UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of May, 2014

 

Comission File Number 001-32535

 

Bancolombia S.A.

(Translation of registrant’s name into English)

 

Cra. 48 # 26-85
Medellín, Colombia
(Address of principal executive offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F þ                    Form 40-F ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):___

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(2):___

 

Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes o                    No þ

 

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-                    .

  

 
 

 

   
  1Q14

 

BANCOLOMBIA S.A. (NYSE: CIB; BVC: BCOLOMBIA, PFBCOLOM) REPORTS CONSOLIDATED NET INCOME OF COP 508 BILLION FOR THE FIRST QUARTER OF 2014 (COP 580 PER SHARE - USD 1.18 PER ADR). NET INCOME REPRESENTS AN INCREASE OF 4% COMPARED TO THE LAST QUARTER.

 

·The bank showed a solid and healthy growth in the loan portfolio during 1Q14. Bancolombia’s loan portfolio grew 2.3% during the quarter and 26.9% during the last twelve months. The annual growth was explained, 16.5% by the contribution of Banistmo (formerly HSBC Panama) and 10.4% by the organic growth of the existing operation before the consolidation of Banistmo.

 

·Net interest income increased 8% and fees increased by 3% during 1Q14. Net interest income increased due to higher yields on assets and lower cost of funding. Fees increased due to higher volume of banking transactions.

 

·The bank reduced its funding cost and maintained its liquidity position. The annualized average weighted cost of deposits was 2.3% in 1Q14, lower than the 2.6% for 4Q13 and the 3.2% for 1Q13. Deposits decreased 4% during the quarter and increased 24% compared to 1Q13, and the ratio of net loans to deposits ended at 99%. This annual growth was explained, 17.5% by the contribution of Banistmo (formerly HSBC Panama) and 6.5% by the organic growth of the existing operation before the acquisition of Banistmo.

 

·Past due loans as a percentage of total loans remain low in 1Q14. 30 days (or more) past due loans as a percentage of total gross loans were 3.2%. Net provision charges for past due loans and foreclosed assets totaled COP 308 billion, which represents 1.36% of gross loans when annualized.

 

·Loan portfolio coverage remains at high levels. At the end of 1Q14, the ratio between allowances for loans losses and 30-days past due loans was 142%, indicating that Bancolombia has sufficient reserves to maintain its business operation and has a strong and healthy balance sheet.

 

May 5, 2014. Medellín, Colombia – Today, BANCOLOMBIA S.A. (“Bancolombia” or “the Bank”) announced its earnings results for the first quarter of 2014.

 

For the quarter ended on March 31, 2014 (“1Q14”), Bancolombia reported consolidated net income of COP 508 billion, or COP 580 per share - USD 1.18 per ADR. Net income represents an increase of 4% as compared to the results for the quarter ended on December 31, 2013 (“4Q13”) and an increase of 3.2% as compared to the results for the quarter ended on March 31, 2013 (“1Q13”).

 

Bancolombia ended 1Q14 with COP 130,443 billion in assets, 0.3% lower than those at the end of 4Q13 and 26.5% greater than those at the end of 1Q13. At the same time, liabilities totaled COP 115,481 billion, decreasing 2.4% as compared to the figure presented in 4Q13 and increasing 25.9% as compared to 1Q131.

  

 

1 This report corresponds to the consolidated financial statements of BANCOLOMBIA S.A. and its affiliates (“BANCOLOMBIA” or “The Bank”) of which it owns, directly or indirectly more than 50% of the voting capital stock. These financial statements have been prepared in accordance with generally accepted accounting principles in Colombia and the regulations of Superintendencia Financiera de Colombia, collectively COL GAAP. BANCOLOMBIA maintains accounting records in Colombian pesos, referred to herein as “Ps.” or “COP”. Certain monetary amounts, percentages and other figures included in this report have been subject to rounding adjustments. There have been no changes to the Bank's principal accounting policies in the quarter ended March 31, 2014. The statements of income for the quarter ended March 31, 2014 are not necessarily indicative of the results for any other future interim period. For more information, please refer to the Bank's filings with the Securities and Exchange Commission, which are available on the Commission's website at www.sec.gov.

 

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

Representative Market Rate April 1, 2014 $1.969,45 = US$ 1

 

1
 

 

   
  1Q14

 

BANCOLOMBIA: Summary of consolidated financial quarterly results2

CONSOLIDATED BALANCE SHEET            
AND INCOME STATEMENT  Quarter   Growth 
(COP millions)  1Q13   4Q13   1Q14   1Q14/4Q13   1Q14/1Q13 
ASSETS                         
Loans and financial leases, net   68,817,162    85,394,012    87,334,646    2.27%   26.91%
Investment securities, net   14,233,292    13,805,790    15,384,799    11.44%   8.09%
Other assets   20,097,854    31,616,439    27,723,651    -12.31%   37.94%
Total assets   103,148,308    130,816,241    130,443,096    -0.29%   26.46%
                          
LIABILITIES AND SHAREHOLDERS' EQUITY                         
Deposits   67,146,387    86,556,579    83,043,278    -4.06%   23.67%
Non-interest bearing   8,584,903    14,680,487    13,904,799    -5.28%   61.97%
Interest bearing   58,561,484    71,876,092    69,138,479    -3.81%   18.06%
Other liabilities   24,564,684    31,766,816    32,437,333    2.11%   32.05%
Total liabilities   91,711,071    118,323,395    115,480,611    -2.40%   25.92%
Shareholders' equity   11,437,237    12,492,846    14,962,485    19.77%   30.82%
Total liabilities and shareholders' equity   103,148,308    130,816,241    130,443,096    -0.29%   26.46%
                          
Interest income   2,196,919    2,151,683    2,252,750    4.70%   2.54%
Interest expense   792,676    803,137    798,189    -0.62%   0.70%
Net interest income   1,404,243    1,348,546    1,454,561    7.86%   3.58%
Net provisions   (302,868)   (272,919)   (307,523)   12.68%   1.54%
Fees and income from service, net   436,328    525,018    542,322    3.30%   24.29%
Other operating income   228,514    257,790    260,651    1.11%   14.06%
Total operating expense   (1,091,382)   (1,207,369)   (1,171,770)   -2.95%   7.37%
Goodwill amortization   (15,348)   (38,335)   (53,375)   39.23%   247.77%
Non-operating income, net   19,859    20,061    (11,558)   -157.61%   -158.20%
Income tax expense   (186,610)   (144,052)   (204,957)   42.28%   9.83%
Net income   492,736    488,740    508,351    4.01%   3.17%

 

PRINCIPAL RATIOS  Quarter   As of 
   1Q13   4Q13   1Q14   Mar-13   Mar-14 
PROFITABILITY                         
Net interest margin (1)   6.78%   5.33%   5.54%   6.78%   5.54%
Return on average total assets (2)   1.99%   1.56%   1.56%   1.99%   1.56%
Return on average shareholders´ equity (3)   16.83%   15.97%   15.31%   16.83%   15.31%
EFFICIENCY                         
Operating expenses to net operating income   53.49%   58.45%   54.27%   53.49%   54.27%
Operating expenses to average total assets   4.47%   3.99%   3.76%   4.47%   3.76%
CAPITAL ADEQUACY                         
Shareholders' equity to total assets   11.09%   9.55%   11.47%   11.09%   11.47%
Technical capital to risk weighted assets   16.96%   10.61%   13.66%   16.96%   13.66%
KEY FINANCIAL HIGHLIGHTS                         
Net income per ADS (USD)   1.26    1.19    1.18           
Net income per share $COP   578.45    573.75    580.13           
P/BV ADS (4)   2.16    1.61    1.63           
P/BV Local (5) (6)   2.14    1.62    1.58           
P/E  (7)   12.48    10.34    11.77           
ADR price  (8)   63.25    49.02    56.48           
Common share price  (8)   28,800    23,820    26,940           
Weighted average shares outstanding  (9)   851,827,000    851,827,000    876,271,445           
USD exchange rate (quarter end)   1,832.20    1,926.83    1,969.45           

 

 

(1) Defined as net interest income divided by monthly average interest-earning assets. (2) Net income divided by monthly average assets. (3) Net income divided by monthly average shareholders' equity. (4) Defined as ADS price divided by ADS book value. (5) Defined as share price divided by share book value. (6) Share prices on the Colombian Stock Exchange; (7) Defined as market capitalization divided by annualized quarter results. (8) Prices at the end of the respective quarter. (9) Common and preferred.

 

2
 

 

   
  1Q14

 

1.BALANCE SHEET

 

1.1.Assets

 

·As of March, 2014, Bancolombia’s assets totaled COP 130,443 billion, which represents a decrease of 0.3% compared to 4Q13 and an increase of 26.5% compared to 1Q13. The annual growth was explained 16.5% by the contribution of Banistmo (formerly HSBC Panama) and 10.4% by the organic growth of the existing operation before the consolidation of Banistmo.

 

The decrease in assets in the quarter was explained by the reduction of cash that was used to reduce the most expensive liabilities. The annual growth of the assets was mainly explained by the consolidation of Banistmo’s assets in 4Q13 and the organic growth of loans and finance leases, which represented 67% of the assets at the end of 1Q14

 

1.2.Loan Portfolio

 

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

 

(COP Million)  Amounts in COP   Amounts in USD converted to COP   Amounts in USD (thousands)   Total 
(1 USD = 1969.45 COP)      1Q14/4Q13   1Q14/1Q13       1Q14/4Q13   1Q14/1Q13       1Q14/4Q13   1Q14/1Q13       1Q14/4Q13   1Q14/1Q13 
Net investment securities   11,158,126    10.91%   -6.21%   4,226,673    12.85%   80.87%   2,146,118    10.41%   68.26%   15,384,799    11.44%   8.09%
Gross Loans   62,662,801    1.84%   13.80%   28,807,439    3.14%   68.21%   14,627,149    0.90%   56.49%   91,470,240    2.25%   26.71%
Commercial loans   34,552,274    2.26%   13.75%   19,194,378    3.34%   44.66%   9,746,060    1.10%   34.58%   53,746,652    2.64%   23.15%
Consumer loans   12,100,575    0.21%   10.87%   4,620,267    2.06%   114.31%   2,345,968    -0.14%   99.37%   16,720,842    0.72%   27.93%
Small  business loans   406,301    3.83%   23.04%   127,579    1.69%   316.24%   64,779    -0.51%   287.24%   533,880    3.31%   47.95%
Mortgage loans   6,818,058    3.05%   22.55%   3,854,942    4.76%   387.38%   1,957,370    2.50%   353.41%   10,673,000    3.66%   67.96%
Finance lease   8,785,593    1.49%   11.49%   1,010,273    -1.43%   14.90%   512,972    -3.56%   6.89%   9,795,866    1.2%   11.8%
Allowance for loan losses   (3,448,566)   1.65%   13.40%   (687,028)   2.09%   108.28%   (348,843)   -0.12%   93.77%   (4,135,594)   1.72%   22.68%
Net total loans and fin. leases   59,214,235    1.86%   13.83%   28,120,411    3.16%   67.42%   14,278,307    0.93%   55.76%   87,334,646    2.27%   26.91%
Operating leases, net   2,969,701    5.11%   30.11%   95,123    1.26%   -5.56%   48,299    -0.93%   -12.14%   3,064,824    4.99%   28.60%
Total assets   87,092,406    -1.99%   10.33%   43,350,690    3.33%   79.04%   22,011,572    1.09%   66.56%   130,443,096    -0.29%   26.46%
Total deposits   58,497,718    -7.30%   5.83%   24,545,560    4.65%   106.77%   12,463,155    2.38%   92.36%   83,043,278    -4.06%   23.67%
Total liabilities   73,575,451    -5.13%   6.94%   41,905,160    2.79%   82.91%   21,277,595    0.57%   70.16%   115,480,611    -2.40%   25.92%

 

The most relevant aspects regarding the evolution of the loan portfolio during 1Q14 were:

 

·         The growth of commercial, mortgage loans and financial leases in Colombia during 1Q14 indicate a sustained credit demand.

 

·         Net loans in USD correspond to loans originated in Colombia (USD 4,123 million, 29%), El Salvador (USD 2,644 million, 19%), Panamá (USD 7,098 million, 50%), and other countries (USD 412 million, 3%). USD denominated loans represented 31% of total loans as of 1Q14.

 

·         COP depreciated 2.2% versus USD during 1Q14 and 7.5% in the last 12 months.

 

·         Mortgage loans denominated in COP presented a dynamic performance, growing 22.5% year on year. The dynamism of mortgage lending in Colombia is explained by the lower long-term interest rates, as well as by the Colombian government’s interest rate subsidy programs. On the other hand, the mortgage balance denominated in USD from our operation in El Salvador and Panama represented 36% of the mortgage loans at the end of 1Q14.

 

·         Financial leases, of which 90% are denominated in COP, increased 1.2% during the quarter and 11.8% as compared to 1Q13. Operating leases, net of depreciation, increased 5.0% during 1Q14 and 28.6% in the last 12 months. These two products are mainly used by enterprises in order to finance equipment, commercial real estate and commercial vehicles.

 

3
 

 

   
  1Q14

 

When analyzing the loan portfolio according to the customer categories established by Bancolombia in order to manage its commercial strategy (see table below), it becomes clear that commercial loans led the growth during 1Q14, as they increased 2.9% with respect to 4Q13. The growth is explained by the credit demand for business investment. This is the segment that contributes the most to the nominal growth of the total loan book. Consumer and SMEs loans increased by 1.1% when compared with 4Q13, which indicates a moderate credit demand versus the growth of previous quarters.

 

Total reserves (allowances in balance sheet) for loan losses increased by 1.7% during 1Q14 and totaled COP 4,136 billion, or 4.5% of gross loans at the end of the quarter. For further explanation regarding coverage of the loan portfolio and credit quality trends, see section “2.4. Asset Quality, Provision Charges and Balance Sheet Strength”.

 

The following table summarizes Bancolombia’s total loan portfolio:

 

LOAN PORTFOLIO      As of       Growth   % of Total   % of 
(COP million)  Mar-13   Dec-13   Mar-14   1Q14/4Q13   1Q14/1Q13   loans   Category 
CORPORATE                                   
Working capital loans   31,538,526    33,992,771    34,856,205    2.54%   10.52%   38.11%   81.97%
Funded by domestic development banks   355,406    489,798    607,384    24.01%   70.90%   0.66%   1.43%
Trade Financing   2,204,646    6,706,315    6,861,583    2.32%   211.23%   7.50%   16.14%
Overdrafts   140,418    80,023    141,472    76.79%   0.75%   0.15%   0.33%
Credit Cards   49,174    42,406    57,723    36.12%   17.39%   0.06%   0.14%
TOTAL CORPORATE   34,288,170    41,311,313    42,524,367    2.94%   24.02%   46.49%   100.00%
RETAIL AND SMEs                                   
Working capital loans   8,427,869    9,666,234    9,795,981    1.34%   16.23%   10.71%   34.40%
Personal loans   7,111,898    9,573,141    9,545,276    -0.29%   34.22%   10.44%   33.52%
Loans funded by   domestic development banks   858,872    1,319,245    1,326,432    0.54%   54.44%   1.45%   4.66%
Credit Cards   3,791,335    4,548,670    4,638,627    1.98%   22.35%   5.07%   16.29%
Overdrafts   307,704    251,724    332,406    32.05%   8.03%   0.36%   1.17%
Automobile loans   2,187,397    2,577,704    2,606,755    1.13%   19.17%   2.85%   9.15%
Trade Financing   100,879    234,145    231,529    -1.12%   129.51%   0.25%   0.81%
TOTAL RETAIL AND SMEs   22,785,954    28,170,863    28,477,006    1.09%   24.98%   31.13%   100.00%
MORTGAGE   6,354,650    10,295,930    10,673,001    3.66%   67.96%   11.67%   100.00%
FINANCIAL LEASES   8,759,368    9,681,436    9,795,866    1.18%   11.83%   10.71%   100.00%
Total loans and financial leases   72,188,142    89,459,542    91,470,240    2.25%   26.71%   100.00%   100.00%
Allowance for loan losses   (3,370,980)   (4,065,530)   (4,135,594)   1.72%   22.68%          
Total loans and financial leases, net   68,817,162    85,394,012    87,334,646    2.27%   26.91%          

 

1.3.Investment Portfolio

 

As of March 31, 2014, Bancolombia’s net investment portfolio totaled COP 15,385 billion, 11.4% higher than that reported in 4Q13 and 8.1% higher when compared to that reported in 1Q13. This growth resulted from the investment of the proceeds of the issuance of shares in March 2014, which totaled COP 2,656 billion. The investment portfolio consisted primarily of debt securities, which represented 88% of Bancolombia’s total investments and 10% of assets at the end of 1Q14. Investments denominated in USD totaled USD 2,146 million and represented 27% of the investment portfolio.

 

Additionally, the Bank had COP 863 billion in net mortgage backed securities, which represented 5.6% of the investment portfolio.

 

At the end of 1Q14, the portfolio of investments in debt securities had a duration of 15.8 months and a yield to maturity of 4.01%.

 

4
 

 

   
  1Q14

 

1.4.Goodwill

 

As of 1Q14, Bancolombia’s goodwill totaled COP 3,616 billion, increasing 0.7% compared to the amount reported in 4Q13 and 527.5% compared to 1Q13. This annual variation is explained by the acquisition of Banistmo which generated goodwill of approximately 1.500 million USD and the quarterly increase is explained by the depreciation of the peso against the dollar during the quarter. Under Colombian GAAP, goodwill is amortized within a maximum period of 20 years.

 

1.5.Funding

 

As of March 31, 2014, Bancolombia’s liabilities totaled COP 115,481 billion, decreasing 2.4% compared to 4Q13 and increasing 25.9% compared to 1Q13. The annual growth was explained, 17.5% by the contribution of Banistmo and 6.5% by the organic growth of the existing operation before the consolidation of Banistmo.

 

Deposits totaled COP 83,043 billion (or 72% of liabilities) at the end of 1Q14, decreasing 4.1% during the quarter and increasing 23.7% over the last 12 months. The net loans to deposits ratio (including borrowings from domestic development banks) was 99% at the end of 1Q14, increasing compared to the 94% reported in 4Q13, and the 98% reported in 1Q13.

 

Bancolombia´s funding strategy during the quarter was to reduce the most expensive deposits and liabilities while maintaining the liquidity position. This strategy allowed the bank to reduce the cost on deposits during the quarter. The ultimate goal is to defend the net interest margin.

 

Funding mix  1Q13    4Q13   1Q14 
COP Million                        
Checking accounts   10,699,810    12%   16,784,933    15%   16,161,651    15%
Saving accounts   29,476,333    34%   34,649,764    31%   33,307,739    31%
Time deposits   26,235,282    31%   34,058,452    30%   32,321,287    30%
Other deposits   734,962    1%   1,063,430    1%   1,252,601    1%
Long term debt   12,489,392    15%   12,328,275    11%   12,434,851    11%
Loans with banks   6,267,337    7%   13,632,894    12%   13,513,804    12%
Total Funds   85,903,116   100%   112,517,748    100%   108,991,933    100%

 

At the end of 1Q14, Bancolombia had outstanding bonds for USD 3,972 million in international markets and for COP 4,612 billion in local markets. The maturities of these bonds range from 2 to 10 years.

 

1.6.Shareholders’ Equity and Regulatory Capital

 

Shareholders’ equity at the end of 1Q14 was COP 14,962 billion, increasing 30.8% or COP 3,525 billion, with respect to the 11,437 billion reported at the end of 1Q13 as a result of the proceeds of the issuance of 110 million shares in March 2014, which totaled COP 2,656 billion, and the appropriation of 2013 earnings.

 

Bancolombia’s capital adequacy ratio was 13.66%, 305 basis points above the 10.61% for 4Q13 and 330 basis points below the 16.96% at the end of 1Q13. The quarterly increase in the capital adequacy was due to the new capital, proceeds from the issuance of shares and retained earnings of the previous year, as defined in the general shareholders' meeting of March 17, 2014; while the annual decrease was due to the implementation in Colombia of a new capital regulation for banks, which increased deductions from the tier 1 calculation and the incorporation of Banistmo’s risk weighted assets.

 

5
 

 

   
  1Q14

 

Bancolombia’s capital adequacy ratio was 466 basis points above the minimum level required by Colombia’s regulator, while the basic capital ratio (Tier 1) to risk weighted assets was 8.88%, 438 basis points above the regulatory minimum of 4.5% . The tangible capital ratio, defined as shareholders’ equity minus goodwill and intangible assets divided by tangible assets, was 8.5% at the end of 1Q14.

 

TECHNICAL CAPITAL RISK WEIGHTED ASSETS 
Consolidated (COP millions)  1Q13³   %   4Q13   %   1Q14   % 
Basic capital (Tier I)   10,425,945    11.55%   6,207,050    5.81%   9,681,500    8.88%
Additional capital (Tier II)   4,876,112    5.41%   5,124,564    4.80%   5,206,580    4.78%
Technical capital (1)   15,302,057        11,331,614         14,888,080      
Risk weighted assets included market risk   90,206,549        106,826,579         108,970,764      
CAPITAL ADEQUACY (2)   16.96%      10.61%        13.66%     

 

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

(2) Capital adequacy is technical capital divided by risk weighted assets.

(3) Capital adequacy ratio for 1Q13 is calculated according to the capital rules existing until August 2013

 

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  1Q14

 

2.INCOME STATEMENT

 

Net income totaled COP 508 billion in 1Q14, or COP 580 per share - USD 1.18 per ADR. This net income represents an increase of 4.0% compared to 4Q13 and 3.2% compared to 1Q13. Bancolombia’s annualized ROE was 15.3% for 1Q14.

 

2.1.Net Interest Income

 

Net interest income totaled COP 1,455 billion in 1Q14, 7.9% higher than that reported in 4Q13, and 3.6% higher than the figure for 1Q13. The performance of this line was driven by higher loan volumes, the expansion of the loans interest margin, and the performance of the securities portfolio, that even though 55% lower compared to the same period last year, show an improvement against 4Q13.

 

During 1Q14, the investment portfolio generated COP 155 billion, product of the good performance of the Colombian government debt securities. The strategy for the last quarters has been maintaining low the volatility and duration of the portfolio.

 

Net Interest Margin

 

The annualized net interest margin expanded in 1Q14 to 5.5% for the quarter.

 

The annualized net interest margin for investments was 1.8%, higher than the 0.1% of 4Q13 due to the better performance on debt securities of the Colombian government. The annualized net interest margin of the loan portfolio, financial leases, overnight funds and interbank loans was 6.1%, higher than the 6.0% of 4Q13, due to higher interest rates and the reduction in the funding cost.

 

Annualized Interest                                    
Margin  1Q12   2Q12   3Q12   4Q12   1Q13   2Q13   3Q13   4Q13   1Q14 
Loans' Interest margin   6.8%   7.0%   7.1%   6.9%   6.6%   6.4%   6.2%   6.0%   6.1%
Debt investments' margin   4.1%   4.1%   4.0%   2.9%   8.0%   -5.1%   -0.4%   0.1%   1.8%
Net interest margin   6.5%   6.6%   6.6%   6.3%   6.8%   4.7%   5.3%   5.3%   5.5%

 

The funding cost decreased during 1Q14 due to the low interest rates, greater liquidity and management of the liabilities structure, which reduced the most expensive funding sources. Savings and checking accounts kept their share during the quarter, and the annualized average weighted cost of deposits was 2.3% in 1Q14, decreasing compared to the 2.6% for 4Q13 and the 3.2% for 1Q13.

 

Average weighted            
funding cost  1Q13   4Q13   1Q14 
Checking accounts   0.24%   0.19%   0.17%
Time deposits   5.25%   4.44%   4.27%
Saving accounts   2.59%   1.77%   1.49%
Total deposits   3.20%   2.55%   2.30%
Long term debt   6.06%   6.09%   6.15%
Loans with banks   5.63%   3.34%   3.53%
Total funding cost   3.79%   3.07%   2.88%

 

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  1Q14

 

2.2.Fees and Income from Services

 

During 1Q14, net fees and income from services totaled COP 542 billion, increasing 3.3% with respect to 4Q13 and 24.3% with respect to 1Q13. Fees from credit and debit cards increased 3.3% compared to 4Q13 due to a greater volume of transactions and the contribution of three months of Banistmo, against only two in 4Q13. Fees from banking services decreased 3.7% compared to 4Q13 but increased 53.8% compared to 1Q13; this line includes fees from insurance distribution throughout the distribution networks in Colombia and in El Salvador. Fees from asset management and trust services increased 6% in 1Q14 as a result of the growth of assets under management.

 

The following table summarizes Bancolombia’s participation in the credit card business in Colombia:

 

ACCUMULATED CREDIT CARD BILLING  %   2014 
(COP millions)  Feb-13   Feb-14   Growth   Market Share 
Bancolombia VISA   418,791    456,597    9.03%   7.41%
Bancolombia Mastercard   493,246    569,712    15.50%   9.24%
Bancolombia American Express   609,849    620,739    1.79%   10.07%
Total Bancolombia   1,521,886    1,647,048    8.22%   26.73%
Colombian Credit Card Market   5,657,861    6,162,577    8.92%     

 

CREDIT CARD MARKET SHARE  %   2014 
(Outstanding credit cards)  Feb-13   Feb-14   Growth   Market Share 
Bancolombia VISA   434,525    453,309    4.32%   4.94%
Bancolombia Mastercard   483,438    602,902    24.71%   6.57%
Bancolombia American Express   649,015    682,902    5.22%   7.44%
Total Bancolombia   1,566,978    1,739,113    10.99%   18.94%
Colombian Credit Card Market   8,527,246    9,182,402    7.68%     
Source: Superintendencia Financiera de Colombia 

 

2.3.Other Operating Income

 

Total other operating income was COP 261 billion in 1Q14, 1.1% higher than that in 4Q13, and 14.1% higher than in 1Q13. Income from foreign exchange gains and derivatives denominated in foreign currencies increased in the quarter due to the net effect of the active and passive positions the bank had in foreign currency.

 

During 1Q14 the bank received COP 45.9 billion in dividends from companies in which Bancolombia and its subsidiaries have interests, especially from Protección S.A. (COP 14.4 billion), Odinsa S.A. (COP 9.7 billion), EPSA S.A. E.S.P (COP 4.2 billion) and Titularizadora Colombiana S.A. (COP 3.7 billion).

 

Revenues aggregated in the communication, rent and others line totaled COP 139 billion in 1Q14, which is 14.3% higher as compared to 4Q13 and 30.7% higher as compared to those in 1Q13. This line includes revenues from commercial discounts and operating leases payments, which have increased as this product grows.

 

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  1Q14

 

2.4.Asset Quality, Provision Charges and Balance Sheet Strength

 

The quality of the loan portfolio showed a slight deterioration in 1Q14 due to the incorporation of Banistmo’s assets in 4Q13 that under Colombian rule resulted in an increase in the past due loans and the formation of nonperforming loans by a seasonal effect of the first quarter. Colombian standards consider those loans overdue more than 30 days as delinquent while Panamanian standard considers them past due after 90 days or more. Thus, past due loans (those that are overdue for more than 30 days) totaled COP 2.913 billion at the end of 1Q14, representing 3.2% of total gross loans for 1Q14, and increasing compared to the 2.9% reported in 4Q13 and the 3.0% reported in 1Q13. Charge-offs totaled COP 261 billion in 1Q14.

 

The coverage, measured by the ratio of allowances for loans losses (principal) to PDLs (overdue 30 days), was 142% at the end of 1Q14, decreasing with respect to the 157% of 4Q13 and the 156% of 1Q13. Likewise, the coverage measured by the ratio of allowances for loans losses to loans classified as C, D and E, was 111% at the end of 1Q14, remaining stable with respect to the 111% reported in 4Q13 and decreasing with respect to the 117% reported in 1Q13. These reductions are explained by seasonality effects in Colombia and Panama where delinquencies in the first months of the year tend to be higher.

 

The deterioration of the loan portfolio (new past due loans including charge-offs) was COP 577 billion in 1Q14, which represented 1.0% of the loan portfolio at the beginning of the quarter, increasing with respect to the COP 524 billion in 1Q13.

 

Provision charges (net of recoveries) totaled COP 308 billion in 1Q14. Provisions as a percentage of the average gross loans were 1.36% for 1Q14.

 

Bancolombia maintains a strong balance sheet supported on an adequate level of loan loss reserves. Allowances for loan losses totaled COP 4,136 billion, or 4.52% of total loans at the end of 1Q14. This proportion decreased with respect to the 4.54% presented at the end of 4Q13, and with respect to the 4.67% for 1Q13.

 

The following tables present key metrics related to asset quality:

 

ASSET QUALITY      As of       Growth 
( COP millions)  Mar-13   Dec-13   Mar-14   1Q14/4Q13   1Q14/1Q13 
Total performing past due loans (1)   844,165    967,194    1,250,478    29.29%   48.13%
Total non-performing past due loans   1,319,536    1,630,027    1,662,715    2.01%   26.01%
Total past due loans   2,163,701    2,597,221    2,913,193    12.17%   34.64%
Allowance for loans interest losses   3,370,980    4,065,530    4,135,594    1.72%   22.68%
Past due loans to total loans   3.00%   2.90%   3.18%          
Non-performing loans as a percentage of total loans   1.83%   1.82%   1.82%          
“C”, “D” and “E” loans as a percentage of total loans   3.98%   4.11%   4.08%          
Allowances to past due loans (2)   155.80%   156.53%   141.96%          
Allowance for loan  losses as a percentage of “C”, “D” and “E” loans (2)    117.45%   110.54%   110.69%          
Allowance for loan losses as a percentage of non-performing loans (2)   255.47%   249.41%   248.73%          
Allowance for loan losses as a percentage of total loans   4.67%   4.54%   4.52%          
Percentage of performing loans to total loans   98.17%   98.18%   98.18%          

 

(1)      "Performing" past due loans are loans upon which Bancolombia continues to recognize income although interest in respect of such loans has not been received. Mortgage loans cease to accumulate interest on the statement of operations when they are more than 60 days past due. For all other loans and financial leasing operations of any type, interest is no longer accumulated after they are more than 30 days past due.

 

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

 

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  1Q14

 

PDL Per Category (30 days)  % Of loan Portfolio   1Q13   4Q13   1Q14 
Commercial loans   58.76%   1.72%   1.75%   1.89%
Consumer loans   18.28%   5.40%   4.73%   5.08%
Microcredit   0.58%   10.55%   9.89%   9.18%
Mortgage loans   11.67%   7.29%   6.22%   7.20%
Finance lease   10.71%   2.34%   2.09%   2.34%
PDL TOTAL   100.00%   3.00%  2.90%   3.18%

 

PDL Per Category (90 days)  % Of loan Portfolio   1Q13   4Q13   1Q14 
Commercial loans   58.76%   1.08%   1.13%   1.12%
Consumer loans   18.28%   2.35%   2.30%   2.23%
Microcredit   0.58%   6.44%   6.52%   5.93%
Mortgage loans   11.67%   2.95%   2.39%   2.36%
Finance lease   10.71%   1.19%   1.28%   1.38%
TOTAL LOAN PORTFOLIO   100.00%   1.51%   1.54%   1.53%

 

 

LOANS AND FINANCIAL LEASES CLASSIFICATION  Mar-13   Dec-13   Mar-14 
( COP millions)                    
¨A¨ Normal   67,282,593    93.20%   82,576,481    92.31%   84,575,447    92.46%
¨B¨ Subnormal   2,035,475    2.82%   3,205,115    3.58%   3,158,452    3.45%
¨C¨ Deficient   1,201,500    1.67%   1,590,505    1.77%   1,670,319    1.82%
¨D¨ Doubtful recovery   933,184    1.29%   1,213,257    1.36%   1,139,806    1.25%
¨E¨ Unrecoverable   735,390    1.02%   874,184    0.98%   926,216    1.01%
Total   72,188,142    100.00%   89,459,542    100.00%   91,470,240    99.99%
    62249473    1    72188142    1    75933288    100.01%
Loans and financial leases classified as C, D and E as a percentage of total loans and financial leases   3.98%        4.11%        4.08%     

 

2.5.Operating Expenses

 

During 1Q14, operating expenses totaled COP 1,172 billion, decreasing 2.9% with respect to 4Q13 and increasing 7.4% with respect to 1Q13.

 

Personnel expenses (salaries, bonus plan payments and compensation) totaled COP 467 billion in 1Q14, increasing 18.9% as compared to 4Q13 and 9.7% as compared to 1Q13. This increase was explained by higher salaries expenses due to the higher number of employees as well as by the 2014 wage increases. In addition, in 1Q14 are reflected 3 months of Banistmo’s expenses versus just the two that were reflected in 4Q13.

 

During 1Q14, administrative expenses totaled COP 535 billion, decreasing 18.9% as compared to 4Q13 and increasing 0.2% as compared to 1Q13.

 

Depreciation expenses totaled COP 127 billion in 1Q14, increasing 7.1% as compared to 4Q13 and 33.0% as compared to 1Q13. The increase in this type of expense is explained by the increase of operating leases from Leasing Bancolombia whose assets given on lease are depreciated.

 

At the end of 1Q14, Bancolombia had 28,798 employees, 1,086 branches and 4,332 ATMs.

 

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  1Q14

 

3.BANCOLOMBIA Company Description (NYSE: CIB)

 

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

 

Contact Information

 

Bancolombia’s Investor Relations

Phone: (574) 4041837 / (574) 4041838

E-mail: investorrelations@bancolombia.com.co

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

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

 

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  1Q14

 

BALANCE SHEET                        
(COP million)  Mar-13   Dec-13   Mar-14   Last
Quarter		   Annual   % of
Assets		   % of
Liabilities		 
ASSETS                                   
Cash and due from banks   7,365,762    11,427,441    8,409,335    -26.41%   14.17%   6.45%     
Overnight funds and interbank loans   2,044,687    3,981,205    2,471,036    -37.93%   20.85%   1.89%     
Total cash and equivalents   9,410,449    15,408,646    10,880,371    -29.39%   15.62%   8.34%     
Debt securities   13,066,955    12,136,179    13,616,544    12.20%   4.21%   10.44%     
Trading   8,237,060    6,537,697    7,962,392    21.79%   -3.33%   6.10%     
Available for Sale   1,395,419    1,803,144    1,914,140    6.16%   37.17%   1.47%     
Held to Maturity   3,434,476    3,795,338    3,740,012    -1.46%   8.90%   2.87%     
Equity securities   1,177,893    1,680,237    1,778,746    5.86%   51.01%   1.36%     
Trading   360,786    411,987    404,789    -1.75%   12.20%   0.31%     
Available for Sale   817,107    1,268,250    1,373,957    8.33%   68.15%   1.05%     
Allowance for impairment   -11,556    -10,626    -10,491    -1.27%   -9.22%   -0.01%     
Net investment securities   14,233,292    13,805,790    15,384,799    11.44%   8.09%   11.79%     
Commercial loans   43,643,362    52,363,519    53,746,652    2.64%   23.15%   41.20%     
Consumer loans   13,069,900    16,601,890    16,720,842    0.72%   27.93%   12.82%     
Small business loans   360,862    516,767    533,880    3.31%   47.95%   0.41%     
Mortgage loans   6,354,650    10,295,930    10,673,000    3.66%   67.96%   8.18%     
Financial leases   8,759,368    9,681,436    9,795,866    1.18%   11.83%   7.51%     
Allowance for loan and financial lease losses   -3,370,980    -4,065,530    -4,135,594    1.72%   22.68%   -3.17%     
Net total loans and financial leases   68,817,162    85,394,012    87,334,646    2.27%   26.91%   66.95%     
Accrued interest receivable on loans and financial leases   669,373    624,317    675,460    8.19%   0.91%   0.52%     
Allowance for accrued interest losses   -62,165    -63,745    -64,810    1.67%   4.25%   -0.05%     
Net total interest accrued   607,208    560,572    610,650    8.93%   0.57%   0.47%     
Customers' acceptances and derivatives   665,813    602,409    633,600    5.18%   -4.84%   0.49%     
Accounts receivable, net   1,182,277    1,537,218    1,782,703    15.97%   50.79%   1.37%     
Premises and equipment, net   1,424,313    2,191,677    2,211,579    0.91%   55.27%   1.70%     
Foreclosed assets, net   88,505    103,565    91,968    -11.20%   3.91%   0.07%     
Prepaid expenses and deferred charges, net   575,434    690,932    646,592    -6.42%   12.37%   0.50%     
Goodwill   576,239    3,589,203    3,615,655    0.74%   527.46%   2.77%     
Premises and equipment under operating leases, net   2,383,135    2,919,181    3,064,824    4.99%   28.60%   2.35%     
Other assets   2,220,954    2,590,110    2,683,638    3.61%   20.83%   2.06%     
Reappraisal of assets   963,527    1,422,926    1,502,071    5.56%   55.89%   1.15%     
Total assets   103,148,308    130,816,241    130,443,096    -0.29%   26.46%   100.00%     
LIABILITIES AND SHAREHOLDERS' EQUITY                                   
LIABILITIES                                   
DEPOSITS                                   
Non-interest bearing   8,584,903    14,680,487    13,904,799    -5.28%   61.97%   10.66%   12.04%
Checking accounts   7,849,941    13,617,057    12,652,198    -7.09%   61.18%   9.70%   10.96%
Other   734,962    1,063,430    1,252,601    17.79%   70.43%   0.96%   1.08%
Interest bearing   58,561,484    71,876,092    69,138,479    -3.81%   18.06%   53.00%   59.87%
Checking accounts   2,849,869    3,167,876    3,509,453    10.78%   23.14%   2.69%   3.04%
Time deposits   26,235,282    34,058,452    32,321,287    -5.10%   23.20%   24.78%   27.99%
Savings deposits   29,476,333    34,649,764    33,307,739    -3.87%   13.00%   25.53%   28.84%
Total deposits   67,146,387    86,556,579    83,043,278    -4.06%   23.67%   63.66%   71.91%
Overnight funds and interbank borrowings   631,092    1,124,802    1,254,163    11.50%   98.73%   0.96%   1.09%
Bank acceptances outstanding and derivatives   521,919    464,514    521,114    12.18%   -0.15%   0.40%   0.45%
Other interbank borrowings   2,206,315    7,876,792    7,478,659    -5.05%   238.97%   5.73%   6.48%
Borrowings from development and other domestic banks   3,429,930    4,631,300    4,780,982    3.23%   39.39%   3.67%   4.14%
Accounts payable   3,084,310    2,611,114    2,959,148    13.33%   -4.06%   2.27%   2.56%
Accrued interest payable   483,213    610,511    541,282    -11.34%   12.02%   0.41%   0.47%
Other liabilities   741,411    1,250,757    1,146,069    -8.37%   54.58%   0.88%   0.99%
Long-term debt   12,489,392    12,328,275    12,434,851    0.86%   -0.44%   9.53%   10.77%
Accrued expenses   902,588    423,303    839,722    98.37%   -6.97%   0.64%   0.73%
Minority interest   74,514    445,448    481,343    8.06%   545.98%   0.37%   0.42%
Total liabilities   91,711,071    118,323,395    115,480,611    -2.40%   25.92%   88.53%   100.00%
SHAREHOLDERS' EQUITY                                   
Subscribed and paid in capital   425,914    425,914    460,827    8.20%   8.20%   0.35%     
Retained earnings   10,151,937    11,253,148    13,634,314    21.16%   34.30%   10.45%     
Appropiated   9,659,201    9,802,509    13,125,963    33.90%   35.89%   10.06%     
Unappropiated   492,736    1,450,639    508,351    -64.96%   3.17%   0.39%     
Reappraisal of assets   826,161    853,454    892,505    4.58%   8.03%   0.68%     
Gross unrealized net gain on investments   33,225    -39,670    -25,161    -36.57%   -175.73%   -0.02%     
Total shareholder's equity   11,437,237    12,492,846    14,962,485    19.77%   30.82%   11.47%     

 

12
 

 

   
  1Q14

 

INCOME STATEMENT              Growth 
(COP million)  1Q13   4Q13   1Q14   1Q14/4Q13   1Q14/1Q13 
Interest income and expenses                         
Interest on loans   1,616,159    1,821,119    1,858,728    2.07%   15.01%
Interest on investment securities   347,817    99,396    155,478    56.42%   -55.30%
Overnight funds and interbank loans   7,180    8,970    11,113    23.89%   54.78%
Financial leases   225,763    222,198    227,431    2.36%   0.74%
Total interest income   2,196,919    2,151,683    2,252,750    4.70%   2.54%
Interest expense                         
Checking accounts   7,058    7,119    7,625    7.11%   8.03%
Time deposits   334,900    357,034    354,144    -0.81%   5.75%
Savings deposits   183,291    142,083    126,225    -11.16%   -31.13%
Total interest on deposits   525,249    506,236    487,994    -3.60%   -7.09%
Interbank borrowings   9,950    31,494    35,261    11.96%   254.38%
Borrowings from development and other domestic banks   57,630    58,437    64,686    10.69%   12.24%
Overnight funds   13,928    19,113    19,878    4.00%   42.72%
Long-term debt   185,919    187,857    190,370    1.34%   2.39%
Total interest expense   792,676    803,137    798,189    -0.62%   0.70%
Net interest income   1,404,243    1,348,546    1,454,561    7.86%   3.58%
Provisions for loans and accrued interest losses and other receivables , net   (337,033)   (327,858)   (337,047)   2.80%   0.00%
Recovery of charged-off loans   52,322    69,412    44,936    -35.26%   -14.12%
Provision for foreclosed assets and other assets   (46,547)   (37,347)   (40,886)   9.48%   -12.16%
Recovery of provisions for foreclosed assets and other assets   28,390    22,874    25,474    11.37%   -10.27%
Total net provisions   (302,868)   (272,919)   (307,523)   12.68%   1.54%
Net interest income after provision for loans                         
and accrued interest losses   1,101,375    1,075,627    1,147,038    6.64%   4.15%
Commissions from banking services   107,772    172,050    165,723    -3.68%   53.77%
Electronic services and ATM fees   19,557    22,828    25,637    12.31%   31.09%
Branch network services   29,288    38,628    34,982    -9.44%   19.44%
Collections and payments fees   62,177    77,756    75,875    -2.42%   22.03%
Credit card merchant fees   (112)   2,697    2,950    9.38%   2733.93%
Credit and debit card fees   165,354    184,737    195,547    5.85%   18.26%
Checking fees   16,804    17,653    17,917    1.50%   6.62%
Trust activities   56,397    49,046    51,973    5.97%   -7.84%
Brokerage fees   15,567    12,878    11,780    -8.53%   -24.33%
Check remittances   4,980    9,055    8,832    -2.46%   77.35%
International wire transfers   14,842    17,253    20,579    19.28%   38.65%
Fees and other service income   492,626    604,581    611,794    1.19%   24.19%
Fees and other service expenses   (56,298)   (79,563)   (69,472)   -12.68%   23.40%
Total fees and income from services, net   436,328    525,018    542,322    3.30%   24.29%
Other operating income                         
Foreign exchange gain (loss), net   45,446    62,889    32,745    -47.93%   -27.95%
Gains on forward contracts in foreign currency   (1,769)   7,613    13,957    83.33%   888.98%
Gains on sales of investments in equity securities   75    4,916    (576)   -111.72%   -868.00%
Gains on sales of mortgage loans   8,018    5,758    5,105    -11.34%   -36.33%
Dividend income   32,118    8,402    45,880    446.06%   42.85%
Income from non-financial subsidiaries   38,456    36,605    33,423    -8.69%   -13.09%
Insurance income   -    10,164    (8,690)   -185.50%   0.00%
Communication, postage, rent and others   106,170    121,443    138,807    14.30%   30.74%
Total other operating income   228,514    257,790    260,651    1.11%   14.06%
Total income   1,766,217    1,858,435    1,950,011    4.93%   10.41%
Operating expenses                         
Salaries and employee benefits   359,392    367,606    404,227    9.96%   12.48%
Bonus plan payments   57,299    16,730    51,062    205.21%   -10.89%
Indemnities benefits   8,743    8,395    11,550    37.58%   32.11%
Administrative and other expenses   534,072    659,745    535,019    -18.91%   0.18%
Insurance on deposits, net   34,117    34,462    41,570    20.63%   21.85%
Donation expenses   1,948    1,545    961    -37.80%   -50.67%
Depreciation   95,811    118,886    127,381    7.15%   32.95%
Total operating expenses   1,091,382    1,207,369    1,171,770    -2.95%   7.37%
Net operating income   674,835    651,066    778,241    19.53%   15.32%
Goodwill amortization (1)   15,348    38,335    53,375    39.23%   247.77%
Non-operating income (expense)                         
Other income   51,141    99,878    38,973    -60.98%   -23.79%
Minority interest   (1,216)   (9,981)   (1,666)   -83.31%   37.01%
Other expense   (30,066)   (69,836)   (48,865)   -30.03%   62.53%
Total non-operating income   19,859    20,061    (11,558)   -157.61%   -158.20%
Income before income taxes   679,346    632,792    713,308    12.72%   5.00%
Income tax expense   (186,610)   (144,052)   (204,957)   42.28%   9.83%
Net income   492,736    488,740    508,351    4.01%   3.17%

 

13
 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  BANCOLOMBIA S.A.
(Registrant)		  
     
Date:  May 5, 2014  By:   /s/  JAIME ALBERTO VELÁSQUEZ B.  
    Name:   Jaime Alberto Velásquez B.  
    Title:   Vice President of Strategy and Finance