For a better society where integrity and high performance are possible

4 ANNUAL ANNUAL 5 MANAGEMENT REPORT MANAGEMENT REPORT

Index

102 Contributing to overall economic growth 8 Corporate Message 4 10 Message to our Shareholders 18 Economic Report 20 Macroeconomic environment 106 Commitment to our investors 23 For a better society, where integrity and high performance are possible 108 Efficiency and Profitability 109 Revenue optimization 5 118 Proactive Reputation Management 23 140 years of transforming society 118 Committed to providing economic, social and environmental value 26 Our Shareholders 27 Board of Directors 1 28 1875 – 2015: making history together 120 The best human talent 30 Organizational structure 122 Committed to our "Humanistic Banking" Approach 31 Awards and Recognition 122 Consolidating Our Humanistic Banking Model 32 Ratings 6 123 Innovative talent management 42 Talking with our stakeholders 125 Breakdown of jobs by company and countries

44 Creating shareholder value 46 Bancolombia Group's Consolidated Results 132 Hand-in-hand with our strategic partners 48 Bancolombia – a Retail and Commercial Bank 2 50 Sustainable growth 7 50 Personal and SME banking: 55 Corporate and Government Banking 69 International consolidation 71 The value of trust 142 Transforming communities 72 Working together 144 A brand with a purpose 72 Partnerships and alliances 144 Working for peace 74 Stock market access 8 145 Contributing to culture 75 Managing trust 149 Contributing to a Better Quality of Life 76 Leaders in .... 154 Consolidating our Sustainability, Social and Environmental Model 77 Making dreams come true throughout the region

78 Making life easier 170 Our Responsibility with Authorities 79 Finding new ways of shaping a more gratifying experience for our clients 79 Building more and better relationships with our clients 3 84 Operating simplicity and impeccability 9 88 Wherever, whenever and however our clients need us 93 Strengthening key lines of business in terms of creating added value 194 GRI Sustainability Report About Our Report for 2014

In drawing up this report, we identified Guided by our strategy, we hereby declare that the more salient aspects of the initiatives deployed throughout the year for the this report was printed according to world-class benefit of our different stakeholder groups, environmental standards, using soybean oil-based informing them of the main achievements inks and paper sourced from sustainable crops, both obtained through our strategy as well materials duly certified by recognized international as the goals ahead. In the final part of organizations. Our printing supplier has implemented this report, we present the GRI content and Environmentarl and Social Management System index along with different economic, environmental and social areas indicators that is fully aligned with Grupo Bancolombia's that go into drawing up a sustainability sustainability policies. report. Since we are only beginning to adopt this new G4 version, we chose to base this report on the G4 core option. We are firmly committed to working with this methodology so as to be able to provide our stakeholder groups with more complete information regarding our sustainability initiatives as we continue on this learning curve. This report was verified by the auditing firm, Deloitte which also reviewed how the contents of this report were adapted to the Global Reporting Initiative´s Sustainability Reporting Guidelines Version 4.0

Our Sustainability report for2013 can e found at: http//www.grupobancolombia.com

Should you have any queries regarding the contenet of such, please contact us at the following e-mail address: Mailto:[email protected] 8 ANNUAL ANNUAL 9 MANAGEMENT REPORT MANAGEMENT REPORT

Honduras Puerto Rico Nicaragua Islas Cayman

Panamá Colombia

Guatemala El Salvador

Costa Rica

We are a financial group serving as a driver of economic and social development in all those countries where we are present.

Our business model is based on providing a 'more Humanistic Banking experience', building interactive relationships based Perú on trust as a key to achieving our goals in terms of growth, efficiency and sustainability. Listening carefully to our clients and responding to their needs has led us to evolve in providing a new, more gratifying client experience with a CRM approach based on the idea that we are all important and where results are nothing but the natural consequence of a job well done.

For 140 years now, we have been able to achieve a sustainable growth so as to be able to provide shared value from the economic, social and environmental standpoints; while driving change for a more prosperous society 10 ANNUAL ANNUAL 11 MANAGEMENT REPORT MANAGEMENT REPORT

Dear shareholders Our Humanistic Banking approach has been the received student loans, which correspond to a driving force with which we have been able to portfolio worth more than COP 34 thousand We have always considered our Annual Shareholders´ achieve the results that we are pleased to share million. Consequently the total amount paid out Meeting to be an excellent opportunity to talk about with you today. came to COP 1.42 billion, for a total portfolio how proud we are to form part of Bancolombia, an reaching COP 2.7 billion with regard to our organization that works toward raising the bar in a Consumer and SME clients. general sense, and driving transcendental changes for Integrity together with high performance. society, this based on the relationships of trust we are As for our corporate and government banking able to build thanks to the consistent steps we have This year was an important one in terms of segment, we were able to get to grips with taken. revenues. This excellent level of performance the new dynamics and market structures was mainly due to a wide range of factors of the Colombian financing industry, with a However, this year in particular we have many more such as a 20% growth in the number of new greater emphasis on short-term loans, that is arguments for taking pride in this sense of belonging savings and checking accounts opened, which to say for terms of less than 12 months. This we feel for our Organization. Bancolombia is currently surpassed the eight million mark. But beyond and the committed efforts on the part of our celebrating two important milestones: 140 years of the numbers, there are the all-important sales personnel represented a 15% growth in existence and 20 years of being listed with the New concepts such as 'bankarization' and 'financial business loans for this segment, for a market York Stock Exchange, the world´s No. 1 equity market inclusion' areas where our initiatives have filled share of 25.5%. These results were also driven in terms of trading volumes and market capitaliza- us with satisfaction. by driving and deepening subsidiary operations tion, an achievement that has allowed us to grow on abroad, given their substantial liquidity and the Message to our an international scale and to receive significant sup- A clear example of this is our "Ahorro a significant change in their product portfolios. port. These celebrations we wish to share with you to- la Mano" free savings account that can be day, together with the very good levels of performance opened from a mobile phone. This product Overall, our foreign subsidiaries Bancolombia Shareholders we obtained for 2014, for the greater good of our cli- was publicly recognized by the Colombian Panama and Bancolombia Puerto Rico showed ents, employees, partners, you, our shareholders, and Ministry of Information and Communication a combined growth of 49%. On the other hand, the public at large. Technologies and as well as the Colombian our trade finance business played a much Association of Industrialists, ANDI, for its use greater role this year, going from COP 1.2 2014 was a year of record highs for us thanks to a of new technologies. More than 280 thousand billion at year-end 2013 to COP 1.6 billion at great deal innovation we were able to incorporate Colombians now hold this innovative savings year-end 2014. As for our specialized lines of within our business and, above all, the advances account, for many of whom this has been their business, I would like to highlight some of our made with consolidating our economic and social first ever experience with the financial sector. achievements that were publicly recognized. For model. This was the fourth year since we first em- Furthermore, we continue as the preferred example, our Investment Banking subsidiary, barked on our Humanistic Banking approach, govern- bank of both credit and debit cardholders, with Banca de Inversión, which was involved with 25 ing customer service, financial and social inclusion, market shares of 23% and 43%, respectively. major projects worth a total of COP13.5 billion, respect, the client, responsible selling, dignified col- Today, our organization has over eight million obtained a well-balanced performance across lections, Bancolombia for All, a sound performance, active debit and credit cards in circulation, for a various industries and products. trust, teamwork, among others, that show that we at year-on-year increase of 8%. Bancolombia are on the right path towards fostering Thanks to the efforts of this subsidiary, we were a better society, based on the idea that integrity and We also helped our clients to attain their dreams ranked as the best Investment Bank in Colombia high performance are mutually compatible. in terms of home ownership with housing loans for 2014 according to the specialized journals, and residential leasing arrangements, for which Latin Finance and Euromoney. Meanwhile, As we have stated on a number of occasions in the we paid out more than COP 2 billion and COP Leasing Bancolombia became the largest past, these results were been made possible with the 550 thousand million, respectively. We helped leasing company in Latin America, with a 44% help of our people, who are just as important as the more than 31,000 families in this regard, in share of the local market with its Financial way in which we obtain these results, and in this sense 2014. As for Sufi, the Group´s retail financing Leasing, Residential Leasing, Operating Leases, we are convinced that this is the result of a job well subsidiary, its165,000 clients hold at least one Renting and International Leasing products. done by all of us. of its financing products. Of these, nearly 7,000 With just its Operating Leasing and Renting lines 12 ANNUAL ANNUAL 13 MANAGEMENT REPORT MANAGEMENT REPORT

of business, this subsidiary recorded a growth lombia, we maintained our industry leadership branch office. These service improvements led introducing new products and services according of more than 13%, with total disbursements thanks to having drilled down on existing agree- to a reduction in client grievances. to the needs of our clients, this as part of our reaching COP 860 billion. Also through our ments and made inroads on new markets such "Responsible Selling" program. BAM was another broker-dealer subsidiary, Valores Bancolombia as energy and government. Disbursements here For the first time in recent history, we were able subsidiary that obtained important awards we participated in the placement of 18 issues came close to COP 10 billion pesos, for an in- to reduce the number of complaints, claims and recognition. In a survey conducted by the of bonds worth more than COP 3.6 billion crease of 22% compared to the previous year. and clarifications on the part of our clients by firm Centro Enlace Research, the Guatemalans pesos, all of which has helped us preserve our 2014 was an excellent year for harnessing our 3.68%. Furthermore, 54% of all client requests ranked this bank as providing the highest level leadership in the placement of issues of stocks synergies and forming alliances with which we were attended to at the first contact and the of client satisfaction with a total score of 74%. and bonds. Another hit was allowing clients to were able to strengthen our business model. availability rate of our technological services We continued to extend our presence in Peru. access the stock market through our E-Trading came to 99.8%. But these good results also Through our representation office in this part platform with trades rising by 735% year-on-year Today we work closely with organizations such transcended the frontiers of Colombia, as is of the world, we achieved a 33% growth in to a total of COP 2.1 billion, this corresponding as Easytaxi (transport), Proteccion (pension only natural with an organization such as ours. market size, with a much more diversified to approximately 35,000 individual trades. funds) and Suramericana (insurance and For example, in Panama we were able to make portfolio of clients and having participated social security), among others, as well as with decisions that ultimately benefited our clients. in major financing projects in sectors such as So in this way we are encouraging people to the mass transit companies in Bogota, Cali, In Banistmo, we modified our credit card and education, real estate, chemicals and the agro learn more, and become more involved with the Medellin and Barranquilla, as well as with other lending policies which led to an 80% year-on- industry. Another point worth mentioning is financial system, in addition to help deepen the entities and projects dedicated to catering to year increase in personal loans, and another our relationship with Peruvian government for financial market so as to continue to advance as our clients´ needs. All these achievements and 50% increase in new credit cards. which we manage funds worth USD 453 million a developing economy. As for our Trading Desks, results have been possible thanks to initiatives for building energy networks in the central and we continued to work on providing solutions that were put into place forming the basis for After just 14 months of operations, Banistmo southern parts of the country. for handling market risks through interest and such. For example, we deployed a new Code has improved upon its performance indicators exchange rate hedging arrangements. of Service where we defined our performance almost on a daily basis, gaining public confidence We also granted a loan of USD 20 million to model with regard to our clients, by thinking and strength. It is also important to mention a private company that provides basic and Here, our transactions with derivatives came to more of meeting their needs through simple, that the acquisition of Banistmo was ranked by secondary education for more than 23 thousand more than USD 23 thousand million, which rep- swift and impeccable solutions, all with the Euromoney magazine as 'the Business of the schoolchildren from the middle- to low-income resented almost COP 29,400 million in revenues aim of going beyond a good client experience Year' in Panama; and although it was acquired brackets. And in Puerto Rico, we continued for the Group. It is also worth noting that 14% to providing a truly memorable one. For us in 2013, it was only recognized as such in 2014. to strengthen the structuring of our coverage of this volume corresponded to transactions 'Service and Responsible Selling' are not Also, Banistmo has regained its former status and risk management function, with initiatives performed with our SME clients. antonyms but perfect complements. Thinking as 'Market Maker' a distinction awarded by the aimed at identifying, measuring, controlling and more about the client and seeking ways Public Credit Division of the Panamanian Ministry mitigating market, liquidity, credit and operating Through our trust management subsidiary, Fidu- of improving our customer care have been of Economy and Finance, for its contribution to risks, this in order to ensure compliance with ciaria Bancolombia, we managed assets worth determining factors that have been much the development of the financial system in this local regulations and the risk appetite defined more than COP 51 billion, representing almost welcomed by the market. part of the world. Banco Agricola in El Salvador, for this bank. Overall, in Puerto Rico, our 16% of the entire local trust sector, which meant financed various regional expansion projects assets came to almost USD 347 million, with a a net profit of nearly COP 60 thousand million In 2014 we were named by the Élite Empresarial within the service sector as well others having portfolio of mainly business and leasing loans pesos. It is worth pointing out that this subsid- survey conducted by the Portafolio newspaper, a substantial impact on the economy of this accounting for USD 248 and USD 63 million, iary recorded a growth of 29.4% with its real es- as the company with Best Customer Care Central American country. It also was named the respectively. tate trust business, and obtained a 30.8% share Service. Similarly, IZO, a leading consulting friendliest bank in El Salvador, an honor that fills of the entire fiduciary guarantee business. firm in Spain and Latin America, ranked us as us with pride. Another front on which we have been actively the bank with the best customer care service working as an Organization is innovation. In As far as Assets Under Management are con- in Colombia. We are always thinking of ways to According to the 23rd Annual National addition to maintaining and improving our cerned, last year saw a recovery with Collective make life easier. Last year alone, we were able Trademark Survey published by The Economist, digital banking channels for the purpose of Investments Funds, which represented COP 187 to streamline another 160 procedures for a Banco Agricola obtained 45% of the votes cast facilitating transactions, this including our thousand million for the Group. Managed Funds total of 1,054 since 2012. Another 25 services in the "preferred bank" category, with the runner- telephone and on-line banking channels, and showed a year-on-year growth of around 14%, were enabled on-line, thereby saving clients the up obtaining just 8% of the total ballot. As for offering the Bancolombia a un Clic product as reaching COP 12 billion. With Factoring Banco- bother of having to visit a "bricks-and-mortar" BAM, in Guatemala, we continued to work on well as the Bancolombia App in Colombia, El 14 ANNUAL ANNUAL 15 MANAGEMENT REPORT MANAGEMENT REPORT

Salvador and Guatemala, we have been able to three main countries where we are present, organization, keenly focused on the "people" so much. For this reason, current trends today drive key lines of business through quick and stood as follows: Colombia with COP 76.2 factor and with a much more gratifying level are aimed at aligning and integrating public easy to use solutions with all the time-saving billion for a 14.8% increase, Panama with COP of performance. and social initiatives with business activities. benefits that clients need in order to improve 19.1 billion and an increase of 45.8% and El Indeed as social players we are compelled to the quality of their lives. Salvador with COP 6.5 billion and an increase strengthen the soundness and sustainability of of 28.6%. Social and corporate governance our corporate clients. We also provide support For example, we pioneered a program for the economic activities and financial needs in Colombia called 'Social Leasing', in From the point of view of risk, the Bank Let me reiterate that these figures, as presented of our clients with COP 103 billion in loans partnership with Comfama, a Colombian continues to demonstrate its strength, as above are all-time highs for us Never before for almost 10 million private individuals and family welfare institute, for the purpose of nonperforming loans at year-end 2014 came has Bancolombia achieved this level of results businesses, and we improve the quality of life of financing homes that this Institute rents out at to just 2.9% of the total, with provisions However, as I mentioned at the beginning, this is our clients and their communities by providing a low cost. This plan provides the lessee with covering 154% of this figure. A significant the natural consequence of excellent teamwork our financial services to the more remote areas the possibility of paying the down-payment as milestone in 2014 was the result of the and a job well done. These achievements of the country, in a variety of innovative ways part of the monthly rentals. On the other hand, largest and most successful capitalization of have been made possible by the decisions using our own network of channels, the largest we disbursed more than COP 667 thousand a Colombian financial institution totaling USD we have made and our understanding of our in Colombia, consisting of 1,271 branch offices, million for the Colombian Government´s free 1.3 billion (approximately COP 2.7 billion) role in forging an economically prosperous, 4,712 ATMs, 598 mobile banking points, housing program, covering 100 thousand through an issue of preferred non-voting environmentally healthy and socially inclusive 4,202 Banking Correspondents (third-party units in all. shares that was completed in March. With this, society. Our employees are essential part of stores and businesses acting as a financial we were able to welcome around 60 thousand our team. inclusion channel), 206 kiosks, supermarket Our innovation has a natural bearing on new shareholders who now form part of our banking, mobile advisory personnel and mobile technological change, and for this reason the organization. With this issue of shares alone For this reason, we signed a new Collective phones. We also drew up a "green" business magazine Global Finance gave us its award we were able to obtain an annual increase in Bargaining Agreement with our labor union strategy, aimed at encouraging all those for 'Best Regional Mobile Banking in Latin Shareholders´ Equity of COP 4.3 billion, or in November of last year, which shall remain clients who are developing energy efficiency America'. 34.6% compared to the previous year, with in full force and effect over the next three projects, renewable energy, cleaner production, total equity now standing at COP 16.8 billion. years. The talks that took place resulted in an sustainable construction, and climate change agreement that improves the quality of life for mitigation and adaptation projects with loans We also launched two issues of bonds: the first a both our employees and their families in terms worth more than COP 200 thousand million. Reaching a Record High in Sustainable series of ordinary bonds on the part of Leasing of salaries, wages, and educational, housing Growth Bancolombia worth COP 400 thousand million and health care subsidies. We also agreed on We are taking our banking activities one step and the second an issue of subordinated notes specific issues such as tele-working, gender further as a way of transforming society, with Last year´s results were the best ever in our worth COP 988 thousand million pesos, both equality, inclusion, working hours and work strategies such as the BanCO2, an initiative entire140 years of existence, with consolidated obtaining an excellent bid-to-cover ratio. On schedules, among others, extending this to the that has been recognized both at home and earnings reaching COP 1.9 billion for a year-on- the other hand, our financial efficiency ratio operating staff of our subsidiaries in Colombia, abroad, and consists of paying rural families year growth of 24% and total assets totaling - operating expense versus operating income for a total of 13 thousand employees. for their environmental services through our COP 150 billion showing an increase of COP before provisions- came to 52.4% compared mobile banking channel. This shall improve the 17.9 billion which is 13.7% higher than for the to 56.81% in 2013; whereas our operating We defend this consistency between what we standard of living of these low-income families previous year, this thanks to the efforts of our efficiency ratio - operating expense versus think, say and do and applying our corporate and preserve the environment for the benefit of sales staff who produced a dynamic increase total assets - stood at 3.6%. Both indicators philosophy that defines a new way of doing all. Another important decision we made was in all types of loans both in local and foreign saw year-on-year improvements of 441 bp and business. This model, aimed at creating value introducing a Corporate Governance model for currency. This mere year-on-year increase in 27 bp respectively. to be shared by all, is firmly based on the belief our particular sector, in keeping with the highest assets is equal to the total net assets of the that if our clients, shareholders, partners, standards of transparent reporting both at 9th largest bank in Colombia. These figures obviously fill us with great employees and the communities we serve do home and abroad, while making the required satisfaction, since they are tangible proof well, so shall we as an organization. adjustments for the latest regulatory changes, This was mainly due to more than a 20% growth that the path we took four years ago was that together with a comprehensive risk in our loan portfolio over the past 12 months. the right one, and as a result we are a much But we are not just economic players but also management policy and in strict compliance At year-end 2014, the loan portfolios in the more profitable, sustainable, and efficient growth drivers for a society to whom we owe with our codes of conduct, guide us along the 16 ANNUAL ANNUAL 17 MANAGEMENT REPORT MANAGEMENT REPORT

path towards greater sustainability, fulfilling For this reason, we support cultural initiatives working in the Bancolombia Group, as evidenced to the media for fulfilling their mission thereby our goal of transforming the lives of people that encourage peaceful coexistence, tolerance by the survey carried out by the HR consulting helping to build a healthy financial market. We and their communities, while helping them to and creativity, programs sponsored through firm, Compañía de Talentos. To conclude we really appreciate their highly responsible work in prosper and attain their dreams and goals. our Bancolombia Foundation this in addition also received awards for the Best Bank in this sense. to the environmental management assistance Colombia from the Latin Finance and Global With a view to ensuring the sustainability of our we provide. We also provided support for Finance magazines, this based on an analysis It was back in 1875 that Banco de Colombia business, we are voluntarily honoring commit- very successful social projects such as 'My of qualitative and quantitative factors, as well first opened its doors to the public in responding ments that go beyond that purely prescribed First Steps', 'Knowledge', 'First Things First' as our successful growth, customer care service, to the need for financial services within the by law thereby placing us on a par with world- and 'Stomp' which benefited a total of 8,500 profitability and innovative products, amongst Colombian economy. At that time we ranked as class sustainability standards. Today, the Ban- children. We also continued with the 'Dreams others. the No. 1 savings bank for more than one million colombia Group has embraced the UN´s Global of Peace' program covering 550 youngsters. Colombians. Today, as we move into the future Compact, the Equator Principles, the Responsi- 'Reading and Writing in Colombia "is a program with 10 million clients we are proud to remain at ble Investment Principles Program, the United in which we work with 200 schools; and our Our gratitude the forefront of our industry. Over these past 140 Nations Environmental Program, the CEO Wa- "Rural Youth' program helps to encourage years, Bancolombia has become the largest bank ter Mandate, and the Business for Peace initia- a new generation of entrepreneurs from 15 Without resorting to clichés and much bandied in the country, amply recognized for its market tive. Furthermore, we were recognized as 'Latin educational institutions. Indeed, with regard to sayings, I would like to express our gratitude share and constant innovation. American leaders in transparency with regard our initiatives to encourage the next generation using simple, straightforward language, which to climate change strategies' by the Carbon of entrepreneurs, the program 'Growing with is perhaps the best way of expressing ourselves. Over these fourteen decades of constant growth, Disclosure Project. My Business' provided support to a total of Thanks to you, our shareholders, for your support we are proud to form part of a great organization 230 micro- entrepreneurs. and, most importantly, your vote of confidence and contribute to a corporate history that is With all of these efforts we are committed to in us, as you have helped us with our ongoing not only known both at home and abroad for pushing ahead in a coherent and consistent We know that we still have still some way to go, process of expanding and strengthening ourselves our economic achievements, but for being an manner, working as a team towards the goals but we also know that we are on the right path. as an organization that is now approaching its effective driving force for the prosperity of all set. All this has allowed us to remain on the So we shall continue to expand our role as a key centenary, amid much joy as we look back on the those nations where we are present. We have a Dow Jones Global Sustainability Index for the player in social transformation in today´s world challenges overcome. goal and we have a vision to which we are deeply third year running, the only Colombian financial of possibilities. committed in the knowledge that we can continue institution and one of just five Latin American We fully understand the mandate you have given with your support companies to do so. Out of a total of 192 banks us, and you can be absolutely certain that we evaluated throughout the world, only 25 were Market and expert opinions shall continue to work with the same commitment Thank you very much! listed, including our own Bancolombia Group, and responsibility that we have dedicated to this maintaining the same score as for the previous As a bank that goes beyond merely receiving mission from day one. We of course, would like year, that is to say 83 out of 100. deposits and granting loans, we regard ourselves to thank our employees- both direct and indirect- as champions of development, generating shared these being team of very capable people both This is clear evidence of our vision of the fu- value while building relationships of trust. from the personal and professional standpoints, ture. We are convinced that profitability is not who show their daily commitment to our common Carlos Raúl Yepes Jiménez just quantitative but also qualitative; the result Thanks to all of this we have achieved significant goal through their responsible handling of a job Chief Executive Officer - Bancolombia of a job well done. Our goal is not just to gener- recognition and awards. Some of these I have well done. We would also like to express our ate profits but primarily to provide and create already outlined in this report, but I would like gratitude to our clients, who remain at the heart added value, because values continue to be the to mention another four distinctions that were of our business, for whom we get up every day guiding principles for shaping the personality of of great importance to us. According to the with the mission of making their dreams and an individual or a company, in rescuing our mor- Corporate Reputation Monitor (Merco), we are projects come true. al heritage, which is the only meaningful goal the private company with the best reputation in worth desiring, pursuing and achieving. There- Colombia, thanks to the confidence we inspire Although I run the risk of repeating myself, I would fore, there is no doubt that integrity and high in both the public and the market itself as well like to stress yet again our conviction that if our performance are mutually compatible. In addi- as our corporate vision of the future. Perhaps it clients do well, we all do well. This is precisely tion to financial stability, we need moral values. is because of this that young people dream of the virtuous circle of shared value. Finally, thanks 18 ANNUAL ANNUAL 19 MANAGEMENT REPORT MANAGEMENT REPORT

Economic report (summarized tables) Bancolombia Banco Comercial Grupo Bancolombia Unconsolidated financial results (excluding subsidiaries) Consolidated financial results

Income statement and balance sheet Income statement and balance sheet (Year-end figures in millions of pesos) 2014 2013 2012 2011 2010 (Year-end figures in millions of pesos) 2014 2013 2012 2011 2010

Direct operating revenues 30.231.086 16.100.274 10.962.300 12.118.167 11.149.631 Direct operating revenues 13.084.739 11.135.032 10.504.664 8.492.762 7.226.263 Net operating earnings 1.515.387 1.548.786 1.456.957 1.267.775 1.212.867 Net operating earnings 2.924.362 1.974.039 2.179.595 2.109.595 1.914.801 Net income 1.331.316 1.467.907 1.284.490 1.192.267 1.177.999 Net income 1.878.721 1.515.127 1.702.046 1.663.894 1.436.494 Total assets 100.287.094 90.004.946 75.141.682 62.183.997 48.678.983 Total assets 148.724.861 130.816.241 97.916.380 85.463.020 68.095.156 Net loans 67.941.677 57.757.411 51.850.670 41.969.524 32.917.062 Net loans 102.803.637 85.394.191 66.739.040 58.575.846 46.091.877 Net investments 12.796.206 12.633.103 11.462.577 8.143.169 6.967.972 8.675.762 Total liabilities 83.593.805 77.575.845 63.640.733 53.390.110 40.861.988 Net investments 13.677.802 13.805.790 12.554.311 9.958.191 Deposits (current accounts, savings accounts 56.231.302 54.888.402 46.945.888 36.197.447 29.364.864 Total liabilities 131.907.507 118.323.394 86.309.425 76.469.661 60.148.016 and CDs) Deposits (current accounts, savings 93.947.063 85.493.148 63.199.304 51.530.061 42.887.073 Equity 16.693.289 12.429.101 11.500.949 8.793.887 7.816.995 accounts and CDs) Equity 16.817.354 12.492.847 11.606.955 8.993.360 7.947.140

Efficiency and profitability 2014 2013 2012 2011 2010 Efficiency and profitability 2014 2013 2012 2011 2010

Efficiency (operating expenses / average total 3,7% 3,9% 4,6% 4,8% 5,1% Efficiency (operating expenses / average total 3,6% 3,9% 4,5% 4,6% 4,9% assets) assets) Average return on total assets 1,5% 1,8% 2,0% 2,2% 2,7% Average return on total assets 1,4% 1,4% 1,9% 2,2% 2,3% Average return on equity 9,0% 12,4% 12,1% 14,6% 16,4% Average return on equity 12,5% 12,8% 16,0% 20,2% 19,7% Total solvency ratio 17,89% 13,34% 17,85% 15,52% 18,06% Total solvency ratio 13,29% 10,61% 15,77% 12,46% 14,68% Basic solvency ratio 8,72% 5,65% 5,62% 10,40% 8,99% Basic solvency ratio 7,71% 5,81% 5,62% 10,40% 8,99% Loan quality (past-due loans/gross loan 2,8% 2,6% 2,5% 2,2% 2,8% Loan quality (past-due loans/gross loan 2,9% 2,9% 2,6% 2,2% 2,9% portfolio) portfolio) Total past-due loan coverage (provisions / 164,1% 175,8% 175,8% 199,8% 173,8% Total past-due loan coverage (provisions / 154,5% 156,5% 177,3% 209,8% 179,8% gross loan portfolio) gross loan portfolio)

Account parametrization based on report from the Board of Directors Market 2014 2013 2012 2011 2010 (December 31st) Colombia IGBC - Bancolombia Stock Market Capitalization December 2012-2014 30.600 Diciembre 2012 - Diciembre 2014 in thousands of millions of Colombian pesos 19.000 31.500 29.100 Weighted stock market price 28.110 23.667 29.928 28.480 29.500 27.600 17.500 Market cap (in millions) 27.037.021 20.160.513 25.493.228 22.437.313 23.240.897 28.000 26.100 16.000 27.500 Ordinary Shares 24.600 No. shares outstanding 14.500 24.500 23.100 26.584 961.827.000 851.827.000 851.827.000 787.827.003 787.827.003 21.600 13.000

IGBC 21.000 20.100 Intrinsic value 17.356 14.591 13.502 11.162 9.922 11.713 11.500 18.600 Earnings per share 1.384 1.723 1.508 1.513 1.495 10.000 17.500 17.100 15.600 Number of shareholders 60.423 17.638 16.624 15.920 15.053 Dic - 12 Feb - 13 Abr - 13 Jun - 13 Ago - 13 Oct - 13 Dic - 13 Feb - 14 Abr - 14 Jun - 14 Ago - 14 Oct - 14 Dic - 14

Number of employees 18.867 18.463 17.508 16.962 16.191 IGBC Ordinary Shares Dic - 12 Feb - 13 Abr - 13 Jun - 13 Ago - 13 Oct - 13 Dic - 13 Feb - 14 Abr - 14 Jun - 14 Ago - 14 Oct - 14 Dic - 14 Number of offices 826 844 815 779 725 Note: The closing price of Bancolombia´s ordinary share was used for this exercise. Source: Colombia Stock Exchange (BVC) Source: Colombian Stock Exchange (BVC) - Bancolombia´s own calculations

Account parameterization based on report from the Board of Directors 20 ANNUAL ANNUAL 21 MANAGEMENT REPORT MANAGEMENT REPORT

in Colombia would have reached 4.7%, which the country's balance of payments recorded a would be the prelude to a projected growth of deficit in its current account amounting to USD Macroeconomic environment 3.4% for 2015. 12,855 million, that is to say 4.6% of its GDP. This mainly explains the negative balance for As for inflation, consumer prices rose at a faster the different sub-categories of factor income pace than the previous year. In fact, inflationary (USD 9.797 million) as well as trades of goods The International Monetary are declining, mainly due to With regard to Colombia, the pressures from food and certain regulated goods and services (USD 6.403 million); all of which Fund (IMF) is placing the av- the possible effect of the in- macroeconomic situation for and services such as electricity, led to a rise in was partially offset by income from current erage Latin American GDP creasing instability with capital 2014 suggests a favorable inflation for FY 2014 of 3.66%, which was higher transfers (USD 2,984 million). The current ac- growth for 2014 at 1.3%, com- flows to the region, as well as level of productive activity. than the 1.94% recorded for 2013. count deficit was financed by incoming flows pared to 2.6% in 2013. This various internal factors that Between January and Septem- of foreign capital inflows as well as accumu- slowdown is mainly due to an have led to a reduction in their ber 2014, Colombia's GDP As we have seen over recent years, a much more lated international reserves in the amount of unfavorable global environ- potential GDP. came to 5% which was much positive labor market was one of the highlights of USD 12,789 which accounts for 4.5% of the ment on account of the slower higher than the 4.4% increase the Colombian economy in 2014. At year-end, the country´s GDP. growth rates of major trading On an individual country level, recorded for the same period urban unemployment rate stood at 9.3%, which partners within the region and a slower growth in Latin Amer- the previous year. However, the was below the 9.7% recorded for 2013. The On the monetary policy front, in response to deteriorating terms of trade, ica for 2014 is largely due to quarterly results show a down- rate at which new jobs are being created within higher inflation and a recovery in productivity, in given the drop in commodity a slowdown with the Brazilian ward trend. Indeed, the year- Colombia´s major cities has been one of the key April 2014, the Board of Directors of Colombia´s prices. In addition to this, in- economy and a slower pace of on-year growth of 6.5% that factors that has sustained a stronger domestic Central Bank began to tighten its monetary poli- vestment in some countries is growth in Mexico. Indeed, the occurred in the first quarter demand, which has allowed household confi- cy. Thus, the benchmark interest rate was raised expected to slow with slack- IMF expects Brazil to grow by was followed by lower growths dence to remain high. from 3.25% to 4.5% in late September in the ening levels of consumer and just 0.1% for the entire year, of 4.3% and 4.2% respec- form of five consecutive increases of 25 bps. consumer and business confi- compared to 2.5% for 2013. tively for the second and third Another negative factor has to do with the de- Current estimates show that increased inflation- dence. The main risks to Latin quarters of 2014. cline on the part of the Colombian external ary pressures in recent months may lead to the America´s productive activity On the other hand, the Mexican sector. During the first nine months of 2014 repo rate being raised to 5%. economy is showing an evident During the third quarter of recovery compared to 2013 2014, the Colombian economy (1.1%), with its GDP expect- was driven by a strong domes- Key macroeconomic indicators for Latin America ed to reach 2.1% at year-end tic demand, which rose by 2014. In Chile, the IMF expects 6.6%. Conversely, the external Economic growth (YoY % chg) Inflation (YoY % chg) sector sapped overall growth real activity to have risen by 2014 (P) 2013 2012 2014 (P) 2013 2012 The International 2%, which is much lower than with exports rising by just Monetary Fund for the previous year (4.2%). 5.3%, while imports increased Peru´s GDP is also expected by 14.2%. On the supply side, Latin America and the Caribbean (1) 1,2 2,8 2,9 8,3 7,5 5,4 (IMF) is placing to decline, going from 5.8% in the construction sector contin- Financially-integrated countries (2) 2,7 3,8 4,0 4,9 4,4 3,9 the average Latin 2013 to 3.6% for 2014. Mean- ued to drive real activity, main- Central America 3,9 4,1 4,6 4,7 3,9 4,2 while, in the case of Central ly due to the amount of civil Colombia (3) 4,7 4,7 4,0 3,7 1,9 2,4 American GDP America, the IMF estimates engineering projects underway. Panama 6,6 8,4 10,8 3,0 3,7 4,6 growth for 2014 at that GDP growth shall rise from Peru 3,6 5,8 6,0 3,2 2,9 2,7 0.7% in 2013 to 2% in 2014. For its part, Colombian indus- El Salvador 1,7 1,7 1,9 0,5 0,8 0,8 try showed signs of a slight Guatemala 3,4 3,7 3,0 3,0 4,4 3,5 The factors behind this quick- contraction, with agriculture Costa Rica 3,6 3,5 5,1 5,1 3,7 4,6 ening pace of growth have remaining on positive ground Dominican Republic 5,3 4,6 2,7 1,6 3,9 3,9 to do with the US economy and the mining sector slowing. picking up, which would help increase the incoming flows For the last quarter of 2014, of remittances from abroad we expect productivity to (P): Projected (1): The growth forecast for 2014 corresponds to the IMF's latest revised update issued in January 2015. as well as the Panamanian have continued to slow to just (2): Brazil, Chile, Colombia, Mexico, Peru and Uruguay economy, whose GDP is fore- 3.8%. If this forecast holds, (3): This growth estimate corresponds to the Bancolombia Group´s own forecasts. cast at 6.6%. GDP growth throughout 2014 Source: International Monetary Fund (October 2014), Bancolombia Group, Bloomberg. FOR A BETTER SOCIETY, WHERE INTEGRITY AND HIGH PERFORMANCE ARE POSSIBLE

Art shall always remain a way of seeing and understanding the world. This could well be an image expressing a concept, or words used to interpret an idea. There are many concepts and ideas have helped us in our organization to give palpable shape to our defining philosophy. We wish to do business in a different way as we work to build up a bank for the benefit of our people and not to their detriment. So with this in mind we have made a great deal of effort in furthering our Humanistic Banking model, words like service, respect, client, strength, confidence and teamwork helped us to make good on our philosophy. And although integrity and high performance could well appear to some as cancelling each other out, we know that this is not the case, in fact on this depends our efforts to build a better society. We have worked hard on the integrity factor, by helping our clients turn their dreams and projects into a reality, this through our determination to help our communities become more prosperous through the shared value we provide. This concept of shared value includes recognizing and understanding that we have an economic, social and environmental responsibility. Indeed, in order to help build a better society, we have defined certain focal points on which we wish to project ourselves beyond merely being a financial institution. This is just another way in which Bancolombia works for the good of society: enhancing people´s quality of life, promoting cultural events, taking on environmental challenges as well as being firmly committed to a peaceful Colombia. In this year´s Management Report we have invited ten young storytellers as well as an illustrator, from different regions in the country, to showcase their artistic skills and invite us into their own worlds, through their stories and pictures, showing us how they understand the four purposes of our mission as outlined above.

Illustrated by: Alex Sarmiento. 1 140 years of transforming AS IF A society MAGNIFICIENT HOUSE WERE TO SUDDENLY APPEAR

By: Fabián Mauricio Martínez González. Bogotá. Illustrated by: Alex Sarmiento.

Dad, even though you are dead and buried, you turned out to be an insatiable reader. In my teens, I continue to have an effect on me; it was impossible realized I wanted nothing more in life than fiction. I for you to have passed without showing how great was happy because, like you, I had discovered the you were. Here lies the great writer, Lautaro Upegui, mysterious privilege of inhabiting other worlds in novelist, essayist and playwright, and I would add, a the books I read. However, I still hated you when I drunken, polygamous destroyer of lives, just like his went to study cinematography in New York. Do you son, Ephraim Upegui. Your servant. You divorced remember the rainy night when we said goodbye at Mum when I was very young. She used to take me the airport. That was the last time I saw you. I never twice a week to your apartment. You used to wrap called and never answered your letters. me in your arms and play with me for a little while, but you always got bored. You used to look at me When I looked at myself the mirror - and increasingly as if to say, "when did I let all of this happen to more- often,- I recognized the same lost look as I me." And "all of this" was me. You used to leave me used to see in you. Do you know, Dad, that I took there between untidy piles of books, dirty dishes my time getting back so I would miss your funeral? and empty bottles. I cut my finger once on one of I did not want anybody else hanging around, I those bottles, do you remember? You almost died just wanted you and me to be together, because of fright when you saw me with my hands and face I could not do this in front of anyone else. And smeared with blood. But you washed my wound here in front of your grave, I forgive you, Dad. You and put two band-aids on my middle finger. You can go in peace, because I no longer hold any stroked my head and retreated to your morning grudge against you, because I have your eyes, routine. I wanted you to stay with me, Dad. But you your voice and your hands, Dad; and, in spite of were always writing. And it never occurred to you this, I don´t want to be like you. Did you know to read me a story. I would have been so happy that you're going to be a grandfather, Dad? Your had you drawn imaginary places inside my head. grandson was conceived three months ago and is Your deep voice would say window, and suddenly now happily growing in Amy´s womb. Amy is my a window would appear, as if a magnificent house girlfriend, Dad. would suddenly materialize out of nothing. But no, you always had a blank look on your face, which I shall call him Lautaro, after you. I'll talk to him made me think that you could not feel anything about you. I shall invent trips we took together to for anybody. I remember waiting endlessly outside the beach, I shall say that we went fishing for weeks your locked front door. I imagined you with a red on end, I´ll describe the camping trips we took cape and a mask writing away inside. Yet, in spite so we could gaze at the stars. Thanks to the best of everything, you were my hero, Dad. things that I inherited from you, I can invent a new grandfather for your grandson. This time I'll make Time passed and look how things turned out. I sure everything is different. Peace. You can rest in Peace became accustomed to being alone and, like you, peace now, Dad. We are ready to transform our future, changing the present and overcoming the past 26 ANNUAL ANNUAL 27 MANAGEMENT REPORT MANAGEMENT REPORT

Our shareholders Board of Directors We ended the year with 60 423 shareholders

26,8% Grupo Suramericana 20,9% ADR Program

20,7% Colombian Pension Funds

3,4% Grupo Argos and subsidiaries

13,9% Other local investors 14,3% Other international investors

Ricardo Sierra Moreno, Roberto Ricardo Steiner Sampedro, David Emilio Bojanini García, José Alberto Vélez Cadavid, Rafael Martínez Villegas, Hernando José Gómez Restrepo, Gonzalo Alberto Pérez Rojas. 28 ANNUAL ANNUAL 29 MANAGEMENT REPORT MANAGEMENT REPORT

We are celebrating 140 years of helping people turn their 1875 - 2015 dreams into a reality and driving Together we have made history a more prosperous society...

Management team Grupo Bancolombia

Showing: History is something we are building contribute to a more prosperous, environmentally healthy Julián Botero, Gonzalo Toro, Lina Duque, Héctor Felipe Rojas, José Luis Valdés, Hernán Alzate, Esteban together. This year, we are celebrating and socially inclusive society. Gaviria, Carmenza Henao, Christian Schneider, Mauricio Rosillo, Rodrigo Prieto, Juan David Correa, Aimeé 140 years of existence, and on behalf Sentmat, Carlos Raúl Yepes, Jorge Isaza, Rafael Barraza, María Cristina Arrastía, Santiago Pérez, Augusto of more than 45 thousand employees, On the occasion of this anniversary, we would like to pay a Restrepo, Liliana Vásquez, Carlos Andrés Echeverri, Jaime Velásquez, José Humberto Acosta, Juan Carlos we, the Bancolombia Group, would like heartfelt tribute of gratitude to each of our shareholders Mora, María Cristina Calderón, Jorge Iván Otálvaro, Jaime Villegas, Ricardo Jaramillo y Luis Fernando Muñoz. to express our gratitude for the trust for allowing us to become a true driving force for placed in us. We have all helped to create development and supporting us in our goal of becoming a Absent from the picture: a different kind of bank, a bank that can more humanistic bank. Marta Jaramillo y Jean Pierre Serani. 30 ANNUAL ANNUAL 31 MANAGEMENT REPORT MANAGEMENT REPORT 2014 Organizational structure Awards The results of our Humanistic Banking approach This is based not on subordination but on coordination through continue to attract recognition both at home and our ability to work as a team. abroad. This shows once again that integrity and high performance go hand in hand in helping to shape a better society.

Reputation bia to extend its positioning have produced tangible results. It now commands a high The most renowned level of admiration, "stated Jorge Londoño, General Manager of Invamer Gallup. Bancolombia was ranked as the No.1 pri- vate company with the best reputation Also with regard to the sixth annual Opin- among Colombia´s 100 top companies by ion Panel Review conducted in 2014, where the Corporate Reputation Monitor (Merco), more than 2,300 opinion leaders nation- for which we held second place in the over- wide voted for the companies they most ad-

Vice-Presidency of StrategyVice-Presidency and Finance of CorporateVice-Presidency Services of Human Resources Vice-Presidency of LegalVice-Presidency Matters and Company of AuditingVice-Presidency Secretary of RiskPresident Management – BancolombiaVice-Presidency of PersonalVice-Presidency and SME Banking of Corporate and Government Banking all ranking. mire, Bancolombia came in third position Jaime Alberto VelásquezJuan Botero Carlos Mora UribeAugusto Restrepo Gómez Mauricio Rosillo Rojas Carmenza Henao TisnésRodrigo Prieto Uribe Carlos Raúl Yepes JiménezSantiago Pérez Moreno Gonzalo Toro Bridge behind Ecopetrol and EPM. This neverthe- less meant that Bancolombia is the top pri-

Direction of Corporate The most valuable vate organization most admired since the Communications other two are state entities. Martha Acosta Betancur Bancolombia was named the most valuable banking brand in Colombia in 2014, occu- Vice-Presidency of Client Brand and Advertising pying 158th position on a global scale, by Services Management The most valuable Jaime Villegas Gutiérrez Paula Echeverri Duque Brand Finance as part of its Most Valuable Banking Brands of 2014 awards. Bancolombia was named the most valuable

Vice-Presidency of IT Sustainability banking brand in Colombia in 2014, occu- Vice Business and Government Services Management Colombia pying 158th position on a global scale, by María Cristina Calderón Betancur Franco Piza Rondón Julián Botero Larrañaga Dow Jones Sustainability Index Brand Finance as part of its Most Valuable Vice-Presidency of Compliance Management ViceReal Estate and Builder Banking Brands of 2014 awards. Administrative Services Diana Bustamante Ramírez For the third consecutive year, the orga- Luis Fernando Muñoz Serna Jorge Iván Otálvaro Tobón nization was again included in the Dow Jones Sustainability World Index as one Boldness In Business Award - Developing Fiduciaria of the most sustainable corporations on Vice-Presidency of Finance Juan David Correa Solórzano Markets Category José Humberto Acosta Martín a global level. Consequently, we were in-

Valores cluded in the DJSI´s Sustainability Year- This award was presented by the British Vice Own Position Jean Pierre Serani Toro book 2014. newspaper the Financial Times to Banco- Hernán Alzate Arias lombia, Nutresa, Sura and Argos for their Vice-Presidency of Personal and Banca de Inversión contribution to the business environment Banistmo SME Banking (Colombia) Ricardo Jaramillo Mejía Aimeé Sentmat de Grimaldo Lina María Duque Echeverri The most admired in Latin America, accounting for 7% of the region´s GDP along with 110,000 jobs. Vice-Presidency of Consumer and Mortgage Leasing Banco Agrícola We were also ranked by private enterprise María Cristina Arrastía Uribe Esteban Gaviria Vásquez Rafael Barraza Domínguez as the most admired private company in Co- lombia, coming in second place in the over- Sufi Factoring Bancolombia Panamá HR Talent Management Jorge Isaza Betancur Héctor Felipe Rojas Guzmán all ranking, according to an Invamer Gallup Víctor Villaquirán Idrobo poll, published in the specialized journal, According to the Merco People survey, Ban- Tuya Bancolombia Perú Bancolombia Puerto Rico Dinero. "The initiatives taken by Bancolom- colombia is the private company with the Marta Jaramillo Arango Carlos Echeverri Bustamante Juan Guillermo Castrillón Sierra 32 ANNUAL ANNUAL 33 MANAGEMENT REPORT MANAGEMENT REPORT

best HR talent in the country. This survey Best Investment Bank in Colombia. ing to the purchase of 100% of its ordinary examined the three facets of an employer´s Best bank shares and 90.1% of its preferred shares, thus Awarded by the publications, Latin Finance reputation: job quality, the employer´s brand giving rise to Banistmo. and Euromoney, which highlighted our busi- and internal reputation. Among the largest in Latin America ness strategy, financial strength, innovation Bancolombia was ranked in 15th place and the support the company has given to Banistmo, market maker among the 50 largest banks in Latin its clients with projects both at home and The Company where young people America (including the state-owned) by in the rest of Latin America. Banistmo has regained its former status as dream of working the magazine, América Economía, having 'Market Maker' a distinction awarded by the According to a survey conducted by the risen by two places compared to the pre- Public Credit Division of the Panamanian Min- consulting firm Compañía de Talentos, vious year. Capital adequacy, asset qual- Best Customer Experience istry of Economy and Finance. This means that Bancolombia is the No. 1 private Co- ity, management, earnings and liquidity as an organization we are contributing to the IZO, the leading consultancy firm in Spain lombian company that young people were amongst the factors evaluated for overall development of the financial system in and Latin America named us as the No. 1 would like to work for on a nationwide this purpose. this part of the world, providing greater liquid- bank in Colombian in terms of customer basis. We also occupied second place ity and growth to care service, ranking us in fifth place com- the investor community. next to a state-owned company and pared to the rest of the local sectors. This sixth place including multinationals in Bank of the Year - Colombia came in recognition of our excellence, best the global ranking. This award is given by the editors of the practices and innovation in providing the “Preferred bank” in El Salvador magazine Latin Finance, taking into con- best possible customer experience. sideration quantitative and qualitative Global Finance named the Banco Agricola High CDP score factors, including financial data, research as the safest bank in the country.Further- studies and the opinions of different mar- more, as a result of the findings of the Our organization scored a high rating Recognition for our use of new technologies 23rd Annual National Trademark Survey with the annual survey carried out by ket players, collected through an on-line The Colombian Ministry of Information published by The Economist, Banco Agri- the Carbon Disclosure Project (CDP), public ballot. Technologies and Communications, in part- cola was named by the Salvadoran people as we get closer to being included in Also, the Global Finance magazine nership with the Colombian Association as their "preferred bank", having obtained the CDP Leadership Index. We scored named Bancolombia is the best bank in of Industrialists - ANDI, the Bancolombia 44.9% of the ballot with the runner-up ob- 85 out of a total 100 points for disclo- Colombia, as part of its 'Best Emerging Group received recognition for the use of taining just an 8% share of the total sure, while being ranked in 'Band B' in Markets Banks in Latin America' awards. new technologies with regard to its SMS terms of performance, which means This decision was made based on our Banking product, Ahorro A La Mano, in view that we are doing well with our efforts successful growth, customer care service, of the positive impact this has had on soci- to preserve the environment and ensure Social responsibility profitability, innovative products and ety as a financial inclusion solution. our ongoing sustainability. This result competitive prices. Banco Agricola was named the top financial was made possible thanks to initiatives organization for its Corporate Social Re- such as building the first ever sustain- Best investor relations practices sponsibility, while obtaining fourth place in able branch office in Colombia´s finan- Best Regional Mobile Banking Channel - the overall ranking. This was based on the Finally, the Colombian Stock Exchange is- cial sector, creating a "green" line of Latin America first ever Brand Perception Survey conduct- credit and embracing the UN´s Princi- sued us with its IR award, for our best prac- Being able to provide our clients with digital, ples for Responsible Investment. tices in the fields of investor relations, the ed in Central America and the Caribbean modern and affordable banking services via quality of the information reported to inves- by the polling firm, Dichter & Neira and their mobile phones were the reasons behind tors and the market in general, as well as published in "What the public understands Top of Mind this award from Global Finance magazine. the Organization´s Corporate Governance. by CSR" a special publication issued by the Bancolombia is the financial institution with Mercados & Tendencias magazine. the highest brand recordal in Colombia ac- Best Investment Bank in Colombia. cording to a Top Of Mind survey, published In Panama, El Salvador The finance and economics magazine, by the specialized journal, Dinero and car- BAM scoring the highest level of client Euromoney, awarded Bancolombia this and Guatemala ried out by the Invamer Gallup research firm. satisfaction distinction in recognition of our commit- It is worth noting that two out of five re- ment to building relationships of trust, Business of the Year In a survey conducted by the firm, Centro En- spondents consider us the best brand in delivering innovative financial solutions For the Euromoney Magazine, one of the "Busi- lace Research, the Guatemalans ranked this the financial sector, placing us in No. 1 po- and providing the best value-added cus- nesses of the Year" for 2013 was Bancolombia´s bank as providing the highest level of client sition in terms of top-of-mind awareness. tomer service in the country. acquisition of HSBC Bank Panama, correspond- satisfaction with a total score of 74%. 34 ANNUAL ANNUAL 35 MANAGEMENT REPORT Ratings MANAGEMENT REPORT Ratings 2014 2014 Bancolombia Bancolombia FITCH MOODY’S

Category Description Category Description

Outlook Positive Upwardly revised from stable to positive. Outlook Negative Reflecting concerns regarding Bancolombia´s rev- VR: Viability Rating BBB Reaffirmed: Investment Grade. enue generation capabilities, which according to this IDR - Issuer Default Rating BBB Reflecting the Bank´s strong franchise, solid bal- bank shall remain under pressure given low net inter- Long-term Issuer Default Rating (IDR) BBB ance sheet, adequate performance, robust asset est margins and securities gains, Its outlook could Short Term Issuer Default Rating (IDR) F2 quality and provisions, good levels of liquidity, an return to stable if earnings rise to levels consistent Long-term foreign currency Default Rating (IDR) BBB ample deposit base, proven access to funding and with the bank's ongoing double digit organic and Short-term foreign currency Default Rating (IDR) F2 to the capital markets along with a positive operat- non-organic loan growth, or if the bank's core capital Long-term local currency Default Rating (IDR) BBB ing environment. is strengthened. Short-term local currency Default Rating (IDR) F2 The viability rating (VR) also reflects the challeng- es posed by recent acquisitions and recognizes the efforts made by Bancolombia to strengthen Bank Deposits in Foreign Currency Determining factors for the ratings given its capital levels over and above those reached at (Long Term / Short Term) Baa3/P-3 - Well positioned in all areas of the typical banking year-end 2013, including a successful issue of pre- Local currency bank deposits business, good geographical and portfolio diversi- ferred shares in the first half of 2014, in addition (short / long term) Baa2 / P-3 fication, and a leading position within its market as to a solid history Bank Financial Strength D + the largest bank in Colombia and Central America. of successful integration of acquired entities. Senior Unsecured Debt Baa2 Support Rating 2 Bancolombia boasts a well-balanced business - Impact of acquisitions partially offset by capital- with loans diversified by geography, by industry, ization. by product and by lender. The Bank also shows an - Good proactive risk management and conservative ability for strong earnings, resilient margins, con- lending and reserving policies have maintained trolled operating costs, adequate risk management past due loans at manageable levels. and ample coverage reserves, In spite of its rapid Subordinated Debt Ba1 growth into riskier segments, Bancolombia's loan - Proven ability to generate recurring core earnings quality indicators remain sound and it has enough based on an ample net interest margin flexibility to continue to grow. Because of its sys- - Broad access to core funding. temic importance as an entity, Bancolombia would count on the support of Colombia´s Central Bank in the event of a possible contingency Colombia's ability to provide such support is reflected in the upgrade given to its Sovereign Rating in December 2013, which drives Bancolombia's support floor of Support Rating Floor BBB- 'BBB-'. Senior Unsecured Debt BBB Revised upwards from BB +. The ratings for this type of debt would move in line Subordinated Debt BBB- with the Bank´s VR and IDR ratings. Local Long-Term Debt AAA (col) Reaffirmed: Local Short-Term Debt F1 + (col) Reaffirmed: Local Issues of Senior Unsecured Debt AAA (col) Reaffirmed: Local Issues of Unsecured Subordinated Debt AA+(col) Reaffirmed: 36 ANNUAL ANNUAL 37 MANAGEMENT REPORT Qualifications MANAGEMENT REPORT Qualifications 2014 2014 Bancolombia Región S&P’s Banco Agrícola – El Salvador

Category Description Fitch Fitch

Outlook Stable Reaffirmed Reflecting the expectation that it • Long-term Issuer Default Rating (IDR) at 'BB+' • Long-term Issuer Default Rating (IDR) at 'BB+' shall remain as the largest financial institution in with a negative outlook with a negative outlook Colombia and one of the largest financial groups • Short-term Issuer Default Rating (IDR) at 'B' • Short-term Issuer Default Rating (IDR) at 'B' in Central America. • VR (Viability Rating) at 'BB +'. • VR (Viability Rating) at 'BB +'. Long Term Foreign Issuer - BBB- Reaffirmed at BBB- for the long term and A-3 for • Long-term National Rating: 'AAA (slv)'; Outlook • Long-term National Rating: 'AAA (slv)'; Outlook Issuer Credit Rating (ICR) the short-term: investment grade. Stable. Stable. Short Term Foreign Issuer - A-3 Bancolombia sustained its dominant market • Short-term National Rating: 'F1+(slv)' • Short-Term National Rating: 'F1 + (slv)'. Issuer Credit Rating (ICR) position in Colombia and has recently positioned • Support at: 3 • Support at: 3 Local Long Term Issuer - (ICR) BBB- itself as one of the largest financial groups in • Senior Unsecured Debt Long-term Rating: • Senior Unsecured Debt Long-term Rating: 'AAA Central America major in Central America. Less 'AAA(slv)'. (slv)'. stronger aspects in terms of its credit rating have • Senior Secured Debt Long-term Rating: 'AAA • Senior Secured Debt Long-term Rating at 'AAA to do with capital and profitability, which have (slv)'. (slv)'. remained fairly stable and at adequate levels. Recently the bank improved its earnings and Reflecting the bank's strong franchise and dominant profitability metrics, and consequently, its internal local position, sound and stable profitability, robust capital generation. loss-absorption capacity, strong capital position above the banking system´s average good asset quality, and These improvements have been better than we ample depositary base had expected due to better funding costs, more profitable earnings assets composition, and The bank's ability to access and sustain an ample, sound cost containment policies. We expect that stable, low-cost and diversified customer deposits the economies of scale and the benefits from base constitutes one of the bank's main strength current acquisitions will be more reflected in Banco Agricola's support of '3' denotes that Fitch Local Short-Term Issuer - (ICR) A-3 the intermediate term, improving profitability views the bank as a core subsidiary for Bancolombia, further. Its risk position as "adequate" as is its provides a meaningful and recurring share of revenues liquidity position. Funding levels are average and to its parent and is an important subsidiary for its refinancing risk is manageable, supported by a Bancolombia's growth and diversification in Central satisfactory maturity profile of the debt issued. Its America customer base continues to exhibit long-standing relationships. Bancolombia has a high systemic The negative outlook for Banco Agricola's IDR reflects importance within the Colombian financial system that an eventual downgrade of El Salvador's current supported by a moderately high likelihood of sovereign rating ('BB-'/Negative Outlook) could result extraordinary government support should this be in a downgrade of the country ceiling (now standing necessary. at 'BB+'). However, Banco Agricola's national ratings would not be affected should El Salvador's sovereign ceiling be downgraded 38 ANNUAL ANNUAL 39 MANAGEMENT REPORT Qualifications MANAGEMENT REPORT Qualifications 2014 2014 Región Región Banistmo - Panamá Bancolombia Panamá

Fitch Fitch S & P's S & P's

• IDR (Issuer Default Rating) at 'BBB' / F2 with • IDR (Issuer Default Rating) at 'BBB' / F2 with 'BBB- / A-3'. • BBB- / A-3. Reflecting the fundamental status of Outlook revised up from stable to positive. Outlook revised up from stable to positive, given the the consolidated Bancolombia Group and forming • VR (Viability Rating) at 'BBB-'. potential support that Banistmo would receive from part of its overall strategy to act as a vehicle to • Long-term National Rating: 'AA + (pan)'; its parent, if required. serve Bancolombia's clients abroad, in fulfilling Outlook revised to stable to positive. their credit needs in foreign currency, and providing • National Short-Term Rating: 'F1 + (pan)'. • VR (Viability Rating): Fitch downgraded the Colombian market with access to the Central • Banistmo's Support Rating: 2 Banistmo´s viability rating from 'bbb' to 'bbb-' American markets. following its assessment of Banistmo's intrinsic creditworthiness after the completion of the acquisition of Banistmo by Bancolombia and the spin off of the bank's subsidiaries, which resulted in a sustained reduction of its size together with a Banco Agromercantil - Guatemala lower income diversification

• Banistmo's Support Rating: 2 Fitch sees the bank Fitch A + (GTM) / F1 (GTM) with a Stable Outlook. as a key subsidiary of Bancolombia.

• Long-term National Rating: 'AA + (pan)'; Outlook revised to stable to positive. Bancolombia Puerto Rico Internacional Inc.

• National Short-Term Rating: 'F1 + (pan)'. Fitch

• Long-term National Rating: 'AAA (col)'; Outlook Stable. S & P's S & P's • Short-term National Rating: 'F1+(col)';

'BBB- / A-3' with a stable outlook. • Standard & Poor's Ratings Services affirmed a long-term rating at 'BBB-' and its short-term and Filiales 'A-3' for Banistmo SA after the completion of its acquisition by Bancolombia Bancolombia S.A. and subordinate companies. S & P now regards Leasing Bancolombia S.A. CFC Banistmo as a core entity for Bancolombia, given its market position in Panama and the expected share capital and earnings for the consolidated Fitch group. • Long-term National Rating: 'AAA (col)'; Outlook Stable • S & P affirmed its ratings of 'BBB- / A-3' with • National Short-Term Rating at 'F1+(col)'; a Stable Outlook for Banistmo and withdrew its • Successive Multiple Emissions Leasing Bancolombia Ordinary Bonds of up to COP 1.5 billion - National observation status for possible review with negative Rating: 'AAA (col)' implications. S&P´s credit ratings for Banistmo as • Issuance and Placement Program for multiple and successive issues under an overall quota of COP 2 billion an issuer from now on will move according to those (extended up to COP 4.5 billion) National Rating at 'AAA (col)' of its parent. 40 ANNUAL ANNUAL 41 MANAGEMENT REPORT Qualifications MANAGEMENT REPORT Qualifications 2014 2014 Glosario Compañía de Financiamiento Tuya S.A. Definición de las nomenclaturas asignadas por cada calificadora Definition of rating symbols assigned by each credit ratings agency Fitch MOODY'S FITCH S & P • Long-term National Rating: 'AAA (col)'; Outlook Stable • National Short-Term Rating at 'F1+(col)'; Baa3 / P-3 / D BBB / F-2 / AAA (col) / AA + (col) / F1 (col) BBB- / A-3

Baa: Investment Grade. The numeric ‘BBB’: Investment Grade: Good creditwor- 'BBB: Investment Grade. Means rela- modifier "3" indicates a position at thiness. tively high levels of solvency and cred- Factoring Bancolombia CFC the lower end of that generic rating ‘ itworthiness. category. Obligations rated Baa are Fitch judged to be medium-grade and sub- ject to moderate credit risk and as such may possess certain speculative • Long-term National Rating: 'AAA (col)'; Outlook Stable characteristics. • National Short-Term Rating at 'F1+(col)'; P-3: Issuers with a Prime-3 rating ’F2’: Good short-term creditworthiness ‘BBB’: Considered by market partici- have an acceptable ability to repay pants to be the lowest level of an in- Banca de Inversión Bancolombia S.A. short-term obligations. vestment grade. Corporación Financiera D: Banks rated with a "D" have a mod- ‘AAA’ (Triple A Colombia). The highest ‘BB+’: Considered by market partici- est intrinsic financial strength, and creditworthiness. pants to be the highest level within the could potentially require some out- speculative grade category. Fitch side support at times.

• Long-term National Rating: 'AAA (col)'; Outlook Stable ‘AA+’: Very high creditworthiness. ‘BB’: Less vulnerable in the short • National Short-Term Rating at 'F1+(col)'; ‘ term but faces major ongoing uncer- tainties in terms of adverse business, financial or economic conditions.

Valores Bancolombia F1+’: The highest short-term creditworthiness. ‘M1(col) Superior’. National Investment Managers rating. Asset management opera- Fitch Fitch tions show the lowest level of vulnerability in terms of operational and investment man- • M1 (col) Superior: National Investment Managers • M1 (col) Superior: National Investment Managers agement shortfalls compared to what would Rating. rating. be appropriate for the market in question. • AAA (col): Counterparty Risk • AAA (col): Counterparty Risk • F1 + (col): National Risk • F1 + (col): National Risk Support Rating: Support Ratings (SRs) re- flect the views of the credit rating agency with regard to the probability that a financial Fitch highlighted the fact that being a subsidiary of the institution would receive extraordinary sup- Bancolombia Group as well as a market leader in terms port, if necessary, to prevent it from default- of Assets Under Management, the total value of its equity, ing on its senior obligations. This extraordi- streams of commission income and net results. This credit nary support would typically come from one ratings agency also highlighted the firm´s constant search of two sources: the shareholders of the rated for best practices in business administration, its stringent entity (institutional support) or national au- corporate governance policies and robust management of thorities in the country where the entity is both financial as well as non-financial risk together with located (sovereign support). Support Ratings its outstanding portfolio management. are assigned on a scale of 1 to 5, with "1" representing an extremely high probability of Fitch expects the company to continue maintaining robust support, and '5' indicating that no support levels of capitalization. can be relied on. 42 ANNUAL ANNUAL 43 MANAGEMENT REPORT MANAGEMENT REPORT

Committed to our The Value of trust Talking with humanistic banking our stakeholders

6 Thinking of others and being sensi- Our humanistic banking approach is 1 8 tive to their needs allows us to create driven by our liaisoning initiatives a different way of relating, in which 7 11 building confidence through conver- Temas sation and constant dialogue with relevantes our stakeholders adds value to what Shareholders: we do and helps us to fulfill our mis- 60.423 sion of making Bancolombia a more 3 2 humanistic bank. We interact with 4 our stakeholder groups through dif- 9 ferent personally-attended events, Clients: 10.427.239 the media as well as through our in- 10 5 terpersonal relationships, so that we are able to get a much better idea of their interests and priorities and, with their help, build an organization Employees: 46.519 that we all dream of. That is why in 2014, we consulted with our share- Sustainable growth New ways of providing a holders, clients, employees and sup- gratifying client experience pliers, using the Global Reporting Suppliers: 18.073 Initiative (GRI4) methodology on all

those material issues that we have Relevant issuesThe Bancolombia Group´s material issues Página defined on an organizational level, so 1 Consolidating a more humanistic banking model Employees 120 as to better understand how impor- Authorities: 10 países 2 Building more and better relations with clients Clients 78 tant they are to our stakeholders and 3 Efficiency and profitability Investors /Suppliers and service providers 107 to gauge our economic, environmen- 4 Operating simplicity and impeccability Clients 82 tal and social performance. For more 5 Wherever, whenever and however our clients need us Clients 86 information please visit this link and 6 Strategic risk management Investors /Authorities* 179 click on the Stakeholder policy. Communities: 10 países 7 Innovative talent management Employees 121 http://www.bancolombia.com/sustainability/ 8 Proactive reputation management Investors 116 dialogueS.html Substantial relevance: 9 Strengthening key lines of business in terms of creating added value Clients and Shareholders 91 report and digital 10 International consolidation Shareholders 67 Medium relevance: For more information please visit this link http://www.bancolombia.com/sustainability/dialogueS.html 11 Consolidating our environmental and social sustainability model Investors / Community 152 digital report and website ANNUAL 45 MANAGEMENT REPORT 2 Our commitment to our investors

THE DAY IT RAINED IN MANATÍ

by: Mayra Alejandra Díaz Montes. Barranquilla. Illustrated by: Alex Sarmiento.

That day it rained so much that the river swept day we set up a small tent , just like you see over us. I say the water came over us, but then at a circus, but tiny. There was barely enough I heard some men say that it was the opposite: room to stretch your arms. And no food. that the streets were built in the path of the river, and nobody likes to be ousted. In any Mom yelled at Dad to go and get food, but Dad case, I never thought that a river could flow was angry. I remained silent so as not to cause through the streets, yet it did. a fuss, even though I felt hunger pains. I wanted to go back in time, I would have liked to have Before I knew it, my bed was full of rubbish gotten up and gone to school, I wouldn´t have and fishes. All the houses in the street were minded getting up so early. But Mom said that converted into murky pools of fallen branches you can´t go back in time. I just wanted to open and dead cats. Mum screamed. Dad started to a book, play with my friends, and kick a ball take out all the stuff that could be saved. As for around. And eat because I like to eat. the hens, no one could save them. "You never know with nature," Mom explained afterwards. The weeks passed and the rain fell, but things Nature is so beautiful and, at the same time, were slowly getting back to normal, and when it so sinister. began to dry up, the good news came. I heard that everything would be fine, that things were Mom always said things like that, which were getting better, that they would come, they would hard to understand. Meanwhile the water bring food and books, (books! just think!) I flowed down the streets from the school to heard some volunteers would come to help. Miss Carmen´s house. Some people were And I waited anxiously. Then help came. Mum Quality of life happily splashing about in the streets. And I cried that day. But she was weeping with joy. did not understand why there were so many Mom always said things like that, which were Early childhood happy people amongst the sad. The following hard to understand. These early years shall always be the most important in the life of an individual, and knowing how to educate a child when small means that we can begin to build a more just, balanced and inclusive society. 46 ANNUAL ANNUAL 47 MANAGEMENT REPORT MANAGEMENT REPORT Bancolombia Group's Consolidated Results 2014

Colombia´s GDP for 2014 was higher than for types of loans showing annual increases which voting shares placed by Bancolombia in March many countries in the region, including Mexico, boosted the overall lending figure and further along with earnings for the period, all of which Peru, Chile and Brazil. consolidated sustainable rates of growth with improved levels of basic and total solvency by our productive assets. 268bp and 190bp respectively, these showing As for the Bancolombia Panama was one of the countries that contrib- the Bancolombia Group's financial capacity to Group's consolidated uted most to the region´s growth, having ob- The foreign currency loan portfolio in Colombian absorb potential losses according to the type results, total assets came to tained one of the lowest unemployment rates in pesos, representing 35.3% of the total, achieved of risk to which its assets are exposed. recent years and a significant reduction in pov- a growth of 9.5% in dollars at year-end 2014. erty, thanks to the good levels of performance The Group´s bottom line therefore rose by of the construction and mining sectors as well On the other hand, net investments slowed by 24.0%, reaching COP 1.9 billion at year-end, as a renewed growth in its fishing industry. The 0.9% year-on-year, as part of a financial man- driven by the 31bp year-on-year increase in its COP17,9 economies in El Salvador as well as Guatemala agement approach based on optimizing liquid- net interest margin, which ended up at 5.8% continue to do well, with the latter scoring much ity in favor of overall results. There was also a due to higher interest income from its loan and billon better results with its mining, manufacturing decline with the bank´s portfolio of debt securi- investment portfolios as well as liquidity opera- and agricultural sectors. ties that offset the growth in its equity securi- tions. On the other hand, the increase in provi- ties. The year-on-year decline of 0.5% in other sion expense on a loan portfolio of COP 174 The Colombian financial system in 2014, pre- assets was mainly due to lower liquidity opera- billion was mainly due to the increase in loans for a year-on-year sented a good level of overall results thanks to tions, particularly in terms of interbank funds, issued and the coverage required past due increase of rising prices of local government debt together simultaneous transactions with Colombia´s loans, as well as having aligned said provisions with a higher degree of macroeconomic stability, Central Bank as well as cash and banks, which with our loan rating system. which in turn drove investments and lending. The offset the growth in derivatives, with the dollar financial system also obtained year-on-year in- value of Banistmo´s goodwill driven up by the Also the growth in net commission income for creases in terms of both assets and profitability. year-on-year depreciation of 24.2% with the the year was mainly due to income from our 13,7 % Colombian peso. card business as well as banking, payments Likewise, the financial systems in the Central and collection services. In turn, given a good American countries have maintained strong As far as liabilities are concerned, fund struc- level of Forex and derivative income coupled balance sheets and stable levels of profitabil- turing costs recorded a year-on-year decline of with an enhanced handling of operating ex- ity. The Central American banking sector is ex- 40bp or 2.9% as a result of deposits which rose pense, our financial efficiency indicator (oper- pected to net a double-digit growth, with the by COP 8.5 billion, for a year-on-year growth of ating expenses versus operating income before exception of El Salvador and Panama, where 9.9%, as well as liquidity operations, specifi- provisions) ended up at 52.4%, with our oper- growth has been slower. cally repos and simultaneous transactions with ating efficiency indicator (operating expenses is similar to the value Colombia´s Central Bank, which came to COP versus total assets) now standing at 3.6%, of all the assets held As for the Bancolombia Group's consolidated re- 0.9 billion. Additionally, issues of bonds on the showing improvements of 441bp and 27bp, re- sults, total assets came to COP17.9 billion, for a part of Leasing Bancolombia, Renting Colombia spectively. by the ninth largest year-on-year increase of 13.7%. On a compara- and Bancolombia allowed for a much more ro- bank in the Colombian tive basis, this increase is similar to the value of bust financial structure, strengthening market Finally, return on equity (ROE) ended up at banking system all the assets held by the ninth largest bank in support and public confidence in the Group. 12.5%, and this is expected to improve in the the Colombian banking system. Its gross loan short term as our subsidiaries and the latest portfolio accounted for COP 18.1 billion of this Shareholders´ Equity rose by COP 4.3 billion issue of shares begin to have an effect on our growth, for a year-on-year rise of 20.2%, with all or 34.6%, driven by an issue of preferred non- financial results. 48 ANNUAL ANNUAL 49 MANAGEMENT REPORT MANAGEMENT REPORT Bancolombia A Retail and Commercial Bank 2014

Bancolombia continued to strengthen its finan- COP 925 thousand million or 106.9%, as did On the other hand, provisions on our loan cial position in 2014 with a growth in total as- the balances held in foreign banks by COP 1.7 portfolio increased with the amount of sets of COP 10.3 billion, representing a year- billion or 26.8%, and bonds, COP 1.0 billion new loans placed during the year as well on-year increase of 11.4%, equivalent in real or10.8%, mainly due to the devaluation of the as past due loans, whereas other operat- terms to twice Colombia´s real GDP growth as peso throughout the year (+ 24.2%), and the ing income declined given the amount of forecast for 2014. subordinated bonds in pesos issued in Septem- income recorded the previous year on the ber 2014 worth COP 988 thousand million. transfer of shares in Protection to anoth- Each of the different types of loans contributed er company belonging to the Group. A Growth in total to the year-end 17.7% increase in net place- The trust inspired by the Bancolombia name on assets of ments amounting to COP 10.3 billion, particu- the different markets was again evident with the In 2014, operating expenses rose at a larly in the corporate and issue of preferred shares placed slower pace than operating income, pro- mortgage lending catego- in March, thereby strengthening ducing improvements in the Group´s op- ries; the latter consisting of the bank´s equity as well as im- erating and financial efficiency ratios of approximately 24,500 new proving its solvency and finan- 357 and 22 basis points, respectively, loans so that more families cial ratios which show its capac- these reaching 51.9% and 3.7% at year- $10,3 were able to benefit from ity to absorb potential losses end. Labor expense increased due to our housing solutions. according to the level of risk to higher provisions on variable compensa- billon which our assets are exposed. tion bonuses and the growth in wages/ Net investments, for their salaries and employee subsidies. part, recorded a year-on- We recorded an increase of year increase of 1.3% or 18bp with regard to our loan Meanwhile, overheads showed a moder- COP 163 billion at year-end quality indicator, calculated ate increase as a result of lower expense Representing 2014, driven by the growth as the ratio of past due loans corresponding to property repairs, de- a year on year in our equity portfolio, rela- to gross loans, which ended preciation (computer equipment) and tive to last year´s devalua- up at 2.80%. This was main- amortization (new software architecture) increase of tion of the Colombian peso ly due to a higher volume of that largely offset higher leasing expense which offset the annual past due loans, which in keep- (computer and office equipment), de- decline in debt security in- ing with their levels of risk, posit insurance and taxes (Industry and vestments. On the other hand, the decrease in implied a provision coverage ratio of 164.1% Commerce as well as Financial Transac- other assets originated in the reduction in the at year-end. tion tax). cash and banks account, specifically the check- 11,4% ing account held with the Colombia´s Central Bancolombia obtained net income of COP 1.3 Bank, as well as with the balance held in repos billion, or -9.3% for the year, this mainly due to Return on equity for the year came to and interbank funds. the increase in income from our loan portfolio 9.0%, which was 3.5% lower than for and investments in debt securities. The bottom 2013, due to higher amortizations of As for liabilities, in 2014 the year-on-year in- line was also driven by net commissions thanks goodwill in December as well as the in- crease in deposits came to 2.6% or COP 1.4 to buoyant revenues from cards, collections, elec- crease in equity with the last year´s issue billion, mainly driven by higher deposits in sav- tronic banking and bancassurance services, as of preferred shares. ROE is expected to ings accounts. Also during this same period, well as the reduction in interest expense specifi- strengthen this coming year as the Bank simultaneous transactions and repos rose by cally with regard to savings accounts and CDs. continues to perform well. 50 ANNUAL ANNUAL 51 MANAGEMENT REPORT MANAGEMENT REPORT

more than for 2013, for a total card portfolio of total portfolio value of COP 8.8 billion, showing a COP 3.2 billion with past due accounts amount- year-on-year growth of 13.61%. Meanwhile, new ing to COP 152,848 million. On the acquiring side, residential leasing arrangements came to COP turnover came to COP 17.2 billion with affiliated 555,977 million, for a market share of 17.1% and retail establishments now numbering 83,226. a total portfolio value of COP 1.5 billion, showing a Sustainable year-on-year growth of 26.59% We also launched two new cards. In the case of the Global Visa card we placed 12,441 plastic for a As for construction loans, we continued to lead the total turnover of COP 35,560 million; and with re- market with a share of 46.3%, this corresponding Growth gard to the Visa Infinite card, aimed at clients from to a total portfolio value of COP 3.182 billion with the preferred and Colombian banking segments, loans for new housing projects totaling COP 3.104 we billed a total of COP 36,017 million with 6,919 billion. We also helped many families with their placed cards. home ownership dreams, with a total of 31,202 housing loans and residential leasing solutions. It is the consequence of doing things right, it Our Young People´s Credit Card achieved signifi- goes beyond a financial result and its reflected cant results last year upon reaching 112,283 is- We recorded a growth of 6.71% in vehicle loans in the responsibility of our management, in our sued plastic for a turnover of COP 212.793 million (for 32,239 new and 7,298 used cars). Leasing op- commitment to continue to reach the furthest places to support the development of the countries where and a portfolio of COP 66,618,000 million. erations rose by 92% as we continue to consolidate we are present, generating shared value, because our leadership in the new car market, in the form of we are interested in building an economically We also furthered the positioning of the Exito Store a 15.7% market share. prosperous, socially inclusive and environmentally Card, recording a total of 335,066 cards placed, healthy society. compared to 258,083 the previous year, for a We also have a total of165,141 clients with at least growth of 29.82%. At year end, we reached a total one SUFI financing product. New SUFI financing ar- of 1,826,490 Exito Store Cards, which compared rangements came to COP 1.42 billion, for a total to the 1,697,770 existing in 2013, represented a portfolio worth COP 2.7 billion. Personal and SME banking: growth of 7.58%. The number of active Exito Store We also provide support to our clients and their Cards at year-end 2014 came to 1,053,494. projects in the form of special development lines We continue firmly engaged with being present in Growths of more than 20% were recorded for our with Bancóldex and Finagro, achieving higher prof- every family and business by building relationships savings and checking accounts, with the former Also in 2014, a total of 76,248 Alkosto Store its for the bank and being able to propose attrac- of trust, which is why we are helping the Colombian now surpassing the 8 million mark, 65% of which Cards were placed, compared to 54,116 in 2013, tive rates for clients, which makes for closer client people to make their dreams come true, providing are active. This has allowed us to enhance ban- for an increase of 40.89%. 119,851 Alkosto Store relationships and helps us to become the bank of them with the opportunity of owning their own karization levels nationwide with the easy, straight- Cards were in circulation by year-end compared opportunities we wish to be. homes and vehicles and giving them access to the forward solutions we are able to opportunely pro- to just 53,055 for 2013, representing a growth financial markets through our retail, savings and vide our clients. of 125.89%. The number of active Alkosto Store With a record growth in commissions of 31% over investment products. We also help SMEs to obtain Cards at year-end 2014 came to 83,366. the previous year, SMEs accounted for 73% of greater liquidity for their businesses by financing We also designed new transactional packages so New housing loans reached a total of COP 2.088 the total commissions received by the bank corre- their asset purchases and working capital. as to be able to attend the payroll and supplier pay- billion, for a total market share of 26.9% and a sponding to COP 419,986 million. ment needs of our SME clients. Here we were able We continue firmly engaged with being present in to sell more than 7,000 packages mainly to our Results Personas y Pymes 2014 2013 % Change every family and business by building relationships micro and small SMEs, for a total of COP 2,000 Deposits in Local Currency* 36.337.222 31.053.270 17,02% of trust, which is why we are helping the Colom- million in cash commissions. Deposits in Foreign Currency (in USD millions) 1.049.508 1.077.141 -2,57% bian people to make their dreams come true, pro- viding them with the opportunity of owning their We continue as the preferred bank for cardholders Loans in Local Currency 35.938.610 32.160.549 11,75% own homes and vehicles and giving them access in Colombia. This has allowed us to invoice COP Loans in Foreign Currency (in USD millions) 529.174 501.603 5,50% to the financial markets through our consumer, 11.24 billion in the case of credit cards and an- savings and investment products. We also helped other COP 81.4 billion for debit cards, for shares Main Indicators 2014 2013 our SME clients to obtain greater liquidity for their of 23.5% and 42.5% in the respective nationwide Past-due loan indicator 5,19% 4,92% businesses by financing their working capital and turnovers. We now have more than 8 million credit Market size 73.756.003 64.692.822 14,01% the assets they need. and debit cards in circulation, that is to say, 8% *Including Collective Investment funds / Figures Main Indicators at December 2014 in millions of Colombian pesos. 52 ANNUAL ANNUAL 53 MANAGEMENT REPORT MANAGEMENT REPORT

Banistmo (Panamá) These results were mainly due to growths of Colombian Micro-SMEs No. Clients 1.048.861 4.27% in mortgage lending, 18.04% in our banking COP 6820220 million in loans Here, market size came to COP 224 million, credit card business and 29.30% in student segments representing an increase of 3.78% compared to loans. We also obtained a 11.07% growth in the No. Clients 147.371 2013, this driven mainly by our asset portfolio number of cards in circulation for a 8.23% rise SMEs From this segment we obtained more than COP 200 thousand million in commissions, which rose by USD 198,1 million, or 7% more in credit card billings. which represented a 15% growth versus previous year than the previous year. Liabilities rose by COP 26 million, for a consequent increase of 0.84%. Government No. Clients 3.579 90% of all towns and cities and 95% of all Departments in Colombia are clients of Bancolombia, BAM* (Guatemala) showing a growth in market size of 13.17% for a total of COP 4.3 billion Thus we obtained a growth of USD 13 million in net income compared to 2013, representing Here we achieved a 16% growth in our market Personal No. Clients 4.194.994 a year-on-year growth of 53.9%. This Company size, with net income reaching more than USD Showing a growth of 23% with a volume of COP 465.833 million recorded a ROE of 9.4% which again rose by 2.8% 8 million. We now have over 8,000 SME clients, compared to the previous year. thanks to our commitment to helping small and medium enterprises in sectors such as agricul- Personal No. Clients 2.473.005 Plus Showing a growth of 39%, driving expected shareholder value to COP 160887 million or We offer financing alternatives consistent with ture, livestock and commerce, where we provided COP 64.700 per client the needs of the Panamanian people. Thus, we more than1,000 loans for a total of USD 73.6 amended our credit policies for personal loans million. and credit cards that resulted in a year-on-year With the aim of providing personalized attention No. Clients 116.682 Preferential to our clients, both existing and prospective, who 27.435 of these belong to the Preferential segment in Colombia, which are attended by our increase of 80% in new consumer loans which local branch offices. Market size rose by 11% to COP 14 billion came to USD 45.3 million. Similarly, we placed visit our branch offices, we organized a team of 17,393 credit cards, for a growth of 50% compared customer care advisors who have been strate- to the previous year, which was made possible by gically allocated, based on the geographic dis- Banconautas No. Clients 115.410 tribution of our network. With the marketplace Showing a growth of 45% with deposits reaching COP 84.403 million, thanks to an increase our new approval and placement model. in new Bancoauta savings accounts accounting for COP 78.760 million changes thus implemented, we significantly ex- We also deployed a new BPO customer care panded our sales force with extra customer care service, by recruiting new suppliers for placing personnel as well as the specialized consumer Youngsters No. Clients 1.253.701 cards and insurance, thereby reaching a greater loan placement teams, all of whom helped to Market size came to COP 1.06 billon, showing an increase of 63.08%, with a volume number of clients, which accounted for 20% of place more than USD 177 million in loans. increase of 70.86% our total product sales with 3,612 new cards issued. Finally, we placed more than 38,000 credit cards Senior No. Clients 849.270 With the aim of increasing our system reliability for a total of 135,000 in circulation, with BAM´s Here we performed 400.840 monthly pension payments on behalf of all those companies total portfolio reaching USD 120 million. with whom we have pension payment agreements for a year-on-year growth of 21% indicators we migrated 26 of our technology platforms that were run under our previous model. This was a joint effort on the part of all our lines Families No. Clients 909.883 of business providing us with a greater degree 909.883 banking relationships on a family level compared to just 391.000 for 2013 Our Consumer and SME of system stability driving our ATM availability rate up to 98%, this based on the Organization´s Banking Channel earned a Employees No. Clients 3.626.608 internally-sourced information. With a new BPO support staff we are now attending 1.800 employees on a nationwide level Net Promoter Score of

Banco Agrícola (El Salvador) Private No. Clients 14.036 Banking Here we drew up a new comprehensive care model for attending the financing, investing % and transaction needs of this segment through a single channel, thanks to a joint customer Banco Agricola´s asset portfolio rose by 4.11% 64,59 care team made up of staff from both the Bank and Valores Bancolombia compared to the previous year with commis- sions from credit and debit cards, bancassur- para Personas y Pymes Colombian nationals No. Clients 93.000 ance, remittances and advances on salaries/ living abroad/foreign Here we helped more than 7.000 families to own their own homes in Colombia with the wages increasing by 7.02%. nationals living in remittances received in Colombia Colombia

* The Bancolombia Group owns a 40% stake in BAM´s share capital and therefore since it is not a subsidiary it is not included in the Group´s consolidated financial statements 54 ANNUAL ANNUAL 55 MANAGEMENT REPORT MANAGEMENT REPORT Corporate and Government Banking

This was extended to include our capital mar- a significant recovery in placement spreads ket business for a more comprehensive CRM which began to pick up during the second half vision along with a specialized sales model of the year, after dipping to their lowest levels providing solutions for six corporate needs, in March, April and May. namely financing, investment, transactions, risk management, strategic support and com- We saw a growing trend with business loans in munities. This has allowed us to develop this foreign currency for a year-on-year increase of business, for a much better alignment and 12%, despite adverse market movements and performance, in addition to having harnessed mainly due to the prevailing exchange rate ex- the inherent synergies. pectations, with regard to the Colombian peso losing ground to the dollar throughout the year These results were also driven by more in- Results in Colombia depth operations through our subsidiaries abroad, given their high liquidity and the sig- We work with a deep conviction that we are nificant changes with their product portfolios. contributing to the prosperity of our clients, Overall, our foreign subsidiaries Bancolom- understanding the dynamics of their particu- bia Panama and Bancolombia Puerto Rico lar businesses as well as the economic sectors showed a combined growth of 49%. On the to which they belong, so as to offer them well- other hand, our trade finance business played differentiated, innovative proposals on which a much greater role this year, going from COP to build long term relationships. 1.2 billion at year-end 2013 to COP 1.6 billion at year-end 2014. Here we obtained positive results despite the conditions on the local and international mar- On the other hand, liabilities in local currency kets. Average assets came to COP 50.5 billion declined, with average deposits ending up at for growth of 9.2%; the most representative COP 30.5 billion, for a drop of -2.7%. Liabili- being peso-denominated assets totaling COP ties in foreign currency reached USD 2.2 bil- 32.6 billion for a growth of 9.9%, thanks to lion, showing an increase of 9.9%. our range of cash management products, or- dinary loans, development loans as well as On average savings and checking account bal- our Leasing, Renting and Factoring products, ances came to COP 16.8 billion. The volume of which recorded individual growths of 27.5 %, deposits in checking accounts rose by 11.4% 4.7%, 74.1%, 6.5%, 15.9% and 34.3%, re- compared to the previous year. Our payment spectively. and collection systems processed more than The business loan portfolio in local currency 144 million transactions on the part of our of the Corporate and Government banking corporate clients, these worth a total of COP division scored a significant growth in both 437 billion. monetary terms and market share compared to the previous year. Thus, business loans in Foreign currency deposits increased by 2.44%, local currency rose from an average of 23% in and we were able to reduce our funding costs 2012, to 25% for 2013 and 25.5% for 2014. by 6 basis points given savings and checking Carlos Enrique Cavelier account balances increasing their share of to- Liaison officer for Sueños de Alqueria, a company that thinks big because it knows In this same order of ideas, it was possible to tal deposits, which averaged out at 40% for that, besides providing financial solutions, engage with the new dynamics and structur- 2014, compared to just 33% for 2013. We the Bancolombia Group is able to make people feel that anything can be achieved. ing of the Colombian financing market, with also were able to provide euro-denominated a greater focus on short-term loans (less than accounts for clients of Bancolombia Panama 12 months), which went hand in hand with as well as dollar-denominated transaction ac- 56 ANNUAL ANNUAL 57 MANAGEMENT REPORT MANAGEMENT REPORT

counts for Bancolombia Puerto Rico, where we Investment Banking expect to see a growth this coming year. Business loans It was an important year for us in terms of the Year-end NPS (Net Promoter Score or Net Furthermore, thanks to the efforts of our sales strategies put in place to leverage this division´s Recommendation Index) came to teams for our international lines of business, showed an business model, which was set up in keeping with the we issued CDs worth COP 280 thousand mil- Group's strategy as well as our corporate mission lion to major clients, offering the possibility increase of 15%, to become an Investment Bank with extensive local of diversifying the funding that up to then had knowledge and a regional scope while adhering to been largely focused on local clients. Also, the highest world-class standards. 58,5% thanks to a comprehensive approach taken on representing a

the part of our Institutional and Government We participated in a total of 25 business arrange- for our Corporate and Trading Desk investors showed an appetite for 25% market share ments for almost COP 13.5 billion, these evenly dis- Government Banking division investing in Colombia. tributed amongst different industries and products.

Product Commissions No. Projects Amount Industry Commission No. Projects Amount No. Clients % Within Total Leasing,Factoring % Of total portfolio Sector the business and Banking Portfolio management of vice (In COP Millions) Financial Services 1.450 22,1% 4.082.183 11,9% M&As * 2,826 1 1,600,000 Infrastructure 5,970 5 1,389,713 Structured Financing 13,446 14 5,403,815 Energy and Natural 10,427 8 4,421,153 Construction 4.770 14,4% 7.828.570 22,9% Capital Markets 4,563 10 6,498,253 Resources Commerce 2.704 13,8% 4.663.542 13,6% Capital Investments * 2,156 0 0 Financial Institutions 3,057 8 4,987,753 Industry and Commerce 3,537 4 2,703,450 Natural Resources 657 10,2% 4.234.808 12,4% Manufacturing Production Supplies 1.551 8,9% 3.639.124 10,6% Total 22,990 25 13,502,608 Total 22,990 25 13,502,608 Government 748 8,8% 1.974.874 5,8% * Including consultancy services and retainer fees * Including consultancy services and retainer fees Agricultural Industry 2.447 8,6% 2.371.862 6,9% Year-end commission figures in millions of Colombian pesos Year-end commission figures in millions of Colombian pesos The Media 1.215 7,9% 4.177.257 12,2% - 2,8% 39.697 0,1% We obtained COP 22,990 million in commissions ter understanding of our clients and their different 269 2,4% 1.176.906 3,4% representing a growth of 15% compared to 2013. industries. Approximately 27% of the total commission figu- re was sourced outside Colombia By expanding the Group´s existing regional covera- ge and as we continue to transfer our investment Results 2014 2013 % Change We are now working on consolidating a new ope- banking skills to different parts of the region, we rating model focused on covering different in- have come up with a work plan designed to repli- Checking Accounts - Local Currency 3,997,301 3,589,751 11.4% dustries while providing a much deeper product cate our value proposal on a regional level, so as Checking Accounts - Foreign Currency (USD) 478,663 448,221 7% knowledge, with which our staff, by gaining a grea- to take full advantage of growth opportunities over Loan Portfolio – Local Currency 29,964,183 27,169,227 10.3% ter degree of specialization, have obtained a bet- the coming years. Loan Portfolio - Foreign Currency (USD) 4,224,641 4,324,797 -2.3% Market Size 77,688,656 75,089,589 3.5% Net Commissions 604,756 547,021 10.6% Results Banca de Inversión 2014 2013 % Change Sales Revenues 2,012,437 1,844,095 9.1% Operating Revenues 49.899 49.864 0,1% Main Indicators Net Profits 24.412 30.924 -21,1% 2014 2013 Equity 521.279 472.542 10,3% Past due loans 0.47% 0.48% ROE (Return on Equity) 4,68% 6,54% -28,4%

Year-end figures in millions of Colombian pesos In millions of Colombian pesos 58 ANNUAL ANNUAL 59 MANAGEMENT REPORT MANAGEMENT REPORT

Leasing Bancolombia and Renting We also help clients to import assets from any- reached a total of COP 1800 million and in for- Colombia where in the world. Leasing Bancolombia is the eign currency USD 175 million, along with a 75% financing company that imports the most pro- increase for its International Factoring business. Here we are focusing on offering our clients dif- ductive assets * 2. ferent solutions in terms of their need for pro- We also managed to sign and drill down on impor- ductive assets, these aimed at providing added Our portfolio of Cross Border Leasing arrange- tant agreements with national and multinational value via our Financial Leasing, Residential Leas- ments, a dollar-denominated product aimed at companies that allowed us to effectively manage ing, Operating Leasing, Renting and International both Colombian and international clients reached their working capital, in the form of accounts Leasing products; all of which have enabled us to a total of COP 544.9 million, representing a receivable and accounts payable, for a total of obtain a market share of 44%. As a result, we are growth of 18.5%. We also continued to work on 463 such arrangements currently in operation, the largest leasing company in Latin America *1. new group-wide regional leasing arrangements while allowing them to take full advantage of the whereby we shall be linking up each of the coun- financial benefits and administrative efficiencies With regard to our Financial Leasing range of tries where we are present. Our leasing portfolio involved and hence contributing to the growth of products, we reached a level of productive assets outside Colombia totaled COP 260 million. both these clients and the economy in general. worth COP 17.9 billion, representing a growth of 11% over the previous year. We also supplement- ed our portfolio with new solutions for financing Factoring Bancolombia assets such as Mas Leasing, so that clients cov- ered by our Real Estate Leasing arrangements Factoring Bancolombia maintained its market Thanks to our efforts that are about to expire can obtain extra liquidity. leadership thanks to having deepened existing in handling credit risk, In only four months we disbursed a total of COP agreements and made inroads on new markets 29,703 million. such as energy and government. Disbursements we achieved a past due here in local currency came to COP 9.8 billion, loan indicator of Residential Leasing arrangements, on the other for an increase of 22% compared to year-end hand, came to COP 1.5 billion, for a 26.54% 2013. One of the highlights of this subsidiary´s growth compared to last year, thus showing how performance was having secured a 38% increase successful this product has been in helping fami- with its Confirming Bancolombia product; and lies to prosper. in terms of its Import Factoring arrangements a year-on-year increase of 52% was obtained. 0,48% A year-on-year growth of 13.58% was recorded for our Operating Leasing and Renting business, hav- With this gratifying level of performance, the ing paid out a total of COP 860 thousand million. subsidiary´s strategic products in local currency

Results Leasing Bancolombia 2014 2013 % Change Results Factoring Bancolombia 2014 2013 % Change Total assets 15.834.135 14.674.172 7,90% Total assets 2.147.124 1.567.247 37,00% Productive assets 14.216.295 12.755.326 11,45% Productive assets 2.188.368 1.599.219 36,84% Net income 193.303 241.773 -20,05% Net profits 5.112 3.834 33,32% Income before provisions 521.262 532.066 -2,03% Income before provisions 59.299 50.754 16,84% Equity 1.606.327 1.373.310 16,97% Equity 102.202 87.446 16,87% Past due loans 184.926 154.790 19,47% Past due loans 0,48% 0,59% ROE (Return on Equity) 13,37% 19,02% -5,65% Return on Equity (ROE) 6,04% 4,73%

In millions of Colombian pesos Year-end figures in millions of Colombian pesos Since Factoring migrated to the bank in October 2014, the methodology for calculating net income was standardized in keeping with the Group´s VAS (Value-Added System) methodology

*1 Source: World Leasing Yearbook. The Alta LAB 100. The Alta Group *2 Source: Foreign Trade Information System. www.sicex.com (http://www.sicex.com/) 60 ANNUAL ANNUAL 61 MANAGEMENT REPORT MANAGEMENT REPORT

Valores Bancolombia bids totaling1.68 times the colombia (80%), Banco Pi- Trading Desks value initially offered. chincha (63%), Grupo Sura This subsidiary continued (59%), Banco Popular (32%), In addition to providing assistance to our cli- as the leading placement This issue obtained a optimi- Emgesa (36%) Banco de Oc- ents with regard to foreign exchange transac- agent for issues of both debt zation rate of 31, 25 and 31 cidente (41%) and the Medel- tions, we continued to focus on offering them and equity securities on a basis points for each tranche lín City Council (84%), the solutions for managing market risk through local level. Here we partici- (10, 15 and 20 years) respec- issues belonging to the latter interest and exchange rate hedging arrange- 80% pated in the placement of tively, compared to the ex- four having been structured ments. Here our derivative transactions totaled 18 bond issues, worth COP pected level. We also would by a third party. Valores Ban- more than USD 23,000 million, which in turn 3.6 billion. It is also worth- like to point out that Valores colombia continued as leader represented close to COP 29,400 million in in- while pointing out that this Bancolombia also took part of the pack with what was come for the Group. We would also like to make subsidiary placed the en- in placing issues on the part considered as the most im- special mention that out of the total trading tire issue of Bancolombia´s of the Argos Group (49% of portant corporate issues to volume, 14% was performed with clients from subordinated bonds, with the total issue), Leasing Ban- be placed last year. our SME segment. corresponded

Bancolombia Group´s participation in corporate debt placements in 2014 We were also the placement agents for to Institutional Bancolombia´s primary issue of subordinated Placed by all the other issuers Placed by Bancolombia Amount placed by Bancolombia as a percentage of the total bonds back in September and together with Va- and Government 1.200.000 lores Bancolombia and acting exclusively as a 1/5 Exclusive group, we managed to obtain funds of almost COP clients 1.000.000 1/4 1/3 2/6 1/3 1 billion and for terms of more than 10 years. 2/12 3/9 800.000 1/6 1/6 1/4 2/5 1/3 1/2 1/3 600.000 1/3 1/3 Besides the operating hedging arrangements 400.000 to mitigate exposure to the exchange rate by Fiduciaria Bancolombia 200.000 means of instruments such as forwards and op- tion structurings, we would like to highlight the This trust fund management subsidiary managed efforts made to offer solutions designed to cover assets worth COP 51.09 billion at November Argos Terpel Jul / 14 Jul / 14 Emgesa Oct / 14 Jun / 14 Jun / 14 risks associated with interest rate on borrowings 2014, representing 15.9% of total trust sector. Feb / 15 Feb / 15 Ago / 14 Sep / 14 Sep / 14 Sep / 14 Sep / 14 Nov / 14 Codensa May / 14 May / 14 May / 14 May / 14 Grupo Sura Grupo Argos or investment positions. In this sense, we struc- Banco Popular Banco Popular

Banco Pichincha tured interest rate hedges for the equivalent of Commission income came to COP 210,211 million Sociedades Bolívar Grupo Bancolombia Leasing Bancolombia Municipio de Medellín USD 467 million through swaps. at year-end, with net income reaching COP 59,863 Titularizadora Colombiana million, representing a 19.3% share of the market. Banco de Occidente Credencial Empresas Públicas de Medellín Serfinansa Compañía Financiera We also performed hedging arrangements with The real estate trust business performed very 1,878 clients, 72% of which were for a total well with a growth of 29.4%, and its fiduciary We also made a lot of effort with recruiting different international counter-parties, other than financial of 1,167 clients from the consumer and SME guarantee business rose by 30.8%. institutions, which represented 46 new clients from different countries such as Brazil, Chile, Peru, the banking segments. We would also like to point USA, Canada, the UK, Switzerland, France and South Africa. These clients include fund management fir- out that out the total amount raised in CDs, We also provide important support to the housing ms, hedge funds, pension fund management companies and broker-dealers. In total, we managed more 80% corresponded to Institutional and Gov- construction sector as well as to SMEs with plans than USD 1,000 million in maximum debt limits for DVP and derivative operations. These new sources ernment clients, thereby confirming the trust that enable them to develop their projects and of funding worth USD 500 million have had a very positive effect on our performance. placed in us by large-scale investors. companies.

Results Valores Bancolombia 2014 2013 % Change Results Fiduciaria Bancolombia 2014 2013 % Change Operating Revenues 162.011 162.765 -0,46% Operating Revenues 223.639 218.124 2,53% Net Income 35.961 31.077 15,71% Net Profits 59.863 58.792 1,82% Equity 205.162 193.306 6,13% Equity 253.230 250.157 1,23% ROE (Return on Equity) 17,53% 16,08% 9,03% ROE (Return on Equity) 23,64% 23,50% 0,59%

In millions of Colombian pesos In millions of Colombian pesos 62 ANNUAL ANNUAL 63 MANAGEMENT REPORT MANAGEMENT REPORT

Asset Management Valores Bancolombia’s Collective Investment Banistmo (Panamá) tained with the past due loan ratio going from Funds came to COP 2 billion, for a growth of 2.8% to just below 1%. Last year saw a recovery with regard to Collective In- 39%. Although this change was mainly due to Here we focused our efforts on organizing our vestment Funds. The aggregate volume of these gen- its Liquidity Fund (which increased by COP 2,616 clients into segments in order to provide We concentrated our attention on recovering erated revenues of COP 187 thousand million for the 356 thousand million), it is important to note timely and innovative solutions through our our share of the capital market, by winning Group. the changes made to our funds with strategies specialized advisory personnel. We also active- back 38 previous clients and signing up 59 new specifically aimed at the Colombian Stock ly participated with various projects, in support ones. These 97 additional clients represented Managed Funds showed an increase of 13.77% com- and Balanced Global funds, with increases of of the Panamanian economy and the country´s USD 264 thousand in banking commissions. pared to the previous year, reaching COP 12 billion, 130% and 61%, respectively. overall prosperity, as can be seen with the fol- mainly due to Valores Bancolombia’s banking net- lowing results. The loan portfolio rose by 17% As for the trust business, we also made prog- work, distribution channels and sales volume all of compared to the previous year; This placed us ress with recovering lost clients, represent- which drove up the final figure by 24.5% year-on-year. in an advantageous position, since we were able ing 45% of the target market, who in turn Banco Agrícola (El Salvador) to grow four times more than the local market represented USD 541 thousand in banking The size of assets under management in Collective In- average. Also, a significant reduction was ob- commissions. vestment Funds and their continued growth show the Here we provided finance for several regional amount of confidence that our clients have deposited expansion projects in the service sector to- in us. We are now the financial group with the highest gether with production plant expansions for volume of managed assets * 1 through the aforemen- our industrial clients, the diversification plans Results Banistmo (Panamá) 2014 2013 % Change tioned investment vehicles, with a lead of more COP of the agricultural industry, as well high-end Total assets 3.174 2.708 17% housing projects and working capital for dif- 2 billion over our nearest competitor and an average Total liabilities 1.432 1.407 2% share of 28.6% of the Collective Investment Fund ferent businesses. Market size 4.606 4.115 12% market in Colombia. We recorded a 10% growth in loans placed Sales 87 94 -7% The assets managed by Fiduciaria Bancolombia in on the Salvadoran and Costa Rican markets, Operating expense 55 73 -24% the form of investment funds, increased at a rate of mainly in the Corporate and Agricultural seg- Net profits 32 22 47% 9.72% for a year-end volume of more than COP 10 bil- ments, for a total share of 30% in the com- Past due loan ratio 0,89% 2,80% -1,90% lion, this mainly driven by the Fiducuenta Fund which bined credit market. increased by more than COP 700 thousand million In millions of USD dollars for a total of COP 7.7 billion. This product was set up On the other hand, deposits declined by 8.7% due to our corporate strategy of not compet- as an excellent complementary deposit alternative for Valores Bancolombia - Panamá clients of the Bancolombia Group's network, a seg- ing so aggressively on the deposit market dur- ment which recorded a growth of more than COP 500 ing the first half of the year. These efforts led Assets under management reached USD 823.1 now receive electronic statements, which are thousand million that is to say 25% compared with us to increase our sales revenues by 9.1% and million, compared to USD 817 million at year- made available two days after the close of the previous period. reduce our past-due loans by 38%. end 2013, for an increase of 0.8%. The return each month and contain detailed information on these managed assets (ROA) came to 0.87% regarding their positions and transactions. On compared to 0.78% for 2013. the other hand, the technological tools used by Results Banco Agrícola 2014 2013 % Change our sales and operating staff are constantly up- We also offered our clients a safer, more ef- dated, allowing for a more flexible, timely and Total Assets 1.814 1.790 1% ficient service network. 60% of our clients transparent service. Total Liabilities 832 844 -1% Total Market Size 2.646 2.634 0,5% Sales 58 53 9% Results Valores Bancolombia - Panamá 2014 2013 % Change Operating expense 22 20 9% Operating revenues for Valores Bancolombia Panamá 7,4 6,3 17% Net Profits 36 33 9% Net income for Valores Bancolombia Panamá 0,83 0,96 -14% Past Due Loan Ratio 0,26% 0,33% -0,07% Equity 17,8 16,9 5% In millions of Colombian pesos ROE (Return on Equity) 4,70% 5,85% -20% Assets managed by Valores Bancolombia Panamá 823,1 817,0 0,8% * Own calculations and information from the Colombian Superintendency of Finance at year-end 2014. This includes collective investment funds only, and not pension funds or private equity funds. In millions of US dollars 64 ANNUAL ANNUAL 65 MANAGEMENT REPORT MANAGEMENT REPORT

Bancolombia Panamá thereby boosting the sector and allowing us to continue as BAM posted a strong financial ally for our clients in carrying out their This subsidiary reached record levels in terms of assets, projects. which for the first time ever surpassed the USD 5 thousand million mark, 59% of which corresponding to business loans and leasing arrangements, and another 23% strategic BAM* (Guatemala) USD220 investments. In this way, Bancolombia Panama became a Here, we continued to include several products and ser- vehicle for the Bancolombia Group to gain greater international millon scale in El Salvador and Guatemala. vices within our portfolio that are more in keeping with new client needs. We created a new deposit-taking area This increase in assets was due to various financial and responsible for providing a full range of financial prod- commercial strategies that improved the subsidiary´s asset ucts and services that make up the Bank´s borrowings, in loans, which structure for an increase of 27%, as well as optimizing the this specifically aimed at corporate and business groups, represented a growth excess liquidity obtained during the year as a result of a which have allowed for a growth of USD 34 million. 13% increase in deposits, 63% of which corresponded to of 20% CDs, 16% checking accounts and 21% savings accounts, From May to December of 2014 Banco Agricola and Ban- thus enabling us to provide solutions to our clients in istmo recorded on Bancolombia's books new loans of different sectors of the Colombian and Central American USD 413 million, in addition to the USD 483 million al- economies with the aim of carrying out their international ready managed. Thus, we managed to reach a total year- projects and strengthening their equity. end figure of USD 897 million, which BAM's sales force Bancolombia Panama, handles in other books belonging to the Bancolombia reduced its past-due We also made progress with our goal of providing a more Group's banking network. memorable client experience by allowing them to access loan ratio to just our financial services in an easier, straightforward and We obtained significant increases with our loan portfolio secure fashion. As part of these efforts, we reviewed and that reached USD 220 million, thereby representing a updated all our internal and external processes. year-on-year growth of 20%, showing the degree of client satisfaction and acceptance. Our risk management initiatives allowed us to reduce our 0,08% past due loans by 0.08%, with the corresponding indicator On the other hand, our borrowings grew by 23% to a total dropping to below the level recorded for the previous year. of COP 64 million. Also, we were able to bring down our past due loan indicator to 0.15%. We maintained our leadership position within the community of international licensed banks operating in We took advantage of the optimal conditions for growth Panama, this according to the country´s Superintendency that prevailed last year with an issue of international thanks to its risk of Finance, with 40% of the country´s total assets, 44% bonds worth USD 300 million and a capitalization of USD management efforts of total loans, 50% of deposits and 40% of net income, 112 million.

Results Bancolombia Panamá 2014 2013 % Change Results BAM* (Guatemala) 2014 2013 % Change Total Assets 1.329 1.073 23,8% Assets 4.980,8 4.332,0 14,98% Total Liabilities 345 272 27% 1.674 1.346 24% Liabilities 4.025,6 3.494,2 15,21% Market size Sales 29 23 26% Equity 955,3 837,8 14,02% Operating expense 5 4 30% Net Profits 25 20 25% Operating Revenues 115,4 184,0 -37,28% Past Due Loan Ratio 0,19% 0,13% 0,06%

In millions of USD dollars In millions of USD dollars

* The Bancolombia Group owns a 40% stake in BAM´s share capital and therefore since it is not a subsidiary it is not included in the Group´s consolidated financial statements 66 ANNUAL ANNUAL 67 MANAGEMENT REPORT MANAGEMENT REPORT

Bancolombia Perú Agency Leasing Perú Renting Perú

Here we achieved a 33% growth in market size, The Financial leasing business, as part of Thanks to the level of trust built over with a more diversified client portfolio and impor- the Peruvian financial system, declined by time and the continuous support we tant financing arrangements in the educational, 2.5% year-on-year. In spite of this, our loan give to our clients, we renovated the real estate, chemical and agricultural sectors. portfolio still managed to reach USD 108 fleets of vehicles of major clients million with 1,300 loans worth more than belonging to different sectors of the It is important to note that we provided USD 20 mil- COP 53 million, representing a year-on-year economy, providing them with efficient lion in financing for a major private company dedi- growth of 10%. solutions for their needs. cated to providing primary and secondary educa- tion for the middle-income brackets. This initiative We are contributing to the economic devel- This subsidiary reported a total of has benefited more than 23,000 students to date, opment of each of the countries where we 223 clients to whom 334 new vehicles thereby evidencing Bancolombia's commitment to are present by providing our support to the were leased worth USD 8.7 million. social development in all those countries where it following economic sectors: The total number of units leased to is present. With regard to the real estate sector, we date comes to 1,562, for a total fleet provided loans totaling USD 40 million to construc- • 30% - Construction value of USD 49.3 million, of which tion companies building middle-class housing • 25% - Transport and warehousing 35% are heavy-duty vehicles (trucks and dump trucks). • 15% - Manufacturing • 10% - Mining and fishing Leasing Peru • 10% - Others The main assets financed through leasing ar- The total vehicles provided its support rangements are broken down as follows: leased to date by to more than • 45% - Machinery and equipment Renting Peru came to • 35% - Vehicles major • 20% - Other assets economic In keeping with our regional service model, we have sectors helped a greater number of Peruvian clients, whose 1.562 12 parent companies are served by the Group in other parts of Latin America to gain greater international scale

Results Leasing Perú 2014 2013 % Change Results Renting Perú 2014 2013 % Change

Assets 129,9 135,9 -4,45% Assets 64,5 64,9 -0,74% Liabilities 113,4 119,2 -4,85% Liabilities 56,9 56,5 0,6% Equity 16,4 16,7 -1,81% Equity 7,6 8,4 -10,05% Operating revenues (before provisions) 4,3 4,0 6,67% Operating revenues (before provisions) 4,8 4,2 15,05% Net income (excluding exchange differences) 1 1,2 -22,28% Net income (excluding exchange differences) 1,7 1,3 30,41%

In millions of USD dollars In millions of USD dollars 68 ANNUAL ANNUAL 69 MANAGEMENT REPORT MANAGEMENT REPORT FiduPerú International consolidation Out of the total number of new clients signed up 70% of our new clients hold more than one in 2014, 75% had no previous knowledge of the trust arrangement with us, thereby confirm- We apply a well-differentiated regional model that reflects our Humanistic Banking philosophy in all those countries products this subsidiary offers and their respec- ing our commitment to creating long term where we are present, supporting the development of the local communities and identifying new opportunities tive benefits. In this way we are helping to expand relationships with these. Moreover, in con- that shall allow us to continue growing on an international scale, in a cost effective and sustainable manner. the trust market and strengthen the local finan- tinuing with our value creation strategy, we cial system, creating a greater awareness of trust obtained for the fourth straight year our ISO Key figures for our foreign-based subsidiaries arrangements as a means of financial protection. 9001 certification for all our trust services, December 31 2014 / 2013 At year-end 2014 this subsidiary recorded USD being the only trust management firm to In millions of USD dollars 453 million in assets under management. have obtained this certification in Peru. Note: Figures corresponding to the individual financial statements of each company which were standardized based on Generally Accepted Accounting Principles in Colombia (COLGAAP)

Results FiduPerú 2014 2013 % Change Banco Agrícola Bancolombia Panamá 2014 2013 % Change 2014 2013 % Change Assets 4,21 4,10 2,69% Assets 3.975,42 3.942,36 0,84% 5.053,44 4.426,52 14,16% Liabilities 3.424,48 3.386,21 1,13% 4.024,15 3.494,17 15,17% Liabilities 0,08 0,10 -17,71% Equity 550,94 556,16 -0,94% 1.029,30 932,35 10,40% Net Income 76,87 82,80 -7,17% 85,72 148,08 -42,11% Equity 4,13 4,00 3,20% Operating revenues 338,91 330,47 2,55% 225,01 290,18 -22,46% Loan Portfolio Operating revenues (before provisions) 1,45 1,47 -1,06% Housing 461,68 442,70 4,29% - - - Consumer 1.149,55 1.101,55 4,36% 2,20 12,16 -81,90% Net income (excluding exchange differences) 0,37 0,43 -13,12% Business 1.250,06 1.212,49 3,10% 2.224,85 1.885,22 18,02% Micro-credit 7,93 12,06 -34,30% - - - Leasing - - - 378,30 0,16 229.436,56% In millions of USD dollars Investments

Debt securities Negotiable ------Held for sale 217 260,81 -16,61% 48 90,32 -46,58% Bancolombia Puerto Rico Held to maturity - 301,26 -100,00% 134 70,62 89,75% Equity securities Negotiable - - - 2 2,45 -19,41% The portfolio of this subsidiary is largely concen- We continued to strengthen our coverage and en- Held for sale 4 3,90 0,00% 725 685,17 5,84% trated in Peru (70%) and Colombia (10%). Last hance our risk management functions. Various year, we speeded up our client sign-up procedure, measures have been implemented for identifying, leading to an 80% reduction in the time it norma- measuring, controlling and mitigating market, li- Bancolombia Puerto Rico Leasing Perú lly takes, thanks to having harnessed synergies quidity, credit and operating risks, this in order to 2014 2013 % Change 2014 2013 % Change

between our foreign subsidiaries (Bancolombia ensure compliance with local regulations and the Assets 346,98 382,54 -9,29% 129,22 135,73 -4,79% Panama, Puerto Rico and Cayman). Liabilities 244,74 290,54 -15,76% 113,53 119,23 -4,78% bank´s own risk appetite. Equity 102,24 91,99 11,14% 15,68 16,49 -4,91% Net Income 9,74 10,24 -4,82% 0,66 1,78 -63,21% Operating revenues 19,59 18,54 5,67% 10,32 9,53 8,22% - Loan Portfolio Results Bancolombia Puerto Rico 2014 2013 % Change Housing ------Consumer - - - 0,00 0,00 652,10% Business 248,18 294,05 -15,60% - - - Assets 346,98 382,54 -9,29% Micro-credit ------Leasing 63,66 - - 90,73 - - Liabilities 244,74 290,54 -15,76% Investments

Equity 102,24 91,99 11,14% Debt securities Negotiable ------Operating Revenues 19,59 18,54 5,67% Held for sale - 4,95 -100,00% - - - Held to maturity - 0,30 -100,00% - - - Equity securities Net profits 9,74 10,24 -4,82% Negotiable ------Held for sale ------

In millions of USD dollars 70 ANNUAL ANNUAL 71 MANAGEMENT REPORT MANAGEMENT REPORT

Key figures for our foreign-based subsidiaries The value December 31 2014 / 2013 In millions of USD dollars Note: Figures corresponding to the individual financial statements of each company which were standardized based on Generally Accepted Accounting Principles in Colombia (COLGAAP) of trust

Fondo de Inversión Renting Perú Fidu Perú 2014 2013 % Change 2014 2013 % Change

Assets 30,20 31,71 -4,75% 4,21 4,10 2,69% Liabilities 17,67 19,12 -7,58% 0,08 0,10 -17,71% We are a solid and responsible organization Equity 12,53 12,58 -0,46% 4,13 4,00 3,20% ready to help people with their life-time ambitions Net Income 0,84 (1,00) -183,32% 0,37 0,43 -13,12% Operating revenues 14,23 13,17 8,07% 1,45 1,47 -1,06% by building relationships of trust. This important attribute, namely trust, is present in everything Loan Portfolio we do, effectively prompting us to transform our Housing ------daily dealings through a proactive, balanced and Consumer ------Business ------comprehensive handling of the risks involved, and Micro-credit ------in so doing building a reputation for being a more Leasing - - - - - "humanistic" bank. Investments

Debt securities Negotiable ------Not content with being an institution that Held for sale ------Held to maturity ------merely lends and borrows, we wish to be rec- Equity securities ognized for our ability to inspire trust, which Negotiable ------Held for sale ------is present in all our dealings and has allowed us to create a different form of relating with our stakeholders, aimed at furthering our sus- tainability, strengthening our relationships and learning more about our different stakeholder Valores Bancolombia Panamá Banistmo groups. 2014 2013 % Change 2014 2013 % Change

Assets 18,37 17,42 5,43% 8.287,79 8.000,05 3,60% A good example of this was when we issued Liabilities 0,55 0,43 29,62% 7.517,66 7.323,97 2,64% Our of the entire bids for a total of 110 million preferred non-voting Equity 17,82 17,00 4,82% 770,13 676,09 13,91% these preferred shares Net Income 0,82 0,96 -14,80% 94,15 1,17 7937,37% shares, whereupon 50,000 new shareholders Operating revenues 5,54 5,36 3,34% 702,88 111,85 528,40% 23% corresponded to private individuals, chose Bancolombia as the depository of their Loan Portfolio dreams, because they see in us a strong, re- 41% pinternational investors and the remaining Housing - - - 1.628,51 1.466,97 11,01% 36% to other local investors. sponsible, transparent organization that thinks Consumer - - - 1.134,30 1.106,12 2,55% Business - - - 3.430,53 2.978,65 15,17% This subsidiary contributed to the success of this not only of today's challenges, but also is ready Micro-credit - - - 55,97 53,05 5,51% Fiduciaria issue of preferred shares by handling the share to plant the seeds for a better future. Leasing - - - 52,39 6,64 689,26% Bancolombia allocation process Investments Thanks to the integrated efforts of our cus- This subsidiary acted as lead placement agent, Debt securities Valores tomer care personnel and the different lines of Negotiable 0,55 6,58 -91,59% 215 186,86 14,85% enabling the use of its network, channeling bids Held for sale - - - 418 422,40 -1,03% Bancolombia worth COP 4.4 billion, which represented 62% of business belonging to our subsidiaries, Fidu- - Held to maturity - - - - - the total volume, as well as allocating COP 1.6 ciaria, Banca de Inversión and Valores Banco- Equity securities billion or 64% of the total amount issued. Negotiable 3 ,06 3,25 -5,88% 110 119,70 -7,82% lombia, bids for this issue came to 2.7 times Held for sale 0,08 0,08 0,00% 13 13,77 -7,57% the amount offered. 72 ANNUAL ANNUAL 73 MANAGEMENT REPORT MANAGEMENT REPORT

Exxon Mobil We continued to strengthen our relationships with Exxon Mobil through 22.500 our innovative “More Fuel” banking Protection Exxon Mobil cards product for our clients We continued to help our clients with Working together: their dreams of home ownership and were issued in 2014 education by means of mortgage loans, Housing residential leasing arrangements, Partnerships and student´s loans, and unrestricted purpose Education loans This was first deployed in 2014, and is $ Tuya scheduled for large-scale release in February Alliances 2015 We continued to offer financing 411.314 through the Exito and Alkosto store We continued to drill down on our cards as well as enabling our clients store cards to conveniently acquire the protection model of strategic alliances, taking they need through the Suramerica and advantage of these partnerships On-line cash Alkosto and Exito Cardif insurance policies we offer. and alliances in serving a common management 335,066 Exito store cards and 76,248 Alkosto goal, thereby creating more value store cards were issued. On-line We continued to help our clients with their for more people through our range dreams of home ownership and education of products and services that are Cash by means of mortgage loans, residential management leasing arrangements, student´s loans, and geared to improving the quality of unrestricted purpose loans. Flytech life of our clients. This was first deployed in 2014, and is scheduled for We continued to encourage electronic toll large-scale release in 2015. collections through our Flypass product, a solution that allows our clients to pass 542 through tollbooths without having to stop to swipe their cards or pay in cash, which so clients benefited far has benefited more than 542 clients Mass transport During the first six months of having deployed this product a total of 1,730 debits were made to clients´ savings, checking and credit cards. We formed alliances with various mass transit systems across the country, such as Mío (Cali), Transmilenio (Bogotá), Mio Transmetro (Barranquilla) y Metro Transmilenio (Medellín), enabling our clients to gain access to these metro stations using Metro y Transmetro their Bancolombia debit cards. Easy Taxi

This was first implemented 2014, and shall be Here we enabled our Colombian clients made available as of February 16, 2015. to pay for their taxi services with a safe 19.778 electronic payment mechanism. This now covers a total of 19,778 taxi drivers taxi drivers through the Ahorro a la Mano savings signed up account. $ Bancassurance 1,858 transactions. We beefed up our tele-sales channel and recorded a 30% increase in the insured values of the life insurance policies sold by the Bancolombia banking network Vehicles 700 Furthermore in partnership with Sura, thousand we launched a personal accident micro- We consolidated our partnerships with insurance policy which we are offering various makes of vehicles representing families benefited through our Banking Correspondents Access to 25% of the Colombian automobile (third-party stores and businesses acting cars and market, namely Renault, Nissan, Porsche, as a financial inclusion channel), motorcycles Volkswagen and BMW. This was also for a total of COP 26 thousand million in extended to makes of motorcycles that insured value. have a combined 14% share of the market, such as Yamaha and AKT. z 74 ANNUAL ANNUAL 75 MANAGEMENT REPORT MANAGEMENT REPORT

Stock market Global Balanced Fund Managing trust This is a new product forming part of the range of funds offered by the Bancolombia Group that access includes traditional and alternative assets in key international markets. Results: a growth of 61% and 1,359 clients.

Colombian Equity Funds These provide investors with a long-term invest- E-Trading ment option bearing an aggressive risk. This fund We consolidated our strategy in helping to deve- is comprised of equity securities issued by com- lop the Colombian stock market with this elec- panies listed on the Colombian stock exchange, tronic trading platform. In June, we became the as well as other local and / or foreign securities first company to send out an order to the fixed listed on Colombia. Results: a growth of 130% income market using this platform. Total trading and 3,080 clients. volume came to COP 2.1 billion for a growth of Assets Under Management 735% compared to the previous year, in the form Pershing Platform of 35,000 transactions, representing an increase Valores Bancolombia Panama continues to offer of 127% year-on-year. its products and services to our clients in Co- lombia, Panama and Central America by means Savings Accounts COP 39.2 billion Liquidity Fund of a more convenient access in real time to the This provides our investors with a short-term in- international stock markets time, especially vestment option bearing a conservative risk in the those of the US, through their mobile phones or form of debt securities duly registered with the Co- tablets. Results: 100% of our clients now have Checking Accounts lombian Registry of Securities and Issuers (RNVE). on-line access to their investment portfolios COP 18.1 billion Results: a growth of COP 400 thousand million and with 60% of these receiving electronic account 25,457 clients. statements. Certificates of Deposit Investec Asset Management COP 36.6 billion Through this stock brokerage sub- (nominal value) sidiary in Panama, we are expan- ding and completing our range of products, including a fourth Bonds family of funds, this consisting COP 13.7 billion of emerging securities, having partnered with companies in different regions of the world, Capital for a greater degree of spe- COP 16.8 billion cialization in these markets. Results: USD 16 million in- vested in these funds. Collective Investment Funds COP 12.4 billion

Third-party Investment portfolios COP 8.4 billion

Figures corresponding to the Bancolombia Group for 2014 76 ANNUAL ANNUAL 77 MANAGEMENT REPORT MANAGEMENT REPORT Leaders in... Making dreams come We have responsibly taken a leadership position on different fronts of the Colombian true throughout the region financial system, as part of our responsible management approach aimed at creating added value for our stakeholders. Bancolombia Group is helping people in the countries where we are present to fulfill their dreams, with a total loan portfolio of COP 112.8 billion. Consumer SME Banking channels Government and Corporate Banking Market share (%) Banking Market share( %) Banking Market share (%) % Participación de Mercado Colombia Perú Puerto Rico

Accounts where low Bancóldex Branch Offices Construction Loans balances are maintained*

29,8% 22,52% Junio 2014 12,96% 46,3% 73,7% 0,2% 0,7% Diciembre 2014 Diciembre 2014 Diciembre 2014 Certificates of Deposit Finagro ATMs 26,1% 26,43% 25,70%

Remittances FNG System Transactions Panamá El Salvador Cayman 36% 33,55% 43,54% Vehicles Findeter On-line Transactions 19,4% 6,1% 0,01% 15,7% 30,55% 64,49%

Housing Turnover - acquiring Transactions performed by business Banking Correspondents 26,9% 34% 41,5% Bancolombia 63,1% Credit Card turnover 23,5% Banistmo 13,4% Debit card turnover Leasing Bancolombia 8,1% 42,5% Banco Agrícola 6,1% Debit cards Bancolombia Panamá 6,0% 31,26% Other 11 companies holding minor shares 3,3% Total 100% Account balances of less than 5 basic monthly wages 3 Commitment to our clients

THE CLOUDS

By: Daniel Alonso Carbonell Parody. Barranquilla. Illustrated by: Alex Sarmiento.

The first thing is my name: Armando. The second shells, cats, lilies, accordions, swans, umbrellas, are the clouds. But, what are the clouds? I might lighthouses, daggers, sea horses ... not know for sure, but I know I like looking at them. When I grow up, I want to be a connoisseur The first thing is my name. The second are the clouds. of clouds. My parents say that clouds are a thing The third are Amanda´s eyes. In Amanda's eyes, I of dreamers, poets or slackers; my language see the sea, and above the sea, I see the clouds. teacher is not so sure, I think that observing clouds Amanda's eyes can change shape, seeing me in is a noble profession and not as straightforward different ways. Someday I will hire a pilot to write as it might seem; you must be careful not to get her name in the sky, with cloud ink, so she´ll know a crick in your neck and the sun in your eyes, how much I love her. As I´ve already said, and I´ll but the reward is indeed great. The sky can be say again, I think I´ll become a cloud connoisseur. as large as the eye can see, or as small as the square window of a prison cell. Whatever the I repeat, it is my greatest wish. Hopefully my parents size of your sky, if you don´t have clouds, life is shall one day come around to the idea that they boring. A cloudless sky would be like having a have a dreamer in the family. Maybe my teacher dog that doesn´t bark when he greets you. shall convince them that this is a commendable vocation. The first thing is my name. The second I think of the clouds and think of my teachers. are the clouds. The third are Amanda´s eyes. The What clouds teach us is priceless! They change, fourth is my plan. My plan is nothing else but living if you look carefully, and anyone, whether they in the clouds. I want to create a society, if it can are young or old become poets when looking at be called that, which is dedicated to appreciating the clouds. This is the education we need. Clouds clouds. People from all walks of life can join in. We are what the wind teaches them, but the very shall teach them the goodness that dwells in cloud nature of the cloud is what allows it to change formations and how they can change depending shape. I've seen really strange clouds; clouds that on the wind. In the same way as we change. What Quality of life look like scarecrows, peppers, dragons, ghosts, clouds teach us is truly priceless! They make the Education icebergs, ice cream cones, carrots, boats, world a better place. Beginning with me! Is the driving force for a country´s ongoing development, which is why we lend our support to educational initiatives, so as to improve schooling coverage and living standards, particularly in rural areas. 80 ANNUAL ANNUAL 81 MANAGEMENT REPORT MANAGEMENT REPORT

Finding new ways of shaping a more gratifying experience for our clients

Our goal is to offer a memorable experience whenever and wherever our clients need us, ensuring easy access to our financial services by means of secure, straightforward processes, providing products and services tailored to the needs of our consumer and corporate clients. For this reason, we are implementing ways of liaisoning with our clients in a closer more opportune fashion.

Since we took the first steps towards our more able to convert this philosophy into a series of Humanistic Banking approach, we have found concrete measures and take full advantage of new ways of relating to our clients, going beyond the lessons learned in talking with our clients in our natural economic role as a bank. We first order to continue enhancing our performance. got to grips with enhancing our human resource talent in adopting a workplace culture that has led us to provide a better, more comprehensive experience for our different stakeholders. Building more and better Thanks to the amount of thought that has gone into understanding our clients and recognizing relationships with that they lie at the heart of everything we do, we have deployed various measures in a responsible fashion, that have lead to significant changes our clients being made to our different processes, the ranges One of our basic premises has always been to of products offered and our determination to constantly be able to reinvent ourselves in terms build a more modern, digital bank that is readily of how we relate to our clients, by listening to accessible, and above all, socially-inclusive them, strengthening our role as their advisors, forming part of their individual stories, under- We still have some way to go in this respect, standing their needs and getting closer to them but 2014 was definitely a year in which we were so as to be able to offer them better solutions. 82 ANNUAL ANNUAL 83 MANAGEMENT REPORT MANAGEMENT REPORT

Adjusting our structure to provide a Enhancing our service models We launched our “Leader of Leaders” initiative for better service the Consumer and SME Banking Division, the goal With the aim of providing a more enhanced cus- of which is for all our leaders to become fully As part of our efforts to better serve our clients, tomer service, we carried out the following initia- aware of our corporate strategy in becoming a we made several adjustments to our sales staffing tives: humanistic banking organization. structure. Colombia: We strengthened our Dignified Our Corporate Code of Service was deployed Colombia: We laid the groundwork for designing in order to guide our conduct and help us Collection strategy with a view to understand- provide a pleasant, more memorable client a new platform, in conjunction with staff from our ing our clients when they are in a difficult eco- experience Cash Management Departments in the countries nomic situation and making them feel respect- where we are present. This has made it easier to ed and supported. This implied training a total have a single On-Line Banking Channel so that We staged seven different events for introducing of 1,400 customer care employees who work clients can access their savings and checking Working for this new Code of Service: 5 in Colombia, one in El for the four strategic partners that provide us Salvador and 1 in Guatemala. accounts,, loans and CDs held with different banks with this telephone help line service. The aim our clients: belonging to the Bancolombia Group. here is to take a more conciliatory approach progress which for a more responsible collection process. We In 2014, we served a total of 22,936 clients from also conducted a client satisfaction survey translates into action More than 3.000 the Preferential Consumer segment with the which provided an average of 5,000 feedbacks employees have now received their copies of our Crediagil revolving line of credit as well as credit per month. Corporate Code of Service cards and checking accounts, achieving a 90% compliance rate for one-day service agreements. We live our Service Model by coordinating This initiative was adopted by Banco On the other hand, and continuing with our Re- the work we have done on a personal Agromercantil in Guatemala, which just a few sponsible Service and Selling strategy while en- basis through our values and our El Salvador: We expanded the number of years ago implemented its own Code of Service. suring a greater degree of security for the trans- ways of doing things which in turn branch offices at which our clients can pay their Our new Corporate Code of Service now provides the reflects on what we do and the housing loans and manage the entire credit actions performed by our 2,800,000 clients who guidelines for our customer care service in Panama, quick, straightforward and timely cycles so as to provide greater convenience with receive their salaries directly in their bank ac- Guatemala, El Salvador and Colombia solutions we provide flexible office hours, more streamlined processes counts, we redesigned our Business Executive and more personalized customer care. Program for a more enhanced client experience with the product or the service offered, ensuring We ended the year with a total of 1,433 Guatemala: We integrated the sales personnel that all points of contact with the client are per- employees acting as “Service Ambassadors” for from the agencies of Banco Agrícola and Ban- fectly aligned in terms of processes as well as our Consumer and SME Banking Division, and in our advisory and after sales services. the Government and Corporate Banking Division we istmo forming one single sales force, and set up a appointed another 100 employees to form part of the shared communication channel with our clients. Leadership Network Service. This allowed us to obtain a loan portfolio of USD El Salvador: Here we opened various special- 897 million, which we manage in other books be- ized points of service for our Government and We also staged a week-long Client Service event, longing to the Bancolombia network. Corporate Banking Division, these called Busi- whereby 1,630 employees took up the challenge ness Banking Agencies. We also installed depos- to change the way in which they serve our clients in We created a new deposit-taking area responsi- it-taking ATMs on client premises with a view to providing them with a more gratifying experience. ble for providing a full range of financial prod- bringing the bank closer to our clients. ucts and services that make up the Bank´s bor- conducted 53 Service Code workshops, in rowings, this specifically aimed at corporate and Bancolombia Panamá: This subsidiary which 2,960 employees were trained in the major business groups, which have allowed for a growth began the required procedures for obtaining cities and towns. of USD 30 million. its ISO quality certification, being the first international licensed bank to implement In El Salvador, we also launched a campaign Finally, we set up a call center along with other al- a quality system in client-facing processes, called “Putting our souls into serving our clients“ ternate channels, so as to support our Consumer that is to say transfers, e-banking, fixed term so that through our day-to-day dealings, our and SME Banking Divisions, making these much investments, complaints, reported incidents clients feel appreciated and are able to more readily recommend us to others more user-friendly and efficient. and congratulations. 84 ANNUAL ANNUAL 85 MANAGEMENT REPORT MANAGEMENT REPORT Operating simplicity and impeccability

We are committed to making our cli- More solutions ent service the Organization´s best asset, as we move toward more im- So as to improve our relations and provide opportune care peccable, straightforward, timely, to almost 7,470,227 of our clients in Colombia, which last autonomous, flexible and innovative year rose by 12% with a total of 907,176 new clients, we processes, so as to make life easier have implemented various initiatives aimed at enhancing for our clients. their banking experience..

We worked in close conjunction Since this project began Client Grievances and Queries* 2012 – 2014 2014 2013 2012 with the Colombian Tax and back in 2012, we have Customs Department (DIAN in # Client Grievances and Queries received% 736.802 764.952 743.210 Thinking streamlined a total of 1,054 YoY Change -3,68% 2,93% 22% Spanish) in Bogota as well as the Comptroller General’s Office procedures. 780.000 of the Republic of Colombia in simply introducing a new channel for In 2014, we launched some 155 764.952 sending and receiving electronic initiatives that allowed us to streamline information in a quicker, more 304 procedures producing savings of 3,68% COP 421 million for the Organization. 760.000 timely fashion. with our As part of its efforts to uphold “Anti-Paperwork” 743.210 2,93% 736.802 the Organization´s best approach Furthermore, we eliminated 740.000 practices, Banistmo streamlined or combined a total of 117 a total of 50 procedures, trailed letters, documents and by Banco Agricola with another forms that were previously 720.000 9. So far, this has benefited We continued to simplify used for our banking more than 15,000 clients of our procedures and 2012 2013 2014 our foreign-based subsidiaries processes. providing a quicker, better eliminate red tape *Only grievances such as queries, complaints and claims on the part of clients were taken into account for this study service in terms of leasing by implementing this We also modified a total of 38 documents operations, branch office initiative with our with which we managed to simplify much service, opening new accounts Banistmo and Banco of the documentation required by Leasing For the first time in recent history, are now deploying 52 additional maining 47.89% - close to half as well as with the products Agricola subsidiaries, Bancolombia. we reduced the amount of client initiatives, which has allowed us of the total - were resolved and/ offered through our call center, so as to provide a more grievances (queries, claims and to reduce the amount of custom- or answered within two business among others. We implemented SME credit studies complaints) by 3.68% compared er complaints regarding credit days. The average time taken to enhanced experience for based on documents remitted on-line, to 2013, this corresponding to cards, consumer loans, business attend our entire volume of cus- In 23 branch offices in Colombia, our clients. training the entire sales force in this 28,150 fewer customer com- loans, savings accounts, among tomer complaints comes to 5.3 we launched a new teller system process. . plaints Compared to the rest of others. working days, having declined by called Voice Transactions, where the sector, over the past two years 15.8% compared to the previous clients do not have to fill in We enabled our Fopep pensioners, some we have reduced customer com- Our opportune service indica- year´s indicator. physical forms for cash deposits, 212,235 retirees representing 72.4% of plaints going from 22.74% for tor surpassed the goals set with manual collections, credit card the total, to withdraw their pensions from 2012 to 17.65% during Q3 2014. 87.45% of all complaints being We also drew up a new policy and loan payments which make any branch office, or depositing these attended within the stated time for temporary and definitive re- up 72% of the bank’s operations, payments directly in their accounts, 22 50 interdisciplinary teams frame, 52.11% being dealt with imbursements so as to facilitate this representing savings of COP for an 11% increase compared to the completed 50 work plans and we upon the first contact and the re- this facet of our customer care. 5,000 million a year for the bank. previous year. 86 ANNUAL ANNUAL 87 MANAGEMENT REPORT MANAGEMENT REPORT

When dealing with fraud, we send out a text We also made the necessary changes to message response, reducing the time it takes to AFC account balance inquiries made via our reimburse clients to a maximum of three days Consumer On-Line Banking Channel as well (in the event of the findings being in favor of as our Bancolombia App, thereby benefiting the client), increasing the amount of customer a total of 59,956 account holders. complaints resolved during the first contact to Agility, A different way of 53% for a total opportune service indicator of We transferred the balances held in 91,067 liaisoning with our 87.87%. savings and checking accounts to other simplicity Offering our accounts held by the same holders, for a and timely stakeholders We also reduced registered mail deliveries of total value of COP 1,033.8 million, thereby clients more credit and debit cards to just three days which protecting the unpaid balances of our clients solutions time avoided clients having to visit our branch offices and reducing the amount of dormant and to claim a total of 81 683 reissued and 56 155 canceled accounts. renewed cards. We also facilitated credit card activations by means of SMS messages sent out We also centralized SUFI´s disbursement by the bank. and commission process. This was previously distributed amongst the major We also did away with clients having to visit a cities of Medellin, Bogota and Cali, with branch office to personally reactivate accounts a response time of one day; after the with low balances or which have remained stabilization period, overall response times dormant for less than three years. were reduced to just two hours, with a 95% compliance rate. We also eliminated the documentation required for complaints regarding lack of knowledge of We also made improvements to our international purchases and advance payments. processes for 219 of our corporate banking clients. The time taken to purchase different Transforming ourselves from within to provide a more enhanced client service We also provided for Guarantee Fund currencies was reduced from 3 to 2 hours commissions to be charged in conjunction (33% faster), and we extended our schedule with the credit quotas for these funds, thereby for receiving the corresponding documents simplifying the payment of such in support until 2:30 pm for foreign exchange trades, of greater efficiency. Since implementing this thereby ensuring that these transactions framework, we have charged COP 133 thousand were performed on the same day. These million on 114,816 loans, and have collected changes shall allow our clients more time Making COP 121 thousand million. for performing their financial transactions. We also assigned an exclusive member of We now receive on-line the deposit forms for our customer care personnel to each region life easier AFC accounts as part of our Corporate On-Line in order to address the concerns of a total of We fulfilled our promise Banking services, which can be paid using our 1,400 clients conducting trading operations, to offer a pleasant, on-line collections service, thus saving our and implemented the IVR for our the VIP more memorable clients a trip to the bank and reducing from 3 and Trading Help Line; this in order to boost days to just 1 the application of these funds to our advisory function in this regard and get employee AFC accounts. closer to our clients with this service. 88 ANNUAL ANNUAL 89 MANAGEMENT REPORT MANAGEMENT REPORT Wherever, whenever and however Overview of all transactions performed through the our clients need us Bancolombia Group´s distribution channels

This approach consists of getting closer to nel), 598 Mobile Service Points 598 and 206 our clients on a daily basis for which we have Kiosks. enabled different channels that allow them to access our financial services in a quick We take pains to reach out to the more re- and convenient fashion, whenever and wher- mote towns and villages that have no physi- ever they wish. cal banking presence through our POS ser- vice, covering a total of 566 so far. In this

We continue to focus our efforts on covering way we are helping the unbanked or under- Chanels / 2014 # of Transactions / 2013 # of Transactions / 2012 # of Transactions Change 2014 vs 2013 the more remote areas, serving more than banked population to achieve their dreams. 875 towns and villages in Colombia, 124 in El Salvador and 9 Panama, with the help of 250 members of our customer care person- nel. In Colombia, we have the largest branch Branch offices 138.597.489 136.932.756 132.498.871 1,22% office network, according to the Superinten- dencies of Finance in both Colombia and El Creating a more digital, Our own ATMs 272.101.252 266.745.289 241.551.935 2,01% Salvador. modern and affordable We conducted 1.945 million transactions, mobile banking Other ATMs 5.687.399 5.245.356 4.383.228 8,43% for a year-on-year growth of 18%; 92.7% of which were performed on-line. experience for all our Own POS 11.391.305 11.542.629 12.151.045 -1,31%

We also sold more than 4.1 million prod- clients was the reason why Other POS 138.502.179 124.865.999 111.141.701 10,92% ucts through our current channels; with an Global Finance named average of 19% via channels other than our Audio-response 16.972.147 16.825.498 17.296.712 0,87% branch offices. us as the Best Regional We have more than 1,400,000 active clients Mobile Bank in Latin Internet 924.490.948 743.976.645 567.147.502 24,26% in our Mobile Banking segment, which is 74.8% more than for 2013. Our mobile bank- America. Mobile Banking 43.428.762 32.335.886 17.273.556 34,31% ing clients conducted approximately 317 million transactions accounting for 16.3% Banking Correspondents 42.728.743 34.017.009 20.696.257 25,61% of the total. We performed 1.945 ACH Banking Network 12.446.257 11.220.348 9.698.075 10,93% In the countries where Bancolombia Group is million transactions, present, we have a network of 1,070 branch offices, 4,524 ATMs (where availability rates with an annual growth Automatic Payments 21.606.919 19.771.058 18.315.854 9,29% average out at 93.62% in the case of Co- lombia and 99.23% for Panama), 7,807 Mi- of 18%; 92.7% of which Total Transactions 1.627.953.40 1.403.478.473 1.152.154.736 15,99% cro ATM wireless machines, 4,2022 Banking were conducted via our Correspondents (third-party stores and busi- nesses acting as a financial inclusion chan- electronic channels. Data based on that reported in Forms 444 and 398 to the Colombian Superintendency of Finance for 2014, this covering only cash withdrawals, payments, deposits, transfers and account statement checks conducted via the group of channels selected for the Colombian Banking Unit. 90 ANNUAL ANNUAL 91 MANAGEMENT REPORT MANAGEMENT REPORT

Digital banking channels: We take care in providing different client experiences in accessing our services and products directly from their mobile devices or home computers, while ensuring the highest security standards.

Internet Always at hand

This channel allows young people to self- Availability rate: 99,55% On-line Credit manage their own applications, directly from Card Sign-Ups: their mobile phones, tablets or computers in just nine minutes, seeing in real-time their "Youngster credit preapproved credit quotas and enabling 1.873 cards" placed Bancolombia a un Clic Bancolombia's On-Line them to continue with or check the status of their applications at any time. Consumer Banking Service

We expanded our portfolio of services to cover document requests on the part We launched a new transaction that allows our custom- of private individuals and corporate persons with regard to our leasing services, This service allows our clients to sell their ers to check their AFC accounts; we also redesigned our Always On obtaining comprehensive insurance coverage, requesting debt to be purchased on-line account statements. Line with products online, using our e-commerce in the form of consumer loans and applying for automatic debits of installments facilities in a safe and secure fashion, thereby retail owed on debit and credit cards as well as mortgage loans. Also, microSMEs Bancolombia: expanding our range of accepted payment establishments and SMEs can self-manage documents without having to go to a branch office. methods and contributing to a greater degree of financial inclusion, with 19,778 taxi drivers now registered with our Easy Taxi alliance. million 87 documents requested transactions 386.541 478 processed

products requested for an of all transactions were

"Salary active increase of 125% performed using our

We introduced this new "Salary Advances" accounts compared to 2013 Advances" product which is now available on our 10.366 140.025 24,6% electronic channels Banco alternate channels as well as ATMs, e-banking Agrícola and kiosk services 90% usage Availability rate: 97,5% With the aim of serving our clients who Bancolombia's On-Line Electronic live in the more remote areas and have clients Banistmo´s On-Line Banking Service no access to branch offices, we launched benefited Corporate Banking Service BAM a cash withdrawal service for all ATMs 135.000 We now offer new services that allow for clients to perform swift, straight- belonging to the 5B network which requires forward and user-friendly searches. We provide a 24 hour service and We created a contingency plan for disruptions entering a special code on their mobile ATMs facilitate access to information showing consolidated account balances in in this channel, to satisfy the needs of our devices. 2.300 a single view. Transactions are now performed in fewer steps with visual customers. aids helping to guide the client through this process. We also implemented an option for approving international money transfers at any time and cre- ated a template for recurring transactions. This on-line shopping card is designed for NetCard making all kinds of on-line purchases in a cards placed on Guatemala safe and secure manner. Each card holder ​​availability rate is assigned a maximum limit which can be 1.200 an annual basis active clients for 2014 disabled whenever required. 36.500 99,27% 92 ANNUAL ANNUAL 93 MANAGEMENT REPORT MANAGEMENT REPORT From cell We enabled the Clic to call from the computer where they receive Use of these client authentication specialized customer care services rose at Strengthening key lines function on our a year-on-year digital services rate of of business in terms of creating this with the aim of Callback providing personal and Con la posibilidad de que el which consists of clients leaving their added value specialized information contact information so that we can for their products communicate with them at a later time 100%

We are constantly looking for new ways of doing business so Availability rate: 99,11% Availability rate: 99,63% as to provide solutions Bancolombia redesigned the APP´s to ensure our ongoing Here we began offering life 3.005.643 market competitiveness, content and transaction services 2.078.482 insurance (22% effective) trust including paying cards belonging clients were attended downloads fund accounts (1,376 accounts per month on average while meeting the to third parties, a new account opened) and the option to through our audio expectations of our movement search engine, AFC update client information (6,265 response service stakeholder groups. account checks, a message center, updates). We also consolidated debit and credit card blocking service, 13% our preferential service with main passwords and the possibility of bank initiatives such as handling pre- 1.471.380 requesting documents and products transactions approved clients and enhancing calls answered Bancolombia APP using Bancolombia a un Clic. through an advisor Telephone Telephone Help Line certain post-sale processes.

included new features in its APP, such as a branch office 35.000 and ATM search engine, downloads product consultations and special events, plus the ability to transfer funds between the client´s own accounts as well 1,1 as paying taxes amongst other million services. transactions BAM App Guatemala

this was ranked as the most 59.897 innovative banking APP in downloads El Salvador, thereby fulfilling its value promise as a modern and efficient bank. 3,2 million transactions Banco Agrícola App 94 ANNUAL ANNUAL 95 MANAGEMENT REPORT MANAGEMENT REPORT Consumer Banking

Low-income families initiative, we were able to reach an average audi- Out of all of the Exito and Alkosto store cards ence of one million with regard to topics such as Inclusion placed, 37.7% corresponded to clients having Figures: with regard to the Colombian Government´s responsible borrowing, channel usage and savings, their first ever credit experience with the local fi- amongst other important issues. Children nancial sector, with 54.6% of these earning an free housing program (100,000 units) we approved income of up to two basic wages. a total of COP 918,490 million and disbursed a total of COP 667,879,000 of this figure. Since Cifras: 1.656 1,656 children signed up. we started these programs for disadvantaged Banikids: Banistmo launched this new segment families with subsidized interest rates, we have Low-income in order to teach children to save from a very Small and medium-sized enterprises paid out a total of COP 1.2 billion, benefiting early age. A new debit card now includes a 39,652 families. In this way, we are supporting savings product personal accident insurance for up to USD Figures: we recruited 11,000 new small SMEs the Colombian Government´s strategies to help 10,000 with dental and A&E medical services and 200,000 micro SMEs. Disbursements: COP fulfill the dreams of many families to purchase Low-income segments available nationwide. 548,481 million (total micro and small SME seg- ments ) Total SME clients: 1,196,232 1,048,861 their own homes through the 'Housing for Savers of the population micro SME clients, and 147,371 SMEs. (VIPA)' and '100 000 Free Homes” programs all of which bear subsidized interest rates. Colombian nationals living abroad We disbursed a total of COP 198.653 million in micro Figures: more than 280.000 clients now hold SME loans, benefiting 31,000 microentrepreneurs. this product. For 19% of these, this was their Housing loans: Here we helped 1,800 families first ever financial product. With products such residing in the Americas, Europe and Ocea- Employees (salaries and wages deposited directly in their accounts) as these, we have now bankarized 30.6% of the nia to own their own homes in Colombia. This target population. We are encouraging more product scored a growth of 22% compared to people to use financial services with this free Sufi credit studies Figures: 2 million employees and 458 thousand 2013. A total of COP 153,891 million was dis- savings account that can be opened directly pensioners receive their salaries, wages and bursed in the form of housing loans to this with a mobile phone. Students pensions directly in their Bancolombia accounts. segment. Compared to 2013, we obtained an increase of Remittances: Here we provided the opportu- Figures: COP 34,604 million in student loans 17% in the number of clients attended with this nity for 275 thousand families living abroad were issued to a total of 6,881 clients. Sufi was product. 9,614 new corporate clients signed up to send back remittances to Colombia and use the first private institution in Colombia to offer for our direct payroll deposit service, where we Clients/users of our this money productively with our savings, pro- student loans for undergraduates, graduates and reduced the amount of complaints by 39%. tection, education or housing solutions. Our continued education courses going from a mini- Banking Correspondents market share came to 36% in terms of incom- mum of COP 500 thousand up to full tuition and ing remittances for an average monthly value for terms of up to 12 years. Clients/users of USD 115 million (USD 1,380 million per year). Social Leasing Program Financial education Beneficiados: Over 1.5 million people are now us- ing this new transaction channel. Figures: 4,098 Figures: 21 families benefited from 139 ap- Segments of the population Banking Correspondents in Colombia (third-party Low income segment proved loans. We were the first in the country to stores and businesses acting as a financial inclu- launch the Social Leasing program in partner- Figures: Through activities such as the "International sion channel) and 104 in El Salvador. We also Products placed: 335,066 Exito store cards ship with Comfama, a Colombian family welfare Financial Education Week for Children and Young- launched, in conjunction with Sura, a personal acci- for an increase of 29.82% compared to 2013. institute, for the purpose of financing the acqui- sters" and the "International Savings Week", we were dent micro-insurance which is unprecedented with Active cards: 1,053,494 sition of housing that the institute rents out at a able to extend our financial education program to this type of channel since it can be obtained with- Turnover: COP 2.5 billion. Products placed: low cost. This plan provides the lessee with the a total of 1,208,718 clients, explaining to them the out necessarily being a client of the bank. There is 76,248 Alkosto store cards representing an possibility of paying the down-payment through importance of knowing how to handle their finan- also the additional protection in the case of death increase of 40.89%. Active cards: 83,366 monthly rentals. cial products. Also through our on-line classroom or total disability as a result of an accident. 96 ANNUAL ANNUAL 97 MANAGEMENT REPORT MANAGEMENT REPORT

Cards Newly launched cards obtained a market penetration of 21.53% with Moments of Truth this product. In order to satisfy the consumption needs of our Global Visa Credit Card (Colombia): 12,772 We help our clients to achieve their dreams by clients, we made progress with our payment strate- cards. El Salvador providing them with the possibility of purchas- gies on a regional level . Visa Infinite Credit Card (Colombia): 5,157 Thinking of our clients´ well-being, we now have ing their own homes, cars, as well as giving them cards placed. 237,553 insurance policies in force for an insured access to the financial markets by means of Re-establishing the American Express Green value of USD 4.381 million, this corresponding credit and debit cards while providing insurance Credit Card: 4,204 new cards. to a year-on-year growth of 18%. Insurance fees Country Panamá

Colombia amounted to USD 5.97 million for a year-on-year Guatemala

against personal and property risk . El Salvador increase of 7.7%. Always Protected Housing Guatemala We offer a range of insurance policies including Figures: 75,500 policies issued. 41% We helped a total of 31,202 families just in Co- life, unemployment, household, fraud and medi- increase. We offer life, household, car, financial lombia with their dreams of home ownership, cal assistance in conjunction with well-known obligation insurance for Guatemalans living in the form of mortgage loans and residential insurance brands such as Sura, Cardif, IKE and abroad. leasing arrangements which together reached Allianz, among others. a total of COP 10.3 billion along with disburse- ments of COP 2.6 billion. Panamá We also offer a range of insurance policies in- We have 204,812 insurance policies in force for cluding life, unemployment, household, fraud an insured value of USD 31,954, representing an and medical assistance in conjunction with the New Debit 1.615.951 266.652 88.104 61.358 increase of 19.2% compared to the previous year. Cards Sura and Cardif and other insurance companies. These insurance policies provide USD 4,535,146 Country Panamá Colombia Guatemala El Salvador in commissions per year. Total Debit 6.524.197 699.445 177.232 180.005 Colombia: Cards Families 31.202 1.264 1.000 2.800 1,500,000 policies currently in force. Insured val- benefited ue: COP 32.9 billion. Growth: 19.3% compared New Credit 517.595 60.000 38.000 17.555 Other initiatives Disbursed $2,6 billon USD 7,28 USD 59 USD 315 with 2013. loans millon millon millon Cards Colombia Total Credit 1.863.512 219.461 135.000 62.329 The "Who Will Lend Me Money?" portal allows Cards clients, primarily eligible employees, to take out Vehicles Protección Total Debit Card $81,4 USD 240 USD 540 USD 405 payroll loans issued by different banks, includ- Helping clients to buy their own cars and mo- Turnover billon millon millon millon • We extended the benefits of our unemployment ing Bancolombia, so as to be able to meet their torcycles through attractive financing plans. insurance to protect clients and their families who financial needs and enabling them to make their Credit Card $11,24 USD 410 USD 290 USD 569 take out unrestricted purpose loans, and for some own decisions. . Turnover billon millon millon millon reason are laid off or succumb to a serious ill- Affiliated 83.226 1.191 N.A. 2.670 ness. Results: 4,038 insured loans. Panamá Country Panamá Retail Colombia • Sufi extended the coverage of the insurable por- We launched the "Express Savings Account" that Guatemala Establishments tion of its financial leasing product by 40%, and clients can sign up for in a quick and straightfor- Vehicles 39.537 900 3.466 Retail $17,3 USD 325 N.A. USD 1.138 also launched its "Life Insurance +" product, in ward fashion. So far, 35,614 accounts have been Motorcycles 14.389 N.A. 2 Establishment billon millon millon conjunction with Sura, so now loans can be in- opened for 12% increase compared to the previ- Portfolio $2,18 billon USD 15,8 USD 156.404 Turnover sured to a much greater degree. So far, we have ous year. millon millon 98 ANNUAL ANNUAL 99 MANAGEMENT REPORT MANAGEMENT REPORT Government

Transforming a country means pation model for the financing of 30 highway from turnkey contracts for new highways working with the Government in concession projects to be implemented over and road works and, that is to say contracts support of its development plans for the next five years. between the Government and private enter- greater progress and better quality prise of life for its people. • 13.4% of the total pensioner base belonging to Colpensiones, approximately 175,125 retir- • We continued to support the Panama- ees, receive their pensions directly through us. nian Government´s infrastructure plans Colombia as major funders of contractors work- • More than 17 million Social Security Settle- ing on projects such as the Meco Vigui- • We provided our support for the Government´s ment Forms (PILA in Spanish) were chan- San Felix highway worth USD 75 million, territorial plans through a client service model neled through our on-line channels (86%) and and others such as the widening of the specially designed to serve contractors. So far branch offices (14%) (assisted forms). Panama Canal. we have signed up 4,900 clients. Market size: COP 69,500 million. • In support of the National Low Carbon Devel- opment Plan, we launched a line of financing Perú • We also worked in partnership with the agricul- for encouraging energy efficiency and renew- tural sector with the Finagro line of credit, cov- able energy for a total of COP 200 thousand • We managed funds worth USD 453 mil- ering its entire production chain. Our market million and so far have placed loans worth lion for building energy networks in the share in terms of Finagro loans came to 19%. COP 86 thousand million. central and southern parts of the coun- try. We managed funds worth USD 453 • We also took part in initiatives for facilitating • We help and advise the Treasury Departments million for building energy networks in home ownership, such as extending subsidized of 178 municipalities with whom we have the central and southern parts of the interest rates for the middle class. Here we signed 376 agreements covering the collection country. have disbursed a total of COP 644 thousand of taxes due, going from the purely manual to million, benefiting 7,851 families since the bar code reading which has made this process • We also granted a loan of USD 20 mil- Frech 3 program began. so much more efficient. lion for a private company that provides basic and secondary education for more • New tax reforms increased the taxpayer base. than 23 thousand schoolchildren from As a Group, we are preparing ourselves for ef- El Salvador the middle- to low-income brackets. ficiently dealing with the projected rise in the amount of tax payments to be transacted, es- • Through our Web Service platform, we in- • We lent USD 22.5 million to a major Pe- pecially since we already collect 34% of the creased the number of tax payments re- ruvian real estate company dedicated country´s total tax revenues. ceived by 20% to 44 thousand transac- to building low-income housing. tions with an increase of 32% in the actual • We also support the country's growth through amounts collected. • We also handled the cash flows associ- a study worth COP 4.7 billion for the 4G high- ated with the repair and maintenance of way tenders. We issued quota letters for more highways far away from the capital city than COP 1.2 billion for different clients. Panamá such as the Abra Toccto – Vilcashuaman Highway, namely the Condorcocha - Vil- • We also worked with the National Infrastruc- • In terms of our proprietary position, 70% cashuaman which was contracted by ture Agency (ANI), so as to define a partici- of our commission income was obtained the Regional Government of Ayacucho. 100 ANNUAL ANNUAL 101 MANAGEMENT REPORT MANAGEMENT REPORT Corporate Banking

Through a comprehensive integrated by means of which they may exchange files with • We doubled the amount of clients holding our portfolio, we made efforts to Bancolombia for paying installments, reporting Integrated Business Collection product (web manage our relationships with our incidents or taking out new loans this through the service) which facilitates the automation of cli- corporate clients so as to fulfill their BPO firm, Enlace Operativo. So far 1,585 compa- ent cash management in real time. nies have signed up. goals and help them during the most • We also extended Cross Border Leasing ar- important moments of their projects. We extended this product to our international rangements to the SME segment, facilitat- leasing clients in Colombia, particularly those ing the purchase of assets manufactured belonging to our Consumer SME segments, abroad. Colombia through which they may choose the solution that best suits their needs for purchasing assets man- We launched a call service for new home buyers, al- ufactured abroad. El Salvador lowing construction companies to close deals with a far greater certainty because they can immedi- We encouraged investing in efficient and en- Here we developed new customized services ately check the feasibility of lending to buyers. vironmentally-friendly technologies through such as automating international transfers, our environmental lines of credit such as the beefing up our interbank payment system as We also launched the 'Tidis Bancolombia' line of Green Line, having disbursed more than more well as introducing new pre-approved supplier credit, which takes assigned rights on future tax than COP 12 thousand million over the last payment options on our Corporate e-Banking refunds as a source of payment. To date we have quarter of 2014 alone. Similarly, with regard platform, allowing us to eliminate manual disbursed loans totaling COP 24 thousand million. to the Bancoldex rediscount lines we provided processes and obtain a 21% increase in the funding worth COP 9.131 million for hybrid amounts traded electronically by clients who We were the first bank to perform a standardized transport and sustainable development. have signed up for this service. derivative operation, with a third party through Give Up arrangements. This allowed our institu- We continue to support our clients with their tional clients to close futures on Colombian Trea- international operations through our Import Guatemala suries (TES), specific references and a notional Factoring product, where we share prompt Here we developed new products and services, bond with the bank, and also transfer these posi- payment discounts with the importer. We such as Bamprovee, Visa Payment Controls tions to the client´s Clearing House (another fi- also resumed our discounted letters of credit and customized applications for the VIP seg- nancial institution). Since this first operation, we business. ment, so as to be able to better cater to the have closed 3,170 contracts for a nominal traded needs of our clients. value of COP 889,979 million. We also developed innovative ideas and improve- ments with regard to our Cash Management We also performed Swaps on the UVR-IBR curve range of products and services: Puerto Rico to help our institutional clients, who by their very nature have CPI-indexed portfolios, in hedging Checking and money market accounts were their risks for a more enhanced risk manage- • We created a collection file converter for a set up for transferring funds from all our de- ment. In this way, we were able to estimate long- quicker, more streamlined reconciliation of our mand deposit accounts to any beneficiary. term inflation more precisely as well as enhance clients´ accounts, this by means of flat files. Previously we only attended our clients with the hedging of our UVR-indexed loans. savings accounts in this regard. Here we • We increased the frequency of the distribu- managed to open underlying accounts with We created a new form of self-management for tion process of new collection agreements at balances of between USD 70 million and companies holding our payroll lending product, branch office level. USD 520 million. 4 Contributing to overall economic growth

LOLAS’S FLY

By: Fernando Borda. Barranquilla. Illustration by: Alex Sarmiento.

A unique smile can be seen in her face. It is noon One day she started her day with an order of one now and there it goes Lola making way through hundred “lolitas” and a life project. She decided bottlenecked cars, in the middle of a strong storm to travel to Bogota and try her luck; but starting a falling of a sudden in Bogota. The rain is dense and company in Colombia is an act of faith. She was profuse but she remains harmless and totally dry. in need of a better package and a solid financial scheme. “Having that, and adding my strength as Determined and free she walks along the city; a woman born in Cartagena, I think is enough to one could swear that Lola has forgotten that she start flying by myself,” she said. Ivan, a very special is made of flesh and bones since she is seen flying officer, welcomed her cordially and told her that through the air. She woke up that morning with her the Foundation had chosen her “lolitas” for the hope on edge, but she hardly noticed that on the project “Growing with my Business.” Now, she was mirror; she made a face and then her customary going to be advised by a team with experience in skepticism arose; the defense mechanism of the administrative, financial, and marketing issues. perfect cancer she pretended to be: The banks Lola fixed her gaze on him totally involved in a lend people umbrellas when it is sunny and take clinical silence. them back when a storm falls, she unknowingly murmured reinventing the famous quotation of Narrating calmly all the events that would result Mark Twain. Her mother, a Caribbean tanned from this could be difficult. A quality of happiness woman who exhibited an ancient sorrow, listened is how fast events occur. With the vertiginous to her with concern: Pessimism can be weighed outburst of the person who recognizes her future, my daughter, she said with a voice of someone she stood up, hugged Ivan, and ran towards the who has known the other side of the things; stop door. This was something she needed to tell her carrying it or it will not let you fly. I totally trust in mother. “Happiness is a contagious emotion and that process. my old mother had not felt happy for a very long time,” she thought. When she reached the door “I can see clearly the elements of your star sign, she was stopped by the rain she had dismissed mom,” Lola said to her mother while watching the that morning. She did not care. She had already weather through the window. A gray block charged advanced one step when she was stopped by with water had huddled in the sky but Lola was someone’s cry. It was Ivan. He was running towards totally convinced of the city climate bipolarity so her along the lobby holding a strange object. she put on a thin jacket. “When we have a cold When Ivan met her, he pushed a button and all of morning, a suffocating hot weather is expected a sudden an incomprehensible framework opened at noon. Gemini is the star sign of Bogota,” she and covered her. Still in shock, she received the affirmed. Squeezed in the bus, she focused on object in her hands, looked upwards and written in planning her business: “Lolitas,” coconut cookies colors of illusion she could recognize a word fixed Quality of life she initially cooked for her school friends and then on that unexpected blue circumference around it: Entrepreneurship for her neighbors and the entire neighborhood. Bancolombia. We give hundreds of families the opportunity to build a society with better employment opportunities for all. 104 ANNUAL ANNUAL 105 MANAGEMENT REPORT MANAGEMENT REPORT

suppliers, customers, the Government and the Out of the total amount of economic value gener- have worked hard to include this group in our overall public at large; as well as our retained economic ated, 64.0% was distributed amongst our stake- plans with regard to our distributed economic value. Contributing to value, or the portion of the economic value pro- holders and the remaining 36.0% was retained to Consequently, the Group as a whole donated a total duced and used to strengthen the organization. strengthen the organization. The total amount of of COP 14.7 thousand million for social projects of overall economic distributed value came to COP 6.12 billion, with a which COP 11 thousand million corresponded to the In 2014, the Bancolombia Group provided a to- year-on-year growth of 15.9%. The group to which actual bank. We also provided the Government with growth tal value of COP 9.57 billion, representing an an- the greatest value was distributed consisted of sup- a total of COP 1.12 billion in the form of taxes, used nual increase of 21.4% over the previous year, pliers who received 36.7%, or COP 2.24 billion of in turn for social, educational and cultural programs, this mainly due to higher net income from our the total in the form of payment for their services reaffirming our purpose as a more Humanistic Bank The economic results obtained by the Bancolom- services and products, including our loan port- and products, namely insurance, transport, fees, and improving social well-being so as to be able to bia Group in 2014 helped to create added value folio, investments and leasing contracts, worth maintenance and repairs this as a fundamental build a better country. amongst our different stakeholder groups, there- COP 6.52 billion, which represented 68.2% of part of the proper functioning of our Organization. by strengthening our relationships with both these the total value obtained and an annual growth Out of the total economic value generated, the and the general public as well as helping to drive of 24.3%. Net commissions also contributed We also distributed 31.8% of our total economic Group retained 36.0%, or COP 3.5 billion, of which the overall economy. Based on the Global Report- the value generated in the amount of COP 2.30 value to 30,158 employees for a value of COP 1.94 47.7% was allocated to provisions for preserving ing Initiative (GRI)1 methodology we calculated billion, this corresponding to 24.1% of the total billion through salaries, wages, benefits and bonus- the quality of our balance sheet (COP 1.65 billion); the economic value we produced, that is to say value generated for which a year-on-year growth es, with an annual growth of 17.0%. Additionally, along with COP 723 thousand million (20.9%) for net operating revenues; our distributed economic of 13.3% was obtained. we provided other benefits to this group, such as replacing and maintaining our productive capacity. value, or payments to employees, shareholders, loans with preferential rates and incentives to en- The remaining COP 1.08 billion (31.3%) was allo- gage in cultural, sporting and social activities that cated to our reserves, with the aim of funding the are held throughout the year. Organization´s ongoing growth plans as well as for complying with additional and amended regulatory Economic Value Generated, Distributed and Retained 2013-2014 Bancolombia, at year end had a total of 60,423 requirements. shareholders, having increased by 243% due to new Economic Value 2014 2013 YoY Growth shares issued in March 2014. This group received The Bancolombia Group upholds guidelines for COP 798 thousand million in the form of dividends, transforming its banking business, making it in- Value Generated 9,57 7,88 21,4% that is to say 13.0% of the total amount thus dis- creasingly more human and more approachable by Brokerage margin 6,52 5,25 24,3% tributed. The percentage of profits distributed in means of financial education programs, innovative Net commissions 2,30 2,03 13,3% 2014 corresponds to the dividends approved by new products and services for the public at large Other ordinary income* 0,72 0,59 22,0% the Board of Directors, that is to say COP 830 per so as to reach the remoter corners of the country share, after the year´s profits had been determined, that up till now have never had any contact whatso- Insurance revenues 0,02 0,01 126,8% this subject to the approval of the Group´s General ever with a bank. Also by means of high-impact so- Value Distributed 6,12 5,28 15,9% Assembly of Shareholders. cial development programs, the Bank is helping to Suppliers 2,24 1,95 14,8% build a better quality of human capital. In this way, Employees 1,94 1,66 17,0% Another group of stakeholders in which the Banco- we have become vital partners in helping society to The State 1,12 0,89 26,1% lombia has a vital interest is the community. Here, we fulfill its dreams. Shareholders 0,80 0,75 7,0% The public 0,01 0,01 27,6% Distributed Economic Value 2014-2013 Minority shareholders (0,00) 0,02 -100,7% 36,04% 27,21% Value Retained 3,45 2,60 32,5% Economic retained value Economic retained value Provisions, depreciation and amortization 2,37 1,84 29,1% 23,45% 20,42% Suppliers Suppliers 1,08 0,77 40,5% 20,32% 17,37% Employees Employees *Amounts expressed in billion Colombian pesos, consistent with the consolidated financial statements as of December 31st, 2014. 11,70% 9,27% *Including net operational income other than commissions and interest, net non-operational income, and exchange difference. Public Administration Public Administration 8,34% 7,80% Shareholders Shareholders 1 The Global Reporting Initiative (GRI) is a Non-Government Organization created in 1997 by the Coalition for Environmentally Responsible 0,15% 0,18% Economies (CERES) and the United Nations Environment Programme (UNEP), which promotes and develops a standardized reporting Society Minority Shareholders approach for companies and organizations alike. The GRI has established principles and indicators that organizations can use to measure and disclose their economic, environmental and social performance. This methodology has been used by the Bancolombia Group since 2008 -0,001% 0,12% in drawing up both its Annual Management and Corporate Responsibility Reports. Minority Shareholders Society 5 Commitment to our investors

THE GARDEN OF OPIUM POPPIES

By: Luis Alberto Mallarino Beleño. Cartagena. Illustration by: Alex Sarmiento.

The drawing teacher had a poppy garden just next strange thing here was that we had never painted to the classroom. It was a garden full of light and butterflies in class before. scents, butterflies, and insects. Flowers were sowed so untidily that one could have the impression that We really had painted gardens, dragonflies, water soil was uncombed. The teacher did not like to trim springs, brooks, landscapes, all kind of flowers: the garden and did not like the lovers to cut his gladiolus, cloves, heliotropes, wallflowers, willows, flowers that were inevitably going to die squashed eucalypts; but we never drew butterflies, and not in the notebooks of the blushed girls, just next to those beautiful butterflies. When we wanted to run the notes on the perfect-square trinomial or the away from the trunk, it was too late; the teacher Colombia fluvial map. caught us red-handed but he said nothing at all. María Alexandra affirmed that the teacher took He only said that our task that day was to make a much more care to flowers than to his students and free drawing (he always said that every time he was I think she was right. If someone damaged a flower feeling sad). Just by the year end, two days before during the recess, punishment involved drawing a the field outing, the teacher confessed everything. new intact flower full of gloss and light. If a lover was He told us that when the school was left alone he surprised pulling a flower up, he/she was required used to plant in the sand the flowers drawn by lovers to sit and draw an intact flower without protesting. and criminals and he waited for a butterfly to lay on the paper and make it turn into a real flower again. If someone did not take with him/her necessary The butterfly then turned into paper as a sacrifice for supplies to be used in his drawing class, his/her the flower’s life. punishment involved watering the flowers and pick dry leaves and petals. They were required to clean He also explained that he would eventually free the garden during two hours, while their classmates the paper butterflies from a balcony and most of were in the classroom painting their noses and them came back to life before falling on the floor. foreheads with paints and laughing at the horrible Remaining paper butterflies had to wait for the rain drawings of the less talented peers. The drawing to be reborn; that clouds were magical brushes. teacher also had a locked secret trunk totally full That day we could understand why our teacher, year with mystery. One day, knowing that his trunk after year during our field outings, left in the forest was unattended, we opened it and we could see (scattered everywhere) drawings of willows, oaks, Environmental Responsibility it was full of butterflies (drawings of butterflies), so brooks, and eucalypts, and will spend the next days Protection of natural reserves well painted that their wings seemed to move. The waiting for news about the rain. We support protection of our reserves because we want to preserve a healthy and clean environment for future generations. 108 ANNUAL ANNUAL 109 MANAGEMENT REPORT MANAGEMENT REPORT

Bancolombia is monitored by 15 international and Finally, the Colombian Stock Exchange issued us This level of efficiency compares favorably to oth- 5 local broker-dealer firms, who constantly gauge with its IR award, for our best practices in the field er banks within our sector, with Bancolombia (the Commitment to the Bank's performance and make recommenda- of Investor Relations, information reporting to in- bank) now ranked in sixth place in terms of financial tions to their own clients and investors regarding vestors and the market in general, as well as Cor- efficiency in Colombia for 2014, compared to eighth our investors Bancolombia’s shares, its ADRs issued abroad as porate Governance. place in 2013. well as its different issues of bonds. In keeping with our strategy of getting closer to our stakeholders, we maintained constant inter- These initiatives help Bancolombia to access the action with our investors and shareholders, in the capital markets on a recurring basis, since it is a Efficiency and Revenue form of more than 500 meetings held in order to well-known issuer. present our latest results and answer queries from our shareholders. The Bank has a dedicated Shareholder Office, Profitability optimization which is a specialized help center responsible for We strive on a daily basis on a variety of fronts Identifying opportunities to capitalize on our in- Our aim with these meetings is to present the addressing their concerns. We have also laid on an to improve our efficiency and profitability, provid- come in the short and medium term, is a prior- more relevant aspects of our organizational per- exclusive Help Line where shareholders can ring ing structural solutions that generate economic ity for us. Hence, the Organization now has areas formance to both shareholders and bondholders up and talk to someone who can take care of any and social value to both the Organization and our responsible for coordinating the handling of rates alike, ensuring that the public can openly ask problem they may have. This is providing excellent stakeholders, thus allowing us to optimize our re- and fees so as to encourage a pricing culture that about the issues that matter most to them and added value as well as being a sign of respect for sources, reduce operating costs and obtain higher sets us apart from the rest of the market. informing them of our strategy going forward. our shareholders. revenues. Looking ahead, we shall be gauging and obtaining In 2014, we channeled and cleared up concerns We also stage quarterly teleconferences at which Our financial efficiency indicator underwent sig- much more information on how sensitive our cli- on the part of shareholders with regard to divi- the Bank reports its recent results. Here our share- nificant improvements during the year, having ents are to prices, and shall be effectively handling dend payments, exchanging old stock certificates holders can connect up via Internet for an on-line risen 3 percentage points on a year-on-year ba- such information so as to provide added value for for new ones, shareholder rights and issues of presentation of the Bank´s financial figures for the sis. The results we have achieved so far are largely both our Organization and our clients. shares, etc. most recent quarter. In this way, the Bank is able to permanently report on the latest business trends, due to our operating expenses rising at a slower the manner in which the strategy is being deployed pace than our operating income as a result of the Furthermore, at year-end 2014, the net commis- and how Senior Management envisions the future. various initiatives that we have put into place for a sion to operating expense ratio came to 47.3% A final Q&A session is held to clear up any queries. more efficient use of resources within the entire compared to 46.8% at the end of the previous More than Organization, including a corporate budget that is year, achieving a much more enhanced diversifica- We also have a good working relationship with our well-aligned with our strategy and financial plan- tion of our revenue base. capital markets with issuing bonds and shares ning, allocating loans below the requested levels, both at home and abroad. improvements with our supply chain having re- In millions of Colombian 2014 2013 viewed our major contracts, our revenue optimi- pesos Net commissions 2.299.962 2.023.279 The relationship we have built up with the Co- zation program and the improvements made to Operating Expense 4.859.129 4.327.213 47,3% 46,8% lombian pension funds that invest in our securi- "across-the-board" processes with the help of our ties has been very fruitful for both parties. While interdisciplinary teams, among others. these pension funds have seen a growth in their 12 Our performance indicator went hand in hand with investments, the Organization on the other hand has obtained funds from share and bond issues a more optimal control over costs and expense, in to secure its future growth. At year-end 2014, keeping with the bank´s corporate vision. We also Bancolombia's bonds accounted for 10.4% of the obtained significant reductions with regard to ac- Bancolombia million Colombian Bank's liabilities while its equity shares and bonds count statements with 41% of these now provided (the bank) now private pension fund represented 20.5% of the Bank's assets. on -line, corresponding to 3,725,000 accounts. We ranked in members are the also controlled the growth of our headcount, intro- duced a new model for packaging and sending out 6 More than 12 million Colombian private pension ultimate beneficiaries cards, made adjustments to current supplier con- of Bancolombia´s fund members are the ultimate beneficiaries of Bancolombia´s combined growth, strength and profit- tracts and implemented a channel strategy whereby combined growth, ability, which is one more reason for stating that if the we encouraged our clients to perform their transac- place in terms of financial strength and profitability. bank does well, so does the country and its people. tions on-line at a much lower cost. efficiency in Colombia for 2014 110 ANNUAL ANNUAL 111 MANAGEMENT REPORT MANAGEMENT REPORT

the companies listed with the securities market. bia Group´s ongoing sustainability strategy and its One of the aspects introduced by the Country Code The result was the new regulations contained in Humanistic Banking approach. Likewise, we incor- and which was submitted for the consideration of A Corporate Circular 28 issued September 30 by Colombian porated measures relating to institutional contribu- our shareholders had to do with our remuneration Superintendency of Finance, which is better tions and sponsorships thus confirming our commit- transparency policies. Governance known as the Country Code. ment to help with programs and activities having an economic, social, environmental or cultural impact In terms of employee remuneration, we have a va- honing in on the Here, Bancolombia has taken an active part in the on local communities, provided these are in keep- riable compensation model in place that rewards various forums that have taken place with regard ing with the Group´s sustainability strategy and the a more comprehensive view of the business, along to reforming our Country Code and we are firmly guidelines for projecting its institutional image. with teamwork and securing a profitable, efficient essential committed to implementing these new standards and sustainable growth based on the people factor. in the coming months, for the benefit of our We also brought forward the annual Code of Eth- Our model, called the VAS - Value Added System Under the leadership of our Corporate Gover- shareholders and investors alike. Similarly, we ics evaluation for all the Group´s employees, with provides a remuneration based on creating added nance Board Committee, the Bancolombia Group attended the Latin American Corporate Governance an average score of more than 95% for the total value, according to the results obtained at Group le- continued to strengthen its standards of good gov- Round Table, organized by the OECD in conjunction headcount. It should be noted that in 2015, we shall vel as well as the degree with which our strategic ernance. The most important of our achievements with the Colombian Superintendency of Finance be bolstering our ethics model so as to present our goals are fulfilled. This model covers the following was undoubtedly the Board of Directors that was and the Colombian Stock Exchange, whose main stakeholders with our anti-corruption policies that attributes and policies: appointed by our Shareholders, made up mostly purpose was to provide an opportunity to discuss apply to each and every one of our employees. of independent members. Out of a total of seven and review the principles of corporate governance • Since remuneration is based on creating added members of the Parent Company’s Board of Direc- as well as design the corresponding policies for value, there is no possibility of performance tors, four enjoy an independent status and none of different Latin American countries. This meeting bonuses being paid should the Organization's them are members of Senior Management. also helped to enrich our outlook and proactively Code of Ethics Evaluation Results Per Country results in terms of profits exceed the value of prepare for implementing these best practices. the cost of capital. Similarly, we updated our Code of Good Gover- 100% 96% • The model measures the fulfillment of the goals nance with the aim of having more independent We have been working as part of an agreement Puerto Rico Colombia relating to our strategic planning, which must members on both the Board and its various Board signed in 2012 with the Swiss Government be aligned with the strategic focus defined by Committees. through the State Secretariat for Economic Affairs the Board of Directors. of the Swiss Confederation, the consultancy firm 99% Likewise, we beefed up our regional performance Seco, as well as Confecámaras, in implementing El Salvador • Long-term results are encouraged, thus avoi- model, celebrating our first every plenary meet- corporate governance practices for Colombian ding incentives for short-term results. ing attended by the Bank's Chief Executive Of- SMEs. In 2014, we worked with Seco to develop a 100% • A maximum remuneration has been set, this ficer, Senior Executive Officers and members of methodology for identifying qualitative corporate Panamá corresponding to six salaries per year in the Boards of Directors of the Bancolombia Group´ governance standards as applicable to our SME form of a bonus. subsidiaries both in Colombia and abroad, as well clients when granting loans. Based on the results 100% • A percentage of this remuneration is deposi- as BAM Guatemala. Here we discussed issues re- obtained, we were able to bolster certain variables Perú ted in the VAS´s Institutional Voluntary Pension garding our strategy, risk management, business within the internal rating models for our loan Fund, which consists of shares in Bancolom- and audit plans, service model and human talent portfolio and in 2015 we hope to implement this bia. Based on the rules and regulations of this management, among other key aspects of our model for a specific group of SME clients, in order Code of Ethics Evaluation Results for the Group Fund, an employee may only withdraw his or commitment to achieving our corporate objec- to show that best corporate governance practices, (Foreign-based subsidiaries, Bancolombia S.A. Local Subsidiaries) her contributions after a minimum term of tives. This event allowed us to share our thoughts as adopted by these help to reduce risk and obtain three years has elapsed. The philosophy behind on our Humanistic Banking approach, which is a better lending conditions and rates. 99% all of this is for employees to feel they "own" the different style of doing business, paying as much International Organization and hence are all the more com- attention to our results as to the way in which we As far as our Code of Ethics is concerned, we ex- Branch 96% mitted to obtaining sustainable results. obtain these. tended this to formally include our commitment Bancolombia S.A to honoring and complying with human rights, Coverage: employees of the Bancolombia Group, The Colombian Government, under the leadership particularly as enshrined in the Universal Decla- in analyst positions or higher. This also applies to of the Superintendency of Finance and based on ration of Human Rights, the principles endorsed senior officers without discrimination. the recommendations made by Organization for by the Global Compact, the Equator Principles, Economic Cooperation and Development (OECD) the Responsible Investment Principles, as well As for the remuneration paid to members of the undertook the task of updating the country´s as the regulations upheld in each country where 99% Board of Directors, this is set by the Shareholders, corporate governance standards as applicable to we are present, this as a basis for the Bancolom- National Branch based on the following principles: 112 ANNUAL ANNUAL 113 MANAGEMENT REPORT MANAGEMENT REPORT

• The members of the Board, upon accepting their appointments, place at the service of the Banco- For 2015, we are estimating COP 1,100 million lombia Group and its shareholders their knowledge, in director fees. Individual shareholders with stakes % held in % held in % held of experience, track record, multidisciplinary approach, equal to or greater than 1% ordinary preferred Total business vision and personal and professional reputa- Other important information with regard to our shares shares tion. Consequently, their remuneration must adequa- Corporate Governance is shown as follows: tely address the contribution that the Organization expects of them.

• The remuneration paid to members of the Board sha- Bancolombia´s ownership structure ll be based on their length of service and more spe- Grupo de Inversiones Suramericana S.A. 45.48% 4.96% 26.43% cifically the personal and professional responsibilities The shareholding structure of Bancolombia, the Bancolombia Fund´s ADR Program 0.00% 44.54% 20.94% they must assume on a legal level, upon accepting parent company of the Bancolombia Group at their appointments. These shall include those inhe- Porvenir Mandatory Pension Fund - Moderate Risk 10.36% 6.55% 8.57% December 2014 was as follows: rent to managing a Colombian financial institution, which is also listed on the United States markets, as Protección Mandatory Pension Fund - Moderate Risk 4.06% 10.69% 7.18% Note 26 of the financial statements shows details of well as the nature of a parent company of a financial Bancolombia´s authorized and subscribed capital. Colfondos Mandatory Pension Fund - Moderate Risk 2.75% 2.48% 2.62% group with international presence. Emmery Equity Corporation 4.78% 0.00% 2.54% • Members of the Board of Directors shall receive a remu- Other items of interest: neration for their services, this based on the following: - Bancolombia is expressly prohibited by current legis- Lorange Industrial Corporation 4.04% 0.00% 2.14% lation to repurchase its own shares. o A monthly fixed fee, the value of which shall be de- Cementos Argos S.A. 4.01% 0.00% 2.12% termined by the Shareholders. - Bancolombia, according to its corporate governance principles, maintains commercial and business rela- Fondo Bursatil Ishares Colcap 0.00% 2.91% 1.37% o A fee defined by the Board for each board commit- tions with major shareholders who in turn are clients tee meeting attended. Grupo Argos S.A. 2.49% 0.00% 1.32% or allies. Such relationships are part of an interest • Members of the Board of Directors shall not receive, each party has in obtaining the best possible condi- either as part of their remuneration or in exchange for tions for their own business. Therefore, any business their services, shares either in the Bank or any of its relationship with shareholders takes into account the Información a 31 de diciembre de 2014 subsidiaries. value created and the financial implications of such • The Chairman of the Board, should the Shareholders for the Bancolombia Group in addition to any other legal provisions. so decide, may receive a higher fee than the other With regard to stock trades performed by senior - Note 30 to the financial statements, as presented to Shares owned by Senior Management members of the Board, taking into account the skills management, Bancolombia is fully compliant with and responsibilities that this position entails, and the our shareholders, contains a breakdown of all tran- None of the members of Bank´s Board of Directors a government regulation that stipulates conditions greater amount of time that must be dedicated to his sactions performed with related parties. holds, either directly or through companies where of mandatory compliance on the part of members or her activities. - Bancolombia is unaware of any agreement made they appear as majority shareholders, shares in of the Board and senior officers, including a ban on between shareholders with regard to their shares, Bancolombia and therefore no voting rights have transactions performed for speculative purposes. Bancolombia pays the following non-salary costs: rights, the bank´s overall management or any other been conferred that could affect the decisions All such stock trades shall require prior approval - Costs and expense that are necessary for the mem- related issues. Other information concerning busi- taken The voting rights in the possession of all from the Board. bers of the Board to adequately perform their func- ness or family relations between shareholders has not members of the Board of Directors are equal to tions, including travel, accommodation, overland been made known to Bancolombia. 0.000058% of the total voting rights. The Bank´s With regard to this policy, in 2014: transport, technological supplies and the sending of shares as held by members of the Board of Direc- information. The following table contains the names of share- tors at year-end 2014, are broken down as follows: - The Board of Directors was not requested to authori- David Bojanini, 10 ordinary shares; Gonzalo Perez, ze any director or senior officer to buy or sell shares - Costs and expenses relating to training courses, tech- holders with stakes of more than 1% in Banco- 10 ordinary shares; Ricardo Sierra, 264 ordinary in the Bank. nological updates and hiring any outside consultants lombia's share capital, this information is peri- shares; Roberto Steinter, 1,338 preferred shares; as required by the Board of Directors. odically recorded through the SIMEV (Integrated - The Board gave its authorization for some of its top Stock Exchange Information System) and is made and Rafael Martinez, 11 ordinary shares. Messrs. executives to negotiate shares in the Bank. Said au- José Alberto Vélez and Hernando Jose Gomez do - Payment of an insurance policy covering members of available to the public on the Colombian Superin- thorizations overwhelmingly were for funds to be not hold shares in Colombia. the Board and senior management. tendency of Finance's portal: withdrawn from the VAS Fund, through which the 114 ANNUAL ANNUAL 115 MANAGEMENT REPORT MANAGEMENT REPORT

Bancolombia Group's variable compensation mo- information were prohibited from acquiring shares. law must be authorized by the Board. Board Committees: del is handled for all its employees, with said fund Under these same principles, the members of the In each case, all loans were approved holding shares in the Bank. All authorizations pro- Board abstained from investing in this issue. after verifying compliance with debt Our Corporate Governance and Audit Committee vided to senior executives in this regard were duly limits and risk concentration factors reports as presented to the General Assembly of disclosed to the public in accordance with current and these were unanimously approved Shareholders provided detailed information regarding reporting regulations and none exceeded the sum by all Board members (a total of 27 the activities performed by these committees in of COP 100 million. Bancolombia's Board of Directors such loans). 2014. - David Bojanini Garcia, Chairman of Finally, with regard to the shares issued by the The Board of Directors of Bancolombia SA is the Board, taking into account the For its part, the Risk Committee continued to provide Bank in 2014, the Board requested senior man- comprised of the following members, who were public announcements made by Grupo its support to the Board in the form of monitoring agement to announce that, in keeping with the appointed in 2014 by the General Assembly of Suramericana de Inversiones regard- and controlling policies, guidelines and strategies for Organization´s good corporate governance princi- Shareholders: ing its intention to purchase shares is- the administration and management of the risks to ples, certain senior officers with access to strategic sued in March 2014, abstained from which Bancolombia s exposed, and understanding any involvement in setting the price of the risks assumed by the Group in general, its risk these shares. appetite and the capital required to address such. - The Board of Directors performed Independent / Date of first Attendance The Appointment, Compensation and Development Name monthly follow-ups on treasury opera- Committee ensured that the Group´s employee re- Not independent appointment tions carried out with the Group´s re- muneration, compensation and development mod- lated parties, as legally defined for the els were properly deployed in order to ensure that purpose of monitoring market risk. we attract and recruit the talent we need for our Bojanini David Garcia - Chairman of the Board Not independent 2007 100% (*) - The professional profiles of the mem- humanistic banking approach. José Alberto Vélez Cadavid Not independent 1996 100% bers of the Board have been made Not independent 2004 93,33% Gonzalo Alberto Pérez Rojas available on the Bancolombia Group´s * Further information regarding our Board committees 2004 86,66% Ricardo Sierra Moreno Independent website. can be found on our website Rafael Martínez Villegas Independent 2010 93,33% Hernando José Gómez Restrepo Independent 2013 100% Independent 2014 100% Roberto Steiner Sampedro of the meetings held after their appointment. (*) Abstained from participating in the extraordinary board meeting where the price of the shares issued in 2014 was set. Board Committees and attendance rate 2014

Risk Committee Corporate Governance Employee Remuneration Other items of interest: and operating risk policies. This has been Audit Committee duly disclosed in the risk management re- Committee and Benefits Committee port presented to the General Assembly of - None of the members of the Board of Di- Shareholders. rectors of Bancolombia, the parent compa- Hernando José Gomez (Chairman) Roberto Steiner (Chairman) José Alberto Vélez Cadavid José Alberto Vélez Cadavid ny of the Bancolombia Group, is a member - As stated in our Code of Corporate Gover- of any of its subsidiaries or holds an execu- nance, the independent members of the 100% 100% 100% 100% tive position in those companies. Board that serve on the Audit Committee met privately at least once during 2014, - None of the members of the Board of Di- Rafael Martínez Villegas Hernando José Gómez Rafael Martínez Villegas Ricardo Sierra Moreno without either the Bank´s senior manage- rectors of Bancolombia, is employed by the ment, or its statutory or internal auditing bank. 100% 100% 100% 100% staff being present. - In 2014 and pursuant to that stipulat- - The members of the Board abstained from Ricardo Sierra Moreno David Bojanini García Carlos Raúl Yepes Jiménez David Bojanini García ed in current legislation and the Bank´s participating in any discussion and/or deci- own by-laws, the Board provided strate- sion regarding loans issued to themselves, 92.30% 100% 100% gic and financial guidelines and approved their relatives or related parties, which by the Company´s credit, market, liquidity 116 ANNUAL ANNUAL 117 MANAGEMENT REPORT MANAGEMENT REPORT

– Appointing Our Board of Directors The Bank´s General Assembly of Shareholders, to handling a financial group, its strategic focus among others. We also disclosed how this Share- in recent years, has ordered a set remuneration and the bank´s risk appetite and risk management holders´ Meeting progressed and the decisions When the General Assembly of Shareholders appoint- for each member. There is no variable remunera- function. The purpose of this was to balance out taken minute-by-minute on our website. ed new members to our Board of Directors in 2014, tion model in the case of our Board of Directors. the interests of different stakeholder groups and the procedure for such, as stipulated in the Bank´s In 2014, the amount paid to board members for create added value for shareholders, depositors, in- Other items of interest: Code of Good Governance, was duly complied with. their work on both the Board and the various Board vestors, regulators and the market in general. - Shareholder attendance was good, as was their re- Committees, totaled COP 854 million sponse to the call for this meeting. The Shareholders´ Senior Management proposed a list of candidates – Transactions with related parties Meeting held in 2014 recorded an attendance rate cor- for the new Board of Directors, that included in- –- Chairman and Secretary of the Board of Directors responding to 90.79% of the Bank´s ordinary shares. formation showing that each of these prospective Note 30 to the financial statements contains a - Notice of this Annual Meeting was published 25 calen- members offered the necessary academic and pro- The Chairman of the Bank´s Board of Directors is breakdown of the transactions performed between dar days beforehand. fessional experience, as contained in our Code of David Bojanini Garcia who is responsible, togeth- the Bank and its related parties. In performing - No other proposals nor miscellaneous matters were Good Governance, as well as the specific skills and er with the Bank´s Chief Executive Officer or the such operations, all legal requirements were duly submitted for the consideration of the Shareholders. knowledge of our industry, financial risks and is- Board´s Secretary, for preparing the yearly schedule complied with, and, wherever necessary, were spe- Shareholder participation at said meeting mainly cor- sues together with legal and business matters, etc. of board meetings and issuing the necessary guide- cifically authorized by the Board of Directors. The responded to motions of congratulations or different This proposal, as soon as it became known to the lines for conducting these, ensuring that adequate Audit Committee periodically conducted follow-ups observations that were of general interest to all. bank, was presented for the consideration of all information is provided to the Board on a timely ba- on these transactions. - At this Annual Shareholders´ Meeting the following doc- shareholders on our website. sis, guiding discussions with the purpose of allowing uments and proposals were approved: Consideration all members of the board to have their say, as well and approval of the audited financial statements and We also checked to ensure that no incompatibili- as deciding on how important specific board discus- - Risk management system Management Report, proposed distribution of profits, ties and disqualifications, criminal or administra- sions are and where they are ultimately leading to. appointing a new Board of Directors, appropriation tive sanctions existed with these candidates, and in Likewise, the Chairman is also in charge of interact- The Bancolombia Group's risk management report proposals and setting the fees for the members of the the case of the prospective independent members, ing with the different members of the Board as well is attached to the Annual Management Report sub- Board, appointing a Statutory Auditing firm for the pe- we evaluated due compliance with all standards, as as between the Board and Shareholders. mitted for the consideration of its Shareholders. riod 2014 - 2016, appropriation proposals and setting established by the Colombian authorities and the the fees for the Statutory Auditing firm and a proposal SEC, together with certification attesting to the in- The Secretary of the Board, as set out in the Bank's - Understanding the Group´s Internal Control Sys- for freely-disposable funds dependent character of such candidates in terms by-laws, is Mauricio Rosillo Rojas, who serves as tem (ICS) and the changes made to such in 2014 of being Colombian institutional investors. This en- Bancolombia´s Chief Legal Officer and Company tire evaluation process was duly documented and Secretary and was appointed to this post by the Our Annual Report contains a comprehensive and Shareholder Assistance made available to shareholders via our website as Board. The Company Secretary´s functions include independent report on our internal control system well as to Colombian pension fund management providing support to the Chairman in calling for for the year 2014 this including our management Bancolombia made available to its shareholders and firms, particularly for the purposes of ensuring full Board meetings, ensuring that the information re- report, the opinions of both our statutory auditing investors its corporate website in both Spanish and compliance with all corresponding legal provisions. quired prior to each Board meeting is opportunely firm and internal auditors as well as a breakdown of English. This important channel provides ready ac- provided, along with any other information that the activities performed by the Bank´s Audit Com- cess to information regarding the Group, its governing It is important to note that the new appointments may be required or relevant so that all members of mittee. This report was subsequently approved by bodies, main products and services, organizational received votes in favor corresponding to 88.35% of the Board are properly informed and may make the the Audit Committee and the Board of Directors. structure, financial information and all those docu- the Bank´s total ordinary shares. respective decisions, keeping Board meeting min- ments relative to its codes of corporate governance ute books, as required by law, thereby ensuring that - Shareholders´ Meeting 2014 and ethics, as well as the mechanisms through which Also, since Bancolombia is a financial institution, all they faithfully comply with all policies and guide- stakeholders can contact the Board of Directors and board members when appointed have to be exam- lines contained in the Bank´s by-laws and its Code The Annual Meeting of Bancolombia´s General senior management of each company. To visit this ined by the Colombian Superintendency of Finance of Good Governance with regard to the Board´s on- Assembly of Shareholders, as held in 2014, was page, please click on the following link: http://www. to ensure that they are suitable for their posts. In going performance. conducted in accordance with that stipulated in grupobancolombia.com/home/_index.asp this case said oversight authority authorized these all applicable legislation, by-laws, regulations, and new members of the board to take office. – External advice received by the Board the Corporate Governance standards, as adopted We received the IR award from the Colombian Stock After Nestor Advisors, a leading UK firm providing by the Bank; the most salient of which was the re- Exchange for our website, in recognition of the Bank´s – -Board of Directors´ Remuneration Policy consultancy services for financial institutions, pro- quired prior disclosure on the Bank´s website, of all commitment to its investors, in adopting and imple- The remuneration of our Board of Directors is de- vided specialized training to both the Board and proposals submitted for the consideration of our menting best investor relations practices. cided by the Shareholders, this being one of their Senior Management, in 2014 adjustments were shareholders such as financial statements, the pro- indelegable functions. made to the methodology used at Board meetings jected distribution of profits as well as appointing a This comes in addition to the Bank´s ability to in- so as to continue to strengthen its role with regard new Board of Directors and statutory auditing firm, teract with its investors through its Investor Rela- 118 ANNUAL ANNUAL 119 MANAGEMENT REPORT MANAGEMENT REPORT

Dow Jones Global Sustainability and Emerging Markets Indices

DJSI 2.500 319 192 25 World Companies Companies Banks World Index Scope Banks USD 20.443 Bll RA: 47 Results 26 40 Results 5 20.,85% / 0,27% COL Countries Countries Countries Latam 10% Mejores 59 59 13 1 Top NY stock exchange Sectors Sectors I: 32 / S: 46 Latam Colombia DJSI 800 86 109 13 Emerging Markets Companies Companies Banks World USD 1.841 Bll RS: 23 12 20 6 21,47% / 4,91% COL Countries Countries Countries Latam 10% 57 37 17 2 Top Local stock Sectors Sectors I: 19 / S: 14 Latam Colombia exchange

tions Office, where shareholders and investors can nization, which is also listed with the Emerging Dow Jones Global Sustainability and Emerging Markets Indices receive direct assistance (in person, by telephone Markets Index, outperformed 52% of the leading or via email), or through Fiduciaria Bancolombia's companies in each sector and was considered the Focos visión 20/20 Material issues Criteria Points % Weighing Percentile Average Dimension Responsible area Shareholder Care Center. second best performing sector out of the entire Employes committed to our * Consolidating a more humanistic Human capital development 80 6 97 41 Social HR Management 59 companies evaluated. In terms of best practic- humanistic banking banking model Ocupational health and safety 80 3 80 47 Social HR Management In 2014, our Investor Relations Office and Share- es, we outperformed 92% of the banks included 91 5 90 67 Social HR Management * Innovative talent management Labor practices and human rights holder Care Center dealt with an estimated 15 in this list, having risen 23 points above the indus- Talent attraction and retention 74 6 82 56 Social HR Management thousand queries and requests, grouped into trial average. The Value of trust * Risk strategic management Financial Stability and Systemic Risk 100 4 32 90 Economic Risk management topics such as the macroeconomic environment, strategy, business metrics, and the competitive * Proactive reputation management Anti-crime Policy/Measures 100 4 86 77 Economic Corporate services Risk & Crisis Management 93 6 86 72 Economic Risk management environment as well as shares, shareholder sta- * Consolidating our environmental Brand Management 96 3 86 65 Economic Corporate Identity tus, and dividend payments. and social sustainability model Controversial Issues, Dilemmas in 90 4 96 50 Social Corporate Identity Proactive Reputation Lending / Financing 82 7 73 73 Economic Company secretary's office Codes of Conduct/Compliance Corporate Governance 72 7 56 69 Economic Company secretary's office Management Tax Strategy 71 2 92 46 Economic Strategy and Finance

Committed to providing New ways of providing a gratifying * To construct more and better Sustainable Business 88 9 87 57 Enviromental business unit client experience relationships with customers Client Relationship 91 6 81 67 Economic business unit economic, social and We know that trust is the core value which forms * Operating simplicity and the basis for our relationships with our stakehol- impeccability Financial Inclusion 92 3 85 55 Social business unit * Wherever, whenever and however environmental value ders, and is a driving factor for clients to recom- our clients need us mend us as a more Humanistic Bank. Conse- * Efficiency and profitability quently, we began designing our new Reputation management We were re-admitted for the third consecutive year Management Model. With this, we aim to extend Sustainable growth Environmental Management Systems 93 3 92 57 Enviromental Identidad Corporativa to the Dow Jones Sustainability World Index, be- our understanding of how we are emotionally * Potenciar negocios clave en la ing one of the best performing companies in the and rationally perceived by our stakeholders, generación de valor Operational Eco-Efficiency 74 3 89 38 Enviromental Servicios Corporativos Corporate Citizenship and Philanthropy 86 3 81 49 Social Identidad Corporativa world on an economic, social and environmental identifying patterns of conduct on the part of * International consolidation Climate Strategy 84 4 88 51 Enviromental Identidad Corporativa level out of a total of 2,500 corporate candidates our Organization and taking measures to stren- Stakeholder Engagement 94 2 93 61 Social Identidad Corporativa from 59 economic sectors that are listed on inter- gthen these relationships For this endeavor we Supply Chain Management 82 2 96 49 Economic Servicios Corporativos national stock exchanges, of which only 319 were hired the services of the Reputation Institute, an Social Reporting 62 4 60 47 Social Identidad Corporativa Environmental Reporting 49 4 39 52 Enviromental Identidad Corporativa selected for this index. On this occasion, a total international company with extensive experience of 25 banks were included in this list. Our orga- Rate: Is the average of the Banks Sector. in the financial sector. Percentile: Is the percentage of companies that are overcome with the score made by Bancolombia. Audit and Strategy and Finance areas are common for all indicators 120 ANNUAL ANNUAL 121 MANAGEMENT REPORT MANAGEMENT REPORT 6 The best human talent

OBSESSION FOR DOING THINGS WELL

By: Santiago Hoyos Buitrago. Medellín. Ilustration by: Alex Sarmiento.

-I have come to see you and know if I am crazy much garbage (bad wastes); I was filling my waste or something similar. The doctor adjusted his container with fruit and vegetable skins… then I eyeglasses. What happened? She panted through decided to buy another container for the organic her nose. Well…. I think everything started with my wastes and… Are you still doing exercise? Yes, I colon. I could not eat anything without feeling pain need to move myself… I do not walk… I jog. Then at night… I could not sleep well either due to my I bought a pair of tennis shoes. One day, I saw pain or for not achieving a comfortable position a beautiful pair of tennis shoes at a store but my until dawn. The problem is that I used to feel work involves the estimation of costs and it seemed exhausted. I saw a doctor and he told me what I to me they were very cheap for shoes holding already knew: Irritable bowel due to stress… Of all such a good quality. I do not know. I had a bad his recommendations, what I really did not like was feeling about purchasing something you really do his suggestion to quit smoking and do exercise. not know how they have been manufactured and The doctor opened his folder and wrote something under what conditions, so I bought a pair of ugly with unreadable letter. but more expensive shoes but manufactured in this country. -The truth is that I used to be concerned about everything…. I am of those people who want The case is that I bought the pair of tennis shoes everything done immediately. Well, since I did not with all the money I saved in gasoline during a want to attend a gym, I decided to walk to my month. Seriously… What other savings do you office. My office is 15 minutes away by car, but if have? Let’s see… I installed LED lights at home, at I walk it takes me forty minutes to get there. How the office… I make other people unplug chargers; I long did you walk to your office? Six months have turn off the faucet when I brush my teeth; I take cold passed. Do you sleep well? She assented with showers. One day, some employees from the utility her head. The doctor was checking and writing company came home to find out why my utility bills behind his folder. The most difficult thing is to were showing such a low price. The point is that start but I liked going out earlier, walking slowly, my family does not stand me anymore. My boss watching houses, and seeing people I had never made me come and visit you because she thinks Environmental Responsibility seen before because I was taking care of traffic. I have a problem. How do you feel about that? I I ate more vegetables this week; I drank more feel happy (she answered with concern). What do Innovation, Production, and Sustainable water; I stopped ordering Chinese food, pizza, I have? The doctor closed his folder and smiled. Consumption and chicken; I could notice I was not piling up too Common sense, he said. We make creation of sustainable products and services possible; environmentally friendly products and services to enjoy a better future. Besides, we every day find new ways of evolving towards a sustainable consumption, with the purpose of reaching a balance of the resources around us and improving everybody’s standard of living. 122 ANNUAL ANNUAL 123 MANAGEMENT REPORT MANAGEMENT REPORT

level. The main collaborative platform shall be essence of our being. Our interest here is for our Intranet, thereby enhancing effective infor- our employees to develop a passion for serving mation searches for greater employee productiv- our clients so as to provide them with a positive Committed to our ity and process efficiency. and memorable experience. It is for this reason that we have set a goal to remain amongst the As part of our efforts towards a becoming health- top three private employers in Colombia, having "Humanistic Banking" ier organization, and in keeping with our model been ranked in No. 1 position by the Merco Peo- for handling psychosocial risks, we have provided ple Survey. We also decided to close the gaps Approach assistance to a total of 1,380 employees in Co- detected according to the findings of this latter lombia who are more exposed to risks associated survey, by drawing up an action plan to redefine with the emotional demands of their jobs. our value proposal.

We achieved 120% of the corresponding target, cov- We redesigned the "Come and Work For Us" section ering a total of 1,699 employees, mostly those in of our corporate website, where we underscored Our purpose as an organization is to think charge of leading teams of staff. A total of 3,076 our approach to the level of employee well-being about others, to help them with their life-time hours of training were given to managers and sec- that we aspire to. Here, all those who are interest- ambitions, to build long term relationships and tion heads in how to handle emotional and leader- ed in working for Bancolombia may apply quickly to form a greater understanding of our clients. This requires the commitment and talent of ship issues with another 3,720 hours of training and in a straightforward fashion for all those jobs our employees and associates so as to be able given to employees on how to handle their emotions. currently on offer, while checking their eligibility to reinvent our business with a more human for such based on the required job profiles. approach, with the firm conviction that we can We have also defined a risk matrix for gauging obtain positive results with a more "people"- the exposure of each work unit. The psychosocial "Bancolombia for All" reflects our strategy em- based orientation. risk factors both inside and outside the workplace bracing diversity and inclusion with regard to the that are a priority for us to treat are as follows: Bancolombia Group's human talent. Since 2012, we have employed a total of 49 people with physical or visual disabilities, as well as those of • Quantitative demands and others relating to indigenous or African descent, thereby indirectly how the job affects the employee outside the benefiting a total of 211 people who, while not workplace. Consolidating Our working in Bancolombia, are sponsored by the • Leadership issues and a clearly-defined lead- Organization. We also adjusted our human talent Humanistic Banking Model ership role. and technological processes to facilitate the work of these employees. Various events and work- • Social relations within the workplace, as well shops were staged to extend our culture of social We have gone into greater detail with our culture tries and was simultaneously deployed in Colom- as housing and the outside environment, and inclusion (the Branch Office Experience forum, model in each of the countries where we are pres- bia, El Salvador, Bancolombia Panama, Peru and how all of this affects the employee´s work. ent, taking into account characteristic regional Puerto Rico. the "Visual Disability” panel and “Social Inclusion differences. For this purpose, we implement cor- • Performance feedback, role consistency, re- in the Workplace" conference). porate policies and unified, cross-cutting mea- We put into place a series of training and coach- wards for developing a sense of belonging to sures to close gaps on our culture map. We also ing programs including employee assistance and the Organization, the work carried out and As part of our Talent Management program deployed various initiatives in each country and support for all those who were promoted for the time spent outside working hours launched in 2013, we identified employees with in keeping with the needs of each business unit. first time to a leadership position, with the aim substantial skills, commitment and aspirations of providing these with the conversational tools who are able to relate in a friendly all-inclusive, Being a more Humanistic Bank! is the phrase to create better relationships with their respec- respectful way so as to be able to handle more that echoes the patterns of conduct that we are tive teams. timely and efficient succession plans for critical aspiring to through personal development, in- Innovative talent positions within our Organization. terpersonal relationships, effective performance We also deployed our Collaborative Work project, leadership and the contributions that each one which came into being when we were drawing up management In 2014, we began with 211 high potential em- of us makes to the Organization as well as for the our Culture Map and our 20/20 Vision, this as a ployees, with 207 of these remaining in the pro- greater good. These definitions resulted from a new form of collaboration-based team effort. All Our Humanistic Banking approach means find- gram. collective project drawn up by those responsible this shall allow us to build more flexible, close ing different ways of doing things, listening to for managing cultural issues in different coun- and effective conversations on a more personal other people, really understanding the matters As far as employee development plans are at hand and performing our work from the very concerned, we deployed various initiatives de- 124 ANNUAL ANNUAL 125 MANAGEMENT REPORT MANAGEMENT REPORT

signed to strengthen and leverage growth op- for each country. portunities for the Group´s employees. Last year, we helped 94 managers and section In Colombia, we continue to work on our com- b. Breakdown heads with their new role as leaders, aligning pensation model in keeping with our strategic these with our Culture Map. needs, and making the required adjustments of jobs by company to our variable compensation plans in the Cor- We also carried out development plans in con- porate and Government Banking Division as a and countries* junction with our employees, but the results result of the having gained greater ground with were unsatisfactory in terms of the internal se- the capital markets. With our Consumer and lection process, where we identified a total of SME Banking Division, we revised our policies 87 employees of whom 82 received assistance. and made significant changes to performance metrics based on the information and concerns We also fully deployed our training model with- received from our employees as part of an in- Bancolombia, local Country No. in our Consumer and SME Banking Divisions, vestigation conducted on the Sales Manage- and foreign-based Employees so that any employee joining the Organization ment Plan and corresponding campaigns. subsidiaries or being promoted to a higher position may go through a more structured induction process. In terms of retaining and attracting human Colombia 20.741 The goal is to prepare and enable our employ- talent, we continued with our career plans es- Panamá 137 ees to perform their jobs effectively and to pecially for the Auditing and IT Departments El Salvador 2.868 adapt to the organization. In 2014, a total of given the amount of specialized knowledge that 2,588 employees received training in their new these functions entail. We also made progress Banistmo 2.573 positions, which represented 79% of the total with some proposals that resulted from these Perú 84 target base. same plans being deployed in other business Puerto Rico 15 units, mainly the so-called emotional salary, As far as employee remuneration and incen- which shall be deployed in 2015 as part of the tives are concerned, we focused on applying "Kind Gestures" program. Other companies our corporate policies within the region, es- belonging to the pecially in Panama and Peru, which included Furthermore, we signed a new collective bar- Group drawing up job maps, wage and salary policies, gaining agreement in force from 1 November Other companies 3.740 and introducing variable remuneration plans 2014 to 31 October 2017, with the aim of en- belonging to the Group hancing the quality of life of our employees and their families. The following were the highlights of this new agreement in terms of wages/sala- Other types of non ries, education and housing. direct employment agreements This new collective bargaining agreement cov- External 12.066 ers more than 13,000 employees, that is to say Service Providers 3.492 63% 63% of all employees at operating level in both Interns 803 Bancolombia and its Colombia-based subsid- iaries (Banca de Inversión, Fiduciaria, Leasing and Valores), whether or not they are union members. Total 46.519

of human talent in • Being able to successfully complete these agreements was another point in favor of b and g includes Bancolombia and its subsidiaries in Colombia (Leasing, Valores, Fiduciaria and Banca de Inversión) and its foreign-based subsidiaries ( (Banco Agrícola, Banistmo, Bancolombia Panamá, Puerto Rico and Peru ) for a total of 26,418 employees, representing 88% of the entire 30,158 the organization are our Humanistic Banking approach, which employee base as reported by the Group. involves talking over our differences while c, d, e, h, i, j, k, l, m includes Bancolombia and its subsidiaries in Colombia (Leasing, Valores, Fiduciaria and Banca de Inversión) and the two largest women upholding our core values of responsibility, foreign-based subsidiaries ( (Banco Agrícola and Banistmo) representing 87% of the entire 30,158 employee base as reported by the Group. trust and respect. f corresponds to Colombia only, that is to say the Organization´s 20,741 local accounting for 68% of the Group's entire employee base. 126 ANNUAL ANNUAL 127 MANAGEMENT REPORT MANAGEMENT REPORT

a. Demographics: c. Exiting Employees We recognize demographic diversity and genera- Indicator Number % turnover tional changes in seeking greater flexibility with the Organization´s development processes inclu- Total exiting employees 1.970 7,5% ding gender, knowledge and different skills. Exiting female employees 1.154 7,0% Exiting male employees 816 8,4% Exiting employees under 30 years of age 1.004 10,5% Indicator No. % Exiting employees between 30 and 40 years of age 589 5,8% Women Gender 16.610 63% Exiting employees over 40 years of age 377 5,8% Men 9.808 37% Voluntary departures 822 3,1% Employees under 30 years of age Dismissals ( without just cause) 545 2,1% Age 9.693 37% Employees between 30 and 40 years of age Mutually agreed departures 334 1,3% 10.186 39% Employees over 40 years of age Exiting employees - Colombia 1.175 5,7% 6.539 25% Employees with less than 3 years of service Exiting employees - Banco Agrícola 232 8,1% Seniority 6.663 25% Exiting employees - Banistmo 563 21,9% Employees with between 3 and 10 years of service 10.899 41% Employees with more than 10 years of service 8.855 34% Number and % of women in management positions (versus total ) Diversity 2.069 59% d. Promotions Number and % of women in senior management positions 362 52% (executive officers and higher) Indicator Number Promotion rate 60 0,2% Number of minority employees (disabled, ethnic/African descen- Total Promotions 2.672 10,2% dant, etc.) Promoted female employees 1.591 9,7% Promoted male employees 1.081 11,1% b. New Employees Indicator Number % / rate e. Salaries/wages broken down by gender and age Total new employees 2.376 9,1% Percentage Average monthly % below male salaries/ Total new female employees of population salary/wage wages 1.379 58,0% Hierarchical Level Gender Total new male employees Strategic and Media Female 32% 18.274.241 11% 997 42,0% 68% 20.420.175 New employees under 30 years of age Male 1.938 81,6% Tactical Female 54% 8.787.572 4% New employees between 30-40 years of age 383 16,1% Male 46% 9.198.222 New employees over 40 years of age Professional operating Female 63% 3.245.084 5% 55 2,3% 37% 3.412.287 New employees - Colombia Male 1.313 6,3% Operating Female 66% 1.520.432 2% Banco Agrícola: 393 13,7% Male 34% 1.554.177 New employees - Banistmo All Female 64% 2.441.980 17% 670 26,0% Male 36% 2.939.237

* This information is only available in the case of Colombia and does not include senior management. 128 ANNUAL ANNUAL 129 MANAGEMENT REPORT MANAGEMENT REPORT

f. Human Talent Training i. Welfare Programs • Healthy Employees: We promote health We offer our employees a number of added-value care practices, preventive diagnoses benefits amid a working environment based on and healthy lifestyle. Providing health Leaders trained as part of the leadership institute program 3,002 section heads, 86.3% trust and respect, thereby providing ideal condi- care for our female employees including tions for maximizing individual and group talent expecting and nursing mothers, cancer New section heads trained 282 section heads, 98% of total. and achieving higher levels of performance. At prevention for both men and women as Total training hours 1.222.265 hours the same time, we are helping to achieve our cor- well as care for the elderly (our retired Average training hours per employee 46 hours / employee porate objectives. employees), medical check-ups focusing Average hours of on-line training per employee 30 Hours / employee on health risks, preventive care, cultur- Average hours of classroom training per employee 16 Hours / employee al, recreational and sports activities as Average training hours per male employee 45 Hours / employee The pillars of an optimal quality of life: well as providing bonuses and staging conferences. Average training hours per female employee 47 Hours / Employee • Working Environment: We provide a healthy Average training hours per employee - section heads 50 environment, facilitating tools to both lead- • Working conditions: Fostering a safe work Average training hours per employee - non-section heads 46 ers and their teams for optimal mental environment through different practices Average investment in training per person * COP 514,678 / employee health. We celebrate special dates, and train for handling different labor risks, including Scholarships 30 employees for a healthier level of leadership through risk assessments, job evaluations, master conferences and various other events at emergency plan, educational activities for which we disseminate and extend our rec- taking care of the body with mental and * Figures corresponding to foreign subsidiaries converted into Colombian pesos using the exchange rate applicable at December 31, 2014 * including Bancolombia and its local and foreign-based subsidiaries ognition model through leadership training, physical breaks (active breaks), work sta- agreements benefiting our employees and tion inspections to identify risks and edu- their families, as well as celebrating every cating our employees on how to deal with five year period of service. emergency situations. g. Rating performance. The number of employees subject to performance evaluations came to 23,679 . Indicator Number %

Employees with performance evaluations 23.195 98,0% Total investment in quality of life programs * COP 12,745 million Female employees with performance evaluations * 12.869 99,0% No. participating in quality of life programs 115,664 (employees and family members) Male employees with performance evaluations * 7.187 98,5% No. participating in work environment programs 27,406 Section Heads with performance evaluations 3.310 98,0% No. participating in healthy employee programs 47,868 Non- section heads with performance evaluations 19.885 98,0% No. participating in conditions of the workplace programs 40,390

* Information available only for Colombia (classification by gender) * Figures corresponding to our foreign-based subsidiaries were converted to Colombian pesos using the exchange rate applicable on December 31, 2014

In Standard of of heads were trained in the Living programs we 115 86,3% program “Instituto de Liderazgo” had over participants (Leadership Institute) 130 ANNUAL ANNUAL 131 MANAGEMENT REPORT MANAGEMENT REPORT

j. Absenteeism (% of lost time) i. Employee Insurance

General illness 2012 2013 2014 Organization´s Employee Employees Family members Investments Contributions benefited benefited Colombia 1,22 1,25 1,27 Banistmo 0,84 The Organization´s contributions / investments 38.494.548.490 25.412.515.885 Banco Agrícola 2,72 Health care 31.615.235.441 17.690.515.885 17.317 18.061 Group life insurance (paid by employer) 3.830.313.049 23.311 Occupational illness 2012 2013 2014 Personal Accident (paid by employer) 419.000.000 20.741 Colombia 0,003 0,001 0,001 Others 2.630.000.000 7.722.000.000 16.163 Banco Agrícola 0,06 Maternity / paternity 2012 2013 2014 leaves m. Organizational savings programs

Colombia 0,64 0,59 0,62

Other permissions 2012 2013 2014 Organizational contributions / investments 6.398.671.733 Contributions on the part of employees 16.211.634.495 Colombia 0,24 0,45 0,51 Total savings 22.610.306.228 Employees benefited 11.067 Work accidents 2012 2013 2014 Colombia 0,02 0,01 0,02

In 2014 no deaths due to work accidents were reported. l. Colombia College Foundation

k. Employee loans The Colegio Fundación Colombia (the Colombia The education given is supplemented by our insti- Foundation School) was created for the children tutional principles and values, which means that of the Bancolombia Group's employees in Bogotá. students are able to develop a critical sense and Employee loans Amounts No. Loans Established more than 40 years ago, today it is a are respectful, caring and have mapped out what Amounts disbursed 347.582.070.872 10.512 school boasting the highest academic standards. they wish to do in life. We would like to thank Ma- The school´s focus on finance and banking rein- ria Helena Reyes for all her efforts as the school´s Student loans 3.261.141.215 318 forces the administrative and financial education headmistress until retiring the end of 2014. We Housing loans 237.330.527.589 2.890 of its students, preparing them to go onto higher also warmly welcome Jose Vicente Munevar, who Others 106.990.402.068 7.304 education for subsequent professional positions. was appointed the new headmaster this year. * This information applies only to Colombia.

About people’s dream of having their Great Place to Work recognized 2.890 own house came true through “Banco Agrícola” as the second best housing credit program our housing credit program company to work for in Central America 132 ANNUAL ANNUAL 133 MANAGEMENT REPORT MANAGEMENT REPORT 7 Hand-in-hand with our strategic partners and suppliers

¡Shhhh..!

By: Luis Felipe Núñez. Bogotá. Ilustration by: Alex Sarmiento.

I can remember now the day when I stopped having She carried me in her arms and walked through fear of silence. In the beginning, I think it was just the main square. a matter of silence. Now I don’t think so; neither silence nor loneliness. Now, when I stay quiet I feel We entered the library. To top it all, silence had like a bunch of coconuts were falling from their increased three thousand percent. I desperately palm tree, all at the same time. The truth is that looked at mom and she twisted her eyes and stuck coconuts seem to fall all at the same time and, out her tongue. We sat at a table –it was incredible when they bounce on the sand no noise is heard how people sitting at other tables could stay quiet but you can feel you have just heard them fall. as if nothing was happening. My mother asked me to wait for her at the table. I stayed sitting for a It is difficult to understand, isn’t it? I was not moment. When she came back, she brought a pile going to tell that to anybody because my family is of books with her. This is boring, I thought. Little aware of my way of living… but I had to tell them. by little I could see the other side of silence. New Mom did not know what to do at first. Both of us ways and possibilities opened with every line I was remained quiet for a couple of days, exclusively reading. dedicated to ordinary home activities: going to the bathroom, eating, etc. She was thinking about my I could realize that one can talk without voice, unsolvable problem and I -with my knees together without making a scandal, and I like that. By and my arms crossed over my chest- was waiting knowing the words you also learn how to better for her to get involved in my big internal chaos. listen to the others who say important things most of the time. But I didn’t realize that at that moment. Then she took me by the hand and asked me to I could do it when I arrived home and told my get dressed. I did it quickly to avoid wasting more mother that I didn’t like the end of the book. I time. We went out. I can remember now that it was wanted Manuel (the bug) not to be homeless. But cold outside. Fortunately, my mother took a scarf that is the way books are; one never knows what it with her in a purse. Since the green bus was a little will happen. And that is something good because bit late, we had to resign ourselves to the noise of every time I find an end I don’t like, I just write a cars and air… and with the voice of other people different end, in silence of course. When I finish who passed walking in front of us chatting as if writing it, I can read it to my mother and my friends. silent didn’t exist. When we went downtown, my How nice it is to see them smiling at the end of each Culture mother could notice how serious my problem was story, because I can see a little bit of my silence in Citizenship behavior because I was not even running after the doves. their smiles, don’t you think so? To promote citizenship behavior from respect of norms and recognition of the others; this is a chance to achieve a healthy community living, tolerance, and participation. 134 ANNUAL ANNUAL 135 MANAGEMENT REPORT MANAGEMENT REPORT

Total suppliers Hand-in-hand Percentage of total Colombia payments and number of 16.000 with our strategic suppliers per category 49% Proveedores estratégicos 370 El Salvador partners and nacionales 1.703 Panamá suppliers 4% 18.073 Total de proveedores Terceros especiales

Colombia 3% We have continued to move towards Proveedores del being a more humanistic and sustainable exterior organization thanks to the support of our strategic partners and suppliers, with whom we are creating shared value in all those countries where we are present. In 2014, we paid out COP 2.1 (*) billion 6% 38% Proveedores to a total of 9,165 active suppliers and Aliados ocasionales Estratégicos de partners, broken down as follows: nacionales Abastecimiento

Category Number of Amount paid out per Percentage of payments suppliers per category in millions of made as a share of the category pesos total for 2014

Foreign suppliers 218 61.413 3%

Specialized third parties 5.210 93.918 4%

Local strategic suppliers 296 1.043.243 49%

Occasional local suppliers 3.387 121.237 6%

Strategic Supply Chain Partners 54 806.512 38%

TOTAL 9.165 2.126.324 100% 136 ANNUAL ANNUAL 137 MANAGEMENT REPORT MANAGEMENT REPORT

Supplier visits: made in order to ensure that we Financial analysis (FA): assessing the finan- know who our suppliers really are in accordance with cial capacity of the supplier or service pro- Handling sustainability risks along our procurement requirements. The purpose of these vider by analyzing their financial statements visits is to provide a first-hand assessment on the fol- and certifications, based on the value, im- Bancolombia's supply chain lowing 5 fronts: employment, installations, security, pact and risk level of the respective negotia- suppliers and technology on a scale of 0 to 5. tion, on a scale of 0 to 5.

Evaluation of corporate environmental and social The result of this comprehensive assessment Here we identify risk using the methodology de- Market: this variable refers to supplier bargain- responsibility (ESR): covering the environmental allows the Bancolombia Group to make de- veloped in coordination with the Risk Manage- ing power, whether there are substitute products and social risks associated with the service provider cisions regarding its suppliers as well as to ment Department in order to evaluate the supply or services available elsewhere, and whether the or supplier in order to encourage and support sus- define plans to enhance their performance, of all goods and services purchased by our Sup- service is provided by a single or multiple provid- tainable practices and prevent environmental and among others. The values thus defined are ply Chain Procurement Department. This meth- er or supplier as well as restrictions for migrating social risk, on a scale of 0 to 5. shown below: odology allows us to classify our suppliers and or replacing the provider of the current service. service providers based on the impact they have on the following critical variables: Business Scope: this relates to the validity of the contracts in place, the frequency with which the Regulatory Issues: this refers to all circulars, service is adequately provided and the conditions Excellent: Suppliers or service providers who may be rules, regulations and / or decrees governing the agreed upon with the supplier. 4.80 - 5.00 considered for other services service or goods provided, the barriers to invest- ing in the sector, office hours and regulated rates. Social Impact: the possible impact on the community.

Customer Impact: this takes into account wheth- Environmental Impact: affecting the environment er the failure to provide a service has a direct ef- in terms of water, soil or air, or the ecosystem fect on the client and / or causes the suspension and its diversity. of one of the Organization´s processes. Good: Suppliers or service providers who must receive Occupational Risks: this includes evaluating the 4.00 - 4.79 assistance by means of improvement plans so as to probability of accidents and / or occupational ill- achieve excellency. May be invited to submit quotations. nesses occurring due to the type of work activity We defined (high risk) and due compliance with all employ- ment benefits.

Handling Confidential Information: proper use of the proprietary information on the part of the So-so: Suppliers or service providers who must receive Bank and / or subject to banking confidentiality. assistance by means of improvement plans and follow- 3.00 - 3.99 ups. These are not invited to submit quotations until their • We evaluated 91 critical suppliers in terms of performance levels improve. 54 environmental, social and employment issues, these corresponding to 100% of those identi- fied using this methodology.

• We defined 54 companies as Strategic Supply Chain Partners given their economic impact Flagged: Suppliers or service provides who are flagged for their deficient performance. Action plans must be implemented based on the amounts paid out last year as well companies as strategic in the short term (less than 3 months). If no improvement supply allies due to as a comprehensive evaluation carried out every 0.00 - 2.99 is obtained after these measures are taken, their contracts three months, which allowed us to gauge their are terminated without affecting the service provided. These their economic impact performance based on the following factors: suppliers or service providers are not invited to submit quotations under any circumstance. according to the value SLA indicators: the results of service level agree- paid during the last year ments on a scale of 0 to 5. 138 ANNUAL ANNUAL 139 MANAGEMENT REPORT MANAGEMENT REPORT

Percentage of payments made to suppliers subject to Out of the 89 improvement plans that were drawn improvements were noted with 79 of these. Avera- sustainability clauses 167 environmental and up for 60 suppliers or strategic partners, we obtai- ge rating for suppliers and partners who introduced social risk evaluations ned the following indicators as a result of the main improvements: 4,61 out of a maximum 5 opportunities for improvement detected with our were performed, including supply chain: In the case of 6 suppliers and strategic supply subsequent assessments of chain partners where no improvement was obser- ved (4%), this was due to the fact that they alre- 2014 100% the progress made with their 63% had designed and implemented a plan for ady had very high rating or new information was the sustainable management of their supply requested that had not been required in previous corresponding action plans. chains. visits. The average score on sustainability issues 52% had an anti-discrimination policy in place where no improvements were observed came to 52 visits were made to 52% were implementing a Code of Ethics as a means 4.43 out of a maximum 5 whereby stakeholders can air their grievances. 2013 76,38% Suppliers and Strategic Supply 50 suppliers or service providers (37% of the total) Chain Partners in Bogotá and 45% were implementing performance indicators with their handling of hazardous and non-hazar- did not record improvements since this was their Medellín. dous solid waste. very first assessment. Average score on sustainabi- lity issues for suppliers being evaluated for the very 44% had a policy in place dictating the Company's first time: 3,42 out of a maximum 5 respect for Human Rights 2012 48% 89 individual sustainability action plans were drawn up. A total of 47 evaluations were performed on the Out of a total of 135 suppliers and strategic supply different business proposals made, these based on (Value paid out in 2014 to suppliers subject to sustainability clauses chain partners that were evaluated, performance sustainability criteria. versus total amounts paid out to suppliers)

100% of the sample of critical corresponding to 33.44% of We also examined the sustain- Product or Service Proposals evaluated suppliers in terms of environ- the total turnover in 2014. ability factors of 32 out of a mental, social and workplace total of 54 strategic partners, risks were evaluated (for a total We visited the premises of these scoring and average rat- Cloud-Based Human Resource Management 2 of 91). We also evaluated 135 all those suppliers show- ing of 4.23 out of a maximum Secure Networks 3 suppliers from the standpoint ing substantial sustainabil- 5. We also saw an improved Safekeeping of environmental and social risk ity risk and defined action level of performance with 13 2 along with another 44 who pre- plans for subsequent im- suppliers who had been previ- Software Support and Maintenance 9 sented self-assessments, these provements: ously evaluated. Telecommunications 3 Audiovisual services 3 Real Estate Solutions 2 Service received # Visits AESR Evaluations* Average scores Civil Engineering 3 2014 2013 2014 2013 2014 2013 Market Research 6 Maintenance 8 15 37 15 4,08 3,73 Computer Equipment 3 Server Solutions 2 Goods and Services 41 44 99 60 4,07 4,11 Software 2 Civil Engineering and 3 4 31 25 4,46 4,14 Contractor Insurance Policies 3 Retrofitting Work Document Intelligence 1 Safes and Lock Boxes 1 Total 52 63 167 100 4,10 3,99 ATMs 2

*Assessment analysis of environmental and social risks. *Assessment analysis of environmental and social risks 140 ANNUAL ANNUAL 141 MANAGEMENT REPORT MANAGEMENT REPORT

Continuing with our sustainable procurement poli- partners, receiving 33 nominations in all six cat- • Evacuation Drills: employees of our suppliers On-Line Banking Channels: Here we came to an cy, in 2014 we evaluated and included sustainabil- egories, defined in keeping with our corporate and partners who work in a total of 380 branch agreement with one of our strategic partners re- ity clauses in 37 new supplier and service provider strategy. These categories are as follows: offices and 7 administrative buildings took part garding a new model of service charges based on contracts, covering issues such as environmental in these drills. demand, with unified invoice calculation meth- and legal compliance, as well as embracing the 1. Commitment to the humanization of our busi- ods. same international initiatives as Bancolombia. ness • A Humanistic Banking Culture: 6,250 employ- 2. Living the value of trust. ees received our allies content on 20/20 Vision, On-line Bank Statements: With the clearly-de- In order to improve our performance evaluations for 3. Innovating client experience. Model Service, SAC and Zero Tolerance Fraud, fined goal of achieving efficiencies in providing outside maintenance providers, we defined certain 4. Living quality as part of our continuous improve- among others. our clients with their account statements, we be- assessment criteria for on-site maintenance crews ment gan to distribute these electronically having mi- in conjunction with our Facility Management area. 5 .Acting responsibly with the general public • Labor Market Inclusion: here we extended grated 75% of the corresponding volume to our 6. Acting with awareness of the environmental im- awareness of our 'Bancolombia for All' program on-line banking channels for monthly savings of We also worked with our provider of Civil Engi- pact caused with 16 of our strategic partners so as to stress COP 458 million. neering Inspection services to create what we call the importance of providing job opportunities the 120 Form, that includes all legal compliance Allies Against Fraud initiative: We conducted for the disabled. Integrated Document Management: We imple- criteria regarding environmental management, 10 workshops, 75% of which resulted in action mented our Integrated Document Management social management and health and safety within plans being worked out to create a greater aware- Model that offers a range of advantages including the workplace which all providers of civil engi- ness of all those practices that go against the a greater degree of efficiency and more stream- neering services must comply with. guidelines set by the Organization. United for lined document management processes, while reducing operating risk, all of which is having a 100% Sustainable Supplier Initiative: Here we Greater Efficiency favorable effect on our ongoing sustainability and reaffirmed our commitment to sustainability in cost efficiency. Building the conjunction with 60 companies from the Civil Here we adapted our strategic supply methodol- Engineering, Maintenance and Graphic Arts sec- ogy to the Organization’s current situation, with Christmas kit: This kit which we give to our em- Capabilities of tors by holding meetings where we shared experi- a view to driving sustainability in terms of our ployees at Christmas time is made of environ- ences on issues such as climate change, product efficiency and service quality indicators through mentally friendly materials, that is to say paper our Supply Chain life cycles, sustainable procurement policies, en- effectively regulating our consumption and re- manufactured from sugar cane by-products, free vironmental lines and waste recovery. viewing our costs at source. of chemicals and bleaching agents, which repre- Strategic Partner Forum: We conducted our Third sented savings of COP 17 million pesos in the Annual Forum of Strategic Partners where we in- Strategic Supply Chain: use of these materials and COP 135 million com- vite them to join us in the challenge of driving • Here we obtained cost savings of over COP 10 pared with purchases in previous years. our sustainability by means of innovative ideas Impact of our work thousand million compared to 2013 so as to supplement the work we have already • We achieved 144% of our targeted savings. done to show our commitment to providing our • We also improved our service and operating lev- clients with a great banking experience. A total of on managing the els in various areas, including our Contact Cen- We work together with our 54 companies participated in this event ters, Product Sales, Facility Management and suppliers and allies, generating human side of Logistics. better awareness about fraud The Sustainability Challenge: As part of the prevention and developing Stage I of this initiative, we received 85 proposals our business in Application Support and Maintenance: Here we from 27 strategic partners providing helpful ideas achieved a 20% reduction in service costs, going on issues such as the optimization of resources, conjunction with from 23 contracts to just two, by deploying best process improvements, inter supply chain allianc- standards upheld by other industries. es, and enhanced efficiency or revenue-generating our suppliers and capabilities. Stage II continued with five initiatives Advertising Agency: We deployed strategies on the part of 5 strategic partners that met the partners aimed at regulating our consumption and con- 75% required criteria in terms of innovation, efficiency trolling and/or eliminating waste by means of a and sustainability. • Quality of Life: 20 employees and 32 of their formal model entailing various initiatives such as relatives took part in recreational activities held work improvement project teams, single billings Award ceremony: We laid the groundwork for in the more remote areas (Family Day in Urrao, and improved efficiency in our customer care and recognizing our best suppliers and strategic Antioquia). operating model. in action plans 8 Transforming communities

LINE BY LINE

By: Carlos Barros. Bogotá. Ilustration by: Alex Sarmiento.

Junior was standing when the school bus stopped. When he started drawing, he suddenly said “stay He was involved with a great emotion because still” in a loud voice. The museum lights turned we wanted to enter the “Suspended Cube,” as he off at that moment and turned on again a couple used to call the museum. He had walked by the of seconds after. Junior felt that time had stopped place several times with his parents but he never and started to draw -on the first page- the exact had visited the museum. When his plastic arts moment when he dropped off the bus, when he teacher proposed this visit as an end-of-year acti- walked through “Santo Domingo” Square, and vity, he was the first to support the idea. Now that when he entered the museum and took the eleva- he was about to drop off the bus, he felt he was tor to reach the sixth floor. Junior had retained entering a second home. all the details and expressions of his classmates to capture them on the drawing he was creating. The elevator opened on the sixth floor and Junior went out. He started to walk around the room and After a tour by the third room of the museum was astonished with the sounds of seas, projec- he knew he could draw the remaining two. ted images of flora and fauna, and he found out, He recalled the feeling of being at his second with fascination, that we all come from mother home, so he started his task with no difficulties. nature. During his tour on the fifth floor, Junior When he was drawing the last line, he felt his was drawing in his notebook the faces of people plastic arts teacher’s hand on his shoulder; he associated to several cultures and he thought that asked Junior what he was doing. Junior stood he was a combination of all of them but nobody up and limited himself to give him his notebook. had told him that and he was happy for having The teacher opened the notebook and started confirmed that. watching Junior’s drawings carefully and surpri- singly. When he watched the last page, he only Before descending the stairs to visit the fourth floor, had a question: how many times had Junior he thought that he could retain the spirit of the faci- been before to this museum? Junior knew that, lities, the sounds, the lights, the screens, his class- despite saying the truth and saying that this was mates, and even the assigned guide by drawing his first time at this museum, nobody would in his notebook the entire museum, just as it was believe it. But he was feeling very good with at that moment. With this intention in mind, after this question because he proved to himself that reaching the last step of the stairs, with determina- he could draw so well that he could impress tion, he sat at a room corner turning his back on anybody. For this reason, he had no fear to Culture his classmates. He opened his notebook and took answer that he had already known the museum, several coloring pencils from his pencil case. Art line by line. Art promotion is a form of raising the degree of sensitiveness and reaching understanding of several expressions of life and diversity. 144 ANNUAL ANNUAL 145 MANAGEMENT REPORT MANAGEMENT REPORT

An Organization that tirelessly strives to transform purpose, of "giving of themselves". Consequently, our “Digital Theater provided me with the wonderful expe- society, has to have a clear conviction of how brand is connecting with people through our core Contributing rience of watching the Argentinian Ballet Company. and where to focus its strategy. It must also act values for a building a better society. From the comfort of my home and with my son at my in keeping with its philosophy, not only in terms side, I was able to see watch such a beautiful specta- of obtaining results but also in projecting its to culture cle that filled us all with joy and united us as a family. corporate image by choosing the sponsorships, Working for peace It was a different form of entertainment that enriched events, partnerships and social projects that help Culture involves civic participation and recogniz- us both spiritually and culturally.. Digital Theater is a to secure social transformation. We are convinced that being able to live in ing and appreciating our ethnic diversity. For this great opportunity to experience a cultural event with- harmony is essential for a company´s sustainable reason, it has become a tool for social inclusion out having to leave home". In this chapter, we shall attempt to explain how growth, so we decided to support the dreams of and cohesion, which are key factors for reducing Isabel Silva, 59, an accountant. our Humanistic Banking approach has defined our stakeholders in becoming a company in which poverty, promoting peace and promoting a better our support for peace, culture, quality of life human relationships based on respect for others quality of life. and environmental responsibility as the fronts on and the collective well-being are key factors. For Delirium which we wish to be known for in helping to forge this reason, we took part in various programs that Aware of our responsibility as agents of trans- a better society. recognized the role of companies and individuals formation, we have turned to culture as a way For the seventh straight year, we provided our sup- who contributed to peace in our country. of protecting our untold wealth and the roots port to providing a lifetime opportunity for young that define our identity, so as to promote greater people in Cali to train to express themselves artisti- awareness through different cultural expressions cally. This bright and colorful spectacle has propiti- A brand with a Soy CaPAZ (Working for Peace) and to create opportunities to encourage civic ated a sense of our roots, raising awareness of how purpose participation as well as a harmonious and re- strong our idiosyncrasies are and taking on the re- We took part, in conjunction with almost 100 spectful coexistence. sponsibility of sharing this knowledge with future We continued to demonstrate our conviction as companies in Colombia, in this nationwide generations. In 2014, we formed an alliance with Our commitment to cultural development is an Organization by positively transforming society campaign inspiring our people to work for Deliro to provide jobs to almost 500 people with shown through the different alliances we have through our Humanistic Banking approach, which in peace with the understanding that this is an more than 14 shows, attracting more than 10,000 formed: turn is based on relationships of respect and trust. internal process that everyone must go through spectators with nearly 550 students, both children for the sake of our collective welfare and the and young adults receiving training. transformation of our society. Therefore, our branding initiatives in 2014 were Digital Theater - free of charge for focused on how our brand can be used as a driving everyone force for building and strengthening our ties with We invited all of our employees to participate La Cueva Foundation different stakeholder groups. in initiatives that Bancolombia deployed during this public movement for peace. The three best Our support for the first ever free digital theater We supported the release of a CD honoring the in Latin America allows Colombians access to One example of this was the "Beyond victory and ideas were acknowledged by our Chief Human signature song "Te Olvidé" (“I have forgotten you”), of major events occurring in real time at the Teatro defeat" TV campaign which aired at a time when the Resource Officer, Mr. Augusto Restrepo. the Barranquilla Carnival, which was composed 60 Mayor by means of video streaming directly to a country was divided up into opposing political factions years ago, thus reviving the memory of our purest computer or mobile device. in the run-up to the presidential elections as well as Titanes Caracol Caribbean traditions. Our purpose here has been when the Colombian football team classified for the to provide support to the La Cueva Foundation, as With this type of initiative, we are encouraging World Cup for the first time in 16 years. We took part in the Gestures for Peace category with part of a folk tradition that reaffirms our cultural the project "Titanes Caracol", which recognizes social inclusion and the democratization of cul- identity, encouraging community participation as an ture, so that Colombians can participate in cul- This campaign showed the determination of the those who work in favor of peace, education, expression of the inextricable link between culture tural events regardless of their economic situ- Colombian people, that goes beyond all difficulties, technology, communications, sustainability and the and social development. ation. triumphs and defeats, showing who we really are: a environment, as well as health and wellness. deeply-committed nation. The winner of the Gestures for Peace category was That was how in 2014, the Spanish dance com- pany Antonio Gades delighted 676 people from Over By mid-year we scored a 64% Top Of Heart rating, Yeudiel Vargas Mateus, who lives in the town of various regions that were able to connect up to people enjoyed the which has been historically unusual for the local Sucre, Santander, whose projects have entailed great this on-line transmission. This partnership also Spanish dance and financial sector. This shows that a brand can indeed changes for his community, these including the Corn Argentinean ballet allowed 1,600 people to enjoy the Argentinian convey a purpose, and be much appreciated. Festival which pays tribute to rural workers and their shows offered through deeply rooted culture, as well as a new Sports Board Ballet Company, regardless of wherever they 2.270 the Digital Theater. were in the country, thus driving and enhancing Another important moment was at Christmas time, and Human Rights Group, encouraging respect for cultural and social development. when we invited people to unite under a common life and peaceful coexistence. 146 ANNUAL ANNUAL 147 MANAGEMENT REPORT MANAGEMENT REPORT

We also contributed to different programs such as “"hanks to the help of Bancolombia Group, not only with La Cueva for Colombia and the Arts Carnival, with the Teatro Mayor but with all the rest of important events the aim of inspiring the imagination of both children they sponsor in terms of art and culture, we are now able and young adults through participative and creative to meet and enjoy these activities, while gaining knowl- endeavors, as well as reflections, communications edge and helping to build a society capable of rising to and recreational initiatives with regard to topics new challenges and charting its own goals. I would like ranging from the origin and significance of Carnival to thank Bancolombia for its humanistic spirit and for its of Barranquilla to the most amazing life stories. In unwavering commitment to extending culture". this more than 2,000 youngsters and 30,000 adults Clarisa Ruiz Correal, Secretary of Culture for Bogota participated, representing nearly 250 jobs.

"Here in the Caribbean region we really do appreciate Medellín Museum of Modern Art Bancolombia's commitment to our culture and our Caribbean identity. The support received for paying Its "City for the Children" program catered to a tribute to 60 years of the "I Have Forgotten You" total of 80 underprivileged children in Medellin song meant reviving our roots and strengthening the thanks to our support. Here they were taught ways cultural heritage that we wish to continue passing of understanding life and their city, through art as from generation to generation. Abelardo Garcia, a means of transformation. This same program SiliCar Ltda. was also showcased at the Festival of Books and Culture, providing an opportunity for more than 1,100 children to attend workshops where they Blacks and Whites' Carnival could imagine a city shaped as they would like it to be based on how they see and understand the We also helped with traditions that underpin the reality of where they live. history, life and culture of Pasto with our support for the Blacks and Whites' Carnival, where once again we were able to appreciate the rituals and magic Museum of Antioquia woven together as part of such a special event that allowed us to proudly honor our ancestral roots and Almost 34,000 people visited the exhibition "Counter- keep our cultural identity alive. expeditions, reflecting the way the communities in Antioquia inhabit their different territories. Through this alliance we helped 16 resident artists to work Teatro Mayor together with communities documenting their knowl- edge, their collective memory and their problems in With 100,000 people attending 143 shows in 2014 areas such as agriculture, environment, mining, ur- thanks to the support of more than 100 national and ban development and infrastructure. international companies from 20 countries, this The- ater has given a new meaning to cultural exchange, encouraging civic participation and discovering new Expoartesano (Local Handicraft Exhibition) The Gabriel García Márquez Journalism port to these awards for which 1,400 nomina- forms of expressing the world through culture. Awards tions were received from a total of 35 countries. In search of a connection with our past through the We hope that these awards shall preserve the With the Training for the Arts program, almost traditional knowledge and experience of indigenous What it means for Colombia to host the Gabo legacy of someone who with his stories knew 11,800 art students were given the opportunity to communities, we provided our assistance to this Awards goes far beyond being a mere ceremony how to portray our culture, while providing an extend their professional training in dance, music exhibition showcasing Colombian traditional handi- honoring the best journalism in Latin America, it opportunity for continuing to tell stories of our and theater. We also sponsored the program "One crafts as an expression of our identity, aesthetic val- means preserving the collective memory of our rich idiosyncrasy. Hundred Thousand Children at the Theater", helping ues and ethnic customs. Here, more than 360 arti- people, exalting our history, valuing our fanci- to provide more than 67,000 children and young- sans including 52 representatives from indigenous ful imaginings and understanding how we define sters with the experience of collective participation communities and 64 traditional craftsmen from ourselves with regard to what characterizes us. ""The Gabo Awards are based on the conviction that we and civic culture. across the country. For the second year running, we gave our sup- need better informed societies. Thanks to the invaluable 148 ANNUAL ANNUAL 149 MANAGEMENT REPORT MANAGEMENT REPORT Contributing to Early Childhood Program We work in partnership with the public and private sec- a Better Quality tors in continuing to promote the comprehensive develop- ment of children between the ages of 0 and 6. Here we have joined up with various Government initiatives aimed of Life at training educators with regard to teaching and psy- choemotional issues, providing funding for child develop- Being an organization that thinks respon- ment centers and generally strengthening early childhood sibly, requires us to go beyond the eco- education so as to pave the way to formal education. nomic role we play as agents of social de- velopment agents and concern ourselves Significant progress was made with our Successful with creating long-term transformation Transitions program and thanks to these good results and capabilities that have a positive im- we were able expand its coverage to another 16 munic- pact on the community, so as to compre- ipalities, in the Departments of Antioquia, Cundina- hensively support the life cycles of our marca and Sucre, improving the living conditions of people from early childhood until they be- 3,389 children in 66 schools that are currently transi- come independent adults responsible for tioning from early to formal education. We have also their own development. trained 622 qualified educators and teachers so that schools can prepare themselves in the best way pos- One of our main commitments in this sible to help children enter the educational system. regard is being able to reach a larger number of Colombians with our early With an investment of COP 5,301,222,450 we childhood education and entrepreneur- helped a total of 58,300 children and educators ship programs. across the country. support of Bancolombia we were able to hold the First Philharmonic Orchestra Festival of Latin American Journalism, aimed at show- casing journalism as a civic and cultural process of the With our support, 14 concerts were performed dur- utmost importance". ing last year´s Philharmonic Orchestra season, so Jaime Abello, Director of the New Iberoamerican that more people could discover through symphon- Journalism Foundation. ic music a different way of enjoying art. We also sponsored Medellin´s 7th International Music Festi- val, which filled the city with different rhythms and Metropolitan Theater musical genres, providing more than 15 thousand people with free access to lectures, academic activi- Apoyamos la realización de tres conciertos es- ties, concerts and theater performances. peciales que contaron con la asistencia de más de 2.600 personas, entre ellos la presentación del Cuarteto de Cuerdas de Brasil, uno de los Boyaca´s International Culture Festival mejores ensambles de guitarra del mundo y ga- nadores de un Premio Grammy; el concierto de Music, theater, dance, literature, visual arts and cultural Maxim Vengerov, considerado uno de los mejo- exchanges in various scenarios formed the cultural rich- res violinistas del mundo, y la presentación del ness that this event was able to show Colombia, which so cantautor uruguayo ganador de un Premio Oscar, far has been extended to cover nearly 90 municipalities in Jorge Drexler, quien en un concierto estelar de- this Department. More than 15,000 people enjoyed the leitó a más de 1.300 asistentes con la profundi- Festival held in 2014. dad de sus letras. 150 ANNUAL ANNUAL 151 MANAGEMENT REPORT MANAGEMENT REPORT

programs relating to infrastructure, language preneurs in five departments (Quindio, San- Our new program “Contributing from the Heart” Education Program1 and technology labs as well as natural science tander, Norte de Santander, Bolívar and Risa- is gaining popularity. This enables our employees labs together with other programs focusing of ralda), in the technical, financial, social and to make cash donations to the Bancolombia developing human values and social skills so commercial aspects of their different busines- Foundation, which are in turn invested, in Early We continued to support public-rural and urban as to foster a healthier coexistence within the ses. We have enjoyed the support of different Childhood Education and / or Entrepreneurship schools so as to ensure the best possible quality, beneficiary communities. local Chambers of Commerce, the Colombian programs, as the employee should so choose. coverage and relevance of child education. We Apprentice Institute (SENA) as well as town This year we extended the program A Day for also helped hundreds of youngsters to continue We also implemented a children´s financial councils and foundations working in the busi- My Country to six new cities and towns, namely their technical, technological and professional literacy program along with an educational ness ecosystem. We partnered with the Sophia Quibdó, San Andrés, Valledupar, Aguazul, studies. workshop for sugar cane growers, teachers Perez de Soto Foundation in eastern Antioquia, Palmira and Popayan. We also worked in close and parents from the schools covered by the where we are coaching entrepreneurs from a conjunction with our strategic partner Sodexo on With the program 'Reading and Writing in Co- Supporting Education initiative, through which business standpoint through the Promoter of events such as "D-Day" (in-kind donations), and lombia', we are enhancing the literacy skills of they were taught about the financial aspects of Social Commerce agency. voluntary counseling given by experts from this children and young people in rural communities managing their personal finances, credit ma- organization on important issues and which is at a total of 200 educational institutions in 16 nagement products and household economy. We also work on a project in partnership with providing added value to the NGOs participating Departments. 97% of the targeted group of Also, as part of the IDB-ILC Banco Agricola the Carvajal Foundation based on an inclusive in the "Leave Your Footprint" program. schoolchildren were introduced to basic affec- agreement, workshops were staged for owners business model in Cali, supporting eight fa- tive and cognitive reading so as to improve rea- of shops and micro and small SMEs. milies with the launching of a production unit Number of volunteers per region: ding comprehension in the classroom. that is creating full-time jobs.

On the other hand, our higher education scho- The total number of beneficiaries on a Direct beneficiaries of our entrepreneur pro- Antioquia: 4.607 larship program "Dreams of Peace" provided nationwide level came to 58,160 for a total grams in Colombia came to 283 with another gratifying results on a nationwide level, in investment of COP 6.792.338.657 700 indirectly benefited (by the number of providing direct and indirect support to jobs created by these businesses) for a total Bogotá: 1.968 580 young people from 29 Departments, In El Salvador, we helped more than 14,500 investment of COP 1,591,861,813 in 2014. who have been able to realize their students, for which we invested more than COP Sur: 1.702 dreams of a college education. 300,000 thousand dollars. Volunteer Corps In El Salvador, we also demons- Caribe: 1.843 trated our social commitment Here we fulfilled our goal of recruiting 10,000 by carrying out a total of 21 of our employees as members of our volunteer educational projects through Entrepreneurship Program corps. Upon including those who dedicate Centro: 1.073 our intersectoral alliances, their time and make in-kind and monetary providing a total of 215 We work to drive economic development in di- contributions, we now have 11,193 volunteers fferent parts of our country providing coa- across the country, thereby fulfilling the The number of volunteers in 2014 grew by 31% ching to entrepreneurs in the proper fundamental purpose of volunteer work, which year-on-year, for a total of 34,101 volunteers taking part in 30 different towns in 23 Depart- handling of their finances, helping is to is to mobilize more and more employees towards helping the disadvantaged and creating ments. The budgeted investment came to COP them to improve their products and 680'011.858 make them more competitive. We a more equitable social fabric. COP 2,308,600,082 was invested in other so- rate these beneficiary entrepre- cial development projects. neurs in order to exemplify them Our volunteers dedicated a total of 46,636 as agents of social change wi- hours, which is equivalent to COP 819'509.753, The total figure amounted to COP 14,974,034,860 in community projects. thin their own communities. if we were to calculate each hour of their time at an average hourly rate corresponding to their Thus we are consolidating salaries or wages. We invite you to extend the information abour our fundation in the web Growing with My Business ini- https://www.fundacionbancolombia.org/informe-de-gestion-2014/ tiative which began in 2013 as a pilot program in Risaral- *1 Regulatory definitions required that financial education programs were mandatory as an offer of value from financial institutions to their da. Currently we have helped customers; for this reason, it was decided to stop the financial education program that was of benefit for over 100,000 young people from edu- more than 230 microentre- cational institutions, to focus on providing this knowledge on a permanent basis and made it available online for about 10,000,000 Bancolombia customers. See further information at: www.grupobancolombia.com/usoresponsable. 152 ANNUAL ANNUAL 153 MANAGEMENT REPORT MANAGEMENT REPORT

Our presence and impact Caribbean Region Atlántico Early Childhood 14,854 Children 1.843 Córdoba 618 educators on the different regions in Magdalena Lines Education 8.911 students Bolívar 372 teachers San Andrés Entrepreneurship 45 enterpreneur Departments Cesar Volunteer Corps Beneficiaries 4.413 children and Adolescents

Colombia Sucre Volunteers Total La Guajira Antioquia and Chocó Region Education Antioquia Early Childhood 11.335 children 4.607 Chocó 484 educators Lines Education 6.564 students 410 teachers Entrepreneurship 37 entrepreneurs Departments Volunteer Corps Beneficiaries 14.060 children and adolescent

21 entrepreneurs Volunteers Total 176 elderly people 260 animals Bogota and Cundinamarca Region

Cundinamarca Early Childhood 4.206 students 1.968 176 educators

Early Childhood Lines Education 810 students 165 teachers Volunteer Corps 3.995 children and adolescents Departments Beneficiaries 40 householder women Total Volunteers Total Central Region

Boyacá Early Childhood 16.760 children 1.073 Casanare 843 educators Tolima Lines Education 15.767 students Huila 575 teachers Entrepreneurship Meta Entrepreneurship 110 entrepreneurs Departments Norte de Volunteer Corps Beneficiaries 4.313 children and adolescents

Santander 15 Householder women Volunteers Total Santander Amazonas Putumayo Arauca Caquetá Vichada Southern Region

Valle del Cauca Early Childhood 8.326 children 1.702 Cauca 517 educators Volunteer Corps Lines Risaralda Education 21.209 students Caldas 608 teachers Nariño Entrepreneurship 91 entrepreneurs Departments We are present in 31 from 32 Quindío Volunteer Corps Beneficiaries 3.604 children and adolescents departments 120 animals Volunteers Total 154 ANNUAL ANNUAL 155 MANAGEMENT REPORT MANAGEMENT REPORT

having set goals for reducing our consumption of water, ener- In Bancolombia we are striving to Eco-efficiency gy, paper and travel. Consolidating our strike a perfect sustainable balance between the quality of the environ- The consolidated information in this To achieve these goals we created specific strategies that are ment and the quality of people's eco-efficiency report corresponds to regularly reviewed with the corresponding areas, based on the Sustainability, Social lives,, identifying the direct and indi- the period January 1 to December 31, model defined by the Carbon Disclosure Project. Based on rect impacts of our activities on the 2014. The scope of this report includes Bancolombia's International Sustainability strategy, in 2014 environment while preventing, miti- the Bancolombia Group’s subsidiaries in and Environmental Colombia, Panama and El Salvador, for a we extended our Corporate Eco-efficiency program to Banco gating, correcting and offsetting the Agricola in El Salvador and Banistmo in Panama. inherent risks for a better tomorrow 100% coverage of all those places where Model that future generations can enjoy. the Bancolombia Group exercises opera- ting control. Materials used by weight and volume. EN1

The Bancolombia Group's direct im- Paper (kg) Performance Goals for 2010-2020 and the targets set for 2014 goal achieved unrealized goal pact on the environment mainly relates 2010 252.824 to the natural resources it consumes in Total Bancolombia 2011 248.821 Goal Goal % Change Goal carrying out its business activities. In Group 2012 295.447 2014 2015 2010/ 2010/ 2014, we included our eco-efficiency 2013 308.257 program in our Corporate Scoreboard 2014 315.994 2010 2011 2012 2013 2014 2014 2020 Energy consumption within the Organization. EN3

Energy (Kwh) 80707277 85346425 90153219 89115481 87017379 -2% -2% 8% -10% Biodiesel Biodiesel Change 5,7% 5,6% -1,2% -2,35% Water (m3) Diesel (Gl) B8(Gl) B10(Gl) Gas (m3) Electricity (kWh) 398172 223884 277239 250060 238502 -2% -2% -40% -50% Change -43,8% 23,8% -9,8% -4,6% Total 2010 6.792 - - 40.936 80.707.277 Paper (kg) 252824 248821 224547 217157 222669 -5% -7% -12% -35% Bancolombia 2011 - 2.026 9.607 52.485 85.346.425 Change -1,6% -9,8% -3,3% 2,5% Travel (Km) Group 2012 4.153 3.016 18.706 64.362 103.197.690 10963422 12660349 10701353 10645558 8861540 -5% -2% -19% -16% Change 15,5% -15,5% -0,5% -16,8% 2013 3.952 3.745 22.005 34.371 102.423.096 Ordinary Waste 4391 1256 1121 999 1107 -5% -5% N/A N/A 2014 49.196 3.843 28.187 48.818 114.728.451 Change -71,4% -10,7% -10,9% 10,8% B8 2026 3016 3745 3843 N/A N/A N/A N/A Energy Intensity per Full Time Employee (EN5) Change 49% 24% 3% B10 9607 18706 22005 28187 N/A N/A N/A N/A Diesel Biodiesel Biodiesel Electricity Change 95% 18% 28% (Gl/FTE) B8(Gl) B10(Gl) Gas (m3/FTE) (kWh/FTE) Hazardous Waste (Ton) 1 18 15 7 14 -10% Gestion 100% N/A N/A Change 1269% -14% -58% 108% Total 2010 0,239 - - 1,443 2.844,2 Recyclable waste 340665 341549 441486 331575 198803 20% Aprovechamiento N/A N/A Bancolombia 2011 - 0,062 0,296 1,617 2.629,4 Change 0,3% 29,3% -24,9% -40,0% 90% Group / FTE 2012 0,119 0,086 0,535 1,841 2.951,5 WEEEs 58 143 198 174 275 -5% Gestion 100% N/A N/A 2013 0,090 0,085 0,501 0,783 2.333,0 Change 147,6% 38,0% -11,9% 58,1% 2014 1,058 0,083 0,606 1,049 2.466,3 The goals contained in our corporate scoreboard goals only applied to Colombia in 2014. However, an overarching set of corporate goals are scheduled to be defined and deployed in Panama, El Salvador and Colombia. 156 ANNUAL ANNUAL 157 MANAGEMENT REPORT MANAGEMENT REPORT

Reductions in energy consumption. EN6 Total weight of waste by type and disposal method EN23.

2010 2011 2012 2013 2014 Recyclable Waste (Tons) 2010 2011 2012 2013 2014 Electricity 80.707.277 85.346.425 103.197.690 102.423.096 114.728.451 % Change 5,75% 20,92% -0,75% 12,01% Bancolombia 340,6 341,5 441,5 331,5 198,8 Gas 40.936 52.485 64.362 34.371 48.818 Banco Agrícola N/A N/A 0 0 0 % Change 28,21% 22,63% -46,60% 42,03% Diesel 6.792 - 4.153 3.952 49.196 Banistmo N/A N/A N/A N/A 15,8 % Change -100,00% N/A -4,84% 1145% B8 - 2.026 3.016 3.745 3.843 Total 340,6 341,5 441,5 331,5 215 Bancolombia Group % Change N/A 48,86% 24,17% 2,62% B10 - 9.607 18.706 22.005 28.187 % Change N/A 94,71% 17,64% 28,09% Ordinary Waste (Tons) 2010 2011 2012 2013 2014

Total water consumption by source. EN8 Bancolombia 4391 1256 1121 998 1107

2010 2011 2012 2013 2014 Banco Agrícola N/A N/A 16 16 16 Water (m3) 398172 285145 321776 311440 346390 N/A -28,4% 12,8% -3,2% 11,2% Banistmo N/A N/A N/A N/A 134 Total 4391 1256 1137 1014 1257 Rainwater (m3) 2057 7966 13957 14744 13946 N/A 287,3% 75,2% 5,6% -5,4%

Groundwater (m3) 16 359 166 225 1399 Hazardous Waste (Tons) 2010 2011 2012 2013 2014 N/A 2143,8% -53,8% 35,5% 521,8% Total Bancolombia Group Total Bancolombia 1,3 17,8 15,3 6,5 13,5 Total 400245 293470 335899 326409 361735 Banco Agrícola N/A N/A 3,6 3,7 3,8

Percentage and total volume of water recycled and reused. EN10 Banistmo N/A N/A N/A N/A 0,0 Total 1 18 19 10 17 2010 2011 2012 2013 2014 Reused Water (m3) Bancolombia 2073 8325 14123 14969 15345 Reused Water (m3) Banco WEEEs (Tons) 2010 2011 2012 2013 2014 Agrícola N/A N/A 0 0 0 Bancolombia 57,8 143,1 197,5 174,0 275,1 Agua Reused Water (m3)

Bancolombia Banco Agrícola N/A N/A 0 2,6 7,7 Banistmo N/A N/A N/A N/A 0 Total Power Consumption (m3) 400245 293470 335899 326409 300024 Banistmo N/A N/A N/A N/A 7,5 % Reused 0,5% 2,8% 4,2% 4,6% 5,1% Total 58 143 198 177 290 158 ANNUAL ANNUAL 159 MANAGEMENT REPORT MANAGEMENT REPORT

Energy efficiency projects at branch office level are processed in the same way and not printed. these needs. For more information, please click 42,000 trees, for a total of 170,180 since this pro- With this, we have ceased to send out 365,769 on the following link: gram began in 2011. So as to be able to effectively control and our energy spread sheets this year. http://www.grupobancolombia.com/webcorporativa/ efficiency at branch office level, we have a group of responsability/content/RE/climateCH.asp This represents approximately 675 tons of CO2 eq staff dedicated to monitoring consumption and ex- captured in 2014. Over the next 15 years, we are ex- pense relating to our eco-efficiency indicators, and Waste Recovery Strategy at Branch Office Level After reviewing the 96 economic sub-sectors of the pecting to capture another 10,125 tons of CO2 eq. every month an interdisciplinary committee is held. economy in which we work, we performed an analysis As part of our recyclable waste program, we recov- of which were the most sensitive to climate change The 170,180 trees planted as part of this agreement Last year we replaced our fluorescent lamps for LED ered a total volume of 198 tons producing savings (mitigation and adaptation) so as to proactively draw captured a total of 6,808 tons of CO2 in just 2014. white lighting panels at our Los Molinos Branch Of- of COP 58 million that shall be used for our sus- up a work plan in support of these clients. fice, with savings of 1100 kWh / month at cost of tainability projects. Likewise, with the amount donated to the Ban- COP 4,646,400. We have also changed our UPS for With regard to the El Niño weather phenomenon CO2 project, we have offset our footprint with an- a modular system reducing our electricity consump- that affected Colombia in 2014, we are working other 900 tons of CO2. tion by 14% compared to the same period last year. Climate change with our clients that have been most affected in different regions and sectors. In conjunction with Bancolombia Group's Carbon Footprint We also reviewed whether our equipment at branch In 2013, we defined our climate change policy and various suppliers and service providers, we staged (Tons of CO2 equivalent) office was too excessive for the utility perceived. strategy and drew up our first ever report for the Car- workshops where we presented our range of en- These investigations revealed the need to change bon Disclosure Project. The main results obtained in vironmental products and technologies that al- 3493 3516 a 30KVA UPS which only functioned at 30% of its 2014 were as follows: lowed for more efficient processes. We also drew 5452 capacity at the El Poblado Leasing Bancolombia up sector-based infographics for our sales team, subsidiary, replacing this with a smaller one that CDP Results - Bancolombia: in which we identified impacts, risks and oppor- 3353 was available at our Central Headquarters. Installa- • 85-point score for Disclosure, placing us within tunities in terms of cleaner production methods tion expense came to COP 1.648 million, which we the B Performance Band. so as to provide value added advice to our clients recovered within just four months with consump- • We are the only bank and organization in Colom- and encourage them to recommend us to others. tion savings of 17,280 kWh / year. bia to be included in the CDLI (Climate Disclo-

sure Leadership Index for Latin America). 15233 16274 16976 16713 15996 • We are also the regional leader in transparency Carbon footprint Efficient use of water with regard to our climate change strategy. We continued measuring our carbon footprint We corrected or repaired all leakages at our branch based on our direct and indirect operations in Co- 2010 2011 2014 offices, and found that our Calle Nueva Branch Highlights lombia, El Salvador and Panama. With a view to 2012 2013 in Medellín (Antioquia) was spilling 600m3 per reducing our energy consumption, we are offsetting month as a result of faulty plumbing. This repair As part of our role as representatives of the Green Pro- our footprint by means of various ecosystem resto- cost COP 2,652,873, which was recovered in just tocol, we attended a Sisclima Financial Management ration projects in conjunction with the Natura Foun- two months since now the branch´s current water Committee meeting, held on November 20. Here we dation in Colombia where we have planted another Banistmo Banco Agrícola Bancolombia consumption comes to just 30 m3. shared strategies such as the Green Climate Fund and coordinated a plan with the UNEP, UNDP and WRI for Bancolombia Group's Carbon Footprint EN15, EN16, EN17, EN developing capabilities for receiving green fund backing Zero Paper Strategy on the part of both development and private banks. 2010 2011 2012 2013 2014 We initiated various projects in terms of our paper- less strategy, which seeks to reduce printing and Managing risks and opportunities with regard to Scope 1 (tons of CO2 eq) 145 151 270 296 811 the amount of paper used. One of these is the "Viva climate change GRI4 EC2 Voz," project that focuses on eliminating transaction Scope 2 (tons of CO2 eq) 12978 13724 17706 17603 21942 forms with which we aim to save the equivalent of We have detected a series of risks and 84 million print-outs. Since October 2014, we have opportunities with regard to climate change. Scope 3 (tons of CO2 eq) 2109 2399 2493 2329 2050 eliminated 56% of these transaction forms. These include physical, legal, reputational risk as well as changes in client behavior patterns and Total 15233 16274 20469 20228 24802 Another is our "Electronic Teller " projects whereby increased humanitarian demands. We also saw an % Change 6,84% 25,78% -1,18% 22,61% all documents received electronically by the bank opportunity for creating new businesses to meet 160 ANNUAL ANNUAL 161 MANAGEMENT REPORT MANAGEMENT REPORT

Greenhouse Gases (Scope 1). EN15 Maintaining our stakeholders up-to-date on en- efficiency, renewable energy and sustainable vironmental issues construction projects in Colombia. Scope 1 • We were recognized by the Semana magazine Biodiesel Biodiesel TOTAL We use our external and corporate communica- as one of the 20 most sustainable companies tion channels to share with our various stakehold- in Colombia. Diesel (Gl) (Ton Co2 eq) B10(Gl) Gas (m3) (Ton Co2 eq) ers the most important environmental initiatives that we have embarked on, so as to raise aware- AESR: ness among our employees of the importance of Absolute Footprint - 2010 68,87 - - 76,55 145,42 As an integral part of our sustainability strategy acting responsibly in terms of the environment we have provided training to our internal interdis- Bancolombia Group 2011 - 18,81 87,24 45,10 151,15 by means of notes, on-line training courses and ciplinary teams regarding the more environmen- campaigns, among other activities. 2012 41,90 28,00 169,87 30,31 270,07 tally-sensitive sectors of the economy such as: For more information, please go to the following link. 2013 39,88 34,76 199,83 21,28 295,74 a. Fracking http://www.grupobancolombia.com/sustainability/ b. Hydrocarbons Inclusive-Bank.html 2014 496,38 35,67 255,97 22,53 810,56 c. Mining

d. Gas Stations e. Transport of Hazardous Substances Energy indirect greenhouse gas (GHG) emissions (Scope 2). EN 16 Environmental education GRI FS4 Procedures for assessing and screening Scope 2 We conduct employee classroom training and on- line courses on sustainability, environmental and environmental and social risks in business lines. GRI4-FS2/3 Electricity (Ton Co2 eq) TOTAL (Ton Co2 eq) social risk assessments, sustainable business and eco-efficiency issues We have an internal process in place that al- 12.978 12.978 On-line Courses: lows us to identify, prevent and mitigate indi- Absolute Footprint - 2010 rect environmental and social risks associated • Eco-efficiency 8.173 employees Bancolombia Group 2011 13.724 13.724 with projects and activities undertaken by our • Think Green (Sustainable Business): 965 em- clients and investors and financed by us. Here 2012 17.706 17.706 ployees we recognize business opportunities with posi- • "Let´s be sustainable" 1.880 employees tive environmental impact GRI4 FS2. For more 2013 17.603 17.603 • AESR: 1.954 employees information, please click on the following http://www.grupobancolombia.com/ webcorporativa/responsability/content/RE/ 2014 21.942 21.942 Classroom Training: analysisRSE.asp • Sustainable Businesses Other indirect GHG emissions (Scop 3) En17 We conducted 25 training courses for our sales We enhanced our environmental and social risk force, which were attended by 230 members assessment policy by extending this throughout Scope 2 of our staff by means of teleconferences and our entire Organization, including newly designed personally attended meetings. documentation and processes and additional re- Paper Travel TOTAL quirements based on the Equator Principles III in (Ton Co2 eq) (Ton Co2 eq) (Ton Co2 eq) We also contributed to a total of 75 web publica- terms of human rights and climate change, that tions and printed media, for which we obtained shall allow us to expand and improve upon our performance on a Group level. 2010 214,90 1.894,56 2.109,46 recognition for our sustainability strategy, includ- Absolute Footprint - ing the following: 2011 211,50 2.187,81 2.399,30 We evaluated 145 projects being financed by Bancolombia Group our different business units, 49 on the part of • In conjunction with Cecodes we published an 2012 251,13 2.242,29 2.493,42 the Bank and 97 in the case of Leasing Banco- article on our sustainability strategy. 2013 262,02 2.067,30 2.329,31 lombia, 32 of which are worth more than USD • In the Colombia Energia magazine we dis- 10 million, and in turn 20 of these received 2014 268,59 1.781,13 2.049,72 cussed the financing we provide for energy more than USD 10 million in project financing. 162 ANNUAL ANNUAL 163 MANAGEMENT REPORT MANAGEMENT REPORT

Environmental and Social Risk Analysis During 2014, increase the number of projects evaluated 20.7% Type of review Number of projects evaluated Number of projects evaluated based on the amount by business unit

Sector and project 113(78%) 96(66)% Category Evaluation date Country External Internal Top US$10MM Leasing Bancolombia Agro-Industry Project involving the planting, sowing, cultivation and agro- industrial processing of palm oil covering 5500 hectares B 26/03/2014 Nicaragua X Energy Hydroelectric power station A 13/06/2014 Colombia X Hydroelectric power station A 19/06/2014 Colombia X 6(4%) 22(15)% Banca de Banca PYME Hydroelectric power station A 29/10/2014 Colombia X Inversión Hydroelectric power station A 20/08/2014 Guatemala X Hydroelectric power station A 29/10/2014 Colombia X Hydroelectric power station B 04/12/2014 Colombia X 10(7%) Oil and gas Banca Empresarial y Corporativa Building and operating a pipeline A 28/05/2014 Colombia X Oil drilling A 28/11/2014 Colombia X Oil drilling A 07/10/2014 Colombia X 32(22%) 11(8)% Lower US$10MM Banca Empresas y Gobierno Infrastructure New warehousing C 15/08/2014 Colombia X X Public infrastructure C 21/08/2014 Colombia Evaluated projects by economic sector Motorcycle manufacturing plant C 21/08/2014 Colombia X 43(30%) Mining Oil and gas Hydrated lime production A 13/08/2014 Colombia X 13(9%) Quarrying project (building materials) A 12/08/2014 Colombia X Energetic 10(7%) infrastructure Quarrying project (limestone) A 22/10/2014 Colombia X 5(3%) Port services Agroindustry 46(32%) Miner Expanding and maintaining an airport terminal A 22/07/2014 Colombia X 6(4%) Others Building a general-purpose maritime port (bulk and coal freighters) A 09/09/2014 Colombia X Basic sanitation 5(3%) 3(2%) Port Hazardous Substances transport Building an industrial wastewater treatment plant B 28/08/2014 Colombia X 1(1%) 13(9%) Building and operating an area for handling and Chemicals and Agrochemicals Basic sanitation disposing of solid waste B 06/11/2014 Panamá X 164 ANNUAL ANNUAL 165 MANAGEMENT REPORT MANAGEMENT REPORT

Adherence to international protocols Unep FI: We continued to form part of this alli- dustrialists), so we remain permanently updated ating business opportunities, tax benefits for our and principles ance together with more than 200 financial in- on all changes to Colombian legislation in this clients and participating in the workshops held stitutions sharing best sustainable practices in regard discussing and helping to introduce new by the Colombian Government namely the UPME The Equator Principles: We adapted our process- this regard. environmental standards. (Mining and Energy Planning Unit attached to the es to the new requirements contained in Version Colombian Ministry for Mining and Energy) for III of these Principles, these mainly relating to PRI: In March 2014, we became the first compa- We also have our own Environmental Committee regulating said Law. climate change, footprint metrics and prior con- ny in Colombia to become a signatory of the UN´s that meets on a monthly basis to discuss techni- sultation. We rely on the team work being con- Principles for Responsible Investment. As part of cal issues of a legal nature in all those countries Last year, Renting Colombia began maintaining ducted in Latin America so as to be able to share this commitment, we published our own Respon- where the Bancolombia Group is present. the trees planted along the roads transited by our experiences in implementing these practices. sible Investment Policy. As institutional investors, the fleets of vehicles belonging to clients of its we are duty-bound to create long-term value for The most important progress made TransporTempo subsidiary. We also helped with Green Protocol: We continue to actively partici- our beneficiaries. In our role as trustees, we be- in this regard last year is shown as all the paperwork involved with the correspond- pate in this protocol, this year through a specific lieve that environmental, social, and corporate follows: ing environmental authorities approving said pro- area set up to manage the strategies proposed governance issues can affect the performance of gram. at different meetings and their related activities. our investment portfolios and recognize that the We continued to put into place that stipulat- implementation of this policy helps us to act in ed in Resolution 1512 of 2010 with regard Eco-efficiency strategy: : We helped with keeping with society´s broader objectives. to Selective Individual Collection and Environ- Environmental Management System the structuring of a sustainable procure- mental Management System for Computer ment guide for the financial sector under the For the first time ever we were involved in the and Peripheral Waste. This work plan is be- We continued to beef up our environmental man- auspices of the Colombian Ministry of the Colombo - Dutch Responsible Investment Initia- ing developed in conjunction with our supplier agement system so as to continuously improve Environment, Housing and Territorial Devel- tive (CDRII), under the auspices of Sustainalyt- Belmont Tech. upon our environmental performance, in keep- opment (MADS), in order to provide method- ics, which is being funded by the Dutch Embassy ing with our internal Environmental Management ological guidelines for handling the procure- in Colombia. This project is aimed fostering a policy introduced back in 2008, which was drawn • With regard to Resolution 1457 of 2010, re- ment function within each financial institution more propitious environment for Responsible In- up by representatives of each of our operating garding the implementation of a Selective based on sustainable criteria. vestment in Colombia, creating an institutional areas. Our internal and external auditing staff framework and forming a knowledge bank with Individual Collection and Environmental Man- completed a thorough evaluation of this system, agement System for Used Tires both Leasing Our sustainable business strategy: In con- the companies involved in this Responsible In- which enabled us to detect processes that had Bancolombia and Renting Colombia are draw- junction with the Colombian Ministry of the vestment initiative, building up the capabilities to be dealt with so as to ensure our continuous ing up a work plan. Environment, Housing and Territorial Devel- of these same companies and finally further de- improvement and that these were fully compliant opment (MADS and other banks who have veloping the market for sustainable investment in with ISO 14001. embraced the Green Protocol, we drew up Colombia. The Bancolombia Group is a member • In compliance with that stipulated in Resolu- a guide for our sales personnel with regard of the advisory committee for this initiative. tion 222 of 2011, relating to equipment con- The following environmental and social policies to tax incentives in Colombia. We also were taining polychlorinated biphenyls (PCB), we remained in place in 2014: FS1. involved with the first sustainable business Global compact: As part of our commitment to are 60% of the way through an inventory that the Global Compact, we remain engaged with opportunities workshop in the field of solid we are taking of all PCB equipment owned by a. Climate Change waste and worked with the CGFCC - SISCLIMA aligning our operations and strategies with the the Bancolombia Group. with the cooperation of UNEP and UNDP on ten universally-accepted principles in four key b. Controversial Issues in financing the necessary capabilities and resources for areas of human rights, labor standards, environ- • We also responded to the Technical Ozone c. PRI fostering a sustainable business climate. ment and anti-corruption. Unit - (UTO) attached to the Colombian Min- d. Human Rights istry of the Environment regarding Bancolom- AESR strategy: We are currently helping to Respect for all applicable legal and bia's air conditioning equipment and the refrig- draw up the first Sectorial Guide on Waste regulatory provisions as part of We also formed a partnership with the WWF to erant gases contained in such equipment in and Environmental and Social Risk, this for Bancolombia´s policy framework include certain environmental and social crite- order to continue implementing and complying the use of our sales personnel. Also meetings ria for different sectors of the economy crite- with the commitments acquired by Colombia were held with the Colombian Environmental Committed to preserving the environment, we ria, thereby giving rise to our Webex educational in terms of the Montreal Protocol. Licensing Agency to establish two-way com- abide by all current environmental legislation strategy for our clients. munications with projects for which licenses putting into place procedures to reduce the envi- have already been obtained as well as their ronmental impact of our activities. We continued We also evaluated the Colombian renewable en- As for the amounts spent and invested in our en- current compliance status with local environ- to actively participate in the Environmental Com- ergy legislation, as regulated by Law 1715 of vironmental management system, these are bro- mental authorities. mittee of the ANDI (Colombian Association of In- 2014, where we identified issues relevant to cre- ken down as follows: 166 ANNUAL ANNUAL 167 MANAGEMENT REPORT MANAGEMENT REPORT

1. Green Financing Workshop, Guatemala, 9. Biodiversity Talks: The future of November 24 and 25, 2014. environmental offsets in Colombia. Breakdown of total environmental expense and investment 2. Expoagrofuturo Fair, September 2014 Bogotá, May 2014. Universidad de los Andes. 3. Green Business Workshop, Asobancaria Waste and emission treatment expense as Costs Environmental management and risk prevention Costs and Green Protocol. September 2014. 10. Experience and business opportunities in managing environmental and social risk. well as restoration costs costs 4. Event staged by the Bogota Environmental Brasilia, August 2014. BNDES IDB. and Cleaner Production Department. May 2014. 11. The role of the private sector in climate Sanitation rates 253.000.000 “Rational Use of Energy” Strategy 2.300.000 finance. Bogotá, November 2014. DNP. 5. REDD + Cartagena event. April 2014. Technical Maintenance of Electromechanical 12. Responsible investment, Medellín. 6. Cleaner Production Agreements with November 2014 RS. Hazardous waste disposal services 62.591.980 Equipment 13.720.520 Corantioquia. January 2014. 13. Responsible investment, Bogotá. 7. FIMA (International Environmental Fair) Clean-up costs on the Santa Elena plot of land 1.884.087.000 Changeover to more Efficient Equipment 157.200.000 November 2014 RS. Business Roundtable, where our line of Designs of Environmental Infographics per Sector 350.000 financing for energy efficiency projects 14. Green infrastructure, Lima. December Design of Bancolombia´s Environmental Report and renewable energy was presented. 2014. COP20. 2013 3.298.000 June 2014. 15. Latin America and the Caribbean´s 8. IDB´s REED Sustainable Projects, Climate Finance Day, Lima. December Total 2.199.678.980 Total 176.868.520 Cartagena, April 2014. 2014. COP20. Total environmental investment $ 2.376.547.500 Financing Green Line (Leasing Bancolombia and Bancolombia bank) $75,902,779,663.26 20 sustainable SECO Line (Leasing Bancolombia and Bancolombia bank) $1,358,000,000.00 3 Amount / COP business Rediscount Lines (Bancóldex, Findeter) Bancolombia bank $7,150,000,000.00 No. Operations 6 Sustainable Business (GRI FS8) Government (SECO), with which we have worked for seven years, and which are also offered by (Colombia) Rediscount Lines (Bancóldex, Findeter) Leasing Bancolombia $9,131,055,808.00 4 We continued to structure our sustainable busi- Leasing Bancolombia. Leasing Bancolombia $36,961,224,483.00 12 ness model that includes financial and technical Ordinary Loans $57,447,000,000.00 7 assistance for client projects that provide social We have expanded our portfolio of environ- and environmental benefits. We conducted 74 mental suppliers and service provides in pro- Sufi third party channels. Financing for electric motorcycles $28,998,800.00 12 viding greater support and national coverage. client visits, some in the company of our service Total Financing $187,979,058,754.26 64 providers, identifying a total of 165 business op- We have currently partnered with a total of portunities, thereby providing added-value tech- six firms: Azimuth Consulting, Garper Energy nical assistance in seeking innovative solutions Solutions, MGM Innova Services, Ambiental- that have a positive impact on the environment. mente, Gaia SASY and the National Cleaner Production Centre. BanCO2 We helped 67 clients to identify environmental tax benefits when investing in sustainability. Participating in industry events: • We continue to support the BanCO2 project, which is a payment strategy for environmental We also set up our own green line of credit services enabling companies, institutions and aimed at projects involving cleaner production, We gave conferences at 15 of these events, the public at large, to calculate and offset their energy efficiency and renewable energy, thereby where we presented our sustainable business carbon footprint through our website, thereby complementing our existing portfolio of prod- model, our green lines of credit as well as the encouraging the conservation of natural forest- ucts and services provided by development technical support we provide as a group. The land and improving the quality of life of the banking and the environmental lines of credit following were the events in which we took rural workers who live there. The activities car- provided in conjunction with the Secretary of part, which were attended by approximately ried out as part of this initiative included: State for Economic Affairs attached to the Swiss 350 clients. 168 ANNUAL ANNUAL 169 MANAGEMENT REPORT MANAGEMENT REPORT

• Signing a partnership agreement with the Na- ing human rights", as part of our support for Qualitative Annotation – Corporate Being part of a highly regulated and tura Foundation to support productivity and and commitment to the Global Compact and Management Report monitored sector and one upon which the ecotourism projects that benefited 26 families. the Equator Principles, which also under the largest share of taxation is levied, along UN Ruggie Framework included in our Human- The Bancolombia Group, as a regional stakeholder with with the importance that Bancolombia istic Banking approach". bears for the national fiscal collection, • We helped to draw up a Code of Good Gover- presence in 11 countries, complies in a responsible and serves the purpose of the Group’s strat- nance for this BanCO2 project. timely manner as tax contributor, in the understanding that taxes should be paid there where the Group oper- egy, since this constitutes an ongoing en- • Here we defined our commitment to monitor- ates. This makes profound sense in the social sphere giv- couragement for us to perform this func- ing and guiding our clients and suppliers in • In conjunction with different environmental en that said resources leverage the development of the tion within an ethical framework focused protecting and promoting human rights. Since authorities we included the BanCO2 payment communities in which we are present as a means to con- on the perdurability of our business, as 2013, we have been incorporating human model for the ecosystem services rendered. tribute to the fiscal sustainability that their Governments we understand that we will only be able rights in our environmental and social risk as- promote through the various measures that they have to progress in societies that are develop- sessments of clients and suppliers alike. We For more about the BanCO2 project, please click implemented aimed at ensuring healthy public finances. ing in a sustainable manner. Growth in lo- on the following have consequently included a Manifesto of Hu- cal economies within a globalized frame- man Rights in the contracts entered into with http://banco2.com/BCO2_WEB/infografia.do With the purpose of meeting fiscal obligations in a timely work and with a significant number of our clients as well as a clause in contracts fashion and in compliance with regulations in effect, we free trade agreements and double taxa- signed with suppliers and contractors. We also are constantly reviewing and analyzing the laws, decrees tion prevention treaties, along with some included various human rights requirements in The Santa Elena Plot of Land and concepts issued by national and territorial entities. legal restrictions that modify operations our Requests for Proposals forming part of our and the taxes associated with financial RFP valuation models. In 1987, Banco de Colombia received from the In the years ahead, the tax contribution of the Group will products, have various implications in Colombian Federation of Cotton-Growers a plot be impacted by the Tax Reform issued in the year 2014. each one of the jurisdictions. of land on the Mamonal highway in Cartagena, in • We analyzed the risk of human rights violations the form of a payment in kind. This land showed Uncertainty related to the tax legisla- in the case of 94 subsectors of our economy The Bancolombia Group has contributed to the fiscal fi- trace contamination due to herbicides and pesti- tion and its interpretation poses a risk, in order to establish controls over loans being nances of every country where we have presence through cides deposited on the ground prior to its being given that at present changes in taxation issued to the more critical cases in this regard. dutiful payment of the corresponding taxes. received as payment. Since then the Bank has norms are frequent with potential im- had to take measures to correct this situation. The following graph details the proportions of its total pacts on the fiscal burdens and in turn, During 2013 and much of 2014, we managed to • Another important highlight was having includ- taxes that the Group has paid in each country: on financial statements. This is repre- clean up this land. The results to date continue ed human rights policy guidelines in the Ban- sented in the new tax reform regulation to show the benefits of the methodology applied. colombia Group's Code of Ethics. that the Colombian Government has is- sued though Law 1739 of 2014, which The entire clean-up process has been duly moni- Taxes payed by region modifies Law 1607 of 2012 and brings tored by the Colombian environmental authori- important changes that will start to be Success stories ties to whom we have rendered periodic reports. reflected in the coming years. Colombia 891.442

In keeping with our commitment to human rights, Region However, it is within the bounds of possibility, In addition to the above, each year the

El Salvador paid Taxes in 2014 we decided not to fund an energy project 97.268 that some residual compounds and waste still list of fiscal havens is updated and in Central America since it violated the rights of remain and this is scheduled to be rectified. This Panamá 83.580 that may affect the business of Grupo adjacent communities as well as the employees new stage shall begin during the first quarter of Perú 3.060 Bancolombia and consequently its fi- of the company carrying out the project. We also 2015. nancial results, given that operations rejected another project in Colombia's mining Islas Caymán 184 conducted by our clients with compa- sector for violating the human rights of employ- The communities adjacent to this land have wel- Costa Rica 38 nies located in the fiscal havens may ees and failing to perform due diligence with its comed this project and have been informed of be subject to witholding taxation at a affected communities. Puerto Rico 9 the progress made to date. 33% tax fee, and they would also have Guatemala 1 to meet transfer price obligations. This In terms of our Supply Chain, after consistently Estados Unidos - has given rise to countries signing in- promoting human rights and sustainability for a Human Rights formation exchange agreements with period of five years, we decided to terminate our TOTAL 1.075.582 the aim of promoting international relationship with two of our suppliers for violat- • In 2013 Bancolombia issued its human rights cooperation in tax matters as well as ing the human rights of their employees and fail- policy "Respecting, encouraging and remediat- In millions of Colombian pesos double taxation prevention treaties. ing to remedy the situation. 9 Our Responsibility with Local Authorities

BRAHMS’ SYMPHONY

By: Andrés Delgado. Medellín. Ilustration by: Alex Sarmiento.

According to the legend, one night, at one of the power of music. The man was floating. His body city hills, a man went out to his house deck to was vanishing and he unfortunately couldn’t enjoy the breeze. Darkness in the sky was tota- evade Brahms’ effect. Concentrated. His body lly hosted and the gleam of multitudinous yellow disappeared from the studio. lights could be seen down the hill. The tiny lights looked like the living ashes of a gigantic fire. The Brahms’ composition was playing cleanly and man was silently thinking about the absence of in frequency with the universe harmony; all of sounds, but also about the music. a sudden, the concert stopped and the man couldn’t recover his physical state. He remained Both entities belonged to the same order and he floating on a black and peaceful space, just like found pleasure with silence and music and with a lost soul does. He was totally desperate. He loneliness and company. These aspects were for was in panic slapping and kicking under his this man like intellectual and emotional exercises; weightless condition, just like a ghost, within a music and silence; reasoning and emotion; loneli- dark and lifeless space. Stuck in nameless time ness and company. He remained this way for a and place, with no floor or bottom; a state that while until the moment he wanted to continue liste- made him feel asphyxiated with darkness and ning to the night but with Brahms’ compositions. emptiness. It was terrifying! A couple of seconds elapsed and music started again. He went to his studio and approached the couch near the stereo; he adjusted the headphones and played The man immediately recovered his physical one of the symphonies. He concentrated on the state, sitting in his studio. He was breathing magnificence of that vigorous, strong, and splendidly again, felling his arms and legs and watching executed body. He closed his eyes and imagined he his books and desk. What it happened when was seeing the entire orchestra playing the symphony. he remained suspended in the infinite was a The imaginary lines formed by the violinists’ bows on change of a musical piece, from an Allegro the air; the director moving his baton; and the flau- to an Adagio. But he had not anticipated that tists’ eyes embedded in the scores. He imagined the because he did not know that symphony well. empire of sounds mixed in a masterful manner. This The man understood that he could be kept in was his intellectual exercise. But then he wanted to the space forever. The legend tells us that if stop thinking and started to feel emotions. Now it you are going to listen to Brahms’ songs you was just emotions; placid and clean music. He felt should first know the musical composition, its his weightless body filled with an endless peace. His tone variations, its peaks, its voids, its distres- reality was changing… his reality. ses; you should know by heart all the motions of the composition. Otherwise, and if you exceed Culture His body was not a body anymore; it was a your concentration status, you might vanish in Music spirit, a concentrated steam. It was also the the dark universe of silence. To open your mind and soul and to know the world and approach several musical expressions are the notes of a universal melody that encourages us to transcend as a society. 172 ANNUAL ANNUAL 173 MANAGEMENT REPORT MANAGEMENT REPORT

contained in our Codes of Ethics and Good Gov- ernance that govern all our employees. Employee The Bank´s Compliance understanding and adherence to these codes was evaluated in 2014, producing a good level of re- Legal Situation with intellectual Internal Control sults. The Group has a structure in place, along with the corresponding policies and procedures In 2014, Bancolombia conducted its opera- property and Report to provide reasonable assurance regarding the tions and business transactions in strict ac- achievement of its objectives, where it has con- cordance with current regulations, under the In terms of our internal controls, the Banco- tinued with its strategic planning based on the oversight of the Colombian Superintendency copyright lombia Group deploys a model based on the Group´s 20/20 Vision and its employees were of Finance. recommendations of the Committee of Spon- duly notified of the progress and achievements legislation soring Organizations of the Treadway Com- made with the goals set for 2014. Its financial results have been faithfully re- mission (COSO). This model was updated in 2013 to reflect the characteristics of a finan- flected in its financial statements and all SPursuant to Article 47 of Law 222 passed in The Board of Directors has remained in charge of cial organization with an extensive regional relevant information publicly disclosed us- 1995, as well as Article 1 of Law 603 of 2000, we promoting a culture of risk control within the bank presence such as ours. ing the channels enabled for such by the hereby inform our shareholders that Bancolombia that has been extended to the other companies Colombian Superintendency of Finance and has duly complied with all intellectual property making up the Bancolombia Group. Likewise, roles The following is our Internal Control Report, as the Securities and Exchange Commission and copyright legislation in carrying out its and responsibilities have been defined in terms presented to our shareholders, which contains (SEC) in the United States. business purpose, possessing the corresponding of risk management, internal controls and their an assessment carried out by Senior Manage- rights and/or authorizations, as part of the corresponding assessments, along with clearly ment as well as the findings of independent au- The main contingencies arising from legal contracts entered into with owners or authorized established reporting channels. As a result, we dits conducted by both our statutory auditing proceedings are disclosed in the notes to distributors of such intellectual property and / or have considered the risks relating to the Group´s firm and our internal auditing staff. the financial statements. copyright. strategic definition of its business processes so as to be able to properly manage these. Similarly, we include a report on the activities Since the end of the fiscal year of 2014, the Our own Bancolombia trademark as well as carried out by our Audit Committee. Bank has not been made aware of any sig- other relevant trademarks are duly registered. In The Board of Directors has also ensured that the nificant events that could adversely affect its Colombia, the Bank has registered 203 trademarks, Group´s internal control architecture covers all of

economic, administrative or legal situation 17 commercial slogans, 14 commercial emblems its companies and lines of business, establishing responsibilities for implementing these policies and 15 trade names; having registered another Senior Management Report: 190 trademarks and 2 commercial slogan abroad. and guidelines and clearly defining the respective reporting channels so as to facilitate a more Based on the activities and assessments conduct- At December 31, 2014 and since then, we have comprehensive view of the risks to which the ed by Senior Management, the Bank´s internal not been made aware of any pending legal claims Group is exposed as well as to put into place any Free circulation control system at December 31, 2014 produced on the part of authorities or third parties involving other controls that may be required. positive results in terms of its effectiveness. The possible violations of intellectual property or of commercial control weaknesses detected had no material im- copyright legislation. Employee remuneration plans are periodically pact on the financial statements of 2014. reviewed in keeping with the Bank´s objectives and invoices market conditions. Additionally, job descriptions At December 31, 2014 The results of the assessments made by Senior have been drawn up stipulating the skills, abilities, Pursuant to the provisions of Law 1676 of Management with regard to the different aptitude and expertise that our employees must 2013, we hereby certify that we have duly and after the close, we are components and principles of the COSO I model have in order to fulfill their duties, and these are complied with the obligations that bind are presented below: subject to bottom-up and top-down performance Bancolombia to receive and pay invoices issued not aware of outstanding evaluations as well as conversations with their for its account. To facilitate the free movement claims by authorities or third superiors designed to recognize or enhance and payment of said invoices, we have adopted Control Environment their individual efforts. We also continued with several measures aimed at ensuring that bills parties involving possible our employee training courses, both personally are duly processed and opportunely paid, in Senior Management articulates and demon- attended and on-line, which included content order to meet with due diligence the discounts violations of the intellectual strates the importance of integrity and corporate relating to regulatory compliance, risk prevention, requested by our suppliers. property rules or copyright values, setting the tone at the top of our Orga- information transparency and internal controls. nization by applying all those ethical principles 174 ANNUAL ANNUAL 175 MANAGEMENT REPORT MANAGEMENT REPORT

On an annual basis, the Bank´s internal control Likewise, we determined the extent of our supervised by the Board. The Bank requires that all have a top-down, bottom-up information re- system is evaluated by its Senior Management to compliance with the Sarbanes-Oxley Act of its employees apply the principle of self regulation porting structure that is accurate, complete make sure that all the corresponding components the United States, as a listed issuer on the US so that in conducting different processes this is and easy to understand so as to facilitate the are in place and working properly in keeping with market, and we conducted different trial-runs considered as an inherent part of the scope of decision-making process with regard to risk the 17 principles of our Internal Control System on all those processes included in our financial their responsibility and serves as support for the management and our internal controls. (ICS). The results of these assessments were duly report in order to identify the related risks, claims decisions made. validated by our Internal Auditing Department as and controls. This structure allows Senior Management to well as our Statutory Auditing Firm. In terms of processes, duties have been segregated involve the entire Group in a collective re- On the other hand, and having adopted the Inter- as a control for mitigating the risk of omitting or sponsibility for our risk management func- Both the Board and Senior Management have national Financial Reporting Standards (IFRS) we tampering with information. There are also general tion as well as for defining the correspond- given their wholehearted support to the “Zero evaluated the impact of said standards on each and specific controls for applications, that have be ing controls so that all employees are able to Tolerance” Anti- Fraud campaign, the application of the transactions and processes corresponding specifically designed and deployed to ensure the understand their roles in terms of risk man- of which was reinforced in 2014 for all employees, to all the companies that make up the Banco- proper functioning of programs and technological agement, identifying the controls in place which has been relayed by different messages lombia Group so as to be able to draw up the platforms, as well as inventory controls and spread- and their individual contribution to the work underscoring our ethical commitment as well as opening balance sheet and financial statements sheet monitoring in support of our accounting of others. Similarly, we have adopted the lat- our duty to report any wrongdoing via the Ethics for the year 2014. function. Processes were also updated by those est COBIT standards in support of all our IT Help Line or the Group´s Security Department. responsible for handling such. processes thus ensuring adequate levels of Similarly the Anti-Fraud Program was monitored This methodology allowed Senior Management to information confidentiality and safekeeping to prevent and mitigate the risk of fraud. measure our risk exposure more efficiently while Finally, every six months, the Bank evaluates and as well as policies governing the custody of obtaining a more comprehensive view of how this certifies employee access to applications to ensure such information. is controlled, the effectiveness of such controls due compliance with the respective policies as well and the residual risks obtained, which served as the responsibilities assigned to each position. Risk Management as input for consequent decision-making as well To supplement the above, we are encourag- as subsequent risk mitigation plans. In all those ing a more collaborative culture with a view As a financial group, we are committed to cases where a material risk was detected, these Information and communication to renovating the Bank´s internal information upholding an optimal risk management model losses were measured, recorded and reported site so as to fast track the flow of information that allows us to properly manage our business to the appropriate management levels, which to our employees. risks and achieve the strategic results we expect. Our Organization strives to provide our em- in turn took action to minimize future impacts. From the standpoint of internal control, and ployees and stakeholders with clear, consis- Management policies and maximum exposure in addition to disclosures regarding risks as tent and timely information and have policies In 2014, we informed all our employees of the limits are approved and monitored by the Board contained in our Annual Shareholders Report, in place for handling such. In this regard, the relevant issues affecting our internal control of Directors. it must be noted that the Group has identified findings of different audits carried out allowed system and in violation of our ethical con- potential risks based on how well we know and us to conclude that we have systems in place duct. This was conducted using our corporate understand our business, taking into account that ensure the security and quality of our bulletin boards, internal communications and quantitative factors as well as their probability Control activities information, as well as a governance struc- our own CCTV facilities. Here we firmly un- of occurrence, while applying qualitative criteria ture for processing data with clearly-defined derscored our zero tolerance to fraud, and associated with the type, complexity or structure In order to manage the risks thus detected, we requirements on how to receive, interpret and whenever we did discover instances of inter- of the respective line of business. Based on the reviewed, analyzed and monitored the results process the information obtained from inter- nal fraud, we promptly communicated this above, we assessed wide range of risks, including obtained in order to detect potential problems nal and external sources. The Group has an situation to all our employees together with credit, market, liquidity, operating, financial or errors in our financial reporting as well as the organizational culture in place where both se- the sanctions that were applied. reporting, business continuity, fraud, asset presence of fraudulent activities so as to apply the nior management and employees manage the laundering and the financing of terrorism, using necessary corrective measures. This according to risks associated with their own activities and The latest trends and best practices in rela- our risk management systems. The Group has the Bank´s policy and risk culture, and which are help design the appropriate controls. tion to the internal control system were re- put into place a risk map, which identifies and governed by specific activities and controls. We also ported to Senior Management and the Audit monitors the financial and non-financial risks to effectively apply all policies, processes, controls Our risk culture, philosophy and policies are Committee. Employees, suppliers and cli- which it is exposed. The Board of Directors meets and metrics with regard to risk management. disseminated from top down and transversely ents alike can anonymously report any ille- regularly and periodically oversees the bank´s across the entire Organization, along with the gal or unethical behavior or situations that exposure to maximum risk limits and proposes The Board of Directors through its Audit Committee exposure limits approved by the Board. This go against our risk management culture and any corrective actions and follow-ups to correct ensures the existence of an adequate internal enables us to consider the risks and controls controls via our Ethics Help Line. Further- any anomalous situation control system, consistent with the Bank´s risk inherent to each of our activities. We also more, the Bank´s Board of Directors and the management policy, the effectiveness of which is 176 ANNUAL ANNUAL 177 MANAGEMENT REPORT MANAGEMENT REPORT

Audit Committee were duly informed of the Internal Audit staff on our internal control and plans were promptly drawn up. With the aim of as the Bancolombia Group. matters thus reported. The Group complied risk management systems with regard to their enhancing the Organization´s processes, the Au- with all its reporting obligations both with the working order, existence, effectiveness, efficiency, diting Department provided a series of recom- The Committee, through its monthly meetings, market and the corresponding oversight au- reliability and reasonableness, were satisfactory mendations that added measurable value to the ensured the proper working order of policies and thorities. and no material or significant shortfalls were Bank´s comprehensive risk management system procedures and controls in place, the efficiency identified with the Bank´s process controls and and the effectiveness and efficiency of its inter- and effectiveness of the operations carried out, financial reporting mechanisms. nal control system; also new innovation-based the reliability and timeliness of the information Monitoring work plans were introduced and advances were provided, as well as the prevention and mitigation The Internal Audit assessed vital business pro- made with knowledge management. of fraud all being essential factors in achieving The Board of Directors, through its Audit Com- cesses such as the handling of credit cycles, the Organization´s strategic goals on both an mittee is responsible for overseeing the effective- capital markets, risk management systems, life In performing these audits, all applicable stan- individual as well as consolidated level. ness of the various components of the Group´s cycles of technological solutions (change man- dards and regulatory requirements were taken Internal Control System. Senior Management, agement as well as designing and enabling new into account, as well as the policies drawn up Through monitoring the functions and activities who is responsible for the Group´s processes, solutions), security management, channels, stra- by the Board of Directors and Senior Manage- of both our internal auditing staff and the acting as the first line of defense, as well as the tegic partners, financial and accounting manage- ment, through the Audit Committee, along with statutory auditing firm, the Committee was related support areas -acting as the second line ment, among others. Similarly new methodolo- the standards for the professional practice of In- able to provide assurance that these effectively of defense, duly supervised the more salient gies were introduced for evaluating the various ternal Auditing. carried out their work plans, in an independent business processes. This is carried out by means processes relative to the credit cycle, that is to and autonomous fashion, that said plans were of indicators, metrics, and committee meetings, say CSA, ongoing audits, structuring and imple- In carrying out these audits, the Auditing staff sufficiently adequate in scope and that the risk among others. Annual self-assessments are per- menting the methodology for analyzing credit were given full access to all records and informa- management systems functioned properly. formed on all those controls affecting the Bank´s risk models used by the Group for decision- tion required for such. financial reporting, identifying control weakness- making purposes. There were also various corpo- As far as financial reporting is concerned, 2014 was a es and devising the corresponding action plans. rate projects that helped with the Organization´s year of enormous challenges for Bancolombia´s Audit compliance and business strategy, that is to say Committee. In addition to examining the results and The Group´s monitoring activities are aimed at pro- Statutory Auditor´s Report DELTA, SARIC, IFRS. other financial information presented to the markets, viding reasonable assurance of the effectiveness of as disclosed in Form 20F filed with the Securities the Control Architecture, which mainly involves our In a report submitted to the Audit Committee We also duly audited the trades performed at and Exchange Commission of the United States, the internal auditing staff with the help of the Statu- as well as an opinion attached to the financial front and middle office level with regard to Banco- Committee, and as part of Colombia´s plan to adopt tory Auditing firm with regard to matters falling statements, the Bank´s Statutory Auditing firm lombia Group's investment portfolios, evidencing International Accounting Standards (IAS), the Audit under its authority, particularly with regard to all provided the following conclusion regarding the adequate compliance with policies, procedures Committee made sure that the Bancolombia Group financial information reported by the Organization. Bank´s internal control system:: and controls in place for manage operating, mar- took the required measures for preparing, presenting ket and liquidity risks in handling the Bank´s pro- and disclosing its financial information in accordance Our Internal Auditing Department presented a “Adequate internal controls were observed along prietary position as well as client funds. with these new standards as well as overseeing that the general work plan along with how much of this with a proper preservation and custody of the necessary controls were put into place and used. was accomplished during the year. The results assets belonging to both the Bank as well as Audits were also performed on the security con- of the monitoring conducted by both Senior those of third parties held in safekeeping. I have trols of our information systems by running ethi- Consequently, this Committee evaluated major policies Management and the oversight authorities were performed follow-ups on the recommendations cal hacking tests. We also audited our database for preparing its opening statements of financial position duly discussed amongst the different areas made to improve the internal control system, security and management functions as well as both on an individual as well as a consolidated level, as involved, and transmitted to the higher managerial finding that all significant recommendations our business continuity on all four fronts, namely required by the Colombian Superintendency of Finance levels whenever necessary. The Audit Committee, were duly implemented as well as more than Technology, Infrastructure, Processes and Peo- and also examined the qualitative and quantitative meanwhile, was responsible for monitoring the 70% of other minor recommendations, which in ple. Audits were also performed on critical cash impacts that this changeover to the IAS would have on action plans and the progress made with such, my opinion have no material effect on the Bank´s management applications. branch office opera- the Bancolombia Group. as reported by the internal and statutory auditing financial statements" tions and the closing of our accounts, together staff. The Audit Committee kept the Board of with major technology platforms that support Aware of the impact that fraud is having on the Directors permanently informed of the progress our banking services. finance industry both at home and abroad, the Audit made with their activities. Audit Committee Report Committee was permanently engaged in monitoring These audits revealed no significant breaches the Organization's efforts to prevent fraud and monitor Internal Auditing Report that could have a detrimental effect on our inter- In 2014, Bancolombia's Audit Committee contin- its zero tolerance for such, while strengthening our nal control system, and potential improvements ued to provide its support to the Board of Direc- organizational culture in this respect. The results of an assessment conducted by the were discussed with the users with whom action tors in monitoring the effectiveness of the inter- nal control system belonging to the Bank as well 178 ANNUAL ANNUAL 179 MANAGEMENT REPORT MANAGEMENT REPORT

The Committee also monitored other work fronts, transferring funds to the Ahorro a la Mano savings such as our corporate IT security model, busi- accounts via our Telephone Banking branch as ness processes such as bank reconciliations, Attending to Operating Quality well as the monitoring of transactions performed checks on securities, accounting records, moni- using the PSE Payment Button. We informed our toring and controls, tax management, drawing our financial and Security clients of these latest enhancements by means up legal reports, the closing of books and the of security recommendations to be taken into drawing up of financial statements, the safekeep- consumers In 2014, Bancolombia continued to improve account when performing transactions via our ing of securities, portfolio valuations, distribu- the quality of its transactions and the security different channels. tion channels and their current risk mitigation In 2014, the bank carried out different activities measures in place, so as to ensure a speedy, strategies, corporate projects and their impact as part of our financial consumer service model. straightforward, efficient and impeccable service, on strategy, the business continuity plan, among In order to ensure that our financial consumers pursuant to that stipulated by the Colombian others, where their performance was evaluated receive accurate information, we periodically Superintendency of Finance in External Circular and action plans deployed to ensure their con- check rates, tariffs and other consumer 042 of 2012. Managing the tinuous improvement information made available on Bancolombia's website and make sure that our Telephone Help We paid special attention to speed and simplicity Risk of Asset On an international level, and from the parent com- Line provides adequate advice on how to lodge a by redesigning our Bancolombia App and pany's standpoint, the Committee conducted an complaint with the Consumer Ombudsman. Mobile Banking Website for a more unique evaluation of the broker-dealer firm, Valores Ban- client experience that is more intuitive and user- Laundering and colombia as well as the companies domiciled in We continued with our financial education friendly. Efficiency was also addressed by means Peru, Banco Agricola in El Salvador and Banistmo strategy "Responsible Money Management" with of a strategy aimed at migrating monetary the Financing of in Panama. In the case of Banistmo, in 2014, the informative and educational activities on our transactions from our branch offices to our other Committee helped to draw up and deploy a cor- website, social networks, client messages as channels, namely the Consumer On-Line Banking Terrorism porate model that included the structuring of the well as personally attended talks for employees. Channel, the Bancolombia App, Bancolombia a three lines of defense as perceived by Bancolom- Also with the aim of reducing client grievances, la Mano - Banking Correspondents (third-party In 2014, we continued working on the prevention bia, namely No. 1 Self-regulation, No. 2 Monitoring we deployed our new "Root Cause" strategy stores and businesses acting as a financial and control of money laundering and the financing and support policies (these being the responsibility for our more critical products. In addition to inclusion channel), , the Mobile Banking Channel of terrorism with process enhancements and a of senior management) and No. 3, Assurance and the new policies that were drawn up governing and ATMs, so that clients do not have to go out new corporate risk management methodology consultancy services (for which the Audit Commit- temporary and permanent payments to clients of their way to visit a bricks-and-mortar branch that allowed us to increase our efficiency in tee and Board of Directors are responsible). This and with a view to speeding up this process, we office. triggering alerts and become more assertive in also included the progress made in terms of en- designed a series of messages to our clients defining controls. Similarly, we redesigned the vironmental issues, risks, controlling and monitor- informing them of the current status of their We are also working on increasing the volume of alert evaluation process based on the critical ing information and communications, the adoption complaints and/or claims. secure financial transactions in all our channels nature of the risk involved and deployed tools for of the Bancolombia Group's Codes of Ethics and by deploying different security mechanisms. a 360 ° view of our clients, which again helped Corporate Governance, the implementation of the Thanks to our efforts in conjunction with the Firstly, we signed up a total of 106,676 clients to increase the timeliness with which we analyze COBIT reference control model with regard to tech- Financial Consumer Ombudsman, we continued for our Alerts and Notification service, whereby and report cases to the authorities. nological issues as well as introducing the Ethical to monitor client complaints and design and messages are received in real time regarding Help Line, among others. plan processes or strategies to improve the movements with their financial products all this In 2014, we continued to analyze the alerts services we provide. free of charge 24 hours a day, 365 days a year. produced by our transaction monitoring system The information that the Bancolombia Group pro- as well as the media, requirements from external vided the market for the year ended December Similarly, we carried out various activities in We also implemented a strategy whereby we entities and notifications for our sales personnel, 31, 2014, as handled by the Disclosure Commit- order to extend a culture of service within the reduced transaction limits depending on whether and whenever necessary, we reported these tee was sufficient, reliable, timely and reflected Organization through strategies such as the or not the client performs transactions using cases to the corresponding authorities. We also the real situation of our business. Code of Service, the Ambassadors Network and the following channels: PSE Payment Button, performed blacklist checks with new and existing Client Week. Facturanet, the Telephone Banking Branch, the clients, training our employees and clients in Based on the statements made and upon com- Consumer On-Line Banking Channel, the Mobile controlling and preventing asset laundering and pleting the audits of both the individual and con- In compliance with that stipulated in External Banking Site, this in order to reduce on-line fraud. the financing of terrorism, and analyzing different solidated financial statements at December 31, Circular 029 of 2014 issued by the Colombian economic sectors and jurisdictions with higher 2014, along with the accompanying notes to the Superintendency of Finance, the Financial Other measures were also implemented to risk exposures, taking all necessary measures financial statements and the draft opinions on Consumer Ombudsman now reports on the enhance access security to all our channels, to mitigate these. With regard to knowing our the part of the Statutory Auditor, the Audit Com- different activities carried out. for which a second password is required for clients, we conducted activities with the staff mittee was able to allow these to be submitted to the shareholders for their subsequent approval. 180 ANNUAL ANNUAL 181 MANAGEMENT REPORT MANAGEMENT REPORT

responsible for such highlighting the importance Renting Colombia S.A. Bancolombia, Valores Bancolombia and Banca Under the auspices of the Colombian Superinten- of this issue in being able to prevent risk. de Inversión Bancolombia, which at year-end dency of Finance, we deployed a Risk-Based Super- At year end, the main lending operations for this totaled COP 77,821, COP 22,917 and COP vision methodology throughout the entire Group, in On a corporate level, we continued to work on Company corresponded to a loan portfolio of COP 73,069 million respectively. This corresponded to which the respective supervisor is in charge of as- our compliance model, defining initiatives for 190,698 million (including provisions for COP 2,325 COP 9.507 million in interest expense and other sessing the various business areas and the quality standardizing our policies, processes and best million). items for Bancolombia. of its management systems and internal controls practices on a regional level, that is to say in all so as to identify the areas posing the greatest risk those countries where we are present. These produced interest income totaling COP 8,177 and concern and focusing their supervisory efforts million mainly on those areas. After just two official inspec- tions, the results obtained to date have been good, evidencing appropriate levels of risk management Banagrícola Group Article 446 and well-established competent structures within Transactions with the different organizational areas. At December 31, 2014, Bancolombia did not report of the Code of any transactions with the entities that make up the related parties The Bancolombia Group's comprehensive risk Banagricola Group. Commerce management system was developed in compliance Transactions with related parties as performed with current regulations and internal standards de- in 2014 were properly recorded in our financial Suvalor Panamá S.A. Other reports required by Article 446 of the Code fined by the Group´s Board of Directors with regard statements and duly complied with all applicable of Commerce have been duly disclosed in the fi- to credit, market, liquidity and operating risks. Our legislation. Note 30 to the financial statements At year end, Bancolombia S.A. recorded depos- nancial statements and accompanying notes. risk management activities are fully integrated and contains a list of these transactions. its with other corresponding banks amounting to coordinated with the rest of the Organization´s ac- COP81,948 million. In 2014, Bancolombia S.A. is- tivities, for which advanced methodologies are used sued loans to its subsidiary Bancolombia Panama to identify the different risks to which we are ex- Special Report On The Economic S.A., for a year-end total of COP 1.985.742 million. posed. Group Strategic risk This produced an interest expense of COP 50,792 The Board of Directors reviews and approves re- Leasing Bancolombia S.A. million for Bancolombia. management sources, structures and processes required for the Organization´s risk management function, and in At year end, the main lending operations per- Inversiones CFNS S.A.S. supervising such receives the support of the Risk formed by this subsidiary included a loan portfolio Risk Management Report Committee, which is the area responsible for advis- of COP 1.324.983 million (including provisions to- At year-end, the main lending operations with this ing the Board with regard to issues concerning the taling COP 16,177 million); as well as investments company corresponded to a loan portfolio of COP We assessed all those operating, market and approval, monitoring and control of policies, meth- in bonds and CDs issued by Leasing Bancolombia 172,440 million (including provisions amounting to credit risks that could have an impact on both odologies, tools, guidelines and strategies for iden- for a total of COP 46,630 million. Bancolombia re- COP 2,102million). These operations produced rev- our Organization and stakeholders, in a timely, tifying, measuring, controlling and mitigating risk. ported borrowings on the part of Leasing Banco- enues of COP 20,177 million. rigorous manner, as part of our innovative risk lombia for a total of COP 600,923 million, this in management function. Here we drew up strat- Our Risk Management Department is made up the form of deposits. egies to adequately anticipate such risk and of highly-skilled officers able to comprehensively Banistmo S.A. where possible turn these into profits. handle different risks inherent to the Bank´s activi- The above operations provided Bancolombia with ties, this as part of their own responsibilities and COP 52,006 million in interest and commission At year end, Bancolombia recorded deposits with During the year, we continued to consolidate duties for which it has the required technological income as well as COP 28,641 million in interest other corresponding banks amounting to COP Bancolombia Group's international expansion infrastructure to obtain the necessary information expense on deposits. 473,373 million. Bancolombia recorded a year- having acquired HSBC Panama, now known as with which to handle and monitor all types of risk, end total of COP 478,492 million in interbank Banistmo. Although this was a challenge for the based on the type of operation performed. This has funds sold with its subsidiary Banistmo produc- Tuya S.A. Compañía de Financiamiento Group, we were able to extend our comprehensive allowed the Risk Department to draw up and pres- ing year-end revenues of COP 2.183 million. risk management model throughout our Organi- ent consolidated risk management reports. At December 31, 2014, liabilities with this sub- zation, achieving a great deal of progress and sidiary in the form of deposits totaled COP Other Operations positive results in standardizing the policies and Likewise, the Bank has properly documented pro- 56,701 million. This produced an interest ex- procedures put into place by the Bancolombia cesses in place, with which we check that opera- pense of COP 3,476 million. Bancolombia received deposits in both savings Group with regard to credit, operating, market tions are fully compliant with the agreed terms and checking accounts belonging to Fiduciaria and liquidity risks amongst others. and conditions and are properly registered in 182 ANNUAL ANNUAL 183 MANAGEMENT REPORT MANAGEMENT REPORT

books. Similarly, the Internal and External Auditing can be handled based on their level of maturity. models that were deployed in both Banistmo and staff keeps track of the Bank´s operations and op- These maturity models shall provide valuable input BAM, based on their own individual credit history. Our past-due loan portunely reports on all issues required by current for our risk planning function since they shall help ratio declined from regulations. us identify the current level of maturity of each ele- ment of risk so as to be able to define a target for Results for the Bancolombia Group Our major achievements in handling the main risks the entire Group. to which we are exposed included the following: Although our line of business loans has shown the fastest growth, it has also recorded the most With regard to handling credit risk, amongst the Credit Risk impairment, this due to the amount of past due 2.8 % tools used for monitoring our loan portfolio and loans mainly with clients from the oil and com- the corresponding provisions, it is worthwhile not- With regard to handling our credit risk, measures modity sectors To counter this, we have taken ing that we were able to join up our past due loan were taken in 2014 in support of our profitable a number of actions that have begun to have a forecasts and provisions with our growth strategy, growth strategy and the consolidation of our in- positive effect on our early default indicator. It impairment expectations and financial forecasting ternational business. is important to mention that coverage rates are at year-end 2013 to risk in a single model. This also including business maintained at adequate levels. expectations, historical performance trends with In keeping with these guidelines, certain improve- 2.7% at year-end 2014 our loan portfolios prospects going forward within ments were introduced to our tools, models, poli- In 2014, the Bancolombia Group presented a the business environment. Based on this, we were cies and processes that led to a more enhanced year-on-year increase of 20.9% with its gross able to draw up estimates of key risk indicators risk selection in the case of private individuals, loan portfolio, which was lower than for the previ- Trusts), Factoring Bancolombia, Tuya, Ban- for each company, product and segment. These enabling us to recover a greater amount of past ous year, due to our profitable growth strategy, as colombia Panama, Bancolombia Cayman, estimates form part of our financial planning, as due loans in the case of Banistmo, which record- well as having established stricter requirements Bancolombia Puerto Rico, Bancolombia well as our sales and collection targets. Similarly, ed an early default indicator for the preceding for granting consumer loans in order to maintain Peru, Banistmo and Banco Agrícola. in 2014 we continued to develop tools for automat- year which was a lot higher than the average lev- adequate levels of past due loans. Including the loan portfolios of our subsid- ing our workload in terms of loan origination and els posted by the rest of the Group's subsidiaries. iaries abroad converted to Colombian pesos. extracting information. Before inter-company eliminations In January 2014, we introduced a new financial Gross Loan Portfolio Bancolombia Group As for market and liquidity risk, it is worth noting that analysis and rating application for our corporate Our past-due loan ratio declined from 2.8% at Saldo Capital %Crec anual year-end 2013 to 2.7% at year-end 2014, this we included new methodologies and management clients. This replaced the existing one, and shall En Billones de Pesos models (VaR, Incremental VaR, Marginal VaR and help us adhere to best credit management prac- $ 114 mainly due to the a higher value of our gross Component VaR simulators) as well as improving the tices on a global level. This has allowed us to im- 35% 31.2% 120 portfolio versus a lower degree of impairment existing ones (probable maximum withdrawal mod- prove our efficiency in conducting credit evalua- to our consumer loan portfolio in Colombia, 30% 100 el). Significant improvements were also achieved with tions and represents important synergies since $ 94 thanks to the adjustments made in our lending the exposure indicator for short-term currency opera- the entire Group shall be using the same tool. 25% 20.9% policies and the collection campaigns staged 80 tions as regulated by the Colombian Central Bank, re- This shall also allow us to prepare ourselves for $ 72 to recover past-due loans. It is also worthwhile defining liquidity alerts as well as policies and limits adequately assessing all those clients who are 20% pointing out the success we have had with 60 governing our foreign currency liquidity. now presenting their financial statements un- 14.2% Banistmo´s collection strategy, reducing its 15% der IFRS. This system is still at a developmental 30-day past due indicator from 5.16% at year- 40 On the other hand, with regard to operating risk we stage and is scheduled to be up and running by 10% end 2013 to 3.71% at year-end 2014. made significant progress with our pricing models, the first half of 2015. premium estimations as well as optimizing our insur- 5% 20 Our provision coverage indicator also dropped ance policies for more efficient coverage. We therefore In 2014, significant progress was made with from 159.3% to 156.5% year-on-year, due to 0% - a further deterioration in some segments, es- renewed our global banking policy obtaining much standardizing our internal provision models. By Dic/12 Dic/13 Dic/14 better terms and conditions, this based on the Ban- aligning the principles applied across the entire pecially SMEs, given a slower growth in much colombia Group's actual needs and risk profile. Group, we are ensuring the same standardized In billions of Colombian pesos of the year. It should be noted, that this con- measurements and estimated risk profiles for trasts with the results of the last two months As part of our strategy to consolidate our compre- each of our subsidiaries. This has been a funda- of the year, given a greater amount of loans hensive risk management on an international level, mental step towards consolidating our financial Notes: issued. On the other hand, coverage for loans which began in 2014, we were able to draw up dif- statements under IFRS The most important prog- These figures do not include employee loans more than 90 days past due remained at above ferent risk maturity models as a tool for describing ress made on this front includes the Probability Including Bancolombia, Leasing Bancolom- 265%, which is considered sufficient to miti- the key issues that are expected to arise and that of Default (PD) and Loss Given Default (PDI) bia (Financial, Operational and Stand-Alone gate any further risk. 184 ANNUAL ANNUAL 185 MANAGEMENT REPORT MANAGEMENT REPORT

30-day Past Due Loan and Provision Coverage Ratios annual average of COP 6.3 billion. On the other Past-due loans increased given a greater degree Similarly, measures were taken for more efficient hand, consumer and housing loans obtained the of impairment to our business loans, mainly in loan originations, while continuing to deploy de- lowest growth rates compared to previous years. the SME segment as well as with certain clients cision engine tools that facilitate the handling of 180% 3,5% attended by our corporate banking division. This parameters and allow us to quickly incorporate is why our 30-day past due ration rose from policy changes. 170% Bancolombia gross portfolio balance 2.66% to 2.84%. Our coverage ratio also dipped 2,8% from 175.5% to 163.8%. A certification program was launched for our sa- 2,72% 3,0% 160% Figures in billions of pesos les, credit analysis and collection staff, producing very positive results so far. This has allowed us Bancolombia capital 150% 156,5% % anual increase to test employee knowledge of our policy and balance 30-day Past Due Loan and Provision Coverage Ratio 158,6% 2,5% credit analysis issues and identify key points that 25% $ 80 3,50% must be addressed by our training programs. 140% 180% 175,53%

$ 70 170% 2,0% 163,87% With regard to our corporate clients, adjustments 130% $ 70 3,00% 160% were made to the policies governing business 2,84% loans for builders, the business sector and in- 20% 17,7% 120% $ 60 150% 2,66% 2,50% ternational counter-parties, among others. Also $ 60 1,5% with regard to cash management operations, we Dic-13 Mar-14 Jun-14 Sep-14 Dic-14 $ 53 140% 2,00% redefined our credit risk management processes. 130% Cobertura total (Saldo de provisión total de Capital / Saldo... $ 50 15% In 2014, we defined policies and tools for hand- 120% 1,50% ICV 30 (Saldo Vencido / Saldo Bruto) 21,7% 12,1% ling counter-party risk (RiC) on the part of our $ 40 Dic-13 Mar-14 Jun-14 Sep-14 Dic-14 broker-dealer firm, this based on instructions Notes: issued by the Colombian Superintendency of Fi- Cobertura total (Saldo de provisión total de.... nance. These policies and tools are scheduled to These figures do not include employee loans 10% $ 30 be up and running in 2015 according to the time- Including Bancolombia, Leasing Bancolombia Note: These figures do not include employee loans table set for this recently introduced standard. (Financial, Operational and Stand-Alone Trusts), With these, we expect to have proper control over Factoring Bancolombia, Tuya, Bancolombia $ 20 individual and consolidated exposures for the va- Panama, Bancolombia Cayman, Bancolombia With regard to loans issued to the SME segment, 5% rious products offered by Valores Bancolombia. Puerto Rico, Bancolombia Peru, Banistmo and we made adjustments to the tools used for ori- Banco Agrícola. $ 10 ginating loans, by including new variables that allow for more accurate credit analyses to be At the end of 2014, Leasing Bancolombia's por- Including the loan portfolios of our subsidiaries tfolio (including financial and operational leasing abroad converted to Colombian pesos. performed on this segment. In the case of sma- 0% $ - ll-scale SMEs, a scoring model was developed for arrangements) grew by 15.2%, for a total of ad- Before inter-company eliminations vanced supplier payments of COP 2.3 billion. Its Dic/12 Dic/13 Dic/14 more enhanced risk selection purposes, while ex- tending credit coverage in this segment. We also 30-day past due indicator came to 1.75% and its fine-tuned our collection models and strategies provision coverage ratio stood at 199.7%. Note: so as to enhance our recovery of past-due loans. Results per Subsidiary These figures do not include employee loans Among the strategies that helped to improve our The figures at the end of 2014 include the Fac- With regard to our consumer segments, we also risk management capabilities was having achieved With regard to the results reported by each indi- toring portfolio which was assigned to the Bank. amended our lending policies with regard to a better understanding of the assets being finan- vidual subsidiary in the case of Bancolombia its mortgages, financing for Colombian nationals ced which we are incorporating at all stages of the loan portfolio rose by 17.7% which was higher living abroad, all purpose loans, credit cards, mi- credit risk cycle. Similarly, we continue to reinfor- than for 2013. Its business loan portfolio scored This slower growth continued through much of cro-credit and payroll lending. ce our permanent monitoring and early detection the highest growth, mainly due to having migra- the year, as a result of our profitable growth stra- methodologies to help prevent impairment. ted Factoring's loan portfolio to the Bank´s own tegy and stricter lending policies. However, given During the year new scoring models were develo- books, along with a higher amount of loans gran- how well our consumer loans performed, we were ped for greater innovation in selecting clients and With regard to our Factoring business, its mi- ted during the last few months of the year, ave- able to relax our policy a little and encourage a segments, this based on their inherent charac- grated loan portfolio and factoring operations in raging out at COP 8.9 billion compared with an greater growth over the last quarter of the year. teristics, while expanding coverage with a much Bancolombia and its subsidiaries abroad, rea- more improved level of risk. ched a total of COP 2.19 billion pesos, with its 186 ANNUAL ANNUAL 187 MANAGEMENT REPORT MANAGEMENT REPORT

past-due loan ratio standing at 0.48%. This good With regard to the Group´s overseas subsidiaries, In 2014, we began to readjust the Group´s risk a confidence level of 99% over a time horizon of level of performance was by possible by the stra- Bancolombia Panama posted a 56.7% growth in management model in keeping with the particu- 10 days. We also continued with our historic and tegies that form part of our credit policies, our terms of its portfolio, which reached COP 6.76 lar characteristics of the Panamanian economy. hypothetical stress testing in monitoring risks that handling of past-due loans as well as the diffe- billion at year-end 2014. The portfolios belon- We updated our models for calculating portfolio are not addressed by our internal VaR model. Pro- rent lines of credit. ging to Bancolombia Cayman and Bancolombia provisions using the Parent Company's metho- gress was also made in extending the our cash risk Puerto Rico performed similarly to the previous dology, and deployed Moody´s credit risk rating management to the Group´s largest subsidiaries, Tuya showed an increase of 4.1% with its gross year. Both the ratios and the amounts of past- model for our for Corporate and Government coordinating the necessary adjustments made loan portfolio, which was much lower than the due loans declined in the case of Bancolombia Banking division, having made changes to our according to the specific characteristics of each 15.2% recorded for the previous year, this in turn Panama, Bancolombia Cayman and Puerto Rico. lending policies for our Consumer and SME Ban- of the different countries and lines of business as due to changes in its business strategy and ha- king Divisions which allowed us to place loans in well as the corresponding legal requirements. ving ceased to issue any further vehicle loans. As for Banco Agricola its loan portfolio in pesos sectors previously considered restricted. Due to the specific profile of its borrowers, out showed a growth of 28.6%, this due to increases In 2014, the Bancolombia Group's cash manage- of all the Group´s subsidiaries TUYA continued with the exchange rate. Its dollar-denominated Leasing Peru's loan portfolio rose by 32.4% for ment function was mainly centered on customer to post the highest past due loan ratio, that is to loan portfolio ended up with an increase of 3.6%, 2014 mainly due to a new focus on clients from care, reducing as much as possible directional open say 8.8%, after reaching 7.5% the previous year. which was slightly below the 3.7% recorded for the non-financial services sector, where the main risk exposures in net terms. This had an impact This increase was due to a lower growth with its the previous year. The overall past-due indicator assets financed included: overland transport, in- on our VaR, which continue to decline throughout loan portfolio as well as changes to its loan ad- came to 2.56%, thanks to a proactive monitoring dustrial machinery and equipment and buildings, the year. Market risk exposure measured using the justment and restructuring policies. It must be and handling of collections, which resulted in a with the latter increasing its share of the total standard methodology required by the Colombian noted that the Company deployed shock plans in lower expenditure versus the previous year. On from 9% to 14% at year-end. Last year, we saw Superintendency of Finance, ranged between COP 2014 to combat the impairment to its loan por- the other hand, its coverage indicator went from specific cases of clients defaulting on their debts, 154 million and COP 289 million, with the interest tfolio. In spite of the increase in past-due loans, 186% to 192% in 2014. who received our assistance in this respect. This rate risk factor contributing the most to the Grou- the Company has set up the necessary provisions drove up its past-due loan ratio to 3.2% compa- p´s total cash management exposure figure, con- to maintain a coverage ratio of 234.3%. Banco Agricola´s main achievements last year red to 2.6% for the previous year. The coverage tinuing with the same trend seen over prior years. included designing and defining its risk appe- ratio ended up 96.6%, this based on the estima- . tite, which consisted of indicators, levels and ted level of provisions for this Company. appropriate methodologies for measuring and In Banistmo, monitoring such. Also, in terms of regulatory Leasing Peru's loan nonperforming loans changes affecting the Group as a whole, we wor- Market Risk ked hard with the Salvadoran bank in adopting portfolio rose by major indicator to 30 IFRS, so as to standardize our international bu- In 2014, as part of the ongoing review of risk siness and provide greater confidence to inves- management and measuring models, we im- days closed at tors. We also continued to standardized credit plemented tools for handling third party funds risk and capital allocation policies and metho- such as VaR, Incremental VaR, Marginal VaR and dologies so as to align these with the rest of the Component VaR simulators, through which risk Bancolombia Group. positions or assets can be identified in terms 32.4 % of their contribution to our total risk exposure. At the end of 2014, Banistmo recorded an in- Also, limits were set in terms of crisis events for crease of 38.2% in the gross loan portfolio some of the more speculative portfolios, and we 3,71% denominated in pesos. This increase in dollars redefined our maximum tolerable VaR limits, by came to11.3%. modifying the basic allocation variables, with the aim of preserving our capital, and helping to se- Its 30-day past due loan ratio came to 3.71% ha- cure the targets set by the Bancolombia Group in for 2014 mainly ving dropped by 125 bp on a year-on-year basis. terms of its sustainable growth We also adjusted due to a new focus with a 125 pb This was mainly due to new collection strategies the Vega limit for our options portfolio so as to be reduction versus implemented at an earlier stage for all products extend our capability to serve our clients. on clients from the making up the Bank´s loan portfolio. to indicator from For 2014, the market risk affecting Bancolom- non-financial services Coverage increased from 61.4% in December bia's cash management ledger continued to be one year ago 2014 to 59.7% in December 2014. measured using the Banks internal Value at Risk sector (VaR) model based on historical simulations with 188 ANNUAL ANNUAL 189 MANAGEMENT REPORT MANAGEMENT REPORT

Total Market VaR for the Bancolombia Group's Cash Management Function. With regard to the interest rate risk correspon- In 2014, Banistmo reviewed and adjusted its VaR li- Standard Methodology Annex 1 Chapter XXI CBCF ding to our Banking Book in 2014, we continued mits for its cash management function in keeping with to measure the Bank´s VaR in Colombia, using its risk profile. It also deployed a new management tool 600,000.00 the parametric methodology over a horizon of consisting of VaR loss alerts which was duly aligned one year with a confidence level of 99%. Metrics with the Parent Company’s VaR model and guidelines. 500,000.00 were designed to evaluate how our mortgage The relationship with headquarters was strengthened lending contributes to the Bank´s overall risk in with the adoption of best practices and enhancing 400,000.00 Colombia, which resulted in the GAP Committee local knowledge of methodologies used to measure authorizing certain strategies to preserve our fi- market risk. 300,000.00 nancial margin.

200,000.00 Generally speaking, the Group maintained a posi- Liquidity Risk tive sensitivity to increases with the interest rate In millions of Colombian pesos In millions of Colombian pesos 100,000.00 and their effect on our financial margin. With re- The Group's liquidity management model allows for gard to sensitivity in terms of our Economic Value its subsidiaries to act autonomously while promo- 0.00 of Equity (EVE), the Group´s balance sheet was ting a level of coordination at corporate level. This such that the average duration of our liabilities structure allows the Group to measure its liquidity was higher than that of our asset given the levels based on common, unified standards duly adjusted Jul - 13 Jul - 14 Dic - 13 Dic - 14 Oct - 13 Oct - 14 Jun - 14 Abr - 13 Abr - 14 Feb - 13 Feb - 14 Ago - 13 Ago - 14 Ene - 13 Ene - 14 Sep - 13 Sep - 14 Nov - 13 Nov - 14 Mar - 13 Mar - 14 May - 13 May - 14 Jun - 13 of stability recorded with our deposit accounts. for the particularities of each business and country.

In millions of Colombian pesos With regard to liquidity risk management, we conti- Economic Value of Equity (EVE) to 100 bp nued in 2014 to use our internal projection model for measuring liquidity gaps at different time inter- Subsidiary risk exposure drove up the Bancolombia Group´s total Percentage of total market risk for its cash management function by18%. vals for situations both real and stressed; as well as with the LRI (Liquidity Risk Indicator) stipulated by 44,7% the Colombian Superintendency of Finance. Panamá Breakdown of Risk Factors 1,7% Otros* In 2014, our efforts in managing liquidity risk were Standard Methodology Annex 1 Chapter XXI CBCF mainly geared to implementing a short-term cu- rrency risk exposure indicator as regulated by the Collective investment funds Colombian Central Bank, and redefining alerts, po- 6,7% licies and limits governing our liquidity in foreign cu- El Salvador rrency, in order to adjust such risk to the prevailing trends with different economies and international Share prices markets. The internal models of our dealer-broker firms in both Colombia and Panama were also up- dated by incorporating client default indicators. Also, as part of these upgrades and continuous Exchange rate 46,9% improvements, we designed and implemented new Colombia Maximum Probable Withdrawal (MPW) models for some investment funds managed by the Bancolom- Others Puerto Rico and Cayman bia Group, so as to be able to predict incoming and Interest rate outgoing flows over a horizon of one day.

0 50.000 100.000 150.000 200.000 In 2014, a sovereign zero coupon curve was drawn up in conjunction with Headquarters for El Salvador In 2014, the Group maintained ample liquidity po- In millions of Colombian pesos - Banco Agrícola, applying the most appropriate me- sitions with an average 30-day liquidity coverage thodology given liquidity constraints as well as market ratio of more than 400% in pesos, and 340% in 31 / 12 / 2013 information, to be used with the theoretical valuation dollars. Liquid assets in Colombian pesos averaged out at COP 10.4 billion, with liquid assets in foreign 31 / 12 / 2014 of local bonds, thus providing greater innovation and reliable information for our internal clients. currency averaging out at USD 3.396 million. 190 ANNUAL ANNUAL 191 MANAGEMENT REPORT MANAGEMENT REPORT

Short Term Exposure Indicator for local and foreign currency market and its size. Additionally, a new liquidity that it plays an important role in our major deci- The main action plans implemented in 2014 Total liquid assets / Net 30-day liquidity requirements contingency plan was designed in keeping with sions in handling or mitigating risk from a more with a view to mitigating operating risks, in- Banistmo´s new needs and the nature of its lo- cost-effective standpoint. cluded a new authentication process for our cal market. branch office clients in the case of large tran- 410% The Bancolombia Group's operating risk cultu- sactions, a robust client authentication mecha- re has become one of the cornerstones of our nism for our corporate On-Line Banking Chan- 400% Operating Risk organizational dynamics, being one of the main nel as well as changing our cards and channels vehicles for connecting up our business needs over to chip technology. In 2015, we shall be In keeping with regulatory requirements with our operating capabilities. Our operating focusing our efforts on improving our authenti- 390% and best practices, the Bancolombia Group risk management system has been amply dis- cation mechanisms for our other On-Line Ban- achieves its objectives by strictly adhering seminated amongst the various countries where king Channels. 380% to its operating risk management function. we are present and forms part of the day-to-day This involves certain policies and procedu- activities of all our employees. These achieve- In 2014, progress was made in implemen- res for identifying, measuring, monitoring ments have been made possible with the assis- ting continuity strategies for the Bancolombia 370% and mitigating risks with its business ope- tance we provide and the responsibilities set in Group's critical processes as identified in our rations. Parallel to its ongoing growth, the terms of the risks posed by each of our pro- BIA (Business Impact Analysis) report, produ- ducts, including our day-to-day operating risks. cing a gain of 90% with documenting operating 360% Group has adapted the necessary methodo- logies in order for its operating risk manage- contingency procedures. Out of the 114 tech- ment system to provide relevant information As far as insurance is concerned, we have been nology components that make up these critical 350% for the decision-making process in all tho- proposing outlines for distributing the cost of sub-processes, 97 have their own High Availabi- se companies that make up the Group, this transferring risk to our insurance policies, for lity (HA) contingency technology. Also we achie- 340% in terms of their level of maturity, business which we developed a methodology for measu- ved a significant level of performance with the culture and local regulatory requirements in ring physical risks at branch office level. We also tests performed on different aspects of our IT each of the countries where we are present. adjusted our cost-benefit model with regard to continuity, infrastructure, employees, and pro- 330% Here we made a special effort in going be- our insurance policies so as to produce maxi- cesses with the aim of ensuring the continuity yond the methodological and technical stan- mum efficiency between our insurability and the of the Group´s critical services. This year we dards, seeking subsidiary engagement with cost of such. set up a Crisis Management Team with better 320% the Group´s business models; integrating capabilities in order to promptly respond to the concepts of profitability and efficiency Risk mitigation strategies were also put into pla- any disruption. Average for 2014 within their basic performance assumptions. ce with regard to our banking correspondents by profiling, classifying and evaluating fraud for Banco Agricola made progress in covering and The Bancolombia Group's operating risk mana- our infidelity and financial risk insurance poli- drawing up its risk profile by identifying and In pesos In dollars gement (ORMS) is a dynamic, constantly evol- cies. We also drew up a model for estimating the measuring risks through various factors such ving system, which allows us to optimize our quotas to be objectively assigned to these ban- processes, projects, products, channels and risk decisions based on sufficient and adequate king correspondents, based on their financial services. It also made the operating risk tools Banco Agricola improved its handling of liquidi- information. As part of this work plan, we drew and non-financial information as well as historic available to its employees much more robust, ty risk by defining set levels for warning indica- up regional maturity models, in which each of payment patterns taking risk analysis and risk-based decisions as tors in tracking, monitoring and activating con- the subsidiaries and countries where the Group a point of reference for determining the feasibi- tingency plans, in accordance with established is present could assess their current status in With regard to renewing our Global Banking poli- lity of introducing changes and improvements methodologies, so as to reflect recent changes terms of all those components that make up our cy we planned and carried out this process with to both processes and services. within the market. Operating Risk Management System, which in evident results in preparing information for the turn produced action plans in order to reach the reinsurance market, optimizing delivery times Banistmo successfully implemented changes to In 2014, Banitsmo made much effort in terms standards required on a Group-wide basis. In and the reliability of the information reported to its operating risk management system, in kee- of managing its liquidity risk, improving models 2012, we made changes that allowed for more the insurance companies, providing a diagnosis ping with the Bancolombia Group's best practi- for projecting expected flows, in measuring the precise quantitative measurements to be taken of the coverage to be provided and the respecti- ces, and drew up a new operating risk profile ba- gaps detected, as well as its internal model. The in terms of our operating risk and last year we ve requests as well as including Banco Agricola sed on the new SOX standards governing critical Company also adjusted the methodology used made significant progress in this regard by me- in this coverage. All this produced a marked im- processes. Finally, with regard to the business for defining short-term liquidity alerts, to reflect asuring statistical factors, generating scenarios provement in the insurability terms and condi- continuity, procedures and contingency strate- in a more timely fashion movements with its ba- and models that have significantly improved the tions relating to this policy, upon adjusting this gies were defined to ensure seamless banking lance sheet as well as recent changes within the accuracy of our risk evaluations, so much so to the Group´s risk profile and needs. operations in the event of any disruption. 192 ANNUAL ANNUAL 193 MANAGEMENT REPORT MANAGEMENT REPORT

Capital Allocation Money Desk Compliance

Aware of the importance of optimizing its ca- In 2014, we supervised and monitored or- pital structure, creating shareholder value and ders and instructions received from clients, maintaining an adequate level of solvency, the including an analysis of transactions that Bancolombia Group has developed a framework depart from the market average, placing of principles and methodologies to assess the a special emphasis on all those activities relationship between risk and returns for deci- that allowed us to continue raising our sion-making purposes. The Value Added System operating standards by amply dissemina- (VAS) model was set up for assessing risk with ting best practices and the corresponding regard to profitability in order to facilitate pricing lessons learned. Our Compliance Mana- and form a basis for the Bank´s variable compen- gement function was extended to Banco sation plans. Agricola´s Money Desks, and progress was made with its deployment in Panama, whe- The balanced capital allocation policy adopted reupon we shall have achieved full coverage by the Bancolombia Group for assessing the in- throughout the Group. herent risk, is mainly focused on covering unex- pected losses that may be caused by the risks to In terms of innovation and efficiency, our which it is exposed. Compliance staff took part in a research pro- ject in conjunction with our Internal Auditing We continue with our efforts to validate and fi- Department and the Universidad EAFIT to ne-tune the methodologies used to calculate ca- develop a voice-mining and sentiment analy- pital allocation percentages, these being key to sis system. Additionally, we developed and measuring risk and being able to consolidate the optimized our business analysis models that Bancolombia Group's models. allowed us to advance with the strengthening of our risk-based supervision. The main aspects addressed here were: Finally, we held various informal talks with o Improvements in the capital allocation cri- regard to creating added value for our clients teria for our payroll lending product. offering important tips for conducting tran- sactions so as to mitigate the risk of their o Improving estimated capital allocations for succumbing to inadequate practices on the private individuals using credit risk scores. capital markets.

o Developing the methodology for estimating Also in 2014, we defined our Risk Appetite for economic capital per operating risk. the eight most relevant indicators for moni- toring risk. We also constructed a consumed Also in 2014, we defined our Risk Appetite for appetite indicator, which shows the relative the eight most relevant indicators for monitoring measurement between the company´s risk risk. We also constructed a consumed appetite profile in a given month and the maximum indicator, which shows the relative measurement appetite for all said indicators. between the company´s risk profile in a given month and the maximum appetite for all said Finally, progress was made with the initial indicators. Finally, progress was made with the determination to disaggregate Risk Appe- initial determination to disaggregate Risk Appe- tite limits in the following manner: credit tite limits in the following manner: credit risk risk per bank and market, market and li- per bank and market, market and liquidity risk quidity risk per company and operating per company and operating risk per country. risk per country. 194 ANNUAL ANNUAL 195 MANAGEMENT REPORT MANAGEMENT REPORT

Sustainability report GRI G4 196 ANNUAL ANNUAL 197 MANAGEMENT REPORT MANAGEMENT REPORT

General reporting aspects Page / Answer Omitted External assurance General reporting aspects Page / Answer Omitted External assurance

Strategy and Analysis G4.22 Description of the effect of any restatements of About Our Report for 2014 x information provided in previous reports, and the reasons G4.1 Statement from the most senior decision- Letter to our Shareholders X for such restatements. . maker of the organization about the relevance of G4.23 Significant changes from previous reporting About Our Report for 2014 x sustainability to the organization. periods in the Scope, Coverage and Valuation Methods G4.2 Description of key impacts, risks and Letter to our Shareholders X applied in this report opportunities. Stakeholder Engagement Organizational Profile G4.24 List the stakeholder groups engaged by the Interacting with our stakeholders G4.3 Name of the Organization. Economic report X organization. G4.4 Primary brands, products, and/or services Bancolombia, a retail and commercial bank G4.25 Report the basis for identification and selection of Interacting with our stakeholders x G4.5 Location of organization’s headquarters Avenida Los Industriales, Carrera 48 # 26-85, X stakeholders with whom to engage Medellin, Colombia G4.26 The organization’s approach to stakeholder interacting with our stakeholders x G4.6 Number of countries where the organization Bancolombia, a retail and commercial bank X engagement, including frequency of engagement by type operates, and names of countries with either major and by stakeholder group, and an indication of whether operations or that are specifically relevant to the any of the engagement was undertaken specifically as sustainability issues covered in the report part of the report preparation process. G4.7 Nature of ownership and legal form. Chapter X, Notes to Financial Statements, Note x G4.27 key topics and concerns that have been raised Interacting with our stakeholders x 1- Reporting Entity through stakeholder engagement, and how the organization G4.8 Markets served (including geographic Bancolombia, a retail and commercial bank x has responded to those key topics and concerns, including breakdown, sectors served, and types of clients). through its reporting. Report the stakeholder groups that G4.9 Scale of the reporting organization, Economic report x raised each of the key topics and concerns. including: - Number of employees Report Profile - Total number of operations. - Net sales or revenues. G4.28 Reporting period for information provided Interacting with our stakeholders x - Quantity of products or services offered. From January 1, 2014 to December 31, 2014 G4.10 Report the following employment Consolidating Our Humanistic Banking Model x G4.29 Date of most recent previous report 2013 x information: G4.30 Reporting cycle ( annual, biennial). Annual x - Report the total number of employees by G4.31 Contact point for questions regarding the report Please contact the following email address: x employment contract and gender. or its contents comunica@bancolombia. com.co - Report the total workforce by region and gender G4.32 Report the ‘in accordance’ option the organization This report was drawn up based on the GR1 4 x G4.11. Report the percentage of total employees Consolidating Our Humanistic Banking Model x has chosen (Core-Comprehensive). Report the GRI "Core" option covered by collective bargaining agreements Content Index for the chosen option G4.12 Describe the organization’s supply chain. 6 Hand-in-hand with our strategic partners and x G4.33 Report the organization’s policy and current Chapter I, Subsequent To Issuing This Report x suppliers practice with regard to seeking external assurance for for 2014. G4.13 Significant changes during the reporting Not applicable. x the report. period regarding the organization’s size, structure, ownership, or its supply chain. Governance G4.14 Report whether and how the precautionary Chapter IX Relations with Authorities, Strategic x approach or principle is addressed by the Risk Management G4.34 The governance structure of the organization, Chapter c A Corporate Governance honing in on x organization including committees of the highest governance body. the essential G4.15 Externally developed economic, Chapter Quality of Life and Environmental x Identify any committees responsible for decision-making environmental and social charters, principles, Management on economic, environmental and social impacts. or other initiatives to which the organization G4.35. Report the process for delegating authority for This authority is delegated to our Sustainability x subscribes or which it endorses. economic, environmental and social topics from the Department who reports directly to the Group´s G4.16 List memberships of associations (such as Chapter - Environmental Management x highest governance body to senior executives and other Chief Executive Officer industry associations) and/or local or international employees. advocacy entities which the organization supports G4.36 . Report whether the organization has appointed Chapter c. A Corporate Governance x an executive-level position or positions with responsibility honing in on the essential /Global Compact Identified Material Aspects and Boundaries for economic, environmental and social topics, and whether post holders report directly to the highest G4.17. List all entities included in the Chapter X, Notes to the Financial Statements, x governance body. organization’s consolidated financial statements Note 1- Reporting Entity G4.37 Report processes for consultation between This authority is delegated to our Sustainability x and report whether any of these entities are not stakeholders and the highest governance body on Department who reports directly to the Group´s covered by this report economic, environmental and social topics. If Chief Executive Officer G4.18 Explain the process for defining the Interacting with our stakeholders x consultation is delegated, describe to whom and report content and the Aspect Boundaries. any feedback processes to the highest governance G4.19. List all the material aspects identified in Interacting with our stakeholders x body the process for defining report content. G4.38 Report the composition of the highest governance Chapter c. A Corporate Governance honing in x G4.20. For each material aspect, report All aspects contained in the matrix are material x body and its committees by: on the essential /Structure of Bancolombia´s whether the Aspect Boundary covers the entire for the Bancolombia Group - Executive or non-executive Board of Directors organization. If not, indicate which aspect is not - Independence material to any of the entities that form part of the - Term of office. organization. - Gender. G4.21 For each material aspect, report whether Materiality Matrix Graph, Chapter I x - Ÿ Membership of under-represented social groups this is material outside of the organization. - Ÿ Competences relating to economic, environmental and social impacts. 198 ANNUAL ANNUAL 199 MANAGEMENT REPORT MANAGEMENT REPORT

General reporting aspects Page / Answer Omitted External assurance General reporting aspects Page / Answer Omitted External assurance

G4.39 Report whether the Chair of the highest governance Chapter c. A Corporate Governance honing in on x G4.52 Report the process for determining Chapter c. A Corporate Governance honing in on x body is also an executive officer (and, if so, his or her the essential /Structure of Bancolombia´s Board compensation. Indicate whether there are the essential /Structure of Bancolombia´s Board function within the organization’s management and the of Directors consultants hired to determine such. of Directors reasons for this arrangement) G4.53 Report how stakeholders’ views are sought The only stakeholder group who defines the x G4.40 Report the nomination and selection processes for Chapter c. A Corporate Governance honing in on x and taken into account regarding remuneration, remuneration of the Board of Directors are the the highest governance body and its committees. and the the essential /Structure of Bancolombia´s Board including the results of votes on remuneration shareholders. criteria used for such, including: of Directors policies and proposals, if applicable - Whether and how diversity is considered G4.54 Report the ratio of the annual total Not reported confidentiality x - Independence is considered. compensation for the organization’s highest-paid reasons. - Whether and how independence is considered individual to the median annual total compensation - Ÿ Whether and how shareholders are involved for all employees. G4.41 Report on procedures deployed to avoid conflicts of Chapter c. A Corporate Governance honing in on x G4.55 Report the ratio of percentage increase in This came to 7% for all employees x interest on the part ofthe highest governance body. the essential /Structure of Bancolombia´s Board annual total compensation for the organization’s of Directors highest-paid individual to the median percentage G4.42 Report the highest governance body’s and senior Chapter c. A Corporate Governance honing in on x increase in annual total executives’ roles in the development, approval, and the essential /Structure of Bancolombia´s Board compensation for all employees. updating of the organization’s purpose, value or mission of Directors statements, strategies, policies, and goals related to Ethics and integrity economic, environmental and social impacts G4.43 Report the measures taken to develop and enhance Chapter V, External advisory services received by x G4.56 . Describe the organization’s values, Our Responsibility with Local Authorities/ Control x the highest governance body’s collective knowledge of the Board of Directors principles, standards and norms of behavior such Environment economic, environmental and social topics. as codes of conduct and codes of ethics. G4.44 Procedures for evaluating the performance of the Chapter V, Structure of the Board of Directors x G4.57 Report the internal and external Manuals have been made available through x highest governance body’s performance with respect to and meeting attendance / Board Meeting mechanisms for seeking advice on ethical Bancolombia's intranet governance of economic, environmental and social topics. attendance / Board Committee meeting and lawful behavior, and matters related to Report whether such evaluation is independent or not, and attendance organizational integrity, such as help lines or its frequency. advice lines, G4.45 Report the highest governance body’s role in Chapter c. A Corporate Governance honing in on x G4.58 Report the internal and external Our Responsibility with Local Authorities/ Control x the identification and management of economic, the essential /Structure of Bancolombia´s Board mechanisms for reporting concerns about Environment environmental and social impacts, risks, and of Directors/ Bank´s Humanistic Banking model unethical or unlawful behavior, and matters related opportunities. addressed at the first plenary meeting. to organizational integrity, such as escalation G4.46 a. Report the highest governance body’s role in Chapter c. A Corporate Governance honing in on x through line management, whistle blowing reviewing the effectiveness of the organization’s risk the essential /Structure of Bancolombia´s Board mechanisms or hotlines management processes for economic, environmental and of Directors/ Bank´s Humanistic Banking model social topics. addressed at the first plenary meeting. G4.47 Report the frequency of the highest governance This depend on the matters to be discussed, i.e.: x body’s review of economic, environmental and social monthly, bimonthly or quarterly impacts, risks, and opportunities. G4.48 Report the highest committee or position that The highest body in charge of reviewing this x formally reviews and approves the organization’s report is Organization´s Corporate Identity sustainability report and ensures that all material aspects Council, of which the Chief Executive Officer is a are covered member. This report is reviewed by the Board of Directors before being published. G4.49 Report the process for communicating critical Every month the Company Secretary compiles the x concerns to the highest governance body. strategic matters to be discussed by the Board of Directors at their monthly meetings. These are validated in advance by the Chief Executive Officer and his Basic Support Committee. G4.50 Report the nature and total number of critical The Board is informed of the progress made with The number of x concerns that were communicated to the highest the Organization´s strategy. In turn the Board critical issues governance body and the mechanism(s) used to address has its own Committees that provide support communicated to and resolve them. in areas such as: Good Governance, Auditing, the Board is not Appointments, Compensation and Development reported and Risk G4.51. Report the remuneration policies for the highest Chapter c. A Corporate Governance honing in on x governance body and senior executives for the below types the essential /Structure of Bancolombia´s Board of remuneration of Directors - Performance-based fixed or variable pay. - Equity-based fixed or variable pay - Bond-based fixed or variable pay - Termination Pay. - Report how performance criteria in the remuneration policy relate to the highest governance body’s and senior executives’ economic, environmental and social objectives 200 ANNUAL ANNUAL 201 MANAGEMENT REPORT MANAGEMENT REPORT

Aspect Material Related GRI Indicator Information for 2014 Omitted External Aspect Material Related GRI Indicator Information for 2014 Omitted External for Bancolombia Aspect (GRI, Own) assurance for Bancolombia Aspect (GRI, Own) assurance

Consolidating Our Labor Practices LA1. Total number and rates "Chapter 6: The best human x Humanistic Banking of new employee hires and Talent. Breakdown of jobs by Wherever, whenever Not a GRI Aspect Own ATM Availability Chapter 3: Commitment to our clients / x Model employee turnover by age company and countries (Page and however our Wherever, whenever and however our clients group, gender and region. 125); a. Demographics (Page clients need us need us (Page 88) 126); b. New Employees (Page 126); and c. Exiting Employees Not a GRI Aspect Own Telephone Banking Chapter 3: Commitment to our clients / x (Page 127) " Channel Availability From cell (Page 92) LA2. Benefits provided to Chapter 6The best human talent full-time employees that are Páges 124, 130 y 131 (Graphics: not provided to temporary or K. Employee Loans,i. employee Not a GRI Aspect Own APP Availability Chapter 3: Commitment to our clients / x part-time employees, broken Insurance; m.Organizational From cell (Page 92) down by main activity savings programs. Labor relations LA4. Minimum notice Chapter 6: The best human Own Corporate On-Line Chapter 3: Commitment to our clients / x management periods regarding talent Página 124 Banking Channel Availability Digital banking channels (Page 91) operational changes, including whether these are specified in collective Local Communities Own Consumer On-Line Chapter 3: Commitment to our clients / x agreements Banking Channel Availability Wherever, whenever and however our clients Occupational health LA6. Absenteeism, Chapter 6: The best human This indicator is not x FS13. Access points in areas need us (Page 88) and safety occupational diseases lost Talent. Graphic j. Absenteeism reported by gender of low population density or days,and number of work- (% of lost time) (page 130) economically disadvantaged related fatalities work by by type. region and gender. Training and e LA9. Average hours of Chapter 6: The best human x FS14. Initiatives to improve Chapter 3: Commitment to our clients / x ducation training per year per Talent. Graphic f. Human Talent access to financial services Consumer Banking (Pages 94 and 95) employee by gender and Training (Page 128) for disadvantaged people. broken down by employee category. LA10. Programs for skills Chapter 6: The best human management and lifelong Talent (Page 124) Strengthening key Product Portfolio FS1. policies with specific Chapter 3: Commitment to our clients / x learning that support the lines of business in environmental and social Consumer Banking (Pages 94 and 95) continued employability of terms of creating components applied to These are our policies:Sustainable employees and assist them added value business lines Purchasing,Human Rights,Climate Chapter in managing the end of their careers. FS2. Procedures for 8: Transforming communities / Graphic: x LA11. Percentage of Chapter 6: The best human x assessing and screening Environmental and Social Risk Analysis (162) employees receiving regular Talent / Graphic g. Rating environmental and social performance and career performance. The number risks in business lines development reviews, by of employees subject to gender and by employee performance evaluations came FS3. Processes for Chapter 8: Transforming communities / x category to 23,679 (Page 124) monitoring clients’ Graphic: Environmental and Social Risk Equal remuneration LA13. Ratio of basic salary Chapter 6: The best human x implementation of Analysis (162) Although commitments have for men and women and remuneration of Talent / Graphic e. Salaries/ Excluding senior and compliance with been generated through the environmental women to men by employee wages broken down by gender management environmental and social risk analysis in Project finance contracts category and age (Page 127) requirements included in regarding environmental requirement Innovate talent Not a GRI Aspect Own % implementation of Chapter 6: The best human agreements or transactions compliance, review on the compliance of management the action plan based on the Talent / Innovative talent said commitments has not been carried results of the Merco people management (Page 123) out by 100% due to current capacities in survey the team for effective review. Strategies Not a GRI Aspect Own Merco People Ranking Chapter 6: The best human have been generated to close this gap, Talent / Innovative talent we expect to report on this advance in management (Page 123) 2015, emphasizing on projects with higher Building more and Product and service PR5. Results of surveys Chapter 2: Our commitment x environmental risk and specific conditions better relations with labeling measuring client to our investors / (Page 53 during risk analysis. clients satisfaction. NPS for Personas and SMEs segment and page 57 NPS for Strategic risk Not a GRI aspect Own Structuring our Chapter 5: Commitment to our investors / x our Corporate and Government management reputation indicator Proactive Reputation Management (Page Banking division) 118) 202 ANNUAL ANNUAL 203 MANAGEMENT REPORT MANAGEMENT REPORT

Aspect Material Related GRI Indicator Information for 2014 Omitted External Aspect Material Related GRI Indicator Information for 2014 Omitted External for Bancolombia Aspect (GRI, Own) assurance for Bancolombia Aspect (GRI, Own) assurance

Operating simplicity Not a GRI Aspect Own % increase in complaints Chapter 3: Commitment to our x Consolidating our General EN31. Breakdown by type of Chapter 8: Transforming communities / x and impeccability andclaims clients / Operating simplicity environmental and total environmental expense Graphic: Breakdown of total environmental and impeccability (Page 84) social model and investments expense and investment (166) Strengthening key lines Product Portfolio FS6. Percentage of the portfolio Chapter 2: Our commitment to x Materials EN1. Materials used by Chapter 8: Transforming communities / x of business in terms of for business lines by specific our investors / Making dreams weight or volume Graphic: Materials used by weight and creating added value region, size and sector (i.e. come true throughout the volume. EN1 (Page 155) micro, medium and large-sized region (Page 77) Water EN8. Total water withdrawal Chapter 8: Transforming communities x SMEs and their corresponding by source / Graphic: Total water consumption by sector source. EN8 (Page 156) EN10. Percentage and total Chapter 8: Transforming communities / volume of water recycled Graphic: Percentage and total volume of Proactive Reputation Product Portfolio FS7. Monetary value of products Chapter 3: Commitment to our x and reused. water recycled and reused. EN10 (Page 156) Management and services designed to clients / Consumer Banking Energy EN3. Energy consumption Chapter 8: Transforming communities / x deliver a specific social benefit (Pages 94 and 95) within the Organization. Graphic: Energy consumption within the for each business benefit for Organization. EN3 (Page 155) each business broken down by EN5. Energy intensity. Chapter 8: Transforming communities / purpose Graphic: Energy Intensity per Full Time FS8. Monetary value of products Chapter 8: Transforming This indicator is x Employee EN5 (Page 155) and services designed to deliver communities / (Page 166) omitted since the EN6. Reductions in energy Chapter 8: Transforming communities x a specific environmental benefit following is no consumption. / Graphic: Reductions in energy for each business line, broken longer reported: consumption. EN6 (Page 156) down by purpose 2.The percentage of Emissions EN15. Greenhouse Gases Chapter 8: Transforming communities / x this value in relation (Scope 1) Graphic: Greenhouse Gases (Scope 1). to the total value of EN15 (Page 160) goods and services EN16. Energy indirect Chapter 8: Transforming communities / x corresponding greenhouse gas (GHG) Graphic: Energy indirect greenhouse gas to each line of emissions (Scope 2) (GHG) emissions (Scope 2). EN 16 (Page 160) business. EN17. Other indirect Chapter 8: Transforming communities / Strategic risk Not a GRI Aspect Own Size of risk/ Consumed Chapter 9: Our Responsibility x greenhouse gas (GHG) Graphic: Other indirect greenhouse gas management appetite with Local Authorities (Page emissions (Scope 3). emissions (Scope 3) EN 17 (Page 160) 192) EN18. Greenhouse gas Chapter 8: Transforming communities Not a GRI Aspect Own Number of environmental Chapter 7: Hand-in-hand with x (GHG) emissions intensity (Page 160) and social risk assessments our strategic partners and EN19. Greenhouse gas Chapter 8: Transforming communities x performed on suppliers and suppliers (Page 136) reductions. (Page 160) strategic partners Not a GRI Aspect Own Number of action and Chapter 7: Hand-in-hand with x Effluents and waste EN23. Total weight of waste Chapter 8: Transforming communities / x improvement plans for strategic our strategic partners and by type and disposal method Graphic: Total weight of waste by type and partners and suppliers suppliers (Page 139) disposal method EN23. (Page 157) Not a GRI Aspect Own Segmentation, Chapter 9: Our Responsibility x Economic Performance EC2. Financial implications "Chapter 8: Transforming communities / identification, measurement with Local Authorities / and other risks and Graphic: Managing risks and opportunities and control of the risk of asset Managing the Risk of Asset opportunities for the with regard to x laundering and the financing of Laundering and the Financing organization's activities due climate change GRI4 EC2 (Page 158)" terrorism. of Terrorism(Page 192) to climate change Consolidating our Not a GRI Aspect Own Financial information for Chapter 2: Our commitment x Economic Performance EC1. Value distributed - Chapter 4: Contributing to overall economic international presence each foreign-based subsidiary to our investors / International Social Investment growth / Contributing to overall economic consolidation (Page 69) growth (Page 104) Not a GRI Aspect Own Growth rate Chapter 2: Our commitment x to our investors / International consolidation (Page 69) SO1. Percentage Chapter 8: Transforming communities / x Improving Efficiency Not a GRI Aspect Own Energy, water, paper and Chapter 8: Transforming x of operations with Contributing to a Better Quality of Life and Profitability travel savings communities / Graphic: implemented local (Pages 149 to 153) Performance Goals for 2010- Local Communities community engagement, 2020 and the targets set for impact assessments, and 2014 (Page 154) development programs Not a GRI Aspect Own Group-wide efficiency Chapter 5: Commitment to x indicator our investors / Efficiency and Profitability (Page 109) Not a GRI Aspect Own % Commissions vs. total Chapter 5: Commitment to x expenditures our investors / Efficiency and For further details of information related to basic and specific indicators, and management models, please refer to our Corporate Profitability (Page 109) Website, in the following links: http://www.grupobancolombia.com/sostenibilidad/ http://www.grupobancolombia.com/webcorporativa http://www.grupobancolombia.com/webcorporativa/gobierno http://www.grupobancolombia.com/webcorporativa/proveedores 204 ANNUAL ANNUAL 205 MANAGEMENT REPORT MANAGEMENT REPORT 206 ANNUAL ANNUAL 207 MANAGEMENT REPORT MANAGEMENT REPORT Origin of sugar cane fiber

Harvest

Sugar Cane Cut

Boiler

Cane Fiber Transportation Classification

Mill Transportation

Chipper

Origin and process of Cane Conveyor Evaporation paper made from Sugar We transport it to the paper production plant sugar cane fibers Paper Production Process

coffe pulp Coffee pulp surge tank Evidence of the commitment of Carvajal Paper machine Pulpa y Papel with the environment through a paper made 100% from sugar cane fibers, free of whitening chemicals, product of the innovation and research that the company has undertaken over Purifying more than 50 years. For the process of Paper roll

Wash paper production, the company has two Cooking production plants, located in Yumbo, Valle de Cauca and in Caloto, Cauca where all the technology is available to comply with the highest standards of quality. Below you can find the origin and production process of the sustainable paper used for printing our Corporate Management and Responsibility report oriented by our Strainer sustainability strategy. Transportation Boiler Financial results

We have an integrated report available in Spanish which includes all financial information.

For financial information in English, please refer to our 20F form, and the following websites: Annual Integrated Report (Spanish) – Pag 220-385

http://www.grupobancolombia.com/contenidoCentralizado/informacionEmpresarial/ relacionInversionistas/gobiernoCorporativo/resultadosFinancieros/resultadosAnuales/anuales/2014/informe2014.pdf

20F Form (English) http://www.grupobancolombia.com/investorRelations/informacionEmpresarial/ investorRelations/20FForms/index.asp?opcion=op1 212 ANNUAL MANAGEMENT REPORT