Bancolombia reports earnings

SUMMARY

Bancolombia S.A. ("BANCOLOMBIA" or the "Bank") reports consolidated net income of 253.1 billion Colombian pesos ("COP") for the quarter ended June 30, 2009 ("2Q09") or COP 321.29 per share-U.S. $0.60 per ADR. For the first six months of 2009, ("1H09") net income totaled COP 564.2 billion, decreasing 10.3% as compared to the first six months of 2008 ("1H08").

During 2Q09, BANCOLOMBIA maintained its strong balance sheet. The Bank reserves for loan losses represented 5.2% of total loans by the end of 2Q09, while coverage, measured by the ratio of allowances for loans and accrued interest losses to past due loans (overdue more than 30 days), increased to 137.3% in 2Q09. On the other hand, past due loans ratio improved, decreasing from 4.0% in 1Q09 to 3.9% by the end of 2Q09.

Driven primarily by corporate lending, BANCOLOMBIA experienced loan growth in COP denominated loans during 2Q09, increasing 5% and 17% as compared to the end of the quarter ended March 31, 2009 ("1Q09") and the quarter ended June 30, 2008 ("2Q08"), respectively. Likewise, deposits continued their positive performance reaching COP 42,888 billion as of June 30, 2009, representing an increase of 24% as compared to 2Q08, while the ratio of net loans to deposits (including borrowings from development banks) remained stable at 92% at the end of 2Q09.

In 2Q09 net interest income decreased 6% as compared to 1Q09 as the Bank experienced margin compression driven by the rapid decrease in interest rates in Colombia; the weighted average of the interest rates for 90 day CDs offered by the Colombian financial system ("DTF") fell 259 basis points during the quarter. As a result, the Bank's net interest margins compressed as a significant portion of BANCOLOMBIA's loan portfolio was indexed to DTF.

In addition, the Bank's non-interest income was mixed during 2Q09:

-- Net fees and income from services continued its positive performance reaching a record COP 379.7 billion for 2Q09, representing an increase of 27.0% as compared to 2Q08.

-- Other operating income amounted to COP 20 billion, decreasing 89.8% as compared to 2Q08 due to the negative impact in the line item of income from derivative financial instruments caused by a COP 62.9 billion non-recurring charge during 2Q09, related to rule changes concerning valuation methodologies for derivative instruments established by the Colombian regulator. The Bank notes that it finished amortizing the reduction in the carrying value of derivatives in 2Q09. For further information about non-recurring events please see Section 2.1 "Effect of non-recurring items in results" of this report.

The Bank's results were impacted by high credit cost as net provision charges totaled COP 345.0 billion in 2Q09, an increase of 43% as compared to 2Q08, although stable as compared to the COP 339.9 billion provision charges for 1Q09. In addition, operating expenses totaled COP 681.3 billion, decreasing for the second consecutive quarter (down 5% as compared to 1Q09).

Overall, the annualized return on average shareholders' equity ("ROE") for 2Q09 is 16.5% while the ROE for the first six months of 2009 is 18.2%.

Shareholders' equity amounted to COP 6,213 billion by the end of 2Q09, while capital adequacy (tier 1+ 2 capital ratio) finished at 12.94% in 2Q09, up from 12.73% in 1Q09.

By BillBigD on Aug 4, 2009, 06:04 in Friendly Talkzone.

yummyj says on Aug 4, 2009, 07:21: Well, 2,000,000 pesos of their income was STOLEN from me. Anyone else? Just because you have been to Colombia, that does NOT mean that you are anywhere near an expert on the place. Sorry. Truth hurts. 0 funny, 0 helpful.

ColombianoGringo (Moderator) (Trustee board) (☼Travelguide writer) says on Aug 4, 2009, 07:32: It's hard to not make money when you rip off your customers with fees for even the most minor of transactions. These guys are thieves and I could never invest with them in good conscience. I'm so hip, I have difficulty seeing over my pelvis. 0 funny, 0 helpful.

panthdave says on Aug 5, 2009, 04:15: Banks in Colombia are probably the most profitable banks in the world... panthdave Miami 0 funny, 0 helpful.

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