About Bancolombia

Bancolombia S.A. (Bancolombia) operates as a full-service financial institution that offers a wide range of banking products and services to a diversified individual and corporate customer base of nearly 29 million customers. Bancolombia delivers its products and services through its regional network comprising Colombia's largest non-Government owned banking network, El Salvador's leading financial conglomerate, Guatemala's fifth-largest bank, Panama's second-largest bank and off-shore banking subsidiaries in Panama and Puerto Rico, in each case measured by amount of gross loans. Bancolombia and its subsidiaries offer the following products and services, however not all are offered in each country where the bank operates. Savings and Investment: The bank offers its customers checking accounts, savings accounts, fixed term deposits and a diverse variety of investment products that fit the specific transactional needs of each client and their income bracket. A la Mano: This is a mobile phone-based savings account specially designed to serve low-income clients and those with no prior experience with banking products. Financing: The bank offers its customers a wide range of credit alternatives which include trade financing, loans funded by domestic development banks, working capital loans, mortgage, credit cards, personal loans, vehicle loans, payroll loans and overdrafts, among others. Factoring: Bancolombia offers its clients solutions for handling their working capital and maximizing their assets turnover through comprehensive solutions to manage their accounts receivable financing. Financial and Operating Leases: The bank offers financial and operating leases specifically designed for acquiring fixed assets. Capital Markets: The bank assists its clients in mitigating market risk through hedging instruments, such as, futures, forwards, options and swaps. Trading: The bank offers an APP and an-internet-based trading platform, available for retail and institutional clients, which allows them to buy/sell securities in the Colombian Securities Exchange. The bank also performs inter-bank lending, repurchase agreements (repos), foreign exchange transactions, as well as sovereign and corporate securities sales and trading. Bancolombia is an active player in the 'market-makers' scheme for trading Colombian sovereign debt (TES bonds). The bank offers its clients direct access to local and international capital markets through a full range of brokerage and investment advisory services that cover equities and fixed income securities, proprietary trading and third-party asset management products, such as mutual funds, private equity funds, and privately managed investment accounts for institutional, corporate and private bank clients. Cash Management: The bank provides support to its clients through efficient cash management, offering a portfolio of standard products that allows clients to make payments and collections through different channels. The bank's payables and receivables services provide solutions to process and reconcile transactions accurately, efficiently, and in a timely manner. The bank also offers a comprehensive reporting solution, providing the data that is required by customers' internal processes. In addition, the bank designs and creates custom-made products in order to address the bank's clients' specific payment and collection needs. These include a variety of real time web services, straight through processing (STP) and messaging through Swift Net solutions. Foreign Currency and Trade Finance: The bank offers its clients specialized solutions to satisfy their investment, financing and payment needs with regard to foreign currency transactions. The bank also provides trade finance solutions with products, such as Letters of Credit, Standby Letters of Credit and Bills Collection. Bancassurance and Insurance: Bancolombia distributes diverse insurance products (Life, health, agriculture, pets, debtors, and homeowner's insurance) written by Seguros Generales Suramericana S.A and Seguros de Vida Suramericana S.A, two of the main insurance companies in Colombia. In addition, the bank offers unemployment and theft insurance written by Cardif Colombia Seguros Generales S.A. company with more than 10 years of experience in Colombia. Investment Banking: The bank, through its subsidiary Banca de Inversión, offers a wide variety of value-added services, including structuring of leverage finance (project finance, acquisitions, and large corporate loans), loan syndication, debt and equity capital markets, principal investments (in alternative assets), M&A, hedging strategy advisory, restructurings, across all economic sectors, with coverage in Colombia and Central America. Trust and Fiduciary Services: The bank, through its subsidiary Fiduciaria Bancolombia offers a broad and diversified portfolio of services for companies and individuals, meeting their needs with tailored services. These services include managing escrow accounts, multiple investment funds, and real estate funds. Sustainable Finance: Special credit lines designed to support the bank's customers involved in making a positive impact on the environment and society. This includes, a sustainable credit line, for projects that promote the use of clean technologies, renewable energies, energy efficiency, clean fuels, and reduction of waste and emissions. This also includes Sustainable/ Environmental, Social and Governance (ESG) credit lines for certified sustainable businesses, a gender-focused sustainable credit line, and a retail banking sustainable credit line. Ecosystems: Instead of focusing exclusively on banking services, Bancolombia seeks to offer a wide range of financial and non-financial solutions, which impact close to nine million clients. Therefore, Ecosystems are comprehensive solutions leveraged by technology, designed to achieve the evolution of the bank's value proposition. In the long run, Ecosystems will eventually gather and articulate every other customer-centric Bank´s solutions. Moreover, the bank obtains a competitive advantage by being involved in and supporting all aspects of its clients' lives, using data transactions to understand the customer's life stages and the business processes of the companies. Nequi (Digital): Nequi is a 100% digital platform that operates independently from Bancolombia's brand and aims to address real financial needs of clients with a wide range of possibilities enabled by technology. Nequi is completely paperless; users interact with the platform exclusively by mobile phone, with no contact with Bancolombia's branch network. Nequi offers saving accounts, a digital debit card, PayPal integration, nano-loans and third-party non-financial services, like utilities, entertainment and transportation among others, to over 14.8 million users in Colombia and over 173 thousand in Panama. Nequi's business will be separated from the bank. The separation is expected to take place in 2023, subject to the timeframe to be determined with the Superintendency of Finance (SFC), and is intended to be achieved through the establishment of a financing company (Compañía de Financiamiento). This process will involve the following two stages: formation of the financing company, consisting of the incorporation upon registration of the public deed of incorporation (which has been completed according to the authorization granted by SFC) and operational authorization procedure before the SFC (in process); and once the operational authorization is obtained, the assignment of assets, and contracts corresponding to Nequi's business from the bank to the newly incorporated financing company. Although Nequi provides financial services, other strategies are being developed in integrated experiences through alliances with third parties. New Products or Services Bancolombia continues its efforts to diversify and innovate in its product portfolio. Below is a brief description of the new products and services introduced in 2022: Bancolombia Capital LLC and Bancolombia Capital Advisers LLC: Provides services as a broker-dealer and as an investment advisor, respectively, in the United States. New Fund Renta Alternativo Global: Bancolombia launched an alternative assets fund, which invests in infrastructure, real estate and credit assets. The fund also invests globally and allows the bank's clients to have some periodic exit periods. Morgan Stanley is an advisor for the investment process and is a manager with extensive experience in this area. Bancolombia Pay: In 2022, the bank launched the digital wallet as a service through application programming interfaces (API). This service includes two main functionalities; it allows customers to synchronize their Bancolombia savings account with a third-party´s digital wallet and then allows the making of one-click payments within the third-party's platform. In October 2022, the bank's first client completed its integration to this service, launching to the market its own digital wallet for their customers. the bank is supporting the integration process for additional clients. Ordinary Loans in Unidades de Valor Real (UVR): Ordinary Loans in UVR is a line of credit which was launched in June 2022 and is linked to the UVR (Real Value Unit), which is a certificated rate from Colombia´s Central Bank and reflects the costumers purchasing power based on the variation of the consumer price index. This line of credit generates a natural coverage for those corporate clients whose income is tied to inflation, since their income and credit fluctuations are based on the same variable. This type of loan has the possibility of creating flexible financial conditions appropriate to the client's cash flow. Microcredito + Elevate: In August 2022, the bank launched Microcredito + Elevate, which is a financial education program offered in conjunction with the Independent Microcredit product. The purpose of this program is to support the growth of entrepreneurs, providing them with business training tools for the proper management of their businesses and credits they have with the bank. The duration of this financial education program is six months and includes two counseling sessions per month with a personalized tutor from Elevate. The tutor evaluates the business to determine the appropriate topics and content necessary for the bank's clients to improve their sales and strengthen their business. Once the client has successfully completed the counseling and complies with their payment obligations, Bancolombia grants the client a rate reduction on their microcredit product. Protected-Agriculture Plan: In April 2022, the bank launched Plan Agro Protegido, which is an insurance policy for Bancolombia clients who have already completed a credit assessment for the Finagro or Agrofácil credit lines through its allies, Suramericana and HDI, which are insurance companies. This type of insurance is designed to support agricultural crops against climate disasters or natural events that cause damage to the plant or generate crop loss while interrupting production cycles. Multifamily Rent: Multifamily for rent is a building management model where pay rent for residential property and can request other services, such as installing furniture, electrical appliances, or other additional services. Solar Panel Rent: Agreements where a payment is made for the temporary (usually 10 to 15 years) use of the solar panel. The tenant uses the solar technology to produce or/to sell energy. ESG Derivatives: This is a hedging product that seeks to provide a more favorable rate when negotiating interest rate swaps to clients who meet sustainable requirements, such as having a credit through the bank's sustainable line, being a B-Corp, or having certain selected certifications. In addition to meeting the sustainability requirements, the client is assessed in terms of, for example, credit risk and must be part of certain business segments. The benefit is limited according to the availability of resources and conditions provided by certain departments of the bank. Main Lines of Business The bank operates through nine segments: Banking Colombia, Banking Panama, Banking El Salvador, Banking Guatemala, Trust, Investment Banking, Brokerage, International Banking, and All other. Banking Colombia This segment provides retail and corporate banking products and services to individuals, companies and national and local governments in Colombia. The bank's strategy in Colombia is to grow with these clients based on value added and long-term relationships. In order to offer specialized services to individuals, small and medium size enterprises (SMEs) and big size enterprises, the bank´s retail sales force targets the clients classified as: Personal, plus and Entrepreneurs. The bank´s corporate and government sales force targets and specializes in companies with more than Colombian pesos (COP) 100,000 million in revenue in twelve economic sectors: Agribusiness, Commerce, Manufacturing of Supplies and Materials, Consumer goods, Financial Services, Health, Education, Construction, Government, Infrastructure, Real estate, and Natural Resources. This segment is also responsible for the management of the bank's proprietary trading activities, liquidity and distribution of treasury products and services to its client base in Colombia. Banking Panama This segment provides retail and commercial banking products and services to individuals and companies in Panama and includes all the operations of Banistmo S.A. and its subsidiaries, which are managed and monitored by the chief operating decision maker (CODM) on a consolidated basis. Banking Panama also includes operations of the following operational stage subsidiaries (Banistmo Investment Corporation S.A.; and Leasing Banistmo S.A. y Valores Banistmo S.A.) and of the following non-operational subsidiaries (Banistmo Panamá Fondo de Inversión S.A.; Banistmo Capital Markets Group Inc.; Anavi Investment Corporation S.A.; Desarrollo de Oriente S.A.; Steens Enterpresies S.A.; and Ordway Holdings S.A. This segment is also responsible for the management of Banistmo's proprietary trading activities, liquidity and distribution of treasury products and services to its client base in Panama. Banking El Salvador This segment provides retail and commercial banking products and services to individuals, companies and national and local governments in El Salvador through Banco Agrícola S.A. Banking El Salvador also includes operations of the following subsidiaries: Banagrícola S.A; Inversiones Financieras Banco Agrícola S.A. (IFBA); Bagrícola Costa Rica S.A.; Gestora de Fondos de Inversión Banagricola, S.A; Valores Banagrícola S.A. de C.V.; Credibac S.A. de C.V.; and Arrendadora Financiera S.A. (Arfinsa). This segment is also responsible for the management of Banco Agrícola's proprietary trading activities, liquidity and distribution of treasury products and services to its client base in El Salvador. Banking Guatemala This segment provides retail and commercial banking and insurance products and services to individuals, companies and national and local governments in Guatemala through Banco Agromercantil de Guatemala S.A., Banking Guatemala also includes operations of the following subsidiaries: Seguros Agromercantil S.A.; Financiera Agromercantil S.A.; Agrovalores S.A.; Arrendadora Agromercantil S.A.; Agencia de Seguros y Fianzas Agromercantil S.A. (company in liquidation); Asistencia y Ajustes S.A.; Serproba S.A.; Servicios de Formalización S.A.; Conserjería, Mantenimiento y Mensajería S.A.(company in liquidation); New Alma Enterprises LTD.; and Mercom Bank Ltd Shareholders authorized the beginning of an organized and gradual process to transfer the assets and liabilities of Mercom Bank, Ltd., to Banco Agromercantil de Guatemala, S. A. or other companies of the bank. This segment is also responsible for the management of Banco Agromercantil's proprietary trading activities, liquidity and distribution of treasury products and services to its client base in Guatemala. Trust This segment provides trust and asset management services to clients in Colombia through Fiduciaria Bancolombia S.A. Sociedad Fiduciaria (Fiduciaria Bancolombia). The main products offered by this segment include money market accounts, mutual and pension funds, private equity funds, payment trust, custody services, and corporate trust. Investment banking This segment provides corporate and project financial advisory services, underwriting, capital markets services and private equity management through Banca de Inversión Bancolombia S.A. Corporación Financiera (Banca de Inversión). Its customers include private and publicly-held corporations, as well as government institutions. Brokerage This segment provides brokerage, investment advisory and private banking services to individuals and institutions through Valores Bancolombia S.A. Comisionista de Bolsa. It sells and distributes equities, futures, foreign currencies, fixed income securities, mutual funds and structured products. In September 2021, the bank through Valores Bancolombia S.A. formed the companies Bancolombia Capital Holdings USA LLC; Bancolombia Capital LLC; and Bancolombia Capital Advisers LLC. In 2022, these companies obtained regulatory authorizations to operate as a broker-dealer and as a registered investment adviser in the United States. International Banking This segment provides a complete line of international banking services to Colombian and foreign customers through Bancolombia Panamá S.A.; Bancolombia Cayman S.A.; and Bancolombia Puerto Rico International, Inc. It offers loans to private sector companies, trade financing, leases financing and financing for industrial projects, as well as a complete portfolio of cash management products, such as checking accounts, international collections and payments. Through these subsidiaries, the bank also offers investment opportunities in the U.S. dollars, savings and checking accounts, time deposits, and investment funds to its high net worth clients and private banking customers. All Other This segment provides financial and operating lease activities, including leasing services to clients in Colombia. Bancolombia offers these services mainly through the following Subsidiaries: Renting Colombia S.A.S. and Transportempo S.A.S. Additionally, through the FCP Fondo Inmobiliario Colombia, the bank provides real estate service. This segment also includes results from the operations of investment vehicles of the bank: Valores Simesa S.A.; Negocios Digitales Colombia S.A.S.; Inversiones CFNS S.A.S.; Sistema de Inversiones y Negocios S.A. (Sinesa); and the technology services company Wompi S.A.S. In addition, this segment includes Wenia LTD, a company formed by the subsidiary, Sistemas de Inversiones y Negocios S.A. (SINESA), in Bermuda. It is a corporate vehicle for the creation and implementation of operating systems and software applications, which will allow the bank to continue advancing in the adoption and incorporation of a business model based on decentralized finance. Distribution Network Bancolombia provides its products and services through a traditional branch network, sales, and customer representatives, as well as through mobile branches (or Puntos de Atención Móviles), an ATM network, online and computer banking, telephone banking, mobile phone banking services, and points of sale (or Puntos de Atención Cercano), among others. Transactions performed through electronic channels represented more than 95.59% of all transactions in 2022. The following are the distribution channels offered by Bancolombia: Branch Network Bancolombia's consolidated branch network consisted of offices, including from Bancolombia S.A., Banco Agricola, Banistmo, BAM and other subsidiaries. Banking Correspondents A banking correspondent is a platform which allows non-financial institutions, such as retail stores open to the public, to provide financial services and transactions in locations where banks and financial institutions have limited or no presence. Bancolombia has banking correspondents in Colombia, Panama, Guatemala and El Salvador. Puntos de Atención Móviles (PAM) PAMs consist of commercial advisors who visit small towns periodically to offer Bancolombia's products and services. Bancolombia has PAMs in Colombia, Panama, Guatemala and El Salvador. Kiosks Kiosks are located inside the bank's branches, malls, and other public places and are used to provide the bank's clients with the possibility of conducting a variety of self-service transactions. Bancolombia has kiosks in El Salvador and Colombia. Automated Teller Machines (ATMs) Bancolombia has ATMs in Colombia, El Salvador, Panama, and Guatemala. Online/Computer Banking The bank offers multiple online and computer-based banking alternatives designed to fit the specific needs of its different client segments. Through a variety of platforms (computer and Internet-based solutions) the bank's clients can review their account balances and monitor transactions in their deposit accounts, loans, and credit cards, make virtual term investments, access funds from pre-approved loans, make payroll and supplier payments, make purchases and bill payments, negotiate stocks, learn about products and services and complete other transactions in real time. Telephone Banking The bank provides customized and convenient advisory services to customers of all segments through automatic interactive voice response (IVR) operations and a 24/7 contact center. Mobile Phone Banking Service The bank's clients can conduct a variety of transactions using their cell phones, including fund transfers between Bancolombia accounts, account balance inquiries, QR code payments and payment of bills and invoices. Business Connections Banking Service The Bancolombia Business Connections service is a new differentiating feature of the bank's entire range of solutions, consisting of a direct connection between bank servers and the client through which transactions and documents exchange are carried out; the aim of which is to supplement the interaction with both its cash management and factoring products. Furthermore, it offers a secure, efficient, and impeccable option for clients to handle their funds and particularly their cash management needs in general. Seasonality Of Deposits Historically, the bank has experienced some seasonality in its demand deposits, with lower average balances during the first months of the year and higher average balances at the end of the year. This behavior is explained primarily by the increased liquidity provided by the Central Bank and the Colombian National Treasury at year end (year ended December 31, 2022), as economic activity tends to be higher during this period resulting in a greater number of transactions. Research and Development For the year ended December 31, 2022, the bank incurred costs that are directly related to software development in the amounts of COP 40,229. Acquisitions On August 22, 2022, Bancolombia acquired an additional interest of 30.40% of the outstanding participation units in Fondo de Capital Privado Fondo Inmobiliario Colombia FIC, a real estate fund. Supervision and Regulation The bank is organized as a stock company (sociedad anónima). Its corporate existence is subject to the rules applicable to commercial companies, principally the Colombian Commercial Code which requires stock companies (such as the bank) to have a minimum of five shareholders at all times and provides that no single shareholder may own 95% or more of the bank's subscribed capital stock. Article 262 of the Colombian Commerce Code prohibits the bank's subsidiaries from acquiring stock of the bank. All Bancolombia's Colombian subsidiaries that do not provide financial services are governed by the laws and regulations embodied in the Colombian Civil Code and the Colombian Commercial Code, as well as any regulations issued by the Colombian Superintendency of Industry and Commerce and the Superintendency of Corporations or any other type of special regulations that may be applicable to the commercial and industrial activities carried out by such subsidiaries. In addition, certain subsidiaries of Bancolombia located in other countries have transmitted directly to the U.S. Internal Revenue Service (IRS) the information required pursuant to the Foreign Account Tax Compliance Act of 2010 (FATCA), since those other countries have not entered into an intergovernmental agreement (IGA). Competition Bancolombia competitors include Banco de Bogotá; Davivienda; BBVA; Banco de Occidente; Banco Corpbanca; Banco Colpatria; Scotiabank Colpatria; and Itaú Corpbanca. Total Net Loans: Bancolombia competitors include Davivienda; Banco de Bogotá; BBVA; Banco de Occidente; and Itaú Corpbanca. Checking Accounts: Bancolombia competitors include Banco de Bogotá; Davivienda; BBVA; Banco de Occidente; Scotiabank Colpatria; and Itaú Corpbanca. Time Deposits: Bancolombia competitors include Davivienda; BBVA; Banco de Bogotá; Scotiabank Colpatria; Banco de Occidente; and Itaú Corpbanca. Saving Accounts: Bancolombia competitors include Davivienda; BBVA; Banco de Bogotá; Banco de Occidente; Scotiabank Colpatria; and Itaú Corpbanca. Banco Agrícola Total Loans: Banco Agríco competitors include Davivienda; BAC; and Promerica. Checking Accounts: Banco Agríco competitors include Cuscatlán; Davivienda; BAC; and Promerica. Time Deposits: Banco Agríco competitors include Cuscatlán; Davivienda; BAC; and Promerica. Saving Accounts: Banco Agríco competitors include Cuscatlán; Davivienda; BAC; and Promerica. Banistmo Total Loans: Banistmo competitors include Banco General; Global Bank; Banesco; and BAC. Saving Accounts: Banistmo competitors include Banco General; Global Bank; Banesco; and BAC. Checking Accounts: Banistmo competitors include Banco General; Global Bank; Banesco; and BAC. Time Deposits: Banistmo competitors include Banco General; Global Bank; Banesco; and BAC. Banco Agromercantil de Guatemala S.A. (BAM) Net Loans: BAM competitors include Banco Industrial; Bacnrural; BAC-Reformador; Banco G&T Continental; Bantrab; Banco Promerica; Internacional; Crédito Hipotecario Nacional; Ficohsa; Azteca; Inmobiliario; De Antigua; Vivibanco; Citibank, N.A. de Guatemala, Inv; and Credicorp. Checking Accounts: BAM competitors include Banco Industrial; Banrural; Banco G&T Continental; BAC-Reformador; Banco Promerica; Bantrab; Internacional; Crédito Hipotecario Nacional; Ficohsa; Azteca; Inmobiliario; De Antigua; Vivibanco; Citibank, N.A. de Guatemala, Inv; and Credicorp. Time Deposits: BAM competitors include Banco Industrial; Banrural; Bantrab; Banco G&T Continental; BAC-Reformador; Banco Promerica; Internacional; Crédito Hipotecario Nacional; Ficohsa; Azteca; Inmobiliario; De Antigua; Vivibanco; Citibank, N.A. de Guatemala, Inv; Credicorp. Saving Accounts: BAM competitors include Banrural; Banco Industrial; Banco G&T Continental; Bantrab; BAC-Reformador; Banco Promerica; Internacional; Crédito Hipotecario Nacional; Ficohsa; Azteca; Inmobiliario; De Antigua; Vivibanco; Citibank, N.A. de Guatemala, Inv; and Credicorp. History Bancolombia S.A. was founded in 1875. The company was incorporated under Colombian law in 1945.