UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report Of Foreign Private Issuer
Pursuant To Rule 13a-16 Or 15d-16 Of
The Securities Exchange Act Of 1934 |
For the month of April 2013
Commission File Number: 000-54290
Grupo Aval Acciones y Valores S.A.
(Exact name of registrant as specified in its charter)
Carrera 13 No. 26A - 47
Bogotá D.C., Colombia
(Address of principal executive office)
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 | X | Form 40-F | ____ |
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Yes | ____ | No | X |
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
Yes | ____ | No | X |
GRUPO AVAL ACCIONES Y VALORES S.A.
TABLE OF CONTENTS
ITEM | |
1. | Notice of payment of certain loans disbursed by Adminegocios & Cía S.C.A. to Grupo Aval |
2. | Resolutions approved by Grupo Aval’s Ordinary General Shareholders’ Meeting held on September 28, 2012 |
3. | Unaudited Unconsolidated Individual Income Statement and Balance Sheet for the quarter ended September 30, and semester ended June 30, 2012 |
4. | Management Report - Second Semester 2012 |
5. | Management Report - First Semester 2012 |
THIS IS A FREE TRANSLATION OF THE SPANISH VERSION ORIGINAL
Item 1
Grupo Aval Acciones y Valores S.A. (“Grupo Aval”) informs that on April 19, 2012, the Company paid certain loans disbursed by Adminegocios & Cía S.C.A. to Grupo Aval for a sum equivalent to $353,703,358,388.15.
THIS IS A FREE TRANSLATION OF THE SPANISH VERSION ORIGINAL
Item 2
On September 28, 2012 Grupo Aval Acciones y Valores S.A. (“Grupo Aval”) informed the following:
Grupo Aval’s Ordinary General Shareholders’ Meeting held on September 28, 2012:
1. | Approved the company’s financial statements, management report and other attachments, for the six month period ended on June 30, 2012. It further approved the following proposed distribution of profits: |
GRUPO AVAL ACCIONES Y VALORES S.A.
PROPOSED DISTRIBUTION OF PROFITSColombian GAAP (in Ps) | |||||||||
Net Income | 722,574,133,093.10 | ||||||||
With tax benefit | 722,574,133,093.10 | ||||||||
Plus | |||||||||
Occasional reserve release for the General Shareholders' Meeting disposal | 2,461,055,649,677.39 | ||||||||
With Tax-Benefit | 2,000,363,050,820.56 | ||||||||
Year 2011 - Second Semester | |||||||||
Without Tax-Benefit | 460,692,598,856.83 | ||||||||
Total Income available for the General Shareholders' Meeting disposal | 3,183,629,782,770.49 | ||||||||
a) To constitute a Legal Reserve of up to 50% | 2,304,191,647.67 | ||||||||
of the outstanding capital pursuant to Article 452 | |||||||||
of the Code of Commerce | 2,304,191,647.67 | ||||||||
b) To distribute a cash dividend of $ 4 per share per month, from October of 2012, to March of 2013, including these two months as follows: | 445,242,394,872.00 | ||||||||
Over 18,551,766,453 common and preferred outstanding shares | |||||||||
With tax benefit: | |||||||||
Year 2011 - Second Semester | 445,242,394,872.00 | ||||||||
Dividends shall be paid within the first ten (10) days of each month to shareholders at the moment each payment is due, according to applicable regulations and in relation to their paid portion at the moment such dividend is due. | |||||||||
Note: In accordance with Decree 4766 of 2011 and the regulation of Colombian Stock Exchange, dividends for the month of October 2012, ill be paid from the fourth trading day following the date in which the shareholders´ general assembly approved the distribution of profits, which is from October 4, 2012. In this month, dividends will be paid until october 16, 2012. | |||||||||
Occasional reserve for disposal at the General Shareholders' Meeting | 2,736,083,196,250.82 | ||||||||
Total with tax benefit | 2,275,390,597,393.99 | ||||||||
Year 2012 - First semester - with tax benefit | 722,574,133,093.10 | ||||||||
Year 2011 - Second Semester - with tax benefit | 1,552,816,464,300.89 | ||||||||
460,692,598,856.83 | |||||||||
Year 2011 - Second Semester - without tax benefit | 460,692,598,856.83 | ||||||||
TOTAL | 3,183,629,782,770.49 |
2. | Accepted the resignation of Mr. Guillermo Fernandez de Soto Valderrama and elected as members of the Board of Directors, for the period ending on March 31, 2013, the following individuals: |
PRINCIPAL | ALTERNATE | |
Luis Carlos Sarmiento Angulo | José Hernán Rincón Gómez | |
Alejandro Figueroa Jaramillo | Juan María Robledo Uribe | |
Efraín Otero Álvarez | Juan Camilo Ángel Mejía | |
Mauricio Cárdenas Müller | Gabriel Mesa Zuleta | |
Álvaro Velásquez Cock | Ana María Cuellar de Jaramillo | |
Antonio José Urdinola Uribe (*) | Enrique Mariño Esguerra (*) | |
Esther América Paz Montoya (*) | Germán Villamil Pardo (*) | |
(*) Independent members (under Colombian law). |
THIS IS A FREE TRANSLATION OF THE SPANISH VERSION ORIGINAL
Item 3
Grupo Aval Acciones y Valores S.A. Non Audited - Individual Income Statement |
September 30 | June 30 | |||||||
Operating Revenues | ||||||||
Interest | $ | 13,818 | 36,220 | |||||
Financial Returns | 27 | 145 | ||||||
Income–Participation Method | 340,748 | 825,729 | ||||||
Recoveries from Equity changes | 19,045 | 18,069 | ||||||
Total Operating Revenues | 373,638 | 880,163 | ||||||
Loss-Participation Method from changes in Equity | 205 | 35,319 | ||||||
Gross Profit | 373,433 | 844,844 | ||||||
Operating, sales and administration expenses | ||||||||
Personnel expenses | 5,408 | 9,901 | ||||||
Fees | 1,308 | 8,567 | ||||||
Industry and Commerce | 2,361 | 5,128 | ||||||
Tax on financial transactions | 1,082 | 3,667 | ||||||
VAT - deductible | 0 | 1,127 | ||||||
Rentals | 182 | 360 | ||||||
Contributions and memberships | 0 | 151 | ||||||
Insurance | 0 | 4 | ||||||
Services | 289 | 593 | ||||||
Legal expenses | 0 | 8 | ||||||
Maintenance and repairs | 1 | 29 | ||||||
Fittings and installation | 0 | 8 | ||||||
Travel expenses | 9 | 123 | ||||||
Depreciations | 44 | 91 | ||||||
Amortization of intangibles | 2,980 | 5,552 | ||||||
Amortization of deferred assets | 5,821 | 11,619 | ||||||
Reserve - Negotiable Investments | 2 | 3 | ||||||
Operational expenses- sales | 1,202 | 563 | ||||||
Sundry | 103 | 214 | ||||||
Total operating, sales and administration expenses | 20,792 | 47,708 | ||||||
Operating Profit | 352,641 | 797,136 | ||||||
Non-Operating Revenues | ||||||||
FX Differential | 1 | 57 | ||||||
Fees | 9,678 | 21,938 | ||||||
Services | 1 | 2 | ||||||
Recoveries | 6 | 119 | ||||||
9,686 | 22,116 | |||||||
Non-operating expenses | ||||||||
Financial Expenses | 40,114 | 90,590 | ||||||
Sundry | 3 | 52 | ||||||
40,117 | 90,642 | |||||||
Non-operating profit - Net | (30,431) | (68,526) | ||||||
Earnings before Income Tax | 322,210 | 728,610 | ||||||
Income and Complementary Tax | (3,018) | (6,036) | ||||||
Earnings of the Period | $ | 319,192 | 722,574 |
LUIS CARLOS SARMIENTO GUTIÉRREZ President | MARÍA EDITH GONZÁLEZ FLÓREZ Accountant CPA No. 13.083-T | |
Disclaimer | ||
This information includes the individual non-audited balance sheet and the individual non-audited profit and loss statements as of September 30, 2012, compared with the audited financial statements as of June 30, 2012. This publication is made for illustrative purposes only taking into account that part of the information has not been audited nor approved by the General Shareholders' Meeting of Grupo Aval Acciones y Valores S.A. Moreover, the information contained in this document may be subject to modification. This information shall not be used for investment decision purposes and is not indicative of future results. |
Grupo Aval Acciones y Valores S.A. Non Audited Balance Sheet |
Assets | September 30 | June 30 | Liabilities and Shareholders Equity | September 30 | June 30 | |||||||||||||||
Current Assets: | Current Liabilities: | |||||||||||||||||||
Available | $ | 1,004,110 | 1,079,732 | Financial Obligations | $ | 100,045 | 84,595 | |||||||||||||
Negotiable Investments, net | 1,972 | 1,832 | Suppliers | 1,193 | 62 | |||||||||||||||
Short term debtors | 373,555 | 169,667 | Accounts Payable | 536,160 | 290,524 | |||||||||||||||
Taxes, dues and levies | 12,434 | 14,177 | ||||||||||||||||||
Labor related debt | 714 | 714 | ||||||||||||||||||
Estimated Liabilities and provisions | 9,869 | 7,368 | ||||||||||||||||||
Deferred Charges | 16,721 | 22,397 | Other Liabilities | 1,978 | 2,105 | |||||||||||||||
Bonds outstanding | 125,751 | 125,750 | ||||||||||||||||||
Total Current Assets | 1,396,358 | 1,273,628 | Total Current Liabilities | 788,144 | 525,295 | |||||||||||||||
Equity Tax | 11,464 | 17,196 | ||||||||||||||||||
Financial Obligations | 1,050,872 | 1,069,155 | ||||||||||||||||||
Bonds outstanding | 724,249 | 724,250 | ||||||||||||||||||
Permanent Investments, net | 10,346,733 | 9,508,186 | Total Liabilities | 2,574,729 | 2,335,896 | |||||||||||||||
Shareholders Equity: | ||||||||||||||||||||
Properties, Plant & Equipment - Net | 475 | 500 | ||||||||||||||||||
Social Capital | 18,552 | 18,552 | ||||||||||||||||||
Intangibles - Net | 414,976 | 417,954 | Capital Surplus | 5,625,913 | 4,780,564 | |||||||||||||||
Reserves | 2,745,359 | 2,468,028 | ||||||||||||||||||
Deferred Charges -Net | 428 | 571 | Revaluation of Shareholders Equity | 875,225 | 875,225 | |||||||||||||||
Earnings of the Period | 319,192 | 722,574 | ||||||||||||||||||
Revaluations | 7,190,632 | 8,172,547 | Revaluations | 7,190,632 | 8,172,547 | |||||||||||||||
Total Shareholders Equity | 16,774,873 | 17,037,490 | ||||||||||||||||||
Total Liabilities and Shareholders Equity | ||||||||||||||||||||
Total Assets | $ | 19,349,602 | 19,373,386 | $ | 19,349,602 | 19,373,386 | ||||||||||||||
Debtor Memo Accounts: | Creditor Memo Accounts: | |||||||||||||||||||
Debtor - Fiscal | 11,593,647 | 11,593,647 | Debtor-fiscal contra-account | 11,593,647 | 11,593,647 | |||||||||||||||
Debtor - Control | 943,451 | 962,290 | Debtor-control contra-account | 943,451 | 962,290 | |||||||||||||||
Credit - Contingent contra-account | 2,880,832 | 1,070,760 | Creditor – Contingent | 2,880,832 | 1,070,760 | |||||||||||||||
Credit - Control - contra-account | 875,225 | 875,225 | Creditor - Control | 875,225 | 875,225 | |||||||||||||||
Credit - Fiscal contra-account | 11,917,482 | 11,917,482 | Creditor - fiscal | 11,917,482 | 11,917,482 | |||||||||||||||
Total Memo Accounts | $ | 28,210,637 | 26,419,404 | Total Memo Accounts | $ | 28,210,637 | 26,419,404 |
LUIS CARLOS SARMIENTO GUTIÉRREZ President | MARÍA EDITH GONZÁLEZ FLÓREZ Accountant CPA No. 13.083-T | |
Disclaimer | ||
This information includes the individual non-audited balance sheet and the individual non-audited profit and loss statements as of September 30, 2012, compared with the audited financial statements as of June 30, 2012. This publication is made for illustrative purposes only taking into account that part of the information has not been audited nor approved by the General Shareholders' Meeting of Grupo Aval Acciones y Valores S.A. Moreover, the information contained in this document may be subject to modification. This information shall not be used for investment decision purposes and is not indicative of future results. |
THIS IS A FREE TRANSLATION OF THE SPANISH VERSION ORIGINAL
Item 4
Grupo Aval Acciones y Valores S.A. Non Audited Balance Sheet |
Board of Directors
President of the Board of Directors
Luis Carlos Sarmiento Angulo
Principals
Luis Carlos Sarmiento Angulo
Alejandro Figueroa Jaramillo
Efrain Otero Alvarez
Mauricio Cardenas Müller
Alvaro de Jesus Velásquez
Antonio José Urdinola Uribe
Esther América Paz Montoya
Alternates
José Hernán Rincón Gómez Juan María Robledo Uribe Juan Camilo Angel Mejía Gabriel Mesa Zuleta
Ana María Cuéllar de Jaramillo Enrique Marino Esguerra Germán Villamil Pardo
Secretary
Luis Fernando Pabón Pabón
Fiscal Auditor
Lida Marcela Herrera Vargas
Member of KPMG Ltda.
SENIOR MANAGEMENT
Luis Carlos Sarmiento Gutiérrez
President
Jorge Adrián Rincón P. Chief Legal Counsel | Luz Karime Vargas H. Manager – Internal Audit |
Diego Fernando Solano | Diego Rodriguez Piedrahita | Rodolfo Velez Borda | Carlos Ernesto Perez | Rafael Eduardo Neira |
Senior Vice President | Senior Vice President | Senior Vice President | Senior Vice President | Senior Vice President |
Finance | Risk | Shared Services | Strategy | |
Maria Edith Gonzalez | Edgar Enrique Lasso | Juan Guillermo Amaya | Mauricio Maldonado | |
Accounting Consolidation | Operational and Regulatory | Technology Vice President | Strategy Vice President | |
Vice President | Risk Vice President | |||
Tatiana Uribe Beninghoff | Maria José Arango C. | José Manuel Ayerbe | ||
Financial Planning and Relations with | Corporate Purchases | Corporate Marketing | ||
Investors Manager | Vice President | Vice President | ||
CONTENTS
Management Report
Graphs
Financial Statements with Opinion of Fiscal Auditor
Consolidated Financial Statements with Opinion of Fiscal Auditor
4
Management Report
Second Semester 2012
Bogota D.C.
Misters
Shareholders:
Preliminary data leads us to conclude that 2012 will be a year of macroeconomic contrast. On the one hand, both inflation and unemployment register a positive performance while the exchange rate – although stable- worries exporters, who would prefer devaluation of the Peso to add value to their exports in domestic currency. On the other hand, the growth locomotives of the Government are hardly moving at half speed specially in matters regarding the announced works in road infrastructure that seem never to materialize. It is for these reasons that, in contrast with the mentioned positive macroeconomic data, preliminary growth data is not so pleasant. It may be anticipated that growth for 2012 will be significantly lower than in 2011. Banco de la Republica seems to understand so and has for this reason lowered its intervention rate, almost restless, during the last three months. The bank expects to incentive growth through application of this policy. We expect that the bank is right for industry, which had virtually no growth during 2012, to react and take –once more- the path of growth. Of equal importance will be that Government may reach agreement with the various fundamental sectors of the economy such as coal, cocoa, coffee and transportation, all of which are threatening or are already in work strike activity. We also expect that this may be done without excess grants. We hopefully look at the peace conversations that are taking place at La Habana and wish them luck.
Some data known at this instance on economic performance for 2012 are as follows:
During the third quarter of 2012 the Colombian economy grew 2.1%1 when compared with the same quarter in 2011. When compared with the immediately prior quarter, it declined 0.7%. The accumulated variation for the nine months of 2012 compared to the same period in 2011 was 3.9%. For 2012, Banco de la Republica estimated a projection of GDP growth in the 3.0% to 5.0% range. For all it is known, it would seem that in a best scenario, real growth would be at the middle of the range.
On the one hand, as we stated before, the labor market registered favorable dynamics. According to information released by the National department of Statistics (DANE), at the close of December the unemployment rate reached 9.6%, that is fulfilling the limit of the one digit target set by the Government.
As to inflation, that ended 2012 at 2.44%, performance during the second semester does once more reflect the asserted management of Banco de la Republica. In summary, this important ratio does progressively converge below 3%, which corresponds to the long term target set by the Board of Directors of Banco de la Republica.
Seeking to encourage a reduction in the internal demand for consumer credit, the Board of Directors of Banco de la Republica successfully lowered by 25 basis points the intervention rate during the second semester of 2012 to reach 4.25%; later on, facing the continued weakening of the domestic economy, on 28th January and 22 February 2013, such rate was further lowered 25 basis points each time to finally rest at 3.75%. Additionally, trying to contain the appreciation of the Colombian peso, the Board of Directors of Banco de la Republica opted for the purchase of US$5,413.6 million during the months of January and February of 2013 through the mechanism of direct purchase auctions.
The performance of the economy
Regarding observed growth of the Colombian economy, its Gross Domestic Product (GDP) for the third quarter of 2012 grew by 2.1% when compared to the same period in 2011. Versus the immediately prior quarter, GDP declined 0.7%.1
The analysis of the resulting GDP for the third quarter of 2012 when compared with the same period in 2011 by branch of activity allows determination of the following annual sector variations: 0.5% in exploitation of mines and quarries, -12.3% in construction; 4.4% in financial establishments, insurance, real estate and corporate services; 3.3% in transportation, warehousing and communications; 3.7% in commerce, repair services, restaurants and hotels; 3.3% in electricity, city gas and water; 5.3% in social services, communitarian and personal services; 4% in agriculture, forestry, hunting and fishing; and -0.1% in the manufacturing industry. Total tax revenues increased by 2.2% when compared to the same period in 2012.
Regarding industrial performance, as per the last released date from the Joint Poll on Industrial Opinion conducted by ANDI in 2012, production grew 0.7%, total sales increased 2.3% and sales to the domestic market rose 2.1%. On the other hand, utilization of installed capacity reached 76.5% in 2012 above the historic average of 76.4%. Another economic predictor is the domestic demand for energy, which increased 3.87% on an accumulated basis during the period January-December of 2012 (59,364.1 GWh) when compared to the same period in 2011 (57,150.2 GWh).
1 DANE - Gross Domestic Product – Third Quarter 2012 – Base 2005
5
The general Index of the Colombian Stock Exchange (IGBC) closed at 14,175.8 points at the end of the second semester of 2012, which represents a 9.68% increase during the semester and a 16.19% increase during 2012.
Economic ratios with effect on the consumer
According to DANE, as of the closing of December 2012, unemployment at the national level reached 9.6%, a figure below that of December 2011 (9.8%). In December 2012, the sub-employment rate remained high at the 30.0% level.
Regarding inflation rate, the variation of the Consumer Price Index (CPI) registered for the period January – December 2012 was 2.44%, a rate below by -1.29 percent points that of December 2011 (3.73%). In the second semester of 2012, CPI was 2.01%, thus registering a decline of -1.72 points when compared to December 2011
Fiscal Balance
As of the closing of the third quarter of 2012, the Consolidated Public Sector (CPS) registered a fiscal surplus equivalent to 4.3% of GDP, a result that surpasses that of the same period in 2011, a surplus of 2.1% of GDP.
The External Sector
As to the trade balance, the period January-December 2012 registered a surplus of US$4,915.4 million FOB, from a surplus – in the same period in 2011- of US$5,422.1 million FOB; this change is explained by a larger export than import growth. Exports moved from US$57,420.3 million FOB as of the closing of 2011 to US$60,666.5 million FOB at the closing of 2012 (a 5.65% increase) that compares with a 7.2% increase in imports, from US$51,998.2 million FOB to US$55,751.1 million FOB.
Colombia continues to hold an adequate level of international reserves with a balance of US$37,466.6 million in December 2012, higher by US$5,166.2 million (16.0%) to the figure registered in December 2011 (US$32,300.4 million) and larger by US$3,201.1 million (6.1%) over that registered in June 2012 (US$34,265.5 million). The above, notwithstanding that in Banco de la Republica made net foreign currency purchases of US$ 4,843.8 million in the FX market, amount that, when compared to net purchases during the same period in 2011 (US$ 3,719.9 million), translated into a US $1,123.9 million increase.
Regarding evolution of the Price of the Colombian peso in terms of the US dollar, the nominal rate of Exchange closed at Col$1,768.23 for a revaluation of 0.9% during the second semester of 2012 (Col$1,784.60 in June 2012). During the twelve month period ended in December 2012, the Price of the US dollar moved from Col$1,942.70 to Col$1,768.23 which represents a peso revaluation of 9.0%.
The spread over comparable US Bonds in the Bond Index for Emerging Markets for Colombia, (EMBI Colombia closed at 117 points in December 2012 for a 40 basis points decline when compared to the level posted in June 2012 (157 basis points) and a 74 basis points decline versus December 2011 (191 basis points).
Recent performance of the financial sector and of the Entities in which Grupo Aval has Direct Investment
Certain figures are worthy of mention. Total assets of the sector reached the amount of Col$358,600 billion, growing 13.9% when compared to December 2011 (Col$314,900 billion); during the second semester of 2012 this caption grew 7.9% (Col$26,200 billion) moving from Col $332,400 billion in June 2012 to Col$358,600 billion in December 2012. Total fixed rate investments of the sector rose by 9.9% ($4,600 billion), moving from Col $46,900 billion in December 2011 to Col$51,500 billion in December 2012; during the second semester fixed rate investments of the sector grew 4.7% (Col$2,300 billion) from Col $49,200 billion in June 2012 to Col$51,500 billion in December 2012. Participation of fixed rate investments in total assets of the sector declined by 52 basis points in 2012, falling from 14.89% to 14.37%; participation of TES in fixed rate investments grew 329 basis points, moving from 70.48% in December 2011 to 73.77% in December 2012. Net loan portfolio rose 13.9% during 2012, moving from Col$203,400 billion in December 2011 to Col$234,300 billion in December 2012; for the second semester of 2012, this caption grew 7.9% moving from Col$216,100 billion in June 2012 to Col $234,300 billion in December 2012. Growth of net loan portfolio of the banking sector by segment of activity is detailed as follows. Commercial loan portfolio rose 13.2% from Col $127,900 billion in December 2011 to Col $144,800 billion in December 2012; consumer loan portfolio grew 16.9% moving from Col $55,100 billion in December 2011 to Col$64,500 billion in December 2012; micro-credit loan portfolio increased 18.9% moving from Col $5,600 billion in December 2011 to Col$6,600 billion in December 2012 and mortgage loan portfolio rose by 24.4% from Col$15,000 billion in December 2011 to Col$18,700 billion in December 2012. The loan portfolio quality ratio declined by 0.3%, moving from 2.5% in December 2011to 2.8% in December 2012. For entities specialized in the mortgage sector, at the closing of 2012 this ratio reached 3.5%. On the other hand, coverage of past due loan portfolio of the banking sector declined from 183.8% in December 2011 to 162.1% in December 2012.
As to Foreclosed assets (BRPs), the banking sector evidenced an unfavorable performance with net outstanding balance of Col$194,174 million in December 2011 increasing to Col$325,034 million in December 2012 (167.4%). The mortgage sector, during the same period, increased its outstanding BRPs net balance from Col$52,170 million to Col$110,597 million (112.0%). As of the closing of December 2012, net outstanding balance of BRPs accounts for 0.09% of total assets of the system.
For the twelve-month period ending December 2012 the overall banking sector posted earnings of Col$6,880 billion (Col $3,600billion between January and Junes 2012 a figure higher by Col $7 billion (11.4%) to the Col $6,180 billion posted for the same period in 2011
6
(Col$3,120 billion between January and June 2011 and Col$3.060 billion between July and December 2011). Some 79.6% of earnings posted by the sector in 2012 (Col$5,470 billion) correspond to domestic private entities which, at the closing of 2012 accounted for 76.1% of total assets of the system (Col$273.000 billion) while public entities, controlling 5.2% of the assets of the system (Col$18,600 billion) accounted for 7.4% of earnings (Col$510 billion). On the other hand, private foreign entities, controlling 18.7% of total assets of the system (Col$67,000 billion) posted earnings equivalent to 13.0% of the total, that is Col$90 billion.
On the other hand the financial entities in which Grupo Aval holds direct participation (Banco de Bogota, Banco de Occidente, Banco Popular, Banco AV Villas) reported net earnings of Col$2,403,466 million (Col$1,103,379 million at 30 June 2012 and Col$1,300,087 million during the second semester of 2012), higher by 15.9% over those reported by these same entities during the same period in 2011, which reached Col Col$2,073,296 million (Col$989,264 million during the first semester of 2011 and Col$1,084,033 million during the second semester of 2011). Should these figures be added to earnings yielded during the same period by Sociedad Administradora de Fondos de Pensiones y Cesantias Porvenir S.A., total earnings would rise to Col$2,615,326 million, a figure that registers a 17.5% over that posted for the same period in 2011 (Col$2,226,616 million).
In terms of net loan portfolio and deposits for 2012, the entities in which Grupo Aval holds direct investment, as a whole grew by 16.1% and 15.4%, respectively. On the other hand, the total banking sector did during the same period register growth of, respectively, 15.2% and 18.0% in net loan portfolio and deposits.
7
Most relevant regulatory measures
During the second semester of 2012 various regulatory measures were enacted that, due to their important effects over the results of entities in the sector, are contemplated and summarized in Annex No. 1 hereto.
Activities pursued in development of corporate purpose
During the second semester of 2012 Grupo Aval engaged in the following activities:
l |
Vice Presidency - Shared Services
During the second semester of 2012 the Vice Presidency of Shared Services provided technologic support to the activities of the company and supported other entities of Aval in the following projects and areas of activity:
· | Aval Services Network |
· | Banking Core |
· | Accounting Consolidation |
· | BI (Business Intelligence) |
· | New Credit Card Solution and homologation of processes |
· | Transactional Internet |
· | Internet and Intranet Websites |
· | Cash management |
· | Process Automation |
· | Informatics Security |
· | Systems Management |
· | Management of Technological Infrastructure |
· | Computer Back-up Centers |
· | Technological Architecture for Service Integration |
· | Management of technological Projects and Technologic Support |
· | Training |
· | Corporate negotiation with suppliers |
Vice Presidency - Risk
· | The Vice Presidency of Risk supported those entities in which Grupo Aval holds direct investments in areas such as analysis of credit risk and structuring of credit transactions with most significant common institutional customers, using tools internally developed by Grupo Aval, oriented to ensure that credit transactions enjoy credit standards and to measure yields in accordance with the underlying credit risk, opportunity cost and use of patrimonial resources. |
· | In a similar manner, it continued to study better practices for analysis of credit and operational risk in order to submit such policies to consideration for their adoption by the entities in which Grupo Aval holds direct investment. |
· | It provided support to those entities in which Grupo Aval holds direct investment in the evaluation of tools for implementation of systems for administration of operational risks (SARO) and asset laundering and financing of terrorism (SARLAFT). Also, it accompanied the development and implementation of the Plan for Business Continuity (PCN). |
· | The Vice Presidency assumed the function of Compliance Officer for Grupo Aval, thus ensuring due compliance with all dispositions in SARLAFT. |
· | The Vice Presidency assumed responsibility for ensuring evaluation of internal control systems in the entities in which Grupo Aval holds direct investment within the scope of the Sarbanes-Oxley (SOX) Act. |
Vice Presidency - Finances
· | Analysis of performance of investments controlled by Grupo Aval in terms of competition and budget |
· | Evaluation of possible opportunities for mergers and acquisitions |
· | Follow-up on trends off the financial sector for development of strategies that yield higher value to the shareholders of the Group |
· | Follow-up on trends of financial activity in comparable countries |
8
Vice Presidency – Accounting Consolidation
· | Preparation, follow-up and analysis of performance of the individual and consolidated financial statements of the entities that integrate Grupo Aval |
· | Administration of the financial tool Hyperion to provide support to the entities of the Group in their corporate consolidation processes |
· | Preparation of all reports required to ensure domestic and international compliance under Colgaap, Banking and USGAAP standards |
· | Administration of ERP - SAP for preparation of the financial statements of the parent company Grupo Aval holding |
· | Preparation of all reports required to ensure compliance with domestic regulations and surveillance entities |
· | Compliance with fiscal reporting requirements |
· | Implementation of the accounting system of two foreign subsidiaries: Grupo Aval Limited and Grupo Aval International Limited |
· | Implementation of the Project for accrual of accounts payable-dividends due from third parties |
· | Launching of the corporate Project for adoption of international accounting standards (IFRS) |
Corporate Comptroller
The Office of the Corporate Comptroller carried out audit visits during the second semester of 2012 in development of the annual program submitted to the President of the group. The Comptroller visited Banks, trust companies, the administrator of severance and pension funds, as well as the company that operates the ATM network of the Banks. It also organized training courses for the auditors of Grupo Aval companies in the areas of operational risks, asset laundering and SOX.
Also, follow-up activities were conducted for revision of implementation of programs for enhancement of some entities. Likewise, guidelines were issued to the entities of the Group in areas related to audit, control and informatics security.
Internal Audit
During the second semester of 2012, the Office of the Internal Auditor engaged in audit of the different processes of the Company in fulfillment of the work program approved by the Audit Committee of Grupo Aval. Also, reports were issued on the outcome of said audits for responsible persons to establish action plans and pertinent enhancement measures, which were then matter of follow-up by Internal Audit to ensure improvement of the internal control system of Grupo Aval Acciones y Valores S.A.
Periodic reports were submitted to the Audit Committee of Grupo Aval regarding the outcome of evaluations conducted by the Office of Internal Audit.
Management - Legal Affairs
An active participation in the second issue of common bonds in the foreign capital markets conducted through Grupo Aval Limited, under dispositions in Rule 144A and Regulation S issued in accordance with dispositions in the 1933 Securities Act of the United States of America.
Assessment and support in the process of negotiation of the purchase-sale agreement signed by subsidiary company Sociedad Administradora de Fondos de Pensiones y Cesantias Porvenir S.A. for the acquisition of 99.99% of outstanding shares of BBVA Horizonte Sociedad Administradora de Fondos de Pensiones y Cesantias S.A.
Verification of fulfillment of duties of regulatory nature applicable to Grupo Aval in its capacity as commercial establishment issuer of securities.
Preparation and negotiation of contracts required for the due functioning of the entity; assessment in areas of legal concern resulting from the activity of the company. Supervision and surveillance of trademarks registered by the Grupo Aval in Colombia and abroad, registration of new trademarks, renewal of those coming to maturity and filing of oppositions to applications for registration of trademarks that could lead to confusion with those registered by Grupo Aval.
Follow-up to the legislative agenda of the Government and to regulations issued by its different entities to ensure their due implementation to the interior of Grupo Aval and its subordinated entities, when the case may be.
Answers to all requirements received and to information requests issued by the various entities of the State as well as response to rights to petition submitted to Grupo Aval
9
Results of the Period - Grupo Aval Acciones y Valores S.A
Most relevant financial results of Grupo Aval for the second semester of 2012 are as follows:
Assets
As of 31 December 2012, total assets of Grupo Aval reached the amount of Col $19,762,754 million, for a 2.0% increase from outstanding total assets at 30 June 2012 of Col$19,373,386 million and of 4.6% over outstanding total assets at 31 December 2011 of Col$18,897,256 million. The assets of the company are mainly represented by its investments in Banco de Bogota, Banco de Occidente, Banco Popular, Banco Comercial AV Villas and Sociedad Administradora de Fondos de Pensiones y Cesantias Porvenir.
Liabilities
Total liabilities of Grupo Aval at 31 December 2012 amounted to Col$2,232,447 million, for a decrease of 4.4% from outstanding total liabilities at 30 June 2012 of Col$2,335,896 million and of 17.9% from total liabilities at 31 December 2011 of Col $2,718,886 million. Most relevant liabilities of Grupo Aval are represented by bonds issued by the company, which outstanding balance at 31 December amounted to Col $724,249 million and to loans contracted with related companies which then totaled Col$1,150,917 million.
Shareholder Equity
As of the closing of the second semester of 2012, Shareholders Equity of Grupo Aval totaled Col $17,530,307 million, for an increase of 2.9% from outstanding balance at 30 June 2012 of Col$17,037,490 million and an 8.4% increase from outstanding balance at 31 December 2011 of Col$16,178,370 million.
Net Earnings
For the second semester of 2012 Grupo Aval reported net earnings of Col $802,398 million, a figure higher by Col$79,824 million (11.0%) to that registered at the closing of the first semester of 2012 (Col$722,574 million)and higher by Col $134,836 million (20.2%) to earnings posted at the closing of the second semester of 2011 Col$667,562 million).
Risk Rating
Given the financial strength of Grupo Aval, risk rating company BRC Investor Services S.A. in September 2012 warded a AAA rating to the common bonds issued by the company for a total of Col $724,249 million. This rating evidences the highest credit quality and the highest certainty of payment as well as the virtually non-existence of risk factors.
Results for the main investments of Grupo Aval
At 31 December 2012, Grupo Aval held direct investment in the following entities, subject to the surveillance of the Financial Superintendence of Colombia:
Banco de Bogota S.A.
Grupo Aval is owner of 64.4% of outstanding common shares of Banco de Bogota. Total assets of the bank at 31 December 2012 was Col $49,588,722 million and shareholder equity on said date totaled Col$9,397,400 million. During the second semester of 2012 the bank posted net earnings of Col $733,156 million, a figure that accounts for an increase of 18.7% from that of the first semester of 2012 (Col$617,692 million) and of 23.5% from that of the second semester of 2011 (Col$593,740 million).
Banco de Bogota holds AAA rating for its long term debt, warded by BRC Investor Services S.A. indicating that timely repayment capacity for both principal and interest is extremely high; it is the highest possible investment grade rating. For its short term debt the bank has been awarded rating of BRC1+ also the highest possible investment grade rating. It indicates that likelihood of timely repayment for both principal and interest is extremely high.
Banco de Occidente S.A.
Grupo Aval owns 68.2% of outstanding common shares of Banco de Occidente, entity that at the closing of December 2012 posted total assets in the amount of Col$23,610,192 million and shareholder equity of Col$ 3,479,051 million. During the second half of 2012, the bank registered net earnings of Col$287,510 million, for an increase of 28.6% from earnings during the first semester of 2012 (Col$223,616 million) and a 26.7% increase from the amount reported in the second semester of 2011 (Col$226,938 million).
Banco de Occidente holds AAA rating for its long term debt, warded by BRC Investor Services S.A. indicating that timely repayment capacity for both principal and interest is extremely high; it is the highest possible investment grade rating. For its short term debt the bank has been awarded rating of BRC1+ also the highest possible investment grade rating. It indicates that likelihood of timely repayment for both principal and interest is extremely high.
10
Banco Comercial AV Villas S.A.
Direct participation of Grupo Aval in Banco Comercial AV Villas is 79.9%. At 31 December 2012, Banco AV Villas posted total assets of Col$8,885,497 million and shareholder equity of Col $1,132,021 million. During the second semester of 2012, Banco Comercial AV Villas accumulated earnings in the amount of Col$90,730 million, for an increment of 11.4% from earnings reported for the first semester of 2012 of Col $81,442 million and an increase of 0.8% from the figure registered during the second semester of 2011 (Col$90,022 million).
Banco Comercial AV Villas holds AAA rating for its long term debt, warded by BRC Investor Services S.A. indicating that timely repayment capacity for both principal and interest is extremely high; it is the highest possible investment grade rating. For its short term debt the bank has been awarded rating of BRC1+ also the highest possible investment grade rating. It indicates that likelihood of timely repayment for both principal and interest is extremely high.
Banco Popular S.A.
Grupo Aval is owner of 93.7% of shares outstanding of Banco Popular. Total assets of the bank at 31 December 2012 totaled Col$15,024,194 million and net-worth at such date amounted to Col$2,145,338 million. During the second semester of 2012 the bank registered net earnings of Col$188,691 million, a figure that represents an increase of 4.5% over net earnings of the first semester of 2012 (Col$180,629 million) and an 8.9% increase from that of the second semester of 2011 (Col$173,333 million).
Banco Popular holds AAA rating for its long term debt, warded by BRC Investor Services S.A. indicating that timely repayment capacity for both principal and interest is extremely high; it is the highest possible investment grade rating. For its short term debt the bank has been awarded rating of BRC1+ also the highest possible investment grade rating. It indicates that likelihood of timely repayment for both principal and interest is extremely high.
Sociedad Administradora de Fondos de Pensiones y Cesantias Porvenir S.A.
Grupo Aval holds direct ownership of 20.0% de Porvenir; on the other hand, Banco de Bogota, Banco de Occidente and some of their affiliates own the remaining 80.0%. Porvenir is the most important private administrator of pensions and severance fund management business in Colombia when measured by the assets under management, with market share in the mandatory pensions market of 28.0% and of 33.5% in the severance market. As of 31 December 2012 Porvenir had 3,586,416 persons affiliated in mandatory pensions, 1,642,881 in severance and posted assets under management in the amount of Col$39,452,156 million.
At 31 December 2012 Porvenir held total assets in the amount of Col $912,724 million and shareholder equity of Col $799,994 million. Accumulated earnings for the semester reached Col $105,307 million, for a decrease of 1.2% from earnings of the first semester of 2012 (Col$106,552 million) and a 37.0% increase from accumulated earnings of the second semester of 2011 (Col$76,847 million).
Porvenir S.A. has been awarded risk rating of AAA by risk rating company BRC Investor Services, thus indicating that company has exceptional financial condition, operational capacity and market positioning. Weaknesses are mitigated and neutralized by the strength of the Organization.
Corporacion Financiera Colombiana S.A. (Corficolombiana)
Grupo Aval holds indirect investment through Banco de Bogota, Banco de Occidente and Banco Popular in Corporacion Financiera Colombiana S.A. (Corficolombiana), an entity dedicated to the administration of an important investment portfolio in companies in the real and financial sector and engaged in rendering advisory services in matters of investment banking.
As of the closing of 31 December 2012 Corficolombiana posted total assets in the amount of Col $9,779,753 million and its net-worth reached Col$2,995,199 million. During the second semester of 2012 Corficolombiana posted net earnings of Col $117,222 million, for a 57.8% decline when compared to that of the first semester of 2012 (Col$277,957 million) and a decrease of 46.8% from earnings reported during the second semester of 2011 (Col$220,360 million).
Corficolombiana holds AAA rating for its long term debt, warded by BRC Investor Services S.A. indicating that timely repayment capacity for both principal and interest is extremely high; it is the highest possible investment grade rating. For its short term debt the bank has been awarded rating of BRC1+ also the highest possible investment grade rating. It indicates that likelihood of timely repayment for both principal and interest is extremely high.
Results of the entities in which Grupo Aval holds Direct Investment
Below follows an analysis of main captions in the financial statements of those entities in which Grupo Aval holds direct investment, during the second semester of 2012.
11
Total Operating Income
During the second semester of 2012, gross financial margin reported by the entities in which Grupo Aval holds direct investment reached Col $3,688,610 million, higher by 13.5% tan margin reported between January and June of 2012 (Col$3,250,628 million) and 11.4% above that registered at the closing of the second semester of 2011 (Col$3,309,941 million).
Gross Financial Margin* | % Change 2H - 2012 Vs. | % Change 2H - 2012 Vs. | ||||||||||||||||||||||
(Million Pesos) | 1H - 2011 | 2H - 2011 | 1H - 2012 | 2H - 2012 | 2H - 2011 | 1H - 2012 | ||||||||||||||||||
Banco de Bogota | 1,322,184 | 1,669,217 | 1,491,484 | 1,805,024 | 8.1 | 21.0 | ||||||||||||||||||
Banco de Occidente | 722,592 | 748,362 | 815,289 | 889,061 | 18.8 | 9.0 | ||||||||||||||||||
Banco Popular | 550,123 | 548,200 | 571,172 | 591,790 | 8.0 | 3.6 | ||||||||||||||||||
Banco AV Villas | 345,842 | 344,162 | 372,683 | 402,736 | 17.0 | 8.1 | ||||||||||||||||||
Total | 2,940,741 | 3,309,941 | 3,250,628 | 3,688,610 | 11.4 | 13.5 |
Net interest income plus net income other tan interest. Accumulated figures for each semester
Source: Superintendency of Finance .
Deposits and Liabilities
Consolidated deposits of the entities in which Grupo Aval holds direct investment totaled Col $64,481,139 million at the closing of December 2012, 9.1% above balance outstanding in June 2012 (Col$59,077,032 million) and 15.4% higher than outstanding balance at 31 December 2011 (Col$55,859,421 million); the performance of the entities in which Grupo Aval holds direct investment fell below that of the financial system as a whole, which incremented deposits by 16.3% between December of 2012 and June 2012 and by 18.0% between December 2011 and December 2012. As a result of the above, the entities in which Grupo Aval holds direct investment reached market share of 27.5% in terms of deposits and liabilities. Noteworthy is participation of savings accounts and Certificates of Deposit in the mix of captured deposits, which rose to respectively 49.6% and 26.9% of this caption.
Deposits and | June | December | June | December | ||||||||||||||||||||||||||||
Liabilities | 2011 | % | 2011 | % | 2012 | % | 2012 | % | ||||||||||||||||||||||||
(Million Pesos) | ||||||||||||||||||||||||||||||||
Checking | 11,951,081 | 22.7 | 13,752,140 | 24.6 | 13,805,787 | 23.4 | 14,418,196 | 22.4 | ||||||||||||||||||||||||
Savings | 27,897,486 | 52.9 | 27,126,772 | 48.6 | 27,951,699 | 47.3 | 31,983,012 | 49.6 | ||||||||||||||||||||||||
Time Deposits | 12,248,530 | 23.2 | 14,137,260 | 25.3 | 16,711,299 | 28.3 | 17,353,451 | 26.9 | ||||||||||||||||||||||||
Others | 613,514 | 1.2 | 843,249 | 1.5 | 608,247 | 1.0 | 726,479 | 1.1 | ||||||||||||||||||||||||
Total | 52,710,610 | 100.0 | 55,859,421 | 100.0 | 59,077,032 | 100.0 | 64,481,139 | 100.0 |
Outstanding balance at the end of the semester
Source: Superintendency of Finance
Past-due Loan Portfolio; Allowance and Loan Portfolio Coverage Ratio
At closing of the second semester of 2012 the past-due loan portfolio to gross loan portfolio ratio of the entities in which Grupo Aval holds direct investment was 2.3%, higher by 27 basis points tan the ratio registered in June 2012 and higher by 231 basis points to the same ratio at 31 December 2011 (2.0%). The past-due loan portfolio ratio of the financial system was 2.8% at 31 December 2012.
Past-due loans | June | Ratio* | December | Ratio* | June | Ratio* | December | Ratio* | ||||||||||||||||||||||||
(Million Pesos) | 2011 | % | 2011 | % | 2012 | % | 2012 | % | ||||||||||||||||||||||||
Banco de Bogota | 480,792 | 1.9 | 438,708 | 1.6 | 525,012 | 1.8 | 645,563 | 2.1 | ||||||||||||||||||||||||
Banco de Occidente | 383,393 | 2.9 | 362,111 | 2.5 | 407,053 | 2.6 | 415,867 | 2.5 | ||||||||||||||||||||||||
Banco Popular | 216,295 | 2.3 | 209,513 | 2.1 | 260,017 | 2.3 | 246,586 | 2.1 | ||||||||||||||||||||||||
Banco AV Villas | 149,235 | 3.2 | 142,340 | 2.8 | 170,299 | 3.1 | 179,622 | 3.1 | ||||||||||||||||||||||||
Total | 1,229,715 | 2.4 | 1,152,672 | 2.0 | 1,362,380 | 2.2 | 1,487,638 | 2.3 |
* Past-due loans / Gross Loan Portfolio
Source: Superintendency of Finance
12
At closing of the second semester of 2012 outstanding balance of reserves for loan-loss portfolio of the entities in which Grupo Aval holds direct investment grew by 5.6% from June 2012 and 11 .6% from December 2011, thus a lower growth ratio than growth of gross loan portfolio of these entities.
Allowance for | % Change | % Change | ||||||||||||||||||||||
Loan losses | June | December | June | December | Dec 12 Vs. | Dec 12 Vs. | ||||||||||||||||||
( Million Pesos) | 2011 | 2011 | 2012 | 2012 | Dec 11 | Jun 12 | ||||||||||||||||||
Banco de Bogota | 800,920 | 852,821 | 893,513 | 1,006,767 | 18.1 | 12.7 | ||||||||||||||||||
Banco de Occidente | 553,390 | 572,519 | 604,944 | 609,473 | 6.5 | 0.7 | ||||||||||||||||||
Banco Popular | 378,287 | 388,562 | 423,215 | 429,268 | 10.5 | 1.4 | ||||||||||||||||||
Banco AV Villas | 260,615 | 243,636 | 253,952 | 251,158 | 3.1 | -1.1 | ||||||||||||||||||
Total | 1,993,212 | 2,057,538 | 2,175,624 | 2,296,666 | 11.6 | 5.6 |
Outstanding balance at the end of each semester
Source: Superintendency of Finance
As to the past-due loan coverage ratio, Banco Popular continues to post healthy and ample coverage levels, 174.1%, above the 162.1% reported by the sector in December 2012
Past-due loan portfolio | June | December | June | December | ||||||||||||
Coverage ratio %* | 2011 | de 2011 | 2012 | de 2012 | ||||||||||||
Banco de Bogota | 166.6 | 194.4 | 170.2 | 156.0 | ||||||||||||
Banco de Occidente | 144.3 | 158.1 | 148.6 | 146.6 | ||||||||||||
Banco Popular | 174.9 | 185.5 | 162.8 | 174.1 | ||||||||||||
Banco AV Villas | 174.6 | 171.2 | 149.1 | 139.8 | ||||||||||||
Total | 162.1 | 178.5 | 159.7 | 154.4 |
* Loan-loss reserves / Past-due loan portfolio
Source: Superintendency of Finance
Total Allowance for loan losses
Total net provision for allowance for loan losses during the second semester of 2012 by the entities in which Grupo Aval holds direct investment amounted to Col$1,223,103 million, as depicted in the chart below. Additionally, recoveries, charge-offs, reacquisition of securitized loan portfolio, earnings on the sale of assets and reclassification of investments to fiduciary rights reached the amount of Col$1,093,113 million. In summary, the net change in provisions during the second semester of 2012 was Col $129,990 million, for a net reduction of Col $12,430 million when compared to movements during the first semester of 2012, which totaled Col $142,420 million.
Provisions |
Changes between 30 June and 31 December 2012 |
Figures in Million Pesos
Allowance for loans losses | Banco de Bogota | Banco de Occidente | Banco Comercial AV Villas | Banco Popular | Total | |||||||||||||||
Outstanding Balance at 30 June 2012 | 893,513 | 604,944 | 253,952 | 423,215 | 2,175,624 | |||||||||||||||
(+) Provisions | 481,734 | 308,637 | 149,449 | 178,011 | 1,117,831 | |||||||||||||||
(-) Recoveries | 259,017 | 187,381 | 92,010 | 135,636 | 674,044 | |||||||||||||||
(-) Charge-offs | 115,593 | 116,726 | 60,233 | 36,322 | 328,874 | |||||||||||||||
(+) Transfer from Megabanco - Autonomous Patrimony | 6,130 | 6,130 | ||||||||||||||||||
Net Change | 113,254 | 4,530 | (2,794 | ) | 6,053 | 121,043 | ||||||||||||||
Outstanding balance at 31 December 2012 | 1,006,767 | 609,474 | 251,158 | 429,268 | 2,296,667 | |||||||||||||||
Allowance for investment losses | ||||||||||||||||||||
Outstanding Balance at 30 June 2012 | 708 | - | 2,189 | - | 2,897 | |||||||||||||||
(+) Provisions | 28 | 27 | 55 | |||||||||||||||||
(-) Recoveries | 34 | 34 | ||||||||||||||||||
Net Change | (6 | ) | 27 | 21 | ||||||||||||||||
Outstanding Balance at 31 December 2012 | 702 | - | 2,216 | - | 2,918 | |||||||||||||||
Allowance for foreclosed assets losses | ||||||||||||||||||||
Outstanding balance at 30 June 2012 | 62,164 | 18,248 | 7,851 | 28,745 | 117,008 | |||||||||||||||
(+) Provisions | 11,051 | 8,586 | 543 | 1,656 | 21,836 | |||||||||||||||
(-) Recoveries | 16,651 | 2,030 | 497 | 852 | 20,030 | |||||||||||||||
(-) Charge-offs | 1,601 | 1,601 | ||||||||||||||||||
(-) Provision used on sales | 520 | 36 | 67 | 623 | ||||||||||||||||
(+) Provision for Restitution and Reclassification | 1,213 | 1,213 | ||||||||||||||||||
Net Change | (4,907 | ) | 6,556 | 10 | (864 | ) | 795 | |||||||||||||
Outstanding Balance at 31 December 2012 | 57,257 | 24,804 | 7,861 | 27,881 | 117,803 |
13
Provisions |
Changes between 30 June and 31 December 2012 |
Figures in Million Pesos
Allowance – Accounts Receivable losses | Banco de Bogota | Banco de Occidente | Banco Comercial AV Villas | Banco Popular | Total | |||||||||||||||
Outstanding balance at 30 June 2012 | 78,340 | 33,887 | 18,097 | 21,577 | 151,901 | |||||||||||||||
(+) Provision for loan losses | 37,565 | 29,850 | 7,497 | 6,323 | 81,235 | |||||||||||||||
(-) Recoveries | 18,147 | 14,043 | 4,228 | 5,202 | 41,620 | |||||||||||||||
(-) Charge-offs | 14,973 | 13,087 | 2,754 | 1,403 | 32,217 | |||||||||||||||
(+) Transfer from Megabanco – Autonomous Patrimony | 923 | 923 | ||||||||||||||||||
Net Change | 5,368 | 2,720 | 515 | (282 | ) | 8,321 | ||||||||||||||
Outstanding Balance at 31 December 2012 | 83,708 | 36,607 | 18,612 | 21,295 | 160,222 | |||||||||||||||
Allowance – Properties, Plant & Equipment and Other losses | ||||||||||||||||||||
Outstanding balance at 30 June 2012 | 2,729 | 6,062 | 2,296 | 1,968 | 13,055 | |||||||||||||||
(+) Provisions | 1,613 | 237 | 297 | 2,147 | ||||||||||||||||
(-) Recoveries | 557 | 305 | 12 | 874 | ||||||||||||||||
Net Change | 1,056 | (68 | ) | 285 | 1,273 | |||||||||||||||
Outstanding Balance at 31 December 2012 | 3,785 | 5,994 | 2,581 | 1,968 | 14,328 | |||||||||||||||
Allowance – Other assets in fiduciary rights losses | ||||||||||||||||||||
Outstanding balance at 30 June 2012 | 2,398 | - | 8,972 | 14,501 | 25,871 | |||||||||||||||
(-) Recoveries | 1,462 | 1,462 | ||||||||||||||||||
Net Change | (1,462 | ) | (1,462 | ) | ||||||||||||||||
Outstanding Balance at 31 December 2012 | 2,398 | - | 7,510 | 14,501 | 24,409 | |||||||||||||||
Total | ||||||||||||||||||||
Outstanding balance at 30 June 2012 | 1,039,852 | 663,141 | 293,357 | 490,006 | 2,486,356 | |||||||||||||||
(+) Provisions | 531,990 | 347,310 | 157,813 | 185,990 | 1,223,103 | |||||||||||||||
(+) Transfer from Megabanco – Autonomous Patrimony | 7,053 | 7,053 | ||||||||||||||||||
(-) Recoveries | 294,406 | 203,759 | 98,209 | 141,690 | 738,064 | |||||||||||||||
(-) Charge-offs | 130,566 | 129,813 | 62,987 | 39,326 | 362,692 | |||||||||||||||
(-) Provision used on sales | 520 | 36 | 67 | 623 | ||||||||||||||||
(+) Reserve for restitution and reclassification | 1,213 | 1,213 | ||||||||||||||||||
Net Change | 114,764 | 13,738 | (3,419 | ) | 4,907 | 129,990 | ||||||||||||||
Outstanding Balance at 31 December 2012 | 1,154,616 | 676,879 | 289,938 | 494,913 | 2,616,346 |
Foreclosed assets (BRPs)
During the second semester of 2012 net outstanding balance of BRPs of entities in which Grupo Aval holds direct investment increased by Col $7,549 million moving from Col $175,843 million to Col$183,391 million. Net BRPs, of entities in which Grupo Aval holds direct investment correspond to 23.7% of the holdings of the banking system, amount below their effective market share; noteworthy is the fact that during the period in consideration, these entities engaged in gross BRPs sales in the amount of Col $24,287 million.
Foreclosed Assets (BRPs) |
Changes between 30 June and 31 December 2012 |
Figures in Million Pesos
GROSS BRPs Real Estate | Banco de Bogota | Banco de Occidente | Banco Comercial AV Villas | Banco Popular | Total | |||||||||||||||
Outstanding balance at 30 June 2012 | 62,313 | 38,879 | 11,466 | 31,947 | 144,605 | |||||||||||||||
(+) Assets received | 9,621 | 13,049 | 2,213 | 4,458 | 29,341 | |||||||||||||||
(-) Assets sold | 14,563 | 3,271 | 749 | 1,798 | 20,381 | |||||||||||||||
Net Change | (4,942 | ) | 9,778 | 1,464 | 2,660 | 8,960 | ||||||||||||||
Outstanding Balance at 31 December 2012 | 57,371 | 48,657 | 12,930 | 34,607 | 153,565 | |||||||||||||||
Chattel Assets and Securities | ||||||||||||||||||||
Outstanding balance at 30 June 2012 | 21,051 | 4,825 | 217 | 5,144 | 31,237 | |||||||||||||||
(+) Assets received | 1,213 | 1,032 | - | 611 | 2,856 | |||||||||||||||
(-) Assets sold | 2,142 | - | 1,764 | 3,906 | ||||||||||||||||
(-) Charge-offs and reclassifications | 361 | 361 | ||||||||||||||||||
Net Change | 852 | (1,110 | ) | - | (1,153 | ) | (1,411 | ) | ||||||||||||
Outstanding Balance at 31 December 2012 | 21,903 | 3,715 | 217 | 3,991 | 29,826 | |||||||||||||||
Total Assets received in Gross Payment | ||||||||||||||||||||
Outstanding balance at 30 June 2012 | 83,364 | 43,704 | 11,683 | 37,091 | 175,842 | |||||||||||||||
(+) Assets received | 10,834 | 14,081 | 2,213 | 5,069 | 32,196 | |||||||||||||||
(-) Assets sold | 14,563 | 5,413 | 749 | 3,562 | 24,287 | |||||||||||||||
(-) Charge-offs and reclassifications | 361 | - | - | - | 361 | |||||||||||||||
Net change | (4,090 | ) | 8,668 | 1,464 | 1,507 | 7,548 | ||||||||||||||
Outstanding Balance at 31 December 2012 | 79,274 | 52,372 | 13,147 | 38,598 | 183,390 |
14
Foreclosed Assets (BRPs) |
Changes between 30 June and 31 December 2012 |
Figures in Million Pesos
Allowance closes - BRPs | Banco de Bogota | Banco de Occidente | Banco Comercial AV Villas | Banco Popular | Total | |||||||||||||||
Outstanding balance at 30 June 2012 | 60,682 | 18,248 | 7,807 | 28,745 | 115,482 | |||||||||||||||
(+) P&L Provisions | 11,051 | 8,586 | 543 | 1,656 | 21,836 | |||||||||||||||
(+) Provision for restitution and reclassification | 1,213 | 1,213 | ||||||||||||||||||
(-) Use in sales | 520 | 6 | 1,669 | 2,195 | ||||||||||||||||
(-) Recoveries | 16,449 | 2,030 | 493 | 852 | 19,824 | |||||||||||||||
Net change | (4,705 | ) | 6,556 | 44 | (865 | ) | 1,030 | |||||||||||||
Outstanding Balance at 31 December 2012 | 55,977 | 24,804 | 7,851 | 27,880 | 116,512 | |||||||||||||||
NET - BRPs | ||||||||||||||||||||
Outstanding balance at 30 June 2012 | 22,682 | 25,456 | 3,876 | 8,346 | 60,360 | |||||||||||||||
(+) Net change Gross Assets Received in lieu of Payment | (4,090 | ) | 8,668 | 1,464 | 1,507 | 7,548 | ||||||||||||||
(-) Net change in BRPs reserves | (4,705 | ) | 6,556 | 44 | (865 | ) | 1,030 | |||||||||||||
Total Net Change | 615 | 2,112 | 1,420 | 2,372 | 6,518 | |||||||||||||||
Outstanding Balance at 31 December 2012 | 23,297 | 27,568 | 5,296 | 10,718 | 66,878 |
Personal Expenses
Consolidated personnel expenses as a percentage of consolidated gross financial margin of the entities in which Grupo Aval holds direct investment reached during the second semester of 2012 a level of 16.5%, below the same ratio of these same entities at the closing of June 2012 (18.0%) and below the level posted in December 2011 (17.0%); the ration for the banking system was 20.1% at the closing of the second semester of 2012. These expenses, for the entities in which Grupo Aval holds direct investment totaled Col$609,680 million during the second semester of 2012, higher by 4.0% than those posted for the first semester of 2012 and 8.1% higher when compared with the same ratio at the closing of the second semester of 2011.
Personal Expenses* (Million Pesos) | 1H - 2011 | 2H - 2011 | 1H - 2012 | 2H - 2012 | % Change 2H - 2012 Vs. 2H - 2011 | % Change 2H - 2012 Vs. 1H - 2012 | ||||||||||||||||||
Banco de Bogota | 210,472 | 219,703 | 232,626 | 245,835 | 11.9 | 5.7 | ||||||||||||||||||
Banco de Occidente | 146,404 | 158,272 | 161,845 | 168,241 | 6.3 | 4.0 | ||||||||||||||||||
Banco Popular | 112,117 | 112,971 | 115,993 | 121,208 | 7.3 | 4.5 | ||||||||||||||||||
Banco AV Villas | 71,237 | 73,213 | 75,824 | 74,398 | 1.6 | -1.9 | ||||||||||||||||||
Total | 540,230 | 564,160 | 586,288 | 609,680 | 8.1 | 4.0 | ||||||||||||||||||
MFB | 2,940,741 | 3,309,941 | 3,250,628 | 3,688,610 | ||||||||||||||||||||
% Personnel expenses to GFM | 18.4 | 17.0 | 18.0 | 16.5 |
GFM: Gross Financial Margin
Accumulated figures at the end of each semester
Source: Superintendency of Finance
Direct and Indirect taxes and mandatory legal Contributions
During the second semester of 2012 income and complementary taxes accrued by the entities in which Grupo Aval holds direct investment and their subsidiaries reached the amount of Col $609,835 million, a figure that represents an increase of 5.5% from the amount registered during the first semester of 2012 (Col$577,836 million) and a 21.8% increase from that of the second semester of 2011 (Col$500,653 million). The Effective Tax Rate (ETR) applicable to the entities in which Grupo Aval holds direct investment reached 25.8% above the Average ETR of the financial sector for the same period, of 24.7%.
Income tax* and ETR (Million Pesos) | 1H-2011 | 2H-2011 | 1H-2012 | 2H-2012 | % Change | |||||||||||||||||||||||||||||||||||
Income Tax | ETR % | Income Tax | ETR % | Income Tax | ETR % | Income Tax | ETR % | 2H - 2012 2H - 2011 | 2H - 2012 1H - 2012 | |||||||||||||||||||||||||||||||
Banco de Bogota | 157,833 | 23.8 | 169,570 | 22.2 | 202,226 | 24.7 | 235,747 | 24.3 | 39.0 | 16.6 | ||||||||||||||||||||||||||||||
Banco de Occidente | 70,463 | 24.7 | 61,254 | 21.3 | 98,948 | 30.7 | 67,118 | 18.9 | 9.6 | (32.2 | ) | |||||||||||||||||||||||||||||
Banco Popular | 88,045 | 31.3 | 80,962 | 31.8 | 85,978 | 32.2 | 92,719 | 32.9 | 14.5 | 7.8 | ||||||||||||||||||||||||||||||
Banco AV Villas | 35,659 | 32.2 | 39,254 | 30.4 | 32,863 | 28.8 | 45,023 | 33.2 | 14.7 | 37.0 | ||||||||||||||||||||||||||||||
Porvenir | 43,462 | 36.2 | 43,302 | 36.0 | 54,992 | 34.0 | 50,270 | 31.7 | 16.1 | (8.6 | ) | |||||||||||||||||||||||||||||
Subtotal – Grupo Aval entities | 395,462 | 27.1 | 394,342 | 25.4 | 475,007 | 28.2 | 490,877 | 25.8 | 24.5 | 3.3 | ||||||||||||||||||||||||||||||
Grupo Aval - Affiliates** | 78,870 | 13.3 | 106,311 | 22.4 | 102,828 | 16.6 | 118,958 | 19.1 | 11.9 | 15.7 | ||||||||||||||||||||||||||||||
Total | 474,332 | 23.1 | 500,653 | 24.7 | 577,836 | 25.1 | 609,835 | 24.2 | 21.8 | 5.5 |
* Accumulated figures at the end of each semester
** Affiliates of the entities in which Grupo Aval holds direct investment include FiduBogota, Casa de Bolsa, Corficol-consolidated, Almaviva, Ventas y Servicios, Fiduoccidente, Alpopular and Fiduciaria Popular
Additionally, should we add to income and complementary taxes the multiple indirect taxes and other legal contributions, the entities in which Grupo Aval holds direct investment and their affiliates accrued taxes in the amount of Col $990,064 million during the second semester of 2012, for a 6.6% increase when compared to the same caption during the first semester of 2012 (Col$928,827 million) and an 18.7% increase in the same caption at the end of the second semester of 2011 (Col$834,348 million). When the above mentioned figure for the second semester of 2012 is compared with dividends paid by the entities in which Grupo Aval holds direct investment, it is rather clear that that there is a disproportion since we observe that while during the second semester of 2012 these entities disbursed dividends in the amount of Col $606,146 million and paid taxes in the amount of Col $990,064 million. In other words, during the second semester of 2012, for each peso paid by Grupo Aval to its shareholders, one peso and sixty three cents were paid to the Colombian State.
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Direct and Indirect taxes & mandatory Legal Contributions *, ETR and Dividends Paid
1H - 2011 | 2H - 2011 | 1H - 2012 | 2H - 2012 | |||||||||||||||||||||||||||||||||||||||||||||
(Million Pesos) | Taxes (1) | ETR % | Dividends Paid | Taxes (1) | ETR % | Dividends. paid | Dividends Paid (1) | ETR % | Dividends Paid | Taxes (1) | ETR % | Dividends Paid | ||||||||||||||||||||||||||||||||||||
Banco de Bogota | 283,761 | 35.9 | 211,335 | 300,459 | 33.6 | 234,171 | 343,236 | 35.7 | 247,827 | 388,865 | 34.7 | 268,479 | ||||||||||||||||||||||||||||||||||||
Banco de Occidente | 133,379 | 38.4 | 94,037 | 127,509 | 36.0 | 97,592 | 169,274 | 43.1 | 104,895 | 146,288 | 33.7 | 105,562 | ||||||||||||||||||||||||||||||||||||
Banco Popular | 133,625 | 40.9 | 84,794 | 136,189 | 44.0 | 86,035 | 136,394 | 43.0 | 87,410 | 150,750 | 44.4 | 91,090 | ||||||||||||||||||||||||||||||||||||
Banco AV Villas | 66,562 | 47.0 | 32,686 | 73,385 | 44.9 | 35,474 | 67,968 | 45.5 | 35,504 | 78,769 | 46.5 | 38,061 | ||||||||||||||||||||||||||||||||||||
Porvenir | 62,347 | 44.9 | 83,366 | 62,348 | 44.8 | 80,508 | 58,678 | 35.5 | 75,923 | 54,444 | 33.4 | 102,954 | ||||||||||||||||||||||||||||||||||||
Subtotal – Grupo Aval Entities | ||||||||||||||||||||||||||||||||||||||||||||||||
Entities | 679,674 | 38.9 | 506,218 | 699,890 | 37.6 | 533,780 | 775,550 | 39.1 | 551,559 | 819,116 | 36.8 | 606,146 | ||||||||||||||||||||||||||||||||||||
Affiliates – Grupo | ||||||||||||||||||||||||||||||||||||||||||||||||
Aval ** | 136,605 | 134,458 | 153,277 | 170,948 | ||||||||||||||||||||||||||||||||||||||||||||
Total | 816,279 | 34.0 | 506,218 | 834,348 | 35.3 | 533,780 | 928,827 | 35.0 | 551,559 | 990,064 | 34.1 | 606,146 |
* Accumulated figures at the end of each semester
ETR –Effective Tax Rate calculated as accrual of direct and indirect taxes and mandatory legal contributions to Earnings before Direct and Indirect taxes and mandatory legal contributions
(1) Includes Income and Complementary tax, Net-Worth Tax, Contributions to the Financial Superintendence of Colombia and the Superintendence of Corporations, Deposit Insurance, Tax on Financial Transactions. Indirect taxes include VAT (non-deductible portion), Industry and Commerce Tax, Land Property Tax, Surcharges and Other, Tax on 50% non-remunerated deposit reserve requirements, registration and Notes
** Affiliates of the entities in which Grupo Aval holds direct investment include: FiduBogota, Casa de Bolsa, Corficol-consolidated, Almaviva, Ventas y Servicios, Fiduoccidente, Alpopular and Fiduciaria Popular.
Net Earnings
As a result of the above, during the second semester of 2012 the entities in which Grupo Aval holds direct investment posted consolidated net earnings in the amount of Col $1,405,394 million ($1,300,087 million if Porvenir is excluded), showing a 16.2% increase from Col$1,209,931 million registered in the first semester of 2012 (Col$1,103,379 million if Porvenir is excluded) and a 21.1% increase when compared to Col $1,160,880 million posted by these same entities during the second semester of 2011 (Col$1,084,033 million if Porvenir is excluded).
Net earnings (Million Pesos) | 1S - 2011 | 2S - 2011 | 1S - 2012 | 2S - 2012 | % Variation 2S - 2012 Vs. 2S - 2011 | % Variation 2S - 2012 Vs. 1S - 2012 | ||||||||||||||||||
Banco de Bogota | 506,657 | 593,740 | 617,692 | 733,156 | 23.5 | 18.7 | ||||||||||||||||||
Banco de Occidente | 214,342 | 226,938 | 223,616 | 287,510 | 26.7 | 28.6 | ||||||||||||||||||
Banco Popular | 193,212 | 173,333 | 180,629 | 188,691 | 8.9 | 4.5 | ||||||||||||||||||
Banco AV Villas | 75,052 | 90,022 | 81,442 | 90,730 | 0.8 | 11.4 | ||||||||||||||||||
Total excl .Porvenir | 989,263 | 1,084,033 | 1,103,379 | 1,300,087 | 19.9 | 17.8 | ||||||||||||||||||
Porvenir | 76,472 | 76,847 | 106,552 | 105,307 | 37.0 | -1.2 | ||||||||||||||||||
Total with Porvenir | 1,065,735 | 1,160,880 | 1,209,931 | 1,405,394 | 21.1 | 16.2 |
Accumulated figures at the end of each semester
Source: Superintendency Finance
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Sociedad Administradora de Fondos de Pensiones y Cesantias Porvenir
During the second semester of 2012 Sociedad Administradora de Fondos de Pensiones y Cesantias - Porvenir continued to hold leadership in the sector of Pension and Severance Funds , reporting net earnings of Col $105,307 million that account for 42.0% of total net earnings posted by the System of Private Administrators of Pension and Severance Funds (AFP's). Additionally, as of December 2012, by number of affiliated individuals, Porvenir held its market share in the mandatory pension market, at 33.1% of the total market, and 29.0% of the severance market. At the closing of December 2012, Porvenir assent under management Col$39,452,156 million, which accounts for market share of 27.4% and growth of 11 .3% in this area, when compared to figures posted at the closing of June 2012 (Col$35,449,946 million) and 20.9% when compared to figures at the closing of December 2011 (Col$32,637,492 million).
Results of Companies Administrators of Pension and Severance Funds
Earnings 2S - 2012 (Million Pesos) | % of Total | Affiliated to Mandatory Pension Funds Administered** | % of Total | Individuals Affiliated to Severance Funds* | % of Total | Total Value Assets under management (Million Pesos) | % of Total | |||||||||||||||||||||||||
Provenir | 105,307 | 42 | 3,586,416 | 33.1 | 1,642,881 | 29 | 39,452,156 | 27.4 | ||||||||||||||||||||||||
Proteccion | 45,781 | 18.3 | 2,319,941 | 21.4 | 1,191,277 | 21 | 37,729,738 | 26.2 | ||||||||||||||||||||||||
Horizonte | 48,909 | 19.5 | 1,930,036 | 17.8 | 1,603,492 | 28.3 | 21,688,135 | 15.1 | ||||||||||||||||||||||||
Citicolfondos | 26,166 | 10.4 | 1,642,248 | 15.2 | 569,656 | 10.1 | 18,859,021 | 13.1 | ||||||||||||||||||||||||
ING | 472 | 0.2 | 1,275,650 | 11.8 | 616,351 | 10.9 | 15,520,114 | 10.8 | ||||||||||||||||||||||||
Skandia | 24,077 | 9.6 | 78,495 | 0.7 | 40,943 | 0.7 | 10,670,853 | 7.4 | ||||||||||||||||||||||||
Total | 250,713 | 100.0 | 10,832,786 | 100.0 | 5,664,600 | 100.0 | 143,920,018 | 100.0 |
* Figures at December 2012
** The value of funds administered includes: mandatory pension funds, voluntary pension funds and Severance funds.
Source: Superintendency of Finance and Colombian Association of Pension and Severance Funds
Foreseeable Evolution of Grupo Aval and its controlled entities
Economics
Despite the worldwide crisis there has been no direct impact on the financial system or related capital flows and it is expected that the recovery initiated in 2011 is upheld.
Development of the Company
Grupo Aval will continue to develop its strategy focused on the management of financial entities that collectively are leaders in this sector in Colombia. Specifically, it is sought to:
· | Achieve sustained growth in market participation and profitability, both domestically and internationally; |
· | Accomplish organizational growth higher than the market, |
· | Generate shareholder value; |
· | Maintain a solid patrimonial position in Grupo Aval entities and the Company; |
· | Uphold the highest ratios of administrative and operational efficiency. |
The different areas of Grupo Aval will continue to endeavor in the development of those responsibilities for which they are now accountable, as follows:
Vice Presidency – Shared Services
Continue to provide support to the aforementioned initiatives and additionally to seek homologation of the purchase processes and the achievement of solutions that facilitate innovation, cost optimization and enhancement of service for all entities, in areas such as Mobile Banking, transactional Internet for individuals, presence in the social websites, automatic generation of fees, etc.
Vice Presidency – Risk
· | Development of tools that allow establishment of a suitable profitability level for the loan portfolio, the appropriatestructure of significant credit transactions and the identification of concentrations in economic groups and sectorsof the economy; |
· | Provide support in the areas of Operational risk (SARO, SARLAFT, PCN) seeking to unify efforts, identify betterpractices and achieve economies of scale; |
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· | Development of tools that permit evaluation of aggregate market and liquidity risks; |
· | Ensure that the entities in which Grupo Aval holds direct investment enjoy availability of internal control systemsthat fulfill the requirements of the Sarbanes-Oxley (SOX) Act. |
Vice Presidency – Finance
Planning and follow-up of financial results of the entities, recommending strategies and evaluating performance
Vice Presidency – Accounting Consolidation
· | Review of incumbent processes to warrant due functioning and permanent enhancement, |
· | Implementation of accounting at Grupo Aval limited and Grupo Aval International Limited under ERP- SAP guidelines; |
· | Continue to coordinate the corporate process of adoption of IFRS in the period of mandatory preparation; |
· | Implementation of better practices in the preparation of reports of the main investments of Grupo Aval and the financial statements of the Company |
Corporate Comptroller
Execution will take place of the visit program for 2013 that was submitted to the Office of the President of Grupo Aval. Also, follow-up will be conducted for verification of compliance with action plans proposed by the entities.
The office of the Corporate Comptroller will issue, for all entities of Grupo Aval, all necessary and pertinent guidelines in areas such as control, audit and informatics security.
It will also conduct training courses for internal auditors of the various companies of Grupo Aval on international accounting standards and USGAAP, amongst other.
Internal Audit
During the first semester of 2013 and in compliance with the audit program approved by the Audit Committee of Grupo Aval, the management of Internal Audit will evaluate internal control in the Company by utilization of an approach to key processes and risks, adopting and implementing better practices and seeking permanent improvement in the internal control of the Company.
In a similar manner, follow-up of action and enhancement plans will take place as originated in Internal Audit reports, external audit processes or those of the control and surveillance entities, all of which will strengthen the internal control of the Company.
Periodic reports will continue to be submitted to the Administration and Audit Committee of Grupo Aval regarding the results of evaluations conducted by Management – Internal Audit.
Management - Legal Affairs
Will continue to provide support in coverage of legal needs at the internal and corporate level, particularly in areas related to preparation and negotiation of contracts, corporate governance issues, trademark follow-up, assessment on legal concerns that arise in due development of corporate activity and that of the subordinates and in fulfillment of duties of regulatory nature that arise from Grupo Aval capacity as issuer of securities.
Likewise, from the Office of Management - Legal Affairs there will continue a coordination of some corporate level projects in which there is joint participation of entities subordinate to Grupo Aval as well as in implementation and follow-up of corporate guidelines instructed by the president of the Company.
Also, there will be follow-up of legislative initiatives and regulatory novelties that have incidence on the activities developed by Grupo Aval and subordinated entities (mainly of financial and stock Exchange nature) in order to implement measures as necessary for fulfillment of applicable regulations.
Transactions with Shareholders and Administrators
Transactions engaged between Grupo Aval and its shareholders and administrators are duly detailed in Note 24 to the financial statements.
Risks faced by Grupo Aval
· | Domestic Macroeconomic Environment: The context in which Grupo Aval develops its corporate activity depends of macroeconomic adjustments designed by the National Government and of their impact on the fiscal sustainability of the country. |
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· | Regulatory Changes: Permanent changes in applicable regulations enacted by the various authorities of supervision and control, taxes and accounting, will continue to affect the yields anticipated by Grupo Aval and its affiliates. |
· | Market Risk: market volatility has a direct effect on the Price of the portfolios of Grupo Aval and its affiliates. |
· | External Macroeconomic Environment: The perception of other countries on the Colombian economy does have a direct impact on the Price at which Colombian securities are traded, the rates at which the Government shall issue them and, potentially, on the value of the investment portfolios of the entities and the administrator of severance and pension funds. |
Evolution of Share Price
Between June and December of 2012, the Price of our common share fluctuated from Col$1,140 to Col$1,290 for a 13.2% increase. During this same period, the IGBC rose 9.7%.
Important events after closing
After the closing of 31 December 2012 several events have occurred that are relevant and as such are detailed in Note 34 to the individual financial statements.
Statement of Compliance with Rules on Intellectual Property and Copyrights
In fulfillment of dispositions under Numeral 4 of Article 47 of Law 222 of 1995, as added by Law 603 of 2000, Grupo Aval has fully applied norms on Intellectual Property and Copyrights. Products and programs covered by copyrights are duly licensed.
Regarding the legal standing of the Company, its business and operations, they all have been conducted within legal and statutory parameters as well as in fulfillment of sound corporate governance principles adopted by the Company.
Finally, I would like to acknowledge and thank the continued and dedicated effort of all employees of Grupo Aval, without which it would not have been possible to achieve the results of this semester.
Truly yours,
Luis Carlos Sarmiento Gutierrez
President - Grupo Aval Acciones y Valores S.A.
This report has been accepted by the Board of Directors for consideration at the general Shareholders Meeting.
ANNEX No. 1
Most relevant regulatory measures
During the second semester of 2012 and though the date of this Report, several norms were issued of importance to Grupo Aval, amongst which we would like to highlight the following:
Laws
Law 1555 of 2012: “By means of which it is permitted that the financial consumers make prepayment of credit transactions and other dispositions are enacted”
This Law includes the possibility to make anticipated payments of credit transactions denominated in domestic currency without any penalty or compensation by reason of loss-profit. The Law establishes that this possibility will not be applied to (i) credit transactions which outstanding balance exceeds 880 minimum legal monthly salaries, (ii) mortgage loans and (iii) this right is effective only after effectiveness of this Law.
Law 1 581 of 2012: “Through which dispositions of general nature for the protection of personal data are enacted”
This Statutory Law regulates the constitutional right to know, update and correct any and all information in databases or files. Excluded from the scope of this Law are those databases or files (i) kept in personal or household environments; ii) which purpose is the national defense and security as well as the prevention, detection, monitoring and control of asset laundering and financing of terrorism; (iii) that incorporate intelligence and counter-intelligence information; (iv) of journalistic information and other editorial contents, (v) of financial, credit, commercial, services information and information coming from other countries and (vi)population and housing poll counts.
Additionally, this Statutory Law granted to the Financial Superintendence of Colombia the function of being the incumbent authority for protection of personal data and created the National registry of databases to be used as a public directory of data bases subject to treatment currently operating in the country.
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Law 1607 of 2012: “By means of which issue is made of norms of tax nature and other dispositions are enacted”
This Law, known as The Tax Reform, introduces several measures addressed to accomplish higher equity in the collection of domestic taxes. The following issues are highlighted:
- | Income Tax: Income tax rate s lowered from 33% to 25% and the equity taxi s implemented, under the CREE denomination, at 9% for the years 2013, 2014 and 2015. |
- | Contributions to AFC Accounts: Are thereafter limited to Col $99 million and a limit of ten years has been imposed for withdrawals destined to concepts other tan housing. Resources captured through AFC accounts may only be used for financing of mortgage loan portfolio or to investment in securitization of loan portfolios originated in the acquisition of housing units. |
- | Contributions to Voluntary Pension Funds: Limited to Col $99 million and the minimum permanence period was extended to 10 years or prior to such tenor if on age to retire or if resources are used in the acquisition of housing units. |
- | Para-fiscal Contributions: Health, SENA and ICBF contributions are eliminated (commencing on 1st January 2014) for all workers earning less than ten (10) minimum legal monthly salaries. |
- | VAT: eliminated on the transaction (sale/purchase) of foreign currencies. |
- | Surveys on the Financial Sector: The Superintendence of Industry and Commerce shall conduct a study to identify competition levels and existence of failures in relevant markets covered by financial institutions. |
Decrees
Ministry of Finance and Public Credit
Decree 1548 of 19 July 2012: “Through which amendment is made of the solvency margin entities administrators of pension and severance funds”.
This Decree amended the Single Decree for the Financial, Bourse and Insurance Sector and the Securities Market, establishing a new modality for calculation of the solvency ratio of the administrators of pensions and severance funds in order to recognize the risk of those companies that face it by charges against their own equity resources. Acceding to this new regulation the new minimum solvency ratio is 9%.
Decree 1771 of 23 August 2012: “Through which amendment is regulated of Decree 2555 of 2010 in matters regarding calculation of the minimum solvency ratio of credit establishments”
By means of this decree adoption is made of international standards in matters regarding the solvency ratio of international institutions, defining a more precise manner of calculation of the solvency ratio of credit establishments. In this manner the decree establishes that the minimum solvency ratio shall be 9% and the minimum basic solvency ratio shall be 4.5%. Compliance with minimum solvency ratios will be verified individually and shall also be fulfilled in a consolidated manner.
Decree 1895 of 11 September 2012: “Through which determination is set of the adequate level of equity for administrators of pension and severance funds, trust companies and insurance companies that through administration of autonomous patrimonies engage in the investment of resources from the social security system”
The Decree introduces a calculation of operating risk corresponding to the administration of resources from the social security system and rules separation regarding risk covered by the stabilization reserve, as follows:
- | The minimum solvency ratio of trust companies engaged in administration of social security resources through autonomous patrimonies will be 9%. The solvency ratio shall be the result of dividing technical patrimony by exposure of the autonomous patrimonies to operating risk, which includes legal risk but excludes reputation and strategy risks. |
- | Insurance companies that engage in administration of resources from the national fund of territorial pensions - FONPET, shall deduct the stabilization reserve from their technical patrimony. They must also add, to the calculation of the adequate patrimony the value of exposure to operational risk associated to administration of resources from the social security system through autonomous patrimonies. The operating risk includes legal risk but excludes risks of reputation and strategy. |
- | As to the relationship with administrators of pension and severance funds, amendment was rule don the formula for calculation of operating risk that had been introduced by means of Decree 1548 of 2012 in order to include income from fees earned in administration of resources from FONPET. |
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Decree 2672 of 21 December 2012: “By means of which amendment is enacted of Decree 2555 of 2010 in matters regarding financial services delivered through correspondents”
The Decree creates a uniform regime for the various types of correspondent t services that may be hired by credit establishments, stock brokerage companies, administrators of collective portfolios, intermediaries in the foreign Exchange market, administrators of severance and pension funds and trust companies. Regarding credit establishments, these may act as correspondents of other credit establishments, savings and loans cooperatives, mulltiactive and integral cooperatives with a savings and loans department and with the departments of savings and loans of the family benefit compensation entities. Additionally, it is ruled that credit establishments may engage in the following activities through their correspondents: collection, domestic currency transfers in the national territory; cash deposits and withdrawals; funds transfers, consultation of outstanding balances; issue and delivery of account statements; cash disbursements and payments; receipt or payment of resources originated from purchase and sale of foreign currency. Additionally, the Decree regulated the contents of the correspondent agreements and established the process of authorization to engage in this activity.
Decree 2673 of 21 December 2012: “By means of which amendment is made of Title 1 of Book 34 of Part 2 of decree 2555 of 2010 in matters related to the used of the network and other dispositions are enacted”
The Decree unifies norms related to utilization of networks property of those entities supervised by the Financial Superintendence, widening their scope of utilization and enlarging the number of authorized operations in order to avoid regulatory arbitrage. Services may therefore be rendered as users of the network by credit establishments, financial services companies, stock brokerage companies, independent stock brokers, investment management companies and administrators of securities deposit administration companies. Also, the decree covers the operations that may be conducted through the centralized securities deposits, such as: capture of term deposits and term savings deposits, payment of checks, funds transfers, and contracts for the opening of accounts and affiliation to voluntary pension funds, amongst other.
National Planning Department
Decree 1467 of 6 July 2012: “Through which regulation of Law 1508 of 2012 is enacted”
The Decree sets the terms and conditions for the selection, celebration and execution of contracts for incorporation of private-public associations taking into account that private initiative must be framed by the boundaries of common wellbeing, free competition and the objective selection of the offerings. Particularly, this Decree regulates the structuring and execution of private-public association projects through the establishment of quality standards, service levels and availability as well as in terms of regulations regarding public contribution to these contracts, amongst other.
Ministry of Justice and Rights
Decree 2677 of 21 December 2012: “By means of which regulation is dictated on some dispositions of the General processing Code in the areas of procedures of insolvency of natural non-merchant individuals and other dispositions”
This Decree regulates requirements that must be fulfilled by (i) conciliators, public notaries and liquidators that carry the functions of operators of solvency in order to get to know the procedures for negotiation of debt and con-validation of private agreements; (ii) the entities that train the conciliators in insolvency and (iii) the treatment to be given to the holdings of the debtor when under the form of family patrimony not subject to seizure or when affected as family household, amongst other.
Ministry of Commerce, Industry and Tourism:
Decree 2784 of 28 December 2012: “Through which regulation is issued for Law 1314 of 2009 on the regulatory technical framework for creators of financial information that integrate Group 1 1”
By means of this Decree issue is made of regulations on financial information (NIF), international accounting standards (NIC), SIC interpretations, CINIIF interpretations and the conceptual framework for preparation of financial information for entities in Group 1 (which include issuers of securities). The following dates are to be observed in the process for conversion:
- | Mandatory Preparation Period: The entities most engage in activities related to the process of convergence and the supervisors may request information on this process. The mandatory preparation period will cover from 1st January through 31st December 2013. |
- | Date of Transition: Commencing on 1st January 2014, preparation is to be initiated of financial information corresponding to the first year under the new framework. |
- | Transition Period: from 1st January through 31st December 2014 accounting is to be taken to the schemes (Decrees 2649 and 2650 of 1993) and the new regulatory technical framework in order to produce comparable financial information. |
- | Date of Effectiveness: On 1st January 2015 will cease the effectiveness of accounting standards under Decrees 2649 and 2650 of 1 993 and application will commence of the new regulatory technical framework. |
- | First Period of Application: Will be the period from 1st January through 31st December 2015 and it will be the period in which all accounting is to be prepared under the new regulatory technical framework. |
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Financial Superintendence of Colombia
Resolution 1528 of 28 September 2012: “Through which certification is issued of Current Banking Interest Rate for the modalities of micro-credit, consumer credit and common credit”
By means of this resolution the Financial Superintendence certified the Current banking Interest rate applicable for the period 1st October – 31st October 2012 for the modalities of consumer and common credit (effective 20.89% p.a.) and between 1st October – 30th September 2013 for the modality of micro-credit (effective 35.63% p.a.).
Resolution 2200 28 December 2012: “Through which certification is issued of current banking Interest rate for the modality of consumer and common credit”
By means of this resolution the Financial Superintendence certified applicable interest rate for the period 1st January – 31st March 2013 for the modalities of consumer and common credit (effective 20.75% p.a.).
External Memorandum 32 of 2012: “Fulfillment of seizure mandates on resources that may not be seized”
This Memorandum is addressed to legal representatives of credit establishments and Banco de la Republica with instructions on procedures to be adopted in case these entities receive mandates for seizure of resources that by reason of their nature may not be seized. In the event that there is a preventive request or a warning from the control authorities, the entities will proceed to (i) freeze the incumbent resources and (ii) take action under instructions issued by the respective control authority.
External Memorandum 39 of 2012: “Amendment of External Memorandum 006 of 2012, specifically Chapter Sixteen of Title One of the Basic Juridical Memorandum in Chapters I, XI and Annexes 1, 2 and 3 of Chapter XXI of the Basic Accounting and Financial Memorandum, instructions on Pro-forma F.0000-146 “Valuation of basic financial derivative instruments” and Pro-forma F-0000-110 “Contents of the investment portfolio”.
This Memorandum is addressed to the legal representatives of the supervised entities and determines that effective 1st December 2012 the supervised entities shall value their investments in derivative financial instruments that are compensated through the central counterpart risk chamber through utilization of the scheme supplied by providers of valuation prices. In a similar manner extension through 30 September 2012 is granted for entering into operation of the scheme for providers of valuation prices. Taking the above into account, supervised entities shall select a provider of valuation prices between 1st October and 30th November 2012.
External Memorandum 40 of 2012: “Elimination of Numeral 1.8 of Chapter VIII of Title I of the basic Juridical Memorandum”.
Information is provided to legal representatives and fiscal auditors of financial institutions on the elimination of regulations in the Basic Judiciary Memorandum that relate to the financing of bonds convertible to stock by financial institutions.
External Memorandum 41 of 2012: “Instructions are issued on registration of transactions involving derivative financial instruments and structured over the counter products and modification is made of Chapter Three of Title IX of the Basic Judiciary Memorandum”
By means of this Memorandum instructions are issued to legal representatives of the entities that administer systems for registration of securities transactions, chambers of central counterpart risk and all other supervised entities that engage in transactions involving derivative financial instruments and structured over the counter products. The Memorandum sets (i) requirements for implementation of a registry of operations with derivative financial instruments and structured products; (ii) the need to comply with regulations on intermediation in the over-the-counter market by entities that engage in transactions involving derivative financial instruments and structured over the counter products and (iii) instructions for registration of transactions with derivative financial instruments and structured over the counter products.
External Memorandum 42 of 2012: “Through which addition is made of amendments to Chapter twelve of Title One of the Basic Judiciary Memorandum in matters of minimum requirements of safety and quality for the development of transactions”
This Memorandum is addressed to legal representatives and fiscal auditors of the supervised entities and amends the Basic Judiciary Memorandum to introduce mobile banking as new cannel for the development of transactions and establishes mechanisms that will be considered to be strong mechanisms for authentication.
External Memorandum 048 of 2012: “Amendment to Numerals 3 to 9 of Chapter X of Title I of the Basic Judiciary Memorandum – Proceedings before the Superintendence”
By means of this Memorandum information is provided to legal representatives and fiscal auditors of the supervised and to the general public on the update of regulations related to proceedings under rights to petition, accumulation of administrative actions pursued against or by a supervised entity and rejection of requests for confidential information, amongst other.
22
Letter Memorandum 68 of 2012: “Adjustment to the Time Schedule on Process for Application of International Standard son Financial Information (NIIF)”
Setting takes place of a time schedule for the users that integrate Group 1 (which includes issuers of securities and entities under the supervision of the Financial Superintendence):
- | Date of issuance of NIIF guidelines: no later than 31st December 2012 |
- | Mandatory Preparation Period: the year 2013 |
- | Transition Date (opening balance): 1st January 2014 |
- | Date of Effectiveness (first comparison): December 2014 |
- | Reporting Date (NIIF financial statements): 31st December 2015. |
23
Graphs
Subordinate Entities of Grupo Aval
Evolution of Total Assets
Market Participation – Total Assets
Evolution of Net Loan Portfolio
Market Participation – Net Loan Portfolio
Evolution of Net Loan Portfolio Quality
Evolution of Deposits and Liabilities
Market Participation - Deposits and Liabilities
Evolution of Shareholders Equity
Evolution of Annual Net Earnings
Sector Participation – Annual Net Earnings
Grupo Aval
Total Assets
Total Liabilities Shareholders Equity Annual Earnings
24
Subordinate entities of Grupo Aval
Outstanding balance at the end of each period
Source: Superintendency of Finance
Grupo Aval entities include: Banco de Bogota, Banco de Occidente, Banco Popular and Banco AV Villas.
The Financial Sector includes all Banks and consumer finance companies.
Source: Superintendency of Finance
25
Subordinate entities of Grupo Aval
Outstanding balance at the end of each period
Source: Superintendency of Finance
Net Loan Portfolio=Gross Loan Portfolio – Loan Loss Reserves.
Grupo Aval entities include: Banco de Bogota, Banco de Occidente, Banco Popular y Banco AV Villas.
The financial sector inludes all Banks and consumer finance companies.
Source: Superintendency of Finance.
26
Subordinate entities of Grupo Aval
Loan Portfolio Quality = Past-due loans / Gross loan portfolio
Source: Superintendency of Finance.
Outstanding balance at the end of each period
Source: Superintendency of Finance
27
Subordinate entities of Grupo Aval
Grupo Aval entities include: Banco de Bogota, Banco de Occidente, Banco Popular y Banco AV Villas.
The financial sector includes all Banks and consumer finance companies
Source: Superintendency of Finance
Outstanding balance at the end of each period
Source: Superintendency of Finance
28
Subordinate entities of Grupo Aval
Accumulated annual earnings at the end ofeach period
Source: Superintendency of Finance
Accumulated anual earnings at the end of each period
The financial sector includes all Banks and consumer finance companies
Source: Superintendency of Finance
29
Grupo Aval
Source: Grupo Aval Acciones y Valores S.A.
Source: Grupo Aval Acciones y Valores S.A.
30
Source: Grupo Aval Acciones y Valores S.A.
Source: Grupo Aval Acciones y Valores S.A.
31
Individual
Financial
Statements
As of
31 December and 30 June of 2012
accompanied by the Opinion of the Fiscal Auditor
32
Opinion of the Fiscal Auditor
To the Shareholders of
Grupo Aval Acciones y Valores S.A.
I have examined the individual financial statements of Grupo Aval Acciones y Valores S.A. which include the general balance sheet at 31 December and 30 June 2012 and the individual income statements, statement of changes in shareholders equity, statement of changes in financial condition and cash flow, for the semester then ended and their respective notes, which include a summary of significant accounting policies and other explanatory information.
The administration is responsible for the due preparation and presentation of the individual financial statements in accordance with accounting principles generally accepted in Colombia. Such responsibility includes: the design, implementation and preservation of relevant internal control for the preparation and presentation of the financial statements free of errors of material importance whether by reason of fraud or error and the application of appropriate accounting policies, as well as the establishment of reasonable accounting estimates for the circumstances.
It is my responsibility to express an opinion on the financial statements on the basis of my examination. I received all information necessary to fulfill my functions and conducted my examination according to audit practices generally accepted in Colombia. Such practices require that I fulfill ethical requirements, plan and conduct the audit to achieve reasonable certainty on whether the financial statements are free of errors of material importance.
An audit includes engaging in procedures to obtain evidence on the amounts and findings in the financial statements. The procedures selected depend on the criterion of the fiscal auditor, including evaluation of the risk of errors of material importance in the individual financial statements. In course of the evaluation of such risk, the fiscal auditor takes into account internal control relevant or the preparation and presentation of the individual financial statements, in order to design audit procedures that are suitable to the circumstances. An audit also includes evaluation of the use of adequate accounting policies and the reasonability of accounting estimates conducted by the administration, as well as the evaluation of the general presentation of the individual financial statements. It is my opinion that the information I received provides basis for substantiation of the opinion that I express hereinafter.
In my opinion, the aforementioned individual financial statements duly taken from the books and attached to this opinion, do reasonably present, in all aspects of material importance, the individual financial situation of Grupo Aval Acciones y Valores S.A. as of the closing of 31 December and 30 June 2012, the individual result of its operation, the changes in the individual financial condition and cash flows for the semesters then ended, in accordance with accounting principles generally accepted in Colombia, applied in a uniform manner.
Without qualifying my opinion, I call for attention to the contents of Note 5 to the individual financial statements; on 8th October 2012 incorporation took place of Grupo Aval International Limited as an affiliate located in the Cayman Islands. Ownership participation of Grupo Aval Acciones y Valores S.A. in Grupo Aval International Limited at 31 December 2012 is 100%.
Based on the findings from my examination, it is my opinion that:
a) | Accounting of Grupo Aval Acciones y Valores S.A. has been conducted in accordance with legal dispositions and accounting technique; |
b) | The transactions registered in the books and Minutes of the administrators adjust to the by-laws and decisions of the Shareholders Meeting; |
c) | All correspondence, accounting supports and books of Minutes and registry of stock are duly carried-out and preserved; |
d) | There exist adequate measures of internal control for the preservation and custody of the assets of Grupo Aval Acciones y Valores S.A. and of those of third parties in their possession; |
e) | Compliance has been given to the norms and instructions of the Financial Superintendence of Colombia regarding the Internal System for the Prevention of Asset Laundering –SIPLA, as applicable to Grupo Aval Acciones y Valores S.A.; |
f) | There is concordance between the individual financial statements attached hereto and the contents of the Management Report prepared by the administrators; |
g) | Information in the declarations of auto-liquidation of contributions to the Integral Social Security System, particularly that regarding affiliated individuals and their base income for contribution, has been taken from accounting registries and supports. Grupo Aval Acciones y Valores S.A. is not in default by reason of payment of contributions to the Integrated Social Security System. |
Lida Marcela Herrera Vargas
Fiscal Auditor of Grupo Aval Acciones y Valores S.A.
CPA No. 106.020 - T
Member of KPMG Ltda.
26 February 2013
33
Individual General balance Sheet
31 December and 30 June 2012
(Figures in Million Pesos) Assets | 31 December | 30 June | ||||||
Current Assets: | ||||||||
Available (Notes 3 and 24) | $816,328 | 1,079,732 | ||||||
Negotiable Investments(Notes 4 and 24) | 8,298 | 1,832 | ||||||
Short term debtors (Notes 6 and 24) | 177,266 | 169,667 | ||||||
Deferred Charges (Note 9) | 11,044 | 22,397 | ||||||
Total Current Assets | 1,012,936 | 1,273,628 | ||||||
Permanent Investments, net (Notes 5 and 24) | 10,598,119 | 9,508,186 | ||||||
Properties, Plant & Equipment - Net (Note 7) | 535 | 500 | ||||||
Intangibles - Net (Notes 8 and 24) | 411,992 | 417,954 | ||||||
Deferred Charges -Net (Note 9) | 306 | 571 | ||||||
Revaluations (Notes 10 and 23) | 7,738,866 | 8,172,547 | ||||||
Total Assets | $19,762,754 | 19,373,386 | ||||||
Debtor Memo Accounts: | ||||||||
Debtor - fiscal (Note 28) | 12,285,837 | 11,593,647 | ||||||
Debtor - Control Note 29) | 908,309 | 962,290 | ||||||
Credit – contingent contra-account (Note 30) | 2,829,168 | 1,070,760 | ||||||
Credit- Control – contra-account (Note 29) | 875,225 | 875,225 | ||||||
Credit – Fiscal contra-account (Note 29) | 12,659,282 | 11,917,482 | ||||||
Total Memo Accounts | $29,557,821 | 26,419,404 |
Please refer to the attached Notes to the Individual Financial Statements
34
Liabilities and Shareholders Equity | 31 December | 30 June | ||||||
Liabilities: | ||||||||
Current Liabilities: | ||||||||
Financial Obligations (Notes 11 and 24) | $355,356 | 84,595 | ||||||
Suppliers (Note 12) | 289 | 62 | ||||||
Accounts Payable (Notes 13 and 24) | 315,621 | 290,524 | ||||||
Taxes, dues and levies (Note 14) | 25,698 | 14,177 | ||||||
Labor related debt (Note 15) | 1,086 | 714 | ||||||
Estimated Liabilities and provisions (Note 16) | 1,171 | 7,368 | ||||||
Other Liabilities (Note 17) | 1,952 | 2,105 | ||||||
Bonds outstanding (Note 18) | - | 125,750 | ||||||
Total Current Liabilities | 701,173 | 525,295 | ||||||
Equity Tax (Note 14) | 11,464 | 17,196 | ||||||
Financial Obligations (Notes 11 and 24) | 795,561 | 1,069,155 | ||||||
Bonds outstanding (Note 18) | 724,249 | 724,250 | ||||||
Total Liabilities | 2,232,447 | 2,335,896 | ||||||
Shareholders Equity: | ||||||||
Social Capital (Note 19) | 18,552 | 18,552 | ||||||
Capital Surplus (Notes 20 and 24) | 5,349,906 | 4,780,564 | ||||||
Reserves (Note 21) | 2,745,360 | 2,468,028 | ||||||
Revaluation of Shareholders Equity (Note 22) | 875,225 | 875,225 | ||||||
Earnings of the Period | 802,398 | 722,574 | ||||||
Revaluations (Notes 10 and 23) | 7,738,866 | 8,172,547 | ||||||
Total Shareholders Equity | 17,530,307 | 17,037,490 | ||||||
Total Liabilities and Shareholders Equity | $19,762,754 | 19,373,386 | ||||||
Creditor Memo Accounts: | ||||||||
Debtor-fiscal contra-account (Note 28) | 12,285,837 | 11,593,647 | ||||||
Debtor-control contra-account (Note 29) | 908,309 | 962,290 | ||||||
Creditor – Contingent (Note 30) | 2,829,168 | 1,070,760 | ||||||
Creditor - Control (Note 29) | 875,225 | 875,225 | ||||||
Creditor - fiscal (Note 29) | 12,659,282 | 11,917,482 | ||||||
Total Memo Accounts | $29,557,821 | 26,419,404 |
LUIS CARLOS SARMIENTO GUTIERREZ President | MARIA EDITH GONZALEZ FLOREZ Accountant CPA No. 13.083-T | LIDA MARCELA HERRERA VARGAS Fiscal Auditor CPA No. 106.020-T Member of KPMG Ltda. (Please refer to the attached Opinion dated 26 February 2013 |
35
Individual Income Statement
For the semesters ended 31 December and 30 June 2012
(Figures in Million Pesos except earnings per share)
31 December | 30 June | |||||||
Operating Revenues (Notes 24 and 25) | ||||||||
Interest (Note 24) | $25,923 | 36,220 | ||||||
Financial Returns (Note 25) | 252 | 145 | ||||||
Income–Participation Method - Net (Notes 5 and 24) | 833,001 | 825,729 | ||||||
Recoveries from Equity changes (Notes 5 y 24) | 54,185 | 18,069 | ||||||
Total Operating Revenues | 913,361 | 880,163 | ||||||
Loss-Participation Method from changes in Equity (Notes 5 and 24) | 205 | 35,319 | ||||||
Gross Profit | 913,156 | 844,844 | ||||||
Operating, sales and administration expenses (Notes 24 and 25): | ||||||||
Personnel expenses | 11,524 | 9,901 | ||||||
Fees: | 4,603 | 8,567 | ||||||
Industry and Commerce | 5,148 | 5,128 | ||||||
Tax on financial transactions | 2,656 | 3,667 | ||||||
VAT - deductible | 4 | 1,127 | ||||||
Rentals (Note 24) | 371 | 360 | ||||||
Contributions and memberships | 178 | 151 | ||||||
Insurance | 0 | 4 | ||||||
Services | 665 | 593 | ||||||
Legal expenses | 12 | 8 | ||||||
Maintenance and repairs | 108 | 29 | ||||||
Fittings and installation | 69 | 8 | ||||||
Travel expenses | 112 | 123 | ||||||
Depreciations | 113 | 91 | ||||||
Amortization of intangibles (Notes 8 and 24) | 5,962 | 5,552 | ||||||
Amortization of deferred assets (Note 9) | 11,639 | 11,619 | ||||||
Reserve - Negotiable Investments (Note 4) | - | 3 | ||||||
Operational expenses- sales | 1,942 | 563 | ||||||
Sundry | 241 | 214 | ||||||
Total operating, sales and administration expenses | 45,347 | 47,708 | ||||||
Operating Profit | 867,809 | 797,136 | ||||||
Non-Operating Revenues (Notes 24 and 26) | ||||||||
FX Differential | 4 | 57 | ||||||
Fees | 19,814 | 21,938 | ||||||
Services | 2 | 2 | ||||||
Recoveries | 2 | - | ||||||
Reimbursement of other costs | 90 | 119 | ||||||
19,912 | 22,116 | |||||||
Non-operating expenses (Notes 24 and 26) | ||||||||
Financial Expenses | 79,285 | 90,590 | ||||||
Sundry | 2 | 52 | ||||||
79,287 | 90,642 | |||||||
Non-operating profit - Net | (59,375 | ) | (68,526 | ) | ||||
Earnings before Income Tax | 808,434 | 728,610 | ||||||
Income and Complementary Tax (Note 27) | (6,036 | ) | (6,036 | ) | ||||
Earnings of the Period | $802,398 | 722,574 | ||||||
Earnings per Share (in Col Pesos) (Note 32) | $43.25 | 38.95 |
Please refer to the attached Notes to the Individual Financial Statements
LUIS CARLOS SARMIENTO GUTIERREZ President | MARIA EDITH GONZALEZ FLOREZ Accountant CPA No. 13.083-T | LIDA MARCELA HERRERA VARGAS Fiscal Auditor CPA No. 106.020-T Member of KPMG Ltda. (Please refer to the attached Opinion dated 26 February 2013 |
36
Statement of Changes in Individual Shareholders Equity
For the semesters ended 31 December and 30 June 2012
(Figures in Million Pesos except cash dividends and price of stock
Capital Surplus | ||||||||||||||||||||||||||||||||||||
Participation | Reserves | |||||||||||||||||||||||||||||||||||
Social capital | Premium on sale of stock | Method | Legal | temporary | Equity Revaluation | Earnings of the Period | Revaluations | Shareholders Equity | ||||||||||||||||||||||||||||
Balance at 31 December 2011 | 18,552 | 3,671,052 | 1,762,529 | 6,972 | 2,194,212 | 875,225 | 667,562 | 6,982,266 | 16,178,370 | |||||||||||||||||||||||||||
Reserve for future dividend distribution | 667,562 | (667,562 | ) | - | ||||||||||||||||||||||||||||||||
For distribution of cash dividends | ||||||||||||||||||||||||||||||||||||
$3.60 per share and per month from April to September of 2012, both months included, over 18,551,766,453 common and preferred shares subscribed | (400,718 | ) | (400,718 | ) | ||||||||||||||||||||||||||||||||
Sale of Grupo Aval stock shares through Casa de Bolsa | 602 | 602 | ||||||||||||||||||||||||||||||||||
Execution of warrant on shares | 13 | 13 | ||||||||||||||||||||||||||||||||||
Application of Equity Participation Method | (653,632 | ) | (653,632 | ) | ||||||||||||||||||||||||||||||||
Revaluation-Investments (Notes 5 and 10) | 1,190,281 | 1,190,281 | ||||||||||||||||||||||||||||||||||
Earnings of the Period | 722,574 | 722,574 | ||||||||||||||||||||||||||||||||||
Balance at 30 June 2012 | $18,552 | 3,671,667 | 1,108,897 | 6,972 | 2,461,056 | 875,225 | 722,574 | 8,172,547 | 17,037,490 | |||||||||||||||||||||||||||
Reserve for future dividend distribution | 720,270 | (720,270 | ) | - | ||||||||||||||||||||||||||||||||
Increase in Legal Reserve | 2,304 | (2,304 | ) | - | ||||||||||||||||||||||||||||||||
For distribution of cash dividends of | ||||||||||||||||||||||||||||||||||||
$4.00 per share and per month from October 2012 through March 2013, both months included, over 18,551,766,453 common and preferred shares subscribed | (445,242 | ) | (445,242 | ) | ||||||||||||||||||||||||||||||||
Application of Equity Participation Method | 569,342 | 569,342 | ||||||||||||||||||||||||||||||||||
Revaluation-Investments(Notes 5 and 10) | (433,681 | ) | (433,681 | ) | ||||||||||||||||||||||||||||||||
Earnings of the Period | 802,398 | 802,398 | ||||||||||||||||||||||||||||||||||
Balance at 31 December 2012 | $18,552 | 3,671,667 | 1,678,239 | 9,276 | 2,736,084 | 875,225 | 802,398 | 7,738,866 | 17,530,307 |
LUIS CARLOS SARMIENTO GUTIERREZ President | MARIA EDITH GONZALEZ FLOREZ Accountant CPA No. 13.083-T | LIDA MARCELA HERRERA VARGAS Fiscal Auditor CPA No. 106.020-T Member of KPMG Ltda. (Please refer to the attached Opinion dated 26 February 2013 |
37
Statement of Changes in Individual Financial Situation
For the semesters ended 31 December and 30 June 2012
(Figures in Million Pesos)
31 December | 30 June | |||||||
Uses of Working Capital: | ||||||||
Earnings of the Period | $ | 802,398 | 722,574 | |||||
Items that do not use Working Capital: | ||||||||
Amortization of Goodwill | 5,962 | 5,552 | ||||||
Amortization of deferred charges | 11,639 | 11,619 | ||||||
Depreciation of property, plant and equipment | 113 | 91 | ||||||
Income under equity Participation Method | (833,001 | ) | (825,729 | ) | ||||
Recoveries from Equity changes | (54,185 | ) | (18,069 | ) | ||||
Loss- participation Method from Equity changes | 205 | 35,319 | ||||||
Reserve – Negotiable Investments | - | 3 | ||||||
Working Capital used in Operations | (66,869 | ) | (68,640 | ) | ||||
Dividends received during the period | 386,981 | 366,560 | ||||||
Increase in financial obligations | - | 65,000 | ||||||
Premium on sale of stock | - | 615 | ||||||
(Decrease) in Equity Tax | (5,732 | ) | (5,732 | ) | ||||
$ | 314,380 | 357,803 | ||||||
Uses of Working Capital | ||||||||
Increase in Working Capital | (436,570 | ) | (476,380 | ) | ||||
Increase in deferred charges | 11,373 | 898 | ||||||
Increase in permanent investments - Net | 20,592 | 25,190 | ||||||
Increase in properties, plant and equipment | 149 | 149 | ||||||
Decrease in financial obligations | 273,594 | 407,228 | ||||||
Dividends decreed | 445,242 | 400,718 | ||||||
$ | 314,380 | 357,803 | ||||||
Changes in components of Working capital: | ||||||||
Increase (decrease) in current assets: | ||||||||
Readily Available | (263,404 | ) | (510,158 | ) | ||||
Negotiable Investments | 6,466 | 1,728 | ||||||
Debtors | 7,599 | (2,194 | ) | |||||
Deferred charges – short term | (11,353 | ) | (785 | ) | ||||
(260,692 | ) | (511,409 | ) | |||||
(Increase) decrease in current liabilities: | ||||||||
Short term financial obligations | (270,761 | ) | (51,858 | ) | ||||
Suppliers | (227 | ) | 439 | |||||
Accounts Payable | (25,097 | ) | (992 | ) | ||||
Taxes, dues and levies | (11,521 | ) | (644 | ) | ||||
Labor related debt | (372 | ) | 202 | |||||
Estimated liabilities and reserves | 6,197 | (7,368 | ) | |||||
Bonds outstanding | 125,750 | 94,700 | ||||||
Other liabilities | 153 | 550 | ||||||
(175,878 | ) | 35,029 | ||||||
Increase in Working Capital | $ | (436,570 | ) | (476,380 | ) |
Please refer to the attached Notes to the Individual Financial Statements
LUIS CARLOS SARMIENTO GUTIERREZ President | MARIA EDITH GONZALEZ FLOREZ Accountant CPA No. 13.083-T | LIDA MARCELA HERRERA VARGAS Fiscal Auditor CPA No. 106.020-T Member of KPMG Ltda. (Please refer to the attached Opinion dated 26 February 2013 |
38
Statement of Individual cash Flows
For the semester ended 31 December and 30 June 2012
(Figures in Million Pesos)
31 December | 30 June | |||||||
Cash flow from operating activity: | ||||||||
Earnings of the period | $ | 802,398 | 722,574 | |||||
Conciliation between earnings of the period and net cash used in operating activity: | ||||||||
Amortization of Goodwill | 5,962 | 5,552 | ||||||
Depreciation of properties, plant and equipment | 113 | 91 | ||||||
(Increase) in negotiable investments | (6,466 | ) | (1,728 | ) | ||||
Acquisition of investments | (20,592 | ) | (25,190 | ) | ||||
Dividends received during the Period | 386,981 | 366,560 | ||||||
Income under Equity Participation Method | (833,001 | ) | (825,729 | ) | ||||
Recoveries from Equity changes | (54,185 | ) | (18,069 | ) | ||||
Loss- Equity Participation from equity changes | 205 | 35,319 | ||||||
(Increase) in deferred charges | (21 | ) | (111 | ) | ||||
Amortization of deferred charges | 11,639 | 11,619 | ||||||
(Increase) decrease in accounts receivable | (3,588 | ) | 7,149 | |||||
(Increase) in prepaid taxes and contributions - Net | (4,011 | ) | (4,954 | ) | ||||
Decrease in liabilities (suppliers, taxes, accounts receivable, labor related obligations, other liabilities, estimated liabilities and reserves) – Net | 165 | (6,447 | ) | |||||
Cash used in operating activity - Net | 285,599 | 266,636 | ||||||
Cash flow from investment activity: | ||||||||
Acquisition of property, plant and equipment | (149 | ) | (149 | ) | ||||
Cash from investment activity - Net | (149 | ) | (149 | ) | ||||
Cash flow from financing activity: | ||||||||
Dividends paid | (420,270 | ) | (392,190 | ) | ||||
Bank loans | - | 65,000 | ||||||
Payment of bank loans | (2,833 | ) | (355,370 | ) | ||||
Payment of Bonds outstanding | (125,751 | ) | (94,700 | ) | ||||
Premium on sale of stock | - | 615 | ||||||
Cash used in financing activity - Net | (548,854 | ) | (776,645 | ) | ||||
Reduction in cash holdings and cash equivalents | (263,404 | ) | (510,158 | ) | ||||
Cash holdings at the beginning of the semester | 1,079,732 | 1,589,890 | ||||||
Cash holdings at the end of the semester | $ | 816,328 | 1,079,732 |
Please refer to the attached Notes to the Individual Financial Statements
LUIS CARLOS SARMIENTO GUTIERREZ President | MARIA EDITH GONZALEZ FLOREZ Accountant CPA. 13.083-T | LIDA MARCELA HERRERA VARGAS Fiscal Auditor CPA. 106.020-T Member of KPMG Ltda. (Please refer to the attached Opinion dated 26 February 2013) |
39
40
Notes to the Individual Financial Statements
For the semesters ended 31 December and 30 June 2012
(Figures in Million Pesos)
(1) | The Economic Entity |
Grupo Aval Acciones y Valores S.A. is a private holding company incorporated by means of Public Deed No 43 of 7 January 1994 and it is domiciled in Bogota.
Its social objective is the purchase and sale of stocks, bonds and securities of entities of the financial system and other commercial institutions. In due development of such social objective, company may acquire and negotiate all sorts of securities freely negotiated in the market and other securities in general; promote the creation of all sorts of companies with similar or complementary interests to its social objective; represent natural or legal persons that engage in similar or complementary activities to those mentioned above; take or surrender monies by reason of loans with or without interest; place its real estate and movable properties as guarantees or under administration; issue, endorse, acquire, protest, cancel or pay drafts, checks, promissory notes or any other securities or accept them or give them in payment and to execute or engage in general in exchange contracts in all of its modalities and expressions or in similar activities, parallel or complementary.
Duration of the company, as established in its by-laws is 23 may 2044 but it may either be dissolved or extended prior to such date.
(2) | Principal Accounting Practices |
(a) | Basic Policies |
Accounting practices and policies for preparation of the financial statements of the company are in accordance with accounting principles generally accepted in Colombia and to the requirements established by the Financial Superintendence of Colombia.
(b) | Investments |
Investments are represented by securities and other documents against other economic entities, acquired to earn variable or fixed income. |
Classification |
- | In accordance with their respective intention, investments are either classified as negotiable or permanent; the latter, in turn, are classified on the basis of control exerted on the issuer as either controlling or non-controlling. |
- | In accordance with income generated, investments are of either fixed or variable income. |
Accounting
Fixed income variable investments are booked at cost.
- | When pertinent, said cost must be adjusted to realizable value through provisions or revaluation. If realizable value is higherthan book cost, the difference causes an entry by revaluation during the exercise, which carried in books against therevaluation surplus. If realizable value is lower than book cost, the difference will first have an effect on valuation and if higher the defect will be registered as a provision against the results of the period. |
- | Controlling Permanent Investments are accounted for under the “Equity Participation Method”, an accounting procedurethrough which an investment is initially recorded at cost and later on increased or reduced in value on the basis of changesin shareholder equity of the Subordinate Company. |
As of 18 August 2005, after issuance of Joint Memorandum No. 011 of the former Superintendence of Securities (currently the Superintendence of Finance of Colombia) and 06 in the event that subordinate company registers positive variation in equity account of future exercises, a loss recorded due to changes in shareholder equity of the subordinate may be recognized as income for purposes recovery of deductions up to an amount equal to the expense initially recorded; if variations exceed the value of the initially recorded expense, the resulting difference will be accounted under the surplus of the equity participation method. The result from application of this formula was the recovery, at respectively, 31 December 2012 and 30 June 2012, of Col$54,185 and Col $18,069.
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Revaluation of Permanent Investments
The historic cost of investments of the economic entity in public liability or assimilated companies includes the amounts directly involved in their acquisition. The acquisition cost is to be incremented or decreased according to the participation percentage corresponding to the investor upon subsequent variations of the equity holdings of the respective issuer.
Should the value of the investment be higher that its book value, such difference is a revaluation of the investment. Its value must be registered in the revaluations account and its counter entry as a component of equity holdings of the investor, through an increase in the revaluation surplus.
Should the realizable value of the investment be lower than its book value, such difference is a devaluation of the investment. In such case such devaluation is to be booked as an item in the devaluation account and its counter item is booked in the equity account, affecting revaluation surplus as a lower value in both accounts.
- | Shares acquired in escision processes are booked at the amount received. Revaluations or devaluation resulting from differences between their intrinsic value and the value for which they are received (traded value) are booked in the revaluations account and its counter entry against the revaluation surplus for later booking as a higher value of the investment in the sub-account Equity Participation with counter entry against the account surplus under equity revaluation method. Revaluations originated from the difference between the costs of the investment received and its intrinsic value is booked in the revaluations account with counter entry in the account revaluation surplus, thereafter remaining in these accounts. |
Later on application is made of the equity participation method on the basis of the financial statements of the subordinate company and the new participation percentage in such company, where the intrinsic value of the investment is taken as its cost at the instance of the escision.
For the second semester of 2011, Company, after consultation with supervision authorities (The Financial Superintendence of Colombia, and the Superintendence of Corporations) has opted for accounting of revaluations and/or devaluations of investments in controlled entities at realizable value notwithstanding application of the equity participation method for the accounting registration of such investments, which
according to dispositions under Article 61 of Decree 2649 of 1993 and Joint Memorandum 011 of 18 August 2005 issued by the Superintendence of Securities (currently the Superintendence of finance) are carried at intrinsic value at the closing of each period.
The difference between the intrinsic share value (equity participation method) and its realizable value, determined as established under current applicable regulations, constitutes either a revaluation or devaluation which is to affect the financial statements according to the duty to disclose, completely and truly, the general condition of the business and the equity condition of the entrepreneur (Articles 48 and 52 of the Code of Commerce) and to accounting norms generally accepted, particularly the principle of valuation (Article 10 of Decree 2649 of 1993) and to the ethical rule on investments (Article 61, ibídem).
The realizable or market value of an investment is defined in Article 10 of Decree 2649 of 1993 as that which represents the cash value, or its equivalent, into which an asset is expected to be converted in the regular course of business. Article 61 of said Decree defines Realizable Value of variable income investments as the average of the representative quote at the securities exchanges during the last month and, should this not be possible, as its intrinsic value.
(c) | Debtors |
Represents rights arising from loans, dividends receivable and other credit transactions
(d) | Properties, Plant and Equipment |
Properties, Plant and Equipment are booked at cost. Depreciation is calculated under the straight line method depending on the useful life of the asset. Useful life for office equipment is ten (10) years and computer equipment is five (5) years.
(e) | Intangibles |
Includes assets property of the economic entity that though lacking physical nature implies a right or privilege opposable to third parties, other than those derived from other assets
(f) | Goodwill |
Registers additional amounts paid –over book value – on occasion of the acquisition of stock shares. |
Mercantile credit received from the purchase of shares in Corporacion de Ahorro y Vivienda AHORRAMAS S.A.; currently Banco Comercial AV Villas S.A. is amortized, straight-line, in ten (10) years, as determined since its acquisition and other mercantile credit acquired through purchase of shares in September and December of 2007 is amortized in 36 and 33 months, respectively. |
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Mercantile credit acquired through the purchase of shares of Banco Popular S.A. and Banco de Occidente S.A. conducted by Grupo Aval Acciones y Valores S.A., is amortized under the “Reverse of the Sum of the Digits” method during a period of twenty (20) years. |
(g) | Deferred Charges |
Deferred charges correspond to cash outlays for acquisition of computer programs, research and investigations; these are amortized over a period no longer than three (3) years; advertising expenses by reason of the issuance and placement of stocks are amortized over two (2) years. |
(h) | Revaluations |
This account represents revaluations and devaluations in stock companies under processes of escision, resulting from the difference between acquisition cost and intrinsic value. Commencing on 31 December 2011, this account includes revaluations in investments in controlled companies, resulting from differences between intrinsic value and realizable value (please refer to literal (b) above). |
(i) | Estimated Liabilities and reserves |
Company registers reserves for recognition of the value of costs and expenses which exact amount is unknown but which for accounting and financial purposes must be timely accrues in accordance with estimates. The accounting registry is caused affecting the related expense against a liability in reserves. Reserves are caused by reason of purchases and services already performed and that as of the date of these financial statements have not been invoiced. |
(j) | Memo Accounts |
Company registers in Memo Accounts those events, circumstances, commitments or contracts from which it may generate rights or obligations and that, as a result, pay have effects on its financial structure. It also includes accounts for control of assets, liabilities and equity, management information or control of future financial situations and differences between accounting records and tax declarations. |
(k) | Income Recognition |
Interest income, financial returns and dividends are recognized as accrued. Income under the equity participation method and income resulting from equity changes are registered monthly in accordance with standing accounting policy for investments in subordinated companies as explained in literal (b)-investments. |
(l) | Net earnings Per Share |
For determination of net earnings per share, Company uses a ratio of total net earnings for the period to total shares outstanding which at the closing of 31 December and 30 June 2012 totaled 18,551,766,453 shares. |
(m) | Relative Importance or Materiality |
Economic facts are recognized and presented according to their relative importance. In the preparation of financial statements, materiality is determined regarding total current assets and total current liabilities, total assets, total liabilities, shareholders equity, working capital or results of the period, as the case may be.
(n) | Transactions in Foreign Currency |
Transactions in foreign currency are recorded in Colombian pesos at the Exchange rate applicable for the date of the transaction. The current account balance in foreign currency as of 31 December and 30 June 2012 is converted to Colombian pesos at market representative rate, in Colombian pesos, of respectively, Col $1,768.23 and Col$1,784.60 for each United States dollar. The foreign exchange differential resulting from adjustment of assets and liabilities is charged to income statement. |
(o) | Related Entities |
Assets, liabilities and transactions with companies of Grupo Aval Acciones y Valores S.A. (also owner of the parent company) are presented as with related entities.
Taxes, dues and levies – Income Tax
Expense by reason of current income taxi s calculated on the basis of presumptive income. |
Equity Tax
According to legal dispositions regulatory of accounting principles generally accepted in Colombia, Company opted for registration of standing equity tax, along with the surcharge, against the equity revaluation account and so accrued the total amount due under this tax charge, which effect applies through 2014.
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(3) | Readily Available Funds |
Breakdown of readily available funds in domestic currency is as follows:
31 December | 30 June | |||||||
Cash | $ | 1 | 1 | |||||
Banks | ||||||||
Domestic | 9,460 | 1,886 | ||||||
Foreign (1) | 2 | 2 | ||||||
Savings Accounts | 806,865 | 1,077,843 | ||||||
$ | 816,328 | 1,079,732 |
(1) | Include balance outstanding, denominated in United States dollars, at a demand deposit account in Banco de Bogota-Panama in the amount of US$1,001.44 at 31 December and 30 June 2012. Included in Note 24 - c) Readily Available Funds |
There are no restrictions of any nature over this caption
(4) | Negotiable Investments - Net |
Breakdown of negotiable investments is as follows:
31 December | 30 June | |||||||
Fiduciary Rights: | ||||||||
Fiduciaria Bogota | $ | 21 | 37 | |||||
Fiduciaria Corficolombiana | 8,277 | 1,795 | ||||||
$ | 8,298 | 1,832 |
(5) | Permanent Investments - Net |
Value of permanent investments is as follows:
Percentage Ownership | Number of Shares | Book Value | ||||||||||||||||||||||
In controlled entities | 31 December | 30 June | 31 December | 30 June | 31 December | 30 June | ||||||||||||||||||
Banco de Bogota S.A. | 64.44 | % | 64.44 | % | 184,830,376 | 184,830,376 | $ | 5,686,382 | 5,036,474 | |||||||||||||||
Banco de Occidente S.A. | 68.24 | % | 68.24 | % | 106,385,430 | 106,385,430 | 2,256,851 | 2,064,699 | ||||||||||||||||
Banco Comercial AV Villas S.A. | 79.85 | % | 79.85 | % | 179,453,557 | 179,453,557 | 854,015 | 772,932 | ||||||||||||||||
Sociedad Administradora de Fondo de Pensiones y Cesantias Porvenir S.A. (1) (*) | 20.00 | % | 20.00 | % | 15,994,319 | 15,085,589 | 163,146 | 143,600 | ||||||||||||||||
Banco Popular S.A. | 93.73 | % | 93.73 | % | 7,241,296,738 | 7,241,296,738 | 1,698,802 | 1,513,475 | ||||||||||||||||
Grupo Aval Limited (2) (*) | 100.00 | % | 100.00 | % | 1 | 1 | (61,063 | ) | (22,994 | ) | ||||||||||||||
Grupo Aval International Limited (3) (*) | 100.00 | % | 0.00 | % | 1 | - | (14 | ) | - | |||||||||||||||
$ | 10,598,119 | 9,508,186 |
As of 31 December and 30 June 2012 there were no restrictions over these investments
(1) | In the first semester of 2012 393,686 shares were received with par value of Col $8,110 corresponding to capitalization of retained earnings. During the second semester of 2012 908,730 shares were 20.592 received as capitalization of retained earnings. |
(2) | On 23 January 2012, Grupo Aval Limited was incorporated as a Cayman Islands affiliate |
(3) | On 8 October 2012, Grupo Aval International Limited was incorporated as a Cayman Islands affiliate |
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Equity Participation Method
Below is a detailed presentation of assets, liabilities and equity holdings of the controlled entities, audited by independent public accountants, registered under the equity participation method, homogenized through application of accounting principles:
31 December | ||||||||||||||||||||||||||||||||
Entity | Assets | Liabilities | Shareholders Equity | |||||||||||||||||||||||||||||
Social Capital | Reserves | Capital Surplus | Retained Earnings | Earnings of The Period | Total Equity | |||||||||||||||||||||||||||
Banco de Bogota S.A | $ | 49,015,951 | 40,191,322 | 2,868 | 5,651,276 | 2,743,517 | (238,870 | ) | 665,838 | 8,824,629 | ||||||||||||||||||||||
Banco de Occidente S.A | 23,438,384 | 20,131,141 | 4,677 | 2,111,541 | 920,593 | 6,660 | 263,773 | 3,307,243 | ||||||||||||||||||||||||
Banco Comercial Av Villas S.A | 8,821,281 | 7,751,790 | 22,473 | 677,221 | 344,182.60 | (67,554 | ) | 93,168 | 1,069,491 | |||||||||||||||||||||||
Sociedad Administradora de Fondos de Pensiones y Cesantias Porvenir S.A. (1) | 928,420 | 112,730 | 79,968 | 552,763 | 105,365 | (26,449 | ) | 104,043 | 815,690 | |||||||||||||||||||||||
Banco Popular S.A. | 14,906,446 | 12,878,856 | 77,253 | 1,173,817 | 598,073 | 242 | 178,205 | 2,027,590 | ||||||||||||||||||||||||
Grupo Aval Limited (2) (*) | 2,812,316 | 2,873,378 | - | (22,783 | ) | 22,783 | (22,783 | ) | (38,279 | ) | (61,063 | ) | ||||||||||||||||||||
Grupo Aval International Limited (3) (*) | 70,967 | 70,981 | - | - | - | - | (14 | ) | (14 | ) | ||||||||||||||||||||||
$ | 99,993,764 | 84,010,198 | 187,240 | 10,143,835 | 4,734,513 | (348,755 | ) | 1,266,734 | 15,983,566 | |||||||||||||||||||||||
30 June | ||||||||||||||||||||||||||||||||
Entity | Assets | Liabilities | Shareholders Equity | |||||||||||||||||||||||||||||
Social Capital | Reserves | Capital Surplus | Retained Earnings | Earnings of The Period | Total Equity | |||||||||||||||||||||||||||
Banco de Bogota S.A | $ | 45,872,285 | 38,056,240 | 3,827 | 2,695,297 | 4,727,753 | (294,758 | ) | 683,926 | 7,816,045 | ||||||||||||||||||||||
Banco de Occidente S.A | 22,185,169 | 19,159,510 | 4,677 | 1,265,867 | 1,443,723 | 73,239 | 238,153 | 3,025,659 | ||||||||||||||||||||||||
Banco Comercial Av Villas S.A | 8,197,720 | 7,229,771 | 22,473 | 466,416 | 465,172 | (60,225 | ) | 74,113 | 967,949 | |||||||||||||||||||||||
Sociedad Administradora de Fondos de Pensiones y Cesantias Porvenir S.A. (1) (*) | 956,911 | 238,943 | 75,424 | 66,506 | 495,935 | (24,240 | ) | 104,343 | 717,968 | |||||||||||||||||||||||
Banco Popular S.A. | 14,599,512 | 12,769,636 | 77,253 | 1,019,809 | 632,533 | (76,229 | ) | 176,510 | 1,829,876 | |||||||||||||||||||||||
Grupo Aval Limited (2) (*) | 1,071,727 | 1,094,721 | - | - | - | - | (22,994 | ) | (22,994 | ) | ||||||||||||||||||||||
Grupo Aval International Limited (3) (*) | - | - | - | - | - | - | - | |||||||||||||||||||||||||
$ | 92,883,324 | 78,548,821 | 183,654 | 5,513,895 | 7,765,116 | (382,213 | ) | 1,254,051 | 14,334,503 |
(*) Please refer to explanation in Page No. 52
The effect of the increase (decrease) in income statement accounts and capital surplus resulting from application of the equity participation method to the equity holdings of the parent company is as follows.
31 December | 30 June | |||||||
Income from application of equity participation method at affiliates (1) | $ | 833,001 | 825,729 | |||||
Earningsfrom recovery of prior periods expenses due to changes in equity hldings (1) | 54,185 | 18,069 | ||||||
Loss caused by changes in equity holdings of affiliates(2) | (205 | ) | (35,319 | ) | ||||
Net effect on Income Statement | 886,981 | 800,479 | ||||||
Deficit (Surplus) for the semester orignated from equity changes at affiliates | $ | (569,342 | ) | (653,632 | ) |
(1) Included in Note 24 – Income – Equity Participation Method – Recoveries from equity changes
(2) Included in Note 24 – Loss under Equity Participation Method due to equity changes
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Homogenization of Balance Sheets of Subordinate entities
Adhering to the criteria of the Joint Memorandum No. 6 of the Superintendence of Corporations and No. 011 of 2005 of the Financial Superintendence of Colombia, homogenization was carried through of accounting methods at those entities recognized for application of the equity participation method and which are ruled by regulations issued by the Financial Superintendence of Colombia for application by supervised entities.
31 December | 30 June | |||||||||||||||||||||||||||||||
Legal Name | Assets | Liabilities | Equity | Earnings of The Period | Assets | Liabilities | Equity | Earnings of The Period | ||||||||||||||||||||||||
Banco de Bogota S.A. | ||||||||||||||||||||||||||||||||
Decree 2649 of 1993 | 49,015,951 | 40,191,322 | 8,824,629 | 665,838 | 45,872,285 | 38,056,240 | 7,816,045 | 683,926 | ||||||||||||||||||||||||
Regulation for Supervised | 49,588,722 | 40,191,322 | 9,397,400 | 733,156 | 46,407,275 | 38,056,240 | 8,351,035 | 617,692 | ||||||||||||||||||||||||
Variation | (572,771 | ) | - | (572,771 | ) | (67,318 | ) | (534,990 | ) | - | (534,990 | ) | 66,234 | |||||||||||||||||||
Banco de Occidente S.A. | ||||||||||||||||||||||||||||||||
Decree 2649 of 1993 | 23,438,384 | 20,131,141 | 3,307,243 | 263,773 | 22,185,169 | 19,159,510 | 3,025,659 | 238,153 | ||||||||||||||||||||||||
Regulation for Supervised | 23,610,192 | 20,131,141 | 3,479,051 | 287,510 | 22,267,995 | 19,159,510 | 3,108,485 | 223,616 | ||||||||||||||||||||||||
Variation | (171,807 | ) | - | (171,807 | ) | (23,737 | ) | (82,826 | ) | - | (82,826 | ) | 14,537 | |||||||||||||||||||
Banco Comercial Av Villas S.A. | ||||||||||||||||||||||||||||||||
Decree 2649 of 1993 | 8,821,281 | 7,751,790 | 1,069,491 | 93,168 | 8,197,720 | 7,229,771 | 967,949 | 74,113 | ||||||||||||||||||||||||
Regulation for Supervised | 8,885,497 | 7,753,476 | 1,132,021 | 90,730 | 8,216,496 | 7,229,771 | 986,725 | 81,442 | ||||||||||||||||||||||||
Variation | (64,217 | ) | (1,686 | ) | (62,530 | ) | 2,438 | (18,776 | ) | - | (18,776 | ) | (7,329 | ) | ||||||||||||||||||
Sociedad Administradora de Fondos de Pensiones y Cesantias Porvenir S.A. (1) (*) | ||||||||||||||||||||||||||||||||
Decree 2649 of 1993 | 928,420 | 112,730 | 815,690 | 104,043 | 956,911 | 238,943 | 717,968 | 104,343 | ||||||||||||||||||||||||
Regulation for Supervised | 912,724 | 112,730 | 799,994 | 105,307 | 929,608 | 238,943 | 690,665 | 106,552 | ||||||||||||||||||||||||
Variation | 15,696 | - | 15,695 | (1,265 | ) | 27,303 | - | 27,303 | (2,209 | ) | ||||||||||||||||||||||
Banco Popular S.A. | ||||||||||||||||||||||||||||||||
Decree 2649 of 1993 | 14,906,446 | 12,878,856 | 2,027,590 | 178,205 | 14,599,512 | 12,769,636 | 1,829,876 | 176,510 | ||||||||||||||||||||||||
Regulation for Supervised | 15,024,194 | 12,878,856 | 2,145,338 | 188,691 | 14,708,386 | 12,769,636 | 1,938,750 | 180,629 | ||||||||||||||||||||||||
Variation | (117,748 | ) | - | (117,748 | ) | (10,486 | ) | (108,874 | ) | - | (108,874 | ) | (4,119 | ) | ||||||||||||||||||
Grupo Aval Limited (2) (*) | ||||||||||||||||||||||||||||||||
Decree 2649 of 1993 | 2,812,316 | 2,873,378 | (61,063 | ) | (38,279 | ) | 1,071,727 | 1,094,721 | (22,994 | ) | (22,994 | ) | ||||||||||||||||||||
Regulation for Supervised | 2,812,316 | 2,873,378 | (61,063 | ) | (38,279 | ) | 1,071,727 | 1,094,721 | (22,994 | ) | (22,994 | ) | ||||||||||||||||||||
Variation | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Grupo Aval International Limited (3) (*) | ||||||||||||||||||||||||||||||||
Decree 2649 of 1993 | 70,967 | 70,981 | (14 | ) | (14 | ) | - | - | - | - | ||||||||||||||||||||||
Regulation for Supervised | 90,419 | 101,619 | (11,200 | ) | (11,200 | ) | - | - | - | - | ||||||||||||||||||||||
Variation | (19,452 | ) | (30,638 | ) | 11,186 | 11,186 | - | - | - | - | ||||||||||||||||||||||
Effects of Homogenization | (930,299 | ) | (32,324 | ) | (897,975 | ) | (89,181 | ) | (718,163 | ) | - | (718,163 | ) | 67,114 |
(*) Please refer to explanation in Page No. 52
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(6) | Short term debtors |
31 December | 30 June | |||||||
Dividends: (1) | ||||||||
Banco de Bogota S.A. | $ | 89,273 | 83,728 | |||||
Banco de Occidente S.A. | 36,703 | 35,427 | ||||||
Banco Popular S.A. | 42,144 | 42,144 | ||||||
Sociedad Administradora de Fondos de Pensiones y Cesantias Porvenir S.A. | - | 2,380 | ||||||
168,120 | 163,679 | |||||||
Fees (1) | - | 826 | ||||||
- | 826 | |||||||
Advances: | ||||||||
Taxes and Contributions | 8,967 | 4,955 | ||||||
Sundry Debtors: | ||||||||
Deposit Holders (1) | 172 | 188 | ||||||
Accounts receivable EPS - Disability | 6 | 19 | ||||||
Accounts Receivable on behalf of third parties | 1 | - | ||||||
9,146 | 5,162 | |||||||
$ | 177,266 | 169,667 |
(1) Included in Note 24 – Related Parties – Debtors
(7) | Properties, Plant and Equipment – Net |
Breakdown of properties, plant and equipment is as follows:
31 December | 30 June | |||||||
Office Equipment | $ | 177 | 158 | |||||
Computer equipment | 1,319 | 1,191 | ||||||
1,496 | 1,349 | |||||||
Less: Accumulated Depreciation | 961 | 849 | ||||||
$ | 535 | 500 |
There are no restrictions over properties, plant and equipment; the Company does not own any conditional properties. Fixed assets correspond to computer and office equipment and have no revaluation since demerit is permanent.
(8) | Intangibles – Net |
Breakdown of Intangibles is as follows:
31 December | 30 June | |||||||
Goodwill Acquired – Net (1) | $ | 411,992 | 417,954 |
(1) Included in Note 24 - c) Intangibles
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Goodwill Acquired – Net
31 December | 30 June | |||||||
Capitalization of AV Villas (1) on 17 September 2001 in the amount of Col $156,000 (1) | ||||||||
Number of shares acquired 72,289,157 at an intrinsic value of Col$1,577.54. | $ | 41,961 | 41,961 | |||||
Increase from acquisition of shares of Banco Popular (2) on 1 November 2005 | ||||||||
In the amount of Col$168,629. Number of shares acquired 733,172,111 at an intrinsic value of Col $84.90 | 106,383 | 106,383 | ||||||
Increase from acquisition of shares of Banco Popular (2) on 21 December 2006 | ||||||||
In the amount of Col$220,368. Number of shares acquired 733,620,000 at an intrinsic value of Col $94.98. | 150,689 | 150,689 | ||||||
Increase from purchase of shares of Banco de Occidente (3) on 30 June 2007 | ||||||||
In the amount of Col$36,060. Number of shares acquired 1,897,881 at an intrinsic value of Col $8,159.55. | 20,574 | 20,574 | ||||||
Increase from acquisition of shares of Banco de Occidente (3) on 18 December 2007 | ||||||||
In the amount of Col$29,735.1. Number of shares acquired 1,338,272 at an intrinsic value of Col $ 9,201.66 | 17,421 | 17,421 | ||||||
Increase from acquisition of shares of Banco Popular (2) on 13 June 2008 | ||||||||
In the amount of Col$239,417.8. Number of shares acquired 901,894,321 at an intrinsic value of Col $101.01 | 148,317 | 148,317 | ||||||
Increase from acquisition of shares of Banco AV Villas (1) in July 2008 | ||||||||
in the amount of Col$432.8. Number of shares acquired 1 20,1 54 at an intrinsic value of Col $2,600.68. | 120 | 120 | ||||||
Increase from the purchase of shares of Banco AV Villas (1) in August 2008 | ||||||||
in the amount of Col $234.4. Number of shares acquired 65,01 0 at an intrinsic value of Col $2,648.69. | 62 | 62 | ||||||
Increase from acquisition of shares of Banco AV Villas (1) in September 2008 | ||||||||
in the amount of Col $776.4. Number of shares acquired 218,260 at an intrinsic value of Col $2,765.85. | 173 | 173 | ||||||
Increase from purchase of shares of Banco AV Villas (1) efectuada in October 2008 | ||||||||
in the amount of Col$871 .2. Number of shares acquired 242,007 at an intrinsic value of Col$2,668.47. | 226 | 226 | ||||||
Increase from acquisition of shares of Banco AV Villas (1) in November 2008 | ||||||||
in the amount of Col$18.8. Number of shares acquired 6,522 at an intrinsic value of Col $2, 676.68. | 1 | 1 | ||||||
Increase from acquisition of shares of Banco AV Villas (1) in December 2008 | ||||||||
in the amount of Col $422.7. Number of shares acquired 140,451 at an intrinsic value of Col $2,794.95. | 30 | 30 | ||||||
Increase from acquisition of shares of Banco de Occidente (2) on 22 September 2011 | ||||||||
in the amount of Col$13,693. Number of shares acquired 414,936 at an intrinsic value of Col $18,068.87 | 6,195 | 6,195 | ||||||
Accumulated Amortization | (74,198 | ) | (68,646 | ) | ||||
Amortization of the period | ||||||||
(Note24) Amortization of Goodwill Acquired | (5,962 | ) | (5,552 | ) | ||||
$ | 411,992 | 417,954 |
(1) | Amortization of goodwill in Banco AV Villas concluded in September 2011 |
(2) | Under dispositions in External Memorandum No. 011 of 18 August 2005 issued by the former Superintendence of Securities (currently the Financial Superintendence of Colombia) and on the basis of the fact that Company acquired control of Banco Popular S.A. though the signing of an agreement that gives Grupo Aval Acciones y Valores S.A. total and absolute representation of shares property of Rendifín S.A. en Liquidación in Banco Popular, accounting was recorded of goodwill acquired in each of these acquisitions. |
(3) | In compliance with dispositions in the External memorandum mentioned in the above paragraph and based on the fact that Company holds its investments in the long run, accounting took place of goodwill acquired. Information regarding intrinsic value is denominated in Colombian pesos. These transactions took place on 30 June and 18 December 2007 |
(4) | In September 2011, under dispositions in the aforementioned External Memorandum and based on the fact that company has control of Banco de Occidente and holds its investments for the long run, recording took place of goodwill acquired. |
48
Amortization of Goodwill originated from the acquisition of shares of Banco Popular and Banco de Occidente is conducted over a twenty-year period through application of the method denominated “Reversal of the sum of the digits in the tenor”, according to the following chart
Period | Factor | Amount | |||||||||
Banco Popular (1) | Banco Popular (2) | Banco de Occidente (3) | Banco de Occidente (4) | Banco de Occidente (5) | |||||||
1 | 0.0047619048 | $ | 1,224 | 706 | 98 | 83 | 29 | ||||
2 | 0.0095238095 | 2,448 | 1,413 | 196 | 166 | 59 | |||||
3 | 0.0142857143 | 3,672 | 2,119 | 294 | 249 | 88 | |||||
4 | 0.0190476190 | 4,897 | 2,825 | 392 | 332 | 118 | |||||
5 | 0.0238095238 | 6,121 | 3,531 | 490 | 415 | 147 | |||||
6 | 0.028571 4286 | 7,345 | 4,238 | 588 | 498 | 177 | |||||
7 | 0.0333333333 | 8,569 | 4,944 | 686 | 581 | 206 | |||||
8 | 0.0380952381 | 9,793 | 5,650 | 784 | 664 | 236 | |||||
9 | 0.0428571429 | 11,017 | 6,356 | 882 | 747 | 265 | |||||
10 | 0.0476190476 | 12,242 | 7,063 | 980 | 830 | 295 | |||||
11 | 0.0523809524 | 13,466 | 7,769 | 1,078 | 913 | 325 | |||||
12 | 0.0571428571 | 14,690 | 8,475 | 1,176 | 995 | 354 | |||||
13 | 0.0619047619 | 15,914 | 9,182 | 1,274 | 1,078 | 384 | |||||
14 | 0.0666666667 | 17,138 | 9,888 | 1,372 | 1,161 | 413 | |||||
15 | 0.0714285714 | 18,362 | 10,594 | 1,469 | 1,244 | 443 | |||||
16 | 0.0761904762 | 19,586 | 11,300 | 1,567 | 1,327 | 472 | |||||
17 | 0.0809523810 | 20,811 | 12,007 | 1,665 | 1,410 | 502 | |||||
18 | 0.0857142857 | 22,035 | 12,713 | 1,763 | 1,493 | 531 | |||||
19 | 0.0904761905 | 23,259 | 13,419 | 1,861 | 1,576 | 561 | |||||
20 | 0.0952380952 | 24,483 | 14,126 | 1,959 | 1,659 | 590 | |||||
$ | 257,072 | 148,318 | 20,574 | 17,421 | 6,195 |
The initiation of each amortization period is as follows: (1) January 2007, (2) July 2008, (3) July 2007, (4) January 2008 and (5) September 2011
(9) | Deferred Charges – Net |
Breakdown of deferred charges is as follows:
31December | 30 June | |||||||
Current | ||||||||
Research and Investigation | $ | 498 | 368 | |||||
Computer programs | 680 | 589 | ||||||
Licenses | 6 | 0 | ||||||
Accumulated Amortization | (523 | ) | (433 | ) | ||||
Amortization for the period | (223 | ) | (90 | ) | ||||
Advertising and publicity (1) | 10,383 | 10,383 | ||||||
Accumulated Amortization | (6,064 | ) | (3,468 | ) | ||||
Amortization for the period | (2,596 | ) | (2,596 | ) | ||||
Fees (1) | 35,288 | 35,227 | ||||||
Accumulated Amortization | (17,583 | ) | (8,761 | ) | ||||
Amortization for the period | (8,822 | ) | (8,822 | ) | ||||
Total - Current | $ | 11,044 | 22,397 | |||||
Long Term | ||||||||
Research and Investigation | $ | 281 | 411 | |||||
Computer programs | 25 | 99 | ||||||
Fees | - 61 | |||||||
Total – Long Term | 306 | 571 | ||||||
Total Deferred Charges | $ | 11.350 | 22,968 |
(1) | Deferred charges for Advertising and Publicity correspond to the issue and placement of shares that took place during the first semester of 2011 and will be amortized over a 24-month period |
49
(10) | Revaluations: |
For the semesters ended 31 December and 30 June 2012, Company has recognized revaluation of stock owned in controlled companies in the amounts of, respectively, Col $7,738,866 and Col$8,172,547of which, during the second semester of 2012, Col $433,681 on the basis of their realizable value and their book value under the equity participation method, as established in guidelines in the Single Accounts Plan for Merchants (Decree 2650 of 1993) which establishes that active account 1905- Revaluation of Investments, “Registers the favorable difference between the realizable value and book value of investments property of the economic entity that have been acquired seeking compliance with legal dispositions or in order to hold a secondary liquidity source, just as those acquired for permanent hold”.
For these effects, the market value of the shares is calculated taking into account the guidelines set in Articles 10 and 61 of Decree 2649 of 1993. Below follows presentation of realizable values, intrinsic values and revaluations as of 31 December and 30 June 2012:
31 December | ||||||||||||||||||||
In controlled entities | Number of Shares A | Book Value of Investments B | Share Price C | Realizable Value A * C = D | Revaluations D - B | |||||||||||||||
Banco de Bogota S.A. | 184,830,376 | $ | 5,686,382 | 54,045.36 | 9,989,224 | 4,302,842 | ||||||||||||||
Banco de Occidente S.A. | 106,385,430 | 2,256,851 | 31,608.83 | 3,362,719 | 1,105,868 | |||||||||||||||
Banco Comercial AV Villas S.A. common | 179,192,996 | 852,775 | 7,100.00 | 1,272,270 | 419,495 | |||||||||||||||
Banco Comercial Av Villas S.A. -preferred | 260,561 | 1,240 | 4,758.98 | 1,240 | - | |||||||||||||||
Banco Popular S.A. (2) | 7,241,296,738 | 1,900,552 | 500.00 | 3,620,648 | 1,720,097 | |||||||||||||||
Sociedad Administradora de Fondo de | ||||||||||||||||||||
Pensiones y Cesantias Porvenir S.A. | 15,994,319 | 163,146 | 10,200.23 | 163,146 | - | |||||||||||||||
Grupo Aval Limited | 1 | (61,063 | ) | - | (61,063 | ) | - | |||||||||||||
Grupo Aval International Limited | 1 | (14 | ) | - | (11,200 | ) | (11,186 | ) | ||||||||||||
Sub-total | 10,799,869 | 18,336,984 | 7,537,116 | |||||||||||||||||
Banco Popular S.A.(2) | (201,750 | ) | 201,750 | (*) | ||||||||||||||||
$ | 10,598,119 | 7,738,866 |
(2) | balance outstanding – Accumulated revaluations (F).Please refer to Summary of Escision |
30 June | ||||||||||||||||||||
In controlled entities | Number of Shares A | Book Value of Investments B | Share Price C | Realizable Value A * C = D | Revaluations D - B | |||||||||||||||
Banco de Bogota S.A. | 184,830,376 | $ | 5,036,474 | 50,037.36 | 9,248,425 | 4,211,951 | ||||||||||||||
Banco de Occidente S.A. | 106,385,430 | 2,064,699 | 30,643.02 | 3,259,971 | 1,195,272 | |||||||||||||||
Banco Comercial Av Villas S.A. - common | 179,192,996 | 771,810 | 7,980.00 | 1,429,960 | 658,151 | |||||||||||||||
Banco Comercial Av Villas S.A. - preferred | 260,561 | 1,122 | 4,307.14 | 1,122 | - | |||||||||||||||
Banco Popular S.A. | 7,241,296,738 | 1,715,225 | 500.00 | 3,620,648 | 1,905,423 | |||||||||||||||
Sociedad Administradora de Fondo de | ||||||||||||||||||||
Pensiones y Cesantias Porvenir S.A. | 15,085,589 | 143,600 | 9,519.04 | 143,600 | - | |||||||||||||||
Grupo Aval Limited | 1 | (22,994 | ) | - | (22.994 | ) | - | |||||||||||||
Sub-total | 9,709,936 | 17,680,732 | 7,970,797 | |||||||||||||||||
Banco Popular S.A.(1) | (201,750 | ) | 201,750 | (*) | ||||||||||||||||
$ | 9,508,186 | 8,172,547 |
(1) | balance outstanding – Accumulated revaluations (F).Please refer to Summary of Escision |
(*) | In the process of escision undertaken in 2011 for 4,872,610,306 shares of Banco Popular S.A. by Rendifin S.A., Inversiones Escorial S.A. and Popular Securities in favor of Grupo Aval Acciones y Valores S.A., determination was made of the following revaluation account. |
50
31 December | ||||
Consolidated homogenized Equity Value of Banco Popular S.A. (as of May 2011) (A) | $ | 1,789,264 | ||
Number of shares outstanding (B) | 7,725,326,503 | |||
Intrinsic Value (in Colombian pesos (A/B) | 232 | |||
Number of shares received by Aval under the escision (C) | 1,514,163,994 | |||
Intrinsic value of shares acquired (D=(A/B)*(C)) | 350,696 | |||
Amount booked as cost (E) | 681,374 | |||
Accrued Revaluation (D-E) | (330,678 | ) | ||
Outstanding balance-Accumulated revaluation (F) | $ | 201,750 | (*) |
(11) | Financial Obligations |
Breakdown of financial obligations is as follows
Breakdown of financial obligations is as follows.
31 December | 30 June | |||||||
Current | ||||||||
Bienes y Comercio S.A. | $ | 92,117 | 48,000 | |||||
Rendifin S.A. | 263,239 | 36,595 | ||||||
$ | 355,356 | 84,595 | ||||||
Long Term | ||||||||
Rendifin S.A. | 526,478 | 753,122 | ||||||
Bienes y Comercio S.A. | 260,750 | 307,700 | ||||||
Adminegocios y Cía. S.C.A. (1) | 8,333 | 8,333 | ||||||
795,561 | 1,069,155 | |||||||
$ | 1,150,917 | 1,153,750 |
Tenor of these obligations is five (5) years with two (2) years grace at a rate of DTF + 3 points, payable quarterly in arrears
(12) | Suppliers |
Breakdown of the domestic suppliers account is as follows:
31 December | 30 June | |||||||
Supply of administration services | $ | 72 | 45 | |||||
Services (1) | 153 | 15 | ||||||
Properties, plant and equipment | 64 | 2 | ||||||
$ | 289 | 62 |
51
(13) | Accounts Payable |
Breakdown of Accounts payable is as follows:
Breakdown of Accounts payable is as follows:
31 December | 30 June | |||||||
Costs and Expenses Payable (1) | $ | 19,295 | 19,230 | |||||
Dividends and Participations (2) | 293,454 | 268,481 | ||||||
Withholdings | 885 | 770 | ||||||
Vat withheld | 29 | 152 | ||||||
ICA withheld | 126 | 123 | ||||||
Withholdings and contributions | 352 | 286 | ||||||
Creditors under Portfolio AV Villas - Bienes y | ||||||||
Comercio S.A. (3) | 1,480 | 1,482 | ||||||
$ | 315,621 | 290,524 |
(2) Included in Note 24 - a) Shareholders – Accounts Payable – Dividends - Adminegocios y Cia. S.C.A. Col$61,651; Actiunidos S.A. Col $41,1 27.
(3) Includes amounts received by Grupo Aval Acciones y Valores S.A. totaling Col$1,365.8 for sale of assets received in lieu of payment.
(14) | Taxes, Dues and Levies |
Breakdown of this account is as follows
31 December | 30 June | |||||||
Current | ||||||||
Industry and Commerce | $ | 1,594 | 1,636 | |||||
Sales | 568 | 1,077 | ||||||
Equity Tax | 11,464 | 11,464 | ||||||
Income and Complementary Tax | 12,072 | - | ||||||
$ | 25,698 | 14,177 | ||||||
Long Term | ||||||||
Equity Tax | $ | 11,464 | 17,196 |
Equity Tax
Company has booked the whole equity tax with counter charge to the account of Revaluation of Shareholders Equity. Equity Tax accrued by Company during 2011 was Col $45,857 of which a total of Col$11,465 was paid in 2011 and Col$11,464 was paid in 2012.
Date of Payment | Equity Tax | Installment | Amount Paid | Accumulated Payments |
May-11 | Payment Installment 1 | $ 5,733 | 5,733 | 5,733 |
Sept-11 | Payment Installment 2 | 5,732 | 5,732 | 11,465 |
May-12 | Payment Installment 3 | 5,732 | 5,732 | 17,197 |
Sept-12 | Payment Installment 4 | 5,732 | 5,732 | 22,929 |
May-1 3 | Payment Installment 5 (1) | 5,732 | - | |
Sept-13 | Payment Installment 6 (1) | 5,732 | - | |
May-14 | Payment Installment 7 (2) | 5,732 | - | |
Sept-14 | Payment Installment 8 (2) | 5,732 | - | |
$ 45,857 | 22,929 | |||
(1) Current portion of Equity Tax | 11,464 | |||
(2) Long term portion equity Tax | 11,464 | |||
22,928 | ||||
Total Payments Due | ||||
Amounts paid through 31December 2012 | $22,929 |
52
(15) | Labor Related Obligations |
Breakdown of labor related obligations is as follows:
31 December | 30 June | |||||||
Consolidated severance | $ | 225 | - | |||||
Interest on consolidated severance | 24 | - | ||||||
Consolidated vacations | 837 | 714 | ||||||
$ | 1,086 | 714 |
(16) | Estimated Liabilities and Reserves |
Outstanding balance of estimated liabilities and reserves is as follows:
31 December | 30 June | |||||||
For Costs and Expenses | $ | 1,171 | 1,107 | |||||
For labor related obligations | - | 225 | ||||||
For Income Tax (1) | - | 6,036 | ||||||
$ | 1,171 | 7,368 |
(1) | This liability is reflected in Note 14 – Income and Complementary Tax |
(17) | Other Liabilities |
Breakdown of other liabilities is as follows:
31 December | 30 June | |||||||
Prepayments and advances received from shareholders | $ | 1,952 | 2,105 |
(18) | Bonds Outstanding |
Following is breakdown of bonds issued:
Short Term: | ||||||||
Year 2009 - fourth issue (1) | $ | - | 125,750 | |||||
Sub-total - short-term | - | 125,750 | ||||||
Long Term: | ||||||||
Year 2005 - third issue | 100,000 | 100,000 | ||||||
Year 2009 - Fourth issue | 624,249 | 624,250 | ||||||
Sub-total long term | 724,249 | 724,250 | ||||||
Total | $ | 724,249 | 850,000 |
53
Outstanding Bonds have the following features:
Third issue - 2005 | ||
Type of Security: | Common Bonds | |
Date of issue: | 28 October 2005 | |
Face value: | $ 1,000,000 (pesos) each | |
Authorized Amount: | $ 200,000 | |
Amount issued: | $ 200,000 | |
Series: | A | |
Tenor for redemption: | Six (6) and ten (10) years as of date of issue | |
Legal representative of Bond holders: | Fiduciaria Corredores Asociados FIDUCOR S.A. | |
Administrator: | Deposito Centralizado de Valores de Colombia DECEVAL S.A. | |
Yield: | Series A and B Bonds earn interest at a floating rate base don inflation(CPI) and principal will be fully redeemed at maturity. Yield reflects market conditions on the date of placement in fulfillment of conditions set by issuer in the issue and placement memorandum approved through Minutes No. 71 of 7 September 2005 of the Board of Directors |
Fourth Issue - 2009 | ||
Type of Security: | Common Bonds | |
Date of issue: | 3 December 2009 | |
Face value: | $1,000,000 (pesos) each | |
Authorized Amount: | $ 750,000 | |
Amount Issued: | $ 750,000 | |
Series: | A y B | |
Tenor for redemption: | Three (3) and fifteen (15) years as of the date of issue | |
Legal Representative Of Bond holders: | Fiduciaria Corredores Asociados FIDUCOR S.A. | |
Administrator: | Deposito Centralizado de Valores de Colombia DEC EVAL S.A. | |
Yield: | Series B3 Bonds earn interest at a floating rate of DTF+1.14; Series A5, A7, A10 and A15 earn interest at a floating rate based on inflation (CPI) plus 3.69, 4.49, 4.84 y 5.20 points respectively and principal will be fully paid at maturity |
(19) | Capital Social |
As of 31 December and 30 de June de 2012 authorized capital was Col$120,000 represented in 120,000,000,000 shares with face value of one peso (Col$1) each.
At Shareholders Meeting held on 7 December 2010 approval was voted for an amendment of Company By-laws to allow the possibility of conversion of common shares into preferred dividend share. Said resolution was further approved by the Financial Superintendence of Colombia by means of Resolution No. 2443 of 23 December 2010. The exchange ratio so defined was 1 common for 1 preferred dividend non-voting share. Shares may only be converted when so approves or authorizes, as the case may be, the General Shareholders Meeting.
Movement in subscribed and paid-in capital during the semester was as follows:
31 December | 30 June | |||||||
Shares subscribed and paid | 18,551,766,453 | 18,551,766,453 | ||||||
Shares subscribed and unpaid | - | - | ||||||
Total Shares | 18,551,766,453 | 18,551,766,453 | ||||||
Subscribed and Paid-in Capital | $ | 18,552 | 18,552 |
54
Preferred Dividend Shares issued entitle holders to receive a preferential minimum dividend on the earnings of each period, after deduction of allocations legally required to increase legal reserve and prior to the creation or increase of any other capital reserve. The minimum preferential dividend is one peso (Col$1.00) per share and per semester provided that this preferential dividend is higher than dividends decreed on Common Shares; in a contrary situation, that is, if the minimum preferred dividend is not higher than dividend on Common Shares, each Preferred Share will be recognized the same dividend decreed for Common Shares. There shall be no accumulation of dividends. The right of conversion of common shares to preferred shares has been exercised over 67,298,895 shares during the second semester of 2012 and over 117,370,221 shares during the first semester of 2012.
(20) | Capital Surplus |
Following is breakdown of the capital surplus account:
31 December | 30 June | |||||||
Premium on sales of stock (1) | $ | 3,671,667 | 3,671,667 | |||||
Surplus – Equity Participation Method | ||||||||
Banco de Bogota S. A. | 1,176,732 | 777,328 | ||||||
Banco de Occidente S. A. | 413,186 | 327,625 | ||||||
Banco Popular S. A. | 85,431 | - | ||||||
Sociedad Administradora de Fondos de | ||||||||
Pensiones y Cesantias Porvenir S.A. | 2,679 | 3,944 | ||||||
Grupo Aval Limited | 211 | - | ||||||
1,678,239 | 1,108,897 | |||||||
$ | 5,349,906 | 4,780,564 |
(1) | Included in Note 24 – Capital Surplus |
(21) | Reserves |
Legal
According with legal dispositions, all companies must create a legal reserve through allocation of ten percent (10%) of net earnings of each period au to the amount of fifty percent (50%) of subscribed capital. This reserve may be reduced to less than fifty percent (50%) of subscribed capital when required to cover losses in excess of retained earnings.
Breakdown of the reserves account is as follows:
31 December | 30 June | |||||||
Legal reserve | $ | 9,276 | 6,972 | |||||
Temporary reserve | ||||||||
At discretion of the highest corporate authority | 2,736,084 | 2,461,056 | ||||||
$ | 2,745,360 | 2,468,028 |
(22) | Revaluation of Shareholders Equity |
During the first semester of 2011 recording took place of equity tax in the amount of Col $45,857, an amount that covers payments during four years (2011-2014). At 31 December 2012 this item registered no movement
31 December | 30 June | |||||||
On social capital | $ | 53,081 | 53,081 | |||||
On capital surplus | 188,138 | 188,138 | ||||||
On Reserves | 403,585 | 403,585 | ||||||
On retained earnings | 90,891 | 90,891 | ||||||
On non-productive assets | 2,100 | 2,100 | ||||||
On Surplus – Equity Participation Method | 137,430 | 137,430 | ||||||
$ | 875,225 | 875,225 |
55
(23) | Surplus on Revaluation of Investments |
Equity holdings of the Company between 31 December and 30 June 2012 b reason of changes in accounting policies and practices of Grupo Aval Acciones y Valores, as described in Note 10, increased in the amount of Col$433,681 resulting from the booking and disclosure of revaluation of investments in controlled companies.
31 December | 30 June | |||||||
Banco de Bogota S.A. | $ | 4,302,842 | 4,211,951 | |||||
Banco de Occidente S.A. | 1,105,868 | 1,195,272 | ||||||
Banco AV Villas S.A. | 419,495 | 658,151 | ||||||
Banco Popular S.A. | 1,921,847 | 2,107,173 | ||||||
Grupo Aval International Limited | (11,186 | ) | - | |||||
$ | 7,738,866 | 8,172,547 |
(24) | Transactions with Related Parties |
Related Parties are the main shareholders, members of Boards of Directors and Companies in which Grupo Aval Acciones y Valores S.A. holds investment stakes above ten percent (10%) or where there are interests of economic, administrative or financial nature. Also included in this category are companies in which shareholders or members of the Board of Directors have ownership participation higher than ten percent (10%).
Below follows presentation of outstanding balances at 31 December and 30 June 2012:
a) | Shareholders |
Main outstanding balances of transactions engaged with shareholders are as follows:
31 December | 30 June | |||||||
Financial Obligations: | ||||||||
Adminegocios y Cía. S.C.A. (1) | $ | 8,333 | 8,333 |
(1) Included in Note 11; conditions applicable are also included in Note 11
31 December | 30 June | |||||||
Accounts payable - Interest | ||||||||
Adminegocios y Cía. S.C.A.(2) | $ | 107 | 108 | |||||
107 | 108 | |||||||
Dividends | ||||||||
Adminegocios y Cía. S.C.A. (2) | 61,651 | 46,553 | ||||||
Actiunidos S.A. (2) | 41,127 | 37,014 | ||||||
102,778 | 83,567 | |||||||
Total Dividends and Interest | 102,885 | 83,675 |
(2) Included in Note 13 – Accounts Payable
31 December | 30 June | |||||||
Accounts payable - Interest | ||||||||
Adminegocios y Cía. S.C.A.(2) | $ | 107 | 108 | |||||
107 | 108 | |||||||
Dividends | ||||||||
Adminegocios y Cía. S.C.A. (2) | 61,651 | 46,553 | ||||||
Actiunidos S.A. (2) | 41,127 | 37,014 | ||||||
102,778 | 83,567 | |||||||
Total Dividends and Interest | 102,885 | 83,675 |
(2) Included in Note 13 – Accounts Payable
56
b) | Members of the Board of Directors |
Transactions engaged with Board members are as follows:
31 December | 30 June | |||||||
Fees paid (1) | $ | 213 | 239 |
1) Included in Note 25 – Operating Income and Expenses
c) | Companies in which Company holds ownership interest equal to or higher than 10% |
Most relevant outstanding balances in transactions held with companies in which Company has ownership interest equal to or higher than 10% are as follows.
31 December | 30 June | |||||||
Readily Available Funds: | ||||||||
Demand Deposit Accounts: (1) | ||||||||
Banco de Bogota S.A. (2) | $ | 844 | 557 | |||||
Banco de Occidente S.A. | 7,986 | 787 | ||||||
Banco Comercial AV Villas S.A. | 7 | 32 | ||||||
Banco Popular S.A. | 625 | 513 | ||||||
$ | 9,462 | 1,889 | ||||||
Savings Accounts: (1) | ||||||||
Banco de Bogota S.A. | 575,142 | 736,703 | ||||||
Banco de Occidente S.A. | 159,118 | 222,852 | ||||||
Banco Comercial AV Villas S.A. | 2,540 | 3,929 | ||||||
Banco Popular S.A. | 70,066 | 114,359 | ||||||
$ | 806,866 | 1,077,843 | ||||||
Total Readily Available Funds | $ | 816,328 | 1,079,732 |
(1) Included in Note 3 – Readily Available Funds
(2) Includes Col$2 in foreign currency converted to domestic currency according to accounting policy described in Note 2 (m).
31 December | 30 June | |||||||
Debtors: | ||||||||
Dividends (3) | ||||||||
Banco de Bogota S.A. | $ | 89,273 | 83,728 | |||||
Banco de Occidente S.A. | 36,703 | 35,427 | ||||||
Banco Popular S.A. | 42,144 | 42,144 | ||||||
Sociedad Administradora de | ||||||||
Fondos de Pensiones y Cesantias Porvenir S.A. | - | 2,380 | ||||||
$ | 168,120 | 163,679 | ||||||
Fees | ||||||||
Banco Comercial AV Villas S.A. | - | 826 | ||||||
$ | - | 826 | ||||||
Deposit Holders | ||||||||
Banco de Occidente S.A. | $ | 172 | 188 |
(3) Included in Note 6 –Short Term debtors
31 December | 30 June | |||||||
Negotiable Investments : (16) | ||||||||
Fiduciaria Bogota S.A. | 21 | 37 | ||||||
Fiduciaria Corficolombiana S.A. | 8,277 | 1,795 | ||||||
$ | 8,298 | 1,832 |
(4) Included in Note 4 – Negotiable Investments
57
31 December | 30 June | |||||||
Permanent Investments (5) | ||||||||
Banco de Bogota S.A. | $ | 5,686,382 | 5,036,474 | |||||
Banco de Occidente S.A. | 2,256,851 | 2,064,699 | ||||||
Banco Comercial AV Villas S.A. | 854,015 | 772,932 | ||||||
Sociedad Administradora de | ||||||||
Fondos de Pensiones y Cesantias Porvenir S.A. | 163,146 | 143,600 | ||||||
Banco Popular S.A. | 1,698,802 | 1,513,475 | ||||||
Grupo Aval Limited | (61,063 | ) | (22,994 | ) | ||||
Grupo Aval International Limited | (14 | ) | - | |||||
$ | 10,598,119 | 9,508,186 |
(5) Included in Note 5 – Permanent Investments
31 December | 30 June | |||||||
Intangibles: (6) | ||||||||
Goodwill Acquired | ||||||||
Banco de Occidente S.A. | $ | 41,138 | 41,662 | |||||
Banco Popular S.A. | 370,854 | 376,292 | ||||||
$ | 411,992 | 417,954 |
(6) Included in Note Nota 8 - Intangibles
31 December | 30 June | |||||||
Accounts Payable: | ||||||||
Banco de Bogota S.A. (7) | $ | 14 | - |
( 7) Included Note 12-Supliers
Capital Surplus: | 31 December | 30 June | ||||||
Equity Participation Method (8) | ||||||||
Banco de Bogota S. A. | $ | 1,176,732 | 777,328 | |||||
Banco de Occidente S. A. | 413,186 | 327,625 | ||||||
Sociedad Administradora de | ||||||||
Fondos de Pensiones y Cesantias Porvenir S.A. | 2,679 | 3,944 | ||||||
Banco Popular S. A. | 85,431 | - | ||||||
Grupo Aval Limited | 211 | - | ||||||
$ | 1,678,239 | 1,108,897 | ||||||
(8) Included in Note 20 – Capital Surplus | ||||||||
31 December | 30 June | |||||||
Operating Income: | ||||||||
Interest Income (9) | ||||||||
Banco de Bogota S.A. | $ | 18,787 | 24,686 | |||||
Banco de Occidente S.A. | 4,759 | 6,414 | ||||||
Banco Comercial AV Villas S.A. | 102 | 1,888 | ||||||
Banco Popular S.A. | 2,274 | 3,232 | ||||||
$ | 25,922 | 36,220 |
58
31 December | 30 June | |||||||
Income – Equity Participation Method: (10) | ||||||||
Banco de Bogota S.A. | $ | 429,050 | 440,706 | |||||
Banco de Occidente S.A. | 179,998 | 162,515 | ||||||
Banco AV Villas S.A. | 74,397 | 59,181 | ||||||
Sociedad Administradora de | ||||||||
Fondos de Pensiones y Cesantias Porvenir S.A. | 20,809 | 20,870 | ||||||
Banco Popular S.A. | 167,040 | 165,451 | ||||||
Grupo Aval Limited | (38,279 | ) | (22,994 | ) | ||||
Grupo Aval International Limited | (14 | ) | - | |||||
$ | 833,001 | 825,729 |
Recoveries from changes in equity holdings (11) | ||||||||
Banco AV Villas S.A. | $ | 36,835 | 9,663 | |||||
Sociedad Administradora de | ||||||||
Fondos de Pensiones y Cesantias Porvenir S.A. | 17,145 | 8,406 | ||||||
Grupo Aval Limited | 205 | - | ||||||
$ | 54,185 | 18,069 |
31 December | 30 June | |||||||
Loss under Equity Participation Method due to equity changes (12) | ||||||||
Sociedad Administradora de Fondos de | ||||||||
Pensiones y Cesantias Porvenir S.A. | - | 7,783 | ||||||
Banco Popular S.A. | - | 17,145 | ||||||
Banco Comercial AV Villas S.A. | - | 10,391 | ||||||
Grupo Aval Limited | 205 | - | ||||||
$ | 205 | 35,319 |
Operating Expenses Rentals | ||||||||
31 December | 30 June | |||||||
Sociedad Administradora de | ||||||||
Fondos de Pensiones y Cesantias Porvenir S.A. | $ | 242 | 235 | |||||
Banco Comercial AV Villas S.A. | 122 | 118 | ||||||
$ | 364 | 353 |
(13) Included in Note 25 – Operating Income and expenses
Amortization of Goodwill Acquired:(14) | ||||||||
31 December | 30 June | |||||||
Banco de Occidente S.A. | $ | 524 | 467 | |||||
Banco Popular S.A. | $ | 5,438 | 5,085 | |||||
$ | 5,962 | 5,552 |
59
31 December | 30 June | |||||||
Non-Operating Income (15) | ||||||||
Fees: | ||||||||
Banco de Bogota S.A. | $ | 6,439 | 7,130 | |||||
Banco de Occidente S.A. | 4,458 | 4,936 | ||||||
Banco Comercial AV Villas S.A. | 2,477 | 2,742 | ||||||
Banco Popular S.A. | 3,963 | 4,388 | ||||||
Sociedad Administradora de | ||||||||
Fondos de Pensiones y Cesantias Porvenir S.A. | 2,477 | 2,742 | ||||||
$ | 19,814 | 21,938 |
(15) Included in Note 26 – Non Operating Income and expenses
31 December | 30 June | |||||||
Non-Operating Expenses (16) | ||||||||
Financial: | ||||||||
Banco de Bogota S.A. | $ | 159 | 179 | |||||
Banco Comercial AV Villas S.A. | 1 | 27 | ||||||
Banco de Occidente S.A. | 90 | 19 | ||||||
Banco Popular S.A. | 1 | 7 | ||||||
$ | 251 | 232 |
As of 31 December and 30 June 2012, Company did not engage in transactions with its Administrators. Transactions developed with related companies were so under generally applicable market conditions for transactions of similar features and nature
60
(25) | Operating Income and Expenses |
Breakdown of Operating income and expenses is as follows:
Operating Income: | ||||||||
Interest (1) | $ | 25,923 | 36,220 | |||||
Financial Returns | 252 | 145 | ||||||
Equity Participation Method | 833,001 | 825,729 | ||||||
Recoveries from equity changes | 54,185 | 18,069 | ||||||
$ | 913,361 | 880,163 | ||||||
Operating Expenses: | ||||||||
Personnel expenses | $ | 11,524 | 9,901 | |||||
Fees | ||||||||
Board of Directors (2) | 213 | 239 | ||||||
Fiscal Auditor | 45 | 21 | ||||||
Legal Counseling | 434 | 1,533 | ||||||
Financial Counseling | 301 | 3,956 | ||||||
Technical Counseling | 554 | 2,818 | ||||||
Other | 3,056 | 0 | ||||||
4,603 | 8,567 | |||||||
Taxes | ||||||||
Industry and Commerce | 5,148 | 5,128 | ||||||
Financial Transactions | 2,656 | 3,667 | ||||||
Vat - deductible | 4 | 1,127 | ||||||
7,808 | 9,922 | |||||||
Rentals | ||||||||
Real Estate (3) | 364 | 353 | ||||||
Computer Equipment | 7 | 7 | ||||||
371 | 360 | |||||||
Contributions and memberships | 178 | 151 | ||||||
Insurance | - | 4 | ||||||
Services | 665 | 593 | ||||||
Legal expenses | 12 | 8 | ||||||
Maintenance and Repairs | 108 | 29 | ||||||
Fittings and Installation | 69 | 8 | ||||||
Travel expenses | 112 | 123 | ||||||
Depreciation | 113 | 91 | ||||||
Amortization of Intangibles | 5,962 | 5,552 | ||||||
Amortization of deferred assets | 11,639 | 11,619 | ||||||
Reserve – Negotiable investments | - | 3 | ||||||
Operational sales expenses | 1,942 | 563 | ||||||
Sundry | 241 | 214 | ||||||
$ | 45,347 | 47,708 |
(2) Included in Note 24 - b)Members of the Board of Directors
(3) Included in Note 24 - c) Rental expenses
61
(26) | Non-Operating Income and expenses |
Following is breakdown of non-operating income and expenses for the semesters ended on:
31 December | 30 June | |||||||
Fees:(1) | ||||||||
Banco de Bogota S.A. | $ | 6,439 | 7,130 | |||||
Banco de Occidente S.A. | 4,458 | 4,936 | ||||||
Banco AV Villas S.A. | 2,477 | 2,742 | ||||||
Banco Popular S.A. | 3,963 | 4,388 | ||||||
Sociedad Administradora de | ||||||||
Fondo de Pensiones y Cesantias Porvenir S.A. | 2,477 | 2,742 | ||||||
$ | 19,814 | 21,938 | ||||||
Services | ||||||||
Corporacion Publicitaria S.A. | 2 | 2 | ||||||
2 | 2 | |||||||
Recoveries: | ||||||||
Reimbursement of other costs | 90 | 119 | ||||||
Other recoveries | 2 | - | ||||||
92 | 119 | |||||||
Foreign Exchange differential | 4 | 57 | ||||||
$ | 19,912 | 22,116 | ||||||
(1) Included in Note 24 - c) Non-operating Income |
62
Following is breakdown of non.-operating expenses for the semesters ended on
31 December | 30 June | |||||||
Financial | ||||||||
Banking expenses(1) | $ | 5 | 28 | |||||
Fees (2) | 354 | 360 | ||||||
Foreign Exchange differential | 13 | 9 | ||||||
372 | 397 | |||||||
Interest | ||||||||
Bonds | 30,490 | 34,679 | ||||||
Financial Obligations - Bienes y Comercio | 14,853 | 14,389 | ||||||
Financial Obligations - Adminegocios(3) | 350 | 8,899 | ||||||
Financial Obligations -Rendifin | 33,219 | 32,226 | ||||||
Interest / Other | 1 | 0 | ||||||
78,913 | 90,193 | |||||||
79,285 | 90,590 | |||||||
Sundry | ||||||||
Extraordinary expenses | - | 31 | ||||||
Extraordinary Expenses DIAN | - | 7 | ||||||
Guarantee Enforcement Process | - | 14 | ||||||
Donations | 2 | - | ||||||
2 | 52 | |||||||
$ | 79,287 | 90,642 |
(2) Included in Note 24 – Non-Operating expenses – Financial- Banco de Bogota Col$157; Occidente Col$89
(3) Included in Note 24 a) Shareholders – Financial expenses
63
(27) | Income and Complementary Tax |
Below follows conciliation of accounting earnings and estimated net earnings for the semesters ended 31 December and 30 June 2012
31 December | 30 June | |||||||
Earnings before Income Tax | $ | 808,434 | 728,610 | |||||
Plus (Less) items that increase or | ||||||||
(Reduce) fiscal earnings: | ||||||||
Recoveries | (54,185 | ) | (18,069 | ) | ||||
Income – Equity Participation Method | (833,001 | ) | (825,729 | ) | ||||
Loss – equity Participation Method | 205 | 35,319 | ||||||
Tax on Financial transactions | 1,992 | 2,750 | ||||||
Non-deductible expenses (Art. 13 Law 788/02) | 94,845 | 95,406 | ||||||
Expenses and reserves –Non deductible | - | 3 | ||||||
Net Taxable Earnings | $ | 18,290 | 18,290 | |||||
Presumptive Earnings | 18,291 | 18,291 | ||||||
Current Income Tax (33%) | $ | 6,036 | 6,036 |
At 31 December 2012 and 30 June 2012 accounting equity differs from fiscal equity by reason of the following
31 December | 30 June | |||||||
Accounting Equity | $ | 17,530,307 | 17,037,490 | |||||
Plus (less) items that increase (decrease) fiscal equity: | ||||||||
Lower cost of investments | (4,552,535 | ) | (3,432,626 | ) | ||||
Intangibles-goodwill | 196,186 | 190,224 | ||||||
Revaluations | (7,537,116 | ) | (7,970,797 | ) | ||||
Estimated Liabilities and Reserves | 1,171 | 7,368 | ||||||
Fiscal Equity | $ | 5,638,013 | 5,831,659 |
The Colombian Congress issued Law 1607 of 26 December 2012 introducing important reforms to the Colombian tax systems, mainly:
· | Income tax rate declines from 33% to 25% commencing in 2013 and a new tax, denominated tax for equality (CREE) is created at a rate of 9% between 2013 and 2015 and of 8% commencing on 2016; review of items included in calculation of the taxable base incorporates several differences when compared to calculation of taxes on regular income. |
· | Taxpayers of CREE are not obligated to make SENA and ICBF contributions corresponding to employees making less than 10 minimum legal monthly salaries per month; this exoneration is also applicable to cont4ributionsto the overall health regime commencing in January 2014. |
· | Introduction takes place of the concept of “permanent establishment” understood as a permanent location at which a foreign company carries out its business activity. |
· | Amendment is made to calculation of taxable and non-taxable earnings of companies that make dividend payments to their shareholders and partners. |
· | New rules are created on the transfer price regime. Amongst them, enlargement of the scope for application to operations with related economic parties located at duty free zones and the regulation of some operations of taxpayers with foreign companies linked to a permanent establishment in Colombia or abroad. |
64
(28) | Memo Accounts – Fiscal |
Following is breakdown of memo accounts - fiscal:
31 December | 30 June | |||||||
Difference between accounting and fiscal value | ||||||||
Investments | 4,552,535 | 3,432,626 | ||||||
Intangibles | 196,186 | 190,224 | ||||||
Revaluations | 7,537,116 | 7,970,797 | ||||||
$ | 12,285,837 | 11,593,647 |
(29) | Memo Accounts – Control |
Following is Breakdown of memo accounts – control:
31 December | 30 June | |||||||
Debtors - control | ||||||||
Control-Loss Equity Participation Method | $ | 23,151 | 77,132 | |||||
Inflation Adjustment - assets | 885,158 | 885,158 | ||||||
908,309 | 962,290 | |||||||
Creditor - Control Inflation adjustments - Equity | ||||||||
$ | 875,225 | 875,225 | ||||||
Creditor – Equity Holdings | ||||||||
Difference between accounting and fiscal value | ||||||||
Equity | $ | 11,892,294 | 11,205,831 | |||||
Net earnings | 765,817 | 704,284 | ||||||
Liabilities | 1,171 | 7,367 | ||||||
$ | 12,659,282 | 11,917,482 |
(30) | Creditor Memo Accounts – Contingents |
Following is breakdown of creditor memo accounts - contingents:
31 December | 30 June | |||||||
Guarantee- Bond Issue by Grupo Aval Limited | ||||||||
25 January 2012 | $ | 1,060,938 | 1,070,760 | |||||
19 September 2012 | 1,768,230 | - | ||||||
2,829,168 | 1,070,760 |
65
(31) | Financial ratios |
Financial ratios for the semesters then ended are as follows:
31 December | 30 June | |
Liquidity Ratio | ||
Current Assets | 1.44 | 2.42 |
Current Liabilities | ||
Return on Assets | ||
Net Earnings | ||
Total Assets | 4.06% | 3.73% |
Return on Equity | ||
Net earnings | ||
Total Shareholders Equity | 4.58% | 4.24% |
Leverage | ||
Total Liabilities Total Shareholders Equity | 12.73% | 13.71% |
Operating Efficiency | ||
Operating Expenses Total Assets | 0.23% | 0.25% |
Working Capital | ||
Current Assets – Current Liabilities | $311,763 | 748,333 |
Solvency | ||
Shareholders Equity Total Assets | 88.70% | 87.94% |
Operating Margin | ||
Operating Profit | 95.01% | 90.57% |
Operating Income |
Liquidity ratio:
The liquidity ratio remains stable and within optimum ranges that indicate existing due support for payment of current liabilities.
Operating Efficiency:
This ratio continues to be within parameters for companies characterized by high operating and administrative efficiency.
Working Capital:
Working Capital registers a decrease resulting from increases in accrual of the current portion of long term financial obligations or outstanding bond issues and a reduction in the amount of cash holdings.
Solvency:
Solvency ratio for the Company is 88.70%, mainly reflected in its permanent and negotiable investments.
66
Main variations in items of the general balance sheet:
a) | Negotiable Investments |
Negotiable investments present a Col$6,466 increase resulting mainly from the strengthening of investments in Fiduciaria Corficolombiana.
b) | Permanent Investments |
Permanent investments rose in the amount of Col$1,089,933 due to variation in homogenized equity holdings
c) | Revaluations |
There is a Col$433,681 reduction in this item due to recognition of valuation of Grupo Aval investments in controlled entities when compared to their respective realizable value
31 December | 30 June | |||||||
Banco de Bogota S.A. | $ | 4,302,842 | 4,211,951 | |||||
Banco de Occidente S.A. | 1,105,868 | 1,195,272 | ||||||
Banco AV Villas S.A. | 419,495 | 658,151 | ||||||
Banco Popular S.A. | 1,921,847 | 2,107,173 | ||||||
Grupo Aval International Limited | (11,186 | ) | - | |||||
$ | 7,738,866 | 8,172,547 |
d) | Equity Tax |
This account presents outstanding long term value of Col$11,464 corresponding to accrued tax for years 2013 and 2014 in compliance with dispositions under Law 1370 of 30 December 2009 and Decree 4825 of 29 December 2010.
e) | Shareholders Equity |
Main variations in components of shareholders equity were as follows
Capital Surplus
Increase in surplus resulting from application of the equity participation method, in the amount of Col $569,342 from changes in permanent investments. Following is breakdown of surplus under equity participation method:
31 December | 30 June | |||||||
Banco de Bogota S.A. | $ | 1,176,732 | 777,328 | |||||
Banco de Occidente S.A. | 413,186 | 327,625 | ||||||
Banco Popular S.A. | 85,431 | - | ||||||
Sociedad Administradora de Fondos de | ||||||||
Pensiones y Cesantias Porvenir S.A. | 2,679 | 3,944 | ||||||
Grupo Aval Limited | 211 | - | ||||||
Total | $ | 1,678,239 | 1,108,897 |
Reserves
Legal reserve increase by Col$2,304 in accordance with legal regulations under which a company must create a legal reserve through allocation of ten percent (10%) of net earnings of each accounting period up to the equivalent of fifty percent (50%) of subscribed capital.
Creation took place of a temporary reserve at discretion of the highest corporate instance in the amount of Col$2,736,083. Temporary reserves increase in a total amount of Col$275,028 at the discretion of the highest corporate instance, approved by the general Shareholders Meeting held on 30 march 2012.
67
Revaluation Surplus
Revaluation surplus registered a significant increase as a result of application of a new valuation policy, as commented in Note 10, referring to accounting and disclosure of revaluation of investment in controlled companies.
(32) | Other disclosures |
Total number of employees was:
31 December | 30 June | |||||||
Officers | 20 | 18 | ||||||
Other | 114 | 104 | ||||||
Total | 134 | 122 |
(33) | Determination of intrinsic value and earnings per share |
On the basis of the weighted average of shares outstanding on December 2012 and the number of shares outstanding on December 2012, determination was made of intrinsic value and earnings per share, as follows:
31 December | 30 June | ||||||||||
Intrinsic value of shares | |||||||||||
Total accounting equity (balance sheet) | $ | 17,530,306 | 17,037,490 | ||||||||
Total equity base for calculation of intrinsic value (A) | $ | 17,530,306 | 17,037,490 | ||||||||
Shares subscribed and paid (Nota 19) | 18,551,766,453 | 18,551,766,453 | |||||||||
Total shares outstanding (Note 2, literal j) | (B) | 18,551,766,453 | 18,551,766,453 | ||||||||
Intrinsic Value (A) / (B) | $ | 944.94 | 918.38 | ||||||||
Net earnings per share | |||||||||||
Earnings of the period | (1) | $ | 802,397 | 722,574 | |||||||
At 31 December and 30 June 2012 – number of outstanding shares during the respective period (in million shares) | (2) | $ | 18,552 | 18,552 | |||||||
Net earnings per share (1) / (2) | 43.25 | 38.95 |
(34) | Relevant Events |
On 23 January 2012, Grupo Aval Limited a Cayman Islands affiliate of Grupo Aval Acciones y Valores S.A. issued bonds in the international capital markets under the terms of Regulation S Of the 1933 capital Markets Act of the United States of America and under the terms of Rule 144A, for a total amount of US$600 million, maturing January 2017, with a deduction of 54.2 basis points, price of 99.458% at an annual interest rate of 5.25%.
On 19 September 2012, Grupo Aval Limited, a Cayman Islands affiliate of Grupo Aval Acciones y Valores S.A. issued bonds in the international capital markets under the terms of Regulation S of the 1933 Capital Markets Act of the United States of America and under Rule 144 in the amount of US$1,000 million maturing August 2022, with a deduction of 39.3 basis points, price of 99.607% and interest rate of 4.75%.
On 8 October 2012 incorporation took place of Grupo Aval International Limited a Cayman Islands affiliate of Grupo Aval Acciones y Valores S.A.
On 3 December 2012, Grupo Aval Acciones y Valores S.A. made payment of Col $125,751 corresponding to capital under placement of Series “B” Bonds – Fourth issue, in compliance with established terms.
On 24 December 2012, Banco Bilbao Vizcaya Argentaria S.A. and Companía Chilena de Inversiones S.L., in their capacity as seller, Sociedad Administradora de Pensiones y Cesantias Porvenir S.A in its capacity as buyer and Grupo Aval in its capacity as guarantor of the obligations of Porvenir, subscribed a contract for the purchase-sale of shares in undertaking of the acquisition of 99.99% of shares property of BBVA Horizonte Sociedad Administradora de Fondos de Pensiones y Cesantias S.A.
68
(35) | Subsequent Events |
On16 January 2013, the Board of Directors of the Company authorized participation in the acquisition of a portion of the shares of BBVA Horizonte Sociedad Administradora de Fondos de Pensiones y Cesantias, in its capacity as assignee under the purchase-sale agreement subscribed by Sociedad Administradora de Pensiones y Cesantias Porvenir S.A. on 24 December 2012.
The Board of Directors of Grupo Aval then also authorized Company to grant a loan to Porvenir up to the amount of Col $350,000 and granted ample authority to the legal representative to negotiate the terms and conditions of said loan.
On 20 February 2013, Porvenir subscribed an agreement with Banco de Bogota S.A., Banco de Occidente S.A. and Grupo Aval by means of which it made partial assignment to these entities of its right to acquire Horizonte shares in a proportion similar to their actual ownership interest in Porvenir, which, in the case of Banco de Bogota S.A. and Banco de Occidente S.A. includes their indirect ownership interest in Porvenir through their affiliates, Fiduciaria Bogota S.A and Fiduciaria de Occidente S.A. respectively.
69
Consolidated
Financial Statements
As of 31 December and 30 June 2012
With the Opinion of the Fiscal Auditor
Opinion of the Fiscal Auditor
To the Shareholders of
Grupo Aval Acciones y Valores S.A.
I have examined the audited the consolidated financial statements of Grupo Aval Acciones y Valores S.A. and the subordinates referred to in Note 1 to the consolidated financial statements, including the consolidated general balance sheets at 31 December and 30 June 2012 and the consolidated income statements, statements of changes in shareholders equity, statements of changes in financial condition and statements of cash flow for the semester ended on such dates and their respective Notes, which include a summary of significant accounting policies and other explanatory information. The financial statements at 30 June de 2012 of Banco Comercial AV Villas S.A. and Banco Popular S.A., entities property in more than 50% by Grupo Aval Acciones y Valores S.A., were audited by other fiscal auditors. Said financial statements include total assets that account for 7% and 12% of income representing 4% and 9% at 30 June of 2012 in terms of, respectively, total consolidated assets and income. The reports on the financial statements of Banco Comercial AV Villas S.A. and Banco Popular S.A. at 30 June 2012 have been made available to me and my opinion regarding these amounts is solely based on the reports of these fiscal auditors.
The administration is responsible for the due preparation and presentation of the consolidated financial statements according with accounting principles generally accepted in Colombia and the instructions issued by the Financial Superintendence of Colombia. Such responsibility includes; design, implementation and preservation of internal control relevant to the preparation and presentation of consolidated financial statements free of errors of material importance whether by reason of fraud or error, select and apply appropriate accounting policies as well as establish reasonable accounting estimates to the circumstances.
It is my responsibility to issue an opinion on the consolidated financial statements on the basis of my audit and on the reports issued by other fiscal auditors at 30 June 2012. I received all information necessary to perform my functions and conducted my examination according to audit principles generally accepted in Colombia. Such principles require that I fulfill ethical requirements, plan and carry out the audit to achieve reasonable certainty that the financial statements are free of errors of material importance.
An audit includes performing procedures to achieve evidence on the amounts and findings of the consolidated financial statements. The procedures selected depend on the criteria of the fiscal auditor, including evaluation of the risk of errors of material importance in the consolidated financial statements. In such evaluation of risk, the fiscal auditor takes into account internal control relevant to the preparation and presentation of the consolidated financial statements in order to design audit procedures appropriate to the circumstances. An audit also includes evaluation of the utilization of suitable accounting policies and of the reasonability of accounting estimated performed by the administration, as well as evaluation of the presentation of the consolidated financial statements, in general. I consider that the audit evidence achieved provides a reasonable base to support the opinion I express below.
In my opinion, based on my audits at 31 December and 30 June 2012 and on the reports of other fiscal auditors at 30 June 2012, the aforementioned consolidated financial statements, attached hereto, reasonably present, in all aspects of material importance, the consolidated financial condition of Grupo Aval Acciones y Valores S.A. and its subordinates at 31 December and 30 June 2012, the consolidated results of its operations and consolidated flows for the semester then ended, in accordance with accounting principles generally accepted in Colombia and the instructions of the Financial Superintendence of Colombia, applied in uniform manner.
Lida Marcela Herrera Vargas
Fiscal Auditor of Grupo Aval Acciones y Valores S.A.
CPA No. 106. 020-T
Member of KPMG Ltda.
26 February 2013
Consolidated Balance Sheet
As of 31 December and 30 June 2012
(Figures in million pesos)
Assets | 31 December | 30 June | ||||||
Readily Available Holdings: | ||||||||
Cash and bank Deposits (Note 4) | $ | 9,889,060 | 10,952,115 | |||||
Active position in monetary market and related transactions (Note 5) | 3,509,819 | 2,237,865 | ||||||
Total Readily Available Cash Holdings | 13,398,879 | 13,189,980 | ||||||
Investments(Note 6): | 19,242,240 | 17,393,170 | ||||||
Negotiable | 4,749,582 | 2,749,698 | ||||||
Available for sale | 11,231,338 | 11,224,009 | ||||||
To hold through maturity | 3,261,320 | 3,419,463 | ||||||
Participation securities (variable income): | 3,829,793 | 3,073,350 | ||||||
Negotiable | 901,076 | 1,293,447 | ||||||
Available for sale | 2,928,717 | 1,779,903 | ||||||
Reserves | (9,207 | ) | (8,336 | ) | ||||
Total Investments – Net | 23,062,826 | 20,458,184 | ||||||
Loan Portfolio and Financial Lease transactions (Note 7): | 45,514,193 | 42,598,938 | ||||||
Commercial Loan Portfolio | 23,380,197 | 21,173,509 | ||||||
Consumer loan portfolio | 290,916 | 281,219 | ||||||
Micro-credit | 4,348,331 | 4,086,182 | ||||||
Mortgage Loan Portfolio | 6,495,717 | 5,896,773 | ||||||
Financial lease transactions | 80,029,354 | 74,036,621 | ||||||
Total gross loan portfolio and financial lease transactions | (2,545,565 | ) | (2,397,724 | ) | ||||
Reserves- Loans portfolio and financial lease transactions | 77,483,789 | 71,638,897 | ||||||
Total loan portfolio and financial lease transactions-Net | 793,220 | 737,359 | ||||||
Accounts receivable - Interest (Note 8): Accounts receivable – Interest - Gross | (77,230 | ) | (73,102 | ) | ||||
Reserve – Accounts receivable - Interest | 715,990 | 664,257 | ||||||
Total Accounts receivable – Interest - Net | 454,306 | 328,674 | ||||||
Acceptances and derivatives (Note 9 ) | 1,805,251 | 1,612,728 | ||||||
Accounts receivable other than interest – Net (Note 8) | 1,738,729 | 1,754,048 | ||||||
Properties, Plant and equipment – Net (Note 10) | 375,707 | 364,646 | ||||||
Operating Lease transactions – Net (Note 11) | 91,990 | 88,405 | ||||||
Restitutions and Assets received in Payment – Net (Note 12) Prepaid expenses and deferred Charges – Net (Note 13) | 2,096,111 | 2,051,426 | ||||||
Goodwill – Net (Note 14) | 2,842,216 | 2,893,232 | ||||||
Other assets - net (Note 15) | 1,125,905 | 1,671,662 | ||||||
Reappraisal of assets - Net (Note 16) | 2,097,607 | 2,600,293 | ||||||
Total Assets | $ | 127,289,306 | 119,316,432 | |||||
Memorandum Accounts (Note 25) | $ | 503,185,988 | 469,129,732 | |||||
Contingent Accounts – Net (Note 26) | $ | 6,091,356 | 2,307,503 |
Liabilities and Shareholders’ Equity | 31 December | 30 June | ||||||
Liabilities: | ||||||||
Deposits: | ||||||||
Without cost: | ||||||||
Demand deposit accounts | $ | 11,852,841 | 10,737,089 | |||||
Other | 949,958 | 799,317 | ||||||
12,802,799 | 11,536,406 | |||||||
Interest bearing: | ||||||||
Demand deposit accounts | 8,249,595 | 8,642,978 | ||||||
Term Deposits (Note 17) | 26,864,967 | 26,082,519 | ||||||
Savings deposits | 33,545,932 | 28,316,766 | ||||||
68,660,494 | 63,042,263 | |||||||
Total Deposits | 81,463,293 | 74,578,669 | ||||||
Passive positions in monetary market and related transactions | 5,156,482 | 7,324,754 | ||||||
Acceptances and derivatives (Note 9) | 410,553 | 267,125 | ||||||
Bank loans and other (Note 18) | 10,380,926 | 9,629,660 | ||||||
Accounts payable other than interest (Note 19) | 3,005,304 | 2,912,675 | ||||||
Accounts payable - interest | 474,821 | 394,984 | ||||||
Other liabilities (Note 20) | 1,698,936 | 1,441,021 | ||||||
Debt Instruments – Long term (Note 21) | 9,769,001 | 7,534,241 | ||||||
Estimated Liabilities (Note 22) | 811,711 | 1,011,838 | ||||||
Minority Interest (Note 23) | 5,575,377 | 5,386,236 | ||||||
Total Liabilities | 118,746,404 | 110,481,203 | ||||||
Shareholders’ equity: | ||||||||
Subscribed and paid-in Capital (Note 24): | 18,552 | 18,552 | ||||||
Preferred Shares | 4,930 | 4,744 | ||||||
Common Shares | 13,622 | 13,808 | ||||||
Premium on Sale of Stock | 3,671,668 | 3,671,668 | ||||||
Retained earnings (Note 24): | 3,032,036 | 2,808,123 | ||||||
Allocated Retained Earnings | 2,254,194 | 2,089,606 | ||||||
Unallocated retained earnings (earnings of the period) | 777,842 | 718,517 | ||||||
Revaluation of Shareholders Equity | 1,246,387 | 1,324,698 | ||||||
Capital Surplus: | 574,259 | 1,012,188 | ||||||
Unrealized earnings on sale of investments available for sale | (146,688 | ) | (153,732 | ) | ||||
Asset Revaluation (Note 16) | 720,947 | 1,165,920 | ||||||
Total shareholders’ equity | 8,542,902 | 8,835,229 | ||||||
Total liabilities and shareholders’ equity | $ | 127,289,306 | 119,316,432 | |||||
Memorandum Accounts (Note 25) | $ | 503,185,988 | 469,129,732 | |||||
Contingent Accounts - Net (Note 26) | $ | 6,091,356 | 2,307,503 | |||||
Please refer to the attached Notes to the consolidated financial statements |
LUIS CARLOS SARMIENTO GUTIÉRREZ President | MARÍA EDITH GONZÁLEZ FLÓREZ Accountant CPA No. 13.083-T | LIDA MARCELA HERRERA VARGAS Fiscal Auditor CPA No. 106.020-T Member of KPMG Ltda. (Please refer to the attached Opinion dated 26 February 2013) |
Consolidated Income Statement
For the Semesters ended 31 December and 30 June 2012
(Figures in Million Pesos)
31 December | 30 June | |||||||
Interest Income: | ||||||||
Loan Portfolio | $ | 4,200,708 | 3,845,263 | |||||
Investments | 665,548 | 672,534 | ||||||
Overnight Funds | 109,881 | 98,454 | ||||||
Lease transactions | 345,450 | 307,739 | ||||||
Total Interest Income | 5,321,587 | 4,923,990 | ||||||
Interest expense: | ||||||||
Demand Deposit Accounts | 86,360 | 72,882 | ||||||
Term deposits | 747,080 | 648,982 | ||||||
Savings deposits | 575,910 | 519,614 | ||||||
Bank loans and other | 233,207 | 240,170 | ||||||
Active positions in monetary market and related transactions | 128,277 | 99,995 | ||||||
Debt Instruments (long term debt) | 283,288 | 260,401 | ||||||
Total Interest Expense | 2,054,122 | 1,842,044 | ||||||
Net Interest Margin | 3,267,465 | 3,081,946 | ||||||
Expenses – Net of Reserves for Loan Portfolio and Accounts Receivable | 581,887 | 462,532 | ||||||
Recoveries – charge offs | (77,369 | ) | (65,282 | ) | ||||
Expenses - reserves for assets received in payment and other assets | 37,936 | 32,928 | ||||||
Recovery of Reserves for assets received in payment and other assets | (30,211 | ) | (35,549 | ) | ||||
Total expenses – Net of Allocations for reserves | 512,243 | 394,629 | ||||||
Net Interest Margin – Net of reserves | 2,755,222 | 2,687,317 | ||||||
Services – Fees and Income: | ||||||||
Bank Services - commissions | 713,359 | 680,418 | ||||||
Services of Branch network | 13,497 | 13,948 | ||||||
Commissions - credit cards | 190,782 | 165,136 | ||||||
Commissions – transfers, checks and checkbooks | 35,264 | 36,682 | ||||||
Warehousing services | 91,710 | 83,035 | ||||||
Fiduciary activity | 91,742 | 86,704 | ||||||
Administration of pension and severance funds | 245,616 | 240,914 | ||||||
Other | 92,178 | 84,480 | ||||||
Total Services – Fees and Income | 1,474,148 | 1,391,317 | ||||||
Fees and income on other services | (247,789 | ) | (222,252 | ) | ||||
Total services fees and income – Net | 1,226,359 | 1,169,065 | ||||||
Other Operating Income: | ||||||||
Earnings (Loss) in foreign Exchange transactions | 72,107 | (108,183 | ) | |||||
Earnings on derivatives transactions | 41,986 | 172,958 | ||||||
Earnings on the sale of variable income investments | 741 | 9,967 | ||||||
Dividends | 9,470 | 89,808 | ||||||
Communications, rentals and other | 965,229 | 864,421 | ||||||
Total Other Operating Income | 1,089,533 | 1,028,971 | ||||||
Operating Margin | 5,071,114 | 4,885,353 | ||||||
Operating Expenses: | ||||||||
Employee salaries and benefits | 1,075,534 | 1,014,076 | ||||||
Bonuses | 43,752 | 56,287 | ||||||
Indemnities | 11,620 | 10,535 | ||||||
Administrative expenses and other (Note 27) | 1,997,373 | 1,727,526 | ||||||
Deposit insurance | 93,909 | 91,355 | ||||||
Donations expense | 8,429 | 5,063 | ||||||
Depreciation | 167,495 | 159,713 | ||||||
Amortization of Goodwill | 46,474 | 46,390 | ||||||
Total Operating Expenses | 3,444,586 | 3,110,945 | ||||||
Net Operating Margin | 1,626,528 | 1,774,408 | ||||||
Non-Operating Income (Expenses) - Net (Note 28): | ||||||||
Other Income | 407,966 | 201,619 | ||||||
Other expenses | (83,187 | ) | (107,545 | ) | ||||
Total non-operating results - Net | 324,779 | 94,074 | ||||||
Earnings before income tax and minority interest | 1,951,307 | 1,868,482 | ||||||
Income Tax | (690,286 | ) | (677,727 | ) | ||||
Net earnings before minority interest | 1,261,021 | 1,190,755 | ||||||
Minority interest | (483,179 | ) | (472,238 | ) | ||||
Net earnings of the Period | $ | 777,842 | 718,517 | |||||
Net Earnings per Share (in Colombian pesos) | $ | 41.93 | 38.73 |
Please refer to the attached Notes to the consolidated financial statements. |
LUIS CARLOS SARMIENTO GUTIÉRREZ President | MARÍA EDITH GONZÁLEZ FLÓREZ Accountant CPA No. 13.083-T | LIDA MARCELA HERRERA VARGAS Fiscal Auditor CPA No. 106.020-T Member of KPMG Ltda. (Please refer to the attached Opinion dated 26 February 2013 |
74
Consolidated Statement of Changes in Shareholders Equity
For the semesters ended 31 December and 30 June 2012
(Figures in Million Pesos)
Subscribed and Paid-in Capital | Premium on sale of Stock | Allocated Retained Earnings | Unallocated retained Earnings | Revaluation of Shareholders Equity | Unrealized Earnings (Loss) | Revaluations | Total Shareholders Equity | |||||||||||||||||||||||||
Balance at 31 December 2011 | $ | 18,552 | 3,671,053 | 2,110,365 | 663,360 | 920,087 | (187,100 | ) | 881,742 | 8,078,059 | ||||||||||||||||||||||
Movement of earnings account | – | – | 663,360 | (663,360 | ) | – | – | – | – | |||||||||||||||||||||||
Issue of Stock (Note 24) | – | 615 | – | – | – | – | – | 615 | ||||||||||||||||||||||||
Payment of cash Dividend (Note 24) | – | – | (400,718 | ) | – | – | – | – | (400,718 | ) | ||||||||||||||||||||||
Donations to winter victims | – | – | (1,143 | ) | – | – | – | – | (1,143 | ) | ||||||||||||||||||||||
Unrealized earnings | – | – | – | – | – | 13,481 | – | 13,481 | ||||||||||||||||||||||||
Conversion | – | – | (3,733 | ) | – | – | – | – | (3,733 | ) | ||||||||||||||||||||||
Adjustments | – | – | – | – | – | – | 316,506 | 316,506 | ||||||||||||||||||||||||
Revaluations (Note 16) | – | – | (278,525 | ) | – | 404,781 | 19,887 | (32,328 | ) | 113,815 | ||||||||||||||||||||||
Movement | – | – | – | – | (170 | ) | – | – | (170 | ) | ||||||||||||||||||||||
Payment of Equity Tax | ||||||||||||||||||||||||||||||||
Earnings of the Period | – | – | – | 718,517 | – | – | – | 718,517 | ||||||||||||||||||||||||
Balance at 30 June 2012 | $ | 18,552 | 3,671,668 | 2,089,606 | 718,517 | 1,324,698 | (153,732 | ) | 1,165,920 | 8,835,229 | ||||||||||||||||||||||
Movement of Earnings account | – | – | 718,517 | (718,517 | ) | – | – | – | – | |||||||||||||||||||||||
Payment of cash dividends (Note 24) | – | – | (445,242 | ) | – | – | – | – | (445,242 | ) | ||||||||||||||||||||||
Donations to Winter victims | – | – | (6 | ) | – | – | – | – | (6 | ) | ||||||||||||||||||||||
Unrealized earnings | – | – | – | – | – | 7,046 | – | 7,046 | ||||||||||||||||||||||||
Conversion adjustments | – | – | (977 | ) | – | – | (2 | ) | (60 | ) | (1,039 | ) | ||||||||||||||||||||
Revaluations (Note 16) | – | – | – | – | – | – | (444,913 | ) | (444,913 | ) | ||||||||||||||||||||||
Movement | – | – | (107,704 | ) | – | – | – | – | (107,704 | ) | ||||||||||||||||||||||
Payment of Equity Tax | – | – | – | – | (78,311 | ) | – | – | (78,311 | ) | ||||||||||||||||||||||
Earnings of the Period | – | – | – | 777,842 | – | – | – | 777,842 | ||||||||||||||||||||||||
Balance at 31 December 2012 | $ | 18,552 | 3,671,668 | 2,254,194 | 777,842 | 1,246,387 | (146,688 | ) | 720,947 | 8,542,902 |
LUIS CARLOS SARMIENTO GUTIÉRREZ President | MARÍA EDITH GONZÁLEZ FLÓREZ Accountant CPA No. 13.083-T | LIDA MARCELA HERRERA VARGAS Fiscal Auditor CPA No. 106.020-T Member of KPMG Ltda. (Please refer to the attached Opinion dated 26 February 2013) |
75
Consolidated Statement of Changes
In Financial Condition
For the semesters ended 31 December and 30 June 2012
(Figures in Million Pesos)
31 December | 30 June | |||||||
Funds provided by: Operating Activity: | ||||||||
Net earnings of the period | $ | 777,842 | $ | 718,517 | ||||
Minority Interest | 483,179 | 472,238 | ||||||
Items not affecting operating activity: | ||||||||
Reserve for Investments | 871 | (399 | ) | |||||
Reserve – Loan Portfolio and Accounts receivable | 504,518 | 397,250 | ||||||
Reserve – Assets received in payment and Other | 7,725 | (2,621 | ) | |||||
Recovery of reserves | 107,580 | 100,830 | ||||||
Depreciation | 167,495 | 159,713 | ||||||
Amortization | 46,474 | 46,390 | ||||||
Earnings on sale of variable income investments | 11,597 | (8,939 | ) | |||||
Loss (gain) on valuation of derivatives | 1,368 | (116,118 | ) | |||||
Earnings on sale of assets received in payment | (92,810 | ) | (5,135 | ) | ||||
Earnings on sale of properties, plant and equipment | (104,854 | ) | (6,856 | ) | ||||
Deferred Income Tax | (8,454 | ) | (37,727 | ) | ||||
Funds provided by Operations | 1,902,531 | 1,717,143 | ||||||
Funds from other sources: | ||||||||
Resources from sale of assets received in payment | 126,688 | 36,879 | ||||||
Resources from sale of properties, plant and equipment | 270,140 | 120,847 | ||||||
Assets received in lieu of payment | - | 6,562 | ||||||
Deposits and obligations | 7,058,788 | 3,571,056 | ||||||
Interbank passive overnight funds | (2,166,596 | ) | 4,099,609 | |||||
Debt investment instruments / (long term debt) | 2,284,258 | 968,006 | ||||||
Estimated liabilities and reserves | 200,128 | 1,011,839 | ||||||
Other assets and liabilities - Net | (298,801 | ) | 806,678 | |||||
Total Funds Provided | 9,377,135 | 12,338,619 | ||||||
Funds Used: | ||||||||
Additions to property, plant and equipment | 337,769 | 393,114 | ||||||
Bank loans and other | (817,237 | ) | 1,808,091 | |||||
Accounts payable | (172,466 | ) | 99,320 | |||||
Other liabilities | (257,915 | ) | 6,748 | |||||
Assets surrendered in leasing | 598,944 | 733,006 | ||||||
Assets received in lieu of payment | 3,585 | - | ||||||
Payment of dividends | 417,971 | 392,190 | ||||||
Investments | 2,488,243 | 1,407,827 | ||||||
Loan Portfolio | 6,531,279 | 5,802,540 | ||||||
Acceptances and derivatives | (17,796 | ) | 111,704 | |||||
Accounts Receivable | 55,861 | 92,686 | ||||||
Total Funds Used | 9,168,238 | 10,847,226 | ||||||
Net Increase in Funds | $ | 208,898 | $ | 1,491,393 | ||||
Please refer to the attached Notes to the consolidated financial statements. |
LUIS CARLOS SARMIENTO GUTIÉRREZ President | MARÍA EDITH GONZÁLEZ FLÓREZ Accountant CPA No. 13.083-T | LIDA MARCELA HERRERA VARGAS Fiscal Auditor CPA No. 106.020-T Member of KPMG Ltda. (Please refer to the attached Opinion dated 26 February 2013) |
Consolidated Statement of Cash Flows
For the semesters ended 31 December and 30 June of 2012
(Figures in Million Pesos) | 31 December | 30 June | ||||||
Cash Flows from operating activity: | ||||||||
Net Earnings of the Period | $ | 777,842 | 718,517 | |||||
Minority Interest | 483,179 | 472,238 | ||||||
Adjustments for conciliation of net earnings with net cash from operating activity: | ||||||||
Depreciation – Property, plant and equipment | 167,495 | 159,713 | ||||||
Amortization - Goodwill | 46,474 | 46,390 | ||||||
Reserve – Loan Portfolio and Accounts Receivable – Net | 504,518 | 397,250 | ||||||
(Recovery Reserve for assets received in payment and Other Assets - Net | 7,725 | (2,621 | ) | |||||
Reserve for Investments - Net | 871 | (399 | ) | |||||
Earnings on sale of Investments - Net | 11,597 | (8,939 | ) | |||||
(Earnings) Loss on sale of assets received in payment | (92,810 | ) | (5,135 | ) | ||||
Earnings on sale of property, plant and equipment | (104,854 | ) | (6,856 | ) | ||||
Loss (gain) on valuation of derivative financial instruments | 1,368 | (116,118 | ) | |||||
Net change in other assets and liabilities | (209,760 | ) | 844,103 | |||||
Net cash provided by Operating activity | 1,593,645 | 2,498,143 | ||||||
Cash flows from investment activity: | ||||||||
Increase in loan portfolio and assets surrendered in leasing | (6,531,279 | ) | (5,802,540 | ) | ||||
Resources from sale of properties, plant and equipment | 270,140 | 120,847 | ||||||
Resources from sale of assets received in lieu of payment | 126,688 | 36,879 | ||||||
Acquisition of properties, plant and equipment | (337,769 | ) | (393,114 | ) | ||||
Net (Increase) decrease in investments | (2,488,243 | ) | (1,407,827 | ) | ||||
Net cash used in investment activity | (8,960,463 | ) | (7,445,755 | ) | ||||
Cash flows from financing activity: | ||||||||
Dividends paid | (417,971 | ) | (392,190 | ) | ||||
Increase in deposits | 7,058,788 | 3,571,056 | ||||||
(Decrease) increase in interbank loans and overnight funds | (2,166,596 | ) | 4,099,609 | |||||
Increase (decrease) in bank loans and other | 817,237 | (1,808,091 | ) | |||||
Increase in long term debt - Bonds | 2,284,258 | 968,006 | ||||||
Premium on sale of Stock | - | 615 | ||||||
Net cash from financing activity | 7,575,716 | 6,439,005 | ||||||
Increase in cash holdings and cash equivalents | 208,898 | 1,491,393 | ||||||
Cash holdings and cash equivalents at the beginning of the period | 13,189,980 | 11,698,587 | ||||||
Cash holdings and cash equivalents at the closing of the period | $ | 13,398,878 | 13,189,980 | |||||
LUIS CARLOS SARMIENTO GUTIÉRREZ President | MARÍA EDITH GONZÁLEZ FLÓREZ Accountant CPA No.. 13.083-T | LIDA MARCELA HERRERA VARGAS Fiscal Auditor CPA No. 106.020-T Member of KPMG Ltda. (Please refer to the attached Opinion dated 26 February 2013) |
Notes to the Consolidated Financial at 31 December and June 2012
(Figures in million pesos)
(1) Organization and Background
Grupo Aval Acciones y Valores S.A. (hereinafter the “Company” or “Grupo Aval”) was incorporated under Colombian law on January 7, 1994 with a registered office and business address in Bogota, Colombia. The corporate purpose of Grupo Aval (as parent company) also includes the purchase and sale of securities issued by mercantile and financial entities. I development of its main corporate purpose, it is the largest shareholder of Banco de Bogota S.A., Banco de Occidente S.A., Banco Popular S.A. and Banco Comercial AV Villas S.A.), entities which main purpose is to carry out all transactions, acts and services inherent to the banking business according to applicable laws and regulations. Additionally and through its direct and indirect investments in Corporacion Financiera Colombiana S.A. (“Corficolombiana”) and Sociedad Administradora de Fondos y Pensiones Porvenir S.A. (“Porvenir”), the Company is also present in the merchant banking market and in the pension and severance fund administration business in Colombia.
In accordance with its social statute, Grupo Aval may (i) promote the creation and invest in all sorts of companies with similar or complementary interests to its business purposes; (ii) represent natural or legal persons that engage in similar or complementary activities to those mentioned above; (iii) take or surrender loans with or without interest; (iv) place its real estate and personal properties as guarantees or under administration; (v) issue, endorse, acquire, protest, cancel or pay drafts, checks, promissory notes or any other securities, or accept them or give them in payment; (vi) participate in companies that pursue similar corporate interests and freely use its capital for participation in such companies; (vii) render services in those areas related to its activities and expertise in and knowledge of Colombia and (viii) and execute, or engage in general, in exchange contracts in all of its modalities and expressions in similar activities, parallel or complementary to allow exercise of its rights and fulfillment of its obligations.
Duration of the Company as established in its by-laws is 23 May 2044 although it may be dissolved or extended prior to such term.
The Consolidated Financial Statements include the assets, liabilities, earnings, contingent accounts and memo accounts of Grupo Aval Acciones y Valores S. A. and its majority owned subsidiaries in which it holds, directly or indirectly, 50% or more of the outstanding voting shares, as well as the companies in which it holds control although being owner of less than 50% of outstanding shares with voting right, excluding participation in collective funds or loan portfolios that according to standing legislation do not require consolidation.
All significant intercompany transactions and balances have been eliminated in consolidation.
Following are those entities in which Grupo Aval Acciones y Valores S.A. directly consolidates its financial statements in a direct manner:
Banco de Bogota S.A.
Banco de Bogota is a privately owned company with main principal offices in Bogota, incorporated by means of Public Deed No. 1923 of 15 November 1870 issued by the Second Public Notary of Bogota D.C. The Financial Superintendence of Colombia, by means of Resolution No. 3140 of 24 September 1993 renewed, with indefinite character, the operating license of the institution. Duration of the bank, as established in its by-laws is through 30 June 2070 but it may either be extended or terminated prior to such date. The corporate purpose of the Bank is to engage in and/or execute all transactions and contracts legally authorized to banking establishments of commercial character, subject to fulfillment of all requirements and limitations imposed by Colombian legislation.
At 31 December 2012, the bank operated with a total of eight thousand five hundred and fifty nine (8,559) employees under work contracts, two hundred and eighty five (285) under civil learning contract and seven hundred seventeen temporary employees and one thousand nine hundred and seventeen (1,957) employees hired for Magazine; additionally the bank hires, from specialized companies under outsourcing contracts a total of two thousand, two hundred and forty three (2,243) people; it operates a branch network of five hundred and sixty eight (568) offices, five (5) Corporate Service Centers (CSC), three (3) Pyme Service Centers, forty six (46) Collection and Payment Offices, , eighteen (18) Entrepreneurial Assessment Offices, one (1) Cash Extension Office with Self-code, ninety (90) Cash extension Offices without self-code, thirteen (13) Branch extensions, , eight (8) Premium Branches, twenty (20) 24 Hour Service Centers, one thousand nineteen (1,019) Banking Correspondents, thirteen (13) Cash-Services, two (2) Client Service Branches, five (5) Service Center for Payroll-Based Loans with Special Services, , eight (8) Payroll-based Loan Attention Centers without self-code and four (4) Basic Branches. It also owns one hundred percent (100%) of the foreign affiliates Banco de Bogota S.A. Panama, which includes Banco de Bogota Nassau, Banco de Bogota Finance Corporation in Cayman Islands and Leasing Bogota S.A. Panama, which includes BAC Credomatic Inc. Other subordinates and investments are presented in Note 6.
Banco de Occidente S.A.
Banco de Occidente S.A. is a legal entity of private nature incorporated as baking establishment, authorized to operate according to dispositions in Resolution No. 3140 of 24 September 1993, issued by the Financial Superintendence of Colombia, which fully and indefinitely renewed its operating license. It was incorporated on 8th September 1964 by means of Public Deed No. 659 of Public Notary 4 of the city of Cali.
The Bank has main offices and domicile in the city of Santiago de Cali. Duration, as established in corporate by-laws is 99 years as of the date of incorporation. In fulfillment of its corporate purpose, the Bank may engage in, execute or conduct all transactions and contracts legally authorized to banking establishments of commercial character, subject to satisfaction of all requirements and limitations imposed by Colombian legislation.
As of 31 December 2012 el Banco de Occidente S.A. operates with ten thousand eight hundred and fifty four (10,854) employees through two hundred and twenty one (221) branches located in Colombian territory.
Banco Comercial AV Villas S.A.
A private banking entity with main offices in the city of Bogota D.C., incorporated by means of Public Deed No. 5700 of 24 November 1972, with statutory duration through 24 October 2071 but with capacity for extension or liquidation prior to such date. The Bank has, as main corporate purpose, the celebration or execution of all transactions and contracts legally permitted to banking establishment of commercial character under the requirements and limitations imposed by Colombian standing legislation.
At 31 December 2012 el Banco AV Villas S.A. operated with a total of three thousand eight hundred and forty two (3,842) employees through indefinite term labor contracts, seventeen (17) under fixed term civil learning contract, one hundred forty seven (147) under civil learning three hundred and seventy three (373) under the modality of outsourcing. It had a branch network of one hundred and ninety eight (198) general public service offices and fifty one (51) Immediate Credit Offices OCI, ten (10) Payment Centers , eight (8) Satellite Services, nine (9) Entrepreneurial Business Service Centers CNE and thirteen thousand six hundred and ninety six (13,696) Non-bank Correspondents.
Banco Popular S.A.
An entity that at 31 December 2012 is 98% owned by the private sector and 2% by the Colombian State, with legal domicile in the city of Bogota, created on 5 July 1950 through Decree No. 359 of the Township of Bogota´, formalized by means of Public Deed No. 5858 of 3 November 1950 issued at Public Notary Four of Bogota. Duration of the Bank is through 30 June 2050. The Bank has, as main corporate purpose, the celebration or execution of all transactions and contracts legally permitted to banking establishment of commercial character under the requirements and limitations imposed by Colombian standing legislation and perform through its Auction Service (the “Hammer”) the sale and or barter of goods and any other form for the divestiture of real estate or chattel goods or any other negotiable items.
As of 31 December 2012 Banco Popular S.A operated with three thousand three hundred and seventy four (3,374) direct employees and one thousand five hundred and forty seven (1,547) indirect employees. Activities are carried out through a two hundred and eleven (211) branch network that provides all banking services, ten (10) cash extension offices, two (2) ”Supercades”, one (1) “Rapicade”, two hundred and one (201) non-bank correspondents, twelve (12) service centers, seven (7) payroll-based loan offices, forty one (41) collection and payment centers, one hundred and four (104) signed correspondent banking contracts and one thousand and one (1,001) ATMs in Colombian territory.
On 20 June 2011 by means of Public Deed of Escision, No. 2936 issued at Public Notary / of the city of Bogota, formalization was conducted of the process of escision between the former owner company Rendifín S.A. and the beneficiary company Grupo Aval Acciones y Valores S.A. under which Grupo Aval Acciones y Valores S.A., as beneficiary, received, as main asset, 3,358,446,312 shares of the former owner in Banco Popular S.A. after which the Company increased its ownership interest in Banco Popular from 30.66% to 74.13%. On the other hand, Rendifín S.A. received 2,073,115,007 preferred shares issued by Grupo Aval Acciones y Valores S.A.
On 19 September 2011, by means of Public Deed of Escision No. 4631 issued at Public Notary 73 of the city of Bogota, formalization took place of the process of escision by the former owner companies Inversiones Escorial S.A. and Popular Securities, by virtue of which Grupo Aval Acciones y Valores S.A., in its capacity as beneficiary Company, received, as main asset under the transaction, 1,514,163,964 shares of Banco Poplar held by the former owners, which increased its owner ship participation in Banco Popular S.A. from 74.13% to 93.73%. On the other hand, Inversiones Escorial S.A. and Popular Securities each received 467,334,563 preferred shares issued by Grupo Aval Acciones y Valores S.A.
Grupo Aval Limited
Incorporated in the Cayman Islands in January 2012 as a special purpose vehicle, including issue of debt instruments.
Grupo Aval International Limited
Created in the Cayman Islands on 8 October 2012 as a special purpose vehicle, including issue of debt instruments.
Breakdown of permanent investments owned by the parent company is as follows:
31 December | 30 June | |||||||||||||||
% ownership | No. of shares | % ownership | No. of shares | |||||||||||||
In controlled entities: | ||||||||||||||||
Banco de Bogota S.A. | 64.44 | 184,830,376 | 64.44 | 184,830,376 | ||||||||||||
Banco de Occidente S.A. | 68.24 | 106,385,430 | 68.24 | 106,385,430 | ||||||||||||
Banco Comercial AV Villas S.A | 79.85 | 179,453,557 | 79.85 | 179,453,557 | (1) | |||||||||||
Sociedad Administradora de | ||||||||||||||||
Pensiones y Cesantias - Porvenir S.A. | 20.00 | 15,994,319 | 20.00 | 15,085,589 | (2) | |||||||||||
Banco Popular S.A | 93.73 | 7,241,296,738 | 93.73 | 7,241,296,738 | (3) | |||||||||||
Grupo Aval Limited | 100.00 | 1 | 100.00 | 1 | ||||||||||||
Grupo Aval International Limited | 100.00 | 1 | - | - | ||||||||||||
In non-controlled entities: | ||||||||||||||||
Taxair S. A. | 0.01 | 1,117 | 0.01 | 1,117 |
(1) | At 31 December and 30 June 2012 Company owned 179,192,996 common shares and 260,561 preferred shares |
(2) | During the second semester of 2012 a total of 908,730shares with value of Col $20,592 were received after capitalization of retained earnings |
(3) | On 20 June 2011, by means of Public Deed of Escision No. 2936 issued at Public Notary Seventy Three of Bogota, formalization took place of the escision process between the former owner company Rendifín S.A. and the beneficiary company Grupo Aval Acciones y Valores S.A. under which Grupo Aval Acciones y Valores S.A., as beneficiary, received, as the main asset, 3,358,446,312 shares in Banco Popular S.A. thus increasing its active ownership participation therein from 30.66% to 74.13%. On the other hand, Rendifin S.A .received 2,073,115,007 preferred shares issued by Grupo Aval Acciones y Valores S.A. |
(4) | On 19 September 2011, by means of Public Deed of Escision No. 4631 issued at Public Notary 73 of the city of Bogota, formalization took place of the process of escision by the former owner companies Inversiones Escorial S.A. and Popular Securities, by virtue of which Grupo Aval Acciones y Valores S.A., in its capacity as beneficiary Company, received, as main asset under the transaction, 1,514,163,964 shares of Banco Poplar held by the former owners, which increased its owner ship participation in Banco Popular S.A. from 74.13% to 93.73%. On the other hand, Inversiones Escorial S.A. and Popular Securities each received 467,334,563 preferred shares issued by Grupo Aval Acciones y Valores S.A. |
Banco de Bogota consolidates as follows:
31 December | 30 June | |||||||||||||||||||||||||||||||
Assets | Liabilities | Equity | Net earnings of the Period | Assets | Liabilities | Equity | Net earnings of the Period | |||||||||||||||||||||||||
Banco de Bogota (Parent Company) | $ | 49,092,628 | 40,191,322 | 8,901,306 | 673,918 | $ | 45,872,286 | 38,056,240 | 7,816,044 | 673,847 | ||||||||||||||||||||||
Almacenes Generales de Deposito | ||||||||||||||||||||||||||||||||
ALMAVIVA S.A and subsidiaries | 209,156 | 51,095 | 158,061 | 4,208 | 21 2,689 | 55,518 | 157,171 | 7,434 | ||||||||||||||||||||||||
Fiduciaria Bogota S.A. | 216,327 | 51,524 | 164,803 | 30,178 | 200,104 | 47,037 | 153,066 | 27,203 | ||||||||||||||||||||||||
Corporacion Financiera Colombiana S.A and subsidiaries | 12,921,689 | 10,053,349 | 2,868,340 | 1 38,600 | 12,226,256 | 9,1 76,740 | 3,049,515 | 240,132 | ||||||||||||||||||||||||
Sociedad Administradora de Pensiones y Cesantias Porvenir S.A and subordinate | 932,870 | 117,119 | 815,751 | 1 04,043 | 960,008 | 241,964 | 718,045 | 104,343 | ||||||||||||||||||||||||
Banco de Bogota S.A - Panama and subordinates | 1,470,008 | 1,368,435 | 101,573 | 3,121 | 1,313,023 | 1,213,772 | 99,251 | 7,143 | ||||||||||||||||||||||||
Bogota Finance Corporation | 147 | - | 147 | 1 | 148 | - | 148 | - | ||||||||||||||||||||||||
Leasing Bogota S.A - Panama and subordinates | 22,437,506 | 18,984,631 | 3,452,874 | 216,171 | 19,345,607 | 16,088,935 | 3,256,673 | 210,632 | ||||||||||||||||||||||||
Corporación Financiera | ||||||||||||||||||||||||||||||||
Centroamericana FICENTRO | 5 | 6 | - | - | 5 | 6 | - | - | ||||||||||||||||||||||||
Megalínea S.A. | 8,236 | 5,898 | 2,338 | 123 | 6,994 | 4,779 | 2,216 | 93 | ||||||||||||||||||||||||
Casa de Bolsa S.A. | 65,154 | 37,194 | 27,960 | 244 | 48,263 | 20,351 | 27,912 | (1,316 | ) | |||||||||||||||||||||||
$ | 87,353,726 | 70,860,573 | 16,493,153 | 1,170,607 | $ | 80,185,383 | 64,905,342 | 15,280,041 | 1,269,511 | |||||||||||||||||||||||
Consolidated | $ | 80,189,139 | 72,621,396 | 7,567,744 | 655,475 | $ | 73,675,528 | 66,450,197 | 7,225,331 | 664,967 |
Banco de Occidente S.A. consolidates as follows
31 December | 30 June | |||||||||||||||||||||||||||||||
Net Earnings | Net earnings | |||||||||||||||||||||||||||||||
Assets | Liabilities | Equity | Of the Period | Assets | Liabilities | Equity | Of the Period | |||||||||||||||||||||||||
Banco de Occidente (Parent) | $ | 23,398,544 | 20,131,141 | 3,267,403 | 263,773 | $ | 22,252,291 | 19,159,510 | 3,092,780 | 230,239 | ||||||||||||||||||||||
Fiduoccidente S.A | 135,025 | 41,916 | 93,109 | 16,991 | 123,281 | 36,008 | 87,273 | 15,753 | ||||||||||||||||||||||||
Banco de Occidente S.A. - (Panama) S.A. | 1,396,589 | 1,341,162 | 55,428 | 3,205 | 1,300,736 | 1,246,281 | 54,456 | 791 | ||||||||||||||||||||||||
Occidental Bank Barbados Ltda. | 384,020 | 345,380 | 38,640 | 2,865 | 351,248 | 315,023 | 36,225 | 730 | ||||||||||||||||||||||||
Ventas y Servicios S.A | 24,676 | 16,587 | 8,089 | 901 | 24,118 | 17,905 | 6,213 | 626 | ||||||||||||||||||||||||
$ | 25,338,855 | 21,876,186 | 3,462,669 | 287,735 | $ | 24,051,674 | 20,774,727 | 3,276,947 | 248,139 | |||||||||||||||||||||||
Consolidated | $ | 24,665,582 | 21,379,573 | 3,286,009 | 279,508 | $ | 23,368,099 | 20,358,615 | 3,009,484 | 228,045 |
Banco Comercial AV Villas S.A. consolidates as follows:
31 December | 30 June | |||||||||||||||||||||||||||||||
Net Earnings | Net earnings | |||||||||||||||||||||||||||||||
Assets | Liabilities | Equity | Of the Period | Assets | Liabilities | Equity | Of the Period | |||||||||||||||||||||||||
Banco Comercial AV Villas (Parent) Occidente (Parent) | $ | 8,821,281 | 7,751,790 | 1,069,491 | 93,176 | $ | 8,197,720 | 7,229,771 | 967,949 | 71,148 | ||||||||||||||||||||||
A Toda Hora S.A. (ATH) | 40,071 | 33,321 | 6,750 | (90 | ) | 24,154 | 17,269 | 6,885 | 433 | |||||||||||||||||||||||
$ | 8,861,352 | 7,785,111 | 1,076,241 | 93,086 | $ | 8,221,874 | 7,247,040 | 974,834 | 74,581 | |||||||||||||||||||||||
Consolidated | $ | 8,856,188 | 7,786,660 | 1,069,528 | 93,176 | $ | 8,216,671 | 7,248,937 | 967,734 | 73,842 |
Banco Popular S.A. consolidates as follows: |
31 December | 30 June | |||||||||||||||||||||||||||||||
Assets | Liabilities | Equity | Net earnings of the Period | Assets | Liabilities | Equity | Net earnings of the Period | |||||||||||||||||||||||||
Banco Popular (Parent) | $ | 14,951,602 | 12,878,856 | 2,072,746 | 178,205 | $ | 14,540,453 | 12,769,636 | 1,770,817 | 173,252 | ||||||||||||||||||||||
Alpopular S.A. | 134,914 | 15,485 | 119,429 | 1,942 | 136,657 | 17,870 | 118,787 | 2,856 | ||||||||||||||||||||||||
Fiduciaria Popular S.A. | 67,712 | 13,143 | 54,569 | 3,193 | 60,901 | 11,112 | 49,789 | 1,827 | ||||||||||||||||||||||||
Inca S.A. | 47,320 | 7,140 | 40,180 | 919 | 45,992 | 14,983 | 31,009 | 2,776 | ||||||||||||||||||||||||
$ | 15,201,548 | 12,914,624 | 2,286,924 | 184,259 | $ | 14,784,003 | 12,813,601 | 1,970,402 | 180,711 | |||||||||||||||||||||||
Consolidated | $ | 15,154,191 | 12,964,071 | 2,190,120 | 184,060 | $ | 14,636,328 | 12,858,661 | 1,777,667 | 175,577 |
(2) Effects of Consolidation
The effects of consolidation over the structure of the financial statements of the Parent Company were the following:
31 December | 30 June | |||||||||||||||||||||||||||||||
Assets | Liabilities | Equity | Net earnings of the Period | Assets | Liabilities | Equity | Net earnings of the Period | |||||||||||||||||||||||||
Individual | $ | 19,762,754 | 2,232,447 | 17,530,307 | 819,595 | $ | 19,402,047 | 2,335,896 | 17,066,151 | 716,842 | ||||||||||||||||||||||
Consolidated | 127,289,306 | 118,746,404 | 8,542,902 | 777,842 | 119,316,433 | 110,481,204 | 8,835,229 | 718,518 | ||||||||||||||||||||||||
Variation | 107,526,552 | 116,513,957 | (8,987,405 | ) | (41,752 | ) | 99,914,386 | 108,145,308 | (8,230,922 | ) | 1,675 | |||||||||||||||||||||
Increase | 544.09 | % | 5,219.11 | % | (51.27 | %) | (5.09 | %) | 514.97 | % | 4,629.71 | % | (48.23 | %) | 0.23 | % |
The subsidiaries, by reason of their respective by-laws, engage in semi-annual accounting closings with exception of entities that sub-consolidate into the subsidiaries, which have annual closings and are audited by their corresponding fiscal auditors.
Banco de Bogota S.A.:
Banco de Bogota Finance Corporation
Banco de Bogota Panama
Leasing Bogota S.A. - Panama
Corporacion Financiera Centroamericana S.A. (FICENTRO)
Banco de Occidente S.A.:
Banco de Occidente Panama S.A.
Occidental Bank Barbados Ltd.
Ventas y Servicios S.A.
Banco A.V. Villas S.A.:
A Toda Hora S.A.
Banco Popular S.A.:
Inca S.A.
(3) Main Accounting Policies
(a) Presentation of the Financial Statements
Grupo Aval prepares its financial statements on the basis of generally accepted accounting principles formally enacted through Decree 2649 of 1993, the terms of External Memorandum No.002 of 28 January 1998 and the Joint Memorandum of the Superintendence of Corporations No.100-000006 and Superintendence of Securities No. 11of 18 August 2005. Nevertheless, taking into account that most of the consolidated entities are financial in nature, Grupo Aval does not present its financial statements classified per current and non-current assets and liabilities and the presentation of some accounts in the financial statements follows the regulations issued by the Financial Superintendence of Colombia.
(b) Basic Accounting and Consolidation Policies
Accounting policy and the preparation of financial statements of the Parent Company are in accordance with accounting principles generally accepted in Colombia and those of the subordinates are prepared according to accounting principles generally accepted and the instructions issued by the Financial Superintendence of Colombia.
The financial statements of foreign subsidiaries have been adjusted to allow adoption of uniform accounting practices in accordance with the requirements of Accounting Principles Generally Accepted in Colombia and the instructions issued by the Financial Superintendence of Colombia. .
In order to apply uniform accounting practices to transactions and events of similar nature and under similar circumstances, the financial statements of the subordinates were homogenized on the basis of ruling of External Memorandum No. 002 of 1998 issued by the Financial Superintendence of Colombia (Memorandum 100 of 1995 and on dispositions enacted through Decree No. 2649 of 199) as follows:
31 December | 30 June | |||||||||||||||||||||||||||||||
Legal name | Assets | Liabilities | Equity | Net earnings (Loss) of the Period | Assets | Liabilities | Equity | Net earnings (Loss) of the Period | ||||||||||||||||||||||||
Banco de Bogota S.A. - Consolidated | ||||||||||||||||||||||||||||||||
Decree 2649 of1993 | $ | 80,189,139 | 72,621,396 | 7,567,744 | 655,475 | $ | 73,675,528 | 66,450,197 | 7,225,331 | 664,967 | ||||||||||||||||||||||
Rules for Supervised (Audited) | 80,506,449 | 72,704,500 | 7,801,949 | 661,266 | 73,747,059 | 66,474,578 | 7,272,481 | 664,782 | ||||||||||||||||||||||||
Variation | (317,310 | ) | (83,104 | ) | (234,205 | ) | (5,791 | ) | (71,531 | ) | (24,381 | ) | (47,150 | ) | 185 | |||||||||||||||||
Banco de Occidente S.A. Consolidated | ||||||||||||||||||||||||||||||||
Decree 2649 of1993 | 24,665,582 | 21,379,573 | 3,286,009 | 279,508 | 23,368,099 | 20,358,615 | 3,009,484 | 228,045 | ||||||||||||||||||||||||
Rules for Supervised (Audited) | 24,837,389 | 21,379,573 | 3,457,816 | 295,327 | 23,450,926 | 20,358,615 | 3,092,310 | 224,978 | ||||||||||||||||||||||||
Variation | (171,807 | ) | - | (171,807 | ) | (15,819 | ) | (82,827 | ) | - | (82,826 | ) | 3,067 |
31 de December | 30 de June | |||||||||||||||||||||||||||||||
Legal name | Assets | Liabilities | Equity | Net earnings (Loss) of the Period | Assets | Liabilities | Equity | Net earnings (Loss) of the Period | ||||||||||||||||||||||||
Banco Comercial AV Villas S.A. Consolidated | ||||||||||||||||||||||||||||||||
Decree 2649 1993 | 8,856,188 | 7,786,660 | 1,069,528 | 93,176 | 8,216,671 | 7,248,937 | 967,734 | 73,842 | ||||||||||||||||||||||||
Rules for Supervised (audited) | 8,920,405 | 7,788,347 | 1,132,058 | 90,694 | 8,235,692 | 7,248,937 | 986,755 | 81,615 | ||||||||||||||||||||||||
Variation | (64,217 | ) | (1,687 | ) | (62,530 | ) | 2,482 | (19,021 | ) | - | (19,021 | ) | (7,773 | ) | ||||||||||||||||||
Banco Popular S.A. Consolidated | ||||||||||||||||||||||||||||||||
Decree 2649 of1993 | 15,154,191 | 12,964,071 | 2,190,120 | 184,060 | 14,636,328 | 12,858,661 | 1,777,667 | 175,577 | ||||||||||||||||||||||||
Rules for Supervised (Audited) | 15,128,585 | 12,964,364 | 2,164,222 | 197,952 | 14,805,996 | 12,859,135 | 1,946,861 | 179,963 | ||||||||||||||||||||||||
Variation | 25,606 | (293 | ) | 25,898 | (13,892 | ) | (169,668 | ) | (474 | ) | (169,194 | ) | (4,386 | ) | ||||||||||||||||||
Effects of homogenization - Banks | ||||||||||||||||||||||||||||||||
(527,728 | ) | (85,084 | ) | (442,644 | ) | (33,020 | ) | (343,047 | ) | (24,855 | ) | (318,191 | ) | (8,907 | ) | |||||||||||||||||
Total Consolidated | ||||||||||||||||||||||||||||||||
Under decree 2649 of 1993 | 128,865,100 | 114,751,700 | 14,113,400 | 1,212,219 | 119,896,626 | 106,916,410 | 12,980,216 | 1,142,430 | ||||||||||||||||||||||||
Parent Company | 19,762,754 | 2,232,447 | 17,530,307 | 819,595 | 19,402,047 | 2,335,896 | 17,066,151 | 716,842 | ||||||||||||||||||||||||
Grupo Aval Limited | 2,812,316 | 2,873,378 | (61,063 | ) | (38,279 | ) | 1,071,727 | 1,094,721 | (22,995 | ) | (22,994 | ) | ||||||||||||||||||||
Aval Limited International | 90,419 | 101,619 | (11,200 | ) | (11,200 | ) | - | - | - | - | ||||||||||||||||||||||
Total combined | 151,530,589 | 119,959,143 | 31,571,445 | 1,982,334 | 140,370,400 | 110,347,027 | 30,023,372 | 1,836,278 | ||||||||||||||||||||||||
Eliminations from consolidation | $ | (24,241,283 | ) | (1,212,739 | ) | (23,028,543 | ) | (1,204,492 | ) | $ | (21,053,968 | ) | 134,176 | (21,188,143 | ) | (1,117,761 | ) | |||||||||||||||
Total - Consolidated | $ | 127,289,306 | 118,746,404 | 8,542,902 | 777,842 | $ | 119,316,432 | 110,481,203 | 8,835,229 | 718,517 |
Main items from homogenization carried out by the subordinates (including foreign affiliates) in the financial sector were as follows:
(1) | Calculation of inflation adjustments as of 1st January 2011 through and including 21st December 2006 (excluding foreign affiliates); |
(2) | Investments were valued under the line accrual method, adjusting equity income accounts, unrealized earnings and/or losses and revaluations surplus (please refer to literal (f) of Note 3); |
(3) | Outstanding balance of loan portfolio and financial lease transactions, active and passive positions in monetary market transactions, acceptances and derivatives, assets received in lieu of payment, are determine don the basis of regulations issued by the Financial Superintendence of Colombia, entity that rules these operations in Colombia, as developed by financial entities. |
(4) | In order to comply with presentation of the financial statements under dispositions in Decree 2649 of 1993, outstanding balance of premium on sale of stock is presented as a separate account in Shareholders Equity composition. |
(c) Conversion of balances in foreign currency
Assets, liabilities and equity holdings denominated in foreign currency included in the consolidation were converted to Colombian pesos at a rate of exchange equal to the market representative rate of the market calculated for the last day of the month and certified by the Financial Superintendence of Colombia. At 31 December and 30 June 2012 market representative rates applied by the Subordinates were, respectively, Col$1,768.23 and Col$1,784.60.
Income statement accounts were converted to Colombia pesos using exchange rates of Col $1,802.27 and Col$1,794.16 (for US$1.00, corresponding to the average market representative rates registered during the periods 1st July – 31st December 2012 and 1st January-3oth June 2012, respectively. The average rate was calculated excluding Saturdays, Sundays and holidays and divided by the number of working days in each semester.
Foreign subsidiaries have functional currencies other than the Colombian peso. In order to carry-out their conversion, the following procedure was followed.
Balance sheet accounts are converted to Colombian pesos using the “Market Representative rate” or rate of exchange applicable to the last day of the accounting period, as determined by the Financial Superintendence of Colombia (excluding equity accounts that are converted at historic rates of exchange). Rates of exchange for, respectively 31 December and 30 June 2012 were Col$1,768.23 and Col$1,784.60 for US$1.00. The consolidated income statements for the semesters ended 31 December and 30 June 2012 were converted too Colombian pesos using the market daily average rate of exchange of Col$1,802.27and Col$1,794.16 for US$1.00, respectively. Foreign exchange differentials in equity accounts in the balance sheets are registered as “conversion adjustments” in net equity holdings and differentials originated from conversion of income accounts are recorded as net foreign exchange “earnings” (“losses”).
(d) Cash equivalents
The expression cash equivalents for purposes of the consolidated statement of cash flows include active positions in monetary and related market transactions
(e) Active and Passive positions in monetary and related market transactions
This item groups interbank funds transactions, repo transactions, simultaneous transactions and transactions for the temporary transfer of assets.
Ordinary Interbank Funds
Interbank funds are those resources directly received or placed by the subordinates at other financial entities, without any underlying agreement for the transfer of investments or loan portfolios. These are transactions permitted by the corporate purpose agreed to for a tenor not exceeding thirty (30) calendar days, provided they are performed to take advantage or cover excess or deficit liquidity situations. These transactions also include those denominated “over-night”, carried out with foreign banks using funding provided by the subordinates.
Income derived from these transactions is accounted for in Income Statement.
Transactions not settled ruing the agreed time period are legalized and booked as components of the loan portfolio with exception of those carried out with Banco de la Republica.
Repo Transactions
A repo transaction takes place when the subordinates acquire or transfer securities in exchange for delivery of liquid funds, while assuming at that instance and by virtue of such action, the commitment to transfer of acquire from the counterpart on either the same day or at a later date, at an established price, the same securities matter of the transaction or other securities of the same kind and features.
The initial amount may be calculated after a discount over market price of those securities involved in the transaction; it may be established that, through the duration of the transaction, the securities surrendered may be exchanged for other securities and also, restrictions may be imposed as to the mobility of the securities involved in the operation.
Earnings are registered in this account, calculated in exponential manner during the tenor of the transaction and are recognized for income statement purposes.
Securities transferred under the repo transaction must be accounted for in debit or credit contingent/memo depending on whether the transaction is of open or closed nature.
Amounts transferred under the transaction must be booked as memo accounts, debt or credit, depending on whether open repos or closed repos, respectively.
Simultaneous Transactions
These are transactions in which the subordinate acquire or transfer securities in consideration for delivery of an amount of money, assuming at such instance and by virtue of the business, a commitment to once again acquire or transfer property, on the same day or at a later date, at an agreed price in securities of the same kind and characteristics.
It is not permitted that the initial amount of the transaction be calculated as a discount over the market price of the securities involved; it may neither be established that through the duration of the transaction there is substitution of the securities initially surrendered by others nor is it possible to impose limitations to the mobility of the securities matter of the transaction.
This item includes returns earned by the acquiring party, paid by the seller in the form of financial returns as cost for the simultaneous transaction, calculated exponentially during the tenor of the operation.
The difference between the present value (at delivery of the securities) and the future value (final transfer price) is an income account in the form of financial return, calculated exponentially through the duration of the transaction and recognized for income statement purposes.
Securities transferred under the simultaneous transaction must be filed under contingent/memo credit or debit accounts for credit or debit positions, respectively.
Temporary Transfer of Securities
Refers to those transactions in which Subordinates transfer title over certain securities under agreements for reversal transaction on the same date or at a later date. At the same time, the counterpart transfers to the Subordinates property over other securities or an amount of funds equal to or higher than the value of the securities matter of the transaction.
Transactions for the Temporary Transfer of Securities
Refers to those transactions in which the Subordinates transfer title over certain securities with agreement to reverse the transaction on the same or at a later date. In turn, the counterpart transfers to the Subordinate the ownership of other securities or an amount of money equal to or higher than the value of the securities matter of the transaction.
(f) Investments
Investments of the Parent Company are represented by securities and other instruments issued by other economic entities, acquired to obtain either fixed or variable income and to hold control, direct or indirect, over any company.
Investments held by Subordinates correspond to securities acquired for purposes of maintaining a secondary source of liquidity, to maintain control, direct or indirect, over any company in the financial or technical services market, to comply with legal or regulatory mandates, or for the exclusive purpose of elimination or reduction of market risks to which the underlying assets or the liabilities or other elements of the financial statements are exposed.
Outstanding balances of investments held by the financial subordinates, for purposes of consolidation, have been valued using the linear accrual method (that includes all costs accumulated throughout their respective history). Notwithstanding this statement, the policy that these entities apply to their individual balance sheets for purposes of individual classification, valuation and registry is described in literal b) of Note 3.
Valuation of investments has, as its main objective, to calculate, book and disclosure to the market of the value or correct exchange price at which a certain security or paper could be negotiated at a certain date in accordance with its individual characteristics and under conditions prevailing in the market on such date.
Determination of value or fair price for the exchange of a certain security o title does take into consideration all criteria necessary to warrant fulfillment of the intent to valuate securities or titles, as follows:
Objectivity: Determination and assignment of a value or fair price for the exchange of a security or title is conducted on the basis of technical and professional criteria that recognize the effects derived from changes in the performance of all variable that may affect such price.
Transparency and representation: The fair value or price of exchange of a security or title is determined and assigned with the purpose of revealing a true economic result, neutral, verifiable and representative of the rights incorporated into such security or title.
Permanent Evaluation and Analysis: The fair value or price of exchange that is attributed to a security or title is based on the permanent evaluation and analysis of market conditions of its issuers and the issue itself. Variations of such conditions are reflected in changes in the previously assigned price or value, under the periodicity set for valuation of the underlying investments.
Professionalism: Determination of the fair value or price of exchange of a certain security or title is based upon the outcome resulting from analysis and study performed by an prudent and diligent expert, focusing on the search, achievement, knowledge and evaluation of all relevant information available, in such a manner that the price so determined reflects the amounts that would reasonably be received for its sale.
Below follows description of the manner in which the various types of investments are classified, valued and booked:
Classification | Tenor | Features | Valuation | Accounting |
Negotiable | Short Term | Securities acquired to generate profits through fluctuation of market prices | Through fair exchange prices, rates of reference and/or margins, as calculated and published daily by the Colombian Stock Exchange. This procedure is conducted in a daily manner. | The difference resulting between the current market value and its immediately prior value is registered as a higher or lower value of the investment and its counter account affects the income statement of the period. This procedure is followed in a daily manner. In compliance with dispositions of External Memorandum 014 of 2007 issued by the Financial Superintendence of Colombia Investments are valued at market prices as of the same date of their acquisition; therefore, accounting of changes between the cost of acquisition and market value of the investment is carried out as of the date of acquisition. |
Negotiable – Participation | Short Term | Grant to the holder of the security a capacity as co-owner of the issuer. Includes investments in collective sight loan portfolios created to earn income | Investment in participation securities issued and traded in Colombia are valued in accordance with prices furnished by agents authorized by the Financial Superintendence of Colombia on the basis of information provided by the Stock Exchange in which they are traded. Participations in collective loan portfolios are valued on a per unit basis calculated by the administrator company one day before the date of valuation | Differences arising between the current market value and the immediate prior value are booked as a higher or lower value of the investment and its counterpart affects income statement of the period. This procedure is carried out daily For participation securities: investments are booked at cost. Dividends or earnings distributed in kind, including derivatives from capitalization into the shareholders equity revaluation are not booked as income and thus do not affect the value of the underlying investment. In this situation, sole modification will be that of the number of social rights in the respective accounting books. Dividends or earnings distributed are accounted for as a lower value of the investment. |
To hold through maturity | Through maturity | Securities through which subordinates hold the serious purpose and legal capacity, contractual and financial and operational, to hold through maturity or date of redemption. | In exceptional manner on the basis of their internal rate of return calculated at the instance of their acquisition. This procedure is carried out in a daily manner. | Present value is accounted for as a higher value of the investment and its counter account is booked in income statement for the period. This is a daily procedure. Investment income pending collection is booked as a higher value of |
These investments may not be used for liquidity transactions or repos, simultaneous or temporary transfers, except when dealing with mandatory or forced investments undertaken in the primary market and provided its counterpart is Banco de la Republica or the General Directorate of Public Credit or the National Treasury or any of the entities under the supervision of the Financial Superintendence of Colombia. In a similar manner these instruments may be surrendered as guarantee through a counterpart central risk chamber seeking to provide support to the fulfillment of agreed obligations in terms of settlement and liquidation | the investment. | |||
Debt securities available for sale | One year | Securities respect of which the Subordinates hold the serious purpose and legal capacity, contractual, financial and operational, to hold during at least one (1) year as of the date of classification in this category. After one year, on the first day of the immediately following year, may be reclassified as negotiable or to hold through maturity. Investments in this category may be used as guarantee for negotiation of derivative financial instruments when the counterpart is the central risk chamber of counterparts. Likewise, these investments may be used in transactions for purposes of liquidity, repos, simultaneous or temporary transfer of securities. | Through use of fair exchange prices, rates of reference and margins, calculated daily by the Colombian Stock Exchange. Investments represented of securities or public debt instruments or instruments representative of private debt are valued on the basis of verified information regarding their generic raw price as published by a recognized information platform at 16:00 Colombian official time. In those days when it is not possible to find or estimate a price for valuation of such securities or investment instruments, valuation is performed in exponential manner on the basis of their internal rate of return. This is a daily procedure. | Changes registered by these instruments are accounted for under the following procedure: 1) The difference between present value on the date of valuation and the immediately prior day is registered as a higher or lower value of the investment with credit or debit to the pertinent income statement. 2) The difference between market value and present value is registered as an unrealized accumulated gain or loss in pertinent equity accounts. This procedure is carried out daily. |
Participation Securities – available for sale | None | Investments that grant subordinate entities the capacity or title as co-owners of the issuer. This category includes securities of low or no tradability or not quoted in stock markets and securities held by subordinates in their capacity as controlling or parent company. | Investment in Participation securities are valued depending on whether they are quoted or not in stock markets, as follows: Participation securities registered in stock exchanges are valued on the basis of the last valuation price published by authorized agents. Should there be no price available for the date of valuation, such investments are therefore valued at the last known valuation price. In the event that a security registered at the stock exchange does not have a record of transactions from the instance of its issuance in the secondary market and there is no market price for its primary issue, valuation is performed in accordance with methodology established for participation securities issued and negotiated in Colombia but not registered at the Stock Exchange. Participation instruments not registered at securities and stock exchanges are valued monthly and under a maximum three month tenor following cut-off date of the financial statements of the subordinated companies. Acquisition cost is increased or reduced in the participation percentage of subsequent variation in the equity position of the issuer, calculated on the basis of certified financial statements as of 30 June and 31 December of each year or the most recently available. Collective loan portfolios and securitization instruments are valued at their per unit value calculated by the company administrator of the issue on the day prior to valuation date. Securities and titles traded in Colombian stock exchange Securities quoted at foreign stock exchanges are valued at closing price or in its absence at their most recent transaction price during the five (5) days prior to negotiation including the date of negotiation: Should there be no such price or any quote during such period, instruments are valued at the average price of quotes reported during the thirty (30) trading days, including the date of valuation. | Low or minimum tradability (or no market quotes): The difference between market value or the updated investment value and the amount in which the investment was booked, is accounted for as follows: If higher, it initially reduces –through exhaustion- the reserve or provision for devaluation and any excess is booked as revaluation surplus. If lower, it affects the revaluation surplus through exhaustion and any excess is booked as devaluation. When dividends or earnings are paid in kind, including proceeds from capitalization of the equity revaluation account, registration as income follows of the portion booked as revaluation surplus, through charge to the investment account and reversal of such surplus. When dividends or earnings are distributed in cash, the portion booked as revaluation surplus is accounted for as income, after reversal of such surplus, and any excess dividend payment is booked as a lower value of the investment. High and Medium Tradability Update of market price of securities with high or medium tradability or those quoted in International exchanges of recognized standing are booked as realized accumulated gains or losses in equity accounts and its counter account is a charge or credit to the investment account. This procedure is carried out daily. Cash or kind dividends including those derived from capitalization of equity revaluation surplus are booked as income up to the amount entitled to the investor as a percentage of the equity or equity revaluation of the issuer, as booked from the date of acquisition of the investment, with charge to accounts receivable. |
In the event securities are traded at more than one foreign stock exchanges, utilization will be made of the closing price or quote available at the most important foreign stock exchange, it being understood as the stock exchange in which trade is conducted of the highest number of the underlying instruments during the last thirty (30) trade days including the date of valuation. The price of the respective security is then converted into domestic currency through utilization of the market representative rate (TRM) for the day of valuation. Should there have been no quotes during the last thirty (3o) trading days valuation will be conducted using the procedures provided for transaction of securities not registered at the stock exchanges with the last valuation price being used as purchase price |
Reclassification of Investments |
In order for a security to remain in any category of investment classification, the underlying security or instrument must satisfy the features or conditions incumbent to any title of the assigned category.
The Financial Superintendence of Colombia may, at any time, mandate entities to reclassify a certain security or instrument whenever it is deemed that such security or instrument does not fulfill the features of the pertinent category in which it is intended to classify it or when such reclassification is required to ensure higher clarity or disclosure of the respective financial condition.
Investments may be reclassified following the dispositions listed below:
For investments to be held through maturity to and including negotiable investments, reclassification will be conducted upon occurrence of any of the following circumstances:
· | Significant deterioration of the conditions of its issuer, parent company, subordinates or related companies; |
· | Regulatory changes that make it impossible to uphold the investment; |
· | Merge processes that lead to reclassification or realization of the investment in order to secure an own position of interest rate risk or to adjust to credit risk policies established by the resulting entity; |
· | Other events of unforeseen nature, subject to availability of a previous authorization by the Financial Superintendence of Colombia. |
· | For investments available for sale to and including negotiable investments or investments to be held through maturity: there will be reclassification upon the occurrence of any of the following circumstances: |
· | One year has passed since classification in this category; |
· | The investor loses its capacity as parent company or controlling entity and this event involves a decision to divest the investment or the main purpose of making profit by reason of short term price fluctuations, as of such date; |
· | Significant deterioration in the condition of the issuer, its parent company, subordinates and/or other related companies; |
· | Regulatory changes that prevent holding the investment; |
· | Merge processes that attach reclassification or realization of the investment seeking to hold a prior risk position in terms of interest rates or to adjust to a credit policy previously established by the resulting entity; |
· | The investment moves from low tradability or minimum tradability at stock exchanges or is not quoted as of high or medium level tradability. |
When investments to be held through maturity or investments available for sale are reclassified as negotiable investments, observation is made of rules on valuation and accounting of the latter category; consequently, unrealized earnings or losses are recognized as income or expenses on the date of reclassification.
In the event of reclassification of an investment, pertinent report will be sent to the Financial Superintendence of Colombia regarding the reclassification made no later than on the tenth (10th) calendar days after such date, informing the reasons that support such decision and stating any impact on the income statement.
Securities or instruments that are reclassified in order to transfer to negotiable investments may not be reclassified later on.
Rights for repurchase of investments
It corresponds to restricted investments that constitute a collateral guarantee over commitments to repurchase e investments.
Regarding these investments, subordinates keep their rights and all economic benefit associated to their value and preserves all inherent risks although the legal title is transferred at exercise of the repurchase transaction.
The securities continue to be valued on a daily basis and accounted for in the balance sheet and income statement according to methodology and procedures applicable to investments classified as negotiable, to hold through maturity and available for sale.
Investments surrendered as security
Represents those investments in securities or debt instruments that result from the collateral on any transaction involving derivative financial instruments which may be liquidated in cash, as established in the incumbent contract or in the corresponding rulings of the system for negotiation of securities, of the system for registration of transaction involving securities or on the system for settlement and compensation of securities.
These instruments are valued on a daily basis and are accounted for in the balance sheet and income statement according to methodology and procedures applicable to investments classified as available for sale.
Effective 1st January 2010, these securities are included in the investment account as per dispositions in Resolution 1420 of 2008 and Communication 066 of 2009 issued by the Financial Superintendence of Colombia.
Investments received under processes of escision
Stock shares acquired in processes of escision are registered at the value for which they are received. Revaluations arising from differences between trading prices and the intrinsic value of the shares received are registered in the revaluations account with counter entry to revaluation surplus and are later on transferred as a higher value of the investment into the sub-account equity participation method to equity holdings and counter entry to surplus under equity participation. Revaluations or devaluations arising from differences between the cost of the investment received and its intrinsic value are registered in the revaluations account with counter entry into the revaluations surplus account and remaining thereat.
Later on application takes place of the equity participation method on the basis of the financial statements of the subordinate and the new percentage participation of the subordinate, taking as cost the intrinsic value of the investment at the instance of escision.
Credit Risk Rating – Reserves or Losses
Non-rated Instruments and/or issues of Securities or Reserves:
Securities or instruments that do not carry external rating and securities or debt instruments issued by unrated entities, are classified and reserves are created taking into account the following parameters:
Category | Risk | Features | Reserves |
A | Normal | Fulfill the agreed terms for the instrument t r security or have sufficient debt service capacity for both principal and interest | Not applicable |
B | Acceptable | Issues involving factors of uncertainty that could affect capacity for continued debt service. Also, their financial statements and other information available present weaknesses that may affect their financial condition. | Net value must not exceed eighty percent (80%) of its acquisition cost. |
C | Noticeable | Issued that represent medium or high probability of default in the timely payment of either capital or interest. Also, their financial statements and other information available evidence deficiencies in financial condition that compromise recovery of the underlying investment. | Net value must not exceed sixty percent (60%) of their acquisition cost. |
D | Significant | Corresponds to those issues that already register default in compliance with agreed terms; also, their financial statements and other information available evidence marked deficiencies in their financial condition and, as a result, probability of not recovery is highly questionable. | Net value may not exceed forty percent (40%) of their acquisition cost. |
E | Non- collectable | Issues that as per their financial statements and other information available are deemed uncollectable. Also, there are no financial statements as of the closing of 30 June and 31 December of each year. | The full value of this item must be entirely reserved. |
Securities or Instruments under Issues or by Issuers that carry external risk rating
Securities and/or instruments that have received one or several grading awarded by entities recognized by the Financial Superintendence of Colombia and/or securities or debt instruments issued by entities than have been rated by these risk rating companies may not be booked in amounts that exceed the following percentages of their face value, net of amortizations occurred through the date of their valuation:
Rating – Long Term | Maximum Amount % | Rating – Short Term | Maximum Amount % |
BB+, BB, BB- | Ninety(90) | 3 | Ninety(90) |
B+, B, B- | Seventy (70) | 4 | Fifty (50) |
CCC | Fifty (50) | 5 and 6 | Zero (0) |
DD, EE | Zero (0) |
Pursuant to creation of reserves over certificates of time deposit, the risk rating of the issuer is to be applied.
Reserves on investments classified as “through maturity”, regarding which it is possible to establish a fair price of exchange according to dispositions applicable to negotiable securities and/or instruments and/or to securities/instruments available for sale, are to be created in amounts equal to the difference between such price and the registered value.
Investments in foreign securities and instruments
Negotiable investments and investments available or sale represented by securities or public debt instruments issued abroad and by securities or public debt instruments issued abroad by foreign issuers are valued on the basis of their purchase price (BID) as published by Bloomberg BID
The net present value or market value of securities or instruments denominated in currencies other than the dollar of the United States of America are converted to this currency on the basis of conversion rates published for the date of valuation at the website of the Central Bank of Europe. When rates are not available at said website, utilization will be made of conversion rates to the dollar of the United States of America as published by the Central Bank of the respective country
g) Credit Loan Portfolio and Financial Lease Transactions
This account registers loans granted and financial lease transaction undertaken by the Subsidiaries (credit establishments) supervised by the Financial Superintendence of Colombia under the various modalities authorize. Resources used in credit extension are provided from their own funding, deposits from the general public and other financing sources, domestic and external.
Loans are book at initial disbursement amount with exception of purchases of loan portfolios under the “factoring” modality, which are booked at cost.
Classification of loan portfolio in distributed in four (4) credit modalities:
Comercial
Loans that, regardless of their amount, are extended to individuals for the acquisition of consumption goods or payment of services for non-commercial or entrepreneurial purposes, other than those disbursed as microcredit transactions.
Financial agreements in which the Lessor (the banking subsidiaries of Grupo Aval that engage in rental or lease transactions) acquire an asset (equipment, vehicles, software) and deliver it in rental to a Lessee. The Lessee pays monthly rental installments to the Lessor for the use of the asset. The Lessee has the option to purchase the asset at the end of the rental period by payment of a previously established price.
Consumer loans
Loans that, regardless of their amount, are extended to individuals for the acquisition of consumption goods or payment of services for non-commercial or entrepreneurial purposes, other than those disbursed as microcredit transactions.
Housing loans
Extended to individuals for the acquisition or new or used residential units are denominated in UVRs or legal currency and must be backed by a first degree mortgage on the asset financed. Tenor for amortization must fall between –minimum- five (5) years and –maximum- thirty (30) years. Loans may be fully or partially prepaid at any time without penalty. In the event of partial prepayment, the debtor is entitled to choose whether application is to me made against outstanding capital installments or to a reduction in the tenor of the obligation. Additionally, these loans carry a remunerator interest rate which is applied to the outstanding balance of the obligations, whether denominated in Pesos or UVRs; interest is charged in arrears and may not be capitalized. Loan size may be up to seventy percent (70%) of the value of the property, determined by the purchase price or a technical appraisal conducted during the six (6) months prior to extension of the loan. In the case of loans for financing of social interest housing nits the amount of the loan may increase to eighty percent (80) of the value of the property. Acquisitions so financed must carry insurance against fire and earthquake risks.
Microcredit portfolio
Integrated by credit transactions referred to in Article 39 of Law 590 of 2000, as amended or modified, replaced or extended, as well as by those transactions entertained with micro-companies, under which most important repayment source arises from revenues generated by their operations.
The outstanding debt of the debtor may not exceed the equivalent of one hundred and twenty (120) minimum legal monthly salaries at the moment of approval of the respective credit transaction. Outstanding indebtedness is understood as the total amount of combined indebtedness of the micro.—company with the entire financial sector, as determined through consultation of databases and information provided by the company, excluding mortgage loans for the financing of housing units and adding the new obligation.
A micro-company is defined as a unit for economic exploitation, by an individual or legal entity, of entrepreneurial activities of agricultural, industrial, commercial or service nature, rural or urban, which total number of employees is not higher than ten (10) or total assets fall below five hundred (500) minimum legal monthly salaries.
Criteria for evaluation of credit risks
Subordinates (credit establishments) permanently engage in evaluation of credit risk on assets, both when granting the loans as well as throughout their duration, including restructurings. For this purpose, they have designed and implemented a System for Administration of Credit Risk (SARC) which compiles credit policies and procedures for credit administration, reference models for estimation or quantification of expected losses, a system of reserves for coverage of credit risk and internal control procedures.
In course of the credit approval process, several variables are established for each loan category, which allow discrimination of creditworthy individuals that match the risk profile set by the Bank. The processes for segmentation and discrimination under the credit portfolios and their respective credit worthy individuals are used as basis for their classification as well as for application of internal statistical models that evaluate the various features of the credit applicant for quantification of credit risk.
Methodologies and processes incorporated into the credit approval process allow monitoring and control of credit exposure under the various loan portfolios as well as of the aggregate portfolio, thus avoiding excess credit concentration by levels of borrower, economic sector, economic groups, risk factors, etc.
The Banks engage in permanent monitoring and rating of credit transactions in accordance with the respective approval process, which is in turn based, amongst other criteria, on information regarding the historic performance of the portfolios and individual credits; on the individual features of the borrowers, their exposure and guarantees; on the credit record of the borrowers at other financial entities and on financial information that the borrower discloses as a component of its financial records; and on sector and macroeconomic variables that affect the normal development of the transactions.
In evaluation of territorial public entities, Subordinates do verify compliance with conditions established in Laws 358 of 1997, 550 of 1999, 617 of 2000 and 1116 of 2006.
Evaluation and Requalification of Loan Portfolio
Subordinates - credit establishments (including foreign subsidiaries) evaluate loan portfolio risk through amendments to the respective risk ratings whenever in possession of analysis or information that justifies such changes.
For an adequate fulfillment of this obligation, Subordinates evaluate the financial performance of the obligor at other financial entities, particularly if at the instance of evaluation the debtor registers any restructured obligation, in accordance with information provided by risk classification centers or any other reliable source. Performance of the long term portfolio is evaluated on a monthly basis, in aspects including repayment, cancellations, charge-offs and past due time of the underlying transactions.
When loans incur in default after being restructured, immediate reclassification is mandatory.
Classification of Credit Risk
Subordinates review credit transaction on the basis of the aforementioned criteria and classify them in one of the following credit risk categories, taking into account the following minimum objective conditions:
Category | Approval | Approved Commercial Loan Portfolio | Approved Consumption Loan Portfolio |
“AA” | New loans which assigned classification at approval is “AA”. | Outstanding loans with past due payments not exceeding 29 days i.e. between 1 and 29 days past due. | Loans which risk rating through application of MRCO methodology is “AA”. |
“A” | New loans which risk rating at approval is “A” | Outstanding loans with delayed payments in excess of 30 days but not exceeding 59 days, i.e. between 30 and 59 days past due. | Loans which classification after application of MRCO rating methodology is “A”. |
“BB” | New loans which risk rating at approval is “BB”. | Outstanding loan obligations past due more than 60 days but less than 90 days, i.e. between 60 and 89 days past due. | Loans which classification after application of MRCO methodology is “BB”. |
“B” | New loans which risk rating at approval is “B”. | Outstanding loans past due over 90 days but less than 120 days, i.e. between 90 and 119 days past due. | Loans which classification after application of MRCO methodology is “B”. |
“CC” | New loans which risk rating at approval is “CC”. | Outstanding loans more than 120 days past due but less than 150 days, i.e. between 120 and 149 days past due. | Loans which classifications after application of MRCO methodology is “CC”. |
Default” | - | Outstanding loans past due for 180 days or more. | Consumer loan portfolio past due over 90 days. |
Other criteria taken into account by the subsidiaries in the rating of credit portfolios are as follows: for commercial loan approved, rating at the instance of approval, rating at monthly closings of the quarterly anniversaries of loan disbursement; rating upon completion of the approval process for features of each debtor and other factors that might be deemed of higher risk. For consumer loan portfolio, the rating assigned at the instance of approval and on the quarterly anniversaries of loan disbursement.
For consumer loan portfolio, classification assigned at loan approval is valid solely through the closing of the month in which the loan is disbursed.
Pursuant to homologation of risk ratings for commercial and consumer loan portfolios in reports of indebtedness and registration of the financial statements of the subordinates (credit entities), ratings in the chart below are applicable:
Group Category | Reporting Categories | |
Commercial | Consumer | |
A | AA | AA |
A for past dues between 0-30 days | ||
B | A | A for past dues higher than 30 days |
BB | BB | |
C | B | B |
CC | CC | |
C | C | |
D | D | D |
E | E | E |
When by reason of implementation of the reference model adopted by the Financial Superintendence of Colombia, the subordinates (credit entities) rate customers as in situation of default, homologation of outstanding exposure is d as follows:
Group category E = Past due customers which assigned PDI (loss upon default) is one hundred percent (100%).
Group category D = All other past due customers
For purposes of homologation of consumer loan portfolio, default period, as in the above chart, must be understood as the maximum delay reported for the individual debtors under aligned products.
For all debtors that at the instance of rating are not classified in the default category, in development of the Reference Model for Consumer Loan Portfolio (MRCO), the subordinates apply the model below, depending on the segment being rated. This model calculates a score on the basis of the individual features of each debtor and results from the application of the following equation:
Score = | 1 –z |
1 +e |
Where Z varies depending on the sector to which the debtor belongs. Finally, on the basis of the resulting score, ratings are assigned according to a chart set by the Financial Superintendence of Colombia, as shown below:
Score up to | |||
Classification | General - vehicles | General - other | Credit Card |
AA | 0.2484 | 0.3767 | 0.3735 |
A | 0.6842 | 0.8205 | 0.6703 |
BB | 0.81507 | 0.8900 | 0.9382 |
B | 0.94941 | 0.9971 | 0.9902 |
CC | 1 | 1 | 1 |
Subordinates must rate debtors in the higher risk category whenever additional risk elements are available that support such change.
Housing and Microcredit loan portfolios are classified as follows, depending on the age of past due exposure:
Category | Micro-credit | Housing |
“A” Normal Risk | Up to date and up to 30 days past due | In compliance or with up to two monthly installments past due |
“B” Acceptable Risk | Past due between one and two months | Past due installments between 2 and 5 months |
“C” Noticeable Risk | Past due between 2 and 3 months | Past due installments between 5 and 12 months |
“D” Significant Risk | Past due between 3 and 4 months | Past due installments between 12 and 18 months |
“E” Uncollectable | Past due over 4 months | Past due installments over 18 months |
Credit Restructuring
Credit restructuring is understood as any mechanism of exceptional nature instrumented through the execution of a juridical business in order to amend conditions originally agreed on, aiming to allow the debtor a timely servicing of its obligation when under a situation of real or potential deterioration of debt service capacity. Additionally, restructurings include agreements under the framework established by Laws 550 of 1999, 617 of 2000 and 1116 of 2006 or other rules or regulations that add to, amend or substitute them, as well as extraordinary restructurings and novation.
Fiscal Soundness as per Law 617 of 2000
Pursuant to loan restructurings derived from participation in the Fiscal and Financial Soundness Programs created by Law 617 of 2000 the government extends guarantee over financial obligations of territorial entities with financial institutions supervised by the Financial Superintendence of Colombia upon certified fulfillment of all requirements established under this Law, including, amongst other, that fiscal adjustment agreements were signed before 30 June 2001. Such guarantee is up to forty percent (40%) of credits outstanding prior to 31 December 1999 and up to one hundred percent (100%) of all new credits destined to fulfill the fiscal adjustment programs.
Such restructuring, as common feature, provide for reversal of loan-loss provisions previously created for loans included in the restructuring pertinent to the portion guaranteed by the government while the unguaranteed portion may keep rating assigned prior to 30 June 2001.
Should default occur under the restructuring agreement, debt is classified back to a higher risk category than the one held prior to restructuring.
In order to achieve a better credit rating after restructuring, all terms and conditions must be fulfilled.
In the event of default by territorial entities, existing debt on date of default that is not covered by the government guarantee is reclassified as “E”.
Extraordinary Restructurings
For all loan restructurings booked by subsidiaries (credit establishments) under the dispositions of External Memorandum 039 of 1999 issued by the Financial Superintendence of Colombia and for a period ending 31 December 1999, reversal or reserves for loan losses was permitted provided the restructuring agreement allowed “A” rating for the debtor and at least two interest payments or one principal installment were made and a certificate of Management Performance and debt Service Capacity had been issued under the terms of the agreement.
Restructuring Agreements
Pursuant to all credits restructured through the duration of Law 550 of 1999, upon initiation of the restructuring negotiation, the subordinates (credit establishments) suspended accrual of interest on outstanding loans and held risk classification as of the date of the negotiation. However, should the customer be classified as “A”, it was reclassified to “B” and a loan loss reserve of one hundred percent (100%) of outstanding amount was created.
In the event of failure of the negotiation, credits as rated “E”, uncollectable.
As of the issuance and effectiveness of Law 1116 de 2006, through which creation was mandated of the Corporate Insolvency Regime, all debtors are deemed to be in situation of default.
When a customer is accepted into a restructuring process under the terms of Law 1116 of 2006, the Subordinate suspends accrual of interest and classifies the customer in a risk category in accordance with its current situation. Should such situation deteriorates or should it be perceived that terms of the restructuring agreement being negotiated do not satisfy the expectations of the subordinate, risk classification is revised and new classification is assigned in accordance with the higher risk. If no agreement is reached or partial liquidation is mandated, the customer is classified as in default.
Special Criteria for classification of restructured loans
Restructured loans may keep former credit rating provided that restructuring involves an improvement in debt service capacity and/or in the probability of default. If the restructuring contemplates grace periods for principal repayment, such rating is only maintained when such periods do not exceed one year as of the date of signing of the agreement.
Outstanding credit may be upgraded after restructuring only after debtor demonstrates regular and effective performance in payment of outstanding principal as in a regular credit transaction and provided its debt service capacity is either upheld or improved.
(h) Loan Portfolio Charge-Offs
Loans are susceptible of charge-offs when, in the opinion of the administration of the subordinates, they are deemed uncollectable or their recovery is considered remote or uncertain and after loan loss reserves equal to 100% of outstanding balances are created and all possible collection mechanisms have been exhausted in the opinion of judiciary recovery experts and lawyers.
Charge-offs, however, do not constitute release of officers responsibility for approval and administration of the incumbent loan nor does it eliminate their obligation to continue to engage in collection efforts aimed to accomplish recovery.
The Board of Directors is the only administrative instance with sufficient authority to approve charge-off of transactions deemed uncollectable.
(i) Loan and Accounts Receivable Loss Provisions
In order to duly cover loss related risks, subordinates (credit establishments) have implemented a loan-loss reserve system through which provisions are calculated over the outstanding balance of the obligation, on the basis of application of reference models for commercial loans (MRC) and Consumer Loans (MRCO). For loans outstanding under the modalities of Housing and Micro-credit, reserves are calculated on the basis of default periods of the individual customers.
Commercial and Consumer Loan Portfolios
Subordinates (credit establishments) have adopted the reference models for commercial and consumer loan portfolios established by the Financial Superintendence of Colombia, based on which reserves are created after application.
Determination of expected loss (reserve) results from application of the following formula:
EXPECTED LOSS = [Probability of Default] x [Exposure of the Asset at the instance of Default] x [Loss resulting from Default]
Processes for segmentation and discrimination of credit loan portfolios and possible credit subjects are used as basis for determination of expected losses in the Reference Model for Commercial Loan Portfolio (MRC) in turn based on segments that are differentiated by the asset level of the incumbent debtors, under the following criteria:
Classification of Commercial Loan Portfolio by Asset levels:
Classification of Commercial Loan Portfolio by level of total assets | |
Size of the Company | Total Assets |
Large Companies | Over 15,000 MLMS(*) |
Medium Companies | Between 5,000 and 15,000 MLMS |
Small Companies | Less than 5,000 MLMS |
(*) Minimum legal monthly salaries |
The model includes a special category denominated “Natural Persons” which groups individuals eligible for commercial loan extension.
The Reference Model for Consumer Loan Portfolio (MRCO) is based on segments that are differentiated according to the underlying products and the credit establishments that administer and approve them, seeking to preserve the features of market niches and products used.
Following are market segments established by subordinates pursuant to the MRCO reference model:
· | General – Automotive vehicles: loans granted for acquisition of motor vehicles |
· | General - Other: Loans granted for acquisition of consumer goods other than automotive vehicles. Does not include credit cards. |
· | Credit cards: Roll-over credit facilities for acquisition of consumer goods by means of a plastic card. |
The reference model for commercial and consumer loan portfolios allow determination of components of expected loss in accordance with the following parameters.
a. | Probability of Payment Default |
Indicates the probability that, within a period of twelve (12) months, debtor incurs in payment default
Probability of default is defined according to the following matrixes, established by the Financial Superintendence of Colombia:
Commercial Loan Portfolio
Classification | Large Companies | Medium Companies | Small Companies | Natural Persons | ||||
Matrix A | Matrix B | Matrix A | Matrix B | Matrix A | Matrix B | Matrix A | Matrix B | |
AA | 1.53% | 2.19% | 1.51% | 4.19% | 4.18% | 7.52% | 5.27% | 8.22% |
A | 2.24% | 3.54% | 2.40% | 6.32% | 5.30% | 8.64% | 6.39% | 9.41% |
BB | 9.55% | 14.13% | 11.65% | 18.49% | 18.56% | 20.26% | 18.72% | 22.36% |
B | 12.24% | 15.22% | 14.64% | 21.45% | 22.73% | 24.15% | 22.00% | 25.81% |
CC | 19.77% | 23.35% | 23.09% | 26.70% | 32.5% | 33.57% | 32.21% | 37.01% |
Default | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% |
Consumer Loan Portfolio
Classification | Matrix A | Matrix B | ||||
General Automotive vehicles | General Other | Credit Card | General Automotive vehicles | General Other | Credit Card | |
AA | 0.97% | 2.10% | 1.58% | 2.75% | 3.88% | 3.36% |
A | 3.12% | 3.88% | 5.35% | 4.91% | 5.67% | 7.13% |
BB | 7.48% | 12.68% | 9.53% | 16.53% | 21.72% | 18.57% |
B | 15.76% | 14.16% | 14.17% | 24.80% | 23.20% | 23.21% |
CC | 31.01% | 22.57% | 17.06% | 44.84% | 36.40% | 30.89% |
Default | 100.0% | 100.0% | 100.0% | 100,00% | 100,00% | 100,00% |
In this manner, for each segment of the commercial and consumer loan portfolios calculation is made of the probability of change in the assigned category and the classification of default during the following twelve (12) month period according to the cycle of general performance of the overall credit risk.
b. Loss upon Default (PDI)
PDI is defined as the economic deterioration in which subsidiaries would incur in the event of materialization of any situation of default. PDI for debtors rated in the default category will suffer a gradual increase depending on the number of days lapsed after classification in such category.
Guarantee backing the incumbent transaction become necessary to calculation of the losses expected in the event of non-payment and, as a result, are key for determination the level of reserves.
Subordinates consider suitable guarantees those assurances duly formalized that carry a value determined on the basis of technical and objective criteria, that provide a juridical efficient backup to the repayment of the guaranteed obligation and which likelihood of realization is reasonable adequate.
In order to evaluate offered support and the likelihood of realization of each available guarantee, the Bank takes into consideration the following factors: nature, value, coverage and liquidity of the guarantees as well as the potential costs for its realization and the requirements of legal nature that would be necessary for their enforcement.
PDI by type of guarantee is classified as follows:
Commercial Loan Portfolio
Type of Guarantee | PDI | Days after payment default | New PDI | Days alter payment default | New PDI |
Not admissible guarantee | 55% | 270 | 70% | 540 | 100% |
Subordinated credits | 75% | 270 | 90% | 540 | 100% |
Admissible financial collateral | 0 – 12% | - | - | - | - |
Commercial and residential real estate properties | 40% | 540 | 70% | 1080 | 100% |
Assets under real estate leasing | 35% | 540 | 70% | 1080 | 100% |
Assets under leasing modalities other than real estate leasing | 45% | 360 | 80% | 720 | 100% |
Other forms of collateral | 50% | 360 | 80% | 720 | 100% |
Collection Rights | 45% | 360 | 80% | 720 | 100% |
Unguaranteed | 55% | 210 | 80% | 420 | 100% |
Consumer Loan Portfolio
Type of Guarantee | PDI | Days after payment default | New PDI | Days after payment default | New PDI |
Not admissible guarantee | 60% | 210 | 70% | 420 | 100% |
Subordinated credits | 0 – 12% | - | - | - | - |
Admissible financial collateral | 40% | 360 | 70% | 720 | 100% |
Commercial and residential real estate properties | 35% | 360 | 70% | 720 | 100% |
Assets under real estate leasing | 45% | 270 | 70% | 540 | 100% |
Assets under leasing modalities other than real estate leasing | 50% | 270 | 70% | 540 | 100% |
Other forms of collateral | 45% | 360 | 80% | 720 | 100% |
Unguaranteed | 75% | 30 | 85% | 90 | 100% |
c. Exposure value of an Asset
Regarding commercial and consumer loans, the exposure of the value of an asset is understood as the outstanding balance of principal, interest, interest accounts receivable and other accounts receivable.
Individual Loan Loss reserves under reference models
Commencing on 1st April 2010 under the terms of External Memorandums 035 of 23 September 2009 issued by the Financial Superintendence of Colombia, for the commercial and consumer loan portfolio reference models, the Subordinates have established a general scheme for loan portfolio reserves, which are thereupon calculated as the sum of the components denominated, respectively “pro-cyclical individual component” and “countercyclical individual component”. The subordinates apply a cumulative phase calculation to the monthly evaluation of performance of ratios for deterioration, efficiency, stability and growth.
Cumulative Phase | De-cumulative Phase | |
Deterioration | < 9% | > = 9% |
Efficiency | < 17% | > = 17% |
Stability | < 42% | > = 42% |
Growth | > 23% | < = 23% |
Commencing on the accounting closing of May 2011, implementation took place of changes in calculation of the above ratios, in accordance with dispositions in External memorandum 017 of 4th May 2011 which reflects dispositions under Numeral 1 .3.4.1 of Chapter II of External Memorandum No. 100 of 1995. The above includes deflation of Deterioration ratios (quarterly variation of individual real reserves of total loan exposure classified in the B, C, D and E categories) and Growth ratios (Real annual growth rate of total gross loan portfolio). Additionally discount took place of accumulated quarterly interest income pursuant to calculation of the above ratios during the semester, registered in sub-accounts 410241, 410242 and 410243 (Post-default interest on consumer, housing and micro-credit loan portfolios).
Upon calculation of the above ratios, the individual loan loss reserve was calculated as the Sum of the Pro-cyclic Individual Component and the Counter-cycle Individual Component.
The Pro-cyclical Individual Component corresponds to the portion of the individual reserve of the loan portfolio that reflects the current credit risk of each debtor.
The Countercyclical Individual Component corresponds to the portion of the individual reserve for loan losses in the overall loan portfolio that reflects possible change in the credit rating of the debtors in those instances in which deterioration of assets increases. This portion is incorporated in order to reduce impact over financial results when such situation arises. CIC is the highest of CIC in the previous month affected by exposure and the difference between losses anticipated by Matrix A and B in the month of evaluation.
Under no circumstance may the countercyclical individual component of each obligation be lower than zero and may not either surpass the value of the expected loss calculated as per matrix B: likewise, the sum of the two components may not exceed exposure value.
Subordinates calculate these two components in separate manner for both principal and accounts receivable pursuant to outstanding loan portfolio and leasing obligations.
In order to establish methodology to be applied for calculation of these components, Subordinates engage in monthly evaluation of indicators related to: real quarterly variation of individual reserves for total loan portfolio classified as B, C, D and E; quarterly accumulated reserves net of recoveries (loans and leasing portfolios) as a percentage of quarterly accumulated income for interest on loans and leasing portfolios; accumulated quarterly reserves net of loans and leasing portfolios recoveries as accumulated percentage of quarterly adjusted financial margin; and annual real growth rate of gross portfolio.
Depending on the result of these indicators, methodology is applied in cumulative stage or a methodology of non-cumulative stage
As of 31 December and 30 June 2012 individual reserves were calculated on the basis of the cumulative stage methodology, as established by the Financial Superintendence of Colombia.
Pursuant to homologation of the various guarantees incorporated in each credit agreement under the segments listed above, subsidiaries classify, for each type of guarantee, the following guarantees:
Housing and Micro-credit Loan Portfolio
General Provision
Correspond to a minimum of one percent (1%) of the total gross loan portfolio for the modalities of housing and micro-credit.
Subordinates at all times keep reserves not below the above percentage, as reflected in the outstanding balances pending payment:
Category | Microcredit | Housing | |||
Principal | Interest and Other Concepts | Guaranteed Principal % | Unguaranteed Principal % | Interest and Other Concepts | |
A - Normal | 1 | 1 | 1 | 1 | 1 |
B - Acceptable | 3.2 | 100 | 3.2 | 100 | 3.2 |
C - Noticeable | 20 | 100 | 10 | 100 | 100 |
D - Significant | 50 | 100 | 20 | 100 | 100 |
E - Uncollectable | 100 | 100 | 30 | 100 | 100 |
In terms of Housing Loan Portfolio, if during a period of two (2) consecutive years the individual loan remains classified in the E category, the reserve percentage over the secured portion is raised to sixty percent (60%. Should a third (additional) year occur in such circumstance, the reserve percentage over the guarantees portion increases to one hundred percent (100%).
Effects of Eligible guarantees over the creation of individual loan-loss provisions
Pursuant to the creation of individual loan-loss provisions, guarantees are deemed to only secure outstanding principal amounts. Therefore, balances to be amortized under exposure secured by eligible guarantees are subject to loan-loss provisions in the applicable percentage, which is applied as follows:
· | When pursuant to housing loans, non-guaranteed portion, to the difference between the unpaid amount and one hundred percent (100%) of the guarantee. For the guaranteed portion, one hundred percent (100%) of the outstanding guaranteed principal exposure. |
· | When pursuant to micro-credit exposure, to the difference between the unpaid amount and seventy percent (70%) of the value of the guarantee. In these cases, depending on the nature of the guarantee and of the default period of the respective loan, consideration is made of only those percentages of the total guarantee that are listed in the following charts: |
Non-mortgage Guarantee | Mortgage Guarantee or Trust Guarantee Eligible Guarantee | ||
Percentage | Percentage | ||
Default | Coverage | Default Period | Coverage |
0 - 12 months | 70.0% | 0 – 18 months | 70.0% |
12 – 24 months | 50.0% | 18 – 24 months | 50.0% |
More than 24 months | 0.0% | 24 – 30 months | 30.0% |
30 – 36 months | 15.0% | ||
More than 36 months | 0.0% |
Rules for Alignment
Subordinates (credit establishments) align risk classification of their obligations in accordance with the following procedures:
a) | Prior to the step of creation of reserves and homologation of classifications, on a monthly basis and for each debtor, subordinates carry-out an internal alignment process under which all exposure of the same obligor is classified at the Highest risk rating of any loan extended in the same modality. |
b) | According to standing legal dispositions, subordinates mandated to consolidate financial statements assign the same risk category to all credits under the same modality that are extended to the same debtor. |
(i) Acceptances, Cash Transactions and Derivatives
This item registers the value of banker acceptances created by the Parent Company on behalf of its customers and those created on its name by foreign bank correspondents. It also registers cash denominated transactions and operating contracts of the Parent Company for derivative transactions such as forwards, repetitive assignments, futures, swaps and options.
Bankers Acceptances
A commercial transaction in which the Subordinates, upon signature of an “Draft of Exchange”, as accepting party, commit to pay to a third party (the beneficiary), in a certain time, a bill of exchange issued by one of its customers (the requesting party) arising from a purchase-sale of merchandise in a determinate amount.
Banker Acceptances have a maturity of up to one (1) year and may only originate from import and export (goods) related transactions or under sale-purchase agreements for domestic movable goods. .
In the moment of acceptance of the drafts, their value is booked simultaneously as an asset and a liability as “Time Bankers Acceptances” and if not presented for payment at maturity, will be reclassified as Overdue Time Acceptances. If at the moment of payment acceptance have not been covered by the buyer of the underlying merchandise, they are to be reclassified in the account Loans – Bankers Acceptances Covered.
After maturity, banker acceptances are subject to reserve requirements imposed on sight obligations and obligations before thirty (30) days.
Cash Transactions and Derivatives
Cash transactions are those which liquidation and payment takes place within three (3) working days immediately following the date on which they are agreed.
Financial assets acquired through cash transactions are booked on their date of compliance or in their liquidation date but not on their date of negotiation unless the two dates coincide. Notwithstanding the above, changes in the market value of the incumbent instruments divested are to be reflected in income statement as of the date of negotiation, as the case may be.
Under the method of date of liquidation, the seller books the financial asset as an item in the balance sheet up to the date of delivery of the respective asset and, additionally, books, in the asset side, the right to receive the funds resulting from the transaction and the obligation to surrender the asset negotiated. The latter is valued at market price in accordance with standing regulations applicable to investments and variations in the value of the obligation are booked in income statement.
On the other hand, the buyer of the asset does not book the financial asset until it is received but, accounting wise, it registers –in the asset side, a right to receive the asset, which is to be valued at market prices, and an obligation to deliver the funds agreed in the transaction.
When the transaction is successfully completed, buyer and seller of the asset reverse both the right and the obligations booked at initiation of the transaction.
Subordinates book transactions regarding financial derivatives meaning contracts which main feature is that their fair exchange price depends on one or more undertakings and which compliance or liquidation takes place at a later date. These transactions are carried out for several reasons, amongst which the following are to be highlighted:
· | Offering products tailored to the needs of each customer, fulfilling, amongst other, a function of coverage of financial risks. |
· | Structuring of portfolios for the subordinates for adoption of advantageous arbitrage positions on different curves, assets and markets and allowing achievement of high profitability levels under low levels of equity consumption. |
· | Subordinates engage in derivatives transactions for purposes of coverage of active and passive positions of balance sheet items, for intermediation between customers or for capitalization of arbitrage opportunities, both of rates of exchange or interest rate, in the domestic and external markets |
Types of Derivative Financial Instruments:
A derivative financial instrument allows administration of one or more risks associated with the underlying products and f fulfills any of the following characteristics:
· | Non requirement of a net initial investment; |
· | Requirement of initial investment below that which would be needed to acquire instruments that result in the same expected payment as a response to changes in market factors. |
Transactions involving derivative financial instruments are valued daily at their fair trading price; they depend on one or more subjacent and their settlement or liquidation is carried out at a later moment upon consideration of the following:
The fair trading price of basic financial derivatives in absence of a market price is that resulting from the application of formulas for valuation established by the Financial Superintendence of Colombia.
Methodology, parameters and sources of information adopted for valuation of basic financial derivative instruments are used consistently during a minimum of one (1) year commencing on the date of the modification. The same technology is used for valuation of different derivatives that involve similar features provide they relate to the same subjacent.
Financial derivatives that yield a positive trading price are booked as assets, with separation of the value of the right and the value of the obligation except in cases of options, when the accounting registry affects solely one account. Those instruments that yield a negative fair trading price, that is to say, a price that is not favorable to the supervised entity, are booked as liabilities under the same separation. When the fair trading price of the derivative financial instrument is zero (0) whether on the initial date or at any other date, its financial registry is made on the asset side.
Derivative financial products are negotiated at the various Treasury tables; that is to say, in specialized and distribution tables when covering the foreign exchange risk and support the underlying entity by allowing projection of resulting cash flows and permitting Treasury to return to its principal activity: that of covering such risks.
Derivative products that the subsidiaries engage in transactions are:
· | Forward transactions (peso-dollar, other currencies and instruments) |
· | Options – basic and combined |
· | Swaps (Cross Currency Swap and Interest Rate Swap) |
· | Futures: Standard derivatives of the Colombia Stock Exchange (futures over notional bonds and TRM futures) |
· | Standard derivatives in foreign markets (exchange rate futures and euro-dollar futures) |
· | Novated Forwards |
· | Forward Contracts |
A “forward” is a derivative formalized through a contract between two (2) parties, tailored to their individual needs, for the purchase/sale of a specific amount of a determined subjacent at a future date, setting the date of execution of basic conditions on the derivative financial instrument, amongst them the Price, date of delivery of the subjacent and the modality of delivery. Liquidation of the instrument in the date of compliance pay arise from its physical delivery or the liquidation of differences, depending on the subjacent and on the agreed modality for delivery, the latter may be amended by common agreement during the tenor of the instrument.
· | Options |
An “option” is a contract that grants its holder an option or right, although not the obligation, to buy or sell a certain amount of one asset at an agreed price and on a certain date or during a certain period of time. Such contract mandates the issuer to either buy or sell the asset on the date in which the “option” is exercised by its holder, according to conditions such as amount, quality and price, as agreed pursuant to the contract.
· | Swaps |
A swap or financial exchange contract is a contract executed by two (2) parties in which they agree to the exchange of a series of cash flows, calculated under certain conditions agreed under the contract which must be compensated on specific dates, also agreed at initiation of the transaction.
The purpose of this type of transaction is to reduce the risks created by the fluctuations of currency exchange rates and interest rates. In general, these are contracts aimed to provide coverage of long term transactions with more than one remaining flow.
Swap transactions may be of two modalities:
· | Interest rate swaps or contracts under which the cash flows that are surrendered by both parties are denominated in the same currency and which are in turn divided in two modalities: fixed rate for variable rate swaps and variable rate for variable rate swaps. |
· | The interest rate swap (IRS Interest Rate Swap) is a two party contract for the exchange of interest flows derived from payment or charge of future flows under different modalities of interest rates. In this type of swap there is no exchange of principal amounts and the transactions occur in the same currency. |
· | Foreign exchange Swaps or foreign currency swaps in which the flows resulting from the transaction are denominated in different currencies. There are three modalities of currency swaps: currency against fixed, variable currency against variable and fixed currency against variable currency. |
Foreign exchange swaps (Cross Currency Swaps) are two party contracts for exchange of principal flows, denominated in different currencies, during a certain period of time. Through the tenor of the contract, each party assumes interest payments accrued under the principal amount received at the exchange. On the dates for amortization and at maturity of the contract, there is an effective exchange of principal amounts in the currencies originally held by each party, liquidated at the spot rate of exchange of the day of initiation of the transaction.
· | Futures |
A future is defined as a standard contract in terms of date of compliance, magnitude or face value, the characteristics of its respective undertaking, location and manner of delivery (in cash or kind). It is negotiated in the stock exchange through the Central Counterpart Risk Chamber and the two (2) parties commit to sell or buy the underlying asset on a specific future date at a price set at execution of the respective contract.
Futures may be settled through cash liquidation by means of a transaction contrary to the initial one, to be carried out at maturity through the physical delivery of the product or through liquidation against a given index.
1 – Accounting and Valuation of Derivative Financial Instruments:
In accordance with rules set by External Memorandum 025 of 2008, Resolution 1420 of 2008 and Communication 066 of 2009 issued by the Financial Superintendence of Colombia, derivative financial instruments are classified on the basis of their tradability, as follows:
· | Coverage of Risk of other positions, |
· | Speculation seeking to obtain gains |
· | Market arbitration |
Accounting of derivative financial instruments depends on the finality of the underlying negotiation. As of 31 December and 30 June 2012, all transactions carried out by the Subordinates are registered as of coverage and speculation.
Although derivatives cover the risks of foreign exchange rates they generate volatility in terms of income statement in light of the variation of other types of associated risks such as devaluation curves peso-dollar (differential of foreign exchange rates). The purpose of the accounting treatment of these coverage is to isolate the effects of volatility over income statements resulting from variation in risk factors other than rate of exchange, taking to income statement only the income/expense resulting from foreign exchange re-expression and taking to net-worth accounts the portion of variation of the fair exchange price corresponding to other factors (devaluation, lapse of time, etc.).
Commencing on1st January 2010, regardless of their finality, derivative financial instruments that yield a fair positive exchange price , that is: favorable to the Subordinate, are booked as assets with separation of the value of the right and the value of the obligation and excluding options for which the accounting entry is only one. On the other hand, those that yield a negative fair exchange Price, that is: unfavorable to the Subordinate, are to be booked as liabilities, with the same separation. Likewise, there is no net settlement of favorable balances and unfavorable balances for the various transactions even when of the same nature.
Derivative financial instruments with purposes of speculation are to be booked, as of the date of their execution, in amount equal to their fair exchange Price. When, on the initial date, the value of the contract is zero (0), that is to say when there is no actual payment or physical delivery between the parties, there is no accounting for income statement purposes. In subsequent valuations, variations in the fair exchange price are booked in income statement.
On the date of liquidation of derivative financial instruments cancellation takes place of outstanding balances in general balance sheet accounts and any resulting difference is either credited or charged to the respective income statement accounts, as applicable. Should the accumulated balance of the derivative financial instrument be positive on such date, it is booked as income and, should it be negative, it is then booked as expense. This procedure is completed independently, instrument by instrument, each time one is liquidated.
Type of Transaction | Valuation and Accounting |
Forward on Securities | In forward transactions on the purchase of securities the right is calculated through valuation of the security at market prices and valuation of the obligation at the present value of the amount of the agreed purchase price. In cases of forwards over the sale of securities, the right is calculated as the present value of the agreed sale price of the security and the obligation is calculated through valuation of the security at market prices. |
Forward on FX currency | The methodology for valuation of forward and cash denominated transactions on foreign currency used by the Bank is based on the present value of the future underlying flows (rights and obligations) resulting from the transaction; it is most common that one of such flows is denominated in dollars of the United States of America and the other in Colombian pesos. Each flow is brought to present value using market discount rates for dollars and pesos, as applicable for the remaining time lapse in each transaction. The resulting present values are calculated using compounded continued rates. Once the present value of the flows is determined, they are re-expressed in Colombian pesos at market Representative rate (TRM) as calculated and certified by the Financial Superintendence of Colombia. Interest rates used are those of the market, based on the average devaluation of the Colombian market. |
Options | Determination of market value of options in foreign currencies performed by the Banks is calculated using a methodology developed by Black and Scholes. Information to be used in the model for valuation of options is secured from financial information systems that are current providers of prices for the various variables involved (volatilities, risk free domestic and foreign interest rates, etc.). The initial registry corresponds to the Premium effectively paid and to market variations affecting the fair trading price in respect of the initial and effectively paid price; these are accounted for at Income Statement. Rights and obligations are booked in contingent accounts. When the bank buys an option, be it a “call” or a “put”, the accounting entries of both the premium paid and the daily variations of the fair trading price are carried through on the Asset side of the balance sheet. When the bank sells an option, the accounting entry for the Premium received and the daily variations of the fair trading price is conducted on the Liability side of the balance sheet. On the date of settlement of the contract, the corresponding outstanding balances are cancelled for both the right and the obligation and any resulting difference is accounted for as either gain or loss on the valuation of derivatives. |
Swaps | The valuation of a swap transaction consists on bringing to present value (discount) each of the future flows and to convert them to the base accounting currency. In order to carry through the process for valuation of a swap transaction, the Bank updates market information (curves of interest rates and foreign exchange rates) and, on the basis of the particular features of each transaction, decomposes the swap into future cash flows and calculates the total flow for each settlement date. The aggregate sum of the present value of the flows received is accounted for as a right and the aggregate sum of all flows surrendered is accounted for as an obligation. The result calculated for the valuation on the date in which the transaction is agreed is booked as a deferred item to be amortized through the maturity of the swap. The results of valuation from the second day forward and through the date of maturity are deducted in the amount of the resulting deferred item. |
Futures | In this type of derivatives there is a daily liquidation of profit and loss. The Central Chamber for counterparty Risk “CRCC” does communicate, on a daily basis, the result of compensation to the participants and further engages in the debit or credit of realized losses or earnings. In the case of notional bond futures, if the bank presents a short position, it does inform to CRCC what is the instrument or security chosen for liquidation of the resulting obligation, on the basis of the basket of deliverables and then engages in the transfer of the securities through the Deposit of Securities (DCV or DECEVAL) which will confirm the effective transfer of the securities to CRCC. For futures on foreign exchange rates dollar/peso, at maturity of the contract settlement is performed against the price of the subjacent asset (TRM) as published for the last day of the negotiation. The amount of the obligation to be booked by the seller in its balance sheet (a right for the buyer) corresponds to the price of each unit under the futures contract reported on the date of valuation by the Stock Exchange multiplied by the number of contracts and for the nominal value of each contract. On the other hand, the value of the right that is to be accounted for by the seller, in its balance sheet, (an obligation for the buyer) in Colombian pesos, corresponds to the price of each unit as set in the futures contract, multiplied by the number of contracts and the nominal value of each contract. Novated forwards are instruments of financial derivatives nature that are negotiated over the counter and which counterparts, by joint agreement, take to a central chamber for counterparty risk for its settlement and liquidation. The agreement is ruled by a general frame contract signed by both parties until the date in which the central chamber for counterparty risk enters as a counterpart in the transaction. As of such moment the rules of the chamber are applied and the frame contract previously signed by the initial counterparties to such financial instrument will cease to rule. In a similar manner, the respective central risk chamber must warrant to the Financial Superintendence of Colombia full access to information pursuant to these transactions whenever required. The accumulated outstanding balance through the date in which the Central chamber for counterparty risk does effectively accept the transaction is taken as an item of accounts payable or accounts receivable, as the case may be, on the name of the chamber. This account will be cancelled in the process for settlement and liquidation of the transactions according to the rules of the respective Central Chamber for Counterparty Risk. |
2 - Coverage Derivative Financial Instruments |
It is a combination of transactions in which one or several financial instruments, denominated instruments for coverage, are designed to reduce or eliminate a specific risk that may have adverse impact on income statement as a consequence of variations in their fair trading price, cash flows or rate of exchange applicable to one or various items, denominated primary positions.
Accounting of derivative financial instruments used for coverage purposes depends on the specific type of coverage being used. Specifically, for coverage of assets and liabilities denominated in foreign currency, it operates as follows:
· | Accumulated earnings or loss of the derivative financial instrument is recognized in the pertinent sub-account of the income statement provided that such amount does not exceed the value of the accumulated variation of the covered primary position attributable to changes in the rate of exchange, from the date of initiation of the coverage transactions, which is booked in the respective accounts for either loss or earnings in foreign exchange. |
· | When the accumulated earnings or loss of the derivative financial instrument is higher than the amount mentioned above, the difference is booked in the equity account “accumulated unrealized earnings or loss on coverage derivative financial instruments- coverage of assets or liabilities denominated in foreign currency”, with the pertinent sign. |
· | On the date of maturity of the coverage transaction, the accumulated outcome of the derivative financial instrument used for this type of coverage, that is booked in the equity subaccount “accumulated unrealized earnings or loss on coverage derivative financial instruments- coverage of assets or liabilities denominated in foreign currency” is transferred to income statement at the respective subaccount for derivative financial instruments. |
On the other hand, accounting of primary positions covered is as follows::
a. | The primary position continues to be registered at its nominal value on each date, at the same balance sheet and income statement accounts, under the same methodology and dynamics as it would occur should there be no coverage. |
b. | Starting on the date of initiation of the coverage transaction through derivative financial instruments, the present value of the primary position is accounted for in Memo Accounts. |
Derivative financial instruments used as instruments for coverage are forward peso/US dollar transactions with different maturity profiles.
(j) Realizable, Received in Payment and Repossessed assets
Realizable: Those tangible assets property of the company that is intended for sale; may be assets acquired or built for sale, assets received in recovery of loans or financial lease transactions.
Received in payment: books the value of those assets received by the Subsidiaries in lieu of payment originated from unpaid credits.
Assets received in lieu of payment and represented by real estate properties are received on the basis of a technically established commercial appraisal while movable assets, stocks and participations are received at market value.
For proper booking of assets received in lieu of payment, the following conditions must be fulfilled:
· | Initial booking is made in accordance with the value determined in the official attachment or as agreed with the debtor party. |
· | When the asset to be received in lieu of payment does not meet conditions for divestiture, its cost is increased in the amount of all expenses necessary to engage in its commercialization. |
· | If there is a difference between the value of receipt and the amount of the loan to be repaid which results in favor of the paying party, the pertinent amount is accounted for as an account payable; in the event the value of the asset is not sufficient to cover outstanding debt, the difference is covered through a provision equivalent to such difference. |
· | Assets received in payment corresponding to investments in securities, are valued through application of criteria indicated in this Note under Numeral “2 (e) of Investments” and taking into account all requirements for reserves during the period mentioned below. |
· | When the commercial value of the property is below book value, a reserve is created in an amount equal to the resulting difference. |
· | Appraisal of assets received in payment is booked in memo Accounts |
Restituted assets are those that are returned to financial entities in development of financial lease transactions by reason of breach of contract by the lessors or location holders or by the non-exercise of purchase options. These assets are not subject to depreciation.
Assets not used pursuant to the corporate objective are assets for own use that entities cease to use in development of their corporate purpose. These assets are depreciated through the instance of their realization and are accounted for as fixed assets pursuant to the limits set by Numeral 1.2 of Chapter Seven of Title One of the Basic Juridical memorandum of the Financial Superintendence of Colombia.
Reserve for Realizable Assets, Assets Received in Payment and Repossessed Assets
The financial subordinates book the value of assets received in lieu of payment of unpaid outstanding balances under credit transactions in their favor.
Real Estate properties
The Financial Superintendence of Colombia defined a model for calculation of reserves on assets received in lieu of payment and permitted the possibility that financial entities adopt their own models subject to prior approval by the same Superintendence. On this basis, individual reserves of Banco de Bogota are created for real estate through application of a model approved by the Financial Superintendence of Colombia. The model calculates the maximum expected loss resulting from the sale of assets received in lieu of payment in accordance with their history of recoveries from assets divested, the addition of expenses incurred in the forfeiting transaction, maintenance and sale of these assets and their grouping in common categories for determination of the base rate for the reserve. This rate is adjusted on a monthly basis up to reaching a reserve equal to eighty percent (80%) depending on the group of assets to which it belongs, as follows:
- | For assets received in lieu of payment after two (2) and four (4) years of receipt and for which the Financial Superintendence of Colombia did not approve extension of sale period and those assets with more than two (2) years and less than four (4) years after receipt and for which the Financial Superintendence did grant authorization for extension of sale period, these entities have fulfilled the required adjustment after twenty seven (27) months and reserves have adjusted to reach eighty percent (80%) at 31 December 2005. |
- | For assets received in lieu of payment with less than two years after receipt and received after 1 October 2003, application was made of the adjustment function during a period of forty eight (48) months and a provision was created at eighty percent (80%). |
- | For purposes of real estate properties a reserve is to be created through allocation of equal monthly quotas during the year following receipt of the assets, up to an equivalent to an additional thirty percent (30%) which is increased in monthly amounts during the second year up to another thirty percent (30%) to reach a total sixty percent (60%) of their acquisition cost. Once the authorized period for sale is expired without approval for extension, the reserve must be increased to eighty percent (80%). In the event an extension is approved, the remaining twenty percent (20%) may be reserved at expiration of the approved extension. |
- | When the commercial value of the real estate property is below book value of the asset received in lieu of payment, a reserve is created in the amount of the resulting difference. |
- | Regarding real estate properties which date of receipt was over two (2) years before the date of issuance of the above mentioned External Memorandum, a reserve was created through the allocation of monthly quotas up to a level of eighty percent (80%) of their acquisition cost. |
Movable Assets
A reserve must be created during the year following receipt of the asset, up to thirty five percent (35%) of its acquisition cost, which reserve is increased by an additional thirty five percent (35%) during the second year after acquisition up to reaching a level of seventy percent (70%) of book value before reserves. Once the legal period authorized for sale of the asset is expired without an approved extension, the reserve must be increased to one hundred percent (100%) of book value. In the case an extension of the sale period is granted, the remaining thirty percent (30%) reserve may be created during the tenor of the extension.
When the commercial value of the assets is lower than the book value of the asset received in lieu of payment, a reserve is to be created in the amount of the resulting difference.
Notwithstanding rules for reserves mentioned above, movable assets received in lieu of payment that correspond to investment securities are valued through application of criteria established in Chapter I of the Basic Financial Accounting Memorandum, on the basis of their classification, as either negotiable investments, available for sale or to be held through maturity.
Reserves created over assets received in lieu of payment or assets restituted under financial lease transactions may be reversed when the underlying assets are sold in cash; when the assets are booked as loan portfolio or financial lease transactions, earnings derived from the transfer to the loan portfolio account and financial lease transactions account, are to be deferred throughout the agreed tenor of the respective transaction.
Rules regarding Legal Tenor for Divestiture
Assets received in lieu of payment must be sold off in a period of two years following the date of their acquisition; however, they may be booked as fixed assets when necessary for the ordinary course of business and subject to compliance with asset investment limits.
Extension of the above period may be requested to the Financial Superintendence of Colombia, which is to be filed prior to expiry of the tenor permitted for divestiture.
The pertinent application for extension must demonstrate that fulfillment has been made of all stops required/available for divestiture and that sale has not been possible. In any event, extension may not exceed an additional two-year period as of expiry of the original period for divestiture, and all efforts for sale of such non-productive must be pursued.
k) Properties and equipment
Represents registry of tangible assets acquired, built or in process of import, construction or assemble which are used in permanent manner by subordinates in due development of their social business objectives and which useful life exceeds one (1) year. Includes direct costs and expenses incurred up to the date in which they are in condition of use.
Additions, improvements and extraordinary repairs that have a significant increase in the useful life of these assets and other disbursements for maintenance and repairs for their preservation, are depreciated as caused.
Depreciation is registered on the basis of application of the straight line method and in accordance with the estimated number of useful life years of each item. Annual depreciation rates for each account are as follows:
Buildings, warehouses and silos | 5% |
Equipment, furniture and office items | 10% |
Transportation equipment and machinery | 10% |
Computer equipment | 20% |
Vehicles | 20% |
Properties and equipment are booked at cost, subject to yearly re-expression as a consequence of inflation until 31 December 2000.
Assets surrendered under operating lease transactions are booked at cost and disbursements for improvements and repairs that increase the efficiency and useful life of the assets, are capitalized. Cash outlays by reason of maintenance and repairs are accounted for as expenses for the period in which they are incurred.
Starting 1997, Banco de Occidente adopted the method of reduction of balances for depreciation – for fiscal purposes. The system of reduction of balances consists in annual fixed rate depreciation applicable to non-depreciated balances in previous years; the applicable depreciation rate if the nth root of balances over cost.
For purposes of calculation a residual value was determined which is an integral component of the amount to be depreciated in the last year of the useful life of the asset, as to achieve total depreciation.
(l) Assets Surrendered under operating lease contracts
This account registers the cost of assets under operating lease contracts that the subordinates, under the respective lease contract, surrender to the lessor for its utilization.
Depreciation of assets surrendered under operating lease contracts is made on the lesser of the useful life of the asset and the tenor of the lease contract.
When, under operating lease contracts, it is established that rental installments are to be used for amortization of at least ninety percent (90%) or a higher portion of the value of the asset, depreciation is made through the duration of the contract and under the methodology of financial depreciation according to the conditions of the contract.
A general reserve of one per cent (1%) of the value of the asset is created and the sum of accumulated depreciation and the general reserve may not exceed one hundred percent (100%) of the value of assets under operating lease contracts.
The reserve is created along the guidelines issued in Chapter I of Memorandum 100 of 1995.
Individual reserves are created for properties and equipment surrendered under operating lease transactions which net book value is higher than their respective commercial value, determined through technical appraisals, and when the net book value is below appraised commercial value, the difference is booked as asset revaluation in the equity account.
(m) | Branches and Agencies |
Registers changes in operations conducted between General management and the offices of the financial entities, as well as those engaged into between the offices of the financial entities and the Agencies located abroad.
Outstanding balances are reconciled daily and pending items are normalized over a period not exceeding thirty (30) calendar days.
At closing of the accounting periods, net outstanding balances in the subaccount branches and agencies are reclassified in the asset and liability accounts and the respective income or expenses are duly recognized.
(n) | Prepaid expenses and deferred charges |
Prepaid expenses correspond to cash outlays incurred by the Parent Company and the subordinates in normal development of their activity, which benefit is to be received over several periods and which may be recovered and assume the successive execution of the services to be received.
Deferred charges correspond to costs and expenses that will benefit future periods and are not susceptible of recovery. Their amortization is recognized as of the date in which they initiate contribution to income generation.
Amortization is done as follows:
Prepaid expenses
a. Interest – during the prepaid period.
b. Insurance – during the life of the policy
c. Leases – during the prepaid period
d. Equipment maintenance – during the life of the contract.
e. Other prepaid expenses – during the period in which services are received
Deferred Charges
Deferred expenses represent charges by reason of costs and expenses and that will benefit future periods and are not susceptible of recovery. Amortization is recognized as of the date in which the underlying expense contributes to income generation.
a. | Expenses incurred in the reorganization and pre-operational expenses represent expenses of research and development of studies and projects which are deferred provided that pertinent expenses may be identified in a separate manner and that their technical feasibility is proven. Amortization takes place over a period not longer than five (5) years; |
b. | Road construction projects; amortization takes place over the tenor of the contract; |
c. | Remodeling amortize over period not longer than two (2) years; |
d. | Computer programs amortize over periods not longer than three (3) years. |
e. | Office supplies and materials according to their effective consumption; |
f. | Improvements in properties under lease contracts amortize during the lesser of the period of duration of the underlying contract and its probable useful life. |
g. | Deferred income taxes of “debit” nature resulting from temporary differences are amortized upon compliance with legal and regulatory requirements as pertinent to fiscal dispositions. |
h. | Memberships and contributions over the period prepaid; |
i. | Advertising and propaganda amortize during a period equal to that of the accounting exercise; however, those expenses for publicity and propaganda under launching of new products or image change may not exceed an amortization period of three (3) years. |
j. | Equity Tax during a four-year period |
k. | Studies and projects over a period not to exceed two (2) years |
l. | Other concepts are amortized over the period for recovery of the cash outlay or during the period in which benefits are received. |
m. | Fees and commissions paid for products are amortized over a period not exceeding six (6) months. |
n. | Discounts in placement of investment securities are amortized over a five (5) year period. |
o. | Intangible Assets |
Acquired Goodwill
Parent Company
Accounts for amounts paid in excess of book value in the acquisition of shares or aliquots of ownership participation
Mercantile credit received from the acquisition of shares of Corporacion de Ahorro y Vivienda AHORRAMAS S.A., currently Banco Comercial AV Villas S.A. is amortized in straight line over ten (10) years as established since its origin and acquired along with the acquisition of shares in September and December 2007 are amortized in respectively 36 and 33 months.
Mercantile credit from the acquisitions of Banco Popular S.A. and Banco de Occidente S.A.by Grupo Aval Acciones y Valores S.A. is amortized under the method “Reversal of the sum of the digits over the tenor” in a twenty year period.
Subordinate Banco de Bogota S.A. as of 9 October 2006 adhered to the dispositions of External Memorandum 034 of the Financial Superintendence of Colombia and in this sense, outstanding mercantile credit as of the closing of fiscal year 2006 began to be amortized under the exponential method over a period of twenty (20) years. In a similar manner, mercantile credit was allocated amongst several business lines. These business lines are subject to a deterioration test in which comparison with book value (including the assigned mercantile credit) with technical valuation studies prepared annually by independent experts. If losses due to deterioration are found, the mercantile credit assigned to such line of business must be amortized up to the amount of the established loss.
Subordinate Banco de Occidente S.A., amortizes mercantile credit on the basis of the exponential method over amounts originated on the difference between values paid and net shareholder equity on the date of acquisition of Banco Aliadas and Banco Union Colombiano, over a period of respectively 216 and 237 months, in accordance with the dispositions of External memorandum 034 issued by the Financial Superintendence of Colombia. The Bank values selected business lines at market price in order to establish if there is or not a deterioration of such business line. Valuation is prepared on the basis of earnings flows generated by each business line, identified as an independent cash flow generator.
Banco Popular S.A. and Banco Comercial AV Villas S.A. do not account for any amounts corresponding to acquired mercantile credit in their financial statements.
(p) | Other Assets |
Other Assets basically include assets available for sale, investments in custody, assets available under leasing contracts and prepaid taxes. Assets available for sale are assets no longer used in the main core business of the banking subsidiaries of Grupo Aval and which are depreciated through the moment of sale. Furthermore, these assets are material proof of demerit and any deterioration is charged to the Consolidated Income Statement; investments in custody are rights acquired under trust transactions; assets available under leasing contracts represent a stock of assets to be placed under lease contracts for tenor no exceeding one (1) year.
Rights under Trust Agreements
Register all rights generated through execution of mercantile fiduciary agreements which give either the trustee or the beneficiary the right to exert in accordance with either the contract or legal dispositions.
The transfer of one or more of the assets, as directed by the trustee to the trust agent, must be executed, as per accounting regulations, at adjusted cost in such a way that the delivery of the asset does not in itself generate realization of profit for the trustee and the latter will only be relevant, in income terms, when the assets is effectively realized to a third party.
(q) | Revaluations and Asset Revaluation |
Subordinates register in this account the revaluation of investments available for sale under participation securities, properties and equipment, specifically real estate and vehicles and of art and culture holdings.
Company registers in this account revaluation originated from the difference between cost of investments received under processes of escision and their respective intrinsic value at the moment of the transaction, as well as those arising from the difference between the intrinsic cost of the investments and its realizable value.
No revaluation is accounted for by reason of assets received in lieu of payment and restituted assets, which if any are to be registered in memo accounts.
Asset Revaluation and Devaluation
Revaluation of assets included in shareholders equity is made as follows:
(1) | Commercial technical appraisals conducted by specialized firms versus the net book value of properties and equipment surrendered under operating leases. According to stipulations in Decree 2649 of 1993, valuation of assets is to be made, at least, every three (3) years. |
(2) | The commercial value of investments available for sale versus their respective net book value. |
For investments quoted in stock exchanges such excess is determine don the basis of market value and, when not available, on their intrinsic value, which is determine don the basis of the financial statements not older than six months.
In the event of devaluation of investments available for sale in the form of participation instruments and for properties, plant and equipment, following a caution guideline, for each individual asset, reversal is made of revaluations booked and a reserve is then created.
Accounting
Revaluation of investments available for sale through participation securities are registered on the basis of the shareholder equity variations of the issuer.
Revaluation of real estate properties is determined as the difference between the net cost of the assets and the value of their commercial appraisal conducted by firms with recognized experience and reputation in these matters. In the event of devaluation in the value of the property, under a rule of prudence, a reserve is then created.
Revaluation of art and culture holdings is registered taking into account the condition of preservation of the works, their authenticity, size, technique and the price of similar works.
(r) | Income received in advance |
Registers deferred income and revenues received in advance by subordinates in due development of their activity and are amortized during the period in which they accrue or during the period in which services are rendered.
Deferred earnings resulting from the sale of assets received in lieu of payment arising from financing by means of credit transactions are amortized during the tenor of the respective loan exposure.
Interest and monetary correction of loans denominated in UVR (Units of Real Value) that were activated as the product of credit restructurings are registered as income when collected.
Adjustments of the Unit of Real Value, UVR, as indicated in the Policy for Recognition of income from returns and financial leasing.
(s) | Retirement Pensions |
At 31 December and 30 June 2012, subordinates that have not amortized 100% of outstanding amounts, apply dispositions issued through Decree 4565 of 7 December 2010 which amended the methodology for determination of the portion that is to be amortized. The reserve is created under a linear method in such a way that as of 31 December 2029 amortization of one hundred percent (100%) of the respective calculation. Thereafter, amortization is kept as such level; payments of retirement pensions are charged to the reserve so created.
For entities that have already amortized 100% , retirement pensions are quantified by means of an actuarial study prepared by individuals specialized in this matter, with appropriate knowledge and under conditions of total independence from the Parent Company and the subsidiaries.
The reserve is booked for one hundred percent (100%) of the corresponding calculation and is thereafter kept at such level. Payments by reason of retirement pensions are charged against the reserve so created.
(t) | Estimated Liabilities and reserves |
Subordinates have created reserves for coverage of estimated liabilities on the basis of:
· | the existence of an acquired right and, therefore, of a binding obligation; |
· | that payment is demandable or probable; and |
· | that the reserve is justifiable, quantifiable and verifiable. |
Likewise, this account registers values estimated by reason of taxes, contributions and memberships.
(u) | Bonds mandatorily converted into shares of stock |
This item represents the nominal value of bonds issued by the subsidiaries and which grant their holders a right to convert them into shares of stock in the Company.
Discounts granted in their issuance are charged to subaccount 192037-discount in the placement of Boceas – and any premiums are registered in subaccount 272010 – premium on sales of stock.
(v) Recognition of income by reason of returns, leases and monetary correction
Income originated as financial returns and other Concepts are recognized at accrual:
Suspension of interest accrual:
Pursuant tom loan portfolio, subordinates suspend interest accrual, monetary correction, foreign exchange adjustments, fees, other payments and any other income as soon as there is delay in payment, in the terms of the following chart:
Credit Modality | Past-due over |
Commercial | 3 months |
Consumer | 2 months |
Housing | 2 months |
Microcredit | 1 month |
In consequence there is no impact on financial results until income is effectively collected. Until such instance, potential income is registered under memo accounts.
In those cases in which, as a result of restructuring agreements or any other modality of agreement, there is capitalization of interest already booked under memo accounts or as balances of charged-off portfolio including capital, interest and other Concepts, accounting is conducted in the form of deferred income, code 272035 and amortization for income statement is proportional to the amounts effectively collected.
In compliance with dispositions of Law 546 of 1999, article 3, creation was made of the UVR (unit of real value) as account unit reflecting the purchase power of the local currency on the basis of, exclusively, changes in the consumer price index as certified by DANE, which value is calculated under a methodology adopted by the central government.
This methodology mandates that during the months in which the CPI is seasonally higher, UVR will suffer a larger adjustment than in months of low inflation. For this reason, calculation of annual inflation on the basis of inflation rate for any given month is equivalent to assume that this is going to be the inflation rate for the entire year, which distorts the reality of what could happen in such period. Aiming to eliminate such distortion, the Financial Superintendence of Colombia has determined that income from this source must be amortized within one year.
(w) | Special Rule for the Reserve for Accounts receivable (interest, monetary correction, rentals, FX adjustment and other concepts) |
When subordinates suspend accrual of returns, monetary correction, exchange adjustments, rentals and income of this nature, the entire accrual and non-accrual amounts are reserved.
(x) Income Tax
Expense by reason of income taxi s determine don the basis of the highest of net liquid income at a tax rate of thirty three per cent (33%) and presumptive income equivalent to three percent (3%) of net shareholders equity as of the last day of the immediately preceding year.
(y) | Deferred Income Tax |
Booking takes place in this account of temporary differences that imply payment of a higher or lower income tax during the current year, calculated at current tax rates, provided there is a reasonable expectation that sufficient taxable income will be generated during those periods for which such differences will be reversed.
(z) Equity Tax
The central government, through Law of Tax Reform, No. 1370 of December 2009 created the Equity Tax for tax years 2011 through 2014, which passive subjects are natural and legal persons. The same law established that such tax will accrue at a rate of four point eight percent (4.8%) plus a twenty five percent (25%) surcharge for a total rate of six percent (6%) over net shareholders equity as of 1st January 2011.
Accounting wise, Grupo Aval and its subordinates adopted a policy for recognition, as a liability, the whole amount due under this concept, which is payable in eight (8) equal installments during years 2011 through 2014, charged against deferred charges during the same period, in forty eight (48) monthly installments against earnings of the respective period. Other companies book this tax against revaluation of shareholders equity, a practice permitted under dispositions in Decree 514 of 2010 which added Article 78 of Decree 2649 of 1993.
(aa) | Legal Reserve |
As established in Decree 663 of 2 April 1993, legal reserve of credit establishments is created through an allocation of minimum ten percent (10%) of the net earnings of each period up to the level of fifty percent (50%) of subscribed capital; such reserve may not be reduced below this level unless to be used for coverage of accumulated losses in excess of the level of unallocated retained earnings..
(ab) Contingent Accounts
These accounts are used for registration of transactions through which the bank acquires a right or assumes an obligation which materialization is conditioned to the occurrence or not of events that would take place depending on future factors, eventual or remote in nature. Debtor contingencies include financial returns and the financial component of lease installments as of the instance of suspension of accruals in the loan portfolio accounts and assets surrendered under operating lease transactions.
As components of these accounts we must highlight lease contracts close to maturity, as follows: as current portion register is made of lease installments and purchase options that mature during the immediately following year and, as non-current, those that mature after the first year.
In a similar manner, debtor and creditor contingent accounts are registered in the amount of the values transferred under a repurchase or simultaneous transaction.
(ac) Memo Accounts
These accounts are used for registration, on the basis of their active or passive nature, transactions with third parties that, due to their nature, do not affect the financial condition of the Bank. Likewise, they include accounts of fiscal order where registration takes place of figures for preparation of income tax returns; also, they include those accounts of registry used for fiscal effects, internal control or management information. Memo accounts may either be of debtor or creditor nature depending on the underlying transaction. Additionally they include the value of credits classified in order of maturity, reciprocal transactions with affiliates and, commencing on 1st January 2001, the value of fiscal inflation adjustments on non-monetary assets and equity.
(ad) Recognition of Income, Costs and Expenses
Grupo Aval uses the norm of association and accrual for recognition and registry of income, costs and expenses. Interest, fees and rentals paid or received in advance are registered in the account for expenses or income paid or received in advance. Interest accrual, monetary corrections, FX adjustments, rentals and income for other concepts will cease to accrue when a loan registers the following past due situation: commercial loan 3 months – consumer loans 2 months; housing 2 months and microcredit 1 month.
(ae) Net earnings per Share
At 31 December and 30 June 2012, in order to determine earnings per share. Subordinates used the weighted average of the number of shares subscribed and paid-for between 1st July and 31 December 2012 and between 1st January and 30th June of 2012, which respectively correspond to 18,551,766,453 and 18,551,545,870. Net earnings per share was Col$41.93 and Col$38.73 at 31 December 2012 and 30 June 2012, respectively.
(af) Relative Importance or Materiality
In the consolidated financial statements and its Notes disclosure is made, in integral manner, of economic facts and events that, during the semesters ended 31 December 2012 and 30 June 2012, had effect on the financial condition of the Parent Company and its Subsidiaries, their results and cash flows, as well as changes in the financial condition and equity holdings of the shareholders. No events of such nature exist , not disclosed, that could alter in a significant manner the economic decisions of user so the aforementioned information.
(ag) Reclassifications
Some captions in the general balance sheet and income statement at 30 June 2012 were reclassified for purposes of comparison with those at 31 December 2012.
(4) Cash and Due from Banks
Outstanding balance of cash and bank deposits at 31 December and June 2012, were as follows:
31 December | 30 June | |||||||
In Colombian Pesos: | ||||||||
Cash | $ | 2,177,424 | 2,047,676 | |||||
Due from the Colombian Central Bank(1) | 3,666,587 | 4,080,993 | ||||||
Banks and other financial entities | 122,444 | 231,083 | ||||||
In clearance | - | 2,781 | ||||||
Remittances in transit | 3.181 | 1,652 | ||||||
Allowance for cash and cash equivalents | (2,128 | ) | (2,791 | ) | ||||
Total | 5,967,508 | 6,361,394 | ||||||
In foreign currency: | ||||||||
Cash (2) | 520,010 | 418,210 | ||||||
Due from the Colombian Central Bank | 889 | 343 | ||||||
Banks and other financial entities (2) | 3,155,828 | 3,927,334 | ||||||
Remittances in transit | 244,877 | 244,834 | ||||||
Allowance for cash and cash equivalents | (52 | ) | - | |||||
Total | 3,921,552 | 4,590,721 | ||||||
$ | 9,889,060 | 10,952,115 | ||||||
(1) | These amounts are sufficient for fulfillment of deposit reserve requirements imposed by Banco de la Republica and are based on a percentage of all customer deposits at each of the banking subsidiaries of Grupo Aval in Colombia. As per disposition of Resolution 11 of 2008, deposit reserve requirements are determined on a weekly basis and the resulting amounts depend on the type of deposit: 11% for checking accounts and savings deposit and 4.5% on of time deposit with maturity less than 540 days. |
(2) | Certain cash and deposits Amounts in foreign Central Banks are suitable for compliance with reserve requirements established, basically, over deposits at BAC Credomatic from its customers in Central America in accordance with standing dispositions in each of the countries where the institution operates. There are no restrictions over cash. |
Allowance for cash and cash equivalents
Below is presentation of changes in the allowance for cash and cash equivalents for the semesters ended on:
31 December | 30 June | |||||||
Balance at beginning of period | $ | 2,791 | 2,247 | |||||
Allowance charged to expenses | 906 | 780 | ||||||
Allowance recoveries | (910 | ) | (215 | ) | ||||
Charge-offs and other | (607 | ) | (21 | ) | ||||
Balance at the end of period | $ | 2,180 | 2,791 | |||||
(5) Active Position in monetary market and related transactions
Outstanding balance of active positions in monetary market and related transactions were as follows:
31 December | 30 June | |||||||
Colombian peso - denominated: | ||||||||
Ordinary interbank funds sold | $ | 239,900 | 74,361 | |||||
Transfer commitments under closed repo operations | - | 9,311 | ||||||
Investment transfer commitments under simultaneous operations | 1,997,168 | 566,399 | ||||||
2,237,068 | 650,071 | |||||||
Foreign Currency - denominated: | ||||||||
Ordinary interbank funds sold | 1,272,751 | 1,587,794 | ||||||
1,272,751 | 1,587,794 | |||||||
$ | 3,509,819 | 2,237,865 | ||||||
(6) Investments Securities, Net
Investment in trading securities, net is as follows:
31 December | 30 June | |||||||
Colombian peso - denominated | ||||||||
Issued by the Colombian Government | $ | 1,724,120 | 1,013,757 | |||||
Government entities | 8,603 | 10,765 | ||||||
Financial institutions | 358,911 | 292,626 | ||||||
Entities not supervised by the Financial Superintendence | 19,444 | 11,223 | ||||||
Securitization of mortgage loan portfolios | 60,965 | 61,870 | ||||||
Securitizations of other than mortgage loan portfolios | 13,816 | 21,640 | ||||||
Other | 116,324 | 104,689 | ||||||
2,302,183 | 1,516,570 | |||||||
Foreign Currency - denominated | ||||||||
Issued by the Colombian Government | 3,965 | 4,628 | ||||||
Foreign banks | 434,894 | 102,230 | ||||||
Foreign Governments | 86,047 | 81,614 | ||||||
Foreign residents | 11,514 | 11,832 | ||||||
Financial entities | 32,255 | 45,831 | ||||||
Securitizations of other than mortgage loan portfolios | 104 | 144 | ||||||
Other | 86,127 | 61,704 | ||||||
654,906 | 307,983 | |||||||
Repurchase rights on Trading debt securities(*) | 1,773,107 | 919,176 | ||||||
Trading investments surrendered as guarantee | 19,386 | 5,969 | ||||||
1,792,493 | 925,145 | |||||||
Total investments in debt instruments | $ | 4,749,582 | 2,749,698 |
31 December |
Entity | Assets | |||
Banco de Bogota S.A | $ | 49,015,951 | ||
Banco de Occidente S.A | 23,438,384 | |||
Banco Comercial Av Villas S.A | 8,821,281 | |||
Sociedad Administradora de Fondos de Pensiones y Cesantias Porvenir S.A. (1) | 928,420 | |||
Banco Popular S.A. | 14,906,446 | |||
Grupo Aval Limited (2) (*) | 2,812,316 | |||
Grupo Aval International Limited (3) (*) | 70,967 | |||
$ | 99,993,764 | |||
30 June | ||||
Entity | Assets | |||
Banco de Bogota S.A | $ | 45,872,285 |
Available for sale Debt securities
Available for sale debt securities were as follows:
31 December | 30 June | |||||||
Colombian peso - denominated: | ||||||||
Issued by Colombian Government | $ | 4,332,484 | 2,934,902 | |||||
Financial Institutions | 16,734 | 16,471 | ||||||
Entities not supervised by the Financial Superintendence | 985 | 1,564 | ||||||
Securitizations of mortgage loan portfolios | 326,953 | 361,386 | ||||||
Securitizations other than mortgage loan portfolios | 40,135 | 40,336 | ||||||
Other | 7,143 | 37,450 | ||||||
4,724,434 | 3,392,109 | |||||||
Foreign Currency - denominated | ||||||||
Issued by Colombian Government | 549,347 | 410,128 | ||||||
Financial Institutions | 1,373,788 | 911,820 | ||||||
Multilateral credit entities | 52,446 | 51,463 | ||||||
Foreign governments | 1,021,521 | 727,600 | ||||||
Entities not supervised by the Superintendence Financiera | 107,151 | 59,824 | ||||||
Other | 1,153,380 | 67,682 | ||||||
4,257,633 | 2,228,517 | |||||||
Subtotal investments in debt securities | 8,982,067 | 5,620,626 | ||||||
Repurchase rights on available for sale debt securities (*) | 2,155,387 | 5,485,529 | ||||||
Endorsed or guaranteed instruments | 93,884 | 117,854 | ||||||
$ | 11,231.338 | 11,224,009 |
31 December | 30 June | |||||||
Colombian peso – denominated: Internal Public Debt Instruments | ||||||||
Guaranteed by the Colombian Government | $ | 2,075,632 | 5,333,912 | |||||
Total Colombian peso - denominated | 2,075,632 | 5,333,912 | ||||||
Foreign currency - denominated: | ||||||||
Other public debt instruments | 48,160 | 21,738 | ||||||
Securities issued, endorsed or guaranteed by foreign governments | 23,598 | 43,401 | ||||||
Securities issued, endorsed or guaranteed entities supervised by the Financial Superintendence | - | 75,216 | ||||||
Other securities | 7,997 | 11,262 | ||||||
Total foreign currency - denominated | 79,755 | 151,617 | ||||||
$ | 2,155,387 | 5,485,529 |
Held to maturity debt securities
Investment in hold to maturity debt securities included the following:
31 December | 30 June | |||||||
Debt Securities Colombian peso - denominated: | ||||||||
Issued by the Colombian Government | $ | 628,023 | 710,364 | |||||
Government entities | 611,387 | 616,532 | ||||||
Financial Institutions | 417,172 | 49,455 | ||||||
Securitizations of mortgage loan portfolios | 981 | 1,879 | ||||||
Corporate Bonds | - | 1,832 | ||||||
Other | 1,224,840 | 1,186,119 | ||||||
2,882,403 | 2,566,181 | |||||||
Foreign Currency - denominated | ||||||||
Issued by the Colombian Government | 1,872 | 1,913 | ||||||
Foreign banks | 159,738 | 128,471 | ||||||
Foreign governments | 14,347 | 14,405 | ||||||
Multilateral credit entities | 5,425 | 7,280 | ||||||
Financial institutions | 166,387 | 227,297 | ||||||
Other | 19,541 | 23,973 | ||||||
367,310 | 403,339 | |||||||
Repurchase rights (*) | 11,607 | 449,943 | ||||||
Total investment in held to maturity debt securities | $ | 3,261,320 | 3,419,463 | |||||
(*) Repurchase rights on investment in held to maturity debt securities included:
31 December | 30 June | |||||||
Colombian peso – denominated: | ||||||||
Internal public debt instruments issued or guaranteed by the Colombian Government | $ | 11,607 | 449,943 | |||||
Total Colombian currency peso - denominated | $ | 11,607 | 449,943 |
Maturity and yield of investment in held to maturity debt securities at 31 December 2012 was as follows:
Balance | Yield(1) | |||||||
Maturity: | ||||||||
A year or less | $ | 2,765,675 | 2.65 | % | ||||
One to five years | 495,645 | 3.47 | % | |||||
Five to ten years | - | - | ||||||
$ | 3,261,320 | 2.78 | %(2) |
(1) | Calculated using Internal Rate of return at 31 December 2012 |
(2) | Weighted average on the basis of the volume of each yield |
Trading Equity Securities
Trading securities include the following items:
31 December | 30 June | |||||||
Trading Equity Instruments: | ||||||||
Severance Fund - Stabilization Reserve | $ | 39,681 | 37,349 | |||||
Pension Fund – Stabilization Reserve | 348,983 | 310,445 | ||||||
Autonomous Patrimonies – Stabilization Reserve | 154,457 | - | ||||||
In other entities | 357,955 | 945,653 | ||||||
Total Colombian peso - denominated | $ | 901,076 | 1,293,447 |
All investments carry risk rating “A” with exception of the following:
Entity | Category | 31 December | Category | 30 June | ||||||||||||
Promotora de Inversiones Ruitoque S.A. | B | $ | 1,591 | B | 198 | |||||||||||
Petroleos Colombianos Limited | E | 89 | E | 89 | ||||||||||||
CCI Marketplace S.A. | C | 142 | C | 132 | ||||||||||||
Textiles el Espinal S.A | E | 2,399 | E | 2,399 | ||||||||||||
Petroleos Nacionales S.A. | E | 257 | E | 257 | ||||||||||||
Inversiones FCPM Holdings | E | 362 | E | 369 | ||||||||||||
Fabrica de Textiles del Tolima | E | 379 | E | 379 | ||||||||||||
Promotora la Alborada S.A. | E | 316 | E | 316 | ||||||||||||
Edubar | E | 143 | E | 143 | ||||||||||||
Inmobiliaria Selecta S.A. | D | 84 | D | 84 | ||||||||||||
Inversiones Sides S.A.S | C | 43 | B | 43 | ||||||||||||
Inducarbon | E | 1 | E | 1 | ||||||||||||
Promotora la Enseñanza | E | 70 | E | 70 | ||||||||||||
Reforestadora de Santa Rosalia | E | 12 | E | 12 | ||||||||||||
Other | 193 | 215 | ||||||||||||||
$ | 6,081 | 4,707 |
Available for sale Equity Securities
Available for sale Equity Securities included the following:
Legal name | Ownership % at 31 December | 31 December | Ownership % at 30 June | 30 June | ||||||||||||
Empresa de Energia de Bogota “EEBB” | 3.56 | % | $ | 572,238 | 3.56 | % | 572,238 | |||||||||
Promigas S.A. | 44.66 | % | 1,462,556 | 24.97 | % | 808,111 | ||||||||||
Mineros S.A | - | 6.98 | % | 50,257 | ||||||||||||
Gas Natural S.A | 1.68 | % | 53,480 | 1.68 | % | 53,481 | ||||||||||
Concesionaria Ruta del Sol S.A.0 | 33.00 | % | 86,562 | 33.00 | % | 86,562 | ||||||||||
Bolsa de Valores de Colombia S.A. “BVC” | 3.36 | % | 12,075 | 4.51 | % | 12,075 | ||||||||||
Jardin Plaza S.A. | 17.76 | % | 10,477 | 17.76 | % | 10,478 | ||||||||||
Concesionaria Tibito S.A. | 33.33 | % | 13,505 | 33.33 | % | 13,505 | ||||||||||
Redeban Red Multicolor S.A. | 5.05 | % | 5,192 | 2.44 | % | 5,114 | ||||||||||
Sociedad Transportadora de Gas de Occidente S.A. | 2.80 | % | 3,568 | 2.80 | % | 3,601 | ||||||||||
Depósito Centralizado de Valores de Colombia. | 2.01 | % | 3,831 | 6.62 | % | 3,397 | ||||||||||
ACH Colombia S.A. | 8.46 | % | 2,512 | 11.91 | % | 2,661 | ||||||||||
A Toda Hora | - | 20.00 | % | 1,092 | ||||||||||||
Other | 702,721 | 157,331 | ||||||||||||||
$ | 2,928,717 | 1,779,903 |
Dividend income received on investment securities respectively totaled Ps$9,740 and Ps$89,808 for the semesters ended December 31 and June 30 2012.
In addition to a direct ownership of 14.39% by Corficolombiana in Promigas S.A. E.S.P. or "Promigas", in February 2011 Corficolombiana acquired a 10.58% indirect participation in the company through the acquisition of 20.30% in Promigas Holding, Promigas Investment and Promigas Ltda, that together held direct ownership of 52.13% in Promigas.
As of June 5 2012, the 10.58% indirect ownership of Corficolombiana in Promigas was transferred to CFC Limited a subsidiary of Corficolombiana through a process of escision. Following restructuring, CFC Limited merged with CFC Gas Holdings SAS, a Colombian affiliate of Corficolombiana,
On 13 June 2012, CFC Limited paid share dividends equivalent to Ps$19,700,000 that account for a foreign exchange effect due to the appreciation of the Colombian currency versus the United States dollar, that was registered in the books of Promigas Holding, Promigas Investment and Promigas Ltda, before the escision; and on June 27 2012, CFC Gas Holdings SAS paid cash dividends in the amount of Ps$38,300,00 million corresponding to dividends declared by Promigas to Promigas Holdings, Promigas Investment and Promigas Ltda prior to the escision, derived from its 10.58% ownership. From February 2011 and through the moment of the aforementioned escision, Promigas Holding, Promigas Investment and Promigas Ltd were not consolidate by Corficolombiana.
On July 24 2012, Corficolombiana announced a public offering for the acquisition of the remaining 75.03% remaining stock equivalent to 99,726,875 outstanding common shares of Promigas at a price of Ps$25,000 per share. The offering opened July 31 2012 and closed September 12 2012 after having acquired 1,281,993 shares representing 0.96% of outstanding common shares of Promigas for a total amount of US$32,000 million.
Form November 9 through November 23 2012, Corficolombiana launched a public offering for the acquisition of up to 20% of the remaining outstanding common shares of Promigas. The offering, announced on October 31 2012, resulted in the acquisition, by Corficolombiana, of 24,886,569 common shares representing 18.72% of total outstanding common shares of Promigas for a total amount of Col$ 634,600 million (US$355.6 million). As a result of the new purchase offers, as of November 30 2012, the ownership direct and indirect, of Corficolombiana in Promigas rose to respectively, 34.08% and 10.58%.
Allowance for debt securities and equity securities
Following is breakdown of the Allowance for debt and equity securities:
31 December | 30 June | |||||||
Debt Securities: | ||||||||
Trading | $ | 789 | 1,316 | |||||
Available for sale | 2,337 | 2,313 | ||||||
Total debt Securities | 3,126 | 3,629 | ||||||
Equity Securities: | ||||||||
Available for sale | 6,081 | 4,707 | ||||||
Total Equity Securities | 6,081 | 4,707 | ||||||
$ | 9,207 | 8,336 |
Changes in reserves | 31 December | 30 June | ||||||
Balance at the beginning of period | $ | 8,336 | 8,735 | |||||
Plus: | ||||||||
Allowance charged to operations | 1,713 | 495 | ||||||
Recoveries | - | 46 | ||||||
Less: | ||||||||
Conversion adjustments | (11 | ) | (142 | ) | ||||
Recovery of allowance for investments | (831 | ) | (798 | ) | ||||
Balance at the end of period | $ | 9,207 | 8,336 |
Net amount reported for cash flow purposes was Ps$871 and (Ps$399) for December 31 and June 30 2012, respectively.
Maturity of Investment Portfolio
31 December | ||||||||||||||||||||
Up to 1 year | Between 1 and 3 years | Between 3 and 5 years | More than 5 years | Total | ||||||||||||||||
Debt securities | $ | 1,488,255 | 689,124 | 480,489 | 2,091,714 | 4,749,582 | ||||||||||||||
Held to maturity | 2,765,675 | 435,758 | 59,887 | - | 3,261,320 | |||||||||||||||
Debt securities available for sale | 1,085,960 | 1,628,003 | 1,352,888 | 7,164,487 | 11,231,338 | |||||||||||||||
$ | 5,339,890 | 2,752,885 | 1,893,264 | 9,256,201 | 19,242,240 |
30 de June | ||||||||||||||||||||
Up to 1 year | Between 1 and 3 years | Between 3 and 5 years | More than 5 years | Total | ||||||||||||||||
Debt securities | $ | 653,378 | 790,737 | 336,053 | 969,530 | 2,749,698 | ||||||||||||||
Held to maturity | 2,817,434 | 413,538 | 186,309 | 2,182 | 3,419,463 | |||||||||||||||
Debt instruments available for sale | 1,115,846 | 1,918,570 | 3,237,180 | 4,952,413 | 11,224,009 | |||||||||||||||
$ | 4,586,658 | 3,122,845 | 3,759,542 | 5,924,125 | 17,393,170 |
(7) Loan and Financial Leases
Breakdown of loan portfolio and financial lease transactions is as follows:
31 December | 30 June | |||||||
Ordinary loans | $ | 58,475,550 | 53,597,725 | |||||
Loans funded by other entities | 1,575,324 | 1,743,598 | ||||||
Non-recourse factoring | 110,875 | 93,587 | ||||||
Letters of Credit - covered | 164,900 | 207,952 | ||||||
Uncovered demand deposit accounts | 1,262,979 | 1,507,372 | ||||||
Discounts | 383,667 | 389,258 | ||||||
Credit cards | 5,599,087 | 4,755,934 | ||||||
Advanced reimbursements | 431,665 | 408,876 | ||||||
Loans to micro-companies and pymes | 811,943 | 979,140 | ||||||
Micro-credits | 290,916 | 281,220 | ||||||
Housing mortgage portfolio | 4,229,476 | 3,978,199 | ||||||
Loans to employees | 160,472 | 149,761 | ||||||
Reimbursed foreign credits | 504 | 504 | ||||||
Assets surrendered in leasing | 2,496,273 | 2,175,331 | ||||||
Movable assets surrendered in leasing | 3,999,444 | 3,715,054 | ||||||
Other | 36,279 | 53,110 | ||||||
$ | 80,029,354 | 74,036,621 |
Risk Loan Portfolio
The loans and financial leases are classified in accordance with the requirements of the Superintendency of Finance, as follows:
31 December | 30 June | |||||||||||||||
Risk Category | Capital | Allowance | Capital | Allowance | ||||||||||||
Commercial: | ||||||||||||||||
Category A Normal | $ | 42,945,087 | 611,547 | 39,941,445 | 489,126 | |||||||||||
Category B Acceptable | 1,348,241 | 58,160 | 1,380,999 | 48,600 | ||||||||||||
Category C Noticeable | 634,289 | 75,004 | 649,878 | 70,206 | ||||||||||||
Category D Significant | 339,151 | 195,245 | 362,327 | 215,602 | ||||||||||||
Category E Uncollectable | 247,425 | 227,418 | 264,289 | 236,863 | ||||||||||||
Subtotal Commercial | 45,514,193 | 1,167,374 | 42,598,938 | 1,060,397 |
31 December | 30 June | |||||||||||||||
Risk Category | Capital | Allowance | Capital | Allowance | ||||||||||||
Consumer: | ||||||||||||||||
Category A Normal | 21,951,117 | 564,423 | 19,936,195 | 368,879 | ||||||||||||
Category B Acceptable | 452,397 | 41,874 | 388,661 | 31,666 | ||||||||||||
Category C Appreciable | 390,007 | 63,560 | 304,258 | 56,721 | ||||||||||||
Category D Significant | 444,961 | 318,509 | 392,049 | 279,986 | ||||||||||||
Category E Unrecoverable | 141,715 | 136,981 | 152,345 | 141,003 | ||||||||||||
Subtotal consumer | 23,380,197 | 1,125,347 | 21,173,508 | 878,255 | ||||||||||||
Micro-credit: | ||||||||||||||||
Category A Normal | 257,298 | 2,574 | 256,309 | 2,564 | ||||||||||||
Category B Acceptable | 8,653 | 285 | 8,208 | 266 | ||||||||||||
Category C Appreciable | 5,140 | 1,046 | 3,982 | 768 | ||||||||||||
Category D Significant | 3,835 | 1,896 | 3,008 | 1,489 | ||||||||||||
Category E Unrecoverable | 15,990 | 15,832 | 9,712 | 9,509 | ||||||||||||
Subtotal micro-credit | 290,916 | 21,633 | 281,219 | 14,596 | ||||||||||||
Mortgage: | ||||||||||||||||
Category A Normal | 4,016,097 | 14,861 | 3,875,965 | 14,579 | ||||||||||||
Category B Acceptable | 91,875 | 1,566 | 102,575 | 2,156 | ||||||||||||
Category C Appreciable | 197,805 | 3,705 | 62,164 | 2,766 | ||||||||||||
Category D Significant | 16,996 | 3,052 | 20,730 | 3,925 | ||||||||||||
Category E Unrecoverable | 25,558 | 7,443 | 24,748 | 5,282 | ||||||||||||
Subtotal mortgage | 4,348,331 | 30,627 | 4,086,182 | 28,708 | ||||||||||||
Financial Lease: | ||||||||||||||||
Category A Normal | 6,089,487 | 99,391 | 5,451,062 | 314,475 | ||||||||||||
Category B Acceptable | 205,862 | 9,022 | 260,242 | 11,486 | ||||||||||||
Category C Appreciable | 66,694 | 6,649 | 51,958 | 4,830 | ||||||||||||
Category D Significant | 108,489 | 50,420 | 107,779 | 49,571 | ||||||||||||
Category E Unrecoverable | 25,185 | 22,406 | 25,733 | 23,239 | ||||||||||||
Subtotal Financial Lease | 6,495,717 | 187,888 | 5,896,774 | 403,601 | ||||||||||||
General Allowance | 12,696 | - | 12,167 | |||||||||||||
Total by loan modality | $ | 80,029,354 | 2,545,565 | 74,036,621 | 2,397,724 |
Loan Portfolio by Currency
31 December | 30 June | |||||||||||||||||||||||
Domestic | Foreign | Domestic | Foreign | |||||||||||||||||||||
By currency | Currency | Currency | Total | Currency | Currency | Total | ||||||||||||||||||
Commercial | $ | 36,131,156 | 9,454,246 | 45,585,402 | $ | 36,890,049 | 5,708,889 | 42,598,938 | ||||||||||||||||
Consumer | 18,656,280 | 4,768,893 | 23,425,173 | 16,966,052 | 4,207,456 | 21,173,508 | ||||||||||||||||||
Micro-credit | 290,916 | - | 290,916 | 281,219 | - | 281,219 | ||||||||||||||||||
Mortgage | 955,019 | 3,275,556 | 4,230,575 | 910,626 | 3,175,556 | 4,086,182 | ||||||||||||||||||
Financial Lease | 6,146,522 | 350,766 | 6,497,288 | 5,632,999 | 263,775 | 5,896,774 | ||||||||||||||||||
Total by currency | $ | 62,179,893 | 17,849,461 | 80,029,354 | $ | 60,680,945 | 13,355,676 | 74,036,621 |
Restructured Loan Portfolio
The chart below includes a summary presentation of restructured loans at 31 December 2012:
Risk category | Capital | Allowance | ||||||
Commercial: | ||||||||
Law 116 | $ | 217,588 | 90,480 | |||||
Law 550 | 115,722 | 51,255 | ||||||
Law 617 | 240,150 | 16,895 | ||||||
Ordinary and extraordinary | 764,204 | 105,730 | ||||||
Homologue restructurings | 1,084 | 878 | ||||||
Liquidation | 37,201 | 33,467 | ||||||
1,375,949 | 298,705 |
Risk category | Capital | Allowance | ||||||
Consumer: | ||||||||
Law 116 | 1,505 | 1,261 | ||||||
Law 550 | 5 | 4 | ||||||
Ordinary and extraordinary | 337,308 | 101,476 | ||||||
Homologue restructurings | 64 | 56 | ||||||
Liquidation | 115 | 77 | ||||||
338,997 | 102,874 | |||||||
Micro-credits: | ||||||||
Law 116 | 174 | 124 | ||||||
Ordinary and Extraordinary | 6,093 | 854 | ||||||
6,267 | 978 | |||||||
Mortgage: | ||||||||
Ordinary and Extraordinary | 71,715 | 7,124 | ||||||
71,715 | 7,124 | |||||||
Financial Lease | ||||||||
Law 116 | 5,701 | 3,178 | ||||||
Law 550 | 1,220 | 125 | ||||||
Ordinary and Extraordinary | 86,351 | 25,987 | ||||||
Homologue Restructurings | 151 | 152 | ||||||
Liquidation | 133 | 16 | ||||||
93,556 | 29,458 | |||||||
Total Restructures and Agreements | $ | 1,886,484 | 439,139 |
Allowance for Loan Portfolio and Financial Lease Transactions
Changes in the reserve for loan portfolio and financial lease transactions by modality are as follows.
31 December | 30 June | |||||||
Balance at beginning of period | $ | 2,397,724 | 2,306,500 | |||||
Plus: | ||||||||
(+) Provision charged to expenses | 1,222,973 | 1,040,473 | ||||||
Business combinations | 6,130 | 5,486 | ||||||
Effect of changes in foreign exchange rate | (3,472 | ) | (18,838 | ) | ||||
Less: | ||||||||
(-) Loans charged-off | (397,931 | ) | (315,227 | ) | ||||
(-) Recovery of provisions | (679,859 | ) | (620,670 | ) | ||||
Balance at end of period | $ | 2,545,565 | 2,397,724 |
(8) Accounts Receivable
Accrued interest on loan portfolio, financial leasing and other accounts receivable is as follows:
31 December | 30 June | |||||||
Interest: | ||||||||
Interbank funds sold and repurchase agreements | $ | 342 | 245 | |||||
Loan portfolio | 747,339 | 709,541 | ||||||
Financial component of lease transactions | 8,076 | 7,793 | ||||||
Interest & Other | 37,463 | 19,780 | ||||||
793,220 | 737,359 | |||||||
Provision for Accounts Receivable - Interest | (77,230 | ) | (73,102 | ) | ||||
Total Accounts Receivable - Interest | $ | 715,990 | 664,257 |
31 December | 30 June | |||||||
Other Accounts Receivable | ||||||||
Commissions and Fees | 59,784 | 54,587 | ||||||
Dividends | 32,189 | 43,993 | ||||||
Warehouse services | 31,350 | 28,567 | ||||||
Rentals | 614 | 623 | ||||||
Payment on goods surrendered in operating lease | 34,952 | 33,953 | ||||||
Sale of goods and services | 181,356 | 202,998 | ||||||
Payments on behalf of loan portfolio debtors | 214,182 | 220,271 | ||||||
Committed sellers | 37,045 | 37,091 | ||||||
Advances on contracts with suppliers | 765,334 | 632,968 | ||||||
Advances to employees | 2,217 | 1,716 | ||||||
Aliquots of pensions (1) | 4,324 | 4,171 | ||||||
Cash shortages | 1,620 | 1,228 | ||||||
Clearance shortages | 781 | 2,590 | ||||||
Claims to insurance companies | 11,757 | 10,111 | ||||||
Sales tax | 41,931 | 39,145 | ||||||
Transfers to the Department of the Treasury | ||||||||
Inactive accounts (2) | 34,651 | 39,416 | ||||||
Colombian Government – Law 546 of 1999 | 315 | 315 | ||||||
Servibanca and other networks | 30,551 | 32,091 | ||||||
Banco Republica - Citibank New York | 2,645 | 2,645 | ||||||
Other ATMs and ATH | 19,171 | 16,832 | ||||||
Other - NDR forwards, undelivered | - | 4,419 | ||||||
Other- forgiven TC collections | - | 801 | ||||||
Other | 413,944 | 315,272 | ||||||
1,920,713 | 1,725,803 | |||||||
Reserve – Other Accounts Receivable | (115,462 | ) | (113,075 | ) | ||||
Total Other Accounts Receivable | $ | 1,805,251 | 1,612,728 |
(1) | This amount includes the proportional share paid by Banco Popular must cover under pensions liquidated which must be assumed by Caja Nacional de Previsión in Liquidation. The bank is currently engaged in the process of collection of this amount. |
(2) | Corresponds to transfer of inactive balances in demand/savings accounts to the Department of the Treasury under dispositions in Decree 2332 of 1998 issued by the Ministry of Finance and Public Credit and in External Memorandums 01 of 1 999 and 015 of 2011 issued by the Superintendency of Finance of Colombia |
Changes in provision for other accounts receivable and interest
Changes in provision for other accounts receivable and interest during the periods under consideration were as follows:
31 December | 30 June | |||||||
Balance at beginning of period | $ | 186,177 | 171,202 | |||||
Plus: | ||||||||
Provision charged to expenses | 89,368 | 77,562 | ||||||
Business combinations | 777 | - | ||||||
Effect of changes in foreign exchange rate | (45 | ) | 7,413 | |||||
Less: | ||||||||
Recoveries | (47,891 | ) | (40,502 | ) | ||||
Charge-offs | (28,780 | ) | (27,234 | ) | ||||
Other | (6,914 | ) | (2,264 | ) | ||||
Balance at end of period | $ | 192,692 | 186,177 |
(9) Acceptances and Derivatives
31 December | 30 June | |||||||||||||||
Acceptances: | Assets | Liabilities | Assets | Liabilities | ||||||||||||
Within tenor | $ | 67,083 | 85,556 | 80,802 | 81,018 | |||||||||||
After tenor | 1,195 | 1,212 | 6,055 | 6,072 | ||||||||||||
Total acceptances | 68,278 | 86,768 | 86,857 | 87,090 | ||||||||||||
Cash transactions | 49 | - | 86 | 26 | ||||||||||||
Forward Contracts – speculation: | ||||||||||||||||
Foreign exchange rights contracts sold | 8,473,286 | (278,407 | ) | 6,143,958 | (2,867,846 | ) | ||||||||||
Foreign exchange rights contracts purchased | 336,765 | (7,357,530 | ) | 2,159,790 | (4,664,455 | ) | ||||||||||
Foreign exchange commitments sold | (8,246,054 | ) | 303,583 | (6,018,860 | ) | 2,889,088 | ||||||||||
Foreign exchange commitments purchased | (332,031 | ) | 7,528,124 | (2,172,022 | ) | 4,728,874 | ||||||||||
Investment securities rights - sold | - | (1,236,077 | ) | - | - | |||||||||||
Investment securities rights - purchased | 84,205 | - | - | - | ||||||||||||
Investment securities commitments purchased | (82,787 | ) | - | - | - | |||||||||||
Investment commitments contracts sold | - | 1,263,286 | - | - | ||||||||||||
233,384 | 222,979 | 112,866 | 85,661 | |||||||||||||
Forward Coverage Contracts – FX | ||||||||||||||||
Foreign exchange rights contracts sold | 1,844,931 | (22,951 | ) | 1,321,099 | (206,493 | ) | ||||||||||
Foreign exchange rights contracts purchased | - | (195,309 | ) | 73,145 | (41,041 | ) | ||||||||||
Other rights | 10 | - | - | - | ||||||||||||
Other commitments | (40 | ) | - | - | - | |||||||||||
Foreign exchange commitments sold | (1,762,227 | ) | 22,983 | (1,265,523 | ) | 207,353 | ||||||||||
Foreign exchange commitments purchased | - | 199,007 | (72,947 | ) | 41,560 | |||||||||||
Investment securities commitments purchased | - | - | - | - | ||||||||||||
82,674 | 3,730 | 55,774 | 1,379 | |||||||||||||
Futures Contracts: | ||||||||||||||||
Foreign exchange rights contracts sold | 856,425 | (58,475 | ) | 925,025 | (8,999 | ) | ||||||||||
Foreign exchange rights contracts purchased | 102,858 | (785,250 | ) | 12,514 | (1,108,879 | ) | ||||||||||
Investment securities rights - sold | - | - | 33,727 | (658,396 | ) | |||||||||||
Investment securities rights - purchased | - | - | 16,286 | (10,280 | ) | |||||||||||
Foreign exchange commitments sold | (856,347 | ) | 58,475 | (925,025 | ) | 8,999 | ||||||||||
Foreign exchange commitments purchased | (102,858 | ) | 785,297 | (12,347 | ) | 1,109,005 | ||||||||||
Investment commitments contracts sold | - | - | (33,727 | ) | 658,401 | |||||||||||
Investment securities commitments purchased | - | - | (16,285 | ) | 10,280 | |||||||||||
78 | 47 | 168 | 131 | |||||||||||||
Swaps: | ||||||||||||||||
Foreign exchange rights contracts sold | 623,895 | (453,043 | ) | 633,409 | (306,920 | ) | ||||||||||
Interest rate rights contracts | 240,932 | (184,103 | ) | 605,599 | (653,187 | ) | ||||||||||
Foreign exchange commitments contracts | (579,265 | ) | 488,064 | (591,217 | ) | 335,220 | ||||||||||
Interest rate commitments contracts | (226,079 | ) | 216,013 | (593,179 | ) | 683,117 | ||||||||||
59,483 | 66,931 | 54,612 | 58,230 | |||||||||||||
Options: | ||||||||||||||||
Foreign exchange call options | 4,288 | 1,197 | 14,721 | 1,385 | ||||||||||||
Foreign exchange put options | 6,072 | 28,901 | 3,590 | 33,223 | ||||||||||||
10,360 | 30,098 | 18,311 | 34,608 | |||||||||||||
Total Acceptances and Derivatives | $ | 454,306 | 410,553 | 328,674 | 267,125 |
Rights and obligations of Grupo Aval, originated in cash transactions and derivatives were as follows:
· | Banking subsidiaries of Grupo Aval currently hold investments portfolios denominated in domestic and foreign currency, which allows them to offer coverage transactions on foreign currency and interest rates to their customers. |
· | Derivatives are used as a mechanism of protection against risks in interest rates and therefore increase the capacity to anticipate return levels of foreign currency transactions for its Foreigh Currency FX denominated investments. |
· | Under the guidelines of the Superintendency of Finance of Colombia, the portfolios held by subsidiaries in foreign currency are valued at market prices on a daily basis. Earnings and losses are recognized in the Consolidated Income Statement. |
· | Rates and maturities of “Forward” contracts are the same as in Futures contracts. |
(10) | Property, Plant and Equipment – Net |
Breakdown of properties, plant and equipment was as follows:
31 December | 30 June | |||||||
Non depreciable : | ||||||||
Land | $ | 239,962 | 234,460 | |||||
Imports in progress | 87,303 | 179,503 | ||||||
Constructions in progress | 45,479 | 49,655 | ||||||
Rural holdings | 158,840 | 122,616 | ||||||
Total Non-depreciable | 531,584 | 586,234 | ||||||
Depreciable: | ||||||||
Buildings and warehouses | 1,105,683 | 1,087,738 | ||||||
Equipment, furniture and office utensils | 586,795 | 589,581 | ||||||
Computer equipment | 781,800 | 745,790 | ||||||
Vehicles | 65,701 | 65,840 | ||||||
Machinery and equipment | 263,447 | 254,142 | ||||||
Silos | 1,170 | 1,770 | ||||||
Cattle | 489 | 490 | ||||||
Total Depreciable | 2,805,085 | 2,744,751 | ||||||
Accumulated depreciation | (1,590,456 | ) | (1,572,621 | ) | ||||
Allowance | (7,484 | ) | (4,316 | ) | ||||
Properties and equipment - Net | $ | 1,738,729 | 1,754,048 | |||||
Commercial value | 5,475,320 | 5,498,956 | ||||||
Revaluation | $ | 2,138,651 | 2,167,971 |
Accumulated depreciation – property and equipment
31 December | 30 de June | |||||||
Buildings, warehouses and silos | $ | (544,000 | ) | (556,600 | ) | |||
Furniture and utensils | (359,662 | ) | (356,921 | ) | ||||
Computer equipment | (527,215 | ) | (497,178 | ) | ||||
Vehicle | (32,224 | ) | (32,919 | ) | ||||
Moving equipment and machinery | (162,269 | ) | (165,886 | ) | ||||
Rural holdings | (3 | ) | (201 | ) | ||||
Deferred depreciation - net | 34,917 | 37,086 | ||||||
$ | (1,590,456 | ) | (1,572,621 | ) |
31 December | 30 June | |||||||
Land | $ | 2.029 | 1.033 | |||||
Buildings | 2.198 | 1.407 | ||||||
Moving equipment and machinery | 2,102 | 402 | ||||||
Computer equipment | 1,155 | 1,474 | ||||||
Total Allowance | $ | 7,484 | 4,316 |
(11) | Operating Lease transactions – Net |
Operating leasing transactions in which Grupo Aval and any of the banking subsidiaries participate as lessee is as follows:
31 December | 30 June | |||||||
Machinery and equipment | $ | 79,539 | 83,256 | |||||
Vehicles | 55,490 | 37,227 | ||||||
Computer equipment | 245,362 | 256,983 | ||||||
Computer programs | 117,021 | 117,977 | ||||||
Furniture and utensils | 57,733 | 52,782 | ||||||
Real estate | 27,333 | 27,332 | ||||||
582,478 | 575,557 | |||||||
Accumulated depreciation. | (201,245 | ) | (205,438 | ) | ||||
Allowance - assets under operating lease transactions | (5,526 | ) | (5,473 | ) | ||||
(206,771 | ) | (210,911 | ) | |||||
$ | 375,707 | 364,646 |
31 December | 30 June | |||||||
Machinery and equipment | $ | (25,056 | ) | (33,516 | ) | |||
Vehicles | (7,260 | ) | (5,324 | ) | ||||
Computer equipment | (100,094 | ) | (101,825 | ) | ||||
Computer programs | (46,625 | ) | (44,427 | ) | ||||
Furniture and utensils | (21,649 | ) | (19,846 | ) | ||||
Real estate | (561 | ) | (500 | ) | ||||
$ | (201,245 | ) | (205,438 | ) |
31 December | 30 June | |||||||
Movable assets | $ | 5,258 | 5,223 | |||||
Real estate | 268 | 250 | ||||||
$ | 5,526 | 5,473 |
(12) | Restituted Assets and Foreclosed assets |
Breakdown of the account of restituted assets and Foreclosed assets was as follows:
31 December | 30 June | |||||||
Assets Restituted under operating lease transactions | ||||||||
Movable Assets: | ||||||||
Machinery and equipment | $ | 2,649 | 3,746 | |||||
Vehicles | 3,354 | 2,884 | ||||||
Furniture and Utensils | - | 4 | ||||||
Computer equipment | 5 | - | ||||||
Real estate | 35,815 | 34,299 | ||||||
Real estate under housing leases | 2,216 | 1,806 | ||||||
44,039 | 42,739 | |||||||
Foreclosed assets: | ||||||||
Real Estate - housing | 30,926 | 37,296 | ||||||
Real estate - other | 148,609 | 139,846 | ||||||
Movable assets | 10,528 | 11,475 | ||||||
Real Estate securities | - | - | ||||||
190,063 | 188,617 | |||||||
Allowance - Restituted Assets and foreclosed assets | (142,112 | ) | (142,951 | ) | ||||
$ | 91,990 | 88,405 |
31 de December | 30 June | |||||||
Realizable Assets: | ||||||||
Land | $ | 2,259 | 18,331 | |||||
Construction and raw materials | 51,687 | 51,773 | ||||||
Constructions in progress | 294 | 294 | ||||||
Products in process | 70,294 | 73,236 | ||||||
Houses | - | 18,436 | ||||||
Finished Goods | 22,436 | 15,456 | ||||||
Merchandise in transit | 3,401 | 3,421 | ||||||
Merchandise | 12,954 | 13,201 | ||||||
163,325 | 194,148 | |||||||
Other: | ||||||||
Cattle inventory | 3,590 | 4,792 | ||||||
Assets not used in Corporate Purpose: | ||||||||
Land | 4,956 | 5,217 | ||||||
Buildings | 5,833 | 7,890 | ||||||
Less: Depreciation | (1,291 | ) | (1,265 | ) | ||||
9,498 | 11,842 | |||||||
Allowance - Realizable assets and other | (3,708 | ) | (3,009 | ) | ||||
Realizable and Other assets - Net | 172,705 | 207,773 | ||||||
Total reserve – realizable, foreclosed and restituted assets | (145,820 | ) | (145,960 | ) | ||||
Total Assets - Realizable and Foreclosed assets | $ | 264,695 | 296,178 |
Balance – Changes in Allowance for Assets – Realizable and Foreclosed assets
Changes in the reserve for realizable assets and assets received in lieu of payment during the semester were as follows:
31 December | 30 June | |||||||
Balance at beginning of period | $ | 145,960 | 170,802 | |||||
Plus: | ||||||||
Allowance charged to expenses | 30,635 | 15,785 | ||||||
Business combination | 1,213 | - | ||||||
Effect of changes of foreign exchange rates | (175 | ) | (2,387 | ) | ||||
Less: | ||||||||
Recoveries | (28,000 | ) | (8,559 | ) | ||||
Provision used on sales | (4,082 | ) | (5,570 | ) | ||||
Reclassifications | 643 | (22,746 | ) | |||||
Charge-offs | (374 | ) | (1,365 | ) | ||||
Balance at end of period | $ | 145,820 | 145,960 |
(13) | Prepaid expenses and deferred charges - net |
Breakdown of the prepaid expenses and deferred charges account is as follows:
31 December | 30 June | |||||||
Prepaid expenses: | ||||||||
Interest | $ | - | 3,574 | |||||
Insurance | 17,879 | 21,287 | ||||||
Leases | 1,128 | 1,356 | ||||||
Equipment maintenance | 1,322 | 2,378 | ||||||
Other | 47,037 | 66,847 | ||||||
Total Prepaid Expenses | 67,366 | 95,442 |
31 December | 30 June | |||||||
Deferred Charges: | ||||||||
Pre-operating and reorganization | 11,127 | 4,032 | ||||||
Remodeling | 13,281 | 9,807 | ||||||
Studies and projects | 182,424 | 175,498 | ||||||
Computer programs | 82,221 | 79,847 | ||||||
Office equipment and stationary | 30,702 | 30,928 | ||||||
Leasehold | 72,945 | 44,081 | ||||||
Discount in placement of investment securities | 9,345 | 10,598 | ||||||
Commission on placement of investment securities | 8 | 25 | ||||||
Deferred Income tax - asset | 120,253 | 118,880 | ||||||
Publicity and advertising | 1,819 | 5,322 | ||||||
Equity tax | 351,134 | 445,106 | ||||||
Contributions and memberships | 164 | 1,927 | ||||||
Loss in adjustment for valuation of securities | 1,958 | 5,717 | ||||||
Road construction projects | 963,174 | 769,059 | ||||||
Other deferred charges | 188,190 | 255,157 | ||||||
Total Deferred Charges | 2,028,745 | 1,955,984 | ||||||
$ | 2,096,111 | 2,051,426 |
(14) | Good Will - Net |
Breakdown of Good Will is as follows:
31 December | 30 June | |||||||
Goodwill related to Banco Popular | $ | 411,992 | 417,953 | |||||
Goodwill acquired in the business combination with Megabanco | 489,100 | 500,290 | ||||||
Goodwill acquired in the business combination with BAC (“Banco de America Central”) | 1,781,118 | 1,828,011 | ||||||
Goodwill acquired in the business combination with Corporacion Financiera Colombiana S.A. | 135,734 | 121,962 | ||||||
Goodwill acquired in the business combination with Banco Aliadas and Banco Unión | 24,272 | 25,016 | ||||||
$ | 2,842,216 | 2,893,232 |
(15) | Other Assets – Net |
Breakdown of the Other Assets account is as follows:
31 December | 30 June | |||||||
Assets held for sale (1) | $ | 478,187 | 479,164 | |||||
Value added tax deductible and withholding taxes | 64,847 | 152,167 | ||||||
Restricted deposits | 155,453 | 166,341 | ||||||
Investments in trust | 28,675 | 31,147 | ||||||
Prepaid taxes | 55,730 | 428,803 | ||||||
Assets available for lease contracts | 279,442 | 302,864 | ||||||
Joint ventures (2) | 29,285 | 80,334 | ||||||
Other | 95,352 | 95,227 | ||||||
1,186,971 | 1,736,047 | |||||||
Less: Allowance | (61,066 | ) | (64,385 | ) | ||||
$ | 1,125,905 | 1,671,662 |
(1) | Includes inventory of companies in the real sector of the economy |
(2) | Includes capitalized expenses related to a tollroad operated by Corficolombiana. |
(16) | Reappraisal of assets - Net |
The chart below presents description of asset revaluations as of 31 December and 30 June 2012:
31 December | 30 June | |||||||
Reappraisal of property, plant and equipment | $ | 2,138,651 | 2,167,971 | |||||
Reappraisal Investment Surplus (1) | (51,810 | ) | 421,563 | |||||
Reappraisal of other assets | 10,766 | 10,759 | ||||||
Reappraisal of Asset | $ | 2,097,607 | 2,600,293 | |||||
Non- Controlling Interest | 1,376,660 | 1,434,373 | ||||||
(Deficit) Surplus – Reappraisal of Asset | $ | 720,947 | 1,165,920 |
In course of the process of escision of the 3,358,446,312 shares of Banco Popular S.A. by Rendifin S.A. and 757,081,997 shares of Inversiones Escorial and Popular Securities in favor of Grupo Aval Acciones y Valores S.A., the following revaluation was appraised:
September 20 2011 | June 23 2011 | |||||||
Value of the homogenized consolidated net-worth of | ||||||||
Banco Popular S,A, in May 2011) (A) | $ | 1,789,264,000 | 1,758,109,000 | |||||
Number of shares outstanding (B) | 7,725,326,503 | 7,725,326,503 | ||||||
Intrinsic value (in Col Pesos) (A/B) | $ | 232 | 228 | |||||
Number of shares received by Aval in escision process (C) | 1,514,163,994 | 3,358,446,312 | ||||||
Intrinsic value of shares acquired (D = (A/B) * (C)) | $ | 350,696 | 764, 306 | |||||
Amount booked as cost (E) | 681,374 | 231,878 | ||||||
Accrued Devaluation (D-E) | (330,678 | ) | 532,428 | |||||
Balance – Accumulated Revaluation (F) | $ | 201,750 | 532,428 |
Revaluation as herein reported was eliminated in the process of consolidation thus solely leaving their effect on equity holdings:
(17) Time Deposits
Breakdown of the Time deposits account (by tenor of placement at creation) is as follows:
31 December | 30 June | |||||||
Colombian –Peso denominated: | ||||||||
Less than six months | $ | 2,629,508 | 2,852,256 | |||||
Between six and twelve months | 3,081,296 | 2,798,016 | ||||||
Between twelve and eighteen months | 1,434,930 | 1,263,553 | ||||||
Over eighteen months | 11,492,855 | 11,356,160 | ||||||
Foreign Currency- denominated: | ||||||||
Less than six months | 3,091,167 | 3,189,178 | ||||||
Between six and twelve months | 1,905,694 | 1,976,285 | ||||||
Between twelve and eighteen months | 1,903,537 | 1,712,351 | ||||||
Over eighteen months | 1,325,980 | 934,720 | ||||||
$ | 26,864,967 | 26,082,519 |
(18) | Borrwing from Bank |
The Colombian government has created programs for promotion of the development of specific sectors of the economy. These sectors include foreign trade, agriculture, tourism and many other industries. These programs have placed under the administration of Banco de la Republica and several other government entities such as BANCOLDEX, FINAGRO and FINDETER.
31 December | ||||||||||||||||||||
Entity | Short Term (1 year) | Medium Term (1-3 years) | Long Term (3-5 years) | Tenor over 5 years | Total | |||||||||||||||
Banco de Comercio Exterior | $ | 218,351 | 489,804 | 67,118 | 14,487 | 789,760 | ||||||||||||||
Fondo para el financiamiento del sector agropecuario FINAGRO | 28,312 | 310,806 | 148,376 | 61,611 | 549,105 | |||||||||||||||
Financiera de Desarrollo Territorial FINDETER | 48,082 | 483,221 | 130,232 | 334,771 | 996,306 | |||||||||||||||
Foreign Banks | 18,010 | 2,774,645 | 1,017,004 | 448,730 | 4,258,389 | |||||||||||||||
Other | 342,764 | 1,136,507 | 279,087 | 2,029,008 | 3,787,366 | |||||||||||||||
$ | 655,519 | 5,194,983 | 1,641,817 | 2,888,607 | 10,380,926 |
30 June | ||||||||||||||||||||
Entity | Short Term (1 year | Medium Term (1-3 years) | Long Term (3-5 years) | Tenor over 5 years | Total | |||||||||||||||
Banco de Comercio Exterior | $ | 296,464 | 612,288 | 65,428 | 10,330 | 948,510 | ||||||||||||||
Fondo para el Financiamiento del Sector Agropecuario FINAGRO | 58,044 | 309,299 | 145,100 | 54,153 | 566,956 | |||||||||||||||
Financiera de Desarrollo | ||||||||||||||||||||
Territorial S,A FINDETER | 50,577 | 335,365 | 199,486 | 366,945 | 952,373 | |||||||||||||||
Foreign Banks (1) | 1,351,904 | 2,025,410 | 359,065 | 1,331,357 | 5,067,736 | |||||||||||||||
Other | 307,130 | 255,524 | 1,253,314 | 242,477 | 2,058,445 | |||||||||||||||
$ | 2,064,119 | 3,537,886 | 2,022,393 | 2,005,262 | 9,629,660 |
(1) | Includes a three-year loan in the amount of US$500 million equivalent to Col$892.3 million acquired by Banco de Bogota and three other financial entities Citigroup Global Markets Inc., HSBC Securities Inc., and J.P. Morgan Securities LLC, on 19 December 2011. Funds used earn interest at a rate of three-six months LIBOR plus 225 bps by decision at the discretion of Banco de Bogota. |
(19) | Accounts Payable |
Balance of accounts payable is as follows:
31 December | 30 June | |||||||
Interest | ||||||||
Deposits and liabilities | $ | 279,530 | 234,285 | |||||
Monetary market transactions | 180 | 103 | ||||||
Borrowings from Banks and other financial entities | 98,922 | 77,098 | ||||||
Outstanding investment securities | 86,094 | 72,391 | ||||||
Mandatorily convertible Bonds | 1 | 1 | ||||||
Other | 10,094 | 11,106 | ||||||
$ | 474,821 | 394,984 |
31 de December | 30 de June | |||||||
Commissions and Other: | ||||||||
Commissions and Fees | $ | 35,561 | 45,220 | |||||
Income and complementary tax | 169,502 | 35,420 | ||||||
Equity tax | 87,670 | 108,531 | ||||||
Other taxes | 322,770 | 390,473 | ||||||
Dividends and surplus payable | 421,028 | 393,760 | ||||||
rents | 5,127 | 5,065 | ||||||
Tax on financial transactions | 34,603 | 31,323 | ||||||
Sales tax payable | 38,297 | 39,335 | ||||||
Committed buyers | 6,020 | 14,563 | ||||||
Payments to suppliers | 410,430 | 399,774 | ||||||
Contributions and memberships | 8,516 | 3,959 | ||||||
Withholdings and other labor contributions | 217,493 | 200,658 | ||||||
Insurance premium | 288,432 | 242,883 | ||||||
Collections for third parties | 104,449 | 279,945 | ||||||
Excess compensation - AVAL | 103,790 | 59,831 | ||||||
Cedulas cafeteras | 85,150 | 71,387 | ||||||
Time deposits | 30,098 | 27,732 | ||||||
Principal and Interest – (Paz) Bonds | 28,573 | 28,552 | ||||||
Encumbered customer accounts | - | 18,200 | ||||||
Principal and Interest – (Seguridad) Bonds | 7,229 | 7,152 | ||||||
Pending checks | 33,988 | 7,965 | ||||||
Fees to professionals | 3,862 | 3,453 | ||||||
Compensation – Credibanco | - | 2,436 | ||||||
Other (*) | 562,716 | 495,058 | ||||||
$ | 3,005,304 | 2,912,675 |
(20) | Other Liabilities |
Outstanding balance of the Other Liabilities and Obligations is as follows:
31 December | 30 June | |||||||
Labor obligations | $ | 259,592 | 222,752 | |||||
Income received in advance | 419,400 | 216,635 | ||||||
Deferred income | 65,514 | 72,163 | ||||||
Retirement pensions | 305,420 | 309,867 | ||||||
Deferred payment Letters of Credit | 11,694 | 14,891 | ||||||
Credit - Deferred monetary correction | 11,893 | 12,776 | ||||||
Deferred Income tax | 214,711 | 207,630 | ||||||
Cancelled accounts | 25,804 | 23,917 | ||||||
Funds for application to pending obligations | 286,330 | 277,306 | ||||||
Other | 98,578 | 83,084 | ||||||
$ | 1,698,936 | 1,441,021 |
Breakdown of pension related obligations of Grupo Aval subsidiaries
Banco de Bogota S.A. and Subordinates:
Legal Name | ||||||
Retirement Pensions | Banco de Bogota | Corficolombiana | Almaviva | |||
Actuarial Method Used | Contingent growing fractioned payments. Decree 2984 of 2009, decree 2783 of 2001 and Resolution 1555 published 30 June 2010 | On the basis of Decree 2984 of 2009, which amended Decree 2783 of 2001, on the basis of a DANE established rate of 4.80% | Contingent annually growing fractioned payments in arrears. Decree 4565 of 2010 | |||
Number of users | 1,137 persons of which 672 are retired, 418 substitute, 32 retires pensioned and 15 are active individuals | 1 direct pensioner | Thirty seven (37) retirees of which twelve (12) are pensioned, twenty four (24) are substitutes and one (1) is retired. | |||
Benefits covered | Monthly payment and one additional payment | None | Monthly payments plus additional payment for pensioned beneficiaries and with expectation of pension | |||
The accumulated amortized percentage of the actuarial calculation on the closing date of the financial statements with reference to the accumulated amortized percentage as of the closing of the immediately previous period | 31-Dec -12 83.79% | 30-Jun-12 83.79% | 30-Dec-12 100.00% | 30-Jun-12 86.09% | 31-Dec-12 100.0% | 30-Jun-12 100.0% |
Amortization plan for the actuarial calculation to reach one hundred percent (100%) of accumulated amortization | The annual reserve is increased rationally and systematically in such a way that as of 31 December 2029 amortization reaches one hundred percent (100%) | There is no amortization plan; one hundred percent (100%) of actuarial cost is already amortized | There is no amortization plan; one hundred percent (100%) of actuarial cost is already amortized |
Banco de Occidente S.A. and Banco Popular S.A.:
Pension | Banco de Occidente | Banco Popular | ||
Actuarial Method used | Fractioned payments in arrears | Fractioned payments in arrears as indicated in Article 112 of the Tax Code and in consideration of regulations in Decree 2783 of 20 December 2001 as to tax considerations | ||
Number of users | 40 persons | 1,965 persons at Banco Popular and Alpopular (a subordinate of the bank)2 persons, for a total of 1,967 persons | ||
Benefits covered | Monthly payment and bonus | One monthly payment plus two payments in July and in December and a postmortem allowance | ||
The accumulated amortized percentage of the actuarial calculation on the closing date of the financial statements with reference to the accumulated amortized percentage as of the closing of the immediately previous period | 31 Dec 12 100.00% | 30 June 12 100.00% | 31 Dec 12 80.51% | 30 June 12 80.51% |
Amortization plan for the actuarial calculation to reach one hundred percent (100%) of accumulated amortization | NA | Amortization takes place at a rate of 1.15% p.a. to conclude in 2029 | ||
Amount of the pension bonds issued and period of redemption | NA | In 2012 Banco Popular issued two pension bonds in the amount of Col$412.3 million which date of redemption in 2009 and 2010 (1) . Alpopular (subordinate of the bank) has issued one pension bond in the amount of $50 million with redemption date in 2022. | ||
Insurance company with which payment of pensions has been hired. | NA | NA | ||
Specific funds or guarantees destined to back-up the total obligation | NA | NA |
(1) Redemption date of these pension bonds corresponds to the date in which the incumbent individual fulfilled requirements for retirement. Bonds were issued after such dates, in 2012, since the private pension fund to which the amounts involved were to be paid allowed to engage in proceedings after date of completion of requirements.
(21) | Debt Instruments (Long Term debt) |
Companies are authorized by the Superintendency of Finance to issue and place Bonds or general guarantee bonds. All bond issues by Grupo Aval and its subordinates carry no guarantee and represent, exclusively, the obligation of each issuer.
Breakdown of liabilities for this concept at December 31 and June 30 2012, including date of issue and date of redemption is as follows:
Issuer | Date of issue | 31 December 2012 | 30 June 2012 | Date of Redemption | Interest rate | |||||||||
BAC Honduras | October 2009 | $ | - | 12,714 | Oct-12 | 14.38% to 14.49% | ||||||||
November 2009 | - | 10,146 | Oct-12 | 14.38% to a 14.49% | ||||||||||
December 2009 | - | 24 | Oct-12 | 14.38% to 14.49% | ||||||||||
December 2012 | 10,586 | - | Dec-15 | 14.49% | ||||||||||
10,586 | 22,884 | |||||||||||||
Banco de America | January 2008 | 17,682 | 17,846 | Jan-13 | 2.44% to 2.69% | |||||||||
Central | November 2008 | 26,523 | 26,769 | Nov-13 | 4.17% | |||||||||
February 2009 | 26,523 | 26,769 | Feb-14 | 2.41% | ||||||||||
December 2010 | - | 22,512 | Jan-1 2 | 4.00% | ||||||||||
December 2011 | 7,073 | 7,745 | Dec-1 6 | 4.25% | ||||||||||
February 2012 | 3,536 | - | Feb-17 | 4.25% | ||||||||||
Mach 2012 | 7,073 | - | Mar-17 | 4.25% | ||||||||||
May 2012 | 10,339 | 20,465 | May-17 | 4.25% | ||||||||||
December 2012 | 23,475 | - | Jan-13 to Dec-14 | 4.00% to 5.00% | ||||||||||
122,224 | 122,106 | |||||||||||||
Banco de Bogota S.A. | April 2008 | 212,313 | 211,792 | Apr-15 | IPC + 7.00% to UVR + 7.00% a DTF + 3.00% | |||||||||
February 2010 | 209,758 | 209,046 | Feb-1 7 to Feb-20 | IPC + 5.33% to UVR + 5.29% to IPC + 5.45% to UVR + 5.45%. | ||||||||||
December 2011 | 1,060,938 | 1,065,988 | Jan-17 | 5.00% | ||||||||||
1,483,009 | 1,486,826 | |||||||||||||
Banco de | August 2006 | 75,000 | 75,000 | Aug-13 | IPC + 5.58% | |||||||||
Occidente S.A. | August 2007 | 80,000 | 80,000 | Feb -15 | DTF + 5.90% | |||||||||
August 2008 | 186,910 | 186,910 | Jun-14 to Ag-18 | IPC + 6.60% IPC + 7.00% | ||||||||||
June 2007 | 53,842 | 53,842 | Jun 2014 | IPC + 6.60% | ||||||||||
March 2009 | 174,536 | �� | 174,536 | Mar-14 to Mar-1 9 | IPC + 5.00% a IPC + 6.00% | |||||||||
November 2010 | 550,000 | 550,000 | Nov-1 3 to Nov-15 | IPC + 2.72% a 3.15% DTF + 1.35% IBR + 1.42% | ||||||||||
October 2006 | 44,680 | 44,680 | Oct 2013 | IPC + 5.75% | ||||||||||
March 2011 | 387,000 | 400,000 | Mar-14 to Mar-1 6 | IPC + 2.49% a 3.05% IBR + 1.50% | ||||||||||
September 2011 | 247,119 | 247,119 | Sep-14 to Sep-21 EA | IPC + 4.00% a 4.50% IBR + 1.80% 6.65% EA 7.25% | ||||||||||
February 2012 | 200,000 | 200,000 | Feb-1 9 to Feb-22 | |||||||||||
August 2012 | 300,000 | - | Aug-15 to Aug-27 | IPC + 4.34% a 4.65% | ||||||||||
2,299,087 | 2,012,087 | |||||||||||||
Banco Popular S.A. | July 2008 | 100,000 | 100,000 | Jul 2015 | IPC + 2.44% | |||||||||
September 2006 | 100,000 | 100,000 | Sept 2013 | IPC + 5.49% | ||||||||||
June 2010 | 47,575 | 47,575 | Jun 2013 | IPC + 3.23% | ||||||||||
February2010 | 260,800 | 260,800 | Feb 2015 | DTF + 1.10% | ||||||||||
October 2010 | 189,500 | 243,000 | Oct 2013 | IBR + 1.40% IPC + 2,64% | ||||||||||
August 2011 | 400,000 | 400,000 | Feb-1 3 to Ago-15 | IPC + 3.68% TV to IBR + 1.81% TV | ||||||||||
January 2012 | 400,000 | 400,000 | Jun-1 3 to Ene-1 7 | IBR + 1.80% to DTF + 1.82% to IPC | ||||||||||
September 2012 | 400,000 | - | +3.90% Sep-14 to Sep-19 IPC + | |||||||||||
1,897,875 | 1,551,375 | 3.69% 6.30% to 6.39% | ||||||||||||
Concesionaria Vialde los Andes S.A. | July 2007 | |||||||||||||
29,150 | 47,700 | Jul-14 | IPC + 5.70% | |||||||||||
29,150 | 47,700 | |||||||||||||
BAC Credomatic | January 2011 | 45 | 45 | Jan-13 | 5.14% to 8.69% | |||||||||
Guatemala | July 2011 | - | 14,079 | Jul-12 | 4.65% to 8.25% | |||||||||
August 2011 | - | 13,969 | Aug-12 | 4.75% to 8.25% | ||||||||||
September 2011 | - | 14,141 | Sep-12 | 4.75% to 8.45% | ||||||||||
October 2011 | - | 6,276 | Oct-12 | 4.65% to 8.45% | ||||||||||
November 2011 | - | 11,318 | Nov-12 | 4.65% to 8.30% | ||||||||||
December 2011 | - | 7,043 | Dec-1 2 | 4.65% to 8.22% | ||||||||||
January 2012 | 12,122 | 14,779 | Jan-1 3 | 5.84% to 8.25% | ||||||||||
February 2012 | 14,116 | 16,939 | Feb-13 | 5.84% to 8.40% | ||||||||||
March 2012 | 11,372 | 12,931 | Apr-1 3 | 5.84% to 8.25% | ||||||||||
April 2012 | 12,596 | 14,518 | May-13 | 5.84% to 8.25% | ||||||||||
May 2012 | 15,326 | 15,792 | May-13 | 5.84% to 8.50% | ||||||||||
June 2012 | 21,508 | 21,994 | Jun-13 | 5.84% to 8.50% | ||||||||||
July 2012 | 18,100 | - | Aug-13 | 4.75% to 8.50% | ||||||||||
August 2012 | 19,910 | - | Sep-13 | 4.75% to 8.40% | ||||||||||
September 2012 | 25,881 | - | Oct-13 | 4.89% to 8.50% | ||||||||||
October 2012 | 22,232 | - | Nov-13 | 4.75% to 8.50% | ||||||||||
October 2012 | 1,007 | - | Apr-14 | 8.25% | ||||||||||
November 2012 | 14,999 | - | Dec-13 | 4.65% to 8.50% | ||||||||||
December 2012 | 9,979 | - | Dec-13 | 4.65% to 8.25% | ||||||||||
199,193 | 163,824 | |||||||||||||
Grupo Aval Acciones | October 2005 | 100,000 | 100,000 | Oct-15 | IPC + 3.37% | |||||||||
y Valores S.A. | December 2009 | 624,249 | 749,733 | Dec -14 to Dic-24 | IPC + 3.69% to IPC + 5.20% | |||||||||
724,249 | 849,733 |
Issuer | Date of issue | 31 December 2012 | 30 June 2012 | Date of Redemption | Interest rate | |||||||||
Grupo Aval Limited (3) | January 2012 | 1,060,938 | 1,070,760 | Feb-17 | 5.25% | |||||||||
January 2012 | 1,736,402 | - | Feb-17 | 5.25% | ||||||||||
2,797,340 | 1,070,760 | |||||||||||||
Industrias | June 2000 | 1,053 | 1,053 | Jun-12 | 5.25% | |||||||||
Lenher S.A. (4) | 1,053 | 1,053 | ||||||||||||
Leasing | January 2005 | 9,203 | 9,861 | Jan-13 toOct-14 | 6.91% to 8.70% | |||||||||
Corficolombiana | January 2009 | 116,032 | 116,032 | Mar-13 to Oct-14 | 1.80% to 2.10% | |||||||||
125,235 | 125,893 | |||||||||||||
Proyectos de | May 2009 | 80,000 | 80,000 | May-16 to May-19 | 10.09% to 10.39% | |||||||||
80,000 | 80,000 | |||||||||||||
$ | 9,769,001 | 7,534,241 |
(22) | Estimated Liabilities |
Breakdown of estimated liabilities is as follows.
31 December | 30 June | |||||||
Interest | $ | 2,617 | 2,394 | |||||
Labor related debt | 30,092 | 35,398 | ||||||
Income tax payable (1) | 410,782 | 568,183 | ||||||
Industry and commerce tax and other | 44,173 | 45,111 | ||||||
Contributions and memberships | 6,550 | 7,298 | ||||||
Fines and penalties imposed by the Financial | ||||||||
Superintendence (2) | 450 | 1,522 | ||||||
Fines and sanctions, litigation, indemnities, and demands(2) | 64,419 | 67,827 | ||||||
Reserves- Guarantee Fund | 21,822 | 20,805 | ||||||
Reserves – deposit Insurance | 10,287 | 9,706 | ||||||
Publicity, advertising, and customer fidelity campaigns | 6,234 | 10,188 | ||||||
Public utilities | - | 773 | ||||||
Equipment maintenance | 542 | 1,024 | ||||||
Data processing | 665 | 895 | ||||||
Legal and judiciary expenses | 145 | 289 | ||||||
Transportation of currency | 1,091 | 817 | ||||||
Security expenses | 9 | 390 | ||||||
Accrued/unpaid expenses | - | 373 | ||||||
Labor related contingencies (2) | 43,649 | 50,367 | ||||||
Other | 168,184 | 188.478 | ||||||
$ | 811,711 | 1,011,838 |
(1) | Income tax |
Consolidation of amounts due by reason of income and complementary taxi s not permitted under Colombian tax regulations and as such it may not be used for net-off of taxable income of another subsidiary. For consolidation purposes of local subsidiaries, the applicable tax rate for the semesters ended on 31 December and 30 June 2012 was 33%.
a. | Basis for determination of income and complementary tax may not be lower than 3% of net equity holdings of the subject taxpayer as of the last day of the immediately preceding fiscal year |
b. | Extraordinary earnings are treated separately and subject to the aforementioned tax rate. Extraordinary earnings include issues such as gains on the sale of fixed assets available for sale during a period exceeding two years or more and the sale of companies also for sale during a period longer than two years. |
c. | In the case of subsidiaries with legal residence in Panama that are property of Grupo Aval, income taxes are ruled by Panamanian law. Earnings of the companies mentioned above are not subject to Panamanian income tax. |
(2) | Contingencies, Fines and Other |
This caption includes demands and litigation which are deemed probable likelihood above 50%) and for which the payable amount may be reasonably estimated. Additionally, a contingent liability by reason of demands or litigation must be booked as a balance sheet item whenever a Court issues a ruling contrary to the interests of Grupo Aval or any of its subsidiaries.
(23) | Non-Controlling Interest |
Non - controlling interest of the banking subsidiaries which in turn include minority interest of their subordinates is as follows:
31 December | 30 June | |||||||
Banco de Bogota S.A. | $ | 4,293,879 | 4,199,986 | |||||
Banco de Occidente S.A. | 896,985 | 832,027 | ||||||
Banco Popular S.A. | 169,101 | 158,092 | ||||||
Banco AV Villas S.A. | 215,412 | 196,131 | ||||||
Total | $ | 5,575,377 | 5,386,236 |
(24) | Shareholders’ Equity |
Number of authorized, issued and outstanding shares is as follows:
31 December | 30 June | |||||||
Number of shares authorized, issued and outstanding | 120,000,000,000 | 120,000,000,000 | ||||||
Number of shares: | ||||||||
Subscribed and paid for | 18,551,766,453 | 18,551,766,453 | ||||||
Subscribed and not paid | - | - | ||||||
Total shares | 18,551,766,453 | 18,551,766,453 | ||||||
Subscribed and Paid-in capital | $ | 18,552 | 18,552 |
During the month of March 2012 a total of 466,457 preferred shares were sold that were in the name of Grupo Aval Acciones y Valores S.A. and that were the result of the application of the default mechanism in the May 2011 stock issue, in turn resulting in a Premium in the sale of stock in the amount of Col$ 615,298,943.
In the second semester of 2011 there was a capital increase arising from the process of escision in which Grupo Aval Acciones y Valores S.A. received shares of Banco Popular and surrendered shares of Grupo Aval to Inversiones Escorial S.A. and Popular Securities S.A. in number of 934,669,126 preferred shares with value of Col$ 934. Premium in the sale of stock rose by Col $697,521.
Preferred Shares issued grant the right to receive a minimum preferred dividend over the earnings of the period after coverage of losses affecting capital, deduction of the amount that is to be legally allocated for legal reserve and prior to the creation or increase of any other reserve. Minimum preferred dividend is one peso ($1.00) per semester and per share, provided that such preferred dividend is to be higher than common dividends declared for payment to common shares; otherwise, that is, when preferred dividend is not higher than that applicable to common shares, preferred shares will earn dividends in the same amount decreed for common shares. There will be no accumulation of dividends
Allocated retained Earnings
Breakdown of this account is as follows:
31 December | 30 June | |||||||
Legal reserve | $ | 9,276 | 6,972 | |||||
Temporary reserve at discretion of the highest corporate | 2,244,918 | 2,082,634 | ||||||
Total | $ | 2,254,194 | 2,089,606 |
Allocated retained earnings
Legal reserve
According with standing legal regulations, Grupo Aval and its banking subsidiaries are mandated to create a legal reserve through the allocation of ten percent (10%) of net annual earnings up to an amount equal to fifty percent (50%) of subscribed and paid-in capital. Such reserve may be reduced to a lower amount –below the stated fifty percent (50%) of subscribed capital when used for coverage of losses in excess of retained earnings. The legal reserve may not be lower than the above mentioned percentages except when used for used to cover losses in excess of retained earnings.
Mandatory and Voluntary Reserves
Mandatory and Voluntary reserves are determined during the semiannual shareholders meeting.
Inflation Adjustments over Shareholders Equity
Up to December 2006 equity holdings of Grupo Aval was subject to inflation adjustments. The accumulated effect of such adjustments over non-monetary assets and liabilities is incorporated to each of the adjusted accounts and the adjustments to equity accounts are incorporated into the item “inflation adjustments – equity holdings”.
Dividends Declared
The consolidated financial statements are prepared for presentation to the shareholders but are not to be considered as basis for the distribution of dividends or allocation of earnings. Distribution of dividends is based on the non-consolidated earnings of Grupo Aval.
Dividends are declared and paid to shareholders on the basis of the non-consolidated earnings of the immediately prior year. Dividends paid were as follows:
31 December | 30 June | |||||||
Non-consolidated earnings of the immediately prior year | $ | 1,524,971 | 1,250,220 | |||||
Cash dividends distributed | ||||||||
Col$25.20 per share payable in six installments of Col4.20 per share from April 2013 (on the basis of net earnings for the second semester of 2012). Col$21.60 per share payable in six installments of Col$$3.60 per share from October 2012 (on the basis of net earnings for the first semester of 2012) | Col$21.60 per share payable in six installments of Col$$3.60 per share from October 2012 (on the basis of net earnings for the first semester of 2012) |
Common shares outstanding | 13,622,022,124 | 13,689,321,019 | ||||||
Preferred shares outstanding | 4,929,744,329 | 4,862,4445,434 | ||||||
Total shares outstanding | 18,551,766,453 | 18,551,766,453 | ||||||
Total dividends decreed | $ | 467,505 | 400,718 |
At the General Shareholders Meeting held on 7 December 2010 approval was granted to an amendment of Company by-laws allowing for the possibility of conversion of common shares into preferred dividend shares. Such amendment of corporate by-laws was approved by the Financial Superintendence of Colombia through Resolution No. 2443 of 23 December 2010. The trade ratio thus established was 1 common share per 1 preferred dividend share without voting right. Share may only be converted when so approved or authorized by the General Shareholders Meeting.
(25) | Memorandum Accounts |
Breakdown of Memorandum Accounts is as follows:
31 December | 30 June | |||||||
Fiduciary: | ||||||||
investment | $ | 642,756 | 839,849 | |||||
Administration | 17,183,024 | 14,655,820 | ||||||
Guarantees and other | 6,342,955 | 4,811,586 | ||||||
Real estate | 5,388,643 | 4,761,541 | ||||||
Pension Liabilities | 6,705,428 | 779,382 | ||||||
Collective Portfolios | 9,286,459 | 7,810,447 | ||||||
Resources from the General Social Security System | 18,763,220 | 16,369,793 | ||||||
Total Fiduciary: | 64,312,485 | 50,028,418 | ||||||
Commitments receivable: | ||||||||
Securities surrendered-repo and simultaneous transactions | 4,198,706 | 7,270,202 | ||||||
Interest – loan portfolio | 300,060 | 270,959 | ||||||
Interest – financial leases | 27,696 | 23,694 | ||||||
Monetary correction – loan portfolio | 641 | 948 | ||||||
Rentals and sanctions in operating lease contracts | 4,980 | 4,347 | ||||||
Rights on options - speculation | 1,027,956 | 995,688 | ||||||
Relief Housing Portfolio-Law 546 of 1 999 | 3,613 | 3,815 | ||||||
Rentals receivable | 8,285,419 | 7,513,946 | ||||||
Purchase options receivable | 422,467 | 379,939 | ||||||
Other debtor contingencies | 845,193 | 900,726 | ||||||
Total commitments receivable | 15,116,731 | 17,364,263 | ||||||
Commitments payable: | ||||||||
Unused credit card facilities | 10,931,976 | 9,820,045 | ||||||
Litigation against the entity | 657,534 | 672,176 | ||||||
Letters of Credit issued and confirmed | 529,208 | 924,253 | ||||||
Uncompromised lines of credit | 3,093,254 | 2,959,849 | ||||||
Bank guarantees | 2,113,102 | 2,222,519 | ||||||
Undisbursed loans approved | 1,820,964 | 1,839,185 | ||||||
Government accounts payable (Law 546) (1) | 8,921 | 9,369 | ||||||
Other | 2,053,128 | 1,224,370 | ||||||
Total commitments payable | 21,208,087 | 19,671,766 | ||||||
Memo accounts receivable: | ||||||||
Tax value of assets | 107,394,300 | 106,432,420 | ||||||
Assets and securities surrendered in custody | 6,026,815 | 6,366,337 | ||||||
Assets and securities surrendered as collateral | 1,427,298 | 2,105,052 | ||||||
Negotiable investments in debt instruments | 4,322,995 | 2,786,422 | ||||||
Assets charged-off | 4,254,737 | 4,141,021 | ||||||
Investments to hold through maturity | 2,981,567 | 3,382,257 | ||||||
Inflation adjustment on assets | 1,044,323 | 1,044,824 | ||||||
Interest accounts under negotiable investments in debt instruments. | 180,048 | 240,319 | ||||||
Investment in debt instruments available for sale | 6,819,994 | 8,464,392 | ||||||
Remittances for collection | 45,593 | 42,855 | ||||||
Amortization of investments in debt instruments | 1,973,486 | 1,972,828 | ||||||
Other | 78,596,838 | 74,724,193 | ||||||
Total memo accounts Receivable | 215,067,994 | 211,702,920 |
Memo Accounts Payable: | ||||||||
Assets and securities received as collateral | 54,391,148 | 47,120,209 | ||||||
Rating of commercial loan portfolio | 45,534,791 | 42,633,608 | ||||||
Assets and securities received in custody | 6,141,590 | 5,921,618 | ||||||
Tax value of shareholders equity | 17,421,898 | 17,111,404 | ||||||
Rating of consumer loan portfolio | 23,338,582 | 21,131,731 | ||||||
Inflation adjustments - equity | 1,897,704 | 1,895,378 | ||||||
Rating of micro-credit loan portfolio | 290,916 | 281,219 | ||||||
Merchandise in warehouses owned | 1,876,757 | 1,657,878 | ||||||
Rating of financial leases | 6,551,745 | 5,954,336 | ||||||
Rating of operating leases | 389,312 | 377,928 | ||||||
Rating of mortgage loan portfolio | 4,232,412 | 3,981,533 | ||||||
Other | 25,41 3,836 | 22,295,523 | ||||||
Total Memo Accounts Payable | 187,480,691 | 170,362,365 | ||||||
$ | 503,185,988 | 469,129,732 |
(1) | As of the effectiveness of Law 546 of 1999 (that eliminated the Unit of Constant Purchasing Power (UPAC, as per its Spanish initials) and created the “UVR” all financial entities are mandated to evaluate their mortgage Housing Loan Portfolio by moving it from UPAC into UVR. The difference resulting from such re-appraisal was paid by the government with Bonds and, according to regulations issued by the Financial Superintendence of Colombia, must be booked in the account of revalued mortgage loan portfolio for the year 2000 and that was outstanding in each of those dates. |
(26) | Contingent Accounts |
Breakdown of Contingent Accounts is as follows:
31 December | 30 June | |||||||
Debtor: | ||||||||
Interest on loan portfolio | $ | 4,198,706 | 7,248,736 | |||||
Interest on financial leases | 300,060 | 270,959 | ||||||
Monetary correction on loan portfolio | 27,696 | 23,694 | ||||||
Rental and penalties on lease contracts | 641 | 948 | ||||||
Rights on speculation options | 4,980 | 4,347 | ||||||
Rentals receivable | 1,027,956 | 995,688 | ||||||
Purchase options receivable | 8,285,419 | 7,513,946 | ||||||
Securities surrendered under repo transactions | 422,467 | 379,939 | ||||||
Other debtor contingents | 848,806 | 926,006 | ||||||
15,116,731 | 17,364,263 | |||||||
Creditor: | ||||||||
Securities received under repo and simultaneous transactions | 805,740 | 874,475 | ||||||
Endorsements and guarantees | 1,015,254 | 146,085 | ||||||
Letters of credit | 2,106,102 | 2,215,519 | ||||||
Undisbursed loans approved | 529,208 | 925,356 | ||||||
Credit approvals | 1,820,964 | 1,839,185 | ||||||
Commitments under options | 14,025,229 | 12,779,894 | ||||||
Other creditor contingencies | 905,590 | 891,252 | ||||||
21,208,087 | 19,671,766 | |||||||
Total - Net | $ | 6,091,356 | 2,307,503 |
(27) | Administrative and Other expenses |
Other operating expenses during the period then ended include the following items:
31 December | 30 June | |||||||
Professional fees | $ | 82,578 | 80,646 | |||||
Taxes (other than income and complementary tax) | 291,629 | 268,558 | ||||||
Rent | 118,372 | 99,815 | ||||||
Contributions and memberships | 100,970 | 100,198 | ||||||
Insurance | 22,161 | 21,226 | ||||||
Maintenance and repairs | 121,770 | 94,435 | ||||||
Amortization of deferred charges | 159,194 | 135,989 | ||||||
Cleaning and security service | 53,737 | 50,854 | ||||||
Temporary services | 67,010 | 62,625 | ||||||
Public relationships | 111,812 | 84,125 | ||||||
Public utilities | 120,925 | 110,862 | ||||||
Transportation services | 68,179 | 66,091 | ||||||
Operating cost of the non-financial sector | 5,402 | 4,750 | ||||||
Other | 673,634 | 547,352 | ||||||
$ | 1,997,373 | 1,727,526 |
(28) | Non-Operating Income (Expenses) - Net |
Non-operating income (expenses) for the semesters ended 31 December and 30 June 2012 included the following concepts:
31 December | 30 June | |||||||
Non-operating Income: | ||||||||
Gain on sale of assets received in payment | $ | 92,810 | 5,135 | |||||
Gain on sale of property, plant and equipment | 104,854 | 6,856 | ||||||
Recovery of other reserves | 148,702 | 130,640 | ||||||
Other | 61,600 | 58,988 | ||||||
Total non-operating income | 407,966 | 201,619 |
31 de December | 30 de June | |||||||
Non-Operating expenses: | ||||||||
Loss on sale of property, plant and equipment | (165 | ) | (145 | ) | ||||
Indemnities | (8,004 | ) | (6,431 | ) | ||||
Penalties | (73 | ) | (159 | ) | ||||
Other | (74,945 | ) | (100,810 | ) | ||||
Total non-operating expenses | (83,187 | ) | (107,545 | ) | ||||
$ | 324,779 | 94,074 |
(29) | Transactions with related parties |
Related parties are the main shareholders of the Company, members of its Board of Directors and of companies in which Grupo Aval Acciones y Valores S.A. owns ownership interest higher than ten percent (10%) or in which there are interests of economic, administrative or financial nature. Also, this category includes companies in which shareholders or members of the Board of Directors hold ownership stakes higher than ten percent (10%).
Below follows presentation of outstanding balances and transactions as of the closings of 31 December and 30 June 2012:
Consolidated 31 December 2012 | ||||||||||||||||||||||||||||
Directors with legal representation | Members of the Board of Directors | Entities participant in the combination | Shareholders with ownership higher than 10% | Related companies | Companies related to Directors | Shareholders with debt higher than 5% of technical equity | ||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||
Cash | $ | - | - | - | - | 2,318,692 | - | - | ||||||||||||||||||||
Investments | 36,644 | - | 176 | 574 | 751,974 | - | - | |||||||||||||||||||||
Reserve for Investments | - | - | - | - | - | - | - | |||||||||||||||||||||
Loan Portfolio and financial lease transactions | 4,014 | 2,424 | 34,834 | - | 93,666 | 600,954 | 200,000 | |||||||||||||||||||||
Accounts receivable | 29,607 | - | 13,336 | - | 2,401,968 | - | - | |||||||||||||||||||||
Revaluations | - | - | - | - | - | - | - | |||||||||||||||||||||
Other Assets | 1,034 | - | - | - | 1,254,021 | - | - | |||||||||||||||||||||
LIABILITIES | ||||||||||||||||||||||||||||
Deposits | 1,530,837 | 2,695 | 118,379 | 2,320 | 2,356,018 | 293,345 | 497,966 | |||||||||||||||||||||
Accounts Payable | 112,733 | - | 12,110 | 181 | 5,435,437 | - | - | |||||||||||||||||||||
Other Liabilities | 1,773,414 | - | 13,092 | - | 91,384 | - | - | |||||||||||||||||||||
SHAREHOLDERS EQUITY | ||||||||||||||||||||||||||||
Unrealized earnings or loss | - | - | - | - | - | - | ||||||||||||||||||||||
INCOME | ||||||||||||||||||||||||||||
Interest | - | 17 | 328 | 132,555 | - | - | ||||||||||||||||||||||
Commissions | 179 | 2 | 9,997 | 85,932 | - | 10,686 | ||||||||||||||||||||||
Rentals | 242 | - | 1,143 | - | - | - | ||||||||||||||||||||||
Other Income | 31,174 | - | 64,174 | 177,003 | - | - | ||||||||||||||||||||||
EXPENSES | ||||||||||||||||||||||||||||
Interest | 9,295 | - | 1,150 | 139,564 | - | 6,390 | ||||||||||||||||||||||
Commissions | - | - | 2,219 | 23,071 | - | - | ||||||||||||||||||||||
Fees | - | - | - | 16,262 | - | - | ||||||||||||||||||||||
Rentals | - | - | 223 | 6,079 | - | - | ||||||||||||||||||||||
Other expenses | - | - | 766 | 209,868 | - | - |
Consolidated 30 June 2012 | ||||||||||||||||||||||||||||
Directors with legal representation | Members of the Board of Directors | Entities participant in the combination | Shareholders with ownership higher than 10% | Related companies | Companies related to Directors | Shareholders with debt higher than 5% of technical equity | ||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||
Cash | - | - | 1,083,712,23 | - | 1,088,795,30 | 852,131,00 | - | |||||||||||||||||||||
Investments | - | - | 9,508,186,00 | - | 15,344,423,00 | 6,549,949,00 | - | |||||||||||||||||||||
Portfolio and Financial leases | 3,072,59 | 243,12 | 49,866,30 | - | 46,495,50 | 477,745,00 | 525,1 08,00 | |||||||||||||||||||||
Accounts Receivable | - | - | 191,643,83 | - | 204,007,60 | 125,872,00 | - | |||||||||||||||||||||
Other Assets | - | - | 417,954,00 | - | 517,954,00 | 376,292,00 | - | |||||||||||||||||||||
LIABILITIES | ||||||||||||||||||||||||||||
Deposits | 737,647,77 | 3,264,69 | 151,665,59 | 9,971,00 | 839,608,38 | 130,620,21 | 594,586,00 | |||||||||||||||||||||
Accounts Payable | 83,728,20 | - | 13,922,18 | 92,008,00 | 38,651,33 | - | - | |||||||||||||||||||||
Bonds | - | - | 892,30 | - | 4,771,20 | - | - | |||||||||||||||||||||
Other Liabilities | - | - | 143,03 | - | 2,850,70 | - | - | |||||||||||||||||||||
SHAREHOLDERS EQUITY | ||||||||||||||||||||||||||||
Unrealized earnings loss | - | - | - | - | 1,419,619 | - | - | |||||||||||||||||||||
INCOME | ||||||||||||||||||||||||||||
Interest | - | - | 48,128,54 | - | 37,867,50 | 27,918,00 | - | |||||||||||||||||||||
Commissions | - | 2,19 | 21,719,09 | - | 1,852,03 | - | 4,271,00 | |||||||||||||||||||||
Rentals | - | - | 1,073,99 | - | 245,20 | - | - | |||||||||||||||||||||
Other Income | - | - | 864,633,01 | 76,00 | 802,449,00 | 61 7,675,00 | - | |||||||||||||||||||||
EXPENSES | ||||||||||||||||||||||||||||
Interest | 8,00 | - | 1,709,66 | - | 16,962,07 | - | 15,209,00 | |||||||||||||||||||||
Commissions | 178,50 | - | 3,384,35 | 2,047,00 | 1,795,10 | - | 2,876,00 | |||||||||||||||||||||
Fees | 7,129,70 | 415,57 | 309,00 | - | - | - | - | |||||||||||||||||||||
Rentals | - | - | 572,99 | - | 706,10 | - | - | |||||||||||||||||||||
Other expenses | 354,00 | - | 44,521,26 | 11,641,00 | 46,062,94 | 22,416,00 | - |
(30) | Other Disclosures |
At 31 December and 30 June 2012 total number of employees of the Parent Company and Consolidated Entities as well as personnel expenses was as follows:
3131 December | 30 June | |||||||||||||||
Total No. | Personnel Expenses | Total No. | Expenses | |||||||||||||
Officers | 306 | $ | 92,738 | 1,244 | 79,764 | |||||||||||
Other | 55,822 | 1,038,174 | 50,287 | 1,001,254 | ||||||||||||
Total | 56,128 | $ | 1,130,912 | 51,531 | 1,081,018 |
(31) | Relevant Events |
On 23 January 2012, Grupo Aval Limited, a Cayman Islands affiliate of Grupo Aval Acciones y Valores S.A. issued Bonds in the international capital markets under the terms of Regulation S of the 1934 Capital Markets Act of the United States of America and under the terms of Rule 144A, in a total amount of US$ 600 million maturing on January 2017 with a deduction of 54.2 bps , price of 99.458% and annual interest rate of 5.25%.
On 19 September 2012, Grupo Aval Limited a Cayman Islands affiliate of Grupo Aval Acciones y Valores S.A. issued Bonds in the international capital markets under the terms of Regulation S of the 1934 Capital Markets Act of the United States of America and under the terms of Rule 144A, in a total amount of US$1,000 million, maturing August 2022 with a deduction of 39.3 bps, price of 99.607% and annual interest rate of 4.75%.
On 08 October 2012 incorporation took place of Grupo Aval International Limited a Cayman Islands affiliate of Grupo Aval Acciones y Valores S.A.
On 03 December 2012, Grupo Aval Acciones y Valores S.A. made principal payment of Col$125,751under placement of “B” series Bonds fourth issue, in compliance with established tenors.
On 24 December 2012, Banco Bilbao Vizcaya Argentaria S.A. and Companía Chilena de Inversiones S.L., as sellers, Sociedad Administradora de Pensiones y Cesantias Porvenir S.A as buyer and Grupo Aval as guarantor of the obligations of Porvenir, subscribed an agreement for the purchase-sale of shares for acquisition of 99.99% of shares property of BBVA Horizonte Sociedad Administradora de Fondos de Pensiones y Cesantias S.A.
(32) | Subsequent Events |
- | On 20 February 2013, Porvenir subscribed an agreement with Banco de Bogota S.A., Banco de Occidente S.A. and Grupo Aval for the partial assignment of its right to acquire the shares of Horizonte in similar prorate share to that of their current ownership interest in Porvenir, that in the case of Banco de Bogota S.A. and Banco de Occidente S.A. includes their indirect participation in the equity holdings of Porvenir through their affiliates Fiduciaria Bogota S.A and Fiduciaria de Occidente S.A., respectively. |
- | Banco de Bogota, on 19 February 2013, issued Subordinate Bonds in the international capital markets for a total of US$500 million, maturing 19 February 2023. |
The issue was rated investment grade by two international rating companies, Moody`s Investor Services and Fitch Ratings and was awarded ratings of, respectively, Baa3 and BBB-.
Citigroup Global Markets Inc., HSBC Securities (USA) Inc and J.P Morgan Securities LLC led the transactions.
Bonds have a 5.375% coupon, price of 100.00% and earn semi-annual interest. Redemption of Bonds will be made through a single payment at maturity (bullet payment).
Subordinate Bonds were issued under the terms of Regulation S of the aforementioned Capital Markets Act of the United States and Rule 144ªof the same Law.
- | on 16 January 2013, the Board of Directors authorized company to participate in the acquisition of a portion of the shares of BBVA Horizonte Sociedad Administradora de Fondos de Pensiones y Cesantias, as assignee of the acquisition agreement subscribed by Sociedad Administradora de Pensiones y Cesantias Porvenir S.A., on 24 December 2012. |
In the same session, the Board of Directors of Grupo Aval also authorized company to extend a loan to Porvenir up to the amount of Col$350.000 and included ample authority to the legal representative of the company to negotiate conditions applicable to said loan.
- | The Congress of Colombia enacted Law 1607 of 26 December 2012 to introduce significant reforms to the Colombian tax system, mainly: |
a) | Income tax rate is lowered from 33% to 25% as of 2013 and creation takes place of a new tax for equity (CREE) at a )% rate between 2013 and 2015 and 8% commencing on 2016; calculation of tax base for determination of this tax has several differences with the system of calculation of applicable income tax as calculated on regular income. |
b) | Tax payers of the new tax for equity are not mandated to make contributions to SENA and ICBF for those employees earning less than ten minimum legal monthly salaries and this exoneration is extended to contributions to the health regime as of January 2014. |
c) | Definition is included of “permanent establishment” understood as a permanent location at which a foreign company develops its business in the country. |
d) | Amendment is introduced to the manner of calculation of taxable and non-taxable earnings of those companies that distribute dividends to their partners or shareholders. |
e) | New rules are introduced regarding the price transfer regime. Amongst other, extension of its scope of application to include transactions with related economic parties located at duty free zones and regulation of some transactions between taxpayers and foreign companies linked to a permanent establishment in Colombia or abroad. |
THIS IS A FREE TRANSLATION OF THE SPANISH VERSION ORIGINAL
Item 5
Board of Directors
President of the Board of Directors
Luis Carlos Sarmiento Angulo
Principals
Luis Carlos Sarmiento Angulo
Alejandro Figueroa Jaramillo
Efraín Otero Álvarez
Mauricio Cárdenas Müller
Guillermo Fernández de Soto
Antonio José Urdinola Uribe
Esther América Paz Montoya
Alternates
Hernán Rincón Gómez
Juan María Robledo Uribe
Juan Camilo Ángel Mejía
Gabriel Mesa Zuleta
Alvaro Velásquez Cock
Enrique Mariño Esguerra
Germán Villamil Pardo
Secretary
Luis Fernando Pabón Pabón
Fiscal Auditor
Lida Marcela Herrera Vargas
Member of KPMG Ltda.
General Management
Luis Carlos Sarmiento G.
President
Diego Fernando Solano | Diego Rodríguez | Julio Leonzo Álvarez | Rafael Eduardo Neira | |
Senior Vicepresident | Senior Vicepresident | Senior Vicepresident | Senior Corporate Controller | |
Financing | Risk | Shared Services | ||
Javier Díaz | Edgar Enrique Lasso | Juan Guillermo Amaya | Mauricio Maldonado | |
Vicepresident | Vicepresident | Vicepresident | Vicepresident | |
Relationships with | Operating and | IT | Strategic Planning | |
Investors | Regulatory Risk | |||
María Edith González | María José Arango | |||
Vicepresident | Vicepresident | |||
Accounting Consolidation | Corporate Procurement | |||
Contents
Report of the President
Graphs
Financial Statements and Report of the Fiscal Auditor
Consolidated Financial Statements and Auditor’s Report
Report of the President
First Semester 2012
Bogotá, D.C.
Dear Shareholders:
Once again Colombia is engaging in a new attempt to reach peace. Full of hope, we see with sympathy the endeavors of the President of the Republic and are ready to do our own bit. The major differences between this last attempt and other failed processes in the past are two: on the one hand, we are now starting the process with a stronger country from the economic standpoint and, on the other hand the Colombians are now more realistic in regards to expectations.
Regarding the economy, there are good news. During the second quarter of 2012, the Colombian economy grew 4.9%1 as compared to the same quarter of 2011. Against all odds, GDP increased by 1.6% as against previous quarter. The variation for the first semester as compared to the same period of 2011 was 4.8%. It is concluded that the Colombian economy shows stability amidst an unfavorable external context. For he year 2012 Banco de la República estimates the growth projection of GDP within a range of 3.0 to 5.0 % . The wide range stems from the uncertainty over global slowdown; however, both Fedesarrollo and CEPAL place the stakes on the higher bracket.
The labor market, on the other hand, showed a favorable dynamics. According to information from the DANE, the unemployment rate remained in 10%, namely, in the upper limit of the one digit rate set out by the government.
Regarding inflation which ended 2011 in 3.73%, the behavior during the first semester of 2012 reflects again the adequate management of this variable by Banco de la Republica. As a result, during the first semester of the year inflation reached 2.01%, while during the twelve months ended in June this year, it reached only 3.20%. We may conclude that this important indicator progressively converges towards 3%, which is in line with the long range goal set out by the Board of Directors of Banco de la República.
In order to reduce the growth of demand of credit for consumption, the Board of Directors of Banco de la República successively increased by 25 pbs the rate of intervention during the first semester, up to 4.75%; Lately, upon continued weakening of world economics and the potential effect on the national economy, the rate was reduced in decrements of 25 pbs until reaching 4.75%. Additionally, and in order to contain the appreciation of the Colombian peso, Banco de la República decided to buy US$700 million during the months of August and September using the mechanism of daily auctions of at least US$20 million.
Behavior of the Economy
As announced at the beginning of this report, during the first semester of year 2012, the Gross Domestic Product grew by 4.8% as compared to the first semester of 2011. This behavior is explained by the following sectorial variations: 10.8% in exploitations of mines and quarries; 7.9% in construction; 5.9% in financial entities, insurance, goods and services; 4.8% in transportation, storage and communications;
1 DANE - Gross Domestic Product – Second quarter 2012 - Base 2005
4.5% in trade, repair services, restaurants and hotels; 4.0% in electricity, domiciliary gas and water; 3.7% in social, community and personal services; 1.2% in agricultural, forestry and fishing; and – 0.2% in manufacturing industry. Total of taxes increased by 7.0% as compared to the same period of 2011. Regarding the industrial performance and according to the last figures of the Survey on Joint Industrial Opinion published by ANDI for the period January-June, 2012, production grew by 1,3%, total sales grew by 3.2% and sales intended for the internal market increased by 1.9%. Concurrently with the greater dynamism, the use of installed capacity reached 76.6% by June 2012, greater than the historical average and 0.6% under the register of June, 2011. (77.2%). Another symptom of improvement in the economic activity is observed in the national demand of energy which increased 4.15% in the cumulative figure from January to June 2012 (29, 123.3 GWh) as compared to the same period of 2011 (27,963.5 GWh).
The Colombian Stock Exchange Index (IGBC) closed at 13, 417.51 points at the end of the first semester of 2012, which represents an increase of 5.94% during the semester and a decrease of 4.62% for the last twelve months ended in June 2012.
Economic Indices Affecting the Consumer
According to DANE, by the closing of first semester 2012, national unemployment climbed to 10.0% a figure higher than that registered by December 2011 (9.8%) and lower than that presented by June 2011 (10.9%). By June 2012, the sub-employment rate kept the high level of 33.1%.
In regards to the inflation rate, the variation of the Consumer Price Index (IPC) registered for the period of January – June 2012 was 2.01% as against 2.53% for the same period of 2011. For the last twelve months ended in June 2012, the IPC was 3.20% as against 3.23% for the same period of 2011.
Fiscal Balance
At the closing of the first semester of 2012, the Consolidated Public Sector (SPC) reported a fiscal surplus of 1.5% of GDP, a result better than that registered for the same period of 2011 when it was reported a surplus of 1.2% of GDP.
External Sector
In regards to the trade balance, the period January-June 2012 registered a surplus of US$2,936.7 million FOB as against a surplus for the same period 2011 of US$2,202.5 million FOB, as a result of the lesser growth of imports vs. exports. Exports went from US$26,800.3 million FOB in the first semester of 2011 to US$30,368.4 million FOB in the first semester of 2012 (an increase of 11.7%) as against an increase of 11.4% in imports which went from US$25,879.5 million CIF to US$28,818.4 million CIF
Colombia continues keeping an adequate level of international net reserves with a balance of US$34,265.5 million at June 2012, superior by US$3,067.7 million (9.8%) to the figure of June 2011 (US$31,197.8 million) and superior by US$1,965.1 million (6.1%) to the figure registered in December, 2011 (US$32,300.4 million). The above, notwithstanding that Banco de la República made net purchases of US$1,960 million in foreign currency in the exchange market which compared with the net purchases made in the same period of 2011 (US$2,460 million) meant a decrease of US$500 million.
In regards to the evolution of the price of the Colombian peso against the US dollar, the nominal exchange rate closed the month of June at the rate of $1.784.60, representing an appreciation of 8.1% (1,942.70 by December 2011). During the last twelve months ended in June 2012, the US dollar went from $1,780.16 to $1,784.60 accounting for a devaluation of 0.2% of the Colombian peso.
The spread over comparable American Bonds of the Index of Bonus of Emerging Markets for Colombia (EMBI Colombia) was 157 points at the June 2012 close, an increase of 36 base points as against June, 2011 (121 points) and a decrease of 34 base points as compared to December 2011.
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Recent Performance of the Financial Sector and of the Entities where Grupo Aval holds Direct Investment
During the first semester of 2012 the Colombian financial sector showed its strength through a significant growth in comparison with the growth local and global economies. Such performance is yet more meaningful considering the fact that it was made in times of uncertainty in the sight of crisis in the industrialized countries and further considering that such growth did not come from the deterioration of solvency ratios, but on the contrary, those remained stable.
Certain figures deserve to be highlighted: the total assets of the sector reached $332.4 billion, growing 5.6% when compared with December 2011 ($314.9 billion). Total investment in fixed income of the sector grew 5.0% ($2.3 billion), from $46.9 billion in December to $49.2 billion in June 2012. The participation of investments of fixed income within the sector assets declined in the first semester of 2012 by 8 base points, from 14.89% to 14.81%; TES involvement within the fixed income investments declined 49 bps from 70.48% in December to 69.98% in June 2012. The net loan portfolio grew 6.2% in the going months of 2012, from $203.4 billion in December to $216.1 billion in June 2012. The growths by segments of net receivables of the banking sector in the first semester of 2012 are listed as follows: the commercial receivables grew 4.8% from $127.9 billion in December to $134.0 billion in June 2012; the consumption receivables grew 8.4% from $55.1 billion in December to $59.8 billion in June 2012; microcredit grew 7.4% from $5.6 billion in December to $6.0 billion in June 2012 and the mortgage receivables grew 9.9% from $15.0 billion in December to $16.5 billion in June 2012. The indicator of loan portfolio quality worsened by 0.4%, from 2.5% in December to 2.9% in June 2012. For entities specializing in the mortgage sector, at the end of June 2012 this indicator reached 3.7%. On the other hand, the coverage of due loans in the sector decreased from 183.8% in December to 160.1 % in June 2012.
As far as the foreclosed assets (BRPs), the banking sector showed unfavorable performance by increasing the net balance of $194,174 million in December to $268,881 million in June 2012 (38.5%). The mortgage sector, in the same period, increased its net balance in BRPs of $52,170 million to $93,569 million (79.4%). At the closing of June 2012, the net balance of BRPs represented 0.08% of the total system assets.
For the 12 months ending in June 2012, the whole of the banking sector registered profits for $6.7 billion ($3.1 billion between July and December 2011 and $3.6 billion between January and June 2012), higher in $1.03 billion (18.4%) to the $5.63 billion achieved in the same period in 2011 ($2.51 billion between June and December 2011 and $3.12 billion between January and June 2012). 79.1% of the profits obtained by the sector in the past 12 months ending in June 2012 ($5.27 billion) come from private national entities which, at the end of June 2012 represented 75.6% of the assets of the sector ($251.2 billion), while public entities controlling 5.4 per cent of the assets of the sector ($17.9 billion), generated the 6.7% of the same ($0.45 billion). For their part, private foreign entities, controlling the 19.0% of assets ($63.3 billion), showed profits equivalent to 14.2% of the total, namely $0.95 billion.
9
For their part, credit institutions in which Grupo Aval has direct investment (Banco de Bogotá, Banco de Occidente, Banco Popular, Banco AV Villas), reported during the 12 months ending in June 2012 net earnings of $2 billion 187,412 million ($1 billion 84,033 million during the second semester of 2011 and $1 billion 103,379 million during the first semester of 2012, higher by 19.6% than those reported by these same entities in the same period of 2011, which reached $1 billion 828,634 million ($839,370 million during the second semester of 2010 and $989,264 million during the first semester of 2011). If to these profits are added the profits obtained in the same periods by the Sociedad Administradora de Fondos de Pensiones y Cesantias Porvenir S.A., the total profits amounted to $2 billion 370,740 million, a figure higher by 19.1% to that recorded in the same period in 2011 ($1 billion 990,072 million).
In regards to the areas of net receivables and deposits for the first semester of 2012, the entities in which Grupo Aval has direct investment as a whole grew 7.5% and 5.8%, respectively. For its part, the total of the banking sector during the same period recorded growths of 6.2% and 4.7% in net receivables and deposits, respectively.
Main Regulatory Measures
During the first semester of 2012, were issued regulatory measures, which by its significant effects on the results of the entities of the sector, are listed and summarized in Annex No.1.
Activities Carried Out in Social Object Development
Grupo Aval carried out during the first semester of 2012 the following activities:
● Vicepresidency of Corporate Systems
During the first semester of 2012, the Vicepresidency of Corporate Systems supported the technological activities of the company and provided support to the Aval entities in the following projects and activities fronts:
· | Aval Network of Services. |
· | Non- banking Correspondents. |
· | Bank Core. |
· | Accounting Consolidation. |
· | CRM (Customer Relationship Management). |
· | BI(Business Intelligence). |
· | New solution of Credit Card and process homologation |
· | Collections. |
· | Transactional Internet. |
· | Portals for Internet and Intranet. |
· | Cash Management. |
· | Telecommunications. |
· | Process Automation. |
· | Informatic Security. |
10
· | Systems Management. |
· | Management of Technological Infrastructure. |
· | Backup Computer Centers. |
· | Integration of Technological Architecture by Services. |
· | Management of technological projects and technological support |
· | Training. |
· | Corporate negotiations with Suppliers. |
● Vicepresidency of Risk
· | The Vice-Presidency of Risk supported entities in which Grupo Aval has direct investment in credit risk analysis and structuring of credit operations with common, most significant institutional customers using tools developed in Grupo Aval, aimed at ensuring that the credit operations have credit standards and measure return consistent with credit risk, opportunity cost and use of capital. |
· | Likewise, it continued the study of best practices in credit and operating risk analysis with a view to presenting these policies to consider its adoption in entities in which Grupo Aval has direct investment. |
· | Provided support to the entities in which Grupo Aval has direct investment in the evaluation of tools for the implementation of management systems of operating risk (SARO), money laundering and financing of terrorism (SARLAFT). Accompaniment was also given in the development and implementation of the business continuity Plan (PCN). |
· | Performed the function of compliance officer of Grupo Aval, thereby ensuring compliance with the rules of SARLAFT. |
● Financial Vicepresidency
· | Analysis of performance of the investments controlled by Grupo Aval against competition and their budgets. |
· | Evaluation of potential opportunities of acquisition or sale. |
· | Follow up of trends in the financial sector in order to develop strategies that will bring about greater value to the shareholders of the group. |
· | Follow up of trends of financial activity in comparable countries. |
● Vicepresidency of Accounting Consolidation
· | Monitoring and analysis of financial performance of Grupo Aval vs. budget. |
· | Stabilization of the Oracle Hyperion tool for corporate consolidation. |
· | Stabilization of ERP SAP for management and accounting of the approval of AVAL headquarters. |
· | Daily follow up of performance of the entities in which Grupo Aval has direct investment. |
· | Report generation including comparisons of entities of the Colombian financial sector. |
· | Control of Grupo Aval Treasury operations. |
● Corporate Comptroller
The Corporate Comptroller carried out audit visits during the first semester of 2012, according to the annual plan submitted to the Chairman of the Grupo. The Comptroller paid visits to some subsidiaries of the entities and to a company in which Corficolombiana has capital investments. Likewise, follow-up activities were carried out to review the implementation of the action plans of improvement of some entities.
Equally, were given guidelines to the entities of the group, in matters related to auditing, control and security of information.
● Internal Audit
During the first semester or 2012 the Internal Audit Department led and executed valuations
11
pursuant to the Working Plan adopted by the Internal Auditing Committee of Grupo Aval.
Additionally, it was made the follow-up of action plans and other activities aimed at strengthening the Internal Control System of the entity.
Exercise Results - Grupo Aval Acciones y Valores S.A
Grupo Aval main financial results for the first semester of 2012 were:
Assets
On June 30, 2012, the total assets of Grupo Aval amounted to $19 billion 373,386 million, with an increase of 69.6% over the balance as of June 30, 2011 ($11 billion 423,630 million) and of 2.5% above the balance on December 31, 2011 ($18 billion 897,256 million). The assets of the company are represented mainly by its investments in Banco de Bogotá, Banco de Occidente, Banco Popular, Banco Comercial AV Villas and Sociedad Administradora de Fondos de Pensiones y Cesantías Porvenir.
Liabilities
The total liabilities of Grupo Aval on June 30, 2012, amounted to $2 billion 335,896 million, with a decrease of 14.0% over the balance as of June 30, 2011 ($2 billion 716,591 million) and a 14.1% over the balance as of December 31, 2011 ($2 billion 718,886 million). The most significant liabilities of Grupo Aval are represented by bonds issued by the company which balance on 30 June amounted to $850,000 million and credits acquired with related companies that amounted to $1 billion 153,750 million.
Shareholder´s Equity
At the end of the first semester of the year 2012, the net worth of Grupo Aval amounted to $17 billion 37,490 million, an increase of 95.7% over the balance on June 30, 2011 ($8 billion 707,039 million) and an increase of 5.3% compared with the balance recorded on 31 December 2011 ($16 billion 178,370 million).
Net Income
At the end of the first semester of year 2012, Grupo Aval reported profits for $722,574 million, more than $139,916 million (24.0%) than in the first semester of 2011 ($582,658 million) and $55,013 million higher (8.2%) than the results obtained at the end of the second semester of 2011 ($667,562 million).
Risk Rating
Given the financial strength of Grupo Aval, BRC Investor Services S.A. ratified in November 2011 the AAA rating of the ordinary bonds issued for $944,700 million. This rating demonstrates the highest credit quality and the highest certainty of payment, as well as the almost total absence of risk factors.
Results of the Main Investments of Grupo Aval
As of 30 June 2012, Grupo Aval had direct investments in the following institutions supervised by the Colombian Superintendency of Finance:
Banco de Bogotá S.A.
Grupo Aval is the owner of 64.4% of the common stock of Banco de Bogotá. The total assets of the Bank as of 30 June 2012 were $46 billion 407,275 million and its net worth on the same date amounted to $8 billion 351,035 million. During the first semester of 2012, the Bank recorded net earnings of $617,692 million, representing an increase of 21.9% compared to the first semester of 2011 ($506,657 million) and 4.0% compared to the second semester of 2011 ($593,740 million).
Banco de Bogotá has AAA rating for its long-term debt by BRC Investor Services S.A., which indicates that the ability to pay timely principal and interest is extremely high. This is the highest category in investment grade. For its short-term debt the Bank has a rating of BRC1 + which is the highest category of investment grades. This indicates that the probability of timely repayment, for both capital and interest, is extremely high.
12
Banco de Occidente S.A.
Grupo Aval owns 68.2% of the common stock of Banco de Occidente, entity which, at the end of 30 June 2012, recorded total assets of $22 billion 267,996 million and a patrimony of $3 billion 108,485 million. During the first semester of 2012, the Bank earned net profits of $223,616 million, an increase of 4.3% compared to earnings of the first semester of 2011 ($214,342 million) and a decrease of 1.5% compared to the figure for the second semester of 2011 ($226,938 million).
Banco de Occidente is rated AAA for long-term debt by BRC Investor Services S.A., which indicates that the ability to pay timely both principal and interest is extremely high. This is the highest investment grade category. For its short-term debt the Bank has a rating of BRC1 + which is the highest investment grade category. This indicates that the probability o timely repayment, for both capital and interest, is extremely high.
Banco Comercial AV Villas S.A.
Direct ownership participation of Grupo Aval in Banco Comercial AV Villas is of 79.9%. On 30 June 2012, Banco AV Villas presented total assets by $8 billion 216,497 million and netr-worth of $986,725 million. During the first semester of 2012, the Banco Comercial AV Villas accumulated earnings by $81,442 million, an increase of 8.5% compared to the earnings of the first semester of 2011, which was $75,052 million and a decrease of 9.5% compared to the one recorded during the second semester of 2011 ($90,022 million).
Banco AV Villas rated AAA for long-term debt by BRC Investor Services S.A., which indicates that the ability to pay timely both principal and interest is extremely high. This is the highest investment grade category. For its short-term debt the Bank has a rating of BRC1 + which is the highest investment grade category. This indicates that the probability of timely repayment, for both capital and interest, is extremely high.
Banco Popular S.A.
Grupo Aval is the owner 93.7% of the common stock of Banco Popular. The total assets of the Bank to 30 June 2012 was $14 billion 708,386 million and its heritage at the same date amounted to $1 billion 938,750 million. During the first semester of 2012, the Bank recorded net earnings of $180,629 million, representing a decrease of 6.5% compared to the first semester of 2011 earnings ($193,212 million) and an increase of 4.2% compared to the one registered in the second semester of 2011($173,333 million).
Banco Popular rated AAA rating for long-term debt by BRC Investor Services S.A., which indicates that the ability to pay timely both principal and interest is extremely high. This is the highest investment grade category. For its short-term debt the Bank has a rating of BRC1 + which is the highest investment grade category. It indicates that the probability of timely repayment, for both capital and interest, is extremely high.
Sociedad Administradora de Fondos de Pensiones y Cesantías Porvenir S.A.
Grupo Aval is the direct owner of 20.0% in Porvenir; on the other hand, Banco de Bogotá, Banco de Occidente and some of its subsidiaries are the owners of the remaining 80.0%. Porvenir is the leading private administrator of severance and pension funds in Colombia, with a market share of mandatory pensions of 27.9% and 33.7% in the severance market at 30 June 2012. At the end of June 2012, Porvenir had 3,341,474 members in mandatory pension, 1,804,681 in severance pay and held assets in administration for a total of $35 billion 449,946 million.
By June 2012, Porvenir posted total assets of $929,608 million and equity of $690,665 million. The accumulated income in the semester amounted to $106,552 million, an increase of 39.3% compared to the first semester of 2011 ($76,472 million) and an increase of 38.7% compared to the accumulated during the second semester of 2011 ($76,847 million).
Porvenir S.A. has a AAA rating from BRC Investor Services, which shows that the company presents an exceptional financial condition and operational capacity and positioning in the market. The weaknesses are mitigated and neutralized by the strengths of the organization.
Corporación Financiera Colombiana S.A. (Corficolombiana)
Grupo Aval, through Banco de Bogotá, Banco de Occidente and Banco Popular holds indirect
13
investments in Corporacion Financiera Colombiana S.A. (Corficolombiana), an entity engaged the administration of an important investment portfolio in companies of the real and financial sectors and to rendering of consulting services in the field of investment banking.
At the closing of June 2012, Corficolombiana reported total assets of $9 billion 67,579 million and its net equity amounted to $3 billion 19,117 million. During the first semester of 2012 Corficolombiana posted net income for $277,957 million, a decrease of 24.3% if compared to that obtained in the first semester of 2011 ($367,377 million) and an increase of 26.1% compared to those recorded during the second semester of 2011 ($220,360 million).
Corficolombiana rated AAA for long-term debt by BRC Investor Services S.A., which indicates that the ability to pay timely both principal and interest is extremely high. This is the highest investment grade category. For its short-term debt the Bank has a rating of BRC1 + which is the highest investment grade category. It indicates that the probability of timely repayment, for both capital and interest, is extremely high.
Results of Entities in which Grupo Aval holds a Direct Investment
The following is the analysis of the main captions of the financial statements of the entities in which Grupo Aval holds direct investment during the first semester of 2012.
Gross Financial Margin
During the first semester of 2012, the gross financial margin reported by the entities in which Grupo Aval holds direct investment amounted to $3 billion 250,629 million, 10.5% higher to that obtained between January and June, 2011 ($2 billion 940,741 million) and 1.8% lower than the one presented at the end of the second semester of 2011 ($3 billion 309,941 million).
Gross Financial | Variation % | Variation % | ||||||||||||||||||||||
Margin* | 1S - 2012 Vs | 1S - 2012 Vs | ||||||||||||||||||||||
(Million pesos) | 2S - 2010 | 1S - 2011 | 2S - 2011 | 1S - 2012 | 1S - 2011 | 2S - 2011 | ||||||||||||||||||
Banco de Bogotá | 1,248,051 | 1,322,184 | 1,669,217 | 1,491,484 | 12.8 | -10.6 | ||||||||||||||||||
Banco de Occidente | 654,911 | 722,592 | 748,362 | 815,289 | 12.8 | 8.9 | ||||||||||||||||||
Banco Popular | 521,565 | 550,123 | 548,200 | 571,172 | 3.8 | 4.2 | ||||||||||||||||||
Banco AV Villas | 350,253 | 345,842 | 344,162 | 372,683 | 7.8 | 8.3 | ||||||||||||||||||
Total | 2,774,780 | 2,940,741 | 3,309,941 | 3,250,628 | 10.5 | -1.8 |
* Net income on account of interest plus net income different from interest
Figures accumulated for each semester.
Source: Colombian Superintendency of Finance.
Deposits and Liabilities
Consolidated deposits from entities in which Grupo Aval holds direct investment amounted to $59 billion 77,032 million as of the balance closing of June 2012, a 12.1% higher than the balance of June 2011 ($52 billion 710,610 million) and 5.8% higher than the December balance ($55 billion 859,421 million); the behavior of entities in which Grupo Aval has direct investment fell below that of the overall financial system, which posted deposits increase by 16.3% from June 2011 to June 2012 and 4.7% between December 2011 and June 2012. As a result of the above, the entities in which Grupo Aval holds direct investment, posted market share of 28.4% in terms of deposits and liabilities. Noteworthy id the participation of savings deposits and CDTs in total funds captured, which rose to 47.3% and 28.3% respectively, of the overall mix.
Deposits and | December | June | December | June | ||||||||||||||||||||||||||||
Liabilities | 2010 | % | 2011 | % | 2011 | % | 2012 | % | ||||||||||||||||||||||||
(Million pesos) | ||||||||||||||||||||||||||||||||
Checking Account | 12,702,902 | 26.2 | 11,951,081 | 22.7 | 13,752,140 | 24.6 | 13,805,787 | 23.4 | ||||||||||||||||||||||||
Saving Deposits | 24,089,813 | 49.8 | 27,897,486 | 52.9 | 27,126,772 | 48.6 | 27,951,699 | 47.3 | ||||||||||||||||||||||||
CDT | 10,796,626 | 22.3 | 12,248,530 | 23.2 | 14,137,260 | 25.3 | 16,711,299 | 28.3 | ||||||||||||||||||||||||
Other | 828,528 | 1.7 | 613,514 | 1.2 | 843,249 | 1.5 | 608,247 | 1.0 | ||||||||||||||||||||||||
Total | 48,417,869 | 100.0 | 52,710,610 | 100.0 | 55,859,421 | 100.0 | 59,077,032 | 100.0 |
Balance outstanding at the end of each period
Source: Colombian Superintendency of Finance.
14
Past due Loan Portfolio, Loan Loss Provisions and Loan Loss Coverage Ratio
At the closing of the first semester of 2012, the loan loss coverage ratio of entities in which Grupo Aval holds direct investment was 2.2%, lower by 12 base points than the ratio registered in June, 2011 and higher by 20 basis points for the same category on December 31, 2011 (2.0%). The past due loan ratio of the overall financial system reached a level of 2.9% at June 30, 2012.
Past due loans | December | Ratio* | June | Ratio* | December | Ratio* | June | Ratio* | ||||||||||||||||||||||||
(Million pesos) | 2010 | % | 2011 | % | 2011 | % | 2012 | % | ||||||||||||||||||||||||
Banco de Bogotá | 497,721 | 2.2 | 480,792 | 1.9 | 438,708 | 1.6 | 525,012 | 1.8 | ||||||||||||||||||||||||
Banco de Occidente | 328,267 | 2.8 | 383,393 | 2.9 | 362,111 | 2.5 | 407,053 | 2.6 | ||||||||||||||||||||||||
Banco Popular | 209,985 | 2.4 | 216,295 | 2.3 | 209,513 | 2.1 | 260,017 | 2.3 | ||||||||||||||||||||||||
Banco AV Villas | 151,428 | 3.4 | 149,235 | 3.2 | 142,340 | 2.8 | 170,299 | 3.1 | ||||||||||||||||||||||||
Total | 1,187,401 | 2.5 | 1,229,715 | 2.4 | 1,152,672 | 2.0 | 1,362,381 | 2.2 |
* Past due loans / Gross Loan Portfolio
Source: Colombian Superintendency of Finance.
At the closing of the first semester of 2012, outstanding loan loss provisions in entities in which Grupo Aval holds direct investment grew 9.2% compared to June of 2011 and 5.7% compared to December 2011, lower than the increase posted by the gross loan portfolio of these banks.
Variation % | Variation % | |||||||||||||||||||||||
Loan Loss Provisions | December | June | December | June | Jun 12 Vs | Jun 12 Vs | ||||||||||||||||||
(Million pesos) | de 2010 | 2011 | de 2011 | 2012 | Jun 11 | Dic 11 | ||||||||||||||||||
Banco de Bogotá | 793,117 | 800,920 | 852,821 | 893,513 | 11.6 | 4.8 | ||||||||||||||||||
Banco de Occidente | 535,254 | 553,390 | 572,519 | 604,944 | 9.3 | 5.7 | ||||||||||||||||||
Banco Popular | 360,141 | 378,287 | 388,562 | 423,215 | 11.9 | 8.9 | ||||||||||||||||||
Banco AV Villas | 255,501 | 260,615 | 243,636 | 253,952 | -2.6 | 4.2 | ||||||||||||||||||
Total | 1,944,013 | 1,993,212 | 2,057,538 | 2,175,624 | 9.2 | 5.7 |
Balance as of the closing of the period
Source: Colombian Superintendency of Finance.
In terms of loan loss coverage ratio, Banco de Bogotá and Banco Popular continue to report ample and healthy coverage levels, 170.2% and 162.8%, respectively, higher than the 160.1% reported by the sector on June 2012.
Coverage of Overdue | December | June | December | June | ||||||||||||
Receivables %* | 2010 | 2011 | 2011 | 2012 | ||||||||||||
Banco de Bogotá | 159.3 | 166.6 | 194.4 | 170.2 | ||||||||||||
Banco de Occidente | 163.1 | 144.3 | 158.1 | 148.6 | ||||||||||||
Banco Popular | 171.5 | 174.9 | 185.5 | 162.8 | ||||||||||||
Banco AV Villas | 168.7 | 174.6 | 171.2 | 149.1 | ||||||||||||
Total | 163.7 | 162.1 | 178.5 | 159.7 |
* Provisions of Receivables / Overdue Receivables.
Source: Colombian Superintendency of Finance.
Total Loss Provisions
The gross expense allocated to loss reserves for the first semester of 2012 of the entities in which Grupo Aval has direct investment amounted to $1 billion 47,309 million, as shown in the table below. In addition, recoveries, charge offs, reacquisition of securitized portfolio, earnings from sale of assets and reclassification of investments to fiduciary rights amounted to $904,888 million. In summary, net charge in loss reserves during the first semester of 2012 was $142,420 million, an increase of $86,053 million when compared to net changes registered during the first semester of 2011, which was $56,365 million.
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Provisions
Changes between december 31, 2011 and june 30, 2012
Figures in $Million
Banco de | Banco de | Banco Comercial | Banco | Total | ||||||||||||||||
Bogotá | Occidente | AV Villas | Popular | |||||||||||||||||
Loan Loss Provisions | ||||||||||||||||||||
Balance at Dec. 31, 2011 | 852,821 | 572,519 | 243,636 | 388,562 | 2,057,538 | |||||||||||||||
(+) Allocation Charged to Expenses | 397,019 | 282,348 | 122,849 | 157,847 | 960,063 | |||||||||||||||
(+)Equity Transfer Megabanco | 5,486 | - | - | - | 5,486 | |||||||||||||||
(-) Recoveries | 250,896 | 168,436 | 71,127 | 101,703 | 592,162 | |||||||||||||||
(-) Charge offs | 110,917 | 81,487 | 41,406 | 21,491 | 255,301 | |||||||||||||||
Net change | 40,692 | 32,425 | 10,316 | 34,653 | 118,086 | |||||||||||||||
Balance at Jun. 30/12 | 893,513 | 604,944 | 253,952 | 423,215 | 2,175,624 |
Provision for Investments | ||||||||||||||||||||
Balance Dic. 31/11 | 769 | - | 2,110 | - | 2,879 | |||||||||||||||
(+) Allocation Charged to Expenses | 37 | - | 79 | - | 116 | |||||||||||||||
(-) Recoveries | 98 | - | - | - | 98 | |||||||||||||||
Net change | (61 | ) | - | 79 | - | 18 | ||||||||||||||
Balance at June. 30/12 | 708 | - | 2,189 | - | 2,897 |
Provision for foreclosed assets | ||||||||||||||||||||
Balance at Dic. 31/11 | 56,329 | 17,710 | 7,716 | 28,244 | 109,999 | |||||||||||||||
(+) Allocation Charged to Expenses | 6,437 | 2,672 | 684 | 1,432 | 11,225 | |||||||||||||||
(-) Recoveries | 282 | 2,134 | 476 | 706 | 3,598 | |||||||||||||||
(-) Utilization for Sale of Goods | 320 | - | 73 | 225 | 618 | |||||||||||||||
Net Change | 5,835 | 538 | 135 | 501 | 7,009 | |||||||||||||||
Balance at Jun. 30/12 | 62,164 | 18,248 | 7,851 | 28,745 | 117,008 |
Provision for Accounts Receivable | ||||||||||||||||||||
Balance at Dec. 31/11 | 70,701 | 29,340 | 16,358 | 19,946 | 136,345 | |||||||||||||||
(+) Allocation Charged to Expenses | 30,931 | 26,389 | 6,668 | 8,197 | 72,185 | |||||||||||||||
(+) Tran Equity Transfer Megabanco | 271 | - | - | - | 271 | |||||||||||||||
(-) Recoveries | 11,518 | 11,718 | 3,245 | 5,683 | 32,164 | |||||||||||||||
(-) Charge offs | 12,045 | 10,124 | 1,684 | 883 | 24,736 | |||||||||||||||
Net Changes | 7,639 | 4,547 | 1,739 | 1,631 | 15,556 | |||||||||||||||
Balance at Jun. 30/12 | 78,340 | 33,887 | 18,097 | 21,577 | 151,901 |
Provision for Property, Plant and Equipment and Other | ||||||||||||||||||||
Balance at Dec. 31, 2011 | 2,729 | 5,334 | 2,167 | 565 | 10,795 | |||||||||||||||
(+) Allocation Charged to Expenses | - | 2,187 | 130 | 1,403 | 3,720 | |||||||||||||||
(-) Recoveries | - | 1,459 | 1 | - | 1,460 | |||||||||||||||
Net Movement | - | 728 | 129 | 1,403 | 2,260 | |||||||||||||||
Balance at Jun. 30/12 | 2,729 | 6,062 | 2,296 | 1,968 | 13,055 |
Provision for Other Assets under fiduciary rights | ||||||||||||||||||||
Balance at Dec. 31/11 | 2,398 | - | 9,481 | 14,501 | 26,380 | |||||||||||||||
(-) Recoveries | - | - | 509 | - | 509 | |||||||||||||||
Net change | - | - | (509 | ) | - | (509 | ) | |||||||||||||
Balance at June 30, 2012 | 2,398 | - | 8,972 | 14,501 | 25,871 |
Total | ||||||||||||||||||||
Balance at Dec. 31/11 | 985,747 | 624,903 | 281,468 | 451,818 | 2,343,936 | |||||||||||||||
(+) Allocation Charged to Expenses | 434,424 | 313,596 | 130,410 | 168,879 | 1,047,309 | |||||||||||||||
(+) Equity Transfer Megabanco | 5,757 | - | - | - | 5,757 | |||||||||||||||
(-) Recoveries | 262,794 | 183,747 | 75,357 | 108,092 | 629,990 | |||||||||||||||
(-) Charge offs | 122,962 | 91,611 | 43,090 | 22,374 | 280,037 | |||||||||||||||
(-) Utilization Sale of Goods | 320 | - | 73 | 225 | 618 | |||||||||||||||
Net Change | 54,105 | 38,238 | 11,890 | 38,188 | 142,420 | |||||||||||||||
Balance at Jun. 30/12 | 1,039,852 | 663,141 | 293,358 | 490,006 | 2,486,356 |
Foreclosed Assets (BPRs)
During the first semester of 2012, the outstanding gross BRPs balance for entities in which Grupo Aval has direct investment, increased $26,564 million, from $149,278 million to $175,843 million. Net BRPs of entities in which Grupo Aval has direct investment corresponds to 22.4% of the total for the banking system, an amount below their market share; it is worth mentioning that during the period in question, the entities made gross BRPs sales for a value of $10,057 million.
16
Foreclosed Assets (BRPs)
Changes between december 31, 2011 and june 30, 2012
Figures in $Millones
Banco de | Banco de | Banco Comercial | Banco | Total | ||||||||||||||||
Bogotá | Occidente | AV Villas | Popular | |||||||||||||||||
GROSS BRPs | ||||||||||||||||||||
Real Estate Holdings | ||||||||||||||||||||
Balance at Dic. 31, 2011 | 61,564 | 22,739 | 11,446 | 31,115 | 126,864 | |||||||||||||||
(+) Assets Received | 2,281 | 19,674 | 1,360 | 2,227 | 25,542 | |||||||||||||||
(-) Assets Sold | 1,532 | 3,534 | 1,340 | 1,395 | 7,801 | |||||||||||||||
Net change | 749 | 16,140 | 20 | 832 | 17,741 | |||||||||||||||
Balance at Jun. 30/12 | 62,313 | 38,879 | 11,466 | 31,947 | 144,605 |
Movable Assets and Securities | ||||||||||||||||||||
Balance at Dec. 31, 2011 | 12,378 | 4,880 | 214 | 4,942 | 22,414 | |||||||||||||||
(+) Assets Received | 9,065 | 1,366 | 3 | 645 | 11,079 | |||||||||||||||
(-) Assets Sold | 392 | 1,421 | - | 443 | 2,256 | |||||||||||||||
Net Change | 8,673 | (55 | ) | 3 | 202 | 8,823 | ||||||||||||||
Balance at June 30, 2012 | 21,051 | 4,825 | 217 | 5,144 | 31,237 |
Total Gross Foreclosed assets | ||||||||||||||||||||
Balance at Dic. 31, 2011 | 73,942 | 27,619 | 11,660 | 36,057 | 149,278 | |||||||||||||||
(+) Assets Received | 11,346 | 21,040 | 1,363 | 2,872 | 36,621 | |||||||||||||||
(-) Assets Sold | 1,924 | 4,955 | 1,340 | 1,838 | 10,057 | |||||||||||||||
Net change | 9,422 | 16,085 | 23 | 1,034 | 26,564 | |||||||||||||||
Balance Jun. 30/12 | 83,364 | 43,704 | 11,683 | 37,091 | 175,842 |
BRP PROVISIONS | ||||||||||||||||||||
Balance at Dec. 31, 2011 | 54,846 | 17,710 | 7,684 | 28,244 | 108,484 | |||||||||||||||
(+) Allocations charged to P & L | 6,437 | 2,672 | 672 | 1,432 | 11,213 | |||||||||||||||
(-) Utilization for Sale of Assets | 320 | - | 73 | 225 | 618 | |||||||||||||||
(-) Recoveries | 281 | 2,134 | 476 | 706 | 3,597 | |||||||||||||||
Net changes | 5,836 | 538 | 123 | 501 | 6,998 | |||||||||||||||
Balance at June 30, 2012 | 60,682 | 18,248 | 7,807 | 28,745 | 115,482 |
NET BRPs | ||||||||||||||||||||
Balance at Dec. 31, 2011 | 19,096 | 9,909 | 3,976 | 7,813 | 40,794 | |||||||||||||||
(+) Net Variation- Gross Foreclosed Assets | 9,422 | 16,085 | 23 | 1,034 | 26,564 | |||||||||||||||
(-) Net Variation BRP provisions | 5,836 | 538 | 123 | 501 | 6,998 | |||||||||||||||
Total Net changes | 3,586 | 15,547 | (100 | ) | 533 | 19,566 | ||||||||||||||
Balance at June 30, 2012 | 22,682 | 25,456 | 3,876 | 8,346 | 60,360 |
Personnel Expenses
Consolidated personnel expenses as a percentage of consolidated gross financial margin of entities in which Grupo Aval holds direct investment in the first semester of 2012 reached 18.0%, a ratio lower than that obtained by these entities in June 2011 (18.4%), and higher than the December ratio (17.0%); the ratio for the overall financial system was 20.1% at the closing of the first semester of 2012. Personnel expenses for the entities in which Grupo Aval has direct investment, amounted to $586,289 million during the first semester of 2012, higher than those of the first semester of 2011 at 8.5% and higher at 3.9% when compared to those of the second semester of 2011.
Variation % | Variation % | |||||||||||||||||||||||
Personnel Expenses* | 1S - 2012 Vs | 1S - 2012 Vs | ||||||||||||||||||||||
(Million pesos) | 2S - 2010 | 1S - 2011 | 2S - 2011 | 1S - 2012 | 1S - 2011 | 2S - 2011 | ||||||||||||||||||
Banco de Bogotá | 200,721 | 210,472 | 219,703 | 232,626 | 10.5 | 5.9 | ||||||||||||||||||
Banco de Occidente | 142,147 | 146,404 | 158,272 | 161,845 | 10.5 | 2.3 | ||||||||||||||||||
Banco Popular | 92,158 | 112,117 | 112,971 | 115,993 | 3.5 | 2.7 | ||||||||||||||||||
Banco AV Villas | 66,500 | 71,237 | 73,213 | 75,824 | 6.4 | 3.6 | ||||||||||||||||||
Total | 501,526 | 540,230 | 564,159 | 586,288 | 8.5 | 3.9 | ||||||||||||||||||
GFM | 2,774,780 | 2,940,741 | 3,309,941 | 3,250,629 | ||||||||||||||||||||
% Personnel Expenses Vs GFM | 18.1 | 18.4 | 17.0 | 18.0 |
MFB: Gross Financial margin.
*Accumulated figures for each semester
Source: Colombian Superintendency of Finance.
Direct and Indirect Taxes and Law Contributions
During the first semester of 2012, income and complementary taxes accrued by the entities in which Grupo Aval has direct investment and their subsidiaries amounted to $577,836 million, a figure which
17
represents an increase of 21.8% compared to the amount registered during the same period in 2011 ($474,332 million) and an increase of 15.4% compared to the second semester of 2011 ($500,653 million). The applicable Effective Tax Rate (ETR) to entities in which Grupo Aval has direct investment amounted to 28.2%, higher than the average ETR of the financial sector which for the same period, reached 24.7%.
Income Tax* | 2S-2010 | 1S-2011 | 2S-2011 | 1S-2012 | Variation % | |||||||||||||||||||||||||||||||||||
And ETR | Income | Income | Income | Income | 1S - 2012 | 1S - 2012 | ||||||||||||||||||||||||||||||||||
(Million pesos) | Tax | ETR % | Tax | ETR % | Tax | ETR % | Tax | ETR % | 1S - 2011 | 2S - 2011 | ||||||||||||||||||||||||||||||
Banco de Bogotá | 145,127 | 27.0 | 157,833 | 23.8 | 169,570 | 22.2 | 202,226 | 24.7 | 28.1 | 19.3 | ||||||||||||||||||||||||||||||
Banco de Occidente | 71,248 | 26.1 | 70,463 | 24.7 | 61,254 | 21.3 | 98,948 | 30.7 | 40.4 | 61.5 | ||||||||||||||||||||||||||||||
Banco Popular | 67,695 | 29.0 | 88,045 | 31.3 | 80,962 | 31.8 | 85,978 | 32.2 | (2.3 | ) | 6.2 | |||||||||||||||||||||||||||||
Banco AV Villas | 25,442 | 24.5 | 35,659 | 32.2 | 39,254 | 30.4 | 32,863 | 28.8 | (7.8 | ) | (16.3 | ) | ||||||||||||||||||||||||||||
Porvenir | 43,792 | 34.0 | 43,462 | 36.2 | 43,302 | 36.0 | 54,992 | 34.0 | 26.5 | 27.0 | ||||||||||||||||||||||||||||||
Subtotal Grupo Aval Entities | 353,304 | 27.7 | 395,462 | 27.1 | 394,342 | 25.4 | 475,007 | 28.2 | 20.1 | 20.5 | ||||||||||||||||||||||||||||||
Affiliates of Grupo Aval Entities** | 71,092 | 14.3 | 78,870 | 13.3 | 106,311 | 22.4 | 102,828 | 16.6 | 30.4 | (3.3 | ) | |||||||||||||||||||||||||||||
Total | 424,396 | 23.9 | 474,332 | 23.1 | 500,653 | 24.7 | 577,835 | 25.1 | 21.8 | 15.4 |
* Cumulative figures for each semester
** Affiliates of entities in which Grupo Aval holds direct investment include Fidubogotá, Casa de Bolsa, Corficol consolidated, Almaviva, Ventas y Servicios, Fiduoccidente, Alpopular and Fiduciaria Popular.
Also, if to the income tax and complementary are added multiple indirect taxes and other mandatory contributions, the entities in which Grupo Aval holds direct investment and its subsidiaries accrued taxes for $928,827 million during the first semester of 2012, an increase of 13.8% compared to the same field in the first semester of 2011 ($816,279 million), and an increase of 11.3% compared to the same field for the second semester of year 2011 ($834,348 million). When comparing the tax figure mentioned for the first semester of 2012 with dividends paid during the same period by the entities in which Grupo Aval holds direct investment, there is an evident disproportion when we observe that during the first semester of 2012, the entities paid dividends for $551,559 million, while they contributed $928,827 million in taxes. In other words, during the first semester of 2012 for each peso that entities related to Grupo Aval paid to shareholders, they had to pay one peso and 68 cents to the State.
Direct and Indirect Taxes, Law Contributions*, ETR an Paid Dividends
2S - 2010 | 1S - 2011 | 2S - 2011 | 1S - 2012 | |||||||||||||||||||||||||||||||||||||||||||||
Taxes | Paid | Taxes | Paid | Taxes | Paid | Taxes | Paid | |||||||||||||||||||||||||||||||||||||||||
(Million pesos) | (1) | ETR % | Dividends | (1) | ETR % | Dividends | (1) | ETR % | Dividends | (1) | ETR % | Dividends | ||||||||||||||||||||||||||||||||||||
Banco de Bogotá | 235,459 | 37.5 | 188,678 | 283,761 | 35.9 | 211,335 | 300,459 | 33.6 | 234,171 | 343,236 | 35.7 | 247,827 | ||||||||||||||||||||||||||||||||||||
Banco de Occidente | 119,578 | 37.2 | 88,254 | 133,379 | 38.4 | 94,037 | 127,509 | 36.0 | 97,592 | 169,274 | 43.1 | 104,895 | ||||||||||||||||||||||||||||||||||||
Banco Popular | 108,799 | 39.6 | 76,636 | 133,625 | 40.9 | 84,794 | 136,189 | 44.0 | 86,035 | 136,394 | 43.0 | 87,410 | ||||||||||||||||||||||||||||||||||||
Banco AV Villas | 49,667 | 38.8 | 31,264 | 66,562 | 47.0 | 32,686 | 73,385 | 44.9 | 35,474 | 67,968 | 45.5 | 35,504 | ||||||||||||||||||||||||||||||||||||
Porvenir | 53,150 | 38.5 | 70,584 | 62,347 | 44.9 | 83,366 | 62,348 | 44.8 | 80,508 | 58,678 | 35.5 | 75,923 | ||||||||||||||||||||||||||||||||||||
Subtotal Entities | ||||||||||||||||||||||||||||||||||||||||||||||||
Grupo Aval | 566,653 | 38.0 | 455,416 | 679,674 | 38.9 | 506,218 | 699,890 | 37.6 | 533,780 | 775,550 | 39.1 | 551,559 | ||||||||||||||||||||||||||||||||||||
Affiliates of | ||||||||||||||||||||||||||||||||||||||||||||||||
Grupo Aval entities ** | 100,475 | 136,605 | 134,458 | 153,277 | ||||||||||||||||||||||||||||||||||||||||||||
Total | 667,128 | 33.1 | 455,416 | 816,279 | 34.0 | 506,218 | 834,348 | 35.3 | 533,780 | 928,827 | 35.0 | 551,559 |
* accumulated figures for each semester
ETR –Effective Tax Rate- calculated as accrual of direct, indirect taxes and mandatory contributions on profits before direct taxes, indirect and mandatory contributions .
(1) | Includes income and complementary tax, tax on net worth, contribution to Superintendencias Financiera y de Sociedades deposit insurance, indirect taxes and tax on financial transactions (non-deductible VAT, industry and commerce, land property, surcharges and others; 50% tax on remunerated deposit reserve requirement, Registry and Filing). |
** Affiliate of the entities in which Grupo Aval holds direct investment include: Fidubogota, Casa de Bolsa, Corficol Consolidado, Almaviva, Ventas y Servicios, Fiduoccidente, Alpopular and Fiduciaria Popular.
Net Income
As a result of the above, during the first semester of 2012 entities in which Grupo Aval holds direct investment posted consolidated net earnings of $1 billion 209,931 million ($1 billion 103,379 million excluding Porvenir), showing an increase of 13.5% compared to $1 billion 65,735 million during the first semester of the year 2011 ($989,263 million excluding Porvenir) and 4.2% when compared with the $1 billion 160,880 billion for these entities during the second semester of 2011 ($1 billion 84,033 million excluding Porvenir).
18
Variation % | Variation % | |||||||||||||||||||||||
Net Income* | 1S - 2012 Vs | 1S - 2012 Vs | ||||||||||||||||||||||
(Million pesos) | 2S - 2010 | 1S - 2011 | 2S - 2011 | 1S - 2012 | 1S - 2011 | 2S - 2011 | ||||||||||||||||||
Banco de Bogotá | 393,181 | 506,657 | 593,740 | 617,692 | 21.9 | 4.0 | ||||||||||||||||||
Banco de Occidente* | 202,020 | 214,342 | 226,938 | 223,616 | 4.3 | -1.5 | ||||||||||||||||||
Banco Popular | 165,730 | 193,212 | 173,333 | 180,629 | -6.5 | 4.2 | ||||||||||||||||||
Banco AV Villas | 78,439 | 75,052 | 90,022 | 81,442 | 8.5 | -9.5 | ||||||||||||||||||
Total sin Porvenir | 839,370 | 989,263 | 1,084,033 | 1,103,379 | 11.5 | 1.8 | ||||||||||||||||||
Porvenir | 84,966 | 76,472 | 76,847 | 106,552 | 39.3 | 38.7 | ||||||||||||||||||
Total con Porvenir | 924,336 | 1,065,735 | 1,160,880 | 1,209,931 | 13.5 | 4.2 |
Accumulated figures for each semester
Source: Colombian Superintendency of Finance.
Sociedad Administradora de Fondos de Pensiones y Cesantías Porvenir
During the first semester of 2012, the Sociedad Administradora de Fondos de Pensiones y Cesantias Porvenir maintained its leadership in the sector of Managers of Pension Funds and Severance, and reported earnings for $106,552 million representing the 47.6% of the total earnings obtained by the system of private managers of Pension Funds and Severance (AFP's). Additionally, by June 2012, in terms of the number of individuals affiliated to Porvenir, the company maintained its participation with 32.1% of the market of mandatory pension funds and 30.1 % of the total market of severance funds. By June, 2012 Porvenir managed funds totaling $35 billion 449,946 million, which represents a share in the market of 27.5% and growth of 9.9% in this area vs. figures of closing of June 2011 ($32 billion 265,408 million) and 8.6% compared to figures for December 2011 ($32 billion 637,492 million).
Pension Fund and Severance Administration Companies Results
Members in | Total Value | |||||||||||||||||||||||||||||||
Net Income | Mandatory | Members in | Managed | |||||||||||||||||||||||||||||
1S - 2012 | Pension | Severance | Fund** | |||||||||||||||||||||||||||||
(Million pesos) | % Total | Fund * | % Total | Fund* | % Total | (Million pesos) | % Total | |||||||||||||||||||||||||
Porvenir | 106,552 | 47.6 | 3,341,474 | 32.1 | 1,804,681 | 30.1 | 35,449,946 | 27.5 | ||||||||||||||||||||||||
Protección | 23,857 | 10.7 | 2,246,782 | 21.6 | 1,287,082 | 21.5 | 33,641,043 | 26.1 | ||||||||||||||||||||||||
Horizonte | 39,370 | 17.6 | 1,846,334 | 17.8 | 1,600,293 | 26.7 | 19,331,077 | 15.0 | ||||||||||||||||||||||||
Citicolfondos | 27,627 | 12.3 | 1,634,313 | 15.7 | 605,186 | 10.1 | 16,933,093 | 13.1 | ||||||||||||||||||||||||
ING | (472 | ) | (0.2 | ) | 1,253,779 | 12.1 | 651,628 | 10.9 | 14,007,872 | 10.9 | ||||||||||||||||||||||
Skandia | 27,000 | 12.1 | 78,003 | 0.7 | 42,178 | 0.7 | 9,640,342 | 7.5 | ||||||||||||||||||||||||
Total | 223,934 | 100.0 | 10,400,685 | 100.0 | 5,991,048 | 100.0 | 129,003,373 | 100.0 |
* Figures at june, 2012
** The value of the Funds managed include, Fondos de Pensiones Obligatorias, Fondos de Pensiones Voluntarias and Fondos de Cesantías.
Source: Superintendencia Financiera de Colombia y Asociación Colombiana de Fondos de Pensiones y Cesantías.
Foreseeable Evolution of Grupo Aval and its Controlled Entities
Economy
Notwithstanding the global economic crisis, the health of the financial system and related capital flow has not been seriously affected, and it is expected to keep the recovery initiated in 2011.
Development of the Company
Grupo Aval will continue to develop its strategy focused on the management of financial entities that are sector leaders in Colombia. It is specifically sought:
· | To achieve sustained growth in market positioning and profitability, both domestic and international. |
· | Reach organic growth above the market. |
· | Generate value for shareholders. |
· | Keep a solid equity position at the entities and at Grupo Aval as a company. |
· | Uphold the highest levels of administrative and operational efficiency. |
The different areas of Grupo Aval will continue to develop those tasks for which they are now currently responsible, as follows:
19
Vicepresidency of Corporate Systems
Permanent support of company activities and cooperation on projects of technological value for the Aval entities such as:
· | Aval Network of Services. |
· | Non- banking Correspondents. |
· | Bank Core. |
· | Accounting Consolidation. |
· | CRM (Customer Relationship Management). |
· | BI(Business Intelligence). |
· | New solution of Credit Card and process homologation |
· | Collections. |
· | Transactional Internet. |
· | Portals for Internet and Intranet. |
· | Cash Management. |
· | Telecommunications. |
· | Process Automation. |
· | Computer Security. |
· | Systems Management. |
· | Management of Technological Infrastructure. |
· | Backup Computer Centers. |
· | Integration of Technological Architecture by Services. |
· | Management of technological projects and technological support |
· | Training. |
· | Corporate negotiations with Suppliers. |
Vicepresidency - Risk
· | Development of tools to enable establishing the appropriate level of profitability of the loan portfolio, the appropriate structure for significant credit operations and the identification of concentrations in economic groups and sectors of the economy; |
· | Support in the area of operational risk (SARO, SARLAFT, PCN) in order to unify efforts, identify best practices, and achieve scale economies. |
· | Development of tools allowing for evaluation of aggregate risk of market and liquidity. |
Vicepresidency - Financial
Planning and monitoring of financial results of entities, recommending strategies and evaluating their performance.
Vicepresidency - Accounting Consolidation
· | Quality assurance in the process of consolidation of Grupo Aval and its direct and indirect affiliates. |
· | Stabilization of corporate accounting consolidation system. |
· | Stabilization of the system of accounting for the holding company. |
· | Implementation of best practices in the preparation of reports for the most significant investments of Grupo Aval and the financial statements of the company |
Corporate Comptroller
The Corporate Comptroller will continue with the implementation of the plan of auditing visits during the second semester of 2012. Also, pursue of follow-up activities verifying the implementation of the action plans proposed by the entities. Similarly, the Comptroller will issue to Group entities, good practices and guidelines deemed relevant, in relation to the issues of information security, audit and control.
20
Internal Audit
During the second semester of 2012, the Internal Audit Department will continue evaluating the entity's internal Control, measuring the effectiveness of the controls defined by the Administration, in each relevant process.
Moreover, it will continue reviewing compliance with policies defined by top management and the legal rules that apply, as well as the risk management process.
In addition, it will continue follow up on improvement plans proposed by the owners of processes, as a result of reports made and issued by this Audit.
Operations with Partners and Administrators
Operations carried out by Grupo Aval with its partners and administrators are properly specified in Note 24 of the financial statements.
Risks Faced by Grupo Aval
· | Domestic Macroeconomic Environment: The context in which Grupo Aval operates depends upon the macroeconomic adjustments designed by the national Government and its effects on the fiscal sustainability of the country. |
· | Regulatory changes: the continuous regulatory changes by different authorities of supervision and control, taxation and accounting, will continue affecting the expected returns of Grupo Aval and its subsidiaries. |
· | Market risk: the market volatility directly affects the price of the portfolios of Grupo Aval and its affiliates. |
· | External macroeconomic environment: the perception of other economies over the Colombian economy directly affects the price of negotiation of the Colombian securities, the rates that the Government must apply and potentially the value of the investment portfolios of the entities and the funds of the pension and severance fund manager, Administradora de Pensiones y Cesantías. |
Evolution of Share Price
Between December 2011 and June 2012, the share price moved from $1,250 to $1,140 a decrease of 8.8%. In the same period the IGBC rose 5.9%.
Important Post- Closing Events
Relevant events that have occurred are evidenced in note 33 of the individual financial statements which took place subsequent to June 30, 2012.
Statement of Compliance with Rules of Intellectual Property and Copyright
Pursuant to paragraph 4 of article 47 of Act 222, 1995, added by Act 603, 2000, Grupo Aval has fully applied the rules on intellectual property and copyright. Products and programs with copyright are duly licensed.
Regarding the legal status of the entity, its business and operations have been developed within the legal and statutory parameters, as well as in compliance with the principles of corporate governance adopted by the Company. Also, the Administration considers that in relation to ongoing proceedings against the company, it is not required the allocation of reserves.
21
Finally, I would like to acknowledge and thank the continued and dedicated efforts of all employees of Grupo Aval and its subordinates, without whom, it would not have been possible to achieve the results of this semester.
Yours very truly,
Luis Carlos Sarmiento Gutiérrez
President - Grupo Aval Acciones y Valores S.A.
This report has been accepted by the Board of Directors of Grupo Aval for its submission to the General Shareholders Meeting.
22
ANNEX No. 1
Main Regulatory Measures
During the first semester of 2012, were issued several regulations relevant to Grupo Aval Acciones y Valores and its subordinates, among which we highlight the following:
Laws
Law 1527, 2012: "Which sets out a general framework for clearance (bill of exchange) or direct discount and enacting other provisions"
The law establishes rules relating to the acquisition of products and financial services or goods and services of any kind through clearance, such as:
1. | There should be an express and irrevocable authorization of discounts by whoever acquires goods or services through the clearance. |
2. | The rate of interest agreed can only be modified by novation, refinancing or by changes in the labor situation of the debtor, and with the express consent of the debtor. |
3. | The wager or pensioner cannot receive less than 50% net of his/her salary or pension, after the legal discounts. |
4. | The Colombian Superintendency of Finance, of Companies and Solidarity Economy must have an information portal on the internet that will allow comparison of the rates of funding from institutions that offer loans through clearance. |
Law 1555, 2012 (although enacted in the month of July; it is included given its importance): "Whereby it is allowed to financial consumers the advance payment in credit operations and enacts other provisions":
Prepayment of credit in national currency operations is authorized by this Act for balances not exceeding the 800 smlmv, without any penalty. Additionally, it is pointed out that when partial payments are made the debtor shall have the right to decide if the payment is to be applied to capital with decrease in term or to capital decrease in the value of the installment. The benefits of the law only cover loans granted from the entry into force of the same.
Decrees
Ministry of Hacienda y Crédito Público
Decree 709 of April 10, 2012: "Amending the regime of investment of compulsory pension and severance funds resources established in title 12 of book 6 of part 2 of the Decree 2555 of 2010 and enacting other provisions":
It points out among others:
* | That limit applicable to the short-term operations on foreign currencies carried out by compulsory pension funds falls only upon dollars of the United States of America. The Financial Superintendent's Office will determine the value of the Fund to be taken into account for the purpose of calculation of the limit. |
* | Empowers the assemblies of investors to determine a period exceeding 6 months for the realization of the underlying assets in the settlement of the collective portfolios. |
Decree 947 of May 8, 2012: "which added Decree 2555, 2010, in the sense of authorizing investment in companies incorporated as operators of databases of financial, credit, trade, information services and from third countries".
23
Authorization is given to credit establishments, financial services companies and capitalization companies, to acquire shares in technical or administrative services societies constituted as operators of databases of financial, credit, trade, information services and from third countries referred to in Act 1266, 2008 (law of habeas data).
Ministry of Minas y Energia
Decree 51 of January 13, 2012: "establishing the procedure for distribution of financial returns generated by royalties and compensation".
The decree clearly establishes clearly in favor of who should be charged returns that generate resources drawn on account of royalties and compensation, as well as the procedure for the distribution.
Ministry of Vivienda, Ciudad y Territorio
Decree 391 of February 16, 2012: "which regulates the family housing subsidy applied to lease contracts earmarked for the acquisition of family housing and other provisions".
Sets the family housing subsidy in leasing contracts and is designated the procedure and the requirements that must be met for access
Colombian Superintendency of Finance
External memorandum 1 of 2012 (modified by external memo14 of 2012): "Exercise of political rights of the AFP in recipients of funds of mandatory pension and severance Fund investments".
Sets the minimum content that must contain the "policy of exercise of political rights" to be followed by AFP at the time of exercising the political rights in recipients of investments.
Some of the minimum requirements set out in the Circular are:
* | The adoption of the Politics of exercise of Political Rights" corresponds to the Board of Directors of the AFP. |
* | Representatives of the AFP for the exercise of their political rights must be persons of acknowledged responsibility and fitness. |
* | When at the meeting of the General Assembly of shareholders, an issuer of AFP votes in a manner contrary to the majority, he/she must justify your vote. |
* | In the policy it must be pointed out the criteria which AFP will take into account the AFP vote for candidates to the position of Member of Board of Directors and Auditor of the entity receiving the investment of the AFP. It shall be taken into account, as a minimum, qualifications, experience and independence (the AFP should establish a maximum number of times that they will support the re-election of an independent member of the Board of Directors). |
External memorandum 4 2012: "Reports of periodic and relevant information".
Are shown in instructions only the rules contained in external memo 003 of 2003 on basic information of issuers update through Internet, 003 information report 2007 on periodic and relevant and 020 2011 on remission of financial reporting by issuers of securities listed on the National Register of Securities and Issuers (RNVE), and enacts new provisions related to disclosure of information by such issuers.
External memorandum 6 2012: "Creation of the sixteenth chapter of the Title One of the basic legal Circular of the Superintendencia Financiera of Colombia, related to the supply of prices for valuation of investments of the supervised entities".
The memorandum points out that the "standard and professional rendering of the service of calculation, determination and supply or provision of information for the evaluation of investments, as well as the creation and issuance of the methodologies of assessment and valuation systems regulations, are exclusive activities of providers of prices for valuation organized in Colombia. They will be responsible for providing the information to entities subject to inspection and supervision by the Superintendency.
24
Financial Colombia must value its investments, in accordance with the provisions of article 2.16.1.1.2 of Decree 2555 of 2010 and the provisions of sets out the parameters that entities subject to inspection and supervision of the Financial Superintendent for the valuation of its investments should be followed.
External memorandum 12, 2012: "Instructions related to the rules and principles that must be observed for fixation, broadcasting and advertising rates and prices of products and financial services".
This Circular is addressed to the legal representatives of credit institutions, establishes certain rules and principles to be observed by the establishments of credit for fixation, broadcasting and advertising rates and prices of products and financial services.
External memorandum 13, 2012: "adds numeral 3 to chapter II of title IV and modifies the sub-numeral 3.3 of chapter II of title VI of the basic legal Circular in relation to new types of pension".
Through the Memorandum, whose recipients are the legal revisers and legal representatives of insurance companies life and societies administering pension funds and severance pay, the following types of pension are authorized:
· | Temporary income with certain deferred annuity. |
· | Temporary income with deferred life annuity. |
· | Retirement scheduled without negotiation of pension bonus. |
· | Temporary income with immediate life annuity. |
External memorandum 21 of 2012: "Special rules for managing credit risk on loans granted to the victims referred to in the Act 1448 of 2011, in accordance with the provisions of article 128 thereof".
The memorandum establishes instructions relating to the category of special risks applied to victims of the internal armed conflict that are registered in the "Unique log of victims" considered in Act 1448 2011.
External memorandum 22 2012: "Exercise of social rights by foreign investors in local securities inscribed in the national registry of securities and issuers - RNVE".
Through this memorandum the Financial Superintendent's Office gave instructions about the exercise of social rights embodied in local values of foreign investors that are listed in account without disaggregation at the level of final beneficiary in local repository, under the terms of the Decree 2555 of 2010. The given instructions include rules related to call the meetings of the General Assembly of shareholders of issuers, and with participation and vote on foreign investors in these meetings.
External memorandum 24 of 2012: "Modification to Chapter Three of title IV of the basic legal Circular of strategic asset allocation and investment policy".
Chapter Three of title IV of the legal basic Circular is amended "to include elements relating to conflicts of interest within the minimum content of the investment policies of the resources of the compulsory pension and severance funds administered by the Pension Fund and Severance Administration Companies provided for in paragraph 3.1.1 Literal I of the mentioned chapter".
External memorandum 26 in 2012: "Constitution of an additional individual reserve on the portfolio of consumption".
By means of this Circular, the Colombian Superintendency of Finance orders credit establishments and the Fondo Nacional del Ahorro the creation, on a temporary basis, of an additional individual provision consumer portfolio.
Circular letter 14, 2012: "request for information on progress in the process of convergence towards international norms of financial reporting and accounting (IFRS / IAS) and the impact thereof".
25
Through this Circular, the Colombian Superintendency of Finance delivered to the legal representatives and auditors of the entities subject to its supervision and the issuers of securities registered in the national registry of securities and issuers - RNVE, a survey aimed at was to analyzing the advance of such entities in the implementation of the International Reporting Standards of Financial Information (IFRS) and Accounting Reporting Standards accounting (IAS).
Circular letter 22, 2012: "Corporate best practice 2011 survey".
By this Circular letter, the Financial Superintendent's Office informed the legal representatives of issuers of securities terms, instructions and recommendations for broadcasting of the Encuesta Código País which seeks to inquire about the adoption of the recommendations of the "code of best corporate practices of Colombia"
Circular letter 44, 2012: "Process of convergence towards international standards of accounting and financial reporting (IAS/IFRS) and standards of auditing and assurance of financial reporting (NIA)".
There are instructions to legal representatives, members of Board of Directors and Auditors of the entities supervised by the Colombian Superintendency of Finance on the procedure of convergence to IFRS, IAS and the NIA (international Standards of Information Assurance). The procedure shall apply differentially depending on the nature of the entity that will implement the international standards.
26
Graphs
Financial Entities Subordinated to Grupo Aval
Evolution of Total Assets
Market Share - Total Assets
Evolution of Net Receivables
Market Share – Net Receivables
Evolution of Quality of Receivables
Evolution of Deposits and Liabilities
Market Share – Deposits and Liabilities
Evolution of Shareholder´s Equity
Evolution of Net Annual Earnings
Share of Annual Net Earnings with the Sector
Grupo Aval
Total Assets
Total Liabilities
Total Equity Shareholder´s
Annual Earnings
27
Financial Entities Subordinated to Grupo Aval
29
Financial Entities Subordinated to Grupo Aval
30
Financial Entities Subordinated to Grupo Aval
31
Financial Entities Subordinated to Grupo Aval
32
Financial Entities Subordinated to Grupo Aval
33
Grupo Aval
34
Grupo Aval
35
Individual Financial
Statements
June 30, 2012 and December 31, 2011
with the Report of the Auditor
Report of the
Auditor
Dear Shareholders
Grupo Aval Acciones y Valores S.A.
I have audited the individual balance sheet of Grupo Aval Acciones y Valores S.A. at December 31, 2011 and June 30, 2012 and corresponding individual statements of results, changes in equity, changes in the financial position and cash flows, the summary of significant accounting policies and other explanatory notes, for the semesters ended on those dates.
The Administration is responsible for the proper preparation and presentation of these financial statements in accordance with accounting principles generally accepted in Colombia. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and presentation of financial statements free from errors of material importance, whether due to fraud or error; selecting and applying appropriate accounting policies as well as establish reasonable accounting estimates under the circumstances thereat.
My responsibility is to express an opinion on the financial statements based on my audits. I got the information needed to fulfill my duties and conducted my examination in accordance with auditing standards generally accepted in Colombia. Those standards require that I comply with ethical requirements, plan and perform the audit to obtain reasonable assurance about whether financial statements are free of material significant errors.
An audit includes application procedures to obtain evidence about the amounts and disclosures in the individual financial statements. The procedures selected depend on the criterion of the Fiscal Auditor, including the assessment of the risk of material importance in the individual financial statements. In this risk assessment, the Auditor takes into account the internal control relevant to the preparation and presentation of financial statements, in order to design audit procedures appropriate for the circumstances. An audit also includes evaluating the use of appropriate accounting policies and the reasonableness of balances and the accounting estimates carried out by the Administration, as well as assess the presentation of the financial statements in general. I consider that the evidence of audit which I obtained provides a reasonable basis to substantiate the view that I express below.
In my opinion, the individual financial statements mentioned, faithfully taken from books and attached to this report, reasonably present, in all aspects of material importance, the individual financial position of Grupo Aval Acciones y Valores S.A. on June 30, 2012 and 31 December 2011, the individual results of its operations, the individual changes in the financial situation and the individual cash flows for the semesters ended on those dates in accordance with accounting principles generally accepted in Colombia, applied in a uniform manner.
38
Without qualifying my opinion, I call attention to note 5 of the financial statements. On January 23, 2012 it was created Grupo Aval Limited was as a subsidiary in the Cayman Islands. The participation of Grupo Aval Acciones y Valores S.A., in Grupo Aval Limited at June 30, 2012 is 100%.
Based on the results of my tests, in my opinion:
a) | The Accounting of Grupo Aval Acciones y Valores S.A. has been conducted pursuant to legal regulations and accounting technique. |
b) | The operations registered in the books and the acts of the administrators conform to the statutes and to the decisions of the General Assembly of Shareholders. |
c) | Correspondence, receipts for the accounts and the books of minutes and registry of shares are properly maintained. |
d) | There are adequate measures of internal control, of conservation and custody of the goods of Grupo Aval Acciones y Valores S. A-., and of those of third parties in its possession. |
e) | It has been complied with rules and instructions of the Superintendencia Financiera de Colombia related to the comprehensive system of prevention of money laundering - SIPLA in regards to Grupo Aval Acciones y Valores S.A. |
f) | The information contained in the declarations of self-liquidations contributions to the system of Comprehensive Social Security, in particular that relating to affiliates and their basic earnings for contribution, has been taken from records and accounting support. Grupo Aval Acciones y Valores S.A. is not in default on account of contributions to the Comprehensive Social Security System. |
g) | There is consistency between the accompanying financial statements and the management report prepared by the administrators. |
Lida Marcela Herrera Vargas
Fiscal Auditor of Grupo Aval Acciones y Valores S.A.
T. P. 106.020 - T
Member of KPMG Ltda.
September 5, 2012
39
Individual General Balance Sheets
June 30, 2012 and December 31, 2011
(Figures in Million pesos)
Assets | June 30 | December 31 | ||||||
Current Assets: | ||||||||
Available (notes 3 and 24) | $ | 1,079,732 | 1,589,890 | |||||
Negotiable investments, net (note 4) | 1,832 | 104 | ||||||
Short Term Debtors (notes 6 and 24) | 169,667 | 171,861 | ||||||
Deferred charges, net (note 9) | 22,397 | 23,182 | ||||||
Total current assets | 1,273,628 | 1,785,037 | ||||||
Permanent investments, net (notes 5 and 24) | 9,508,186 | 9,694,709 | ||||||
Property, plant and equipment, net (note 7) | 500 | 444 | ||||||
Intangibles, net (notes 8 and 24) | 417,954 | 423,506 | ||||||
Deferred charges, net(note 9) | 571 | 11,294 | ||||||
Valuations (notes 10 and 23) | 8,172,547 | 6,982,266 | ||||||
Total Assets | $ | 19,373,386 | 18,897,256 | |||||
Debtor Memorandum accounts: | ||||||||
Tax Debtors (note 28) | 11,593,647 | 10,805,888 | ||||||
Control debtors (note 29) | 962,290 | 885,367 | ||||||
Contingent creditors per contra | 1,070,760 | - | ||||||
Control creditors per contra (note 29) | 875,225 | 875,225 | ||||||
Tax creditors per contra (nota 29) | 11,917,482 | 11,092,815 | ||||||
Total memo accounts | $ | 26,419,404 | 23,659,295 |
See notes accompanying financial statements
40
Liabilities and Sahreholder´s Equity | June 30 | December 31 | ||||||
Liabilities: | ||||||||
Current Liabilities: | ||||||||
Financial Obligations (notes 11 and 24) | $ | 84,595 | 32,737 | |||||
Suppliers (note 12) | 62 | 501 | ||||||
Accounts Payable (notes 13 and 24) | 290,524 | 289,532 | ||||||
Taxes, fees and charges (note 14) | 14,177 | 13,533 | ||||||
Labor Obligations (note 15) | 714 | 916 | ||||||
Estimated Liabilities and Provisions (note 16) | 7,368 | - | ||||||
Other liabilities (note 17) | 2,105 | 2,655 | ||||||
Outstanding Bonds (note 18) | 125,750 | 220,450 | ||||||
Total current liabilities | 525,295 | 560,324 | ||||||
Tax Equity (note 14) | 17,196 | 22,928 | ||||||
Financial Obligations (notes 11 and 24) | 1,069,155 | 1,411,384 | ||||||
Outstanding Bonds (note 18) | 724,250 | 724,250 | ||||||
Total Liabilities | 2,335,896 | 2,718,886 | ||||||
Shareholder´s Equity: | ||||||||
Social Capital (nota 19) | 18,552 | 18,552 | ||||||
Capital surplus (notes 20 and 24) | 4,780,564 | 5,433,581 | ||||||
Reserves (note 21) | 2,468,028 | 2,201,184 | ||||||
Revaluation of Equity (note 22) | 875,225 | 875,225 | ||||||
Profits for the Period | 722,574 | 667,562 | ||||||
Valuation of investments (notes 10 and 23) | 8,172,547 | 6,982,266 | ||||||
Total Shareholder´s Equity | 17,037,490 | 16,178,370 | ||||||
Total Liabilities and Equity | $ | 19,373,386 | 18,897,256 | |||||
Memo accounts - credit: | ||||||||
Tax debtor per contra (note 28) | 11,593,647 | 10,805,888 | ||||||
Control debtors per contra (note 29) | 962,290 | 885,367 | ||||||
Contingency creditors | 1,070,760 | - | ||||||
Control creditors (nota 29) | 875,225 | 875,225 | ||||||
Tax creditors (note 29) | 11,917,482 | 11,092,815 | ||||||
Total memo accounts | $ | 26,419,404 | 23,659,295 |
41
Individual Income Statement
Semesters Ending June 30, 2012 and December 31, 2011
(Figures in million pesos, except earnings per share)
June 30 | December 31 | |||||||
Operating Income (notes 24 and 25) | ||||||||
Interest (note 24) | $ | 36,220 | 40,202 | |||||
Financial Income | 145 | 7 | ||||||
Income equity method, net (notes 5 and 24) | 825,729 | 757,880 | ||||||
Recoveries for equity changes (notes 5 and 24) | 18,069 | 23,303 | ||||||
Total Operating Income | 880,163 | 821,392 | ||||||
Loss in participation method for equity changes | ||||||||
(notes 5 and 24) | 35,319 | 21,331 | ||||||
Gross Profit | 844,844 | 800,061 | ||||||
Operating expenses - administration and | ||||||||
sales (notes 24 and 25): | ||||||||
Personnel expenses | 9,901 | 9,205 | ||||||
Fees | 8,567 | 7,820 | ||||||
Taxes: | ||||||||
Industry and Trade | 5,128 | �� | 4,393 | |||||
Levy on financial transactions | 3,667 | 2,653 | ||||||
Discountable Sales tax | 1,127 | 3,189 | ||||||
Rentals (note 24) | 360 | 356 | ||||||
Contributions and memberships | 151 | 148 | ||||||
Insurance | 4 | 1 | ||||||
Services | 593 | 626 | ||||||
Legal expenses | 8 | 42 | ||||||
Maintenance and repairs | 29 | 99 | ||||||
Adaptation and installation | 8 | 5 | ||||||
Travel expenses | 123 | 117 | ||||||
Depreciations | 91 | 71 | ||||||
Amortization of intangibles (notes 8 and 24) | 5,552 | 6,341 | ||||||
Amortization of deferred assets (note 9) | 11,619 | 11,562 | ||||||
Reserve for negotiable investments (note 4) | 3 | 3 | ||||||
Operating expenses of sales | 563 | 1,491 | ||||||
Various | 214 | 139 | ||||||
Total operating expenses - administration and sales | 47,708 | 48,261 | ||||||
Earnings from operations | 797,136 | 751,800 | ||||||
Non -Operating Income (notes 24 and 26) | ||||||||
Exchange difference | 57 | 21 | ||||||
Fees | 21,938 | 10,626 | ||||||
Services | 2 | 2 | ||||||
Appropiations | 0 | 2 | ||||||
Recoveries | 119 | 16 | ||||||
22,116 | 10,667 | |||||||
Non - operating income (notes 24 y 26) | ||||||||
Financial expenses | 90,590 | 91,029 | ||||||
Various | 52 | 30 | ||||||
90,642 | 91,059 | |||||||
Non - operational result, net | (68,526 | ) | (80,392 | ) | ||||
Income before Income Taxes | 728,610 | 671,408 | ||||||
Income tax and complementary (note 27) | (6,036 | ) | (3,846 | ) | ||||
Profit for the period | $ | 722,574 | 667,562 | |||||
Earnings per share (in pesos) (note 32) | $ | 38.95 | 36.80 |
42
Statement of Changes in Individual Shareholder´s Equity
Semesters Ending June 30, 2012 and December 31, 2011
(Figures in million pesos, except for the value of shares)
Capital Surplus | ||||||||||||||||||||||||||||||||||||
Reserves | ||||||||||||||||||||||||||||||||||||
Social | Premium in share | Participation | Revaluation | Earnings | Shareholder´s | |||||||||||||||||||||||||||||||
Capital | allocation | Method | Legal | Occasional | of Equity | of Period | Valuations | Equity | ||||||||||||||||||||||||||||
Balance as of june 30, 2011 | $ | 17,617 | 2,973,531 | 1,724,204 | 6,972 | 1,994,404 | 875,225 | 582,658 | 532,428 | 8,707,039 | ||||||||||||||||||||||||||
Constitution of reserve for future distributions | 582,658 | (582,658 | ) | - | ||||||||||||||||||||||||||||||||
Return to occasional reserves of dividends decreed in the first semester of 2011 when were taken resources for the payment of the cash dividends of $3.25 per share, thus: (i) for the month of June 2011 corresponding to 2,073,115,007 shares with preferential dividend and without voting rights and (ii) for the months of July, August and September corresponding to three shares with preferential dividends and without the right to vote, not issued | 6,738 | 6,738 | ||||||||||||||||||||||||||||||||||
To distribute a cash dividend of $3.50 per share and per month during the months of October 2011 through March 2012, both months included, on 17,617,097,327 ordinary and preferential stock subscribed | (369,959 | ) | (369,959 | ) | ||||||||||||||||||||||||||||||||
Increase of legal reserve to distribute a cash dividend of $3,50 per share and per month on 934,669,126 preferential shares on occasion of the reorganization in which Grupo Aval participated as beneficiary, during the months of October 2011 through March 2012, both months included | (19,629 | ) | (19,629 | ) | ||||||||||||||||||||||||||||||||
Issue of 934,669,126 shares in the process of reorganization in which Grupo Aval Acciones y Valores S.A. delivered to Inversiones Escorial S.A. y Popular Secutiries S.A. 934,669,126 preferential shares (note 5) | 935 | 697,521 | 698,456 | |||||||||||||||||||||||||||||||||
Use of the method of participation | 38,325 | 38,325 | ||||||||||||||||||||||||||||||||||
Valuation of investrments (notes 5 and 10) | 6,449,838 | 6,449,838 | ||||||||||||||||||||||||||||||||||
Profits for the period | 667,562 | 667,562 | ||||||||||||||||||||||||||||||||||
Balance as of december 31, 2011 | $ | 18,552 | 3,671,052 | 1,762,529 | 6,972 | 2,194,212 | 875,225 | 667,562 | 6,982,266 | 16,178,370 | ||||||||||||||||||||||||||
Constitution of reserve for future distribution | - | 667,562 | (667,562 | ) | ||||||||||||||||||||||||||||||||
To distribute a dividend of $3.60 per share and during the months of April through September 2012 both months included on 18,551,766,453 ordinary and preferential shares subscribed. | (400,718 | ) | (400,718 | ) | ||||||||||||||||||||||||||||||||
Sale of shares on behalf of Grupo Aval through Casa de Bolsa | 602 | 602 | ||||||||||||||||||||||||||||||||||
Execution of guarantees of shares | 13 | 13 | ||||||||||||||||||||||||||||||||||
Use of the method o participation | (653,632 | ) | (653,632 | ) | ||||||||||||||||||||||||||||||||
Appreciation of investments (notes 5 and 10) | 1,190,281 | 1,190,281 | ||||||||||||||||||||||||||||||||||
Earnings for the period | 722,574 | 722,574 | ||||||||||||||||||||||||||||||||||
Balance as of june 30,, 2012 | $ | 18,552 | 3,671,667 | 1,108,897 | 6,972 | 2,461,056 | 875,225 | 722,574 | 8,172,547 | 17,037,490 |
43
Statement of Changes in the Individual Financial Situation
Semesters ended June 30, 2012 and December 31, 2011
(Figures in en million pesos)
June 30 | December 31 | |||||||
Sources of working capital: | ||||||||
Profits for the period | $ | 722,574 | 667,562 | |||||
Items that do not use working capital: | ||||||||
Amortization of intangibles | 5,552 | 6,341 | ||||||
Amortization of deferred assets | 11,619 | 11,562 | ||||||
Depreciation of property, plant and equipment | 91 | 71 | ||||||
Equity method income | (825,729 | ) | (757,880 | ) | ||||
Recovery for changes in equity | (18,069 | ) | (23,303 | ) | ||||
Equity method loss for changes in equity | 35,319 | 21,331 | ||||||
Provision for negotiable investments | 3 | 3 | ||||||
Working Capital used in the operations | (68,640 | ) | (74,313 | ) | ||||
Dividends received during the period | 366,560 | 325,500 | ||||||
Increase in financial obligations | 65,000 | 66,706 | ||||||
Increase of mercantile credit acquired | - | (6,194 | ) | |||||
Increase in paid and subscribed capital | - | 935 | ||||||
Premium on share placement | 615 | 697,521 | ||||||
(Decrease) in Tax Equity | (5,732 | ) | (11,464 | ) | ||||
$ | 357,803 | 998,691 | ||||||
Uses of Working Capital | ||||||||
Decrease in working capital | (476,380 | ) | (332,962 | ) | ||||
Increase in deferred charges | 898 | 10,015 | ||||||
Net increase in permanent investments | 25,190 | 813,008 | ||||||
Increase in property, plant and equipment | 149 | 29 | ||||||
Decrease of financial obligations | 407,228 | - | ||||||
Decrease in outstanding bonds | - | 125,750 | ||||||
Dividends Paid | 400,718 | 382,851 | ||||||
$ | 357,803 | 998,691 | ||||||
Changes in components of working capital: | ||||||||
Increase (decrease) in current assets: | ||||||||
Available | (510,158 | ) | (260,042 | ) | ||||
Negotiable Investments | 1,728 | (35,350 | ) | |||||
Debtors | (2,194 | ) | 26,777 | |||||
Long term deferred charges | (785 | ) | 8,456 | |||||
(511,409 | ) | (260,159 | ) | |||||
Decrease (increase in current liabilities: | ||||||||
Short Term Financial Obligations | (51,858 | ) | (22,003 | ) | ||||
Suppliers | 439 | (399 | ) | |||||
Accounts Payable | (992 | ) | (28,031 | ) | ||||
Taxes, fees and charges | (644 | ) | (6,261 | ) | ||||
Labor Obligations | 202 | (442 | ) | |||||
Estimated Liabilities and Provisions | (7,368 | ) | 4,187 | |||||
Outstanding Bonds | 94,700 | (25,750 | ) | |||||
Other liabilities | 550 | 5,896 | ||||||
35,029 | (72,803 | ) | ||||||
Decrease in working capital | $ | (476,380 | ) | (332,962 | ) |
Please refer to attached notes to the financial reports
44
Statements of Individual Cash Flows
Semesters ended June 30, 2012 and December 31, 2011
(Figures in en million pesos)
June 30 | December 31 | |||||||
Cash Flows from operating activity: | ||||||||
Profit for the period | $ | 722,574 | 667,562 | |||||
“Adjustments for conciliation of net earning with net cash | ||||||||
(used) from activities of the operation” | ||||||||
Amortization of Intangibles | 5,552 | 6,341 | ||||||
Depreciation of property, plant and equipment | 91 | 71 | ||||||
Earnings from sale of property, plant and equipment | - | 28 | ||||||
(Increase) Decrease in negotiable investments | (1,728 | ) | 10,477 | |||||
Reversal of causation investments available for sale | (808,479 | ) | (759,852 | ) | ||||
Increase in deferred charges | (111 | ) | (18,469 | ) | ||||
Amortization of deferred charges | 11,619 | 11,562 | ||||||
Decrease (increase) in accounts receivable | 7,149 | (6,720 | ) | |||||
Net increase in other assets | (4,954 | ) | (6,194 | ) | ||||
Net increase in other liabilities | (6,447 | ) | (5,998 | ) | ||||
Net cash used by operation activities | (74,734 | ) | (101,192 | ) | ||||
Cash Flow from investment activity: | ||||||||
Proceeds from sale of property, plant and equipment | - | 60 | ||||||
Proceeds from sale of investments | - | 24,873 | ||||||
Acquisition of property, plant and equipment | (149 | ) | (116 | ) | ||||
Acquisition of investments | (25,190 | ) | (833,063 | ) | ||||
Dividends received during the period | 366,560 | 325,500 | ||||||
Net cash flow (used) from investment activities | 341,221 | (482,747 | ) | |||||
Cash Flow from financing activity: | ||||||||
Dividend paid | (392,190 | ) | (363,267 | ) | ||||
Acquisition of other bank loans | 65,000 | 113,000 | ||||||
Payment of other bank loans | (355,370 | ) | (24,291 | ) | ||||
Payment of bonds | (94,700 | ) | (100,000 | ) | ||||
Premium on shares placement | 615 | 698,456 | ||||||
Net cash (used) from financing activity | (776,645 | ) | 323,897 | |||||
Decrease in cash | (510,158 | ) | (260,042 | ) | ||||
Cash balance at the beginning of the semester | 1,589,890 | 1,849,932 | ||||||
Cash balance at the end of the semester | $ | 1,079,732 | 1,589,890 |
Please refer to attached notes to the financial reports
45
Notes to the Individual Financial Statements
Semesters ended June 30, 2012 and December 31, 2011
(Figures in en million pesos)
(1) Economic Entitiy
Grupo Aval Acciones y Valores S.A. is a public liability company incorporated through Public Deed number 0043 of January 7, 1994. Its domicile is the city of Bogotá D.C.
Its corporate purpose is intended for the purchase and sale of stocks, bonds and securities of entities belonging to the financial system and other commercial entities. In development of the purpose, the society can acquire and negotiate all sorts of securities of free movement in the market and of stock values in general; promote the creation of all kinds of related or complementary businesses of the corporate purpose; represent natural or legal persons engaged in activities similar or complementary to those identified in previous literals; take or give money in loans with or without interest, give in warranty or in administration or movable or immovable property, draft, endorse, acquire, accept, collect, protest, cancel or pay bills of exchange, checks, promissory notes or any other securities or accept them or give them in payment and execute or in general enter into agreement for change in all of its manifestations, in all its forms or related activities similar, parallel and/or complementary
The duration of the company, as established in its by-laws is until May 23, 2044, although it may be dissolved or extended prior to such date.
(2) Main Accounting Policies
(a) Basic Policies
Accounting policies and the preparation of the financial statements of the company are in accordance with accounting principles generally accepted in Colombia.
(b) Investments
Investments are represented in securities and other documents held by other economic entities, acquired with the purpose of obtaining fix or variable income.
Classification
- | According to the intention, investments are classified into: negotiable and permanent, the latter, in turn, according to the control that is exercised over the issuer are classified as minority interest and controlling interest. |
- | In accordance with the returns generated they are: fix or variable income. |
Accounting
- | Negotiable investments of variable income are recorded at cost |
Whenever appropriate, this cost must be adjusted to the value of realization, through provisions or valuations. If the realizable value is greater than the cost in books, the difference generates an appreciation in the exercise, which will be taken against surplus by valuation. If the realizable value is lower than the cost in books, the difference will affect firstly the valuation; in the event of being greater, the defect shall be recorded as a provision with charge to income of the period.
- | Permanent investments in controlled companies are accounted for by the equity sharing method (MPP), accounting procedure whereby the investment is initially recorded at cost, and subsequently increases or decreases its value according to the changes in the equity of the subordinate. |
46
As of August 18, 2005, with the issuance of Joint Circular no. 011 of the Superintendency of Securities (today the Colombian Superintendency of Finance) and 06 of the Superintendency of Societies, in the event that the subordinate present positive variations in the accounts of patrimony of future periods, the loss recorded by effect of economic changes of the subsidiary can be recognized as income for recovery of deductions, up to the amount of spending previously accounted for; if the variations exceed the amount of spending, such a difference will be taken to surplus by the equity sharing method. The effect of applying this standard was the recovery on June 30, 2012 and December 31, 2011 of $18.069 and $23.303, respectively.
- | Permanent investments in uncontrolled companies are recorded by the cost method, thus: |
The historical cost of the investments made by the economic entity in societies by shares and/or assimilated, includes the amounts directly incurred in its acquisition. The cost of acquisition should increase or decrease in the participation rate that corresponds to the investor on the subsequent variations of the equity of the respective issuer.
If the realizable value of the investment is greater than the value in books, such a difference is an appreciation of the investment. Its value must be registered in the account of valuations and it has as counterpart the equity of the investor, affecting the account of surplus by valuations.
If the realizable value of the investment is less than the book value of the same, such a difference is a devaluation of the investment. Its value must be registered in the account of valuations or devaluation and has as counterpart the equity of the investor, affecting the account surplus by valuations, as lesser value of either account.
- | Shares acquired in process of reorganization are recorded at the value for which are received. The valuation or devaluation caused by the difference between the exchange value and the intrinsic value of the shares received is recorded in the account of appreciations, and has a counterpart in the account surplus for recovery; and subsequently are moved as a higher value of the investment in the sub-account equity sharing method and its counterpart in the account surplus by equity sharing method. The revaluations caused by the difference between the received cost of the investment and the intrinsic value is recorded in the account of valuations with its counterpart in the account of surplus for appreciation, remaining in these accounts. |
Subsequently, applies the equity sharing method based on the financial statements of the subordinate and the new percentage of participation, taking as cost the intrinsic value of the investment at the time of the split.
For the semester ended on December 31, the company after completing consultations with agencies of supervision (Colombian Superintendency of Finance and Superintendency of Societies), decided to post the valuations or devaluations of its investments in controlled companies with respect to their realizable value, without prejudice of the application of the equity method for the accounting records of such investments, pursuant to article N ° 61 of the Decree 2649 of 1993 and the joint Circular 011 of 18 August 2005 of the Superintendency of Securitites (currently the Superintendency of Finance) and the Superintendency of Societies, are carried by the intrinsic value at the end of each period.
The difference between the intrinsic value of the shares (equity method) and its realizable value, determined as set out in the regulations, is an appreciation or depreciation that should affect the financial statements, in accordance with the duty to disclose the clear history, complete, and accurate of the general State of the business and the situation of the assets of the employer (articles, number 48 and 52 of the code of Commerce) and with generally accepted accounting standards, in particular the principle of valuation (article number 10 of 2649 Decree of 1993) and of the technical rule about investments (article number 61, ibid.).
The realization value or the market of investments is defined in article 10 of 2649 Decree of 1993 as the one representing the amount in cash or its equivalent, that is expected to be converted an asset in the normal course of business. Article 61 of the Decree defines the realization value of the investments of variable income as the average of cross listing on stock exchanges in the last month and, in the absence of this, its intrinsic value.
47
(c) Debtors
Represents credit rights, as a result of loans, dividends receivable and other operations.
(d) Property, Plant and Equipment
Property, plant and equipment are recorded at cost. Depreciation is calculated using the straight-line method, based on the estimated useful life of the assets. For Office equipment estimated useful life is ten (10) years and the computer equipment five (5) years.
(e) Intangibles
Comprises assets of the economic entity that, lacking a material nature involve a right or privilege opposable to third parties, other than derivatives of other assets.
Goodwill
Registers the extra amount paid over the book value in the purchase of shares in subordinates.
Mercantil Credit received in the split from the purchase of shares of the Corporación de Vivienda AHORRAMAS SA, currently Banco AV Villas S.A. is amortized in straight line in ten (10) years as determined from its origin and those acquired through purchase of shares in September and December 2007 are amortized at 36 and 33 months respectively.
Mercantil Credit acquired on the purchases of shares in Banco Popular SA and Banco de Occidente S.A. carried out by Grupo Aval Acciones y Valores Valores S.A., is depreciated by the method " Reverse of the sum of the digits in the term" at twenty (20) years.
(f) Deferred Charges
Deferred charges correspond to computer programs, studies and research, are amortized over one period no longer than three (3) years; and expenses from advertising relating to the issuance and placement of shares which are amortized over a period of two (2) years.
(g) Valuations
It records the valuations and devaluations in shares of companies in spin-off processes , by the difference between the acquisition cost and the intrinsic value.
As of December 31, 2011, the valuations in investments in controlled companies are recorded by the difference between the intrinsic value and the realizable value (see literal b).
(h) Estimated liabilities and provisions
The company records from June 2012, provisions for recognizing the value of costs and expenses which exact amount is unknown, but for accounting and financial effects should occur promptly, according to estimates made. The accounting register is caused affecting spending linked against a liability of provisions. Provisions are made for purchases and services already made, existing on the date of these individual financial statements, which have not yet been invoiced.
(i) Memorandum accounts
The company has recorded in contingency accounts facts, circumstances, commitments or contracts out of which rights and obligations can be generated which can affect the financial structure. It also includes accounts for control of assets, liabilities and property, management information or control of future financial situations and differences between accounting records and tax returns.
48
(j) Income Recognition
The income for interest, financial returns and dividends is recognized at the time of causation. Revenues by equity sharing method and recoveries by patrimony changes are recorded monthly in accordance with the policy of accounting for investments in subordinates explained in literal (b) investments.
(k) Net Profit per share
To determine the net earnings per share, the society uses the net profits of the period on the weighted average number of shares outstanding at June 30, 2012 and December 31, 2011, which was 18,552 and 18,141 respectively.
(l) Relative Importance or Materiality
The economic facts are recognized and presented according to their relative importance. In the preparation of the financial statements, the materiality was determined in relation to total assets and current liabilities, the total of assets and liabilities, working capital, heritage, or the results of the exercise, as the case may be.
(m) Conversion of Foreign Currency Transactions
Foreign currency transactions are accounted for in pesos at the rate in effect on the date of the transaction. The balance of the current account in foreign currency as of June 30, 2012 and 31 December 2011, is converted to Colombian pesos at the representative market rate in pesos of, $1,784.60 and $1,942.70 respectively, for every US dollar. The resulting exchange difference from the adjustment of assets and liabilities is recorded in results.
(n) Related Entities
Assets, liabilities and transactions with companies belonging to Grupo Aval Acciones y Valores S.A. (to which belongs the parent company) are presented as related entities.
(o) Taxes, Fees and Charges
Income tax
The current income tax expense is determined based on presumptive income.
Equity Tax
Pursuant to the legal norms governing the accounting principles generally accepted in Colombia, the company chose to register the property tax , together with the surcharge, against the account revaluation of equity and caused all of the tax payable, which effect goes until 2014.
(3) Available
Breakdown of available in legal currency is as follows:
June 30 | December 31 | |||||||
Cash | $ | 1 | 1 | |||||
Banks | ||||||||
Local | 1,886 | 1,884 | ||||||
Foreign(1) | 2 | 2 | ||||||
Savings accounts | 1,077,843 | 1,588,003 | ||||||
$ | 1,079,732 | 1,589,890 |
(1) Includes a balance in checking account at Banco de Bogotá-Panamá for 1,001.44 as of June 30, 2012 and December 31, 2011. Included Note 24 - c) Available
There is no restriction on the available.
49
(4) Negotiable investments, net
The breakdown of negotiable investments is as follows:
30 de junio | 31 de diciembre | |||||||
Trust Rights: | ||||||||
Fiduciaria Bogotá | $ | 37 | 85 | |||||
Fiduciaria de Occidente | - | 3 | ||||||
Fiduciaria Corficolombiana | 1,795 | 16 | ||||||
Total Trust Rights | $ | 1,832 | 104 |
(5) Permanent investments, net
The cost of permanent investments is as follows:
Percent Participation | Number of Shares | Book value | ||||||||||||||||||||||
June 30 | December 31 | June 30 | December 31 | June 30 | December 31 | |||||||||||||||||||
Banco de Bogotá S.A. | 64.44 | % | 64.44 | % | 184,830,376 | 184,830,376 | $ | 5,036,474 | 5,226,621 | |||||||||||||||
Banco de Occidente S.A.(1) | 68.24 | % | 68.24 | % | 106,385,430 | 106,385,430 | 2,064,699 | 2,053,160 | ||||||||||||||||
Banco Comercial AV Villas S.A. | 79.85 | % | 79.85 | % | 179,453,557 | 179,453,557 | 772,932 | 743,191 | ||||||||||||||||
Fondo de Pensiones y Cesantías Porvenir S.A.(2) | 20.00 | % | 20.00 | % | 15,085,589 | 14,691,903 | 143,600 | 130,721 | ||||||||||||||||
Banco Popular(3) | 93.73 | % | 93.73 | % | 7,241,296,738 | 7,241,296,738 | 1,513,475 | 1,541,016 | ||||||||||||||||
Grupo Aval Limited(4) | 100.00 | % | 0.00 | % | 1 | - | (22,994 | ) | - | |||||||||||||||
Total permanent investments | $ | 9,508,186 | 9,694,709 |
As of June 30 , 2012 and December 31, 2011 there were no restrictions on these investments.
(1) | During the second semester of 2011 Banco de Occidente was capitalized for a value of $ 143,443, through direct purchase of 4,119,574 shares at a cost of $135,945 and 414,936 shares for a value of $7,496. |
(2) | During the second semester, 2011 were received 400,304 shares for a value of $8,246 which correspond to capitalization of earnings. During the first semester of 2012 were received 393.686 shares for a value of $8,110 which correspond to capitalization of earnings. |
(3) | On June 20, 2011, through Public Deed of Split No. 2936 of Notary 73 de Bogotá, it was perfected the Split process between the Split society Rendifín S.A. and the beneficiary society Grupo Aval Acciones y Valores S.A. by virtue of which Grupo Aval Acciones y Valores S.A., as beneficiary received as main asset, 3,358,446,312 shares possessed by Rendifin in Banco Popular S.A. which increased the percent participation of Grupo Aval from 30.66% to 74.13%. In return, Rendifin S.A. received 2,073,115,007 preferential shares issued by Grupo Aval Acciones y Valores S.A. |
On September 19, 2011, through the public deed No. 4631 of the notary 73 of Bogotá, it was perfected the process of division between the split companies Inversiones Escorial S.A. and Popular Securities, the benenficiary of company Grupo Aval Acciones y Valores S.A. by virtue of which Grupo Aval Acciones y Valores S.A., in his capacity as beneficiary, received, as main asset, 1,514,163,994 shares possessed by those in Banco Popular SA with which it was increased the percentage of participation from 74.13% to the 93.73%.. Escorial Investments S.A. and Popular Securities received 467,334,563 preferential shares each, issued by Grupo Aval Acciones y Valores S. A.
(4) | On January 23, 2012, Grupo Aval Limited was created as a subsidiary in the Cayman Islands. |
Equity Method
The following is the breakdown of assets, liabilities and equity of controlled entities, audited by independent public accountants, recorded by the equity sharing method; homogenized in the application of accounting principles:
June 30 | ||||||||||||||||||||||||||||||||
Assets | Liabilities | Equity | ||||||||||||||||||||||||||||||
Social | Social of | Results | Results of | Total | ||||||||||||||||||||||||||||
Entidad | Capital | Reserves | Capital | of Previous | the Period | Equity | ||||||||||||||||||||||||||
Periods | ||||||||||||||||||||||||||||||||
Banco de Bogotá S.A. | $ | 45,872,285 | 38,056,240 | 3,827 | 2,695,297 | 4,727,753 | (294,758 | ) | 683,926 | 7,816,045 | ||||||||||||||||||||||
Banco de Occidente S.A. (1) | 22,185,169 | 19,159,510 | 4,677 | 1,265,867 | 1,443,723 | 73,239 | 238,153 | 3,025,659 | ||||||||||||||||||||||||
Banco Comercial AV Villas S.A. | 8,197,720 | 7,229,771 | 22,473 | 466,416 | 465,172 | (60,225 | ) | 74,113 | 967,949 | |||||||||||||||||||||||
Fondo de Pensiones y Cesantías Porvenir S.A. (2) | 956,911 | 238,943 | 75,424 | 66,506 | 495,935 | (24,240 | ) | 104,343 | 717,968 | |||||||||||||||||||||||
Banco Popular (3) | 14,599,512 | 12,769,636 | 77,253 | 1,019,809 | 632,533 | (76,229 | ) | 176,510 | 1,829,876 | |||||||||||||||||||||||
Grupo Aval Limited (4) | 1,071,727 | 1,094,721 | - | - | - | - | (22,994) | (22,994 | ) | |||||||||||||||||||||||
$ | 92,883,324 | 78,548,821 | 183,654 | 5,513,895 | 7,765,116 | (382,213 | ) | 1,254,051 | 14,334,503 |
50
December 31 | ||||||||||||||||||||||||||||||||
Assets | Liabilities | Equity | ||||||||||||||||||||||||||||||
Entity | Social Capital | Reserves | Surplus of Capital | Results Of Previous Periods | Results of the Period | Total Equity | ||||||||||||||||||||||||||
Banco de Bogotá S.A. | $ | 43,275,685 | 35,164,552 | 2,868 | 4,975,308 | 2,820,747 | (278,248 | ) | 590,458 | 8,111,133 | ||||||||||||||||||||||
Banco de Occidente S.A. (1) | 20,929,017 | 17,920,268 | 4,677 | 1,863,203 | 1,020,726 | (123,533 | ) | 243,676 | 3,008,749 | |||||||||||||||||||||||
Banco Comercial AV Villas S.A. | 7,596,051 | 6,665,346 | 22,473 | 647,023 | 231,385 | (61,439 | ) | 91,263 | 930,705 | |||||||||||||||||||||||
Fondo de Pensiones y (2) Cesantías Porvenir S.A. | 832,751 | 179,180 | 73,456 | 438,024 | 87,238 | (37,104 | ) | 91,957 | 653,571 | |||||||||||||||||||||||
Banco Popular (3) | 14,145,468 | 12,286,210 | 77,253 | 1,000,658 | 716,678 | (100,236 | ) | 164,905 | 1,859,258 | |||||||||||||||||||||||
$ | 86,778,972 | 72,215,556 | 180,727 | 8,924,216 | 4,876,774 | (600,560 | ) | 1,182,259 | 14,563,416 |
The effect of the increase (decrease) in accounts of results and surplus by the application of the equity sharing method in the equity of the parent is as follows:
June 30 | December 31 | |||||||
Income of the subsidiaries by the equity sharing method (1) | $ | 825,729 | 757,880 | |||||
In results by recovery of expenses for equity changes of previous periods (1) | 18,069 | 23,303 | ||||||
Loss originated in equity changes of the subsidiaries (2) | (35,319 | ) | (21,331 | ) | ||||
Net effect on results | $ | 808,479 | 759,852 | |||||
(Deficit) surplus in the semester originated in equity changes in the subsidiaries | $ | (653,632 | ) | 38,325 |
(1) Included Note 24 – Income by method of equity sharing, - Recovery for equity changes.
(2) Included Note 24 - Loss by equity sharing method for equity changes
Homogenization of the Subordinates Balances
Following the criteria of the Joint Circular of Superintendency of Societies 06 and Colombian Superintendency of Finance 011, 2005, It was made the homogenization of the accounting method of the entities which are recognized by the equity sharing method and which are governed by the rules of the Colombian Superintendency of Finance for supervised entities.
June 30 | December 31 | |||||||||||||||||||||||||||||||
Business name | Assets | Liabilities | Equity | Results of The Period | Assets | Liability | Equity | Results of the Period | ||||||||||||||||||||||||
Banco de Bogotá S.A. | ||||||||||||||||||||||||||||||||
Decree 2649, 1993 | $ | 45,872,285 | 38,056,240 | 7,816,045 | 683,926 | 43,275,685 | 35,164,552 | 8,111,133 | 590,458 | |||||||||||||||||||||||
Norm for supervised | 46,407,275 | 38,056,240 | 8,351,035 | 617,692 | 43,264,854 | 35,164,553 | 8,100,301 | 593,740 | ||||||||||||||||||||||||
variation | (534,990 | ) | - | (534,990 | ) | 66,234 | 10,831 | (1 | ) | 10,832 | (3,282 | ) | ||||||||||||||||||||
Banco de Occidente S.A. | ||||||||||||||||||||||||||||||||
Decree 2649, 1993 | 22,185,169 | 19,159,510 | 3,025,659 | 238,153 | 20,929,018 | 17,920,268 | 3,008,750 | 243,677 | ||||||||||||||||||||||||
Norm for supervised | 22,267,995 | 19,159,510 | 3,108,485 | 223,616 | 20,950,830 | 17,920,268 | 3,030,562 | 226,938 | ||||||||||||||||||||||||
variation | (82,826 | ) | - | (82,826 | ) | 14,537 | (21,812 | ) | - | (21,812 | ) | 16,739 | ||||||||||||||||||||
Banco Comercial Av Villas S.A. | ||||||||||||||||||||||||||||||||
Decree 2649, 1993 | 8,197,720 | 7,229,771 | 967,949 | 74,113 | 7,596,051 | 6,665,346 | 930,705 | 91,263 | ||||||||||||||||||||||||
Norm for supervised | 8,216,496 | 7,229,771 | 986,725 | 81,442 | 7,600,089 | 6,665,346 | 934,743 | 90,022 | ||||||||||||||||||||||||
variation | (18,776 | ) | - | (18,776 | ) | (7,329 | ) | (4,038 | ) | - | (4,038 | ) | 1,241 | |||||||||||||||||||
Fondo de Pensiones y Cesantías Porvenir S.A. | ||||||||||||||||||||||||||||||||
Decree 2649, 1993 | 956,911 | 238,943 | 717,968 | 104,343 | 832,752 | 179,180 | 653,571 | 91,957 | ||||||||||||||||||||||||
Norm for supervised | 929,608 | 238,943 | 690,665 | 106,552 | 799,489 | 179,180 | 620,309 | 76,847 | ||||||||||||||||||||||||
variation | 27,303 | - | 27,303 | (2,209 | ) | 33,263 | - | 33,262 | 15,110 | |||||||||||||||||||||||
Banco Popular S.A. | ||||||||||||||||||||||||||||||||
Decree 2649, 1993 | 14,599,512 | 12,769,636 | 1,829,876 | 176,510 | 14,145,468 | 12,286,211 | 1,859,258 | 164,905 | ||||||||||||||||||||||||
Norm for supervised | 14,708,386 | 12,769,636 | 1,938,750 | 180,629 | 14,151,426 | 12,286,211 | 1,865,215 | 173,333 | ||||||||||||||||||||||||
variation | (108,874 | ) | - | (108,874 | ) | (4,119 | ) | (5,958 | ) | - | (5,957 | ) | (8,428 | ) | ||||||||||||||||||
Grupo Aval Limited | ||||||||||||||||||||||||||||||||
Decree 2649, 1993 | 1,071,727 | 1,094,721 | (22,994 | ) | (22,994 | ) | - | - | - | - | ||||||||||||||||||||||
Norm for supervised | 1,071,727 | 1,094,721 | (22,994 | ) | (22,994 | ) | - | - | - | - | ||||||||||||||||||||||
variation | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Effect of homogeneization | $ | ( 718,163 | ) | - | (718,163 | ) | 67,114 | 12,286 | (1 | ) | 12,287 | 21,380 |
51
(6) Short Term debtors
The following is the detail of debtors
June 30 | December 31 | |||||||
Dividends: (1) | ||||||||
Banco de Bogotá S.A. | $ | 83,728 | 75,965 | |||||
Banco de Occidente S.A. | 35,427 | 34,469 | ||||||
Banco Popular S.A. | 42,144 | 57,921 | ||||||
Fondo de Pensiones y Cesantías Porvenir S.A. | 2,380 | 2,315 | ||||||
163,679 | 170,670 | |||||||
Fees (1) | 826 | 727 | ||||||
826 | 727 | |||||||
Advances: | ||||||||
Taxes and contributions | 4,955 | - | ||||||
Sundry debtors: | ||||||||
Depositors (1) | 188 | 438 | ||||||
Accounts Receivable EPS - Incapacity | 19 | 26 | ||||||
5,162 | 464 | |||||||
$ | 169,667 | 171,861 |
(1) Included Note 24 – Related Parties - debtors
(7) Property, Plant and Equipment, net
The detail of property, plant and equipment is as follows:
June 30 | December 31 | |||||||
Office equipment | $ | 158 | 141 | |||||
Computer equipment | 1,191 | 1,063 | ||||||
1,349 | 1,204 | |||||||
Less: cumulative depreciation | 849 | 760 | ||||||
$ | 500 | 444 |
There is no restriction on property, plant and equipment; the society does not possess goods with conditional property. Fixed assets correspond to computer and office equipment; they do not have value as its demerit is permanent.
(8) Intangibles, net
The detail of intangibles is as follows:
June 30 | December 31 | |||||||
Mercantil credit acquired, net (1) | $ | 417,954 | 423,506 |
(1) Included Note 24 - c) Intangibles,
Commercial Credit Acquired, net
June 30 | December 31 | |||||||
Capitalización of AV Villas (1) made on september 17, 2001 for a value of $156,000. | ||||||||
Number of shares purchased 72,289,157 at an intrinsec value of $1,577.54. | $ | 41,961 | 41,961 | |||||
Increase by purchase of shares of Banco Popular (2) made on November 1, 2005 | ||||||||
for a value of $168,629. Number of shares purchased 733,172,111 at an intrinsic value of $84.90. | 106,383 | 106,383 | ||||||
Increase by purchase of shares of Banco Popular (2) made on december 21 , 2006 | ||||||||
for a value of $220,368. Number of shares purchased 733,620,000 at an intrinsic value of $94.98. | 150,689 | 150,689 | ||||||
Increase by purchase of shares of Banco de Occidente (3) made on june 30, 2007 | ||||||||
for a value of $36,060. Number of shares purchased 1,897,881 at an intrinsic value of $8,159.55. | 20,574 | 20,574 | ||||||
Increase by purchase of shares of Banco de Occidente (3) made on december 18 , 2007 | ||||||||
for a value of $29,735.1. Number of shares purchased 1,338,272 at an intrinsic value of $ 9,201.66. | 17,421 | 17,421 |
52
June 30 | December 31 | |||||||
Increase by the purchase of shares of Banco Popular (2) made on june 13 , 2008 | ||||||||
for a value of $239,417.8. Number of shares purchased 901,894,321 at an intrinsic value of $101.01. | 148,317 | 148,317 | ||||||
Increase by the purchase of shares of Banco AV Villas (1) made in july, de 2008 | ||||||||
for a value of $432.8. Number of shares purchased 120,154 at an intrinsic value of $2,600.68. | 120 | 120 | ||||||
Increase by the purchase of shares of l Banco AV Villas (1) made in august, 2008 | ||||||||
for a value of $234.4. Number of shares purchased 65,010 at an intrinsic value of $2,648.69. | 62 | 62 | ||||||
Increase by the purchase of shares of Banco AV Villas (1) made in september , 2008 | ||||||||
por valor de $776.4. Number of shares purchased 218,260 at an intrinsic value of $2,765.85. | 173 | 173 | ||||||
Increase by the purchase of shares of Banco AV Villas (1) made in October, 2008 | ||||||||
for a value of $871.2. Number of shares purchased 242,007 at an intrinsic value of $2,668.47. | 226 | 226 | ||||||
Increase by the purchase of shares of Banco AV Villas (1) made in November, 2008 | ||||||||
for a value of $18.8. Number of shares purchased 6,522 at an intrinsic value of $2,676.68. | 1 | 1 | ||||||
Increase by the purchase of shares of Banco AV Villas (1) made in December, 2008 | ||||||||
for a value of $422.7. Number of shares purchased 140,451 at an intrinsic value of $2,794.95. | 30 | 30 | ||||||
Increase by the purchase of shares of l Banco de Occidente (4) made on september 22 , 2011 | ||||||||
for a value of $13,693. Number of shares purchased 414,936 at an intrinsic value of $18,068.87. | 6,195 | 6,195 | ||||||
Accumulated Amortization | (68,646 | ) | (62,305 | ) | ||||
Amortization for the period (Note 24) | (5,552 | ) | (6,341 | ) | ||||
$ | 417,954 | 423,506 |
(1) | On september, 2011 was completed the amortization of mercantile credit of Banco AV Villas. |
(2) | In compliance with dispositions in External memo No. 011 of august 18, 2005 of Superintendency of Securities (currently Colombian Superintendency of Finance) and based on acquisition by the society of control of Banco Popular S.A. through the suscription of a contract granting full and absolute representation to Grupo Aval Acciones y Valores, of the shares that Rendifín S.A. in Liquidación possess in Banco Popular, it was accounted for the commercial credit acquired in each of the acquisitions made. |
(3) | In compliance with dispositions in the Circular mentioned in the paragraph above, and since the society possesses control over Banco de Occidente and keeps its long term investments, it was accounted for the commerce credit obtained. The information related to the intrinsec value is expressed in Colombian pesos. These operations were made on june 30 and December 18, 2007. |
(4) | By september 2011, in compliance with the mentioned Circular, and since the society holds control over Banco de Occidente and keeps its long term investments, it was accounted for the commerce credit acquired |
The amortization of commerce credit (goodwill) in the acquisition of shares of Banco Popular and Banco de Occidente is carried out over a period of 20 years by applying the method "Reverse sum of the digits in the term", according to the following table:
Value | ||||||||||||||||||||||||||
Period | Factor | Banco Popular (1) | Banco Popular (2) | Banco de Occidente (3) | Banco de Occidente (4) | Banco de Occidente (5) | ||||||||||||||||||||
1 | 0.0047619048 | 1,224 | 706 | 98 | 83 | 30 | ||||||||||||||||||||
2 | 0.0095238095 | 2,448 | 1,413 | 196 | 166 | 59 | ||||||||||||||||||||
3 | 0.0142857143 | 3,672 | 2,119 | 294 | 249 | 89 | ||||||||||||||||||||
4 | 0.0190476190 | 4,897 | 2,825 | 392 | 332 | 118 | ||||||||||||||||||||
5 | 0.0238095238 | 6,121 | 3,531 | 490 | 415 | 148 | ||||||||||||||||||||
6 | 0.0285714286 | 7,345 | 4,238 | 588 | 498 | 177 | ||||||||||||||||||||
7 | 0.0333333333 | 8,569 | 4,944 | 686 | 581 | 207 | ||||||||||||||||||||
8 | 0.0380952381 | 9,793 | 5,650 | 784 | 664 | 236 | ||||||||||||||||||||
9 | 0.0428571429 | 11,017 | 6,356 | 882 | 747 | 266 | ||||||||||||||||||||
10 | 0.0476190476 | 12,242 | 7,063 | 980 | 830 | 295 | ||||||||||||||||||||
11 | 0.0523809524 | 13,466 | 7,769 | 1,078 | 913 | 325 | ||||||||||||||||||||
12 | 0.0571428571 | 14,690 | 8,475 | 1,176 | 995 | 354 | ||||||||||||||||||||
13 | 0.0619047619 | 15,914 | 9,182 | 1,274 | 1,078 | 384 | ||||||||||||||||||||
14 | 0.0666666667 | 17,138 | 9,888 | 1,372 | 1,161 | 413 | ||||||||||||||||||||
15 | 0.0714285714 | 18,362 | 10,594 | 1,470 | 1,244 | 443 | ||||||||||||||||||||
16 | 0.0761904762 | 19,586 | 11,300 | 1,568 | 1,327 | 472 | ||||||||||||||||||||
17 | 0.0809523810 | 20,811 | 12,007 | 1,666 | 1,410 | 502 | ||||||||||||||||||||
18 | 0.0857142857 | 22,035 | 12,713 | 1,763 | 1,493 | 531 | ||||||||||||||||||||
19 | 0.0904761905 | 23,259 | 13,419 | 1,861 | 1,576 | 561 | ||||||||||||||||||||
20 | 0.0952380952 | 24,483 | 14,125 | 1,959 | 1,659 | 590 | ||||||||||||||||||||
257,072 | 148,318 | 20,574 | 17,421 | 6,195 |
The beginning of each period is: (1) January, 2007, (2) July, 2008, (3) July, 2007, (4) January, 2008 and (5) September, 2011.
53
(9) Deferred Charges, net
The detail of deferred charges is as follows
June 30 | December 31 | |||||||
Current | ||||||||
Studies and investigations | $ | 368 | 260 | |||||
Computer Programs | 589 | 520 | ||||||
Cumulative Amortization | (433 | ) | (322 | ) | ||||
Amortization of the period | (90 | ) | (111 | ) | ||||
Advertising and publicity (1) | 10,383 | 8,659 | ||||||
Cumulative Amortization | (3,468 | ) | (872 | ) | ||||
Amortization of the period | (2,596 | ) | (2,596 | ) | ||||
Commisions (1) | 35,227 | 26.405 | ||||||
Cumulative Amortization | (8,761 | ) | - | |||||
Amortization of the period | (8,822 | ) | (8,761 | ) | ||||
Total Current | $ | 22,397 | 23,182 | |||||
Long Term | ||||||||
Studies investigations | $ | 411 | 520 | |||||
Computer Program | 99 | 168 | ||||||
Advertising and publicity (1) | - | 1,723 | ||||||
Commissions | 61 | 8,883 | ||||||
Total Long Term | 571 | 11,294 | ||||||
Total Deferred Charges | $ | 22,968 | 34,476 |
(1) Deferred charges for advertising and publicity correspond to the issuance and placement of shares taking place during the first semester, 2011 and will be amortized over a period of 24 months
(10) Valuations
For the semesters ended June 30, 2012 and December 31, 2011, the company has recognized valuations of its shares in subsidiaries with a value of $8,172,547 and $6,982,266 respectively of which in the first semester of 2012, recognized $1,190,281 taking into account their realizable value and its registration in books by the equity method, in accordance with the rules established in the single Plan of Accounts of merchants (Decree 2650 of 1993), where it is prescribed that the active account 1905 - valuation of investments, "records the positive difference between the realization value and the value in books of investments owned by the economic entity that have been purchased with the purpose of complying with legal provisions or in order to maintain a high availability of liquidity", as well as those acquired on a permanent basis".
For these purposes, the market value of investments is calculated taking into account the rules laid down in articles 10 and 61 of the Decree 2649 from 1993. Values of realization, intrinsic value and valuations below the 30 June 2012 and December 31, 2011:
June 30 | ||||||||||||||||||||
In Controlled entities | Number of shares A | Book value of investments B | Price per share C | Value of Realization A * C = D | Appreciations D - B | |||||||||||||||
Banco de Bogotá S.A. | 184,830,376 | $ | 5,036,474 | 50,037.36 | 9,248,425 | 4,211,951 | ||||||||||||||
Banco de Occidente S.A. | 106,385,430 | 2,064,699 | 30,643.02 | 3,259,971 | 1,195,272 | |||||||||||||||
Banco Comercial AV Villas S.A. - ordinarias | 179,192,996 | 771,810 | 7,980.00 | 1,429,960 | 658,151 | |||||||||||||||
Banco Comercial AV Villas S.A. - Preferential | 260,561 | 1,122 | 4,307.14 | 1,122 | - | |||||||||||||||
Banco Popular S.A. (3) | 7,241,296,738 | 1,715,225 | 500.00 | 3,620,648 | 1,905,423 | |||||||||||||||
Fondo de Pensiones y Cesantías Porvenir S.A. | 15,085,589 | 143,600 | 9,519.04 | 143,600 | - | |||||||||||||||
Grupo Aval Limited | 1 | (22,994 | ) | - | - | - | ||||||||||||||
Sub-total | 9,709,936 | 17,703,726 | 7,970,797 | |||||||||||||||||
Banco Popular S.A (3) | (201,750 | ) | 201,750 | (*) | ||||||||||||||||
$ | 9,508,186 | 8,172,547 |
54
December 31 | ||||||||||||||||||||
In Controlled entities | Number of shares A | Book value of investments B | Price per share C | Value of Realization A * C = D | Appreciations D - B | |||||||||||||||
Banco de Bogotá S.A. | 184,830,376 | $ | 5,226,621 | 48,292.30 | 8,925,884 | 3,699,262 | ||||||||||||||
Banco de Occidente S.A. | 106,385,430 | 2,053,160 | 29,249.36 | 3,111,706 | 1,058,546 | |||||||||||||||
Banco Popular S.A. (1) | 7,241,296,738 | 1,742,766 | 520.00 | 3,765,474 | 2,022,708 | |||||||||||||||
Banco Comercial AV Villas S.A. (2) | 179,453,557 | 743,191 | - | - | ||||||||||||||||
Fondo de Pensiones y Cesantías Porvenir S.A. (2) | 14,691,903 | 130,720 | - | - | ||||||||||||||||
Sub-total | 9,896,459 | 15,803,064 | 6,780,516 | |||||||||||||||||
Banco Popular S.A. (1) | (201,750 | ) | 201,750 | (*) | ||||||||||||||||
$ | 9,694,709 | 6,982,266 | ||||||||||||||||||
(1) Balance per cumulative appreciation (F). See summary of split
(2) The shares of these companies did not register Price per share as of December 31
(*) | In the split process carried out in 2011 for the 4,872,610,306 shares of Banco Popular S.A. by Rendifin S.A., Inversiones Escorial S.A. and Popular Securities, in favor of Grupo Aval shares and securities S.A., it was determined the following appreciation: |
June 30 | ||||
Homogenized and consolidated equity value of Banco Popular S.A. (a mayo 2011) (A) | $ | 1,789,264 | ||
No. of outstanding shares (B) | 7,725,326,503 | |||
Intrinsec value (in pesos) (A/B) | 232 | |||
No. Of shares received by Aval by split (C) | 1,514,163,994 | |||
Intrinsec value of the shares acquired (D=(A/B)*(C)) | 350,696 | |||
Value accounted for as cost (E) | 681,374 | |||
Valuation (D-E) caused | (330,678 | ) | ||
Balance cumulative valuation (F) | $ | 201,750 | (*) |
The effect on the application of this mechanism corresponds to an increase in the assets of the company between June 30, 2012 and December 31, 2011 amounting to $1,190,281, as a result of the accounting and disclosure of the valuation of investments in subsidiaries.
(11) Financial Obligations
The detail of the financial obligations is as follows:
June 30 | December 31 | |||||||
Current | ||||||||
Bienes y Comercio S.A. | $ | 48,000 | 2,833 | |||||
Adminegocios y Cía. S.C.A. (1) | - | 29,904 | ||||||
Rendifin S.A. | 36,595 | - | ||||||
$ | 84,595 | 32,737 | ||||||
Long Term | ||||||||
Rendifin S.A. | 753,122 | 789,717 | ||||||
Bienes y Comercio S.A. | 307,700 | 307,867 | ||||||
Adminegocios y Cía. S.C.A. (1) | 8,333 | 313,800 | ||||||
1,069,155 | 1,411,384 | |||||||
$ | 1,153,750 | 1,444,121 |
(1) Included Note 24 - a) Shareholders – Financial Obligations
The term for these obligations is five (5) years with two (2) years of grace, at a rate of interest of the DTF + 3-point TV
(12) Suppliers
The detail of the account local suppliers is as follows:
55
June 30 | December 31 | |||||||
Administration supplies | $ | 45 | 29 | |||||
Of services1 | 15 | 453 | ||||||
Of property, plant and equipment | 2 | 19 | ||||||
$ | 62 | 501 |
(1) | (Included Note 24 c) Societies in which the Company has participation higher than 100% - Accounts Payable Banco de Bogota $40 |
(13) Accounts Payable
The detail of accounts payable is as follows:
June 30 | December 31 | |||||||
Costs and expenses to be paid1 | $ | 19,230 | 26,684 | |||||
Dividends and participations2 | 268,481 | 259,953 | ||||||
Withholdiings at source | 770 | 954 | ||||||
Retained sales tax | 152 | 21 | ||||||
Reteined Industry and Commerce Tax | 123 | 117 | ||||||
Creditors – receivables A.V. Villas | ||||||||
Bienes y Comercio 3 | 1,482 | 1,532 | ||||||
$ | 290,524 | 289,532 |
(1) | Included Note 24 - a) Shareholders – Account Payable – Interest, Adminegocuios y Cía S.C.A $ 108. |
(2) | Included Note 24 - a) Shareholders – Account Payable – Dividends, Adminegocios y Cía S.C.A $ 46,553 and Actiunidos $37,014. |
(3) | Includes value received by Grupo Aval Acciones y Valores S. A. for $ 1,365.8 from sale of foreclosed assets after the sale of this portfolio. |
(14) Taxes, Fees and Charges
The detail is as follows:
June 30 | December 31 | |||||||
Current | ||||||||
Industry and Commerce | $ | 1,636 | 1,576 | |||||
Sales Tax | 1,077 | (331 | ) | |||||
Equity Tax | 11,464 | 11,465 | ||||||
Income Tax and Complementary | - | 823 | ||||||
$ | 14,177 | 13,153 | ||||||
Long Term | ||||||||
Equity Tax | $ | 17,196 | 22,928 |
Equity Tax
The company registered in accounts payable the full Equity Tax with counterpart on the Account of Net Equity Valuation
The equity tax caused by the company in 2011 was $$45,857 out of which it was paid $11,465 in year 2011 and $5,732 in the first semester of 2012
Payment date | Equity Tax | Value Install | Pay value | Acc. Payment | |||||||||
May-11 | pay installment 1 | $ | 5,733 | 5,733 | 5,733 | ||||||||
Sep-11 | pay installment 2 | 5,732 | 5,732 | 11,465 | |||||||||
May- 12 | pay installment 3 | 5,732 | 5,732 | 17,197 | |||||||||
Sep-12 | Pay installment 4 (1) | 5,732 | - | ||||||||||
May 13 | Pay installment 5 (1) | 5,732 | - | ||||||||||
Sept-13 | Pay installment 6 (2) | 5,732 | - | ||||||||||
May-14 | Pay installment 7 (2) | 5,732 | - | ||||||||||
Sep-14 | Pay installment 8 (2) | 5,732 | - | ||||||||||
$ | 45,857 | 17,197 | |||||||||||
(1) Current Equity tax | 11,464 | ||||||||||||
(2) Long Term Equity Tax | 17,196 | ||||||||||||
Total Pending | $ | 28,660 | |||||||||||
Value paid as of June 30, 2012 | $ | 17,196 |
56
(15) Labor Obligations
The detail of labor obligations is as follows:
June 30 | December 31 | |||||||
Consolidated severance pay | $ | - | 182 | |||||
Interest on severance pay | - | 20 | ||||||
Consolidated Vacations | 714 | 714 | ||||||
$ | 714 | 916 |
(16) Estimated Liabilities and Provisions
The balance of estimated liabilities and provisions is as follows
June 30 | December 31 | |||||||
For cost and expenses | $ | 1,107 | - | |||||
For labor obligations | 225 | - | ||||||
For income tax | 6,036 | - | ||||||
$ | 7,368 | - |
(17) Other liabilities
The balance of other liabilities is as follows:
June 30 | December 31 | |||||||
Pre-payments / advances received from shareholders | $ | 2,105 | 2,655 |
(18) Outstanding Bonds
The following is the detail of bonds issued
June 30 | December 31 | |||||||
Short term: | ||||||||
Year 2005 second issue (1) | $ | - | 94,700 | |||||
Year 2009 fourth issue | 125,750 | 125,750 | ||||||
Sub-total short term | 125,750 | 220,450 | ||||||
Long Term: | ||||||||
Year 2005 third issue | 100,000 | 100,000 | ||||||
Year 2009 fourth issue | 624,250 | 624,250 | ||||||
Sub-total long term | 724,250 | 724,250 | ||||||
Total | $ | 850,000 | 944,700 |
(1) | In compliance with the deadline, for the placement of the second issue series "A", in April 2012 there was a payment for $94,700 from capital. |
Outstanding bonds have the following features:
Second issue year 2005
Kind of security: | Ordinary Bonds |
Date of issuance: | April 22, 2005 |
Nominal Value: | $1,000,000 (pesos) each |
Amount authorized: | $200,000 |
Amount issued: | $200,000 |
57
Series: | A |
Redemption term: | Five (5) and seven (7) years from the date of issuance |
Legal Representative of Bond Holders tenedores de bonos: | Fiduciaria Corredores Asociados FIDUCOR S.A. |
Managing Entity: | Depósito Centralizado de Valores de Colombia DECEVAL S.A. |
Yield: | Bonds Series A and B earn a floating interest referenced by inflation (IPC) and its capital will be fully redeemed at maturity. |
Emission performance reflects current market conditions at the date of placement of it, complying with the issuer guidelines laid down in the regulation of issuance and placement approved by minutes of Board of Directors No.55 of October 24, 2003. |
Third Issue year 2005 | |
Kind of security: | Ordinary Bonds |
Date of issuance: | October 28, 2005 |
Nominal Value: | $1,000,000 (pesos) each |
Amount authorized: | $200,000 |
Amount issued: | $200,000 |
Series: | A |
Redemption Term: | Six (6) and ten (10) years from date of issue. |
Legal Representantive Of bond holders: | Fiduciaria Corredores Asociados FIDUCOR S.A. |
Managing entity: | Depósito Centralizado de Valores de Colombia DECEVAL S.A. |
Yield: | Bonds Series A and B earn a floating interest referenced by inflation (IPC) and its capital will be fully redeemed at maturity. |
Emission performance reflects current market conditions at the date of placement of it, complying with the issuer guidelines laid down in the regulation of issuance and placement approved by minutes of Board of Directors No.71 of October 7, 2005. |
Fourtth issue 2009 | |
Kind of security: | Ordinary Bonds |
Date of Issuance: | December 3, 2009 |
Nominal Value: | $1,000,000 (pesos) each |
Amopunt authorized: | $750,000 |
Amount issued: | $750,000 |
Series: | A y B |
Redemption Term: | Three (3) and fifteen (15) from the date of issue. |
Legal Representative of bond holders | Fiduciaria Corredores Asociados FIDUCOR S.A. |
Entidad Administradora: | Depósito Centralizado de Valores de Colombia DECEVAL S.A. |
Yield: | B3 series bonds bear a floating interest tied to the DTF+1. 14, A5, A7 series, A10 and A15 bear a floating interest referenced to inflation (CPI), more 3.69, 4.49, 4.84 and 5.20 points respectively and its capital will be redeemed completely upon maturity. |
(19) Social Capital and Premium in Shares Placement
On June 30, 2012 and December 31, 2011, the authorized capital was $120,000 represented in 120.000.000.000 shares with nominal value of one peso ($ 1) each.
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The Assembly held on December 7, 2010, approved an amendment to the by-laws, allowing the possibility of converting ordinary shares into shares of preferential dividend. This modification of by-laws, was approved by the Colombian Superintendency of Finance through resolution No. 2443 of December 23, 2010. The defined exchange ratio was 1 ordinary share for 1 of preferential dividend without vote right. Shares may only be converted when so approved or authorized by the General Assembly, depending on the case.
The movement of paid and subscribed capital during the semester was:
June 30 | December 31 | |||||||
Paid and subscribed | 18,551,766,453 | 18,551,299,996 | ||||||
Suscribed to be paid | - | 466,457 | ||||||
Total Shares | 18,551,766,453 | 18,551,766,453 | ||||||
Value in million pesos | $ | 18,552 | 18,552 |
On march 2012 were sold 466.457 preferential shares which were in the name of Grupo Aval Acciones y Valores S.A. and which were the result of the application of the mechanism of default of the issue of May 2011, generating a premium on placement of shares amounting to $615,298,943 were sold during the month of March 2012.
The preferred shares issued are entitled to receive a minimum preferential dividend on the benefits of exercise, after covering losses affecting the capital, deduced the contribution which legally must be for legal reserve, and before creating or increasing any other reserve. The minimum preferential dividend is one peso ($1.00) per semester per share, provided this preferential dividend is greater than the dividend declared for ordinary shares; otherwise, i.e. if the minimum preferential dividend is not higher than that applicable to ordinary shares, only will be recognized to every preferential share the dividend declared for each ordinary share. There will be no accumulation of dividends. The right of conversion of ordinary shares to preferential has been exercised for the first semester of 2012 for a total of 117,370,221 shares and for the second semester of 2011 for a total of 137,239,416 shares.
3 Shares at nominal value of $3 were adjusted, corresponding to the sum of the fractions that as product of the split were recorded in accounting but not in the book of shareholders of Deceval; for this reason the accounting conforms to the figure presented by Deceval.
During the second semester of 2011 it was presented an increase in capital on account of the split process explained in note (5) by means of which Grupo Aval Acciones y Valores S.A. delivered to Popular Securities S.A. and Inversiones Escorial S.A. 934,669,126 preffered shares worth $935. The premium for placement of shares was increased by $697,519.
(20) Capital surplus
The following is the detail for capital surplus:
June 30 | december 31 | |||||||
Prime in placement of shares | $ | 3,671,667 | 3,671,052 | |||||
Surplus equity sharing method: (1) | ||||||||
Banco de Bogotá S.A. | 777,328 | 1,240,725 | ||||||
Banco de Occidente S.A. | 327,625 | 407,749 | ||||||
Sociedad Administradora de Fondos de Pensiones y Cesantías Porvenir S.A. | 3,944 | 5,416 | ||||||
Banco Popular S.A. | - | 108,639 | ||||||
1,108,897 | 1,762,529 | |||||||
$ | 4,780,564 | 5,433,581 |
(1) Included note 24 – Capital surplus
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(21) Reserves
Legal
In accordance with legal provisions, every society should constitute a legal reserve of ten percent (10%) of liquid profits of each year up to fifty percent (50%) of the subscribed capital. The reserve may be reduced to less than fifty percent (50%) of the subscribed capital, when it is intended to cover losses in excess of non-distributed profits.
The following is the detail of the reserves:
June 30 | December 31 | |||||||
Legal Reserve | $ | 6,972 | 6,972 | |||||
Occasional Reserve | ||||||||
At the disposition of the maximum corporate body | 2,461,056 | 2,194,212 | ||||||
$ | 2,468,028 | 2,201,184 |
(22) Valuation of Shareholder´s Equity
The first semester of 2011 was affected with the registration of the equity tax for a value of $45.857, on account of the lien corresponding to four years (2011-2014). As of June 30, 2012 this account did not show any movement.
June 30 | December 31 | |||||||
Of corporate capital | $ | 53,081 | 53,081 | |||||
Of surplus capital | 188,138 | 188,138 | ||||||
Of reserves | 403,585 | 403,585 | ||||||
Of results of previous periods | 90,891 | 90,891 | ||||||
Of assets in unproductive period | 2,100 | 2,100 | ||||||
Surplus equity sharing method | 137,430 | 137,430 | ||||||
875,225 | 875,225 |
(23) Surplus in Valuation of Investments
The equity of the company between June 30, 2012 and December 31, 2011, by effect of the change in policies and accounting practices of Grupo Aval Acciones y Valores, described in note 10, increased in the amount of $1,190,281, as a result of the accounting and disclosure of the valuation of investments in subsidiaries.
June 30 | December 31 | |||||||
Banco de Bogotá | 4,211,951 | 3,699,262 | ||||||
Banco de Occidente | 1,195,272 | 1,058,546 | ||||||
Banco AV Villas | 658,151 | - | ||||||
Banco Popular | 2,107,173 | 2,224,458 | ||||||
$ | 8,172,547 | 6,982,266 |
(24) Transactions with Related Parties
Are considered related parties main shareholders, Board members and companies where Grupo Aval Acciones y Valores S.A. owns investment above ten per cent (10%), or administrative, financial or economic interests are considered related parties. Also companies where shareholders or members of the Board of Directors have more than ten percent (10%) participation.
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a) | Shareholders |
The main balances of transactions with shareholders are as follows
June 30 | December 31 | |||||||
Financial Obligations: | ||||||||
Adminegocios y Cía. S.C.A.(1) | $ | 8,333 | 343,703 |
(1) Included in note 11, the conditions of financial obligations are found in the same note. |
June 30 | December 31 | |||||||
Accounts Payable | ||||||||
Interest | ||||||||
Adminegocios y Cía. S.C.A.(2) | 108 | $ | 3,750 | |||||
108 | 3,750 | |||||||
Dividends | ||||||||
Adminegocios y Cía. S.C.A.(2) | 46,553 | 45,260 | ||||||
Actiunidos S.A. (2) | 37,014 | 35,986 | ||||||
83,567 | 81,246 | |||||||
Total Dividends and interest | 83,675 | 84,996 |
(2) Included in Note 13 – Accounts Payable |
June 30 | December 31 | |||||||
Financial expenses | ||||||||
Interest: | 8,899 | 10,781 | ||||||
Adminegocios y Cía. S.C.A. (3) | $ | 8,899 | 10,781 |
(3) Included in Note 26 – Income and non- operating expenses |
b) Members of the Board of Directors
Transactions carried out with members of Board of Directors are as follows:
June 30 | December 31 | |||||||
Fees paid (1) | $ | 239 | 170 | |||||
(1) Included in Note 25 – Income and Operating expenses |
b) Companies in which the company has participation equal to or greater than 10 %
The main balances of transactions with companies in which the company has participation equal to or greater than 10% are as follows:
June 30 | December 31 | |||||||
Available: | ||||||||
Checking accounts: (1) | ||||||||
Banco de Bogotá S.A. (2) | 556 | $ | 611 | |||||
Banco de Occidente S.A. | 787 | 743 | ||||||
Banco Comercial AV Villas S.A. | 32 | 4 | ||||||
Banco Popular S.A. | 513 | 528 | ||||||
$ | 1,888 | 1,886 | ||||||
Saving Accounts: (1) | ||||||||
Banco de Bogotá S.A. | 736,703 | 1,099,292 | ||||||
Banco de Occidente S.A. | 222,852 | 249,104 | ||||||
Banco Comercial AV Villas S.A. | 3,929 | 113,920 | ||||||
Banco Popular S.A. | 114,359 | 125,688 | ||||||
$ | 1,077,843 | 1,588,004 | ||||||
Total Available | $ | 1,079,731 | 1,589,890 | |||||
(1) Included in Note 3 - Available | ||||||||
(2) Includes $1.8 in foreign currency converted into national currency in accordance with the accounting policy in note 2 (m). |
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June 30 | December 31 | |||||||
Debtors: | ||||||||
Dividends(3) | ||||||||
Banco de Bogotá S.A. | $ | 83,728 | 75,965 | |||||
Banco de Occidente S.A. | 35,427 | 34,469 | ||||||
Banco Popular S.A. | 42,144 | 57,921 | ||||||
Sociedad Administradora de | ||||||||
Fondos de Pensiones y Cesantías Porvenir S.A. | 2,380 | 2,315 | ||||||
$ | 163,679 | 170,670 | ||||||
Fees(3) | ||||||||
Banco de Bogotá S.A. | $ | - | 727 | |||||
Banco Comercial AV Villas S.A. | 826 | - | ||||||
$ | 826 | 727 | ||||||
Depositaries(3) | ||||||||
Banco de Occidente S.A. | $ | 188 | 438 | |||||
(3) Included in Note 6 – Debtors short term | ||||||||
June 30 | December 31 | |||||||
Permanent Investments(4) | ||||||||
Banco de Bogotá S.A. | $ | 5,036,474 | 5,226,621 | |||||
Banco de Occidente S.A. | 2,064,699 | 2,053,160 | ||||||
Banco Comercial AV Villas S.A. | 772,932 | 743,191 | ||||||
Sociedad Administradora de | ||||||||
Fondos de Pensiones y Cesantías Porvenir S.A. | 143,600 | 130,721 | ||||||
Banco Popular S.A. | 1,513,475 | 1,541,016 | ||||||
Grupo Aval Limited | (22,994 | ) | - | |||||
$ | 9,508,186 | 9,694,709 | ||||||
(4) Included in Note 5 – Permanent Investments | ||||||||
June 30 | December 31 | |||||||
Intangibles: (5) | ||||||||
Mercantile credit (good will) acquired | ||||||||
Banco de Occidente S.A. | $ | 41,662 | 42,129 | |||||
Banco Popular S.A. | 376,292 | 381,377 | ||||||
$ | 417,954 | 423,506 | ||||||
(5) Included in Note 8 - Intangibles | ||||||||
June 30 | December 31 | |||||||
Accounts Payable: | ||||||||
Banco de Bogotá S.A.(6) | $ | - | 40 | |||||
(6) Included in Note 12 - Suppliers | ||||||||
June 30 | December 31 | |||||||
Capital surplus: | ||||||||
Surplus by equity participation method (7) | ||||||||
Banco de Bogotá S.A. | $ | 777,328 | 1,240,725 | |||||
Banco de Occidente S.A. | 327,625 | 407,749 | ||||||
Sociedad Administradora de Fondos de Pensiones y Cesantías Porvenir S.A. | 3,944 | 5,416 | ||||||
Banco Popular S.A. | - | 108,639 | ||||||
$ | 1,108,897 | 1,762,529 | ||||||
(7) Included in Note 20 – Capital surplus | ||||||||
June 30 | December 31 | |||||||
Operating Income: | ||||||||
Interest income (8) | ||||||||
Banco de Bogotá S.A. | $ | 24,686 | 25,890 | |||||
Banco de Occidente S.A. | 6,414 | 7,762 | ||||||
Banco AV Villas S.A. | 1,888 | 3,074 | ||||||
Banco Popular S.A. | 3,232 | 3,290 | ||||||
$ | 36,220 | 40,016 | ||||||
(8) Included in Note 25 – Income and Operating Expenses. |
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June 30 | December 31 | |||||||
Income by equity sharing method: (9) | ||||||||
Banco de Bogotá S.A. | $ | 440,706 | 360,650 | |||||
Banco de Occidente S.A. | 162,515 | 162,103 | ||||||
Banco AV Villas S.A. | 59,181 | 72,826 | ||||||
Sociedad Administradora de | ||||||||
Fondos de Pensiones y Cesantías Porvenir S.A. | 20,870 | 18,770 | ||||||
Banco Popular S.A. | 165,451 | 143,531 | ||||||
Grupo Aval Limited | (22,994 | ) | - | |||||
$ | 825,729 | 757,880 |
(9) Included in Note 5 – Permanent Investments; Note 25 – Income and Operating Expenses
June 30 | December 31 | |||||||
Recovery for equity changes: (10) | ||||||||
Banco AV Villas S.A. | $ | 9,663 | 18,923 | |||||
Sociedad Administradora de | ||||||||
Fondos de Pensiones y Cesantías Porvenir S.A. | 8,406 | 4,380 | ||||||
$ | 18,069 | 23,303 |
(10) Included in Note 5 - Permanent Investments; Note 25 – Income and Operating Expenses
June 30 | December 31 | |||||||
Loss in participation method | ||||||||
for equity changes: (11) | ||||||||
Sociedad Administradora de | ||||||||
Fondos de Pensiones y Cesantías Porvenir S.A. | $ | 7,783 | 7,711 | |||||
Banco Popular S.A. | 17,145 | - | ||||||
Banco Comercial AV Villas S.A. | 10,391 | 13,620 | ||||||
$ | 35,319 | 21,331 |
(11) Included in Note 5 – Permanent Investments
June 30 | December 31 | |||||||
Operating expenses | ||||||||
Leases: (12) | ||||||||
Fondo de Pensiones y Cesantías Porvenir S.A. | $ | 235 | 234 | |||||
Banco Comercial AV Villas S.A. | 118 | 117 | ||||||
$ | 353 | 351 |
(12) Included in Note 25 – Income and operating expenses
June 30 | December 31 | |||||||
Amortization of mercantil credit (goodwill) acquired: (13) | ||||||||
Banco de Occidente S.A. | $ | 467 | 418 | |||||
Banco Comercial AV Villas S.A. | - | 1,450 | ||||||
Banco Popular S.A. | 5,085 | 4,473 | ||||||
$ | 5,552 | 6,341 |
(13) Included in Note 8 - Intangibles
June 30 | December 31 | |||||||
Non Operating Income | ||||||||
Fees: (14) | ||||||||
Banco de Bogotá S.A. | $ | 7,130 | 3,454 | |||||
Banco de Occidente S.A. | 4,936 | 2,391 | ||||||
Banco Comercial AV Villas S.A. | 2,742 | 1,328 | ||||||
Banco Popular S.A. | 4,388 | 2,125 | ||||||
Fondo de Pensiones y Cesantías Porvenir S.A. | 2,742 | 1,328 | ||||||
$ | 21,938 | 10,626 |
(14) Included in Note 26 – Income and Non-operating expenses
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June 30 | December 31 | |||||||
Non-Operating Expenses(15) | ||||||||
Financial: | ||||||||
Banco de Bogotá S.A. | $ | 179 | 214 | |||||
Banco Comercial AV Villas S.A. | 27 | - | ||||||
Banco de Occidente S.A. | 19 | 42 | ||||||
Banco Popular S.A. | 7 | - | ||||||
$ | 232 | $ | 256 |
(15) Included in Note 26 – Income and non operating expenses
On June 30, 2012 and December 31, 2011, the society did not perform operations with its administrators. Transactions with related companies were under current conditions in the market for similar operations.
(25) Income and Operational Expenses
The following is the detail of operational income for the semesters ended in:
June 30 | December 31 | |||||||
Operating Income: | ||||||||
Interest(1) | $ | 36,220 | 40,202 | |||||
Financial yields | 145 | 7 | ||||||
Equity sharing method, net neto | 825,729 | 757,880 | ||||||
Recovery for equity changes | 18,069 | 23,303 | ||||||
$ | 880,163 | 821,392 | ||||||
Operating expenses: | ||||||||
Personnel expenses | $ | 9,901 | 9,205 | |||||
Fees | ||||||||
Board of Directors (2) | 239 | 170 | ||||||
Fiscal Auditor | 21 | 40 | ||||||
Legal Advise | 1,533 | 825 | ||||||
Financial Advise | 3,956 | 3,109 | ||||||
Technical Advise | 2,818 | 3,676 | ||||||
8,567 | 7,820 | |||||||
Taxes | ||||||||
Industry and commerce | 5,128 | 4,393 | ||||||
Liens to financial movements | 3,667 | 2,653 | ||||||
VAT discountable | 1,127 | 3,189 | ||||||
Leases | ||||||||
Property(3) | 353 | 351 | ||||||
Computer Equipment | 7 | 5 | ||||||
360 | 356 | |||||||
Contributions and Memberships | 151 | 148 | ||||||
Insurance | 4 | 1 | ||||||
Services | 593 | 626 | ||||||
Legal expenses | 8 | 42 | ||||||
Maintenance and repairs | 29 | 99 | ||||||
Adaptations and installations | 8 | 5 | ||||||
Travel expenses | 123 | 117 | ||||||
Depreciatiions | 91 | 71 | ||||||
Amortization of intangibles | 5,552 | 6,341 | ||||||
Amortization of deferred expenses | 11,619 | 11,562 | ||||||
Provision for negotiable equity investments | 3 | 3 | ||||||
Sales operating expenses | 563 | 1,491 | ||||||
Various | 214 | 139 | ||||||
$ | 47,708 | 48,261 |
(1) Included in Note 24 - c) Operating Income
(2) Included in Note 24 - b) Members of the Board
(3) Included in Note 24 - c) Expenses for leases
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(26) Income and Non-Operating Expenses
The following is the detail of non- operating income for the semesters ended in:
June 30 | December 31 | |||||||
Fees:(1) | ||||||||
Banco de Bogotá S.A. | $ | 7,130 | 3,454 | |||||
Banco de Occidente S.A. | 4,936 | 2,391 | ||||||
Banco AV Villas S.A. | 2,742 | 1,328 | ||||||
Banco Popular S.A. | 4,388 | 2,125 | ||||||
Fondo de Pensiones y Cesantías Porvenir S.A. | 2,742 | 1,328 | ||||||
$ | 21,938 | 10,626 | ||||||
Services: | ||||||||
Corporación Publicitaria S.A. | 2 | 2 | ||||||
2 | 2 | |||||||
Recoveries: | ||||||||
Recovery of other costs | 119 | 16 | ||||||
Appropriations | - | 2 | ||||||
119 | 18 | |||||||
Exchange difference | 57 | 21 | ||||||
$ | 22,116 | 10,667 |
(1) Included in Note 24 - c) Non- operational Income
The following is the detail for non-operating expenses for the semesters ended in:
Financial | June 30 | December 31 | ||||||
Bank Expenses (1) | $ | 28 | 4 | |||||
Commission(1) | 360 | 387 | ||||||
Exchange difference | 9 | 17 | ||||||
397 | 408 | |||||||
Interest | ||||||||
Bonds | 34,679 | 39,284 | ||||||
Financial Obligations Bienes y Comercio | 14,389 | 11,314 | ||||||
Financial Obligations Adminegocios (2) | 8,899 | 10,781 | ||||||
Financial Obligations Rendifin | 32,226 | 29,242 | ||||||
90,193 | 90,621 | |||||||
90,590 | 91,029 | |||||||
Loss in sale and withdrawal of goods | - | 29 | ||||||
Extraordinary expenses | 31 | - | ||||||
Various | ||||||||
Extraordinary Expenses DIAN | 7 | - | ||||||
Process of execution of guarantees | 14 | - | ||||||
Others | - | 1 | ||||||
52 | 30 | |||||||
$ | 90,642 | 91,059 |
(1) Includes Banco de Bogotá $179, AV Villas $27, Occidente $19, Popular $7 - Note 24
(2) Included in Note 24 - a) Shareholders – Financial Expenses
(27) Income Tax and Complementary
The following is the reconciliation between the accounting profits and liquid income estimated by semesters ended June 30, 2012 and 31 December 2011:
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June 30 | December 31 | |||||||
Profits before Income Tax | $ | 728,610 | 671,408 | |||||
Plus (less) ítems that increase | ||||||||
(Decrease) fiscal profits: | ||||||||
Recoveries | (18,069 | ) | (23,303 | ) | ||||
Income equity sharing method | (825,729 | ) | (757,880 | ) | ||||
Loss equity sharing method | 35,319 | 21,331 | ||||||
Tax on financial transactions | 2,750 | 1,990 | ||||||
Non deductible expenses (Art. 13. Ley 788/02) | 95,406 | 97,740 | ||||||
Non deductible expenses and provisions | 3 | 3 | ||||||
Net taxable income | $ | 18,290 | 11,289 | |||||
Presumptive income | 18,291 | 11,653 | ||||||
Current tax income (33%) | $ | 6,036 | 3,846 |
Reconciliaton between accounting equity and fiscal equity
On June 30, 2012 and 31 December 2011, accounting equity differs from the fiscal equity by the following:
June 30 | December 31 | |||||||
Accounting equity | $ | 17,037,490 | 16,178,370 | |||||
Plus (less) items increasing | ||||||||
(decreasing) fiscal equity: | ||||||||
Less cost of investments | (3,432,626 | ) | (3,840,700 | ) | ||||
Intangible – good will | 190,224 | 184,672 | ||||||
Valuations | (7,970,797 | ) | (6,780,516 | ) | ||||
Estimated liabilities and provisions | 7,368 | - | ||||||
Fiscal equity | $ | 5,831,659 | 5,741,826 |
Income tax returns for the taxable years 2011, 2010 and 2009 are pending review by the tax authorities.
Grupo Aval is subject to the property tax and surcharge set out for year 2011 by Act 1370 of 2009 and the Legislative Decree 4825 of 2010 at the rate of 6%, liquidated on the equity as of January 1, 2011. For accounting purposes, pursuant to the provisions previously referenced the company adopted as policy to attribute it in its entirety against the equity revaluation account.
(28) Fiscal Contingent Accounts
The following is the detail of the tax contingent accounts:
June 30 | December 31 | |||||||
Excess of presumptive income | $ | - | - | |||||
Difference between accounting and fiscal value of: | ||||||||
Investments | 3,432,626 | 3,840,700 | ||||||
Intangibles | 190,224 | 184,672 | ||||||
Appreciations | 7,970,797 | 6,780,516 | ||||||
$ | 11,593,647 | 10,805,888 |
(29) Control Contingent Accounts
The following is the detail of the control accounts
June | December 31 | |||||||
Debtors of control | ||||||||
Control of Losses - Equity sharing method | $ | 77,132 | - | |||||
Adjustment for inflation - assets | 885,158 | 885,367 | ||||||
962,290 | 885,367 |
66
June 30 | December 31 | |||||||
Creditors of control | ||||||||
Adjustments for inflation - equity | $ | 875,225 | 875,225 | |||||
Fiscal creditors | ||||||||
Difference between accounting and fiscal value: | ||||||||
Equity | $ | 11,205,831 | 10,436,544 | |||||
Net Income | 704,284 | 656,271 | ||||||
Liabililites | 7,367 | - | ||||||
$ | 11,917,482 | 11,092,815 |
(30) Financial Indicators
The detail of financial indicators is:
June 30 | December 31 | |||||||
Liquidity ratio | ||||||||
Current Assets | 2.42 | 3.19 | ||||||
Current Liabilities | ||||||||
Return of assets | ||||||||
Net Earnings | ||||||||
Total assets | 3.73 | % | 3.53 | % | ||||
Return on Equity | ||||||||
Net Earnings | ||||||||
Net Shareholder´s Equity | 4.24 | % | 4.13 | % | ||||
Leverage | ||||||||
Total liabilities | ||||||||
Net Shareholder´s Equity | 13.71 | % | 16.81 | % | ||||
Operating Efficiency | ||||||||
Operating expenses | ||||||||
Total assets | 0.25 | % | 0.26 | % | ||||
Working Capital | ||||||||
Current assets – current liabilities | $ | 748,333 | 1,224,713 | |||||
Solvency | ||||||||
Shareholder´s Equity | 87.94 | % | 85.61 | % | ||||
Total Assets | ||||||||
Operating Margin | ||||||||
Operating Profit | 90.57 | % | 91.53 | % | ||||
Operating Income |
Liquidity ratio:
The liquidity ratio remains stable and within optimal ranges that indicate the support that exists for the payment of current liabilities.
Operating efficiency:
This indicator remains within the parameters of companies that are characterized by their high operational and administrative efficiency.
67
Working capital:
Working capital presents a decrease arising out of the increase of the causation of the portion of current portion of financial obligations and outstanding bonds and the reduction of the value in the available.
Solvency:
The solvency of the company is 87.94%, and is mainly reflected in permanent and negotiable investments.
Major variations in the items of the balance sheet:
a) Negotiable Investments
Negotiable investments presented an increase of $1,728 mainly by the strengthening of investment in Fiduciaria Corficolombiana.
b) Permanent Investments
Permanent investments decreased by $186,523 due to homogenized equity variations
c) Valuations
There is an increase by $1,190,281 under this heading, due to recognition of revaluations of investments of Grupo Aval in controlled entitie,s regarding the value of its realization.
June 30 | December 31 | |||||||
Banco de Bogotá | $ | 4,211,951 | 3,699,262 | |||||
Banco de Occidente | 1,195,272 | 1,058,546 | ||||||
Banco AV Villas | 658,151 | - | ||||||
Banco Popular | 2,107,173 | 2,224,458 | ||||||
$ | 8,172,547 | 6,982,266 |
Included in Note 23
d) Equity Tax
This item presents a long-term balance for total value of $17,196 which corresponds to the tax caused for the years 2012, 2013 and 2014, in accordance with the Act 1370 of December 30, 2009 and Decree 4825 of December 29, 2010.
e) Shareholder´s Equity
The main variations of net worth were:
Capital surplus
Decrease of surplus by equity sharing method by $653,632, which corresponds to the application of the equity method to permanent investments. The following is the detail of the surplus by the equity sharing method:
June 30 | December 31 | |||||||
Banco de Bogotá S.A. | $ | 777,328 | 1,240,725 | |||||
Banco de Occidente S.A. | 327,625 | 407,749 | ||||||
Banco Popular S.A. | - | 5,416 | ||||||
Sociedad Administradora de Fondos de | ||||||||
Pensiones y Cesantías Porvenir S.A. | 3,944 | 108,639 | ||||||
Total | $ | 1,108,897 | 1,762,529 |
Included Note 20 – Capital surplus
68
It was constituted reserve available to the maximum social body by $2,461,056. Occasional reserves increased in $266,844 available to the highest social body and approved in the Assembly of shareholders held on March 30, 2012.
Surplus from revaluations
The valuation surplus presented a significant increase, due to the application of the new policy for valuation included in note 10, relating to the accounting and disclosure of the valuation of investments in controlled entities.
June 30 | December 31 | |||||||
Banco de Bogotá | $ | 4,211,951 | 3,699,262 | |||||
Banco de Occidente | 1,195,272 | 1,058,546 | ||||||
Banco AV Villas | 658,151 | - | ||||||
Banco Popular | 2,107,173 | 2,224,458 | ||||||
$ | 8,172,547 | 6,982,266 |
Included in Note 23 – Surplus in valuation of investments
(31) Other disclosures
The total number of employees was:
June 30 | December 31 | |||||||
Directors | 18 | 15 | ||||||
Other | 104 | 104 | ||||||
Total | 122 | 119 |
(32) Determination of intrinsic value and net earnings per share
Based on the weighted average number of shares in June 2012 and number of outstanding shares in December 2011, it is determined the intrinsic value and the net earnings per share, thus:
June 30 | December 31 | |||||||
Intrinsic value of the share | ||||||||
Total accounting equity ( general balance sheet) | $ | 17,037,490 | 16,178,370 | |||||
Total equity base for calculation of the intrinsec value (A) | $ | 17,037,490 | 16,178,370 | |||||
Shares subscribed and paid (Note 19) | 18,551,766,453 | 18,551,299,996 | ||||||
Total outstanding shares (Note 2, literal j) (B) | 18,551,766,453 | 18,551,299,996 | ||||||
Intrinsec value (A) / (B) | $ | 918.38 | 872.07 | |||||
Net earnings per share | ||||||||
Profits of the period(1) | $ | 722,574 | 667,562 | |||||
On June 30 de 2012 and December 31, 2011 | ||||||||
The weighted average of outstanding shares | ||||||||
during the respective period.(2) | $ | 18,552 | 18,141 | |||||
Net earnings per share (1) / (2) | 38.95 | 36.80 |
(33) Relevant Events
By January 23, 2012, Grupo Aval Limited a subsidiary in Cayman Islands of Grupo Aval Acciones y Valores S.A. issued bonds in the market of international capital in accordance with the Regulation S of the capital market act of 1934 of the United States of America and under Rule 144A, for a total of USD 600 million, with maturity in January 2017 with a deduction of 54.2 Basic, price of 99.458% with an annual interest of the 5.25%.
69
70
Consolidated
Financial Statements
June 30, 2012 y 31 and December 31, 2011
with the Report of the Fiscal Auditor
71
Report of the
Fiscal Auditor
Señores Accionistas
Grupo Aval Acciones y Valores S.A.
I have audited the consolidated general balance sheets of Grupo Aval Acciones y Valores S. A. and the subordinates listed in Note 1 to the financial statements as of June 30, 2012 and December 31, 2011 and the corresponding consolidated income statements, changes in net worth, changes in the financial situation and cash flows, summary of significant accounting policies and other explanatory notes for the semesters ending in those dates.
The financial statements of Banco Comercial AV Villas S.A. and Banco Popular S.A., entities owned by more than 50% by Grupo Aval Acciones y Valores S.A., were audited by other tax reviewers. These financial statements include total assets which represent 7% and 12% on June 30, 2012 and December 31 in relation to the consolidated total assets and revenues which represent 4% and 9% as of 30 June 2012 and 8% and 14% as of December 31, 2011, in relation to consolidated revenues, respectively. The reports on the financial statements of Banco Comercial AV Villas S.A. and Banco Popular S.A. have been provided to me, and my opinion in regards to these values are only based on the reports of the aforementioned tax reviewers.
The administration of the Company is responsible for the adequate preparation and correct presentation of the financial statements in accordance with accounting principles generally accepted in Colombia and the requirements imposed by the Superintendencia Financiera de Colombia. Such responsibility includes: design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements, free of errors of material importance, whether by fraud or error, the selection and application of accounting policies and the establishment of accounting estimates reasonable to such circumstances.
It is my responsibility to issue an opinion on the financial statements based on my audits. I received all information necessary for fulfillment of my duty and conducted examinations according to audit norms generally accepted in Colombia. Such norms require that I satisfy ethical requirements, plan and carry out the audit to achieve reasonable security over whether the financial statements are free of errors of material importance.
An audit includes application of procedures to secure evidence regarding the amounts and disclosures in the financial statements. The procedures selected depend on the criteria of the Fiscal Auditor, including evaluation of the risk of errors of material importance in the financial statements. In due course of such evaluation, the Fiscal Auditor takes into account internal control relevant to the preparation and presentation of the financial statements in order to design audit procedures suitable to incumbent circumstances.
72
An audit also includes evaluation for utilization of suitable accounting policies and the reasonability of accounting balances and estimates conducted by the administration, as well as an evaluation of the general presentation of the financial statements. In my opinion that audit related evidence, as received, is a reasonable base to support the opinion I express next.
In my opinion, based on my audits and reports of tax reviewers of the Comercial Banco AV Villas S.A. and Banco Popular S.A., the aforementioned consolidated financial statements, attached to this report, present reasonably, in all aspects of material significance, the consolidated financial position of Grupo Aval Acciones y Valores S.A. and its subordinates as of June 30, 2012 December 31 2011, the consolidated results its operations and cash flows consolidated by semesters ended on those dates, in accordance with accounting principles generally accepted in Colombia, applied in a uniform manner.
Without qualifying my opinion, I call attention to note 1 to the consolidated financial statements. On January 23, 2012 it was created Grupo Aval Limited as a subsidiary in the Cayman Islands. The participation of Grupo Aval Acciones y Valores S.A., in Grupo Aval Limited as of June 30, 2012 is 100%.
Lida Marcela Herrera Vargas Fiscal Auditor of Grupo Aval Acciones y Valores S.A. T. P. 106.020-T Member of KPMG Ltda. |
September 5, 2012
73
Consolidated Balance Sheet
As of June 30, 2012 and December 31, 2011
(Figures in million pesos)
Assets | June 30 | December 31 | ||||||
Available: | ||||||||
Cash and Bank deposits (note 4) | $ | 10,952,115 | 8,781,960 | |||||
Active Position in the monetary market and | ||||||||
related (note 5) | 2,237,865 | 2,916,627 | ||||||
Total Available | 13,189,980 | 11,698,587 | ||||||
Investments (note 6): | ||||||||
Debt Securities (Fixed Income): | 17,393,170 | 16,213,687 | ||||||
Negotiable | 2,749,698 | 3,450,435 | ||||||
Available for sale | 11,224,009 | 9,691,470 | ||||||
To hold through maturity | 3,419,463 | 3,071,782 | ||||||
Participation Securities (variable income): | 3,073,350 | 2,828,334 | ||||||
Negotiable | 1,293,447 | 1,052,386 | ||||||
Available for sale | 1,779,903 | 1,775,948 | ||||||
Provisions | (8,336 | ) | (8,735 | ) | ||||
Total investments, net | 20,458,184 | 19,033,286 | ||||||
Loan Portfolio and financial lease transactions (note 7): | ||||||||
Commercial Loan Portfolio | 42,598,938 | 40,545,544 | ||||||
Consumer Loan Portfolio | 21,173,509 | 19,735,885 | ||||||
Microcredit Loan Portfolio | 281,219 | 284,167 | ||||||
Mortgage Loan Portfolio | 4,086,182 | 4,218,377 | ||||||
Financial Lease Transactions | 5,896,773 | 5,163,767 | ||||||
Provisions | (2,397,724 | ) | (2,306,500 | ) | ||||
Total Loan Portfolio and Financial Lease Transactions, net | 71,638,897 | 67,641,240 | ||||||
Accounts receivable - Interest (note 8): | ||||||||
Gross Accounts Receivable - Interest | 737,359 | 644,676 | ||||||
Provision for Accounts Receivable - Interest | (73,102 | ) | (61,156 | ) | ||||
Total Account Receivables – Net - Interest | 664,257 | 583,520 | ||||||
Acceptances and Derivatives (note 9) | 328,674 | 418,809 | ||||||
Accounts Receivable Non-Interest - Net (note 8) | 1,612,728 | 1,612,903 | ||||||
Property, plant and equipment, net (note 10) | 1,754,048 | 1,837,711 | ||||||
Operating Lease Transactions, net (note 11) | 364,646 | 323,249 | ||||||
Foreclosed Assets, net (note 12) | 88,405 | 94,967 | ||||||
Prepaid expenses and deferred charges, net (note 13) | 2,051,426 | 1,981,642 | ||||||
Goodwill, net (note 14) | 2,893,232 | 3,109,297 | ||||||
Other assets, net (note 15) | 1,671,662 | 1,073,553 | ||||||
Asset Valuation, net (note 16) | 2,600,293 | 2,091,305 | ||||||
Total Assets | $ | 119,316,432 | 111,500,070 | |||||
Memorandum accounts (note 25) | $ | 468,971,802 | 425,871,982 | |||||
Contingent accounts, net (note 26) | $ | 2,307,503 | 6,129,033 |
Please refer to attached Notes to the consolidated financial statements.
74
Liabilities and Shareholder´s Equity | June 30 | December 31 | ||||||
Liabilities: | ||||||||
Deposits: | ||||||||
Without cost: | ||||||||
Checking accounts | $ | 10,737,089 | 12,249,991 | |||||
Other | 799,317 | 1,047,378 | ||||||
11,536,406 | 13,297,369 | |||||||
Without cost: | ||||||||
Checking accounts | 8,642,978 | 7,167,800 | ||||||
Time Deposits (note 17) | 26,082,519 | 22,630,493 | ||||||
Saving deposits | 28,316,766 | 27,911,952 | ||||||
63,042,263 | 57,710,244 | |||||||
Total deposits | 74,578,669 | 71,007,613 | ||||||
Passive Positions in monetary market operations and related | 7,324,754 | 3,225,145 | ||||||
Bank Acceptances (note 8) | 267,125 | 468,964 | ||||||
Borrowings from Banks and Others (nota 18) | 9,629,660 | 11,437,751 | ||||||
Accounts Payable other than interest (note 19) | 2,912,675 | 3,093,949 | ||||||
Accounts Payable - Interest | 394,984 | 313,030 | ||||||
Other liabilities (note 20) | 1,441,021 | 1,447,769 | ||||||
Bonds (long term debt) (note 21) | 7,534,241 | 6,566,235 | ||||||
Estimated liabilities (note 22) | 1,011,838 | 855,261 | ||||||
Non-controlling Interest (note 23) | 5,386,236 | 5,006,294 | ||||||
Total liabilities | 110,481,203 | 103,422,011 | ||||||
Net Shareholder´s Equity: | ||||||||
Subscribed and Paid-in Capital (nota 24) | 18,552 | 18,552 | ||||||
Preferred stock | 4,744 | 4,744 | ||||||
Common Stock | 13,808 | 13,808 | ||||||
Premium on sale of stock | 3,671,668 | 3,671,053 | ||||||
Retained earnings: | 2,808,123 | 2,773,725 | ||||||
Appropiated Retained Earnings | 2,089,606 | 2,110,365 | ||||||
Inappropiated Retained Earnings (profits of the period) | 718,517 | 663,360 | ||||||
Revaluation of Shareholder´s Equity | 1,324,698 | 920,087 | ||||||
Capital surplus: | 1,012,188 | 694,642 | ||||||
Unrealized gain (loss) in investments available for sale | (153,732 | ) | (187,100 | ) | ||||
Asset Valuatiion, net (note 16) | 1,165,920 | 881,742 | ||||||
Total Shareholder´s Equity | 8,835,229 | 8,078,059 | ||||||
Total Liabilities and Shareholder´s Equity | $ | 119,316,432 | 111,500,070 | |||||
Total memorandum accounts (note 25) | $ | 468,971,802 | 425,871,982 | |||||
Contingent accounts, net (note 26) | $ | 2,307,503 | 6,129,033 |
Please refer to attached Notes to the consolidated financial statements.
75
Consolidated Income Statement
As of June 30, 2012 and December 31, 2011
(Figures in million pesos)
Interest Income: | 30 de junio | 31 de diciembre | ||||||
Interest on Loan Portfolio | $ | 3,845,263 | 3,467,924 | |||||
Interest on Investment Securities | 672,534 | 358,178 | ||||||
Yield of overnight funds | 98,454 | 80,371 | ||||||
Leasing Transactions | 307,739 | 252,838 | ||||||
Total Interest Income | 4,923,990 | 4,159,311 | ||||||
Interest expense: | ||||||||
Checking Accounts | 72,882 | 48,564 | ||||||
Time Deposits | 648,982 | 488,654 | ||||||
Saving Deposits | 519,614 | 452,783 | ||||||
Borrowings form Bank and Others | 240,170 | 255,307 | ||||||
Interest expense for active position in money market | ||||||||
Operations and related | 99,995 | 82,703 | ||||||
Bonds(long term debt) | 260,400 | 153,079 | ||||||
Total interest expense | 1,842,043 | 1,481,090 | ||||||
Net Interest Margin | 3,081,947 | 2,678,221 | ||||||
Net Expense – Provisions for Loan Portfolio and Accounts Receivable | 462,532 | 433,201 | ||||||
Recovery of charge-offs | (65,281 | ) | (89,427 | ) | ||||
Expense - Recovery of provisions for Foreclosed Assets and others | 32,928 | 37,129 | ||||||
Recovery of reserves for Foreclosed Assets | ||||||||
and others assets | (35,549 | ) | (190,693 | ) | ||||
Total provision expense, net | 394,630 | 190,210 | ||||||
Net Interest Margin after Net Reserve Expense | 2,687,317 | 2,488,011 | ||||||
Service Fees and Income -Net: | ||||||||
Banking service Fees | 675,433 | 678,196 | ||||||
Branch Network Services | 13,948 | 23,160 | ||||||
Credit Card Fees | 165,136 | 162,145 | ||||||
Fees for transfers, checks and checkbooks | 36,682 | 39,365 | ||||||
Warehousing Services | 83,035 | 92,666 | ||||||
Fiduciary Activities | 86,704 | 76,322 | ||||||
Administration of severance and pension Funds | 240,914 | 238,636 | ||||||
Other | 82,136 | 97,099 | ||||||
Total service fees and Income - Net | 1,383,988 | 1,407,589 | ||||||
Other service fees and expenditures | (218,408 | ) | (225,185 | ) | ||||
Total service fees and income, net | 1,165,580 | 1,182,404 | ||||||
Other Operating Income and expenses: | ||||||||
(Losses) earnings in foreign currency transactions | (108,183 | ) | 271,231 | |||||
Earnings (losses) en derivatives transactions | 172,958 | (134,844 | ) | |||||
Earnings (losses) for sale of variable income investments | 9,967 | 30,922 | ||||||
Dividends | 89,808 | 5,760 | ||||||
Communications, rentals and others | 102,431 | 139,722 | ||||||
Income from real sector companies | 197,855 | 204,616 | ||||||
Total other operating income | 464,836 | 517,407 | ||||||
Operating Margin | 4,317,733 | 4,187,822 | ||||||
Operating expenses: | ||||||||
Employee salaries and benefits | 938,523 | 904,272 | ||||||
Bonuses | 53,589 | 54,546 | ||||||
Indemnities | 10,263 | 10,847 | ||||||
Administrative and other expenses (note 27) | 1,249,718 | 1,283,390 | ||||||
Deposit insurance | 91,355 | 84,087 | ||||||
Donations | 4,999 | 11,357 | ||||||
Depreciation | 148,555 | 141,756 | ||||||
Amortization of mercantile credit | 46,323 | 35,801 | ||||||
Total Operating Expenses | 2,543,325 | 2,526,056 | ||||||
Net Operating Margin | 1,774,408 | 1,661,765 | ||||||
Non-operating income (expense) (note 28): | ||||||||
Other Income | 201,619 | 131,307 | ||||||
Other expenses | (107,545 | ) | (84,476 | ) | ||||
Total non- operating result | 94,074 | 46,831 | ||||||
Earnings before taxes | 1,868,482 | 1,708,596 | ||||||
Income Tax | (677,727 | ) | (596,804 | ) | ||||
Net Earnings before Non-controlling Interest | 1,190,755 | 1,111,792 | ||||||
Non-controlling Interest | (472,238 | ) | (448,432 | ) | ||||
Net Earnings attributable to Grupo Aval shareholders | $ | 718,517 | 663,360 | |||||
Net Earnings per share (in pesos) | $ | 38.73 | 36.57 |
Please refer to attached Notes to the consolidated financial statements.
76
Consolidated Statement of Changes in Shareholder´s Equity
Semesters ended in June 30, 2012 and December 31, 2011
(Figures in million pesos)
Retained Earnings
Subscribed And Paid-in capital | Premium Sale Stock | Appropiated Retained Earnings | Inappropiated Retained Earnings | Revaluation of Equity | Unrealized (loss) Earnings | Asset Valuation | Total Equity | |||||||||||||||||||||||||
Balance at June 30, 2011 | $ | 17,617 | 2,973,532 | 1,865,420 | 622,832 | 921,082 | (130,608 | ) | 1,215,012 | 7,484,887 | ||||||||||||||||||||||
Transfer of results | - | - | 622,832 | (622,832 | ) | - | - | - | - | |||||||||||||||||||||||
Issuance of shares (note 24) | 935 | 697,521 | - | - | - | - | - | 698,456 | ||||||||||||||||||||||||
Recoveryt of dividends first semester | - | - | 6,737 | - | - | - | - | 6,737 | ||||||||||||||||||||||||
Distribution of Cash Dividends | - | - | (389,587 | ) | - | - | - | - | (389,587 | ) | ||||||||||||||||||||||
Donations to victims of floods | - | - | (1,206 | ) | - | - | - | - | (1,206 | ) | ||||||||||||||||||||||
Unrealized Earnings | - | - | - | - | - | (62,244 | ) | - | (62,244 | ) | ||||||||||||||||||||||
Conversion Adjustment | - | - | - | -- | - | 5,752 | - | 5,752 | ||||||||||||||||||||||||
Revaluations (note 16) | - | - | - | - | - | - | (333,270 | ) | (333,270 | ) | ||||||||||||||||||||||
Revaluation of Net Worth | - | - | - | - | (995 | ) | - | - | (995 | ) | ||||||||||||||||||||||
Others | - | - | 6,169 | - | - | - | - | 6,169 | ||||||||||||||||||||||||
Earnings of the Period | - | - | - | 663,360 | - | - | - | 663,360 | ||||||||||||||||||||||||
Balance at december 31, 2011 | $ | 18,552 | 3,671,053 | 2,110,365 | 663,360 | 920,087 | (187,100 | ) | 881,742 | 8,078,059 | ||||||||||||||||||||||
Transfer of results | - | - | 663,360 | (663,360 | ) | - | - | - | - | |||||||||||||||||||||||
Issuance of shares (nota 24) | - | 615 | - | - | - | - | - | 615 | ||||||||||||||||||||||||
Distribution of Cash Dividends | - | - | (400,718 | ) | - | - | - | - | (400,718 | ) | ||||||||||||||||||||||
Donation to victims of floods | - | - | (1,143 | ) | - | - | - | - | (1,143 | ) | ||||||||||||||||||||||
Unrealized earnings | - | - | - | - | - | 13,481 | - | 13,481 | ||||||||||||||||||||||||
Conversion Adjustments | - | - | (3,733 | ) | - | - | - | - | (3,733 | ) | ||||||||||||||||||||||
Revaluations (note 16) | - | - | - | - | - | - | 316,506 | 316,506 | ||||||||||||||||||||||||
Transfers | - | - | (278,525 | ) | - | 404,781 | 19,887 | (32,328 | ) | 113,815 | ||||||||||||||||||||||
Payment of Property Tax | - | - | - | - | (170 | ) | - | - | (170 | ) | ||||||||||||||||||||||
Net Earnings of the Period | - | - | - | 718,517 | - | - | - | 718,517 | ||||||||||||||||||||||||
Balance at June 30, 2012 | $ | 18,552 | 3,671,668 | 2,089,606 | 718,517 | 1,324,698 | (153,732 | ) | 1,165,920 | 8,835,229 |
Please refer to attached Notes to the consolidated financial statements
77
Consolidated Changes in the Financial Condition
Semesters ended in June 30, 2012 and December 31, 2011
(Figures in million pesos)
June 30 | December 31 | |||||||
FUNDS GENERATED FROM: | ||||||||
Operating Activities: | ||||||||
Earnings of the Period | $ | 718,517 | 663,360 | |||||
Non-controlling Interest | 472,238 | 448,432 | ||||||
Items that do not generate (use) funds: | ||||||||
Provision - Investments | (399 | ) | (174,487 | ) | ||||
Provision – Loan Portfolio and Accounts Receivable | 397,251 | 343,774 | ||||||
Provision –Foreclosed Assets and Other assets | (2,621 | ) | 24,288 | |||||
Recovery of provisions | 100,830 | (280,120 | ) | |||||
Depreciation | 148,554 | 141,756 | ||||||
Amortizations | 46,323 | 35,801 | ||||||
Earnings on sale of variable income investments | (8,939 | ) | (40,297 | ) | ||||
Gain on Valuation of Derivatives | (116,118 | ) | (149,335 | ) | ||||
Gain on sale of Foreclosed Assets | (2,621 | ) | (2,601 | ) | ||||
Gain on sale of Property, Plant and Equipment | (6,711 | ) | (5,611 | ) | ||||
Deferred Income Tax | (37,727 | ) | 32,276 | |||||
Funds generated from Operations | 1,708,577 | 1,037,236 | ||||||
Funds generated from other sources: | ||||||||
Proceeds from sale of foreclosed assets | 39,374 | 43,339 | ||||||
Proceeds from sale of property plant and equipment | 120,702 | 205,011 | ||||||
Goods received in payment | 6,562 | - | ||||||
Investments | - | 466,418 | ||||||
Deposits and liabilities | 3,571,056 | 5,411,158 | ||||||
Overnight funds , interbank liabilitties | 4,099,609 | - | ||||||
Banker Acceptances | - | 1,210,008 | ||||||
Accounts Payable | - | 333,283 | ||||||
Bonds (long term) | 968,006 | 1,465,451 | ||||||
Estimated liabilities and provisions | 1,011,839 | - | ||||||
Other liabilities | - | 70,737 | ||||||
Other assets and liabilities, net | 801,736 | 895,668 | ||||||
Total funds provided | 12,327,461 | 11,138,309 | ||||||
FUNDS USED: | ||||||||
Additions to Property Plant and Equipment | 381,955 | 489,065 | ||||||
Overnight Funds interbank liabilities | - | 1,975,754 | ||||||
Borrowings from Banks and Others | 1,808,091 | - | ||||||
Accounts Payable | 99,320 | - | ||||||
Estimated liabilities and provisions | - | 32,131 | ||||||
Other liabilities | 6,748 | |||||||
Assets surrender in leasing transactions | 733,006 | 819,544 | ||||||
Dividends paid | 392,190 | 245,411 | ||||||
Investments | 1,407,827 | - | ||||||
Loan Portfolio | 5,802,541 | 6,985,756 | ||||||
Acceptances and derivatives | 111,704 | - | ||||||
Accounts receivable | 92,683 | 84,549 | ||||||
Foreclosed assets | - | 6,758 | ||||||
Total funds used | 10,836,065 | 10,638,968 | ||||||
Net increase of funds | $ | 1,491,396 | 499,340 |
Please refer to attached Notes to the consolidated financial statements
78
Consolidated Statement of Cash Flow
Semesters ended in June 30, 2012 and December 31, 2011
(Figures in million pesos)
June 30 | December 31 | |||||||
Cash Flow from operating activity: | ||||||||
Net earnings of the period | $ | 718,517 | 663,360 | |||||
Non-controlling Interest | 472,238 | 448,432 | ||||||
Adjustments for conciliation of net earnings and net cash from operating activity: | ||||||||
Depreciation of property plant and equipment | 148,554 | 141,756 | ||||||
Amortization of goodwill | 46,323 | 35,801 | ||||||
Provision – Loan portfolio and accounts receivable, net | 397,251 | 343,774 | ||||||
(Recovery) Provision Foreclosed Assets and Other Assets, net | (2,621 | ) | 24,288 | |||||
Provision - Investments, net | (399 | ) | (174,487 | ) | ||||
Gain on sale of investments, net | (8,939 | ) | (40,297 | ) | ||||
(Gains) loss on sale of foreclosed assets | (7,630 | ) | 2,601 | |||||
Gain on sale of property plant and equipment | (6,711 | ) | (5,611 | ) | ||||
(Gain) loss on valuation of derivatives | (116,118 | ) | 149,335 | |||||
Net change in assets and liabilities | 844,170 | (195,010 | ) | |||||
Net cash generated from Operating Activity | 2,484,635 | 1,393,942 | ||||||
Cash Flow from investment activity: | ||||||||
(Increase) Loan Portfolio and Financial Lease Transactions | (5,802,541 | ) | (6,985,756 | ) | ||||
Proceeds from sale of property plant and equipment | 120,702 | 205,011 | ||||||
Proceeds from sale of foreclosed assets | 39,374 | 43,339 | ||||||
Acquisition of property plant and equipment | (381,955 | ) | (489,065 | ) | ||||
(Increase) decrease in investments, net | (1,407,827 | ) | 466,418 | |||||
Net Cash used in investment activities | (7,432,247 | ) | (6,760,053 | ) | ||||
Cash Flow from financing activity: | ||||||||
Dividend payment | (392,190 | ) | (245,411 | ) | ||||
Increase in deposits | 3,571,056 | 5,411,158 | ||||||
Increase (decrease) of interbank loans and overnight funds | 4,099,609 | (1,975,754 | ) | |||||
(Decrease) increase in borrowings from bank and others | (1,808,091 | ) | 1,210,008 | |||||
Bonds (Long term debt) | 968,006 | 1,465,451 | ||||||
Issuance of shares and additional paid in capital | 615 | - | ||||||
Net cash flow from financing activity | 6,439,005 | 5,865,452 | ||||||
Increase of cash and cash equivalents | 1,491,393 | 499,341 | ||||||
Cash and cash equivalents at the beginning of the semester | 11,698,587 | 11,199,246 | ||||||
Cash and cash equivalents at the end of the semester | $ | 13,189,980 | 11,698,587 |
Please refer to attached Notes to the consolidated financial statements
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Notes to the Consolidated Financial Statements
Semesters ended in June 30, 2012 and December 31, 2011
(Figures in million pesos)
(1) Organization and Background
Grupo Aval Acciones y Valores S.A. (hereinafter "Grupo Aval" or the "Company") was incorporated under Colombian law on January 7, 1994, with main offices and commercial address in the city of Bogotá, D.C., Colombia. Main corporate purpose of Grupo Aval consists of the purchase and sale of securities issued by financial and commercial institutions. In development of its corporate purpose of the company is the largest shareholder of financial institutions (Banco de Bogotá, Banco de Occidente, Banco Popular and Banco AV Villas) and its main purpose carry out all transactions, actions and services inherent to the banking business according to applicable laws and regulations. Through its direct and indirect investments in the Corporacion Financiera Colombiana S.A. ("Corficolombiana") and the Sociedad Administradora de Fondos de Pensiones y Cesantias Porvenir S.A. ("Porvenir"), the company is also present in investment banking, investments in the real sector and pension and severance fund administration business in Colombia.
According to the bylaws, Grupo Aval can (i) promote the creation of all kinds of companies related to its corporate purpose; (ii) represent natural and legal persons engaged in similar or complementary activities; (iii) take or surrender loans with or without interest; (iv) deliver properties as guarantees; (v) issue, endorse, acquire, protest, cancel, or pay drafts, checks, promissory notes or any other securities, or accept them or give them in payment; (vi) participate in companies that pursue similar or complementary corporate interests and freely use its capital for participation in such companies; (vii) render services in areas related to its activities, experience and knowledge of Colombia; and (viii) execute or engage in general, acts and contracts related to the above, to enable the exercise of rights and the fulfillment of its obligations.
Duration of the company as established by its by-laws is until May 24, 2044, although it may be dissolved or extended prior to such term.
The consolidated Financial Statements include the assets, liabilities, earnings, contingent accounts and memorandum accounts of Grupo Aval Acciones y Valores S. A. and its majority owned subsidiaries in which it holds, directly or indirectly 50% or more of the outstanding voting shares, except the participations in funds or collective portfolios which according to current regulations do not require consolidation
All significant intercompany transactions between the consolidated companies have been eliminated in the Consolidation.
Following are those entities in which Grupo Aval Acciones y Valores S. A. directly consolidates its financial statements
Banco de Bogotá S.A.
A private capital corporation with main offices in the city of Bogota, incorporated through Public Deed number 1932 of November 15, 1870 of Notary Two of Bogota D. C.. By resolution number 3140 on September 24, 1993 Colombian Superintendency of Finance renewed definitively the operating permit. The duration established in the bylaws lasts until June 30, 2070 but can be dissolved or extended prior to that term. The Bank has as corporate purpose celebrating or executing all operations and contracts legally permitted to banking establishments of commercial nature, subject to the requirements and limitations of the Colombian law.
By June 30, 2012, the bank operated with eight thousand two hundred eighty-four (8,284) employees with employment contract three hundred sixty-eight (368) through a civil contract of learning and seven hundred and seventy-two (772) temporary employees; In addition the Bank hires through the modality of outsourcing with specialized companies a total of three thousand two hundred and thirty (3,230) people through five hundred and sixty one (561) branches, five
81
(5) Centers of Corporate Services (CSC), three (3) centers of PYME services, forty-six (46) offices of collections and payments, eighteen (18) offices of advice to entrepreneur, twelve (12) cashier extensions with own code, ninety (90) cashier extensions without own code, thirteen (13) office extensions, eight (8) Premium offices, twenty (20) service centers 24 x 7, two hundred and thirty-one (231) non-banking correspondents, thirteen (13) Servicajas, two (2) customer care offices , four (4) centers of attention of clearance with special services, three (3) centers of attention of clearance without own code, four (4) Basic offices and two (2) agencies, one in New York City and another in Miami. Besides, it has one hundred per cent (100%) ownership in overseas subsidiaries known as Banco de Bogotá S.A. Panama, which includes Bank of Bogotá Nassau, Bogotá Finance Corporation Bank in Cayman Islands and Leasing Bogotá S.A. Panama, which includes BAC Credomatic Inc. Other subordinates and investments are presented in Note 6.
Banco de Occidente S.A.
Private entity legally incorporated as a banking establishment, authorized to operate under the terms of resolution for renewal No. 3140 of September 24, 1993 of the Colombian Superintendency of Finance. Incorporated on September 8, 1964 through public deed No. 659 of Notary 4 of Cali.
The Bank has its main domicile in Cali. The duration established in the by-laws is 99 years from its date of incorporation. In pursuit of its corporate purpose, the bank can execute operations and contracts legally permitted to banking establishments of commercial nature, subject to the requirements and limitations of the Colombian law.
On June 30, 2012 the Banco de Occidente S.A. operates with 6,828 employees through 211 offices in the Colombian territory.
Banco Comercial AV Villas S.A.
It is a private entity, with main domicile in the city of Bogotá D.C., incorporated by means of public deed number 5700 of November 24, 1972. The duration established in its by-laws is until October 24, 2071, but the corporation may either be dissolved or extended prior to such date. The Bank’s main corporate purpose is to enter into and execute all operations and contracts legally permitted to banking establishments of commercial nature subject to the requirements and limitations of Colombian law. It operates through two hundred and fifty (250) branches across the country and two hundred (200) service centers through non-bank correspondents.
Banco Popular S.A.
It is an entity which ownership at June 30, 2012 belongs 98% to the private sector an 2% to the Colombian State, domiciled in the city of Bogotá D.C., and organized on July 5, 1950 through the Decree No. 359 of the Mayor of Bogotá, formalized in deed no. 5858 of November 3, 1950 of Notary 4 Bogotá. The term of duration of the Bank is until June 30, 2050. The corporate purpose of the Bank is development of activities, operations and services which by nature correspond to a banking establishment, to engage in the sale of merchandise or other negotiable objects through its Auction House (“The Hammer”). It operates through one hundred and eighty three (183) offices that offer all banking services, twenty-five (25) cashier extensions, two (2) supercades, a (1) rapicade, one hundred ninety-one (191) non-banking correspondents, thirteen (13) service stations, eight (8) centers of clearance, forty-five (45) centers of collection and (918) nine hundred eighteen ATMs in the Colombian territory.
On June 20, 2011, through public deed of Division No. 2936 of notary 73 of Bogotá, it was perfected the process of split between the company being divided Rendifin S.A. and the beneficiary company Grupo Aval Acciones y Valores S. A., by virtue of which Grupo Aval Acciones y Valores S.A., in his capacity as beneficiary, received, as main asset, 3,358,446,312 shares that Rendfin S. A. owned in Banco Popular SA, which increased it participation from the 30.66% to the 74.13%. For his part, Rendifin S.A. received 2,073,115,007 preferred shares issued by Grupo Aval Acciones y Valores S.A.
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On September 19, 2011, through public deed of Division No. 4631 of notary 73 of Bogotá, it was perfected the process of division between the divided companies Inversiones Escorial S.A and Popular Securities, and the receiving company Grupo Aval Acciones y Valores S.A., by virtue of which Grupo Aval Acciones y Valores S.A., in his capacity as beneficiary, received, as main asset, 1,514,163,964 shares that the divided companies possessed in Banco Popular SA which increased the percentage of participation of Grupo Aval from 74.13% to 93.73%.. For this part, Escorial investments S.A. and Popular Securities received each 467,334,563 preferred shares issued by Grupo Aval Acciones y Valores S.A.
Grupo Aval Limited
It was organized in Cayman Island son December 29, 2011 as a vehicle of special purpose, including debt issue.
Detail of permanent investments owned by the parent company is as follows:
June 30 | December 31 | |||||||||||||||
% Participation | No. of Shares | % Participation | No. of Shares | |||||||||||||
In controlled entities: | ||||||||||||||||
Banco de Bogotá S. A. | 64.44 | 184,830,376 | 64.44 | 184,830,376 | ||||||||||||
Banco de Occidente S. A. | 68.24 | 106,385,430 | 68.24 | 106,385,430 | ||||||||||||
Banco Comercial AV Villas S. A. | 79.85 | 179,453,557 | (1) | 79.85 | 179,453,557 | |||||||||||
Sociedad Administradora de | ||||||||||||||||
Pensiones y Cesantías: Porvenir S. A. | 20.00 | 15,085,589 | (2) | 20.00 | 14,691,903 | |||||||||||
Banco Popular S. A. | 93.73 | 7,241,296,738 | (3) | 93.73 | 7,241,296,738 | |||||||||||
Grupo Aval Limited | 100 | 1 | (4) | - | - | |||||||||||
In non controlled entities: | ||||||||||||||||
Taxair S. A. | 0.01 | 1,117 | 0.01 | 1,117 |
(1) | On June 30, 2012 and 31 December 2011, the society had 179,192,996 shares and 260,561 preferential. |
(2) | In the second half of 2011were received 400,304 shares worth $8,246 corresponding to the capitalization of profits. |
(3) | On June 20, 2011, through the public deed of Escision No. 2936 of the 73 notary of Bogotá, it was perfected the process of division between the company being divided Rendifin S.A. and the receiving company Valores S.A. and Grupo Aval by virtue of which Grupo Aval Acciones y Valores S.A., in his capacity as beneficiary, received, as a main asset, 3,358,446,312 shares Rendifin owned in the Banco PopularS.A. with which Grupo Aval increased their percentage of participation from the 30.66% to the 74.13%. For his part, Rendifin S.A. received 2,073,115,007 preference shares issued by Grupo Aval Acciones y Valores S.A. On September 19, 2011, through the public deed of Division No. 4631 of notary 73of Bogotá, it was perfected the process of division between the breakaway companies investment Escorial S.A and Popular Securities, and the beneficiary company Grupo Aval Acciones y Valores S.A. by virtue of which Grupo Aval Acciones y Valores S.A., as a beneficiary, received, as main asset, 1,514,163,994 actions that those possessed in Banco Popular S.A. which increased its percentage of participation from the 74.13% to the 93.73%. For their part, Escorial Investments S.A. and Popular Securities received 467,334,563 preferential shares, each, issued by Grupo Aval Acciones y Valores S.A. |
(4) | In January 2012, Grupo Aval Limited was created as a subsidiary in the Cayman Islands. |
Banco de Bogotá S.A. consolidates as follows:
June 30 | December 31 | |||||||||||||||||||||||||||||||
Assets | Liabilities | Equity | Earnings (loss) of the period | Assets | Liabilities | Equity | Earnings (loss)of the period | |||||||||||||||||||||||||
Banco de Bogotá (Matriz) | $ | 46,407,277 | 38,056,241 | 8,351,036 | 617,692 | $ | 43,264,854 | 35,164,553 | 8,100,301 | 593,740 | ||||||||||||||||||||||
Almacenes Generales de Depósito | ||||||||||||||||||||||||||||||||
ALMAVIVA S.A. y Subordinadas | 205,534 | 55,518 | 150,016 | 7,434 | 201,572 | 52,798 | 148,774 | 7,971 | ||||||||||||||||||||||||
Fiduciaria Bogotá S. A. | 194,312 | 46,760 | 147,552 | 28,659 | 183,575 | 48,998 | 134,576 | 25,683 | ||||||||||||||||||||||||
Corporación Financiera Colombiana S.A. | ||||||||||||||||||||||||||||||||
y Subordinadas | 12,281,439 | 9,190,869 | 3,090,570 | 209,187 | 10,280,332 | 7,349,963 | 2,930,368 | 234,442 | ||||||||||||||||||||||||
Sociedad Administradora de Pensiones | ||||||||||||||||||||||||||||||||
y Cesantías - Porvenir S. A. y Subordinada | 932,625 | 241,960 | 690,666 | 105,694 | 801,808 | 181,499 | 620,309 | 78,692 | ||||||||||||||||||||||||
Banco de Bogotá S. A.- Panamá | ||||||||||||||||||||||||||||||||
y Subordinada | 1,314,820 | 1,213,772 | 101,048 | 7,143 | 1,428,409 | 1,314,481 | 113,929 | 4,136 | ||||||||||||||||||||||||
Bogotá Finance Corporation | 148 | - | 148 | - | 161 | - | 161 | 1 | ||||||||||||||||||||||||
Leasing Bogotá S. A. – Panamá y subordinadas | 19,335,686 | 16,088,935 | 3,246,751 | 209,878 | 19,830,965 | 16,377,752 | 3,453,213 | 170,378 | ||||||||||||||||||||||||
Corporación Financiera Centroamericana FICENTRO | 5 | 5 | - | - | 6 | 6 | - | - | ||||||||||||||||||||||||
Megalínea S. A. | 48,472 | 20,351 | 28,120 | 329 | 8,057 | 5,935 | 2,123 | 385 | ||||||||||||||||||||||||
Casa de Bolsa S. A. | 6,994 | 4,779 | 2,215 | 92 | 32,414 | 4,138 | 28,276 | 102 | ||||||||||||||||||||||||
$ | 80,727,312 | 64,919,191 | 15,808,121 | 1,186,108 | $ | 76,032,153 | 60,500,123 | 15,532,030 | 1,115,530 | |||||||||||||||||||||||
Consolidated | $ | 73,747,059 | 66,474,578 | 7,272,481 | 664,782 | $ | 68,809,602 | 61,963,708 | 6,845,894 | 565,289 |
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June 30 | December 31 | |||||||||||||||||||||||||||||||
Assets | Liabilities | Equity | Earnings (loss) of the period | Assets | Liabilities | Equity | Earnings (loss)of the period | |||||||||||||||||||||||||
Banco de Occidente (Matriz) | $ | 22,267,996 | 19,159,510 | 3,108,486 | 223,616 | $ | 20,950,830 | 17,920,268 | 3,030,562 | 226,937 | ||||||||||||||||||||||
Fiduoccidente S.A. | 123,281 | 36,008 | 87,273 | 15,753 | 112,422 | 30,390 | 82,032 | 13,061 | ||||||||||||||||||||||||
Banco de Occidente S.A. -(Panamá) S.A. | 1,300,737 | 1,246,281 | 54,456 | 791 | 1,274,137 | 1,219,546 | 54,591 | (1,661 | ) | |||||||||||||||||||||||
Occidental Bank Barbados Ltda. | 351,248 | 315,023 | 36,255 | 730 | 355,290 | 319,035 | 36,255 | 848 | ||||||||||||||||||||||||
Ventas y Servicios S.A. | 24,118 | 17,905 | 6,213 | 626 | 15,589 | 10,747 | 4,842 | 718 | ||||||||||||||||||||||||
$ | 24,067,380 | 20,774,727 | 3,292,653 | 241,516 | $ | 22,708,267 | 19,499,985 | 3,208,282 | 239,903 | |||||||||||||||||||||||
Consolidado | $ | 23,450,926 | 20,358,615 | 3,092,310 | 224,565 | $ | 22,180,088 | 19,165,042 | 3,015,046 | 224,401 |
Banco Comercial AV Villas S.A. consolidates as follows:
June 30 | December 31 | |||||||||||||||||||||||||||||||
Assets | Liabilities | Equity | Earnings (loss) of the period | Assets | Liabilities | Equity | Earnings (loss)of the period | |||||||||||||||||||||||||
Banco Comercial AV Villas (Matriz) | $ | 8,216,497 | 7,229,772 | 986,725 | 81,442 | 7,600,089 | 6,665,346 | 934,743 | 90,022 | |||||||||||||||||||||||
A Toda Hora S.A. (ATH) | 24,154 | 17,268 | 6,886 | 433 | 23,061 | 16,563 | 6,498 | (153 | ) | |||||||||||||||||||||||
$ | 8,240,651 | 7,247,040 | 993,611 | 81,875 | 7,623,150 | 6,681,909 | 941,241 | 89,869 | ||||||||||||||||||||||||
Consolidated | $ | 8,235,692 | 7,248,937 | 986,755 | 81,615 | 7,618,247 | 6,683,678 | 934,569 | 89,960 |
Banco Popular S.A. consolidates as follows:
June 30 | December 31 | |||||||||||||||||||||||||||||||
Assets | Liabilities | Equity | Earnings (loss) of the period | Assets | Liabilities | Equity | Earnings (loss)of the period | |||||||||||||||||||||||||
Banco Popular (Parent) | $ | 14,708,386 | 12,769,636 | 1,938,750 | 180,629 | 14,151,426 | 12,286,211 | 1,865,215 | 173,333 | |||||||||||||||||||||||
Alpopular S.A. | 136,655 | 17,869 | 118,785 | 2,856 | 114,842 | 18,599 | 96,243 | 3,120 | ||||||||||||||||||||||||
Fiduciaria Popular S.A. | 62,273 | 11,112 | 51,161 | 3,198 | 58,159 | 8,974 | 49,185 | 2,530 | ||||||||||||||||||||||||
Inca S.A. | 45,992 | 14,983 | 31,009 | 2,776 | 51,774 | 18,139 | 33,635 | 2,994 | ||||||||||||||||||||||||
$ | 14,953,306 | 12,813,601 | 2,139,705 | 189,460 | 14,376,200 | 12,331,922 | 2,044,278 | 181,977 | ||||||||||||||||||||||||
Consolidated | $ | 14,805,996 | 12,852,824 | 1,953,172 | 182,376 | 14,251,434 | 12,368,084 | 1,883,351 | 175,676 |
(2) Effect of Consolidation
The effect of consolidation on the structure of the financial statements of the Parent company was as follows:
June 30 | December 31 | |||||||||||||||||||||||||||||||
Assets | Liabilities | Equity | Earnings (loss) of the period | Assets | Liabilities | Equity | Earnings (loss)of the period | |||||||||||||||||||||||||
Individual | 19,402,047 | 2,335,896 | 17,066,151 | 716,842 | 18,897,255 | 2,718,885 | 16,178,370 | 667,562 | ||||||||||||||||||||||||
Consolidated | 119,202,863 | 110,478,021 | 8,724,842 | 742,380 | 111,500,070 | 103,422,011 | 8,078,058 | 663,360 | ||||||||||||||||||||||||
Variation | 99,800,816 | 108,142,125 | (8,341,309 | ) | 25,538 | 92,602,815 | 100,703,125 | (8,100,312 | ) | (4,202 | ) | |||||||||||||||||||||
Increment | 514.38 | % | 4,629.58 | % | (48.88 | %) | 3.56 | % | 490.03 | % | 3,703.84 | % | (50.10 | %) | (0.63 | %) |
The subordinates, by statutes have semi-annual accounting closures, except the following entities which sub- consolidate in the subordinates, and have annual accounting closures audited by the corresponding Fiscal Auditors:
Banco de Bogotá S.A.:
Banco de Bogotá Finance Corporation
Banco de Bogotá Panamá
Leasing Bogotá S.A. - Panamá
Corporación Financiera Centroamericana S.A. FICENTRO
Banco AV Villas S.A.:
A Toda Hora S.A.
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Banco de Occidente (Panamá)
S.A. Occidental Bank Barbados
Ltd. Ventas y Servicios S.A.
Banco Popular S.A.:
Inca S.A.
(3) Main accounting policies
(a) Submission of Financial Statements
Grupo Aval prepares its financial statements subject to the generally accepted accounting principles enacted by decree 2649 of 1.993, External Memo No. 002 of 28th January 1998 and the Joint memo of the Superintendency of Societies No 100-000006 and the Colombian Superintendency of Finance No 11 of August 18th 2005. Nonetheless, keeping in mind that the main institutions that consolidate are financial, the Grupo Aval does not submit financial statements classified in current and non-current assets and liabilities.
(b)Basic Accounting and Consolidating Policy
Accounting policies and the preparation of financial statements of the Parent Company comply with generally accepted accounting standards in Colombia and those of the Subordinate companies comply with the generally accepted principles and instructions of Colombians Superintendency of Finance.
Financial statements of foreign Subordinates have been adjusted to allow the adoption of uniform accounting practices in agreement with the Generally Accepted Accounting Principles in Colombia.
For the purpose of applying uniform accounting policies for similar transactions and events for similar transactions and events under similar circumstances, the financial statements of the Subordinates were homogenized in agreement with External Memo 002 of 1998 to standards of Colombia’s Financial Superintendence (Memo 100 of 1995 and to that which is not regulated Decree 2649 of 1993), is applied as follows:
June 30 | December 31 | |||||||||||||||||||||||||||||||
Entity | Assets | Liabilities | Equity | Earnings (loss) of the period | Assets | Liabilities | Equity | Earnings (loss)of the period | ||||||||||||||||||||||||
Banco de Bogotá Consolidated | ||||||||||||||||||||||||||||||||
Decree 2649 of 1993 | $ | 73,675,528 | 66,450,197 | 7,225,331 | 664,967 | $ | 68,837,533 | 62,033,866 | 6,803,667 | 549,930 | ||||||||||||||||||||||
Standards for audited | 73,747,059 | 66,474,578 | 7,272,481 | 664,782 | 68,809,602 | 61,963,708 | 6,845,894 | 565,289 | ||||||||||||||||||||||||
Variation | (71,531 | ) | (24,381 | ) | (47,150 | ) | 185 | 27,931 | 70,158 | (42,227 | ) | (15,359 | ) | |||||||||||||||||||
Banco de Occidente Consolidated: | ||||||||||||||||||||||||||||||||
Decree 2649 of 1993 | 23,368,099 | 20,358,615 | 3,009,483 | 228,045 | 21,556,005 | 19,165,042 | 2,390,961 | 242,106 | ||||||||||||||||||||||||
Standards for audited | 23,450,926 | 20,358,615 | 3,092,310 | 224,978 | 22,180,088 | 19,165,042 | 3,015,046 | 432,109 | ||||||||||||||||||||||||
Variation | (82,827 | ) | - | (82,827 | ) | 3,067 | (624,083 | ) | - | (624,085 | ) | (190,003 | ) | |||||||||||||||||||
Banco Comercial AV Villas Consolidated: | ||||||||||||||||||||||||||||||||
Decree 2649 of 1993 | 8,216,671 | 7,248,937 | 967,734 | 73,841 | 7,614,210 | 6,683,676 | 930,531 | 90,145 | ||||||||||||||||||||||||
Standards for audited | 8,235,692 | 7,248,937 | 986,755 | 81,615 | 7,618,247 | 6,683,678 | 934,569 | 90,173 | ||||||||||||||||||||||||
Variation | (19,021 | ) | - | (19,021 | ) | (7,774 | ) | (4,037 | ) | (2 | ) | (4,038 | ) | (28 | ) | |||||||||||||||||
Banco Popular Consolidated: | ||||||||||||||||||||||||||||||||
Decree 2649 of 1993 | 14,636,328 | 12,858,661 | 1,777,667 | 175,577 | 13,976,999 | 12,368,084 | 1,608,914 | 166,232 | ||||||||||||||||||||||||
Standards for audited | 14,805,996 | 12,859,135 | 1,946,861 | 179,963 | 14,251,434 | 12,368,084 | 1,883,351 | 175,676 | ||||||||||||||||||||||||
Variation | (169,668 | ) | (474 | ) | (169,194 | ) | (4,386 | ) | (274,435 | ) | - | (274,437 | ) | (9,444 | ) | |||||||||||||||||
Homogenization effect - Banks | (343,047 | ) | (24,855 | ) | (318,192 | ) | (8,908 | ) | (874,624 | ) | 70,155 | (944,786 | ) | (214,834 | ) | |||||||||||||||||
Total consolidated: | ||||||||||||||||||||||||||||||||
Under decree 2649 de 1993 | 119,896,626 | 106,916,410 | 12,980,216 | 1,142,430 | 111,984,747 | 100,250,667 | 11,734,073 | 1,048,413 | ||||||||||||||||||||||||
Parent | 19,402,047 | 2,335,896 | 17,066,151 | 716,842 | 18,897,256 | 2,718,886 | 16,178,370 | 667,562 | ||||||||||||||||||||||||
Grupo Aval Limited | 1,071,727 | 1,094,721 | (22,995 | ) | (22,994 | ) | - | - | - | - | ||||||||||||||||||||||
Total combined | 140,370,400 | 110,347,027 | 30,023,372 | 1,836,278 | 130,882,002 | 102,969,553 | 27,912,443 | 1,715,975 | ||||||||||||||||||||||||
Elimination of consolidation | (21,167,537 | ) | 130,994 | (21,298,530 | ) | (1,118,954 | ) | (19,381,932 | ) | 461,097 | (19,834,385 | ) | (1,052,615 | ) | ||||||||||||||||||
Total consolidated | $ | 119,202,863 | 110,478,021 | 8,724,842 | 717,324 | $ | 111,500,070 | 103,430,650 | 8,078,058 | 663,360 |
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The main homogenization accounting entries performed by subordinates from the financial business sector were the following:
(1) | Adjustments for inflation were calculated from 1st January 2001 until the 31st December 2006. |
(2) | Investments were valued though the linear accrual method, adjusting the non-performed estate accounts of results, gains or losses and surpluses due to valuations. |
Balances of loan portfolios and financial leasing operations, asset and liability positions from monetary markets and derivatives, goods received as payment, are established based on standards set by Colombia’s Financial Superintendence, which is the one that regulates operations developed though financial institutions in the country.
(c) Conversion of Foreign Currencies
Assets, liabilities and patrimony in foreign currency included in the consolidation were converted into Colombian pesos at the average market exchange rate calculated the last working day of the month and certified by Colombia’s Financial Superintendence. On the 30th of June 2012 and 31st December 2011 the exchange rates applied by the Subordinates were COP $1,784.60 and COP $1,942.70, respectively.
The results accounts were converted to Colombian pesos using the rates of COP $1,794.16 and COP $1,857.47 per dollar corresponding to average value of the exchange rates that reflect the market, registered between the 1st of January and the 30th of June 2012 and the 1st of July and the 31st December 2011, respectively. The average exchange rate was calculated excluding Saturdays, Sundays and holidays and divided by the number of working days in the semester.
Subsidiaries abroad have currencies different from the pesos. To transfer them to Colombian pesos the following procedure is followed:
Balance accounts are converted into pesos at “Market Reflecting Rates or the type of exchange rate applicable in the market at the end of the period as established by the Financial Superintendence (except for the capital accounts that are converted to historical exchange rates). The types of exchange rates on the 30th of June 2012 and the 31st of December 2011 were COP $1,784.60 and $1,942.70, per US$ 1.00, respectively. Consolidated Statements of the results accounts for the semesters that ended the 30th of June 2012 and the 31st of December 2011 were converted into pesos using average types of daily exchange rates of COP $1,794.16 and $1,857.47 per US$ 1.00, respectively. Exchange rate differences originated in the patrimonial accounts are logged as “conversion adjustments” in the net patrimony and the differences arising in the conversion of results, are registered as “gains (losses), in net, exchanges.”
(d) Cash Equivalents
For purposes of cash flow status, active positions in operations of money markets and related ones are considered as cash equivalents.
(e) Asset and Liability Positions in Market Operations and Related ones
It groups operations of inter-banking funds, re-purchase (repo) operations, simultaneous operations and temporary transfer operations of securities.
Ordinary Inter-banking Funds
It is considered to be inter-banking funds those that are placed or received directly by the Subordinates in another financial institution, without mediation of a pact of transfer of investments or of loan portfolios. They are operations related to the business objective agreed upon for a term of no more than 30 calendar days, as long as the aim is to take advantage of surpluses or compensate liquidity defects. Likewise, they include over-night transactions performed with foreign banks and using funds from the Subordinates.
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Yields per interests derived from the operation are logged in the status results
Operations not cancelled within the term indicated are legalized and posted in books in the loans portfolio group except for those performed with the Banco de la República.
Repurchase (REPO) Operations
A repo operation comes about when Subordinates acquire or transfer securities in exchange for the delivery of a sum of money, assuming in such action and moment the commitment to transfer or acquire the property again from their “counterpart” on the same day or at a later date at a set price for securities of the same nature and characteristics.
The initial amount may be calculated with a discount over the market price for the securities subject for the operation; it may be established that during the validity of the operation the securities initially delivered by others are substituted and restrictions to the mobility of the securities subject to the operation may be imposed.
The yield registered from this entry are calculated exponentially during the term of the operation and are placed in the results status.
The transferred securities subject to the repo operation must be registered in contingent accounts receivable or payable, depending on whether they are open or closed repo operations, respectively.
Simultaneous Transactions
They arise when Subordinates acquire or transfer securities in exchange for the delivery of a sum of money, assuming in the same moment the commitment to transfer or acquire the property again on the same day or at a later date and at a set price for securities of the same nature and characteristics.
It may not be established that the initial amount may be calculated with a discount over the market price for the securities subject for the operation; it may not be established that during the validity of the operation the securities initially delivered by others are substituted and no restrictions may be imposed to the mobility of the securities subject to the operation.
This entry logs yields caused by the acquirer and that the transferor pays as a cost of the simultaneous operation during the term of the latter.
The difference between the current value (cash delivery) and the future value (final price of transference), constitute an earning under the heading of financial yields calculated exponentially during the life of the operation and is acknowledged under status of results.
The securities transferred subject to the simultaneous operation must be registered in contingent loan or credit accounts for active or passive positions respectively.
Transaction for the Temporary Transfer of Securities
Are those where the Subordinates transfer ownership of some securities with the agreement to transfer them on the same date or at a later date. At the same time, the counterpart transfers to the Subordinate the ownership of other securities or sums of money for the same or greater value of the securities subject to the operation.
(f) Investments
The investments of the Parent company are represented in securities and remaining documents under the care of other financial institutions, acquired for the purpose of attaining fixed or variable earnings and having direct or indirect control of any company.
Investments of the Subordinates correspond to titles acquired with the aim a secondary liquidity reserve, acquiring the direct or indirect control of any company from the financial or technical services sectors, complying with the legal and statutory dispositions, or with the sole objective of eliminating or reducing exposure of assets, liabilities or other elements of financial statements to market risks.
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Investment balances from financial subordinates have been valued for purposes of consolidation through the method of linear causation (that includes the accumulated costs through their history), nonetheless the following policy is the one such institutions apply in their individual balances for the classification, valuation and registration of their investments:
The valuation of investments has the key objective of calculating, accounting logging and disclosing to the market on the value or fair trading price some securities could be negotiated in a given date in agreement with its specific characteristics and within the prevailing market conditions on such a date.
Determining the fair trading value or price of securities takes into account all the criteria necessary to guarantee compliance with the objective of investments valuation as follows:
Objectivity. Establishing and assigning the fair trading price or value is done based on technical and professional criteria that acknowledge the effects derived from changes in the behavior of all variables that may affect such price.
Transparency and representativeness. The fair trading price or value of a security is determined and assigned for the purpose of revealing an economic result that is certain, neutral, verifiable and representing the rights incorporated in the respective bond or security.
Permanent assessment and analysis. The fair trading price or value attributed to a bond or security is founded on the permanent assessment and analysis of the market conditions, of the bond issuers and of the respective bond issue. Variations in such conditions are reflected in changes in their previously assigned value or price with the frequency established for the valuation of investments.
Professionalism. The establishing of the fair trading value or price of a bond or security is based on the conclusions arising from the analysis and study that a prudent and diligent expert would perform, aimed at search, attaining knowledge and assessment of all relevant information in such a way that the established price reflects the actual amounts that would reasonably be received for their sale.
Shown below, the way in which the different types of investments are classified, valued and accounted
Classification | Term | Characteristics | Valuation | Accounting |
Negotiable | Short term | Securities acquired for profit due to price fluctuations | Use the fair trading prices, reference rates and/or margins calculated and published daily by the Colombia Stock Exchange. This procedure is done in a daily basis. Investments in bonds or securities or treasury or private bonds issued abroad by foreign issuers are valued in agreement with verified information of the generic dirty price value published by a reputed information provider platform at 16:00, official Colombian time. On days when it is not possible to find or estimate a price of valuation for the security or valuable, such securities or securities are valued exponentially from the internal ROI. This procedure is performed on a daily basis. | Any difference detected between the actual market value and and the immediately previous one is logged as greater or lesser value of investment and its counterpart affects the period results. This procedure is done on a daily basis. Complying with External Memo 014 of 2007 from the Financial Superintendence of Colombia, investments are valued at Market prices as of the same day of acquisition, thus, posting of changes between acquisition cost and market value of investments is performed as of the date of purchase. |
Negotiable-equity securities | Short term | Grant holders of respective securities the nature of part-owner of issuer. It includes investments on collective loan portfolios for the purpose of attaining profits. | Investments on equity investments issued and negotiated in Colombia are valued according to the prices provided by agents authorized by Columbia’s Financial Superintendence, based on the information of the Stock Exchange where they are negotiated. Participation in collective loan portfolios are valued keeping in mind the unit value calculated by the managing company on the date immediately before to the date of valuation. | The difference arising between the actual market value and the immediately previous one registered as greater or lesser investment value and its setoff affects the results for the period. This procedure is performed on a daily basis. In equity securities: They are registered for the cost of acquisition of investments. The dividends or profits that are distributed in kind, including those derived from the funding of the patrimonial revaluation account are not logged as an earning and thus, they will not affect the value of the investment. In this case the procedure will be only to modify the number of shares in the respective accounting books. The dividends or profits that are distributed in cash, will be posted as a lesser value of the investment.. |
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Classification | Term | Characteristics | Valuation | Postings |
To hold until they are due | Until due date | Securities respect of which their Subordinates have the serious intent and the legal, contractual, financial and operational capacity of keeping until their maturity or redemption period issue. No liquidity operations may be performed on these investments and neither simultaneous repo operations or the temporary transfer of securities, except when it deals with mandatory or regulatory investments subscribed in the primary market and as long as the counterpart of the operation is the Central Bank (Banco de la República), lthe General Directorate of Public Credit and the National Treasury and institutions overseen by Colombia’s Financial Superintendence. Likewise they may be turned in as collateral in a central risk chamber of the counterpart to back compliance with accepted operations by the latter for its compensation and liquidation. | Exponential starting from the calculated internal rate of return at the time of purchase. This procedure is done on a daily basis. | Present value is posted as a greater value of investment and its setoff are posted in the results of the period. This procedure is performed daily. Due yields pending collection are posted as a greater |
Available for the sale of treasury bonds | One year | Securities respect of which their Subordinates have the serious intent and the legal, contractual, financial and operational capacity of keeping for at least one (1) year counted as of the day when they were classified in this category. When the year is due, the first working day immediately classifying them as negotiable or to keep until they are due. Investments classified in this category may be used as derived financial instruments when the counterpart is a central risk chamber of counterpart. Likewise, repo liquidity operations can be performed simultaneously or of temporary transfer of securities. | They use fair trading prices, reference rates and margins calculated and published daily by the Colombia Stock Exchange. The investments represented in securities or treasury bonds issued abroad by foreign issuers are valued based on the information verified of the generic dirty price published by a reputed platform that provides information at 16:00 official Colombian time. On the days that it is not possible to find or estimate a price of valuation for the securities or securities are valued exponentially starting from the collateral backing the negotiation of internal rate of return. This procedure is performed on a daily basis. | Changes arising in these bonds or securities are posted according to the following procedure: 1. The difference between the present value of the day of valuation and the immediately previous one is registered a greater or lesser value of investment paid or charged on account of results. 2. The difference between market value and current value is registered as an accumulated gain or loss not performed within patrimonial accounts. This procedure is performed on a daily basis. |
Available for the sale of equity securities | Does not have | Investments that grant its subordinates entitlement as co-owner of the issuer. Securities for each category and values with low or minimal marketability or without any trading and securities kept by its Subordinates in their capacity | Investments on equity securities are valued depending on whether the trade or not in the stock market as follows: l Securities or equity shares issued and negotiated in Colombia: Equity securities traded in stock markets, value based on the daily valuation price published by of contractor or Parent company.authorized agents. If the price calculated for the valuation day does not exist, such investments are valued based on the last valuation price known. In the event that a participating security traded in a stock exchange does not show any trading from the moment it was issued in the secondary market and has not registered a market price in its primary issue, it is valued according to what is established for equity securities issued and negotiated in Colombia and not traded in the stock market. Equity securities not traded in stock markets, are valued monthly and for a maximum term of 3 months after the closing date of the financial statements of its Subordinates. The acquisition cost is increased or reduced on the participation percentage over the subsequent variations on the patrimony of the issuer, calculated based on the certified financial statements with a closing dates on the 30th of June and the 31st of December of each year, or more recently in the event that it is known. Collective portfolios and securitizations are valued per calculated unit value by the managing company on the day before the valuation. Investments traded on foreign stock exchanges. They are valued at closing price or, otherwise per the most recent trade reported by the stock market where it was traded during the last five (5) days, including the day of valuation. If there is no closing price or trading during such period, they are valued by the average trades reported during the last thirty (30) stock market days, including the valuation day. | Low or minimal marketability without any trading The difference between market value or updated value of investment and the value for which the investment is registered, is posted as follows: If it is greater, on first instance it reduces the provision or devaluation until it is spent and excess it registers surplus for valuation. If it is lower, it affects surplus for valuation until it is spent and the excess is registered as devaluation. -When the dividends or profits are distributed in kind, including those coming from capitalization of the revaluation account for patrimony, the part that has been posted as a surplus for valuation and charged to the investment and such surplus is reversed. -When the dividends or profits are distributed in cash, the amount posted is registered as surplus income for valuation, reverting such surplus and the amount that exceeds it is posted as a lower value of the investment. High and low marketability Updating the market value of the securities of high or low marketability or that are traded in internationally acknowledged stock exchanges is posted as an accumulated gain or lossnot performed within the patrimony accounts credited or charged to the investment. This procedure is done on a daily basis. Dividends or profits that are distributed in kind or cash, including those coming from the replenishing of the patrimony revaluation account, are registered as income up until the amount corresponding to the investor on the profits or revaluation of patrimony of the issuer posted by the latter from the date of acquisition until the date of investment, charging it to accounts receivables. |
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Classification | Term | Characteristics | Valuation | Postings |
In the event that the values are negotiated from a foreign stock exchange, the closing price will be used or the market trading from the main trading abroad, understanding as the market of main trading that where the greater amount of the respective securities is traded during the last thirty (30) days of stock exchange including the day of valuation. The price of the respective bond is converted to local exchange for purposes of the market exchange rate (TRM, in Spanish) calculated on the day of valuation. In cases where no tradings have come about during the last thirty (30) stock exchange days, we proceed according to the regulations foreseen for traded securities not registered in stock exchanges using as a purchase price the last trade value registered. |
Reclassification of Investments
For an investment to be kept within any of the classification categories, the respective bond or security must comply with the characteristics or conditions for the type of investments of which it makes part.
At any given time Colombia’s Financial Superintendence may order the company the reclassification of a security or bond, whenever it does not comply with the characteristics of the type it is pretended to classify it or such reclassification be required to achieve a better disclosure of the financial situation. Investments can be reclassified in agreement with the following regulations:
Of investments to keep negotiable investments until they are due: It leads to reclassification when one or any of the following circumstances come about:
· | Significant deterioration of the conditions of the issuer, its parent company, its subordinates or its linked ones. |
· | Changes in regulations that hinder the keeping of the investment. |
· | Merger procedures that may lead to the reclassification or making of investments, for the purpose of maintaining the previous position of risk of interest rates or of adjustment to the credit risk policies previously established by the resulting company. |
· | Other unforeseen events with the previous authorization of Colombia’s Financial Superintendence. |
Of available investments for sale to negotiable investments or to investments to keep until they are due. Reclassification is called for when:
· | A year has passed in the new reclassification. The investor has lost its status of Parent or controlling company if this event involves the decision of transferring the investment or the main purpose of attaining profits due to short term price fluctuations, as of that date. |
· | Significant deterioration of the conditions of the issuer, its parent company, its subordinates or its linked ones. |
· | Changes in regulations that hinder the keeping of the investment.. |
· | Merger procedures that may lead to the reclassification or making of investments, for the purpose of maintaining the previous position of risk of interest rates or of adjustment to the credit risk policies previously established by the resulting company. |
· | The investment goes from low or minimal marketability without trading to high or medium marketability. |
When investments made to keep until they are due or available investments for sale are reclassified to negotiable investments, standards on valuation and postings of the latter are complied with; in consequence, the gains or losses not performed are not acknowledged as earnings or expenses on the day of reclassification.
In the events where an investment is reclassified, it will be reported to Colombia’s Financial Superintendence on the reclassification performed no later than ten (10) calendar days from the date of the latter, stating the reasons that justify such decision and explaining their effect on the status of results.
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The securities or bonds that are reclassified for the purpose of making part of the negotiable investments, cannot be reclassified.
Rights of Repurchase of Investments
It corresponds to restricted investments that represent collateral guarantee of commitments of repurchase of investments.
Subordinates keep their rights and financial benefits on these investments associated to the security and retain all the risks inherent to the latter, although it transfers the legal ownership upon performing the repo operation.
These securities continue valuating daily and accounting (posting) in the balance and status of results, in agreement with applicable methodology and procedures to investments classified as negotiable until their due date and available for sale.
Investments given in Guarantee
It corresponds to security or restricted treasury bonds resulting from guaranteeing an operation with derived financial instruments, which liquidation may be in cash, as stated in the contract or in the corresponding regulations of the system of trading of securities, of the system of the registry of operations on securities or of the compensation system or of liquidation of securities.
These securities are valued daily and are posted in the balance and status of results in agreement with applicable methodology and procedures to investments classified as available for sale.
As of the 1st of January 2010, these securities are included in the investment account, according to Resolution 1420 of 2008 and the Memo-Letter 066 0f 2009 of Colombian Superintendency of Finance.
Investments Received in Escisión Processes
Shares acquired in excision proceedings are registered with the value for which they are received. Valuations originated due to the difference between the trade value and the intrinsic value of the shares received, are registered in the valuation account with its setoff in the surplus for valuation and later on they are transferred as a greater value of investment in the sub-account method of participation per patrimony and its setoff in the surplus account per participation method. Valuation or devaluations originated due to the difference between the cost received of the investment and the intrinsic value of the latter, is registered in the valuations account with its setoff in the surplus account per valuation, remaining in these accounts.
Afterwards the method of patrimonial participation is applied based on the financial statements of the Subordinate and the new participation percentage in the latter, taking as a cost the intrinsic value of the investment at the time of the excision.
Provisions for Losses from Classification of Credit Risk
Securities and/or Instruments with Unclassified of Issuances or Provisions:
The values or treasury bonds that do not have with an external qualification and the securities or treasury bonds issued by institutions that are not classified, are graded and provisioned keeping in mind the following parameters:
Category | Risk | Characteristics | Provisions |
A | Normal | They comply with the agreed terms in the security or bond and they have an adequate capacity of payment for capital and interests | Does not proceed |
B | Acceptable | They correspond to issuances that have uncertainty factors that could affect the capacity of continue servicing the debt in an adequate fashion. Likewise, their financial statements and remaining available information show weaknesses that could affect their financial situation. | Net value cannot be above eighty percent (80%) of the acquisition cost, nominal net value of the amortizations performed until their valuation date. |
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Category | Risk | Characteristics | Provisions |
C | Appreciable | It corresponds to issuances that show a high or medium level probability of defaulting on the timely payment of capital and interests. Likewise, its financial statements and remaining available information, show deficiencies in their financial situation that compromise the recovery of the investment. | Net value cannot be greater than sixty percent (60%) of the acquisition cost. Dealing with securities and/or bonds their accounting value cannot be greater than eighty percent (80%) of its nominal net value from the redemptions performed until the date of valuation. |
D | Significant | It corresponds to those issuances showing default under the agreed terms on the security, as well as in its financial statements and remaining available information showing accentuated differences in its financial situation, leading to a highly doubtful probability of recovering the investment. | Net value cannot be greater than forty percent (40%) of the acquisition cost. |
E | Irredeemable | Issuers that according to their financial statements and remaining available information it is estimated that the investment is irredeemable. Likewise, if the financial statements closed on the 30th of June and the 31st of December of each year, are not available. | The value of these investments must be provisioned in full. |
Securities and/or Instruments from Issuers or Issuances Having External Ratings
Securities and/or bonds having one or a number of ratings granted by external raters acknowledged by Colombia’s Financial Superintendence, or the securities and/or treasury bonds issued by institutions rated by the latter, cannot be posted for an amount that exceeds the following percentages of their net nominal value from the redemptions performed until the date of valuation:
Rating Long Term | Maximum Value %` | Rating Short Term | Maximum Value % |
BB+, BB, BB- | Ninety (90) | 3 | Ninety (90) |
B+, B, B- | Seventy (70) | 4 | Fifty (50) |
CCC | Fifty (50) | 5 and 6 | Zero (0) |
DD, EE | Zero (0) |
For purposes of the estimation of provisions on term deposits takes the rating of the respective issuer.
Provisions on investments classified to keep until they are due and referring to which a fair trade price may be established in in compliance with that which is foreseen for securities and/or bonds negotiable or available for sale, correspond to the difference between the registered value and such price.
Investments Abroad
Negotiable investments and available investments for sale represented in securities or treasury bonds issued abroad and the securities or private debt bonds issued abroad by foreign issuers are valued based on Bid Issue Date (BID) published by Bloomberg BID.
Current value or market value for securities or bonds denominated in a currency different from the US dollars is converted to such currency based on the currency conversion rates published on the day of valuation in the site of the Central European Bank. When the currency conversion rates are not found in the site of the Central European Bank, the conversion rate before the US dollar published by the Central Bank of the respective country is taken.
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(g) Loans Portfolio and Financial Leasing Operations
It registers credits and financial leasing operations granted by the Subsidiaries (credit institutions) overseen by Colombia’s Financial Superintendence under the different authorized modalities. The resources used in the granting of credits come from their own resources, from the public under the modality of deposits and from other financing sources both external and internal.
Loans are posted for their disbursement value, except factoring, which are registered at cost price.
Commercial
They are granted to natural or legal persons for the development of organized economic activities different from the credits assigned under the modality of microcredit.
Consumption
They are those credits that independently of their amount, are granted to natural or legal persons to finance the purchase of consumption goods or the payment of services for non-commercial nor corporate purposes, different from those granted under the modality of microcredit.
Housing
They are those that regardless of the amount, are granted to natural persons destined for the purchase of new or used homes or to the construction of individual homes. In compliance with Law 546 of 1999, they are denominated in UVRs (acronym in Spanish for Real Value Units), or in local currency and backed with mortgage collateral in the first degree, constituted on the financed home. The amortization period is between five (5) years as a minimum and a maximum of thirty (30). Credits can be paid before they are due in whole or in part at any given time without any penalty. In the event of partial prepayments, the debtor has the right to choose whether the sum subscribed reduces the monthly installments or the life of the obligation. In addition to the above, these loans have remunerative interest rates that are applied to the balance of the denominated debtor or in Colombian pesos; interests are charged when the loan is mature and they cannot be capitalized; the amount of the credit can be up to seventy percent (70%) of the value of the real estate, determined by the purchase price or the technically established by a prospector within six (6) months before the granting of the credit. Credits to finance social housing (low income homes) the amount of the loan can be up to eighty percent (80%) of the value of the home. Financed real estate must be insured against fire and earthquake.
Microcredit
It is constituted by active credit operations referred to in article 39 of Law 590 of 2000, or the regulations that modify, substitute or add to it, as well as those performed by micro-companies where the main source of payment for the credit comes from income derived from their activities.
The balance of debt of the debtor cannot exceed one hundred twenty (120) monthly minimum wages in force at the time of approval of the respective active credit operation. It is understood as debt balance the amount of valid obligations on account of the corresponding micro-company with the financial sector and other sectors that are found in the registries of bank operators from data consulted by the respective operator, excluding mortgage credits that finance housing and adding the amount of the new obligation.
A micro-company is the unit of economic exploitation by a natural or legal person in agricultural, industrial, commercial business, or services, rural or urban, whose staff plant does not exceed ten (10) workers to finance such housing, which is less than five hundred (500) legal monthly minimum wages.
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Financial Leasing
They are agreements in which the lessor (the Subordinated from the Grupo Aval that perform renting or leasing operations) acquires an asset (equipment, vehicles, software) and delivers it leased to a tenant. The tenant pays the lessor monthly fees for the use of the asset. The lessee has the option of purchasing the asset at the end of the lease period by paying a pre-set price.
Criteria for the assessment of credit risk
Subordinated (credit establishments) continually assess the incorporated risk in their credit assets, both at the time of lending and throughout the life of the loans, including cases of restructuring. To this end, they designed and adopted a SARC (System for Assessment of Risk Credit) which is composed of policies and processes for managing credit risk, reference models for the estimation or quantification of expected losses, system provisions to cover the risk of credit and internal control processes.
In the process of granting credits for each of the portfolios they have established policies, variables that allow to discriminate the borrowers that fit the risk profile of the Bank. Segmentation processes and discrimination in credit portfolios and credit potential subjects, are the basis for rating, and the implementation of internal statistical models evaluating different aspects of the applicants to quantify the credit risk. The methodologies and procedures implemented in the granting process allows monitoring and controlling the credit exposure of the different portfolios and the aggregate portfolio, avoiding excessive credit concentration by borrower, industry, group .economic risk factor, etc.
Banks perform continuous monitoring and rating of credit transactions in accordance with the grant processes, which is based among other criteria, in the information regarding the historical performance of portfolios and loans, the particular characteristics of debtors, credits and guarantees to back them up, the debtor's credit behavior in other entities and financial information allowing it to know your financial situation, and sectorial and macroeconomic variables that affect the normal development of the same.
In the evaluation of territorial public entities, the Subordinated verify compliance with the conditions established by law 358 of 1997, 550, 1999, 2000 and 1116 of 2006.
Assessment and Requalification of Loan Portfolios
Subordinates (credit establishments) assess the risk of their loan portfolios by introducing changes in the respective ratings when new information justify new analysis or such changes.
For the proper implementation of this obligation, Subordinates consider debtor's credit behavior in other institutions and, particularly, if at the time of evaluation the debtor records restructured obligations, according to information from credit bureaus or any other source. Monthly updates of the portfolio behavior by customers, in regard to subscriptions, cancellations, penalties and default height of operations.
When a restructured loan is in default it should be reclassified immediately.
Rating of Credit Risks
Subordinates rate credit transactions based on the above criteria and classifies them into one of the following categories of credit risk, taking into account the following minimum objective conditions:
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Category | Approval | Approved Commercial Portfolio | Approved Consumption Portfolio |
“AA” | New credits with assigned rating at time of assignment is “AA”. | Credits already granted that do not have a default above 29 days in their contract obligations, this is between 0 and 29 days in default. | Credits rated through the application of the rating methodology of l MRCO established by the norm, is the same as "AA". |
“A” | In thias category must qualify the new credit with assigned rating of A at the time of granting | The credits already granted which are in default equal or superior to 30 days and less than 60 days in its contractual obligations, i.e. between 30 and 59 days of default. | Appropriations whose qualification awarded by the application of the methodology of qualification of the MRCO established by the norm, is equal to 'A'. |
“BB” | En esta categoría se deben clasificar los créditos nuevos cuya calificación asignada al momento de otorgamiento sea “BB”. | Los créditos ya otorgados que presenten mora superior o igual a 60 días e inferior a 90 días en sus obligaciones contractuales, esto es entre 60 y 89 días en mora. | Los créditos cuya calificación obtenida por la aplicación de la metodología de calificación del MRCO establecida por la norma, sea igual a “BB”. |
“B” | En esta categoría se deben clasificar los créditos nuevos cuya calificación asignada al momento de otorgamiento sea “B”. | Los créditos ya otorgados que presenten mora superior o igual a 90 días e inferior a 120 días en sus obligaciones contractuales, es decir entre 90 y 119 días en mora. | Los créditos cuya calificación obtenida por la aplicación de la metodología de calificación del MRCO establecida por la norma, sea igual a “B”. |
“CC” | En esta categoría se deben clasificar los créditos nuevos cuya calificación asignada al momento de otorgamiento sea “CC”. | Los créditos ya otorgados que presenten mora superior o igual a 120 días e inferior a 150 días en sus obligaciones contractuales, es decir entre 120 y 149 días en mora. | Los créditos cuya calificación obtenida por la aplicación de la metodología de calificación del MRCO establecida por la norma, sea igual a “CC”. |
“IDefault” | En esta categoría se deben clasificar los créditos nuevos cuando el solicitante se encuentre reportado por alguna entidad en la central de riesgo CIFIN en calificación D, E o con cartera castigada. | Los créditos ya otorgados que presenten mora superior o igual a 150 días. | Créditos de consumo que se encuentren en mora mayor a 90 días. |
Other criteria considered by the subsidiaries to rate credit operations are as follows:
for commercial loans granted, the rating at the time of grant in the monthly closings for the months corresponding to the quarterly period of loan disbursement, the rating in the granting process with the characteristics of each debtor and other factors that may be considered of higher risk. For consumer loans, the rating assigned to the grant only in the end of the month in which it was disbursed.
For purposes of approving credit ratings of commercial loans and consumer debt in reports and registration statements in Subsidiaries (credit) applicable to the following table:
Group Category | Reporting Categories | |
Commercial | Consumption | |
A | AA | AA |
A current default 0-30 days | ||
B | A | A current default greater than 30 days |
BB | BB | |
C | B | B |
CC | CC | |
C | C | |
D | D | D |
E | E | E |
Where by reason of the implementation of the reference model adopted by the Financial Superintendence of Colombia, its Subsidiaries (credit institutions) rate their customers as defaulting, they are approved as follows:
Group category E = Past due customers which assigned PDI (loss upon default) is one hundred percent (100%). |
Group category D = All other past due customers. |
For purposes of homologation in consumer loans, current arrears referred to in the table above should be understood as the maximum that registers the debtor for the aligned products.
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For debtors that at the time of qualification do not belong to the category of default, on development of the Reference Model for Consumer Loans (MRCO) Subsidiaries apply the following model depending on the segment to rate. This model calculates a score, which is the product of the particular characteristics of each debtor and is reached by applying the following equation:
Score = | 1 |
1+e -z |
Where, Z varies according to segment that the debtor belongs to. Finally on this score ratings are set according to the table established by the Colombian Superintendency of Finance, which is shown below:
Score Until | |||
Rating | General Vehicles | General others | Credit Cards |
AA | 0.2484 | 0.3767 | 0.3735 |
A | 0.6842 | 0.8205 | 0.6703 |
BB | 0.81507 | 0.89 | 0.9382 |
B | 0.94941 | 0.9971 | 0.9902 |
CC | 1 | 1 | 1 |
Subordinated must rate debtors in higher risk categories, when they have additional risk factors that support this change.
The portfolio of Housing and Microcredit, following the default height criterion is classified as:
Categoy | Micro-credit | Housing |
“A” Normal Risk | Valid Credits and until 1 month of expiration. | With instalamentos up to dater or due up to 2 months. |
“B” Acceptable Risk | Credits with maturities exceeding 1 month and Up to 2 months | With maturities over 2 months and up to 5 months |
“C” Noticeable Risk | Credits with maturities greater than 2 Months and up to 3 months | With maturities of over 5 months and up to 12 months. |
“D” Significant Risk | Credits with maturities exceeding 3 Months and up to 4 months. | With maturities greater than 12 months and up to 18 months |
“E” Risk of uncollectability | Credits with maturities of more than 4 months. | With maturities of more than 18 months. |
Restructuring Process
Restructuring a loan is understood as any outstanding mechanism implemented by the conclusion of any legal business, which tends to change the originally agreed conditions, in order to allow debtors to adequately care for their obligations in face of the actual or potential deterioration of their paying capacities. Additionally, it is considered restructuring the agreements concluded within the framework of Law 550 of 1999, 2000 and 1116 of 2006 or regulations that add them or substitute them as well as extraordinary restructuring and novations.
Fiscal Soundness as per Law 617 of 2000
In the restructuring derived from subscribing the Fiscal and Financial Restructuring Program under the terms of Act 617 of 2000, the Nation provided guarantees to the obligations of the territorial entities before financial institutions supervised by the Financial Superintendence of Colombia, as long as they meet the requirements of this Act and the fiscal adjustment agreements are subscribed before June 30, 2001. This guarantee could be up to forty percent (40%) for outstanding loans at December 31, 1999, and up to one hundred percent (100%) for new loans for fiscal adjustment.
These restructurings were reversed characteristic that the provisions made for the restructured obligations guaranteed portion in the nation, while the part of the
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restructured loans that were not guaranteed by the nation, kept their rating of June 30th 2001.
If the restructuring agreement is complied with, the debtor is rated in the grade before restructuring at a higher risk.
For purposes of improving the relevant rating after restructuring, the terms of the agreement must be fully met.
In the event that a local authority breaches the agreement, the existing debt on the date of the breach that is not backed by the Nation, is reclassified to risk category "E".
Extraordinary Restructuring
For the restructuring that took place based on External Memo 039 of 1999 from the Financial Superintendence of Colombia and until December 31st 1999, its Subordinated may reverse their provisions as long as the restructuring agreement rates the debtor "A" or had paid at least two installments of interests or made a payment to capital and a
compliance certification would have been provided under the terms of the Management Agreement and on the debtor's paying capacity
.
Restructuring Agreements
For restructured loans during the validity of Law 550 of 1999, upon beginning restructuring negotiations by the Subsidiaries (credit institutions), they suspended the accrual of interest on outstanding loans and kept the rating they had at the time of negotiations. However, if a client was qualified in risk category "A", it would be reclassified "B" as a minimum and a one hundred percent (100%) provision for accounts receivable would be made.
In the event of failed negotiations, loans are classified in category "E" bad credit.
As of the issuance and effectiveness of Law 1116 of 2006, the Corporate Insolvency Regime was established, debtors are considered in default status.
When a client is admitted to the restructuring process under the terms of Law 1116 of 2006, Subordinates suspend the accrual of performance and rates the customer in a risk category in agreement with their current situation. If the client's situation further deteriorates or it is perceived that the agreement in process does not meet the expectations of the Subordinate rating is reviewed, reclassifying it to the category of the corresponding risk. If no agreement is reached or liquidation is declared, the customer is classified as defaulter.
Special Criteria for the Qualification of Restructured Loans
Restructured loans can maintain their previous rating, provided that the restructured agreement entails an improvement in the debtor's ability to pay and/or the likelihood of noncompliance. If restructuring includes grace periods for payment of principal, it only maintains that rating when the period does not exceed a period of one year as of signing the agreement.
Credit ratings may improve or be modified from their default condition after being restructured, only when the debtor payment behavior follows a regular and effective payment pattern to principal, in agreement with a normal credit behavior and provided their ability to pay is maintained or improved.
(h) Loan Portfolio Charge-offs
Obligations that in the opinion of the management of the Subordinated are considered irrecoverable or that have a remote and uncertain recovery and they are one hundred percent
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may be written-off or provisioned, after having exhausted all possible means of collection, in accordance with the concepts of legal collection agencies and lawyer’s operators.
The write-off does not relieve officers of their accountability for the approval and management of the credit, nor removes their obligation to continue the collection efforts to achieve its collection.
The Board is the only competent body to approve write-offs of operations deemed as lost.
(i) Provision for Credit Portfolios and Accounts Receivables
Subordinates (credit institutions) have a provisioning system to cover credit risks, which is calculated on the outstanding balance by applying reference models from the commercial portfolio (MRC) and from Consumer Loans (MRCO). For loans under the Housing portfolio and Microcredit modalities, provisions are determined based on customer arrears.
Commercial and Consumer Loan Portfolio
Subordinates (credit institutions) adopted the commercial and consumer reference models, established by the Financial Superintendence of Colombia, which are used for the creation of provisions resulting from their application.
The estimate of the expected loss (provisions) resulting from the application of the following formula:
EXPECTED LOSS = [probability of default] x [Asset exposure at the time of default] x [Loss in face of default] |
Segmentation and discrimination processes of credit portfolios and of their possible subjects of credit, are the basis for estimating expected losses in the Commercial Portfolio Reference Model (MRC), which is based on segments differentiated by the level of assets of debtors under the following criteria:
Classification of Commercial Portfolio per Level of Assets
Company Size | Level of Assets |
Large Companies | More than 15,000 SMMLV |
Medium Companies | Between 5,000 and 15,000 SMMLV |
Small Companies | Less than 5,000 SMMLV |
The model also has a category called Natural Persons (Individuals) grouping all individuals having a commercial credit.
The Reference Model for Consumer Loans (MRCO), is based on differentiated by product segments and credit institutions that offer them, in order to preserve the characteristics of the market niches and products granted.
The following are the defined segments for MRCO Subsidiaries:
· | General - Cars: Loans granted for car purchases. |
· | General - Other: Loans granted for the purchase of consumer goods other than cars. This segment does not include credit cards. |
· | Credit Cards: Revolving credit for the purchase of consumer goods using a plastic card. |
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Reference models of commercial and consumer portfolio allow establishing the components of the expected loss according to the following parameters:
a. Probability of Payment Default
It corresponds to the probability that in a period of twelve (12) months debtors default.
The probability of failure was defined according to the following matrixes, established by the Financial Superintendence of Colombia:
Commercial Loan Portfolio
Rating | Large Company | Medium Company | Small Company | Natural Persons | ||||
Matrix A | Matrix B | Matrix A | Matrix B | Matrix A | Matrix B | Matrix A | Matrix B | |
AA | 1.53% | 2.19% | 1.51% | 4.19% | 4.18% | 7.52% | 5.27% | 8.22% |
A | 2.24% | 3.54% | 2.40% | 6.32% | 5.30% | 8.64% | 6.39% | 9.41% |
BB | 9.55% | 14.13% | 11.65% | 18.49% | 18.56% | 20.26% | 18.72% | 22.36% |
B | 12.24% | 15.22% | 14.64% | 21.45% | 22.73% | 24.15% | 22.00% | 25.81% |
CC | 19.77% | 23.35% | 23.09% | 26.70% | 32.50% | 33.57% | 32.21% | 37.01% |
Default | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% |
Consumer Loan Portfolio
Rating | Matrix A | Matrix B | ||||
General Automobiles | General Others | Credit Cards | General Automobiles | General Others | Credit Cards | |
AA | 0.97% | 2.10% | 1.58% | 2.75% | 3.88% | 3.36% |
A | 3.12% | 3.88% | 5.35% | 4.91% | 5.67% | 7.13% |
BB | 7.48% | 12.68% | 9.53% | 16.53% | 21.72% | 18.57% |
B | 15.76% | 14.16% | 14.17% | 24.80% | 23.20% | 23.21% |
CC | 31.01% | 22.57% | 17.06% | 44.84% | 36.40% | 30.89% |
Default | 100.0% | 100.0% | 100.0% | 100.00% | 100.00% | 100.00% |
Thus, for each debtor-commercial loan segment and consumption gives the probability of migrating from its current rating and default rating in the next 12 months according to the cycle of the general behavior of credit risk.
b. Loss in the event of default (LGD)
It is defined as the economic downturn of Subsidiaries in the event that some situations of non-compliance materialize. The PDI for qualified borrowers default category suffers a gradual increase according to the days elapsed after rating in that category.
The collateral backing the transaction is required to calculate the expected losses in the event of default and therefore, to determine the level of provisions.
The Bank deems appropriate guarantees, those securities duly perfected that have a set value based on technical and objective criteria providing effective legal backing for the payment of the secured obligation and which possibility of realization is reasonably adequate.
To assess the support provided and the possibility of realization of each collateral, the Bank considers the following factors: Nature, value, coverage and liquidity of collateral as well as the potential costs of fulfillment and legal requirements necessary to make them enforceable .
The PDI per type of guarantee is:
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Type of Guarantee | PDI | Díays after Payment default | Nuevo PDI | Days after Payment default | New PDI |
Not admissible Guarantee | 55% | 270 | 70% | 540 | 100% |
Subordinated credits | 75% | 270 | 90% | 540 | 100% |
Admissible Financial Collateral | 0 - 12% | - | - | - | - |
Real estate commercial and residential | 40% | 540 | 70% | 1080 | 100% |
Collateral in real estate leasing | 35% | 540 | 70% | 1080 | 100% |
Collateral in leasing different from real estate | 45% | 360 | 80% | 720 | 100% |
Other collaterals | 50% | 360 | 80% | 720 | 100% |
Collection rights | 45% | 360 | 80% | 720 | 100% |
Unguaranteed | 55% | 210 | 80% | 420 | 100% |
Consumption Loan Portfolio
Type of Guarantee | PDI | Díays after non Payment Default | New PDI | Days after non Payment Default | New PDI |
Not admissible guarantee | 60% | 210 | 70% | 420 | 100% |
Admissible Financial Collateral | 0 - 12% | - | - | - | - |
Real estate commercial and residential | 40% | 360 | 70% | 720 | 100% |
Collateral in real estate leasing | 35% | 360 | 70% | 720 | 100% |
Collateral in leasing different from real estate | 45% | 270 | 70% | 540 | 100% |
Other collaterals | 50% | 270 | 70% | 540 | 100% |
Collection rights | 45% | 360 | 80% | 720 | 100% |
Unguaranteed | 75% | 30 | 85% | 90 | 100% |
c. Exposure value of the asset
For purposes of commercial and consumer loan portfolios this denomination is understood as the total outstanding exposure value of the asset, the current balance of capital, interest, receivables of interest and other accounts receivable
Individual Loan Loss Reserves under Reference Models
Commencing on April 1, 2010 under the terms of the External Memorandum 035 of September 23, 2009 issued by the Financial Superintendence of Colombia for the commercial and consumer loan portfolio reference models, the Subordinates have established a general scheme for loan portfolio reserves which are thereupon calculated as the sum of the components denominated respectively “pro-cyclical individual component” and “countercyclical individual component. Subordinates apply a methodology for calculating the cumulative phase based on the monthly evaluation of the behavior of the indicators of deterioration, efficiency, stability and growth:
Cumulative stage | Non-cumulative stage | |
Deterioration | < 9% | > = 9% |
Efficiency | < 17% | > = 17% |
Stability | < 42% | > = 42% |
Growth | > 23% | < = 23% |
From the accounting closing of May 2011, were implemented changes in the calculation of these indicators, in accordance with the External Memo 017 of May 4, 2011 which shows the numeral 1.3.4.1 of chapter II of the External Memo 100 of 1995. This includes deflating deterioration indicators (real quarterly variation of individual reserves of the total portfolio, B, C, D and E) and growth (rate of annual real growth of gross portfolio). In addition, sub-accounts 410241, 410242 and 410243 were discounted from the calculation of the income portfolio interest indicator accumulated during the quarter. (Default Interest for consumption, housing and microcredit).
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The individual provision of portfolio was calculated as the sum of the Individual component pro-cyclical and countercyclical Individual component indicators listed above.
The Individual pro-cyclical component: Corresponds to the portion of the individual's credit portfolio which reflects the credit risk of each debtor, in the present.
The individual Contracyclical component: It corresponds to the portion of the individual's loan portfolio that reflects possible changes in the credit risk of borrowers at a time in which the impairment of these assets is increased. This portion will reduce the impact on the income statement when such a situation arises. CIC corresponds to the higher value between the CIC of the previous month affected by the exposure, and the difference between the expected loss of the matrices B and of the month of evaluation.
In any case, the counter-cyclical individual component of each obligation can be less than zero and not exceed the expected loss calculated with the matrix B; Likewise the sum of these two components cannot exceed the value of the exhibition.
The two components separately for the capital and accounts receivable portfolio and leasing obligations are calculated by the Subordinates.
In order to establish the methodology to be applied for the calculation of these components, the subordinates engage in monthly evaluation of indicators related to: real quarterly variation of individual reserves of the total portfolio classified as B, C, D and E; quarterly accumulated reserves net of recoveries (loans and leasing portfolios) as a percentage of quarterly cumulative income for interest on loans and leasing portfolios; cumulative quarterly reserves net of loans and leasing portfolio recoveries of portfolio as accumulated percentage of quarterly adjusted gross financial margin; and annual real growth rate of gross portfolio. Depending on the outcome of these indicators, applies the methodology in cumulative stage or a methodology of disaccumulative stage.
On June 30, 2012 and 31 December 2011 individual provisions were calculated under the methodology of cumulative stage as established by the Superintendencia Financiera de Colombia.
To homologate various warranties in contracts of credit with the previously listed segments, subsidiaries classified within each group of guarantees the following:
Portfolio of Housing and Micro-credit
General Provision
Corresponds at least to the one per cent (1%) of the total amount of the gross loan portfolio in the modality of housing and microcredit.
Subordinates keep all the time reserves not lower tan those resulting of the percentages calculated over outstanding unpaid amounts:
Category | Microcredit | Housing | |||
Capital | Interest and Other Concepts | Capital % Guaranteed part | Capital % not Guaranteed part | Interest and Other Concepts | |
A - Normal | 1 | 1 | 1 | 1 | 1 |
B - Acceptable | 3.2 | 100 | 3.2 | 100 | 3.2 |
C - Noticeable | 20 | 100 | 10 | 100 | 100 |
D - Significant | 50 | 100 | 20 | 100 | 100 |
E - Uncollectable | 100 | 100 | 30 | 100 | 100 |
For purposes of Housing Loan Portfolio, if exposure is classified in the category "E", during two (2) consecutive years, the percentage reserve over the guaranteed portion increases to sixty percent (60%). After one (1) additional year in this situation, the percentage over the guaranteed portion rises to one hundred percent (100%).
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Pursuant to the creation of individual loan-loss provisions, guarantees are deemed to only secure outstanding principal amounts. Therefore, balances to be amortized under exposure secured by eligible guarantees are subject to loan-loss provisions in the applicable percentage, which is applied as follows:
· | When pursuant to housing loans, non-guaranteed portion, to the difference between the unpaid amount and one hundred percent (100%) of the guarantee. For the guaranteed portion, one hundred percent of the outstanding guaranteed principal exposure. |
· | When pursuant to micro-credit exposure, to the difference between the unpaid amount and seventy percent (70%) of the value of the guarantee. In these cases, depending on the nature of the guarantee and of the default period of the respective loan, consideration is made of only those percentages of the total guarantee that are listed in the following charts: |
● | Non-mortgage Guarantees | Mortgage Guarantee or Eligible Trust Mortgage Guarantee | ||||||||
Percentage | Percentage | |||||||||
Time of Payment Default | Coverage | Time of Payment Default | Coverage | |||||||
0 - 12 months | 70.0 | % | 0 – 18 months | 70.0 | % | |||||
12 – 24 months | 50.0 | % | 18 – 24 months | 50.0 | % | |||||
More than 24 months | 0.0 | % | 24 – 30 months | 30.0 | % | |||||
30 – 36 months | 15.0 | % | ||||||||
More than 36 months | 0.0 | % |
Rules of Alignment
The Subordinates (credit entities) realize the alignment of ratings of their debtors following the criteria below:
a) Before the process of setting of provisions and homologation of qualifications, the Subordinates monthly, and for each debtor, realize the process of internal alignment , and for this purpose they take the category of greater risk of credits
To the same modality granted to this, except if there are sufficient reasons for qualification in a category of lesser risk.
b) According to relevant legal dispositions, the Subordinate obligated to consolidate financial statements assigns the same qualification to credits of the same modality granted to the same debtor.
(i) | Acceptances, Cash Operations and Derivatives |
Registers the value of bank acceptances created by the Parent company on behalf of their clients and those created on its behalf by the its correspondents. Likewise, registers the cash operations and the contracts entered into by the parent, of operations with derivatives such as forwards, carrousel, futures, swaps and options.
Banker Acceptances
This is commercial transaction of the subordinates through the subscription of a bill of exchange and as acceptor is obliged to pay to a third party (beneficiary) within a certain term, the bill of exchange drawn by one of its clients as a result of a sales contract of merchandise for a certain sum.
Bank acceptances have a maturing term of up to one (1) year and can only be originated in import/export of goods or sale of movable goods within the country.
At the time of the acceptance of the bills of exchange, its value is accounted for simultaneously in assets and liabilities as bank acceptances in term and if at the expiration they are not presented for payment, are classified under the heading of bank acceptances after the term. If upon payment those have not been covered by the acquirer of the merchandise, those are reclassified to the account of loans, bank acceptances covered.
After maturity, the bank acceptances are subject to the exchange set out for sight obligations and before thirty (30) days.
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Cash Transactions and Derivatives
Cash transactions are those which liquidation and payment takes place within three (3) working days immediately following the date on which they are agreed.
The financial assets acquired in cash operations are accounted for in the date of compliance or liquidation thereof and not on the date of negotiation, unless a coincidence occurs. Without prejudice of the above, the changes in the market value of the instruments sold must be reflected from the date of negotiation, as the case may be.
Under the method of the same date of liquidation, the salesman registers the financial asset in its balance up to its delivery, and additionally registers in the asset account, a right to receive the money derived from the transaction and an obligation to deliver the asset negotiated which is valued at market prices pursuant to the rules set out for investments and is recorded in the Income Statement the variations of the valuation of this obligation.
On its part, the buyer of the asset does not register the financial asset until its delivery but registers in accounting in the asset account a right to receive the asset which must be valued at market prices, and an obligation to deliver the money agreed in the operation.
When the operation is accomplished, the buyer and seller of the asset will revert both the right and the obligation registered at the time of negotiation.
The subordinates register the operations with derivative financial instruments which are contracts which main feature is that their fair price of exchange depends on one or more underlyings and its fulfillment or liquidation takes place later on. These operations have different objectives among which are highlighted:
· | Offering products tailored to the needs of each customer, fulfilling, amongst other, a function of coverage of financial risks; |
· | Structuring of portfolios for the subordinates for adoption of advantageous arbitrage positions on different curves, assets and markets and allowing achievement of high profitability levels under low levels of equity consumption. |
· | The Subordinates perform derivatives, both for risk hedging of asset and liability positions of its balance sheet, and with the purpose of intermediation with clients or to capitalize arbitrage opportunities, both exchange rate and interest rate in local and external markets. |
Types of Derivatives Financial Instruments
A derivative financial instrument enables management of one or more risks associated with the underlying and meets any of the following conditions:
· | Do not require a net initial investment. |
· | Require a net investment initial lower than that which would be needed to acquire instruments that provide the same payment expected in response to changes in market factors. |
The operations with derivative financial instruments are valued on a daily basis at fair price of exchange; depends on one or more underlying instruments and its enforcement or liquidation is carried out at a later time considering the following:
The right price for the exchange of financial derivatives basic instruments when there is no market price is the result of applying formulas of assessment established by the Superintendencia Financiera de Colombia.
The methodology, parameters and sources of information for the assessment of the basic derivative financial instruments are used consistently, at least for one (1) year, counted from
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the modification. Used a similar methodology to assess basic derivative financial instruments having similar characteristics, provided that they related to the same underlying.
Derivative financial instruments that will deliver fair price of positive exchange is recorded in the assets, separating the value of the right and the value of the obligation, except for the options, where the accounting register is carried out in a single account. Those that will deliver fair price of negative exchange, namely unfavorable to the supervised entity are recorded as liabilities, making the same separation. When the fair price of exchange of the derivative financial instrument is equal to zero (0), either on the initial date or in another later date, its accounting record is made in the assets.
Financial derivatives are negotiated at different tables of the Treasury, i.e. specialized and distribution where are covered exchange rate risks and help the entity to project cash flows so that you can devote to its main activity, to cover these risks.
Derivative products that subordinate work with are as follows:
· | Forward transactions (peso-dollar, other currencies and instruments) |
· | Options – basic and combined |
· | Swaps (Cross Currency Swap and Interest Rate Swap) |
· | Futures: Standard derivatives of the Colombia Stock Exchange (futures over notional bonds and TRM futures) |
· | Standard derivatives in foreign markets (exchange rate futures and euro-dollar futures) |
· | Novated Forwards |
· | Forward Contracts |
A “forward” is a derivative formalized through a contract between two (2) parties, tailored to their individual needs, for the purchase/sale of a specific amount of a determined subjacent at a future date, setting the date of execution of basic conditions on the derivative financial instrument, amongst them the Price, date of delivery of the subjacent and the modality of delivery. Liquidation of the instrument in the date of compliance pay arise from its physical delivery or the liquidation of differences, depending on the subjacent and on the agreed modality for delivery, the latter may be amended by common agreement during the tenor of the instrument.
· | Options |
An “option” is a contract that grants its holder an option or right, although not the obligation, to buy or sell a certain amount of one asset at an agreed price and on a certain date or during a certain period of time. Such contract mandates the issuer to either buy or sell the asset on the date in which the “option” is exercised by its holder, according to conditions such as amount, quality and price, as agreed pursuant to the contract.
· | Swaps |
A swap or financial exchange contract is a contract executed by two (2) parties in which they agree to the exchange of a series of cash flows, calculated under certain conditions agreed under the contract which must be compensated on specific dates, also agreed at initiation of the transaction.
The purpose of this type of transaction is to reduce the risks created by the fluctuations of currency exchange rates and interest rates. In general, these are contracts aimed to provide coverage of long term transactions with more than one remaining flow.
There are two types of interest rate Swaps:
· | Swap transactions may cover interest rates or contracts under which the cash flows delivered by both parties are denominated in the same currency or to cover rates of Exchange in which the flows of the transactions are denominated in different currencies. Fixed rate for Variable rate and Variable rate for Variable rate.. |
· | The interest rate swap (IRS Interest Rate Swap) is a two party contract for the exchange of interest flows derived from payment or charge of future flows under different modalities of interest rates. In this type of swap there is no exchange of principal amounts and the transactions occur in the same currency. |
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· | Foreign exchange swaps (Currency Swaps) are two party contracts for exchange of principal flows, denominated in different currencies, during a certain period of time. Through the tenor of the contract, each party assumes interest payments accrued under the principal amount received at the exchange. |
On the dates for amortization and at maturity of the contract, there is an effective exchange of principal amounts in the currencies originally held by each party, liquidated at the spot rate of exchange of the day of initiation of the transaction. There are three (3) types of currency swaps: Fixed for Fixed, variable for variable and fixed for variable.
· | Futures Contracts |
A future is defined as a standard contract in terms of date of compliance, magnitude or face value, the characteristics of its respective undertaking, location and manner of delivery (in cash or kind). It is negotiated in the stock exchange through the Central Counterpart Risk Chamber and the two (2) parties commit to sell or buy the underlying asset on a specific future date at a price set at execution of the respective contract.
1. | Accounting and Valuation of Derivative Financial Instruments |
In accordance with rules set by External Memorandum 025 of 2008, Resolution 1420 of 2008 and Communication 066 of 2009 issued by the Financial Superintendence of Colombia, derivative financial instruments are classified on the basis of their tradability, as follows:
· | Coverage of Risk of other positions, |
· | Speculation seeking to obtain gains |
· | Market arbitration |
Accounting of derivative financial instruments depends on the finality of the underlying negotiation. As of 31 December 2009 and 30 June 2010, all transactions carried out by the Subordinates are registered as of speculation.
Although derivatives cover the risks of foreign exchange rates they generate volatility in terms of income statement in light of the variation of other types of associated risks such as devaluation curves peso-dollar (differential of foreign exchange rates). The purpose of the accounting treatment of these coverage is to isolate the effects of volatility over income statements resulting from variation in risk factors other than rate of exchange, taking to income statement only the income/expense resulting from foreign exchange re-expression and taking to net-worth accounts the portion of variation of the fair exchange price corresponding to other factors (devaluation, lapse of time, etc.).
Effective January 1, 2010, regardless of their finality, derivative financial instruments that yield a fair positive exchange price , that is: favorable to the Subordinate, are booked as assets with separation of the value of the right and the value of the obligation and excluding options for which the accounting entry is only one. On the other hand, those that yield a negative fair exchange Price, that is: unfavorable to the Subordinate, are to be booked as liabilities, with the same separation. Likewise, there is no net settlement of favorable balances and unfavorable balances for the various transactions even when of the same nature.
Derivative financial instruments with purposes of speculation are to be booked, as of the date of their execution, in amount equal to their fair exchange Price. When, on the initial date, the value of the contract is zero (0), that is to say when there is no actual payment or physical delivery between the parties, there is no accounting for income statement purposes. In subsequent valuations, variations in the fair exchange price are booked in income statement.
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On the date of liquidation of derivative financial instruments cancellation takes place of outstanding balances in general balance sheet accounts and any resulting difference is either credited or charged to the respective income statement accounts, as applicable. Should the accumulated balance of the derivative financial instrument be positive on such date, it is booked as income and, should it be negative, it is then booked as expense. This procedure is completed independently, instrument by instrument, each time one is liquidated.
Type of operation | Accounting and Valuation |
Forward over titles | In forward purchase of titles, the right is estimated valuing the title at market prices and the obligation obtaining the present value of the agreed purchase price. In the case of the forward sale of titles, the right is calculated obtaining the present value of the agreed amount of sale and the obligation rating title at market prices. |
Forward over exchange | The methodology of valuation for forward operations and cash over exchange that uses the Bank is based on bringing to present value the future flows involved in operation; the most usual is that one of these two flows is nominated in US dollars and the other in Colombian pesos. Each flow is brought to the present value using discount from market rates in dollars and Colombian pesos for the term remaining in each operation. These present values are calculated using continuous composite rates. Once the present values of the flows are obtained, they are restated in Colombian pesos using the representative market rate calculated and certified by the Superintendencia Financiera de Colombia. Interest rates used are market based on the average devaluation of the Colombian peso When the Bank buys an option, either 'call' or 'put', the accounting register of the premium paid as daily variations at fair price of exchange occurs in the asset.. |
Options | The determination of the market value of the options in currency made by the Bank are estimated using the methodology developed by Black and Scholes. The information to be used in the model for the valuation of options is obtained from financial information systems that currently provide prices for the variables involved (lrisk-free rates, volatiles and foreign). The initial registry corresponds to the premium actually paid and the variations in the fair price of Exchange with respect to the initial, actually paid value, are recorded in the income statement. Rights and obligations are recorded in contingent accounts. When the Bank buys an option, either 'call' or 'put', the accounting register of both the premium paid and the daily variations at fair price of exchange occurs in the asset. When the Bank sells an option, the accounting register of the premium received and its daily variations at fair price of exchange occurs in liabilities. On the date of expiration of the contract, Balances corresponding to the value of the right and obligation are cancelled and any difference is booked as a profit or loss on the valuation of derivatives. |
Swaps | The valuation of swap consist of bringing to present value (discounted) each of the future flows and convert them to the accounting currency. To carry out the process of valuation of a swap, the Bank updates the market information (curves of interest rates and exchange rates) and according to the particular features of each operation, breaks down the swap in future cash flows and calculates the total flow at each date of compliance. The sum of present values of received flows are accounted for as a right and the sum of the series of flows delivered are accounted for as duty. The result of the valuation of the day in which the operation was held is recorded as a deferred, and is amortized until maturity of the swap. To the result of the valuation of the second day and until the day of maturity of the operation it is substracted the amortization of such deferred. |
Futures | In this type of derivatives, there is daily settlement of gains and losses. The Central Chamber of Risk of the counterpart counterpart "CRCC" daily communicates the result of the compensation of participants and proceeds to debit or pay the realized gain or loss. For the case of future national bond, if the Bank has a short position, notifies the "CRCC" the title with which it wishes to fulfill its obligation, according to the specifications of the basket of deliverables and transfers the titles through deposits of securities (DECEVAL or DCV) who confirmed to "CRCC" the transfer of such securities. In the case of future exchange rates dollar/peso upon expiration of the contract, liquidation is performed against the price of the underlying (TRM) posted the last day of negotiation. The value of the obligation that the seller must register in its balance (right to the buyer), in Colombian pesos, corresponds to the price of each unit of the futures contract reported on the date of valuation by the stock exchange multiplied by the number of contracts and the nominal value of each contract. For its part, the value of the right that the seller must register on its balance sheet (obligation to the purchaser), in Colombian pesos, corresponds to the price of each unit in the futures contract, multiplied by the number of contracts and the nominal value of each contract. The Forward Novados, consist of derivative financial instruments that were negotiated in the market counter and whose counterparts, by mutual agreement decide to take it to a central risk chamber of counterparty for its compensation and liquidation; This agreement is governed by the framework agreement signed between respective counterparts until the day in which the Chamber of central risk of counterpart stands as counterpart of the operation. From that time on, applies the rules thereof and therefore, will not govern the contract framework previously subscribed between the initial counterparts of such financial instrument. Liikewise, the respective Chamber of central risk of the counterparty must assure access to the Superintendencia Financiera de Colombia to information from these operations whenever required by the latter. The cumulative balance staying in the balance until the day in which the Chamber of central risk of the counterpart effectively accepts operation, is taken on the same day to an account payable or receivable, as appropriate, on behalf of the Chamber. The account is canceled in the process of compensation and liquidation of such operations, in accordance with the rules of the respective chamber of Central risk of the counterpart. |
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2.- Derivative financial instruments for hedging
It is a combination of operations whereby one or more financial instruments, known as hedging instruments, are designated to reduce or cancel a specific risk which may have impact on the income statement as a result of variations in the fair price of Exchange, cash flow or the type of change of one or more items denominated primary positions.
Accounting for financial instruments derivatives for the purpose of coverage depends on the specific type of coverage in question. In the case of the coverage of assets and liabilities in foreign currency:
· | The gain or loss or accumulated of the derivative financial instrument is recognized in the corresponding statement sub account, provided that this amount does not exceed the amount of the accumulated variation of the primary position covered attributable to the movements of the exchange rate since the starting date of coverage, which is accounted for by changes in the respective accounts of profit or loss by changes |
· | When the profit or loss accumulated for the derivative financial instrument is greater than the amount referred to above, the difference is recorded in the equity account "unrealized profits or accumulated losses in derivative financial instruments for purposes of coverage of assets or liabilities denominated in foreign currency", with the corresponding sign. |
· | On the date when the coverage expires, the cumulative result of the derivative financial instrument used for this type of coverage, which is located in the equity sub-account "unrealized gains or losses accumulated in derivative financial instruments for purposes of coverage of assets or liabilities in foreign currency, is moved to the income statement in the respective sub-account for derivative financial instruments. |
On the other hand, the accounting of primary positions covered is as follows:
a. | The Primary position continues registering at its respective nominal value at each date, in the same accounts of the balance sheet and income statement, with the same methodology and dynamics as it would happen if it did not have coverage. |
b. | From the date coverage with derivative financial instruments appears, the present value of the primary position is recorded in memorandum accounts. |
Derivative financial instruments designated as coverage are forward peso / dollar operations with different maturity profiles.
(j) Foreclosed Assets
This account registers the value of assets received in lieu of payment by subordinate companies in exchange for non-payment of outstanding loan amounts.
Assets received in lieu of payment in the form of real estate properties are received on the basis of their commercial appraisal established in technical manner and other assets such as movables, securities and participations are received at market value.
For proper booking of assets received in lieu of payment, the following conditions must be fulfilled:
· | Initial booking is made in accordance with the value determined in the official attachment or as agreed with the debtor party. |
· | When the asset to be received in lieu of payment does not meet conditions for divestiture, its cost is increased in the amount of all expenses necessary to engage in its commercialization. |
· | If there is a difference between the value of receipt and the amount of the loan to be repaid which results in favor of the paying party, the pertinent amount is accounted for as an account payable; in the event the value of the asset is not sufficient to cover outstanding debt, the difference is covered through a provision equivalent to such difference. |
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· | Foreclosed assets corresponding to investments in securities, are valued through application of criteria indicated in this Note under Numeral “2 (e) of Investments” and taking into account all requirements for reserves during the period mentioned below. |
· | Earnings from term sales of assets received in payment are deferred through the life of the loan and are realized when the underlying obligation is duly paid. |
· | When the commercial value of the property is below book value, a reserve is created in an amount equal to the resulting difference. |
· | Appraisal of assets received in payment is booked in memo Accounts. |
Assets not used pursuant to the corporate purpose are assets for own use that entities cease to use in development of their corporate purpose. These assets are depreciated through the instance of their realization and are accounted for as fixed assets pursuant to the limits set by Numeral 1.2 of Chapter Seven of Title One of the Basic Juridical memorandum of the Financial Superintendence of Colombia.
Provision for Foreclosed Assets
The financial subordinates register the value of the assets received in payment of balances not paid steming form credit in their favor.
Real Estate Properties
Individual provisions of Banco de Bogotá are created for real estate through application of a model approved by the Colombian Superintendency of Finance. The model calculates the maximum expected loss resulting from the sale of assets received in lieu of payment in accordance with their history of recoveries from assets divested, the addition of expenses incurred in the forfeiting transaction, maintenance and sale of these assets and their grouping in common categories for determination of the base rate for the reserve. This rate will be adjusted on a monthly basis up to reaching a reserve equal to eighty percent (80%) depending on the group of assets to which it belongs, as follows:
- | For foreclosed assets after two (2) and four (4) years of receipt and for which the Colombian Superintendency of Finance did not approve extension of sale period and those assets with more than two (2) years and less than four (4) years after receipt and for which the Colombian Superintendency of Finance did grant authorization for extension of sale period, these entities have fulfilled the required adjustment after twenty seven (27) months and reserves have adjusted to reach eighty percent (80%) at 31 December 2005. |
- | For foreclosed assets with less than two years after receipt and received after 1 October 2003, application was made of the adjustment function during a period of forty eight (48) months and a provision was created at eighty percent (80%). |
- | For purposes of real estate properties a reserve is to be created through allocation of equal monthly quotas during the year following receipt of the assets, up to an equivalent to an additional thirty percent (30%) which is increased in monthly amounts during the second year up to another thirty percent (30%) to reach a total sixty percent (60%) of their acquisition cost. Once the authorized period for sale is expired without approval for extension, the reserve must be increased to eighty percent (80%). In the event an extension is approved, the remaining twenty percent (20%) may be reserved at expiration of the approved extension. |
When the commercial value of the property is below the book value of the foreclosed asset, a provision is booked equivalent to the resulting difference.
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- | Regarding real estate properties which date of receipt was over two (2) years before the date of issuance of the above mentioned External Memorandum, a reserve was created through the allocation of monthly quotas up to a level of eighty percent (80%) of their acquisition cost. |
Movable Assets
A reserve must be created during the year following receipt of the asset, up to thirty five percent (35%) of its acquisition cost, which reserve is increased by an additional thirty five percent (35%) during the second year after acquisition up to reaching a level of seventy percent (70%) of book value before reserves. Once the legal period authorized for sale of the asset is expired without an approved extension, the reserve must be increased to one hundred percent (100%) of book value. In the case an extension of the sale period is granted, the remaining thirty percent (30%) reserve may be created during the tenor of the extension.
Whenever the commercial value of the asset is lower than the book value of the assets received in payment, a reserved must be accounted for the difference.
Without prejudice of the rules of reserves mentioned before, the assets received in payment which correspond to securities are valuated applying the criteria contemplated in chapter I of the basic accounting financial memo, taking into account the classification as negotiable investments available for sale or to hold through maturity.
Provisions made on foreclosed assets or assets repossessed from leasing operations can be reverted when those are sold cash, if those assets are placed in a portfolio or financial leasing operations. The earnings generated as a result of transfer of assets to the account of loan portfolio and operations of financial leasing must be deferred in the term agreed for the operation.
Rules regarding Legal Tenor for Divestiture
Foreclosed assets must be sold off in a period of two years following the date of their acquisition; however, they may be booked as fixed assets when necessary for the ordinary course of business and subject to compliance with asset investment limits.
Extension of the above period may be requested to the Colombian Superintendency of Finance, which is to be filed prior to expiry of the tenor permitted for divestiture.
The pertinent application for extension must demonstrate that fulfillment has been made of all stops required/available for divestiture and that sale has not been possible. In any event, extension may not exceed an additional two-year period as of expiry of the original period for divestiture, and all efforts for sale of such non-productive must be pursued.
(k) Property and equipment
Represents registry of tangible assets acquired, built or in process of import, construction or assemble which are used in permanent manner by subordinates in due development of their social business objectives and which useful life exceeds one (1) year. Includes direct costs and expenses incurred up to the date in which they are in condition of use.
Additions, improvements and extraordinary repairs that have a significant increase in the useful life of these assets and other disbursements for maintenance and repairs for their preservation, are depreciated as caused.
Depreciation is registered on the basis of application of the straight line method and in accordance with the estimated number of useful life years of each item. Annual depreciation rates for each account are as follows:
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Buildings, warehouses and silos | 5% |
Equipment, furniture and utensils | 10% |
Transportation equipment and machinery | 10% |
Computer equipment | 20% |
Vehicles | 20% |
Property and equipment are accounted for at cost which was re-expressed as a consequence of the inflation up to December, 2000
Assets given in operating leasing are registered at cost and the disbursements on account of improvements and repairs increasing efficiency and useful life are capitalized. The disbursement on account off maintenance and repairs are accounted as expenses in the period that they occur.
Starting 1997, Banco de Occidente adopted the method of reduction of balances for depreciation – for fiscal purposes. The system of reduction of balances consists in annual fixed rate depreciation applicable to non-depreciated balances in previous years; the applicable depreciation rate if the nth root of balances over cost.
For purposes of calculation a residual value was determined which is an integral component of the amount to be depreciated in the last year of the useful life of the asset, as to achieve total depreciation.
(l) Assets Surrendered under operating lease contracts
Registers the cost of the assets given in operating leasing that the Subordinates, previous the respective contract deliver in rental to the user.
The depreciation of assets given in operating leasing is made in the lesser time between the useful life and the term of the leasing contract.
When the operating lease contracts establish that payment of lease installments amortizes ninety percent (90%) or more of the values of the underlying asset, depreciation will take place during the life of the contract and under a methodology for financial depreciation in line with the terms of the respective contract.
Over the value of the assets given in leasing, it is constituted a general reserve of 1% in such a way that the sum of the accumulated depreciation and the general reserve will exceed 100% of the assets given in operating leasing.
The provision is made pursuant to the guidelines of chapter II of memo 100 of 1995.
Are registered individual reserves on property equipment and assets given in operating leasing which net value in books is higher than the commercial value established through technical evaluations, and whenever the net value is lower than the commercial value, such difference is accounted for as revaluations of assets in net-worth
m) Branches and agencies
Registers the movement of operations between the General Management and the offices of financial entities as well as those practiced between those and the foreign agencies.
Balances are conciliated daily and the resulting pending items are regularized in a term no longer than thirty (30) calendar days.
At the accounting closing the net balances are reclassified, reflecting the active or passive accounts and are recognized the respective income and expenses
(m) Prepaid expenses and deferred charges
Prepaid expenses correspond to cash outlays by the Holding and subsidiaries in the development of their respective activity, which benefit is received over several periods and which may be recoverable and assume the successive execution of services received.
Amortization takes place in the following manner:
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Prepaid expenses
a. | Interest – during the prepaid period. |
b. | Insurance – during the life of the policy |
c. | Leases – during the prepaid period |
d. | Equipment maintenance – during the life of the contract. |
e. | Other prepaid expenses – during the period in which services are received. |
Deferred Charges
Deferred charges represent costs and expenses for benefit in future periods and which are not susceptible of recovery. Amortization takes place on the date in which they contribute to generation of income.
a. | Expenses incurred in the reorganization and pre-operational expenses represent expenses of research and development of studies and projects which are deferred provided that pertinent expenses may be identified in a separate manner and that their technical feasibility is proven. Amortization takes place over a period not longer than five (5) years; |
b. | Road construction projects. Amortization is made on the contract. |
c. | Remodeling amortize over period not longer than two (2) years; |
d. | Computer programs amortize over periods not longer than three (3) years. |
e. | Improvements in properties under lease contracts amortize during the lesser of the period of duration of the underlying contract and its probable useful life without taking lease extension into consideration. |
f. | Deferred income taxes of “debit” nature resulting from temporary differences are amortized upon compliance with legal and regulatory requirements as pertinent to fiscal dispositions. |
g. | Advertising and propaganda amortize during a period equal to that of the accounting exercise; however, those expenses for publicity and propaganda under launching of new products or image change may not exceed an amortization period of three (3) years. |
h. | Taxes under a prepaid fiscal period of 4 years |
i. | Surveys and projects will be amortized over a two (2) years period. |
j. | Other concepts are amortized over the period for recovery of the cash outlay or during the period in which benefits are received. |
k. | Fees and commissions paid for products are amortized over a period not exceeding six (6) months. |
k) | Commissions paid for products will be amortized over a period no greater than six (6) months |
l) | Discounts placed on investment titles are amortized over a five (5) year period |
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(n) Intangible Assets
Mercantile Credit Acquired
Parent Company
Accounts for amounts paid in excess of book value in the acquisition of shares or aliquots of ownership participation
Mercantile credit received from the acquisition of shares of Corporacion de Ahorro y Vivienda AHORRAMAS S.A., currently Banco Comercial AV Villas S.A. is amortized in straight line over ten (10) years as established since its origin.
Mercantile credit from the acquisitions of Banco Popular S.A. and Banco de Occidente S.A.by Grupo Aval Acciones y Valores S.A. is amortized under the method “Reversal of the sum of the digits over the tenor” in a twenty year period”.
Subordinate Banco de Bogotá S.A. as of 9 October 2006 adhered to the dispositions of External Memorandum 034 of the Financial Superintendence of Colombia and in this sense, outstanding mercantile credit as of the closing of fiscal year 2006 began to be amortized under the exponential method over a period of twenty (20) years. In a similar manner, mercantile credit was allocated amongst several business lines. These business lines are subject to a deterioration test in which comparison with book value (including the assigned mercantile credit) with technical valuation studies prepared annually by independent experts. If losses due to deterioration are found, the mercantile credit assigned to such line of business must be amortized up to the amount of the established loss.
Subordinate Banco de Occidente S.A., amortizes mercantile credit on the basis of the exponential method over amounts originated on the difference between values paid and net shareholder equity on the date of acquisition of Banco Aliadas and Banco Union Colombiano, over a period of respectively 216 and 237 months, in accordance with the dispositions of External memorandum 034 issued by the Financial Superintendence of Colombia. The Bank values selected business lines at market price in order to establish if there is or not a deterioration of such business line. Valuation is prepared on the basis of earnings flows generated by each business line, identified as an independent cash flow generator.
Banco Popular S.A. and Banco Comercial AV Villas S.A. do not account for any amounts corresponding to acquired mercantile credit in their financial statements.
(o) Other Assets
Other Assets basically include assets available for sale, investments in custody, assets available under leasing contracts and prepaid taxes.
Assets available for sale are assets no longer used in the main core business of the banking subsidiaries of Grupo Aval and which are depreciated through the moment of sale. Furthermore, these assets are material proof of demerit and any deterioration is charged to the Consolidated Income Statement; investments in custody are rights acquired under trust transactions; assets available under leasing contracts represent a stock of assets to be placed under lease contracts for tenor no exceeding one (1) year.
Rights under Trust Agreements
Register all rights generated through execution of mercantile fiduciary agreements which give either the trustee or the beneficiary the right to exert in accordance with either the contract or legal dispositions.
The transfer of one or more of the assets, as directed by the trustee to the trust agent, must be executed, as per accounting regulations, at adjusted cost in such a way that the delivery of the asset does not in itself generate realization of profit for the trustee and the latter will only be relevant, in income terms, when the assets is effectively realized to a third party.
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(p) Valuations
Subordinates register in this account the revaluation of investments available for sale under participation securities, properties and equipment, specifically real estate and vehicles and of art and culture holdings.
The company registers in this account the appreciations originated by the difference between the cost of the investment received in split processes and the intrinsic value thereof at the time of transaction as well as those generated between the intrinsec value of investments and their realization value.
No valuations are registered over assets received in payment and repossessed
Accounting
Revaluation of investments available for sale through participation securities are registered on the basis of the shareholder equity variations of the issuer.
Revaluation of real estate properties is determined as the difference between the net cost of the assets and the value of their commercial appraisal conducted by firms with recognized experience and reputation in these matters. In the event of devaluation in the value of the property, under a rule of prudence, a reserve is then created.
Revaluation of art and culture holdings is registered taking into account the condition of preservation of the works, their authenticity, size, technique and the price of similar works.
(q) Income received in advance
Registers deferred income and revenues received in advance by subordinates in due development of their activity and are amortized during the period in which they accrue or during the period in which services are rendered.
The deferred earnings earnings from the sale of assets received in payment financed through credit operations are amortized during the period of the respective credits.
Interests and monetary correction of the credits placed in UVR which were product of credit restructure are registered as income when collected.
The adjustment of the UVR such as indicated in the policy of Recognition of Income for yields and financial leasing.
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(r) Pensions Obligations
On June 30, 2012 and December 2011 subordinates not having amortized 1000% will apply the provisions of decree 4565 of December 7,, 2010 which modified the methodology to determine the proportion of calculation that must be amortized The reserve is realized lineally, so that at December 31, 2009 is amortized 100% of the corresponding calculation. From thereon, the amortization of such percentage will be kept; the payment of retirement pensions are charged against the constitute reserve.
For institutions having amortized 100%, the retirement pensions are quantified through an actuarial study elaborated by specialized experts independent from the Holding company and its subordinates.
The provision is registered 100% of the corresponding calculation and such percentage is maintained.
Payments of retirement pensions are made against the pertinent reserve.
(s) Estimated Liabilities and Provisions
Subordinates have created reserves for coverage of estimated liabilities on the basis of:
· | the existence of an acquired right and, therefore, of a binding obligation; |
· | that payment is demandable or probable; and |
· | the provision is justifiable, quantifiable and verifiable. |
Likewise, this account registers values estimated by reason of taxes, contributions and memberships.
(t) Bonds mandatorily converted in shares
Represents the nominal value of bonds issued by the subordinates which grant holders the right to conver them in shares issued by the society,
The discounts granted in the issue will be charged to the subaccount – 192037 in placement of “boceas” and the premiums in the subaccount 272010.
(u) Recognition of Income by yields, Financial Leasing and Monetary Correction
The income from financial leasing and other concepts ar recognized at the time of the causation:
Suspension of interest accrual
Pursuant tom loan portfolio, subordinates suspend interest accrual, monetary correction, foreign exchange adjustments, fees, other payments and any other income as soon as there is delay in payment, in the terms of the following chart:
Credit Modality | Past due over |
Commercial | 3 months |
Consumer | 2 months |
Housing | 2 months |
Micro-credit | 1 month |
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Therefore, there is no impact on financial results until income is effectively collected. Until such instance, potential income is registered under memo accounts.
In those cases in which, as a result of restructuring agreements or any other modality of agreement, there is capitalization of interest already booked under memo accounts or as balances of charged-off portfolio including capital, interest and other Concepts, accounting is conducted in the form of deferred income, code 272035 and amortization for income statement is proportional to the amounts effectively collected.
In compliance with dispositions of Law 546 of 1999, article 3, creation was made of the UVR (unit of real value) as account unit reflecting the purchase power of the local currency on the basis of, exclusively, changes in the consumer price index as certified by DANE, which value is calculated under a methodology adopted by the central government.
This methodology mandates that during the months in which the CPI is seasonally higher, UVR will suffer a larger adjustment than in months of low inflation. For this reason, calculation of annual inflation on the basis of inflation rate for any given month is equivalent to assume that this is going to be the inflation rate for the entire year, which distorts the reality of what could happen in such period. Aiming to eliminate such distortion, the Colombian Superintendency of Finance has determined that income from this source must be amortized within one year.
(v) Special Rule for Provisions of Accounts Receivable (interest, monetary correction, installments, foreign exchange adjustment and other Concepts)
When subordinates suspend accrual of returns, monetary correction, exchange adjustments, rentals and income of this nature, the entire accrual and non-accrual amounts are reserved.
w) Income Tax
The expenses for income tax are determined on the basis on the greater value between the net income applying the tariff of 33 percent and the presumptive income equivalent to to 3% of net worth of the last day of the preceding year
(x) Deferred Income Tax
Is registered as deferred income tax the effect of the temporary differences implying the payment of greater or lesser value in the current year, calculated at actual rates, provided that there is a resonable expectation that will be generated enough taxable income during the periods when such differences will be reverted.
(y) Equity Tax
The National Government, through the Law of Tax Reform 1370 of December, 2009 created the Equity tax for the taxable years 2011 to 201, to be applied to legal and natural persons, The same law established that such tax is caused at the tariff of 4.8% plus a surcharge of 25 %, for a total rate of 6% over the net equity at January 1, 2011
For accounting purposes, Grupo Aval and its subordinates adopted as a policy the recognition in liabilities of the total tax which is demanded in 8 installments during years 2011 to 2014 against deferred charges amortized during the same period in 48 monthly installments against the results of the period. There are companies that register this against surplus of equity, based on decree 514 of 2010 which added article 78 of decree 2649 of 1993.
(z) Legal Reserve
Pursuant to Decree 663 of April 2, 1993 the Legal Reserve of the credit establishments is conformed as a minimum of 10% of the net earnings of the same period up to 505 of the subscribed capital; such reserve can only be reduced to a lower percentage to take care of losses accumulated in excess of the amount of non-distributed earnings
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(aa) Contingent accounts
These accounts register operations through which the bank acquires a right or assumes an obligation which appearance is conditioned to whether a fact is produced or not, depending on future, eventual or remote factors. Within the debtor are registered the financial yields and the financial component of leasing canons from the time the causation is suspended in the accounts of loan portfolio and leasing of assets given in leasing.
Within these accounts are highlighted the leasing contracts to be matured, as follows: as current part are registered the canons and purchase options expiring during the following year and non-current the part of such contracts that expire after the first year.
Equally, in the contingent debtor and creditor accounts are registered the values transferred object of a repo or simultaneous operation.
(ab) Memorandum accounts
In these accounts are registered, according to its active or passive nature the operations carried out with third parties which by nature do not affect the financial situation of the bank. Likewise are included the fiscal memo accounts where are registered the figure for the elaboration of the income tax return; equally includes those registry accounts used for fiscal effects, of internal control or management information. The memo accounts can be debtors or creditors depending on the nature of the operation. Besides it contains the value of credits qualified by due date, the reciprocal operations with Affiliates, and from January 1, 2001, the value of the fiscal adjustments for inflation of the non- monetary assets and net worth.
(ac) Recognition of Income, Expenses and Costs
Grupo Aval uses the norm of association and causation to recognize and register the income, costs and expenses. The interests, commissions and rentals paid or received in advance are registered in the account of expenses or income paid or received in advance. No interest, monetary correction, adjustments in exchange, canons and income from other concepts will be caused when a credit is in default ; commercial credit, 3 months; consumption, 2 months; housing, 2months; and microcredit, 1 month.
(ad) Net income per share
As of June 30, 2012 and December 31, 2011, in order to determine the net earnings per share, the subordinates used the weighted average of the number of shares subscribe and paid between January 1 and June 30, 2012 and july 1 and december 31, which corresponds to 18,551,545,870 and 18,141,550,662 shares respectively. The net earnings per share amounted to $38.73 and $36.57 respectively.
(ae) Relative Importance or Materiality
The consolidated financial statements and accompanying Notes reveal, in an integral manner, those events of economic nature that, for the semi-annual periods terminated on 30 June 30, 2012 and 31 December, 2011 had influence over the financial condition of the Parent Company and the subordinates, its results and cash flows, as well as in changes in the financial condition and in shareholder´s equity. There are no events of this nature that remain undisclosed or that could have a significant effect on the economic decisions of users of the above mentioned information.
(4) Cash and Bank Deposits
Outstanding balances of cash and bank deposits as of 30 June 2012 and December 31, 2011 is as follows:
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June 30 | December 31 | |||||||
Denominated In Colombian pesos: | ||||||||
Cash | $ | 2,047,676 | 2,001,634 | |||||
At Banco de la República de Colombia(1) | 4,080,993 | 3,129,391 | ||||||
At other local Banks and financial entities | 231,083 | 232,553 | ||||||
2,781 | 2,345 | |||||||
Remittances in transit | 1,652 | 1,510 | ||||||
Provision for cash and bank deposits | (2,791 | ) | (2,247 | ) | ||||
Total | 6,361,394 | 5,365,186 | ||||||
Denominated In foreign curency: | ||||||||
Cash | 418,210 | 481,417 | ||||||
At Banco de la República de Colombia | 343 | 373 | ||||||
At foreign banks(2) | 3,927,334 | 2,741,832 | ||||||
Remittances in transit | 244,834 | 193,152 | ||||||
Total | 4,590,720 | 3,416,774 | ||||||
$ | 10,952,115 | 8,781,960 | ||||||
(1) | These values are appropriate for the fulfillment of reserve requirements set by the Bank of the Republic and are based on a percentage of the deposits received from customers in each of the bank subsidiaries of Grupo Aval in Colombia. In accordance with the provisions of resolution No. 11 of 2008, the reserve requirements are determined weekly and their amounts depend on the type of deposit: 11% for deposits in checking accounts and savings and 4.5% on deposits to term with maturity of less than 540 days. |
(2) | Certain values in cash and deposits in central banks from abroad are appropriate for the fulfillment of reserve requirements basically established on deposits received by BAC Credomatic's customers in Central America, in accordance with the legal provisions of each of the countries where it operates. There is no restriction on the available. |
Provision of Available
The following is the movement of the provision of the available by semester ending in:
June 30 | December 31 | |||||||
Initial Balance | $ | 2,247 | 2,587 | |||||
Provision charged to expenses | 780 | 655 | ||||||
Recovery of provision | (215 | ) | (1,004 | ) | ||||
Charge offs and others | (21 | ) | 9 | |||||
Final Balance | $ | 2,791 | 2,247 | |||||
(5) Active positions in Operation s of Monetary Market and Related
The balances of active positions in the monetary market and related operations were as follows:
June 30 | December 31 | |||||||
Legal Currency: | ||||||||
Ordinary interbank funds sold | $ | 74,361 | 160,300 | |||||
Transfer commitments in closed repo operations | 9,311 | 39,617 | ||||||
Transfer commitments of investments in simultaneous operations | 566,399 | 807,996 | ||||||
650,071 | 1,007,913 | |||||||
Foreign currency: | ||||||||
Ordinary interbank funds sold | 1,587,794 | 1,896,400 | ||||||
Transfer commitments of investments in simultaneous operations | - | 12,314 | ||||||
1,587,794 | 1,908,714 | |||||||
$ | 2,237,865 | 2,916,627 |
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Outstanding balance of negotiable investments was as follows:
June 30 | December 31 | |||||||
Negotiable debt securities | ||||||||
Legal currency: | ||||||||
Government of Colombia | $ | 1,013,757 | 1,417,856 | |||||
Government entities | 10,765 | 5,194 | ||||||
Financial institutions | 292,626 | 502,395 | ||||||
Entities not supervised by the Superintendency Of Finance | 11,223 | 19,414 | ||||||
Entitlement of mortgage portfolio | 11,494 | 14,531 | ||||||
Entitlements different from mortgage portfolio | 72,278 | 71,193 | ||||||
Other | 104,427 | 155,369 | ||||||
1,516,570 | 2,185,952 | |||||||
Foreign currency: | ||||||||
Government of Colombia | 4,628 | 28,113 | ||||||
Government entities | - | 963 | ||||||
Foreign bank | 102,230 | 65,125 | ||||||
Foreign government | 81,614 | 34,071 | ||||||
Residents abroad | 11,832 | 9,345 | ||||||
Financial institutions | 45,831 | 57,194 | ||||||
Entitlements different from mortgage portfolio | 144 | 22,635 | ||||||
Other | 61,704 | 60,747 | ||||||
307,983 | 278,193 | |||||||
Repurchase of rights in negotiable investments in debt securities | 919,176 | 981,282 | ||||||
Negotiable investments given as guarantee of payment | 5,969 | 5,008 | ||||||
925,145 | 986,290 | |||||||
Total investments in debt instruments | 2,749,698 | 3,450,435 |
Debt instruments denominated in foreign currency issued by the Colombian Government are bonds denominated in dollars of the United States of America, which are purchased at face value.
(*) The negotiable Rights of repurchase (transfer) of investments in debt securities consist of the following:
June 30 | December 31 | |||||||
In Colombian pesos: | ||||||||
Public debt instruments issued or guaranteed by the Colombian Government | $ | 343,963 | 705,717 | |||||
Other public debt instruments | - | 12,009 | ||||||
Securities guaranteed by supervised | ||||||||
Institutions of the | ||||||||
Superintendency of Finance | ||||||||
(including mandatory bond s or optionally | ||||||||
convertible in shares) | 463,623 | 21,540 | ||||||
Securities guaranteed or accepted by | ||||||||
Foreign banks | - | 1,954 | ||||||
Total in Colombian pesos | 807,586 | 741,220 | ||||||
In foreign currency: | ||||||||
Public debt isntruments issued or | ||||||||
guaranteed by the colombian government | 35,720 | 34,608 | ||||||
Other public debt instruments | 5,067 | 48,076 | ||||||
Securities guaranteed by supervised | ||||||||
Institutions of the | ||||||||
by the Superintendency of Finance (incluiding | ||||||||
mandatory bond or optionally | ||||||||
convertible in shares) | 4,876 | 83,569 |
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June 30 | December 31 | |||||||
Debt securities issued by entities supervised by Superintendency of Finance (includes mandatory bonds or optionally | ||||||||
Convertible in shares) | 7,166 | 8,875 | ||||||
Debt securities issued or guaranteed by | ||||||||
Foreign governments | 42,310 | 51,180 | ||||||
Securites guaranteed | ||||||||
by foreign banks | 2,256 | 2,396 | ||||||
Securities guaranteed and accepted by | ||||||||
Foreign banks | 14,195 | 11,358 | ||||||
Total in foreign currency | 111,590 | 240,063 | ||||||
$ | 919,176 | 981,282 |
Debt securities available for sale
Investments in debt securities available for sale are as follows:
June 30 | December 31 | |||||||
Legal currency: | ||||||||
Issued by the government | $ | 2,934,902 | 4,979,317 | |||||
Financial Institutions | 16,471 | 16,979 | ||||||
Entities not supervised by the Superintendency | ||||||||
Of Finance | 1,564 | 1,057 | ||||||
Entitlements of mortgage portfolio | 361,386 | 420,917 | ||||||
Entitlements different from mortgage portfolio | 40,336 | 20,097 | ||||||
Other | 37,450 | 33,405 | ||||||
3,392,109 | 5,471,772 | |||||||
Foreign currency: | ||||||||
Issued by the government | 410,128 | 623,083 | ||||||
Government entities | 59,639 | 40,773 | ||||||
Banco de la República | 549,049 | 573,034 | ||||||
Financial Institutions | 806,737 | 637,202 | ||||||
Credit from multinational entity | 51,463 | 61,276 | ||||||
Entities not supervised by the Superintendecy | ||||||||
Of Finance | 59,824 | 58,963 | ||||||
Entitlements of mortgage portfolio | 223,995 | 208,349 | ||||||
Other | 67,682 | 100,350 | ||||||
2,228,517 | 2,303,030 | |||||||
Subtotal investments in debt securities | 5,620,626 | 7,774,802 | ||||||
Repurchasing rights in investments available | ||||||||
for sale in debt securities | 5,485,529 | 1,861,231 | ||||||
Securities issued and guaranteed | 117,854 | 55,438 | ||||||
$ | 11,224,009 | 9,691,470 |
(*) Rights of repurchase of investments available for sale as debt securities included:
June 30 | December 31 | |||||||
Denominated In colombian pesos: | ||||||||
Public debt securities issued or | ||||||||
guaranteed by the government | $ | 5,333,912 | 1,798,070 | |||||
Total in colombian pesos | 5,333,912 | 1,798,070 | ||||||
Denominated In foreign currency: | ||||||||
Securities issued or guaranteed by | ||||||||
foreign governments | 65,139 | 61,080 | ||||||
Securities issued or guaranteed by | ||||||||
Foreign banks | - | 2,081 | ||||||
Securities issued or guarnateed by the | 75,216 | - | ||||||
Superintendency of Finance | ||||||||
Other securitites | 11,262 | - | ||||||
Total in foreign currency | 151,617 | 63,161 | ||||||
$ | 5,485,529 | 1,861,231 |
119
Investments to hold through maturity
Investments in securities to hold through maturity, consisted of the following items:
June 30 | December 31 | |||||||
Debt securities | ||||||||
Legal currency: | ||||||||
Issued by tjhe government | $ | 710,364 | 763,161 | |||||
Government entities | 616,532 | 594,783 | ||||||
Financial Institutions | 49,455 | 543,915 | ||||||
Entitlements mortgage portfolio | 1,879 | 4,322 | ||||||
Corporate Bonds | 1,832 | - | ||||||
Other | 1,186,119 | 1,119,912 | ||||||
$ | 2,566,181 | 3,026,093 | ||||||
Foreign currency: | ||||||||
Issued by the government | 1,913 | 13,058 | ||||||
Foreign bank | 128,471 | - | ||||||
Foreign government | 14,405 | 11,855 | ||||||
Multilateral credit institution | 7,280 | 13,524 | ||||||
Residents abroad | - | 1,018 | ||||||
Financial Institutions | 227,297 | 4,166 | ||||||
Other | 23,973 | 2,068 | ||||||
403,339 | 45,689 | |||||||
Repurchasing rights | 449,943 | - | ||||||
Total Investments to hold through maturity | $ | 3,419,463 | 3,071,782 | |||||
(*) Rights of repurchase of investments to hold through maturity included:
June 30 | december 31 | |||||||
Denominated In colombian pesos | ||||||||
Public debt securities issued by the government | $ | 449,943 | - | |||||
Total denominated in colombian pesos | $ | 449,943 | - |
Maturity and performance of the investments to hold through maturity on June 30, 2012, is as follows:
Balance | Yield | (1) | ||||||
Maturity: | ||||||||
One year or less | $ | 2,817,421 | 3.15 | % | ||||
From one to five years | 599,862 | 4.57 | % | |||||
From five to ten years | 2,180 | 9.76 | % | |||||
More tan ten years | - | 0 | % | |||||
$ | 3,419,463 | 3.41 | %(2) |
(1) Calculated using the internal rate of return (IRR) of june 30, 2012.
(2) Weighted average, based on the volume of each of the yields.
Equity Trading Securities
The trading equity securities are composed of the following items:
120
June 30 | December 31 | |
Trading Equity securities: | ||
Banco de Bogotá | - | 36,967 |
Severance funds – Reserve of stabilization | 37,349 | 20,369 |
Pension funds – Reserve of stabilization | 310,445 | 288,121 |
Others entities | 759,660 | 661,763 |
Other | 185,993 | 45,166 |
$ 1,293,447 | 1,052,386 |
All investments in securities were classified under category "A" with the exception of the following:
Entity | Category | Provision June 30 | Category | Provision December 31 | ||||||||||||
Promotora de Inversiones Ruitoque S.A. | B | $ | 198 | B | $ | 198 | ||||||||||
Petróleos Colombianos Limited | E | 89 | E | 96 | ||||||||||||
CCI Marketplace S.A. | C | 132 | D | - | ||||||||||||
Textiles el Espinal S.A. | E | 2,399 | E | 2,399 | ||||||||||||
Petróleos Nacionales S.A. | E | 257 | E | 257 | ||||||||||||
Inversiones FCPM Holdings | E | 369 | E | - | ||||||||||||
Fábrica de textiles del Tolima | E | 379 | E | - | ||||||||||||
Promotora la Alborada S.A. | E | 316 | E | 316 | ||||||||||||
Edubar | E | 143 | D | - | ||||||||||||
Inmobiliaria Selecta S.A. | D | 84 | D | - | ||||||||||||
Inversiones Sides S.A.S | B | 43 | E | - | ||||||||||||
Inducarbón | E | 1 | E | 1 | ||||||||||||
Promotora la Enseñanza | E | 70 | E | 70 | ||||||||||||
Reforestadora de Santa Rosalia | E | 12 | E | 12 | ||||||||||||
Otros | 215 | 1,382 | ||||||||||||||
$ | 4,707 | $ | 4,733 |
Equity securities available for sale
The participatory securities available for sale consist of the following instruments
Business name | Participation June 30 | June 30 | Participation December 31 | December 31 | ||||||||||||
Empresa De Energía de Bogotá “EEBB” | 3.56 | % | $ | 572,238 | 3.56 | % | 585,573 | |||||||||
Promigás S.A. | 24.97 | % | 808,111 | 14.39 | % | 523,153 | ||||||||||
Proenergía Internacional S.A. | - | - | 9.99 | % | 117,482 | |||||||||||
AEI Promigas Holdings LTD. (Inversión en Dólares) | - | - | 20.30 | % | 102,524 | |||||||||||
AEI Promigas LTD. (Inversión en Dólares) | 20.30 | % | - | 20.30 | % | 90,351 | ||||||||||
AEI Promigas Invesments LTD. (Inversión en Dólares) | 20.30 | % | - | 20.30 | % | 90,351 | ||||||||||
Mineros S.A. | 6.98 | % | 50,257 | 6.98 | % | 87,905 | ||||||||||
Gas Natural S.A. | 1.68 | % | 53,481 | 1.68 | % | 53,481 | ||||||||||
Concesionaria Ruta del Sol S.A. | 33.00 | % | 86,562 | 33.00 | % | 41,534 | ||||||||||
Bolsa de Valores de Colombia S.A. “BVC” | 4.51 | % | 12,075 | 3.36 | % | 17,215 | ||||||||||
Jardín Plaza S.A. | 17.76 | % | 10,478 | 17.76 | % | 10,031 | ||||||||||
Concesionaria Tibitó S.A. | 33.33 | % | 13,505 | 33.33 | % | 9,823 | ||||||||||
Redeban Redmulticolor S.A. | 2.44 | % | 5,114 | 20.20 | % | 5,115 | ||||||||||
Sociedad Transportadora de Gas de Occidente S.A. | 2.80 | % | 3,601 | 2.80 | % | 4,236 | ||||||||||
Depósito Centralizado de Valores de Colombia | 6.62 | % | 3,397 | 8.04 | % | 3,159 | ||||||||||
ACH Colombia S.A. | 11.91 | % | 2,661 | 33.84 | % | 2,661 | ||||||||||
A Toda Hora | 20.00 | % | 1,092 | 59.99 | % | 425 | ||||||||||
Otros | 157,331 | 30,930 | ||||||||||||||
$ | 1,779,903 | 1,775,948 |
Dividends received by investments in securities totaled $89,808 and $5,760 for the semesters ended June 30, 2012 and December 31, 2011, respectively.
In addition to the direct participation of 14.39% of Corficolombiana in Promigas S.A. E.S.P. or "Promigas", in February 2011, Corficolombiana acquired a 10.58% indirect participation in the society through the acquisition of the 20.30% in Promigas Holding, Promigas Investment and Promigas Ltda, which together had a direct participation of the 52.13% in Promigas.
121
On June 5, 2012, the 10.58% indirect stake of Corficolombiana in Promigas, was transferred to CFC Limited, subsidiary of Corficolombiana, through a process of Division. After the restructuring, CFC Limited was merged with CFC Gas Holdings SAS, colombiansubsidiary of Corficolombiana,
On June 13, 2012, CFC Limited paid dividends in shares for $19.7 billion, representing an effect of exchange caused by the appreciation of the peso against the dollar, which was registered in the books of Promigas Holding, Promigas Investment and Promigas Ltda, before the Division; and on June 27, 2012, CFC Gas Holdings SAS paid Ps. 38.3 billion in cash dividends that represent dividends declared by Promigas Promigas Holdings, Promigas Investment and Promigas Ltda. before the split, derived from its 10.58% economic interest. From February 2011, and until the time of the split, Promigas Holding, Promigas Investment and Promigas Ltda. were not entities consolidated by Corficolombiana.
Provision for debt and equity securities
The following is the provision for debt and equity securities:
June 30 | December 31 | |||||||
Debt securities: | ||||||||
Negotiable | $ | 1,316 | 1,719 | |||||
Available for sale | 2,313 | 2,283 | ||||||
Total debt securities | 3,629 | 4,002 | ||||||
Equity securities: | ||||||||
Negotiable | - | - | ||||||
Available for sale | 4,707 | 4,733 | ||||||
Total Equity securities | 4,707 | 4,733 | ||||||
$ | 8,336 | 8,735 |
Change of the provision:
June 30 | December 31 | |||||||
Initial balance | $ | 8,735 | 183,222 | |||||
Plus: | ||||||||
Provision charged to operating expenses | 495 | 463 | ||||||
Recoveries | 46 | - | ||||||
Less: | ||||||||
Charge offs | - | (675 | ) | |||||
Conversion adjustments | (142 | ) | - | |||||
Recovery provision for investments | (798 | ) | (174,275 | ) | ||||
Final balance | $ | 8,336 | 8,735 |
Maturity of Investments
June 30 | ||||||||||||||||||||
Up to 1 year | Between 1 and 3 years | Between 3 and 5 years | Greater than 5 years | Total | ||||||||||||||||
Debt securities | $ | 653,378 | 790,737 | 336,053 | 969,530 | 2,749,698 | ||||||||||||||
Hold through maturity | 2,817,434 | 413,538 | 186,309 | 2,182 | 3,419,463 | |||||||||||||||
Available for sale In debt securities | 1,115,846 | 1,918,570 | 3,237,180 | 4,952,413 | 11,224,009 | |||||||||||||||
$ | 4,568,658 | 3,122,845 | 3,759,542 | 5,924,125 | 17,393,170 |
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December 31 | ||||||||||||||||||||
Up to 1 year | Between 1 and 3 years | Between 3 and 5 years | Greater than 5 years | Total | ||||||||||||||||
Debt securities | $ | 705,817 | 1,695,581 | 248,911 | 800,126 | 3,450,435 | ||||||||||||||
Hold through maturity | 2,319,742 | 526,867 | 220,135 | 5,038 | 3,071,782 | |||||||||||||||
Available for sale Debt securities | 1,044,208 | 3,417,597 | 2,742,363 | 2,487,302 | 9,691,470 | |||||||||||||||
$ | 4,069,767 | 5,640,045 | 3,211,409 | 3,292,465 | 16,213,687 |
(7) | Loan portfolio and Financial Lease Transactions |
The detail of loan portfolio and Financial Lease Transactions is as follows:
June 30 | December 31 | |||||||
Portfolio per modality | ||||||||
Ordinary loans | $ | 53,597,725 | 50,801,362 | |||||
Loans with resources of other entities | 1,743,598 | 1,876,103 | ||||||
Factoring without recourse | 93,587 | 99,607 | ||||||
Closed letters of credit | 207,952 | 292,528 | ||||||
Overdrafts in checking accounts | 1,507,372 | 567,462 | ||||||
Rebates | 389,258 | 260,600 | ||||||
Credit card | 4,755,934 | 1,074,179 | ||||||
Anticipated recoveries | 408,876 | 3,945,462 | ||||||
Loans to microbusiness and y pymes | 979,140 | 295,559 | ||||||
Microcredits | 281,220 | 1,024,818 | ||||||
Mortgage portfolio for housing | 3,978,199 | 952,580 | ||||||
Loans to employees | 149,761 | 143,675 | ||||||
Reimbursed foreign loans | 504 | 3,404,605 | ||||||
Real estate given on leasing | 2,175,331 | 1,747,132 | ||||||
Immovables given on leasing | 3,715,054 | 2,091,107 | ||||||
Other | 53,110 | 1,370,960 | ||||||
Subtotal by modality | $ | 74,036,621 | 69,947,740 |
Loan portfolio by risk
Loan Portfolio and Financial Leasing operations were classified in accordance with the requirements of the Superintendencia Financiera of Colombia, as follows:
June 30 | December 31 | |||||||||||||||
Risk Category | Capital | Provision Capital | Capital | Provision Capital | ||||||||||||
Commercial: | ||||||||||||||||
Category A Normal | $ | 39,941,445 | 489,126 | 37,962,255 | 478,608 | |||||||||||
Category B Acceptable | 1,380,999 | 48,600 | 1,431,282 | 54,827 | ||||||||||||
Category C Apreciable | 649,878 | 70,206 | 529,817 | 75,108 | ||||||||||||
Category D Significant | 362,327 | 215,602 | 362,832 | 209,697 | ||||||||||||
Category E Uncollectable | 264,289 | 236,863 | 259,358 | 223,184 | ||||||||||||
Subtotal comercial | 42,598,938 | 1,060,397 | 40,545,544 | 1,041,424 | ||||||||||||
Consumer | ||||||||||||||||
Category A Normal | 19,936,195 | 368,879 | 18,675,381 | 332,538 | ||||||||||||
Category B Acceptable | 388,661 | 31,666 | 309,726 | 28,043 | ||||||||||||
Category C Apreciable | 304,258 | 56,721 | 266,575 | 54,674 | ||||||||||||
Category D Significant | 392,049 | 279,986 | 327,823 | 230,830 | ||||||||||||
Category E Uncollectable | 152,345 | 141,003 | 156,380 | 152,841 | ||||||||||||
Subtotal consumer | 21,173,508 | 878,255 | 19,735,885 | 798,927 |
123
June 30 | December 31 | |||||||||||||||
Risk Category | Capital | Provision Capital | Capital | Provision Capital | ||||||||||||
Micro-credit: | ||||||||||||||||
Category A Normal | 256,309 | 2,564 | 270,610 | 2,707 | ||||||||||||
Category B Acceptable | 8,208 | 266 | 3,524 | 114 | ||||||||||||
Category C Apreciable | 3,982 | 768 | 1,895 | 368 | ||||||||||||
Category D Significant | 3,008 | 1,489 | 1,683 | 832 | ||||||||||||
Category E Uncollectable | 9,712 | 9,509 | 6,455 | 6,246 | ||||||||||||
Subtotal micro-credit | 281,219 | 14,596 | 284,167 | 10,267 | ||||||||||||
Housing: | ||||||||||||||||
Category A Normal | 3,875,965 | 14,579 | 3,975,448 | 14,212 | ||||||||||||
Category B Acceptable | 102,575 | 2,156 | 115,983 | 2,338 | ||||||||||||
Category C Apreciable | 62,164 | 2,766 | 70,782 | 3,128 | ||||||||||||
Category D Significant | 20,730 | 3,925 | 18,241 | 3,461 | ||||||||||||
Category E Uncollectable | 24,748 | 5,282 | 37,923 | 17,858 | ||||||||||||
Subtotal Housing | 4,086,182 | 28,708 | 4,218,377 | 40,997 | ||||||||||||
Financial Leasing : | ||||||||||||||||
Category A Normal | 5,451,062 | 314,475 | 4,767,843 | 321,217 | ||||||||||||
Category B Acceptable | 260,242 | 11,486 | 229,274 | 9,987 | ||||||||||||
Category C Apreciable | 51,958 | 4,830 | 51,346 | 4,900 | ||||||||||||
Category D Significant | 107,779 | 49,571 | 83,509 | 41,478 | ||||||||||||
Category E Uncollectable | 25,733 | 23,239 | 31,795 | 27,013 | ||||||||||||
Subtotal Financial Leasing | 5,896,774 | 403,601 | 5,163,767 | 404,594 | ||||||||||||
General Provision | - | 12,167 | - | 10,291 | ||||||||||||
Total per Modality | $ | 74,036,621 | 2,397,724 | 69,947,740 | 2,306,500 |
Loan Portfolio per currency
June 30 | December 31 | |||||||||||||||||||||||
Per currency | Legal Currency | Foreign Currency | Total | Legal Currency | Foreign Currency | Legal Total | ||||||||||||||||||
Commercial | $ | 36,890,049 | 5,708,889 | 42,598,938 | 32,023,943 | 8,521,601 | 40,545,544 | |||||||||||||||||
Consumption | 16,966,052 | 4,207,456 | 21,173,508 | 15,474,457 | 4,261,428 | 19,735,885 | ||||||||||||||||||
Microcredit | 281,219 | - | 281,219 | 284,167 | - | 284,167 | ||||||||||||||||||
Housing | 910,626 | 3,175,556 | 4,086,182 | 833,973 | 3,384,404 | 4,218,377 | ||||||||||||||||||
Financial Leasing | 5,632,999 | 263,775 | 5,896,774 | 4,868,033 | 295,734 | 5,163,737 | ||||||||||||||||||
Total per currency | $ | 60,680,945 | 13,355,676 | 74,036,621 | 53,484,574 | 16,463,167 | 69,947,740 |
Restructured Loans
The table below contains a summary presentation of the portfolio of loans restructured on June 30, 2012:
Category Risk | Capital | Capital Provision | ||||||
Commercial: | ||||||||
Law 116 | $ | 218,519 | 105,052 | |||||
Law 550 | 125,915 | 59,883 | ||||||
Law 617 | 276,184 | 34,418 | ||||||
Ordinary and extraordinary | 716,418 | 120,068 | ||||||
Homologated reorganization plan | 1,304 | 1,013 | ||||||
Liquidation | 25,319 | 23,164 | ||||||
1,363,659 | 343,598 | |||||||
Consumer: | ||||||||
Law 116 | 1,317 | 1,202 | ||||||
Law 550 | 5 | 4 | ||||||
Ordinary and extraordinary | 336,530 | 104,615 | ||||||
Homologated reorganization plan | 74 | 48 | ||||||
Liquidation | 138 | 92 | ||||||
338,064 | 105,961 |
124
Category Risk | Capital | Capital Provision | ||||||
Micro-credits: | ||||||||
Law 116 | 170 | 120 | ||||||
Ordinary and extraordinary | 3,450 | 600 | ||||||
3,620 | 720 | |||||||
Housing: | ||||||||
Ordinary and extraordinary | 66,630 | 6,700 | ||||||
Financial Leasing : | ||||||||
Law 116 | 7,694 | 4,371 | ||||||
Law 550 | 937 | 126 | ||||||
Ordinary and extraordinary | 93,728 | 28,717 | ||||||
Homologated reorganization plan | 392 | 240 | ||||||
102,751 | 33,454 | |||||||
Total restructures and agreements | $ | 1,874,725 | 490,432 |
Provision for Loan Portfolio and Financial Lease Operations
The movement of reserves of loan portfolio and financial leasing operations by modality is as follows:
June 30 | December 31 | |||||||
Initial balance | $ | 2,306,500 | 2,225,975 | |||||
Plus: | ||||||||
(+) Provision charged to expenses | 1,040,473 | 1,007,120 | ||||||
Combination of businesses | 5,486 | 1,206 | ||||||
Exchange difference | (18,838 | ) | 20,120 | |||||
Lewss: | ||||||||
(-) Loan charge offs | (315,227 | ) | (327,297 | ) | ||||
(-) Recovery of provision | (620,670 | ) | (620,624 | ) | ||||
Fina Balancel | $ | 2,397,724 | 2,306,500 |
(8) | Accounts Receivable |
Caused interest receivable on loans, financial leases and other accounts receivable comprise:
June 30 | December 31 | |||||||
Interest: | ||||||||
Inter-Bank funds sold and resale agreements | $ | 245 | 158 | |||||
Loan Portfolio | 709,541 | 616,340 | ||||||
Financial component in leasing operatios | 7,793 | 5,592 | ||||||
Intereset - Others | 19,780 | 22,285 | ||||||
737,359 | 644,676 | |||||||
Other accounts receivable: | ||||||||
Fees and commissions | 54,587 | 56,913 | ||||||
Dividends | 43,993 | 4,695 | ||||||
Warehousing Service | 28,567 | 32,488 | ||||||
Leases | 623 | 559 | ||||||
Cannons of operational leasing collateral | 33,953 | 5,631 | ||||||
Sale of goods and services | 202,998 | 393,707 | ||||||
Payments on behalf of clients portfolio | 220,271 | 200,638 | ||||||
Credit card vouchers | - | 9,179 | ||||||
Promitent sellers | 37,091 | 27,750 | ||||||
Advance payment of suppliers contracts | 632,968 | 541,190 | ||||||
Advances to personnel | 1,716 | 1,671 | ||||||
Installments retirement pensions(1) | 4,171 | 7,656 |
125
June 30 | December 31 | |||||||
Cash missings | 1,228 | 1,284 | ||||||
Exchange missing | 2,590 | 1,992 | ||||||
Claims to insurance companies | 10,111 | 5,553 | ||||||
Sales Tax | 39,145 | 17,630 | ||||||
Transfer to Dirección Nacional del Tesoro (inactive accounts) | 34,706 | 33,437 | ||||||
Gobierno Nacional Law 546 of 1999 | 315 | 315 | ||||||
Servibanca and other networks | 32,091 | 29,906 | ||||||
Banco República Citibank New York | 2,645 | 2,645 | ||||||
Patrimonio Autónomo de Megabanco M/L | - | 1,539 | ||||||
Other automatic tellers - ATH | 16,832 | 15,853 | ||||||
Other forwards NDR without delivery | 4,419 | 292,624 | ||||||
Other condonations TC collections | 801 | 725 | ||||||
Inactive accounts(2) | 4,710 | 4,700 | ||||||
Other | 315,273 | 32,669 | ||||||
1,725,803 | 1,722,949 | |||||||
Total interest and other receivables | 2,463,162 | 2,367,625 | ||||||
Reserve of accounts receivable | (186,177 | ) | (171,202 | ) | ||||
Total accounts receivable | $ | 2,276,985 | 2,196,423 |
(1) | This value includes the share of pensions canceled by Banco Popular and we must assume the Caja Nacional de Previsión – En Liquidación. The Bank currently is carrying out work aimed at collection of these pensions. |
(2) | Corresponds to the transfer of the inactive accounts to DTN pursuant to Decree 2332 of 1998 of the Ministerio de Hacienda and External Memorandum 01 of 1999 and 015 of 2011 of the Colombian Superintendency of Finance.. |
Movement of Provisions for Accounts Receivable
The Movement of Reserves for Accounts Receivable was as follows
June 30 | December 31 | |||||||
Initial Balance | $ | 171,202 | 158,112 | |||||
Provision charged to expenses | 77,562 | 82,496 | ||||||
Combination of businesses | - | - | ||||||
Exchang difference | 7,413 | 506 | ||||||
Recoveries | (40,502 | ) | (43,902 | ) | ||||
Charge offs | (27,234 | ) | (31,437 | ) | ||||
Others | (2,264 | ) | 5,427 | |||||
Final Balance | $ | 186,177 | 171,202 |
(9) | Acceptances and Derivatives |
June 30 | December 31 | |||||||||||||||
Assets | Liabilities | Assets | Liabilities | |||||||||||||
Acceptances: | ||||||||||||||||
In term | $ | 80,802 | 81,018 | 107,763 | 113,349 | |||||||||||
After the term | 6,055 | 6,072 | 8,834 | 9,894 | ||||||||||||
Total acceptances | 86,857 | 87,090 | 116,597 | 123,243 | ||||||||||||
Cash Operations | 86 | 27 | 50 | - | ||||||||||||
Forward contracts of speculation: | ||||||||||||||||
Sales Rights over foreign exchange | 6,143,958 | (2,867,846 | ) | 2,377,937 | (6,367,649 | ) | ||||||||||
Rights of purchase of foreign exchange | 2,159,790 | (4,664,455 | ) | 6,143,984 | (1,887,352 | ) | ||||||||||
Sales obligations on foreign currency | (6,018,860 | ) | 2,889,088 | (2,360,521 | ) | 6,568,409 | ||||||||||
Purchasing obligations on foreign currency | (2,172,022 | ) | 4,728,874 | (5,957,831 | ) | 1,900,893 | ||||||||||
112,866 | 85,661 | 203,569 | 214,301 | |||||||||||||
Coverage forward contracts M/E: | ||||||||||||||||
Sales Rights over foreign exchange | 1,321,099 | (206,493 | ) | 223,837 | (1,554,546 | ) | ||||||||||
Rights of purchase of foreign exchange | 73,145 | (41,041 | ) | 302,450 | - | |||||||||||
Sales obligations on foreign currency | (1,265,523 | ) | 207,353 | (222,114 | ) | 1,585,376 | ||||||||||
Purchasing obligations on foreign currency | (72,947 | ) | 41,560 | (297,393 | ) | - | ||||||||||
55,774 | 1,379 | 6,780 | 30,830 |
126
June 30 | December 31 | |||||||||||||||
Assets | Liabilities | Assets | Liabilities | |||||||||||||
Forward Contracts: | ||||||||||||||||
Rights of sale over foreign exchange | 925,025 | (8,999 | ) | 9,689 | (304,658 | ) | ||||||||||
Rights of purchase over foreign exchange | 12,514 | (1,108,879 | ) | 716,413 | - | |||||||||||
Rights of sale over securities | 33,727 | (658,396 | ) | 41,651 | (16,049 | ) | ||||||||||
Rights of purchase over securities | 16,286 | (10,280 | ) | 3,420 | - | |||||||||||
Obligations of sale over foreign exchange | (925,025 | ) | 8,999 | (9,689 | ) | 304,810 | ||||||||||
Obligations of purchase over foreign exchan | (12,347 | ) | 1,109,005 | (716,303 | ) | - | ||||||||||
Obligations of sale over securities | (33,727 | ) | 658,401 | (41,651 | ) | 16,052 | ||||||||||
Obligations of purchase over securities | (16,285 | ) | 10,208 | (3,420 | ) | - | ||||||||||
168 | 131 | 110 | 155 | |||||||||||||
Swaps: | ||||||||||||||||
Obligations of sale over foreign exchange | 633,409 | (306,920 | ) | 389,789 | (483,523 | ) | ||||||||||
Rights over interest rate | 605,599 | (653,187 | ) | 656,335 | (704,161 | ) | ||||||||||
Obligations over foreign exchange | (591,217 | ) | 335,220 | (351,203 | ) | 521,798 | ||||||||||
Obligations over interest rate | (593,179 | ) | 683,117 | (643,536 | ) | 740,633 | ||||||||||
54,612 | 58,230 | 51,385 | 74,747 | |||||||||||||
Options: | ||||||||||||||||
Call options in foreign currency | 14,721 | 1,385 | 38,692 | 4,261 | ||||||||||||
Put options on foreign currency | 3,590 | 33,223 | 1,626 | 21,425 | ||||||||||||
18,311 | 34,608 | 40,318 | 25,687 | |||||||||||||
Total acceptances and derivatives | $ | 328,674 | 267,125 | 418,809 | 468,964 |
The rights and obligations of Grupo Aval, originated in cash transactions and derivatives, transactions were as follows:
· | Bank subsidiaries of Grupo Aval currently have investment portfolios in local and foreign currency, enabling them to offer their customers interest rates and hedge foreign currency operations. |
· | Derivatives are used as protection against risks from Exchange rates and increase the ability to anticipate the performance levels of investments in foreign currency foreign currency. |
· | Under the guidelines emanated from the Colombian Superintendency of Finance, the portfolios of derivatives of Grupo Aval Bank subsidiaries are valued at market prices every day. Unrealized profits and losses are recognized in the consolidated statements of results. |
· | Rates and maturities of forward contracts are the same of the futures contracts |
(10) | Property, Plant and Equipment - net |
Elements of property plant and equipment, was as follows:
June 30 | December 31 | |||||||
Non depreciable: | ||||||||
Land | $ | 234,460 | 235,278 | |||||
Importations in transit | 179,503 | 234,258 | ||||||
Constructions in progress | 49,655 | 36,478 | ||||||
Rural realty | 122,616 | 126,712 | ||||||
Total non depreciable | 586,234 | 632,726 | ||||||
Depreciable: | ||||||||
Buildings and warehouses | 1,087,738 | 1,138,075 | ||||||
Equipment, office furniture and utensils | 589,581 | 607,540 | ||||||
Computer Equipment | 745,790 | 773,088 | ||||||
Vehicles | 65,840 | 77,432 | ||||||
Machinery and equipment | 254,142 | 280,517 | ||||||
Silos | 1,770 | 820 | ||||||
Livestock | 490 | 540 | ||||||
Total depreciable | 2,744,751 | 2,878,012 |
127
June 30 | December 31 | |||||||
Accumulated Depreciation | (1,572,621 | ) | (1,667,942 | ) | ||||
Provision | (4,316 | ) | (5,085 | ) | ||||
Net Property and equipment | $ | 1,754,048 | 1,837,711 | |||||
Commercial value | $ | 5,495,774 | 5,603,820 | |||||
Reappraisal | $ | 2,167,971 | 2,093,081 |
Accumulated Depreciation property and equipment:
June 30 | December 31 | |||||||
Buildings, warehouses and silos | $ | (519,716 | ) | (572,369 | ) | |||
Furniture and utensils | (356,991 | ) | (363,713 | ) | ||||
Computer Equipment | (497,178 | ) | (503,940 | ) | ||||
Vehicle | (38,708 | ) | (36,059 | ) | ||||
Equipment of mobilization and machinery | (160,027 | ) | (191,861 | ) | ||||
$ | (1,572,621 | ) | (1,667,942 | ) |
Provision for property and equipment:
June 30 | December 31 | |||||||
Activo: | ||||||||
Edificios | $ | (613 | ) | (649 | ) | |||
Muebles y enseres | (2,229 | ) | (2,789 | ) | ||||
Equipo de cómputo | (1,474 | ) | (1,647 | ) | ||||
Total provisión | $ | (4,316 | ) | (5,085 | ) |
(11) | Operating Leasing - net |
Operational leases in which the Bank or any of its bank subsidiaries act as lessor, is as follows:
June 30 | December 31 | |||||||
Machinery and equipment | $ | 83,256 | 78,229 | |||||
Vehicles | 37,227 | 29,195 | ||||||
Computer equipment | 256,983 | 221,194 | ||||||
Computer software | 117,977 | 108,728 | ||||||
Furniture and utensils | 52,782 | 50,627 | ||||||
Realty | 27,332 | 27,242 | ||||||
575,557 | 515,215 | |||||||
Accumulated Depreciation | (205,438 | ) | (187,180 | ) | ||||
Provision for assets given in operating leasing | (5,473 | ) | (4,786 | ) | ||||
(210,911 | ) | (191,966 | ) | |||||
$ | 364,646 | 323,249 |
Accumulated depreciation of assets given in operating lease is as follows:
June 30 | December 31 | |||||||
Machinery and equipment | $ | (33,516 | ) | (34,561 | ) | |||
Vehicles | (5,324 | ) | (3,683 | ) | ||||
Computer Equipment | (101,826 | ) | (89,983 | ) | ||||
Computer software | (44,427 | ) | (39,885 | ) | ||||
Furniture and utensils | (19,846 | ) | (18,627 | ) | ||||
Realty | (500 | ) | (441 | ) | ||||
$ | (205,439 | ) | (187,180 | ) |
128
The expense of the provision for assets given in operative leasing was calculated over
June 30 | December 31 | |||||||
Furniture and utensils | $ | (43 | ) | (24 | ) | |||
Realty | (5,430 | ) | (4,762 | ) | ||||
$ | (5,473 | ) | (4,786 | ) |
(12) | Foreclosed Assets , Net |
The composition of the account goods received in payment account, was as follows:
June 30 | December 31 | |||||||
Reinstated assets of leasing contracts: | ||||||||
Real estate | ||||||||
Machinery and equipment | $ | 3,746 | 3,961 | |||||
Vehicles | 2,884 | 2,244 | ||||||
Furniture and utensils | 4 | 10 | ||||||
Computeer equipment | - | - | ||||||
Real estate | 34,299 | 8,787 | ||||||
Real estate residential leasing | 1,806 | 2,107 | ||||||
42,739 | 17,109 | |||||||
Assets received in payment: | ||||||||
Real estate housing | 37,296 | 40,378 | ||||||
Other real estate | 139,846 | 189,242 | ||||||
Furniture | 11,475 | 10,104 | ||||||
Movable values | - | 4,671 | ||||||
188,617 | 244,395 | |||||||
Provision reinstated assets and assets received in payment | (142,951 | ) | (166,537 | ) | ||||
Reinstated assets and assets received in payment, net | $ | 88,405 | 94,967 | |||||
Realizable assets: | ||||||||
Land | 18,331 | 2,259 | ||||||
Construction Materials and raw materials | 51,773 | 50,319 | ||||||
Constructions in process | 294 | 297 | ||||||
In process Products | 73,236 | 77,247 | ||||||
Housing | 18,436 | 14,408 | ||||||
Finished goods | 15,456 | 16,369 | ||||||
Merchandise in tránsit | 3,421 | 7,143 | ||||||
Merchandise | 13,201 | 17,152 | ||||||
194,148 | 185,194 | |||||||
Other: | ||||||||
Inventory of livestock | 4,792 | 4,678 | ||||||
Assets not used in the corporate purpose: | ||||||||
Land | 5,217 | 5,439 | ||||||
Buildings | 7,890 | 9,522 | ||||||
Less depreciation | (1,265 | ) | (1,509 | ) | ||||
11,842 | 13,452 | |||||||
Pprovision realizable assets and other | (3,009 | ) | (4,265 | ) | ||||
Realizable assets, net | 207,773 | 199,059 | ||||||
Total reserve for realizable assets, received | ||||||||
In payment and reinstated assets | (145,960 | ) | (170,802 | ) | ||||
Total foreclosed assets | $ | 296,178 | 294,026 |
Balance Movement Provision Foreclosed Assets
The movement was as follows:
129
June 30 | December 31 | |||||||
Initial Balancel | $ | 170,802 | 158,311 | |||||
Provision charged to expenses | 15,785 | 15,111 | ||||||
Combination of expenses | - | 17,526 | ||||||
Exchange difference | (2,387 | ) | 2,566 | |||||
Recoveries | (8,559 | ) | (16,836 | ) | ||||
Provision used in sales | (5,570 | ) | (3,642 | ) | ||||
Reclassifications | (22,746 | ) | (975 | ) | ||||
Charge offs | (1,365 | ) | (1,259 | ) | ||||
Final Balance | $ | 145,960 | 170,802 |
(13) | Prepaid Expenses and Deferred Charges, net |
The composition of the account is as follows:
June 30 | December 31 | |||||||
Pre-paid Expenses: | ||||||||
Interest | $ | 3,574 | 4,510 | |||||
Insurance | 21,287 | 15,124 | ||||||
Rentals | 1,356 | 1,281 | ||||||
Maintenance of equipment | 2,378 | 2,337 | ||||||
Other | 66,847 | 13,018 | ||||||
Total prepaid Expenses | $ | 95,442 | 36,270 | |||||
Deferred Charges: | ||||||||
Operational and reorganization Expenses | 4,032 | 5,421 | ||||||
Remodeling Expenses | 9,807 | 17,016 | ||||||
Studies and projects | 175,498 | 146,041 | ||||||
Computer software | 79,847 | 78,691 | ||||||
Stationary | 30,928 | 26,657 | ||||||
Improvements to properties taken in lease | 44,081 | 46,974 | ||||||
Discount investment securities placement | 10,598 | 12,808 | ||||||
Commission of Placement of investment securities | 25 | 42 | ||||||
Deferred income tax debit | 118,880 | 132,667 | ||||||
Publicity and advertising | 5,322 | 9,113 | ||||||
Property Tax | 445,106 | 507,527 | ||||||
Contributions and y affiliations | 1,927 | 26,516 | ||||||
Commissions paid for derivative products | - | - | ||||||
Loss for adjustment in valuation of securities | 5,717 | 7,467 | ||||||
Goods received in rental leasing | - | 72,260 | ||||||
Double driveway construction and improvement | ||||||||
Existing driveway (Coviandes) | 769,059 | 475,958 | ||||||
Work deviations Pisa | - | 154,561 | ||||||
Consorcio constructor Ruta del sol Consol | - | 38,695 | ||||||
Other values lower than 5% reported by the entities | - | 58,221 | ||||||
Other deferred charges | 255,157 | 128,737 | ||||||
Total deferred charges | $ | 1,955,984 | 1,945,372 | |||||
2,051,426 | 1,981,642 |
(14) | Goodwill, net |
The composition of mercantile credit, is as follows:
June 30 | December 31 | |||||||
Mercantil credit acquired by Aval in the purchase of | ||||||||
hares of Bancos Popular y Occidente | $ | 417,953 | 423,506 | |||||
Mercantil credit acquired in the combination of | ||||||||
business with Megabanco | 500,290 | 510,799 | ||||||
Mercantil credit acquired in the combination of | ||||||||
Business with BAC ("Banco de América Central") | 1,828,011 | 2,017,279 | ||||||
Mercantile Credit in the combiantion of | ||||||||
Business with Corporación Financiera | ||||||||
Colombiana S,A, | 121,962 | 131,993 | ||||||
Mercantil credit acquired in the combination of | ||||||||
Business with Banco Aliadas and Banco Unión | 25,016 | 25,720 | ||||||
$ | 2,893,232 | 3,109,297 |
130
(15) | Other Assets - Net |
The composition of Other Assets, are as follows:
June 30 | December 31 | |||||||
Asets available for sale(1) | $ | 479,164 | 407,208 | |||||
Aggregate value deductible from taxes and | ||||||||
Tax withholding | 152,167 | 38,693 | ||||||
Restricted Deposits | 166,341 | 109,308 | ||||||
Investments in custody | 31,147 | 32,808 | ||||||
Taxes paid in advance | 428,803 | 65,507 | ||||||
Assets available for rental contracts | 302,864 | 338,739 | ||||||
Consortium(2) | 80,334 | 75,663 | ||||||
Other | 95,227 | 67,507 | ||||||
1,736,047 | 1,135,433 | |||||||
Less: Provision and accumulated depreciation | (64,385 | ) | (61,880 | ) | ||||
$ | 1,671,662 | 1,073,553 |
(1) | It includes inventories of real sector companies.7 |
(2) | They include capital expenditures related to consortia for the collection of tolls by Corficolombiana. |
(16) | Asset Valuation, net |
The table below describes the revaluations at the closing of June 30, 2012 and December 31, 2011:
June 30 | December 31 | |||||||
Appraisal of property plant and equipment | $ | 2,164,971 | 2,093,081 | |||||
Surplus (devaluation) of investments(1) | 421,563 | (12,535 | ) | |||||
Valuation of other assets | 10,759 | 10,759 | ||||||
Valuations of assets | 2,600,293 | 2,091,305 | ||||||
Participation of non-controlling interest | 1,434,373 | 1,209,563 | ||||||
Surplus for Valuation of assets | $ | 1,165,920 | 881,742 |
(1) | Surplus and devaluation by valuation of investments. |
In the process of split of the 3,358,446,312 shares of Banco Popular S.A. by Rendifin S.A. and 757,081,997 shares by Inversiones Escorial and Popular Securities, in favor of Grupo Aval Acciones y Vaalores S.A., it was determined the following valuation:
September 20, 2011 | June 23, 2011 | |||||||
Value mof the consolidated homogenized equity | ||||||||
of Banco Popular S,A, (at mayo 2011) (A) | $ | 1,789,264,000 | 1,758,109,000 | |||||
Number of outstanding shares (B) | 7,725,326,503 | 7,725,326,503 | ||||||
Intrinsec value (en pesos) (A/B) | $ | 232 | 228 | |||||
Number of shares received by Aval | ||||||||
In escisión (C) | 1,514,163,994 | 3,358,446,312 | ||||||
Intrinsec value of share s | ||||||||
acquired (D = (A/B) * (C)) | $ | 350,696 | 764,306 | |||||
Value accounted as expense (E) | 681,374 | 231,878 | ||||||
Devaluation (D-E) caused | (330,678 | ) | 532,428 | |||||
Balance accumulated valuation(F) | $ | 201,750 | 532,428 |
The valuations here determined, were eliminated in the consolidation process remaining only the effect of Sahreholder´s Equity.
131
(17) | Time Deposits |
Breakdown of time deposits (in terms of maturity) account was as follows
June 30 | December 31 | |||||||
Legal currency: | ||||||||
Less than six months | $ | 2,852,256 | 2,971,171 | |||||
Between six and twelve months | 2,798,016 | 3,132,630 | ||||||
Between twelve and eighteen months | 1,263,553 | 1,278,509 | ||||||
More than eighteen months | 11,356,160 | 7,939,199 | ||||||
Foreign currency: | ||||||||
Less tan six months | 3,189,178 | 2,767,769 | ||||||
Between six and twelve months | 1,976,285 | 1,665,993 | ||||||
Between twelve and eighteen months | 1,712,351 | 2,081,564 | ||||||
More than eighteen months | 934,720 | 793,658 | ||||||
$ | 26,082,519 | 22,630,493 |
(18) | Borrowings form Banks and Others |
The Colombian Government has created programs for the promotion of the development of specific sectors of the economy. These sectors include foreign trade, agriculture, tourism and many other industries. These programs have been placed under the administration of the Banco de la República and various government entities such as BANCOLDEX and FINAGRO FINDETER.
June 30 | ||||||||||||||||||||
Entity | Short Term (1 year) | Medium Term (1-3 years) | Long Term (3-5 years) | Long Term More than 5 years | Total | |||||||||||||||
Banco de Comercio Exterior | $ | 296,464 | 612,288 | 65,428 | 10,330 | 948,510 | ||||||||||||||
Fondo para el Financiamiento | ||||||||||||||||||||
del Sector Agropecuario FINAGRO | 58,044 | 309,299 | 145,100 | 54,153 | 566,596 | |||||||||||||||
Financiera de Desarrollo | ||||||||||||||||||||
Territorial S,A FINDETER | 50,577 | 335,365 | 199,486 | 366,945 | 952,373 | |||||||||||||||
Foreign banks(1) | 1,351,904 | 2,025,410 | 359,065 | 1,331,357 | 5,067,736 | |||||||||||||||
Other | 307,130 | 255,524 | 1,253,314 | 242,477 | 2,058,445 | |||||||||||||||
$ | 2,064,119 | 3,537,886 | 2,022,393 | 2,005,262 | 9,629,660 |
December 31 | ||||||||||||||||||||
Entity | Short Term (1 yeaar) | Medium Term (1-3 years) | Long Term (3-5 years) | Long Term More than 5 years | Total | |||||||||||||||
Banco de Comercio Exterior | $ | 407,699 | 755,791 | 58,919 | 2,568 | 1,224,977 | ||||||||||||||
Fondo para el Financiamiento | ||||||||||||||||||||
del Sector Agropecuario FINAGRO | 64,623 | 273,339 | 263,701 | 232 | 601,895 | |||||||||||||||
Financiera de Desarrollo | ||||||||||||||||||||
Territorial S,A FINDETER | 61,327 | 460,463 | 321,297 | 232,538 | 1,075,625 | |||||||||||||||
Foreign banks | 3,111,628 | 2,501,663 | 830,034 | - | 6,443,325 | |||||||||||||||
Otros | 149,645 | 292,920 | 1,649,364 | - | 2,091,929 | |||||||||||||||
$ | 3,794,922 | 4,284,176 | 3,123,315 | 235,338 | 11,437,751 |
Loans under these programs carry interest rates ranging between 3.0% and 6.0% above the average rates paid by local banks on their funds in short-term deposits. Credit terms vary depending on the program (with terms of up to 10 years). Grupo Aval finances approximately between 0% and the 15.0% of the total of each credit and the remainder is financed by the appropriate governmental entity. The loans granted to customers are denominated in the same currency and carry the same maturity of the loans granted by government agencies.
132
(1) | Includes an obligation to three years to US$ 500 million equivalent to PS. 892.3 million, acquired by Banco de Bogotá with different financial institutions, including HSBC Securities Inc., Citigroup Global Markets Inc., and J.P. Morgan Securities LLC, on December 19. Used amounts shall accrue interest at three or six-month LIBOR rate plus 225 bps, by decision of Banco de Bogotá |
(19) | Accounts Payable |
The balance of accounts payable is as follows:
June 30 | December 31 | |||||||
Interest: | ||||||||
Deposits and liabilities | $ | 234,285 | 182,139 | |||||
Operations of the money market | 103 | 340 | ||||||
Credits in Banks and other financial obligations | 77,098 | 61,171 | ||||||
Outstanding investment securities | 72,391 | 58,460 | ||||||
Bonds mandatorily convertible in shares | 1 | 152 | ||||||
Others | 11,106 | 10,768 | ||||||
$ | 394,984 | 313,030 | ||||||
Commission and other: | ||||||||
Commissions and fees | $ | 45,220 | 39,269 | |||||
Income tax and complimentary | 35,420 | 118,654 | ||||||
Property tax | 108,531 | 131,504 | ||||||
Other taxes | 390,473 | 440,679 | ||||||
Dividends and surpluses to pay | 393,760 | 568,245 | ||||||
Rentals | 5,065 | 5,172 | ||||||
Financial transactions tax | 31,323 | 31,994 | ||||||
Sales tax to pay | 39,335 | 43,769 | ||||||
Promitent buyers | 14,563 | 5,006 | ||||||
Payments to suppliers | 399,774 | 550,968 | ||||||
Contributions and affiliations | 3,959 | 15,918 | ||||||
Withholdings and other labor contributions | 200,658 | 194,015 | ||||||
Fines and penalties, litigation, indemnities and lawsuits | 4 | 61 | ||||||
Insurance premium | 242,883 | 237,501 | ||||||
Fondo de garantías de instituciones financieras | - | 701 | ||||||
Collections on behalf of third parties | 279,945 | 152,825 | ||||||
Operations with card | - | 27,548 | ||||||
Sobrantes por compensación AVAL | 59,831 | 115,414 | ||||||
Cédulas cafeteras pendientes de utilizar | 71,387 | 42,793 | ||||||
CDTS vencidos | 27,732 | 30,129 | ||||||
Principal and interest bonds of peace | 28,552 | 28,433 | ||||||
Transitory for dispersion of funds | - | 26,532 | ||||||
Attachments to customer accounts | 18,200 | 21,218 | ||||||
Sundry surplus | - | 4,286 | ||||||
Sundries from other institution reported as less than 5 % | - | 148,025 | ||||||
Creditors by clearance installments | - | 8,678 | ||||||
Principal and interest security bonds | 7,152 | 6,996 | ||||||
Cash collection through transporter of securities | - | 6,830 | ||||||
Checks unpaid | 7,965 | 8,113 | ||||||
Professional fees | 3,453 | 2,947 | ||||||
Compensation credibanco | 2,436 | 5,283 | ||||||
Other (*) | 495,054 | 74,442 | ||||||
$ | 2,912,675 | 3,093,949 |
(20) | Other Liabilities |
The balance of the account other liabilities and obligations is as follows:
133
June 30 | December 31 | |||||||
Labor Obligations | $ | 222,752 | 234,657 | |||||
Advance income | 216,635 | 235,552 | ||||||
Deferred payments | 72,163 | 68,504 | ||||||
Pensions obligations | 309,867 | 299,001 | ||||||
Letters of credit of deferred payment | 14,891 | 4,835 | ||||||
Credit for deferred monetary correction | 12,776 | 13,581 | ||||||
Deferred income tax | 207,630 | 183,691 | ||||||
Cancelled accounts | 23,917 | 19,511 | ||||||
Payments to be applied to sight obligations | 277,306 | 134,992 | ||||||
Other | 83,084 | 253,445 | ||||||
$ | 1,441,021 | 1,447,769 |
Detail of the pension obligations of subsidiaries of Grupo Aval,
Banco de Bogotá SA and subordinates:
Entity | |||
Pension Obligation | Banco de Bogotá | Corficolombiana | Almaviva |
Actuarial method used | Contigent growing fractioned payments. Decree 2984 of 2009, decree 2783 of 2011. And Resolution 1555 published 30 june 2010 | On the basis of decree 2984 of 2009 wich amended Decree 2783 of 2011, on the basis of a DANE established rate Of 4.80%. | Contingent annually growing fractionated payments in arrears. Decree 4565 of 2010. |
Number of users. | 1,137 persons of wich 672 are retired 418 substitute, 32 retires pensioned, And 15 are active individuals. | 1 direct pensioner. | Thirty eight (38) retirees of which thirteen 13) are pensioned, twenty four (24) are retired. Substitutes and one (1) is retired. |
Benefits Covered | Monthly Payment and one aditional. | None | Monthly Payment plus additional Payment for pensioned beneficiaries and With expectation of Pension. |
The accumulated amortized percentage Of the actuarial calculation on the Closing date of the financial statement with reference to the accumulated amortized percentage as of the closing date. | 31-dec-11 30-jun-12 83,79% 83,79% | 31-eic-11 30-jun-12 86,09% 86,09% | 31-dec-11 30-jun-12 100,0% 100,0% |
Amortization plan for the actuarial Calculation to reach one hundred (100%) of accumulated amortization. | The anual provision is increased rationally and sistematically in such A way that as of December 31, 2029 Amortization reaches 100% | There is not amortization plan; one hundred percent (110%) of actuarial cost is already amortized. | There is not amortization plan; one hundred percent (110%) of actuarial cost is already amortized. |
Banco de Occidente S.A. y Banco Popular S.A.:
Entity | ||
Pension Obligation | Banco de Occidente | Banco Popular |
Actuarial method used | Fractioned Payments in arrears. | Fractioned payments in arrears as indicated in Article 112 of Tax Code and in consideration of regulations in Decree 2783 of 20 December 2001 as to tax considerations. |
Number of users | 40 persons | 2,057 persons at Banco Popular and Alpopular (a subordinated of the bank) 2 persons, for a total of 2,060 persons |
Benefits Covered | Monthly Payment and Bonus | One monthly payment plus two paymnts in July and December |
The accumulated amortized percentage of the actuarial calculation on the closing date of the financial statements with reference to the accumulated amortized percentage as of the closing of the immediately previous period. | 31-dic-11 30-jun-12 100,00% 100,00% | 30-jun-11 31-dic-10 78.21% 78.21% |
Amortization plan for the actuarial calculation To reach one hundred percent (100%) of Accumulated amortization. | NA | Amortization takes place at a rate of 1.15% p.a to conclude in 2029. |
Amount of the pension bonds issued and period Of redemption. | NA | Banco Popular has not issued pension bonds, Alpopular (a subordinate of the bank) has issued one Pension bond in the amount of $ 50 million for redemption in 2022.. |
Insurance company with wich payment of ‘pensions has been hired. | NA | NA |
Specific funds or guarantees destined to back-up the total obligation | NA | NA |
134
(21) | Bonds (Long Term Debt) |
Companies are authorized by the Colombian Superintendency of Finance for issue or placing bonds or bonds of general warranty. Emissions of bonds by Grupo Aval and its bank subordinates all have been issued without guarantees and they exclusively represent obligations of each of the issuers.
The detail of liabilities on June 30, 2012 and 31 December 2011 by date of issuance and expiration date is as follows:
June 30, | December | ||||||||||||||
Issuer | Date of issue | 2012 | 31, 2011 | Date of maturity | Interest Rate | ||||||||||
BAC Honduras | October 2009 | $ | 12,714 | 14,163 | Oct/2012 | 14.38% to 14.49% | |||||||||
November 2009 | 10,146 | 11,303 | Oct/2012 | 14.38% to 14.49% | |||||||||||
December 2009 | 24 | 26 | Oct/2012 | 14.38% to 14.49% | |||||||||||
22,884 | 25,492 | ||||||||||||||
Banco de América | March 2007 | - | 19,427 | Mar/2012 | 4.19% | ||||||||||
Central | May 2007 | - | 19,427 | May/2012 | 3.58% | ||||||||||
January 2008 | 17,846 | 19,427 | Jan/2013 | 3.94% to 3.98% | |||||||||||
November 2008 | 26,769 | 29,141 | Nov/2013 | 4.17% | |||||||||||
February 2009 | 26,769 | 29,141 | Feb/2014 | 5.02% | |||||||||||
December 2010 | 22,512 | 23,170 | Jan/2012 | 4.00% | |||||||||||
December 2011 | 7,745 | 7,771 | Dec/2016 | 4.25% | |||||||||||
May 2012 | 20,465 | - | May/2017 | 4.25% | |||||||||||
122,106 | 147,504 | ||||||||||||||
Banco de Bogotá S.A. | April 2008 | 211,792 | 209,960 | Apr/2015 | IPC + 7.00% UVR + 7.00% | ||||||||||
DTF + 3.00% | |||||||||||||||
February 2010 | 209,046 | 206,545 | Feb/2017 to Feb/2020 | IPC + 5.33% UVR+5.29% IPC + | |||||||||||
5.45% UVR + 5.45%. | |||||||||||||||
December 2011 | 1,065,988 | 1,165,619 | Jan/2017 | 5.00% | |||||||||||
1,486,826 | 1,582,124 | ||||||||||||||
Banco de Occidente S.A. | August 2006 | 75,000 | 75,000 | Aug/2006 to Aug/2013 | DTF + 5.58% | ||||||||||
August 2007 | 80,000 | 80,000 | Aug2007 to Feb/2015 | DTF + 5.90% | |||||||||||
August 2008 | 186,910 | 186,910 | Aug/2008 to Aug/2018 | DTF + 2.70% IPC + 7.00% | |||||||||||
June 2007 | 53,842 | 135,406 | Jun/2007 to Jun/2014 | DTF + 2.90% IPC + 6.60% | |||||||||||
March 2009 | 174,536 | 236,439 | Mar/2009 to Mar/2019 | DTF + 1.30% DTF + 1.60% + | |||||||||||
IPC + 5.00% IPC + 6.00% | |||||||||||||||
May 2005 | - | 40,000 | May/2005 to May/2012 | IPC + 5.09% | |||||||||||
November 2010 | 550,000 | 550,000 | Nov/2010 to Nov/2015 | IPC + 2.72% DTF + 1.35% | |||||||||||
IBR + 1.42% | |||||||||||||||
October 2006 | 44,680 | 44,680 | Oct/2006 to Oct/2013 | IPC + 5.75% | |||||||||||
March 2011 | 400,000 | 400,000 | Mar/2011 to Mar/2016 | IPC + 2.49% + IPC + 3.05% | |||||||||||
6.65%,.7.25% | |||||||||||||||
September 2011 | 247,119 | 247,119 | Sep/2014 to Sep/2021 | IPC +4.5% | |||||||||||
February 2012 | 200,000 | - | Feb/2021 | IPC +4.65% | |||||||||||
2,012,087 | 1,995,554 | ||||||||||||||
Banco Popular S.A. | October 2010 | 243,000 | 300,000 | Apr/2012 to Oct/2013 | IBR + 1.10% MV a IPC + 2.64%TV | ||||||||||
June 2010 | 47,575 | 151,158 | Dec/2011 to Jun/2013 | DTF+ 0.95%TV a 4.98%MV a IPC + | |||||||||||
3.23%TV a IBR + 1.20% MV | |||||||||||||||
February 2010 | 260,800 | 400,300 | Aug/2011 to Feb/2015 | DTF + 1.10% TV a IPC + 3.30%TV a | |||||||||||
IBR + 1.44% MV | |||||||||||||||
July 2008 | 100,000 | 100,000 | Jul/2015 | IPC + 7.70%TV | |||||||||||
September 2006 | 100,000 | 100,000 | Sept/2013 | IPC + 5.49%TV | |||||||||||
August 2011 | 400,000 | 400,000 | Feb/2013 to Aug/2015 | IPC + 3.68%TV a IBR + 1.81%TV | |||||||||||
January 2012 | 400,000 | - | Jun/2013 to Jan/2017 | IBR + 1.80% DTF + 1.82% IPC + 3.90% | |||||||||||
1,551,375 | 1,451,458 |
135
June 30, | December 31 | ||||||||||||||
Issuer | Date of Issue | 2012 | 31, 2011 | Date of maturity | Interest Rate | ||||||||||
Concesionaria | July 2007 | 47,700 | 47,700 | Jul/2012 to Jul/2014 | IPC + 5.50% IPC + 5.70% | ||||||||||
Vial de los Andes S.A. | 47,700 | 47,700 | |||||||||||||
Credomatic | January 2011 | 45 | 11,365 | Jan/2012 | 5.14% to 8.69% | ||||||||||
Guatemala | February 2011 | - | 10,989 | Feb/2012 | 6.31% to 8.50% | ||||||||||
March 2011 | - | 9,722 | Mar/2012 | 6.31% to 8.69% | |||||||||||
April 2011 | - | 12,224 | Oct/2011 to Apr/2012 | 6.31% to 8.69% | |||||||||||
May 2011 | - | 11,866 | Nov/2011 to May/2012 | 6.31% to 8.50% | |||||||||||
June 2011 | - | 16,191 | Nov/2011 to Jun/2012 | 4.89% to 8.69% | |||||||||||
July 2011 | 14,079 | 15,663 | Jul/2012 | 4.65% to 8.25% | |||||||||||
August 2011 | 13,969 | 15,675 | Aug/2012 | 4.75% to 8.25% | |||||||||||
September 2011 | 14,141 | 18,471 | Sep/2012 | 4.75% to 8.45% | |||||||||||
October 2011 | 6,276 | 15,790 | Oct/2012 | 4.65% to 8.45% | |||||||||||
November 2011 | 11,318 | 13,676 | Nov/2012 | 4.65% to 8.30% | |||||||||||
December 2011 | 7,043 | 13,136 | Dec/2012 | 4.65% to 8.22% | |||||||||||
January 2012 | 14,779 | - | Jan/2013 | 5.14% to 8.69% | |||||||||||
February 2012 | 16,939 | - | Feb/2013 | 6.31% to 8.50% | |||||||||||
March 2012 | 12,931 | - | Mar/2013 | 4.65% to 8.25% | |||||||||||
April 2012 | 14,518 | - | Apr/2013 | 4.65% to 8.25% | |||||||||||
May 2012 | 15,792 | - | May/2013 | 4.65% to 8.50% | |||||||||||
June 2012 | 21,994 | - | Jun/2013 | 4.65% to 8.50% | |||||||||||
163,824 | 164,768 | ||||||||||||||
Grupo Aval Acciones | April 2005 | - | 94,700 | Apr/2012 | IPC + 5.60% | ||||||||||
y Valores S.A. | October 2005 | 100,000 | 100,000 | Oct/2011 to Oct/2015 | IPC + 2.63% IPC + 3.37% | ||||||||||
December 2009 | 749,733 | 749,733 | Dec/2012 to Dec/2024 | IPC + 3.69% DTF + 1.14% | |||||||||||
849,733 | 944,433 | ||||||||||||||
Grupo Aval Limited | January 2012 | 1,070,760 | - | Feb/2017 | 5.25% | ||||||||||
1,070,760 | - | ||||||||||||||
Industrias Lenher S.A. | June 2000 | 1,053 | 1,053 | Apr/2012 | 4.98% | ||||||||||
1,053 | 1,053 | ||||||||||||||
Leasing | January 2005 | 9,861 | 10,117 | Jan/2013 to Oct/2014 | 6.91% to 8.70% | ||||||||||
Corficolombiana S.A. | January 2009 | 116,032 | 116,032 | Mar/2013 | 7.18% | ||||||||||
125,893 | 126,149 | ||||||||||||||
Proyectos de | May 2009 | 80,000 | 80,000 | May/2016 to May/2019 | IPC + 6.59% IPC +6.90% | ||||||||||
Infraestructura S.A. | 80,000 | 80,000 | |||||||||||||
$ | 7,534,241 | 6,566,235 |
(22) | Estimated Liabilities |
The composition of the item estimated liabilities, is as follows:
June 30 | December 31 | |||||||
Interest | $ | 2,394 | 1,215 | |||||
Labor Obligations | 35,398 | 27,485 | ||||||
Income tax to pay(1) | 568,183 | 435,099 | ||||||
Industry and commerce tax and others | 45,111 | 37,002 | ||||||
Contributions and affiliations | 7,298 | 5,938 | ||||||
Fines from Superintendency of Finance(2) | 1,522 | 1,589 | ||||||
Fines and sanctions, litigation, damages and lawsuits(2) | 67,827 | 67,434 | ||||||
Liquidity risk and interest rate | - | - | ||||||
Provisions of Fondo de Garantía | 20,805 | 26,810 | ||||||
Advertising, publicity and customer loyalty | 10,188 | 6,999 | ||||||
Utilities | 773 | 741 | ||||||
Maintenance of equipment | 1,024 | 850 | ||||||
Data Processing | 895 | 742 | ||||||
Judicial and legal expenses | 289 | 419 | ||||||
Transportation of money | 817 | 578 | ||||||
Security expenses | 390 | 505 | ||||||
Caused expenses not paid | 373 | 373 | ||||||
Labor Contingencies(2) | 50,367 | 67,391 | ||||||
Other | 198,184 | 174,091 | ||||||
$ | 1,011,838 | 855,261 |
136
(1) | The consolidation of tax payable in respect of income tax and supplementary is not permitted under the Colombian tax rules and cannot therefore be used to offset taxable income from other consolidated subsidiary. From the effects of the consolidation of the local subsidiaries, the applicable tax rate for the semester ended in June 2012 and December 2011 was 33%. |
a. | The basis for determination of income tax and complementary cannot be less than 3% of the net worth of the taxpayer on the last day of the immediately preceding fiscal year; |
b. | Extraordinary gains are treated separately from the ordinary, and are subject to the rates set forth in the preceding paragraph. Extraordinary profits include items such as earnings on the sale of fixed assets available for sale for two years or more and the sale of companies also at the sale during two years or more.. |
c. | In the case of companies domiciled in Panama belonging to Grupo Aval, income taxes are governed by Panamanian Law. The profits of the companies mentioned above are not subject to income taxation in Panama. |
(2) | Contingencies, fines and other |
This item includes legal proceedings, suits and litigation that are considered probable (over 50%) and for which the amount can be reasonably estimated. Additionally, any contingent liability by reason of lawsuits or litigation must be registered in the Balance Sheet provided that any Court issues a ruling adverse to Grupo Aval or any of its subsidiaries.
(23) | Non-controlling Interest |
Non-controlling interest of bank subsidiaries which include minority interests of its subordinates, are as follows:
June 30 | December 31 | |||||||
Banco de Bogotá | $ | 4,199,986 | 3,983,707 | |||||
Banco de Occidente | 832,027 | 672,708 | ||||||
Banco Popular | 158,092 | 162,675 | ||||||
Banco AV Villas | 196,131 | 187,204 | ||||||
Total | $ | 5,386,236 | 5,006,294 |
(24) | Shareholders Equity |
The number of shares authorized, issued and outstanding, were the following:
June 30 | December 31 | |||||||
Number of shares authorized, issued and outstanding | 120,000,000,000 | 120,000,000,000 | ||||||
Number of shares: subscribed and paid | 18,551,766,453 | 18,551,299,996 | ||||||
Unpaid subscribed | - | 466,457 | ||||||
Total shares | 18,551,766,453 | 18,551,766,453 | ||||||
Value in million pesos | $ | 18,552 | 18,552 |
On march of 2012, were sold 466,457 Preferential shares which were on behalf of Grupo Aval Acciones y Valores S.A. and which were the result of the application of the mechanism of delay in the issuance of May 2011, generating a premium on placement of shares amounting to $615,298,943 were sold during the month of March 2012.
The second semester showed increase in capital arising from the split process in which Grupo Aval Acciones y Valores S.A. received shares of Banco Popular and issued 934,669,126 preferential shares of Grupo Aval to Inversiones Escorial S. A. and Popular at a value of $934 each.
The premium in placement of shares is increased by $697,521.
The preferred shares issued are entitled to receive a minimum preferential dividend on the benefits of the exercise, after covering losses affecting the capital, deducting the legal contribution which must be assigned for legal reserve, and before creating or increasing any other reserve. The minimum preferential dividend is one peso ($ 1.00) per semester per share, provided this preferential dividend is higher than the dividend decreed for ordinary shares; otherwise, namely, If the minimum preferential dividend is not higher than that corresponding to ordinary shares, it will only be recognized to every preferential share the dividend decreed for each ordinary share. There will be no accumulation of dividends.
Allocated Retained Earnings
Breakdown of this account is as follows:
June 30 | December 31 | |||||||
Legal Provision | $ | 6,972 | 6,972 | |||||
Ocassional Reserves at the disposition of the General Assembly | 2,082,634 | 2,103,393 | ||||||
Total | $ | 2,089,606 | 2,110,365 |
Retained Earnings
Legal Reserve
In accordance with current legal norms, Grupo Aval and its banking subsidiaries must create a legal reserve through the appropriation of ten percent (10%) of the net earnings of each year up to an amount equal to fifty percent (50%) of the subscribed social capital. This reserve may be reduced below the fifty percent (50%) of the social capital subscribed to cover losses in excess of retained earnings. Legal reserve may not be less than the percentage before mentioned except to cover losses in excess of retained earnings.
Mandatory and Voluntary Reserves
Mandatory and voluntary reserves are determined during the semi-annual shareholders meetings.
Adjustments for inflation – Net Worth
Until December 2006, the Net Worth of Grupo Aval, was subject to adjustments for inflation. The cumulative effect of such adjustments on non-monetary assets and liabilities is incorporated to each of the adjusted accounts and the adjustments to net-worth accounts are incorporated to the account "inflation adjustments – Net Worth".
Declared Dividends
The consolidated financial statements are prepared for presentation to shareholders, but should not be taken as a basis for the distribution of dividends or the allocation of earnings. Dividends are distributed based on the non-consolidated net earnings of Grupo Aval.
Dividends are declared and paid to shareholders based on non-consolidated net earnings for the immediately preceding year. The dividends paid were as follows:
138
June 30 | December 31 | |||
Retained earnings from the immediately prrevious year | 1,250,220 | 1,046,938 | ||
Cash dividends pai (en $) | $21.60 per share payable in six installments of $3.60 per share starting October, 2012 (based on net earnings of the First semester of 2011). | $21.00 per share payable in six installments of $3.50 per share starting April 2011 (based on net earnings of the first semester de 2011) and $19.50 per share Payable in six install-ments of $3.25 per share starting April 2011(based on net earnings of the second semester of 2010). | ||
Common shares outstanding | 13,689,321,019 | 13,806,691,240 | ||
Preferential shares outstanding | 4,862,445,434 | 4,745,075,213 | ||
Total Shares outstanding | 18,551,766,453 | 18,551,766,453 | ||
Total dividends declared | $ | 400,718 | 709,245 |
In the General Assembly held on December 7, 2010, it was approved an amendment to the bylaws, allowing the possibility of converting ordinary shares into preferential shares. This modification of bylaws, was approved by the Colombian Superintendency of Finance through resolution No. 2443 of December 23, 2010. The defined exchange ratio was 1 ordinary share for 1 of preferential share without right to vote. Shares can only be converted upon approval or authorization of the General Assembly of Shareholders.
(25) | Memorandum Accounts |
The composition of the memorandum accounts is as follows:
June 30 | December 31 | |||||||
Fiduciary: | ||||||||
Investment Funds | $ | 49,870,488 | 47,724,152 | |||||
Commitments Receivable: | ||||||||
Securities delivered in repo operations and simultaneous | 7,270,202 | 3,318,200 | ||||||
Interest Loan Portfolio | 270,959 | 246,847 | ||||||
Interest financial leasing | 23,694 | 27,470 | ||||||
Monetary correction of loan portfolio | 948 | 746 | ||||||
Cannons and sanctions in operating leasing contracts Rights | 4,347 | 4,581 | ||||||
in options - speculation | 995,688 | 1,162,905 | ||||||
Portfolio of Housing relief Law 546 de 1999 | 3,815 | 19,324 | ||||||
Canons to receive | 7,513,946 | 7,330,035 | ||||||
Purchasing receivable options | 379,939 | 385,309 | ||||||
Other debt contingencies | 900,726 | 1,111,909 | ||||||
Total commitments receivable | 17,364,263 | 13,607,326 | ||||||
Commitments Payable: | ||||||||
Unused Credit card facilities | 9,820,045 | 9,538,766 | ||||||
Lawsuits against the entity | 672,176 | 646,367 | ||||||
Credit cards issued and confirmed | 924,253 | 638,059 | ||||||
Credit lines not compromised | 2,959,849 | 2,807,012 | ||||||
Bank guarantees | 2,222,519 | 1,906,647 | ||||||
Undisbursed loans approved | 1,839,185 | 2,013,505 | ||||||
Government Accounts payable (Law 546)(1) | 9,369 | 46,428 | ||||||
Other | 1,224,370 | 2,144,104 | ||||||
Total commitments payable | 19,671,766 | 19,740,888 |
139
June 30 | December 31 | |||||||
Memo accounts payable: | ||||||||
Assets tax value | 106,432,420 | 92,288,818 | ||||||
Assets an d securities delivered in custody | 6,366,337 | 6,312,275 | ||||||
Assets and securities delivered as collateral | 2,105,052 | 444,257 | ||||||
Negotiable Investments in the form of debt securities | 2,786,422 | 3,354,678 | ||||||
Assets charged off | 4,141,021 | 3,997,275 | ||||||
Investments to hold until maturity | 3,382,257 | 3,019,305 | ||||||
Adjustments for inflation on assets | 1,044,824 | 1,048,890 | ||||||
Accounts with interests in negotiable debt securities investments | 240,319 | 35,888 | ||||||
Investments in debt securities available for sale | 8,464,392 | 6,686,579 | ||||||
Remittances sent to collection | 42,855 | 47,224 | ||||||
Amortization of investments in debt securities | 1,972,828 | 1,829,104 | ||||||
Other | 74,724,193 | 62,494,986 | ||||||
Total memo accounts payable | 211,702,920 | 181,559,279 | ||||||
Memo accounts payable: | ||||||||
Assets and securities delivered as colateral | 47,120,209 | 47,129,540 | ||||||
Commercial portfolio rating | 42,633,608 | 40,593,292 | ||||||
Assets an d securities delivered in custody | 5,921,618 | 7,608,787 | ||||||
Tax value of equity of shareholders | 17,111,404 | 14,085,921 | ||||||
Consumer Portfolio rating | 21,131,731 | 19,681,276 | ||||||
Adjustments for inflation on net worth | 1,895,378 | 1,896,223 | ||||||
Micro-credit portfolio rating | 281,219 | 284,167 | ||||||
Goods in own warehouses | 1,657,878 | 1,880,832 | ||||||
Rating of finance leases | 5,954,336 | 5,216,658 | ||||||
Rating of operating leases | 377,928 | 333,674 | ||||||
Rating of mortgage portfolio | 3,981,533 | 4,120,038 | ||||||
Other | 22,295,523 | 20,409,929 | ||||||
Total memo accounts payable | 170,362,365 | 163,240,337 | ||||||
$ | 468,971,802 | 425,871,982 |
(1) | Perr Law 546 of 1999 (which eliminated the "UPAC" unit and created the UVR), all financial institutions should revalue mortgage portfolio previously denominated UPAC and pass it to the UVR index. The difference generated from this revaluation was paid by the Government with government bonds , in accordance with the provisions of the Superintendencia Financiera of Colombia, should be accounted for in the accounts of each bank. Amounts observed at closing on June 30, 2012 and 31 December 2011 reflect the difference between the mortgage revaluated in 2000 and those valid on each of these dates |
(26) | Contingent Accounts |
The detail of contingent accounts is as follows:
June 30 | December 31 | |||||||
Fiduciary: | ||||||||
Debtors: | ||||||||
Interest Loan Portfolio | $ | 7,248,736 | 265,526 | |||||
Interest financial leasing | 270,959 | 8,791 | ||||||
Monetary correction of loan portfolio | 23,694 | 139 | ||||||
Cánones y sanciones contratos leasing | 948 | 333,331 | ||||||
Rights in options of speculation | 4,347 | 1,150,702 | ||||||
Canons to receive | 995,688 | 7,001,285 | ||||||
Purchasing options to bd received | 7,513,946 | 180,100 | ||||||
Securities delivered in repo operations and simultaneous | 379,939 | 2,803,524 | ||||||
Other contingencies debtors | 926,006 | 1,863,522 | ||||||
$ | 17,364,263 | 13,606,920 | ||||||
Creditors: | ||||||||
Securities received on repo operations and simultaneous | 874,475 | 388,797 | ||||||
Guarantees | 146,085 | 1,904,865 | ||||||
Letters of credit | 2,215,519 | 638,059 | ||||||
Undisbursed approved credits | 925,356 | 708,682 | ||||||
Opening of credit | 1,839,185 | 12,345,778 | ||||||
Obligations in options | 12,779,894 | 1,256,298 | ||||||
Other creditor contingencies | 891,252 | 2,493,474 | ||||||
$ | 19,671,766 | 19,735,953 | ||||||
Total, Net | $ | 2,307,503 | 6,129,033 |
140
(27) | Administrative and Other Expenses |
Expenses for administration and other concepts for the period then ended, include the following items:
June 30 | December 31 | |||||||
Professional fees | $ | 74,305 | 71,601 | |||||
Taxes (other than income and complementary) | 254,779 | 238,916 | ||||||
Rentals | 92,648 | 95,939 | ||||||
Contributions and memberships | 99,372 | 87,533 | ||||||
Insurance | 17,999 | 18,960 | ||||||
Maintenance and repairs | 85,319 | 107,235 | ||||||
Amortization of deferred charges | 88,356 | 73,887 | ||||||
Cleaning and security services | 47,608 | 67,972 | ||||||
Temporary services | 61,302 | 62,329 | ||||||
Public relations | 81,595 | 90,063 | ||||||
Utilities | 99,003 | 99,446 | ||||||
Transportation | 57,164 | 58,234 | ||||||
Operating costs of the non-financial sector | 4,750 | 10,739 | ||||||
Other | 185,518 | 200,537 | ||||||
$ | 1,249,718 | 1,283,390 |
(28) | Non-Operating Income (Expense) - Net |
The chart below summarizes the main components of non-operating income (expense) for the semesters ended June 30, 2012 and December 31, 2011:
June 30 | December 31 | |||||||
Non- operating income: | ||||||||
Gain on sale of foreclosed assets | $ | 5,135 | 8,254 | |||||
Gain on sale of property, plant and equipment | 6,856 | 6,808 | ||||||
Reversals of provisions | 130,640 | 83,271 | ||||||
Other | 58,988 | 32,974 | ||||||
201,619 | 131,307 | |||||||
Non operating expenses: | ||||||||
Loss on sales of property, plant and equipment | (145 | ) | (1,194 | ) | ||||
Indemnities paid | (6,431 | ) | (2,368 | ) | ||||
Fines | (159 | ) | (7,048 | ) | ||||
Other | (100,810 | ) | (73,866 | ) | ||||
Total Non Operating Expenses | (107,545 | ) | (84,476 | ) | ||||
$ | 94,074 | 46,831 |
(29) | Transactions with Related Parties |
Classification as related parties is given to main shareholders, members of the Board of Directors, and to the companies in which Grupo Aval Acciones y Valores S.A. holds interest ownership through investments higher than 10% or in which there are interests of economic, administrative or financial nature. Additionally included are those companies in which members of the Board of Directors hold interest ownership higher than 10%.
Below please find outstanding balances as of June 30, 2012 and December 31, 2011
141
Consolidated | ||||||||||||||||||||||||||||
June 30, 2012 | ||||||||||||||||||||||||||||
Directores with Rlegal lrepresentation | Miembers of the Board of Directors Directiva | Entidies making part of the combination | Shareholders with participation higher than 10% | Linked companies | Societies related to directors | Shareholders with obligation higher than 5% dof PT | ||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||
Available | - | - | 1,083,712,23 | - | 1,088,795,30 | 852,131,00 | - | |||||||||||||||||||||
Investments | - | - | 9,508,186,00 | - | 15,344,423,00 | 6,549,949,00 | - | |||||||||||||||||||||
Loan Portfolio and financial leasing operations | 3,072,59 | 243,12 | 49,866,30 | - | 46,495,50 | 477,745,00 | 525,108,00 | |||||||||||||||||||||
Accounts receivable | - | - | 191,643,83 | - | 204,007,60 | 125,872,00 | - | |||||||||||||||||||||
Other Assets | - | - | 417,954,00 | - | 517,954,00 | 376,292,00 | - | |||||||||||||||||||||
LIABILITIES | ||||||||||||||||||||||||||||
Deposits | 737,647,77 | 3,264,69 | 151,665,59 | 9,971,00 | 839,608,38 | 130,620,21 | 594,586,00 | |||||||||||||||||||||
Accounts Payable | 83,728,20 | - | 13,922,18 | 92,008,00 | 38,651,33 | - | - | |||||||||||||||||||||
Bonds | - | - | 892,30 | - | 4,771,20 | - | - | |||||||||||||||||||||
Other liabilities | - | - | 143,03 | - | 2,850,70 | - | - | |||||||||||||||||||||
NET WORTH | ||||||||||||||||||||||||||||
Unrealized profit or loss | - | - | - | - | 1,419,619 | - | - | |||||||||||||||||||||
INCOME | ||||||||||||||||||||||||||||
Interest | - | - | 48,128,54 | - | 37,867,50 | 27,918,00 | - | |||||||||||||||||||||
Commissions | - | 2,19 | 21,719,09 | - | 1,852,03 | - | 4,271,00 | |||||||||||||||||||||
Rentals | - | - | 1,073,99 | - | 245,20 | - | - | |||||||||||||||||||||
Otrher income | - | - | 864,633,01 | 76,00 | 802,449,00 | 617,675,00 | - | |||||||||||||||||||||
EXPENSES | ||||||||||||||||||||||||||||
Interest | 8,00 | - | 1,709,66 | - | 16,962,07 | - | 15,209,00 | |||||||||||||||||||||
Commissions | 178,50 | - | 3,384,35 | 2,047,00 | 1,795,10 | - | 2,876,00 | |||||||||||||||||||||
Fees | 7,129,70 | 415,57 | 309,00 | - | - | - | - | |||||||||||||||||||||
Rentals | - | - | 572,99 | - | 706,10 | - | - | |||||||||||||||||||||
Other expenses | 354,00 | - | 44,521,26 | 11,641,00 | 46,062,94 | 22,416,00 | - |
Consolidated | ||||||||||||||||||||||||||||
December 31, 2011 | ||||||||||||||||||||||||||||
Directors with legal representation | Miembers of the Board of Directors | Entities making part of the combination | Shareholders with participation higher than 10% | Linked companies | Societies related to directors | Shareholders with obligation superior to 5% of PT | ||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||
Available | - | - | 1,675,977,83 | 464,215,16 | 1,600,721,79 | 1,226,119,00 | - | |||||||||||||||||||||
Investments | - | - | 264,20 | - | 16,443,740,84 | 6,767,637,00 | - | |||||||||||||||||||||
Provision of investments | - | - | - | - | 752,80 | - | - | |||||||||||||||||||||
Portfolio and financial leasing operations | 4,136,00 | 239,71 | 48,397,73 | - | 32,406,72 | 667,432,65 | 487,611,20 | |||||||||||||||||||||
Accounts receivable | 4,15 | 54,33 | 190,413,47 | - | 252,320,20 | 134,613,00 | - | |||||||||||||||||||||
Valuations | - | - | 1,122,61 | - | 248,955,30 | - | - | |||||||||||||||||||||
Other assets | - | - | 529,208,88 | 180,602,42 | 851,796,35 | 381,377,00 | - | |||||||||||||||||||||
LIABILITIES | ||||||||||||||||||||||||||||
Deposits | 2,008,05 | 2,072,94 | 104,233,46 | 113,924,00 | 2,001,669,68 | - | 337,912,00 | |||||||||||||||||||||
Accounts Payable | - | - | 11,518,19 | 470,565,09 | 80,398,66 | - | - | |||||||||||||||||||||
Other liabilities | - | - | 17,940,46 | 10,427,05 | 963,03 | 478,00 | - | |||||||||||||||||||||
NET WORTH | ||||||||||||||||||||||||||||
Unrealized profits or loss | - | - | - | - | 1,678,234,50 | - | - | |||||||||||||||||||||
INCOME | ||||||||||||||||||||||||||||
Interest | 22,18 | 5,49 | 197,02 | - | 5,659,45 | - | 12,251,80 | |||||||||||||||||||||
Commissions | 3,00 | - | 13,281,73 | - | 11,218,05 | - | 3,757,00 | |||||||||||||||||||||
Rentals | - | - | 3,209,22 | 280,97 | 519,42 | - | - | |||||||||||||||||||||
Other income | - | - | 898,218,73 | 17,832,45 | 898,331,95 | 538,939,00 | - | |||||||||||||||||||||
EXPENSES | ||||||||||||||||||||||||||||
Interest | 1,95 | 0,01 | 1,958,44 | - | 14,001,33 | - | 4,675,00 | |||||||||||||||||||||
Commissions | - | - | 4,443,00 | 3,880,17 | 2,354,50 | - | 2,526,00 | |||||||||||||||||||||
Fees | 184,55 | 2,401,77 | - | - | - | - | - | |||||||||||||||||||||
Rentals | - | - | 304,51 | 55,14 | 51,40 | - | - | |||||||||||||||||||||
Other expenses | 3,108,00 | 1,979,31 | 22,982,81 | 51,320,85 | 15,414,34 | 214,00 | - |
142
(30) | Other Disclosures |
On June 30, 2012 and December 31, 2011 the total number of employees of the parent company and consolidated entities as well as personnel expenses is as follows:
June 30 | December 31 | |||||||||||||||
No. Total | Personnel expenses | No. Total | Personnel Expenses | |||||||||||||
Directors | 1,244 | $ | 79,764 | 1,279 | $ | 81,474 | ||||||||||
Other | 50,287 | 1,001,254 | 47,841 | 957,734 | ||||||||||||
Total | 51,531 | $ | 1,081,018 | 49,120 | $ | 1,039,208 |
(31) | Relevant Events |
On January 23, 2012, Grupo Aval Limited a subsidiary in Cayman Islands of Grupo Aval Acciones y Valores S.A. issued bonds in the international capital market, in accordance with Regulation S of the Law of Capital Markets and Rule 144A, for a total of US$600 million, with maturity in January 2017 with a deduction of 54.2 Basic points, price of 99,458% with an annual interest of the 5.25%.
143
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: April 26, 2013
GRUPO AVAL ACCIONES Y VALORES S.A. | ||||||
By: | /s/ Jorge Adrián Rincón Plata | |||||
Name: | Jorge Adrián Rincón Plata | |||||
Title: | Chief Legal Counsel |