MANAGEMENT AND SUSTAINABILITY REPORT 2019 “Please note that this is a convenience translation. Only the Spanish version of this document is decisive. This translation is provided for convenience purposes only. No representation is made as to the accuracy of this document and the Company does not assume any liability based upon it.” Contents 1 President’s Report 2019 (GRI 102-14) 10 2 About this Report 14 Introduction to the Management Report ...........................................................................14 3 Grupo Aval and its Subsidiaries 16 3.1 Direct and indirect shareholding of Grupo Aval in its subsidiaries .............................19 3.2 Geographical presence and markets served ................................................................26 3.3 Employees (general approach) ...................................................................................32 3.4 Changes in the organization .......................................................................................33 3.5 Summary of our operations’ performance ..................................................................33 3.6 Performance analysis of our operations in Colombia ..................................................35 3.6.A. Colombian economic environment ................................................................................ 36 3.6.B. Recent results of the Colombian financial system ...................................................... 43 3.6.C. Grupo Aval in the Colombian banking system ............................................................. 53 3.6.D. Results of the Holding Company’s separate financial statements ......................... 55 3.6.E. Results of Grupo Aval’s consolidated financial statements ...................................... 59 3.6.F. Performance of Grupo Aval’s shares ............................................................................... 62 3.6.G. Results of our subsidiaries in Colombia ........................................................................ 63 3.7 Performance analysis of our operations in Central America .......................................82 3.7.A. Central American economic environment .................................................................... 83 3.7.B. Recent results of the Central American financial system .......................................... 85 3.7.C. BAC in the Central American banking system .............................................................. 87 3.7.D. Results of BAC ...................................................................................................................... 90 3.8 Grupo Aval’s other related entities .............................................................................92 4 4 Structure and Strategic Management 98 4.1 Governing bodies ........................................................................................................99 4.1.A. Principal members of the Board of Directors .............................................................100 4.1.B. Alternate members ...........................................................................................................103 4.1.C. General Counsel ................................................................................................................107 4.1.D. Committees ........................................................................................................................108 4.2 Organization chart ....................................................................................................109 4.2.A. Senior Vice-Presidency of Finance ...............................................................................110 4.2.B. Senior Vice-Presidency of Information Technology .................................................110 4.2.C. Senior Vice-Presidency of Corporate Compliance ....................................................111 4.2.D. Vice-Presidency of Corporate Risks .............................................................................111 4.2.E. Vice-Presidency of Corporate Marketing .....................................................................112 4.2.F. Legal Department ..............................................................................................................112 4.2.G. Internal Auditing Department .......................................................................................112 4.3 Strategic management ..............................................................................................113 4.3.A. Mission and vision ............................................................................................................113 4.3.B. Values and governing principles ...................................................................................114 4.3.C. Organizational objectives ...............................................................................................115 5 Laws and Regulations 116 5.1 State of compliance with intellectual property, copyright and free circulation of invoices laws ...........................................................................................................116 5.2 Events after the closing date ....................................................................................117 5.3 Risks faced by Grupo Aval .........................................................................................117 5.4 Regulations for conglomerates .................................................................................117 5.5 Laws ..........................................................................................................................118 5.6 Decrees .....................................................................................................................119 5.7 Resolutions ...............................................................................................................121 5.8 External bulletins .....................................................................................................121 5.9 Circular letters ..........................................................................................................123 5 6 Sustainability at Grupo Aval 124 6.1 Stakeholders .............................................................................................................125 6.1.A. Other relevant communication channels ....................................................................130 6.2 Materiality analysis ..................................................................................................130 6.3 Subsidiary relations for sustainability ......................................................................133 6.4 Corporate governance, risk and ethics management ................................................134 6.4.A. Corporate governance structure ...................................................................................135 6.4.B. Risk management and internal control ........................................................................137 6.4.C. Ethics ....................................................................................................................................140 6.5 Financial performance ..............................................................................................144 6.5.A. Subsidiary management ..................................................................................................145 6.5.B. Investor relations ..............................................................................................................146 6.5.C. Innovation and digital transformation .........................................................................148 6.6 Corporate efficiency .................................................................................................151 6.6.A. Corporate marketing ........................................................................................................151 6.6.B. Corporate procurement ...................................................................................................155 6.7 Human resources ......................................................................................................157 6.7.A. Employee well-being, health and training ..................................................................157 6.8 Environment .............................................................................................................160 6.8.A. Financial inclusion ............................................................................................................160 6.8.B. Social investment ..............................................................................................................162 7 Sustainability in our Subsidiaries 164 7.1 Banco de Bogotá .......................................................................................................165 7.1.A. Initiative highlights ..........................................................................................................166 7.1.B. Sustainability commitments for 2020 .........................................................................168 7.2 Banco de Occidente ..................................................................................................169 7.2.A. Initiative highlights ..........................................................................................................170 7.2.B. Sustainability commitments for 2020 .........................................................................172