Edgar Filing: BANCOLOMBIA SA

Unassociated Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 OF

THE SECURITIES EXCHANGE ACT OF 1934

For the month of August, 2010.

Comission File Number 001-32535

Bancolombia S.A.

(Translation of registrant’s name into English)

Cra. 48 # 26-85

Medellín, Colombia

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F þ Form 40-F o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):___

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(2):___

Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes o No þ

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- .

2Q10

BANCOLOMBIA S.A. (NYSE: CIB; BVC: BCOLOMBIA, PFBCOLOM) REPORTS CONSOLIDATED

NET INCOME OF COP 291 BILLION FOR THE SECOND QUARTER OF 2010 (COP 370 PER SHARE

- USD 0.77 PER ADR), WHICH REPRESENTS AN INCREASE OF 15% COMPARED TO THE SAME

QUARTER LAST YEAR.

Net loans grew 4.92% compared to 1Q10. There was still a reduction of 2% in net loans with respect to 2Q09; however, the positive trend in credit demand that began to show at the end of 1Q10 became stronger during 2Q10.

Net Interest Margin recovered in 2Q10 due to the better performance of investment securities and an effective funding strategy. Net interest margin increased 37 basis points (“bp”) during the quarter and ended 2Q10 at 6.45%. This increase is explained by the better performance of investment securities and a funding strategy that decreased the cost of funds from 2.73% in 1Q10 to 2.56% in 2Q10.

Net income from fees and other services continued to increase consistently during the quarter and totaled COP 396 billion, 5.7% higher than in 1Q10 and 4% higher than in 2Q09. This positive performance is explained by greater income from the Bank’s investment banking and asset management businesses, and by solid levels of credit and debit card fees.

There was less deterioration of the loan portfolio in 2Q10 vs. 1Q10. The deterioration of the loan portfolio in 2Q10 totaled COP 35 billion, a figure 88% lower than that for 1Q10 and 85% lower than that 2Q09. Loan charge-offs were COP 225 billion, 64% higher than those reported in 1Q10 and 32% lower than those reported in 2Q09. Net provision charges were COP 187 billion in 2Q10.

The balance sheet remains strong due in part to the solid level of loan loss reserves, which represented 5.6% of total loans and 154% of past due loans at the end of 2Q10. The capital adequacy ratio increased during the past 12 months and ended at 13.37% (Tier 1 of 10.7%), a figure that is considerably higher than the 12.9% (Tier 1 de 10%) reported at the end of 2Q09.

Solid liquidity position. The ratio of net loans to deposits (including borrowings from domestic development banks) was 95% at the end of 2Q10, and net investment securities totaled COP 9,009 billion, 4.7% higher as compared to 1Q10 and 19.3% as compared to 2Q09.

August 4, 2010. Medellín, Colombia – Today, BANCOLOMBIA S.A. (“Bancolombia” or “the Bank”) announced its earnings results for the second quarter of 2010.

For the quarter ended June 30, 2010 (“2Q10”), Bancolombia reported consolidated net income of COP 291 billion, or COP 370 per share - USD 0.77 per ADR, which represents an increase of 15% as compared to the results for the quarter ended June 30, 2009 (“2Q09”) and a decrease of 15% as compared to the results for the quarter ended March 31, 2010 (“1Q10”). Bancolombia’s annualized return on equity (“ROE”) was 16.7% for 2Q10, and 18.03% for the first semester of 2010.

Bancolombia ended 2Q10 with COP 62,489 billion in assets, 3% higher than at the end of 1Q10 and 1% lower than at the end 2Q09. At the same time, liabilities totaled COP 55,387 billion and decreased 3% as compared to the figure reported in 2Q091.

_________________________

1 This report corresponds to the consolidated financial statements of BANCOLOMBIA S.A. (“BANCOLOMBIA”) and its affiliates of which it owns, directly or indirectly more than 50% of the voting capital stock. These financial statements have been prepared in accordance with generally accepted accounting principles in Colombia and the regulations of Superintendencia Financiera de Colombia, collectively COL GAAP. BANCOLOMBIA maintains accounting records in Colombian pesos, referred to herein as “Ps.” or “COP”. Certain monetary amounts, percentages and other figures included in this report have been subject to rounding adjustments. There have been no changes to the Bank's principal accounting policies in the quarter ended June 30, 2010. The statements of income for the quarter ended June 30, 2010 are not necessarily indicative of the results for any other future interim period. For more information, please refer to the Bank's filings with the Securities and Exchange Commission, which are available on the Commission's website at www.sec.gov.

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS: This release contains statements that may be considered forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934. All forward-looking statements, whether made in this release or in future filings or press releases or orally, address matters that involve risks and uncertainties; consequently, there are or will be factors, including, among others, changes in general economic and business conditions, changes in currency exchange rates and interest rates, introduction of competing products by other companies, lack of acceptances of new products or services by our targeted customers, changes in business strategy and various others factors, that could cause actual results to differ materially from those indicated in such statements. We do not intend, and do not assume any obligation, to update these forward-looking statements. Certain monetary amounts, percentages and other figures included in this report have been subject to rounding adjustments. Any reference to BANCOLOMBIA means the Bank together with its affiliates, unless otherwise specified.

Representative Market Rate July 1, 2010: COP 1,913.15 =USD 1 Average Representative Market Rate for 2Q10: COP1,947.57=USD 1

2Q10

BANCOLOMBIA: Summary of consolidated financial quarterly results2

CONSOLIDATED BALANCE SHEET
AND INCOME STATEMENT			Quarter					Growth
(COP million)	2Q 09			1Q 10		2Q 10			2Q 10/1Q 10		2Q 10/2Q 09
ASSETS
Loans and financial leases, net	42,383,700			39,493,643		41,436,323			4.92	%	-2.24	%
Investment securities, net	7,549,268			8,608,550		9,009,171			4.65	%	19.34	%
Other assets	13,334,336			12,668,389		12,044,002			-4.93	%	-9.68	%
Total assets	63,267,304			60,770,582		62,489,496			2.83	%	-1.23	%

LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits	42,888,356			40,113,266		41,039,287			2.31	%	-4.31	%
Non-interest bearing	5,008,486			5,570,111		5,402,692			-3.01	%	7.87	%
Interest bearing	37,879,870			34,543,155		35,636,595			3.17	%	-5.92	%
Other liabilities	14,165,459			13,855,066		14,347,892			3.56	%	1.29	%
Total liabilities	57,053,815			53,968,332		55,387,179			2.63	%	-2.92	%
Shareholders' equity	6,213,489			6,802,250		7,102,317			4.41	%	14.30	%
Total liabilities and shareholders' equity	63,267,304			60,770,582		62,489,496			2.83	%	-1.23	%

Interest income	1,652,790			1,208,967		1,250,203			3.41	%	-24.36	%
Interest expense	726,356			408,565		383,671			-6.09	%	-47.18	%
Net interest income	926,434			800,402		866,532			8.26	%	-6.47	%
Net provisions	(344,957	)		(142,498	)	(186,647	)		30.98	%	-45.89	%
Fees and income from service, net	379,719			374,411		395,614			5.66	%	4.19	%
Other operating income	20,025			159,119		94,610			-40.54	%	372.46	%
Total operating expense	(681,306	)		(730,854	)	(742,683	)		1.62	%	9.01	%
Goodwill amortization	(18,104	)		(15,142	)	(15,041	)		-0.67	%	-16.92	%
Non-operating income, net	24,920			37,968		(4,489	)		-111.82	%	-118.01	%
Income tax expense	(53,608	)		(142,422	)	(116,646	)		-18.10	%	117.59	%
Net income	253,123			340,984		291,250			-14.59	%	15.06	%

PRINCIPAL RATIOS				Quarter						As of
	2Q 09			1Q 10			2Q 10			Jun-09			Jun-10
PROFITABILITY
Net interest margin (1)		6.66	%		6.07	%		6.45	%		6.88	%		6.25	%
Return on average total assets (2)		1.58	%		2.22	%		1.89	%		1.77	%		2.05	%
Return on average shareholders´ equity (3)		16.54	%		19.44	%		16.75	%		18.22	%		18.03	%
EFFICIENCY
Operating expenses to net operating income		52.74	%		55.92	%		55.85	%		51.21	%		55.89	%
Operating expenses to average total assets		4.37	%		4.86	%		4.91	%		4.50	%		4.88	%
CAPITAL ADEQUACY
Shareholders' equity to total assets		9.82	%		11.19	%		11.37	%		9.82	%		11.37	%
Technical capital to risk weighted assets		12.94	%		13.62	%		13.37	%		12.94	%		13.37	%
KEY FINANCIAL HIGHLIGHTS
Net income per ADS (USD)		0.60			0.90			0.77
Net income per share $COP		321.29			432.82			369.69
P/BV ADS (4)		2.07			2.54			2.66
P/BV Local (5) (6)		2.08			2.58			2.64
P/E (7)		12.75			12.80			16.12
ADR price (8)		30.50			45.66			50.13
Common share price (8)		16,400			22,280			23,760
Shares outstanding (9)		787,827,003			787,827,003			787,827,003
USD exchange rate (quarter end)		2,145.21			1,921.88			1,913.15

2 (1) Defined as net interest income divided by monthly average interest-earning assets. (2) Net income divided by monthly average assets. (3) Net income divided by monthly average shareholders' equity. (4) Defined as ADS price divided by ADS book value. (5) Defined as share price divided by share book value. (6) Share prices on the Colombian Stock Exchange; (7) Defined as market capitalization divided by annualized quarter results. (8) Prices at the end of the respective quarter. (9) Common and preferred.

2Q10

1.	BALANCE SHEET

1.1.

Assets

As of June 30, 2010, Bancolombia’s assets totaled COP 62,489 billion, which represents an increase of 3% compared to 1Q10 and a decrease of 1% compared to 2Q09.

Assets denominated in COP totaled COP 46,278 billion at the end of 2Q10, decreasing 3% compared to 1Q10 and remaining stable compared to 2Q09. Assets denominated in currencies other than COP (mainly American dollars (“USD”)) represented 26% of total assets (or USD 8.5 billion) at the end of 2Q10, increasing 23% compared to 1Q10 and 7% compared to 2Q09.

Loans and financial leases, net of provisions, represented 66% of assets at the end of 2Q10, decreasing as compared to the 67% they represented at the end of 2Q09. Net investments were 14% of total assets at the end of the quarter, increasing their participation in assets from 12% at the end of de 2Q09.

1.2.	Loan Portfolio

During the second quarter of 2010, there was growth of the loan portfolio in our operation in Colombia. Loans denominated in COP totaled COP 33,574 billion at the end of 2Q10, remained stable compared to 2Q09 but increased 4% compared to 1Q10. On the other hand, loans denominated in USD totaled USD 5,390 million (23% of the loan portfolio), increasing 7% compared to 1Q10 and 3% compared to 2Q09. These USD denominated loans correspond to loans in Colombia (USD 1,250 million or 23% of loans in USD), El Salvador (USD 2,453 million or 46% of loans in USD) and other countries (USD 1,687 million or 31% of loans in USD).

The appreciation of the COP against de USD was of 1% in 2Q10 and has been of 11% since 2Q09. This appreciation of the peso, negatively affected the conversion to COP of loans denominated in USD. Overall, Bancolombia’s gross loans totaled COP 43,886 billion at the end of 2Q10 and increased 4.62% compared to the COP 41,946 billion at the end of 1Q10.

In annual terms, gross loans decreased 2% compared to the COP 44,714 billion in loans reported as of the end of 2Q09. This decrease is explained by the contraction of loans in USD resulting from their conversion to COP. When converted to COP, USD denominated loans showed a decrease of 8% in 2Q10 compared to 2Q09. In general, the higher volume of loans denominated in USD during the quarter, reveal an increase in lending activity in our subsidiaries of Panama (off-shore banking), an operation that already begins to reflect the pick-up in economic activity and the greater financing needs of our clients. The recovery of international trade flows played a key role in the increase of loans denominated in USD. Similarly, loans denominated in COP, which constitute the majority of our loan portfolio, didn’t show significant growth in annual terms.

Commercial loans denominated in COP ended 2Q10 at COP 20,447 billion and showed a significant increase of 5% with respect to 1Q10. Commercial loans denominated in USD totaled USD 3,683 million at the end of the quarter and increased 10% compared to 1Q10.

Consumer loans also began to show dynamism during the quarter, reaching COP 5,130 billion, a figure 5% higher than that reported at the end of 1Q10. In contrast, consumer loans originated in El Salvador continue to be subdued and don’t show significant growth. Overall, consumer loans denominated in USD totaled USD 1,009 million and decreased 1% with respect to 2Q09, but increased 1% with respect to 1Q10.

2Q10

In 2Q10, mortgage loans expressed in COP grew 48 billion, and reached COP 3,639 billion. Additionally, COP 276 billion in mortgages were securitized in the same period, taking the outstanding balance of securitized mortgages to 2,413 billion at the end of 2Q10. When taking into account securitizations, mortgage loans increased 3% during the quarter and 10% during the past 12 months. The increased dynamism of mortgage lending in Colombia is explained by the lower long-term interest rates, as well as by the Colombian government’s interested rate subsidy program, which have produced higher credit demand in this segment. On the other hand, the outstanding mortgage balances denominated in USD from our operation in El Salvador totaled USD 433 million, 1% and 6% lower that the outstanding mortgage balances in USD reported in 1Q10 and 2Q09, respectively.

Financial leases, 91% of which are denominated in COP, remained constant during the quarter and showed a decrease of 1% with respect to 2Q09.

When analyzing the performance of the loan portfolio, it becomes clear that corporate loans were key drivers of the growth of the total loan portfolio during the quarter as they increased 9% with respect to 1Q10. This increase is explained by higher demand for working capital and financing by businesses. On the other hand, retail and SME loans increased 1% in the same period due to greater demand for consumer loans.

Reserves for loan losses remained stable during 2Q10 and totaled COP 2,449 billion, or 5.6% of total loans at the end of the quarter. For further explanation regarding coverage of the loan portfolio and credit quality trends, please see Section 2.4. “Asset Quality, Provision Charges and Balance Sheet Strength” of this report.

The following table summarizes Bancolombia’s total loan portfolio:

LOAN PORTFOLIO				As of						Growth
(COP million)	2Q09			1Q10			2Q10			2Q10/1Q10			2Q10/2Q09
CORPORATE
Working capital loans		20,480,489			18,155,416			19,788,703			9.00	%		-3.38	%
Funded by domestic development banks		754,878			416,809			395,026			-5.23	%		-47.67	%
Trade Financing		1,536,181			1,419,113			1,602,804			12.94	%		4.34	%
Overdrafts		108,467			86,468			91,362			5.66	%		-15.77	%
Credit Cards		38,577			38,798			37,147			-4.26	%		-3.71	%
TOTAL CORPORATE		22,918,592			20,116,604			21,915,042			8.94	%		-4.38	%
RETAIL AND SMEs
Working capital loans		4,139,241			4,496,309			4,424,178			-1.60	%		6.88	%
Personal loans		4,009,022			3,611,806			3,820,676			5.78	%		-4.70	%
Loans funded by domestic development b		841,001			772,129			762,168			-1.29	%		-9.37	%
Credit Cards		2,409,140			2,379,969			2,414,429			1.45	%		0.22	%
Overdrafts		305,275			251,934			251,938			0.00	%		-17.47	%
Automobile loans		1,228,467			1,211,770			1,178,490			-2.75	%		-4.07	%
Trade Financing		98,344			74,424			43,983			-40.90	%		-55.28	%
TOTAL RETAIL AND SMEs		13,030,490			12,798,341			12,895,862			0.76	%		-1.03	%
MORTGAGE		3,271,842			3,603,657			3,638,968			0.98	%		11.22	%
FINANCIAL LEASES		5,492,600			5,427,246			5,435,666			0.16	%		-1.04	%
Total loans and financial leases		44,713,524			41,945,848			43,885,538			4.62	%		-1.85	%
Allowance for loan losses		(2,329,824	)		(2,452,205	)		(2,449,215	)		-0.12	%		5.12	%
Total loans and financial leases, net		42,383,700			39,493,643			41,436,323			4.92	%		-2.24	%

1.3.	Investment Portfolio

As of June 30, 2010, Bancolombia’s investment portfolio totaled COP 9,009 billion, increasing 5% compared to 1Q10 and 19% compared to 2Q09. The investment portfolio is mainly composed of debt investment securities, which represented 96% of Bancolombia’s total investments and 14% of assets at the end of 2Q10. Investments denominated in USD totaled USD 1,122 million and represented 24% of the investment portfolio. Additionally, the Bank has COP 1,721 billion in TIPS, which represents 19% of the investment portfolio.

2Q10

1.4.

Goodwill

As of 2Q10, Bancolombia’s goodwill totaled COP 777 billion and decreased 16% compared to the amount reported in 2Q09. This variation is explained by the appreciation of the Colombian peso in the quarter and the amortization of goodwill reported during the past year (it is important to remember that under COL GAAP, goodwill is amortized within a period of 20 years). As of June 30, 2010, Bancolombia’s goodwill included USD 403 million related mostly to the acquisition of Banagrícola in 2007 and COP 6 billion related to the acquisition of a participation of Renting Bancolombia by Leasing Bancolombia.

1.5.

Funding

As of June 30, 2010, Bancolombia’s liabilities totaled COP 55,387 billion and increased 3% compared to 1Q10, but decreased 3% compared to 2Q09. During 2Q10, the Bank maintained a solid liquidity position. The ratio of net loans to deposits (including borrowings from domestic development banks) was 95% at the end of 2Q10 and increased compared to the 92% reported in 1Q10 and 2Q09.

Deposits totaled COP 41,039 billion (or 74% of liabilities) at the end of 2Q10 and increased 2% during the quarter. The composition of deposits during 2Q10 showed little change compared to 1Q10; however, the decrease in the proportion of CDs compared to 2Q09 is notable. CDs represented 50% of deposits in 2Q09, but represented only 42% in 2Q10. This decrease is in line with the funding strategy executed by the Bank in the last few quarters, which is aimed at taking advantage of the greater liquidity and low interest rates through increasing savings and checking accounts and decreasing the cost of CDs. As a result of this recomposition of the funding mix, demand deposits went from representing 50% of the Bank’s total deposits in 2Q09, to representing 58% as of the end of 2Q10.

DEPOSIT MIX	2Q09					1Q10					2Q10
COP Million			%					%					%
Checking accounts		6,878,151		16.0	%		7,594,986		18.9	%		7,606,010		18.5	%
Saving accounts		14,133,895		33.0	%		15,428,560		38.5	%		15,956,900		38.9	%
Time deposits		21,508,359		50.1	%		16,687,250		41.6	%		17,090,686		41.6	%
Other		367,951		0.9	%		402,470		1.0	%		385,691		0.9	%
Total deposits		42,888,356					40,113,266					41,039,287

1.6.	Shareholders’ Equity and Regulatory Capital

Shareholders’ equity at the end of 2Q10 was COP 7,102 billion, increasing 14%, or COP 889, with respect to the COP 6,213 billion reported at the end of 2Q09.

Bancolombia’s capital adequacy ratio decreased slightly during the quarter, ending the period at 13.37%, 25 basis points below the 13.62% for 1Q10 but considerably higher than the 12.94% for 2Q09.

Bancolombia’s capital adequacy ratio was 437 basis points above the minimum level required by Colombia’s regulator, while the basic capital ratio (tier 1) was 10.68% and the tangible capital ratio, which is equal to shareholders’ equity minus goodwill and intangible assets divided by tangible assets, was 9.9% at the end of 2Q10.

2Q10

TECHNICAL CAPITAL RISK WEIGHTED ASSETS
Consolidated (COP millions)
	2Q09			%			1Q 10			%			2Q10			%
Basic capital (Tier I)		5,540,492			9.99	%		5,877,736			10.84	%		6,004,109			10.68	%
Additional capital (Tier II)		1,632,250			2.94	%		1,503,888			2.77	%		1,510,970			2.69	%
Technical capital (1)		7,172,742						7,381,624						7,515,080
Risk weighted assets included market risk		55,434,962						54,207,462						56,217,651
CAPITAL ADEQUACY (2)		12.94	%					13.62	%					13.37	%

(1) Technical capital is the sum of basic and additional capital.

(2) Capital adequacy is technical capital divided by risk weighted assets.

2Q10

2.	INCOME STATEMENT

Net income totaled COP 291 billion in 2Q10 or COP 370 per share – USD 0.77 per ADR, which represents and an increase of 15% compared to 2Q09 and a decrease of 15% compared to 1Q10. Bancolombia’s ROE was 16.75% for 2Q10, similar to the ROE of 16.54% for 2Q09 but inferior to the 19.4% ROE for 1Q10.

2.1.	Net Interest Income

Net interest income totaled COP 866 billion in 2Q10, 6% lower than that reported in 2Q09, and 8% higher than the figure for 1Q10. There was a change in the net interest margin for 1T10 with respect to the figure reported in the first quarter of the year due to a reclassification of expenses generated by derivatives, for COP 31 billion, which used to be recorded as part of net income from investments and is now recorded in the line item “derivative financial instruments” under other operating income. This quarterly variation is explained by the recovery in income from investment securities. Notably, as interest income increased and interest expenses decreased in 2Q10, there was a recovery in net interest income that reflects the lower funding cost associated with a better funding mix and the re-pricing of deposits.

During 2Q10, income generated by the investment portfolio totaled COP 126 billion, a figure 8% lower than the COP 138 billion for 2Q09, but 67% higher than the COP 76 billion for 1Q10. During 2Q10, income generated by the investment portfolio increased due to higher bond prices in the secondary markets. These mark-to-market gains were realized primarily in Colombia where interest rates in the secondary bond markets showed downward trends in the second quarter of the year.

Net Interest Margin

Annualized net interest margin ended 2Q10 at 6.45%, significantly higher than the annualized interest margin of 6.07% (after the reclassification explained in Section 2.1 “Net Interest Income” in this report) in 1Q10. Annualized net interest margin for investments was 3.1% in 2Q10, evidencing a recovery of part of the losses incurred in 1Q10. Additionally, annualized net interest margin for loans, financial leases and overnight funds was 7.1% in 2Q10, remaining stable with respect to 1Q10, although lower than the 7.4% margin reported in 2Q09.

Annualized Interest
Margin	2Q09			3Q09			4Q09			1Q10 (*)			2Q10
Loan Interest margin		7.4	%		7.0	%		7.3	%		7.1	%		7.1	%
Net investments' margin		2.0	%		2.3	%		11.1	%		0.6	%		3.1	%
Net interest margin		6.7	%		6.3	%		7.9	%		6.1	%		6.4	%

(*)There was a change in the net interest margin for 1T10 with respect to the figure reported in the first quarter of the year due to a reclassification of expenses generated by derivatives, for COP 30,727 million, which used to be recorded as part of net income from investments and is now recorded in the line item “derivative financial instruments” under Other Operating Income.

Notably, funding cost continued to decrease during 2Q10. The lower funding cost is the result of the liability re-pricing effort undertaken during the last quarters and the changes in the funding mix composition. The annualized average weighted cost of deposits reached 2.56% in 2Q10, decreasing as compared to the 2.73% and 4.86% for 1Q10 and 2Q09, respectively.

2Q10

Deposits' weighted
average cost	2Q09			1Q10			2Q10
Checking accounts		0.62	%		0.41	%		0.47	%
Time deposits		7.33	%		4.41	%		4.05	%
Saving accounts		3.28	%		2.08	%		2.03	%
Total deposits		4.86	%		2.73	%		2.56	%

2.2.	Fees and Income from Services

During 2Q10, net fees and income from services totaled COP 396 billion, 4% higher than those reported in 2Q09 and 6% higher than those reported in 1Q10. In particular, credit and debit card annual fees, the biggest contributor to total fees (33%), increased 3% compared to 2Q09. On the other hand, fees from collection and payment services decreased 4% with respect to 1Q10, but increased 15% with respect to 2Q09. Fees from fiduciary activities, pension fund management and brokerage, showed important increases during 2Q10, and although the two latter fee categories showed decreases with respect to 2Q09, they are already evidencing a positive change in the trend and are recovering.

Variation with respect to 1Q10 responds to seasonal effects and higher fees generated by the greater value of assets under management. Notably, fees from banking services and other services, which include fees from investment banking, were 17% higher than those for 2Q09 and 19% higher than those for 1Q10. Among the most significant transactions completed by Banca de Inversión Bancolombia (Bancolombia’s investment banking unit) are the structuring of a project finance deal for USD 350 million for AEI in Guatemala and the structuring of a syndicated credit for USD 205 million for IDEAL in Panama.

The following table summarizes Bancolombia’s participation in the credit card business in Colombia:

ACCUMULATED CREDIT CARD BILLING					%			Jul-05
(COP millions)	Jun-09		Jun-10		Growth			Market Share
Bancolombia VISA		845.281		889.307		5,21	%		7,84	%
Bancolombia Mastercard		1.124.231		1.091.473		-2,91	%		9,63	%
Bancolombia American Express		818.916		1.088.642		32,94	%		9,60	%
Total Bancolombia		2.788.427		3.069.423		10,08	%		27,08	%
Colombian Credit Card Market		10.259.263		11.336.604		10,50	%
Source: Credibanco y Redeban multicolor

CREDIT CARD MARKET SHARE					%			Jul-05
(Outstanding credit cards)	Jun-09		Jun-10		Growth			Market Share
Bancolombia VISA		306.966		317.344		3,38	%		6,02	%
Bancolombia Mastercard		365.572		344.520		-5,76	%		6,53	%
Bancolombia American Express		324.541		401.525		23,72	%		7,61	%
Total Bancolombia		997.079		1.063.389		6,65	%		20,16	%
Colombian Credit Card Market		5.232.858		5.275.517		0,82	%
Source: Credibanco y Redeban multicolor

2.3.	Other Operating Income

Total other operating income was COP 95 billion in 2Q10, 41% lower than in 1Q10, and 372% higher than in 2Q09.

Communication, postage, rent and others (primarily comprising income related to operating leases and commercial discounts) totaled COP 43 billion in 2Q10, 4% higher as compared to 1Q10 and 12% higher as compared to 2Q09.

2Q10

Dividend income, obtained from investments in participations in non-subsidiary companies totaled COP 11 billion in 2Q10, 28% lower than in 1Q10 but 174% higher than in 2Q09.

2.4.	Asset Quality, Provision Charges and Balance Sheet Strength

The deterioration of the loan portfolio (new past due loans before charge-offs) was COP 35 billion in 2Q10, a figure 88% lower than that presented in 1Q10 (COP 285 billion) and 85% than that presented in 2Q09 (COP 238 billion). This slower pace of deterioration is in line with the seasonal behavior of credit quality, which tends to have peaks at the beginning of the year and then improves. Credit quality continues to be impacted by a persistently high level of unemployment, although in general the pick-up in economic activity contributes to the improvement of loan quality.

Past due loans (those overdue more than 30 days) totaled COP 1,586 billion at the end of 2Q10, which represents 3.6% of total gross loans. The PDL ratio decreased from 4.23% at the end of 1Q10 and 3.9% at the end of 2Q09. Loan charge-offs totaled COP 225 billion in 2Q10, 64% higher than charge-offs for 1Q10 (COP 137 billion).

Provision charges (net of recoveries), totaled COP 187 billion in 2Q10, 31% higher than provision charges for 1Q10 and 46% lower than those for 2Q09.

Bancolombia maintains a strong balance sheet in terms of loan loss reserves. Allowances for loan losses totaled COP 2,449 billion, or 5.6% of total loans at the end of 2Q10, increasing with respect to the 5.2% of loans they represented as of June 30, 2009. Additionally, coverage, measured by the ratio of allowances for loans losses to PDLs (overdue 30 days), was 154% at the end of 2Q10, increasing with respect to the 138% at the end of 1Q10, and the 134% at the end of 2Q09. Likewise, coverage measured by the ratio of allowances for loans losses to loans classified as C, D and E, was 111% at the end of the second quarter of 2010, showing no variation compared to 1Q10.

The following tables present key metrics for asset quality:

ASSET QUALITY				As of						Growth
(COP millions)	Jun-09			Mar-10			Jun-10			2Q 10 / 1Q 10			2Q 10 / 2Q 09
Total performing past due loans (1)		774,928			723,348			584,149			-19.24	%		-24.62	%
Total non-performing past due loans		962,163			1,052,315			1,002,246			-4.76	%		4.17	%
Total past due loans		1,737,091			1,775,663			1,586,395			-10.66	%		-8.68	%
Allowance for loans interest losses		2,329,824			2,452,205			2,449,215			-0.12	%		5.12	%
Past due loans to total loans		3.88	%		4.23	%		3.61	%
Non-performing loans as a percentage of total loans		2.15	%		2.51	%		2.28	%
“C”, “D” and “E” loans as a percentage of total loans		4.00	%		5.25	%		5.04	%
Allowances to past due loans (2)		134.12	%		138.10	%		154.39	%
Allowance for loan losses as a percentage of “C”, “D” and “E” loans (2)		130.36	%		111.29	%		110.69	%
Allowance for loan losses as a percentage of non-performing loans (2)		242.14	%		233.03	%		244.37	%
Allowance for loan losses as a percentage of total loans		5.21	%		5.85	%		5.58	%
Percentage of performing loans to total loans		97.85	%		97.49	%		97.72	%

(1)

"Performing" past due loans are loans upon which Bancolombia continues to recognize income although interest in respect of such loans has not been received. Mortgage loans cease to accumulate interest on the statement of operations when they are more than 60 days past due. For all other loans and financial leasing operations of any type, interest is no longer accumulated after they are more than 30 days past due.

(2)

Under Colombian Bank regulations, a loan is past due when it is at least 31 days past the actual due date.

PDL Per Category
% Of loan Portfolio			2Q09			1Q10			2Q10
Commercial loans	62.7	%		2.7	%		3.3	%		2.6	%
Consumer loans	16.1	%		6.2	%		6.2	%		4.9	%
Microcredit	0.5	%		10.6	%		10.0	%		8.8	%
Mortgage loans	8.3	%		9.3	%		8.4	%		8.4	%
Finance lease	12.4	%		3.7	%		3.2	%		3.4	%
PDL TOTAL				3.9	%		4.2	%		3.6	%

2Q10

LOANS AND FINANCIAL LEASES CLASSIFICATION	2Q09					1Q10					2Q10
(COP millions)
¨A¨ Normal		41,324,933		92.4	%		37,845,118		90.2	%		40,045,941		91.3	%
¨B¨ Subnormal		1,601,358		3.6	%		1,897,276		4.5	%		1,626,884		3.7	%
¨C¨ Deficient		574,681		1.3	%		739,608		1.8	%		723,440		1.6	%
¨D¨ Doubtful recovery		908,207		2.0	%		1,125,766		2.7	%		1,138,996		2.6	%
¨E¨ Unrecoverable		304,343		0.7	%		338,080		0.8	%		350,276		0.8	%
Total		44,713,522		100	%		41,945,848		100	%		43,885,537		100	%

Loans and financial leases classified as C, D and E as a percentage of total loans and financial leases		4.0	%				5.3	%				5.0	%

2.5.	Operating Expenses

During 2Q10, operating expenses totaled COP 743 billion, increasing 2% compared to 1Q10 and 9% compared to 2Q09.

Personnel expenses (the sum of salaries and employee benefits, bonus plan payments and compensation) totaled COP 314 billion in 2Q10, 1% lower than in 1Q10, but 12% higher than in 2Q09. The increase with respect to 2Q09 is mainly explained by the annual increment in salaries and bonus plan payments related to Bancolombia’s variable compensation program in which compensation is determined taking into account the economic value added by the firm.

Administrative and other expenses increased 3% en 2Q10 compared to 1Q10 and 7% compared to 2Q09, totaling COP 356 billion. This variation is explained by higher expenses from the rental and leasing of technology during the year.

Depreciation expense totaled COP 49 billion in 2Q10, increasing 3% compared to 1Q10 and 7% compared to 2Q09. This variation is explained by the growth in the depreciation of assets that are part of the operating lease business of Bancolombia. These assets totaled COP 914 billion en 2Q10, increasing 6% compared to 1Q10 and 15% compared to 2Q09. In particular, COP 20 billion, or 41% of the quarter’s depreciation expense, is associated with operating lease.

3.	BANCOLOMBIA Descripción de la compañía (NYSE: CIB)

Bancolombia is a full service financial institution incorporated in Colombia that offers a wide range of banking products and services to a diversified individual and corporate customer base of more than 6.9 million customers. Bancolombia delivers its products and services via its regional network comprised of Colombia’s largest non-government owned banking network, El Salvador’s leading financial conglomerate (Banagricola S.A.), off-shore banking subsidiaries in Panama, Cayman and Puerto Rico, as well as an agency in Miami. Together, Bancolombia and its subsidiaries provide stock brokerage, investment banking, leasing, factoring, consumer finance, fiduciary and trust services, asset management, pension fund administration, and insurance, among others.

Contact Information

Bancolombia’s Investor Relations

Phone (574) 4041837 / (574) 4041838

E-mail: investorrelations@bancolombia.com.co

Alejandro Mejia (IR Manager) /Catalina Botero (Analyst)

Website: http://www.grupobancolombia.com/investorrelations/

2Q10

BALANCE SHEET							Growth
(COP million)	Jun-09		Mar-10		Jun-10		QoQ			YoY
ASSETS
Cash and due from banks		4,725,276		4,592,302		4,180,009		-8.98	%		-11.54	%
Overnight funds sold		2,054,241		1,736,629		1,013,705		-41.63	%		-50.65	%
Total cash and equivalents		6,779,517		6,328,931		5,193,714		-17.94	%		-23.39	%
Debt securities		7,366,892		8,222,999		8,629,835		4.95	%		17.14	%
Trading		2,220,649		2,866,781		3,216,523		12.20	%		44.85	%
Available for Sale		2,032,017		2,217,319		2,146,980		-3.17	%		5.66	%
Held to Maturity		3,114,226		3,138,899		3,266,332		4.06	%		4.88	%
Equity securities		250,629		474,600		468,588		-1.27	%		86.96	%
Trading		61,509		230,441		227,226		-1.40	%		269.42	%
Available for Sale		189,120		244,159		241,362		-1.15	%		27.62	%
Market value allowance		-68,253		-89,049		-89,252		0.23	%		30.77	%
Net investment securities		7,549,268		8,608,550		9,009,171		4.65	%		19.34	%
Commercial loans		28,639,686		25,871,666		27,513,576		6.35	%		-3.93	%
Consumer loans		7,157,808		6,824,949		7,059,906		3.44	%		-1.37	%
Microcredit		151,588		218,330		237,422		8.74	%		56.62	%
Mortgage loans		3,271,842		3,603,657		3,638,968		0.98	%		11.22	%
Finance lease		5,492,600		5,427,246		5,435,666		0.16	%		-1.04	%
Allowance for loan losses		-2,329,824		-2,452,205		-2,449,215		-0.12	%		5.12	%
Net total loans and financial leases		42,383,700		39,493,643		41,436,323		4.92	%		-2.24	%
Accrued interest receivable on loans		512,409		382,918		359,663		-6.07	%		-29.81	%
Allowance for accrued interest losses		-55,820		-48,052		-47,399		-1.36	%		-15.09	%
Net total interest accrued		456,589		334,866		312,264		-6.75	%		-31.61	%
Customers' acceptances and derivatives		129,448		628,622		776,967		23.60	%		500.22	%
Net accounts receivable		782,705		681,351		676,926		-0.65	%		-13.51	%
Net premises and equipment		1,268,141		1,022,101		1,081,336		5.80	%		-14.73	%
Foreclosed assets, net		31,684		80,000		80,586		0.73	%		154.34	%
Prepaid expenses and deferred charges		143,062		210,944		219,326		3.97	%		53.31	%
Goodwill		929,702		795,640		777,328		-2.30	%		-16.39	%
Operating leases, net		795,070		864,839		913,735		5.65	%		14.93	%
Other		1,364,256		1,020,466		1,299,099		27.30	%		-4.78	%
Reappraisal of assets		654,162		700,629		712,721		1.73	%		8.95	%
Total assets		63,267,304		60,770,582		62,489,496		2.83	%		-1.23	%
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
DEPOSITS
Non-interest bearing		5,008,486		5,570,111		5,402,692		-3.01	%		7.87	%
Checking accounts		4,640,535		5,167,641		5,017,001		-2.92	%		8.11	%
Other		367,951		402,470		385,691		-4.17	%		4.82	%
Interest bearing		37,879,870		34,543,155		35,636,595		3.17	%		-5.92	%
Checking accounts		2,237,616		2,427,345		2,589,009		6.66	%		15.70	%
Time deposits		21,508,359		16,687,250		17,090,686		2.42	%		-20.54	%
Savings deposits		14,133,895		15,428,560		15,956,900		3.42	%		12.90	%
Total deposits		42,888,356		40,113,266		41,039,287		2.31	%		-4.31	%
Overnight funds		2,472,605		1,894,116		1,714,331		-9.49	%		-30.67	%
Bank acceptances outstanding		33,086		453,057		635,061		40.17	%		1819.43	%
Interbank borrowings		876,344		1,191,429		1,428,948		19.94	%		63.06	%
Borrowings from domestic development banks		3,260,963		2,730,401		2,670,756		-2.18	%		-18.10	%
Accounts payable		1,809,332		1,874,519		2,055,007		9.63	%		13.58	%
Accrued interest payable		517,775		293,956		266,926		-9.20	%		-48.45	%
Other liabilities		521,279		622,227		654,314		5.16	%		25.52	%
Bonds		3,893,681		4,127,958		4,198,459		1.71	%		7.83	%
Accrued expenses		588,149		600,646		655,736		9.17	%		11.49	%
Minority interest in consolidated subsidiaries		192,245		66,757		68,354		2.39	%		-64.44	%
Total liabilities		57,053,815		53,968,332		55,387,179		2.63	%		-2.92	%
SHAREHOLDERS' EQUITY
Subscribed and paid in capital		393,914		393,914		393,914		0.00	%		0.00	%
Retained earnings		4,995,206		5,388,839		5,680,638		5.41	%		13.72	%
Appropiated		4,430,958		5,047,855		5,048,404		0.01	%		13.93	%
Unappropiated		564,248		340,984		632,234		85.41	%		12.05	%
Reappraisal and others		817,229		985,147		991,985		0.69	%		21.38	%
Gross unrealized gain or loss on debt securities		7,140		34,350		35,780		4.16	%		401.12	%
Total shareholder's equity		6,213,489		6,802,250		7,102,317		4.41	%		14.30	%

2Q10

INCOME STATEMENT	As of						Growth												Growth
(COP million)	Jun-09			Jun-10			Jun-10/Jun-09			2Q09			1Q10			2Q10			QoQ			YoY
Interest income and expenses
Interest on loans		2,700,263			1,942,468			-28.06	%		1,306,041			969,360			973,108			0.39	%		-25.49	%
Interest on investment securities		291,752			202,708			-30.52	%		137,689			76,349			126,359			65.50	%		-8.23	%
Overnight funds		45,577			27,136			-40.46	%		17,319			16,747			10,389			-37.97	%		-40.01	%
Leasing		406,015			286,858			-29.35	%		191,741			146,511			140,347			-4.21	%		-26.80	%
Total interest income		3,443,607			2,459,170			-28.59	%		1,652,790			1,208,967			1,250,203			3.41	%		-24.36	%
Interest expense											-
Checking accounts		23,653			17,863			-24.48	%		11,644			8,498			9,365			10.20	%		-19.57	%
Time deposits		811,342			363,876			-55.15	%		399,900			192,963			170,913			-11.43	%		-57.26	%
Savings deposits		257,760			159,095			-38.28	%		113,867			79,543			79,552			0.01	%		-30.14	%
Total interest on deposits		1,092,755			540,834			-50.51	%		525,411			281,004			259,830			-7.54	%		-50.55	%
Interbank borrowings		35,620			9,359			-73.73	%		12,618			4,819			4,540			-5.79	%		-64.02	%
Borrowings from domestic development banks		154,119			74,867			-51.42	%		67,022			39,047			35,820			-8.26	%		-46.55	%
Overnight funds		67,613			18,531			-72.59	%		29,629			8,990			9,541			6.13	%		-67.80	%
Bonds		181,895			148,645			-18.28	%		91,676			74,705			73,940			-1.02	%		-19.35	%
Total interest expense		1,532,002			792,236			-48.29	%		726,356			408,565			383,671			-6.09	%		-47.18	%
Net interest income		1,911,605			1,666,934			-12.80	%		926,434			800,402			866,532			8	%		-6	%
Provision for loan and accrued interest losses, net		(768,211	)		(421,019	)		-45.19	%		(384,604	)		(185,989	)		(235,030	)		26.37	%		-38.89	%
Recovery of charged-off loans		81,719			118,235			44.68	%		48,560			55,736			62,499			12.13	%		28.70	%
Provision for foreclosed assets and other assets		(39,064	)		(39,616	)		1.41	%		(15,753	)		(19,164	)		(20,452	)		6.72	%		29.83	%
Recovery of provisions for foreclosed assets and other assets		40,686			13,255			-67.42	%		6,840			6,919			6,336			-8.43	%		-7.37	%
Total net provisions		(684,870	)		(329,145	)		-51.94	%		(344,957	)		(142,498	)		(186,647	)		30.98	%		-45.89	%
Net interest income after provision for loans											-
and accrued interest losses		1,226,735			1,337,789			9.05	%		581,477			657,904			679,885			3.34	%		16.92	%
Commissions from banking services and other services		130,695			149,019			14.02	%		69,042			68,061			80,958			18.95	%		17.26	%
Electronic services and ATM fees		30,424			27,190			-10.63	%		14,961			13,775			13,415			-2.61	%		-10.33	%
Branch network services		53,396			56,138			5.14	%		26,806			27,566			28,572			3.65	%		6.59	%
Collections and payments fees		88,813			107,960			21.56	%		45,924			55,147			52,813			-4.23	%		15.00	%
Credit card merchant fees		13,807			7,893			-42.83	%		6,591			4,203			3,690			-12.21	%		-44.01	%
Credit and debit card annual fees		274,458			280,836			2.32	%		137,253			140,008			140,828			0.59	%		2.60	%
Checking fees		34,435			34,299			-0.39	%		17,476			17,407			16,892			-2.96	%		-3.34	%
Fiduciary activities		81,633			83,568			2.37	%		42,692			40,105			43,463			8.37	%		1.81	%
Pension plan administration		51,499			46,431			-9.84	%		25,336			22,243			24,188			8.74	%		-4.53	%
Brokerage fees		18,312			15,865			-13.36	%		10,410			7,477			8,388			12.18	%		-19.42	%
Check remittance		12,898			9,059			-29.76	%		6,748			4,639			4,420			-4.72	%		-34.50	%
International operations		26,940			26,948			0.03	%		13,308			11,493			15,455			34.47	%		16.13	%
Fees and other service income		817,310			845,206			3.41	%		416,547			412,124			433,082			5.09	%		3.97	%
Fees and other service expenses		(70,544	)		(75,181	)		6.57	%		(36,828	)		(37,713	)		(37,468	)		-0.65	%		1.74	%
Total fees and income from services, net		746,766			770,025			3.11	%		379,719			374,411			395,614			5.66	%		4.19	%
Other operating income											-
Net foreign exchange gains		(116,648	)		22,969			119.69	%		(321,943	)		5,098			17,871			250.55	%		105.55	%
Derivatives Financial Contracts		75,728			11,703			-84.55	%		261,793			27,772			(16,069	)		-157.86	%		-106.14	%
Gains(loss) on sales of investments on equity securities		538			33,587			6142.94	%		532			34,212			(625	)		-101.83	%		-217.48	%
Securitization income		27,162			25,516			-6.06	%		13,494			9,876			15,640			58.36	%		15.90	%
Dividend income		20,772			27,564			32.70	%		4,202			16,069			11,495			-28.46	%		173.56	%
Revenues from commercial subsidiaries		51,875			43,495			-16.15	%		23,219			23,148			20,347			-12.10	%		-12.37	%
Insurance income		12,178			4,581			-62.38	%		367			1,540			3,041			97.47	%		728.61	%
Communication, postage, rent and others		74,792			84,314			12.73	%		38,361			41,404			42,910			3.64	%		11.86	%
Total other operating income		146,397			253,729			73.32	%		20,025			159,119			94,610			-40.54	%		372.46	%
Total income		2,119,898			2,361,543			11.40	%		981,221			1,191,434			1,170,109			-1.79	%		19.25	%
Operating expenses											-
Salaries and employee benefits		519,644			553,317			6.48	%		264,992			270,414			282,903			4.62	%		6.76	%
Bonus plan payments		37,936			61,926			63.24	%		11,913			37,422			24,504			-34.52	%		105.69	%
Compensation		10,224			17,387			70.06	%		5,390			9,889			7,498			-24.18	%		39.11	%
Administrative and other expenses		699,863			701,474			0.23	%		333,675			345,090			356,384			3.27	%		6.81	%
Deposit security, net		38,639			41,145			6.49	%		19,022			19,427			21,718			11.79	%		14.17	%
Donation expenses		1,393			1,503			7.90	%		687			864			639			-26.04	%		-6.99	%
Depreciation		90,274			96,785			7.21	%		45,627			47,748			49,037			2.70	%		7.47	%
Total operating expenses		1,397,973			1,473,537			5.41	%		681,306			730,854			742,683			1.62	%		9.01	%
Net operating income		721,925			888,006			23.01	%		299,915			460,580			427,426			-7.20	%		42.52	%
Goodwill amortization (1)		38,297			30,183			-21.19	%		18,104			15,142			15,041			-0.67	%		-16.92	%
Non-operating income (expense)											-
Other income		119,174			99,479			-16.53	%		56,408			72,176			27,303			-62.17	%		-51.60	%
Minority interest		(10,743	)		(4,942	)		-54.00	%		(5,607	)		(2,702	)		(2,240	)		-17.10	%		-60.05	%
Other expense		(56,330	)		(61,058	)		8.39	%		(25,881	)		(31,506	)		(29,552	)		-6.20	%		14.18	%
Total non-operating income		52,101			33,479			-35.74	%		24,920			37,968			(4,489	)		-111.82	%		-118.01	%
Income before income taxes		735,729			891,302			21.15	%		306,731			483,406			407,896			-15.62	%		32.98	%
Income tax expense		(171,481	)		(259,068	)		51.08	%		(53,608	)		(142,422	)		(116,646	)		-18.10	%		117.59	%
Net income		564,248			632,234			12.05	%		253,123			340,984			291,250			-14.59	%		15.06	%

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	BANCOLOMBIA S.A. (Registrant)
Date: August 4, 2010	By:	/s/ JAIME ALBERTO VELÁSQUEZ B.
		Name:	Jaime Alberto Velásquez B.
		Title:	Vice President of Finance