Company Quick10K Filing
Grupo Aval
20-F 2020-12-31 Filed 2021-04-12
20-F 2019-12-31 Filed 2020-04-27
20-F 2018-12-31 Filed 2019-04-26
20-F 2017-12-31 Filed 2018-04-27
20-F 2016-12-31 Filed 2017-04-28
20-F 2015-12-31 Filed 2016-05-02
20-F 2014-12-31 Filed 2015-04-27
20-F 2013-12-31 Filed 2014-04-28
20-F 2012-12-31 Filed 2013-04-26
20-F 2011-12-31 Filed 2012-04-30
20-F 2010-12-31 Filed 2011-06-30

AVAL 20F Annual Report

Part I
Item 1. Identity of Directors, Senior Management and Advisers
Item 2. Offer Statistics and Expected Timetable
Item 3. Key Information
Item 4. Information on The Company
Item 4A. Unresolved Staff Comments
Item 5. Operating and Financial Review and Prospects
Item 6. Directors, Senior Management and Employees
Item 7. Major Shareholders and Related Party Transactions
Item 8. Financial Information
Item 9. The Offer and Listing
Item 10. Additional Information
Item 11. Quantitative and Qualitative Disclosures About Risk
Item 12. Description of Securities Other Than Equity Securities
Part II
Item 13. Defaults, Dividend Arrearages and Delinquencies
Item 14. Material Modifications To The Rights of Security Holders and Use of Proceeds
Item 15. Controls and Procedures
Item 16. [Reserved]
Item 16A. Audit Committee Financial Expert
Item 16B. Code of Ethics
Item 16C. Principal Accountant Fees and Services
Item 16D. Exemptions From The Listing Standards for Audit Committees
Item 16E. Purchases of Equity Securities By The Issuer and Affiliated Purchasers
Item 16F. Change in Registrant's Certifying Accountant
Item 16G. Corporate Governance
Item 16H. Mine Safety Disclosure
Part III
Item 17. Financial Statements
Item 18. Financial Statements
Item 19. Exhibits
Note 1 - Reporting Entity
Note 2 - Basis of Preparation of The Consolidated Financial Statements and Summary of Significant Accounting Policies
Note 3 - Judgments and Critical Accounting Estimates in Applying Accounting Policies
Note 4 - Risk Management
Note 5 - Estimation of Fair Value
Note 6 - Classification of Financial Assets and Financial Liabilities
Note 7 - Cash and Cash Equivalents
Note 8 - Trading Assets and Liabilities
Note 9 - Investment Securities
Note 10 - Hedge Accounting
Note 11 - Loans
Note 12 - Other Accounts Receivable, Net
Note 13 - Non - Current Assets Held for Sale
Note 14 - Investments in Associates and Joint Ventures
Note 15 - Tangible Assets
Note 16 - Concession Arrangements Rights
Note 17 - Goodwill
Note 18 - Other Intangible Assets
Note 19 - Income Tax
Note 20 - Customer Deposits
Note 21 - Financial Obligations
Note 22 - Employee Benefits
Note 23 - Legal Related and Non Legal Related Provisions
Note 24 - Other Liabilities
Note 25 - Equity Attributable To Owners of The Parent
Note 26 - Non - Controlling Interest
Note 27 - Commitments and Contingencies
Note 28 - Income From Contracts with Customers
Note 29 - Net Trading Income
Note 30 - Other Income and Expense
Note 31 - Analysis of Operating Segments
Note 32 - Unconsolidated Structured Entities
Note 33 - Transfers of Financial Assets
Note 34 - Related Parties
Note 35 - Business Combination
Note 36 - Subsequent Events
Note 37 - Parent Company Information
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Grupo Aval Earnings 2020-12-31

Balance SheetIncome StatementCash Flow

20-F 1 aval-20201231x20f.htm 20-F

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
for the fiscal year ended December 31, 2020

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________

OR

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report

Commission file number: 001-36631

GRUPO AVAL ACCIONES Y VALORES S.A.

(Exact name of Registrant as specified in its charter)

Republic of Colombia

(Jurisdiction of incorporation)

Carrera 13 No. 26A - 47

Bogotá D.C., Colombia

(Address of principal executive offices)

Jorge Adrián Rincón

Chief Legal Counsel

Grupo Aval Acciones y Valores S.A.

Carrera 13 No. 26A - 47

Bogotá D.C., Colombia

Phone: (+57 1) 743-3222

E-mail: jrincon@grupoaval.com

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Copies to:

Nicholas A. Kronfeld, Esq.

Davis Polk & Wardwell LLP

450 Lexington Avenue

New York, NY 10017

Phone: (212) 450-4000

Securities registered or to be registered pursuant to Section 12(b) of the Act:

None

Securities registered or to be registered pursuant to Section 12(g) of the Act:

Title of each class

 

Name of each exchange on which
registered

American Depositary Shares, each representing 20 preferred shares, par value Ps 1.00 per preferred share

 

New York Stock Exchange

Preferred Shares, par value Ps 1.00 per preferred share

 

New York Stock Exchange*


*     Grupo Aval Acciones y Valores S.A.’s preferred shares are not listed for trading, but are only listed in connection with the registration of the American Depositary Shares, pursuant to the requirements of the New York Stock Exchange under the trading symbol(s): AVAL.

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

Indicate the number of outstanding shares of each of the issuer’s classes of capital stock or common stock as of the close of business covered by the annual report.

Preferred shares: 7,149,819,407


Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes   No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes   No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes   No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes   No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer

Accelerated filer

Non-accelerated filer

Emerging growth company

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.     

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

US GAAP

International Financial Reporting Standards as issued by the International Accounting Standards Board

Other

If “Other” has been checked in response to the previous question indicate by check mark which financial statement item the registrant has elected to follow.

Item 17   Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes   No


TABLE OF CONTENTS

 

 

Page

 

 

 

PRESENTATION OF FINANCIAL AND OTHER INFORMATION

1

PART I

5

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

5

A.

Directors and senior management

5

B.

Advisers

5

C.

Auditors

5

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

5

A.

Offer statistics

5

B.

Method and expected timetable

5

ITEM 3. KEY INFORMATION

5

A.

Selected financial data

5

B.

Capitalization and indebtedness

10

C.

Reasons for the offer and use of proceeds

10

D.

Risk factors

10

ITEM 4. INFORMATION ON THE COMPANY

37

A.

History and development of the company

37

B.

Business overview

41

C.

Organizational structure

98

D.

Property, plant and equipment

98

ITEM 4A. UNRESOLVED STAFF COMMENTS

98

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

99

A.

Operating results

99

B.

Liquidity and capital resources

156

C.

Research and development, patents and licenses, etc.

160

D.

Trend information

160

E.

Off-balance sheet arrangements

161

F.

Tabular disclosure of contractual obligations

161

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

162

A.

Directors and senior management

162

B.

Compensation

166

C.

Board practices

166

D.

Employees

168

E.

Share ownership

169

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

169

A.

Major shareholders

169

B.

Related party transactions

170

C.

Interests of experts and counsel

172

ITEM 8. FINANCIAL INFORMATION

172

A.

Consolidated statements and other financial information

172

B.

Significant changes

173

ITEM 9. THE OFFER AND LISTING

173

A.

Offering and listing details

173

B.

Plan of distribution

173

C.

Markets

174

D.

Selling shareholders

175

E.

Dilution

175

F.

Expenses of the issue

175

i


ITEM 10. ADDITIONAL INFORMATION

175

A.

Share capital

175

B.

Memorandum and articles of association

175

C.

Material contracts

182

D.

Exchange controls

182

E.

Taxation

182

F.

Dividends and paying agents

188

G.

Statement by experts

190

H.

Documents on display

190

I.

Subsidiary information

190

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT RISK

191

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

213

A.

Debt securities

213

B.

Warrants and rights

213

C.

Other securities

214

D.

American depositary shares

214

PART II

216

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

216

A.

Defaults

216

B.

Arrears and delinquencies

216

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

216

A.

Material modifications to instruments

216

B.

Material modifications to rights

216

C.

Withdrawal or substitution of assets

216

D.

Change in trustees or paying agents

216

E.

Use of proceeds

216

ITEM 15. CONTROLS AND PROCEDURES

216

A.

Disclosure controls and procedures

216

B.

Management’s annual report on internal control over financial reporting

216

C.

Attestation report of the registered public accounting firm

217

D.

Changes in internal control over financial reporting

217

ITEM 16. [RESERVED]

217

ITEM 16A. Audit committee financial expert

217

ITEM 16B. Code of ethics

217

ITEM 16C. Principal accountant fees and services

217

ITEM 16D. Exemptions from the listing standards for audit committees

218

ITEM 16E. Purchases of equity securities by the issuer and affiliated purchasers

218

ITEM 16F. Change in registrant’s certifying accountant

218

ITEM 16G. Corporate governance

219

ITEM 16H. Mine safety disclosure

220

PART III

221

ITEM 17. Financial statements

221

ITEM 18. Financial statements

221

ITEM 19. Exhibits

221

ii


PRESENTATION OF FINANCIAL AND OTHER INFORMATION

All references herein to “peso”, “pesos”, or “Ps” refer to the lawful currency of Colombia. ‎All references to “U.S. dollars”, “dollars” or “U.S.$” are to United States dollars. This annual report translates certain Colombian peso amounts ‎into U.S. dollars at specified rates solely for the convenience of the reader. The conversion of amounts expressed in ‎pesos as of a specified date at the then prevailing exchange rate may result in the presentation of U.S. dollar amounts ‎that differ from U.S. dollar amounts that would have been obtained by converting Colombian pesos as of another specified ‎date. Unless otherwise noted in this annual report, all such peso amounts have been translated at the ‎rate of Ps 3,432.50 per U.S.$1.00, which was the representative market rate published on December 31, 2020. The ‎representative market rate is computed and certified by the Superintendency of Finance on a daily basis and ‎represents the weighted average of the buy/sell foreign exchange rates negotiated on the previous day by certain ‎financial institutions authorized to engage in foreign exchange transactions. Such conversion should not be ‎construed as a representation that the peso amounts correspond to, or have been or could be converted into, U.S. ‎dollars at that rate or any other rate. On April 8, 2021 the representative market rate was Ps 3,634.07 per U.S. $1.00.

Definitions

In this annual report, unless otherwise indicated or the context otherwise requires, the terms:

“BAC Credomatic” or “BAC” means BAC Credomatic Inc. and its consolidated subsidiaries;
“Banco AV Villas” means Banco Comercial AV Villas S.A. and its consolidated subsidiary;

“Banco de Bogotá” means Banco de Bogotá S.A. and its consolidated subsidiaries;
“Banco de Occidente” means Banco de Occidente S.A. and its consolidated subsidiaries;
“Banco Popular” means Banco Popular S.A. and its consolidated subsidiaries;
“banks” and “our banking subsidiaries” mean Banco de Bogotá S.A., Banco de Occidente S.A., Banco Popular S.A. and Banco Comercial AV Villas S.A., and their respective consolidated subsidiaries;
“Corficolombiana” means Corporación Financiera Colombiana S.A. and its consolidated subsidiaries;
“Grupo Aval”, “we”, “us”, “our” and “our company” mean Grupo Aval Acciones y Valores S.A. and its consolidated subsidiaries;
“LB Panamá” means Leasing Bogotá S.A., Panamá and its consolidated subsidiaries;
“Multi Financial Group” or “MFG” means Multi Financial Group Inc. and its consolidated subsidiaries.
“Porvenir” means Sociedad Administradora de Fondos de Pensiones y Cesantías Porvenir S.A. and its consolidated subsidiary; and
“Superintendency of Finance” means the Colombian Superintendency of Finance (Superintendencia Financiera de Colombia), a supervisory authority ascribed to the Colombian Ministry of Finance and Public Credit (Ministerio de Hacienda y Crédito Público), or the “Ministry of Finance”, holding the inspection, supervision and control authority over the individuals or entities involved in financial activities, securities markets, insurance and any other operations related to the management, use or investment of resources collected from the public, as well as inspection and supervision authority over the holding companies of financial conglomerates in Colombia.

In this annual report, references to “beneficial ownership” are calculated pursuant to the definition ascribed by the U.S. Securities and Exchange Commission, or the “SEC”, of beneficial ownership for foreign private issuers contained in Form 20-F. Form 20-F defines the term “beneficial owner” of securities as referring to any person who, even if not the record owner of the securities, has or shares the underlying benefits of ownership, including the power to direct the voting or the disposition of the securities or to receive the economic benefit of ownership of the securities. A person is also considered to be the “beneficial owner” of securities when such person has the right to acquire within 60 days pursuant to an option or other agreement. Beneficial owners include persons who hold their securities through one or more trustees, brokers, agents, legal representatives or other intermediaries, or through companies in which they have a “controlling interest”, which means the direct or indirect power to direct the management and policies of the entity.

1


Financial statements

We are a financial holding company and an issuer in Colombia of securities registered with the National Registry of Shares and Issuers (Registro Nacional de Emisores y Valores), and in this capacity, we are subject to inspection and surveillance by the Superintendency of Finance and required to comply with corporate governance and periodic reporting requirements to which all financial holdings and issuers are subject. We are not a financial institution in Colombia and we are not supervised or regulated as a financial institution. Since February 6, 2019, we are subject to the inspection and surveillance of the Superintendency of Finance as the financial holding company of the Aval Financial Conglomerate and we are required to comply with capital adequacy and additional regulations applicable to financial conglomerates. See “Item 4. Information on the Company—B. Business overview—Supervision and regulation”. All of our Colombian financial subsidiaries, including Banco de Bogotá, Banco de Occidente, Banco Popular, Banco AV Villas, Corficolombiana, Porvenir, and their respective financial subsidiaries, are entities under the direct comprehensive supervision of, and subject to inspection and surveillance as financial institutions by, the Superintendency of Finance. In the case of LB Panamá’s financial subsidiaries, BAC and MFG, and their respective financial subsidiaries are subject to inspection and surveillance as financial institutions by the relevant regulatory authorities in each of the countries where BAC and MFG operate.

Our consolidated financial statements at December 31, 2020 and 2019 and for the years ended December 31, 2020, 2019, and 2018 are included in this annual report and referred to as our audited consolidated financial statements. Our historical results are not necessarily indicative of results to be expected for future periods. We have prepared the audited consolidated financial statements included herein in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

Grupo Aval adopted IFRS 16 using the modified retrospective approach with the cumulative effect of initial adoption being recognized on January 1, 2019. Grupo Aval has not restated comparatives for prior reporting periods, as permitted under the specific transitional provisions in the standard. The reclassifications and the adjustments arising from the new leasing rules are therefore recognized in the opening Consolidated Statement of Financial Position on January 1, 2019. For more information on the effects of the adoption on Grupo Aval, please refer to “Note 2.4 Changes in Accounting Policies—A. IFRS 16 Leases” of our audited consolidated financial statements.

We and our Colombian subsidiaries prepare consolidated financial statements for publication in Colombia under IFRS as adopted by the Superintendency of Finance in accordance with Decree 1851 of 2013 and 3023 of 2013, as modified by Decrees 2420 and 2496 of 2015, 2131 of 2016, 2170 of 2017, 2483 of 2018 and 2270 of 2019. Prior to January 1, 2018, this accounting standard differed from IFRS as issued by the IASB in certain material respects. Starting on January 1, 2018, Grupo Aval’s consolidated financial statements for publication in Colombia do not differ from the consolidated financial statements prepared under IFRS as issued by the IASB.

Separate financial statements for us and our financial subsidiaries in Colombia are based on IFRS issued by the IASB in Spanish as of December 31, 2018 (which we refer to as “Colombian IFRS”), and pursuant to certain requirements under Colombian regulations. As a result, rules subsequently issued by the IASB are not applicable under Colombian IFRS. Our separate financial statements for local purposes, differ from IFRS as issued by the IASB in the following principal aspects:

Loss allowances are calculated based on specific rules of the Financial and Accounting Basic Circular (Circular Básica Contable y Financiera) issued by the Superintendency of Finance (which is applied in the local separate financial statements), whereas under IFRS, loss allowances are calculated according to the criteria set forth in IFRS 9 beginning on January 1, 2018.
Financial instruments under Colombian IFRS are classified and measured under specific rules of the Financial and Accounting Basic Circular, whereas under IFRS, financial instruments are classified and measured according to the criteria set forth in IFRS 9 beginning on January 1, 2018 (with the exception of hedge accounting which is still treated under guidelines set forth in IAS 39).

Ratios and Measures of Financial Performance

We have included in this annual report ratios and measures of financial performance such as return on average assets, or “ROAA”, and return on average equity, or “ROAE”. These measures should not be construed as an alternative to IFRS measures and should not be compared to similarly titled measures reported by other companies, which may evaluate such measures differently from how we do. For ratios and measures of financial performance, see “Item 3. Key Information—A. Selected financial data”.

Market share and other information

We obtained the market and competitive position data, including market forecasts, used throughout this annual report from market research, publicly available information and industry publications. We have presented this data on the basis of information from third-party sources that we believe are reliable, including, among others, the International Monetary Fund, or “IMF”, the Superintendency of Finance, the Colombian Banking Association (Asociación Bancaria y de Entidades Financieras de Colombia) or “Asobancaria”, the Colombian Stock Exchange, the Colombian National Bureau of Statistics (Departamento Administrativo Nacional de Estadística), or “DANE”, the World

2


Bank, the Superintendency of Banks in Panama (Superintendencia de Bancos de Panamá), the Superintendency of Financial Institutions in Costa Rica (Superintendencia General de Entidades Financieras), the Superintendency of Banks in Guatemala (Superintendencia de Bancos de Guatemala), the National Commission of Banks and Insurances in Honduras (Comisión Nacional de Bancos y Seguros), the Financial System Superintendency in El Salvador (Superintendencia del Sistema Financiero) and the Superintendency of Banks and Other Financial Institutions in Nicaragua (Superintendencia de Bancos y Otras Instituciones Financieras). Industry and Government publications, including those referenced herein, generally state that the information presented has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed. Unless otherwise indicated, gross domestic product, or “GDP”, figures with respect to Colombia in this annual report are based on the 2015 base year data series published by DANE. Although we have no reason to believe that any of this information or these reports is inaccurate in any material respect, we have not independently verified the competitive position, market share, market size, market growth or other data provided by third parties or by industry or other publications. We do not make any representation or warranty as to the accuracy of such information.

Our consolidated statement of financial position and statement of income reflect information prepared under IFRS. Comparative disclosures of financial and operating performance of our Colombian banking subsidiaries, Corficolombiana, Porvenir and that of our competitors are based on separate information prepared under Colombian IFRS as reported to the Superintendency of Finance. These separate financial statements under Colombian IFRS do not reflect the consolidation of subsidiaries such as Corficolombiana, Porvenir or LB Panamá, are not intended to reflect the consolidated financial results of Grupo Aval and are not necessarily indicative of the results for any other future period. Except where otherwise indicated, comparative disclosures of our financial and operating performance pertaining to our operations in BAC and MFG are presented in accordance with IFRS and based on publicly available information filed with regulators. We include certain ratios in this annual report to compare us to our principal competitors, such as ROAA, ROAE, operational efficiency and asset quality indicators, among others.

“Grupo Aval aggregate” data reflects the sum of the separate financial statements of our four Colombian banking subsidiaries (Banco de Bogotá, Banco de Occidente, Banco Popular and Banco AV Villas) as reported to the Superintendency of Finance under Colombian IFRS. When referring to comparative figures to our peers in Central America on a national basis (i) data for Panama reflects the sum of the separate financial statements of BAC and MFG and (ii) data for other countries refers to the separate financial statements for BAC in each country where it operates, in each case as reported with the applicable local regulators.

Throughout this document, unless otherwise noted, references to average consolidated statement of financial position for 2020, 2019 and 2018 have been calculated as follows: the average of balances at December 31, at September 30, at June 30, and at March 31 of the corresponding year, and the balance at December 31, of the previous year.

Other conventions

Certain figures included in this annual report have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be an arithmetic summation of the figures that precede them. As such, percentage calculations presented may differ from those of rounded numbers. References to “billions” in this annual report are to 1,000,000,000s and to “trillions” are to 1,000,000,000,000s.

“Non-controlling interest” refers to the participation of minority shareholders in a subsidiary’s equity or net income, as applicable.

FORWARD-LOOKING STATEMENTS

Some of the matters discussed in this annual report concerning our operations and financial performance include estimates and forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 “Reform Act” including such statements contained in “Item 3. Key Information—D. Risk factors”, “Item 4. Information on the Company—B. Business overview” and “Item 5. Operating and Financial Review and Prospects”.

Our estimates and forward-looking statements are mainly based on our current expectations and estimates on projections of future events and trends, which affect or may affect our businesses and results of operations. Although we believe that these estimates and forward-looking statements are based upon reasonable assumptions, they are subject to several risks and uncertainties and are made in light of information currently available to us. Our estimates and forward-looking statements may be influenced by the following factors, among others:

changes in Colombian, Central American, regional and international business and economic, political or other conditions;
developments affecting Colombian, Central American and international capital and financial markets;
Government regulation and tax matters and developments affecting our company and industry;

3


declines in the oil and affiliated services sector in the Colombian and global economies;
increases in defaults by our customers;
increases in goodwill impairment losses, or other impairments;
decreases in deposits, customer loss or revenue loss;
increases in allowances for contingent liabilities;
our ability to sustain or improve our financial performance;
increases in inflation rates, particularly in Colombia and in jurisdictions in which we operate in Central America;
the level of penetration of financial products and credit in Colombia and Central America;
changes in interest rates which may, among other effects, adversely affect margins and the valuation of our treasury portfolio;
decreases in the spread between investment yields and implied interest rates in annuities;
movements in exchange rates;
competition in the banking and financial services, credit card services, insurance, asset management, pension fund administration and related industries;
adequacy of risk management procedures and credit, market and other risks of lending and investment activities;
decreases in the level of capitalization of our subsidiaries;
changes in market values of Colombian and Central American securities, particularly Colombian Government securities;
adverse legal or regulatory disputes or proceedings;
successful integration and future performance of acquired businesses or assets;
natural disasters, public health crises or internal security issues affecting countries where we operate;
loss of any key member of our senior management; and
other risk factors as set forth under “Item 3. Key Information—D. Risk factors”.

The words “believe”, “may”, “will”, “estimate”, “continue”, “anticipate”, “intend”, “expect”, “should”, “could”, “would”, “plan”, “predict”, “potential” and similar words are intended to identify estimates and forward-looking statements. All statements addressing our future operating performance, and statements addressing events and developments that we expect or anticipate will occur in the future, are forward-looking statements within the meaning of the Reform Act. Estimates and forward-looking statements are intended to be valid only at the date they were made, and we undertake no obligation to update or to review any estimate and/or forward-looking statement because of new information, future events or other factors. Estimates and forward-looking statements involve risks and uncertainties and are not guarantees of future performance. Our future results may differ materially from those expressed in these estimates and forward-looking statements. In light of the risks and uncertainties described above, the estimates and forward-looking statements discussed in this annual report might not occur and our future results and our performance may differ materially from those expressed in these forward-looking statements due to the factors mentioned above, among others. Because of these uncertainties, you should not make any investment decision based on these estimates and forward-looking statements.

These cautionary statements should be considered in connection with any written or oral forward-looking statements that we may issue in the future.

4


PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

A.          Directors and senior management

Not applicable.

B.          Advisers

Not applicable.

C.          Auditors

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

A.          Offer statistics

Not applicable.

B.          Method and expected timetable

Not applicable.

ITEM 3. KEY INFORMATION

A.          Selected financial data

The following financial data of Grupo Aval at December 31, 2020 and 2019 and for the years ended December 31, 2020, 2019 and 2018 have been derived from our audited consolidated financial statements prepared in accordance with IFRS, included in this report. Our historical results are not necessarily indicative of results to be expected for future periods.

This financial data should be read in conjunction with our audited consolidated financial statements and the related notes, “Presentation of financial and other information” and “Item 5. Operating and Financial Review and Prospects” included in this annual report.

5


Statement of income data

IFRS

    

2020

    

2019

    

2018

(in Ps billions, except share and per share data)

Total interest income

 

20,222.8

19,552.7

18,356.6

Total interest expense

 

(8,262.3)

(8,267.2)

(7,484.8)

Net interest income

 

11,960.5

11,285.5

10,871.8

Impairment loss on loans and other accounts receivable

 

(6,267.2)

(4,194.0)

(4,150.0)

Impairment (loss) recovery on other financial assets

 

(74.8)

60.0

32.5

Recovery of charged-off financial assets

 

328.1

378.9

320.1

Net impairment loss on financial assets

 

(6,013.9)

(3,755.1)

(3,797.3)

Net interest income, after impairment losses

 

5,946.6

7,530.4

7,074.4

Net income from commissions and fees

 

5,093.4

5,455.3

4,839.6

Gross profit from sales of goods and services

2,823.3

2,374.8

2,643.9

Net trading income

 

1,295.4

761.9

582.7

Net income from other financial instruments mandatorily at fair value through profit or loss

252.4

217.6

205.8

Other income

 

1,716.9

1,283.0

1,358.7

Other expenses

 

(10,652.7)

(10,171.3)

(9,371.0)

Income before tax expense

 

6,475.3

7,451.7

7,334.1

Tax expense

 

(1,843.7)

(2,086.3)

(2,149.6)

Net income for the year

 

4,631.6

5,365.5

5,184.6

Net income for the year attributable to:

 

Owners of the parent

 

2,349.5

3,034.4

2,912.7

Non-controlling interest

 

2,282.1

2,331.0

2,271.9

Earnings per 1,000 shares (basic and diluted earnings):

 

  

 

  

 

  

Common shares (in pesos)

 

105,449.5

 

136,188.1

 

130,725.4

Earnings per 1,000 shares (basic and diluted earnings):

 

  

 

  

 

  

Preferred shares (in pesos)

 

105,449.5

 

136,188.1

 

130,725.4

Dividends per 1,000 shares(1):

 

  

 

  

 

  

Common and preferred shares (in pesos)

 

54,000.0

 

60,000.0

 

60,000.0

Weighted average number of shares:

 

  

 

  

 

  

Outstanding common shares in thousands

 

15,135,829.5

15,158,004.8

15,169,502.8

Outstanding preferred shares in thousands

 

7,145,187.6

7,123,012.3

7,111,514.4

Outstanding common and preferred shares in thousands

 

22,281,017.2

22,281,017.2

22,281,017.2

6


Statement of financial position data

    

2020

    

2019

(in Ps billions)

Assets:

 

  

 

  

Cash and cash equivalents

 

34,025.5

30,117.2

Trading assets

 

11,038.9

9,113.7

Investment securities

 

36,061.8

26,000.3

Hedging derivative assets

 

156.2

166.6

Total loans, net

 

195,542.0

173,942.3

Other accounts receivables, net

 

14,996.3

11,702.3

Non-current assets held for sale

 

240.4

206.2

Investments in associates and joint ventures

 

1,029.3

988.0

Tangible assets

 

8,974.0

8,950.4

Concession arrangement rights

 

9,187.6

7,521.5

Goodwill

 

7,713.8

7,348.6

Other intangible assets

 

1,623.7

1,206.5

Income tax assets

 

1,797.9

1,141.8

Other assets

 

508.5

427.2

Total assets

 

322,895.9

 

278,832.6

Liabilities:

 

  

 

  

Trading liabilities

 

1,452.6

962.4

Hedging derivatives liabilities

 

56.6

94.3

Customer deposits

 

211,841.6

175,491.4

Interbank borrowings and overnight funds

 

7,179.6

9,240.5

Borrowings from banks and others

 

19,654.5

19,803.3

Bonds issued

 

27,760.8

21,918.3

Borrowings from development entities

 

4,029.8

3,882.5

Provisions

 

912.9

868.6

Income tax liabilities

 

3,588.2

3,258.6

Employee benefits

 

1,201.9

1,235.0

Other liabilities

 

9,777.9

8,729.4

Total liabilities

 

287,456.3

 

245,484.3

Equity:

 

  

 

  

Attributable to the owners of the parent

 

  

 

  

Subscribed and paid-in capital

 

22.3

22.3

Additional paid-in capital

 

8,470.9

8,445.8

Retained earnings

 

11,302.1

10,289.1

Other comprehensive income

 

862.0

1,093.4

Equity attributable to owners of the parent

 

20,657.3

 

19,850.6

Non-controlling interest

 

14,782.3

13,497.7

Total equity

 

35,439.6

 

33,348.3

Total liabilities and equity

 

322,895.9

 

278,832.6

7


Other financial and operating data

Grupo Aval

 

At and for the year ended December 31, 

 

    

2020

    

2019

    

2018

 

(in percentages, unless otherwise

 

indicated)

 

Profitability ratios:

 

  

 

  

 

  

Net interest margin(1)

 

5.1%

5.6%

5.7%

ROAA(2)

 

1.5%

2.0%

2.2%

ROAE(3)

 

11.7%

16.4%

17.8%

Efficiency ratios(4):

 

Cost to income

46.0%

47.6%

45.7%

Cost to assets

3.4%

3.8%

3.9%

Capital ratios:

 

  

  

  

Period-end equity as a percentage of period-end total assets

 

11.0%

12.0%

11.4%

Tangible equity ratio(5)

 

8.3%

9.2%

8.4%

Credit quality data:

 

  

  

  

Cost of risk: Impairment loss on loans and other accounts receivable / average gross loans(6)

3.1%

2.4%

2.6%

Cost of risk, net: Impairment loss on loans and other accounts receivable, net / average gross loans(6)(7)

3.0%

2.2%

2.4%

Charge-offs as a percentage of average gross loans(6)

 

2.0%

2.7%

2.0%

Loans past due more than 30 days / gross loans(6)

 

4.9%

4.4%

4.3%

Loans past due more than 90 days / gross loans(6)

 

3.6%

3.3%

3.1%

Loans classified as Stage 2 / gross loans(6)

13.2%

4.5%

4.6%

Loans classified as Stage 3 / gross loans(6)

6.1%

5.5%

6.0%

Loans classified as Stage 2 and Stage 3 / gross loans(6)

19.3%

10.0%

10.6%

Loss allowance as a percentage of loans past due more than 30 days

 

110.3%

104.6%

113.9%

Loss allowance as a percentage of loans past due more than 90 days

 

151.7%

140.1%

158.0%

Loss allowance for Stage 2 loans as a percentage of Stage 2 loans(6)

11.4%

14.4%

15.5%

Loss allowance for Stage 3 loans as a percentage of Stage 3 loans(6)

49.4%

52.4%

50.8%

Loss allowance for Stage 2 and Stage 3 loans as a percentage of Stage 2 and Stage 3 loans(6)

23.5%

35.3%

35.6%

Loss allowance as a percentage of gross loans(6)

 

5.4%

4.6%

4.8%

Operational data (in units):

 

  

 

  

 

  

Number of customers of the banks(8)

 

16,999,944

 

16,474,645

 

15,654,858

Number of employees(9)

 

104,862

 

111,192

 

91,191

Number of branches(10)

 

1,589

 

1,692

 

1,734

Number of ATMs(10)

 

5,562

 

5,671

 

5,570


(1)Net interest margin is calculated as net interest income divided by total average interest-earning assets. Average interest-earning assets for 2020, 2019 and 2018 are calculated as the sum of interest-earning assets at each quarter-end during the applicable year and the prior year end divided by five.
(2)For the years ended December 31, 2020, 2019 and 2018, ROAA is calculated as net income divided by average assets. Average assets for 2020, 2019 and 2018 are calculated as the sum of assets at each quarter-end during the applicable year and the prior year end divided by five. See “Item 4. Information on the company—B. Business overview—Selected statistical data”.
(3)For the years ended December 31, 2020, 2019 and 2018, ROAE is calculated as net income attributable to owners of the parent divided by average equity attributable to owners of the parent. Average equity attributable to owners of the parent for 2020, 2019 and 2018 is calculated as the sum of equity attributable to owners of the parent at each quarter-end during the applicable year end and the prior year end divided by five. See “Item 4. Information on the company—B. Business overview—Selected statistical data”.
(4)Our cost to income ratio is calculated as Other Expenses (see Note 30 of our audited consolidated financial statements), divided by total income before net impairment losses on financial assets (defined as the sum of net interest income, net income from commissions and fees, gross profit (loss) from sales of goods and services, net trading income, net income from other financial instruments mandatorily at fair value through profit or loss “FVTPL” and other income). Our cost to assets ratio is calculated as Other expenses divided by average assets, as defined under ROAA.

8


(5)Tangible equity ratio is calculated as total equity minus intangible assets (calculated as goodwill plus other intangible assets, excluding those related to concession arrangements rights, Ps 9,187.6 billion in 2020, Ps 7,521.5 billion in 2019 and Ps 5,514.5 billion in 2018) divided by total assets minus intangible assets (as defined before). See “Item 3. Key Information—A. Selected financial data— Ratios and Measures of Financial Performance”.
(6)Gross loans exclude Interbank and overnight funds (Ps 4,693.7 billion in 2020, Ps 2,719.0 billion in 2019 and Ps 7,635.2 billion in 2018) as these are short-term liquidity operations generally not subject to deterioration. Total gross loan portfolio includes Interbank and overnight funds. Throughout this document charge-offs and write-offs refer to the same concept.
(7)Impairment (loss) on loans and other accounts receivable, net refers to Impairment (loss) on loans and other accounts receivable minus Recovery of charged-off financial assets.
(8)Reflects aggregated customers of our banking subsidiaries. Customers of more than one of our Colombian banking subsidiaries, BAC and MFG (for 2020 only) are counted separately for each banking subsidiary.
(9)Number of employees is defined as the sum of direct, temporary and outsourced personnel in financial entities (68,774 in 2020, 71,269 in 2019 and 71,851 in 2018), call-centers (8,813 in 2020, 8,538 in 2019 and 8,081 in 2018) and employees of non-financial entities of Corficolombiana (27,275 in 2020, 31,385 in 2019 and 11,259 in 2018). Employees in financial entities include 1,222 employees of MFG (for 2020 only).
(10)Reflects aggregated number of full-service branches or ATMs of our Colombian banking subsidiaries, BAC and MFG (for 2020 only), as applicable, located throughout Colombia and Central America.

Ratios and Measures of Financial Performance

The tables in this section, and elsewhere in this annual report, provide the calculation of certain ratios and measures of financial performance, which are used by our management to analyze the evolution and results of our company. Some of the ratios and measures of financial performance presented by us are either non-IFRS or use non-IFRS inputs. This non-IFRS information should not be construed as an alternative to IFRS measures. The ratios and measures of financial performance as determined and measured by us should not be compared to similarly titled measures reported by other companies as other companies may calculate and report such measures differently.

ROAA and ROAE

ROAA, which is calculated as net income divided by average assets, provides a measure of return on assets. ROAE, which is calculated as net income attributable to owners of the parent, divided by average equity attributable to owners of the parent, provides a measure of the total return generated from our company and our subsidiaries for shareholders. Net income attributable to non-controlling interest divided by net income, provides an indication of non-controlling interest ownership of Grupo Aval’s consolidated subsidiaries net income; where a higher ratio typically implies that higher net income was generated in subsidiaries in which Grupo Aval has lower ownerships and vice versa.

The following table sets forth ROAA, ROAE and Net income attributable to non-controlling interest divided by net income for Grupo Aval for the indicated years.

Year ended December 31, 

 

    

2020

    

2019

    

2018

 

(in Ps billions, except percentages)

 

Grupo Aval (consolidated):

 

  

 

  

Average assets(1)

 

317,797.0

 

267,058.8

 

240,905.4

Average equity attributable to owners of the parent(2)

 

20,146.5

 

18,521.1

 

16,349.5

Net income

 

4,631.6

 

5,365.5

 

5,184.6

Net income attributable to owners of the parent

 

2,349.5

 

3,034.4

 

2,912.7

Net income attributable to non-controlling interest

 

2,282.1

 

2,331.0

 

2,271.9

ROAA(1)

 

1.5%

2.0%

2.2%

ROAE(2)

 

11.7%

16.4%

17.8%

Net income attributable to non-controlling interest divided by net income

 

49.3%

43.4%

43.8%


(1)For methodology used to calculate Average assets and ROAA, see note (2) to the table under “Item 3. Key Information—A. Selected financial data—Other financial and operating data”.

9


(2)For methodology used to calculate Average equity attributable to owners of the parent and ROAE, see note (3) to the table under “Item 3. Key Information—A. Selected financial data—Other financial and operating data”.

B.          Capitalization and indebtedness

Not applicable.

C.          Reasons for the offer and use of proceeds

Not applicable.

D.          Risk factors

Our business, financial condition and results of operations could be materially and adversely affected if any of the risks described below occur. In such an event, the market price of our preferred shares or our American Depositary Shares, or ADSs, could decline, and you could lose all or part of your investment. We may face additional risks and uncertainties that are not presently known to us, or that we currently deem immaterial, which may also impair our business.

Summary

The following summarizes some, but not all, of the risks provided below. Please carefully consider all of the information discussed in this Item 3.D. “Risk Factors” in this annual report for a more thorough description of these and other risks:

Risks relating to Colombia and other countries in which we operate:
owe are exposed to adverse economic and political conditions in Colombia and other countries in which we operate, including variations in the exchange rates or downgrades in credit ratings of sovereign debt securities;
owe are exposed to the vulnerability to external shocks of the Colombian and Central American economies;
owe are exposed to internal security issues that have had or could have a negative effect on the Colombian economy;
owe are exposed to political and economic instability in the region;
owe are exposed to changes in Government policies and actions, as well as judicial decisions in Colombia and other countries in which we operate that could significantly affect the local economy;
owe are exposed to violations of anti-corruption laws and other laws in the jurisdictions in which we operate;
owe are exposed to risks related to our participation in government enforcement actions and/or ongoing governmental investigations;
owe are exposed to changes in tax regulations or the interpretation thereof that could result in new or higher taxes as well as Colombian tax haven regulations;
owe are exposed to natural disasters, acts of war or terrorism, rioting or other external events;
owe are exposed to public health threats such as the coronavirus outbreak and other pandemic diseases; and
owe are exposed to risks related to global climate change and environmental requirements;

Risks relating to our businesses and industry
oRisks relating to our banking business

we are exposed to a deterioration in asset quality, including the loan portfolios of our banking subsidiaries;
we are exposed to the inability of our banking subsidiaries to realize on collateral or guarantees of secured loans;
we are exposed to limitations on the ability of our banking subsidiaries to collect on monetary obligations and enforce rights against collateral or under guarantees imposed by Colombian and Central American insolvency laws;
we are exposed to failures of our risk management processes, including credit and market risk;
we are exposed to declines in the value of our banks’ sovereign debt portfolios;
we are exposed to counterparty risk;
we are exposed to market and operational risks associated with derivatives transactions;
we are exposed to liquidity risk;
we are exposed to defaults by one or more of our largest borrowers;
we are exposed to downgrades in our long-term credit ratings or in the credit ratings of our banking subsidiaries;
we are exposed to prepayment risk;
we are exposed to high competition in the credit card industry;
10

we are exposed to changes in banking and financial services laws and regulations in Colombia and the other countries in which we operate;
we are exposed to changes in accounting standards;
we are exposed to regulatory actions that may result in fines, penalties or restrictions;
we are exposed to legal and other challenges to maximize revenue from credit card fees and other fees from customer; and
we are exposed to the failure to protect personal information.

oRisks relating to our merchant banking business

we are exposed to difficult market conditions that could affect Corficolombiana;
we are exposed to Corficolombiana’s inability to realize profits from illiquid assets, which represent a significant part of its investments;
we are exposed to risks derived from Corficolombiana holding minority interest in other companies;
we are exposed to the concentration of Corficolombiana’s investments in five industries; and
we are exposed to a variety of other issues outside of our control.

oRisks relating our pension and severance fund management business

we are exposed to risks derived from the highly regulated market in which Porvenir operates; and
we are exposed to risks derived from the management of a significant amount of debt securities in pension and severance funds issued or guaranteed by the Colombian Government.

oOther risks relating to our businesses

we are exposed to fluctuations in interest rates and other market risks;
we are exposed to our inability to effectively manage risks associated with the replacement of benchmark indices;
we are exposed to fluctuations between the value of the Colombian peso or other local currencies where we operate, and the U.S. dollar;
we are exposed trading risks with respect to our trading activities;
we are exposed to limitations on interest rates;
we are exposed to limitations on the ability of residents to obtain loans denominated in foreign currency;
we are exposed to constitutional actions, class actions and other legal actions involving claims for significant monetary awards against financial institutions;
we are exposed to risks derived from acquisitions and strategic partnerships not performing in accordance with expectations, failing to receive required regulatory approvals or disrupting our operations;
we are exposed to risks derived from our inability to manage our growth successfully;
we are exposed to operational risks;
we are exposed to risks derived from the failure of our information systems;
we are exposed to cybersecurity threats;
we are exposed to risks derived from our inability to detect money laundering and other illegal or improper activities fully or on a timely basis;
we are exposed to competition and consolidation in the Colombian and Central American banking and financial industry;
we are exposed to risks derived from our dependency on our senior management and Board of Directors;
we are exposed to reputational risk; and
we are exposed to risks derived from conflicting interests between our controlling shareholder and other common, preferred shareholders and ADS holders.

Risks relating to our Central American operations
owe are exposed to risks derived from our inability to address the challenges and risks presented by our operations in countries outside Colombia;
owe are exposed to our dependency on BAC’s and MFG’s current senior management;
owe are exposed to changes in credit card regulations; and
owe are exposed to compliance risks in connection with a multi-jurisdictional regulatory regime.

Risks relating to our preferred shares and ADSs
owe are exposed to exchange rate volatility;
owe are exposed to restrictions on purchases of our preferred shares;
11

owe are exposed to risks derived from the relative illiquidity of the Colombian securities markets;
owe are exposed to risks derived from our inability to continue to develop or maintain an active market for our preferred shares and ADSs;
owe are subject to different corporate rules and regulations than those available in other jurisdictions which may make it more difficult to holders of ADSs and underlying preferred shares to protect their interests;
owe are subject to limitations imposed by Colombian law on our ability to pay dividends on the ADSs or underlying preferred shares;
oholders of ADSs may encounter difficulties in the exercise of dividend rights and in the limited voting rights of our preferred shares;
oour status as a foreign private issuer allows us to follow alternate standards to the corporate governance standards of the NYSE;
opreemptive rights may not be available to holders of preferred shares or ADSs;
oour ability to make payments on the ADSs may be adversely affected if we become unable to convert Colombian pesos to U.S. dollars or to transfer U.S. dollars abroad;
owe are exposed to price variations as a result of being traded on more than one market;
oif holders of ADSs surrender their ADSs and withdraw preferred shares, they may face adverse Colombian tax consequences;
obanking regulations, accounting standards and corporate disclosure applicable to us differ from those in the United States and other countries;
ojudgments of Colombian courts with respect to our preferred shares will be payable only in pesos; and
oU.S. investors in our preferred shares or the ADSs may find it difficult or impossible to enforce service of process and enforcement of judgments against us and our officers and directors.

Risks relating to Colombia and other countries in which we operate

Adverse economic and political conditions in Colombia and other countries in which we operate, including variations in the exchange rates or downgrades in credit ratings of sovereign debt securities, may have an adverse effect on our results of operations and financial condition.

Our principal subsidiaries in Colombia are financial institutions (four commercial banks, a pension and severance fund administrator and a merchant bank), and the majority of our operations, properties and customers are located in Colombia. As a consequence, our results of operations and financial condition are materially affected by economic and political conditions in Colombia.

Colombia is subject to economic, political and other uncertainties, including changes in monetary, exchange control and trade policies that could affect the overall business environment in Colombia, which would, in turn, affect our results of operations and financial condition. For example, the Central Bank of Colombia (the “Colombian Central Bank” or “Central Bank”), could sharply raise or lower interest rates, which could negatively affect our net interest income and asset quality, and also restrict our growth. Variations in exchange rates could also negatively affect the foreign currency positions of our borrowers or our or our subsidiaries’ solvency, liquidity or profitability. Any of these events could have an adverse effect on our results of operations and financial condition.

Decreases in the growth rate of the Colombian economy, periods of negative growth, material increases in inflation or interest rates, or high fluctuations in the exchange rate could result in lower demand for, or affect the cost of risk and the pricing of our services and products. Due to the fact that a large percentage of the costs and expenses of our subsidiaries is fixed, we may not be able to reduce costs and expenses upon the occurrence of any of these events, in which case our profitability could be affected.

In the case of our pension and severance fund management business, economic conditions may affect the businesses and financial capacity of employers, which may result in a reduction in employee-contributor head counts or decrease the ability of employers to create new jobs or increase employee incomes and could reduce returns on “stabilization reserves” and/or performance-based fees.

Our results of operations and financial condition also depend on economic, political and social conditions in other countries where our non-Colombian subsidiaries operate, primarily in Central America. The political, economic and social environments in such countries are affected by many different factors, including significant governmental influence over local economies, substantial fluctuations in economic growth, high levels of inflation, exchange rate movements, exchange controls or restrictions on expatriation of earnings, high domestic interest rates, civil strife, political instability, drug trafficking and other forms of organized crime, wage and price controls, changes in tax policies, imposition of trade barriers, changes in the prices of commodities and unexpected changes in regulation. The results of operations and financial condition of our Central American operations could be affected by changes in economic and other policies of each country’s government, which have exercised and continue to exercise substantial influence over many aspects of the private sector, and by other social and political developments in each country.

12


Adverse economic, political and social developments, including allegations of corruption against the Colombian Government and governments of other countries in which we operate in Central America, may adversely affect demand for banking services and create uncertainty regarding our op