Bancolombia S A : Management Report 1Q23

Quarterly Report

January 2023 - March 2023

Bancolombia SA

Address:

Carrera 48 # 26-85

Medellín, Colombia

Issuer's Current Securities

Bancolombia also has a Level III ADR listed on the New York Stock Exchange (NYSE). Each ADR represents four preferred shares.

Grupo Bancolombia Bonds Levels in USD

(As of March 31, 2023)

Contents

1. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL OPERATIONS AND

1. QUANTITATIVE AND QUALITATIVE ANALYSIS OF THE MARKET RISK TO WHICH THE ISSUER IS EXPOSED AS A RESULT OF ITS ACTIVITIES AND SENSITIVE TO MARKET

1. MATERIAL VARIATIONS THAT HAVE OCCURRED IN THE RISKS TO WHICH THE ISSUER IS EXPOSED, OTHER THAN MARKET RISK, AND THE MECHANISMS IMPLEMENTED

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL OPERATIONS AND RESULTS

BALANCE SHEET

Assets

As of March 31, 2023, Bancolombia's assets at the consolidated level totaled COP 349,323 billion, which represents a decrease of 1.0% compared to 4Q22 and an increase of 19.9% compared to 1Q22. The variation in total assets during the last year is largely explained by loan book growth.

During the quarter, the peso appreciated 3.4% against the US dollar and depreciated 23.7% in the last 12 months. The average exchange rate was 11.8% higher in 1Q23 versus 4Q22, and 21.6% higher in the last 12 months.

Loan Portfolio

In 1Q23, gross loans declined 1.0% compared to 4Q22 (increasing 0.3% when excluding the FX effect) and rose 20.1% compared to 1Q22. During the last 12 months peso-denominated loans grew 14.0% and the dollar-denominated loans (expressed in USD) grew 7.0%.

At the end of 1Q23, Banco Agricola operations in El Salvador, Banistmo in Panama and BAM in Guatemala represented 28.7% of total gross loans. Gross loans denominated in currencies other than COP, generated by operations in Central America, the international operation of Bancolombia Panamá, Puerto Rico and the USD denominated loans in Colombia, accounted for 36.7% of the portfolio, and decreased 0.9% in the quarter (when expressed in COP).

Total reserves (provisions in the balance sheet) for loan losses increased 6.7% during the quarter and totaled COP 16,513 billion or 6.2% of the gross loans at the end of the quarter.

During 1Q23, for the first time since 2020 the credit portfolio experienced a quarterly contraction. Such decrease is partially explained by the Colombian peso appreciation that impacted the balance on foreign subsidiaries. The largest decrease took place in the commercial portfolio both in absolute value and in percentage change (-1.2%). On consumer, the loan reduction was led by Bancolombia S.A. in line with the strong pick-up in interest rates and the lower credit demand, which was reflected in the decline of personal loans and credit card balances.

Investment Portfolio

As of March 31, 2023, Bancolombia net investment portfolio at the consolidated level totaled COP 30,969 billion, increasing 10.8% from the end of 4Q22 and 13.4% from the end of 1Q22. Such growth was a deliberate strategy to allocate resources in the market intended to optimize the

asset balance. At the end of 1Q23, the debt securities portfolio had a duration of 13.7 months and a weighted average yield to maturity of 10.0%.

Goodwill and intangibles

At the end of 1Q23, Bancolombia's goodwill and intangibles at the consolidated level totaled COP 10,093 billion, down 3.3% compared to 4Q22. This quarterly variation is mainly explained by the appreciation of the COP against the USD.

Funding

As of March 31, 2023, Bancolombia's liabilities at the consolidated level totaled COP 311,469 billion, decreasing 0.4% from the end of 4Q22, and increasing 20.0% compared to 1Q22.

Customer deposits totaled COP 251,007 billion (80.6% of liabilities) at the end of 1Q23, up 0.01% compared to 4Q22 and up 20.4% over the last 12 months. The net loans to deposits ratio was 99.9% at the end of 1Q23 decreasing compared to 101.4% in 4Q22, driven by the credit portfolio contraction.

Certificates of deposit increased by 11.9% during 1Q23, following the growing trend seen since the first quarter of 2022. This performance is explained to a greater extent by the operation in Colombia and represents a significant variation in the funding mix on a consolidated basis, going from a 30% share in 4Q22 to 34% in 1Q23. The new funding composition is explained by the higher interest rates environment and the clients´ demand for more profitable products. The appreciation of the peso against the dollar affected the amount of long-term debt and loans with banks due to the balance of foreign subsidiaries.

Shareholders' Equity and Regulatory Capital

Shareholders' equity attributable to the owners of the parent company at the end of 1Q23 was COP 36,918 billion, decreasing by 5.6% compared to 4Q22 and increasing by 22.2% when compared to 1Q22. In March of 2023 the General Shareholders' Meeting approved the proposal for distribution of profits for a total of COP 3.4 trillion. Dividends approved mainly explain the quarterly reduction in equity and capital ratio.

Bancolombia solvency ratio on a consolidated basis under Basel III was 12.01% in 1Q23 standing 113 basis points above the minimum level required by the regulator in Colombia, while the basic capital ratio (Tier 1) stood at 9.75%, 225 basis points above the minimum regulatory capital level (value to fully comply with the new capital requirements in the third year of the Basel III phase-in period). The reduction in solvency levels for the quarter is mainly due to the distribution of profits.

INCOME STATEMENT

Net income attributable to equity holders of the parent company was COP 1,717 billion in 1Q23, or COP 1,784.91 per share (USD $ 1.54 per ADR). This profit represents an increase of 4.5% compared to 4Q22. The company´s annualized return on equity ("ROE") was 17.7% for 1Q23 and 19.0% for the last 12 months.