As filed with the Securities and Exchange Commission on May 30, 2013

Registration No. 333-

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM F-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 GRUPO AVAL ACCIONES Y VALORES S.A.

(Exact name of Registrant as specified in its charter)

Not Applicable

(Translation of Registrant’s name into English)

Republic of Colombia	6029	Not Applicable
(State or other jurisdiction of	(Primary Standard Industrial	(I.R.S. Employer
incorporation or organization)	Classification Code Number)	Identification Number)
	Carrera 13 No. 26A - 47 Bogotá D.C., Colombia Phone: (+57 1) 241-9700
(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

		Banco de Bogotá S.A., New York Agency 375 Park Avenue, Suite 3407 New York, New York 10152 Phone: (212) 230-1857
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service)
	Copies to:
Nicholas A. Kronfeld, Esq. Manuel Garciadiaz, Esq. Davis Polk & Wardwell LLP 450 Lexington Avenue New York, NY 10017 Phone: (212) 450-4000 Fax: (212) 701-5800	Jorge Adrián Rincón Plata Chief Legal Counsel Grupo Aval Acciones y Valores S.A. Carrera 13 No. 26A - 47 Bogotá D.C., Colombia Phone: (+57 1) 241-9700 Fax: (+57 1) 241-9729		Jaime Mercado, Esq. Grenfel S. Calheiros, Esq. Simpson Thacher & Bartlett LLP 425 Lexington Avenue New York, NY 10017 Phone: (212) 455-2000 Fax: (212) 455-2502

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. o

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

CALCULATION OF REGISTRATION FEE
Title of each class of securities to be registered	Proposed maximum aggregate offering price (1)(2)	Amount of registration fee
Preferred shares, par value Ps 1.00 per preferred share in the form of ADSs	U.S.$100,000,000	U.S.$13,640

(1) Estimated solely for the purpose of determining the amount of registration fee in accordance with Rule 457(o) under the Securities Act of 1933, as amended.

(2) Includes preferred shares in the form of ADSs that the underwriters may purchase solely to cover over-allotments, if any.

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Commission, acting pursuant to such Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities, and we are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Subject to completion, dated May 30, 2013

Prospectus

preferred shares in the form of American depositary shares

Grupo Aval Acciones y Valores S.A.

(incorporated in the Republic of Colombia)

This is the initial public offering of our American Depositary Shares, or “ADS.” Each ADS representspreferred shares, par value Ps 1.00 per share.

Prior to the offering, no public market existed for our ADSs. The initial public offering price of the ADSs is expected to be between U.S.$             and U.S.$             per ADS. We intend to apply to list the ADSs on The New York Stock Exchange under the symbol “AVAL.” Our preferred shares are listed on the Colombian Stock Exchange under the symbol “PFAVAL.” The closing price of our preferred shares on the Colombian Stock Exchange on          , 2013 was Ps       per preferred share, which is equivalent to approximately U.S.$      per preferred share, based on the representative market rate of Ps      per U.S.$1.00 as computed and certified by the Superintendency of Finance (Superintendencia Financiera de Colombia) on         , 2013.

	Per ADS	Total
Offering price	U.S.$	U.S.$
Underwriting discounts and commissions(1)	U.S.$	U.S.$
Proceeds to us (before expenses)	U.S.$	U.S.$

(1) We have agreed to reimburse the underwriters for certain expenses in connection with this offering.  See “Underwriting.”

We have granted the underwriters an option for a period of 30 days to purchase from us up to              additional ADSs to cover over-allotments, if any.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed on the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

Investing in the ADSs involves a high degree of risk. See “Risk factors” beginning on page 23 of this prospectus for certain factors you should consider before investing in the ADSs.

Delivery of the ADSs will be made on or about             , 2013.

Global Coordinators and Joint Bookrunners

J.P. Morgan Goldman, Sachs & Co.

                 , 2013

Table of contents

Page

Presentation of financial and other information	iii
Summary	1
Risk factors	23
Forward-looking statements	48
Use of proceeds	50
Market information	51
Capitalization	54
Dilution	55
Exchange rates	56
Selected financial and operating data	57
Selected statistical data	65
Operating and financial review and prospects	94
Industry	224
Business	233
Supervision and regulation	307
Management	334
Principal shareholder	345
Related party transactions	346
Dividends and dividend policy	351
Description of share capital	355
Description of American depositary shares	364
Taxation	376
Underwriting	381
Expenses of the offering	390
Legal matters	390
Experts	390
Service of process and enforcement of judgments	391
Where you can find more information	393
Index to financial statements	F-1

In this prospectus, unless the context otherwise requires, the terms:

· “Grupo Aval,” “we,” “us,” “our” and “our company” mean Grupo Aval Acciones y Valores S.A. and its consolidated subsidiaries;

· “banks” and “our banking subsidiaries” mean Banco de Bogotá S.A., Banco de Occidente S.A., Banco Popular S.A. and Banco Comercial AV Villas S.A. and their respective consolidated subsidiaries;

· “Banco de Bogotá” means Banco de Bogotá S.A. and its consolidated subsidiaries;

· “Banco de Occidente” means Banco de Occidente S.A. and its consolidated subsidiaries;

· “Banco Popular” means Banco Popular S.A. and its consolidated subsidiaries;

· “Banco AV Villas” means Banco Comercial AV Villas S.A. and its consolidated subsidiary;

· “BAC Credomatic” or “BAC” means BAC Credomatic Inc. and its consolidated subsidiaries;

· “Corficolombiana” means Corporación Financiera Colombiana S.A. and its consolidated subsidiaries;

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· “Horizonte” means BBVA Horizonte Sociedad Administradora de Fondos de Pensiones y de Cesantías S.A.;

· “LB Panama” means Leasing Bogotá S.A., Panama and its consolidated subsidiaries; and

· “Porvenir” means Sociedad Administradora de Fondos de Pensiones y Cesantías Porvenir S.A. and its consolidated subsidiary.

The term “Superintendency of Finance” means the Colombian Superintendency of Finance (Superintendencia Financiera de Colombia), a supervisory authority ascribed to the Colombian Ministry of Finance and Public Credit (Ministerio de Hacienda y Crédito Público), or the “Ministry of Finance,” holding the inspection, supervision and control authority over the persons involved in financial activities, securities markets, insurance and any other operations related to the management, use or investment of resources collected from the public.

Unless noted otherwise, references in this prospectus to beneficial ownership are calculated pursuant to the U.S. Securities and Exchange Commission's, or the SEC, definition of beneficial ownership contained in Form 20-F for foreign private issuers. In Form 20-F the term “beneficial owner” of securities refers to any person who, even if not the record owner of the securities, has or shares the underlying benefits of ownership. These benefits include the power to direct the voting or the disposition of the securities or to receive the economic benefit of ownership of the securities. A person also is considered to be the “beneficial owner” of securities that the person has the right to acquire within 60 days by option or other agreement. Beneficial owners include persons who hold their securities through one or more trustees, brokers, agents, legal representatives or other intermediaries, or through companies in which they have a “controlling interest,” which means the direct or indirect power to direct the management and policies of the entity.

We have not authorized anyone to provide any information other than that contained in this prospectus or in any free writing prospectus prepared by us or on our behalf or to which we may have referred you. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We and the underwriters have not authorized any other person to provide you with different or additional information. If anyone provides you with different or additional information, you should not rely on it. Neither Grupo Aval nor the underwriters are making an offer to sell the ADSs in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus, regardless of the time of delivery of this prospectus or any sale of the ADSs. Our business, financial condition, results of operations and prospects may have changed since the date on the front cover of this prospectus.

This prospectus is being used in connection with the offering of our non-voting preferred shares in the form of ADSs in the United States and other countries outside Colombia.

This offering is being made in the United States and elsewhere outside Colombia solely on the basis of the information contained in this prospectus.

No offer or sale of ADSs may be made in Colombia except in circumstances that do not constitute a public offer or distribution under Colombian laws and regulations.

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Presentation of financial and other information

All references herein to “peso,” “pesos,” “Colombian pesos” or “Ps” refer to the lawful currency of Colombia. All references to “U.S. dollars,” “dollars” or “ U.S.$” are to United States dollars. See “Exchange rates” for information regarding exchange rates for pesos into U.S. dollars since 2009. This prospectus translates certain peso amounts into U.S. dollars at specified rates solely for your convenience. The conversion of amounts expressed in pesos as of a specified date at the then prevailing exchange rate may result in presentation of U.S. dollar amounts that differ from U.S. dollar amounts that would have been obtained by converting pesos as of another specified date. Unless otherwise noted in this prospectus, all such peso amounts have been translated at the rate of Ps 1,768.23 per U.S.$1.00, which is the representative market rate calculated on December 31, 2012. The representative market rate is computed and certified by the Superintendency of Finance on a daily basis and represents the weighted average of the buy/sell foreign exchange rates negotiated on the previous day by certain financial institutions authorized to engage in foreign exchange transactions. Such conversion should not be construed as a representation that the peso amounts correspond to, or have been or could be converted into, U.S. dollars at that rate or any other rate. On May 27, 2013, the representative market rate was Ps 1,874.10 per U.S.$1.00.

Financial statements

Grupo Aval is an issuer in Colombia of securities registered with the National Registry of Shares and Issuers (Registro Nacional de Valores y Emisores), and in this capacity, it is subject to oversight by the Superintendency of Finance. Grupo Aval is a not a financial institution in Colombia. Grupo Aval is required to comply with corporate governance and periodic reporting requirements to which all issuers are subject, but it is not supervised or regulated as a financial institution or as a holding company of banking subsidiaries and, thus, is not required to comply with capital adequacy regulations applicable to banks and other financial institutions. All of our banking subsidiaries (Banco de Bogotá, Banco de Occidente, Banco Popular, Banco AV Villas, and their respective Colombian financial subsidiaries, including Porvenir and Corficolombiana) are entities under the comprehensive supervision of, and subject to inspection and surveillance as financial institutions by, the Superintendency of Finance.

Our consolidated financial statements at December 31, 2012 and 2011 and for each of the years ended December 31, 2012, 2011 and 2010, have been audited, as stated in the report appearing herein by KPMG Ltda., and are included in this prospectus and referred to as our audited consolidated financial statements. We have prepared these financial statements and other financial data included herein in accordance with the regulations of the Superintendency of Finance applicable to financial institutions (Resolution 3600 of 1988 and External Circular 100 of 1995) and, on issues not addressed by these regulations, generally accepted accounting principles prescribed by the Superintendency of Finance for banks operating in Colombia, consistently applied, together with such regulations, on the filing date, “Colombian Banking GAAP.”

Although we are not a financial institution, we present our consolidated financial statements under Colombian Banking GAAP in this prospectus because we believe that presentation on that basis most appropriately reflects our activities as a holding company of a group of banks and other financial institutions. The audited consolidated financial statements have not been reviewed or approved by the Superintendency of Finance; however, consolidated financial statements for each six-month period, prepared on the basis of Colombian Banking GAAP for each of our subsidiaries (which are the basis for our own consolidated financial statements) are remitted to the Superintendency of Finance for their review on a semi-annual basis. The Colombian Banking GAAP consolidated financial statements included in this prospectus differ from the consolidated financial statements published by Grupo Aval in Colombia, which are prepared under Colombian GAAP.

Because we are not regulated as a financial institution in Colombia, we are required to prepare our consolidated financial statements for publication in Colombia under Colombian GAAP applicable to companies that are not financial institutions (Decree 2649 of 1993 and Circular No. 100-000006 of the Superintendency of Companies (Superintendencia de Sociedades) and former Superintendency of Securities (Superintendencia de Valores), currently the Superintendency of Finance) No. 011 of 2005, which differs in certain respects from Colombian Banking GAAP. These Colombian GAAP financial statements are presented semi-annually to our shareholders for approval, are reviewed and published by the Superintendency of Finance and are available in Spanish to the general public on Grupo Aval’s

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website. Please see “Dividends and dividend policy—Dividend policy of Grupo Aval” for a discussion of the main differences between Colombian Banking GAAP and Colombian GAAP. We do not file consolidated financial statements prepared on the basis of Colombian Banking GAAP with the Superintendency of Finance; however, we may from time to time publish semi-annual or quarterly financial data for subsequent periods on a Colombian Banking GAAP basis.

Colombian Banking GAAP differs in certain significant respects from generally accepted accounting principles in the United States, or U.S. GAAP. Note 30 to our audited consolidated financial statements provides a description of the principal differences between Colombian Banking GAAP and U.S. GAAP as they relate to our audited consolidated financial statements and provides a reconciliation of net income and shareholders’ equity for the years and at the dates indicated herein. Unless otherwise indicated, all financial information of our company included in this prospectus is stated on a consolidated basis prepared under Colombian Banking GAAP.

BAC Credomatic acquisition

On December 9, 2010, we acquired BAC Credomatic, a Central American banking group. See “Business––BAC Credomatic.” As a consequence of our acquisition of BAC Credomatic, our results of operations for the year ended December 31, 2010 may not be comparable with other periods. As permitted by the Superintendency of Finance, we have included the results of operations of BAC Credomatic for the month of December 2010 in our consolidated results of operations for the year ended December 31, 2010.

In this prospectus, we present certain financial information for BAC Credomatic on a stand-alone basis in accordance with U.S. GAAP. When comparing financial information of BAC Credomatic to other Grupo Aval subsidiaries, we present the results of LB Panama, based on its financial statements prepared in accordance with Colombian Banking GAAP. LB Panama acquired BAC Credomatic and consolidates its operations in accordance with Colombian Banking GAAP. At December 31, 2012, LB Panama had Ps 1,786.2 billion of goodwill associated with the BAC Credomatic acquisition and Ps 477.4 billion of indebtedness that it incurred to finance, in part, the BAC Credomatic acquisition. Goodwill amortization and interest expense associated with the BAC Credomatic acquisition for the year ended December 31, 2012 were Ps 52.3 billion and Ps 19.2 billion, respectively. On a US GAAP basis, BAC Credomatic represented 84.0% of LB Panama’s assets, 87.7% of LB Panama’s liabilities and 97.9% of LB Panama’s revenues at and for the year ended December 31, 2012.  

Market share and other information

We obtained the market and competitive position data, including market forecasts, used throughout this prospectus from market research, publicly available information and industry publications. We have presented this data on the basis of information from third-party sources that we believe are reliable, including, among others, the International Monetary Fund, or “IMF,” the Superintendency of Finance, the Colombian Stock Exchange, the Colombian National Bureau of Statistics (Departamento Administrativo Nacional de Estadística), or “DANE,” and the World Bank Development Indicators. Industry and government publications, including those referenced herein, generally state that the information presented has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed. Unless otherwise indicated, gross domestic product, or “GDP,” figures with respect to Colombia in this prospectus are based on the 2005 base year data series published by DANE. Although we have no reason to believe that any of this information or these reports are inaccurate in any material respect, we have not independently verified the competitive position, market share, market size, market growth or other data provided by third parties or by industry or other publications. We do not make any representation or warranty as to the accuracy of such information.

Except where otherwise indicated, our balance sheet and statement of income data included in this prospectus reflects consolidated Colombian Banking GAAP information, while comparative disclosures of our financial and operating performance against that of our competitors are based on unconsolidated information prepared on the basis of Colombian Banking GAAP reported to the Superintendency of Finance. Our banking subsidiaries report unconsolidated financial data to the Superintendency of

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Finance; however, Grupo Aval, as a holding company, is not required to report such data. Unless otherwise indicated or the context otherwise requires, market share and other data comparing our performance and that of our competitors reflects the unconsolidated results of our banking subsidiaries, Porvenir and Corficolombiana. “Grupo Aval aggregate” data throughout this document pertaining to Grupo Aval reflects the sum of the unconsolidated financial statements of our four Colombian banking subsidiaries (Banco de Bogotá, Banco de Occidente, Banco Popular and Banco AV Villas) as reported to the Superintendency of Finance. These unconsolidated financial statements do not reflect the consolidation process of subsidiaries such as Corficolombiana, Porvenir or LB Panama, are not intended to reflect the consolidated financial statements of Grupo Aval and are not necessarily indicative of the results for any other future interim period. Except where otherwise indicated, financial and market share data pertaining to BAC Credomatic has been prepared on the basis of U.S. GAAP. The calculations for our competitors on a consolidated basis are made based on each bank’s financial statements publicly available on their websites. All the calculations on an unconsolidated basis are made based on publicly available information from the Superintendency of Finance.

Banks, financing companies and finance corporations are deemed credit institutions by the Superintendency of Finance and are the principal institutions authorized to accept deposits and make loans in Colombia. Banks undertake traditional deposit-taking and lending activities. Financing companies place funds in circulation by means of active credit operations, with the purpose of fostering the sale of goods and services, including the development of leasing operations. Finance corporations invest directly in the economy and thus are the only credit institutions that may invest in non-financial sectors. Banks are permitted to invest in finance corporations. See “Supervision and regulation.” In Colombia, we operate four banks, one financing company and one finance corporation, and our market share is determined by comparing our banks to other banks reporting their results to the Superintendency of Finance; however, if market share data including financing companies and finance corporations is considered, our market shares would generally be lower than in a bank-only comparison, and the gaps between our market shares and those of our competitors would be smaller, but our market leadership in most market categories would be unaffected.

We consider our principal competitors in Colombia to be Bancolombia S.A., or “Bancolombia,” Banco Davivienda S.A., or “Davivienda,” and Banco Bilbao Vizcaya Argentaria Colombia S.A., or “BBVA Colombia,” which are the three leading banking groups in Colombia after Grupo Aval.

Porvenir’s, our pension and severance fund administrator, principal competitors include Administradora de Fondos de Pensiones y Cesantías Protección S.A., or “Protección,” Horizonte (acquired by Grupo Aval  on April 18, 2013), Colfondos S.A. Pensiones y Cesantías, or “Colfondos,” (acquired by Scotiabank on December 19, 2012), ING Administradora de Fondos de Pensiones y Cesantía S.A., or “ING,” (merged into Protección on December 31, 2012) and Skandia Administradora de Fondos de Pensiones y Cesantías S.A., or “Skandia.” Corficolombiana, our merchant bank, is a financial corporation, and its competitors are Banca de Inversión Bancolombia S.A., J.P. Morgan Corporación Financiera S.A., BNP Paribas Colombia Corporación Financiera S.A. and Itaú BBA Colombia S.A. Corporación Financiera.

We consider the following banking groups with operations in El Salvador, Guatemala, Costa Rica, Nicaragua, Honduras and Guatemala to be our principal competitors in those countries: Banco Industrial, Scotiabank, G&T Continental, Citibank and Bancolombia (in the process of acquiring Banco Agromercantil in Guatemala and HSBC Bank (Panama) S.A. in Panama).

Other conventions

Certain figures included in this prospectus have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be an arithmetic summation of the figures that precede them. References to “billions” in this prospectus are to 1,000,000,000s and to “trillions” are to 1,000,000,000,000s.

“Minority interest” and “non-controlling interest” both refer to the participation of minority shareholders in Grupo Aval or our subsidiaries, as applicable.

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Summary

This summary highlights selected information about us and the ADSs that we are offering. It may not contain all of the information that may be important to you. Before investing in our ADSs, you should read this entire prospectus carefully for a more complete understanding of our business and this offering, including our consolidated financial statements and the related notes included elsewhere in this prospectus and the sections entitled “Risk factors,” and “Operating and financial review and prospects” in this prospectus.

Our company

Grupo Aval is Colombia’s largest banking group based on total assets, and its most profitable based on return on average shareholders’ equity, or “ROAE,” as compared to our principal competitors, in each case based on available information at and for the years ended December 31, 2012, 2011 and 2010. We are also a leading banking group in Central America. Grupo Aval provides a comprehensive range of financial services and products, ranging from traditional banking services, such as making loans and taking deposits, to pension and severance fund management.

Grupo Aval currently consists of four commercial banks in Colombia (Banco de Bogotá, Banco de Occidente, Banco Popular and Banco AV Villas), as well as the largest pension and severance fund manager in Colombia (Porvenir), the largest merchant bank in Colombia (Corficolombiana) and a leading banking group in Central America (BAC Credomatic), each of which we control and consolidate into our results of operations. We acquired 99.99% of the outstanding shares of Horizonte on April 18, 2013, which on an aggregate basis with Porvenir, positions us as the market leader in the management of mandatory pension funds and severance funds in Colombia. See “—Recent developments—Horizonte acquisition.”Our Red de Grupo Aval (Grupo Aval network) is the largest combined network of ATMs and branches in the country and has been a key element of our competitive positioning in the Colombian market, with 1,317 branches and 3,086 ATMs at December 31, 2012. Customers of any of our banks may access Grupo Aval’s other bank branches to carry out basic banking transactions throughout our Red de Grupo Aval (Grupo Aval network).

Under our multi-brand strategy, each of our banks focuses on particular types of customers, geographic regions and products. Our banks are encouraged to compete among themselves and with other market participants, while operating within central guidelines established by us. We believe that this strategy has contributed to our strong financial performance and allowed us to provide an integrated service network to our customers. Underlying Grupo Aval’s competitive strengths are group-level policies focused on comprehensive brand management, strategic planning, general procurement, risk management, convergence of technologies and cost controls that we believe promote best practices, realization of synergies and efficiency across our subsidiaries.

The following table shows our ROAA, ROAE and efficiency ratio and that of our principal competitors’ operations on a consolidated basis, and market share information in Colombia.

	Grupo Aval (1)		Bancolombia		Davivienda		BBVA Colombia
	(in percentages)
	At December 31, 2012
ROAA(2)		2.0		1.9		1.7		1.6
ROAE(3)		17.7		16.5		13.7		16.7
Efficiency ratio(4)		51.3		51.3		49.1		48.3
Colombian market share:
Deposits		28.8		21.4		10.7		10.9
Gross loans and financial leases		28.4		23.0		12.4		9.2
Assets		28.8		22.3		11.7		9.0
Branches		25.8		15.5		11.2		7.2
ATMs		25.0		26.8		12.3		8.2

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Source: Company calculations for ROAA, ROAE and efficiency ratio for competitors are based on each entity’s respective financial statements for the period indicated publicly available on their websites. Colombian market share information is based on unconsolidated data filed with the Superintendency of Finance, except for figures relating to Grupo Aval’s branches and ATMs, which are derived from Company data. Colombian market share data for Grupo Aval is based on aggregate figures. For market share information on each of our banking subsidiaries see “Business—Our company.”

(1) Return on average assets, or “ROAA,” ROAE and efficiency ratio reflect ratios of Grupo Aval calculated on a consolidated basis.

(2) For methodology used to calculate ROAA, see note (2) to the table under “—Financial and operating data.”

(3) For methodology used to calculate ROAE, see note (3) to the table under “—Financial and operating data.”

(4) For methodology used to calculate efficiency ratio, see note (4) to the table under “—Financial and operating data.”

Central American operations

Through our BAC Credomatic operations, we are one of the leading banking groups in Central America based on consolidated assets. We believe we have a leading Central American presence with operations that are complementary to our Colombian businesses and a leading position in the consumer and credit card banking businesses in the region.

We have operations in six Central American countries: Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama. We are one of the leading credit card issuers and merchant-acquiring franchises in Central America. We have the only network that processes all major credit card brands in the region.

Through a network of 492 points of contact (including 228 full-service branches, 49 in-store branches, 187 on-site branches and 28 auto/drive-thru branches) and 1,242 ATMs at December 31, 2012, BAC Credomatic has more than two million customers and serves a region with a population of approximately 44 million, providing significant opportunity for growth in financial services. Our Central American operations represented 17.6% of our assets at December 31, 2012.

Since acquiring BAC Credomatic in December 2010, we have implemented some of our best practices from our Colombian operations, improving its efficiency ratio from 65.7% in 2010 to 57.1% in 2012. In addition (calculated from its U.S. GAAP financial statements), net income attributable to shareholders, improved from Ps 287.4 billion in 2010 to Ps 476.6 billion in 2012. BAC Credomatic’s ROAE was 17.4% for the year ended December 31, 2010 and 23.4% for the year ended December 31, 2012, and its ROAA was 1.9% for the year ended December 31, 2010 and 2.7% for the year ended December 31, 2012.

We believe we can further improve our performance in Central America and continue to improve BAC Credomatic’s efficiency ratio. The efficiency ratio for our Colombian operations was 49.8% at December 31, 2012.

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The following table shows market shares and other metrics of our Central American operations and that of our principal competitors in Central America, excluding Panama.

	Grupo Aval Central America (1)		Banco Industrial		Scotiabank Central America		G&T Continental		Citibank Central America		Bancolombia Central America
	(in percentages)
	At December 31, 2012
Central American market share:
Deposits		9.1		10.2		4.2		7.0		4.7		4.1
Loans and financial leases		10.4		8.9		5.7		5.9		4.6		4.8
Shareholders’ equity		10.2		7.5		4.7		4.8		7.7		5.8
Net income		15.5		9.9		3.7		4.3		5.7		6.4

Source: Calculated based on data aggregated from the local superintendencies of Costa Rica, Honduras, El Salvador, Guatemala and Nicaragua. Market share is determined based on the sum of each bank’s operations  in the above-mentioned countries. This comparison excludes Panama due to the difficulty of separating international from local businesses of Panamanian banks. Including both of these businesses, our market shares in deposits and loans and financial leases in Panama is 3.4% and 3.0%, respectively, at December 31, 2012.

(1) Reflects BAC Credomatic operations.

Financial and operating data

The following table presents our key consolidated financial and operating data for the periods and at the dates indicated.

	At and for the year ended December 31,
	2012			2012			2011			2010
	(In U.S$ millions, except where otherwise indicated)(1)			(in Ps billions, except where otherwise indicated)
Financial data:
Total assets		72,198.1			127,663.0			111,501.9			96,309.3
Gross loans and financial leases		45,259.6			80,029.4			69,947.7			58,623.6
Total deposits		46,070.5			81,463.3			71,007.6			63,669.3
Non-controlling interest		3,058.3			5,407.7			4,927.0			4,475.5
Total shareholders’ equity		5,136.8			9,083.1			8,159.1			4,554.6
Net interest income		3,568.7			6,310.3			5,468.9			4,628.8
Total (provisions) reversals, net		(518.8	)		(917.3	)		(416.3	)		(1,026.9	)
Total fees and other services income, net		1,347.1			2,382.0			2,234.4			1,617.7
Total other operating income		500.9			885.7			958.0			785.5
Total operating income		4,897.9			8,660.6			8,244.9			6,005.1
Total operating expenses		(2,997.2	)		(5,299.5	)		(4,932.9	)		(3,520.0	)
Total non-operating income (expense), net		253.4			448.1			196.2			176.9
Income tax expense		(775.8	)		(1,371.7	)		(1,136.7	)		(831.0	)
Income before non-controlling interest		1,378.4			2,437.4			2,371.5			1,831.1
Non-controlling interest		(515.2	)		(911.1	)		(1,080.2	)		(874.2	)
Income attributable to shareholders		863.2			1,526.4			1,291.2			956.9
Financial ratios (in percentages)
ROAA(2)		–			2.0			2.3			2.2
ROAE(3)		–			17.7			20.3			22.2
Efficiency ratio(4)		–			51.3			52.7			46.6
Operational data (in units):
Number of customers of the banks(5)		–			10,345,695			9,596,694			8,700,266
Number of employees		–			59,406			54,463			53,485
Number of branches(6)		–			1,545			1,491			1,438
Number of ATMs(6)		–			4,328			3,835			3,518

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(1) Translated for convenience only using the representative market rate as computed and certified by the Superintendency of Finance of Ps 1,768.23 per U.S. dollar at December 31, 2012.

(2) For the years ended December 31, 2012, 2011 and 2010, ROAA is calculated on a consolidated basis as income before non-controlling interest divided by average assets (the sum of total assets at December 31 of the fiscal year and total assets at December 31 of the previous fiscal year, divided by two). For the year ended December 31, 2010, BAC Credomatic’s results are included in 1/12 of our 2010 income and BAC Credomatic's total assets were only accounted for in the month of December 2010 due to the consolidation of BAC Credomatic financial data in Grupo Aval’s financial statements from December 1, 2010. Excluding BAC Credomatic’s assets from the calculation of ROAA would result in an adjusted ROAA for Grupo Aval of 2.5%. For a reconciliation of ROAA, see “Selected financial and operating data—Non-GAAP measures reconciliation.”

If average assets were calculated using monthly consolidated information, rather than the average at the beginning and end of an annual period, our ROAA would be: 2.1%, 2.3% and 2.4% for the periods ended December 31, 2012, 2011 and 2010, respectively.

(3) For the years ended December 31, ROAE is calculated on a consolidated basis as net income divided by average shareholders’ equity (shareholders’ equity at the end of the period plus shareholders’ equity at the end of the prior period, divided by two).

If average shareholders’ equity were calculated using monthly consolidated information, rather than the average at the beginning and end of such period, our ROAE would be: 17.8%, 23.8% and 23.3% for the periods ended December 31, 2012, 2011 and 2010, respectively.

(4) Efficiency ratio is calculated on a consolidated basis as operating expenses before depreciation and goodwill amortization, divided by total operating income before net provisions. See “Selected financial and operating data—Non-GAAP measures reconciliation.”

(5) Reflects aggregated customers of our banking subsidiaries and BAC Credomatic. Customers of more than one of our banking subsidiaries are counted separately for each banking subsidiary.

(6) Reflects aggregated number of branches or ATMs of our banking subsidiaries and BAC Credomatic, as applicable, located throughout Colombia and Central America.

Our markets and opportunity

Colombia

Our operations in Colombia represent 82.0% and 84.3% of our net income and gross loan portfolio, respectively, and our operations in the six countries in Central America, represent 18.0% and 15.7% of our net income and gross loan portfolio, respectively, in each case at and for the year ended December 31, 2012.

We believe that Colombia presents significant growth potential for banking groups given its favorable economic conditions and a relatively low penetration rate for banking and financial services in Latin America. According to IMF data, at December 31, 2012, Colombia’s population and economy were the third and fourth largest in Latin America, respectively. According to DANE, in 2012, Colombia’s population was approximately 46.6 million people and its nominal GDP was Ps 664.5 trillion (U.S.$369.6 billion).

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Colombia’s nominal GDP per capita increased from Ps 7.9 million in 2005 (U.S.$3,416 using the average exchange rate for that year) to Ps 14.3 million in 2012 (U.S.$7,934 using the average exchange rate for that year).

During the ten-year period ended December 31, 2012, Colombia outperformed the average GDP growth rate for Latin America by 0.9 percentage points, while reducing the country’s dependency on foreign financing as reflected in an external debt to GDP ratio of 21.6% at December 31, 2012. According to IMF data, Colombia has achieved GDP growth every year during the last half century (other than 1999). Unlike other emerging Latin American countries, Colombia has regularly met all principal and interest payments on external debt and has avoided hyperinflation, maintaining a single-digit inflation rate for the ten years ended December 31, 2012. According to the Central Bank of Colombia, or the “Colombian Central Bank,” Colombia’s annual inflation rate for 2012 was 2.4%, down from the 3.7% recorded in 2011. These economic fundamentals, together with Colombia’s history as a stable democracy, account for Colombia’s relative strength during the recent global economic and financial crisis.

During the ten-year period ended December 31, 2012, based on data published by the Superintendency of Finance, Colombia’s financial system grew at a compounded annual growth rate, or “CAGR,” of 12.8% in terms of loans and 10.4% in terms of deposits, on an inflation-adjusted basis, compared to 4.7% for the country’s GDP during the same ten-year period ended December 31, 2012. Despite this recent growth, Colombia’s bank credit to GDP ratio remains relatively low, with an approximate 34.8% ratio at December 31, 2012, according to the Superintendency of Finance. Using the ratio of domestic credit to the private sector as a percentage of GDP provided by the World Bank, Colombia stands at 45.0% compared to 71.2% for Chile, 61.4% for Brazil, 26.4% for Peru and 26.1% for Mexico at December 31, 2011. As Colombia’s largest banking group, we believe we are well-positioned to take advantage of Colombia’s potential for growth in financial products and services. The capitalization of Colombia’s banking sector consists mostly of primary capital (Tier I) with a ratio of primary capital (Tier I) to risk-adjusted assets of 10.9% at December 31, 2012, according to the Superintendency of Finance.

Central America

At December 31, 2012, Central America had a total population of approximately 44 million, making it the fourth largest market in Latin America by population. At the same date, Central America posted an estimated combined GDP of U.S.$184.0 billion, ranking the region as the eighth largest economy in Latin America. According to estimates prepared by the IMF, Central America’s GDP is expected to grow at an annual average rate of 4.3% between 2013 and 2015, compared to Colombia’s expected average annual growth rate of 4.4% during the same period. In terms of banking penetration, according to World Bank data, Central America had a ratio of domestic credit to private sector as a percentage of GDP of 49.4% as of December 31, 2011, mainly driven by the 105.2% ratio recorded for Panama. This indicator for the other countries in the region ranges from 23.4% to 49.1%, leading us to believe that growth in the financial sector could outperform GDP growth in the coming years. We also see the additional penetration of credit cards in the population as an important growth opportunity in Central America.

Our history

Grupo Aval was created by our chairman, Mr. Sarmiento Angulo, to consolidate his interests in the Colombian financial sector. The milestones in the history of Grupo Aval are the following:

· Mr. Sarmiento Angulo established a real estate development firm in Bogotá in 1956, and in 1959 founded Organización Luis Carlos Sarmiento Angulo, which developed low- and middle-income housing neighborhoods in Bogotá in the 1960s and 1970s;

· In 1971, Mr. Sarmiento Angulo acquired a majority stake in Banco de Occidente, and in 1972 founded Corporación de Ahorro y Vivienda Las Villas to focus on low- and middle-income mortgage financing;

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· In 1981, Mr. Sarmiento Angulo purchased a minority stake in Banco de Bogotá, and in 1988 he acquired a majority stake and control, consolidating a major participation in the banking system. Banco de Bogotá acquired a substantial majority of, and absorbed, Banco del Comercio in 1992;

· In 1991, Banco de Bogotá and Banco de Occidente founded Porvenir as a severance fund manager, and following the creation in 1993 of the private pension fund system in Colombia, expanded the business to include pension fund management in 1994;

· Banco Popular was acquired in 1996 from the Colombian government through a privatization process;

· In 1997, Mr. Sarmiento Angulo acquired Corporación de Ahorro y Vivienda Ahorramas which was later merged with Corporación de Ahorro y Vivienda Las Villas in 2000 and became Banco AV Villas in 2002;

· In 1998, Mr. Sarmiento Angulo contributed a majority of his direct and indirect holdings in the financial institutions to Grupo Aval. The Red de Grupo Aval (Grupo Aval network) was also established in 1998 to provide an integrated service network of branches and ATMs;

· In 1999, we conducted our initial public equity offering in Colombia and listed our common shares on the Colombian Stock Exchange under the ticker symbol “GRUPOAVAL,” raising approximately Ps 62.5 billion (U.S.$35.3 million) in gross proceeds. Grupo Aval’s initial public offering was the first large-scale equity offering of a Colombian company to the general public, which allowed several thousand investors to become our shareholders;

· Corficolombiana, which was founded in 1959 as an affiliate of Banco de Bogotá, acquired and merged with several merchant banks between 1997 and 1999, including Corfitolima, Corfiprogreso, Corfes, Corfiboyacá, Corfisantander, Corfiandes and Indufinanciera. In 2005, Corfivalle, also a merchant bank, and Corficolombiana merged;

· In 2007, we conducted our second public offering of common shares to the Colombian public, raising approximately Ps 372.0 billion (U.S.$210.4 million) in gross proceeds;

· On December 9, 2010, we acquired BAC Credomatic from GE Consumer Finance Central Holdings Corp. and General Electric Capital Corporation;

· In 2011, we registered our preferred shares with the SEC;

· In 2011, we concluded our first offering of our preferred shares to the Colombian public, raising Ps 2.1 trillion (U.S.$1.1 billion) in gross proceeds;

· In February 2012, we completed our first international bond offering, issuing U.S.$600 million of our 5.25% Senior Notes due 2017;

· In September 2012, we completed our second international bond offering, issuing U.S.$1.0 billion of our 4.75% Senior Notes due 2022; and

· On April 18, 2013, we acquired Horizonte.

Grupo Aval Acciones y Valores S.A. is a sociedad anónima, incorporated under the laws of Colombia on January 7, 1994 under the name Administraciones Bancarias S.A. On April 18, 1997, the company changed its name to Sociedad A.B. S.A., and on January 8, 1998, to Grupo Aval Acciones y Valores S.A.

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Our operations

We conduct our operations through our four banks (Banco de Bogotá, Banco de Occidente, Banco Popular and Banco AV Villas), a pension and severance fund manager (Porvenir), our merchant bank (Corficolombiana) and our Central American banking group, BAC Credomatic. On April 18, 2013, we acquired Horizonte, another pension and severance fund manager, which on an aggregate basis with Porvenir positions us as the market leader in mandatory pension funds management and severance funds management. The following chart presents our corporate structure on a simplified basis.

Source: Company data at December 31, 2012.

(1) Corficolombiana held an additional 4.0% beneficial interest in Banco de Occidente at December 31, 2012, due to the merger of Leasing de Occidente into Banco de Occidente in June 2010. These shares are expected to be sold in open-market transactions.

(2) Porvenir and Corficolombiana are subsidiaries of Banco de Bogotá, whose financial data is consolidated into Banco de Bogotá’s results. Ownership percentages shown include direct and indirect participation.

(3) This acquisition was completed on December 9, 2010. BAC Credomatic’s results of operations prior to December 1, 2010 are not included in the results of operations that are described in this prospectus.

(4) Mr. Sarmiento Angulo beneficially owns 9.6% of Banco de Bogotá, 13.3% of Banco de Occidente, 0.8% of Banco Popular, 15.4% of Banco AV Villas and 0.3% of Corficolombiana, at December 31, 2012.

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Colombian banking operations

Banco de Bogotá, founded in 1870, is Colombia’s oldest financial institution and at December 31, 2012, was the largest bank in Colombia based on net income and the second largest bank in Colombia based on total consolidated assets. Banco de Bogotá had market shares of 15.1% of deposits and 13.5% of loans at December 31, 2012. It is also the largest financial institution within our group by assets and the largest contributor to our net income before income tax expense and non-controlling interest. Banco de Bogotá is a full-service bank with nationwide coverage and a comprehensive portfolio of services and products, distributed through a network of 638 branches and 1,289 ATMs. While Banco de Bogotá serves all segments in the market through differentiated service and product offerings, it is particularly focused on commercial lending with a market share of 18.5% of commercial loans at December 31, 2012.

Banco de Occidente is the fifth largest bank in Colombia, based on assets and loans at December 31, 2012. It focuses on enterprise customers, state-owned entities and retail customers and has a leading presence in the Southwest of Colombia. Banco de Occidente has the second largest market share, with 19.1%, in the financial leasing business, and the third largest market share, with 11.4%, in checking accounts, given its strong presence in corporate and public sector clients.

Banco Popular is the pioneer of, and the market leader in, payroll loans and is a leading provider of financial solutions to government entities throughout Colombia. Banco Popular achieved strong returns on its consumer loan portfolio due to its access to payroll deductions for repayment of loans, which results in consumer loans with a substantially lower-risk profile (consumer past due loans of 2.7% compared to a banking system average of 4.7% at December 31, 2012).

Banco AV Villas is a consumer-focused bank, which targets mid-income segments of the population and serves its clients through a nationwide service-point network and an advanced mobile banking platform. It is also Grupo Aval’s most active bank in terms of usage of non-traditional channels (mobile banking, banking correspondents and virtual branches). Over the past decade, Banco AV Villas has evolved from being a lender exclusively focused on mortgages to a diversified full-service consumer bank. Banco AV Villas’ risk management systems provide the bank with real-time and in-depth credit quality analyses that allow the bank to approve consumer loans on an accelerated basis. 

Pension and severance fund management administration

Porvenir operates a leading pension and severance fund management business in Colombia, with a 27.4% market share of assets under management at December 31, 2012. Pension funds provide individual savings for retirement, while severance funds provide temporary income to employees who lose their jobs. Porvenir has experienced an increase in earnings with a 17.0% CAGR for the 2010 to

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2012 period. Porvenir is the most profitable and efficient pension and severance fund manager in the market, with an ROAE of 27.1% in 2011 and 30.1% for 2012. The recent acquisition of Horizonte, together with Porvenir, positions Grupo Aval on an aggregate basis as the market leader in mandatory pension funds management and severance funds management.

Horizonte, which we recently acquired, operates independently from Porvenir in the pension and severance fund management business in Colombia. As of December 31, 2012, Horizonte was the third largest operator in the market based on assets under management with a 15.1% market share and had an ROAE of 22.2% for 2012. We intend to integrate the operations of Porvenir and Horizonte.

Merchant banking

Corficolombiana is the leading merchant bank in Colombia by assets, shareholder’s equity and net income. Corficolombiana’s core business is the active management of an equity portfolio through controlling and non-controlling investments in key strategic sectors of the Colombian economy, including infrastructure, energy and gas, agribusiness and hotels. Corficolombiana complements its core equity portfolio with (i) treasury operations that manage a proprietary fixed-income portfolio while also providing treasury products to corporate clients; (ii) financial services, including leasing, off-shore banking and fiduciary activities; and, (iii) investment banking services. Corficolombiana’s ROAE was 21.3% for 2011 and 10.2% for 2012.

Central American operations

BAC Credomatic is a leading Central American banking group with operations in Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama. BAC Credomatic is a full-service financial institution with one of the leading credit card issuers and merchant-acquiring franchises in Central America. It has achieved processing volumes of U.S.$10,996 million for the year ended December 31, 2012 in the merchant acquiring business, which compares favorably to processing volumes of other leading Latin American issuers. BAC Credomatic’s ROAE (calculated from its U.S. GAAP financial statements) was 21.8% in 2011 and 23.4% in 2012.

Key figures

The following table presents key information regarding the results of operations of Grupo Aval on a consolidated basis and our operating subsidiaries at the date and for the period indicated.

				At and for the year ended December 31, 2012
	Grupo Aval Consolidated			Banco de Bogotá			Porvenir(1)			Corficolombiana(1)			LB Panamá(1)			Banco de Occidente			Banco Popular			Banco AV Villas
				(in U.S. millions)(6)
Loans and financial leases, net		43,820.0			25,003.4			–			427.4			6,994.3			9,267.4			6,401.2			3,169.9
Assets		72,198.1			45,529.4			518.7			7,390.9			12,689.3			14,046.5			8,555.8			5,044.8
Deposits		46,070.5			28,854.7			–			1,831.3			7,390.5			9,145.6			5,336.7			3,837.4
Shareholders’ equity		5,136.8			4,412.3			452.4			1,706.9			1,952.8			1,955.5			1,223.9			640.2
Net income		863.2			749.9			121.0			172.1			241.5			294.3			213.7			97.4
ROAA(2)		2.0	%		2.3	%		24.9	%		3.4	%		2.0	%		2.2	%		2.6	%		2.1	%
ROAE(3)		17.7	%		18.1	%		30.1	%		10.2	%		12.4	%		16.1	%		18.7	%		16.7	%
Efficiency ratio(4)		51.3	%		49.6	%		38.8	%		24.2	%		57.1	%		43.5	%		51.5	%		55.8	%
Delinquency ratio past due more than 30 days		2.3	%		2.1	%		–			1.6	%		2.4	%		2.5	%		2.1	%		3.7	%
Allowance for loans as a percentage of past due loans		139.2	%		132.2	%		–			171.2	%		70.7	%		146.8	%		172.4	%		116.9	%
Solvency ratio (5)		12.5	%		13.1	%		–			31.3	%		12.8	%		10.5	%		11.5	%		13.7	%

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Source: Company data and calculations based on consolidated financial statements of our principal operating subsidiaries.

(1) Porvenir and Corficolombiana are subsidiaries of Banco de Bogotá. Their financial data is consolidated in Banco de Bogotá’s results. BAC Credomatic was acquired by LB Panamá, which is a subsidiary of Banco de Bogotá and its financial data is consolidated in Banco de Bogotá’s results.

(2) For methodology used to calculate ROAA, see note (2) to the table under “—Financial and operating data.”

(3) For methodology used to calculate ROAE, see note (3) to the table under “—Financial and operating data.”

(4) For methodology used to calculate efficiency ratio, see note (4) to the table under “—Financial and operating data.”

(5) Solvency ratio is calculated as technical capital divided by risk-weighted assets. For a definition of technical capital, see “Supervision and regulation—Capital adequacy requirements.” The solvency ratio for Grupo Aval is calculated as the sum of technical capital of our banking subsidiaries on a consolidated basis divided by the sum of risk-weighted assets of our banking subsidiaries on a consolidated basis.

(6) Translated for convenience only using the representative market rate as computed and certified by the Superintendency of Finance at December 31, 2012 of 1,768.23 pesos per U.S.$1.00.

Our business strengths

We believe that we have achieved our leading positions in the Colombian and Central American financial services industry through the following competitive strengths.

Largest player in most financial sectors in Colombia

We are the largest participant in most sectors of the Colombian banking market, with market-leading shares of 31.6% of commercial loans and 28.3% of consumer loans, at December 31, 2012. We also have the largest market share of deposits at 28.8% at December 31, 2012. Our Red de Grupo Aval (Grupo Aval network) is the largest combined ATM and branch network in the country and has been a key element of our competitive positioning in the Colombian market. At December 31, 2012 our ATMs and branches represented 25.0% and 25.8%, respectively, of total ATMs and branches in Colombia. Porvenir and Horizonte are market leaders in funds under management with a market share of 43.9% in mandatory fund management and 49.7% in severance fund management, on an aggregate basis, respectively, at December 31, 2012. In addition, Porvenir and Horizonte, on an aggregate basis, had the highest percentage of net income (63.2%) among the main market participants in Colombia. Corficolombiana, our merchant bank, is the largest financial corporation in Colombia.

Leading banking operations in Central America

BAC Credomatic is one of the leading financial institutions in Central America with a record of strong financial performance. Its ROAE was 21.8% for the year ended December 31, 2011 and 23.4% for the year ended December 31, 2012. BAC Credomatic is a full-service financial institution with one of the leading card-issuing and acquiring businesses in the region. Its Credomatic brand has key alliances with major credit card networks, such as Visa, MasterCard, American Express and Diners Club, and has the only network that processes all major credit card brands in the region. BAC Credomatic’s customer base and distribution network are sizable when compared to our Colombian banks. BAC Credomatic’s market share in terms of gross loans varies in the different countries as follows, as of December 31, 2012: Costa Rica 11.7%, El Salvador 10.2%, Guatemala 4.8%, Honduras 12.9%, Nicaragua 26.5% and Panama 3.0%.

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Strong track record of profitability and growth

We believe that our leading position in the Colombian market, cross-bank synergies, economies of scale, low-cost funding and operating efficiencies have helped us achieve higher and more stable profits compared to our competitors. Our average ROAE of 20.1% and average ROAA of 2.2% for the 2010 to 2012 period, and our ROAE of 17.7% and ROAA of 2.0% for the year ended December 31, 2012, have been the highest among our direct competitors in the Colombian market, and our consolidated net interest margin (net interest income divided by total average interest-earning assets) has ranged from 7.2% at December 31, 2010 to 6.5% at December 31, 2012. We believe that our ROAA and ROAE have outperformed those of our competitors mainly due to better yields on loans (from our diversified loan portfolio), significant yields from our investment portfolio, lower net provisions (due to a lower ratio of charge-offs to total loans) and better efficiency margins. Our total assets have grown at a CAGR of 15.1% from December 31, 2010 to December 31, 2012 (16.0% excluding BAC). During the same period, our total deposits have grown at a CAGR of 13.1% (14.7% excluding BAC). We have accomplished our growth through organic expansion and strategic acquisitions.

Diversified and competitive sources of funding

We have access to diverse sources of funding, including deposits and debt securities placed in the Colombian and international markets, which result in a competitive cost of funding. At December 31, 2012, in Colombia, our market share of total deposits was 28.8%, supported by a 36.5% market share in checking accounts and 29.0% in savings accounts. Deposits represented 76.2% of our total funding at December 31, 2012, compared to 77.0% at December 31, 2010, which provides us with a stable and cost-effective funding base.

As a result of our efforts to broaden our funding base, we increased our funding from Ps 82.6 trillion (U.S.$46.7 billion) at December 31, 2010 to Ps 106.9 trillion (U.S.$60.4 million) at December 31, 2012. On May 12, 2011, we completed an offering of preferred shares, raising Ps 2.1 trillion (U.S.$1.1 billion) in gross proceeds. On February 1, 2012, we successfully completed our inaugural international bond offering of U.S.$600 million of 5.25% Senior Notes due 2017 and on September 26, 2012 we issued U.S.$1.0 billion of our 4.75% Senior Notes due 2022 in the international markets. We believe that our funding base supports our initiatives to expand our businesses.

Sound risk management

We believe we have asset quality that is superior to the market average. Our aggregate ratio of loans past due more than 30 days over total loans was 2.3% at December 31, 2012, the lowest among our principal competitors on an unconsolidated basis. Bancolombia's ratio was 2.6%, Davivienda's was 4.0% and BBVA Colombia's was 2.6% at December 31, 2012. We have maintained our relative asset quality, as evidenced by our ratio of non-performing loans to total loans of 1.6% at December 31, 2012, and a ratio of charge-offs to average outstanding loans (annualized) of 1.0% at December 31, 2012. In addition, we believe that our reputation as a banking group that pursues conservative policies has allowed us to consistently retain and attract new customers. Each of our banking subsidiaries has a comprehensive risk management system, which we view as fundamental to their long-term stability and viability, and enables them to identify risks and resolve potential problems on a timely basis. In addition, we have established upward loan reporting processes, and our risk management staff meets on a weekly basis to discuss the loan portfolio, developments in the industry, risks and opportunities.

Each of our banks and Grupo Aval on an aggregate basis have strong capital adequacy ratios as calculated under current capital adequacy regulations. The aggregate solvency ratio of our banks on an unconsolidated basis was 13.9% at December 31, 2012, compared to 9.0%, Colombia’s minimum regulatory requirement.

Multi-brand business model

Our differentiated multi-brand business model builds on the individual strengths of our banking subsidiaries and the market-wide recognition of their brands. Each of our banks has developed a focus on particular and, to a degree, overlapping market sectors, geographic regions, services and products. We

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believe that this specialization has contributed to the individual success of our banks and the diversity of Grupo Aval as a whole. Our banking subsidiaries operate as four independent banks that are encouraged to compete among themselves and with other market participants, while operating within central guidelines established by us in the areas of internal control, credit risk management, brand management, strategic planning, general procurement and information technology. These guidelines, together with group support services, are designed to allow each bank to achieve economies of scale and benefit from cross-bank synergies and groupwide best practices without affecting individual competition and the decision-making abilities of each bank’s management. We may, in the future, consider merging one or more of our subsidiaries in our group or additional business we may acquire if meaningful improvements in efficiencies, revenue or other benefits could be achieved.

Focus on group-wide best practices

Grupo Aval applies groupwide best practices for all of its operating subsidiaries. These practices are designed to encourage a consistent approach with respect to effective risk management, efficient use of capital, cost control, brand management, general procurement and integration of information technology. We believe that these practices have helped us achieve economies of scale and synergies to reduce operating and administrative costs. At December 31, 2012, we had a consolidated efficiency ratio of 51.3%, and our banking subsidiaries had efficiency ratios ranging from 43.5% (Banco de Occidente) to 55.8% (Banco AV Villas).

Experienced management teams

Our qualified and experienced management teams, both at the group and operating subsidiary levels, have played a key role in guiding our growth. Our chairman, Mr. Sarmiento Angulo, has over 55 years of business experience, including 40 years in the banking and related financial services industry. Our president Mr. Luis Carlos Sarmiento Gutiérrez, has over 15 years of experience in the banking and related financial services industry and over 20 years of business experience as a banking executive in Colombia and the United States. We believe that the strength of our management at all levels has enabled us to become Colombia’s largest banking group and its most profitable based on ROAE as compared to our principal competitors. Our and each of our operating subsidiaries’ management teams are dedicated to formulating and executing business strategies through a culture of excellence, innovation and cooperation, which has served as our guiding vision throughout the various acquisitions and initiatives undertaken by Grupo Aval.

Our strategy

Our overall objectives are to build upon our competitive strengths to pursue opportunities for growth and to enhance our long-term financial performance. To achieve these objectives, we intend to pursue a strategy with the following principal elements:

Further penetrate the Colombian market

We believe that Colombia offers significant opportunities to expand our business because of the country’s strong economic fundamentals and low penetration rates for banking and other financial services and products, as compared to other countries in the region. For example, according to the 2011 World Bank Development Indicators, domestic credit to the private sector accounted for 45.0% of GDP in Colombia as compared to 71.2% for Chile, 61.4% for Brazil and 26.4% for Peru, in each case, at December 31, 2011. See “Industry—Colombia—Credit volumes.” Furthermore, according to the Colombian Central Bank, Colombia’s GDP is expected to grow by 4.3% in 2013 (revised upwards in April 2013, from 4.0%) and between 3.0% and 5.0% in 2014. We anticipate that demand for financial services and products will increase across all customer sectors. As Colombia’s leading banking group, and drawing upon our distinctive multi-brand business model, we believe that we are well-positioned to take advantage of this significant growth potential.

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We believe we offer the most comprehensive range of banking services and products in Colombia and Central America, and we continually seek to expand these offerings to meet evolving customer needs and enhance our profitability. We believe we can capture additional revenue by improving our market share in credit segments and products where we have not historically focused on in the past (for example, credit cards and mortgages). In addition, we are also expanding our cross-selling efforts to our over 10 million banking clients.

Furthermore, we are currently implementing initiatives to increase our non-interest income, which consists primarily of net fee income. Net fee income accounted for 24.9% of our consolidated total operating income before net provisions for the year ended December 31, 2012. We believe that we can expand the contribution of non-interest income to our profitability in future periods by, for example, expanding bancassurance (i.e., bank-offered third-party insurance products) through our distribution networks and credit card fee income through an increase in credit card loan volume across all of our banks.

We are also studying initiatives to develop cost-effective changes and risk management tools to extend our banking services to segments of the Colombian population that have a low use or that do not currently use banking services.

Further penetrate the Central American market

We plan to continue executing our multi-brand business model and maintain the BAC Credomatic brand. We intend to capitalize on the expansion of the Central American market as we believe that BAC Credomatic will offer us significant opportunities for organic and acquisition growth in financial services in this region. In order to improve operational efficiency and increase market share in key sectors, we intend to continue to share our group-wide commercial and operational standards and best practices with BAC Credomatic, while capitalizing on its regional expertise, brand recognition, customer base, and services and products, such as credit card issuance and merchant-acquiring businesses. We believe that we can continue improving BAC Credomatic’s efficiency ratio, which at December 31, 2012 was 57.1%, compared to 49.8% for Grupo Aval’s Colombian operations, by implementing our best practices at BAC Credomatic.

Continue capitalizing on synergies and improving efficiencies

We believe that there is additional room to create synergies among our subsidiaries and leverage their combined strength without affecting our multi-brand business model. We intend to continue identifying and working on groupwide projects, mainly in information technology, and we will continue to seek economies of scale by fostering procurement of goods and services for multiple subsidiaries, which we believe have contributed to improvements in our efficiency ratios. As an example, we are in the process of executing a plan to sequentially replace the core banking systems in our subsidiaries to converge in time to a common technology platform.

Pursue other selected acquisitions

We have a proven track record of identifying, acquiring and integrating interests in companies we believe have strategic value to us. We are interested in expanding our businesses in Colombia and Central America and to other regions. We regularly evaluate expanding into new geographies and acquisition candidates (such as our acquisitions of BAC Credomatic and Horizonte) that may permit us to grow the services and products we offer and markets we can access. We actively consider additional strategic investments, alliances and acquisitions, principally in Colombia, Central America and other selected Latin American countries, and anticipate we will enter into such transactions, which may be material, if we believe they will be both strategic and accretive to our existing businesses. We may also continue acquiring additional shares to increase our controlling interests in certain of our banking subsidiaries.

13

Recent developments

Horizonte acquisition

Grupo Aval, Banco de Bogotá, Banco de Occidente and Porvenir acquired Horizonte on April 18, 2013 pursuant to a stock purchase agreement entered into by Porvenir, and guaranteed by Grupo Aval, with BBVA and Compañía Chilena de Inversiones S.L., an affiliate of BBVA, to acquire 99.99% of the outstanding shares of Horizonte on December 24, 2012. The total purchase price was U.S.$541.4 million (Ps 999.7 billion as of the date of the acquisition). As of December 31, 2012, Horizonte was the third largest pension fund administrator in Colombia, based on assets under management, with a 15.1% market share and 18.6% share of all net income generated by pension funds in Colombia. According to market share data published by the Superintendency of Finance, Horizonte on an aggregate basis with Porvenir is the market leader in the management of mandatory pension funds and severance funds in Colombia. Porvenir and Horizonte, on an aggregate basis, have Ps 79.3 trillion in assets under management as of December 31, 2012. See “Business—Competition—Pension and severance fund management – Porvenir.” Horizonte had shareholders’ equity of Ps 431.9 billion, assets under management of Ps 24.0 trillion and ROAE of 22.2% at December 31, 2012, while Porvenir had shareholders’ equity of Ps 800.0 billion, assets under management of Ps 55.3 trillion and ROAE of 30.1% on a consolidated basis at December 31, 2012.

The acquisition of Horizonte, and its future integration into Porvenir, provides an important opportunity to strengthen our presence in the pension and severance fund management business in Colombia and retain our leadership position. We believe the integration of the two companies will create significant opportunities and potential synergies between the two companies to improve their commercial and operational efficiency due in part to the new economies of scale.

Risk factors

We face risks and uncertainties that may affect our future financial and operating performance, including, among others, the following: economic and political conditions in Colombia and other countries in which we operate; internal security issues affecting the countries in which we operate; governmental and regulatory actions and developments affecting our operating subsidiaries and our industry; natural disasters; declines in the quality of our loan portfolio and other assets; adequacy of risk management procedures and systems; counterparty risks; exposures in derivatives transactions; increases in funding costs; changes in interest and exchange rates and other market risks; losses from trading operations; completion and integration of acquisitions; failures of information technology and other systems; competition; loss of key members of senior management; and litigation and other legal proceedings. One or more of these matters could negatively affect our business or financial performance as well as our ability to successfully implement our strategy. See “Risk factors” beginning on page 23 for a discussion of certain risk factors you should consider before investing in the ADSs.

Our registered and principal executive offices are located at Carrera 13 No. 26A - 47, Bogotá D.C., Colombia, and our general telephone number is (+57) 1 241-9700. Our website is www.grupoaval.com. Information contained on, or accessible through, our website is not incorporated by reference in, and shall not be considered part of, this prospectus.

14

The offering

Issuer	Grupo Aval Acciones y Valores S.A.
ADSs	Each ADS represents        preferred shares. The ADSs will be evidenced by ADRs.
ADSs offered by us	ADSs.
Share capital to be outstanding after this offering	Our share capital is divided into common and non-voting preferred shares. Each share of our share capital represents the same economic interest, except that the preferred shares are entitled to the preferences described under “Description of share capital—Dividends—Preferred shares” and “Dividends and dividend policy—Dividend policy of Grupo Aval.” Our outstanding share capital immediately after completion of this offering (assuming no exercise of the underwriters’ over-allotment option) will consist of            shares, as follows: ·     common shares; and ·     preferred shares including preferred shares issued in the form of ADSs.
Offering price	U.S.$            per ADS.
Over-allotment option	We have granted the underwriters an option for a period of 30 days after the date of this Prospectus to purchase from us up to           additional ADSs to cover over-allotments, if any.
Use of proceeds	We intend to use the net proceeds from this offering to increase capital in our banking subsidiaries. We may also use a portion of the proceeds for general corporate purposes, which may include prepaying outstanding indebtedness, including to related parties. These expected uses of net proceeds represent our intentions based upon our present plans and business conditions. However, we cannot predict with certainty all of the particular uses of the proceeds from this offering or the amounts that we will actually spend on the uses set forth above. Accordingly, our management will have significant flexibility in applying the net proceeds of this offering.
Dividend policy	Holders of the preferred shares and ADSs will be entitled to receive a minimum dividend to be paid preferentially over holders of common shares, so long as dividends have been approved by the shareholders’ meeting of Grupo Aval. If no dividends are declared, none of the holders of Grupo Aval’s share capital, including holders of preferred shares and ADSs, will be entitled to dividends. The minimum dividend payable per preferred share will be Ps 1.00 in each calendar semester consisting of a six-month period, as long as this amount is higher than the dividend paid to holders of common shares. Otherwise, the minimum dividend paid to holders of preferred shares and ADSs will be equal to that paid to the holders of common shares, subject in each case to Grupo Aval generating sufficient profits in the period and, in the case of holders of ADSs, the deduction of the fees of the depositary and the costs of foreign exchange conversion. See “Dividends and dividend policy” and “Description of share capital.” The decision whether to pay a dividend, as well as the amount of any dividend, will depend on many factors, such as our and our subsidiaries’ results of operations, financial condition, cash requirements, prospects and other factors deemed relevant by our board of directors and shareholders.

15

Voting rights

Holders of our preferred shares will not be entitled to voting rights, except in very limited circumstances. Holders of our common shares are entitled to one vote per share. See “Description of share capital—Voting rights.” Holders of ADSs will not have voting rights but may instruct the ADR depositary how to vote the preferred shares underlying their ADSs under the circumstances described in the deposit agreement. See “Description of American depositary shares—Voting rights.”

Liquidation preference

Upon our liquidation, each holder of preferred shares will be entitled to a preferential reimbursement of its contribution (aporte) to Grupo Aval out of the surplus assets available for distribution to shareholders. This reimbursement, if any, is payable in pesos before any distribution or payment may be made to holders of common shares. If, upon any liquidation, assets that are available for distribution among the holders of preferred shares (in liquidation) are insufficient to pay in full their respective liquidation preferences, such assets will be distributed among those holders pro rata. See “Description of share capital—Liquidation rights.”

NYSE, and Colombia Stock
Exchange symbols   We intend to apply to list the ADSs on the New York Stock Exchange, or NYSE, under the trading symbol “AVAL.” Our preferred shares are listed on the Colombian Stock Exchange under the symbol “PFAVAL.”

Lock-up agreements	In connection with this offering, we, our controlling shareholder and certain of our directors and executive officers will enter into lock-up agreements with the underwriters of this offering under which neither we nor they may, subject to certain exceptions, for a period of           days after the date of this prospectus, directly or indirectly sell, dispose of or hedge, or file or cause to be filed, a registration statement with the SEC under the Securities Act of 1933, as amended, or the Securities Act, relating to, any of our preferred shares or other share capital, including in the form of ADSs, or any securities convertible into or exercisable or exchangeable for any of our preferred shares or other share capital, including in the form of ADSs, without the prior written consent of the representatives of the underwriters.
ADR Depositary
Risk factors	You should carefully read the information set forth under “Risk factors” and the other information set forth in this prospectus before investing in the ADSs.

16

Expected timetable for the offering (subject to change):
Commencement of marketing of the offering	, 2013
Announcement of offer price	, 2013
Allocation of ADSs	, 2013
Settlement and delivery of ADSs	, 2013

Unless otherwise indicated, all information contained in this prospectus assumes:

· no exercise of the underwriters’ option to purchase up to            additional ADSs to cover over-allotments of ADSs, if any; and

· the ADSs to be sold in this offering will be sold at an offering price of U.S.$            per ADS (the midpoint of the range set forth on the cover page of this prospectus), after deduction of the underwriting discount and estimated offering expenses payable by us in connection with the offering and assuming no exercise of the over allotment option by the underwriters.

17

Summary financial and operating data

The following financial data of Grupo Aval at December 31, 2012 and 2011 and for the years ended December 31, 2012 and 2011 have been derived from our audited annual consolidated financial statements prepared in accordance with Colombian Banking GAAP included in this prospectus. The selected financial data at December 31, 2010, 2009 and 2008, and for the years ended December 31, 2010, 2009 and 2008 have been derived from our audited consolidated financial statements prepared in accordance with Colombian Banking GAAP that are not included in this prospectus. Our historical results are not necessarily indicative of results to be expected for future periods.

This financial data should be read in conjunction with our audited consolidated financial statements and the related notes and “Presentation of financial and other information,” “Selected financial and operating data” and “Operating and financial review and prospects” included in this prospectus.

Statement of income data

	Grupo Aval
	For the year ended December 31,
	2012			2012			2011			2010			2009			2008
	(in U.S.$ millions, unless otherwise indicated)(1)			(In Ps billions, except share and per share data)
Colombian Banking GAAP
Operating income:
Net interest income		3,568.7			6,310.3			5,468.9			4,628.8			4,826.0			3,715.3
Total (provisions) reversals, net		(518.8	)		(917.3	)		(416.3	)		(1,026.9	)		(887.6	)		(713.5	)
Total fees and other services income, net		1,347.1			2,382.0			2,234.4			1,617.7			1,583.5			1,393.9
Total other operating income		500.9			885.7			958.0			785.5			684.1			612.5
Total operating income		4,897.9			8,660.6			8,244.9			6,005.1			6,205.9			5,008.2
Total operating expenses		(2,997.2	)		(5,299.5	)		(4,932.9	)		(3,520.0	)		(3,292.4	)		(3,027.9	)
Net operating income		1,900.7			3,361.1			3,312.0			2,485.1			2,913.5			1,980.3
Non-operating income (expense):
Other income		349.8			618.5			320.7			364.6			367.4			290.3
Other expense		(96.4	)		(170.4	)		(124.5	)		(187.6	)		(299.7	)		(164.9	)
Total non-operating income (expense), net		253.4			448.1			196.2			176.9			67.7			125.4
Income before income tax expense and non-controlling interest		2,154.2			3,809.2			3,508.2			2,662.1			2,981.2			2,105.8
Income tax expense		(775.8	)		(1,371.7	)		(1,136.7	)		(831.0	)		(864.3	)		(677.3	)
Income before non-controlling interest		1,378.4			2,437.4			2,371.5			1,831.1			2,116.9			1,428.4
Non-controlling interest		(515.2	)		(911.1	)		(1,080.2	)		(874.2	)		(1,051.5	)		(671.3	)
Net income attributable to Grupo Aval shareholders		863.2			1,526.4			1,291.2			956.9			1,065.4			757.1
Earnings per 1,000 shares (basic and diluted earnings):
Common and preferred shares (in pesos)		–			82,277.2			79,184.3			68,621.0			76,448.0			54,368.0
Common and preferred shares (in U.S. dollars) (2)		–			46.5			40.8			35.9			37.4			24.2

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	Grupo Aval
	For the year ended December 31,
	2012		2012		2011		2010		2009		2008
	(in U.S.$ millions, unless otherwise indicated)(1)		(In Ps billions, except share and per share data)
Dividends and interest on capital per 1,000 shares (3):
Common and preferred shares (in pesos)		–		49,200.0		48,465.3		37,800.0		33,240.0		30,000.0
Common and preferred shares (in U.S. dollars) (2)		–		27.8		24.9		19.7		16.3		13.4
Weighted average number of common and preferred fully paid shares outstanding (basic and diluted):
Outstanding shares		–		18,551,766.5		16,306,613.4		13,943,980.7		13,935,966.1		13,925,515.2
U.S. GAAP (4)
Net income attributable to controlling interest under U.S. GAAP		–		1,564.5		885.3		965.3		934.5		807.1
Basic and diluted net income per 1,000 shares
Outstanding shares (in pesos)		–		84,330.3		54,293.4		69,228.4		67,060.2		57,956.8
Outstanding shares (in U.S. dollars) (2)		–		47.7		27.9		36.2		32.8		25.8

(1) Translated for convenience only using the representative market rate as computed and certified by the Superintendency of Finance at December 31, 2012 of Ps 1,768.23 per U.S.$1.00.

(2) Translated for convenience using the representative market rate as computed and certified by the Superintendency of Finance of Ps 2,243.59, Ps 2044.23, Ps 1,913.98, Ps 1,942.70 and Ps 1,768.23, per U.S.$1.00 at December 31, 2008, 2009, 2010, 2011 and 2012, respectively.

(3) Dividends are declared semi-annually in March (for the six-month period ended December 31 of the previous year) and September (for the six-month period ended June 30 of the current year) of each year. We do not declare dividends on a quarterly basis.

(4) See note 30 to our audited consolidated financial statements included in this prospectus for reconciliations to U.S. GAAP.

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Balance sheet data

	Grupo Aval
	At December 31,
	2012		2012		2011			2010		2009		2008
Colombian Banking GAAP	(in U.S.$ millions except per share data) (1)		(In Ps billions, except per share data)
Assets:
Total cash and cash equivalents		7,577.5		13,398.9		11,698.6			9,682.6		7,370.9		6,621.3
Total investment securities, net		13,174.6		23,295.8		18,975.2			19,174.9		16,587.3		11,427.7
Total loans and financial leases, net		43,820.0		77,483.8		67,641.2			56,439.7		40,015.6		38,518.3
Total interest accrued on loans and financial leases, net		404.9		716.0		583.5			448.2		406.1		556.0
Bankers’ acceptances, spot transactions and derivatives		256.9		454.3		418.8			306.9		78.8		87.8
Accounts receivable, net		1,018.5		1,800.9		1,612.9			1,337.3		783.1		751.2
Property, plant and equipment, net		1,015.1		1,794.9		1,761.3			1,643.7		1,096.5		956.7
Operating leases, net		212.5		375.7		323.2			263.9		282.5		255.7
Foreclosed assets, net		52.0		92.0		77.8			85.5		48.0		42.6
Prepaid expenses and deferred charges		1,109.4		1,961.7		1,956.2			920.7		611.6		521.1
Goodwill, net (2)		1,607.6		2,842.5		3,110.7			3,031.4		1,020.1		1,064.0
Other assets, net		638.3		1,128.6		1,072.6			912.0		769.5		697.6
Reappraisal of assets		1,310.8		2,317.8		2,269.7			2,062.5		1,923.1		1,580.0
Total assets		72,198.1		127,663.0		111,501.9			96,309.3		70,993.1		63,079.9
Liabilities:
Total deposits		46,070.5		81,463.3		71,007.6			63,669.3		49,348.5		45,050.8
Bankers’ acceptances and derivatives financial instruments		231.9		410.0		469.0			309.3		41.6		64.9
Interbank borrowings and overnight funds		2,916.2		5,156.5		3,225.1			2,477.4		2,753.7		794.8
Borrowings from banks and others		5,870.8		10,380.9		11,437.8			10,491.2		3,854.9		5,048.4
Accounts payable		1,699.6		3,005.3		3,093.9			2,243.5		1,518.5		1,568.6
Accrued interest payable		268.5		474.8		313.0			247.4		269.1		381.5
Other liabilities		961.7		1,700.6		1,447.8			1,291.9		950.7		856.1
Long-term debt (bonds)		5,524.7		9,769.0		6,566.2			5,952.4		3,422.2		2,320.3
Estimated liabilities		459.1		811.7		855.3			596.9		711.6		593.6
Non-controlling interest		3,058.3		5,407.7		4,927.0			4,475.5		4,038.0		3,191.1
Total liabilities		67,061.3		118,579.9		103,342.7			91,754.7		66,908.8		59,870.1
Shareholders’ equity:
Subscribed and paid-in capital:
Common shares		10.5		18.6		18.6			13.9		13.9		13.9
Additional paid-in capital		2,076.5		3,671.7		3,671.1			647.4		647.4		637.9
Retained earnings:
Appropriated		1,646.5		2,911.3		2,332.0			1,930.3		1,266.0		878.5
Unappropriated		455.2		804.9		669.0			483.3		679.7		441.0
Equity surplus:
Equity inflation adjustments		370.2		654.6		741.9			742.1		743.2		746.7
Unrealized gains (losses) on investment securities available for sale		44.2		78.2		(293.0	)		29.7		18.3		(90.3	)
Reappraisal of assets		533.7		943.8		1,019.6			707.8		715.7		581.9
Total shareholders’ equity (2)		5,136.8		9,083.1		8,159.1			4,554.6		4,084.3		3,209.7
Total liabilities and shareholders’ equity		72,198.1		127,663.0		111,501.9			96,309.3		70,993.1		63,079.9
U.S. GAAP (3)
Controlling interest shareholders’ equity under U.S. GAAP		4,199.8		7,426.2		6,466.7			3,949.5		3,285.7		2,563.2
Controlling interest shareholders’ equity under U.S. GAAP per 1,000 shares (in U.S. dollars and Ps)		226.4		400,297.5		396,567.6			283,242.4		235,770.8		184,061.6

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(1) Translated for convenience only using the representative market rate as computed and certified by the Superintendency of Finance at December 31, 2012 of Ps 1,768.23 per U.S.$1.00.

(2) Goodwill attributable to Grupo Aval’s shareholders was Ps 1,943.4 billion and Ps 2,123.0 billion at  December 31, 2012 and 2011, respectively. Our attributable tangible equity (calculated as total shareholders’ equity minus goodwill attributable to Grupo Aval)was Ps 7,139.7 billion and Ps 6,036.2 billion at December 31, 2012 and 2011, respectively.

(3) See note 30 to our audited consolidated financial statements included in this prospectus for reconciliations to U.S. GAAP.

Other financial and operating data

	Grupo Aval
	At and for the year ended December 31,
Colombian Banking GAAP	2012		2011		2010		2009		2008
	(in percentages, except for operational data)
Profitability ratios:
Net interest margin (1)		6.5		6.5		7.2		8.8		7.8
ROAA (2)		2.0		2.3		2.2		3.2		2.4
ROAE (3)		17.7		20.3		22.2		29.2		25.4
Efficiency ratio:
Operating expenses before depreciation and amortization / total operating income before net provisions (4)		51.3		52.7		46.6		42.9		49.0
Capital ratios:
Period-end shareholders’ equity and non-controlling interest as a percentage of period-end total assets		11.4		11.7		9.4		11.4		10.1
Tangible equity ratio (5)		9.3		9.2		6.4		10.1		8.6
Credit quality data:
Non-performing loans as a percentage of total loans (6)		1.6		1.6		1.9		2.7		2.4
Delinquency ratio (loans past due more than 30 days)		2.3		2.2		2.7		3.6		3.6
“C,” “D” and “E” loans as a percentage of total loans (7)		3.3		3.2		3.9		4.8		4.0
Allowance for loans as a percentage of non-performing loans		194.3		200.6		194.0		169.3		170.1
Allowance for loans as a percentage of past due loans		139.2		150.0		139.1		124.5		112.9
Allowance for loans as a percentage of “C,” “D” and “E” loans		95.6		103.8		96.2		94.1		100.5
Allowance for loans as a percentage of total loans		3.2		3.3		3.7		4.5		4.0
Operational data (in units):
Number of customers of the banks (8)		10,345,695		9,596,694		8,700,266		6,532,302		6,209,746
Number of employees		59,406		54,463		53,485		36,976		35,510
Number of branches (9)		1,545		1,491		1,438		1,180		1,142
Number of ATMs (9)		4,328		3,835		3,518		2,340		2,160

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(1) Net interest margin is calculated as net interest income divided by total average interest-earning assets.

(2) For methodology used to calculate ROAA, see note (2) to the table under “—Financial and operating data.”

(3) For methodology used to calculate ROAE, see note (3) to the table under “—Financial and operating data.”

(4) See “Selected financial and operating data—Non-GAAP measures reconciliation.”

(5) Tangible equity ratio is calculated as shareholders’ equity plus non-controlling interest minus goodwill, divided by total assets minus goodwill. See “Selected financial and operating data—Non-GAAP measures reconciliation.”

(6) Non-performing loans include microcredit loans that are past due more than 30 days, mortgage and consumer loans that are past due more than 60 days and commercial loans that are past due more than 90 days. Each category includes financial leases respectively. See “Selected statistical data—Loan portfolio—Risk categories.”

(7) See “Selected statistical data—Loan portfolio—Risk categories.”

(8) Reflects aggregated customers of our banking subsidiaries and BAC Credomatic. Customers of more than one of our banking subsidiaries are counted separately for each banking subsidiary.

(9) Reflects aggregated number of branches or ATMs of our banking subsidiaries and BAC Credomatic, as applicable, located throughout Colombia and Central America.

Capitalization ratios

The following table presents consolidated capitalization ratios for our Colombian banking subsidiaries, Grupo Aval and our principal competitors.

	At December 31, 2012
	Grupo Aval entities
Colombian Banking GAAP	Banco de Bogotá		Banco de Occidente		Banco Popular		Banco AV Villas		Grupo Aval aggregate (1)		Grupo Aval consolidated		Bancolombia		Davivienda		BBVA Colombia
	(in percentages)
Tangible equity ratio (2)		10.3		13.9		14.7		12.7		11.7		9.3		11.4		9.3		8.4
Tier 1 ratio (3)		11.9		8.5		9.3		11.5		10.9		N/A		10.4		10.1		8.5
Solvency ratio (4)		13.1		10.5		11.5		13.7		12.5		N/A		15.8		15.2		11.3

Source: Company calculations for competitors based on each entity’s respective financial statements for the period indicated publicly available on their websites.

(1) Reflects the summation of calculated amounts for each line item for each of our banking subsidiaries.

(2) Tangible equity ratio is calculated as total shareholders’ equity plus minority interest minus goodwill, divided by total assets minus goodwill. See “Selected financial and operating data—Non-GAAP measures reconciliation.”

(3) Tier 1 ratio is calculated as primary capital divided by risk-weighted assets. Tier 1 ratio for BBVA Colombia is based on unconsolidated figures.

(4) Solvency ratio is calculated as technical capital divided by risk-weighted assets. For a definition of technical capital, see “Supervision and regulation—Capital adequacy requirements.” The solvency ratio for Grupo Aval is calculated as the sum of technical capital of our banking subsidiaries on a consolidated basis divided by the sum of risk-weighted assets of our banking subsidiaries on a consolidated basis.

Tangible solvency ratio differs from solvency ratio. Tangible solvency ratio is calculated as technical capital minus goodwill, divided by risk-weighted assets minus goodwill. The tangible solvency ratios for the following entities at December 31, 2012 were: Banco de Bogotá 10.0%, Banco de Occidente 10.4%, Banco Popular 11.5%, Banco AV Villas 13.7%, Grupo Aval aggregate 10.5%, Bancolombia 15.2%, Davivienda 12.9% and BBVA Colombia 10.1%. Tangible solvency ratio for BBVA Colombia is based on unconsolidated figures.

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Risk factors

You should carefully consider the risks and uncertainties described below, as well as the other information in this prospectus, before deciding to purchase the ADSs offered hereby. Our businesses, results of operations, financial condition or prospects could be adversely affected by any of these risks and uncertainties, and as a result, the market price of the ADSs and underlying preferred shares could decline. The risks and uncertainties described below are those that are known to us and that we currently believe may materially affect us.

Risks relating to Colombia and other countries in which we operate

Adverse economic and political conditions in Colombia and other countries in which we operate, including the Central American region, may have an adverse effect on our results of operations and financial condition.

Our principal subsidiaries in Colombia are financial institutions (four commercial banks, a pension and severance fund administrator and a merchant bank), and a substantial majority of our operations, properties and customers are located in Colombia. As a consequence, our results of operations and financial condition are materially affected by economic and political conditions in Colombia.

Colombia is subject to economic, political and other uncertainties, including changes in monetary, exchange control and trade policies that could affect the overall business environment in Colombia, which would, in turn, affect our results of operations and financial condition. For example, the Colombian Central Bank could sharply raise or lower interest rates, which could negatively affect our net interest income and asset quality and also restrict our growth. Extreme variations in exchange rates could also negatively affect the foreign currency position of our borrowers. Any of these events could have an adverse effect on our results of operations and financial condition.

Decreases in the growth rate of the Colombian economy, periods of negative growth, or material increases in inflation or interest rates could result in lower demand for, or affect the pricing of, our services and products. Because a large percentage of the costs and expenses of our subsidiaries is fixed, we may not be able to reduce costs and expenses upon the occurrence of any of these events, in which case our profitability could be affected.

In the case of our pension and severance fund management business, economic conditions may affect the businesses and financial capacity of employers, which might result in a drop in employee-contributor head counts or decrease the ability of employers to create new jobs or increase employee incomes.

BAC Credomatic’s results of operations and financial condition depend on economic, political and social conditions in the countries where BAC Credomatic operates, mainly in Central America. The political, economic and social environments in such countries are affected by many different factors, including significant governmental influence over local economies, substantial fluctuations in economic growth, high levels of inflation, exchange rate movements, exchange controls or restrictions on expatriation of earnings, high domestic interest rates, drug trafficking and other forms of organized crime, wage and price controls, changes in tax policies, imposition of trade barriers, and unexpected changes in regulation. BAC Credomatic’s results of operations and financial condition could be affected by changes in economic and other policies of each country’s government, which have exercised and continue to exercise substantial influence over many aspects of the private sector, and by other social and political developments in each such country. During the past several decades, El Salvador, Guatemala, Honduras, Nicaragua and Panama have experienced civil strife and political instability that have included a succession of regimes with differing economic policies and programs. Previous governments have imposed, among other measures, controls on prices, exchange rates, local and foreign investment and international trade, restricted the ability of companies to dismiss employees, expropriated private sector assets and prohibited the remittance of profits to foreign investors.

Adverse economic, political and social developments in Central America may adversely affect demand for banking services and create uncertainty regarding our operating environment, which could have a material

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adverse effect on BAC Credomatic and, consequently, our company. In addition, changes in political administrations may result in changes in governmental policy, which could affect BAC Credomatic or our business.

The Colombian and Central American economies remain vulnerable to external shocks.

A significant decline in economic growth of any of Colombia’s or Central America’s major trading partners—in particular, the United States, China, Ecuador and Venezuela—could have a material adverse effect on each country’s balance of trade and economic growth. In addition, a “contagion” effect, where an entire region or class of investments becomes less attractive to, or subject to outflows of funds by, international investors could negatively affect Colombia or Central American countries. Lower economic growth may result in asset quality deterioration and could negatively affect our business.

Pension funds, such as those managed by Porvenir and Horizonte, are global investors and thus are affected by regional and global economic factors. Lower economic growth of Colombia’s major trading partners or a contagion effect in the region or globally may lead to lower pension fund returns, which may, in turn, result in decreases in assets under management and impair our businesses or financial condition. In recent years, pension fund returns have been subject to increased volatility in international financial markets. Foreign investments represented 13.5% and 11.1%, respectively, of Porvenir’s total assets under management at December 31, 2012 and 2011.

The recent global economic and financial crisis, which began in the U.S. financial system and spread to different economic sectors and countries around the world, has had negative effects on the Colombian economy and the economies of Central American countries. During 2009, the economies of the United States and some European countries contracted, which, in turn, affected the Colombian and Central American economies. Although there have recently been signs of recovery in the global economy, this recovery may be fragile and also may reflect temporary benefits from government stimulus programs that may not be sustained. Moreover, several European Union members have been obliged to reduce their public expenditures due to their high indebtedness rates, which has negatively affected the Eurozone’s economy. The ability of certain countries, such as Greece, Italy, Portugal, Spain and Cyprus, and companies in those countries and in the Eurozone to repay their debt obligations remains uncertain. In addition, certain events, such as the outbreak of civil and political unrest in several countries in Africa and the Middle East, including Bahrain, Egypt, the Ivory Coast, Libya, Syria and Tunisia, might further strain and adversely affect the global economy and the global financial system.

Even though exports from Colombia have grown at an accelerated rate in recent years, fluctuations in commodity prices pose a significant challenge to their sustainability. Unemployment continues to be high in Colombia compared to other economies in Latin America. Furthermore, recent political and economic actions in the Latin American region, including actions taken by the Argentine and Venezuelan governments, may negatively affect international investor perception of the region. We cannot assure you that growth achieved over the past decade by the Colombian economy will continue in future periods. A reversal of the rate of growth of the Colombian economy, a slowdown in the growth of customer demand, an increase in market competition or changes in governmental regulations, could adversely affect the rate of growth of our loan portfolio and our risk index and, accordingly, increase our required allowances for loan losses. All this could in turn lead to decreased demand for borrowings in general.

The long-term effects of the global economic and financial crisis on the international financial system remain uncertain. In addition, the effect on consumer confidence of any actual or perceived deterioration of household incomes in the Colombian or Central American economies may have a material adverse effect on our results of operations and financial condition.

Colombia has experienced and continues to experience internal security issues that have had or could have a negative effect on the Colombian economy.

Colombia has experienced and continues to experience internal security issues, primarily due to the activities of guerrilla groups such as the Revolutionary Armed Forces of Colombia (Fuerzas Armadas Revolucionarias de Colombia), or “FARC,” paramilitary groups and drug cartels. In remote regions of the country with minimal governmental presence, these groups have exerted influence over the local

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population and funded their activities by protecting, and rendering services to drug traffickers. Even though the Colombian government’s “democratic security” program has reduced guerilla and criminal activity, particularly in the form of terrorism attacks, homicides, kidnappings and extortion, such activity persists in Colombia, and possible escalation of such activity and the effects associated with them have had and may have in the future a negative effect on the Colombian economy and on us, including our customers, employees, results of operations and financial condition. The Colombian government commenced peace talks with the FARC in August 2012. Our business or financial condition could be adversely affected by rapidly changing economic or social conditions, including the Colombian government’s response to current peace negotiations which may result in legislation that increases our tax burden or that of other Colombian companies.

Tensions with Venezuela, Ecuador and Nicaragua may affect the Colombian economy and, consequently, our results of operations and financial condition.

Diplomatic relations with Venezuela and Ecuador, two of Colombia’s main trading partners, have from time to time been tense and affected by events surrounding the Colombian armed forces combat of the FARC throughout Colombia, particularly on Colombia’s borders with Venezuela or Ecuador.

On November 19, 2012, the International Court of Justice placed a sizeable area of the Caribbean Sea within Nicaragua’s exclusive economic zone, that until then had been deemed by Colombia as part of its own exclusive economic zone. A worsening of diplomatic relations between Colombia and Nicaragua involving the disputed waters could result in the Nicaraguan government taking measures, or a reaction among the Nicaraguan public, which is detrimental to Colombian-owned interests in that country, including those owned by us through BAC Credomatic.

Any future deterioration in relations with Venezuela, Ecuador and Nicaragua may result in the closing of borders, the imposition of trade barriers or a breakdown of diplomatic ties, any of which could have a negative effect on Colombia’s trade balance, economy and general security situation, which may adversely affect our results of operations and financial condition.

Government policies and actions, and judicial decisions, in Colombia could significantly affect the local economy and, as a result, our results of operations and financial condition.

Our results of operations and financial condition may be adversely affected by changes in Colombian governmental policies and actions, and judicial decisions, involving a broad range of matters, including interest rates, exchange rates, exchange controls, inflation rates, taxation, banking and pension fund regulations and other political or economic developments affecting Colombia. The Colombian government has historically exercised substantial influence over the economy, and its policies are likely to continue to have a significant effect on Colombian companies, including us. The president of Colombia has considerable power to determine governmental policies and actions relating to the economy, and may adopt policies that negatively affect us. Future governmental policies and actions, or judicial decisions, could adversely affect our results of operations or financial condition.

New or higher taxes resulting from changes in tax regulations or the interpretation thereof in Colombia could adversely affect our results of operations and financial condition.

New tax laws and regulations, and uncertainties with respect to future tax policies, pose risks to us. In recent years, Colombian tax authorities have imposed additional taxes in a variety of areas, such as taxes on financial transactions and taxes to fund Colombia’s war against terrorism. Changes in tax-related laws and regulations, and interpretations thereof, can affect tax burdens by increasing tax rates and fees, creating new taxes, limiting tax deductions, and eliminating tax-based incentives and non-taxed income. In addition, tax authorities or courts may interpret tax regulations differently than we do, which could result in tax litigation and associated costs and penalties. In order to avoid double taxation, our Colombian subsidiaries usually distribute dividends from profits that have already been subject to income tax. These dividends are usually not taxable for Grupo Aval in Colombia, and dividends paid by Grupo Aval to its shareholders in Colombia from these sources of income also are usually not taxable, in each case provided that such profits have been taxed at the subsidiary level. This tax treatment may not be maintained in the future, and any change could have a material adverse effect on our results of operations and financial condition.

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On December 26, 2012, the Colombian Congress approved a number of tax reforms that took effect on January 1, 2013. These changes include, among others, VAT rate consolidation, a reduction in corporate income tax, changes to transfer pricing rules, the creation of a new corporate income tax to pay for health, education and family care issues, modifications to the individual income tax rules, new “thin capitalization” rules and a reduction of social contributions paid by certain employees. The implementation of such tax reforms requires further administrative regulation. Although as of the date of this prospectus we cannot estimate the full impact of these recent tax reforms on our Colombian operations, they are expected to have a negative impact on the business of our pension fund manager subsidiary, as they impose more burdensome conditions for obtaining tax deductions for contributions made to the voluntary pension funds. Considering our banking operations, there can be no assurance that the implementation of the tax reforms will not have an adverse impact on our revenues in Colombia.

Natural disasters in Colombia could disrupt our businesses and affect our results of operations and financial condition.

We are exposed to natural disasters in Colombia, such as earthquakes, volcanic eruptions, tornadoes, tropical storms and hurricanes. Heavy rains in Colombia, attributable in part to the La Niña weather pattern, have resulted in severe flooding and mudslides. La Niña is a recurring weather phenomenon, and it may contribute to flooding, mudslides or other natural disasters on an equal or greater scale in the future. In the event of a natural disaster, our disaster recovery plans may prove to be ineffective, which could have a material adverse effect on our ability to conduct our businesses, particularly if such an occurrence affects computer-based data processing, transmission, storage and retrieval systems or destroys customer or other data. In addition, if a significant number of our employees and senior managers were unavailable because of a natural disaster, our ability to conduct our businesses could be compromised. Natural disasters or similar events could also result in substantial volatility in our results of operations for any fiscal quarter or year.

Risks relating to our businesses and industry

Risks relating to our banking business

A decline in asset quality, including the loan portfolios of our banks, may have an adverse effect on our results of operations and financial condition.

Changes in the financial condition or credit profiles of customers of our banking subsidiaries and increases in inflation or interest rates could have a negative effect on the quality of our banks’ loan portfolios, potentially requiring them to increase loan loss provisions or resulting in reduced profitability. In particular, the percentage of non-performing loans may increase in the future as a result of factors beyond our control, such as economic conditions and political events affecting Colombia generally or specific sectors of the economy.

A substantial number of our banks’ customers are individuals and small- and medium-sized enterprises, or “SMEs,” and these customers are potentially more susceptible to downturns in the Colombian economy than large corporations and high-income individuals. For example, unemployment directly affects the ability of individuals to obtain and repay consumer and residential mortgage loans. Consequently, our banking subsidiaries may experience higher levels of non-performing loans, which could result in increased loan loss provisions due to defaults by, or deterioration in the credit profiles of, individual borrowers. Non-performing loans and resulting loan losses may increase materially in the future and adversely affect our results of operations and financial condition.

Existing loan loss allowances may not be adequate to cover any increases in non-performing loans or deterioration in the credit quality of loan portfolios. As a result, our banking subsidiaries may be required to increase loan loss provisions, which may adversely affect our results of operations and financial condition.

In addition, there is no precise method for predicting loan and credit losses, such that loan loss allowances may not be sufficient to cover actual losses. If we and our banking subsidiaries are unable to manage the level of non-performing or other poor credit quality loans, our results of operations and financial condition would be materially and adversely affected.

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The loan portfolios of our banking subsidiaries have grown substantially in recent years. See “Selected statistical data.” As default rates generally increase with the age of loans, the level of non-performing loans may lag behind the rate of growth in loans but may increase when growth slows or the loan portfolios become more mature. As a result, historic loan loss experience may not necessarily be indicative of future loan loss experience.

Our banking subsidiaries may be unable to realize on collateral or guarantees securing loans, which may adversely affect their results of operations and financial condition.

Our banking subsidiaries make loans that are secured by collateral, including real estate and other assets that are generally located in Colombia and the countries where we operate. The value of collateral may significantly fluctuate or decline due to factors beyond the control of our subsidiaries, including, for example, prevailing economic and political conditions in the relevant jurisdiction. At December 31, 2012, 37.6% of our total past due loans (including our foreign operations) were secured. An economic slowdown may lead to a downturn in the Colombian or Central American real estate market, which may, in turn, result in declines in the value of real estate securing loans to levels below the principal balances of these loans. Any decline in the value of the collateral securing these loans may result in reduced recoveries from collateral realization and have an adverse effect on our results of operations and financial condition. We may also not have sufficiently recent information on the value of collateral, which may result in an inaccurate assessment for impairment losses of our loans secured by such collateral. If this were to occur, we may need to make additional provisions to cover actual impairment losses of our loans, which may materially and adversely affect our results of operations and financial condition.

Our banking subsidiaries also make loans on the basis of guarantees from relatives, affiliates or associated persons of their principal borrowers. To the extent that guarantors encounter financial difficulties due to economic conditions, personal or business circumstances, or otherwise, the ability of our banks to enforce such guarantees may be impaired.

In addition, our banking subsidiaries may face difficulties in enforcing their rights as secured creditors against borrowers, collateral or guarantees. In particular, timing delays and procedural problems in realizing against collateral, as well as a debtor-protective judicial interpretations of the law, may make it difficult to foreclose on collateral, realize against guarantees or enforce judgments in our favor, which could materially and adversely affect our results of operations and financial condition.

A new insolvency law in Colombia may limit the ability of our banking subsidiaries to collect on monetary obligations and enforce rights against collateral or under guarantees.

Colombian insolvency laws provide that creditors of an insolvent debtor in default are prohibited from initiating collection proceedings outside the bankruptcy or reorganization process of such debtor. In addition, all collection proceedings outstanding at the beginning of the bankruptcy or reorganization process must be suspended and any creditors are prevented from enforcing their rights against the collateral and other assets of the debtor.

On July 12, 2012, the Colombian Congress enacted Law 1564 of 2012, or “Law 1564,” which provides insolvency protection for non-merchant individuals. Under the new insolvency regulation, which came into effect on October 1, 2012, once a non-merchant individual has ceased paying his or her debts, that individual can initiate a voluntary insolvency proceeding before a notary public or mediator to reach an agreement with its creditors. The terms of any agreement reached with a group (two or more) of creditors that represent more than 50% of the total amount of the claims will be mandatorily applicable to all relevant creditors. The insolvency law also provides for increased debtor protections, including an automatic stay for a maximum of 90 days. A perception that loans to individuals may be difficult or impossible to recover could cause our banking subsidiaries to enhance credit requirements and result in decreased lending to individuals by making access to credit more expensive. In addition, increased difficulties in enforcing debt and other monetary obligations due to this new insolvency law could have an adverse effect on our results of operations and financial condition.

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Any failure of risk management processes, including credit and market risk, could materially and adversely affect our banking businesses, results of operations and financial condition.

Credit risk is a principal risk inherent in the business of our banks. Although we have groupwide risk management guidelines, each bank is responsible for managing its own risk. Each bank’s policies and procedures, which are designed to identify, monitor and manage risk, may prove to be insufficient. Furthermore, our banks may not be able to upgrade, on a timely basis, risk management systems. For example, our banks’ risk management systems utilize an internal credit rating system to assess the risk profile of each customer. As this process involves detailed analyses of the customer’s credit risk, taking into account quantitative and qualitative factors, it is necessarily subject to human error. Due to limitations in the availability of information and the developing information infrastructure in Colombia, our assessment of credit risk associated with a particular customer may not be based on complete, accurate or reliable information. Personnel of our banking subsidiaries may fail to detect risks before they occur, or may not effectively implement their risk management systems, which may increase exposure to credit risk. As a result, any failure by our banking subsidiaries to effectively implement or consistently follow or refine risk management systems may result in higher risk exposures for our banking subsidiaries, which could materially and adversely affect our results of operations and financial condition.

Declines in the value of our banks’ sovereign debt securities portfolios could have an adverse effect on our results of operations.

Our banks’ debt securities portfolio primarily consists of sovereign debt securities, mainly securities issued or guaranteed by the Colombian government. LB Panama’s debt securities portfolios primarily consist of private issuers of corporate debt securities. We are exposed to significant credit, market and liquidity risks associated with sovereign debt. At December 31, 2012 and December 31, 2011, debt securities represented 15.4% and 14.6%, respectively, of our consolidated total assets; approximately 58.2% and 64.0%, respectively, of these securities were issued or backed by the Colombian government, and approximately 5.5% and 5.2%, respectively, of these securities were issued or backed by Central American governments. A significant decline in the value of these government securities could materially and adversely affect our debt securities portfolio and, consequently, our financial condition and results of operations. See “Supervision and regulation—Mandatory investments.”

We are subject to market risk in our banking business.

Our banks are directly and indirectly affected by changes in market conditions. Market risk, or the risk that the value of assets and liabilities or revenues will be adversely affected by variation in market conditions, is inherent in the products and instruments associated with our operations, including loans, deposits, securities, bonds, long-term debt, short-term borrowings, proprietary trading in assets and liabilities and derivatives. Changes in market conditions that may affect our financial condition and results of operations include fluctuations in interest and currency exchange rates, securities prices, changes in the implied volatility of interest rates and foreign exchange rates, among others.

We are subject to counterparty risk in our banking business.

Our banks and, to a lesser extent, Porvenir, Horizonte and Corficolombiana are exposed to counterparty risks in addition to credit risks associated with lending activities. Counterparty risk may arise from, for example, investing in securities of third parties, entering into derivative contracts under which counterparties have obligations to make payments to us, or executing securities, futures, currency or commodity trades from proprietary trading activities that fail to settle at the required time due to non-delivery by the counterparty or systems failure by clearing agents, exchanges, clearing houses or other financial intermediaries. These risks could materially and adversely affect our results of operations and financial condition.

Our banks are subject to market and operational risks associated with derivative transactions.

Our banks and, to a lesser extent, Porvenir, Horizonte and Corficolombiana, enter into derivative transactions primarily for hedging purposes and, on a limited basis, on behalf of customers. They are subject to market and operational risks, including basis risk (the risk of loss associated with variations in

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the spread between the asset yield and the funding and/or hedge cost) and credit or default risk (the risk of insolvency or other inability of a counterparty to perform its obligations to us).

Market practices and documentation for derivative transactions in Colombia may differ from those in other countries. For example, documentation may not incorporate terms and conditions of derivatives transactions as commonly understood in other countries. In addition, the execution and performance of these transactions depend on our banks’ ability to develop adequate control and administration systems, and to hire and retain qualified personnel. Moreover, our banks’ ability to monitor and analyze these transactions depends on their information technology systems. These factors may further increase risks associated with derivative transactions and could materially and adversely affect our results of operations and financial condition.

Our banking subsidiaries are subject to liquidity risk, which may result in increases to funding costs.

The principal sources of funding for our banking subsidiaries are savings deposits, time deposits and checking accounts, that together represented approximately 67.9% and 67.7% of consolidated total liabilities at December 31, 2012 and 2011, respectively. Because our banking subsidiaries rely primarily on short-term deposits for funding, a sudden or unexpected shortage of funds in the banking systems in which we operate and overnight money markets may prevent our banking subsidiaries from meeting their obligations or obtaining necessary funding without incurring higher costs or selling certain assets at prices below prevailing market values, which could materially and adversely affect our results of operations and financial condition.

Default by one or more of our largest borrowers could adversely affect our results of operations and financial condition.

The aggregate outstanding loans to our banks’ ten largest borrowers represented 5.9% of our consolidated total loan portfolio at December 31, 2012. Default on loans by one or more of these borrowers may adversely affect our results of operations and financial condition.

Downgrades in our credit ratings or in the credit ratings of our banking subsidiaries would increase the cost of, or impair access to, funding.

Our credit ratings and those of our banking subsidiaries are an important component of our and our banking subsidiaries’ ability to obtain funding. Our banking subsidiaries’ ability to compete successfully in the marketplace for deposits depends on various factors, including their financial stability as reflected by their credit ratings. A downgrade in credit ratings may adversely affect perception of their financial stability and ability to raise deposits. Adverse changes in credit ratings could also increase the cost of raising funds in the capital markets or borrowing funds for our subsidiaries and for us. In addition, lenders and counterparties in derivative transactions are sensitive to the risk of a rating downgrade. Any downgrade in our credit rating or in any of our banking subsidiaries’ credit ratings could materially and adversely affect our results of operations and financial condition.

Our banking subsidiaries’ loan portfolios are subject to risk of prepayment, which may result in reinvestment of assets on less profitable terms.

The loan portfolios of our banking subsidiaries are subject to prepayment risk, which results from the ability of a borrower to pay a loan prior to maturity. Generally, in a declining interest rate environment, prepayment activity increases with the effect of reducing weighted average lives of interest-earning assets and adversely affecting results. Prepayment risk also has an adverse effect on credit card and collateralized mortgage obligations, since prepayments could shorten the weighted average life of these portfolios, which may result in a mismatch in funding or in reinvestment at lower yields.

The credit card industry is highly competitive and entails significant risks, including the possibility of overindebtedness of customers, which could have a material adverse effect on us.

The credit card business is subject to a number of risks and uncertainties, including the possibility of overindebtedness of our customers, despite our focus on low-risk, middle- and high-income customers.

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The credit card industry is characterized by higher consumer default than other credit industries, and defaults are highly correlated with macroeconomic indicators that are beyond our control. Part of our current growth strategy is to increase volume and number of cards in the credit card portfolio, at the same or a higher rate than the market, which may increase our exposure to risk in our loan portfolio. If Colombian and Central American economic growth slows or declines, or if we fail to effectively analyze the creditworthiness of our customers (including by targeting certain sectors), we may be faced with unexpected losses that could have an adverse effect on our results of operations and financial condition.

Changes in banking laws and regulations in Colombia and the other countries in which we operate could adversely affect our consolidated results.

Banking and financial services laws and regulations are subject to ongoing review and revision, including changes in response to global regulatory trends and, more recently, the global economic and financial crisis. In the wake of this crisis, governments have been actively considering new banking laws and regulations, and reviewing and revising existing laws and regulations, particularly in relation to capital adequacy and accounting standards. In addition, various international developments, such as the adoption of risk-based capital, leverage and liquidity standards by the Basel Committee on Banking Supervision in December 2010, known as “Basel III,” will continue to impact us in the coming years. To prepare for the implementation of the Basel III accords in Colombia, the Ministry of Finance, in consultation with the Superintendency of Finance, has initiated an internal review of regulations applicable to financial institutions. The adoption of new laws or regulations, or changes in the interpretations or enforcement of existing laws or regulations, may have an adverse effect on our results of operations and financial condition.

Regulatory actions may result in fines, penalties, and restrictions that could materially and adversely affect our businesses and financial performance.

Our Colombian banks, as well as Porvenir, Horizonte and Corficolombiana, are subject to regulation and supervision by Colombian financial authorities. These regulatory authorities have broad powers to adopt regulations and other requirements affecting or restricting virtually all aspects of our subsidiaries’ organization and operations, including, for example, the imposition of anti-money laundering measures and the authority to regulate the terms and conditions of credit that can be applied by Colombian banks. Failure to comply with applicable regulations could subject our banking subsidiaries to fines or sanctions or even revocation of licenses or permits to operate their businesses. In the event that any of these subsidiaries encounters significant financial problems, is in danger of insolvency or becomes insolvent, or is otherwise not deemed to be viable, the financial authorities would have broad powers to intervene in their management and operations, including by suspending or removing management and, in extreme circumstances, putting our banks, Porvenir, Horizonte and Corficolombiana, into conservatorship or receivership or taking control of our banks, Porvenir, Horizonte and Corficolombiana. Grupo Aval is required, as an issuer of securities in Colombia, to submit information to the Superintendency of Finance and comply with corporate governance requirements; however, we are not regulated as a financial institution or as a bank holding company, and we are not required to comply with capital adequacy regulations applicable to banks and other financial institutions. We may, however, become subject to more stringent regulation in the event that our status as a non-financial entity is not maintained by Colombian authorities in the future.

We may face legal and other challenges to maximizing revenue from credit card fees and other fees from customers.

As part of their credit card business, our banks face risks relating to the pricing of fees and commissions charged to merchants (merchant discounts) and the pricing of bank interchange fees charged by issuer banks to acquiring banks. Banks and card processors in Colombia have been subject to administrative investigations regarding the fees and commissions that are charged to the merchants by the acquiring banks and in respect to the banking interchange fees.

In the past, the Superintendency of Industry and Commerce (Superintendencia de Industria y Comercio) has conducted investigations on the practices of Asociación Gremial de Instituciones Financieras Credibanco (Visa franchisee in Colombia) and Redeban Multicolor S.A. (MasterCard franchisee in Colombia), the entities used by most Colombian banks to manage the credit card system in Colombia, relating to alleged price fixing schemes among Colombian banks relating to fees and commissions charged to merchants. The Superintendency of Industry and Commerce has also conducted investigations

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into certain Colombian banks in the past, including our Colombian banking subsidiaries, for alleged price fixing of bank interchange fees charged during the period from May 2007 to October 2008.

Although we have not been subject to any fine or penalty as a result of these investigations, it is possible that similar investigations be carried out by the relevant authorities in the future resulting in a decrease of the fees charged to merchants and bank interchange fees could decrease, which could also lead to changes in commercial strategies that could affect our results of operations and financial condition. We may also be subject to financial penalties in connection with such future investigations. In addition, fees charged for other banking services may continue to be reduced in the future as a result of regulatory measures and/or pressure from retailers and interest groups.

Failure to protect personal information could adversely affect our reputation and our business.

Our banks manage and hold confidential personal information of customers in the conduct of their banking operations. Although our banks have procedures and controls to safeguard personal information in our possession, unauthorized disclosures or unauthorized access to privileged information, fraud or interfering with regular banking and other services could subject our banks and us to legal actions and administrative sanctions as well as damages. Any failure to protect personal information could result in reputational damage and have an adverse effect on our results of operations and financial condition.

In the future, we may be subject to supervision as a bank holding company.

The Colombian government has announced that it is considering presenting to the Colombian Congress a bill to submit controlling entities of financial institutions to banking supervision and oversight. Although we are not aware of the content of such future regulation, in the future, we may be subject to banking supervision and oversight as the controlling entity of our banking subsidiaries.

Risks relating to our merchant banking business

Difficult market conditions can adversely affect Corficolombiana’s business.

Corficolombiana may be affected by lower than expected returns on investments, reduced opportunities to realize value from investments, and failure to find suitable investments so as to deploy capital effectively. During periods of difficult market conditions (which may span across one or more industries, sectors or geographies), portfolio companies may experience adverse operating performance, decreased revenues, financial losses, difficulty in obtaining access to financing or increased funding costs. Negative financial performance of portfolio companies may materially and adversely affect Corficolombiana’s results of operations and cash flow. To the extent the operating performance of those portfolio companies (as well as valuation multiples) does not improve or other portfolio companies experience adverse operating performance, it may sell those assets at values that are less than projected or even at a loss. Portfolio companies may also have difficulties in expanding their businesses and operations or meeting debt service and other obligations as they become due. Furthermore, negative market conditions could potentially result in a portfolio company entering bankruptcy proceedings, thereby potentially resulting in a complete loss of the investment. Although market conditions have recently shown some signs of improvement, economic and market conditions may not continue to improve. Even if such conditions do improve broadly and significantly over the long term, adverse conditions and/or other events in particular sectors may cause our performance to suffer further.

Corficolombiana’s due diligence process for evaluating prospective investments may not identify all risks or ensure investment returns.

Before making investments, Corficolombiana conducts due diligence that it deems reasonable and appropriate based on the facts and circumstances applicable to each investment. When conducting due diligence, it may be required to evaluate important and complex business, financial, tax, accounting, environmental and legal issues. Outside consultants, legal advisors, accountants and investment banks may be involved in the due diligence process to varying degrees depending on the type of investment, but we may be unable to engage these third parties in a timely manner, or at all. Nevertheless, the due diligence investigation carried out by Corficolombiana with respect to any investment opportunity may not

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reveal or highlight all relevant risks of such investment opportunity. Moreover, such an investigation will not necessarily result in the investment being successful.

A significant part of Corficolombiana’s investments are primarily in relatively illiquid assets, and it may fail to realize any profits from these activities for a considerable period of time or lose some or all of the principal amount of these investments.

At December 31, 2012, approximately 46.9% of Corficolombiana’s investments was in securities of privately held companies, for which there often are no readily ascertainable market prices. As a result, there may be limited or no marketability for these investments, and these investments may decline in value while Corficolombiana is seeking to dispose of them. Because there is significant uncertainty as to the valuation of illiquid investments, the stated values of such investments may not necessarily reflect the values that could actually be realized by Corficolombiana. In addition, in some cases, Corficolombiana may be prevented by contract from selling such securities for a period of time. Corficolombiana’s ability to dispose of investments may also be dependent on factors beyond its control. Thus, investments may only be disposed of over a substantial length of time, exposing the investment returns to risks of declines in market prices during the intended disposition period. Accordingly, under certain conditions, Corficolombiana may be forced to either sell securities at lower prices than it had expected to realize or defer—potentially for a considerable period of time—sales that it had planned to make.

Corficolombiana makes minority investments in companies that it does not control.

Corficolombiana’s investments include non-controlling equity interests, and it may also dispose of a portion of its majority equity investments in portfolio companies over time in a manner that results in Corficolombiana retaining minority investments. Those investments will be subject to the risk that the company in which the investment is made may make business, financial or management decisions with which we do not agree. Similarly, the majority stakeholders or the management of the company may take risks or otherwise act in a manner contrary to our interests. If any of the foregoing were to occur, the values of these investments could decrease or we may not be able to dispose of them, which would adversely affect Corficolombiana’s results of operations and financial condition.

Most of Corficolombiana’s investments are concentrated in three industries.

At December 31, 2012, approximately 82.7% of Corficolombiana’s investment portfolio were concentrated in the infrastructure, energy and gas, and financial sectors. During periods of difficult market conditions or slowdowns in these sectors, Corficolombiana may experience decreased revenues, difficulty in obtaining access to financing and increased funding costs.

Risks relating to our pension and severance fund management business

Porvenir and Horizonte operate in a highly regulated market, which limits their flexibility to manage their businesses.

Porvenir’s and Horizonte’s operations are regulated by Law 100 of 1993, the Organic Statute of the Financial System (Estatuto Orgánico del Sistema Financiero), or “EOSF,” issued by the Ministry of Finance, Decree 2555 of 2010, or “Decree 2555,” and regulations issued by the Superintendencyof Finance and, to the extent applicable, Colombian Corporation Law. These regulationslimit the range of assets in which pension fund administrators, or “AFPs,” can invest and also set investment limits. In addition, each AFP is legally required to provide a minimum return on investment for each of its pension and severance funds. This minimum return is determined pursuant to specified formulas established in Decree 2555, which vary according to the type of fund. If a fund’s return for any month is lower than the minimum return, the AFP must cover the difference within a period of five days. To do so, the AFP must first apply funds from a stabilization reserve (a portion of the AFP’s capital invested in the fund equal to 1% of the value of each pension fund under management). If the stabilization reserve is insufficient to cover the difference, the AFP must provide resources from its own capital. If the AFP does not have enough resources to cover the difference, the Superintendency of Finance may order the capitalization of the AFP. If, notwithstanding the above, an AFP fails to observe either the minimum return or the stabilization reserve requirements or failure to comply with the order of capitalization, the Superintendency of Finance may take

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possession (tomar posesión) of the AFP, in which case the Colombian Deposit Insurance Fund(Fondo de Garantías de Instituciones Financieras), or “FOGAFIN,” must supply funds to cover the shortfall. Although Porvenir has never failed to meet the minimum requirements, failure to do so could require us to increase our investment in Porvenir or similarly, Horizonte, seek capital from alternative sources or forfeit our investment, or lead to dissolution of the AFP and transfer of the fund to another AFP. If Porvenir or Horizonte is unable to fulfill the minimum return or the stabilization reserve requirements, or if new laws or decrees impose more onerous requirements, Porvenir’s or Horizonte’s business may be materially adversely affected.

In addition, there are regulatory limitations on the amount of commissions that Porvenir or Horizonte may charge for its services. For example, we may only retain 300 basis points of the 16.0% (up to 17.0% for employees meeting a certain salary threshold) of the base contribution to a mandatory pension fund, a portion of which (currently 160 basis points) we are required to pay to an insurer for life and disability coverage. The percentage that we pay for this insurance may increase or decrease depending on market conditions and other factors. Life and mortality rate tables have been adopted in Colombia and became effective on October 1, 2010. These tables account for longer life expectancy trends, which may result in an increase in the amount we pay for insurance and may affect our results of operations.

In 2009, the regulatory system began to shift from an obligatory pension system to a multi-funds system, allowing pension funds to be more specifically tailored to the individual needs of customers according to their risk profiles. Regulations related to the establishment of the multi-funds system are continuing to be developed. The Colombian government has announced that it is considering presenting to the Colombian Congress a bill to amend current pension fund regulation to improve access to coverage, reduce inequality, and consolidate the financial sustainability of the system. These regulations or their interpretation by the Ministry of Finance or the Superintendency of Finance may not provide a favorable business environment and may adversely affect our results of operations and financial condition of our pension and severance fund management business.

A significant amount of debt securities in pension and severance funds managed by our pension and severance fund businesses are issued or guaranteed by the Colombian government.

Our pension and severance fund management business, like our banks and other participants in the banking industry, is subject to the risk of loss in value of sovereign debt securities. For example, at December 31, 2012, total debt securities held by Porvenir represented 66.1% of the total assets of the funds managed by Porvenir, and 62.2% of total debt securities were issued or backed by the Colombian government. A significant decline in the value of the securities issued or guaranteed by the Colombian government could adversely affect the debt securities portfolio of our pension and severance fund management business and, consequently, our pension and severance fund management business results of operations and financial condition.

Other risks relating to our businesses

We are subject to fluctuations in interest rates and other market risks, which may materially and adversely affect our results of operations and financial condition.

Market risk refers to the probability of variations in income or in the market value of assets and liabilities due to changes in markets, including variations in market rates of interest and foreign currency exchange rates. Changes in interest rates affect the following areas, among others, of our banks’ businesses: net interest income; the volume of loans originated; market value of securities holdings; asset quality; and gains from sales of loans and securities. We do not manage market risk on a groupwide basis and are not subject to regulation or supervision of market risk on a groupwide basis.

Changes in short-term interest rates may affect interest margins quickly and, therefore, net interest income, which comprises the majority of our revenue. Increases in interest rates may reduce the volume of loans originated by our banking subsidiaries. Sustained high interest rates may discourage customers from borrowing and may result in increased delinquencies in outstanding loans and deterioration in the quality of assets. Increases in interest rates may reduce the value of our assets, including the financial assets of our banks, the assets managed by Porvenir and the investments of Corficolombiana. Our banking subsidiaries

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hold a substantial portfolio of loans and debt securities that have both fixed and floating interest rates. In addition, we may incur costs (which, in turn, will affect our results of operations) if our banking subsidiaries implement strategies to reduce future interest rate exposure. Increases in interest rates may reduce gains or require our banking subsidiaries to record losses on sales of their loans or securities.

High interest rates have historically been common in many countries in Latin America. We have regional exposure to fluctuations in interest rates. To the extent that there are significant increases in such rates in any of the countries in which BAC Credomatic operates, our operating margins may be adversely affected and our results of operations may experience significant adverse consequences.

We face exposure to fluctuations in foreign currency exchange, particularly in light of the fact that the currencies in countries where we and BAC Credomatic operate have historically experienced significant devaluations and depreciations. The types of instruments exposed to foreign exchange rate risk include, for example, investments in foreign subsidiaries, foreign currency-denominated loans and securities, foreign currency-denominated debt and various foreign exchange derivative instruments whose values fluctuate with changes in the level or volatility of currency exchange rates or foreign interest rates.

We may be adversely affected by fluctuations between the value of the Colombian peso or other local currencies in which we operate and the U.S. dollar as a result of U.S. dollar-denominated indebtedness.

We financed our acquisition of BAC Credomatic, in part, through the incurrence of approximately U.S.$1.3 billion of U.S. dollar-denominated debt (Ps 2.4 trillion as of the date of the acquisition, December 9, 2010). Because the substantial majority of our revenue is in Colombian pesos, we will be exposed to fluctuations in the exchange rate between the Colombian peso and the U.S. dollar and the uncertainty of the amount of Colombian pesos that will be required to service the principal and interest payments on this debt. On a consolidated basis, we and our subsidiaries have U.S.$2.4 billion (Ps 4.2 trillion) of long-term debt denominated in U.S. dollars as of December 31, 2012. Fluctuations in the peso/dollar exchange rate may affect the value of this debt on our balance sheet and cause us to recognize gains or losses on our income statement. Any substantial increase in the U.S. dollar relative to the Colombian peso could affect our results of operations and our ability to meet our future payment obligations on this debt.

A substantial portion of BAC Credomatic’s earnings, assets and liabilities are in Costa Rican colones, Guatemalan quetzals, Honduran lempiras, Nicaraguan cordobas, Panamanian balboas and U.S. dollars. As a result, we are subject to risks relating to foreign currency exchange rate fluctuations between these currencies and Colombian pesos. Nevertheless, as described in “Business––BAC Credomatic—Foreign exchange rate risk related to BAC Credomatic,” BAC Credomatic maintains a U.S. dollar net asset position, which is intended to hedge at least 60% of its shareholders’ equity against the possible devaluations and depreciations of each of these local currencies.

We are subject to trading risks with respect to our trading activities.

Our banking subsidiaries, Corficolombiana and Porvenir engage in proprietary trading, and we derive a portion of our profits from such trading activities. As a result, any reduction in trading income could adversely affect our results of operations and financial condition. Our trading income is volatile and dependent on numerous factors beyond our control, including, among others, market trading activity, interest rates, exchange rates and general market volatility. A significant decline in our trading income, or large trading losses, could adversely affect our results of operations and financial condition.

Declines in the market price for securities could result in our recording impairment losses as well as increased unrealized losses on other securities. Losses in the Colombian equity markets could result in further losses from impairment or sale of these securities. Any significant increases in exposure to any of these non-traditional risks, or a significant increase in credit risk or bankruptcy of any of the counterparties, could materially and adversely affect our results of operations and financial condition.

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Colombian law imposes limitations on interest rates, and future additional restrictions on interest rates or banking fees could negatively affect our profitability.

The Colombian Commercial Code limits the amount of interest that may be charged on commercial transactions, including transactions of our banking subsidiaries. In the future, regulations in Colombia could impose increased limitations regarding interest rates or banking fees. Law 1430 of December 2010 authorizes the Colombian government to impose or place limits on tariffs and fees charged by banks and other financial institutions where the government has determined that there is insufficient competition in a relevant market. Additionally, the law requires the Superintendency of Finance to implement a monitoring scheme of the tariffs and fees charged by the financial institutions in their relevant markets and to report the results of this evaluation semi-annually to the Colombian government. The Colombian government issued Decree 4809 of 2011, which (1) requires banks to provide each of their clients with statements of all fees charged to such clients on an annual basis, (2) sets a limit on the fees that banks may charge to their clients for withdrawals from automated teller machines of other banks and (3) establishes that transactions through the internet may not cost more than those made through other channels. The Colombian Congress is currently considering a draft bill which would prevent Colombian banks from charging certain transactional and service fees to individuals whose income is equal or under two times the legal monthly minimum wage. A significant portion of our banks’ revenues and operating cash flow is generated by credit services and any such increased limitations would materially and adversely affect our results of operations and financial condition.

The Colombian Central Bank may impose requirements on the ability of Colombian residents, including us, to obtain loans denominated in foreign currency.

Under Colombian exchange control operations, the Colombian Central Bank may impose certain mandatory deposit requirements in connection with foreign currency-denominated loans obtained by Colombian residents, including us. Most recently, when the peso appreciated against foreign currencies in 2008, such mandatory deposit requirement was set at 40% of the amounts to be disbursed under any credit facility denominated in a foreign currency. Future measures or requirements imposed by the Colombian Central Bank, such as mandatory deposit requirements, may adversely affect our and our clients’ ability to obtain loans in foreign currency.

We face uncertainty regarding consumer protection laws.

Law 1328 of 2009, also referred to as the “financial reform law,” created a new customer protection regime with respect to financial institutions. The financial reform law provides a bill of rights for consumers of financial services and products, including the right to receive clear, complete and reliable information about the services and products offered by financial institutions. The law also contains specific obligations for financial institutions, including a duty to maintain a financial ombudsman in charge of consumer protection and procedures regulating the responsibilities and functions of the ombudsman, a duty to create a financial consumer attention center pursuant to terms set by the Superintendency of Finance, an obligation to provide services and products under the same conditions offered to the general public, and a prohibition on the inclusion of predatory or abusive clauses in contracts with consumers. Any violation of this law and its implementing regulations by our banking subsidiaries could result in monetary or administrative sanctions or restrictions on our operations.

Decree 4809 of 2011 regulates certain fees charged by Colombian financial institutions. The most salient of these regulations include a cap of 20 Unidades de Valor Real or “UVR” (an inflation indexed unit) for ATM fees charged to clients for transactions conducted through ATMs owned by a third party, the requirement that ATM fees be disclosed to clients with the possibility to opt out of the transaction before it takes place, and the prohibition of charging higher fees for internet transactions than for non-internet transactions as well as charging fees for failed internet transactions. These restrictions could affect the profitability of our business by decreasing our fee income.

Additionally, Law 1555 of 2012 or “Law 1555,” allows consumers of financial services to prepay obligations denominated in pesos owed to financial institutions, without incurring any penalty. The law also requires that financial institutions disclose the possibility of such prepayment to borrowers prior to the extension of any loan. Although this law does not apply to loans having a balance that exceeds 880 times the legal

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monthly minimum wages, nor to financial obligations acquired prior to its effective date (July 9, 2012), its implementation may substantially affect our banking business profits.

Our businesses may face constitutional actions, class actions and other legal actions involving claims for significant monetary awards against financial institutions, which may affect our businesses.

Under the Colombian Constitution, individuals may initiate constitutional actions (acciones populares), or class actions (acciones de grupo), to protect their collective or class rights, respectively. Colombian financial institutions, including our banking subsidiaries, have been, and continue to be, subject to these actions with regard to fees, financial services, mortgage lending and interest rates, the outcomes of which are uncertain. In addition, the number of such actions could increase in the future and could significantly affect our businesses.

Acquisitions and strategic partnerships may not perform in accordance with expectations, may fail to receive required regulatory approvals or may disrupt our operations and adversely affect our credit rating and profitability.

A component of our strategy is to identify and pursue growth-enhancing strategic opportunities. As part of that strategy, we have acquired interests in various financial institutions in recent years. We regularly evaluate strategic acquisitions and alliances, in and outside of Colombia. Strategic acquisitions and alliances could expose us to risks with which we have limited or no experience, such as in the case of any significant acquisition outside of Colombia. In addition, potential acquisitions in Colombia and elsewhere may be subject to regulatory approval. We may be unsuccessful in obtaining any such approval or we may not obtain approvals on terms that are optimal for us—particularly in view of our subsidiaries’ and our combined significant market share in the Colombian banking industry.

We must necessarily base any assessment of potential acquisitions and alliances on assumptions with respect to operations, profitability and other matters that may subsequently prove to be incorrect. Future acquisitions and alliances, as well as other investments, may not produce anticipated synergies or perform in accordance with our expectations and could adversely affect our operations and profitability. In addition, new demands on our existing organization and personnel resulting from the integration of new acquisitions, including our recent acquisition of Horizonte, could disrupt our operations and adversely affect our operations and profitability.

We may not be able to manage our growth successfully.

We have been expanding the scope of our operations over the past few years, and we expect that this expansion will continue. As we continue to grow, we must improve our operational, technical and managerial knowledge and compliance systems in order to effectively manage our operations across the expanded group. Failure to integrate, monitor and manage expanded operations could have a material and adverse effect on our reputation and financial results. Our future growth will also depend on our access to internal and external financing sources. We may be unable to access such financing on commercially acceptable terms or at all.

We are subject to operational risks.

Our business depends on the ability of our banking subsidiaries to process large numbers of transactions efficiently and accurately. Operational risks and losses can result from fraud, employee error, failure to properly document transactions or to obtain proper internal authorization, failure to comply with regulatory requirements, breaches of conduct of business rules, equipment failures, natural disasters or the failure of external systems, among others. Our, and our banking subsidiaries’ currently adopted procedures may not be effective in controlling each of the operational risks faced by our banking subsidiaries.

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Failure of our information systems could materially and adversely affect the effectiveness of our risk management and internal control processes as well as our results of operations and financial condition.

We and our subsidiaries are highly dependent on the ability to collect and process, on a timely basis, a large amount of financial and other information, and services and products, at a time when transaction processes have become more complex with increasing volumes. A partial or complete failure of any of these systems could materially and adversely affect our decision-making process, risk management and internal control systems as well as our ability to respond on a timely basis to changing market conditions.

In addition, our and our subsidiaries’ ability to remain competitive will depend in part on their ability to upgrade information technology infrastructure on a timely and cost-effective basis. We and our subsidiaries must continually make significant investments and improvements in their information technology infrastructure in order to ensure the proper functioning of financial control, accounting and other data collection and processing systems and to remain competitive. In addition, as our banking subsidiaries continue to open new branches, they will need to improve their information technology infrastructure, including maintaining and upgrading their software and hardware systems and their back-office operations. We and our subsidiaries are currently in the process of sequentially replacing certain of our core banking systems on a bank by bank basis to converge in time to a common technology platform. If there are technological impediments, unforeseen complications, errors or breakdowns in implementing new systems, our business, financial condition or results of operations may be adversely affected.

Any failure to effectively improve or upgrade our or our subsidiaries’ information technology infrastructure and management information systems in a timely manner could damage our and their reputation and materially and adversely affect our or their results of operations and financial condition.

We and our subsidiaries also rely on information systems to operate their websites, process transactions, respond to customer inquiries on a timely basis and maintain cost-efficient operations. We and our subsidiaries may experience operational problems with their information systems as a result of system failures, viruses, computer “hackers” or other causes. While we have not experienced a material breach of cyber security, we cannot assure you that we will not experience any such breach in the future, and any material disruption or slowdown of our or our subsidiaries’ systems could cause information, including data related to customer requests, to be lost or to be delivered to our customers with delays or errors, which could reduce demand for their services and products and could materially and adversely affect our results of operations and financial condition.

Our policies and procedures may not be able to detect money laundering and other illegal or improper activities fully or on a timely basis, which could expose us to fines and other liabilities.

We, our banking subsidiaries, BAC Credomatic and all of our financial institutions are required to comply with applicable anti-money laundering laws, anti-terrorism financing laws and other regulations. These laws and regulations require us, among other things, to adopt and enforce “know your customer” policies and procedures and to report suspicious or large transactions to the applicable regulatory authorities. While we and our financial institutions have adopted policies and procedures aimed at detecting and preventing the use of banking networks for money laundering activities and by terrorists and terrorist-related organizations and individuals generally, such policies and procedures have in some cases only been recently adopted and may not completely eliminate instances where they may be used by other parties to engage in money laundering and other illegal or improper activities. To the extent we and any of our financial institutions fail to fully comply with applicable laws and regulations, the relevant government authorities to which they report have the power and authority to impose fines and other penalties. In addition, our businesses and reputation could suffer if customers use our financial institutions for money laundering or illegal or improper purposes.

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Competition and consolidation in the Colombian and Central American banking and financial industry could adversely affect our market position.

We operate in a competitive market. Since the 1990s, when the Colombian financial system was deregulated, there has been an ongoing process of consolidation that has included foreign bank participants entering the Colombian market. We expect that consolidation to lead to the creation of larger local financial institutions, including additional foreign banks, presenting the risk that we could lose a portion of our market share in the industry, adversely affecting our results of operations.

Various banking institutions, which have recently been incorporated in Colombia, target the microcredit and small and medium enterprises segments. These institutions include Banco de las Microfinanzas-Bancamía S.A., Banco WWB S.A. and Banco Coomeva S.A. In addition, three newly incorporated financial corporations, JP Morgan Corporación Financiera S.A., BNP Paribas Colombia Corporación Financiera S.A. and Itaú BBA Colombia S.A. Corporación Financiera, which are local subsidiaries of international financial institutions, have entered the market targeting corporate clients. Recently, Banco Santander filed a petition with the Superintendency of Finance to obtain a bank license in order to incorporate a new bank aimed primarily toward corporate clients. The business of these new credit institutions may affect our market position in the individual, small and medium enterprises and merchant banking segments. To a lesser extent, we also face competition from non-bank competitors, such as brokerage companies, department stores (for some credit products), leasing and factoring companies, mutual fund and pension fund management companies and insurance companies.

In addition, the pace of consolidation in the Colombian and Central American financial services industry has increased, which may also increase competition in the markets where we operate. In the pension and severance fund management market, Grupo de Inversiones Suramericana agreed to acquire ING’s pension fund operations in Colombia (which on December 31, 2012 was merged into Protección) and Scotiabank agreed to buy Colfondos. On April 18, 2013, we acquired Horizonte. Also, in the wholesale banking market in 2011, Scotiabank acquired a controlling stake in Banco Colpatria and Banco Santander S.A. agreed to sell Banco Santander Colombia S.A. to Corpbanca S.A., a Chilean financial services company, which subsequently, in 2012, agreed to buy Helm Bank S.A. In 2012, HSBC agreed to sell HSBC Colombia S.A. to Banco GNB Sudameris S.A. and in 2012, HSBC agreed to sell HSBC Bank (Panamá) S.A. to Bancolombia and Bancolombia agreed to acquire 40% of the shares in Grupo Financiero Agromercantil, the owner of several financial institutions in Guatemala.

Our ability to maintain our competitive position depends mainly on our ability to anticipate and fulfill the needs of new and current customers through the development of innovative services and products, and our ability to offer adequate services and strengthen our customer base through cross-selling. Our businesses will be adversely affected if we are unable to retain current customers and attract new ones.

In addition, our efforts to offer new services and products may not succeed if product or market opportunities develop more slowly than expected or if the profitability of these opportunities is undermined by competitive pressures. As we expand the range of our products and services, some of which may be at an early stage of development in the Colombian and Central American market, we will be exposed to new and potentially increasingly complex risks and development expenses. Our employees and our risk management systems may not be adequate to handle such risks. In addition, the cost of developing products that are not launched is likely to affect our results of operations. Any or all of these factors, individually or collectively, could have a material adverse effect on us.

We depend on our chairman, our president and our senior management, and the loss of their services could have an adverse effect on our business.

We are highly dependent on our founder and chairman, Mr. Sarmiento Angulo (80 years old), our president, Mr. Sarmiento Gutiérrez (51 years old), and members of our senior management teams at both the group and subsidiary levels, all of whom possess considerable experience and expertise and have strong relationships with customers, participants of the Colombian business.

Our president, Mr. Luis Carlos Sarmiento Gutiérrez has been responsible for our day-to-day management over the last 12 years and has acted as president of companies controlled by Mr. Sarmiento Angulo for the

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past 20 years. Mr. Sarmiento Gutiérrez, who became president of Grupo Aval in 2000, and our chairman, Mr. Sarmiento Angulo, are responsible for the overall strategic direction of the group.

In addition, our senior managers at each subsidiary are responsible for implementing strategies and for the day-to-day operations of the companies they run. Although Grupo Aval does not require that its employees mandatorily retire at a certain age, the presidents of our four banks (who have an average tenure of 25 years with these banks) and other members of the senior management are not obliged to remain employed with us.

The loss of the services of any of these members of our, or our subsidiaries’ senior management, in particular of our chairman, or our president, could have an adverse effect on our business. Accordingly, our success is dependent on appropriately managing the risks related to executing a succession plan for our chairman, our president and our senior management on a timely basis.

We are subject to reputational risk, and our reputation also is closely tied to that of our founder and chairman, Mr. Sarmiento Angulo, our president, Mr. Sarmiento Gutiérrez, and that of our subsidiaries.

Damage to our reputation may limit our ability to attract customers, employees and investors. Harm to our reputation can arise from employee misconduct, legal and regulatory requirements, ethical issues, allegations of money laundering, and failing to deliver minimum standards of service and quality, among others. In particular, our success has been attributable, in part, to the high esteem in which Mr. Sarmiento Angulo, Mr. Sarmiento Gutiérrez and our subsidiaries are held in Colombia. Reputation plays an integral role in our business operations, which are based on customer confidence and trust. If the public image or reputation of Mr. Sarmiento Angulo, Mr. Sarmiento Gutiérrez, Grupo Aval or any of our subsidiaries is damaged as a result of adverse publicity or otherwise, business relationships with customers of the entire group may deteriorate, which would adversely affect our results of operations and financial condition. Any perceived or real difficulties experienced by any one of our subsidiaries would harm the reputation of Grupo Aval as a whole, which would also have an adverse effect on our results of operations and financial condition.

Following this offering, we will continue to be controlled by Mr. Sarmiento Angulo, whose interests could differ from the interests of ADS holders.

Mr. Sarmiento Angulo beneficially owns 95.1% of our common shares outstanding and 60.7% of our preferred shares outstanding, as of May 27, 2013, and, accordingly, controls our group. See “Principal shareholder.” This offering is of ADSs representing non-voting preferred shares and thus will not affect such control of our group. As a result, following this offering, Mr. Sarmiento Angulo will continue to have the right to control decisions, regardless of how our minority shareholders may vote on these issues and regardless of the interests of such shareholders, including holders of the ADSs and underlying preferred shares. In addition, Mr. Sarmiento Angulo beneficially owns interests in certain of our subsidiaries through entities other than Grupo Aval: 9.6% of Banco de Bogotá, 13.3% of Banco de Occidente, 15.4% of Banco AV Villas, 0.8% of Banco Popular and 0.3% of Corficolombiana, in each case, as of December 31, 2012.

Circumstances may occur in which Mr. Sarmiento Angulo may have an interest in pursuing transactions that, in his judgment, enhance the value of his several investments in the banking sector. These transactions may not necessarily be in Grupo Aval’s interest or that of its shareholders even if holders of the ADSs or the underlying preferred shares disagree. Due to his control, Mr. Sarmiento Angulo has, and will have, the power to: