REPORT FROM THE BOARD OF DIRECTORS AND THE PRESIDENT OF BANCÓLDEX 2011

REPORT FROM THE BOARD OF DIRECTORS AND THE PRESIDENT TO THE GENERAL SHAREHOLDERS MEETING ENE

2011

FEB

MAR

ABR

MAY

JU

REPORT FROM THE BOARD OF DIRECTORS AND THE PRESIDENT TO THE GENERAL SHAREHOLDERS MEETING ENE

2011

FEB

MAR

ABR

MAY

JU

INTRODUCTION

REPORT FROM THE BOARD OF DIRECTORS AND THE PRESIDENT TO THE GENERAL SHAREHOLDERS MEETING 2011

INTRODUCTION

INTRODUCTION During 2011, the country’s performance exceeded the expectations of analysts, in contrast to the behavior of the economies of Europe and the United States, wherein a general deterioration of the financial outlook was observed. Colombian economy showed better dynamism and entered a path of growth which became consolidated during the last quarter of the year. In addition, an excellent business environment was perceived, accompanied by a good behavior of foreign investment and exports, as well as a lower unemployment level. On the other hand, the year was characterized by a significant credit growth to accompany the good dynamism of the productive apparatus.

For Bancoldex, the favorable business environment was reflected in an excellent annual credit behavior. Particularly, the last month of the year showed the greatest historical levels of disbursements both in local and foreign currencies. This optimistic context allowed expanding the deepening of attention to Small and Medium Enterprises (SMEs) throughout the year, strengthening regional presence. Likewise, the Bank focused in offering products destined for industrial modernization and reconversion, extending and strengthening the financial resources distribution network, supporting the purchases of Colombian goods and services. It also continued driving the entrepreneurial strengthening with training programs in Management and continued the private equity funds investment program. Finally, aware of its function as Development Bank, it supported sectors with specific problems such as the seasonal rains with special conditions.

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This good performance was confirmed with the results obtained in an evaluation with an impact analysis of Bancoldex credit activity on performance of enterprises, emphasizing the effect of credit lines modernization. This impact assessment found a positive correlation between the use of medium and long term of Bancoldex credit and growth of companies during the years following the credit disbursement. On the other hand, the companies who received Bancoldex credits reflected a production increase of 24%, increases of employment levels of 11%, investment 70%, and a productivity 10% compared to those companies that did not receive resources from Bancóldex. In addition, a positive effect of the short term lines was outstanding within the export sector, which increased its sales levels abroad and broadened the export supply.

1 | Impact evaluation carried out for Bancoldex by the IDB under the coordination of Mr. Fernando De Olloqui in Alliance with the economists Ms Marcela Eslava and Marcela Meléndez. The study covered the period between 2000 and 2009.

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On the other hand, during 2011 a new era began for Bancoldex, strengthening its function as Development Bank. Its commitment with the National Development Plan “Prosperity for all” represents new challenges to attend and promote entrepreneurial development in the country. In such sense, the Government strategy to design and implement an Integral Development Banking model, within the framework of sustainable growth and competitiveness was established as one of the strategic guidelines to support the growth locomotives and employment in the country. In accordance with the foregoing guideline, Bancoldex will migrate to this model, incorporating development agency functions and offering services supplementary to credit.

To achieve the foregoing, the Bank was in charge of carrying out the actions necessary to implement the Development and Innovation Unit (DIU), as well as establishing the timetables for the activities and requirements of resource management both for the Modernization and Innovation Fund for Micro, Small and Medium enterprises, such as the Productive Transformation Program (PTP). his process of structuring, assembly and operation of the Development and Innovation Unit was successfully completed in the month of October. For the Bank, the foregoing implied an adjustment and learning process throughout the year which concentrated on supporting the implementation of priority strategic projects relating to the structuring of new roles to be assumed. On its part, the reallocation of resources, the strengthening of processes and the construction of an adequate infrastructure allowed a year ending with satisfactory management results.

With regards to the Investment Program “Banca de las Oportunidades”, the activity focused throughout the year on strengthening the instruments to increase population coverage and banking services accessibility. In this sense, the consolidation of the increase in coverage extension in 183 municipalities, the opening of 22 Non Banking Correspondents (NBC) in marginal neighborhoods, the design of financial education programs, the implementation of mobile banking for payment of conditioned subsidies, the technical assistance to implement community banking methodologies and finally, the fulfillment of the credit goal for micro-entrepreneurs.

The organizational effectiveness, as an element necessary for attaining the mission’s results, continued with its consolidation process grounded on strengthening its human capital, versatile and robust technological structures and a functional architecture oriented towards quality and excellence.

Finally, aware of the responsibility and the new challenges for Bancoldex of strengthening the entity as an Integral Development Banking Model, the mission’s and vision’s strategic guidelines

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REPORT FROM THE BOARD OF DIRECTORS AND THE PRESIDENT TO THE GENERAL SHAREHOLDERS MEETING 2011

INTRODUCTION

were modified, in order to include the new elements in force to set the Framework of the management as from 2012.

Following, we submit the complete report of the Bank’s performance during 2011, including the corresponding regulating mandates, aspects relating to risk management, quality management, internal control system, legal situation, corporate government, transactions with parties related to capital, subordinates, intellectual property and copyrights, among others.

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BEHAVIOR OF THE ECONOMY DURING 2011

REPORT FROM THE BOARD OF DIRECTORS AND THE PRESIDENT TO THE GENERAL SHAREHOLDERS MEETING 2011

BEHAVIOR OF THE ECONOMY DURING 2011 During 2011 the world economy showed different results that maintained uncertainty regarding the soundness and speed of the 2008 and 2009 financial crisis recovery. Dynamism slower than expected was observed in the United States, situation that led to a reduction of the GDP growth 2 forecast for 2011 , whose current estimate is 1.5%. The labor market slowly improved and the 3 average unemployment rate decreases compared to that recorded in 2010 ; nevertheless, it maintained itself at high levels. The real estate market activity continued to be Peak and the prices are still pending recovery. On its part, Europe showed a general deterioration of the economic outlook, which was driven by the fiscal crises of countries such as Greece4, Portugal and Ireland, among others5, which led to questioning the feasibility of the Euro and of the European Union itself. The boom of emerging markets such as Brazil, China, India and Russia helped to mitigate the negative impact of the economic context of advanced economies. Notwithstanding, during 2011 a 6 slight downturn was observed in the growth of such countries .

The foregoing, added to the loss of investors confidence facing the search for fast and efficacious solutions by the political authorities of the U.S. and Europe, led to an increase of volatility in the financial markets and a preference for refuge assets. On its part, monetary authorities implemented measures to provide sufficient liquidity to the markets and avoid contractions in the 7 credit supply to the economy .

On its part, during 2011, Colombian economy showed a better dynamism and expects a GDP growth of nearly 5.5%. The growth was driven by the behavior of internal demand through greater investment, as well as through an increase of consumption of households. Between January and September 2011, the household consumption recorded an annual variation of 6.7%, while

2 | In the World Economic Outlook of April 2011m the International Monetary Fund (IMF) expected a GDP growth of 2,8%, while the forecast of the report of September 2011 decreased to 1.5%.

3 | Between January and December 2011 the unemployment rate was 8.9% compared to 9.6% for the same period in 2010.

4 | Greece was the country showing the greatest fiscal deterioration in the Euro Zone, reason for which in May the European Union and the IMF had to provide a second bail out package of EUR 78.000 million.

5 | Also. A fiscal deterioration stood out of countries such as Italy and Spain, situation that was reflected in a significant deterioration of their sovereign bonds.

6 | With the exemption of Russia, the countries registered growth rates lower than those observed during 2010.

7 | In August 2011, The Federal Reserve of the U.S. announced it would maintain the overnight interest rate unaltered in 0.25% until mid 2013. On its part the European Central Bank reduced the overnight interest rate from 1.5% to 1.0%.

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investment (gross capital formation) registered 18.7%. On the side of supply, GDP growth was led by the exploitation of mines and quarries, sector that has shown a good dynamism during past years and has consolidated as one of the main receptors of foreign investment. Between January and September, this sector accumulated growth of 12.6%, followed by sectors relating to services, such as transport, storage and communications and the trade sector, with variations of 7.2% and 6.6% respectively. Finally, the economic results were reflected by the evolution of the labor market; in November the unemployment rate reached 9.2%, compared to 10.8% registered during the same period of 2010.

Regarding foreign trade between January and October a significant growth was observed in 8 exports (42.2%) , due to the exceptional dynamics of sales of traditional products (56.8%). On its part, non traditional exports increased in 17.6%, although their behavior was limited by the slow recovery of the commercial partners such as the U.S. and the European Union and by the remarkable reduction of trade with Venezuela. With respect to imports, its behavior was favored by internal demand and between January and October the growth reached 37.1%. The foregoing led to a generation of surplus in the balance of trade, which reached USD 3,401 million in October, as well as a strengthening of the exchange terms.

As of the closing of 2011, inflation reached 3.73%, within the range goal fixed by the Central Bank (Banco de la Republica) (2%-4%). The recovery of the economy as well as the impact of the seasonal rains over food prices generated pressures to increase the consumer price index throughout the year. The foregoing led the Central Bank to initiate a monetary contraction policy through the increase of the reference interest rate. During the year, the Central Bank increased the repo rate seven times from 3.0% to 4,75%.

A strengthening of the Colombian Peso (COP) was observed throughout the year and the average exchange rate was COP 1,848,17, namely COP 49.72 less than that registered in 2010 (COP 1,898.89). The foregoing is explained due to the fast recovery of some of the emerging economies of Asia and Latin America, which was reflected in larger inflows of direct foreign investment capital (DFI) and the consequent appreciation of currencies. In the Colombian case, between January and September, the DFI registered an increase of 88.7% compared to 2010 and reached USD 10,821 9 million . Nevertheless, due to the uncertainty of the fiscal situation of Europe, as from September risk aversion in the financial markets increased generating preferences for refuge assets and strengthening of the USD. In accordance with the foregoing, the Exchange Rate Representative of

8 | As of October closing, total exports reached USD 46,297 million.

9 | Preliminary data of the Balance of Payments. Source: Central Bank (Banco de la Republica).

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REPORT FROM THE BOARD OF DIRECTORS AND THE PRESIDENT TO THE GENERAL SHAREHOLDERS MEETING 2011

BEHAVIOR OF THE ECONOMY DURING 2011

the Market (ERM) at the year closing was COP 1,942.07, which is equivalent to a depreciation of 1.5%.

With respect to fiscal matters, a better dynamism of the economy had a positive impact on tax collection and the estimate growth for tax income for 2011 of the National Central Government 10 (NCG) is greater than 25% . The foregoing led to a reduction of the NCG deficit from 3.8% of the GDP on 2010 to 3.2% of the GDP in 2011. In accordance with the foregoing, the deficit of the Non Financial Public Sector (NFPS) and the Consolidated Public Sector (CPS) shall be 2.8% and 2.9% of the GDP respectively. It is worth mentioning that in June the Senate of the Republic approved the 11 bill establishing the implementation of the Fiscal Rule , with which it shall seek a greater fiscal discipline and assuring a greater sustainability of public debt. The good growth perspectives as well as the greater soundness of public finances were determining factors for the rating agencies Moody’s, Standard and Poor’s and Fitch Ratings to grant the investment grade to the country during the first semester of 2011 for long term sovereign debt.

The economic growth rhythm is expected to be maintained during 2012, thanks to a positive dynamism of a significant portion of the economic sectors, investment and foreign trade.

Nevertheless, due to economic activity performance, we could expect potential inflation increases as well as of interest rates. Notwithstanding, there are risks within the international environment, such as a growth slowdown in the U.S. and deterioration of the European crisis, that could affect the dynamics of the economic activity, especially that relating to foreign trade.

10 | Preliminary data of the Ministry of Finance and Public Credit. December 22, 2011.

11 | Mechanism that allows strengthening the fiscal discipline by establishing single goals over the balance of the Central Government, in such a manner that its expenses are in accordance with its long term structural income. Compliance of such single commitments shall allow the strengthening of public finance in the medium term and guaranteeing the sustainability of the public debt and the macroeconomic stability of the country.

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FINANCIAL SECTOR

REPORT FROM THE BOARD OF DIRECTORS AND THE PRESIDENT TO THE GENERAL SHAREHOLDERS MEETING 2011

FINANCIAL SECTOR12 Despite the fact that 2011 was characterized by an environment of high uncertainty of the international financial markets, the Colombian financial system showed a positive behavior. The soundness of the national banking, the low dependence on international financial markets and the good performance of the economy allowed this result. Thus, as of November 2011, the credit establishments accumulated COP 3.1 trillion, a figure greater than the one registered in 2010 (COP 5.4 trillion).

A positive dynamism of credit was observed throughout the year. As of November 2011 the 13 portfolio balance reached COP 213.1 trillion and showed an annual growth of 22.2% . The consumption portfolio recorded the greatest expansion per modality, showing an annual variation of 25.2% followed by the commercial portfolio 21.5%14. The growth of the portfolio was accompanied by a good credit quality, product of the economic recovery and the strengthening of the processes of placement and Collection by the financial intermediaries. In November 2011, the 15 due portfolio represented 2.8% of the total portfolio and the level of provisions was 163.2% .

Notwithstanding, the consumption portfolio recorded a slight deterioration compared to the indicator registered during the first months of the year.

Investments recorded a growing trend and continued with a significant participation in the assets (20%), contributing positively to profits. Among the investments, the public debt certificates had a participation of l 57%16 and recorded appraisements which contributed a 19% of the total 17 income .

The capitalization level continued to be one of the strengths of the financial system entities.

Average solvency of these entities was 14.6% and exceeded in 5.6 per cent points the minimum required. The capital plus reserves grew 27% because several entities adopted the capitalization of a great portion of their profits obtained during 2010 as a policy.

12 | Only includes credit establishments.

13 | In 2010, for this same period of time, the growth was 16.4% 14 | The mortgage portfolio grew 12.4% as a result of the incentives established by the Government and the micro credit portfolio grew 38.4% supported on the conversion of some entities not subject to the surveillance of the Financial Superintendence in banks.

15 | As of December 2010, the quality indicator was 2.9% and the hedging indicator was 171.2%.

In November 2011 they participated with 65%. Calculations by Bancoldex.

16 | In November 2011 they participated with 65%. Calculations by Bancoldex.

17 | Considering the most liquid reference of the market, the Public Debt Certificates (TES) with maturity in July 24, 2010, it was observed that such certificates accumulated a drop of 56 basis points, which was reflected in a greater re-appraisement of such certificates.

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In general, the profitability indicators18 remained at adequate levels and the profits were generated mainly by greater portfolio income, important dynamism of recovery and income due to investments. Notwithstanding, the financial margin decreased due to the effect of greater funding rates.

For 2012 the expectation is that credit will continue to show positive growth dynamics, although at a lower pace than in 2011, particularly for some types of portfolio, especially consumption, since some entities will increase the requirements for the placements. On its part, it is expected that liquidity of the system is strengthened thanks to the application of new strict regulations on the matter, similar to the new Basel standards. Nevertheless, that could restrict the availability of liquid resources in the market, and eventually they could generate pressures on funding interest rates.

On the other hand, the profitability is expected to continue to be adequate, although with lower margins due to higher financing costs, lower income for services and greater requirements of liquid assets. Notwithstanding, the solvency levels shall continue to be adequate.

18 | In November 2011, the system recorded a ROAA of 2.6% compared to a ROAA of 2,5% in 2010.

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MANAGEMENT AND ACCOMPLISHMENTS 2011

MANAGEMENT AND ACCOMPLISHMENTS 2011 2011 was a year characterized by relevant facts within the development of the Institution: • The first refers to the role to be accomplished by the Institution within the National Development Plan of the new government.

• The performance of the credit business as support to the growth requirements of the productive apparatus as a set, trade sector, industry and tourism, as well as specifically what relates to accompaniment of foreign trade.

Under these facts, following are the details of the progress and achievements in each front:

1 | BANCOLDEX AS RESOURCE ADMINISTRATOR

SECOND FLOOR BANK

SPECIAL PROGRAMS ADMINISTRATOR

COMPREHENSIVE

DEVELOPMENT FINANCIAL ACTIVITY

MODEL

BANK OF OPPORTUNITIES DEVELOPMENT AND INNOVATION UNIT MODERNIZATION AND INNOVATION FUND PRODUCTIVE TRANSFORMATION PROGRAM

Development and Innovation Unit - iNNpulsa Colombia The basis of Law 1450 of June 16, 2011, through which the National Development Plan 2010-2014 - “PROSPERITY FOR ALL”- was issued, established that the National Government shall support the entrepreneurial and innovative activity of the companies through a set of modern industrial policy instruments, integrated through the creation of the development banking. This concept shall allow coordinating different financial and non financial existing instruments as well as the design of new instruments taking into account the needs of entrepreneurs and businessmen.

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REPORT FROM THE BOARD OF DIRECTORS AND THE PRESIDENT TO THE GENERAL SHAREHOLDERS MEETING 2011

MANAGEMENT AND ACCOMPLISHMENTS 2011

Additionally, the basis of Law 1450 of June 16, 2011 established that Bancoldex shall migrate to a model of integral development banking, incorporating functions as a development agency and offering its services and activities supplementary to credit.

In such sense, during 2011 Bancoldex assumed the challenge of implementing the Development and Innovation Unite, in accordance with the direction defined by the Government in the National Development Plan, with the objective of driving the productive sectors of the country and achieving that more entrepreneurs engage in high impact processes with emphasis in innovation, acting through four (4) major strategies:

1. Innovative Dynamic Enrtepreneurship: The objective is to support the development of an ecosystem for innovative Entrepreneurship, its coordination as well as the strengthening of an entrepreneurial culture of the country, promote the creation of companies with high value and technological basis, through financial and non financial instruments such as: (a) allocation of non reimbursable investment resources for entrepreneurial prototyping services, pre-seed and seed capital; (b) promotion of the risk capital industry through seed capital funds and Networks of angel investors; (c) support of the Academy, research centers and institutions for non academic accompaniment for strengthening those activities supporting entrepreneurship.

2. Entrepreneurial Innovation and Competitiveness / Micro, Small and Medium Enterprises (MSMEs): The objective of the Modernization and Innovation Fund for Micro, Small and Medium Enterprises is to strengthen this entrepreneurial segment. The Fund, operated through open counter invitation based on the demand of non reimbursable confined resources, namely permanent invitations up to the exhaustion of resources, shall focus such resources for the development of projects oriented towards entrepreneurial innovation, whether during the development of new products and/or services, development of new processes, and in association schemes such as development of suppliers, distributors or cross linking.

On October 2011, the Fund assumed the commitments acquired by the former Fomipyme in order to continue with the projects under way. The challenge for 2012 is to implement an administrative and operation model designed for the new Fund, which shall concentrate in supporting

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entrepreneurial innovation and modernization in formalized MSMEs. Likewise, a challenge is to assume the management of resources of contributors of the national and international orders, through the creation and operation of special programs for MSMEs.

3. Innovation in major companies and promotion of R & D: As part of innovation cultural strengthening, the work with major companies focuses on promoting in-house systemic innovation programs, which allow a continuous improvement and positioning vis a vis its similar companies as a competitive advantage. The creation of R & D centers would be a result of this work, to develop all its activities in-house and to attract research by international companies, focusing on innovation in national business.

4. Innovation Program for Innovation and Regional Strengthening: A joint effort with the regions through Regional Competitiveness Commissions seeks to generate local capacities for identifying initiatives and proposals of projects, through regional clusters and their coordination with public and private resources to implement them. Competitiveness strategic projects shall be coordinated through a management and structuring program to promote innovation and productive transformation with a regional emphasis, including the needs of resources and sources of public and private funding, along with Bancoldex rediscount lines as an applicable instrument, to implement projects as well as pilot projects, establishing a Suppliers Development Program. It initiates with the Hydrocarbons sector and high-end mining through the definition of strategic projects with each of the companies allowing a productivity increase and technical capacity within the sector.

Productive Transformation Program Article 50 of the National Development Plan 2010-2014, established that the Productive Transformation Program, originally created by the Ministry of Commerce, Industry and Tourism in 2008, should be administered by Bancoldex.

Due to the foregoing, in September 2011, Bancoldex and the Ministry of Commerce, Industry and Tourism, entered into the agreement 187 of 2011, through which the institutional framework is created to manage the Program.

The strategic objective of the Productive Transformation Program is to

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REPORT FROM THE BOARD OF DIRECTORS AND THE PRESIDENT TO THE GENERAL SHAREHOLDERS MEETING 2011

MANAGEMENT AND ACCOMPLISHMENTS 2011

promote productivity and competitiveness of sectors19 with a high export potential, acting as an instrument for making the most of free trade agreements.

Progress and achievements of the Program during 2011 à

Identification and engagement of 4 new sectors (reaching a total of 16 sectors).

à Exports of those sectors participating in the PTP reached over USD 5.9 billion, exceeding the

results expected for this period. à Incorporation of the Program to Bancoldex, increasing its Budget from COP 9.74 billion in

2011 to COP 24 billion in 2012. à Positioning and consolidation of the PTP with other government entities and international

organizations, promoting projects such as: ¤ Orientation of COP 15 billion pesos deriving from the SENA and Colciencias for innovation

and technological development in sectors of the Program. ¤ Obtaining international cooperation resources for programs and projects seeking to

increase competitiveness of the sectors belonging to the Program. As an example, Technical Cooperation among the sectors and EU, CBI, SECO, JICA, KOICA and GEF-CAF. à Broadening and strengthening of the work team to guarantee an efficient response and a

greater impact to the needs of the sectors. à Focus of the work of the PTP sectors through the identification of 4 flagship projects and 8

priority initiatives. à International acknowledgement to the Program for its leadership in implementing innovating

policies in productive transformation, by McKinsey & Co and Oxford University in England. à The first Major National Conference of Productive transformation – under the framework of

the Agreement for Prosperity No. 48- was carried out in the city of Medellin, including: ¤ The attendance of more than 600 entrepreneurs of first level and 200 public officers.

19 | The PTP sectors are son: metallurgical and y iron and steel, vegetables and fruits, Dairy and tourism of nature (identified in 2011); and industry of automotive parts and vehicles,; electric power, related goods and services; publishing and graphical communication industry; leather, textiles, clothing, fashion and design; health tourism; cosmetics and cleaning articles; business processes outsourcing (BPO); software & IT; shrimp farming; bovine meat, palm, oils, vegetable fats and bio-fuels; chocolate making, confectionery and their raw materials.

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¤ -Workshop were developed for each sector in which the public and private sectors

reached agreements and work initiatives with due dates and responsible persons.

Investment Program “Banca de las oportunidades” EThe investment program of “Banca de las Oportunidades” (IPBO) was created by the Decree 3078 of September the 8th of 2006, incorporated in Decree 2555 of 2010. This initiative emerged as a long term policy from the National Government and is oriented towards promoting access to financial services for the population, with emphasis in low income families, aiming to promote the country’s development and looking for social equity. By mandate of the Ministry of Finance and Public Credit, the program is administered by the Colombian Foreign Trade Bank S.A. -Bancoldex.

The Program seeks to improve the financial inclusion level and to expand the coverage to all municipalities, with products and financial services adequate for all segments of Colombia’s population.

The Banca de las Oportunidades network is comprised by Banks, Credit Unions with financial activity, Microcredit NGO entities, Financing Companies, and existing Insurance Companies which are used as mechanisms to attend and expand the program.

During 2011 the development of the programs for extending the coverage of Non Banking Correspondents (NBC) continued reaching 183 additional municipalities that did not have financial presence, leaving 10 municipalities without presence.

Additionally, the co-financing programs continued to increase the coverage with the participation of 11 NGOs, 13 Credit Unions and 2 Financing Companies, consolidating presence in 104 municipalities. It is worthwhile mentioning that after the programs are completed, the entities maintain the contact points open in such municipalities and furthermore they reached neighboring municipalities with financial presence.

During the development of agreements entered into for co-financing the opening and promotion of Non Banking Correspondents (NBC) in marginal neighborhoods, during 2011 22 NBC were opened in zones of socio-economic strata 1 and 2 in marginal neighborhoods of the cities of Barranquilla, Bogota, Medellin, Bucaramanga, Cartagena and Cali, providing coverage to all the zones of these cities that lacked financial presence.

With the purpose of promoting the savings culture in families with low resources, through the

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REPORT FROM THE BOARD OF DIRECTORS AND THE PRESIDENT TO THE GENERAL SHAREHOLDERS MEETING 2011

MANAGEMENT AND ACCOMPLISHMENTS 2011

agreement with Carvajal Tecnología, it was possible to train 28,000 women belonging to Familias en Acción.

Since 2008 the Banca de las Oportunidades Program has promoted the implementation of the mobile banking as a channel and means to provide access to banking. During 2011 different schemas of Mobile banking were launched as a massive solution for financial inclusion for the poorest population, to allow carrying out transactions, in some cases free of charge. The Banca de las Oportunidades Program with Social Action (currently the Administrative Department for Social Prosperity) carried out a pilot project to perform payment of conditioned subsidies of beneficiaries of Familias en Acción through Mobile banking. Such program counted with the participation of Davivienda, AvVillas, Banco Agrario and Banco Popular, whose mobile solutions remained in the market to attend the different segments of the country’s population in a massive manner.

In an alliance with the Confederation of Credit Unions of Colombia – Confecoop, Banca de las Oportunidades developed a Financial Education program for Credit Unions with financial activity in order to train trainers. Through three workshops in the cities of Bogota, Medellin and Bucaramanga, the methodology was conveyed to 52 Credit Unions in Colombia, who shall replicate the Financial Education.

Through the development of a consultancy program to carry out a pilot project to issue and place a credit card for micro-entrepreneur women, in November 2011 the Banco Agrario launched such card.

Based on the positive results of the pilot Savings Groups and Local Credit and with the purpose of continue with the implementation of this methodology reaching poor population, during 2011 the expansion phase of the methodology reaching the poor population was initiated conforming 600 groups with 9,600 beneficiaries focused in the population of United Networks. In order to develop such project, the financing was provided by Acción Social and DNP. In addition, a donation was made of € 865.400 by Alliance for Financial Inclusion (AFI) and GIZ to develop a model of adjustment to the financial system of the beneficiaries of the Savings Groups and Local Credit and to perform an impact assessment.

Seeking to increase the supply of credit and savings products adequate for the population with lower income, Banca de las Oportunidades through the firm AECOM INTERNATIONAL is carrying out a Technical Assistance Program to implement the methodology Community Banking in 6 intermediary institutions, in 14 departments and 54 municipalities. As of September, 2011, 22,452 clients had been engaged through this project.

On the other hand, during 2011 Banca de las Oportunidades initiated the project with technical

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assistance for the design and implementation of savings and credit products to engage 100,000 active low income clients with micro-savings and/or micro credit products through Credit Unions.

For such end, WOCCU was hired as technical assistant, who in December 2011 had pre-selected 12 Credit Unions, through which this goal will be met.

In order to support the lower income population for mitigating risks and preventing they fall below the line of extreme poverty while facing a casualty, the Banca de las Oportunidades awarded the bid for the Development of a Special Product of Micro-Insurance for people integrating Hogares de las Familias of the United Network.

To contribute to the population affected by seasonal rains, in 2001 Banca de las Oportunidades signed an amendment to the agreement entered into with FNG to support with an automatic guarantee 80% of the credits granted by the entities to natural persons, micro and small enterprises affected by the seasonal rains.

In connection with the total Credits to micro entrepreneurs through the Banca de las Oportunidades network, in 2011 more than 2 million micro credits were disbursed for over 6 trillion pesos.

As of December 2011 there are 19,927 Non Banking Correspondents (NBC), opened by 14 entities, in 918 municipalities of Colombia. During the same period of the previous year, the number of Non Banking Correspondents (NBC) was 9,698, opened by 11 entities, in 857 municipalities The NBC mechanism was implemented in 2011 by: Colpatria, Finamerica and Bank WWB.

19,927

18,595 14,942 12,569

DEC/11

NOV/11

OCT/11

SEP/11

AUG/11

JUL/11

JUN/11

MAY/11

APR/11

6,676 FEB/11

JAN/11

DEC/10

NOV/10

OCT/10

SEP/10

13,296

12,346

9,843

9,458

AUG/10

16,462

7,628 6,229

6,104

18

19,220

9,698

MAR/11

NUMBER OF NBCs OPENED

9,732

8,315

REPORT FROM THE BOARD OF DIRECTORS AND THE PRESIDENT TO THE GENERAL SHAREHOLDERS MEETING 2011

MANAGEMENT AND ACCOMPLISHMENTS 2011

2 | BANCOLDEX AS A BANK FOR ENTREPRENEURIAL DEVELOPMENT AND FOREIGN TRADE Year 2011 was a record year with the greatest level of disbursements in the history of the Bank.

During this year, the Bank disbursed COP 4.2 trillion due to an exceptional demand of dollars for USD 1.161 billion. This happened during a year in which the Bank assumed new challenges initiating a consolidation process as agency for development and took the leadership in matters such as environmental financing in the country.

Thus, during 2011 the Bank’s management focused on the following principles: à

As a development Bank, to deepen in the financing of modernization of the productive apparatus and the consolidation of the MSMEs entrepreneurial segment with a new element: ¤

Consolidation of the environmental policy of the Bank generating internal control processes and the creation of the first line 100% green, seeking to deliver resources exclusively directed towards the control and improvement of the environmental impact of the companies.

à

In its role as foreign trade promoter, to support the internationalization of the economy with emphasis in market diversification.

à

Being one of the main tools of action of the National Government, to attend the conjunctural needs present in the country during the year, such as:

à

¤

The recovery process of the entrepreneurial activity in the zones affected by the seasonal rains, along with the financial support of investments to allow the mitigation of the effects of natural disasters in the future.

¤

To become the liquidity support for enterprises with exports to the United States during the months of suspensions of the ATPDEA benefits prior to the approval of the Free Trade Agreement with that country.

Initiation of the consolidation process of the Bank as Agency for Development through the creation of new programs or their transfer to the Bank from entities such as the Ministry of Commerce, Industry and Tourism.

In this manner Bancoldex fulfilled the medium and long term strategic objectives, which may be summarized as follows:

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à

Entrepreneurial modernization: COP 1.28 trillion in financing for modernizing the productive apparatus, including disbursements for COP 635 billion through the new Line for Entrepreneurial Modernization and COP 329 billion for the program “aProgresar” whose objective is the productive improvement of Micro, Small and Medium Enterprises (MSMEs).

à

Medium and long term financing: 53% of the total disbursements were placed with larger terms, attaining the objective proposed of term transformation, including medium term financing in dollars for market diversification.

à

MSMEs approach: 40% of the total disbursements were directed to this segment.

à

Support to economy’s internationalization, foreign trade: 1. Financing: USD 156.58 million.

2. International Banking Operation (IBO): USD 76.3 million.

à

Regional coverage: the Bank maintained a strong coverage and reached 719 municipalities attended during the year with emphasis in the zones affected by seasonal rains.

à

Likewise, the Bank maintained its goal of deepening its role as a multibank for development.

Thus it carried out efforts for strengthening its portfolio initiating a structuring of new products, among which the creation of an immediate revolving credit for entrepreneurs and a new scheme of invoices international discount stand out to drive exports of Colombian products.

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REPORT FROM THE BOARD OF DIRECTORS AND THE PRESIDENT TO THE GENERAL SHAREHOLDERS MEETING 2011

MANAGEMENT AND ACCOMPLISHMENTS 2011

The steps taken by the Bank to fulfill these objectives was oriented towards the following areas:

1 | Products Consolidation Credit Lines and Special Quotas In 2011, Bancoldex strengthened its portfolio in several ways: à

12 special new regional quotas were published, besides the extension of some of the existing ones, in agreement with municipal and departmental entities to attend enterprises in regions with preferential conditions and to promote credit dynamics. The foregoing allowed 2011 to stand out as the year with the greatest dynamism in disbursements for these types of lines with COP 210.53 billion delivered.

à

New lines for working capital, entrepreneurial sustainability and modernization were launched in September to broaden the portfolio for attending entrepreneurial basic needs. The great acceptance of these lines allowed reaching disbursements for COP 1.11 trillion in 4 months of operation and to become one of the leading products of the Bank.

à

In agreement with the Ministry of Culture, the Bank published a special line directed to drive the development of MSMEs dedicated to cultural activities, with an allocation of COP 4 billion of which COP 268 million have been disbursed.

2 | Strengthening the Bank’s regional presence Deepening of MSMEs attention was achieved through strategic alliances carried out with labor guilds, chambers of commerce and universities. This allowed the coordination of disclosure activities for the product portfolio, training, participation in fairs and advisory for its affiliates.

Furthermore, the coverage of the Program Junior Executives was extended to two new cities, strengthening the presence of the Bank in Tunja and Cucuta, supplementing the program for executives in Villavicencio, Pereira, Bucaramanga, Pasto, Neiva and Ibague.

3 | Provide a tool to support sectors with specific problems During 2011, several alliances took place with the National Government and the Ministry of Commerce, Industry and Tourism to generate packages of credit lines directed towards the attention of circumstantial problems such as the lack of liquidity of enterprises with exports to the United States, caused by the suspension of the ATPDEA tariffs in February. This was addressed through supplementary lines to cover the liquidity needs of the companies, promoting

21

investments for industrial reconversion and the penetration of new markets. In 2011 these lines delivered resources for USD 253 million.

Additionally, along with the Ministry of Commerce, special lines were created to support companies located in border zones Colombia – Venezuela, lines through which resources were delivered for COP 21.933 billion to drive the productive development in these areas.

Aware of the negative effects of the continuous rains in several regions in the country, the Bank offered lines specifically directed to those companies affected by the seasonal rains, attending investments for recovery, mitigation and future control of the effects of the NiĂąa Phenomenon.

These lines disbursed resources for COP 48.762 billion during the year.

4 | Promote and encourage entrepreneurial productive transformation through entrepreneurial modernization and reconversion Although the Bank focused great part of its resources for supporting sectors with liquidity problems, disbursements for entrepreneurial modernization maintained a good dynamism.

Between January and December 2011, these reached COP 1.28 trillion, (44% greater than in 2010) representing 30% of the total disbursements of the Bank during a complex year for this type of financing.

In this sense, both the aProgresar program as well as the new line for modernization drove financing of investment plans to improve entrepreneurial productivity and competitiveness. As from its beginning, aProgresar has disbursed resources for more than COP 3.7 trillion. In 2011, aProgresar disbursements reached the sum of COP 329 billion and the Entrepreneurial Modernization line reached COP 645 billion.

5 | Expand and strengthen the financial resources distribution network In 2011, Bancoldex included 8 new entities oriented towards micro-entrepreneurial credit as financial intermediaries with credit line allocation. The network formed by financial entities allies of Bancoldex allowed the bank to count with coverage in 29 departments in the country throughout the year.

In addition, Bancoldex offered training and updating both for existing intermediaries as well as for those recently engaged, all of which concentrated in the promotion of the utilization of credit lines

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REPORT FROM THE BOARD OF DIRECTORS AND THE PRESIDENT TO THE GENERAL SHAREHOLDERS MEETING 2011

MANAGEMENT AND ACCOMPLISHMENTS 2011

TOWNS

719 SERVED PRESENCE IN

30

DEPARTMENTS

to attend working capital and modernization. Updating and promotion campaigns were developed covering the offices of the most affected regions, supplementing campaigns to generate business with enterprises. Likewise, a help tool called “Bancoldex Virtual Advisor” was updated directly at the intermediaries’ intranets with the purpose of facilitating the executives of financial entities the selection of the best option of Bancoldex credit line to be utilized.

6 | Technological Innovation: Electronic Rediscount The use of Electronic Banking was consolidated by financial entities under the surveillance of the Financial Superintendence, with which they substantially improved the response times to entrepreneurs regarding disbursements. Periodical follow-ups and surveys of satisfaction were carried out with the users of the system which showed acceptance levels over 90%.

In 2011 the process of implementation of entities not subject to surveillance of the Financial Superintendence was initiated, attaining the migration of 20% of said entities. This process is expected to be completed in 2012.

23

7 | Support the purchase of Colombian products and services Bancoldex, through continuous work with its correspondents abroad, concentrated in promoting the purchase of Colombian products and services, mainly in those countries where this trade is important and where customer diversification opportunities are found. In this sense, Bancoldex promoted the utilization of instruments such as purchaser credit, supplier post-shipping, documents discount, Liquidex dollars and international banking operation services. The foregoing contributed to and promoted Colombian foreign trade.

CORRESPONDANT BANKS IN

17COUNTRIES

In this sense, during 2011 disbursements of USD 156.6 million were reached in the item of financing abroad and International banking operation (IOB) business were attended for USD 76.3 million.

In addition, during 2011 a new international invoice discount product was designed to provide liquidity and negotiation tools in sales to Colombian Exporters. During the second semester of the year, visits were made, proposing and adjusting the scheme for the new product with banks abroad, eligible for Bancoldex. These entities shall provide a guarantee for the importer of Colombian products and services, so that Bancoldex may purchase the international receivable portfolio of Exporters. During the following months an operational pilot project will be implemented seeking its full application during 2012.

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REPORT FROM THE BOARD OF DIRECTORS AND THE PRESIDENT TO THE GENERAL SHAREHOLDERS MEETING 2011

MANAGEMENT AND ACCOMPLISHMENTS 2011

8 | To impulse entrepreneurial strengthening through offering “aProgresar – Entrepreneurial Management” programs to form entrepreneurs” The Bank strengthened the formation, training and updating management program “aProgresar Entrepreneurial Management”, through which it developed essential activities, virtual training publications and entrepreneurial accompaniment.

During 2011, this program focused on MSMEs, developing activities with contents directed towards specific conditions of the entrepreneurial segments. Within the framework of this program, several courses were carried out such as “aProgresar with my enterprise" directed towards micro-entrepreneurs, “Management Development for Micro and Small Enterprises”. In 2011 sectorial formation courses were developed and it was initiated with companies engaged with the tourism sector. These courses include on site and practical training, continued education, and developed the management topics that contribute to improve entrepreneurial management.

Strategic topics such as financial and environmental management, entrepreneurial social responsibility, and good practices of corporate government, human resources management, exchange coverage and international negotiation were developed through practical workshops.

With the support of the Inter-American Investment Corporation (ICC) with courses on international cooperation, courses were developed in Corporate Government in family enterprises in the cities of Medellin and Cali.

TRAINING

(

ACTIVITIES IN

PROGRAM 59 CITIES

)

8.270 T R A I N E D

ENTREPRENEURS

25

At the end of 2011, the Bank made available the information sheet and the multimedia course “Finances, the key for entrepreneurial success” fir entrepreneurs, including the main elements that an entrepreneur should take into account for the financial management of its company or business. The entrepreneurs also had access to multimedia courses such as "Management Advisor in International Negotiation" and “Management Aspects for Credit Access” and to support publications at the web site.

In addition, a videoconference scheme was implemented as a new tool to develop management topics and to obtaining increased coverage.

In conclusion, during 2011 on site activities were carried out in 59 cities and municipalities of the country, with the participation of 8,444 entrepreneurs. The program has contributed to strengthen the academic relationship of the entrepreneurial real sector, private actors and workers guilds, associations and chambers of commerce and the public sector, with the sole purpose of strengthening the managerial skills of the country’s entrepreneurs of the country.

9 | Support for entrepreneurial capitalization Financial Support During 2011 the private equity fund investment program - Bancoldex Capital continued. Three evaluations of equity funds were completed and four additional evaluations were initiated. The Investments Committee recently approved an investment commitment for COP 9,600 million in a 20 new fund that will invest in the tourism sector in Colombia . With the current investments of Bancoldex21, the Bank has channeled resources through equity funds for COP 128,018 million in 12 Colombian companies in several sectors. The foregoing means that for each peso contributed by Bancoldex to capital funds, the resources available duplicate for capitalization of Colombian enterprises.

Non financial support for the capital funds industry By the end of 2011 a Non Refundable Technical Cooperation agreement was entered into with the Inter-American Development Bank. The purpose of the agreement is to develop a program for Consolidating the Entrepreneur Equity Sector in Colombia, which includes the following

20 | This commitment will be effective once the fund manager completes the minimum capital to begin operating the fund.

21 | Investment commitments for COP 66,41 billion in four capital funds. This does not include Bancoldex investment commitment in the new fund that will invest in the tourism sector.

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REPORT FROM THE BOARD OF DIRECTORS AND THE PRESIDENT TO THE GENERAL SHAREHOLDERS MEETING 2011

MANAGEMENT AND ACCOMPLISHMENTS 2011

components: (i) strengthening of the capacity of local funds managers; (ii) strengthening of the capacity of local institutional investors; (iii) facilitating contacts between dynamic SMEs and the entrepreneurial equity sector; and (iv) promoting entrepreneurial equity investment /private equity of Colombia. The program’s duration is 4 years with a total amount of USD1,455,000 of which Bancoldex is committed to contribute with USD455,025 during the project development.

FINANCIAL SUPPORT INVESTMENT IN PRIVATE EQUITIES AND ENTREPRENEUR CAPITAL FUNDS. BANCOLDEX DOESN´T INVEST IN ENTERPRISES DIRECTLY.

NON FINANCIAL SUPPORT BANCOLDEX WILL CONTRIBUTE TO THE CONSTRUCTION OF THE PRIVATE EQUITIES INDUSTRY ECOSYSTEM. THIS, WITH THE PURPOSE OF INTRODUCING THE BEST PRACTICES OF THE INDUSTRY, THROUGH ACTIVITIES WITH INVESTORS, MANAGERS, ENTERPRISES AND OTHER ELEMENTS IN THE INDUSTRY.

10 | Environmental Management Financial institutions for development such as Bancoldex have stated to identify the role they may perform with respect to the environmental agenda of their countries as well as the synergies that may be established with multilateral banking, government entities and local actors. The foregoing, with the purpose of defining the intervention mechanism to solve faults in the market from the view point of financial intermediaries and the entrepreneurial sector.

The experience in the environmental issue of multilateral banking has allowed Bancoldex to take advantage of the synergies through alliances, which was reflected in the development of two technical cooperation projects agreed with the Inter American Development Bank –IDB-, which seek to generate and develop the capacity inside the Bank and to establish the intervention mechanisms.

The first technical cooperation completed the design of environmental and social management system for Bancoldex and in September 2011 initiated a pilot for its implementation within the Bank operations. The system is expected to be operational during the first semester of 2012. The

27

environmental management system has the objective of developing an efficient cash flow risk management, management of guarantees and reputation, including the environmental variable within the credit operations analysis.

11 | Financial Management Year 2011 was characterized by an important dynamism of disbursements, especially those of medium and long term, both in pesos as in dollars.

This juncture obliged Bancoldex to increase its financing in pesos and in dollars. Thus, the Bank was very dynamic in funding through Fixed Term Deposit Certificates (TDC) and Bonds indexed to the DTF (quarterly funding reference rate) and to the IBR (banking reference indicator). Regarding financing in dollars, the Bank utilized multilateral banking sources such as the IBD and CAF, and their correspondent lines.

On the other hand, the portfolio growth implied a significant provision to continue with the same standards of the Bank of portfolio protection, which had an impact on the financial results.

12 | Technological Modernization Project –Orion During 2011, the Bank continued with the development of the Technological Modernization Project – ORION- with which it projects to provide the institution with cutting-edge technology to allow efficiency improvement to attend the fundamental elements of the business, such as the customers, information management, change in processes, cost reduction, within a modern standardized architecture to facilitate development at all levels.

The development stage of Phase II was carried out throughout the year, corresponding to treasury and management modules, as well as initiating Phase II acceptance tests by the bank relating to the portfolio products, which allowed initiating the migration process of these products towards the new platform beginning with the month of December with credits and financial obligations in charge of the Bank.

The remaining portfolio products, as well as Phase III of treasury are projected to migrate during 2012.

13 | International Relationships and Cooperation The transformation process assumed by Bancoldex has evidenced the relevance of international cooperation as an important tool for the Bank’s development as for its sustainability as a Development Bank.

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REPORT FROM THE BOARD OF DIRECTORS AND THE PRESIDENT TO THE GENERAL SHAREHOLDERS MEETING 2011

MANAGEMENT AND ACCOMPLISHMENTS 2011

The International Relationships and Cooperation Office was created in 2011 as a new transversal support for the bank for the management of international cooperation resources. The objective of this front is to contribute to Bancoldex relationships as an agent in the International System for an efficacious development of the Bank, of its programs and projects.

The increasing transcendence of the role of banks within international dynamics and the development agenda allows Bancoldex, with its new challenges, to position itself as an international interesting entity to receive cooperation. This reality also raises great challenges of strategic positioning and of Refining priorities for acting within the cooperation framework.

The specific objectives are focused on coordinating the funding and the supply of international cooperation resources, as well as increasing the insertion and relevance of Bancoldex as a Development Bank within the international context.

Simultaneously to the process of creation of the office, several internal training activities have been developed, seeking the awareness of the International Cooperation National System entities, which are currently aware and know in detail the role of Bancoldex and the Bank’s needs in terms of cooperation. Additionally, the relationship has deepened with cooperation sources which are already working with Bancoldex procuring a comprehensive vision of the Bank allowing an 22 integral utilization of opportunities and have opened new relationships with cooperation actors .

As from September 2011, Bancoldex is a member of the new IDFC (International Development Finance Club), conformed by 18 national and sub regional development financial institutions.

14 | Management of human talent and welfare The human talent management style prevailing in the Bank is focused on the officer as an integral human being. Thus, it has defined a Capacities Management System that allows the development of the knowledge and skills of the officers, in accordance with their positions. This system counts with organizational, functional and position capacities.

Additionally, it covers the personnel needs, attaining a balance between personal and labor life.

Development of human talent is not only an effort of capacities, it also takes into account factors such as management, retention, and transfer of knowledge, values, attitudes, skills, potentials, health, growth, cultural transformation, family environment and social responsibility.

22 | From 25 international cooperation entities registered in Colombia by Acción Social, which may be potential partners of Bancoldex, 18 have been approached.

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RISK RATINGS During 2011, the Bank maintained the local long term AAA ratings, granted by Fitch of Colombia S.A and BRC Investor Services. Regarding the rating in foreign currency the Bank obtained the Investment Grade by the international rating agency Standard & Poor’s. The foregoing was based on the increase of the sovereign rating of the Republic of Colombia that allowed an improvement in the sovereign risk rating changing from BB+ to BBB- with a Stable perspective.

DEBT INSTRUMENTS

LATEST RATINGS

LONG-TERM LIABILITIES (FOREIGN CURRENCY)

DEC / 2011

JUL / 2011

AUG / 2011

F1+

BRC1+

AAA

AAA

BBBStable

SHORT-TERM LIABILITIES (COP)

LONG-TERM LIABILITIES (COP)

FULFILLMENT OF THE SISMEG GOALS FOR 2011 (PERIOD FROM AUGUST 2010- JULY 2014) Within the National Development Plan, Bancoldex participates in the objective of “Sustainable Growth and Competitiveness”, with 5 goals: A. Bancoldex financing for MSMEs modernization. Bancoldex financing goal for 2011 was COP 960 billion.

Resources were disbursed during the year for COP 805 billion, with which the goals was met in 84%.

23 | Colombian Government Goals System. Allows the Government and citizens to monitor in detail the social and economic policies, within the framework of the National Development Plan.

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REPORT FROM THE BOARD OF DIRECTORS AND THE PRESIDENT TO THE GENERAL SHAREHOLDERS MEETING 2011

MANAGEMENT AND ACCOMPLISHMENTS 2011

B. Seasonal rains emergency financing. For the period 2011, the goal for financing enterprises affected by seasonal rains was COP 50 billion. As of the closing of December 2011, Bancoldex had delivered COP 48.762 billion to this segment reaching a fulfillment of 98% of the goal for the period.

C. Disbursement for formalizing MSMEs standard rediscount conditions.

For 2011, the goal was COP 25 billion. As of December closing a disbursement level of COP 18,616 billion was reached for a fulfillment of 74% of the goal. Nevertheless, the report of formalized enterprises is still pending by Confecamaras and other allies for the last quarter of 2011, information with which this goal established is expected to be exceeded.

D. Disbursements to finance projects for the improvement of entrepreneurial environmental impact. In 2011 the first lines of the green portfolio of the Bank were launched and a goal for the year was defined for disbursements of COP 30 billon. As of the closing of December, disbursements were reached for COP 22,168 billion, which allowed a fulfillment of 74% of the goal established.

E. Likewise, in accordance with the Ministry of Commerce, Industry and Tourism, for 2011,m financing goals had been defined under preferential conditions for enterprises affected by the seasonal rains (COP 200 billion) and for MSMEs under formalization processes (COP 50 billon), base don the possibility of obtaining resources to support such entity. The non feasibility of obtaining these resources due to budgetary restrictions of the Ministry and the national Government postponed these girls for 2012 and following years.

FINANCIAL RESULTS Credits Portfolio The disbursements performed during the year exceeded the goals budgeted in 210%. This result was a consequence mainly of the high demand of resources in dollars as an alternative, given the internal and external conditions. On its part the local market registered liquidity with the purpose of preventing an overheating of the economy, with an impact in key variables such as the inflation target. For such purpose the Central Bank increased the intervention rate throughout the year in 175 basic points.

Additionally, the strong demand of Bancoldex resources was attended with special lines both in dollars as in pesos such as the Counter-cyclic Liquidity Line, Colombia Exports, Entrepreneurial Internationalization Line, Productive Colombia, Financial Intermediaries Liquidex Line, Sustainable Development and Lines for the Seasonal Rains Emergency, whose disbursements

31

reached the sum of COP 719 billion. (Includes pesos and dollars)

5,000,000 MILLION COP

4,000,000 MILLION COP

3,000,000 MILLION COP

2011

2,000,000 MILLION COP

2010

1,000,000 MILLION COP

PORTFOLIO DISBURSEMENTS

Balance Sheet Accounts Assets A good dynamism of disbursements in dollars was present in 2011 (USD 1.16 million), of which 25% was destined for medoium and long term credits. Total disbursements in dollars explain a greater balance in USD 174 million compared to the previous year. On the other hand, the investments portfolio did not show major variations in amount cut the composition changed. As from the first semester of 2011, the Board of Directors approved the construction of a strategic portfolio to contribute to profitability and financial sustainability of the Bank, while in 2010 a portfolio had been structured as a liquidity strategy. As a result of all the foregoing, the Bank’s assets reached COP 5.95 trillion, an amount greater in COP 406 billion compared to the previous year.

Liabilities 2011 was characterized by favorable liquidity conditions offered by the market in local and foreign curency, which allowed to fund the credit lines growth both in pesos as in dollars. The greatest needs of resources to cover maturities of liabilities and to meet the portfolio disbursements were reflected in the collection of funds mainly in TDCs. On the other hand, the needs of resources in dollars were reflected in the growth of utilization of allocations with corresondents and multilaterals. As a result of the foregoing, the liabilities reached COP 4.6 trillion, in excess of COP 440 billion compared to the previous year.

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REPORT FROM THE BOARD OF DIRECTORS AND THE PRESIDENT TO THE GENERAL SHAREHOLDERS MEETING 2011

MANAGEMENT AND ACCOMPLISHMENTS 2011

Equity As of December 2011, the equity showed a decrease of COP 34 billion with respect to December 2011. The foregoing was due mainly to a decrease of the profits during the period (COP 83 billion), effect that was compensated by an increase in reserves for COP 44 billion, in which the legal reserve for capitalization of trhe MSMEs is included. Lastly, a greater surplus was present for COP 5 billion, product of the appraisement of available investments for the sale of strategic portfolio.

Statement of Results Financial margin The gross financial margin compared to that of the previous year showed a reduction of COP 10 billion. The foregoing as a result of lower income deriving from the credit portfolio in pesos for COP 43 billones (allocations at special rates and a lower average balance). It is worth highlighting the management of treasury for obtaining resources, the expense due to funding with bonds decreased in COP 32 billion, while greater collections in TDCs meant an increase in expenses of COP 5 billion.

Profit The accumulated profit in 2011 reached COP 15 billion, which was lower than that of the same period of the previousn year in COP 83 billion. The foregoing is explained by a greater portfolio provision (COP 33 billion), an increase in taxes due to the advanced payment of the accrual of equity tax and the over rate of 2012 (COP 31 billion), and for a greater income tax COP 11 billion, for the transition of presumptive income to oridnary income and the exhaustion of the fiscal credits in the Bank.

Utilidad acumulada

UTILIDAD ACUMULADA 120.000 (MM COP)

2011

90.000 (MM COP)

15,289

60.000 (MM COP)

2010

30.000 (MM COP)

98,821

33

RISK MANAGEMENT In 2011, Bancoldex continued with its consolidation process and strengthening of integral risk management. The major efforts focused on strengthening the management systems of market, liquidity, information security and business continuity risks.

Operational Risk Management System (ORMS) Among the actions developed, it is worth highlighting the construction and adjustment of operational processes risks maps, deriving from the modification of the chain value, the change in the technological platform developed by the Bank and the application of a new methodology of assessment of operational risk. Likewise, training journeys for officers were developed with the purpose of deepening the culture of operational risk. On the other hand, tests were carried out to the continuity plan of the business, with satisfactory results.

Market Risk Management System (MRMS) During 2011, the Bank carried out a revision and updating of market risk policies and modified some of the limits for treasury operations, in accordance with market conditions and business strategy. In addition, work was carried out among different areas to operate forwards of COP/USD with the Chamber of Central Counterparty Risk. On its part, the criteria to be contemplated in the negotiation of “Credit Support Annex� were defined and approved, requirement of the ISDA agreements entered into with counterparties abroad with which Bancoldex negotiates or Experts to negotiate derivatives.

Credit Risk Management System (CRMS) During 2011, the SARC accompanied the development of the strategic plan in an environment characterized by the international financial crisis, through the strengthening of the processes of granting credits and follow-up of debtors and counterparties.

Liquidity Risk Management System (LRMS) During 2011, the liquidity risk management was oriented towards improving the measurement of such risk, which is evident in the development and implementation of a new indicator in the internal model. Such measurement model, approved by the Bank’s Board of Directors is an adaptation of the standard methodology of the Financial Superintendence of Colombia and the major modification was to include projections and adjustments of the different flows. Likewise, as part of the continuous improvement process, a modification of the liquidity contingency plan was

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REPORT FROM THE BOARD OF DIRECTORS AND THE PRESIDENT TO THE GENERAL SHAREHOLDERS MEETING 2011

MANAGEMENT AND ACCOMPLISHMENTS 2011

approved, whose main changes include the redefinition of criteria to activate the liquidity contingency plan, the adjustment of strategies to mitigate liquidity risk and a greater disaggregation of the responsibility levels, including the creation of the Liquidity Crisis Group.

Information Security and Business Continuity (ISBC) The Information Security Management System was consolidated in 2011, as part of the risk management process within the new chain value in the Bank. A methodology was drafted for the construction of the technology risk map and important progress was achieved in the matters relating to strengthening of the SGSI and information classification.

Attributes were assigned to users of the Orion Project in accordance with their roles and responsibilities identified in the new processes; technological recovery strategies were developed for the continuity plan and the modules in production were prepared for their administration by the Information Technology Department.

Regarding the requirements of the External Circular Letter 052 of 2007 of the Financial Superintendence, the Bank continued to work focused on the development of the Orion Project.

Money Laundering and Terrorism Financing Risk Management System (AML/CTF) During 2011, the Bank continued to improve the SARLAFT to mitigate the AL/FT risks of the operations carried out. The methodologies to determine homogenous groups of direct clients were revised and adjusted, as well as the assessment of risk factors, mainly those of clients and international jurisdiction. During the monitoring of AL/FT risk maps different processes were migrated and adjusted to the chain value of the Bank. A follow-up of the risk profile for each risk factor was carried out, along with associated and consolidated risks, both inherent and residual, maintaining the latter under the level approved by the Board of Directors. Improvements were implemented in the application of prior control of AL/FT, which has maximized the administration of the data base and the permanent monitoring not only of clients, but also their related parties.

Synergies were developed with other processes of the Bank, which allowed the centralization of information which is important for the AML/FT, as well as the documentation and information of customers. The Compliance Units was consolidated concentrating some of the responsibilities that relied on other areas, which has allowed optimizing the procedures.

The culture socialization efforts continued for preventing and controlling the AL/FT in all operations of the Bank through training sessions for the officers. Likewise, internal and external reports were timely drafted, and the requirements of the AML/FT by the different component authorities were met.

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MECI24 – Quality Management System The Bank has complied with what was established in Decree 2913 of July 31, 2007, and has implemented the Internal Control Standard Model and the Quality Management System (in those entities obliged by Law 872 of 2003) and currently it counts with an Internal Control Standard Model and a Quality Management System duly harmonized. The system is under permanent follow-up and revision, complying with what has been set forth on Circular Letter 06 of June 27, 2005 of the DAFP25 and Decree No. 4110 of December 9, 2004 of the Presidency of the Republic.

During the month of January 2011 the DAFP Survey was answered within the terms foreseen for such purpose, obtaining the following rating: progress of the MECI 96.59% and Quality progress 98.24%. Such ratings place the Bank’s management at the highest level of the rating matrix.

In May 2011, the rating entity Bureau Veritas Ltda. carried out a follow-up visit to determine the recertification corresponding to the new version NTC GP 1000:2009 and ISO 9001:2008. In June 2011, the rating entity granted the re-certification without observations about non-conformities, finding a continuous and satisfactory operation of the Quality Management System within the organization. This certification is valid until August 2014.

Complying with the purpose of the Quality Management System, Bancoldex has reached high standards in its work with regards to customer’s needs satisfaction (entrepreneurs). The system counts with a systemic approach in which all officers of Bancoldex should work towards improving the processes, aiming at compliance of the quality policy in the every day activities and to reach the objectives of quality, defined for this system.

The Quality Management System and the harmonization with the MECI have been the basis to consolidate a management model and a structure based on processes, thus attaining a better response to the satisfaction of the customers needs. Likewise, a permanent progress has been attained regarding efficiency, efficaciousness and organizational effectiveness. The foregoing, allows an integral understanding of its operations and represents a structure supported in those differentiating pillars that provide the identity of the purpose of the business.

24 | MECI- Internal Control Standard Model.

25 | DAFP- DAFP- Administrative Department of the Public Function.

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REPORT FROM THE BOARD OF DIRECTORS AND THE PRESIDENT TO THE GENERAL SHAREHOLDERS MEETING 2011

MANAGEMENT AND ACCOMPLISHMENTS 2011

INTERNAL CONTROL SYSTEM The Political Constitution of 1991 incorporated Internal Control as an instrument oriented to guarantee the achievements of each Sate entity and compliance of the public function. On its part, Law 87 of 1993 established the regulations to exercise Internal Control in State entities and bodies and Law 489 of 1998 provided the creation of the Internal Control National System. With the purpose of seeking more efficaciousness and impact of Internal Control in Sate entities, the Administrative Department of the Public Function promoted the adoption and implementation of an internal control model, initiative embraced by the Internal Control Advisor of the National Government, which led to the issue of Decree 2599 of 2005 “through which the Standard Internal Control Model MECI 1000:2005was adopted�.

Such conceptual framework proposed a Standard Internal Control Model for the public sector, in such a manner to establish a basic control structure, observing the characteristics inherent to each entity. The main purpose of MECI is to orient the entities towards compliance of the objectives and that the same contribute to the essential ends of the State.

The current degree of maturity of the Internal Control Model of the Bank, along with the Quality Management System have allowed the organization to focus on a continuous improvement of the elements comprising these systems, in a consistent manner with other management systems applicable to the Bank, showing favorable results in the progress and functioning evaluations practiced by different external and internal control entities, and with the Risk Management Systems enshrined in the regulations of the Financial Superintendence and with the Internal Control System regulated by such entity under Circular Letters 014 and 038 of 2009.

The main management body of the Internal Control System is the Audit Committee, which permanently monitors the adequate functioning of Bancoldex Internal Control System, performing its functions in accordance with its Internal Regulations and with has been established regarding internal control both for State entities in general and specifically for Financial Entities. In compliance with its responsibilities, it has operated as support and permanent communication channel with the Board of Directors for decision making regarding the Internal Control System and its continuous improvement. Likewise, it has monitored the activity and performance of the Internal Audit function exercised by the Comptrollers Office, which in 2011, carried out an evaluation of the Internal Control System pursuant to the Annual Audit Plan approved by the Audit Committee and to the Audit Regulations. During the assurance work it applied the objectiveness and independence required, without any limitations for an adequate performance of the audit work. The approach of the audit, the definition of the scope, the selection and application of the

37

tests was carried out based on the regulations for the professional practice of Internal Audit. Both the Comptroller’s Office as the Statutory Auditor were able to carry out their evaluations with independence.

With regards to the external evaluations of the ICS, in accordance with the last Government Audit report with an integral approach, by the General Comptroller’s Office of the Republic available, (in force 2010) “Bancoldex Internal Control System (ICS) obtained the score “Adequate” in the conceptual evaluation, and its development is reliable, pursuant to the parameters established under applicable regulations, general controls exist and are applied. Operationally, it obtained the score “Efficient” and the specific controls of the lines, areas or processes examined mitigate the risks fore which they were established.

According to the same report, Bancoldex, for registering its accounting operations, as well as for the drafting and submittal of its Accounting Statements complies with the regulations established by the Financial Superintendence of Colombia. In those aspects not included therein, the Bank applies the standards and regulations contemplated provided by Decree 2649 of 1993. The Accounting Internal Control System of Bancoldex obtained the score of Efficient. In accordance with the evaluation carried out and the analysis of information provided by the Entity, the conclusion is that the Bank counts with policies, processes and procedures clearly established for the registration, control and generation of accounting information, which provide reliability of the organization over the figures and information disclosed in the Bank’s financial statements.”

As of the closing of 2011, the Management, the internal or external control bodies of the Bank and the Audit Committee did not detect any material or significant weakness that could represent risk for the effectiveness of the Internal Control System. There was no knowledge about any frauds, willful errors or manipulations of the financial information submitted and revealed by the Bank.

The results of the evaluations by the internal and external control bodies are informed to the Audit Committee and the management carried out the plans pertinent for continuous improvement to attend or overcome those aspects that required correction.

Regarding affiliates, on one part, Leasing Bancoldex, pursuant to the reports coordinated by the Internal Control office, utilizes the reference of the MECI Model, using for such purpose the survey “Self-Assessment2 of the Internal Control System in accordance with the methodology established by the DAFP for its evaluation, concluding that the “degree of perception, understanding and knowledge of all officers of the Internal Control System and the Organizational Culture of SelfControl are ADEQUATE”. Additionally, “it was established that during 2011 the regulations governing the operation of the Company were observed as well as the policies and directions defined by the Management and the Board of Directors. Notwithstanding, items subject to

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REPORT FROM THE BOARD OF DIRECTORS AND THE PRESIDENT TO THE GENERAL SHAREHOLDERS MEETING 2011

MANAGEMENT AND ACCOMPLISHMENTS 2011

improvement were identified as not critical, and they do not jeopardize compliance of the objectives of the Company; the deviations found are not material and do not have an economic impact on the financial statements.”

On the other hand, Fiducodex, “in compliance of External Circular Letter 038 of 2009 of the Financial Superintendence of Colombia and based on the special areas of the Internal Control System (…) maintains good performance of the Control System elements, as follows: à

A good control environment established by a Code of Conduct (…).

à

All the Risk Management Systems have been established, (…) with an adequate organizational structure that allows the Trustee to preserve efficaciousness, efficiency and effectiveness of its management and operational capacity, as well as to safeguard the resources it manages.

à

The Quality Management System (…) allows compliance of the instructions and directions”.

BANCOLDEX´S LEGAL SITUATION At the closing of the economic period 2011, Bancoldex maintains its legal regime as a mixed economy corporation of the national order, ascribed to the Ministry of Commerce, Industry and Tourism, and organized as a credit-banking establishment not subject to the regime for State industrial and commercial enterprises, independently from the state interest in its capital. Due to this characterization, notwithstanding its nature as a public entity, Bancoldex maintains a legal regime of Private Law with respect to its acts and contracts, pursuant to the legal provisions and regulations that govern the matter, which enables its competitiveness with regards to financial support activities for entrepreneurs.

The Congress of the Republic issued Law 1450 of 2011, National Development Plan 2010 - 2014, creating the Innovation and Modernization Fund for Micro, Small and Medium Enterprises (MSMEs), as a system with separate management of accounts administered by Bancoldex, that for all effects it resembles an autonomous equity. This aspect was regulated by the National Government through Decree 3321 of 2011.

Likewise, Law 1450 of 2011 established that the National Government, subject to instructions about distribution to the Nation by the CONPES, may allocate resources from the Bank’s profits for the design, assembly and implementation of a Development Unit and for structuring and implementing projects and programs identified by such Unit. Similarly, the cited Law 1450 assigned Bancoldex as the administrator of the Productive Transformation Program as a separate management system of accounts, similar in all its effects to an autonomous equity.

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The issue of Law 1448 of 2011 is also highlighted, through which the measures for the attention, assistance and repair of the victims of the internal armed conflict, which order Bancoldex to create rediscount lines with preferential conditions directed to finance credits granted by credit establishments to such victims, for financing activities tending to the recovery of their productive capacity.

As a tool to strengthen the mechanisms of prevention, investigation and sanctioning of corruption acts and effectiveness of public management control, the Congress of the Republic issued Law 1474 of 2011, through which administrative and criminal measures were established among others, for the fight against public or private corruption, including new responsibilities for statutory auditors, new obligations for those responsible of internal control and institutional and pedagogical policies so that the entities of the national order carry out an Anti-Corruption Plan and Attention for the Citizens.

In addition, as of the date of the report, Bancoldex along with Fiducoldex, the Central Bank (Banco de la Republica) and the Ministry of Foreign Affairs have been involved in five ordinary labor proceedings carried out by Attachés, Staff Members and Directors of commercial offices of Colombia abroad, who had rendered their services between 1967 and 1992. The cited proceedings claim the acknowledgement of pension contributions.

CORPORATE GOVERNMENT As of 2001, Bancoldex operates under a Code of Good Governorship, containing the policies and procedures of Corporate Government oriented towards the protection of its shareholders and the general public.

In 2011 several meetings of the Corporate Government Committee took place, in which the analysis of results of the administration of the Board of Directors corresponding to the last semester of 2010 and first semester of 2011, was carried out, among other activities. With regards to this matter, the self-evaluation comprises the qualification of the individual participation of the members, the performance of the Board as a joint body, and the performance and participation of the Management in the meetings of the Board.

Regarding the individual participation of members, there was consensus with respect to the timely attendance to the meetings, to the sufficiency of the time invested in the review of the information provided by the Management and the high degree of knowledge regarding the Bank’s business.

With respect to the Board’s performance, the independence of the management, the adoption of decisions based on knowledge and the efficiency for developing the meeting were highlighted.

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REPORT FROM THE BOARD OF DIRECTORS AND THE PRESIDENT TO THE GENERAL SHAREHOLDERS MEETING 2011

MANAGEMENT AND ACCOMPLISHMENTS 2011

With respect to the performance of the Management during the meetings of the Board, it was deemed that the information was provided in a comprehensive, sufficient and clear manner; the questions were resolved satisfactorily by the Management and the issues are reviewed profoundly, with the knowledge required until exhaustion.

Additionally, in 2011 the Bank entered into the Corporate Governance Development Framework” with 25 international financing institutions, for establishing a common set of directions aimed at supporting a sustainable economic development in emerging markets through Corporate Government. The subscription of the Covenant aforementioned assumes a commitment of each of the parties to integrate the Corporate Government in the investment operations, to identify and assign an internal function for applying the guidelines, to provide training, and to draft an annual report about the application of policies of each of the entities.

The Board of Directors met thirteen times in an ordinary manner, and the matters considered, as well as the decisions adopted are attested to in the respective minutes drafted for such purpose, which are kept under the custody of the Juridical Vice-Presidency – General Secretariat. Finally, a training plan was developed for the members of the Board of Directors covering specific topics, through their participation in a forum organized by the Colombian-American Chamber of Commerce, denominated “Make your Board of Directors an Asset”, which took place on November 1, 2011, and in the training called “Analysis of the Anti-Corruption Regulation” carried out on December 19, 2011.

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INFORME DE LA JUNTA DIRECTIVA Y DEL PRESIDENTE A LA ASAMBLEA GENERAL DE ACCIONISTAS 2011

GESTIÓN Y LOGROS 2011

SURVEY COUNTRY CODE The Country Code Survey is defined as a tool applied by the Financial Superintendence of Colombia for attaining an adequate corporate government that contributes to the fulfillment of stability, safety and confidence objectives, promotion of the Colombian stock market and protection of investors, savers and insured parties.

The Superintendence expressly highlighted the results of Bancoldex regarding this matter, with compliance of 85.37% with respect to the measures adopted, in such a way that the Bank was 14th among 152 entities evaluated, very close to Isagen (1st place), Bolsa de Valores de Colombia (3rd), Bancolombia (6th), BBVA Colombia (9th) and Ecopetrol (13th), and even on top of entities such as Davivienda, Protección, ISA, Argos, Codensa and Almacenes Éxito, among others.

ENTREPRENEURIAL SOCIAL RESPONSIBILITY During 2011, the Ministry of Commerce, Industry and Tourism hired a diagnosis with the Chilean consulting firm Vincular to carry out an analysis about compliance of the expectations of the International Standard ISO:26.000 of social responsibility, by all the entities belonging to such sector. In this sense, Bancoldex was considered by the study as a leading entity in all components of social responsibility covered by the regulation, such as corporate government, human rights, and matters of consumers, fair operational practices, labor practices, active participation, community development and environmental management.

HIRING GOODS AND SERVICES IN BANCOLDEX Hiring of goods and services in Bancoldex is mainly oriented by the values of equity, economy, objective selection and transparency. Through a prior definition of contracting objectives and its rigorous application, the Bank guarantees the appropriate selection of its suppliers. In turn, through the publication of the contracting terms in its web site, it allows the general community to know its contracting activities, guaranteeing free access to all persons and companies interested in participating of such invitations.

The hiring process is not limited to a simple acquisition of goods and services. For the Bank, within its Entrepreneurial Social Responsibility philosophy, its suppliers constitute an important group of interest, reason for which it will make its best effort to generate long term relationships base don trust, equity and cooperation. With regards to this last aspect, the Bank has implemented an Entrepreneurial Strengthening Program for Bancoldex Suppliers, divided in two general blocks.

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REPORT FROM THE BOARD OF DIRECTORS AND THE PRESIDENT TO THE GENERAL SHAREHOLDERS MEETING 2011

MANAGEMENT AND ACCOMPLISHMENTS 2011

First, the managers have the facility of accessing knowledge about the best and most recent organizational and business practices. Second, with the cooperation of the University Externado de Colombia and its Plan of Sponsors for Entrepreneurial Accompaniment, suppliers have the opportunity of relying on an advisor group with the mission of drafting an organizational diagnosis of their company, oriented towards providing advise in light of the best practices and solutions relating to the areas of opportunity identified.

TRANSACTIONS WITH RELATED PARTIES As of the date of this report, the Bank maintains its operations duly instrumented and complies with the governing regulations.

The operations carried out by the Bank with its Partners and administrators are adjusted to the general policies of the entity. Such operations are duly specified in note number 28 (transactions with related parties) of the financial statements. The Bank did not carry out any transactions or operations with partners or administrators whose characteristics differed from those carried with third parties, neither did it supply gratuitous or compensated services, or loans without interests or any consideration whatsoever, except for those having a labor character regulated by articles 152 and 153 of the Substantive Labor Code.

SUBORDINATES Bancoldex configures a control situation with the Fiduciaria Colombiana de Comercio Exterior S.A., FIDUCOLDEX, with an interest of 89.17%, an indirect mixed economy corporation by shares of the national order, organized as from October 31, 1992, as well as with Leasing Bancoldex S.A., with a share of 86.55%, a mixed economy corporation organized indirectly, not ascribed or related to any Ministry, and subject to the regime governing industrial and commercial State enterprises.

Throughout 2011, the Bank performed directly with Fiducoldex some administrative operations such as leasing and contracting of the global banking policy. In addition, dividends were received from the Trust entity and this entity is in charge of administering the autonomous equity deriving from the securitization of Bancoldex portfolio carried out at the end of 2010.

On the other hand, it carried out credit portfolio, treasury and administration operations with Leasing Bancoldex, Financing Entity, relating to the Bank’s global banking insurance and leasing policy.

In this order of ideas, Bancoldex maintains a macro agreement of shared services with Fiducoldex

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and with Leasing Bancoldex, with which it intends to take advantage of the synergies of the entities that form part of the “Bancoldex Group”, provided that the same does not imply in any case a delegation of professional standards.

Likewise, and pursuant to what is set forth under Article 44 of Law 1150 of 2011, the Ministry of Commerce, Industry and Tourism through Fiducoldex, who acted as administrator of the trust of the former Modernization Fund for Micro, Small and Medium Enterprises – Fomipyme – on December delivered the documentation necessary to comply with the obligations and rights that were assigned to the new Modernization and Innovation Fund for Micro, Small and Medium Enterprises.

Finally, it is worthwhile highlighting that during 2011 the Board of Directors of Bancoldex, approved the general policies for financial cluster risk management with respect to the Bank and its affiliate and interested entities, regarding risks, corporate government, prevention of asset laundering and financing of terrorism and internal control, which shall be implemented throughout 2012.

It is important to point out that the independence in the businesses and decision making, constitutes a premise of its relationship, which is limited by the benefit that may be obtained by the client, from the products and services offered by each entity.

OTHER CAPITAL INVESTMENTS As of the closing of December 2011, Bancoldex maintained investments in the “Aseguradora de Comercio Exterior” -SEGUREXPO - (49.57%), in the “Banco Latinoamericano de Exportaciones” BLADEX (1.34%) and in the National Fund of Guarantees (30.21%).

INTELLECTUAL PROPERTY AND COPYRIGHTS Bancoldex operates pursuant to Law, through policies defined with respect to the acquisition of technology and the use of licensed software. Likewise, it counts with internal control procedures that seek to ensure due compliance of said regulations.

PERFORMANCE OF THE DISCLOUSURE AND CONTROL SYSTEMS In order to comply with the provisions set forth under articles 46 and 47 of Law 964 of 2005 – the Colombian Foreign Trade Bank S.A. – Bancoldex, certifies that the financial statements and other reports relevant for the public do not contain any vices, inaccuracies or errors which may hamper

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REPORT FROM THE BOARD OF DIRECTORS AND THE PRESIDENT TO THE GENERAL SHAREHOLDERS MEETING 2011

MANAGEMENT AND ACCOMPLISHMENTS 2011

the knowledge about the true equity situation or about the operations carried out. Additionally, the disclosure and control systems used by the entity to include information contained in said financial statements and reports relevant for the public are adequate, based on truthful information, and subject to audits practiced by the Internal Control Office of the Bank and by the Statutory Auditor, under the supervision of the Audit Committee.

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OUTLOOK AND MANAGEMENT 2012

REPORT FROM THE BOARD OF DIRECTORS AND THE PRESIDENT TO THE GENERAL SHAREHOLDERS MEETING 2011

OUTLOOK AND MANAGEMENT 2012 Aware of the responsibility and the new challenges implied by the strengthening of Bancoldex as a model of integral development bank, the strategic guidelines of the mission and vision of the Bank were modified in order to include the new elements in force to establish the management framework as from 2012. In accordance with the foregoing, the mission and vision were defined as follows:

Mission: As a development bank, we drive the Colombian entrepreneurial sector productivity through innovation, modernization and internationalization, with financial sustainability and commitment of our human capital, within the framework of social responsibility.

Vision: In 2014, to become the leading Bank implementing entrepreneurial development instruments to promote productivity of Colombian enterprises.

Pursuant to these strategic guidelines, the Banks hall continue its transformation towards a “Integral Development Bank Model”, adding to its traditional credit activity the administration of programs, access to financial services, functions of development agency and support in matters relating to private capital and entrepreneurial capital funds. On the other hand, it shall focus in offering activities supplementary to credit. All the foregoing supported on a cooperation scheme that allows the Bank to count with non reimbursable external resources (national and international) for developing its function.

The foregoing implies focusing on eight strategic action fronts established in the Plan: à

Accessibility to banking, social inclusion and entrepreneurial formalization.

à

Productive transformation and entrepreneurial development

à

Economy internationalization

à

Environmental Management and social responsibility

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à

Development, innovation and entrepreneurship

à

Cooperation

à

Guarantee the bank’s financial sustainability

à

Organizational effectiveness

On the other hand in 2012 Bancoldex shall continue committed with the initiatives established in the Sectorial Strategic Plan led by the Ministry of Commerce, Industry and Tourism, within the framework of the National Development Plan “Prosperity for all”.

In this context, Bancoldex will strengthen the management of the Development and Innovation Unit in its 4 action lines. Additionally, the challenge for 2012 shall be to implement the programs and instruments defined for each of these strategic areas, define the impact indicators adequate for measuring the management of the programs and in a parallel manner, to assess the functioning of the programs and management of the work developed by the Un it.

In this sense, the follow- up of the Bank’s strategic activities as well as the programs managed by Bancoldex, it shall be extremely important to guarantee the adequate handling of resources, the transparency and a good fund management.

Within the environmental management context, Bancoldex will implement the social and environmental Management of the Bank. For such purpose as from 2011 the pilot project for the assessment of the system scheme and the information forms was initiated, along with the four main intermediary financial entities of our resources.

It is important to take into account the fact that the system not only seeks compliance of the laws and regulations issued about the matter and regulated by the Ministry of Environment, but also to provide a valid risk assessment scheme for the operations funded to the financial system by Bancoldex. The ultimate end of the scheme is to attain that the financial system as a whole implements its own assessment schemes during the coming years.

The extension of the Sustainable Development Line is planned for 2012, to deliver resources for COP 40 billion pesos to specific investments of companies for monitoring, controlling and mitigating the environmental and social impact of their activity.

With regards to the financial management, the outlook for 2012 is a fundamental challenge constituted by the application of international accounting standards (IAS) and international financial reporting standards (IFRS) in Colombia.

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REPORT FROM THE BOARD OF DIRECTORS AND THE PRESIDENT TO THE GENERAL SHAREHOLDERS MEETING 2011

PERSPECTIVAS Y GESTIĂ“N 2012

Law 1314 of 2009 sets forth that for year 2014, the entities subject to the obligation of keep public accounting shall be governed by international standards. Such is the case of banking and of Bancoldex. Thus, all financial institutions have started to prepare themselves for this great change regarding the way of submitting and analyzing the financial statements. The first phase is a stage of knowledge about the regulations, the second constitutes an assessment stage of the main changes and their impact in the entity and the third stage is the implementation of the international standards.

Bancoldex, in coordination with its affiliates has started to work on this subject and during 2012 it should exhaust the first two stages. Given the different businesses of Bancoldex and its affiliates, the challenge of implementing international standards is big. It is a project that generates impact over all the organization and implies a deep change in the technological applications utilized by the bank to keep its financial information.

On the other hand, the bank continues with the challenge of expanding its funding sources both in pesos and in foreign currency (especially dollars). An excellent dynamism of the credit disbursements is expected for year 2012 and consequently assuring its funding becomes relevant.

Finally during 2012, Bancoldex shall continue to reinforce its good standing in the national and international environment.

SUBSEQUENT EVENTS The Management is not aware of any important event that may have occurred between the date of closing of the economic period 2011 and the date in which this report is submitted, that could affect its scope or interpretation.

SANTIAGO ROJAS ARROYO PRESIDENT OF BANCOLDEX

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WE ARE THE DEVELOPMENT BANK OF COLOMBIA

OFFICES Bogotá: Calle 28 No. 13A–15, pisos 38 a 42 Barranquilla: Cra. 52 No. 76–167, local 101, centro comercial Atlantic Center Cali: Calle 4 Norte No. 1N–04, edificio Torre Mercurio, barrio Centenario Medellín: Calle 7 Sur No. 42–70, oficina 613, edificio Forum, sector de El Poblado Bucaramanga: Cra. 31 No. 51–74, oficina 1207, edificio Torre Mardel Pereira: Cra. 13 No. 13–40, oficina 405, centro comercial Uniplex Circunvalar

BANCÓLDEX ENTREPRENEURIAL CENTRE Bogotá: Calle 28 No. 13A–63, edificio Centro de Comercio Internacional Barranquilla: Cra. 52 No. 76–167, local 101, centro comercial Atlantic Center Cali: Calle 4 Norte No. 1N–04, edificio Torre Mercurio, barrio Centenario

BANCÓLDEX TOLL-FREE NUMBER

Bogotá: (+571) 742 0281 Other Cities: 01 8000 18 0710

@bancoldex

Ministerio de Comercio, Industria y Turismo República de Colombia

www.bancoldex.com