribution to economic growth through a higher primary budget deficit.
The performance of key GDP components during 2024, compared to 2023 and in real terms (constant prices), was as follows: fixed investment increased by 3.0% year-on-year, private consumption increased by 1.6%, total public spending decreased by 0.5%, imports increased by 4.2%, and exports increased by 2.0%. As a reference to contextualize the contribution of each GDP component in the previous year, in 2024, gross fixed capital formation accounted for 17% of nominal GDP, private consumption for 76%, public spending for 15%, exports for 18%, and imports for 23%.
The sectors that exhibited the most dynamic growth during 2024 (compared to 2023) were arts, entertainment, and recreation activities (up 8.1% year-on-year), agriculture (8.1%), and the broader sector of public administration, defense, health, and education (4.2%).
Interest Rates
As of December 31, 2024, the Central Banks's benchmark interest rate stood at 9.50%, following a reduction of 350 basis points during the year. In the eight Central Bank meetings where interest rate decisions were made, the board of directors of the Central Bank opted to cut the repo rate. However, after six consecutive meetings with 50-basis-point cuts, they decided to moderate the pace of easing in the December meeting, opting for a 25-basis-point reduction.
Despite the cuts to the benchmark interest rate, the monetary policy stance remains highly contractionary. The Central Bank retains significant room to continue advancing with rate cuts without abandoning the contractionary stance of its policy. This approach will enable inflation to continue converging toward its target throughout 2025.
Inflation
Annual consumer inflation (measured by CPI) stood at 5.2% at the end of 2024, significantly below the 9.28% recorded in 2023. The components that contributed the most to inflationary pressures in 2024 were rents (with annual increases of 7.30% for imputed rent and 7.56% for actual rent), dining out (up 8.12%), and urban transportation (up 8.21%). Eggs (-2.72%), vehicles (-9.84%), and telecommunications equipment (-14.96%) were the main contributors on the negative side.
During the latter part of 2024, annual inflation maintained a consistent but gradual downward trend, a pattern expected to persist throughout 2025. This trend will enable the Central Bank to continue lowering its interest rate at a moderate pace over the course of the year.
Exchange Rate
The Colombian peso depreciated by 15.4% against the U.S. dollar in 2024, closing the year at COP 4,409 per USD. This contrasts sharply with the 20.5% appreciation experienced in 2023, when the exchange rate ended the year at COP 3,822 per U.S. dollar. Thus, 2024 marked a setback for the Colombian peso following its recovery in 2023.
Several signals of institutional and fiscal uncertainty compounded an international environment that heightened global investor risk aversion, leading to a depreciation of emerging market currencies against the dollar. In Colombia’s case, fiscal setbacks reinforced this trend, leaving the Colombian peso as the third most devalued currency in Latin America at the close of 2024.
Outlook
Prospects for the Colombian economy, the financial sector in general, and for Bancolombia in particular, are expected to depend on these factors:
|
|
|
|
|
|
| Favorable factors for the Colombian economy – medium-term |
Unfavorable factors for the Colombian economy – medium term |
Rapid economic recovery following the sustained increase in interest rates both locally and globally.
The country is expected to maintain responsible monetary policies.
Institutional strength will continue to ensure a stable political environment.
Democracy in Colombia, along with the separation of powers and checks and balances, underpins the predictability of policy measures and economic pragmatism.
A significant decline in the current account deficit in 2024 to levels between 1% and 2% of GDP, down from 2.4% in 2023, reflects reduced short-term external vulnerabilities.
The Central Bank remains committed to its institutional tradition of targeting inflation and allowing the currency to float freely.
The country has a solid cushion of international reserves, which helps mitigate external vulnerabilities stemming from the, albeit declining, still relatively high current account deficit compared to peer countries.
|
Private investment remains low, which will constrain medium-term economic growth.
Persistently low investor confidence could impact private investment, posing risks to expectations that GDP growth will return to its potential level, slightly above 3%, in the coming years.
Low potential growth in the medium term could lead to challenges for public finances or heightened external vulnerabilities.
Colombia is exposed to the adverse effects of climate change, particularly flooding; over 80% of its population and economic activity is concentrated in approximately 20% of its territory, making it vulnerable to natural disasters.
Public finances could be affected in terms of revenue if international commodity prices decline.
The country faces significant volatility in international trade due to its dependence on hydrocarbons.
Low trade openness and an export base reliant on basic commodities imply high vulnerability to price shocks.
Elevated spending expectations for 2025, relative to revenues, pose risks to compliance with the Fiscal Rule.
The risk of civil unrest will remain high throughout the 2025–2028 forecast period, reflecting deep societal divisions in Colombia and fragmentation in Congress, which will hinder swift progress in addressing issues such as poverty and low-quality education.
Threats of higher tariffs on trade with the U.S., other commercial sanctions, and reduced economic aid from key U.S. government agencies. |
GENERAL DISCUSSION OF THE CHANGES IN RESULTS FOR 2024 VERSUS 2023
The following discussion does not address the changes in results for 2023 versus 2022; the discussion of these changes may be found in our Annual Report on Form 20-F for the year ended December 31, 2023, filed with the SEC.
Summary
Bancolombia's earnings increased in 2024, despite the complex economic environment, due to a series of competitive advantages. Sustained monetary easing in the different economies where we operate, with interest rates falling across the region, alleviated pressure on households and financial markets laid the groundwork for better macroeconomic conditions ahead. As a result, credit demand has resumed its growth and there has been a gradual recovery of asset quality ratios.
Unlike the strong rebound in 2023, the Colombian peso depreciated throughout 2024, closing at COP 4,409.15 per U.S. dollar, a 15.36% depreciation for the year.
Net income attributable to equity holders of Bancolombia rose to COP 6,268 billion (COP 6,576 per share, both common and preferred shares, and USD 5.97 per ADS) in 2024, an increase of 2.47% as compared to the COP 6,117 billion of net income attributable to equity holders of Bancolombia for 2023.
The average return on stockholder equity was 15.77% for 2024, down from 16.14% in 2023.
The net interest and valuation income margin fell in 2024 to 6.85%, down from 6.99% in 2023.
Credit impairment charges, totaled COP 5,452 billion for 2024, down 26.93% from COP 7,462 billion in 2023. The improvement is due to a significant slowdown of the pace of new past due loans mainly in the consumer segment which had caused most of the deterioration in the previous year. The improved consumer loan performance coupled with a better macroeconomic outlook on the back of lower interest rates and lower inflation, allowed for a reduction on provision expenses under our expected losses models.
Notwithstanding the above, delinquency on commercial and mortgage portfolios increased in 2024, reflecting a delayed effect of the weak economic cycle in 2023 and other non-sector-related credit issues. The 30-day past due loan ratio improved year over year, whereas the 90-day past due loan ratio slightly increased, driven mainly by mortgages loans.
Loans and advances to customers and financial institutions increased by 10.04% during the year. This result is partially attributed to the depreciation of the Colombian peso against the U.S. dollar and the restatement of foreign subsidiary balances. Excluding the exchange rate effect, growth accounted to 5.06% annually.
Despite still-slow economic growth throughout the year, the loan portfolio rose steadily, reversing the downward trend of 2023. Commercial loans showed the highest increase in nominal terms, on the back of our efforts to stimulate demand by offering special credit lines with discounted rates that resulted in loan demand recovery. Home lending accelerated after the implementation of a program in the second half of the year to extend lower interest rates on mortgages supporting the reactivation of real estate in Colombia. This, coupled with social housing subsidies granted by the government, has provided significant growth. On the other hand, our still-cautious stance in the consumer segment has led to a low volume of loan originations. The total loan book in Colombian pesos grew 4.54% whereas the portfolio in U.S. dollars increased 22.55% in Colombian pesos (6.23% when calculated in U.S. dollars).
Allowance for loans and lease losses represented 5.37% of total loans and 112.39% of 30-day past-due loans (excluding accrued interest) at the end of 2024 compared with 6.02% of total loans and 120.04% of 30-day past-due loans (excluding accrued interest) at the end of 2023. Based on our expected loss credit models, we expect that these allowances will provide adequate coverage for expected loan losses.
Capital adequacy was 13.75% (Tier 1 ratio of 11.89%), higher than the 13.40% (Tier 1 ratio of 11.42%) reported at the end of 2023, largely explained by a faster pace of capital buildup than the increase in risk weighted assets, amid a period of slow growth in loan originations.
Deposits by customers increased 12.55% during 2024, while the ratio of net loans to deposits stood at 94.3%, down from 95.9% at the end of 2023, given that loans grew at a slower pace than deposits during the year.
Net interest margin and valuation income on financial instruments before impairment on loans and financial leases and off-balance-sheet credit instruments.
Interest income - the sum of interest on loans, financial leases, overnight funds and interest and valuation income from investment securities - was COP 35,544 billion in 2024, down 4.05% from 37,046 billion in 2023, driven mainly by a lower-yielding credit portfolio, as a result of lower interest rates. It is worth noting that most of the loan portfolio is indexed to variable rates, which causes assets to reprice quickly when interest rates change.
Consumer loans, which historically provide the highest risk-adjusted returns, contracted for the second consecutive year, when excluding the exchange rate effect, which further impacted interest income generation in the period. This performance is largely explained by the operations in Colombia and Panama. Commercial loans and mortgages contributed to lending business revenues, an improvement on the modest performance of originations of the previous year.
As a result, the weighted average nominal interest rate on loans and financial leases was 12.3%, down from 13.4% in 2023.
Interest expense was COP 15,024 billion, down 9.87% year over year, consistent with our efforts to optimize our funding structure, supported by effective diversification and the flexibility to shift between different sources according to interest rate cycles and client demand. Growth on low-cost deposit sources such as savings accounts outpaced that of time deposits during the year. Thus, the interest rate paid on interest-bearing liabilities decreased in 2024 to 5.2% from 5.9%, recorded in 2023.
Interest on debt instruments using the effective interest method totaled COP 966 billion in 2024, down 6.16% from 2023, given prevailing lower interest rates, whereas total valuation on financial instruments was COP 1,756 billion, a significant 203.49% increase when compared to 2023. The overall positive performance of the investments division was due to a higher liquidity position and a series of proficient asset and liability management strategies that allowed us to maximize revenues by means of the valuation of financial instruments and the sale of derivative securities to clients.
As a result, net interest income and valuation for 2024 was COP 20,520 billion, a 0.70% increase from COP 20,378 billion in 2023. This represents a net interest and valuation income margin from continuing operations of 6.85%, down 14 basis points from 6.99% recorded in 2023. While the contraction in interest expenses did not fully offset the reduction in loan yields, the performance is relatively strong given the size of Central Bank interest rate cuts.
Fees and Commissions
The following table lists the principal categories of revenue-producing fees and commissions for the years ended on December 31, 2024, and December 31, 2023, along with year-to-year variations. For further information about the composition of Bancolombia’s segments, see Note 3 Operating segments:
Fees and commissions income, gross
As of December 31, 2024
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Banking
Colombia |
|
|
Banking
Panama |
|
|
Banking El
Salvador |
|
|
Banking
Guatemala |
|
|
Trust |
|
|
Investment
Banking |
|
|
Brokerage |
|
|
International
Banking |
|
|
All Other
Segments |
|
|
Total |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Revenue of contracts with customers for fees and Commissions |
In millions of COP |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Credit and debit card fees and commercial establishments |
|
2,657,690 |
|
|
|
282,611 |
|
|
|
257,697 |
|
|
|
85,841 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,934 |
|
|
|
- |
|
|
|
3,285,773 |
|
|
| Bancassurance |
|
958,311 |
|
|
|
67,197 |
|
|
|
47 |
|
|
|
- |
|
|
|
6 |
|
|
|
- |
|
|
|
3 |
|
|
|
- |
|
|
|
- |
|
|
|
1,025,564 |
|
|
| Banking services |
|
694,554 |
|
|
|
131,958 |
|
|
|
166,713 |
|
|
|
65,432 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
43,540 |
|
|
|
34,580 |
|
|
|
1,136,777 |
|
|
| Payment and collections |
|
1,024,053 |
|
|
|
15,735 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,039,788 |
|
|
| Fiduciary Activities and Securities |
|
- |
|
|
|
18,962 |
|
|
|
6,515 |
|
|
|
904 |
|
|
|
448,848 |
|
|
|
- |
|
|
|
95,972 |
|
|
|
50 |
|
|
|
- |
|
|
|
571,251 |
|
|
| Acceptances, Guarantees and Standby Letters of Credit |
|
73,302 |
|
|
|
27,365 |
|
|
|
5,789 |
|
|
|
1,880 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
679 |
|
|
|
- |
|
|
|
109,015 |
|
|
| Investment banking |
|
- |
|
|
|
1,670 |
|
|
|
2,097 |
|
|
|
- |
|
|
|
- |
|
|
|
69,266 |
|
|
|
8,854 |
|
|
|
- |
|
|
|
- |
|
|
|
81,887 |
|
|
| Brokerage |
|
- |
|
|
|
16,473 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
20,648 |
|
|
|
- |
|
|
|
- |
|
|
|
37,121 |
|
|
| Others |
|
252,445 |
|
|
|
359 |
|
|
|
76,876 |
|
|
|
57,721 |
|
|
|
- |
|
|
|
- |
|
|
|
6,715 |
|
|
|
5,698 |
|
|
|
1,848 |
|
|
|
401,662 |
|
|
| Total revenue of contracts with customers |
|
5,660,355 |
|
|
|
562,330 |
|
|
|
515,734 |
|
|
|
211,778 |
|
|
|
448,854 |
|
|
|
69,266 |
|
|
|
132,192 |
|
|
|
51,901 |
|
|
|
36,428 |
|
|
|
7,688,838 |
|
|
As of December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Banking
Colombia |
|
|
Banking
Panama |
|
|
Banking El
Salvador |
|
|
Banking
Guatemala |
|
|
Trust |
|
|
Investment
Banking |
|
|
Brokerage |
|
|
International
Banking |
All Other
Segments |
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Revenue of contracts with customers for fees and Commissions |
In millions of COP |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Credit and debit card fees and commercial establishments |
|
2,467,174 |
|
|
|
272,380 |
|
|
|
233,049 |
|
|
|
95,833 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,992 |
|
- |
|
3,070,428 |
|
| Bancassurance |
|
924,280 |
|
|
|
72,705 |
|
|
|
77 |
|
|
|
- |
|
|
|
104 |
|
|
|
29 |
|
|
|
126 |
|
|
|
- |
|
- |
|
997,321 |
|
| Banking services |
|
593,729 |
|
|
|
110,271 |
|
|
|
157,386 |
|
|
|
68,857 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
37,746 |
|
23,574 |
|
991,563 |
|
| Payment and collections |
|
950,167 |
|
|
|
15,236 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
- |
|
965,403 |
|
| Fiduciary Activities and Securities |
|
- |
|
|
|
20,233 |
|
|
|
6,399 |
|
|
|
851 |
|
|
|
361,632 |
|
|
|
- |
|
|
|
74,377 |
|
|
|
54 |
|
- |
|
463,546 |
|
| Acceptances, Guarantees and Standby Letters of Credit |
|
72,335 |
|
|
|
25,159 |
|
|
|
5,211 |
|
|
|
3,173 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,803 |
|
- |
|
107,681 |
|
| Investment banking |
|
- |
|
|
|
980 |
|
|
|
1,225 |
|
|
|
- |
|
|
|
- |
|
|
|
55,888 |
|
|
|
10,728 |
|
|
|
- |
|
- |
|
68,821 |
|
| Brokerage |
|
- |
|
|
|
15,568 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
11,140 |
|
|
|
- |
|
- |
|
26,708 |
|
| Others |
|
244,414 |
|
|
|
398 |
|
|
|
76,221 |
|
|
|
54,486 |
|
|
|
229 |
|
|
|
- |
|
|
|
7,614 |
|
|
|
5,633 |
|
412 |
|
389,407 |
|
| Total revenue of contracts with customers |
|
5,252,099 |
|
|
|
532,930 |
|
|
|
479,568 |
|
|
|
223,200 |
|
|
|
361,965 |
|
|
|
55,917 |
|
|
|
103,985 |
|
|
|
47,228 |
|
23,986 |
|
7,080,878 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Growth |
|
2024 |
- |
2023 |
|
|
COP |
|
% |
|
| Revenue for fees and commissions of contracts with customers |
|
|
|
|
| Credit and debit card fees and commercial estabilshments |
215,345 |
|
|
7.01 |
% |
|
| Bancassurance |
28,243 |
|
|
2.83 |
% |
|
| Banking services |
145,214 |
|
|
14.64 |
% |
|
| Payment and collections |
74,385 |
|
|
7.71 |
% |
|
| Fiduciary Activities and Securities |
107,705 |
|
|
23.24 |
% |
|
| Acceptances, Guarantees and Standby Letters of Credit |
1,334 |
|
|
1.24 |
% |
|
| Investment banking |
13,666 |
|
|
19.86 |
% |
|
| Brokerage |
10,413 |
|
|
38.99 |
% |
|
| Others |
11,655 |
|
|
2.99 |
% |
|
| Total revenue of contracts with customers |
607,960 |
|
|
8.59 |
% |
|
Fees and commissions expenses
The following table presents the increase in fees and commissions expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year |
|
Growth |
|
|
2024 |
|
2023 |
|
2024-2023 |
|
|
In millions of COP |
|
| Banking services |
1,704,221 |
|
|
1,483,785 |
|
|
220,436 |
|
|
14.86 |
% |
|
Sales, collections and other services(1) |
894,836 |
|
|
855,480 |
|
|
39,356 |
|
|
4.60 |
% |
|
| Correspondent banking |
623,193 |
|
|
507,586 |
|
|
115,607 |
|
|
22.78 |
% |
|
| Payments and collections |
46,792 |
|
|
41,820 |
|
|
4,972 |
|
|
11.89 |
% |
|
| Others |
242,732 |
|
|
208,609 |
|
|
34,123 |
|
|
16.36 |
% |
|
| Total fees and commissions expenses |
3,511,774 |
|
|
3,097,280 |
|
|
414,494 |
|
|
13.38 |
% |
|
Fees and commission income, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year |
|
Growth |
|
|
2024 |
|
2023 |
|
2024-2023 |
|
|
In millions of COP |
|
| Fees and commission income |
7,688,838 |
|
|
7,080,878 |
|
|
607,960 |
|
|
8.59 |
% |
|
| Fees and commission expenses |
(3,511,774) |
|
|
(3,097,280) |
|
|
(414,494) |
|
|
13.38 |
% |
|
| Total fees and commissions income, net |
4,177,064 |
|
|
3,983,598 |
|
|
193,466 |
|
|
4.86 |
% |
|
For 2024, gross revenues from fees and commissions totaled COP 7,689 billion, up 8.59% compared to COP 7,081 billion in 2023. The main sources of fee income are credit and debit cards, banking services, payments and collections, and Bancassurance. These segments account for approximately 43%, 15%, 14%, and 13% of total fee income, respectively.
Credit and debit card income is generated from interchange fees paid by merchants and monthly maintenance fees. Revenues for this division grew 7.01% year over year due to an increase in transactional volumes and interbank exchange fees generated by a higher amount of national and international purchases, both through point of sale and electronic payments.
Banking services made a significant contribution to the increase in fees, posting a 14.64% growth in the period, due to, among other factors, higher revenues from digital banking in Colombia. Payment and collections fees grew 7.71% in the year, primarily due to a higher number of automatic payment transactions at the operation in Colombia.
Bancassurance experienced growth of 2.83%, slower than a year earlier, due to reduced household consumption for most of the year that was only partially offset by a rebound in the fourth quarter.
Fee expenses totaled COP 3,512 billion in 2024, up 13.38% compared to COP 3,097 billion in 2023. Banking services represented 50% of all fee expenses and were up 14.77%. This increase is mainly due to higher costs in data processing for banking services and greater royalties on credit-debit card franchises due to incremental transactional flows.
Sales, collections and other services accounted for 25% of fee expenses. On an annual basis, this line was up a 4.60%, a moderate increase as we continue to use sales outsourcing services and third-party collections, which pursue payments from borrowers who have failed to meet their obligations, contributing to an improvement in asset quality.
Banking agents accounted for 18% of our fee expenses, which increased 22.78% in 2024, due to the increased number of transactions processed and new merchants enrolled as we intensified the use of this channel for in-person transactions.
Other Operating Income
Other operating income was COP 3,042 billion, down 23.56% from COP 3,980 billion in 2023. The aggregate balance of currency hedging income resulted in a positive net effect considering currency trading and derivatives FX contracts, but at a lower level than in 2023 when the substantial volatility implied a higher number of currency operations.
Revenues from operating leases totaled COP 1,827 billion in 2024, an increase of 3.17% compared to 2023. The variation corresponds to higher income in real estate rentals under FIC (Fondo Inmobiliario Colombia).
Total dividends received and other net income from equity investments
Total dividends and other net income from equity investments was COP 105 billion in 2024, down 50.25% from COP 210 billion from 2023. The decrease is primarily due to impairment charges in associates and joint ventures based on lower market valuations resulting from the weakening credit cycle in Colombia.
Operating expenses
The following table summarizes the principal components of our operating expenses for the last two fiscal years:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended December 31, |
|
Growth |
|
|
2024 |
|
2023 |
|
2024-2023 |
|
|
In millions of COP |
|
| Operating expenses |
|
|
|
|
|
|
|
|
| Salaries and employee benefits |
5,628,062 |
|
|
5,350,234 |
|
|
277,828 |
|
|
5.19 |
% |
|
| Other administrative and general expenses |
5,445,212 |
|
|
5,033,944 |
|
|
411,268 |
|
|
8.17 |
% |
|
| Taxes other than income tax |
1,442,511 |
|
|
1,433,148 |
|
|
9,363 |
|
|
0.65 |
% |
|
| Impairment, depreciation and amortization |
1,117,881 |
|
|
1,124,859 |
|
|
(6,978) |
|
|
(0.62 |
%) |
|
| Total operating expenses |
13,633,666 |
|
|
12,942,185 |
|
|
691,481 |
|
|
5.34 |
% |
|
The following table summarizes the principal components of our operating expenses for the fiscal years ended:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended December 31, |
|
Growth |
|
|
2023 |
|
2022 |
|
2023-2022 |
|
|
In millions of COP |
|
| Operating expenses |
|
|
|
|
|
|
|
|
| Salaries and employee benefits |
5,350,234 |
|
|
4,417,656 |
|
|
932,578 |
|
|
21.11 |
% |
|
| Other administrative and general expenses |
5,033,944 |
|
|
4,559,900 |
|
|
474,044 |
|
|
10.40 |
% |
|
| Taxes other than income tax |
1,433,148 |
|
|
929,512 |
|
|
503,636 |
|
|
54.18 |
% |
|
| Impairment, depreciation and amortization |
1,124,859 |
|
|
980,575 |
|
|
144,284 |
|
|
14.71 |
% |
|
| Total operating expenses |
12,942,185 |
|
|
10,887,643 |
|
|
2,054,542 |
|
|
18.87 |
% |
|
Operating expenses totaled COP 13,634 billion in 2024, up 5.34% from COP 12,942 billion in 2023. Salaries and employee benefits (excluding bonuses) totaled COP 4,754 billion in 2024, an increase of 7.81% from 2023. This result is largely due to annual salary increases. Bonuses decreased by 7.08% for the year under the performance-based model, which rewards employee contributions to company profitability.
Other administrative and general expenses totaled COP 5,445 billion in 2024, an increase of 8.17% from 2023. This was mostly due to (i) an increase in expenses for computer equipment maintenance and license maintenance, and (ii) higher operational risk expenses related to virtual debit and credit card transactions.
Impairments, depreciation, and amortization totaled COP 1,118 billion in 2024, down 0.62% compared to 2023. This decrease is primarily due to lower amortization of intangible assets and reduced depreciation of assets, mainly from the Renting division and the operation in Colombia.
As a result of the changes in expenses and revenues, the cost-to-income ratio of Bancolombia for 2024 was 48.96%, up from 45.33% in 2023.
Provision charges and credit quality
Total net credit impairment charges fell to COP 5,452 billion (or 2.05% of average loans) in 2024, down 26.93% from COP 7,462 billion (or 2.84% of average loans) in 2023.
Macroeconomic factors such as lower inflation and lower interest rates, which stimulated economic acceleration, helped improve our portfolio in the countries where we operate.
The significant decrease in the cost of credit for 2024 compared to 2023 was mostly explained by the improved quality of the consumer portfolio and better macroeconomic conditions.
Net loan charge-offs totaled COP 7,856 billion in 2024, up 16.90% from 6,720 billion in 2023. The increase in charge-offs is mainly explained by older consumer loans that became past due prior to 2024.
Net charge-offs have two important features: first, they reduce the balance of the loan portfolio, and secondly, they help reduce the amount of past due loans.
Past-due loans amounted to COP 14,524 billion on December 31, 2024, up 6.01% compared to COP 13,700 billion a year earlier.
The past-due loan ratio (loans overdue more than 30 days divided by total loans) was 5.20% on December 31, 2024, down from 5.39% on December 31, 2023.
The decrease is mainly due to lower delinquencies on retail, resulting from a more selective risk profile for new loans and a better collection procedure, which began in 2023 and had positive effects in 2024.
Income tax expenses
Income tax expense for 2024 totaled COP 2,487 billion, up 27.22% from COP 1,955 billion for 2023. (This excludes income tax from previous periods, which would have resulted in a total of COP 2,393 billion for 2024, up from COP 1,933 billion from 2023.) The effective tax rate in 2024 was 28.39%.
The higher effective tax rate in 2024 results from a lower contribution to net income from the Central American operations, which have lower statutory tax rates. The effective tax rate is lower than statutory tax rate because of certain tax benefits. For Colombia, these include tax exemptions related to social housing and investments in productive fixed assets, as well as untaxed dividends. For the remaining operations, tax benefits result from exempt income from returns on securities issued by the governments of Guatemala, El Salvador and Panama.
For further details, see Note 13 of the Consolidated Financial Statements.
Results by Segment
We manage our business through nine main operating segments: Banking Colombia, Banking El Salvador, Banking Panama, Banking Guatemala, Trust, Investment Banking, Brokerage, International Banking and All Other.
The segment information in this Annual Report reflects the reporting structure in place at the reporting date, in accordance with the segment information in Note 3. Operating Segments to the Consolidated Financial Statements.
Banking Colombia:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, |
|
|
|
|
Change |
Change |
|
2024 |
2023 |
2022 |
2024-2023 |
2023-2022 |
|
In millions of COP |
| Total interest and valuation on financial instruments |
27,543,286 |
|
29,230,060 |
|
20,727,335 |
|
(5.77) |
% |
41.02 |
% |
| Interest income on loans and financial leases |
25,632,102 |
|
28,366,678 |
|
19,263,960 |
|
(9.64) |
% |
47.25 |
% |
| Debt investments |
1,503,298 |
|
937,090 |
|
1,361,299 |
|
60.42 |
% |
(31.16) |
% |
| Derivatives, net |
155,794 |
|
(167,887) |
|
108,255 |
|
192.80 |
% |
(255.08) |
% |
| Liquidity operations, net |
252,092 |
|
94,179 |
|
(6,179) |
|
167.67 |
% |
1624.18 |
% |
| Interest expenses |
(11,588,039) |
|
(13,464,980) |
|
(6,333,834) |
|
(13.94) |
% |
112.59 |
% |
| Net interest margin and valuation on financial instruments before impairment on loans and financial leases, off balance sheet credit instruments and other financial instruments |
15,955,247 |
|
15,765,080 |
|
14,393,501 |
|
1.21 |
% |
9.53 |
% |
| Credit impairment charges, net |
(4,220,207) |
|
(6,480,377) |
|
(2,971,599) |
|
(34.88) |
% |
118.08 |
% |
| Net interest margin and valuation on financial instruments after impairment on loans and financial leases, off balance sheet credit instruments and other financial instruments |
11,735,040 |
|
9,284,703 |
|
11,421,902 |
|
26.39 |
% |
(18.71) |
% |
| Expenses from transactions by the operating segments |
(151,933) |
|
(187,467) |
|
(32,163) |
|
(18.95) |
% |
482.87 |
% |
| Fees and commissions income |
5,660,355 |
|
5,252,099 |
|
4,684,563 |
|
7.77 |
% |
12.12 |
% |
| Fees and commissions expenses |
(2,885,272) |
|
(2,522,927) |
|
(2,099,585) |
|
14.36 |
% |
20.16 |
% |
| Total fees and commissions, net |
2,775,083 |
|
2,729,172 |
|
2,584,978 |
|
1.68 |
% |
5.58 |
% |
Other operating income (expenses)(1) |
800,252 |
|
1,575,845 |
|
(72,994) |
|
(49.22) |
% |
2258.87 |
% |
| Dividends and net income on equity investments |
(121,975) |
|
17,613 |
|
(8,058) |
|
(792.53) |
% |
318.58 |
% |
| Total operating income, net |
15,036,467 |
|
13,419,866 |
|
13,893,665 |
|
12.05 |
% |
(3.41) |
% |
Operating expenses(2) |
(8,651,424) |
|
(8,022,042) |
|
(6,600,686) |
|
7.85 |
% |
21.53 |
% |
| Impairment, depreciation and amortization |
(770,207) |
|
(744,346) |
|
(613,807) |
|
3.47 |
% |
21.27 |
% |
| Total operating expenses |
(9,421,631) |
|
(8,766,388) |
|
(7,214,493) |
|
7.47 |
% |
21.51 |
% |
| Profit before income tax |
5,614,836 |
|
4,653,478 |
|
6,679,172 |
|
20.66 |
% |
(30.33) |
% |
| Segment assets |
266,593,755 |
|
254,367,378 |
|
247,113,605 |
|
4.81 |
% |
2.94 |
% |
| Segment liabilities |
222,402,215 |
|
216,200,157 |
|
207,293,246 |
|
2.87 |
% |
4.30 |
% |
(1)Includes derivatives, net foreign exchange, operating leases and gains on sale of assets.
(2)Includes salaries and employee benefits, other administration and general expenses and taxes other than income tax.
Analysis of 2024 versus 2023
Banking Colombia's profit before taxes increased by 20.66% to COP 5,615 billion for 2024, up from COP 4,653 billion in 2023, due to the reasons described below.
Total interest and valuation decreased by 5.77% to COP 27,543 billion, mainly due to a 9.64% decrease in interest income from loan and financial lease operations. This reduction was primarily observed in the commercial and consumer segments and resulted from the decrease in the Central Bank's benchmark interest rate.
Total interest expenses decreased by 13.94% to COP 11,588 billion from COP 13,465 billion, although the volume of savings accounts increased by 12.9% and the volume of time deposits by 4.1% compared with the previous year. Interest expenses were affected by the decrease in the Central Bank's benchmark rate throughout 2024. Additionally, interest corresponding to obligations with banks decreased due to prepayments. This was offset by higher expenses related to the acceleration of the amortization of deferred incremental costs associated with debt management carried out in 2024. The net interest margin and the valuation of financial instruments rose 1.21% to COP 15,955 billion.
The total net credit impairment charge decreased by 34.88% to COP 4,220 billion from COP 6,480 billion. This variation is mainly due to the decrease in credit impairment in the consumer portfolio resulting from better performance on personal loans and a better economic outlook in 2024.
Total net fees and commission increased by 1.68% to COP 2,775 billion, mainly due to better income from banking services, up 16.98%, credit and debit cards, up 7.72%, and payments-collections, up 7.78% (digital channels). These increases were mainly offset by expenses associated with banking services and fees for services and collections, which increased by 14.36% compared to the previous year.
Other operating income decreased to COP 800 billion, mainly due to lower net foreign exchange income and lower income generated by exchange rate derivatives, which resulted from higher foreign exchange volatility related to uncertainty, political risk and global macroeconomic variables.
Dividends and net income from equity investments saw a loss of COP 122 billion, compared with a profit of COP 18 billion in 2023, mainly due to the impairment of an investment classified as a joint venture.
Total operating expenses increased by 7.47% to COP 9,422 billion from COP 8,766 billion, mainly due to an increase in administrative and general expenses to COP 5,478 billion. This increase resulted from higher operational risk expenses, as well as systematization expenses and costs associated with the generation and issuance of debit and credit cards. Salaries and employee benefits rose 8.10% to COP 3,857 billion.
Assets attributable to Banking Colombia grew by 4.81% during the year, mainly driven by an increase in the loan portfolio, with notable performance in the commercial and mortgage portfolios. The latter was strengthened through Bancolombia's initiative to lead interest rate reductions via the 'Housing for All' strategy. Additionally, there was an increase in investment in debt securities, primarily in fixed-income portfolios associated with derivative positions.
Finally, liabilities attributable to Banking Colombia grew by 2.87% during 2024, driven by an increase in deposits, particularly in savings accounts and time deposits.
Banking El Salvador:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, |
|
|
|
|
Change |
Change |
|
2024 |
2023 |
2022 |
2024-2023 |
2023-2022 |
|
In millions of COP |
| Total interest and valuation on financial instruments |
1,851,126 |
|
1,773,140 |
|
1,527,860 |
|
4.40 |
% |
16.05 |
% |
| Interest income on loans and financial leases |
1,623,427 |
|
1,524,765 |
|
1,293,556 |
|
6.47 |
% |
17.87 |
% |
| Debt investments |
226,122 |
|
236,350 |
|
170,423 |
|
(4.33) |
% |
38.68 |
% |
| Derivatives, net |
775 |
|
11,187 |
|
63,494 |
|
(93.07) |
% |
(82.38) |
% |
| Liquidity operations, net |
802 |
|
838 |
|
387 |
|
(4.30) |
% |
116.54 |
% |
| Interest expenses |
(437,244) |
|
(464,851) |
|
(297,839) |
|
(5.94) |
% |
56.07 |
% |
| Net interest margin and valuation on financial instruments before impairment on loans and financial leases, off balance sheet credit instruments and other financial instruments |
1,413,882 |
|
1,308,289 |
|
1,230,021 |
|
8.07 |
% |
6.36 |
% |
| Credit impairment charges, net |
(236,086) |
|
(154,938) |
|
(102,710) |
|
52.37 |
% |
50.85 |
% |
| Net interest margin and valuation on financial instruments after impairment on loans and financial leases, off balance sheet credit instruments and other financial instruments |
1,177,796 |
|
1,153,351 |
|
1,127,311 |
|
2.12 |
% |
2.31 |
% |
| Expenses from transactions by the operating segments |
(19,110) |
|
(17,844) |
|
(7,371) |
|
7.09 |
% |
142.08 |
% |
| Fees and commissions income |
515,734 |
|
479,568 |
|
444,177 |
|
7.54 |
% |
7.97 |
% |
| Fees and commissions expenses |
(226,445) |
|
(188,972) |
|
(170,563) |
|
19.83 |
% |
10.79 |
% |
| Total fees and commissions, net |
289,289 |
|
290,596 |
|
273,614 |
|
(0.45) |
% |
6.21 |
% |
Other operating income(1) |
40,818 |
|
51,656 |
|
19,685 |
|
(20.98) |
% |
162.41 |
% |
| Dividends and net income on equity investments |
4,338 |
|
10,982 |
|
5,340 |
|
(60.50) |
% |
105.66 |
% |
| Total operating income, net |
1,493,131 |
|
1,488,741 |
|
1,418,579 |
|
0.29 |
% |
4.95 |
% |
Operating expenses(2) |
(771,078) |
|
(668,105) |
|
(639,748) |
|
15.41 |
% |
4.43 |
% |
| Impairment, depreciation and amortization |
(93,982) |
|
(131,921) |
|
(106,601) |
|
(28.76) |
% |
23.75 |
% |
| Total operating expenses |
(865,060) |
|
(800,026) |
|
(746,349) |
|
8.13 |
% |
7.19 |
% |
| Profit before income tax |
628,071 |
|
688,715 |
|
672,230 |
|
(8.81) |
% |
2.45 |
% |
| Segment assets |
26,670,513 |
|
21,608,586 |
|
26,696,524 |
|
23.43 |
% |
(19.06) |
% |
| Segment liabilities |
23,889,120 |
|
19,220,367 |
|
23,738,984 |
|
24.29 |
% |
(19.03) |
% |
(1)Includes derivatives, net foreign exchange, operating leases and gains on sale of assets.
(2)Includes salaries and employee benefits, other administration and general expenses and taxes other than income tax.
Analysis of 2024 versus 2023
In 2024, profit before taxes for Banking El Salvador decreased by 8.81% to COP 628 billion, due to the reasons described below.
The financial statements expressed in Colombian pesos were affected by the depreciation of the Colombian peso, which fell 15.36% against the U.S. dollar during the last year.
Total interest and valuation expressed in Colombian pesos increased by 4.40% to COP 1,851 billion, mainly due to higher interest income accrued from the commercial portfolio. Similarly, interest expenses decreased by 5.94%, primarily driven by loans with financial institutions.
Moreover, the loan portfolio in Colombian pesos grew by 21.72% due to the depreciation of the Colombian peso against the U.S. dollar. Expressed in U.S. dollars, the loan portfolio increased by 5.51%, mainly driven by the consumer portfolio, which grew by 10.15% in U.S. dollars terms. Deposits grew by 13.82% in U.S. dollar terms, primarily driven by time deposits and current accounts.
Net credit impairment charges increased by 52.37% to COP 236 billion, from COP 155 billion in 2023, mainly due to the growth in the consumer portfolio.
Net fees and commissions decreased by 0.45% to COP 289 billion, primarily due to the growth in expenses for banking services.
Total operating expenses increased by 8.13% to COP 865 billion, mainly due to the increase in employee bonuses and general expenses.
Assets attributable to Banking El Salvador grew by 23.43% during the year, mainly driven by the depreciation of the Colombian peso, which impacted the portfolio expressed in U.S. dollars. Similarly, liabilities grew by 24.29%, mainly due to the increase in deposits by customers.
Banking Panama:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, |
|
|
|
|
Change |
Change |
|
2024 |
2023 |
2022 |
2024-2023 |
2023-2022 |
|
In millions of COP |
| Total interest and valuation on financial instruments |
2,689,904 |
|
2,826,559 |
|
2,364,820 |
|
(4.83) |
% |
19.53 |
% |
| Interest income on loans and financial leases |
2,283,111 |
|
2,415,234 |
|
2,154,151 |
|
(5.47) |
% |
12.12 |
% |
| Debt investments |
316,205 |
|
301,167 |
|
161,974 |
|
4.99 |
% |
85.94 |
% |
| Derivatives, net |
3,322 |
|
817 |
|
(1,026) |
|
306.61 |
% |
179.63 |
% |
| Liquidity operations, net |
87,266 |
|
109,341 |
|
49,721 |
|
(20.19) |
% |
119.91 |
% |
| Interest expenses |
(1,336,250) |
|
(1,238,112) |
|
(910,937) |
|
7.93 |
% |
35.92 |
% |
| Net interest margin and valuation on financial instruments before impairment on loans and financial leases, off balance sheet credit instruments and other financial instruments |
1,353,654 |
|
1,588,447 |
|
1,453,883 |
|
(14.78) |
% |
9.26 |
% |
| Credit impairment charges, net |
(456,748) |
|
(270,501) |
|
(545,012) |
|
68.85 |
% |
(50.37) |
% |
| Net interest margin and valuation on financial instruments after impairment on loans and financial leases, off balance sheet credit instruments and other financial instruments |
896,906 |
|
1,317,946 |
|
908,871 |
|
(31.95) |
% |
45.01 |
% |
| Expenses from transactions by the operating segments |
(40,110) |
|
(34,105) |
|
(25,022) |
|
17.61 |
% |
36.30 |
% |
| Fees and commissions income |
562,330 |
|
532,930 |
|
446,583 |
|
5.52 |
% |
19.34 |
% |
| Fees and commissions expenses |
(286,392) |
|
(258,897) |
|
(210,004) |
|
10.62 |
% |
23.28 |
% |
| Total fees and commissions, net |
275,938 |
|
274,033 |
|
236,579 |
|
0.70 |
% |
15.83 |
% |
Other operating income(1) |
65,876 |
|
36,939 |
|
51,494 |
|
78.34 |
% |
(28.27) |
% |
| Dividends and net income on equity investments |
11,474 |
|
13,498 |
|
9,655 |
|
(14.99) |
% |
39.80 |
% |
| Total operating income, net |
1,210,084 |
|
1,608,311 |
|
1,181,577 |
|
(24.76) |
% |
36.12 |
% |
Operating expenses(2) |
(853,980) |
|
(909,843) |
|
(797,091) |
|
(6.14) |
% |
14.15 |
% |
| Impairment, depreciation and amortization |
(128,544) |
|
(107,716) |
|
(110,293) |
|
19.34 |
% |
(2.34) |
% |
| Total operating expenses |
(982,524) |
|
(1,017,559) |
|
(907,384) |
|
(3.44) |
% |
12.14 |
% |
| Profit before income tax |
227,560 |
|
590,752 |
|
274,193 |
|
(61.48) |
% |
115.45 |
% |
| Segment assets |
45,964,767 |
|
40,740,495 |
|
52,445,934 |
|
12.82 |
% |
(22.32) |
% |
| Segment liabilities |
41,132,907 |
|
36,315,750 |
|
47,081,613 |
|
13.26 |
% |
(22.87) |
% |
(1)Includes derivatives, net foreign exchange, operating leases and gains on sale of assets.
(2)Includes salaries and employee benefits, other administration and general expenses and taxes other than income tax.
Analysis of 2024 versus 2023
In 2024, Banking Panama's profit before taxes decreased by 61.48% to COP 227 billion, from COP 591 billion in 2023, due to the reasons described below.
The financial statements expressed in Colombian pesos were affected by the 15.36% depreciation of the Colombian peso against the U.S. dollar during the last year.
Total interest and valuation decreased by 4.83% to COP 2,690 billion, mainly due to the decrease in interest income generated from consumer loans. The loan portfolio, expressed in U.S. dollars, decreased by 2.35%, primarily driven by the decline in the commercial and consumer portfolios.
The total net credit impairment charge increased by 68.85% to COP 457 billion, from COP 270 billion in 2023. This variation is mainly explained by higher provisions in the consumer and mortgage portfolio, and lower provision reversals.
Total net fees and commission increased by 0.70% to COP 276 billion, mainly due to higher income generated by merchant acquiring services and ATM fees, which exceeded the increase in banking service expenses.
Total operating expenses decreased by 3.44%, mainly due to the reduction in bonuses and administrative expenses.
Assets attributable to Banking Panama increased by 12.82% during the year, primarily driven by the depreciation of the exchange rate, which impacted loans expressed in U.S. dollars. Similarly, liabilities grew by 13.26%, mainly due to the increase in deposits by customers.
Banking Guatemala:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, |
|
|
|
|
Change |
Change |
|
2024 |
2023 |
2022 |
2024-2023 |
2023-2022 |
|
In millions of COP |
| Total interest and valuation on financial instruments |
1,939,602 |
1,795,543 |
1,537,801 |
8.02 |
% |
16.76 |
% |
| Interest income on loans and financial leases |
1,807,334 |
1,726,821 |
1,509,143 |
4.66 |
% |
14.42 |
% |
| Debt investments |
134,101 |
60,534 |
27,089 |
121.53 |
% |
123.46 |
% |
| Liquidity operations, net |
(1,833) |
8,188 |
1,569 |
(122.39) |
% |
421.86 |
% |
| Interest expenses |
(804,815) |
|
(731,886) |
|
(528,459) |
|
9.96 |
% |
38.49 |
% |
| Net interest margin and valuation on financial instruments before impairment on loans and financial leases, off balance sheet credit instruments and other financial instruments |
1,134,787 |
1,063,657 |
1,009,342 |
6.69 |
% |
5.38 |
% |
| Credit impairment charges, net |
(394,589) |
|
(499,368) |
|
(168,834) |
(20.98) |
% |
195.77 |
% |
| Net interest margin and valuation on financial instruments after impairment on loans and financial leases, off balance sheet credit instruments and other financial instruments |
740,198 |
564,289 |
840,508 |
31.17 |
% |
(32.86) |
% |
| Expenses from transactions by the operating segments |
(87,061) |
|
(76,054) |
|
(45,526) |
|
14.47 |
% |
67.06 |
% |
| Fees and commissions income |
211,778 |
223,200 |
218,554 |
(5.12) |
% |
2.13 |
% |
| Fees and commissions expenses |
(85,700) |
|
(89,405) |
|
(91,424) |
|
(4.14) |
% |
(2.21) |
% |
| Total fees and commissions, net |
126,078 |
133,795 |
127,130 |
(5.77) |
% |
5.24 |
% |
Other operating income(1) |
130,140 |
130,757 |
129,403 |
(0.47) |
% |
1.05 |
% |
| Dividends and net income on equity investments |
1,555 |
1,827 |
828 |
(14.89) |
% |
120.65 |
% |
| Total operating income, net |
910,910 |
|
754,614 |
|
1,052,343 |
|
20.71 |
% |
(28.29) |
% |
Operating expenses(2) |
(645,310) |
|
(620,928) |
|
(577,497) |
|
3.93 |
% |
7.52 |
% |
| Impairment, depreciation and amortization |
(61,471) |
|
(55,243) |
|
(54,999) |
|
11.27 |
% |
0.44 |
% |
| Total operating expenses |
(706,781) |
|
(676,171) |
|
(632,496) |
|
4.53 |
% |
6.91 |
% |
| Profit before income tax |
204,129 |
78,443 |
419,847 |
160.23 |
% |
(81.32) |
% |
| Segment assets |
27,332,834 |
21,377,205 |
26,143,629 |
27.86 |
% |
(18.23) |
% |
| Segment liabilities |
25,018,466 |
19,469,075 |
23,635,998 |
28.50 |
% |
(17.63) |
% |
(1)Includes derivatives, net foreign exchange, operating leases and gains on sale of assets.
(2)Includes salaries and employee benefits, other administration and general expenses and taxes other than income tax.
Analysis of 2024 versus 2023
Banking Guatemala's profit before taxes increased to COP 204 billion for 2024 from a profit of COP 78 billion in 2023, due to the reasons described below.
The financial statements expressed in Colombian pesos were affected by the 15.36% depreciation of the Colombian peso against the U.S. dollar during the last year.
Total interest and valuation increased by 8.02% to COP 1,940 billion, due to better interest income generation from the commercial and mortgage portfolios, as well as valuations of debt investments. The loan portfolio expressed in U.S. dollars grew by 7.98%, mainly driven by the increase in the commercial and consumer portfolios.
Net credit impairment charges decreased by 20.98% to COP 395 billion from COP 499 billion in 2023, due to lower provision charges in the consumer portfolio and higher recoveries of written-off loans.
Net fees and commission decreased by 5.77% to COP 126 billion, mainly due to the decline in income from electronic services and ATM fees.
Total operating expenses increased by 4.53% to COP 707 billion, mainly due to increases in bonuses, vacations, and maintenance expenses.
Assets attributable to Banking Guatemala, expressed in Colombian pesos, grew by 27.86% during the year, primarily explained by the depreciation of the Colombian peso against the U.S. dollar, which impacted loans expressed in U.S. dollars. Similarly, liabilities grew by 28.50%, mainly due to the increase in deposits by customers.
Trust:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, |
|
|
|
|
Change |
Change |
|
2024 |
2023 |
2022 |
2024-2023 |
2023-2022 |
|
In millions of COP |
| Total interest and valuation on financial instruments |
61 |
|
47 |
|
72 |
|
29.79 |
% |
(34.72) |
% |
| Interest income on loans and financial leases |
61 |
|
47 |
|
72 |
|
29.79 |
% |
(34.72) |
% |
| Interest expenses |
(192) |
|
(179) |
|
(150) |
|
7.26 |
% |
19.33 |
% |
| Net interest margin and valuation on financial instruments before impairment on loans and financial leases, off balance sheet credit instruments and other financial instruments |
(131) |
|
(132) |
|
(78) |
|
(0.76) |
% |
69.23 |
% |
| Credit impairment charges, net |
(554) |
|
(2,893) |
|
(796) |
|
(80.85) |
% |
263.44 |
% |
| Net interest margin and valuation on financial instruments after impairment on loans and financial leases, off balance sheet credit instruments and other financial instruments |
(685) |
|
(3,025) |
|
(874) |
|
(77.36) |
% |
246.11 |
% |
| Expenses from transactions by the operating segments |
(58,498) |
|
(16,518) |
|
(12,658) |
|
254.15 |
% |
30.49 |
% |
| Fees and commissions income |
448,854 |
|
361,965 |
|
318,869 |
|
24.00 |
% |
13.52 |
% |
| Fees and commissions expenses |
(3,804) |
|
(4,244) |
|
(3,668) |
|
(10.37) |
% |
15.70 |
% |
| Total fees and commissions, net |
445,050 |
|
357,721 |
|
315,201 |
|
24.41 |
% |
13.49 |
% |
Other operating income(1) |
13,737 |
|
14,107 |
|
14,897 |
|
(2.62) |
% |
(5.30) |
% |
| Dividends and net income on equity investments |
45,558 |
|
33,275 |
|
2,164 |
|
36.91 |
% |
1437.66 |
% |
| Total operating income, net |
445,162 |
|
385,560 |
|
318,730 |
|
15.46 |
% |
20.97 |
% |
Operating expenses(2) |
(168,494) |
|
(177,626) |
|
(153,377) |
|
(5.14) |
% |
15.81 |
% |
| Impairment, depreciation and amortization |
(3,000) |
|
(2,218) |
|
(1,630) |
|
35.26 |
% |
36.07 |
% |
| Total operating expenses |
(171,494) |
|
(179,844) |
|
(155,007) |
|
(4.64) |
% |
16.02 |
% |
| Profit before income tax |
273,668 |
|
205,716 |
|
163,723 |
|
33.03 |
% |
25.65 |
% |
| Segment assets |
719,006 |
|
658,547 |
|
603,486 |
|
9.18 |
% |
9.12 |
% |
| Segment liabilities |
153,181 |
|
138,171 |
|
126,307 |
|
10.86 |
% |
9.39 |
% |
(1)Includes derivatives, net foreign exchange, operating leases and gains on sale of assets.
(2)Includes salaries and employee benefits, other administration and general expenses and taxes other than income tax.
Analysis of 2024 versus 2023
Profit before taxes for the Trust segment increased by 33.03% to COP 274 billion for 2024, from COP 206 billion in 2023, due to the reasons described below.
Net fees and commissions increased by 24.41% to COP 445 billion, mainly driven by higher income from collective investment fund commissions. Total net operating income increased by 15.46% to COP 445 billion.
Total operating expenses decreased by 4.64% to COP 171 billion, mainly due to a 15.82% reduction in personnel expenses, which fell to COP 111 billion as decreases in bonuses and indemnification payments outweighed an increase in administrative and general expenses.
Assets attributable to the Trust segment increased by 9.18% during 2024 to COP 719 billion, due to the performance of investments in associates. Liabilities increased by 10.86% to COP 153 billion, driven by increased accounts payable and provisions.
Investment Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, |
|
|
|
|
Change |
Change |
|
2024 |
2023 |
2022 |
2024-2023 |
2023-2022 |
|
In millions of COP |
| Total interest and valuation on financial instruments |
6 |
|
6 |
|
4 |
|
— |
% |
50.00 |
% |
| Debt investments |
6 |
|
6 |
|
4 |
|
— |
% |
50.00 |
% |
| Interest expenses |
— |
|
(1) |
|
(4) |
|
(100.00) |
% |
(75.00) |
% |
| Net interest margin and valuation on financial instruments before impairment on loans and financial leases, off balance sheet credit instruments and other financial instruments |
6 |
|
5 |
|
— |
|
20.00 |
% |
100.00 |
% |
| Credit impairment charges, net |
768 |
|
(380) |
|
(924) |
|
302.11 |
% |
(58.87) |
% |
| Net interest margin and valuation on financial instruments after impairment on loans and financial leases, off balance sheet credit instruments and other financial instruments |
774 |
|
(375) |
|
(924) |
|
306.40 |
% |
(59.42) |
% |
| Revenues from transactions by the operating segments |
7,823 |
|
13,949 |
|
3,404 |
|
(43.92) |
% |
309.78 |
% |
| Fees and commissions income |
69,266 |
|
55,917 |
|
86,232 |
|
23.87 |
% |
(35.16) |
% |
| Fees and commissions expenses |
(115) |
|
(238) |
|
(269) |
|
(51.68) |
% |
(11.52) |
% |
| Total fees and commissions, net |
69,151 |
|
55,679 |
|
85,963 |
|
24.20 |
% |
(35.23) |
% |
Other operating income (expenses)(1) |
1,609 |
|
(1,011) |
|
671 |
|
259.15 |
% |
(250.67) |
% |
| Dividends and net income on equity investments |
(97,585) |
|
(98,512) |
|
8,760 |
|
(0.94) |
% |
(1,224.57) |
% |
| Total operating income, net |
(18,228) |
|
(30,270) |
|
97,874 |
|
(39.78) |
% |
(130.93) |
% |
Operating expenses(2) |
(55,157) |
|
(49,759) |
|
(47,997) |
|
10.85 |
% |
3.67 |
% |
| Impairment, depreciation and amortization |
(89) |
|
(208) |
|
(232) |
|
(57.21) |
% |
(10.34) |
% |
| Total operating expenses |
(55,246) |
|
(49,967) |
|
(48,229) |
|
10.56 |
% |
3.60 |
% |
| Profit before income tax |
(73,474) |
|
(80,237) |
|
49,645 |
|
(8.43) |
% |
(261.62) |
% |
| Segment assets |
1,464,180 |
|
1,719,824 |
|
2,116,143 |
|
(14.86) |
% |
(18.73) |
% |
| Segment liabilities |
48,620 |
|
51,841 |
|
80,162 |
|
(6.21) |
% |
(35.33) |
% |
(1)Includes derivatives, net foreign exchange, operating leases and gains on sale of assets.
(2)Includes salaries and employee benefits, other administration and general expenses and taxes other than income tax.
Analysis of 2024 versus 2023
The Investment Banking segment posted a smaller loss of COP 73 billion in 2024, down from a loss of COP 80 billion in 2023, due to the reasons described below
Net fees and commissions increased by 24.20% to COP 69 billion, driven by higher commissions in structured financing, financial advisory services, and securities structuring.
The combined loss from dividends and equity investments declined slightly to COP 97 billion from COP 99 billion the previous year, due to higher net income from equity investments. The net operating loss fell 39.78% to COP 18 billion, down from COP 30 billion the previous year.
Total operating expenses increased by 10.56% to COP 55 billion. This increase is largely due to a 22.50% rise in salaries and employee benefits, which rose to COP 47 billion, outweighing a 29.95% decrease in administrative expenses to COP 8 billion.
Assets attributable to Investment Banking decreased by 14.86% to COP 1,464 billion, mainly due to the reduction in associated investments, and joint ventures.
Liabilities attributable to the Investment Banking segment decreased by 6.21% during 2024 to COP 49 billion, due to a decrease in tax liabilities and an increase in employee benefits.
Brokerage:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, |
|
|
|
|
Change |
Change |
|
2024 |
2023 |
2022 |
2024-2023 |
2023-2022 |
|
In millions of COP |
| Total interest and valuation on financial instruments |
44,750 |
45,875 |
12,996 |
(2.45)% |
252.99% |
| Interest income on loans and financial leases |
5,327 |
5,076 |
511 |
4.94% |
893.35% |
| Debt investments |
37,480 |
36,538 |
20,024 |
2.58% |
82.47% |
| Derivatives, net |
(2,463) |
|
(1,747) |
658 |
|
40.98 |
% |
(365.50) |
% |
| Liquidity operations, net |
4,406 |
6,008 |
|
(8,197) |
(26.66) |
% |
173.30 |
% |
| Interest expenses |
(165) |
|
(222) |
|
(104) |
|
(25.68)% |
113.46% |
| Net interest margin and valuation on financial instruments before impairment on loans and financial leases, off balance sheet credit instruments and other financial instruments |
44,585 |
45,653 |
12,892 |
(2.34)% |
254.12% |
| Credit impairment charges, net |
— |
106 |
3,133 |
|
(100.00) |
% |
(96.62) |
% |
| Net interest margin and valuation on financial instruments after impairment on loans and financial leases, off balance sheet credit instruments and other financial instruments |
44,585 |
45,759 |
16,025 |
(2.57)% |
185.55% |
| Revenues from transactions by the operating segments |
86,150 |
68,617 |
53,229 |
25.55% |
28.91 |
% |
| Fees and commissions income |
132,192 |
103,985 |
111,366 |
27.13 |
% |
(6.63) |
% |
| Fees and commissions expenses |
(8,600) |
|
(8,645) |
|
(6,160) |
|
(0.52)% |
40.34% |
| Total fees and commissions, net |
123,592 |
95,340 |
105,206 |
29.63 |
% |
(9.38) |
% |
Other operating income(1) |
7,566 |
4,737 |
13,575 |
|
59.72 |
% |
(65.10) |
% |
| Dividends and net income on equity investments |
3,622 |
6,416 |
|
(4,314) |
(43.55) |
% |
248.73 |
% |
| Total operating income, net |
265,515 |
220,869 |
183,721 |
20.21% |
20.22% |
Operating expenses(2) |
(188,573) |
|
(186,212) |
|
(153,317) |
|
1.27% |
21.46% |
| Impairment, depreciation and amortization |
(2,759) |
|
(2,950) |
|
(1,754) |
|
(6.47)% |
68.19 |
% |
| Total operating expenses |
(191,332) |
|
(189,162) |
|
(155,071) |
|
1.15% |
21.98% |
| Profit before income tax |
74,183 |
31,707 |
28,650 |
133.96% |
10.67 |
% |
| Segment assets |
398,066 |
351,694 |
326,047 |
13.19% |
7.87 |
% |
| Segment liabilities |
122,213 |
121,423 |
106,115 |
0.65% |
14.43 |
% |
(1)Includes derivatives, net foreign exchange, operating leases and gains on sale of assets.
(2)Includes salaries and employee benefits, other administration and general expenses and taxes other than income tax.
Analysis of 2024 versus 2023
The Brokerage segment saw profit before taxes increase by 133.96% to COP 74 billion in 2024, up from COP 32 billion in 2023, due to the reasons described below.
Total interest and valuation decreased by 2.45% to COP 45 billion, mainly due to a 26.66% decrease in liquidity operations.
Net fees and commissions increased by 29.63% to COP 124 billion, primarily due to an increase of COP 96 billion in commission income from the management of securities funds and COP 21 billion in brokerage commissions. Total net operating income grew by 20.21% compared to 2023.
Total operating expenses increased by 1.15% to COP 191 billion from COP 189 billion in 2023, mainly driven by an increase to COP 136 billion in salaries and employee benefits.
Assets attributable to the Brokerage segment increased by 13.19% to COP 398 billion, primarily due to an increase in the equity investment portfolio. Liabilities attributable to the Brokerage segment increased by 0.65% during 2024 to COP 122 billion, due to an increase in liabilities from money market operations.
International Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, |
|
|
|
|
Change |
Change |
|
2024 |
2023 |
2022 |
2024-2023 |
2023-2022 |
|
In millions of COP |
| Total interest and valuation on financial instruments |
1,203,838 |
|
1,112,171 |
|
512,417 |
|
8.24 |
% |
117.04 |
% |
| Interest income on loans and financial leases |
987,378 |
|
940,091 |
|
446,028 |
|
5.03 |
% |
110.77 |
% |
| Debt investments |
116,662 |
|
85,091 |
|
48,722 |
|
37.10 |
% |
74.65 |
% |
| Derivatives, net |
(94) |
|
(188) |
|
— |
|
(50.00) |
% |
100.00 |
% |
| Liquidity operations, net |
99,892 |
|
87,177 |
|
17,667 |
|
14.59 |
% |
393.45 |
% |
| Interest expenses |
(708,671) |
|
(596,039) |
|
(271,280) |
|
18.90 |
% |
119.71 |
% |
| Net interest margin and valuation on financial instruments before impairment on loans and financial leases, off balance sheet credit instruments and other financial instruments |
495,167 |
|
516,132 |
|
241,137 |
|
(4.06) |
% |
114.04 |
% |
| Credit impairment charges, net |
(91,617) |
|
4,164 |
|
25,029 |
|
(2,300.22) |
% |
(83.36) |
% |
| Net interest margin and valuation on financial instruments after impairment on loans and financial leases, off balance sheet credit instruments and other financial instruments |
403,550 |
|
520,296 |
|
266,166 |
|
(22.44) |
% |
95.48 |
% |
| Revenues from transactions by the operating segments |
410,003 |
|
415,508 |
|
212,049 |
|
(1.32) |
% |
95.95 |
% |
| Fees and commissions income |
51,901 |
|
47,228 |
|
42,021 |
|
9.89 |
% |
12.39 |
% |
| Fees and commissions expenses |
(10,116) |
|
(11,042) |
|
(8,025) |
|
(8.39) |
% |
37.60 |
% |
| Total fees and commissions, net |
41,785 |
|
36,186 |
|
33,996 |
|
15.47 |
% |
6.44 |
% |
Other operating income(1) |
12,435 |
|
16,794 |
|
9,954 |
|
(25.96) |
% |
68.72 |
% |
| Dividends and net income on equity investments |
25 |
|
37 |
|
35 |
|
(32.43) |
% |
5.71 |
% |
| Total operating income, net |
867,798 |
|
988,821 |
|
522,200 |
|
(12.24) |
% |
89.36 |
% |
Operating expenses(2) |
(98,570) |
|
(89,219) |
|
(79,814) |
|
10.48 |
% |
11.78 |
% |
| Impairment, depreciation and amortization |
(8,016) |
|
(4,259) |
|
(2,626) |
|
88.21 |
% |
62.19 |
% |
| Total operating expenses |
(106,586) |
|
(93,478) |
|
(82,440) |
|
14.02 |
% |
13.39 |
% |
| Profit before income tax |
761,212 |
|
895,343 |
|
439,760 |
|
(14.98) |
% |
103.60 |
% |
| Segment assets |
35,272,842 |
|
30,199,897 |
|
35,131,458 |
|
16.80 |
% |
(14.04) |
% |
| Segment liabilities |
24,248,959 |
|
20,734,521 |
|
23,216,118 |
|
16.95 |
% |
(10.69) |
% |
(1)Includes derivatives, net foreign exchange, operating leases and gains on sale of assets.
(2)Includes salaries and employee benefits, other administration and general expenses and taxes other than income tax.
Analysis of 2024 versus 2023
Profit before taxes for the International Banking segment decreased by 14.98% to COP 761 billion in 2024 from COP 895 billion in 2023, due to the reasons described below.
The financial statements expressed in Colombian pesos were affected by the 15.36% depreciation of the Colombian peso against the U.S. dollar during the last year.
Total interest and valuation on financial instruments increased in Colombian pesos terms by 8.24% to COP 1,204 billion, up from COP 1,112 billion in 2023. This was mainly due to higher interest income from commercial loans and foreign trade financing provided to corporate and medium-sized companies, as well as a higher level of interest income from liquidity operations and investments in debt securities.
Net credit impairment charges rose to COP 92 billion for 2024 from COP (4) billion in 2023, mainly due to higher provision charges for a corporate client whose payment became past due.
Net fees and commissions increased by 15.47% to COP 42 billion, mainly due to a higher volume of transactions by foreign trade clients. Commission expenses decreased due to a reduction in services related to dealer distribution and custody agreement fees.
Total operating expenses increased by 14.02% to COP 106 billion, due to investments in digital transformation and automation of operational capabilities.
Assets attributable to the International Banking segment grew by 16.80% to COP 35,273 billion, primarily due to the growth of the portfolio and the depreciation of the Colombian peso, which impacted loans expressed in U.S. dollars.
All Other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, |
|
|
|
|
Change |
Change |
|
2024 |
2023 |
2022 |
2024-2023 |
2023-2022 |
|
In millions of COP |
| Total interest and valuation on financial instruments |
271,648 |
|
262,758 |
|
113,642 |
|
3.38 |
% |
131.22 |
% |
| Interest income on loans and financial leases |
274,811 |
|
262,075 |
|
116,072 |
|
4.86 |
% |
125.79 |
% |
| Debt investments |
41 |
|
683 |
|
(2,447) |
|
(94.00) |
% |
127.91 |
% |
| Derivatives, net |
(3,204) |
|
— |
|
— |
|
100.00 |
% |
— |
% |
| Liquidity operations, net |
— |
|
— |
|
17 |
|
— |
% |
(100.00) |
% |
| Interest expenses |
(148,535) |
|
(172,025) |
|
(99,863) |
|
(13.65) |
% |
72.26 |
% |
| Net interest margin and valuation on financial instruments before impairment on loans and financial leases, off balance sheet credit instruments and other financial instruments |
123,113 |
|
90,733 |
|
13,779 |
|
35.69 |
% |
558.49 |
% |
| Credit impairment charges, net |
(53,316) |
|
(57,399) |
|
(29,984) |
|
(7.11) |
% |
91.43 |
% |
| Net interest margin and valuation on financial instruments after impairment on loans and financial leases, off balance sheet credit instruments and other financial instruments |
69,797 |
|
33,334 |
|
(16,205) |
|
109.39 |
% |
305.70 |
% |
| Expenses from transactions by the operating segments |
(147,264) |
|
(166,086) |
|
(145,942) |
|
(11.33) |
% |
13.80 |
% |
| Fees and commissions income |
36,428 |
|
23,986 |
|
18,161 |
|
51.87 |
% |
32.07 |
% |
| Fees and commissions expenses |
(5,330) |
|
(12,910) |
|
(468) |
|
(58.71) |
% |
2,658.55 |
% |
| Total fees and commissions, net |
31,098 |
|
11,076 |
|
17,693 |
|
180.77 |
% |
(37.40) |
% |
Other operating income(1) |
1,969,552 |
|
2,149,826 |
|
1,886,750 |
|
(8.39) |
% |
13.94 |
% |
| Dividends and net income on equity investments |
257,561 |
|
225,049 |
|
221,444 |
|
14.45 |
% |
1.63 |
% |
| Total operating income, net |
2,180,744 |
|
2,253,199 |
|
1,963,740 |
|
(3.22) |
% |
14.74 |
% |
Operating expenses(2) |
(1,083,199) |
|
(1,093,592) |
|
(857,541) |
|
(0.95) |
% |
27.53 |
% |
| Impairment, depreciation and amortization |
(49,813) |
|
(75,998) |
|
(88,633) |
|
(34.45) |
% |
(14.26) |
% |
| Total operating expenses |
(1,133,012) |
|
(1,169,590) |
|
(946,174) |
|
(3.13) |
% |
23.61 |
% |
| Profit before income tax |
1,047,732 |
|
1,083,609 |
|
1,017,566 |
|
(3.31) |
% |
6.49 |
% |
| Segment assets |
10,901,576 |
|
10,224,734 |
|
9,222,529 |
|
6.62 |
% |
10.87 |
% |
| Segment liabilities |
4,639,406 |
|
4,874,547 |
|
4,320,836 |
|
(4.82) |
% |
12.81 |
% |
(1)Includes derivatives, net foreign exchange, operating leases and gains on sale of assets.
(2)Includes salaries and employee benefits, other administration and general expenses and taxes other than income tax.
Analysis of 2024 versus 2023
Profit before taxes for all other segments decreased by 3.31% to COP 1,048 billion in 2024, due to the reasons described below.
Total interest from loan portfolios and financial leasing operations grew by 4.86%, as financial lease payments increased.
Other operating income decreased by 8.39% to COP 1,969 billion from COP 2,150 billion in 2023, associated with a reduction in operating lease payments and real estate asset valuations.
Dividends and net income from equity investments increased by 14.45% to COP 258 billion, due to the better performance of the real estate asset portfolio.
Operating expenses decreased by 3.13% to COP 1,133 billion, mainly due to amortization, depreciation and impairment expenses associated with operating lease assets.
Assets of other segments increased by 6.62% to COP 10,902 billion.
B.LIQUIDITY AND CAPITAL RESOURCES
B.1LIQUIDITY AND FUNDING
Liquid Assets
One of our main principles is to maintain a solid liquidity position. Our Asset-Liability Committee ('ALCO'), has established a minimum level of liquid assets to ensure that each subsidiary always has sufficient liquidity to meet its liabilities without incurring big losses or risking reputational damage.
We seek to maintain in the optimum level of liquid assets to ensure proper operations not only under normal conditions but also under market stress scenarios. We maintained a solid liquidity position in 2024, with high liquidity levels during the second half of the year.
The following table shows the composition of the liquid assets in the last two years:
|
|
|
|
|
|
|
|
|
Liquid Assets (1) |
December 31, 2024 |
December 31, 2023 |
| High quality Liquid Assets (2) |
|
|
| Cash |
27,931,834 |
|
25,273,317 |
|
| High quality liquid securities |
24,862,860 |
|
19,951,771 |
|
| Other Liquid Assets |
|
|
| Other securities (3) |
6,823,145 |
|
5,455,735 |
|
| Total Liquid Assets |
59,617,839 |
|
50,680,823 |
|
(1)Cash and those liquid assets received by the Central Bank for its expansion and contraction monetary operations. Liquid assets are adjusted by a haircut. The following are considered as liquid assets: cash, repos held for trading and investments held for trading in listed shares in Colombia’s stock exchange, in investment funds units or in other trading debt instruments.
(2) High-quality liquid assets: cash and shares that are eligible to be reportable or repo operations, in addition to those liquid assets that the Central Bank receives for its monetary expansion and contraction operations described in paragraph 3.1.1 of the Foreign Regulatory Circular DODM-142 of the Central Bank.
(3) Other Securities: Securities issued by financial and corporate entities.
As of December 31, 2024, liquid assets showed a growth of COP 8,937 billion, mainly due to the increase in high-quality liquid securities. This change is a consequence of higher deposits and excess of liquidity, which has been managed through the treasury portfolio with purchases of liquid securities.
We measure liquid assets on a daily basis and compare this result to an objective target set by the Risk Committee. Under this rule, daily liquid assets must be equal to or higher than the target. In the event the limit is not reached, there is a five-day period to increase liquidity levels.
Cash is important to guarantee branch and ATM operations. Our expansion across Colombia requires considerable levels of cash and we monitor cash levels on a daily basis in order to minimize opportunity costs. Additionally, cash is included in the banking reserve established by the Central Bank.
Securities that comprise liquid assets are reviewed by the ALCO when considering our liquidity objective. Even though available-for-sale and held-to-maturity debt securities cannot be sold, they can be pledged as collateral in repurchase agreements. Some of them are mandatory investments that can be posted to the Central Bank as collateral.
The SFC requires financial entities to have liquid assets greater than the contractual liquidity cumulative one-month gap. This contractual gap reflects the maturity of the current positions of assets and liabilities and does not reflect projections of future operations. The maturity of the loan portfolio for this purpose is affected by the historical default indicator and the maturity of deposits is modeled according to the regulation.
We believe that the current level of liquidity is adequate and will seek to maintain the solid deposit base and access to alternative sources of funding, such as borrowings from domestic and international development and commercial banks, repurchase agreements, bond issuances, overnight funds and Central Bank funds, considering market conditions, interest rates and the desired maturity profile of liabilities.
Funding Structure
As of December 31, 2024, our liabilities reached COP 327,631 billion, a 7.82% increase compared to December 31, 2023. Liabilities denominated in Colombian pesos increased by 3.75%, and liabilities denominated in U.S. dollars increased by 15.38%. These changes are principally the result of the increase in peso- and dollar-denominated time deposits and peso-denominated savings accounts. However, although dollar-denominated liabilities increased by 15.38%, this change was mainly affected by the depreciation of the Colombian peso against the U.S. dollar (15.36% in 2024).
|
|
|
|
|
|
|
|
|
|
As of December 31, |
|
2024 |
2023 |
|
In millions of COP |
| Total funding |
|
|
| Peso-denominated |
204,977,765 |
|
197,575,174 |
|
| Dollar-denominated. |
122,653,342 |
|
106,303,906 |
|
| Total Liabilities |
327,631,107 |
|
303,879,080 |
|
In 2024, our deposits reached COP 279,059 billion at year-end, an increase of COP 31,118 billion, or 12.55%, compared to 2023. Deposits denominated in Colombian pesos increased by 8.86%, explained mainly by the rise in savings accounts, while deposits denominated in U.S. dollars increased by 20.06% as a result of the growth in time deposits and the effect of exchange rate variations. The ratio of deposits to total assets was 75%, increasing by 267 basis points compared to 2023.
|
|
|
|
|
|
|
|
|
|
As of December 31, |
|
2024 |
2023 |
|
In millions of COP |
| Total Deposits |
279,059,401 |
|
247,941,180 |
|
The following table sets forth checking accounts, savings accounts and time deposits as a percentage of our total liabilities for 2024 and 2023:
|
|
|
|
|
|
|
|
|
|
2024 |
2023 |
| Saving accounts |
38.1 |
% |
35.8 |
% |
| Time deposits |
33.5 |
% |
32.5 |
% |
| Checking accounts |
11.6 |
% |
11.6 |
% |
| Other deposits |
2.0 |
% |
1.7 |
% |
| Percentage of Total Liabilities |
85.2 |
% |
81.6 |
% |
Our principal sources of funding are deposits, which are mainly composed of checking accounts, time deposits and savings accounts. During 2024, savings accounts and time deposits played an important role in the financing structure of the balance sheet. As inflation continued to decline during 2024, the Central Bank began to gradually reduce its monetary policy rate. As a result, the cost of funds was positively affected due to lower interest rates and the greater weight of savings accounts as a source of funding.
Deposits as a percentage of our total liabilities in 2024 were 85.2%, increasing from 81.6% of total liabilities at year-end 2023.
The ratio of net loans to deposits (including borrowings from commercial banks) was 89.32% at the end of 2024, decreasing from 90.19% at the end of 2023. Net loans and advances to customers rose to COP 263,274 billion in 2024 from COP 237,728 billion in 2023, while deposits were COP 294,748 billion in 2024, an increase of COP 31,159 billion from 2023.
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, |
|
|
2024 |
2023 |
|
| Net Loans to Deposits |
89.32 |
% |
90.19 |
% |
|
We also fund our operations with borrowings from financial institutions. Nevertheless, the main source of financing during 2024 was savings accounts and time deposits. Additionally, our time deposits and borrowings from financial institutions are linked to different market rates/indexes like the IBR, (a short-term benchmark interest rate of Colombian money market liquidity that reflects the price at which banks are willing to lend or borrow funds from financial market), DTF, IPC1 and SOFR.
Debt instruments in issue
In 2024, we issued USD 1,005 million aggregate of notes distributed as follows: Bancolombia issued notes in amounts of USD 800 million, Banistmo USD 173.2 million, Banagrícola USD 21.3 million and Bancolombia Puerto Rico issued USD 14.7 million. However, a USD 1,320 million bond prepayment was completed during 2024, and so the carrying amount of debt securities in issue decreased by COP 3,388 billion.
As of December 31, 2024, the total outstanding aggregate principal amount of bonds issued was COP 11,725 billion.
The following table shows our debt securities in issue maturity profile:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2025 |
2026 |
2027 |
2028 |
2029 |
2030 and
thereafter |
Total |
|
In millions of COP |
| Debt securities in issue |
1,297,811 |
|
1,052,776 |
|
4,461,862 |
|
- |
|
360,713 |
4,102,054 |
|
11,275,216 |
|
________________________________________
1The IPC refers to the Consumer Price Index certified by the Colombian statistical bureau ('DANE')
The following table sets forth the components of our liabilities for the years 2024 and 2023:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December, |
|
|
2024 |
% of total
funding |
2023 |
% of total
funding |
|
|
In millions of COP, except percentages |
|
| Savings accounts |
|
|
|
|
|
| Peso-denominated |
93,938,152 |
|
28.7 |
% |
83,053,422 |
|
27.3 |
% |
|
| Dollar-denominated |
30,698,842 |
|
9.4 |
% |
25,917,912 |
|
8.5 |
% |
|
| Total |
124,636,994 |
|
38.1 |
% |
108,971,334 |
|
35.8 |
% |
|
| Time deposits |
|
|
|
|
|
| Peso-denominated |
60,608,350 |
|
18.5 |
% |
59,146,972 |
|
19.5 |
% |
|
| Dollar-denominated |
49,152,372 |
|
15.0 |
% |
39,539,544 |
|
13.0 |
% |
|
| Total |
109,760,722 |
|
33.5 |
% |
98,686,516 |
|
32.5 |
% |
|
| Checking accounts |
|
|
|
|
|
| Peso-denominated |
20,567,300 |
|
6.3 |
% |
19,712,279 |
|
6.5 |
% |
|
| Dollar-denominated |
17,466,396 |
|
5.3 |
% |
15,280,787 |
|
5.1 |
% |
|
| Total |
38,033,696 |
|
11.6 |
% |
34,993,066 |
|
11.6 |
% |
|
| Other deposits |
|
|
|
|
|
| Peso-denominated |
5,863,094 |
|
1.8 |
% |
4,336,318 |
|
1.4 |
% |
|
| Dollar-denominated |
764,895 |
|
0.2 |
% |
953,946 |
|
0.3 |
% |
|
| Total |
6,627,989 |
|
2.0 |
% |
5,290,264 |
|
1.7 |
% |
|
| Interbank Deposits |
|
|
|
|
|
| Peso-denominated |
— |
|
— |
% |
— |
|
— |
% |
|
| Dollar-denominated |
716,493 |
|
0.2 |
% |
606,141 |
|
0.2 |
% |
|
| Total |
716,493 |
|
0.2 |
% |
606,141 |
|
0.2 |
% |
|
| Derivate financial instrument-Liabilities |
|
|
|
|
|
| Peso-denominated |
2,642,149 |
|
0.8 |
% |
6,635,034 |
|
2.2 |
% |
|
| Dollar-denominated |
37,494 |
|
0.0 |
% |
75,330 |
|
0.0 |
% |
|
| Total |
2,679,643 |
|
0.8 |
% |
6,710,364 |
|
2.2 |
% |
|
Borrowings from other financial institutions (1) |
|
|
|
|
|
| Peso-denominated |
5,055,039 |
|
1.5 |
% |
6,488,331 |
|
2.1 |
% |
|
| Dollar-denominated |
10,634,493 |
|
3.3 |
% |
9,160,275 |
|
3.0 |
% |
|
| Total |
15,689,532 |
|
4.8 |
% |
15,648,606 |
|
5.1 |
% |
|
| Debt securities in issue |
|
|
|
|
|
| Peso-denominated |
2,241,026 |
|
0.7 |
% |
4,097,729 |
|
1.3 |
% |
|
| Dollar-denominated |
9,034,190 |
|
2.8 |
% |
10,565,847 |
|
3.5 |
% |
|
| Total |
11,275,216 |
|
3.5 |
% |
14,663,576 |
|
4.8 |
% |
|
| Repurchase agreements and other similar secured borrowing |
|
|
|
|
|
| Peso-denominated |
679,878 |
|
0.2 |
% |
308,711 |
|
0.1 |
% |
|
| Dollar-denominated |
380,594 |
|
0.1 |
% |
161,584 |
|
0.1 |
% |
|
| Total |
1,060,472 |
|
0.3 |
% |
470,295 |
|
0.2 |
% |
|
| Leases |
|
|
|
|
|
| Peso-denominated |
1,141,239 |
|
0.4 |
% |
1,107,405 |
|
0.4 |
% |
|
| Dollar-denominated |
748,125 |
|
0.2 |
% |
666,205 |
|
0.2 |
% |
|
| Total |
1,889,364 |
|
0.6 |
% |
1,773,610 |
|
0.6 |
% |
|
| Other liabilities |
|
|
|
|
|
| Peso-denominated |
12,241,538 |
|
3.7 |
% |
12,688,973 |
|
4.2 |
% |
|
| Dollar-denominated |
3,019,448 |
|
0.9 |
% |
3,376,335 |
|
1.1 |
% |
|
| Total |
15,260,986 |
|
4.6 |
% |
16,065,308 |
|
5.3 |
% |
|
| Total funding |
|
|
|
|
|
| Peso-denominated |
204,977,765 |
|
62.6 |
% |
197,575,174 |
|
65.0 |
% |
|
| Dollar-denominated |
122,653,342 |
|
37.4 |
% |
106,303,906 |
|
35.0 |
% |
|
| Total Liabilities |
327,631,107 |
|
100.0 |
% |
303,879,080 |
|
100.0 |
% |
|
(1)Includes borrowings from commercial banks and other non-financial entities.
Consolidated statement of cash flows
The following table shows net cash provided by operating activities, net cash used in investing activities and net cash used in financing activities, for the years ended December 31, 2024, 2023 and 2022:
|
|
|
|
|
|
|
|
|
|
|
|
|
2024 |
2023 |
2022 |
|
In millions of COP |
| Operating activities |
435,895 |
|
19,153,084 |
|
6,339,438 |
|
| Investing activities |
(559,196) |
|
(159,689) |
|
(4,654,502) |
|
| Financing activities |
(9,244,376) |
|
(5,430,672) |
|
853,436 |
|
| (Decrease) / increase in cash and cash equivalents |
(9,367,677) |
|
13,562,723 |
|
2,538,372 |
|
Operating activities
In 2024, operating activities resulted in positive net cash as a result of the increase of COP 18,329 billion in deposits by customers, compared to an increase of COP 17,025 billion in 2023, and COP 33,225 billion of interest received, down from COP 34,702 billion in 2023. The increase in loans and advances to customers and financial institutions was COP 21,622 billion, compared to COP 10,554 billion and COP 37,593 billion in 2023 and 2022, respectively. Interest paid generated a use of cash of COP 14,982 billion in 2024, COP 15,978 billion in 2023 and COP 7,508 billion in 2022. The net change in value of investment securities recognized at fair value through profit and losses was negative by COP 8,401 billion in 2024, compared to 2023 when the net change in value was COP 1,988 billion.
Investing activities
In 2024, we purchased debt securities at amortized cost of COP 2,114 billion, down from COP 3,629 billion in 2023 and COP 4,915 billion in 2022. The proceeds from maturities of debt securities at amortized cost provided cash of COP 1,622 billion in 2024, COP 4,738 in 2023 and COP 4,260 billion in 2022.
Investing activities related to debt instruments at fair value through OCI provided net cash of COP 1,858 billion during 2024 and COP 1,415 billion during 2023. Investing activities related to equity securities and interests in associates and joint ventures used net cash of COP 93,892 billion during 2024, while in 2023 it used COP 106 billion; and investing activities related to purchases and sales of premises and equipment and investment properties used net cash of COP 1,628 billion, compared with COP 2,226 billion used during 2023, and COP 3,117 billion in 2022.
Financing activities
Proceeds from borrowings from other financial institutions provided COP 9,416 billion in 2024, COP 9,855 billion in 2023 and COP 14,374 billion in 2022. The placement of debt securities in issue provided COP 4,155 billion in 2024, COP 1,781 in 2023 and COP 2,138 in 2022. The repayment of borrowings used COP 10,496 billion in 2024, compared with COP 9,921 used in 2023 and COP 5,874 used in 2022; and the payments of debt securities in issue used COP 9,276 billion during 2024, COP 3,928 billion during 2023 and COP 6,699 billion during 2022. Cash was also used to pay dividends to stockholders in the amount of COP 3,398 billion, while in 2023 and 2022 this amount was COP 3,298 billion and COP 2,310 billion, respectively.
The increase in repurchase agreements provided cash of COP 550 billion, compared with COP 304 billion in 2023 and COP 579 billion used in 2022.
Capital adequacy
Bancolombia and its subsidiaries comply with the capital adequacy requirements in their respective countries of operation.
Stockholders’ equity attributable to the stockholders of Bancolombia amounted to COP 43,542 billion on December 31, 2024, up 14.32% from COP 38,090 billion on December 31, 2023. This increase is mainly explained by the generation of profits during 2024 and the depreciation of the Colombian peso against the U.S. dollar.
Our capital adequacy ratio on a consolidated basis was 13.75% as of December 31, 2024, up from 13.40% in 2023.
Our capital adequacy ratio was 475 basis points above the minimum 9% required by the Colombian government and the SFC.
The basic capital ratio (Tier 1) was 11.89% and the tangible capital ratio, which is equal to the ratio of the difference between equity and goodwill and intangible assets to tangible assets, was 9.09% at the end of 2024. For a full description of the Bank’s capital adequacy requirements, please see Item 4. Information on the Company – B. Business Overview – B.8 –Supervision and Regulation.
The following table sets forth certain information regarding our consolidated capital adequacy as of December 31, 2024, and 2023:
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2024 |
As of December 31, 2023 |
|
|
In millions of COP, except percentages |
|
| Primary capital |
45,245,388 |
|
39,704,541 |
|
|
| Subscribed capital |
480,914 |
|
480,914 |
|
|
| Additional paid-in capital |
5,441,658 |
|
5,441,658 |
|
|
| Financial statements translation adjustment |
|
|
|
| Legal reserve |
14,429,333 |
|
14,541,561 |
|
|
| Occasional reserves |
9,874,876 |
|
7,250,712 |
|
|
| Non-controlling interest |
1,041,807 |
|
960,217 |
|
|
| Other comprehensive income (loss) |
6,642,526 |
|
4,065,182 |
|
|
| Net income |
6,267,744 |
|
6,116,936 |
|
|
| Retained earnings |
1,066,531 |
|
847,362 |
|
|
| Less: |
(10,188,105) |
|
(8,919,345) |
|
|
| Long-term investments |
|
|
|
| Prior-year losses |
(79,590) |
|
(79,587) |
|
|
| Intangibles assets |
(9,017,419) |
|
(7,818,125) |
|
|
| Revaluation property, plant and equipment |
(340,612) |
|
(350,061) |
|
|
| Other intangibles |
(750,484) |
|
(671,572) |
|
|
| Deferred net income tax |
— |
|
— |
|
|
| Primary capital (Tier I) |
35,057,283 |
|
30,785,197 |
|
|
| Non-controlling interest |
|
|
|
| Hybrid bonds |
4,669,804 |
|
4,283,448 |
|
|
| Subordinated bonds |
595,442 |
|
678,797 |
|
|
| Other comprehensive income related to investments at fair value |
|
|
|
| General provisions |
220,519 |
|
375,902 |
|
|
| Computed secondary capital (Tier II) |
5,485,765 |
|
5,338,147 |
|
|
| Less: |
(13,798) |
|
(10,687) |
|
|
Technical Capital (1) |
40,529,249 |
|
36,112,657 |
|
|
| Capital Ratios |
|
|
|
| Primary capital to risk-weighted assets (Tier I) |
11.89 |
% |
11.42 |
% |
|
| Secondary capital to risk-weighted assets (Tier II) |
1.86 |
% |
1.98 |
% |
|
| Risk-weighted assets including market risk and operational risk |
294,794,366 |
|
269,591,211 |
|
|
Technical capital to risk-weighted assets (2) |
13.75 |
% |
13.40 |
% |
|
(1)Technical capital is the sum of basic and additional capital.
(2)Capital adequacy is technical capital divided by risk weighted assets.
Additionally, Bancolombia's total exposure used to estimate leverage ratio was COP 388,089 billion as of December 2024 and the leverage ratio was 9.03%.
B.2FINANCIAL INSTRUMENTS AND TREASURY ACTIVITIES
Our treasury division oversees the sales and trading activities in Bancolombia, Banistmo, Bancoagrícola, Bancolombia Panamá, Bancolombia Puerto Rico, and Bam. We are responsible for the execution of all transactions in domestic and foreign currencies legally authorized in Colombia and in all the countries where we have a presence. These include derivatives transactions, fixed income and indexed securities trading, repurchase or resale transactions, short sales, temporary securities transfers, as well as FX trading.
We ensure oversight of the treasury division's activities through policies regarding the management of liquidity, market, legal, credit and operational risks. Such policies are monitored by the Chief Risk Officer (CRO). To control market and liquidity risks, we set limits intended to keep our exposure levels and losses within certain ranges determined by Bancolombia's Board of Directors. Our investment policies do not include restrictions regarding the maturity of the securities held in the portfolio, except for those related to the liquidity portfolio and over the counter ('OTC') derivatives transactions held by Bancolombia, Banistmo and Bancoagrícola. However, we have defined a policy to classify investments in trading portfolios, structural portfolios and other portfolios that have a specific objective.
Before taking any additional position, our treasury division also verifies, with respect to investments in domestic and in foreign currencies, the availability of funds for investment and each investment’s compatibility with our liquidity structure.
As mentioned in Item 11. Quantitative and Qualitative Disclosure about Market Risk, the market risk stated in the treasury book is measured with value at risk (VaR) metrics, and the position limits are based on the results of these methodologies. We have defined VaR limits that follow a hierarchical structure, which avoids the concentration of market risk in certain groups of assets and also takes advantage of portfolio diversification. In addition to VaR limits, we use stop loss signals, except for GAH, to inform senior management when accumulated losses are close to certain predefined thresholds in the trading book. Moreover, for the options portfolio in Bancolombia, we have set limits based on the sensitivity of the portfolio to the underlying volatility, underlying currency and interest rates.
As part of our operations, we hold cash and cash equivalents primarily in Colombian pesos, U.S. dollars and Guatemalan quetzals. These positions, as well as any other currency position, are determined by the treasury division in connection with our currency risk assessment and management. Specifically, our exposure to FX risk primarily arises from changes in the U.S. dollar/Colombian peso exchange rate. The exposure to currency risk is managed by our Treasury Division. We estimate VaR metrics to manage and limit foreign currency risk exposure across our balance sheet in Bancolombia, Valores Bancolombia, Bancoagrícola, Banistmo and Bam. These limits are supervised daily by our Market Risk Management Office. Our Treasury Division manages a derivative portfolio in Bancolombia and Banistmo, which includes foreign exchange forward transactions with the purpose, among others, of hedging our overall currency exposure.
The Colombian Chief Treasury Officer ('CTO'), centralizes all the reports from the Treasury Directors in the subsidiaries in all geographies in which they are responsible for FX, investment and risk taking.
The Investment Committee is in charge of making decisions associated with the management of the Treasury areas and the CTO. The participants in the Investment Committee, which meets monthly, are: the CTO, the proprietary trading director, the market risk director, the treasury directors from each bank, and the head of each desk in Colombia (fixed income, FX and derivatives). This committee reviews the investment strategy portfolios, profit and loss figures, VaR levels and Benchmark portfolios, based on the framework and risk appetite defined by the Board of Directors.
Performance is evaluated based on the benchmark approved for each treasury, which includes a target position for each asset and limits for every product and market in which the treasury operation can invest. There is a continuous follow up of the portfolios by the Investment Committee.
B.3COMMITMENT FOR CAPITAL EXPENDITURES
See Item 4. Information on the Company - A. History and Development of the Company – Capital Acquisitions and Divestitures.
C.Research and development, patents and licenses, etc
Bancolombia's Innovation Vice Presidency leads investment in new business and internal testing, and runs pilots and proofs of concept ('POCs') of new technologies aimed at creating new opportunities in our industry.
The innovations derived from these activities are protected by the rigorous management of trademarks and copyright, and protection of industrial secrets. To date, there are no outstanding patents or processes to obtain new patents. To date, there are no licensing agreements of our solutions or digital creations.
Bancolombia, through its Research, Development and Innovation Unit, is certified as a highly innovative company by the Ministry of Science, Technology and Innovation of Colombia.
D.Trend information
Credit conditions continue to improve across most of the countries where we operate, amid resilient economic activity, stronger demand, decreasing inflation, and lower borrowing costs. Revenues on a consolidated basis increased on the back of a better credit cycle, the resilience of the aggregate contribution from our Central American operations, and an efficient control on operating expenses. Net interest and valuation income in 2024 increased 16.66%. Even though net interest margin contracted by lower average interest rates, we made significant progress on the risk management of our loan portfolio and our clients experienced better financial conditions, which translated to lower loan-loss provisions and higher net income for shareholders. The evolution of the current monetary policy and the strategies to preserve a strong competitive position in deposits will be key drivers of our performance going forward. The following is a brief discussion of recent trends affecting Bancolombia and the economy.
Loan volume performance
Gross loans and financial leases (before allowance for loans and financial lease losses) increased by 10.04% and totaled COP 279,454 billion in 2024. The depreciation of the Colombian peso against the U.S. dollar during the period was 15.36%, which resulted in a relative distortion of the increase (since 34.01% of total loans are denominated in foreign currency). Without the foreign exchange effect, the balance would have increased by 5.06%.
After financial institutions tightened standards and borrower demand diminished across all loan categories in 2023, there was dynamic, broad-based credit activity in 2024 everywhere that Bancolombia operates, except for Banistmo. Adjusted to local currency, commercial loans increased 11.47%, mortgages 15.15%, consumer loans 2.26% and micro-lending 18.06%.
Loans in Bancolombia expanded by 4.76% last year. Credit originations picked up in the second half of the year, and they are expected to continue to accelerate in light of further interest rate cuts and a better macroeconomic environment. Commercial loans benefited from specific lending programs aimed at enhancing demand. Mortgages presented the highest percentage increase, a result of proactive interest rate reductions and government social housing subsidies that further encouraged loan origination. The consumer portfolio contracted on an annual basis as we continued to reinforce origination policies on unsecured credits to relieve pressure on asset quality.
Loans in Banco Agrícola grew 5.51% in dollar terms last year. Consumer loans saw the highest expansion, surpassing commercial loans as the largest category in the portfolio. This performance reaffirms our strategy of taking advantage of transactional data while obtaining the best risk-adjusted returns. In 2024, the economy in El Salvador was mainly propelled by private consumption, public investment, and exports, bolstered by a surge in foreign demand, higher remittances and enhanced perceptions of the business environment.
The credit portfolio in Banco Agromercantil was up 7.98%. Commercial loans have resumed growth after a contraction in 2023, standing out as the strongest segment in terms of disbursements. Consumer loans also experienced growth, primarily during the second half of 2024, when enhanced risk profiles resulted in better asset quality for new originations. Guatemala's economy has shown resilience, and inflationary pressures have eased significantly, remaining within the central bank's target range. This stability is the legacy of prudent monetary and fiscal policies, which have created a sound economic environment.
Banistmo’s credit portfolio was down 2.35% on an annual basis, when measured in U.S. dollars, decreasing across all loan categories. By prioritizing a sound liquidity position, lower delinquency ratios and profitable margins, Banistmo has favored more restrictive origination policies. Panama has faced important challenges in 2024, and economic growth is projected to contract on an annual basis due to the cessation of significant mining activities. The recovery of GDP growth in 2025 should lead to credit expansion. An improvement in operating conditions and economic recovery should also limit risk buildup.
Foreign-denominated loans increased 6.23% in 2024. The performance of the international loan portfolios of Bancolombia Panama, Puerto Rico, Banco Agromercantil, Banco Agricola and the dollar-denominated loans in Colombia widely outpaced the contraction of the dollar-denominated portfolio of Banistmo on a consolidated basis. An improved environment in the economy, a continued reduction of interest rates and more robust domestic demand across all countries where we operate should enhance loan growth in 2025, both in local and foreign currency and for all banks, on a consolidated basis.
Net interest margin and valuation
The annualized net interest margin ('NIM') on a consolidated basis was 6.85% for 2024, down from 6.99% for 2023.
The Colombian Central Bank maintained a contractionary monetary policy from 2021 until the end of 2023, which led to a spike in our interest income. Conversely, the benchmark interest rate fell 350 basis points in 2024, ending the year at 9.50%. While our credit portfolio grew during the year, interest income declined slightly, as most of our loans have a variable rate and our assets tend to reprice faster than our liabilities. In addition, the weight of consumer loans in our portfolio decreased to 19.99% from 22.10%, contributing to a reduction in margins, declining further on cautious loan originations. The interest on debt instruments in our investment portfolio rose during the year, offsetting to some extent the decline in interest from the loan portfolio.
Interest expenses have declined faster than interest income. First, our strategy on time deposits has allowed us to offset falling loan yields to some extent by focusing on shorter maturity dates and secondly, by reducing interest paid ahead of the central bank rate cuts. Furthermore, sight deposits have gained share, providing a very low cost of financing. Going forward, we will continue managing the sensitivity and duration of our assets and liabilities to mitigate NIM contraction. Customer deposits accounted for 85.2% of our liabilities, offering a cost-competitive and stable source of funding. Likewise, long term debt and loans with banks have decreased proportionally, reducing pressure on funding costs.
Cost of credit
For 2024, the cost of credit was 2.05% of average loans, down from 2.84% posted in 2023. The fall is due to the positive evolution of the credit cycle, which has reduced past-due consumer loans compared to a significant increase in delinquency ratios and provisioning expenses a year earlier. The more favorable macroeconomic environment also allowed us to reduce loan provisions based on our risk models, which contributed to a higher net income. Commercial loans showed a slight deterioration on an annual basis, although signaling quarterly improvements toward the last part of the year. As we navigate through a better credit cycle for individuals and companies, we expect a stabilized cost of risk going forward. We maintain a strong balance sheet, supported by an adequate level of loan loss reserves, reporting a coverage ratio to PDLs (overdue 30 days) of 112.39% at the end of 2024.
.
E.Critical accounting policies and estimates
The preparation of the Consolidated Financial Statements requires our management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses.
The material accounting policies, including the policies that include critical accounting estimates and judgments, are described in Note 2.E. to the Consolidated Financial Statements, Material accounting policies, Use of estimates and judgments.
The accounting policies listed below involve a high degree of uncertainty and could have a material impact on the Consolidated Financial Statements:
•Credit risk impairment: The most significant judgments relate to the selection and calibration of the probability of default, loss given default, and exposure at default models, as well as the selection of model inputs and economic forecasts and the likelihood of these economic scenarios. For the collective estimate of expected credit losses, assumptions and judgments include the definition of a significant increase in credit risk, the definition of default, forecasts collateral values, loan maturities and macroeconomic forecasts of variables such as unemployment, GDP and interest rates. In addition, individual expected credit loss models consider assumptions about how a customer’s financial performance and future cash flows may be affected, the customer’s expected future operational and business activity, the ability to generate sufficient cash to pay debt obligations, trends and regulatory changes in the industry in which the customer operates, changes in the value of collateral, the weighting of scenarios used and other internal and external factors. There is a high degree of uncertainty involved in making estimates using assumptions that are highly subjective and sensitive to risk factors. As of December 31, 2024, December 31, 2023, and December 31, 2022, a total of COP 5,413,652, COP 7,461,479 and COP 3,721,353, respectively, of credit impairment charges on loans, advances and financial leases, net, were recorded on the Consolidated Statement of Income. The provision for loan losses for 2024 decreased by 27% compared to the previous year. This decrease is primarily due to a decrease in the provision of credit losses on the consumer portfolio. This is a result of the lending and collection actions that Bancolombia initiated in 2023, which have had positive effects in 2024. Additionally, the reduction in the provision for credit losses due to macroeconomic variables, as a result of the decrease in the interest rate in Colombia, also contributed to the decrease of the provision for loan losses. For further information about the change of the allowance for credit losses from 2023 to 2022, see Note 6 to the Consolidated Financial Statements, Loans and Advances to Customers, Net, Impact of movements in the value of the portfolio and loss allowance by Stage section and Note Risk Management in the Credit Risk section.
•Impairment testing of cash generating units ('CGUs'), including goodwill: The identification of cash-generating units, the allocation of goodwill based on expectations as to which of our business segments will benefit from the business acquisition, the estimation of the future cash flows of the CGUs and the rates used to discount these cash flows are subject to a high degree of uncertainty. As of December 31, 2024, and December 31, 2023, a total of COP 9,017,419 and COP 7,818,125, respectively, of goodwill were recorded on the Consolidated Statement of Financial Position. See Note 2.E.2 to the Consolidated Financial Statements.
•Recognition of digital assets: Determining the appropriate accounting treatment for the digital asset holdings and for the custody of digital assets held by customers involves significant judgment, as there is currently no specific definitive guidance in IFRS or alternative accounting frameworks to account for these transactions. See Note 2.E.3 to the Consolidated Financial Statements.
•Deferred tax and uncertainty over income tax treatments: Due to the changing conditions of the political, social and economic environment, the constant changes in tax legislation and the constant changes in tax principles and interpretations by tax authorities, the determination of the tax bases of deferred tax items involves difficult judgments related to recoverability, which is based on expected future profitability, offsets or tax deductions. As of December 31, 2024, and December 31, 2023, COP 763,757 and COP 685,612, respectively, of deferred tax assets were recorded on the Consolidated Statement of Financial Position. See Note 2.E.4 and 13 to the Consolidated Financial Statements.
•Provisions and contingent liabilities: Significant judgment is required in determining whether a present obligation exists and in estimating the probability, timing and amount of any outflows, including the assumption of the discount rate where the timing of the outflow is greater than 12 months. As of December 31, 2024, and December 31, 2023, COP 439,095 and COP 401,111, respectively, of provisions were recorded on the Consolidated Statement of Financial Position. See Note 2.E.5 to the Consolidated Financial Statements.
•Fair value of assets and liabilities: A variety of valuation techniques are used to determine the fair value of assets and liabilities, some of which involve significant unobservable inputs and are subject to significant uncertainty based on assumptions that would be used in the market to determine the price for assets or liabilities. As of December 31, 2024, and December 31, 2023, a total of COP 39,514,527 and COP 31,459,076, respectively, of assets and COP 2,679,643 and COP 6,710,364, respectively, were recorded in respect of liabilities that have been measured at fair value on a recurring basis in the Consolidated Statement of Financial Position. See Note 2.E.6 to the Consolidated Financial Statements.
•Measurement of employee benefits: The measurement of post-employment and long-term employee benefit obligations involves a number of inputs and is dependent on a number of assumptions about future events, such as discount rate, inflation rate, pension payments and deferred pensions, compensation and mortality. As of December 31, 2024, and December 31, 2023, COP 951,555 and COP 882,954, respectively, of liabilities relating to post-employment benefit and long-term benefit plans were recorded on the Consolidated Statement of Financial Position. See Note 2.E.7 to the Consolidated Financial Statements.
•Transaction price determination: We have fixed and variable prices considering the characteristics of each service, future events, discounts, returns and other variables that may influence the selling price. See Note 2.E.8 to the Consolidated Financial Statements.
•Leases: The measurement of the right-of-use asset and of the lease liabilities requires a series of judgments, among which are the determination of the term of the lease and the rate used in discounting the cash flows. As of December 31, 2024, and December 31, 2023, a total of COP 1,757,206 and COP 1,634,045, respectively, of right-of-use assets and COP 1,889,364 and COP 1,773,610, respectively, of lease liabilities were recorded on the Consolidated Statement of Financial Position. See Note 2.E.9 to the Consolidated Financial Statements.
Given the inherent uncertainties of the items above, the estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Management bases its estimates and judgments on historical experience and various other factors that are believed to be reasonable under current circumstances.
Actual results may differ from these estimates if assumptions and conditions change.
As of December 31, 2024, there were no changes in the significant estimates and judgments made by management in applying our accounting policies compared to those applied in the Consolidated Financial Statements for the years ended December 31, 2023, and December 31, 2022.
ITEM 6 Directors, Senior Management and Employees
A.Directors and senior management
The following persons acted as directors and senior managers of Bancolombia:
Directors
•Ricardo Jaramillo Mejía was born in 1972. Mr. Jaramillo holds a degree in civil engineering from Universidad EIA and has an MBA in finance from Boston University's Questrom School of Business. He currently serves as CEO of Grupo de Inversiones Suramericana S.A., the holding company of the Sura–Bancolombia financial conglomerate, where he previously served as Vice President of Business Development and Finance. He also served as CEO, CFO and Project Manager in Banca de Inversión Bancolombia, among other roles in Fiduciaria Bancolombia. He is a member of the board of directors of Suramericana S.A., Sura Asset Management S.A., Grupo Argos S.A., Fundación Sura, Fundación Ideas por la Paz (FIP), Consejo Privado de Competitividad, Fundación Empresarios por la Educación, Medellín Cultural Association, Medellín Philarmonic Orchestra, and the Superior Council of EIA University. Mr. Jaramillo has been a non-independent member of Bancolombia's Board of Directors since his appointment in June 2024 and has also been the Vice Chairman of the Board since September 2024.
•Juan David Escobar Franco was born in 1969. Mr. Escobar has a degree in systems engineering from Universidad Eafit and holds a post-graduate degree in electronic business and an MBA from Tecnológico de Monterrey. He holds a master’s in actuarial science from Georgia State and has studied advanced management at the Kellogg School of Management and digital transformation at the University of Virginia. Mr. Escobar has served as the CEO of Seguros Sura Colombia S.A. since 2018, where he previously served as vice president of insurance and actuarial manager and director of automobile insurance. He is a member of the board of directors of Fasecolda and Corporación Ballet Folclórico de Antioquia. Mr. Escobar has been a non-independent member of Bancolombia's Board of Directors since his appointment in 2020.
•Luis Fernando Restrepo Echavarría was born in 1958. He holds a bachelor’s degree in industrial management from Georgia Institute of Technology and an MBA degree from the University of Chicago. He has been affiliated with The Marmon Group of Chicago and was part of the Leadership Rotational Program in Chicago at The Rego Company (Planning Production and Industrial Engineering), Hammond Organ Company (Financial and Cost Accounting) and Marmom Keystones (Sales). Mr. Restrepo currently serves as CEO of Crystal S.A.S., a company that produces and sells brands such as Gef, Punto Blanco, Baby Fresh and Galax. He is a member of the board of directors of: Etiflex S.A (Litography), Espumas Plásticas S.A.S - Comodisimos, and Proantioquia. He is also a member of the Georgia Tech Advisory Board. Mr. Restrepo has been an independent member of Bancolombia's Board of Directors since his appointment in 2016. He has been the Chairman of the Board since April 26, 2022.
•Andrés Felipe Mejía Cardona was born in 1962. Mr. Mejía holds a degree in economics from the University of Michigan and an MBA from Universidad Eafit. He studied strategic planning at the Universitat de Barcelona, advanced management at the Universidad de los Andes and took part of the EXPRO Program in International Business at CBI Rotterdam, Netherlands. Mr. Mejía has extensive professional experience in foreign trade and international markets. He is CEO of MU Mecanicos Unidos S.A.S., a metal casting company and manufacturer of the Victoria brand. Mr. Mejia has been an independent member of Bancolombia’s Board of Directors since his appointment in 2016.
•Sylvia Escovar Gómez was born in 1961. Ms. Escovar holds a degree in economics from the Universidad de los Andes. She has worked as chief economist of the World Bank´s resident mission in Colombia and was head of the External Credit Division of the National Planning Department ('Departamento Nacional de Planeación' or 'DNP'). She served as Head of the Economic Research Service of the Central Bank, Head of the National Public Policy Evaluation System of the DNP and General Director of FES Leadership Foundation. She was Undersecretary of Education and Undersecretary of Finance of the municipal government of Bogota and previously served as Financial Vice President of Fiducolombia. She served as Chief Executive Officer of Organización Terpel S.A.
from 2012 until 2020 and currently serves as a strategic advisor to its board of directors. She is also a member of the boards of directors of Grupo Energía de Bogotá, Terpel S.A., Geo Park S.A.S. and ETB S.A. Ms. Escovar has been an independent member of Bancolombia's Board of Directors since her appointment in 2020.
•Arturo Condo Tamayo was born in 1967. Mr. Condo holds a doctorate in business strategy and competitiveness from Harvard Business School. He is President of Universidad EARTH, a Costa Rican institution that educates leaders on sustainability in rural areas and in the past has been President of INCAE Business School and Director of the Latin American Center for Competitiveness and Sustainable Development (LACCSD). He has advised multilateral organizations like the IDB and the World Bank. In 2014, he launched Keyword Centroamérica, a strategic information company he chairs. He has been recognized by the World Economic Forum (WEF) as a Young Global Leader (YGL). He is a founding board member of the Global Business Oath Project, which seeks to change the ethical behavior of business leaders. Mr. Condo was also one of the founders and promoters of the Fintech Association of Central America and the Caribbean. He is a member of the boards of directors of Voces Vitales Costa Rica- NGO, Earth Ventures and The Commons Project. Mr. Condo has been an independent member of Bancolombia’s Board of Directors since his appointment in 2016.
•Silvina Vatnick was born in 1959. Ms. Vatnick holds a degree in economics from the University of Buenos Aires and a master’s degree in economics from UCEMA. She also received and MPhil in Macroeconomics and International Finance at Columbia University and completed a Management of Financial Institutions program at New York University. Her career has focused on macroeconomic policy, financial stability, bank and non-bank regulatory issuescorporate governance, access to finance, sustainability, and entrepreneurship. She has a solid technical expertise and a close understanding of the economies of Latin America, and the global economy after a distinguished career at the World Bank. Ms. Vatnick also has extensive experience in Central Banking and the management of financial institutions. She is cofounder and director of Global Outcomes LLC, a strategic advisory firm for companies, governments, and public and private institutions in Latin America and the globally. She has beenAdviser to the U.S. Treasury Department’s Office of Technical Assistance on financial and regulatory stability issues. She is also a member of the Corporate Governance Task Force at the OECD. Ms. Vatnick has been an independent member of Bancolombia’s Board of Directors since her appointment in 2021 and is the audit committee’s financial expert.
For additional information regarding the Board of Directors and its functions, see Item 10 Additional Information – B. Memorandum and Articles of Association – Board of Directors.
Senior Management
•Juan Carlos Mora Uribe was born in 1965. He has been CEO of Bancolombia since May 2016. Prior to his appointment as CEO, he was Vice President for Corporate Innovation and Digital Transformation, a post he held until 2015. He holds a bachelor's degree in business administration (BBA) from Universidad Eafit and an MBA degree from Babson College. Mr. Mora has wide experience in corporate finance and investment banking. Mr. Mora also previously served as Chief Risk Officer, Chief IT Officer, Chief Operating Officer of Bancolombia. He is a member of the boards of directors of Proantioquia, Acumen Latinoamérica, Asociación Nacional de Empresarios Colombianos (ANDI), Asociación Nacional de Instituciones Financieras (ANIF), Asobancaria and also chairs the Comité Universidad Empresa Estado – CUEE.
•Mauricio Rosillo Rojas was born in 1969. He has been the Business Vice President of Bancolombia since December 2023. Mr. Rosillo holds a law degree from Pontificia Universidad Javeriana, a degree in financial legislation from Universidad de Los Andes, a master’s degree in commercial and economic law from the University of Georgia and additional training in European Community law from the Free University of Brussels. Mr. Rosillo has held several positions in the public and private sectors, including General Secretary of Federación Colombiana de Compañías de Leasing (Fedeleasing), Interim Colombian Superintendency of Cooperatives ('Superintendente de Economia Solidaria encargado), Director of Financial Regulation of the Colombian Ministry of Finance, Supervisor of the Securities Market of the Colombian Securities Exchange and President of the Colombian Self-Regulatory Organization (Autoregulador del Mercado de Valores - AMV). He was the Chief Legal Officer of Bancolombia from December 2008 until September 2019, when he was appointed as Corporate Vice President, a position that he held until his appointment as Business Vice President. As Business Vice President he is responsible for proposing, implementing and controlling strategies aimed at generating value for Bancolombia’s businesses, aiming the consolidation and increase of Bancolombia's leadership in the market, among others.Mr. Rosillo is also a member of the board of directors of certain subsidiaries.
•Julián Mora Gómez was born in 1976. He has been the Corporate Vice President since December 2023. He holds a law degree and a degree in insurance from from Universidad Pontificia Bolivariana in Medellin and an MBA from the EADA Business School. Mr. Mora has held various roles in Bancolombia for more than 20 years, as a lawyer, commercial and regional manager of Fiduciaria Bancolombia, director of industry and trade of Banca de Inversión Bancolombia and CEO of Fiduciaria Bancolombia. He served as Chief Compliance Officer for Bancolombia Group from January 2022 until his appointment as Corporate Vice President. He has also been a Professor in Pontificia Universidad Javeriana in Bogota. As Corporate Vice President he directs and guides the ethical, human, regulatory, reputational and communications management teams. Mr. Mora is also a member of the board of directors of certain subsidiaries.
•Jaime Alberto Villegas Gutierrez was born in 1965. He has been the Vice President of Corporate Services since November 2016. He holds an industrial engineering degree and a graduate degree in finance from Universidad de los Andes. He has worked in the finance, operations and technology department of financial institutions such as Citibank and Standard Chartered Bank, the latter in Colombia, Peru, United Arab Emirates and Singapore. As Corporate Services Vice President he is responsible for supplying corporate, administrative, technological, operational, and project support services to the business units, ensuring the normal development of our activities in Colombia and other countries. Mr. Villegas is also a member of the board of directors of certain subsidiaries.
•Rodrigo Prieto Uribe was born in 1973. He has been Vice President of Corporate Risks since March 2011. He holds a degree in civil engineering from from Universidad EIA and has a master’s degree in economics from Universidad de los Andes and a master’s degree in finance from Instituto Tecnológico y de Estudios Superiores de Monterrey. Mr. Prieto has held positions in various departments of Bancolombia, including Risk, Investment Banking, Financial Planning, Strategic Planning and Corporate Project Management. He has also been a professor at several universities, including Universidad Eafit, Universidad EIA and Universidad de los Andes. As Vice President of Corporate Risks he is responsible for the design of the Bank's risk management strategy, and formulation of the risk appetite. Mr. Prieto is also a member of the board of directors of certain subsidiaries.
•José Mauricio Rodríguez Ríos was born in 1972. He has been the Vice President of Internal Audit since August 2020. He has more than 25 years of experience in auditing, and has worked for The Bank since 1994. He previously served as Vice President of Internal Audit at Banco Agrícola. Mr. Rodríguez is a Certified Public Accountant from Universidad de Medellín and an IT Technician from Politecnico Colombiano. He also holds an Executive MBA from Centro Universitario Villanueva and a postgraduate degree in Finance from Universidad de Medellín. Mr. Rodríguez is also certified in international risk (CRMA) by IIA – The Institute of Internal Auditors- and is licensed to perform quality assessments (QA). As Vice President for Internal Audit, he is responsible for advising and coordinating the continuous evaluation of the Internal Control System of our companies as well as leading the development of the organizational control culture.
•Cipriano López González was born in 1974. He has been the Vice President of Innovation and Sustainability Vice President since 2019. He holds a mechanical engineering degree from Universidad Pontificia Bolivariana, an MBA degree from the Bordeaux School of Business in France, a master’s in energy, sustainability and circular economy from the Polytechnic of Milan, and has participated in complementary executive programs at Harvard, Stanford and the Wharton Business School. He has previously worked at SAB-Miller Group as negotiating director, DANONE Group as head of the cereal products category for Europe, and at L’Oreal in France and Spain. From 2010 to 2018 he was CEO of Haceb Industries S.A., where he led the innovation and digital transformation process, developing new businesses, alliances and a customer-centric culture. As Vice President of Innovation and Sustainability, he is responsible for enabling the implementation of innovation, sustainability, new ventures, social impact strategies and alliances in all regions where we operate.
•Claudia Echavarría Uribe was born in 1979. She has served as Legal Vice President and General Counsel since December 2019. She is a lawyer from Universidad Pontificia Bolivariana, has a Master of Laws degree from Columbia University Law School and is a member of the New York Bar. She was the corporate vice president and the general counsel of Almacenes Exito S.A. and held different positions in the legal department of Bancolombia and in Banca de Inversion Bancolombia between 2004 and 2015. As Legal Vice President, she is responsible for orienting and establishing Bancolombia's legal policies, taking into account the corporate and legal framework, in order to identify, manage and mitigate legal risks. Ms. Echavarría is also a member of the board of directors of certain subsidiaries.
•Mauricio Botero Wolff was born in 1978. He has been Bancolombia's Vice President of Strategy and Finance since August 2024. He holds a degree in administrative engineering from Universidad EIA, a postgraduate degree in economics from Universidad de Los Andes, and an MBA from Emory University, which he completed as a
Fulbright scholar. He has held different positions in Bancolombia, including as a Corporate Trader in the Treasury department, Investor Relations Manager, Acquisitions Integration Manager and Corporate Projects Manager. He became Vice President of Administrative Services in 2016, a position that became the Vice President of Customer and Employee Services in 2022. As Vice President of Strategy and Finance, he is responsible for directing and integrating the formulation and execution of the corporate strategy and the financial and treasury management, for our companies and businesses in all geographies. Mr. Botero is also a member of the board of directors of certain subsidiaries.
Jose Humberto Acosta, who held the position of Financial Vice President until July 30, 2024, presented his resignation upon reaching retirement age, which was accepted by the Board of Directors.
There are no family relationships between the directors and senior management of Bancolombia listed above.
No arrangements or understandings have been made by major shareholders, customers, suppliers or others pursuant to which any of the above directors or members of senior management were selected.
The Good Governance Code of Bancolombia sets a mandatory retirement age of 65 years for senior management.
B.Compensation of Directors and Officers
In 2024, Bancolombia paid each member of the Board of Directors who resides in Colombia a fee of COP 13.42 million per month for membership of the Board, and another fee of COP 13.42 million per month for membership and participating in at least one meeting for each Support Committee.
In 2024, Bancolombia paid each member of the Board of Directors who does not reside in Colombia a fee of USD 3.336 per month for membership of the Board, and another fee of USD 3.336 for membership and participating in at least one meeting for each Support Committee. In addition, they receive an allowance of USD 278 per day when they travel.
In accordance with the current policy, 70% of directors’ fees are paid in cash each month and the remaining 30% is paid through a contribution to a fund that invests in Bancolombia shares. Directors can withdraw money from the fund two years after the respective contribution is made.
The directors received no other compensation or benefits, and there is no stock option plan for them.
The Board maintains a Designation, Compensation and Development Committee, which consists of three Board members, supports the Board in matters related to the selection, appointment, hiring, and remuneration policies for senior management officers and other matters related to Bancolombia's remuneration model.
The Board of Directors approves any salary increases for the Chief Executive Officer of Bancolombia and salary policies for other employees.
Consistent with Colombian law, Bancolombia does not publish information regarding the compensation of its individual officers. The aggregate amount of remuneration paid by Bancolombia to senior management during the fiscal year ended December 31, 2024, is disclosed in Note 28. Related party transactions of consolidated financial statements.
Bancolombia has an incentive plan that awards bonuses annually or semi-annually to its employees. In determining the amount of any bonuses, Bancolombia takes into consideration the overall return on equity of Bancolombia and its executives’ achievement of established goals. Bonuses are paid in cash and through an investment fund that invests in Bancolombia shares. Employees can withdraw from the fund three years following the respective contributions are made.
C.Board Practices
The following table reflects the composition of the Board of Directors of Bancolombia as of March 28, 2025
|
|
|
|
|
|
|
|
|
| Name |
Elected to the Board |
Term Expires |
| Luis Fernando Restrepo Echavarría |
2016 |
2026 |
| Andrés Felipe Mejía Cardona |
2016 |
2026 |
| Arturo Condo Tamayo |
2016 |
2026 |
| Juan David Escobar Franco |
2020 |
2026 |
| Sylvia Escovar Gómez |
2020 |
2026 |
| Silvina Vatnick |
2021 |
2026 |
| Ricardo Jaramillo Mejía |
2024 |
2026 |
|
|
|
Luis Fernando Restrepo Echavarría, Andres Felipe Mejía Cardona, Sylvia Escovar Gomez, Arturo Condo Tamayo and Silvina Vatnick are independent directors in accordance with Bancolombia's bylaws, Colombian laws and NYSE standards. Consequently, the majority of the Board of Directors is composed of independent directors. Neither Bancolombia nor its subsidiaries have any type of agreement with Bancolombia's directors providing for benefits upon termination of their term.
The following are the current terms of office and the period served for members of senior management. There are no defined expiration terms. The members of senior management can be removed by the Board of Directors.
|
|
|
|
|
|
| Name |
Period Served |
| President |
|
| Juan Carlos Mora Uribe |
Since 2016 |
| Vice Presidents |
|
| Mauricio Rosillo Rojas |
Since 2008 |
| Julián Mora Gómez |
Since 2023 |
| Jaime Alberto Villegas Gutierrez |
Since 2016 |
| Rodrigo Prieto Uribe |
Since 2011 |
| Jose Mauricio Rodriguez Rios |
Since 2021 |
| Cipriano Lopez Gonzalez |
Since 2019 |
| Claudia Echavarría Uribe |
Since 2019 |
| Mauricio Botero Wolff |
Since 2024 |
For further information about Bancolombia’s corporate governance practices please see Item 16. Reserved – B. Corporate Governance and Code of Ethics.
Audit committee
Bancolombia’s Board of Directors, in compliance with Colombian banking regulations, maintains an Audit Committee that is currently comprised of three (3) members of which at least three (3) must be independent directors. The current members of the Audit Committee are Arturo Condo Tamayo, Andrés Felipe Mejia Cardona and Silvina Vatnick. The Board of Directors re-elected them as members of the Audit Committee on September 24, 2024. Each of them serves as an independent member of the Board of Directors.
Pursuant to the applicable U.S. regulations for foreign private issuers, Ms. Silvina Vatnick has served as the financial expert of the Audit Committee since May 2021, replacing Sylvia Escovar Gomez. In addition, the Committee has an independent advisor and expert in financial reporting and auditing matters, who provides advice to the Committee on such matters. Arturo Condo Tamayo serves as a cybersecurity expert.
For a broader description of the experience and qualifications of Mr. Condo Tamayo, Mr. Mejia Cardona and Ms.Vatnick, see Item 6. Directors, Senior Management and Employees—A. Directors and Senior Management.
This Committee has a charter approved by the Board of Directors that establishes its composition, organization, objectives, duties, responsibilities and extension of its activities. The main purpose of this Committee is to support the Board of Directors by overseeing the effectiveness of Bancolombia's internal controls. Other specific responsibilities of the Committee include:
(i) overseeing the integrity of the financial statements, financial reporting process and systems of internal accounting and financial controls.
(ii) proposing external auditor candidates to the Board of Directors and the Shareholder´s General Meeting, and evaluating their qualifications and independence.
(iii) reviewing with management and external auditors the annual and interim financial statements and reporting the results to the Board of Directors.
(iv) approving the annual internal audit plan and its modifications.
(v) approving the annual budget, overseeing the activities and evaluating the performance of the Internal Auditor, who reports directly to the audit committee.
(vi) receiving and reviewing reports issued by internal and external auditors.
(vii) evaluating the design and implementation of programs and controls aimed to prevent, detect and adequately manage risks related to internal fraud and misconduct.
(viii) being informed about relevant fraud and misconduct cases related to Bancolombia's employees.
(ix) taking measures in cases of fraud that could affect the quality of the financial information.
(x) reviewing non-recurrent operations with related parties, according to the Good Governance Code.
(xi) evaluating and advising the potential conflicts of interests of directors and members of senior management.
(xii) monitoring compliance with ESG commitments and the closing of identified gaps.
Further, the Internal Auditor of Bancolombia and the Compliance Officer report to the Audit Committee. Likewise, Bancolombia has an Ethics Committee that reports to the Audit Committee and is in charge of defining general policy issues and giving guidelines on ethics, conduct and integrity, as well as defining corporate positions in the face of difficult ethical dilemmas. From time to time, the Audit Committee may be informed of diagnostic studies of the ethical culture in Bancolombia.
The Audit Committee meets and reports to the Board of Directors at least monthly and must present an annual report of its activities at the General Shareholders’ Meeting. The Committee met 16 times during 2024.
The shareholders establish the remuneration of the members of the Audit Committee in their general meeting.
Designation, Compensation and Development Committee
This committee is composed of three (3) members of which at least two (2) must be independent directors, who are elected by the Board itself. The Manager of Human Resources of Bancolombia acts as secretary of this Committee.
The Designation, Compensation and Development Committee has a charter approved by the Board of Directors that governs matters such as its composition and meeting invitees, and the roles, responsibilities and internal rules of the Committee.
The Designation, Compensation and Development Committee supports the Board of Directors in matters related to the appointment, hiring, remuneration and compensation policies for senior management officers and other matters related to Bancolombia's remuneration model.
The duties of the Designation, Compensation and Development Committee are:
(i) proposing to the Board of Directors the succession policy for the senior management of Bancolombia.
(ii) evaluating and proposing to the Board of Directors candidates for the positions of CEO and Corporate Vice Presidents of Bancolombia.
(iii) proposing to the Board of Directors the remuneration policy for the senior management of Bancolombia. When the remuneration policy for Bancolombia's senior management includes a variable component linked to Bancolombia shares, it shall be submitted for approval by the General Assembly of Shareholders.
(iv) supervising compliance with the policies on appointment, remuneration, and succession of key executives of The Bank.
(v) periodically reviewing the remuneration programs for senior management and proposing updates as appropriate.
(vi) presenting to the Board of Directors proposals for corporate human management policies within its competence, such as annual salary increases, non-traditional work schemes, inclusion policies, among others.
(vii) addressing any other matters related to the appointment and remuneration of key executives.
The members of the Designation, Compensation and Development Committee are Ricardo Jaramillo Mejía, Luis Fernando Restrepo Echavarria and Sylvia Escovar Gómez. The committee met twice during 2024.
The shareholders establish the remuneration of the members of the Committee at the ordinary General Shareholders' Meeting.
Good Governance Committee
The Good Governance Committee is composed of three (3) members of the Board of Directors, of which at least two (2) must be independent directors. Bancolombia’s CEO attends this committee on a permanent basis.
The Good Governance Committee has a charter approved by the Board of Directors that governs matters such as its composition and meeting invitees, and the roles, responsibilities and internal rules of the Committee.
The purpose of this Committee is to assist the Board of Directors in overseeing compliance with corporate governance policies, reviewing changes to the policies, and monitoring the results of good governance assessments. The Committee also evaluates the qualifications, compatibility and independence of candidates to join the Board of Directors, as well as the selection criteria, and informs shareholders of the results of this procedure prior to the General Shareholders Meeting. The Committee prepares the calendar of meetings of the Board of Directors and makes recommendations for the agenda.
This Committee also supports the Board of Directors in cases related to the implementation of succession policies of the Board of Directors and its remuneration.
The members of the Good Governance Committee are Arturo Condo Tamayo, Sylvia Escovar Gómez and Luis Fernando Restrepo Echavarria. The committee met six times in 2024.
The shareholders establish the remuneration of the members of the Committee at the ordinary General Shareholders' Meeting.
Risk Committee
Bancolombia’s Risk Committee consists of three (3) members of the Board of Directors, of which at least two (2) must be independent directors.
The Risk Committee has a charter approved by the Board of Directors that establishes its composition, organization, objectives, duties, responsibilities and activities.
The main purpose of this Committee is to support the approval, follow-up and control of policies, guidelines and strategies for risk management. In addition, this Committee supports Bancolombia's Board of Directors in matters such as knowledge and understanding of the risks assumed by Bancolombia and the monitoring of its risk appetite, including its subsidiaries, and the capital required to administer such risks.
Among other responsibilities, the Risk Committee supports the Board of Directors in verifying compliance with general exposure and concentration limits, the risk governance structure, and strategies for managing risks, capital, liquidity, and conflicts of interest and their disclosure.
The Committee advises the Board of Directors on risk culture, including the attitudes and behaviors of employees that influence risk management.
The Committee also oversees risks related to sustainability, for example, climate risks, and supports the Board of Directors in the discussion, management and oversight of these risks.
The members of the Risk Committee are Andrés Felipe Mejía Cardona, Juan David Escobar Franco and Silvina Vatnick. The Risk Committee meets monthly and met twelve times in 2024.
The shareholders establish the remuneration of the members of the Committee at the ordinary General Shareholders' Meeting.
Technology and Cybersecurity Committee
Bancolombia's Technology and Cybersecurity Committee consists of at least three (3) members of the Board of Directors, of which at least one must be an expert on cybersecurity matters.
The Technology and Cybersecurity Committee has a charter approved by the Board of Directors which establishes its composition, organization, objectives, duties, responsibilities and activities.
The main purpose of this Committee is to support the Board of Directors in technology and cybersecurity strategy, oversight and governance. The Committee also enhances the Board’s knowledge of technology trends and Bancolombia’s technological operations. The Committee also must stay informed about significant cybersecurity or technology events and supports the Board of Directors in preventing and mitigating channel unavailability events. It also periodically analyzes reports presented by senior management on technology and cybersecurity risk exposure, as well as substantial changes in exposure, compliance with tolerance levels, and the mitigation and management measures adopted.
The members of the Technology and Cybersecurity Committee are Arturo Condo Tamayo, Silvina Vatnick, Andrés Felipe Mejía Cardona and Juan David Escobar Franco. The Committee met four times in 2024.
The shareholders establish the remuneration of the members of the Committee at the shareholders' general meeting.
For further information about our corporate governance practices, please see Item 16. Reserved – B. Corporate Governance and Code of Ethics.
D.EMPLOYEES
The following table sets forth the number of our employees for the last three fiscal years:
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| As of December 31, |
Total number of employees
(Bancolombia and its consolidated subsidiaries) |
| 2024 |
34,114 |
| 2023 |
34,756 |
| 2022 |
33,140 |
The following table sets forth the number of our employees for 2024:
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| Bancolombia and its consolidated subsidiaries |
| Company |
Number of employees |
| Bancolombia S.A, Valores Bancolombia, Fiduciaria Bancolombia and Banca de Inversión (Colombia) |
23,113 |
| Banco Agrícola (El Salvador) |
3,079 |
| Banistmo (Panamá) |
2,326 |
| Bancolombia Panamá and Puerto Rico |
181 |
| BAM (Guatemala) |
3,691 |
| Subtotal |
32,390 |
| Others consolidated subsidiaries |
1,724 |
| Total Bancolombia and its consolidated subsidiaries |
34,114 |
As of December 31, 2024, we had 34,114 employees; approximately 72.8% are located in Colombia, 9% in El Salvador, 10.8% in Guatemala, and 7.4% in Panama, Puerto Rico and the United States. Of the total, 47.3% are operational personnel and 52.7% are professional or managerial employees.
Companies with active union membership are Bancolombia, Valores Bancolombia, Banca de Inversión Bancolombia, and Fiduciaria Bancolombia. The trade union density is 41.6% in these companies. In line with our Social Dialogue Model, our Collective Bargaining Agreement (CBA) is effective from November 2023 until October 2026 for all operating personnel, regardless of whether they are union members. The CBA coverage rate is 48% of the total employees in those companies.
Five trade unions submitted independent lists of petitions requesting the intervention of arbitral tribunals to solve pending pleas. However, the CBA reached with the more representative unions (Uneb and Sintrabancol) applies to all operating personnel of other unions.
During 2024, we employed an average of 255 persons per month through temporary employment agencies.
We offer benefits to our employees and their families. In 2024, these benefits included loans, savings programs, insurance, psychological support, and financial advice, in addition to personal development benefits, with an investment of more than USD 256 million and covering nearly 100% of the workforce.
E.Share Ownership
The following director owned common shares in Bancolombia on December 31, 2024: Juan David Escobar Franco.
None of the directors or members of senior management owned preferred shares in Bancolombia on December 31, 2024.
None of the directors or members of senior management owned shareholdings, individually or in the aggregate, exceeding 1% of Bancolombia’s outstanding common shares, preferred shares or a combination of both classes of shares.
As of December 31, 2024, there are no stock options to acquire any of Bancolombia’s outstanding common shares or preferred shares or share-based payments to any employee.
F.Disclosure of a registrant's action to recover erroneously awarded compensation
Pursuant to Section 303A.14 of the NYSE Listed Company Manual (Erroneously Awarded Compensation), each listed issuer that does not qualify for an exemption set forth in the rule was required to adopt a recovery policy by December 1, 2023. Complying with the rule, the Board of Directors of Bancolombia approved the implementation of a Recovery Policy (or Clawback Policy) on November 20, 2023.
Bancolombia was not required to prepare an accounting restatement that required recovery of erroneously awarded compensation pursuant to its compensation recovery policy, nor was there any outstanding balance at the end of 2024 of erroneously awarded compensation to be recovered from the application of the policy to a prior restatement.
ITEM 7 Major Stockholders and Related Party Transactions
A.Major stockholders
In accordance with Bancolombia's bylaws, there are two classes of authorized and outstanding stock: common shares and preferred shares. Each common share entitles its holder to one vote at meetings of our stockholders, and there are no differences in the voting rights conferred by any of the common shares. Under Bancolombia's bylaws and Colombian corporate law, holders of preferred shares (and consequently, holders of ADSs) have no voting rights, other than in limited circumstances as described in Item 10. Additional Information – B. Memorandum and Articles of Association – Description of Share Rights, Preferences and Restrictions – Voting Rights – Preferred Shares.
The following table sets forth, solely for purposes of United States securities laws, certain information regarding the beneficial ownership of Bancolombia’s capital stock by each person known to Bancolombia to own beneficially more than 5% of each class of Bancolombia’s outstanding capital stock as of December 31, 2024. A beneficial owner includes anyone who has the power to receive the economic benefit of ownership of the securities.
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| Name |
Common Shares |
Preferred Shares |
% Ownership of
Common
Shares(1)
|
% Ownership of
Preferred
Shares(1)
|
% Ownership of
Total Shares (1)
|
|
Grupo de Inversiones Suramericana S.A (2) |
235,012,336 |
— |
46.11 % |
— % |
24.43 % |
|
| ADR Program |
— |
122,163,696 |
— % |
27.02 % |
12.70 % |
|
| Fondo Bursátil ISHARES MSCI COLCAP |
18,515,507 |
32,847,367 |
3.63 % |
7.27 % |
5.34 % |
|
| Fondo de Pensiones Obligatorias Porvenir Moderado |
41,754,723 |
8,940,845 |
8.19 % |
1.98 % |
5.27 % |
|
(1)Common shares have one vote per share; preferred shares have limited voting rights under certain circumstances specified in the bylaws of Bancolombia filed as Exhibit 1 to this Annual Report
(2)Represents ownership of Grupo de Inversiones Suramericana S.A. directly and through its subsidiaries: Grupo de Inversiones Suramericana Panamá
S.A., Inversiones y Construcciones Estrategicas S.A., CIA. Suramericana de Seguros de Vida S.A., Cia. Suramericana de Seguros S.A., Suratep.
As of December 31, 2024, a total of 509,704,584 common shares and 452,122,416 preferred shares were registered in our stockholder registry in the name of 43,522 stockholders. A total of 122,163,696 representing 27.02% of preferred shares were part of the ADR Program and were held by 34 record holders registered in The Bank of New York Mellon’s registered stockholder list. Given that some of the preferred shares and ADSs are held by nominees, the number of record holders may not be representative of the number of beneficial owners.
During the past year, the ADR program decreased as a percentage of our total ownership, from 13.56% on December 31, 2023, to 12.70% by the end of December 2024. Fondo de Pensiones Obligatorias Porvenir Moderado, a Colombian private pension fund manager, decreased its total ownership percentage to 5.27% as of December 31, 2024, from 5.49% as of December 31, 2023. Finally, Fondo de Pensiones Obligatorias Protección Moderado, another Colombian private pension fund manager, decreased its ownership percentage to 4.68% as of December 31, 2024, from 5.12% as of December 31, 2023.
There are no other significant changes in the percentage of ownership held by major shareholders during the last year.
There are no arrangements known to Bancolombia that may at a subsequent date result in a change in control of the company. To the extent known to Bancolombia, and in accordance with Colombian law, Bancolombia is not directly or indirectly owned or controlled by any other entity or person. For further information on corporate structure changes see Recent Developments section of Item 4.A.
.
B.RELATED PARTY TRANSACTIONS
Our Good Governance Code provides that in no event may any transaction regarding Bancolombia's shares that is carried out by any officer, director or manager be executed for speculative purposes, which would be presumed if the following three conditions were met:
(a) if suspiciously short lapses of time exist between the purchase and the sale of shares; (b) if situations arise proving to be exceptionally favorable for Bancolombia;
(c) if significant profits are obtained from this transaction.
All transactions that we enter into with our directors, officers and senior management are subject to the limitations and conditions set forth by the applicable law governing the prevention, handling and resolution of conflicts of interest.
Over time, Bancolombia has granted loans and engaged in other transactions with related parties. Such loans were made in the ordinary course of business, on substantially the same terms, including interest rates and required collateral, as those prevailing at the time for comparable transactions with other persons, and did not involve more than the normal risk of collectability, and do not present any additional unfavorable terms for Bancolombia.
On a non-consolidated basis, Bancolombia had a total amount of COP 2,470,820 million in loans outstanding to related parties as of February 28, 2025. The principal amounts outstanding as of February 28, 2025, included in this amount are:
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| Entity |
Amount
outstanding |
Accrued
Interest |
Average
Interest rate |
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In millions of COP, except percentages |
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| Subsidiaries Grupo Sura |
2,323,374 |
|
37,129 |
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12.19 |
% |
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For additional information regarding Bancolombia's related party transactions, please see Note 28. Related party transactions to the Consolidated Financial Statements.
C.Interest of Experts and Counsel
Not applicable.
ITEM 8 FINANCIAL INFORMATION
A.CONSOLIDATED FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION
A.1CONSOLIDATED FINANCIAL STATEMENTS
Reference is made to pages F-1 through F-209.
A.2Legal Proceedings
We are involved in normal collection proceedings and restructuring proceedings with respect to certain borrowers as well as other legal proceedings. For further information regarding legal proceedings, see Note 21.2 - Provisions and Contingent Liabilities to the Consolidated Financial Statements.
A.3Dividend Policy
The declaration, amount and payment of dividends are based on Bancolombia’s unconsolidated earnings. Dividends must be approved at the ordinary annual shareholders’ meeting upon the recommendation of the Board of Directors. Under the Colombian Commercial Code, after payment of income taxes and appropriation of legal and other reserves, and after setting off losses from prior fiscal years, Bancolombia must distribute to its stockholders at least 50% of its annual net income or 70% of its annual net income if the total amount of reserves exceeds its outstanding capital. Such dividend distribution must be made to all stockholders, in cash or in issued stock of Bancolombia, as may be determined by the stockholders, and within a year from the date of the ordinary annual stockholders’ meeting in which the dividend was declared. According to Colombian law, the minimum dividend per share may be waived by an affirmative vote of the holders of 78% of the voting shares present at the stockholders’ meeting.
The annual net profits of Bancolombia must be applied as follows: (i) first, an amount equal to 10% of Bancolombia’s net profits to a legal reserve until such reserve is equal to at least 50% of Bancolombia’s paid-in capital; (ii) second, to the payment of the minimum dividend on the preferred shares (for more information, see Item 10. Additional Information – B. Memorandum and Articles of Association); and (iii) third, as may be determined in the ordinary annual stockholders’ meeting by the vote of the holders of a majority of the shares entitled to vote.
The proposal for the distribution of profits of the Board of Directors will seek to maintain an adequate capital structure and an optimal level of solvency to meet the expected growth of the business, maintaining prudent standards above regulatory levels.
The following table sets forth the annual cash dividends paid on each common share and each preferred share during the periods indicated:
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Dividends declared with respect to net
income earned in: |
Cash dividends
per share(1)(2)
|
Cash dividends
per share(1)(3)
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(COP) |
(U.S.dollars) |
| 2024 |
3,900 |
0.943 |
| 2023 |
3,536 |
0.899 |
| 2022 |
3,536 |
0.735 |
| 2021 |
3,120 |
0.831 |
| 2020 |
260 |
0.071 |
(1)Includes common shares and preferred shares.
(2)Cash dividends for 2024,will be paid in a single payment on April 1, 2025.
(3)Amounts have been translated from pesos at the Representative Market Rate in effect at the end of the month in which the dividends were declared in March. In 2024, the amount were converted from pesos at the representative market rate at the end of February.
B.SIGNIFICANT CHANGES
There have not been any significant changes since the date of the annual Consolidated Financial Statements included in this document.
ITEM 9 THE OFFER AND LISTING
A.OFFER AND LISTING DETAILS
Bancolombia’s ADSs, each representing four preferred shares, have been listed on the NYSE since 1995, where they are traded under the symbol 'CIB'. Bancolombia’s preferred shares are also listed on the Colombian Securities Exchange.
ADRs evidencing ADSs are issuable by The Bank of New York Mellon (the 'Depositary'), as Depositary, pursuant to the Deposit Agreement, dated July 25, 1995, entered into by Bancolombia, the Depositary, the owners of ADSs from time to time and the owners and beneficial owners from time to time of ADSs, pursuant to which the ADSs are issued (as amended, the 'Deposit Agreement'). The Deposit Agreement was amended and restated on January 14, 2008. Copies of the Deposit Agreement are available for inspection at the Corporate Trust Office of the Depositary, currently located at 101 Barclay Street, New York, New York 10286, and at the office of Fiduciaria Bancolombia, as agent of the Depositary, currently located at Carrera 48, No. 26 - 85, Medellin, Colombia or Carrera 11 No. 91-42, Bogota, Colombia. The Depositary’s principal executive office is located at One Wall Street, New York, New York 10286.
On September 30, 1998, Bancolombia filed a registration statement on Form F-3 with the SEC to register ADSs evidenced by ADRs, each representing four preferred shares, issued in connection with the merger between BIC and Banco de Colombia for resale by the holders into the U.S. public market from time to time. On January 24, 2005, the Board determined to deregister the unsold ADSs registered under the registration statement on Form F-3. On March 14, 2005, Bancolombia filed an amendment to the registration statement deregistering the remaining unsold ADSs. On August 8, 2005, Bancolombia filed, through the Depositary, a registration statement on Form F-6 registering 50,000,000 ADSs evidenced by ADRs in connection with the Conavi/Corfinsura merger.
On May 14, 2007, Bancolombia filed an automatic shelf registration statement on Form F-3 with the SEC to register an indeterminate amount of debt instruments, preferred shares and rights to subscribe for preferred shares in connection with the subsequent offerings which took place in the second and third quarter of 2007. On January 14, 2008, by filing Form F-6 with the SEC, Bancolombia increased the amount of its ADR program up to 400,000,000 American Depositary Shares and registered some amendments to the Depositary Agreement of ADSs between Bancolombia and The Bank of New York Mellon. On July 13, 2010, Bancolombia filed an automatic shelf registration statement on Form F-3 with the SEC to register an indeterminate amount of debt instruments, preferred shares, American Depositary Shares representing preferred shares and rights to subscribe for preferred shares in connection with the subsequent offering of subordinated debt instruments, which took place on July 19, 2010. On February 6, 2012, Bancolombia priced a public offer of 63,999,997 preferred shares, which represented an aggregate amount of approximately COP 1,680 billion. On March 3, 2014, Bancolombia priced a public offer of 110,000,000 preferred shares, which represented an aggregate amount of approximately COP 2,656 billion.
On April 25, 2019, Bancolombia filed an automatic shelf registration statement on Form F-3 with the SEC to register an indeterminate amount of debt instruments, preferred shares and rights to subscribe for preferred shares. On April 27, 2022, Bancolombia filed an automatic shelf registration statement on Form F-3 with the SEC to register an indeterminate amount of debt instruments, preferred shares and rights to subscribe for preferred shares.
B.Plan of Distribution
Not applicable.
C.MARKETS
The Colombian Securities Exchange is the principal non-U.S. trading market for the preferred shares and the sole market for the common shares. As of December 31, 2024, the market capitalization for Bancolombia’s preferred shares based on the closing price in the Colombian Securities Exchange was COP 15,906 billion. (Bancolombia’s total market capitalization, which includes the common and preferred shares, was COP 35,071 billion or USD 7.95 billion as of the same date.)
There are no official market makers or independent specialists on the Colombian Securities Exchange to ensure market liquidity and, therefore, orders to buy or sell in excess of corresponding orders to sell or buy will not be executed. The aggregate equity market capitalization of the Colombian Securities Exchange, as of December 31, 2024, was COP 320,568 billion (USD 72,705 billion), with 74 companies listed as of that date.
On December 11, 2024, Bancolombia announced that the Colombian Securities Exchange ('BVC') authorized the indefinite renewal of its liquidity program in Colombia for its ordinary and preferred shares, under a contract with Credicorp Capital Colombia. This program seeks to increase the number of transactions involving Bancolombia's shares through purchase and sale orders entered by Credicorp Capital Colombia in the stock market, enabling price formation. These mechanisms contribute to promoting liquidity and mitigating volatility in stock trading, facilitating market entry and exit mechanisms for investors.
D.Selling Stockholders
Not applicable.
E.Dilution
Not applicable.
F.Expenses of the Issue
Not applicable.
ITEM 10 ADDITIONAL INFORMATION
A.Share Capital
Not applicable.
B.Memorandum and articles of association
Set forth below is certain information concerning Bancolombia’s capital stock and a brief summary of certain significant provisions of Bancolombia’s bylaws and Colombian corporate law. This description does not purport to be complete and is qualified by reference to Bancolombia’s bylaws (an English translation of which is attached as Exhibit 1 to this Annual Report) and to Colombian corporate law.
Bancolombia’s Corporate Purpose
Pursuant to Article 3 of its bylaws, Bancolombia’s corporate purpose consists of all kinds of banking operations, business, acts and services. Subject to applicable law, Bancolombia may carry out all the activities and investments authorized to banks. Bancolombia is also authorized to participate in the capital stock of other companies, subject to any restrictions imposed by applicable law.
Board of Directors
As of the date of filing of this Annual Report, Bancolombia’s Board of Directors is composed of seven directors, elected for a two-year term, with no alternate directors. For additional information regarding Bancolombia’s current directors please see Item 6.A, Directors and Senior Management.
After being designated, all of the members of the Board of Directors need an authorization from the SFC. The SFC assesses whether the director has an adequate profile for the position according to the requirements under Colombian Law.
According to Decree 3923 of 2006, the election of independent directors must be in a separate ballot from the ballot to elect the rest of the directors, unless reaching the minimum number of independent directors required by law or by the bylaws is assured, or when there is only one list that includes the minimum number of required independent directors. According to Law 964 of 2005, 25% of the members of the Board of Directors shall be independent. An independent director is a director who is NOT:
(i) an employee or director of the issuer or any of its parent or subsidiary companies, including all those persons acting in said capacity during the year immediately preceding that in which they were appointed, except in the case of an independent member of the Board of Directors being re-elected;
(ii) shareholders, who either directly or by virtue of an agreement direct, guide or control the majority of the entity’s voting rights or who determine the majority composition of the administration, the board of directors or other corporate bodies of this same entity;
(iii) a partner or employee of any association or firm that provides advisory or consultancy services to the issuer or to companies who belong to the same economic group to which the issuer in question belongs, in the event that income obtained from such services represent for said association or firm twenty percent (20%) or more of its total operating income;
(iv) an employee or director of a foundation, association or institution that receives significant donations from the issuer. The term 'significant donations' is quantified as being twenty percent (20%) or more of the total amount of donations received by the respective institution;
(v) an administrator of any entity on whose board of directors a legal representative of the issuer participates
(vi) any person who receives from the issuer any kind of remuneration different from fees as a member of the board of directors, of the audit committee or any other committee set up by the board of directors.
The Good Governance Code, aiming to strengthen the independence of the Board, establishes the following criteria to qualify a director as non-independent:
i.Employees or managers of Bancolombia or of any of its affiliates, subsidiaries or controllers, or former employees or managers of Bancolombia or of any of its affiliates, subsidiaries or controllers, during the two-year period immediately prior to the appointment, except in the case of the re-election of an independent person.
ii.Any of the following persons: (a) the relevant shareholders (b) any person that determines the majority composition of Bancolombia's administrative or management bodies.
iii.Shareholders, employees or advisers to shareholders, who directly or through an agreement, direct, guide or control more than ten percent (10%) of the voting rights of the entity or determine the majority of the entity´s administrative, management or control bodies.
iv.Partners or employees of associations or companies that provide services or other concepts, or receive payments from Bancolombia Group, for: (i) an amount greater than the equivalent to US $ 250,000 or corresponding to two percent (2%) or more of the total income of the applicable association or company (whichever is higher) for the last three years, or (ii) when the income for said association or company represents a value corresponding to twenty percent (20%) or more of the association or company´s operating income for the prior year.
v.Partners or employees of legal entities or similar (e.g. trusts) that have made payments to Bancolombia or its affiliates, subsidiaries or controllers, for a value greater than US $1 Million or corresponding to two percent (2%) of the total income of the respective company or association (whichever is higher) in the last three years, except for interest payments or financial services rendered by Bancolombia or its subsidiaries in the ordinary course of business.
vi.Employees or directors of legal entities or similar (e.g., trusts) that receive significant donations from Bancolombia, or from individuals or corporate entities that own shares of Bancolombia that represent zero point five percent (0.5%) or more of the voting rights of Bancolombia. A donation will be considered significant when it represents more than twenty percent (20%) of donations received by the employee, director of the non-profit entity, association or society.
vii.Directors, senior management or key executives of an entity whose board of directors includes a legal representative of Bancolombia.
viii.People who receive from the Bancolombia Group any remuneration other than fees as members of the Board of Directors, the audit committee or any other committee created by the Board of Directors, or who have received remuneration for an amount greater than U.S. $120,000 for 12 months, in the last three years, other than payments for being a member of the Board of Directors or a Board committee.
ix.Current partners or employees, or individuals who were, within the past three years, partners or employees of the external auditors.
x.Directors, senior management or key executives or legal representatives of another entity with respect to which any of the current Directors, senior management or key executives or representatives of Bancolombia is a member of the compensation committee.
The electoral quotient system will be applied for the election of members of the Board of Directors or any collegiate committee. This shall be determined by dividing the total number of votes validly cast by the number of persons to be elected. The count will begin with the slate that received the largest number of votes and in descending order. From each slate, as many names as the quotient in the number of votes cast by it will be declared elected, and if there are any places that remain to be filled, these will correspond to the highest residuals, counting them in the same descending order. Blank ballots will only be counted to determine the electoral quotient. If, at the time of the count, a person on one slate has already been elected because he or she appears on a previous slate, the person that comes next in the order of placement shall be chosen. In the event of a tie in the residuals, in elections performed as provided for in the above rule, the position
will be decided by drawing lots.
The directors of Bancolombia must abstain from participating, directly or through an intermediary, on their own behalf or on behalf of a third party, in activities that may compete against Bancolombia or in conflict-of-interest transactions that may generate a conflict of interest situation. When a director finds that in the exercise of their duties they may be faced with a conflict of interest, they or any other director aware of the potential conflict, shall immediately inform the other members of the Board of Directors. The director in a conflict situation shall, in any event, refrain from discussing and deciding on the matter giving rise to the conflict of interest; and the Board shall deliberate and decide without the participation of the directors in conflict if they are not required to form the quorum required to deliberate and decide. Otherwise, the dispute will be submitted to the competent body according to the regulations, including special regulations for financial conglomerates.
Pursuant to the bylaws of Bancolombia, the Board of Directors has the power to authorize the execution of any agreement, within the corporate purpose of Bancolombia, and to adopt the necessary measures in order for Bancolombia to accomplish its purpose, except for agreements that, by law, can only be authorized at the Shareholders’ Meeting. Furthermore, the Board of Directors must authorize certain transactions such as the issuance of Bancolombia’s bonds or common shares up to the total amount of authorized capital stock.
With respect to the appointment of directors of the other companies of Bancolombia Group, the Good Governance Code establishes that Bancolombia's CEO, with the support of the Corporate Vice Presidents, is responsible for appointing the nominees as members of the board of directors of the companies that are part of Bancolombia Group.
Description of Share Rights, Preferences and Restrictions
Bancolombia’s bylaws provide for an authorized capital stock of COP 700 billion divided into 1,400,000,000 shares of a par value of COP 500 each, which must belong to one of the following classes: (i) common shares, (ii) privileged shares; and (iii) preferred shares. Pursuant to Articles 5 and 8 of the bylaws, all shares issued shall have the same nominal value.
As of December 31, 2024, Bancolombia had 509,704,584 common shares and 452,122,416 preferred shares outstanding and a shareholders’ equity of COP 43.54 trillion divided into 961,827,000 shares.
Voting Rights Common Shares
The holders of common shares are entitled to vote on the basis of one vote per share on any matter subject to approval at a general shareholders’ meeting. These general meetings may be ordinary meetings or extraordinary meetings.
Ordinary general shareholder’s meetings occur at least once a year but no later than three months after the end of the prior fiscal year, for the following purposes:
(i) to consider the approval of Bancolombia’s annual report, including the financial statements for the preceding fiscal year
(ii) to review the annual report prepared by the external auditor
(iii) to determine the compensation for the members of the Board of Directors, and the external auditor every two years
(iv) to elect, every two years, the members of the Board of Directors, the external auditor and the financial consumer representative ('defensor del consumidor financiero'). The financial consumer representative's primary duty is to solve the individual complaints submitted by clients and users and serve as their spokesman
(v) to determine the dividend policy and the allocation of profits, if any, of the preceding fiscal year, as well as any retained earnings from previous fiscal years.
Extraordinary general shareholders’ meetings may take place when duly called for a specified purpose or purposes. The general shareholders' meeting may validly meet without prior notice, when holders representing all outstanding shares are duly represented at the meeting.
Quorum for both ordinary and extraordinary general shareholders’ meetings to be convened at first call requires the presence of two or more shareholders representing at least half plus one of the outstanding shares entitled to vote at the relevant meeting. If a quorum is not present, a subsequent meeting is called at which the presence of one or more holders of shares entitled to vote at the relevant meeting constitutes a quorum, regardless of the number of shares represented.
General shareholders’ meetings may be called by the Board of Directors, the CEO or the external auditor of Bancolombia.
In addition, according to Bancolombia's bylaws, two or more shareholders representing at least 10% of the outstanding shares have the right to request that a general meeting be convened. Notice of ordinary meetings and extraordinary meetings shall be issued by means of a notice published in at least one widely circulating newspaper in Bancolombia's principal place of business. For meetings at which year-end balance sheets, increases in authorized capital, reductions in subscribed capital, spin-offs, mergers, or the assignment of assets, liabilities and contracts representing more than twenty-five percent (25%) of their total value are to be examined, or where members are to be elected to the Board of Directors, the summons shall be issued at least fifteen (15) business days prior to the date set for the meeting; in all other cases, five (5) calendar days’ notice will suffice. When calculating these deadlines, neither the day on which the summons is issued nor the day of the meeting will be counted.
Except when Colombian law or Bancolombia’s bylaws require a special majority, action may be taken at a general shareholder’s meeting by the vote of two or more shareholders representing a majority of common shares present. Pursuant to Colombian law and/or Bancolombia’s bylaws, special majorities are required to adopt the following corporate actions:
(i) a favorable vote of at least 70% of the shares represented at a general shareholders’ meeting is required to approve the issuance of shares without preemptive rights available for shareholders; (ii) a favorable vote of at least 78% of the holders of represented common shares to decide not to distribute as dividend at least 50% of the annual net profits of any given fiscal year; (iii) a favorable vote of at least 80% of the holders of represented common shares and 80% of the holders of outstanding preferred shares to approve the payment of the dividend in shares; and (iv) a favorable vote of at least 70% of the holders of common shares and of outstanding preferred shares to effect a decision to impair the conditions or rights established for such preferred shares, or a decision to convert those preferred shares into common shares.
If the SFC determines that any amendment to the bylaws fails to comply with Colombian law, it may demand that the relevant provisions be modified accordingly. Under these circumstances, Bancolombia will be obligated to comply in a timely manner.
Preferred Shares
The holders of preferred shares are not entitled to receive notice of, attend to or vote at any general shareholders’ meeting except as described below.
The holders of preferred shares will be entitled to vote on the basis of one vote per share at any shareholders’ meeting, whenever a shareholder’s vote is required on the following matters, in addition to those indicated above:
(i) when voting the anticipated dissolution, merger or transformation of the corporation or change of its corporate purpose
(ii) when the preferred dividend has not been fully paid during two consecutive annual terms. In this event, holders of such shares shall retain their voting rights until the corresponding dividends have been fully paid to them
(iii) if at the end of a fiscal period, Bancolombia’s profits are not enough to pay the minimum dividend and the SFC, by its own decision or upon petition of holders of at least ten percent (10%) of preferred shares, determines that benefits were concealed or shareholders were misled with regard to benefits received from Bancolombia by Bancolombia’s directors or officers decreasing the profits to be distributed, the SFC may resolve that holders of preferred shares should participate with speaking and voting rights at the general shareholders’ meeting, in the terms established by law
(iv) when the registration of shares at the Colombian Securities Exchange or at the SFC is suspended or canceled. In this event, voting rights shall be maintained until the irregularities that resulted in such cancellation or suspension are resolved
(v) when voting amendments that could impair the preferred shares’ rights, or the conversion of the preferred shares to common shares, a favorable vote of a minimum of seventy percent (70%) of the subscribe capital stock, including the favorable vote of a minimum of seventy percent (70%) of the preferred shares, is required.
Common share dividends
Once the unconsolidated Financial Statements are approved by the general shareholders meeting, the appropriation for the payment of taxes of the corresponding taxable year has been made, and the transfers to the reserves have been performed, then they can determine the allocation of distributable profits, if any, for the preceding year.
Under the Colombian Commercial Code, a company must distribute at least 50% of its annual net profits to all shareholders, payable in cash, or as determined by the shareholders, within a period of one year following the date on which the shareholders determine the dividends. If the total amount segregated in all reserves of a company exceeds its outstanding capital, this percentage is increased to 70%. The minimum common stock dividend requirement of 50% or 70%, as the case may be, may be waived by a favorable vote of the holders of 78% of a company’s common stock present at the meeting.
Under Colombian law and Bancolombia’s bylaws, annual net profits are to be applied as follows:
(i) first, an amount equivalent to 10% of net profits is segregated to build a legal reserve until that reserve is equal to at least 50% of Bancolombia’s paid-in capital
(ii) second, payment of the minimum dividend on the preferred shares
(iii) third, allocation of the net profits is determined by the holders of a majority of the common shares entitled to vote on the recommendation of the Board of Directors and the CEO and may, subject to further reserves required by the bylaws, be distributed as dividends. Under Bancolombia’s bylaws, the dividends payable to the holders of common shares cannot exceed the dividends payable to holders of the preferred shares. Bancolombia’s bylaws require Bancolombia to maintain a reserve fund equal to 50% of paid-in capital. All common shares that are fully paid in and outstanding at the time a dividend or other distribution is declared are entitled to share equally in that dividend or other distribution. Common shares that are only partially paid participate in a dividend or distribution in the same proportion as the shares that have been fully paid in at the time of the dividend or distribution.
The general shareholders’ meeting may allocate a portion of the profits to welfare, education or civic services, or to support economic organizations of Bancolombia’s employees.
Preferred share dividends
Holders of preferred shares are entitled to receive dividends based on the net profits of the preceding fiscal year, after deducting losses affecting the capital and once the amount that shall be legally set apart for the legal reserve has been deducted, but before creating or accruing for any other reserve, of a non-cumulative minimum preferred dividend equal to one percent (1%) yearly of the subscription price of the preferred share, provided this dividend is higher than the dividend assigned to common shares. If this is not the case, the dividend shall be increased to an amount that is equal to the per share dividend on the common shares. The dividend received by holders of common shares may not be higher than the dividend assigned to preferred shares.
Payment of the preferred dividend shall be made at the time and in the manner established in the general shareholders’ meeting and with the priority indicated by Colombian law.
In the event that the holders of preferred shares have not received the minimum dividend for a period in excess of two consecutive fiscal years, they will acquire certain voting rights. See Item 10. Additional Information – B. Memorandum and Articles of Association – Description of Share Rights, Preferences and Restrictions – Voting Rights – Preferred Shares.
General considerations relating to dividends
In the general shareholders’ meeting, shareholders will determine the effective date, the system and the place for payment of dividends, including payment in installments.
Dividends declared on the common shares and the preferred shares will be payable to the record holders of those shares, as they are recorded on Bancolombia’s stock registry, on the appropriate record dates as determined in the general shareholders’ meeting.
Any dividend in shares payable by Bancolombia will be paid in common shares to the holders of common shares and in preferred shares to the holders of preferred shares. Nonetheless, shareholders at the general shareholders’ meeting may authorize the payment in common shares to all shareholders.
Any dividend in shares requires the approval of 80% or more of the shares present at a shareholders’ meeting, which will include 80% or more of the outstanding preferred shares. In the event that such voting majority is not obtained, shareholders may individually elect to receive a stock dividend or a cash dividend.
Liquidation rights
Bancolombia will be dissolved if certain events take place, including the following: (i) its term of existence, as stated in the bylaws, expires without being extended by the shareholders prior to its expiration date; (ii) when, according to the financial statements, there is no realistic alternative to liquidating the entity or ceasing operations; (iii) by decision at the general shareholders’ meeting; and (iv) in certain other events expressly provided by law and in the bylaws.
Upon dissolution, a liquidator must be appointed by the general shareholders’ meeting to wind up its affairs. In addition, the SFC has the power to take over the operations and assets of a bank and proceed to its liquidation under certain circumstances and in the manner prescribed in the 'Estatuto Orgánico del Sistema Financiero', Decree 663 of 1993. For more information see Item 4. 'Information on the Company – B. Business Overview – B.8. Supervision and Regulation – Bankruptcy Considerations'.
Preemptive Rights and Other Anti-Dilution Provisions
Under Bancolombia’s bylaws, the holders of common shares determine in their meeting the amount of authorized capital stock, and the Board of Directors has the power to (a) order the issuance and regulate the terms of subscription of common shares up to the total amount of authorized capital stock and (b) regulate the issuance of shares with rights to a preferential dividend but without the right to vote, when expressly delegated at the general shareholders’ meeting. The issuance of preferred shares must always be first approved at the general shareholders’ meeting, which shall determine the nature and extent of any privileges, according to the bylaws and Colombian law.
Bancolombia’s bylaws and Colombian law require that, whenever Bancolombia issues new shares of any outstanding class, it must offer the holders of each class of shares the right to purchase a number of shares of such class sufficient to maintain their existing percentage ownership of the aggregate capital stock of Bancolombia. These rights are called preemptive rights. See Item 3. Key Information – D. Risk Factors – Preemptive rights may not be available to holders of (ADRs evidencing ADSs.
Shareholders at a general meeting of shareholders may suspend preemptive rights with respect to a particular capital increase by a favorable vote of at least 70% of the shares represented at the meeting. Preemptive rights must be exercised within the period stated in the share placement terms of the increase, which cannot be shorter than 15 business days following the publication of the notice of the public offer of that capital increase. From the date of the notice of the share placement terms, preemptive rights may be transferred separately from the corresponding shares.
The SFC will authorize decreases in the outstanding capital stock decided by the holders of common shares only if: (i) Bancolombia has no liabilities; (ii) Bancolombia’s creditors consent in writing; or (iii) the outstanding capital stock remaining after the reduction represents at least twice the amount of Bancolombia’s liabilities.
Limits on Purchases and Sales of Capital Stock by Related Parties
Pursuant to the Colombian Commerce Code, the members of Bancolombia’s Board of Directors and certain of Bancolombia’s principal executive officers may not, directly or indirectly, buy or sell shares of Bancolombia’s capital stock while they hold their positions, except when dealing with nonspeculative operations and in that case they need to obtain the prior authorization of the Board of Directors passed with the vote of two-thirds of its members (excluding, in the case of transactions by a director, such director’s vote) or when deemed relevant by the Board of Directors of Bancolombia with the authorization of the Shareholders Meeting the affirmative vote of the ordinary majority foreseen in the bylaws, excluding the vote of the petitioner.
No Redemption
Colombian law prohibits Bancolombia from repurchasing shares of its capital stock, including the preferred shares.
Limitations on the Rights to Hold Securities
There are no limitations in Bancolombia’s bylaws or Colombian law on the rights of Colombian residents or foreign investors to own the shares of Bancolombia, or on the right to hold or exercise voting rights with respect to those shares.
Restrictions on Change of Control Mergers, Acquisitions or Corporate Restructuring of the Company
Under Colombian law and Bancolombia’s bylaws, the general shareholders’ meeting has full and exclusive authority to approve any corporate restructuring, including mergers, acquisitions or spin-offs upon authorization by the SFC.
Ownership Threshold Requiring Public Disclosure
We must disclose to the SFC at the end of each fiscal quarter the names of the shareholders of Bancolombia, indicating at least the twenty-five shareholders with the highest number of shares.
Colombian securities regulations set forth the obligation to disclose any material event or relevant fact. Any transfer of shares equal to or greater than 5% of Bancolombia’s capital stock or any person acquiring a percentage of shares that would make him the beneficial owner of 5% or more of the Bancolombia’s capital stock, is a material event, and therefore, must be disclosed to the SFC.
Changes in the Capital of the Company
There are no conditions in Bancolombia’s bylaws governing changes in Bancolombia’s capital stock that are more stringent than those required under Colombian law.
C.Material contracts
We have not entered into any contract, other than those entered in the ordinary course of business or that are not considered to be material, to which we or any of our subsidiaries are a party, for the two years immediately preceding the date of this Annual Report.
D.Exchange controls
The Colombian Foreign Exchange Regime allows Colombian residents to acquire in the exchange market the currencies required to carry out their operations. For such purpose, the Colombian Foreign Exchange Regime establishes certain procedures that must be followed in order to carry out foreign exchange operations, which are known as 'channeling of currencies,' through the exchange market. This channeling must be carried out through an intermediary of the exchange market (such as commercial banks in Colombia), or through compensation accounts (bank accounts abroad opened by Colombian residents registered before the Central Bank). Therefore, there are no limitations regarding the import or export of capital, including the availability of cash and cash equivalents for use by us. Nevertheless, these operations must be carried out following the applicable procedures.
The Foreign Exchange Statute, Law 9 of 1991, outlines the Colombian foreign exchange regime which relates to matters such as imports and exports of goods, foreign indebtedness, and guarantees in foreign currencies, among others. Additionally, Decree 1068 of 2015 and Decree 119 of 2017, as amended, sets forth an international investments regime which provides for rules applicable to foreign residents who invest in the Colombian securities markets and undertake other types of investments, prescribes registration before the Central Bank of certain foreign exchange transactions, and specifies procedures pursuant to which certain types of foreign investments are to be authorized and administered. Both the Foreign Exchange Statute and the International Investments Regime are regulated by External Resolution No. 1 of 2018 and External Regulating Circular DCIP-83, both as amended, of the board of directors of the Central Bank.
Under Colombian law and Bancolombia's bylaws, foreign investors receive the same treatment as Colombian citizens with respect to ownership and the voting rights of ADSs and preferred shares, as well as the remittance abroad of dividends, or any other type of proceedings derived from any type of securities investments duly registered before the Central Bank. For a detailed discussion of ownership restrictions see Item 4. Information on the Company - B. Business Overview – B.8. Supervision and Regulation – Ownership and Management Restrictions.
E.Taxation
Colombian tax consideration
ADSs do not have the same tax treatment as other equity investments in Colombia.
Although ADSs represent Bancolombia’s preferred shares, they are held through a foreign capital fund in Colombia, subject to a specific tax regulatory regime. Accordingly, the applicable law in Colombia to equity investments, particularly those relating to dividends and profits from sales, are not applicable to ADSs, including Bancolombia’s ADSs.
Under Section 18-1 of the Colombian Tax Code, dividends are subject to to a dividend tax as follows:
Foreign Portfolio investment:
To determine the income tax concerning the profits earned from the foreign portfolio investment, regardless of the method or vehicle used to invest by the investor, the following rules shall apply:
i.Dividends subject to CIT at the corporate level are taxed at 20%.
ii.Dividends that did not pay CIT at the corporate level are subject to the equalization tax at 25% upon distribution, plus a 20% dividend tax on top of that.
The tax is to by collected via withholding tax on the accrual or cash basis and is applicable to:
i.Non-residents of Colombia for foreign exchange matters.
ii.Corporations whose head office, principal place of business or effective place of management is located outside of Colombia; or
iii.Companies incorporated under non-Colombian laws.
Tax residence for Individuals
For Colombian tax purposes, individuals are considered tax residents if they meet any of the following requirements:
•He or she remains in Colombia (continuously or not) for an aggregate period of 183 calendar days or more, including entry and departure days from the country, within a period of 365 consecutive calendar days. If that requirement is met by considering the days spent in Colombia over two successive fiscal years, the individual would be viewed as a tax resident as of the second fiscal year.
•Individuals who work for the Colombian Foreign Services in other countries under the Vienna Conventions on Diplomatic and Consular Relations and whose income and capital gains are exempt from taxation in the country they serve.
•If the individual is a Colombian citizen and falls within any of the following scenarios:
a)The spouse or dependents are tax residents of Colombia.
b)50% or more of their income is Colombian-sourced income.
c)50% or more of their assets are managed in Colombia.
d)50% or more of their assets are physically located in Colombia.
e)If the Colombian Tax Office (DIAN) requests evidence of the fiscal residency status in another country and the individual does not provide it.
f)The individual has a fiscal residence in a non-cooperative jurisdiction, a place of null or minimum taxation, or a preferential tax regime jurisdiction (tax havens).
Colombian citizens are not considered tax residents for any of the scenarios above if:
a)50% or more of their annual income has been sourced where they are domiciled; or
b)50% or more of their assets are located in the jurisdiction where they are domiciled.
Entities
Corporate residence is determined by the place of incorporation of any given company. Companies incorporated in Colombia under Colombian Laws qualify as National Companies and are taxed on their worldwide income. For Colombian tax purposes, a non-resident entity that is effectively managed in Colombia would be considered as a Colombian entity (effective place of management).
Preferred shares
Preferred shares will have the same treatment as financial liabilities for the issuer's tax purposes. The treatment will be the same as financial assets for the holder. This treatment will not apply to listed shares that do not comply with the rest of the requirements established by Section 33-3 of the Colombian Tax Code.
Industry and commerce tax
Industry and commerce tax ('ICT') is a territorial tax levied on industrial, commercial and services activities performed by the taxpayer within a Colombian municipality. ICT is paid in the municipality where the activity is performed over the gross revenue at rates ranging between 0.2% and 2%. Each municipality fixes the rate and how the tax should be collected and paid to the municipal tax office.
Dividends received by holders are not subject to any special rule and therefore are subject to industry and commerce tax if they are derived from a commercial activity at a rate of 0.5%.
Other Tax Considerations
As of the date of this report, there is no Double Taxation Treaty between Colombia and the United States.
United States Federal Income Taxation Considerations
This section describes the material United States federal income tax consequences generally applicable to a U.S. holder (as defined below) of owning preferred shares or ADSs. It applies to you only if you hold your preferred shares or ADSs as capital assets for United States federal income tax purposes. This discussion addresses only United States federal income taxation and does not discuss all of the tax consequences that may be relevant to you in light of your individual circumstances, including foreign, state or local tax consequences, estate and gift tax consequences, and tax consequences arising under the Medicare contribution tax on net investment income or the alternative minimum tax. This section does not apply to you if you are a member of a special class of holders subject to special rules, including:
•A dealer in securities
•A bank
•A trader in securities that elects to use a mark-to-market method of accounting for securities holdings
•A tax-exempt organization
•A life insurance company
•A person that actually or constructively owns 10.00% or more of the combined voting power of the Bank’s voting stock or of the total value of the Bank’s stock
•A person that holds preferred shares or ADSs as part of a straddle or a hedging or conversion transaction for United States federal income tax purposes
•A person that purchases or sells preferred shares or ADSs as part of a wash sale for United States federal income tax purposes, or
•A person whose functional currency is not the U.S. dollar.
This section is based on the Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed regulations, published rulings and court decisions. These laws are subject to change, possibly on a retroactive basis. There is currently no comprehensive income tax treaty between the United States and Colombia. In addition, this section is based in part upon the representations of the Depositary and the assumption that each obligation in the Deposit Agreement and any related agreement will be performed in accordance with its terms.
If an entity or arrangement that is treated as a partnership for United States federal income tax purposes holds the preferred shares or ADSs, the United States federal income tax treatment of a partner will generally depend on the status of the partner and the tax treatment of the partnership. A partner in a partnership holding the preferred shares or ADSs should consult its tax advisor with regard to the United States federal income tax treatment of an investment in the preferred shares or ADSs.
You are a U.S. holder if you are a beneficial owner of preferred shares or ADSs and you are:
•A citizen or resident of the United States
•A domestic corporation (or an entity treated as a domestic corporation)
•An estate whose income is subject to United States federal income tax regardless of its source, or
•A trust if a United States court can exercise primary supervision over the trust’s administration and one or more United States persons are authorized to control all substantial decisions of the trust.
In general, and taking into account the earlier assumptions, for United States federal income tax purposes, if you hold ADRs evidencing ADSs, you will be treated as the owner of the preferred shares represented by those ADRs. Exchanges of preferred shares for ADRs, and ADRs for preferred shares generally will not be subject to United States federal income tax.
The tax treatment of your preferred shares or ADSs will depend in part on whether or not we are classified as a passive foreign investment company, or PFIC, for United States federal income tax purposes. Except as discussed below under “PFIC Rules”, this discussion assumes that we are not classified as a PFIC for United States federal income tax purposes.
You should consult your own tax advisor regarding the U.S. federal, state and local and other tax consequences of owning and disposing of preferred shares or ADSs in your particular circumstances.
Taxation of Distributions
Under the United States federal income tax laws, the gross amount of any dividend we pay out of the Bank’s current or accumulated earnings and profits (as determined for United States federal income tax purposes), other than certain pro-rata distribution of the Bank’s preferred shares, including the amount of any Colombian tax withheld, will be treated as a dividend that is subject to United States federal income taxation. If you are a non-corporate U.S. holder, dividends paid to you that constitute qualified dividend income will be taxable to you at preferential rates applicable to long-term capital gains provided that you hold the preferred shares or ADSs for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date (or, if the dividend is attributable to a period or periods aggregating over 366 days, provided that you hold the preferred shares or ADSs for more than 90 days during the 181-day period beginning 90 days before the ex-dividend date) and meet other holding period requirements. Dividends we pay with respect to the ADSs generally will be qualified dividend income provided that, in the year that you receive the dividend, the ADSs are readily tradable on an established securities market in the United States. The Bank believes that its ADSs, which are listed on the NYSE, are readily tradable on an established securities market in the United States; however, there can be no assurance that the Bank’s ADSs will continue to be readily tradable on an established securities market. Because the preferred shares are not listed on any United States securities market, it is unclear whether dividends we pay with respect to the preferred shares will also be qualified dividend income. If dividends we pay with respect to the Bank’s preferred shares are not qualified dividend income, then the U.S. dollar amount of such dividends received by a U.S. holder (including dividends received by a non-corporate U.S. holder) will be subject to taxation at ordinary income tax rates.
You must include any Colombian tax withheld from the dividend payment in this gross amount even though you do not in fact receive it. The dividend is taxable to you when you, in the case of preferred shares, or the Depositary, in the case of ADSs, receive the dividend, actually or constructively. The dividend will not be eligible for the dividends-received deduction generally allowed to United States corporations in respect of dividends received from other United States corporations. The amount of the dividend distribution that you must include in your income will be the U.S. dollar value of the Colombian Peso payments made, determined at the spot Colombian Peso / U.S. dollar rate on the date the dividend is distributed, regardless of whether the payment is in fact converted into U.S. dollars. Generally, any gain or loss resulting from currency exchange fluctuations during the period from the date the dividend is distributed to the date you (or the Depositary on your behalf) convert the payment into U.S. dollars will be treated as ordinary income or loss and will not be eligible for the special tax rate applicable to qualified dividend income. The gain or loss generally will be income or loss from sources within the United States for foreign tax credit limitation purposes. Distributions in excess of current and accumulated earnings and profits, as determined for United States federal income tax purposes, will be treated as a non-taxable return of capital to the extent of your basis in the preferred shares or ADSs and thereafter as capital gain. However, we do not expect to calculate earnings and profits in accordance with U.S. federal income tax principles. Accordingly, you should expect to generally treat distributions with respect to preferred shares or ADSs as dividends.
Subject to certain limitations, the Colombian tax withheld and paid over to Colombia will be creditable or deductible against your United States federal income tax liability. Special rules apply in determining the foreign tax credit limitation with respect to dividends that are subject to preferential rates. To the extent a refund of the tax withheld is available to you under Colombian law, the amount of tax withheld that is refundable will not be eligible for credit against your United States federal income tax liability. The rules governing foreign tax credits are complex, and U.S. holders should consult their tax advisors regarding the creditability of foreign taxes in their particular circumstances.
For foreign tax credit purposes, dividends will generally be income from sources outside the United States and will generally be “passive” income for purposes of computing the foreign tax credit allowable to you.
The rules governing the foreign tax credit are complex. You are urged to consult your tax advisors regarding the availability of the foreign tax credit under your particular circumstances.
Taxation of Capital Gains
If you sell or otherwise dispose of your preferred shares or ADSs, you will recognize capital gain or loss for United States federal income tax purposes equal to the difference between the U.S. dollar value of the amount that you realize and your tax basis, determined in U.S. dollars, in your preferred shares or ADSs. Capital gain of a non-corporate U.S. holder is generally taxed at preferential rates where the property is held for more than one year. The deductibility of capital losses is subject to limitations. The gain or loss will generally be income or loss from sources within the United States for foreign tax credit limitation purposes.
PFIC Rules
We believe that we are not currently classified as a PFIC for United States federal income tax purposes, and we do not expect to become a PFIC in the foreseeable future. However, this conclusion is a factual determination that is made annually and thus may be subject to change. In addition, our current position that we do not expect to be a PFIC is based on our position that we qualify for a special rule that treats income recognized by a bank in the active conduct of a banking business as active income for PFIC purposes (the “active bank exception”). It is possible, however, that we may not satisfy the requirements of the active bank exception in the current or a future taxable year, or that the U.S. Internal Revenue Service may issue guidance in the future under which we would not satisfy the requirements of the active bank exception. In such a case, our interest income would be treated as passive income for PFIC purposes and we would therefore be treated as a PFIC. Accordingly, it is possible that we could become a PFIC in the current taxable year or in a future taxable year.
In general, we will be a PFIC in a taxable year if:
•at least 75% of our gross income for the taxable year is passive income or
•at least 50% of the value, determined on the basis of a quarterly average, of our assets in such taxable year is attributable to assets that produce or are held for the production of passive income.
'Passive income' generally includes dividends, interest, gains from the sale or exchange of investment property, rents and royalties (other than certain rents and royalties derived in the active conduct of a trade or business) and certain other specified categories of income. If a foreign corporation owns at least 25% by value of the stock of another corporation, the foreign corporation is treated for purposes of the PFIC tests as owning its proportionate share of the assets of the other corporation, and as receiving directly its proportionate share of the other corporation's income.
If we are treated as a PFIC, you will generally be subject to special rules with respect to:
•any gain you realize on the sale or other disposition of your preferred shares or ADSs and
•any excess distribution that we make to you (generally, any distributions to you during a single taxable year, other than the taxable year in which your holding period in the preferred shares or ADSs begins, that are greater than 125% of the average annual distributions received by you in respect of the preferred shares or ADSs during the three preceding taxable years or, if shorter, your holding period for the preferred shares or ADSs that preceded the taxable year in which you receive the distribution).
Under these rules:
•the gain or excess distribution will be allocated ratably over your holding period for the preferred shares or ADSs,
•the amount allocated to the taxable year in which you realized the gain or excess distribution or to prior years before the first year in which we were a PFIC with respect to you will be taxed as ordinary income,
•the amount allocated to each other prior year will be taxed at the highest tax rate in effect for that year, and
•the interest charge generally applicable to underpayments of tax will be imposed in respect of the tax attributable to each such year.
Special rules apply for calculating the amount of the foreign tax credit with respect to excess distributions by a PFIC.
Unless you make certain elections, your preferred shares or ADSs will generally be treated as stock in a PFIC if we were a PFIC at any time during your holding period in your preferred shares or ADSs, even if we are not currently a PFIC.
In addition, notwithstanding any election you make with regard to the preferred shares or ADSs, dividends that you receive from us will not constitute qualified dividend income to you if we are a PFIC (or are treated as a PFIC with respect to you) either in the taxable year of the distribution or the preceding taxable year. Dividends that you receive that do not constitute qualified dividend income are not eligible for taxation at the preferential rates applicable to qualified dividend income. Instead, you must include the gross amount of any such dividend paid by us out of our accumulated earnings and profits (as determined for United States federal income tax purposes) in your gross income, and it will be subject to tax at rates applicable to ordinary income.
If you own preferred shares or ADSs during any year that we are a PFIC with respect to you, you may be required to file IRS Form 8621.
Information with Respect to Foreign Financial Assets
Owners of 'specified foreign financial assets' with an aggregate value in excess of USD 50,000 (and in some circumstances, a higher threshold) may be required to file an information report with respect to such assets with their tax returns. 'Specified foreign financial assets' may include financial accounts maintained by foreign financial institutions, as well as any of the following, but only if they are held for investment and not held in accounts maintained by financial institutions: (i) stocks and securities issued by non-United States persons (including the preferred shares and ADSs), (ii) financial instruments and contracts that have non-United States issuers or counterparties, and (iii) interests in foreign entities. You are urged to consult your tax advisors regarding the application of this reporting requirement to your ownership of the preferred shares or ADSs.
FATCA Withholding
Under FATCA, a 30% withholding tax will be imposed on certain payments to certain non-U.S. financial institutions that fail to comply with information reporting requirements or certification requirements in respect of their direct and indirect United States shareholders and/or United States accountholders. To avoid becoming subject to the 30% withholding tax on payments to them, we and other non-U.S. financial institutions may be required to report information to the IRS regarding the holders of preferred shares or ADSs and to withhold on a portion of payments under the preferred shares or ADSs to certain holders that fail to comply with the relevant information reporting requirements (or hold preferred shares or ADSs directly or indirectly through certain non-compliant intermediaries). However, under proposed Treasury regulations, such withholding will not apply to payments made before the date that is two years after the date on which final regulations defining the term “foreign passthru payment” are enacted. The rules for the implementation of this legislation have not yet been fully finalized, so it is impossible to determine at this time what impact, if any, this legislation will have on holders of the preferred shares and ADSs.
FATCA is particularly complex and its application is uncertain at this time. The above description is based in part on regulations, the intergovernmental agreement between the United States and Colombia and official guidance, which are subject to change, and the provisions described above may be implemented in a materially different form. Holders of preferred shares or ADSs should consult their own tax advisors regarding how these rules may apply to their investment in the preferred shares or ADSs.
F.Dividends and Paying Agents
Not applicable.
G.Statement by Experts
Not applicable.
H.Documents on Display
Bancolombia files reports and other information with the SEC pursuant to the rules and regulations of the SEC that apply to foreign private issuers. You may view the Bancolombia's SEC filings on the SEC’s website at http://www.sec.gov.
I.Subsidiary Information
Not applicable.
ITEM 11 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Introduction
This section describes the market risks that Bancolombia is exposed to, along with the tools and methodologies used to measure these risks as of December 31, 2024. Bancolombia faces market risk as an inherent aspect of its lending, trading and investments operations. Market risk represents the potential loss due to adverse changes in market prices of financial instruments driven by fluctuations in interest rates, foreign exchange rates, equity prices and other risk factors, such as sovereign risk.
Bancolombia’s risk management strategy, called the Integrated Risk Management Strategy, is based on principles set by international bodies and by Colombian regulations, and is guided by Bancolombia’s corporate strategy. The main objective of the Integrated Risk Management Strategy is to identify, measure, coordinate, monitor, report and propose policies for market and liquidity risks, which in turn serve to facilitate the efficient administration of Bancolombia’s assets and liabilities. To formalize the approach to market risk management, the Board of Directors and senior management have formalized the policies, procedures, strategies and rules of action for market risk administration in its 'Market Risk Manual'. This manual defines the roles and responsibilities of each subdivision and their interaction to ensure effective market risk administration.
Our Market Risks Management Office is responsible for: (a) identifying, measuring, monitoring, analyzing and controlling the market risk inherent in our businesses, (b) analyzing our exposure under stress scenarios and confirming compliance with Bancolombia’s risk management policies, (c) analyzing the methodologies designed by the official price vendor for valuation of the market value securities and financial instruments, (d) reporting to senior management and the Board of Directors any violation of Bancolombia’s risk management policies, (e) reporting to the senior management on a daily basis the levels of market risk associated with the trading instruments recorded in its treasury book (the 'Treasury Book'), and (f) proposing policies to the Board of Directors and to senior management that ensure the maintenance of predetermined risk levels. We have also implemented an approval process for new products across each of our subdivisions. This process is designed to ensure that every subdivision is prepared to incorporate the new product into their procedures, that every risk is considered before the product is incorporated and that approval is obtained from the Board of Directors before the new product can be sold.
Our assets include both trading and non-trading instruments. Trading instruments are recorded in the Treasury Book and include fixed income securities, foreign exchange (FX) and bond futures, and over-the-counter plain vanilla and exotic derivatives. Trading in derivatives includes forward contracts on foreign currency operations, forward contracts on fixed income securities, plain vanilla options on foreign currency, Asian options on U.S. dollar/COP, cross currency swaps and interest rate swaps. Non-trading instruments are recorded in our banking book (the 'Banking Book'), which includes primarily loans, time deposits, checking accounts and savings accounts.We use a Value-at-Risk ('VaR') calculation to manage our exposure to the market risk of our Treasury Book, using two different VaR methodologies: the (1) standard methodology required by the SFC, which is used to report market risk exposure to the regulator and to measure the capital requirements for Bancolombia (which is the methodology used for the analysis below); and (2) internal methodology of historical simulation, which is used to monitor the VaR limits structure to trading activities.
The Board of Directors is responsible for establishing the maximum VaR based on the assessment of the appropriate level of risk for Bancolombia. The Proprietary Trading Risks Committee is responsible for establishing the maximum VaR by type of investment. These limits are supervised daily by the Market Risk Management Office.
We are exposed to foreign currency exchange rate risk as a result of mismatches between assets and liabilities and off-balance sheet items denominated in different currencies.These mismatches may occur either as a result of trading activities or during the normal course of business operations. Our principal foreign currency exposure is the U.S. dollar, which is actively managed by Treasury Division and monitored by measuring positions, VaR and daily results.To manage interest rate risk associated with banking activities, we conduct a thorough analysis of the interest rate mismatches between its interest earning assets and its interest-bearing liabilities. This analysis evaluates the potential impact of interest rate shocks on both the economic value of equity (EVE) and net interest income (NII). In addition, the foreign currency exchange rate exposures arising from the Banking Book are provided to the Treasury Division, where these positions are consolidated and effectively managed.
Trading Instruments Market Risk Measurement
We also measure the Treasury Book exposure to market risk (including over-the-counter derivatives positions) as well as the currency risk exposure of the Banking Book, which is provided to the Treasury Division, using a VaR methodology established in accordance with Chapter XXXI of the Basic Accounting Circular issued by the SFC.
This methodology is based on the model recommended by the Amendment to the Capital Accord to Incorporate Market Risks of Basel Committee of 2005, which focuses on the Treasury Book and excludes investments measured under amortized cost which are not being given as collateral and any other investment that comprises the Banking Book, such as non-trading positions excluding the currency risk position stemming from investment in affiliated but not consolidated entities denominated in foreign currencies. In addition, the methodology aggregates all risks by the use of correlations, through an allocation system based on defined zones and bands, affected by given sensitivity factors.
Our total market risk is calculated by the arithmetical aggregation of the VaR calculated for each subsidiary. The aggregated VaR is reflected in our Capital Adequacy (Solvency) ratio, in accordance with Decree 2555 of 2010.
For purposes of VaR calculations, a risk exposure category is any market variable that is able to cause potential changes in the portfolio value. Considering a given risk exposure, the VaR model assesses the maximum loss not exceeding at a specified confidence level over a given period of time. The fluctuations in the portfolio’s VaR depend on volatility, modified duration and positions changes relating to the different instruments that are subject to market risk.
The relevant risk exposure categories for which VaR is computed by Bancolombia according to the “Chapter XXXI, appendix VI of the Basic Accounting Circular” are: (i) interest rate risks relating to local currency, foreign currency and UVR; (ii) currency risk; (iii) stock price risk; (iv) fund risk and (v) credit default swaps.
Interest Rate Risk (Treasury Book)
The interest rate risk is the probability of decrease in the market value of the position due to fluctuations in market interest rates. Bancolombia calculates the interest rate risk for positions in local currency, foreign currency and UVR separately, in accordance with Chapter XXXI of the Basic Accounting Circular issued by the Superintendency of Finance. The calculation of the interest rate risk begins with determining the net position in each instrument and estimating its sensitivity, which is calculated by multiplying its net present value ('NPV') by its “modified duration” and by the interest rate’s estimated fluctuation (as defined by the Superintendency of Finance). The interest rate’s fluctuations are established by the SFC according to historical market performance, as shown in the following table:
Figure 1. Interest Risk – Sensitivity by Bands and Zones
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|
Modified Duration |
Interest rate fluctuations (basis points) |
| Zone |
Band |
Low |
High |
Pesos |
UVR |
USD |
| Zone 1 |
1 |
0 |
0.08 |
274 |
274 |
100 |
|
2 |
0.08 |
0.25 |
268 |
274 |
100 |
|
3 |
0.25 |
0.5 |
259 |
274 |
100 |
|
4 |
0.5 |
1 |
233 |
274 |
100 |
| Zone 2 |
5 |
1 |
1.9 |
222 |
250 |
90 |
|
6 |
1.9 |
2.8 |
222 |
250 |
80 |
|
7 |
2.8 |
3.6 |
211 |
220 |
75 |
| Zone 3 |
8 |
3.6 |
4.3 |
211 |
220 |
75 |
|
9 |
4.3 |
5.7 |
172 |
200 |
70 |
|
10 |
5.7 |
7.3 |
162 |
170 |
65 |
|
11 |
7.3 |
9.3 |
162 |
170 |
60 |
|
12 |
9.3 |
10.6 |
162 |
170 |
60 |
|
13 |
10.6 |
12 |
162 |
170 |
60 |
|
14 |
12 |
20 |
162 |
170 |
60 |
|
15 |
20 |
- |
162 |
170 |
60 |
After calculating the sensitivity factor for each position, the modified duration is applied to classify positions into their respective bands. A net sensitivity is then calculated for each band, by determining the difference between the sum of all long-positions and the sum of all short-positions. Subsequently, a net position is calculated for each zone, comprising a series of bands as defined by the SFC. The final step involves adjusting within each band, across bands and within each zone, culminating in the computation of the interest rate risk VaR by currency. All adjustments are executed in accordance with the guidelines issued by the Superintendency of Finance.
Our exposure to interest risk primarily arises from investments in Colombian government’s treasury bonds (TES) and other securities issued by the Colombian government.
The interest rate risk VaR increased from COP 405 billion on December 31, 2023, to COP 540 billion on December 31, 2024, due to an increase in the position in Colombian government’s treasury bonds (TES). During the year 2024, the average interest rate risk VaR was COP 507 billion, the maximum COP 586 billion and the minimum COP 433 billion.
Currency (Treasury and Banking Book), Equity (Treasury Book) and Fund Risk (Treasury Book)
The VaR model uses a sensitivity factor to estimate the probability of loss due to fluctuations in the prices of stocks, funds and currencies in which we holds positions. As previously indicated, the methodology used in this Annual Report to quantify such risk consists of computing VaR, which is derived by multiplying the position by the maximum probable variation in the price of such positions ('Δp').
The Δp is determined by the Superintendency of Finance, as shown in the following table:
Figure 2. Sensitivity Factor for Currency Risks, Equity Risks and Fund Risks
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| Currency |
Sensitivity Factor |
|
| USD |
12.49 |
% |
|
| Euro |
11.00 |
% |
|
| Other currencies |
13.02 |
% |
|
| Equity and Fund Risk |
14.70 |
% |
|
The currency risk VaR increased from COP 333 billion as of December 31, 2023 to COP 765 billion as of December 31, 2024 due to the increase in the position in USD in Bancolombia’ s portfolio. Between December 31, 2023 and December 31, 2024, the average currency risk VaR was COP 555 billion, the maximum COP 765 billion and the minimum COP 364 billion. Current currency risk primary arises from the USD exposure of Bancolombia in foreign exchange derivatives.
The equity risk VaR increased from COP 342 billion as of December 31, 2023 to COP 360 billion as of December 31, 2024 driven primarily by the fund Colombia Inmobiliario investments. Between December 31, 2023 and December 31, 2024, the average equity VaR was COP 351 billion, the maximum COP 360 billion and the minimum COP 340 billion.
The fund risk, which arises from investment in mutual funds, increased from COP 16 billion as of December 31, 2023 to COP 32 billion as of December 31, 2024 driven primarily by the market risk factor of the fund Colombia Inmobiliario investments . Between December 31, 2023 and December 31, 2024, the average fund risk VaR was COP 26 billion, the maximum COP 32 billion and the minimum COP 18 billion.
Total Market Risk VaR
This VaR is calculated as the algebraic sum of the interest rate risk, the currency risk, the stock price risk, fund risk and the credit default swaps risk. These components are calculated by aggregating the exposures of Bancolombia and its subsidiaries to each respective risks. At present, Bancolombia does not exhibit exposure to credit default swaps risk.
The total market risk VaR, increased 54.9%, going from COP 1,096 billion on December 31, 2023 to COP 1,698 billion as of December 31, 2024, and primarily increase in the currency and equity risks mentioned above.
Assumptions and Limitations of VaR Models:
While VaR models are widely recognized as a valuable tool for risk management, they have inherent limitations, including reliance on historical data that may not be indicative of future market conditions or trading patterns. Consequently, VaR models should not be viewed as predictive indicators of future results. We may incur in losses that could be materially in excess of the amounts estimated by the models on a particular trading day or over a specific period, and there have been instances when results have fallen outside the values generated by our VaR models. A VaR model does not calculate the greatest possible loss. The outcomes derived from these models, as well as the subsequent analysis, are subject to prudent judgment of our risk management personnel.
The chart below provides information about Bancolombia’s consolidated VaR for trading instruments at the end of December 2023 and December 2024.
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As of December 31, |
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2024 |
2023 |
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In millions of COP |
| Interest Rate Risk VaR |
540,397 |
|
405,467 |
|
| Currency Risk VaR |
764,920 |
|
332,662 |
|
| Equity Risk VaR |
360,287 |
|
342,024 |
|
| Fund Risk VaR |
31,962 |
|
15,847 |
|
| Total VaR |
1,697,566 |
|
1,096,000 |
|
As of December 31, 2024, the proprietary cryptocurrency portfolio of Wenia amounted to USD 956.2 thousand, with a Value at Risk (VaR) of USD 17.2 thousand. The VaR was calculated using an internal methodology based on a Dynamic Conditional Correlation (DCC) GARCH model, with a one-day time horizon and a 99% of confidence level.
Between December 31, 2023 and December 31, 2024, the average Total VaR was COP 1,439 billion, the maximum value COP 1,734 billion, and the minimum value COP 1,182 billion.
Non-Trading Instruments Market Risk Measurement
The relevant risk exposure in the Banking Book is interest rate risk, defined as the probability of unexpected changes in net interest income because of a change in market interest rates. Changes in interest rates affect Bancolombia’s earnings as a result of timing differences on the repricing of the assets and liabilities. We manage the interest rate risk arising from banking activities in non-trading instruments by analyzing the interest rate mismatches between its interest earning assets and its interest-bearing liabilities. The foreign currency exchange rate exposures associated with the Banking Book are provided to the Treasury Division where these positions are aggregated and managed.
Interest Risk Exposure (Banking Book)
We have performed a sensitivity analysis of market risk sensitive instruments, estimating the impact on the net interest income for each position in the Banking Book, using a repricing model and assuming positive parallel shifts of 100 basis points (bps).
Table 1 provides information about Bancolombia’s interest rate sensitivity for the items on the statement of financial position that comprises the Banking Book:
Table 1. Sensitivity to Interest Rate Risk of the Banking Book
The chart below provides information about Bancolombia’s interest rate risk sensitivity in local currency (COP) at December 31, 2024 and December 31, 2023:
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| Interest Rate Risk |
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As of December 31, |
|
2024 |
2023 |
|
In millions of COP |
| Assets sensitivity 100 bps |
1,262,776 |
|
1,152,782 |
|
| Liabilities sensitivity 100 bps |
915,528 |
|
595,749 |
|
| Net interest income sensitivity 100 bps |
347,248 |
|
557,033 |
|
The chart below provides information about Bancolombia’s interest rate risk sensitivity in foreign currency (USD) at December 31, 2024 and December 31, 2023:
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| Interest Rate Risk |
|
As of December 31, |
|
2024 |
2023 |
|
In thousands of USD |
| Assets sensitivity 100 bps |
76,219 |
|
75,052 |
|
| Liabilities sensitivity 100 bps |
83,051 |
|
74,800 |
|
| Net interest income sensitivity 100 bps |
(6,832) |
|
252 |
|
A positive net sensitivity denotes a higher sensitivity of assets than of liabilities and implies that a rise in interest rates will positively affect our net interest income. A negative sensitivity denotes a higher sensitivity of liabilities than of assets and implies that a rise in interest rates will negatively affect our net interest income. In the event of a decrease in interest rates, the impacts on net interest income would be opposite to those described above.
Total Exposure
Net interest income sensitivity in local currency for the Banking Book instruments, entered for other than trading purposes with positive parallel shifts of 100 basis points was COP 347,248. The variation in the sensitivity of the net interest margin between December 2023 and December 2024 is a result of the increase in the sensitivity of demand deposits.
On the other hand, the sensitivity to the net interest margin in foreign currency, assuming parallel shifts of 100 basis points, presented a decrease between December 2023 and December 31, 2024, due to the increase in demand deposits and time deposits.
Assumptions and Limitations
Net interest income sensitivity analysis is based on the repricing model and incorporates the following key assumptions: (a) it does not consider prepayments for Banistmo, Bam, Bancoagrícola, Bancolombia Panama and Puerto Rico, new operations, defaults, or other factors; (b) the sensitivity of fixed rate instruments, includes the amounts with maturity of less than one year and assumes these will be disbursed at market interest rates, and (c) changes in interest rate occur immediately and parallel in the yield curves from assets and liabilities for different maturities.
Structural Equity Risk Exposure (Banking Book)
Bancolombia’s investment banking affiliate, in its role of financial corporation, has, directly and through its affiliated companies, structural equity investments. These positions are maintained mostly in Industrial and financial sectors. The market value of those investments decreased by 11.9% during the year, from COP 41 billion as of December 31, 2023, to COP 36 billion as of December 31, 2024, mainly as a result of the depreciation of ENKA’s shares.
The structural equity positions are exposed to market risk. Sensitivity calculations are made for those positions:
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As of December 31, |
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|
2024 |
2023 |
|
|
In millions of COP |
|
| Market Value |
36,226 |
|
41,096 |
|
|
| Delta |
14.70 |
% |
14.70 |
% |
|
| Sensitivity |
5,325 |
|
6,041 |
|
|
A negative impact of 14.7%, applied to the market value, produces a decrease of COP 5.3 billion in the structural equity investments market value, from COP 36 billion to COP 31 billion.
ITEM 12 Description of Securities Other than Equity Securities
D.AMERICAN DEPOSITARY SHARES
D.3FEES AND CHARGES APPLICABLE TO HOLDERS OF AMERICAN DEPOSITARY RECEIPTS
The Depositary collects its fees for delivery and surrender of ADSs directly from investors depositing shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The Depositary may generally refuse to provide fee-attracting services until its fees for those services are paid.
The following are the fees charged by the Depositary:
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| Persons depositing or withdrawing shares must pay: |
For: |
USD 5.00 per 100 ADSs (or portion of 100 ADSs) |
•Issuance of ADSs, including issuances resulting from a distribution of shares or rights or other property.
•Cancellation of ADSs for the purpose of withdrawal, including if the deposit agreement terminates.
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Registration or transfer fees |
•Transfer and registration of shares on Bancolombia’s share register to or from the name of the depositary or its agent when you deposit or withdraw shares. |
Expenses of the depositary |
•Cable, telex and facsimile transmissions (when expressly provided in the deposit agreement).
•Converting foreign currency to U.S. dollars.
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Taxes and other Governmental charges the depositary or the custodian has to pay on any ADSs or share underlying a ADSs, for example, stock transfer taxes, stamp duty or withholding taxes. |
•As necessary. |
Any charges incurred by the depositary or its agents for servicing the deposited securities. |
•As necessary. |
D.4.i.FEES INCURRED IN PAST ANNUAL PERIOD
For the period between January 1, 2024, and December 31, 2024, the Depositary reimbursed Bancolombia USD 319,056 for expenses related to the administration and maintenance of the ADR facility, investor relations activities, annual listing fees and any other ADR program-related expenses incurred by Bancolombia directly associated with Bancolombia’s preferred share ADR Program, corresponding to USD 203,022 for the period of May 2022 to May 2023, and 116,034 for the period of May 2023 to May 2024. In addition, Fiduciaria Bancolombia received COP 264 million from The Bank of New York Mellon for the period between January 1, 2024, and December 31, 2024 in connection with its role as local custodian of the depositary bank.
D.4.ii.FEES TO BE PAID IN THE FUTURE
The Bank of New York Mellon, as Depositary, has agreed to reimburse Bancolombia for expenses incurred that are related to establishment and maintenance expenses of the ADR Program. The Depositary has agreed to reimburse Bancolombia for its continuing annual stock exchange listing fees. The Depositary has also agreed to pay the standard out-of-pocket maintenance costs for the ADSs, which consist of the expenses of postage and envelopes for mailing annual and interim financial reports, printing and distributing dividend checks, electronic filing of U.S. federal tax information, mailing required tax forms, stationery, postage, facsimile, and telephone calls. It has also agreed to reimburse Bancolombia annually for certain investor relationship programs or special investor relations promotional activities. In certain instances, the depositary has agreed to provide additional payments to Bancolombia based on any applicable performance indicators relating to the ADR facility. There are limits on the amount of expenses for which the Depository will reimburse the Company, but the amount of reimbursement available to Bancolombia is not necessarily tied to the amount of fees the depositary collects from investors.
The Depositary collects its fees for delivery and surrender of ADSs directly from investors depositing shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The depositary may collect its annual fee for depositary services by deduction from cash distributions or by directly billing investors or by charging the book-entry system accounts of participants acting for them. The depositary may generally refuse to provide fee-attracting services until its fees for those services are paid.
PART II
ITEM 13 DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
There has not been any default, arrearage or delinquency neither in the payment of principal, interest, a sinking or purchase fund installment, nor in any payment relating to indebtedness or dividends by us.
ITEM 14 Material Modifications to the Rights of Security Holders and Use of Proceeds
At the General Shareholders’ extraordinary meeting held on June 26, 2024, an amendment to the bylaws was approved, which included, among other changes, the following modifications to rights of the security holders:
•Changes to Article 47 (Elections and voting): this article was amended to stipulate that, when appointing members of the Board of Directors, the Shareholders’ Meeting must consider the requirements for appointing such members to the Board of Directors, approved by the General Shareholders' Meeting.
•Inclusion of Article 95 (Price Matching Obligation): this article was included to provide that after June 26, 2024: (i) any beneficial owner of common shares of Bancolombia that owns less than 25% and acquires more than 25% of Bancolombia’s common shares, in one or more transactions, directly or indirectly, within a 12-month period following the first acquisition, or (ii) any beneficial owner of common shares of Bancolombia that acquires common shares of Bancolombia through an initial takeover bid, and subsequently acquires, in one or more transactions, directly or indirectly, additional shares that increase its percentage of Bancolombia's common shares by 5% or more of Bancolombia's common shares, within a 12-month period from the first acquisition and/or the award of the initial takeover bid; shall be obligated to pay each Seller who has disposed of their common shares of Bancolombia during this period an amount equal to the difference between (x) the highest price per common share of Bancolombia paid by the beneficial owner during that period and (y) the price per common share of Bancolombia paid to the Seller .
The new Article 95 language is as follows:
'Article 95. Price Matching Obligation. Article 95. Price-Matching Obligation. (a) In the event that, after June 26, 2024 (the "Cut-off Date"), any beneficial owner of common shares in Bancolombia that owns less than 25% of such shares on the Cut-off Date should acquire, in one or more transactions, directly or indirectly, during a period of 12 months following the first acquisition after the Cut-off Date ("Matching Period One"), ordinary shares that lead them to have a shareholding interest greater than 25% of Bancolombia’s common shares, will be obliged to pay to each Seller that disposed of their common shares during Matching Period One, an amount equal to the difference between, (x) the highest price per common share in the Bank paid by the beneficial owner during Matching Period One and, (y) Bancolombia's common share price paid to Seller ('Matching Value One'). (b) Any beneficial owner who acquires common shares in Bancolombia via an Initial Takeover Bid, and subsequently acquires, in one or more transactions, directly or indirectly, during a period of 12 months following the award of the Initial Takeover Bid ('Matching Period Two'), additional shareholding that increases its percentage of Bancolombia's common stock by 5% or more, shall be obliged to pay each Seller that disposed of its common shares in Bancolombia during Matching Period Two, an amount equal to the difference between, (x) the highest price per common share of Bancolombia paid by the beneficial owner during Matching Period Two and, (y) the price per common share in Bancolombia paid to the Seller ('Matching Value Two'). Once Matching Period Two has expired, if the beneficial owner makes a new Takeover Bid for common shares in Bancolombia, that offer shall be considered a new Initial Takeover Bid and the provisions of this Article 95 shall be reapplied.
FIRST PARAGRAPH: Under this Article 95, (i) 'acquire' shall mean any act by which a person or group of persons becomes, directly or indirectly, the beneficial owner of common shares in Bancolombia; (ii) 'beneficial owner' shall have the meaning given to this term in Decree 2555/2010, Article 6.1.1.1.3; (iii) the 'Seller' shall mean a holder of common stock in Bancolombia that sells his or her shares subject to subparagraph (a) or (b) of this Article 95; (iv) 'Initial Takeover Bid' shall mean a public offering of shares ('Takeover Bid') under the terms of Decree 2555, Article 6.15.2.1.1., awarded after the Cut-off Date; (v) 'Matching Value' shall mean Matching Value One, or Matching Value Two, as applicable to subparagraph (a) or (b).
SECOND PARAGRAPH: When Takeover Bid or Bids are made in United States Dollars or another currency, the sum in Colombian pesos calculated at the current representative market rate certified by the Colombian Financial Superintendent on the date or dates defined in the corresponding takeover booklet will be used to determine the price and apply the provisions of this article.
THIRD PARAGRAPH: For payment of the Matching Value to Sellers: (i) A beneficial owner that has acquired common shares in Bancolombia under subparagraph (a) or (b) of this Article 95 (the 'Buyer') will be obliged to notify Bancolombia (1) that the obligation to pay the Matching Value exists, (2) the date on which the said obligation arose, and (3) the period covered by Matching Period One, in the case of subparagraph (a), or the expiration date of Matching Period Two, in the case of subparagraph (b). (ii) Once Bancolombia receives the information referred to in the preceding paragraph from the Buyer, it shall inform the market, using the appropriate reporting mechanism. (iii) The Buyer shall, no more than forty-five calendar days after the obligation to pay the Matching Value has arisen, lift the stock exchange reserve and grant any and all other consents and documents required to make effective the provisions of this Article 95, and to allow Sellers to verify if they are creditors of the Matching Value. Likewise, and during the same forty-five calendar day period, the Buyer shall establish the process for, directly or through a third party, receiving requests for payment of the Matching Value from Sellers, verify whether payment is applicable, and perform any and all other activities required for payment of the Matching Value to the Sellers. (iv) Buyer shall pay the Matching Value to Sellers no later than 15 business days from the date on which it receives the corresponding payment request from Seller.
FOURTH PARAGRAPH: If the Buyer fails to meet its reporting obligations under this Article 95 or fails to pay the Matching Value under the terms set forth in this Article 95, the Buyer agrees that (i) it will be in default and will therefore pay default interest at the highest rate permitted by law as of the date payment was due under the Third Paragraph; and (ii) it will be liable for any other damages caused to each holder of common shares in Bancolombia due to its non-performance or late or defective performance of its obligation to pay the Matching Value.'
ITEM 15 Controls and Procedures
We carried out an evaluation under the supervision and with the participation of our management, including Bancolombia's Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures. As a result, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, the disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in the reports we file and submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and regulations of the SEC and to provide reasonable assurance that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding disclosure.
There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.
Management’s Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with IFRS.
Our internal control over financial reporting includes those policies and procedures that:
•Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets ;
•Provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
•Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of internal control over financial reporting as of December 31, 2024, based on criteria established in the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework version). On this assessment, management concluded that our internal control over financial reporting was effective as of December 31, 2024.
The effectiveness of our internal control over financial reporting as of December 31, 2024, has been audited by PwC Contadores y Auditores S.A.S. located in Colombia with PCAOB ID 6466, an independent registered public accounting firm, which report is included on page F-5 of this Annual Report.
In addition, there were no changes in our internal control over financial reporting occurred during the period covered by this Annual Report that has materially affected or is reasonable likely to materially affect our internal control over financial reporting.
ITEM 16 RESERVED
A.Audit Committee Financial Expert
The Board of Directors of Bancolombia appointed Silvina Vatnick as the audit committee financial expert in accordance with SEC rules and regulations.
Bancolombia's audit committee financial expert, along with the other members of Bancolombia's Audit Committee, is considered to be independent according to applicable NYSE criteria.
Ms. Vatnick has served as Bancolombia's audit committee financial expert since May 2021, in replacement of Ms. Sylvia Escovar. There is no business relationship between her and Bancolombia, except for standard personal banking services. Further, there is no fee arrangement between Mrs. Vatnick and Bancolombia, except in connection with her capacity as a member of Bancolombia's Board of Directors and as a member of the Audit, Technology and Cybersecurity, and the Risk Committee. Mrs. Vatnick is considered an independent director under Colombian law and Bancolombia's Good Governance Code, as well as under NYSE’s director independence standards and SEC's independence criteria. The Audit Committee and the financial expert also have an independent advisor, who provides advice on financial reporting and auditing matters. For more information regarding Bancolombia's audit committee, see Item 6. 'Directors, Senior Management and Employees— C. Board Practices—Audit Committee'.
B.Corporate Governance and Code of Ethics
Bancolombia has adopted a Code of Ethics and a Good Governance Code, both of which apply to all employees, including Bancolombia's Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, as well as to Bancolombia's Board of Directors.
Bancolombia also has an anonymous Ethics Line (línea ética) for reporting improper conduct.
English translations of the Code of Ethics and the Good Governance Code are available on our website at www.grupobancolombia.com. The Spanish versions take precedence for all legal purposes.
The Code of Ethics was updated on February 20, 2024, with the approval of the Board of Directors. The main changes are as follows:
•We added an Artificial Intelligence section, based on OECD recommendations.
•We improved the language related to diversity, equity and inclusion .
•We added new standards on non-financial products and services.
•We added standards of behavior in the digital environment.
•We updated certain defined terms on personal data and information.
As a foreign private issuer, Bancolombia must disclose how its corporate governance practices may differ from those that U.S. companies listed on the NYSE must follow. We address these differences in Item 16. G Corporate Governance, which includes subsections on Independence of Directors, Non-Executive Director Meetings, Committees of the Board of Directors and Stockholders’ Approval of Dividends.
A copy of our Code of Ethics is filed as Exhibit 11.1 to this Annual Report on Form 20-F
C.PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit Fees
The aggregate fees billed under the caption audit fees for professional services rendered to us for the audit of our financial statements and for services that are normally provided to us, in connection with statutory or regulatory filings or engagements totaled COP 23,401 million and COP 20,251 million in audits carried out by audited by PwC Contadores y Auditores S.A.S. and by the member firms of the PwC network located in Panamá, El Salvador, Guatemala and Puerto Rico, which are the auditors of the Bank for the years 2024 and 2023, respectively.
Additionally, the amount of fees not billed as of December 31, 2024 and 2023 for the audit by PwC Contadores y Auditores S.A.S. is approximately COP 6,059 million and COP 6,008 million, respectively.
Tax Fees
For the years ended December 31, 2024 and 2023, we did not contract professional services related to tax compliance, tax advice or tax planning rendered by PwC Contadores y Auditores S.A.S.
All Other Fees
In 2024 and 2023, we did not pay other fees to PwC Contadores y Auditores S.A.S.
Pre-Approval Policy and Procedure
The audit committee of each company within the Bancolombia Group approves the fees and assignments of external auditors, and the overall fee proposal for Bancolombia and its subsidiaries is made known to the Audit Committee of Bancolombia. The fees are then submitted for approval by the General Shareholders' Meeting of each company. In cases where additional services related to the role of the external auditor and SOX are required, these must be submitted for prior approval by the audit committee of each company within the Bancolombia Group, in accordance with the delegation made by the General Shareholders' Meeting. Additionally, on a quarterly basis, a report will be presented to Bancolombia's Audit Committee, providing an informative summary of the fees approved by the audit committees of the subsidiaries for additional services related to the role of the external auditor and SOX.
During 2024, there were no services approved by the Audit Committee pursuant to paragraph (c) (7) (i) (C) of Rule 2-01 of Regulation S-X.
D.Exemptions from the Listing Standards for Audit Committees
Not applicable.
E.Purchases of Equity Securities by the Issuer and Affiliated Purchasers
There have not been any purchases by Bancolombia or any affiliated purchaser (as defined in 17CFR240.10b-18(a) (3)) of shares or any other units of any class of equity securities issued by Bancolombia during 2024.
Colombian law prohibits the repurchase of shares issued by banks. Therefore, Bancolombia may not repurchase its own issued securities.
F.Change in Registrant's Certifying Accountant
Not applicable.
G.Corporate Governance
Bancolombia, as a listed company that qualifies as a foreign private issuer under the NYSE listing standards in accordance with the NYSE corporate governance rules, is permitted to follow home-country practice in some circumstances instead of the provisions of the corporate governance rules contained in Section 303A of the NYSE Listed Company Manual that are applicable to U.S. companies. Bancolombia follows corporate governance practices applicable to Colombian companies and those described in Bancolombia's Good Governance Code, which in turn follows Colombian corporate governance rules. An English translation of the Good Governance Code is available at Bancolombia’s website at www.grupobancolombia.com. The Spanish prevails for all legal purposes.
In Colombia, a series of laws and regulations set forth corporate governance requirements. External Circular 029 of 2014, issued by the SFC, contains the corporate governance standards to be followed by companies issuing securities.
Additionally, Law 964 of 2005 established mandatory corporate governance requirements for all issuers whose securities are publicly traded in the Colombian market, and Decree 2555 of 2010, the External Circulars 031 of 2021 and 012 of 2022 —both incorporated into External Circular 029 of 2014—regulate the information disclosure requirements, including relevant and periodical information for the Colombian securities issuers. Bancolombia’s corporate governance standards comply with these legal requirements and Bancolombia has implemented additional corporate governance measures pursuant to regional recommendations including the OECD White Paper on Corporate Governance for Latin America and the Andean Development Corporation’s (CAF) Good Governance Code.
The following is a summary of the significant differences between the corporate governance practices followed by Bancolombia and those applicable to domestic issuers under the NYSE listing standards.
•Independence of Directors. Under NYSE corporate governance rules, a majority of a U.S. company’s board of directors must be composed of independent directors. Regarding Colombian legislation, Law 964 of 2005 requires that at least 25% of the members of Bancolombia's Board of Directors are independent directors, and Decree 3923 of 2006 regulates their election. Additionally, Colombian law requires that all directors exercise independent judgment under all circumstances. Bancolombia’s Good Governance Code includes a provision stating that directors shall exercise independent judgment and requires that at least 2 of the 7 directors must be independent.
The Good Governance Code also includes additional independence standards that must be met by 2 of 7 directors. As of December 31, 2024, Bancolombia’s Board of Directors included a majority of independent members (5 members of 7). For the independence test applicable to directors of Bancolombia, see Item 10. 'Additional Information. – B. Memorandum and Articles of Association – Board of Directors'.
•Non-Executive Director Meetings. Pursuant to the NYSE listing standards, non-executive directors of U.S. listed companies must meet on a regular basis without management present. There is no prohibition under Colombian regulations for officers to be members of the board of directors; however, it is customary for Colombian companies to maintain separation between the directors and management. Bancolombia’s Board of Directors does not include any management members; however, the CEO attends the monthly meetings of Bancolombia’s Board of Directors, and members of senior management may attend the meetings of the Board of Directors and committees to guarantee an adequate flow of information between employees, management and directors; in both cases, the CEO and members of senior management are not allowed to vote. In accordance with Law 964 of 2005, no executive officer can be elected as chairman of a board of directors, and according to Bancolombia’s bylaws, under any circumstances, a legal representative of Bancolombia can be elected chairman of the Board of Directors.
•Committees of the Board of Directors. Under NYSE listing standards, all U.S. companies listed on the NYSE must have an audit committee, a compensation committee, and a nominating/corporate governance committee and all members of such committees must be independent. In each case, the independence of directors must be established pursuant to highly detailed rules enacted by the NYSE and, in the case of the audit committee, the NYSE and the SEC. Bancolombia’s Board of Directors has a Designation, Compensation and Development Committee, a Corporate Governance Committee, a Risk Committee, a Technology and Cybersecurity Committee and an Audit Committee, each of which is composed exclusively of directors (Audit Committee and Corporate Governance Committee are composed exclusively of independent directors, whereas the other committees have both independent and non-independent directors). For a description of the Designation, Compensation and Development Committee, Corporate Governance Committee, Audit Committee, Technology and Cybersecurity Committee and Risk Committee, see Item 6. 'Directors, Senior Management and Employees – C. Board Practices'.
•Stockholders’ Approval of Dividends. While NYSE corporate governance standards do not require listed companies to have stockholders approve or declare dividends, in accordance with the Colombian Code of Commerce, all dividends must be approved by Bancolombia’s stockholders.
H.Mine Safety Disclosures
Not applicable.
I.Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
J.Insider Trading Policies
We have adopted insider trading policies and procedures to provide guidance on the purchases, sales and other dispositions of Bancolombia's securities by the Board of Directors, officers (including senior management) and employees, specially those that have access to privileged information, with the objective of promoting compliance with applicable insider trading laws, rules, regulations and NYSE listing standards applicable to us. Such policies and procedures are included in our Code of Ethics, updated on February 20, 2024 and in the Code of Good Governance, updated on August 27, 2024.
In addition, we have analytical guidelines, controls and monitoring to prevent and mitigate the risk of sharing privileged information among areas or businesses that should not have access to it.
Colombian law prohibits Bancolombia from repurchasing shares of its capital stock, including the preferred shares.
A copy of our Code of Ethics and of our Code of Good Governance is filed as Exhibit 11.1 and 11.2 to this Annual Report on Form 20-F.
K.Cybersecurity
The growing threat of cybersecurity incidents, which affects the global financial system and other industries, remains a concern for us. As cyberattacks become more sophisticated, failing to protect our operations could lead to loss of sensitive data, disruptions to our customers and business and financial losses. We monitor geopolitical events and cyber threats, take proactive measures and make significant investments (including in security processes, controls, insurance coverage and human capabilities) to attempt to minimize impacts on our customers and The Bank.
Processes for assessing, identifying, and managing material risks from cybersecurity threats
We have implemented policies, procedures and controls to safeguard our operations from cybersecurity threats. We have defined the responsibilities for employees and third-party providers, and we have put in place procedures to detect, prevent and mitigate any exposure of our information, people, processes, technology and physical infrastructure to cyberattacks. These policies focus on both internal and external potential attacks on our information and the other essential components of our operations.
We also have a process to identify, evaluate and manage the material risks of cybersecurity threats, which we consider as part of our overall risk management cycle. When a cybersecurity incident is detected, it is quickly escalated so that we can make the necessary tactical and strategic decisions.
We continuously strengthen our Information Security Management System (‘ISMS’) to prevent, detect, and mitigate cybersecurity threats. The ISMS is a comprehensive set of policies, standards, controls, baselines, manuals, methodologies and governance frameworks. It incorporates ISO 27001, the U.S. National Institute of Standards and Technology’s Cybersecurity Framework 2.0, and Control Objectives for Information and Related Technologies (‘COBIT’). We also incorporate a maturity model based on Capability Maturity Model Integration (‘CMMI’), Information Technology Infrastructure Library (‘ITIL’), and ISO 15504 criteria, which we review and update annually. This information is readily accessible to employees via our intranet.
Additionally, we leverage other specialized technical frameworks, including the Center for Internet Security (‘CIS’) for infrastructure security and the Open Web Application Security Project (‘OWASP’) for secure development, Application Programming Interface (‘API’) security, and related areas.
As part of our risk management strategy, we have engaged consultants and audit firms with industry-recognized expertise in cybersecurity since 2018 to periodically assess our cybersecurity procedures, controls and maturity level. In 2024, the results revealed significant progress in cybersecurity maturity. Key strengths included a robust culture and awareness of cybersecurity management, the expertise of our people, the integration of cybersecurity principles into the design and maintenance of solutions, as well as advances in innovation and technological capabilities.
In response to the growing sophistication of cyberattackers worldwide and the adoption of new detection and response technologies, we relaunched our Security Operations Center (‘SOC’) as the Intelligence and Cyber Defense Center (‘CDC’). The new capabilities include innovative threat detection and intelligence, including an AI module, which has improved detection and has made us more proactive and effective in response to emerging threats.
We implemented several modernization initiatives, including the transition to a zero-trust strategy for remote access, enhanced malware protection, a strengthened cybersecurity posture, and reinforcement of the development lifecycle for services offered to customers.
We also continued our efforts to identify and assess cybersecurity threats associated with our use of third party service providers by: (i) identifying and classifying the information that we share with our most critical third party service providers, (ii) conducting a security evaluation of third party service providers, (iii) obtaining security scorecards for their public websites, certifications that validate their management practices, and (iv) requesting reports from external auditors on the operational effectiveness of key providers' controls. In 2024, we increased the number of third party service providers that we evaluated for cybersecurity risk, especially in Banistmo, Banco Agrícola and Nequi, compared with 2023.
In 2024, we carried out a series of comprehensive awareness and training initiatives for all employees and a significant number of third-party service providers. These efforts included 10 cybersecurity exercises addressing topics such as phishing, ransomware, and business email attacks, achieving 100% employee participation. Additionally, all employees completed mandatory annual virtual courses on cybersecurity and information security. The virtual training platform, Cybersecurity Campus, remains accessible on our intranet, providing continuous learning and certification opportunities for all employees. We organized a cybersecurity marathon featuring interactive activities, demonstrations and conferences, engaging a large number of employees. Additionally, we developed a 20-hour theoretical and practical course on secure development, tailored for employees in roles such as developers, technical leaders, cybersecurity architects, and personnel from risk and audit departments. By the end of 2024, more than 1,200 employees had successfully completed the program.
We conducted awareness sessions on cybersecurity and fraud prevention, specifically for senior leaders, including participation from corporate-level vice presidents. Additionally, we engaged our clients through financial education and fraud prevention initiatives, leveraging social media campaigns, conferences and direct messaging across all segments. To further support our personal segment clients, we launched a podcast that is available on Spotify.
In 2025, we aim to enhance resilience against emerging cybersecurity threats by designing and simulating new scenarios to evaluate and improve the prevention and detection of threats and our response and recovery.
We will continue to address the improvement opportunities identified in our last assessment, advancing initiatives to strengthen the security of internet-exposed services, protect information, and simplify and converge our cybersecurity solutions.
In terms of automation, our focus will be on the initial operational stages of the CDC and the evaluation of third- and fourth-party providers, along with the integration of artificial intelligence into existing security controls. The goal is to enhance the effectiveness of these processes in operations. Additionally, through the Identity, Governance and Administration (‘IGA’) project, we are automating access provisioning (including registrations, cancellations, and changes), with plans to expand coverage further by 2025.
We will continue to define and implement work plans with our subsidiaries to implement best cybersecurity practices and enhance cybersecurity maturity levels across companies such as Wenia, Wompi, Renting, and Bancolombia Capital. This will consist through knowledge transfer, consulting, tool selection, and the provision of corporate services, tailored to the level of integration of each company.
To date, no material cybersecurity incident has occurred. However, we acknowledge the dynamic and ever-evolving nature of the global cyber risk landscape faced by industries and businesses. Depending on their origin and severity, future cybersecurity incidents could potentially have a material impact on our business strategy, operational performance or financial condition.
Board of Directors’ oversight of risks of cybersecurity threats
Bancolombia's Board of Directors, directly or through its committees, establishes and oversees our cybersecurity risk management strategy.
The Board of Directors receives semiannual reports from the Chief Information Security Officer (‘CISO’) regarding the cybersecurity environment, including the outcomes of the cybersecurity risk management process. These reports include evaluations of the confidentiality, integrity and availability of information, the identification of cybersecurity threats, assessments of the effectiveness of cybersecurity programs, the evolution of the maturity model, cybersecurity practices with third parties, awareness initiatives, improvement proposals, and a summary of incidents that have impacted us.
Additionally, the Board of Directors has engaged an external technology and cybersecurity advisor, with more than 30 years of experience and extensive expertise in the payment industry, to advise on such matters. The advisor attends the Board and relevant committee meetings when invited, offering independent advice and recommendations.
The Board has three committees that are involved in overseeing cybersecurity risk:
–The Technology and Cybersecurity Committee is comprised of at least three Board members, of which at least one must be an expert on cybersecurity matters. The Committee’s primary role is to assist the Board in the strategic oversight of technology and cybersecurity matters. It evaluates technological trends that may impact Bancolombia's strategic objectives and approves related adoption and management strategies. Key areas of focus include software development, technological architecture, service availability, IT continuity, and investment performance. The Committee also monitors significant cybersecurity and technology events, providing recommendations to the Board on measures to prevent and address channel unavailability. Additionally, it reports to the Board on the effectiveness of cybersecurity risk management, incidents of cybersecurity breaches, and the mitigation measures implemented.
–The Audit Committee is comprised of three independent Board members. This committee reviews and recommends to the Board of Directors, as per Colombian regulations, the approval of the information security and cybersecurity policy and the strategic technology plan, and their respective modifications.
–The Risk Committee is comprised of three independent Board members. This committee assists the Board with the oversight of the risk management strategy, which includes cyber risks.
Management’s role and expertise in assessing and managing cybersecurity risks
Our management is responsible for identifying, considering and assessing cybersecurity risks on an ongoing basis, establishing processes to monitor potential cybersecurity exposures, implementing appropriate mitigation measures, and maintaining robust cybersecurity programs.
The CISO, who reports to the Vice President of Customer and Employee Services, and dedicated personnel on his team are certified and experienced information systems security professionals and information security managers.
Bancolombia’s CEO and senior management receive monthly reports on cybersecurity achievements, including metrics on monthly expected loss compliance, fraud management and the availability of components, as well as new initiatives, controls, integration and alerts.
Bancolombia has two management committees involved in managing cybersecurity risks:
The Corporate Cybersecurity Committee is responsible for approving and promoting cybersecurity and information security policies, strategies, and projects. It oversees compliance with the strategic plan, prioritizes initiatives and budget allocation, monitors significant changes in cybersecurity risks, and fosters a culture of information security within Bancolombia. The committee meets quarterly and includes Bancolombia's Vice Presidents of Customer and Employee Services, Human Resources, and Risk, as well as the Vice Presidents of Services for Bancolombia, Banistmo, Banco Agrícola, Banco Agromercantil and Nequi. Meetings are led by the CISO, who participates as a permanent invitee. While the committee’s responsibilities align with those of the Cybersecurity and Information Security Committee, its decisions have a regional scope, impacting other companies within Bancolombia and tailoring specific initiatives to each bank.
The Cybersecurity and Information Security Committee approves and promotes policies, standards, strategies and crucial projects, in addition to making decisions on associated controls. It periodically evaluates strategic and tactical compliance plans, reviewing, approving and prioritizing initiatives or decisions. The Committee meets monthly, and its members are Bancolombia’s Vice-President of Corporate Services, Vice-President of Customer and Employee Services, Vice-President of Risk and Vice-President of Human Resources, Technology Services and Product Environment. The CISO, who has over 26 years of experience in Technology and Cybersecurity, is a permanent invitee of the Committee.
PART III
ITEM 17 FINANCIAL STATEMENTS
See Item 18.
ITEM 18 FINANCIAL STATEMENTS
Reference is made to pages F-1 through F-209.
ITEM 19 EXHIBITS
The following exhibits are filed as part of this Annual Report.
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| 1.1 |
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| 2.1 |
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| 2.2 |
Instruments defining the rights of the holders of long-term debt issued by Bancolombia S.A. and its subsidiaries. |
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The Bank agrees to furnish to the SEC upon request, copies of the instruments, including indentures, defining the rights of the holders of the Bank’s long-term debt and of the Bank’s subsidiaries’ long-term debt. |
| 2.4 |
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| 8.1 |
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| 11.1 |
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| 12.1 |
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| 12.2 |
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| 13.1 |
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| 13.2 |
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| 15.1 |
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| 97.1 |
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| 101.INS |
Inline XBRL Instance Document |
| 101.SCH |
Inline XBRL Taxonomy Extension Schema Document |
| 101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB |
Inline XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 104 |
Inline XBRL Cover Page Interactive Data File |
(1)Incorporated by reference to the Registration Statement on Form F-6, filed by Bancolombia on January 14, 2008.
SIGNATURE
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Annual Report on its behalf.
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| BANCOLOMBIA S.A. |
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/s/ MAURICIO BOTERO WOLFF |
Name: Mauricio Botero Wolff |
| Title: Chief Financial Officer |
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Date: March 28, 2025 |
CONSOLIDATED FINANCIAL STATEMENTS
2024, 2023 and 2022
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Bancolombia S. A.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated statements of financial position of Bancolombia S. A. and its subsidiaries (the “Bank”) as of December 31, 2024 and 2023, and the related consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2024, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Bank´s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Bank as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. Also in our opinion, the Bank maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Bank's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 15. Our responsibility is to express opinions on the Bank’s consolidated financial statements and on the Banks's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Bank in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
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| PwC Contadores y Auditores S.A.S., Calle 7 Sur No. 42-70, Torre 2, Piso 11, Edificio Forum, Medellín, Colombia. |
Tel: (60-4) 6040606, www.pwc.com/co |
© 2025 PricewaterhouseCoopers. PwC se refiere a las Firmas colombianas que hacen parte de la red global de PricewaterhouseCoopers International Limited, cada una de las cuales es una entidad legal separada e independiente. Todos los derechos reservados. |
F-2
Bancolombia S. A.
Report of Independent Registered Public Accounting Firm
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
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|
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| PwC Contadores y Auditores S.A.S., Calle 7 Sur No. 42-70, Torre 2, Piso 11, Edificio Forum, Medellín, Colombia. |
Tel: (60-4) 6040606, www.pwc.com/co |
© 2025 PricewaterhouseCoopers. PwC se refiere a las Firmas colombianas que hacen parte de la red global de PricewaterhouseCoopers International Limited, cada una de las cuales es una entidad legal separada e independiente. Todos los derechos reservados. |
F-3
Bancolombia S. A.
Report of Independent Registered Public Accounting Firm
Allowance for loans, advances and lease losses
As described in Notes 2 (section D.4.1.2.1 and E.1), to the consolidated financial statements, management assesses the adequacy of the allowance for loan losses based on evaluations of the loan portfolio utilizing objective and subjective criteria. As of December 31, 2024, the allowance for loan losses was COP$16,179,738 million on total loans of COP$279,453,908 million. As disclosed by management, expected credit losses are calculated using both individual and collective models and methodologies. These are based on significant assumptions and judgements that consider historical credit data, the current situation of the borrower and reasonable and proper forecasts of future economic conditions. Collective models include parameters such as the probability of default at 12 months, probability of default throughout the lifetime of the obligation (when the loan is classified as stage 2), loss given default, and exposure at default. These models also incorporate a prospective approach that includes assumptions of future macroeconomic conditions in plausible future scenarios. In addition, for loans individually assessed in stage 3, the Bank will evaluate significant defaulted loans. This evaluation will consider the debt profile of each debtor, the fair value of guarantees granted, information on credit behavior and the expected future cash flows from the client.
The principal considerations for our determination that performing procedures relating to the allowance for loans, advances and lease losses is a critical audit matter are (i) the significant judgment used by management in determining the expected credit losses, in particular the assumptions used in determining: probability of default at 12 months, probability of default throughout the lifetime of the obligation, loss given default, exposure at default with the inclusion of the forward-looking basis that includes assumptions of future macroeconomic conditions in plausible future scenarios. In addition, for loans individually assessed in Stage 3 analysis of the debt profile of each debtor, information on the credit behavior, the future cash flows expected from the client and the fair value of guarantees granted, which in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and in evaluating audit evidence obtained relating to these significant assumptions, and (ii) the audit effort involved the use of professionals with specialized skill and knowledge to assist in performing procedures and evaluating the audit evidence obtained.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming the overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the Bank allowance for loans, advances and leasing losses estimation process, which included controls over the data, models and assumptions used in the estimation process. These procedures also included, among others: testing management’s process for estimating the allowance for loan, advances and lease losses by (i) evaluating the appropriateness of the models utilized for the estimation of the expected loss parameters and the reasonableness of the significant assumptions, such as default at 12 months and lifetime, loss given default and exposure at default with the inclusion of the forward-looking basis that include assumptions of future macroeconomic conditions in plausible future scenarios, and evaluating the adjustments, (ii) testing the completeness and accuracy of the data used in the estimate and the mathematical accuracy of the impairment calculation for the credit portfolios; and (iii) evaluating individual credit files to determine the reasonableness of management’s estimation of the future cash flows expected from the client and the fair value of guarantees granted, estimated by management in the impairment for the credit portfolios. The procedures included the use of professionals with specialized skill and knowledge to assist in evaluating the appropriateness of the models utilized by management, methodologies and the reasonableness of the assumptions used in the credit loss estimates.
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| PwC Contadores y Auditores S.A.S., Calle 7 Sur No. 42-70, Torre 2, Piso 11, Edificio Forum, Medellín, Colombia. |
Tel: (60-4) 6040606, www.pwc.com/co |
© 2025 PricewaterhouseCoopers. PwC se refiere a las Firmas colombianas que hacen parte de la red global de PricewaterhouseCoopers International Limited, cada una de las cuales es una entidad legal separada e independiente. Todos los derechos reservados. |
F-4
Bancolombia S. A.
Report of Independent Registered Public Accounting Firm
Goodwill impairment assessment
As described in Notes 2 (section D.13) and 12.2 to the consolidated financial statements, the Bank goodwill balance was COP$9,017,419 million as of December 31, 2024. The Bank evaluates at the end of each period whether there is any indication that on a stand-alone basis non-financial assets and cash-generating units are impaired. If some indication of impairment does exist, the Bank estimates the recoverable amount of the assets and the loss by impairment, the impairment loss is recognized for the amount by which the carrying amount of the cash generating unit exceeds its recoverable amount. Regardless of whether impairment indicators exist, impairment of goodwill is assessed annually, or more frequently if events or changes in circumstances indicate that it may be impaired. The recoverable amount of non-financial assets or cash-generating units is defined as the higher of fair value less costs of disposal and value in use. Fair value is determined by Management with reference to market value (if available), through pricing models, or with the assistance of a valuation specialist. Meanwhile, value in use requires Management to develop significant assumptions and estimates to forecast cash flow for periods that extend beyond the normal requirements of management reports, assessing the appropriate discount rate and growth rate.
The principal considerations for our determination that performing procedures relating to the goodwill impairment assessment of all reporting units is a critical audit matter are the significant judgment by management when developing the recoverable amount measurement of the cash generating units. This in turn led to degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate management’s cash flow projections and significant assumptions, related to discount rate and growth rate, and other assumptions commonly used to determine the recoverable value of the goodwill. In addition, the audit effort involved the use of professionals with specialized skill and knowledge to assist in performing procedures and evaluating the audit evidence obtained.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming the overall opinion on the financial statements. These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the valuation of the Bank cash generating units. These procedures also included, among others, testing management’s process for developing the recoverable amount estimate; evaluating the appropriateness of the discounted cash flow model; testing the completeness, accuracy and relevance of underlying data used in the model; and evaluating the assumptions used by management were reasonable considering: (i) the current and past performance of the cash generating unit, (ii) the consistency with external market and industry data; and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit and other assumptions used to determine the recoverable value of the goodwill. Professionals with specialized skill and knowledge were used to assist in the evaluation of the appropriateness of the discounted cash flow model and the reasonableness of significant assumptions, relating to the discount rate and growth rate.
/s/ PwC Contadores y Auditores S. A. S.
Medellín, Colombia
March 28, 2025
We have served as the Company’s auditor since 2020.
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|
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| PwC Contadores y Auditores S.A.S., Calle 7 Sur No. 42-70, Torre 2, Piso 11, Edificio Forum, Medellín, Colombia. |
Tel: (60-4) 6040606, www.pwc.com/co |
© 2025 PricewaterhouseCoopers. PwC se refiere a las Firmas colombianas que hacen parte de la red global de PricewaterhouseCoopers International Limited, cada una de las cuales es una entidad legal separada e independiente. Todos los derechos reservados. |
F-5
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
BANCOLOMBIA S.A. AND ITS SUBSIDIARIES
As of December 31, 2024 and 2023
(Stated in millions of Colombian pesos)
|
|
|
|
|
|
|
|
|
|
|
|
| |
Note |
December 31, 2024 |
December 31, 2023 |
| ASSETS |
|
|
|
| Cash and cash equivalents |
4 |
32,844,099 |
39,799,609 |
| Financial assets investments |
5.1 |
37,570,270 |
25,674,195 |
| Derivative financial instruments |
5.2 |
2,938,142 |
6,252,270 |
| Financial assets investments and derivative financial instruments |
|
40,508,412 |
31,926,465 |
| Loans and advances to customers |
|
279,453,908 |
253,951,647 |
| Allowance for loans, advances and lease losses |
|
(16,179,738) |
|
(16,223,103) |
|
| Loans and advances to customers, net |
6 |
263,274,170 |
237,728,544 |
| Assets held for sale and inventories, net |
7 |
1,106,399 |
906,753 |
| Investment in associates and joint ventures |
8 |
2,928,984 |
2,997,603 |
| Investment properties |
9 |
5,580,109 |
4,709,911 |
| Premises and equipment, net |
10 |
5,906,064 |
6,522,534 |
| Right-of-use assets, lease |
11.2 |
1,757,206 |
1,634,045 |
| Goodwill and intangible assets, net |
12 |
9,767,903 |
8,489,697 |
| Deferred tax, net |
13.5 |
763,757 |
685,612 |
| Other assets, net |
14 |
7,778,279 |
7,528,036 |
| TOTAL ASSETS |
|
372,215,382 |
342,928,809 |
| LIABILITIES AND EQUITY |
|
|
|
| LIABILITIES |
|
|
|
| Deposits by customers |
15 |
279,059,401 |
247,941,180 |
| Interbank deposits and repurchase agreements and other similar secured borrowing |
16 |
1,776,965 |
1,076,436 |
| Derivative financial instruments |
5.2 |
2,679,643 |
6,710,364 |
| Borrowings from other financial institutions |
17 |
15,689,532 |
15,648,606 |
| Debt instruments in issue |
18 |
11,275,216 |
14,663,576 |
| Lease liabilities |
11.2 |
1,889,364 |
1,773,610 |
| Preferred shares |
|
584,204 |
584,204 |
| Current tax |
|
156,162 |
164,339 |
| Deferred tax, net |
13.5 |
2,578,504 |
1,785,230 |
| Employee benefit plans |
19 |
951,555 |
882,954 |
| Other liabilities |
20 |
10,990,561 |
12,648,581 |
| TOTAL LIABILITIES |
|
327,631,107 |
303,879,080 |
| EQUITY |
|
|
|
| Share capital |
22 |
480,914 |
480,914 |
| Additional paid-in-capital |
|
4,857,454 |
4,857,454 |
| Appropriated reserves |
23 |
22,575,837 |
20,044,769 |
| Retained earnings |
|
2,715,313 |
2,515,278 |
| Net income attributable to equity holders of the Parent Company |
|
6,267,744 |
6,116,936 |
| Accumulated other comprehensive income, net of tax |
|
6,645,206 |
4,074,161 |
| SHAREHOLDERS’ EQUITY ATTRIBUTABLE TO THE OWNERS OF THE PARENT COMPANY |
|
43,542,468 |
38,089,512 |
| Non-controlling interest |
|
1,041,807 |
960,217 |
| TOTAL EQUITY |
|
44,584,275 |
39,049,729 |
| TOTAL LIABILITIES AND EQUITY |
|
372,215,382 |
342,928,809 |
The accompanying notes form an integral part of these Consolidated Financial Statements.
CONSOLIDATED STATEMENT OF INCOME
BANCOLOMBIA S.A. AND ITS SUBSIDIARIES
For the years ended December 31, 2024, 2023 and 2022
(Stated in millions of Colombian pesos, except EPS stated in units of pesos)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Note |
2024 |
2023 |
2022 |
| Interest on loans and financial leases |
|
|
|
|
| Commercial |
|
16,550,290 |
|
17,277,481 |
|
10,950,463 |
|
| Consumer |
|
8,502,467 |
|
10,062,092 |
|
7,821,758 |
|
| Mortgage |
|
3,790,158 |
|
3,852,725 |
|
3,377,432 |
|
| Financial leases |
|
3,559,814 |
|
3,879,188 |
|
2,461,456 |
|
| Small business loans |
|
210,822 |
|
169,301 |
|
172,384 |
|
| Total interest income on loans and financial leases |
|
32,613,551 |
|
35,240,787 |
|
24,783,493 |
|
| Interest on debt instruments using the effective interest method |
25.1 |
965,935 |
|
1,029,377 |
|
588,792 |
|
| Total Interest on financial instruments using the effective interest method |
|
33,579,486 |
|
36,270,164 |
|
25,372,285 |
|
| Interest income on overnight and market funds |
|
208,491 |
|
197,307 |
|
61,962 |
|
| Interest and valuation on financial instruments |
25.1 |
1,756,244 |
|
578,688 |
|
1,362,700 |
|
| Total interest and valuation on financial instruments |
|
35,544,221 |
|
37,046,159 |
|
26,796,947 |
|
| Interest expenses |
25.2 |
(15,023,911) |
|
(16,668,295) |
|
(8,442,470) |
|
| Net interest margin and valuation on financial instruments before impairment on loans and financial leases, off balance sheet credit instruments and other financial instruments |
|
20,520,310 |
|
20,377,864 |
|
18,354,477 |
|
| Credit impairment charges on loans, advances and financial leases, net |
6 |
(5,413,652) |
|
(7,461,479) |
|
(3,721,353) |
|
| Credit impairment for other financial instruments |
5.1 - 21.1 |
(38,697) |
|
(107) |
|
(70,344) |
|
| Total credit impairment charges, net |
|
(5,452,349) |
|
(7,461,586) |
|
(3,791,697) |
|
| Net interest margin and valuation on financial instruments after impairment on loans and financial leases and off balance sheet credit instruments and other financial instruments |
|
15,067,961 |
|
12,916,278 |
|
14,562,780 |
|
| Fees and commissions income |
25.3 |
7,688,838 |
|
7,080,878 |
|
6,370,526 |
|
| Fees and commissions expenses |
25.3 |
(3,511,774) |
|
(3,097,280) |
|
(2,590,166) |
|
| Total fees and commissions, net |
|
4,177,064 |
|
3,983,598 |
|
3,780,360 |
|
| Other operating income |
25.4 |
3,041,985 |
|
3,979,650 |
|
2,053,435 |
|
| Dividends and net income on equity investments |
25.5 |
104,573 |
|
210,185 |
|
235,854 |
|
| Total operating income, net |
|
22,391,583 |
|
21,089,711 |
|
20,632,429 |
|
| Operating expenses |
|
|
|
|
| Salaries and employee benefits |
26.1 |
(5,628,062) |
|
(5,350,234) |
|
(4,417,656) |
|
| Other administrative and general expenses |
26.2 |
(5,445,212) |
|
(5,033,944) |
|
(4,559,900) |
|
| Taxes other than income tax |
26.2 |
(1,442,511) |
|
(1,433,148) |
|
(929,512) |
|
| Impairment, depreciation and amortization |
26.3 |
(1,117,881) |
|
(1,124,859) |
|
(980,575) |
|
| Total operating expenses |
|
(13,633,666) |
|
(12,942,185) |
|
(10,887,643) |
|
| Profit before income tax |
|
8,757,917 |
|
8,147,526 |
|
9,744,786 |
|
| Income tax |
13.3 |
(2,392,336) |
|
(1,932,555) |
|
(2,748,421) |
|
| Net income |
|
6,365,581 |
|
6,214,971 |
|
6,996,365 |
|
| Net income attributable to equity holders of the Parent Company |
|
6,267,744 |
|
6,116,936 |
|
6,783,490 |
|
| Non-controlling interest |
|
97,837 |
|
98,035 |
|
212,875 |
|
| Basic and diluted earnings per share to common shareholders, stated in units of pesos |
27 |
6,576 |
|
6,420 |
|
7,113 |
|
The accompanying notes form an integral part of these Consolidated Financial Statements.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
BANCOLOMBIA S.A. AND ITS SUBSIDIARIES
For the years ended December 31, 2024, 2023 and 2022
(Stated in millions of Colombian pesos)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Note |
2024 |
2023 |
2022 |
| Net income |
|
6,365,581 |
|
6,214,971 |
|
6,996,365 |
|
| Other comprehensive income/(loss) that will not be reclassified to net income |
|
|
|
|
| Remeasurement income related to defined benefit liability |
|
6,041 |
|
(44,594) |
|
69,249 |
|
| Income tax |
13.4 |
(4,747) |
|
13,234 |
|
(25,090) |
|
| Net of tax amount |
|
1,294 |
|
(31,360) |
|
44,159 |
|
| Investments in equity instruments measured at fair value through other comprehensive income (FVTOCI) |
|
|
|
|
| Unrealized gain |
|
22,109 |
|
11,144 |
|
33,354 |
|
| Income tax |
13.4 |
6,463 |
|
(246) |
|
(1,282) |
|
| Net of tax amount |
|
28,572 |
|
10,898 |
|
32,072 |
|
| Gains on asset revaluation |
|
|
|
|
| Income tax |
13.4 |
- |
|
- |
|
(71) |
|
| Net of tax amount |
|
- |
|
- |
|
(71) |
|
| Total other comprehensive income that will not be reclassified to net income, net of tax |
|
29,866 |
|
(20,462) |
|
76,160 |
|
| Other comprehensive income/(loss) that may be reclassified to net income |
|
|
|
|
| Investments in debt instruments measured at fair value through other comprehensive income (FVTOCI) |
|
|
|
|
| (Loss)/Gain on investments recycled to profit or loss upon disposal |
|
(5,996) |
|
(8,679) |
|
15,250 |
|
| Unrealized gain/(loss) |
|
20,272 |
|
119,225 |
|
(182,729) |
|
| Unrealized loss for fair value hedging |
|
- |
|
- |
|
(3,647) |
|
| Changes in loss allowance for credit losses |
|
538 |
|
3,741 |
|
(1,259) |
|
| Income tax |
|
8,422 |
|
(21,023) |
|
7,843 |
|
| Net of tax amount |
|
23,236 |
|
93,264 |
|
(164,542) |
|
| Foreign currency translation adjustments: |
|
|
|
|
| Exchange differences arising on translating the foreign operations |
|
2,978,351 |
|
(4,963,913) |
|
4,064,795 |
|
| (Loss)/Gain on net investment hedge in foreign operations |
|
(742,930) |
|
1,948,833 |
|
(1,833,087) |
|
| Income tax |
13.4 |
307,656 |
|
(772,755) |
|
746,232 |
|
Net of tax amount(1) |
|
2,543,077 |
|
(3,787,835) |
|
2,977,940 |
|
| Cash flow hedges |
|
|
|
|
| Net gains from cash flow hedges |
|
351 |
|
- |
|
- |
|
| Reclassification to the Statement of Income |
|
(135) |
|
- |
|
- |
|
| Income tax |
13.4 |
(87) |
|
- |
|
- |
|
Net of tax amount |
|
129 |
|
- |
|
- |
|
| Unrealized loss on investments in associates and joint ventures using equity method |
|
(7,690) |
|
(2,225) |
|
(1,929) |
|
| Income tax |
13.4 |
1,348 |
|
2,223 |
|
(1,221) |
|
| Net of tax amount |
|
(6,342) |
|
(2) |
|
(3,150) |
|
| Total other comprehensive income that may be reclassified to net income, net of tax |
|
2,560,100 |
|
(3,694,573) |
|
2,810,248 |
|
| Other comprehensive income, attributable to the owners of the Parent Company, net of tax |
|
2,589,966 |
|
(3,715,035) |
|
2,886,408 |
|
| Other comprehensive income, attributable to the Non-controlling interest |
|
3,278 |
|
(5,222) |
|
3,441 |
|
| Total comprehensive income attributable to: |
|
8,958,825 |
|
2,494,714 |
|
9,886,214 |
|
| Equity holders of the Parent Company |
|
8,857,710 |
|
2,401,901 |
|
9,669,898 |
|
| Non-controlling interest |
|
101,115 |
|
92,813 |
|
216,316 |
|
(1)In 2024, there was a 15.36% devaluation of the Colombian peso against the U.S. dollar and in 2023 there was 20.54% revaluation.
The accompanying notes form an integral part of these Consolidated Financial Statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
BANCOLOMBIA S.A. AND ITS SUBSIDIARIES
For the years ended December 31, 2024, 2023 and 2022
(Stated in millions of Colombian pesos, except per share amounts stated in units of pesos)
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to owners of Parent Company |
|
|
|
|
|
|
Accumulated other comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
Capital
(Note 22) |
Additional
Paid in
capital |
Appropiated
Reserves
(Note 23) |
Translation
adjustment |
Cash flow hedging |
Equity
Securities
through OCI |
Debt
instruments
at fair value
through OCI |
Revaluation
of assets |
Associates |
Employee
Benefits |
Retained
earnings |
Net
Income |
Attributable
to owners
of Parent
Company |
Non-
Controlling
interest |
Total
equity |
| Balance as of January 1, 2024 |
480,914 |
4,857,454 |
|
20,044,769 |
|
3,974,379 |
|
- |
|
193,906 |
|
(67,306) |
|
2,137 |
|
11,520 |
|
(40,475) |
|
2,515,278 |
|
6,116,936 |
|
38,089,512 |
|
960,217 |
|
39,049,729 |
|
| Transfer to profit from previous years |
- |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
6,116,936 |
|
(6,116,936) |
|
- |
|
- |
|
- |
|
Dividend payment corresponding to 509,704,584 common shares and 452,122,416 preferred shares without voting rights, subscribed and paid as of December 31, 2023, at a rate of COP 3,536 per share. |
- |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(3,343,319) |
|
- |
|
(3,343,319) |
|
- |
|
(3,343,319) |
|
| Other reserves |
- |
- |
|
2,531,068 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(2,566,144) |
|
- |
|
(35,076) |
|
- |
|
(35,076) |
|
Realization of retained earnings(1) |
- |
- |
|
- |
|
- |
|
- |
|
(18,921) |
|
- |
|
- |
|
- |
|
- |
|
18,921 |
|
- |
|
- |
|
- |
|
- |
|
| Others |
- |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(26,359) |
|
- |
|
(26,359) |
|
- |
|
(26,359) |
|
| Non-controlling interest |
- |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(19,525) |
|
(19,525) |
|
| Net Income |
- |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
6,267,744 |
|
6,267,744 |
|
97,837 |
|
6,365,581 |
|
| Other comprehensive income |
- |
- |
|
- |
|
2,543,077 |
|
129 |
|
28,572 |
|
23,236 |
|
- |
|
(6,342) |
|
1,294 |
|
- |
|
- |
|
2,589,966 |
|
3,278 |
|
2,593,244 |
| Balance as of December 31, 2024 |
480,914 |
4,857,454 |
|
22,575,837 |
|
6,517,456 |
|
129 |
|
203,557 |
|
(44,070) |
|
2,137 |
|
5,178 |
|
(39,181) |
|
2,715,313 |
|
6,267,744 |
|
43,542,468 |
|
1,041,807 |
|
44,584,275 |
|
(1)Mainly corresponds to partial payments of asset-backed securities investments.
The accompanying notes form an integral part of these Consolidated Financial Statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
BANCOLOMBIA S.A. AND ITS SUBSIDIARIES
For the years ended December 31, 2024, 2023 and 2022
(Stated in millions of Colombian pesos, except per share amounts stated in units of pesos)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to owners of Parent Company |
|
|
|
|
|
|
Accumulated other comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
Capital
(Note 22) |
Additional
Paid in
capital |
Appropiated
Reserves
(Note 23) |
Translation
adjustment |
Equity
Securities
through OCI |
Debt
instruments
at fair value
through OCI |
Revaluation
of assets |
Associates |
Employee
Benefits |
Retained
earnings |
Net
Income |
Attributable
to owners
of Parent
Company |
Non-
Controlling
interest |
Total
equity |
| Balance as of January 1, 2023 |
480,914 |
4,857,454 |
|
15,930,665 |
|
7,762,214 |
|
152,028 |
|
(160,570) |
|
2,137 |
|
11,522 |
|
(9,115) |
|
3,278,164 |
|
6,783,490 |
|
39,088,903 |
|
908,648 |
|
39,997,551 |
|
| Transfer to profit from previous years |
- |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
6,783,490 |
|
(6,783,490) |
|
- |
|
- |
|
- |
|
Dividend payment corresponding to 509,704,584 common shares and 452,122,416 preferred shares without voting rights, subscribed and paid as of December 31, 2022, at a rate of COP 3,536 per share. |
- |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(3,343,319) |
|
- |
|
(3,343,319) |
|
- |
|
(3,343,319) |
|
| Other reserves |
- |
- |
|
4,114,104 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(4,149,684) |
|
- |
|
(35,580) |
|
- |
|
(35,580) |
|
Realization of retained earnings(1) |
- |
- |
|
- |
|
- |
|
30,980 |
|
- |
|
- |
|
- |
|
- |
|
(30,980) |
|
- |
|
- |
|
- |
|
- |
|
| Others |
- |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(22,393) |
|
- |
|
(22,393) |
|
- |
|
(22,393) |
|
| Non-controlling interest |
- |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(41,244) |
|
(41,244) |
|
| Net Income |
- |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
6,116,936 |
|
6,116,936 |
|
98,035 |
|
6,214,971 |
|
| Other comprehensive income |
- |
- |
|
- |
|
(3,787,835) |
|
10,898 |
|
93,264 |
|
- |
|
(2) |
|
(31,360) |
|
- |
|
- |
|
(3,715,035) |
|
(5,222) |
|
(3,720,257) |
|
| Balance as of December 31, 2023 |
480,914 |
4,857,454 |
|
20,044,769 |
|
3,974,379 |
|
193,906 |
|
(67,306) |
|
2,137 |
|
11,520 |
|
(40,475) |
|
2,515,278 |
|
6,116,936 |
|
38,089,512 |
|
960,217 |
|
39,049,729 |
|
(1)Corresponds mainly to the exchange of shares from Bolsa de Valores de Colombia for shares of the Holding Bursátil Regional in Chile. The Holding Bursátil Regional was constituted as of the integration of the Colombia, Peru and Chile Stock Exchanges in November 2023. See Note 5.1. Financial assets investments.
The accompanying notes form an integral part of these Consolidated Financial Statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
BANCOLOMBIA S.A. AND ITS SUBSIDIARIES
For the years ended December 31, 2024, 2023 and 2022
(Stated in millions of Colombian pesos, except per share amounts stated in units of pesos)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to owners of Parent Company |
|
|
|
|
|
|
Accumulated other comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
Capital
(Note 22) |
Additional
Paid in
capital |
Appropiated
Reserves
(Note 23) |
Translation
adjustment |
Equity
Securities
through OCI |
Debt
instruments
at fair value
through OCI |
Revaluation
of assets |
Associates |
Employee
Benefits |
Retained
earnings |
Net
Income |
Attributable
to owners
of Parent
Company |
Non-
Controlling
interest |
Total
equity |
| Balance as of January 1, 2022 |
480,914 |
4,857,454 |
|
14,661,007 |
|
4,784,274 |
|
135,364 |
|
3,972 |
|
2,208 |
|
13,874 |
|
(65,303) |
|
3,273,788 |
|
4,086,795 |
|
32,234,347 |
|
1,691,111 |
|
33,925,458 |
|
| Transfer to profit from previous years |
- |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
4,086,795 |
|
(4,086,795) |
|
- |
|
- |
|
- |
|
Dividend payment corresponding to 509,704,584 common shares and 452,122,416 preferred shares without voting rights, subscribed and paid as of December 31, 2021, at a rate of COP 3,120 per share. |
- |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(2,943,199) |
|
- |
|
(2,943,199) |
|
- |
|
(2,943,199) |
|
| Other reserves |
- |
- |
|
1,269,658 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(1,299,084) |
|
- |
|
(29,426) |
|
- |
|
(29,426) |
|
Realization of retained earnings(1)(2) |
- |
- |
|
- |
|
- |
|
(15,408) |
|
- |
|
- |
|
798 |
|
12,029 |
|
2,581 |
|
- |
|
- |
|
- |
|
- |
|
| Others |
- |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
11,776 |
|
- |
|
11,776 |
|
- |
|
11,776 |
|
Acquisition Non-controlling interest (3) |
- |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
145,507 |
|
- |
|
145,507 |
|
(961,588) |
|
(816,081) |
|
| Non-controlling interest |
- |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(37,191) |
|
(37,191) |
|
| Net Income |
- |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
6,783,490 |
|
6,783,490 |
|
212,875 |
|
6,996,365 |
|
| Other comprehensive income |
- |
- |
|
- |
|
2,977,940 |
|
32,072 |
|
(164,542) |
|
(71) |
|
(3,150) |
|
44,159 |
|
- |
|
- |
|
2,886,408 |
|
3,441 |
|
2,889,849 |
|
| Balance as of December 31, 2022 |
480,914 |
4,857,454 |
|
15,930,665 |
|
7,762,214 |
|
152,028 |
|
(160,570) |
|
2,137 |
|
11,522 |
|
(9,115) |
|
3,278,164 |
|
6,783,490 |
|
39,088,903 |
|
908,648 |
|
39,997,551 |
|
(1)Mainly corresponds to partial payments of asset-backed securities investments.
(2)Corresponds to termination to the Pension Premium Plan. For further information see Note 19.3 Retirement Pension Premium Plan and Executive Pension Plan Premium.
(3)During the third trimester of 2022, the Parent Company increased its participation percentage in FCP Fondo Inmobiliario Colombia. As of December 31, 2022, the Parent Company’s’ participation in said the private equity fund increased to 80.47%.
The accompanying notes form an integral part of these Consolidated Financial Statements.
CONSOLIDATED STATEMENT OF CASH FLOW
BANCOLOMBIA S.A. AND ITS SUBSIDIARIES
For the years ended December 31, 2024, 2023 and 2022
(Stated in millions of Colombian pesos)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note |
2024 |
2023 |
2022 |
| Net income |
|
6,365,581 |
|
6,214,971 |
|
6,996,365 |
|
| Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
| Depreciation and amortization |
26.3 |
1,011,455 |
|
1,082,838 |
|
949,448 |
|
| Other assets impairment |
26.3 |
106,426 |
|
42,021 |
|
31,127 |
|
| Impairment of investments in associates and joint ventures |
8 - 25.5 |
314,347 |
|
108,175 |
|
9,633 |
|
| Equity method |
8 - 25.5 |
(222,572) |
|
(113,115) |
|
(219,105) |
|
| Credit impairment charges on loans and advances and financial leases |
6 |
5,413,652 |
|
7,461,479 |
|
3,721,353 |
|
Credit impairment charges on off balance sheet credit and other financial instruments(1) |
|
38,697 |
|
107 |
|
70,344 |
|
| Gain on sales of assets |
25.4 |
(103,481) |
|
(170,910) |
|
(171,482) |
|
| Valuation gain on investment securities |
25.1 - 25.5 |
(2,376,109) |
|
(1,680,403) |
|
(1,786,416) |
|
Loss upon disposal of investment in subsidiary, associates and joint ventures(2) |
|
- |
|
- |
|
41,434 |
|
| Valuation gain on derivative financial instruments |
|
(323,784) |
|
(180,246) |
|
(68,055) |
|
| Income tax |
13.2 |
2,392,336 |
|
1,932,555 |
|
2,748,421 |
|
| Bonuses and short-term benefits |
|
811,648 |
|
734,916 |
|
640,458 |
|
| Dividends |
25.5 |
(140,634) |
|
(127,427) |
|
(59,072) |
|
| Investment property valuation |
25.4 |
(200,256) |
|
(197,526) |
|
(236,617) |
|
Effect of exchange rate changes |
|
307,689 |
|
(245,915) |
|
(224,788) |
|
| Other non-cash items |
|
(10,276) |
|
74,905 |
|
22,632 |
|
| Net interest |
|
(17,589,640) |
|
(18,572,492) |
|
(16,341,023) |
|
| Change in operating assets and liabilities: |
|
|
|
|
| (Increase) / decrease in derivative financial instruments |
|
(394,624) |
|
859,961 |
|
348,554 |
|
| (Increase) / decrease in accounts receivable |
|
(713,069) |
|
(525,550) |
|
515,052 |
|
| Increase in loans and advances to customers |
|
(21,622,099) |
|
(10,554,946) |
|
(37,593,875) |
|
| Decrease / (increase) in other assets |
|
895,908 |
|
(1,151,822) |
|
(724,769) |
|
| (Decrease) / increase in accounts payable |
|
(859,352) |
|
945,923 |
|
2,719,586 |
|
| (Decrease) / increase in other liabilities |
|
(1,393,618) |
|
245,593 |
|
(127,044) |
|
| Increase in deposits by customers |
|
18,329,816 |
|
17,025,357 |
|
23,214,318 |
|
| Decrease in estimated liabilities and provisions |
|
(18,204) |
|
(40,602) |
|
(31,945) |
|
| Net changes in investment securities recognized at fair value through profit or loss |
|
(8,401,726) |
|
(1,988,166) |
|
6,321,440 |
|
| Proceeds from sales of assets held for sale and inventories |
|
1,380,264 |
|
1,060,642 |
|
778,328 |
|
| Recovery of charged-off loans |
6 |
926,268 |
|
770,934 |
|
674,966 |
|
| Income tax paid |
|
(1,954,871) |
|
(2,737,511) |
|
(2,057,388) |
|
| Dividend received |
|
223,313 |
|
155,676 |
|
81,899 |
|
| Interest received |
|
33,225,177 |
|
34,702,410 |
|
23,603,725 |
|
| Interest paid |
|
(14,982,367) |
|
(15,978,748) |
|
(7,508,066) |
|
| Net cash (used) / provided by operating activities |
|
435,895 |
|
19,153,084 |
|
6,339,438 |
|
| Cash flows from investment activities: |
|
|
|
|
| Purchases of debt instruments at amortized cost |
|
(2,114,414) |
|
(3,629,543) |
|
(4,915,717) |
|
| Proceeds from maturities of debt instruments at amortized cost |
|
1,622,184 |
|
4,738,686 |
|
4,260,063 |
|
| Purchases of debt instruments at fair value through OCI |
|
(448,930) |
|
(7,837,997) |
|
(6,562,334) |
|
| Proceeds from debt instruments at fair value through OCI |
|
2,307,032 |
|
9,253,538 |
|
6,797,420 |
|
| Purchases of equity instruments at fair value through OCI and interests in associates and joint ventures |
|
(134,381) |
|
(122,910) |
|
(255,129) |
|
| Proceeds from equity instruments at fair value through OCI and interests in associates and joint ventures |
|
40,489 |
|
16,804 |
|
198,807 |
|
Consideration paid to non-controlling interests(3) |
|
- |
|
- |
|
(816,081) |
|
| Purchases of premises and equipment and investment properties |
|
(2,042,094) |
|
(2,412,123) |
|
(3,538,855) |
|
| Acquisition of subsidiaries |
|
- |
|
- |
|
799 |
|
| Proceeds from sales of premises and equipment and investment properties |
|
414,030 |
|
185,324 |
|
421,729 |
|
| Purchase of other long-term assets |
|
(203,112) |
|
(351,468) |
|
(245,204) |
|
| Net cash used in investing activities |
|
(559,196) |
|
(159,689) |
|
(4,654,502) |
|
| Cash flows from financing activities: |
|
|
|
|
| Increase / (decrease) in repurchase agreements and other similar secured borrowing |
|
550,584 |
|
304,846 |
|
(579,488) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Proceeds from borrowings from other financial institutions |
|
9,416,739 |
|
9,855,033 |
|
14,374,110 |
|
| Repayment of borrowings from other financial institutions |
|
(10,496,891) |
|
(9,921,582) |
|
(5,874,833) |
|
| Payment of lease liability |
|
(174,818) |
|
(182,596) |
|
(157,402) |
|
Placement of debt instruments in issue(4) |
|
4,155,253 |
|
1,781,728 |
|
2,138,125 |
|
Payment of debt instruments in issue(4) |
|
(9,276,962) |
|
(3,928,673) |
|
(6,699,219) |
|
| Dividends paid |
|
(3,398,756) |
|
(3,298,183) |
|
(2,310,666) |
|
| Transactions with non-controlling interests |
|
(19,525) |
|
(41,245) |
|
(37,191) |
|
Net cash (used) provided in financing activities(5) |
|
(9,244,376) |
|
(5,430,672) |
|
853,436 |
|
Effect of exchange rate changes on cash and cash equivalents |
|
2,412,167 |
|
(5,408,405) |
|
3,777,073 |
|
| (Decrease) / increase in cash and cash equivalents |
|
(9,367,677) |
|
13,562,723 |
|
2,538,372 |
|
| Cash and cash equivalents at beginning of year |
4 |
39,799,609 |
|
31,645,291 |
|
25,329,846 |
|
| Cash and cash equivalents at end of year |
4 |
32,844,099 |
|
39,799,609 |
|
31,645,291 |
|
(1)Mainly credit card limits and overdrafts.
(2)In 2022, was registered the spin-off of Protección S.A. and the creation of Asulado Seguros de Vida S.A., were registered; the Bank sold its interest in Asulado Seguros de Vida S.A. to SURA Asset Management S.A., to comply with the authorized investment regime.
(3)During the third trimester of 2022, the Parent Company increased its participation percentage in FCP Fondo Inmobiliario Colombia. As of December 31, 2022, the participation in said private equity fund increased to 80.47%.
(4)For further information, see Note 18 Debt instruments in issues.
(5)For further information about the reconciliation of the balances of liabilities from financing activities, see Note 29 Liabilities from financing activities.
The statement of cash flows includes the following non-cash transactions, which were not reflected in the Consolidated Statement of Cash Flows:
•During the years ended December 31, 2024, 2023 and 2022, restructured loans and returned assets that were transferred to assets held for sale, inventories, and other assets for COP 1,408,331, COP 1,361,465 and COP 889,752, respectively,
•In 2024, asset received as payment in kind for a loan portfolio, which was recognized as an equity instrument representing an 11% stake in the units of the FCP Pactia Inmobiliario for COP 230,674.
•In 2024, cancellation of active credit operations as a source of payment for the acquisition of P.A. Cedis Sodimac.
The accompanying notes form an integral part of these Consolidated Financial Statements.
NOTE 1. REPORTING ENTITY
Bancolombia S.A., hereinafter the Parent Company, is a credit establishment, listed on the Colombia Stock Exchange (BVC) as well as on the New York Stock Exchange (NYSE), since 1981 and 1995, respectively. The Parent Company's main location is in Medellin (Colombia), main address Carrera 48 # 26-85, Avenida Los Industriales, and was originally constituted under the name Banco Industrial Colombiano (BIC) according to public deed number 388, date January 24, 1945, from the First Notary's Office of Medellin, authorized by the Superintendence of Finance of Colombia (“SFC”). On April 3, 1998, by means of public deed No. 633, BIC merged with Bank of Colombia S.A., and the resulting organization of that merger was named Bancolombia S.A.
The operating license was authorized definitively by the SFC according to Resolution number 3140 on September 24, 1993. The duration of the company was extended until December 8, 2144. The company may be dissolved or extended before said term.
The Parent Company´s bylaws are formalized in the public deed number 2040, dated July 26, 2024, at the 20th Notary´s Office of Medellín.
Bancolombia S.A.’s business purpose is to carry out all operations, transactions, acts and services inherent to the banking business. The Parent Company may, by itself or through its subsidiaries, own interests in other corporations, wherever authorized by law, according to all terms and requirements, limits or conditions established therein.
The Parent Company and its subsidiaries include the following operating segments: Banking Colombia, Banking Panama, Banking El Salvador, Banking Guatemala, Trust, Investment banking, Brokerage, International Banking and Others. The activities carried out by each operating segment of Bancolombia Group are described in Note 3. Operating segments.
The Parent Company, through its subsidiaries, has banking operations and an international presence in United States, Puerto Rico, Panama, Guatemala, and El Salvador.
The assets and liabilities of operations in Barbados through Mercom Bank were transferred to other companies, leaving the balances of the credit portfolio and deposit portfolio at zero. As of December 31, 2024, the company is in the process of dissolution and liquidation.
Operations in the Cayman Islands through Sinesa Cayman, Inc. (before Bancolombia Cayman) have been canceled or transferred. On November 22, 2023, the Cayman Islands Monetary Authority approved the delivery of the banking license in accordance with Section 20(1)(a) of the Banking and Trust Companies Act (2021 Revision) (the “BTCA”). Therefore, the banking license has been canceled as of that date. As it is no longer a banking entity, on June 20, 2024, the name was changed to Sinesa Cayman, Inc., the company is currently in the process of dissolution and liquidation in the Cayman Islands Companies Registry.
The General Assembly of Shareholders of Transportempo S.A.S approved the liquidation of the company, making the corresponding adjudications and approvals of its final accounts. The above is recorded in Minute No. 98 of July 3, 2024.
On December 14, 2021, The Parent Company´s Board of Directors authorized the legal separation of the Nequi business, the digital platform of Bancolombia Group. The Financial Superintendence of Colombia (Superintendencia Financiera de Colombia) through Resolution 0843 of July 6, 2022, later modified by the Resolution 0955 of July 27, 2022, authorized the establishment of Nequi S.A. Compañía de Financiamiento. The legal separation resulted in the creation and commercial registration of a new corporation through which Nequi will operate as a 100% digital credit establishment. Nequi must obtain an authorization certificate or operating permit, accredited by the Financial Superintendence of Colombia in order to operate. Activities for this process are in progress. In September 2022, the company Nequi S.A. was created with a capitalization of COP 150,000 distributed mainly in Banca de Inversión Bancolombia S.A. Corporación Financiera with a participation percentage of 94.99%, Inversiones CFNS S.A.S. and others minority stockholders of 5.01%.
The Parent Company announced on October 29, 2024 that its Board of Directors authorized management to move forward with the steps necessary to modify the corporate structure of The Parent Company, its affiliates and subsidiaries through the creation of a holding company to be named Grupo Cibest S.A. as well as certain related corporate transactions.
The corporate structure changes will be presented, as applicable, for consideration at the shareholder meetings of the entities involved, including at an Extraordinary General Shareholders’ Meeting of the common and preferred shareholders of The Parent Company once required regulatory authorizations are obtained in Colombia and in other jurisdictions where The Parent Company ´s affiliates and subsidiaries operate.
The changes in the corporate structure include the following transactions:
(i)The distribution of certain subsidiaries by Bancolombia (Panama) S.A. to Sociedad Beneficiaria BC Panamá S.A.S., a company established by The Parent Company with the sole purpose of being the beneficiary of this distribution and subsequently merged into The Parent Company.
(ii)The merger of Sociedad Beneficiaria BC Panamá S.A.S into The Parent Company.
(iii)The distribution of certain assets and subsidiaries of Banca de Inversión Bancolombia S.A. Corporación Financiera to The Parent Company.
(iv)The distribution of certain assets and subsidiaries of The Parent Company to Grupo Cibest.
Once the corporate structure changes are completed, Grupo Cibest will be the parent company of The Parent Company, its affiliates and subsidiaries.
The shareholders of The Parent Company will become shareholders of Grupo Cibest, maintaining the same number of shares and the same percentage investment and under the same terms and conditions they have in The Parent Company at the time the transaction is finalized, which means the transaction will not involve the change in any rights with respect to the common and preferred shares nor any transfer of value to third parties.
On January 13, 2025, The Parent Company announced the publication of notices of merger by absorption and distribution of certain assets.
As of December 31, 2024, Bancolombia Group has 34,114 employees, 34,786 banking correspondents, 6,113 ATMs and operates through 844 offices.
For more information on the Bank’s subsidiaries, see Note 2.C.1. Subsidiaries.
NOTE 2. MATERIAL ACCOUNTING POLICIES
A. Basis for preparation of the consolidated financial statements
The consolidated financial statements of the Bank's are prepared in accordance with the International Financial Reporting Standards (hereinafter, “IFRS”) issued by the International Accounting Standards Board (hereinafter, “IASB”), as well as, the interpretations issued by the International Financial Reporting Interpretations Committee (hereinafter, “IFRS-IC”).
The preparation of consolidated financial statements in conformity with IFRS requires the use of accounting estimates that, by definition, will seldom equal the actual results. Therefore, the estimates and assumptions are constantly reviewed. Any revision is recognized in the same period if it affects the reviewed period; or in the reviewed period and future periods if it affects all the current and future periods.
Preparation of the consolidated financial statements under going concern basis
Management has assessed the Bank's ability to continue as a going concern and confirms that the Bank has adequate liquidity and solvency to continue operating the business for the foreseeable future, which is at least, but is not limited to, 12 months from the end of the reporting period. Based on the Bank's liquidity position at the date of authorization of the consolidated financial statements, Management maintains a reasonable expectation that it has adequate liquidity and solvency to continue in operation for at least the next 12 months and that the going concern basis of accounting remains appropriate.
The consolidated financial statements were prepared on a going concern basis and do not include any adjustments to the reported carrying amounts and classification of assets, liabilities and expenses that might otherwise be required if the going concern basis were not correct.
Assets and liabilities are measured at cost or amortized cost, except for some financial assets and liabilities and investment properties that are measured at fair value. Financial assets and liabilities measured at fair value comprise those classified as assets and liabilities at fair value through profit or loss, debt instruments and equity securities measured at fair value through other comprehensive income (“OCI”) and derivative instruments. Likewise, the carrying value of assets and liabilities recognized as a fair value hedge are adjusted for changes in fair value attributable to the hedged risk. Almost all investments in associates and joint ventures are measured using the equity method.
The consolidated financial statements are stated in Colombian pesos (“COP”) and figures are stated in millions or billions (when indicated), except earnings per share, diluted earnings per share and the exchange rate, which are stated in units of Colombian pesos, while other currencies (dollars, euro, pounds, etc.) are stated in thousands.
The Parent Company’s financial statements, which have been prepared in accordance with “Normas de Contabilidad e Información Financiera” (“NCIF”) applicable to separate financial statements, are those that serve as the basis for the distribution of dividends and other appropriations by the shareholders.
The separate financial statements are those presented by the Parent Company in which the entity recognizes and measures the impairment of credit risk through allowances for loans losses, the classification and measurement of certain financial instruments (such as debt securities and equity instruments) and the recognition of provisions for foreclosed assets, in accordance with the accounting required by the SFC, which differ in certain accounting principles from IFRS that are used in the consolidated financial statements.
B. Presentation of the consolidated financial statements
The Bank presents the consolidated statement of financial position ordered by liquidity and the consolidated statement of income is prepared based on the nature of expenses. Revenues and expenses are not offset unless such treatment is permitted or required by an accounting standard or interpretation and described in the Bank's policies.
The consolidated statement of comprehensive income presents net income and items of OCI classified by nature and grouped into those that will not be reclassified subsequently to profit or loss and those that will be reclassified when specific conditions are met. The Bank discloses the amount of income tax relating to each item of OCI.
The consolidated statement of cash flows was prepared using the indirect method, whereby net income is adjusted for the effects of transactions of a non-cash nature, changes during the period in operating assets and liabilities, and items of income or expense associated with investing or financing cash flows.
C. Consolidation
1. Subsidiaries
The consolidated financial statements include the financial statements of Bancolombia S.A. and its subsidiaries as of December 31, 2024 and 2023. The Parent Company consolidates the financial results of the entities over which it exerts control.
The Parent Company has the following subsidiaries making up the Bank´s organizational structure, which is currently registered as a corporate group:
|
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|
| ENTITY |
JURISDICTION
OF
INCORPORATION |
BUSINESS |
PROPORTION OF
OWNERSHIP
INTEREST AND
VOTING POWER
HELD BY THE
BANK 2024 |
PROPORTION OF
OWNERSHIP
INTEREST AND
VOTING POWER
HELD BY THE
BANK 2023 |
PROPORTION OF
OWNERSHIP
INTEREST AND
VOTING POWER
HELD BY THE
BANK 2022 |
| Fiduciaria Bancolombia S.A. Sociedad Fiduciaria |
Colombia |
Trust |
98.81 |
% |
98.81 |
% |
98.81 |
% |
| Banca de Inversión Bancolombia S.A. Corporación Financiera |
Colombia |
Investment banking |
100.00 |
% |
100.00 |
% |
100.00 |
% |
| Valores Bancolombia S.A. Comisionista de Bolsa |
Colombia |
Securities brokerage |
100.00 |
% |
100.00 |
% |
100.00 |
% |
Wompi S.A.S.(1) |
Colombia |
Technology services provider |
100.00 |
% |
100.00 |
% |
99.98 |
% |
| Renting Colombia S.A.S. |
Colombia |
Operating leasing |
100.00 |
% |
100.00 |
% |
100.00 |
% |
Transportempo S.A.S. “En liquidación”(2) |
Colombia |
Transportation |
- |
% |
100.00 |
% |
100.00 |
% |
Inversiones CFNS S.A.S.(3) |
Colombia |
Investments |
100.00 |
% |
99.94 |
% |
99.94 |
% |
| Negocios Digitales Colombia S.A.S. |
Colombia |
Payment solutions |
100.00 |
% |
100.00 |
% |
100.00 |
% |
| Fondo de Capital Privado Fondo Inmobiliario Colombia |
Colombia |
Real estate investment fund |
80.47 |
% |
80.47 |
% |
80.47 |
% |
| P.A. Inmuebles CEM |
Colombia |
Mercantile trust |
80.47 |
% |
80.47 |
% |
80.47 |
% |
| P.A. Calle 92 FIC-11 |
Colombia |
Mercantile trust |
52.31 |
% |
52.31 |
% |
52.31 |
% |
| P.A. FIC Edificio Corfinsura |
Colombia |
Mercantile trust |
80.47 |
% |
80.47 |
% |
80.47 |
% |
| P.A. FIC-A5 |
Colombia |
Mercantile trust |
80.47 |
% |
80.47 |
% |
80.47 |
% |
| P.A. FIC Inmuebles |
Colombia |
Mercantile trust |
80.47 |
% |
80.47 |
% |
80.47 |
% |
| P.A. FIC Clínica de Prado |
Colombia |
Mercantile trust |
62.00 |
% |
62.00 |
% |
62.00 |
% |
| P. A. FIC A6 |
Colombia |
Mercantile trust |
80.47 |
% |
80.47 |
% |
80.47 |
% |
| P.A. Central Point |
Colombia |
Mercantile trust |
60.35 |
% |
60.35 |
% |
60.35 |
% |
Fideicomiso Irrevocable de Garantía, Fuente de Pago y Administración Inmobiliaria Polaris(4) |
Colombia |
Mercantile trust |
- |
% |
80.47 |
% |
80.47 |
% |
| P.A. Fideicomiso Twins Bay |
Colombia |
Mercantile trust |
80.47 |
% |
80.47 |
% |
80.47 |
% |
| Fideicomiso Lote Av San Martín |
Colombia |
Mercantile trust |
80.47 |
% |
80.47 |
% |
80.47 |
% |
| P.A. Fideicomiso Lote 30 |
Colombia |
Mercantile trust |
80.47 |
% |
80.47 |
% |
80.47 |
% |
| Fideicomiso Fondo Inmobiliario Bancolombia |
Colombia |
Mercantile trust |
80.47 |
% |
80.47 |
% |
80.47 |
% |
P.A. Florencia Ferrara(5) |
Colombia |
Mercantile trust |
44.26 |
% |
44.26 |
% |
44.26 |
% |
P.A. Flor Morado Plaza(5) |
Colombia |
Mercantile trust |
80.47 |
% |
80.47 |
% |
80.47 |
% |
P.A. Galería la 33(6) |
Colombia |
Mercantile trust |
80.47 |
% |
80.47 |
% |
- |
% |
P.A. Linz Granz del Rio(7) |
Colombia |
Mercantile trust |
44.26 |
% |
- |
% |
- |
% |
Fideicomiso Selecto Terrazu E1(7) |
Colombia |
Mercantile trust |
64.38 |
% |
- |
% |
- |
% |
Valores Simesa S.A.(8) |
Colombia |
Investments |
62.75 |
% |
64.93 |
% |
66.33 |
% |
Fideicomiso Lote Distrito Vera B1B2(8) |
Colombia |
Mercantile trust |
62.44 |
% |
64.61 |
% |
66.00 |
% |
Fideicomiso Lote Distrito Vera B3B4(9) |
Colombia |
Mercantile trust |
- |
% |
64.61 |
% |
66.00 |
% |
Fideicomiso Lote B6 Ciudad del Rio(10) |
Colombia |
Mercantile trust |
- |
% |
- |
% |
66.00 |
% |
P.A. FAI Calle 77(11) |
Colombia |
Mercantile trust |
98.00 |
% |
98.00 |
% |
98.00 |
% |
P.A. Nomad Salitre(12) |
Colombia |
Mercantile trust |
98.00 |
% |
98.00 |
% |
98.00 |
% |
P.A. Nomad Central-2(13) |
Colombia |
Mercantile trust |
98.00 |
% |
98.00 |
% |
- |
% |
P.A. Calle 84 (2)(13) |
Colombia |
Mercantile trust |
98.00 |
% |
98.00 |
% |
- |
% |
P.A. Calle 84 (3)(13) |
Colombia |
Mercantile trust |
98.00 |
% |
98.00 |
% |
- |
% |
P.A. Nomad Distrito Vera(14) |
Colombia |
Mercantile trust |
98.00 |
% |
- |
% |
- |
% |
P.A. Nexo(14) |
Colombia |
Mercantile trust |
98.00 |
% |
- |
% |
- |
% |
P.A. Mercurio(15) |
Colombia |
Mercantile trust |
100.00 |
% |
100.00 |
% |
100.00 |
% |
P.A. CEDIS Sodimac(14) |
Colombia |
Mercantile trust |
100.00 |
% |
- |
% |
- |
% |
Wenia S.A.S.(16) |
Colombia |
Technology services |
100.00 |
% |
100.00 |
% |
100.00 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
P.A. Wenia(16) |
Colombia |
Mercantile trust |
100.00 |
% |
100.00 |
% |
- |
% |
Nequi S.A. Compañía de Financiamiento(17) |
Colombia |
Financial services |
100.00 |
% |
100.00 |
% |
100.00 |
% |
Sociedad Beneficiaria BC Panamá S.A.S.(18) |
Colombia |
Holding |
100.00 |
% |
- |
% |
- |
% |
| Bancolombia Panamá S.A. |
Panama |
Banking |
100.00 |
% |
100.00 |
% |
100.00 |
% |
| Sistemas de Inversiones y Negocios S.A. Sinesa |
Panama |
Investments |
100.00 |
% |
100.00 |
% |
100.00 |
% |
| Banagrícola S.A. |
Panama |
Holding |
99.17 |
% |
99.17 |
% |
99.17 |
% |
| Banistmo S.A. |
Panama |
Banking |
100.00 |
% |
100.00 |
% |
100.00 |
% |
| Banistmo Investment Corporation S.A. |
Panama |
Trust |
100.00 |
% |
100.00 |
% |
100.00 |
% |
| Leasing Banistmo S.A. |
Panama |
Leasing |
100.00 |
% |
100.00 |
% |
100.00 |
% |
| Valores Banistmo S.A. |
Panama |
Purchase and sale of securities |
100.00 |
% |
100.00 |
% |
100.00 |
% |
Banistmo Panamá Fondos de Inversión S.A.(19) |
Panama |
Investment fund holder |
100.00 |
% |
100.00 |
% |
100.00 |
% |
Banistmo Capital Markets Group Inc.(19) |
Panama |
Purchase and sale of securities |
100.00 |
% |
100.00 |
% |
100.00 |
% |
Anavi Investment Corporation S.A.(19) |
Panama |
Real estate |
100.00 |
% |
100.00 |
% |
100.00 |
% |
Desarrollo de Oriente S.A.(19) |
Panama |
Real estate |
100.00 |
% |
100.00 |
% |
100.00 |
% |
Steens Enterprises S.A.(19) |
Panama |
Portfolio holder |
100.00 |
% |
100.00 |
% |
100.00 |
% |
Ordway Holdings S.A.(19) |
Panama |
Real estate broker |
100.00 |
% |
100.00 |
% |
100.00 |
% |
| Grupo Agromercantil Holding S.A. |
Panama |
Holding |
100.00 |
% |
100.00 |
% |
100.00 |
% |
| Banco Agromercantil de Guatemala S.A. |
Guatemala |
Banking |
99.68 |
% |
99.68 |
% |
99.68 |
% |
| Seguros Agromercantil de Guatemala S.A. |
Guatemala |
Insurance agency |
79.92 |
% |
79.92 |
% |
79.92 |
% |
| Financiera Agromercantil S.A. |
Guatemala |
Financial services |
100.00 |
% |
100.00 |
% |
100.00 |
% |
| Agrovalores S.A. |
Guatemala |
Securities brokerage |
100.00 |
% |
100.00 |
% |
100.00 |
% |
| Arrendadora Agromercantil S.A. |
Guatemala |
Financial Leasing |
100.00 |
% |
100.00 |
% |
100.00 |
% |
Agencia de Seguros y Fianzas Agromercantil S.A.(20) |
Guatemala |
Insurance agency |
- |
% |
- |
% |
100.00 |
% |
| Asistencia y Ajustes S.A. |
Guatemala |
Roadside and medical assistance services |
100.00 |
% |
100.00 |
% |
100.00 |
% |
| Serproba S.A. |
Guatemala |
Maintenance and remodeling services |
100.00 |
% |
100.00 |
% |
100.00 |
% |
| Servicios de Formalización S.A. |
Guatemala |
Loans formalization |
100.00 |
% |
100.00 |
% |
100.00 |
% |
| Conserjeria, Mantenimiento y Mensajería S.A. “En liquidación” |
Guatemala |
Maintenance services |
100.00 |
% |
100.00 |
% |
100.00 |
% |
Mercom Bank Ltd.(21) |
Barbados |
Banking |
99.68 |
% |
99.68 |
% |
99.68 |
% |
| New Alma Enterprises Ltd. |
Bahamas |
Investments |
99.68 |
% |
99.68 |
% |
99.68 |
% |
| Bancolombia Puerto Rico Internacional Inc. |
Puerto Rico |
Banking |
100.00 |
% |
100.00 |
% |
100.00 |
% |
Sinesa Cayman, Inc. (before Bancolombia Cayman S.A)(22) |
Cayman Islands |
Banking |
100.00 |
% |
100.00 |
% |
100.00 |
% |
| Banco Agrícola S.A. |
El Salvador |
Banking |
97.36 |
% |
97.36 |
% |
97.36 |
% |
| Arrendadora Financiera S.A. Arfinsa |
El Salvador |
Leasing |
97.37 |
% |
97.37 |
% |
97.37 |
% |
| Accelera S.A. de C.V. (before Credibac S.A. de C.V) |
El Salvador |
Credit card services |
97.36 |
% |
97.36 |
% |
97.36 |
% |
| Valores Banagrícola S.A. de C.V. |
El Salvador |
Securities brokerage |
98.89 |
% |
98.89 |
% |
98.89 |
% |
| Inversiones Financieras Banco Agrícola S.A. IFBA |
El Salvador |
Holding |
98.89 |
% |
98.89 |
% |
98.89 |
% |
| Gestora de Fondos de Inversión Banagrícola S.A. |
El Salvador |
Administers investment funds |
98.89 |
% |
98.89 |
% |
98.89 |
% |
| Bagrícola Costa Rica S.A. |
Costa Rica |
Business and management advising |
99.17 |
% |
99.17 |
% |
99.17 |
% |
| Bancolombia Capital Holdings USA LLC |
United States |
Holding |
100.00 |
% |
100.00 |
% |
100.00 |
% |
| Bancolombia Capital Advisers LLC |
United States |
Investment advisor |
100.00 |
% |
100.00 |
% |
100.00 |
% |
| Bancolombia Capital LLC |
United States |
Securities brokerage |
100.00 |
% |
100.00 |
% |
100.00 |
% |
Wenia Ltd.(16) |
Bermuda |
Technology services |
100.00 |
% |
100.00 |
% |
100.00 |
% |
(1) During 2022 and 2023, Bancolombia Group through its subsidiary Banca de Inversión S.A., purchased remaining shares from minority investors.
(2) Company liquidated in July 2024. For more information, see Note 1. Reporting entity.
(3) During 2024, Banca de Inversión Bancolombia S.A acquired shares of Inversiones CFNS S.A.S., therefore Bancolombia Group increased its effective participation percentage.
(4) On February 29, 2024, the trust rights were transferred as a result of the sale by Fondo de Capital Privado Fondo Inmobiliario Colombia
(5) Companies consolidated by Fondo de Capital Privado Fondo Inmobiliario Colombia since April and December 2022, respectively. The P.A Florencia Ferrara is a subsidiary of Fondo de Capital Privado Fondo Inmobiliario Colombia, which has a 55.00% percentage of ownership. Bancolombia has an effective percentage of ownership in Fondo de Capital Privado Fondo Inmobiliario Colombia of 80.47%.
(6) Company consolidated by Fondo de Capital Privado Fondo Inmobiliario Colombia since March 2023.
(7) The P.A. Linz Granz del Rio and Fideicomiso Selecto Terrazu E1 are consolidated through Fondo de Capital Privado Fondo Inmobiliario as of September and December 2024, respectively.
(8) The decrease in the shareholding is due to the repurchase of outstanding stock carried out by Valores Simesa subsidiary (Parent of the fund) during 2024 and 2023.
(9) During 2024, the trust rights were transferred as a result of the sale by Valores Simesa S.A.
(10) During 2023, the trust rights were transferred as a result of the sale by Valores Simesa S.A.
(11) On March 1, 2022, the Parent Company was established as trustor of P.A. FAI Calle 77, owner of a property that will be used for rental housing.
(12) On April 4, 2022, the Parent Company was appointed as trustor of 100% of the trust rights of Patrimonio Autonomo Nomad Salitre, whose main purpose is to develop a Multifamily Project.
(13) During February and April 2023, the parent company was established as trustor of P.A. Nomad Central-2, P.A Calle 84 (2) and P.A. Calle 84 (3), through a management mercantile trust agreement.
(14) During May, June and November 2024, the parent company was established as trustor of P.A. CEDIS Sodimac, P.A. Nomad Distrito Vera and P.A. Nexo, respectively through a management mercantile trust agreement, for real estate activity purposes.
(15) On July 8, 2022, Bancolombia S.A. acquired control of Fidecomiso P.A. Mercurio, through a management mercantile trust agreement.
(16) On July 22, 2022, Bancolombia Group through the subsidiary, Sistemas de Inversiones y Negocios S.A. SINESA, established the company Wenia LTD in Bermuda, a digital corporate vehicle whose purpose is to provide technology services. On November 22, 2022, Wenia LTD established the company called Wenia S.A.S., whose purpose is the creation and implementation of operating systems and software applications. On May 17, 2023, Wenia S.A.S. was established as trustor of the fiduciary rights of P.A. Wenia.
(17) On December 14, 2021, the Board of Directors of the Parent Company authorized the legal separation of the business of Nequi, Bancolombia Group’s digital platform that offers financial services. The Superintendencia Financiera de Colombia, with Resolution 0843 of July 6, 2022, as amended by Resolution 0955 of July 27, 2022, authorized the incorporation of Nequi S.A. Compañía de Financiamiento. The legal separation resulted in the creation and commercial registration of a new corporation supervised by the Superintendencia Financiera de Colombia through which Nequi will operate as a 100% digital credit establishment. For further information, see Note 1. Reporting entity.
(18) On September 27, 2024, Sociedad Beneficiaria BC Panamá was established, a company whose corporate purpose is to be the beneficiary of the division of a company domiciled in Panama, by virtue of which it partially transfers its assets, as a consequence of the above, to be the owner of the assets and liabilities received on the occasion of said operation, and merge with a company domiciled in Colombia. For more information, see Note 1. Reporting entity.
(19) Investments in non-operational stage.
(20) Company liquidated as of June 2023.
(21) On September 30, 2021, Mercom Bank Ltd shareholder authorized the beginning of an organized and gradual process to transfer of the assets and liabilities of Mercom Bank, Ltd., to Banco Agromercantil de Guatemala, S. A. or other companies of the Bancolombia Group. For further information, see Note 1. Reporting Entity.
(22) On October 5, 2020, the Board of Directors of Bancolombia Panamá (parent company of Sinesa Cayman), authorized the decision to wind-down the business and operations of its subsidiary in Cayman. For further information, see Note 1. Reporting entity.
When necessary, adjustments are made to the accounting principles in the financial statements of subsidiaries to bring their accounting policies into line with the Bank's accounting policies, in order to prepare consolidated financial statements using uniform accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Bank are eliminated in full on consolidation.
Non-controlling interests in controlled entities are presented in profit or loss and equity separately from the Parent Company's shareholders' equity and profit or loss. When the Bank loses control over a subsidiary, any residual interest remaining on the Bank balances is measured at fair value; gains or losses arising from this measurement are recognized in net income.
The loan and financial leases originated by Banistmo and Bancolombia Panama are subject to prudential regulation in Panama by the Superintendencia de Bancos de Panamá (“SBP”) requiring the maintenance of minimum reserves as a countercyclical capital buffer. For the years ended as of December 31, 2024 and 2023, the reserves recognized amounted to COP 972,818 and COP 835,527. The establishment of these reserves restrict the ability of the aforementioned subsidiaries to pay dividends to Bancolombia S.A., the ultimate parent, except in the event of liquidation.
2. Transactions between entities under common control
Combinations of entities under common control refer to those transactions in which all the combining entities are under the control of the Bank both before and after the combination, and that control is not transitory.
The assets and liabilities recognized as a result of transactions between entities under common control are recognized at the carrying value of the acquirer’s financial statements. The Bank presents the net assets received prospectively from the date of the transfer.
3. Fund’s administration
The Bank manages assets held in mutual funds and other forms of investment. Assets managed by the Bank's subsidiaries and owned by third parties are not included in the consolidated financial statements unless control exists as structured entities.
The Bank consolidates the following funds:
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| Name |
Country |
% of ownership
interest held by
the Bank, 2024 |
% of ownership
interest held by
the Bank, 2023 |
% of ownership
interest held by
the Bank, 2022 |
Assets managed |
December 31,
2024 |
December 31,
2023 |
Fondo de Capital Privado Fondo Inmobiliario Colombia(1) |
Colombia |
80.47% |
80.47% |
80.47% |
6,039,891 |
5,503,022 |
Fideicomiso Lote Distrito Vera B1B2(2) |
Colombia |
62.44% |
64.61% |
66.00% |
26,367 |
25,073 |
Fideicomiso Lote Distrito Vera B3B4(3) |
Colombia |
- |
64.61% |
66.00% |
- |
56,295 |
Fideicomiso Lote B6 Ciudad del Rio(4) |
Colombia |
- |
- |
66.00% |
- |
- |
Banistmo Panamá Fondos de Inversión S.A.(5) |
Panama |
100.00% |
100.00% |
100.00% |
126,092 |
132,496 |
(1)It includes the amounts of certain equity instruments that are controlled through the subsidiary Fondo de Capital Privado Fondo Inmobiliario Colombia, they meet the definition of control in accordance with IFRS 10. For further information, see Note 2.C. Consolidation. Also, during 2022, the Bank increased its participation in FCP Fondo Inmobiliario Colombia, which facilitates speed in decision-making in matters of government and strategy. For further information see Note 1. Reporting entity.
(2) The decrease in equity interest is due to the repurchase by the subsidiary Valores Simesa S.A. (Parent of the fund), during 2024 and 2023. For further information, see Note 2.C. Consolidation.
(3) During 2024, the trust rights were transferred by Valores Simesa S.A. (Parent of the fund).
(4) During 2023, the trust rights were transferred by Valores Simesa S.A. (Parent of the fund).
(5) Investment in non-operational stage. The variation in assets managed is mainly due to the effect of converting US dollars to Colombian pesos in the consolidation process, the closing exchange rate was to 3,822.05 in December 2023 and 4,409.15 in December 2024 and the exit of clients from one of its investment Funds. For further information, see Note 2.C. Consolidation.
For all these funds, the Bank participated in the design of the structured entity, makes operating and financial decisions on behalf of the funds, and is exposed to variable returns such as dividends or returns paid in quarterly installments.
Commissions earned by the management of funds that are not consolidated are included in the consolidated statement of income as “Fees and commissions income”.
4. Non-controlling interest
Non-controlling interests in the net assets of consolidated subsidiaries are presented separately within the Bank equity. Similarly, net income and other comprehensive income are also attributed to non-controlling interest and equity holders of the Parent Company. In a business combination, the amount of non-controlling interest may be initially measured either at fair value or at the non-controlling interest’s proportionate share of the acquirer’s identifiable net assets. The option for recognition is made on an investment-by-investment basis.
Any purchase or sale of shares in subsidiaries that does not imply a loss or gain of control is directly recognized in equity.
D. Material Accounting Policies
The material accounting policies used by the Bank in the preparation of its consolidated financial statements are detailed below:
1. Functional currency, transactions and balances in foreign currency
The functional and presentation currency of the Bank's consolidated financial statements is the Colombian peso. Therefore, all balances and transactions denominated in currencies other than the Colombian peso are considered as foreign currency, which are translated into the functional currency using the exchange rates at the dates of the transactions.
Foreign exchange gains and losses resulting from the settlement of the transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at period end are generally recognized in net income. They are deferred in equity (other comprehensive income) if they relate to qualifying cash flow hedges and qualifying net investment hedges or are attributable to part of the net investment in a foreign operation.
Non-monetary items that are measured at cost are held at the exchange rate at the transaction date, while those which are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. When a gain or loss on a non-monetary item is recognized in the consolidated statement of comprehensive income, any exchange component of that gain or loss is recognized in other comprehensive income. Conversely, when a gain or loss on a non-monetary item is recognized in net income, any exchange component of that gain or loss shall be recognized in net income.
The Bank translated the results and financial position of foreign subsidiaries into the functional currency as follows:
•Assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that consolidated statement of financial position;
•Income and expenses for each statement of income and statement of comprehensive income is translated at average exchange rates for the period; and
•All resulting of such translations are recognized in other comprehensive income in the caption “Translation adjustment”.
When a foreign operation is sold, the associated exchange differences are reclassified to net income, as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing exchange rate.
The table below sets forth the exchange rate used by the Bank and its subsidiaries to convert consolidated statement of financial position accounts and transactions in U.S. dollar into Colombian pesos:
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December 31, 2024 |
December 31, 2023 |
December 31, 2022 |
| Year-end exchange rate |
4,409.15 |
3,822.05 |
4,810.20 |
| Average rate for the period ended at |
4,073.75 |
4,330.14 |
4,257.12 |
2. Cash and cash equivalents
The Bank considers cash and cash equivalents to include cash and balances at banks and the Central Bank, interbank assets and reverse repurchase agreements and other similar secured lending that have original maturities up to 90 days, as shown in Note 4. Cash and cash equivalents.
3. Business combinations and goodwill
Business combinations are those transactions where an acquirer obtains control of a business (e.g., an acquisition or merger).
Business combinations are accounted for using the acquisition method as follows: a) identifiable acquired assets, liabilities and contingent liabilities assumed in the acquisition are recognized at fair value at the date of acquisition; b) acquisition costs are recognized in the consolidated statement of income as expenses in the periods in which the costs are incurred and the services are received; and c) goodwill is recognized as an asset in the consolidated statement of financial position or a gain from a bargain purchase.
The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred to the former owners of the acquiree, and the equity interests issued by the Bank (if any).
Goodwill is measured as the excess of the sum of the consideration transferred, the value of any non-controlled interest and, when applicable, the fair value of any previous equity interest in the acquired entity, over the net fair value of the acquired assets, liabilities or contingent liabilities assumed at the date of acquisition.
For each business combination, at the date of acquisition, the Bank measures the non-controlling interest by the proportional share of the identifiable assets acquired, as well as liabilities and contingent liabilities assumed by the acquired company, or by their fair value.
Any contingent consideration in a business combination is classified as a liability or as equity and is recognized at fair value at the date of acquisition, the liability is remeasured at subsequent reporting dates in accordance with IAS 37 Provisions, contingent liabilities and contingent assets, and the consideration classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity.
The goodwill acquired in a business combination is allocated, at the date of acquisition, to the Bank cash-generating units (or group of cash generating units) which are expected to benefit from the combination, regardless of whether other assets or liabilities of the acquiree are assigned to those units or group of units.
For business combinations achieved in stages, any previous equity interest held by the Bank in the acquiree is remeasured at its fair value at the date of acquisition and any resulting gain (or loss) is reported in the consolidated statement of income or other comprehensive income, as appropriate. Amounts related to such investments previously recognized in other comprehensive income that must be recycled through net income are reclassified to the consolidated statement of income, as if such investment had been sold. When the associate had other comprehensive income, which was not reclassified to profit or loss, the amounts were reclassified within equity to “Retained earnings” once the investment was sold.
4. Financial instruments
A financial instrument is a contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
4.1. Financial assets
Financial assets are recognized in the consolidated statement of financial position when the Bank becomes party to the contractual provisions of the instrument. This includes regular way purchases and sales, which are those purchases and sales of financial assets that require the delivery of assets within the time frame established by regulation or convention in the marketplace. The Bank uses settlement date accounting for regular way contracts when recording financial asset transactions.
At initial recognition, the Bank measures financial assets at fair value plus, in the case of a financial asset that is not measured at fair value through profit or loss, the transaction costs directly attributable to the acquisition of the financial assets. Transaction costs of financial assets subsequently measured at fair value with changes in profit or loss are recognized as expenses in the income statement. After initial recognition, for financial assets measured at amortized cost and investments in debt securities subsequently measured at fair value with changes in other comprehensive income, an allowance for expected credit losses (“ECL”) is recognized.
4.1.1. Classification and measurement of financial assets
The Bank classifies its financial assets considering the business model and the characteristics of contractual cash flows (cash flows that consist solely of payments of principal and interest on the principal amount outstanding at specified dates – “SPPI”) in accordance with the following categories of subsequent measurement:
•Amortized cost: measured at cost using the effective interest rate method, excluding future credit losses, and considering transaction costs and premiums granted, less commissions and discounts received that are included in the calculation of the effective interest rate.
•Fair value through other comprehensive income (“FVOCI”): measured using fair value, variations in the fair value of the investment are recognized in other comprehensive income, except for impairment losses or recoveries, interest income, and gains or losses on foreign exchange, which are recognized in the income statement.
•Fair value through profit or loss (“FVTPL”): measured using fair value, variations in the fair value are recognized in the income statement.
The classification based on the business model reflects how the Bank manages financial assets and how it determines whether cash flows from the asset will come from obtaining contractual cash flows, selling the instrument, or both. If the objective is to obtain contractual cash flows, the assets are subsequently measured at amortized cost; if the objective is to obtain contractual cash flows and selling financial assets, the assets are subsequently measured at FVOCI. A financial asset shall be measured at FVTPL unless it is measured at amortized cost or at FVTORI.
The Bank measures equity instruments at FVTPL. Likewise, the Bank has made an irrevocable choice to present subsequent changes in the fair value of some equity instrument investments that are not held for trading in other comprehensive income; dividends from such investments are recognized in the income statement when the right to receive payment is established.
Accumulated gains or losses in other comprehensive income at the time of derecognition of a financial asset are reclassified from equity to the income statement, except for investments in equity instruments for which the Bank has made the irrevocable choice to present subsequent changes in fair value in other comprehensive income; for these, reclassification is made to the "retained earnings" line.
4.1.2. Impairment of financial assets at amortized cost or at fair value through other comprehensive income “FVTOCI”
4.1.2.1. Impairment of loan portfolio and financial leasing transactions
Expected credit losses are calculated using both individual and collective models and methodologies. These are based on significant assumptions and judgments that consider historical credit data, the current situation of the borrower and reasonable and proper forecasts of future economic conditions. Collective models include parameters such as the probability of default at 12 months, probability of default throughout the lifetime of the obligation (when the loan is classified as stage 2), loss given default, and exposure at default. These models also incorporate a prospective approach that includes assumptions of future macroeconomic conditions in plausible future scenarios. In addition, for loans individually assessed in stage 3, the Bank will evaluate significant defaulted loans. This evaluation will consider the debt profile of each debtor, the fair value of guarantees granted, information on credit behavior and the expected future cash flows from the client.
At the end of each period, the Bank assesses the impairment model based on the expected loss of a financial asset or a group of them, measured at amortized cost. The impairment loss will be measured from “day 1” after its initial recognition. The model is structured in three stages in which the financial asset can be categorized, from its initial recognition. This categorization considers the degree of credit risk, and the circumstances that produce a significant increase in it, as described below:
•Stage 1: Financial instruments that have not experienced a significant increase in credit risk since their initial recognition, or that have low credit risk at the reporting date.
•Stage 2: Financial instruments that have experienced a significant increase in credit risk since their initial recognition (unless they have low credit risk at the reporting date), but do not have objective evidence of impairment.
•Stage 3: Financial assets that have objective evidence of impairment (“OEI”) at the reporting date.
For each of the stages, an expected credit loss (“ECL”) is calculated. This calculation takes into account both current and future conditions, the behavior of the portfolio and various associated macroeconomic conditions.
•For stage 1, a 12-month ECL is calculated. This represents the expected credit losses that could occur from default events within 12 months after the reporting date.
•For stage 2 and 3, a Lifetime ECL is calculated. This represents the expected credit losses that could occur from all possible default events over the expected life of the financial instrument.
Significant increase in risk
To determine whether an asset has experienced a significant increase in risk since its initial recognition, and is therefore classified as Stage 2, the Bank performs an assessment of both quantitative and qualitative factors and reviews. For each portfolio, the Bank reviews the rebuttable presumption of more than 30 days overdue in payment. The Bank determines whether the credit risk of financial instruments has increased significantly since their initial recognition as follows:
Quantitative criteria
•Clients who are more than 30 days past due.
•Lifetime PD assessment: The Bank has determined that the most suitable quantitative way to establish the significant increase in credit risk is by comparing the residual lifetime PD at the initial recognition and the current lifetime PD. To measure this difference, two thresholds are defined:
▪Absolute threshold: This is the absolute difference between the current lifetime PD and the residual lifetime PD at initial recognition. A positive absolute variation beyond this threshold indicates an increase in the instrument’s risk.
▪Relative threshold: This is a percentage variation between the value of the current lifetime PD and the residual lifetime PD at initial recognition. A positive percentage variation beyond this threshold indicates an increase in the instrument’s risk.
If the PD comparison surpasses one threshold but not the other, it is not considered a significant increase in the instrument’s risk.
If the instrument does not exceed the threshold, other qualitative criteria are assessed. These can identify a significant increase in credit risk even when the obligation is nearing expiration. The criteria are as follows:
Qualitative criteria
•Assets restructured due to risk, where the client is experiencing financial difficulties, are classified in stage 2, until the instrument is canceled, cured, or transferred to stage 3 because it meets the definition of default.
•Customers who are no longer in default (stage 3) remain in stage 2 for a period of 12 months.
•For SME and Corporate clients on the watch list with a medium risk level.
•The Bank also reviews every six months to see if there are collective criteria for the migration of a group of clients to stage 2. For example, if a significant change has occurred from the commencement of a specific product or geographic region, or the occurrence of industry events, regulatory changes, market changes or any other significant event impacting the generation of future cash flow of the customer's operation.
Refutable presumption of more than 30 days of default
The Bank has reviewed for each portfolio the presumption of a significant increase in 30 days past due and finds historical evidence that there is a relationship between this presumption and default.
Definition of default
To determine whether an asset is in default, and thus classified as stage 3, the Bank conducts an assessment of both quantitative and qualitative factors. It also reviews the rebuttable presumption of more than 90 days overdue in payment for each portfolio.
The Bank applies the following criteria to ascertain if there is a breach:
Quantitative criteria
•Clients with an active portfolio and who have at least one instrument written off in the modality.
•Clients who are 90 or more days past due.
Qualitative criteria
•Clients in special states of restructuring, business reorganization or insolvency agreements.
•For SME and Corporate clients on the watchlist a high-risk level.
•The Bank also aligns all products of the same client to stage 3 when at least one of its obligations is in default.
Refutable presumption of default beyond 90 days
The Bank has conducted a review of the default presumption after 90 days past due for each portfolio. Historical evidence indicates a high probability of loss at 90 days. However, this presumption has been refuted for Banistmo’s mortgage portfolio. The rationale for this refutation is the historical evidence that demonstrates the default typically occurs at 120 days.
Collective methodology for measuring expected credit losses
The collective quantification of expected credit losses is conducted based on the stage classification, the homogeneous groups defined within each portfolio type and the client’s risk level.
Homogeneous groups are segmented by client type; for individuals, they are grouped by product, and for companies, they are grouped by industry segments defined by the client’s sales level.
Likewise, the risk level is assigned by customer type. For individuals, the risk is assessed using a behavioral scoring model for consumer products and a separate scoring model for housing products. The purpose of these models is to rank customers according to risk, allowing for more effective monitoring. The rating is based on historical behavior, transactional information, and customer product information. The consumer portfolio rating system is evaluated using various advanced statistical methodologies. These models allow the inclusion of a greater number of variables related to the customer, providing a more precise rating that aligns with the risk level.
For companies, risk levels are assessed using an internal rating model that incorporates both qualitative and quantitative variables as financial indicators. Clients are ranked on a scale from 1 to 19. This process also takes into account regional qualification programs, local market factors, and the client’s market knowledge.
In Colombia, for SME and Corporate portfolio, the risk level is estimated based on models that allow assigning an internal rating to a client considering their economic sector and in accordance with multiple variables. These include: financial information, transactional data, sectoral data, qualitative variables, and behavior. These models aim to achieve greater assertiveness in classifying the risk level of the Bank's clients, greater discrimination and precision, the use of non-traditional information, and interpretability, with the goal of achieving a deep understanding of the client. These methodologies play a fundamental role in the evaluation and monitoring of credit risk.
To estimate the expected credit losses (“ECL”) under the collective methodology, the following formula is used:
ECL = Probability of Default * Loss Given Default * Exposure at Default
The factors are estimated using statistical models developed from internal historical information of the entity and then adjusted with forward-looking information as described below:
•Probability of Default (“PD”): Estimated probability of occurrence of a default of an instrument. IFRS 9 proposes the specification of this parameter and its application according to the classification of stages 1, 2 and 3.
◦PD 12 months: The estimated probability of occurrence of a default in the next 12 months of the instrument’s life as of the date of analysis. The Bank defines the use of PD 12 months for current portfolio that does not present a significant increase in credit risk or any impairment evidence (portfolio classified in stage 1). To estimate the probability of default for 12 months, the Bank uses traditional techniques such as logistic regression, modeling the behavior of the portfolio by level of risk for each of the segments.
◦Lifetime PD: The estimated probability of occurrence of a default over the remaining life of an instrument, being dependent on the conditions of the product and the level of risk. The Bank defines the use of lifetime PD for portfolio with a significant increase in credit risk (portfolio classified in stage 2). The Bank estimates this factor using survival models which propose a statistical analysis to quantify the survival rate of a portfolio for a given period. One of the advantages of the methodology is the inclusion of prepaid models.
◦PD stage 3: The customers evaluated by the collective methodology in stage 3 have an associated probability of default of 100.00%.
•Loss Given Default (“LGD”): The severity of Loss Given Default is the percentage of exposure that the entity ultimately expects to lose in the event of a default in a financial instrument. The general formulation for the calculation of the LGD is equal to (1 - Recovery Percentage), where the recovery percentage refers to the sum of the flows received from the transaction discounted at the rate for the client on the date of analysis on the total of the exposure at the time of default, including contractual debt sales and other recovery strategy. For secured products, this is primarily based on collateral type and projected collateral values, the use of appraisals to determine the value of the collateral and time to repossession and recovery costs observed.
•Exposure at Default (“EAD”): The exposed value of the asset valued at amortized cost (includes the balance of capital, interest and accounts receivable), this is based on the contractual repayments owed by the borrower over a 12 month or lifetime basis.
For revolving products and those with available borrowing that is likely to be used in its entirety, the Exposure at Default (“EAD”) estimate considers the use of the CCF (credit conversion factor), in order to find a relationship corresponding to the used and unused component of the instrument. To estimate the expected credit losses (“ECL”), a component of probability of becoming loan is included.
To estimate the lifetime expected credit loss, the exposed balance is projected annually, considering the discount of contractual payments agreed with the client for each year. Cash flows are discounted at the effective interest rate or an approximation of it.
Forward-looking information incorporated in the ECL models
To incorporate the prospective information to the factors defined for the estimation of the expected loss, the Bank uses methodologies that correlate the historical behavior of the portfolio with certain economic variables. The Bank uses projections based on three macro scenarios (base, pessimistic and optimistic); each scenario has a plausible probability of occurrence to evaluate the best estimate of the expected loss under possible future economic conditions.
To make the projections, the Economic Research team has defined a process for the generation of estimates under two perspectives: thematic and analytical.
•Thematic Perspective: in the first instance, a series of external variables are defined, which are those whose values are established at a global level and in whose definition the idiosyncratic dynamics of the analyzed country have no incidence. As these are issues whose detailed study is beyond the scope of the Corporate Economic Research team, the Bank uses as reference the estimates made by external analysts.
•Analytical Perspective: this consists in the compilation of the historical information for the most important economic and financial variables of each country. The information bases are compiled from official sources, which mostly correspond to official authorities, such as the Superintendency, the Official Statistics Department or the Central Bank of each country. The Bank estimates forecasts based on time series models widely used in econometrics.
As a result, projections are obtained for the economic variables of interest, which are formulated monthly in a time horizon that includes the current year and four subsequent years. After that period, given the technical quality constraints of the exercises and the high uncertainty, the projection of the economic variables for the total remaining useful life of each instrument corresponds to the projected value for the last period.
The Bank considers that a five year projection horizon continues to be reasonable and that maintaining the fifth-year estimate for subsequent periods is a reasonable approximation. This is based on the natural behavior of any statistical or econometric exercise of variable projection, in which the series tend towards a reversion to the mean or to the long-term trend or equilibrium level. Then, in subsequent periods they remain there once the macroeconomic projections reach that steady state and only the materialization of a shock (unpredictable, so it is not possible to project when it will happen) would cause a deviation.
It is reasonable to think that in a period of 5 years, the macroeconomic variables projection would already be at a level very close to their equilibrium, since historically the maximum periods of consecutive deviation above or below the long-term trend (more or less 0.25 standard deviations of the variable) of the economic cycle (from the series of annual economic growth in the period 1972-2024) has been precisely a period of 5 years.
Economic scenario weightings
To incorporate not only a perspective, but also to recognize the uncertainty surrounding the short and medium-term economic context that the country will experience, the projection work incorporates three scenarios: base, optimistic and pessimistic.
These scenarios reflect reasonable (non-extreme) expectations. The current weighting in the year-end macroeconomic forecasts was as follows:
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Optimistic |
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Base |
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Pessimistic |
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| Country |
2024 |
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2023 |
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2024 |
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2023 |
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2024 |
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2023 |
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| Colombia |
15.00 % |
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15.00 % |
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60.00 % |
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50.00 % |
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25.00 % |
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35.00 % |
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| Panama |
20.00 % |
|
20.00 % |
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55.00 % |
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50.00 % |
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25.00 % |
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30.00 % |
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| El Salvador |
20.00 % |
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20.00 % |
|
55.00 % |
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55.00 % |
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25.00 % |
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25.00 % |
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| Guatemala |
20.00 % |
|
20.00 % |
|
55.00 % |
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55.00 % |
|
25.00 % |
|
25.00 % |
|
The following is a comparison of the main macroeconomic variable projected in each country, "GDP growth", used to estimate ECL as of December 31, 2024 and 2023:
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|
| As of December 31, 2024 |
|
Colombia |
Panama |
| Cutoff |
Optimistic |
Base |
Pessimistic |
|
Optimistic |
Base |
Pessimistic |
|
| 2024 |
1.98 % |
1.80 % |
1.59 % |
|
3.51 % |
2.46 % |
1.41 % |
|
| 2025 |
3.89 % |
2.57 % |
1.23 |
% |
|
6.04 % |
3.48 % |
0.92 % |
|
| 2026 |
4.76 % |
2.96 % |
1.16 % |
|
6.68 % |
3.76 % |
0.85 % |
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|
|
|
|
|
|
| As of December 31, 2024 |
|
Guatemala |
El Salvador |
| Cutoff |
Optimistic |
Base |
Pessimistic |
|
Optimistic |
Base |
Pessimistic |
|
| 2024 |
3.83 % |
3.48 % |
3.12 % |
|
3.10 % |
2.59 % |
2.09 % |
|
| 2025 |
4.46 % |
3.46 % |
2.45 % |
|
3.77 % |
2.36 % |
0.95 % |
|
| 2026 |
4.55 % |
3.35 % |
2.14 % |
|
3.93 % |
2.25 % |
0.58 % |
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|
|
| As of December 31, 2023 |
|
Colombia |
Panama |
| Cutoff |
Optimistic |
Base |
Pessimistic |
|
Optimistic |
Base |
Pessimistic |
|
| 2023 |
1.64 % |
1.16 % |
0.68 % |
|
7.92 % |
5.95 % |
3.99 % |
|
| 2024 |
2.37 % |
0.87 % |
(0.63) |
% |
|
6.68 % |
4.00 % |
1.33 % |
|
| 2025 |
4.47 % |
2.60 % |
0.73 % |
|
7.17 % |
4.20 % |
1.23 % |
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|
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|
|
|
|
|
| As of December 31, 2023 |
|
Guatemala |
El Salvador |
| Cutoff |
Optimistic |
Base |
Pessimistic |
|
Optimistic |
Base |
Pessimistic |
|
| 2023 |
3.69 % |
3.12 % |
2.55 % |
|
2.75 % |
2.25 % |
1.74 % |
|
| 2024 |
4.33 % |
3.26 % |
2.19 % |
|
3.32 % |
1.90 % |
0.49 |
% |
|
| 2025 |
4.61 % |
3.38 % |
2.15 % |
|
3.76 % |
2.08 % |
0.41 |
% |
|
Special methodologies applied in stage 3
Collateral methodology
For defaulted loans (stage 3), when it is determined that the fundamental source of collection is a mortgage guarantee or a leased asset, the amount of the loss is estimated as the balance owed minus the weighted net present value of the market value of the collateral, estimated through appraisals with an age no longer than one year, minus the costs of obtaining, maintaining and selling the collateral, and affected by several macroeconomic scenarios with an expected probability of occurrence that result in a weighted expected loss.
Individual methodology
The Bank will individually evaluate defaulted loans (stage 3) greater than COP 20,000 or USD 5 for foreign subsidiaries, analyzing the debt profile of each debtor, the guarantees granted and information on the credit behavior of the client and of the sector. Significant financial assets are considered in default when, based on current or past information and events, it is probable that the entity will not be able to recover all the amounts described in the original contract, including the interest and commissions agreed to in the contract. When a significant financial asset has been identified as being in default, the amount of the loss is measured as the balance due minus the weighted net present value of the expected future cash flows under two minimum macroeconomic scenarios with an expected probability of occurrence.
Customers classified as individual methodology will be evaluated at least twice a year and, additionally, each time a relevant event occurs that reflects in significant changes in their level of risk and that leads to a change in the scenarios previously analyzed. The relevant events can be:
•Significant changes in the value of the guarantee,
•Expected or adverse changes in the business,
•Potentially shocking regulatory changes for the business,
•Changes they make in their commercial and operational dynamics, and
•Significant amount of payments made by the client.
To establish the future cash flows expected from the client, two approaches are presented, which may be via cash flow generation or via execution of some type of guarantee or liquidation of assets, that is, “Going Concern” or “Gone Concern” approach.
Approach via cash flow: This refers to an analysis under the premise of "Going concern", that is, it is assumed that the payment of the obligation will be made through the client's cash flow. The expected NPV calculation with a cash flow approach includes:
•Financial projections of the client.
•Debt simulator.
•Expected NPV calculation.
Approach via guarantee recovery: This refers to the "Gone concern", that is, it is assumed that the payment of the obligation will be given through the execution of guarantees, liquidation of assets, the execution of personal guarantees and adjudication of assets through judicial processes. The calculation of the NPV with guarantee approach includes:
•Analysis of the guarantee.
•Future value of the guarantee.
•NPV calculation.
•Recovery times.
Future cash flows are estimated based on two scenarios (base and alternative) that can be affected by the aforementioned variables.
4.1.2.2. Impairment of investments measured at fair value with changes in other comprehensive income
At the end of each period, the Bank evaluates the impairment model based on the expected loss of a financial asset or a group of assets that are measured at fair value with changes in other comprehensive income, where the impairment loss will be measured from "day 1" after its initial recognition.
Investments are classified in stages according to the risk level (rating), as follows:
Stage 1:
•Investments rated at investment grade.
•Investments rated at speculation grade, if:
◦The current external rating is maintained or improved against the rating granted on the date of purchase.
◦If there is a rating deterioration, the deterioration is lower than the number of notches that signify a significant increase in risk.
Stage 2:
•Investments that pass from an investment grade rating to speculation level.
•If there is a rating deterioration, the deterioration is a number of notches that signify a significant increase in risk.
Stage 3:
•Investments that are classified as default.
Significant increase in risk
Investments classified in stage 2 include those instruments that meet the corporate definition of a significant increase in risk.
To establish whether a security has a significant increase in risk since the initial recognition, an assessment of the deterioration of the rating in the current date is made against the rating granted at the time of purchase; according to the origin classification there may be an increase with 1, 2 or 3 notches, as shown in the following table:
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|
|
|
|
|
| EXTERNAL RATING ORIGIN |
SIGNIFICANT INCREASE
IN RISK |
|
| Ba1/BB+ |
3 Notches |
| Ba2/BB |
3 Notches |
| Ba3/BB- |
3 Notches |
| B1/B+ |
2 Notches |
| B2/B |
2 Notches |
| B3/B- |
1 Notch |
| Caa/CCC |
1 Notch |
Measurement of expected losses:
Impairment: [Amortized Cost or Market Position (Exposure)] * PD (Probability of default) * LGD (Loss given default)
•All instruments classified in stage 1 will be assigned a default probability for 12 months.
•All instruments classified in stage 2 will be assigned a probability of default for the life of the instrument.
•All instruments classified in stage 3 will be assigned a default probability of 100.00%.
To estimate the impairment of the instruments if the issue has an external rating, provision is made with the PD (Probability of default) of the external rating agency; if it does not have an external rating, it is determined from the internal rating model and the default probability of the portfolio.
In all cases, the LGD (Loss Given Default) is the parameter calculated by the external rating agency for the investment portfolio at the closure of December 2024 it corresponds to 66.60%.
4.1.3. Derecognition of financial assets
4.1.3.1. Derecognition of financial assets not resulting from modifications
Financial assets are derecognized when the rights to receive cash flows from the financial assets have expired or have been transferred, and the Bank has transferred substantially all the risks and rewards of ownership, or when the Bank neither transfers nor retains substantially all of the risks and rewards of ownership but it does not retain control of the financial asset.
When the Bank retains the contractual rights to receive cash flows from the financial asset, but assumes a contractual obligation to pay those cash flows to other entities, it shall treat the transaction as a transfer that results in derecognition if:
•It has no obligation to pay any amounts to the other entities unless it collects equivalent amounts from the assets;
•It is prohibited from selling or pledging the assets; and
•It has an obligation to remit without material delay any cash flows it receives from the assets.
4.1.3.2. Modifications
In modifications for commercial or market reasons, an assessment is made as to whether the modification is substantial; that is, whether the changes in the terms of the contract differ substantially from the original contract, based on the analysis of qualitative variables (inclusion of returns based on profit sharing, guarantees, other collateral, or credit enhancements that significantly affect the credit risk profile associated with the loan, changes in currency and/or obligor) and, in some cases, a quantitative assessment. When the modifications result in derecognition, the renegotiated contract is a new loan, subject to the classification and measurement requirements established by IFRS 9.
Similarly, the costs and commissions associated with the financial asset are derecognized. Modifications that do not result in derecognition are understood as non-substantial modifications, the carrying amount will be recalculated as the present value of the modified contractual cash flows discounted at the original interest rate, recognizing the effect of the modification in the margin net interest in the statement consolidated of income.
Likewise, costs and commissions are adjusted and amortized over the remaining life of the modified asset.
Contractual modifications of financial assets may be carried out due to restructurings and/or renegotiations for credit risk due to the borrower's financial difficulties are evaluated as a non-substantial modification and therefore does not lead to derecognition. When a financial asset is restructured, the difference between the original contractual cash flow and the new cash flow of the restructured asset discounted at the original effective interest rate is recognized as a gain or loss in the statement consolidated of income as “Interest income on loan and financial leases”, the costs and fees are deferred and will be amortized by the remaining life of the modified asset.
4.1.3.3. Written-Off loan portfolio
Loans are written off when the Bank concludes there is no realistic expectation of recovery of the loans and receivables balances from a client or third party, i.e., there is no possibility of recovery due to the debtor's lack of ability or willingness to pay or in the absence of open guarantees granted by the debtor. In general, this characteristic will be fulfilled when the following delinquency conditions are present:
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|
Length of delinquency (days) |
| Type |
Collateral |
Grupo Agromercantil Holding S.A. |
Banistmo S.A. |
Banco Agrícola S.A. |
Bancolombia S.A. |
|
Without collateral |
|
|
180 |
|
| Commercial |
With collateral |
N/A(1) |
360 |
360 |
360 |
|
Without collateral |
180 |
180 |
180 |
180 |
| Consumer |
With collateral |
540 for vehicles collateral |
1080 for mortgage collateral |
720 for mortgage collateral |
|
|
Without collateral |
|
180 |
|
|
| Small Business Loan |
With collateral |
N/A(1) |
1080 for mortgage collateral |
180 |
180 |
| Mortgage |
With collateral |
1440 |
1080 |
720 |
N/A(1) |
(1)Not dependent on the length of delinquency but on the reasons underlying a loan's non-recoverability.
Among the reasons underlying a loan's non-recoverability are the estimated recovery time of the obligation, the probable recovery percentage given the existence or lack of collateral and the inability to locate the client. When default conditions are present, it is initially necessary to evaluate whether the collateral that supports the loan generates a reasonable expectation of recovery; if so, the necessary steps are taken to realize on the collateral prior to writing-off the loan. In cases where the collateral net fair value indicates that there are no reasonable expectations of recovery, loans are written-off in the consolidated financial statements.
4.2. Financial liabilities
At initial recognition, the Bank measures its financial liabilities at fair value. The transaction costs that are directly attributable to the financial liability are deducted from its fair value if the instruments are subsequently recognized at amortized cost or will be recognized in the consolidated statement of income if the liabilities are measured at fair value.
4.2.1. Classification and Measurement of Financial Liabilities
Financial liabilities are classified and subsequently measured as follows:
•Amortized cost, measured at cost using the effective interest rate method.
•Fair value through profit or loss (“FVTPL”), measured using fair value, with variations in value recognized in the income statement.
•Irrevocably designated at fair value through profit or loss, measured using fair value, with variations in value recognized in the income statement. The effect of changes in own credit risk is presented in other comprehensive income.
4.2.2. Derecognition of Financial Liabilities
The Bank derecognizes a financial liability from the consolidated statement of financial position when it is extinguished; that is, when the contractual obligation has been paid or settled or has expired.
Debt Exchange
The Bank assesses whether instruments subject to debt exchange are substantially different from each other, considering qualitative aspects such as currencies, maturities, interest rates, subordination terms, regulatory framework, among others, and quantitative aspects, in which the present value of discounted cash flows under the conditions of the new instruments (including any net commission paid minus any commission received) using the original effective interest rate to calculate the discount differs by at least 10 percent from the present value of discounted cash flows remaining from the original financial liability.
When it is concluded that the instruments subject to debt exchange are not substantially different (based on the analysis of qualitative variables such as currency or issuance market changes, and in some cases a quantitative evaluation), the transaction is recognized as a modification of debt, and in this case, the amortized cost of the modified liability is adjusted to the present value of estimated contractual cash flows discounted at the original effective interest rate of the financial instrument, and the gain or loss is recognized immediately in the income statement. Incremental costs and commissions adjust the carrying amount of the liability and are amortized over the remaining life of the modified liability, following its subsequent measurement at amortized cost. In debt exchanges that are considered substantially different, derecognition is recognized in the income statement, and a new financial liability is recognized.
4.3. Day one profit adjustment
In situations where the fair value of a financial asset acquired or financial liability assumed at initial recognition differs from the transaction price, the Bank shall recognize a gain or loss directly in the consolidated statement of income if the fair value is supported by Level 1 inputs or is based on a valuation technique that uses only observable market data. In all other circumstances, the Bank defers the Day one gain or loss and recognizes it in the consolidated statement of income over the course of the transaction period.
4.4. Compound instruments
The Bank recognizes compound financial instruments that contain both liability and equity components separately. Therefore, for initial measurement, the liability component is the fair value of a similar liability which doesn´t have an equity component (determined by discounting future cash flows using the market rate at the date of the issuance). The difference between the fair value of the liability component and the fair value of the compound financial instrument, considered as a whole, is the residual value assigned to the equity component. After initial recognition, the liability component of a compound financial instrument is measured at amortized cost using the effective interest method. The equity component of a compound financial instrument is not re-measured subsequent to initial recognition. The liability component corresponds to the preferred dividend related to 1% of the subscription price, which is the payment of the minimum dividend on the preferred shares for each period. For further information, see Note 22. Share capital.
4.5. Financial guarantee contracts and loan commitments
The Bank issues financial guarantees and loan commitments. Loan commitments are those agreements under which the Bank has an irrevocable obligation to grant the loan. The financial guarantee contracts issued by the Bank are contracts that require the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due to accordance with the original or modified terms of a debt instrument.
Both financial guarantee contracts and loan commitments are initially recognized as liabilities at fair value, which is normally the fee received, adjusted for the directly attributable transaction costs incurred. Subsequently, liabilities are measured at the higher of the provision amount measured according to IFRS 9, and the amount initially recognized, less the accumulated amortization recognized according to IFRS 15 Revenue from contracts with customers.
Income derived from guarantees is recognized as “commission income” in the consolidated statement of income over the term of the contract, in accordance with the method and frequency of commission’s payments.
4.6. Derivatives financial instruments
A financial derivative is an instrument whose value changes in response to changes in a variable or index, such as an interest rate, exchange rate, the price of a financial instrument, a credit rating or a credit index. This instrument requires no initial payment or is lower in comparison to other financial instruments with a similar response to changes in market conditions and is generally settled at a future date.
The Bank recognizes its derivative financial instruments at fair value, based on the prices and valuation methodologies provided by the official pricing service provider (Precia); this includes counterparty credit-risk adjustments applied to derivatives when the Bank's position is a derivative asset, and the Bank's credit risk when the position is a liability on a derivative. For further information, see Note 30. Fair value of assets and liabilities, section d. Credit valuation adjustment.
Derivatives are recognized and measured at fair value through profit or loss unless such derivatives are designated as cash flow hedges or hedges of a net investment in a foreign operation. In those cases, the effective portion of changes in the fair value of the derivatives are recognized in other comprehensive income. All derivatives are carried as assets when fair value is positive and as liabilities when fair value is negative. Gains and losses arising from changes in the fair value of derivatives, which are not in hedging relationships, are recognized in the consolidated statement of income under the "valuation on financial instruments" item, and gains and losses from the valuation of foreign exchange derivatives are included in the "Other Operating Income" item.
4.7. Hedge accounting
The Bank designates and documents hedge accounting at inception in accordance with the requirements of IFRS 9 Financial Instruments. When the hedging relationship is considered to be highly effective, the changes in value of the hedging derivative are accounted for according to their classification, as fair value hedges, cash flow hedges and hedges of net investment in foreign operations, as set out in the paragraph below.
The Bank assesses at the inception of the hedge and on an ongoing basis during the life of the instrument, whether the hedge used in the transaction is expected to be aligned with the hedge effectiveness requirement (prospective effectiveness):
•Economic relationship between the hedging instrument and the hedged item.
•The effect of credit risk does not predominate over the value of the economic relationship.
•Designated hedge ratio is consistent with risk management strategy.
The Bank discontinues the hedge accounting when the hedging relationship no longer meets the criteria provided for hedge effectiveness or when the hedging instrument expires or is sold, terminated or exercised. Consequently, the item no longer complies with the hedge accounting conditions or the hedging relationship no longer complies with the risk management objective.
Before the establishment of hedge accounting, the Bank documents the relationship between hedged items and hedging instruments, as well as its risk management objectives and hedging strategies, which are approved by the Asset and Liability Management Committee.
Hedge relationships are classified and accounted for in the following ways:
Fair value hedges
Fair value hedges are designated to protect against the exposure to changes in the fair value of recognized assets or liabilities or unrecognized firm commitments.
Changes in the fair value of derivatives that are designated and qualify as hedging instruments in fair value hedges are recorded in the same line item of the consolidated statement of income as hedged item. The change in fair value of the hedged item that is attributable to the hedged risk is recorded as part of the carrying value of the hedged item, and it is also recognized in the same line item of the consolidated statement of income as the hedge item.
For fair value hedges of items carried at amortized cost, adjustments to the carrying value are amortized to the consolidated statement of income over the remaining life of the hedge item until maturity. Amortization is based on a recalculated effective interest rate at the beginning of the amortization period, which begins when the hedged item ceases to be adjusted for changes in its fair value attributable to the risk being hedged. The adjustment shall be amortized fully by maturity of the financial instrument or, in the case of a portfolio hedge of interest rate risk, by expiry of the relevant repricing period.
If the hedged item is derecognized, the non-amortized fair value is recognized immediately in the consolidated statement of income.
When an unrecognized firm commitment is designated as a hedged item, the subsequent cumulative change in the fair value of the firm commitment attributable to the hedged risk is recognized as an asset or liability with corresponding gain or loss recognized in net income.
Cash flow hedges
Cash flows hedges are used mainly to manage the exposure to variability related to the cash flow attributable to a specific risk associated with an asset or liability recognized on the consolidated statement of financial position or to a highly probable forecast transaction.
The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognized in other comprehensive income. The ineffective portion of the gain or loss on the hedging instrument is recognized in the consolidated statement of income as interest and valuation on financial instruments.
If the hedging instrument expires or is sold, terminated or exercised, without replacement or rollover into another hedging instrument, or if the hedging designation no longer meets the criteria provided for the hedge effectiveness requirements after any subsequent rebalancing adjustment, any accumulated gain or loss previously recognized in OCI remains in OCI, until the planned operation or the firm commitment affects the result.
When a forecasted transaction is no longer expected to occur, the gain or loss accumulated in equity is recognized immediately in net income.
Hedges of a net investment in a foreign operation
In accordance with IFRS 9 and IFRIC 16 Hedges of a net investment in a foreign operation, the Bank has decided to apply the hedge accounting of the foreign currency risk arising from currency translation of consolidated financial statements and goodwill of its net investment in Banistmo, designating as a hedging instrument of certain debt securities issued by the Parent Company and financial liabilities. The hedge accounting requires that the Bank accounts for the gain or loss derived from the foreign exchange differences related to the debt securities that are determined to be an effective hedge is recognized in other comprehensive income, as is the currency translation adjustment of the Banistmo operation into the presentation currency as required by IAS 21 Effects of changes in foreign exchange rates as detailed in 1. Functional currency, transactions and balances in foreign currency. When a foreign operation is sold or an outstanding security that forms part of the net investment is paid, the related exchange differences are reclassified to the consolidated statement of income as part of the gain or loss on sale.
5. Investments in associates and joint arrangements
5.1. Investments in associates and joint ventures
An associate is an entity over which the Bank has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but does not have control or joint control to make those policies decisions.
A joint venture is an entity that the Bank controls jointly with other participants, where the parties maintain a contractual agreement that establishes joint control over the relevant activities of the entity (which only exists when decisions about those activities require unanimous consent of the parties sharing control) and the parties have rights to the net assets of the joint arrangement.
The Bank's investments in associates and joint ventures are initially recorded at cost and their results, assets and liabilities are subsequently included in the consolidated financial statements using the equity method, except when the investment, or a portion thereof, is classified as held for sale, in which case it is accounted for in accordance with IFRS 5 Non-current assets held for sale and discontinued operations.
When an investment in an associate or joint venture is held by, or is held indirectly through, an entity that is a venture capital organization, or a mutual fund, unit trust or similar entities, and such investment is measured at fair value through profit or loss in that entity, the Bank may elect to measure investments in those associates and joint ventures at fair value through profit or loss in the consolidated financial statements. This election is applied on an investment-by-investment basis.
At the acquisition date, the excess of the acquisition cost of the associate or joint venture shares exceeding the Bank's share of the net fair value of identifiable assets and liabilities of the investee is recognized as goodwill and is included in the carrying amount of the investment and it is not amortized. Any excess of the Bank's share of the net fair value of the investee’s identifiable assets and liabilities over the cost of the investment is included as income in the determination of the Bank's share of the associate or joint venture’s profit or loss in the period in which the investment is acquired. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with IAS 36 Impairment of assets. Impairment losses are recognized in accordance with the policy for impairment of assets, cash-generating units and goodwill (see section 12. Impairment of assets, cash-generating units and goodwill, of this note).
If the Bank's share of losses of an associate or joint venture exceeds the Bank's interest in that associate or joint venture (which includes any long-term interests that, in substance, form part of the Bank's net investment in the associate or joint venture), the Bank discontinues recognition its share of further losses. Additional, losses are recognized only to the extent that the Bank has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture.
When the equity method is applicable, adjustments are considered in order to adopt uniform accounting policies of the associate or joint venture with the Bank. The portion that corresponds to the Bank for changes in the investee´s other comprehensive income items is recognized in the consolidated statement of comprehensive income as “Unrealized gain/loss on investments in associates and joint ventures using equity method” and gains or losses of the associate or joint venture are recognized in the consolidated statement of income as “Dividends and net income on equity investments”, in accordance with the Bank's participation. Gains and losses resulting from transactions between the Bank and its associate or joint venture are recognized in the Bank's consolidated financial statements only to the extent of the unrelated investor´s interest in the associate or joint venture. The equity method is applied from the acquisition date until the significant influence or joint control over the entity is lost. When the significant influence on the associate or the joint venture is lost, the Bank measures and recognizes any residual investment that remains at its fair value. The difference between the associate or joint venture carrying value (taking into account the relevant items of other comprehensive income), the fair value of the retained residual investment and any proceeds from disposing of a partial interest in the associate or joint venture, is recognized in the consolidated statement of income. The currency translation adjustments recognized in equity are reclassified to net income at the moment of disposal.
The unrealized gain or loss of an associate or joint venture is presented in the consolidated statement of comprehensive income, net of tax. Changes in the investment´s participation that arise from changes in other comprehensive income of an associate or joint venture are recognized directly in the investor’s statement of comprehensive income.
The dividends received from the associate or joint venture reduce the investment carrying value.
For further information, please see Note 8. Investments in associates and joint ventures.
5.2. Joint operations
A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement.
The Bank recognizes and measures assets, liabilities, revenues, and expenses in relation to its interest in joint operations in accordance with the applicable IFRS for the particular assets, liabilities, revenues and expenses.
When the Bank acquires an interest in a joint operation in which the activity constitutes a business, as defined in IFRS 3, or when an existing business is contributed to the joint operation on its formation by one of the parties that participate in the joint operation, the Bank will apply all of the principles of IFRS 3. In this case, the Bank recognizes goodwill in the event that consideration transferred exceeds the net of the acquisition date amounts of the identifiable assets acquired and the liabilities assumed.
When the Bank transacts with a joint operation in which the Parent Company or its subsidiaries is a joint operator (such as a sale or contribution of assets), the Bank is considered to be conducting the transaction with the other parties to the joint operation, and gains and losses resulting from the transactions are recognized in the Bank's consolidated financial statements only to the extent of other parties’ interests in the joint operation.
6. Leases
6.1. The Bank as lessee
The Bank assesses whether a contract is or contains a lease at the inception of the contract and recognizes a right-of-use asset representing its right to use the leased asset and a lease liability representing its obligation to make lease payments. The Bank elected to apply the recognition exemptions for short-term leases (leases of 12 months or less and without a purchase option) and leases where the underlying asset is of low value. Lease payments related to these exemptions will be recognized as an expense in profit or loss on a straight-line basis over the term of the lease.
Both the right-of-use asset and the lease liability are measured at the present value of the lease payments that have not been paid at that date. Lease payments are discounted using the lessee’s incremental borrowing rate. In addition, the right-of-use asset includes: 1) the amount of the initial measurement of the lease liability, 2) lease payments or costs incurred by the lessee made before or after the commencement date, less lease incentives received, and 3) an estimate of the costs to be incurred to dismantle the underlying asset, restore the site on which it is located or restore the underlying asset to the condition required by the lease.
Subsequently, the Bank measures the right-of-use asset at cost less any accumulated depreciation and any accumulated impairment losses and adjusted for any remeasurement of the lease liability. The Bank measures the lease liability by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made, and remeasuring the carrying amount to reflect any new expectation or lease modifications. Each lease payment has been allocated between the liability and interest expenses. The accrued interest on the lease liability for each period over the lease term will be the amount that produces a constant periodic rate of interest (incremental borrowing rate) on the remaining balance of the liability.
6.2. The Bank as lessor
The lease agreements entered into by the Bank are classified at the initial recognition as financial or operating leases.
A lease is classified as a finance lease when substantially all the risks and rewards incidental to ownership of the asset are transferred to the lessee and are recognized at a value equal to the net investment in the lease, corresponding to the sum of the minimum lease payments receivable and any unguaranteed residual value, discounted at the interest rate implicit in the lease. Otherwise, it is classified as an operating lease, recognizing and measuring the assets under the principles of property and equipment or investment property, in which case income and depreciation of property and equipment are recognized on a straight-line basis over the life of the asset. Contingent lease payments are recognized as revenue in the period in which they are received.
If during the lease term, the lessor and the lessee decide to modify the initial conditions, and the agreed changes result in a different classification, then the modified agreement will be considered a new lease with new clauses that will lead to the classification of a financial or operating lease, as appropriate.
The Bank uses the following indicia of transfer of risk and rewards incidental to ownership to the asset; if one of them is met, lease is classified as a finance lease:
•The agreement indicates that the lessee has the option to purchase the asset at a price that is expected to be equal to or less than 10% of the fair value of the asset, upon termination of the lease.
•The term of the lease covers most of the economic life of the asset, even when the lease does not transfer the ownership of the underlying asset to the lessee at the end of the lease term, i.e., when the minimum lease term represents 75% or more of the economic life of the leased asset.
•At the inception of the lease, the present value of the minimum lease payments amounts to at least 90% of the fair value of the leased asset.
•The leased assets are of such a specialized nature that only the lessee has the possibility of using them without making significant modifications.
7. Premises and equipment and depreciation
Premises and equipment include tangible items that are held for use, for rental to others, or for administrative purposes and are expected to be used for more than one period.
Items of premises and equipment are expressed at cost less accumulated depreciation and impairment losses. Depreciation is calculated using the straight-line method, in order to derecognize the depreciable amount of premises and equipment over the estimated useful lives of the assets. The depreciable amount is the cost of an asset less its residual value. The estimated useful lives for each asset group are:
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| Asset group |
Useful life range |
| Buildings |
10 to 75 years |
| Furniture and fixtures |
3 to 20 years |
| Computer equipment |
3 to 20 years |
| Equipment and machinery |
2 to 40 years |
| Vehicles |
3 to 10 years |
The asset’s residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. When there is a significant change, the depreciation and the charge to the consolidated statement of income are adjusted based on the new estimation.
The Bank assesses at the end of each year whether there is any indication of external or internal reduction in the asset’s recoverable value. If there is any indication of impairment, the Bank estimates the recoverable amount of the assets and then recognizes the impairment loss in the consolidated statement of income. For further information, see section 12. Impairment of non-financial assets, cash-generating units and goodwill in this note.
Maintenance expenses of the premises and equipment are recognized as an expense in the period in which they are incurred and are registered in the consolidated statement of income as “Other administrative and general expenses”.
Gains and losses in sales of premises and equipment are registered in the consolidated statement of income as “Other operating income”.
8. Investment properties
The investment properties are measured initially at cost, including the transaction costs. The carrying value includes the cost of replacement or substitution of a part of an investment property at the time the cost is incurred, if the cost meets the recognition criteria; and it excludes the daily maintenance costs of the investment property which are included in the consolidated statement of income as “Other administrative and general expenses”.
After the initial recognition, the investment properties are measured at fair value which reflects the market conditions at the consolidated statement of financial position date and are valued by Management with the support of external experts using valuation techniques based on comparable prices, direct capitalization, discounted cash flows and replacement cost. The gains and losses that arise from changes in the fair values of investment properties are included in the consolidated statement of income as “Other operating income”.
Transfers of an asset to or from the investment properties are only made when there is a change in its use. For a transfer from an investment property to premises and equipment, the cost taken into account for its subsequent accounting is the fair value at the time of the change in use. If a premise and equipment becomes an investment property, it will be accounted for at its fair value.
9. Intangible assets
Intangible assets are identifiable, non-monetary assets without physical appearance, separately acquired or internally generated by the Bank that are measured initially at cost and subsequently at cost less any accumulated amortization and any accumulated impairment loss. Intangible assets acquired in business combinations are recognized at fair value at the date of acquisition.
Intangible assets with finite useful lives (ranging from 1 to 10 years) are amortized using the straight-line method over their estimated useful lives and assessed at the end of the period for impairment. The amortization period and the amortization method for intangible assets with a finite useful life are reviewed at least annually. The expected changes in the useful life or in the pattern of consumption of the future economic benefits of the asset are recognized when the amortization period or method has changed, as appropriate, and they are treated as changes in the accounting estimates. The amortization expense of intangible assets with finite useful lives is recognized in the consolidated statement of income.
The Bank's intangible assets comprise mainly intangibles of finite useful life, such as licenses, software and computer applications, customer relationships and trademarks (See Note 9. Goodwill and intangible assets, net). Intangibles of indefinite useful life include Goodwill.
When intangible assets with finite useful life are written-off, the expected future economic benefits period is reduced to increase the amount of amortization, resulting in the derecognition of the intangible asset in a shorter period than initially estimated.
Intangible assets with indefinite useful lives are not subject to amortization but are periodically tested to identify any impairment, either individually or at the cash-generating unit level. The assessment of the indefinite life is reviewed annually to determine if it continues being supportable. In the event that the assessment was not valid, the change from indefinite useful life to finite useful life is recognized prospectively. Intangible assets with an indefinite useful life correspond to goodwill.
9.1. Internally generated intangible assets
The costs of internally generated intangible assets are recognized as intangible assets if they have been incurred in the development stage and meet the recognition criteria; if so, such assets are presented in the consolidated statement of financial position at cost less accumulated amortization and accumulated impairment losses (see section 12. Impairment of non-financial assets, cash-generating units and goodwill in this note). Other expenditures are recorded as expenses in the consolidated statement of income.
Amortization of the asset begins when development is complete and the asset is available for use. Intangible assets are amortized using the straight-line method over their estimated useful lives and assessed at the end of the period for impairment.
10. Inventories
The Bank recognizes as inventory the assets or returned property from finance or operating lease and real estate acquired or held in construction for sale in the ordinary course of business.
Assets or returned property from finance or operating lease
Inventories of assets or returned property are those assets arising from an early termination of a finance or operating lease or those on which the lease has been terminated, and they are expected to be sold in the normal course of business, which are controlled by the Bank and are expected to obtain future economic benefit.
The inventory of returned property is recognized as an asset from the date on which the Bank assumes the risks and benefits thereof. Assets arising from operating leases are initially measured at cost, which is the carrying amount less accumulated depreciation and impairment, if any. Assets returned property financial leasing operations are recognized at the lower of their book value plus sanitation costs and its net realizable value. When the book value is greater than the net realizable value, an adjustment is recognized under the caption "Provision for impairment of loan portfolio and financial leasing operations, net" in the consolidated income statement.
Real estate acquired or in construction for sale
Real estate acquired or in construction for sale in the ordinary course of the Bank’s business mainly include:
•Real estate units in construction: Refers to investments made in real estate construction projects (residential, commercial, etc.) that are in the development phase.
•Real estate units in inventory: Corresponds to real estate units available for sale.
The cost of real estate acquired or in construction for sale includes all expenses incurred in their acquisition and transformation, as well as other expenses necessary to complete them. Once the construction phase is completed, any subsequent costs will be recognized as an expense in the income statement for the period.
Inventories are measured at the lower of cost and net realizable value. Net realizable value ("NRV") is the estimated selling price in the normal course of business, less the estimated costs necessary to make the sale. The cost of inventories is assigned by using specific identification of their individual costs.
The Bank revises the NRV of its inventories at least annually, or when market conditions so require; the adjustment of the decrease in value is recognized directly in income. Adjustments to the NRV are recognized under the caption "Amortization, depreciation and impairment" in the consolidated statement of income, up to the value initially recognized.
10.1. Digital assets
The Bank chooses as an accounting policy to recognize digital assets held to be sold in the normal course of its operations as inventories. Digital assets are measured at fair value less costs of sale. If there is no active market, the fair value of the digital asset will be zero given the low probability of its realization.
Changes in fair value are recognized in the consolidated statement of income for the period in which such changes occur.
The exchange differences of the digital asset in foreign currency are recognized within the valuation process inherent to the fair value model.
11. Digital assets and liabilities held in custody for customers
The Bank safeguards crypto assets for customers in digital wallets and cryptographic keys are required to access digital assets on the Bank's platform. The Bank safeguards these assets and/or keys and is required to protect them from loss, theft, or other misuse.
The Bank recognizes customer's digital assets initially and subsequently at fair value. At the same time, the Bank recognizes the obligation to safeguard the customer's digital asset as a liability. The liability should be measured at the same amount as the corresponding asset at fair value.
Any loss, theft or other misuse that impacts the measurement of customer cryptoassets is recognized in profit or loss in the period in which it occurs.
The Bank does not monetize unsupported assets or assets transferred through unsupported networks that are realized on the platform. The unsupported crypto assets or crypto assets received through unsupported networks are not material to the consolidated financial statements as of December 31, 2024.
12. Assets held for sale and discontinued operations
The Bank classifies non-current assets or disposal groups held for sale if their carrying value will be recovered through a sale transaction, rather than through continuing use. These assets are measured at the lower of their carrying value and their fair value less costs to sell and they are not depreciated nor amortized from the date of their classification. Additionally, if any indications of impairment exist, impairment losses are recognized for the difference between the carrying and the fair value less costs to sell as “Impairment, depreciation and amortization” in the consolidated statement of income. Gains and losses in the sale of assets held for sale are recognized in the consolidated statement of income as “Other operating income” or “Other administrative and general expenses”.
The held for sale condition is met if the assets or groups of assets are available, in their current condition, for immediate sale or the sale transaction is highly probable and is expected to be completed within the year following the date of classification. In the Bank, the assets held under this classification correspond to foreclosed assets. If the sale of the asset does not take place within the planned period, the assets are reclassified to "Other assets, net" in the consolidated statement of financial position.
A discontinued operation is a component of an entity that has been disposed of, or is classified as held for sale, and represents a separate major line of business or a geographical area of operations, is part of a single coordinated and individual plan to dispose of a separate major line of business or geographical area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of a discontinued operation are presented separately from those of continuing operations in the consolidated statement of income on a comparative basis.
13. Impairment of non-financial assets and cash-generating units and goodwill
The Bank evaluates at the end of each period whether there is any indication that on a stand-alone basis non-financial assets and cash-generating units are impaired. If some indication of impairment does exist, the Bank estimates the recoverable amount of the assets and the loss by impairment, the impairment loss is recognized for the amount by which the carrying amount of the cash generating unit exceeds its recoverable amount.
Regardless of whether impairment indicators exist, impairment of goodwill is assessed annually, or more frequently if events or changes in circumstances indicate that it may be impaired.
The recoverable amount of non-financial assets or cash-generating units is defined as the higher of fair value less costs of disposal and value in use. Fair value is determined by Management with reference to market value (if available), through pricing models, or with the assistance of a valuation specialist. Meanwhile, value in use requires Management to develop significant assumptions and estimates to forecast cash flow for periods that extend beyond the normal requirements of management reports, assessing the appropriate discount rate and growth rate.
If an asset does not generate cash flows that are independent from the rest of the assets or group of assets, the recoverable amount is determined by the cash-generating unit to which the asset belongs.
The amount of impairment losses recognized in net income during the period are included in the consolidated statement of income as “Impairment, depreciation and amortization”. Except for impairment loss recognized for goodwill, impairment losses are subject to reversal, the increased carrying amount of an asset other than goodwill attributable to a reversal of an impairment loss shall not exceed the carrying amount that would have been determined (net of amortization or depreciation) had no impairment loss been recognized for the asset in prior years.
14. Other assets
The Bank presents as other assets, among other things, (a) the expenses paid in advance incurred in the development of its business, in order to receive future services, which are amortized during the period in which services are received or the costs or expenses are recorded and (b) foreclosed assets that do not comply with the requirements to be recognized as assets held for sale and where there are no plans to use them in the supply of services or for administrative purposes.
Foreclosed assets are initially recognized at the lower of net amount of the charged-off financial assets to which the foreclosed assets relate and net realizable value of the foreclosed asset (the net realizable value will be the estimated selling price of the asset or its awarding value, less the estimated costs necessary to carry out its sale), pending obtaining a plan for its commercialization. If net amount of the charged-off financial assets is greater than net realizable value of the foreclosed asset, an adjustment for impairment of credit risk of the financial asset is recorded in the results for the period.
There is evidence of impairment when these group of assets remain in the consolidated statement of financial position for a period of time exceeding one year from the reception date, without buyer having been found, despite the Bank's ongoing efforts to sell them (even adjusting the selling price).
Foreclosed assets are subsequently assessed to determine whether an impairment lost must be recognized. In the case of events that arise that are beyond the control of the Bank and that make remote the realization of these assets, they are identified as "non-tradable”, and a complete impairment is carried out.
15. Derecognition of non-financial assets
The Bank non-financial assets are derecognized either on disposal or when they are permanently withdrawn from use and no future economic benefits are expected. The difference between the value obtained on disposal and the carrying amount is recognized in the consolidated statement of income.
16. Employee benefits
16.1. Short term benefits
The Bank grants to its employees short-term benefits such as bonuses based on added value to clients and the Bank's results, salaries, accrued performance costs and social security that are expected to be wholly settled within 12 months. Expenses related to these benefits are recognized over the period in which the employees provide the services to which the payments relate. For further information, see Note 19. Employee benefit plans.
16.2. Other long-term employee benefits
The Bank grants to its employees seniority bonuses as long-term employee benefits whose payment is not expected within the 12 months following the end of the annual period in which the employees have rendered their services. The cost of long-term employee benefits is allocated across the period from the time the employee was hired by the Bank and the expected date of obtaining the benefit.
These benefits are projected up to the date of payment and are discounted through the projected unit credit method.
16.3. Pensions and other post-employment benefits
–Defined contribution plans
The Bank makes monthly contributions to pension funds, due to legal requirements and it has no legal obligation to pay further contributions.
The Bank recognizes contributions in the consolidated statement of income once the contribution is accrued. Any contributions unpaid at the consolidated statement of financial position date are included as a liability.
–Defined benefit plans
These are post-employment benefit plans in which the Bank has the legal or constructive obligation to take responsibility for the payments of benefits that have been agreed, for example, severance pay, pension recognition bonuses, and pensions for retirees who fall under the Bank’s responsibility, as well as any other defined benefit plans agreed upon with former employees. The Bank makes an actuarial valuation based on the projected unit credit method and a risk-free rate which reflects current market assessments of the time value of money in each country (interest rate of treasury bonds [“TES”], representative of the nation's public debt), related to the characteristics and the benefit flows weighted average, to discount such obligation.
17. Provisions, contingent liabilities and contingent assets
Provisions
Provisions are recognized when the Bank has a present obligation (legal or constructive) as a result of a past event, where it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the obligation's value can be made.
The corresponding expense for any provision is presented in the consolidated statement of income, net of all expected reimbursement. The increase in the provision due to the time value of money is recognized as a financial expense.
The amounts recognized in the consolidated statement of financial position, correspond mainly to:
I. Judicial proceedings
Judicial provisions refer to pending legal proceedings on employment matters, ordinary lawsuits, class actions suit, civil actions within criminal prosecutions and executive proceedings against the Bank.
II. Onerous contracts
For the Bank, an onerous contract is a contract in which the unavoidable costs of meeting the obligations under the contract exceeds the economic benefits expected to be received under it.
III. Loan commitments
In order to meet the needs of its customers, the Bank issues loan commitments, letters of credit and bank guarantees. Loan commitments are those approved irrevocable loans, in which, despite having acquired a commitment to grant them, due to the contract or agreement or for any other reason they are still pending disbursement.
IV. Financial guarantees
The Bank issues bank guarantees on behalf of its customers. A bank guarantee represents an irrevocable commitment pursuant to which the Bank will cover, up to the maximum amount guaranteed, a breach of the client's contractual obligations to third parties for a certain period of time. These are commitments issued by the Bank to guarantee the performance of a customer to a third party and are mainly issued to guarantee agreements established between parties from the energy sector, hydrocarbons sector, private sector and public procurement contracts.
The Bank expects most of those guarantees provided to expire before they are used.
The events or circumstances that would require the Bank to perform under a guarantee are determined by the type of guarantee, as outlined below:
Guarantees for the energy sector
The Bank is responsible before the guarantee’s beneficiary in the following situations:
•Lack of energy supply due to low availability from the generating company (the guaranteed entity).
•Noncompliance with the contract signed by the guaranteed entity.
•Noncompliance with the payment for energy supply.
•Noncompliance with the construction and operating of power plants.
•Noncompliance with the construction and operating of transmission lines.
Guarantees for the hydrocarbons sector
The Bank is responsible before the guarantee’s beneficiary in the following situations:
•Noncompliance with the contractual obligations in the Minimum Exploration Program.
•Noncompliance with the contractual obligations in the Additional Exploratory Program.
•Noncompliance with the contractual obligations in the Post Exploratory Program.
•Noncompliance with the Technical Evaluation obligations.
Guarantees for public procurement
The Bank must pay a state entity up to the amount guaranteed for the breach by the contractor of the contractual or legal obligations agreed.
Commitment issued by the Bank to guarantee the performance of a customer from the private sector
The Bank must pay the third party if there is any breach of what has been agreed upon or due to the economic insolvency of the client.
Contingent liabilities
Possible obligations that arise from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events, not wholly within the control of the Bank, or present obligations that arise from past events but are not recognized because it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligations or the amount of the obligations cannot be measured with sufficient reliability, are not recognized in the consolidated statement of financial position, but instead are disclosed as contingent liabilities, unless the possibility of an outflow of resources embodying economic benefits is remote, in which case no disclosure is required.
Contingent assets
Possible assets that arise from past events whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events, not wholly within the control of the Bank, are not recognized in the consolidated statement of financial position; instead, these are disclosed as contingent assets where an inflow of economic benefits is probable. When the realization of income is virtually certain, then the related asset is not a contingent asset and its recognition is appropriate.
18. Revenue recognition
The Bank recognizes revenue from ordinary activities, which represent the transfer of goods or services committed with customers in exchange for an amount that reflects the consideration to which the entity expects to be entitled. For performance obligations where none of the conditions for revenue recognition over time are met, the Bank satisfies the performance obligation at a point in time, at which the customer obtains control of the promised services.
Revenue is measured based on the consideration specified in the contract with the customer, and excludes amounts received on behalf of third parties when the Bank is an agent. The Bank recognizes revenue when it transfers control over a good or service to a customer. Revenue is presented net of reimbursements and discounts and after eliminating inter-group sales. The Bank evaluates its revenue categories based on specific criteria to determine whether it acts as principal or agent. Revenue is recognized to the extent that it is probable that economic benefits will flow to the Bank and it is possible to reliably measure the related revenues and costs.
When the Bank fulfills a performance obligation through the delivery of promised goods or services to customer, it creates a contractual asset for the consideration amount obtained with the performance. The Bank recognizes the contractual assets as current assets, as they are expected to be realized within the normal operating cycle.
The costs of contracts eligible for capitalization as incremental costs when obtaining a contract are recognized as a contractual asset. Contractual costs are capitalized when incurred if the Bank expects to recover those costs. Contractual costs constitute non-current assets to the extent that the Bank expects to receive the economic benefits of those assets in a period greater than twelve months. The contractual costs are amortized systematically and consistently with the transfer of the services to the customer once the corresponding revenue has been recognized. The capitalized contractual costs are impaired if the customer withdraws or if the carrying amount of the asset exceeds the projection of the discounted cash flows that are related to the contract.
Interest income comprises income of financial assets at amortized cost or at fair value through other comprehensive income. Interest income is recognized using the effective interest rate method, the computation takes into account all the contractual conditions of the financial instrument (for example, prepayment options) and includes incremental fees and commissions (for example, certain loan commitment fees) or expenses that are directly attributed to the instrument and are an integral part of the effective interest rate, without taking account future credit losses.
Valuation income relates to debt securities at fair value, where gains and losses arising from changes in fair value are included in the consolidated statement of income as “Interest and valuation on financial instruments”.
Fees and services commissions are recognized as the right to consideration is obtained through the exchange of goods or services that the entity has transferred to a customer. Therefore, the Bank recognizes some fees as revenue over time, such as income from commissions and asset management, custody and other administration and advisory commissions. While other fees are recognized as revenue at a point in time of completion of the underlying transaction, like commissions arising from the negotiation or participation in the negotiation of a transaction for a third party, such as the acquisition of shares or other securities or the purchase or sale of businesses. In addition, the Bank maintains a credit card loyalty program to provide incentives to its customers. The program allows customers to purchase goods and services, based on the exchange of awards points, which are awarded based on purchases using the Bank's credit cards and the fulfillment of certain conditions established in such program. The redemption of points for prizes is carried out by a third party. Therefore, the expenses of the Bank's commitments with its clients arising from this program are recognized as a lower value of the fees and commission income, considering the total number of points that can be redeemed over the accumulated prizes and the probability of redemptions.
Dividend revenue of investments that are not associates or joint ventures are recognized when the right to payment of the Bank is established, which is generally when the shareholders declare the dividend. These are included in the consolidated statement of income as “Dividends and net income on equity investments”.
19. Income tax
Income tax includes current tax and deferred tax. The current tax is the income tax payable with respect to the profit for the fiscal year, which arises in profit or other comprehensive income. A provision is made for current tax considering the tax bases and tax rates enacted in each of the jurisdictions where the Bank is located, at the date of preparation of the consolidated financial statements.
The Bank recognizes, when appropriate, deferred tax assets and liabilities by estimating the future tax effects attributable to differences between book values of assets, liabilities and their tax bases. Deferred tax assets and liabilities are measured based on the tax rate that, in accordance with the valid tax laws in each country where the Bank has operations, must be applied in the year in which the deferred tax assets and liabilities are expected to be realized or settled. The future effects of changes in tax laws or tax rates are recognized in the deferred taxes as from the date of publication of the law providing for such changes.
Tax bases for deferred tax must be calculated by factoring in the definition of IAS 12 Income tax and the value of the assets and liabilities that will be realized or settled in the future according to the valid tax laws of each of the countries where the Bank has operations.
Deferred tax liabilities due to deductible temporary differences associated with investments in subsidiary and associated entities or shares in joint ventures, are recognized, except when the Bank is able to control the period in which the deductible temporary difference is reverted, and it is likely that the temporary difference will not be reverted in the foreseeable future.
Deferred tax assets, identified with temporary differences, are only recognized if it is considered likely that the Bank will have sufficient taxable income in the future that allows it to be recovered based on the stand-alone entity expected cash flow forecast for the next three years.
Tax credit from fiscal losses and surplus amounts from the presumptive income on the net income are recognized as a deferred asset, provided that it is likely that the Bank will generate future net income to allow their offset.
The deferred tax is recorded as debit or credit according to the result of each of the companies that form the Bank, and for the purpose of disclosure on the consolidated statement of financial position it is disclosed as net.
The deferred income tax expense is recognized in the consolidated statement of income under the heading “Income tax”, except when referring to amounts directly recognized in OCI (Other Comprehensive Income).
Regulatory changes in tax laws and in tax rates are recognized in the consolidated statement of income under the heading “Income Tax” in the period when such rule becomes enforceable. Interest and fines are recognized in the consolidated statement of income under the other administrative and general expenses or in the caption "Income tax" of the consolidated income statement, when applicable.
The Bank periodically assesses the tax positions adopted in tax returns, and, according to the results of the tax audits conducted by the tax authorities, determines possible tax outcomes provided it has a present obligation and it is more likely than not that the Bank will have to dispose of the economic resources to cancel the obligation, and the Bank can make an accurate estimate of the amount of the obligation.
For further information about deferred tax considerations derived from the last Colombian tax reform (Law 2277 of 2022), see Note 13. Income tax.
Transfer pricing policy
The Bank has as a general policy that each of its companies be responsible for their income, costs and expenses independently. The policy takes into account the regulation for the Parent Company provided for in the Organic Statute of the Financial System (article 119, numeral 4) which in relation to the autonomy of the subsidiaries states that: The activity of the subsidiaries of entities subject to the control and supervision of the SFC must be carried out in conditions of independence and administrative autonomy, so that they have sufficient decision-making capacity to carry out the operations that constitute their object.
The Bank recognizes arm’s length operations with foreign economic links. These operations are documented and reported to the tax Administration according to the last evaluation date corresponding to the previous year.
E. Use of estimates and judgments
The preparation of consolidated financial statements requires Bank's Management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
Judgments or changes in assumptions are disclosed in the notes to the consolidated financial statements. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under current circumstances. Actual results may differ from these estimates if assumptions and conditions change.
The significant accounting estimates that the Bank uses in preparing its consolidated financial statements are detailed below:
1. Credit risk impairment
As disclosed by Management and described in section D. Material Accounting Policies, paragraph 4.1.2. Impairment of financial assets at amortized cost or at fair value through other comprehensive income ‘FVTOCI’, expected credit losses are calculated using individual and collective models and methodologies based on significant assumptions and judgment considering historical credit data, current borrower situation and reasonable and supportable forecasts of future economic conditions. Collective models include parameters of probability of default at 12 months, probability of default throughout the lifetime of the obligation, loss given default, and exposure at default with the inclusion of the prospective approach that include assumptions of future macroeconomic conditions in plausible future scenarios. In addition, for loans individually assessed in stage 3, the Bank will evaluate defaulted significant loans, analyzing the debt profile of each debtor, the fair value of guarantees granted, information on credit behavior and the future cash flows expected from the client.
The estimation of impairment charges is a critical accounting policy because of the significance of this line item, the sensitivity of the charges to changes in assumptions about future events (behavior of the expected macroeconomic variables), weighting of macroeconomic scenarios and other somewhat subjective judgments that are incorporated in the individual credit loss models.
Some relevant assumptions must be made to operate the mathematical models behind the expected credit loss assessment. Assumptions are constructed from historical data to consider whether a customer has a significant increase in risk or is in default; these are reviewed by expert panels. Other assumptions such as future economic conditions, the simulation of reasonable future economic scenarios and the likelihood of those scenarios have a high impact on lifetime default probability models. These scenarios are determined and leveraged by the Direction of Economic Research.
The main factors considered in collective estimations of credit losses are the definition of significant increase in credit risk, definition of default, collateral values, loan maturity and macroeconomic forecast of variables such as unemployment, GDP, interest rates, among others. It is also important to consider any other variable that could influence a client´s willingness to pay.
In addition, individual credit loss models consider assumptions on how the financial performance and future cash flow of a client could be affected, the client’s expected future operational and commercial activity, the capacity to generate sufficient cash to pay debt obligations and trends and regulatory changes in the economic sector in which the client operates, changes in the collateral value, weighting of the scenarios used, as well as other internal or external factors. For further information, see Note 6. Loans and advances to customers, net and Risk management.
Given the inherent uncertainties and the high level of subjectivity involved in the assessment of three following factors, it is possible that the outcomes in the next financial year could differ from the expectations on which Management’s estimates are based:
•Exposure at default: The exposed balance of assets to the current capital balance, interest, and receivable accounts. In the case of products whose nature is revolving and that have an available borrowing that is susceptible to be used in its entirety according to loan contracts subscribed with clients, this parameter includes an estimation of the use of those products after the client’s default.
•Probability of default (“PD”): This is the probability that the debtor fails to fulfill their obligations of capital and/or interest payment over a period of 12 months. This is linked to the rating/scoring of each debtor/operation.
•Loss given default (“LGD”): This is defined as the economic impairment that the entity would incur in the event of any instance of default. This depends mainly upon the characteristics of the debtor and upon the valuation of guarantees or collateral associated with the operation.
Impairment loss models and methodologies, and the related assumptions, are assessed by the Bank Chief Risk Officer (“CRO”) on a regular basis, using robust validation procedures in order to assure a reasonable coverage of effective losses. This process enables Management to periodically determine whether assumptions and models used to measure credit risk impairment should be adjusted to achieve more precise estimations. Internal controls, data governance standards and approval processes, have been implemented by the Bank to make estimations more accurate.
2. Impairment testing of cash generating units (“CGU”), including goodwill
The Bank tests goodwill recognized upon business combinations for impairment at least annually. The impairment test for goodwill involves estimates and significant judgments, including the identification of cash generating units and the allocation of goodwill based on the expectations of which operating segments of the Bank will benefit from the acquisition.
The fair value of the acquired companies is sensitive to changes in the valuation models’ assumptions. Adverse changes in any of the factors underlying these assumptions could lead the Bank to record a goodwill impairment charge. Management believes that the assumptions and estimates used are reasonable and supportable in the existing market environment and commensurate with the risk profile of the assets valued. See Note 12. Goodwill and intangible assets, net, for further information related to carrying amount, valuation methodologies, key assumptions, sensitivities and the allocation of goodwill.
3. Recognition of digital assets
Currently, there is no specific definitive guidance in IFRS or alternative accounting frameworks to account for the recognition of digital assets held by the Bank, as well as the custody of digital assets held for customers, so management has exercised significant judgment in determining the appropriate accounting treatment.
The Bank has considered that it acts in the quality of a commodity trader, as defined in IAS 2, Inventories, by characterizing certain of its holdings as inventories, or more specifically, digital assets. The business model for digital assets will be to sell them in the near future and generate a profit from fluctuations in price or dealer margin. So, inventories held by commodity broker-dealers are measured at fair value less costs to sale. When such inventories are measured on that basis, changes in value are recognized in profit or loss in the period.
With respect to the custody of digital assets held by customers, the Bank recognizes a liability for the obligation to safeguard user's assets and recognizes an associated asset for the cryptographic assets safeguarded. Both the liability and the asset must be measured initially and subsequently at the fair value of the crypto assets being safeguarded.
In the event that the IASB issues final guidance, the Bank may be required to modify its accounting policies, which could have a significant effect on the Bank´s consolidated financial statements.
4. Deferred tax
Deferred tax assets and liabilities are recorded on deductible or levied temporary differences originating between tax and accounting bases, taking into account the tax rules applicable in each country where the Bank has operations. Due to the changing conditions of the political, social and economic environment, the constant amendments to tax legislation and the permanent changes in the tax principles and changes in interpretations by tax authorities determining the tax bases for the deferred tax items involves difficult judgments including estimates of future gains, offsets or tax deductions. Accordingly, the determination of the deferred tax is considered a critical accounting policy.
For more information relating to the nature of deferred tax assets and liabilities recognized by the Bank, please see Note 13. Income tax.
5. Provisions and contingent liabilities
The Bank is subject to contingent liabilities, including those arising from judicial, regulatory and arbitration proceedings, tax and other claims arising from the conduct of the Bank's business activities. These contingencies are evaluated based on Management’s best estimates and provisions are established for legal and other claims by assessing the likelihood of the loss actually occurring as probable, possible or remote. Contingences are provisioned and recorded when all the information available indicates that it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation before the consolidated statement of financial position date and the amounts may be reasonably estimated. The Bank engages internal and external experts in assessing probability and in estimating timing, nature and amount of outflows that may result from past events.
Provisions are determined by Management’s best estimate of the expenditure required to settle the present obligation at the end of the reporting period, which estimate is discounted using a risk-free rate which reflects current market assessments of the time value of money in each country, which for Colombia is the interest rate on treasury bonds “TES”.
Throughout the life of a contingency, the Bank may learn of additional information that can affect assessments regarding probability or the estimates of amounts involved; changes in these assessments can lead to changes in recorded provisions.
The Bank considers the estimates used to determine the provisions for contingent liabilities critical estimates because the probability of their occurrence and the amounts that the Bank may be required to pay are based on the Bank judgment and those of its internal and external experts, which will not necessarily coincide with the future outcome of the proceedings.
For further information regarding legal proceedings and contingencies and their carrying amounts, see Note 21. Provisions and contingent liabilities.
6. Fair value of assets and liabilities
The fair value of the Bank's assets and liabilities is determined at the date of the consolidated statement of financial position. The Bank's fair value measurement process considers the characteristics of the asset or liability in the same way that market participants would take them into account when pricing the asset or liability at the measurement date; the estimate takes into account inputs from valuation techniques used to measure fair value.
To increase consistency and comparability in fair value measurements and related disclosures, the Bank specifies different levels of inputs that may be used to measure the fair value of financial instruments, as follows:
Level 1: Assets and liabilities are classified as Level 1 if there are observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. An active market is one in which transactions occur with sufficient volume and frequency to provide pricing information on an ongoing basis. Instruments are valued by reference to unadjusted quoted prices for identical assets or liabilities in active markets where the quoted price is readily available, and the price represents actual and regularly occurring market transactions.
Level 2: Assets and liabilities are classified as Level 2 if in the absence of a market price for a specific financial instrument, its fair value is estimated using models whose input data are observable for recent transactions of identical or similar instruments.
Level 3: Assets and liabilities are classified as level 3 if unobservable input data were used in the measurement of fair value that are supported by little or no market activity and that are significant to the fair value of these assets or liabilities. The fair value of Level 3 financial assets and liabilities is determined using pricing models, discounted cash flow methodologies or similar techniques.
Transfers into or out of Level 3 are made if the significant inputs used in the financial models measuring the fair values of the assets and liabilities became unobservable or observable, respectively, in the current marketplace. All transfers between the aforementioned levels are assumed to occur at the end of the reporting period.
The measurement of the fair value of financial instruments generally involves a higher degree of complexity and requires the application of judgments especially when the models use unobservable inputs (level 3) based on the assumptions that would be used in the market to determine the price for assets or liabilities. Determination of these assumptions includes consideration of market conditions and liquidity levels. Changes in the market conditions, such as reduced liquidity in the capital markets or changes in secondary market activities, may reduce the availability and reliability of quoted prices or observable data used to determine fair value.
When developing fair value measurements, the Bank maximizes the use of observable inputs and minimizes the use of unobservable inputs in measuring fair value. Additionally, the Bank uses third-party pricing services to obtain fair values, which are used to either record the price of an instrument or to corroborate internally developed prices. Third-party price validation procedures are performed over the reasonableness of the fair value measurements. For further details regarding carrying amount and sensitivity disclosures, please see Note 30. Fair value of assets and liabilities.
7. Measurement of employee benefits
The measurement of post-employment benefit obligations and long-term employee benefits takes into account a range of inputs and it is dependent upon a series of assumptions of future events. The projected unit credit method is used to determine the present value of the obligation for the defined benefits and its associated cost. Future measurements of obligations may differ to those presented in the consolidated financial statements, among others, due to changes in economic and demographic assumptions and significant events. The actuarial valuation methodology of the post-employment and long-term benefit plans include typified discount rates by each benefit plan, with the objective of presenting more relevant information on the value of these plans in the consolidated financial statements. For further information, see Note 19. Employee benefit plans.
8. Transaction price determination
With respect to contracts with the Bank's customers, for the determination of the transaction price, the Bank allocates to each one of the performance obligations under the contract the price which represents the value expected to be received in respect of each such performance obligation based on its relative stand-alone selling price.
Such price is determined based on the cost of each service, related tax and associated risks to the operation and inherent to the transaction, plus the margin expected to be received for the services, considering in each case the market price for the service, the conditions agreed with the customer and the customer’s segment. The Bank has fixed and variable prices considering the characteristics of each service, future events, discounts, returns and other variables that may influence the selling price. No significant financing components are factored in the determination of the selling price. For further information, see Note 25. Operating income.
9. Leases
The measurement of the right-of-use asset and of the lease liabilities requires a series of judgments, among which are the determination of the term of the lease and the rate used in discounting the cash flows. The term of the lease is defined according to the historical information of the contracts and the period over which an asset is expected to be economically usable, which involves a high degree of uncertainty due to the use of relevant information about past events. In the Bank's case, the weighted average lessee’s incremental borrowing rate was used to discount the cash flows associated with the leasing contracts. The Bank performs analysis taking into account the currency, lease term, economic environment and class of underlying assets, as to determine the weighted average lessee’s incremental borrowing rate. For further information, see Note 11. Leases.
10. Uncertainty over income tax treatments
In the process of determining the current and deferred tax for periods subject to review by the tax authority, the applicable rules have been applied and interpretations have been made to take positions, on which different interpretations could arise from those made by the entity. Due to the complexity of the tax system, the continuous modifications of the fiscal rules, the accounting changes with implications in the tax bases and in general the legal instability of the country, at any time the tax authority could have different criteria from the Bank. Therefore, a dispute or inspection by the tax authority on a specific tax treatment may affect the deferred or current tax asset or liability Bank's accounting, in accordance with the requirements of IAS 12.
Management and its advisors believe that their decisions concerning the estimates and judgments made in each fiscal period are in accordance with those required by the current tax regulations, and therefore have not considered it necessary to recognize any additional provisions to those indicated in Note 13. Income tax.
F. Recently issued accounting pronouncements
a) Recently issued accounting pronouncements applicable in future periods
Amendments Supplier financing agreements to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures: The amendments to IAS 7 and IFRS 7 establish disclosure requirements for vendor financing arrangements. This allows users of financial statements to assess the impact of these arrangements on an entity's liabilities and cash flows. The amendments to IAS 7 and IFRS 7 include: Qualitative and quantitative disclosure requirements, Clarification of the characteristics of the agreements that qualify or not, as vendor financing contracts.
This amendment is effective as of January 1, 2024. This amendment do not apply to the Bank.
Amendments to IFRS 9 Financial instruments and IFRS 7 Financial instruments: disclosures - Classification and measurement of financial instruments: In May 2024, the Board issued amendments to the classification and measurement requirements in IFRS 9. These amendments respond to feedback from post-implementation review of the accounting standard and clarify the requirements in areas where stakeholders have raised concerns, or where new issues have emerged since IFRS 9 was issued.
These amendments include:
–Clarifying the classification of financial assets with environmental, social and corporate governance (ESG) and similar features: ESG-linked features in loans could affect whether the loans are measured at amortised cost or fair value. To resolve any potential diversity in practice, the amendments clarify how the contractual cash flows on such loans should be assessed.
–Settlement of liabilities through electronic payment systems: The amendments clarify the date on which a financial asset or financial liability is derecognised. The IASB also decided to develop an accounting policy option to allow a company to derecognise a financial liability before it delivers cash on the settlement date if specified criteria are met.
With these amendments, the IASB has also introduced additional disclosure requirements to enhance transparency for investors regarding investments in equity instruments designated at fair value through other comprehensive income and financial instruments with contingent features, for example features tied to ESG-linked targets.
The amendments are effective for annual reporting periods beginning on or after January 1, 2024, and early application is permitted.
Management is assessing the impact that these amendments will have on the Bank's consolidated financial statements and disclosures.
New standard NIIF 18 Presentation and Disclosure in Financial Statements: In April 2024, the Board issued IFRS 18 to replace IAS 1 Presentation of Financial Statements. IFRS 18 introduces three sets of new requirements to improve the way companies report their financial performance and give investors a better basis for analyzing and comparing companies:
–Improved comparability in the statement of income: IFRS 18 introduces three defined categories for income and expenses (operating, investing and financing) to improve the structure of the statement of income, and requires all companies to provide new defined subtotals, including operating profit.
–Enhanced transparency of management-defined performance measures: The new standard requires companies to disclose explanations of those company-specific measures that are related to the statement of income, referred to as management-defined performance measures.
–More useful grouping of information in the financial statements: IFRS 18 sets out enhanced guidance on how to organize information and whether to provide it in the primary financial statements or in the notes. In addition, the new standard requires companies to provide more transparency about operating expenses, helping investors to find and understand the information they need.
IFRS 18 is effective for annual reporting periods beginning on or after January 1, 2027, and early application is permitted.
Management is assessing the impact that these amendments will have on the Bank's consolidated financial statements and disclosures.
Annual improvements to IFRS: On July 18, 2024, the Board issued narrow amendments to IFRS and accompanying guidance as part of its regular maintenance of the Standards. These amendments include clarifications, simplifications, corrections and changes aimed at improving the consistency of several IFRS, including IFRS 1 First-time Adoption of International Financial Reporting Standards; IFRS 7 Financial Instruments: Disclosures and its accompanying Guidance on implementing IFRS 7; IFRS 9 Financial Instruments; IFRS 10 Consolidated Financial Statements; and IAS 7 Statement of Cash Flows.
The amendments are effective for annual periods beginning on or after 1 January 2026, with earlier application permitted.
These amendments have been reviewed by Management and have no impact on the Bank's consolidated financial statements and disclosures, due to the annual improvements are limited to changes that either clarify the wording in an IFRS or correct relatively minor unintended consequences or oversights in the Accounting Standards.
NOTE 3. OPERATING SEGMENTS
Operating segments are defined as components of an entity about which separate financial information is available and that is evaluated regularly by the chief operating decision maker (CODM) in deciding how to allocate resources and assessing performance; the CODM is comprised of the Bank’s President (CEO) and Financial Vicepresident (CFO). The segment information has been prepared following the Bank’s accounting policies and has been presented consistently with the internal reports provided to the CODM.
The chief operating decision maker (CODM) uses a variety of information and key financial data on a segment basis to assess the performance and make decisions regarding the investment and allocation of resources, such as:
•Net interest margin (Net margin on financial instruments divided by average interest-earning assets).
•Return on average total assets (Net income divided by average total assets).
•Return on average stockholders’ equity.
•Efficiency ratio (Operating expenses as a percentage of interest, fees, services and other operating income).
•Asset quality and loan coverage ratios.
The Bank has the following segments: Banking Colombia, Banking Panama, Banking El Salvador, Banking Guatemala, Trust, Investment Banking, Brokerage, International Banking and All other segments. The factors used to identify the Bank’s reportable segments are the nature of the products and services provided by the subsidiaries and the geographical locations where the subsidiaries are domiciled, in line with the CODM’s operating decisions related to the results of each segment.
The Bank’s operating segments are comprised as follows:
• Banking Colombia
This segment provides retail and corporate banking products and services to individuals, companies and national and local governments in Colombia. The Bank’s strategy in Colombia is to grow with these clients based on value added and long-term relationships. In order to offer specialized services to individuals to guarantee quality service and promote business growth and country development.
In order to offer specialized services to individuals, small and medium-sized enterprises (SMEs) and large companies, the individual sales force classifies its target customers as: Personal, Plus and Corporate. The Bank´s corporate and government sales force targets and specializes in companies with more than COP 100,000 in revenue in twelve economic sectors: agribusiness, commerce, manufacturing of supplies and materials, consumer goods, financial services, health, education, construction, government, infrastructure, real estate, and natural resources.
This segment is responsible for managing the Bank operations with its own portfolio, liquidity and distribution of treasury products and services to its customers in Colombia.
As of December 31, 2024, Nequi is in process to obtain an authorization certificate or operating permit, accredited by the Financial Superintendence of Colombia in order to operate. For further information, see Note 1. Reporting Entity.
• Banking Panama
This segment provides retail and commercial banking products and services to individuals and companies in Panama and includes all the operations of Banistmo S.A. and its subsidiaries, which are managed and monitored by the CODM on a consolidated basis. Banking Panama also includes operations of the following operational stage subsidiaries: Banistmo Investment Corporation S.A., Leasing Banistmo S.A. y Valores Banistmo S.A.; and of the following non-operational subsidiaries: Banistmo Panamá Fondo de Inversión S.A., Banistmo Capital Markets Group Inc., Anavi Investment Corporation S.A., Desarrollo de Oriente S.A., Steens Enterprises S.A. and Ordway Holdings S.A.
This segment is also responsible for the management of Banistmo’s proprietary trading activities, liquidity and distribution of treasury products and services to its client base in Panama.
• Banking El Salvador
This segment provides retail and commercial banking products and services to individuals, companies and national and local governments in El Salvador through Banco Agrícola S.A. Banking El Salvador also includes operations of the following subsidiaries: Banagrícola S.A, Inversiones Financieras Banco Agrícola S.A. IFBA, Bagrícola Costa Rica S.A., Gestora de Fondos de Inversión Banagricola, S.A, Valores Banagrícola S.A. de C.V., Accelera S.A. de C.V. (before Credibac S.A. de C.V.) and Arrendadora Financiera S.A. Arfinsa.
This segment is also responsible for the management of Banco Agrícola’s proprietary trading activities, liquidity and distribution of treasury products and services to its client base in El Salvador.
• Banking Guatemala
This segment provides retail and commercial banking and insurance products and services to individuals, companies and national and local governments in Guatemala through Banco Agromercantil de Guatemala S.A., Banking Guatemala also includes operations of the following subsidiaries: Seguros Agromercantil S.A., Financiera Agromercantil S.A., Agrovalores S.A., Arrendadora Agromercantil S.A., Asistencia y Ajustes S.A., Serproba S.A., Servicios de Formalización S.A., Conserjería, Mantenimiento y Mensajería S.A.(company in liquidation), New Alma Enterprises LTD. On June 29, 2023, Agencia de Seguros y Fianzas Agromercantil S.A.S. was wound up. The assets and liabilities of operations in Barbados through Mercom Bank were transferred to other companies, leaving the balances of the credit portfolio and deposit portfolio at zero as of January 31, 2023.
As of December 31, 2024, the company is in the process of dissolution and liquidation, for further information, see Note 1. Reporting Entity.
This segment is also responsible for the management of Banco Agromercantil’s proprietary trading activities, liquidity and distribution of treasury products and services to its client base in Guatemala.
• Trust
This segment provides trust and asset management services to clients in Colombia through Fiduciaria Bancolombia S.A. Sociedad Fiduciaria.
The main products offered by this segment include money market accounts, mutual and pension funds, private equity funds, payment trust, custody services and corporate trust.
• Investment Banking
This segment provides corporate and project financial advisory services, underwriting, capital markets services and private equity management through Banca de Inversión Bancolombia S.A. Corporación Financiera. Its customers include private and publicly-held corporations as well as government institutions.
• Brokerage
This segment provides brokerage, investment advisory and private banking services to individuals and institutions through Valores Bancolombia S.A. Comisionista de Bolsa. It sells and distributes equities, futures, foreign currencies, fixed income securities, mutual funds and structured products.
This segments also includes the operations of Bancolombia Capital Holdings USA LLC, Bancolombia Capital LLC and Bancolombia Capital Advisers LLC, to provide broker-dealer and investment advisor services in the United States.
• International Banking
This segment provides a complete line of international banking services to Colombian and foreign customers through Bancolombia Panamá S.A. and Bancolombia Puerto Rico International, Inc. It offers loans to private sector companies, trade financing, leases financing and financing for industrial projects, as well as a complete portfolio of cash management products, such as checking accounts, international collections and payments. Through these subsidiaries, the Bank also offers investment opportunities in U.S. dollars, savings and checking accounts, time deposits, and investment funds to its high net worth clients and private banking customers.
Operations in the Cayman Islands through Sinesa Cayman, Inc. (before Bancolombia Cayman) have been canceled or transferred. As of December 31, 2024, the company is in the process of dissolution and liquidation. For further information, see Note 1. Reporting entity.
• All other segments
This segment provides financial and operating lease activities, including leasing services to clients in Colombia. Bancolombia offers these services mainly through Renting Colombia S.A.S. Additionally, the Bank provides real estate service through the FCP Fondo Inmobiliario Colombia, P.A. FAI CALLE 77, P.A. Nomad Salitre, P.A. Mercurio, P.A. Nomad Central, P.A. Calle 84 (2), P.A. Calle 84 (3) and since 2024 through P.A. Cedis Sodimac, P.A. Nomad Distrito Vera and P.A. Nexo. The General Assembly of Shareholders approved the liquidation of Transportempo S.A.S. (minute No. 98 of July 3, 2024)
This segment also includes results from the operations of other investment vehicles of the Bank: Valores Simesa S.A., Negocios Digitales Colombia S.A.S., Inversiones CFNS S.A.S., Sistema de Inversiones y Negocios S.A. Sinesa and the technology services company Wompi S.A.S. In addition, it includes Wenia LTD, a corporate vehicle for the creation and implementation of operating systems and software applications and it includes Wenia S.A.S. and Wenia P.A.
In accordance with IFRS 8, the figures reported in "all other segments" combine the information on operating segments that did not meet the quantitative thresholds defined by this same standard, i.e., the absolute individual amount of their reported results is, in absolute terms, less than 10 percent of the combined results of all segments and their assets represent less than 10 percent of the combined assets of all operating segments of the Bank.
Financial performance by operating segment:
The CODM reviews the performance of the Bank using the following financial information by operating segment:
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For the year ended December 31, 2024 |
|
Banking
Colombia |
Banking
Panama |
Banking El
Salvador |
Banking
Guatemala |
Trust |
Investment
banking |
Brokerage |
International
Banking |
All other
segments |
Total
segments |
| In millions of COP |
| Total interest and valuation on financial instruments |
27,543,286 |
|
2,689,904 |
|
1,851,126 |
|
1,939,602 |
|
61 |
|
6 |
|
44,750 |
|
1,203,838 |
|
271,648 |
|
35,544,221 |
|
| Interest income on loans and financial leases |
25,632,102 |
|
2,283,111 |
|
1,623,427 |
|
1,807,334 |
|
61 |
|
- |
|
5,327 |
|
987,378 |
|
274,811 |
|
32,613,551 |
|
| Debt investments |
1,503,298 |
|
316,205 |
|
226,122 |
|
134,101 |
|
- |
|
6 |
|
37,480 |
|
116,662 |
|
41 |
|
2,333,915 |
|
| Derivatives, net |
155,794 |
|
3,322 |
|
775 |
|
- |
|
- |
|
- |
|
(2,463) |
|
(94) |
|
(3,204) |
|
154,130 |
|
| Liquidity operations, net |
252,092 |
|
87,266 |
|
802 |
|
(1,833) |
|
- |
|
- |
|
4,406 |
|
99,892 |
|
- |
|
442,625 |
|
| Interest expenses |
(11,588,039) |
|
(1,336,250) |
|
(437,244) |
|
(804,815) |
|
(192) |
|
- |
|
(165) |
|
(708,671) |
|
(148,535) |
|
(15,023,911) |
|
| Net interest margin and valuation on financial instruments before impairment on loans and financial leases, off balance sheet credit instruments and other financial instruments |
15,955,247 |
|
1,353,654 |
|
1,413,882 |
|
1,134,787 |
|
(131) |
|
6 |
|
44,585 |
|
495,167 |
|
123,113 |
|
20,520,310 |
|
| Credit impairment charges, net |
(4,220,207) |
|
(456,748) |
|
(236,086) |
|
(394,589) |
|
(554) |
|
768 |
|
- |
|
(91,617) |
|
(53,316) |
|
(5,452,349) |
|
| Net interest margin and valuation on financial instruments after impairment on loans and financial leases, off balance sheet credit instruments and other financial instruments |
11,735,040 |
|
896,906 |
|
1,177,796 |
|
740,198 |
|
(685) |
|
774 |
|
44,585 |
|
403,550 |
|
69,797 |
|
15,067,961 |
|
| (Expenses) Revenues from transactions by the operating segments of the Bank |
(151,933) |
|
(40,110) |
|
(19,110) |
|
(87,061) |
|
(58,498) |
|
7,823 |
|
86,150 |
|
410,003 |
|
(147,264) |
|
- |
|
Fees and commissions income(1) |
5,660,355 |
|
562,330 |
|
515,734 |
|
211,778 |
|
448,854 |
|
69,266 |
|
132,192 |
|
51,901 |
|
36,428 |
|
7,688,838 |
|
| Fees and commissions expenses |
(2,885,272) |
|
(286,392) |
|
(226,445) |
|
(85,700) |
|
(3,804) |
|
(115) |
|
(8,600) |
|
(10,116) |
|
(5,330) |
|
(3,511,774) |
|
| Total fees and commissions, net |
2,775,083 |
|
275,938 |
|
289,289 |
|
126,078 |
|
445,050 |
|
69,151 |
|
123,592 |
|
41,785 |
|
31,098 |
|
4,177,064 |
|
| Other operating income |
800,252 |
|
65,876 |
|
40,818 |
|
130,140 |
|
13,737 |
|
1,609 |
|
7,566 |
|
12,435 |
|
1,969,552 |
|
3,041,985 |
|
Dividends and net income on equity investments(2) |
(121,975) |
|
11,474 |
|
4,338 |
|
1,555 |
|
45,558 |
|
(97,585) |
|
3,622 |
|
25 |
|
257,561 |
|
104,573 |
|
| Total operating income, net |
15,036,467 |
|
1,210,084 |
|
1,493,131 |
|
910,910 |
|
445,162 |
|
(18,228) |
|
265,515 |
|
867,798 |
|
2,180,744 |
|
22,391,583 |
|
Operating expenses(3) |
(8,651,424) |
|
(853,980) |
|
(771,078) |
|
(645,310) |
|
(168,494) |
|
(55,157) |
|
(188,573) |
|
(98,570) |
|
(1,083,199) |
|
(12,515,785) |
|
| Impairment, depreciation and amortization |
(770,207) |
|
(128,544) |
|
(93,982) |
|
(61,471) |
|
(3,000) |
|
(89) |
|
(2,759) |
|
(8,016) |
|
(49,813) |
|
(1,117,881) |
|
| Total operating expenses |
(9,421,631) |
|
(982,524) |
|
(865,060) |
|
(706,781) |
|
(171,494) |
|
(55,246) |
|
(191,332) |
|
(106,586) |
|
(1,133,012) |
|
(13,633,666) |
|
| Profit before income tax |
5,614,836 |
|
227,560 |
|
628,071 |
|
204,129 |
|
273,668 |
|
(73,474) |
|
74,183 |
|
761,212 |
|
1,047,732 |
|
8,757,917 |
|
(1)For further information about income from contracts with customers, see Note 25.3. Commissions income, net.
(2)For further information see Note 25.5. Dividends and net income on equity investments.
(3)Includes Includes salaries and employee benefits, other administration and general expenses and taxes other than income tax.
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For the year ended December 31, 2023 |
|
Banking
Colombia |
Banking
Panama |
Banking El
Salvador |
Banking
Guatemala |
Trust |
Investment
banking |
Brokerage |
International
Banking |
All other
segments |
Total
segments |
| In millions of COP |
| Total interest and valuation on financial instruments |
29,230,060 |
|
2,826,559 |
|
1,773,140 |
|
1,795,543 |
|
47 |
|
6 |
|
45,875 |
|
1,112,171 |
|
262,758 |
|
37,046,159 |
|
| Interest income on loans and financial leases |
28,366,678 |
|
2,415,234 |
|
1,524,765 |
|
1,726,821 |
|
47 |
|
- |
|
5,076 |
|
940,091 |
|
262,075 |
|
35,240,787 |
|
| Debt investments |
937,090 |
|
301,167 |
|
236,350 |
|
60,534 |
|
- |
|
6 |
|
36,538 |
|
85,091 |
|
683 |
|
1,657,459 |
|
| Derivatives, net |
(167,887) |
|
817 |
|
11,187 |
|
- |
|
- |
|
- |
|
(1,747) |
|
(188) |
|
- |
|
(157,818) |
|
| Liquidity operations, net |
94,179 |
|
109,341 |
|
838 |
|
8,188 |
|
- |
|
- |
|
6,008 |
|
87,177 |
|
- |
|
305,731 |
|
| Interest expenses |
(13,464,980) |
|
(1,238,112) |
|
(464,851) |
|
(731,886) |
|
(179) |
|
(1) |
|
(222) |
|
(596,039) |
|
(172,025) |
|
(16,668,295) |
|
| Net interest margin and valuation on financial instruments before impairment on loans and financial leases, off balance sheet credit instruments and other financial instruments |
15,765,080 |
|
1,588,447 |
|
1,308,289 |
|
1,063,657 |
|
(132) |
|
5 |
|
45,653 |
|
516,132 |
|
90,733 |
|
20,377,864 |
|
| Credit impairment charges, net |
(6,480,377) |
|
(270,501) |
|
(154,938) |
|
(499,368) |
|
(2,893) |
|
(380) |
|
106 |
|
4,164 |
|
(57,399) |
|
(7,461,586) |
|
| Net interest margin and valuation on financial instruments after impairment on loans and financial leases, off balance sheet credit instruments and other financial instruments |
9,284,703 |
|
1,317,946 |
|
1,153,351 |
|
564,289 |
|
(3,025) |
|
(375) |
|
45,759 |
|
520,296 |
|
33,334 |
|
12,916,278 |
|
| (Expenses) Revenues from transactions by the operating segments of the Bank |
(187,467) |
|
(34,105) |
|
(17,844) |
|
(76,054) |
|
(16,518) |
|
13,949 |
|
68,617 |
|
415,508 |
|
(166,086) |
|
- |
|
Fees and commissions income(1) |
5,252,099 |
|
532,930 |
|
479,568 |
|
223,200 |
|
361,965 |
|
55,917 |
|
103,985 |
|
47,228 |
|
23,986 |
|
7,080,878 |
|
| Fees and commissions expenses |
(2,522,927) |
|
(258,897) |
|
(188,972) |
|
(89,405) |
|
(4,244) |
|
(238) |
|
(8,645) |
|
(11,042) |
|
(12,910) |
|
(3,097,280) |
|
| Total fees and commissions, net |
2,729,172 |
|
274,033 |
|
290,596 |
|
133,795 |
|
357,721 |
|
55,679 |
|
95,340 |
|
36,186 |
|
11,076 |
|
3,983,598 |
|
| Other operating income (expenses) |
1,575,845 |
|
36,939 |
|
51,656 |
|
130,757 |
|
14,107 |
|
(1,011) |
|
4,737 |
|
16,794 |
|
2,149,826 |
|
3,979,650 |
|
Dividends and net income on equity investments(2) |
17,613 |
|
13,498 |
|
10,982 |
|
1,827 |
|
33,275 |
|
(98,512) |
|
6,416 |
|
37 |
|
225,049 |
|
210,185 |
|
| Total operating income, net |
13,419,866 |
|
1,608,311 |
|
1,488,741 |
|
754,614 |
|
385,560 |
|
(30,270) |
|
220,869 |
|
988,821 |
|
2,253,199 |
|
21,089,711 |
|
Operating expenses(3) |
(8,022,042) |
|
(909,843) |
|
(668,105) |
|
(620,928) |
|
(177,626) |
|
(49,759) |
|
(186,212) |
|
(89,219) |
|
(1,093,592) |
|
(11,817,326) |
|
| Impairment, depreciation and amortization |
(744,346) |
|
(107,716) |
|
(131,921) |
|
(55,243) |
|
(2,218) |
|
(208) |
|
(2,950) |
|
(4,259) |
|
(75,998) |
|
(1,124,859) |
|
| Total operating expenses |
(8,766,388) |
|
(1,017,559) |
|
(800,026) |
|
(676,171) |
|
(179,844) |
|
(49,967) |
|
(189,162) |
|
(93,478) |
|
(1,169,590) |
|
(12,942,185) |
|
| Profit before income tax |
4,653,478 |
|
590,752 |
|
688,715 |
|
78,443 |
|
205,716 |
|
(80,237) |
|
31,707 |
|
895,343 |
|
1,083,609 |
|
8,147,526 |
|
(1)For further information about income from contracts with customers, see Note 25.3. Commissions income, net.
(2)For further information see Note 25.5. Dividends and net income on equity investments.
(3)Includes Includes salaries and employee benefits, other administration and general expenses and taxes other than income tax.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended December 31, 2022 |
|
Banking
Colombia |
Banking
Panama |
Banking El
Salvador |
Banking
Guatemala |
Trust |
Investment
banking |
Brokerage |
International
Banking |
All other
segments |
Total
segments |
| In millions of COP |
| Total interest and valuation on financial instruments |
20,727,335 |
|
2,364,820 |
|
1,527,860 |
|
1,537,801 |
|
72 |
|
4 |
|
12,996 |
|
512,417 |
|
113,642 |
|
26,796,947 |
|
| Interest income on loans and financial leases |
19,263,960 |
|
2,154,151 |
|
1,293,556 |
|
1,509,143 |
|
72 |
|
- |
|
511 |
|
446,028 |
|
116,072 |
|
24,783,493 |
|
| Debt investments |
1,361,299 |
|
161,974 |
|
170,423 |
|
27,089 |
|
- |
|
4 |
|
20,024 |
|
48,722 |
|
(2,447) |
|
1,787,088 |
|
| Derivatives, net |
108,255 |
|
(1,026) |
|
63,494 |
|
- |
|
- |
|
- |
|
658 |
|
- |
|
- |
|
171,381 |
|
| Liquidity operations, net |
(6,179) |
|
49,721 |
|
387 |
|
1,569 |
|
- |
|
- |
|
(8,197) |
|
17,667 |
|
17 |
|
54,985 |
|
| Interest expenses |
(6,333,834) |
|
(910,937) |
|
(297,839) |
|
(528,459) |
|
(150) |
|
(4) |
|
(104) |
|
(271,280) |
|
(99,863) |
|
(8,442,470) |
|
| Net interest margin and valuation on financial instruments before impairment on loans and financial leases, off balance sheet credit instruments and other financial instruments |
14,393,501 |
|
1,453,883 |
|
1,230,021 |
|
1,009,342 |
|
(78) |
|
- |
|
12,892 |
|
241,137 |
|
13,779 |
|
18,354,477 |
|
| Credit impairment charges, net |
(2,971,599) |
|
(545,012) |
|
(102,710) |
|
(168,834) |
|
(796) |
|
(924) |
|
3,133 |
|
25,029 |
|
(29,984) |
|
(3,791,697) |
|
| Net interest margin and valuation on financial instruments after impairment on loans and financial leases, off balance sheet credit instruments and other financial instruments |
11,421,902 |
|
908,871 |
|
1,127,311 |
|
840,508 |
|
(874) |
|
(924) |
|
16,025 |
|
266,166 |
|
(16,205) |
|
14,562,780 |
|
| (Expenses) Revenues from transactions by the operating segments of the Bank |
(32,163) |
|
(25,022) |
|
(7,371) |
|
(45,526) |
|
(12,658) |
|
3,404 |
|
53,229 |
|
212,049 |
|
(145,942) |
|
- |
|
Fees and commissions income(1) |
4,684,563 |
|
446,583 |
|
444,177 |
|
218,554 |
|
318,869 |
|
86,232 |
|
111,366 |
|
42,021 |
|
18,161 |
|
6,370,526 |
|
| Fees and commissions expenses |
(2,099,585) |
|
(210,004) |
|
(170,563) |
|
(91,424) |
|
(3,668) |
|
(269) |
|
(6,160) |
|
(8,025) |
|
(468) |
|
(2,590,166) |
|
| Total fees and commissions, net |
2,584,978 |
|
236,579 |
|
273,614 |
|
127,130 |
|
315,201 |
|
85,963 |
|
105,206 |
|
33,996 |
|
17,693 |
|
3,780,360 |
|
| Other operating (expenses) income |
(72,994) |
|
51,494 |
|
19,685 |
|
129,403 |
|
14,897 |
|
671 |
|
13,575 |
|
9,954 |
|
1,886,750 |
|
2,053,435 |
|
Dividends and net income on equity investments(2) |
(8,058) |
|
9,655 |
|
5,340 |
|
828 |
|
2,164 |
|
8,760 |
|
(4,314) |
|
35 |
|
221,444 |
|
235,854 |
|
| Total operating income, net |
13,893,665 |
|
1,181,577 |
|
1,418,579 |
|
1,052,343 |
|
318,730 |
|
97,874 |
|
183,721 |
|
522,200 |
|
1,963,740 |
|
20,632,429 |
|
Operating expenses(3) |
(6,600,686) |
|
(797,091) |
|
(639,748) |
|
(577,497) |
|
(153,377) |
|
(47,997) |
|
(153,317) |
|
(79,814) |
|
(857,541) |
|
(9,907,068) |
|
| Impairment, depreciation and amortization |
(613,807) |
|
(110,293) |
|
(106,601) |
|
(54,999) |
|
(1,630) |
|
(232) |
|
(1,754) |
|
(2,626) |
|
(88,633) |
|
(980,575) |
|
| Total operating expenses |
(7,214,493) |
|
(907,384) |
|
(746,349) |
|
(632,496) |
|
(155,007) |
|
(48,229) |
|
(155,071) |
|
(82,440) |
|
(946,174) |
|
(10,887,643) |
|
| Profit before income tax |
6,679,172 |
|
274,193 |
|
672,230 |
|
419,847 |
|
163,723 |
|
49,645 |
|
28,650 |
|
439,760 |
|
1,017,566 |
|
9,744,786 |
|
(1)For further information about income from contracts with customers, see Note 25.3. Commissions income, net.
(2)For further information see Note 25.5. Dividends and net income on equity investments.
(3)Includes Includes salaries and employee benefits, other administration and general expenses and taxes other than income tax.
The following table presents financial information of the total assets and liabilities by operating segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31, 2024 |
| In millions of COP |
|
Banking
Colombia |
Banking
Panama |
Banking El
Salvador |
Banking
Guatemala |
Trust |
Investment
banking |
Brokerage |
International
Banking |
All other
segments |
Total before
eliminations |
Adjustments
for
consolidation |
Total after
eliminations |
| Total assets |
266,593,755 |
|
45,964,767 |
|
26,670,513 |
|
27,332,834 |
|
719,006 |
|
1,464,180 |
|
398,066 |
|
35,272,842 |
|
10,901,576 |
|
415,317,539 |
|
(43,102,157) |
|
372,215,382 |
|
| Total liabilities |
222,402,215 |
|
41,132,907 |
|
23,889,120 |
|
25,018,466 |
|
153,181 |
|
48,620 |
|
122,213 |
|
24,248,959 |
|
4,639,406 |
|
341,655,087 |
|
(14,023,980) |
|
327,631,107 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31, 2023 |
| In millions of COP |
|
Banking
Colombia |
Banking
Panama |
Banking El
Salvador |
Banking
Guatemala |
Trust |
Investment
banking |
Brokerage |
International
Banking |
All other
segments |
Total before
eliminations |
Adjustments
for
consolidation |
Total after
eliminations |
| Total assets |
254,367,378 |
|
40,740,495 |
|
21,608,586 |
|
21,377,205 |
|
658,547 |
|
1,719,824 |
|
351,694 |
|
30,199,897 |
|
10,224,734 |
|
381,248,360 |
|
(38,319,551) |
|
342,928,809 |
|
| Total liabilities |
216,200,157 |
|
36,315,750 |
|
19,220,367 |
|
19,469,075 |
|
138,171 |
|
51,841 |
|
121,423 |
|
20,734,521 |
|
4,874,547 |
|
317,125,852 |
|
(13,246,772) |
|
303,879,080 |
|
The following table presents financial information of the investments in associates and joint ventures by operating segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2024(1) |
|
Banking
Colombia |
Banking El
Salvador |
Trust |
Investment
banking |
All other
segments |
Total |
| In millions of COP |
| Investments in associates and joint ventures |
205,311 |
|
27,621 |
|
300,881 |
|
499,195 |
|
1,895,976 |
|
2,928,984 |
|
| Equity method |
(28,130) |
|
4,320 |
|
45,312 |
|
58,507 |
|
142,563 |
|
222,572 |
|
(1)As of December 31, 2024, Banking Panama, Banking Guatemala, Brokerage and International Banking did not have investments in associates and joint ventures.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2023(1) |
|
Banking
Colombia |
Banking El
Salvador |
Trust |
Investment
banking |
All other
segments |
Total |
| In millions of COP |
| Investments in associates and joint ventures |
332,862 |
|
21,292 |
|
285,838 |
|
617,982 |
|
1,739,629 |
|
2,997,603 |
|
| Equity method |
(52,183) |
|
2,730 |
|
30,043 |
|
4,398 |
|
128,127 |
|
113,115 |
|
(1)As of December 31, 2023, Banking Panama, Banking Guatemala, Brokerage and International Banking did not have investments in associates and joint ventures.
For additional information related to investment in associates and joint ventures, see Note 8. Investments in associates and joint ventures.
Information about products and services
The Bank does not report revenues from external customers for each product and service or each group of similar products and services, because the information is not available and the cost to develop it is excessive.
Geographic information
The following summarizes the Bank’s total interest and valuation and long-lived assets attributable to Colombia and other foreign countries based on the country where the Interest and valuation was originated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2024 |
2023 |
2022 |
| Geographic information |
Interest and
valuation(1)
|
Long-lived
assets(2)
|
Interest and
valuation(1)
|
Long-lived
assets(2)
|
Interest and
valuation(1)
|
Long-lived
assets(2)
|
| In millions of COP |
| Colombia |
28,127,681 |
|
13,614,718 |
|
29,812,448 |
|
13,466,457 |
|
20,977,845 |
|
12,666,847 |
|
| Panama |
4,156,413 |
|
995,045 |
|
4,234,542 |
|
877,407 |
|
3,023,461 |
|
1,042,824 |
|
| El Salvador |
1,852,097 |
|
607,601 |
|
1,774,165 |
|
547,357 |
|
1,528,264 |
|
636,071 |
|
| Guatemala |
1,939,808 |
|
436,804 |
|
1,795,597 |
|
361,840 |
|
1,537,811 |
|
445,288 |
|
| United States of America |
63 |
|
4,176 |
|
55 |
|
4,805 |
|
- |
|
7,504 |
|
| Bermuda |
177 |
|
4,416 |
|
184 |
|
3,434 |
|
2 |
|
- |
|
| Puerto Rico |
187,913 |
|
1,552 |
|
149,541 |
|
1,297 |
|
64,709 |
|
2,328 |
|
| Total |
36,264,152 |
|
15,664,312 |
|
37,766,532 |
|
15,262,597 |
|
27,132,092 |
|
14,800,862 |
|
| Eliminations and adjustment |
(719,931) |
|
8,453,369 |
|
(720,373) |
|
7,000,343 |
|
(335,145) |
|
8,795,011 |
|
| Total, net |
35,544,221 |
|
24,117,681 |
|
37,046,159 |
|
22,262,940 |
|
26,796,947 |
|
23,595,873 |
|
(1)Includes interest and valuation on financial instruments.
(2)Includes assets held for sale, premises and equipment, net, investment property, right-of-use assets, goodwill and intangible assets, net.
NOTE 4. CASH AND CASH EQUIVALENTS
For purposes of the Consolidated Statement of Cash Flow and the Consolidated Statement of Financial Position, the following assets are considered as cash and cash equivalents:
|
|
|
|
|
|
|
|
|
|
December 31, 2024 |
December 31, 2023 |
| In millions of COP |
| Cash and balances at central bank |
|
|
| Cash |
9,439,363 |
|
8,830,305 |
|
Due from central banks(1)(2) |
7,504,135 |
|
11,248,230 |
|
| Due from other private financial entities |
7,778,937 |
|
7,607,921 |
|
| Checks on hold |
132,929 |
|
214,004 |
|
| Remittances of domestic negotiated checks in transit |
26,172 |
|
74,524 |
|
| Total cash and due from banks |
24,881,536 |
|
27,974,984 |
|
| Money market transactions |
|
|
| Interbank borrowings |
2,239,615 |
|
3,983,699 |
|
Reverse repurchase agreements and other similar secured loans(3) |
5,722,948 |
|
7,840,926 |
|
| Total money market transactions |
7,962,563 |
|
11,824,625 |
|
| Total cash and cash equivalents |
32,844,099 |
|
39,799,609 |
|
(1)According to External Resolution No. 3 of 2024 of Banco de la República de Colombia, which amends External Resolution No. 5 of 2008, Bancolombia S.A. must maintain, the equivalent of 7%, (8% as of December 2023) of the deposits mentioned in Article 1, paragraph (a), and the equivalent of 2.5% (3.5% as of December 2023) of its customer’s deposits with a maturity of less than 18 months (paragraph b), as ordinary reserve, represented in deposits at the Central Bank or as cash in hand. In addition, according to Resolution Number 177 of 2002 issued by the Guatemala Monetary Board, Grupo Agromercantil Holding through its subsidiary Banco Agromercantil de Guatemala must maintain the equivalent of 14.60% of its customer’s deposits daily balances as a legal banking reserve, represented in unrestricted deposits at the Bank of Guatemala. Additionally, circular SBP-DR-CIRCULAR-2024-0036 dated July 02, 2024, communicates the decision of the Superintendency of Banks of Panama to maintain the percentage established in the General Resolution of the Board of Directors SBP-GJD-0003-2014 dated January 28, 2014, which sets at 30.00% the minimum legal liquidity rate that Panamanian banks must maintain. Finally, in accordance with temporary rule NPBT-13, which is effective from September 25, 2024, to March 25, 2025, Banco Agrícola must maintain an equivalent average daily amount of its deposits and debt instruments in issue as a liquidity reserve between 1.00% and 16.00% represented in unrestricted deposits or debt instruments in issue by El Salvador Central Bank. Once the complete term established, the bank continues with the Technical Norm (NRP-28), issued by the Central Bank, where the Bank must maintain an equivalent amount between 1.00% and 18.00%, which has been in effect since 23 June 2021.
(2)The variation compared to the previous period is mainly due to the usual transactions of Bancolombia operations, as well as the cancellation of interest-bearing deposits of COP 3,500 billion opened in December 2023 and cancelled in January 2024.
(3)The variation is mainly generated by the decrease in Reverse repurchase agreements and other similar secured loans in simultaneous operations with the Cámara de Riesgo Central de Contraparte in Colombia.
As of December 31, 2024 and 2023, there is restricted cash amounting to COP 530,924 and COP 1,082,611, respectively, included in other assets on the Consolidated Statement of Financial Position, which represents margin deposits pledged as collateral for derivative contracts traded through Colombian clearing houses. See Note 14. Other assets, net.
NOTE 5. FINANCIAL ASSETS INVESTMENTS AND DERIVATIVES
5.1 Financial assets investments
The Bank’s securities portfolios at fair value through profit or loss, other comprehensive income and at amortized cost are listed below, as of December 31, 2024 and 2023:
As of December 31, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Financial assets investments |
Measurement methodology |
Total carrying
value, net |
Fair value through
profit or loss |
Fair value through other
comprehensive income, net |
Amortized
cost, net |
| In millions of COP |
Securities issued by the Colombian Government(1) |
11,644,181 |
2,683,925 |
159,323 |
14,487,429 |
Securities issued by foreign governments(2) |
10,283,450 |
1,484,546 |
651,494 |
12,419,490 |
| Corporate bonds |
257,326 |
639,108 |
3,612,049 |
4,508,483 |
| Securities issued by government entities |
118,760 |
- |
3,380,491 |
3,499,251 |
Securities issued by other financial institutions(3) |
731,564 |
276,837 |
601,521 |
1,609,922 |
Total debt instruments(4) |
23,035,281 |
5,084,416 |
8,404,878 |
36,524,575 |
| Total equity securities |
537,213 |
474,097 |
- |
|
1,011,310 |
Total other instruments financial(5) |
34,385 |
- |
|
- |
|
34,385 |
| Total financial assets investments |
23,606,879 |
|
5,558,513 |
|
8,404,878 |
|
37,570,270 |
(1)The increase in investments in financial assets measured at fair value through profit or loss is mostly due to the acquisition of Colombian treasury instruments (TES) by Bancolombia S.A.
(2)The increase in investments in financial assets measured at fair value through profit or loss mainly corresponds to securities issued by the United States government by Banagrícola S.A., Banistmo S.A., and Grupo Agromercantil Holding S.A.
(3)Includes mortgage-backed securities (TIPS) measured at fair value through profit or loss amounting to COP 142,945. For further information on TIPS’ fair value measurement see Note 30. Fair value of assets and liabilities.
(4)At December 31, the Bank has recognized in the Consolidated Statement of Comprehensive Income COP 23,236 related to debt instruments at fair value through OCI.
(5)Corresponds to convertible notes or agreements for the future purchase of shares, Simple Agreement for Future Equity “SAFE”, by Sistema de Inversiones y Negocios, S.A., Banagrícola S.A., Inversiones CFNS S.A.S. and Bancolombia S.A.
As of December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Financial assets investments |
Measurement methodology |
Total carrying
value, net |
Fair value through
profit or loss |
Fair value through other
comprehensive income, net |
Amortized
cost, net |
| In millions of COP |
| Securities issued by foreign governments |
6,274,400 |
2,437,996 |
537,831 |
9,250,227 |
| Securities issued by the Colombian Government |
4,725,605 |
2,725,722 |
68,624 |
7,519,951 |
| Corporate bonds |
237,234 |
611,153 |
2,559,336 |
3,407,723 |
| Securities issued by government entities |
84,990 |
- |
3,129,501 |
3,214,491 |
Securities issued by other financial institutions(1) |
774,178 |
373,306 |
552,790 |
1,700,274 |
Total debt instruments(2) |
12,096,407 |
6,148,177 |
6,848,082 |
25,092,666 |
| Total equity securities |
98,853 |
444,357 |
- |
|
543,210 |
Total other instruments financial(3) |
38,319 |
- |
|
- |
|
38,319 |
| Total financial assets investments |
12,233,579 |
|
6,592,534 |
|
6,848,082 |
|
25,674,195 |
(1)Includes mortgage-backed securities (TIPS) measured at fair value through profit or loss amounting to COP 84,301. For further information on TIPS’ fair value measurement see Note 30. Fair value of assets and liabilities.
(2)At December 31, 2023, the Bank has recognized in the Consolidated Statement of Comprehensive Income COP 93,264 related to debt instruments at fair value through OCI.
(3)Corresponds to convertible notes or agreements for the future purchase of shares, Simple Agreement for Future Equity “SAFE”, by Inversiones CFNS S.A.S., Sistema de Inversiones y Negocios, S.A. and Banagrícola S.A.
The following tables set forth the debt instruments portfolio by maturity:
As of December 31, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than 1
year |
Between 1 and 3 years |
Between 3 and 5 years |
Greater than 5 years |
Total |
| In millions of COP |
| Securities at fair value through profit or loss |
|
|
|
|
|
| Securities issued by the Colombian Government |
1,019,028 |
|
6,767,240 |
|
1,157,703 |
|
2,700,210 |
|
11,644,181 |
|
| Securities issued by foreign governments |
7,088,685 |
|
1,835,751 |
|
651,529 |
|
707,485 |
|
10,283,450 |
|
| Securities issued by other financial institutions |
192,039 |
|
235,209 |
|
200,251 |
|
104,065 |
|
731,564 |
|
| Securities issued by government entities |
33,854 |
|
82,536 |
|
2,370 |
|
- |
|
118,760 |
|
| Corporate bonds |
42,395 |
|
28,019 |
|
41,022 |
|
145,890 |
|
257,326 |
|
| Subtotal |
8,376,001 |
|
8,948,755 |
|
2,052,875 |
|
3,657,650 |
|
23,035,281 |
|
| Fair value through other comprehensive income |
|
|
|
|
| Securities issued by the Colombian Government |
2,648,354 |
|
35,571 |
|
- |
|
- |
|
2,683,925 |
|
| Securities issued by foreign governments |
169,992 |
|
648,246 |
|
497,967 |
|
168,341 |
|
1,484,546 |
|
| Corporate bonds |
- |
|
73,409 |
|
60,922 |
|
504,777 |
|
639,108 |
|
| Securities issued by other financial institutions |
119,479 |
|
51,275 |
|
49,744 |
|
56,339 |
|
276,837 |
|
| Subtotal |
2,937,825 |
|
808,501 |
|
608,633 |
|
729,457 |
|
5,084,416 |
|
| Securities at amortized cost |
|
|
|
|
|
| Corporate bonds |
56,847 |
|
1,086,392 |
|
847,742 |
|
1,621,068 |
|
3,612,049 |
|
| Securities issued by government entities |
3,330,223 |
|
- |
|
- |
|
50,268 |
|
3,380,491 |
|
| Securities issued by foreign governments |
143,911 |
|
162,996 |
|
85,772 |
|
258,815 |
|
651,494 |
|
| Securities issued by other financial institutions |
201,944 |
|
44,699 |
|
271,793 |
|
83,085 |
|
601,521 |
|
| Securities issued by the Colombian Government |
- |
|
51,260 |
|
46,598 |
|
61,465 |
|
159,323 |
|
| Subtotal |
3,732,925 |
|
1,345,347 |
|
1,251,905 |
|
2,074,701 |
|
8,404,878 |
|
| Total debt instruments |
15,046,751 |
|
11,102,603 |
|
3,913,413 |
|
6,461,808 |
|
36,524,575 |
|
As of December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than 1
year |
Between 1 and 3 years |
Between 3 and 5 years |
Greater than 5 years |
Total |
| In millions of COP |
| Securities at fair value through profit or loss |
|
|
|
|
|
| Securities issued by foreign governments |
4,864,121 |
|
513,546 |
|
283,020 |
|
613,713 |
|
6,274,400 |
|
| Securities issued by the Colombian Government |
390,307 |
|
2,759,392 |
|
491,867 |
|
1,084,039 |
|
4,725,605 |
|
| Securities issued by other financial institutions |
312,749 |
|
236,597 |
|
89,526 |
|
135,306 |
|
774,178 |
|
| Corporate bonds |
39,361 |
|
40,930 |
|
28,624 |
|
128,319 |
|
237,234 |
|
| Securities issued by government entities |
48,893 |
|
33,601 |
|
2,496 |
|
- |
|
84,990 |
|
| Subtotal |
5,655,431 |
|
3,584,066 |
|
895,533 |
|
1,961,377 |
|
12,096,407 |
|
| Fair value through other comprehensive income |
|
|
|
|
| Securities issued by the Colombian Government |
2,672,090 |
|
53,632 |
|
- |
|
- |
|
2,725,722 |
|
| Securities issued by foreign governments |
1,346,171 |
|
598,014 |
|
355,927 |
|
137,884 |
|
2,437,996 |
|
| Corporate bonds |
549 |
|
- |
|
63,474 |
|
547,130 |
|
611,153 |
|
| Securities issued by other financial institutions |
149,124 |
|
154,659 |
|
- |
|
69,523 |
|
373,306 |
|
| Subtotal |
4,167,934 |
|
806,305 |
|
419,401 |
|
754,537 |
|
6,148,177 |
|
| Securities at amortized cost |
|
|
|
|
|
| Securities issued by government entities |
3,078,744 |
|
- |
|
- |
|
50,757 |
|
3,129,501 |
|
| Corporate bonds |
229,811 |
|
46,925 |
|
322,314 |
|
1,960,286 |
|
2,559,336 |
|
| Securities issued by other financial institutions |
103,414 |
|
106,681 |
|
46,969 |
|
295,726 |
|
552,790 |
|
| Securities issued by foreign governments |
188,651 |
|
189,744 |
|
56,703 |
|
102,733 |
|
537,831 |
|
| Securities issued by the Colombian Government |
39,046 |
|
- |
|
7,350 |
|
22,228 |
|
68,624 |
|
| Subtotal |
3,639,666 |
|
343,350 |
|
433,336 |
|
2,431,730 |
|
6,848,082 |
|
| Total debt instruments |
13,463,031 |
|
4,733,721 |
|
1,748,270 |
|
5,147,644 |
|
25,092,666 |
|
For further information related to disclosures of the fair value of securities, please see Note 30. Fair value of assets and liabilities.
Equity securities that are measured at fair value through OCI are considered strategic for the Bank and, thus, there is no intention to sell them in the foreseeable future and that is the main reason for using this presentation alternative.
The following table details the equity instruments designated at fair value through OCI analyzed by listing status:
|
|
|
|
|
|
|
|
|
| Equity securities |
Carrying amount |
| December 31, 2024 |
December 31, 2023 |
| In millions of COP |
| Securities at fair value through OCI: |
|
|
Equity securities listed in Colombia |
2 |
|
2 |
|
Equity securities listed in foreign countries |
76,795 |
|
78,787 |
|
| Equity securities unlisted: |
|
|
| Telered S.A. |
160,761 |
|
164,981 |
|
| Asociación Gremial de Instituciones Financieras Credibanco S.A. |
109,011 |
|
110,786 |
|
Transacciones y Transferencias, S. A.(1) |
55,401 |
|
17,346 |
|
| Compañía de Procesamiento de Medios de Pago Guatemala (Bahamas), S. A. |
18,913 |
|
16,333 |
|
| Cámara de Riesgo Central de Contraparte de Colombia S.A. |
17,385 |
|
14,998 |
|
| Derecho Fiduciario Inmobiliaria Cadenalco |
4,212 |
|
4,449 |
|
| Others |
31,617 |
|
36,675 |
|
| Total equity securities at fair value through OCI |
474,097 |
|
444,357 |
|
(1)The increase is due to the valuation of the company during 2024.
The Bank has recognized in the consolidated statement of comprehensive income COP 28,572 in 2024, COP 10,898 in 2023 and COP 32,072 in 2022 related to equity securities and trust funds at fair value through OCI. See Consolidated Statement of Comprehensive Income.
During 2024, 2023 and 2022, no impairment loss was recognized on equity securities. Dividends received from equity investments at fair value through OCI held as of December 31, 2024, 2023 and 2022 amounted to COP 17,194, COP 18,464 and COP 16,842, respectively. See Note 25.5 Dividends and net income on equity investments.
Equity investments do not have a specific maturity date; therefore, they are not included in the maturity detail.
The detail of the securities pledged as collateral as of December 31, 2024 and 2023 is as follows:
As of December 31, 2024
|
|
|
|
|
|
|
|
|
|
|
|
| Pledged financial assets |
Term |
Security pledged |
Carrying amount |
| In millions of COP |
| Investments pledged as collateral in money market |
|
|
|
| Securities issued by foreign governments |
Up to 3 months |
Time deposits |
43,424 |
|
| Securities issued by foreign governments |
Between 6 and 12 months |
Bonds |
26,314 |
|
| Securities issued by foreign governments |
Between 6 and 12 months |
Time deposits |
109,792 |
|
| Securities issued by foreign governments |
Greater than 12 months |
Bonds |
48,841 |
|
| Securities issued by foreign governments |
Greater than 12 months |
Time deposits |
166,849 |
|
| Securities issued by the Colombian Government |
Greater than 12 months |
TES - Treasury instruments |
491,472 |
|
| Securities issued by other financial institutions |
Between 3 and 6 months |
Time deposits |
5,037 |
|
| Securities issued by other financial institutions |
Between 6 and 12 months |
Time deposits |
4,019 |
|
| Securities issued by other financial institutions |
Greater than 12 months |
Bonds |
1,876 |
|
| Securities issued by other financial institutions |
Greater than 12 months |
Time deposits |
29,058 |
|
| Subtotal investments pledged as collateral in money market |
|
|
926,682 |
|
| Investments pledged as collateral in derivative operations |
|
|
|
| Securities issued by the Colombian Government |
Up to 3 months |
TES - Treasury instruments |
68,903 |
|
| Securities issued by the Colombian Government |
Between 3 and 6 months |
TES - Treasury instruments |
414,296 |
|
| Securities issued by the Colombian Government |
Greater than 12 months |
TES - Treasury instruments |
200,561 |
|
| Securities issued by foreign governments |
Between 6 and 12 months |
Foreign issueds |
2,229 |
|
| Subtotal investments pledged as collateral in derivative operations |
|
|
685,989 |
|
| Total securities pledged as collateral |
|
|
1,612,671 |
|
As of December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
| Pledged financial assets |
Term |
Security pledged |
Carrying amount |
| In millions of COP |
| Investments pledged as collateral in money market |
|
|
|
| Securities issued by foreign governments |
Up to 3 months |
Time deposits |
120,477 |
|
| Securities issued by foreign governments |
Between 3 and 6 months |
Time deposits |
94,582 |
|
| Securities issued by other financial institutions |
Up to 3 months |
Time deposits |
5,443 |
|
| Securities issued by other financial institutions |
Between 6 and 12 months |
Time deposits |
2,179 |
|
| Securities issued by other financial institutions |
Greater than 12 months |
Time deposits |
25,938 |
|
| Securities issued by other financial institutions |
Greater than 12 months |
Bonds |
6,687 |
|
| Corporate bonds |
Up to 3 months |
Bonds |
4,570 |
|
| Subtotal investments pledged as collateral in money market |
|
|
259,876 |
|
| Investments pledged as collateral in derivative operations |
|
|
|
| Securities issued by the Colombian Government |
Up to 3 months |
TES - Treasury instruments |
39,257 |
|
| Securities issued by the Colombian Government |
Between 6 and 12 months |
TES - Treasury instruments |
7,821 |
|
| Securities issued by the Colombian Government |
Greater than 12 months |
TES - Treasury instruments |
1,244,190 |
|
| Securities issued by foreign governments |
Between 3 and 6 months |
Foreign issueds |
1,875 |
|
| Subtotal investments pledged as collateral in derivative operations |
|
|
1,293,143 |
|
| Total securities pledged as collateral |
|
|
1,553,019 |
|
The following table shows the breakdown of the changes in the gross carrying amount of the debt securities at fair value through other comprehensive income and amortized cost, in order to explain their significance to the changes in the loss allowance for the same portfolio as discussed above:
As of December 31, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Debt instruments portfolio measure at fair value through OCI and amortized cost |
Stage 1 |
Stage 2 |
Stage 3 |
Total |
| In millions of COP |
| Gross carrying amount as at 1 January 2024 |
12,760,342 |
|
205,133 |
|
30,784 |
|
12,996,259 |
|
Transfer from stage 1 to stage 2(1) |
(294,440) |
|
294,440 |
|
- |
|
- |
|
Transfer from stage 2 to stage 1(2) |
12,678 |
|
(12,678) |
|
- |
|
- |
|
| Sales and maturities |
(7,928,390) |
|
(171,505) |
|
- |
|
(8,099,895) |
|
| Purchases |
7,975,932 |
|
129,455 |
|
- |
|
8,105,387 |
|
| Valuation and payments |
(125,564) |
|
3,806 |
|
984 |
|
(120,774) |
|
| Foreign Exchange |
598,094 |
|
5,414 |
|
4,809 |
|
608,317 |
|
| Gross carrying amount as at 31 December 2024 |
12,998,652 |
|
454,065 |
|
36,577 |
|
13,489,294 |
|
(1)Stage transfer in corporate bonds by Banistmo S.A., Bancolombia Puerto Rico Internacional Inc and Bancolombia Panamá S.A.
(2)Stage transfer in corporate bonds by Banagrícola S.A.
As of December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Debt instruments portfolio measure at fair value through OCI and amortized cost |
Stage 1 |
Stage 2 |
Stage 3 |
Total |
| In millions of COP |
| Gross carrying amount as at 1 January 2023 |
15,973,144 |
|
340,891 |
|
- |
|
16,314,035 |
Transfer from stage 1 to stage 3(1) |
(30,784) |
|
- |
|
30,784 |
|
- |
Transfer from stage 2 to stage 1(1) |
6,627 |
|
(6,627) |
|
- |
|
- |
| Sales and maturities |
(9,792,950) |
|
- |
|
- |
|
(9,792,950) |
|
| Purchases |
7,701,763 |
|
- |
|
- |
|
7,701,763 |
|
| Valuation and payments |
84,609 |
|
(66,959) |
|
- |
|
17,650 |
|
| Foreign Exchange |
(1,182,067) |
|
(62,172) |
|
- |
|
(1,244,239) |
| Gross carrying amount as at 31 December 2023 |
12,760,342 |
205,133 |
30,784 |
12,996,259 |
(1)Stage transfer in corporate bonds by Banistmo S.A.
The following table shows the impairment detail for the debt instruments portfolio using the expected credit losses model:
As of December 31, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Concept |
Stage 1 |
Stage 2 |
Stage 3 |
Total |
| In millions of COP |
| Securities at amortized cost, net |
7,975,158 |
|
393,143 |
|
36,577 |
|
8,404,878 |
|
| Carrying amount |
8,008,567 |
|
401,263 |
|
53,985 |
|
8,463,815 |
|
| Loss allowance |
(33,409) |
|
(8,120) |
|
(17,408) |
|
(58,937) |
|
Securities at fair value through other comprehensive income(1) |
5,023,494 |
|
60,922 |
|
- |
|
5,084,416 |
|
| Total debt instruments portfolio measure at fair value through OCI and amortized cost |
12,998,652 |
|
454,065 |
|
36,577 |
|
13,489,294 |
|
(1)Loss allowance of investments at fair value through OCI corresponds to COP (6,513) classified mainly in stage 1 to COP (5,734). The increase in relation to 2023 is due to the acquisition of instruments to COP (2,517) and sales and maturities to COP 1,708.
As of December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Concept |
Stage 1 |
Stage 2 |
Stage 3 |
Total |
| In millions of COP |
| Securities at amortized cost, net |
6,612,165 |
|
205,133 |
|
30,784 |
|
6,848,082 |
|
| Carrying amount |
6,642,104 |
|
217,046 |
|
44,735 |
|
6,903,885 |
|
| Loss allowance |
(29,939) |
|
(11,913) |
|
(13,951) |
|
(55,803) |
|
Securities at fair value through other comprehensive income(1) |
6,148,177 |
|
- |
|
- |
|
6,148,177 |
|
| Total debt instruments portfolio measure at fair value through OCI and amortized cost |
12,760,342 |
|
205,133 |
|
30,784 |
|
12,996,259 |
|
(1)Loss allowance of investments at fair value through OCI corresponds to COP (5,562) classified in stage 1.
The following table sets forth the changes in the allowance for debt instruments measured at amortized cost:
As of December 31, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Concept |
Stage 1 |
Stage 2 |
Stage 3 |
Total |
| In millions of COP |
| Loss allowance of January 1, 2024 |
29,939 |
|
11,913 |
|
13,951 |
|
55,803 |
|
Transfer from stage 1 to stage 2(1) |
(3,213) |
|
3,213 |
|
- |
|
- |
|
Transfer from stage 2 to stage 1(2) |
298 |
|
(298) |
|
- |
|
- |
|
| Sales and maturities |
(11,187) |
|
(5,895) |
|
- |
|
(17,082) |
|
New debt instruments purchased(3) |
13,296 |
|
3,114 |
|
- |
|
16,410 |
|
| Net provisions recognised during the period |
1,465 |
|
(4,482) |
|
1,214 |
|
(1,803) |
|
Foreign Exchange(4) |
2,811 |
|
555 |
|
2,243 |
|
5,609 |
|
| Loss allowance of December 31, 2024 |
33,409 |
|
8,120 |
|
17,408 |
|
58,937 |
|
(1)Stage transfer in corporate bonds by Banistmo S.A., Bancolombia Puerto Rico Internacional Inc y Bancolombia Panamá S.A.
(2)Stage transfer in corporate bonds by Banagrícola S.A.
(3)Impairment is mainly in securities issued by corporate bonds mainly in Banistmo S.A., Bancolombia Panamá S.A. y Bancolombia S.A. and government entities by Bancolombia S.A.
(4)The decrease is due to the variation in the market representative rate during the year 2024.
As of December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Concept |
Stage 1 |
Stage 2 |
Stage 3 |
Total |
| In millions of COP |
| Loss allowance of January 1, 2023 |
29,881 |
|
35,020 |
|
- |
|
64,901 |
|
Transfer from stage 1 to stage 3(1) |
(13,951) |
|
- |
|
13,951 |
|
- |
|
Transfer from stage 2 to stage 1(1) |
129 |
|
(129) |
|
- |
|
- |
|
| Sales and maturities |
(9,459) |
|
- |
|
- |
|
(9,459) |
|
New debt instruments purchased(2) |
10,497 |
|
- |
|
- |
|
10,497 |
|
Net provisions recognised during the period(3) |
19,030 |
|
(17,882) |
|
- |
|
1,148 |
|
Foreign Exchange(4) |
(6,188) |
|
(5,096) |
|
- |
|
(11,284) |
|
| Loss allowance of December 31, 2023 |
29,939 |
|
11,913 |
|
13,951 |
|
55,803 |
|
(1) Stage transfer in corporate bonds by Banistmo S.A.
(2) Impairment is mainly in securities issued by government entities and corporate bonds by Bancolombia S.A. and Banistmo S.A.
(3)The increase in stage 1 is mostly due to a higher value of impairment loss in corporate bonds by Banistmo S.A. and provision recovery in stage 2 is mostly in securities issued by foreign governments by Banagrícola S.A.
(4)The decrease is due to the variation in the market representative rate during the year 2023.
As of December 31, 2022
|
|
|
|
|
|
|
|
|
|
|
|
| Concept |
Stage 1 |
Stage 2 |
Total |
| In millions of COP |
| Loss allowance of January 1, 2022 |
17,690 |
6,989 |
24,679 |
Transfer from stage 1 to stage 2(1) |
(3,808) |
|
3,808 |
- |
Transfer from stage 2 to stage 1(2) |
526 |
|
(526) |
- |
|
Change in measure(3) |
(213) |
- |
(213) |
| Sales and maturities |
(6,097) |
(1,170) |
(7,267) |
| New debt instruments purchased |
16,104 |
28,795 |
44,899 |
| Net provisions recognised during the period |
3,482 |
|
(4,088) |
|
(606) |
|
| Foreign Exchange |
2,197 |
1,212 |
3,409 |
| Loss allowance of December 31, 2022 |
29,881 |
35,020 |
64,901 |
(1) Stage transfer in corporate bonds by Banistmo S.A. and Banagrícola S.A.
(2) Stage transfer in securities issued by the Guatemalan government and corporate bonds by Bancolombia Panamá S.A. and Bancolombia Puerto Rico Internacional, Inc.
(3) Mercom Bank Ltd., a Grupo Agromercantil Holding S.A. subsidiary, is in the process of being gradually wound down; the measurement of the portfolio of securities issued by the government of Guatemala was changed from amortized cost to fair value through profit or loss.
5.2 Derivative financial instruments
The Bank derivative activities do not give rise to significant open positions in portfolios of derivatives. The Bank enters into derivative transactions to facilitate customer business, for hedging purposes and arbitrage activities, such as forwards, options or swaps where the underlying are exchange rates, interest rates and securities.
A swap agreement is a contract between two parties to exchange cash flows based on specified underlying notional amounts, assets and/or indices. Financial futures and forward settlement contracts are agreements to buy or sell a quantity of a financial instrument (including another derivative financial instrument), index, currency or commodity at a predetermined rate or price during a period or at a date in the future. Futures and option contracts are standardized agreements for future delivery, traded on exchanges that typically act as a platform.
For further information related to the objectives, policies and processes for managing the Bank’s risk, please see Risk Management.
The following table sets forth the carrying values of the Bank’s derivatives by type of risk as of December 31, 2024 and 2023:
|
|
|
|
|
|
|
|
|
| Derivatives |
December 31, 2024 |
December 31, 2023 |
| In millions of COP |
| Forwards |
|
|
| Assets |
|
|
| Foreign exchange contracts |
1,084,830 |
|
4,381,906 |
|
| Equity contracts |
51,645 |
|
3,015 |
|
| Subtotal assets |
1,136,475 |
|
4,384,921 |
|
| Liabilities |
|
|
| Foreign exchange contracts |
972,295 |
|
4,526,353 |
|
| Equity contracts |
1,367 |
|
10,481 |
|
| Subtotal liabilities |
973,662 |
|
4,536,834 |
|
Total forwards(1) |
162,813 |
|
(151,913) |
|
| Swaps |
|
|
| Assets |
|
|
|
|
|
|
|
|
|
|
|
| Derivatives |
December 31, 2024 |
December 31, 2023 |
| In millions of COP |
| Foreign exchange contracts |
1,463,256 |
|
1,304,337 |
|
| Interest rate contracts |
236,033 |
|
352,424 |
|
| Subtotal assets |
1,699,289 |
|
1,656,761 |
|
| Liabilities |
|
|
| Foreign exchange contracts |
1,332,431 |
|
1,491,086 |
|
| Interest rate contracts |
291,068 |
|
449,857 |
|
| Subtotal liabilities |
1,623,499 |
|
1,940,943 |
|
| Total swaps |
75,790 |
|
(284,182) |
|
| Options |
|
|
| Assets |
|
|
| Foreign exchange contracts |
102,378 |
|
210,588 |
|
| Subtotal assets |
102,378 |
|
210,588 |
|
| Liabilities |
|
|
| Foreign exchange contracts |
82,482 |
|
232,587 |
|
| Subtotal liabilities |
82,482 |
|
232,587 |
|
| Total options |
19,896 |
|
(21,999) |
|
| Derivative assets |
2,938,142 |
|
6,252,270 |
|
| Derivative liabilities |
2,679,643 |
|
6,710,364 |
|
(1)At December 31, 2024, mainly at Bancolombia, there is a decrease in both the active and passive forwards contracts compared to those in effect as December 31, 2023. Out of a total of 14,105 operations, 13,741 have matured as December 31, 2024.
The following table sets forth the remaining contractual life of the derivatives portfolio:
As of December 31, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Forwards |
Swaps |
Options |
Total |
| In millions of COP |
| Assets |
1,136,475 |
1,699,289 |
102,378 |
2,938,142 |
| Less than 1 year |
1,105,226 |
440,817 |
96,891 |
1,642,934 |
| Between 1 and 3 years |
31,249 |
651,770 |
5,487 |
688,506 |
| Greater than 3 years |
- |
606,702 |
- |
606,702 |
| Liabilities |
973,662 |
1,623,499 |
82,482 |
2,679,643 |
| Less than 1 year |
943,804 |
376,346 |
76,537 |
1,396,687 |
| Between 1 and 3 years |
29,858 |
604,473 |
5,945 |
640,276 |
| Greater than 3 years |
- |
642,680 |
- |
642,680 |
As of December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Forwards |
Swaps |
Options |
Total |
| In millions of COP |
| Assets |
4,384,921 |
1,656,761 |
210,588 |
6,252,270 |
| Less than 1 year |
4,235,981 |
642,305 |
135,559 |
5,013,845 |
| Between 1 and 3 years |
147,826 |
517,314 |
75,029 |
740,169 |
| Greater than 3 years |
1,114 |
497,142 |
- |
498,256 |
| Liabilities |
4,536,834 |
1,940,943 |
232,587 |
6,710,364 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Forwards |
Swaps |
Options |
Total |
| In millions of COP |
| Less than 1 year |
4,419,918 |
419,251 |
152,285 |
4,991,454 |
| Between 1 and 3 years |
116,916 |
979,130 |
80,302 |
1,176,348 |
| Greater than 3 years |
- |
542,562 |
- |
542,562 |
Collateral for derivatives
The table below presents the collateral amounts posted under derivatives contracts as of December 31, 2024 and 2023:
|
|
|
|
|
|
|
|
|
|
December 31, 2024 |
December 31, 2023 |
| In millions of COP |
| Collateral granted |
1,157,880 |
2,326,977 |
| Collateral received |
378,767 |
795,628 |
Day one gains or (losses)
If an asset has been acquired or a liability has been assumed in a market transaction, it could be assumed that the transaction price is the fair value of the asset or liability. However, the fair value of the financial asset or liability at the time of initial recognition may be different from the transaction price, because the fair value includes variables in its valuation technique that include market information, such as interest rate yield curves, currencies rates, indicators, default factors among others. When the values are not equal, the asset or liability must be measured at fair value and the difference between the transaction price and the fair value must be recognized as follows:
•If fair value is evidenced by Level 1 inputs or is based on a valuation technique that uses only observable market data, the Group must recognize the difference as a gain or loss on initial recognition directly in the income statement.
•In all other circumstances, the entire day 1 gain or loss is deferred and is recognized in the income statement over the life of the transaction.
The table below presents the unrecognized gains or (losses) for derivatives trading at the initial moment, due to use of valuation techniques for which not all inputs were observable market data:
As of December 31, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward |
Swaps |
Options |
Total |
| In millions of COP |
| Balance at January 1, 2024 |
36,289 |
(13,630) |
63,068 |
85,727 |
| New trades |
702,001 |
(978) |
|
117,125 |
818,148 |
| Amortization |
(687,024) |
|
(8,767) |
(130,767) |
|
(826,558) |
|
| Early cancellations and level transfers |
(8,292) |
|
168 |
|
(12,989) |
|
(21,113) |
|
| Balance at December 31, 2024 |
42,974 |
(23,207) |
|
36,437 |
56,204 |
As of December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward |
Swaps |
Options |
Total |
| In millions of COP |
| Balance at January 1, 2023 |
61,724 |
16,580 |
39,714 |
118,018 |
| New trades |
1,159,069 |
(26,905) |
195,456 |
1,327,620 |
| Amortization |
(1,176,173) |
|
4,166 |
|
(148,299) |
|
(1,320,306) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward |
Swaps |
Options |
Total |
| Early cancellations and level transfers |
(8,331) |
|
(7,471) |
|
(23,803) |
|
(39,605) |
|
| Balance at December 31, 2023 |
36,289 |
(13,630) |
63,068 |
85,727 |
Offsetting of derivatives
The Bank enters into International Swaps and Derivatives Association (ISDA) master netting agreements or similar agreements with substantially all of the Bank’s derivative counterparties. Where legally enforceable, and depending on the Bank’s intention, these master netting agreements give the Bank, in the event of default by the counterparty, the right to liquidate securities and cash equivalents held as collateral and to offset receivables and payables with the same counterparty.
The table below presents derivative instruments subject to enforceable master netting agreements and other similar agreements but not offset in the statement of financial position as of December 31, 2024 and 2023 by derivative and by risk:
As of December 31, 2024
|
|
|
|
|
|
|
|
|
|
Derivatives Assets |
Derivatives Liabilities |
| In millions of COP |
| Over-the-counter |
|
|
| Foreign exchange contracts |
|
|
| Forwards |
1,084,830 |
|
972,295 |
|
| Swaps |
1,463,256 |
|
1,332,431 |
|
| Options |
102,378 |
|
82,482 |
|
| Interest rate contracts |
|
|
| Swaps |
236,033 |
|
291,068 |
|
| Equity contracts |
|
|
| Forwards |
51,645 |
|
1,367 |
|
| Gross derivative assets/liabilities |
2,938,142 |
|
2,679,643 |
|
| Offseting of derivates |
- |
|
- |
|
| Derivative financial instruments in statement of financial position |
2,938,142 |
|
2,679,643 |
|
| Master netting agreements |
(2,540,752) |
|
(2,679,643) |
|
| Collateral received/paid |
(378,767) |
|
- |
|
| Total derivative financial instruments assetss/ liabilities before collateral and Master netting agreements |
18,623 |
|
- |
|
As of December 31, 2023
|
|
|
|
|
|
|
|
|
|
Derivatives Assets |
Derivatives Liabilities |
| In millions of COP |
| Over-the-counter |
|
|
| Foreign exchange contracts |
|
|
| Forwards |
4,381,906 |
4,526,353 |
| Swaps |
1,304,337 |
1,491,086 |
| Options |
210,588 |
232,587 |
| Interest rate contracts |
|
|
| Swaps |
352,424 |
449,857 |
|
|
|
|
|
|
|
|
|
|
Derivatives Assets |
Derivatives Liabilities |
| In millions of COP |
| Equity contracts |
|
|
| Forwards |
3,015 |
10,481 |
| Gross derivative assets/liabilities |
6,252,270 |
6,710,364 |
| Offseting of derivates |
- |
- |
| Derivative financial instruments in statement of financial position |
6,252,270 |
6,710,364 |
| Master netting agreements |
(6,215,727) |
|
(5,548,746) |
|
| Collateral received/paid |
(36,543) |
|
(1,161,618) |
|
| Total derivative financial instruments assetss/ liabilities before collateral and Master netting agreements |
- |
- |
For further information about offsetting of other financial assets and liabilities see Note 16. Interbank deposits and repurchase agreements and other similar secured borrowing.
5.3 Hedge Accounting
The Bank is exposed to certain risks relating to its ongoing business operations. The main risks managed through derivative instruments are exchange rate risk and interest rate risk. Details of the covered risks are as follows:
Exchange rate risk
Exchange rate risk is the risk that the fair value or future cash flows of an exposure fluctuate due to changes in exchange rates. Bancolombia's exposure to the risk of exchange rate fluctuations primarily relates to its operational activities (when revenues or expenses are denominated in a foreign currency) and Bancolombia's net investments in foreign subsidiaries. The hedging strategy of this exposure may occur naturally through the interaction of balance sheet accounts, that is, with strategic decisions oriented toward asset and liability accounts in the foreign currency banking book, and through the trading of foreign exchange financial derivatives.
When a derivative is contracted for the purpose of hedging exchange rate risk, Bancolombia negotiates the terms of the derivative seeking to mitigate the adverse financial effects of the covered exposure according to market conditions. For forecasted transaction hedges, the derivative covers the exposure period from the moment cash flows from transactions are forecasted until the settlement of the resulting receivable or payable denominated in foreign currency.
Among the financial derivatives most commonly used to manage exchange rate risk are foreign exchange forwards and Cross Currency Swaps (CCS). When these are designated as hedging instruments, they can be classified as cash flow hedges or fair value hedges under the IFRS 9 accounting guidelines.
Bancolombia determines the existence of an economic relationship between the hedging instrument and the hedged item based on the currency, amount, and timing of their respective cash flows. The effectiveness of the hedge is assessed at the start of the hedging relationship and through periodic prospective effectiveness assessments to ensure that there is an economic relationship between the hedged item and the hedging instrument. Bancolombia evaluates whether the designated derivative in each hedging relationship is expected to be, and has been, effective in offsetting changes in the cash flows of the hedged item using the hypothetical derivative method.
In these hedge relationships, the main sources of ineffectiveness are:
•The effect of the credit risk of counterparties and the Group itself on the fair value of foreign exchange swap and forward contracts, which are not reflected in the change in the fair value of the cash flows hedged attributable to changes in exchange rates; and
•Changes in the timing of recognition in the financial statements of the anticipated transactions regarding the nominal value and the exchange rate of their settlement.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument fluctuate due to changes in market interest rates. Bancolombia’s exposure to changes in market interest rates primarily relates to treasury operations and the banking book, where a mismatch between assets and liabilities in duration, indexing, repricing, and maturity creates an asymmetry that could have repercussions on financial results.
Coverage of this exposure may occur naturally through the interaction of balance sheet accounts, that is, with strategic decisions oriented toward asset and liability accounts in the banking book, and through the trading of interest rate financial derivatives, among which we primarily have Swaps (IRS: Interest Rate Swap), where flows between fixed and variable rates (market index) are agreed upon.
Bancolombia determines the existence of an economic relationship between the hedging instrument and the hedged item based on reference interest rates, terms, pricing review dates, maturities, and the notional amounts.
When a derivative is contracted for the purpose of hedging interest rate risk, Bancolombia negotiates the terms of the derivative seeking to mitigate the adverse financial effects of the covered exposure according to market conditions. To test the effectiveness of the hedge, Bancolombia uses the hypothetical derivative method and compares the changes in the fair value of the hedging instrument against the changes in the fair value of the hedged item attributable to the covered risk.
Hedge ineffectiveness may arise from:
•The difference between the variable rate index present in the hedged item and the index used in the derivative instruments, according to market convention (Basis Risk).
•Differences in the settlement dates of the cash flows of the hedged item and the hedging instrument, and
•The credit risk of counterparties impacts the movements of the fair value of the hedging instrument and the hedged item differently.
Bancolombia’s risk management strategy and details of its application are further elaborated in the Risk Management - Market Risk section.
As of November 2024, cash flow and fair value hedging operations are carried out in Bancolombia S.A., the details of derivatives designated as hedging instruments according to the type of hedge and covered risk are provided below:
1.Cash Flow hedges
As of December 31, 2024, on the Consolidated Statement of Financial Position, Bancolombia held the following instruments to hedge exposures to changes in foreign currency and interest rates which have a maturity of less than one year:
As of December 31, 2024
|
|
|
|
|
|
|
|
|
|
Maturity |
Total |
| Less than 1 year |
| In millions of COP (Except average rate) |
| Foreign currency risk |
|
|
| Forward exchange contracts |
|
|
| Notional amount of hedging instruments |
6,614 |
6,614 |
| Average rate of hedging instruments (COP/USD) |
4,496 |
|
| Interest rate risk |
|
|
| Interest rate swaps |
|
|
| Notional amount of hedging instruments |
188,000 |
188,000 |
| Average fixed interest rate |
8.63 |
% |
|
The impacts of the hedging instrument on the Consolidated Statement of Financial Position as of December 31, 2024, are as follows:
As of December 31, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notional amount |
Carrying amount |
Line item in the Consolidated Statement of Financial Position |
Change in fair value used for measuring ineffectiveness for the period |
| Assets |
Liabilities |
| In millions of COP |
| Foreign currency risk |
|
|
|
|
|
Forward exchange contracts(1) |
6,614 |
- |
- |
Derivative financial instruments |
(65) |
| Interest rate risk |
|
|
|
|
|
Interest rate swaps(1) |
188,000 |
- |
- |
Derivative financial instruments |
281 |
(1) The net balance between the rights and obligations of derivatives negotiated through risk chambers (or novated therein) is zero, given their daily clearing and settlement.
The impacts of hedged items on the Consolidated Statement of Financial Position as of December 31, 2024, are as follows:
As of December 31, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value used for measuring ineffectiveness |
Cash flow hedge reserve (OCI) |
Balances remaining in the cash flow hedge reserve from hedging relationships for which hedge accounting is no longer applied |
| In millions of COP |
| Foreign currency risk |
|
|
|
| Forecast transactions |
65 |
(65) |
- |
| Interest rate risk |
|
|
|
| Deposits |
(298) |
281 |
- |
The effects of the cash flow hedge in the Consolidated Statement of Income and Consolidated Statement of Comprehensive Income as of December 31, 2024, are as follows:
As of December 31, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total hedging gain/(loss) recognised in OCI |
Ineffectiveness recognised in profit or loss |
Line item in the Consolidated Statement of Income that includes the recognised hedge ineffectiveness |
Amount reclassified from OCI to profit or loss |
Line item in the Consolidated Statement of Income that includes the the reclassification adjustment |
| In millions of COP |
| Foreign currency risk |
|
|
|
|
|
| Forecast transactions |
(65) |
- |
Other operating income |
- |
Other administrative and general expenses |
| Interest rate risk |
|
|
|
|
|
| Deposits |
416 |
- |
Other operating income |
(135) |
Interest expense |
Set out below is the reconciliation of each component of equity and the analysis of Other Comprehensive Income as of December 31, 2024:
As of December 31, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency risk |
Interest rate risk |
Total |
| In millions of COP |
| As of January 1, 2024 |
|
|
- |
| Total hedging (loss)/gain recognized in OCI |
(65) |
416 |
351 |
| Amount reclassified to profit or loss |
- |
(135) |
(135) |
| Amount included in the cost of non-financial items |
- |
- |
- |
| Total cash flow hedging |
(65) |
281 |
216 |
| Income tax |
|
|
(87) |
| As of December 31, 2024 |
|
|
129 |
2. Fair Value Hedges
The impacts of the hedging instrument on the Consolidated Statement of Financial Position as of December 31, 2024, is as follows:
As of December 31, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notional amount |
Carrying amount |
Line item in the Consolidated Statement of Financial Position |
Change in fair value used for measuring ineffectiveness for the period |
| Assets |
Liabilities |
| In millions of COP |
| Interest rate risk |
|
|
|
|
|
Interest rate swaps(1) |
134,000 |
- |
- |
Derivative financial instruments |
(1,044) |
(1) The net balance between the rights and obligations of derivatives negotiated through risk chambers (or novated therein) is zero, given their daily clearing and settlement. The instrument has a maturity of 1 to 3 years at an average fixed interest rate of 8.22%, for further details on maturity, see Note 15 Deposits by customers.
The impacts of hedged items on the Consolidated Statement of Financial Position as of December 31, 2024, is as follows:
As of December 31, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying amount |
Accumulated fair value adjustments |
Line item in the Consolidated Statement of Financial Position |
Change in fair value used for measuring ineffectiveness for the period |
Accumulated amount of fair value hedge adjustments remaining in the Statement of Financial Position for any hedged items that have ceased to be adjusted for hedging gains and losses |
| In millions of COP |
| Interest rate risk |
|
|
|
|
|
| Deposits |
128,454 |
(963) |
Deposits by customers |
963 |
- |
The effects of the cash flow hedge in the Consolidated Statement of Income and Consolidated Statement of Comprehensive Income as of December 31, 2024, is as follows:
As of December 31, 2024
|
|
|
|
|
|
|
|
|
|
Ineffectiveness recognised in profit or loss |
Line item in the Consolidated Statement of Income that includes the recognised hedge ineffectiveness |
| In millions of COP |
| Interest rate risk |
|
|
| Deposits |
(81) |
Other operating income |
3. Hedges of a net asset in a foreign operation
Bancolombia has designated debt instruments in issue for USD884,544 in 2024 and USD1,592,034 in debt instruments in issue and financing with correspondent banks in 2023 as hedge accounting for an equivalent amount of the net assets of its investment in Banistmo. The purpose of this operation is to protect Bancolombia from the foreign exchange rate risk (USD/COP) of a portion of the net assets in the subsidiary Banistmo S.A., a company domiciled in Panama, which has a different functional currency from that of the Group.
The following is the detail of the hedging of a net asset in a foreign operation:
|
|
|
|
|
|
|
|
|
| Hedges of a net asset in a foreign operation |
December 31, 2024 |
December 31, 2023 |
| In thousands of USD |
Hedged(1) |
884,544 |
1,592,034 |
| Non hedged |
1,723,889 |
1,004,000 |
| Total net asset in a foreign operation |
2,608,433 |
2,596,034 |
(1) Bancolombia discontinued the coverage relationship corresponding to financing with correspondent banks in March 2024 for USD200,000 and a portion corresponds to debt securities issued for USD1,036,695. The accumulated effects
of the exchange difference previously recognized are maintained in other comprehensive income. On the debt securities issued in June maturing in 2034, Bancolombia designated USD529,205 as hedge.
As of December 31, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Debt securities issued designated as a hedging instrument |
| In thousands of USD |
| Opening date |
Expiration date |
Rate |
Principal balance |
Designated capital as a hedged instrument |
| 18/10/2017 |
18/10/2027 |
7.03% |
461,707 |
355,339 |
| 18/12/2019 |
18/12/2029 |
4.68% |
800,000 |
529,205 |
| Total debt securities issued |
|
1,261,707 |
884,544 |
On March 21 and 26, 2024, Bancolombia S.A. made advance payment of financing with correspondent banks with Barclays Bank PLC for USD50,000 and Bank of America for USD150,000 with maturities in 2025.
During 2024, Bancolombia made advance payment of bonds maturing in 2025, 2027 and 2029 for a total of USD1,320,327, of this amount, USD1,036,695 were part of hedges of a net asset in a foreign operation, which it was decided to discontinue in the same proportion. On the other hand, Bancolombia issued bonds in June, maturing in 2034 for a value of USD800,000, of this issuance, in December a total of USD529,205 was designated as hedge. See Note 18. Debt instruments in issue.
As of December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Debt securities issued designated as a hedging instrument |
| In thousands of USD |
| Opening date |
Expiration date |
Rate |
Principal balance |
Designated capital as a hedged instrument |
| 18/10/2017 |
18/10/2027 |
7.03% |
750,000 |
360,000 |
| 18/12/2019 |
18/12/2029 |
4.68% |
436,516 |
436,516 |
| 18/12/2019 |
18/12/2029 |
4.68% |
85,710 |
85,710 |
| 18/12/2019 |
18/12/2029 |
4.68% |
27,774 |
27,774 |
| 29/01/2020 |
29/01/2025 |
3.02% |
482,034 |
482,034 |
| Total debt securities issued |
|
1,782,034 |
1,392,034 |
| Financing with correspondent banks designated as a hedging instrument |
| 31/03/2022 |
17/03/2025 |
6.06% |
150,000 |
150,000 |
| 07/09/2022 |
05/09/2025 |
6.36% |
50,000 |
50,000 |
| Total financing with correspondent banks |
200,000 |
200,000 |
| Total |
|
|
1,982,034 |
1,592,034 |
Measurement of effectiveness and ineffectiveness
A hedge is considered effective if, at the beginning of the period and subsequent periods, changes in fair value or cash flows attributable to the hedge risk during the period for which the hedge has been designated.
Bancolombia has documented the effectiveness tests of the hedge.The hedge is considered effective, since the critical terms and risks of the obligations that serve as a hedging instrument are identical to those of the primary hedged position. Hedged effectiveness is measured on a before income tax.
Gains or losses on the conversion of Banistmo’s financial statements are recognized in Consolidated Statements of Comprehensive Income. Consequently, the exchange difference related to the conversion of debt securities issued and financing with correspondent banks is recognized directly in OCI, as a result of the revaluation of the peso against the dollar, the adjustment recognized in Consolidated Statements of Comprehensive Income amounted to COP (742,930), COP 1,948,833 and COP (1,833,087), for the years ended at December 31, 2024, 2023 and 2022, respectively.
For further information see Consolidated Statement of Comprehensive Income, Note 17. Borrowings from other financial institutions and Note 18. Debt instruments in issue.
NOTE 6. LOANS AND ADVANCES TO CUSTOMERS, NET
Loans and financial leasing operating portfolio
The following is the composition of the loans and financial leasing operations portfolio, net as of December 31, 2024 and 2023:
|
|
|
|
|
|
|
|
|
| Composition |
December 31, 2024 |
December 31, 2023 |
| In millions of COP |
| Commercial |
153,252,811 |
|
134,687,396 |
|
| Consumer |
55,815,683 |
|
54,591,769 |
|
| Mortgage |
41,741,601 |
|
36,250,408 |
|
Financial Leases(1) |
27,291,604 |
|
27,277,057 |
|
| Small Business Loans |
1,352,209 |
|
1,145,017 |
|
Total gross loans and advances to customers(2) |
279,453,908 |
|
253,951,647 |
|
| Total allowance |
(16,179,738) |
|
(16,223,103) |
|
| Total Net loans and advances to customers |
263,274,170 |
|
237,728,544 |
|
(1)See note 11.1 Lessor.
(2)Operations in Colombia, Panama, and Guatemala through the Group's Banks operating in these geographies contributed to the increase in the portfolio. Additionally, as of December 31, 2024, the Colombian peso devalued 15.36% against the US dollar, compared to December 31, 2023.
Allowance for loans losses
The following table sets forth the changes in the allowance for loans and advances and lease losses as of December 31, 2024, 2023 and 2022:
As of December 31, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Concept |
Commercial |
Consumer |
Mortgage |
Financial
Leases |
Small
business
loans |
Total |
| In millions of COP |
| Balance at beginning of period January 1, 2024 |
6,290,266 |
|
7,717,038 |
|
1,023,206 |
|
1,024,575 |
|
168,018 |
|
16,223,103 |
|
Loan sales(1) |
(178,128) |
|
- |
|
- |
|
- |
|
- |
|
(178,128) |
|
Recovery of charged - off loans(2) |
85,858 |
|
637,131 |
|
48,029 |
|
150,466 |
|
4,784 |
|
926,268 |
|
Credit impairment charges on loans, advances and financial leases, net(3) |
1,462,622 |
|
3,660,321 |
|
215,240 |
|
62,708 |
|
12,761 |
|
5,413,652 |
|
Adjusted stage 3(4) |
331,332 |
|
579,861 |
|
41,563 |
|
72,432 |
|
9,010 |
|
1,034,198 |
|
Charges-off(2) |
(977,743) |
|
(6,406,521) |
|
(143,885) |
|
(228,639) |
|
(99,124) |
|
(7,855,912) |
|
Translation adjustment(5) |
245,023 |
|
309,947 |
|
51,024 |
|
6,730 |
|
3,833 |
|
616,557 |
|
| Balance at December 31, 2024 |
7,259,230 |
|
6,497,777 |
|
1,235,177 |
|
1,088,272 |
|
99,282 |
|
16,179,738 |
|
(1)Corresponds to the release of loan allowances related to portfolio sales.
(2)This amount results from collections of previously charged off loans.
(3)The credit impairment charges decreased by 27.45% compared to the previous year. This decrease is primarily due an improvement in the consumer portfolio resulting from lending and collection actions that the Bank initiated in 2023, which had positive effects in 2024. Additionally, there has been a positive effect of the macroeconomic variables in the expected credit losses models. .
(4)Recognized as a reduction to Interest Income on loans and financial leases in Consolidated Statement of Income, in accordance with IFRS 9.
(5)The variation is due to the increase in the market representative rate from COP 3,822.05 in December 2023 to COP 4,409.15 in December 2024.
As of December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Concept |
Commercial |
Consumer |
Mortgage |
Financial
Leases |
Small
business
loans |
Total |
| In millions of COP |
| Balance at beginning of period January 1, 2023 |
7,270,305 |
|
6,047,135 |
|
1,024,091 |
|
1,013,074 |
|
125,035 |
|
15,479,640 |
|
Loan sales(1) |
(829,547) |
|
- |
|
- |
|
- |
|
- |
|
(829,547) |
|
Recovery of charged - off loans(2) |
93,251 |
|
548,655 |
|
64,573 |
|
61,749 |
|
2,706 |
|
770,934 |
|
| Credit impairment charges on loans, advances and financial leases, net |
756,174 |
|
6,313,453 |
|
104,417 |
|
167,904 |
|
119,531 |
|
7,461,479 |
|
Adjusted stage 3(3) |
427,283 |
|
509,668 |
|
33,465 |
|
67,288 |
|
11,201 |
|
1,048,905 |
|
Charges-off(2) |
(970,685) |
|
(5,261,966) |
|
(128,532) |
|
(277,904) |
|
(81,276) |
|
(6,720,363) |
|
Translation adjustment(4) |
(456,515) |
|
(439,907) |
|
(74,808) |
|
(7,536) |
|
(9,179) |
|
(987,945) |
|
| Balance at December 31, 2023 |
6,290,266 |
|
7,717,038 |
|
1,023,206 |
|
1,024,575 |
|
168,018 |
|
16,223,103 |
|
(1)Corresponds to the release of loan allowances related to portfolio sales.
(2)This amount is still subject to enforcement activity.
(3)Recognized as reduction to interest income on loans and financial leases in Consolidated Statement of Income, in accordance with IFRS 9.
(4)The variation is due to the decrease in the market representative rate from COP 4,810.20 in December 2022 to COP 3,822.05 in December 2023.
As of December 31, 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Concept |
Commercial |
Consumer |
Mortgage |
Financial
Leases |
Small
business
loans |
Total |
| In millions of COP |
| Balance at beginning of period January 1, 2022 |
7,813,023 |
|
5,305,267 |
|
1,061,058 |
|
1,521,067 |
|
164,067 |
|
15,864,482 |
|
Loan sales(1) |
(225,226) |
|
- |
|
- |
|
- |
|
- |
|
(225,226) |
|
Recovery of charged - off loans(2) |
188,018 |
|
385,011 |
|
28,690 |
|
72,056 |
|
1,191 |
|
674,966 |
|
| Credit impairment charges on loans, advances and financial leases, net |
502,577 |
|
3,447,515 |
|
183,436 |
|
(461,665) |
|
49,490 |
|
3,721,353 |
|
Adjusted stage 3(3) |
323,196 |
|
279,843 |
|
38,769 |
|
48,836 |
|
11,989 |
|
702,633 |
|
Charges-off(2) |
(1,742,895) |
|
(3,788,517) |
|
(345,991) |
|
(176,407) |
|
(111,092) |
|
(6,164,902) |
|
Translation adjustment(4) |
411,612 |
|
418,016 |
|
58,129 |
|
9,187 |
|
9,390 |
|
906,334 |
|
| Balance at December 31, 2022 |
7,270,305 |
|
6,047,135 |
|
1,024,091 |
|
1,013,074 |
|
125,035 |
|
15,479,640 |
|
(1)Corresponds to the release of loan allowances related to portfolio sales.
(2)This amount is still subject to enforcement activity.
(3)Recognized as a reduction to Interest Income on loans and financial leases in Consolidated Statement of Income, in accordance with IFRS 9.
(4)The variation is due to the increase in the market representative rate from COP 3,981.16 in December 2021 to COP 4,810.20 in December 2022.
The following table presents information about the nature and effects of changes in the contractual cash flows of the loan portfolio that did not result in derecognition and the effect of these changes on the measurement of expected credit losses.
|
|
|
|
|
|
|
|
|
| Changes in the contractual cash flows of the loan portfolio that did not result in derecognition |
| In millions of COP |
|
December 31, 2024 |
December 31, 2023 |
| Loan portfolio modified during the period |
|
|
| Amortized cost before modification |
7,563,621 |
7,566,692 |
| Net gain or loss on changes |
(560,552) |
|
(182,023) |
|
| Loan portfolio modified since initial recognition |
|
|
| Gross carrying value of the previously modified loan portfolio for which the allowance for losses has been changed from the asset's life to the expected credit losses for 12 months. |
325,028 |
393,789 |
Impact of movements in the value of the portfolio and loss allowance by Stage
Variation December 2024 vs December 2023
The following explains the significant changes in the loans and the allowance for loan losses by category during the periods ended on December 31, 2024 and 2023 as a result of applying the expected credit loss model according to IFRS 9:
Stage 1 (12-month expected credit losses)
The exposure in Stage 1 increased by COP 22,899,408 and the loss allowance decreased by COP (1,520,924). The increase in the portfolio in this Stage is mainly due to the dynamics of disbursements in the corporate portfolio and the restatement of dollar loans into Colombian Pesos due to the increase in the exchange rate. The decrease in the loss allowance is due to a higher portfolio participation in lower-risk categories and the macroeconomic impact on the PD (probability of default) models, which have a more favorable economic outlook, where a downward trend in interest rates in Colombia is observed, which positively affects the portfolios of individuals.
Stage 2 (Lifetime expected credit losses)
The exposure in Stage 2 increased by COP 627,630 and the loss allowance increased by COP 137,359. The increase in exposure is mainly due to clients in the corporate portfolio classified as medium risk, through monitoring by the Special Client Management Committee, and a higher number of restructurings compared to the previous year. The increase in the provision is consistent with the arrival of these clients.
Stage 3 (Lifetime expected credit losses)
The exposure in Stage 3 increased by COP 1,975,223,and the loss allowance increased by COP 1,340,200. This variation in exposure and provisions is primarily due to the deterioration of clients in the legal entity portfolio, which includes both corporate clients and SMEs. Significant defaults were particularly observed in the pharmaceutical, commerce, manufacturing, and construction sectors.
As of December 31, 2024
Commercial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stage1 |
Stage2 |
Stage3 |
Total |
|
Gross
carrying |
Allowance |
Gross
carrying |
Allowance |
Gross
carrying |
Allowance |
Gross
carrying |
Allowance |
| In millions of COP |
| Balance at January 1, 2024 |
120,773,927 |
(638,095) |
5,453,537 |
(425,470) |
8,459,932 |
(5,226,701) |
134,687,396 |
(6,290,266) |
| Transfers of financial instruments: |
(1,548,717) |
(13,835) |
(200,399) |
101,921 |
1,749,116 |
(88,086) |
- |
- |
| Transfers from stage 1 to stage 2 |
(1,625,193) |
22,890 |
1,625,193 |
(22,890) |
- |
- |
- |
- |
| Transfers from stage 1 to stage 3 |
(1,207,431) |
36,155 |
- |
- |
1,207,431 |
(36,155) |
- |
- |
| Transfers from stage 2 to stage 1 |
1,278,864 |
(70,018) |
(1,278,864) |
70,018 |
- |
- |
- |
- |
| Transfers from stage 2 to stage 3 |
- |
- |
(633,645) |
86,370 |
633,645 |
(86,370) |
- |
- |
| Transfers from stage 3 to stage 1 |
5,043 |
(2,862) |
- |
- |
(5,043) |
2,862 |
- |
- |
| Transfers from stage 3 to stage 2 |
- |
- |
86,917 |
(31,577) |
(86,917) |
31,577 |
- |
- |
| Remeasurement arising from transfer of stage |
(537,295) |
42,814 |
(254,631) |
(33,104) |
(236,667) |
(1,205,996) |
(1,028,593) |
(1,196,286) |
| Remeasurement from remaining in the stage |
(7,993,068) |
112,459 |
(269,421) |
38,168 |
29,358 |
(329,489) |
(8,233,131) |
(178,862) |
| Remeasurement due to changes in economics factors |
- |
3,800 |
- |
(1,359) |
- |
109 |
- |
2,550 |
| Remeasurement due to changes in model inputs |
- |
12,929 |
- |
(60,157) |
- |
28,775 |
- |
(18,453) |
New financial assets purchased/originated(1) |
83,411,122 |
(234,532) |
2,012,893 |
(166,762) |
1,595,995 |
(954,919) |
87,020,010 |
(1,356,213) |
| Financial assets that have been derecognized |
(61,617,701) |
229,467 |
(1,631,559) |
81,976 |
(1,177,975) |
734,137 |
(64,427,235) |
1,045,580 |
| Charges-off |
(18,847) |
872 |
(71,910) |
24,045 |
(886,986) |
952,826 |
(977,743) |
977,743 |
| Foreign Exchange and other movements |
5,292,046 |
(17,916) |
507,278 |
(18,768) |
412,783 |
(208,339) |
6,212,107 |
(245,023) |
| Balance at December 31, 2024 |
137,761,467 |
(502,037) |
5,545,788 |
(459,510) |
9,945,556 |
(6,297,683) |
153,252,811 |
(7,259,230) |
(1) Includes financial assets purchased, originated and restructured.
Consumer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stage1 |
Stage2 |
Stage3 |
Total |
|
Gross
carrying |
Allowance |
Gross
carrying |
Allowance |
Gross
carrying |
Allowance |
Gross
carrying |
Allowance |
| In millions of COP |
| Balance at January 1, 2024 |
46,060,615 |
|
(2,672,234) |
|
4,407,067 |
|
(1,584,505) |
|
4,124,087 |
|
(3,460,299) |
|
54,591,769 |
|
(7,717,038) |
|
| Transfers of financial instruments: |
(3,287,690) |
|
167,853 |
|
1,334,175 |
|
(32,948) |
|
1,953,515 |
|
(134,905) |
|
- |
|
- |
|
| Transfers from stage 1 to stage 2 |
(2,355,931) |
|
236,700 |
|
2,355,931 |
|
(236,700) |
|
- |
|
- |
|
- |
|
- |
|
| Transfers from stage 1 to stage 3 |
(1,694,306) |
|
185,537 |
|
- |
|
- |
|
1,694,306 |
|
(185,537) |
|
- |
|
- |
|
| Transfers from stage 2 to stage 1 |
705,570 |
|
(207,512) |
|
(705,570) |
|
207,512 |
|
- |
|
- |
|
- |
|
- |
|
| Transfers from stage 2 to stage 3 |
- |
|
- |
|
(572,936) |
|
195,424 |
|
572,936 |
|
(195,424) |
|
- |
|
- |
|
| Transfers from stage 3 to stage 1 |
56,977 |
|
(46,872) |
|
- |
|
- |
|
(56,977) |
|
46,872 |
|
- |
|
- |
|
| Transfers from stage 3 to stage 2 |
- |
|
- |
|
256,750 |
|
(199,184) |
|
(256,750) |
|
199,184 |
|
- |
|
- |
|
| Remeasurement arising from transfer of stage |
(322,470) |
|
214,334 |
|
(389,162) |
|
(153,151) |
|
1,432,594 |
|
(4,673,940) |
|
720,962 |
|
(4,612,757) |
|
| Remeasurement from remaining in the stage |
(3,891,488) |
|
246,406 |
|
(137,592) |
|
(27,302) |
|
27,126 |
|
(96,141) |
|
(4,001,954) |
|
122,963 |
|
| Remeasurement due to changes in economics factors |
- |
|
13,782 |
|
- |
|
8,102 |
|
- |
|
(4,463) |
|
- |
|
17,421 |
|
| Remeasurement due to changes in model inputs |
- |
|
370,905 |
|
- |
|
(37,890) |
|
- |
|
(28,501) |
|
- |
|
304,514 |
|
New financial assets purchased/originated(1) |
18,171,352 |
|
(503,056) |
|
1,702,506 |
|
(592,301) |
|
1,099,137 |
|
(970,118) |
|
20,972,995 |
|
(2,065,475) |
|
| Financial assets that have been derecognized |
(11,013,532) |
|
597,248 |
|
(895,311) |
|
336,485 |
|
(525,071) |
|
422,288 |
|
(12,433,914) |
|
1,356,021 |
|
| Charges-off |
(1,093,049) |
|
266,898 |
|
(1,092,436) |
|
502,944 |
|
(4,221,036) |
|
5,636,679 |
|
(6,406,521) |
|
6,406,521 |
|
| Foreign Exchange and other movements |
2,073,275 |
|
(72,848) |
|
189,360 |
|
(63,708) |
|
109,711 |
|
(173,391) |
|
2,372,346 |
|
(309,947) |
|
| Balance at December 31, 2024 |
46,697,013 |
|
(1,370,712) |
|
5,118,607 |
|
(1,644,274) |
|
4,000,063 |
|
(3,482,791) |
|
55,815,683 |
|
(6,497,777) |
|
(1)Includes financial assets purchased, originated and restructured.
Financial Leases
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stage1 |
Stage2 |
Stage3 |
Total |
|
Gross
carrying |
Allowance |
Gross
carrying |
Allowance |
Gross
carrying |
Allowance |
Gross
carrying |
Allowance |
| In millions of COP |
| Balance at January 1, 2024 |
22,553,128 |
|
(145,429) |
|
3,293,100 |
|
(206,641) |
|
1,430,829 |
|
(672,505) |
|
27,277,057 |
|
(1,024,575) |
|
| Transfers of financial instruments: |
(626,993) |
|
(32,495) |
|
164,252 |
|
42,979 |
|
462,741 |
|
(10,484) |
|
- |
|
- |
|
| Transfers from stage 1 to stage 2 |
(807,360) |
|
11,270 |
|
807,360 |
|
(11,270) |
|
- |
|
- |
|
- |
|
- |
|
| Transfers from stage 1 to stage 3 |
(301,609) |
|
5,217 |
|
- |
|
- |
|
301,609 |
|
(5,217) |
|
- |
|
- |
|
| Transfers from stage 2 to stage 1 |
476,482 |
|
(48,011) |
|
(476,482) |
|
48,011 |
|
- |
|
- |
|
- |
|
- |
|
| Transfers from stage 2 to stage 3 |
- |
|
- |
|
(261,903) |
|
28,911 |
|
261,903 |
|
(28,911) |
|
- |
|
- |
|
| Transfers from stage 3 to stage 1 |
5,494 |
|
(971) |
|
- |
|
- |
|
(5,494) |
|
971 |
|
- |
|
- |
|
| Transfers from stage 3 to stage 2 |
- |
|
- |
|
95,277 |
|
(22,673) |
|
(95,277) |
|
22,673 |
|
- |
|
- |
|
| Remeasurement arising from transfer of stage |
(29,224) |
|
26,927 |
|
(111,911) |
|
(24,264) |
|
82,688 |
|
(332,058) |
|
(58,447) |
|
(329,395) |
|
| Remeasurement from remaining in the stage |
(2,030,801) |
|
1,024 |
|
(36,408) |
|
6,618 |
|
(48,471) |
|
19,994 |
|
(2,115,680) |
|
27,636 |
|
| Remeasurement due to changes in economics factors |
- |
|
388 |
|
- |
|
(1,315) |
|
- |
|
3,278 |
|
- |
|
2,351 |
|
| Remeasurement due to changes in model inputs |
- |
|
33,405 |
|
- |
|
(39,054) |
|
- |
|
(19,599) |
|
- |
|
(25,248) |
|
New financial assets purchased/originated(1) |
4,685,664 |
|
(16,709) |
|
265,140 |
|
(61,525) |
|
43,177 |
|
(26,867) |
|
4,993,981 |
|
(105,101) |
|
| Financial assets that have been derecognized |
(2,161,635) |
|
14,818 |
|
(369,040) |
|
13,130 |
|
(232,037) |
|
116,203 |
|
(2,762,712) |
|
144,151 |
|
| Charges-off |
(2,309) |
|
116 |
|
(626) |
|
38,690 |
|
(225,704) |
|
189,833 |
|
(228,639) |
|
228,639 |
|
| Foreign Exchange and other movements |
173,604 |
|
(873) |
|
8,203 |
|
(2,848) |
|
4,237 |
|
(3,009) |
|
186,044 |
|
(6,730) |
|
| Balance at December 31, 2024 |
22,561,434 |
|
(118,828) |
|
3,212,710 |
|
(234,230) |
|
1,517,460 |
|
(735,214) |
|
27,291,604 |
|
(1,088,272) |
|
(1)Includes financial assets purchased, originated and restructured.
Mortgage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stage1 |
Stage2 |
Stage3 |
Total |
|
Gross
carrying |
Allowance |
Gross
carrying |
Allowance |
Gross
carrying |
Allowance |
Gross
carrying |
Allowance |
| In millions of COP |
| Balance at January 1, 2024 |
32,210,648 |
|
(184,915) |
|
2,628,654 |
|
(284,921) |
|
1,411,106 |
|
(553,370) |
|
36,250,408 |
|
(1,023,206) |
|
| Transfers of financial instruments: |
(530,580) |
|
(63,741) |
|
(110,527) |
|
65,658 |
|
641,107 |
|
(1,917) |
|
- |
|
- |
|
| Transfers from stage 1 to stage 2 |
(1,054,660) |
|
17,932 |
|
1,054,660 |
|
(17,932) |
|
- |
|
- |
|
- |
|
- |
|
| Transfers from stage 1 to stage 3 |
(388,239) |
|
7,709 |
|
- |
|
- |
|
388,239 |
|
(7,709) |
|
- |
|
- |
|
| Transfers from stage 2 to stage 1 |
911,038 |
|
(89,109) |
|
(911,038) |
|
89,109 |
|
- |
|
- |
|
- |
|
- |
|
| Transfers from stage 2 to stage 3 |
- |
|
- |
|
(575,585) |
|
77,114 |
|
575,585 |
|
(77,114) |
|
- |
|
- |
|
| Transfers from stage 3 to stage 1 |
1,281 |
|
(273) |
|
- |
|
- |
|
(1,281) |
|
273 |
|
- |
|
- |
|
| Transfers from stage 3 to stage 2 |
- |
|
- |
|
321,436 |
|
(82,633) |
|
(321,436) |
|
82,633 |
|
- |
|
- |
|
| Remeasurement arising from transfer of stage |
(46,383) |
|
71,166 |
|
(34,361) |
|
(69,232) |
|
58,849 |
|
(197,427) |
|
(21,895) |
|
(195,493) |
|
| Remeasurement from remaining in the stage |
(1,500,100) |
|
146 |
|
(28,254) |
|
(50,026) |
|
(14,983) |
|
(92,113) |
|
(1,543,337) |
|
(141,993) |
|
| Remeasurement due to changes in economics factors |
- |
|
(655) |
|
- |
|
232 |
|
- |
|
- |
|
- |
|
(423) |
|
| Remeasurement due to changes in model inputs |
- |
|
35,570 |
|
- |
|
38,196 |
|
- |
|
(59,346) |
|
- |
|
14,420 |
|
New financial assets purchased/originated(1) |
7,250,404 |
|
(24,146) |
|
89,441 |
|
(15,434) |
|
38,103 |
|
(15,032) |
|
7,377,948 |
|
(54,612) |
|
| Financial assets that have been derecognized |
(2,219,679) |
|
13,232 |
|
(88,540) |
|
12,205 |
|
(114,124) |
|
47,832 |
|
(2,422,343) |
|
73,269 |
|
| Charges-off |
(3,221) |
|
263 |
|
(2,019) |
|
1,789 |
|
(138,645) |
|
141,833 |
|
(143,885) |
|
143,885 |
|
| Foreign Exchange and other movements |
1,915,491 |
|
(5,340) |
|
247,536 |
|
(14,193) |
|
81,678 |
|
(31,491) |
|
2,244,705 |
|
(51,024) |
|
| Balance at December 31, 2024 |
37,076,580 |
|
(158,420) |
|
2,701,930 |
|
(315,726) |
|
1,963,091 |
|
(761,031) |
|
41,741,601 |
|
(1,235,177) |
|
(1)Includes financial assets purchased, originated and restructured.
Small business loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stage1 |
Stage2 |
Stage3 |
Total |
|
Gross
carrying |
Allowance |
Gross
carrying |
Allowance |
Gross
carrying |
Allowance |
Gross
carrying |
Allowance |
| In millions of COP |
| Balance at January 1, 2024 |
774,571 |
|
(55,230) |
|
260,303 |
|
(34,865) |
|
110,143 |
|
(77,923) |
|
1,145,017 |
|
(168,018) |
|
| Transfers of financial instruments: |
48,693 |
|
4,363 |
|
(90,096) |
|
465 |
|
41,403 |
|
(4,828) |
|
- |
|
- |
|
| Transfers from stage 1 to stage 2 |
(32,175) |
|
5,260 |
|
32,175 |
|
(5,260) |
|
- |
|
- |
|
- |
|
- |
|
| Transfers from stage 1 to stage 3 |
(26,237) |
|
3,577 |
|
- |
|
- |
|
26,237 |
|
(3,577) |
|
- |
|
- |
|
| Transfers from stage 2 to stage 1 |
106,886 |
|
(4,362) |
|
(106,886) |
|
4,362 |
|
- |
|
- |
|
- |
|
- |
|
| Transfers from stage 2 to stage 3 |
- |
|
- |
|
(22,854) |
|
3,333 |
|
22,854 |
|
(3,333) |
|
- |
|
- |
|
| Transfers from stage 3 to stage 1 |
219 |
|
(112) |
|
- |
|
- |
|
(219) |
|
112 |
|
- |
|
- |
|
| Transfers from stage 3 to stage 2 |
- |
|
- |
|
7,469 |
|
(1,970) |
|
(7,469) |
|
1,970 |
|
- |
|
- |
|
| Remeasurement arising from transfer of stage |
(8,293) |
|
2,046 |
|
(11,218) |
|
(35) |
|
2,245 |
|
(59,190) |
|
(17,266) |
|
(57,179) |
|
| Remeasurement from remaining in the stage |
(119,140) |
|
13,134 |
|
(1,716) |
|
9,558 |
|
(4,671) |
|
(1,179) |
|
(125,527) |
|
21,513 |
|
| Remeasurement due to changes in economics factors |
- |
|
549 |
|
- |
|
103 |
|
- |
|
(52) |
|
- |
|
600 |
|
| Remeasurement due to changes in model inputs |
- |
|
9,603 |
|
- |
|
(169) |
|
- |
|
(740) |
|
- |
|
8,694 |
|
New financial assets purchased/originated(1) |
774,418 |
|
(15,290) |
|
42,211 |
|
(6,973) |
|
18,044 |
|
(12,363) |
|
834,673 |
|
(34,626) |
|
| Financial assets that have been derecognized |
(323,208) |
|
12,414 |
|
(120,903) |
|
5,663 |
|
(27,026) |
|
16,366 |
|
(471,137) |
|
34,443 |
|
| Charges-off |
(19,210) |
|
3,952 |
|
(19,407) |
|
7,670 |
|
(60,507) |
|
87,502 |
|
(99,124) |
|
99,124 |
|
| Foreign Exchange and other movements |
47,972 |
|
(523) |
|
32,082 |
|
(1,438) |
|
5,519 |
|
(1,872) |
|
85,573 |
|
(3,833) |
|
| Balance at December 31, 2024 |
1,175,803 |
|
(24,982) |
|
91,256 |
|
(20,021) |
|
85,150 |
|
(54,279) |
|
1,352,209 |
|
(99,282) |
|
(1)Includes financial assets purchased, originated and restructured.
Variation December 2023 vs December 2022
Stage 1 (12-month expected credit losses)
Stage 1 exposure decreased by COP (14,397,167) and the loss allowance increased by COP 820,111. The decrease in the portfolio at this stage is mainly due to the restatement of the dollar loans into Colombian pesos due to a lower in the market representative rate and a slow disbursement dynamic of the consumer portfolio compared to the previous period. The increase in the loss allowance is due to the impact of a less favorable economic outlook, where there is lower economic growth and a high trend of interest rates throughout the year.
Stage 2 (Lifetime expected credit losses)
The exposure in Stage 2 decreased by COP 2,613,778 and the loss allowance decreased by COP 608,427. The decrease in exposure is due to the migration of loans with delinquency over 90 days to Stage 3, and the level of new overdue portfolio being lower than the previous period. The decrease of loss allowance is in accordance with the decrease in exposure.
Stage 3 (Lifetime expected credit losses)
The exposure in Stage 3 increased by COP 1,038,853 and the loss allowance increased by COP 531,779. The variation in exposure and loss allowance in this Stage is mainly due to clients of the consumer portfolio reaching a delinquency height over 90 days and the impairment of significant clients from the construction sector.
As of December 31, 2023
Commercial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stage1 |
Stage2 |
Stage3 |
Total |
|
Gross
carrying |
Allowance |
Gross
carrying |
Allowance |
Gross
carrying |
Allowance |
Gross
carrying |
Allowance |
| In millions of COP |
| Balance at January 1, 2023 |
126,530,862 |
|
(665,259) |
|
8,062,435 |
|
(751,728) |
|
8,944,556 |
|
(5,853,318) |
|
143,537,853 |
|
(7,270,305) |
|
| Transfers of financial instruments: |
(1,248,210) |
|
(73,788) |
|
(565,802) |
|
157,677 |
|
1,814,012 |
|
(83,889) |
|
- |
|
- |
|
| Transfers from stage 1 to stage 2 |
(1,286,292) |
|
24,362 |
|
1,286,292 |
|
(24,362) |
|
- |
|
- |
|
- |
|
- |
|
| Transfers from stage 1 to stage 3 |
(900,645) |
|
26,071 |
|
- |
|
- |
|
900,645 |
|
(26,071) |
|
- |
|
- |
|
| Transfers from stage 2 to stage 1 |
931,660 |
|
(118,403) |
|
(931,660) |
|
118,403 |
|
- |
|
- |
|
- |
|
- |
|
| Transfers from stage 2 to stage 3 |
- |
|
- |
|
(1,081,128) |
|
139,257 |
|
1,081,128 |
|
(139,257) |
|
- |
|
- |
|
| Transfers from stage 3 to stage 1 |
7,067 |
|
(5,818) |
|
- |
|
- |
|
(7,067) |
|
5,818 |
|
- |
|
- |
|
| Transfers from stage 3 to stage 2 |
- |
|
- |
|
160,694 |
|
(75,621) |
|
(160,694) |
|
75,621 |
|
- |
|
- |
|
| Remeasurement arising from transfer of stage |
(172,134) |
|
98,684 |
|
(190,275) |
|
(7,563) |
|
(153,574) |
|
(1,140,608) |
|
(515,983) |
|
(1,049,487) |
|
| Remeasurement from remaining in the stage |
(10,087,837) |
|
69,038 |
|
(444,057) |
|
97,791 |
|
(135,588) |
|
(159,438) |
|
(10,667,482) |
|
7,391 |
|
| Remeasurement due to changes in economics factors |
- |
|
(14,781) |
|
- |
|
(19,968) |
|
- |
|
7,515 |
|
- |
|
(27,234) |
|
| Remeasurement due to methodological changes |
- |
|
19,001 |
|
- |
|
53,533 |
|
- |
|
25,299 |
|
- |
|
97,833 |
|
New financial assets purchased/originated(1) |
60,154,305 |
|
(302,169) |
|
1,192,219 |
|
(143,442) |
|
1,296,765 |
|
(725,298) |
|
62,643,289 |
|
(1,170,909) |
|
| Financial assets that have been derecognized |
(45,206,464) |
|
181,931 |
|
(1,519,892) |
|
121,596 |
|
(1,715,530) |
|
1,391,718 |
|
(48,441,886) |
|
1,695,245 |
|
| Charges-off |
(19,285) |
|
973 |
|
(81,528) |
|
17,475 |
|
(869,872) |
|
952,237 |
|
(970,685) |
|
970,685 |
|
| Foreign Exchange and other movements |
(9,177,310) |
|
48,275 |
|
(999,563) |
|
49,159 |
|
(720,837) |
|
359,081 |
|
(10,897,710) |
|
456,515 |
|
| Balance at December 31, 2023 |
120,773,927 |
|
(638,095) |
|
5,453,537 |
|
(425,470) |
|
8,459,932 |
|
(5,226,701) |
|
134,687,396 |
|
(6,290,266) |
|
(1)Includes financial assets purchased, originated and restructured.
Consumer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stage1 |
Stage2 |
Stage3 |
Total |
|
Gross
carrying |
Allowance |
Gross
carrying |
Allowance |
Gross
carrying |
Allowance |
Gross
carrying |
Allowance |
| In millions of COP |
| Balance at January 1, 2023 |
51,510,943 |
|
(1,823,841) |
|
5,288,921 |
|
(1,868,882) |
|
2,788,857 |
|
(2,354,412) |
|
59,588,721 |
|
(6,047,135) |
|
| Transfers of financial instruments: |
(2,366,645) |
|
(213,509) |
|
299,377 |
|
313,735 |
|
2,067,268 |
|
(100,226) |
|
- |
|
- |
|
| Transfers from stage 1 to stage 2 |
(1,890,263) |
|
116,262 |
|
1,890,263 |
|
(116,262) |
|
- |
|
- |
|
- |
|
- |
|
| Transfers from stage 1 to stage 3 |
(1,805,932) |
|
124,706 |
|
- |
|
- |
|
1,805,932 |
|
(124,706) |
|
- |
|
- |
|
| Transfers from stage 2 to stage 1 |
1,252,391 |
|
(381,036) |
|
(1,252,391) |
|
381,036 |
|
- |
|
- |
|
- |
|
- |
|
| Transfers from stage 2 to stage 3 |
- |
|
- |
|
(547,962) |
|
230,723 |
|
547,962 |
|
(230,723) |
|
- |
|
- |
|
| Transfers from stage 3 to stage 1 |
77,159 |
|
(73,441) |
|
- |
|
- |
|
(77,159) |
|
73,441 |
|
- |
|
- |
|
| Transfers from stage 3 to stage 2 |
- |
|
- |
|
209,467 |
|
(181,762) |
|
(209,467) |
|
181,762 |
|
- |
|
- |
|
| Remeasurement arising from transfer of stage |
(176,080) |
|
281,499 |
|
(103,802) |
|
(541,174) |
|
990,976 |
|
(4,445,663) |
|
711,094 |
|
(4,705,338) |
|
| Remeasurement from remaining in the stage |
(4,024,103) |
|
(79,073) |
|
(162,497) |
|
(79,505) |
|
278,004 |
|
(493,421) |
|
(3,908,596) |
|
(651,999) |
|
| Remeasurement due to changes in economics factors |
- |
|
(242,317) |
|
- |
|
(32,244) |
|
- |
|
989 |
|
- |
|
(273,572) |
|
| Remeasurement due to methodological changes |
- |
|
(423,782) |
|
- |
|
252,110 |
|
- |
|
19,805 |
|
- |
|
(151,867) |
|
New financial assets purchased/originated(1) |
15,350,895 |
|
(866,684) |
|
1,429,142 |
|
(584,910) |
|
1,275,594 |
|
(1,053,814) |
|
18,055,631 |
|
(2,505,408) |
|
| Financial assets that have been derecognized |
(9,643,264) |
|
349,930 |
|
(858,742) |
|
315,991 |
|
(294,422) |
|
250,487 |
|
(10,796,428) |
|
916,408 |
|
| Charges-off |
(1,299,715) |
|
231,387 |
|
(1,129,877) |
|
542,312 |
|
(2,832,374) |
|
4,488,267 |
|
(5,261,966) |
|
5,261,966 |
|
| Foreign Exchange and other movements |
(3,291,416) |
|
114,156 |
|
(355,455) |
|
98,062 |
|
(149,816) |
|
227,689 |
|
(3,796,687) |
|
439,907 |
|
| Balance at December 31, 2023 |
46,060,615 |
|
(2,672,234) |
|
4,407,067 |
|
(1,584,505) |
|
4,124,087 |
|
(3,460,299) |
|
54,591,769 |
|
(7,717,038) |
|
(1)Includes financial assets purchased, originated and restructured.
Financial leases
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stage1 |
Stage2 |
Stage3 |
Total |
|
Gross
carrying |
Allowance |
Gross
carrying |
Allowance |
Gross
carrying |
Allowance |
Gross
carrying |
Allowance |
| In millions of COP |
| Balance at January 1, 2023 |
23,566,544 |
|
(151,328) |
|
3,172,285 |
|
(238,920) |
|
1,358,887 |
|
(622,826) |
|
28,097,716 |
|
(1,013,074) |
|
| Transfers of financial instruments: |
(33,774) |
|
(56,552) |
|
(337,901) |
|
74,010 |
|
371,675 |
|
(17,458) |
|
- |
|
- |
|
| Transfers from stage 1 to stage 2 |
(886,398) |
|
15,837 |
|
886,398 |
|
(15,837) |
|
- |
|
- |
|
- |
|
- |
|
| Transfers from stage 1 to stage 3 |
(214,258) |
|
6,202 |
|
- |
|
- |
|
214,258 |
|
(6,202) |
|
- |
|
- |
|
| Transfers from stage 2 to stage 1 |
1,065,222 |
|
(77,927) |
|
(1,065,222) |
|
77,927 |
|
- |
|
- |
|
- |
|
- |
|
| Transfers from stage 2 to stage 3 |
- |
|
- |
|
(211,221) |
|
26,291 |
|
211,221 |
|
(26,291) |
|
- |
|
- |
|
| Transfers from stage 3 to stage 1 |
1,660 |
|
(664) |
|
- |
|
- |
|
(1,660) |
|
664 |
|
- |
|
- |
|
| Transfers from stage 3 to stage 2 |
- |
|
- |
|
52,144 |
|
(14,371) |
|
(52,144) |
|
14,371 |
|
- |
|
- |
|
| Remeasurement arising from transfer of stage |
(67,839) |
|
66,879 |
|
(66,232) |
|
(43,021) |
|
38,500 |
|
(275,772) |
|
(95,571) |
|
(251,914) |
|
| Remeasurement from remaining in the stage |
(1,719,440) |
|
7,812 |
|
(84,050) |
|
27,024 |
|
(16,635) |
|
(44,480) |
|
(1,820,125) |
|
(9,644) |
|
| Remeasurement due to changes in economics factors |
- |
|
(2,286) |
|
- |
|
(4,103) |
|
- |
|
8,419 |
|
- |
|
2,030 |
|
| Remeasurement due to methodological changes |
- |
|
(1,756) |
|
- |
|
(5,150) |
|
- |
|
8,486 |
|
- |
|
1,580 |
|
New financial assets purchased/originated(1) |
2,926,745 |
|
(21,654) |
|
915,316 |
|
(57,704) |
|
67,467 |
|
(45,494) |
|
3,909,528 |
|
(124,852) |
|
| Financial assets that have been derecognized |
(1,780,980) |
|
11,596 |
|
(264,866) |
|
12,186 |
|
(129,570) |
|
62,077 |
|
(2,175,416) |
|
85,859 |
|
| Charges-off |
(863) |
|
29 |
|
(25,471) |
|
27,464 |
|
(251,570) |
|
250,411 |
|
(277,904) |
|
277,904 |
|
| Foreign Exchange and other movements |
(337,265) |
|
1,831 |
|
(15,981) |
|
1,573 |
|
(7,925) |
|
4,132 |
|
(361,171) |
|
7,536 |
|
| Balance at December 31, 2023 |
22,553,128 |
|
(145,429) |
|
3,293,100 |
|
(206,641) |
|
1,430,829 |
|
(672,505) |
|
27,277,057 |
|
(1,024,575) |
|
(1)Includes financial assets purchased, originated and restructured.
Mortgage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stage1 |
Stage2 |
Stage3 |
Total |
|
Gross
carrying |
Allowance |
Gross
carrying |
Allowance |
Gross
carrying |
Allowance |
Gross
carrying |
Allowance |
| In millions of COP |
| Balance at January 1, 2023 |
34,067,734 |
|
(206,800) |
|
1,997,270 |
|
(256,275) |
|
1,306,369 |
|
(561,016) |
|
37,371,373 |
|
(1,024,091) |
|
| Transfers of financial instruments: |
(1,226,789) |
|
(46,563) |
|
838,151 |
|
32,285 |
|
388,638 |
|
14,278 |
|
- |
|
- |
|
| Transfers from stage 1 to stage 2 |
(1,419,929) |
|
20,379 |
|
1,419,929 |
|
(20,379) |
|
- |
|
- |
|
- |
|
- |
|
| Transfers from stage 1 to stage 3 |
(330,417) |
|
7,821 |
|
- |
|
- |
|
330,417 |
|
(7,821) |
|
- |
|
- |
|
| Transfers from stage 2 to stage 1 |
523,311 |
|
(74,687) |
|
(523,311) |
|
74,687 |
|
- |
|
- |
|
- |
|
- |
|
| Transfers from stage 2 to stage 3 |
- |
|
- |
|
(306,993) |
|
52,110 |
|
306,993 |
|
(52,110) |
|
- |
|
- |
|
| Transfers from stage 3 to stage 1 |
246 |
|
(76) |
|
- |
|
- |
|
(246) |
|
76 |
|
- |
|
- |
|
| Transfers from stage 3 to stage 2 |
- |
|
- |
|
248,526 |
|
(74,133) |
|
(248,526) |
|
74,133 |
|
- |
|
- |
|
| Remeasurement arising from transfer of stage |
(18,655) |
|
45,186 |
|
(8,302) |
|
(84,371) |
|
63,442 |
|
(154,335) |
|
36,485 |
|
(193,520) |
|
| Remeasurement from remaining in the stage |
(1,240,204) |
|
(6,873) |
|
(12,416) |
|
(5,955) |
|
(20,842) |
|
(125,459) |
|
(1,273,462) |
|
(138,287) |
|
| Remeasurement due to changes in economics factors |
- |
|
(8,108) |
|
- |
|
(1,386) |
|
- |
|
- |
|
- |
|
(9,494) |
|
| Remeasurement due to methodological changes |
- |
|
54,756 |
|
- |
|
17,730 |
|
- |
|
58,972 |
|
- |
|
131,458 |
|
New financial assets purchased/originated(1) |
5,361,515 |
|
(36,938) |
|
102,552 |
|
(19,513) |
|
37,864 |
|
(11,435) |
|
5,501,931 |
|
(67,886) |
|
| Financial assets that have been derecognized |
(1,428,077) |
|
11,130 |
|
(69,961) |
|
10,885 |
|
(106,100) |
|
53,259 |
|
(1,604,138) |
|
75,274 |
|
| Charges-off |
(2,088) |
|
8 |
|
(2,446) |
|
497 |
|
(123,998) |
|
128,027 |
|
(128,532) |
|
128,532 |
|
| Foreign Exchange and other movements |
(3,302,788) |
|
9,287 |
|
(216,194) |
|
21,182 |
|
(134,267) |
|
44,339 |
|
(3,653,249) |
|
74,808 |
|
| Balance at December 31, 2023 |
32,210,648 |
|
(184,915) |
|
2,628,654 |
|
(284,921) |
|
1,411,106 |
|
(553,370) |
|
36,250,408 |
|
(1,023,206) |
|
(1)Includes financial assets purchased, originated and restructured.
Small business loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stage1 |
Stage2 |
Stage3 |
Total |
|
Gross
carrying |
Allowance |
Gross
carrying |
Allowance |
Gross
carrying |
Allowance |
Gross
carrying |
Allowance |
| In millions of COP |
| Balance at January 1, 2023 |
1,093,973 |
|
(28,564) |
|
135,528 |
|
(29,024) |
|
98,575 |
|
(67,447) |
|
1,328,076 |
|
(125,035) |
|
| Transfers of financial instruments: |
(210,552) |
|
3,957 |
|
155,467 |
|
(680) |
|
55,085 |
|
(3,277) |
|
- |
|
- |
|
| Transfers from stage 1 to stage 2 |
(177,024) |
|
4,932 |
|
177,024 |
|
(4,932) |
|
- |
|
- |
|
- |
|
- |
|
| Transfers from stage 1 to stage 3 |
(46,849) |
|
2,745 |
|
- |
|
- |
|
46,849 |
|
(2,745) |
|
- |
|
- |
|
| Transfers from stage 2 to stage 1 |
13,169 |
|
(3,625) |
|
(13,169) |
|
3,625 |
|
- |
|
- |
|
- |
|
- |
|
| Transfers from stage 2 to stage 3 |
- |
|
- |
|
(17,243) |
|
5,043 |
|
17,243 |
|
(5,043) |
|
- |
|
- |
|
| Transfers from stage 3 to stage 1 |
152 |
|
(95) |
|
- |
|
- |
|
(152) |
|
95 |
|
- |
|
- |
|
| Transfers from stage 3 to stage 2 |
- |
|
- |
|
8,855 |
|
(4,416) |
|
(8,855) |
|
4,416 |
|
- |
|
- |
|
| Remeasurement arising from transfer of stage |
(2,939) |
|
2,268 |
|
(4,798) |
|
(5,519) |
|
(8,155) |
|
(58,743) |
|
(15,892) |
|
(61,994) |
|
| Remeasurement from remaining in the stage |
(133,210) |
|
5,932 |
|
(9,475) |
|
(7,767) |
|
(94) |
|
(9,821) |
|
(142,779) |
|
(11,656) |
|
| Remeasurement due to changes in economics factors |
- |
|
(3,185) |
|
- |
|
(882) |
|
- |
|
24 |
|
- |
|
(4,043) |
|
| Remeasurement due to methodological changes |
- |
|
(14,202) |
|
- |
|
3,792 |
|
- |
|
2,808 |
|
- |
|
(7,602) |
|
New financial assets purchased/originated(1) |
395,777 |
|
(29,237) |
|
31,394 |
|
(8,643) |
|
32,093 |
|
(28,378) |
|
459,264 |
|
(66,258) |
|
| Financial assets that have been derecognized |
(220,594) |
|
5,021 |
|
(13,738) |
|
3,545 |
|
(12,904) |
|
9,549 |
|
(247,236) |
|
18,115 |
|
| Charges-off |
(17,840) |
|
1,787 |
|
(17,376) |
|
7,174 |
|
(46,060) |
|
72,315 |
|
(81,276) |
|
81,276 |
|
| Foreign Exchange and other movements |
(130,044) |
|
993 |
|
(16,699) |
|
3,139 |
|
(8,397) |
|
5,047 |
|
(155,140) |
|
9,179 |
|
| Balance at December 31, 2023 |
774,571 |
|
(55,230) |
|
260,303 |
|
(34,865) |
|
110,143 |
|
(77,923) |
|
1,145,017 |
|
(168,018) |
|
(1)Includes financial assets purchased, originated and restructured.
NOTE 7. ASSETS HELD FOR SALE AND INVENTORIES, NET
The breakdown of inventories and assets held for sale, net of the Bank is as follows:
|
|
|
|
|
|
|
|
|
| Assets held for sale and inventories |
December 31, 2024 |
December 31, 2023 |
| In millions of COP |
| Inventories, net |
932,657 |
|
747,302 |
|
| Assets held for sale, net |
173,742 |
|
159,451 |
|
| Total assets held for sale and inventories, net |
1,106,399 |
|
906,753 |
|
7.1. Inventories
Due to the nature of the financial services provided by some subsidiaries of the Bank, assets provided through operating or financial leases to third parties that do not exercise the purchase option or that do not have a purchase option, are recorded as inventories once the agreement expires, considering that in the course of the ordinary activities performed by such subsidiaries, those assets are routinely sold.
In addition, the Bancolombia Group companies have a business unit that develops real estate, which are sold in the ordinary course of business and are classified as inventories.
The Bank’s inventories at December 31, 2024 and 2023, are summarized as follows:
|
|
|
|
|
|
|
|
|
| Inventories |
December 31, 2024 |
December 31, 2023 |
| In millions of COP |
Lands and buildings(1) |
576,556 |
|
275,808 |
|
Vehicles(2) |
365,173 |
|
469,949 |
|
| Machinery and others |
32,166 |
|
38,310 |
|
| Total inventory cost |
973,895 |
|
784,067 |
|
| Impairment |
(41,238) |
|
(36,765) |
|
| Total inventories, net |
932,657 |
|
747,302 |
|
(1)In 2024, includes business unit that develops real estate, which are sold in the ordinary course of business and are classified as inventories.
(2) The decrease corresponds to higher sales in the year.
Impairment is recognized based on market price fluctuation due to the fact that the fair value is determined by the offering price less cost to sell.
There are no inventories pledged as collateral for liabilities as of December 31, 2024 and 2023.
7.2. Assets held for sale
The assets recognized by the Bank as assets held for sale correspond to machinery, equipment, motor vehicles and technology, among others that have been received as foreclosed assets.
These assets are subject to a current plan for their sale, which contains the details of the selling price allocation and the advertising and marketing plan. Furthermore, the plan specifies the conditions to proceed with the selling process.
The total balance of assets held for sale, by operating segment, are detailed below:
As of December 31, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Assets held for sale |
Banking
Colombia |
Banking
Panama |
Banking
El Salvador |
Banking
Guatemala |
Total |
| In millions of COP |
| Machinery and equipment |
5,563 |
|
4,522 |
|
- |
|
- |
|
10,085 |
|
| Cost |
5,660 |
|
4,532 |
|
- |
|
- |
|
10,192 |
|
| Impairment |
(97) |
|
(10) |
|
- |
|
- |
|
(107) |
|
| Real estate for residential purposes |
2,887 |
|
111,983 |
|
6,349 |
|
12,644 |
|
133,863 |
|
| Cost |
2,887 |
|
116,214 |
|
6,374 |
|
12,673 |
|
138,148 |
|
| Impairment |
- |
|
(4,231) |
|
(25) |
|
(29) |
|
(4,285) |
|
| Real estate different from residential properties |
182 |
|
29,612 |
|
- |
|
- |
|
29,794 |
|
| Cost |
182 |
|
29,787 |
|
- |
|
- |
|
29,969 |
|
| Impairment |
- |
|
(175) |
|
- |
|
- |
|
(175) |
|
| Total assets held for sale - cost |
8,729 |
|
150,533 |
|
6,374 |
|
12,673 |
|
178,309 |
|
| Total assets held for sale - impairment |
(97) |
|
(4,416) |
|
(25) |
|
(29) |
|
(4,567) |
|
Total assets held for sale(1) |
8,632 |
|
146,117 |
|
6,349 |
|
12,644 |
|
173,742 |
|
(1)For 2024 there are no assets related to investments held for sale.
As of December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Assets held for sale |
Banking
Colombia |
Banking
Panama |
Banking
El Salvador |
Banking
Guatemala |
Total |
| In millions of COP |
| Machinery and equipment |
9,238 |
|
2,464 |
|
- |
|
- |
|
11,702 |
|
| Cost |
9,300 |
|
2,473 |
|
- |
|
- |
|
11,773 |
|
| Impairment |
(62) |
|
(9) |
|
- |
|
- |
|
(71) |
|
| Real estate for residential purposes |
6,191 |
|
104,934 |
|
3,091 |
|
3,260 |
|
117,476 |
|
| Cost |
6,191 |
|
106,642 |
|
3,148 |
|
4,060 |
|
120,041 |
|
| Impairment |
- |
|
(1,708) |
|
(57) |
|
(800) |
|
(2,565) |
|
| Real estate different from residential properties |
5,406 |
|
24,867 |
|
- |
|
- |
|
30,273 |
|
| Cost |
5,947 |
|
24,980 |
|
- |
|
- |
|
30,927 |
|
| Impairment |
(541) |
|
(113) |
|
- |
|
- |
|
(654) |
|
| Total assets held for sale - cost |
21,438 |
|
134,095 |
|
3,148 |
|
4,060 |
|
162,741 |
|
| Total assets held for sale - impairment |
(603) |
|
(1,830) |
|
(57) |
|
(800) |
|
(3,290) |
|
Total assets held for sale(1) |
20,835 |
|
132,265 |
|
3,091 |
|
3,260 |
|
159,451 |
|
(1)For 2023 there are no assets related to investments held for sale.
Impairment losses are recognized for the difference between the carrying and recoverable amount of the asset.
NOTE 8. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
The following table presents information regarding the Bank’s investments in associates and joint ventures:
|
|
|
|
|
|
|
|
|
| Composition |
December 31, 2024 |
December 31, 2023 |
| In millions of COP |
Investments in associates(1) |
2,768,611 |
|
2,526,073 |
|
Investments in joint ventures(2) |
160,373 |
|
471,530 |
|
| Total investments in associates and joint ventures |
2,928,984 |
|
2,997,603 |
|
(1)As of December 31, 2024 and 2023, the amount includes investments in associates at fair value for COP 1,830,884 and COP 1,670,782, respectively, see Note 30. Fair value of assets and liabilities. Additionally, the amount includes investments in associates at equity method value for COP 937,727 and COP 855,291, respectively.
(2)All investments in joint ventures are accounted for using the equity method.
The following are the investments in associates that the Bank holds as of December 31, 2024 and 2023:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Company name |
Main activity |
Country |
December 31, 2024 |
|
December 31, 2023 |
|
% of Ownership
interest |
Carrying
amount |
|
% of Ownership
interest |
Carrying
amount |
|
| In millions of COP |
P.A Viva Malls(1) |
Development and operation of commercial spaces |
Colombia |
49.00 |
% |
1,817,503 |
|
|
49.00 |
% |
1,661,679 |
|
|
Protección S.A.(1) |
Administration of pension funds and severances |
Colombia |
20.58 |
% |
625,370 |
|
|
20.58 |
% |
594,105 |
|
* |
| P.A El Bosque |
Real estate ecosystems |
Colombia |
14.11 |
% |
85,863 |
|
* |
14.11 |
% |
57,120 |
|
* |
| Redeban Multicolor S.A. |
Network data transmission services |
Colombia |
20.36 |
% |
42,190 |
|
* |
20.36 |
% |
35,735 |
|
* |
| Titularizadora Colombiana S.A. Hitos. |
Mortgage portfolio securities |
Colombia |
26.98 |
% |
42,050 |
|
* |
26.98 |
% |
37,950 |
|
* |
| P.A El Otoño |
Real estate ecosystems |
Colombia |
16.30 |
% |
36,676 |
|
* |
16.30 |
% |
33,442 |
|
* |
| ACH Colombia S.A. |
Electronic transfer services |
Colombia |
19.94 |
% |
23,706 |
|
* |
19.94 |
% |
21,952 |
|
* |
| Patria Asset Management S.A. (before Gestoría Externa de Portafolios S.A.) |
Investment management service |
Colombia |
49.31 |
% |
20,428 |
|
|
49.31 |
% |
11,278 |
|
* |
| Servicio Salvadoreño de Protección, S. A. de C.V. |
Custodial services and transfer of monetary types |
El Salvador |
25.00 |
% |
13,382 |
|
* |
25.00 |
% |
10,223 |
|
* |
| P.A Distrito Vera |
Real estate ecosystems |
Colombia |
33.33 |
% |
13,325 |
|
|
33.33 |
% |
9,103 |
|
|
| Servicios Financieros, S.A. de C.V. |
Processing of financial transactions and electronic payment methods |
El Salvador |
49.78 |
% |
12,695 |
|
* |
49.78 |
% |
9,514 |
|
* |
Internacional Ejecutiva de Aviación S.A.S.(2) |
Aircraft and aircraft travel service |
Colombia |
37.50 |
% |
9,158 |
|
|
25.00 |
% |
6,093 |
|
* |
| P.A Boreal |
Real estate ecosystems |
Colombia |
20.00 |
% |
8,658 |
|
* |
20.00 |
% |
7,579 |
|
* |
| P.A Mirador de la Ciénaga. |
Real estate ecosystems |
Colombia |
13.00 |
% |
4,326 |
|
* |
13.00 |
% |
4,518 |
|
* |
| P.A La Felicidad |
Real estate ecosystems |
Colombia |
20.00 |
% |
4,067 |
|
* |
20.00 |
% |
6,938 |
|
* |
| Reintegra S.A.S. |
Collections and recovery of portfolio |
Colombia |
46.00 |
% |
3,520 |
|
|
46.00 |
% |
5,864 |
|
* |
| P.A Madrid II |
Real estate ecosystems |
Colombia |
20.00 |
% |
3,103 |
|
* |
20.00 |
% |
9,208 |
|
* |
| ACH de El Salvador, S. A. de C.V. |
Electronic transfer services |
El Salvador |
25.00 |
% |
1,544 |
|
* |
25.00 |
% |
1,554 |
|
* |
| Agricapital S.A.S. |
Financial services |
Colombia |
10.79 |
% |
991 |
|
* |
10.79 |
% |
1,262 |
|
* |
| Fideicomiso Locales Distrito Vera |
Real estate ecosystems |
Colombia |
33.33 |
% |
56 |
|
|
— |
% |
— |
|
|
Servicios de Identidad Digital S.A.S.(3) |
Digital services |
Colombia |
33.33 |
% |
— |
|
* |
33.33 |
% |
956 |
|
|
| Total, investments in associates |
|
|
2,768,611 |
|
|
|
2,526,073 |
|
|
(1)For further information, see table the changes in the carrying amount of associates of the Bank as of December 31, 2024 and 2023.
(2)The increase in the percentage of ownership is due to the purchase of 562,500 shares from Grupo Nutresa for COP 3,000 in April 2024.
(3)The value of the investment in the company is COP 0, due to the recognition of the equity method in the company up to its recoverable value.
(*)For the purposes of applying the equity method of accounting, financial statements as of November 30, 2024 and 2023 have been used. However, the Bank does not consider that any adjustments have to be made since no significant transactions took place between that date and December 31, 2024 and 2023.
The following table sets forth the changes in the carrying amount of associates of the Bank as of December 31, 2024 and 2023:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2024 |
December 31, 2023 |
|
In millions of COP |
|
P.A Viva Malls |
Protección S.A. |
Others |
Total |
P.A Viva Malls |
Protección S.A. |
Others |
Total |
| Balance at January 1, |
1,661,679 |
|
594,105 |
|
270,289 |
|
2,526,073 |
|
1,530,459 |
|
533,584 |
|
236,407 |
|
2,300,450 |
|
Equity method(1) |
155,824 |
|
94,180 |
|
61,189 |
|
311,193 |
|
128,028 |
|
62,442 |
|
40,234 |
|
230,704 |
|
| OCI (Equity method) |
- |
|
(8,464) |
|
1,642 |
|
(6,822) |
|
- |
|
(1,921) |
|
(1,039) |
|
(2,960) |
|
| OCI (Translation adjustment) |
- |
|
- |
|
3,395 |
|
3,395 |
|
- |
|
- |
|
(5,674) |
|
(5,674) |
|
| Purchase / capitalizations |
- |
|
- |
|
38,285 |
|
38,285 |
|
3,192 |
|
- |
|
35,561 |
|
38,753 |
|
Sells or refund of contributions |
- |
|
- |
|
(21,041) |
|
(21,041) |
|
- |
|
- |
|
(6,428) |
|
(6,428) |
|
Impairment loss(2) |
- |
|
- |
|
(26) |
|
(26) |
|
- |
|
- |
|
(2,017) |
|
(2,017) |
|
| Dividends |
- |
|
(55,558) |
|
(27,432) |
|
(82,990) |
|
- |
|
- |
|
(28,249) |
|
(28,249) |
|
| Others |
- |
|
1,107 |
|
(563) |
|
544 |
|
- |
|
- |
|
1,494 |
|
1,494 |
|
| Balance at December 31, |
1,817,503 |
|
625,370 |
|
325,738 |
|
2,768,611 |
|
1,661,679 |
|
594,105 |
|
270,289 |
|
2,526,073 |
|
(1)For further information see Note 25.5. Dividends and net income on equity investments.
(2)For 2024 and 2023, the Bank management performed a valuation, to establish the recoverables amounts based in value in use of Reintegra S.A.S., which amounted to COP 3,737 and COP 5,750, respectively, with a discount rate of 20.39% and 21.50%, respectively. As a result of the valuation, the recoverables amounts of the investment were lower than the carrying amount of each year, for this, the Bank recorded an impairment in the Consolidated Statement of Income for COP 26 and COP 2,017. For further information see Note 25.5. Dividends and net income on equity investments.
The following is additional information regarding the Bank’s most significant associates as of December 31, 2024 and 2023:
As of December 31, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Company name |
Assets
(unaudited) |
Liabilities
(unaudited) |
OCI
(unaudited) |
Income from
ordinary activities
(unaudited) |
Profits
(unaudited) |
| In millions of COP |
| P.A Viva Malls |
3,823,893 |
114,703 |
- |
761,198 |
487,123 |
| Protección S.A. |
3,194,045 |
752,834 |
38,953 |
1,884,277 |
446,532 |
As of December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Company name |
Assets
(unaudited) |
Liabilities
(unaudited) |
OCI
(unaudited) |
Income from
ordinary activities
(unaudited) |
Profits
(unaudited) |
| In millions of COP |
| P.A Viva Malls |
3,492,834 |
101,653 |
- |
849,928 |
327,838 |
| Protección S.A. |
2,955,547 |
666,280 |
80,088 |
1,597,171 |
303,460 |
The dividends received from the associate at fair value P.A Viva Malls for the year ended December 31, 2024 and 2023 are COP 121,977 and COP 104,623, respectively. These are included in the line Dividends and net income on equity investments in the Consolidated Statement of Income. Dividends are received in Protección S.A. for COP 55,558, effect of the recognition of the equity method, recognized as a reduction in the value of the investment.
The following are the joint ventures that the Bank holds as of December 31, 2024 and 2023:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Company name |
Main activity |
Country |
December 31, 2024 |
|
December 31, 2023 |
|
% of Ownership
interest |
Carrying
amount |
|
% of Ownership
interest |
Carrying
amount |
|
| In millions of COP |
Compañía de Financiamiento TUYA S.A.(1) |
Financing Services |
Colombia |
50.00 |
% |
95,106 |
|
|
50.00 |
% |
410,324 |
|
|
| P.A Laurel |
Renewable energies |
Colombia |
50.00 |
% |
27,835 |
|
|
50.00 |
% |
27,364 |
|
* |
| Puntos Colombia S.A.S. |
Administration of the customers loyalty |
Colombia |
50.00 |
% |
17,691 |
|
|
50.00 |
% |
10,922 |
|
* |
| Fondo de Capital Privado Ruta del Sol compartimento A |
Investment in infrastructure projects |
Colombia |
26.30 |
% |
10,597 |
|
* |
26.30 |
% |
10,588 |
|
* |
| P.A Blup |
Inventory finance and comprehensive logistics operation |
Colombia |
50.00 |
% |
3,888 |
|
|
50.00 |
% |
3,313 |
|
|
| Ecosistemas Digitales de Negocio S.A.S. |
Digital electronic billing services |
Colombia |
50.00 |
% |
3,182 |
|
|
50.00 |
% |
6,293 |
|
* |
P.A Coba(2)(3) |
Technological platform development |
Colombia |
51.78 |
% |
1,720 |
|
|
— |
% |
- |
|
|
P.A Acelera TI(2) |
IT talent development |
Colombia |
50.00 |
% |
279 |
|
|
— |
% |
- |
|
|
| Avicapital |
Purchase and sale of loans and receivables |
Colombia |
50.00 |
% |
75 |
|
* |
50.00 |
% |
- |
|
|
| P.A. Finsocial |
Purchase and sale of loans and receivables |
Colombia |
— |
% |
- |
|
|
50.00 |
% |
42 |
|
* |
P.A Reintegra(4) |
Collections and recovery of portfolio |
Colombia |
46.00 |
% |
- |
|
* |
46.00 |
% |
- |
|
* |
P.A Muverang(5) |
Sustainable mobility services |
Colombia |
33.33 |
% |
- |
|
* |
33.33 |
% |
2,684 |
|
|
| Total investments in joint venture |
|
|
160,373 |
|
|
|
471,530 |
|
|
(1)For further information, see table the changes in the carrying amount of joint ventures of the Bank as of December 31, 2024 and 2023.
(2)Investments acquired by Negocios Digitales Colombia S.A.S. during the year 2024.
(3)The investment is classified as a joint venture because the relevant decisions are made jointly and there is no control over it.
(4)In 2024 and 2023, the carrying amount at the end of the year is COP 0, because the amount of downstream transactions between Bancolombia S.A. and P.A Reintegra made during these years.
(5)In 2024, the value of the investment in the company is COP 0, due to the recognition of the equity method and impairment of the company.
(*)For the purposes of applying the equity method of accounting, financial statements as of November 30, 2024 and 2023 have been used. However, the Bank does not consider that any adjustments have to be made since no significant transactions took place between these dates and December 31, 2024 and 2023.
The following table sets forth the changes in the carrying amount of joint ventures of the Bank as of December 31, 2024 and 2023:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2024 |
December 31, 2023 |
|
In millions of COP |
|
Compañía de
financiamiento
Tuya S.A. |
Others |
Total |
Compañía de
financiamiento
Tuya S.A. |
Others |
Total |
| Balance at January 1, |
410,324 |
|
61,206 |
|
471,530 |
|
564,998 |
|
50,185 |
|
615,183 |
|
Equity method(1) |
(79,681) |
|
(8,940) |
|
(88,621) |
|
(110,600) |
|
(6,989) |
|
(117,589) |
|
| Purchase / capitalizations |
76,751 |
|
15,437 |
|
92,188 |
|
62,500 |
|
17,890 |
|
80,390 |
|
| Sells or refund of contributions |
- |
|
(403) |
|
(403) |
|
- |
|
(296) |
|
(296) |
|
(Impairment loss) / Recovery(2) |
(312,288) |
|
(2,033) |
|
(314,321) |
|
(106,574) |
|
416 |
|
(106,158) |
|
| Balance at December 31, |
95,106 |
|
65,267 |
|
160,373 |
|
410,324 |
|
61,206 |
|
471,530 |
|
(1)For further information, see Note 25.5. Dividends and net income on equity investments.
(2)During the year 2024 and 2023, the impairment loss relates mainly to the fact that the Bank's management requested a valuation of joint venture Tuya S.A. to establish the recoverable amount based in value in use of the previously mentioned joint ventures, which amounted to COP 85,993 and COP 425,494 with a 12.90% - 16.10% and 13.10% - 20.30% discount rate, respectively. As a result of the valuation, the recoverables amounts on investment were lower than the carrying amount, therefore, the Bank recorded an impairment in the Consolidated Statement of Income for COP 312,288 and COP 106,574, respectively. Additionally, for 2024, the Bank's management determined that due to its divestment decision in the P.A. Muverang, the recoverable amount is COP 0. As the recoverable amount was lower than the carrying amount, an impairment was recorded in the Consolidated Statement of Income for the period for COP 2,033. Additionally, for 2023, the Bank management performed a valuation, to establish the recoverable amount
based in value in use of Fondo de Capital Privado Ruta del Sol compartimento A, which amounted to COP 2,742, with a 36.03% discount rate. As a result of the valuation, the recoverable amount of the investment was higher than the carrying amount, for this, the Bank recognized a recovery of the impairment losses for COP 416. See Note 25.5. Dividends and net income on equity investments.
The following is additional information regarding the Bank’s most significant joint ventures as of December 31, 2024 and 2023:
As of December 31, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Company name |
Assets
(unaudited)(1)
|
Liabilities
(unaudited) |
Income from
ordinary activities
(unaudited) |
Loss
(unaudited)(2)
|
| In millions of COP |
| Compañía de financiamiento Tuya S.A. |
2,830,280 |
2,322,251 |
1,505,074 |
155,514 |
(1)Includes cash and cash equivalents for COP 317,389.
(2)Includes interest and valuation income for COP 704,535, credit impairment charges, net for COP 510,496, interest expenses for COP 305,343, depreciation and amortization for COP 29,329 and income tax revenue for COP 53,566.
As of December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Company name |
Assets
(unaudited)(1)
|
Liabilities
(unaudited) |
Income from
ordinary activities
(unaudited) |
Loss
(unaudited)(2)
|
| In millions of COP |
| Compañía de financiamiento Tuya S.A. |
3,827,631 |
3,313,741 |
2,205,538 |
221,199 |
(1)Includes cash and cash equivalents for COP 223,625.
(2)Includes interest and valuation income for COP 1,142,715, credit impairment charges, net for COP 949,125, interest expenses for COP 502,501, depreciation and amortization for COP 38,491 and income tax revenue for COP 131,265.
The accumulated other comprehensive income before tax of investments in associates and joint ventures as of December 31, 2024 and 2023, corresponds to COP 1,324 and COP 4,751, respectively.
As of December 31, 2024 and 2023, there are no restrictions on the ability of the associates and joint ventures to transfer funds to the Bank in the form of cash dividends. In the same way, there are no contingent liabilities incurred by the Bank regarding its interests in the aforementioned joint ventures and associates.
In the companies P.A El Bosque, P.A El Otoño, ACH Colombia S.A., P.A Mirador de la Ciénaga and Agricapital S.A.S. the participation of the Bank is less than 20%, however, it has participation in the Board of Directors and for this reason it is considered that it has significant influence over the decisions that may be taken in the company.
NOTE 9. INVESTMENT PROPERTIES
The table below sets forth the conciliation between the initial and ending balances of the market value of investment properties of Consolidated Statement of Financial Position at the end of the period:
|
|
|
|
|
|
|
|
|
|
December 31, 2024 |
December 31, 2023 |
| In millions of COP |
| Balance at the beginning of the year |
4,709,911 |
3,994,058 |
Acquisitions(1) |
682,334 |
294,569 |
| Subsequent expenditure recognized as an asset |
222,167 |
170,920 |
Sales/Write-offs(2) |
(156,697) |
|
(21,194) |
|
Amount reclassified (to) from other assets(3) |
(77,862) |
39,096 |
Gains on valuation(4) |
200,256 |
232,462 |
Balance at the end of the period(5) |
5,580,109 |
4,709,911 |
(1)In 2024 corresponds to PA Cedis Sodimac for COP 461,815 and of the Constellation real estate for COP 161,427.
(2)In 2024, corresponds mainly to the sale of the PA Polaris for COP 63,475, Lote B5 for COP 33,364, Local of the Molinos 4139 for COP 7,709 and Plaza de la Aduana for COP 5,032.
(3)In 2024 corresponds to property of Fondo Inmobiliario Colombia that were reclassified to the inventories category and in 2023 reclassified from the property and equipment category, considering the change of use of these assets.
(4)In 2023 the difference with the line Investment property valuation included in Other operating income corresponds to gains recognized in acquisitions. See Note 25.4. Other operating income - Investment property valuation and Others.
(5)Between December 31, 2024 and 2023, there were no transfers in and out of Level 3 fair value hierarchy related with investment properties. See Note 30. Fair value of assets and liabilities.
The valuation adjustments recorded by the Bank related to its investment properties are detailed below:
As of December 31, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Type of asset |
Balance at the
beginning of the
year |
Appraisals |
Net increase(1) |
Amount reclassified (to) from other asset(2) |
Amount reclassified from construction to finished(3) |
Adjusted fair
value at the end
of the year |
| In millions of COP |
| Buildings |
4,369,629 |
191,051 |
578,639 |
(77,862) |
18,819 |
5,080,276 |
| Lands |
340,282 |
9,205 |
169,165 |
- |
(18,819) |
499,833 |
| Total |
4,709,911 |
200,256 |
747,804 |
(77,862) |
- |
5,580,109 |
(1) The net increase in buildings corresponds mainly the purchase of PA Cedis Sodimac for COP 461,815, and Constellation property for COP 161,427.
(2) In 2024 corresponds to property of Fondo Inmobiliario Colombia that were reclassified to the inventories category because they are assets intended to be sold in the ordinary course of business.
(3) In 2024 the movement corresponds to the reclassification of properties that were under construction and have already been completed.
As of December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Type of asset |
Balance at the
beginning of the
year |
Appraisals |
Net increase (1)(2) |
Acquisitions
from business
combination(3)
|
Adjusted fair
value at the end
of the year |
| In millions of COP |
| Buildings |
3,870,706 |
194,608 |
265,219 |
39,096 |
4,369,629 |
| Lands |
123,352 |
37,854 |
|
179,076 |
|
- |
340,282 |
| Total |
3,994,058 |
232,462 |
444,295 |
39,096 |
4,709,911 |
(1)The increase in buildings corresponds mainly in Bancolombia for the purchase for COP 80,954, FCP Fondo Inmobiliario Colombia for COP 91,182, in addition to subsequent expenditure for investment properties under construction for COP 71,023.
(2)The increase in lands corresponds mainly to the entry of Nomad Central-2, P.A Calle 84 (2) and P.A Calle 84 (3) for COP 92,585 and the subsequent expenditure for COP 71,354.
(3)The amount reclassified from premises and equipment corresponds properties from FCP Fondo Inmobiliario Colombia that were transfers to investment property, because they are held for obtaining profits and capital appreciation.
Amounts recognized in the statement of income for the period.
The table sets forth the main income recorded by the Bank related to its investment properties:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2024 |
December 31, 2023 |
December 31, 2022 |
|
In millions of COP |
| Income from rentals |
325,286 |
|
228,325 |
|
157,511 |
|
| Operating expenses due to: |
60,334 |
|
39,191 |
|
40,288 |
|
| Investment properties that generated income through rentals |
37,394 |
|
28,813 |
|
21,267 |
|
| Investment properties that did not generate income through rentals |
22,940 |
|
10,378 |
|
19,021 |
|
Currently, there are no restrictions on the use or income derived from the buildings or lands that the Bank has as investment property.
The fair value of the Bank’s investment properties for the year ending at December 31, 2024 and 2023, has been recorded according to the assessment made by independent external consulting companies that have the appropriate capacity and experience in performing those assessments. The appraisers are either approved by the Property Market Auctions of Colombia or foreign appraisers, who are required to provide a second signature by a Colombia appraiser accredited by the Property Market Auctions.
Fair value appraisals are carried out in accordance with IFRS 13. The reports made by the external consulting company contain the description of the valuation methodologies used, and key assumptions such as: discount rates, calculation of applied expenses and income approach, among others. The fair value of the investment properties is based on the comparative market approach, which reflects the prices of recent transactions with similar characteristics. Upon determining the fair value of these investment properties, the greater and best use of these investment properties is their present use. For further information about measurement techniques and inputs used by consulting companies, see Note 30 Fair Value of assets and liabilities.
As of December 31, 2024 and 2023, the Bank does not have investment properties held under financial leases.
NOTE 10. PREMISES AND EQUIPMENT, NET
As of December 31, 2024 and 2023, the premises and equipment, net consisted of the following:
|
|
|
|
|
|
|
|
|
| Composition |
December 31, 2024 |
December 31, 2023 |
| In millions of COP |
| Premises and equipment for own use, net |
2,650,602 |
|
2,525,254 |
|
| Premises and equipment in operating leases, net |
3,255,462 |
|
3,997,280 |
|
| Total premises and equipment, net |
5,906,064 |
|
6,522,534 |
|
As of December 31, 2024
Premises and equipment for own use
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Premises and equipment for own use |
Balance at
January 1,
2024 |
Roll - forward |
Balance at
December 31,
2024 |
Additions(1) |
Expenses
depreciation and
impairment(2)
|
Disposals(3) |
Transfers(4) |
Effect of
changes in
foreign
exchange
rate |
| In millions of COP |
| Land |
|
|
|
|
|
|
|
| Cost |
517,405 |
|
- |
|
- |
|
(8,729) |
|
1,437 |
|
28,520 |
|
538,633 |
|
| Construction in progress |
|
|
|
|
|
|
|
| Cost |
83,633 |
|
27,273 |
|
- |
|
(19,945) |
|
(51,842) |
|
7,570 |
|
46,689 |
|
| Buildings |
|
|
|
|
|
|
|
| Cost |
1,740,005 |
|
14,187 |
|
- |
|
(17,843) |
|
42,645 |
|
97,040 |
|
1,876,034 |
|
| Accumulated depreciation |
(493,196) |
|
- |
|
(36,311) |
|
5,581 |
|
865 |
|
(51,608) |
|
(574,669) |
|
| Furniture and fixtures |
|
|
|
|
|
|
|
| Cost |
678,138 |
|
88,033 |
|
- |
|
(20,444) |
|
98 |
|
34,340 |
|
780,165 |
|
| Accumulated depreciation |
(415,517) |
|
- |
|
(42,332) |
|
15,163 |
|
(6) |
|
(22,020) |
|
(464,712) |
|
| Accumulated impairment |
- |
|
- |
|
(441) |
|
441 |
|
- |
|
- |
|
- |
|
| Computer equipment |
|
|
|
|
|
|
|
| Cost |
974,433 |
|
163,304 |
|
- |
|
(111,079) |
|
(1,857) |
|
48,143 |
|
1,072,944 |
|
| Accumulated depreciation |
(592,436) |
|
- |
|
(116,102) |
|
93,511 |
|
6 |
|
(31,407) |
|
(646,428) |
|
| Accumulated impairment |
- |
|
- |
|
(401) |
|
401 |
|
- |
|
- |
|
- |
|
| Vehicles |
|
|
|
|
|
|
|
| Cost |
33,980 |
|
4,809 |
|
- |
|
(5,174) |
|
445 |
|
2,374 |
|
36,434 |
|
| Accumulated depreciation |
(17,306) |
|
- |
|
(6,007) |
|
4,762 |
|
17 |
|
(1,276) |
|
(19,810) |
|
| Leasehold improvements |
|
|
|
|
|
|
|
| Cost |
16,637 |
|
33,848 |
|
- |
|
- |
|
(44,781) |
|
203 |
|
5,907 |
|
| Accumulated depreciation |
(522) |
|
- |
|
(23) |
|
- |
|
- |
|
(40) |
|
(585) |
|
| Total premises and equipment for own use - cost |
4,044,231 |
|
331,454 |
|
- |
|
(183,214) |
|
(53,855) |
|
218,190 |
|
4,356,806 |
|
| Total premises and equipment - accumulated depreciation |
(1,518,977) |
|
- |
|
(200,775) |
|
119,017 |
|
882 |
|
(106,351) |
|
(1,706,204) |
|
| Total premises and equipment - accumulated impairment |
- |
|
- |
|
(842) |
|
842 |
|
- |
|
- |
|
- |
|
| Total premises and equipment for own use, net |
2,525,254 |
|
331,454 |
|
(201,617) |
|
(63,355) |
|
(52,973) |
|
111,839 |
|
2,650,602 |
|
(1) Corresponds mainly to Bancolombia S.A due to:
Computer equipment, mainly: ATMs, laptops, central processing unit (CPU) and security cameras.
Furniture and fixtures, mainly: Condensing unit, modular system, handling unit and Chiller (complementary air conditioning equipment), power plant and cashier stand.
Leasehold improvements, mainly: Cosmocentro building, Carrera Primera Branch and Calle 76 Branch.
(2) See Note 26.3. Impairment, depreciation and amortization.
The impairment, mainly in Bancolombia S.A, corresponds to the procedure defined in the assets for obsolescence, accidents and others, which results in the write-off of the asset.
(3) Corresponds mainly to Bancolombia S.A in computer equipment due to obsolescence of ATMs and laptops.
(4) Corresponds mainly to Bancolombia S.A. for transfer to right-of-use assets due to completion of improvements and activation of contracts, the most significant improvements being in branches and activation due to completion of improvements of other assets.
Premises and equipment in operating leases
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Premises and equipment in operating leases |
Balance at
January 1,
2024 |
Roll - forward |
Balance at
December 31,
2024 |
| Additions |
Expenses
depreciation and
impairment(1)
|
Disposals |
Transfers |
Effect of
changes in
foreign
exchange
rate |
| In millions of COP |
| Furniture and fixtures |
|
|
|
|
|
|
|
| Cost |
2,091 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
2,091 |
|
| Accumulated depreciation |
(614) |
|
- |
|
(254) |
|
- |
|
- |
|
- |
|
(868) |
|
| Computer equipment |
|
|
|
|
|
|
|
| Cost |
228,161 |
|
73,678 |
|
- |
|
(15,015) |
|
(21,594) |
|
- |
|
265,230 |
|
| Accumulated depreciation |
(95,638) |
|
- |
|
(63,251) |
|
12,730 |
|
21,294 |
|
- |
|
(124,865) |
|
Vehicles(2) |
|
|
|
|
|
|
|
| Cost |
4,787,645 |
|
673,997 |
|
- |
|
(148,572) |
|
(1,246,104) |
|
- |
|
4,066,966 |
|
| Accumulated depreciation |
(924,365) |
|
- |
|
(369,475) |
|
30,259 |
|
310,489 |
|
- |
|
(953,092) |
|
| Total premises and equipment in operating leases - cost |
5,017,897 |
|
747,675 |
|
- |
|
(163,587) |
|
(1,267,698) |
|
- |
|
4,334,287 |
|
| Total premises and equipment - accumulated depreciation |
(1,020,617) |
|
- |
|
(432,980) |
|
42,989 |
|
331,783 |
|
- |
|
(1,078,825) |
|
| Total premises and equipment in operating leases, net |
3,997,280 |
|
747,675 |
|
(432,980) |
|
(120,598) |
|
(935,915) |
|
- |
|
3,255,462 |
|
(1)See Note 26.3. Impairment, depreciation and amortization
(2)The decrease is mainly due in Bancolombia S.A due to cancellations and transfers to inventories of vehicles leased.
Premises and equipment total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Premises and equipment total |
Balance at
January 1,
2024 |
Roll - forward |
Balance at
December 31,
2024 |
| Additions |
Expenses
depreciation and
impairment(1)
|
Disposals |
Transfers |
Effect of
changes in
foreign
exchange
rate |
| In millions of COP |
| Total premises and equipment - cost |
9,062,128 |
|
1,079,129 |
|
- |
|
(346,801) |
|
(1,321,553) |
|
218,190 |
|
8,691,093 |
|
| Total premises and equipment - accumulated depreciation |
(2,539,594) |
|
- |
|
(633,755) |
|
162,006 |
|
332,665 |
|
(106,351) |
|
(2,785,029) |
|
| Total premises and equipment - accumulated impairment |
- |
|
- |
|
(842) |
|
842 |
|
- |
|
- |
|
- |
|
| Total premises and equipment, net |
6,522,534 |
|
1,079,129 |
|
(634,597) |
|
(183,953) |
|
(988,888) |
|
111,839 |
|
5,906,064 |
|
(1)See Note 26.3. Impairment, depreciation and amortization.
As of December 31, 2023
Premises and equipment for own use
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Premises and equipment for own use |
Balance at
January 1,
2023 |
Roll - forward |
Balance at
December 31,
2023 |
| Additions |
Expenses
depreciation and
impairment(1)
|
Disposals |
Transfers |
Effect of
changes in
foreign
exchange
rate |
| In millions of COP |
| Land |
|
|
|
|
|
|
|
| Cost |
605,713 |
|
3,750 |
|
- |
|
(3,738) |
|
(39,665) |
|
(48,655) |
|
517,405 |
|
| Construction in progress |
|
|
|
|
|
|
|
| Cost |
51,839 |
|
46,846 |
|
- |
|
- |
|
- |
|
(15,052) |
|
83,633 |
|
| Buildings |
|
|
|
|
|
|
|
| Cost |
1,878,689 |
|
25,644 |
|
- |
|
(30,968) |
|
18,311 |
|
(151,671) |
|
1,740,005 |
|
| Accumulated depreciation |
(535,550) |
|
- |
|
(38,565) |
|
10,828 |
|
(11,916) |
|
82,007 |
|
(493,196) |
|
| Accumulated impairment |
- |
|
- |
|
(153) |
|
153 |
|
- |
|
- |
|
- |
|
| Furniture and fixtures |
|
|
|
|
|
|
|
| Cost |
709,894 |
|
57,565 |
|
- |
|
(29,474) |
|
(6,522) |
|
(53,325) |
|
678,138 |
|
| Accumulated depreciation |
(432,992) |
|
- |
|
(44,238) |
|
25,956 |
|
- |
|
35,757 |
|
(415,517) |
|
| Accumulated impairment |
- |
|
- |
|
(797) |
|
797 |
|
- |
|
- |
|
- |
|
| Computer equipment |
|
|
|
|
|
|
|
| Cost |
1,007,230 |
|
129,012 |
|
- |
|
(91,096) |
|
2,416 |
|
(73,129) |
|
974,433 |
|
| Accumulated depreciation |
(595,991) |
|
- |
|
(114,887) |
|
73,226 |
|
(4,100) |
|
49,316 |
|
(592,436) |
|
| Accumulated impairment |
- |
|
- |
|
(1,507) |
|
1,507 |
|
- |
|
- |
|
- |
|
| Vehicles |
|
|
|
|
|
|
|
| Cost |
31,713 |
|
9,967 |
|
- |
|
(6,709) |
|
2,489 |
|
(3,480) |
|
33,980 |
|
| Accumulated depreciation |
(19,506) |
|
- |
|
(5,331) |
|
5,650 |
|
(14) |
|
1,895 |
|
(17,306) |
|
| Leasehold improvements |
|
|
|
|
|
|
|
| Cost |
9,661 |
|
26,950 |
|
- |
|
- |
|
(19,436) |
|
(538) |
|
16,637 |
|
| Accumulated depreciation |
(627) |
|
- |
|
(25) |
|
- |
|
- |
|
130 |
|
(522) |
|
| Total premises and equipment for own use - cost |
4,294,739 |
|
299,734 |
|
- |
|
(161,985) |
|
(42,407) |
|
(345,850) |
|
4,044,231 |
|
| Total premises and equipment - accumulated depreciation |
(1,584,666) |
|
- |
|
(203,046) |
|
115,660 |
|
(16,030) |
|
169,105 |
|
(1,518,977) |
|
| Total premises and equipment - accumulated impairment |
- |
|
- |
|
(2,457) |
|
2,457 |
|
- |
|
- |
|
- |
|
| Total premises and equipment for own use, net |
2,710,073 |
|
299,734 |
|
(205,503) |
|
(43,868) |
|
(58,437) |
|
(176,745) |
|
2,525,254 |
|
(1)See Note 26.3. Impairment, depreciation and amortization.
Premises and equipment in operating leases
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Premises and equipment in operating leases |
Balance at
January 1,
2023 |
Roll - forward |
Balance at
December 31,
2023 |
| Additions |
Expenses
depreciation and
impairment(1)
|
Disposals |
Transfers |
Effect of
changes in
foreign
exchange
rate |
| In millions of COP |
| Furniture and fixtures |
|
|
|
|
|
|
|
| Cost |
2,091 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
2,091 |
|
| Accumulated depreciation |
(360) |
|
- |
|
(254) |
|
- |
|
- |
|
- |
|
(614) |
|
| Computer equipment |
|
|
|
|
|
|
|
| Cost |
150,969 |
|
66,833 |
|
- |
|
(4,463) |
|
14,822 |
|
- |
|
228,161 |
|
| Accumulated depreciation |
(66,577) |
|
- |
|
(49,364) |
|
3,855 |
|
16,448 |
|
- |
|
(95,638) |
|
| Vehicles |
|
|
|
|
|
|
|
| Cost |
4,718,405 |
|
1,156,419 |
|
- |
|
(79,280) |
|
(1,007,899) |
|
- |
|
4,787,645 |
|
| Accumulated depreciation |
(787,535) |
|
- |
|
(383,712) |
|
18,181 |
|
228,701 |
|
- |
|
(924,365) |
|
| Accumulated impairment |
- |
|
- |
|
(2,023) |
|
2,023 |
|
- |
|
- |
|
- |
|
| Total premises and equipment in operating leases - cost |
4,871,465 |
|
1,223,252 |
|
- |
|
(83,743) |
|
(993,077) |
|
- |
|
5,017,897 |
|
| Total premises and equipment - accumulated depreciation |
(854,472) |
|
- |
|
(433,330) |
|
22,036 |
|
245,149 |
|
- |
|
(1,020,617) |
|
| Total premises and equipment - accumulated impairment |
- |
|
- |
|
(2,023) |
|
2,023 |
|
- |
|
- |
|
- |
|
| Total premises and equipment in operating leases, net |
4,016,993 |
|
1,223,252 |
|
(435,353) |
|
(59,684) |
|
(747,928) |
|
- |
|
3,997,280 |
|
(1)See Note 26.3. Impairment, depreciation and amortization.
Premises and equipment total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Premises and equipment total |
Balance at
January 1,
2023 |
Roll - forward |
Balance at
December 31,
2023 |
| Additions |
Expenses
depreciation and
impairment(1)
|
Disposals |
Transfers |
Effect of
changes in
foreign
exchange
rate |
| In millions of COP |
| Total premises and equipment - cost |
9,166,204 |
|
1,522,986 |
|
- |
|
(245,728) |
|
(1,035,484) |
|
(345,850) |
|
9,062,128 |
|
| Total premises and equipment - accumulated depreciation |
(2,439,138) |
|
- |
|
(636,376) |
|
137,696 |
|
229,119 |
|
169,105 |
|
(2,539,594) |
|
| Total premises and equipment - accumulated impairment |
- |
|
- |
|
(4,480) |
|
4,480 |
|
- |
|
- |
|
- |
|
| Total premises and equipment, net |
6,727,066 |
|
1,522,986 |
|
(640,856) |
|
(103,552) |
|
(806,365) |
|
(176,745) |
|
6,522,534 |
|
(1)See Note 26.3. Impairment, depreciation and amortization.
As of December 31, 2024 and 2023, there were contractual commitments for the purchase of premises and equipment of COP 2,664 and COP 4,025, respectively. As of December 31, 2024, these commitments are mainly for branch projects, asset changes, and improvements to the Niquia Datacenter (data processing center).
As of December 31, 2024 and 2023, there was no premises and equipment pledged as collateral, or with ownership restrictions. Additionally, the assessment made by Bancolombia Group indicates there is no evidence of impairment of its premises and equipment.
As of December 31, 2024 and 2023, the amount of fully depreciated premises and equipment that is still in use is COP 735,090 and COP 673,376, respectively, mainly comprised of computer equipment, furniture and fixtures and office equipment, buildings and vehicles. The temporarily idle premises and equipment amounted to COP 97,055 in 2024 and COP 79,644 in 2023.
NOTE 11. LEASES
11.1. Lessor
Finance leases
The Bank has entered into lease agreements as the lessor. These lease arrangements involve machinery and equipment, computer equipment, vehicles, buildings and furniture and fixtures, and their terms range between one and thirty years, as follows:
As of December 31, 2024
|
|
|
|
|
|
|
|
|
| Period |
Gross investment in finance
lease receivable
|
Present value of minimum
payments
|
| In millions of COP |
| Less than 1 year |
1,443,191 |
|
1,253,099 |
|
| Between 1 and 5 years |
10,610,800 |
|
8,446,425 |
|
| Greater than 5 years |
31,988,317 |
|
17,592,080 |
|
| Total gross investment in finance lease receivable/ present value of minimum payments |
44,042,308 |
|
27,291,604 |
|
Less: Future financial income(1) |
(16,750,704) |
|
- |
|
Present value of payments receivable(2) |
27,291,604 |
|
27,291,604 |
|
| Minimum non-collectable payments impairment |
(1,088,272) |
|
(1,088,272) |
|
| Total |
26,203,332 |
|
26,203,332 |
|
(1)Future financial income: Total Gross Investment - Total Present Value of minimum payments.
(2)See Note 6. Loans and advances to customers, net.
As of December 31, 2023
|
|
|
|
|
|
|
|
|
| Period |
Gross investment in finance
lease receivable
|
Present value of minimum
payments
|
| In millions of COP |
| Less than 1 year |
1,481,313 |
|
1,257,859 |
|
| Between 1 and 5 years |
10,967,173 |
|
8,338,151 |
|
| Greater than 5 years |
34,066,937 |
|
17,681,047 |
|
| Total gross investment in finance lease receivable/ present value of minimum payments |
46,515,423 |
|
27,277,057 |
|
Less: Future financial income(1) |
(19,238,366) |
|
- |
|
Present value of payments receivable(2) |
27,277,057 |
|
27,277,057 |
|
| Minimum non-collectable payments impairment |
(1,024,575) |
|
(1,024,575) |
|
| Total |
26,252,482 |
|
26,252,482 |
|
(1)Future financial income: Total Gross Investment - Total Present Value of minimum payments.
(2)See Note 6. Loans and advances to customers, net.
Unsecured residual value(*)
The following table sets the unsecured residual values by type of asset as of December 31, 2024 and 2023:
|
|
|
|
|
|
|
|
|
| Type of asset |
December 31, 2024 |
December 31, 2023 |
| In millions of COP |
| Technological equipment |
58,357 |
|
49,990 |
|
| Vehicles |
15,966 |
|
14,243 |
|
| Machinery and equipment |
20,650 |
|
11,930 |
|
| Furniture and fixtures |
14 |
|
12 |
|
| Other assets |
1,862 |
|
1,417 |
|
| Total |
96,849 |
|
77,592 |
|
(*)The unsecured residual value is the part of the residual value of the leased asset, whose realization is not secured or is secured by a third party related to the lessor.
Amounts recognized as income for extensions
At the end of the reporting period, the following entries are recognized as income corresponding to contract extensions or automatic time extension of financial leasing contracts:
|
|
|
|
|
|
|
|
|
| Type of asset |
December 31, 2024 |
December 31, 2023 |
| In millions of COP |
| Technological equipment |
15,572 |
|
20,717 |
|
| Buildings |
9,254 |
|
8,088 |
|
| Machinery and equipment |
236 |
|
532 |
|
| Vehicles |
200 |
|
102 |
|
| Total |
25,262 |
|
29,439 |
|
As of December 31, 2024, 2023 and 2022, The Bank has recognized in its financial statements COP 3,559,814, COP 3,879,188, and COP 2,461,456, corresponding to financial leases income, respectively.
Operating leases
Some of the Bank’s subsidiaries lease assets to third parties under the lease modality. Assets provided through operating leases are recorded as premises and equipment. The terms established for these agreements range from six months to ten years.
The following table presents the information of minimum payments by lease to be received:
|
|
|
|
|
|
|
|
|
| |
December 31, 2024 |
December 31, 2023 |
| In millions of COP |
| Less than 1 year |
246,875 |
259,277 |
| Between 1 and 5 years |
186,465 |
524,293 |
| Greater than 5 years |
56,999 |
60,619 |
Total(1) |
490,339 |
844,189 |
(1)During 2024, Renting Colombia S.A.S. has increased the placement of financial leases, which has resulted in a decrease in operating leases.
As of December 31, 2024, 2023 and 2022, The Bank has recognized in its financial statements COP 795,179, COP 833,244 and COP 649,693 corresponding to operating leases income, respectively. Additionally, The Bank recognized other services related to the lease for COP 671,251, COP 660,442 and COP 541,436 respectively.
Risk management associated with leases
The Bank, in those companies offering leasing services, acting as lessor, has a comprehensive asset management model for those assets classified as property, plant and equipment. For the risk of non-payment of rent by the lessee, the model includes policies and guidelines in the origination of leasing contracts, where the lessee's payment capacity is assessed through financial analysis, historical payment behavior evaluation, and risk level. This model includes an impairment test that evaluates indicators that impact the assets, which is carried out annually. The test evaluates both external indicators (economic and legal), and internal ones (insurance, maintenance and used market sales) indicators that impact the assets and their environment are evaluated. Likewise, the calculation of residuals was updated to reflect the effect of the new macroeconomic conditions. Moreover, the Bank performs a detailed review process at the time of return of the asset by the lessees in order to guarantee their operating conditions. Additionally, the Bank employs experts apart from the sales team, who constantly monitor the conditions of the second-hand market, and carry out back-testing in order to determine the consistency of the residual value model, and periodically review the results together with key managers. All the above is complemented by agreements with suppliers, which allow the exchange of information, knowledge and, in some cases, the structuring of residual risk mitigation mechanisms.
In order to manage the risks associated with the assets, the Bank also employs an insurance department, and engages an international broker and insurance companies. They all serve as support to design and define the strategies for the different types of protection that cover the lessor's risks, assets and customers. In the vehicle rental business of Renting Colombia S.A.S., there is also a proprietary insurance model for a percentage of the vehicles in the active fleet, which covers partial and total losses due to damage and theft with company resources. At the same time, civil liability and assistance coverage are managed through insurance companies. This proprietary insurance model is managed through projected estimation strategies, monitoring the frequency of claims, and containment strategies through methodological support and the design and implementation of road safety programs.
Similarly, in the same vehicle rental business of Renting Colombia's, assets are managed with the goal of preserving commercial value through necessary maintenance, which avoids deterioration beyond that generated by regular use. Service indicators with suppliers are periodically reviewed in order to ensure their quality and compliance with the expected levels. Safe mobility strategies are also defined based on the permanent analysis of the road safety indicators. These strategies aim at ensuring the status and useful life of the asset.
11.2. Lessee
The Bank has entered into lease agreements as a lessee. These arrangements involve offices, branches and administrative offices as well as certain Computer equipment. As of December 31, 2024 and 2023, the rollforward of right-of-use assets was as follows:
As of December 31, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roll - forward |
|
| Right-of-use assets |
Balance at
January 01, 2024 |
Acquisitions |
Additions |
Expenses
depreciation(1)
|
Disposals |
Revaluation(2) |
Effect of changes
in foreign
exchange rate
|
Balance at
December 31, 2024 |
| In millions of COP |
| Buildings |
|
|
|
|
|
|
|
|
| Cost |
2,302,922 |
|
105,666 |
|
61,879 |
|
- |
|
(62,106) |
|
91,414 |
|
144,744 |
|
2,644,519 |
|
| Accumulated depreciation |
(706,786) |
|
- |
|
- |
|
(191,472) |
|
34,561 |
|
- |
|
(62,201) |
|
(925,898) |
|
| Computer equipment |
|
|
|
|
|
|
|
| Cost |
58,069 |
|
4,552 |
|
195 |
|
- |
|
(3,538) |
|
803 |
|
7,620 |
|
67,701 |
|
| Accumulated depreciation |
(34,936) |
|
- |
|
- |
|
(12,352) |
|
3,398 |
|
- |
|
(5,026) |
|
(48,916) |
|
| Furniture and fixtures |
|
|
|
|
|
|
|
| Cost |
2,762 |
|
5,083 |
|
- |
|
- |
|
(509) |
|
33 |
|
617 |
|
7,986 |
|
| Accumulated depreciation |
(2,607) |
|
- |
|
- |
|
(656) |
|
509 |
|
- |
|
(317) |
|
(3,071) |
|
| Vehicles |
|
|
|
|
|
|
|
|
| Cost |
19,755 |
|
89,733 |
|
- |
|
- |
|
(90,464) |
|
21 |
|
244 |
|
19,289 |
|
| Accumulated depreciation |
(5,134) |
|
- |
|
- |
|
(3,080) |
|
4,005 |
|
- |
|
(195) |
|
(4,404) |
|
| Total right-of-use assets – cost |
2,383,508 |
|
205,034 |
|
62,074 |
|
- |
|
(156,617) |
|
92,271 |
|
153,225 |
|
2,739,495 |
|
| Total right-of-use assets - accumulated depreciation |
(749,463) |
|
- |
|
- |
|
(207,560) |
|
42,473 |
|
- |
|
(67,739) |
|
(982,289) |
|
| Total right-of-use assets, net |
1,634,045 |
|
205,034 |
|
62,074 |
|
(207,560) |
|
(114,144) |
|
92,271 |
|
85,486 |
|
1,757,206 |
|
(1)See Note 26.3 Impairment, depreciation and amortization.
(2)The variation corresponds mainly to changes in the estimated term of buildings lease liabilities.
As of December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roll - forward |
|
| Right-of-use assets |
Balance at
January 01, 2023
|
Acquisitions |
Additions |
Expenses
depreciation(1)
|
Disposals |
Revaluation(2) |
Effect of changes
in foreign
exchange rate
|
Balance at
December 31, 2023 |
| In millions of COP |
| Buildings |
|
|
|
|
|
|
|
|
| Cost |
2,319,471 |
67,049 |
11,861 |
- |
(75,701) |
|
218,592 |
(238,350) |
2,302,922 |
| Accumulated depreciation |
(637,615) |
|
- |
- |
(198,156) |
|
41,560 |
- |
87,425 |
|
(706,786) |
| Computer equipment |
|
|
|
|
|
|
|
| Cost |
95,240 |
7,965 |
- |
- |
(30,650) |
(2,773) |
(11,713) |
58,069 |
| Accumulated depreciation |
(53,757) |
|
- |
- |
(17,043) |
|
29,864 |
- |
6,000 |
|
(34,936) |
|
| Furniture and fixtures |
|
|
|
|
|
|
|
| Cost |
4,449 |
620 |
- |
- |
(1,783) |
|
- |
|
(524) |
2,762 |
| Accumulated depreciation |
(4,291) |
|
- |
- |
(548) |
|
1,708 |
- |
524 |
|
(2,607) |
|
| Vehicles |
|
|
|
|
|
|
|
|
| Cost |
136,560 |
418,773 |
- |
- |
(539,293) |
|
4,419 |
(704) |
19,755 |
| Accumulated depreciation |
(32,949) |
|
- |
- |
(13,918) |
|
41,128 |
- |
605 |
|
(5,134) |
|
| Total right-of-use assets – cost |
2,555,720 |
|
494,407 |
|
11,861 |
|
- |
|
(647,427) |
|
220,238 |
|
(251,291) |
|
2,383,508 |
|
| Total right-of-use assets - accumulated depreciation |
(728,612) |
|
- |
|
- |
|
(229,665) |
|
114,260 |
|
- |
|
94,554 |
|
(749,463) |
|
| Total right-of-use assets, net |
1,827,108 |
|
494,407 |
|
11,861 |
|
(229,665) |
|
(533,167) |
|
220,238 |
|
(156,737) |
|
1,634,045 |
|
(1)See Note 26.3 Impairment, depreciation and amortization.
(2)The variation corresponds mainly to changes in the estimated term of buildings lease liabilities.
The following table sets forth the changes in lease liabilities as of December 31, 2024 and 2023:
As of December 31, 2024
|
|
|
|
|
|
| Concept |
Total |
| In millions of COP |
| Balance at January 01, 2024 |
1,773,610 |
|
| (+) New contracts |
114,425 |
|
(+/-) Reassessment of the lease liability(1) |
74,457 |
|
| (-) Payments |
(311,082) |
|
(+) Accrued Interest(2) |
136,924 |
|
(+/-) Effect of changes in foreign exchange rate(3) |
101,030 |
|
| Balance at December 31, 2024 |
1,889,364 |
|
(1)The variation corresponds mainly to changes in the estimated term of buildings lease liabilities.
(2)The difference of COP 1,378 with the interest expensive on lease liabilities recognized in the Consolidated Statement Income corresponds to the expense accrued for the difference between the book value of the right-of-use asset and the lease liability at the time of early termination of contracts.
(3)Corresponds to the increase in the market representative rate from COP 3,822.05 Colombian pesos in December 2023 to COP 4,409.15 Colombian pesos in December 2024.
As of December 31, 2023
|
|
|
|
|
|
| Concept |
Total |
| In millions of COP |
| Balance at January 01, 2023 |
1,900,268 |
| (+) New contracts |
75,345 |
(+/-) Reassessment of the lease liability(1) |
161,787 |
| (-) Payments |
(305,413) |
|
(+) Accrued Interest(2) |
123,175 |
(+/-) Effect of changes in foreign exchange rate(3) |
(181,552) |
| Balance at December 31, 2023 |
1,773,610 |
(1)The variation corresponds mainly to changes in the estimated term of buildings lease liabilities.
(2)The difference of COP 9,360 with the interest expensive on lease liabilities recognized in the Consolidated Statement Income corresponds to the expense accrued for the difference between the book value of the right-of-use asset and the lease liability at the time of early termination of contracts.
(3)Corresponds to the decrease in the market representative rate from COP 4,810.20 Colombian pesos in December 2022 to COP 3,822.05 Colombian pesos in December 2023.
The following table shows maturity analysis of lease liabilities as of December 31, 2024 and 2023:
As of December 31, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Type of assets |
Maturity less than 1 year |
Maturity between 1 and 3 years |
Maturity between 3 and 5 years |
Maturity more than 5 years |
Total lease liabilities |
| In millions of COP |
| Buildings |
20,467 |
|
71,155 |
|
220,050 |
|
1,551,740 |
|
1,863,412 |
|
| Computer equipment |
1,332 |
|
9,683 |
|
8,693 |
|
1,224 |
|
20,932 |
|
| Furniture and fixtures |
- |
|
890 |
|
3,954 |
|
- |
|
4,844 |
|
| Vehicles |
- |
|
176 |
|
- |
|
- |
|
176 |
|
| Total lease liabilities |
21,799 |
|
81,904 |
|
232,697 |
|
1,552,964 |
|
1,889,364 |
|
As of December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Type of assets |
Maturity less than 1 year |
Maturity between 1 and 3 years |
Maturity between 3 and 5 years |
Maturity more than 5 years |
Total lease liabilities |
| In millions of COP |
| Buildings |
17,345 |
58,438 |
230,397 |
1,441,288 |
1,747,468 |
| Computer equipment |
2,733 |
14,124 |
7,524 |
1,391 |
25,772 |
| Vehicles |
125 |
245 |
- |
- |
370 |
| Total lease liabilities |
20,203 |
72,807 |
237,921 |
1,442,679 |
1,773,610 |
The following table shows the weighted average rates and average useful life of right-of-use assets as of December 31, 2024 and 2023:
As of December 31, 2024
|
|
|
|
|
|
|
|
|
|
|
|
| Right-of-use assets |
Weighted average life |
Weighted average
remaining lease terms
|
Weighted average discount rates |
| Buildings |
222 months |
109 months |
7.11 |
% |
| Computer equipment |
82 months |
32 months |
7.52 |
% |
| Furniture and fixtures |
53 months |
53 months |
8.71 |
% |
| Vehicles |
49 months |
17 months |
10.44 |
% |
As of December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
| Right-of-use assets |
Weighted average life |
Weighted average
remaining lease terms
|
Weighted average discount rates |
| Buildings |
209 months |
99 months |
6.67 % |
| Computer equipment |
73 months |
31 months |
8.36 % |
| Vehicles |
51 months |
22 months |
9.81 % |
The following table shows the detail of leases in the Consolidated Statement of Income as of December 31, 2024 and 2023:
As of December 31, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Right-of-use assets |
Financial interest(1) |
Expenses depreciation(2) |
Short-term leases |
Leases for which the underlying asset is of low value |
Variable payments |
| In millions of COP |
| Buildings |
133,176 |
|
191,472 |
|
1,350 |
|
639 |
|
5,300 |
|
| Computer equipment |
2,170 |
|
12,352 |
|
169 |
|
9,098 |
|
- |
|
| Furniture and fixtures |
93 |
|
656 |
|
410 |
|
303 |
|
- |
|
| Vehicles |
107 |
|
3,080 |
|
5 |
|
59 |
|
- |
|
| Total |
135,546 |
|
207,560 |
|
1,934 |
|
10,099 |
|
5,300 |
|
(1)Includes the expense generated by the difference between the carrying amount of the asset for the right to use and the liability for leasing at the time of the early termination of lease contracts by COP 1,378, see Note 25.2 Interest expenses.
(2)See Note 26.3 Impairment, depreciation and amortization.
As of December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Right-of-use assets |
Financial interest(1) |
Expenses
depreciation(2)
|
Short-term leases |
Leases for which the underlying asset is of low value |
Variable payments |
| In millions of COP |
| Buildings |
109,800 |
198,156 |
983 |
235 |
7,577 |
| Computer equipment |
3,907 |
17,043 |
- |
6,545 |
- |
| Furniture and fixtures |
68 |
548 |
904 |
432 |
- |
| Vehicles |
40 |
13,918 |
51 |
- |
- |
| Total |
113,815 |
229,665 |
1,938 |
7,212 |
7,577 |
(1)Includes the expense generated by the difference between the carrying amount of the asset for the right to use and the liability for leasing at the time of the early termination of lease contracts by COP 9,360, see Note 25.2 Interest expenses.
(2) See Note 26.3 Impairment, depreciation and amortization.
The following table contains the minimum payments lease liabilities as of December 31, 2024 and 2023:
As of December 31, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Type of assets |
Maturity less than 1 year |
Maturity between 1 and 3 years |
Maturity between 3 and 5 years |
Maturity more than 5 years |
Total minimum payments lease liabilities |
| In millions of COP |
| Buildings |
24,464 |
87,714 |
318,197 |
2,530,561 |
2,960,936 |
| Computer equipment |
1,523 |
10,641 |
9,755 |
1,267 |
23,186 |
| Furniture and fixtures |
- |
986 |
4,625 |
- |
5,611 |
| Vehicles |
72 |
120 |
- |
- |
192 |
| Total minimum payments lease liabilities |
26,059 |
99,461 |
332,577 |
2,531,828 |
2,989,925 |
As of December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Type of assets |
Maturity less than 1 year |
Maturity between 1 and 3 years |
Maturity between 3 and 5 years |
Maturity more than 5 years |
Total minimum payments lease liabilities |
| In millions of COP |
| Buildings |
21,050 |
73,316 |
301,470 |
2,074,687 |
2,470,523 |
| Computer equipment |
2,964 |
16,263 |
1,550 |
8,323 |
29,100 |
| Vehicles |
193 |
206 |
- |
- |
399 |
| Total minimum payments lease liabilities |
24,207 |
89,785 |
303,020 |
2,083,010 |
2,500,022 |
NOTE 12. GOODWILL AND INTANGIBLE ASSETS, NET
Intangibles assets and goodwill net are as follows:
|
|
|
|
|
|
|
|
|
|
December 31, 2024 |
December 31, 2023 |
| In millions of COP |
| Goodwill |
9,017,419 |
|
7,818,125 |
|
| Intangible assets, net |
750,484 |
|
671,572 |
|
| Total intangible assets and goodwill, net |
9,767,903 |
|
8,489,697 |
|
12.1. Intangible assets
The following table sets forth the Bank’s intangible assets as of December 31, 2024 and 2023, including the reconciliation of initial and final balances of the cost and accrued amortization:
As of December 31, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cost |
Trademarks |
Licenses, software
and computer
applications |
Client
relationships |
Total |
| In millions of COP |
| Balance at January 1, 2024 |
22,596 |
1,409,836 |
440,636 |
1,873,068 |
| Acquisitions |
- |
|
211,456 |
|
- |
|
211,456 |
|
| Write off |
- |
|
(85,717) |
|
- |
|
(85,717) |
|
| Foreign currency translation adjustment |
3,471 |
|
119,874 |
|
67,686 |
|
191,031 |
|
| Balance at December 31, 2024 |
26,067 |
|
1,655,449 |
|
508,322 |
|
2,189,838 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Amortization |
Trademarks |
Licenses, software
and computer
applications |
Client
relationships |
Total |
| In millions of COP |
| Balance at January 1, 2024 |
22,596 |
741,765 |
437,135 |
1,201,496 |
| Write off |
- |
(76,876) |
|
- |
(76,876) |
|
Amortization expense(1) |
- |
168,647 |
1,493 |
170,140 |
| Foreign currency translation adjustment |
3,471 |
|
73,853 |
|
67,270 |
|
144,594 |
|
| Balance at December 31, 2024 |
26,067 |
907,389 |
505,898 |
1,439,354 |
|
|
|
|
|
| Intangible assets at December 31, 2024, net |
- |
748,060 |
2,424 |
750,484 |
(1)See Note 26.3. Impairment, depreciation and amortization.
As of December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cost |
Trademarks |
Licenses, software
and computer
applications |
Client
relationships |
Total |
| In millions of COP |
| Balance at January 1, 2023 |
28,438 |
|
1,361,258 |
|
554,558 |
|
1,944,254 |
|
| Acquisitions |
- |
|
352,248 |
|
- |
|
352,248 |
|
| Write off |
- |
|
(119,482) |
|
- |
|
(119,482) |
|
| Foreign currency translation adjustment |
(5,842) |
|
(184,188) |
|
(113,922) |
|
(303,952) |
|
| Balance at December 31, 2023 |
22,596 |
|
1,409,836 |
|
440,636 |
|
1,873,068 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Amortization |
Trademarks |
Licenses, software
and computer
applications |
Client
relationships |
Total |
| In millions of COP |
| Balance at January 1, 2023 |
28,437 |
|
765,339 |
|
547,947 |
|
1,341,723 |
|
| Write off |
- |
|
(119,482) |
|
- |
|
(119,482) |
|
Amortization expense(1) |
- |
|
210,333 |
|
1,984 |
|
212,317 |
|
| Foreign currency translation adjustment |
(5,841) |
|
(114,425) |
|
(112,796) |
|
(233,062) |
|
| Balance at December 31, 2023 |
22,596 |
|
741,765 |
|
437,135 |
|
1,201,496 |
|
|
|
|
|
|
| Intangible assets at December 31, 2023, net |
- |
|
668,071 |
|
3,501 |
|
671,572 |
|
(1)See Note 26.3. Impairment, depreciation and amortization.
As of December 31, 2024 and 2023, the assessment made by the Bank indicates there is no evidence of impairment of intangible assets.
As of December 31, 2024 and 2023, the Bank does not have intangible assets with restricted ownership, intangible assets pledged as collateral or contractual agreements for the acquisition of this class of assets.
Research and development costs
During the period ended at December 31, 2024, 2023 and 2022, the Bank incurred in research and development expenditures on non-capitalized intangible assets for COP 65,010, COP 64,363 and COP 40,229, respectively, recognized in the Consolidated Statement of Income. These costs were the result of the analysis design and implementation of the transformation projects, the most representative of which were: core transformation in Banistmo S.A. and Core Nequi Renewal (Colombia). The expenses were recorded mainly as fees in the line ‘Other administrative and general expenses’ of the Consolidated Statement of Income.
Intangibles which did not meet the criteria to be recognized as assets
During the period ended December 31, 2024, 2023 and 2022, the Bank recognized in the Consolidated Statement of Income the amount of COP 3,552, COP 1,026 and COP 49,079, respectively, related to expenditures which were not recognized as intangible assets. These expenses were not recorded as assets due to the lack of characteristics to be reliably identifiable, and those assets do not support critical processes to be recognized as intangible assets.
12.2 Goodwill
The following table presents the goodwill:
|
|
|
|
|
|
|
|
|
|
December 31, 2024 |
December 31, 2023 |
| In millions of COP |
| Balance at beginning of the year, net |
7,818,125 |
|
9,836,661 |
|
Effect of change in foreign exchange rate(1) |
1,199,294 |
|
(2,018,536) |
|
| Balance at end of the year, net |
9,017,419 |
|
7,818,125 |
|
(1)The market representative rate at the end of December 31, 2024, 2023 and 2022 is COP 4,409.15, COP 3,822.05 and COP 4,810.20, respectively. See Note 2.D.1. Functional currency, transactions and balances in foreign currency.
The Bank tests goodwill recognized as a result of business combinations for impairment at least annually using a process that begins with an estimation of the recoverable amount of a group of cash-generation units equal to the operating segment. Recoverable amount is determined by management by reference to market value, if available, by pricing models, or with the assistance of a valuation specialist. Determination of recoverable amount requires management to make assumptions and use estimates to forecast cash flow for periods that are beyond the normal requirements of management reporting; the assessment of the appropriate discount rate; estimation of the recoverable amount of cash-generation units; and the valuation of the separable assets of each business whose goodwill is being reviewed.
The key assumptions used by management in determining the recoverable amount as of December 31, 2024 and 2023 are:
As of December 31, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating segment |
Valuation methodology |
Key assumptions |
Discount rate (real)(1) |
Growth rate (real)(2) |
Goodwill 2024 |
| In millions of COP |
| Banking Panama |
Discounted Cash flow |
5 years plan |
10.50 |
% |
4.40 |
% |
6,733,971 |
|
Banking El Salvador(3) |
Discounted Cash flow |
5 years plan |
14.90% and 14.30% |
3.90 |
% |
1,243,711 |
|
| Banking Guatemala |
Discounted Cash flow |
5 years plan |
11.70 |
% |
5.10 |
% |
1,029,077 |
|
| Others segments |
Comparable multiples |
Multiples EV/ Revenue and EV/EBITDA |
Does not apply |
Does not apply |
10,660 |
|
| Total |
|
|
|
|
9,017,419 |
|
(1)The discount rate is the return that would be expected for an investment that generates cash flows similar to those that are expected to be obtained from the use of the CGU. CAPM (Capital Asset Pricing Model) methodology was used as a basis to determine this rate.
(2)This rate is equivalent to the nominal or real growth of the economy in Guatemala, Panama and El Salvador, which is considered an important concept for the growth of the banking industry.
(3)Corresponds to the discount rate used for the short and long term, respectively.
As of December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating segment |
Valuation methodology |
Key assumptions |
Discount rate (real)(1) |
Growth rate (real)(2) |
Goodwill 2023 |
| In millions of COP |
| Banking Panama |
Discounted Cash flow |
5 years plan |
10.90 |
% |
4.50 |
% |
5,837,310 |
|
Banking El Salvador(3) |
Discounted Cash flow |
5 years plan |
17.10% and 15.50% |
3.70 |
% |
1,078,105 |
|
| Banking Guatemala |
Discounted Cash flow |
5 years plan |
12.30 |
% |
4.80 |
% |
892,050 |
|
| Others segments |
Comparable multiples |
Multiples EV/ Revenue and EV/EBITDA |
Does not apply |
Does not apply |
10,660 |
|
| Total |
|
|
|
|
7,818,125 |
|
(1)The discount rate is the return that would be expected for an investment that generates cash flows similar to those that are expected to be obtained from the use of the CGU. CAPM (Capital Asset Pricing Model) methodology was used as a basis to determine this rate.
(2)This rate is equivalent to the nominal or real growth of the economy in Guatemala, Panama and El Salvador, which is considered an important concept for the growth of the banking industry.
(3)Corresponds to the discount rate used for the short and long term, respectively.
In 2024 and 2023, the Bank tested the aforementioned goodwill for impairment purposes at the following operating segment levels: Banking Panama, Banking El Salvador and Banking Guatemala. Each operating segment represents a group of cash generating units. Evaluating the goodwill impairment at an operating segment level ensures the alignment with the approach used by the CODM (Chief Operating Decision Maker) to make decisions about resources to be allocated to the segments and assess its performance. After the valuation, it was determined that there is no impairment loss for any of the cash-generating units mentioned above during 2024 and 2023.
Sensitivity analysis:
In order to assess the impact of changes in certain significant inputs such as the discount rate and the growth rate in the operating segments’ recoverable amount, the Bank undertook a sensitivity analysis of these inputs through alternative scenarios.
The tables below present the estimated recoverable amount of each operating segment obtained as a result of sensitivity analysis for the discount rate and growth rate in basis points (bips):
As of December 31, 2024
Banking Panama
|
|
|
|
|
|
|
|
|
|
|
|
|
+50 bips |
Discount rate |
-50 bips |
| Growth rate |
11.00 |
% |
10.50 |
% |
10.00 |
% |
| 4.40% |
12,069,096 |
13,061,970 |
14,232,692 |
|
|
|
|
|
-50 bips |
Growth rate |
+50bips |
| Discount rate |
3.90 |
% |
4.40 |
% |
4.90 |
% |
| 10.50% |
12,512,669 |
13,061,970 |
13,709,357 |
Banking El Salvador
|
|
|
|
|
|
|
|
|
|
|
|
|
+100 bips |
Discount rate |
-100 bips |
|
15.90% |
14.90% |
13.90% |
| Growth rate |
15.30% |
14.30% |
13.30% |
| 3.90% |
4,821,361 |
5,290,874 |
5,861,625 |
|
|
|
|
|
-50 bips |
Growth rate |
+50 bips |
| Discount rate |
3.40% |
3.90% |
4.40% |
14.90% and 14.30% |
5,201,761 |
5,290,874 |
5,388,987 |
Banking Guatemala
|
|
|
|
|
|
|
|
|
|
|
|
|
+50 bips |
Discount rate |
-50 bips |
| Growth rate |
12.20 |
% |
11.70 |
% |
11.20 |
% |
| 5.10% |
4,433,281 |
4,819,854 |
5,271,139 |
|
|
|
|
|
-50 bips |
Growth rate |
+50 bips |
| Discount rate |
4.60 |
% |
5.10 |
% |
5.60 |
% |
| 11.70% |
4,665,498 |
4,819,854 |
4,999,513 |
As of December 31, 2023
Banking Panama
|
|
|
|
|
|
|
|
|
|
|
|
|
+50 bips |
Discount rate |
-50 bips |
| Growth rate |
11.40% |
10.90% |
10.40% |
| 4.50% |
10,826,278 |
11,721,608 |
12,770,528 |
|
|
|
|
|
-50 bips |
Growth rate |
+50bips |
| Discount rate |
4.00% |
4.50% |
5.00% |
| 10.90% |
11,224,673 |
11,721,608 |
12,302,770 |
Banking El Salvador
|
|
|
|
|
|
|
|
|
|
|
|
|
+100 bips |
Discount rate |
-100 bips |
|
18.10 |
% |
17.10 |
% |
16.10 |
% |
| Growth rate |
16.50 |
% |
15.50 |
% |
14.50 |
% |
| 3.70% |
3,909,551 |
4,241,177 |
4,634,962 |
|
|
|
|
|
-50 bips |
Growth rate |
+50 bips |
| Discount rate |
3.20 |
% |
3.70 |
% |
4.20 |
% |
17.10% and 15.50% |
4,182,324 |
4,241,177 |
4,305,238 |
Banking Guatemala
|
|
|
|
|
|
|
|
|
|
|
|
|
+50 bips |
Discount rate |
-50 bips |
| Growth rate |
12.80% |
12.30% |
11.80% |
| 4.80% |
3,903,356 |
4,224,256 |
4,592,449 |
|
|
|
|
|
-50 bips |
Growth rate |
+50 bips |
| Discount rate |
4.30% |
4.80% |
5.30% |
| 12.30% |
4,090,025 |
4,224,256 |
4,377,661 |
The Bank considers goodwill as an asset with indefinite useful life.
12.3 Business combination
For 2024 and 2023 there were no business combinations, for 2022 the business combination effected by the Bank is below:
P.A. FAI CALLE 77
On June 4, 2021, Bancolombia S.A. entered into an agreement with CCLA Colombia S.A.S. for the conditional assignment of the fiduciary rights of the Trust named P.A. FAI Calle 77, which owns the Nomad 77 Building located in the city of Bogotá (Colombia), which is the first project built for Multifamily rental housing in Colombia. Bancolombia S.A. concluded that it has control over the P.A. FAI Calle 77 given that it has exposures, or rights, to variable returns from its involvement in the investee and also has the ability to use its power to affect returns from the rental housing activity, through its participation in executive committees, and has the capacity to direct the activity that most significantly affects returns of all business – namely, approval rights over the disposal of the real estate projects.
The transaction was completed on March 1, 2022, upon Bancolombia S.A. obtaining the registration that qualifies it as a lessor of real estate for urban housing from the “Secretaría de Habitat” of Bogota. This registration was the condition to which the transfer of the fiduciary rights was subject. The Bank also obtained control of the P.A. FAI Calle 77 Trust on March 1, 2022, and has an equity interest of 98.00%. This acquisition reflects the Bank's objective to evolve its value proposition based on the current needs of the market, seeking to provide a differential service in rental housing.
The consideration paid by Bancolombia S.A. was COP 56,968, which consisted of a cash advance of COP 29,025 on June 9, 2021 and settlement of an active financial leasing operation with the sellers for COP 27,943.
The acquisition of the P.A. FAI Calle 77 Trust was accounted for in accordance with the acquisition method of IFRS 3. The purchase price was assigned to the assets and liabilities acquired, based on their estimated fair values at the acquisition date.
The Bank opted to measure the non-controlling interest in the acquiree of 2.00% at fair value, which amounted to COP 1,166 at the date of acquisition.
The estimate of the fair value of the assets acquired and liabilities assumed was based on information available as of March 1, 2022. The Bank believes that this information provides a reasonable basis for determining fair values:
|
|
|
|
|
|
|
In millions of COP |
| Purchase Price Allocation |
|
| Pruchase price on June 9, 2021 |
56,968 |
| Non-controlling interest at fair value |
1,166 |
| TOTAL |
58,134 |
|
|
| Fair value of net assets acquired |
|
| ASSETS |
|
| Cash and cash equivalents |
799 |
| Accounts receivable |
299 |
| Premises and equipment, net |
3 |
| Investments property |
60,850 |
| Other assets |
78 |
| Total Assets |
62,029 |
|
|
| LIABILITIES |
|
| Accounts payable |
1,080 |
| Deferred tax |
283 |
| Other liabilities |
99 |
| Total Liabilities |
1,462 |
| Fair value of net assets acquired |
60,567 |
|
|
| Gain from a bargain purchase |
2,433 |
The acquisition of P.A. FAI Calle 77 Trust resulted in the recognition of a gain from a bargain purchase of COP 2,433, which was recognized in “Dividends and net income on equity investments” line item of the Consolidated Statement of Income. The amount of the identifiable net assets of the acquiree exceeds the fair value of the consideration transferred, plus the fair value of the non-controlling interest therein, due to the fact that the price was agreed 9 months before the effective transfer of control of the business, reflecting a valuation of the assets.
Acquisition-related cost
In connection with the acquisition, the Bank incurred costs which are recorded in the "Other administrative and general expenses" line item of the Consolidated Statement of Income.
NOTE 13. INCOME TAX
The income tax is recognized in each of the countries where the Bank has operations, in accordance with the tax regulations in force in each of the jurisdictions.
13.1 Components recognized in the Consolidated Statement of Income
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2024 |
December 31,
2023 |
December 31,
2022 |
| In millions of COP |
Current tax(1) |
|
|
|
| Fiscal term |
(1,814,435) |
|
(1,779,538) |
|
(2,644,173) |
|
Prior fiscal terms(2) |
161,501 |
46,791 |
39,137 |
| Total current tax |
(1,652,934) |
|
(1,732,747) |
|
(2,605,036) |
|
| Deferred tax |
|
|
|
Fiscal term (3) |
(660,591) |
|
(258,046) |
|
(80,663) |
|
Prior fiscal terms(2) |
(67,083) |
(23,966) |
|
— |
| Adjustments for consolidation purposes |
(11,728) |
82,204 |
|
(62,722) |
| Total deferred tax |
(739,402) |
|
(199,808) |
|
(143,385) |
|
Total income tax(4) |
(2,392,336) |
|
(1,932,555) |
|
(2,748,421) |
|
(1) The nominal income tax rate used in Colombia for the years 2024 and 2023 is 35%, and for the year 2022 it was 31%. The Colombian financial institutions of the Group liquidated some additional points in the income tax of 5% for the years 2024 and 2023, and 3% for the year 2022.
2) Mainly due to the effects of Sentence CE 26739 of January 25, 2024, in both Bancolombia S.A. and Renting Colombia S.A.S.; as well as for invoices received after the end of the year and industry and commerce tax paid prior to the filing of the income tax return.
3) The deferred tax asset of Nequi and Wompi was reversed during 2024 in compliance with the guidelines established in IAS 12 and the applicable regulatory provisions
(4) See table 13.3 Reconciliation of the effective tax rate.
13.2 Legal regulatory changes
In El Salvador, on March 14, 2024, Decree 969 was published in the Official Gazette with an amendment to article 4 of the Income Tax Law, which includes income obtained abroad among the income excluded from said tax.
13.3 Reconciliation of the effective tax rate
The reconciliation between total income tax expenses calculated at the current nominal tax rate and the tax expense recognized in the income statement for the periods ended December 31, 2024, 2023 and 2022 is detailed below:
|
|
|
|
|
|
|
|
|
|
|
|
| Reconciliation of the tax rate |
December 31,
2024 |
December 31,
2023 |
December 31,
2022 |
| In millions of COP |
| Accounting profit |
8,757,917 |
8,147,526 |
9,744,786 |
Applicable tax with nominal rate(1) |
(3,503,167) |
|
(3,259,011) |
|
(3,703,019) |
|
| Non-deductible expenses to determine taxable profit (loss) |
(378,428) |
|
(478,901) |
|
(425,458) |
|
| Accounting and non-tax expense (income) to determine taxable profit (loss) |
665,224 |
667,744 |
978,468 |
Differences in accounting bases(2) |
559,244 |
|
(106,648) |
|
(19,448) |
|
| Fiscal and non-accounting expense (income) to determine taxable profit (loss) |
(982,937) |
|
(652,607) |
|
(470,063) |
|
| Ordinary activities income exempt from taxation |
1,550,137 |
1,563,793 |
832,822 |
| Ordinary activities income not constituting income or occasional tax gain |
79,525 |
67,132 |
120,513 |
| Tax deductions |
209,076 |
156,543 |
374,233 |
| Goodwill Depreciation |
461 |
2,478 |
461 |
| Tax depreciation surplus |
212,694 |
223,901 |
162,111 |
| Untaxed recoveries |
(103,017) |
|
(64,516) |
|
(40,559) |
|
| Tax rate effect in other countries |
(293,596) |
|
(121,597) |
|
(319,825) |
|
| Prior fiscal terms |
94,418 |
22,825 |
39,137 |
| Tax discounts |
8,250 |
— |
— |
|
| Other effects of the tax rate by reconciliation between accounting profit and tax expense (income) |
(510,220) |
46,309 |
(277,794) |
|
| Total income tax |
(2,392,336) |
|
(1,932,555) |
|
(2,748,421) |
|
(1) The nominal income tax rate used in Colombia for the years 2024 and 2023 is 35%, and for the year 2022 it was 31%. The Colombian financial institutions of the Group liquidated some additional points in the income tax of 5% for the years 2024 and 2023, and 3% for the year 2022.
(2) Difference between the technical accounting frameworks in force and the full International Financial Reporting Standards (IFRS).
13.4 Components recognized in Other Comprehensive Income (OCI)
See Consolidated Statement of Comprehensive Income
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2024 |
| In millions of COP |
|
Amounts before taxes |
Deferred tax |
Net taxes |
| Remeasurement income related to defined benefit liability |
6,041 |
|
(4,747) |
|
1,294 |
|
| Unrealized gain Investments in equity instruments measured at fair value through other comprehensive income (FVTOCI) |
22,109 |
|
6,463 |
|
28,572 |
|
| Unrealized loss Investments in debt instruments measured at fair value through other comprehensive income (FVTOCI) |
14,814 |
|
8,422 |
|
23,236 |
|
| Loss on net investment hedge in foreign operations |
(742,930) |
|
307,656 |
|
(435,274) |
|
| Exchange differences arising on translating the foreign operations. |
2,978,351 |
|
- |
|
2,978,351 |
|
| Unrealized gain Cash flow hedge |
216 |
|
(87) |
|
129 |
|
| Unrealized loss on investments in associates and joint ventures using equity method |
(7,690) |
|
1,348 |
|
(6,342) |
|
| Net |
2,270,911 |
|
319,055 |
|
2,589,966 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2023 |
| In millions of COP |
|
Amounts before taxes |
Deferred tax |
Net taxes |
| Remeasurement income related to defined benefit liability |
(44,594) |
|
13,234 |
|
(31,360) |
| Unrealized loss Investments in equity instruments measured at fair value through other comprehensive income (FVTOCI) |
11,144 |
|
(246) |
|
10,898 |
| Unrealized gain Investments in debt instruments measured at fair value through other comprehensive income (FVTOCI) |
114,287 |
|
(21,023) |
|
93,264 |
| Loss on net investment hedge in foreign operations |
1,948,833 |
|
(772,755) |
|
1,176,078 |
|
| Exchange differences arising on translating the foreign operations. |
(4,963,913) |
|
- |
|
(4,963,913) |
| Unrealized gains on investments in associates and joint ventures using equity method |
(2,225) |
|
2,223 |
|
(2) |
|
| Net |
(2,936,468) |
(778,567) |
(3,715,035) |
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2022 |
| In millions of COP |
|
Amounts before taxes |
Deferred tax |
Net taxes |
| Remeasurement expense related to defined benefit liability |
69,249 |
|
(25,090) |
|
44,159 |
|
Unrealized gain Investments in equity instruments measured at fair value through other comprehensive income (FVTOCI)(1) |
33,354 |
|
(1,282) |
|
32,072 |
|
| Gains due to asset revaluation |
- |
|
(71) |
|
(71) |
|
| Unrealized gain Investments in debt instruments measured at fair value through other comprehensive income (FVTOCI) |
(172,385) |
|
7,843 |
|
(164,542) |
|
| Loss on net investment hedge in foreign operations |
(1,833,087) |
|
746,232 |
|
(1,086,855) |
|
| Exchange differences arising on translating the foreign operations. |
4,064,795 |
|
- |
|
4,064,795 |
|
| Unrealized gains on investments in associates and joint ventures using equity method |
(1,929) |
|
(1,221) |
|
(3,150) |
|
| Net |
2,159,997 |
|
726,411 |
|
2,886,408 |
|
(1) Includes income tax to partial payments of asset-backed securities transferred to retained earnings and reclassification of income tax on investments in associates that were transferred from retained earnings to OCI.
13.5 Deferred tax
In accordance with its financial projections, the companies from the Bank’s expects in the future to generate enough liquid income to offset the items recorded as deductible deferred tax. These estimates start from the financial projections that were prepared considering information from the Bank’s economic research records, the expected economic environment for the next five years. The main indicators on which the models are based are GDP growth, loans growth and interest rates. In addition to these elements, the long-term Group's strategy is taken into account.
The deferred tax asset and liability for each of the concepts that generated taxable or deductible temporary differences for the period ending December 31, 2024 are detailed below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2023 |
Effect on
Income
Statement |
Effect on
OCI |
Effect on
Equity(1)
|
Tax Made(2) |
Foreign
Exchange |
Adjustments for
consolidation
purposes
|
December 31,
2024 |
In millions of COP |
| Asset Deferred Tax: |
|
|
|
|
|
|
|
|
| Property and equipment |
5,982 |
|
350 |
|
- |
|
(11) |
|
- |
|
(3,586) |
|
(67) |
|
2,668 |
|
| Employee Benefits |
259,406 |
|
23,532 |
|
(4,747) |
|
- |
|
- |
|
4,410 |
|
- |
|
282,601 |
|
| Deterioration assessment |
416,452 |
|
20,417 |
|
- |
|
- |
|
- |
|
65,956 |
|
109,388 |
|
612,213 |
|
| Investments evaluation |
5,061 |
|
316 |
|
(118) |
|
- |
|
- |
|
19 |
|
- |
|
5,278 |
|
| Derivatives Valuation |
235,067 |
|
(230,193) |
|
- |
|
- |
|
- |
|
- |
|
1,189 |
|
6,063 |
|
Tax credits settlement (4) |
34,940 |
|
(29,859) |
|
- |
|
(2,690) |
|
- |
|
2,587 |
|
- |
|
4,978 |
|
| Financial Obligations |
— |
|
197,660 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
197,660 |
|
| Insurance operations |
13,319 |
|
19,541 |
|
- |
|
— |
|
- |
|
2,046 |
|
- |
|
34,906 |
|
| Net investment coverage in operations abroad |
528,438 |
|
(94,400) |
|
307,656 |
|
- |
|
(378,908) |
|
- |
|
- |
|
362,786 |
|
| Other deductions |
241,635 |
|
39,211 |
|
- |
|
- |
|
- |
|
9,438 |
|
- |
|
290,284 |
|
| implementation adjustment |
376,216 |
|
114 |
|
- |
|
- |
|
- |
|
25,500 |
|
- |
|
401,830 |
|
Total Asset Deferred Tax (3) |
2,116,516 |
|
(53,311) |
|
302,791 |
|
(2,701) |
|
(378,908) |
|
106,370 |
|
110,510 |
|
2,201,267 |
|
| Liability Deferred Tax: |
|
|
|
|
|
|
|
|
| Property and equipment |
(144,988) |
|
20,635 |
|
- |
|
- |
|
- |
|
(3,124) |
|
12,839 |
|
(114,638) |
|
| Deterioration assessment |
(113,391) |
|
(714,178) |
|
- |
|
- |
|
- |
|
(2,773) |
|
(143,478) |
|
(973,820) |
|
| Participatory titles evaluation |
(369,809) |
|
(25,930) |
|
15,003 |
|
- |
|
- |
|
2,742 |
|
— |
|
(377,994) |
|
| Derivatives evaluation |
(10,045) |
|
(71,636) |
|
(87) |
|
- |
|
- |
|
(1,179) |
|
572 |
|
(82,375) |
|
| Lease restatement |
(215,411) |
|
(106,402) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(321,813) |
|
| Investments in associates. Adjustment for equity method |
(79,584) |
|
7,552 |
|
1,348 |
|
(89) |
|
- |
|
38,139 |
|
7,829 |
|
(24,805) |
|
| Financial Obligations |
(179,947) |
|
179,496 |
|
- |
|
- |
|
- |
|
(105) |
|
- |
|
(556) |
|
| Goodwill |
(1,573,966) |
|
641 |
|
- |
|
- |
|
- |
|
(1,035) |
|
- |
|
(1,574,360) |
|
| Insurance operations |
(13,949) |
|
(21,287) |
|
- |
|
— |
|
- |
|
(2,143) |
|
- |
|
(37,379) |
|
| Properties received in payment |
(148,462) |
|
45,504 |
|
- |
|
- |
|
- |
|
(2,032) |
|
- |
|
(104,990) |
|
| Other deductions |
(366,557) |
|
11,242 |
|
- |
|
- |
|
- |
|
(47,944) |
|
- |
|
(403,259) |
|
| implementation adjustment |
(25) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(25) |
|
Total Liability Deferred Tax (3) |
(3,216,134) |
|
(674,363) |
|
16,264 |
|
(89) |
|
- |
|
(19,454) |
|
(122,238) |
|
(4,016,014) |
|
| Net Deferred Tax |
(1,099,618) |
|
(727,674) |
|
319,055 |
|
(2,790) |
|
(378,908) |
|
86,916 |
|
(11,728) |
|
(1,814,747) |
|
(1) Recognition of the valuation of the investment in Protection by Fiduciaria Bancolombia S.A. and Banca de Inversion Bancolombia S.A.
(2) Current tax arising from the exchange difference on payment of debt and liquidation of bonds that were associated as hedging instruments.
(3) The values revealed in the Unaudited Condensed Consolidated Interim Statement of Financial Position correspond to the sum of the net deferred tax per company.
(4) The deferred tax asset of Nequi and Wompi was reversed during 2024 in compliance with the guidelines established in IAS 12 and the applicable regulatory provisions.
13.6 Amount of temporary differences in subsidiaries, branches, associates over which deferred tax was not recognized is
In accordance with IAS 12, no deferred tax credit was recorded, because management can control the future moment in which such differences are reversed and this is not expected to occur in the foreseeable future.
|
|
|
|
|
|
|
|
|
|
December 31, 2024 |
December 31, 2023 |
| In millions of COP |
| Temporary differences |
|
|
| Local Subsidiaries |
(373,971) |
|
(1,378,775) |
|
| Foreign Subsidiaries |
(20,176,494) |
|
(17,696,145) |
|
13.7 Tax credits
For the 2024 period, a deferred tax asset was recognized since the Group companies will have future taxable profits in which they can charge this temporary difference.
The following is the detail of the fiscal losses and presumptive income excesses over net income in the Group's entities, which have not been used, as of December 31, 2024.
|
|
|
|
|
|
|
|
|
| Company |
Base |
Deferred tax
recognized asset |
| In millions of COP |
| Renting Colombia S.A.S. |
15,085 |
4,978 |
| Total |
15,085 |
4,978 |
13.8 Dividends
13.8.1 Dividend Payment
If the parent company or any of its subsidiaries were to distribute dividends, they would be subject to the tax regulations of each of the countries in which they are decreed and distributed. In the case of Colombian companies, dividends will be subject to the application of Articles 48 and 49 of the Tax Statute and consequently will be subject to withholding at source at the established rates, in accordance with the tax characteristics of each shareholder.
13.8.2 Dividends received from Subsidiary Companies
Considering the historical tax status of the dividends received by the Bank from its affiliates and national subsidiaries, it is expected that in the future dividends will be received on the basis of non-income tax. They will not be subject to withholding tax, taking into account that the Bank, its affiliates and national subsidiaries belong to the same business group.
13.9 Tax contingent liabilities and assets
In the determination of the effective current and deferred taxes subject to review by the tax authority, the relevant regulations have been applied in accordance with the interpretations made by the Group Bancolombia.
In Colombia due to the complexity of the tax system, ongoing amendments to the tax regulations, accounting changes with implications on tax bases and in general the legal instability of the country, the tax authority may at any time have different criteria than that of the Bank. Consequently, a dispute or inspection by the tax authority on a tax treatment may affect the Bank accounting of assets or liabilities for deferred or current taxes, in accordance with the requirements of IAS 12. However, based on the criteria established in the interpretation of IFRIC 23, the Bank did not recognize uncertain tax positions in its financial statements.
NOTE 14. OTHER ASSETS, NET
As of December 31, 2024 and 2023 the Bank’s other assets, net consist of:
|
|
|
|
|
|
|
|
|
| Other Assets, net |
December 31, 2024 |
December 31, 2023 |
| In millions of COP |
Tax advance(1) |
2,014,638 |
|
1,461,816 |
|
Other receivables(2) |
1,110,974 |
|
1,193,294 |
|
Marketable and non-marketable for sale assets(3) |
1,049,169 |
|
890,653 |
|
Prepaid expenses(4) |
907,620 |
|
713,505 |
|
Assets pledged as collateral (cash)(5) |
530,924 |
|
1,082,611 |
|
Receivables related to abandoned accounts(6) |
453,956 |
|
403,432 |
|
| Balance in credit card clearing house |
298,677 |
|
185,164 |
|
Accounts receivable from contracts with customers(7) |
257,262 |
|
259,516 |
|
| Receivable Sales of goods and service |
251,904 |
|
254,607 |
|
| Operating leases |
176,585 |
|
201,302 |
|
Other receivables of commission for letters of credit(8) |
95,008 |
|
207,327 |
|
| Debtors |
84,453 |
|
85,698 |
|
| Others |
556,044 |
|
595,799 |
|
| Total other assets |
7,787,214 |
|
7,534,724 |
|
| Allowance others |
(8,935) |
|
(6,688) |
|
| Total other assets, net |
7,778,279 |
|
7,528,036 |
|
(1) Mainly due to increase in income tax credit balance.
(2) Other accounts receivable is mainly associated with outstanding items with payment system networks , accounts receivable from derivatives and cash transactions, among others.
(3) Corresponds mainly to the income from marketable assets of Bancolombia Puerto Rico for COP 9,850.
(4) The variation is mainly generated by Bancolombia S.A.
(5) Mainly in Bancolombia S.A. due to fluctuations in the valuation of open positions and trading volumes of transactions requiring guarantee.
(6) In Bancolombia, corresponds to the application of Law 1777 of February 1, 2016, where established that entities holding balances in savings or checking accounts that are considered abandoned, must transfer these resources to the special fund created and administered by ICETEX for the granting of study credits and credits to promote the quality of Higher Education Institutions.
(7) See Note 25.3. Commissions.
(8) Decrease mainly in Banistmo S.A. in customer obligations for acceptance of associated letters of credit.
NOTE 15. DEPOSITS BY CUSTOMERS
The detail of the deposits of Bancolombia Group as of December 31, 2024 and 2023 is as follows:
|
|
|
|
|
|
|
|
|
| Deposits |
December 31, 2024 |
December 31, 2023 |
| In millions of COP |
|
|
Saving accounts(1)(2) |
124,636,994 |
108,971,334 |
Time deposits(3) |
109,760,722 |
98,686,516 |
| Checking accounts |
38,033,696 |
34,993,066 |
Other deposits(1) |
6,627,989 |
5,290,264 |
| Total deposits by customers |
279,059,401 |
247,941,180 |
(1) As of December 31, 2024 and 2023 includes Nequi Deposits by COP 4,449,420 and COP 2,924,906, respectively, the variation is mainly due to an increase in the number of customers and transactions.
(2) The increase is mainly explained by Bancolombia S.A and the 15.36% devaluation of the Colombian peso against the US dollar as of December 2023, which has an upward impact on the balances of foreign subsidiaries.
(3) The increase is mainly in Bancolombia S.A. in time deposits with maturities less than 6 months and between 6 months and 12 months.
The following table details the time deposits issued by Bancolombia Group:
As of December 31, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Time deposits |
Effective interest rate |
December 31, 2024 |
| Modality |
Minimum |
Maximum |
Carrying Value |
Fair value(1) |
| In millions of COP |
| Less than 6 months |
0.01% |
10.60% |
27,429,721 |
27,305,410 |
| Between 6 months and 12 months |
0.01% |
12.00% |
21,295,319 |
21,140,127 |
| Between 12 months and 18 months |
1.35% |
14.55% |
17,826,919 |
17,878,843 |
| Greater than 18 months |
0.01% |
17.65% |
43,208,763 |
43,839,953 |
| Total time deposits |
|
|
109,760,722 |
110,164,333 |
(1)See Note 30. Fair value of assets and liabilities.
As of December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Time deposits |
Effective interest rate |
December 31, 2023 |
| Modality |
Minimum |
Maximum |
Carrying Value |
Fair value(1) |
| In millions of COP |
| Less than 6 months |
0.10% |
15.52% |
17,641,158 |
17,494,878 |
| Between 6 months and 12 months |
0.50% |
17.32% |
18,422,400 |
18,314,065 |
| Between 12 months and 18 months |
0.85% |
20.52% |
17,523,847 |
17,647,508 |
| Greater than 18 months |
0.01% |
20.86% |
45,099,111 |
46,629,404 |
| Total time deposits |
|
|
98,686,516 |
100,085,855 |
(1)See Note 30. Fair value of assets and liabilities.
The detail of time deposits issued by Bancolombia Group by maturity is as follows:
As of December 31, 2024
|
|
|
|
|
|
|
|
|
| December 31, 2024 |
| Period |
Carrying value |
Fair value(1) |
| In millions of COP |
| Less than 1 year |
86,592,320 |
|
86,553,690 |
|
| Between 1 and 3 years |
10,868,175 |
|
10,919,972 |
|
| Between 3 and 5 years |
2,490,326 |
|
2,462,312 |
|
| Greater than 5 years |
9,809,901 |
|
10,228,359 |
|
| Total |
109,760,722 |
|
110,164,333 |
|
(1)See Note 30. Fair value of assets and liabilities.
As of December 31, 2023
|
|
|
|
|
|
|
|
|
| December 31, 2023 |
| Period |
Carrying value |
Fair value(1) |
| In millions of COP |
| Less than 1 year |
71,178,788 |
71,315,171 |
| Between 1 and 3 years |
13,715,792 |
13,949,647 |
| Between 3 and 5 years |
3,197,528 |
3,256,102 |
| Greater than 5 years |
10,594,408 |
11,564,935 |
| Total |
98,686,516 |
100,085,855 |
(1)See Note 30. Fair value of assets and liabilities.
NOTE 16. INTERBANK DEPOSITS AND REPURCHASE AGREEMENTS AND OTHER SIMILAR SECURED BORROWING
The following table sets forth information regarding the money market operations recognized as liabilities in Consolidated Statement of Financial Position:
|
|
|
|
|
|
|
|
|
| Interbank and repurchase agreements and other similar secured borrowing |
December 31, 2024 |
December 31, 2023 |
| In millions of COP |
| Interbank Deposits |
|
|
| Interbank liabilities |
716,493 |
|
606,141 |
|
| Total interbank |
716,493 |
|
606,141 |
|
| Repurchase agreements and other similar secured borrowing |
|
|
| Short selling operations |
155,973 |
|
273,791 |
|
| Temporary transfer of securities |
532,495 |
|
44,888 |
|
| Repurchase agreements |
372,004 |
|
151,616 |
|
Total Repurchase agreements and other similar secured borrowing(1) |
1,060,472 |
|
470,295 |
|
| Total money market transactions |
1,776,965 |
|
1,076,436 |
|
(1)Total repo liabilities have maturities of less than 30 days.
Offsetting of Repurchase and Resale Agreements
For the Bancolombia Group, substantially all repurchase and resale activities are transacted under legally enforceable repurchase agreements that give the Bank, in the event of default by the counterparty, the right to liquidate securities held with the same counterparty.
The Bank does not offset repurchase and resale transactions with the same counterparty in the Consolidated Statement of Financial Position.
The table below presents repurchases and resale transactions included in the Consolidated Statement of Financial Position at December 31, 2024 and 2023:
As of December 31, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets /
liabilities gross |
Amounts offset in
the statement of
financial position |
Net balance
presented in the
statement of financial
position |
Financial
instruments as
collaterals |
Assets /
liabilities
net |
| In millions of COP |
Securities purchased under resale agreements(1) |
5,725,166 |
|
- |
|
5,725,166 |
|
(5,725,166) |
|
- |
|
| Securities sold under repurchase agreements |
(1,060,472) |
|
- |
|
(1,060,472) |
|
1,060,472 |
|
- |
|
| Total repurchase and resale agreements |
4,664,694 |
|
- |
|
4,664,694 |
|
(4,664,694) |
|
- |
|
(1)The amount includes those presented as cash and cash equivalents for COP 5,722,948 and those presented as other assets for COP 2,218.
As of December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets /
liabilities gross |
Amounts offset in
the statement of
financial position |
Net balance
presented in the
statement of financial
position |
Financial
instruments as
collaterals |
Assets /
liabilities
net |
| In millions of COP |
Securities purchased under resale agreements(1) |
7,850,516 |
|
- |
|
7,850,516 |
|
(7,850,516) |
|
- |
|
| Securities sold under repurchase agreements |
(470,295) |
|
- |
|
(470,295) |
|
470,295 |
|
- |
|
| Total repurchase and resale agreements |
7,380,221 |
|
- |
|
7,380,221 |
|
(7,380,221) |
|
- |
|
(1)The amount includes those presented as cash and cash equivalents for COP 7,840,926 and those presented as other assets for COP 9,590.
For further information about offsetting of other financial assets and liabilities see Note 5. Financial assets investments and derivatives.
NOTE 17. BORROWINGS FROM OTHER FINANCIAL INSTITUTIONS
As of December 31, 2024 and 2023, the composition of the borrowings from other financial institutions measured at amortized cost is the following:
|
|
|
|
|
|
|
|
|
| Borrowings from other financial institutions |
December 31, 2024 |
December 31, 2023 |
| In millions of COP |
| Obligations granted by foreign banks |
10,619,033 |
|
9,139,834 |
|
Obligations granted by domestic banks(1) |
5,070,499 |
|
6,508,772 |
|
| Total borrowings from other financial institutions |
15,689,532 |
|
15,648,606 |
|
(1)Decrease due to prepayments of obligations mainly with Banco de Comercio Exterior de Colombia (Bancoldex), due to liquidity strategy.
Obligations granted by foreign banks
As of December 31, 2024
|
|
|
|
|
|
|
|
|
|
|
|
| Financial entity |
Rate Minimum |
Rate Maximum |
December 31, 2024 |
| In millions of COP |
Financing with Correspondent Banks and Multilateral Entities(1) |
1.50 |
% |
8.99 |
% |
9,959,214 |
|
| Banco Interamericano de Desarrollo (BID) |
8.47 |
% |
9.62 |
% |
614,946 |
|
| Banco Latinoamericano de Comercio Exterior (Bladex) |
5.80 |
% |
5.80 |
% |
44,873 |
|
| Total |
|
|
10,619,033 |
|
(1) In 2024, prepayments are made on loans with foreign banks with Barclays Bank PLC for USD50,000 and Bank of America for USD150,000 which were designated as hedges. See Note 5.3. Hedge accounting.
As of December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
| Financial entity |
Rate Minimum |
Rate Maximum |
December 31, 2023 |
| In millions of COP |
Financing with Correspondent Banks and Multilateral Entities(1) |
1.21 % |
10.06 % |
8,566,580 |
| Banco Interamericano de Desarrollo (BID) |
9.50 % |
10.64 % |
532,899 |
| Banco Latinoamericano de Comercio Exterior (Bladex) |
6.91 % |
6.91 % |
40,355 |
| Total |
|
|
9,139,834 |
(1) At Bancolombia S.A. USD200 million were designated as coverage of net investment abroad. See Note 5.3 Hedge accounting.
The maturities of the financial obligations with foreign entities as of December 31, 2024 and 2023 are the following:
|
|
|
|
|
|
|
|
|
| Foreign |
December 31, 2024 |
December 31, 2023 |
| In millions of COP |
| Amount expected to be settled: |
|
|
| No more than twelve months after the reporting period |
7,428,943 |
3,813,504 |
More than twelve months after the reporting period(1) |
3,190,090 |
5,326,330 |
| Total |
10,619,033 |
9,139,834 |
(1) In 2024, prepayments are made on loans with foreign banks with Barclays Bank PLC for USD50,000 and Bank of America for USD150,000 which were designated as hedges. See Note 5.3. Hedge accounting.
Obligations granted by domestic banks
As of December 31, 2024
|
|
|
|
|
|
|
|
|
|
|
|
| Financial entity |
Rate
Minimum |
Rate
Maximum |
December 31, 2024 |
| In millions of COP |
| Financiera de desarrollo territorial (Findeter) |
4.15% |
17.21% |
2,239,644 |
| Fondo para el financiamiento del sector agropecuario (Finagro) |
5.09% |
13.59% |
1,363,891 |
Banco de comercio exterior de Colombia (Bancoldex)(1) |
2.17% |
17.50% |
399,266 |
| Other private financial entities |
5.11% |
13.01% |
1,067,698 |
| Total |
|
|
5,070,499 |
(1)Decrease due to prepayments of obligations mainly with Banco de Comercio Exterior de Colombia (Bancoldex), due to liquidity strategy.
As of December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
| Financial entity |
Rate
Minimum |
Rate
Maximum |
December 31, 2023 |
| In millions of COP |
| Financiera de desarrollo territorial (Findeter) |
8.15% |
20.85% |
2,530,570 |
| Fondo para el financiamiento del sector agropecuario (Finagro) |
8.37% |
15.88% |
1,509,594 |
| Banco de comercio exterior de Colombia (Bancoldex) |
2.17% |
21.46% |
1,404,873 |
| Other private financial entities |
12.88% |
16.67% |
1,063,735 |
| Total |
|
|
6,508,772 |
The maturities of financial obligations with domestic banks as of December 31, 2024 and 2023, are as follows:
|
|
|
|
|
|
|
|
|
| Domestic |
December 31, 2024 |
December 31, 2023 |
| In millions of COP |
| Amount expected to be settled: |
|
|
| No more than twelve months after the reporting period |
679,069 |
767,470 |
More than twelve months after the reporting period(1) |
4,391,430 |
5,741,302 |
| Total |
5,070,499 |
6,508,772 |
(1) Decrease due to prepayments of obligations mainly with Banco de Comercio Exterior de Colombia (Bancoldex), due to liquidity strategy.
As of December 31, 2024 and 2023, there were some financial covenants, mainly regarding capital adequacy ratios, past due loans and allowances, linked to some of the aforementioned outstanding credit facilities. None of these covenants had been breached nor were the related obligations past due.
NOTE 18. DEBT INSTRUMENTS IN ISSUE
Duly authorized by the authority in each country bonds have been issued as follows:
As of December 31, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Issuer |
Currency |
Face value(1) |
Balance COP |
Rate Range |
Bancolombia S.A.(2)(3) |
Local |
COP |
2,253,761 |
2,244,212 |
7.80%-12.49% |
Bancolombia S.A.(4)(5)(6) |
Foreign |
USD |
1,247,766 |
5,553,607 |
5.20%-8.82% |
Banistmo S.A.(7) |
Foreign |
USD |
585,051 |
2,617,132 |
4.25%-6.35% |
Banco Agrícola S.A.(8) |
Foreign |
USD |
117,182 |
517,068 |
5.60%-7.70% |
| Bancolombia Puerto Rico Internacional Inc. |
Foreign |
USD |
51,734 |
246,083 |
5.15%-5.50% |
| Bancolombia Panamá S.A. |
Foreign |
USD |
20,338 |
95,070 |
5.00%-6.00% |
| Grupo Agromercantil Holding S.A. |
Foreign |
USD |
464 |
2,044 |
0.25%-7.25% |
| Total debt instruments in issue |
|
|
|
11,275,216 |
|
(1)Face value is in US thousands dollar for foreign currency bonds.
(2)The decrease is due to the maturity of bonds in local currency.
(3)The decrease in bond interest rates is due to the relationship with the IPC (Consumer Price Index) and IBR (Banking Reference Indicator) indicators.
(4)See Note 18.1. Issue of Bancolombia S.A. subordinary bonds.
(5) See Note 18.2. Repurchase Bonds maturing in 2025 and 2027 Bancolombia S.A..
(6) As of December 31, 2024, USD884,544 were designated as net investment coverage abroad. See Note 5.3. Hedge Accounting.
(7) See Note 18.3. Issue of Banistmo S.A. ordinary bonds.
(8) See Note 18.4. Issue of Banco Agrícola S.A. ordinary bonds
As of December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Issuer |
Currency |
Face value(1) |
Balance COP |
Rate Range |
| Bancolombia S.A. |
Local |
COP |
4,029,882 |
|
4,097,727 |
|
12.87%-21.06% |
Bancolombia S.A.(2) |
Foreign |
USD |
1,832,534 |
|
6,861,098 |
|
3.02%-7.03% |
Banistmo S.A.(3) |
Foreign |
USD |
679,395 |
|
2,626,235 |
|
3.00%-6.25% |
Banco Agrícola S.A.(4) |
Foreign |
USD |
162,700 |
|
623,568 |
|
5.58%-7.57% |
| Bancolombia Puerto Rico Internacional Inc. |
Foreign |
USD |
69,648 |
|
276,451 |
|
5.05%-5.50% |
| Bancolombia Panamá S.A. |
Foreign |
USD |
44,924 |
|
176,376 |
|
4.70%-6.10% |
| Grupo Agromercantil Holding S.A. |
Foreign |
USD |
555 |
|
2,121 |
|
0.25%-7.25% |
| Total debt instruments in issue |
|
|
|
14,663,576 |
|
|
(1)Face value is in US thousands dollar for foreign currency bonds.
(2)As of December 31, 2023, USD1,392,034 was designated as hedge of net asset in a foreign operation. See Note 5.3. Hedge Accounting.
(3)See Note 18.3. Issue of Banistmo S.A. ordinary bonds
(4)See Note 18.4. Issue of Banco Agrícola S.A. ordinary bonds
The following table shows the detail of the bonds classified by currency, term and type of issue:
As of December 31, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Issuer |
Less than
1 year |
Between
1 and 3 years |
Between
3 and 5 years |
Greater than 5 years |
Total amortized cost |
| In millions of COP |
| Local currency |
|
|
|
|
|
Subordinated bonds(1) |
- |
|
- |
|
- |
|
615,699 |
|
615,699 |
|
| Ordinary bonds |
- |
|
- |
|
- |
|
1,628,513 |
|
1,628,513 |
|
| Foreign currency |
|
|
|
|
|
Subordinated bonds(1) |
- |
|
- |
|
- |
|
5,516,940 |
|
5,516,940 |
|
| Ordinary bonds |
243,861 |
|
1,097,493 |
|
7,684 |
|
2,165,026 |
|
3,514,064 |
|
| Total |
243,861 |
|
1,097,493 |
|
7,684 |
|
9,926,178 |
|
11,275,216 |
|
(1)In the event of default of the Bank, the subordinated bonds, will be subordinated to the claims of depositors and all other creditors of the issuer, other than creditors whose claims rank equally with, or are junior to, the claims of the holders of the subordinated liabilities.
As of December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Issuer |
Less than
1 year |
Between
1 to 3 years |
Between
3 to 5 years |
Greater than 5 years |
Total amortized cost |
| In millions of COP |
| Local currency |
|
|
|
|
|
Subordinated bonds(1) |
- |
- |
- |
1,236,385 |
1,236,385 |
| Ordinary bonds |
- |
- |
165,589 |
2,695,753 |
2,861,342 |
| Foreign currency |
|
|
|
|
|
Subordinated bonds(1) |
- |
- |
- |
4,822,273 |
4,822,273 |
| Ordinary bonds |
106,707 |
1,375,723 |
137,613 |
4,123,533 |
5,743,576 |
| Total |
106,707 |
1,375,723 |
303,202 |
12,877,944 |
14,663,576 |
(1)In the event of default of the Bank, the subordinated bonds, will be subordinated to the claims of depositors and all other creditors of the issuer, other than creditors whose claims rank equally with, or are junior to, the claims of the holders of the subordinated liabilities.
18.1. Issue of Bancolombia S.A. subordinated bonds.
On June 24, 2024, the Bank issued subordinated bonds for USD800,000, maturing in 2034, which have an early redemption option that may be exercised after five years from the date of issue and a nominal coupon of 8.625% payable semi-annually on December 24 and June 24 of each year, beginning on December 24 of this year.
18.2. Repurchase Bonds maturing in 2025 and 2027 Bancolombia S.A.
On June 24, 2024, the Bank carried out a debt management operation by offering to the market a repurchase of the senior bonds due in 2025 and subordinated bonds due in 2027 for USD267,421 and USD283,632 respectively.
On July 2, 2024, the second repurchase cut of the debt management operation that began in June was met, for USD2,013 of the senior bonds due in 2025 and USD4,661 USD of the subordinated bonds due in 2027.
On November 12, 2024, the full redemption of the senior bonds due in 2025 was carried out for USD212,600.
On December 18, 2024, the Bank exercised the call option on the subordinated bonds due in 2029, which were fully redeemed for USD550,000.
The total nominal amount repurchased from the above transactions is USD1,320,327, of which USD1,036,695 was part of the net foreign investment hedging relationship, which is being discontinued in the same proportion. See Note 5.3 Hedge Accounting.
18.3 Issue of Banistmo S.A. ordinary bonds.
Banistmo S.A., a subsidiary of the Bank issued in 2024 bonds under the Revolving Bond Program, totaling USD106,868 with rates from 5.70% to 6.35% and terms from 1 year to 2 years. In the year 2023 issued bonds under the Revolving Bond Program, totaling USD58,062 with a term of 1 year each and rates between 6.00% and 6.25%.
18.4. Issue of Banco Agrícola S.A. ordinary bonds.
Banco Agrícola a subsidiary of the Bank issued ordinary bonds in 2024 for USD21,382 with rates from 7.00% to 7.05% and terms from 1 year to 1.5 years. In the year 2023 issued ordinary bonds for USD77,700 with rates from 6.68% to 7.25% and terms from 1.5 years to 8 years.
For information related to the disclosures of fair value of the debt securities in issue, see Note 30. Fair value of assets and liabilities.
The following is a schedule of the debt instruments in issue by maturity:
|
|
|
|
|
|
|
|
|
| Issuer |
December 31, 2024 |
December 31, 2023 |
| In millions of COP |
| Amount expected to be settled: |
|
|
| No more than twelve months after the reporting period |
1,297,811 |
3,368,076 |
| More than twelve months after the reporting period |
9,977,405 |
11,295,500 |
| Total |
11,275,216 |
14,663,576 |
As of December 31, 2024 and 2023, there were no financial covenants linked to the aforementioned securities in issue, except for some financial covenants related to the Banistmo S.A. social gender private placement bond. None of these covenants had been breached nor were the related obligations past due.
NOTE 19. EMPLOYEE BENEFIT PLANS
The following table shows liabilities relating to post-employment benefit and long-term benefit plans:
|
|
|
|
|
|
|
|
|
| Employee benefit plans |
December 31,
2024 |
December 31,
2023 |
| In millions of COP |
| 19.1 Defined benefit pension plan |
140,996 |
|
132,854 |
|
| 19.2 Severance obligation |
9,351 |
|
14,360 |
|
| 19.3 Retirement Pension Premium Plan and Executive Pension Plan Premium |
222,786 |
|
195,295 |
|
| 19.4 Other long term benefits |
581,168 |
|
543,210 |
|
| Total Post-employment and long-term benefit plans |
954,301 |
|
885,719 |
|
| Fair value Plan assets |
2,746 |
|
2,765 |
|
| Total Unfunded Post-employment and long-term benefit plans |
951,555 |
|
882,954 |
|
These benefits include all types of payments that the Bank provides to its employees. The recognition of liabilities related to post-employment and long-term employee benefit plans is based on actuarial computations which involve judgments and assumptions made by management (with the assistance of external actuaries) related to the future macroeconomic and employee demographic factors, among others, which will not necessarily coincide with the future outcome of such factors.
Post-employment benefits
19.1 Defined benefit pension plan
Colombia
Under Colombian law, employee pension obligations are managed as a defined contribution plan since 1990. The Bank’s legal retirement benefit obligation as of December 31, 2024 and 2023 relates to retired employees who rendered services to the Bank before the current regulations took effect. Under this unfunded plan, benefits are based on length of service and level of compensation. As of December 2024, 479 participants were covered by this plan, and as of December 2023, 498 participants.
For purposes of the projected assessment of the pension plan obligation, in the absence of an extensive market for high-quality corporate debt, the sovereign bond curve of the Colombian government is used, with maturity similar to the residual life of the obligation of the projected benefit. The net cost of pensions is accounted for in the Consolidated Statement of Income as “salaries and employee benefits” and includes the interest costs and cost of current service.
|
|
|
|
|
|
|
|
|
| Defined benefit pension plan and other benefits |
2024 |
2023 |
| In millions of COP |
| Present value of the obligation as of January 1 |
101,778 |
95,081 |
| Interest cost |
10,459 |
11,409 |
| Benefits paid |
(13,003) |
|
(12,237) |
|
| Net actuarial loss due to changes in assumptions |
2,229 |
7,025 |
|
| Net actuarial (gain) / loss due to plan experience |
(366) |
500 |
|
| Others |
2,150 |
- |
|
| Defined obligation, unfunded as of December 31 |
103,247 |
101,778 |
Panamá
The Chase Manhattan Bank Corporation, N.A. (formerly “HSBC Bank Panamá”, later merged with Banistmo S.A. in 2000) offered a defined benefit pension plan based on the average salaries paid during the 120 most recent months prior to the employee's retirement date and the years of employment service. The right to this plan was obtained after 10 years of service with the organization. This individual plan covered a certain group of employees who were hired by Chase Manhattan Bank Corporation, N.A. and it was not extended to employees of HSBC Bank Panama, now Banistmo S.A.
As of December 31, 2024, and 2023, there were 34 participants (7 participants with deferred benefits and 27 participants receiving benefits), and 37 participants (10 participants with deferred benefits and 27 participants receiving benefits), respectively.
|
|
|
|
|
|
|
|
|
| Defined benefit pension plan |
2024 |
2023 |
| In millions of COP |
| Present value of the obligation as of January 1 |
3,051 |
5,296 |
| Interest cost |
234 |
312 |
| Benefits paid from plan assets |
(524) |
|
(1,088) |
|
| Net actuarial loss / (gain) due to changes in assumptions |
117 |
|
(174) |
|
| Net actuarial gain due to plan experience |
(63) |
|
(361) |
|
| Foreign currency translation effect |
450 |
|
(934) |
| Defined obligation, funded as of December 31 |
3,265 |
3,051 |
The Bank, through its subsidiary Banistmo, has established a plan with assets to secure benefits promised by Banistmo to the employees entitled to participate in the Pension Plan for former Chase employees under the terms described above and to comply with Panama labor code, which specifies the terms of securing the payments to be made in the event of an employee’s termination (voluntary or involuntary) or upon retirement (termination indemnity plan).
Banistmo’s pension and post-retirement plan assets consider investments in fixed-term deposits and cash and due from banks, in order to reduce the investment risk. The plan assets are managed by a trustee (third party). Likewise, the assets allocation is periodically reviewed by Banistmo and, when necessary, adjusted according to the investment strategy. The plan's investment assets are measured at fair value using significant, unobservable market data and, therefore, are classified as Level 3.
The expected return on assets assumption represents the long term rate of return based on analysis of historical returns, historical asset class volatilities and the fund’s past experience.
The following table details the change in plan assets:
|
|
|
|
|
|
|
|
|
| Banistmo’s Plan assets |
2024 |
2023 |
| In millions of COP |
| Fair value of assets as of January 1 |
2,765 |
4,619 |
| Interest income on plan assets |
129 |
80 |
| Benefits paid |
(540) |
|
(1,105) |
|
| Foreign currency translation effect |
392 |
|
(829) |
| Fair value assets as of December 31 |
2,746 |
2,765 |
Guatemala
Banco Agromercantil Guatemala S.A. has established a retirement pension plan for its employees. Under this plan, the employees are entitled to receive a lifetime payment of 50% of their monthly nominal wage, if they are 70 years old and have 30 years of service, or if they are 65 years old and have 40 years of service. On the other hand, employees are entitled to receive a lifetime payment of 70% of their monthly nominal wage, if they are 70 years old and have 40 years of service, or they are 65 years old and have 45 years of service.
|
|
|
|
|
|
|
|
|
| Defined benefit pension plan |
2024 |
2023 |
| In millions of COP |
| Present value of the obligation as of January 1 |
28,025 |
30,878 |
| Current cost of service |
1,136 |
|
878 |
|
| Interest cost |
2,657 |
|
2,757 |
|
Past service cost(1) |
– |
|
(4,821) |
|
| Benefits paid |
(1,668) |
|
(1,764) |
|
Net actuarial (gain) / loss due to changes in assumptions(2) |
(556) |
|
5,544 |
|
| Net actuarial (gain) / loss due to plan experience |
(61) |
|
1,272 |
|
| Foreign currency translation effect |
4,951 |
|
(6,719) |
|
| Defined obligation, unfunded as of December 31 |
34,484 |
|
28,025 |
|
(1)Corresponds to the change in the computable age of the benefit, modified in the year 2023.
(2)The gain for the year 2024 was mainly due to the increase in the discount rate from 9.00% in 2023 to 9.10% in 2024.
19.2 Severance obligation
Colombia
Under Colombian labor regulations, employees hired before 1990 are entitled to receive severance in an amount equal to one month’s salary for each year of service. This benefit accumulates and is paid to the employees upon their termination or retirement from the Bank, calculated based on the employees’ last salary base; however, employees may request advances against this benefit at any time. In 1990, the Colombian government revised its labor regulations for new employees to permit companies, subject to the approval of the employees, to transfer this severance obligation annually to private pension funds (this scheme of employee benefits is known as the current severance obligation).
As of December 2024 and 2023, 82 and 114 participants, respectively, were covered by this plan.
The balances recognized in the Consolidated Statement of Financial Position are listed below:
|
|
|
|
|
|
|
|
|
| Severance obligation |
2024 |
2023 |
| In millions of COP |
| Present value of the obligation as of January 1 |
14,360 |
15,446 |
| Current cost of service |
267 |
357 |
| Interest cost |
1,116 |
1,566 |
| Benefits paid |
(5,369) |
(6,594) |
| Net actuarial loss due to changes in assumptions |
13 |
888 |
| Net actuarial (gain) / loss due to plan experience |
(1,036) |
2,697 |
| Defined obligation, unfunded as of December 31 |
9,351 |
14,360 |
19.3 Retirement Pension Premium Plan and Executive Pension Plan Premium
Colombia
Under Colombian labor regulations, employers and employees are entitled to negotiate private agreements. The Bank’s employees and its subsidiaries Valores Bancolombia S.A. Comisionista de Bolsa, Banca de Inversión Bancolombia S.A. Corporación Financiera and Fiduciaria Bancolombia S.A. Sociedad Fiduciaria participate in a defined benefit plan according to which they are entitled to receive, on the date of their retirement, a single payment.
El Salvador
By means of Decree 592 of 2013, under Salvadorian labor regulations, employees are entitled to receive 15 days of salary for each year of service. This benefit is payable upon retirement, resignation, unjustified dismissal, death and disability. As of December 31, 2024, and 2023, there were 3,023 and 2,927 participants respectively, covered by the plan.
Guatemala
Banco Agromercantil Guatemala S.A. has established a defined benefit plan for its employees. Under this plan, the employees are entitled to receive a one-off payment based on the number of years of service to the organization in the event of waiver before retirement. As of December 31, 2024, and 2023, there were 3,627 and 3,733 participants respectively, covered by the plan.
The annual change of the present value of the obligations of defined benefit plans is as follows:
|
|
|
|
|
|
|
|
|
| Retirement Pension Premium Plan |
2024 |
2023 |
| In millions of COP |
| Present value of the obligation as of January 1 |
195,295 |
|
176,816 |
|
| Current service cost |
20,632 |
|
18,427 |
|
| Interest cost |
18,157 |
|
17,338 |
|
| Benefits paid |
(22,004) |
|
(18,889) |
|
| Net actuarial loss / (gain) due to changes in assumptions |
1,046 |
|
(565) |
|
Net actuarial (gain) / loss due to plan experience(1) |
(6,103) |
|
24,238 |
|
Foreign currency translation effect(2) |
15,763 |
|
(22,070) |
|
| Defined obligation, unfunded as of December 31 |
222,786 |
|
195,295 |
|
(1)The actuarial gain in 2024 is mainly explained for Bancolombia S.A. by the departure of employees covered by the plan.
(2)Corresponds to Banagrícola S.A. y Filiales and Banco Agromercantil de Guatemala S.A. given higher devaluation between COP to USD currencies.
19.4 Other long term benefits
In addition to legal benefits and the aforementioned post-employment benefits, the Bank grants to its employees other benefits based on the employees’ seniority. For the periods ended December 31, 2024 and December 31, 2023, the reconciliation of the other long term benefits is set below:
|
|
|
|
|
|
|
|
|
| Other long term benefits |
2024 |
2023 |
| In millions of COP |
| Present value of the obligation as of January 1 |
543,210 |
|
446,473 |
|
| Current service cost |
57,653 |
|
48,790 |
|
| Interest cost |
56,157 |
|
54,878 |
|
| Benefits paid |
(62,762) |
|
(55,257) |
|
Net actuarial (gain) / loss due to changes in assumptions(1) |
(8,083) |
|
38,497 |
|
Net actuarial (gain) / loss due to plan experience(2) |
(11,655) |
|
18,721 |
|
| Foreign currency translation effect |
6,648 |
|
(8,892) |
|
| Defined obligation, unfunded as of December 31 |
581,168 |
|
543,210 |
|
(1)In the case of Bancolombia S.A., in 2024 the discount rate decreased from 11.75% to 11.00% and the nominal inflation rate from 6.35% to 5.40%, generating an actuarial gain of COP 8,394.
(2)Mainly in Bancolombia S.A. as the effective salary was slightly below expectations.
Defined contribution plans
The expense recognized in the line “Salaries and employee benefits” of the Consolidated Statement of Income for defined contribution plans, for current severance regimen and pension benefits, is as follows:
|
|
|
|
|
|
|
|
|
| Defined contribution plans |
2024 |
2023 |
| In millions of COP |
| Pension |
318,988 |
|
286,621 |
|
| Current severance regimen |
92,729 |
|
82,963 |
|
| Total |
411,717 |
|
369,584 |
|
The economic assumptions used in the determination of the present value of the defined benefit plans, in nominal terms, are as follows:
Colombia
|
|
|
|
|
|
|
|
|
|
|
|
| Main projected assumptions |
December 31, 2024 |
December 31, 2023 |
|
| Discount rate |
11.00 % |
11.75 |
% |
|
| Rate of wage increase |
7.90 % |
8.85 % |
|
| Projected inflation |
5.40 % |
6.35 % |
|
| Rate of pension increase |
5.40 % |
6.35 |
% |
|
Bancolombia Panamá
|
|
|
|
|
|
|
|
|
|
|
|
| Main projected assumptions |
December 31, 2024 |
December 31, 2023 |
|
| Discount rate |
6.50 % |
7.00 |
% |
|
| Rate of wage increase |
2.00 % |
2.00 % |
|
| Projected inflation |
2.00 % |
2.00 |
% |
|
Banistmo
|
|
|
|
|
|
|
|
|
|
|
|
| Main projected assumptions |
December 31, 2024 |
December 31, 2023 |
|
| Discount rate |
7.00 % |
7.60 |
% |
|
| Expected long-term rate of return on plan assets |
5.40 % |
2.20 |
% |
|
El Salvador
|
|
|
|
|
|
|
|
|
|
|
|
| Main projected assumptions |
December 31, 2024 |
December 31, 2023 |
|
| Discount rate |
5.20 |
% |
6.20 |
% |
|
| Rate of wage increase |
2.50 |
% |
2.50 |
% |
|
| Projected inflation |
1.50 |
% |
1.50 |
% |
|
Guatemala
|
|
|
|
|
|
|
|
|
|
|
|
| Main projected assumptions |
December 31, 2024 |
December 31, 2023 |
|
| Discount rate |
9.10 % |
9.00 |
% |
|
| Rate of wage increase |
5.00 % |
5.00 |
% |
|
| Projected inflation |
4.00 % |
4.00 |
% |
|
In 2024, assumptions regarding future longevity have been based on mortality tables, which reflect average ages of mortality from 20-60 years. The rate used to discount the obligation of the defined benefit plan to reflect the duration of the labor liabilities as of December 2024 corresponds to the yield of sovereign bonds of each country where the plan is established, either Colombia, Panama, Guatemala and El Salvador, as applicable, since the market transactions of these countries involving corporate bonds of high quality have no high levels of activity. The assumption of the rate of inflation is based on the long term projection of the Central Bank of Colombia, Panama, Guatemala and El Salvador.
The nature of the risks related to the obligations aforementioned are summarized below:
|
|
|
|
|
|
| Investment risk |
The present value of the obligation for the defined benefits plan is calculated using a discount rate determined with reference to high quality sovereign yields of each country. Currently, the plan includes investment in financial instruments that are not vulnerable to market risks |
| Interest rate risks |
A reduction of the bond interest rates will increase the obligation of the plan |
| Longevity risk |
The present value of the obligation of the defined benefit plan is calculated with reference to the highest estimate of the mortality of participants during their time of employment. An increase in the life expectancy of the participants will increase the plan obligation |
| Salary risk |
The present value of the obligation of the benefit plan is calculated with reference to the future salaries of the participants. As such, an increase in the participants’ wages will increase the obligation of the plan |
Estimated payment of future benefits
The payments of benefits, which reflect future service rendered, are considered to be paid as follows:
|
|
|
|
|
|
|
|
|
| Years |
Pension Benefits |
Other benefits |
| In millions of COP |
| 2025 |
15,775 |
|
94,112 |
|
| 2026 |
15,866 |
|
102,009 |
|
| 2027 |
15,726 |
|
94,663 |
|
| 2028 |
15,638 |
|
106,651 |
|
| 2029 |
15,281 |
|
99,247 |
|
| 2030 to 2034 |
68,560 |
|
524,305 |
|
Sensitivity analysis
In presenting the sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same method used to calculate the defined benefit obligation (DBO) recognized in the Statement of Financial Position. Obligations and expenses will change in the future as a result of future changes in the methods of projection and assumption, participant information, plan provisions and regulations, or as resulting from future gains and losses.
There were no changes in the methods and assumptions used in preparing the sensitivity analyses from prior years.
Colombia
Defined benefit pension plan
|
|
|
|
|
|
|
|
|
|
|
|
| Assumption |
Value |
(Increase/Decrease) |
Effect on DBO |
| In millions of COP |
| Discount rate |
11.50 |
% |
0.50% increase |
(2,916) |
|
| Discount rate |
10.50 |
% |
0.50% decrease |
3,089 |
|
| Pension increases |
5.90 |
% |
0.50% increase |
3,456 |
|
| Pension decreases |
4.90 |
% |
0.50% decrease |
(3,285) |
|
| Mortality Table |
RV-08 ("Rentistas Válidos") |
One year increase in life expectancy |
4,245 |
|
| Mortality Table |
RV-08 ("Rentistas Válidos") |
One year decrease in life expectancy |
36 |
|
Retirement Pension Premium Plan
|
|
|
|
|
|
|
|
|
|
|
|
| Assumption |
Value |
(Increase/Decrease) |
Effect on DBO |
| In millions of COP |
| Discount rate |
11.50 |
% |
0.50% increase |
(5,630) |
|
| Discount rate |
10.50 |
% |
0.50% decrease |
6,119 |
|
| Salary increases |
8.40 |
% |
0.50% increase |
6,304 |
|
| Salary decreases |
7.40 |
% |
0.50% decrease |
(5,840) |
|
Severance obligation
|
|
|
|
|
|
|
|
|
|
|
|
| Assumption |
Value |
(Increase/Decrease) |
Effect on DBO |
| In millions of COP |
| Discount rate |
10.00 |
% |
0.50% increase |
(114) |
|
| Discount rate |
9.00 |
% |
0.50% decrease |
117 |
|
| Salary increases |
8.40 |
% |
0.50% increase |
286 |
|
| Salary decreases |
7.40 |
% |
0.50% decrease |
(280) |
|
Panamá
Defined benefit pension plan
|
|
|
|
|
|
|
|
|
|
|
|
| Assumption |
Value |
(Increase/Decrease) |
Effect on DBO |
| In millions of COP |
| Discount rate |
7.50 |
% |
0.50% increase |
(106) |
|
| Discount rate |
6.50 |
% |
0.50% decrease |
113 |
|
| Mortality Table |
RP-2000 |
One year increase in life expectancy |
102 |
|
Guatemala
Defined Benefit Pension Plan
|
|
|
|
|
|
|
|
|
|
|
|
| Assumption |
Value |
(Increase/Decrease) |
Effect on DBO |
| In millions of COP |
| Discount rate |
9.60 |
% |
0.50% increase |
(2,780) |
|
| Discount rate |
8.60 |
% |
0.50% decrease |
3,179 |
|
| Salary increases |
5.50 |
% |
0.50% increase |
2,097 |
|
| Salary decreases |
4.50 |
% |
0.50% decrease |
(1,882) |
|
| Mortality Table |
RP-2000 |
One year increase in life expectancy |
978 |
|
Retirement Pension Premium Plan
|
|
|
|
|
|
|
|
|
|
|
|
| Assumption |
Value |
(Increase/Decrease) |
Effect on DBO |
| In millions of COP |
| Discount rate |
8.40 % |
0.50% increase |
(1,842) |
|
| Discount rate |
7.40 % |
0.50% decrease |
1,927 |
| Salary increases |
5.50 % |
0.50% increase |
1,973 |
| Salary decreases |
4.50 % |
0.50% decrease |
(1,901) |
|
El Salvador
Retirement Pension Premium Plan
|
|
|
|
|
|
|
|
|
|
|
|
| Assumption |
Value |
(Increase/Decrease) |
Effect on DBO |
| In millions of COP |
| Discount rate |
5.70 |
% |
0.50% increase |
(979) |
|
| Discount rate |
4.70 |
% |
0.50% decrease |
1,055 |
|
| Salary increases |
3.00 |
% |
0.50% increase |
154 |
|
| Salary decreases |
2.00 |
% |
0.50% decrease |
(228) |
|
Other long term benefits
Colombia
|
|
|
|
|
|
|
|
|
|
|
|
| Assumption |
Value |
(Increase/Decrease) |
Effect on DBO |
| In millions of COP |
| Discount rate |
11.50 |
% |
0.50% increase |
(15,480) |
|
| Discount rate |
10.50 |
% |
0.50% decrease |
16,430 |
|
| Salary increases |
8.40 |
% |
0.50% increase |
16,811 |
|
| Salary decreases |
7.40 |
% |
0.50% decrease |
(15,967) |
|
Guatemala
|
|
|
|
|
|
|
|
|
|
|
|
| Assumption |
Value |
(Increase/Decrease) |
Effect on DBO |
| In millions of COP |
| Discount rate |
8.60 % |
0.50% increase |
(1,223) |
|
| Discount rate |
7.60 % |
0.50% decrease |
1,307 |
| Salary increases |
5.50 % |
0.50% increase |
1,340 |
| Salary decreases |
4.50 % |
0.50% decrease |
(1,264) |
|
El Salvador
|
|
|
|
|
|
|
|
|
|
|
|
| Assumption |
Value |
(Increase/Decrease) |
Effect on DBO |
| In millions of COP |
| Discount rate |
5.70 % |
0.50% increase |
(168) |
|
| Discount rate |
4.70 % |
0.50% decrease |
179 |
Bonuses and short-term benefits
Short-term employment benefit plans recognized in the Consolidated Statement of Financial Position in the line “other liabilities” consist of the following:
|
|
|
|
|
|
|
|
|
| Other employment benefit plans |
December 31,
2024 |
December 31,
2023 |
| In millions of COP |
| Current severance obligation |
107,938 |
95,732 |
Bonuses and short-term benefits(1) |
676,967 |
734,916 |
| Other employment benefit plans |
784,905 |
830,648 |
(1)The decrease between December 31, 2024 and 2023, corresponds to the bonuses related to employees’ variable compensation. See Note 20 Other Liabilities.
NOTE 20. OTHER LIABILITIES
Other liabilities consist of the following:
|
|
|
|
|
|
|
|
|
| Other liabilities |
December 31, 2024 |
December 31, 2023 |
| In millions of COP |
Payables(1) |
3,547,341 |
|
4,746,323 |
|
| Suppliers |
1,840,622 |
|
1,653,424 |
|
| Advances to obligations |
1,373,401 |
|
1,199,509 |
|
Dividends(2) |
873,598 |
|
870,846 |
|
Bonuses and short-term benefits(3) |
676,967 |
|
734,916 |
|
| Security contributions |
559,038 |
|
524,741 |
|
Collection services(4) |
480,202 |
|
820,393 |
|
Provisions(5) |
439,095 |
|
401,111 |
|
Salaries and other labor obligations(3) |
428,077 |
|
396,734 |
|
Deposits delivered as security(6) |
378,767 |
|
795,628 |
|
| Advances in leasing operations and loans |
173,168 |
|
186,547 |
|
| Deferred interests |
106,058 |
|
217,507 |
|
Liabilities from contracts with customers(7) |
68,040 |
|
60,128 |
|
| Other financial liabilities |
46,187 |
|
40,774 |
|
| Total |
10,990,561 |
|
12,648,581 |
|
(1)The decrease corresponds mainly to lower items with payment systems networks, mainly for payments through electronic systems (PSE).
(2)This relates to the last installment pending payment which is payable on January 2, 2025. See Consolidated Statement of Changes in Equity, distribution of dividends.
(3)For further information, see Note 19. Employee benefit plans (Bonuses and short-term benefits).
(4)The decrease is due to lower tax collections.
(5)See Note 21. Provisions and contingent liabilities.
(6)The variation is generated by the valuation of current operations with international counterparties. For more information See Note 5.2. Derivative financial instruments.
(7)See Note 25.3. Fees and commissions.
NOTE 21. PROVISIONS AND CONTINGENT LIABILITIES
21.1. Provisions
The following tables show the detail of the provisions at December 31, 2024 and 2023:
As of December 31, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Judicial
proceedings(1)
|
Administrative
proceedings(2)
|
Financial
guarantees(3)
|
Loan
commitments |
Onerous
contracts(4)
|
Total |
| In millions of COP |
| Balance at January 1, 2024 |
50,812 |
|
92,380 |
|
2,238 |
|
252,381 |
|
3,300 |
|
401,111 |
|
| Net provisions recognized during the period |
24,985 |
|
1,038 |
|
2,192 |
|
31,826 |
|
5,420 |
|
65,461 |
|
| Provisions used during the period |
(33,333) |
|
(9,976) |
|
- |
|
- |
|
- |
|
(43,309) |
|
| Translation adjustment |
1,581 |
|
26 |
|
63 |
|
12,722 |
|
- |
|
14,392 |
|
| Effect of discounted cash flows |
1,440 |
|
- |
|
- |
|
- |
|
- |
|
1,440 |
|
| Final balance at December 31, 2024 |
45,485 |
|
83,468 |
|
4,493 |
|
296,929 |
|
8,720 |
|
439,095 |
|
(1)The balance includes provisions mainly with Tuvacol S.A. and payments mostly with the processes of the municipality of Purificación Tolima and fiscal responsibility of the departmental comptroller's office of Cundinamarca.
(2)Mainly includes environmental remediation of the Santa Elena property, see Note 21.2. Contingent Liabilities; Judicial Proceesing current and proceedings in administrative litigation regarding the discussion of the difference in income tax criteria according to the applicable tax law for COP 15,655.
(3)The balance corresponds mainly to financial guarantees in Bancolombia S.A. and its increase is due to the news operations.
(4)Onerous contracts corresponds to Renting Colombia S.A.S.
As of December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Judicial
proceedings |
Administrative
proceedings(1)
|
Financial
guarantees(2)
|
Loan
commitments |
Onerous
contracts(3)
|
Total |
| In millions of COP |
| Balance at January 1, 2023 |
47,577 |
84,997 |
16,501 |
265,405 |
2,762 |
417,242 |
| Net provisions recognized during the period |
19,427 |
11,248 |
(14,139) |
|
4,394 |
538 |
21,468 |
| Provisions used during the period |
(10,666) |
|
(3,865) |
|
- |
- |
- |
(14,531) |
|
| Translation adjustment |
(1,395) |
|
- |
(124) |
(17,418) |
- |
(18,937) |
| Effect of discounted cash flows |
(4,131) |
- |
- |
- |
- |
(4,131) |
| Final balance at December 31, 2023 |
50,812 |
92,380 |
2,238 |
252,381 |
3,300 |
401,111 |
(1)Mainly includes environmental remediation of the Santa Elena property, see Note 21.2. Contingent Liabilities; Judicial Proceesing current and proceedings in administrative litigation regarding the discussion of the difference in income tax criteria according to the applicable tax law for COP 14,920.
(2)The balance corresponds mainly to financial guarantees in Bancolombia S.A. and its decrease is due to the cancellation of operations
(3)Onerous contracts corresponds to Renting Colombia S.A.S.
The following table shows the changes in the provision for financial guarantees and loan commitments during period at December 31, 2024 and 2023 with the expected credit loss model:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Stage 1 |
Stage 2 |
Stage 3 |
Total |
| Balance at January 1, 2024 |
158,337 |
|
45,058 |
|
51,224 |
|
254,619 |
|
| Transfers |
5,186 |
|
4,587 |
|
(9,773) |
|
- |
|
| Transfer to stage 1 |
12,161 |
|
(6,950) |
|
(5,211) |
|
- |
|
| Transfer to stage 2 |
(4,383) |
|
14,688 |
|
(10,305) |
|
- |
|
| Transfer to stage 3 |
(2,592) |
|
(3,151) |
|
5,743 |
|
- |
|
| Provisions recognized during the period |
74,787 |
|
51,131 |
|
44,387 |
|
170,305 |
|
| Provisions reversed during the period |
(91,105) |
|
(26,271) |
|
(18,911) |
|
(136,287) |
|
| Translation adjustment |
8,851 |
|
3,875 |
|
59 |
|
12,785 |
|
| Balance at December 31, 2024 |
156,056 |
|
78,380 |
|
66,986 |
|
301,422 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stage 1 |
Stage 2 |
Stage 3 |
Total |
| Balance at January 1, 2023 |
140,574 |
82,615 |
58,717 |
281,906 |
| Transfers |
34,443 |
(23,490) |
(10,953) |
- |
| Transfer to stage 1 |
33,530 |
(24,858) |
|
(8,672) |
|
- |
| Transfer to stage 2 |
2,384 |
4,992 |
(7,376) |
|
- |
| Transfer to stage 3 |
(1,471) |
|
(3,624) |
|
5,095 |
- |
| Provisions recognized during the period |
56,254 |
11,515 |
9,928 |
77,697 |
| Provisions reversed during the period |
(60,779) |
|
(20,306) |
|
(6,357) |
(87,442) |
|
| Translation adjustment |
(12,155) |
(5,276) |
(111) |
(17,542) |
| Balance at December 31, 2023 |
158,337 |
45,058 |
51,224 |
254,619 |
Judicial proceedings
Judicial provisions refer to pending legal proceedings on employment matters, ordinary lawsuits, class actions suits, civil actions within criminal prosecutions and executive proceedings against the Bank. In the opinion of management, after receiving pertinent legal advice, the payments estimated to be made in connection with these proceedings will not generate significant losses in addition to the provisions recognized as of December 31, 2024 and 2023.
In addition, the Bank does not expect to obtain any reimbursement from judicial proceedings raised against it and, therefore, has not recognized any assets for that purpose, see Note 21.2 Contingent liabilities.
Onerous contracts
For the Bank, an onerous contract is a contract in which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it.
Financial guarantees
As of December 31, 2024
|
|
|
|
|
|
| Maturity |
Financial guarantees |
| In millions of COP |
| Guarantees under 1 month |
744,077 |
|
Guarantees greater than 1 month and up to 3 months(1) |
1,498,132 |
|
Guarantees greater than 3 months and up to 1 years (1) |
5,036,939 |
|
Guarantees greater than 1 year and up to 3 years(2) |
2,135,249 |
|
| Guarantees greater than 3 years and up to 5 years |
60,876 |
|
| Guarantees greater than 5 years |
669,028 |
|
| Total |
10,144,301 |
|
(1) The decrease is mainly due to the cancellation of operations with the following economic sectors: energy, private, among others.
(2) The increase is mainly due to reclassifications between ranges due to extension in the term or modifications in the maturity dates of the operations that arise according to the needs and requests of the client. This is presented with the following economic sectors: energy, private, government contracting and commercial.
As of December 31, 2023
|
|
|
|
|
|
| Maturity |
Financial guarantees |
| In millions of COP |
| Guarantees under 1 month |
826,699 |
|
| Guarantees greater than 1 month and up to 3 months |
3,778,824 |
|
| Guarantees greater than 3 months and up to 1 years |
5,609,521 |
|
Guarantees greater than 1 year and up to 3 years(1) |
1,489,899 |
|
| Guarantees greater than 3 years and up to 5 years |
450,875 |
|
| Guarantees greater than 5 years |
535,380 |
|
| Total |
12,691,198 |
|
(1) The decrease with respect to the previous year is mainly due to the cancellation of operations with the following economic sectors: energy, private, among others.
The total amount outstanding is the maximum potential payments which represent a “worse-case scenario”, and does not reflect expected results.
Loan commitments
As of December 31, 2024
|
|
|
|
|
|
| Maturity |
Loan commitments |
| In millions of COP |
| Commitments under 1 month |
606,027 |
| Commitments greater than 1 month and up to 3 months |
20,060 |
| Commitments greater than 3 months and up to 1 years |
5,962,608 |
| Commitments greater than 1 year and up to 3 years |
2,100,683 |
| Commitments greater than 3 years and up to 5 years |
2,959,532 |
| Commitments greater than 5 years |
395,847 |
| Total |
12,044,757 |
As of December 31, 2023
|
|
|
|
|
|
| Maturity |
Loan commitments |
| In millions of COP |
| Commitments under 1 month |
687,405 |
| Commitments greater than 1 month and up to 3 months |
11,373 |
| Commitments greater than 3 months and up to 1 years |
4,205,833 |
| Commitments greater than 1 year and up to 3 years |
2,269,280 |
| Commitments greater than 3 years and up to 5 years |
3,411,570 |
| Commitments greater than 5 years |
648,153 |
| Total |
11,233,614 |
The table below shows the maximum exposure to credit risk and provision based on the bank´s internal credit rating system, 12 months Basel PD range and year-end stage classification.
As of December 31, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Standard |
PD range |
Stage 1 |
Stage 2 |
Stage 3 |
Total |
| Exposure |
Provision |
Exposure |
Provision |
Exposure |
Provision |
Exposure |
Provision |
| Normal risk |
0% - 3.11% |
9,738,866 |
|
12 |
|
267 |
|
- |
|
- |
|
- |
|
9,739,133 |
|
12 |
|
| Acceptable risk |
> 3.11% - 11.15% |
173,730 |
|
14 |
|
10,563 |
|
1 |
|
8,000 |
|
2 |
|
192,293 |
|
17 |
|
| Appreciable risk |
> 11.15% - 72.75% |
14,123 |
|
1 |
|
6,970 |
|
3 |
|
48,221 |
|
- |
|
69,314 |
|
4 |
|
| Significant risk |
> 72.75% - 89.89% |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
| Bad risk |
> 89.89% - 100% |
- |
|
- |
|
- |
|
- |
|
143,561 |
|
4,460 |
|
143,561 |
|
4,460 |
|
| Total |
|
9,926,719 |
27 |
17,800 |
4 |
199,782 |
4,462 |
10,144,301 |
4,493 |
As of December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Standard |
PD range |
Stage 1 |
Stage 2 |
Stage 3 |
Total |
| Exposure |
Provision |
Exposure |
Provision |
Exposure |
Provision |
Exposure |
Provision |
| Normal risk |
0% - 3.11% |
11,885,724 |
6 |
5,165 |
- |
- |
- |
11,890,889 |
6 |
| Acceptable risk |
> 3.11% - 11.15% |
629,867 |
15 |
5,974 |
1 |
- |
- |
635,841 |
16 |
| Appreciable risk |
> 11.15% - 72.75% |
18,277 |
1 |
15,750 |
23 |
- |
- |
34,027 |
24 |
| Significant risk |
> 72.75% - 89.89% |
- |
- |
- |
- |
- |
- |
- |
- |
| Bad risk |
> 89.89% - 100% |
- |
- |
- |
- |
130,441 |
2,192 |
130,441 |
2,192 |
| Total |
|
12,533,868 |
22 |
26,889 |
24 |
130,441 |
2,192 |
12,691,198 |
2,238 |
21.2. Contingent liabilities
Contingencies due to judicial or administrative proceedings/litigations in which Bancolombia and the entities with which financial statements are consolidated as of December 31, 2024, are listed as follow, and that represents a contingency superior to USD7,110.
Some of the proceedings in which the claims are inferior and that were revelated in prior periods will be kept providing information about its evolution.
BANCOLOMBIA S.A.
Neos Group S.A.S. (in reorganization) and Inversiones Davanic S.A.S.
On November 3, 2022, Bancolombia S.A. was served of a lawsuit in which Neos Group S.A.S. and Inversiones Davanic S.A.S. alleges that a loan agreement was entered between them, rather than a lease agreement. Subsidiary, Neos Group S.A.S. and Inversiones Davanic S.A.S. requested the rescission of the purchase and sale agreement on the ground that the price of the property was lower than its fair price.
The Neos Group S.A.S. and Inversiones Davanic S.A.S.'s claims amount is COP 65,000. The contingency is qualified as remote because the parties always intended to celebrate a lease agreement and not a different type of contract. On December 7, 2022, Bancolombia S.A. filed a brief with its defenses. As of December 31, 2024, the Court has not summoned the initial hearing. There is no provision for this proceeding.
Public Interest Class Action - Carlos Julio Aguilar and other
There is a public interest class action in which the plaintiffs allege that due to the restructuring of Departamento del Valle's financial obligations and its performance plan, the Departamento del Valle's collective rights of the public administration and the public funds of the were breached. Bancolombia S.A. filed its defenses arguing that the agreement was made in accordance with the law.
On November 15, 2024, the First Instance Court issued a judgement in favor of Bancolombia S.A. The plaintiffs filed an appeal against the first instance judgment. As of December 31, 2024, the Second Instance Court has not issued a final decision. The contingency is qualified as eventual and there is no provision for this proceeding.
Contraloría Departamental de Cundinamarca against GEHS, Bancolombia and other natural persons (COMPLETED)
The development of the Water Treatment Plant PTAR Chía I Delicias Sur from Municipio de Chía, Colombia, was outlined through a lease agreement signed on September 28, 2015. The price agreed was COP 19,000. The object of the lease agreement was the financing of the Project, as well as the optimization, design, and construction of the Water Treatment Plant PTAR Chía I Delicias Sur. As of December 31, 2018, the lease agreement was at the advance payment stage (payment of interest on the principal amount). The Municipio de Chía´s Mayor Office, has claimed that irregularities have been found during the execution of the Project. Due to these allegations, the Contraloría de Cundinamarca began a Fiscal Responsibility proceeding against GEHS Global Environment and Health Solutions de Colombia (Supplier), Guillermo Varela Romero, Rafael Antonio Ballesteros Gómez, Luís Alejandro Prieto González (Municipio de Chía´s former Mayor and employees of the municipal administration), and Bancolombia S.A., based on the alleged loss. Bancolombia S.A. has alleged in its defense, among other arguments, that the Bank fully complied with its contractual obligations and that it is not responsible for the loss of the Municipality's resources.
The Contraloría de Cundinamarca at first and second instance held responsible five (5) individuals, including Bancolombia S.A., for a total amount of COP 7,650.
As of December 31, 2024, the proceeding before the Contraloría de Cundinamarca has ended due to the total payment of the awarded amount. Nevertheless, Bancolombia S.A. is going to file a lawsuit before the administrative to request the revocation of the Contraloría de Cundinamarca’s judgment and the devolution of the amount paid.
Remediation Plan for Santa Elena´s property
In 1987, Banco de Colombia (now known as Bancolombia S.A.) received a property located in Municipio de Cartagena, Colombia from the Federación Nacional de Algodoneros. After the transfer of the property to Bancolombia S.A., soil contamination from pesticides and herbicides was found on the property. Bancolombia S.A. commenced a civil responsibility judicial proceeding against the Federación Nacional de Algodoneros alleging environmental contamination.
On November 13, 2015, the Court issued the final judgment. In the judgment, the Court stated that the Federación Nacional de Algonoderos was liable for environmental damages and consequently, Bancolombia S.A. was not.
Despite not being liable for environmental damages, Bancolombia S.A. has assumed binding commitments to contract and pay for the property’s decontamination. As a result of these commitments, Bancolombia S.A. has conducted different decontamination processes over the years. Currently, Bancolombia S.A. has the approval of the Autoridad Nacional de Licencias Ambientales de Colombia (ANLA) for the execution of a remediation plan (plan de remediación) divided into three stages: Stage I, Stage II, and Stage III.
As of December 31, 2024, Bancolombia S.A. submitted before the ANLA the results of the complementary studies of Stage I, demolition activities of the warehouses of Stage II were completed, and is carrying out with the extraction and disposal of the resulting material. Also is carrying out the pre-feasibility activities of the Stage III and continues with the execution of a social management plan with the communities in the influence area of the remediation plan, emergency and contingency plan, hazardous waste management plan and the biotic environment protection plan.
The estimated time for the execution of the remediation plan is 36 months from July 2023, with the possibility of adjustment according to the results of the pre-feasibility and feasibility stage of Stage III and the supervening requirements of the competent authorities. As of December 31, 2024, there is a provision of COP 64,800 to attend the execution of the pending activities of the plan.
Fredy Alberto Lara Borja (COMPLETED)
On December 13, 2023, Bancolombia S.A. was notified of a lawsuit filed by a former employee of the liquidated company
Aluminio Reynolds Santo Domingo S.A, seeking the absolute nullity of the purchase agreement entered between Leasing Bancolombia and Bancolombia S.A. for two properties signed in 2011. Leasing Bancolombia acquired those properties through a purchase agreement with the company Armarcas E.U, which had received them as a payment from Sociedad Aluminio Reynolds Santo Domingo S.A. The plaintiff requested that the properties be returned to Aluminios Reynolds Santo Domingo´s assets so they can be used as payment of the company´s labor liabilities.
The amount of the claims was COP 103,943. As of December 31, 2024, the proceeding ended because the Court rejected the lawsuit.
Constructora Primar S.A.S.
On June 7, 2022, Bancolombia S.A. was notified of a lawsuit filed by Incopav S.A.S., Constructora Primar S.A.S., Inversiones M & Galindo y Cía. S en C and Inversiones M & Baquero y Cía. S en C. The plaintiffs request the payment of the damages caused by Bancolombia S.A. for his decision not to fully finance of the Altos de San Jorge project.
The plaintiffs' claims amount is COP 107,344. The contingency is qualified as remote because the plaintiffs are not part of the mutual agreement entered into for the financing of the Altos de San Jorge project. On July 9, 2024, the First Instance Court ruled in favor of Bancolombia S.A. The plaintiffs filed an appeal against the first instance judgement.
As of December 31, 2024, the Second Instance Court has not issued a final decision. There is no provision for this proceeding.
Tuvacol S.A.
On July 18, 2024, Bancolombia S.A. was served of the lawsuit filed by Tuvacol S.A. Tuvacol S.A. is requesting the payment of the damages caused by the alleged irregular payment of checks charged to its checking account. Bancolombia S.A. argues that the payments of the checks were correct. The plaintiff’s claims are COP 56,769.
The initial hearing has not been held. The initial hearing was convened for June 17 and 18, 2025. As of December 31, 2024, the contingency is qualified as eventual and has a provision for COP 5,676.
FIDUCIARIA BANCOLOMBIA
Quinta Sur S.A.S.
In March 2022, Fiduciaria Bancolombia was notified of a lawsuit filed by Quinta Sur S.A.S. in liquidation proceeding. According to the lawsuit, Quinta Sur seeks the indemnification for damages due to the non-transfer of the resources to beginning of a housing construction project, under the terms agreed in the trust agreement.
Fiduciaria Bancolombia alleges that it has complied with the law and the contract, arguing that the property on which the housing project was to be constructed did not fulfill the contractual requirements. The plaintiff’s claims amount is COP 128,000.
On August 24, 2023, the First Instance Court issued a favorable judgment to Fiduciaria Bancolombia. Quinta Sur S.A.S. filed an appeal against the First Instance judgment. As of December 31, 2024, the Second Instance Court has not issued a final decision. The contingency is qualified as eventual and there is no provision for this proceeding.
BANISTMO
Constructora Tymsa S.A.
In October 2021, Banistmo and Banistmo Investment were notified of a lawsuit in which the plaintiff alleged fraudulent acts involving the sale of the plaintiff´s property. Constructora Tymsa request the nullity of the public instrument of purchase through which property was transferred to Limipa S.A. Limipa S.A. requested a loan to Banistmo and guaranteed its obligation with an an administration and guarantee trust over the property. The trust was administered by Banistmo Investment. Constructora Tymsa alleges that the signatures and fingerprints in the public instrument of purchase, sale and in the mortgage in favor of Banistmo are false.
The plaintiff’s claims amount is USD10,000, in addition to interests, costs and expenses. Banistmo and Banistmo Investment allege they are not liable for any intentional or negligent conduct regarding to the alleged fraudulent sale of the property. As of December 31, 2024, the Court is pending of the resolution of three motions, including the motion for lack of jurisdiction alleged by the Bank, and to rule on the evidence presented in the proceeding. The Bank’s legal advisors have qualified the proceeding as eventual and there is no provision.
Five Star Production Inc., Global Men Health Foundation, Ingrid Perscky and Others (COMPLETED)
In April 2022, Banistmo was notified of a lawsuit filed by Five Star Production Inc., Global Men Health Foundation, Ingrid Perscky and others. The plaintiff’s claims amount is USD5,000.
The lawsuit was filed based on a dispute between Ingrid Perscky and Jose Barbero (who used to be husband and wife) for the distribution of their assets. In 2017, Ms. Perscky, who had an authorized signature, ordered the cancelation of a fixed term deposit from Five Star, and instructed that those funds be transferred to 3 accounts that belonged to persons related to her (for example, her children). Mr. Barbero contacted Banistmo and tried to reverse the instructions, however as it was not possible, Mr. Barbero filed criminal complaints against Ms. Perscky.
Banistmo has complied with banking law and has handled the information´s confidentiality according to the law and the contract. The plaintiffs seeked compensation for material and moral damages, alleging that Banistmo breached confidentiality and banking secret in detriment of the plaintiffs.
The proceeding was completed by a settlement agreement between the parties.
Deniss Rafael Pérez Perozo, Carlos Pérez Leal and others
Promotora Terramar (client of Banistmo, formerly HSBC Panamá) received USD299, through Visa Gift Cards issued by a foreign bank. These payments were received as a partial payment of 2 apartments located in Panamá City.
The Credit Card Securities and Fraud Prevention department of the HSBC bank detected an irregular activity by Promotora Terramar, when a monitoring alert was activated due to the high number of cards with the same BIN and bank. Therefore, pursuant to the Business Establishments Affiliate Agreement, HSBC reversed funds from Promotora Terramar´s accounts for COP 287, recorded it in a suspense account while investigations were conducted. After further investigations the money was refunded.
The plaintiff’s claim is the payment of the compensation of the material and moral damages caused, which according to their valuation, amounts to USD5,252,000. Banistmo alleges it has complied with the contractual terms outlined in the Affiliate Agreement, that Mr. and Mrs Perez Leal are not customers of the Bank and thar the statute of limitations deadline has lapsed.
As of December 31, 2024, the lawsuit has not been notified to the parties. The contingency is qualified as remote by the external advisors and there is no provision for this proceeding.
DD&C, Carlos Pérez Leal and Others
In October 2022, Banistmo received a communication announcing the filing of a legal action in the Tribunal of First Instance of Kaloum in the Republic of Guinea. This action was commenced by Inversiones DD&C, Carlos Perez Leal and other natural persons against the Central Bank of the Republic of Guinea (“BCRG”) and five international banks, including Banistmo. The action seeks compensatory damages derived from alleged fraud involving six international transfers for a total USD1,900 that Inversiones DD&C, who was a client of Banistmo at the time, ordered to be made to a bank account at the BCRG.
The parties who commenced the action are seeking USD28,100 in “dommages matériels” (which are damages for alleged economic loss), as well as additional amounts in “dommages moraux” (which are damages for alleged non-economic loss, including alleged psychological suffering and moral anguish).
On May 22, 2023, a favorable First Instance judgment was issued for Banistmo. The plaintiff filed an appeal against the decision. On October 23, 2024, the Second Instance Court issued a favorable judgment to Banistmo.
The contingency is qualified as remote and there is provision for this proceeding.
Interfast Panamá & Pacific Point 96624
In February 2024, Banistmo and Banistmo Investment were served of a lawsuit filed against them and against 2020 Debt Investors Corp and José Talgham Cohen. The plaintiffs seek compensation for damages originated from the assignment of credit agreement made by Banistmo as the assignor in benefit of the assignee 2020 Debt Investors Corp., of a credit operation managed by Inverfast Panamá for a value of USD 2,000. The loan was secured with a trust of administration and guarantee of real state set up on Banistmo Investment.
The plaintiffs alleges that the credit assignment agreement presented irregularities and deviations from Banistmo and breach of fiduciary duties from Banistmo Investment. The plaintiff’s claims amount is USD 15,000.
As of December 31, 2024, the proceeding is pending rule a clarification request of the plaintiff´s lawsuit.
The contingency is qualified as remote and there is no provision for this matter.
BANCO AGRÍCOLA
Dirección General de Impuestos Internos of El Salvador
The authority on taxes of El Salvador (DGII), in accordance with the resolution of October 2018, determined that Banco Agrícola failed to declare and pay income taxes related to 2014’s fiscal year for a total of USD11,116 and related penalties.
In 2021, the appeal presented by Banco Agrícola was decided. The Tribunal de Apelaciones de los Impuestos Internos y Aduanas (TAII) modified the Resolution issued by DGII, adjusted the rental tax to USD6,341 and revoked the sanction.
Banco Agrícola filed a lawsuit before the Contentious Administrative Tribunal seeking to overrule DGII´s and TAII´s previous decisions in relation to the tax’s payment. As of December 31, 2024, is still pending the decision of the Contentious Administrative Tribunal.
The contingency is qualified as remote and there is no provision for this proceeding.
ARRENDADORA FINANCIERA S.A.
Cordal
Cordal filed a lawsuit against Arrendadora Financiera, seeking compensation for USD6,454. According to the lawsuit, Cordal was the owner of a current account in Arrendadora Financiera (formerly Banco Capital S.A.), and it alleged that it´s funds were irregularly transferred to third parties. Arrendadora Financiera alleges Cordal´s account was liquidated before the acquisition of Banco Capital S.A. and, therefore, no funds were transferred.
As of December 31, 2024, the proceeding is at the evidentiary stage. The contingency is qualified as remote and there is no provision for this proceeding. A former employee of the plaintiff was convicted of aggravated theft in connection with the facts of this lawsuit.
BANCO AGROMERCANTIL
Bapa Holdings Corp.
On September 20, 2022, a lawsuit against Banco Agromercantil was filed by Bapa Holdings Corp. The plaintiff alleges that it invested USD7,000 through a participation agreement with North Shore Development Company (NDSC) for the development of a housing project that was going to be built in a property, which was security for a loan given by Banco Agromercantil to NDSC, located in Roatan Island, Honduras. Bapa alleges that BAM caused damages due to its failure to provide information about NDSC´s financial situation and going through with the sale of the credit. On October 24, 2022, BAM responded to the claim and filed exceptions alleging that it has no commercial relationship with Bapa, and the statute of limitations deadline expired. As of December 31, 2024, the Court is pending a ruling on the exceptions to the lawsuit. The contingency is qualified as remote and there is no provision for this proceeding.
Superintendencia de Administración Tributaria (SAT)
The Superintendencia de Administración Tributaria (SAT) de Guatemala ordered a tax adjustment in the fiscal year 2014 of Banco Agromercantil´s rental tax declaration, duly paid by BAM, for a value of USD13,583 (including tax and sanction). BAM initiated legal proceedings against the decision adopted by the SAT, arguing the inadmissibility of the adjustment by applying the legal rule in an analogous way, the admissibility of the expense’s deductions of the revenue tax for being necessary to generate lien revenue and the non-withhold of the revenue tax in the interests paid to exempt people, arguing that they were appropriate according to the law.
As of December 31, 2024, the proceeding is pending the final decision from the Court. The contingency is qualified as remote and there is no provision for this proceeding.
NOTE 22. SHARE CAPITAL
The subscribed and paid-in capital is the following:
|
|
|
|
|
|
|
|
|
| Share capital |
December 31, 2024 |
December 31, 2023 |
| Authorized shares |
1,400,000,000 |
1,400,000,000 |
| Subscribed and paid-in shares: |
|
|
Ordinary shares with a nominal value of COP 500 pesos |
509,704,584 |
509,704,584 |
Preferred shares with dividend without voting rights with nominal value of COP 500 pesos |
452,122,416 |
452,122,416 |
| Total subscribed and paid-in shares |
961,827,000 |
961,827,000 |
| Subscribed and paid capital (nominal value, in millions of COP) |
480,914 |
480,914 |
Dividends declared
The declaration, amount and payment of dividends are based on Bancolombia S.A.’s unconsolidated net income. Dividends must be approved at the ordinary general shareholders' meeting upon the recommendation of the Board of Directors. Under the Colombian Commercial Code, after payment of income taxes and appropriation of legal and other reserves, and after setting off losses from prior fiscal years, Bancolombia must distribute to its stockholders at least 50% of its annual net income or 70% of its annual net income if the total amount of reserves exceeds its outstanding capital, unless such minimum percentages are waived by an affirmative vote of the holders of at least 78% of the shares present at the stockholders’ meeting. Such dividend distribution must be made to all stockholders, in cash or in issued stock of Bancolombia, as may be determined by the stockholders, and within a year from the date of the annual general ordinary stockholders' meeting in which the dividend was declared.
The payment of dividends must be made in cash during the year following the applicable date for the annual general ordinary stockholders' meeting. If the payment is made in the Bank’s own equity securities instead of cash, that must be approved by 80% of the outstanding common shareholders and 80% of the outstanding preferred shares.
The annual net profits of Bancolombia must be applied as follows: (i) first, an amount equal to 10% of Bancolombia’s net profits to a legal reserve until such reserve is equal to at least 50% of the Bank’s paid-in capital; (ii) second, to the payment of the minimum dividend on the preferred shares; and (iii) third, as may be determined in the ordinary annual general ordinary stockholders' meeting by the vote of the holders of a majority of the shares entitled to vote.
|
|
|
|
|
|
Dividends declared with respect to
net income earned in: |
Cash dividends per share
(Stated in COP) |
| 2024 |
3,900 |
|
| 2023 |
3,536 |
|
| 2022 |
3,536 |
|
| 2021 |
3,120 |
|
| 2020 |
260 |
|
Common shares
The holders of common shares are entitled to vote on any matter subject to approval at an annual general ordinary stockholders' meeting. Within 15 calendar days prior to such meeting, such holders are entitled to inspect the books and records of the Company.
Also, the holders of common shares will receive a proportion of the profits subject to the provisions of law, statutes and established at general shareholders’ meeting. The dividend received by holders of common shares may not be higher than the dividend assigned to preferred shares.
Preferred shares
Holders of preferred shares are entitled to receive dividends based on the net profits of the preceding fiscal year, after deducting losses affecting the capital and once the amount that shall be legally set apart for the legal reserve has been deducted, but before creating or accruing for any other reserve, of a non-cumulative minimum preferred dividend equal to one percent (1%) yearly of the subscription price of the preferred share, provided this dividend is higher than the dividend assigned to common shares. If this is not the case, the dividend shall be increased to an amount that is equal to the per share dividend on the common shares.
Payment of the preferred dividend shall be made at the time and in the manner established in the general shareholders’ meeting and with the priority indicated by Colombian law.
Any dividend in shares requires the approval of 80% or more of the shares present at a shareholders’ meeting, which will include 80% or more of the outstanding preferred shares. In the event of absence of such holders of preferred shares, a stock dividend only has can be payable to the holders of common shares that approve this payment.
Reserved Shares
Stocks that are available between maximum authorized shares and paid-in shares. The Bank has not reserved shares.
NOTE 23. APPROPRIATED RESERVES
As of December 31, 2024 and 2023, the appropriated retained earnings consist of the following:
|
|
|
|
|
|
|
|
|
| Concept |
December 31, 2024 |
December 31, 2023 |
| In millions of COP |
Appropriation of net income(1)(2) |
12,700,961 |
|
12,794,057 |
|
Others(3) |
9,874,876 |
|
7,250,712 |
|
| Total appropriated reserves |
22,575,837 |
|
20,044,769 |
|
(1)The legal reserve fulfills two objectives: to increase and maintain the company's capital and to absorb economic losses. Based on the aforementioned, this amount shall not be distributed in dividends to the stockholders.
(2)As of December 31, 2024 and 2023, includes reclassification of unclaimed dividends under Article 85 of the Bancolombia S.A Bylaws for COP 506 and COP 557, respectively.
(3)At Bancolombia S.A, the creation of an occasional reserve for equity strengthening and future growth continues, which was approved at the General Shareholders Meeting.
NOTE 24. UNCONSOLIDATED STRUCTURED ENTITIES
Nature and risks associated with the Bank’s interests in unconsolidated structured entities
The term "unconsolidated structured entities" refers to all structured entities that are not controlled by the Bank. The Bank manages transactions with unconsolidated structured entities in the normal course of business to facilitate customer transactions and for specific investment opportunities.
The table below shows the total assets of unconsolidated structured entities in which the Bank had an interest at the reporting date and its maximum exposure to loss in relation to those interests.
As of December 31, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
Securitizations |
The Bank’s managed funds |
Total |
| In millions of COP |
| Total assets of the entities |
792,368 |
176,591,828 |
177,384,196 |
| The Bank’s interest-assets |
|
|
|
| Investments at fair value through profit or loss |
68,710 |
- |
68,710 |
| Investments at fair value through other comprehensive income |
8,649 |
- |
8,649 |
| Loans and advances to customers |
- |
8,435,301 |
8,435,301 |
| Total assets in relation to the Bank’s interests in the unconsolidated structured entities |
77,359 |
8,435,301 |
8,512,660 |
| The Bank’s maximum exposure |
77,359 |
8,435,301 |
8,512,660 |
| Fees income |
3,065 |
558,877 |
561,942 |
As of December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
Securitizations |
The Bank’s managed funds |
Total |
| In millions of COP |
| Total assets of the entities |
1,028,501 |
|
159,609,365 |
|
160,637,866 |
|
| The Bank’s interest-assets |
|
|
|
| Investments at fair value through profit or loss |
80,436 |
|
- |
|
80,436 |
|
| Investments at fair value through other comprehensive income |
22,149 |
|
- |
|
22,149 |
|
| Loans and advances to customers |
- |
|
7,997,406 |
|
7,997,406 |
|
| Total assets in relation to the Bank’s interests in the unconsolidated structured entities |
102,585 |
|
7,997,406 |
|
8,099,991 |
|
| The Bank’s maximum exposure |
102,585 |
|
7,997,406 |
|
8,099,991 |
|
| Fees income |
3,763 |
|
474,136 |
|
477,899 |
|
Securitizations
The Bank invests in asset-backed securities issued by securitization entities for which underlying assets are mortgages originated by financial institutions. The Bank does not have a significant exposure to sub-prime securities. The asset-backed securities are denominated in local market TIPS and accounted for as investment at fair value through profit or loss and residual rights accounted for as investment at fair value through other comprehensive income. These asset-backed securities have different maturities and are generally classified by credit ratings. The Bank does not expect significant changes in those ratings.
Also, the Bank retains beneficial interests in the form of servicing fees on the securitized mortgages.
The Bank’s managed funds
The Bank’s managed funds are derived from the following type of business lines: related trusts, mutual funds sold to individuals, corporate trusts, escrow accounts, private equity funds, and delegated tailor-made mandates from third parties. Generally, the revenues correspond to the fees received from the management of resources that are invested in several instruments and management of properties and premises related to real estate projects in progress.
Likewise, the Bank receives fees for management assets pledged as collateral for clients’ commitments and obligations, and fees from management of resources of government agencies and entities.
On the other hand, there is not an additional exposure to loss, such as funding commitments with regards to the Bank’s involvement with those entities.
NOTE 25. OPERATING INCOME
25.1. Interest and valuation on financial instruments
The following table sets forth the detail of interest and valuation on financial asset instruments for the years ended December 31, 2024, 2023 and 2022:
|
|
|
|
|
|
|
|
|
|
|
|
|
2024 |
2023 |
2022 |
| In millions of COP |
| Interest on debt instruments using the effective interest method |
965,935 |
1,029,377 |
588,792 |
| Interest and valuation on financial instruments |
|
|
|
Debt investments(1) |
1,367,980 |
628,082 |
1,198,296 |
| Repos |
237,321 |
137,014 |
|
(84,410) |
|
Derivatives(2) |
154,130 |
|
(157,818) |
171,381 |
| Spot transactions |
(3,187) |
|
(28,590) |
77,433 |
| Total valuation on financial instruments |
1,756,244 |
578,688 |
1,362,700 |
| Total Interest and valuation on financial instruments |
2,722,179 |
1,608,065 |
1,951,492 |
(1) The increase is mainly presented in Bancolombia S.A., due to a higher volume and higher valuation in the portfolio of securities issued by foreign governments (United States Treasury Bonds), which are directly related to the variations in the exchange rate.
(2) The variation occurs mainly in Bancolombia due to the valuation of forwards.
25.2. Interest expenses
The following table sets forth the detail of interest on financial liability instruments for the years ended December 31, 2024, 2023 and 2022:
|
|
|
|
|
|
|
|
|
|
|
|
| |
2024 |
2023 |
2022 |
| In millions of COP |
Deposits(1) |
12,215,673 |
13,323,516 |
6,141,680 |
Borrowing costs(1) |
1,349,913 |
1,658,996 |
763,717 |
Debt instruments in issue(2) |
1,202,112 |
1,426,615 |
1,328,511 |
| Lease liabilities |
135,546 |
113,815 |
111,349 |
| Preferred shares |
57,701 |
57,701 |
57,701 |
| Overnight funds |
22,306 |
30,540 |
11,375 |
| Other interest (expense) |
40,660 |
57,112 |
28,137 |
| Total interest expenses |
15,023,911 |
|
16,668,295 |
|
8,442,470 |
|
(1)The intervention rate issued by the Banco de la República de Colombia for the period of 2024 started at 13.00% and closed at 9.50%, for 2023 it started at 12.00% and closed at 13.00% and for 2022 it started at 3.00% and closed at 12.00%. This has an impact on the rates of deposits and financial obligations.
(2) In 2024, the decrease occurs mainly due to maturities of debt securities in legal currency.
Net interest income is defined as interest on loan portfolio and financial leasing operations, interest on debt instruments measured by the effective interest method and interest expense amounts to COP 18,555,575 COP 19,601,869 and COP 16,929,815 for the years ended on December 31, 2024, 2023 and 2022, respectively.
25.3. Fees and commissions
The Bank has elected to present the income from contracts with customers as an element in a line named “Fees and commissions income” in the consolidated statement of income separated from the other income sources.
The information contained in this section about the fees and commission’s income presents information on the nature, amount, timing and uncertainty of the income from ordinary activities which arise from a contract with a customer under the regulatory framework of IFRS 15 Revenue from Ordinary activities from Contracts with Customers.
In the following table, the description of the main activities through which the Bank generates revenue from contracts with customers is presented:
|
|
|
|
|
|
| Fees and Commissions |
Description |
| Banking services |
Banking Services are related to commissions from the use of digital physical channels or once the customer makes a transaction. The performance obligation is fulfilled once the payment is delivered to its beneficiary and the proof of receipt of the payment is sent, in that moment, the collection of the commission charged to the customer is generated, which is a fixed amount. The commitment is satisfied during the entire validity of the contract with the customer. The Bank acts as principal. |
|
|
|
|
|
|
| Credit and debit card fees |
In debit card product contracts, it is identified that the price assigned to the services promised by the Bank to the customers is fixed. Given that no financing component exists, it is established on the basis of the national and international interbank rate. Additionally, the product charges to the customers commissions for handling fees, at a determined time and with a fixed rate.
For Credit Cards, the commissions are the handling fees and depend on the card franchise. The commitment is satisfied in so far that the customer has capacity available on the card.
Other revenue received by the (issuer) credit card product, is advance commission; this revenue is the charge generated each time the customer makes a national or international advance, at owned or non-owned ATMs, or through a physical branch. The exchange bank fee is a revenue for the Issuing Bank of the credit card for the services provided to the business for the transaction effected at the point of sale. The commission is accrued and collected immediately at the establishment and has a fixed amount.
In the credit cards product there is a customer loyalty program, in which points are awarded for each transaction made by the customer in a retail establishment. The program is administrated by a third party who assumes the inventory and claims risks, for which it acts as agent. The Bank, recognized it as a lower value of the revenue from the exchange bank fee.
The rights and obligations of each party in respect of the goods and services for transfer are clearly identified, the payment terms are explicit, and it is probable, that is, it takes into consideration the capacity of the customer and the intention of having to pay the consideration at termination to those entitled to change the transferred goods or services. The revenue is recognized at a point in time: the Bank satisfies the performance obligation when the “control” of the goods or services was transferred to the customers.
|
| Deposits |
Deposits are related to the services generated from the offices network of the Bank once a customer makes a transaction. The Bank generally commits to maintain active channels for the products that the customer has with the Bank, with the purpose of making payments and transfers, sending statements and making transactions in general. The commissions are deducted from the deposit account, and they are incurred at a point in time. The Bank acts as principal. |
| Electronic services and ATMs |
Revenue received from electronic services and ATMs arises through the provision of services so that the customers may make required transactions, and which are enabled by the Bank. These include online and real-time payments by the customers of the Bank holding a checking or savings accounts, with a debit or credit card for the products and services that the customer offers. Each transaction has a single price, for a single service. The provision of collection services or other different services provided by the Bank, through electronic equipment, generates consideration chargeable to the customer established contractually by the Bank as a fee. The Bank acts as principal and the revenue is recognized at a point in time. |
| Brokerage |
Brokerage is a group of services for the negotiation and administration of operations for purchasing fixed revenue securities, equities and operations with derivatives in its own name, but on the account of others. The performance obligations are fulfilled at a point in time when the commission agent in making its best effort can execute the business entrusted by the customer in the best conditions. The performance obligations are considered satisfied once the service stipulated in the contract is fulfilled, as consideration fixed, or variable payments are agreed, depending on the service. The Bank acts generally as principle and in some special cases as agent. |
| Remittance |
Revenue for remittance is received as consideration for the commitment established by the Bank to pay remittances sent by the remitting companies to the beneficiaries of the same. The commitment is satisfied at a point in time to the extent that the remittance is paid to the beneficiary.
The price is fixed, but may vary in accordance to the transferred amount, due to the operation being dependent on the volume of operations generated and the transaction type. There is no component of financing, nor the right to receive consideration dependent on the occurrence or not of a future event.
|
| Acceptances, Guarantees and Standby Letters of Credit |
Banking Service from acceptances, guarantees and standby letters of credit which are not part of the portfolio of the Bank. There exist different performance obligations; the satisfaction of performance obligations occurs when the service is given to the customer. The consideration in these types of contracts may include fixed amounts, variable amounts, or both, and the Bank acts as principal. The revenue is recognized at a point in time. |
|
|
|
|
|
|
| Trust |
Revenue related to Trust are received from the administration of the customer resources in the business of investment trusts, property trusts, management trusts, guarantee trusts, for the resources of the general social security system, Collective portfolios and Private Equity Funds (PEF). The commitments are established in contracts independently and in an explicit manner, and the services provided by the Bank are not inter-related between the contracts. The performance obligation corresponds to performing the best management in terms of the services to be provided in relation to trust characteristics, thus fixed and variable prices are established depending on the complexity of the business, similarly, revenues are recognized throughout or at a determined time. In all the established businesses it acts as principal. |
| Placement of Securities |
Valores Bancolombia makes available its commercial strength for the deposit, reinvestment of resources through financial instruments to the issuing company. It receives a payment for deposits made. The commitment of the contract is satisfied to the extent that the resources requested by the issuer are obtained through the distribution desks of Valores Bancolombia. The collection is made monthly. It is established that Valores Bancolombia may undertake collection of these commissions at the end of the month through a collection account charged to the issuer, acting as principal. |
| Bancassurance |
The bank receives a commission for collecting insurance premiums at a given time and for allowing the use of its network to sell insurance from different insurance companies over time. The Bank in these bancassurance contracts acts as agent (intermediary between the customer and the insurance company), since it is the insurance company which assumes the risks, and which handles the complaints and claims of the customers inherent in each insurance. Therefore, the insurance company acts as principal before the customer. The prices agreed in bancassurance are defined as a percentage on the value of the policy premiums. The payment shall be tied to the premiums collected, sold or taken for the case of employees’ insurance. The aforementioned then means that the price is variable, since, the revenue will depend on the quantity of policies or calculations made by the insurance companies. |
| Collections |
The Bank acting as principal, commits to collect outstanding invoices receivable by the collecting customers through the different channels offered by the bank, send the information of the collections made and credit the money to the savings or checking account defined by the collecting customer. The commitment is satisfied at a point in time to the extent that the money is collected by the different channels, the information of the said collections is delivered appropriately, and the resources are credited in real-time to the account agreed with the customer. For the service, the Bank receives a fixed payment, which is received for each transaction once the contract is in effect. |
| Services |
These are the maintenance services performed on the fleet owned by the customers, these services are performed on demand, and the value of the service cost is invoiced plus an intermediation margin. The collection is made by the amount of expense invoiced by the provider plus an intermediation percentage, which ranges between 5% and 10% depending on the customer.
The contract is written, is based on a framework contract which is held between the customers which contains the general terms of negotiation and the payment terms are generally 30 days after generating the invoice. The revenue is recognized when the service is provided. There is no financing nor sanctions for early cancellations. To view the details of the balance, refer to line ‘Logistics services’ in Note 25.4 Other operational Income.
|
|
|
|
|
|
|
| Gains on sale of assets |
These are the revenue from the sale of assets, where the sale value is higher than the book value recorded in the accounts, the difference representing the gains. The recognition of the revenue is at a point in time once the sale is realized. The Bank acts as principal in this type of transaction and the transaction price is determined by the market value of the asset being sold.
To view the details of the balance, refer to line ‘Gain on sale of assets’ in Note 25.4 Other operational Income.
|
| Investment Banking |
Investment Banking offers to customer’s financial advisory services in the structuring of businesses in accordance with the needs of each one of them. The advisory services consist in realizing a financial structuring of a credit or bond in which the Investment Bank offers the elements so that the company decides the best option for structuring the instrument. In the financial advisory contract, a best efforts clause is included.
The promises given to the customers are established in the contracts independently and explicitly. The services provided by the Investment Bank are not interrelated between the contracts, correspond to the independent advice agreed and do not include additional services in the commission agreed with the customer. The advisory services offered in each one of the contracts are identifiable separately from the other performance commitments that the Investment Bank may have with the customers. The Investment Bank does not have a standard contract for the provision of advisory services, given than each contract is tailored to the customer’s needs.
The transaction price is defined at the start of the contract and is assigned to each service provided independently. The price contains a fixed and a variable portion which is provided in the contracts. The variation depends on the placement amount for the case of a financial structuring contract and coordination of the issuance and conditions of the same. In these operations Banca de Inversion Bancolombia provides advice to the customers and the price shall depend at times on the success and amount of the operation. In the contracts subject to evaluation there are no incremental costs associated with the satisfaction of the commitments of the Bank with the customers provided for.
In the contracts signed with the customers, a penalty clause is established in case of a customer withdrawing from continuing with the provision of the services established in the commercial offer. The penalty shall be recognized in the financial statements once the Investment Bank is notified on the withdrawal under the concept of charges for early termination of the contract.
|
The Bank presents the information on revenue from contracts with customers in accordance with its operating segments defined earlier in Note 3. Operating Segments for each of the principal services offered.
The following table shows the balances categorized by nature and by segment of revenue from ordinary activities from contracts with customers, for further information about composition of Bank’ segments see Note 3. Operating segments:
As of December 31, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Banking
Colombia |
Banking
Panama |
Banking El
Salvador |
Banking
Guatemala |
Trust |
Investment
Banking |
Brokerage |
International
Banking |
All Other
Segments |
Total |
| Revenue from contracts with customers |
In millions of COP |
| Fees and Commissions income |
|
|
|
|
|
|
|
|
|
|
| Credit and debit card fees and commercial establishments |
2,657,690 |
|
282,611 |
|
257,697 |
|
85,841 |
|
- |
|
- |
|
- |
|
1,934 |
|
- |
|
3,285,773 |
|
| Banking services |
694,554 |
|
131,958 |
|
166,713 |
|
65,432 |
|
- |
|
- |
|
- |
|
43,540 |
|
34,580 |
|
1,136,777 |
|
| Payment and collections |
1,024,053 |
|
15,735 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
1,039,788 |
|
| Bancassurance |
958,311 |
|
67,197 |
|
47 |
|
- |
|
6 |
|
- |
|
3 |
|
- |
|
- |
|
1,025,564 |
|
| Fiduciary Activities and Securities |
- |
|
18,962 |
|
6,515 |
|
904 |
|
448,848 |
|
- |
|
95,972 |
|
50 |
|
- |
|
571,251 |
|
| Acceptances, Guarantees and Standby Letters of Credit |
73,302 |
|
27,365 |
|
5,789 |
|
1,880 |
|
- |
|
- |
|
- |
|
679 |
|
- |
|
109,015 |
|
| Investment banking |
- |
|
1,670 |
|
2,097 |
|
- |
|
- |
|
69,266 |
|
8,854 |
|
- |
|
- |
|
81,887 |
|
| Brokerage |
- |
|
16,473 |
|
- |
|
- |
|
- |
|
- |
|
20,648 |
|
- |
|
- |
|
37,121 |
|
| Others |
252,445 |
|
359 |
|
76,876 |
|
57,721 |
|
- |
|
- |
|
6,715 |
|
5,698 |
|
1,848 |
|
401,662 |
|
| Total revenue of contracts with customers |
5,660,355 |
|
562,330 |
|
515,734 |
|
211,778 |
|
448,854 |
|
69,266 |
|
132,192 |
|
51,901 |
|
36,428 |
|
7,688,838 |
|
As of December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Banking
Colombia |
Banking
Panama |
Banking El
Salvador |
Banking
Guatemala |
Trust |
Investment
Banking |
Brokerage |
International
Banking |
All Other
Segments |
Total |
| Revenue from contracts with customers |
In millions of COP |
| Fees and Commissions income |
|
|
|
|
|
|
|
|
|
|
| Credit and debit card fees and commercial establishments |
2,467,174 |
|
272,380 |
|
233,049 |
|
95,833 |
|
- |
|
- |
|
- |
|
1,992 |
|
- |
|
3,070,428 |
|
| Banking services |
593,729 |
|
110,271 |
|
157,386 |
|
68,857 |
|
- |
|
- |
|
- |
|
37,746 |
|
23,574 |
|
991,563 |
|
| Payment and collections |
950,167 |
|
15,236 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
965,403 |
|
| Bancassurance |
924,280 |
|
72,705 |
|
77 |
|
- |
|
104 |
|
29 |
|
126 |
|
- |
|
- |
|
997,321 |
|
| Fiduciary Activities and Securities |
- |
|
20,233 |
|
6,399 |
|
851 |
|
361,632 |
|
- |
|
74,377 |
|
54 |
|
- |
|
463,546 |
|
| Acceptances, Guarantees and Standby Letters of Credit |
72,335 |
|
25,159 |
|
5,211 |
|
3,173 |
|
- |
|
- |
|
- |
|
1,803 |
|
- |
|
107,681 |
|
| Investment banking |
- |
|
980 |
|
1,225 |
|
- |
|
- |
|
55,888 |
|
10,728 |
|
- |
|
- |
|
68,821 |
|
| Brokerage |
- |
|
15,568 |
|
- |
|
- |
|
- |
|
- |
|
11,140 |
|
- |
|
- |
|
26,708 |
|
| Others |
244,414 |
|
398 |
|
76,221 |
|
54,486 |
|
229 |
|
- |
|
7,614 |
|
5,633 |
|
412 |
|
389,407 |
|
| Total revenue of contracts with customers |
5,252,099 |
|
532,930 |
|
479,568 |
|
223,200 |
|
361,965 |
|
55,917 |
|
103,985 |
|
47,228 |
|
23,986 |
|
7,080,878 |
|
As of December 31, 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Banking
Colombia |
Banking
Panama |
Banking El
Salvador |
Banking
Guatemala |
Trust |
Investment
Banking |
Brokerage |
International
Banking |
All Other
Segments |
Total |
| Revenue from contracts with customers |
In millions of COP |
| Fees and Commissions income |
|
|
|
|
|
|
|
|
|
|
| Credit and debit card fees and commercial establishments |
2,248,727 |
|
232,637 |
|
216,977 |
|
79,551 |
|
- |
|
- |
|
- |
|
1,868 |
|
- |
|
2,779,760 |
|
| Banking services |
481,103 |
|
91,938 |
|
142,047 |
|
78,264 |
|
- |
|
- |
|
- |
|
31,277 |
|
12,732 |
|
837,361 |
|
| Payment and collections |
851,983 |
|
13,975 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
865,958 |
|
| Bancassurance |
814,653 |
|
57,858 |
|
97 |
|
- |
|
29 |
|
8 |
|
32 |
|
- |
|
- |
|
872,677 |
|
| Fiduciary Activities and Securities |
- |
|
18,975 |
|
6,522 |
|
803 |
|
318,840 |
|
- |
|
78,509 |
|
53 |
|
- |
|
423,702 |
|
| Acceptances, Guarantees and Standby Letters of Credit |
58,293 |
|
18,382 |
|
10,081 |
|
3,774 |
|
- |
|
- |
|
- |
|
828 |
|
- |
|
91,358 |
|
| Investment banking |
- |
|
550 |
|
1,482 |
|
- |
|
- |
|
86,224 |
|
15,667 |
|
- |
|
- |
|
103,923 |
|
| Brokerage |
- |
|
11,888 |
|
- |
|
- |
|
- |
|
- |
|
15,960 |
|
- |
|
- |
|
27,848 |
|
| Others |
229,804 |
|
380 |
|
66,971 |
|
56,162 |
|
- |
|
- |
|
1,198 |
|
7,995 |
|
5,429 |
|
367,939 |
|
| Total revenue of contracts with customers |
4,684,563 |
|
446,583 |
|
444,177 |
|
218,554 |
|
318,869 |
|
86,232 |
|
111,366 |
|
42,021 |
|
18,161 |
|
6,370,526 |
|
For the determination of the transaction price, the Bank assigns to each one of the services the amount which represents the value expected to be received as consideration for each independent commitment, which is based on the relative price of independent sale. The price that the Bank determines for each performance obligation is done by defining the cost of each service, related tax and associated risks to the operation and inherent to the transaction plus the margin expected to be received in each one of the services, taking as references the market prices and conditions, as well as the segmentation of the customer.
In the transactions evaluated in the contracts, changes in the price of the transaction are not identified.
Contract assets with customers
The Bank receives payments from customers based on the provision of the service, in accordance to that established in the contracts. When the Bank incurs costs for providing the service prior to the invoicing, and if these are directly related with a contract, they improve the resources of the entity and are expected to recuperate, these costs correspond to a contract asset. Currently, the Group does not have assets related to contracts with customers.
As a practical expedient, the Bank recognizes the incremental costs of obtaining a contract as an expense when the amortization period of the asset is one year or less.
Contract liabilities with customers
The contract liabilities constitute the obligation of the Bank to transfer the services to a customer, for which the Group has received a payment on the part of the final customer or if the amount is due before the execution of the contract. They also include deferred income related to services that shall be delivered or provided in the future, which will be invoiced to the customer in advance, but which are still not due.
The following table shows the detail of accounts receivable, and contract liabilities balances as at December 31, 2024, 2023 and 2022:
|
|
|
|
|
|
|
|
|
|
|
|
| |
2024 |
2023 |
2022 |
| In millions of COP |
Accounts receivable from contracts with customers(1) |
257,262 |
|
259,516 |
|
192,029 |
|
Liabilities from contracts with customers(2)(3)(4) |
68,040 |
|
60,128 |
|
56,856 |
|
(1) Allowances for receivables from customers are COP 23,639, COP 21,591 and COP 15,330 for the year 2024, 2023 and 2022, respectively.
(2) Contract liabilities are mainly related to commissions received from customers when the Bank issues financial guarantees. They are recognized as income during the term of the contract, according to the form and frequency of payment of the commissions. The weighted-average expected period for income recognition as of December 31, 2024 was 1.5 years, as of December 31, 2023, 1.3 years and as of December 31, 2022 was 1.6 years.
(3) During the years 2024, 2023 and 2022, income was recognized for COP 53,906, COP 55,179 and 45,656 respectively from the liability of contracts with clients at the beginning of the period.
(4) See Note 20. Other liabilities.
The contract liabilities increased COP 7,912 in 2024 and COP 3,272 in 2023. The changes in contract liabilities are due to performance circumscribed in the contract.
Fees and Commissions Expenses
|
|
|
|
|
|
|
|
|
|
|
|
| Fees and Commissions Expenses |
2024 |
2023 |
2022 |
In millions of COP |
| Banking services |
1,704,221 |
1,483,785 |
1,242,590 |
| Sales, collections and other services |
894,836 |
855,480 |
712,266 |
| Correspondent banking |
623,193 |
507,586 |
409,455 |
| Payments and collections |
46,792 |
41,820 |
34,720 |
| Others |
242,732 |
208,609 |
191,135 |
| Total expenses for commissions |
3,511,774 |
3,097,280 |
2,590,166 |
25.4. Other operating income
The following table sets forth the detail of other operating income net for the years ended December 31, 2024, 2023 and 2022:
|
|
|
|
|
|
|
|
|
|
|
|
| Other operating income |
2024 |
2023 |
2022 |
| In millions of COP |
Leases and related services(1) |
1,827,163 |
|
1,771,016 |
|
1,362,677 |
|
Net foreign exchange and Derivatives Foreign exchange contracts(2) |
437,884 |
|
1,215,064 |
|
(373,045) |
|
Investment property valuation(3) |
200,256 |
|
197,526 |
|
236,617 |
|
Gains on sale of assets(4) |
103,481 |
|
170,910 |
|
171,482 |
|
Insurance(5) |
85,993 |
|
86,330 |
|
92,294 |
|
| Other reversals |
75,928 |
|
67,617 |
|
64,467 |
|
Logistics services(6) |
47,880 |
|
136,118 |
|
165,738 |
|
| Penalties for failure to contracts |
7,952 |
|
13,855 |
|
6,833 |
|
| Others |
255,448 |
|
321,214 |
|
326,372 |
|
| Total Other operating income |
3,041,985 |
|
3,979,650 |
|
2,053,435 |
|
(1) Corresponds to operating leases for COP 795,179, COP 833,244 and COP 649,693, other related leasing services for COP 671,251, COP 660,442 and COP 541,436 (see Note 11.1 lessor), property leases for COP 325,286, COP 228,325 and COP 157,511 (see Note 9. Investment properties) and other assets leases for COP 35,447, COP 49,005, COP 14,037 for the years ended December 31, 2024, 2023 and 2022 respectively.
(2) Corresponds to the management of assets and liabilities in foreign currencies and the volatility of the U.S. dollar.
(3) In 2024, the increase occurs due to the indexation of properties to the UVR and due to updating the appraisals of investment properties.
(4) Corresponds mainly to lower gains on assets held for sale, mostly vehicles and assets returned from leasing contracts.
(5)Corresponds to income from insurance operations of Seguros Agromercantil S.A., subsidiary domiciled in Guatemala.
(6) The decrease is mainly due to the total closure of operations of the subsidiary Transportempo. For further information see note 1. Reporting entity.
25.5. Dividends and net income on equity investments
The following table sets forth the dividends and net income on equity investments for the years ended December 31, 2024, 2023 and 2022:
|
|
|
|
|
|
|
|
|
|
|
|
| Dividends and net income on equity investments |
2024 |
2023 |
2022 |
| |
In millions of COP |
Equity method(1) |
222,572 |
113,115 |
219,105 |
Dividends(2) |
140,634 |
127,427 |
59,072 |
Equity investments and other financial instruments(3) |
42,194 |
22,944 |
|
(672) |
(Losses) Gains on sale of investments in associates(4) |
- |
|
- |
|
(34,451) |
Impairment of investments in associates and joint ventures(5) |
(314,347) |
|
(108,175) |
|
(9,633) |
|
Others(6) |
13,520 |
54,874 |
2,433 |
| Total dividends received, and share of profits of equity method investees |
104,573 |
210,185 |
235,854 |
(1)As of December 31, 2024, 2023 and 2022, corresponds to income from equity method of investments in associates for COP 311,193, COP 230,704 and COP 265,885 (includes valuation of investments in associates at fair value), respectively, and joint ventures for COP (88,621), COP (117,589) and (46,780), respectively. For further information, see Note 8. Investments in associates and joint ventures.
(2)As of December 31, 2024, 2023 and 2022, includes dividends received from equity investments at fair value through profit or loss for COP 1,461, COP 768 and COP 6,209 and investments written off for COP 2, COP 341 and COP 116, respectively; dividends from equity investments at fair value through OCI for COP 17,194, COP 18,464 and COP 16,842, respectively and investments written off for COP 3,231 in 2023. Dividends received of the associate at fair
value P.A. Viva Malls are COP 121,977, COP 104,623 and COP 35,905, respectively. For further information, see Note 8. Investments in associates and joint ventures.
(3)For 2024, the variation is in Bancolombia S.A. for COP 34,438 mainly in FCP Pactia Inmobiliario, Inversiones CFNS S.A.S. for COP (9,237) and Banagrícola S.A. for COP (8,227). For 2023, the increase is explained by the effect of the exchange of shares from Bolsa de Valores de Colombia for shares of the Holding Bursátil Regional in Chile. The Holding Bursátil Regional was constituted as of the integration of Colombia, Perú and Chile Stock Exchanges in November 2023.
(4)In December 2022, was registered the spin-off of Protección S.A. and the creation of the company Asulado Seguros de Vida S.A., of which the Bank sold its participation to SURA Asset Management S.A., to comply with the authorized investment regime, and a loss of COP (41,434) was recognized, during the same year as a result of the sale in 2019 of the investments in the associates Avefarma S.A.S, Glassfarma Tech S.A.S. and Panamerican Pharmaceutical Holding Inc., COP 6,983 was received as contingent payment.
(5)As of December 31, 2024, 2023 and 2022, impairment of investments in associates and joint ventures recognized in the Investment Banking segment is COP 156,205, COP 106,574 and COP (5,032) and in other segments is COP 2,091, COP 1,601 and COP 14,665, respectively. For 2024, in Banking Colombia segment is recognized a impairment for COP 156,051. For further information, see Note 8. Investments in associates and joint ventures.
(6)For the three periods, corresponds to gains recognized from a bargain purchase of P.A. Sodimac for COP 13,520 in 2024, of P.A. Calle 84 (2) and P.A. Calle 84 (3) for COP 31,117 and P.A. Nomad Central for COP 23,757 in 2023 and of P.A. FAI Calle 77 (for further information, see Note 9.3. Business combination) in 2022.
NOTE 26. OPERATING EXPENSES
26.1. Salaries and employee benefit
The detail for salaries and employee benefits for the years ended December 31, 2024, 2023 and 2022 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
| Salaries and employee benefit |
2024 |
2023 |
2022 |
| In millions of COP |
Salaries(1) |
2,452,902 |
|
2,286,471 |
|
1,897,710 |
|
Bonuses(2) |
873,739 |
|
940,292 |
|
823,517 |
|
Private premium |
628,882 |
|
651,048 |
|
423,261 |
|
| Social security contributions |
599,171 |
|
546,434 |
|
447,017 |
|
| Indemnization payment |
229,909 |
|
179,916 |
|
189,643 |
|
Other benefits(3) |
843,459 |
|
746,073 |
|
636,508 |
|
| Total salaries and employee benefit |
5,628,062 |
|
5,350,234 |
|
4,417,656 |
|
(1)This is mainly explained by salary increases.
(2)Corresponds mainly to bonuses for employees in accordance with the variable compensation model of the Bank.
(3)Includes vacations, severance and interest on severance, pension and employee benefits (policy benefits, training and recreation).
26.2. Other administrative and general expenses
The detail for administrative and general expenses for the years ended December 31, 2024, 2023 and 2022 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
| Other administrative and general expenses |
2024 |
2023 |
2022 |
| In millions of COP |
Maintenance and repairs(1) |
1,012,853 |
|
900,251 |
|
757,861 |
|
| Fees |
937,643 |
|
943,781 |
|
864,520 |
|
| Insurance |
734,358 |
|
738,786 |
|
640,753 |
|
Data processing(2) |
560,016 |
|
473,059 |
|
362,621 |
|
Frauds and claims(3) |
419,920 |
|
346,899 |
|
258,834 |
|
| Transport |
257,703 |
|
233,856 |
|
232,471 |
|
| Advertising |
179,122 |
|
175,690 |
|
185,122 |
|
| Cleaning and security services |
136,242 |
|
129,460 |
|
117,966 |
|
| Public services |
135,328 |
|
125,433 |
|
119,949 |
|
| Contributions and affiliations |
115,939 |
|
109,038 |
|
116,118 |
|
Useful and stationery(4) |
97,871 |
|
57,061 |
|
55,045 |
|
| Communications |
76,268 |
|
74,685 |
|
72,501 |
|
| Properties improvements and installation |
68,335 |
|
66,438 |
|
70,845 |
|
Disputes, fines and sanctions(5) |
46,093 |
|
43,499 |
|
63,519 |
|
| Real estate management |
38,396 |
|
33,637 |
|
30,216 |
|
| Travel expenses |
32,031 |
|
31,813 |
|
25,600 |
|
| Publications and subscriptions |
23,412 |
|
22,574 |
|
20,644 |
|
| Storage services |
17,845 |
|
16,321 |
|
15,013 |
|
| Short-term and low-value leases |
17,333 |
|
11,577 |
|
19,926 |
|
| Legal expenses |
12,676 |
|
14,136 |
|
10,573 |
|
| Joint operations activities |
9,471 |
|
8,892 |
|
8,357 |
|
| Others |
516,357 |
|
477,058 |
|
511,446 |
|
Total other administrative and general expenses |
5,445,212 |
|
5,033,944 |
|
4,559,900 |
|
Taxes other than income tax |
1,442,511 |
|
1,433,148 |
|
929,512 |
|
(1)The increase is mainly in computer equipment maintenance.
(2)The increase is mainly generated in license maintenance.
(3)The increase is generated mainly in virtual transactions and card frauds.
(4)The increase is mainly due to the issuance, personalization and packaging of debit and credit cards.
(5)The amount for the year 2022 includes the following events: Banagrícola and subsidiaries by USD 4,000 due to out-of-court closing of contingency and in Banistmo and subsidiaries by USD 2,500 due to judgment against.
26.3. Impairment, depreciation and amortization
The detail for Impairment, depreciation and amortization for the years ended December 31, 2024, 2023 and 2022 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
| Impairment, depreciation and amortization |
2024 |
2023 |
2022 |
| In millions of COP |
Depreciation of premises and equipment(1) |
633,755 |
|
636,376 |
|
560,596 |
|
Depreciation of right-of-use assets(2) |
207,560 |
|
229,665 |
|
212,861 |
|
Amortization of intangible assets(3) |
170,140 |
|
212,317 |
|
175,991 |
|
Impairment of other assets, net(4)(5) |
106,426 |
|
46,501 |
|
31,127 |
|
| Total impairment, depreciation and amortization |
1,117,881 |
|
1,124,859 |
|
980,575 |
|
(1)See Note 10 Premises and equipment, net.
(2)See Note 11.2 Lessee.
(3)See Note 12 Goodwill and intangibles assets, net.
(4)Includes value for impairment of property and equipment for COP 842 in 2024, COP 4,480 in 2023 and COP 3,536 in 2022.
(5)The detail of the impairment of other assets net by operating segments for the years ended December 31, 2024, 2023 and 2022 is presented in the table below:
|
|
|
|
|
|
|
|
|
|
|
|
| Impairment (recovery) of other assets, net |
2024 |
2023 |
2022 |
| In millions of COP |
Banking Colombia(1) |
51,626 |
|
45,122 |
|
24,187 |
|
Banking Panama(1) |
28,475 |
|
5,290 |
|
12,599 |
|
| Banking Guatemala |
13,703 |
|
8,929 |
|
12,101 |
|
| International Banking |
5,999 |
|
1,730 |
|
314 |
|
| All other segments |
5,826 |
|
4,713 |
|
1,803 |
|
Banking El Salvador(2) |
732 |
|
(19,283) |
|
(19,877) |
|
| Brokerage |
65 |
|
- |
|
- |
|
Total |
106,426 |
|
46,501 |
|
31,127 |
|
(1)The variation in 2024 with respect to 2023 and 2022 is mainly for
the impairment of assets received in lieu of payment by restatement to
Net realizable value (NRV).
(2) The variation corresponds mainly to the Net realizable value (NRV)
and higher sales generated in 2023.
During 2024, 2023 and 2022, no significant cybersecurity breaches materialized, according to the data security policies established by Management that would warrant disclosure in the Consolidated Financial Statements.
NOTE 27. EARNING PER SHARE (‘EPS’)
Basic EPS is calculated by reducing the income from continuing operations by the amount of dividends declared in the current period for each class of stock and by the contractual amount of dividends that must be paid for the current period, considering the allocation of remaining earnings to common stock and participating securities to the extent that each security may share in earnings as if all of the earnings for the period had been distributed. EPS is determined by dividing the total earnings allocated to each security by the weighted average number of common shares outstanding.
Diluted EPS assumes the issuance of common shares for all dilutive potential common shares outstanding during the reporting period. The Bank had no dilutive potential common shares as of December 31, 2024, 2023 and 2022.
The following table summarizes information related to the computation of basic EPS for the years ended December 31, 2024, 2023 and 2022 (in millions of pesos, except per share data):
|
|
|
|
|
|
|
|
|
|
|
|
| |
2024 |
2023 |
2022 |
| Income from continuing operations before attribution of non-controlling interests |
6,365,581 |
|
6,214,971 |
|
6,996,365 |
|
| Less: Non-controlling interests from continuing operations |
97,837 |
|
98,035 |
|
212,875 |
|
| Net income from controlling interest |
6,267,744 |
|
6,116,936 |
|
6,783,490 |
|
| Less: Preferred dividends declared |
1,541,003 |
|
1,541,003 |
|
1,352,921 |
|
| Less: Allocation of undistributed earnings to preferred stockholders |
1,374,673 |
|
1,303,784 |
|
1,805,191 |
|
| Net income allocated to common shareholders for basic and diluted EPS |
3,352,068 |
|
3,272,149 |
|
3,625,378 |
|
| Weighted average number of common shares outstanding used in basic EPS calculation (In millions) |
510 |
|
510 |
|
510 |
|
| Basic and diluted earnings per share to common shareholders |
6,576 |
|
6,420 |
|
7,113 |
|
| Basic and diluted earnings per share from continuing operations |
6,576 |
|
6,420 |
|
7,113 |
|
NOTE 28. RELATED PARTY TRANSACTIONS
IAS 24 Related Party Disclosures requires that an entity discloses:
(a)Transactions with its related parties; and
(b)Relationships between a parent and its subsidiaries irrespective of whether there have been transactions between them.
Under IAS 24, an entity must disclose information about related party relationships, transactions and outstanding balances, including commitments, recognized in the consolidated and separate financial statements of a parent or investors with joint control or significant influence over, an investee presented in accordance with IFRS 10 Consolidated Financial Statements.
Under this standard parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions, or one other party controls both. This definition applies to the Bank in the cases below:
•Stockholders with ownership interest equal or higher than 20% of the Bank’s capital:
–Grupo de Inversiones Suramericana S.A.
–Fondo Bancolombia ADR Program.
•Members of Board of Directors and Senior Management, understood as the President and corporate Vice-presidents, as well as their close relatives (spouse and children) and the companies in which they have a participation of 10% or more of the Bank's capital.
•Associates and joint ventures for which Bancolombia S.A. or any of the subsidiaries of Bancolombia Group provide commercial banking services and deposits. For these purposes, all companies in which Bancolombia Group has joint control or significant influence have been included. For more information see note 8. Investments in associates and joint control.
Bancolombia S.A. or some of the subsidiaries of the Bancolombia Group provide banking and financial services to its related parties in order to satisfy their liquidity needs, and except for the intercompany merger agreement described below, these transactions are conducted on similar terms to third-party transactions and are not individually material. In the case of treasury operations, Bancolombia operates between its own position and its related parties through transactional channels or systems established for this purpose and under the conditions established by current regulations.
Between the Parent Company and its related parties, during the periods ending at December 31, 2024, 2023 and 2022, there were no:
–Loans that for its contractual terms do not represent a lending transaction.
–Loans with interest rates different to those that are ordinarily paid or charged to third parties in similar conditions of term, risk, etc.
–Operations whose characteristics differ from those carried out with third parties
–Guarantees, pledges or commitments given or received in respect of the aforementioned transactions.
As of December 31, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders with an
interest equal or
higher than 20% of
the Bank's capital(1)
|
Directors and
senior
management |
Associates and
joint ventures |
| In millions of COP |
| Assets |
|
|
|
| Financial assets investments |
1,232 |
|
- |
|
49,643 |
|
| Derivative financial instruments |
1,283 |
|
729 |
|
53 |
|
| Loans and advances to customers |
2,562,324 |
|
23,973 |
|
294,674 |
|
| Allowance for loans, advances and lease losses |
(2,759) |
|
(19) |
|
(2,453) |
|
| Investment in associates and joint ventures |
- |
|
- |
|
2,928,984 |
|
| Other assets |
17,685 |
|
16 |
|
332,811 |
|
| Total assets |
2,579,765 |
|
24,699 |
|
3,603,712 |
|
|
|
|
|
| Liabilities |
|
|
|
| Deposits by customers |
1,522,278 |
|
16,807 |
|
242,996 |
|
| Derivative financial instruments |
53,051 |
|
183 |
|
10,116 |
|
| Other liabilities |
20,044 |
|
91 |
|
73,838 |
|
| Total liabilities |
1,595,373 |
|
17,081 |
|
326,950 |
|
|
|
|
|
| Income |
|
|
|
| Interest on loans and financial leases |
268,820 |
|
1,834 |
|
27,177 |
|
| Valuation on financial instruments |
145 |
|
- |
|
9,504 |
|
| Fees and commissions income |
750,416 |
|
159 |
|
18,004 |
|
Dividends and net income on equity investments |
75 |
|
- |
|
30,202 |
|
| Derivatives Foreign exchange contracts |
(68,910) |
|
1,442 |
|
(6,797) |
|
| Other operating income |
43,476 |
|
70 |
|
47,629 |
|
| Net income |
994,022 |
|
3,505 |
|
125,719 |
|
|
|
|
|
| Expenses |
|
|
|
| Interest expenses |
136,562 |
|
876 |
|
9,066 |
|
| Credit impairment (recovery) charges, net |
1,566 |
|
(29) |
|
2,742 |
|
| Fees and commissions expenses |
477 |
|
- |
|
186,384 |
|
Employee benefits(2) |
105,604 |
|
131 |
|
- |
|
| Other administrative and general expenses |
130,571 |
|
2,711 |
|
77,086 |
|
| Total expenses |
374,780 |
|
3,689 |
|
275,278 |
|
(1)Includes Grupo Sura conglomerate.
(2)In case of stockholders with an interest equal or higher than 20% of the Bank’s capital, includes the benefit provided to employees for insurance policies and for directors and senior management corresponds to the benefit of special credit rates for employees.
As of December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders with an
interest equal or
higher than 20% of
the Bank's capital(1)
|
Directors and
senior
management |
Associates and
joint ventures |
| In millions of COP |
| Assets |
|
|
|
| Financial assets investments |
6,050 |
|
- |
|
54,001 |
|
| Derivative financial instruments |
48,747 |
|
- |
|
7,297 |
|
| Loans and advances to customers |
1,850,407 |
|
22,437 |
|
271,676 |
|
| Allowance for loans, advances and lease losses |
(1,455) |
|
(50) |
|
(760) |
|
| Investment in associates and joint ventures |
- |
|
- |
|
2,997,603 |
|
Other assets |
17,951 |
|
18 |
|
271,263 |
|
| Total assets |
1,921,700 |
|
22,405 |
|
3,601,080 |
|
|
|
|
|
| Liabilities |
|
|
|
| Deposits by customers |
1,434,117 |
|
16,312 |
|
141,853 |
|
| Derivative financial instruments |
14 |
|
209 |
|
1,068 |
|
Other liabilities |
23,070 |
|
59 |
|
70,387 |
|
| Total liabilities |
1,457,201 |
|
16,580 |
|
213,308 |
|
|
|
|
|
| Income |
|
|
|
| Interest on loans and financial leases |
157,451 |
|
1,783 |
|
27,925 |
|
| Valuation on financial instruments |
97 |
|
- |
|
11,998 |
|
| Fees and commissions income |
744,000 |
|
98 |
|
14,647 |
|
Dividends and net income on equity investments(2) |
213 |
|
- |
|
109,563 |
|
| Derivatives Foreign exchange contracts |
63,060 |
|
(218) |
|
27,174 |
|
| Other operating income |
48,531 |
|
9 |
|
9,806 |
|
| Net income |
1,013,352 |
|
1,672 |
|
201,113 |
|
|
|
|
|
| Expenses |
|
|
|
| Interest expenses |
181,085 |
|
1,038 |
|
8,261 |
|
| Credit impairment (recovery) charges, net |
(8,307) |
|
4 |
|
(1,193) |
|
| Fees and commissions expenses |
590 |
|
- |
|
152,563 |
|
Employee benefits(3) |
89,199 |
|
93 |
|
- |
|
| Other administrative and general expenses |
159,184 |
|
2,492 |
|
23,644 |
|
| Total expenses |
421,751 |
|
3,627 |
|
183,275 |
|
(1)Includes Grupo Sura conglomerate.
(2)Includes impairment of associates and joint ventures mainly in Tuya S.A.
(3)In case of stockholders with an interest equal or higher than 20% of the Bank’s capital, includes the benefit provided to employees for insurance policies and for directors and senior management corresponds to the benefit of special credit rates for employees.
As of December 31, 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders with an
interest equal or
higher than 20% of
the Bank’s capital(1)
|
Directors and
senior
management |
Associates and
joint ventures |
| In millions of COP |
| Assets |
|
|
|
| Financial assets investments |
5,711 |
|
- |
|
51,991 |
|
| Derivative financial instruments |
191 |
|
5 |
|
8 |
|
| Loans and advances to customers |
947,150 |
|
28,935 |
|
342,896 |
|
| Allowance for loans, advances and lease losses |
(9,746) |
|
(49) |
|
(3,470) |
|
| Investment in associates and joint ventures |
- |
|
- |
|
2,915,633 |
|
Other assets(2) |
17,520 |
|
41 |
|
209,350 |
|
| Total assets |
960,826 |
|
28,932 |
|
3,516,408 |
|
|
|
|
|
| Liabilities |
|
|
|
| Deposits by customers |
1,364,663 |
|
14,433 |
|
161,708 |
|
| Derivative financial instruments |
23 |
|
- |
|
27,571 |
|
Other liabilities(2) |
26,803 |
|
56 |
|
54,017 |
|
| Total liabilities |
1,391,489 |
|
14,489 |
|
243,296 |
|
|
|
|
|
| Income |
|
|
|
| Interest on loans and financial leases |
74,896 |
|
1,249 |
|
21,715 |
|
| Valuation on financial instruments |
- |
|
- |
|
994 |
|
| Fees and commissions income |
929,721 |
|
100 |
|
20,574 |
|
| Dividends and net income on equity investments |
30 |
|
- |
|
224,602 |
|
| Derivatives Foreign exchange contracts |
(10,158) |
|
984 |
|
(30,484) |
|
| Other operating income |
50,816 |
|
28 |
|
99,855 |
|
| Net income |
1,045,305 |
|
2,361 |
|
337,256 |
|
|
|
|
|
| Expenses |
|
|
|
| Interest expenses |
112,403 |
|
301 |
|
8,483 |
|
| Credit impairment (recovery) charges, net |
10,171 |
|
50 |
|
(550) |
|
| Fees and commissions expenses |
19 |
|
- |
|
180,951 |
|
Employee benefits(3) |
76,455 |
|
117 |
|
- |
|
| Other administrative and general expenses |
161,367 |
|
2,056 |
|
30,792 |
|
| Total expenses |
360,415 |
|
2,524 |
|
219,676 |
|
(1)Includes Grupo Sura conglomerate.
(2)The values disclosed for Other assets and Other liabilities corresponding to Stockholders with an interest equal or higher than 20% as of December 31, 2022 were restated from COP 54,842 to COP 17,520 and from COP 163,385 to 26,803, respectively; this restatement has no effect on the Financial Statements and their notes, and it was also concluded that the revised figures were adjusted and disclosed on a comparative basis.
(3)In case of stockholders with an interest equal or higher than 20% of the Bank’s capital, includes the benefit provided to employees for insurance policies and for directors and senior management corresponds to the benefit of special credit rates
During the years ending December 31, 2024, 2023 and 2022, the Bank paid fees to the directors of COP 2,474, COP 2,306 and COP 1,937, respectively, as compensation for attending meetings of the Board and its Committees.
The payments to senior management in the same periods were COP 20,327, COP 18,387 and COP 15,776 for short-term retributions and COP 643, COP 312 and COP 552 for long-term retributions. In addition, there were payments for post-employment benefits of COP 980 in 2024, COP 827 in 2023 and 642 in 2022.
The Parent Company, which is also the ultimate parent company, is Bancolombia S.A. Transactions between companies included in consolidation, described in the significant accounting policies, see Note 2.C.1 Subsidiaries, meet the definition of related party transactions and were eliminated from the consolidated financial statements.
NOTE 29. LIABILITIES FROM FINANCING ACTIVITIES
The following table presents the reconciliation of the balances of liabilities from financing activities as of December 31, 2024 and 2023:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of
January 1, 2024 |
Cash flows |
Non-cash changes |
Balance as of
December 31, 2024 |
|
Foreign
currency
translation
adjustment |
Interests
accrued |
Other
movements |
|
In millions of COP |
| Liabilities from financing activities |
|
|
|
|
|
|
| Repurchase agreements and other similar secured borrowing |
470,295 |
|
550,584 |
|
39,593 |
|
- |
|
- |
|
1,060,472 |
|
Borrowings from other financial institutions(1) |
15,648,606 |
|
(2,506,604) |
|
1,196,756 |
|
1,349,913 |
|
861 |
|
15,689,532 |
|
Debt instruments in issue(1) |
14,663,576 |
|
(6,226,196) |
|
1,635,724 |
|
1,202,112 |
|
- |
|
11,275,216 |
|
Preferred shares(2) |
584,204 |
|
(57,701) |
|
- |
|
57,701 |
|
- |
|
584,204 |
|
| Total liabilities from financing activities |
31,366,681 |
|
(8,239,917) |
|
2,872,073 |
|
2,609,726 |
|
861 |
|
28,609,424 |
|
(1)The cash flows disclosed in this table related with Borrowings from other financial institutions and Debt securities in issue include the interests paid during the year amounting to COP 1,426,452 and COP 1,104,487, respectively, which are classified as cash flows from operating activities in the Consolidated Statement of Cash Flow.
(2)The cash flow amounting to COP 57,701 corresponds to the fixed minimum dividend paid to the preferred shares' holders and is included in the line "dividends paid" of the Consolidated Statement of Cash Flow, which includes the dividends paid during the year to both preferred and common shares holders.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of
January 1, 2023 |
Cash flows |
Non-cash changes |
Balance as of
December 31, 2023 |
|
Foreign
currency
translation
adjustment |
Interests
accrued |
Other
movements |
|
In millions of COP |
| Liabilities from financing activities |
|
|
|
|
|
|
| Repurchase agreements and other similar secured borrowing |
189,052 |
|
304,846 |
|
(23,603) |
|
- |
|
- |
|
470,295 |
|
Borrowings from other financial institutions(1) |
19,692,638 |
|
(1,674,476) |
|
(4,029,947) |
|
1,658,996 |
|
1,395 |
|
15,648,606 |
|
Debt instruments in issue(1) |
19,575,988 |
|
(3,494,834) |
|
(2,844,193) |
|
1,426,615 |
|
- |
|
14,663,576 |
|
Preferred shares(2) |
584,204 |
|
(57,701) |
|
- |
|
57,701 |
|
- |
|
584,204 |
|
| Total liabilities from financing activities |
40,041,882 |
|
(4,922,165) |
|
(6,897,743) |
|
3,143,312 |
|
1,395 |
|
31,366,681 |
|
(1)The cash flows disclosed in this table related with Borrowings from other financial institutions and Debt securities in issue include the interests paid during the year amounting to COP 1,607,927 and COP 1,347,889, respectively, which are classified as cash flows from operating activities in the Consolidated Statement of Cash Flow.
(2)The cash flow amounting to COP 57,701 corresponds to the fixed minimum dividend paid to the preferred shares' holders and is included in the line "dividends paid" of the Consolidated Statement of Cash Flow, which includes the dividends paid during the year to both preferred and common shares holders.
NOTE 30. FAIR VALUE OF ASSETS AND LIABILITIES
The following table presents the carrying amount and the fair value of the assets and liabilities as of December 31, 2024 and 2023:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note |
December 31, 2024 |
December 31, 2023 |
|
Carrying
amount |
Fair
Value |
Carrying
amount |
Fair
Value |
| In millions of COP |
| Assets |
|
|
|
|
|
| Debt instruments at fair value through profit or loss |
5.1 |
23,035,281 |
|
23,035,281 |
|
12,096,407 |
|
12,096,407 |
|
| Debt instruments at fair value through OCI |
5.1 |
5,084,416 |
|
5,084,416 |
|
6,148,177 |
|
6,148,177 |
|
| Debt instruments at amortized cost |
5.1 |
8,404,878 |
|
8,403,740 |
|
6,848,082 |
|
6,840,867 |
|
| Derivative financial instruments |
5.2 |
2,938,142 |
|
2,938,142 |
|
6,252,270 |
|
6,252,270 |
|
| Equity securities at fair value |
5.1 |
1,011,310 |
|
1,011,310 |
|
543,210 |
|
543,210 |
|
| Other financial instruments |
5.1 |
34,385 |
|
34,385 |
|
38,319 |
|
38,319 |
|
| Loans and advances to customers at amortized cost, net |
6 |
263,274,170 |
|
269,345,583 |
|
237,728,544 |
|
238,771,724 |
|
| Investment properties |
9 |
5,580,109 |
|
5,580,109 |
|
4,709,911 |
|
4,709,911 |
|
Investments in associates(1) |
8 |
1,830,884 |
|
1,830,884 |
|
1,670,782 |
|
1,670,782 |
|
| Total |
|
311,193,575 |
|
317,263,850 |
|
276,035,702 |
|
277,071,667 |
|
| Liabilities |
|
|
|
|
|
| Deposits by customers |
15 |
279,059,401 |
|
279,463,012 |
|
247,941,180 |
|
249,340,519 |
|
| Interbank deposits |
16 |
716,493 |
|
716,493 |
|
606,141 |
|
606,141 |
|
| Repurchase agreements and other similar secured borrowing |
16 |
1,060,472 |
|
1,060,472 |
|
470,295 |
|
470,295 |
|
| Derivative financial instruments |
5.2 |
2,679,643 |
|
2,679,643 |
|
6,710,364 |
|
6,710,364 |
|
| Borrowings from other financial institutions |
17 |
15,689,532 |
|
15,689,532 |
|
15,648,606 |
|
15,648,606 |
|
| Preferred shares |
|
584,204 |
|
407,174 |
|
584,204 |
|
394,550 |
|
| Debt instruments in issue |
18 |
11,275,216 |
|
11,389,498 |
|
14,663,576 |
|
14,468,650 |
|
| Total |
|
311,064,961 |
|
311,405,824 |
|
286,624,366 |
|
287,639,125 |
|
(1)It corresponds to investments in associates P.A. Viva Malls, P.A. Distrito Vera and Fideicomiso Locales Distrito Vera. For further information see Note 8. Investments in associates and joint ventures.
Fair value hierarchy
IFRS 13 establishes a fair value hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable, that reflects the significance of inputs adopted in the measurement process. In accordance with IFRS, the financial instruments are classified as follows:
Level 1: Observable inputs that reflect quoted prices (unadjusted) in active markets for identical assets or liabilities. An active market is a market in which transactions for the asset or liability being measured take place with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability either directly or indirectly. Level 2 generally includes: (i) quoted prices for similar assets or liabilities in active markets; (ii) quoted prices for identical or similar assets or liabilities in markets that are not active, that is, markets in which there are few transactions for the asset or liability.
Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. This category generally includes certain retained residual interests in securitizations, asset-backed securities (ABS) and highly structured or long-term derivative contracts where independent pricing information was not able to be obtained for a significant portion of the underlying assets.
Valuation process for fair value measurements
The valuation to fair value prices is performed using prices, methodologies and inputs provided by the official pricing services provider (Precia - Proveedor de Precios para Valoración S.A.) to the Bank.
All methodologies and procedures developed by the pricing services provider are supervised by the Financial Superintendence of Colombia, which has not objected to them.
Daily, the back-office Service Valuation Officer (SVO) verifies the valuation of investments, and the Credit and Financial Risk Manager area reports the results of the portfolio’s valuation.
Fair value measurement
Assets and liabilities
a. Debt instruments
The Bank assigns prices to those debt investments, using the prices provided by the official pricing services provider (Precia) and assigns the appropriate level according to the procedure described above. For securities not traded or over-the-counter such as certain bonds issued by other financial institutions, the Bank generally determines fair value utilizing internal valuation and standard techniques. These techniques include determination of expected future cash flows which are discounted using curves of the applicable currencies and the Colombian consumer price index (interest rate in this case), modified by the credit risk and liquidity risk. The interest rate is generally computed using observable market data and reference yield curves derived from quoted interest in appropriate time bandings, which match the timings of the cash flows and maturities of the instruments.
b. Equity securities and other financial instruments
The Bank performs the market price valuation of its investments in variable income using the prices provided by the official pricing services provider (Precia) and classifies those investments according to the procedure described above (Hierarchy of fair value section). Likewise, the fair value of unlisted equity securities and other financial instruments is based on an assessment of each individual investment using methodologies that include publicly-traded comparable derived by multiplying a key performance metric (e.g., earnings before interest, taxes, depreciation and amortization) of the portfolio company by the relevant valuation multiple observed for comparable companies, acquisition comparable, and if necessary considered, are subject to appropriate discounts for lack of liquidity or marketability. Interests in investment funds, trusts and collective portfolios are valued using the investment unit value determined by the fund management company. For investment funds where the underlying assets are investment properties, the investment unit value depends on the investment properties value, determined as described below in “i. Investment property”.
c. Derivative financial instruments
The Bank holds positions in standardized derivatives, such as futures over local stocks, and over the market representative rate. These instruments are evaluated according to the information provided by Precia, which perfectly matches the information provided by the Central Counterparty Clearing House – CCP.
Additionally, the Bank holds positions in Over The Counter (OTC) derivatives, which in the absence of prices, are valued using the inputs and methodologies provided by the pricing services provider, which have the no objection of the SFC.
The key inputs depend upon the type of derivative and the nature of the underlying instrument and include interest rate yield curves, foreign exchange rates, the spot price of the underlying volatility, credit curves and correlation of such inputs.
d. Credit valuation adjustment
The Bank measures the effects of the credit risk of its counterparties and its own creditworthiness in determining fair value of the swap, option and forward derivatives.
Counterparty credit-risk adjustments are applied to derivatives when the Bank’s position is a derivative asset and the Bank’s credit risk is incorporated when the position is a derivative liability. The Bank attempts to mitigate credit risk to third parties which are international banks by entering into master netting agreements. The agreements allow to offset or bring net amounts that are liabilities, derivates from transactions carried out by the different agreements. Master netting agreements take different forms and may allow payments to be made under a variety of other master agreements or other negotiation agreements between the same parties; some may have a monthly basis and others only apply at the time the agreements are terminated.
When assessing the impact of credit exposure, only the net counterparty exposure is considered at risk, due to the offsetting of certain same-counterparty positions and the application of cash and other collateral.
The Bank generally calculates the asset’s credit risk adjustment for derivatives transacted with international financial institutions by incorporating indicative credit related pricing that is generally observable in the market (Credit Default Swaps, “CDS”). The credit-risk adjustment for derivatives transacted with non-public counterparties is calculated by incorporating unobservable credit data derived from internal credit qualifications to the financial institutions and corporate companies located in each geography. The Bank also considers its own creditworthiness when determining the fair value of an instrument, including OTC derivative instruments if the Bank believes market participants would take that into account when transacting the respective instrument. The approach to measuring the impact of the Bank’s credit risk on an instrument transacted with international financial institutions is done using the asset swap curve calculated for subordinated bonds issued by the Bank in foreign currency. For derivatives transacted with local financial institutions, the Bank calculates the credit risk adjustment by incorporating credit risk data provided by rating agencies and released in the financial markets.
e. Impaired loans measured at fair value
The Bank measured certain impaired loans based on the fair value of the associated collateral less costs to sell. The fair values were determined as follows using external and internal valuation techniques or third party experts, depending on the type of underlying asset.
For vehicles under leasing arrangements, the Bank uses an internal valuation model based on price curves for each type of vehicle. Such curves show the expected price of the vehicle at different points in time based on the initial price and projection of economic variables such as inflation, devaluation and customs. The prices modelled in the curves are compared every six months with market information for the same or similar vehicles and in the case of significant deviation; the curve is adjusted to reflect the market conditions.
Other vehicles are measured using matrix pricing from a third party. This matrix is used by most of the market participants and is updated monthly. The matrix is developed from values provided by several price providers for identical or similar vehicles and considers brand, characteristics of the vehicles, and manufacturing date among other variables to determine the prices.
For real estate assets, a third-party qualified appraiser is used. The methodologies vary depending on the date of the last appraisal available for the property (the appraisal is estimated based on either of three approaches: cost, sales comparison and income approach, and is required every three years). When the property has been valued in the last 12 months and the market conditions have not shown significant changes, the most recent valuation is considered the fair value of the property.
For all other cases (for example, appraisals older than 12 months) the value of the property is updated by adjusting the value in the last appraisal for weighted factors such as location, type and characteristics of the property, size, structural conditions and the expected sales prices, among others. The factors are determined based on current market information gathered from several external real estate specialists. For all other cases (for example, appraisals older than 12 months) the value of the property is updated by adjusting the value in the last appraisal for weighted factors such as location, type and characteristics of the property, size, structural conditions and the expected sales prices, among others. The factors are determined based on current market information gathered from several external real estate specialists.
f. Assets held for sale measured at fair value less cost of sale
The Bank measures certain impaired foreclosed assets and premises and equipment held for sale based on fair value less costs to sell. The fair values were determined using external and internal valuation techniques, depending on the type of underlying asset. Those assets are comprised mainly of real estate properties for which the appraisal is conducted by experts considering factors such as the location, type and characteristics of the property, size, physical conditions and expected selling costs, among others. Likewise, in some cases the fair value is estimated considering comparable prices or promises of sale and offering prices from auctions process.
g. Mortgage-backed securities (“TIPS”) and Asset-Backed securities
The Bank invests in asset-backed securities for which underlying assets are mortgages and earnings under contracts issued by financial institutions and corporations, respectively. The Bank does not have a significant exposure to sub-prime securities. The asset-backed securities are denominated in local market TIPS and are classified as fair value through profit or loss. These asset-backed securities have different maturities and are generally classified by credit ratings.
TIPS are part of the Bank portfolio and its fair value is measured with published price by the official pricing services provider. These securities are leveled by margin and are assigned level 2 or 3 based on the Precia information.
Residual TIPS have their fair value measured using the discounted flow method, taking into account the amortization tables of the Titularizadora Colombiana, the betas in COP and UVR of Precia (used to construct the curves) and the margins; when they are residual TIPS of subordinated issues, a liquidity premium is applied. These securities are assigned level 3.
h. Investments in associates measured at fair value
The Bank recognizes its investments in P.A Viva Malls, P.A Distrito Vera and Fideicomiso Locales Distrito Vera as associates at fair value. The estimated amount is provided by the fund manager as the variation of the units according to the units owned by the FCP Fondo Inmobiliario Colombia. The associate’s assets are comprised of investment properties which are measured using the following techniques: comparable prices, discounted cash flows, replacement cost and direct capitalization. For further information about techniques methodologies and inputs used by the external party see “Quantitative Information about Level 3 Fair Value Measurements”.
i. Investment property
The Bank’s investment property is valued by external experts, who use valuation techniques based on comparable prices, direct capitalization, discounted cash flows and replacement costs.
Assets and liabilities measured at fair value on a recurring basis
The following table presents for each of the fair-value hierarchy levels the Bank’s assets and liabilities that are measured at fair value on a recurring basis at December 31, 2024 and 2023:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Financial Assets |
| Type of instrument |
December 31, 2024 |
December 31, 2023 |
| Fair value hierarchy |
Total fair
value |
Fair value hierarchy |
Total fair
value |
| Level 1 |
Level 2 |
Level 3 |
Level 1 |
Level 2 |
Level 3 |
| In millions of COP |
| Investment securities |
|
|
|
|
|
|
|
|
| Debt instruments at fair value through profit or loss |
|
|
|
|
|
|
|
| Securities issued by the Colombian Government |
10,625,153 |
|
1,019,028 |
|
- |
|
11,644,181 |
|
4,363,135 |
|
362,470 |
|
- |
|
4,725,605 |
|
| Securities issued or secured by government entities |
- |
|
118,760 |
|
- |
|
118,760 |
|
- |
|
84,990 |
|
- |
|
84,990 |
|
| Securities issued by other financial institutions |
140,703 |
|
513,040 |
|
77,821 |
|
731,564 |
|
41,003 |
|
654,446 |
|
78,729 |
|
774,178 |
|
| Securities issued by foreign governments |
6,191,395 |
|
4,092,055 |
|
- |
|
10,283,450 |
|
3,621,960 |
|
2,652,440 |
|
- |
|
6,274,400 |
|
| Corporate bonds |
124,812 |
|
98,255 |
|
34,259 |
|
257,326 |
|
125,010 |
|
97,940 |
|
14,284 |
|
237,234 |
|
| Total debt instruments at fair value through profit or loss |
17,082,063 |
|
5,841,138 |
|
112,080 |
|
23,035,281 |
|
8,151,108 |
|
3,852,286 |
|
93,013 |
|
12,096,407 |
|
| Debt instruments at fair value through OCI |
|
|
|
|
|
|
|
|
| Securities issued by the Colombian Government |
35,570 |
|
- |
|
2,648,355 |
|
2,683,925 |
|
61,427 |
|
- |
|
2,664,295 |
|
2,725,722 |
|
| Securities issued by other financial institutions |
119,479 |
|
107,614 |
|
49,744 |
|
276,837 |
|
224,049 |
|
149,257 |
|
- |
|
373,306 |
|
| Securities issued by foreign governments |
368,736 |
|
1,115,810 |
|
- |
|
1,484,546 |
|
1,675,193 |
|
762,803 |
|
- |
|
2,437,996 |
|
| Corporate bonds |
60,922 |
|
747 |
|
577,439 |
|
639,108 |
|
63,475 |
|
547,678 |
|
- |
|
611,153 |
|
| Total debt instruments at fair value through OCI |
584,707 |
|
1,224,171 |
|
3,275,538 |
|
5,084,416 |
|
2,024,144 |
|
1,459,738 |
|
2,664,295 |
|
6,148,177 |
|
| Total debt instruments |
17,666,770 |
|
7,065,309 |
|
3,387,618 |
|
28,119,697 |
|
10,175,252 |
|
5,312,024 |
|
2,757,308 |
|
18,244,584 |
|
| Equity securities |
|
|
|
|
|
|
|
|
| Equity securities |
31,086 |
|
262,351 |
|
717,873 |
|
1,011,310 |
|
89,128 |
|
69,400 |
|
384,682 |
|
543,210 |
|
| Total equity securities |
31,086 |
|
262,351 |
|
717,873 |
|
1,011,310 |
|
89,128 |
|
69,400 |
|
384,682 |
|
543,210 |
|
| Other financial assets |
|
|
|
|
|
|
|
|
| Other financial assets |
- |
|
- |
|
34,385 |
|
34,385 |
|
- |
|
- |
|
38,319 |
|
38,319 |
|
| Total other financial assets |
- |
|
- |
|
34,385 |
|
34,385 |
|
- |
|
- |
|
38,319 |
|
38,319 |
|
| Derivative financial instruments |
|
|
|
|
|
|
|
|
| Forwards |
|
|
|
|
|
|
|
|
| Foreign exchange contracts |
- |
|
617,961 |
|
466,869 |
|
1,084,830 |
|
- |
|
3,308,258 |
|
1,073,648 |
|
4,381,906 |
|
| Equity contracts |
- |
|
298 |
|
51,347 |
|
51,645 |
|
- |
|
152 |
|
2,863 |
|
3,015 |
|
| Total forwards |
- |
|
618,259 |
|
518,216 |
|
1,136,475 |
|
- |
|
3,308,410 |
|
1,076,511 |
|
4,384,921 |
|
| Swaps |
|
|
|
|
|
|
|
|
| Foreign exchange contracts |
- |
|
1,200,777 |
|
262,479 |
|
1,463,256 |
|
- |
|
1,066,915 |
|
237,422 |
|
1,304,337 |
|
| Interest rate contracts |
105,560 |
|
114,980 |
|
15,493 |
|
236,033 |
|
130,792 |
|
206,011 |
|
15,621 |
|
352,424 |
|
| Total swaps |
105,560 |
|
1,315,757 |
|
277,972 |
|
1,699,289 |
|
130,792 |
|
1,272,926 |
|
253,043 |
|
1,656,761 |
|
| Options |
|
|
|
|
|
|
|
|
| Foreign exchange contracts |
161 |
|
36,207 |
|
66,010 |
|
102,378 |
|
6 |
|
136,979 |
|
73,603 |
|
210,588 |
|
| Total options |
161 |
|
36,207 |
|
66,010 |
|
102,378 |
|
6 |
|
136,979 |
|
73,603 |
|
210,588 |
|
| Total derivative financial instruments |
105,721 |
|
1,970,223 |
|
862,198 |
|
2,938,142 |
|
130,798 |
|
4,718,315 |
|
1,403,157 |
|
6,252,270 |
|
| Investment properties |
|
|
|
|
|
|
|
|
| Lands |
- |
|
- |
|
499,833 |
|
499,833 |
|
- |
|
- |
|
325,394 |
|
325,394 |
|
| Buildings |
- |
|
- |
|
5,080,276 |
|
5,080,276 |
|
- |
|
- |
|
4,384,517 |
|
4,384,517 |
|
| Total investment properties |
- |
|
- |
|
5,580,109 |
|
5,580,109 |
|
- |
|
- |
|
4,709,911 |
|
4,709,911 |
|
| Investment in associates at fair value |
|
|
|
|
|
|
|
|
| Investment in associates at fair value |
- |
|
- |
|
1,830,884 |
|
1,830,884 |
|
- |
|
- |
|
1,670,782 |
|
1,670,782 |
|
| Total investment in associates at fair value |
- |
|
- |
|
1,830,884 |
|
1,830,884 |
|
- |
|
- |
|
1,670,782 |
|
1,670,782 |
|
| Total |
17,803,577 |
|
9,297,883 |
|
12,413,067 |
|
39,514,527 |
|
10,395,178 |
|
10,099,739 |
|
10,964,159 |
|
31,459,076 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Financial liabilities |
| Type of instrument |
December 31, 2024 |
December 31, 2023 |
| Fair value hierarchy |
Total fair
value |
Fair value hierarchy |
Total fair
value |
| Level 1 |
Level 2 |
Level 3 |
Level 1 |
Level 2 |
Level 3 |
| In millions of COP |
| Derivative financial instruments |
|
|
|
|
|
|
|
|
| Forwards |
|
|
|
|
|
|
|
|
| Foreign exchange contracts |
- |
|
885,520 |
|
86,775 |
|
972,295 |
|
- |
|
4,458,528 |
|
67,825 |
|
4,526,353 |
|
| Equity contracts |
- |
|
89 |
|
1,278 |
|
1,367 |
|
- |
|
8,629 |
|
1,852 |
|
10,481 |
|
| Total forwards |
- |
|
885,609 |
|
88,053 |
|
973,662 |
|
- |
|
4,467,157 |
|
69,677 |
|
4,536,834 |
|
| Swaps |
|
|
|
|
|
|
|
|
| Foreign exchange contracts |
- |
|
1,264,593 |
|
67,838 |
|
1,332,431 |
|
- |
|
1,388,113 |
|
102,973 |
|
1,491,086 |
|
| Interest rate contracts |
102,701 |
|
160,721 |
|
27,646 |
|
291,068 |
|
126,728 |
|
312,051 |
|
11,078 |
|
449,857 |
|
| Total swaps |
102,701 |
|
1,425,314 |
|
95,484 |
|
1,623,499 |
|
126,728 |
|
1,700,164 |
|
114,051 |
|
1,940,943 |
|
| Options |
|
|
|
|
|
|
|
|
| Foreign exchange contracts |
421 |
|
82,061 |
|
- |
|
82,482 |
|
19 |
|
232,568 |
|
- |
|
232,587 |
|
| Total options |
421 |
|
82,061 |
|
- |
|
82,482 |
|
19 |
|
232,568 |
|
- |
|
232,587 |
|
| Total derivative financial instruments |
103,122 |
|
2,392,984 |
|
183,537 |
|
2,679,643 |
|
126,747 |
|
6,399,889 |
|
183,728 |
|
6,710,364 |
|
| Total |
103,122 |
|
2,392,984 |
|
183,537 |
|
2,679,643 |
|
126,747 |
|
6,399,889 |
|
183,728 |
|
6,710,364 |
|
Fair value of assets and liabilities that are not measured at fair value in the Statement of Financial Position
The following table presents for each of the fair-value hierarchy levels the Bank’s assets and liabilities that are not measured at fair value in the Statement of Financial Position, but for which the fair value is disclosed at December 31, 2024 and December 31, 2023:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Assets |
| Type of instrument |
December 31, 2024 |
December 31, 2023 |
| Fair value hierarchy |
Total fair
value |
Fair value hierarchy |
Total fair
value |
| Level 1 |
Level 2 |
Level 3 |
Level 1 |
Level 2 |
Level 3 |
| In millions of COP |
| Debt instruments |
|
|
|
|
|
|
|
|
| Securities issued by the Colombian Government |
156,209 |
|
- |
|
- |
|
156,209 |
|
67,514 |
|
- |
|
- |
|
67,514 |
|
| Securities issued or secured by government entities |
- |
|
46,272 |
|
3,326,959 |
|
3,373,231 |
|
- |
|
49,980 |
|
3,075,936 |
|
3,125,916 |
|
| Securities issued by other financial institutions |
284,281 |
|
57,091 |
|
250,508 |
|
591,880 |
|
209,178 |
|
280,662 |
|
55,112 |
|
544,952 |
|
| Securities issued by foreign governments |
412,579 |
|
227,076 |
|
- |
|
639,655 |
|
150,695 |
|
377,560 |
|
- |
|
528,255 |
|
| Corporate bonds |
1,050,588 |
|
14,017 |
|
2,578,160 |
|
3,642,765 |
|
774,624 |
|
12,620 |
|
1,786,986 |
|
2,574,230 |
|
| Total – Debt instruments |
1,903,657 |
|
344,456 |
|
6,155,627 |
|
8,403,740 |
|
1,202,011 |
|
720,822 |
|
4,918,034 |
|
6,840,867 |
|
| Loans and advances to customers, net |
- |
|
- |
|
269,345,583 |
|
269,345,583 |
|
- |
|
- |
|
238,771,724 |
|
238,771,724 |
|
| Total |
1,903,657 |
|
344,456 |
|
275,501,210 |
|
277,749,323 |
|
1,202,011 |
|
720,822 |
|
243,689,758 |
|
245,612,591 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Liabilities |
| Type of instruments |
December 31, 2024 |
December 31, 2023 |
| Fair value hierarchy |
Total fair
value |
Fair value hierarchy |
Total fair
value |
| Level 1 |
Level 2 |
Level 3 |
Level 1 |
Level 2 |
Level 3 |
| In millions of COP |
| Deposits by customers |
- |
|
60,894,992 |
|
218,568,020 |
|
279,463,012 |
|
- |
|
60,236,355 |
|
189,104,164 |
|
249,340,519 |
|
| Interbank deposits |
- |
|
- |
|
716,493 |
|
716,493 |
|
- |
|
- |
|
606,141 |
|
606,141 |
|
| Repurchase agreements and other similar secured borrowing |
- |
|
- |
|
1,060,472 |
|
1,060,472 |
|
- |
|
- |
|
470,295 |
|
470,295 |
|
| Borrowings from other financial institutions |
- |
|
- |
|
15,689,532 |
|
15,689,532 |
|
- |
|
- |
|
15,648,606 |
|
15,648,606 |
|
| Debt instruments in issue |
5,811,412 |
|
2,669,991 |
|
2,908,095 |
|
11,389,498 |
|
8,021,700 |
|
4,025,322 |
|
2,421,628 |
|
14,468,650 |
|
| Preferred shares |
- |
|
- |
|
407,174 |
|
407,174 |
|
- |
|
- |
|
394,550 |
|
394,550 |
|
| Total |
5,811,412 |
|
63,564,983 |
|
239,349,786 |
|
308,726,181 |
|
8,021,700 |
|
64,261,677 |
|
208,645,384 |
|
280,928,761 |
|
IFRS requires entities to disclose the fair value of financial instruments, both assets and liabilities recognized and not recognized in the statement of financial position, for which it is practicable to estimate fair value. Certain categories of assets and liabilities, however, are not eligible for fair value accounting. The financial instruments below are not measured at fair value on a recurring and nonrecurring basis:
Short-term financial instruments
Short-term financial instruments are valued at their carrying amounts included in the consolidated statement of financial position, which are reasonable estimates of fair value due to the relatively short period to maturity of the instruments. This approach was used for cash and cash equivalents, accrued interest receivable, customers’ acceptances, accounts receivable, accounts payable, accrued interest payable and bank acceptances outstanding.
Deposits from customers
The fair value of time deposits was estimated based on the discounted value of cash flows using the appropriate discount rate for the applicable maturity. Fair value of deposits with no contractual maturities represents the amount payable on demand as of the statement of financial position date.
Interbank deposits and repurchase agreements and other similar secured borrowings
Short-term interbank borrowings and repurchase agreements have been valued at their carrying amounts because of their relatively short-term nature. Long-term and domestic development bank borrowings have also been valued at their carrying amount because they bear interest at variable rates.
Borrowings from other financial institutions
The fair value of borrowings from other financial institutions were determined using discounted cash flow models. The cash flows projection of capital and interest was made according to the contractual terms, considering capital amortization and interest bearing. Subsequently, the cash flows were discounted using reference curves formed by the weighted average of the Bank’s deposit rates.
Debt instruments in issue
The fair value of debt instruments in issue, comprised of bonds issued by Bancolombia S.A. and its subsidiaries, was estimated substantially based on quoted market prices. The fair value of certain bonds which do not have a public trading market, were determined based on the discounted value of cash flows using the rates currently offered for bonds of similar remaining maturities and the Bank’s creditworthiness.
Preferred shares
In the valuation of the liability component of preferred shares related to the minimum dividend of 1% of the subscription price, the Bank uses the Gordon Model to price the obligation, taking into account its own credit risk, which is measured using the market spread based on observable inputs such as quoted prices of sovereign debt.
The Gordon Model is commonly used to determine the intrinsic value of a stock based on a future series of dividends that are estimated by the Bank and growth at a constant rate considering the Bank’s own perspectives of the payout ratio.
Loans and advances to customers
Estimating the fair value of loans and advances to customers is considered an area of considerable uncertainty as there is no observable market. The loan portfolio is stratified into tranches and loans segments such as commercial, consumer, small business loans, mortgage and leasing. The fair value of loans and advances to customers and financial institutions is determined using a discounted cash flow methodology, considering each credit’s principal and interest projected cash flows to the prepayment date. The projected cash flows are discounted using reference curves according to the type of loan and its maturity date.
Items measured at fair value on a non-recurring basis
The Bank measures assets held for sale based on fair value less costs to sell. This category includes certain foreclosed assets and investments in associates held for sale. The fair values were determined using external and internal valuation techniques or third party experts, depending on the type of underlying asset. The following breakdown sets forth the fair value hierarchy of those assets classified by type:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2024 |
December 31, 2023 |
| Type of instruments |
Fair-value hierarchy |
Total fair
value |
Fair-value hierarchy |
Total fair
value |
|
Level 1 |
Level 2 |
Level 3 |
Level 1 |
Level 2 |
Level 3 |
| In millions of COP |
| Machinery and equipment |
- |
- |
10,085 |
10,085 |
- |
- |
11,702 |
11,702 |
| Real estate for residential purposes |
- |
- |
133,863 |
133,863 |
- |
- |
117,476 |
117,476 |
| Real estate different from residential properties |
- |
- |
29,794 |
29,794 |
- |
- |
30,273 |
30,273 |
| Total |
- |
- |
173,742 |
173,742 |
- |
- |
159,451 |
159,451 |
Changes in level 3 fair-value category
The table below presents reconciliation for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs at December 31, 2024 and 2023:
As of December 31, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Type of instruments |
Balance,
January 1,
2024 |
Included
in
earnings |
OCI |
Purchases |
Settlement |
Reclassifications(1) |
Prepaids |
Transfers
in to
level 3 |
Transfers
out of
level 3 |
Balance,
December 31,
2024 |
| In millions of COP |
| Assets |
|
|
|
|
|
|
|
|
|
|
| Debt instruments at fair value though profit or loss |
|
|
|
|
|
|
|
|
|
|
| Securities issued or secured by other financial entities |
78,729 |
|
2,042 |
|
- |
|
14,696 |
|
(12,157) |
|
- |
|
(3,117) |
|
3,195 |
|
(5,567) |
|
77,821 |
|
| Corporate bonds |
14,284 |
|
538 |
|
- |
|
2,994 |
|
- |
|
- |
|
- |
|
16,443 |
|
- |
|
34,259 |
|
| Total |
93,013 |
|
2,580 |
|
- |
|
17,690 |
|
(12,157) |
|
- |
|
(3,117) |
|
19,638 |
|
(5,567) |
|
112,080 |
|
| Debt instruments at fair value through OCI |
|
|
|
|
|
|
|
|
|
|
| Securities issued by the Colombian Government |
2,664,295 |
|
- |
|
157,708 |
|
2,490,647 |
|
(2,664,295) |
|
- |
|
- |
|
- |
|
- |
|
2,648,355 |
|
| Securities issued or secured by other financial entities |
- |
|
- |
|
(272) |
|
50,016 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
49,744 |
|
| Corporate bonds |
- |
|
- |
|
1,892 |
|
71,517 |
|
- |
|
- |
|
- |
|
504,030 |
|
- |
|
577,439 |
|
| Total |
2,664,295 |
|
- |
|
159,328 |
|
2,612,180 |
|
(2,664,295) |
|
- |
|
- |
|
504,030 |
|
- |
|
3,275,538 |
|
| Derivative financial instruments |
|
|
|
|
|
|
|
|
|
|
| Foreign exchange contracts |
1,384,673 |
|
(45,870) |
|
- |
|
592,047 |
|
(1,193,801) |
|
(11,487) |
|
- |
|
155,582 |
|
(85,786) |
|
795,358 |
|
| Interest rate contracts |
15,621 |
|
(2,591) |
|
- |
|
6,910 |
|
(3,606) |
|
(138) |
|
- |
|
3,909 |
|
(4,612) |
|
15,493 |
|
| Equity contracts |
2,863 |
|
- |
|
- |
|
51,347 |
|
(2,863) |
|
- |
|
- |
|
- |
|
- |
|
51,347 |
|
| Total |
1,403,157 |
|
(48,461) |
|
- |
|
650,304 |
|
(1,200,270) |
|
(11,625) |
|
- |
|
159,491 |
|
(90,398) |
|
862,198 |
|
| Equity securities |
|
|
|
|
|
|
|
|
|
|
| Equity securities |
384,682 |
|
48,562 |
|
50,303 |
|
261,301 |
|
(26,973) |
|
- |
|
- |
|
- |
|
(2) |
|
717,873 |
|
| Total |
384,682 |
|
48,562 |
|
50,303 |
|
261,301 |
|
(26,973) |
|
- |
|
- |
|
- |
|
(2) |
|
717,873 |
|
| Other financial instruments |
|
|
|
|
|
|
|
|
|
|
| Other financial instruments |
38,319 |
|
(5,646) |
|
- |
|
1,712 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
34,385 |
|
| Total |
38,319 |
|
(5,646) |
|
- |
|
1,712 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
34,385 |
|
| Investment in associates |
|
|
|
|
|
|
|
|
|
|
| P.A. Viva Malls |
1,661,679 |
|
155,824 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
1,817,503 |
|
| P.A. Distrito Vera |
9,103 |
|
(401) |
|
- |
|
5,186 |
|
(563) |
|
- |
|
- |
|
- |
|
- |
|
13,325 |
|
| Fideicomiso Locales Distrito Vera |
- |
|
(5) |
|
- |
|
61 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
56 |
|
| Total |
1,670,782 |
|
155,418 |
|
- |
|
5,247 |
|
(563) |
|
- |
|
- |
|
- |
|
- |
|
1,830,884 |
|
| Total Assets |
6,254,248 |
|
152,453 |
|
209,631 |
|
3,548,434 |
|
(3,904,258) |
|
(11,625) |
|
(3,117) |
|
683,159 |
|
(95,967) |
|
6,832,958 |
|
| Liabilities |
|
|
|
|
|
|
|
|
|
|
| Derivative financial instruments |
|
|
|
|
|
|
|
|
|
|
| Foreign exchange contracts |
170,798 |
|
48,127 |
|
- |
|
114,156 |
|
(95,051) |
|
(11,487) |
|
- |
|
3,194 |
|
(75,124) |
|
154,613 |
|
| Interest rate contracts |
11,078 |
|
(50) |
|
- |
|
206 |
|
(4,595) |
|
(138) |
|
- |
|
27,432 |
|
(6,287) |
|
27,646 |
|
| Equity contracts |
1,852 |
|
- |
|
- |
|
1,278 |
|
(1,852) |
|
- |
|
- |
|
- |
|
- |
|
1,278 |
|
| Total |
183,728 |
|
48,077 |
|
- |
|
115,640 |
|
(101,498) |
|
(11,625) |
|
- |
|
30,626 |
|
(81,411) |
|
183,537 |
|
| Total liabilities |
183,728 |
|
48,077 |
|
- |
|
115,640 |
|
(101,498) |
|
(11,625) |
|
- |
|
30,626 |
|
(81,411) |
|
183,537 |
|
(1)From derivative assets to derivative liabilities classified in level 3 and vice versa.
As of December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Type of instruments |
Balance,
January 1,
2023 |
Included
in
earnings |
OCI |
Purchases |
Settlement |
Reclassifications(1) |
Prepaids |
Transfers
in to
level 3 |
Transfers
out of
level 3 |
Balance,
December 31,
2023 |
| In millions of COP |
| Assets |
|
|
|
|
|
|
|
|
|
|
| Debt instruments at fair value though profit or loss |
|
|
|
|
|
|
|
|
|
|
| Securities issued by the Colombian Government |
- |
(4,150) |
- |
4,150 |
- |
- |
- |
- |
- |
- |
| Securities issued or secured by other financial entities |
81,389 |
12,869 |
- |
2,639 |
(12,767) |
|
- |
(9,613) |
|
4,212 |
- |
78,729 |
| Corporate bonds |
- |
- |
- |
- |
- |
- |
- |
14,284 |
- |
14,284 |
| Total |
81,389 |
8,719 |
- |
6,789 |
(12,767) |
- |
|
(9,613) |
18,496 |
- |
|
93,013 |
| Debt instruments at fair value through OCI |
|
|
|
|
|
|
|
|
|
|
| Securities issued by the Colombian Government |
- |
- |
173,648 |
|
2,490,647 |
|
- |
- |
- |
- |
- |
2,664,295 |
| Total |
- |
|
- |
|
173,648 |
|
2,490,647 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
2,664,295 |
|
| Derivative financial instruments |
|
|
|
|
|
|
|
|
|
|
| Foreign exchange contracts |
1,163,336 |
(60,699) |
- |
1,295,089 |
(812,275) |
|
(13,559) |
|
- |
46,459 |
(233,678) |
|
1,384,673 |
| Interest rate contracts |
29,170 |
(10,694) |
- |
6,957 |
(4,593) |
|
(38) |
|
- |
525 |
(5,706) |
|
15,621 |
| Equity contracts |
105 |
- |
- |
2,863 |
(105) |
|
- |
- |
- |
- |
2,863 |
| Total |
1,192,611 |
(71,393) |
- |
1,304,909 |
(816,973) |
(13,597) |
- |
46,984 |
(239,384) |
1,403,157 |
| Equity securities |
|
|
|
|
|
|
|
|
|
|
Equity securities |
462,253 |
(3,577) |
|
(8,087) |
6,740 |
(72,647) |
|
- |
- |
- |
- |
384,682 |
| Total |
462,253 |
(3,577) |
(8,087) |
6,740 |
(72,647) |
- |
- |
- |
- |
384,682 |
| Other financial instruments |
|
|
|
|
|
|
|
|
|
|
| Other financial instruments |
42,171 |
(13,746) |
|
- |
9,894 |
- |
- |
- |
- |
- |
38,319 |
| Total |
42,171 |
(13,746) |
- |
9,894 |
- |
- |
- |
- |
- |
38,319 |
| Investment in associates |
|
|
|
|
|
|
|
|
|
|
| P.A. Viva Malls |
1,530,459 |
128,028 |
- |
3,192 |
- |
- |
- |
- |
- |
1,661,679 |
| P.A. Distrito Vera |
1,697 |
1,179 |
|
- |
6,227 |
- |
- |
- |
- |
- |
9,103 |
| Total |
1,532,156 |
129,207 |
- |
9,419 |
- |
- |
- |
- |
- |
1,670,782 |
| Total Assets |
3,310,580 |
49,210 |
165,561 |
3,828,398 |
(902,387) |
(13,597) |
(9,613) |
65,480 |
(239,384) |
6,254,248 |
| Liabilities |
|
|
|
|
|
|
|
|
|
|
| Derivative financial instruments |
|
|
|
|
|
|
|
|
|
|
| Foreign exchange contracts |
348,027 |
15,346 |
- |
164,179 |
(329,858) |
|
(13,559) |
|
- |
4,330 |
(17,667) |
|
170,798 |
| Interest rate contracts |
51,662 |
(6,297) |
- |
3,628 |
(41,002) |
|
(38) |
|
- |
3,734 |
(609) |
|
11,078 |
| Equity contracts |
- |
- |
- |
1,852 |
- |
- |
- |
- |
- |
1,852 |
| Total |
399,689 |
9,049 |
- |
169,659 |
(370,860) |
(13,597) |
- |
8,064 |
(18,276) |
183,728 |
| Total liabilities |
399,689 |
9,049 |
- |
169,659 |
(370,860) |
(13,597) |
- |
8,064 |
(18,276) |
183,728 |
(1)From derivative assets to derivative liabilities classified in level 3 and vice versa.
Level 3 fair value rollforward
The following were the significant level 3 transfers at December 31, 2024 and 2023:
As of December 31, 2024 and 2023, net transfers in Bancolombia S.A. for COP 8,987 and COP 257,660, respectively, from level 3 to level 2 of derivatives foreign exchange contracts and interest rate contracts, it was presented due to the transfer of the credit risk of the counterparty to the own credit risk. As of December 31, 2024, net transfers for COP 128,865, from level 2 to level 3 of the derivative foreign exchange contracts and interest rate contracts, it was presented due to the transfer of the credit risk from the Bank to the credit risk of the counterparty.
As of December 31, 2024, there are corporate bonds of debt instruments at fair value through OCI for COP 577,439. Additionally, there is a transfer from level 2 to level 3 of debt instruments of corporate bonds for COP 504,030.
As of December 31, 2024 and 2023, unrealized gains and losses on debt instruments were COP 2,580 and COP 8,719; equity securities COP 48,562 and COP (3,577), respectively.
Transfers between level 1 and level 2 of the fair value hierarchy
The table below presents the transfers for all assets and liabilities measured at fair value on a recurring basis between level 1 and level 2 as of December 31, 2024 and 2023:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2024 |
December 31, 2023 |
| Type of instruments |
Transfers level 1
to level 2 |
Transfers level
2 to level 1 |
Transfers level
1 to level 2 |
Transfers level
2 to level 1 |
| In millions of COP |
| Debt instruments at fair value though profit or loss |
|
|
|
|
| Securities issued by the Colombian Government |
202,779 |
|
- |
|
- |
|
- |
|
| Securities issued or secured by foreign government |
26,866 |
|
929 |
|
1,712 |
|
- |
|
| Securities issued or secured by government entities |
- |
|
- |
|
13,619 |
|
- |
|
| Corporate bonds |
- |
|
- |
|
- |
|
8,397 |
|
| Securities issued or secured by other financial entities |
- |
|
- |
|
1,848 |
|
- |
|
| Total |
229,645 |
|
929 |
|
17,179 |
|
8,397 |
|
| Debt instruments at fair value through OCI |
|
|
|
|
| Securities issued or secured by foreign government |
467,133 |
|
137,884 |
|
572,800 |
|
- |
|
| Securities issued or secured by other financial entities |
- |
|
- |
|
64,944 |
|
- |
|
| Corporate bonds |
- |
|
- |
|
- |
|
95,572 |
|
| Total |
467,133 |
|
137,884 |
|
637,744 |
|
95,572 |
|
| Equity securities |
|
|
|
|
| Equity securities |
63,827 |
|
- |
|
13,740 |
|
7 |
|
| Total |
63,827 |
|
- |
|
13,740 |
|
7 |
|
During 2024, the Bank transferred securities from level 1 to level 2, because such securities decreased in liquidity and were traded less frequently in an active market.
All transfers are assumed to occur at the end of the reporting period.
Quantitative information about level 3 fair value measurements
The fair value of financial instruments is, in certain circumstances, measured using valuation techniques that incorporate assumptions that are not evidenced by prices from observable market transactions in the same instrument and are not based on observable market data. Changing one or more of the inputs to the valuation models to reasonably possible alternative assumptions would change the fair values and therefore a valuation adjustment would be recognized in profit or loss. Favorable and unfavorable changes are determined on the basis of changes in the value of the instrument as a result of varying the levels of the unobservable input as described in the table below.
The following table sets forth information about significant unobservable inputs related to the Bank’s material categories of level 3 financial assets and liabilities and the sensitivity of these fair values to reasonably possible alternative assumptions.
As of December 31, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Type of instruments |
Fair Value |
Valuation
technique |
Significant
unobservable input |
Range of
inputs |
Weighted
average |
Sensitivity
100
basis point
increase |
Sensitivity
100
basis point
decrease |
| In millions of COP |
| Debt instruments |
|
|
|
|
|
|
|
| Securities issued by other financial institutions |
|
|
|
|
|
|
|
|
|
|
Yield |
0.14% to 10.66% |
3.61 |
% |
61,474 |
|
65,164 |
|
| TIPS |
63,280 |
|
Discounted cash flow |
Prepayment Speed |
n/a |
n/a |
65,081 |
|
n/a |
|
|
|
Prepayment Speed |
n/a |
n/a |
60,732 |
|
n/a |
| Other bonds |
62,558 |
|
Discounted cash flow |
Interest rate |
0.10% to 1.12% |
0.94 |
% |
61,003 |
|
64,177 |
|
| Time deposits |
1,727 |
|
Discounted cash flow |
Yield / Interest rate |
0.91% to 6.40% |
3.36 |
% |
1,441 |
|
1,772 |
|
| Total securities issued by other financial institutions |
127,565 |
|
|
|
|
|
|
|
| Securities issued by the Colombian Government |
|
|
|
|
|
|
|
| Bonds by government entities |
2,648,355 |
|
Discounted cash flow |
Yield |
1.18% to 1.18% |
1.18 |
% |
2,639,349 |
|
2,660,301 |
|
| Corporate bonds |
|
|
|
|
|
|
|
| Corporate bonds |
611,698 |
|
Discounted cash flow |
Yield |
0.00% to 5.25% |
0.98 |
% |
573,929 |
|
647,264 |
|
| Total debt instruments |
3,387,618 |
|
|
|
|
|
|
|
| Equity securities |
|
|
|
|
|
|
|
| Equity securities |
717,873 |
|
Price-based |
Price |
n/a |
n/a |
n/a |
n/a |
| Other financial instruments |
|
|
|
|
|
|
|
| Other financial instruments |
34,385 |
|
Internal valuation methodology |
Internal valuation methodology |
n/a |
n/a |
n/a |
n/a |
| Derivative financial instruments |
|
|
|
|
|
|
|
| Forward |
430,163 |
|
Discounted cash flow |
Credit spread / Yield |
0.00% to 20.80% |
7.05 |
% |
429,581 |
|
430,753 |
|
| Swaps |
182,488 |
|
Discounted cash flow |
Credit spread |
0.00% to 56.14% |
4.03 |
% |
166,650 |
|
204,677 |
|
| Options |
66,010 |
|
Discounted cash flow |
Credit spread |
0.12% to 34.75% |
0.50 |
% |
65,512 |
|
66,242 |
|
| Total derivative financial instruments |
678,661 |
|
|
|
|
|
|
|
| Investment in associates |
|
|
|
|
|
|
|
| P.A. Viva Malls |
1,817,503 |
|
Price-based |
Price |
n/a |
n/a |
n/a |
n/a |
| P.A. Distrito Vera |
13,325 |
|
Price-based |
Price |
n/a |
n/a |
n/a |
n/a |
| Fideicomiso Locales Distrito Vera |
56 |
|
Price-based |
Price |
n/a |
n/a |
n/a |
n/a |
| Total investment in associates |
1,830,884 |
|
|
|
|
|
|
|
As of December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Type of instruments |
Fair Value |
Valuation
technique |
Significant
unobservable input |
Range of
inputs |
Weighted
average |
Sensitivity
100
basis point
increase |
Sensitivity
100
basis point
decrease |
| In millions of COP |
| Debt instruments |
|
|
|
|
|
|
|
| Securities issued by other financial institutions |
|
|
|
|
|
|
|
|
|
|
Yield |
2.06% to 10.73% |
5.48 |
% |
70,982 |
|
75,852 |
|
| TIPS |
74,087 |
|
Discounted cash flow |
Prepayment Speed |
n/a |
n/a |
78,953 |
|
n/a |
|
|
|
Prepayment Speed |
n/a |
n/a |
73,271 |
|
n/a |
| Time deposits |
4,642 |
|
Discounted cash flow |
Yield / Interest rate |
2.15% to 5.70% |
3.78 |
% |
4,277 |
|
4,701 |
|
| Total securities issued by other financial institutions |
78,729 |
|
|
|
|
|
|
|
| Securities issued by the Colombian Government |
|
|
|
|
|
|
|
| Bonds by government entities |
2,664,295 |
|
Discounted cash flow |
Yield |
0.00% to 1.18% |
1.17 |
% |
2,658,010 |
|
2,679,372 |
|
| Corporate bonds |
|
|
|
|
|
|
|
| Corporate bonds |
14,284 |
|
Discounted cash flow |
Yield |
3.49% to 3.49% |
3.49 |
% |
13,700 |
|
14,912 |
|
| Total debt instruments |
2,757,308 |
|
|
|
|
|
|
|
| Equity securities |
|
|
|
|
|
|
|
| Equity securities |
384,682 |
|
Price-based |
Price |
n/a |
n/a |
n/a |
n/a |
| Other financial instruments |
|
|
|
|
|
|
|
| Other financial instruments |
38,319 |
|
Internal valuation methodology |
Internal valuation methodology |
n/a |
n/a |
n/a |
n/a |
| Derivative financial instruments |
|
|
|
|
|
|
|
| Forward |
1,006,834 |
|
Discounted cash flow |
Credit spread / Yield |
0.00% to 50.58% |
7.22 |
% |
1,004,399 |
|
1,009,283 |
|
| Swaps |
138,992 |
|
Discounted cash flow |
Credit spread |
0.00% to 63.39% |
5.86 |
% |
139,451 |
|
138,577 |
|
| Options |
73,603 |
|
Discounted cash flow |
Credit spread |
0.13% to 33.77% |
0.57 |
% |
73,048 |
|
73,870 |
|
| Total derivative financial instruments |
1,219,429 |
|
|
|
|
|
|
|
| Investment in associates |
|
|
|
|
|
|
|
| P.A. Viva Malls |
1,661,679 |
|
Price-based |
Price |
n/a |
n/a |
n/a |
n/a |
| P.A. Distrito Vera |
9,103 |
|
Price-based |
Price |
n/a |
n/a |
n/a |
n/a |
| Total investment in associates |
1,670,782 |
|
|
|
|
|
|
|
The following table sets forth information about valuation techniques used in the measurement of the fair value investment properties of the Bank, the significant unobservable inputs and the respective sensitivity:
|
|
|
|
|
|
|
|
|
|
|
|
| Methodology |
Valuation technique |
Significant unobservable input |
Description of sensitivity |
|
Sales Comparison Approach - SCA
The fair value assessment is based on the examination of prices at which similar properties in the same area recently sold. Since no two properties are identical the measurement valuation must take into account adjustments for the differences between the sold properties and those held by the Bank to earn rentals or for capital appreciation.
|
Comparable prices |
The weighted average rates used in the capitalization methodology for revenues in the last quarter for 2024 are:
•Direct capitalization: initial rate 8.13%.
•Discounted cash flow: discount rate: 12.27%, terminal rate: 8.29%.
The same weighted rates for the last quarter of 2023 were:
•Direct capitalization: initial rate 8.07%
•Discounted cash flow: discount rate: 12.44%, terminal rate: 8.25%.
The ratio between monthly gross income and real estate value directly administered by the FIC (rental rate) considering the differences in placements and individual factors between properties and in a weighted way in the last quarter of 2024 are 0.88% and for December 31, 2023 was 0.82%.
|
An increase (light, normal, considerable, significant) in the capitalization rate used would generate a decrease (significant, considerable, normal, light) in the fair value of the asset, and vice versa.
An increase (light, normal, considerable, significant) in the leases used in the valuation would generate a (significant, light, considerable) increase in the fair value of the asset, and vice versa.
|
|
Income Approach
Used to estimate the fair value of the property by taking future net cash flows and discounting them at the capitalization rate.
|
Direct capitalization
Discounted cash flows
|
|
Cost approach
Used to estimate the fair value of the property considering the cost to replace or build a property at the same or equal conditions of the asset to be measured, deducting the accumulated depreciation charge and adding-up the amount of the land.
|
Replacement cost |
There has been no change to the valuation technique during the year 2024 for each asset.
NOTE 31. SUBSEQUENT EVENTS
Approval of Consolidated Financial Statements
The consolidated financial statements were approved by the Board of Directors on March 28, 2025.
In connection with the procedures aimed to modify the corporate structure of Bancolombia and its subsidiaries by creating a holding company named Grupo Cibest S.A. ("Grupo Cibest"), and the completion of a series of related corporate transactions (the "Corporate Structure Changes"), the Superintendencia Financiera de Colombia (the “Financial Superintendence of Colombia” or the “SFC”), through Resolution 0356 of February 28, 2025, resolved to:
• Not object to the merger of Sociedad Beneficiaria BC Panamá S.A.S., into Bancolombia.
• Approve the distribution of certain assets and subsidiaries of Banca de Inversión Bancolombia to Bancolombia.
• Approve the distribution of certain assets and subsidiaries of Bancolombia to Grupo Cibest.
With the non-objection and the approvals issued by the SFC, all of the required regulatory authorizations regarding the Corporate Structure Changes have been obtained.
RISK MANAGEMENT
The Bank’s comprehensive risk management is developed in compliance with current regulations and internal standards as defined by the Board of Directors, in relation to market, credit/ counterparty, liquidity and interest rate of the banking book, operational, business continuity, technological and cybersecurity risk, country risk, Risk Appetite Framework (MAR) and stress tests applicable. In accordance with the requirements of the External Circular (EC) 018 as of September 2021 about the “Comprehensive Risk Management System (SIAR)”, we work continues to comply the applicable instructions for the implementation for the management of interest rate risk of the banking book (RTILB), considering the testing period and the into force and into force on External Circular (EC) 018 as of September 2021 about the “Comprehensive Risk Management System (SIAR)”, we work continues to comply the applicable instructions for the implementation for the management of interest rate risk of the banking book (RTILB), considering the testing period and the into force and into force on n December 31, 2024.
To strengthen comprehensive risk management, the Bank has a Three Lines Model, with a cohesive and coordinated approach, in which its independence is guaranteed. Within the Corporate Governance Framework, the roles of the responsible areas in each line are defined, according to the level of responsibility in Bancolombia, in order to guarantee effective and efficient coordination among them for risk management (in its different stages) and internal control.
First line: owns the processes, products, services, channels, whose activities manage the risks that may contribute or impede the achievement of the Bank’s objectives. The first line owns the risk and defines the design and execution of the organization's controls to respond to those risks.
The 1st line is made up of 1A and 1B, highlighting the following characteristics:
•Identification, evaluation, control and mitigation of risks.
•Definition of standards / Implementation of policies, standards and procedures.
•Execution of control and risk management procedures and activities as part of your daily activity.
Second line: defines the risk and internal control framework, as well as the policies and guidelines for the 1st line to manage risks. It is a global advisory, support and control function that monitors that risks are identified, controlled and managed within appropriate limits.
The 2nd line is made up of 2A and 2B, highlighting the following characteristics and differences:
•Provision of a risk and internal control framework.
•Escalation of new risks.
•Advice and support.
Third line: made up of Internal Audit. It is an independent and objective assurance and advisory function on the internal control system and risk management, highlighting the following characteristics:
•Independent review.
•Assurance on the Internal Control System.
•Evaluation and improvement in the effectiveness of management in risk control.
Credit risk
Credit risk is the risk of an economic loss to the Bank due to a non-fulfillment of financial obligations by a customer or counterparty and arises principally from the decline on borrower´s creditworthiness or changes in the business climate. Credit risk is the single largest risk for the Bank's business; which is managed at each stage of the credit cycle.
The information below contains the maximum exposure to credit risk for the periods ending December 31, 2024 and 2023:
December 31, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Maximum exposure to credit risk - Financial instruments subject to impairment |
| In millions of COP |
|
Stage 1 |
Stage 2 |
Stage 3 |
Total |
| Loans and Advances |
245,272,297 |
|
16,670,291 |
|
17,511,320 |
|
279,453,908 |
|
| Commercial |
137,761,467 |
|
5,545,788 |
|
9,945,556 |
|
153,252,811 |
|
| Consumer |
46,697,013 |
|
5,118,607 |
|
4,000,063 |
|
55,815,683 |
|
| Mortgage |
37,076,580 |
|
2,701,930 |
|
1,963,091 |
|
41,741,601 |
|
| Small Business Loans |
1,175,803 |
|
91,256 |
|
85,150 |
|
1,352,209 |
|
| Financial Leases |
22,561,434 |
|
3,212,710 |
|
1,517,460 |
|
27,291,604 |
|
| Off-Balance Sheet Exposures |
43,604,372 |
|
223,317 |
|
256,249 |
|
44,083,938 |
|
| Financial Guarantees |
9,926,719 |
|
17,800 |
|
199,782 |
|
10,144,301 |
|
| Loan Commitments |
33,677,653 |
|
205,517 |
|
56,467 |
|
33,939,637 |
|
| Loss Allowance |
(2,331,035) |
|
(2,752,141) |
|
(11,397,984) |
|
(16,481,160) |
|
| Total |
286,545,634 |
|
14,141,467 |
|
6,369,585 |
|
307,056,686 |
|
December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Maximum exposure to credit risk - Financial instruments subject to impairment |
| In millions of COP |
|
Stage 1 |
Stage 2 |
Stage 3 |
Total |
| Loans and Advances |
222,372,889 |
|
16,042,661 |
|
15,536,097 |
|
253,951,647 |
|
| Commercial |
120,773,927 |
|
5,453,537 |
|
8,459,932 |
|
134,687,396 |
|
| Consumer |
46,060,615 |
|
4,407,067 |
|
4,124,087 |
|
54,591,769 |
|
| Mortgage |
32,210,648 |
|
2,628,654 |
|
1,411,106 |
|
36,250,408 |
|
| Small Business Loans |
774,571 |
|
260,303 |
|
110,143 |
|
1,145,017 |
|
| Financial Leases |
22,553,128 |
|
3,293,100 |
|
1,430,829 |
|
27,277,057 |
|
| Off-Balance Sheet Exposures |
39,266,370 |
|
154,567 |
|
157,801 |
|
39,578,738 |
|
| Financial Guarantees |
12,533,868 |
|
26,889 |
|
130,441 |
|
12,691,198 |
|
Loan Commitments(1) |
26,732,502 |
|
127,678 |
|
27,360 |
|
26,887,540 |
|
| Loss Allowance |
(3,854,240) |
|
(2,581,460) |
|
(10,042,022) |
|
(16,477,722) |
|
| Total |
257,785,019 |
|
13,615,768 |
|
5,651,876 |
|
277,052,663 |
|
(1) The informational disclosed value of loan commitments has been updated.
Other Financial Instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Maximum Exposure to Credit Risk - Other Financial Instruments |
| In millions of COP |
|
Maximum Exposure |
Collateral |
Net Exposure |
|
2024 |
2023 |
2024 |
2023 |
2024 |
2023 |
| Maximum Exposure to Credit Risk |
|
|
|
|
|
|
| Debt instruments |
36,583,512 |
|
25,148,469 |
|
(1,669,011) |
|
(1,407,484) |
|
34,914,501 |
|
23,740,985 |
|
| Derivatives |
929,498 |
|
1,824,750 |
|
(589,098) |
|
(698,662) |
|
340,400 |
|
1,126,088 |
|
| Equity |
1,011,310 |
|
543,210 |
|
- |
|
- |
|
1,011,310 |
|
543,210 |
|
| Other financial instruments |
34,385 |
|
38,319 |
|
- |
|
- |
|
34,385 |
|
38,319 |
|
| Total |
38,558,705 |
27,554,748 |
(2,258,109) |
|
(2,106,146) |
|
36,300,596 |
25,448,602 |
| Note: Collateral Held (-) and Collateral Pledged (+) |
Maximum exposure to credit risk of the loans and advances refers to the carrying amount at the end of the period. It does not take into account any collateral received or any other credit risk mitigants.
Maximum exposure to credit risk of financial guarantees and loan commitments corresponds to the total amount guaranteed at the end of the period. It does not take into account any collateral received or any other credit risk mitigants.
Maximum exposure to derivatives refers to the fair value at the end of the period, without considering any guarantee received or any other credit risk mitigants.
Maximum exposure to credit risk of debt instruments and equity securities refers to the carrying amount at the end of the period without considering any guarantee received.
Credit Risk Management - Loans and Advances
In 2024, the dynamics of Grupo Bancolombia's portfolio responded to a modest and gradual economic reactivation, influenced by macroeconomic factors such as the decrease in inflation and interest rates, which boosted internal and external demand thanks to increased investment and consumption. However, political and fiscal uncertainty, mainly in Colombia, and geopolitical tensions in the Middle East, which affect the global economy, create a challenging economic environment. In this context, the perception of risk among investors and the decrease in confidence among both consumers and businesses affected the demand for credit in the countries where the Group has a presence.
The monitoring and review of credit portfolios continue to be a relevant factor in the identification and application of strategies at different stages of the credit cycle, which has led to the development of new processes, methodologies, and models with traditional, alternative, and sectoral information, aimed at managing the portfolio in the cycle with greater personalization and timeliness, through local and transversal tools in the countries where the Group has a presence. This has contributed to both a general improvement in the risk indicators of the portfolio and in the support to our clients.
Risk management during the credit life cycle is developed through the fulfillment of the policies, procedures and methodologies stipulated in the “Comprehensive Risk Management System (SIAR)”, which include the general criteria for evaluating, measuring, assuming, monitoring, controlling and hedging credit risk. In addition, Management has developed process and methodology manuals that specify the policies and procedures for the different products and segments served by the organization in accordance with the strategy approved by the Board of Directors for monitoring and controlling such risk.
The Credit Risk Administration System also contains general criteria to evaluate, classify, measure and mitigate credit risk. In addition, the credit risk department has developed methodologies and manuals that specify the policies and procedures for different products and segments managed by the Bank.
To maintain credit quality and manage the risk arising from its lending activities, the Bank has established general loan policies, including the following:
•Credit exposure limits: Contains guidelines with regards to the establishment of credit exposure limits. This is set as a result of legal requirements and according to the Bank’s internal guidelines.
•Origination policies: These policies aim to acquire ample and sufficient knowledge of the characteristics of potential borrowers and to select them properly. The risk level of the individual and legal entities is determined using rating and scoring models which define cut-off points that are applied in the process of issuing credit. These models use information such as the credit history of the borrower, sociodemographic particularities, the type of business the borrower engages in, the borrower’s ability to repay the loan, and information received from the credit risk bureaus. In addition, sectorial and macroeconomic behavior is taken into account. Loan applications, depending on their amount and risk level, are presented for approval at the level of management authority required.
•Collaterals policies: For the purpose of mitigating risk associated with non-fulfillment of obligations agreed upon by the borrower, the Bank has established policies for the valuation of collateral received as well as for the determination of the maximum loan amount that can be granted against the value of the collateral.
•Allowance policies: The objective of this policy is to fulfill legal requirements and the Bank’s business policies. In addition, this policy is meant to provide the guidelines to analyze the client’s status and take the necessary actions in order to mitigate credit risk to which the Bank is exposed. For further information, please see Note 2. Material Accounting Policies.
•Monitoring policies: Contains various monitoring procedures, portfolio reports and policies for the purpose of overseeing, in an adequate and timely manner, the evolution of credit risk. These procedures include a continuous process of classification and reassessment of credit operations and they maintain consistency with the policies implemented for granting loans.
•Portfolio recovery policies: Through these policies, the Bank aims to establish those mechanisms that allow it to anticipate the action to be taken in the event of possible delays and minimize the impact resulting from non-fulfillment of payment or delays by the borrower. Additionally, the aspects established in this policy delimit what the Bank has defined as collection management and that make it possible to obtain information to improve the origination policies and the allowances for loans and advances and lease losses models. The established actions are combined with strategies to adjust to the economy, market and costumer conditions, allowing the Bank to offer alternatives tailored to each case, such as payment deals, foreclosed assets, cession agreements, modifications, restructuring, and so on.
Management of credit risk is carried out through all the credit life cycle. These stages are defined in the following way:
•Origination: Knowing the borrower, payment capacity analysis, payment behavior and credit approval and structure.
•Monitoring: Knowing the borrower’s situation during the life of the credit.
•Recovery: Collection management during the different stages of the same credit.
To support the credit origination processes, models, methodologies, and analytical techniques based on statistical information and expert criteria are used. Their purpose is to evaluate and differentiate the risk level of potential and current clients, thus facilitating informed decision-making. These models are mainly applied during the granting stage and also play a fundamental role in monitoring, by allowing the tracking of the client's evolution, and in recovery, by facilitating the implementation of risk mitigation and portfolio recovery strategies. Continuous monitoring of the client's evolution is carried out, which allows for the timely detection of credit deterioration and proactive risk management throughout the credit lifecycle. Additionally, strategies and mechanisms based on quantitative and qualitative analysis are implemented to optimize collection management, reduce expected losses, and minimize the impact of defaults on the portfolio.
The Risk Vice Presidency is responsible for defining and documenting the specific characteristics of the models, methodologies, and analytical techniques employed. It has the authority to develop mathematical and expert formulas, as well as to establish key parameters according to market conditions, the product, and the risk appetite framework approved by the Board of Directors. The models may include variables of different natures, such as sociodemographic, sectoral, and qualitative variables, as well as internal and external behavior, financial information related to investment, savings, and transactions, in addition to market studies and product-specific parameters. The adequate performance of the models is ensured, measured through their discriminative capacity, understood as the model's ability to differentiate between clients with different levels of risk.
In accordance with current regulations, which include the regulations issued by the Financial Superintendency and international risk management standards, backtesting tests are conducted on the models used in credit cycle management. The results of these tests are presented quarterly to the Risk Committee and the Board of Directors for their information. Additionally, the Risk Vice Presidency establishes, through internal circulars, the internal rating or the required range in credit processes, regulating the parameters for assigning a rating different from the model, considering quantitative and qualitative aspects of the client.
Monthly, the credit portfolio is rated using internal models that allow for the assessment of the credit risk of each debtor and the determination of the required provisions. These models are regularly updated to reflect changes in market conditions and ensure their accuracy and relevance. The monthly provisions allow for the assessment of risk collectively or individually, using parameters such as Probability of Default (PD), Loss Given Default (LGD), and Exposure at Default (EAD). For more details, see Note 2. Material Accounting Policies, section 4.1.2.
Individual analysis is applied to clients in stage 3 with significant balances and to corporate clients who recover from default and move to stage 2. This analysis is based on the projection of each client's cash flow, considering parameters associated with recovery rates estimated by models that incorporate financial information, behavior, collateral, and qualitative variables. Periodically, backtesting tests are conducted on these provisioning models to ensure an adequate level of coverage aligned with Grupo Bancolombia's risk appetite.
To ensure compliance with concentration limit regulations, Grupo Bancolombia continuously monitors risk groups and controls their exposures, evaluating legal debt limits. Analytical tools are used to identify clients or sectors with high risk concentration and to implement diversification strategies to mitigate potential adverse impacts. Methodologically, Grupo Bancolombia relies on international benchmarks defined by external risk rating agencies, which allows for the analysis of concentration across different geographies. Normatively, Grupo Bancolombia adheres to the concepts and methodologies established in applicable external regulations.
The following classifications are established for the analysis of concentration:
•By country: Based on the country where the loans were originated.
•By sector: According to the sectorial sub-segmentation defined by the Bank based mainly on the code CIIU1.
•By categories: According to the portfolio category of each agreement (commercial, financial leases, consumer loans, small business loans and mortgages).
•By economic group: According to the characteristics of economic groups as established by regulations.
•By maturity: According to the remaining term to loan maturity.
•By past due days: This concentration evaluates loans that are more than one month overdue.
1 CIIU: International Standard Industrial Classification of All Economic Activities.
Country Risk
The Bank's financial companies, which are subject to the application of the Comprehensive Risk Management System (SIAR), the framework for the management of country risk is included, which refers to the possibility of an entity incurring losses as a result of financial operations abroad due to adverse economic and/or political conditions in the country receiving those operations, either because of restrictions on the transfer of foreign exchange or because of factors not attributable to the commercial and financial condition of the country receiving those operations. This definition includes, but is not limited to, sovereign risk (SR) and transfer risk (TR) associated with such factors.
The framework has guidelines, processes and methodologies that evaluate periodically the country risk to which it is exposed in its Equity Investments, such as equity investments, those that are executed in jurisdictions different from Colombia that could have a high economic materiality, individually or aggregated by country, and whose purpose is to remain in the country.
Country risk management includes different stages to identificate, measure, control and monitor the risk to which the entity is being exposed. For this management, the business plan, type of operations, their materiality, current and future vocation, as well as the characteristics of the country in which the investment is made. Additionally, it is supported by policies and strategies that are proposed by the Vice Presidency of Risks and approved by the Board of Directors.
The definition of investment appetite takes into account the assessment of country risk as defined in the SIAR and must ensure compliance with solvency and liquidity indicators, seeking to be consistent with the strength and financial health of the entity.
At the end of 2024, there were no alerts on any investments, nor were any adjustments made for deterioration in investments that could affect or deteriorate the Bank's financial strength. As relevant variations to highlight, the transfer of the investment from Wenia Ltd. to Investment Banking is presented, and 2 new investments are added: Ozone Financial Technology Limited, whose investing company is Sistema de Inversiones y Negocios, S.A., and Banagrícola S.A., whose investing company is Inversiones CFNS S.A.S. A positive variation of 17% in the balance of investments is presented, mainly attributed to changes in the exchange rate and operational results.
a.Credit Quality Analysis - Loans and Financial Leases
Rating System for Credit Risk Management
The principal aim of this rating system is to determine the risk profile of the borrower, which is obtained through a rating.
The rating of the corporate portfolio is primarily conducted through a Rating model, based on the analysis of the interrelation of both quantitative and qualitative elements, which allow for determining the probability of default that may affect the fulfillment of the financial commitments acquired by a client. The rating model is applied from the origination and is periodically updated, incorporating determinants of credit risk, which can be summarized as the client's financial performance measured through financial figures and payment capacity, payment behavior both with Grupo Bancolombia and with other entities in the financial sector, qualitative information, as well as transactional information of the client within the Group as alternative variables.
In the case of a retail customer, granting and behavior scoring models are used in order to identify the level of risk associated with the borrower. These models include information such as personal details, financial information and transactional, historical behavior, the total number of credit products and external information from credit bureaus.
Description of Loans and Financial Leases
In order to evaluate and manage credit risk, the credits and financial leasing operations have been classified as:
•Commercial and Financial Leases:
Loans granted to individuals or companies in order to carry out organized economic activities and are not classified as small business loans.
The borrowers in this portfolio are mainly made up of companies, segmented in homogenous groups that are constituted according to size, annual sales or main activity. The following variables are part of this classification:
|
|
|
|
|
|
| Segment |
Incomes/Sales |
| Corporate |
Companies with consolidated annual sales by economic group >= COP 100,000M. Banistmo places borrowers with annual sales >= USD10M. BAM place borrowers with annual sales >= USD25M. Banco Agricola place borrowers with annual sales >= USD30M. |
| Business |
Companies with consolidated annual sales by economic group > = COP 13,000M and < COP 100,000M. For Banco Agricola borrowers with annual sales >= USD7 MM y < USD30M and BAM, with annual sales >= USD5M and < USD25M. |
| Commercial |
For BAM, companies with annual sales >= USD2M y < USD5M. |
| Business Construction |
Constructors who dedicate themselves professionally to the construction of buildings to be sold or rented as their main activity, with consolidated annual sales by economic group >= COP 58,000M and <= COP 200,000M or commercial size > = COP 15,000M and < COP 70,000M, or project size >= COP 500,000M and < COP 2.2 billion |
| Corporate Construction |
Constructors who dedicate themselves to the construction of buildings to be sold or rented as their main activity, with consolidated annual sales by economic group > COP 200,000M or commercial size > = COP 70,000M or project size >=COP 2.2 billion |
| SME Construction |
Constructors who dedicate themselves professionally to the construction of buildings to be sold or rented as their main activity with consolidated annual sales by economic group >= COP 380M and <= COP 58,000M or commercial size < COP 15,000M or project size < COP 500,000M. |
| Institutional Financing |
Financial sector institutions. |
| Government |
Municipalities, districts, departments with their respective decentralized organizations and entities at the national level with incomes >= COP 20,000M. |
| SME |
Annual sales < COP 13,000M, with a classification between small, medium, large and plus except for Banistmo which places borrowers < USD10M in annual sales. For Banco Agrícola, borrowers with annual sales < USD7M and BAM, borrowers with annual sales < USD2M. |
•Consumer:
Loans and advances, regardless of amount, granted to individuals for the purchase of consumer goods or to pay for non-commercial or business services. These loans are classified as follows:
|
|
|
|
|
|
| Classification |
| Vehicles |
Credits granted for the acquisition of vehicles and motorcycles. The vehicle financed is used as collateral for the loan. |
| Credit cards |
Revolving credit limits for the acquisition of consumer goods, utilized by means of a plastic card, a virtual card or a token in digital wallets. |
| Payroll loans |
It is a credit line attached to an authorized individual payroll and pension amount. |
| Other loans |
Loans granted for the acquisition of consumer goods other than vehicles and Payroll loans Credit cards are not included in this segment. |
The counterparties in this portfolio are mainly individuals, segmented in homogenous groups, which are formed according to their size, which is calculated by their monthly income.
•Mortgage:
These are loans, regardless of amount, granted to individuals for the purchase of a new or used house, commercial real estate or construction of a home. These loans include loans denominated in local units or local currency that are guaranteed by a senior mortgage on the property and that are financed with a total repayment term of 5 to 30 years.
The counterparties in the mortgage portfolio are mainly made up of individuals segmented in homogenous groups, which are formed according to their size, which is calculated by their monthly income.
•Small Business Loans:
Productive credits are those constituted by credit operations carried out with individuals for the development of economic activities in rural and urban areas issued for the purpose of encouraging the activities of small business and are subject to the following requirements in Colombia: (i) their indebtedness with all entities cannot exceed 120 minimum wages (excluding mortgage obligations for housing financing); (ii) the client's total assets, excluding mortgage assets, are less than 500 minimum wages.
The borrowers in this portfolio are mainly individuals, segmented in homogenous groups, which are formed according to their commercial size, which is calculated by their monthly income.
Analysis of the behavior and impairment of the loan portfolio and financial lease operations
As of December 31, 2024, the Bank’s total loan portfolio, valued in Colombian pesos, registered an increase of 10.0% compared to December 2023, driven by to the growth of the commercial portfolio of the corporate segment. These results are a response to monetary policy adjustments that have gradually reduced inflation and interest rates, generating economic reactivation in certain sectors of the countries where the Group has a presence. Additionally, the depreciation of the peso against the dollar during the analysis period contributed to the increase in the portfolio due to the revaluation in pesos of the Group's foreign currency portfolio. The consolidated delinquency index PDL 30 days showed a reduction, standing at 5.20% in December 2024 compared to 5.39% in December 2023, mainly explained by the improvement in the quality of the consumer portfolio. During the period, different strategies were developed throughout the credit cycle, allowing for the implementation of proactive and coherent actions in line with the reality of the clients and their environment, in order to contain deterioration and place them in better risk profiles.
•Commercial loans and financial leases amounted to COP 180,544 billion, which represented a growth of 11.5% compared to 2023. The 30-day past due loan ratio was 3.77% compared to 3.50% as of December 2023.
•Consumer loans amounted to COP 55,816 billion, which represented a growth of 2.2% compared to 2023. The 30-day past due loan ratio was 7.92% compared to 9.48% as of December 2023.
•Mortgage loans totaled to COP 41,742 billion, which represented a growth of 15.1% compared to 2023. The 30-day past due loan ratio was 7.62% compared to 7.52% as of December 2023.
•Small Business loans ended at COP 1,352 billion, which represented a growth of 18.1% with respect to 2023. The 30-day past due loan ratio was 8.11% compared to 12.17% as of December 2023.
In order to monitor credit risk associated with clients, the Bank has established regular meetings conducted by the AEC Committee to identify events that can lead to a reduction in borrowers’ ability to pay. Generally, clients with good credit behavior could be included in the watch list in case of detecting any event that can lead to future financial difficulties to repay their loans; for instance, internal factors such as the economic activity and sector, financial weakness, impacts of macroeconomic conditions, changes in corporate governance and other situations that could affect clients’ business. The amount and allowance of clients included in the described watch list, as of December 31, 2024 and 2023 is shown below:
December 2024:
|
|
|
|
|
|
|
|
|
|
|
|
| Watch List December 31,2024 |
| In millions of COP |
| Risk Level |
Amount |
% |
Allowance |
| Level 1 – Low Risk |
14,081,182 |
|
0.72 |
% |
101,994 |
|
| Level 2 – Medium Risk |
5,708,673 |
|
6.50 |
% |
370,892 |
|
| Level 3 – High Risk |
3,811,886 |
|
53.84 |
% |
2,052,135 |
|
| Level 4 – High Risk |
5,948,366 |
|
61.67 |
% |
3,668,615 |
|
| Total |
29,550,107 |
|
20.96 |
% |
6,193,636 |
|
December 2023:
|
|
|
|
|
|
|
|
|
|
|
|
| Watch List December 31,2023 |
| In millions of COP |
| Risk Level |
Amount |
% |
Allowance |
| Level 1 – Low Risk |
14,358,838 |
|
1.02 |
% |
146,014 |
|
| Level 2 – Medium Risk |
4,744,341 |
|
7.38 |
% |
349,972 |
|
| Level 3 – High Risk |
2,886,649 |
|
53.31 |
% |
1,538,882 |
|
| Level 4 – High Risk |
5,239,356 |
|
73.24 |
% |
3,837,196 |
|
| Total |
27,229,184 |
|
21.57 |
% |
5,872,064 |
|
Loans and Financial Leases Collateral
The Bank obtains collateral for loans and leases in order to mitigate credit risk by foreclosing the collateral when the borrower cannot fully repay the loan or lease. Collateral is considered in the determination of the allowance for loans and advances and lease losses when it complies with the following conditions:
•Its fair value was established according to technical and objective criteria.
•The Bank is granted a preference to obtain the payment of the obligation, becoming an effective legal mechanism over it.
•Its performance is reasonably possible.
The Bank has defined the criteria for collateral enforceability, which are established according to the classification of the loan portfolio. In addition, the Bank has set guidelines to value collateral and the frequency of such valuations, as well as those guidelines related to the legalization, registry and maintenance of the collateral. Likewise, the Bank has defined the criteria for insurability, custody and the necessary procedures for their cancellation.
The update of the fair value of mortgages and vehicles collaterals for the loan portfolio is made at least once a year. The methodology used to estimate the fair value of the properties is applied by external and independent entities. Updating the fair value of the vehicles is done through guides and valid values commonly used as reference to set the value of a vehicle. The fair value of real state and vehicles are classified in levels 2 and 3 depending on the observability and significance of the inputs used in the valuation techniques according to the hierarchy established by IFRS 13.
To determine the suitability of appraiser’s selection, there are internal guidelines to be fulfilled related to independence, professional certification, reputation and experience. In a similar way, to validate the appraisal´s suitability, the bank has defined guidelines based on current regulations which are related to methodologies, report quality and commercial value.
During the reporting period, the Bank’s collateral policies have not changed significantly in relation to the way collateral is held and its overall quality.
The following table shows loans and financial leases, classified in commercial, consumer, mortgage, financial leases and small business loans, and disaggregated by type of collateral:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2024 |
| In Millions of COP |
| Amount Covered by Collateral |
| Nature of the Collateral |
Commercial |
Consumer |
Mortgage |
Financial
Leasing |
Small
Business |
Total |
| Real Estate and Residential |
25,163,297 |
|
1,816,374 |
|
39,092,440 |
|
39 |
|
363,465 |
|
66,435,615 |
|
| Goods Given in Real Estate Leasing |
- |
|
- |
|
183 |
|
17,382,691 |
|
- |
|
17,382,874 |
|
| Goods Given in Leasing Other Than Real Estate |
- |
|
32 |
|
- |
|
8,181,007 |
|
- |
|
8,181,039 |
|
| Stand by Letters of Credit |
1,540,179 |
|
- |
|
- |
|
- |
|
- |
|
1,540,179 |
|
| Security Deposits |
1,398,254 |
|
326,722 |
|
- |
|
- |
|
139,481 |
|
1,864,457 |
|
| Guarantee Fund |
3,653,583 |
|
37 |
|
- |
|
45,720 |
|
251,827 |
|
3,951,167 |
|
| Sovereign of the Nation |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
| Collection Rights |
7,757,578 |
|
109,946 |
|
- |
|
- |
|
— |
|
7,867,524 |
|
| Other Collateral (Pledges) |
3,688,378 |
|
8,039,811 |
|
30,223 |
|
280 |
|
6,209 |
|
11,764,901 |
|
| Without Guarantee (Uncovered Balance) |
110,051,542 |
|
45,522,761 |
|
2,618,755 |
|
1,681,867 |
|
591,227 |
|
160,466,152 |
|
| Total loans and financial leases |
153,252,811 |
|
55,815,683 |
|
41,741,601 |
|
27,291,604 |
|
1,352,209 |
|
279,453,908 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2023 |
| In Millions of COP |
| Amount Covered by Collateral |
| Nature of the Collateral |
Commercial |
Consumer |
Mortgage |
Financial
Leasing |
Small
Business
|
Total |
| Real Estate and Residential |
23,368,950 |
1,693,007 |
34,253,140 |
10 |
319,038 |
59,634,145 |
| Goods Given in Real Estate Leasing |
- |
- |
189 |
17,104,180 |
- |
17,104,369 |
| Goods Given in Leasing Other Than Real Estate |
- |
26 |
- |
8,580,543 |
- |
8,580,569 |
| Stand by Letters of Credit |
1,052,764 |
- |
- |
- |
- |
1,052,764 |
| Security Deposits |
447,306 |
370,286 |
- |
- |
103,013 |
920,605 |
| Guarantee Fund |
4,012,115 |
191 |
- |
60,242 |
52,222 |
4,124,770 |
| Sovereign of the Nation |
- |
- |
- |
- |
- |
|
- |
| Collection Rights |
6,673,320 |
57,306 |
- |
- |
420 |
6,731,046 |
| Other Collateral (Pledges) |
2,957,482 |
7,286,581 |
39,432 |
- |
2,499 |
10,285,994 |
| Without Guarantee (Uncovered Balance) |
96,175,459 |
45,184,372 |
1,957,647 |
1,532,082 |
667,825 |
145,517,385 |
| Total loans and financial leases |
134,687,396 |
54,591,769 |
36,250,408 |
27,277,057 |
1,145,017 |
253,951,647 |
The Bank closely monitors financial assets that are classified in Stage 3, to the point that a specific methodology for calculating expected credit losses is applied using a sophisticated approach named “ECL model under collateral Methodology”, which considers components like the forecasts of future collateral valuations, including expected sale discounts; time to realization of collateral, cure rates, external costs of realization of collateral, among others; as a consequence of the higher likelihood that the bank will take possession of these collaterals in order to mitigate potential credit losses.
The Financial assets that are classified in Stage 3 and are evaluated under this methodology are shown below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2024 |
| In Millions of COP |
| Classification |
Amount |
Allowance |
Total |
Fair Value of Collateral |
| Commercial |
783,435 |
|
372,156 |
|
411,279 |
|
1,660,829 |
|
| Consumer |
|
|
|
|
| Mortgage |
616,432 |
|
143,894 |
|
472,538 |
|
762,652 |
|
| Small Business Loans |
|
|
|
|
| Financial Leases |
761,892 |
|
327,257 |
|
434,635 |
|
1,305,365 |
|
| Total credit assets |
2,161,759 |
|
843,307 |
|
1,318,452 |
|
3,728,846 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2023 |
| In Millions of COP |
| Classification |
Amount |
Allowance |
Total |
Fair Value of Collateral |
| Commercial |
700,120 |
274,641 |
425,479 |
1,176,130 |
| Consumer |
|
|
|
|
| Mortgage |
383,878 |
94,260 |
289,618 |
331,738 |
| Small Business Loans |
|
|
|
|
| Financial Leases |
699,803 |
383,127 |
316,676 |
1,263,274 |
| Total credit assets |
1,783,801 |
752,028 |
1,031,773 |
2,771,142 |
A portion of the Bank’s financial assets originated by the mortgage and commercial business has sufficiently low ‘loan to value’ (LTV) ratios, which results in no loss allowance being recognized in accordance with The Bank’s expected credit loss model. The carrying amount of such financial assets is COP 273,574 as at December 31, 2024 and COP 175,163 as at 31 December 2023.
Foreclosed assets and other credit mitigants
Assets received in lieu of payment (foreclosed assets) are recognized on the statement of financial position when current possession of the asset takes place.
Foreclosed assets such as immovable and movable property, equity securities and other financial assets, are received based on a commercial valuation, and their net realizable value is given by a specialized team.
During the years ended December 31, 2024 and 2023, the Bank entered into non-cash operating and investing activities related to restructured loans and returned properties that were transferred to assets held for sale and inventories amounting to COP 1,408,331 and COP 1,361,465, respectively.
The Bank classifies foreclosed assets after acknowledgment of the exchange operation according to the intention of use, as follows:
•Non-current assets held for sale.
•Other marketable assets.
•Other non-marketable assets.
•Inventories.
Collateral classified as non-current assets held for sale are those expected to be sold in the following 12 months. When there are market restrictions that do not allow their realization in less than 12 months and this period is extended, retroactive depreciation must be charged to results and the asset value will be reduced by the depreciation value.
Foreclosed assets classified as non-current assets held for sale are those expected to be sold in the following 12 months. The non-current assets held for sale that cease to comply with the guidelines of immediately sell, must be classified as “Other marketable assets” and if it’s necessary, their book value would be adjusted.
b.Risk Concentration – Loans and Advances
The analysis of credit risk concentration is done by monitoring the portfolio by groups such as: loan categories, maturity, past due days, economic sector, country and economic group, as shown here:
•Loans concentration by category
The composition of the credit portfolio in commercial, consumer, mortgage, financial leases and small business loans categories for the periods ending on December 31, 2024 and 2023, it is as follows:
|
|
|
|
|
|
|
|
|
| Composition |
2024 |
2023 |
| In millions of COP |
| Commercial |
153,252,811 |
|
134,687,396 |
|
| Corporate |
85,278,293 |
|
69,843,654 |
|
| SME |
15,203,496 |
|
14,200,557 |
|
| Others |
52,771,022 |
|
50,643,185 |
|
| Consumer |
55,815,683 |
|
54,591,769 |
|
| Credit card |
11,992,511 |
|
11,207,731 |
|
| Vehicle |
5,635,858 |
|
5,409,226 |
|
| Payroll loans |
10,381,247 |
|
9,461,889 |
|
| Others |
27,806,067 |
|
28,512,923 |
|
| Mortgage |
41,741,601 |
|
36,250,408 |
|
VIS2 |
16,183,280 |
|
12,997,624 |
|
| Non- VIS |
25,558,321 |
|
23,252,784 |
|
| Financial Leases |
27,291,604 |
|
27,277,057 |
|
| Small Business Loans |
1,352,209 |
|
1,145,017 |
|
| Loans and advances to customers and financial institutions |
279,453,908 |
|
253,951,647 |
|
| Allowance for loans and advances and lease losses |
(16,179,738) |
|
(16,223,103) |
|
| Total net loan and financial leases |
263,274,170 |
|
237,728,544 |
|
•Concentration of loan by maturity
The following table shows the ranges of maturity for the credit loans and financial leases, according for the remaining term for the completion of the contract of loans and financial leases at the end of December 2024 and 2023:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2024 |
| In millions of COP |
| Maturity |
Less Than 1 Year |
Between 1 and 5
Years |
Between 5 and 15
Years |
Greater Than 15
Years |
Total |
| In millions of COP |
| Commercial |
48,186,159 |
62,610,478 |
41,614,622 |
841,552 |
153,252,811 |
| Corporate |
29,076,028 |
32,243,275 |
|
23,454,114 |
504,876 |
85,278,293 |
| SME |
4,771,087 |
8,555,996 |
|
1,727,911 |
148,502 |
15,203,496 |
| Others |
14,339,044 |
21,811,207 |
|
16,432,597 |
188,174 |
52,771,022 |
| Consumer |
1,267,269 |
34,216,968 |
19,553,651 |
777,795 |
55,815,683 |
| Credit card |
234,325 |
9,587,518 |
|
2,170,668 |
- |
11,992,511 |
| Vehicle |
81,066 |
3,270,554 |
|
2,283,873 |
365 |
5,635,858 |
| Order of payment |
47,981 |
2,261,874 |
|
7,525,578 |
545,814 |
10,381,247 |
| Others |
903,897 |
19,097,022 |
|
7,573,532 |
231,616 |
27,806,067 |
| Mortgage |
79,304 |
1,095,329 |
10,509,429 |
30,057,539 |
41,741,601 |
| VIS |
14,439 |
284,872 |
|
2,540,655 |
13,343,314 |
16,183,280 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2024 |
| In millions of COP |
| Maturity |
Less Than 1 Year |
Between 1 and 5
Years |
Between 5 and 15
Years |
Greater Than 15
Years |
Total |
| In millions of COP |
| Non-VIS |
64,865 |
810,457 |
|
7,968,774 |
16,714,225 |
25,558,321 |
| Financial Leases |
1,804,964 |
8,586,693 |
|
13,202,556 |
3,697,391 |
27,291,604 |
| Small business loans |
194,013 |
919,392 |
|
208,405 |
30,399 |
1,352,209 |
| Total gross loans and financial leases |
51,531,709 |
107,428,860 |
85,088,663 |
35,404,676 |
279,453,908 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2023 |
| In millions of COP |
| Maturity |
Less Than 1 Year |
Between 1 and 5
Years |
Between 5 and 15
Years |
Greater Than 15
Years |
Total |
| Commercial |
40,601,345 |
57,828,301 |
35,936,869 |
320,881 |
134,687,396 |
| Corporate |
22,360,108 |
27,329,312 |
19,970,727 |
183,507 |
69,843,654 |
| SME |
4,486,326 |
7,497,307 |
2,200,274 |
16,650 |
14,200,557 |
| Others |
13,754,911 |
23,001,682 |
13,765,868 |
120,724 |
50,643,185 |
| Consumer |
1,289,150 |
26,549,043 |
26,086,537 |
667,039 |
54,591,769 |
| Credit card |
417,390 |
1,755,518 |
9,034,823 |
- |
11,207,731 |
| Vehicle |
55,295 |
2,982,439 |
2,371,163 |
329 |
5,409,226 |
| Order of payment |
57,211 |
1,872,546 |
7,061,605 |
470,527 |
9,461,889 |
| Others |
759,254 |
19,938,540 |
7,618,946 |
196,183 |
28,512,923 |
| Mortgage |
75,189 |
1,005,831 |
9,601,783 |
25,567,605 |
36,250,408 |
| VIS |
23,303 |
264,232 |
2,157,322 |
10,552,767 |
12,997,624 |
| Non-VIS |
51,886 |
741,599 |
7,444,461 |
15,014,838 |
23,252,784 |
| Financial Leases |
1,639,218 |
9,165,622 |
12,939,908 |
3,532,309 |
27,277,057 |
| Small business loans |
208,429 |
737,255 |
194,581 |
4,752 |
1,145,017 |
| Total gross loans and financial leases |
43,813,331 |
95,286,052 |
84,759,678 |
30,092,586 |
253,951,647 |
_______________________________________________________
2VIS: Social Interest Homes, corresponds to mortgage loans granted by the financial institutions of amounts less than 135 minimum wages.
•Concentration by past due days
The following table shows the loans and financial leases according to past due days for the periods ending on December 31, 2024 and 2023. Loans or financial leases are considered past due if it is more than one month overdue (i.e. 31 days):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2024 |
| In millions of COP |
| Past-due |
| Period |
0 - 30 Days |
31 - 90 Days |
91 - 120 Days |
121 - 360 Days |
More Than 360
Days |
Total |
| Commercial |
147,402,632 |
531,609 |
280,750 |
1,515,324 |
3,522,496 |
153,252,811 |
| Consumer |
51,393,527 |
1,761,496 |
624,945 |
1,776,361 |
259,354 |
55,815,683 |
| Mortgage |
38,560,253 |
1,184,755 |
285,466 |
830,743 |
880,384 |
41,741,601 |
| Financial Leases |
26,331,118 |
247,056 |
58,435 |
273,619 |
381,376 |
27,291,604 |
| Small Business Loans |
1,242,568 |
36,196 |
8,848 |
45,608 |
18,989 |
1,352,209 |
| Total |
264,930,098 |
3,761,112 |
1,258,444 |
4,441,655 |
5,062,599 |
279,453,908 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2023 |
| In millions of COP |
| Past-due |
| Period |
0 - 30 Days |
31 - 90 Days |
91 - 120 Days |
121 - 360 Days |
More Than 360
Days |
Total |
| Commercial |
129,866,971 |
500,794 |
205,141 |
1,777,620 |
2,336,870 |
134,687,396 |
| Consumer |
49,418,431 |
2,244,017 |
794,005 |
1,994,748 |
140,568 |
54,591,769 |
| Mortgage |
33,524,034 |
1,290,817 |
212,433 |
599,351 |
623,773 |
36,250,408 |
| Financial Leases |
26,436,493 |
247,124 |
56,434 |
196,578 |
340,428 |
27,277,057 |
| Small Business Loans |
1,005,725 |
50,138 |
14,859 |
58,244 |
16,051 |
1,145,017 |
| Total |
240,251,654 |
4,332,890 |
1,282,872 |
4,626,541 |
3,457,690 |
253,951,647 |
•Concentration of loans by economic sector
The following table contains the detail of the portfolio of loans and financial leases by main economic activity of the borrower for the periods ending on December 31, 2024 and 2023:
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2024 |
| In millions of COP |
| Economic sector |
Loans and advances |
|
Local |
Foreign |
Total |
| Agriculture |
5,520,414 |
|
2,813,604 |
|
8,334,018 |
|
| Petroleum and Mining Products |
2,126,602 |
|
636,010 |
|
2,762,612 |
|
| Food, Beverages and Tobacco |
10,132,520 |
|
2,164,911 |
|
12,297,431 |
|
| Chemical Production |
4,507,362 |
|
364,649 |
|
4,872,011 |
|
| Government |
10,256,608 |
|
627,705 |
|
10,884,313 |
|
| Construction |
14,441,608 |
|
9,134,115 |
|
23,575,723 |
|
| Commerce and Tourism |
24,920,337 |
|
8,480,380 |
|
33,400,717 |
|
| Transport and Communications |
12,313,907 |
|
597,216 |
|
12,911,123 |
|
| Public Services |
13,253,631 |
|
1,265,243 |
|
14,518,874 |
|
| Consumer Services |
61,263,015 |
|
35,692,512 |
|
96,955,527 |
|
| Commercial Services |
30,662,353 |
|
13,347,867 |
|
44,010,220 |
|
| Other Industries and Manufactured Products |
9,671,905 |
|
5,259,434 |
|
14,931,339 |
|
| Total |
199,070,262 |
|
80,383,646 |
|
279,453,908 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2023 |
| In millions of COP |
| Economic sector |
Loans and advances |
|
Local |
Foreign |
Total |
| Agriculture |
5,162,973 |
2,488,789 |
7,651,762 |
| Petroleum and Mining Products |
1,846,238 |
234,523 |
2,080,761 |
| Food, Beverages and Tobacco |
9,147,936 |
888,429 |
10,036,365 |
| Chemical Production |
4,299,308 |
25,409 |
4,324,717 |
| Government |
8,369,707 |
887,448 |
9,257,155 |
| Construction |
16,202,035 |
5,561,782 |
21,763,817 |
| Commerce and Tourism |
23,803,830 |
11,068,049 |
34,871,879 |
| Transport and Communications |
9,574,318 |
351,176 |
9,925,494 |
| Public Services |
11,758,265 |
1,286,561 |
13,044,826 |
| Consumer Services |
59,032,642 |
32,965,565 |
91,998,207 |
| Commercial Services |
27,474,593 |
7,217,591 |
34,692,184 |
| Other Industries and Manufactured Products |
8,679,684 |
5,624,796 |
14,304,480 |
| Total |
185,351,529 |
68,600,118 |
253,951,647 |
•Credit concentration by country
The following information shows the concentration of the loans and financial leases by country in which the Bank are located as of December 31, 2024 and 2023:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2024 |
| In millions of COP |
| Country |
Loans and advances |
% Participation |
Allowance for loans and
advances and lease losses |
% Participation |
| Colombia |
190,956,423 |
|
68.33 |
% |
(12,490,991) |
|
77.20% |
| Panamá |
47,300,183 |
|
16.93 |
% |
(2,089,269) |
|
12.91% |
| El Salvador |
18,712,218 |
|
6.70 |
% |
(598,710) |
|
3.70% |
| Guatemala |
21,125,637 |
|
7.56 |
% |
(995,339) |
|
6.15% |
| Puerto Rico |
1,359,447 |
|
0.49 |
% |
(5,429) |
|
0.03% |
| Total |
279,453,908 |
|
100.00 |
% |
(16,179,738) |
|
100.00% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2023 |
| In millions of COP |
| Country |
Loans and advances |
% Participation |
Allowance for loans and
advances and lease losses |
% Participation |
| Colombia |
181,951,462 |
|
71.65 |
% |
(13,133,577) |
|
80.96% |
| Panamá |
38,599,152 |
|
15.20 |
% |
(1,645,802) |
|
10.14% |
| El Salvador |
15,373,156 |
|
6.05 |
% |
(552,236) |
|
3.40% |
| Guatemala |
16,958,954 |
|
6.68 |
% |
(887,518) |
|
5.47% |
| Puerto Rico |
1,068,923 |
|
0.42 |
% |
(3,970) |
|
0.02% |
| Total |
253,951,647 |
|
100.00 |
% |
(16,223,103) |
|
100.00% |
•Credit concentration by economic group
As of December 31, 2024 and 2024, concentration of the 20 largest economic groups amounted to COP 39,877,880 M and COP 34,134,547 M, respectively. This exposure corresponds to all credit active operations of these groups.
c.Credit quality – Loans and Advances
The following information about credit quality of the borrower for the periods ending December 31, 2024 and 2023:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2024 |
| In millions of COP |
| Classification |
Stage 1 |
Stage 2 |
Stage 3 |
Total |
| Commercial |
137,761,467 |
5,545,788 |
9,945,556 |
153,252,811 |
| Consumer |
46,697,013 |
5,118,607 |
4,000,063 |
55,815,683 |
| Mortgage |
37,076,580 |
2,701,930 |
1,963,091 |
41,741,601 |
| Small Business Loans |
1,175,803 |
91,256 |
85,150 |
1,352,209 |
| Financial Leases |
22,561,434 |
3,212,710 |
1,517,460 |
27,291,604 |
| Loans and Advances |
245,272,297 |
16,670,291 |
17,511,320 |
279,453,908 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2023 |
| In millions of COP |
| Classification |
Stage 1 |
Stage 2 |
Stage 3 |
Total |
| Commercial |
120,773,927 |
|
5,453,537 |
|
8,459,932 |
|
134,687,396 |
|
| Consumer |
46,060,615 |
|
4,407,067 |
|
4,124,087 |
|
54,591,769 |
|
| Mortgage |
32,210,648 |
|
2,628,654 |
|
1,411,106 |
|
36,250,408 |
|
| Small Business Loans |
774,571 |
|
260,303 |
|
110,143 |
|
1,145,017 |
|
| Financial Leases |
22,553,128 |
|
3,293,100 |
|
1,430,829 |
|
27,277,057 |
|
| Loans and Advances |
222,372,889 |
|
16,042,661 |
|
15,536,097 |
|
253,951,647 |
|
In order to determine the expected credit loss, the Bank considers the economic conditions and performance of the borrower’s industry, the analysis of payments behavior, events that could negatively affect the borrower’s ability to pay, among others factors.
The expected credit loss is determined either by a collective or individual evaluation according to the amount and characteristics of the loan. For further details please see Note 2 Significant Accounting Policies, section 7.4.5 Impairment of financial assets at amortized cost or at fair value through other comprehensive income “FVOCI”.
Impairment loan portfolio analyzed by individual evaluation at COP 6,527 billion, which represented 2.3% of the total portfolio of the Bank.
The table below shows Stage 3 loans and advances according to their type of evaluation for the periods ending December 31, 2024 and 2023:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2024 |
| In millions of COP |
| Impairment |
Individual Evaluation |
Collective Evaluation |
|
Carrying Amount |
ECL |
Carrying Amount |
ECL |
| Commercial |
6,007,099 |
3,443,047 |
3,938,457 |
2,854,636 |
| Consumer |
- |
- |
4,000,063 |
3,482,791 |
| Mortgage |
- |
- |
1,963,091 |
761,031 |
| Financial Leases |
519,462 |
290,932 |
997,998 |
444,282 |
| Small Business Loan |
- |
- |
85,150 |
54,279 |
| Total |
6,526,561 |
3,733,979 |
10,984,759 |
7,597,019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2023 |
| In millions of COP |
| Impairment |
Individual Evaluation |
Collective Evaluation |
|
Carrying Amount |
ECL |
Carrying Amount |
ECL |
| Commercial |
5,198,384 |
2,825,357 |
3,261,548 |
2,401,344 |
| Consumer |
- |
- |
4,124,087 |
3,460,299 |
| Mortgage |
- |
- |
1,411,106 |
553,370 |
| Financial Leases |
562,716 |
315,979 |
868,113 |
356,526 |
| Small Business Loan |
- |
- |
110,143 |
77,923 |
| Total |
5,761,100 |
3,141,336 |
9,774,997 |
6,849,462 |
Sensitivity analysis
The variables with the greatest influence for each country on the expected credit loss (ECL) assessment for the loan portfolio and financial leasing are:
Colombia:
•Consumer price index: due to its significant impact on the clients’ repayment capacity;
•Interest rates: because of its direct impact on the obligations’ repayment.
Panama:
•Consumer price index: due to its significant impact on the clients’ repayment capacity;
•Balance of trade: due to the influence on the client’s income.
El Salvador:
•Consumer price index: due to its significant impact on the clients’ repayment capacity;
•Budget balance: due to the effect of government spending and fiscal policies on the economy.
Guatemala:
•Consumer price index: due to its significant impact on the clients’ repayment capacity;
•Interest rates: because of its direct impact on the obligations’ repayment.
The change in the expected credit losses (ECL) at 31 of December 2024, as a result of a possible positive or negative 1% (100 basis points) change in those variables were assessed based on the assumptions used to calculate the ECL for each of the scenarios: base, optimistic and pessimistic, as following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest Rate - Trade balance - Fiscal balance |
| In Millions of COP |
|
|
[+1%] |
Unchanged |
[-1%] |
|
[+1%] |
182,233 |
|
88,755 |
|
4,983 |
|
|
|
|
|
|
| Inflation |
Unchanged |
93,478 |
|
- |
|
-83,772 |
|
|
|
|
|
|
|
[-1%] |
13,601 |
|
(79,877) |
|
-163,649 |
|
The Bank has estimated the impact on the expected credit loss (ECL) assuming the forward-looking scenarios (e.g. optimistic and pessimistic) were weighted 100% instead of applying scenario probability weights across the two scenarios. The table below shows the impact on the expected credit loss (ECL) for each methodology:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Expected credit loss by scenarios |
| In millions of COP |
|
2024 |
2023 |
| Methodologies |
Optimistic |
Pessimistic |
Optimistic |
Pessimistic |
| Collective methodology |
(435,740) |
|
368,782 |
(437,294) |
|
343,209 |
| Collateral methodology |
(155,591) |
|
173,438 |
(149,983) |
|
137,172 |
Individual methodology(1) |
(408,368) |
|
763,362 |
(240,474) |
|
605,152 |
| Total |
(999,699) |
|
1,305,582 |
(827,751) |
|
1,085,533 |
(1) For individual methodology, the applied scenarios are the base in the optimistic scenario and the alternative in the pessimistic scenario with a weighting of 100% each.
d.Credit Risk Management – Other Financial Instruments:
Each one of the positions that make up the portfolio complies with the policies and limits that seek to diminish credit risk exposure. Those policies are, among others:
•Term Limits: The Credit Committee evaluates and reviews the result of the authorized model for the different counterparties according to quantitative and qualitative variables, allowing it to establish the maximum term to which the Bank wishes to have exposure..
•Credit Limits: Approved limits under the model and with authorization from the Credit Committee, as well as the exposure, are monitored in line or batch, in such a way as to mitigate the occurrence of excesses and, in the event that there is a need for them, applies to the current attribution system.
•Counterparty Limits: These limits, derived from the credit limits or from allocation models and are verified by the Front Office prior to the close of operations.
•Master Agreement: These bilateral agreements describe the handling of operations between the counterparties in accordance with good international practices and that limit the legal and financial risk under the occurrence of events of default (failure to pay or delivery). Mitigation mechanisms, procedures to be carried out in the case of these events of default, special conditions by type of operation and that are applied to OTC derivatives, Repos and other securities financing transactions, are all agreed upon.
•Margin Agreements: For OTC derivatives operations and other securities financing transactions, agreements that regulate the administration of guarantees, haircuts, adjustment periods, minimum transfer amounts, etc., and that limit risk for a period of time (one day, one week, etc.), are established for counterparties involved in the operation.
•Counterparty Alerts: There are financial, qualitative and market indicators that allow the Bank to establish damages to the credit quality of an issuer or counterparty.
e.Credit Quality Analysis - investment financial instruments:
In order to evaluate the credit quality of a counterparty or issuer (to determine a risk level or profile), the Bank relies on two rating systems: an external one and an internal one, both of which allow to identify a degree of risk differentiated by segment and country and to apply the policies that have been established for issuers or counterparties with different levels of risk, in order to limit the impact on liquidity and/or the income statement of the Bank.
External credit rating system is divided by the type of rating applied to each instrument or issuer; in this way the geographic location, the term and the type of instrument allow the assignment of a rating according to the methodology that each examining agency uses.
Internal credit rating system: the “ratings or risk profiles” scale is created with a range of levels that go from low risk to high risk (this can be reported in numerical or alphanumerical scales), where the rating model is sustained by the implementation and analysis of qualitative and quantitative variables at sector level, which according to the relative analysis of each variable, determine credit quality; in this way the internal credit rating system aims to establish adequate margin in decision-making regarding the management of financial instruments.
Credit Quality Analysis of the Bank
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Maximum Exposure to Credit Risk |
| In millions of COP |
|
Debt instruments |
Equity |
Other financial instruments(1) |
Derivatives(2) |
|
2024 |
2023 |
2024 |
2023 |
2024 |
2023 |
2024 |
2023 |
| Low Risk |
29,130,380 |
21,078,496 |
363,198 |
220,967 |
|
1,712 |
21,976 |
834,821 |
1,711,788 |
| Medium Risk |
4,873,025 |
827,469 |
57,119 |
17,354 |
|
16,479 |
- |
1,154 |
316 |
| High Risk |
2,580,107 |
3,242,504 |
677 |
587 |
|
2,966 |
2,966 |
7,086 |
17,327 |
| Without Rating |
- |
- |
590,316 |
304,302 |
|
13,228 |
13,377 |
86,437 |
95,319 |
| Total |
36,583,512 |
25,148,469 |
1,011,310 |
543,210 |
34,385 |
38,319 |
929,498 |
1,824,750 |
(1)Corresponds to SAFE "Simple Agreement for Future Equity".
(2)For derivatives transactions counterparty risk is disclosed as long as the valuation is positive.
In accordance with the criteria and considerations specified in the internal rating allocation and external credit rating systems methodologies, the following schemes of relation can be established, according to credit quality given to each one of the qualification scales:
Low Risk: All investment grade positions (from AAA to BBB-), as well as those issuers that according to the information available (financial statements, relevant information, external ratings, CDS, among others) reflect adequate credit quality.
Medium Risk: All speculative grade positions (from BB+ to BB-), as well as those issuers that according to the available information (Financial statements, relevant information, external qualifications, CDS, among others) reflect weaknesses that could affect their financial situation in the medium term.
High Risk: All positions of speculative grade (from B+ to D), as well as those issuers that according to the information available (Financial statements, relevant information, external qualifications, CDS, among others) reflect a high probability of default of financial obligations or that already have failed to fulfill them.
•Financial credit quality of other financial instruments that are not in default nor impaired in value
Debt instruments: 100% of the debt instruments are not in default.
Equity: The positions do not represent significant risks.
Derivatives: 99.9% of the credit exposure does not present incidences of material default. The remaining percentage corresponds to default events at the end of the period.
•Maximum exposure level to the credit risk given:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Maximum Exposure to Credit Risk |
| In millions of COP |
|
Maximum Exposure |
Collateral(1) |
Net Exposure |
|
2024 |
2023 |
2024 |
2023 |
2024 |
2023 |
| Debt instruments |
36,583,512 |
25,148,469 |
(1,669,011) |
(1,407,484) |
34,914,501 |
23,740,985 |
| Derivatives ** |
929,498 |
1,824,750 |
(589,098) |
(698,662) |
340,400 |
1,126,088 |
| Equity |
1,011,310 |
543,210 |
- |
- |
1,011,310 |
543,210 |
| Other financial instruments |
34,385 |
38,319 |
- |
- |
34,385 |
38,319 |
| Total |
38,558,705 |
27,554,748 |
(2,258,109) |
(2,106,146) |
36,300,596 |
25,448,602 |
•Analysis of the maturity of other financial instruments past due but not impaired
–Debt instruments: Portfolio does not present past due nor impaired assets.
–Equity: Portfolio does not present impaired assets.
–Derivatives: The past due assets are not material.
•The information corresponding to the individual evaluation of impairment at the end of the period for other financial instruments, is detailed as follows:
Debt instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Maximum Exposure to Credit Risk |
| In millions of COP |
|
Exposure |
Impairment |
Final Exposure |
|
2024 |
2023 |
2024 |
2023 |
2024 |
2023 |
| Fair Value |
28,119,697 |
18,244,584 |
6,513 |
5,562 |
28,113,184 |
18,239,022 |
| Amortized Cost |
8,463,815 |
6,903,885 |
58,937 |
55,803 |
8,404,878 |
6,848,082 |
| Total |
36,583,512 |
25,148,469 |
65,450 |
61,365 |
36,518,062 |
25,087,104 |
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Maximum Exposure to Credit Risk |
| In millions of COP |
|
Exposure |
Impairment |
Final Exposure |
|
2024 |
2023 |
2024 |
2023 |
2024 |
2023 |
| Fair Value through profit or loss |
537,213 |
|
98,853 |
|
- |
|
- |
|
537,213 |
|
98,853 |
|
| Fair Value through OCI |
474,097 |
|
444,357 |
|
- |
|
- |
|
474,097 |
|
444,357 |
|
| Total |
1,011,310 |
|
543,210 |
|
- |
|
- |
|
1,011,310 |
|
543,210 |
|
Collateral- investment financial instruments:
Level of collateral: respect to the type of asset or operation, a collateral level is determined according to the policies defined for each product and the market where the operation is carried out.
Assets held as collateral in organized markets: the only assets that can be received as collateral are those defined by the central counterparties, the stock market where the operation is negotiated, those assets that are settled separately in different contracts or documents, which can be managed by each organization and must comply with the investment policies defined by the Bank, taking into account the credit limit for each type of asset or operation received or delivered, which collateral received are the best credit quality and liquidity.
Assets received as bilateral collateral between counterparties: the collateral accepted in international OTC derivative operations is agreed on bilaterally in the Credit Support Annex (CSA)2 and with fulfillment in cash in dollars and managed by Citibank N.A.. This company acts on behalf of Bancolombia for making international margin calls and providing a better management of the collateral.
Collateral adjustments for margin agreements: the adjustments will be determined by the criteria applied by both the external and internal regulations in effect, and at the same time, mitigation standards are maintained so that the operation fulfills the liquidity and solidity criteria for settlement. Among the main characteristics by product or market, we have:
–With respect to the derivative operations, these are carried out daily, with threshold levels of zero for the majority of counterparties, which reduces the exposure to a term that does not exceed 10 days, according to Basel.
–For buy-sell backs, repos and other securities financing transactions, daily monitoring is done in order to establish the need to adjust the collateral in such a way that these are applied in as little time as possible, according to the contracts or market conditions.
2 A Credit Support Annex (CSA) provides credit protection by setting forth the rules governing the mutual posting of collateral. CSAs are used in documenting collateral arrangements between two parties that trade privately negotiated (over-the-counter) derivative securities. The trade is documented under a standard contract called a master agreement, developed by the International Swaps and Derivatives Association (ISDA).
–For all international counterparties, margin agreements that limit exposure to the maximum and with a daily adjustment period are celebrated. These margin agreements are celebrated under ISDA(International Swaps and Derivatives Association)3 and GMRA (Global Master Repurchase Agreement)4 both for OTC derivatives and securities financing transactions.
–For every local counterparty, the local framework agreement is signed (agreement developed by the industry) and the mitigating actions to apply in each operation are agreed upon, whether for margin agreements, re-couponing, early termination, among others.
–For repos, buy-sell backs and other securities financing transactions, these are agreed upon by organized markets that in general implicate complying with haircut or additional collateral rules.
–The central counterparty carries out daily control and monitoring processes in order to comply with the rules imposed by these organizations in such a way that we are always making daily adjustments at the demanded collateral level.
•Level of collateral held:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Maximum Exposure to Credit Risk |
| In millions of COP |
|
Maximum Exposure |
Collateral(1) |
Net Exposure |
|
2024 |
2023 |
2024 |
2023 |
2024 |
2023 |
| Debt instruments |
36,583,512 |
25,148,469 |
(1,669,011) |
(1,407,484) |
34,914,501 |
23,740,985 |
| Derivatives ** |
929,498 |
1,824,750 |
(589,098) |
(698,662) |
340,400 |
1,126,088 |
| Equity |
1,011,310 |
543,210 |
- |
- |
1,011,310 |
543,210 |
| Other financial instruments |
34,385 |
38,319 |
- |
- |
34,385 |
38,319 |
| Total |
38,558,705 |
27,554,748 |
(2,258,109) |
(2,106,146) |
36,300,596 |
25,448,602 |
(1) Collateral Held (-) and Collateral Pledged (+).
f.Credit risk concentration - other financial instruments:
According to the regulations, the Bank must control on a daily basis the risk of positions of the Bank’s companies where the same issuer or counterparty stands, below the legal limits.
By the same way, the positions of the Bank are verified in respect of the authorized risk levels in each country in order to guarantee the alerts and positions limits, that are considered outside of the Bank risk appetite.
Privately negotiated (over-the-counter) derivative securities. The trade is documented under a standard contract called a master agreement, developed by the International Swaps and Derivatives Association (ISDA).
3 ISDA: Organization of participants in the OTC derivatives markets. Its main objective is to establish a reference framework through standard contracts for OTC derivatives trading.
4 GMRA: It is a model legal agreement designed for parties transacting repos and is published by the International Capital Market Association (ICMA).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt instruments |
Equity |
Other financial instruments(1) |
Derivatives(2) |
|
2024 |
2023 |
2024 |
2023 |
2024 |
2023 |
2024 |
2023 |
| Sector Concentration |
|
|
|
|
|
|
|
|
| Corporate |
4,764,748 |
3,675,913 |
337,332 |
279,396 |
16,479 |
23,887 |
362,568 |
951,573 |
| Financial |
5,612,993 |
4,626,294 |
252,731 |
211,037 |
17,906 |
14,432 |
317,722 |
870,598 |
| Government |
26,201,390 |
16,827,596 |
- |
- |
- |
- |
829 |
- |
| Funds ETF |
4,381 |
18,666 |
421,247 |
52,777 |
|
- |
248,379 |
2,579 |
| Total |
36,583,512 |
25,148,469 |
1,011,310 |
543,210 |
34,385 |
38,319 |
929,498 |
1,824,750 |
| Concentration by Region |
|
|
|
|
|
|
|
|
| North America |
6,109,348 |
4,666,195 |
273 |
197 |
- |
- |
132,870 |
344,639 |
| Latam |
30,441,888 |
20,440,893 |
706,437 |
529,033 |
34,385 |
38,319 |
426,424 |
1,009,595 |
| Europe |
32,276 |
41,381 |
3,908 |
- |
- |
— |
147,533 |
467,937 |
| Others (Includes Funds and ETF) |
- |
— |
300,692 |
13,980 |
- |
- |
222,671 |
2,579 |
| Total |
36,583,512 |
25,148,469 |
1,011,310 |
543,210 |
34,385 |
38,319 |
929,498 |
1,824,750 |
(1)Corresponds to SAFE "Simple Agreement for Future Equity".
(2)For derivatives transactions counterparty risk is disclosed as long as the valuation is positive.
Risk exposure by credit rating
|
|
|
|
|
|
|
|
|
| Maximum Exposure to Credit Risk |
| In millions of COP |
|
Other financial instruments(1) |
|
2024 |
2023 |
| Sovereign Risk |
14,487,622 |
7,520,002 |
| AAA |
10,113,581 |
9,613,353 |
| AA+ |
4,714,501 |
2,934,561 |
| AA |
770,266 |
761,139 |
| AA- |
68,124 |
285,253 |
| A+ |
906,847 |
763,754 |
| A |
465,978 |
465,025 |
| A- |
352,619 |
396,755 |
| BBB+ |
587,802 |
604,672 |
| BBB |
221,092 |
243,820 |
| BBB- |
219,676 |
1,808,396 |
| Other |
4,960,616 |
1,745,020 |
| Not rated |
689,981 |
412,998 |
| Total |
38,558,705 |
27,554,748 |
(1) Internal homologation
At the end of the year, the Bank’s positions are not in excess of the concentration limit, according to the applicable laws.
Market risk
Market risk refers to the risk of losses in the Bank’s treasury book due to changes in equity prices, interest rates, foreign-exchange rates and other indicators whose values are set in a public market. It also refers to the probability of unexpected changes in net interest income and equity economic value of equity as a result of a change in market interest rates.
Market risk stems from the following activities at the Bank:
a)Trading: Includes purchase - sale and positioning mainly in fixed income securities, equities, currencies and derivatives, as well as the financial services provided to customers, such as brokerage. Trading instruments are recorded in the treasury book and are managed by the Treasury Division which is also responsible for the aggregated management of exchange rate exposures arising from the banking book and treasury book.
Market risk can also arise from the crypto market fluctuations that affect our crypto assets portafolio held in reserve to facilitate our clients activities of Wenia, our digital asset company in Bermudas, which is the only company in Grupo Bancolombia authorized to take this kind of assets, according to our internal policies.
b)Balance sheet management: Includes the Bank's assets and liabilities that are not part of the treasury and those operations intended to cover the banking book. The Assets Liability Management Division is responsible for the balance sheet management, preserving the stability of the financial margin and the economic value of equity, maintaining adequate levels of liquidity and solvency. Non-trading instruments are recorded in the Bank’s banking book (the “Banking Book”), which includes primarily loans, time deposits, checking accounts and savings accounts.
In the Bank, the market risks are identified, measured, monitored, controlled and reported in order to support the decision-making process for their mitigation, and to create greater shareholder value added.
The guidelines, policies and methodologies for market risks management are approved by the Board of Directors, thus guaranteeing the congruence and consistency in the risk appetite among subsidiaries. Each country has a local Market and Liquidity Risk Management Office that applies at an individual level the principles of the Bank´s Market Risks Management Strategy. The Board of Directors and senior management have formalized the policies, procedures, strategies and rules of action for market risk administration in its “Market Risk Manual”. This manual defines the roles and responsibilities within each subdivision of the Bank and their interaction to ensure adequate market risk administration.
The Bank´s Corporate Market and Liquidity Risks Management Office, responsible for monitoring and permanently controlling compliance with the limits established, is set up with clear independence from the trading and businesses units, ensuring enforcement authority. This independent control function is complemented by regular reviews conducted by the Internal Audit.
The Bank’s Corporate Market and Liquidity Risks Management Office is responsible for: (a) identifying, measuring, monitoring, and controlling the market risk inherent in the Bank’s businesses: (b) the Bank’s exposure under stress scenarios and confirming compliance with the Bank’s risk management policies: (c) designing the methodologies for valuation of the market value of certain securities and financial instruments: (d) reporting to senior management and the Board of Directors any violation of the Bank’s risk management policies: (e) reporting to the senior management on a daily basis the levels of market risk associated with the trading instruments recorded in its treasury book, and (f) proposing policies to the Board of Directors and to senior management that ensure the maintenance of predetermined risk levels. The Bank has also implemented an approval process for new products across each of its subdivisions. This process is designed to ensure that each subdivision is prepared to incorporate the new product into its procedures, that every risk is considered before the product is incorporated and that approval is obtained from the Board of Directors before the new product can be sold.
Market risks arising from trading instruments are measured at the Bank using two different Value at Risk (VaR) methodologies: the standard methodology required by the SFC, and the internal methodology of historical simulation. The standard methodology is established by “Chapter XXXI of the Basic Accounting Circular”, based on the model recommended by the Amendment to the Capital Accord to Incorporate Market Risks of Basel Committee, and is reflected in the Bank’s Capital Adequacy (Solvency) ratio. The internal methodology of weighted historical simulation uses a confidence level of 99%, a holding period of 10 days, and a time frame of one year or at least 250 days from the reference date of the VaR calculation is used, for digital assets the internal methodology uses a holding period of 1 days and a time frame of 4 years, using a multivariate GARCH family model. The standard methodology is used to report the market risk exposure to the Financial Superintendency and is also used to measure the capital requirements for the Bank, therefore the analysis below is based on information obtained from this model.
The Bank’s VaR limits structure for trading activities, is sufficiently granular to conduct an effective control of the various types of market risk factors on which an exposure is held. It ensures that the market risk is not concentrated in certain asset classes and maximizes the portfolio diversification effect. These limits are defined by companies, products or by risk takers. The majority of the limits are based on the maximum VaR values to which a certain portfolio can be exposed, nevertheless, loss triggers, stop loss and sensitivity warning levels are also set, especially in the derivatives portfolios.
The limits are approved by the Board of Directors, and set based on factors such as tolerance for losses, capital resources and market´s complexity and volatility. They are monitored daily, and their excesses or violations are reported to the Board of Directors and the Risk Committee.
In order to capture the tail risks, the Expected Shortfall is estimated, with a confidence interval of 97.5%, which corresponds to the expected value of the losses that are greater than or equal to the VaR.Additional measurements such as stress tests are performed, to identify extreme unusual situations that could cause severe losses. Stress simulations include historical events and hypothetical scenarios. Back testing or model validation techniques through comparison of predicted and actual loss level are applied on a regular basis to analyze and contrast the accuracy of the VaR calculation methodology in order to confirm its reliability, and make adjustments to the models if necessary.
Within the control and monitoring processes of market risks, reports are elaborated on a daily and monthly basis. They include an analysis of the most relevant risk measures and allow for monitoring the exposure levels to market risks and to the legal and internal limits established for each one of the levels of the Bank. These reports are taken as an input for the decision-making process in the different Committees and management of the Bank.
For management and control of the market risks of activities other than trading, the Bank uses a comprehensive approach, with a short-term vision, measuring the sensitivity of the net interest margin over a one-year horizon, and a long-term vision, estimating the impact on the economic value of equity through different scenarios. Additionally, triggers are defined for monitoring and controling exposure to the interest rate risk of the banking book positions, which are periodically reported to Senior Management.
The market risk management of the positions in the banking book is carried out in a decentralized and independent manner in each of the banking entities of the Bank, by the Asset and Liability Management areas, in the Finance Department.
Market Risk and banking book's interest rate risk management
The following section describes the market risks to which the Bank is exposed and the tools and methodologies used to measure these risks as of December 31, 2024. The Bank faces market risk as a consequence of its lending, trading and investments businesses.
The Bank uses VaR calculation to limit its exposure to the market risk of its Treasury Book. The Board of Directors is responsible for establishing the maximum VaR based on its assessment of the appropriate level of risk for Bancolombia. The Risks Committee is responsible for establishing the maximum VaR for each company and the Propietary Trading Risks Committee is responsible for establishing the maximum VaR by type of investment. These limits are supervised on a daily basis by the Market Risk Management Office.
For the management of the interest rate risk of the banking book, the Bank estimates the impact of changes in market rates on the net interest income and the economic value of equity. In addition, the foreign currency exchange rate exposures arising from the banking book are provided to the Treasury Division where these positions are aggregated and managed.
a.Measurement of market risk of trading instruments
The Bank currently measures the treasury book exposure to market risk (including OTC derivatives positions) as well as the currency risk exposure of the banking book, which is provided to the Treasury Division, using a VaR methodology established in accordance with “Chapter XXXI of the Basic Accounting Circular”, issued by the SFC.
The VaR methodology established by “Chapter XXXI of the Basic Accounting Circular” is based on the model recommended by the Amendment to the Capital Accord to Incorporate Market Risks of Basel Committee, which focuses on the treasury book and excludes investments classified as amortized cost which are not being given as collateral and any other investment that comprises the banking book, such as non-trading positions excluding the currency risk position stemming from investment in affiliated but not consolidated entities denominated in foreign currencies. In addition, the methodology aggregates all risks by the use of correlations, through an allocation system based on defined zones and bands, affected by given sensitivity factors.
The total market risk for the Bank is calculated by the arithmetical aggregation of the VaR calculated for each subsidiary. The aggregated VaR is reflected in the Bank’s Capital Adequacy (Solvency) ratio, in accordance with Decree 2555 de 2010.
For purposes of VaR calculations, a risk exposure category is any market variable that is able to influence potential changes in the portfolio value. Taking into account a given risk exposure, the VaR model assesses the maximum loss not exceeded, over a given period of time. The fluctuations in the portfolio’s VaR depend on volatility, modified duration and positions changes relating to the different instruments that are subject to market risk.
The relevant risk exposure categories for which VaR is computed by the Bank according to “Chapter XXXI, Appendix VI of the Basic Accounting Circular” are: (i) interest rate risks relating to local currency, foreign currency and UVR; (ii) currency risk; (iii) stock price risk; (iv) fund risk. and (v) credit default swaps risk.
•Interest Rate Risk (Treasury Book)
The interest rate risk is the probability of decrease in the market value of the position due to fluctuations in market interest rates. The Bank calculates the interest rate risk for positions in local currency, foreign currency and UVR separately; in accordance with Chapter XXXI of the Basic Accounting Circular issued by the SFC.
In the first instance, the interest rate risk exposure is determined by the sensitivity calculation for the net position of each instrument. This sensitivity is calculated as the net present value (NPV) of each instrument, its corresponding modified duration and the estimated variation of interest rates. The possible variations in the interest rates are established by the SFC according to the historical behavior of these variables in the markets, and they are a function of the duration and currency, as seen in the following table:
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|
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|
|
|
|
Modified Duration |
Changes in Interest Rates (bps) |
| Zone |
Band |
Lower Limit |
Upper Limit |
Legal Currency |
UVR |
Foreign
Currency |
|
1 |
0 |
0.08 |
274 |
274 |
100 |
| Zone 1 |
2 |
0.08 |
0.25 |
268 |
274 |
100 |
|
3 |
0.25 |
0.5 |
259 |
274 |
100 |
|
4 |
0.5 |
1 |
233 |
274 |
100 |
|
5 |
1 |
1.9 |
222 |
250 |
90 |
| Zone 2 |
6 |
1.9 |
2.8 |
222 |
250 |
80 |
|
7 |
2.8 |
3.6 |
211 |
220 |
75 |
|
8 |
3.6 |
4.3 |
211 |
220 |
75 |
|
9 |
4.3 |
5.7 |
172 |
200 |
70 |
|
10 |
5.7 |
7.3 |
162 |
170 |
65 |
| Zone 3 |
11 |
7.3 |
9.3 |
162 |
170 |
60 |
|
12 |
9.3 |
10.6 |
162 |
170 |
60 |
|
13 |
10.6 |
12 |
162 |
170 |
60 |
|
14 |
12 |
20 |
162 |
170 |
60 |
|
15 |
20 |
|
162 |
170 |
60 |
Once the sensitivity factor is calculated for each position, the modified duration is then used to classify each position within its corresponding band. A net sensitivity is then calculated for each band, by determining the difference between the sum of all long-positions and the sum of all short-positions. Then a net position is calculated for each zone (which consists of a series of bands) determined by the SFC. The final step is to make adjustments within each band, across bands and within each zone, which results in a final number that is the interest rate risk VaR by currency. Each adjustment is performed following the guidelines established by the SFC.
The Bank’s exposure to interest risk primarily arises from investments in Colombian government’s treasury bonds (TES) and other Colombian government securities.
•Currency (Treasury and Banking Book), Equity (Treasury Book) and Fund (Treasury Book) Risk
The VaR model uses a sensitivity factor to calculate the probability of loss due to fluctuations in the price of stocks, funds and currencies in which the Bank maintains a position. As previously indicated, the methodology used in these financial statements to measure such risk consists of computing VaR, which is derived by multiplying the position by the maximum probable variation in the price of such positions (“∆p”). The (“∆p”) is determined by the SFC, as shown in the following table:
|
|
|
|
|
|
|
|
|
| Currency |
Sensitivity Factor |
|
| United States Dollar |
12.49 |
% |
|
| Euro |
11.00 |
% |
|
| Other currencies |
13.02 |
% |
|
| Equity and Fund Risk |
14.70 |
% |
|
The SFC according to historical market performance establishes the interest rate’s fluctuations and the sensitivity factors for currency, equity and fund risk used in the model.
•Total Market Risk VaR
The total market risk VaR is calculated as the algebraic sum of the interest rate risk, the currency risk, the stock price risk, fund risk and the credit default swaps risk which are calculated as the algebraic sum of the Parent Company and each of its subsidiaries’ exposure to these risks. Currently, the Bank not present exposure to credit default swaps risk.
The total market risk VaR had a 54.9% increase, from COP 1,096,000 in December 31, 2023 to COP 1,697,566 as of December 31, 2024. This increase was highlighted by the foreign exchange rate risk, driven by a greater exposure to the US Dollar. This was followed by an increase in exposure to the interest rate factor, driven by higher investments in Colombian government’s treasury bonds (TES). Additionally, factors related to equity and fund risk portfolios showed an increase, mainly due to valuations in the Colombia Real Estate Fund.
The following table presents the total change in market risk and other risk factors.
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|
|
|
|
| December 2024 |
| In millions of COP |
| Factor |
December 31 |
Average |
Maximum |
Minimum |
| Interest Rate Risk VaR |
540,397 |
507,425 |
586,194 |
433,465 |
| Foreign Exchange Rate Risk VaR |
764,920 |
554,900 |
764,920 |
364,421 |
| Equity Risk VaR |
360,287 |
351,134 |
360,287 |
340,363 |
| Fund Risk VaR |
31,962 |
25,653 |
31,962 |
18,005 |
| Total Value at Risk |
1,697,566 |
1,439,112 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 2023 |
| In millions of COP |
| Factor |
December 31 |
Average |
Maximum |
Minimum |
| Interest Rate Risk VaR |
405,467 |
418,472 |
542,464 |
383,914 |
| Foreign Exchange Rate Risk VaR |
332,662 |
185,624 |
374,407 |
51,410 |
| Equity Risk VaR |
342,024 |
332,443 |
347,539 |
312,136 |
| Fund Risk VaR |
15,847 |
23,292 |
27,923 |
15,847 |
| Total Value at Risk |
1,096,000 |
959,831 |
|
|
*As of December 31, 2024, the proprietary cryptocurrency portfolio of Wenia amounted to USD 956.3 thousand, with a Value at Risk (VaR) of USD 17.2 thousand. The VaR was calculated using an internal methodology based on a Dinamic Conditional Correlation (DCC) GARCH model, with a one-day time horizon and a 99% of confidence level.
Between December 31, 2024 and 2023, the average Total VaR was COP 1,439 billion, the maximum value COP 1,734 billion, and the minimum value COP 1,182 billion.
•Assumptions and Limitations of VaR Models
Although VaR models represent a recognized tool for risk management, they have inherent limitations, including reliance on historical data that may not be indicative of future market conditions or trading patterns. Accordingly, VaR models should not be viewed as predictive of future results. The Bank may incur losses that could be materially in excess of the amounts indicated by the models on a particular trading day or over a period of time, and there have been instances when results have fallen outside the values generated by the Bank’s VaR models. A VaR model does not calculate the greatest possible loss. The results of these models and analysis thereof are subject to the reasonable judgment of the Bank’s risk management personnel.
•The Bank’s results could adversely affected with high inflation rate
High level of inflation increases interest rates and reduces the market value of the Bank´s debt instruments and increases the market risk in general. Inflation also impacts the real interest rate. When the inflation rate is higher than the nominal interest rate, negative real interest rates discourage saving and the greater variability increases uncertainty and risk, not only in the loan market but also in the stock market.
b.Non-trading instruments market risk measurement
The banking book’s relevant risk exposure is interest rate risk, which is the probability of unexpected changes in net interest income or in the economic value of equity as a result of a change in market interest rates. Changes in interest rates affect the Bank’s earnings because of timing differences on the repricing of the assets and liabilities. The Bank manages the interest rate risk arising from banking activities in non-trading instruments by analyzing the interest rate mismatches between its interest earning assets and its interest bearing liabilities, and estimates the impact on the net interest income and the economic value of equity. The foreign currency exchange rate exposures arising from the banking book are provided to the Treasury Division where these positions are aggregated and managed.
•Interest Risk Exposure (Banking Book)
The Bank has performed a sensitivity analysis of market risk sensitive instruments estimating the impact on the net interest income of each position in the Banking Book, using a repricing model and assuming positive parallel shifts of 100 basis points (bps).
The table 1 provides information about Bancolombia’s interest rate sensitivity for the statement of financial position items comprising the Banking Book.
Table 1. Sensitivity to Interest Rate Risk of the Banking Book
The chart below provides information about Bancolombia’s interest rate risk sensitivity in local currency (COP) at December 31, 2024 and December 31, 2023:
|
|
|
|
|
|
|
|
|
| |
December 31, 2024 |
December 31, 2023 |
| In millions of COP |
| Assets sensitivity 100 bps |
1,262,776 |
1,152,782 |
| Liabilities sensitivity 100 bps |
915,528 |
595,749 |
| Net interest income sensitivity 100 bps |
347,248 |
557,033 |
The chart below provides information about Bancolombia’s interest rate risk sensitivity in foreign currency (US dollars) at December 31, 2024 and 2023:
|
|
|
|
|
|
|
|
|
|
December 31, 2024 |
December 31, 2023 |
| In millions of USD |
| Assets sensitivity 100 bps |
76,219 |
75,052 |
| Liabilities sensitivity 100 bps |
83,051 |
74,800 |
| Net interest income sensitivity 100 bps |
(6,832) |
252 |
A positive net sensitivity denotes a higher sensitivity of assets than of liabilities and implies that a rise in interest rates will positively affect the Bank´s net interest income. A negative sensitivity denotes a higher sensitivity of liabilities than of assets and implies that a rise in interest rates will negatively affect the Bank´s net interest income. In the event of a decrease in interest rates, the impacts on net interest income would be opposite to those described above.
Total Exposure:
The net interest income sensitivity in local currency for the banking book instruments, entered for other than trading purposes with positive parallel shifts of 100 basis points was COP 347,248. The variation in the sensitivity of the net interest margin between December 2023 and December 2024 is due to the increase in the sensivity of demand deposits .
On the other hand, the sensitivity to the net interest margin in foreign currency, assuming the same parallel shift of 100 basis points, presented a increase between December 2024 and December 31, 2023, due to increase in demand deposits and time deposits.
•Assumptions and Limitations
Net interest income sensitivity analysis is based on the repricing model and considers the following key assumptions: (a) does not consider prepayments for Banistmo, BAM, Bancolombia Panamá, Bancolombia Puerto Rico y Banco Agrícola, new operations, defaults, etc., (b); the fixed rate instruments sensitivity, includes the amounts with maturity lower than one year and assumes these will be disbursed at market interest rates and (c) changes in interest rate occur immediately and parallel in the yield curves from assets and liabilities for different maturities.
•Structural equity risk exposure (Banking Book)
Bancolombia’s investment banking affiliate, in its role of financial corporation, holds, directly and through its affiliated companies, structural equity investments. These positions are maintained mostly in the industrial and financial sectors. The market value of those investments decreased by 11.9% during the year, from COP 41,096 million as of December 31, 2023 to COP 36,226 million as of December 31, 2024, mainly, as a result of the reduction in the market value of the investments in Enka Shares.
The structural equity positions are exposed to market risk. Sensitivity calculations are made for those positions:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2024 |
December 31, 2023 |
|
| Fair Value |
36,226 |
41,096 |
|
| Delta |
14.70 % |
14.70% |
|
| Sensitivity |
5,325 |
6,041 |
|
A negative impact of 14.7%, applied to the market value, produces a decrease of COP 5 billion in the structural equity investments market value.
Liquidity risk
Liquidity risk is defined as the inability of a financial firm to meet its debt obligations without incurring unacceptably large losses. Thus, funding liquidity risk is the risk that a firm will not be able to meet its current and future cash flow and collateral needs, both expected and unexpected, without materially affecting its daily operations or overall financial condition. The Bank is sensitive to funding liquidity risk since debt maturity transformation is one of its key business areas.
At the Bank, liquidity prevails over any objective of growth or revenue. Managing liquidity has always been a fundamental pillar of its business strategy, together with capital, in supporting its statement of financial position.
The Bank’s liquidity management model promotes the autonomy of subsidiaries, which must be self-sufficient in their structural funding. Each subsidiary is responsible for meeting the liquidity needs of its current and future activity, within a framework of management coordination at the Bank level. The metrics used to control liquidity risk are developed based on common and homogeneous concepts, but analysis and adaptation are made by each subsidiary.
In line with best governance practices, the Bank has established a clear division of function between executing liquidity management, responsibility of the Asset and Liability Division, and their monitoring and control, responsibility of the Market and Liquidity Risks Management Office.
The different authorities of senior management define the policies and guidelines for managing liquidity risk. These authorities are the Board of Directors, the Risk Committee, and senior management of the Parent Company, which set the risk appetite and define the financial strategy. The ALCO committees (Asset and liability committee) define the objective positioning of liquidity and the strategies that ensure the funding needs derived from businesses. The ALM division (Asset and liability management) and the Market and Liquidity Risks Management Office support the mentioned committees, which elaborate analysis and management proposals, and control compliance with the limits established.
Liquidity Risks Management Office is responsible for proposing the minimum amount of the liquidity reserve, the policies of the liquidity portfolio, defining premises and metrics in order to model the behaviour of the cash flows, proposing and monitoring liquidity limits in line with the Bank's risk appetite, simulating stress scenarios, evaluating and reporting the risks inherent to new products and operations; and submitting the reports required by the internal authorities for decision-making, as well as by regulators. All of the above activities are verified and evaluated by the Internal Audit.
The measures to control liquidity risk include maintaining a portfolio of highly liquid assets, and the definition of triggers and liquidity limits, which enable evaluating the level of exposure of each one of the entities in a proactive way.
The methodologies used to control liquidity risk include the liquidity gaps and stress scenarios. The liquidity gaps measure the mismatches of assets, liabilities and off-balance sheet position´s cash flows, separately for local currency and foreign currency. Regulatory metrics are also applied, in which the contractual maturities are used; and internal models in which the cash flows are adjusted by different ratios, to reflect a more accurate behaviour.
Periodically, a validation of the policies, limits, processes, methodologies and tools to evaluate liquidity risk exposure is performed, in order to establish its pertinence and functionality, and to carry out the necessary adjustments. The Market and Liquidity Risks Management Office elaborate reports daily, weekly and monthly basis in order to monitor the exposure levels and the limits and triggers set up, and to support the decision-making process.
Each subsidiary has its own liquidity contingency plan, which is tested annually. These contingency plans procure the optimization of different funding sources, including obtaining additional funding from the Parent Company.
Liquidity risk management
The Bank’s Board of Directors sets the strategy for managing liquidity risk and delegates responsibility for oversight of the implementation of this policy to ALCO committee that approves the Bank’s liquidity policies and procedures. The Treasury Division manages the Bank’s liquidity position on a day-to-day basis and reviews daily reports covering the liquidity position. A summary report, including any exceptions and remedial action taken, is submitted regularly to Risk Committee and ALCO committees.
a.Liquidity risk exposure:
In order to estimate liquidity risk, the Bank measures a liquidity coverage ratio to ensure holding liquid assets sufficient to cover potential net cash outflows over 30 days. This indicator allows the Bank to meet liquidity coverage for the next month. The liquidity coverage ratio is presented as follows:
|
|
|
|
|
|
|
|
|
|
|
|
| Liquidity Coverage Ratio |
December 31, 2024 |
December 31, 2023 |
|
| Net cash outflows into 30 days |
23,887,074 |
13,752,496 |
|
| Liquid Assets |
59,617,840 |
50,680,823 |
|
Liquidity coverage ratio(1) |
249.58% |
368.52% |
|
(1) The minimum level required of the liquidity coverage ratio by the legal norm is 100%.
b.Liquid Assets
One of the main guidelines of the Bank is to maintain a solid liquidity position, therefore, the ALCO Committee, has established a minimum level of liquid assets, based on the funding needs of each subsidiary, to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Bank’s reputation.
The following table shows the liquid assets held by Bank:
|
|
|
|
|
|
|
|
|
Liquid Assets(1) |
December 31, 2024 |
December 31, 2023 |
High quality liquid assets(2) |
|
|
| Cash |
27,931,834 |
25,273,317 |
| High quality liquid securities |
24,862,861 |
19,951,771 |
| Other Liquid Assets |
|
|
Other securities(3) |
6,823,145 |
5,455,735 |
| Total Liquid Assets |
59,617,840 |
50,680,823 |
(1)Cash and those liquid assets received by the Central Bank for its operations expansion and monetary contraction are the assets with highest liquidity. Liquid assets are adjusted by a haircut. The following are considered as liquid assets: cash, repos held for trading and investments held for trading in listed shares in Colombia’s stock exchange, in investment funds units or in other trading debt instruments.
(2) High-quality liquid assets: cash and shares that are eligible to be reportable or repo operations, in addition to those liquid assets that the Central Bank receives for its monetary expansion and contraction operations described in paragraph 3.1.1 of the Foreign Regulatory Circular DODM-142 of the Bank of the Republic.
(3) Other Securities: Securities issued by financial and corporate entities.
c.Contractual maturities of financial assets
The tables below set out the remaining contractual maturities of principal and interest balances of the Bank’s financial assets:
Contractual maturities of financial assets December 31, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Financial Assets |
0 – 30 days |
31 days – 1 Year |
1 - 3 Years |
3 - 5 Years |
More than 5 years |
| Cash and balances with central bank |
24,881,536 |
|
|
|
|
|
| Interbank borrowings - Repurchase agreements |
7,815,791 |
|
146,772 |
|
|
|
|
| Financial assets investments |
2,303,523 |
|
13,929,810 |
|
13,318,529 |
|
5,257,338 |
|
7,910,771 |
|
| Loans and advances to customers |
13,067,571 |
|
102,476,191 |
|
106,645,598 |
|
61,320,760 |
|
113,075,471 |
|
| Derivative financial instruments |
8,858,966 |
|
5,306,353 |
|
2,288,557 |
|
757,393 |
|
847,796 |
|
| Total financial assets |
56,927,387 |
|
121,859,126 |
|
122,252,684 |
|
67,335,491 |
|
121,834,038 |
Contractual maturities of financial assets December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Financial Assets |
0 – 30 days |
31 days – 1 Year |
1 - 3 Years |
3 - 5 Years |
More than 5 years |
| Cash and balances with central bank |
24,461,384 |
- |
- |
- |
- |
| Interbank borrowings - Repurchase agreements |
14,497,024 |
452,847 |
- |
- |
- |
| Financial assets investments |
2,467,493 |
12,311,055 |
5,462,198 |
2,597,787 |
5,525,545 |
| Loans and advances to customers |
12,474,473 |
90,653,852 |
96,770,268 |
57,038,679 |
104,103,871 |
| Derivative financial instruments |
3,922,735 |
12,977,266 |
4,141,896 |
1,699,943 |
1,405,850 |
| Total financial assets |
57,823,109 |
116,395,020 |
106,374,362 |
61,336,409 |
111,035,266 |
d.Contractual maturities of financial liabilities
The tables below set out the remaining contractual maturities of principal and interest balances of the Bank’s financial liabilities:
Contractual maturities of financial liabilities December 31, 2024:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Financial Liabilities |
0 – 30 days |
31 days – 1 Year |
1 - 3 Years |
3 - 5 Years |
More than 5 years |
| Demand deposit from customers |
162,015,643 |
|
|
|
|
|
| Time deposits from customers |
16,673,292 |
|
64,079,401 |
|
16,502,005 |
|
5,879,599 |
|
17,667,549 |
|
| Interbank deposits-Repurchase agreements |
1,801,163 |
|
46,538 |
|
— |
|
|
|
| Borrowings from other financial institutions |
381,534 |
|
8,811,727 |
|
3,537,113 |
|
1,815,062 |
|
2,013,978 |
|
| Debt securities in issue |
56,666 |
|
1,698,794 |
|
6,917,904 |
|
1,131,868 |
|
5,846,266 |
|
| Preferred Shares |
|
57,701 |
|
115,403 |
|
115,403 |
|
295,697 |
|
| Derivative financial instruments |
8,644,300 |
|
5,100,947 |
|
2,152,992 |
|
777,663 |
|
766,037 |
|
| Total financial liabilities |
189,572,598 |
|
79,795,108 |
|
29,225,417 |
|
9,719,595 |
|
26,589,527 |
|
Contractual maturities of financial liabilities December 31, 2023:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Financial Liabilities |
0 – 30 days |
31 days – 1 Year |
1 - 3 Years |
3 - 5 Years |
More than 5 years |
| Demand deposit from customers |
143,307,149 |
- |
- |
- |
- |
| Time deposits from customers |
15,107,203 |
57,588,430 |
17,737,464 |
6,671,911 |
18,331,091 |
| Interbank deposits-Repurchase agreements |
809,027 |
242,810 |
23,431 |
- |
- |
| Borrowings from other financial institutions |
763,580 |
5,604,327 |
6,651,228 |
2,403,786 |
2,661,657 |
| Debt securities in issue |
124,055 |
3,913,687 |
4,363,593 |
6,023,469 |
3,836,353 |
| Preferred Shares |
— |
57,701 |
115,403 |
115,403 |
295,697 |
| Derivative financial instruments |
3,337,039 |
13,511,532 |
4,146,259 |
1,688,473 |
1,484,149 |
| Total financial liabilities |
163,448,053 |
80,918,487 |
33,037,378 |
16,903,042 |
26,608,947 |
The expected cash flows for some financial assets and liabilities may vary significantly from their contractual maturity. The main differences are the following:
•The demand deposits historically have maintained a tendency to remain stable.
•The mortgages loans, in spite of having contractual maturity between 15 and 30 years, its average life is less than these terms.
e.Financial guarantees
The tables below set out the remaining contractual maturities of the Bank’s financial guarantees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2024 |
0 – 30 days |
31 days – 1 Year |
1 - 3 Years |
3 - 5 Years |
More than 5 years |
| In millions of COP |
| Financial guarantees |
744,077 |
6,535,071 |
2,135,249 |
60,876 |
669,028 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2023 |
0 – 30 days |
31 days – 1 Year |
1 - 3 Years |
3 - 5 Years |
More than 5 years |
| In millions of COP |
| Financial guarantees |
826,699 |
9,388,345 |
1,489,899 |
450,875 |
535,380 |
Interest Rate Benchmark Reform
As part of the LIBOR benchmark reform that is being implemented since 2017 by the Financial Conduct Authority of the UK, in March of the present year, it was announced that the publication of LIBOR on a representative basis will cease for the one-week and two-month USD LIBOR settings immediately after December 31, 2022, and the remaining USD LIBOR settings immediately after June 30, 2023.
The Bank has taken the necessary measures to identify and implement the action plans required to address the discontinuation process of the LIBOR rate. The replacement of th LIBOR rate in USD with the SOFR rate was approved by the Asset and Liability Management (ALM) Committee and the Risk Committee of the Board of Directors. The development of products indexed to the new reference rate (SOFR) has commenced.
The following tables provide a breakdown by currency and nature of financial instruments exposed to the LIBOR rate for the periods ending in December 2023 and December 2024:
|
|
|
|
|
|
| December 31, 2024 |
| In millions of COP |
|
USD LIBOR(1) |
| Assets |
|
| Loans |
1,890 |
| Bonds |
- |
| Derivatives |
- |
| Total Assets |
1,890 |
| Liabilities |
|
| Loans |
- |
| Term deposits |
- |
| Total Liabilities |
- |
1Cessation date: USD LIBOR 06/30/23. Portfolio balances and market value of derivative transactions outstanding at December 31, 2024. These correspond to transactions conducted before June 30, 2023, whose maturity will occur according to the agreed contractual terms.
|
|
|
|
|
|
| December 31, 2023 |
| In millions of COP |
|
USD LIBOR(1) |
| Assets |
|
| Loans |
66,351 |
| Bonds |
- |
| Derivatives |
- |
| Total Assets |
66,351 |
| Liabilities |
|
| Loans |
323 |
| Term deposits |
6,750 |
| Total Liabilities |
7,073 |
1Cessation date: USD LIBOR 06/30/23. Portfolio balances and market value of derivative transactions outstanding at December 31, 2023.
Risk
Any failure by market participants, such as the Bank, and regulators to successfully introduce benchmark rates to replace LIBOR and implement effective transitional arrangements to address the discontinuation of LIBOR could result in disruption of the financial and capital markets. In addition, the transition process to an alternative reference rate could impact the Bank’s business, financial condition or result of operations, as a result of:
•An adverse impact in pricing, liquidity, value, return and trading for a broad array of financial products, loans and derivatives that are included in the Bank’s financial assets and liabilities.
•Extensive changes to internal processes and documentation that contain references to LIBOR or use formulas that depend on LIBOR.
•The transition and development of appropriate systems and models to effectively transition the Bank’s risk management processes from LIBOR -based products to those based on one or more alternative reference rates in a timely manner; and
•An increase in prepayments of LIBOR -linked loans by the Bank’s clients.
From January 2022, products indexed to the SOFR rate began to be offered, additionally it was defined not to carry new operations indexed to the LIBOR rate. In turn, as an organization, we will continue during 2025 on the transition process of operations that are indexed to LIBOR.
Capital management
The Capital Management function oversees Shareholders’ equity and Bancolombia’s capital structure, aiming for value generation through businesses related to financial activities and investments.
The goal is to have the enough capital to cover unexpected losses, and develope the business plan. To do so, the Capital Management area oversees Bancolombia’s capital ratios and uses several mechanisms to optimize such ratios according to forecasted business conditions.
The monitoring of corporate investments and shareholders’ equity, as well as different components of assets and associated risks, is executed for internal and external purposes. The results are presented to the Board of Directors and some support committees to make sure that all risks are properly managed and within risks appetite, guidelines, and regulation.
Bancolombia’s management has the goal of maintaining the balance between an adequate capital allocation and value generation for shareholders. This way, business opportunities can be financed with internal funding or capital markets resources.
Bancolombia’s lending and deposit-taking activities are supervisor by the Superintendencia Financiera de Colombia, and that implies complying with Decree 1477 of 2018.
This decree standardized the definitions of regulatory capital according to Basel III standards. It also updated the risk adjusted capital consumption of assets and added capital buffers. New capital measures will be implemented from the current 4.5% basic solvency level and the 9% total solvency level.
Additionally, Bancolombia conducts stress test to estimate how the bank’s balance sheet, results and ratios during adverse scenarios. None of the stress test runs implies reaching solvency ratios below regulatory levels and therefore, we consider that capital levels are optimal at the end of 2024.
Since 2024, the new capital requirements have been fully implemented, which equate to having a Basic Solvency Ratio (Tier 1 Basic Solvency Index) greater than or equal to 4.5%, an Additional Basic Solvency Ratio greater than or equal to 6%, and a Total Solvency Ratio (Tier 1 + Tier 2) greater than or equal to 9% (considering capital buffers, 11.5%) according to the following formulas:
The following table indicates Bancolombia’ s capital ratios for 2024 according to the new regulation implemented in Colombia:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Technical Capital |
Asof |
|
|
A diciembre 31, 2024 |
A diciembre 31, 2023 |
|
| In millions of COP |
|
| Primary capital |
45,245,389 |
|
39,704,542 |
|
|
| Share Capital |
480,914 |
|
480,914 |
|
|
| Additional paid-in capital |
4,857,454 |
|
4,857,454 |
|
|
| Preferred shares |
584,204 |
|
584,204 |
|
|
| Legal reserve |
14,429,333 |
|
14,541,561 |
|
|
| Occasional reserves |
9,874,876 |
|
7,250,712 |
|
|
| Non-controlling interest |
1,041,807 |
|
960,217 |
|
|
| Other comprehensive income |
6,642,526 |
|
4,065,182 |
|
|
| Net income attributable to equity holders of the Parent Company |
6,267,744 |
|
6,116,936 |
|
|
| Retained earnings |
1,066,531 |
|
847,362 |
|
|
| Less: |
(10,188,105) |
|
(8,919,345) |
|
|
| Prior-year losses |
(79,590) |
|
(79,587) |
|
|
| Intangibles assets |
(9,017,419) |
|
(7,818,125) |
|
|
| Revaluation property, plant and equipment |
(340,612) |
|
(350,061) |
|
|
| Other intangibles |
(750,484) |
|
(671,572) |
|
|
| Deferred net income tax |
- |
|
— |
|
|
| Primary capital (Tier I) |
35,057,283 |
|
30,785,197 |
|
|
| Hybrid bonds |
4,669,804 |
|
4,283,448 |
|
|
| Subordinated bonds |
595,442 |
|
678,797 |
|
|
| General provisions |
220,519 |
|
375,902 |
|
|
| Computed secondary capital (Tier II) |
5,485,765 |
|
5,338,147 |
|
|
| Less: |
(13,798) |
|
(10,687) |
|
|
| Technical capital (1) |
40,529,250 |
|
36,112,657 |
|
|
| Capital Ratios |
|
|
|
| Primary capital to risk-weighted assets (Tier I) |
11.89 |
% |
11.42 |
% |
|
| Secondary capital to risk-weighted assets (Tier II) |
1.86 |
% |
1.98 |
% |
|
| Risk-weighted assets including market risk and operational risk |
294,794,366 |
|
269,591,211 |
|
|
| Technical capital to risk-weighted assets (2) |
13.75 |
% |
13.40 |
% |
|
Calculations based on the new definitions of Decree 1477 of 2018.
1) Technical capital is the sum of basic and additional capital.
(2) Capital adequacy is technical capital divided by risk weighted assets.
Additionally, Bancolombia´s total exposure used to estimate leverage ratio was COP 388,088,665 millions of COP as of 2024 and the leverage ratio was 9.03%.
EX-2.4
2
cib-20241231xexx24.htm
EX-2.4
Document
Exhibit 2.4
EXHIBIT 2.4 DESCRIPTION OF SECURITIES REGISTERED UNDER SECTION 12 OF THE U.S. SECURITIES EXCHANGE ACT OF 1934
As of December 31, 2024, Bancolombia S.A. had the following series of securities registered pursuant to Section 12(b) of the U.S. Securities Exchange Act of 1934, as amended (the 'Exchange Act'):
|
|
|
|
|
|
|
|
|
| Title of each class |
Trading Symbol(s) |
Name of each exchange on which
Registered
|
|
American Depositary Shares
Preferred Shares
|
CIB
CIB
|
New York Stock Exchange
New York Stock Exchange1
|
| 6.909% Subordinated Notes due 2027 |
US05968LAK89 |
New York Stock Exchange |
| 8.625% Subordinated Notes due 2034 |
US05968LAN29 |
New York Stock Exchange |
Capitalized terms used but not defined herein have the meanings given to them in the Bank’s annual report on Form 20-F for the fiscal year ended December 31, 2024. References to 'CIB', 'the Company', 'the Bank', 'we', 'us', or 'our' in this document refer to Bancolombia S.A. only and not to the subsidiaries of Bancolombia S.A.
OVERVIEW OF CAPITALIZATION
The Bank’s bylaws provide for an authorized capital stock of COP 700 billion divided into 1,400,000,000 shares of a par value of COP 500 each, which must belong to one of the following classes: (i) common shares, (ii) privileged shares; and (iii) shares with preferred dividend and no voting rights ('preferred shares'). Pursuant to Article 8 of the by-laws, all shares issued shall have the same par value. As of December 31, 2024, a total of 509,704,584 common shares and 452,122,416 preferred shares were registered in the Bank’s stockholder registry in the name of 43,522 stockholders. A total of 122,163,696 representing 27.02% of preferred shares were directly held by the depositary in the United States and were held by 34 record holders registered in The Bank of New York Mellon’s registered stockholder list. Given that some of the preferred shares and American Depository Shares ('ADSs') are held by nominees, the number of record holders may not be representative of the number of beneficial owners.
PREFERRED SHARES
The following description of the Bank’s preferred shares is a summary of the material terms of the by-laws and Colombian corporate law regarding the preferred shares and the holders thereof. The following description is qualified in its entirety by reference to our by-laws (an English translation of which is attached as exhibit to our annual report on Form 20-F for the year ended December 31, 2024, as Exhibit 1.1) and applicable law.
General
1 Bancolombia’s preferred shares are not listed for trading directly, but only in connection with its American Depositary Shares, which are evidenced by American Depositary Receipts, each representing four preferred shares.
The Bank’s preferred shares were approved for issuance from the authorized capital stock and are non-voting (except as described below), non-cumulative preferred shares. The Colombian Securities Exchange is the principal non-U.S. trading market for the preferred shares and the sole market for the common shares. As of December 31, 2024, the market capitalization for the Bank’s preferred shares based on the closing price in the Colombian Securities Exchange was COP 15,906 billion (the Bank’s total market capitalization, which includes the common and preferred shares, was COP 35,071 billion or USD 7.95 billion as of the same date).
There are no official market makers or independent specialists on the Colombian Securities Exchange to ensure market liquidity and, therefore, orders to buy or sell in excess of corresponding orders to sell or buy are not executed. The aggregate equity market capitalization of the Colombian Securities Exchange, as of December 31, 2024, was COP 320,568 billion (USD 72,705 billion), with 74 companies listed as of that date.
Neither the registration of our preferred shares in the Registro Nacional de Valores y Emisores (the National Registry of Securities and Issuers) nor the approval of any public offer by the Financial Supertintendence or SFC should be understood as a rating or assumption of liability by the SFC with respect to us, the price, quality or the tradability of the securities or of our solvency.
Registration and Transfer
The preferred shares are evidenced by a dematerialized global certificate held for custody by Deposito Centralizado de Valores de Colombia - Deceval S.A. (Deceval), in registered form without dividend coupons attached. The Bank maintains a stock registry through Deceval and only those holders listed in that stock registry as holders of preferred shares are recognized by the Bank as holders of preferred shares. Each registration or transfer of preferred shares will be effected only by the book entry record on such stock registry. Any such registration will be effected without charge to the person requesting such registration, but subject to payment by such person of any taxes, stamp duties or other governmental charges payable in connection therewith. The Bank of New York Mellon, which acts as depositary (the depositary) for our American Depositary Receipts (ADRs) facility, or the depositary’s nominee shall be the registered holder on behalf of beneficial owners of ADSs representing the preferred shares, which shall be deposited with Fiduciaria Bancolombia S.A. (formerly Fiducolombia S.A.), as agent of the depositary (the custodian).
In general, transfers of shares of listed companies in Colombia are required to be effected through the Colombian Securities Exchange. The following transfers, however, are not required to be effected through the Colombian Securities Exchange: (i) transfers between shareholders that have the same beneficial owner provided that such condition is evidenced to the SFC; (ii) transfers by operation of law (such as inheritance, liquidation of companies or judicial decisions, among others); (iii) transfers as payment in kind provided that a one year pre-existence of the payment obligation is evidenced to the SFC; and (iv) transfers whose amount does not exceed the value of 66,000 Unidades de Valor Real (or UVRs), a Colombian inflation-adjusted monetary index calculated by the board of directors of the Central Bank of Colombia (the Central Bank) and generally used for pricing home-mortgage loans; as of March 28, 2025 approximately U.S.$ 6,077.14. Neither the Bank nor the depositary will be liable for any failure to comply with the ownership limitation or failure to respond to any request for information to determine compliance with the ownership limitation.
Colombian securities regulations forbid a shareholder to pre-arrange transactions on shares of listed companies unless the pre- arrangement is disclosed publicly and to the SFC at least one month in advance.
Pursuant to Colombian Banking laws, no individual or corporation may hold 10% or more of a Colombian financial institution’s capital stock or increase any such ownership without the prior authorization of the SFC.
Voting Rights
The holders of preferred shares are not entitled to receive notice of, attend or vote at any general shareholders’ meeting of holders of common shares except as described below.
The holders of preferred shares will be entitled to vote on the basis of one vote per share at any general shareholders’ meeting, whenever a shareholders vote is required on the following matters:
In the event of changes in the bylaws that impair the conditions or rights assigned to such preferred shares and when the conversion of such shares into common shares is to be approved. In this event, a favorable vote of at least 70% of the holders of outstanding preferred shares is required (in addition to the favorable vote of 70% of the holders of outstanding common shares).
When voting the anticipated dissolution, merger or transformation of the corporation or change of its corporate purpose.
When the preferred dividend has not been fully paid during two consecutive fiscal years. In this event, holders of such preferred shares shall retain their voting rights until the corresponding dividends have been fully paid to them.
When the in kind payment of dividends in shares is subject to vote at the general shareholders’ meeting. In this event, a favorable vote of at least 80% of the holders of common shares attending the meeting -in person or by proxy- and at least 80% of the holders of outstanding preferred shares is required.
If at the end of a fiscal year, the Bank’s profits are not enough to pay the minimum dividend and the SFC, by its own decision or upon request of holders of at least 10% of preferred shares, determines that benefits were concealed or shareholders were misled by the directors or officers with regard to benefits received from the Bank, thus decreasing the profits to be distributed, then, the SFC may resolve that holders of preferred shares may participate with speaking and voting rights at the general shareholders’ meeting, in accordance with the terms established by law.
When the register of shares at the Colombian Securities Exchange or at the Registro Nacional de Valores y Emisores (the Colombian National Registry of Securities and Issuers) is suspended or canceled. In this event, voting rights shall be maintained until the irregularities that resulted in such cancellation or suspension are resolved.
Except in the events set forth above, holders of preferred shares are not entitled to vote for the election of directors or to influence our management policies.
The holders of preferred shares will not be entitled to receive notice of a general meeting of the holders of common shares unless they have the right to vote on any of the matters to be addressed at such meeting. Each holder of preferred shares shall have the right to vote individually on any of the matters on which the holders of preferred shares have voting rights.
In accordance with Bancolombia's bylaws, notice of meetings at which holders of preferred shares are entitled to vote shall be published in at least one daily newspaper with a wide circulation in Bancolombia’s principal place of business, as is the case for any other shareholders’ meeting. Each notice must state: (i) the date of the meeting, (ii) a description of any resolution to be proposed for adoption at the meeting on which the holders of preferred shares are entitled to vote and (iii) instructions for the delivery of proxies.
General shareholders’ meetings may be ordinary meetings or extraordinary meetings. Ordinary general shareholders’ meetings occur at least once a year during the three months after the end of the prior fiscal year. Extraordinary general shareholders’ meetings may take place when duly called for a specified purpose or purposes, or, without prior notice, when holders representing all outstanding shares entitled to vote on the issues presented are present at the meeting.
Quorum for both ordinary and extraordinary general shareholders’ meetings to be convened at first call requires the presence of two or more shareholders representing at least half plus one of the outstanding shares entitled to vote at the relevant meeting. If a quorum is not present, a subsequent meeting is called at which the presence of one or more holders of shares entitled to vote at the relevant meeting constitutes a quorum, regardless of the number of shares represented.
Ordinary general meetings may be called by the board of directors and the president. Extraordinary general meetings may be called by the board of directors, the CEO or external auditor, either on their own initiative, or when applicable regulations do not otherwise provide with respect to the authority to call such meetings, by two or more shareholders representing no less than ten percent (10%) of the outstanding shares. Notice of ordinary meetings and extraordinary meetings convened to approve fiscal year-end financial statements, the increase of authorized capital, the reduction of the outstanding capital, the merger, spin-off or sale of more than 25% of the assets, liabilities and contracts, or where members are to be elected to the Board of Directors, must be published in one newspaper of wide circulation at Bancolombia’s principal place of business at least fifteen (15) business days prior to the date to such meeting. In all other cases, five (5) calendar days’ notice will suffice. When calculating these deadlines, neither the day on which the call is issued nor the day of the meeting will be counted.
Except when Colombian law or our by-laws require a special majority, action may be taken at a general shareholders’ meeting by the vote of two or more shareholders representing a majority of common shares present. Pursuant to Colombian law and/or our by- laws, special majorities are required to adopt the following resolutions:
a favorable vote of at least 70% of the common shares represented at a general shareholders’ meeting is required to approve the issuance of shares without preemptive rights available to the shareholders;
a favorable vote of at least 78% of common shares represented at a general shareholders’ meeting is required to decide not to distribute as dividend at least 50% of the annual net profits of any given fiscal year;
a favorable vote of at least 80% of the holders of common shares represented at a general shareholders’ meeting, and 80% of the holders of outstanding preferred shares is required to approve the payment dividend in shares; and
a favorable vote of at least 70% of the holders of common shares and of outstanding preferred shares is required to effect a decision to impair the conditions or rights established for such preferred shares, or a decision to convert preferred shares into common shares.
If the SFC determines that any amendment to the by-laws fails to comply with Colombian law, it may demand that the relevant provisions be modified accordingly. Under these circumstances, we will be obligated to comply in a timely manner.
Dividends
The holders of common shares, once they have approved the year-end financial statements, determine the allocation of distributable profits, if any, for the preceding year.
Under the Colombian Commerce Code, a company must distribute at least 50% of its annual net profits to all shareholders, payable in cash, or as determined by the shareholders, within a period of one year following the date on which the shareholders determine the dividends. If the total amount of all reserves of a company exceeds its outstanding capital, this percentage is increased to 70%. The minimum dividend requirement of 50% or 70%, as the case may be, may be waived by a favorable vote of the holders of 78% of a company’s common shares present at the meeting.
Under Colombian law and our bylaws, annual net profits are to be applied as follows:
first, once the Balance Sheet has been approved, the appropriation for the payment of taxes of the corresponding taxable year has been made, an amount equivalent to 10% of net profits is allocated to the legal reserve until such reserve is equal to at least 50% of our paid-in capital;
second, payment of the minimum dividend on the preferred shares; and third, allocation of the remainder of the net profits is determined by the holders of a majority of the common shares entitled to vote on the recommendation of the board of directors and the President and may, subject to further reserves required by the by- laws, be distributed as dividends. In accordance with Colombian law and our by-laws, the dividends payable to the holders of common shares cannot exceed the dividends payable to holders of the preferred shares.
Holders of preferred shares are entitled to receive dividends based on the profits of the preceding fiscal year, after canceling losses affecting the capital and once the amount that shall be legally set apart for the legal reserve has been deducted, but before creating or accruing for any other reserve, of a minimum preferred dividend equal to 1% yearly of the subscription price of the preferred share, provided this dividend is higher than the dividend assigned to common shares. If this is not the case, the dividend shall be increased to an amount that is equal to the per share dividend on the common shares.
Payment of the preferred dividend shall be made at the time and in the manner established by the general shareholders’ meeting and in the priority indicated by Colombian law.
The general shareholders’ meeting may allocate a portion of the profits to welfare, education or civic services, or to support economic organizations of our employees.
The dividend payments may be made in installments which must be approved at the ordinary general shareholders’ meeting. In the general shareholders’ meeting, shareholders will determine the effective date, the system and the place for payment of dividends.
Dividends declared on the preferred shares will be payable to the record holders of those shares, as they appear on our stock registry, on the appropriate record dates as determined by the general shareholders’ meeting. Generally, any stock dividend payable by us to the holders of preferred shares will be paid in preferred shares. However, the general shareholders’ meeting may authorize the payment in common shares to all shareholders. Any in-kind dividend payable in shares requires the approval of 80% or more of the voting interest of the common shares present at a shareholders’ meeting and the approval of 80% or more of the voting interest of the outstanding preferred shares. In the event that such voting majority is not obtained, shareholders may individually elect to receive a stock dividend or a cash dividend.
Liquidation Rights
The Bank will be dissolved if certain events take place, including the following:
our term of existence, as stated in the by-laws, expires without being extended by the shareholders prior to its expiration date;
by reduction of the number of stockholders below the number required by the law for its establishment and operation;
by decision of the general shareholders’ meeting; and
in certain other events expressly provided for by Colombian law and our by-laws.
Upon dissolution, a liquidator must be appointed by the general shareholders’ meeting to wind up our affairs. In addition, the SFC has the power to take over the operations and assets of a bank and proceed to its liquidation under certain circumstances and in the manner prescribed in the Colombian Financial Statute (Estatuto Orgánico del Sistema Financiero - Decree 663 of 1993 - the 'Financial Statute')
Upon liquidation, holders of fully paid preferred shares will be entitled to receive in pesos, out of the surplus assets available for distribution to shareholders, pari passu with any of the other shares ranking at that time pari passu with the preferred shares, an amount equal to the nominal value of those preferred shares before any distribution or payment may be made to holders of common shares or any other shares at that time ranking junior to the preferred shares with regard to participation in our surplus assets. If, upon any liquidation, assets that are available for distribution among the holders of preferred shares and liquidation parity shares are insufficient to pay in full their respective liquidation preferences, then those assets will be distributed among those holders pro-rata in accordance with the respective liquidation preference amounts payable to them.
Subject to the preferential liquidation rights of holders of preferred shares, all fully paid common shares will be entitled to participate equally in any distribution upon liquidation. Partially paid common shares must participate in a distribution upon liquidation in the same proportion that those shares have been paid at the time of the distribution.
To the extent there are surplus assets available for distribution after full payment to the holders of common shares of the nominal value of the common shares, the surplus assets will be distributed among all holders of shares of capital stock pro-rata in accordance with their respective holdings of shares.
Preemptive Rights and Other Anti-Dilution Provisions
Pursuant to the Colombian Commerce Code, the Bank is allowed to have an amount of outstanding capital stock equal to or smaller than the authorized capital stock set out in the by-laws. Under the by-laws, the holders of common shares determine the amount of authorized capital stock, and the board of directors has the power to (a) order the issuance and regulate the terms of subscription of common shares up to the total amount of authorized capital stock and (b) regulate the issuance of preferred shares, when expressly delegated by the general shareholders’ meeting. The issuance of preferred shares must always be first approved by the general shareholders’ meeting, which shall determine the nature and extent of any privileges, according to the by-laws and Colombian law.
At the time a Colombian company is formed, its outstanding capital stock must represent at least 50% of the authorized capital. Any increases in the authorized capital stock or decreases in the outstanding capital stock must be approved by the majority of shareholders required to approve a general amendment to the by-laws. Pursuant to the Financial Statute, the SFC may order a commercial bank to increase its outstanding capital stock under certain special circumstances.
The Bank’s by-laws and Colombian law require that, whenever the Bank issues new shares of any outstanding class, the Bank must offer the holders of each class of shares the right to purchase a number of shares of such class sufficient to maintain their existing percentage ownership of the aggregate capital stock. These rights are called preemptive rights.
The general shareholders’ meeting may suspend preemptive rights with respect to a particular capital increase by a favorable vote of at least 70% of the common shares represented at a general shareholders’ meeting. Preemptive rights must be exercised within the period stated in the share placement terms of the increase, which cannot be shorter than 15 business days following the publication of the notice of the public offer of that capital increase. From the date of the notice of the share placement terms, preemptive rights may be transferred separately from the corresponding shares.
The SFC will authorize decreases in the outstanding capital stock decided by the holders of common shares only if:
the Bank has no liabilities;
the Bank’s creditors consent in writing; or
the outstanding capital stock remaining after the reduction represents at least twice the amount of the Bank’s liabilities.
Other Provisions
Limits on the Issuance of Shares with Preferred Dividends and No Voting Rights
Preferred shares may not represent more than 50% of the outstanding capital.
Limits on Purchases and Sales of Capital Stock by Related Parties
Pursuant to the Colombian Commerce Code, the members of the board of directors and certain of the senior officers may not, directly or indirectly, buy or sell shares of the capital stock while they hold their positions, except when dealing on a non-speculative basis and in that case they need to obtain: (i) the prior authorization of the board of directors passed with the vote of two thirds of its members, (excluding, in the case of transactions by a director, such director’s vote); or (ii) the prior authorization of the general shareholders’ meeting approved with the vote of the majority as provided in the by-laws, excluding the vote of the petitioner.
No Redemption by Bancolombia
Colombian law prohibits Bancolombia from repurchasing shares of its capital stock, including the preferred shares.
AMERICAN DEPOSITARY SHARES
The following section summarizes the material provisions of the Amended and Restated Deposit Agreement, dated as of July 25, 1995 and amended and restated as of January 14, 2008, entered into by Bancolombia, the depositary and the owners and beneficial owners from time to time of ADRs, (the 'deposit agreement'), pursuant to which the ADSs are issued.
As of December 31, 2024, Bancolombia had 452,122,416 preferred shares outstanding. A total of 122,163,696 representing 27.02% of preferred shares were part of the ADR program and were held by 34 record holders registered in The Bank of New York Mellon’s registered stockholder list. Given that some of the preferred shares and ADSs are held by nominees, the number of record holders may not be representative of the number of beneficial owners. A beneficial owner includes anyone who has the power to receive the economic benefit of ownership of the securities. ADRs evidencing ADSs are deliverable by The Bank of New York Mellon, as depositary pursuant to the deposit agreement. Each ADS represents four preferred shares or evidences the right to receive four preferred shares.
Copies of the deposit agreement are available for inspection at the Corporate Trust Office of the depositary (the 'Corporate Trust Office'), currently located at 101 Barclay Street, New York, New York 10286, and at the office of the custodian, currently located at Carrera 48 # 26-85, Medellin, Colombia or Calle 28 # 13a-75, Edificio Atrio, Bogota, Colombia. The depositary’s principal executive office is located at One Wall Street, New York, New York 10286. The deposit agreement is also an exhibit to our registration statement on Form F-3 filed with the U.S. Securities and Exchange Commission on April 28, 2022.
Restrictions Regarding Foreign Investment in Colombia
The following includes a brief summary of certain restrictions on foreign investment in Colombia and does not purport to be complete.
Colombia’s International Investment Regime, Part 17 of Decree 1068 of 2015, as amended (the 'International Investment Regime') regulates the manner in which nonresident entities and individuals can invest in Colombia and participate in the Colombian securities markets. Among other requirements, the regime mandates registration of certain foreign exchange transactions with the Central Bank and specifies procedures to authorize and administer certain types of foreign investments. International investments are regulated by the Central Bank by means of External Resolution 1 of 2018 and External Circular DCIP 83, both as amended, setting forth in detail regulation and procedures regarding foreign investment in Colombia.
Investors who wish to participate in our ADR facility and hold our ADRs will be required to submit to the custodian of the ADR facility certain information and comply with certain registration procedures required under the foreign investment regulations in connection with foreign exchange controls regarding currency conversion (generally COP/USD, related to the foreign investment). Holders of ADRs who wish to withdraw the underlying preferred shares will also have to comply with certain registration and reporting procedures.
See 'Deposit, Transfer and Withdrawal' below. Under Colombian foreign investment regulations, the failure of a non-Colombian resident investor to report or register foreign exchange transactions relating to investments in Colombia with the Central Bank, on a timely basis, may prevent the investor from obtaining remittance rights, constitute an exchange control infraction and result in a fine.
Approval was obtained from the SFC for the depositary facility established for the ADSs pursuant to the deposit agreement (and the agreement between the depositary and the custodian referenced therein) as an institutional fund pursuant to the International Investment Statute. In addition, the SFC authorized the initial and subsequent deposits of preferred shares with the custodian for the purpose of issuing ADSs, as described below. Under such law, the custodian acts as the local administrator of such fund and has certain reporting obligations to the Central Bank and to the SFC.
Deposit, Transfer and Withdrawal
The depositary has agreed, subject to the terms and conditions of the deposit agreement, that upon delivery to the custodian of preferred shares (or evidence of rights to receive preferred shares) and pursuant to appropriate instruments of transfer in a form satisfactory to the custodian, the depositary will, upon payment of the fees, charges and taxes provided in the deposit agreement, execute and deliver an ADR or ADRs, registered in the name or names of the person or persons named in the notice of the custodian delivered to the depositary or requested by the person depositing such preferred shares with the depositary. Such ADR or ADRs shall evidence any authorized number of ADSs requested by such person or persons and shall be executed and delivered at the depositary’s Corporate Trust Office. Each deposit must be accompanied by a written notice describing the price paid for the preferred shares being deposited (including any commissions paid to a securities broker in Colombia) in order to enable the custodian to comply with the foreign exchange regulations of the Central Bank with respect to the fund or such other matters as may be required from time to time under applicable Colombian law.
Pursuant to the Financial Statute, no individual or corporation may hold 10% or more of a Colombian financial institution’s capital stock without the prior authorization of the SFC.
Upon surrender at the Corporate Trust Office of the depositary of an ADR for the purpose of withdrawal of the deposited securities represented by the ADSs evidenced by such ADR, and upon payment of the fees of the depositary for the surrender of ADRs, governmental charges and taxes provided in the deposit agreement, and subject to the terms and conditions of the deposit agreement, our by-laws and the terms of the deposited securities, the owner of such ADR will be entitled to delivery, to him or upon his order, of the amount of deposited securities at the time represented by the ADS or ADSs evidenced by such ADR. The forwarding of share certificates, other securities, property, cash and other documents of title for such delivery will be at the risk and expense of the owner. Any non-resident owner or beneficial owner requesting withdrawals of preferred shares or other deposited securities upon surrender of ADRs must deliver to the depositary a written notice specifying either that those preferred shares or other deposited securities:
have been or are to be sold in Colombia simultaneously with such withdrawal of the preferred shares or other deposited securities; or
are to be held by such owner or beneficial owner, or to its order, without sale, in which case such owner or beneficial owner must acknowledge its obligations to register its investment under the foreign investment regulations, if applicable, and make the required foreign exchange report to the Central Bank.
Such non-resident withdrawing owner or beneficial owner must also deliver or cause to be delivered to the Central Bank a written notice relating to the sales price realized (net of sales commissions paid or payable to a Colombian securities broker) in respect of the sale of preferred shares (or other deposited securities, as the case may be) and such other certifications as may be required from time to time under applicable Colombian law.
A non-resident owner or beneficial owner who withdraws preferred shares or other deposited securities to or for its or his own account or the account of a nonresident third party and who does not sell or cause to be sold such preferred shares or other deposited securities in Colombia simultaneously with such withdrawal will be subject to the foreign investment regulations and will be required individually to comply with one of the authorized forms of foreign investment in securities of Colombian issuers described below:
investment through an institutional fund; or
investment through an individual fund.
Such owner, beneficial owner or third party may be required to register its foreign capital investment in the preferred shares (i.e., the purchase price of preferred shares plus any securities brokerage commissions paid to Colombian brokers) deposited pursuant to the terms of the deposit agreement by or on behalf of such owner or beneficial owner, or the purchase price of ADSs, if ADSs were purchased from a prior owner or beneficial owner thereof, with the Central Bank, in accordance with the requirements of the exchange declaration used.
Non-resident owners or beneficial owners should consult with their investment advisers prior to any withdrawal of preferred shares in the event that such securities may not be sold or held by such owner or beneficial owner in Colombia at the time of such withdrawal. Neither we, the depositary nor the custodian will have any liability or responsibility whatsoever under the deposit agreement or otherwise for any action or failure to act by any owner or beneficial owner relating to its obligations under the foreign investment regulations or any other Colombian law or regulation relating to foreign investment in Colombia in respect of a withdrawal or sale of preferred shares or other deposited securities, including, without limitation, any failure to comply with a requirement to register such investment pursuant to the terms of the foreign investment regulations prior to such withdrawal or any failure to report foreign exchange transactions to the Central Bank, as the case may be. In addition, the deposit agreement provides that the owner or beneficial owner will be responsible for the report of any false information relating to foreign exchange transactions to the custodian or the Central Bank in connection with deposits or withdrawals of preferred shares or other deposited securities.
Subject to the terms and conditions of the deposit agreement and any limitations established by the depositary, unless requested by us to cease doing so, the depositary may deliver ADRs prior to the receipt of preferred shares (a “pre-release”) and deliver shares upon the receipt and cancellation of ADRs which have been pre-released, whether or not such cancellation is prior to the satisfaction of that pre-release or the depositary knows that any ADR has been pre-released.
The depositary may receive ADRs in lieu of preferred shares in satisfaction of a pre-release. Each pre-release must be:
preceded or accompanied by a written representation from the person to whom the ADRs or preferred shares are to be delivered that such person, or its customer, beneficially owns the preferred shares or ADRs to be remitted, as the case may be, and assigns all beneficial right, title, and interest in such preferred shares or ADRs to the depositary;
at all times fully collateralized with cash or such other collateral as the depositary deems appropriate;
terminable by the depositary on not more than five business days’ notice; and
subject to such further indemnities and credit regulations as the depositary deems appropriate.
Dividends, Other Distributions and Rights
Subject to any restrictions imposed by Colombian law, regulations or applicable permits, the depositary is required, as promptly as practicable:
to convert or cause to be converted into U.S. dollars, to the extent that in its judgment it can do so on a reasonable basis and can transfer the resulting U.S. dollars to the United States, all cash dividends and other cash distributions denominated in a currency other than U.S. dollars, including pesos (“Foreign Currency”), that it receives in respect of the deposited preferred shares; and
to distribute, as promptly as practicable, the resulting U.S. dollar amount (net of reasonable and customary expenses incurred by the depositary in converting such Foreign Currency) to the owners entitled thereto, in proportion to the number of ADSs representing such deposited securities evidenced by ADRs held by them, respectively.
If the depositary determines that in its judgment any Foreign Currency received by the depositary or the custodian cannot be converted on a reasonable basis into U.S. dollars transferable to the United States, or if any approval or license of any government or agency thereof which is required for such conversion is denied or in the opinion of the depositary is not obtainable, or if any such approval or license is not obtained within a reasonable period as determined by the depositary, the depositary may distribute the Foreign Currency received by the depositary or the custodian to, or in its discretion may hold such foreign currency uninvested and without liability for interest thereon for the respective accounts of, the owners entitled to receive the same. If any such conversion of foreign currency, in whole or in part, cannot be distributed to some of the owners entitled thereto, the depositary may in its discretion make such conversion and distribution in U.S. dollars to the extent permissible to the owners entitled thereto, and may distribute the balance of the foreign currency received by the depositary to, or hold such balance uninvested and without liability for interest thereon for, the respective accounts of, the owners entitled thereto.
If we declare a dividend in, or free distribution of, preferred shares, the depositary may, and will if we request, distribute to the owners of outstanding ADRs entitled thereto additional ADRs evidencing an aggregate number of ADSs that represents the amount of preferred shares received as such dividend or free distribution, in proportion to the number of ADSs evidenced by the ADRs held by them, subject to the terms and conditions of the deposit agreement with respect to the deposit of preferred shares and the issuance of ADSs evidenced by ADRs, including the withholding of any tax or other governmental charge and the payment of fees of the depositary. The depositary may withhold any such distribution of ADRs if it has not received satisfactory assurances from us that such distribution does not require registration under the U.S. Securities Act of 1933, as amended (the “Securities Act”), or is exempt from registration under the provisions of the Securities Act. In lieu of delivering ADRs for fractional ADSs in the event of any such dividend or free distribution, the depositary will sell the amount of preferred shares represented by the aggregate of such fractions and distribute the net proceeds in accordance with the deposit agreement. If additional ADRs are not so distributed, each ADS will thenceforth also represent the additional preferred shares distributed upon the deposited securities represented thereby.
If we offer or cause to be offered to the holders of any deposited securities any rights to subscribe for additional preferred shares or any rights of any other nature, the depositary will have discretion as to the procedure to be followed in making such rights available to any owners of ADRs or in disposing of such rights for the benefit of any owners and making the net proceeds available in U.S. dollars to such owners or, if by the terms of such rights offering or for any other reason, the depositary may not either make such rights available to any owners or dispose of such rights and make the net proceeds available to such owners, then the depositary shall allow the rights to lapse; provided, however, if at the time of the offering of any rights the depositary determines in its discretion that it is lawful and feasible to make such rights available to all owners or to certain owners but not to other owners, the depositary may distribute to any owner to whom it determines the distribution to be lawful and feasible, in proportion to the number of ADSs held by such owner, warrants or other instruments therefor in such form as it deems appropriate. If the depositary determines in its discretion that it is not lawful and feasible to make such rights available to certain owners, it may sell the rights, warrants or other instruments in proportion to the number of ADSs held by the owners to whom it has determined it may not lawfully or feasibly make such rights available, and allocate the net proceeds of such sales for the account of such owners otherwise entitled to such rights, warrants or other instruments, upon an averaged or other practical basis without regard to any distinctions among such owners because of exchange restrictions or the date of delivery of any ADR or ADRs, or otherwise.
In circumstances in which rights would not otherwise be distributed, if an owner of ADRs requests the distribution of warrants or other instruments in order to exercise the rights allocable to the ADSs of such owner, the depositary will make such rights available to such owner upon written notice from us to the depositary that:
we have elected in our sole discretion to permit such rights to be exercised; and
such owner has executed such documents as we have determined in our sole discretion are reasonably required under applicable law.
Upon instruction pursuant to such warrants or other instruments to the depositary from such owner to exercise such rights, upon payment by such owner to the depositary for the account of such owner of an amount equal to the purchase price of the preferred shares to be received in exercise of the rights, and upon payment of the fees of the depositary as set forth in such warrants or other instruments, the depositary will, on behalf of such owner, exercise the rights and purchase the preferred shares, and we will cause the preferred shares so purchased to be delivered to the depositary on behalf of such owner. As agent for such owner, the depositary will cause the preferred shares so purchased to be deposited, and will execute and deliver ADRs to such owner, pursuant to the deposit agreement.
The depositary will not offer rights to owners unless both the rights and the securities to which such rights relate are either exempt from registration under the Securities Act with respect to a distribution to all owners or are registered under the provisions of the Securities Act; provided, that nothing in the deposit agreement will create, or be construed to create, any obligation on our part to file a registration statement with respect to such rights or underlying securities or to endeavor to have such a registration statement declared effective. If an owner of ADRs requests the distribution of warrants or other instruments, notwithstanding that there has been no such registration under the Securities Act, the depositary will not effect such distribution unless it has received an opinion from recognized counsel in the United States for Bancolombia upon which the depositary may rely that such distribution to such owner is exempt from such registration. The depositary will not be responsible for any failure to determine that it may be lawful or feasible to make such rights available to owners in general or any owner in particular.
Although Colombian law permits preemptive rights to be transferred separately from the preferred shares to which such rights relate, a liquid market for preemptive rights may not exist, and this may adversely affect the amount the depositary would realize upon disposal of rights.
Whenever the depositary receives any distribution other than cash, preferred shares or rights in respect of the deposited securities, the depositary will cause the securities or property received by it to be distributed to the owners entitled thereto, after deduction or upon payment of any fees and expenses of the depositary or any taxes or other governmental charges, in proportion to their holdings, respectively, in any manner that the depositary may reasonably deem equitable and practicable for accomplishing such distribution; provided, however, that if in the opinion of the depositary such distribution cannot be made proportionately among the owners entitled thereto, or if for any other reason (including, but not limited to, any requirement that we or the depositary withhold an amount on account of taxes or other governmental charges or that such securities must be registered under the Securities Act in order to be distributed to owners or beneficial owners) the depositary deems such distribution not to be feasible, the depositary may adopt such method as it may deem equitable and practicable for the purposes of effecting such distribution, including, but not limited to, the public or private sale of the securities or property thus received, or any part thereof, and the net proceeds of any such sale (net of the fees and expenses of the depositary) will be distributed by the depositary to the owners entitled thereto as in the case of a distribution received in cash.
If the depositary determines that any distribution of property (including preferred shares and rights to subscribe therefor) is subject to any taxes or other governmental charges which the depositary is obligated to withhold, the depositary may, by public or private sale, dispose of all or a portion of such property in such amount and in such manner as the depositary deems necessary and practicable to pay such taxes or charges and the depositary will distribute the net proceeds of any such sale after deduction of such taxes or charges to the owners entitled thereto in proportion to the number of ADSs held by them, respectively.
Changes Affecting Deposited Preferred Shares
Upon any change in nominal or par value, stock split, consolidation or any other reclassification of deposited securities, or upon any recapitalization, reorganization, merger or consolidation or sale of assets affecting us or to which we are a party, any securities which shall be received by the depositary or custodian in exchange for, in conversion of, or in respect of deposited securities will be treated as new deposited securities under the deposit agreement, and the ADSs will thenceforth represent, in addition to the existing deposited securities, the right to receive the new deposited securities so received in exchange or conversion, unless additional ADRs are delivered pursuant to the following sentence. In any such case the depositary may, and will, if we so request, execute and deliver additional ADRs as in the case of a distribution in preferred shares, or call for the surrender of outstanding ADRs to be exchanged for new ADRs specifically describing such new deposited securities.
Record Dates
Whenever:
any cash dividend or other cash distribution shall become payable or any distribution other than cash shall be made;
rights shall be issued with respect to the deposited securities;
for any reason the depositary causes a change in the number of preferred shares that are represented by each ADS;
the depositary shall receive notice of any meeting of holders of preferred shares or other deposited securities; or
the depositary shall find it necessary or convenient,
the depositary will fix a record date
for the determination of the owners who will be (A) entitled to receive such dividend, distribution or rights, or the net proceeds of the sale thereof, or (B) entitled to give instructions for the exercise of voting rights at any such meeting; or
on or after which each ADS will represent the changed number of preferred shares, all subject to the provisions of the deposit agreement.
Voting of Deposited Securities
Holders of preferred shares, and consequently holders of ADS, have very limited voting rights. See “Preferred Shares --Voting Rights” above.
In the event holders of preferred shares are entitled to vote, upon receipt of notice of any meeting or solicitation of consents or proxies of holders of preferred shares or other deposited securities, if requested in writing by us, the depositary will, as soon as practicable thereafter, mail to all owners a notice, the form of which notice will be in the sole discretion of the depositary, containing:
the information included in such notice of meeting received by the depositary from us;
a statement that the owners as of the close of business on a specified record date will be entitled, subject to any applicable provision of Colombian law and of our by-laws, to instruct the depositary as to the exercise of the voting rights, if any, pertaining to the amount of preferred shares or other deposited securities represented by their respective ADSs; and a statement as to the manner in which such instructions may be given.
Upon the written request of an owner on such record date, received on or before the date established by the depositary for such purpose, the depositary will endeavor, insofar as practicable, to vote or cause to be voted the amount of preferred shares or other deposited securities represented by the ADSs evidenced by such ADRs in accordance with the nondiscretionary instructions set forth in such request. The depositary will not vote or attempt to exercise the right to vote that attaches to the preferred shares or other deposited securities other than in accordance with such instructions. If the depositary does not receive instructions from the owner on or before the date established by the depositary for such purpose, the depositary shall take such action as is necessary, upon our request, subject to applicable law, the by-laws and the terms and conditions of the deposited securities, to cause the underlying preferred shares to be counted for purposes of satisfying applicable quorum requirements.
There can be no assurance that the owners generally or any owner in particular will receive the notice described above sufficiently prior to the date established by the depositary for the receipt of instructions to ensure that the depositary will in fact receive such instructions on or before such date.
Reports and Other Communications
The depositary makes available for inspection by ADR owners at its Corporate Trust Office any reports and communications, including any proxy soliciting material, received from us, which are both:
received by the depositary as the holder of the preferred shares or other deposited securities; and
made generally available to the holders of such preferred shares or other deposited securities by us.
The depositary will also send to the owners copies of such reports and communications furnished by us pursuant to the deposit agreement. Any such reports and communications including any proxy soliciting material furnished to the depositary by us will be furnished in English when so required pursuant to any regulations of the SEC.
Amendment and Termination of the Deposit Agreement
The form of ADRs and any provisions of the deposit agreement may at any time and from time to time be amended by agreement between us and the depositary in any respect which they may deem necessary or desirable without the consent of the owners of ADRs; provided, however, that any amendment that imposes or increases any fees or charges (other than taxes and other governmental charges, registration fees, cable, telex or facsimile transmission costs, delivery costs or other expenses), or which otherwise prejudices any substantial existing right of ADR owners, will not take effect as to outstanding ADRs until the expiration of 30 days after notice of any amendment given to the owners of outstanding ADRs. Every owner of an ADR, at the time any amendment becomes effective, will be deemed, by continuing to hold such ADR, to consent and agree to such amendment and to be bound by the deposit agreement as amended thereby. In no event will such amendment impair the right of the owner or any ADR to surrender such ADR and receive therefor the preferred shares or other deposited securities represented thereby, except to comply with mandatory provisions of applicable law.
The depositary will at any time at our direction terminate the deposit agreement by mailing notice of such termination to the owners of the ADRs then outstanding at least 90 days prior to the date fixed in such notice for such termination. The depositary may likewise terminate the deposit agreement by mailing notice of such termination to us and the owners of all ADRs outstanding if, at any time after 90 days have expired after the depositary will have delivered to us a written notice of its election to resign, a successor depositary will not have been appointed and accepted its appointment, in accordance with the terms of the deposit agreement.
If any ADRs remain outstanding after the date of termination of the deposit agreement, the depositary thereafter shall discontinue the registration of transfers of ADRs, will suspend the distribution of dividends to the owners thereof and will not give any further notices or perform any further acts under the deposit agreement, except the collection of dividends and other distributions pertaining to the deposited securities, the sale of rights and other property and the delivery of underlying preferred shares or other deposited securities, together with any dividends or other distributions received with respect thereto and the net proceeds of the sale of any rights or other property, in exchange for surrendered ADRs (after deducting, in each case, the fees of the depositary for the surrender of an ADR and other expenses set forth in the deposit agreement and any applicable taxes or governmental charges). At any time after the expiration of one year from the date of termination, the depositary may sell the deposited securities then held thereunder and hold uninvested the net proceeds of such sale, together with any other cash, unsegregated and without liability for interest, for the pro-rata benefit of the owners that have not theretofore surrendered their ADRs, such owners thereupon becoming general creditors of the depositary with respect to such proceeds. After making such sale, the depositary will be discharged from all obligations under the deposit agreement, except to account for net proceeds and other cash (after deducting, in each case, the fee of the depositary and other expenses set forth in the deposit agreement for the surrender of an ADR and any applicable taxes or other governmental charges).
Charges of Depositary
The depositary will charge any party depositing or withdrawing preferred shares or any party surrendering ADRs or to whom ADRs are issued (including, without limitation, issuance pursuant to a stock dividend or stock split declared by us or an exchange of stock regarding the ADRs or deposited securities or a distribution of ADRs pursuant to the deposit agreement) where applicable:
taxes and other governmental charges,
such registration fees as may from time to time be in effect for the registration of transfers of ADSs generally on the ADS register of the issuer or foreign registrar and applicable to transfers of ADSs to the name of the depositary or its nominee or the custodian or its nominee on the making of deposits or withdrawals,
such cable, telex and facsimile transmission expenses as are expressly provided in the deposit agreement,
such expenses as are incurred by the depositary in the conversion of foreign currency pursuant to the deposit agreement,
a fee of $5.00 or less per 100 ADSs (or portion thereof) for the execution and delivery of ADRs pursuant to the deposit agreement, and the surrender of ADRs pursuant to the deposit agreement,
a fee of $1.50 or less per certificate for an ADR or ADRs for transfers made pursuant to the deposit agreement, and
a fee for, and deducted from, the distribution of proceeds of the sale of rights pursuant to the deposit agreement, such fee being in an amount equal to the fee for the execution and delivery of ADSs referred to above which would have been charged as a result of the deposit of ADSs received upon the exercise of such rights, but which rights are instead sold and the proceeds of such sale distributed by the depositary to owners.
The depositary, pursuant to the deposit agreement, may own and deal in any class of securities issued by us and our affiliates and in ADRs.
Liability of Owner for Taxes
If any tax or other governmental charge shall become payable by the custodian or the depositary with respect to any ADR of any deposited securities represented by the ADSs evidenced by such ADR, such tax or other governmental charge will be payable by the owner or beneficial owner of such ADR to the depositary. The depositary may refuse to effect any transfer of such ADR or any withdrawal of deposited securities underlying such ADR until such payment is made, and may withhold any dividends or other distributions, or may sell for the account of the owner or beneficial owner thereof any part or all of the deposited securities underlying such ADR and may apply such dividends, distributions or the proceeds of any such sale to pay any such tax or other governmental charge and the owner or beneficial owner of such ADR will remain liable for any deficiency.
General
Neither the depositary nor we nor any of our respective directors, employees, agents or affiliates will be liable to any owner or beneficial owner of ADRs, if by reason of any provision of any present or future law or regulation of the United States, Colombia or any other country, or of any other governmental or regulatory authority or stock exchange, or by reason of any provision, present or future, of our by-laws, or by reason of any provision of any securities issued or distributed by us, or any offering or distribution thereof, or by reason of any act of God or war or other circumstances beyond its control, the depositary or us or any of our respective directors, employees, agents or affiliates shall be prevented, delayed or forbidden from, or be subject to any civil or criminal penalty on account of, doing or performing any act or thing which by the terms of the deposit agreement or the deposited securities it is provided will be done or performed; nor will the depositary or us incur any liability to any owner or beneficial owner of any ADR by reason of any non- performance or delay, caused as aforesaid, in the performance of any set or thing which by the terms of the deposit agreement it is provided will or may be done or performed, or by reason of any exercise of, or failure to exercise, any discretion provided for under the deposit agreement. Where, by the terms of a distribution pursuant to the deposit agreement, or an offering or distribution pursuant to the deposit agreement, or for any other reason, such distribution or offering may not be made available to owners, and the depositary may not dispose of such distribution or offering on behalf of such owners and make the net proceeds available to such owners, then the depositary will not make such distribution or offering, and will not allow the rights, if applicable, to lapse.
Neither we nor the depositary assumes any obligation, nor we or the depositary will be subject to any liability under the deposit agreement to owners or beneficial owners of ADRs, except that we and the depositary agree to perform our respective obligations specifically set forth under the deposit agreement without negligence or bad faith.
The ADRs are transferable on the books of the depositary, provided, that the depositary may close the transfer books at any time or from time to time when deemed expedient by it in connection with the performance of its duties or upon our written request. As a condition precedent to the execution and delivery, registration of transfer, split-up, combination or surrender of any ADR or withdrawal of any deposited securities, the depositary, the custodian or the registrar may require payment from the person representing the ADR or the depositor of the preferred shares of a sum sufficient to reimburse it for any tax or other governmental charge and any stock, transfer or registration fee with respect thereto (including any such tax or charge and fee with respect to preferred shares being deposited or withdrawn) and payment of any applicable fees payable by the holders of ADRs. The depositary may refuse to deliver ADRs, to register the transfer of any ADR or to make any distribution on, or related to, preferred shares until it has received such proof of citizenship or residence, exchange control approval, approval or registration under the foreign investment regulations or other information as it may deem necessary or proper. The delivery, transfer, registration of transfer of outstanding ADRs and surrender of ADRs generally may be suspended or refused during any period when our or the depositary’s transfer books are closed or if any such action is deemed necessary or advisable by us or the depositary, at any time or from time to time.
The depositary keeps books, at its Corporate Trust Office, for the registration and transfer of ADRs, which at all reasonable times is open for inspection by the owners, provided, that such inspection is not for the purpose of communicating with owners in the interest of a business or object other than our business or a matter related to the deposit agreement or the ADRs.
The depositary may appoint one or more co-transfer agents for the purpose of effecting transfers, combinations and split-ups of ADRs at designated transfer offices on behalf of the depositary. In carrying out its functions, a co-transfer agent may require evidence of authority and compliance with applicable laws and other requirements by owners or persons entitled to ADRs and will be entitled to protection and indemnity to the same extent as the depositary.
DEBT SECURITIES
Each series of notes listed on the New York Stock Exchange and set forth in the table at the beginning of this document has been issued by CIB. Each of these series of notes was issued pursuant to an effective registration statement and a related prospectus and prospectus supplement setting forth the terms of the relevant series of notes.
The following table sets forth the dates of the registration statements, dates of the prospectus supplements and dates of issuance for each relevant series of notes (the “Notes”).
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| Series |
Registration Statement |
Date of Prospectus
Supplement
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Date of Issuance |
| 6.909% Subordinated Notes due 2027 |
333-211071 |
October 11, 2017 |
October 18, 2017 |
8,625% Subordinated Notes due 2024 |
333-264524 |
June 17, 2024 |
June 24, 2024 |
The following description of our Notes is a summary and does not purport to be complete and is qualified in its entirety by the full terms of the Notes.
The 2027 and 2034 Subordinated Notes (the “Subordinated Notes”) were issued in the aggregate principal amount and, from and including the issuance date of the Subordinated Notes to, but excluding, their respective Reset Date (as defined below) will bear interest at the rate set out in the table below.
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| Series |
Aggregate Principal Amount |
Maturity Date |
Interest Rate |
| 2027 notes |
$750,000,000 |
October 18, 2027 |
6.909% |
2034 notes |
$800,000,000 |
December 24, 2034 |
8.625% |
From and after their respective Reset Date, to, but excluding, the date of maturity or earlier redemption date of the Subordinated Notes, the Subordinated Notes will bear interest on the outstanding principal amount at a rate per annum equal to the sum of (i) the Benchmark Reset on the Rate Reset Date plus;
in respect of the 2027 notes, (ii) 292.9 basis points; or
in respect of the 2034 notes, (ii) 432 basis points,
as calculated by the issuer.
In accordance with the terms of the 2027 Notes, the rate of interest on the 2027 Notes reset on October 18, 2022 to 6.909% and the interest rate on the 2034 Notes is due to reset on December 24, 2029 (each, a “Reset Date”).
“Benchmark Reset Rate” means (i) the rate per annum corresponding to the semi-annual equivalent yield to maturity, under the heading that represents the average for the week immediately prior to the third Business Day preceding the respective Reset Date of the Subordinated Notes, as published under the weekly U.S. Federal Reserve Board’s H.15(519) or any successor publication that is published weekly by the U.S. Federal Reserve and that establishes yields on actively traded United States Treasury securities adjusted to constant maturity under the caption “Treasury Constant Maturities”, for the 5-Year U.S. Treasury Bond or (ii) if such release (or any successor release) is not published during the week preceding the respective Reset Date of the Subordinated Notes, or does not contain such yields, the rate per annum equal to the semi-annual equivalent yield to maturity of the 5-Year U.S. Treasury Bond, calculated by U.S. dealers selected by the Issuer using a price for the 5-Year U.S. Treasury Bond (expressed as a percentage of its principal amount) equal to the average of the quotations obtained from such U.S. dealers for the respective Reset Date of each of the Subordinated Notes. The Benchmark Reset Rate will be calculated on the third Business Day preceding the respective Reset Date of the Subordinated Notes.
Interest on the Subordinated Notes will be payable semi-annually, in arrears, on the Fixed Rate Interest Payment Dates, commencing on the First Fixed Rate Interest Payment Date, set forth in the table below:
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Interest Payment Dates |
First Interest Payment Date |
2027 notes........................................................ |
April 18 and October 18 of each year |
April 18, 2018 |
2034 notes........................................................ |
June 24 and December 24 of each year |
December 24, 2024 |
Terms applicable to the Subordinated Notes
The following is a summary of the material terms and provisions of the Subordinated Notes. The following summary does not purport to be a complete description of the Subordinated Notes and is subject to the detailed provisions of, and qualified in its entirety by reference to, the two indentures executed between the Bank and The Bank of New York Mellon, as trustee the “Subordinated Notes Trustee”) in respect of the 2027 Subordinated Notes and the 2034 Subordinated Notes, dated October 18, 2017, and June 24, 2024, respectively (together, the “Subordinated Debt Indentures”). Unless stated otherwise, the material terms and provisions outlined below apply to both the 2027 and the 2034 Subordinated Notes. Capitalized terms not otherwise defined herein shall have the meaning set forth in the respective Subordinated Debt Indentures.
The terms of the Subordinated Notes include those set forth in the Subordinated Debt Indentures and those made part of the Subordinated Debt Indentures by reference to the Trust Indenture Act.
General
Subordinated Debt Indentures
The Subordinated Notes were issued under the Subordinated Debt Indentures.
The Subordinated Notes Trustee has the following two main roles:
First, the Subordinated Notes Trustee can enforce the rights of registered holders of the Subordinated Notes (“Subordinated Notes Holder”, or “Subordinated Notes Holders”) against us if we default in respect of the Subordinated Notes. There are some limitations on the extent to which the Subordinated Notes Trustee acts on behalf of Subordinated Note Holders, which are described under “Events of Default”; and Second, the Subordinated Notes Trustee performs administrative duties for us, such as making interest payments and sending notices to holders of Subordinated Notes.
Principal, Maturity and Interest
Interest on the Subordinated Notes will be payable to Subordinated Notes Holders of record at the close of business on the Business Day immediately prior to each such Interest Payment Date, as the case may be, immediately preceding the relevant Interest Payment Date. Interest on the Subordinated Notes will be computed on the basis of a 360-day year of twelve 30-day months. If any interest payment date or final maturity date is a day that is not a Business Day, the related payment of the principal and interest will be made on the next succeeding Business Day as if it were made on the date the payment was due.
In the event that the Bank defaults on the payment of principal, premium, if any, interest or such other amounts as may be payable in respect of the Subordinated Notes, the Bank will pay interest on overdue principal and premium, if any, at the rate borne by the Subordinated Notes plus 1% per year and it will pay interest on overdue installments of interest at the same rate to the extent lawful.
The Subordinated Notes were issued in registered form, without coupons. Beneficial interests in the Subordinated Notes are shown on, and transfers are effected only through, records maintained by the DTC and its participants.
The Bank will pay the principal of and interest on the Subordinated Notes and any Additional Amounts (as defined below) in U.S. Dollars.
Additional Notes
After the Issue Date of the Subordinated Notes, the Bank may issue additional Notes under either of the Subordinated Debt Indentures, having identical terms and conditions to the 2027 or 2034 Notes to be issued on the early settlement date (the “Additional Subordinated Fungible Notes”), except with respect to (1) issue date, (2) issue price, (3) first Interest Payment Date and (4) any adjustments necessary in order to conform to and ensure compliance with the Securities Act (or other applicable securities laws), which are not adverse in any material respect to any Subordinated Note Holder of any outstanding Subordinated Notes (other than such Additional Subordinated Fungible Notes). Any Additional Subordinated Fungible Notes are expected to be part of the same issue as the Subordinated Notes to be issued on the early settlement date and will be treated as a single series with the Subordinated Notes to be issued on the early settlement date, including for purposes of voting, redemptions and offers to purchase. Pursuant to the Subordinated Debt Indentures, no Additional Fungible Notes may be issued unless such Additional Subordinated Fungible Notes will be fungible with the Subordinated Notes to be issued on the early settlement date for U.S. federal income tax purposes.
Additional Amounts
All payments made by the Bank under or with respect to the Subordinated Notes will be made free and clear of and without withholding or deduction for or on account of any present or future Taxes imposed or levied by or on behalf of any Taxing Authority in any Relevant Taxing Jurisdiction, unless the Bank or the paying agent is required to withhold or deduct Taxes by law or by the interpretation or administration thereof. If the Bank or the paying agent is required to withhold or deduct any Additional Amounts, the Bank will pay such Additional Amounts as may be necessary so that the net amount received by each Subordinated Note Holder (including Additional Amounts) after such withholding or deduction will equal the amount the Subordinated Note Holder would have received if such Taxes had not been withheld or deducted; provided, however, that no Additional Amounts will be payable with respect to any Tax that would not have been imposed, payable or due:
(1) but for the existence of any present or former connection between the Subordinated Note Holder (or the beneficial owner of, or Person ultimately entitled to obtain an interest in, such Subordinated Notes) and the Relevant Taxing Jurisdiction (including being a citizen or resident or national of, or carrying on a business or maintaining a permanent establishment in, or being physically present in, the Relevant Taxing Jurisdiction) other than the mere holding of the Subordinated Notes or enforcement of rights thereunder or the receipt of payments in respect thereof;
(2) but for the failure to satisfy any certification, identification or other reporting requirements whether imposed by statute, treaty, regulation or administrative practice, provided, however, that the Bank has delivered a request to the Subordinated Note Holder to comply with such requirements at least 30 days prior to the date by which such compliance is required; or
(3) if the presentation of Subordinated Notes (where presentation is required) for payment had occurred within 30 days after the date such payment was due and payable or was duly provided for, whichever is later.
In addition, Additional Amounts will not be payable if the beneficial owner of, or Person ultimately entitled to obtain an interest in, such Subordinated Notes had been the Subordinated Note Holder and such beneficial owner would not be entitled to the payment of Additional Amounts by reason of clause (1), (2), or (3) above. In addition, Additional Amounts will not be payable with respect to any Tax which is payable otherwise than by withholding from payments of, or in respect of principal of, or any interest on, the Subordinated Notes.
A reference to the payment of amounts based upon the principal amount of the Subordinated Notes or of principal, interest or of any other amount payable under or with respect to any of the Subordinated Notes, includes the payment of Additional Amounts to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof.
Notwithstanding the foregoing, all payments shall be made net of FATCA Withholding Tax, and no additional amounts will be payable as a result of any such FATCA Withholding Tax.
Upon request, the Bank will provide the Subordinated Notes Trustee with documentation satisfactory to the Subordinated Notes Trustee evidencing the payment of Additional Amounts.
The Bank will pay any present or future stamp, court or documentary taxes, or any other excise or property taxes, charges or similar levies which arise in any jurisdiction from the execution, delivery or registration of the Subordinated Notes or any other document or instrument referred to therein, or the receipt of any payments with respect to the Subordinated Notes, excluding any such taxes, charges or similar levies imposed by any jurisdiction other than a jurisdiction in which the Bank is organized or is otherwise resident for tax purposes, the United States of America or any jurisdiction in which a paying agent is located, but not excluding those resulting from, or required to be paid in connection with, the enforcement of the Subordinated Notes or any other such document or instrument following the occurrence of any Event of Default with respect to the Subordinated Notes.
Methods of Receiving Payments on the Subordinated Notes
The Bank will make payments of principal of, and premium, if any, and interest on the Subordinated Notes and any Additional Amounts represented by global securities by wire transfer of U.S. dollars to DTC or to its nominee as the registered holder of the Subordinated Notes, which will receive the funds for distribution to the owners of beneficial interests in the Subordinated Notes. The Bank has been informed by DTC that the owners will be paid in accordance with the procedures of DTC and its participants. Neither the Bank, the Subordinated Notes Trustee nor the paying agent shall have any responsibility or liability for any of the records of, or payments made by, DTC or its nominee.
Certificated Subordinated Notes
If (i) the Bank notifies the Subordinated Notes Trustee in writing that DTC is no longer willing or able to act as a Depositary or DTC ceases to be registered as a clearing agency under the Exchange Act and, in either case, a successor Depositary is not appointed by the Bank within 90 days of such notice or cessation; (ii) the Bank, in its sole discretion, notifies the Subordinated Notes Trustee in writing that it elects to cause the issuance of Subordinated Notes in definitive form under the Subordinated Debt Indentures; or (iii) upon the occurrence of certain other events as provided in the Subordinated Debt Indentures, then, upon surrender by DTC of the global Subordinated Notes, certificated Subordinated Notes will be issued to each person that DTC identifies as the beneficial owner of the Subordinated Notes represented by the global Subordinated Notes.
Upon any such issuance, the Subordinated Notes Trustee shall (upon written direction from the Bank) register such certificated Subordinated Notes in the name of such person or persons (or the nominee of any thereof) and cause the same to be delivered thereto.
Neither the Bank nor the Subordinated Notes Trustee shall be liable for any delay by DTC or any Participant or Indirect Participant in identifying the beneficial owners of the related Subordinated Notes and the Bank and the Subordinated Notes Trustee may conclusively rely on, and shall be protected in relying on, instructions from DTC for all purposes (including with respect to the registration and delivery, and the respective principal amounts, of the Subordinated Notes to be issued).
Notices
The Bank will mail any notices to Subordinated Notes Holders at the addresses appearing in the security register maintained by the paying agent. The Bank will consider a notice to be given at the time it is mailed. Neither the failure to give any notice to a particular Subordinated Note Holder, nor any defect in a notice given to a particular Subordinated Note Holder, will affect the sufficiency of any notice given to another Subordinated Note Holder.
Subordination of Notes
The Subordinated Notes will constitute unsecured and subordinated obligations of the Bank and will rank pari passu with all other unsecured and Tier Two Capital subordinated Indebtedness of the Bank, if any, other than subordinated Indebtedness, that, under its terms, is designated as junior to the Subordinated Notes. Pursuant to Colombian banking laws, the Subordinated Notes constitute Tier Two Capital “subordinated bonds” (bonos subordinados), as approved by the SFC.
Accordingly, Subordinated Notes Holders may recover less ratably than creditors of the Bank who are creditors of Senior External Liabilities. Also, as a result of the operation of the provisions of the Subordinated Notes described under “Loss Absorption” below, Subordinated Notes Holders may recover less ratably than holders of pari passu subordinated debt of the Bank that does not include a similar loss absorption feature.
In addition, the Subordinated Notes will be structurally subordinated to all indebtedness and other liabilities (including trade payables) of the Bank’s subsidiaries.
The payment of all Obligations on or relating to the Subordinated Notes will, in the event of liquidation, be subordinated in right of payment to the prior payment in full in cash or cash equivalents of all obligations due in respect of Senior External Liabilities of the Bank, whether outstanding on the Issue Date or incurred after that date, and will be senior only to subordinated instruments constituting Tier One Capital and the Bank’s capital stock. The creditors holding Senior External Liabilities will be entitled to receive payment in full in cash or cash equivalents of all obligations due in respect of Senior External Liabilities before the Subordinated Notes Holders will be entitled to receive payment of any Obligations on or relating to the Subordinated Notes:
in the event of any distribution to creditors of the Bank in a total or partial liquidation, dissolution or winding up of the Bank; or
in the event that the SFC institutes an Intervention Measure on the Bank and determines to liquidate the Bank.
Redemption
The Bank will not be permitted to redeem the Subordinated Notes before their stated maturity, except as set forth below.
Optional Redemption on Reset Date
The Bank will have the right to redeem the Subordinated Notes, in whole but not in part, on their respective Reset Date for the 2027 Notes and at any time on or after June 24, 2029 (six months prior to the Reset Date) until (and including) the Reset Date for the 2034 Notes, at a redemption price equal to 100% of the outstanding aggregate principal amount thereof, plus accrued and unpaid interest and Additional Amounts, if any, to, but excluding, the Redemption Date,
A. provided, however, that the Bank shall only exercise its right to redeem the Subordinated Notes in compliance with, and as permitted by, applicable Colombian laws and regulations then in effect; and
B. to the extent required by applicable law, prior approval of the SFC or any other then applicable Colombian governmental authority, has been obtained by the Bank.
Optional Redemption upon Tax Event or Regulatory Event
At any time after the Issue Date, the Bank will have the right to redeem the Subordinated Notes in whole, but not in part, at a price equal to 100% of the principal amount thereof plus accrued and unpaid interest and any Additional Amounts, to the date of redemption:
i. upon the occurrence of a Regulatory Event; or
ii. upon the occurrence of a Tax Event,
A. provided, however, that the Bank shall only exercise its right to redeem the Subordinated Notes in compliance with, and as permitted by, applicable Colombian laws and regulations then in effect; and
B. to the extent required by applicable law, prior approval of the SFC or any other then applicable Colombian Governmental Authority, has been obtained by the Bank.
In addition, in the case of a redemption following the occurrence of a Tax Event, the Bank must provide the Subordinated Notes Trustee an Officers’ Certificate and an opinion of an independent legal counsel of nationally recognized standing in such tax matters, stating that the conditions set forth in the Subordinated Debt Indentures for such exercise have been met.
Optional Clean-Up Redemption (2034 Subordinated Notes)
With respect to the 2034 Subordinated Notes, if at least 90% of the initial aggregate principal amount of the Subordinated Notes has been redeemed or purchased by, or on behalf of, the Bank and cancelled, the Bank may, at any time, at its option, redeem the 2034 Subordinated Notes that remain outstanding, in whole, but not in part, at a redemption price equal to 100% of the principal amount thereof plus accrued and unpaid interest and any Additional Amounts to the redemption date on the date of redemption; provided, however, that any such redemption may only occur after June 24, 2029; and provided, further, that
A. the Bank shall only exercise its right to redeem the 2034 Subordinated Notes in compliance with, and as permitted by, applicable Colombian laws and regulations then in effect; and
B. to the extent required by applicable law, prior approval of the SFC or any other then applicable Colombian governmental authority has been obtained by the Bank.
Redemption Procedures
Notice of redemption must be given to Subordinated Notes Holders not less than 30 days for the 2027 Subordinated Notes Holders and 10 days for the 2034 Subordinated Notes Holders nor more than 60 days prior to the redemption date. On and after the redemption date, interest will cease to accrue on the Subordinated Notes (unless the Bank defaults in the payment of the redemption price and accrued and unpaid interest). On the Business Day immediately preceding the redemption date, the Bank will deposit with the Subordinated Notes Trustee or with a paying agent money sufficient to pay the redemption price of and (unless the redemption date shall be an interest payment date) accrued and unpaid interest to the redemption date on the Subordinated Notes to be redeemed on such date.
A redemption notice will be automatically rescinded and will have no force and effect, and no redemption amount will be due and payable, if a Write- Down Event occurs prior to the applicable redemption date (in which chase, a Write-Down will occur as described under “Loss Absorption”).
Substitution or Variation (2034 Subordinated Notes)
With respect to the 2034 Subordinated Notes, following the occurrence of a Tax Event or Regulatory Event, the Bank may, as an alternative to redemption of the 2034 Subordinated Notes as described in “Optional Redemption upon Tax Event or Regulatory Event” above (without any requirement for the consent or approval of the 2034 Subordinated Notes Holders), on at least 10 days’ but not more than 60 days’ written notice, either substitute all (but no less than all) of the 2034 Subordinated Notes for, or vary the terms of the terms of the 2034 Subordinated Notes so that they remain or, as the case may be, become Qualifying Tier 2 Notes, provided that, in each case, to the extent required by applicable law, prior approval of the SFC or any other then applicable Colombian governmental authority has been obtained by the Bank.
Prior to any substitution or variation of the 2034 Subordinated Notes, the Bank will deliver to the 2034 Subordinated Notes Trustee the documents required under the 2034 Subordinated Debt Indenture, including an Officers’ Certificate, stating that the conditions set forth in the 2034 Subordinated Debt Indenture for such substitution or variation have been met.
Loss Absorption
As determined by applicable Colombian laws and regulations then in effect, if: (i) the Bank’s Basic Individual Solvency Ratio or the Bank’s Basic Consolidated Solvency Ratio is below 4.5% (whichever occurs first); or (ii) the SFC, in its discretion, otherwise so determines in writing (each of the foregoing, a “Write-Down Event”), the outstanding principal, accrued and unpaid interest, and any other amounts due on the Subordinated Notes will be permanently reduced, pro rata with reductions in the outstanding principal, accrued and unpaid interest, and any other amounts due on other Tier Two Capital subordinated Indebtedness as to which a Write- Down Event has occurred, if any, (other than subordinated Indebtedness, that, under its terms, is designated as junior to the Subordinated Notes) to the extent permitted by the SFC at the time, by an amount needed to (x) restore the Basic Individual Solvency Ratio to 6%; (y) restore the Basic Consolidated Solvency Ratio to 6%; or (z) comply with the order of the SFC to restore the Basic Individual Solvency Ratio or Basic Consolidated Solvency Ratio to 6%, as applicable (a “Write- down”), provided that the principal amount of the Subordinated Notes may not be written down below zero. The amount by which the outstanding principal amount, accrued and unpaid interest, and any other amounts due on the Subordinated Notes is reduced upon the occurrence of a Write-Down Event is referred to as the “Permanent Reduction Amount.”
In the event that the Write-Down is insufficient to restore the Basic Individual Solvency Ratio or the Basic Consolidated Solvency Ratio to the required levels, the principal amount of the Subordinated Notes will be reduced to zero. In any case, under Colombian banking laws the Write-Down Event will be triggered prior to the issuance of an order of capitalization or patrimony enhancement of the Bank with public funds.
We will provide notice to Subordinated Notes Holders and the Subordinated Notes Trustee (a “Write-down Notice”) that a Write-Down Event and subsequent Write-down has occurred within two Business Days following such Write-Down Event. Any Write-Down Notice will be accompanied by an Officers' Certificate stating that a Write-Down Event has occurred, specifying the Reduction Date, which shall be the Business Day following the occurrence of the Write-Down Event, setting out the method of calculation of the Permanent Reduction Amount and indicating the amounts of principal, interest and any other amounts due comprising the Permanent Reduction Amount.
On the Reduction Date, the outstanding principal amount on the Subordinated Notes will be decreased as specified in the Write-Down Notice and the amounts of accrued and unpaid interest and any other amounts due on the Subordinated Notes as of the Reduction Date will be canceled, in each case to the extent specified in the Write-Down Notice. Following the Reduction Date, interest will accrue on the principal amount of the Subordinated Notes that remains after giving effect to the Write- Down.
A Write-Down Event and the subsequent reduction of the outstanding principal, accrued and unpaid interest, and any other amounts on the Subordinated Notes will not constitute an Event of Default. Any holder of Subordinated Notes will automatically be deemed to have irrevocably waived its right to claim or receive, and will not have any rights against us or the Subordinated Notes Trustee with respect to, repayment of, the Permanent Reduction Amount, irrespective of whether such amounts have become due and payable prior to the date on which the Write-Down Event shall have occurred.
“Basic Consolidated Solvency Ratio” means in respect to the consolidated capital of the Bank, the consolidated amount of Common Equity Tier One Capital net from all deductions, divided by the consolidated amount of credit and market risk weighted assets, all of the foregoing determined in accordance with Decree 2555 and Colombian Banking GAAP.
“Basic Individual Solvency Ratio” means in respect to the capital of the Bank, the result of dividing the Common Equity Tier One Capital net from all deductions, by the credit and market risk weighted assets of the Bank, all of the foregoing determined in accordance with Decree 2555 and Colombian Banking GAAP.
Certain Covenants
The Subordinated Debt Indentures contain, among others, the following covenants:
Mergers, Consolidations, or Sale of Assets
The Bank will not consolidate with or merge into, or sell, lease, convey or transfer, in one transaction or a series of transactions, all or substantially all of the Bank’s properties and assets to any Person, unless:
1.the Bank obtains any and all regulatory approvals in connection therewith;
the surviving entity, if other than the Bank, is organized and existing under the laws of Colombia or the United States and assumes via supplemental indenture all of the Obligations under the Subordinated Notes and the Subordinated Debt Indentures;
the Bank, or the surviving entity, as the case may be, is not immediately after such transaction in Default under the Subordinated Notes and the Subordinated Debt Indentures; and
the Bank or the surviving entity will have delivered to the Subordinated Notes Trustee an Officers’ Certificate and an Opinion of Counsel, each in form and substance satisfactory to the Subordinated Notes Trustee, stating that such consolidation, merger, sale, assignment, conveyance, transfer, lease or other disposition, and if a supplemental indenture is required in connection with such transaction, such supplemental indenture, complies with the requirements of the Subordinated Debt Indentures and that all conditions precedent in the Subordinated Debt Indentures relating to such transaction have been satisfied and that the Subordinated Debt Indentures and the Subordinated Notes constitute legal, valid and binding obligations of the surviving entity, enforceable in accordance with their terms.
Maintenance of Office or Agent for Service of Process
The Bank shall maintain an office or agent for service of process in the Borough of Manhattan, The City of New York, where notices to and demands upon the Bank in respect of the Subordinated Notes and the Subordinated Debt Indentures may be served. Initially this agent will be CT Corporation System for the 2027 Subordinated Notes and Subordinated Debt Indenture and Law Debenture Corporate Services Inc. for the 2034 Subordinated Notes and Subordinated Debt Indenture, and the Bank will agree not to change the designation of such agents without prior notice to the Subordinated Notes Trustee and designation of a replacement agent in the Borough of Manhattan, The City of New York.
Provision of Financial Statements and Reports
At all times when the Bank is required to file any financial statements or reports with the SEC, the Bank shall use its best efforts to file all required statements or reports in a timely manner in accordance with the rules and regulations of the SEC. In addition, at any time when the Bank is not subject to or is not current in its reporting obligations under Section 13 or Section 15(d) of the Exchange Act and is not exempt from the registration requirements of Section 12(g) of the Exchange Act pursuant to Rule 12g3-2(b) thereunder and any Subordinated Notes remain outstanding, the Bank will make available, upon request, to any Subordinated Note Holder or any prospective purchaser of the Subordinated Notes, who so requests in writing, substantially the same financial and other information that we would be required to include and file in an annual report on Form 20-F and reports that we furnish on Form 6-K.
Delivery of such reports, information and documents to the Subordinated Notes Trustee shall be for informational purposes only and the Subordinated Notes Trustee’s receipt of such reports, information and documents shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Bank’s compliance with any of the covenants contained in the Subordinated Debt Indentures (as to which the Subordinated Notes Trustee will be entitled to conclusively rely upon an Officers’ Certificate).
Further Actions
The Bank will, at its own cost and expense, satisfy any condition or take any action (including the obtaining or effecting of any necessary consent, approval, authorization, exemption, filing, license, order, recording or registration) at any time required, as may be necessary or as the Subordinated Notes Trustee may reasonably request, in accordance with applicable laws and/or regulations, to be taken, fulfilled or done in order to (i) enable the Bank to lawfully enter into, exercise its rights and perform and comply with its obligations under the Subordinated Debt Indentures and the Subordinated Notes, as the case may be; (ii) ensure that its obligations under the Subordinated Debt Indentures and the Subordinated Notes are legally binding and enforceable; (iii) make the Subordinated Debt Indentures and the Subordinated Notes admissible in evidence in the courts of the State of New York and Colombia; (iv) preserve the enforceability of, and maintain the Subordinated Notes Trustee’s rights under, the Subordinated Debt Indentures; and (v) respond to any reasonable requests received from the Subordinated Notes Trustee to enable the Subordinated Notes Trustee to facilitate the exercise of its rights and performance of its obligations under the Subordinated Debt Indentures and the Subordinated Notes, including exercising and enforcing its rights under and carrying out the terms, provisions and purposes of the Subordinated Debt Indentures and the Subordinated Notes.
Events of Default
Each of the following is an “Event of Default”:
2.failure by the Bank to pay interest on any of the Subordinated Notes when it becomes due and payable and the continuance of any such failure for thirty (30) days;
failure by the Bank to pay the principal on any of the Subordinated Notes when it becomes due and payable, whether at Stated Maturity or otherwise, and only with regard to the 2027 Subordinated Notes, when the continuance of any such failure is for seven (7) days;
the Bank pursuant to or within the meaning of any Bankruptcy Law:
(a) commences a voluntary case;
(b) consents to the entry of an order for relief against it in an involuntary case;
(c) consents to the appointment of a Custodian of it or for all or substantially all of its assets;
(d) makes a general assignment for the benefit of its creditors;
(e) is subject to any other Intervention Measure or Preventive Measure; or
the SFC enters an order or decree under any Bankruptcy Law that:
(a) is for relief against the Bank as debtor in an involuntary case;
(b) appoints a Custodian of the Bank or a Custodian for all or substantially all of the assets of the Bank; or
(c) orders the liquidation of the Bank, and the order or decree remains unstayed and in effect for sixty (60) days.
If the Bank fails to make payment of principal, interest or Additional Amounts, if any, on the Subordinated Notes (and, in the case of payment of principal, such failure to pay continues for seven (7) days or, in the case of payment of interest or Additional Amounts, such failure to pay continues for thirty (30) days), each Subordinated Note Holder has the right to demand and collect under the Subordinated Debt Indentures and the Bank will pay to the Subordinated Notes Holders the applicable amount of such due and payable principal, accrued and unpaid interest and Additional Amounts, if any, on the Subordinated Notes; provided, however, that to the extent that the SFC has adopted an Intervention Measure (as defined below) in connection with the Bank under the Colombian Bankruptcy Law, the Subordinated Notes Holders would not be able to commence independent collection proceedings to recover amounts owed.
There is no right of acceleration in the case of a default in any payment on the Subordinated Notes (whether when due or otherwise) or the performance of any of the Bank’s other obligations under the Subordinated Debt Indentures or the Subordinated Notes. Notwithstanding the immediately preceding sentence, the Subordinated Notes Holders shall have the right to accelerate the payments due under the Subordinated Notes upon the Bank’s liquidation. Subject to the subordination provisions of the Subordinated Notes, if any Event of Default occurs and is continuing, the Subordinated Notes Trustee may pursue any available remedy (excluding acceleration, except as provided herein) to collect the payment of principal and interest on the Subordinated Notes or to enforce the performance of any provision of the Subordinated Notes or the Subordinated Debt Indentures.
The Subordinated Notes Trustee is not to be charged with knowledge of any Default or Event of Default or knowledge of any cure of any Default or Event of Default unless either (i) a Responsible Officer of the Subordinated Notes Trustee has actual knowledge of such Default or Event of Default or (ii) written notice of such Default, Event of Default or cure has been given to the Subordinated Notes Trustee at its Corporate Trust Office by the Bank or any Subordinated Note Holder.
Satisfaction and Discharge
The Subordinated Debt Indentures will be discharged and will cease to be of further effect (except as to rights of registration of transfer or exchange of Subordinated Notes, which shall survive until all Subordinated Notes have been canceled) as to all outstanding Subordinated Notes when either:
(1) all the Subordinated Notes that have been authenticated and delivered (except lost, stolen or destroyed Subordinated Notes which have been replaced or paid and Subordinated Notes for whose payment money has been deposited in trust or segregated and held in trust by the Bank and thereafter repaid to the Bank or discharged from the trust) have been delivered to the Subordinated Notes Trustee for cancellation, or
(2) (a) all Subordinated Notes not delivered to the Subordinated Notes Trustee for cancellation otherwise have become due and payable and the Bank has irrevocably deposited or caused to be deposited with the Subordinated Notes Trustee trust funds in trust solely for the benefit of the Subordinated Notes Holders in an amount of money sufficient, without consideration of any reinvestment of interest, to pay and discharge the entire Indebtedness (including all principal and accrued interest) on the Subordinated Notes not delivered to the Subordinated Notes Trustee for cancellation,
(b) the Bank has paid all sums payable by it under the Subordinated Debt Indentures,
(c) the Bank has delivered irrevocable instructions to the Subordinated Notes Trustee to apply the deposited money toward the payment of the Subordinated Notes at maturity, and
(d) the Subordinated Notes Holders have a valid, perfected, exclusive security interest in the trust.
In addition, the Bank must deliver an Officers’ Certificate and an Opinion of Counsel to the Subordinated Notes Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied.
Transfer and Exchange
A Subordinated Note Holder will be able to register the transfer of or exchange Subordinated Notes only in accordance with the provisions of the Subordinated Debt Indentures. The registrar may require a Subordinated Note Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Subordinated Debt Indentures. Without the prior consent of the Bank, the registrar is not required to register the transfer or exchange of a Subordinated Note between a record date and the next succeeding interest payment date.
The Subordinated Note will be issued in registered form and the registered Subordinated Note Holder will be treated as the owner of such Note for all purposes.
Amendment, Supplement and Waiver
Subject to certain exceptions, the Subordinated Debt Indentures or the Subordinated Notes may be amended with the consent (which may include consents obtained in connection with a tender offer or exchange offer for Subordinated Notes) of the Subordinated Notes Holders of at least a majority in aggregate principal amount of the Subordinated Notes then outstanding (including, without limitation, Additional Notes, if any), and any existing Default under, or compliance with any provision of, the Subordinated Debt Indentures may be waived (other than any continuing Default in the payment of the principal or interest on the Subordinated Notes) with the consent (which may include consents obtained in connection with a tender offer or exchange offer for Subordinated Notes) of the Subordinated Notes Holders of a majority in aggregate principal amount of the Subordinated Notes then outstanding (including, without limitation, Additional Notes, if any); provided, that without the consent of each Subordinated Note Holder affected, no amendment or waiver may:
reduce, or change the Stated Maturity of, the principal of any Subordinated Note;
reduce the rate of or extend the time for payment of interest on any Subordinated Note;
change the currency or place of payment of principal of or interest on the Subordinated Notes;
modify or change the related definitions affecting the subordination of the Subordinated Notes or any provision of the Subordinated Debt Indentures (including the covenants in the Subordinated Debt Indentures) in a manner that adversely affects the Subordinated Notes Holders;
reduce the percentage of Subordinated Notes Holders necessary to consent to an amendment or waiver to the Subordinated Debt Indentures or the Subordinated Notes;
impair the rights of Subordinated Notes Holders to receive payments of principal of or interest on the Subordinated Notes; or
make any change in the amendment and waiver provisions of the Subordinated Debt Indentures.
Notwithstanding the foregoing, the Bank and the Subordinated Notes Trustee may amend the Subordinated Debt Indentures or the Subordinated Notes without the consent of any Subordinated Note Holder to cure any ambiguity, defect or inconsistency, to provide for uncertificated Subordinated Notes in addition to or in place of certificated Subordinated Notes, to provide for the assumption of the Bank’s obligations to the Subordinated Notes Holders in the case of a merger, consolidation or sale of all or substantially all of the assets in accordance with “Certain Covenants-Merger, Consolidation, or Sale of Assets”, to add any applicable covenants, to surrender any right or power under the Subordinated Debt Indentures conferred to the Bank not for the benefit of any Subordinated Notes Holder, to conform the text of the Subordinated Debt Indentures or the Subordinated Notes to any provision of the “Description of Notes,” section of the respective Bank's Prospectus Supplements to add to the rights or benefits of the Subordinated Notes Holders, to provide for the issuance of Additional Notes, to provide for the acceptance of a successor trustee or to make any change that does not adversely affect the rights of any Subordinated Note Holder or to maintain the qualification of the Subordinated Debt Indentures under the Trust Indenture Act or to provide for an effect a substitution or variation of the Subordinated Notes in accordance with the terms of the Subordinated Debt Indentures.
No Personal Liability of Directors, Officers, Employees and Stockholders
No director, officer, employee, incorporator or stockholder of the Bank will have any liability for any obligations of the Bank under the Subordinated Notes or the Subordinated Debt Indentures or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Subordinated Note Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Subordinated Notes. The waiver may not be effective to waive liabilities under the federal securities laws.
Concerning the Subordinated Notes Trustee
The Bank of New York Mellon is the Subordinated Notes Trustee under the Subordinated Debt Indentures and has been appointed by the Bank as registrar and paying agent with regard to the Subordinated Notes. The Subordinated Debt Indentures contains certain limitations on the rights of the Subordinated Notes Trustee, should it become a creditor of the Bank, to obtain payment of claims in certain cases, or to realize on certain assets received in respect of any such claim as security or otherwise. The Subordinated Notes Trustee will be permitted to engage in other transactions; however, if it acquires any conflicting interest, it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as trustee (if the Subordinated Debt Indentures have been qualified under the TIA) or resign.
The Subordinated Notes Holders of a majority in principal amount of the then outstanding Subordinated Notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Subordinated Notes Trustee, subject to certain exceptions. The Subordinated Debt Indentures provides that, in case an Event of Default occurs and is not cured, the Subordinated Notes Trustee will be required, in the exercise of its power, to use the degree of care of a prudent person in similar circumstances in the conduct of his own affairs. Subject to such provisions, the Subordinated Notes Trustee will be under no obligation to exercise any of its rights or powers under the Subordinated Debt Indentures at the request of any Subordinated Note Holder, unless such Subordinated Note Holder shall have offered to the Subordinated Notes Trustee security and indemnity satisfactory to the Subordinated Notes Trustee.
Unclaimed Amounts
Any money deposited with the Subordinated Notes Trustee or paying agent or held by the Bank, in trust, for the payment of principal, premium, interest or any Additional Amounts, that remains unclaimed for two (2) years after such amount becomes due and payable shall be paid to the Bank upon its request or, if held by the Bank, shall be discharged from such trust. The Subordinated Note Holder will look only to the Bank for payment thereof, and all liability of the Subordinated Notes Trustee or paying agent shall thereupon cease. However, the Subordinated Notes Trustee or paying agent may at the expense of the Bank cause to be mailed to Subordinated Notes Holders at the last address of record, notice that the money remains unclaimed and any unclaimed balance of such money remaining, after a specified date, will be repaid to the Bank.
No Sinking Fund
The Subordinated Notes will not be entitled to the benefit of a sinking fund.
Listing
The Subordinated Notes are listed on the New York Stock Exchange.
Governing Law
The Subordinated Debt Indentures and the Subordinated Notes are governed by, and construed in accordance with, the laws of the State of New York.
Notwithstanding the foregoing, the authorization and execution of such documentation by the Bank and any subordination provisions of the Subordinated Notes will be governed by the laws of Colombia. The qualification of the Subordinated Notes as Tier Two Capital will be determined pursuant to applicable Colombian banking law and regulations.
Currency Rate Indemnity
The Bank has agreed that, if a judgment or order made by any court for the payment of any amount in respect of any Subordinated Notes is expressed in a currency other than U.S. dollars, the Bank will indemnify the relevant Subordinated Note Holder against any deficiency arising from any variation in rates of exchange between the date as of which the denomination currency is notionally converted into the judgment currency for the purposes of the judgment or order and the date of actual payment. This indemnity will constitute a separate and independent obligation from the Bank’s other obligations under the Subordinated Debt Indentures, will give rise to a separate and independent cause of action, will apply irrespective of any indulgence granted from time to time and will continue in full force and effect notwithstanding any judgment or order for a liquidated sum or sums in respect of amounts due under the Subordinated Debt Indentures or the Subordinated Notes.
EX-8.1
3
cib-20241231xexx81.htm
EX-8.1
Document
Exhibit 8.1
LIST OF SUBSIDIARIES (EXHIBIT)
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ENTITY |
JURISDICTION OF INCORPORATION |
BUSINESS |
PROPORTION OF OWNERSHIP INTEREST AND VOTING POWER HELD BY THE BANK 2024 |
PROPORTION OF OWNERSHIP INTEREST AND VOTING POWER HELD BY THE BANK 2023 |
PROPORTION OF OWNERSHIP INTEREST AND VOTING POWER HELD BY THE BANK 2022 |
Fiduciaria Bancolombia S.A. Sociedad Fiduciaria |
Colombia |
Trust |
98.81% |
98.81% |
98.81% |
Banca de Inversión Bancolombia S.A. Corporación Financiera |
Colombia |
Investment banking |
100.00% |
100.00% |
100.00% |
Valores Bancolombia S.A. Comisionista de Bolsa |
Colombia |
Securities brokerage |
100.00% |
100.00% |
100.00% |
Wompi S.A.S.(1) |
Colombia |
Technology services provider |
100.00% |
100.00% |
99.98% |
Renting Colombia S.A.S. |
Colombia |
Operating leasing |
100.00% |
100.00% |
100.00% |
Transportempo S.A.S. “En liquidación”(2) |
Colombia |
Transportation |
- |
100.00% |
100.00% |
Inversiones CFNS S.A.S.(3) |
Colombia |
Investments |
100.00% |
99.94% |
99.94% |
| Negocios Digitales Colombia S.A.S. |
Colombia |
Payment solutions |
100.00% |
100.00% |
100.00% |
Fondo de Capital Privado Fondo Inmobiliario Colombia |
Colombia |
Real estate investment fund |
80.47% |
80.47% |
80.47% |
P.A. Inmuebles CEM |
Colombia |
Mercantile trust |
80.47% |
80.47% |
80.47% |
P.A. Calle 92 FIC-11 |
Colombia |
Mercantile trust |
52.31% |
52.31% |
52.31% |
P.A. FIC Edificio Corfinsura |
Colombia |
Mercantile trust |
80.47% |
80.47% |
80.47% |
P.A. FIC-A5 |
Colombia |
Mercantile trust |
80.47% |
80.47% |
80.47% |
P.A. FIC Inmuebles |
Colombia |
Mercantile trust |
80.47% |
80.47% |
80.47% |
P.A. FIC Clínica de Prado |
Colombia |
Mercantile trust |
62.00% |
62.00% |
62.00% |
P. A. FIC A6 |
Colombia |
Mercantile trust |
80.47% |
80.47% |
80.47% |
P.A. Central Point |
Colombia |
Mercantile trust |
60.35% |
60.35% |
60.35% |
Fideicomiso Irrevocable de Garantía, Fuente de Pago y Administración Inmobiliaria Polaris(4) |
Colombia |
Mercantile trust |
- |
80.47% |
80.47% |
P.A. Fideicomiso Twins Bay |
Colombia |
Mercantile trust |
80.47% |
80.47% |
80.47% |
Fideicomiso Lote Av San Martín |
Colombia |
Mercantile trust |
80.47% |
80.47% |
80.47% |
P.A. Fideicomiso Lote 30 |
Colombia |
Mercantile trust |
80.47% |
80.47% |
80.47% |
Fideicomiso Fondo Inmobiliario Bancolombia |
Colombia |
Mercantile trust |
80.47% |
80.47% |
80.47% |
P.A. Florencia Ferrara(5) |
Colombia |
Mercantile trust |
44.26% |
44.26% |
44.26% |
P.A. Flor Morado Plaza(5) |
Colombia |
Mercantile trust |
80.47% |
80.47% |
80.47% |
P.A. Galería la 33(6) |
Colombia |
Mercantile trust |
80.47% |
80.47% |
- |
P.A Linz Granz del Rio(7) |
Colombia |
Mercantile trust |
44.26% |
- |
- |
Fideicomiso Selecto Terrazu E1(7) |
Colombia |
Mercantile trust |
64.38% |
- |
- |
Valores Simesa S.A.(8) |
Colombia |
Investments |
62.75% |
64.93% |
66.33% |
Fideicomiso Lote Distrito Vera B1B2(8) |
Colombia |
Mercantile trust |
62.44% |
64.61% |
66.00% |
Fideicomiso Lote Distrito Vera B3B4(9) |
Colombia |
Mercantile trust |
- |
64.61% |
66.00% |
Fideicomiso Lote B6 Ciudad del Rio(10) |
Colombia |
Mercantile trust |
- |
- |
66.00% |
P.A. FAI Calle 77(11) |
Colombia |
Mercantile trust |
98.00% |
98.00% |
98.00% |
P.A. Nomad Salitre(12) |
Colombia |
Mercantile trust |
98.00% |
98.00% |
98.00% |
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P.A. Nomad Central-2(13) |
Colombia |
Mercantile trust |
98.00% |
98.00% |
- |
P.A. Calle 84 (2)(13) |
Colombia |
Mercantile trust |
98.00% |
98.00% |
- |
P.A. Calle 84 (3)(13) |
Colombia |
Mercantile trust |
98.00% |
98.00% |
- |
P.A. Nomad Distrito Vera(14) |
Colombia |
Mercantile trust |
98.00% |
- |
- |
P.A Nexo(14) |
Colombia |
Mercantile trust |
98.00% |
- |
- |
P.A. Mercurio(15) |
Colombia |
Mercantile trust |
100.00% |
100.00% |
100.00% |
P.A CEDIS Sodimac(14) |
Colombia |
Mercantile trust |
100.00% |
- |
- |
Wenia S.A.S.(16) |
Colombia |
Technology services |
100.00% |
100.00% |
100.00% |
P.A. Wenia(16) |
Colombia |
Mercantile trust |
100.00% |
100.00% |
- |
Nequi S.A. Compañía de Financiamiento(17) |
Colombia |
Financial services |
100.00% |
100.00% |
100.00% |
Sociedad Beneficiaria BC Panamá S.A.S.(18) |
Colombia |
Holding |
100.00% |
- |
- |
Bancolombia Panamá S.A. |
Panama |
Banking |
100.00% |
100.00% |
100.00% |
Sistemas de Inversiones y Negocios S.A. Sinesa |
Panama |
Investments |
100.00% |
100.00% |
100.00% |
Banagrícola S.A. |
Panama |
Holding |
99.17% |
99.17% |
99.17% |
Banistmo S.A. |
Panama |
Banking |
100.00% |
100.00% |
100.00% |
Banistmo Investment Corporation S.A. |
Panama |
Trust |
100.00% |
100.00% |
100.00% |
Leasing Banistmo S.A. |
Panama |
Leasing |
100.00% |
100.00% |
100.00% |
Valores Banistmo S.A. |
Panama |
Purchase and sale of securities |
100.00% |
100.00% |
100.00% |
Banistmo Panamá Fondos de Inversión S.A.(19) |
Panama |
Investment fund holder |
100.00% |
100.00% |
100.00% |
Banistmo Capital Markets Group Inc.(19) |
Panama |
Purchase and sale of securities |
100.00% |
100.00% |
100.00% |
Anavi Investment Corporation S.A.(19) |
Panama |
Real estate |
100.00% |
100.00% |
100.00% |
Desarrollo de Oriente S.A.(19) |
Panama |
Real estate |
100.00% |
100.00% |
100.00% |
Steens Enterprises S.A.(19) |
Panama |
Portfolio holder |
100.00% |
100.00% |
100.00% |
Ordway Holdings S.A.(19) |
Panama |
Real estate broker |
100.00% |
100.00% |
100.00% |
Grupo Agromercantil Holding S.A. |
Panama |
Holding |
100.00% |
100.00% |
100.00% |
Banco Agromercantil de Guatemala S.A. |
Guatemala |
Banking |
99.68% |
99.68% |
99.68% |
Seguros Agromercantil de Guatemala S.A. |
Guatemala |
Insurance agency |
79.92% |
79.92% |
79.92% |
Financiera Agromercantil S.A. |
Guatemala |
Financial services |
100.00% |
100.00% |
100.00% |
Agrovalores S.A. |
Guatemala |
Securities brokerage |
100.00% |
100.00% |
100.00% |
Arrendadora Agromercantil S.A. |
Guatemala |
Financial Leasing |
100.00% |
100.00% |
100.00% |
Agencia de Seguros y Fianzas Agromercantil S.A.(20) |
Guatemala |
Insurance agency |
- |
- |
100.00% |
Asistencia y Ajustes S.A. |
Guatemala |
Roadside and medical assistance services |
100.00% |
100.00% |
100.00% |
Serproba S.A. |
Guatemala |
Maintenance and remodeling services |
100.00% |
100.00% |
100.00% |
Servicios de Formalización S.A. |
Guatemala |
Loans formalization |
100.00% |
100.00% |
100.00% |
| Conserjeria, Mantenimiento y Mensajería S.A. “En liquidación” |
Guatemala |
Maintenance services |
100.00% |
100.00% |
100.00% |
Mercom Bank Ltd.(21) |
Barbados |
Banking |
99.68% |
99.68% |
99.68% |
New Alma Enterprises Ltd. |
Bahamas |
Investments |
99.68% |
99.68% |
99.68% |
Bancolombia Puerto Rico Internacional Inc. |
Puerto Rico |
Banking |
100.00% |
100.00% |
100.00% |
Sinesa Cayman, Inc. (before Bancolombia Cayman S.A)(22) |
Cayman Islands |
Banking |
100.00% |
100.00% |
100.00% |
Banco Agrícola S.A. |
El Salvador |
Banking |
97.36% |
97.36% |
97.36% |
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Arrendadora Financiera S.A. Arfinsa |
El Salvador |
Leasing |
97.37% |
97.37% |
97.37% |
Accelera S.A. de C.V. (before Credibac S.A. de C.V) |
El Salvador |
Credit card services |
97.36% |
97.36% |
97.36% |
Valores Banagrícola S.A. de C.V. |
El Salvador |
Securities brokerage |
98.89% |
98.89% |
98.89% |
Inversiones Financieras Banco Agrícola S.A. IFBA |
El Salvador |
Holding |
98.89% |
98.89% |
98.89% |
Gestora de Fondos de Inversión Banagrícola S.A. |
El Salvador |
Administers investment funds |
98.89% |
98.89% |
98.89% |
Bagrícola Costa Rica S.A. |
Costa Rica |
Business and management advising |
99.17% |
99.17% |
99.17% |
Bancolombia Capital Holdings USA LLC |
United States |
Holding |
100.00% |
100.00% |
100.00% |
Bancolombia Capital Advisers LLC |
United States |
Investment advisor |
100.00% |
100.00% |
100.00% |
Bancolombia Capital LLC |
United States |
Securities brokerage |
100.00% |
100.00% |
100.00% |
Wenia Ltd.(16) |
Bermuda |
Technology services |
100.00% |
100.00% |
100.00% |
(1)During 2022 and 2023, Bancolombia Group through its subsidiary Banca de Inversión S.A., purchased remaining shares from minority investors.
(2)Company liquidated in July 2024. For more information, see Consolidated financial statements, Note 1. Reporting entity.
(3)During 2024, Banca de Inversión Bancolombia S.A acquired shares of Inversiones CFNS S.A.S, therefore Bancolombia Group increased its effective participation percentage.
(4)On February 29, 2024, the trust rights were transferred as a result of the sale by Fondo de Capital Privado Fondo Inmobiliario Colombia.
(5)Companies consolidated by Fondo de Capital Privado Fondo Inmobiliario Colombia since April and December 2022, respectively. The P.A Florencia Ferrara is a subsidiary of Fondo de Capital Privado Fondo Inmobiliario Colombia, which has a 55.00% percentage of ownership. Bancolombia has an effective percentage of ownership in Fondo de Capital Privado Fondo Inmobiliario Colombia of 80.47%.
(6)Company consolidated by Fondo de Capital Privado Fondo Inmobiliario Colombia since March 2023.
(7)The P.A Linz Granz del Rio and Fideicomiso Selecto Terrazu E1 are consolidated through Fondo de Capital Privado Fondo Inmobiliario as of September and December 2024, respectively.
(8)(The decrease in the shareholding is due to the repurchase of outstanding stock carried out by Valores Simesa subsidiary (Parent of the fund) during 2024 and 2023.
(9)During 2024, the trust rights were transferred as a result of the sale by Valores Simesa S.A.
(10)During 2023, the trust rights were transferred as a result of the sale by Valores Simesa S.A.
(11)On March 1, 2022, the Parent Company was established as trustor of P.A FAI Calle 77, owner of a property that will be used for rental housing.
(12)On April 4, 2022, the Parent Company was appointed as trustor of 100% of the trust rights of Patrimonio Autonomo Nomad Salitre, whose main purpose is to develop a Multifamily Project.
(13)During February and April 2023, the parent company was established as trustor of P.A Nomad Central-2, P.A Calle 84 (2) and P.A Calle 84 (3), through a management mercantile trust agreement.
(14)During May, June and November 2024, the parent company was established as trustor of P.A CEDIS Sodimac, P.A Nomad Distrito Vera and P.A Nexo, respectively through a management mercantile trust agreement, for real estate activity purposes.
(15)On July 8, 2022, Bancolombia S.A. acquired control of Fidecomiso P.A. Mercurio, through a management mercantile trust agreement.
(16)On July 22, 2022, Bancolombia Group through the subsidiary, Sistemas de Inversiones y Negocios S.A. SINESA, established the company Wenia LTD in Bermuda, a digital corporate vehicle whose purpose is to provide technology services. On November 22, 2022, Wenia LTD established the company called Wenia S.A.S., whose purpose is the creation and implementation of operating systems and software applications. On May 17, 2023, Wenia S.A.S was established as trustor of the fiduciary rights of P.A Wenia.
(17)On December 14, 2021, the board of directors of the Parent Company authorized the legal separation of the business of Nequi, Bancolombia Group’s digital platform that offers financial services. The Superintendencia Financiera de Colombia, with Resolution 0843 of July 6, 2022, as amended by Resolution 0955 of July 27, 2022, authorized the incorporation of Nequi S.A. Compañía de Financiamiento. The legal separation resulted in the creation and commercial registration of a new corporation supervised by the Superintendencia Financiera de Colombia through which Nequi will operate as a 100% digital credit establishment. For further information, see Consolidated financial statements, Note 1. Reporting entity.
(18)On September 27, 2024, Sociedad Beneficiaria BC Panamá was established, a company whose corporate purpose is to be the beneficiary of the division of a company domiciled in Panama, by virtue of which it partially transfers its assets, as a consequence of the above, to be the owner of the assets and liabilities received on the occasion of said operation, and merge with a company domiciled in Colombia. For further information, see Consolidated financial statements, Note 1. Reporting entity.
(19)Investments in non-operational stage.
(20)Company liquidated as of June 2023.
(21)On September 30, 2021, Mercom Bank Ltd shareholder authorized the beginning of an organized and gradual process to transfer of the assets and liabilities of Mercom Bank, Ltd., to Banco Agromercantil de Guatemala, S. A. or other companies of the Bancolombia Group. For further information, see Consolidated financial statements, Note 1. Reporting entity.
(22)On October 5, 2020, the Board of Directors of Bancolombia Panamá (parent company of Sinesa Cayman), authorized the decision to wind-down the business and operations of its subsidiary in Cayman. For further information, see Consolidated financial statements, Note 1. Reporting entity.
EX-11
4
cib-20241231xexx11.htm
EX-11
Document
Exhibit 1.1
BYLAWS BANCOLOMBIA S.A.
CHAPTER I
NAME - TYPE - NATIONALITY - DOMICILE - OBJECT -TERM
Article 1. Name - Nature – Nationality. Bancolombia S.A. is a Colombian business Stock Corporation, incorporated through public deed No. 388, January 24, 1945, granted before Notary’s office No. 1, Medellín. It may also do business under the corporate name Banco de Colombia S.A., and may designate its commercial premises, products, and services, under the trade name of Bancolombia.
Article 2. Domicile. The main domicile of the Bank is the city of Medellín, capital city of the Province of Antioquia, Republic of Colombia, where its main corporate business and premises are also located.
The domicile may not be changed without prior resolution from the General Meeting of Shareholders.
Article 3. Corporate object. The Bank's Corporate Object consists of all the banking operations, business, acts and services, performed through the banking establishment bearing its name and subject to the applicable legal provisions.
In the implementation of its corporate object and subject to the restrictions and limitations imposed by the law, the business Corporation may develop all the activities authorized to such kind of establishments and perform the investments allowed to perform.
In the Bank's corporate object are included such acts which are directly related with it and those whose purpose is to exercise the rights and fulfill the obligations, legally or conventionally derived from the existence and activity of the Corporation.
The Corporation may also participate in the capital of other corporations, when it is authorized by law, within the terms, and with the requirements, limits or conditions established by such a law.
Article 4. Term. The term of the corporation will extend until December eight (8), 2144.
CHAPTER II
CAPITAL
Article 5. Authorized Capital. The authorized capital of Bancolombia S.A. is seven hundred thousand million Colombian Pesos (COP 700,000,000,000), divided into one million four hundred thousand shares (1,400,000,000), of a par value of five hundred pesos (COP 500.oo) each share.
Article 6. Subscribed and Paid-In Capital. The subscribed and paid-in capital of Bancolombia S.A. shall be established and set in accordance with the Law, these bylaws, and any provisions contained in the regulations governing financial institutions.
Article 7. Variations of Capital. The authorized capital may be modified only by the General Meeting of Shareholders in compliance with the requirements of the Law, in accordance with the relevant amendment to the Bylaws, legally approved and formalized. Any modification to the subscribed and paid-in capital stock shall be certified by the Statutory Auditor in accordance with the legal provisions and shall be filed with the mercantile public record.
CHAPTER III
STOCK AND STOCKHOLDERS
Article 8. Share Classes. The company's shares are certificated and of capital stock and these may be a) common, b) privileged, and c) with preferred dividend and without voting right. To the extent that it is not contrary to their nature, privileged shares shall be subject to the provisions in these Bylaws that are applicable to common shares.
Shares in which social capital is divided will circulate in an electronic way; consequently, any negotiation or affectation to their rights will be legalized by electronic registry or registry in an account through a Centralized Securities Deposit. Pursuant to article 5 of the Bylaws, all shares issued shall have the same nominal value.
Article 9. Limits on the issuance of shares with preferred dividend and without no voting rights. In the terms of Law, shares with preferred dividend and without voting rights, may not represent more than fifty percent (50%) of the subscribed capital.
Article 10. Certificates. Banks’s shares will be represented in deposited macro certificates and under the custody of Centralized Securities Deposit, for the shareholder’s rights, the notation and the registration of the certificate in Shareholders’ Book will be sufficient, with which he will credit his ownership before Centralized Securities Deposit.
Article 11. Payment of Shares. While shares are not fully paid up, only provisional certificates shall be issued to shareholders.
Article 12. Shareholders’ book. The Corporation shall keep a Stock Record in the manner prescribed by the law, where each stockholder's name, nationality, domicile, and identification number shall be recorded. Bearing in mind that the transfer of shares will be made with the notation on the account by Centralized Securities Deposit and its registry in the Shareholder’s book, the bank will acknowledge the quality of shareholder or owner of shares only to the person who appears registered in the Shareholder’s book. Likewise, any lien, encumbrance, fractioning, use, legal demand, existing cautionary actions, or those which may be against the bank, as well as any other affectation of them will be in force or will be legalized, as the case may be in the corresponding registry through the notation in the accounts of Centralized Securities Deposit, according to Colombia Securities market. Consequently, no sale or transfer of shares, lien or limitation, encumbrance or adjudication, will have any effect in relation to the bank or the third parties unless they are registered in the Shareholder’s book, to which the bank cannot deny unless there is an order of authorized authority or for shares for which requirements have not been met.
PARAGRAPH: Through decision of Board of Directors, the Bank could delegate on a specialized entity or a Centralized Securities Deposit, the keeping of the Shareholder’s book.
Article 13. Shareholder’s information. Bank shareholders shall update required information for registry, control of money laundering. Information and data contributed, including contact, financial and commercial information, will be kept by the Bank, entity authorized to file and use it for the compliance of obligations and rights it has as issuing Bank. This information may be provided to Centralized Securities Deposit and or to a delegated entity for the shareholders’ assistance; these entities will also be committed to use it, keep it, custody it and use it according to the norms of securities market in which shares are negotiated.
All these without preventing the use of such information by authorized authority.
Article 14. Negotiation of Shares. Shares are negotiable in accordance with the Law, except in the cases legally exempted and their sale will be legalized through a notation in an account by Centralized Securities Deposit.
The Bank does not assume any responsibility by reason of facts or circumstances that might affect the validity of the contract between the transferor and the transferee of shares.
Article 15. Negotiation of Unpaid Shares. Shares not paid up may be negotiated in the same manner as paid-up shares, but both assignor and assignee shall also be responsible for the unpaid amount.
Article 16. Pending Dividends. When in the letter of transfer of shares or in the respective order the contrary is not explicitly stated, pending dividends shall belong to the buyer of the shares from the date of the letter or the order of transfer.
Article 17. Non-Transferable Stock. No stocks whose register has been cancelled or prevented by order of competent authority can be alienated.
To transfer stock whose ownership is under litigation, authorization from the respective judge is needed; as to attached shares, authorization from the plaintiff is also needed.
Article 18. Shares Given as Security and Usufruct. Shares levied with securities may not be alienated without consent of the creditor. The security on shares does not give the creditor the rights inherent to the capacity of shareholder but with authorization of explicit agreement. The writing or document containing the corresponding agreement shall be sufficient to exercise the rights conferred on the creditor before the Bank.
The security shall be legalized through registration in the Shareholder’s book.
Except explicit stipulation to the contrary, the usufruct shall confer all the rights inherent to the capacity of shareholder excepting the right to alienate or encumber them and their reimbursement after liquidation. For the exercise of rights reserved by the owner, the presentation of the writing or document where such reserves are made is sufficient.
Article 19. Attachment of Shares. The attachment of shares shall be carried out with the registration in the Shareholder’s book with written order from the competent officer. The attachment covers the corresponding dividend and can be restricted only to this. In this last event, the attachment shall be carried out through order of the judge to perform the attachment and to place the respective amounts at his disposal.
Article 20. Withholding of Dividends. Whenever there is litigation over shares and withholding of their dividends is ordered, the Bank shall keep these in deposit on hand, without interests, until the official ordering the withholding notifies to whom they shall be provided.
Article 21. Adherence to the Bylaws and the Code of Good Governance. It is understood that anyone who acquires shares in the Bank, either by virtue of a subscription agreement, or by transfer, or any other purchasing instrument, is subject to these bylaws and its Code of Good Governance.
Article 22. Taxes. Taxes levied on the issuance and transfer of stock certificates are to be charged to the stockholders.
CHAPTER IV
SUBSCRIPTION OF NEW STOCKS
Article 23. Share Issuance and Regulation. The shares currently on reserve, and those subsequently created by the General Shareholders´ meeting, shall be issued on the times and according to the basis determined by the competent corporate body.
It is a duty of the Board of Directors, to order the issuance of common stocks, and to publish the respective regulation of the issue of shares, subject to the applicable legal and statutory provisions.
The issuance of shares with preferential dividends and without voting right shall be ordered by the General Shareholders’ Meeting, and its regulation may be delegated to the Board of Directors.
If shares with preferential dividend and without right to voting are issued, the issuance regulation may indicate if they can be converted into common stocks, the term for such conversion and if it is optional or compulsory.
In a similar way, when because of changes in the Bank structure, the type of shares with preferential dividend and without right to voting disappear, such shares shall be converted in common shares.
If shares with preferential dividends and without right to voting are converted into common shares, each share of the first kind, shall be entitled to one share of the second kind.
Issuance of privileged shares shall be approved by the General Meeting of Shareholders, which shall determine the nature and extent of any privileges, subject to the Bylaws and the legal provisions; and shall further regulate the placement thereof. Likewise, the diminution or suppression of privileges will be determined by the General Meeting of Shareholders.
Article 24. Preemptive Rights. In the regulation of subscription of shares, the pre-emptive right in favor of stockholders shall be regulated, indicating the proportion and manner such stockholders will be able to subscribe the new issued shares. The term for the exercise of this right shall also be stated in the regulation and it shall not be less than fifteen (15) business days after the date when the Bank transmits the offer to the stockholders in the manner provided for in these bylaws to call the General Meeting of Shareholders.
The right to subscription of shares is negotiable since the date of the notice of the offer, through written document indicating the name of the assignee or assignees.
In the event there are stockholders with preference dividend and without right to voting, to safeguard the pre-emptive right of these shareholders, the legal and statutory provisions on the matter shall be observed.
Likewise, when approving the issuance of privileged shares, applicable regulations shall govern.
PARAGRAPH: The Board of Directors in the same resolution about placement of stocks, may authorize the Presidency to sell, through direct negotiation with third parties, or outside the stock market, the remaining stock of the issuance once the time for the exercise of the pre-emptive right has elapsed.
Article 25. Placement without pre-emptive right. The General Meeting of Shareholders through favorable voting of at least seventy per cent (70%) of the stock represented at the meeting may dispose that a certain issuance of stock be placed without subjection to the pre-emptive in favor of the shareholders.
Article 26. Payment of issued stock. The issued stock shall be paid in cash in the manner indicated in the regulation. When this provides cancellation by installments, not less than a half shall be paid at the moment of subscription, and the balance in a maximum term of one year.
Article 27. Minimum value of shares and authorization of issuance. The Bank may not issue shares for a price lower than their par value, and to be able to perform the subscription of the issued shares, approval of the respective regulation shall be obtained from the Superintendency of Finance.
CHAPTER V
SHAREHOLDERS’ REPRESENTATION
Article 28. Powers of Attorney. Shareholders may be represented before the Bank to deliberate and vote at the General Shareholders' Meeting, for the collection of dividends, and for any other purpose, by means of a power of attorney granted in writing or by any electronic means, according to the law.
The Bank shall make valid the proxies set up and votes cast by shareholders using electronic mechanisms, according to the terms established for this purpose by Colombian law and as regulated by the Board of Directors.
Article 29. Indivisibility of shares. Shares are indivisible, and therefore, when due to any legal or conventional cause, a share belongs to several people, these shall appoint a single and common representative to exercise the rights corresponding to the capacity of shareholder. In the absence of agreement, any interested party may request the judge with jurisdiction on the corporate domicile, the appointment of a representative of such shares.
Article 30. Representation of illiquid succession. When an illiquid succession own Bank's stock, the executor with tenancy of property shall exercise the stockholders' rights. If there are several executors, they shall appoint a single representative, unless one of them would have been authorized by the judge to such effect. In the absence of executor, the representation shall be exercised by the person elected by a majority of votes of the successors recognized in the proceeding.
Article 31. Exercise of the Representation. The Bank shall only recognize one representative per shareholder, whether this is a natural or legal person, a community, or a corporation. At the meetings of the General Meeting of Shareholders, the representation, and the right to voting are indivisible, that is, the representative or proxy is not allowed to fraction the vote of his principal or donor, which means that he may not vote with a group of represented shares, in one sense or for certain persons, and with another or other shares to the contrary or for other people. This indivisibility is not opposed, nevertheless, to the fact that the representative or proxy of several natural or legal persons, or several individuals or collectivities, may vote in each case adhering separately to the instructions given by each person or group represented or principal, but without dividing, in any event, the votes corresponding to the same person.
Article 32. Legal capacity. The fact that a person is registered in the stock record does not entitle him to exercise his shareholder's rights if he lacks legal capacity. In such case, those rights shall be exercised by his legal representative.
Article 33. Incompatibility of Administrators and Employees. While they hold their positions, the administrators and employees of the Bank may neither have power to represent other people's shares at the meetings of the General Meeting of Shareholders, nor substitute the powers conferred on them. This prohibition does not include the case of legal representation.
They may neither vote, even with their own shares, the decision whose object is the approval of the end-of-term balances and accounts, nor those of the liquidation.
CHAPTER VI
MECHANISMS FOR CONFLICT RESOLUTIONS
Article 34. Dispute resolution mechanisms. Any differences of opinion that may arise between shareholders related to the company’s overall performance, its operations, projects and businesses, shall be discussed and resolved by the General Shareholders' Meeting, subject to the law and these bylaws.
An attempt will be made to resolve individual disputes that may arise between shareholders and the Bank or its directors, or between shareholders, by means of a direct agreement, which shall have a term of thirty (30) business days from the date on which either party enjoins the other in writing, either via e-mail or any other written means.
Any differences that arise between the shareholders and the Bank or between the shareholders and the Bank´s directors, or between the shareholders themselves due to their status as such, during the course of the company’s existence, upon the Bank's dissolution, and during its winding-up, which have not been resolved by direct agreement within thirty (30) business days, shall be submitted to the binding decision of an Arbitration Tribunal which will sit at the Arbitration and Conciliation Center of the Chamber of Commerce of Medellin, subject to the following rules:
(i) The tribunal shall be composed of three (3) arbitrators appointed by the parties by mutual agreement within ten (10) business days of a request submitted by either party to the other. If there is no agreement, the Arbitration and Conciliation Center of the Chamber of Commerce of Medellin will appoint them from a slate of ten names the parties submit together within ten business days of the expiration of the aforementioned period, or failing that, will make the appointment subject to the rules of the Chamber of Commerce. For the purposes of this clause, a party will be understood as a person or group of persons that maintain the same claim.
(ii) The rules of the Arbitration and Settlement Center of the Chamber of Commerce of Medellin will apply.
(iii) The Tribunal will decide according to the law.
PARAGRAPH. This clause also applies to any difference between the shareholders, the Bank or its directors with any person who, by reason of any act or contract enforceable against it, is the holder of any political or economic right deriving from shares issued by the Bank, which arises by reason of the exercise of such rights.
CHAPTER VII
MANAGEMENT AND DUTIES OF DIRECTORS AND OFFICERS
ARTICLE 35. Direction and Management Bodies. For the purposes of its direction and management, the Corporation has the following bodies:
1. General Meeting of Shareholders
2. Board of Directors
3. Presidency
Each such body shall have the functions and attributes provided in these bylaws, pursuant to the special provisions herein contained and the legal provisions.
Article 36. Duties of the Directors. The Bank’s directors must act in good faith, with loyalty and with the diligence of a good businessman. Their actions shall be carried out in the interest of the company, considering the interests of its associates.
In the performance of their duties, and in fulfillment of their functions, directors shall:
1. Carry out efforts that lead to the proper performance of the corporate purpose.
2. Ensure strict compliance with legal or statutory provisions.
3. Ensure that the functions entrusted to the Statutory Auditor are properly carried out.
4. Safeguard and protect the Company’s commercial and industrial reserves. Any person appointed as a member of the Board of Directors will adhere to the Information Management Regulations in the Code of Good Governance and is obliged to sign the Agreement for the Access and Use of Information.
5. Refrain from misusing inside information.
6. Treat all members equally and respect their rights of inspection.
7. Refrain from participating, directly or through an intermediary, for their own benefit or for the benefit of third parties, in activities that involve competition with the company or acts that give rise to conflicts of interest.
All directors, administrators and officers faced with potential conflicts of interest or who consider they may be facing one, must proceed as follows:
In any situation where doubts exist regarding the potential existence of a conflict of interest, the director, administrator or officer will be bound to proceed as though it existed, and the procedure established for this purpose by these Bylaws, the Code of Good Governance, or any other regulations or policy applicable as a result of belonging to a financial conglomerate, under applicable law, will be followed.
The Bank's business relations with its major shareholders shall be conducted within the limitations and conditions established by applicable regulations, and in any event, under market conditions. The Bank's economic relations with its directors, CEO, and top executives, shall be conducted within the limitations and conditions established by applicable regulations, and by regulations related to the prevention, management, and resolution of conflicts of interest.
8. Comply with the rules of conduct and the obligations the law imposes on the directors of financial institutions, especially those related to bank management risks, under the principle of service in the public interest.
9. In general, comply with all legal and statutory provisions, as well as those found in the Bank's Code of Ethics and Good Governance.
CHAPTER VIII
GENERAL MEETING OF SHAREHOLDERS
Article 37. Composition. The General Meeting of Shareholders shall consist of the stockholders registered in the Shareholder’s book, in person or through legal representative or attorneys authorized with power of attorney conferred in writing, met with the quorum and the conditions set forth in these bylaws.
PARAGRAPH: For the Bank electronic participation of shareholders by internet will be valid, as well as the electronic vote, according to applicable legislation.
Article 38. President of the General Meeting of Shareholders. The General Shareholders' Meeting shall be chaired by the President of the Bank; in his absence, by the members of the Board of Directors, according to their order; in the absence of the foregoing, by the person appointed by the General Shareholders’ Meeting among the participants at the meeting, by majority of the votes corresponding to the shares represented therein. The Secretary of the Bank shall act as Secretary of the General Meeting, and in his absence, the person appointed by the President of such meeting.
Article 39. Summons. Summons for both ordinary and extraordinary sessions of the General Shareholders’ Meeting shall be issued by means of a notice published in at least one widely circulating newspaper in the Bank’s principal place of business.
For meetings at which year-end balance sheets, increases in authorized capital, reductions in subscribed capital, spin-offs, mergers, or the assignment of assets, liabilities and contracts representing more than twenty-five percent (25%) of their total value are to be examined, or where members are to be elected to the Board of Directors, the summons shall be issued at least fifteen (15) business days prior to the date set for the meeting; in all other cases, five (5) calendar days’ notice will suffice. When calculating these deadlines, neither the day on which the summons is issued nor the day of the meeting will be counted.The agenda shall be included in the summons.
PARAGRAPH: For meetings at which year-end balance sheets, increases in authorized capital, reductions in subscribed capital, spin-offs, mergers, or the assignment of assets, liabilities and contracts representing more than twenty-five percent (25%) of their total value are to be examined, or where members are to be elected to the Board of Directors, these points will be included in the agenda and in the summons.
For these proposals, the Directors will prepare a report on the reasons for the proposal, which will be made available to shareholders at least fifteen (15) business days before the date set for the meeting.
In the event of spin-offs, mergers and transformations, the notice shall expressly indicate that shareholders may exercise their right of withdrawal.
Article 40. Ordinary meeting. The General Shareholders' Meeting shall be held every year, no later than the thirty-first of March, for the purpose of assessing the situation of the Bank, designating and electing directors and other officers, reviewing reports, accounts, and balance sheets of the preceding fiscal year, deciding on the distribution of profits and agreeing on all measures deemed necessary to ensure achieving the company’s objective. The date of the meeting shall be established by the Board of Directors, and such meeting shall be called by the President of the Bank. If not so called, the Meeting shall automatically take place on the first business day of April, at 10:00 am, at the Bank’s principal executive offices, where the shareholders will meet and make decisions with a majority vote of the number of represented shares at the General Shareholders Meeting.
PARAGRAPH: The shareholders may examine the financial statements, accounting books, vouchers, the report from the administrators supporting the increase to the authorized capital stock or the decrease of the subscribed capital stock, as the case may be, and every other documents and relevant information of the company, within the deadline and subject to the formalities provided by Law and the Code of Good Governance.
Article 41. Extraordinary sessions: Extraordinary meetings shall be held when required by the Bank’s unforeseen or urgent needs, and will be summoned by the Board of Directors, the CEO or the Statutory Auditor, either on their own initiative or when applicable regulations do not provide differently regarding the legitimation to request a summon, at the request of a plural number of shareholders representing no less than ten percent (10%) of the subscribed shares.
At the sessions called under this article the Shareholders’ Meeting may not deal with matters other than those indicated on the agenda included with the summons, except by a decision made by the number of shareholders required by law and once the agenda has been exhausted.
The shareholders’ request must be made in writing and clearly indicate the purpose of the summons.
PARAGRAPH: The Financial Superintendent may order that the Shareholders’ Meeting be summoned to extraordinary sessions or may summon it directly, in the cases provided for by law.
Article 42. Place of meetings. Except in the case of representation of all subscribed shares, General Meetings of Shareholders shall take place in the municipality of the Bank's main domicile, on the day, time and place set out in the notice of meeting.
PARAGRAPH: Likewise, remote, or mixed meetings may take place in the terms authorized by law, in which case the shareholders must have the necessary means to participate in the corresponding meeting.
Article 43. Meeting without notice. The General Meeting of Shareholders may validly meet, deliberate, and decide in any place, without need of prior notice, if all subscribed shares are duly represented.
Article 44. Deliberation Quorum. There shall be quorum to deliberate with the presence of shareholders representing, at least, one half plus one of the shares entitled to vote at the relevant meeting, whether ordinary or special.
If due to lack of quorum the meeting is not held, a new meeting shall be called which may validly deliberate and make decisions with any plural number of people, no matter the number of shares represented thereat.
The new meeting shall neither take place before ten (10) days, nor after thirty (30) days, both ends of business days computed from the date of the adjourned meeting.
PARAGRAPH 1: Issues requiring, pursuant to the law or these bylaws, voting of a special majority of the issued stock, may only be discussed, and passed if the number of shares required in each case is present.
PARAGRAPH 2: Issued stock reacquired by the corporation shall not be computed, in any event, to constitute a quorum.
Article 45. Functions of the General Meeting of Shareholders. The General Meeting of Shareholders shall exercise the functions listed below, in accordance with the Law:
1. Amend the Corporate bylaws.
2. To decree the merging of the Corporation, its demerging through subdivision of the Corporate equity, absorption of another financial Company in which the total assets in circulation have been acquired, conversion, and cession of assets, liabilities and contracts or a part of them higher than 25% of the total of operations of them which may be deems as strategic ones.
3. To decree anticipated dissolution of the Corporation and o its liquidation.
4. Issuing privileged shares, regulating their placement, determining the nature and scope of privileges, diminishing, or suppressing them, subject to the bylaws and to legal provisions.
5. To order the issuance of preference shares, which regulation can be delegated into the Board of Directors.
6. To regulate that a certain issuance of shares be placed without being subject to the pre-emptive right.
7. Examining, approving, disapproving, modifying, and concluding the year-end financial statements and accounts to be rendered at the end of fiscal year by the Board of Directors and the President, or when required by the General Meeting of Shareholders.
8. To appoint, from its members, a plural committee to study the accounts, inventories, and balances when these are not approved, and report the results to the General Meeting of Shareholders when they required it.
9. To order the distribution of profits, providing for reserves and dividends.
10. To elect for a two-term year and according to succession policies that the Shareholder’s assemble has established to the Board of Directors composed of seven (7) Directors to determine their compensation and to remove them at its sole discretion.
11. To elect, for two (2) year terms, the Statutory Auditor of the Corporation and his Alternate, and assign their fees and remove them at its discretion.
12. To designate for periods of two (2) years, the Financial Consumer Defender and his alternate, and dismiss them freely.
13. To order actions against managers, directors or Statutory Auditor.
14. To approve policies and guidelines to be taken into consideration or the variable remuneration of presidents and vice-presidents if such remuneration is represented in Bank shares or lined to their Price.
15. To exercise all other functions according to the bylaws and Law. And in general, those which do not correspond to any other body.
16. To generally adopt measures to comply with bylaws and common interest of shareholders.
FIRST PARAGRAPH: Functions stated in numbers 1 to 14 in this article cannot be delegated.
SECOND PARAGRAPH: The General Meeting of Shareholders shall exercise its functions under the supervision and authorization of the Superintendency of Finance, when legally required. The Bank shall communicate to such Superintendency the date, time, and place of each meeting of the General Meeting of Shareholders.
Article 46. Decisions Majorities. Generally, all resolutions by the General Meeting of Shareholders shall be adopted with the affirmative vote of the majority of shares represented at the meeting, taking into account that every share shall give right to one vote. The following decisions are exempted from the above rule:
1.The issuance of shares that do not imply the preference right, which will require the favorable vote of seventy per cent (70%) of the shares represented at the meeting.
2. The distribution of profits shall be approved by the Meeting with favorable vote of a plural number of shareholders representing at least seventy-eight per cent (78%) of the shares represented at the Meeting.
When the majority provided in the foregoing paragraph is not obtained, at least fifty per cent (50%) of the net profits, or from the balance thereof, shall be distributed, if loss from previous fiscal periods had to be cancelled. But if the amount of the reserves exceeds one hundred per cent (100%) the subscribed capital, the previous percentage will be raised to seventy per cent (70%).
3. When the payment of a dividend is to be paid with issued shares, a favorable vote of eighty per cent (80%) of the common shares represented, and eighty per cent (80%) of the preference shares subscribed shall be required.
4. In the event, that changes that would impair the conditions or rights established for the preference shares are to be approved, or when the conversion of such shares into common shares is to be voted, a favorable vote of seventy per cent (70%) of the common shares and of the subscribed preference shares, shall be required.
5. Those decisions, that according to the Law or by provision of these Bylaws, require a special majority.
Article 47. Elections and voting. Elections and voting by the General Shareholder’s Meeting will observe the following rules:
1. Votes may be written and private, or oral and public, but not secret.
2. The Assembly may not make appointments by acclamation.
3. If substitute proposals are submitted regarding the items on the agenda, the original proposal of the managers or shareholders presented first in time will be voted on first and then the substitute proposals, in the order in which they were made. When one proposal receives enough votes for its approval, the remaining proposals shall not be put to the vote.
4. Election of the Statutory Auditor and its alternate will require an absolute majority of all shares represented and may be performed simultaneously with the appointment of members of the Board of Directors.
5. When electing members of the Board of Directors, the Shareholders’ Meeting must consider the criteria for selection, independence and disqualifications and incompatibilities provided for by law, these Bylaws, the Regulations for Electing Members to the Board of Directors approved by the General Shareholders' meeting, those contained in the Bank’s Code of Good Governance, which will be shared regarding each candidate prior to voting. The election of a Board member that does not meet selection or independence criteria or is subject to disqualification or incompatibility will surpass the limits of the social contract.
Elections of independent directors shall be held by a separate vote from that of the other Board Members, unless it is ensured that the minimum number of independent members required by law or bylaws will be achieved, or, where only one slate is submitted, that slate includes the minimum number of independent members required by laws of bylaws.
Likewise, when setting the compensation for the directors, the Meeting shall consider the number and capacities of its members, their responsibilities and the time required, in such a way that such compensation adequately provides for the contribution the Bank expects from its directors.
6. To guarantee the right of all shareholders to examine the proposals of the candidates to the Board of Directors received by management in advance of the General Meeting and to comply with the prior review by the Good Governance Committee, shareholders interested in submitting slates for the election of members of the Board of Directors, in compliance with the principles of corporate governance, must submit: (i) candidates to the Board of Directors within five (5) business days of the summons to the session of the General Shareholders' Meeting. The proposal must include a communication signed by the candidates indicating that they meet the criteria of independence and that they are not subject to any disqualifications or incompatibilities; and (ii) slates made up of candidates previously submitted under the former item, at least five (5) business days prior to the date of the General Shareholders' Meeting.
Slates that do not comply with the above requirements and terms will not be put to a vote. Candidates and slates must be submitted in writing, through the offices of the CEO or Secretary General or through the Investor Relations Office.
The Good Governance Committee shall evaluate the suitability, disqualifications, incompatibilities, and compliance with independence requirements for the candidates submitted by shareholders and publish the results of its evaluation at least six (6) business days prior to the date of the Shareholders' Meeting.
7. The electoral quotient system will be applied for the election of members of the Board of Directors or any collegiate committee. This shall be determined by dividing the total number of votes validly cast by the number of persons to be elected. The count will begin with the slate that received the largest number of votes and in descending order. From each slate, as many names as the quotient in the number of votes cast by it will be declared elected, and if there are any places that remain to be filled, these will correspond to the highest residuals, counting them in the same descending order. Blank ballots will only be counted to determine the electoral quotient. If, at the time of the count, a person on one slate has already been elected because he or she appears on a previous slate, the person that comes next in the order of placement shall be chosen.
8. In the event of a tie in the residuals, in elections performed as provided for in the above rule, the position will be decided by drawing lots.
9. When the name of a candidate is repeated one or more times on the same slate, it will be understood that its name only appears on the first line of the slate they were included on. The other lines where they appear shall be understood to be occupied by the candidate immediately following them on the same slate.
10. If any slate contains a greater number of names than it should contain, the first names in the placement and up to the proper number shall be counted. If the number of names is less, the existing number of names will be counted.
11. When the Shareholders’ Meeting declares that the members of the Board of Directors have been legally elected, it shall number them in their order of appointment and election on the single slate or the several slates that, according to the number of votes received, have managed to have their candidates elected. It will thus decide, according to the order of the count, the first, second, third, fourth, fifth, sixth and seventh directors.
12. Members of the Board of Directors may not be replaced in by-elections, without proceeding to a new election of the entire Board, using the electoral quotient system, unless vacancies are filled unanimously.
13. Shares that the company owns in any capacity may not vote.
Article 48. Number of debates. All the acts of the General Meeting of Shareholders, amendment of the bylaws included, shall require a single debate, at one regular or special meeting.
Article 49. Minutes. The procedures of the General Meeting of Shareholders shall be recorded in the Minutes Record, which shall be registered at the Chamber of Commerce of the main domicile.
The Minutes Record shall be signed by the President of the General Meeting and by the Secretary or ad-hoc Secretary, and in the absence of this one, by the Statutory Auditor, and they shall be approved by a committee composed of two persons elected by the General Meeting of Shareholders at the same meeting. The minutes shall contain the details and other particulars required by the legal provisions. Minutes for remote meetings must be signed by a legal representative and by the Bank Secretary.
The resolutions of the General Shareholders Meeting regarding amendment of the bylaws and about dissolution of the corporation before the termination of its term shall be legalized by public deed executed by the President and the Secretary of the Bank.
Article 50. Participation by shareholders entitled to preferred dividend and without voting rights. Shares with preference dividend do not grant their holders right to participate at the General Meeting of Shareholders and to voting except in the following cases:
1. In the event that changes that may impair the conditions or rights fixed for such shares and when the conversion of such shares into common shares are to be approved. In this event, such change shall have the approval of the majority established under No. 4 Article 46 of these Bylaws.
2. When voting the advance dissolution, merger, transformation of the corporation or change of its corporate object.
3. When the preference dividend has not been fully paid during two consecutive annual terms. In this event, holders of such shares shall retain their right to voting until the corresponding accrued dividends have been paid up to them.
4. When the General Shareholders´ Meeting orders the payment of dividends with issued shares. In this event, the decision shall be approved by the majority set forth under No. 3, Article 46 of these Bylaws.
5. If at the end of a fiscal period, the Bank does not produce sufficient profits to cancel the minimum dividend, and the Superintendency of Finance by its own decision, or upon petition of holders of preference shares representing at least ten per cent (10%) of these shares, provides that benefits that decrease the profits to be distributed, had been concealed or misled, it may determine that the holders of these shares participate with right to speaking and voting at General Shareholders´ Meeting, according to the provisions of the Law.
6. When the register of shares at the Stock Exchange or at the National Register of Securities is suspended. In this event, the right to voting shall be maintained until the irregularities that determined such cancellation or suspension disappear.
CHAPTER IX
THE BOARD OF DIRECTORS
Article 51. Composition. The Board of Directors is composed of seven Directors, with the character of first, second, third, fourth, fifth, sixth and seventh, according to their order of election. In accordance with Colombian laws, the Board of Directors shall not be composed by a number of members employed by Bank that could by themselves form the majority required to take any decision.
Article 52. Vacancy. The absence of a director for a period of more than three months, shall produce vacancy of his post.
Article 53. Qualification and Inauguration of Directors. Any Director, before taking office, shall await until the Superintendency of Finance qualifies him, authorizes his inauguration and he takes an oath pursuant to the provisions of the law.
Article 54. Incompatibility due to Kinship. There may not be any majority in the Board of Directors formed by persons related to each other by marriage, or by kinship within the third degree of consanguinity, second degree of affinity, or first degree of civil relationship. Likewise, no Board member may be a Person that falls under any of the assumptions of disqualification and incompatibility defined in these Bylaws, the Code of Good Governance and the Regulations for the Election of Members of the Board of Directors approved by the General Shareholders' Meeting.
Any Board elected in contravention of these Regulations may not act and the previous Board will continue performing its functions, which will immediately convene the Shareholder’s Meeting for a new election. Any and all decisions made by the Board by a majority vote in contravention of this rule will not be effective.
Article 55. Term of Directors. The Directors shall be elected for two (2) year periods, but they shall remain in their positions until their successors are elected and qualified, save when they have been removed or declared incompetent before. The directors may be re-elected and removed at the discretion of the General Meeting of Shareholders even before the termination of their term.
Article 56. Board Members. Following qualification, the directors elected by the General Meeting of Shareholders shall hold a meeting to elect a President and a Vice President.
These positions may rotate among the members of the Board of Directors, in the manner determined by the Board of Directors and will have to oversee the efficiency and best performance of the Corporation. Under any circumstances, a legal representative of the Bank can be elected President of the Board of Directors. The President of the Board of Directors in coordination with the President of the Bank or the Secretary will participate in the preparation of the annual Agenda of meetings and will provide necessary guidelines for the execution, will oversee the timely delivery of information to the Board of Directors., will guide conversations with the purpose of assuring the participation of directors and the purpose of debates and will oversee evaluation processes of the body and its committees. They will also guide the interaction of directors among them and between the Board of Directors and the Shareholders.
In the event of temporary or accidental absences of the President of the Bank and in a temporary way until the Board of Directors meets, the President of the Board of Directors will appoint as his deputy to one the vice-presidents who have legal representation.
Article 57. Board Meetings. The Board of Directors shall meet at least once a month on the day and at the time specified by the Board itself; and extraordinarily when summoned by itself, the Bank CEO, the Statutory Auditor, or two of its own members by means of a written notice sent to the Board members, and copied to the company’s President and to the secretary, indicating the agenda and the reason for the summons.
Summons for extraordinary sessions shall be notified at least three (3) calendar days in advance, but when all the members in office are assembled, they may validly deliberate in any place and take decisions without the need for a summons.
It may also hold remote meetings under the terms provided for by law.
Article 58. Attendance of Bank officials. The President of the Bank shall attend the meetings of the Board with authority to speak but without right to voting. The Statutory Auditor may attend under the same conditions. In addition to these, other officials of the Bank may attend, but none of them will earn special remuneration for this attendance.
Article 59. Place of meetings. The meeting of the Board of Directors shall be held at the corporate domicile or at any place, that for special cases, agree the Board.
Article 60. Functioning of the Board of Directors. The operation of the Board of Directors shall be governed by the following rules and by those determined by law, the bylaws. The Code of Good Governance and all other norms or codes of the bank.
1. It shall deliberate validly without the presence of the Bank´s President, Bank´s Secretary or other members of the Bank´s administration.
2. It shall deliberate with a minimum of four (4) members.
3. All decisions shall be made with the affirmative vote of the majority of members, except when the Law requires a higher number of votes.
4. In the event of a tie in voting proposals or resolutions, these are deemed denied. If the tie occurs when making an appointment, the voting shall be repeated, and if there is still a tie, such appointment shall be considered suspended.
5. Minutes shall be taken of all meetings, which shall be recorded in chronological order in a book, and shall include the date and time of the meeting, the names of the attendees, the matters discussed, the decisions adopted and the number of votes cast in favor, against or blank; the records left by the attendees, the appointments made and the date and time of the closing of the meeting.
6. The minutes shall be signed by the President or Vice President and by the Secretary of the meeting. The minutes of remote meetings must be signed by a legal representative and the Bank Secretary.
7. In fulfilling their functions, the directors must abide to the principles set forth in the Corporate Governance Code approved by the Board of Directors.
8. When a director finds that in the exercise of their duties they may be faced with a conflict of interest, they or any other director aware of the potential conflict, shall immediately inform the other Board members. The director in a conflict situation shall, in any event, refrain from discussing and deciding on the matter giving rise to the conflict of interest; and the Board shall deliberate and decide without the participation of the directors in conflict if they are not required to form the quorum required to deliberate and decide. Otherwise, the dispute will be submitted to the competent body according to the regulations, including special regulations for financial conglomerates.
Article 61. Functions of the Board of Directors. Functions of the Board of Directors: The Board of Directors has sufficient powers to order the performance or conclusion of any act or contract included under the corporate purpose, to make any decisions required for the Bank to fulfill its purpose, and, in particular, it will have the following functions in the development of its responsibilities related to governance, senior management, business, control, and the promotion of ethical behavior:
1. Define the Bank's general policies and strategic objectives.
2. Create and abolish, subject to the legal provisions, the branches, and agencies abroad it considers necessary.
3. Fix the schedule of salaries and extralegal benefit payments.
4. Define the general structure he deems convenient for the proper management of the Bank and Bancolombia Group and approve the creation of vice-presidencies of the Bank.
5. Designate the Bank's President, his remuneration, to state his functions, to assure his following plan, and freely remove him.
6. To appoint vice-presidents, regional vice-presidents, general auditor, and all other executives directed subordinated to the President, to fix their evaluation policies payment and to make a follow-up to their management results and to freely remove them.
7. To determine the President's alternates in his definite, temporary, or accidental absences. This without preventing the temporary power of the President pf the Board to appoint a deputy, according to terms set up in article 56 of bylaws.
8. To designate the remaining legal representatives of the Bank.
9. To authorize the establishment of affiliates and subsidiaries, subject to the legal provisions, and transfer, subscribe or alienate shares, "quotas" or right in such affiliates or subsidiaries or in other corporations or enterprises where it holds a direct share of more than 20% of the corresponding company’s stock. In any event, authorization from the Board of Directors will be required for investments or divestments in corporations where the Bank holds a share of less than 20% of their stock, when the amount of the corresponding operation is greater than 5% of the value of the equity instruments account on Bancolombia’s separate balance sheet.
10. To order the issuance and regulate the subscription of common shares maintained on reserve and regulate the issuance of shares with preferential dividend and without right to voting, when delegated by the General Shareholders´ Meeting.
11. Set the date for the ordinary session of the General Shareholders' Meeting, within the period provided under these bylaws, and summon it extraordinarily when required by the Company’s unforeseen or urgent needs or when so requested by a plural number of shareholders representing no less than ten percent (10%) of the subscribed shares. In the latter case, the CEO shall submit the request to the Board of Directors at this body’s next meeting, and the summons shall be made on the date determined by the Board.
12. To give norms to the right to voting of shareholders through electronic means, according to provisions legally applicable to the Bank.
13. To authorize the year-end financial statements, the management's report and the project on profits distribution or cancellation of losses, to be submitted to the General Meeting of Shareholders in its ordinary meetings.
14. To submit, together with the Bank's President, to the ordinary General Meeting of Shareholders for approval or disapproval, the General Balance-Sheet as of December 31, of the immediately preceding year, accompanied by full details concerning loss and profits and the remaining Financial Statements of general purpose, the project for profits distribution, the written report from the President regarding his management, and the Board of Director's report on the Bank's economic and financial condition together with pertinent accounting and statistical data and any other special data required by Law. For the latter, the Board of Directors may accept the President's report or file a different or supplemental one.
15. To determine the investment to be given to the appropriations that, with the character of special funds or of the investment reserve, has ordered the General Meeting of Shareholders, and establish or modify the policies for transitory investment of moneys not immediately necessary for the development of the business of the Bank.
16. To regulate the placement of bonds on the basis that according to the law, may determine the meeting.
17. By explicit delegation from the General Meeting of Shareholders, order donations in favor of welfare, education, or civic services for the benefit of the Bank employees.
18. To determine the levels of suitability for the approval of the banking operations upon the amount, subject, connection with the establishment, etc. When due to operative norms or by disposition of the Code of Good Governance for its electronic use and or link to a banking operation is to be approved by the Board, its approval cannot be delegated.
19. To examine, when it deems it convenient, in person or through one or several delegates thereof, the books, documents, assets, offices and branch offices of the Bank.
20. To grant authorization to the Bank Administrators, in the cases and subject to the statutory requirements, to alienate or acquire shares of the corporation when dealing with operations other than speculation.
21. To authorize new operations and financial services, when the norm so requires it.
22. To appoint Centralized Securities Deposit or a specialized entity for the keeping of Bank’s shareholder’s book.
23. Oversee the proper structure and effectiveness of the Bank's internal control, risk monitoring and legal compliance system, submit the legally required reports to the General Shareholders' Meeting in this regard and make disclosures to shareholders and other investors, using the mechanisms defined in the Code of Good Governance, the main risks to which the Bank is exposed and its control mechanisms.
24. To designate the members of the Bank's Audit Committee that will support the Board of Directors in supervising the effectiveness of the internal control system and Independence and effectiveness of the auditing.
25. To appoint members of the Risk, Good Governance, Appointment, Compensation and Development, and Audit committees and all other support committees that when adopting the Code of Good Governance, the Board deems convenient for the exercise of its functions.
26. To approve the Bank’s Ethics Code, which will establish the principles and rules of conduct that will guide the attitude and behavior of directors, employees, officers, and collaborators regulating, among other aspects, mechanisms to prevent conflicts of interests and the use of privileged information. The Board of Directors will include in the Code the establishment and existence of an Ethics Committee and will regulate its activities.
27. To adopt, through approval of the Code of Good Governance, any necessary measures in connection to the Bank's governance, its conduct, and the information it discloses, to assure full respect of shareholders and investors' rights, the adequate management of its affairs and public disclosure of its performance and assure its compliance, reporting this to the Annual General Assembly.
28. To promote respect and fair treatment of all shareholders and other securities investors, in accordance with the parameters established by the regulatory control agencies of the public stock market, the Code of Good Governance and the internal regulations of the Bank.
29. By approving the Code of Good Governance, to regulate the procedure allowing investors to retain, at their expense and under their own responsibility, conduction of special audits on the company, regarding specific and determined matters.
30. By approving the Code of Good Governance, to define any programs for information to investors, the mechanisms for adequate submission of proposals and participation in assemblies, mechanisms for appropriate attention of their interests and the system for reception of claims from investors in connection with the enforcement of the rules contained in the Code of Good Governance.
31. To carry out an annual self-assessment of its performance and the performance of the Bank's President. The evaluation must include all aspects detailed in the Bank's Code of Good Governance.
32. The Board of Directors may present proposals to the General Meeting of Shareholders in all matters considered necessary for the best operations of the Bank, including among many others a proposal for remuneration of the Board of Directors.
33. To act as a consultant body for the President and the Bank and, generally, exercise all other functions conferred on it by these bylaws and the law.
PARAGRAPH: If a takeover bid is submitted to acquire Bancolombia shares, the Board of Directors, fulfilling its duties of diligence and loyalty toward the entity and its shareholders, and in view of its capacity as a systemically important financial institution, may contract impartial third parties to comprehensively analyze and evaluate all the components of the proposal, without limiting itself to economic aspects and including its sources of funding and the capacities of the bidder, including any links to the local and international financial sector. The conclusions of the analysis contracted for consideration by the shareholders will be published to the market so shareholders can consider it when making their decision.
The foregoing is without prejudice to any confidential analyses and evaluations that may be requested by the Board of Directors for its own consideration.
Article 62. Delegation. The Board of Directors may delegate to the CEO or to a committee of Board members, whenever appropriate, for special cases or for a limited time, one or more of the functions listed in the preceding article, provided that their nature allows them to be delegated.
Article 63. Provision of vacancies. In the event of a definitive vacancy of a Director, the Board of Directors may call to a General Meeting of Shareholders to fill the vacancy, either by partial and unanimous voting or through a new election of the whole board, by the electoral quotient system as provided for in these bylaws.
CHAPTER X
PRESIDENCY
Article 64. President of the Bank – Capacity. The Government and direct management of the Bank shall be in the charge of the President who is appointed and removed by the Board of Directors at its own discretion.
Article 65. Replacement of the President. Upon temporary or accidental absences, and until the Board of Directors meet to appoint a deputy, the position of Bank's President shall be exercised by the Vice-president indicated by the president of the Board of Directors. In the event of absolute absence, that is, because of death, accepted resignation or removal, the Board of Directors shall appoint a new President. Until such appointment is made, the Presidency of the Bank shall be exercised as provided in the preceding paragraph.
Article 66. Hierarchical Superiority of the President. All the employees of the Bank, except the Statutory Auditor and his personnel shall be under the authority of the President in the performance of their duties.
Article 67. Functions of the CEO. The following are the functions of the CEO, which he or she shall exercise directly or through delegates:
1. To execute the decrees and resolutions of the General Meeting of Shareholders and of the Board of Directors.
2. To create the positions, offices, or employees that he may consider necessary for the best operations of the Bank; assign their functions, abolish or merger them.
3. To create and abolish, subject to the legal provisions, the branches, and agencies in the Colombian territory, necessary for the development of the corporate object.
4. To designate, remove and accept any resignations from the Bank's employees, as well as fix their salaries and compensation, except those whose designation and removal correspond to the General Meeting of Shareholders, to the Board of Directors or to the Statutory Auditor. All the foregoing may be done directly or through his delegates. The President shall be responsible for evaluating annually the performance of executives that are his direct subordinates.
5. To decide as to the absences, excuses and leaves of the Bank's employees, whether directly or through his delegates.
6. To order all actions concerning the acknowledgement and cancellations of benefit payments, subject to the provisions of the law and the Board of Directors.
7. To adopt the decisions related to the journalizing of depreciations, establishment of appropriations or reserves and other charges or entries to provide for depreciation, devaluation and guarantee of the Corporation's equity; method for valuation of inventories and other standards for the preparation and presentation of the inventory, the balance sheet and the profit and loss statement, subject to the laws, with the established accounting practices and the provisions of the Board of Directors.
8. To care for the collection and investment of the Bank funds and all the securities belonging to the Bank and received under custody or deposit be kept with due safety.
9. To direct the placement of shares and bonds issued by the Bank.
10. To call the General Meeting of Shareholders and the Board of Directors to extraordinary meetings.
11. To present in the ordinary meeting of the General Assembly a written report regarding the managing of the company, including the measures whose adoption he recommends to the Assembly, and to present to it, jointly with the Board of Directors, the general balance sheet, the complete detail of the statement of results and the other annexes and documents required by law. The Financial Statements shall be certified in accordance with the law. This report shall contain, among others, a description of the risks inherent to activities related to the Bank, and other material aspects relating to the banking operation, in accordance with current applicable laws and regulations.
12. To represent the Bank to the companies, corporations, or communities in which it has an interest.
13. To visit the branch offices of the Bank when he considers it convenient.
14. To perform the functions that by virtue of delegation of the General Meeting of Shareholders or the Board of Directors are conferred on him.
15. To order the Internal General Rules of the Bank, its Branch Offices and Agencies.
16. To delegate any or some of his duties on the committees or officers that he considers convenient and for concrete cases; provided that these functions are not explicitly reserved to him, or those whose delegation is forbidden by the Law.
17. The president may present proposals to the General Meeting of Shareholders in all matters he consider necessary for the best operations of the Bank.
18. Make decisions related to the operation, management and organization of the Bank's investments.
19. All others corresponding to the position by law, these Bylaws, or the nature of the position.
CHAPTER XI
LEGAL REPRESENTATIVES OF THE BANK
Article 68. Legal Representation. For matters concerning the Company, the Bank’s legal representation, in and out of court, shall correspond to the CEO and the Vice-Presidents, who may act jointly or separately.
These representatives have powers to conclude or execute, with no limitations other than those established in these bylaws in the case of operations that must be previously authorized by the Board of Directors or by the General Shareholders' Meeting, all acts or contracts included within the corporate purpose or merely preparatory, ancillary or complementary to the achievement of the purposes pursued by the Bank, and those directly related to the Bank’s existence and operation. In particular, they may settle, conciliate, arbitrate and compromise the corporate business, conclude conventions, contracts, arrangements and agreements, initiate or assist in judicial, administrative or contentious-administrative actions where the Bank has an interest or must intervene, and file all appropriate remedies under the Law; withdraw any actions or remedies they may bring; novate obligations or receivables; give or receive goods in payment; configure attorneys-at-law or -in-fact, delegate powers to them, revoke mandates and proxies, and perform other acts that ensure the fulfillment of the Bank's corporate purpose.
In the event of the absolute or temporary absence of the CEO and the Vice-Presidents, the Bank shall be legally represented by the Board members in order of appointment, except for the director acting as Chair of the Board.
FIRST PARAGRAPH: Within the different regions and zones, and for all business conducted in connection therewith, the Regional Vice-Presidents and the Zone Managers shall also legally represent the Bank, the latter with respect to the Zone under their responsibility. Zone Managers may not conclude transactions for more than 17,241 (seventeen thousand two hundred and forty-one) current minimum legal monthly wages (CMLMW), excluding the constitution of third-party guarantees in favor of the bank for which they will have no limitations on amounts.
Besides, System Managers, Branch Managers, and Deputy Branch Managers, will have legal representation as regards issues related to their corresponding offices, and up to the following amounts:
|
|
|
|
|
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| Position |
Maximum Amount |
| Deputy Branch Manager |
800 CMLMW |
| Branch Manager |
1,300 CMLMW |
| System Manager |
1,800 CMLMW |
System Managers, Branch Managers, and Deputy Branch Managers shall not be authorized to dispose of the Bank´s real estate, except in the case of financial rental and leasing operations.
SECOND PARAGRAPH: The Directors of Bancolombia’s legal areas may also be designated by the Board of Directors as legal representatives for the Bank. All other lawyers appointed by the Board of Directors for this purpose shall have legal representation exclusively for the matters and proceedings carried out before the administrative authorities, including the Financial Superintendent’s Office, and the jurisdictional branch of the public power.
CHAPTER XII
THE SECRETARY GENERAL
Article 69. Appointment. The Bank shall have a Secretary appointed by the Board of Directors, at its discretion, who shall also act as Secretary of the General Meeting of Shareholders, the Board of Directors, and the Presidency. For his appointment, the Board of Directors will accept a report prepared by a Board Committee as stated in the Code of Good Governance.
Article 70. Functions of the Secretary. The Secretary shall:
1. Coordinate the organization of the meeting of the General Meeting of Shareholders and the Board of Directors.
2. Communicate the calls to the meetings of the General Meeting of Shareholders and the Board of Directors.
3. Attend the meetings of the General Meeting of Shareholders and the Board of Directors.
4. Maintain, subject to the law, the minutes record of the General Meeting of Shareholders and the Board of Directors and authorize with his signature any copies issued thereof.
5. To oversee the Shareholder’s book.
6. In his capacity as Vice-President, exercise the Bank's legal representation.
7. Any others of special character conferred on him by the General Meeting of Shareholders, the Board of Directors, and the Presidency
CHAPTER XIII
AUDITING
Article 71. Appointment and Assumption of Office. The Statutory Auditor and its Substitute shall be designated by the General Assembly of Shareholders for periods of two (2) years, but they can be reelected indefinitely and removed by the Assembly at any time. The Substitute shall replace the principal in all the cases of absolute or temporary absence. Election of the Statutory Auditor according to Code of Good Governance, shall be based on an objective and public evaluation conducted by the Bank's Audit Committee, and submitted through the Board of Directors, on a fully transparent basis, with the previous analysis of at least two alternatives in aspects such as services offered, fees and expenses, experience, area knowledge, etc. Once elected, the Statutory Auditor and his substitute, they shall assume office, upon authorization from the Superintendency of Finance.
Article 72. Qualification. The Statutory Auditor and his Alternate shall be registered public accountants. Should a legal person be appointed as Statutory Auditor, this one shall appoint a registered accountant to audit the Bank accounts.
Article 73. Inabilities. Anybody who is a partner of the same corporation or of its affiliates, one holding any other position at the Bank, and the one he who is bound by marriage or kinship within the fourth degree of consanguinity, first civil or second of affinity, that is, copartner of the administrators and management officials, cashiers, treasures, Statutory Auditor, and accountant of the Bank may not occupy the position of Statutory Auditor.
Article 74. Incompatibilities. The Statutory Auditor shall not hold any other position either at the Bank or at its affiliates, and he is also forbidden to enter contracts with the corporation or to acquire shares thereof.
Article 75. Functions. The Statutory Auditor shall carry out the functions provided in the Second Book, Title I, Chapter VIII, of the Commerce Code, and is subject to the provisions therein, without harm to other provisions of other laws and regulations and the General Shareholders Assembly while it is compatible with the Examiner’s legal obligations.
PARAGRAPH: Revelation of findings: The Statutory Auditor, in his report to the Shareholders Assembly, shall include, in addition to what is required by law, the relevant findings he produces, so that the shareholders and other investors may rely on the necessary information to make decisions regarding the corresponding securities.
Article 76. Remuneration. The Statutory Auditor's remuneration shall be fixed by the General Meeting of Shareholders. The General Meeting of Shareholders where the Statutory Auditor is appointed shall include information related to the appropriations foreseen for the supply of human and technical resources, allocated to the performance of his functions.
CHAPTER XIII
BRANCH OFFICES AND AGENCIES
Article 77. Operation of Branches and Agencies. The branch offices shall be administered by an employee designated as Manager and the agencies shall be administered by an employee designated as Director. The Managers of the Branch Offices are authorized to act as legal representatives of the Bank in all the business done in relation to such offices.
Article 78. Coordination. The Board of Directors may ascribe several branch offices and agencies in the same or several municipalities to an administrative unit under the denomination indicated by the Board, in the charge of the immediate direction of an employee whose functions and title shall also be determined by the Board of Director.
CHAPTER XIV
BALANCES, PROFITS, RESERVE AND DIVIDENDS
Article 79. Intermediate Financial Statements. The Bank's intermediate financial statements shall be prepared on the last day of each month and shall be submitted to the Superintendency of Finance.
Article 80. Financial Statements. The company fiscal year shall be the calendar year. As of the thirty-first (31) of December, the company shall prepare a General Financial Statement, an income statement corresponding to the fiscal year ending on such date, and an inventory detailing all assets and liabilities of the company, in accordance with all legal requirements and established accounting regulations, which shall be submitted for consideration to the General Shareholders Meeting, together with the reports, projections and other documents required by law.
The company shall state the economic result of the company as a profit or loss per each issued share. This does not preclude that such results be, in addition, expressed in the aggregate, if so, accepted by the Shareholders Meeting.
Original copies of the General Financial Statement, together with the documents and corresponding attachments, will be sent to the Superintendency of Finance in the manner established by the legal provisions and in accordance with the instructions of the Superintendency.
Financial Statements shall be published in the manner provided by the relevant regulations.
PARAGRAPH: The Bank shall also present and make available, as applicable and in the manner and periodicity required by law, the consolidated financial statements with its subsidiaries, stating the financial condition, the results of operation, changes in the capital and the cash flows between the Bank and its subsidiaries.
Article 81. Legal Reserve. The Bank has established a legal reserve. Such reserve must amount to at least fifty percent (50%) of the subscribed capital, for which purpose ten percent (10%) of each year's profits shall be taken. Once the said limit has been reached, a lesser percentage or no amount may be set aside for said reserve. However, should the reserve fall below fifty percent (50%) of the subscribed capital, it shall be necessary to reach the limit in the manner stated above.
Reduction of the reserve below the minimum limit shall be allowed for the purpose of covering any losses more than non-distributed profits.
Article 82. Distribution of profits. Once the Balance Sheet has been approved, the appropriation for the payment of taxes of the corresponding taxable year has been made, and the transfers to the legal reserve, the General Meeting of Shareholders shall proceed to decree the distribution of the net profits, providing for reserves and dividends. The distribution of profits shall be made pro rata to the portion of the nominal value of the shares already paid.
The amount of the profits to be distributed may not be less than the minimum percentage that shall be distributed among shareholders, according to the laws, except when the General Meeting of Shareholders determines otherwise, with the majority established by the same laws, and provided that the undistributed benefits are assigned to the legal reserve, or to the statutory and voluntary reserves, prior fulfillment of the provisions contained in the law and in these bylaws.
PARAGRAPH: The General Meeting of Shareholders may allocate a portion of the profits to welfare, education, or civic services, or to support economic organizations of the Bank employees.
Article 83. Shares with Preferred Dividend and without Right to Voting. Shares with preferred dividend, and without right to voting, are entitled to payment, on the profits of the fiscal year, after canceling the losses affecting the capital, once the amount that shall be legally set apart for the legal reserve has been deducted, and before creating or accruing any other reserve, of a minimum preferred dividend equal one per cent (1%) yearly on the subscription price of the share, provided this dividend is higher than the dividend assigned to ordinary shares, otherwise, the latter shall be recognized. The dividend received by holders of ordinary shares may not be higher than the dividend assigned to preferred shares. Payment of preferred dividend shall be made on the time and manner established by the competent corporate body and with the priority indicated by the law.
Article 84. Dividend periods. The dividend periods may be different from the periods of the general balance sheet. It is incumbent upon the General Meeting to determine such dividend periods, the effective date of such, the system and place for its payment.
Article 85. Claim of dividends. The Company shall not recognize interest on dividends that are not claimed on due time and they shall remain in the charge of the Bank at the disposal of their owners.
Dividends not claimed within ten (10) years after they are caused are not withdrawable and shall be transferred to the reserve.
Article 86. Dividends in stocks. Subject to the decision of the General Meeting of Shareholders, the dividend may be payable in stock. This decision shall be compulsory to the stockholder's provided it has been approved of the majority in the manner provided for on number 3 of article 46 of these Bylaws. In the absence of this majority, the stockholder is free either to receive the stock dividend or to demand payment in cash.
Article 87. Absorption of Corporate Loss. Losses are cancelled with the reserves especially assigned to this purpose, with the undivided profits, with the Reserve Fund and, lastly, with the profits of the subsequent fiscal years.
The reserves whose end is the absorption of specific losses may not be used to cover different losses, unless otherwise provided by the Stockholder's Meeting.
Before losses from previous fiscal years affecting the capital are cancelled, profits may not be distributed; the losses affect the capital when because of them, the net capital decreases below the subscribed capital.
CHAPTER XV
DISSOLUTION AND LIQUIDATION
Article 88. Dissolution. The corporation shall be dissolved:
1. Due to the expiration of its term unless it is validly extended before its maturity.
2. When 95% or more of the issued stock belong to a single stockholder.
3. By reduction of the number of stockholders below the number required by the law for its establishment and operation.
4. By decision of competent authority in the cases provided by the laws.
5. By decision of the General Meeting of Shareholders.
6. Because of the impossibility for the corporation to develop the corporate purpose, the termination of it or the extinction of the thing or things object of its exploitation.
7. By any other cause set forth in the laws.
If legally possible, the Corporation may avoid that the occurrence of a cause of dissolution may have irreversible effect, if it promptly adopts the measures and remedies provided or permitted by the law and if it carries out the formalities demanded by the situation.
Article 89. Dissolution formalities. After the dissolution of the bank is declared, due to any causes expressed in law or in its bylaws, compliance with formalities stated in these bylaws and in norms in force shall be followed.
Article 90. Liquidation. Once the corporation is dissolved, its liquidation shall be performed therewith. It shall not, therefore, initiate new operations in the development of its object and shall maintain its legal capacity only for the acts necessary for the immediate liquidation.
The name of the Bank, once dissolved, shall always be accompanied with the legend, "under liquidation".
Article 91. Appointment of the liquidator. The liquidation and division of the capital shall be performed, subject to the legal provisions, by a special liquidator appointed by the General Shareholders' Meeting, without prejudice to the fact that the General Meeting may appoint several liquidators and determine, in such event, if they shall act jointly or separately.
The General Shareholders' Meeting shall appoint an alternate liquidator. Until the appointment of the liquidator and his alternate are made and registered at the Chamber of Commerce of the Corporate domicile, the President of the Bank, at the moment it starts its liquidation, shall act as liquidator and the members of the Board of Directors shall act as his alternates in the order of precedence, except for the chairman of the Board.
Article 92. Rules for winding up. The Company will be wound up and its assets divided under mercantile law, with special provisions for the winding up of financial institutions, including applicable regulations under the Civil Code, and observing the following rules:
1. The General Shareholders' Meeting shall be convened and shall meet at the times, in the manner and according to the terms prescribed for ordinary meetings and, extraordinarily, as many times as it is convened by the receiver, the Statutory Auditor, the Financial Superintendent’s Office, or when requested by a plural number of shareholders representing no less than 10 % of the subscribed shares, and subject to the provisions of these Bylaws. At such meetings, it shall perform all functions compatible with the state of liquidation and, in particular, those related to freely appointing, changing and removing the receiver(s) and their deputies, holding them to account, determining the assets to be distributed in kind and establishing priorities for the realization of assets, forms and deadlines for realization, contracting the price of the receivers’ services and adopt any other appropriate determinations by law.
2. The General Meeting of Shareholders may determine which property shall be distributed in kind, fix the value of such property or the manner of determining it, establish the manner of its assignment and authorize the liquidator to carry out the corresponding distribution, subject to the requirements of the law. The meeting shall have the power to authorize the assignment of in "proindiviso" assets by groups of shareholders, make arrangements for the sale of assets through private treaty among the shareholders or with the participation of external bidders, and arrange for the use of other approaches deemed proper.
3. Absolute majority of the votes present, shall be sufficient for the approval of the periodic accounts submitted by the liquidator, or of the occasional accounts he may be required to give as well as to authorize the assignment of property in kind, payments in kind, to carry out the transactions necessary or convenient to facilitate or conclude the liquidation, for the approval of the final account of the liquidation and the minute of the distribution.
Article 93. Duties of the liquidator. The liquidator or liquidators shall exercise their functions subject to the following standards:
1. They shall inform all creditors, in the manner required by the law, about the condition of liquidation of the Bank.
2. They shall make the inventory of assets and liabilities and submit it to the approval of the Superintendencia Financiera (Superintendency of Finance), in compliance with the pertinent legal provisions.
3. They shall also conclude any pending operations, require that previous administrators render account of the management of the Company's business, collect the "active" credits of the corporation, alienate the corporate property, subject to the rules approved by the meeting, maintain and custody the books and the correspondence, render accounts or present statements of liquidation and, in general, do anything deemed necessary for the extinction of the Bank.
4. The liquidator or liquidators shall cancel all the external liabilities before distributing the balance to the stockholders.
5. The balance of the assets shall be distributed among the stockholders, pro rata of the shares owned by each one.
6. The minute of distribution, once approved by the meeting, shall be legalized at a notary of the corporate domicile, together with the inventory procedures and the judicial action, in its case.
7. Once the final account of the liquidation has been approved by the General Meeting of Shareholders, each shareholder will be given his part in the manner determined by the law.
8. Once the liquidation has been duly concluded, its final approval shall be requested from the Superintendencia Financiera (Superintendency of Finance).
Article 94. Administrative liquidation. When the Superintendente Financiero (Superintendent of Finance) has the assets, property, and business of the corporation under his possession, for its liquidation, the relevant legal provisions shall be applied.
Article 95. Price-Matching Obligation. (a) In the event that, after June 26, 2024 (the "Cut-off Date"), any beneficial owner of common shares in the Bank that owns less than 25% of such shares on the Cut-off Date should acquire, in one or more transactions, directly or indirectly, during a period of 12 months following the first acquisition after the Cut-off Date ("Matching Period One"), ordinary shares that lead them to have a shareholding interest greater than 25% of the Bank’s common shares, will be obliged to pay to each Seller that disposed of their common shares during Matching Period One, an amount equal to the difference between, (x) the highest price per common share in the Bank paid by the beneficial owner during Matching Period One and, (y) the Bank's common share price paid to Seller (“Matching Value One"). (b) Any beneficial owner who acquires common shares in the Bank via an Initial Takeover Bid, and subsequently acquires, in one or more transactions, directly or indirectly, during a period of 12 months following the award of the Initial Takeover Bid ("Matching Period Two"), additional shareholding that increases its percentage of the Bank's common stock by 5% or more, shall be obliged to pay each Seller that disposed of its common shares in the Bank during Matching Period Two, an amount equal to the difference between, (x) the highest price per common share of the Bank paid by the beneficial owner during Matching Period Two and, (y) the price per common share in the Bank paid to the Seller (“Matching Value Two"). Once Matching Period Two has expired, if the beneficial owner makes a new Takeover Bid for common shares in the Bank, that offer shall be considered a new Initial Takeover Bid and the provisions of this Article 95 shall be reapplied.
FIRST PARAGRAPH: Under this Article 95, (i) "acquire" shall mean any act by which a person or group of persons becomes, directly or indirectly, the beneficial owner of common shares in the Bank; (ii) "beneficial owner" shall have the meaning given to this term in Decree 2555/2010, Article 6.1.1.1.3; (iii) the "Seller" shall mean a holder of common stock in the Bank that sells his or her shares subject to subparagraph (a) or (b) of this Article 95; (iv) "Initial Takeover Bid" shall mean a public offering of shares (“Takeover Bid”) under the terms of Decree 2555, Article 6.15.2.1.1., awarded after the Cut-off Date; (v) "Matching Value" shall mean Matching Value One, or Matching Value Two, as applicable to subparagraph (a) or (b).
SECOND PARAGRAPH: When Takeover Bid or Bids are made in United States Dollars or another currency, the sum in Colombian pesos calculated at the current representative market rate certified by the Colombian Financial Superintendent on the date or dates defined in the corresponding takeover booklet will be used to determine the price and apply the provisions of this article.
THIRD PARAGRAPH: For payment of the Matching Value to Sellers: (i) A beneficial owner that has acquired common shares in the Bank under subparagraph (a) or (b) of this Article 95 (the “Buyer") will be obliged to notify the Bank (1) that the obligation to pay the Matching Value exists, (2) the date on which the said obligation arose, and (3) the period covered by Matching Period One, in the case of subparagraph (a), or the expiration date of Matching Period Two, in the case of subparagraph (b). (ii) Once the Bank receives the information referred to in the preceding paragraph from the Buyer, it shall inform the market, using the appropriate reporting mechanism. (iii) The Buyer shall, no more than forty-five calendar days after the obligation to pay the Matching Value has arisen, lift the stock exchange reserve and grant any and all other consents and documents required to make effective the provisions of this Article 95, and to allow Sellers to verify if they are creditors of the Matching Value. Likewise, and during the same forty-five calendar day period, the Buyer shall establish the process for, directly or through a third party, receiving requests for payment of the Matching Value from Sellers, verify whether payment is applicable, and perform any and all other activities required for payment of the Matching Value to the Sellers. (iv) Buyer shall pay the Matching Value to Sellers no later than 15 business days from the date on which it receives the corresponding payment request from Seller.
FOURTH PARAGRAPH: If the Buyer fails to meet its reporting obligations under this Article 95 or fails to pay the Matching Value under the terms set forth in this Article 95, the Buyer agrees that (i) it will be in default and will therefore pay default interest at the highest rate permitted by law as of the date payment was due under the Third Paragraph; and (ii) it will be liable for any other damages caused to each holder of common shares in the Bank due to its non-performance or late or defective performance of its obligation to pay the Matching Value.
EX-11.1
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cib-20241231xexx111.htm
EX-11.1
Document
Exhibit 11.1
Code of Ethics and Conduct
2024
Dear Team,
Employees of Grupo Bancolombia are recognized for being an example of ethics and integrity. We have a clear vision: we always do what is right, even when no one is watching! We know that integrity and ethical consistency between what we do and say are the foundation upon which our future, that of our families, and that of the organization in all the countries where we operate are built. Ethical culture is the basis upon which we implement our purpose of promoting sustainable development for the well-being of all.
Amid present and future challenges, both our strategy and our culture are dynamic and evolving. As part of that evolution, this Code of Ethics and Conduct offers an updated guide to the behaviors we must practice among ourselves and towards different stakeholder groups.
In this update, I emphasize the importance of being able to integrate behavioral sciences. Understanding how people think, make decisions, and behave allows us to create a more comprehensive framework adapted to the reality of our daily interactions and is essential for promoting integrity at all levels of our organization. This was achieved through careful listening to our employees and stakeholders, ensuring that our values, principles, and cultural traits declared in Movement B are aligned.
I invite you to have this tool at hand every day, so that in the face of any situation that challenges our conduct, we have it as a guide. Remember that a Bancolombia employee always chooses prudence as the first option. Let’s consult and apply our code of ethics whenever we have any dilemma. By doing so, we strengthen our organizational culture based on ethics and transparency, which have been the foundation for continuing to be recognized as the best place to work, the company with the best reputation and corporate governance, as well as one of the most sustainable banks in the world.
Sincerely,
JUAN CARLOS MORA
CEO, Bancolombia
Table of Contents
1.Why Do we Need This Code?
2.How Do We Connect with Our Stakeholder Groups?
• How is the Group Culture Built?
• How Do We Engage with Our Stakeholder Groups?
• How Do We Engage in Digital Environments?
• How Do We Use Group Resources?
3.How Do We Manage Risks?
• How Do We Prevent Fraud, Corruption, Money Laundering, and Terrorist Financing?
• Precautions for the Use of Information and Personal Data.
• Ethical framework for analytical and artificial intelligence systems
4.How Do We Handle Potential Conflicts of Interest?
• When Can Conflicts of Interest Arise?
• How Can We Manage Personal Investments?
• ¿How Do We Handle Gifts and Invitations?
5.What Mechanisms Promote and Support Our Ethical Conduct?
• Ethics Committees.
• Compliance Areas.
• Whistleblowing Channels and Whistleblower Protection.
6.What is the disciplinary Procedure?
1 Why do we need this Code?
“It reflects our purpose, to promote sustainable development for the wellbeing of all.”
1.1 Our extensive trajectory as Grupo Bancolombia (hereinafter, “Group”) in the countries where we operate is characterized by the responsibility of our businesses (both financial and non-financial in nature), and it is through them that we seek to realize our purpose.
1.2 Our decisions adhere to the law, ethics, and integrity, and take precedence over immediate commercial results. These are the pillars upon which we have built sustained growth.
1.3 The Code of Ethics and Conduct embodies the declaration of an organizational culture, which employees are obligated to practice in our internal relationships and with the various stakeholder groups.
1.4 We understand that the Code of Ethics and Conduct cannot regulate all of our actions or anticipate all ethical dilemmas faced by employees, which is why we rely on good judgment, common sense, and prudence to guide our actions at all times. Therefore, we emphasize that what is not expressly prohibited is not tacitly permitted.
1.5 The provisions of this Code apply to employees and apprentices of all entities within the Group, the Management Teams of each of the Group’s companies, members of the Boards of Directors or Management Boards1, Senior Management2, as well as certain third parties with whom we have a relationship and who adhere to our Code. Hereinafter, and for the exclusive purposes of this Code, we will refer to all of them as “employees”.
1.6 Because ethics transcends geographical and cultural barriers, this Code has corporate scope and was approved by the Boards of Directors or Management Boards of each of the following entities within the Group: Bancolombia, Valores Bancolombia, Fiduciaria Bancolombia, Corporación Banca de Inversión Bancolombia, Banistmo and its subsidiaries, Bam and all companies that are part of the Agromercantil Financial Group, Bancoagrícola and its subsidiaries, Bancolombia Panama and Bancolombia Puerto Rico. Our suppliers are subject to the Ethics and Conduct Guidelines for Suppliers, which, along with this Code, are available to the general community on our corporate websites.
1.7 The Corporate Ethics Committee establishes guidelines for the dissemination of this Code and the implementation of awareness and assessment activities. Likewise, for its update, it defines activities led by the Compliance Vice Presidency through its corporate departments and in the different entities that make up the Group
2. How Do We Connect with Our Stakeholder Groups?
“Our cultural traits are the foundation of our decisions, actions, and relationships”.
HOW IS THE GROUP CULTURE BUILT?
1 Members of Boards of Directors or Management Boards are included in the term “employees” only for the purposes of this Code; they have no employment relationship with the Group.
2 These are the Presidents (or equivalent positions) and Corporate Vice Presidents of Grupo Bancolombia.
2.1 Within the Group, we are convinced that individuals make a difference. Therefore, our organizational culture is built on ethical principles and expressed through our cultural traits, aiming for each employee to be the best version of themselves.
2.2 Our commitment aligns with sustainability, corporate governance, and ethics. Therefore, it is crucial that our employees’ actions are consistent with this commitment and reflected within the following definitions of the six (6) cultural traits:
CUSTOMERS
Loyalty, preference, and the well-being of our customers are our raison d’être
HUMAN BEING
People make the difference
INTEGRITY
Our honesty, coherence, and rectitude make us trustworthy.
EXTRAORDINARY PERFORMANCE
We always aim to be our best selves and exceed our goals.
SUSTAINABLE GROWTH
We take pride in our purpose to promote sustainable economic development for the well-being of all.
DYNAMISM
We are passionate about innovation, agility, efficiency, and transformation.
2.3 We firmly believe that each person, regardless of their origin, gender, age, identity, or creed, brings a unique perspective that enriches our organization. Therefore, we promote respect and provide the necessary tools and resources for the personal and professional development of each member of our community.
2.4. We are committed to promoting, respecting, and recognizing human rights as basic, inherent, and essential prerogatives of individuals. Therefore, we reject any attempt or violation of these rights and adhere to the International Charter of Human Rights.
2.5 Employees are the essence of the Group: it is us who deploy the strategy and make the business model possible. Additionally, we protect and strengthen the Group’s reputation through behavior consistent with the law and organizational culture. Therefore, our selection and hiring practices are aimed at identifying and engaging individuals who, beyond their capabilities and talents, reflect who we are and what we believe in. These practices are transparent and focus on merit, competencies, and candidates’ knowledge to ensure that those who are part of our organization reflect its identity and culture. We ensure diversity in our processes;
therefore, we form teams where characteristics such as age, ethnicity, cultural identity, disabilities, religion, ideology, gender, gender identity, sexual orientation, marital status, family composition, or socio-economic backgrounds are not barriers.
Diversity
How do I contribute to diversity in our team?
Do I value and respect diverse perspectives?
Do I learn from the experiences of my diverse colleagues?
Equity
Do I recognize inequalities in the workplace?
Do I ensure equal opportunities for all?
Do I address concerns about equity fairly?
Inclusion
Do I foster an environment where everyone feels valued?
Do I challenge exclusionary behaviors?
Do I promote collaboration among diverse colleagues?
2.6 We have policies aimed at promoting equal opportunities for candidates, regardless of their gender. In the performance evaluation of our employees, the criteria and mechanisms used are free from biases, associated with models for managing and developing competencies.
Additionally, we recognize that expanding towards comprehensive solutions and ecosystems is a significant opportunity to strengthen our relationship with customers and consolidate our presence in the market. In this regard, we commit to fostering a culture where responsible innovation and strategic collaboration with third parties and allies prevail. We strive to deeply understand the needs of our customers, promoting easy and relevant solutions that inspire confidence and loyalty.
HOW DO WE CONNECT WITH OUR STAKEHOLDER GROUPS?
2.7 In our daily interactions, our relationships must be consistent with the Group’s higher purpose, acting competently and integrating our human and technical skills to achieve outstanding results for each of the following stakeholder groups: In our actions and decisions, we must consider the loyalty and preference of our customers. Therefore, in our relationship with financial consumers, we must:
2.8 FINANCIAL CONSUMERS
a. Strive to clearly understand their needs to build a responsible and close relationship.
b. Promote an environment of trust through efficient, effective, and inclusive service.
c. Provide empathetic, close, and respectful attention that complies with quality and service standards and protects our financial consumers (potential customers, clients, and users).
d. Provide truthful, sufficient, and clear information that allows financial consumers to adequately understand their rights and obligations, as well as the costs of different products, channels, and services.
e. Communicate and explain the different channels and mechanisms established by the Group’s companies to address their requirements, as well as the figure of the Financial Consumer Defender for Colombia or any client protection structure, as appropriate for each country.
f. Implement easy and reliable solutions for our customers. g. Select and manage counterparties3 with sound judgment, in accordance with our ethical principles and risk management systems, including those related to the management and administration of conflicts of interest.
2.9 SHAREHOLDERS
In the pursuit of value and superior results for our shareholders, we require the permanent challenge and extraordinary performance of our employees. Additionally, we will strictly fulfill the duties and responsibilities to which we are committed in our relationship with this stakeholder group.
2.10 AUTHORITIES AND SUPERVISION, MONITORING, AND CONTROL BODIES
Our relationships with the organization’s control areas, especially with Internal Audit, supervision, monitoring, and control bodies, as well as other authorities and public bodies in the countries where the Group operates, will be conducted within the framework of the law, with transparency, respect, and cordiality, and ensuring compliance with all commitments.
2.11. SUPPLIERS
2.11.1 We are responsible and transparent in supplier selection, hiring, and monitoring processes, building teams committed to outstanding performance, sustainability, and compliance with the Ethics and Conduct Guidelines for suppliers and allies.
2.11.2 We are objective and support our decisions with technical, transparent, and ethical criteria, freely and autonomously, ensuring the detection and management of conflicts of interest.
3 Third parties with whom treasury business, collective investment fund management, and delegated portfolio management, and brokerage firms or securities houses, conduct transactions on their own behalf or on behalf of third parties, on securities or assets for which they are authorized, either in a trading system, exchange, or over-the-counter market; additionally, in accordance with the Counterparty Risk Management System (SARIC), applicable for Colombia, a counterparty is the designation that includes the clients of a brokerage firm and those with whom a brokerage firm conducts transactions on its own behalf or on behalf of third parties, on securities or assets for which they are authorized, either in a trading system, exchange, or over-the-counter market.
2.11.3 Contracts and processes derived from them seek the best cost-benefit relationship for the Group at the time of contracting and during the commercial relationship.
2.12. COMPETITORS
2.12.1 Healthy, free, and fair competition is a fundamental element in all our operations and relationships with other financial and non-financial entities. Therefore, as employees, we must avoid, among other things:
• Making comments that may affect the image of competitors or contribute to spreading rumors about them.
• Engaging in acts that may cause confusion or deception to customers.
• Engaging in anticompetitive practices, including but not limited to, agreements aimed at limiting or restricting free competition, abusing dominant market positions if they exist, and engaging in unilateral acts restrictive of competition.
2.13 MEDIA AND PUBLIC OPINION
Through authorized spokespeople in established channels for this purpose, and in cases where not prohibited by regulation, we define the communication strategy in the Group and provide corporate information to sensitize public opinion about our activities, products, channels, and services, promoting financial education and inclusion.
2.13.1 Information disseminated by the Group in compliance with national and foreign regulations must be truthful, clear, timely, and reflective of our integrity.
2.13.2 Presidents (or equivalent positions) of Group companies and employees expressly authorized for this purpose may be the only authorized spokespersons of their respective entities and must, with empathy, promote cordial and respectful relationships with the media and, in general, with public opinion.
2.14 EMPLOYEES
Members of the Boards of Directors or Boards of Administration of Group companies define our ethical principles, guide our behavior, and ensure that business results reflect behaviors consistent with this Code and the law.
2.14.1 Leadership positions in any of the Group’s companies must promote our organizational culture by example. This entails identifying and resolving situations where their teams face ethical dilemmas, involving the Compliance department when their proper and timely management requires advice (to learn more about identifying and managing conflicts of interest, see Chapter 4, How do we act in the face of potential conflicts of interest?). It is important that leaders understand the personal, social, economic, and labor aspects of their team members to guide their development and identify possible warning signs, always through an empathetic, close, and respectful relationship, respecting privacy and confidentiality.
2.14.2 Our internal relationships must be framed within our organizational culture, defined by our cultural traits, this Code, and in strict compliance with our Internal Work Regulations and our Good Governance Code.
2.14.3 As employees, we must promote collaborative work without geographic barriers, adding diverse skills that facilitate learning and ensure gender equality and inclusion through empathetic, respectful, and close relationships with each other and with different stakeholder groups.
2.14.4 We ensure that variable remuneration is consistent with performance, has limits, and does not incentivize incorrect behavior, in order to avoid inappropriate incentives that undermine the integrity promoted by the Group. We have a methodology in the compensation model that guarantees bias-free remuneration, which does not distinguish age, educational level, health condition, ethnicity, gender, cultural identity, sexual orientation, or socioeconomic background.
2.14.5 We reject all forms of illegal or abusive employment and any violation of human rights, including discriminatory acts, workplace or sexual harassment, disrespect, mistreatment, or physical or psychological abuse. As employees, we must, without distinction, build respectful relationships, fostering a positive and inclusive work environment. Any complaint we make will be promptly received and managed by the Talent and Culture department. Through an investigation, actions for attention, reparation, prevention, and non-repetition will be deployed in cases where required.
2.14.6 The safety, health, and well-being (physical, mental, and emotional) of our employees are fundamental to achieving superior results. Therefore, all our leaders must promote a healthy, safe, productive work environment, and equal opportunities for development of capabilities. Additionally, we support our employees and their families in all the places where we operate through strategies focused on their holistic well-being4.
2.14.7 Our comprehensive risk management promotes self-management and self-control, therefore, the activities of the control and audit areas complement those of the direct responsible for executing processes and subprocesses. We are all responsible for knowing and complying with the Group’s internal policies and the controls associated with their functions, which is why we design training courses, some of which are mandatory and must be completed annually.
2.15 PUBLIC ENTITIES, THEIR OFFICIALS, AND COLLABORATORS
Entities and authorities provide a framework of action and essential inputs for the development of our businesses. Our interactions with them and their officials will always be within the framework of the law, transparency, and sound business practices, in a context of respect, collaboration, and under the principles defined by the Group, particularly that of zero tolerance for acts of corruption.
2.16 ENVIRONMENT
2.16.1. Within the Group, we are committed to preserving the environment and natural resources. Therefore, we support and promote initiatives that foster sustainable businesses and integrate elements related to this issue into our risk methodologies.
2.16.2. We raise environmental awareness through environmental partnerships with the public and private sectors, non-governmental organizations (NGOs), and the community at large. Additionally, we encourage our employees to actively participate as volunteers in various sustainability projects aimed at benefiting vulnerable communities.
2.16.3. We evaluate environmental, social, and economic aspects, including good corporate governance, in the projects we finance or invest in, and we guide our clients towards the implementation of projects and activities responsible for the environment.
2.16.4. We support high-impact social programs that contribute to human capital development and the reduction of inequality.
2.16.5 We have an ESG (Environmental, Social, and Governance) governance structure within the organization, from the Board of Directors to each vice presidency, with defined roles and responsibilities
4 For Bancolombia, there is the CONTIGO Line designed to provide legal and psychological support and guidance to employees, should they require expert assistance in personal or work-related matters concerning violence, discrimination, abuse, depression, anxiety, or any other related issue.
regarding sustainability issues, allowing us to articulate environmental, social, and economic trends throughout the organization.
2.16.6 We comply with local and international regulations related to sustainability and participate in local and international groups to influence and advance sustainability goals such as climate change, biodiversity, among others.
HOW DO WE ENGAGE IN DIGITAL ENVIRONMENTS?
2.17 Digital environments (including our own social media, third-party social networks, and instant messaging services) are spaces for conversation and permanent interaction for all aspects of daily life. Therefore, we must protect our reputation and that of the Group on social and digital platforms. Understanding the impact and reach of these environments, we must observe the following:
Impact on institutional image:
1. Our behaviors as Group employees are the same inside or outside the organization, including our digital environment.
2. We are aware that we are not official spokespeople for the organization, and having a personal social network does not make us one. We must always make our posts on a personal basis.
3. We understand that, although social networks are open spaces, within the Group, we act with respect and do not accept any discriminatory or offensive expression from its employees against individuals or other organizations.
4. We are careful about what we say and do in the digital arena, and we do not promote negative conversations or those that directly or indirectly affect the organization and its stakeholder groups.
5. If we wish to use our social networks to promote activities for political purposes, we avoid presenting ourselves as Group employees. In other words, our posts should not relate to both roles.
Confidentiality Protection:
1. We always protect confidential information and any data that may affect the organization and its stakeholders.
2. Under no circumstances do we request or expose personal data or contact information, whether our own or of a third party.
Use of Official Channels:
1. When we receive inquiries or want to share information about Bancolombia Group matters, we always use the appropriate channels and the organization’s official stance.
2. We understand that in publications of the organization’s products and/or services, we must always use authorized materials and commercial language, including terms and conditions. If using graphic elements, they must be provided by the organization, and we should not create our own designs.
3. We do not create spaces or groups on social media platforms on behalf of the organization.
4. We exercise caution when sharing audio or text on digital platforms that can quickly go viral, with potential personal reputational consequences for the Group or its stakeholders.
HOW DO WE UTILIZE GROUP RESOURCES?
2.18 Assets owned by Group companies or under their administration must be used responsibly in performing the duties of each position and for the purposes for which they were acquired.
2.19 The use of digital communication tools and channels (email, internet, intranet, chats, and technological, computer, and office tools, among others) is for informational purposes, to effectively carry out our job functions. Unless explicitly required by job functions or with written authorization, changes to equipment settings are not allowed, unless they jeopardize operations, technological infrastructure, or affect the integrity, availability, or confidentiality of information.
2.20 Personal use of these means must be exercised with good judgment, avoiding any interference with the fulfillment of job duties and complying with all regulations issued by competent authorities or by the Group company for which they work, understanding that:
• all transmitted, created, modified, sent, or retrieved data are the property of the Group and may be monitored when applicable regulations allow, without the need for authorization of any kind;
• inappropriate use constitutes a violation of the provisions of this Code. Without limiting the foregoing, we expressly prohibit the use of Group computer resources for the following purposes:
• Storing, distributing, editing, or recording offensive, racist, pornographic, terrorist, or offensive material to any of our stakeholder groups.
• Distributing political advertising or engaging in political campaigning. • Fraud, extortion, defamation, spreading rumors about any person, creating panic, spreading computer viruses.
• Using technologies and computer resources that undermine the integrity and reputation of any person, their equipment, or their information.
• Engaging in online gambling
• Sharing access keys to software legally used by Group companies.
• Installing software or downloading videos, music, games, or information without legally acquired licenses.
• Allowing third parties to install software on Group equipment.
3. How do we manage risks?
“We conduct comprehensive risk management committed to the evolution of the business and the superior experience of our customers.”
The entity’s comprehensive risk management is developed in compliance with current regulations (where applicable) and internal standards defined by the Board of Directors, which, for its supervisory functions, is supported by the Risk Committee, tasked with accompanying it in the approval, monitoring, and control of policies, methodologies, tools, guidelines, and strategies for the identification, measurement, control, and mitigation of risks.
HOW DO WE PREVENT FRAUD, CORRUPTION, MONEY LAUNDERING, AND TERRORISM FINANCING?
3.1. We are committed to conducting our business in strict compliance with the internal standards voluntarily adopted and the laws and regulations of the jurisdictions in which we operate. Therefore, we seek to prevent the commission of crimes.
PREVENTION OF MONEY LAUNDERING, TERRORISM FINANCING, AND CORRUPTION IN OUR OPERATIONS
3.2 Financial institutions, as guardians of the financial system, have the obligation to prevent money laundering and terrorism financing (ML/ TF). Likewise, we must protect ourselves from being used for any criminal conduct preceding money laundering. These vary from jurisdiction to jurisdiction but include, among others, drug trafficking, terrorism, and corruption-related offenses.
3.3 In line with the above, the Group has established a risk management system to prevent money laundering, terrorism financing, and other related risks. Our corporate system includes policies, procedures, methodologies, and tools for the identification, measurement, control, and monitoring of these risks. This requires all Group employees to comply with the rules, policies, and procedures outlined in the risk management system, including the execution of controls to prevent money laundering and terrorism financing
3.4 In particular, for the effective performance of the commercial and operational roles of our employees and suppliers, we follow the following criteria, even if this entails prioritizing them over achieving commercial objectives:
1. Base management on customer knowledge: Gather timely and complete necessary customer information, such as the onboarding process and routine updates to manage alerts, complying with the most demanding requirements for knowing national or foreign clients representing a money laundering or terrorism financing risk for the entity, according to their profile or functions.
2. Identify and escalate to compliance areas: Use established channels to escalate any unusual activity detected and cooperate with the necessary procedures for evaluation.
3. Manage customer control lists: According to the indications arising from matches of your current and potential customers on the control lists.
4. Update knowledge: On money laundering prevention topics through mandatory training and other training opportunities.
3.5 Compliance department employees will have among their responsibilities evaluating unusual operations to determine if they are justified or if they are suspicious. When the Compliance Officer determines that an operation is suspicious, they must report it to the competent authority on behalf of the respective Group company.
COMPLIANCE WITH TAX AND FISCAL OBLIGATIONS
3.6 We are committed to complying with the tax and fiscal duties applicable to our companies; therefore, as employees, we must align our actions with the fulfillment of our policies, which include, among others:
• Complying with tax obligations according to current regulations and ensuring compliance with laws and regulations in each country.
• Guaranteeing the payment of taxes, fees, and contributions owed in the locations where we operate, considering the use of alternatives and options available in tax laws.
• Disclosing to stakeholders, in the annual report, the resources allocated to the payment of taxes, fees, and contributions in each country where we operate.
• Not engaging in tax evasion operations. Nor conducting operations in jurisdictions classified as non-cooperative or with low or no taxation according to the standards of tax havens defined by the OECD.
• Not participating in artificial tax structures without real economic justification, business purpose, or lacking commercial substancel.
• Identifying, measuring, monitoring, and mitigating tax risks under existing tax principles in the respective country where we operate.
• Timely submitting and paying tax declarations.
• Recognizing transactions conducted between related parties by applying the Arm’s Length Principle. These transactions are documented and reported to each tax authority.
ANTIFRAUD AND ANTICORRUPTION
3.7 As we have mentioned, in the Group, we are committed to respecting and protecting human rights. Therefore, we seek to prevent, measure, and mitigate potential risks that could lead to a violation of these rights, whether through concealment, financing, or any other form of tolerance or support. We exercise this commitment in our operations, ensuring that our alliances with external entities, the projects we invest in and finance, and our suppliers and other stakeholder groups are aligned with our declaration and action in favor of human rights.
3.8 As actors in the financial system, and aware of our role in the countries where we operate, we lead by example and therefore do not tolerate acts of fraud and corruption. Additionally, under the agreements we enter into with our suppliers and partners, we require them to adopt the same standard through the Ethics and Conduct Guidelines for Suppliers and contractual clauses they subscribe to, as well as with our partners and the companies in which we invest.
3.9 The prohibition extends to any form of fraud or corruption sanctioned by law and the best practices that we incorporate into our policies or internal processes.
3.9.1 We define fraud as any act or intent to obtain an illegal benefit or advantage, either personally or for third parties, through deceit and to the detriment of Bancolombia Group’s interests. This may include, among other behaviors:
• Appropriation, embezzlement, or misuse of resources: concealment of assets, misuse of confidential information or intellectual property, unauthorized access or copies of digital assets, unauthorized expenses, or misuse of the internet.
• Forgery or manipulation of financial or non-financial reports: The deliberate misrepresentation of the financial condition of the Group through forgery or manipulation of financial or non-financial reports, deliberate misstatements, or intentional omissions of information.
• Corruption, bribery, conflicts of interest, and abuse of position or functions for personal or third-party benefit
3.9.2 We define corruption as the abuse of power in an assigned function with the purpose of obtaining a personal benefit or for a third party, to the detriment of public or private interests. According to Law 2195 of
2022, issued in Colombia, corruption currently encompasses at least 75 offenses defined in the Colombian Penal Code, including bribery. This implies that all employees in their actions associated with their functions must prevent, identify, and manage potential corruption risks, through the following questions, which are the vulnerable sectors to this risk. The functions performed in relation to our operation in the countries where we have a presence also fall within the scope of Colombian law, taking into account the participation of Bancolombia officials in their day-to-day activities.
OUR MANAGEMENT OF INFORMATION AND PERSONAL DATA
3.10 Our sustainable growth is associated with the responsible use of data that help preserve the integrity, confidentiality, and availability of the information that each of the Group’s companies holds about their processes, technologies, and people. Our employees must make appropriate use based on respect for the information owners.
3.11 We know that information is essential for the execution of our processes, the activities that contribute to innovation, the exploration of new opportunities, and ways of doing things. The use of databases and analytical tools offers us opportunities to better understand our stakeholder groups, including financial consumers, enabling us to provide superior experiences for them; however, they bring significant challenges related to privacy and responsible data use. Therefore, we promote impartiality, ethics, responsibility, transparency, and human control of technology in data use among our employees, in order to protect the privacy and personal sphere of our customers, employees, suppliers, shareholders, and other stakeholder groups.
3.12 We strive to ensure that information is available promptly and intact for our employees who require it to perform their functions, always under adequate security parameters, according to its classification and access management for compliance with regulations applicable to the protection of personal data.
3.13 It is the responsibility of leaders to oversee the information used by employees for the performance of their activities, as well as to verify access control according to the assigned role. However, it is the responsibility of employees to manage the withdrawal of access to technologies and applications that are not required.
3.14 We treat personal data with high compliance standards, under a decentralized model that operates with the principles of legality, purpose, truthfulness, transparency, access, restricted circulation, security, and confidentiality, as well as those derived from the regulations of each country where we have a presence.
3.15 In the design, creation, and implementation of any initiative, a preventive approach to personal data management will be maintained.
3.16 CLASSIFICATION OF INFORMATION
In the Group, we distinguish four types of information: (A) Public; (B) Internal; (C) Confidential, and (D) Restricted. For this, we have minimum security guidelines on criteria for classifying and labeling information in physical or digital format, which is generated, stored, consulted, modified, transmitted, destroyed, or used by the organization’s processes, people, and technologies.
A. We consider information public when it has a low impact on the Organization or related parties. This information is available to all Bancolombia Group employees and third parties, including information intentionally disclosed by Bancolombia Group for public or external distribution, or personal data that is not restricted, confidential, or internal. Additionally:
(i) External sources to the Group have put it in the public domain; (ii) It has been publicly disclosed by authorized employees, complying with the rules and procedures defined for this purpose;
(iii) It has been generated by employees from public information, with the initial intention of sharing knowledge with third parties, and, exercising their good judgment, they disclose it without restriction. We can use public information as long as we show respect for those we refer to and are convinced that the information is true. If we know that the information has been made public as a result of non-compliance with an internal rule or policy, we must refrain from disseminating it.
B. Information is for internal circulation when it has a medium impact on the Organization or stakeholder groups. This information is available to certain authorized groups of people from Bancolombia Group who require it to perform their functions or for the purposes of the process they support; likewise, it includes personal data whose knowledge or disclosure may be of interest not only to its owner but also to a certain sector or group of authorized individuals for the execution of specific internal processes.
C. Information is confidential when it has a high impact on the organization or related parties. In the event that this information is lost, corrupted, or disclosed, it could result in reputational damage or affect the commercial capacity of the organization. This information is only available to certain groups of people who require it to perform their functions or personal information that, due to its intimate or reserved nature, is only of interest to the owner.
D. Information is restricted when it is privileged or represents a critical impact on the organization, stakeholder groups, affects the privacy of the owners, or whose misuse could generate discrimination. In the event that it is lost, misused, or disclosed, it could result in regulatory or legal action, financial loss, reputational damage, or loss of commercial capacity. It is only available to authorized employees.
3.16.1 When it is necessary to share internal and/or confidential information with authorized third parties, they may access it within the scope of their functions, for established purposes, and with strict adherence to defined confidentiality agreements and our data processing and personal data protection policies.
• Confidential information is also restricted when its loss, inappropriate use, or unauthorized disclosure results in a critical impact on the Group or related parties..
3.16.2 We provide training plans, technological capabilities, and other actions that educate about the restrictions derived from the protection of personal data, banking secrecy, and stock exchange secrecy, as applicable, so that our employees understand the classification of information and the potential restrictions on its use or sharing, within and outside the company for which we work.
3.16.3 When there are doubts about the classification of information, whether public, internal, or confidential, we must always treat it as confidential.
ADDITIONAL MEASURES REGARDING CONFIDENTIAL AND RESTRICTED INFORMATION
3.17 We must safeguard confidential and restricted information, complying with the controls corresponding to its classification and using it only for authorized purposes. Before sharing confidential or restricted information, regardless of the medium (digital or analog), we must inquire whether the recipient has the functions and authorizations required for its knowledge or use.
3.18 We must understand and comply with the following criteria regarding the management and use of confidential and/or restricted information:
• We will assume that all information about shareholders, clients, suppliers, employees, and other financial consumers is confidential and/or restricted unless it is evident that it is public information that can be disseminated.
• We will assume that data on the financial and/or strategic situation of any company in the Group is confidential and/or restricted unless it is evident that it is public information that can be disseminated.
• Treat confidential and/or restricted information to which we have access responsibly and in accordance with established policies on personal data protection.
• Confidential and/or restricted information that we create or to which we have access in our role belongs to the Group and will not be used for our own benefit, for third parties, or for purposes other than those authorized by its owners.
• The information contained in our databases is confidential and/or restricted, and we must use it according to the policies established by the Group regarding the personal data of different stakeholders.
• Neither during the tenure of the position nor upon its departure are we allowed to copy, in whole or in part, elements or documents from the local hard drive of the assigned equipment to other technological devices, or extract copies of databases, even if the copy is used solely and exclusively for the performance of assigned functions, unless it is done in strict compliance with the policies or guidelines defined in that case.
• We cannot disclose, transmit, or transfer confidential and/or restricted information via email, physical copies, or any other means, except when we have express authorization and do so in accordance with applicable regulations and established procedures for this purpose.
• We will use the means of storage and transmission of information provided for this purpose by the Group entities.
• Ensure that those to whom we provide this type of information are aware of its classification as confidential and/or restricted and the limitations on its use resulting from this classification.
• If, due to particular or exceptional circumstances, we must discuss topics involving confidential and/or restricted information in public places, we will act with maximum discretion and prudence, always using good judgment.
• We are responsible for the management of confidential information to which we have access, so we must be aware of security controls and best practices regarding its use, which are established in information security policies.
• If we receive confidential and/or restricted information by mistake, we must refrain from using it and immediately inform the sender so that it is not disseminated.
PRIVILEGED INFORMATION AND OUR BEHAVIOR REGARDING IT
3.19 The applicable legislation in each of the countries where we operate defines what is understood by privileged information. In addition, the use of privileged information for our own benefit or that of a third party may constitute a crime in these jurisdictions; therefore, in addition to what is stipulated in this Code regarding confidential information, privileged information will be subject to the restrictions contained in the law.
Privileged information is specific information not available to the public and that an investor would consider for the management of their investments.
3.20 When we have doubts about whether the confidential information we know or have access to is privileged, we must act as if it were or consult with the Legal and/or Compliance department.
The following list illustrates several situations (but not the only ones) in which we could come to possess privileged information:
• Participation in the preparation of financial statements or inputs for them.
• Development of products or businesses for clients who are issuers in a securities market.
• Discussions about strategic business opportunities and high-impact clients who are issuers, or visits to supervise ongoing projects of this type.
• Participation or knowledge of high-impact and strategic projects for the Group.
• Participation or knowledge of critical administrative decisions.
• Participation or knowledge of investment decisions, purchase and/or sale of materially significant assets.
• Participation in the execution of mandates granted to investment banking when they involve an issuer.
• Participation in crisis management involving, for example, a cyber-attack.
ETHICAL FRAMEWORK FOR ANALYTICAL AND ARTIFICIAL
INTELLIGENCE SYSTEMS
3.21 In the Group, we implement an ethical framework for our analytical
systems and artificial intelligence (AI) based on the principles proposed
by the OECD, which reflects our commitment to business ethics
and social responsibility, aligning with the principles of our Code of
Ethics and Conduct.
DEFINITION OF ANALYTICAL AND AI SYSTEMS FOR BANCOLOMBIA
We understand analytical and artificial intelligence systems as those that
make use of computational capacity for the creation of algorithms or combinations
thereof which, through a prior process of learning or training, generate
predictions, content, recommendations, or decisions from the input
data they receive, with the aim of influencing physical or virtual environments.
These systems can vary in their level of autonomy and adaptability after
deployment. They also encompass several subfields, such as deep learning,
natural language processing, machine learning, various statistical and econometric • We promote the inclusion of underrepresented populations and work towards reducing economic and social inequalities.
techniques, among others.
ETHICAL PRINCIPLES FOR ANALYTICAL AND ARTIFICIAL INTELLIGENCE SYSTEMS
Inclusive Growth and Sustainable Development:
• We promote initiatives that protect the environment and foster sustainable development.
Human-Centered Values:
• We respect and promote human rights and democratic values at all stages of the life cycle of analytical and artificial intelligence systems.
• We evaluate privacy and data protection, promoting fairness and social justice.
Transparency and Explainability:
• We seek to implement analytical and AI systems that are transparent and provide clear explanations of how they operate and make decisions.
• We encourage open dialogue with all stakeholders about the implications and operations of analytical and artificial intelligence systems.
• Promote transparency in how personal data is collected, used, and processed, adopting Privacy by Design and Impact Assessments in the creation and development of analytical and AI systems.
• Ensure that personal data remains accurate, complete, up-to-date, and understandable, and that its processing does not alter its accuracy.
Robustness, Security, and Protection:
• We promote the development of analytical and artificial intelligence systems that are robust and secure, operating consistently with their intention and without causing harm.
• We implement security measures to protect against the misuse of analytical and artificial intelligence systems and ensure the security of personal data.
• Promote techniques that protect the identification of personal data, such as anonymization and pseudonymization.
Accountability:
• Take responsibility for the operations of AI systems, ensuring they are traceable and can be audited and monitored, including an approach based on the protection of personal data and the privacy of stakeholder groups.
• Establish accountability mechanisms to ensure that analytical and artificial intelligence systems are used ethically and responsible.
Ethics of Analytical and AI Systems
Inclusive Growth, Sustainable Development, and Well-
Do our AI systems promote inclusion and diversity?
How do our AI systems help reduce social inequalities?
Do our AI systems contribute to environmental protection?
Human-centered Values and Equity
Do our AI systems safeguard human rights and democratic values?
How do our AI systems protect user privacy and data?
Do our AI systems promote equality and non-discrimination?
Transparency and Explainability
Are the decisions of our AI systems transparent and understandable?
Do our AI systems allow for transparent auditing of their processes?
How do our AI systems ensure that users understand their decisions?
Robustness, Security, and Protection
Are our AI systems robust and reliable under various conditions?
How do our AI systems protect users from security risks?
Do our AI systems ensure user data protection?
Responsibility
Do our AI systems ensure accountability at all stages of their lifecycle?
Do our AI systems allow for accountability in decision-making?
Do our AI systems ensure the responsibility of all involved stakeholders?
4. How do we handle potential conflicts of interest?
“Conflicts of interest are inherent to human nature, so we manage them properly to make better decisions.”
WHEN CAN CONFLICTS OF INTEREST ARISE?
4.1 In the Group, we are aware that conflicts of interest are inherent to human nature, and we recognize that their existence is not inherently reprehensible. However, our actions in a situation of conflict of interest, without it being disclosed and/or managed, may lead to inappropriate behavior and affect the Group’s reputation. Therefore, we demand maximum prudence regarding a real, potential, or apparent conflict of interest5.
5 An apparent conflict of interest is when it may give the perception that one is acting in favor of a particular interest, even though this may not be the case.
4.2. We are faced with a potential conflict of interest when: (i) we must make a decision or can influence it, (ii) we have conflicting and incompatible interests in that decision, and (iii) the alternative we choose favors one interest over others.
PERSONAL CONFLICTS OF INTEREST
4.3. Conflicts of interest are personal when we have a personal interest in a matter, either directly or indirectly, and this interest somehow opposes the Group’s interest. Some of these cases include:
• Accepting preferential terms or conditions for investment or business from clients, suppliers, or counterparts of Group companies with whom we have a direct or indirect relationship and that are not offered on equal terms to the rest of the Group’s collaborators;
• Participating in or influencing decisions related to the purchase, sale, or rental of assets by any Group company when the assets belong to us or are managed by us;
• Receiving commissions, remuneration, or economic incentives, without authorization, for the sale of Group company assets or assets received in lieu of payment;
• Obtaining loans from clients, suppliers, or other counterparts of the Group serviced by the collaborator unless the loan is received within the framework of a commercial relationship with an entity whose purpose includes providing financing;
• Granting or receiving significant or regular loans from other collaborators on an onerous basis;
• Being part of the acquisition, approval, and administration processes of assets or assets received in lieu of payment:
» Acquiring for ourselves or third parties, directly or indirectly, goods or assets that have been given in payment to the company for which we work;
» Participating in the approval process of credits aimed at granting financing to the buyer for the purchase of the asset.
4.4 External Activities:
• Directly participating or through third parties in external activities that involve competition with any of the Group’s companies; or
• Being a significant shareholder, employee, director, or advisor of companies or businesses engaged in activities competing with those of the Group entities.
4.4 Activities Involving Related Parties6:
• Serving clients who are Related Parties when the collaborator is part of the credit granting processes or when they have the authority to offer or approve products, services, discounts, or exemptions;
6 Related Parties can be direct or indirect. Direct ones include: (i) the immediate family group, namely, parents, siblings, children, spouses or permanent partners, grandparents, grandchildren; (ii) legal entities in which one serves as an administrator, manager, and/or member of any supervisory body; (iii) legal entities of which one owns or is the real beneficiary of more than 10% of the share capital of the company or the lower percentage required by applicable law. Indirect ones include all natural and/or legal persons with whom one has a contractual, personal, familial, or any other type of relationship that could affect the objectivity and impartiality that should characterize commercial relationships (examples: boyfriends, best friends, brothers-in-law, etc.).
• Participating in selection processes for collaborators or suppliers in which a Related Party is a candidate or bidder, or making decisions regarding a contract in which the supplier is a Related Party or the Related Party has a stake;
• Holding positions within the Group where one leads or supervises or is led or supervised by a Related Party;
• Participating as a collaborator in negotiations or in the exploration of a business where the counterparty is a Related Party or the Related Party has a stake; or
• Being accountable to oversight bodies when this is done concerning a Related Party who works for the oversight body.
To properly manage external activities, see Chapter 2 of this Code.
4.5 Activities Financed by Clients: accepting, from clients of Group companies, coverage of travel expenses or other expenses necessary to carry out Group-related work, including client knowledge.
4.6 We have a responsibility to be vigilant and identify these or other situations that confront us with a conflict of interest. When conflicts arise, they must be immediately reported to our leader for management according to the authorities in each country (see table 1). In cases where these positions do not exist, they must be reported to the vice president of the area or equivalent position.
The leader must assess the situation and determine if action can be taken because there is no conflict or how it can be managed. If in doubt, the situation should be reported to the Compliance area for advice. Always record the disclosure of the conflict and the decisions made according to the mechanisms established by the Compliance area.
TABLE 1
Attributions for managing conflicts of interest.
These attributions may be redefined according to the evolution of the organizational structure and/or the guidelines provided by local ethics committees.
|
|
|
|
|
|
|
|
|
| ENTITY |
APPROVAL IN COMMERCIAL AREAS |
APPROVAL IN ADMINISTRATIVE AREAS |
| Bam |
Agencies: Regional Agency Manager and other commercial areas: Area Vice President |
Area Vice President overseeing the employee, except for Corporate Services Vice Presidency, which will be managed by Unit Managers |
| Bancoagrícola |
Agencies: Commercial Agency Director, other commercial areas: Immediate Director |
Director or equivalent position |
| Banistmo |
Regional Director |
Director |
| Bancolombia |
Regional Vice President |
Director or equivalent position |
4.7 Members of the Board of Directors or Management Boards and the Senior Management of the Group companies must disclose any conflicts of interest in which they may be involved in accordance with the procedure established in the Good Governance Code, so that these can be managed through the established procedure. Additionally, they may disclose to the Compliance area any situations about which they wish to make a record and obtain clarification, even if these do not require disclosure in the manner established in the Good Governance Code.
4.8 To prevent potential conflicts of interest arising from the relationship between employees, their Related Parties, and our clients or suppliers, we must complete the following declarations and update them as defined:
(i) the declaration of kinship in the system made available by the Vice Presidency of Talent and Culture for this purpose; and (ii) the declaration of other Related Parties in the system or mechanisms made available by the Compliance areas for certain groups of employees. Completing these declarations does not exempt from disclosing any conflict in the manner provided in this Code.
CONFLICTS OF INTEREST THAT MAY ARISE FROM BEING PART OF A BUSINESS GROUP AND AS A RESULT OF OPERATIONS WITH RELATED PERSONS
4.9 Each of the Group companies offers its financial products and services to the general public, including other Group companies and other natural or legal persons who, by regulation, are considered related parties, so it is common for them to have financial products with the entities that make up the Group and carry out day-to-day operations with them.
4.10 In the Group, we promote the synergy that arises from carrying out these operations, as well as from entering into agreements and contracts between Group companies in any of the countries where we operate, but we are aware that employees involved in decision-making may face conflicts of interest. These can arise when a decision made by an employee may favor the interest of one of the Group companies, but it is contrary and incompatible with: (i) the interests of another Group company or another related party, and/or (ii) the duties of the Group towards clients.
4.11 Therefore, in addition to requiring that operations between Group companies or between these and related persons occur only when not prohibited by applicable regulations and strictly comply with the parameters defined therein, we have also defined a series of internal policies and guidelines that we must observe. These are contained in the Good Governance Code and the provisions of this Code of Ethics and Conduct and may be supplemented with internal guidelines. In particular, employees must follow the following guidelines:
• Ensure that Operations with Related Parties do not jeopardize the ability of the involved companies to fulfill their obligations to third parties.
• Ensure that Operations with Related Parties are conducted at competitive market prices, comparable in terms of the quality and quantity of the goods or services involved, and the credentials and experience of the counterparty. In the event that there is no market to serve as a reference framework, the operations will be conducted at prices determined objectively, taking into account the business alliances between the companies and ensuring that the transfer of value does not affect the rights of other shareholders and is presented adequately in an environment of free and fair competition.
• When their functions require seeking the best benefit for the Group company for which they work, they must not access client information in the exercise of such functions, nor participate in the decision-making of third parties (for example, providing advice or managing third-party resources).
• When their functions require seeking the best benefit for the client, they must not participate in or influence decisions related to the position of a Group company, unless the interests of that company are fully compatible or aligned with the client’s interest.
4.12 Any employee facing a situation in which it is not feasible to comply with the above guidelines must report the situation to their leader so that together they can determine:
• whether the operation should not be carried out or • whether the situation should be reported to the Compliance area so that together they can determine the areas that need to be convened and define the steps to follow.
4.13 Additionally, to properly inform affected clients, Group companies must take the following measures:
• Conflict disclosure: if the conflict has not yet been disclosed to the client through any verifiable means, the employee involved in the situation must inform the affected client so they can make an informed decision.
• Ongoing disclosure: when the potential conflict of interest may persist over time, potentially affecting various products, operations, or transactions, we must notify affected clients of this situation through any verifiable means so that their decisions can be properly informed.
• Contractual clause: in situations where, in the ordinary course of providing services to a client, simultaneous operations with other Group companies or related parties may occur, the situation can be disclosed. Once informed, the client may allow operations that could potentially lead to a conflict, expressly noting any limitations or restrictions on these powers in the contract, if any.
4.14 Group companies may establish financial floors7 in the countries where they operate to handle their various treasury and brokerage operations and products. To ensure that such operations are transparent and ethical, our employees working in financial floors must strictly comply with the applicable regulatory framework and the following provisions:
• They must not access or consult information that is inaccessible to the company for which they work due to regulations.
• They must not disclose privileged information and must adhere to controls established to prevent inappropriate and unauthorized exchange of information among the areas of the financial floor (for example, restrictions imposed regarding the use of cell phones and other technological devices).
CONFLICTS OF INTEREST IN COMPANIES THAT ADMINISTER COLLECTIVE INVESTMENT FUNDS, INCLUDING PRIVATE CAPITAL FUNDS (HEREINAFTER “FUNDS”).
4.15 In the Group, we understand that the promotion, development, and administration of a Fund, the conclusion and execution of its operations and contracts, or the management of its resources and portfolio, may generate conflicts of interest, real or apparent, that must be properly managed.
4.16 To this end, Group companies that manage Funds will comply with the applicable regulatory provisions in each country regarding prohibitions and management of conflicts of interest, as well as the policies established in their operating regulations.
GUIDELINES AND CONDUCT STANDARDS FOR PRIVATE CAPITAL FUNDS.
• Operating regulations establish those conflicts of interest identified since the structuring of the fund and must clearly indicate how to disclose and manage them, taking into account that the Surveillance Committee or equivalent body must be aware of, evaluate, and resolve these situations.
• When any of the Group companies, as an investor in a fund, wants and can make contributions in kind to a portfolio of the fund and this is possible, the management company must conduct a competitive, transparent, and fair process for all interested parties to make contributions, regardless of whether they have links with the management company. In these cases, the management company must have the appraisal of an impartial third party and a report that objectively justifies the contribution price.
7 Facilities where trading desks of various entities are located.
• The same rule must be followed when a member of the Investment Committee or equivalent body, the management company or its administrators, the manager, or any person linked to the fund, wants an asset, whether own or external, to be integrated into the portfolio.
In these cases, the express approval of the Surveillance Committee or equivalent body responsible for knowing, supervising, and managing potential conflicts of interest of the fund is also required.
• If an asset of the fund or any underlying asset thereof is sold, directly or indirectly, before it can be acquired by an investor of the fund, the management company of the fund or its administrators, the manager, or any person linked to the fund, must follow a process that includes: approval of the sale of the asset or underlying asset by the Investment Committee or equivalent body; the appraisal of said asset by an independent third party; a report that reasonably justifies the conditions and criteria establishing the price; and the approval of the Surveillance Committee or equivalent body responsible for knowing, supervising, and managing the potential conflicts of interest of the fund.
GUIDELINES AND CONDUCT STANDARDS FOR COLLECTIVE INVESTMENT FUNDS..
• Members of the investment committees or equivalent bodies of collective investment funds, regardless of whether they are Group employees or external members, as well as the managers or administrators of each collective investment fund, must follow the same rules and restrictions regarding personal investments as established in this Code for employees who are part of asset management teams. This rule does not apply to private capital funds.
CONFLICT OF INTEREST DUE TO EXTERNAL ACTIVITIES
4.17 We promote the integral development of our employees and respect interests complementary to their professional performance in the Group; therefore, external professional activities are permitted. However, responsibilities acquired with the Group take precedence over any other employment relationship and other external activities carried out with or without profit motive. In accordance with the above, if we wish to undertake this type of activities, we must consider the following criteria and obtain approval from our leader:
• Always consider ethical and legal criteria, as well as the possible reputational impact for the employee or the Group.
• Prioritize the employment relationship with the Group and fulfill the responsibilities in charge.
• Absence of conflicts of interest or, if they exist, the proper management of them according to the provisions established in this Code. Notwithstanding other situations that may lead to a real or apparent conflict of interest, due to the conflict involved, we should not directly or indirectly participate in activities that imply competition for the Group companies, which includes seizing for oneself or for a third party a business opportunity that any of the Group companies could take.
• Do not use the Group’s intellectual property, nor use information from its clients or businesses, unless it is classified as public.
4.18 The participation of our employees on boards of directors or committees of third parties, including nonprofit entities, requires authorization from the leader, except for union associations, Employee Funds, and Community Action Boards. This authorization will depend on the following requirements:
• The approving leader must report, at a minimum, directly to a firstlevel vice president or higher position, or to those determined by the local Ethics Committee. In addition, authorization must be requested from the Compliance area, which may convene a subcommittee of the Ethics Committee to evaluate the case and coordinate with the Talent and Culture area, which must keep a record of the participation of employees on boards of directors.
• Unless the participation is carried out in compliance with instructions from the Group company for which we work, we must always participate on a personal basis.
• We must refrain from participating in deliberations or discussions that involve the Group or that may generate a conflict of interest, and we will consider resignation when the conflict demands it. In case of concerns, inquiries can be raised to the Legal area, for administrators and senior executives; and to the Compliance area, for other employees.
4.19 We respect and promote the exercise of individual rights, including the political rights of our employees. Those who decide to participate in politics through elected positions, public or diplomatic positions, management or treasury of political campaigns, must inform their leader, the Vice Presidency of Talent and Culture, and the Compliance area beforehand. Their political participation must be strictly personal and must not affect their professional objectivity, and the time dedicated to these activities must not interfere with their functions or work schedule.
Additionally, political proselytism activities cannot be carried out through the Group’s tools and communication channels, within the facilities or in the work environment of the Group companies. Nor can the affiliation with the Group be used to promote activities for political purposes.
4.20 In the Group, we respect the private life of our employees and their recreational spaces, expecting that at all times and places, they maintain a full commitment and behavior consistent with our organizational culture and its principles and the law. Therefore, if the behaviors of our employees in society undermine our culture or reputation, we will act to preserve them in accordance with the labor laws applicable in each of the Group companies.
HOW CAN WE MANAGE PERSONAL INVESTMENTS?
• When the assets that the fund wants to acquire or sell correspond to securities traded in the securities market, it will not be necessary to carry out the appraisal by a third party or the report with the pricing justification, but the respective transaction must be made through the transactional systems of the exchanges where these securities are listed.
• Members of the Surveillance Committee or equivalent body cannot participate in and make decisions related to the sale of assets owned by them or their relatives (parents, siblings, spouse, or children) to the fund, or the acquisition of assets or underlying assets that the fund intends to sell to them, directly or indirectly. In these cases, the approval of the board of directors of the management company is required.
General Rules for All Our Employees
4.21 When making personal investments, we must consider the following provisions to avoid conflicts of interest or questions about the misuse of information, among other bad practices.
• Before making personal investments, we must assess whether they generate any conflict of interest with those of the Group or our clients, in which case we must comply with the provisions established for this purpose. In particular, we cannot make investments in businesses of clients, suppliers, or counterparts of the Group whose relationship we manage or with which we have a relevant role, without first managing them as a potential conflict of interest in accordance with the guidelines defined in this Code.
• We must not carry out transactions or operations when we possess privileged information and must comply with the guidelines described in this Code.
• During working hours, we must attend to the needs of clients and the Group, without this being an obstacle to attending to our personal matters prudently and moderately.
• We must be prudent in managing our personal investments considering their legality, our financial capacity, indebtedness, and the risks involved, as well as the possible reputational impacts for the Group.
• Investments made in capital markets must be free from any kind of maneuver that artificially affects asset prices or the perception of their liquidity and must adhere to sound banking and stock exchange practices at all times.
• We must use the same transactional channels that our clients use for these purposes; that is, we must not use the accesses and permissions we have in applications by virtue of our position to manage our operations, nor those of our Related Parties.
• All investment rules apply to us as employees, regardless of whether we negotiate directly, through third parties, or their Related Parties.
• We are authorized to acquire and dispose of any securities issued by any Group company, without further restrictions than those derived from the prohibition of using privileged information, the rules for administrators defined in the Corporate Governance Code of Good
Governance, and the specific provisions contained in this chapter for employees belonging to certain teams.
Group employees who have a value-generation-based remuneration scheme may receive, if they meet the defined goals and conditions, part of their bonus in an investment fund, whose purpose is to purchase shares or ADRs of Bancolombia S.A.
SPECIFIC RULES FOR OUR EMPLOYEES RELATED TO TRADING OF SHARES ISSUED BY BANCOLOMBIA GROUP COMPANIES
4.22 Trading by members of Boards of Directors or Management Councils, Senior Management, and Management Teams of Group companies:
Members of Boards of Directors or Management Councils, Senior Management, and Management Teams of any of the Group companies who wish to carry out operations involving shares of Bancolombia S.A. must comply with the restrictions established in the Corporate Governance Code of Good Governance of the Bancolombia Group.
4.23 Trading by employees who potentially have access to privileged information:
4.23.1 None of the Group employees can carry out personal investments that involve the use of privileged information. We must know the specific rules to prevent its inadvertent use when we may have access to this type of information.
4.23.2. This group of employees includes those who participate in the study and/or execution of special projects for which confidentiality agreements are entered into with specific provisions on information handling (e.g., mergers, acquisitions, or structuring processes), have access to material financial, treasury, accounting, securities market, legal, risk, internal control, or strategic information of any of the Group companies.
4.23.3 Senior Management and Management Teams of Group companies must: identify the employees within their reporting line who are within this group; communicate to them that they are subject to these special rules; and report them to the Compliance area according to the defined procedure.
4.23.4 Operations carried out by this group of employees on shares issued by Bancolombia S.A. must comply with the following requirements:
• The operation does not have or will not have speculative purposes. For purposes of this Code, speculation purposes are presumed when: » Suspiciously short periods elapse between the purchase and sale of securities.
» Exceptionally favorable or unfavorable situations occur for the issuing entity.
» A significant and atypical profit is obtained with the operation.
• Thirty calendar days are taken as the reference period for carrying out transactions of opposite sign.
• The operation is not carried out within blackout periods. For purposes of this Code, “Blackout Periods” are:
» The months of January, April, July, and October of each year.
» The first ten (10) calendar days of the remaining months.
» The time period that elapses between the moment when a relevant operation or business is known and the moment when information regarding such operation or business is disclosed to the market.
4.24 Trading by employees of the Business Vice Presidency responsible for leading the relationship with issuers of shares listed on the local stock exchange:
4.24.1. Employees of the Business Vice Presidency responsible for directly leading the relationship with companies issuing shares listed on the local stock market cannot make investments in shares, derivatives, or investment funds whose sole underlying asset is the share of the issuers they directly manage; the above does not limit investment in multi-asset funds that include the issuer they manage.
Rules for handling personal investments in capital market assets by our collaborators from brokerage firms, treasuries, and teams managing collective investment funds and delegated portfolios8.
4.24.2. Our employees whose functions correspond to front, middle, and back-office activities of our Brokerage Firms or Securities Houses, Treasuries, and teams managing collective investment funds and delegated portfolios9, as well as those who perform audit, compliance, risk, product, technology, or legal activities related to capital market activities, must comply with the additional rules described below:
4.24.3. To promote transparency, manage potential conflicts of interest, and enable control and monitoring activities, all personal investments of this group of collaborators in capital market products must be disclosed at least annually, following the guidelines established by each of the Group’s companies, and must be made through the Group’s companies, except when: (i) they do not offer the required product or service; or (ii) there is any restriction on the transaction.
4.24.4. Operations or investment strategies involving assets of local issuers must be free from speculation as defined in section 4.23.4, except when the employee does not participate in the decision-making for the purchase or sale of the shares, and the transactions result from the use of robots and algorithms.
8 The specific rules established here are consistent with and complementary to the regulations applicable to each company within the Group, to the Treasury Management Manual, the Market Risk and Liquidity Manual, and in general to all internal documents that the Group’s companies have regarding treasury and securities. The Group’s companies may establish additional provisions to comply with applicable regulations and requirements of supervisory and regulatory bodies, but always preserving the culture, philosophy, ethical tone, and principles established in this Code of Ethics and Conduct. In the event that it is necessary to include a provision that contradicts this general framework of action, such a situation will be brought to the attention of the Group’s Compliance Vice Presidency, which will determine the most appropriate way to adopt it.
9 Refer to section 4.16 for the rules applicable to members of the Investment Committees of collective investment funds.
4.24.5. They may make personal investments in shares, convertible bonds into shares, single share funds, or ADRs of issuers of the stock market in both spot and futures markets. When it comes to investments in issuers of the local stock market, they must meet the following requirements, except when the employee does not participate in the decision-making for the purchase or sale of the shares, and the transactions result from the use of robots and algorithms:
• Fill out a declaration of not possessing insider information prior to each transaction, in the format defined and following the procedure determined by the respective Group company.
• Obtain prior approval from their leader to make the investment.
• Express interest in the operation, indicating the date on which the order or instruction must be given, which cannot be less than T+5 (current days) counted from the day the interest in the negotiation is reported.
4.24.6. If they are shares, single share funds, or ADRs of Bancolombia S.A., whether traded in the spot or futures market, they must comply with the requirements described in sections 4.24.4 and 4.23.4 of this chapter regarding the negotiation of shares of Bancolombia S.A.
4.24.7. Those who are market makers or liquidity providers of shares must refrain from trading assets that are the subject of their function.
4.24.8. Collaborators of teams managing and overseeing collective investment funds and delegated portfolios may invest in the funds they manage or oversee, provided that at least 5 current days before each transaction10 , they inform their leader and the Compliance area about it, unless it concerns transactions in liquidity funds, defined as funds whose target duration is less than one year, and the Seed Plan fund, for which it will not be necessary to inform the Compliance area.
4.24.9. For all cases requiring leader authorization, it must be forwarded to the Compliance area through the established means for this purpose.
Special Circumstances
4.25 The leader of each of the different areas and businesses, in consultation with the Legal and Compliance areas, may impose blackout periods or prohibitions on specific assets to prevent a real or apparent conflict of interest and the use of insider information.
4.26 In special situations, investment restrictions may be lifted or reinforced by the Ethics Committee of the respective entity.
HOW DO WE MANAGE GIFTS AND INVITATIONS?
Rules for the reception and granting of gifts and invitations.
4.27 Just as we must manage existing conflicts of interest, we must also prevent the emergence of situations that may generate them. In the Group, we understand that in the business world, the exchange of gifts, invitations, or symbolic tokens of gratitude is a common practice stemming from courtesy. However, when these gestures are recurrent, excessive, or inappropriate, and are made to unduly influence decision-making or their motives are unknown, they can generate a real or apparent conflict of interest that may restrict free competition and, in certain cases, may even be illegal.
10 Within the transactions that must be reported, this includes the opening or early cancellation of an investment strategy managed by robots or algorithms, and as a one-time occurrence, transaction scheduling; withdrawals made on the maturity date in funds with a lock-up period will not require notification.
4.28 To guide our employees regarding the reception and delivery of gifts and invitations, the Group has established the following rules. These must be complied with by all collaborators and complemented by their good judgment, prudence, responsibility, common sense, and ethical sense.
Delivery of Gifts and Invitations to Third Parties.
4.29 As collaborators of the Group, we can only:
a. Deliver gifts that project the values of our brand, consistent with our integrity and our principle of zero tolerance for corruption. Preferably, gifts will be provided or recommended from marketing areas.
b. Make institutional invitations within the ordinary course of business relations (for example, refreshments, lunches, and dinners), provided that the costs of these are in accordance with the corporate expense policies established by each of the companies that make up the Group and our principle of zero tolerance for corruption. Institutional invitations may aim to recognize clients, third parties, suppliers, or allies that are relevant to the Group’s strategy, in which case the selection is made taking into account the provisions on conflicts of interest.
4.30 As collaborators, we can extend invitations to events organized or sponsored by the Group whose primary purpose is commercial or academic, such as forums and fairs relevant to the development of our businesses and those of our clients. These events may include entertainment. Additionally, in coordination with marketing areas, we can invite third parties to events for which the Group has tickets through a commercial sponsorship (for example, sports events and shows), in which case we must consider the free competition regime.
4.31 In the Group, we can sponsor or make institutional contributions to programs with economic, social, environmental, or cultural impact, provided they are framed within the principles of this Code, the policies and procedures on the subject, and aligned with the sustainability strategy and institutional projection guidelines defined by the Group, and/ or the specific policies established by each of the entities that comprise it. Under no circumstances should contributions and sponsorships aim at a business, action, or omission in favor of the Group, nor should they translate into personal gifts for public or private officials.
4.32 In the Group, we can make donations or economic contributions in favor of political parties, movements, or campaigns, provided that the contributions are allowed by applicable legislation, authorized by the corresponding instances, and comply with the policies and procedures established for this purpose. Under no circumstances do they seek to obtain an undue advantage for the Group, its administrators, or Senior Management, in exchange for the donation or contribution.
To learn more about these contributions, click here.
4.33 As collaborators, we can make donations or economic contributions in favor of political parties, movements, or campaigns of our own choice on a personal basis, always avoiding using our affiliation with the Group to make these donations and contributions.
Delivery of Gifts and Invitations to Employees
4.34 Companies within the Group may give gifts to recognize employees for their outstanding performance and contribution to achieving the organization’s objectives.
Likewise, it is possible for Group companies, for various reasons, to have access to tickets and passes for entertainment events, promotional material from other companies, and other goods received as gifts, in accordance with the provisions of this Code. Employees should not seek to receive these goods as gifts, but the entity may distribute them among the employees, ensuring that the delivery is appropriately distributed among the areas of the Group’s companies, taking into account, among other criteria, the type of gift and the performance of the employees.
Receipt of Gifts and Invitations
4.35 Subject to the above general rules, employees may receive gifts and invitations from clients, suppliers, and other counterparts of the Group’s companies, whether current or potential, provided that they do not affect or appear to affect our objectivity, impartiality, or independence. This applies to gifts and invitations made directly to us or through a third party.
When a gift given by the same person, individually or cumulatively over the course of a calendar year, exceeds the equivalent of two hundred United States dollars (USD 200), and as employees, we consider that we can receive it without affecting our objectivity and impartiality, we must request authorization from our leader according to the attributions in each country (see table 2). We must record the receipt of the gift and the authorization through the mechanisms established by the Compliance area for this purpose. If the gift is below the established value and due to its particularity, it can be disclosed through the channels provided.
TABLE 2
Authorization or rejection attributions for gifts and invitations, these attributions may be redefined according to the evolution of the organizational structure and/or the guidelines given by local ethics committees.
|
|
|
|
|
|
|
|
|
| ENTITY |
APPROVAL IN COMMERCIAL AREAS |
APPROVAL IN ADMINISTRATIVE AREAS |
| Bam |
Agencies: Regional Agency Manager and other commercial areas: Area Vice President |
Area Vice President overseeing the employee, except for Corporate Services Vice Presidency, which will be managed by Unit Managers |
| Bancoagrícola |
Agencies: Commercial Agency Director, other commercial areas: Immediate Director |
Director or equivalent position |
| Banistmo |
Regional Director |
Director |
| Bancolombia |
Regional Vice President |
Director or equivalent position |
4.36 When employees or leaders determine that it is inappropriate to receive a gift, we must reject or return it, even if it has been sent to the home address or any other location, and we must inform the Compliance department of the rejection. If returning the gift may offend the sender, we must consult with our area leader according to Table 2 (authorization or rejection attributions for gifts) and may seek advice from the Compliance department to determine if it can be accepted, the purpose it must serve, and the message to be sent to the giver.
4.37 It is common for allies, suppliers, or potential suppliers to extend invitations to technical or knowledge transfer academic events. These invitations are institutional in nature, and we cannot accept them without first consulting with our leader (according to Table 2 of authorization or rejection attributions for gifts) so that he, after consulting with peers attend and obtain the best benefit from the event. If the invitation includes travel, accommodation, and entertainment expenses, this instance must also decide whether these can be accepted or if, on the contrary, they must be covered by our organization. The decision regarding the invitation must be documented through the mechanism established by the Compliance department for this purpose.
4.38 The above does not apply to events open to the public that do not involve traveling outside the city, in which case, any employee may attend with the approval of their leader.
4.39 Notwithstanding the above, if the event is for the promotion of products or services, or mere hospitality, we cannot accept any gift or invitation from participants in a supplier selection process if they participate or will participate directly or indirectly in it. If as part of the process it is necessary to visit the participants at an event to have a better understanding of the goods or services offered, travel, accommodation, and event registration expenses must be covered by the Group company to which one belongs, unless it is determined, in an exceptional manner and with the approval of the Vice President responsible for procurement and the Supply Chain, that they can be covered by the participants in the process, for which the following criteria must be met:
• Verify that on-site referencing is necessary for the proper assessment of the product or service to be acquired;
• The person responsible for the on-site referencing must not accept invitations or attentions that, during the visit, may compromise their independence and objectivity;
• Require that travel and lodging expenses adhere to the organization’s internal policies; and
• Communicate to suppliers that efforts and resources should be directed towards the objectives of the on-site referencing visit. The Supply Chain must take additional measures to ensure the impartiality and independence of the process, such as a clear methodology for rating suppliers and equal conditions for participants.
5. What Mechanisms Promote and Support Our Ethical Conduct?
“We establish various mechanisms that support our ethical behavior.”
5.1. In the Group, we take pride in our culture and are aware that it is necessary to cultivate and foster it. Therefore, we establish various mechanisms that support this task.
CORPORATE ETHICS COMMITTEE
5.2. The Group has a Corporate Ethics Committee, with scope for all the companies that comprise it. This committee defines the general policy and ethical guidelines, conduct, and integrity, and communicates the corporate positions regarding highly complex ethical dilemmas. The Corporate Ethics Committee ensures that our organizational culture and its fundamental principles are interpreted and lived in the same way in all our companies, and determines the necessary actions to disseminate, among employees, our culture and its standards, including the training program required for this. The Committee may designate the conduct of diagnostic activities on ethics in the Group.
5.3. The Board of Directors of Bancolombia S.A. adopts the Operating Regulations of the Corporate Ethics Committee, which establishes, among other things, the members who integrate it in addition to the president of Bancolombia S.A., who chairs it; the persons who can participate as guests; the quorum for deliberation and decision-making; and the frequency of its meetings.
LOCAL ETHICS COMMITTEES
5.4. The Group’s entities present in each of the countries in which we operate must establish, in accordance with corporate guidelines, a Local Ethics Committee that has, among others, the following responsibilities:
(i) review cases raised to it by the competent areas, to validate the consistency of decisions with the guidelines of the Corporate Ethics Committee;
(ii) identify cases or issues that should be brought to the attention of the Corporate Ethics Committee to define the ethical tone of the organization and guidelines on particular issues;
(iii) define corrective measures for situations within their competence and instruct the areas to implement them; and (iv) monitor indicators related to the activities of prevention, detection, and response to incorrect acts presented to them by the Compliance areas, accompanied by other relevant areas. These committees must report periodically to the Corporate Ethics Committee.
COMPLIANCE AREAS: ADVICE REGARDING THE INTERPRETATION OF THE CODE OF ETHICS AND ETHICAL DILEMMAS
5.5. As employees, we may face situations in our day-to-day where doubts arise about how to act to comply with this Code of Ethics and Conduct. In case of needing support in interpreting what is contained herein, before acting, we must seek the advice of the area leader and/or the Compliance area. The Compliance area has specialists in ethics and integrity who guide us in decision-making to avoid non-compliance with the provisions of this Code.
5.6. The Compliance team in the different countries carries out training, awareness, and dissemination activities so that we understand what the Group expects from our conduct. Annually, in conjunction with the Vice Presidency of Talent and Culture, and in accordance with the guidelines of the Corporate Ethics Committee, the training program that we must complete compulsorily is defined.
WHISTLEBLOWING CHANNELS AND PROTECTION OF THE WHISTLEBLOWER
5.7. When any of our employees or individuals from different stakeholder groups, including shareholders, customers, suppliers, allies, and competitors, among others, have a suspicion or knowledge of violations of the provisions of this Code or the policies that complement it, we can report it through the Ethics Line or by contacting any of the following areas: (i) Compliance area; (ii) areas responsible for conducting investigations into malpractices or complaints related to labor aspects; or (iii) Audit area. We can also channel the complaint or suspicion through our direct or indirect leader, for them to communicate it to the areas responsible for its management.
5.8. Complaints made through the Ethics Line can be anonymous if necessary. Those who submit complaints in this way must be aware that, the more information they provide, the more possibilities there are for an effective investigation to be conducted. The identity of the whistleblower, if disclosed, is confidential at all times. By confidentiality, it is understood that the whistleblower’s name will not be revealed and that the reported facts are only shared with those strictly necessary to carry out the investigation and respond to its findings.
5.9. Complaints receive different treatment, depending on their characteristics.
Complaints and reports related to the organizational climate and labor relations.
We invite our employees to maintain an open dialogue to resolve differences and conflicts that may arise in their work relationships. However, there are situations that undermine our culture and may require different mechanisms for their management, such as harassment, discrimination, among others. Complaints and reports on these issues must be transmitted to the Vice Presidency of Talent and Culture, which manages them comprehensively and promptly through discussions, feedback, support, and, if necessary, possible actions against the individuals or entities responsible for the acts, regardless of their position or level.
If the complaint involves an employee of Talent and Culture, the investigation must be conducted by Internal Audit.
Reports on unusual transactions.
These can be made through different means, including the Ethics Line, available to employees or third parties. These reports are transferred to the Compliance area, responsible for assessing money laundering and terrorist financing alerts. This area, with the support of the front line, determines whether the transactions are justified or if they are suspicious and, therefore, must be reported to the competent authorities. The Compliance area also recommends other measures that must be taken to manage the money laundering risk. If the complaint also involves the conduct of an employee, it is managed as indicated below.
Complaints and reports of malpractices.
Complaints and reports related to fraud, corruption, misuse of information, and other practices that violate the provisions of this Code or depart from the expected conduct of our employees are investigated by the responsible area, in accordance with the policies of the anti-fraud program. Investigations are conducted in accordance with established internal processes, which must guarantee the confidentiality of the investigation. If the complaint involves an employee of the area responsible for conducting the investigation, it must be conducted by Internal Audit.
5.10. It is our employees who, due to their knowledge and functions, can detect malpractices. That is why, in the Group, we encourage them to report this type of act, ensuring that, when they report violations of this Code of Ethics and Conduct, complementary policies, applicable laws, or the standards expected by the Group in good faith, they are protected against any retaliation. Employees who observe or are victims of retaliation can report it through any of the mechanisms described above, so that they are investigated by the Vice Presidency of Talent and Culture.
5.11. When employees report suspicious facts under reasonable belief, it is assumed in good faith that these may be true. On the contrary, reporting facts knowing their falsehood is misconduct and is sanctioned in accordance with the provisions of this code.
5.12. The Ethics Line is one of the channels available to report human rights violations. If there is a complaint about any conduct, in which the Group or any of its related entities violates or threatens human rights, the procedure for remediation and non-repetition must be applied, as well as the intervention protocols provided for this purpose.
6.What is the disciplinary procedure?
“All cases are carefully analyzed to make the best decisions.”
6.1All complaints and reports received are investigated. Additionally, investigations may also be initiated based on alerts detected by the areas responsible for ensuring compliance with this Code. When investigations determine that any of our employees have violated the provisions contained in this Code, its complementary policies, or the ethical standards required by the Group, whether actively or by omission, sanctions must be imposed in accordance with the Internal Work Regulations and applicable regulations.
6.2To establish the sanction, factors such as the severity of the act, recidivism, economic losses, reputational effects, among others, are taken into account.
6.3In addition to internal sanctions, the Group may, if deemed necessary, initiate civil or criminal actions based on the regulations of the country where the Group company to which the employee belongs is located.
Ethics Line
Colombia:
• National Colombia:
018000524499
• Cellular: #955
• Medellín: 448 4868
• FAX Colombia: (4)4531953
Bancolombia App:
• Contact us / ethics line
El Salvador: ·
• 503-2259-7898
Guatemala:
• 502-2378-6933
• etica@bam.com.gt
Panamá:
• National Panam:
01 100 800 157 00 76
• Panama City:
(507) 306 55 74
Puerto Rico: ·
• 1866 6876201
lineaetica@bancolombia.com.co
EX-11.2
6
cib-20241231xexx112.htm
EX-11.2
Document
GOOD GOVERNANCE CODE
GRUPO BANCOLOMBIA
(August 27th, 2024)
INTRODUCTION
For GRUPO BANCOLOMBIA (hereinafter referred to as “the Group”), a business culture based on transparency, integrity and responsible decision taking allows us to achieve its purpose: promote sustainable development to attain everyone’s welfare and contributes to foster trust and generate value of the companies that are part of it.
This Good Governance Code (hereinafter referred to as “The Code”), the first version of which was issued in 2001, includes direction, administration, and control measures aimed at consolidating and preserving good governance and integrity in business, as objectives with which we are committed to our investors and other groups of interest, and that are permanently being reviewed in order to incorporate the best practices.
SECTION 1. GENERAL PRINCIPLES OF GOOD GOVERNANCE AT “GRUPO BANCOLOMBIA”
Application Scope. The Companies´ shareholders, senior management and employees are recipients of this Code; therefore, they must comply with its provisions and with the purpose of its principles and policies as a model of action.
Reach. The Code is designed to be adopted by the Companies, in order to guarantee that the corporate governance policies are aligned. Therefore, it is the Companies’ Boards of Directors’ or the competent bodies responsibility to ensure that the Code is incorporated as a corporate document, with the particularities that may be applicable.
When reference is made in this Code to the “Companies” or the “Company”, it shall be understood that is referred to the companies that are part of the Bancolombia´s Business Group, the companies controlled directly or indirectly 100% by Bancolombia S.A. (hereinafter “Bancolombia” or the “Bank”), and those subordinate companies that voluntarily decide to adopt the Code, with the particularities that may be applicable, in accordance with their size, jurisdiction, and the restrictions inherent to their business. When reference is made to “Bancolombia” or the “Bank”, it shall be understood that the provisions apply exclusively to this company as the parent company of the Group.
The Bancolombia´s Business Group its formed by Bancolombia and its subordinates that carry out financial, stock exchange or similar activities. The companies that are part of the Business Group may be consulted in the Certificate of Existence and Legal Representation issued by the Chamber of Commerce (“Business Group” or “Bancolombia´s Business Group”).
Competent Body to Issue Good Governance Policies and Measures. The Code is a document complementary to the Company’s Bylaws or Articles of Incorporation (hereinafter “Bylaws”), which shall be updated and adjusted to the business’s dynamics and evolution. Bancolombia’s Board of Directors, as the Group’s parent company is responsible for the creation, modification and repeal of the provisions related to the Group’s good governance. Notwithstanding the foregoing, the Boards of Directors of the other Companies, in the adoption of the Code, may approve for the Companies, the modifications that may be applicable, in accordance with the procedure defined in this Code.
Bancolombia´s Good Governance Committee will be the competent body to previously study Bancolombia's proposals for statutory reforms regarding corporate governance measures and the Code and present to Bancolombia’s Board of Directors said proposals for consideration.
When any of the Companies needs to adopt a policy or measure of good governance based in their business or applicable regulations, or if they have concerns in the application of the provisions, Bancolombia´s Legal Vice-president and Secretary General will be the body in charge of providing clarity and guidance on such matter prior to its presentation to the respective Board of Directors.
Good governance for Stakeholders. With respect to good governance, it is acknowledged as its main stakeholders, but not limited to them, the shareholders and/or investors, the administrators (Directors, Senior Management and main executives), employees, suppliers, customers and financial consumers, internal and external control bodies and each of the Company’s control and supervision bodies.
In the Group, relations with stakeholders must be conducted within legal, transparency and sound business practices framework, with respect, a collaboration spirit and equitable treatment. For this purpose, the Companies must encourage and promote active participation and cooperation to create value, to share relevant information in a complete and timely manner on issues where they participate according to laws and regulations in force and promote an effective conflict solution with its stakeholders.
SECTION 2. GOOD GOVERNANCE PRINCIPLES AND MEASURES RELATED TO SHAREHOLDERS. SHAREHOLDERS´ ASSEMBLY’S INTERNAL RULES
Each company recognizes a shareholder as the person or entity registered in its Shareholder Registration Book or electronic means, indicating the number of subscribed and registered shares and under the conditions set in current regulations applicable to each company.
In relation to good governance, the companies’ shareholders are a group of great importance and therefore are granted with a set of rights, prerogatives, benefits, and duties consistent with legal provisions, Bylaws and in this Code.
All shareholders shall have, among others, the possibility to know and exercise their rights, to make relevant observations to the management, and to propose amendments or making pertinent proposals for the better performance of the Company of which they are shareholders.
The Companies shall commit to:
a.Recognize and promote its shareholders’ rights.
b.Disclose duties and obligations of its shareholders with the Group’s companies.
c.Disclose the operating regulation of the general shareholder’s meeting, in order to promote shareholders’ participation.
d.With regard to Bancolombia, set necessary mechanisms so that shareholders become duly informed about the main figures and indicators of the Bank’s businesses and those of the most relevant affiliated Group’s companies, the ratings obtained, the general financial, and risk policies, and all other topics related to share issuance.
2.1. Shareholder’s Rights
In addition to other rights set forth in laws and the Bylaws, each Company provides its shareholders with the following rights:
a. Dividends: To have a participation of the dividends as established by the Company’s Shareholders’ Assembly, according to the type of shares they hold, provided that there is distribution of the same.
b. Exercise of political rights: According to the type of shares owned, to participate and vote in the General Shareholders’ Assembly to make the corresponding decisions, including the appointment of bodies and dignitaries who, according to law and bylaws, should be elected. Likewise, shareholders shall be entitled to have effective mechanisms to be represented in the meetings. Bancolombia’s shareholders who represent 5% or more in the share capital of the company, shall be given the opportunity to request, in the beginning of the Assembly meeting where any reform to the company’s Bylaws is intended to be made, shall be given the opportunity to request, at the beginning of the Assembly meeting where any reform to the company’s Bylaws is intended to be made, the revision and voting of some articles in a separate or independent manner due to the significance or impact that a change may generate and to request the revision of other group of articles so that the analysis can be made based on an article-by-article basis. When such a request is rejected, the petition shall be voted on in a comprehensive manner.
Said request must be duly supported and presented to the Assembly meeting’s Chairman, who shall inform all other shareholders of the content of the petition. Without prejudice to the foregoing right and in order to guarantee the effectiveness of the meetings, all petitions the shareholders make with the exclusive purpose of delaying the meeting without a justified reason or petitions not duly supported to result in an individual revision of the articles to be reformed shall be rejected.
c. To transfer or assign their shares, as contemplated by law, the Bylaws, and shareholders’ agreements, if any; and to know the share registration methodology and the identity of the Company’s main shareholders, as established by the applicable law.
d. To have access to the company’s public information in a clear, timely, integral, and complete manner, so that they can make decisions on their investment in the company and to receive from the President and the Board of Directors the Annual report of business management and of the economic and financial state of the Companies.
e. To make recommendations about good governance, in the case of Bancolombia, through Bancolombia’s Investor Service Office.
f. To associate themselves to exercise their rights.
g. To request, together with other shareholders, calls to meetings, as contemplated in provisions contained herein, in the Bylaws or by law.
h. Right to withdraw: With respect to Bancolombia and the financial companies with domicile in Colombia, shareholders shall be entitled to exercise their right to withdraw as contemplated in the applicable provisions of each Company. This right may be exercised when, in case of an agreed merger, the resulting exchange relationship of the technical study is modified by a decision made by a majority exceeding eighty five percent (85%) of subscribed shares of each of the interested entities.
In this case, the shareholders who are not in agreement with the new relationship, shall have the right to withdraw. When a company’s shareholder decides to exercise this right, the Company shall pay the shares at the relevant price in cash within a month following the date when the meeting where the merger was decided; such acquisition shall be paid by the Company, in the form of reduction of capital or acquisition of own shares, as contemplated by the supervisor. The price of such shares shall be equal to each share price used as the basis for the exchange relationship proposed in the technical study.
Likewise, shareholders shall be entitled to exercise their right to withdraw in the spinoff events where such a right may be applicable, as set forth in relevant applicable regulations. In all cases, the right to withdraw shall be subject to provisions of norms in force.
i. Special Audits for Bancolombia: A Shareholder or a group of shareholders having a participation equal to or exceeding five percent (5%) of Bancolombia’s capital, percentage deemed as sufficiently representative and from which financial legislation and Stock Market legislation recognizes certain rights to shareholders, shall be entitled to request, before the Presidency or the
Bank´s Investor Service Office, an authorization to hire, at the shareholder’s or group of shareholders’ expense and responsibility, special audits based on the following terms:
• Special audits shall deal with matters different that those audited by the External Auditor.
• Special audits shall be conducted within ten (10) business days of the Ordinary Assembly of Shareholders held during the first quarter each year, and within the first ten (10) business days of October each year.
• When conducting a special audit, under no circumstances, the violation of the Company’s rights, its information or its customers’ information, its projects, its contracts deemed as competitive benefits or any document deemed as confidential or restricted information or that of third parties will be allowed, as contemplated in current regulations in force applicable to the Company.
• Special audits cannot be conducted about industrial confidential information or with respect to topics covered by legislation about intellectual property rights or information over which there is a confidentiality commitment.
• Special audits shall only cover the information and documentation the Company possesses and has held for two years or less, as long as it is directly related to the purpose of the audit.
• Under no circumstances, special audits shall affect normal operation of the Company or its managers’ autonomy and competence, as contemplated by law and Bylaws.
• A request to conduct special audits shall be made in writing no later than one (1) month prior to the date the special audit will be conducted, indicating clear reasons and facts such a request is based on, specific topics for the audit consistent with the cited reasons and the duration time which should not exceed fifteen (15) calendar days. The request should include specific information to have access to, and no general, unspecific or ambiguous requests will be admitted.
• Such a request shall be filed with the Company Presidency or Bancolombia’s Investor Service Office.
• The Board of Directors, through its Good Governance Committee, shall analyze the relevance of the audit and authorize or deny the audit, informing the shareholder about this decision within fifteen (15) calendar days from the date of receipt of the request.
• All firms hired to conduct such audits shall at least have the qualification of the Fiscal Audit designed by the Company’s Shareholders’ Assembly for the relevant period and known as a firm with professional expertise and reputation. Additionally, the audit firm shall accredit independence criteria with respect to competitors of the Company to be audited, with no conflicts of interest.
• The Bank shall set a space and assign people responsible for the execution of special audits.
• Work documents provided to the special auditor or audit firm conducting the special audits, as well as the audit results, shall be subject to confidentiality and will be retained by the Company. No physical or electronic copies of the consultation documents will be provided. The Bank reserves its right to take necessary measures to assure confidentiality of documents and release of the Company’s confidential information.
• The Company shall keep the results obtained for at least a period of time not less than five (5) years from its issuance date.
• The audit results will not be disclosed without prior written consent of the Company.
Whenever the Audit request comes from a shareholder who directly or indirectly is also a shareholder or beneficial owner of 0.5% or more of the voting rights or is an employee at a financial institution that is Bancolombia´s competitor, the board of directors may reserve its right to supply sensitive information, proposing the measures it deems pertinent to protect it, including the establishment of "clean teams" with the special auditor or firm that performs the specialized audits.
j. Equitable treatment of shareholders: Shares of Bancolombia and those of the financial Companies domiciled in Colombia shall be registered and capital shares, and may be common shares, preferred shares or shares with preferred dividend and with no voting right.
Bancolombia’s Companies shall assure all its shareholders an equitable treatment, bearing in mind that each shareholder shall have the same rights according to the kind and number of shares owned.
Consequently, the Companies shall assure that all shareholders are treated equally within their same class and therefore assure timely and complete response to their inquiries, claims, and petitions presented relating to information associated to topics of mandatory disclosure, information about the Corporate Governance and, in general, legal, statutory or contractual non-confidential information or information that can damage the company’s interests. All without prejudice of the events where, due to regulatory circumstances or directions of competent authorities, any specific information must be disclosed to a specific shareholder.
In Bancolombia, shares with preferential dividends will not confer upon their holder the right to vote in a Shareholders’ Meeting, except for cases set forth in the Company’s Bylaws and in legal provisions regulating such matter. When such a case occurs, Bancolombia will promptly inform these shareholders, so that they can exercise their right to vote or grant necessary powers to be represented at meetings. In any case, Bancolombia will ensure that these shareholders with a preferential dividend and without the right to vote, are duly notified of the Shareholders’ Meetings in which they must be summoned and that they have the opportunity to be represented at the meetings where their vote may be required, and they should appoint a spokesman to represent them.
k. Shareholders’ Representation: Shareholders are entitled to be represented in all assembly of shareholders through a written power. Representatives should identify themselves as contemplated in relevant legal regulations.
In Colombia, the Company’s managers and employees are not entitled to exercise powers to represent third parties’ shares in the Shareholders’ Meeting of the Company of which they are managers or employees, or replace powers granted. They do not have right to vote, not even with their own shares, to make decisions intended to approve balance sheets and end-of-year accounts or liquidation accounts.
In the same way, an employee who is also a shareholder of the respective Company with domicile in Colombia and has decided to represent his/her shares in an Shareholders’ Meeting or have representation in those meetings through a power, should expressly inform, when requesting his/her credential or in the power granted, his/her condition as a shareholder and employee so that his/her vote cannot be taken into account when approving the financial statements.
Except for provisions of paragraph above, managers or employees of the respective Company shall be entitled to exercise the political rights inherent to their own shares and those shares they may be representing when acting as legal representatives or in those cases expressly set forth in current regulations in force.
With the purpose of assuring an equitable treatment of shareholders and avoiding potential conflicts of interest, the following prohibitions are included addressed to directors and employees of the Company, as well as to the entity in charge of managing the Bank’s shareholders book, if such administration is under the responsibility of a third party.
•To promote, encourage or suggest the shareholders to grant blank powers where the name of the representative in Shareholders’ Meetings is not clearly defined.
•To receive from shareholders relevant powers to attend the meetings, where the name of relevant representative is not clearly defined.
•To admit powers granted by shareholders as valid documents when not in compliance with legal requirements. Powers should be granted in writing indicating the representative’s name, his/her deputy (if any), and, if such is the case, the date of the meeting. Legal entities granting a power should attach a recent certificate as evidence of their existence and representation as contemplated by law. To suggest or specify the name of those people to act as representatives in the shareholders’ meetings.
•To recommend the shareholders to vote for a specific list. This does not prevent the Board of Directors or the President, in exercise of their duties, from submitting proposals for consideration before the meeting.
•To coordinate or agree with any shareholder or any shareholder’s representative, a vote in favor or against any proposal submitted in the meeting.
Actions described above shall be also prohibited when they are executed through proxy, intermediary or third party.
l. Mechanisms to avoid capital dilution: In relation to companies that issue shares in the stock market in Colombia, when an increase of subscribed capital with the waiver of the right of preference for the subscription of shares, merger, spin-off or segregation, the company’s Board of Directors shall provide shareholders, during the term of the meeting call, with a report containing the main terms of the transaction to be executed. The report shall include an opinion of an independent external advisor hired by the company for such a purpose. Regarding a merger, spinoff, or transformation the term to submit reports shall be of at least fifteen (15) business days prior to the date of the meeting.
m. Incorporation of new items in the ordinary meetings’ agendas: Notwithstanding legal provisions, Bancolombia’s shareholders shall be entitled to request the company’s management the inclusion of additional items in the agenda. For this purpose, they shall comply with relevant procedures set forth in this Code.
The request to include new items in the ordinary meeting agenda shall be received in writing, addressed to the President of the Company or the Secretary General at the company’s main domicile address, or through the Investor Service Office within five (5) calendar days following the call to the meeting. The request shall contain the reasons to request the inclusion of the item.
The Company shall respond any request received indicating in writing whether the request has been accepted; when the request is rejected, relevant reasons shall be provided.
When a request to include new topics in the agenda is made by a shareholder or a group of shareholders representing five percent (5%) or more of the Company’s stock capital, and such a request is going to be rejected, the reasons for such a rejection shall be informed to the Board of Directors through its Good Governance Committee.
When the inclusion of new topics is accepted in the agenda, the management, with prior approval of the Board of Directors, shall publish on relevant website, no later than fifteen (15) calendar days prior to the meeting’s date, the new agenda of the meeting. The publication may be carried out with less advance notice prior to the date of the meeting, taking into account the terms required by the management and/or the Board of Directors to implement the procedure set forth herein.
n. Presentation of proposals: Bancolombia shall present the shareholders through its website and prior to the meeting all proposals of the Board of Directors, the management or the shareholders, provided that they have already been accepted.
According to the foregoing and in order to guarantee the domestic and international shareholders’ right to be informed about the proposals made in the meeting and to be able to prepare their vote, shareholders interested in presenting proposals shall, in compliance with the Corporate Governance provisions, present such proposals in writing through the President’s Office or the Secretary General’s Office or the Shareholder and Investor Service Office, at least three (3) business days before the date of the meeting. The foregoing, notwithstanding the applicable legal provisions in Colombia.
2.2. Main Obligations of the Shareholders
By the purchase of their shares, the Companies’ shareholders herein accept to comply with Bylaws and rights and obligations contemplated in the Good Governance Code. The main obligations are as follows:
a. To provide the information required by law, the Bylaws and this Code. To keep the Company informed about their current address or that of their legal representative or proxy, whatever the case may be, so all notifications or communications can be sent to that address and have an effective and direct contact with them, when necessary.
b. Transfer of shares can be made through agreement between the parties, but, in order for the transfer be duly and validly executed with respect to the Company and third parties, the shareholder executing the transfer shall report such transfer to the Company or to whoever keeps the shareholders' register; the document should include the number of shares to be transferred and full name and identification of the transferee, in order to make relevant registration of the operation in the shareholder registration book or to make relevant electronic registration, all without prejudice of the previously mentioned steps and procedures set forth in the Company’s By-laws or in the applicable rules to transfer shares to third parties, as well as internal procedures related to prevention and control of money laundering and terrorist financing.
c. In the instance of Bancolombia, to comply with norms set forth to execute inspection right.
d. In the instance of Bancolombia, to comply with the procedure set forth in this Code in order to request the inclusion of items in the agenda or to present proposals before the meeting.
e. In case of participation in meetings, such intervention shall be made with respect and in a short and timely manner and related to the topic being discussed, according to provisions set forth in this Good Governance Code. This is also an obligation for the shareholders’ representatives.
f. Inform the Companies in an accurate, timely and complete manner, the data required by them to report and update the information of their beneficial owners in the Unique Registry of Beneficial Owners, in accordance with the applicable regulations.
2.3. Relationship between the Shareholders and the Company
Shareholders shall act with loyalty and in good faith with the Company they have shares in, refraining themselves from participating in actions or conducts where there is a conflict of interest, or which may result in offenses related to money laundering or terrorist financing. They must also refrain from engaging in any act or conduct intended to hide assets derived from criminal activities, and in general, any act or conduct that harm the Company´s interest, or that imply the company’s confidential information be disclosed or its sustainability is at risk.
Business relations of the Company with its main shareholders shall be conducted within the limitations and conditions set forth in relevant norms and, in all cases, under the market conditions. Section nine (9) herein sets forth the principles and measures related to management of Bancolombia's Transactions with Related Parties.
2.4. Policies related to the exercise of political rights of Colombian Pension Fund Management Companies (“AFPs”)
Bancolombia, based on the existent legal regulations in place in Colombia relating to AFPs (Pension Fund Management Companies) that make investments in the Bank’s shares with third parties’ funds, has implemented the following policies so that such companies can legally exercise their political rights:
a. Without prejudice of the inspection right AFPs have as shareholders and with the purpose of providing a timely, clear, and accurate information that allows them to exercise their voting right, Bancolombia shall take care of any request, petition and requirements of information before the meetings held by the people assigned by the AFPs. For this purpose, the AFPs will be required to assign a representative by means of whom the pending information relating to topics of the meeting agenda will be disclosed.
b. The Bank shall be entitled to request a certification evidencing that the person assigned does not have conflicts of interest with Bancolombia to access the information to be provided.
c. With the purpose of assuring an equitable treatment and access to information under equal conditions for all shareholders, Bancolombia will make available to the other shareholders the answers given to the AFPs. In all cases, Bancolombia shall not provide information related to its customers or users, information related to special projects or strategic information about businesses, personal data of its managers, contracts that may constitute competitive advantages, or other documents that may be deemed confidential, reserved or information about third parties, in compliance with applicable regulations and internal policies set forth by Bancolombia.
d. When the agenda of the Assembly meeting includes a proposal for the election of the Auditing Company, Bancolombia, in addition to complying with the policies set forth for the assignment of such company in this Good Governance Code and legal provisions, shall publish on its website the proposal already approved by the Audit Committee, as well as all other criteria taken into consideration for such a proposal.
e. When the agenda of the Assembly meeting includes a proposal for the election of the Board of Directors, Bancolombia shall inform about the proposals previously presented by shareholders and taken into consideration by the Good Governance Committee that complied with requirements established by law, the Bylaws and this Code, by publishing on its website a brief summary on each candidate’s profile and the result of the evaluation.
f. In case of reelection of the Board of Directors, information will be given about the attendance of such members to the meetings (Board of Directors and supporting Committees).
g. Likewise, Bancolombia shall provide, within its possibilities, all certifications requested by Colombian AFPs, certifying whether or not a candidate is a person independent from the relevant AFP.
h. In relation to statutory reforms, Bancolombia shall publish on its website the most relevant aspects to be modified and the reasons alleged to present such a proposal.
2.5. Operative Rules of the Shareholders’ General Meeting for Colombian Companies
The Company’s highest management body is the Shareholders’ General Meeting and its implementation guidelines listed below will be addressed. In the case of Bancolombia, the meeting will also be governed by the provisions contained in Chapter VIII of the Bylaws.
a. Convening the Shareholders’ Assembly meetings: Without prejudice of the mechanisms set forth in the Company’s Bylaws to convene shareholders’ meetings or shareholders’ boards, the Companies that are going to hold the meeting and have a significant number of shareholders located in different parts of the territory, shall use electronic mechanisms to disclose and convene the meeting and the agenda to be discussed. In the case of Bancolombia, the call shall also be published on the company’s website.
b. Right to inspection: With at least fifteen (15) business days before the date set for the General Shareholders’ Assembly meeting of Companies with domicile in Colombia, shareholders will have access to the financial statements, the managers’ reports, and all other documents and information at the main office facilities, as necessary to make relevant decisions. In relation to Companies where a different term applies by law or in accordance to their Bylaws, and the Companies domiciled abroad, the right to inspection or right to information for shareholders shall be understood as within the terms set by law or by the Bylaws.
In the case of Bancolombia, and with the purpose of assuring and protecting the Bank’s information, a procedure which allows having more clarity, transparency, and effectiveness for exercising the right to inspection will be implemented, and such a document shall be made available on the Company’s website and will be binding upon the parties who intend to make an inspection on the Bank’s books and documents.
The Companies shall promote access to the information of all its shareholders. Bancolombia shall make available on its website all necessary information to make decisions during the meeting, such as financial statements, profit distribution project, and management report. The proposals shall be published on the website as soon as they are presented to the management.
c. Presiding and installation of the Assembly: The Bank´s shareholders Assembly shall be presided by the Bank´s President; in the absence of the Bank´s President it will be presided by the members of the Board of Directors, in its order; in absence of all of the aforementioned, the meeting shall be presided by the meeting assistant whom the Assembly designates by majority vote of the represented shares. The Bank´s Secretary shall act as Secretary of the Assembly, and in absence of the Bank´s Secretary, the Assembly´s Secretary shall be designated by the Assembly’s president. The Assembly shall be installed by the President, which shall then continue to proceed with the verification of the quorum, the reading and approval of the Assembly’s agenda and the election of the scrutiny, approval and signing committee of the minutes.
d. Agenda: The Agenda proposed for the shareholders at the beginning of regular or special Assembly of Shareholders, shall include several businesses to be treated in such a way that they cannot be confused with other businesses, keeping a logical order, except for those topics which should be discussed together due to their association.
The Companies shall refrain from promoting in the agendas of the meetings expressions such as “proposals and miscellaneous,” “miscellaneous,” and “other businesses,” and have defined, within the terms indicated in this section, relevant procedures so that shareholders interested in presenting proposals can do so in advance.
In addition to aspects respect to which this is a legal requirement, in Colombian companies the following topics or decisions shall only be analyzed and developed by the Shareholders’ Assembly, only when they have been expressly included in the convening of the shareholders´ meeting: change of trade purpose, waiver to right of preference, change of trade domicile, advanced dissolution, and segregation (improper spinoff). In the case of Bancolombia, in addition to the aforementioned matters, the election of members of the Board of Directors may only be analyzed and discussed by the Shareholders´ Assembly if it is explicitly included in the notice, in accordance with the provisions set forth in the Bylaws.
e. Information: Shareholders shall be entitled to make questions or request supplementary information or clarifications about the businesses of the agenda through the Investor Service Office or the Secretary General’s Office, during the period set to exercise the right to inspection. The Company shall make available to the shareholders all answers given. The Companies shall not provide information protected by the commercial and industrial reserve of the company, information that exceeds the right of inspection legal scope, or information classified as “Confidential” in accordance with applicable regulation and the policies established by Grupo Bancolombia.
f. Kinds of meetings: There will be an ordinary assembly meeting for the Companies in Colombia each year by of before March 31st, in order to analyze the Company’s situation, appoint directors and all other officers according to the periods set for each position, consider reports, accounts, and end-of-year balances, resolve about profit distribution, and agree on all resolutions deemed as appropriate for assuring compliance with the Company’s trade purpose.
In the case of Bancolombia, the President and the Secretary shall lead the presentation of the agenda, notwithstanding the participation of other directors, as disposed by the President. Following section 3.3. of this code, the Audit Committee’s President of Bancolombia and, in the absence of the latter, any of its members, shall present the information regarding the Audit Committee projects or activities.
There will be a extraordinary meeting when required for the Company’s emergencies or unforeseen needs, through notice made by the Board of Directors, the President or the Auditor, or when applicable regulation do not provide otherwise with respect to the legitimacy to convene an assembly, by request made by a number of shareholders representing not less than ten percent (10%) of subscribed shares. The meeting shall not discuss topics different from the ones contemplated in the Meeting Agenda described in the notice, except for decision made by the number of shareholders demanded by law and upon completion of the Agenda.
If the General Assembly meeting it is convene by a plural number of shareholders, these shareholders must send a communication addressed to the Board of Directors, the President of the Company or the Auditor, as applicable, with a copy to the Company's secretary, in which they shall provide (a) the name of the shareholders requesting the General Assembly call notice, (b) the number and class of shares owned by such shareholders, (c) the proposed agenda for the meeting to be included in the meeting call notice, and (d) the justification of the proposals to be submitted for consideration of the General Assembly. In the case of Bancolombia, the justification shall be available to the other shareholders on the Company's website during the meeting call notice period. Shareholders who submitted the request for a meeting may withdraw the request at any time before the notice is published. Once the request is sent and the notice of the extraordinary meeting is published, the requesting shareholders will not be allowed to modify the proposed agenda.
g. Meeting Suspension: When there are extraordinary circumstances that avoids the normal development of the meeting of assembly, the shareholders shall be entitled to request suspension of the meeting during a period of time necessary to reestablish conditions to continue with the meeting or they shall be entitled to postpone the meeting the number of times decided by a majority of shareholders; that is, at least fifty one percent (51%) of shares represented at the meeting.
In all cases, deliberations cannot take longer than three days, except for those cases where all subscribed shares are represented.
h. Intervention of shareholders in the meetings: When developing the agenda, shareholders shall be entitled to have an intervention in those topics related to the business being developed in the agenda. Each shareholder having an intervention shall identify himself/herself indicating full name and citizenship card number. In the case of a proxy, he/she should provide the name of the shareholder he/she is representing. Each intervention cannot exceed five (5) minutes.
i. Quorum to Deliberate and Make Decisions: A quorum necessary to deliberate and make decisions in the meetings shall be the number of shareholders with voting right, representing 50% plus 1 of subscribed and paid-up shares, except when regulations demand a special quorum for specific meetings.
As a general rule, decisions made by the Shareholders’ Meeting shall be adopted by the majority of votes corresponding to shares with right to vote duly represented in the meeting, bearing in mind that each share gives the right to a vote, except as contemplated by law and the Company’s Bylaws.
Decisions adopted by the Shareholders’ Meeting shall be binding upon all shareholders, without prejudice of legal provisions in force with respect to absent or dissident shareholders.
j. Minutes. The events of the meeting will be recorded in a minute book. The minutes shall be signed by the Assembly’s President and Secretary and shall be approved by committee composed by two persons elected by the Assembly in the same meeting.
k. Discrepancies in Shareholders’ Criteria: Discrepancies in shareholders’ criteria in relation to the general operation of the company, its operations, projects, and businesses, shall be discussed and resolved according to legal provisions and the Company’s Bylaws.
l. Attendance of the Directors to the assembly: Bancolombia’s Directors, particularly those who act as presidents to supporting committees shall attend all ordinary assemblies. The Assembly’s directive board shall be composed by the President, the Secretary of the meeting, and the attending members of the company´s Board of Directors, except in the case of extraordinary meetings or online meetings, in which case, the participation of the President and the Secretary will suffice.
m. Elections and voting: In the elections and voting that correspond to the Assembly of Bancolombia, the rules set forth in the Bank's Bylaws and those included in the Code of Good Governance shall be observed.
SECTION 3: PRINCIPLES AND MEASURES RELATED TO MANAGERS AND MAIN EXECUTIVES AND OPERATING RULES OF THE BOARD OF DIRECTORS
Managers and main executives of each company of the Group shall act in good faith, with loyalty and due diligence of a good businessman. Their actions shall be oriented to comply with the Company’s interests bearing in mind its shareholders’ interests and complying with their duties as contemplated in relevant applicable norms, Bylaws, and in this Good Governance Code.
In the performance of their duties, and in the fulfillment of their functions, managers and main executives shall:
a. Make the best efforts to achieve a proper development of the Company’s trade purpose.
b. Promote total fulfillment of legal provisions and Bylaws.
c. Promote the appropriate completion of the duties conferred upon several control bodies of the Company, especially the Statutory or External and Internal Audit offices.
d. Keep and protect the banking, stock exchange, commercial and industrial reserve, of businesses executed with consumers and suppliers, and information defined as “Confidential Information” in the applicable regulation, the Code of Good Governance and the policies of Grupo Bancolombia.
e. Refrain from making an undue use of confidential information.
f. To provide equitable treatment to all shareholders and respect the exercise of the right of inspection.
g. Refrain from participating in person or through a third party for personal benefit or for a third party’s benefit, in activities implying competition with the entity or in actions where there could be a conflict of interest.
h. Supervise application and compliance with the corporate government and ethics provisions of the Group and adopt necessary mechanisms to strengthen the same.
i. Ensure that the principles of healthy, free and fair competition are a staple in all operations and business relationships of the Companies.
j. Ensure that a culture based on diversity and inclusion is promoted within each Company, which recognizes the differences between individuals, promotes respect and builds on different personal styles, cultures, experiences, beliefs, abilities and preferences. Likewise, ensure that the Companies provide decent, respectful, safe and healthy workplaces.
In this Code of Good Governance, the following terms have the meanings ascribed to them below:
a.“Affiliate” means, with respect to a person, any person who controls, is controlled by, or is under common control with such first person. For the purposes of this definition, "control" means the ability to submit, directly or indirectly, individually or jointly, with another person or persons, the will of another person, and any word derived from the noun "control" will have the corresponding correlative connotation. Control is presumed in the cases provided under article 261 of the Commercial Code. With respect to any natural person, the term Affiliate refers to (a) any person controlled, directly or indirectly, individually or jointly with other persons, by such natural person, (b) their relatives up to the third degree of consanguinity, second by affinity and first by civil law, (c) to the spouse, common-law spouse or any person who lives in the same residence as the natural person in accordance with the circumstances referred to in letter (b), and (d) to any person controlled, directly or indirectly, individually or jointly with other persons, by any of the persons referred to in letters (a), (b) and (c) above. For purposes of this definition, it is presumed that if a natural person and any of the persons referred to in letters (a) to (d) participate in the capital, have votes or otherwise participate in the same person there is an event of joint control.
b.“Management Officer” means, with respect to a corporation or other type of legal entity, its directors and members of senior management.
c."Person" means any natural or legal person, including any company by shares, quotas, interest parties (or equivalent figures according to the legislation applicable to the constitution or operation of the respective Person) or any other form of participation in the corporate capital, as well as any entity assimilated to a person, or that may be the recipient of rights or obligations, in all the above cases in accordance with the law that applies to its constitution or operation, including, without limitation, any company, cooperative, union, trust , autonomous patrimony, trust, investment fund and any other analogous or equivalent figure.
d.“Competitive Situation” means that situation that occurs when a person is a Relevant Partner, or Management Official of one or several companies that are engaged in the same economic activities or participate in the same value chains as any of the Companies.
e."Relevant Partner" means, with respect to any legal or similar person (including any entity that may be the recipient of rights or obligations, such as, without limitation, companies, cooperatives, unions, autonomous estates, trusts, investment funds and analogous or equivalent figures), the partner, associate, member, real beneficiary (as said term is defined in Decree 2555 of 2010) or equivalent figure of said legal or similar person that has, directly or indirectly, more than 10% of the voting interest in such Person.
3.1. Boards of Directors’ Operative Rules.
The activity of the Boards of Directors, as the highest directive and administrative bodies of the Companies, shall be specially focused on defining general policies and strategic objectives of them, as well as on supervising all actions taken to achieve the objectives, in a permanent search for the shareholders’ rights and the Company’s sustainability and growth. Specific functions of the Board of Directors have been established in the Company’s Bylaws and duly contemplated by law and this Code.
The Board of Directors shall also promote the best treatment and assistance to shareholders, customers, consumers, employees, suppliers, and all its stakeholders in general. Powers of the Board of Directors shall be enough for ordering the execution of any action or contract as contemplated in the Company’s trade purpose and for making necessary decisions so the Company can comply with its purposes as contemplated by law and Bylaws.
a. Election, Composition, and Remuneration of the Board of Directors: The Companies’ Boards of Directors shall be elected by the Shareholders’ Meeting and shall consist of the number of members set forth in the Company’s Bylaws.
In Bancolombia’s case, members of the Board of Directors (hereinafter referred to as “Directors”) shall hold their positions during a two-year (2) period, but they shall keep their positions until their successors are elected and appointed before the Financial Superintendency, except for prior removal or declaration of incompetence, or if they have resigned from their positions. These situations shall be reported before the Financial Superintendency or the Mercantile Registry, as the case may be.
Directors can be freely reelected and removed by the Shareholders’ Meeting, even before termination of their period.
For election of Bancolombia’s Directors:
•Shareholders will be informed, before the meeting, about profiles and resumes of the candidates, and the result of the prior evaluation by the Good Governance Committee.
•All shareholders will be assured with a possibility to submit lists of candidates to occupy the Board of Directors, as long as those lists are in compliance with requirements demanded by the applicable regulation, the Bylaws, and this Good Governance Code.
Evaluation of suitability and compliance with the selection criteria defined in this Code and the analysis of inabilities and incompatibilities with respect to candidates to the Boards of Directors shall be performed prior to the shareholders’ meeting, duly led by the Good Governance Committee.
•To guarantee the right of all shareholders to examine the proposals of the candidates to the Board of Directors received by management in advance of the General Meeting and to comply with the prior review by the Good Governance Committee, shareholders interested in submitting slates for the election of members of the Board of Directors, in compliance with the principles of corporate governance, must submit: (i) candidates to the Board of Directors within five (5) business days of the summons to the session of the General Shareholders' Meeting. The proposal must include a communication signed by the candidates indicating that they are not subject to any disqualifications or incompatibilities. In addition, the proposal must include a communication signed by the independent candidates indicating that they meet the criteria of independence; and (ii) slates made up of candidates previously submitted under the former item, at least five (5) business days prior to the date of the General Shareholders' Meeting. The Good Governance Committee shall evaluate (i) compliance with the independence criteria, with respect to independent candidates, and (ii) disqualifications and incompatibilities, with respect to all candidates, publishing the results of its evaluation at least six (6) business days prior to the date of the meeting of the Assembly.
•Proposals or lists of members for the Board of Directors not meeting the requirements demanded shall be eliminated from the election processes.
•The electoral quotient system shall be applied.
For the election of Directors from the other Companies of the Group, the bank´s President, with the support of the Corporate Vice-presidents, will define and nominate the nominees to be members of the Board of Directors of set Companies, without requiring the previous approval of the Board of Directors of Bancolombia.
For the election of their Directors, all Companies shall comply with all the applicable provisions contained in the Company’s Bylaws and the manuals or policies of SARLAFT (Money Laundering and Terrorist Financing Risk Management System).
In order to set the Directors’ remuneration, the Shareholders’ Meeting shall bear in mind number and quality of its members, their responsibilities, and time required in such a way that such remuneration can be consistent with the contribution expected by the Company from its Directors.
Shareholders shall be entitled to approve remuneration other than that of the President of the Board of Directors in relation to the other members of the Board, bearing in mind competences and responsibilities of their positions as well as the time devoted to such a position.
b. Criteria for the Selection of Directors: Bancolombia´s Shareholders may verify before the assembly the proposals of the candidates to form the Board of Directors received by the management which have complied with procedures in relation to propositions presentation, prior evaluation of Good Governance Committee set up in this Code.
For the election of the Directors, Bancolombia´s Assembly shall take into consideration the selection, suitability, and disqualifications or incompatibilities provided for by law, the Bylaws, the Regulations for Electing Members to the Board of Directors approved by the General Shareholders' Meeting and this Code, which will be informed to the shareholders so that they can have necessary judgments elements to appoint the Directors.
The Shareholders’ Meeting shall have into account the following criteria for selecting the Directors:
- General principles: The selection criteria shall be applicable to all candidates for the Board of Directors, as applicable. When possible, each Director shall offer a professional specialization consistent with the Company’s business.
-Academic and professional history: During the process to evaluate candidates, verification shall be made to check their personal and professional qualifications, academic preparation, and/or labor history which accredit them as suitable and competent people to manage and guide the Company.
Bancolombia, as the parent company, shall seek the members of the Board who may offer valuable contributions concerning orientation on relevant and strategic decisions of Bancolombia´s Business Group, as well as on the Bank’s businesses and products, and shall verify that such members understand their responsibilities all financial entities have with their users, customers, shareholders, and all other stakeholders.
-Basic competences: All Directors shall have necessary basic skills that allow them to execute an appropriate performance of their functions, such as analytical and managerial skills, a strategic vision of the business, objectivity, capacity to give their opinion, necessary skills to evaluate superior managerial scenarios and analyze the main components of several control and risk systems and financial results and indicators. Additionally, they shall have necessary capacity to understand and question the financial information and business proposals and work within an international environment.
-Specific competences: In addition to basic competences above, the members of the Board of Directors must have other specific competencies that allow them to contribute in one or more dimensions, due to their special experience, knowledge of the industry, financial or risk areas, as well as in legal areas or commercial or economic topics.
The Company shall make its best efforts to assure the most appropriate knowledge of each Director in relation to businesses and general aspects. When a Director is appointed for the first time, he/she shall be provided with necessary information to have a specific knowledge relating to the Company and the sector where its trade purpose is being developed, as well as necessary information relating to responsibilities, obligations, and powers inherent to their positions. The Secretary General of the Company will coordinate the induction and training process for Directors, in accordance with the Induction and Training Policy.
-Availability: Every candidate for Director of any of the Companies shall assure that they have necessary time available to assume their responsibilities with the Company.
Availability includes, in the case of Bancolombia, an attendance that should not be, except in the case of justified force majeure, less than 80% of the total annual meetings of the Board of Directors and the Committees.
Likewise, the Director must have time for the evaluation of the material and information prior to the meetings, the follow-up of information on the financial sector, training and updating programs, meetings with supervisors and in general to make studies or recommendations the company.
•- Not to be involved in Disqualifications or incompatibility: In compliance with the regulations applicable in Colombia and the best international standards for financial entities and issuers of securities, notwithstanding the cases of ineligibility and disqualifications set forth in regulations and in the Company´s Bylaws, the Person upon which the following circumstances are predicable, will not be eligible as member of the Board of Directors:
I.Belongs, as a member, to the board of directors of other four (4) Colombian public limited companies (sociedades anónimas), in addition to the respective company.
II.In the case of financial entities that are credit institutions (establecimientos de crédito), (a) Directors can neither be nor have been , withing the previous two (2) years, members of the Board of Directors of other credit institutions, in jurisdictions in which the Group has presence, (b) be or have been president, legal representative, administrator or employee of other financial groups, or entities whose purpose or that of their Affiliates is the provision of financial services rendered by the Companies during the two (2) years prior to his or her appointment as Director. In (a) and (b) except in the case of companies of the Bancolombia Group or of the Financial Conglomerate to which the Grupo Bancolombia belongs.
III.Have rendered services or received any remuneration, directly or indirectly, for an annual amount greater than the equivalent of USD $120,000, from financial groups or conglomerates other than the one to which Bancolombia belongs, during the two (2) years prior to his or her appointment.
IV.That the candidate, directly or in conjunction with its Affiliates, has direct or indirect equity participation or be beneficial owners of an equity participation equal to or greater than 0.5% of the voting rights of financial entities other than Bancolombia or of broker dealers (intermediarios del mercado de valores) in Colombia or any of the countries in which the Group operates.
V.To be a counterparty, directly or through its Affiliates or entities in which the candidate or its Affiliates hold a position of Management official, in judicial, administrative or arbitration proceedings, or in judicial or extrajudicial conciliation proceedings, in which the counterparty is any of the Companies or any of the entities of the Conglomerate to which the Grupo Bancolombia belongs.
VI.Be an Affiliate, of a member of the Board of Directors associated with Bank or credit establishments or its equivalent to the Grupo Bancolombia , who exercises functions as a director on the date on which the election of the respective candidate is submitted to the consideration of the general shareholders' meeting or with another candidate for member of the Board of Directors of Bancolombia in the same election.
VII.To be in a competitive situation, directly or through its affiliates, with the financial entities of the Grupo Bancolombia.
VIII.Be involve in a situation of material and permanent conflict of interest, as determined by the Board of Directors.
IX.Having been convicted or found guilty, in Colombia or in another jurisdiction, in judicial or administrative proceedings, within the ten (10) years prior to the date of the general shareholders' meeting at which the Board of Directors would be elected for: (a) violation of the rules regulating the securities market, (b) violation of the rules regulating the activity of financial institutions, as well as having been disqualified, totally or partially, by public or private entities, to engage in commercial activities in any jurisdiction.
X.Having been a Director Officer of Persons who incurred, within the ten (10) years prior to the date of the general shareholders' meeting at which the Board of Directors is to be elected, in the disqualifications contemplated in the preceding paragraph, provided that the candidate has been a Director Officer of the respective Person at the time the events constituting the infraction occurred.
XI.Having been convicted in a criminal proceeding within the ten (10) years prior to the date of the general shareholders' meeting at which the Board of Directors is to be elected.
XII.The Boards of Directors shall never be made up of a number of members working for the applicable company, who may form themselves a majority necessary to make decisions.
In all cases, the Directors shall inform each Company about any potential cause of ineligibility or disqualifications to exercise their positions as Directors of a specific company of the Group.
The above disqualifications and incompatibilities shall apply to the Directors of Bancolombia. The other companies shall take these disqualifications and incompatibilities as a point of reference, and may exclude those that are not applicable due to their size, jurisdiction, or restrictions inherent to their business. Likewise, they may include those that may be applicable according to the applicable regulation. The criteria approved by the Companies shall be submitted to the consideration of the General Secretary of Bancolombia.
•Eligibility before the Financial Superintendency: For the case of financial Companies domiciled in Colombia, all candidates for Directors shall assure their eligibility before “Superintendencia Financiera de Colombia” (Colombia Financial Superintendency) that will perform a detailed analysis of their history, academic and professional history, disciplinary and credit records, among other aspects.
•Independence: Independent Directors shall verify requirements demanded by each country’s regulations, the bylaws of the company, and for Bancolombia, additional criteria established herein. The independent Directors are obliged to prove before the company compliance with such requirements with necessary supporting certification.
In relation to Bancolombia Board of Directors, at least 2 of the 7 directors, must be independent.
When a candidate is nominated as an independent candidate, he/she shall prove before the entity and domestic and foreign pension funds his/her compliance with independence criteria necessary to guarantee such a capacity. Such certification shall also include the certification of each candidate’s independence respect to the Bank’s high management.
Likewise, the Bancolombia´s Board of Directors, through the Good Governance Committee shall execute a procedure to certify that it has checked compliance with the independence criteria demanded and that the candidate is a person independent from the Board of Directors.
In addition to the independence criteria set forth in Law 964 of 2005 for the issue of securities in Colombia, the election of a member independent from Bancolombia’s Board of Directors shall comply with provisions set forth by New York Stock Exchange for US issuers, the independence criteria established in the Bank’s Bylaws, and the following criteria:
A person will not be considered independent if (a) the person itself; or (b) whose Affiliates are:
I.Employees or managers of the companies, or former employees or managers during a two-year period immediately prior to the appointment, except in the case of the re-election of an independent person.
II.Any of the following persons: (a) any of the relevant shareholders (b) any person that determines the majority composition of the Bank's administrative or management bodies.
III.Shareholders, employees or advisers to shareholders, who directly or through an agreement, direct, guide or control more than ten percent (10%) of the voting rights of the entity or determine the majority of the entity´s administrative, management or control bodies.
IV.Partners or employees of associations or companies that provide services or other concepts, or receive payments from Bancolombia Group, for: (i) an amount greater than the equivalent to US $ 250,000 or corresponding to two percent (2%) or more of the total income of the applicable association or company (whichever is higher) for the last three years, or (ii) when the income for said association or company represents a value corresponding to twenty percent (20%) or more of the association or company´s operating income for the prior year.
V.Partners or employees of legal entities or similar (e.g. trusts) that have made payments to Bancolombia or its affiliates, subsidiaries or controllers, for a value greater than the equivalent to US $1 Million or corresponding to two percent (2%) of the total income of the respective company or association (whichever is higher) in the last three years, except for interest payments or financial services rendered by Bancolombia or its subsidiaries in the ordinary course of business.
VI.Employees or directors of legal entities or similar (e.g., trusts) that receive significant donations from Bancolombia, or from individuals or corporate entities that own shares of the Bank that represent zero-point five percent (0.5%) or more of the voting rights of Bancolombia. A donation will be considered significant when it represents more than twenty percent (20%) of donations received by the employee, director of the non-profit entity, association or society.
VII.Directors, senior management or key executives of an entity whose board of directors includes a legal representative of Bancolombia.
VIII.People who receive from Bancolombia Group any remuneration other than fees as members of the board of directors, the audit committee or any other committee created by the board of directors, or who have received remuneration for an amount greater than the equivalent to US $120,000 for 12 months, in the last three years, other than payments for being a member of the Board of Directors or a Board committee.
IX.Current partners or employees, or individuals who were, within the past three years, partners or employees of the external auditors.
X.Directors, senior management or key executives or legal representatives of another entity with respect to which any of the current Directors, senior management or key
executives or representatives of Bancolombia is a member of the compensation committee.
The above independence criteria shall apply to the independent Directors of Bancolombia. The other companies shall take these criteria as a point of reference, and may exclude those that are not applicable due to their size, jurisdiction, or restrictions inherent to their business. Likewise, they may include those that may be applicable according to the applicable regulation. The criteria approved by the Companies shall be submitted to the consideration of the General Secretary of Bancolombia.
•Diversity: Grupo Bancolombia aims for diversity in the composition of its Boards of Directors, including diversity of gender, nationality and ethnicity, among others. In this fashion, the shareholders proposals for the integration of the Boards of Directors members will consider the value that diversity brings on the superior performance expected by the governing body.
The Good Governance Committee, in consideration to its differential strategic vision and its business focus, considers the participation of women as an attribute of special relevance for the evaluation of candidate profiles.
Bancolombia’s Board of Directors, through the Good Governance Committee, shall carry out a prior, internal procedure to evaluate potential legal disqualifications and incompatibilities and the adequacy of the candidate to the profiles as appropriate, and will make known the results of that procedure.
Whenever Bancolombia´s Board of Directors identifies other profiles or characteristics necessary for the composition of the management body, in addition to those set forth in this Good Governance Code, it shall disclose such information on the company’s website.
c. Directors’ Performance Principles: With the purpose of keeping the highest objectivity, independence, and knowledge when making decisions, Directors shall be governed, individually and as a collegiate entity, by the following principles:
- Once elected, Directors shall represent all shareholders and shall not act to the benefit of specific shareholders or groups of shareholders.
- They shall perform their functions in good faith and on an independent basis, with due diligence, loyalty, and care, always assuring that their decisions are to the best interest of the Company.
- Directors of the Companies of the Bancolombia´s Business Group shall also consider the aligned interests of the Bancolombia´s Group in general and its different interest groups, as an element in its decision-making process.
- They shall promote and apply applicable laws, Bylawys, the Good Governance Code, the Code of Ethics and Conduct, anticorruption norms, and all other norms and rules adopted by the Company.
- They shall carry out their positions objectively.
-They shall define plans, strategies, and objectives of the Company.
- They shall know financial and operating conditions, as well as the important segments of the Company’s businesses.
- They shall actively participate in meetings of both the Board of Directors and the Committees they belong to, knowing and reviewing in advance the study and analysis material for the meetings, and this material shall be appropriately, completely, and timely provided by the Company.
- They shall avoid conflicts of interest with the Company, informing about the existence of these conflicts to all other members of the Board of Directors. Likewise, they will inform the Board of Directors when they become aware of a potential conflict of interest of another Director. The Director in a conflict situation shall refrain from voting with respect to the topic subject matter of the conflict, except when the Board of Directors, with unanimous vote of all other members attending the meeting, has decided that this Director is not involved in a conflict of interest. Section eight (8) of this Code develops the principles and measures regarding conflicts of interest.
- They shall refrain from participating, either directly or through third parties, in activities involving competition for the Company.
- They shall refrain from using confidential or restricted information of Grupo Bancolombia and that of several stakeholders they may have access to due to their positions. Any person appointed as a member of the Board of Directors will adhere to the Information Management Regulations included in this Code of Good Governance. The members of the Bancolombia´s Board of Directors are obliged to sign the Agreement for the Access and Use of Information. The members of the Boards of Directors of the other Companies must sign an agreement for the access and use of information, with the particularities applicable to them, taking as a reference the Agreement for the Access and Use of Information of Bancolombia.
For the means of protecting the information of the Group, the Directors individually considered may not access information from the respective company that is not requested by the Board of Directors in accordance with the provisions of section 3.7 of this Code.
Directors will be obliged to sign additional confidentiality agreements for the purpose of protecting the information. The non-subscription of confidentiality agreements does not relieve the Director of strict compliance with the duties and obligations of confidentiality and protection of the information established in the law and the bylaws.
d. Main Responsibilities of the Board of Directors: In addition to legal provisions and the Bylaws, the main duties and powers of the Board of Directors are as follows:
- Concerning Good Governance: The Board of Directors shall be responsible for promoting its own performance and fulfillment of functions and powers. It shall also be responsible for conducting a strict follow-up to good governance principles, policies, and measures contained in this Code, assuring relevant adoption, fulfillment, and implementation of them, and searching for a progressive development of better standards compatible with the Group’s culture and philosophy, according to the normal development of the topic nationally and internationally. The Board of Directors will oversee the approval of the applicable policies for Related Party Transactions. Section nine (9) of this Code includes the policies that have been provided for this purpose.
- Ethics and Transparency: The Board of Directors of each Company shall promote an ethical, upright and transparent behavior, according to principles and guidelines set forth in the Group’s Code of Ethics and Conduct.
Bancolombia’s Board of Directors shall establish existence and composition of a Corporate Committee of Ethics and shall govern its operation. Such a committee shall be in charge of supervising compliance with provisions contained in the Code of Ethics and Conduct, as well as determining necessary actions for assuring knowledge, release, and strengthening of the highest ethical behavior standards of the Group and to communicate the corporate positions regarding conflicts under its competence.
Without prejudice of the information provided above, each Board of Directors of the Companies shall conduct a strict follow-up to principles, policies, and guidelines of the Code of Ethics and Conduct, and shall determine the cases where creation of Committees of Ethics may be necessary within its Company, case in which such committees shall act in a coordinated and complementary manner with the Corporate Committee of Ethics.
- Senior Management: “Senior Management” of Bancolombia means the President and Vice Presidents who report directly to the President. The Board of Directors is responsible for the selection, evaluation, remuneration, and replacement of the Senior Management and for the assignment of their main responsibilities and for the supervision of the succession plan with support of the Appointment, Compensation and Development Committee. Each Company will define whether the concept of Senior Management applies to them and who is included in it.
- Business: In relation to the business operation, the Board of Directors has the power to approve and review the main projects, the risk policy and management, strategic planning, and the evolution of its execution and the financial and innovation plan, among others.
- Control: The Board of Directors shall promote integrity of the accounting, information, corporate government, internal control, risks, and financial consumer service systems, among others. Additionally, it shall promote an appropriate operation of each control, risk supervision, and legal compliance systems. Likewise, the Board of Directors shall also make a follow-up to the entity risk profile and shall approve the segmentation, identification, measurement, and control methodologies with respect to money laundering and terrorist financing.
If there were material weaknesses or comments issued by the Fiscal supervisor in its annual report of financial statements, they will be reported to the Auditing Committee. In case the Management has a different opinion relayed to them, the Board of Directors will issue a report to be submitted to the Assembly including corresponding considerations and explanations and the reasons of criterion differences with the Fiscal Supervisor’s opinion.
e. External Advisors: The Board of Directors shall be entitled to hire or order the management to hire external advisors for serving the Board of Directors; such advisors should be different from those hired by the management when it may deem it necessary for a better performance of its functions.
The Director who requests intervention of an external advisor must declare if there is a conflict of interest between him/her and the advisor requested, any blood relationship or commercial or personal with the Director, its Affiliates or Persons in which the Director is a Director Officer, in this case, the decision to hire the advisor shall be made by all other members of the Board. In all cases, the advisor being hired should keep topics subject matter of the advisory as confidential and should refrain himself/herself from showing a behavior having a conflict of interest or driving to the use of confidential information.
In accordance to the provisions of Bancolombia´s Bylaws, if a takeover bid is submitted to acquire Bancolombia shares, the Board of Directors, fulfilling its duties of diligence and loyalty toward the entity and its shareholders, and in view of its capacity as a systemically important financial institution, may contract impartial third parties to comprehensively analyze and evaluate all the components of the proposal, without limiting itself to economic aspects and including its sources of funding and the capacities of the bidder, including any links to the local and international financial sector . The conclusions of the analysis contracted for consideration by the shareholders will be published to the market so shareholders can consider it when making their decision. The foregoing is without prejudice to any confidential analyses and evaluations that may be requested by the Board of Directors for its own consideration.
f. Budget: The Board of Directors will prepare on a yearly basis a budget of expenses required to develop its management. This budget shall specifically include the aspects related to fees deemed as necessary for hiring external advisors different from the ones hired by the management when needed, national and international trips, representation expenses, attendance to seminars and events, Board supporting committee fees, and all other expenses required to assure an appropriate management.
g. Board of Directors Meetings: Meetings of the Board of Directors shall be held for periods of time as contemplated by law and Bylaws. With respect to Bancolombia and the financial Companies with domicile in Colombia, the Board meetings shall be held at least once a month; however, when special circumstances occur, extraordinary meetings shall be held when convened according to provisions set forth in the Company’s Bylaws.
Bancolombia´s Board of Directors shall meet at least once a year in a special meeting in order to analyze, evaluate, and decide on planning and strategies of the entity.
Minutes of the Board of Directors meetings shall include studies, bases, and all other information sources used for making decisions, as well as the favorable and unfavorable reasons taken into account for making such decisions, in those cases where a unanimous decision is not made by the attending members. The minutes shall also certify the cases when a member of the Board has informed about a conflict of interest.
The minutes of the meetings will serve as a record of the deliberations and decisions adopted by the Board of Directors. When applicable, these decisions will be informed through relevant information mechanisms.
The Board of Directors of each Company shall approve the yearly schedule for its ordinary sessions, without prejudice of the meetings to be held on a special basis. Based on the yearly schedule, the Secretary will send out the meeting calls electronically.
h. Meetings with no Presence of the Management: The Board of Directors shall be entitled to celebrate all necessary meetings with no presence of officers belonging to the company’s management. These meetings shall be held when required by the Board of Directors and its decisions shall be totally valid provided, they comply with legal requirements and the Company’s Bylaws.
i. Intranet or any other Information and Communication Media for Analysis, Discussions, Documents, etc.: The members of the Board of Directors of the Companies will have prior access to information relevant for making decisions, according to the Agenda of the meeting.
The Companies will make available to the Directors the necessary, useful and pertinent information that is required to participate and make decisions in a reasoned manner in each Board meeting with a term in advance of the meeting not less than two (2) days to through any physical or electronic means that guarantees the receipt of the information.
j. President and Vice-President of the Board of Directors: The Board of Directors shall have a President and made have a Vice-President, and such positions can be rotated among the members of the Board as determined by the Board. President and Vice-President shall be responsible for assuring efficiency and best performance of the Board.
The Board’s President, in conjunction with the Company’s President or the Secretary, shall cooperate to prepare the yearly schedule for meetings and shall provide necessary guidelines to comply with such a schedule. The Board’s President shall assure timely and efficient delivery of the information to the Board of Directors and shall guide relevant discussions to assure participation of Directors and the relevance and admissibility of the debates. Additionally, the Board’s President shall lead the Directors’ interaction among them and with the Board and shareholders.
k. Secretary of the Board of Directors: The Board of Directors shall have a Secretary duly appointed by the Board of Directors. The Secretary’s powers and responsibilities shall be defined in the Bylaws. In general, the Secretary shall be responsible for the following activities:
i.To call the Board’s meetings according to the yearly schedule set for such a purpose and to coordinate the Board of Directors’ meetings.
ii.To assure delivery of information when required prior to a meeting of the Board of Directors; in general, the Secretary shall be responsible for providing information as necessary and relevant to keep Directors totally informed and make decisions.
iii.To keep, according to law, relevant Board of Directors’ minutes book, as well as relevant attachments; to authorize, with his/her signature, the issue of copies certifying the agreements adopted by the Board.
iv.To assure compliance with policies and guidelines set forth in the company’s bylaws and this Code in relation to the operation of the Board of Directors.
v.All other powers and responsibilities set forth in regulations applicable to each company or the Group.
l. Meeting agenda: The Board of Directors regular meetings will be prepared by the Secretary based on an annual thematic agenda led by the Board´s President and which shall contain the recommendations of the Directors and the Good Governance Committee (if this Committee exists), as well as the recommendations from the Senior Management, and the President itself. The agenda responds to the functions and responsibilities of the Board of Directors with a strategic, business and risk focus and will flexibly attend to the dynamics of the environment, the evolution of business and the needs of the Companies.
m. Induction and Training Policy: With the aim of facilitating the understanding of their responsibilities and the functioning of the organization by the individuals designated as members of the Board of Directors of the Companies, the General Secretary will coordinate their induction plan based on each Director's experience, background, and profile, the Support Committees they will participate in, and their prior knowledge of the entity.
The plan will include, among others, an induction on the mission, vision and values of the organization; a presentation of the corporate governance structure of Bancolombia´s Group; a presentation on the main challenges and opportunities facing the organization; meetings with the main executives of the entity; and training on the legal and fiduciary responsibilities as a member of the Board of Directors, and on the attributions derived from their appointment.
In the case of Bancolombia, the Corporate Governance Committee will supervise compliance with the induction plan for new members of the Bank's Board of Directors.
Additionally, the Companies will provide the members of the Board of Directors with regular opportunities to update their knowledge and skills through training and education on academic, commercial, and strategic topics related to the competencies of the Board and its Support Committees, as well as on issues that the Board of Directors and Senior Management define as relevant and pertinent for each year.
The Good Governance Committee will promote the training of Directors and their attendance at seminars and events that allow them to engage with national and international organizations, entities, and companies.
3.2. Appointment of President and Main Executives
The Board of Directors shall be responsible for appointing and removing the President of the Company, his/her Deputy, and all other vice-presidents responsible for the ordinary course of the business.
Sixty-five (65) years is the age established as the maximum age to occupy senior management positions (President, Corporate Vice-president, and Managers, as the case may be) of Bancolombia.
In order to set remuneration for President and other members of Senior Management, the Board of Directors of Bancolombia shall take into consideration their qualifications, experience, responsibilities, functions, generation of added value to the company, and its financial status. When such remuneration involves variable remuneration elements, the Board of Directors shall adopt general policies established by the meeting for this purpose.
Appointment of such officers shall be made bearing in mind that the candidates share the Group’s corporate culture and philosophy, as well as principles and values, and have relevant managerial skills, technical knowledge, human virtues, and moral suitability.
With respect to Bancolombia and financial companies in Colombia, government and management functions conducted by the President and the Juridical Vice-president/Secretary General or Secretary General, as the case may be, have been established in the Company’s bylaws and this Good Governance Code. Functions of all other executives shall be set by the President.
Basic information about Directors, President, and other members of Senior Management of Bancolombia can be consulted on corporate website on the yearly report presented in 20F Form and on the SEC’s website: http://www.sec.gov.
3.3. Bancolombia’s Supporting Committees Appointed by the Board of Directors
Without prejudice of the supporting committees required by law to operate in the Companies or those that they decide to establish as a good practice, Bancolombia, as the parent company, shall have corporate supporting committees of the Board of Directors to assist in developing and strengthening the powers of the Board of Directors, which shall be designated according to numeral 25 of article 61 of the Company Bylaws.
In order to form its supporting committees, the Board of Directors shall take into consideration profiles, knowledge, and professional experience of its members.
These Committees are the following:
• Good Governance Committee: The Good Governance Committee shall consist of at least three (3) members of the Board of Directors, two (2) of them being independent members. Bancolombia’s President shall attend this committee permanently. Bancolombia’s Legal Vice-President and Secretary General shall act as the Committee Secretary.
The Good Governance Committee shall have internal regulation to govern aspects such as composition and guests to the meetings, competences, and responsibilities of the Committee and its internal regulation.
The main purpose of this Committee is to attend Bancolombia’s Board of Directors to supervise compliance with the Corporate Governance measures set by the Group and review any potential change to such measures. This Committee shall also support the Board of Directors in cases related to the implementation of succession policies of the Board of Directors and its remuneration.
This Committee shall submit reports on the activities performed by the Bank’s Board of Directors and shall approve a yearly report on Corporate Governance to be submitted before the Assembly of Shareholders.
• Appointment, Compensation, and Development Committee: The Appointment, Compensation, and Development Committee shall consist of at least three (3) members of Bancolombia’s Board of Directors and at least two (2) of them shall be independent members.
This Committee shall have internal regulation to govern aspects such as composition and guests to the meetings, competences, and responsibilities of the Committee and its internal regulation.
The main purpose of this Committee is to support the Board of Directors in cases related to the implementation of selection, appointment, hiring, and remuneration policies for senior management officers and everything related to Grupo Bancolombia’s remuneration model.
This Committee shall submit reports on its activities to the Bank’s Board of Directors and, upon request of the president of assembly, this committee’s president shall be entitled to inform the meeting about specific aspects on the job performed by it.
• Audit Committee: The Audit Committee of Bancolombia, the parent entity, shall consist of three (3) independent members of the Board of Directors. At least one of its members, in compliance with norms in force, shall be an expert in financial topics. The Committee shall have a president and a secretary, duly appointed by this same Committee.
This Committee is intended to support the Board of Directors when supervising the effectiveness of the internal control system, decision making concerning control and improvement of the activities performed by the Company and its managers, and when supervising accounting procedures, relationship with the auditor and, in general, when supervising the Bank’s and the Group’s control architecture.
Additionally, this Committee shall order and verify that internal control procedures are adjusted to the company’s needs, objectives, goals, and strategies and in compliance with the company’s internal control objectives such as effectiveness and efficiency of operations, reliability of financial reports, and compliance with applicable law and regulations.
For this purpose, the Committee shall define necessary mechanisms to consolidate the information of the control bodies to present it before the Board of Directors. This committee shall establish policies, criteria, and practices to be employed by the entity for construction disclosure and release of its financial information.
Bancolombia’s Audit Committee shall establish necessary mechanisms to promote communication channels with Boards of Directors, Audit Committees, and Presidents of subordinate companies of the Group, in such a way that such channels can be used to supervise the operation of the internal control system and all other aspects of the entire Group associated to its nature.
The Audit Committee shall not replace the functions of the Board of Directors or the Management with respect to supervision and execution of the Company’s internal control system. For reaching an appropriate operation, in addition to provisions of the applicable norms in force, the Audit Committee shall have Internal Norms to establish its objectives, functions, responsibilities, and internal rules.
Bancolombia’s Audit Committee shall prepare a yearly report of activities to be submitted before the assembly. Upon request of the President of assembly, the Audit Committee’s president shall inform the assembly about specific aspects of the work carried out by it.
The Companies carrying out financial activity must form Audit Committees, which must have the participation of members of the Board of Directors of the respective Company. Likewise, they shall have internal operating rules that regulate, among other matters, their composition and guests to the meetings, powers and responsibilities of the Committee and the operating rules thereof. Without prejudice to other competences attributed by regulation, the Bylaws or the internal regulations of each Company to this Committee, the main task will be to support the Board of Directors in matters related to the supervision of the effectiveness of the internal control system of the company.
The Audit Committees shall present before the Board of Directors of each company reports on their activities.
• Risk Committee: The main objective of this Committee is to serve as a support for approval, follow-up, and control of policies, guidelines, and strategies for risk management of the Company.
Bancolombia’s Risk Committee shall support the Bank’s Board of Directors in aspects such as knowledge and understanding of the risks assumed by the Bank and the entire Group, considering, among others, the funds required for this support.
Bancolombia’s Risk Committee shall consist of three (3) members of the Board of Directors and at least two (2) of them will be independent members. The Bank’s President (as special guest), the Risk Vice-President, and other officers of the Group, according to the relevance of the topics to be treated in such meetings may attend this committee as special guests.
Bancolombia’s Risk Committee shall establish necessary mechanisms to promote communication channels with Boards of Directors, Risk Committees, and Presidents of subordinate companies of the Group, in such a way that such channels can be used to supervise the operation of the risk management systems and all other aspects of the entire Group associated to its nature.
The Companies, depending on the activity they carry out and in accordance with the applicable legislation, may define the existence of a Risk Committee, in which case, they shall have internal regulation to govern aspects such as composition and guests to the meetings, competences, and responsibilities of the Committee and its internal regulation.
The Risk Committees of the Companies shall present before each Company’s Board of Directors reports on its activities.
In relation to Bancolombia upon request of the President of Assembly, the Committee’s president shall inform the meeting about specific aspects on the job performed by it.
• Technology and Ciber-Security Committee: the Technology and Ciber-Security Committee of Bancolombia shall consist of at least three (3) members of Bancolombia’s Board of Directors, including the Director with expertise in cybersecurity. The Committee will have a president and a secretary.
The Vice President of Corporate Services, the Vice President of Technology, the Corporate Cybersecurity Environment Leader and the Director of Non-Traditional Risks will attend the meetings of the Committee as permanent guests. Additionally, the Vice President of Internal Audit and the Vice President of Risk, and other Bank officers may attend as guests, according to the topics to be discussed.
The main objective of this Committee is to support the Board of Directors in the strategic direction and supervision of matters related to technology and cybersecurity. For this purpose, it will be aware of technology trends that may affect the company's strategic plans, and reports on Bancolombia's technological operations, including progress in software development, technological architecture, channel and service availability, IT continuity and performance of significant investments in technology and cybersecurity.
Other Committees Established by Bancolombia’s Board of Directors
The Board of Directors of Bancolombia has made relevant arrangements for creating a number of committees for addressing strategic business matters. Such committees are the following:
• Credit Committee: The main objective of this Committee is to make decisions about the credit approval process, structure and composition of the fund portfolio, methodologies, and credit risk management tools, and to know the report on operations approved by lower authorities. Additionally, this Committee shall approve the exception regime, define relevant urgent operation mechanisms, and delegate powers to other committees or bodies.
The Board of Directors shall determine its members. Among others, this Committee shall count on the participation of the Bank’s President, the Risk Vice-president, and some other Vice-presidents and employees of the Company.
• GAP (for its initials in Spanish) Committee: The objective of this Committee is to serve as a support to adopt, implement, follow-up, and control general policies intended to reach an optimal management of the Bank’s assets and liabilities, and the Treasury operations and investments.
Without prejudice of the creation of special committees in other Companies the GAP Committee shall be entitled to know the topics related to its competence and associated to the affiliates. The Committee shall have internal regulation.
The Board of Directors shall determine the Committee’s members; some Vice-presidents of the company shall be allowed to participate in this Committee.
• Corporate Committee of Ethics: The Group has a Corporate Committee of Ethics responsible for supervising compliance with provisions of the Code of Ethics and Conduct, as well as determining necessary actions to know, disclose, and strengthen the highest standards of behavior and ethics of each company of the Group This Committee shall report to Bancolombia’s Audit Committee.
The Board of Directors will establish the composition of this Committee and regulate its operation.
• Disclosure Committee: Bancolombia has a Committee responsible for supervising the way the Bank discloses its information in the market, with the purpose of assuring clear, sufficient, and timely information in compliance with relevant regulations applicable to the company. This Committee shall report to Bancolombia’s Audit Committee.
The Board of Directors will determine the positions that will conform this Committee.
The Group’s Companies shall take the committees established by Bancolombia’s Board of Directors as a reference to implement internal committees with similar powers.
This, without prejudice of the attribution the Companies’ President have in order to arrange the creation of other strategic committees to support different management activities and affairs.
3.4. Procedure for acquisition or sale of the Bancolombia’s Shares
As contemplated in Colombian law, Directors and Managers of Companies with domicile in Colombia shall be entitled to transfer and acquire, directly or through third parties, the Bank’s shares, while occupying their positions, provided that they are operations with no speculation purposes and duly authorized by the Board of Directors; this authorization should be granted by a favorable voting of two thirds (2/3) of the members (excluding the requester’s vote), or when necessary at the Board of Director’s discretion, with authorization of the Shareholders’ Meeting and a favorable vote of the majority (excluding the requester’s vote), as contemplated in the Company’s bylaws.
In all cases, negotiation of shares conducted by the managers should be free of speculation purposes; speculation can be supposed, for instance, when the following three circumstances occur simultaneously: i) periods of time suspiciously short between purchase and sale of shares; ii) situations exceptionally favorable for the Company have occurred; and iii) a significant profit has been reached with the operation.
For effects of monitoring and effective compliance with the adopted procedure, the following requirements should be met:
i) Manager’s duty to provide advanced information to the Juridical Vice-presidency/Secretary General Office of the Bank or the entity acting as such in the Company, indicating the intention to acquire or transfer shares of the Company, bonds converted into shares or titles representing shares, number of shares, kind of shares or approximate price of the investment, and reasons for this negotiation.
ii) The Juridical Vice-president/Secretary General or the person acting as such, shall take the request to the next Board of Directors meeting, so that the Board can make a decision thereof according to the provisions set forth in law and in the Good Governance Code.
iii) In relation to Directors, Presidents or General Managers and Corporate Vice-presidents, the above-mentioned authorization shall be revealed in the market as relevant information.
iv) The Board of Directors shall establish a maximum term of two (2) months, from the date of the authorization, so that the operation can be completed, with the purpose of avoiding speculation.
v) The Good Government Committee shall be entitled to monitor the development of authorized operations, for which it may rely on Bancolombia's compliance area.
vi) When a case of variable remuneration occurs, recognized through Fondo de Acciones SVA, authorization is required for the total or partial liquidation of the participation in that fund.
In any case, the managers may not carry out acquisition or sale operations of Bancolombia’s shares during the following periods:
i) During the months of January, April, July, and October each year and during the first ten (10) calendar days of remaining months.
ii) During the time going from the moment the managers know a relevant operation or business to be made by the entity to the moment such operation or when businesses are revealed in the market.
When a case for exercising the preferential right in the Companies’ share issue occurs, managers shall be entitled to exercise such a right without a prior authorization of the Board of Directors, but they will really need an authorization to acquire additional rights they may be entitled to according to their share participation.
3.5. Economic Relations of the Company with Directors, President, and Senior Management
Economic relations of the Companies with its Directors, President, and other members of Senior Management and Main Executives shall be developed within limitations and conditions contemplated in relevant norms and regulations on prevention, management, resolution of conflicts of interest.
All relevant information related to the economic relations between the Companies and its Directors, President, and Main Executives, shall be disclosed in reports appertaining to each exercise, in accordance with the applicable regulations.
3.6. Evaluation Mechanisms of Directors, President, and Main Executives
Boards of Directors of the Companies shall annually conduct an evaluation of their management and that of their supporting committees, and such evaluation shall include, among other things, attendance of its members to the meetings, active participation of its members, follow-up conducted to the Company’s main aspects, evaluation of its tasks, and its contribution to define strategies and projection of the entity. With regard to Bancolombia, the Board of Directors shall determine the mechanisms by means of which such evaluation will be performed and shall be entitled to change between an internal self-evaluation and an external evaluation.
Likewise, the Companies´ Boards of Directors, through their respective Board of Directors President, shall annually evaluate the Company’s President’s management. Each President or General Manager shall do the same with respect to the executives under his/her direct direction.
Additionally, the President or General Manager of the Company will keep the president of its Board of Directors generally informed about the results of the evaluations conducted on their executive team.
In the case of Bancolombia, the evaluation of the President shall be made with the support of the Appointment, Compensation, and Development Committee.
3.7. Information Management Regulations
3.7.1. Special rules of action. Any person appointed as a member of the Board of Directors will adhere to this Information Management Regulations and is obliged to sign the Agreement for the Access and Use of Information.
The Directors must comply with the following special rules for the protection of information (including Confidential Information) of Bancolombia and the Companies. For the purposes of this section, the following definitions shall be taken into account:
• "Confidential Information" means all information, whether identified or not as confidential information, that the Director receives, whether oral, printed, digital, written or transmitted by any other means, including data messages and presentations at the Meeting, which is owned by or related to the Companies in which Bancolombia is a Relevant Partner, persons with whom Bancolombia has alliances or legal vehicles, persons or companies where any of the above has any direct or indirect participation, or the clients, suppliers or allies of any of the above, together with any notes, analyses, worksheets, compilations, comparisons, studies or any other document containing, reflecting, or being based on or generated by such information. Confidential Information includes, but is not limited to: (i) information from contracts with third parties, including, but not limited to, investment agreements, divestitures, joint ventures and potential M&A transactions, except for those terms and conditions that, pursuant to securities market disclosure rules, are required to be disclosed to the market and once such has occurred; ii) business plans and information about the future plans of the Companies, including short, medium or long term plans, or information about the plans of the Companies that have the object or that may give it a competitive advantage or an advantageous positioning against its competitors; (iii) technical, legal, accounting, commercial, operational and financial information; (iv) product and service plans; (v) information on costs, expenditures, prices; (vi) marketing reports; (vii) analyses, research and projections; (viii) information related to the telecommunications network, platforms and software; ix) the information of customers, suppliers, employees and/or shareholders including but not limited to past, current, and potential credit operations entered into with Bancolombia, and their financial conditions; x) the reports and minutes of the different instances of Corporate Governance, or others related to corporate matters; (xi) information on corporate strategy and competitive strategy; xii) information on human talent and compensation, including information regarding compensation of executives, administrators and employees; (xiii) financial information that has not been disclosed to the public in accordance with applicable disclosure rules; xiv) information on litigation or other legal actions for or against; (xv) documents which are subject to lawyer's professional secrecy; (xvi) contracts, agreements or documents subject to confidentiality, whether contractual or legal; (xvii) internal control information; (xviii) information from the institution's risk map, including credit risk reporting and analysis; and xix) valuation and technical analysis reports prepared by independent third parties or employees, including fairness opinions, adequacy or inadequacy opinions, media used for the preparation of valuations or opinions, including unpublished management projections, any forward looking statements, and forward-looking statements, and forward-looking statements. Management's analysis and discussions regarding the future financial performance of any of the Companies.
oReserved Information" means Confidential Information submitted to the knowledge of the Board of Directors restricted to one or more Directors as a result of the particular analysis carried out about the existence of aSituation of Competition or Conflict of Interest with any of the Companies.
a. Request and Access: the Directors are not authorized to act independently and separately from the Board of Directors, considering its collective nature, which requires that their actions obey decisions adopted as a corporate body. The Company will not address requests for information that are not made in accordance with the provisions set in this Section. When a Director considers that the review or analysis of information held by the Company is required, he or she shall recommend to the Board of Directors the corresponding request within the context of a meeting of the Board of Directors. Any request that management or the secretary receives in this regard outside of a meeting of the Board of Directors shall be brought to the Board for consideration for the next meeting. Thus, any request must be in writing and duly substantiated and must be sent to the institutional mail designated for that purpose. Requests for information made within the support committees of the Board of Directors shall be transmitted in the same way to the full Board of Directors to comply with the provisions of this Section. The chairman of the respective committee shall be responsible for transmitting the request to the Chairman and Secretary of the Board. If the Board of Directors does not approve such a request, the Director who made the recommendation has the right to request that his or her request be recorded in the minutes or in the documents relating to his or her management.
b. Delivery: if the Board of Directors, as a collegiate body and with the majority required by law and the Bylaws for the adoption of decisions of this body, authorizes the delivery of Confidential Information in accordance with paragraph (A) above, the Company's administration will deliver the Confidential Information requested by the Board of Directors in accordance with the following rules:
i.the administration will only deliver the Confidential Information that the Board of Directors indicates, as a collegiate body;
ii.the requested Confidential Information will be made available to the Board of Directors through the physical or electronic means appropriate for that purpose.
iii.if the Confidential Information delivered is Reserved Information, the procedure for the protection of Reserved Information of the Companies established in numeral 3.7.3 will be applied; and all Confidential Information submitted to the Board of Directors shall be subject to confidentiality agreements to be entered into by directors.
c. Abstention: Directors shall refrain from requesting or knowing any Confidential Information that is related to a Conflict of Interest or Competition situation with the Companies.
d. Disclosure: The Directors must disclose to the Board of Directors all personal circumstances that could potentially generate a Conflict of Interest or Competition situation with the Companies. Similarly, any change, on the reported circumstances, after the declaration, must be reported to the Board of Directors through its Secretary. When a Director considers that over another member of the Board of Directors exists a situation that should prevent him from accessing certain Confidential Information, he must inform the Chairman of the Board of Directors, in order to apply the same procedure described in the previous paragraph.
e. Restricted Use: Directors must guard and protect the the Confidential Information to which they have access and, therefore, must:
i.use the Confidential Information exclusively to exercise their functions as Directors, always in the best interest of the Company (and, where applicable to the Companies), considering the interests of their associates, and, therefore, refraining from using it for any purpose other than the exercise of their functions (including, without limitation, competing with the Company or a Company, or to take advantage of opportunities that the Company or a Company could exploit);
ii.(2) before commencing their duties as members of the Management Board, enter into confidentiality agreements; and
iii.protect Confidential Information and use it in accordance with the provisions of confidentiality agreements.
f. Caution: Each Director acknowledges that the Confidential Information is property of the Company, its Affiliates or the Companies, as applicable. Each Director undertakes the responsibility to guard and protect the Confidential Information with the same level of diligence that a good businessman, expert and diligent, would use to fulfil this obligation, taking care of his most sensitive information. To do this, among other things, the Director must receive, retain, send and, in general, use the Confidential Information only through the secure devices and channels that the Company makes available to you.
g. Decision: The Board of Directors it’s in charge of evaluating and deciding on the existence, or not, of situations upon which its occurrence it is necessary to prevent access to Confidential Information by the Directors. The decision shall be taken by the Board without the participation of the evaluated Director. The decision thus adopted shall be binding on the Directors.
3.7.2. Reserved Information. Each Director agrees that, unless expressly authorized by the Board of Directors, he or she will be restricted from access to Confidential Information when the Director is in a Competitive or Conflict of Interest Situation under which he or she could exploit such Proprietary Information to the detriment of the Company or a Company.
3.7.3. Procedure for the protection of Reserved Information at meetings of the Board of Directors. In the ordinary and extraordinary sessions of the Board of Directors of Bancolombia, the following procedure will be implemented, in order to protect the Reserved Information of the Companies:
a. The Secretary of the Board of Directors, or the President of the Company, will send the meeting´s agenda, including the express indication of the items on the agenda that, according to the declarations of Conflicts of Interest or possible Situations of Competition with the Companies, are considered Reserved Information over one or some of the members of the Board of Directors.
If the meeting of the Board of Directors is convened directly by two or more Directors, before the meeting, the Secretary will send a report to all members of the Board of Directors with the indication of the items on the agenda that would involve delivery of Reserved Information.
The procedure indicated in Section 3.7.1 will be applied, in case the items included in the agenda implicitly carry the request for Confidential Information.
b. When making information available to the Directors prior to the Board of Directors, it will be evaluated whether such information contains Reserved Information. If so, the possibility of providing the information in an aggregated form, that allows maintaining its confidentiality, will be evaluated, thus preventing the Director or Directors from engaging in any conduct that affects the fulfillment of their duties or the interests of the Companies.
c. Likewise, at the time of addressing the items on the agenda, related with Reserved Information, the possibility of addressing these points without presenting the information generated by the Conflicts of Interest and / or Competition situation with the Companies or presenting it in an aggregate form that allows maintaining its confidentiality will be evaluated. In these cases, the Board of Directors may meet and decide with the presence of the Director who is in this situation who may not have access to such Reserved information except as established in this section.
d. In the event that it is not possible to add, omit or modify the Reserved Information, maintaining its confidentiality, the respective Director will not be given access to such information prior to the Board of Directors and he must withdraw from the meeting and refrain from participating in the deliberations and decisions related to the agenda item and this fact will be recorded in the minutes of the Board of Directors.
e. In those cases in which there is no clear if certain information to be presented is Reserved Information or in cases where the Director does not agree with the decision taken for the treatment of Reserved Information, the matter will be submitted to the Board of Directors for its consideration so that it can decide on the reserved nature or not of the information, along with a recommendation for the handling of the case, which may be accompanied by opinions of independent and qualified experts in the field. The Director in respect of whom the situation is being examined shall refrain from such deliberation and decision. In the event of a tie, the information will be deemed to be Reserved Information.
f. The restriction on access to Proprietary Information will end when the Companies disclose it to the general public, and access to it will be given to the Director with respect to whom such information was considered as Reserved Information, under the same terms and conditions under which it was made available to the other members of the Board of Directors.
g. If the Reserved Information is requested or necessary for the operation of a support committee of the Board of Directors, the provisions of this Section shall apply. In such case, if there are differences with respect to the Reserved nature of the information, the matter will be submitted to the full Board of Directors to proceed in accordance with the provisions of this Section.
3.7.4. Compliance with the Information Management Regulations. None of the Directors may use the Confidential Information in violation to this Section and, to that extent, in the case of decisions upon Confidential Information its used, and until it is made public, they may not share such information, including the meaning of the decision, with any Person.
Failure to comply with the provisions of this Section shall constitute a breach of confidentiality agreements entered into by the directors and shall be considered a material breach of the duties of the Director.
SECTION 4: PRINCIPLES AND MEASURES RELATED TO THE DISCLOSURE OF INFORMATION
With the purpose of providing a proper knowledge to the stakeholders of each Company, financial and non-financial information shall be revealed through the channels already established in this Code for such a purpose.
Among some other issues, each Company shall inform its shareholders and investors, when necessary, about the following:
a. Main foreseeable risks and relevant measures to face them, as well as the mechanisms used for risk management. Each Company shall determine the way to disclose these mechanisms to its shareholders.
b. The year-end financial statements issued by the Auditor. In the case of Bancolombia, disclosure of financial information - not audited - will also be made on a quarterly basis.
c. Relevant findings made by the Auditor and external audits hired by the Company. Reports containing such findings shall be disclosed as they are produced by the means established by law. Each Company shall determine the way it will disclose these findings to its shareholders.
d. Significant findings produced by the internal control systems implemented by the Company, as well as important projects associated to such a system and any relevant change in its structure.
e. Kinds of shares issued by the Company and number of shares issued for each type, shares in reserve, as well as rights and obligations resulting from each type of share.
f. Main shareholders. Bancolombia shall disclose those shareholders who are real beneficiaries of over 5% of the Company’s outstanding shares and all relevant changes in both share participation and control.
g. Agreements between the main shareholders known by the Company, which purpose is the shares, its rights, the exercise of such rights, the company’s management, among others.
h. Relevant businesses executed between the Company and its main shareholders, and with its Directors, Managers, and Main Executives, according to legal dispositions applicable to each Company or in this Code. Sections eight (8) and nine (9) of this Code establishes the disclosure rules on this matter.
i. Notice of the Assembly of Shareholders and any other information deemed as necessary for its development.
j. All other reports about relevant facts with respect to financial, risk, and internal control matters which can physically affect the Company.
These facts shall be disclosed as they occur through the information channels deemed as appropriate for each specific case, when necessary, through the appropriate information channel of the Companies issuing securities in Colombia
Relevant information published by Bancolombia S.A. shall be published through the mechanisms set by the Securities and Exchange Commission (hereinafter referred to as “SEC”) and shall also be available for investors on the Company’s website.
The Board of Directors of Bancolombia, through the Disclosure Committee will ensure the due revelation and disclosure of information to the market, as specified on sections 3.3. and 9.3. of this Code.
4.1. Information Channels for Shareholders, Investors, and Market in General.
The Group shall keep the following information channels with its shareholders, investors, and market in general:
• Corporate website: Bancolombia has a corporate website where it discloses corporate information, the structure and governance, its main products and services, the financial information, and the documents relating to Corporate Governance and Ethics, as well as contact mechanisms for stakeholders.
Bancolombia also has a Group’s website in both Spanish and English. Such website in its corporate information route has the sites “Investor Relations”, “Corporate Governance” and “Sustainability” that provides information of interest for investors, shareholders, and market in general.
This website can be accessed at: http://www.grupobancolombia.com.
The Companies will define the way and the information they will disclose on their websites, if they have one.
• Investor Relationship’s Office: The Investor Relationship’s Office of Bancolombia develops, among other things, the functions corresponding to the Shareholder and Investor Service Office.
The Investor Relationship’s Office shall provide clear and objective information about Bancolombia and its activities, allowing shareholders and investors to make informed decisions with respect to their investments in Bancolombia. Such a Management shall keep an ongoing contact with national and international shareholders, investors, and analysts.
Any stakeholder requiring information related to the provisions governing Good Governance and Ethics Standards in the Companies, shall address its request to the Investor Relationship’s Office that is the body responsible for sent such a request to the competent area and shall assure that the requestor may obtain an answer.
This office can be accessed visiting the Bank’s virtual branch at: www.bancolombia.com, writing to the following e-mails:
relacionconinversionistas@bancolombia.com
investorrelations@bancolombia.com
or in writing to:
Oficina de Relación con Inversionistas
Carrera 48 No. 26-85 Torre Sur
Medellín - Colombia
Notwithstanding, all other Companies are duly authorized to create a contact e-mail on their own website to have direct communication with their investors; they can also have a physical space for consultations and requests, as they may deem relevant and necessary.
• Management Report: Each Company shall annually prepare a document called Management Report which will include all the reports of the Board of Directors and the President to be submitted before shareholders, as well as individual and consolidated financial statements, when necessary, and evaluation of the Auditor or external auditor, as applicable, and notes to the financial statements as well.
• Bancolombia, shall also publish relevant information of other Companies of the Business Group, whenever such information is relevant and material for reaching Bancolombia´s Business Group objectives.
Relevant information is that which would have been taken into account b a prudent and diligent expert when purchasing, selling or keeping securities, as well as which would have been taken into account by a shareholder when exercising his/her political rights in the respective shareholders’ meeting or competent body, according to legal regulations applicable to Bancolombia.
Bancolombia has defined the procedures, those responsible, the terms and, in general, the structure necessary to fully and timely disclose the relevant information that may be of interest to the market, as well as the updating of basic information of the entity, with the support of the Disclosure Committee, pursuant to section 3.3. of this Code.
Shareholders, investors, and market in general shall be entitled to consult at any time the relevant information of the Bank on the Financial Superintendency website: www.superfinanciera.gov.co, and information of Bancolombia on the Company’s website.
• Bancolombia shall publish quarterly reports with information about its performance, to be made available for shareholders and market in general, both in Colombia and abroad.
Likewise, Bancolombia shall refer through the USA “SEC” an annual report under the 20F Form, with information about the Bank’s results during the year.
Relevant information published by Bancolombia S.A. shall also be published through the mechanisms established by SEC pursuant to the applicable rules for foreign issuers listed in the United States.
• National and International Meetings and Conference Calls. Bancolombia’s management shall celebrate on-site and conference calls with national and international investors and shareholders. Meetings and conference calls shall be held by the Presidency within a specific period of time duly informed though its website, with the purpose of providing information about the Bank’s results and its general operation.
• Confidentiality. According to provisions of the Code of Ethics and Conduct, the employees of the Group’s companies shall keep due reservation about the work documents and confidential information under their custody or that information they have had access to for their positions. Therefore, they shall control and avoid an undue use of such information in any office of the Company they work for or avoid its knowledge by people not authorized to know this information or people not belonging to the respective area.
Also, they are not allowed to disclose or transfer to other officers or third parties, technologies, methodologies, know-how, and industrial, commercial or strategic confidential information of the company, its customers or suppliers. They are not allowed to disclose or transfer this kind of information to people who have had access to that information due to their positions. Likewise, they shall not have or try to have access to information deemed as industrial, commercial or strategic confidential information in an illegal manner.
4.2. Risk Rating Agencies: The Group’s companies shall be entitled to hire independent securities rating companies with the purpose of conducting relevant analysis and reporting to market about the probability of making timely payments of obligations resulting from securities issued by the Company and, in general, giving an opinion about the Company’s qualities as a market generator according to terms contemplated in the norms governing such activity.
The Companies will be also rated by other international firms which will evaluate the entity’s situation and publish relevant reports on a periodical basis.
Additionally, each issue of bonds or trade papers of the Company will be accompanied with a risk and investment rating conducted by independent and international securities rating companies.
4.3. Bond Holders. Bancolombia enforces the regulations related to Ordinary Bond Holders Assemblies, ensuring its holders the full compliance with legal provisions and conditions defined in the respective prospects for emission and colocation, which are available in the website.
4.4. Money Laundering and Terrorist Financing Risk Management System. The Group shall have an integral system for prevention and control of money laundering and illegal events whose basic principles are to know the customer, to determine movements of each user and client, market knowledge, detection and analysis of unusual operations, and to determine and report suspicious operations. In order to verify compliance with this integral system, a Compliance Officer has been appointed for each Company where regulation demands operation of this system and policies will be included for prevention and control of money laundering to include norms and policies which should be followed.
4.5. Financial Consumer Defense Office: The Group’s Companies that are supervised by the Colombian Financial Superintendence have a Principal Financial Consumer Representative and a Substitute Financial Consumer Representative, both duly appointed by the General Shareholders Meeting. The Financial Consumer Representative shall act as spokesperson for customers or users before the Company and shall objectively resolve, with no charges, all individual complaints within the legal terms, which consumers may file when the complaint is related to any noncompliance in legal or internal regulation regarding the financial services or the quality of them, offered by the Group´s Companies.
As a sign of respect for the rights of customers and financial consumers, with the purpose of assuring total transparency in all their operations, the Companies supervised by the Financial Superintendency of Colombia commit to follow all decisions made by the Financial Consumer Representative, if the customer agrees.
If, in the nomination, appointment and provision of services of the Financial Consumer Representative, Grupo Bancolombia´s management is immersed in a conflict of interest, the conflicted party must follow the procedures set forth in section 8 of this Code.
Likewise, if the Financial Consumer Representative is immersed in a conflict of interest regarding a financial consumer, he must refrain from acting, and in that case the Substitute Financial Consumer Representative will act. The foregoing, without prejudice to the fact that the conflict must be brought to the attention of the Compliance Officer, to deliver guidelines for the proper administration of the conflict.
Grupo Bancolombia´s management, as well as the Financial Consumer Representative, have the responsibility of identifying any situation that confronts them with a conflict of interest and comply with the procedure established in this Code for its proper administration.
SECTION 5: PRINCIPLES AND MEASURES ASSOCIATED TO THE CONTROL ARCHITECTURE
For Grupo Bancolombia, the control architecture is an essential element of the Corporate Good Governance which involves aspects relating to the Internal Control System and the Risk Management System in such a way that a government structure can be assured and internal policies and guidelines of each company can be consistent with the achievement of strategic objectives established by the Group.
For this purpose, the Companies, based on the nature, structure, and volume of each company’s operations, shall define clear action rules relating to the control architecture and shall make their best efforts to strictly comply with norms applicable to the sector they are involved in.
5.1. Internal Control System. The Group has an Internal Control System based on the Group’s set of values, and corporate culture, duly developed through policies, norms, procedures, and actions which allow the management to assure on a reasonable way that the incorporation of suitable, sufficient, and adequate control procedures any risk faced by the companies does not affect compliance with its basic and strategic objectives.
The Internal Control System is a useful tool for reaching the entity’s objectives, the time spent trying to complete its operations and activities according to internal norms, and regulations applicable to each company.
With the Group’s commitment to have an solid Internal Control System that guarantees sustainability and retention of the Group’s businesses throughout time; the Boards of Directors of the Companies, through their Audit Committees, shall periodically review the elements and components of such a System with the purpose of developing corrective measures and incorporate new national and international standards applicable to this area.
The Group will take the COSO and COBIT standards as a reference and will ensure that the Internal Control System complies with the rules and practices that are applicable in each jurisdiction and with the provisions or standards required for issuers registered with the SEC.
5.2. Risk Management System: The Risk Management System of each Company of Bancolombia´s Business Group encompasses the definition of risk policies and guidelines, specific objectives for risk management, definition and implementation of the system components (identification, evaluation, measurement, management, monitoring, and reporting of risks), creation and follow-up of a risk map, as well as minimum and maximum exposure limits, among others.
At Bancolombia´s Business Group, general risk management policies and objectives take financial companies into consideration, so that cohesion and control can be achieved with them.
Internal Control and Risk Management systems require organizational culture and philosophy based on principles such as self-control, understood as the capacity of all people of the organization to take control into consideration as an inherent part of their responsibilities and decision-making processes.
Based on such principle and pillars such as internal control and risk culture and philosophy Bancolombia´s Business Group has, the Companies have implemented necessary mechanisms to effectively communicate, at all levels of the organization, such culture with the purpose of assuring with the information provided that all employees of Bancolombia´s Business Group understand the importance and the role that a risk management and an appropriate identification of controls have for business sustainability.
5.3. Compliance programs. Bancolombia Group has compliance programs which objectives are: (i) to promote the fulfillment of applicable regulation and corporate policies in each of the Companies, (ii) to promote ethical standards inside the Organization and (iii) to protect the reputation; all this within an approach based on risks linked to the purpose and strategy.
In relation to integral management and administration of compliance risk at a corporate level, Bancolombia Group will have a Compliance Officer, who will report to the Auditing Committee and the Board of Directors and will be responsible for ensuring the execution of guidelines defined by the Board of Directors in relation to compliance and to promote the ethics, integrity and transparency, reflection of the Group´s culture.
5.4. Control Bodies. Notwithstanding the internal control responsibilities that correspond to employees in the performance of their duties, the following bodies are responsible for monitoring the control architecture efficacy:
- Fiscal Auditor: The Companies shall have a Fiscal Auditor or external auditor, as legally or statutorily obligated; who shall execute the functions contemplated in relevant applicable regulations, and audit shall be subject to provisions thereof, without prejudice of provisions set forth in the Company’s Bylaws.
The Fiscal Auditor or External Auditor shall be elected by the General Assembly of Shareholders for two-year (2) periods. Shareholders’ Assembly shall be responsible for setting the auditor’s remuneration and removing him/her when necessary.
Election of the Fiscal Auditor shall be made through a competitive process, whereby proposals will be solicited for the provision of external auditing services from auditors or audit firms that have the capacity to provide such services to the Companies.
The Audit Committee shall conduct an objective evaluation and with total transparency of the received proposals. The selection and evaluation process must include the analysis of the proposals, and aspects such as the offered services, costs and fees, experience, knowledge of the sector, etc will be evaluated. The evaluation will also include within its criteria the registration of the firm with the Public Company Accounting Oversight Board – PCAOB. Following the evaluation conducted by the Audit Committee, the proposal for the appointment of the external auditor and the setting of fees is presented to the assembly by the Board of Directors.
Bancolombia shall not appoint a Fiscal Auditor who has been a person or an entity that had received income from the Companies and/or their economic group, representing twenty five percent (25%) or more of his/her last annual income. Likewise, the Group’s Companies shall not hire with the Fiscal Auditor of its affiliates, services different from those directly or indirectly related to the audit.
Bancolombia’s Audit Committee shall make its best efforts to avoid that one audit firm provides services to Grupo Bancolombia for a period of time exceeding ten (10) years, renewable for a period of ten (10) years by decision of the Board of Directors and shall make sure that the audit firm has implemented international practices concerning staff rotation.
The audit firm shall rotate natural persons who may be executing such a function, at least every five (5) years. The persons who have been rotated can only retake audit of the same Company after a two-year period. Same periods shall apply when the Auditor is a natural person.
Grupo Bancolombia shall make its best efforts to have only one Audit Firm or External Audit for all the Companies.
Furthermore, the Audit Firm may not be an associate of the same company or its subordinates, or someone who holds any other position in the Bank and is related by marriage or kinship within the fourth degree of consanguinity, civil first degree or second degree of affinity or who is an associate of a member of management, senior management, auditor or accountant for Bancolombia.
Whoever holds the position of Audit Firm may not hold any other position or have any different role within the Bank or its subordinates, other than the external audit function and it is also prohibited from celebrating contracts with the company or acquiring any shares in it.
In his/her report to the Assembly of Shareholders, the Auditor shall include, in addition to comply with legal requirements, all relevant findings found so that shareholders and all other investors can obtain necessary information to make decisions on relevant amounts.
- Internal Audit: The Internal Audit, as the third line, is responsible for enhancing and protecting the value of the organization by providing assurance, advice, and risk-based analysis. It is the area in charge of evaluating the internal control system, and allows the Board of Directors, the Audit Committee, the other supporting committees of the Board, and Senior Management to fulfill their oversight role and validate the proper functioning of the organization's Internal Control System.
SECTION 6: PRINCIPLES AND MEASURES RELATED TO CAPITAL INVESTMENT OF THE GROUP IN OTHER COMPANIES
The Group shall direct its actions so that the Companies in which it has capital investments have better standards of corporate governance, such as:
a.To give equitable treatment for shareholders and to assure respect and compliance with legal provisions and bylaws associated to the shareholders’ rights.
b.To celebrate meetings with a minimum yearly recurrence where managers can present relevant management reports, financial statements (including notes to financial statements), and other information which can be relevant for shareholders and their investment in the Company.
c.To process information requests, petitions, complaints or claims of the shareholders and to assure a timely response to the same.
d.To establish necessary mechanisms with the purpose of assuring confidentiality of the Company’s and the shareholders’ information, as well as setting prevention and control mechanisms to avoid use of confidential information.
e.To establish necessary mechanisms with the purpose of having an alternative solution to possible conflicts which can arise with shareholders, such as direct agreements, arbitration, conciliation, etc.
f.To have high ethical standards to develop their businesses.
The Companies shall refrain from supporting with its vote any proposal that can violate provisions named above.
SECTION 7: PRINCIPLES AND POLICIES RELATING TO THE ORGANIZATIONAL STRUCTURE OF GRUPO BANCOLOMBIA
In order to comply with Bancolombia´s Business Group purpose, the Board of Directors of Bancolombia, as parent company, has decided to implement and incorporate a corporate strategy to govern the actions of all the Companies of the Business Group for achieving its purposes and using synergies for maximizing value and sustainability.
An organizational structure has been implemented based on the following principles:
a. The structure should assure an implementation integrated to and coordinated with the corporate strategy, where businesses in each country can be viewed as part of the global strategy, assuring that all business and supporting functions have a common objective.
b. Integral government vision of all of the Companies of the Business Group, both at a national and an international level, at the head of the Bank’s President, with clear reporting lines and accountability.
c. The Bank’s President, with the support of Senior Management shall be the person who will address goals and objectives of each business of the Business Group and validate the strategic execution and plans by assuring that they are consistent with the Group’s context.
d. The Bank, as the holding of the Group, has Corporate Vice-presidents at a financial, service, legal, risk, and audit levels, who shall be responsible for their own actions in all countries.
e. The Bank´s President, with the support of the Corporate Vice-presidents, will define and nominate the nominees to be members of the Board of Directors of the Companies, with the exemption of Bancolombia S.A.
The Corporate Vice-presidents, according to the instructions given by the Bank´s President, may be part of the Board of Directors of these Companies.
f. At an international level, the Group’s companies have a local responsible person (Local Presidents) in each jurisdiction, whose function is to lead the execution of the strategy defined by the parent company and representation of the Group within the country, assuring knowledge of local realities. Local Presidents shall report to the Board of Directors of their companies.
g. Concerning risks, audit, and money laundering prevention, the local responsible persons in each country, as well as the Corporate Vice-presidents in charge of the respective duties, shall report to the local Board of Directors and the parent company through their Audit and Risk Committees.
h. The Bancolombia´s Business Group companies in Colombia have established a shared service model for executing processes with multi-company teams; this model is used to identify functions and common processes of the companies or business units.
This model is intended to reach a unique integral management of processes to manage efficiency and compliance with policies and guidelines given by the holding Group. The model is also intended to reach the company’s purposes, consistency of information, automation, measurement, documentation, contingency support, scalability, and standardization.
Under this system, each company shall provide human talent and assume operating costs before third parties.
Provided that this is a viable and beneficial model, it shall be extended to the companies in other jurisdictions.
Structure and operation of Grupo Bancolombia shall follow regulatory requirements applicable to the companies, according to the norms applicable to each of them.
SECTION 8: PRINCIPLES AND GUIDELINES RELATED TO CONFLICT OF INTERESTS
Grupo Bancolombia understands a conflict of interest as the situation in which a person, having to make a decision regarding an act or business, or being able to influence its adoption, is faced with two or more interests that are contrary and incompatible with each other, in such a way that any alternative of conduct chosen leads to the favoring of one of the interests over the others.
Conflicts of interest may arise in any of our managers and their existence is not in itself reprehensible. However, acting in a situation of conflict of interest, without it being disclosed and administered, may lead to an inappropriate conduct, hence the maximum prudence of the senior management is expected when faced with a real conflict of interest or apparent.
8.1. Situations that may give rise to a conflict of interest
Due to the impossibility of describing all potential conflicts of interest, the Group relies on the commitment, transparency, good judgment and good faith of its managers: Directors, Senior Management and first and second level executives of the Companies, for the administration of their personal and professional affairs and for the management of situations that may entail a conflict of interest.
Grupo Bancolombia's Code of Ethics and Conduct broadly includes the regime defined for the prevention and management of conflicts of interest of employees in general. In addition to the regime and as an example, below you may find the following situations identified that generate conflict of interest for our management:
•Directly or indirectly (through interposed Persons, Affiliates or Persons in which the Director or an Affiliate of the Director is a Management Officer, or others) possess companies or businesses that carry out similar activities or that imply competition for the entities by the Group or be, directly or indirectly (including through interposed Persons, Affiliates or Persons in which the Director or an Affiliate of the Director is a Management Officer), a partner, employee, senior mangamenet or advisor of the same, except in the case of compliance with instructions given by the Bancolombia Group
• Directly or indirectly (including, but not limited to, through interposed Persons, Affiliates or Persons in which the Director or an Affiliate of the Director is a Management Officer) companies or businesses that carry out similar activities or that imply competition for the entities by the Group or be, directly or indirectly (including through interposed Persons, Affiliates or Persons in which the Director or an Affiliate of the Director is a Management Officer), a partner, employee, senior mangamenet or advisor of the same, except in the case of compliance with instructions given by the Bancolombia Group.
Directly or indirectly (but not limited to, through interposed Persons, Affiliates or Persons in which the Director or an Affiliate of the Director is a Management Officer), make any personal investment in a personal investment in a company, if said investment could affect or appear to affect, its ability to make impartial and objective decisions regarding business related to the Group.
• Participate in the evaluation, analysis or business decision making in Grupo Bancolombia, whenever the senior management has directly or indirectly but not limited to, through interposed Persons, Affiliates or Persons in which the Director or an Affiliate of the Director is a Management Officer), a personal or family interest in the respective business.
Additionally, section ten (10) of the Code establishes prohibitions for the senior management of the Companies.
8.2. Conflicts of Interest that may arise in Transactions with Related Parties
Bancolombia Group promotes the execution of agreements and contracts between the Companies of the Bancolombia Group, between them and their related parties, as well as operations between entities that make up the SURA Bancolombia Conglomerate and between these and their related parties, hereinafter Transactions with Related Parties.
Said Transactions with Related Parties are not considered by themselves as conflictive.
However, there is the possibility that the senior management involved in decision-making related to such transactions, agreements and contracts may be faced with conflicts of interest.
That is why, in addition to requiring that Transactions with Related Parties be carried out only when they are not prohibited by the applicable regulation and with strict compliance with the parameters defined therein, managers shall observe the following series of internal policies and guidelines defined:
• Ensure Transactions with Related Parties do not jeopardize the ability of the companies involved to fulfill their obligations to third parties.
• Ensure that Transactions with Related Parties are made at arms-length, at prices that are within the ranges of market operations that are comparable in terms of quality and quantity of the goods or services involved and the credentials and experience of the respective counterpart. In the event that there is no market that serves as a reference framework, the transactions will be carried out at objectively comparable prices, taking into account the potential synergies and commercial alliances between the Companies and trying to avoid the transfer of value as opposed to the rights of other shareholders.
Section nine (9) of this Code includes additional good governance procedures that are established for Transactions with Related Parties.
8.3. Procedure for the management, administration and disclosure of situations that could give rise to a conflict of interest
The Group considers that those situations that could give rise to conflicts of interest should be managed and resolved in accordance with the particular characteristics of each case. In any situation where doubts exist regarding the potential existence of a conflict of interest, the Director, administrator or officer will be bound to proceed as though it existed and the procedure established for this purpose by these Bylaws, the Code of Good Governance, or any other regulations or policy applicable as a result of belonging to a financial conglomerate, under applicable law, will be followed.
Conflicts of interest can be classified as permanent and sporadic. It will be understood that a conflict of interest is of a permanent nature when the person is incapable of exercising the position or is unable to make decisions related to the complete set of company operations. Other conflicts of interest shall be construed as sporadic.
The Companies shall not appoint as their managers, people who are in a situation of permanent conflict of interest, when said permanent conflict of interest is related to the expected functions of their position.
Managers who are faced with a possible conflict of interest or consider that they may be facing one, must proceed in accordance with the following provisions:
•When a Director (member of the Board of Directors) finds that in the exercise of their duties they may be faced with a conflict of interest, they or any other director aware of the potential conflict, shall immediately inform the other members of the Board of Directors The director in a conflict situation shall, in any event, refrain from discussing and deciding on the matter giving rise to the conflict of interest; and the Board shall deliberate and decide without the participation of the directors in conflict if they are not required to form the quorum required to deliberate and decide. Otherwise, the dispute will be submitted to the competent body according to the regulations, including special regulations for financial conglomerates.
•Special rule for transactions between companies of the SURA Bancolombia Conglomerate. When a Director (member of the Board of Directors) of Bancolombia is faced with a decision that meets the following characteristics:
oIt is a transaction, act or business whose approval corresponds to the Board of Directors, and
oThe transaction, act or business is celebrated with Grupo Sura – Financial Holding, or with a company belonging to the Sura Bancolombia Conglomerate or with one of its related parties, other than a subsidiary or subsidiary of Bancolombia, hereinafter the Conglomerate Counterpart, and
oThe Director is at the same time manager of the Conglomerate Counterpart or senior management of a Company that controls the respective Counterpart company.
In these cases, the Director must bring the situation to the attention of the Board of Directors, providing information about the circumstances that generated the conflict of interest and shall refrain from intervening or influencing the adoption of the decision, in such a way that he/she must refrain from participating in the deliberation and adoption thereof. The foregoing, notwithstanding the voting of the Shareholders' Meeting when required.
The Secretary of the Board of Directors will record the abstention in the respective minutes. Decisions on the act or business will be made by the Board of Directors with the vote of the majority of the members present, excluding the vote of the respective Director.
Whenever the requirements of section nine (9) of this Code are met, these transactions may give rise to special corporate governance procedures.
•In cases where the President or General Manager of a Company may be faced with a possible conflict of interest originated in personal situations or of his/her related parties, he/she must immediately inform the President of the Board of Directors of the respective Company, who will guide the management of the situation and its raising to the Board of Directors when deemed necessary.
•Other members of Senior Management who are faced with a possible conflict of interest, must inform the President of the respective Company, who will guide the management of the situation.
8.4. Disclosure
In the case of Transactions with Related Parties, the annual report that is made available to the General Shareholders' Meeting shall include the information related to situations of potential conflicts of interest that have been known and managed as established in this section. The disclosure will account for the decisions and actions taken in this regard.
SECTION 9: PRINCIPLES AND MEASURES FOR TRANSACTIONS WITH RELATED PARTIES
The Companies offer their financial products and services and develop alliances or agreements with other companies of the Bancolombia Group, entities of the Conglomerate and other natural or judicial persons that by regulation are considered related.
It is common for our affiliates to have financial products with the Companies and to carry out day-to-day transactions with them, hence the importance of having high standards of good governance and transparency for carrying out transactions and entering into agreements and contracts in said Transactions with Related Parties.
9.1. Bancolombia map of associates: Without prejudice of other legal and contractual definitions that Bancolombia must comply with associates or related parties, for effects of the Corporate Government the following natural or juridical persons shall be deemed as Related Parties:
•Companies subject to the control of Bancolombia.
•Members of the Board of Directors and Senior Management of Bancolombia.
•Spouse and children of Bancolombia Board of Directors members, and Senior Management of Bancolombia.
•Capital investments greater than 10% in corporations carried out by Bancolombia’s Board of Directors Members and the Senior Management of Bancolombia.
•Grupo Sura, financial holding company, its subordinate companies and the entities that make up the SURA Bancolombia Conglomerate.
•Other Bancolombia shareholders owning over ten percent (10%) of the Bank's capital stock. In this case, the entities under the control of the respective shareholder will be included as Related Parties.
9.2. Corporate Governance Rules applicable to Transactions with Related Parties. The operations executed between Bancolombia and its Related Parties, from a good governance perspective, shall be classified as (i) recurrent or non-recurrent, (ii) material or non-material.
9.2.1 A recurrent operation shall be understood as that operation corresponding to the ordinary course of the business of the Companies. Recurrent operations involve the following, among others that the Bank develops in the ordinary course of its business:
•Active credit operations
•Operations to raise funds, payments, and collections
•Treasury operations and currency purchase and sale operations
•Agreement for the use of Distribution Channels
•Stock market operations
•Structuring and investment banking operations.
•Trust businesses
•Leasing operations
•Businesses resulting from collective investment funds.
•Factoring operations
•General framework contracts, adhesion or standardized contracts for financial products and services.
•Purchase of movable and immovable property intended for leasing, rental, and use.
•Capital contributions to subsidiary companies.
Recurrent operations will not require a recommendation of the Audit Committee or prior approval from Bancolombia’s Board of Directors, notwithstanding the amount, except otherwise provided by law or by statutory disposition.
Regarding non-recurring operations, their materiality will be analyzed as provided in paragraph 9.2.2. herein.
9.2.2. Non-recurrent operations shall be deemed material when its amount is equal or exceeds USD 20 MM.
Material and non-recurrent operations shall be attached with a report containing the criteria that were taken into consideration for determining the price and other conditions of the transaction; this price should be previously known by Bancolombia’s Audit Committee.
With the approval of the Audit Committee, relevant operations can be executed whether or not they are submitted to the approval of the Board of Directors when needed; the approval of the Board of Directors shall require a quorum of fifty percent (50%) plus one (1) of the Board members, and the majority of the independent Directors.
When applicable, the procedure for the management, administration and disclosure of situations that may give rise to a conflict of interest provided in section eight (8) of this Code shall be applied.
If the non-recurring operation has an amount below USD 20 MM, it is considered to be non-material and therefore it will not be required to carry out the aforementioned procedure. These operations shall be reported to the Audit Committee within the month following their celebration or at the next committee meeting.
Capital contributions of Bancolombia in its subsidiaries, in accordance with the Bylaws, will require approval of the Board of Directors.
9.3. Disclosure.
Bancolombia shall disclose its Transactions with Related Parties within the notes to the financial statements of each exercise. Material operations shall be disclosed in the Corporate Governance report made available for the shareholders.
9.4. Principles applicable to transactions between companies of the SURA Bancolombia Conglomerate
Transactions of Grupo Bancolombia with entities of the Conglomerate will comply with the following principles:
a. Business relationships as clients of products and services reflect the interest that each of the parties has in obtaining the best conditions for their own business with full freedom to compete for their business, according to price and service conditions.
b. The provision of financial services by Grupo Bancolombia to the entities of the Conglomerate will be preceded by the profitability analysis, and the offer of products and services will be made at prices in accordance with the generation of value. The prices will always seek that the business relationship, as a whole, generates a financial contribution to the Bancolombia Group.
c. The Board of Directors will be aware of those transactions that by legal or statutory provision are within the scope of this body.
d. Transactions of Grupo Bancolombia with entities of the Conglomerate shall have as a fundamental premise compliance with legal regulations.
e. Transactions of Grupo Bancolombia with entities of the Conglomerate must not jeopardize the ability of the Companies to comply with their obligations to third parties.
f. Transactions of Grupo Bancolombia with the entities of the conglomerate shall be carried out at arms-length terms, meaning prices that are, within market ranges, in operations that are comparable in terms of the quality and quantity of the goods or services involved and the credentials and experience of the respective counterpart.
. In the event that there is no market that serves as a reference framework, the operations will be carried out at objectively comparable prices, taking into account the potential synergies and commercial alliances between the Companies and trying to avoid the transfer of value as opposed to the rights of other shareholders.
g. Taking into account the existing regulations for financial conglomerates in Colombia, it is necessary that between the entities of Grupo Bancolombia and Grupo Sura, as a financial holding company, there is exchange of additional information in order to comply with obligations before the Financial Superintendence of Colombia. Said exchange of information will be framed in protocols that compromise the use of the information only for the purposes for which it was delivered and that includes procedures and actions aimed at maintaining, protecting and giving adequate treatment to confidential and privileged information.
SECTION 10: PROHIBITED SITUATIONS FOR MANAGERS
The Group has identified a set of prohibited situations which shall be observed by managers of the Group’s companies. Such situations are the following:
•Refrain from participating, directly or through an intermediary, for their own benefit or for the benefit of third parties, in activities that involve competition with the company or acts that give rise to conflicts of interest.
•To refrain from participating in activities, businesses or operations contrary to law or to the Group’s interests, which may damage the compliance of his/her duties and responsibilities or put at risk the reputation of the Group.
•To refrain from making any business or operation based on feelings of friendship or enmity.
•To refrain from advising the execution of an operation, based on privileged or confidential information he/she may know for his/her activities or position in the company.
•To avoid obtaining personal or family benefits from suppliers, contractors, third parties, customers or users, except for what has been set in the Code of Ethics and Conduct for gifts and invitations.
•To refrain from offering, requesting or accepting commissions or any other remuneration in any transaction or business in which the Group is involved, with the purpose of assuring the effectiveness or the results from such business or transaction.
•To refrain from granting any kind of discounts, preferential rates, reductions or exemptions, based on friendship or kinship or which do not correspond to the Group’s trading policies.
•To act as advisors, proxies or representatives of customers or third parties’ businesses that have interests incompatible or contrary to those of Grupo Bancolombia.
SECTION 11: GOOD GOVERNANCE CODE COMPLIANCE PRINCIPLES AND MEASURES
Any violation of the procedures or standards contained in this Code, as well as in the Group’s Code of Ethics and Conduct, either by omission or by action during the execution of their obligations, will entail for such director, manager or officer who violates them, the imposition of the corresponding penalties or sanctions in each case pursuant to the provisions of the Substantive Labor Code, the Internal Labor Regulations, The Organic Statute of the Financial System, and current applicable regulations, without prejudice of the civil or criminal liability actions which will be executed by the representatives of the Company.
In order to assess the penalty, factors such as prior records, losses for the Company or the customers, among others, will be taken into consideration. Such provisions will be included in relevant agreements and will be reported to the managers.
Claims Related to the Good Governance Code
Shareholders and investors of each one of the Companies shall be entitled to submit requests before Grupo Bancolombia’s Investor Relationship Office or the Presidency of the other Companies, if they think there has been a failure to comply with the Good Governance Code; in these cases, the Company’s Management, through such Office or area, shall provide a clear and sufficient answer to the requester with diligence and on a timely basis.
By using the same means, shareholders and investors shall be entitled to submit claims and complaints before the Auditor, for failures to comply with the Good Governance Code. In these cases, the Company shall provide a timely reply to the requests of the Auditor in relation to the claim and will accept requests submitted when the mentioned failure to comply is established.
Any amendment, modification or supplement made to this Code will be informed on Bancolombia´s website.
EX-12.1
7
cib-20241231xexx121.htm
EX-12.1
Document
Exhibit 12.1
CERTIFICATION 302
I, Juan Carlos Mora Uribe, certify that:
1.I have reviewed this annual report on Form 20-F of Bancolombia S.A.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of Bancolombia as of, and for, the periods presented in this report;
4.Bancolombia’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for Bancolombia and have:
a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to Bancolombia, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)Evaluated the effectiveness of Bancolombia’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)Disclosed in this report any change in Bancolombia’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, Bancolombia’s internal control over financial reporting; and
5.Bancolombia’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to Bancolombia’s auditors and the audit committee of Bancolombia’s board of directors (or persons performing the equivalent functions):
a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect Bancolombia’s ability to record, process, summarize and report financial information; and
b)Any fraud, whether or not material, that involves management or other employees who have a significant role in Bancolombia’s internal control over financial reporting.
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March 28, 2025 |
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Name: Juan Carlos Mora Uribe
Title: Chief Executive Officer
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EX-12.2
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cib-20241231xexx122.htm
EX-12.2
Document
Exhibit 12.2
CERTIFICATION 302
I, Mauricio Botero Wolff, certify that:
1.I have reviewed this annual report on Form 20-F of Bancolombia S.A.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
4.Bancolombia’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for Bancolombia and have:
a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to Bancolombia, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)Evaluated the effectiveness of Bancolombia’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)Disclosed in this report any change in Bancolombia’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, Bancolombia’s internal control over financial reporting; and
5.Bancolombia’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to Bancolombia’s auditors and the audit committee of Bancolombia’s board of directors (or persons performing the equivalent functions):
a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect Bancolombia’s ability to record, process, summarize and report financial information; and
b)Any fraud, whether or not material, that involves management or other employees who have a significant role in Bancolombia’s internal control over financial reporting.
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March 28, 2025 |
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EX-13.1
9
cib-20241231xexx131.htm
EX-13.1
Document
Exhibit 13.1
CERTIFICATION
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Pursuant to 18 U.S.C. § 1350, the undersigned officer of Bancolombia S.A., hereby certifies, to such officer’s knowledge, that the Company’s Annual Report on Form 20-F for the year ended December 31, 2024 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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March 28, 2025 |
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Title: Chief Executive Officer |
The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.
EX-13.2
10
cib-20241231xexx132.htm
EX-13.2
Document
Exhibit 13.2
CERTIFICATION
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Pursuant to 18 U.S.C. § 1350, the undersigned officer of Bancolombia S.A., hereby certifies, to such officer’s knowledge, that the Company’s Annual Report on Form 20-F for the year ended December 31, 2024 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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March 28, 2025 |
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Name: Mauricio Botero Wolff
Title: Chief Financial Officer
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The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.
EX-15.1
11
cib-20241231xexx151.htm
EX-15.1
Document
Exhibit 15.1
Consent Of Independent Registered Public Accounting Firm
We hereby consent to the incorporation by reference in the Registration Statement on Form F-3 (No. 333-264524) of Bancolombia S. A. of our report dated March 28, 2025 relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 20-F.
/s/ PwC Contadores y Auditores S. A. S.
Medellín, Colombia
March 28, 2025
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| PwC Contadores y Auditores S.A.S., Calle 7 Sur No. 42-70, Torre 2, Piso 11, Edificio Forum, Medellín, Colombia. |
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Tel: (60-4) 6040606, www.pwc.com/co
© 2025 PricewaterhouseCoopers. PwC se refiere a las Firmas colombianas que hacen parte de la red global de PricewaterhouseCoopers International Limited, cada una de las cuales es una entidad legal separada e independiente. Todos los derechos reservados.
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EX-97.1
12
cib-20241231xexx971.htm
EX-97.1
Document
Exhibit 97.1
Bancolombia S.A.
CLAWBACK POLICY
I. BACKGROUND
Bancolombia S.A. (the “Company”) has adopted this policy (the “Policy”) to regulate the process of recuperating excess Incentive-Based Compensation granted to Executive Officers in the event of a Restatement of its financial statements.
This Policy is intended to comply with, and will be interpreted to be consistent with, the requirements of Section 303A.14 of the New York Stock Exchange (“NYSE”) Listed Company Manual (the “Listing Standard”).
The terms in uppercase will have the meaning assigned to them within this document.
II. STATEMENT OF POLICY
The Company will recover the amount of erroneously awarded Incentive-Based Compensation in the event that the Company is required to prepare an accounting restatement of its financial statements due to the material noncompliance of the Company with any financial reporting requirement under the securities laws, (the “Restatement”) including accounting restatements made to correct an error in previously issued financial statements that is material to the previously issued financial statements or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period.
In compliance with this Policy, the Company must recover the erroneously awarded Incentive-based Compensation except to the extent provided under Section V below.
III. SCOPE OF POLICY
A.Covered Persons and Recovery Period
This Policy applies to Incentive-Based Compensation received by an Executive Officer who served as such at any time during the performance period for that Incentive-Based Compensation, while the Company has securities listed on an American Securities Exchange.
The Company shall recover the erroneously awarded Incentive-Based Compensation received during the three completed fiscal years immediately preceding the date on which the Company is required to prepare a Restatement (the “Recovery Period”).
Notwithstanding this look-back requirement, the Company is only required to apply this Policy to the Incentive-Based Compensation received by the Executive Officers on or after October 2, 2023.
For purposes of this Policy, the Incentive-Based Compensation shall be deemed “received” in the Company’s fiscal period during which the Financial Reporting Measure is attained, even if the payment occurs after the end of that fiscal period.
B.Transition Period
This Policy applies to any transition period that results from a change in the Company´s fiscal year within the Recovery Period, provided that the transition period between the last day of previous fiscal year and the first day of the new fiscal year that comprises a period of nine to 12 months and is considered a complete fiscal year.
C.Determining Recovery Period
For the purpose of determining the Recovery Period, the date on which it is considered that the Company was required to prepare the Restatement is the earliest that occurs between:
•The date the Board of Directors concludes, or reasonably should have concluded, the Company is required to prepare a Restatement, and
•The date a court, regulator, or other legally authorized body directs the Company to prepare a Restatement.
For clarity, the Company’s obligation to recover erroneously awarded Incentive-Based Compensation under this Policy is not dependent on if or when a Restatement is filed
IV. AMOUNT SUBJECT TO RECOVERY
(a)Recoverable Amount: The amount of Incentive-Based Compensation subject to recovery under this Policy is the amount that exceeds the amount of Incentive-Based Compensation that would have been received had it been determined based on the restated amounts, computed without regard to any taxes or social security paid.
(b)Compensation based on stock price or TSR: For Incentive-Based Compensation based on stock price or total shareholder return (“TSR”), where the amount of erroneously awarded Incentive-Based Compensation is not subject to mathematical recalculation, the recoverable amount will be determined by the Designation, Compensation and Development Committee based on a reasonable estimate of the effect of the Restatement on the stock price or TSR upon which the Incentive-Based Compensation was received. In such event, the Company must maintain documentation that supports the determination of the estimation and provide such documentation to NYSE.
V. EXCEPTIONS
In compliance with this Policy, the Company shall recover the overpaid Incentive-Based Compensation reasonably promptly, except to the extent that the conditions set out below are met and that the Designation, Compensation and Development Committee determines that recovery would be impracticable:
(a)Direct expense exceeds recoverable amount. The direct expense paid to a third party to assist in the enforcement of this Policy would exceed the amount to be recovered; provided, however, that before concluding it would be impracticable to recover any amount of the erroneously awarded Incentive-Based Compensation based on expense of enforcement, the Company has made a reasonable attempt to recover the such erroneously awarded Incentive-Based Compensation, has documented said attempt, and has provided the documents to NYSE.
(b)Violation of Home Country Law. Recovery would violate Colombian law where such law was adopted prior to November 28, 2022; provided, however, that the Company obtains an opinion of a Colombian counsel acceptable to NYSE in that sense and provides such opinion to NYSE.
(c)Recovery from Certain Tax-Qualified Retirement Plans. Recovery would likely cause an otherwise tax-qualified retirement plan, under which benefits are broadly available to employees of the Company, to fail to meet the requirements of 26 U.S.C. 401(a)(13) or 26 U.S.C. 411(a) and regulations thereunder.
VI. PROHIBITION AGAINST INDEMNIFICATION
Notwithstanding the terms of any indemnification arrangement or insurance policy with any Executive Officer covered by this Policy, the Company will not indemnify any Executive Officer or former Executive Officer for the devolution of the overpaid Incentive-Based Compensation, nor will it pay or reimburse any costs associated with the hiring of insurance to finance the amounts recoverable under this Policy.
VII. DISCLOSURE
The Company will file all disclosures with respect to this Policy in accordance with the requirements of the U.S. Federal securities laws, including the disclosure required by the applicable Securities and Exchange Commission (“SEC”) filings and the Colombian securities law regarding relevant information.
VIII. DEFINITIONS
The following terms will have the following definitions for the purposes of this Policy:
“Executive Officer” means the Company’s president, principal financial officer, principal accounting officer (or if there is no such accounting officer, the controller), any vice-president of the Company in charge of a principal business unit, division, or function (such as sales, administration, or finance), any other officer who performs a policy-making function, or any other person who performs similar policymaking functions for the Company. Executive officers of the Company’s subsidiaries are deemed Executive Officers of the Company if they perform such policy making functions for the Company. Policy-making function is not intended to include policymaking functions that are not significant. Identification of an Executive Officer for purposes of this Policy will include at a minimum executive officers identified pursuant to 17 CFR 229.401(b).
“Financial Reporting Measures” means any of the following:
(i) measures that are determined and presented in accordance with the accounting principles used in preparing the Company’s financial statements, and any measures that are derived wholly or in part from such measures, (ii) stock price and (iii) TSR. A Financial Reporting Measure need not be presented within the Company’s financial statements or included in a filing with the SEC.
“Incentive-Based Compensation” means any compensation that is granted, earned, or vested based wholly or in part upon the attainment of a Financial Reporting Measure.
IX. ADMINISTRATION; AMENDMENT; TERMINATION
All determinations under this Policy will be made by the Board of Directors, including determinations regarding how any recovery of the overpaid Incentive-Based Compensation under this Policy is effected. Any determinations of the Board of Directors will be final, binding and conclusive and need not be uniform with respect to each individual covered by this Policy.
The Board of Directors may amend or terminate this Policy anytime.
X. EFFECTIVENESS; OTHER RECOUPMENT RIGHTS
This Policy shall be effective as of December 1st, 2023. Any right of recoupment under this Policy is in addition to, and not in lieu of, any other remedies or rights of recoupment that may be available to the Bank and its subsidiaries and affiliates under applicable law or pursuant to the terms of any similar policy or similar provision in any employment agreement, equity award agreement or similar agreement.
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