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LEASES
12 Months Ended
Dec. 31, 2022
LEASES  
LEASES

NOTE 7. LEASES

7.1. Lessor

Finance leases

The Bank has entered into lease agreements as the lessor. These lease arrangements involve machinery and equipment, computer equipment, vehicles and furniture and fixtures, and their terms range between one and ten years, as follows:

As of December 31, 2022

Period

Gross investment in finance
lease receivable

Present value of minimum
payments

In millions of COP

Less than 1 year

634,388

612,012

Between 1 and 5 years

10,579,102

8,286,322

Greater than 5 years

34,118,764

19,199,382

Total gross investment in finance lease receivable/ present value of minimum payments

45,332,254

28,097,716

Less: Future financial income(1)

(17,234,538)

-

Present value of payments receivable(2)

28,097,716

28,097,716

Minimum non-collectable payments impairment

(972,743)

(972,743)

Total

27,124,973

27,124,973

(1) Future financial income: Total Gross Investment - Total Present Value of minimum payments.
(2) See Note 6. Loans and advances to customers, net.

As of December 31, 2021

Period

Gross investment in finance
lease receivable

Present value of minimum
payments

In millions of COP

Less than 1 year

1,183,637

735,304

Between 1 and 5 years

8,352,753

6,958,333

Greater than 5 years

25,499,661

17,425,991

Total gross investment in finance lease receivable/ present value of minimum payments

35,036,051

25,119,628

Less: Future financial income(1)

(9,916,423)

-

Present value of payments receivable(2)

25,119,628

25,119,628

Minimum non-collectable payments impairment

(1,520,880)

(1,520,880)

Total

23,598,748

23,598,748

(1) Future financial income: Total Gross Investment - Total Present Value of minimum payments.
(2) See Note 6. Loans and advances to customers, net.

Unsecured residual value(*)

The following table sets the unsecured residual values by type of asset as of December 31, 2022 and 2021:

Type of asset

December 31, 2022

December 31, 2021

In millions of COP

Technological equipment

47,922

37,139

Vehicles

24,187

23,912

Machinery and equipment

13,124

11,683

Furniture and fixtures

28

128

Other assets

1,541

-

Total

86,802

72,862

(*) The unsecured residual value is the part of the residual value of the leased asset, whose realization is not secured or is secured by a third party related to the lessor.

Amounts recognized as income for extensions

At the end of the reporting period, the following entries are recognized as income corresponding to contract extensions or automatic time extension of financial leasing contracts:

Type of asset

December 31, 2022

December 31, 2021

In millions of COP

Technological equipment

30,075

15,210

Buildings

3,905

3,052

Machinery and equipment

498

720

Vehicles

206

537

Furniture and fixtures

1

1

Total

34,685

19,520

As of December 31, 2022 and 2021, financial leases income amounted to COP 2,461,456 and COP 1,440,493, respectively.

Operating leases

Certain of the Bank’s subsidiaries lease assets to third parties under non-cancellable operating lease arrangements. Assets provided through operating leases are recorded as premises and equipment. The terms established for these agreements range from one to ten years.

The following table presents the information of minimum payments by lease to be received:

December 31, 2022

December 31, 2021

In millions of COP

Less than 1 year

501,738

400,296

Between 1 and 5 years

783,663

308,802

Greater than 5 years

423,459

75,521

Total

1,708,860

(1)

784,619

(1) During 2022, Renting S.A.S. y Filiales showed an increase in the number of leased vehicles.

As of December 31, 2022 and 2021, the operating lease income amounted to COP 649,693 and COP 412,286, respectively. Additionally, the Bank recognized other services related to the lease for COP 541,436 and COP 375,275, respectively.

Risk management associated with leases

Grupo Bancolombia, in those companies that offer leasing services, performing as a lessor, has a comprehensive risk assessment model for those assets classified as property and equipment. For the risk arising from non-payment of the lease fee by the lessee, the model includes policies and guidelines in the lease contracts origination, in which the payment capacity of the lessee is assessed through financial analysis, evaluation of historical payment behavior and risk level.

For active risk, the model includes the impairment test that is carried out annually for this type of asset, where external (economic and legal) and internal (insurance, maintenance, sales) indicators that impact the assets and their environment are evaluated. The lessor carries out a detailed review process at the time of the return of the asset by the lessees to guarantee its operating conditions and determine the required adjustments.

Additionally, the bank relies on the participation of experts, separate from the salesforce, who permanently monitor the conditions of the asset preowned market, back testing the consistency of the variables involved in estimating the residual value (commercial value minus selling costs) and the periodic review of the model results with key executives. All of the above, complemented by agreements with suppliers for the exchange of information, knowledge and in some cases, structuring the residual risk mitigation mechanisms.

In order to manage the risks associated with the assets, the Bank also employs an insurance department, and engages an international broker and insurance companies. They all serve as support to design and define the strategies for the different types of protection that cover the lessor's risks, assets and customers.

Additionally, in Renting Colombia's vehicle rental business, assets are managed with the goal of preserving commercial value through necessary maintenance, which avoids deterioration beyond that generated by regular use. Service indicators with suppliers are periodically reviewed in order to ensure their quality and compliance with the expected levels. Safe mobility strategies are also defined based on the permanent analysis of the road safety indicators. These strategies aim at ensuring the status and useful life of the asset.

7.2. Lessee

The Bank has entered into lease agreements as a lessee. These arrangements involve offices, branches and administrative offices as well as certain Computer equipment. As of December 31, 2022 and 2021, the rollforward of right-of-use assets was as follows:

As of December 31, 2022

Roll - forward

Right-of-use assets

Balance at
January 01, 2022

Acquisitions

Additions

Expenses
depreciation(1)

Disposals

Revaluation

Effect of changes
in foreign
exchange rate

Balance at
December 31, 2022

In millions of COP

Buildings

Cost

2,015,154

66,738

8,746

-

(55,759)

83,387

201,205

2,319,471

Accumulated depreciation

(431,147)

-

-

(175,538)

31,276

-

(62,206)

(637,615)

Furniture and fixtures

Cost

3,972

-

-

-

-

37

440

4,449

Accumulated depreciation

(2,821)

-

-

(1,066)

-

-

(404)

(4,291)

Computer equipment

Cost

87,357

2,603

-

-

(985)

(2,659)

8,924

95,240

Accumulated depreciation

(32,538)

-

-

(18,717)

826

-

(3,328)

(53,757)

Vehicles

Cost

72,369

99,041

-

-

(70,207)

34,776

581

136,560

Accumulated depreciation

(16,481)

-

-

(17,540)

1,558

-

(486)

(32,949)

Total right-of-use assets – cost

2,178,852

168,382

8,746

-

(126,951)

115,541

211,150

2,555,720

Total right-of-use assets - accumulated depreciation

(482,987)

-

-

(212,861)

33,660

-

(66,424)

(728,612)

Total right-of-use assets, net

1,695,865

168,382

8,746

(212,861)

(93,291)

115,541

144,726

1,827,108

(1)See Note 26.3 Impairment, depreciation and amortization.

As of December 31, 2021

Roll - forward

Right-of-use assets

Balance at
January 01, 2021

Acquisitions

Additions

Expenses
depreciation(1)

Disposals

Revaluation

Effect of changes
in foreign
exchange rate

Balance at
December 31, 2021

In millions of COP

Buildings

Cost

1,845,970

48,913

61,281

-

(64,972)

(11,048)

135,010

2,015,154

Accumulated depreciation

(278,008)

-

-

(163,422)

30,637

11,055

(31,409)

(431,147)

Furniture and fixtures

Cost

3,466

224

-

-

-

(9)

291

3,972

Accumulated depreciation

(1,674)

-

-

(969)

-

-

(178)

(2,821)

Computer equipment

Cost

65,681

14,723

-

-

(526)

3,304

4,175

87,357

Accumulated depreciation

(18,282)

-

-

(13,606)

440

-

(1,090)

(32,538)

Vehicles

Cost

58,103

22,195

-

-

(7,292)

(1,029)

392

72,369

Accumulated depreciation

(14,241)

-

-

(12,822)

10,567

282

(267)

(16,481)

Total right-of-use assets – cost

1,973,220

86,055

61,281

-

(72,790)

(8,782)

139,868

2,178,852

Total right-of-use assets - accumulated depreciation

(312,205)

-

-

(190,819)

41,644

11,337

(32,944)

(482,987)

Total right-of-use assets, net

1,661,015

86,055

61,281

(190,819)

(31,146)

2,555

106,924

1,695,865

(1)See Note 26.3 Impairment, depreciation and amortization.

The following table sets forth the changes in lease liabilities as of December 31, 2022 and 2021:

As of December 31, 2022

Concept

Total

In millions of COP

Balance at January 01, 2022

1,819,077

(+) New contracts

68,201

(+/-) Reassessment of the lease liability

12,131

(-) Payments

(285,920)

(+) Accrued Interest(1)

123,510

(+/-) Effect of changes in foreign exchange rate

163,269

Balance at December 31, 2022

1,900,268

(1)The difference of COP 12,161 with the interest expense on lease liabilities recognized in the Consolidated Statement Income corresponds to the expense accrued for the difference between the book value of the right-of-use asset and the lease liability at the time of early termination of contracts.

As of December 31, 2021

Concept

Total

In millions of COP

Balance at January 01, 2021

1,818,358

(+) New contracts

63,515

(+/-) Reassessment of the lease liability

(41,800)

(-) Payments

(259,140)

(+) Accrued Interest(1)

122,011

(+/-) Effect of changes in foreign exchange rate

116,133

Balance at December 31, 2021

1,819,077

(1)The difference of COP 10,455 with the interest expensive on lease liabilities recognized in the Consolidated Statement Income corresponds to the expense accrued for the difference between the book value of the right-of-use asset and the lease liability at the time of early termination of contracts.

The following table shows maturity analysis of lease liabilities as of December 31, 2022 and 2021:

As of December 31, 2022

Type of assets

Maturity less than 1 year

Maturity between 1 and 3 years

Maturity between 3 and 5 years

Maturity more than 5 years

Total lease liabilities

In millions of COP

Buildings

10,502

43,545

82,647

1,716,968

1,853,662

Vehicles

83

300

183

-

566

Computer equipment

3,052

17,775

14,650

10,563

46,040

Total lease liabilities

13,637

61,620

97,480

1,727,531

1,900,268

As of December 31, 2021

Type of assets

Maturity less than 1 year

Maturity between 1 and 3 years

Maturity between 3 and 5 years

Maturity more than 5 years

Total lease liabilities

In millions of COP

Buildings

5,632

49,939

39,367

1,665,386

1,760,324

Vehicles

159

119

-

-

278

Computer equipment

-

29,964

15,890

11,559

57,413

Furniture and fixtures

566

496

-

-

1,062

Total lease liabilities

6,357

80,518

55,257

1,676,945

1,819,077

The following table shows the weighted average rates and average useful life of right-of-use assets as of December 31, 2022 and 2021:

As of December 31, 2022

Right-of-use assets

Weighted average life

Weighted average
remaining lease terms

Weighted average discount
rates

Buildings

195

97

5.75

%

Computer equipment

75

35

8.65

%

Vehicles

48

35

10.24

%

As of December 31, 2021

Right-of-use assets

Weighted average life

Weighted average
remaining lease terms

Weighted average discount
rates

Buildings

207

123

5.35

%

Computer equipment

72

40

6.94

%

Furniture and fixtures

45

12

6.50

%

Vehicles

46

18

3.79

%

The future cash outflows of variable lease payments and termination options that are not reflected in the measurement of lease liabilities as of December 31, 2022 and 2021, amount to COP 2,412 and COP 2,323.

The following table shows the detail of leases in the Consolidated Statement of Income as of December 31, 2022 and 2021:

As of December 31, 2022

Right-of-use assets

Financial interest

Expenses
depreciation(2)

Payments of penalties

Effect of changes in foreign exchange rate

Short-term leases

Leases for which the underlying asset is of low value

Variable payments

In millions of COP

Buildings

107,002

175,538

11,168

416

872

208

6,048

Vehicles

13

17,540

-

-

394

55

-

Computer equipment

4,289

18,717

-

-

-

8,649

-

Furniture and fixtures

45

1,066

-

-

1,015

2,685

-

Total

111,349

(1)

212,861

11,168

416

2,281

11,597

6,048

(1)Includes the expense generated by the difference between the carrying amount of the asset for the right to use and the liability for leasing at the time of the early termination of lease contracts by COP 12,161, see Note 25.2 Interest expenses.
(2)See Note 26.3 Impairment, depreciation and amortization.

As of December 31, 2021

Right-of-use assets

Financial interest

Expenses
depreciation(2)

Payments of penalties

Effect of changes in foreign exchange rate

Short-term leases

Leases for which the underlying asset is of low value

Variable payments

In millions of COP

Buildings

109,062

163,422

2,108

250

961

249

2,038

Vehicles

16

12,822

-

-

-

18

-

Computer equipment

2,381

13,606

-

-

-

5,103

-

Furniture and fixtures

97

969

-

-

875

1,193

-

Total

111,556

(1)

190,819

2,108

250

1,836

6,563

2,038

(1) Includes the expense generated by the difference between the carrying amount of the asset for the right to use and the liability for leasing at the time of the early termination of lease contracts by COP 10,455, see Note 25.2 Interest expenses.
(2)See Note 26.3 Impairment, depreciation and amortization.

The following table contains the minimum payments lease liabilities as of December 31, 2022 and 2021:

As of December 31, 2022

Type of assets

Maturity less than 1 year

Maturity between 1 and 3 years

Maturity between 3 and 5 years

Maturity more than 5 years

Total minimum payments lease liabilities

In millions of COP

Buildings

13,492

52,100

110,495

2,427,607

2,603,694

Vehicles

84

330

229

256

899

Computer equipment

3,117

19,266

19,875

14,292

56,550

Total minimum payments lease liabilities

16,693

71,696

130,599

2,442,155

2,661,143

As of December 31, 2021

Type of assets

Maturity less than 1 year

Maturity between 1 and 3 years

Maturity between 3 and 5 years

Maturity more than 5 years

Total minimum payments lease liabilities

In millions of COP

Buildings

5,890

56,726

46,573

2,394,751

2,503,940

Vehicles

160

129

-

-

289

Computer equipment

-

32,439

21,693

13,228

67,360

Furniture and fixtures

-

1,096

-

-

1,096

Total minimum payments lease liabilities

6,050

90,390

68,266

2,407,979

2,572,685