As filed with the Securities and Exchange Commission on August 1, 2014

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(3)
Preferred shares, par value Ps 1.00 per preferred share in the form of ADSs	U.S.$100,000,000	U.S.$12,880 (3)

(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.

(3) In accordance with Rule 457(p), $12,880 representing the full amount of the registration fee due in connection with this Registration Statement has been offset by the registration fee previously paid with respect to the prior registration statement on Form F-1 (No. 333-188934) initially filed on May 30, 2013. Accordingly, no additional fee is due in connection with this filing.

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 August 1, 2014

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, or “NYSE,” under the symbol “AVAL.” Our preferred shares are listed on the Colombian Stock Exchange (Bolsa de Valores de Colombia) under the symbol “PFAVAL.” The closing price of our preferred shares on the Colombian Stock Exchange on          , 2014 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         , 2014.

Holders of our non-voting preferred shares and ADSs are entitled to receive dividends equal to that paid to the holders of our common shares, subject, in the case of holders of ADSs, to the deduction of the fees of the depositary and the costs of foreign exchange conversion. Although we have not adopted a dividend policy, since we first issued preferred shares in 2011, we have declared and paid cash dividends per preferred share of Ps 49.20 (U.S.$0.028) with respect to our 2012 net income and of Ps 53.10 (U.S.$0.028) with respect to our 2013 net income of which Ps 44.10 (U.S.$0.023) per preferred share has been paid as of the date of this prospectus. The decision whether to pay any future dividend, as well as the amount of any such 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. See “Dividends and dividend policy” and “Description of share capital—Dividends—Preferred shares.”

	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 after the date of this prospectus to purchase from us up to              additional ADSs to cover over-allotments, if any.

Neither the U.S. 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 24 of this prospectus for certain factors you should consider before investing in the ADSs.

Delivery of the ADSs will be made on or about             , 2014.

Global Coordinators and Joint Bookrunners

J.P. Morgan Goldman, Sachs & Co.

, 2014

Table of contents

	Page
Presentation of financial and other information	iv
Summary	1
Risk factors	24
Forward-looking statements	50
Use of proceeds	52
Market information	53
Capitalization	56
Dilution	58
Exchange rates	59
Selected financial and operating data	60
Selected statistical data	69
Operating and financial review and prospects	101
Industry	234
Business	243
Supervision and regulation	316
Management	342
Principal shareholder	353
Related party transactions	354
Dividends and dividend policy	359
Description of share capital	363
Description of American depositary shares	372
Taxation	384
Underwriting	390
Expenses of the offering	399
Legal matters	399
Experts	399
Service of process and enforcement of judgments	400
Where you can find more information	402
Index to financial statements	F-1
Annex A	A-1

The ADSs may not be offered or sold, directly or indirectly, in Colombia or any other jurisdiction or to any resident of Colombia or any such jurisdiction, except as permitted by applicable Colombian law or the laws of any such jurisdiction.

The preferred shares have been registered with the Colombian National Registry of Securities and Issuers and listed on the Colombian Stock Exchange. Neither the registration of the preferred shares with the Colombian National Registry of Securities and Issuers nor the listing of the preferred shares on the Colombian Stock Exchange should be understood as a rating or assumption of liability by the Superintendency of Finance or the Colombian Stock Exchange with respect to the issuer, price, quality or tradability of the securities or of the issuance, or of our solvency.

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;

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· “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;

· “Banco BAC de Panama” means Banco BAC de Panama, S.A., and its consolidated subsidiaries, formerly known as Banco Bilbao Vizcaya Argentaria (Panama) or “BBVA Panama”;

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

· “Grupo Financiero Reformador” or “Grupo Reformador” means Grupo Financiero Reformador de Guatemala  and its consolidated subsidiaries;

· “Horizonte” means AFP Horizonte Sociedad Administradora de Fondos de Pensiones y de Cesantías S.A., formerly known as 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 definition ascribed by the U.S. Securities and Exchange Commission, or the “SEC,” 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 if 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 we 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.

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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 the Colombian currency. This prospectus translates certain peso amounts into U.S. dollars at specified rates solely for the convenience of the reader. 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 for figures at December 31, 2013 have been translated at the rate of Ps 1,926.83 per U.S.$1.00, which was the representative market rate calculated on such date. 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 July 29, 2014, the representative market rate was Ps 1,850.61 per U.S.$1.00.

Financial statements

We are an issuer in Colombia of securities registered with the National Registry of Shares and Issuers, and in this capacity, we are subject to oversight by the Superintendency of Finance. We are not a financial institution in Colombia. We are required to comply with corporate governance and periodic reporting requirements to which all issuers are subject, but are not supervised or regulated as a financial institution or as a holding company of banking subsidiaries and, thus, are not required to comply with the 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 financial subsidiaries, including Porvenir and Corficolombiana) are entities under the direct comprehensive supervision of, and subject to inspection and surveillance as financial institutions by, the Superintendency of Finance and, in the case of BAC Credomatic, subject to inspection and surveillance as a financial institution by the relevant regulatory authorities in each country where BAC Credomatic operates.

Our consolidated financial statements at December 31, 2013 and 2012 and for each of the years ended December 31, 2013, 2012 and 2011 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 audited consolidated 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 (which we refer to in this prospectus, collectively, as “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. Our 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 submitted to the Superintendency of Finance for their review on a semi-annual basis. The Colombian Banking GAAP audited 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.

iv

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 our 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 also 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.

LB Panama segment

On December 9, 2010, we acquired BAC Credomatic through LB Panama, 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 prior financial reporting periods.

LB Panama’s financial information is prepared in accordance with Colombian Banking GAAP and primarily reflects (i) BAC Credomatic’s consolidated results since December 2010 (and Grupo Financiero Reformador since December 2013), and (ii) the acquisition of Banco BAC de Panama (BBVA’s operation in Panama) in December 2013. As of December 31, 2013, LB Panama’s balance sheet carried goodwill of Ps 2,500.5 billion (U.S.$1,298 million) resulting from the direct acquisitions the company made of BAC Credomatic and Banco BAC de Panama. LB Panama’s balance sheet also includes Ps 2,056.7 billion (U.S.$1,067million) of indebtedness, including Ps 520.2 billion (U.S.$270 million) incurred to fund a portion of our acquisition of BAC Credomatic and Ps 1,536.5 billion (U.S.$797 million) of additional indebtedness, of which Ps 496.0 billion (U.S.$257 million) is owed to Grupo Aval Limited and Ps 1,040.5 billion (U.S.$540 million) to Deutsche Bank, compared to total indebtedness of LB Panama of Ps 2,245.7 billion (U.S.$1,270million) as of December 31, 2012.  As of December 31, 2013, LB Panama had a fixed income portfolio of Ps 1,387.8 billion (U.S.$720million) comprised mainly of investment grade bonds issued by Latin American sovereign and corporate issuers, acquired pursuant to Banco de Bogotá’s investment guidelines.

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

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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 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 to that of our competitors reflects the unconsolidated results of our banking subsidiaries, Porvenir, Corficolombiana and BAC Credomatic. “Grupo Aval aggregate” data throughout this prospectus 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 of subsidiaries such as Corficolombiana, Porvenir or LB Panama, are not intended to reflect the consolidated financial results 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 in accordance with U.S. GAAP. Information regarding our competitors that is presented on a consolidated basis is made based on the financial statements of each bank publicly available on their respective websites. All calculations on an unconsolidated basis are made based on publicly available information filed with 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 financing companies and finance corporations are included in the calculation of market share data, 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.

The principal competitors of Porvenir, our pension and severance fund administrator, include Administradora de Fondos de Pensiones y Cesantías Protección S.A., or “Protección,” Colfondos S.A. Pensiones y Cesantías, or “Colfondos” and Skandia Administradora de Fondos de Pensiones y Cesantías S.A., or “Skandia.” We have included in this prospectus competitive position data for Porvenir as compared to these principal competitors. Corficolombiana, our merchant bank, is a financial corporation, and its competitors include 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.

Our principal competitors in Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama include Banco Industrial, Scotiabank, G&T Continental, Citibank and Bancolombia (which in October 2013 acquired (i) a 40% interest in Grupo Agromercantil Holding S.A., the parent Company of Banco Agromercantil in Guatemala, and (ii) a 100% interest in the ordinary voting shares in Banistmo (formerly HSBC Bank (Panama) S.A. in Panama)).

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We include certain ratios in this prospectus which we believe provide investors with important information regarding our operations, such as return on average shareholders’ equity, or “ROAE,” return on average assets, or “ROAA,” net interest margin, and operational efficiency and asset quality indicators, among others. In addition, certain of these ratios are also used in this prospectus to compare ourselves to our principal competitors.

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.

“Central American acquisitions” refers to the acquisitions by Banco de Bogotá of (i) a 98.92% equity interest in BBVA Panama (now known as Banco BAC de Panama) on December 19, 2013 through its subsidiary LB Panama and (ii) 100.00% equity interest in Grupo Financiero Reformador de Guatemala on December 23, 2013 through its indirect subsidiary Credomatic International Corporation (a subsidiary of LB Panama).

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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 one of its most profitable based on return on average shareholders’ equity, or “ROAE,” as compared to our principal competitors, at and for the years ended December 31, 2013, 2012 and 2011. We are also the largest banking group in Central America based on total assets as of December 31, 2013. 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.

Colombian operations

Our operations in Colombia currently consist of four commercial banks (Banco de Bogotá, Banco de Occidente, Banco Popular and Banco AV Villas), the largest pension and severance fund manager (Porvenir) and the largest merchant bank (Corficolombiana). We acquired 99.99% of the outstanding shares of Horizonte on April 18, 2013 and, on December 31, 2013, we completed the merger of Horizonte into Porvenir. The merger of Horizonte into Porvenir positions us as the market leader in the management of mandatory pension funds and severance funds in Colombia. See “Business—Competition—Pension and severance fund management – Porvenir.” Our Red de Grupo Aval (Grupo Aval network) is the largest combined network of ATMs and branches in Colombia and has been a key element of our competitive positioning in the Colombian market, with 1,374 branches and 3,674 ATMs at December 31, 2013. 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 strategic guidelines established by our management. 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 return on average assets, or “ROAA,” ROAE and efficiency ratio and that of our Colombian banking subsidiaries and principal competitors at December 31, 2013, on a consolidated basis, and Colombian market share information.

1

	At December 31, 2013
	Grupo Aval entities
	Banco de Bogotá		Banco de Occidente		Banco Popular		Banco AV Villas		Consolidated (1)		Bancolombia		Davivienda		BBVA Colombia
	(in percentages)
ROAA(2)		2.1		1.6		2.5		2.0		1.9		1.3		1.7		1.6
ROAE(3)		17.1		11.9		17.3		16.1		17.1		12.6		14.9		17.2
Efficiency ratio(4)		49.0		45.6		53.1		51.6		50.4		53.2		53.1		45.1
Colombian market share:
Deposits		14.9		7.0		4.3		2.9		29.1		21.6		11.2		10.9
Gross loans and financial leases		13.6		7.4		4.6		2.5		28.0		22.7		13.0		9.8
Assets		14.8		7.1		4.3		2.5		28.6		23.2		12.1		9.0
Branches		13.0		3.7		4.2		5.0		25.9		15.4		10.9		8.0
ATMs		12.4		2.2		8.3		4.0		26.9		25.9		11.6		8.3

Source: Company calculations for ROAA, ROAE and efficiency ratio for competitors are based on each entity’s respective financial statements that are 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) 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 “—Other financial and operating data.”  

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

ROAE for Banco de Bogotá and Grupo Aval for the year ended December 31, 2013 has been adjusted to exclude the respective effect of the recent Ps 1,300 billion (U.S.$675 million) and Ps 2,114 billion (U.S.$1,097 million) capitalizations that occurred in December 2013. See “Selected financial and operating data—Reconciliation of non-GAAP measures” for non-adjusted amounts.

(4) For methodology used to calculate efficiency ratio, see note (1) to the table under “Selected financial and operating data—Reconciliation of non-GAAP measures—Efficiency ratio.”  

Central American operations

Through our BAC Credomatic operations and our recent Central American acquisitions, we are the largest banking group in Central America based on consolidated assets. 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) and Mexico. We are one of the leading credit card issuers and merchant-acquiring franchises in Central America and have the only network that processes all major credit card brands in the region.

Through a network of 623 points of contact (including 347 full-service branches, 42 in-store branches, 206 on-site branches and 28 auto/drive-thru branches) and 1,505 ATMs at December 31, 2013, BAC Credomatic has more than 3.0 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 22.8% of our assets at December 31, 2013.

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 55.6% in 2013. In addition (calculated under its U.S. GAAP financials), net income attributable to shareholders improved from Ps 287.4 billion in 2010 to Ps 567.6 billion in 2013. BAC Credomatic’s ROAE was 17.4% and its ROAA was 1.9% in 2010 compared to an ROAE of 22.3% and an ROAA of 2.4% in 2013.

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 and 49.0% at December 31, 2013.

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The following tables show market shares and other metrics of our Central American operations and that of our principal competitors in Central America, excluding Panama, for the period indicated.

	At December 31, 2013
	Grupo Aval Central America (1)		Banco Industrial		Scotiabank Central America		G&T Continental		Citibank Central America		Bancolombia Central America
	(in percentages)
Central American market share:
Deposits		11.3		10.1		4.0		7.3		4.2		7.0
Loans and financial leases		12.4		9.3		5.2		5.9		4.1		7.4
Shareholders’ equity		11.9		7.9		4.6		4.8		7.1		8.2
Net income		16.8		11.1		2.9		5.7		5.8		9.3

Source: Calculated based on data aggregated from the local superintendencies of Costa Rica, El Salvador, Guatemala, Honduras 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 are 5.8% and 6.0%, respectively, at December 31, 2013.

(1) Reflects BAC Credomatic operations.

Other 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,
	2013			2013			2012			2011
	(in U.S.$ millions, except where otherwise indicated) (1)			(in Ps billions, except where otherwise indicated)
Financial data:
Total assets		80,073.2			154,287.4			127,663.0			111,501.9
Total loans and financial leases, net		48,494.6			93,440.8			77,483.8			67,641.2
Total deposits		52,516.5			101,190.4			81,463.3			71,007.6
Non-controlling interest		3,359.0			6,472.2			5,407.7			4,927.0
Total shareholders’ equity		6,086.8			11,728.2			9,083.1			8,159.1
Net interest income		3,623.0			6,981.0			6,310.3			5,468.9
Total (provisions) reversals, net		(671.7	)		(1,294.2	)		(917.3	)		(416.3	)
Total fees and other services income, net		1,460.6			2,814.4			2,382.0			2,234.4
Total other operating income		683.7			1,317.4			885.7			958.0
Total operating income		5,095.7			9,818.5			8,660.6			8,244.9
Total operating expenses		(3,128.5	)		(6,028.1	)		(5,299.5	)		(4,932.9	)
Total non-operating income (expense), net		122.6			236.1			448.1			196.2
Income tax expense		(734.2	)		(1,414.7	)		(1,371.7	)		(1,136.7	)
Income before non-controlling interest		1,355.5			2,611.9			2,437.4			2,371.5
Non-controlling interest		(524.9	)		(1,011.4	)		(911.1	)		(1,080.2	)
Income attributable to shareholders		830.6			1,600.5			1,526.4			1,291.2
Financial ratios (in percentages)
ROAA(2)					1.9			2.0			2.3
ROAE(3)					17.1			17.7			20.3
Efficiency ratio(4)					50.4			51.3			52.7

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	At and for the year ended December 31,
	2013	2013		2012		2011
	(in U.S.$ millions, except where otherwise indicated) (1)	(in Ps billions, except where otherwise indicated)
Operational data (in units):
Number of customers of the banks(5)			11,661,279		10,345,695		9,596,694
Number of employees			66,865		59,406		54,463
Number of branches(6)			1,721		1,545		1,491
Number of ATMs(6)			5,179		4,328		3,835

(1) Translated for convenience only using the representative market rate as computed and certified by the Superintendency of Finance at December 31, 2013 of Ps 1,926.83 per U.S.$1.00.  

(2) ROAA is calculated 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 period, divided by two).  

If average assets were calculated using monthly consolidated information, rather than the average at the beginning and end of a fiscal year, our ROAA would be: 1.9%, 2.1% and 2.3%, respectively, for the periods ended December 31, 2013, 2012 and 2011.

(3) ROAE is calculated 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). It is adjusted to exclude the Ps 2.1 trillion (U.S.$1,097 million) raised through the issuance of 1,626,520,862 shares at December 31, 2013 in connection with the Common Share Rights Offering (as defined below), since the capitalization process took place at the end of the year and had no material impact on our income statement. If the Common Share Rights Offering were not excluded, ROAE for Grupo Aval for 2013 would have been 15.4%.  

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 as follows: 17.3%, 17.8% and 23.8%, respectively, for the periods ended December 31, 2013, 2012 and 2011.

(4) See “Selected financial and operating data—Reconciliation of non-GAAP measures.”  

(5) Reflects aggregated customers of our banking subsidiaries. Customers of more than one of our banking subsidiaries and BAC Credomatic 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

The majority of our operations are located in Colombia, representing 79.7% and 78.6% of our net income and gross loan portfolio, respectively, and in the six countries in Central America, representing 20.3% and 21.4% of our net income and gross loan portfolio, respectively, in each case at and for the year ended December 31, 2013 and 2012, respectively.

We believe that Colombia’s financial system presents significant growth potential given its favorable economic conditions and low penetration rate for banking and financial services compared to other countries in the Latin American region such as Brazil and Chile. According to data from the IMF, at December 31, 2013, Colombia’s population and economy were the third and fourth largest in Latin America, respectively. According to DANE, in 2013 Colombia’s population was approximately 47.1 million people and its nominal GDP was Ps 707.2 trillion (U.S.$378.4 billion). Colombia’s nominal GDP per capita increased from Ps 7.93 million in 2005 (U.S.$3,416 using the average exchange rate for that year) to Ps 15.0 million in 2013 (U.S.$8,030 using the average exchange rate for that year).

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During the ten-year period ended December 31, 2013, 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 the country’s external debt to GDP ratio of 24.4% at December 31, 2013. 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, 2013 and throughout 2014. According to the Central Bank of Colombia, or the “Colombian Central Bank,” Colombia’s annual inflation rate for 2013 was 1.9%, the lowest rate since 1954 and down from 2.4% for 2012. Annual inflation for 2014 was 2.8% as of June 30, 2014. These economic fundamentals, together with Colombia’s record as a stable democracy, account for Colombia’s relative strength during the recent global economic and financial crisis.

During the ten-year period ended March 31, 2014, according to the Superintendency of Finance, Colombia’s financial system grew at a compounded annual growth rate, or “CAGR,” of 14.1% in terms of loan balances outstanding and 11.8% in terms of deposits, on an inflation-adjusted basis, compared to 4.8% for the country’s GDP during the same ten-year period ended March 31, 2014. Despite this recent growth, Colombia’s bank-loans-to-GDP ratio remains relatively low, with an approximate 37.6% ratio at March 31, 2014, according to the Superintendency of Finance. Using the ratio of domestic credit to the private sector to GDP, provided by the World Bank, Colombia stands at 48.8% compared to 100.5% for Chile, 68.5% for Brazil, 28.2% for Peru and 27.5% for Mexico at December 31, 2012, the most recent date for which such data is available.

Central America

We view Central America as a strategic region that meets our expansion criteria. At December 31, 2013, Central America had a total population of approximately 44.5 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.$198.9 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 4.1% between 2014 and 2016, compared to Colombia’s expected average growth rate of 4.5% during the same period. In terms of banking penetration, Central America had a ratio of domestic credit to the private sector to GDPof 49.2% as of December 31, 2012, mainly driven by Panama’s 85.6% ratio. This indicator for the other countries in the Central American region ranges from 26.6% to 51.8%, which we believe positions the financial sector to outperform GDP growth. 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;  

· 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;  

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· 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 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 merged with Corficolombiana;  

· In 2007, we conducted our second public offering of common shares pursuant to a preemptive rights offering in Colombia, raising 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 pursuant to a preemptive rights offering in Colombia, raising Ps 2.1 trillion (U.S.$1.1 billion) in gross proceeds;  

· In February 2012, we completed our first international bond offering, issuing Ps 1,083.6 billion (U.S.$600 million) at the date of the issuance of our 5.25% Senior Notes due 2017;  

· In September 2012, we completed our second international bond offering, issuing Ps 1,795.7 billion (U.S.$1.0 billion) at the date of the issuance of our 4.75% Senior Notes due 2022;  

· On April 18, 2013, we acquired Horizonte and on December 31, 2013, we completed the merger of Horizonte into Porvenir, with Porvenir acting as the surviving entity;  

· On December 19, 2013 and December 23, 2013, we expanded our Central America operations with the acquisitions of BBVA Panama (now known as Banco BAC de Panama) and Grupo Reformador, respectively; and  

· On January 17, 2014, we completed our third public offering of common shares pursuant to a preemptive rights offering of 1,855,176,646 common shares, or the “Common Share Rights Offering,” raising Ps 2.4 trillion (U.S.$1.3 billion).  

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.

Source: Company data at December 31, 2013.

(1) Corficolombiana held an additional 0.4% beneficial interest in Banco de Occidente at December 31, 2013, 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, Corficolombiana and BAC Credomatic 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 owned 8.9% 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, 2013.  

Colombian banking operations

Banco de Bogotá, founded in 1870, is Colombia’s oldest financial institution and at December 31, 2013, was the second 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 14.9% of deposits and 13.6% of loans at December 31, 2013. It is also the largest financial institution within our group by assets and

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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 in Colombia and a comprehensive portfolio of services and products, distributed through a network of 689 branches and 1,688 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 18.6% of commercial loans at December 31, 2013.

Banco de Occidente is the fifth largest bank in Colombia, based on assets and loans at December 31, 2013. It focuses on enterprise customers, state-owned entities and retail customers and has a leading presence in the southwest region of Colombia. Banco de Occidente has the second largest market share in Colombia, with 18.4% at December 31, 2013, in the financial leasing business, the second largest market share, with 18.1% at December 31, 2013, in the vehicle financing business, and the third largest market share, with 11.9% at December 31, 2013, 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 4.4% at December 31, 2013).

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 consumer bank. Banco AV Villas’ risk management systems provide it 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 is the leading private pension and severance fund management business in Colombia, based on funds under management, with a 42.6% market share of assets under management at December 31, 2013. Pension funds provide individual savings for retirement, while severance funds provide temporary income to employees who become unemployed. Porvenir has experienced an 8.8% CAGR in net income in the 2010 to 2013 period. Porvenir is the most profitable and efficient pension and severance fund manager in Colombia, with an ROAE of 27.1% for 2011, 30.1% for 2012 and 20.9% for the year ended December 31, 2013. Porvenir completed the merger by absorption of Horizonte, a recently acquired pension and severance fund management business in Colombia, on December 31, 2013.

Merchant banking

Corficolombiana is the leading merchant bank in Colombia by assets, shareholders’ 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 10.2% for 2012 and 15.3% for 2013.

Central American operations

BAC Credomatic is the leading Central American banking group with operations in Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panama and Mexico. BAC Credomatic is a full-service financial institution with one of the leading credit card issuance and merchant-acquiring franchises in

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Central America. It has achieved processing volumes of U.S.$12,604 million and U.S.$10,996 million for the years ended December 31, 2013 and 2012, respectively, in the merchant acquiring business, which compares favorably to processing volumes of other leading Latin American issuers. BAC Credomatic’s ROAE (calculated under its U.S. GAAP financial statements) was 21.8% in 2011, 23.4% in 2012, and 22.3% in 2013. On December 19, 2013, Banco de Bogotá acquired BBVA Panama through its subsidiary, LB Panama, for U.S.$505 million (Ps 982.5 billion at the date of the transaction). BBVA Panama, now known as Banco BAC de Panama, will be integrated into the Panamanian operations of BAC Credomatic. On December 23, 2013, BAC Credomatic acquired Grupo Reformador through its subsidiary, Credomatic International Corporation for U.S.$421 million (Ps 815.0 billion at the date of the transaction).

Key figures

The following tables present 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.

	Grupo Aval Consolidated			Banco de Bogotá			Porvenir(1)			Corficolombiana(1)			LB Panama(1)			Banco de Occidente			Banco Popular			Banco AV Villas
				At and for the year ended December 31, 2013
				(in U.S.$ millions, except where otherwise indicated) (6)
Loans and financial leases, net		48,494.6			29,366.0			–			413.8			10,501.2			9,833.4			6,047.4			3,265.7
Assets		80,073.2			52,245.9			853.9			7,297.7			18,275.2			15,066.1			8,673.2			5,039.1
Deposits		52,516.5			33,263.9			–			1,712.7			11,001.6			10,327.8			5,821.5			3,945.3
Shareholders’ equity		6,086.8			5,136.6			586.1			2,090.2			2,661.5			1,955.3			1,261.2			610.1
Net income		830.6			726.6			104.6			279.8			249.5			222.2			205.7			96.6
ROAA(2)		1.9	%		2.1	%		16.3	%		4.7	%		1.7	%		1.6	%		2.5	%		2.0	%
ROAE(3)		17.1	%		17.1	%		20.9	%		15.3	%		12.6	%		11.9	%		17.3	%		16.1	%
Efficiency ratio(4)		50.4	%		49.0	%		53.2	%		15.3	%		55.6	%		45.6	%		53.1	%		51.6	%
Delinquency ratio past due more than 30 days		2.4	%		2.3	%		–			1.7	%		2.6	%		2.4	%		2.1	%		3.8	%
Allowance for loans as a percentage of past due loans		133.3	%		123.3	%		–			168.1	%		77.8	%		146.9	%		176.1	%		118.2	%
Solvency ratio (5)		11.5	%		11.2	%		–			24.8	%		12.1	%		12.9	%		10.8	%		11.8	%

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

(1) Porvenir, Corficolombiana and LB Panama are subsidiaries of Banco de Bogotá. Their financial data is consolidated in Banco de Bogotá’s results. BAC Credomatic is a subsidiary of LB Panama. Solvency ratio of LB Panama corresponds to BAC Credomatic results (including Grupo Reformador) and does not include the recent acquisition of BBVA Panama.  

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

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

(4) For methodology used to calculate efficiency ratio, see note (1) to the table under “Selected financial and operating data—Reconciliation of non-GAAP measures—Efficiency ratio.”  

(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. For a description of capital adequacy ratios, see “Supervision and regulation—Capital adequacy requirements.”  

(6) Translated for convenience only using the representative market rate as computed and certified by the Superintendency of Finance at December 31, 2013 of Ps 1,926.83 per U.S.$1.00.

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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 banking and financial services operator 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 28.1% of consumer loans, at December 31, 2013. We also have the largest market share of deposits, 29.1%, at December 31, 2013. 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, 2013, our ATMs and branches represented 26.9% and 25.9%, respectively, of total ATMs and branches in Colombia. Porvenir is a market leader in funds under management with a market share of 43.9% in mandatory fund management and 49.9% in severance fund management, respectively, both at December 31, 2013. In addition, Porvenir has the highest percentage of net income, 55.7%, among the main market participants in Colombia for the year ended December 31, 2013. Corficolombiana, our merchant bank, is the largest financial corporation in Colombia.

Leading banking operations in Central America

BAC Credomatic is the leading financial group in Central America with a record of strong financial performance. Its ROAE (calculated under its U.S. GAAP financials) was 21.8% for the year ended December 31, 2011, 23.4% for the year ended December 31, 2012 and 22.3% for the year ended December 31, 2013. 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 in the region that processes all major credit card brands. BAC Credomatic’s customer base and distribution network are sizable in comparison 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, 2013: 12.3% in Costa Rica, 10.8% in El Salvador, 10.5% in Guatemala, 13.1% in Honduras, 26.6% in Nicaragua and 6.0% in Panama. We expanded our operations in Central America with the acquisitions of BBVA Panama (now known as Banco BAC de Panama) and Grupo Reformador during 2013.

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 19.3% and average ROAA of 2.1% for the 2010 to 2013 period, and our ROAE of 17.1% (adjusted to exclude the effect of Grupo Aval’s Ps 2,114 billion capitalization in December 2013) and ROAA of 1.9% for the year ended December 31, 2013, have been among the highest when compared to 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 6.2% at December 31, 2013. We believe that our ROAA and ROAE have outperformed those of our competitors in recent years mainly due to better yields on loans (from the diversified loan portfolio provided by our multi-brand banking subsidiaries), significant yields from our investment portfolio, a low-cost funding structure lower net provisions (due to a lower ratio of charge-offs to total loans) and better efficiency ratios. Our total assets have grown at a CAGR of 17.0% from December 31, 2010 to December 31, 2013 (15.1% excluding BAC). During the same period, our total deposits have grown at a CAGR of 16.7% (15.5% excluding BAC). We have accomplished our growth through organic expansion and strategic acquisitions.

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Diversified and competitive sources of funding

We have access to diverse sources of funding, including deposits and debt securities placed in Colombian and international capital and credit markets, which results in a competitive cost of funding for our operations. At December 31, 2013, our market share of total deposits in Colombia was 29.1%, supported by a 35.9% market share in checking accounts and a 30.5% market share in savings accounts. Deposits represented 78.0% of our total funding at December 31, 2013 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.$42.9 billion) at December 31, 2010 to Ps 129.7 trillion (U.S.$67.3 billion) at December 31, 2013. On May 12, 2011, we completed an offering of preferred shares, raising Ps 2.1 trillion (U.S.$1.1 billion at the date of issuance) in gross proceeds. On February 1, 2012, we successfully completed our inaugural international bond offering of U.S.$600 million (Ps 1,083.6 billion at the date of the issuance) of 5.25% Senior Notes due 2017 and on September 26, 2012 we issued U.S.$1.0 billion (Ps 1.8 trillion at the date of the issuance) of 4.75% Senior Notes due 2022 in the international markets. Between December 16, 2013 and January 17, 2014, we issued an aggregate of 1,855,176,646 common shares, pursuant to a preemptive rights offering, raising Ps 2.4 trillion (U.S.$1.3 billion). 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 2.4% at December 31, 2013, the lowest among our principal competitors on an unconsolidated basis. Bancolombia’s ratio was 2.7%, Davivienda’s was 3.5% and BBVA Colombia’s was 2.6% at December 31, 2013. We have maintained our relative consolidated asset quality, as evidenced by our ratio of non-performing loans to total loans of 1.8% at December 31, 2013 and our ratio of charge-offs to average outstanding loans of 1.1% at December 31, 2013. 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, that 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, risks, opportunities and developments in the industry.

Each of our banks and Grupo Aval on an aggregate basis are well-capitalized above the minimum capital adequacy mandatory ratios as calculated under Colombian capital adequacy regulations.

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 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 in Colombia 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 group-wide best practices without inhibiting 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.

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Focus on group-wide best practices

We apply group-wide best practices to all of our 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, 2013, we had a consolidated efficiency ratio of 50.4%, and our banking subsidiaries had efficiency ratios ranging from 45.6% (Banco de Occidente) to 53.1% (Banco Popular).

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 20 years of experience in the banking and related financial services industry and over 25 years of business experience as an 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 one of 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 key 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 2012 World Bank Development Indicators, domestic credit to the private sector accounted for 48.8% of GDP in Colombia as compared to 100.5% for Chile and 68.5% for Brazil, in each case, as of December 31, 2012. See “Industry—Colombia—Credit volumes.” Furthermore, according to the Colombian Central Bank, Colombia’s GDP expanded 4.3% in 2013 and is expected to grow 4.3% 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.

We believe we offer the most comprehensive range of banking services and products in Colombia, 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 segments and products where we have not historically focused in the past (for example, credit cards in Colombia, mortgages and payrolls). In addition, we are also expanding our cross-selling efforts to our over 8.6 million banking clients and our over 9.8 million pension fund clients in Colombia.

Furthermore, we are currently implementing initiatives to increase our non-interest income, which consists primarily of net fee income. Net fee income accounted for 25.3% of our consolidated total operating income before net provisions for the year ended December 31, 2013. We believe we can expand the contribution of non-interest income to our profitability in future periods by, for example, expanding our offering of 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.

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We are also studying initiatives to develop cost-effective channels, such as mobile banking (Transfer Aval) and risk management tools to extend our banking services to under-penetrated segments of the Colombian population that have a low use or that do not currently use banking services. We are also implementing initiatives to encourage the migration of some banking transactions from branches to lower cost channels such as Corresponsales Bancarios and digital channels.

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 and our recent Central American acquisitions 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 financial services and products, such as credit card issuance and merchant-acquiring businesses. We believe we can continue improving BAC Credomatic’s efficiency ratio, which at December 31, 2013 was 55.6%, compared to 49.0% for Grupo Aval’s Colombian operations, by implementing our best practices at BAC Credomatic.

We expect that our recent Central American acquisitions will enable BAC Credomatic’s franchise to grow in Panama and Guatemala, benefiting from expected robust GDP growth in each of those markets and increased banking penetration, supported by the creation of further synergies.

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. Through areas such as our vice presidencies of Shared Services and of Strategy we intend to continue identifying and working on group-wide projects, mainly in information technology, service channels (branches, ATMs, digital channels) and implementation of commercial and operational best practices. 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 another example, we are executing a plan to sequentially replace the core banking systems in our subsidiaries to converge in time to a common 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 into other regions. We will continue to seek opportunities to further expand into new geographies and will evaluate potential acquisition targets that would enable us to grow and consolidate our franchise through the services and products we offer and the markets we can access. We actively consider additional strategic investments, alliances and acquisitions, principally in Colombia, Central America and other selected Latin American countries, which may materialize, 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. During 2013, we increased our beneficial ownership of the outstanding share capital of Banco de Bogotá by 2.2% to 66.6% and of Banco de Occidente by 4.0% to 72.2% through purchase of shares in the open market. In December 2013, we further increased our ownership in Banco de Bogotá by 1.0% to 67.6% through the Banco de Bogotá capitalization process in connection with the issuance of preemptive rights. We have recently expanded our operations in Central America with the acquisitions of BBVA Panama (now known as Banco BAC de Panama) and Grupo Reformador in 2013.

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Recent developments

For a summary of our recent developments and financial results at and for the three months ended March 31, 2014, see Annex A.

On May 30, 2014, the Board of Directors of Banco Popular appointed Mr. Carlos Eduardo Upegui Cuartas (age 52) as the new President of Banco Popular after Mr. José Hernán Rincón Gómez (age 85) presented his resignation as Banco Popular’s President. Mr. Upegui who had previously served as Executive Vice President of Banco Popular has more than 18 years of experience in the financial sector acting as President of Banco Caja Social, between 2009 and 2012 and as Commercial Vice President of Banco de Bogotá, between 1999 and 2009, among other positions.

We completed the acquisition of Grupo Financiero Reformador in Guatemala and ‎BBVA Panama (now known as Banco BAC de Panama) in December 2013. We ‎have since completed the operational integration of technology, systems and policies with ‎those of BAC Credomatic and expect to formally merge Grupo Financiero Reformador ‎and Banco BAC de Panama into our BAC Credomatic subsidiaries following receipt of ‎regulatory approvals that we expect to receive in 2014‎.

On June 3, 2014, Corficolombiana, through its subsidiary Episol, was awarded the toll-road concession “Conexión Pacifico 1” by the Colombian Government’s National Infrastructure Agency (Agencia Nacional de Infraestructura—ANI). This concession is part of the fourth generation highways program led by the Colombian Government. For the concession, Corficolombiana, through Estudios y Proyectos del Sol S.A., or “Episol,” entered into an equity partnership with Iridium Colombia, a subsidiary of Grupo ACS of Spain, in which Episol will have a 60% participation and Iridium a 40% participation in the project entity. The toll-road concession involves the construction, operation and maintenance of 53.8 kilometers of highway between Medellín and Bolombolo in the Antioquia region. This is the first tranche of the highway that will connect this part of the country with the Colombian pacific coast. The concession will have a design and construction period of six years and a total duration of at least 25 years. The investment cost is estimated at Ps 2.3 trillion (U.S.$1.2 billion at the exchange rate on the day of allocation), and it involves the construction of four tunnels and 52 bridges.

Through June 30, 2014, we further increased our share ownership in Banco de Bogotá and Banco de Occidente through the acquisition of 624,731 shares or 0.20% of Banco de Bogotá and 119,142 shares or 0.08% of Banco de Occidente through the purchase of shares in the open market, resulting in an increase of our direct and indirect ownership to 67.8% in Banco de Bogotá and 72.2% in Banco de Occidente as of that date.

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 where 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 24 for a discussion of certain risk factors you should consider before investing in the ADSs.

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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.

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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 hereby 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, principally Banco de Bogotá. Our expected use of the net proceeds represents 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 a meeting of the common shareholders 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. If dividends are declared, 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.” Although we have not adopted a dividend policy, since we first issued preferred shares in 2011, we have declared and paid cash dividends per preferred share of Ps 49.20 (U.S.$0.028) with respect to our 2012 net income and of Ps 53.10 (U.S.$0.028) with respect to our 2013 net income of which Ps 44.10 (U.S.$0.023) per preferred share has been paid as of the date of this prospectus. The decision whether to pay any future dividend, as well as the amount of any such 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.

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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 NYSE under the 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 180 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 U.S. 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.

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Expected timetable for the offering (subject to change):
Commencement of marketing of the offering	, 2014
Announcement of offer price	, 2014
Allocation of ADSs	, 2014
Settlement and delivery of ADSs	, 2014

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.

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Summary financial and operating data

The following financial data of Grupo Aval at December 31, 2013 and 2012 and for the years ended December 31, 2013, 2012 and 2011 have been derived from our audited consolidated financial statements prepared in accordance with Colombian Banking GAAP that are included in this prospectus. The selected financial data at December 31, 2011, 2010 and 2009 and for the years ended December 31, 2010 and 2009 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,
	2013			2013			2012			2011			2010			2009
	(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		3,623.0			6,981.0			6,310.3			5,468.9			4,628.8			4,826.0
Provisions for loan and financial lease losses, accrued interest and other receivables, net		(735.6	)		(1,417.4	)		(1,041.8	)		(874.9	)		(820.3	)		(953.2	)
Recovery of charged-off assets		76.9			148.2			142.7			167.5			109.0			83.2
Provision (recovery) for investment securities, foreclosed assets and other assets		(13.0	)		(25.0	)		(18.2	)		291.1			(315.6	)		(17.6	)
Total (provisions) reversals, net		(671.7	)		(1,294.2	)		(917.3	)		(416.3	)		(1,026.9	)		(887.6	)
Total fees and other services income, net		1,460.6			2,814.4			2,382.0			2,234.4			1,617.7			1,583.5
Total other operating income		683.7			1,317.4			885.7			958.0			785.5			684.1
Total operating income		5,095.7			9,818.5			8,660.6			8,244.9			6,005.1			6,205.9
Total operating expenses		(3,128.5	)		(6,028.1	)		(5,299.5	)		(4,932.9	)		(3,520.0	)		(3,292.4	)
Net operating income		1,967.2			3,790.4			3,361.1			3,312.0			2,485.1			2,913.5
Non-operating income (expense):
Other income		235.3			453.4			618.5			320.7			364.6			367.4
Other expense		(112.7	)		(217.2	)		(170.4	)		(124.5	)		(187.6	)		(299.7	)
Total non-operating income (expense), net		122.6			236.1			448.1			196.2			176.9			67.7
Income before income tax expense and non-controlling interest		2,089.7			4,026.6			3,809.2			3,508.2			2,662.1			2,981.2
Income tax expense		(734.2	)		(1,414.7	)		(1,371.7	)		(1,136.7	)		(831.0	)		(864.3	)
Income before non-controlling interest		1,355.5			2,611.9			2,437.4			2,371.5			1,831.1			2,116.9
Non-controlling interest		(524.9	)		(1,011.4	)		(911.1	)		(1,080.2	)		(874.2	)		(1,051.5	)
Net income attributable to Grupo Aval shareholders		830.6			1,600.5			1,526.4			1,291.2			956.9			1,065.4

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	Grupo Aval
	For the year ended December 31,
	2013			2012			2011			2010			2009
	(in Ps billions, except share and per share data)
Earnings per 1,000 shares (basic and diluted earnings):
Common and preferred shares (in pesos)	86,013.9			82,277.2			79,184.3			68,621.0			76,448.0
Common and preferred shares (in U.S. dollars) (1)	44.6			42.7			41.1			35.6			39.7
Dividends and interest on capital per 1,000 shares (2):
Common and preferred shares (in pesos)		55,632.9			49,200.0			48,465.3			37,800.0			33,240.0
Common and preferred shares (in U.S. dollars) (1)		28.9			25.5			25.2			19.6			17.3
Weighted average number of common and preferred fully paid shares outstanding (basic and diluted):
Outstanding shares		18,607,487.3			18,551,766.5			16,306,613.4			13,943,980.7			13,935,966.1
U.S. GAAP (3)
Provision for loans, leases and other receivables		(1,113.5	)		(971.7	)		(670.0	)		(614.0	)		(805.4	)
Net income attributable to controlling interest under U.S. GAAP		1,632.5			1,564.5			885.3			965.3			934.5
Basic and diluted net income per 1,000 shares
Outstanding shares (pesos)		87,731.9			84,330.3			54,293.4			69,228.4			67,060.2
Outstanding shares (U.S. dollars) (1)		45.5			43.8			28.2			35.9			34.8

(1) Translated for convenience only using the representative market rate as computed and certified by the Superintendency of Finance at December 31, 2013 of Ps 1,926.83 per U.S.$1.00.  

(2) 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.  

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

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Balance sheet data

	Grupo Aval
	At December 31,
	2013			2013			2012			2011
	(in U.S.$ millions, except per share data) (1)			(in Ps billions, except share and per share data)
Colombian Banking GAAP
Assets:
Total cash and cash equivalents		8,353.9			16,096.6			13,398.9			11,698.6
Total investment securities, net		14,167.6			27,298.6			23,295.8			18,975.2
Total loans and financial leases, net		48,494.6			93,440.8			77,483.8			67,641.2
Total interest accrued on loans and financial leases, net		381.6			735.2			716.0			583.5
Bankers’ acceptances, spot transactions and derivatives		213.8			411.9			454.3			418.8
Accounts receivable, net		916.3			1,765.6			1,800.9			1,612.9
Property, plant and equipment, net		1,061.2			2,044.8			1,794.9			1,761.3
Operating leases, net		228.0			439.2			375.7			323.2
Foreclosed assets, net		56.7			109.2			92.0			77.8
Prepaid expenses and deferred charges		1,162.4			2,239.7			1,961.7			1,956.2
Goodwill, net (2)		2,578.3			4,968.0			2,842.5			3,110.7
Other assets, net		687.1			1,323.9			1,128.6			1,072.6
Reappraisal of assets		1,771.7			3,413.7			2,317.8			2,269.7
Total assets		80,073.2			154,287.4			127,663.0			111,501.9
Liabilities:
Total deposits		52,516.5			101,190.4			81,463.3			71,007.6
Bankers’ acceptances and derivatives financial instruments		232.2			447.3			410.0			469.0
Interbank borrowings and overnight funds		2,659.1			5,123.6			5,156.5			3,225.1
Borrowings from banks and others		6,204.0			11,954.1			10,380.9			11,437.8
Accounts payable		1,488.3			2,867.7			3,005.3			3,093.9
Accrued interest payable		264.3			509.2			474.8			313.0
Other liabilities		1,153.0			2,221.7			1,700.6			1,447.8
Long-term debt (bonds)		5,802.1			11,179.7			9,769.0			6,566.2
Estimated liabilities		307.9			593.3			811.7			855.3
Non-controlling interest		3,359.0			6,472.2			5,407.7			4,927.0
Total liabilities		73,986.4			142,559.2			118,579.9			103,342.7
Shareholders’ equity:
Subscribed and paid-in capital:
Common shares		10.5			20.2			18.6			18.6
Additional paid-in capital		3,002.1			5,784.5			3,671.7			3,671.1
Retained earnings:
Appropriated		1,855.3			3,574.8			2,911.3			2,332.0
Unappropriated		397.3			765.6			804.9			669.0
Equity surplus:
Equity inflation adjustments		338.5			652.2			654.6			741.9
Unrealized gains (losses) on investment securities available for sale		(271.7	)		(523.6	)		78.2			(293.0	)
Reappraisal of assets		754.9			1,454.5			943.8			1,019.6
Total shareholders’ equity (2)		6,086.8			11,728.2			9,083.1			8,159.1
Total liabilities and shareholders’ equity		80,073.2			154,287.4			127,663.0			111,501.9
U.S. GAAP (3)
Loans		48,745.5			93,924.4			78,333.3			68,067.0
Financial leases		4,205.6			8,103.4			7,650.7			6,392.8
Total loans and financial leases		52,951.1			102,027.8			85,984.0			74.459.8
Allowance for loans, lease losses and other receivables losses		(1,357.5	)		(2,615.7	)		(2,350.4	)		(2,012.9	)
Total loans and financial leases, net		51,593.6			99,412.0			83,633.6			72,446.9
Controlling interest shareholders’ equity under U.S. GAAP		4,949.3			9,536.5			7,426.2			6,466.7
Controlling interest shareholders’ equity under U.S. GAAP per 1,000 shares		265,986.4			512,510.6			400,297.5			396,567.6

(1) Translated for convenience only using the representative market rate as computed and certified by the Superintendency of Finance at December 31, 2013 of Ps 1,926.83 per U.S.$1.00.

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(2) Goodwill attributable to Grupo Aval’s shareholders was Ps 3,617.4 billion and Ps 1,943.4 billion at December 31, 2013 and 2012, respectively. Our attributable tangible equity (calculated as total shareholders’ equity minus goodwill attributable to Grupo Aval) was Ps 8,110.8 billion and Ps 7,139.7 billion at December 31, 2013 and 2012, 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	2013		2012		2011
	(in percentages, unless otherwise indicated)
Profitability ratios:
Net interest margin (1)		6.2		6.5		6.5
ROAA (2)		1.9		2.0		2.3
ROAE (3)		17.1		17.7		20.3
Efficiency ratio:
Operating expenses before depreciation and amortization / total operating income before net provisions (4)		50.4		51.3		52.7
Capital ratios:
Period-end shareholders’ equity and non-controlling interest as a percentage of period-end total assets		11.8		11.4		11.7
Tangible equity ratio (5)		8.9		9.3		9.2
Credit quality data:
Non-performing loans as a percentage of total loans (6)		1.8		1.6		1.6
Delinquency ratio past due more than 30 days		2.4		2.3		2.2
“C,” “D” and “E” loans as a percentage of total loans (7)		3.5		3.3		3.2
Allowance for loans as a percentage of non-performing loans		179.3		194.3		200.6
Allowance for loans as a percentage of past due loans		133.3		139.2		150.0
Allowance for loans as a percentage of “C,” “D” and “E” loans		90.4		95.6		103.8
Allowance for loans as a percentage of total loans		3.2		3.2		3.3
Operational data (in units):
Number of customers of the banks (8)		11,661,279		10,345,695		9,596,694
Number of employees		66,865		59,406		54,463
Number of branches (9)		1,721		1,545		1,491
Number of ATMs (9)		5,179		4,328		3,835

(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 “—Other financial and operating data.”  

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

(4) See “Selected financial and operating data—Reconciliation of non-GAAP measures.”  

(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—Reconciliation of non-GAAP measures.”  

(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. Customers of more than one of our banking subsidiaries and BAC Credomatic 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.

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Capitalization ratios

The following table presents consolidated capitalization ratios for our Colombian banking subsidiaries, Grupo Aval and our principal competitors at December 31, 2013. For a description of capital adequacy ratios, including how such ratios are calculated under capital adequacy regulations (which became effective in Colombia on August 1, 2013), see “Supervision and regulation—Capital adequacy requirements.”

	At December 31, 2013
	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)		9.7		12.9		14.9		12.1		11.1		8.9		7.3		9.1		8.8
Tier 1 ratio (3)		7.5		9.1		9.5		10.7		8.2		–		5.8		7.0		6.4
Solvency ratio (4)		11.2		12.9		10.8		11.8		11.5		–		10.6		10.8		11.4

Source: Company calculations for competitors based on each entity’s respective financial statements for the period indicated that are 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—Reconciliation of non-GAAP measures.”  

(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.

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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 positions 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 may 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 and our recent Central American acquisitions’ results of operations and financial condition depend on economic, political and social conditions in the countries where they operate, primarily 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. The results of operations and financial condition of our Central American operations 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, and restricted the ability of companies to dismiss employees, expropriated private sector assets and prohibited the remittance of profits to foreign investors.

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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 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 and, consequently, 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 than expected may result in asset quality deterioration and could negatively affect our business.

Pension funds, such as those managed by Porvenir, 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 business, results of operations or financial condition. In recent years, pension fund returns have been subject to increased volatility in international financial markets. Foreign investments represented 13.6% and 13.5% of Porvenir’s total assets under management at December 31, 2013 and 2012, respectively.

The global economic and financial crisis, which began in 2008 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, major economies throughout the world 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 may reflect temporary benefits from government stimulus programs that may not be sustained.

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 the growth achieved by the Colombian economy over the past decade 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 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 population and funded their activities by protecting, and rendering services to drug traffickers. Even though the Colombian government’s policies have reduced guerilla and criminal activity, particularly in the form of terrorism attacks, homicides, kidnappings and extortion, such activity persists in Colombia, and

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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, which are still ongoing. Despite these efforts, drug-related crime and guerilla and paramilitary activities may have a negative impact on the Colombian economy in the future. 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.

Political and economic instability in the region may affect the Colombian economy and, consequently, our results of operations and financial condition.

Some of Colombia’s neighboring countries and principal trading partners, particularly Venezuela, have experienced and continue to experience periods of political and economic instability. Moreover, diplomatic relations with Venezuela and Ecuador have from time to time been tense and affected by events surrounding the Colombian armed forces’ confrontations with 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.

Further economic and political instability in Colombia’s main trading partners or any future deterioration in relations with Venezuela, Ecuador, Nicaragua and other countries in the region may result in the closing of borders, the imposition of trade barriers and a breakdown of diplomatic ties, or 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 as well as 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

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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.

Currently, according to Article 36-1 of the Colombian Tax Code, capital gains obtained in a sale of shares listed on the Colombian Stock Exchange are not subject to income tax in Colombia, provided that the shares sold by the same beneficial owner during each fiscal year do not represent more than 10% of the issued and outstanding shares of the listed company. The Colombian government may implement changes in the tax rules applicable to the sale of the offered securities which may adversely affect our shareholders or holders of ADSs.

ADSs do not have the same tax benefits as equity investments in Colombia. Although ADSs represent our preferred shares, they are subject to a different tax regulatory regime. Accordingly, the tax benefits applicable in Colombia to equity investments, in particular those relating to dividends and profits from sale, are not applicable to ADSs.

The Colombian government publicly announced that a new tax reform may be required in order to obtain additional funds and close potential deficits. The new tax reform may extend the Equity Tax.  We are not aware of the contents of the new tax reform which may result in higher levels of taxation than we currently expect which can significantly affect our results of operations or financial condition.

Colombian tax haven regulation could adversely affect our results of operations and financial condition.

Pursuant to Decree 2193 of 2013, a relevant number of jurisdictions including countries in which our banking subsidiaries operate, were either declared tax havens for Colombian tax purposes or temporarily excluded from such list subject to the completion of tax information exchange treaties within a short timeframe.  As a result, some of our clients with financial products offered by our banking subsidiaries in such countries may experience, among other effects, an increase in their withholding tax rates, transfer pricing regulation and disclosure of information requirements which could have a negative impact on our business, financial condition and results of operations.

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 or abnormally low rainfall in Colombia, attributable in part to the La Niña and El Niño weather patterns, have resulted in severe flooding and mudslides and prolonged droughts in the past. These are recurring weather phenomena that may contribute to flooding, mudslides, droughts 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 bank subsidiaries, 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.

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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.

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, 2013, 37.2% of total past due loans (including our foreign operations) in Colombia were secured. An economic slowdown may lead to a downturn in the Colombian or Central American real estate markets, 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.

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Colombian insolvency laws 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.

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 out-of-court agreement with 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 Colombian insolvency laws could have an adverse effect on our results of operations and financial condition.

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 group-wide 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, risk management systems on a timely basis. 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 portfolios could have an adverse effect on our results of operations.

Our banks’ portfolio of securities primarily consists of sovereign bonds, mainly securities issued or guaranteed by the Colombian government. LB Panama’s securities portfolios primarily consist of securities issued by corporate and sovereign issuers. We are exposed to significant credit, market and liquidity risks associated with sovereign debt. At December 31, 2013 and December 31, 2012, debt securities represented 15.3% and 15.4%, respectively, of our consolidated total assets; approximately 60.4% and 58.2%, respectively, of these securities were issued or backed by the Colombian government, and approximately 5.2% of these securities were issued or backed by Central American governments each of those two years. 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 bank subsidiaries 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,

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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, Corficolombiana and our international banking operations, 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 derivatives transactions.

Our banks and, to a lesser extent, Porvenir, Corficolombiana and our international banking operations, enter into derivatives 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 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 derivatives 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 derivatives 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 70.2% and 67.9% of consolidated total liabilities at December 31, 2013 and 2012, 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 6.7% of our consolidated total loan portfolio at December 31, 2013. Default on loans by one or more of these borrowers may adversely affect our results of operations and financial condition.

Downgrades in our long-term 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

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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 funding in the capital markets or borrowing funds for our  and our subsidiaries’ operations. In addition, lenders and counterparties in derivatives transactions are sensitive to the risk of a ratings downgrade. Any downgrade in our credit ratings 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.

The credit card industry is characterized by higher consumer default than other segments of the credit markets, and defaults are highly related to 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, effected an internal review of regulations applicable to financial institutions. Decree 1771 of 2012 was issued as a result of this review, amending certain capital adequacy requirements for Colombian credit institutions set forth in Decree 2555 of 2010, or Decree 2555. Although Decree 1771 maintained the requirement for a credit institution’s technical capital to be at least 9.0% of that institution’s total risk-weighted assets, it also introduced a new measure of “core solvency” for Common Equity Tier 1, which requires higher quality capital and is set at a minimum of 4.5% of risk-weighted assets. 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.

Moreover, the Colombian government has presented to Congress a legislative initiative to create a new type of financial institution that will have the sole purpose of offering electronic deposits and payments in order to promote financial inclusion. If the law is enacted this could create a new competitive environment that could adversely affect our consolidated results.

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In Panama, Accord No. 004-2013 (which came into effect on June 30, 2014) introduced a new reserve in addition to the loan-loss provisioning requirements already in place for credit card risk. This new reserve is calculated quarterly and applied over performing loan portfolios with a maximum of 2.5% and a minimum of 1.25% over the risk-weighted assets that have been rated as “normal” under applicable regulations, and subject to certain exceptions, cannot be lower than the amount of the previous quarter.

During recent years, legislators in Central America have unsuccessfully attempted to enact regulation to impose maximum interest rates for all or certain types of loans. Although the scope of these legislative initiatives has varied, these initiatives have primarily focused on personal loans and, particularly, on credit card loans. However, these bills have not been successful, with the exception of El Salvador’s Law Against Usury enacted in January 2013. The enactment of any of these bills or similar regulations in the countries where we operate could have an adverse effect on the results of the operations and financial condition in such jurisdiction.

Additionally, as part of a legislative effort to narrow the current fiscal deficit, the Salvadorian congress is contemplating certain tax reforms that include the introduction of a new withholding tax of 0.25% on financial transactions made by check or wire transfer and on cash transactions made through the Salvadorian financial system in excess of U.S.$5,000 on a single or monthly aggregate basis. If adopted, this tax reform could adversely impact the results of our banking, credit card and brokerage operations in El Salvador.

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, Corficolombiana and our international banking operations, 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, Corficolombiana and our international banking operations, into conservatorship or receivership or taking control of our banks, Porvenir, Corficolombiana and our international banking operations. 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 bank subsidiaries face pressures related to the 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 the Asociación Gremial de Instituciones Financieras Credibanco (the Visa franchisee in Colombia) and Redeban Multicolor S.A. (the MasterCard franchisee in Colombia), the entities used by most Colombian banks to manage the credit card system in Colombia,

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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 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 may be carried out by the relevant authorities in the future, which may result in lower fees charged to merchants and bank interchange fees, and/or lead to changes in commercial strategies that may adversely 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 normal course 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, administrative sanctions and 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 (Ley de Conglomerados). In this regard, the Superintendency of Finance has initiated an internal review in order to develop a new model of cross-border consolidated supervision based on four pillars: (i) integrated risk management, (ii) prudential requirements, (iii) cooperation and information exchange and (iv) protocols for cross-border crises.  Although we are not aware of the content of such future regulations, 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 adversely 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. If the operating performance of those portfolio companies (as well as valuation multiples) does not improve following any such downturn or other portfolio companies experience adverse operating performance, Corficolombiana may be forced to sell those assets at values that are less than projected or even at a loss. Portfolio companies may also have difficulties 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.

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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 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 in relatively illiquid assets, and Corficolombiana may fail to realize any profits from these investments for a considerable period of time or lose some or all of the principal amount of these investments.

At December 31, 2013, 47.8% of Corficolombiana’s investments were in securities of privately held companies. There often are no readily assertainable market prices for such accounts. As a result, there may be limited or no marketability for these investments, and they 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, it is possible that investments in privately held companies may only be disposed of over a substantial length of time, if at all, 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.

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Corficolombiana’s new investment projects depend on its ability to access financing.

Corficolombiana may directly, or through its operating subsidiaries, enter into new investment projects such as infrastructure projects, including the toll-road concession “Conexión Pacifico 1,” that require a significant access to financing. Corficolombiana or its operating subsidiaries may experience difficulties in accessing debt and equity financing resources required to fund such projects and/or may obtain them at higher costs and/or lower tenure than initially expected. As a result, Corficolombiana’s investment objectives may attain lower returns due to higher financing costs, delays in the investment schedule or any eventual stoppage of the investment project, which could also result in the payment of penalties to its counterparties, including the government entities in the case of developments of new highways. If Corficolombiana is unable to obtain adequate financing on terms satisfactory to it, its ability to continue to grow or support its business and respond to business challenges could be significantly limited.    

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

At December 31, 2013, 97.1% of Corficolombiana’s investment portfolio was concentrated in the energy and gas, infrastructure, agribusiness, hotels division and financial services. 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 operates in a highly regulated market, which limits its flexibility to manage its businesses.

Porvenir’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 and regulations issued by the Superintendency of Finance and, to the extent applicable, Colombian Corporation Law. These regulations limit 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 fails to comply with the order of capitalization, the Superintendency of Finance may take 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, seek capital from alternative sources or forfeit our investment, or lead to the dissolution of the AFP and the transfer of the fund to another AFP. If Porvenir is unable to fulfill the minimum return or the stabilization reserve requirements, or if new laws or decrees impose more onerous requirements, Porvenir’s business may be materially adversely affected.

On December 6, 2013, the Executive Branch issued Decree 2837 of 2013 to establish  a group of financial experts to discuss and review the minimum return definition methodology.  The group is led by the Minister of Finance and includes the Financial Superintendent, a representative of the Central Bank, the Director of the Unit of Financial Regulation and five financial experts appointed by the Ministry of Finance.  Although we are uncertain how the minimum return definition methodology will be changed, more onerous requirements may be imposed on Porvenir, which may materially adversely affect its business, financial condition and results of operations. In addition, there are regulatory limitations on the commissions that Porvenir may charge for its services. For example, Porvenir may only retain 300 basis points of the 16.0% (up to 17.0% for employees meeting a certain salary threshold) of the base

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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 of the subject employee contributor. The percentage 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 as provided under Resolution 1555 of 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. The future regulation may not provide a favorable business environment and may adversely affect our results of operations and the 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, 2013, total debt securities held by Porvenir represented 66.8% of the total assets of the funds managed by Porvenir, and 62.4% 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’s 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 group-wide basis and are not subject to regulation or supervision of market risk on a group-wide basis.

Changes in short-term interest rates may affect interest margins quickly and, therefore, net interest income, which is the most important component 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 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. If 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.

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We face exposure to fluctuations in the rate of exchange between local currencies and the U.S. dollar, 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 where we operate, and the U.S. dollar as a result of U.S. dollar-denominated indebtedness.

As on average 26.5% of our consolidated assets and 29.3% of our consolidated liabilities are foreign currency-denominated, we are subject to the negative impacts on our income statement and/or balance sheet derived from fluctuations, in particular, against the U.S. dollar, where most of our foreign long-term debt is denominated, and the Colombian peso, and between the US dollar and each of the currencies in our Central American operations.

On a consolidated basis, we and our subsidiaries have U.S.$2.9 billion (Ps 5.6 trillion) of long-term debt denominated in U.S. dollars as of December 31, 2013 which we have used in part to finance our Central American acquisitions. Fluctuations in the exchange rate between the Colombian peso and the U.S. dollar 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.

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 pesos. Nevertheless, as described in “Business—BAC Credomatic—BAC Credomatic operations—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, Porvenir and our other subsidiaries 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.

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 our Colombian subsidiaries 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

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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. Accordingly, the Superintendency of Finance has issued External Circular 012 of 2012, setting the rules and principles that must be followed by banking and financial institutions at the time of establishing, publishing and promoting their tariffs and fees.  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 requirements, 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 Colombian 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 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.

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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, inside and outside of Colombia. Strategic acquisitions and alliances could expose us to risks with which we have limited or no experience, 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 acquisitions of Horizonte, Grupo Reformador and Banco BAC de Panama, 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 successfully integrate, monitor and manage expanded operations could have a material 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.

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

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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 their 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.

We are subject to cyber security threats.

We and our subsidiaries also rely on information systems to operate 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 and our subsidiaries 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. If we or any of our subsidiaries 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.

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 will 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, 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

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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 businesses 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.  See “Industry.”

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.

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 (81 years old), our president, Mr. Sarmiento Gutiérrez (53 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 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 past 20 years. Mr. Sarmiento Gutiérrez, who became president of Grupo Aval in 2000, and our chairman 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 two of our 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

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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.

We are controlled by Mr. Sarmiento Angulo, whose interests could differ from the interests of ADS holders.

Mr. Sarmiento Angulo beneficially owns 95.9% of our common shares outstanding and 60.7% of our preferred shares outstanding, as of July 29, 2014, and, accordingly, controls our group. See “Principal shareholder.” The preferred shares do not have any voting rights and thus will not affect such control of our group. 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, as of July 29, 2014, Mr. Sarmiento Angulo beneficially owns interests in certain of our subsidiaries through entities other than Grupo Aval: 8.9% of Banco de Bogotá, 13.3% of Banco de Occidente, 15.5% of Banco AV Villas, 0.8% of Banco Popular and 0.3% of Corficolombiana.

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:

· elect a majority of our directors and appoint our executive officers, set our management policies and exercise overall control over our company and subsidiaries;

· agree to sell or otherwise transfer his controlling stake in our company; and

· determine the outcome of substantially all actions requiring shareholder approval, including transactions with related parties, corporate reorganizations, acquisitions and dispositions of assets, and dividends.

In addition, the concentration of ownership may have the effect of delaying, preventing or deterring a change of control of our company, could deprive our shareholders of an opportunity to receive a premium for the ADSs or underlying preferred shares as part of a sale of our company and might ultimately affect the market price of the ADSs and the underlying preferred shares.

We may engage in additional transactions with our controlling shareholder in the future.

We may engage in business and financial transactions with our controlling shareholder and other shareholders that may present conflicts of interest between our company and these shareholders. For example, acquire from entities beneficially owned by Mr. Sarmiento Angulo shares in Banco de Bogotá, Banco de Occidente, Banco Popular and Banco AV Villas, that are not owned by us. While we believe that these transactions will be carried out on an arm’s-length basis, commercial and financial transactions between us and our controlling shareholder could create the potential for, or could result in, conflicts of interests between us and our other shareholders. To the extent that the price we pay for any assets acquired from our controlling shareholder exceeds the market value of such assets or is not as productive a use of our cash as other uses, our results of operations and financial condition could be adversely affected.

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Certain risks relating to our Central American operations

We may be unsuccessful in addressing the challenges and risks presented by our operations in countries outside Colombia.

We conduct banking businesses outside our historical home market of Colombia primarily through BAC Credomatic. Our Central America operations may involve risks to which we have not previously been exposed. Some of these operations are in countries that may present different or greater risks than those in Colombia, including, for example, in terms of competition. BAC Credomatic has, in particular, a significant consumer finance business, including credit card operations, in the Central American countries in which it operates. At December 31, 2013, BAC Credomatic’s consumer loan portfolio totaled U.S.$3.3 billion (including mortgages, vehicles and other personal loans), which represented 36.2% of BAC Credomatic’s total loan portfolio, and U.S.$2.0 billion in credit card loans, which represented 21.3% of BAC Credomatic’s total loan portfolio. We have limited experience conducting credit card and consumer finance businesses in countries outside Colombia. Accordingly, we may not be successful in managing credit card and consumer finance operations outside of our traditional domestic market. We may face delays in payments by customers and higher delinquency rates in these countries, which could necessitate higher provisions for loan losses and, consequently, have a negative effect on our financial performance.

In addition, we may not be able to realize all of the anticipated benefits from our Central American acquisitions. Achieving such benefits will depend, to a large extent, on our ability to run a business outside Colombia. Any failure to do so could adversely affect our margins, results of operations and financial condition.

We depend on BAC Credomatic’s current senior management, and the loss of their services could have a material adverse effect on BAC Credomatic’s business.

We have retained the current senior management of BAC Credomatic, who have worked on average over 15 years at BAC Credomatic, and most of whom pre-date GE Capital’s 2005 investment in BAC Credomatic. The loss of services of any of BAC Credomatic’s senior officers could have an adverse effect on BAC Credomatic’s business.

Changes in credit card regulations may adversely affect BAC Credomatic’s business.

The credit card business is an important business segment for BAC Credomatic, representing 21.3% and 24.4% of its total loan portfolio at December 31, 2013 and 2012, respectively, the adoption of new laws and regulations or the revision of the current regulatory regime for credit cards in any of the jurisdictions in which BAC Credomatic operates may have an adverse effect on BAC Credomatic’s results of operations and financial condition.

BAC Credomatic and our Central American operations are subject to significant compliance risks in connection with a multi-jurisdictional regulatory regime.

BAC Credomatic businesses are subject to regulation under Bahamian, Costa Rican, Guatemalan, Grand Cayman, Honduran, Mexican, Nicaraguan, Panamanian, Salvadoran and U.S. federal, state and other foreign laws, regulations and policies. BAC Credomatic thus is subject to a multi-jurisdictional regulatory regime, with which we have had little or no experience, and, accordingly, following the acquisition of BAC Credomatic, we are subject to increased compliance risks. In addition, any changes to the regulatory regime of one of the Central American countries may lead to corresponding changes to the regulatory regime of other countries in the region. BAC Credomatic’s businesses are regularly reviewed or investigated by regulators, which could lead to enforcement actions, fines and penalties or the assertion of private litigation claims and damages.

We are subject to the consequences of consolidated supervision due to regulatory asymmetries.

Regulation of financial institutions varies across the different Central American jurisdictions in which we operate. These differences are particularly pronounced in the assessment of credit risk and investments.

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These asymmetries may affect the expected results of our operations in each jurisdiction, and as a consequence could adversely affect our consolidated results of operations in Central America.

Risks relating to our preferred shares and the ADSs

Exchange rate volatility may adversely affect the Colombian economy, the market price of the ADSs and the dividends payable to holders of the ADSs.

Pursuant to Colombian law, the Colombian Central Bank has the power to intervene in the exchange market in order to consolidate or dispose of international reserves, as well as to control any volatility in the exchange rate, acting through a variety of mechanisms, including discretionary ones. During recent years, the Colombian Central Bank has employed a floating exchange rate system with periodic interventions. From time to time, there have been significant fluctuations in the exchange rate between the Colombian peso and the U.S. dollar. For example, the peso depreciated 9.0% against the U.S. dollar in 2013, appreciated 9.0% in 2012, depreciated 1.5% in 2011, appreciated 6.4% in 2010 and appreciated 8.9% in 2009. Unforeseen events in international markets, fluctuations in interest rates, changes in capital flows, political developments or inflation rates may cause exchange rate instability that could, in turn, depress the value of the Colombian peso, thereby decreasing the U.S. dollar value of the dividends paid to holders of the ADSs.

Restrictions on purchasing our preferred shares may affect the market liquidity of our ADSs.

Under Colombian securities regulations, as a general rule, any transaction involving the sale of publicly traded shares of any Colombian company, including any sale of our preferred shares for the equivalent of 66,000 Unidades de Valor Real, or “UVRs” (approximately U.S.$7,119), or more, must be effected through the Colombian Stock Exchange. UVR is a Colombian inflation-adjusted monetary index calculated by the board of directors of the Colombian Central Bank and generally used for pricing home-mortgage loans (one UVR = Ps 207.84 (U.S.$0.11) at December 31, 2013). Any transfer of preferred shares underlying the ADSs may be required to be sold through the Colombian Stock Exchange, which could limit their liquidity or affect their market price.

The relative illiquidity of the Colombian securities markets may impair the ability of the holders of ADSs to sell preferred shares underlying the ADSs.

Our preferred shares have been listed since February 1, 2011 on the Colombian Stock Exchange, which is relatively small and illiquid compared to securities exchanges in major financial centers. In addition, a small number of issuers represents a disproportionately large percentage of the market capitalization and trading volume on the Colombian Stock Exchange. A liquid trading market for the preferred shares underlying the ADSs may not develop on the Colombian Stock Exchange following this offering. A limited trading market could impair the ability of a holder of ADSs to sell preferred shares (obtained upon withdrawal of such shares from the ADR facility) on the Colombian Stock Exchange in the amount and at the price and time desired by such holder, and could increase the volatility of the market price of the preferred shares and the ADSs.

An active market for our preferred shares and the ADSs may not develop or be maintained and the market price of our preferred shares and the ADSs may fluctuate in response to numerous factors.

Prior to this offering, there was no market for our ADSs and, to our knowledge, no public market for our preferred shares has existed in the United States, or elsewhere outside Colombia. A public market for the preferred shares currently exists in Colombia. The offering price for the ADSs will be determined by negotiations between us and the representatives of the underwriters. Although we intend to apply to list our ADSs on the NYSE and our preferred shares were listed on the Colombian Stock Exchange on February 1, 2011, an active public market for the preferred shares may not continue to develop or be maintained and an active public market for the ADSs may not develop or be maintained after this offering. Even if an active market develops, the market price for the ADSs and preferred shares may fall below the public offering price of the ADSs.

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The market price of the ADSs and preferred shares may fluctuate significantly in response to numerous factors, many of which are beyond our control, including actual or anticipated fluctuations in our operating results, economic downturns, political events in Colombia, Central America or other jurisdictions where we operate, developments affecting the banking industry, changes in financial estimates by securities analysts or our failure to perform in line with such estimates, departures of key personnel, and sales of our preferred shares in the future, including by our banking subsidiaries who may have to sell our preferred shares obtained from investors who entered into loans with them to acquire our preferred shares in our offering of 1,600 million preferred shares on May 12, 2011, or the “Preferred Shares Local Offering.”

Our banking subsidiaries extended a total of Ps 654.3 billion (U.S.$363.8 million at the representative market rate on May 12, 2011) of credit disbursed through 14,533 loans to finance the acquisition of preferred shares in the Preferred Shares Local Offering of which 354 loans representing Ps 182.0 billion (U.S.$94.5 million) were outstanding at June 30, 2014. The final loan will mature in 2021. Depending on the characteristics of the borrower, our banking subsidiaries may have required collateral, which may have included a pledge of the preferred shares that were subject to the financing. Such a pledge would permit our banking subsidiaries through a court procedure to seek the sale of the preferred shares if the borrower defaults. Our banking subsidiaries had, on an aggregate basis, pledges over 88,159,538 preferred shares related to loans made to third parties at June 30, 2014. All the loans are full-recourse loans. Under the terms of the pledges, each borrower is limited from selling the pledged shares until the loan is repaid. Under Colombian law, our banking subsidiaries must seek to sell any repossessed shares as banks are not permitted to hold shares issued by their parent. If changes in general economic conditions or other factors cause these borrowers to default on their loans, our subsidiaries will have to sell our preferred shares into the market, or alternatively, upon repayment of the loans, these borrowers will not be restricted from selling such shares in the market. As a result, the market price of our preferred shares and ADSs may decline.

Holders of ADSs may face difficulties in protecting their interests because we are subject to different corporate rules and regulations than those available in other jurisdictions, and our preferred shareholders have limited rights.

Holders of ADSs will not be direct shareholders of our company and will be unable to enforce the rights of shareholders under our by-laws and Colombian law. Under Colombian law, holders of our preferred shares may have fewer rights than shareholders of a corporation incorporated in the United States. Even if a holder of ADSs surrenders its ADSs and becomes a direct shareholder, a holder of our preferred shares under Colombian law may have fewer alternatives to protect its interests relative to actions by our board of directors or executive officers, and these alternatives may be less well-defined than under the laws of those other jurisdictions.

The Colombian securities markets are not as highly regulated or supervised as the U.S. securities markets or the markets in some other jurisdictions. In addition, rules and policies against self-dealing or for preserving shareholder interests may be less well-defined and enforced in Colombia than in the United States and certain other countries, which may put holders of our preferred shares and the ADSs at a potential disadvantage. Corporate disclosures also may be less complete or informative than for a public company in the United States or in certain other countries.

Our by-laws contain an arbitration clause that provides for the exclusive jurisdiction of an arbitral tribunal to be seated at the Bogotá Chamber of Commerce. The arbitration provision provides that any conflict arising among shareholders, or between shareholders and Grupo Aval, in connection with the by-laws must be resolved by an arbitral tribunal. In addition, holders of the ADSs and our preferred shares are not entitled to vote for the election of directors or to influence our management policies. Under our by-laws and Colombian law, holders of preferred shares (and, consequently, holders of ADSs) have no voting rights in respect of preferred shares, other than in limited circumstances.

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Our ability to pay dividends on the ADSs or underlying preferred shares may be limited by Colombian law and because we are a holding company dependent on dividends from subsidiaries.

Under Colombian law, a company may only distribute dividends to the extent such distribution is fully supported by accurate financial statements demonstrating the financial condition of the company. Any dividends distributed in violation of this provision may not be reclaimed from shareholders who received such payments in good faith, and any subsequent distribution of profits may be suspended. In addition, dividends may not be distributed until losses from previous fiscal years have been absorbed. Dividends must be approved at the ordinary annual shareholders’ meeting upon the recommendation of the board of directors.

Our ability to pay dividends on the preferred shares represented by ADSs will be contingent upon the financial condition of our subsidiaries. Any of our banking subsidiaries may be restricted from paying dividends to us if such subsidiary does not meet its required regulatory capital ratios or does not have sufficient retained earnings. In addition, we conduct substantially all of our operations through subsidiaries and are dependent on dividends from our subsidiaries to meet our obligations.

Holders of ADSs may encounter difficulties in the exercise of dividend rights and in the limited voting rights of our preferred shares.

Holders of ADSs may encounter difficulties in exercising rights with respect to the preferred shares underlying ADSs. If we make a distribution to holders of underlying shares in the form of securities, the depositary is allowed, in its discretion, to sell those securities on behalf of ADS holders and instead distribute the net proceeds to the ADS holders. Also, under some circumstances, you may not be able to exercise your limited voting rights by giving instructions to the depositary.

Our status as a foreign private issuer allows us to follow alternate standards to the corporate governance standards of the NYSE, which may limit the protections afforded to investors.

We are a “foreign private issuer” within the meaning of the NYSE corporate governance standards. Under the NYSE rules, a foreign private issuer may elect to comply with the practices of its home country and not to comply with certain corporate governance requirements applicable to U.S. companies with securities listed on the NYSE. We currently follow Colombian practices concerning corporate governance and intend to continue to do so. Accordingly, you will not have the same protections afforded to shareholders of companies that are subject to all NYSE corporate governance requirements. For example, Colombian law requires that at least 25% of our board of directors consist of “independent” directors within the meaning of Colombian law, whereas NYSE rules generally require that a majority of a domestic U.S. company’s board consist of “independent” directors within the meaning of NYSE rules. In addition, NYSE rules require non-executive directors of domestic U.S. listed companies to meet on a regular basis without management being present. There is no similar requirement under Colombian law, and our non-executive directors do not meet formally without management present. See “Management—Principal differences between Colombian and U.S. corporate governance practices.”

Preemptive rights may not be available to holders of ADSs.

Colombian law and our by-laws require that, whenever we issue new common shares, we must offer the holders of common shares the right to subscribe a number of shares of such class sufficient to maintain their existing percentage ownership of our aggregate share capital. On the other hand, holders of preferred shares, including holders of ADSs, are entitled to preemptive rights only when so declared at a meeting of holders of our common shares. Our common shareholders’ may decide not to provide for such preemptive rights. Also, U.S. holders of ADSs may not be able to exercise their preemptive rights through                      , which acts as ADR depositary for our ADR facility, unless a registration statement under the Securities Act is effective with respect to such rights or an exemption from the registration requirement thereunder is available. Although we are not obligated to do so, we will consider at the time of any preemptive rights offering the costs and potential liabilities associated with any such registration statement, the benefits to us from enabling the holders of the ADSs to exercise those rights and any other

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factors deemed appropriate at the time, and will then make a decision as to whether to file a registration statement. Accordingly, we might decide not to file a registration statement in some cases.

If holders of ADSs are unable to exercise these rights because a registration statement has not been filed and no exemption from the registration requirement under the Securities Act is available, the ADR depositary may attempt to sell the holders’ preemptive rights and distribute the net proceeds from that sale, if any, to such holders, provided that, the meeting of holders of our common shares decides that holders of preferred shares are entitled to preemptive rights. The ADR depositary, after consultation with us, will have discretion as to the procedure for making preemptive rights available to the holders of ADSs, disposing of such rights and making any proceeds available to such holders. If by the terms of any preemptive rights offering or for any other reason the ADR depositary is unable or chooses not to make those rights available to any holder of ADSs, and if it is unable or for any reason chooses not to sell those rights, the depositary may allow the rights to lapse.

Whenever the rights are sold by the ADR depositary or such rights lapse, or if the common shareholders’ meeting does not grant preemptive rights to the holders of preferred shares, the equity interests of the holders of ADSs will be proportionately diluted.

Our ability to make payments on the ADSs may be adversely affected if we become unable to convert Colombian pesos to U.S. dollars or to transfer U.S. dollars abroad.

The Colombian government does not currently restrict the ability of Colombian persons or entities to convert Colombian pesos to U.S. dollars. However, the government may impose foreign exchange controls on dividend payments and remittances of interest and principal if the foreign currency reserves of the Central Bank fall below a level equal to the value of three months of imports into Colombia. Colombian law also allows the imposition of a deposit requirement with the Central Bank in connection with any foreign exchange transaction that may increase the cost of foreign exchange transactions or limit the amount of such transactions for a particular time. No such foreign exchange controls are currently applicable. Nevertheless, such restrictions may be imposed in the future, and any such restrictions could prevent, restrict or increase the price of our access to U.S. dollars, which we need to pay our foreign currency-denominated obligations.

Actual or anticipated sales of a substantial number of our common shares or preferred shares in the future could decrease the market prices of the ADSs.

Sales of a substantial number of our common shares or preferred shares after the completion of the offering, or the perception that such sales could occur, could negatively affect the market prices of the ADSs. Following this offering, we will have 15,396,427,140 common shares and              preferred shares outstanding, and our board of directors will have authority under our by-laws to issue additional shares of share capital, subject to certain limitations described in “Description of share capital.” Furthermore, common shares may be converted into preferred shares on a 1-to-1 basis provided that our preferred shares do not exceed 50% of our total subscribed share capital.  Subject to certain exceptions, we have agreed not to offer, sell or contract to sell, pledge or otherwise dispose of, directly or indirectly, or file with the SEC or the Superintendency of Finance a registration statement relating to, any additional shares of our share capital or securities convertible into or exchangeable or exercisable for any shares of our share capital, or publicly disclose any such offer, sale, pledge, disposition or filing, for a period of 180 days after the date of this prospectus, without the prior written consent of the representatives of the underwriters. Our controlling shareholder, Mr. Sarmiento Angulo, and our other directors and certain of our executive officers have agreed to substantially similar lock-up provisions, subject to certain exceptions. If, in the future, substantial sales of shares of common or preferred shares are made by existing or future holders, the market prices of the ADSs may decrease significantly. As a result, holders of ADSs may not be able to sell their ADSs at or above the price they paid for them.

In addition, our banking subsidiaries extended credit to finance the acquisition of preferred shares by investors in the Preferred Shares Local Offering. Depending on the characteristics of the borrower, our banking subsidiaries may have required collateral, including a pledge of the preferred shares that were subject to the financing which would permit our banking subsidiaries to seek the sale of the preferred

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shares if the borrower defaults on its loan. Our banking subsidiaries had, on an aggregate basis, pledges over 88,159,538 preferred shares related to loans made to third parties at June 30, 2014. All the loans are full-recourse loans. Under the terms of the pledges, each borrower is limited from selling the pledged shares until the loan is repaid. Under Colombian law, our banking subsidiaries must seek to sell any repossessed shares as banks are not permitted to hold shares issued by their parent. If changes in general economic conditions or other factors cause these borrowers to default on their loans, our subsidiaries will have to sell our preferred shares into the market, or alternatively, upon repayment of the loans, these borrowers will not be restricted from selling such shares in the market. As a result, the market price of our preferred shares and ADSs may decline.

The economic value of your investment will be diluted.

The estimated offering price of the ADSs is higher than the equivalent net tangible book value per preferred share immediately prior to the offering. If you purchase ADSs in this offering, you will experience an immediate dilution in the equivalent net tangible book value of Ps           per share or Ps         (U.S.$          ) per ADS from the offering price of U.S.$            per ADS (the midpoint of the range per ADS set forth on the cover page of this prospectus). See “Dilution.”

In addition, we may need additional funds, and to the extent that public or private financing is available, we may issue additional common or preferred shares. Any additional funds obtained by such a capital increase may dilute your interest in our company.

Banking regulations, accounting standards and corporate disclosure applicable to us differ from those in the United States and other countries.

Colombian banking regulations may differ in material respects from regulations applicable to banks in other countries, including those in the United States. For example, in Colombia, we are not subject to regulation applicable to financial institutions, although our banking subsidiaries, Corficolombiana, Porvenir and certain of our other subsidiaries are subject to such regulations. In addition, capital adequacy requirements for banks under Colombian regulations differ from those under U.S. regulations and may differ from those of other countries.

Although we are required to prepare our financial statements in accordance with Colombian GAAP, we also prepare our audited consolidated financial statements included in this prospectus in accordance with Colombian Banking GAAP, which differs in significant respects from U.S. GAAP and International Financial Reporting Standards, or “IFRS,” as issued by the International Accounting Standards Board, or “IASB.” As a result, the financial statements of Colombian companies, such as ours, may differ from those of companies in other countries.

We prepare our financial statements in accordance with Colombian Banking GAAP, which differs in certain significant respects from IFRS. Following the adoption of IFRS, our results of operations may differ significantly from previous amounts reported under Colombian Banking GAAP in our total shareholders’ equity and net income.

In 2009, the Colombian Congress passed Law 1314 and in 2012 the Colombian government enacted Decree 2784 which established the implementation of IFRS in Colombia. Colombian authorities have proposed a schedule for the implementation of IFRS pursuant to which Colombian issuers of securities in the public market (such as Grupo Aval) must (i) prepare an opening transition balance sheet beginning on January 1, 2014 in accordance with IFRS, and (ii) prepare financial statements in full compliance with IFRS no later than December 31, 2015 for the periods commencing on January 1, 2015.

Considering the above and current SEC regulations, and assuming that we will be required to comply with IFRS, as issued by the IASB, as our basis of presentation, we will no longer be required to include a reconciliation note of equity and income under U.S. GAAP in our annual consolidated financial statements. There can be no assurance however, that IFRS as applicable to us under Colombian regulations will not differ from IFRS as issued by the IASB, in which case we may be required to continue to include a U.S. GAAP reconciliation note in our annual consolidated financial statements.

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Furthermore, Decree 2784 also established an additional six-month period for the Colombian government to regulate the implementation of IFRS in companies, such as our banks, under the surveillance of the Superintendency of Finance. Through Decree 1851 of August 29, 2013 the Colombian government decided to implement a partial application of IFRS with respect to the separate (unconsolidated) financial statements of financial entities and full IFRS application in the case of the consolidated financial statements of these entities. Considering that Grupo Aval will be subject to a full implementation of IFRS, its consolidated financial statements will have to include homogenization adjustments in its consolidation process.

Even though there are certain similarities between IFRS and U.S. GAAP, adoption of IFRS may have an effect on, for example, our accounting for the following items of our consolidated financial statements on January 1, 2014 and thereafter: (i) loan loss reserves, (ii) business combinations, (iii) valuation of securities, (iv) calculation of employee benefit liabilities, (v) consolidation of structured entities, (vi) deferred taxes, (vii) calculation and presentation of equity regarding non-controlling interest, (viii) loan origination fees, and (ix) increased disclosures on our financial statements.

Furthermore, our implementation of IFRS will require significant changes in our information technology and operational processes requiring additional efforts and investments from our management.

Judgments of Colombian courts with respect to our common and preferred shares will be payable only in pesos.

If proceedings are brought in Colombian courts seeking to enforce the rights of holders of our preferred shares, we will not be required to discharge our obligations in a currency other than Colombian pesos. Under Colombian law, an obligation in Colombia to pay amounts denominated in a currency other than Colombian pesosmay only be satisfied in Colombian currency at the exchange rate, as determined by the Colombian Central Bank and published by the Superintendency of Finance, also known as Tasa Representativa del Mercado, in effect on the date the judgment is obtained, and such amounts are then adjusted to reflect exchange rate variations through the effective payment date. The then-prevailing exchange rate may not afford non-Colombian investors with full compensation for any claim arising out of or related to our obligations under the preferred shares, or indirectly, the ADSs.

U.S. investors in our preferred shares or the ADSs may find it difficult or impossible to enforce service of process and enforcement of judgments against us and our officers and directors.

We are incorporated under the laws of Colombia, and all of our subsidiaries are and immediately after this offering will be incorporated in jurisdictions outside the United States. In addition, our executive offices are located outside of the United States. All of our directors and officers reside outside of the United States, and all or a substantial portion of our assets and the assets of most of our officers and directors are, and will most likely continue to be, located outside of the United States. As a result, it may be difficult or impossible for U.S. investors to serve legal process within the United States upon us or any of these persons or to enforce a judgment against us for civil liabilities in U.S. courts. In addition, you should not assume that courts in the countries where we or our subsidiaries are incorporated or where our or our subsidiaries’ assets are located (1) would enforce judgments of U.S. courts obtained in actions against us or our subsidiaries based upon the civil liability provisions of applicable U.S. federal and state securities laws or (2) would enforce, in original actions, liabilities against us or our subsidiaries based on those laws.

There is also substantial doubt that the courts of Colombia would enter judgment in original actions brought in those courts predicated on U.S. federal or state securities laws. We have been advised by our Colombian counsel that there is no legal basis for original actions to be brought against us or our directors and executive officers in a Colombian court predicated solely upon the provisions of the U.S. federal or state securities laws. In addition, certain remedies available under provisions of the U.S. securities laws may not be admitted or enforced by Colombian courts.

Grupo Aval’s by-laws contain an arbitration provision that provides for the exclusive jurisdiction of an arbitral tribunal to be seated at the Bogotá Chamber of Commerce. The arbitration provision provides that any conflict arising among shareholders, or between shareholders and Grupo Aval, in connection with the by-laws must be resolved by the arbitral tribunal. See “Service of process and enforcement of judgments.”

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Forward-looking statements

This prospectus contains estimates and forward-looking statements, principally in “Risk factors,” “Operating and financial review and prospects” and “Business.” Some of the matters discussed concerning our operations and financial performance include estimates and forward-looking statements within the meaning of the Securities Act and the U.S. Securities Exchange Act of 1934, as amended, or the “Exchange Act.”

Our estimates and forward-looking statements are mainly based on our current expectations and estimates on projections of future events and trends, which affect or may affect our businesses and results of operations. Although we believe that these estimates and forward-looking statements are based upon reasonable assumptions, they are subject to several risks and uncertainties and are made in light of information currently available to us. Our estimates and forward-looking statements may be influenced by the following factors, among others:

· changes in Colombian, Central American, regional and international business and economic, political or other conditions;

· developments affecting Colombian, Central American and international capital and financial markets;

· government regulation and tax matters and developments affecting our company and industry;

· increases in defaults by our customers;

· increases in goodwill impairment losses;

· decreases in deposits, customer loss or revenue loss;

· increases in provisions for contingent liabilities;

· our ability to sustain or improve our financial performance;

· increases in inflation rates, particularly in Colombia and in jurisdictions throughout Central America;

· the level of financial products and credit penetration in Colombia and Central America;

· changes in interest rates which may, among other effects, adversely affect margins and the valuation of our treasury portfolio;

· decreases in the spread between investment yields and implied interest rates in annuities;

· movements in exchange rates;

· competition in the banking and financial services, credit card services, insurance, asset management, pension fund administration and related industries;

· adequacy of risk management procedures and credit, market and other risks of lending and investment activities;

· decreases in our level of capitalization;

· changes in market values of Colombian and Central American securities, particularly Colombian government securities;

· adverse legal or regulatory disputes or proceedings;

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· successful integration and future performance of acquired businesses or assets;

· internal security issues affecting countries where we operate and natural disasters;

· loss of key members of our senior management; and

· other risk factors as set forth under “Risk factors.”

The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect” and similar words are intended to identify estimates and forward-looking statements. Estimates and forward-looking statements speak only at the date they were made, and we undertake no obligation to update or to review any estimate and/or forward-looking statement because of new information, future events or other factors. Estimates and forward-looking statements involve risks and uncertainties and are not guarantees of future performance. Our future results may differ materially from those expressed in these estimates and forward-looking statements. In light of the risks and uncertainties described above, the estimates and forward-looking statements discussed in this prospectus might not occur and our future results and our performance may differ materially from those expressed in these forward-looking statements due to, including, but not limited to, the factors mentioned above. Because of these uncertainties, you should not make any investment decision based on these estimates and forward-looking statements.

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Use of proceeds

We expect to receive total estimated net proceeds from this offering of approximately U.S.$          million (Ps           billion), or U.S.$          million (Ps           billion) if the underwriters exercise the over-allotment option in full, in each case, after deducting estimated underwriting discounts and estimated expenses of the offering that are payable by us, and assuming an initial public offering price of U.S.$        (the midpoint of the price range per ADS set forth on the cover page of this prospectus).

Each U.S.$1.00 increase (decrease) in the public offering price per ADS would increase (decrease) our net proceeds, after deducting estimated underwriting discounts and expenses, by U.S.$           (assuming no exercise of the over-allotment option by the underwriters).

We intend to use the net proceeds from this offering to increase capital in our banking subsidiaries, principally Banco de Bogotá. Our expected use of the net proceeds represents 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.

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Market information

Prior to this offering, there has been no public market for the ADSs. We cannot assure you that an active trading market will develop for the ADSs, or that the ADSs will trade in the public market subsequent to the offering at or above the offering price. Each ADS will represent            preferred shares. We intend to apply to list the ADSs on the NYSE under the symbol “AVAL.”

Trading history of our preferred shares

Our preferred shares have been listed since February 1, 2011 on the Colombian Stock Exchange under the symbol “PFAVAL” and we first issued preferred shares on May 12, 2011 at the conclusion of the Preferred Shares Local Offering. The following table presents the high and low closing sales prices for the periods indicated, and average daily trading volume for our preferred shares on the Colombian Stock Exchange.

	Colombian Stock Exchange
	High		Low		Average daily trading volume
	(Ps per share)				(in shares)
Year
2011 (beginning May 12)		1,320		1,120		3,363,366
2012		1,325		1,130		3,077,023
2013		1,435		1,235		4,323,943
Quarter
First quarter 2013		1,305		1,255		3,799,814
Second quarter 2013		1,430		1,235		6,906,810
Third quarter 2013		1,435		1,315		4,074,499
Fourth quarter 2013		1,400		1,240		2,505,641
First quarter 2014		1,305		1,135		2,415,869
Second quarter 2014		1,360		1,285		3,210,991
Third quarter 2014 (through July 29, 2014)		1,400		1,345		2,420,060
Month
January 2014		1,275		1,140		1,344,760
February 2014		1,250		1,135		2,321,954
March 2014		1,305		1,210		3,634,449
April 2014		1,325		1,285		2,747,882
May 2014		1,335		1,310		3,472,219
June 2014		1,360		1,305		3,420,790
July 2014 (through July 29, 2014)		1,400		1,345		2,420,060

Source: Colombian Stock Exchange.

On July 29, 2014, the last reported closing sale price on the Colombian Stock Exchange was Ps 1,400 per preferred share.

Trading history of our common shares

Our common shares are listed on the Colombian Stock Exchange. Our common shares began trading on the Colombian Stock Exchange in 1999 and are listed under the symbol “GRUPOAVAL.” The following table presents the high and low closing sales prices and average daily trading volume for shares of our common shares on the Colombian Stock Exchange for the periods indicated.

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	Colombian Stock Exchange
	High		Low		Average daily trading volume
	(Ps per share)				(in shares)
Year
2007		697		570		1,638,804
2008		645		388		1,378,067
2009		785		450		1,781,899
2010		1,770		745		2,069,109
2011		1,715		1,125		1,492,887
2012		1,330		1,130		496,621
2013		1,425		1,235		492,221
Quarter
First Quarter 2013		1,295		1,260		627,895
Second quarter 2013		1,425		1,235		697,886
Third quarter 2013		1,425		1,305		354,029
Fourth quarter 2013		1,395		1,240		298,052
First quarter 2014		1,300		1,130		253,306
Second quarter 2014		1,360		1,265		322,271
Third quarter 2014 (through July 29, 2014)		1,385		1,335		204,048
Month
January 2014		1,270