Filed by Bowne Pure Compliance
 
 
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 August, 2008.
Comission File Number 001-32535
Bancolombia S.A.
(Translation of registrant’s name into English)
Calle 50 No. 51-66
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 o
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-  ________ .
 
 

 

 


 

(LOGO)
CONSOLIDATED FINANCIAL RESULTS
FOR THE QUARTER ENDED JUNE 30, 2008
August 4, 2008. Medellín, Colombia — Today, BANCOLOMBIA S.A. (“BANCOLOMBIA” or the “Bank”) (NYSE: CIB) announced its financial results for the second quarter of fiscal year 2008, ended June 30, 2008.1
                                         
CONSOLIDATED BALANCE SHEET   Quarter     Growth  
AND INCOME STATEMENT   Pro forma                              
(Ps. millions)   2Q07     1Q08     2Q08     2Q08 / 1Q08     2Q08 / 2Q07  
ASSETS
                                       
Loans and financial leases, net
    31,110,145       36,607,315       37,710,491       3.01 %     21.22 %
Investment securities, net
    5,517,317       5,899,352       6,168,070       4.56 %     11.79 %
Other assets
    8,383,636       9,228,530       10,432,007       13.04 %     24.43 %
 
                             
Total assets
    45,011,098       51,735,197       54,310,568       4.98 %     20.66 %
 
                             
 
                                       
LIABILITIES AND SHAREHOLDERS’ EQUITY
                                       
Deposits
    29,540,131       33,299,951       34,538,354       3.72 %     16.92 %
Non-interest bearing
    4,499,236       4,676,607       4,764,975       1.89 %     5.91 %
Interest bearing
    25,040,895       28,623,344       29,773,379       4.02 %     18.90 %
Other liabilities
    11,902,250       13,514,534       14,480,464       6.67 %     21.66 %
Total liabilities
    41,442,381       46,814,485       49,018,818       4.71 %     18.28 %
Shareholders’ equity
    3,568,717       4,920,712       5,291,750       7.54 %     48.28 %
 
                             
Total liabilities and shareholders’ equity
    45,011,098       51,735,197       54,310,568       4.98 %     20.66 %
 
                             
 
                                       
Interest income
    1,152,435       1,419,605       1,494,665       5.29 %     29.70 %
Interest expense
    463,861       623,160       636,839       2.20 %     37.29 %
Net interest income
    688,574       796,445       857,826       7.71 %     24.58 %
Net provisions
    (123,212 )     (173,234 )     (241,685 )     39.51 %     96.15 %
Fees and income from service, net
    271,361       306,941       298,984       -2.59 %     10.18 %
Other operating income
    47,291       134,743       195,761       45.28 %     313.95 %
Total operating expense
    (556,020 )     (584,078 )     (609,566 )     4.36 %     9.63 %
Goodwill amortization
    (15,302 )     (16,561 )     (10,497 )     -36.62 %     -31.40 %
Non-operating income, net
    11,310       (53,429 )     29,883       155.93 %     164.22 %
Income tax expense
    (82,703 )     (156,951 )     (145,359 )     -7.39 %     75.76 %
 
                             
Net income
    241,299       253,876       375,347       47.85 %     55.55 %
 
                             
 
     
1  
This report corresponds to the consolidated financial statements of BANCOLOMBIA and its affiliates 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 Superintendency of Finance in Colombia, collectively COL GAAP. BANCOLOMBIA maintains accounting records in Colombian pesos, referred to herein as “Ps.”. 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 June 30, 2008. The statements of income for the quarter ended June 30, 2008 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.
 
   
This report contains pro forma figures for 2Q07. The unaudited pro forma combined condensed financial statements are provided for illustrative purposes only and do not purport to represent what the actual consolidated results of operations or the consolidated financial position of BANCOLOMBIA would have been, nor are they necessarily indicative of future consolidated results of operations or consolidated financial position. These pro forma financial statements reflect certain assumptions, including (i) that the acquisition of Banagrícola S.A. (“BANAGRICOLA”) was consummated on June 30, 2006, while it in fact occurred in May 2007, and (ii) that the Bank’s capital structure at June 30, 2006 was the same as the one present at July 31, 2007. The unaudited pro forma financial statements do not include the realization of cost savings from operating efficiencies, revenue synergies or other restructuring costs resulting from or expected to result from the acquisition of BANAGRICOLA.
 
   
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: July 1 2008 Ps. 1,923.02 = US$ 1 Average Representative Market Rate June 2008 Ps. 1,838.63 = US$ 1
         
Contacts
       
Sergio Restrepo
  Jaime A. Velásquez   Juan E. Toro
Executive VP
  Financial VP   IR Manager
Tel.: (574) 5108668
  Tel.: (574) 5108666   Tel.: (574) 5108866

 

1


 

(LOGO)
1. SUMMARY:
During the quarter ended June 30, 2008 (“2Q08”), BANCOLOMBIA recorded net income of Ps. 375.3 billion, an increase of 55.6% as compared to the pro forma Ps. 241.3 billion for the quarter ended June 30, 2007 (“2Q07”). Net income for the first six months of 2008 (“1H08”) totaled Ps. 629.2 billion, increasing 40.6% as compared to the same period of 2007.
As of June 30, 2008, BANCOLOMBIA’s gross loans totaled Ps. 39,327 billion, increasing 22.0% as compared to 2Q07. Loan growth pace, although lower than recent years’ levels, increased from the 21.5% year over year loan growth presented in the quarter ended March 31, 2008 (“1Q08”).
BANCOLOMBIA’s ratio of past due loans to total loans as of June 30, 2008 increased slightly to 3.5% from 3.4% in 1Q08. Charge-offs for 2Q08 totaled Ps. 104 billion and coverage ratio, measured as the ratio between allowances for loan and accrued interest losses and past due loans, increased to 120.1% from 115.2% in 1Q08.
BANCOLOMBIA’s efficiency ratio, measured as the ratio between operating expenses and net operating income, reached 45.8% for 2Q08 compared to the 56.7% pro forma efficiency ratio for 2Q07.
BANCOLOMBIA’s annualized average return on equity for 2Q08 was 29.5% increasing considerably from 19.7% for 1Q08. The Bank’s earnings per share for 2Q08 were Ps. 476.43 or US$0.99 per ADR.
The Bank’s positive performance in 2Q08 was mainly driven by strong growth in the main lines of revenue, such as:
   
Net interest income that totaled Ps. 857.8 billion in 2Q08, resulting in an increase of 24.6% as compared to the pro forma figures for 2Q07.
 
   
Fees and income from services that amounted to Ps. 346.5 billion in 2Q08, representing an increase of 18.0% as compared to the pro forma figures for 2Q07.
 
   
Other operating income that amounted to Ps. 195.8 billion in 2Q08, representing an increase of 314.0% as compared to the pro forma figures for 2Q07.
The Bank’s performance in 2Q08 was partially off-set by:
   
Total net provisions that amounted to Ps. 241.7 billion for 2Q08, representing an increase of 96.2% when compared to the pro forma figures for 2Q07.
 
   
Fees and other service expenses that amounted to Ps 47.6 billion, increasing 113.9% as compared to the pro forma figures for 2Q07.

 

2


 

(LOGO)
During 2Q08 BANCOLOMBIA executed an agreement to sell 100% of its interest in Multienlace S.A, company that provides business process outsourcing and contact center services to corporate clients. As a partial result of this deal, the Bank had non-recurring net income of Ps. 21 billion in 2Q08. In addition, the Bank recorded Ps. 19.7 billion as non-recurring net income as a consequence of the VISA IPO as explained in section 3.6 below.
                                         
    Quarter     As of  
KEY FINANCIAL HIGHLIGHTS   2Q07     1Q08     2Q08     Jun-07     Jun-08  
Net Income (Ps millions)
    241,299       253,876       375,347       447,694       629,223  
Basic and Diluted net income per ADS
    0.68       0.70       0.99       1.25       1.66  
Basic and Diluted net income per share $COP (7)
    331.31       322.25       476.43       614.70       798.68  
Return on average total assets (1)
    2.14 %     1.95 %     2.86 %     1.99 %     2.41 %
Return on average shareholders’ equity (2)
    27.05 %     19.67 %     29.48 %     25.09 %     24.40 %
P/BV ADS (3)
    3.28       2.60       2.24                  
P/BV Local (4) (5)
    3.14       2.36       2.12                  
P/E (6)
    11.77       11.86       7.62                  
ADR price
    32.83       35.46       31.30                  
Common price (7)
    15,380       14,760       14,220                  
Weighted average of Preferred and Common Shares outstanding
    728,314,060       787,827,003       787,827,003                  
     
(1)  
Defined as annualized quarterly net income divided by monthly average assets.
 
(2)  
Defined as annualized quarterly net income divided by monthly average equity.
 
(3)  
Defined as ADS price divided by ADS book value.
 
(4)  
Defined as share price divided by share book value.
 
(5)  
Share prices on the Colombian Stock Exchange
 
(6)  
Defined as market capitalization divided by annualized quarter results.
 
(7)  
Prices by the end of the respective quarter.
2. CONSOLIDATED BALANCE SHEET
2.1.  
Assets
 
   
BANCOLOMBIA’s assets totaled Ps. 54,311 billion as of June 30, 2008, representing an increase of 5.0% compared to Ps. 51,735 billion as of March 31, 2007 and an increase of 20.7% compared to Ps. 45,011 billion as of June 30, 2007.
 
2.1.1.  
Loan Portfolio
 
   
Loan growth increased slightly during 2Q08, reaching 3.3% as compared to 1Q08 and 22.0% as compared to 2Q07, mostly due to an increase in credit activity in June and to a higher Colombian Peso conversion rate for U.S. dollar denominated loans as a result of the depreciation of the Colombian Peso against the U.S. Dollar towards the end of 2Q08.

 

3


 

(LOGO)
                                         
LOAN PORTFOLIO   As of     Growth  
(Ps. millions)   30-Jun-07     31-Mar-08     30-Jun-08     Jun-08 / Mar-08     Jun-08 / Jun-07  
CORPORATE
                                       
Working capital loans
    14,058,294       15,825,682       16,147,393       2.03 %     14.86 %
Loans funded by domestic development banks
    608,272       851,755       983,613       15.48 %     61.71 %
Trade Financing
    945,679       1,229,712       993,021       -19.25 %     5.01 %
Overdrafts
    145,706       141,521       227,848       61.00 %     56.38 %
Credit Cards
    76,867       37,949       43,414       14.40 %     -43.52 %
 
                             
TOTAL CORPORATE
    15,834,818       18,086,619       18,395,289       1.71 %     16.17 %
 
                             
RETAIL AND SMEs
                                       
Working capital loans
    2,680,255       3,691,082       3,913,770       6.03 %     46.02 %
Personal loans
    3,780,146       3,835,763       3,982,508       3.83 %     5.35 %
Loans funded by domestic development banks
    439,583       752,106       807,006       7.30 %     83.58 %
Credit Cards
    1,126,592       2,123,973       2,220,956       4.57 %     97.14 %
Overdrafts
    218,921       288,780       306,272       6.06 %     39.90 %
Automobile loans
    1,121,268       1,333,066       1,358,355       1.90 %     21.14 %
Trade Financing
    80,230       73,653       96,566       31.11 %     20.36 %
 
                             
TOTAL RETAIL AND SMEs
    9,446,995       12,098,423       12,685,433       4.85 %     34.28 %
 
                             
MORTGAGE
    2,955,711       3,066,537       3,149,911       2.72 %     6.57 %
 
                             
FINANCIAL LEASES
    3,989,953       4,814,395       5,096,379       5.86 %     27.73 %
 
                             
Total loans and financial leases
    32,227,477       38,065,974       39,327,012       3.31 %     22.03 %
Allowance for loan losses and financial leases
    (1,117,332 )     (1,458,659 )     (1,616,521 )     10.82 %     44.68 %
 
                             
Total loans and financial leases, net
    31,110,145       36,607,315       37,710,491       3.01 %     21.22 %
 
                             
The composition of the loan portfolio reflected minor changes in 2Q08; corporate loans, BANCOLOMBIA’s largest segment, represented 46.8% of the loan portfolio, decreasing from 47.5% at the end of 1Q08. The Retail and SME’s segment reached 32.3% of the loan portfolio, increasing from 31.8% in 1Q08. Financial leases increased their share on the loan portfolio to 13.0%, an increase compared to a share of 12.6% in 1Q08. Finally, mortgage loans maintained their relative size in the loan portfolio, representing 8.0% of the gross loan portfolio, mainly as a result of continuous securitization processes.
Corporate loans amounted to Ps. 18,395 billion as of June 30, 2008, increasing 1.7% as compared to 1Q08 and 16.2% as compared to 2Q07, where loans funded by domestic development banks were the most dynamic, growing at a pace of 15.5% over the quarter.
Retail and small and medium-sized enterprise (“SME”) loans amounted to Ps. 12,685 billion as of June 30, 2008. This represents an increase of 4.8% as compared to 1Q08 and 34.3% as compared to 2Q07.
Financial leases amounted to Ps. 5,096 billion, increasing 5.9% as compared to 1Q08 and 27.7% as compared to 2Q07. Financial leases is a segment with a number of growth opportunities, as BANCOLOMBIA can take advantage of the cross selling derived from its client base in this segment, especially SME’s which get a tax deduction for their financial lease payouts.
Mortgage loans amounted to Ps. 3,150 billion in 2Q08, increasing 2.7% as compared to 2Q07 and 6.6% as compared to 1Q08. During 2Q08 BANCOLOMBIA securitized mortgage loans amounting to Ps. 268.3 billion. If the outstanding securitized loans are added to the outstanding loans in the Bank’s balance sheet, this segment would have recorded an increase of 23.2% compared to 2Q07 and 6.3% as compared to 1Q08.

 

4


 

(LOGO)
   
BANCOLOMBIA has two types of currency denominated loans: those denominated in Colombian Peso which comprise 63% of the loan portfolio and those denominated in U.S. Dollars which comprise the remaining part of the loan portfolio. Loan growth figures are affected by currency conversion, especially in periods of high volatility. Specifically, in 2Q08 the Colombian market experienced currency exchange volatility, particularly in the last week of June, when the Colombian Peso ended the quarter depreciating 4.8% against the U.S. dollar which corrected part of the appreciation trend seen during the first six months of the year. This depreciation had a positive effect on the loan portfolio growth as it impacts U.S. dollar denominated loans when converted to Colombian Pesos for accounting purposes. Even without the currency conversion effect, both the peso denominated and U.S. dollar denominated loans maintained a growth rate of over 20% on a year over year basis. U.S. dollar denominated loans grew 1.2% as compared to 1Q08 and 23.8% as compared to the pro forma figures for 2Q07 when measured in dollars. Colombian Peso denominated loans grew 2.3% as compared to 1Q08 and 22.3% as compared to pro forma figures for 2Q07.
 
   
Net loans and financial leases represented 69.4% of the total assets as of June 30, 2008, amounting to Ps. 37,710 billion.
 
2.1.2.  
Investment Portfolio
 
   
As of June 30, 2008, BANCOLOMBIA’s net investment securities amounted to Ps. 6,168 billion and represented an increase of 4.5% when compared to the figures as of March 31, 2008, and an increase of 11.8% when compared to the figures as of June 30, 2007.
 
   
As of June 30, 2008, investments in debt securities amounted to Ps. 6,014 billion and represented 97.5% of BANCOLOMBIA’s net investment securities, maintaining a stable relative size comprising 11.1% of total assets. Debt securities increased 5.7% as compared to March 31, 2008, when debt securities amounted to Ps. 5,687 billion and represented 11.0% of total assets, and an increase of 12.1% as compared to the Ps. 5,363 billion as of June 30, 2007 which represented 11.9% of total assets. The quarter over quarter increase is explained by the Bank’s need to maintain its debt securities portfolio relative size for liquidity management purposes and by the 10.8% increase in Colombian mortgage backed securities (“TIPS”) as a result of the repurchase of a portion of the mortgages securitized by the Bank in the same period, of which, a vast majority are backed by mortgages originated by the Bank according to its credit policies and standards.
 
   
The following table presents the debt securities portfolio breakdown by type of issuer.
                                         
Debt Securities   Government
(Colombia)
    Government
(Others)
    MBS
(TIPS)
    Corporate
(Others)
    Total  
Trading
    20 %     0 %     1 %     11 %     32 %
Available for sale
    11 %     4 %     10 %     7 %     31 %
Held to Maturity
    13 %     10 %     9 %     5 %     36 %
 
                             
Total
    44 %     14 %     20 %     22 %     100 %
 
                             
     
*  
“Government” includes debt securities issued or backed by governments, “Corporate” means debt securities issued by corporations and “MBS” means Colombian mortgage backed securities.

 

5


 

(LOGO)
2.1.3.  
Asset Quality
 
   
Asset quality measures deteriorated slightly over 2Q08 as past due loans to total loans ratio reached 3.5% of total loans, increasing from 3.4% recorded by the end 1Q08. After growing at a pace of 17.0% quarterly in 1Q08, past due loans moderated their growth rate to 6.4% in 2Q08, due in part by the write-down of a Ps. 104 billion loan in 2Q08. On the other hand, allowances for loans and accrued interest losses increased 10.9% over the quarter, increasing coverage levels, as the ratio of allowances to past due loans increased to 120.1% from 115.2% in 1Q08, while the ratio of allowances to loans classified as C, D and E (i.e. those of an inferior quality as measured by their number of days past due) at the end of 2Q08 decreased to 125.9% from 131.4% in 1Q08.
 
   
As of June 30, 2008, allowances for loan and accrued interest losses represented 4.2% of gross loans and financial leases, while non-performing loans represented 2.0% of gross loans and financial leases.
 
   
Increasing interest rates and continuous gradual change on the composition of the loan portfolio have been the main drivers of the Bank’s past due loans levels. The Colombian Central Bank was the first in the region to hike interest rates and has done it since April 2006 increasing its overnight lending rate from 6.00% to 10.00%. As a result of this, interest rates along the economy have increased in recent years, affecting asset quality. In addition, the gradual change in the composition of the loan book presented in recent time, as part of the increased participation of banks in the Colombian economy, has translated in higher participation of Retail and SMEs in BANCOLOMBIA’s loan book. Historically, Retail and SME’s has been a segment with two particular characteristics: (i) higher margins and (ii) higher levels of delinquencies. In conclusion, higher interest rates in the economy plus a higher participation of the SMEs segment in the loan portfolio have been accompanied by a higher level of past due loans and higher margins, which as a result, have helped to compensate the higher provisions charges in recent quarters and to maintain the Bank’s profitability.
                                                 
LOANS AND FINANCIAL LEASES CLASSIFICATION                  
( Ps. millions)   As of 30-Jun-07     As of 31-Mar-08     As of 30-Jun-08  
¨A¨ Normal
    30,307,013       94.1 %     35,780,026       94.0 %     36,597,476       93.1 %
¨B¨ Subnormal
    1,101,821       3.4 %     1,152,247       3.0 %     1,417,227       3.6 %
¨C¨ Deficient
    260,297       0.8 %     301,742       0.8 %     374,663       1.0 %
¨D¨ Doubtful recovery
    295,430       0.9 %     518,490       1.4 %     621,091       1.5 %
¨E¨ Unrecoverable
    262,916       0.8 %     313,469       0.8 %     316,555       0.8 %
 
                                               
Total
    32,227,477       100 %     38,065,974       100 %     39,327,012       100 %
 
                                               
 
                                   
Loans and financial leases classified as C, D and E as a percentage of total loans and financial leases
    2.5 %             3.0 %             3.3 %        
 
                                   

 

6


 

(LOGO)
                                         
ASSET QUALITY           As of             Growth  
( Ps. millions)   Jun-07     Mar-08     Jun-08     2Q 08 / 1Q 08     2Q 08 / 2Q 07  
Total performing past due loans (1)
    387,295       584,416       589,206       0.82 %     52.13 %
Total non-performing past due loans
    486,762       708,370       786,658       11.05 %     61.61 %
Total past due loans
    874,057       1,292,786       1,375,864       6.43 %     57.41 %
Allowance for loans and accrued interest losses
    1,133,380       1,489,572       1,652,491       10.94 %     45.80 %
Past due loans to total loans
    2.71 %     3.40 %     3.50 %                
Non-performing loans as a percentage of total loans
    1.51 %     1.86 %     2.00 %                
“C”, “D” and “E” loans as a percentage of total loans
    2.54 %     2.98 %     3.34 %                
Allowances to past due loans (2)
    129.67 %     115.22 %     120.11 %                
Allowance for loan and accrued interest losses as a percentage of “C”, “D” and “E” loans (2)
    138.45 %     131.39 %     125.92 %                
Allowance for loan and accrued interest losses as a percentage of non-performing loans (2)
    232.84 %     210.28 %     210.06 %                
Allowance for loan and accrued interest losses as a percentage of total loans
    3.52 %     3.91 %     4.20 %                
Percentage of performing loans to total loans
    98.49 %     98.14 %     98.00 %                
     
(1)  
“Performing” past due loans are loans upon which the Bank 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.
   
The following table presents past due loans per loan category:
                         
LOAN CLASSIFICATION           PDL/ total Loans as Of  
    % Of loan Portfolio     31-Mar-08     30-Jun-08  
Commercial loans
    61.1 %     2.0 %     2.1 %
Consumer loans
    17.6 %     6.1 %     6.2 %
Small business loans
    0.3 %     9.9 %     10.2 %
Mortgage loans
    8.0 %     8.4 %     7.5 %
Finance lease
    13.0 %     2.6 %     3.7 %
 
                 
TOTAL LOAN PORTFOLIO
    100.0 %     3.4 %     3.5 %
 
                 
2.2.  
Liabilities
 
   
During 2Q08 the Bank began to focus on increasing its deposit base and consolidating its competitive advantage in terms of funding costs. As of June 30, 2008, BANCOLOMBIA had Ps 34,538 billion of total deposits which represents an increase of 3.7% as compared to 1Q08 and an increase of 16.9% as compared to 2Q08. Most of the growth came in interest bearing deposits which increased 4.0% as compared to 1Q08 and 18.9% as compared to 2Q07. Nonetheless, non- interest bearing deposits grew 1.9% over 2Q08 and 5.9% over the year.

 

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Deposit composition has continued to change over the last 12 months; non-interest bearing deposits reached 13.8% of total deposits from 15.2% in 2Q07, while interest bearing deposits increased their share of deposits to 86.2%, coming from 84.8% in 2Q07. These changes were to a large extent driven by the implementation of marginal reserve requirements that have been in place since 2Q07, which are higher for savings and checking accounts (27% marginal reserve requirement) than for time deposits (5% marginal reserve requirement), conditions that affect the funding preferences among Colombian banks. However, Resolution 5 of 2008, issued by the Colombian Central Bank’s board of directors, released on June 20, 2008, introduced some changes to the existing reserve requirement, modifying the ordinary reserve requirements to (i) 11.5% for demand deposits (ii) 6% for time deposits under 540 days; (iii) 0% for deposits with maturities above 540 days. This resolution also eliminates the marginal reserve requirements and will be applied beginning on August 13, 2008. The Bank expects these measures to eliminate the deposit cost distortion created by marginal reserve requirements, especially on branch based deposits. In addition, the Bank also expects these measures to draw some market liquidity and affect funding costs. However, the effect on market liquidity is expected to be gradually eased by the U.S. Dollar international reserves accumulation announced by the Colombian Central Bank in the same resolution.
                                                 
    Jun-07     Participation     Mar-08     Participation     Jun-08     Participation  
Checking Accounts
    5,206,905       17.6 %     5,619,395       16.9 %     5,892,512       17.1 %
Time Deposits
    12,045,703       40.8 %     14,532,213       43.6 %     16,097,667       46.6 %
Savings deposits
    11,938,893       40.4 %     12,739,551       38.3 %     12,150,236       35.2 %
Other
    348,630       1.2 %     408,792       1.2 %     397,939       1.2 %
 
                                   
Total Deposits
    29,540,131       100 %     33,299,951       100 %     34,538,354       100 %
 
                                   
2.3.  
Shareholders’ Equity
 
   
BANCOLOMBIA’s shareholders’ equity amounted to Ps. 5,292 billion at the end of 2Q08, which represents an increase of 7.5% as compared to 1Q08, mostly explained by the operating results of the Bank in 2Q08. As compared to 2Q07, this represents an increase of 48.3%, mainly due to the Bank’s stock issuance in 3Q07.
 
   
At the end of 2Q08, the Bank’s consolidated ratio of technical capital to risk-weighted assets was 11.8%, a slight decrease from the 11.9% recorded in 1Q08, but still 282 basis points above the minimum established by Colombian regulators.
 
   
Unrealized losses on debt securities amounted to Ps 63.7 billion as of June 30, 2008, increasing from Ps. 49.1 billion presented by the end of 1Q08 and explained by higher interest rates on Colombia’s bonds secondary market, which affect the valuation of our available for sale and held to maturity debt securities.
                         
TECHNICAL CAPITAL RISK WEIGHTED ASSETS                  
Consolidated (Ps. millions)   Jun-07     Mar-08     Jun-08  
Basic capital (Tier I)
    3,382,308       4,386,709       4,569,691  
Additional capital (Tier II)
    1,297,599       1,088,900       1,122,139  
Technical capital (1)
    4,679,907       5,475,609       5,691,830  
Risk weighted assets included market risk
    39,507,368       45,978,130       48,139,875  
 
                 
CAPITAL ADEQUACY (2)
    11.85 %     11.91 %     11.82 %
 
                 
     
(1)  
Technical capital is the sum of basic capital and additional capital.
 
(2)  
Capital Adequacy is technical capital divided by risk weighted assets.
3. INCOME STATEMENT
   
BANCOLOMBIA’s net income amounted to Ps. 375.3 billion for 2Q08, increasing 55.6% as compared to the pro forma figures for 2Q07, driven by double digit growth in the net interest income, fees and other operating income, and partially off-set by higher provisions. On a quarterly basis, net income for 2Q08 increased 47.9% as compared to the Ps. 253.9 billion for 1Q08.
 
   
Net income totaled Ps. 629.2 billion for the first six months of 2008, increasing 40.6% as compared to the same period of 2007. Return on average shareholders’ equity for 2Q08 was 29.5% which represents an increase from the 27.0% in the pro forma figures for 2Q07.

 

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3.1.  
Net Interest Income
 
   
During 2Q08, interest on loans reached Ps. 1,174 billion, increasing 3.6% as compared to 1Q08 and 35.5% as compared to the Ps. 867 billion recorded in the pro forma figures for 2Q07, mainly driven by higher interest rates as a result of the continuous re-pricing of the loan portfolio.
 
   
Despite a weak quarter for Colombia’s bond market, interest on investment securities increased 39.4% in 2Q08 to Ps. 111,136 million, explained by a lower duration and a higher participation of variable rate instruments in the debt securities portfolio, which helped to mitigate the losses produced by mark to market valuation of the Bank’s trading portfolio.
 
   
Overall, total interest income increased 5.3% as compared to 1Q08, while total interest expense grew at a lower rate of 2.2%. As a result, net interest income increased 7.7% as compared to 1Q08 and net interest margin increased from 7.0% in 1Q08 to 7.5% in 2Q08 due to higher margin in the loan portfolio (loans interest margin increased to 8.3% from 8.0% in 1Q08) and higher debt investment interest margin (2.1% in 2Q08 compared to 0.1% in 1Q08) .
 
3.2.  
Provisions
 
   
Total net provisions for 2Q08 amounted to Ps. 241.7 billion, increasing 96.2% as compared to the pro forma figures for 2Q07 and increasing 39.5% as compared to 1Q08. Specifically, provisions for loans and accrued interest losses increased 70.3% in 2Q08 as compared to pro forma 2Q07 driven by higher levels of past due loans. On the other hand, recoveries on provisions for foreclosed assets and other assets decreased 35.8% over the same period, also contributing to the higher level of net provisions.
 
3.3.  
Fees and Income from Services
 
   
Net fees and income from services totaled Ps. 299.0 billion during 2Q08, increasing 10.2% as compared to the pro forma figures for 2Q07 and decreasing 2.6% as compared to 1Q08. Net fees and income from services are being affected by the sale of Multienlace S.A., which occurred during 2Q08, as fees and other service expenses related to contact center services used by the Bank and provided by Multienlace S.A. are no longer considered an intercompany transaction. As a result, expenses related to contact center services were not eliminated as intercompany transactions from the 2Q08 numbers. Consequently, fees and other services expenses increased 89.7% as compared to 1Q08 and 113.9% as compared to proforma 2Q07, explaining the lower net fees and income from services rate of growth in yearly basis.
 
   
In fact, fees and other service income before expenses grew 4.4% and 18.0% as compared to 1Q08 and 2Q07 respectively, mostly driven by a dynamic year for credit and debit card related fees, trust management, collection and payment fees, electronic services and ATM fees.
 
   
In the last year BANCOLOMBIA has undertaken a series of initiatives to become Colombia’s credit card business leader, and as a result, the Bank’s accumulated unconsolidated credit card billing increased 26.8% when compared to the pro forma 2Q07, resulting in a 25.6% market share of the Colombian credit card business. In addition, the Bank’s number of outstanding credit cards increased 26.1%, resulting in a 17.9% market share of the Colombian total outstanding credit cards at the end of 2Q08.

 

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ACCUMULATED CREDIT CARD BILLING   As of             %     2008  
(Ps. millions)   Jun-07     Jun-08     Growth     Market Share  
Bancolombia VISA
    648,134       807,371       24.57 %     8.09 %
Bancolombia Mastercard
    925,015       1,055,566       14.11 %     10.58 %
Bancolombia American Express
    440,838       691,620       56.89 %     6.93 %
Total Bancolombia
    2,013,986       2,554,557       26.84 %     25.60 %
 
                       
Mercado de tarjetas de crédito en Colombia
    9,098,806       9,978,510       9.67 %        
 
                       
Source: Credibanco y Redeban multicolor
                                 
CREDIT CARD MARKET SHARE                   %     2008  
(Outstanding credit cards)   Jun-07     Jun-08     Growth     Market Share  
Bancolombia VISA
    246,507       305,780       24.05 %     5.81 %
Bancolombia Mastercard
    328,563       361,480       10.02 %     6.86 %
Bancolombia American Express
    170,737       273,378       60.12 %     5.19 %
Total Bancolombia
    745,807       940,638       26.12 %     17.86 %
 
                       
Mercado de tarjetas de crédito en Colombia
    5,011,592       5,265,859       5.07 %        
 
                       
Source: Credibanco y Redeban multicolor
3.4.  
Other Operating Income
 
   
Total other operating income amounted to Ps. 195.8 billion for 2Q08, positively affected by the sale of Multienlace S.A. during the quarter. According to Colombian GAAP, the gain or loss on sale of equity securities can only be recorded when the consideration involved in the transaction is effectively received by the seller. As part of the Multienlace S.A. transaction, the Bank has only received 44% of the consideration in 2Q08 equating Ps. 37 billion, which has been accounted as part of other operating income. In addition, the Bank also received a dividend income from Multienlace S.A. totaling Ps. 15 billion during the quarter. The remaining part of the consideration for the Multienlace S.A. transaction is expected to be received in the quarter ending December 31, 2008.
 
   
Notwithstanding the non-recurring events described above, the Bank’s other operating income continues to perform in a dynamic way as foreign exchange gains and income derived from forward contracts in foreign currency continue to outperform historic results. The positive performance is explained by the competitive position the Bank has in this market, its broad base of customers and the higher activity in the forward market this year.
 
3.5.  
Operating expenses
 
   
Personnel expenses (the sum of salaries and employee benefits, bonus plan payment and compensation) for 2Q08 increased 10.9% as compared to 1Q08 and 16.9% as compared to the pro forma figures for 2Q07, explained by higher payouts under the bonus plan and variable compensation due to the Bank’s improved 1H08 results as compared to 1H07.
 
   
Administrative and other expenses increased 1.5% as compared to 1Q08 and 7.5% as compared to the pro forma figures for 2Q07.
 
   
During 2Q08, the revenues growth rate was higher than that posted by operating expenses which totaled Ps. 609.6 billion, increasing 4.4% as compared to 1Q08 and 9.6% as compared to the pro forma figures for 2Q07. As a result, BANCOLOMBIA’s efficiency, measured by the ratio of operating expenses to net operating income improved during 2Q08, reached 45.8%, which compares favorably to 56.7%, recorded in the 2Q07 pro forma figures. The Bank’s efficiency, measured as operating expenses over average total assets, was 4.7% for 2Q08, a decline as compared to 5.1% in the pro forma figures for 2Q07, but a slight increase compared to the 4.6% for 1Q08.

 

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3.6.  
Non Operating Income / Expense
 
   
During 2Q08 total non-operating income totaled Ps 29.9 billion, of which Ps. 26.1 billion were related to the compensation received in connection with the membership rights recognized by Visa International Service Association (“Visa International”) as a result of the initial public offering of VISA Inc., which took place in 2007 (the “VISA IPO”). Under the restructuring of Visa International, financial institutions that were members of Visa International were entitled to receive compensation for their membership rights once VISA Inc. underwent its initial public offering. As a result of this, non-operating income increased 155.9% as compared to 1Q08 and 164.2% as compared to the pro forma figures for 2Q07.
 
3.7.  
Income tax expense
 
   
Income tax expense for 2Q08 amounted to Ps 145.4 billion decreasing 7.4% as compared to 1Q08 and increasing 75.8% as compared to the pro forma figures for 2Q07. Income tax expense for 1H08 totaled Ps. 302.3 billion increasing 72.1% as compared to the same period of 2007.
                                         
PRINCIPAL RATIOS   Quarter     As of  
PROFITABILITY   2Q07     1Q08     2Q08     Jun-07     Jun-08  
Net interest margin (1)
    7.11 %     7.03 %     7.51 %     6.73 %     7.26 %
Return on average total assets (2)
    2.14 %     1.95 %     2.86 %     1.99 %     2.41 %
Return on average shareholders’ equity (3)
    27.05 %     19.67 %     29.5 %     25.09 %     24.40 %
 
                                       
EFFICIENCY
                                       
Operating expenses to net operating income (4)
    56.72 %     48.51 %     45.84 %     58.23 %     47.12 %
Operating expenses to average total assets (5)
    5.08 %     4.62 %     4.72 %     4.97 %     4.67 %
 
                                       
CAPITAL ADEQUACY
                                       
Shareholders’ equity to total assets
    7.93 %     9.51 %     9.74 %                
Technical capital to risk weighted assets
    11.85 %     11.91 %     11.82 %                
     
(1)  
Calculated taking into account an average between the figures as of March 2008 and as of June 2008. It’s defined as net interest income divided by monthly average interest-earning assets.
 
(2)  
Net interest income divided by monthly average interest-earning assets.          
 
(3)  
Net income by monthly average assets.          
 
(4)  
Net income by monthly average shareholders’ equity.          
 
(5)  
Operating expenses divided by monthly average assets.                      
           

 

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BALANCE SHEET                           Last        
(Ps. millions)   Jun-07     Mar-08     Jun-08     Quarter     Annual  
ASSETS
                                       
Cash and due from banks
    3,405,203       3,320,974       4,203,606       26.58 %     23.45 %
Overnight funds sold
    513,713       958,839       820,588       -14.42 %     59.74 %
Total cash and equivalents
    3,918,916       4,279,813       5,024,194       17.39 %     28.20 %
 
                             
Debt securities
    5,363,253       5,687,079       6,013,604       5.74 %     12.13 %
Trading
    1,999,470       2,108,656       1,954,381       -7.32 %     -2.26 %
Available for Sale
    1,447,851       1,917,520       1,883,080       -1.80 %     30.06 %
Held to Maturity
    1,915,932       1,660,903       2,176,143       31.02 %     13.58 %
Equity securities
    231,115       283,679       227,372       -19.85 %     -1.62 %
Trading
    70,613       121,505       51,726       -57.43 %     -26.75 %
Available for Sale
    160,502       162,174       175,646       8.31 %     9.44 %
Market value allowance
    -77,051       -71,406       -72,906       2.10 %     -5.38 %
Net investment securities
    5,517,317       5,899,352       6,168,070       4.56 %     11.79 %
 
                             
Commercial loans
    19,581,261       23,358,467       24,022,762       2.84 %     22.68 %
Consumer loans
    5,569,558       6,702,199       6,925,338       3.33 %     24.34 %
Small business loans
    130,994       124,376       132,622       6.63 %     1.24 %
Mortgage loans
    2,955,711       3,066,537       3,149,911       2.72 %     6.57 %
Finance lease
    3,989,953       4,814,395       5,096,379       5.86 %     27.73 %
Allowance for loan losses
    -1,117,332       -1,458,659       -1,616,521       10.82 %     44.68 %
Net total loans and financial leases
    31,110,145       36,607,315       37,710,491       3.01 %     21.22 %
 
                             
Accrued interest receivable on loans
    326,995       457,435       482,991       5.59 %     47.71 %
Allowance for accrued interest losses
    -16,048       -30,913       -35,970       16.36 %     124.14 %
Net total interest accrued
    310,947       426,522       447,021       4.81 %     43.76 %
 
                             
Customers’ acceptances and derivatives
    237,126       269,180       100,081       -62.82 %     -57.79 %
Net accounts receivable
    625,336       699,104       855,548       22.38 %     36.81 %
Net premises and equipment
    885,393       840,283       885,666       5.40 %     0.03 %
Foreclosed assets, net
    40,688       27,102       23,672       -12.66 %     -41.82 %
Prepaid expenses and deferred charges
    119,440       139,958       135,071       -3.49 %     13.09 %
Goodwill
    873,854       877,173       909,121       3.64 %     4.04 %
Operating leases, net
    345,446       608,014       630,942       3.77 %     82.65 %
Other
    662,265       547,956       904,895       65.14 %     36.64 %
Reappraisal of assets
    364,225       513,425       515,796       0.46 %     41.61 %
 
                             
Total assets
    45,011,098       51,735,197       54,310,568       4.98 %     20.66 %
 
                             
LIABILITIES AND SHAREHOLDERS’ EQUITY
                                       
LIABILITIES
                                       
DEPOSITS
                                       
Non-interest bearing
    4,499,236       4,676,607       4,764,975       1.89 %     5.91 %
Checking accounts
    4,150,606       4,267,815       4,367,036       2.32 %     5.21 %
Other
    348,630       408,792       397,939       -2.65 %     14.14 %
 
                             
Interest bearing
    25,040,895       28,623,344       29,773,379       4.02 %     18.90 %
Checking accounts
    1,056,299       1,351,580       1,525,476       12.87 %     44.42 %
Time deposits
    12,045,703       14,532,213       16,097,667       10.77 %     33.64 %
Savings deposits
    11,938,893       12,739,551       12,150,236       -4.63 %     1.77 %
 
                             
Total deposits
    29,540,131       33,299,951       34,538,354       3.72 %     16.92 %
Overnight funds
    1,882,290       2,455,473       2,772,806       12.92 %     47.31 %
Bank acceptances outstanding
    57,071       61,698       36,536       -40.78 %     -35.98 %
Interbank borrowings
    1,752,518       1,422,573       1,493,083       4.96 %     -14.80 %
Borrowings from domestic development banks
    2,780,660       3,524,201       3,718,117       5.50 %     33.71 %
Accounts payable
    1,573,156       1,999,101       2,059,164       3.00 %     30.89 %
Accrued interest payable
    228,875       324,977       334,435       2.91 %     46.12 %
Other liabilities
    486,007       478,117       521,447       9.06 %     7.29 %
Bonds
    2,438,909       2,638,936       2,767,762       4.88 %     13.48 %
Accrued expenses
    516,710       521,335       688,604       32.08 %     33.27 %
Minority interest in consolidated subsidiaries
    186,054       88,123       88,510       0.44 %     -52.43 %
 
                             
Total liabilities
    41,442,381       46,814,485       49,018,818       4.71 %     18.28 %
 
                             
SHAREHOLDERS’ EQUITY
                                       
Subscribed and paid in capital
    365,375       393,914       393,914       0.00 %     7.81 %
Retained earnings
    2,612,363       3,837,185       4,223,649       10.07 %     61.68 %
Appropiated
    2,164,669       3,583,309       3,594,426       0.31 %     66.05 %
Unappropiated
    447,694       253,876       629,223       147.85 %     40.55 %
 
                             
Reappraisal and others
    614,218       738,706       737,842       -0.12 %     20.13 %
Gross unrealized gain or loss on debt securities
    -23,239       -49,093       -63,655       29.66 %     173.91 %
 
                             
Total shareholder’s equity
    3,568,717       4,920,712       5,291,750       7.54 %     48.28 %
 
                             

 

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(LOGO)
                                                                 
INCOME STATEMENT   As of     Growth     Proforma                     Growth  
(Ps. millions)   Jun-07     Jun-08     Jun-08 / Jun-07     2Q07     1Q08     2Q08     2Q08 / 1Q08     2Q08 / 2Q07  
Interest income and expenses
                                                               
Interest on loans
    1,664,884       2,307,700       38.61 %     866,944       1,133,438       1,174,262       3.60 %     35.45 %
Interest on investment securities
    217,732       190,839       -12.35 %     118,077       79,703       111,136       39.44 %     -5.88 %
Overnight funds
    56,468       49,331       -12.64 %     34,922       28,803       20,528       -28.73 %     -41.22 %
Leasing
    252,939       366,400       44.86 %     132,492       177,661       188,739       6.24 %     42.45 %
Total interest income
    2,192,023       2,914,270       32.95 %     1,152,435       1,419,605       1,494,665       5.29 %     29.70 %
 
                                               
Interest expense
                                                               
Checking accounts
    19,355       17,564       -9.25 %     9,197       8,819       8,745       -0.84 %     -4.91 %
Time deposits
    346,805       578,168       66.71 %     185,162       276,826       301,342       8.86 %     62.75 %
Savings deposits
    212,514       271,644       27.82 %     117,569       138,881       132,763       -4.41 %     12.92 %
Total interest on deposits
    578,674       867,376       49.89 %     311,928       424,526       442,850       4.32 %     41.97 %
 
                                               
Interbank borrowings
    70,102       29,935       -57.30 %     38,584       16,667       13,268       -20.39 %     -65.61 %
Borrowings from domestic development banks
    119,777       169,134       41.21 %     64,267       84,665       84,469       -0.23 %     31.43 %
Overnight funds
    53,404       77,467       45.06 %     24,717       42,197       35,270       -16.42 %     42.70 %
Bonds
    65,177       116,087       78.11 %     24,365       55,105       60,982       10.67 %     150.29 %
Total interest expense
    887,134       1,259,999       42.03 %     463,861       623,160       636,839       2.20 %     37.29 %
 
                                               
Net interest income
    1,304,889       1,654,271       26.77 %     688,574       796,445       857,826       7.71 %     24.58 %
Provision for loan and accrued interest losses, net
    (246,961 )     (449,107 )     81.85 %     (149,901 )     (193,882 )     (255,225 )     31.64 %     70.26 %
Recovery of charged-off loans
    41,250       40,448       -1.94 %     21,995       21,841       18,607       -14.81 %     -15.40 %
Provision for foreclosed assets and other assets
    (30,758 )     (24,316 )     -20.94 %     (8,747 )     (10,616 )     (13,700 )     29.05 %     56.63 %
Recovery of provisions for foreclosed assets and other assets
    42,862       18,056       -57.87 %     13,441       9,423       8,633       -8.38 %     -35.77 %
 
                                               
Total net provisions
    (193,607 )     (414,919 )     114.31 %     (123,212 )     (173,234 )     (241,685 )     39.51 %     96.15 %
Net interest income after provision for loans
                                                               
and accrued interest losses
    1,111,282       1,239,352       11.52 %     565,362       623,211       616,141       -1.13 %     8.98 %
 
                                               
Commissions from banking services and other services
    95,056       110,313       16.05 %     47,490       53,377       56,937       6.67 %     19.89 %
Electronic services and ATM fees
    37,126       42,563       14.64 %     18,227       21,392       21,171       -1.03 %     16.15 %
Branch network services
    50,726       49,033       -3.34 %     25,251       23,867       25,166       5.44 %     -0.34 %
Collections and payments fees
    60,559       75,649       24.92 %     31,148       36,896       38,753       5.03 %     24.42 %
Credit card merchant fees
    19,306       13,984       -27.57 %     8,608       8,078       5,906       -26.89 %     -31.39 %
Credit and debit card annual fees
    149,440       208,529       39.54 %     78,713       100,500       108,029       7.49 %     37.24 %
Checking fees
    33,100       33,076       -0.07 %     16,653       16,350       16,726       2.30 %     0.44 %
Fiduciary activities
    32,795       41,980       28.01 %     16,756       19,804       22,176       11.98 %     32.35 %
Pension plan administration
    41,267       39,997       -3.08 %     19,444       20,854       19,143       -8.21 %     -1.55 %
Brokerage fees
    29,949       30,456       1.69 %     15,696       14,126       16,329       15.59 %     4.03 %
Check remittance
    11,126       13,011       16.94 %     5,338       6,678       6,333       -5.17 %     18.64 %
International operations
    20,832       19,965       -4.16 %     10,270       10,093       9,872       -2.19 %     -3.88 %
Fees and other service income
    581,282       678,556       16.73 %     293,594       332,015       346,541       4.38 %     18.03 %
 
                                               
Fees and other service expenses
    (43,860 )     (72,631 )     65.60 %     (22,233 )     (25,074 )     (47,557 )     89.67 %     113.90 %
Total fees and income from services, net
    537,422       605,925       12.75 %     271,361       306,941       298,984       -2.59 %     10.18 %
 
                                               
Other operating income
                                                               
Net foreign exchange gains
    (86,725 )     (50,326 )     -41.97 %     (68,951 )     (110,086 )     59,760       154.28 %     186.67 %
Forward contracts in foreign currency
    110,340       182,848       65.71 %     80,763       166,002       16,846       -89.85 %     -79.14 %
Gains on sales of investments on equity securities
    (15,123 )     37,084       345.22 %     62       (96 )     37,180       38829.17 %     59867.74 %
Gains on sale of mortgage loan
          21,844       *             9,068       12,776       40.89 %     *  
Dividend income
    16,146       36,417       125.55 %     1,435       20,488       15,929       -22.25 %     1010.03 %
Revenues from commercial subsidiaries
    43,515       51,722       18.86 %     27,306       26,087       25,635       -1.73 %     -6.12 %
Insurance income
    2,169       5,797       167.27 %     1,812       4,812       985       -79.53 %     -45.64 %
Communication, postage, rent and others
    9,274       45,118       386.50 %     4,864       18,468       26,650       44.30 %     447.90 %
Total other operating income
    79,596       330,504       315.23 %     47,291       134,743       195,761       45.28 %     313.95 %
 
                                               
Total income
    1,728,300       2,175,781       25.89 %     884,014       1,064,895       1,110,886       4.32 %     25.66 %
Operating expenses
                                                               
Salaries and employee benefits
    412,846       437,013       5.85 %     210,646       219,217       217,796       -0.65 %     3.39 %
Bonus plan payments
    34,764       65,971       89.77 %     17,511       18,452       47,519       157.53 %     171.37 %
Compensation
    10,413       13,534       29.97 %     4,279       7,233       6,301       -12.89 %     47.25 %
Administrative and other expenses
    540,519       583,391       7.93 %     273,364       289,475       293,916       1.53 %     7.52 %
Deposit security, net
    24,316       26,678       9.71 %     12,022       14,324       12,354       -13.75 %     2.76 %
Donation expenses
    1,794       1,519       -15.33 %     648       973       546       -43.88 %     -15.74 %
Depreciation
    63,196       65,538       3.71 %     37,550       34,404       31,134       -9.50 %     -17.09 %
Total operating expenses
    1,087,848       1,193,644       9.73 %     556,020       584,078       609,566       4.36 %     9.63 %
 
                                               
Net operating income
    640,452       982,137       53.35 %     327,994       480,817       501,320       4.26 %     52.84 %
Goodwill amortization (1)
    31,317       27,058       -13.60 %     15,302       16,561       10,497       -36.62 %     -31.40 %
Non-operating income (expense)
                                                               
Other income
    64,157       80,966       26.20 %     29,598       22,338       58,628       162.46 %     98.08 %
Minority interest
    (23,898 )     (10,196 )     -57.34 %     (16,323 )     (3,761 )     (6,435 )     71.10 %     -60.58 %
Other expense
    (26,046 )     (94,316 )     262.11 %     (1,965 )     (72,006 )     (22,310 )     -69.02 %     1035.37 %
Total non-operating income
    14,213       (23,546 )     -265.67 %     11,310       (53,429 )     29,883       155.93 %     164.22 %
Income before income taxes
    623,348       931,533       49.44 %     324,002       410,827       520,706       26.75 %     60.71 %
Income tax expense
    (175,654 )     (302,310 )     72.11 %     (82,703 )     (156,951 )     (145,359 )     -7.39 %     75.76 %
 
                                               
Net income
    447,694       629,223       40.55 %     241,299       253,876       375,347       47.85 %     55.55 %
 
                                               

 

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: August 4, 2008  By:   /s/ JAIME ALBERTO VELÁSQUEZ B.    
    Name:   Jaime Alberto Velásquez B.   
    Title:   Vice President of Finance