Information Security Identification: Confidential

COLOMBIA

Looking to 2013 and Beyond

Presented by Dino Sani

July 8, 2013

Information Security Identification: Confidential

Contents

1. The Economy of Colombia

2. Colombian Trade & International Relations

3. The Financial & Banking Sector

4. Economic Forecast

2

1. The Economy of Colombia

Information Security Identification: Confidential

Third largest population in Latin America

4

0

5

10

15

20

25

30

35

40

45

50

196

0

196

3

196

6

196

9

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0

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1

Mil

lio

ns

Population of Colombia Over Time

0

50

100

150

200

250

Mil

lio

ns

Population of LatAm Countries

Information Security Identification: Confidential

-6

-4

-2

0

2

4

6

8

0

50

100

150

200

250

300

350

400

GD

P G

row

th(%

)

GD

P (

Billio

ns U

SD

)

GDP & GDP Growth by Year

GDP (Billion USD) GDP Growth (%)

5

GDP

• 2004 to 2008: years of rapid

GDP expansion = 5.4% Avg.

• After slowing to 4% in 2012

the GDP growth is expected to

pick up gradually to 4.3% in

2013.

• Modest domestic production

base + strong currency = high

import demand. The weaker

performance in the external

sector will remain a substantial

drag on overall GDP growth

Third largest country ; Fourth largest economy in Latin America

Information Security Identification: Confidential

Foreign direct investment growing in energy & mining

17.8% growth in 2012 to $15.7B

• Focus on hydrocarbons,

infrastructure, and mining

• In comparison:

> FDI Peru: $9 billion

> FDI Chile: $23 billion

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(5.00)

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10.00

15.00

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25.00

30.00

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20

10

20

11

20

12

US

D (

Bil

lio

ns)

Foreign Investment

Direct Portfolio

$15.7B

2012 annualized FDI

Information Security Identification: Confidential

Single digit inflation since 1999

7

• Extremely low inflation, been

dropping since the early 90’s

• Lowest in the region,

currently hovering at around

2%

• Prudent macroeconomic

management will keep

annual inflation within target

range of 2-4% in 2013 -17. 0

5

10

15

20

25

30

35

Infl

ati

on

Rate

Inflation Rate by Year

Information Security Identification: Confidential

High Unemployment relative to other major economies

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

Unemployment in Colombia Over Time

8

Information Security Identification: Confidential

Downside risks to economic activity:

• Sharp decline in Trade

• Failure to deliver on fiscal spending on infrastructure

• Long-running conflicts with guerrillas and crime networks

• Slow progress in social policies. Poverty and inequality

remain high

• Weak job creation

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2. Trade and International Relations

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Pragmatic international economic integration

• Alianza del Pacifico

International economic integrations

and trade

Colombia, Peru, Chile, and Mexico

• Expanding links with Asia

Trade deals with South Korea and

Japan

• Most stable and pro-business in

the area

Based on strong royalties from oil

industry

11

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United States-Colombia Trade Promotion Agreement

Bilateral trade agreement, May

2012, to promote mutual economic

benefit & growth

• No tariffs on 80% of US

consumer and industrial goods

exports to Colombia

• After 10 years: all tariffs removed

• US merchandise exports to

Colombia totaled $14.3 billion in

2011

12

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The U.S. is Colombia’s main trading partner

US 38%

Spain 5% China

5%

Netherlands 4%

Other 48%

Main Destinations of Exports (% Share)

US 31%

China 12%

Mexico 11%

Brazil 5%

Other 41%

Main Origins of Imports (% Share)

Negative trade balance as of April 2013: -$0.22 Billion USD

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Petroleum is the main export

Intermediate goods 40.5%

Capital goods 32.0%

Consumer goods 20.0%

Other 7.5%

Principal Imports (% Share) in 2012

Petroleum & petroleum products

52.4%

Coal 12.9%

Coffee 3.2%

Nickel 1.5%

Other 30.0%

Principal Exports (% Share in 2012)

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Payment Flow

Period: January 2011 - May 2013 (Source: SWIFT)

United States 85%

Germany 10%

Panama 2%

Spain 1%

United Kingdom 1%

Canada 0.5%

All other 0.7%

Other 3%

The Financial and Banking Sectors

Information Security Identification: Confidential

Strong and growing financial market

17

4th largest financial market in

Latin America by market

capitalization

$250 billion

Financial assets grew at a 14%

CAGR in last ten years

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US

D (

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lio

ns

)

Total Financial Assets and AUM

Credit Institutions Assets in trust Pension Funds

Official Institutions Insurance Others 2012 annualized FDI

Information Security Identification: Confidential

Sound Financial System - Capital

18

Information Security Identification: Confidential

Banking sector is profitable and well capitalized

High capital base

Growing profits despite tight monetary policy

Assets rose by 12% in 2012

Despite rapid loan growth, NPLs remain a manageable

2-3%

Banks maintain solid levels of liquidity, primarily funding themselves with local deposits

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0

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20%

ROA Risk Weighted Capital

Banking Profits and Capital

Information Security Identification: Confidential

Sound Financial System – ROA/ROE

20

Information Security Identification: Confidential

Risk Assessment

21

Sovereign Currency Banking Sector Political

Economic

Structure

•Continued

strengthening

of ability to

service debt

•Good access

to external

financing

•Public/GDP

ratio below

40% of GDP

(Q1 June)

•Continued

exchange

rate volatility

•Growing

reserves

•Strong FDI

inflows

•NPL risen

slightly

•Well

managed

•Well

capitalized

•Profitable

• Internal

violence

remains

• Strong

institutions

• Possible

peace

agreement

coming

• Commodity

exports

generate

increasing

share of

foreign

earnings

• High

unemployment

• Fiscal rigidities

• Has never

defaulted

Data sources:

•Economist intelligence,

•Bolsa de Valores de Colombia,

•Bloomberg,

•The World Bank,

•Moody’s Capital Markets Research Group,

•International Trade Administration,

•Swift,

•BNYMellon

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