Bancolombia : March 17, 2014 Bancolombia S.A. announces consolidated results for 4Q13 Download

4Q13

BANCOLOMBIA S.A. (NYSE: CIB; BVC: BCOLOMBIA, PFBCOLOM) REPORTS CONSOLIDATED NET

INCOME OF COP 489 BILLION FOR THE FOURTH QUARTER OF 2013 (COP 574 PER SHARE - USD 1.19

PER ADR), WHICH REPRESENTS AN INCREASE OF 51% COMPARED TO THE SAME QUARTER LAST YEAR.

 The bank showed a strong and healthy growth in assets during 4Q13. Bancolombia's assets grew

15.1% during the quarter and 33.6% during 2013. The annual growth was explained 14.6% by the contribution of Banistmo (formerly HSBC Panama) and 19% by the organic growth of the existing operation before the consolidation of Banistmo.

 Past due loans as a percentage of total loans remain low in 4Q13. 30 days (or more) past due loans as a percentage of total gross loans were 2.9%. Net provision charges for past due loans and foreclosed assets totaled COP 273 billion, which represents 1.30% of gross loans when annualized, an improvement compared to the 1.50% reported in 3Q13 and the 1.99% in 4Q12.

 Loan portfolio coverage remains at high levels. At the end of 4Q13, the ratio between allowances for loans losses and 30-days past due loans was 157%, indicating that Bancolombia has sufficient reserves to maintain its business operation and has a strong and healthy balance.

 The bank improved its liquidity position. Deposits grew 20percent during 4Q13 and 35% during 2013 and the ratio of net loans to deposits ended at 94%. This annual growth was explained, 17% by the contribution of Banistmo (formerly HSBC Panama) and 19% by the organic growth of the existing operation before consolidation Banistmo. The weighted cost of deposits at the end of 4Q13 was 2.6%, less than the 2.7% reported in 3Q13 and the 3.3% in 4Q12.

March 17, 2014. Medellín, Colombia - Today, BANCOLOMBIA S.A. ("Bancolombia" or "the Bank") announced its

earnings results for the fourth quarter of 2013.

For the quarter ended on December 31, 2013 ("4Q13"), Bancolombia reported consolidated net income of COP

489 billion, or COP 574 per share - USD 1.19 per ADR, which represents an increase of 51% as compared to the results for the quarter ended on September 30, 2013 ("3Q13") and an increase of 4.5% as compared to the results for the quarter ended on December 31, 2012 ("4Q12").

Bancolombia ended 4Q13 with COP 130,816 billion in assets, 15.1% higher than those at the end of 3Q13 and

33.6% greater than those at the end of 4Q12. At the same time, liabilities totaled COP 118,323 billion, increasing

16.4% as compared to the figure presented in 3Q13 and 37.1% as compared to 4Q121.

1

This report corresponds to the consolidated financial statements of BANCOLOMBIA S.A. ("BANCOLOMBIA") and its affiliates of wh ich it owns, directly or indirectly more than 50% of the

voting capital stock. These financial statements have been prepared in accordance with generally accepted accounting principles in Colombia and the regulations of Superintendencia Financiera de Colombia, collectively COL GAAP. BANCOLOMBIA maintains accounting records in Colombian pesos, referred to herei n as "Ps." or "COP". Certain monetary amounts, percentages and other figures included in this report have been subject to rounding adjustments. There have been no changes t o the Bank's principal accounting policies in the quarter ended December 31, 2013. The statements of income for the quarter ended December 31, 2013 are not necessarily indicative of the results for any other future interim period. For more information, please refer to the Bank's filings with the Securities and Exchange Commission, which are available on the Commission's website at www.sec.gov.

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS: This release contains statements that may be considered forward -looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934. All forward-looking statements, whether made in this release or in future filings or press releases or orally, address matters that involve risks and uncertainties; consequently, there are or will be factors, including, among others, changes in general economic and business conditions, changes in currency exchange rates and interest rates, introduction of competing products by other companies, lac k of acceptances of new products or services by our targeted customers, changes in business strategy and various others factors, that could cause actual results to differ materially from those indicated in such statements. We do not intend, and do not assume any obligation, to update these forward-looking statements. Certain monetary amounts, percentages and other figures included in this report have been subject to roun ding adjustments. Any reference to BANCOLOMBIA means the Bank together with its affiliates, unless otherwise specified .

Representative Market Rate January 1, 2014 $$1.926,83 = US$ 1

1

BANCOLOMBIA: Summary of consolidated financial quarterly results2

CONSOLIDATED BALANCE SHEET

,,,C.,IB,,.,

4Q13

Quarter Growth

4Q123Q13 4Q134Q13!3Q13 401314012

PRINOPAL RATlOS Quarter As of

4Q12 3Q13 4Q13 Dec-12 De c-13

(l) Defined as net interest incarne divided by monthly average interest- earning assets. (2) Net incarne divided by monthly average assets. (3) N et incarne divided by monthl.y average shareholded equity. (4) Defimd as ADS price divided by ADS book v.Jue. (5) D efimd as share price divided by share book v.Jue. (6) Share prices on the C olombianStock Exchenge; (7) Defined as market capitalization divided by annualized quarter results. (8) Prices at the end of the respective quarter. (9) Common andprefened.

2

1.1. Assets

,,,C.,IB,,.,

NYSE

4Q13

As of Oecember 31, 2013, Bancolombia's assets totaled COP 130,816 billion, which represents an increase of 15.1% compared to 3013 and an increase of 33.6% compared to 4012.

The annual growth of the assets was explained 14.6% by the contribution of Banistmo and 19% by the organic growth of the existing operation before the consolidation of Banistmo. lt is highlighted the growth of loans and finance leases, which represented 65% ofthe assets at the end of 4013.

1.2. Loan Portfolio

The following table shows the composition of Bancolombia's investments and loans by type and currency:

(COP Million)

(1 USD= 1926,83 COP)

Net investment securities

Arnounts in COP Arnounls in USO converted lo COP Amounts in USO (lhousands) Tolal

40130013 401314012 401J!J013 401314012 401J!J013 401314012 401JIJ013 401314012

10,060,478 3.07% .0.51% 3,745,312 .21.36% 53.35% 1,943,769 .21.36% 40.73% 13,805,790 4.94% 9.97%

The most relevant aspects regarding the evolution ofthe loan portfolio during 4013 were:

• The growth of commerciai, consumer and mortgage loans in Colombia during 4013 indicates a sustained credit demand.

• Net loans in USO correspond to loans originated in Colombia (USO 4,321 million, 30%), El Salvador (USO 2,661 million, 19%), Panama (USO 6,878 million, 48%), and other countries (USO 421 million,3%). USO denominated loans represented 32% oftotalloans as of 4013.

• COP depreciated 1.0% versus USO during 4013 and 9.0% during 2013.

• Mortgage loans denominated in COP presented a dynamic performance. The dynamism of mortgage lending in Colombia is explained by the lower long-term interest rates, as well as by the Colombian government's interest rate subsidy programs. On the other hand, the mortgage balance denominated in USO from our operation in El Salvador and Panama represented 36% of the mortgage loans at the end of 4013.

• Financial leases, of which 89% are denominated in COP, increased 4.7% during the quarter and

11.9% as compared to 4012. Operating leases, net of depreciation, increased 3.3% during 4013 and

33.2% in the last 12 months. These two products are mainly used by enterprises in arder to finance equipment, commerciai real estate and commerciai vehicles.

When analyzing the loan portfolio according to the customer categories established by Bancolombia in arder to manage its commerciai strategy (see table below), it becomes clear that commercialloans led the growth during 4013, as they increased 12.1% with respect to 3013, in part by the consolidation of the

3

,,,C.,IB,,.,

NYSE

4Q13

commerciai loan portfolio of Banistmo. The organic increase is explained by the credit demand for business investment. This is the segment that contributes the most to the nominai growth ofthe totalloan book. Consumer and SMEs loans increased 11.7% when compared with 3013, which indicates a sustained credit demand under strict underwriting criteria.
Total reserves (allowances in baiance sheet) for loan losses increased by 10.2% during 4013 and totaled COP 4,066 billion, or 4.5% of gross loans at the end of the quarter. For further explanation regarding coverage of the loan portfolio and credit quality trends, see section "2.4. Asset Ouality, Provision Charges and Balance Sheet Strength".

The following table summarizes Bancolombia's totalloan portfolio:

LOAN PORTFOLIO As of Growth % ofTotalC

(COP mllllon) Dec.12 Sep.1J Dec.1J 401313013 401314012 lo111sC

CORPORATE

W:Jrking capitalloans

Funded by domestic development banks

Tra de Financing Overdrafts CredilCards

30.493,677

261,701

2,215,613

103.434

35,619

34,072,869

417,679

2,076,044

239,602

42,252

33,992,771

489,798

6,706,315

80,023

42.406

-0.24% 11.47% 38.00% 82.28%

17.27% 87.16% 0.55% 1.19%

223.03% 202.68% 7.50% 16.23%

-66.60% -22.63% 0.09% 0.19%

0.36% 19.05% 0.05% 0.10%

TOTAL CORPORAlE 33,110,044 36,848,446 41,311,313 12.11% 24.77% 46.18% 100.00%

capitalloans 1.38% 14.71% 10.81% 34.31% alloans 21.95% 40.35% 10.70% 33.98% funded by domestic development l 21.38% 52.86% 1.47% 4.68%

i Cards 12.56% 23.85% 5.08% 16.15%

-20.30% 12.60% 0.28% 0.89%

1.3. lnvestment Portfolio

As of Oecember 31, 2013, Bancolombia's net investment portfolio totaled COP 13,806 billion, 4.9% lower than that reported in 3013 and 10.0% higher when compared to that reported in 4012. The investment portfolio consisted primarily of debt investment securities, which represented 88% of Bancolombia's total investments and 9% of assets at the end of 4013. lnvestments denominated in USO totaled USO 1,944 million and represented 27% of the investment portfolio.
Additionally, the Bank had COP 952 billion in net mortgage backed securities, which represented 6.9% of the investm ent portfolio.
After the loss in value in the securities portfolio in 2013 because of the expectations of a reduction in the monetary stimulus in the U.S., Bancolombia's strategy focused on reducing volatility and duration of the portfolio in order to minimize the impact on the bank's results. At the end of 4013, the portfolio of investm ents in debt securities had a duration of 15.3 months and a yield to m aturity of 4.1%.

1.4. Goodwill

As of 4013, Bancolombia's goodwill totaled COP 3,589 billion, increasing 525.7% compared to the amount reported in 3013 and 528.2% compared to 4012. This variation is explained by the acquisition of Banistmo which generated goodwill of approximately 1.500 million USO. Under COL GAAP, goodwill is amortized within a maximum period of 20 years.

4

1.5. Funding

,,,C.,IB,,.,

NYSE

4Q13

As of December 31, 2013, Bancolombia's liabilities totaled COP 118,323 billion, increasing 16.4%

compared to 3013 and 37.1% compared to 4012.

Deposits totaled COP 86,557 billion (or 73% of liabilities) at the end of 4013, increasing 20% during the quarter and 35% over the last 12 months. The annual growth of the deposits was explained 17% by the contribution of Banistm o and 19% by the organic growth of the bank. The higher growth rate in deposits against net loans led the bank to a better liquidity position, where net loans to deposits ratio (including borrowings from domestic development banks) was 94% at the end of 4013, decreasing compared to the

98% reported in 3013, and the 104% reported in 4012.

Bancolombia's funding strategy is meant to improve the liquidity position and to encourage non interest bearing checking accounts and savings accounts, and reduce the proportion of tim e deposits.. This strategy allowed the bank to reduce the cost on deposits during the quarter. The ultimate goal is to defend

the net interest m argin.

Fundmg mtx 4Q123Q13 4Q13

COP Mtllton

Checking accounts 11.298,901 9

Sa Ang accounts 27,113,914 5

Time deposits 24.767,489 9

Other deposits 978,416 3

Long tenn debt 12,059.219 2

Loans with banks 5,316.443 1

TotalFunds 81,534,382

3 15%

4 31%

2 30%

0 1%

5 11%

4 12%

100%

At the end of 4013, Bancolombia had outstanding bonds for USO 3,740 million in international markets and for COP 5,122 billion in local markets. The maturities ofthese bonds range from 2 to 10 years.

1.6. Shareholders' Equity and Regulatory Capitai

Shareholders' equity at the end of 4013 was COP 12,493 billion, increasing 7.6% or COP 886 billion, with respect to the 11,607 billion reported at the end of 4012.

Bancolombia's capitai adequacy ratio was 10.61%, 469 basis points below the 15.3% for 3013 and 516 basis points below the 15.77% at the end of 4012. This annual decrease in the capitai adequacy was due to the implementation in Colombia of a new capitai regulation for banks, which increased deductions from the tier 1 calculation.

Bancolombia's capitai adequacy ratio was 161 basis points above the minimum level required by Colombia's regulator, while the basic capitai ratio (Tier 1) to risk weighted assets was 5.8%, 131 basis points above the regulatory minimum of 4.5% . The tangible capitai ratio, defined as shareholders' equity minus goodwill and intangible assets divided by tangible assets, was 6.5% at the end of 4013.

TECHNICAL CA PlTAL RlSK W ElGHTED ASSETS

Consoltdated (COP m1ll1ons)

(1) Technical capitai is the sum of basic and additional capitai.

(2) Capitai adequacy is technical capitai divided by risk weighted assets.

(3) Capitai adequacy ratios for 3012 and 2013 are calculate d according to the capitai rules existing untilAugust 2013

5

,,,C.,IB,,.,

4Q13

Net incarne totaled COP 489 billion in 4013, or COP 574 per share - USO 1.19 per AOR, which represents an increase of 51.0% compared to 3013 and 4.5% compared to 4012. Bancolombia's annualized ROE was 16% for 4013, and 12.8% for 2013.

2.1. Net lnterest Incarne

Net interest income totaled COP 1,349 billion in 4013, 10.5% higher than that reported in 3013, and 8.7% higher than the figure for 4012. The annual increase in net interest income was driven by the larger size of the loan portfolio, although it was overshadowed by the return on investments during the year, which decreased 50.8% compared to the 4012.

Ouring 4013, the investment portfolio continued its path of recovery from the losses posted in 2013, generating USO 99 billion. The strategy for the last quarters has been maintaining low the volatility and duration of the portfolio.

Net lnterest Margin

The annualized net interest m argin kept compressing during 4013, in line with the trend seen since the end of 4012, reaching 5.3% in 4013.

The annualized net interest m argin for investments was 0.1% due to lower yields on debt securities of the CoIombian government and the annualized net interest margin of the loan portfolio, financial leases, overnight funds and interbank loans was 6.0%, negatively impacted by lower interest rates, the change in the composition of the portfolio by type of client, where the corporate credit becam e more important within the overall portfolio, and the consolidation of Banistmo's assets denominated in USO Banistmo, in which net interest m argin is lower.

The funding cost decreased during 4013 due to the rate cuts and management ofthe liabilities structure. Savings and checking accounts slightly increased their share during the quarter, and the annualized average weighted cost of deposits was 2.6% in 4013, decreasing compared to the 2.7% for 3013 and the

3.3% for 4012.

Average weighted

funding cost 3Q12 2Q13 3Q13

Checking accounts

Time deposits

0.24%

5.55%

0.26%

4.74%

0.24%

4.42%

6

,,,C.,IB,,.,

NYSE

4Q13

2.2. Fees and Incarne frarn Services

During 4013, net fees and incarne from services totaled COP 525 billion, 14.0% higher than those reported in 3013 and 6.2% higher compared to those reported in 4012. Fees from credit and debit cards increased 32.1% compared to 3013 due to higher volume of transactions and the incorporation of this type of incom e generated for Banistm o in the last two months of the year. Fees from banking services decreased 14.9% compared to 3013 because in 4013 there was not incarne from advisory services in structuring capitai markets operations, and decreased 15.6% compared to 4012; this line includes fees from insurance distribution throughout the distribution networks in Colombia and in El Salvador. Fees from brokerage services increased 10.5% in 4013 as compared to 3013 and decreased 29.0% as compared to those in 4012, explained by seasonality of business.
The following table summ arizes Bancolombia's participation in the credit card business in Colombia:

Source SupenntendenCia Fmane era de Colombia

2.3. Other Operating Incarne

Total other operating incarne was COP 258 billion in 4013, 18.7% higher than that in 3013, and 31.4% higher than in 4012. Incarne from foreign exchange gains and derivatives denominated in foreign currencies increased in the quarter due to the net effect of the active and passive positions the bank had in foreign currency.
During 4013 the bank received 8.4 billion in dividends from companies in which Bancolombia and its subsidiaries have interests, especially from Sura Asset Management (COP 3.9 billion) and Bolsa de Valores de Colombia (COP 1 billion).
Revenues aggregated in the communication, rent and others line totaled COP 121.4 billion in 4013, which is 1.45% lower as compared to 3013 and 7.62% higher as compared to those in 4012. This line includes revenues from commerciai discounts and operating leases paym ents, which have increased as the operating leasing business grows.

7

Bancolombia•

2.4. Asset Quality, Provision Charges and Balance Sheet Strength

,,,C.,I,B,.,

NYSE

4Q13

The quality of the loan portfolio showed a slight deterioratian in 4013 due to the incorporatian of Banistmo's assets that under Colombian rule resulted in an increase in the past due loans. Colombian standards consider those loans overdue more than 30 days as delinquent while Panamanian law considers them past due after 90 days or more. Thus, past due loans (those that are overdue far more than 30 days) totaled COP 2.597 billion at the end of 4013, representing 2.9% of total gross loans far

4013, and increasing compared to the 2.7% reported in 3013 and the 2.6% reported in 4012. Charge­

offs totaled COP 282 billion in 4013.

The coverage measured by the ratio of allowances far loans losses (principal) to PDLs (overdue 30 days), was 157% at the end of 4013, decreasing with respect to the 175% of 3013 and the 177% of 4012. Likewise, the coverage measured by the ratio of allowances far loans losses to loans classified as C, D andE, was 111% at the end of 4013, decreasing with respect to the 120% reported in 3013 and the

117% reported in 4012. These reductions are explained by the consolidation of Banistmo.

The deterioration of the loan portfolio (new past due loans including charge-offs) was COP 775 billion in

4013, which represented 1.0 % of the loan portfolio at the beginning of the quarter, increasing with respect to the COP 144 billion in 4012. The loan portfolio of Banistm o that under Colombian rule is considered overdue explains COP 562 billion deterioration presented during the quarter.

Provision charges (net of recoveries) totaled COP 273 billion in 4013. Provisions as a percentage ofthe average gross loans were 1.3% far 4013 and 1.59% far 2013.

Bancolombia maintains a strong balance sheet supported on an adequate level of loan loss reserves. Allowances far loan losses totaled COP 4,066 billion, or 4.54% of total loans at the end of 4013. This proportion decreased with respect to the 4.70% presented at the end of 3013, and with respect to the

4.64% far 4012.

The following tables present key metrics related to asset quality:

(1) "Performing" past due loans are loans upon which Bancolombia continues to recognize income although interest in respect of suc h loans has not been received. Mortgage loans cease to accumulate interest on the statement of operations when they are more than 60 days pa st due. Forali other loans and

financialleasing operations of any type, interest is no longer accumulated after they are more than 30 da ys past due.

(2) Under Colombian Bank regulations, a loan is past due when it is at least 31 days p ast the actual due date

8

PDL Per Category (30 days)

% de la cartera total4Q123Q134Q13

Commercialloans 58.53% 1.48% 1.55% 1 75% Consumer loans 18.56% 4.80% 4.80% 4.73% Mi crocredit 0.58% 9.32% 10.30% 9.89%

Mortgageloans 11.51% 6.86% 6.13% 6.22%

,,,C.,IB,,.,

NYSE

4Q13

•PDL Per Category (90 days)

% de la cartera total 4Q12 3Q13 4Q13

Commercialloans 58.53% 1.16% 1 09% 1 13% Consumer loans 18.56% 2.55% 2.42% 2.30% Mi crocredit 0.58% 5.81% 7.27% 6.52% Mortgageloans 11.51% 2.97% 2.81% 2.39% Finance lease 10.82% 1.36% 1.33% 1 28% TOTAL LOAN PORTFOLIO 100.00%1.62%1.54%1.54%

LOANS ANO FINANCIAL LEASES CLASSIFICATION4Q12 3Q13 4Q13

( COP millions)

Loans and financialleases classified as C,DandE

as a percentage oftotalloans and financialleases 3.96% 3.91% 4.11%

2.5. Operating Expenses

During 4013, operating expenses totaled COP 1,207 billion, increasing 5.6% with respect to 3013 and
14.4% with respect to 4012.
Personnel expenses (salaries, bonus pian paym ents and compensation) totaled COP 393 billion in 4013, decreasing 2.5% as compared to 3013 and 3.0% as compared to 4012. This reduction is explained by lower bonuses paym ents as well as the little growth in the number of employees
During 4013, administrative expenses totaled COP 660 billion, increasing 14.3% as compared to 3013 and 24.8% as compared to 4012. This variation during the year is mainly explained by the costs of integration of Banistmo, higher rent expenses, higher taxes (other than incarne tax), higher amortization of capitalized expenses and higher expenses far maintenance offixed assets.
Depreciation expenses totaled COP 119 billion in 4013, increasing 7.0% as compared to 3013 and
32.1% as compared to 4012. The increase in this type of expense is explained by the increase of operating leases from Leasing Bancolombia whose assets given on lease are depreciated.
At the end of 4013, Bancolombia had 28,759 employees, 1,090 branches and 4,31O ATMs.

9

3. BANCOLOMBIA Company Description (NYSE: CIB)

,,,C.,IB,,.,

4Q13

GRUPO BANCOLOMBIA is a full service financial conglomerate incorporated in Colombia that offers a wide range of banking products and services to a diversified individuai and corporate customer base of more than 9 million customers. GRUPO BANCOLOMBIA delivers its products and services via its regional network comprised of: Colombia's largest non-government owned banking network, El Salvador's leading financial conglomerate (Banagricola S.A.), off-shore and local (Banistmo S.A.) banking subsidiaries in Panam a, Caym an and Puerto Rico. Together, BANCOLOMBIA and its subsidiaries provide stock brokerage, investment banking, leasing, factoring, consumer finance, fiduciary and trust services, asset management, among others.

Contact lnformation

Bancolombia's lnvestor Relations

Phone:(574)4041837/(574)4041838

E-mail: investorrelatians@bancolombia.com.co

Alejandro Mejia (IR Manager) l Simon Botero (Analyst)

Website: http://www.grupobancolombia.com/investorRelations/

10

BALANCE SHEET

,,,C.,IB,,.,

Last A % of % of

4Q13

(COP m1ll1on) Dec-12 Sep-13 Dec-13Quarter nnua Assets Liabilities

LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES

DEPOSITS

Non-interest bearing 9,798,874 9,217,936

Checking accounls 8,820,458 8,502,923

Other 978 416 715 013

62,795,570

3,161,616

30,227,429

29, 525

11

,,,C.,IB,,.,

4Q13

9.59% 13.58%

4.59% -50.80%

40.71% 45.55%

2.86% -0.22%

8.72% 5.77%

·3.50% 14.01%

11.80% 9.95%

-16.21%

1.13%

248.96%

-0.38%

-33.15%

11.33% 13.29%

9.20% 10.47%

8.31% -16.96%

32.11% 40.68%

0.43% -1.16%

4.96% -10.60%

10.53% ·29.04%

404.47% 391.52%

and other service expenses

fees and income from serv net perating income

exchange gain (loss), net

·0.88% 2.00%

·26.87% ·51.58%

·924% ·14.57%

14.31% 24.84%

-28.87% 17.57%

-59.42% -36.50%

12

distributed by