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

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): 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)(2): o

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-                    .

 

 

3Q08

CONSOLIDATED FINANCIAL RESULTS
FOR THE QUARTER ENDED SEPTEMBER 30, 2008

November 6, 2008. Medellín, Colombia — Today, BANCOLOMBIA S.A. (“BANCOLOMBIA” or the “Bank”) (NYSE: CIB) announced its financial results for the third quarter of fiscal year 2008, ended September 30, 2008.¹

CONSOLIDATED BALANCE SHEET
AND INCOME STATEMENT		Quarter												Growth
(Ps. million)		3Q07				2Q08				3Q08				3Q08 / 2Q08				3Q08 / 3Q07
ASSETS
Loans and financial leases, net			34,188,333				37,710,491				40,474,342				7.33	%			18.39	%
Investment securities, net			5,331,636				6,168,070				6,947,159				12.63	%			30.30	%
Other assets			9,163,991				10,432,007				10,539,537				1.03	%			15.01	%
Total assets			48,683,960				54,310,568				57,961,038				6.72	%			19.06	%
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits			30,641,803				34,538,354				37,096,051				7.41	%			21.06	%
Non-interest bearing			4,647,520				4,764,975				4,582,805				-3.82	%			-1.39	%
Interest bearing			25,994,283				29,773,379				32,513,246				9.20	%			25.08	%
Other liabilities			13,274,738				14,480,464				15,099,981				4.28	%			13.75	%
Total liabilities			43,916,541				49,018,818				52,196,032				6.48	%			18.85	%
Shareholders’ equity			4,767,419				5,291,750				5,765,006				8.94	%			20.93	%
Total liabilities and shareholders’ equity			48,683,960				54,310,568				57,961,038				6.72	%			19.06	%
Interest income			1,242,684				1,494,665				1,614,618				8.03	%			29.93	%
Interest expense			526,607				636,839				693,547				8.90	%			31.70	%
Net interest income			716,077				857,826				921,071				7.37	%			28.63	%
Net provisions			(192,709	)			(241,685	)			(243,584	)			0.79	%			26.40	%
Fees and income from service, net			280,966				298,984				346,717				15.97	%			23.40	%
Other operating income			106,806				195,761				130,622				-33.27	%			22.30	%
Total operating expense			(531,375	)			(609,566	)			(637,920	)			4.65	%			20.05	%
Goodwill amortization			(19,399	)			(10,497	)			(11,287	)			7.53	%			-41.82	%
Non-operating income, net			5,374				29,883				(14,229	)			-147.62	%			-364.77	%
Income tax expense			(49,007	)			(145,359	)			(124,423	)			-14.40	%			153.89	%
Net income			316,733				375,347				366,967				-2.23	%			15.86	%

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: October 1 2008 Ps. 2,184.76 = US$ 1 Average Representative Market Rate September 2008 Ps. 1,859.46 = US$ 1

3Q08

1.

SUMMARY:

BANCOLOMBIA announces that during the quarter ended September 30, 2008 (“3Q08”), it recorded net income of Ps. 367.0 billion, which represents an increase of 15.9% as compared to the Ps. 316.7 billion for the quarter ended September 30, 2007 (“3Q07”). Net income for the first nine months of 2008 totaled Ps. 996.2 billion, representing an increase of 30.3% as compared to the same period of 2007.

As of September 30, 2008, BANCOLOMBIA’s gross loans totaled Ps. 42,289 billion, increasing 19.3% as compared to 3Q07 and 7.5% as compared to the quarter ended June 30, 2008 (“2Q08”). As in previous quarters, loan growth has slowed due in part to a lower level of economic growth and higher interest rates in Colombia.

BANCOLOMBIA’s ratio of past due loans (i.e. loans overdue for more than 30 days) to total loans as of September 30, 2008 remained stable at 3.5%. Charge-offs for 3Q08 totaled Ps. 132.4 billion and the coverage ratio, measured as the ratio of allowances for loan losses (including allowances for accrued interest losses) to past due loans, increased to 124.1% from 120.1% in 2Q08.

As of September 30, 2008, BANCOLOMBIA’s total deposits totaled Ps. 37,096 billion, increasing 21.1% as compared to 3Q07 and 7.4% as compared to 2Q08.

BANCOLOMBIA’s efficiency ratio, measured as the ratio between operating expenses and net operating income, reached 46.4% for 3Q08 compared to 50.3% in 3Q07.

BANCOLOMBIA’s annualized average return on equity for 3Q08 was 26.7%. The Bank’s earnings per share for 3Q08 were Ps. 466 or US$0.85 per ADR.

BANCOLOMBIA’s results in 3Q08 were mainly driven by the following factors (and are compared to the results for the same period in 2007):

	•		Net interest income that totaled Ps. 921.1 billion in 3Q08, resulting in an increase of 28.6%.
	•		Net fees and income from services that amounted to Ps. 346.7 billion in 3Q08, representing an increase of 23.4%.
	•		Total other operating income that amounted to Ps. 130.6 billion in 3Q08, representing an increase of 22.3%.
	•		Total net provisions that amounted to Ps. 243.6 billion for 3Q08, representing an increase of 26.4%.
	•		Income tax expense totaling Ps 124.4 billion in 3Q08, representing an increase of 153.9%.

3Q08

		Quarter												As of
KEY FINANCIAL HIGHLIGHTS		3Q07				2Q08				3Q08				Sep-07				Sep-08
Net Income (Ps millions)			316,733				375,347				366,967				764,427				996,190
Basic and Diluted net income per ADS US$			0.80				0.99				0.85				1.92				2.32
Basic and Diluted net income per share COP (7)			402.03				476.43				465.80				970.30				1,264.48
Return on average total assets (1)			2.70	%			2.86	%			2.66	%			2.24	%			2.49	%
Return on average shareholders’ equity (2)			28.81	%			29.48	%			26.66	%			24.35	%			25.14	%
P/BV ADS (3)			2.90				2.24				2.12
P/BV Local (4) (5)			2.71				2.12				2.14
P/E (6)			10.45				7.62				8.38
ADR price			34.65				31.30				28.45
Common share price (7)			16,400				14,220				15,640
Weighted average of Preferred and Common Shares outstanding			787,827,003				787,827,003				787,827,003

2.

CONSOLIDATED BALANCE SHEET

2.1.

Assets

BANCOLOMBIA’s assets totaled Ps. 57,961 billion as of September 30, 2008, representing an increase of 6.7% compared to Ps. 54,311 billion as of June 30, 2008 and an increase of 19.1% compared to Ps. 48,684 billion as of September 30, 2007.

2.1.1. Loan Portfolio

BANCOLOMBIA’s gross loan portfolio reached Ps 42,289 billion by the end of 3Q08, increasing 19.3% as compared to 3Q07. As in previous quarters, loan growth slowed, due in part to lower economic growth and higher interest rates in Colombia. COP denominated loans, which represent 70.8% of the loan portfolio, increased 4.3% over the quarter and 16.3% as compared to 3Q07 while U.S. dollar denominated loans increased 2.4% over the quarter and 18.0% over the year, when measured in US dollars. Accordingly, loan growth figures, measured in Colombian Peso “COP”, were impacted positively by the 13.6% COP depreciation occurred in 3Q08, as it increases the US dollar denominated loans conversion (The Bank maintains accounting records in Colombian pesos).

The composition of the loan portfolio did not change significantly during the quarter. The loan portfolio mix at the end of 3Q08, in terms of the gross loans as compared to total loans, was as follows:

	•		Corporate loans represented 47.9%.
	•		Retail and SME’s segment comprised 31.6%.
	•		Financial leases represented 12.5%.
	•		Mortgage loans represented 8.0%.

3Q08

Corporate loans amounted to Ps. 20,268 billion as of September 30, 2008, increasing 10.2% as compared to 2Q08 and 13.4% as compared to 3Q07, where trade finance loans were the most dynamic category over the quarter.

Retail and small and medium-sized enterprise (“SME”) loans amounted to Ps. 13,358 billion as of September 30, 2008. This represents an increase of 5.3% as compared to 2Q08 and 30.7% as compared to 3Q07.

Financial leases amounted to Ps. 5,289 billion, increasing 3.8% as compared to 2Q08 and 22.1% as compared to 3Q07.

Mortgage loans amounted to Ps. 3,373 billion in 3Q08, increasing 7.1% as compared to 2Q07 and 11.8% as compared to 3Q08. During 3Q08 BANCOLOMBIA securitized mortgage loans amounting to Ps. 191.1 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 3Q07 and 7.0% as compared to 2Q08.

Net loans and financial leases represented 69.8% of the total assets as of September 30, 2008, amounting to Ps. 40,474 billion.

LOAN PORTFOLIO		As of												Growth
(Ps. million)		30-Sep-07				30-Jun-08				30-Sep-08				Sep-08 / Jun-08				Sep-08 / Sep-07
CORPORATE
Working capital loans			15,719,266				16,147,393				17,339,568				7.38	%			10.31	%
Loans funded by domestic development banks			852,098				983,613				950,134				-3.40	%			11.51	%
Trade Financing			1,002,428				993,021				1,817,194				83.00	%			81.28	%
Overdrafts			140,692				227,848				111,717				-50.97	%			-20.59	%
Credit Cards			156,576				43,414				49,510				14.04	%			-68.38	%
TOTAL CORPORATE			17,871,060				18,395,289				20,268,123				10.18	%			13.41	%
RETAIL AND SMEs
Working capital loans			2,874,562				3,913,770				4,096,301				4.66	%			42.50	%
Personal loans			3,554,436				3,982,508				4,242,273				6.52	%			19.35	%
Loans funded by domestic development banks			553,915				807,006				861,001				6.69	%			55.44	%
Credit Cards			1,701,169				2,220,956				2,376,832				7.02	%			39.72	%
Overdrafts			234,653				306,272				313,605				2.39	%			33.65	%
Automobile loans			1,214,440				1,358,355				1,340,500				-1.31	%			10.38	%
Trade Financing			90,820				96,566				127,259				31.78	%			40.12	%
TOTAL RETAIL AND SMEs			10,223,995				12,685,433				13,357,771				5.30	%			30.65	%
MORTGAGE			3,017,151				3,149,911				3,373,317				7.09	%			11.80	%
FINANCIAL LEASES			4,332,769				5,096,379				5,289,495				3.79	%			22.08	%
Total loans and financial leases			35,444,975				39,327,012				42,288,706				7.53	%			19.31	%
Allowance for loan losses and financial leases			(1,256,642	)			(1,616,521	)			(1,814,364	)			12.24	%			44.38	%
Total loans and financial leases, net			34,188,333				37,710,491				40,474,342				7.33	%			18.39	%

3Q08

2.1.2.

Investment Portfolio

As of September 30, 2008, BANCOLOMBIA’s net investment securities amounted to Ps. 6,947 billion and represented an increase of 12.6% when compared to the figures as of June 30, 2008, and an increase of 30.3% when compared to the figures as of September 30, 2007.

As of September 30, 2008, investments in debt securities amounted to Ps. 6,705 billion, increasing 11.5% as compared to Ps. 6,014 billion as of June 30, 2008, and 29.6% as compared to the Ps. 5,174 billion as of September 30, 2007. This increase is due in part to the increase experienced by U.S. dollar denominated debt securities portfolio which increased 7.9% over the quarter (not taking into account the 13.6% COP depreciation against the U.S. dollar in 3Q08.)

As of September 30, 2008, the debt securities portfolio represented 11.6% of total assets, slightly increasing its relative size from 11.1% of total assets in the previous quarter, and comprised 96.5% of BANCOLOMBIA’s net investment securities.

2.1.3.

Asset Quality

Asset quality indicators remained stable during 3Q08. The ratio of past due loans (i.e. loans overdue for more than 30 days) to total loans was 3.5% at the end of 3Q08, Coverage measured by the ratio of allowances to past due loans increased to 124.1% at the end of 3Q08 from 120.1% in 2Q08. The ratio of allowances to loans classified as C, D and E (i.e. loans of an inferior quality as measured by their number of days past due) at the end of 3Q08 decreased to 120.9% from 125.9% in 2Q08.

Some asset deterioration occurred during the quarter as past due loans increased 8.8% as compared to the figures presented for the end of 2Q08. Nevertheless, allowances for loan losses increased 12.4% over the period, reaching Ps 1,857 billion and representing 4.4% of gross loans and financial leases. Non-performing loans represented 2.1% of gross loans and financial leases.

Under Colombian bank regulations, a loan is past due when it is at least 31 days past its due date. When a loan is over due more than 30 days, its total outstanding balance is considered in the calculation of the past due loans. The following table presents past due loans per loan category:

						Past due loans / Gross loans as of
LOAN CLASSIFICATION		% of loan portfolio				30-Jun-08				30-Sep-08
Commercial loans			61.7	%			2.1	%			2.3	%
Consumer loans			17.4	%			6.2	%			5.8	%
Small business loans			0.3	%			10.2	%			9.9	%
Mortgage loans			8.0	%			7.5	%			8.5	%
Finance lease			12.5	%			3.7	%			3.1	%
TOTAL LOAN PORTFOLIO			100	%			3.5	%			3.5	%

LOANS AND FINANCIAL LEASES CLASSIFICATION
(Ps. million)		As of 30-Sep-07								As of 30-Jun-08								As of 30-Sep-08
“A” Normal			33,732,877				95.1	%			36,597,476				93.1	%			39,112,111				92.5	%
“B” Subnormal			776,157				2.2	%			1,417,227				3.6	%			1,641,326				3.9	%
“C” Deficient			248,459				0.7	%			374,663				1.0	%			507,581				1.2	%
“D” Doubtful recovery			456,216				1.3	%			621,091				1.5	%			738,867				1.7	%
“E” Unrecoverable			231,266				0.7	%			316,555				0.8	%			288,821				0.7	%
Total			35,444,975				100	%			39,327,012				100	%			42,288,706				100	%
Loans and financial leases classified as C, D and E as a percentage of total loans and financial leases			2.6	%							3.3	%							3.6	%

3Q08

ASSET QUALITY		As of												Growth
(Ps. million)		Sep-07				Jun-08				Sep-08				3Q08 / 2Q08				3Q08 / 3Q07
Total performing past due loans (1)			435,868				589,206				615,605				4.48	%			41.24	%
Total non-performing past due loans			544,985				786,658				880,600				11.94	%			61.58	%
Total past due loans			980,853				1,375,864				1,496,205				8.75	%			52.54	%
Allowance for loans and accrued interest losses			1,286,330				1,652,491				1,856,606				12.35	%			44.33	%
Past due loans to total loans			2.77	%			3.50	%			3.54	%
Non-performing loans as a percentage of total loans			1.54	%			2.00	%			2.08	%
“C”, “D” and “E” loans as a percentage of total loans			2.64	%			3.34	%			3.63	%
Allowances to past due loans (2)			131.14	%			120.11	%			124.09	%
Allowance for loan and accrued interest losses as a percentage of “C”, “D” and “E” loans (2)			137.44	%			125.92	%			120.93	%
Allowance for loan and accrued interest losses as a percentage of non-performing loans (2)			236.03	%			210.06	%			210.83	%
Allowance for loan and accrued interest losses as a percentage of total loans			3.63	%			4.20	%			4.39	%
Percentage of performing loans to total loans			98.46	%			98.00	%			97.92	%

2.2.

Liabilities

As of September 30, 2008, BANCOLOMBIA’s liabilities reached Ps. 52,196 billion, increasing 6.5% as compared to 2Q08 and 18.9% as compared to 3Q07. COP denominated liabilities, which represent 69.0% of total liabilities, increased 4.1% over the quarter and 16.9% as compared to 3Q07 while U.S. dollar denominated increased 14.3% over the year (not taking into account the variation experienced by COP against the U.S. dollar).

During 3Q08 BANCOLOMBIA’s deposits reached Ps. 37,096 billion, increasing 7.4% as compared to 2Q08 and 21.1% as compared to 3Q07. COP denominated deposits, 71.8% of total deposits, increased 6.2% and 23.7% as compared to 2Q08 and 3Q07 respectively while U.S. dollar denominated deposits measured in U.S. dollars increased 6.4% as compared to 3Q07.

Deposit composition continued its trend in favor of interest bearing deposits in Colombia, a consequence of the higher interest rate scenario. Non-interest bearing deposits reached 12.4% of total deposits from 15.2% in 3Q07, while interest bearing deposits increased their share of deposits to 87.6%, coming from 84.8% in 3Q07.

By the end of 3Q08, bonds totaled Ps 3,801 billion of which Ps 2,098 billion are COP denominated. During 3Q08, BANCOLOMBIA and some of its subsidiaries successfully completed the issuance and offering of ordinary notes increasing its COP denominated outstanding bonds by 59.9% as compared to 2Q08.The outstanding amount of U.S. dollar denominated bonds totaled US$ 780 million as of September 30, 2008, which represents an increase of 3.0% over the previous quarter and 11.5% over the previous year.

At a meeting held October 24, 2008, the central bank of Colombia (the “Central Bank”) reduced the existing ordinary reserve requirement to 11% from 11.5% for demand deposits and to 4.5% from 6% for time deposits under 540 days. The Central Bank estimates that this measure will provide liquidity of approximately COP $1 trillion to the Colombian economy. This is one of several measures implemented by the Central Bank to provide adequate liquidity in Colombia for year end.

3Q08

		Sep-07				Participation				Jun-08				Participation				Sep-08				Participation
Checking Accounts			5,472,186				17.9	%			5,892,512				17.1	%			6,031,361				16.3	%
Time Deposits			12,952,902				42.3	%			16,097,667				46.6	%			17,431,652				47.0	%
Savings deposits			11,737,909				38.3	%			12,150,236				35.2	%			13,260,107				35.7	%
Other			478,806				1.6	%			397,939				1.2	%			372,931				1.0	%
Total Deposits			30,641,803				100	%			34,538,354				100	%			37,096,051				100	%

2.3.

Shareholders’ Equity

BANCOLOMBIA’s shareholders’ equity amounted to Ps. 5,765 billion at the end of 3Q08, which represents an increase of 8.9% as compared to 2Q08, mostly due to the Bank’s operating results in 3Q08. As compared to 3Q07, this represents an increase of 20.9%.

At the end of 3Q08, the Bank’s consolidated ratio of technical capital to risk-weighted assets was 11.37%, which is 237 basis points above the minimum established by Colombian regulators.

Unrealized losses on debt securities amounted to Ps. 57.8 billion as of September 30, 2008, decreasing slightly from Ps. 63.7 billion presented by the end of 2Q08.

TECHNICAL CAPITAL RISK WEIGHTED ASSETS
Consolidated (Ps. million)		Sep-07				Jun-08				Sep-08
Basic capital (Tier I)			4,526,042				4,569,691				4,805,333
Additional capital (Tier II)			1,124,654				1,122,139				1,198,724
Technical capital (1)			5,650,696				5,691,830				6,004,058
Risk weighted assets included market risk			42,549,517				48,139,875				52,784,581
CAPITAL ADEQUACY (2)			13.28	%			11.82	%			11.37	%

3.

INCOME STATEMENT

BANCOLOMBIA’s net income amounted to Ps. 367.0 billion for 3Q08, increasing 15.9% as compared to the figures for 3Q07, driven by growth in the net interest income, fees and other operating income, and partially off-set by higher provisions and higher operating expenses. On a quarterly basis, net income for 3Q08 decreased 2.2% as compared to the Ps. 375.3 billion for 2Q08, as the second quarter numbers included non-recurring net income of Ps 40.7 billion related to the sale of the Bank’s interest in Multienlace S.A. and compensation for membership rights received as a consequence of the VISA Inc. initial public offering occurred in 2008.

Net income totaled Ps. 996.1 billion for the first nine months of 2008, increasing 30.3% as compared to the same period of 2007. Annualized return on average shareholders’ equity for 3Q08 is 26.7%. Annualized return on average equity for the first nine months of 2008 is 25.1% which represents an increase from the 24.4% for the same period of 2007.

3Q08

3.1.

Net Interest Income

During 3Q08, interest on loans reached Ps. 1,265 billion, increasing 7.8% as compared to 2Q08 and 30.3% as compared to the Ps. 971 billion recorded in the figures for 3Q07. The increase was mainly driven by higher interest rates, as a result of the continuous re-pricing of loans, as well as larger loan portfolio.

Interest on investment securities increased 12.3% in 3Q08 to Ps. 124.8 billion, as a result of a higher average debt securities portfolio. Despite a volatile quarter for bond prices, the current structure of the debt securities portfolio has translated into more stable revenue generated by this line of income.

Overall, total interest income increased 8.0% as compared to 2Q08, while total interest expense grew 8.9%. Consequently, net interest income increased 7.4% as compared to 2Q08 and net interest margin increased from 7.5% in 2Q08 to 7.7% in 3Q08 due to higher margin in the loan portfolio (loans interest margin increased to 8.5% from 8.3% in 2Q08).

3.2.

Provisions

Provisions for loans and accrued interest losses totaled Ps 294.2 billon in 3Q08 which represents an increase of 44.9% as compared to 3Q07 and 15.3% as compared to 2Q08. This increase was mainly driven by the higher levels of past due loans.

Recovery of charged-off loans totaled Ps 27.6 billion in 3Q08 while recovery of provisions for foreclosed assets and other assets totaled Ps 31.1 billion in the same period, increasing 48.6% and 259.7% respectively, as compared to 2Q08. As a result of the higher recoveries, total net provisions for 3Q08 amounted to Ps. 243.6 billion, which represents a 0.8% increase as compared to 2Q08 and 26.4% as compared to the figures for 3Q07.

Reference model for consumer loans

Beginning on July 1, 2008, BANCOLOMBIA has applied a new methodology for the calculation of provisions related to consumer loans in Colombia, as a consequence of changes in Colombian regulations. This new methodology is similar to the methodology that the Bank has applied for commercial loans since 3Q07; it calculates provisions taking into account probabilities of default, estimated losses and exposures given default. BANCOLOMBIA had previously increased the provisions related to consumer loans since 3Q07; therefore, the change of methodology did not affect significantly the amount of provisions in 3Q08.

3.3.

Fees and Income from Services

Net fees and income from services totaled Ps. 346.7 billion during 3Q08, increasing 23.4% as compared to the figures for 3Q07 and increasing 16.0% as compared to 2Q08. For the first nine months of 2008, net fees and income from services totaled Ps. 952.6 billion increasing 17.1% as compared to the same period of 2007.

The sale of the Bank’s interest in Multienlace affected the 2Q08 fees and other services expenses as the contact center services provided by that company for quarter ended on March 31, 2008 were no longer eliminated in the consolidation process (i.e. no longer considered an inter-company transaction). Consequently, expenses related to contact services are part of the fees and other services expenses for 3Q08.

3Q08

The following table summarizes figures related to BANCOLOMBIA’s participation in the credit card business in Colombia.

ACCUMULATED CREDIT CARD BILLING										%				2008
(Ps. million)		Sep-07				Sep-08				Growth				Market Share
Bancolombia VISA			1,042,111				1,264,825				21.37	%			8.19	%
Bancolombia Mastercard			1,426,638				1,642,889				15.16	%			10.64	%
Bancolombia American Express			686,136				1,085,270				58.17	%			7.03	%
Total Bancolombia			3,154,884				3,992,984				26.57	%			25.85	%
Colombian Credit Card Market			14,007,469				15,447,396				10.28	%

Source: Credibanco and Redeban multicolor

CREDIT CARD MARKET SHARE										%				2008
(Outstanding credit cards)		Sep-07				Sep-08				Growth				Market Share
Bancolombia VISA			287,666				311,769				8.38	%			5.94	%
Bancolombia Mastercard			335,430				364,703				8.73	%			6.94	%
Bancolombia American Express			184,701				288,170				56.02	%			5.49	%
Total Bancolombia			807,797				964,642				19.42	%			18.37	%
Colombian Credit Card Market			5,088,774				5,251,945				3.21	%

Source: Credibanco and Redeban multicolor

3.4.

Other Operating Income

As in previous quarters, total other operating income continues to outperform historic results. Other operating income totaled Ps. 130.6 billion for 3Q08, increasing 22.3% when compared to the figures for 2Q07 and decreasing 33.3% compared to 2Q08. This performance was driven by the following factors:

	•		The sale of Multienlace S.A. in 2Q08 impacted positively other operating income for 2Q08 results. Specifically, the Bank received dividend income from Multienlace that totaled Ps. 15 billion and reported a gain on investment securities of Ps. 37 billion.
	•		The forward contract and derivatives line was affected by a negative mark-to-market valuation on the cross-currency swap portfolio as a result of the recent performance of some benchmark interest rates.
	•		Net foreign exchange gains reached Ps. 83.7 billion for 3Q08, driven by the COP depreciation presented over the quarter. This line aggregates the net gains of the COP conversion of U.S. dollar denominated assets and liabilities, trading and foreign currency exchange gains.

Currency exposure

BANCOLOMBIA’s income statement was not significantly affected by the COP depreciation presented during 3Q08, because BANCOLOMBIA hedged a significant amount of its currency exposure.

BANCOLOMBIA’s exposure to currency risk primarily arises from changes in the U.S. dollar/COP exchange rate. The exposure to currency risk is managed by BANCOLOMBIA’s treasury division. BANCOLOMBIA uses a value at risk (“VaR”) calculation to limit the exposure to currency risk of its balance sheet. These limits are supervised on a daily basis by BANCOLOMBIA’s Market Risk Management Office.

3Q08

3.5.

Operating expenses

For the first nine months of 2008, total operating expenses totaled Ps 1,832 billion increasing 13.1% as compared to the same period of 2007. During 3Q08, operating expenses totaled Ps. 637.9 billion, increasing 4.7% as compared to 2Q08 and 20.1% as compared to the figures for 3Q07.

The increases in operating expenses were mainly driven by:

	•		Increases in personnel expenses (the sum of salaries and employee benefits, bonus plan payment and compensation) for nine months period ended September 30, 2008, which totaled Ps 786.2 billion, representing a 14.3% increase as compared to the same period last year and were mainly caused by bonus plan payments. However, on a quarter over quarter perspective, personnel expenses for 3Q08 decreased 0.7% as compared to 2Q08 and increased 14.9% as compared to figures for 3Q07.
	•		Increases in administrative and other expenses which totaled Ps. 900.2 billion for the nine months period ended September 30, 2008, increasing 12.6% as compared to the same period last year. Administrative and other expenses increased 7.8% as compared to 2Q08 and 22.3% as compared to the figures for 3Q07.

Efficiency, measured by the ratio of operating expenses to net operating income, for the 3Q08 period was 46.4%, which compares favorably to 50.3%, recorded in 3Q07. The Bank’s efficiency, measured as operating expenses over average total assets, was 4.70% for 3Q08, the same as in 3Q07, but a slight decrease compared to the 4.72% for 2Q08.

3.6.

Income tax expense

Income tax expense for 3Q08 amounted to Ps 124.4 billion decreasing 14.4% as compared to 2Q08 and increasing 153.9% as compared to the figures for 3Q07. Income tax expense for the first nine months of 2008 totaled Ps. 426.7 billion which represents an effective tax rate of 30.0% for the period.

PRINCIPAL RATIOS		Quarter												As of
PROFITABILITY		3Q07				2Q08				3Q08				Sep-07				Sep-08
Net interest margin (1)			6.99	%			7.51	%			7.69	%			6.76	%			7.40	%
Return on average total assets (2)			2.70	%			2.86	%			2.66	%			2.24	%			2.49	%
Return on average shareholders’ equity (3)			28.81	%			29.48	%			26.66	%			24.35	%			25.14	%
EFFICIENCY
Operating expenses to net operating income (4)			50.29	%			45.84	%			46.42	%			55.35	%			46.88	%
Operating expenses to average total assets (5)			4.70	%			4.72	%			4.70	%			4.89	%			4.68	%
CAPITAL ADEQUACY
Shareholders’ equity to total assets			9.79	%			9.74	%			9.95	%
Technical capital to risk weighted assets			13.28	%			11.82	%			11.37	%

3Q08

BALANCE SHEET														Last
(Ps. million)		Sep-07				Jun-08				Sep-08				Quarter				Annual
ASSETS
Cash and due from banks			2,846,131				4,203,606				3,943,274				-6.19	%			38.55	%
Overnight funds sold			1,691,508				820,588				570,307				-30.50	%			-66.28	%
Total cash and equivalents			4,537,639				5,024,194				4,513,581				-10.16	%			-0.53	%
Debt securities			5,173,644				6,013,604				6,705,148				11.50	%			29.60	%
Trading			1,745,887				1,954,381				2,125,396				8.75	%			21.74	%
Available for Sale			1,549,168				1,883,080				2,135,482				13.40	%			37.85	%
Held to Maturity			1,878,589				2,176,143				2,444,270				12.32	%			30.11	%
Equity securities			235,401				227,372				307,403				35.20	%			30.59	%
Trading			77,272				51,726				132,996				157.12	%			72.11	%
Available for Sale			158,129				175,646				174,407				-0.71	%			10.29	%
Market value allowance			-77,409				-72,906				-65,392				-10.31	%			-15.52	%
Net investment securities			5,331,636				6,168,070				6,947,159				12.63	%			30.30	%
Commercial loans			21,789,482				24,022,762				26,109,332				8.69	%			19.83	%
Consumer loans			6,189,229				6,925,338				7,375,132				6.49	%			19.16	%
Small business loans			116,344				132,622				141,430				6.64	%			21.56	%
Mortgage loans			3,017,151				3,149,911				3,373,317				7.09	%			11.80	%
Finance lease			4,332,769				5,096,379				5,289,495				3.79	%			22.08	%
Allowance for loan losses			-1,256,642				-1,616,521				-1,814,364				12.24	%			44.38	%
Net total loans and financial leases			34,188,333				37,710,491				40,474,342				7.33	%			18.39	%
Accrued interest receivable on loans			400,825				482,991				525,401				8.78	%			31.08	%
Allowance for accrued interest losses			-29,688				-35,970				-42,242				17.44	%			42.29	%
Net total interest accrued			371,137				447,021				483,159				8.08	%			30.18	%
Customers’ acceptances and derivatives			178,461				100,081				235,133				134.94	%			31.76	%
Net accounts receivable			676,696				855,548				840,638				-1.74	%			24.23	%
Net premises and equipment			806,688				885,666				937,993				5.91	%			16.28	%
Foreclosed assets, net			27,893				23,672				24,179				2.14	%			-13.32	%
Prepaid expenses and deferred charges			133,953				135,071				141,609				4.84	%			5.72	%
Goodwill			917,025				909,121				1,019,732				12.17	%			11.20	%
Operating leases, net			414,959				630,942				651,759				3.30	%			57.07	%
Other			739,947				904,895				1,141,433				26.14	%			54.26	%
Reappraisal of assets			359,593				515,796				550,321				6.69	%			53.04	%
Total assets			48,683,960				54,310,568				57,961,038				6.72	%			19.06	%
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES
DEPOSITS
Non-interest bearing			4,647,520				4,764,975				4,582,805				-3.82	%			-1.39	%
Checking accounts			4,168,714				4,367,036				4,209,874				-3.60	%			0.99	%
Other			478,806				397,939				372,931				-6.28	%			-22.11	%
Interest bearing			25,994,283				29,773,379				32,513,246				9.20	%			25.08	%
Checking accounts			1,303,472				1,525,476				1,821,487				19.40	%			39.74	%
Time deposits			12,952,902				16,097,667				17,431,652				8.29	%			34.58	%
Savings deposits			11,737,909				12,150,236				13,260,107				9.13	%			12.97	%
Total deposits			30,641,803				34,538,354				37,096,051				7.41	%			21.06	%
Overnight funds			2,127,637				2,772,806				2,252,672				-18.76	%			5.88	%
Bank acceptances outstanding			52,378				36,536				49,507				35.50	%			-5.48	%
Interbank borrowings			1,170,339				1,493,083				1,704,714				14.17	%			45.66	%
Borrowings from domestic development banks			3,270,537				3,718,117				3,682,014				-0.97	%			12.58	%
Accounts payable			2,191,160				2,059,164				1,660,001				-19.38	%			-24.24	%
Accrued interest payable			269,085				334,435				401,357				20.01	%			49.16	%
Other liabilities			479,070				521,447				539,330				3.43	%			12.58	%
Bonds			2,937,268				2,767,762				3,801,313				37.34	%			29.42	%
Accrued expenses			606,235				688,604				919,320				33.50	%			51.64	%
Minority interest in consolidated subsidiaries			171,029				88,510				89,753				1.40	%			-47.52	%
Total liabilities			43,916,541				49,018,818				52,196,032				6.48	%			18.85	%
SHAREHOLDERS’ EQUITY
Subscribed and paid in capital			393,914				393,914				393,914				0.00	%			0.00	%
Retained earnings			3,789,802				4,223,649				4,658,803				10.30	%			22.93	%
Appropiated			3,025,375				3,594,426				3,662,613				1.90	%			21.06	%
Unappropiated			764,427				629,223				996,190				58.32	%			30.32	%
Reappraisal and others			617,514				737,842				770,102				4.37	%			24.71	%
Gross unrealized gain or loss on debt securities			-33,811				-63,655				-57,813				-9.18	%			70.99	%
Total shareholder’s equity			4,767,419				5,291,750				5,765,006				8.94	%			20.93	%

3Q08

INCOME STATEMENT		As of								Growth																Growth
(Ps. million)		Sep-07				Sep-08				Sep-08 / Sep-07				3Q07				2Q08				3Q08				3Q08 / 2Q08				3Q08 / 3Q07
Interest income and expenses
Interest on loans			2,636,236				3,572,916				35.53	%			971,352				1,174,262				1,265,216				7.75	%			30.25	%
Interest on investment securities			310,728				315,660				1.59	%			92,996				111,136				124,821				12.31	%			34.22	%
Overnight funds			86,008				74,982				-12.82	%			29,540				20,528				25,651				24.96	%			-13.17	%
Leasing			401,735				565,330				40.72	%			148,796				188,739				198,930				5.40	%			33.69	%
Total interest income			3,434,707				4,528,888				31.86	%			1,242,684				1,494,665				1,614,618				8.03	%			29.93	%
Interest expense
Checking accounts			28,481				27,168				-4.61	%			9,126				8,745				9,604				9.82	%			5.24	%
Time deposits			566,399				906,775				60.09	%			219,594				301,342				328,607				9.05	%			49.64	%
Savings deposits			331,535				413,329				24.67	%			119,021				132,763				141,685				6.72	%			19.04	%
Total interest on deposits			926,415				1,347,272				45.43	%			347,741				442,850				479,896				8.37	%			38.00	%
Interbank borrowings			91,068				49,462				-45.69	%			20,966				13,268				19,527				47.17	%			-6.86	%
Borrowings from domestic development banks			192,806				252,238				30.82	%			73,029				84,469				83,104				-1.62	%			13.80	%
Overnight funds			92,570				114,431				23.62	%			39,166				35,270				36,964				4.80	%			-5.62	%
Bonds			110,882				190,143				71.48	%			45,705				60,982				74,056				21.44	%			62.03	%
Total interest expense			1,413,741				1,953,546				38.18	%			526,607				636,839				693,547				8.90	%			31.70	%
Net interest income			2,020,966				2,575,342				27.43	%			716,077				857,826				921,071				7.37	%			28.63	%
Provision for loan and accrued interest losses, net			(450,008	)			(743,333	)			65.18	%			(203,047	)			(255,225	)			(294,226	)			15.28	%			44.91	%
Recovery of charged-off loans			65,472				68,108				4.03	%			24,222				18,607				27,660				48.65	%			14.19	%
Provision for foreclosed assets and other assets			(53,721	)			(32,388	)			-39.71	%			(22,963	)			(13,700	)			(8,072	)			-41.08	%			-64.85	%
Recovery of provisions for foreclosed assets and other assets			51,941				49,110				-5.45	%			9,079				8,633				31,054				259.71	%			242.04	%
Total net provisions			(386,316	)			(658,503	)			70.46	%			(192,709	)			(241,685	)			(243,584	)			0.79	%			26.40	%
Net interest income after provision for loans and accrued interest losses			1,634,650				1,916,839				17.26	%			523,368				616,141				677,487				9.96	%			29.45	%
Commissions from banking services and other services			176,439				178,185				0.99	%			86,090				56,937				67,872				19.21	%			-21.16	%
Electronic services and ATM fees			58,081				63,250				8.90	%			20,955				21,171				20,687				-2.29	%			-1.28	%
Branch network services			76,595				75,713				-1.15	%			25,869				25,166				26,680				6.02	%			3.14	%
Collections and payments fees			93,496				115,380				23.41	%			32,937				38,753				39,731				2.52	%			20.63	%
Credit card merchant fees			28,106				20,305				-27.76	%			8,800				5,906				6,321				7.03	%			-28.17	%
Credit and debit card annual fees			201,963				327,822				62.32	%			52,523				108,029				119,293				10.43	%			127.13	%
Checking fees			49,646				50,859				2.44	%			16,546				16,726				17,783				6.32	%			7.48	%
Fiduciary activities			49,956				68,603				37.33	%			17,161				22,176				26,623				20.05	%			55.14	%
Pension plan administration			62,179				60,758				-2.29	%			20,912				19,143				20,761				8.45	%			-0.72	%
Brokerage fees			42,488				42,593				0.25	%			12,539				16,329				12,137				-25.67	%			-3.21	%
Check remittance			16,798				18,945				12.78	%			5,672				6,333				5,934				-6.30	%			4.62	%
International operations			31,189				32,450				4.04	%			10,357				9,872				12,485				26.47	%			20.55	%
Fees and other service income			886,936				1,054,863				18.93	%			310,361				346,541				376,307				8.59	%			21.25	%
Fees and other service expenses			(73,255	)			(102,221	)			39.54	%			(29,395	)			(47,557	)			(29,590	)			-37.78	%			0.66	%
Total fees and income from services, net			813,681				952,642				17.08	%			280,966				298,984				346,717				15.97	%			23.40	%
Other operating income
Net foreign exchange gains			14,271				33,400				134.04	%			100,996				59,760				83,726				40.10	%			-17.10	%
Forward contracts in foreign currency			69,706				164,139				135.47	%			(40,634	)			16,846				(18,709	)			-211.06	%			-53.96	%
Gains on sales of investments on equity securities			(15,224	)			36,495				339.72	%			(101	)			37,180				(589	)			-101.58	%			483.17	%
Securitization income			32,427				31,557				-2.68	%			11,981				12,776				9,713				-23.97	%			-18.93	%
Dividend income			18,606				39,497				112.28	%			2,460				15,929				3,080				-80.66	%			25.20	%
Revenues from commercial subsidiaries			66,369				76,437				15.17	%			22,854				25,635				24,715				-3.59	%			8.14	%
Insurance income			1,493				7,499				402.28	%			(676	)			985				1,702				72.79	%			351.78	%
Rent, communication, postage, and others			19,200				72,102				275.53	%			9,926				26,650				26,984				1.25	%			171.85	%
Total other operating income			206,848				461,126				122.93	%			106,806				195,761				130,622				-33.27	%			22.30	%
Total income			2,655,179				3,330,607				25.44	%			911,140				1,110,886				1,154,826				3.96	%			26.75	%
Operating expenses
Salaries and employee benefits			618,026				659,519				6.71	%			205,180				217,796				222,506				2.16	%			8.44	%
Bonus plan payments			52,309				107,713				105.92	%			17,545				47,519				41,742				-12.16	%			137.91	%
Compensation			17,239				18,981				10.10	%			6,826				6,301				5,447				-13.55	%			-20.20	%
Administrative and other expenses			799,328				900,176				12.62	%			259,013				293,916				316,785				7.78	%			22.30	%
Deposit security, net			36,831				39,594				7.50	%			12,515				12,354				12,916				4.55	%			3.20	%
Donation expenses			2,395				4,813				100.96	%			601				546				3,294				503.30	%			448.09	%
Depreciation			92,891				100,768				8.48	%			29,695				31,134				35,230				13.16	%			18.64	%
Total operating expenses			1,619,019				1,831,564				13.13	%			531,375				609,566				637,920				4.65	%			20.05	%
Net operating income			1,036,160				1,499,043				44.67	%			379,765				501,320				516,906				3.11	%			36.11	%
Goodwill amortization (1)			50,716				38,345				-24.39	%			19,399				10,497				11,287				7.53	%			-41.82	%
Non-operating income (expense)
Other income			76,354				94,052				23.18	%			28,297				58,628				13,086				-77.68	%			-53.75	%
Minority interest			(26,072	)			(13,150	)			-49.56	%			(2,174	)			(6,435	)			(2,954	)			-54.09	%			35.88	%
Other expense			(46,638	)			(118,677	)			154.46	%			(20,749	)			(22,310	)			(24,361	)			9.19	%			17.41	%
Total non-operating income			3,644				(37,775	)			-1136.64	%			5,374				29,883				(14,229	)			-147.62	%			-364.77	%
Income before income taxes			989,088				1,422,923				43.86	%			365,740				520,706				491,390				-5.63	%			34.36	%
Income tax expense			(224,661	)			(426,733	)			89.95	%			(49,007	)			(145,359	)			(124,423	)			-14.40	%			153.89	%
Net income			764,427				996,190				30.32	%			316,733				375,347				366,967				-2.23	%			15.86	%