Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
☐
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934for the fiscal year ended December 31, 2025
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from ________________ to ________________
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934Date of event requiring this shell company report
Commission file number: 001-36631
GRUPO AVAL ACCIONES Y VALORES S.A.
(Exact name of Registrant as specified in its charter)
Republic of Colombia
(Jurisdiction of incorporation)
Carrera 13 No. 26A - 47
Bogotá D.C., Colombia 110311
(Address of principal executive offices)
Jorge Adrián Rincón
Chief Legal Officer
Grupo Aval Acciones y Valores S.A.
Carrera 13 No. 26A – 47
Phone: (+57) (601) 743-3222
E-mail: jrincon@grupoaval.com
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Copies to:
Manuel Garciadiaz
Yasin Keshvargar
Davis Polk & Wardwell LLP
450 Lexington Avenue
New York, NY 10017
Phone: (212) 450-4000
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol (s)
Name of each exchange on whichregistered
American Depositary Shares, each representing 20 preferred shares, par value Ps 1.00 per preferred share
AVAL
New York Stock Exchange
Preferred Shares, par value Ps 1.00 per preferred share
New York Stock Exchange*
* Grupo Aval Acciones y Valores S.A.’s preferred shares are not listed for trading, but are only listed in connection with the registration of the American Depositary Shares, pursuant to the requirements of the New York Stock Exchange under the trading symbol(s): AVAL.
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
Indicate the number of outstanding shares of each of the issuer’s classes of capital stock or common stock as of the close of business covered by the annual report.
Preferred shares: 7,565,150,834
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
◻ Yes ⌧ No
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
⌧ Yes ◻ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer ◻
Accelerated filer ⌧
Non-accelerated filer ◻
Emerging growth company ☐
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻
The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements: ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b) : ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
US GAAP ◻
International Financial Reporting Standards as issued by the International Accounting Standards Board ⌧
Other ◻
If “Other” has been checked in response to the previous question indicate by check mark which financial statement item the registrant has elected to follow.
◻ Item 17 ◻ Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
☐ Yes ⌧ No
TABLE OF CONTENTS
Page
PRESENTATION OF FINANCIAL AND OTHER INFORMATION
1
PART I
6
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
A.
Directors and senior management
B.
Advisers
C.
Auditors
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Offer statistics
Method and expected timetable
ITEM 3. KEY INFORMATION
Selected financial data
Capitalization and indebtedness
11
Reasons for the offer and use of proceeds
D.
Risk factors
ITEM 4. INFORMATION ON THE COMPANY
38
History and development of the company
Business overview
40
Organizational structure
113
Property, plant and equipment
ITEM 4A. UNRESOLVED STAFF COMMENTS
114
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
Operating results
Liquidity and capital resources
147
Research and development, patents and licenses, etc.
151
Trend information
E.
Critical Accounting Estimates
152
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
153
Compensation
157
Board practices
158
Employees
160
Share ownership
F.
Disclosure of a registrant’s action to recover erroneously awarded compensation
161
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
Major shareholders
Related party transactions
Interests of experts and counsel
164
ITEM 8. FINANCIAL INFORMATION
Consolidated statements and other financial information
Significant changes
165
ITEM 9. THE OFFER AND LISTING
Offering and listing details
Plan of distribution
Markets
Selling shareholders
166
Dilution
Expenses of the issue
i
ITEM 10. ADDITIONAL INFORMATION
167
Share capital
Memorandum and articles of association
Material contracts
173
Exchange controls
174
Taxation
Dividends and paying agents
182
G.
Statement by experts
185
H.
Documents on display
I.
Subsidiary information
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
202
Debt securities
Warrants and rights
Other securities
American depositary shares
PART II
203
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
Defaults
Arrears and delinquencies
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
Material modifications to instruments
Material modifications to rights
204
Withdrawal or substitution of assets
Change in trustees or paying agents
Use of proceeds
ITEM 15. CONTROLS AND PROCEDURES
Disclosure controls and procedures
Management’s annual report on internal control over financial reporting
Attestation report of the registered public accounting firm
205
Changes in internal control over financial reporting
ITEM 16. [RESERVED]
ITEM 16A. Audit committee financial expert
ITEM 16B. Code of ethics
ITEM 16C. Principal accountant fees and services
ITEM 16D. Exemptions from the listing standards for audit committees
206
ITEM 16E. Purchases of equity securities by the issuer and affiliated purchasers
ITEM 16F. Change in registrant’s certifying accountant
ITEM 16G. Corporate governance
ITEM 16H. Mine safety disclosure
207
ITEM 16K. Cybersecurity
PART III
209
ITEM 17. Financial statements
ITEM 18. Financial statements
ITEM 19. Exhibits
ii
All references herein to “peso”, “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. This annual report translates certain Colombian 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 the presentation of U.S. dollar amounts that differ from U.S. dollar amounts that would have been obtained by converting Colombian pesos as of another specified date. Unless otherwise noted in this annual report, all such peso amounts have been translated at the rate of Ps 3,757.1 per U.S.$1.00, which was the representative market rate published on December 31, 2025. 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 April 10, 2026 the representative market rate was Ps 3,631.49 per U.S. $1.00.
Definitions
In this annual report, unless otherwise indicated or the context otherwise requires, the terms:
In this annual report, references to “beneficial ownership” are calculated pursuant to the definition ascribed by the U.S. Securities and Exchange Commission, or the “SEC”, of beneficial ownership for foreign private issuers contained in Form 20-F. Form 20-F defines the term “beneficial owner” of securities as referring to any person who, even if not the record owner of the securities, has or shares the underlying benefits of ownership, including 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 is also considered to be the “beneficial owner” of securities when such person has the right to acquire within 60 days pursuant to an 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.
Financial Statements
We are a financial holding company and an issuer of securities in Colombia registered with the National Registry of Shares and Issuers (Registro Nacional de Emisores y Valores), and in this capacity, we are subject to inspection and surveillance by the Superintendency of Finance and required to comply with corporate governance and periodic reporting requirements to which all financial holdings and issuers are subject. We are not a financial institution in Colombia and we are not supervised or regulated as a financial institution. Since February 6, 2019, we are subject to the inspection and surveillance of the Superintendency of Finance as the financial holding company of the Aval Financial Conglomerate and we are required to comply with capital adequacy and additional regulations applicable to financial conglomerates. See “Item 4. Information on the Company—B. Business overview—Supervision and regulation”. All of our Colombian financial subsidiaries, including Banco de Bogotá, Banco de Occidente, Banco Popular, Banco AV Villas, Corficolombiana, Porvenir, Aval Fiduciaria, Aval Casa de Bolsa and their respective financial subsidiaries, are entities under the direct comprehensive supervision of, and subject to inspection and surveillance as financial institutions by, the Superintendency of Finance.
Our consolidated financial statements at December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024, and 2023 are included in this annual report and referred to as our audited consolidated financial statements. Our historical results are not necessarily indicative of results to be expected for future periods. We have prepared the audited consolidated financial statements included herein in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (“IASB”), which we refer to as “IFRS”.
We and our Colombian subsidiaries prepare consolidated financial statements for publication in Colombia under IFRS as adopted by the Superintendency of Finance in accordance with Decree 1851 of 2013 and 3023 of 2013, as modified by Decrees 2420 and 2496 of 2015, 2131 of 2016, 2170 of 2017, 2483 of 2018, 2270 of 2019, 1432 of 2020, 938 of 2021 and 1611 of 2022.
Separate financial statements for us and our financial subsidiaries in Colombia are based on IFRS issued by the IASB in Spanish as of December 31, 2025 (which we refer to as “Colombian IFRS”), and pursuant to certain requirements under Colombian regulations. As a result, rules subsequently issued by the IASB are not applicable under Colombian IFRS. Our separate financial statements for local purposes, differ from IFRS as issued by the IASB in the following principal aspects:
2
On November 27, 2025, Banco de Bogotá’s subsidiary Multi Financial Holding, Inc. entered into a share purchase agreement with BAC International Corporation (“BIC”), a subsidiary of BAC Holding International Corp., for the disposal of 17,069,875 shares representing 99.569068% of the issued and outstanding shares of Multi Financial Group Inc. (“MFG”), the parent company of Multibank, Inc., at a price of U.S. $26.8611 per share. On March 18, 2026, after obtaining the required regulatory authorizations and fulfilling all agreed conditions precedent, the transaction was completed at a total price of U.S.$464 million (Ps 1,719.7 billion).
Based on the foregoing, at December 31, 2025, our subsidiary, MFG, is presented as a non-current asset held for sale, together with liabilities directly associated with the assets classified as held for sale, resulting in a discontinued operation for the years 2025, 2024 and 2023. In accordance with IFRS, our consolidated Statement of financial position at December 31, 2024, has not been retrospectively adjusted.
Ratios and Measures of Financial Performance
We have included in this annual report ratios and measures of financial performance such as return on average assets, or “ROAA”, and return on average equity, or “ROAE”. These measures should not be construed as an alternative to IFRS measures and should not be compared to similarly titled measures reported by other companies, which may evaluate such measures differently from how we do. For ratios and measures of financial performance, see “Item 3. Key Information—A. Selected financial data”.
Market share and other information
We obtained the market and competitive position data, including market forecasts, used throughout this annual report 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 Banking Association (Asociación Bancaria y de Entidades Financieras de Colombia) or “Asobancaria”, the Colombian Stock Exchange, the Colombian National Bureau of Statistics (Departamento Administrativo Nacional de Estadística), or “DANE”. 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 annual report are based on the 2015 base year data series published by DANE. Although we have no reason to believe that any of this information or these reports is 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.
Our consolidated statement of financial position and statement of income reflect information prepared under IFRS. Comparative disclosures of financial and operating performance of our Colombian banking subsidiaries, Corficolombiana, Porvenir, Aval Fiduciaria, Aval Casa de Bolsa and that of our competitors are based on separate information prepared under Colombian IFRS as reported to the Superintendency of Finance. These separate financial statements under Colombian IFRS do not reflect the consolidation of subsidiaries such as Corficolombiana or MFH, among others, are not intended to reflect the consolidated financial results of Grupo Aval and are not necessarily indicative of the results for any other future period. We include certain ratios in this annual report to compare us to our principal competitors, such as ROAA, ROAE, operational efficiency and asset quality indicators, among others.
“Grupo Aval aggregate” data reflects the sum of the separate financial statements of our four Colombian banking subsidiaries (Banco de Bogotá, Banco de Occidente, Banco Popular and Banco AV Villas) or our four Colombian trust and fiduciary management subsidiaries (Aval Fiduciaria, Fiduciaria Bogotá, Fiduciaria de Occidente and Fiduciaria Popular) as reported to the Superintendency of Finance under Colombian IFRS.
Other conventions
Certain figures included in this annual report 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. As such, percentage calculations presented may differ from those of rounded numbers. References to “billions” in this annual report are to 1,000,000,000 and to “trillions” are to 1,000,000,000,000.
“Non-controlling interest” refers to the participation of minority shareholders in a subsidiary’s equity or net income, as applicable.
3
FORWARD-LOOKING STATEMENTS
Some of the matters discussed in this annual report concerning our operations and financial performance include estimates and forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 “Reform Act” including such statements contained in “Item 3. Key Information—D. Risk factors”, “Item 4. Information on the Company—B. Business overview” and “Item 5. Operating and Financial Review and Prospects”.
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:
The words “believe”, “may”, “will”, “estimate”, “continue”, “anticipate”, “intend”, “expect”, “should”, “could”, “would”, “plan”, “predict”, “potential” and similar words are intended to identify estimates and forward-looking statements. All statements addressing our future
4
operating performance, and statements addressing events and developments that we expect or anticipate will occur in the future, are forward-looking statements within the meaning of the Reform Act. Estimates and forward-looking statements are intended to be valid 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 annual report might not occur and our future results and our performance may differ materially from those expressed in these forward-looking statements due to the factors mentioned above, among others. Because of these uncertainties, you should not make any investment decision based on these estimates and forward-looking statements.
These cautionary statements should be considered in connection with any written or oral forward-looking statements that we may issue in the future.
5
A. Directors and senior management
Not applicable.
B. Advisers
C. Auditors
A. Offer statistics
B. Method and expected timetable
The following financial data of Grupo Aval at December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 have been derived from our audited consolidated financial statements prepared in accordance with IFRS, included in this report. 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, “Presentation of financial and other information” and “Item 5. Operating and Financial Review and Prospects” included in this annual report.
Statement of income data
IFRS
Grupo Aval
For the years ended December
2025
2024
2023
(in Ps billions, except share and per share data)
Total interest income
25,919.2
26,971.9
27,651.7
Total interest expense
(18,047.9)
(20,044.5)
(21,756.4)
Net interest income
7,871.3
6,927.4
5,895.3
Impairment loss on loans and other accounts receivable
(4,268.2)
(4,615.6)
(4,596.0)
Impairment (loss) recovery on other financial assets
(6.9)
(5.0)
10.8
Recovery of charged-off financial assets
736.3
574.3
555.8
Net impairment loss on financial assets
(3,538.9)
(4,046.3)
(4,029.5)
Net interest income, after impairment losses
4,332.4
2,881.1
1,865.8
Net income from commissions and fees
3,660.0
3,476.0
3,241.5
Gross profit from sales of goods and services
2,087.7
2,477.4
3,218.0
Net income (loss) trading
1,402.0
1,401.7
(919.2)
Net income from other financial instruments mandatorily at fair value through profit or loss
623.2
350.9
323.7
Other income
1,415.8
646.2
3,568.8
Other expenses
(8,899.9)
(8,125.5)
(7,875.4)
Net income before tax expense
4,621.2
3,107.8
3,423.2
Income tax expense
(1,432.7)
(942.0)
(1,309.1)
Net income from continuing operations
3,188.5
2,165.8
2,114.1
Net income from discontinued operations, net of tax
26.6
25.7
63.0
Net income for the year
3,215.2
2,191.5
2,177.1
Net income for the year attributable to owners of the parent
Net income for the period from continuing operations
1,703.5
997.4
695.6
Net income for the period from discontinued operations, net of tax
18.4
17.7
43.4
Owners of the parent
1,721.9
1,015.1
739.0
Net income for the year attributable to non-controlling interests
1,485.0
1,168.4
1,418.5
8.3
8.0
19.6
Non-controlling interest
1,493.3
1,176.4
1,438.1
Earnings per 1,000 shares (basic and diluted earnings):
Common shares (in pesos)
72,519.8
42,752.2
31,124.5
Preferred shares (in pesos)
Dividends per 1,000 shares:
Common and preferred shares (in pesos)
31,800.0
27,600.0
24,000.0
Weighted average number of shares:
Outstanding common shares in thousands
16,186,869.6
16,201,502.9
16,202,376.2
Outstanding preferred shares in thousands
7,556,606.1
7,541,972.8
7,541,099.6
Outstanding common and preferred shares in thousands
23,743,475.8
7
Statement of financial position data
At December 31,
(in Ps billions)
Assets:
Cash and cash equivalents
19,354.7
16,998.9
Trading assets
29,097.6
20,163.2
Investment securities
39,252.6
39,162.6
Hedging derivative assets
236.6
54.0
Total loans, net
184,226.0
190,129.5
Other accounts receivables, net
24,458.9
27,958.4
Non-current assets held for sale
18,256.6
105.2
Investments in associates and joint ventures
1,314.4
1,430.6
Tangible assets
9,608.3
7,243.4
Concession arrangement rights
13,495.1
14,314.6
Goodwill
2,057.1
2,223.6
Other intangible assets
2,954.2
2,758.3
Income tax assets
4,238.2
4,778.1
Other assets
386.4
538.9
Total assets
348,936.7
327,859.4
Liabilities:
Trading liabilities
1,951.4
1,011.9
Hedging derivatives liabilities
34.8
21.7
Customer deposits
207,405.2
200,872.2
Interbank borrowings and overnight funds
22,655.4
18,509.8
Borrowings from banks and others
24,559.2
28,098.2
Bonds issued
21,457.0
26,215.8
Provisions
989.6
1,102.7
Income tax liabilities
6,162.8
5,864.0
Employee benefits
987.8
1,003.3
Liabilities directly associated with non-current assets classified as held for sale
16,459.4
—
Other liabilities
11,531.3
11,997.0
Total liabilities
314,193.8
294,696.5
Equity:
Attributable to the owners of the parent
Subscribed and paid-in capital
23.7
Additional paid-in capital
9,503.0
9,508.1
Retained earnings
9,241.4
8,163.4
Other comprehensive income
(322.2)
(244.0)
Equity attributable to owners of the parent
18,445.9
17,451.3
16,296.9
15,711.7
Total equity
34,742.8
33,162.9
Total liabilities and equity
8
The tables in this section, and elsewhere in this annual report, provide the calculation of certain ratios and measures of financial performance, which are used by our management to analyze the evolution and results of our company. Although calculated using IFRS inputs, the ratios and measures of financial performance as determined and measured by us should not be compared to similarly titled measures reported by other companies, as other companies may calculate and report such measures differently. The Company considers these measurements useful for investors, regulators, management and others to evaluate our performance and compare us against other financial institutions.
At and for the year ended December 31,
2025 (1)
2024 (1)
2023 (1)
(in percentages, unless otherwise
indicated)
Profitability ratios:
Net interest margin(2)
3.5%
3.3%
2.9%
Net interest margin including trading investment income(2)
3.9%
3.6%
ROAA(3)
1.0%
0.7%
ROAE(4)
9.6%
6.0%
4.5%
Efficiency ratios(5):
Cost to income
52.2%
53.2%
51.4%
Cost to assets
2.6%
Capital ratios:
Period-end equity as a percentage of period-end total assets
10.0%
10.1%
10.5%
Tangible equity ratio(6)
8.6%
8.8%
9.2%
Credit quality data:
Cost of risk: Impairment loss on loans and other accounts receivable / average gross loans(7)
2.3%
2.7%
Cost of risk, net: Impairment loss on loans and other accounts receivable, net / average gross loans(7)(8)
1.9%
2.4%
Charge-offs as a percentage of average gross loans(7)
3.0%
Loans past due more than 30 days / gross loans(7)
4.4%
5.4%
5.6%
Loans past due more than 90 days / gross loans(7)
4.1%
Loans classified as Stage 2 / gross loans(7)
4.7%
Loans classified as Stage 3 / gross loans(7)
5.7%
6.6%
6.7%
Loans classified as Stage 2 and Stage 3 / gross loans(7)
10.2%
11.1%
11.4%
Loss allowance as a percentage of loans past due more than 30 days
101.0%
99.4%
101.5%
Loss allowance as a percentage of loans past due more than 90 days
134.3%
131.2%
139.1%
Loss allowance for Stage 2 loans as a percentage of Stage 2 loans(7)
14.4%
15.6%
Loss allowance for Stage 3 loans as a percentage of Stage 3 loans(7)
51.3%
55.5%
59.3%
Loss allowance for Stage 2 and Stage 3 loans as a percentage of Stage 2 and Stage 3 loans(7)
33.6%
39.0%
41.4%
Loss allowance as a percentage of gross loans(7)
5.3%
Operational data (in units):
Number of customers of the banks(9)
18,474,857
16,186,406
15,402,972
Number of employees(10)
67,585
70,271
74,036
Number of branches(11)
946
1,015
1,020
Number of ATMs(11)
2,738
2,853
2,909
9
ROAA and ROAE
ROAA, which is calculated as net income divided by consolidated average assets, provides a measure of return on assets. ROAE, which is calculated as net income attributable to owners of the parent, divided by consolidated average equity attributable to owners of the parent, provides a measure of the total return generated from our company and our subsidiaries for shareholders. Net income attributable to non-controlling interest divided by net income provides an indication of non-controlling interest ownership of Grupo Aval’s consolidated subsidiaries’ net income, where a higher ratio typically implies that higher net income was generated in subsidiaries in which Grupo Aval has lower ownerships and vice versa.
10
The following table sets forth ROAA, ROAE and Net income attributable to non-controlling interest divided by net income for Grupo Aval for the indicated years:
Year ended December 31,
(in Ps billions, except percentages)
Grupo Aval (consolidated):
Average assets(1)
337,237.1
314,632.8
298,489.0
Average equity attributable to owners of the parent(2)
17,848.1
16,958.5
16,454.5
Net income attributable to owners of the parent
Net income attributable to non-controlling interest
ROAA(1)
ROAE(2)
Net income attributable to non-controlling interest divided by net income
46.4%
53.7%
66.1%
B. Capitalization and indebtedness
C. Reasons for the offer and use of proceeds
D. Risk factors
Our business, financial condition and results of operations could be materially and adversely affected if any of the risks described below occur. In such an event, the market price of our preferred shares or our American Depositary Shares, or ADSs, could decline, and you could lose all or part of your investment. We may face additional risks and uncertainties that are not presently known to us, or that we currently deem immaterial, which may also impair our business.
Summary
The following summarizes some, but not all, of the risks provided below. Please carefully consider all the information discussed in this Item 3.D. “Risk Factors” in this annual report for a more thorough description of these and other risks:
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Risks relating to Colombia and other countries in which we operate
Adverse economic, political and social conditions in Colombia and other countries where we operate, including variations in exchange rates or downgrades in credit ratings of sovereign debt securities, 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 the 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, political and social conditions in Colombia.
Colombia is subject to economic, political and other uncertainties, including changes in taxation, 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. In the last five years, the monetary policy implemented by the Central Bank of Colombia has rapidly transitioned from expansion (2020-2021) to contraction (2021-2023) and vice-versa (2023-2025), which has led to sharp movements in our interest margins. The characteristics of retail products (mainly consumer and mortgages) in the local market, which represent 43.3% of our total loans and are mostly fixed rate, has made it difficult to immediately or fully pass through higher interest rates to our customers. On the other hand, our deposit structure continues to be sensitive to benchmark interest rate movements, where 35.7% of our local currency deposits come from institutional clients (financial institutions and government entities) and have a higher pass-through of movements in benchmark rates. This balance sheet structure results in the cost of interest-bearing liabilities increasing faster than interest income on loans. This is the case for Grupo Aval Banks, in particular for Banco Popular and Banco AV Villas, and for Corficolombiana, given its net liability position (see “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Management Discussion and Analysis of Operating Segments—Merchant Banking”).
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Exchange rate volatility could also negatively affect the foreign currency positions of our borrowers, or our subsidiaries’ solvency, liquidity or profitability. Due to the fact that a large percentage of the costs and expenses of our subsidiaries is fixed, and that the speed at which changes in interest rates charged to our customers can be adjusted may differ from that at which our cost of funds may vary, we may not be able to reduce costs and expenses or transfer an increase in our costs to our customers while the occurrences of any of these events adversely affect the Colombian economy, in which case our profitability could be further adversely affected.
In the case of our pension and severance fund management business, economic conditions may affect the business and financial capacity of employers. This could result in a reduction in employee-contributor headcounts, a decrease in the ability of employers to create new jobs, or a decline in employee income growth, all of which are necessary for individuals to become clients of our pension fund. Consequently, these factors could reduce returns on stabilization reserves (see Item 4. Information on the Company—B. Business overview—Supervision and regulation—Pension and Severance Fund Management) and/or performance-based fees.
Furthermore, the progressive dismantling of certain public policies may result in social unrest reflected in protests, vandalism or strikes against such policies. Similarly, amidst these protests, participants vandalize some of our banks’ branches, block access to some of the offices of our entities, or cause disruptions to the mobility of our employees, preventing us from developing our business during those periods and cause temporary economic disruptions in our business.
As stated above, the political, economic and social environments 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, civil strife, political instability, drug trafficking and other forms of organized crime, wage and price controls, changes in tax policies, imposition of tariffs and trade barriers with partners, changes in the prices of commodities and unexpected changes in regulation.
Adverse economic, political and social developments, including allegations of corruption against the Colombian government or Colombian corporations, may adversely affect demand for financial services and create uncertainty regarding our operating environment, which could have a material adverse effect on our subsidiaries and, consequently, on our company.
On April 8, 2026, S&P Global Ratings downgraded Colombia’s long-term foreign currency sovereign credit rating to ‘BB-’ from ‘BB’, and its long-term local currency rating to ‘BB’ from ‘BB+’. The outlooks on both ratings are stable.
The Colombian economy remains vulnerable to internal and external shocks
Economies in Latin America are expected to see a contraction in growth and be impacted by climatic factors and lower export receipts given the expected contraction in growth and reduced demand for commodities by developed countries. Throughout 2025, and currently, there are significant international conflicts in various regions of the world, including in Latin America, for instance, the 2026 U.S. military and economic intervention in Venezuela. This can generate difficulties at the global level on different fronts, international trade, and diplomatic relations between countries, affecting emerging economies such as Colombia and its Latin American counterparts.
In 2025, the Colombian economy showed signs of progress, characterized by relatively stable inflation with an upward outlook. Inflation declined slightly from 5.2% in 2024 to 5.1% in 2025. However, it remained above the Central Bank’s target of 3%. During 2025, the Central Bank of Colombia (Banco de la República), reduced the benchmark interest rate by 25 basis points, bringing it to 9.25%. These measures have contributed to lower market interest rates and a gradual recovery in credit activity.
Furthermore, Colombia’s GDP grew by 2.6% in 2025, building on the 1.5% growth observed in 2024. Challenges persist, including indexation to historically high inflation rates and wage pressures, which constrain a more accelerated expansion.
Looking ahead to 2026, latent risks include potential pressures on interest rates and inflation arising from government debt dynamics and difficulties in maintaining fiscal discipline. Political transitions in the region (Venezuela), electoral processes in Colombia, and the country’s exposure to commodity price volatility may also weigh on economic performance. Additionally, the potential implementation of government-mandated investment requirements could limit operational flexibility and adversely affect the financial performance of regulated entities. These factors may pose material challenges to economic growth and directly impact our entities’ growth and risk metrics.
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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 internal security issues, primarily due to the activities of paramilitary and guerrilla groups, such as the National Liberation Army (Ejército de Liberación Nacional), or “ELN”, urban militias, former members of the Revolutionary Armed Forces of Colombia (Disidencias de las Fuerzas Armadas Revolucionarias de Colombia), or “FARC”, and drug cartels. These groups have exerted influence over the local population. These groups fund their activities by protecting and providing services to drug traffickers. Any breakdown in peace, renewed or continuing drug-related crime or 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 any peace negotiation with guerilla, paramilitary or other groups, which may result in legislation that increases our tax burden, or that of other Colombian companies, which could, in turn, impact the overall economy.
The Colombian government, under the authority granted by Congress under the Total Peace Law (“Ley de Paz Total”), is proposing to cease hostilities between the Colombian Army and various illegal groups and has started negotiating several peace agreements with illegal groups, including various drug trafficking organizations, such as the “Grupos Armados Organizados - GAO’s”. Some of these negotiations have been effectively suspended, with clear evidence of cease-fire breaches, warrants issued against negotiators from criminal groups, and, in some cases, the extradition of leaders who were found to be still engaged in illegal activities. Moreover, the negotiation process has exposed significant shortcomings and has been subject to strong public criticism due to the lack of tangible results and the perceived deterioration in security conditions in some regions.
Political and economic instability in the region and the Middle East may affect the Colombian economy and, consequently, our results of operations and financial condition.
Some of Colombia’s neighboring countries, particularly Venezuela, have experienced and continue to experience periods of political and economic instability. On January 3, 2026, the United States launched a series of strikes against Venezuela and captured and removed former President Maduro and his wife, Cilia Flores, from the country. Following the U.S. strikes, Venezuela announced a state of national emergency, and the Vice President, Delcy Rodriguez, has been elevated to the Presidency of Venezuela. Further escalation of the situation in Venezuela could lead to significant market and other disruptions, which could have a material adverse effect on the region, including in neighboring countries such as Colombia, and on our business, financial position, results of operations and cash flows.
Moreover, strained diplomatic relations with the United States, over matters such as immigration, drug trafficking, and tariffs led the U.S. government to adopt restrictive measures, against certain Colombian persons including the designation of President Petro and individuals associated with him under the “OFAC List”. These developments could further exacerbate political and economic uncertainty. Furthermore, political conditions such as changes in those U.S. policies could affect the countries in which we operate. Economic conditions in the United States and the region, which are being impacted by recent indications of benchmark rate reductions by the Federal Reserve, could have an indirect effect on the Colombian economy.
Recently, the government of Ecuador, led by President Noboa, imposed tariffs on certain commercial products, which prompted a response from the Colombian government, including an increase in the price of electricity supplied to Ecuador, as well as the adoption of additional tariff-related measures. The economic impact of these actions on the sectors in which Grupo Aval has operations remains uncertain; however, we continue to closely monitor the situation in order to anticipate and assess any potential effects arising from such measures.
During June 2025, Israel launched strikes against Iranian nuclear and military facilities, triggering Iranian retaliatory missile and drone attacks on Israel and subsequent U.S. military strikes on Iranian nuclear sites. A ceasefire was reached on June 24, 2025, though regional tensions remained elevated. After December 31, 2025, the United States and Israel carried out new strikes in February 2026 against Iran’s nuclear and missile programs. Iran responded with attacks on Israel, U.S. bases in the region, and energy and civilian infrastructure in several Gulf states, causing sharp oil price volatility and supply chain disruptions. These ongoing conflicts have increased global economic uncertainty. Continued instability in the Middle East and disruptions in energy markets could raise inflationary pressures in Colombia.
Changes in government policies and actions, as well as judicial decisions, 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 governmental policies and actions, as well as judicial decisions, involving a broad range of matters, including interest rates, fees, exchange rates, exchange controls, inflation rates, taxation, banking and pension fund regulations and other political or economic developments affecting Colombia.
Colombian governments have historically exercised substantial influence over their economies, and their policies are likely to continue to have a significant effect on companies, including us. Moreover, regulatory uncertainty, public dialogue on reforms in Colombia and other countries where we operate, or the approval of reforms, may be disruptive to our business or the economy and may result in a material and
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adverse effect on our financial condition and results of operations. In recent years, the Colombian government has increasingly adopted decrees and other regulatory measures that have had, and could continue to have, a significant economic impact and could increase volatility in the sectors in which we operate. Such measures have included, among others, minimum wage increases exceeding 20%, initiatives related to mandatory investment requirements applicable to financial institutions, and proposals aimed at restricting foreign investments by pension funds and encouraging the repatriation of pension fund assets currently held abroad. We cannot predict the timing, scope or final outcome of these measures, nor their potential impact on the Colombian economy or on our business, financial condition, results of operations and cash flows.
Furthermore, even though the Colombian government is in its final year of mandate, it continues to propose changes to the legal and regulatory framework affecting healthcare, private sector participation, and prices across various sectors, including utilities, energy, gas transportation, toll road concessions, import tariffs, pension funds and labor. These proposed changes, currently under discussion in congress, courts and ministries, could result in new compliance obligations, higher costs for our operations, and increased taxation. Such changes could have potentially adverse outcomes for our clients’ income, profitability, and growth prospects.
We and our subsidiaries are subject to anti-corruption laws and other laws in the jurisdictions in which we operate and violation of these regulations could harm our business.
We and our subsidiaries are subject to numerous, and sometimes conflicting, legal regimes on matters as diverse as anti-corruption, taxation, internal control and disclosure obligations, securities and derivatives regulation, anti-competition regulations, data privacy and labor relations. Compliance with diverse legal requirements is costly, time-consuming and requires significant resources. Violations of one or more of these regulations in the conduct of our business or the business of our subsidiaries could result in significant fines, criminal sanctions against us or our officers, prohibitions on doing business and damage to our reputation. Violations of these laws or regulations in connection with the performance of our obligations to our customers, as well as in connection with the performance of our subsidiaries’ obligations, could also result in liability for significant monetary damages, fines or criminal prosecution, unfavorable publicity and other reputational damage, restrictions on our ability to process information and allegations by our customers that we have not performed our contractual obligations. Because of the varying degrees of development of the legal systems in the countries where we operate, local laws might be insufficient to protect our rights due in part to a lack of multiple recourses and/or deficiencies in access to justice.
Our employees, and joint venture partners, or other third parties with whom we associate, could take actions that violate policies or procedures designed to promote legal and regulatory compliance or applicable anti-corruption laws or regulations. Violations of these laws or regulations by us or our subsidiaries, our employees or any of these third parties could subject us to criminal or civil enforcement actions (whether or not we participated or knew about the actions leading to the violations), including fines or penalties, disgorgement of profits and suspension or disqualification from work, including governmental contracting, any of which could materially adversely affect our business, including our results of operations and our reputation.
New or higher taxes resulting from changes in tax regulations or the interpretation thereof in Colombia and other countries in which we operate could adversely affect our results of operations and financial condition or generate burdens to our shareholders or lenders.
It has become usual in Colombia for tax laws to be reformed on a regular basis. Since 2018, several tax reforms have been proposed by the government and enacted by the Colombian congress. As one of the first actions of the new government, in August 2022, the Ministry of Finance presented to the Congress a proposed law that was ultimately approved and enacted in December 2022. The main aspects of this reform can be summarized as follows:
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New tax laws and regulations, and uncertainties with respect to future tax policies, pose risks to us. The Colombian government is required by Law 1473 of 2011, also known as Law of Fiscal Rule, to significantly reduce its fiscal deficit and address issues regarding public policy, regulation regarding oil extraction and the transition to clean energies, migrations, public health events or other events that could require further tax reforms over the following years. This, in addition to an increase in fiscal deficit and the expected increase in new subsidies for the low-income bracket, changes in the health care framework, among others, could lead to higher taxation rates on our business and that of our borrowers. Changes in tax-related laws and regulations, and interpretations thereof, can impact tax burdens by increasing tax rates and fees, creating new taxes or withholdings, limiting tax deductions, and eliminating tax-based incentives and non-taxed income. In addition, tax authorities, local governments or courts may interpret tax regulations differently than we do, or impose new local tax regulations, which could result in increases in our tax payments, tax litigation and associated costs and penalties.
The Colombian government may implement new changes in the tax rules applicable to our securities, which could have a material adverse effect on our results of operations and financial condition, or that 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, may not apply or apply differently in the case of our ADSs.
Since the latest tax reform was not approved by the Colombian congress, the Colombian government relied on certain special powers granted by the state of Economic Emergency (Decree 1,390 of 2025), to introduce temporary tax measures.
On April 9, 2026, the Court issued its ruling declaring Decree 1,390 of 2025 unconstitutional. The Court concluded that the circumstances cited by the Government, such as fiscal shortfalls due to the failure of a tax reform, did not meet the constitutional requirements. Consequently, Decree 1,474 of 2025, which implemented the tax measures to address the emergency, was also suspended.
In addition, the Colombian government issued a second emergency through Decree 150 of 2026. Consequently, by means of Decree 173 of 2025, the Colombian government implemented the temporary equity tax for legal entities whose net equity (assets minus liabilities) is equal to or exceeds 200,000 UVT (equivalent to Ps 10,474,800,000, approximately USD $2,700,000) as of March 1, 2026. The tax applies at a 0.50% rate or 1.60% rate for entities who belong to the financial sector on the entity’s net equity and must be paid in two installments: (i) 50% due on April 1, 2026, and (ii) the remaining 50% due on May 4, 2026. The highest tax rate (1.60%) applies to financial institutions, reinsurers, stockbrokers, and stock market infrastructure providers, among others.
Additionally, Decree 240 of 2026 established that branches of foreign entities and permanent establishments in Colombia are also subject to the tax equity when their net equity equals or exceeds 200,000 UVT as of March 31, 2026 and also established some tax reliefs regarding active processes in administrative and judicial phase.
For further information, see “Item 10. Additional Information-E. Taxation”.
Colombian tax haven regulations could adversely affect our results of operations and financial condition.
Decree 1966 of 2014, as amended by Decree 2095 of 2014, put into effect article 260-7 of Colombia’s Tax Code, which regulates applicable rules for tax havens. Accordingly, a 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.
Article 260-7 of the Colombian Tax Code was reformed by Law 1819 of 2016, establishing a new legal framework pursuant to which certain jurisdictions may be classified as non-cooperative jurisdictions with low or no taxation or as jurisdictions with preferential tax regimes. This legal framework established a higher tax-withholding rate on Colombian source payments to those jurisdictions and entities considered part of such a jurisdiction.
As a result, some of our clients with financial products offered by our banking subsidiaries in such jurisdictions may experience, among other effects, an increase in their withholding tax rates, transfer pricing regulation, increased likelihood of being found in violation of tax regulations by the Colombian authorities and elevated information disclosure requirements which could have a negative impact on our business, financial condition and results of operations.
Natural disasters, acts of war or terrorism, rioting or other external events could disrupt our businesses and affect our results of operations and financial condition.
We are exposed to natural disasters, such as earthquakes, volcanic eruptions, tornadoes, tropical storms and hurricanes. Heavy rains or abnormally low rainfall in Colombia and other countries in which we operate, attributable in part to the La Niña and El Niño weather patterns, have resulted in severe flooding, mudslides and prolonged droughts in the past. These are recurring weather phenomena that may occur on
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an equal or greater scale in the future. We are continuously monitoring the water reservoir indicators in the country’s dams that supply water to hydroelectric plants, in order to predict potential increases in energy costs or production in agribusiness.
In addition to severe weather and natural disasters, acts of war or terrorism, rioting and other adverse external events could have a significant impact on our ability to conduct business and may, among other things, affect the stability of our deposit base, impair the ability of borrowers to repay outstanding loans, impair the value of collateral of secured loans, cause significant property damage, cause us to incur additional expenses and/or result in loss of revenue. In the event of such circumstances, 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. Furthermore, if a significant number of our employees and senior managers were unavailable because of a natural disaster or act of war, our ability to conduct our businesses could be compromised. Natural disasters, acts of war or similar events could also result in substantial volatility in our results of operations for any fiscal quarter or year.
We are subject to risks related to global climate change and environmental requirements which may affect our results of operations and financial condition.
The financial sector faces susceptibility to climate change impacts stemming from both physical and transition risks. These risks manifest in various forms such as financial exposure to flooding caused by rising average temperatures, intensified rainfall, and droughts due to cyclic climatic phenomena like La Niña and El Niño, and the challenges of meeting Colombia’s agreed-upon climate change mitigation goals outlined in the Nationally Determined Contributions (NDC). These commitments aim to reduce greenhouse gas emissions by 51 percent by 2030 compared to 2010. Moreover, a sudden and substantial increase in carbon taxation poses risks to financial stability, with sectors like agriculture, manufacturing, electricity, trade, and transport being primary conduits for transmitting these risks to the banking system, materialized through traditional financial risk categories such as credit, market, liquidity, operational, and other non-financial risks.
The transition towards a low carbon economy and the management of climate risks can result in drastic effects in the allocation of resources to different sectors, subsectors, projects, assets or regions, given the need to finance mitigation and adaptation measures that these demand. This is relevant to our subsidiaries, especially to our banks, which hold loans in diverse sectors, generating exposure to different climate risks. Depending on the nature, speed and focus of these changes, including changes in policy and allocation of resources as well as in the physical climate, the changes may entail different levels of or unpredictable risks for Grupo Aval and our subsidiaries.
To achieve adequate management of climate risk disclosures, in December 2021 the Superintendency of Finance required issuers of securities (through Circular 031) to disclose social, environmental, and climate related information. The report follows SASB standards and TCFD recommendations associated with governance, strategy, management, and metrics about climate change. Implementing the TCFD recommendations is intended to facilitate an understanding of physical climate risks and transition risks that could affect Grupo Aval’s investments, including our banks’ portfolios and projects developed by our subsidiaries Corficolombiana and Porvenir. We and our subsidiaries presented the Practices, policies, processes, and indicators in relation to social and environmental issues, including climate issues in March 2025.
In 2024, the SEC adopted rules to enhance and standardize climate-related disclosures by public companies and in public offerings. The rules were subsequently challenged and stayed by a court pending review. In September 2025, the court issued an order continuing a hold on petitions for review of the rules. The order shifted the burden to the SEC, which had previously informed the court in July 2025 that it did not intend to review or reconsider the rules. The court’s order did not specify the time frame in which the SEC’s determination has to be made. Climate change regulation has not been a priority for the current administration, and so it remains to be seen how the SEC will decide to proceed.
Risks relating to our businesses and industry
Risks relating to our banking business
A deterioration in asset quality, including the loan portfolios of our banking 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, inflation and interest rates trending downward but still remaining high, along with foreign exchange volatility may have a negative effect on the quality of our banks’ loan portfolios, which could have a potential impact on our income statement due to the impairment loans and accounts receivable or due to reduced profitability. In particular, the percentage of past due or impaired loans may increase as a result of factors beyond our control, such as economic conditions and political events affecting Colombia generally or specific sectors of the economy. These effects could be exacerbated by changes in interest rates, which could further reduce our net interest margins and profitability, as we have been, and may in the future be, unable to
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immediately or fully pass through our higher interest costs to our customers, whether due to competitive pressures or regulatory considerations.
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 economy than large corporations and high-income individuals. In addition, some corporate clients could suffer the effects of economic downturns. Consequently, our banking subsidiaries may experience higher levels of past due or impaired loans, which could result in increased impairment losses on loans and other accounts receivable due to defaults by, or deterioration in the credit profiles of, individual borrowers. Past due or impaired loans and resulting impairment 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 past due or impaired loans or a deterioration in the credit quality of loan portfolios. As a result, our banking subsidiaries may be required to increase impairment losses on loans and accounts receivables, which may adversely affect our results of operations and financial condition. Our exposure is concentrated in certain economic sectors and large corporations that could also increase our impairment losses.
Default rates generally increase with the age of loans, the level of past due or impaired loans may lag 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 of secured loans, which may adversely affect their results of operations and financial condition.
Our banking subsidiaries originate loans that are secured by collateral, including real estate and other assets that are generally located in Colombia and other 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. An economic slowdown may lead to a downturn in the Colombian 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 or any other 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 loss allowance of our loans secured by such collateral. If this were to occur, we may need to incur additional impairments to cover actual losses of our loans, which may materially and adversely affect our results of operations and financial condition.
Our banking subsidiaries also make loans based on 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. Timing delays, documentary and procedural problems in realizing against collateral, as well as debtor-protective or other 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.
Colombian insolvency laws or laws of the countries in which our customers are incorporated or the loans are extended, may limit the ability of our banking subsidiaries to collect on monetary obligations and enforce rights against collateral or under guarantees.
Insolvency laws in Colombia and other countries in which some of our clients are incorporated provide that creditors of an insolvent debtor 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 such creditors are prevented from enforcing their rights against the collateral and other assets of the insolvent debtor during the insolvency process.
In Colombia, once a non-merchant individual has ceased paying his or her debts, such 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 of creditors (two or more) that represent most of the total amount of the claims will be mandatorily applicable to all relevant creditors. The insolvency law also provides other protections to debtors. 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 insolvency laws could have an adverse effect on our results of operations and financial condition.
In 2025, the Colombian congress enacted Law 2445, which amended the procedures governing restructuring and bankruptcy proceedings applicable to non-merchant individuals. Among other changes, the law provides for the suspension of payroll-deducted loan payments upon
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a debtor’s admission into the insolvency process and limits creditors’ ability to challenge certain procedural determinations. Since the law’s enactment, Colombian courts have admitted an increasing number of insolvency proceedings, and the overall volume and budgetary impact of such proceedings have risen. These developments have heightened the risk profile of our payroll loan portfolio, which relies primarily on automatic salary deductions as a key credit enhancement mechanism. Because Law 2445 entered into force on February 11, 2025, there is currently insufficient historical data to assess the full extent of its impact, and its effects on credit performance, recovery rates and asset quality may be material and adverse.
Any failure of risk management processes, including credit risk, could materially and adversely affect our banking businesses, results of operations and financial condition.
Credit risk is one of the main risks inherent in the business of our banks. Although we have group-wide risk management guidelines, each bank is responsible for managing its own risk. The policies and procedures implemented by our banks to identify, monitor and manage risk, may prove to be insufficient and we may not be able to upgrade risk management systems on a timely basis. Limitations in the availability of information may also hinder our ability to assess credit risk accurately, as assessment may not always be based on complete, reliable, or up-to-date data. Additionally, personnel of our banking subsidiaries may fail to detect risks proactively or may not effectively implement risk management systems, potentially increasing exposure to credit risk.
Beyond credit risk, our banks are exposed to balance sheet risks, including gap risk (mismatches in interest rate maturities), option risk (exercise of embedded options), and basis risk (differences between reference rates). These risks, if not adequately managed, could adversely affect financial margins, cash flows, and operating results. While we employ hedging strategies and continuous monitoring to mitigate these risks, adverse market conditions or failures in risk management processes could materialize negative impacts.
Any failure by our banking subsidiaries to effectively implement, consistently follow or refine risk management systems could result in higher risk exposures for our banking subsidiaries, which could materially and adversely affect our results of operations, financial condition and overall business performance.
Declines in the value of our banks’ sovereign debt portfolios or other investments could have an adverse effect on our results of operations.
Our Colombian banks’ securities portfolio primarily consists of debt securities issued and other investments guaranteed by the Colombian government. We are exposed to significant credit, market and liquidity risks associated with debt securities and other investments. At December 31, 2025 and 2024, debt securities represented 15.8% and 13.9% of our consolidated total assets, respectively. Of these, 76.5% and 69.0% were issued by the Colombian Central government, and 3.36% and 3.41% were issued or backed by other governments, respectively at December 31, 2025 and 2024. A significant decline in the value of these government securities or other investments could materially and adversely affect our debt securities or broader financial asset portfolios and, consequently, our financial condition and results of operations. See “Item 4. Information on the Company—B. Business overview— Supervision and regulation—Mandatory Investments”.
We are subject to counterparty risk in our banking business.
Our banks and, to a lesser extent, Corficolombiana, Porvenir 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, Corficolombiana, Porvenir and our international banking operations, enter into derivatives transactions primarily for hedging purposes and, on a limited basis, on behalf of customers. Those transactions subject us 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 and the countries where we operate may differ from those 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. These factors may further increase risks associated with derivatives transactions and could materially and adversely affect our results of operations and financial condition.
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Our banking subsidiaries are subject to liquidity risk, which may result in increases in funding costs.
The principal sources of funding for our banking subsidiaries are savings deposits, time deposits and checking accounts, which together represented 65.9% and 63.2% of our consolidated total liabilities at December 31, 2025 and 2024, respectively. Because our banking subsidiaries rely primarily on deposits for funding, a sudden or unexpected shortage of funds in the banking systems in which we operate or 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. The liquidity of our financial entities could also be impacted by reputational events affecting our entities as well as systemic events.
Our liquidity could be adversely affected by any inability to access the capital markets, illiquidity or volatility in the capital markets, the decrease in value of eligible collateral or increased collateral requirements, changes to our relationships with our funding providers based on real or perceived changes in our risk profile, governmental or regulatory decisions restricting public entity deposits in privately held banks, or changes in regulations that impact our funding. Part of the deposits or funding sources of our banks may come from central and/or decentralized public government entities. Due to circumstances related to the weak fiscal situation of the Colombian government, there is a risk related to significant withdrawals caused or triggered by the government that may adversely affect the liquidity of our entities. Although there is government funding associated with purely transactional and/or operational drivers, there is a possibility that due to a more pressing fiscal situation, the available funds will be reduced.
Default by one or more of our largest borrowers could adversely affect our results of operations and financial condition.
Our exposure is concentrated in certain economic sectors and large corporations that could increase our impairment losses. Default on loans by one or more of these borrowers may materially and 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 could increase funding costs or impair access to funding, potentially impacting our ability to maintain regulatory capital ratios.
Our credit ratings and those of our banking subsidiaries are an important component of our and their ability to obtain funding. Rating agencies regularly evaluate us, and their ratings of our debt are based on numerous dynamic, complex and inter-related factors and assumptions, including our financial strength, conditions affecting the overall financial services industry and the sovereign credit rating of Colombia and the jurisdictions we operate in. A deterioration in Colombia’s fiscal position could lead to further downgrade of the country’s sovereign credit rating, which in turn could trigger downgrades of the credit ratings of our banking subsidiaries.
Our banking subsidiaries may be required to raise additional capital or funding in the future to maintain regulatory capital ratios and provide liquidity to meet commitments and business needs, particularly if asset quality or earnings were to deteriorate. Since February 6, 2019, we are subject to the inspection and supervision of the Superintendency of Finance as the financial holding of the Aval Financial Conglomerate and we might be required in the future to raise additional capital to comply with new regulatory adequacy rules applicable to us at the conglomerate level. Certain of our banking subsidiaries have recorded net losses in recent periods, and their credit ratings reflect, in part, the expectation of support from Grupo Aval as their parent company.
Adverse changes in credit ratings or outlooks could increase the cost of funding in the capital markets or borrowings, or reduce the feasibility of refinancing existing debt or issuing new debt required to finance our future projects. In addition, lenders and counterparties in derivatives transactions are sensitive to the risk of a ratings or outlook downgrade. Our ability to raise deposits may also be impacted by a change in credit ratings or outlooks, which could make us less successful when competing for deposits or preclude us or our subsidiaries from receiving funds from institutional investors, governments, governmental entities, or other providers of deposits and other funding.
Any occurrence that may limit our and our banking subsidiaries’ access to funding, such as a downgrade in credit ratings or outlook, or a decline in the confidence of debt purchasers, depositors, or counterparties in the capital markets may adversely affect capital costs, ability to raise capital or funding, and liquidity. Moreover, we and our banking subsidiaries may need to raise capital when many other financial institutions are also seeking to raise capital, which, in turn, would require us to compete with numerous other institutions for investors. An inability to raise additional capital on acceptable terms, when needed, or a downgrade in our or our banking subsidiaries’ credit ratings or outlook could have a materially adverse effect on our and our banking subsidiaries’ financial conditions and results of operations.
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
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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 over indebtedness 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 over indebtedness of our customers, despite our focus on low-risk 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. According to predictions of certain analysts, Colombian economic growth rate prospects are slowing. If this scenario manifests or continues, we may fail to effectively analyze the creditworthiness of our customers (including the targeting of certain sectors) in a timely manner, and we may be faced with unexpected losses that could have a material adverse effect on our results of operations and financial condition. As part of our strategy, we may seek to increase our participation in the credit card business which carries higher inherent risks than other credit products.
Changes in banking and financial services 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. As a result, governments have been actively considering new banking laws, regulations, reviewing and revising existing laws and regulations, particularly in relation to capital adequacy and accounting standards that may change the perceived strength of our banks, our credit ratings or our ability to grow or pay dividends. In addition, various international developments, will continue to impact us in the coming years. Decree 2555 of 2010 was amended in 2012, 2015, 2018 and 2019, modifying certain capital adequacy requirements for Colombian credit institutions. See “Item 4. Information on the Company—B. Business overview—Supervision and regulation”.
On September 21, 2017, the Colombian congress passed Law 1870 to strengthen the regulation and supervision of financial conglomerates, also known as the Law of Financial Conglomerates (Ley de Conglomerados Financieros). This law sets out the principles for supervising and regulating financial conglomerates. This law and its regulatory decrees (i) established criteria for identifying members of the financial conglomerates, as well as their controlling financial holding companies; (ii) provided the Colombian government and Superintendency of Finance with tools to regulate and supervise financial conglomerates with respect to capital adequacy, corporate governance standards, risk management, internal control and criteria for identifying, administering, monitoring and revealing conflicts of interest; and (iii) established obligations and responsibilities applicable to the financial holding companies regarding the application and promotion of guidelines and rules across the financial conglomerates. Financial holding companies may be exposed to sanctions and fines derived from the breach of this law and its regulatory decrees by any member of the financial conglomerate. However, no fines have been imposed since the issuance of this law. We cannot assure that such law and its regulatory decrees will not have a material adverse impact on us. See “Item 4. Information on the Company—B. Business overview—Supervision and regulation—Regulatory framework for Colombian Financial Conglomerates”.
Over recent years, fintech companies and neobanks have significantly increased their presence in the Colombian financial system, particularly in the scope of deposit-taking activities through savings accounts for individuals. These competitors have captured a substantial market share in savings accounts by employing an aggressive pricing strategy that offers interest rates higher than those set by the Central Bank and surpassing those offered by traditional market participants. Recently, some neobanks have begun offering time deposits while simultaneously lowering interest rates on savings accounts, leading to significant transfers from savings accounts to time deposits. The stability of these participants' deposits at benchmark interest rates remains uncertain. Nevertheless, the pricing strategies and value propositions of these fintechs and neobanks may pose challenges to our success in attracting retail deposits from individuals.
Notwithstanding recent public statements by the President of Colombia regarding the potential implementation of a compulsory investment policy for the financial sector, under which financial institutions could be required to allocate resources to government-designated sectors, no draft decree, regulation or other implementing measure has been issued to date. However, should any such measures be implemented they could materially and adversely affect the regulatory framework applicable to the Colombian financial sector and, as a result, our business, financial condition and results of operations.
Our financial results may be negatively affected by changes to accounting standards.
We report our results and financial position in accordance with IFRS as issued by the IASB. Changes to IFRS or interpretations thereof may cause our future reported results and financial position to differ from current expectations, or historical results to differ from those previously reported due to the adoption of accounting standards on a retrospective basis. Such changes may also affect our regulatory capital and ratios. We monitor potential accounting changes and when possible, we determine their potential impact and disclose significant future changes in our audited consolidated financial statements that we expect as a result of those changes. Currently, there are a number of issued but not yet
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effective IFRS standards, as well as potential IFRS changes. For further information about developments in financial accounting and reporting standards, see Note 2 to our audited consolidated financial statements.
Regulatory actions may result in fines, penalties or restrictions that could materially and adversely affect our businesses and financial performance.
Our Colombian banks, as well as Corficolombiana, Porvenir and our international banking operations, are subject to regulation and supervision by 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, the imposition of anti-money laundering measures, liquidity or capital requirements and the authority to regulate the terms and conditions of credit transactions. Failure to comply with applicable regulations could subject our banking subsidiaries to fines or sanctions or even revocation of licenses or permits to operate. In the event that any of these subsidiaries encounter significant financial problems, is in danger of insolvency or becomes insolvent, or is otherwise deemed as non-viable, the financial authorities would have broad powers to intervene in our management and operations, including suspending or removing management and, in extreme circumstances, putting our banks, Corficolombiana, Porvenir and our international banking operations, into conservatorship or receivership or taking control of our banks, Corficolombiana, Porvenir and our other subsidiaries. Since February 6, 2019, Grupo Aval is subject to the inspection and supervision of the Superintendency of Finance as the financial holding of the Aval Financial Conglomerate and is required to comply with capital adequacy and additional regulations applicable to financial conglomerates that became effective. As a result, we may become subject to more stringent regulation. See “Item 4. Information on the Company—B. Business overview—Supervision and regulation”.
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 banking 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.
Similar investigations may be carried out by the relevant authorities in the future, which may result in penalties, lower fees charged to merchants and bank interchange fees, lead to changes in commercial strategies that may adversely affect our results of operations and financial condition. 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 subsidiaries manage and hold confidential personal information of customers in the normal course of their operations. Although, our subsidiaries have procedures and controls to safeguard personal information in our possession, unauthorized disclosures or unauthorized access to privileged information, fraud or events that interfere with regular banking and other services could subject us, our banks and other subsidiaries to legal actions, administrative sanctions and damages.
Although we work to develop secure data and information processing, storage and transmission capabilities to enhance information security, we face risks related to security breaches in connection with debit and credit card transactions that typically involve the transmission of personal information of our customers through various third parties, including retailers and payment processors. We and some of these parties have in the past been the target of security breaches and because the transactions involve third parties and environments, where we do not control the processing, storage or transmission of such information or the security protocols enacted by such third parties or in such environments, security breaches affecting any of these third parties could affect us, and in some cases we may have exposure and suffer losses for breaches relating to them, including costs to replace compromised debit and credit cards and address fraudulent transactions.
Recent regulations for Open Data and Open Finance establish rules to govern the transfer of personal data among new participants in these activities. Our entities may face risks in managing the process of sharing personal data and could be subject to claims and sanctions if new participants experience security breaches, leaks, or losses of our clients' personal financial information, potentially leading to fraud or allegations of mismanagement of client authorizations.
We employ a variety of physical, procedural and technological safeguards to protect personal information from mishandling, misuse or loss, these safeguards do not provide absolute assurance that mishandling, misuse or loss of the information will not occur, and that if mishandling, misuse or loss of information does occur, those events will be promptly detected and addressed. It is not always possible to deter or prevent employee misconduct, and the precautions we take to detect and prevent this activity may not always be effective. Similarly, when personal information is collected, compiled, processed, transmitted or stored by third parties on our behalf, our policies and procedures require that the third party agrees to maintain the confidentiality of the information, establish and maintain policies and procedures designed to preserve the confidentiality of the information, and permit us to confirm the third party’s compliance with the terms of the agreement. Any failure to
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protect personal information could result in reputational damage and have a material adverse effect on our results of operations and financial condition.
Instability in global or local banking and financial systems could have a material adverse effect on our business, financial condition and results of operations.
Actions by central banks in other countries could adversely impact our operations to the extent that we are unable to benefit from them. Such actions could also lead international investors to limit or withdraw capital from banks in jurisdictions that do not receive similar support, which could impede our access to foreign capital or increase its cost. Any such developments, particularly in Colombia, could materially and adversely affect our business, financial condition, and results of operations.
Our banking subsidiaries may be required to raise additional capital or funding in the future to maintain regulatory capital ratios and provide liquidity to meet commitments and business needs, particularly if asset quality or earnings were to deteriorate. We are subject to the inspection and supervision of the Superintendency of Finance as the financial holding of the Aval Financial Conglomerate and we might be required in the future to raise additional capital to comply with new regulatory adequacy rules applicable to us at the conglomerate level.
Adverse changes in global or local financial systems could increase the cost of funding in the capital markets or borrowings, or reduce the feasibility of refinancing existing debt or issuing new equity or debt required to finance our future projects. Our ability to raise deposits may also be impacted by a change in global or local financial systems, which could make us less successful when competing for deposits or preclude us or our subsidiaries from receiving funds from institutional investors, governments, governmental entities, or other providers of deposits and other funding.
Any occurrence that may limit our and our banking subsidiaries’ access to capital and funding, such as instability in global or local financial systems, or a decline in the confidence of debt purchasers, depositors, or counterparties in the capital markets may adversely affect our capital costs, ability to raise capital or funding, and liquidity. Moreover, we and our banking subsidiaries may need to raise capital when many other financial institutions are also seeking to raise capital, which, in turn, would require us to compete with numerous other institutions for investors. An inability to raise additional capital on acceptable terms, when needed, could have a materially adverse effect on our and our banking subsidiaries’ financial conditions and results of operations.
Our balance sheet management is subject to significant risks that could materially impact our financial condition and results of operations.
Our balance sheet management is subject to significant risks that could materially impact our financial condition and results of operations. One key risk is our dependence on capital markets and external financing. Disruptions in these markets, changes in interest rates, or a deterioration in our credit ratings could restrict our access to funding or increase our cost of capital. This could limit our ability to meet financial obligations, pursue growth opportunities, or maintain an optimal balance sheet structure.
We are also exposed to risks associated with interest rate and currency volatility. Fluctuations in interest rates and foreign exchange rates could affect the value of our assets and liabilities. While we use derivative instruments to hedge certain risks, these measures may not fully offset the impact of market volatility, potentially leading to adverse effects on our financial position. Additionally, our balance sheet could be asset sensitive or liability sensitive, meaning that changes in interest rates could disproportionately affect our interest income or interest expenses. For example, if we are asset sensitive, a decline in interest rates could reduce our interest income more than our interest expenses, negatively impacting net interest margins. Conversely, if we are liability sensitive, rising interest rates could increase our interest expenses more than our interest income, similarly pressuring profitability.
High levels of indebtedness further compound these risks. Servicing our debt requires significant cash flow, which could otherwise be used for operational needs or strategic investments. Moreover, an asset-liability mismatch could arise if the timing of cash flows from our assets does not align with the repayment of our liabilities. Such a mismatch could result in liquidity shortfalls, forcing us to seek additional financing under potentially unfavorable conditions.
Regulatory changes also pose a risk to our balance sheet management. New or stricter requirements related to capital adequacy, liquidity ratios, or leverage limits could compel us to adjust our balance sheet structure. Compliance with these regulations may require us to maintain higher levels of capital or liquidity, potentially reducing profitability or limiting our ability to allocate resources efficiently.
Finally, our balance sheet includes significant exposure to market and credit risks, particularly related to our investment portfolio and receivables. A decline in the credit quality of counterparties or a downturn in financial markets could result in impairments, write-downs, or losses, adversely affecting our financial condition. These risks underscore the importance of proactive balance sheet management and robust risk mitigation strategies.
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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, limited opportunities to unlock value, and challenges in identifying suitable projects for effective capital deployment. Recent external assessments such as Fitch’s decision to affirm the company’s ratings while assigning a negative outlook underscore the heightened vulnerability of its portfolio to regulatory uncertainty, macroeconomic pressures and concentration in concession-related assets, which account for a significant share of its balance sheet. Persistent uncertainty in Colombia’s infrastructure and energy sectors, driven by shifts in government policy and delays or ambiguity surrounding the future pipeline of public-private partnership projects, continues to affect investor sentiment and may inhibit the development of new concession opportunities. In such an environment, portfolio companies may face operational challenges, including financing constraints, rising funding costs, or reduced ability to expand their activities, all of which could negatively influence Corficolombiana’s long-term value creation. Moreover, adverse sector-specific conditions or regulatory setbacks could impair certain investments, potentially requiring divestments below expected valuations or, in extreme cases, exposing holdings to restructuring or insolvency risks. Even if broader economic conditions improve, persistent uncertainty in strategic sectors particularly infrastructure, energy, and regulated industries may continue to weigh on the Corficolombiana performance and the stability of its investment portfolio.
Corficolombiana’s due diligence process for evaluating prospective investments may not identify all risks or ensure investment returns.
Corficolombiana’s due diligence process for evaluating prospective investments may not identify all risks or guarantee successful outcomes. Although Corficolombiana conducts detailed reviews of complex business, legal, financial, environmental, tax and accounting matters, recent developments in Colombia’s infrastructure and energy sectors indicate an environment in which underlying risks may be increasingly difficult to detect or anticipate. Market analyses highlight that uncertainty surrounding the future pipeline of infrastructure concessions driven by delays in new project announcements and greater regulatory ambiguity continues to weigh on investor sentiment and may limit the availability of high-quality investment opportunities. In such a context, the ability to engage external consultants, legal advisors, technical experts or other third-party specialists in a timely and effective manner may be constrained by evolving policy requirements, sector-specific complexities, or the nature of the projects under evaluation.
Even when third-party advisors are involved, due diligence procedures may fail to reveal all operational, financial, contractual, or regulatory risks inherent in prospective investments. Additionally, a relevant portion of Corficolombiana’s future income is tied to construction activities associated with concession projects that will be completed over the coming years. Given current uncertainty around the development of new large scale infrastructure initiatives in Colombia, there is a material risk that Corficolombiana may not be able to originate and initiate replacement projects at the required pace. This could constrain Corficolombiana’s ability to maintain long-term value creation and ensure continuity in its investment and development pipeline, particularly in sectors affected by shifts in government policy or structural delays in new project structuring.
A significant part of Corficolombiana’s investments is 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.
A significant part of Corficolombiana’s investments, representing 28.8% of its total assets (comprising mainly long-term financial assets from concession agreements and unlisted equity instruments), is in relatively illiquid assets. 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. These investments primarily consist of financial assets from concession agreements and unlisted equity instruments. A variety of valuation techniques are used to establish the fair value of these assets, some of which are determined using significant unobservable inputs. The performance of these companies is increasingly influenced by a global and local environment marked by persistent geopolitical tensions, fiscal constraints, and elevated financial market uncertainty.
Corficolombiana may also be adversely affected by lower than expected returns on investments, limited exit opportunities, and challenges in identifying suitable new investments. Corficolombiana’s investments may face operational pressures such as decreased revenues, rising costs, and difficulties accessing capital or debt markets.
Subdued financial performance of these investments may materially and adversely affect Corficolombiana’s current and future operating results and cash flows. The company may be required to divest assets at values below expectations under certain adverse scenarios. Corficolombiana’s investments might face challenges in expanding operations or meeting debt obligations due to uneven economic conditions and lingering inflationary pressures.
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Deterioration in market or sector-specific conditions could result in a portfolio company entering bankruptcy or restructuring, potentially leading to a complete loss of the investment. Even in periods where global sentiment improves, specific industries may underperform due to sector level shocks, evolving geopolitical risks, or shifts in trade and regulatory environments, which continue to be highlighted as material global risks.
Furthermore, Corficolombiana’s due diligence processes, although comprehensive, may not capture all material risks, particularly in a macroeconomic environment characterized by rapidly changing regulatory frameworks, shifting trade barriers, and elevated geopolitical uncertainty. Recent global risk assessments highlight the increasing complexity of evaluating financial, technological, environmental, and geopolitical exposures. Even where external advisors are engaged, incomplete, delayed, or imperfect information may lead to investments whose risk profile or ultimate performance diverges significantly from expectations.
Finally, a relevant portion of Corficolombiana’s revenue continues to originate from construction and infrastructure activities, sectors that in Colombia are experiencing a gradual but uneven recovery. This creates the risk that Corficolombiana may not successfully originate or initiate new projects in time or at sufficient scale to replace income from projects being completed in the coming years.
Corficolombiana currently has and might continue to have minority investments in companies and therefore, it might not control them.
Corficolombiana’s investments include non-controlling equity interests. Those investments will be subject to the risk that the controlling owners of the company, in which the investment is made may take business, financial or management decisions with which we do not agree, and which we may not be able to block. These non-controlling investments are subject to the risk that majority owners could adopt policies, capital structures, or management practices that diverge from Corficolombiana’s preferred approach or risk tolerance. In the present operating environment characterized by tighter financial conditions, elevated interest rate pressures, regulatory unpredictability, and increased scrutiny of corporate governance controlling shareholders may take actions that heighten operational or liquidity challenges within portfolio companies. In addition, Corficolombiana’s minority positions in various companies may limit its influence over the strategic, operational, and financial development of its overall portfolio.
Such dynamics could adversely affect the performance, valuation, or strategic flexibility of these investments, potentially limiting exit alternatives or delaying capital recovery. Furthermore, deterioration in business practices, governance failures, or financial stress within these entities could trigger reputational, legal, or compliance-related risks for Corficolombiana, which may ultimately result in impairments or write downs.
Corficolombiana’s new investment projects depend on its ability to access financing.
Corficolombiana’s investment projects rely heavily on continued access to financing, both at the holding level and through its operating subsidiaries. In the current environment marked by persistently elevated interest rates, reduced liquidity, and constrained access to international capital markets companies across Colombia are facing higher funding costs, shorter tenors, and greater uncertainty in securing new debt or refinancing existing obligations. These conditions heighten the risk that financing for large-scale investments, particularly in infrastructure and energy-related projects, may become more expensive or less readily available.
Additionally, the broader corporate landscape is experiencing the effects of regulatory unpredictability, fiscal pressures, and policy adjustments that have contributed to volatility in credit conditions and reduced visibility over medium-term cash flow planning. As a result, Corficolombiana may encounter delays in obtaining required funding or face materially higher financial costs, which could diminish expected returns, delay project execution, or in extreme cases lead to temporary suspension of investment activities. Such delays could also expose the company to contractual penalties, including those associated with government-linked infrastructure concessions such as highways and toll roads.
If adequate financing cannot be secured on acceptable terms, Corficolombiana’s capacity to pursue new opportunities, support ongoing projects, or respond effectively to emerging business challenges may be significantly constrained.
Most of Corficolombiana’s investments are held in five industries.
Although Corficolombiana’s investment portfolio is starting to diversify into new sectors, it remains concentrated in a limited number of strategic industries, particularly energy and gas, infrastructure, agribusiness, hospitality, and financial services. In the current operating environment where regulatory unpredictability, elevated financing costs, and macroeconomic pressures continue to affect corporate performance sectors such as energy, utilities, and infrastructure face heightened exposure to policy intervention, liquidity stress, and shifting cost structures. This concentration increases the risk that adverse developments within these industries could adversely affect the portfolio, especially in periods of tightening credit conditions or evolving regulatory frameworks.
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Moreover, infrastructure and power-related businesses in Colombia have recently encountered greater operational uncertainty due to policy shifts, potential price controls, and fiscal pressures that influence sector profitability and investment incentives. In such circumstances, the interdependence of these industries may lead to simultaneous performance challenges, reducing portfolio diversification benefits and increasing the likelihood of lower-than-expected returns or potential losses. The prevailing market dynamics and the dominant scale of Corficolombian’s energy and infrastructure holdings in its portfolio continue to amplify concentration-driven risks.
A variety of issues outside of Corficolombiana’s control could affect the timing and performance of its investments, which may result in additional costs and reputational harm to Corficolombiana, reductions or delays in revenues or the payment of liquidated damages.
Corficolombiana’s investments, particularly in the energy, gas, and infrastructure sectors, remain exposed to a wide range of external factors that can materially affect project timing, cost, and performance. In the present environment characterized by elevated operational uncertainty, tighter financial conditions, policy shifts impacting project execution, and heightened scrutiny within regulated sectors’ large-scale engineering, permitting, procurement, and construction activities face increased likelihood of delays, cost overruns, or disruptions. Infrastructure and utility-related companies in Colombia are currently operating under conditions of reduced predictability, where regulatory adjustments, fiscal pressures, and intervention risks can complicate planning and execution across multi-year projects.
Projects may also encounter setbacks stemming from difficulties in securing timely permits, rights-of-way, or regulatory approvals, reflecting a business environment where legal and administrative processes have become more complex and subject to evolving policy frameworks. These challenges are compounded by potential interruptions related to weather, social protests, operational incidents, or other unforeseen events that may impede construction timelines and escalate costs. In the energy and gas sector, Corficolombiana through its participation in gas distribution and transportation, faces inherent operational hazards that can lead to significant financial exposure, particularly during periods of heightened macroeconomic and regulatory uncertainty.
Many of these difficulties and delays are beyond Corficolombiana’s control and could negatively impact its ability to achieve its anticipated return from its investments. Delays and additional costs may be substantial and not recoverable from third parties or insurance providers, and in some cases, may cause substantial financial losses.
Failure to meet project schedules or performance obligations can also trigger penalties including liquidated damages that could exceed anticipated profits. In severe cases, cumulative disruptions may lead to project cancellations, and replacement opportunities may not be available on similar terms. These outcomes could meaningfully affect Corficolombiana’s financial performance, stakeholder relationships, and long-term strategic positioning. Furthermore, certain public concession contracts include provisions for early termination subject to defined conditions which may result in liquidation values materially different from the carrying values recognized by Corficolombiana.
Our investment returns are heavily dependent on the construction phases of leveraged projects, exposing us to interest rate volatility and potential losses upon portfolio rotation.
A relevant portion of Corficolombiana’s revenue continues to originate from construction and infrastructure activities. As these concession projects are completed over the coming years, there is a material risk that Corficolombiana may not successfully originate or initiate new replacement projects in time or at a sufficient scale to replace income. Furthermore, many of our infrastructure and energy projects are leveraged. In the current environment, marked by persistently elevated interest rates and higher funding costs, these leveraged portfolio companies are particularly vulnerable. If the interest rate shock were to be sufficiently exacerbated, these companies could potentially face difficulties meeting debt obligations or expanding operations.
A sizable portion of Corficolombiana’s business is subject to adverse governmental action, regulatory change, termination or even expropriation.
Corficolombiana operates in industries that are subject to significant regulatory oversight, which exposes its investments to the risk of adverse governmental decisions, shifting policy priorities, and regulatory modifications that can directly affect asset values, projected income, and divestment options. In the current environment marked by increased policy uncertainty, ongoing fiscal pressures, and a greater likelihood of abrupt regulatory adjustments companies in highly regulated sectors in Colombia face heightened exposure to government-driven changes that may alter tariff structures, tax burdens, operating conditions, or financial obligations. Such interventions can materially and adversely affect the performance and monetary value of Corficolombiana’s portfolio companies, particularly those in energy, utilities, and infrastructure, where regulatory actions have recently introduced operational stress and reduced financial predictability.
Corficolombiana is also exposed to sovereign-level risks, including the potential for expropriation, nationalization, renegotiation of contractual terms, or restrictions on currency convertibility. These risks are amplified in times of fiscal strain or policy realignment, when governments may resort to unilateral changes such as imposing additional taxes, modifying payment obligations, or applying restrictions on
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certain business activities. Such actions could hinder the ability of Corficolombiana’s portfolio companies to operate effectively, impair cash flows, or constrain the company’s ability to monetize its investments on acceptable terms.
Beyond the direct financial consequences, the perception of regulatory or expropriation risk can negatively affect investor confidence, influence valuation metrics, and impact the company’s ability to attract capital. In cases where expropriation or early termination processes apply particularly in concession-based infrastructure projects the liquidation value or compensation may not align with the book value recorded by Corficolombiana, potentially resulting in economic losses.
Corficolombiana’s new investment projects and ongoing operations depend on its ability to access financing and refinance existing obligations
Corficolombiana’s investment projects rely heavily on continued access to financing, both at the holding level and through its operating subsidiaries. In the current environment marked by persistently elevated interest rates, reduced liquidity, and constrained access to international capital markets, companies across Colombia are facing higher funding costs, shorter tenors, and greater uncertainty in securing new debt or refinancing existing obligations. These conditions heighten the risk that financing or refinancing for large-scale investments, particularly in infrastructure and energy-related projects, may become more expensive or less readily available.
Additionally, the broader corporate landscape is experiencing the effects of regulatory unpredictability, fiscal pressures, and policy adjustments that have contributed to volatility in credit conditions and reduced visibility over medium-term cash-flow planning. As a result, Corficolombiana may encounter delays in obtaining required funding or face materially higher financial costs, which could diminish expected returns, delay project execution, or in extreme cases lead to temporary suspension of investment activities. Such delays could also expose the company to contractual penalties, including those associated with government-linked infrastructure concessions such as highways and toll roads. If adequate financing or refinancing cannot be secured on acceptable terms, Corficolombiana’s capacity to pursue new opportunities, support ongoing projects, or respond effectively to emerging business challenges may be significantly constrained.
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, as amended, the Organic Statute of the Financial System (Estatuto Orgánico del Sistema Financiero), or “EOSF”, Decree 2555 of 2010 issued by the Ministry of Finance, as amended, and any other rule issued by such entity, to the extent applicable, Colombian Corporation Law, including the legal framework applicable to the Financial Conglomerates, considering Porvenir is part of the Grupo Aval Conglomerate. These regulations limit the range of assets in which pension fund administrators, or “AFPs”, can invest the assets under administration and set investment limits based on the type of mandatory pension or severance fund managed each AFP manages. AFPs can manage four types of mandatory pension funds (i) Lower Risk Fund (“Fondo Conservador”), (ii) Medium Risk Fund (“Fondo Moderado”), (iii) High Risk Fund (“Fondo de Mayor Riesgo”) and (iv) Planned Retirement Fund (“Fondo Especial de Retiro Programado”), and two types of severance portfolios (i) Short Term portfolio (“Portafolio de Corto Plazo”) and (ii) Long Term portfolio (“Portafolio de Largo Plazo”). In addition, each AFP is legally required to provide a minimum return on investment for each mandatory of its pension and severance funds. See “Item 4. Information on the Company—B. Business overview—Pension Fund Management—Pension Business Overview”. Pursuant to Law 2381 different pension regimes will coexist for a significant period of time. On the one hand, the regime created by Law 100 of 1993 will still apply for a determinate group of people. On the other hand, the regime created by Law 2381 will apply generally to people not covered by Law 100 of 1993.
However, Law 2381 of 2024 has not yet entered into force. The Constitutional Court of Colombia identified procedural defects in its legislative process within the House of Representatives (Cámara de Representantes) of the Congress of Colombia. Consequently, the Court suspended the law’s effectiveness and ordered Congress to repeat the relevant legislative stage to remedy those defects before the Court could rule on its constitutionality. On June 28, 2025, the House of Representatives corrected the procedural irregularities and submitted to the Court the corresponding compliance report and supporting documentation. However, the Court has been unable to issue a final decision due to pending recusals and challenges, as well as a 4–4 voting deadlock, which required the appointment of substitute Justice Carlos Pablo Márquez to cast the deciding vote.
Until the substitute justice renders his opinion and the Court issues its final judgment, the reform remains suspended, and Porvenir must continue applying Law 100 of 1993. Additionally, the Court might consider delaying the effective date to allow adequate time for the implementation process. Furthermore, Porvenir manages voluntary pension funds (fondos de pensiones de jubilación e invalidez) created by Decree 2513 of 1987 and fully amended by Decree 1207 of 2020 as supplementary savings vehicles for pensions, which are independent from the mandatory pension funds, and benefit from tax incentives. Subject to certain limits, savings in voluntary pension funds are considered as exempt income for purposes of the corporate income tax (Impuesto de Renta) under rules defined in article 1261-1 of the Tax statute. These exemptions have been subject to modifications through tax reforms such as Law 1607 of 2012, Law 1819 of 2016, Law 1943
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of 2018, and Law 2277 of 2022 also known as “Reforma Tributaria para la Igualdad y la Justicia Social”. This law includes specific regulations for voluntary pension funds, in particular with respect to their tax benefits, reducing the limits applicable to deductions of income for the calculation of the income tax. These conditions reduce consumer interest in this type of savings product and have an adverse effect on the management fees received by Porvenir for the administration of these funds.
As a result of the accession process of the Colombian government to become a member country of the Organization for Economic Cooperation and Development (OECD), further regulation amending the current pension fund regulation could be enacted. Future regulations may not provide a favorable business environment and may adversely affect our results of operations and the financial condition of our pension fund management business.
The recent pension reform may impose restrictions on commissions and fees for funds management by Porvenir. This adjustment could impact on the growth and profitability of the pension fund business if future reforms or regulations involve changes to the fee structure within the portfolios.
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. 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.
At the discretion of the Government, authorities may broaden the scope of existing regulations or mandate additional expenditures for current asset allocations or required mandatory investments that may adversely affect our results of operations.
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 consolidated basis and are not subject to regulation or supervision of market risk on a consolidated basis. However, each financial subsidiary undertakes an individual monitoring, assessment and management of such risks through dedicated market risk units and asset liability committees
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 investments of Corficolombiana and the assets managed by Porvenir. 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.
We may not effectively manage risks associated with the replacement of benchmark indices.
Interest rate, equity, foreign exchange rate and other types of indices which are deemed to be “benchmarks,” including those in widespread and long-standing use, have been the subject of ongoing international, national and other regulatory scrutiny and initiatives and proposals for reform. Some of these reforms are already effective while others are still to be implemented or are under consideration. These reforms may cause benchmarks to perform differently than in the past, or to disappear entirely, or have other consequences, which cannot be fully anticipated.
Any of the benchmark reforms which have been proposed or implemented, or the general increased regulatory scrutiny of benchmarks, could also increase the costs and risks of administering or otherwise participating in the setting of benchmarks and complying with regulations or requirements relating to benchmarks. Such factors may have the effect of discouraging market participants from continuing to administer or contribute to certain benchmarks, trigger changes in the rules or methodologies used in certain benchmarks or lead to the disappearance of certain benchmarks.
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Any of these developments, and any future initiatives to regulate, reform or change the administration of benchmarks, could result in adverse consequences to the return on, value of and market for loans, mortgages, securities, derivatives and other financial instruments whose returns are linked to any such benchmark, including those issued, funded or held by us or our banking subsidiaries.
We may be adversely affected by fluctuations between the value of the Colombian peso, and the U.S. dollar as a result of U.S. dollar-denominated indebtedness and assets.
We face exposure to fluctuations in the rate of exchange between the Colombian peso and the U.S. dollar, particularly given the fact that the Colombian peso has historically experienced significant devaluations and depreciations. Fluctuations in the exchange rate between the value of the Colombian peso, and the U.S. dollar may also negatively affect our leverage and capitalization ratios as measured by regulators or by rating agencies.
We are subject to impacts on our statement of income and/or statement of financial position derived from fluctuations of the Colombian peso, in particular, against the U.S. dollar, where most of our foreign long-term debt is denominated, as 8.7% of our consolidated loans for the year ended December 31, 2025 and 7.8% of our consolidated deposits for the year ended December 31, 2025 were foreign currency-denominated.
We are exposed to changes in the values of current holdings and future cash flows denominated in other currencies, as part of our financial business as well as in the non-financial activities of Corficolombiana. For information on hedge accounting please refer to Note 10 of our audited consolidated financial statements.
Fluctuations in the exchange rate between the Colombian peso and the U.S. dollar may affect the value of our debt and investments on our statement of financial position and cause us to recognize gains or losses in our statement of income. Any substantial fluctuation 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 and increase or decrease the peso value of our regulatory capital, risk-weighted assets and goodwill, thereby affecting capital ratios of our banking subsidiaries.
We are subject to trading risks with respect to our trading activities.
Our banking subsidiaries, Corficolombiana, Porvenir and some other subsidiaries are allowed to engage in proprietary trading, and we might 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 and expected losses could result in 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 as well as increases in unrealized losses. 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 and similar regulations in countries in which we operate, impose or might impose limitations on interest rates, and future additional restrictions on interest rates or banking fees could negatively affect our profitability.
The Colombian Commercial Code (“Código de Comercio”) limits the amount of interest our Colombian subsidiaries may charge on commercial transactions, including transactions of our banking subsidiaries. In the future, regulations in Colombia or other countries in which we operate, could impose increased limitations regarding interest rates or banking fees. Law 1430 of December 2010, as amended, authorizes the Colombian government to impose or place limits on tariffs and fees charged by banks and other financial institutions where the government has determined that there is insufficient competition in a relevant market. Additionally, the law requires the Superintendency of Finance to implement a monitoring scheme of the tariffs and fees charged by the financial institutions in their relevant markets and to report the results of this evaluation semi-annually to the Colombian government. The Colombian government issued Decree 4809 of 2011 and Decree 1854 of 2015, which (i) require banks to provide each of their clients with statements of all fees charged to such clients on an annual basis, (ii) set a limit on the fees that banks may charge to their clients for withdrawals from automated teller machines of other banks and (iii) establish 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.
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Local authorities may impose requirements on the ability of residents, including our businesses, to obtain loans denominated in foreign currency.
Under local exchange control requirements, authorities may impose certain mandatory deposit requirements in connection with foreign currency-denominated loans obtained by residents, including our businesses. Future measures or requirements imposed by local authorities, such as mandatory deposit requirements, may adversely affect our and our clients’ ability to obtain loans in foreign currency.
Our businesses 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 and similar regulations in other countries in which we operate, individuals may initiate constitutional actions (acciones populares), or class actions (acciones de grupo), to protect their collective or class rights, respectively. Individuals may also initiate constitutional actions for the protection of their fundamental rights, known as “Tutelas”. Colombian financial institutions, including our banking subsidiaries, Corficolombiana and Porvenir, and other of our businesses 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, such as acquisitions and alliances, inside and outside of Colombia. As part of that strategy, we have acquired interests in various financial institutions in recent years. 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 acceptable 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 could disrupt our operations and adversely affect our operations and profitability.
We may not be able to manage our growth successfully.
As we continue to grow, we must effectively manage our operations across the expanded group by successfully managing our operational, technical and managerial knowledge and compliance systems. 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, technological failures, natural disasters or external events, among others.
The procedures adopted by Grupo Aval’s banking subsidiaries regarding operational risk management were designed to identify and measure the risks to which the entities are exposed in the development of their operations, the establishment of controls for the adequate mitigation of the identified risks and the monitoring of the effectiveness of the system of controls. However, there can be no assurance that the currently adopted procedures will be effective in identifying or appropriately mitigating all of the operational risks we face.
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, transactions and services and products, at a time when transaction processes have become more complex with increasing volumes and increasingly shorter response expectations from our stakeholders. If we are unable to maintain these capabilities, our business operations, financial condition, reputation and results of operations could be materially and adversely affected. A partial or complete failure
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of any of these systems could materially and adversely affect our decision-making process, risk management, internal control systems and quality service, as well as our ability to respond on a timely basis to changing market conditions. Additionally, increased dependency on communications as well as the migration of processes to cloud operations can increase our exposure to IT failures and cybersecurity threats. See “—We are subject to cybersecurity threats”.
In addition, Grupo Aval and our subsidiaries’ ability to remain competitive will depend in part on our ability to upgrade our IT infrastructure and implement digitalization of products profitably through agile methodologies in environments with major planning challenges due to, for example, supply chain difficulties that have arisen over the last year increasing the lead times to obtain hardware. We and our subsidiaries must continually make significant investments and improvements in our and their IT infrastructure in order to ensure the proper functioning of financial controls, accounting and other data collection and processing systems and to remain competitive. Furthermore, as our banking subsidiaries open new branches and channels, they will need to improve their IT infrastructure, including maintaining and upgrading their software and hardware systems and their back-office operations. 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 cybersecurity threats
Cybersecurity threats continue to evolve worldwide, particularly with the emergence of new technologies such as Artificial Intelligence (AI), quantum computing, and the enhanced capabilities of malicious actors who conduct illicit activities more efficiently. We and our subsidiaries allocate significant resources to maintaining and upgrading our systems to implement technologies that protect our networks against cyberattacks. For example, we dedicate considerable effort to reviewing security strategies through committees and technical groups. These groups validate security controls, assess the need for new technologies, optimize existing ones, and explore ways to mitigate emerging threats.
In addition, we and our subsidiaries have made progress in adopting security technologies that strengthen our technical capabilities. In 2025, we acquired and implemented a Security Information and Event Management (SIEM) solution with AI capabilities to optimize the detection and response to potential security threats. Additionally, we are exploring the unification of security services under the Security Service Edge (SSE) framework to protect access and enhance security for end users across our organization. However, we cannot assure you that our investments in cybersecurity will be sufficient to protect us against the threat of cyberattacks.
We frequently experience cyberattacks, including malware and ransomware infections, phishing, and interception of sensitive data in cyberspace and these incidents have required immediate attention from our Computer Security Incident Response Team (CSIRT) and have resulted in temporary interruptions. To date, such attacks have not had a material impact on our business or clients. Depending on the severity of a cybersecurity incident, it must be reported to the relevant Information and IT Security committees, executive leadership, and the Board of Directors of Grupo Aval. Nonetheless, future attacks could be more severe and have a material adverse impact on our business. As financial institutions, we and our subsidiaries are susceptible to cybersecurity risks such as malware, ransomware, computer hackers, disgruntled employees, and other threats that could impact our IT infrastructure and service channels. If a cybersecurity threat were to materialize, it could compromise the safety of our systems and endanger the information of our clients and partners.
See “Item 4. Information on the company—Other corporate information—Technology” and “Item 16K. Cybersecurity”
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, anti-bribery 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 including ultimate beneficial owners identification, aimed at detecting and preventing the use of banking networks for money laundering activities and by terrorists and terrorist-related organizations and individuals generally, who are increasingly using sophisticated methods, such policies and procedures may not completely eliminate instances where they may be used by other parties to engage in money laundering and other illegal or improper activities.
We and our subsidiaries are subject to laws and regulations that prohibit corrupt payments to public officials, including the U.S. Foreign Corrupt Practices Act and Colombian regulations on transnational bribery. We have implemented Corporate Anti-corruption Policies and procedures, which incorporate, among other things, training, reporting channels, monitoring, internal investigations, and sanctions. While this system is designed to prevent and detect corrupt behavior and transactions, it does not completely eliminate the risk that our subsidiaries´ employees, providers, clients or agents may engage in corrupt practices.
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If we or any of our subsidiaries, joint ventures or other affiliates fail to fully comply with applicable anti-money laundering laws, anti-terrorism financing laws, anti-corruption laws and other regulations, the relevant Government authorities to which they report have the power and authority to impose fines and other penalties.
Competition and consolidation in the Colombian 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. Local subsidiaries of international financial institutions have entered the market targeting corporate clients. The businesses of these new credit institutions may affect our market position in the individual, small and medium enterprises and our merchant banking operation. We also face competition from non-bank and non-financial competitors, such as fintechs. Several fintechs have started to develop as nonregulated businesses and subsequently sought lower tier banking licenses (for example as “compañías de financiamiento”), allowing them to receive savings deposits.
Also, the National Development Plan draft presented by the Government in January 2023 has proposed an Open Banking initiative, making it compulsory for banks to deliver the information and data of their customers to other entities, which may represent a competition risk for our business. On April 7, 2026, the Ministry of Finance issued Decree 0368 of 2026, which establishes a mandatory Open Finance system. Under this framework, financial institutions supervised by the Superintendency of Finance are required to share their customers’ financial data with authorized third parties, provided that the customer grants informed consent.
In addition, consolidation in the Colombian financial services industry has increased, which may also increase competition in the markets where we operate. See “Item 4. Information on the Company—B. Business overview—Competition”.
Furthermore, our banking subsidiaries may face challenges as new competitors enter the market or existing competitors may adjust their services with unique product or service offerings or approaches to providing banking services. New entrants could take advantage of regulatory arbitrage to compete with substantially lower cost structures. Non-traditional providers of banking services may offer and/or increase their offerings of financial products and services directly to customers. Several of these competitors may have long operating histories, large customer bases, strong brand recognition and significant financial, marketing and other resources. Technological advances and heightened e-commerce activities have increased consumers’ access to products and services, which has in turn intensified competition among banks and nonbanks in offering loans. Existing competitors and market entrants may adopt more aggressive pricing and rates and devote more resources to technology, infrastructure and marketing. If we are unable to successfully compete with current and new competitors, or if we are unable to anticipate and adapt our offerings to changing banking industry trends, including innovation, digitalization and technological changes, our business may be adversely affected.
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 failure to effectively anticipate or adapt to emerging technologies or changes in customer behavior, including among younger customers, could delay or prevent our access to new digital-based markets which would in turn have an adverse effect on our competitive position and business.
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 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 these factors, individually or collectively, could have a material adverse effect on us.
We depend on our senior management and our Board of Directors, and the loss of their services could have an adverse effect on our business.
We are highly dependent on our senior management teams and Board of Directors 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.
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The loss of the services of any of these members of our, or our subsidiaries’, senior management and members of the Board of Directors, 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 senior management and members of the Board of Directors on a timely basis.
We are subject to reputational risk, and our reputation is closely tied to that of our controlling shareholder, our senior management and members of the Board of Directors, 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 or former employee misconduct, legal and regulatory non-compliance, 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 our controlling shareholder Mr. Sarmiento Angulo, the chairman of our Board of directors, Mr. Sarmiento Gutiérrez, our President, Ms. Maria Lorena Gutiérrez, some of our senior management and our subsidiaries’ senior management and members of the Board of Directors are held in Colombia and the markets in which we operate. Reputation plays an integral role in our business operations, which are based on customer confidence and trust. If the public image or reputation of any of the foregoing is damaged as a result of negative publicity or otherwise, business relationships with customers of Grupo Aval 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 other common, preferred shareholders and ADS holders.
Mr. Sarmiento Angulo beneficially owns 97.9% of our common shares outstanding and 45.4% of our preferred shares outstanding, as of April 10, 2026, and, accordingly, controls our group. See “Item 7. Major Shareholders and Related Party Transactions—A. Major shareholders”. 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 ADSs and underlying preferred shares. In addition to Mr. Sarmiento Angulo’s beneficial ownership through Grupo Aval, as of April 10, 2026, he beneficially owns 8.3% of Banco de Bogotá, 13.3% of Banco de Occidente, 15.5% of Banco AV Villas, 0.8% of Banco Popular and 11.5% 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 financial 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:
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.
In the future we may engage, as we have done in the past, in business and financial transactions with our controlling shareholder and other shareholders that may present potential conflicts of interest between our company and these shareholders. See “Item 7. Major Shareholdersand Related Party Transactions—B. Related party transactions.” 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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Risks relating to our preferred shares and 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. Unforeseen events in international markets, fluctuations in interest rates, fluctuations in oil prices, changes in U.S. and international monetary policies, 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 preferred shares and 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” (U.S.$ 6,976.2), 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 397.1 (U.S.$ 0.11) and 66,000 UVRs = Ps 26,210,098.2 at December 31, 2025). 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 preferred shareholders and holders of ADSs to sell preferred shares underlying the ADSs.
Our preferred shares are listed 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 represent a disproportionately large percentage of the market capitalization and trading volume on the Colombian Stock Exchange. A liquid trading market for the preferred shares or ADSs may not develop on the Colombian Stock Exchange or New York Stock Exchange, respectively. A limited trading market could impair the ability of a holder of preferred shares or ADSs to sell preferred shares (in the case of an ADS holder, 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. In addition, a decrease in the liquidity of our ADR program may also impair investors’ ability to sell our preferred shares or ADSs in the New York Stock Exchange.
An active market for our preferred shares and the ADSs may not continue to develop or be maintained and the market price of our preferred shares and the ADSs may fluctuate in response to numerous factors.
The market price of our 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, or Panama, developments affecting the banking industry, exchange rates, 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. The liquidity of our ADSs and preferred shares could decline and might make it difficult to dispose of investments in our ADSs or preferred shares. Furthermore, common shares may be converted into preferred shares on a 1-1 basis provided that our preferred shares do not exceed 50% of our total subscribed share capital. Preferred shares are available for deposit into the ADS Program. Given that the cost of conversion of our ADSs has been and is expected to remain relatively fixed at U.S.$0.05 per ADS, lower market prices for our ADSs or preferred shares adversely affect conversion costs for investors.
Holders of ADSs and underlying preferred shares 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 are not direct shareholders of our company and are 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. 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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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 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.
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 technical 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 or rights to acquire securities, the depositary is allowed, in its discretion, to sell those securities or rights 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. See “Item 6. Directors, Senior Management and Employees—C. Board practices—Principal differences between Colombian and U.S. corporate governance practices”.
Preemptive rights may not be available to holders of preferred shares or 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 JPMorgan Chase Bank, N.A., 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 or our shareholders, as applicable, could 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 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.
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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.
We are traded on more than one market and this may result in price variations; in addition, investors may not be able to easily move shares for trading between such markets.
Trading in our ADSs on the NYSE or preferred shares on the Colombian Stock Exchange take place in different currencies (U.S. dollars on the NYSE and pesos on the Colombian Stock Exchange), and at different times (resulting from different time zones, different trading days and different public holidays in the United States and Colombia). The trading prices of our shares on these two markets may differ due to these and other factors. Any decrease in the price of our preferred shares on the Colombian Stock Exchange could cause a decrease in the trading price of our ADSs on the NYSE. Investors could seek to sell or buy our shares to take advantage of any price differences between the markets through a practice referred to as arbitrage. Any arbitrage activity could create unexpected volatility in both our share prices on one exchange, and the shares available for trading on the other exchange. In addition, holders of ADSs will not be immediately able to surrender their ADSs and withdraw the underlying preferred shares for trading on the other market without effecting necessary procedures with the depositary. This could result in time delays and additional cost for holders of ADSs.
If holders of ADSs surrender their ADSs and withdraw preferred shares, they may face adverse Colombian tax consequences.
Although Colombian tax law does not specifically refer to the tax consequences applicable to an ADS holder withdrawing the underlying preferred shares, we believe, based on the advice of our Colombian counsel, that such a transaction should not result in a taxable event under Colombian law in the case of non-resident entities and non-resident individuals given the nature of the transaction. Nevertheless, this issue is not free from doubt, and the Colombian tax authorities may have a different interpretation of the law, or the law may change, and the Colombian tax authorities may assess taxes on the conversion of ADSs into preferred shares based upon the difference between the market value of the preferred shares and the adjusted tax basis of the ADSs. Furthermore, an investor who surrenders ADSs and withdraws preferred shares will be subject to income taxes on any gain associated with the sale of such preferred shares if such sale exceeds 10% of the issued and outstanding shares of the listed company during a taxable year.
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 U.S. For example, in Colombia, we are not subject to regulations applicable to financial institutions, although our banking subsidiaries, Corficolombiana, Porvenir and certain of our other subsidiaries are subject to such regulations. Since February 6, 2019, Grupo Aval is subject to supervision as the financial holding company of the Aval Financial Conglomerate. In addition, capital adequacy requirements for banks and financial conglomerates under Colombian regulations differ from those under U.S. regulations and may differ from those of other countries.
Colombia and other countries in which we operate have different corporate disclosure and accounting standards for our industry than those applicable in the United States. Financial reporting disclosure requirements in the jurisdictions in which we operate differ in certain significant respects from those required in the United States. There are also material differences between IFRS (as issued by the IASB) and Colombian IFRS. Accordingly, our separate financial statements may not be the same as the information available to holders of shares issued by a U.S. company. Furthermore, since January 1, 2015, we began preparing our financial statements in accordance with IFRS as issued by the IASB and, as a result, some of our financial data may not be easily comparable from period to period.
Judgments of Colombian courts with respect to our 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
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denominated in a currency other than Colombian pesos may 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 (TRM), 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 incorporated in jurisdictions outside the United States. In addition, our executive offices are located outside of the U.S. 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 (i) 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 (ii) 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 “Item 4. Information on the Company—B. Business overview—Service of Process and Enforcement of Judgments”.
A. History and development of the company
As of December 31, 2025, we are Colombia’s largest banking group based on consumer loans and leading in payroll loans. In commercial loans we also lead in foreign currency, construction loans and micro-businesses. Additionally, we rank first in term deposits and checking accounts. We provide a comprehensive range of financial services and products from traditional banking services, such as making loans and taking deposits, to pension and severance fund management.
Grupo Aval Acciones y Valores S.A. is a “sociedad anónima”, domiciled in Bogotá, Colombia and organized under Colombian laws and regulations. Grupo Aval was incorporated 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. Grupo Aval was created by our controlling shareholder, Mr. Sarmiento Angulo, to consolidate his interests in the Colombian financial sector.
The following are some of the main milestones in the development of the company:
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Since 1999, Grupo Aval’s common shares have traded on the Colombian Stock Exchange under the ticker symbol “GRUPOAVAL”. Our preferred shares have been listed on the Colombian Stock Exchange since February 1, 2011 under the symbol “PFAVAL”. On September 22, 2014, we completed a SEC-registered initial public offering in the United States. Our ADSs began to trade on the New York Stock Exchange, or NYSE, under the symbol “AVAL” on September 23, 2014. Each ADS represents 20 preferred shares. For more information see “Item 9. The Offer and Listing—C. Markets”.
We have also completed three bond issuances in the international market through Grupo Aval Limited fully and unconditionally guaranteed by Grupo Aval Acciones y Valores S.A., in addition to those from our subsidiaries. Two of those were paid in full at maturity. Only Senior Notes due 2030 are outstanding:
In addition, we have completed multiple issuances on the local markets with an outstanding balance of Ps 1,208.6 billion and Ps 1,208.5 billion at December 31, 2025 and December 31, 2024, respectively. The most recent of which was Grupo Aval’s ordinary note issuance in the local market in December 2024 in an amount of Ps 300.0 billion.
See Note 21 of our audited consolidated financial statements for further information on Grupo Aval’s financial obligations from issued bonds.
The SEC maintains an internet website that contains reports, proxy, information statements and other information about issuers, like us, that file electronically with the SEC. The address of that website is www.sec.gov. The Company’s website address is www.grupoaval.com. The information contained on, or that can be accessed through, the Company’s website is not part of, and is not incorporated into, this Annual Report. The Company’s headquarters are located at Carrera 13 # 26A – 47, 23rd floor in Bogotá, Colombia and our telephone number is (+57) (601)743-3222.
B. Business overview
Strategic Framework
During 2025 and the first months of 2026 we conducted a comprehensive strategic planning process to update Grupo Aval’s long-term vision for the 2026–2031 period. This process incorporated internal and external analysis, perspectives from our business leaders, and the global trends shaping the financial industry. As a result, we established a strategic framework aimed at guiding our sustainable value creation over the coming years. In section A we describe our strategic framework which will guide our strategic efforts from 2026 onwards. Section B addresses the progress we made in 2025 in our strategic pillars that come from the previous strategic framework.
A. Grupo Aval Strategy Framework 2026-2031
This framework represents our interest of the Group in achieving true relevance in the markets we are participating, capturing efficiencies and tech development in a structured process, and promoting real impact for all of our stakeholders. It provides the foundation for our long-term aspirations and the main axis (Relevance, Opportunities, Impact) materialize through ten strategic pillars that will orient our strategic evolution across Grupo Aval.
Strategic Axes - Pillars
Our strategy is framed around ten strategic pillars that drive Grupo Aval’s sustainable value creation. These pillars are anchored by three main axes: (1) Relevance, (2) Opportunities, (3) Impact. Each axis has a discrimination on how every strategic initiative will impact our results in the axis. There is a total of 10 pillars that will frame all our strategic efforts from 2026 onwards.
Each axis and pillar are defined as follows:
(1) Relevance: We seek to maximize profitability by strengthening our leadership in the sectors where we operate, fostering long-term client relationships, and ensuring disciplined capital allocation.
(2) Opportunities: We capitalize on opportunities through the achievement of operational efficiencies and synergies, the strategic deployment of technology, and the advanced use of data and innovation.
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(3) Impact: We generate impact by strengthening talent, upholding rigorous corporate governance practices, maintaining comprehensive risk management, and committing to social development and environmental stewardship.
Corporate Reputation and Stakeholder Relations: We build a solid reputation through responsible management rooted in trust-based relationships with all stakeholders.
Our Mission
Drive profitable and socially sustainable growth of the entities that comprise Grupo Aval, promoting through them, the protection of the environment and of the well-being and progress of Colombians, through attractive and innovative offerings, under strict corporate governance standards.
Our Vision
Consolidate our position as the leading financial conglomerate in the Colombian market, recognized for our robustness, profitability, sustainability, innovation and contribution to key economic sectors, thereby maximizing value for our investors and other stakeholders.
Our Corporate Values
1. Our customers always come first
Our customers come first. Every decision we make starts with the customer: we listen with empathy, seek deep understanding, anticipate their needs and expectations, act with conviction, and recognize the impact of small gestures.
2. We deliver results
We deliver on our promises. We are committed to achieving our goals with discipline, excellence, effectiveness, and efficiency, to create real impact for our customers, our companies, and the country. We are driven by the challenge of generating and being accountable for results, creating greater value for our shareholders, investors, and all our stakeholders.
3. We own it
We take on challenges as our own, act with initiative, and stand behind the outcomes. We know things are achieved through effort, and we don’t wait for others to solve them: we act, we resolve, and we move forward.
4. Trust brings us together
We always do the right thing. We act with integrity, honesty, respect, and consistency. We protect our reputation. We believe teamwork produces better results, so we build relationships of trust based on collaboration, where people can speak up, ask questions, disagree, and reach consensus.
5. We keep it simple
We make things happen without overcomplicating them. We grow and take on large projects by focusing on what matters most, eliminating what doesn’t add value, and acting with agility. We trust, delegate, and simplify so that solutions arrive faster and better.
6. We innovate
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We encourage creativity and change. We question, learn, and continuously improve. We dare to try, learn from mistakes, and build on what we’ve learned.
7. Our people, our strength
Our people are Aval’s greatest asset. We foster professional growth, well-being and collaboration in a workplace that is respectful, honest, productive, diverse and high performing. This is how we attract, develop and retain outstanding talent across our group.
B. Progress in strategic pillars – strategy from 2024
Alongside the definition of the new strategic framework, in 2025 we were fully committed to execute and deliver significant progress in the seven strategic pillars defined in 2024. The following section describes how we went forward in each of those pillars:
Our objective is to consolidate our group’s position as a market leader by maintaining a strong and sustainable economic performance, addressing social and environmental aspects, as well as best standards in terms of governance. We will achieve these through financial practices that promote our entities as the main provider of choice, encompassed by a product and service offering focused on delivering the best consumer experiences overtime. We strive to maximize the value generated through a comprehensive strategic management of the entities that comprise the conglomerate, diversifying our revenue sources and creating market dynamics that positively impact on our investors, while contributing to the sustainable development of the communities in which we operate.
In 2025, we made significant steps to strengthen our value proposition by providing technological foundations and the appropriate leverage to capitalize a winning position in the market. Some of these achievements are:
For further information on our market leadership strategic pillar see “Item 4. Information on the company—B. Business overview—Our operations” and “Item 4. Information on the company—B. Business overview—Competition”.
Innovation is a cornerstone of our strategy to drive value across business lines, anchored in a customer-centric approach to developing new ideas, processes, products, and technologies. We have reached key milestones in our digital transformation journey, which is built on three pillars: (1) modernizing existing products, innovating new ones, and digitizing processes, (2) developing new digital assets and enhancing performance, and (3) participating in digital ecosystems.
In 2025, we successfully achieved key milestones in our intention to develop deeper relationships with its customers in a more tech-driven context. Customers are now demanding agility in sales and service, easy to use digital end-to-end experiences, and a whole new set of capabilities that are pushing traditional financial institutions to rapidly evolve. This evolution is intended to compete head-to-head with disruptive new entrants such as fintechs and neo-banks, which don’t carry the burden of legacy systems and processes. In this context, we are improving our customers’ experience by capitalizing on the strength of our evolving digital capabilities. In 2025, sales of products through digital channels accounted for 52.9% of consumer product sales (assets and liabilities). In the same period, the proportion of disbursements made through digital channels increased from less than 2% to approximately 15.5%. Additionally, the number of digital
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customers grew by 13%, reaching 8.1 million in 2025, reaching a 79% digital adoption from a total active customer base of 10.3 million. In 2025 we reviewed our technological strategy aiming toward operational efficiency and excellence based on (i) simpler technological architecture and infrastructure and (ii) leaner operating models and processes.
Our digitalization efforts started in 2017 with the development of key technological capabilities such as Aval Digital Labs (ADL) intended to enhance our competitiveness in a whole new tech-driven environment. From 2020 onwards, demand for digital-base financial services soared and consolidated major shifts in the way financial institutions delivered their value propositions. Since that time, Grupo Aval has continued to strengthen its digital capabilities to enhance customer experience, improve operational efficiency, and support the development of new financial products and services. Across our subsidiaries, we are continuing to expand digital channels, leverage on advanced analytics, and boost artificial intelligence tools to match and exceed expectations from more-than-ever tech demanding customers. Some business fronts where we developed important capabilities are:
GOU Payments
Beyond the creation of a new payments company, GOU Payments constitutes the implementation of a world class technological infrastructure designed to enable a more agile, interoperable, and efficient transactional system nationwide.
GOU Payments enhances our ability to deploy integrated solutions that optimize payments, collections, reconciliation, and real time financing, connecting financial institutions, fintechs, cooperatives, corporates, merchants, and individual clients under a unified operational standard. This strategic development accelerates the adoption of new business models, strengthens system liquidity, and reduces operational friction. More than a technological initiative, it represents an evolution in the way money circulates in Colombia and reinforces our commitment to lead the next phase of the country’s digitalization.
TAG Aval
Aligned with our payments innovation strategy, we advanced the evolution of TAG Aval, which positioned itself as a key enabler for the implementation of the Immediate Payments System (Bre b), led by the Central Bank of Colombia. As of year end, Grupo Aval reached 9.1 million keys, holding 46.4% of the merchant keys market share. TAG Aval facilitates the transition toward interoperable, real time transfers, enabling millions of users to send and receive payments more easily, securely, and efficiently.
Red Aval
We continued strengthening the Red Aval (Aval Network) across our transactional infrastructure, focusing on operational efficiency and user experience. Our network reached 2,738 ATMs and 116,594 banking correspondents, with presence in all departments of Colombia. During the year, we added 1,914 new service points, expanding access to financial services in previously underserved areas.
We also modernized our ATM network by incorporating advanced analytics and artificial intelligence to optimize location, availability, and service levels, ensuring presence where customers need us most. Additionally, we deployed cardless withdrawal solutions supported by secure contact technologies, improving both safety and user experience.
Digital features and capabilities
We advanced in developing low value digital payments through conversational channels such as WhatsApp, expanding transaction options and bringing financial services closer to customers’ daily lives. This solution has shown strong traction, with monthly transaction growth near 30% and monthly value growth around 10%, reflecting increasing adoption and frequency of use.
In addition, we announced a strategic alliance with Microsoft to accelerate the incorporation of artificial intelligence solutions, focusing on sustainable growth, operational efficiency, process optimization, and risk management. Early results include enhanced productivity through Microsoft 365 Copilot, improved customer experience, and new development capabilities supported by low code/no code platforms, all underpinned by a robust cybersecurity strategy.
Aval Digital Lab (ADL)
In 2025, ADL strengthened its role as a strategic partner to Grupo Aval, enhancing the ecosystem’s digital capabilities, while raising the digitalization index of products with digital potential. The organization also advanced its analytics and artificial intelligence capabilities, scaling predictive models for retention, recovery, and origination. These developments boosted digital adoption, contributing to a 2.2% increase in unique digital clients compared to 2024 and sustaining a cumulative 45% growth since 2020.
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As the digital ecosystem matured, ADL continued refining the Mobile Banking App, Online Banking, and Public Portal by integrating higher usability and security standards to offer more seamless user journeys. It also strengthened its digital ecosystems, consolidating their relevance in the country. CarroYa issued over 10,000 credit cards (Av Villas) and tokenized more than 6,000 cards. Club Plateado, launched by Banco Popular and ADL, became Colombia’s first digital ecosystem for the 50+ segment, reaching more than 21,000 members in its first four months.
We seek financial stability and the integrity of the conglomerate while promoting an environment of profitable and sustainable growth across all business lines in which we operate. We work in coordination with the entities that conform the conglomerate to develop the necessary capabilities for a proactive, comprehensive and robust management of risk, allowing us to identify, assess and adequately mitigate financial, operational, strategic and compliance risks, while also considering environmental, social and governance (ESG) aspects, generating value in the short, medium and long term. We constantly monitor changes in the environment to assess our risk position and anticipate their impact on our business.
Grupo Aval employs a risk management process that aims to identify, measure, monitor and control all the risks that fall under our risk management policies. Our subsidiaries must comply with risk related regulations in each jurisdiction they operate. In addition, our corporate risk function develops a consolidated assessment of the risks we take as a group, defines corporate risk policies, leads the effort to set risk appetites for our subsidiaries and oversee the implementation of appropriate risk management controls. We also promote the strengthening of the internal control system, implementing compliance, anti-corruption and SOX compliance programs. In addition, our risk management function coordinates group wide transformational initiatives. For a discussion of our risk management guidelines, see “Item 11. Quantitative and Qualitative Disclosures About Market Risk”.
We monitor and analyze cybersecurity incidents, assess their consequences, take the most appropriate actions to remediate or mitigate a cyber-attack and implement additional controls such as fraud intelligence, strengthening the enrollment process in digital channels, among others. Also, we make sure that our third-party service providers follow our security standards and maintain insurance coverage given the increasing sophistication of cyber-attacks. For further information see “Item 4. Information on the company—B. Business overview—Other corporate information—Cybersecurity” and “Item 16K. Cybersecurity”.
In 2025, we advanced in the consolidation of AVC, the organization designed to orchestrate cross-functional capabilities, build shared infrastructure, and enable a modern operating model that allows the Grupo Aval entities to focus on what matters most: serving their customers better and contributing to the country’s sustainable development.
The role of AVC goes beyond integrating services; it involves building the technological, operational, and cultural foundations that will enable Grupo Aval to evolve with agility, efficiency, and security in an increasingly dynamic environment, transforming digital assets into shared capabilities, generating real synergies, and turning complexity into simplicity.
Throughout 2025, we advanced in consolidating the Synergies Center, initiating operations across key processes such as Property Management, Facilities, Procurement, Payroll, and Talent Acquisition:
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Alongside these initiatives, the Center of Excellence for Hyperautomation was created as a key enabler of digital transformation, integrating technologies such as RPA, BPM, artificial intelligence, and low-code platforms. Initial use cases have demonstrated reductions of up to 80% in operational management times and 90% in data analysis and processing times for key business areas in AVC.
Finally, we advanced in defining a unified cloud migration roadmap for Grupo Aval, as well as in optimizing its technology infrastructure, including data centers and the modernization of the telecommunications network toward automated, software-defined models, strengthening the efficiency, resilience, and scalability of operations. In 2026, we expect to implement this roadmap and begin capturing its associated value.
We focus on taking care of our employees, our most valuable asset. Through proactive talent management, we foster a safe, healthy and enriching work environment, promoting a culture grounded in inclusion, equity and diversity. This culture contributes to the group’s success by aligning employees with the organizational goals and values, while encouraging collaboration, innovation and productivity: We also strengthen a sense of belonging and commitment, prioritizing the well-being and quality of life of our teams and supporting their personal and professional development.
We operate as a pluralistic, equitable and inclusive organization, ensuring equal opportunities for all our employees and recognizing talent based on merit and values, free from discrimination. Our workforce reflects this commitment, with 56% women and 44% men. Within the framework of our Corporate Diversity and Inclusion Policy, we continue to reinforce our commitment to respectful and equitable workplaces. As a result of these efforts, we achieved the Friendly Biz recertification for Grupo Aval and all its material subsidiaries (Banco de Bogotá, Banco de Occidente, Banco Popular, Banco AV Villas, Corficolombiana and Porvenir), reaffirming our best practices in inclusion and respect for diversity.
We aim to attract, develop, and retain the best talent, recognizing that employee contribution and engagement are key drivers of our success. Accordingly, Grupo Aval and its subsidiaries continue to strengthen human capital development through well-being initiatives, training programs, diversity and inclusion efforts, and in-house talent identification. We are also advancing talent retention and promotion policies, supported on transparent goal-setting and objective performance evaluation and compensation frameworks.
In relation to training and development, we continue to promote opportunities for our employees to update level up their knowledge, access tools to adapt to change, and design their professional growth paths. Our programs include technical, organizational culture strengthening, and the "Lineamientos Aval” program, aimed at reinforcing and updating knowledge on key regulatory matters.
We have also invested in the design and implementation of actions that enhance employee well-being and quality of life, contributing to a positive work environment and improved organizational performance. These initiatives include spaces for recreation, sports and health for employees and their families, as well as activities that promote work-life balance.
With the well-being of our employees and their families in mind, we developed “Mi Grupo es Aval”, a comprehensive platform that brings together the benefits of all our entities and strategic allies. Through this initiative, we offer access to exclusive discounts, wellness programs, aid, insurance, educational agreements, financing options, and many other benefits designed to improve the quality of life of those who are part of our group. As of December 31, 2025, Mi Grupo es Aval covered 22,589 employees with more than 22 defined benefits.
At Grupo Aval, our senior management and Board of Directors firmly uphold the commitment to act in full alignment with our Human Rights Policy, Diversity, Equity and Inclusion Policy, occupational health and safety standards, and Code of Ethics and Conduct. Beyond compliance, this reflects a conscious and consistent way of leading, where integrity, respect, inclusion, and responsibility guide every decision and action. We actively promote a culture where ethical behavior, well-being, and respect for people are lived daily across all levels of the organization, strengthening trust with our employees, customers, and stakeholders, and ensuring that our actions are always consistent with our values.
ESG Strategy – Sustainable Return on Equity
At Grupo Aval, sustainability is more than a commitment, it's a core principle that drives our every decision. We are dedicated to building a future where financial strength and social and environmental stewardship go hand in hand, ensuring our positive impact for generations to come. We continue advancing with determination towards our sustainability impacts and goals.
In order to do so we have identified the material and relevant topics for our business and stakeholders through a comprehensive consultation process. Every two years, we update our double materiality assessment and annually we review the material topics with our Board of
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Directors and executive team, considering the national context, regulatory developments, best practices, and industry challenges, among others.
As a result of this process, our double materiality matrix was updated during 2025. A total of 280 stakeholders were consulted, and the following material topics were prioritized in order of relevance: (i) Economical and Profitable performance, (ii) Information security and cybersecurity, (iii) Innovation and Digital Transformation, (iv) Comprehensive risk management, (v) Responsible investment, (vi) Sustainable finance, (vii) Corporate Governance, ethics and compliance, (viii) Climate Change Management, (ix) Generation of social value, (x) Diversity, Equity and Inclusion, (xi) Inclusion and Financial Education. We have also defined our stakeholders and defined the main activities we undertake with them to continue strengthening our relationship and ensure transparent and timely information. These are: Board of directors, subsidiaries, shareholders and investors, employees, media and opinion leaders, government and regulatory bodies, suppliers and community.
We focus on aligning management with material issues, ESG factors, stakeholders and regulatory changes, both globally and locally, within the financial industry.
We also adhere to global initiatives such as UNEP FI, CECODES, PCAF and the UN Global Compact, reinforcing our commitment to sustainable finance and the 2030 SDG Agenda. We prioritized the SDGs most impacted by our activities: Gender equity (SDG 5), Decent work and economic growth (SDG 8), Industry, innovation and infrastructure (SDG 9), Reducing inequalities (SDG 10), Climate action (SDG 13).
In addition, we integrate the highest international standards into our sustainability strategy and performance reporting. We use the Sustainability Accounting Standards Board (SASB) framework to ensure transparency on the ESG issues most relevant to our sector, report under the Global Reporting Initiative (GRI) standards to ensure comprehensive and comparable disclosure and follow the Dow Jones Sustainability Index (DJSI) criteria to assess our sustainability performance against global best practices.
Grupo Aval achieved a historic improvement across the Environmental, Social and Governance dimensions, increasing its overall score by 18 points compared to 2024 and reaching 81/100.
Banco de Bogotá ranked within the Top 10% of its industry with a score of 88/100.
Corficolombiana ranked #1 globally in its industry (Diversified Financial Services and Capital Markets – SF&MC) with a score of 89/100.
Banco de Occidente obtained a score of 66/100, and Promigas achieved a score of 73/100.
We acknowledge our ability to support environmentally sustainable development, participating both directly and indirectly in the structuring, financing and implementation of projects that contribute significantly to building resilience to the physical and transition risks stemming from climate change in the economies where we are present. Moreover, at both individual and corporate levels, we commit to preserving and caring for the environment through responsible use of natural resources and protection of our surroundings. This is achieved by the
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implementation of sustainable business practices, emissions reduction and adoption of environmentally friendly technologies, aiming to minimize our ecological footprint.
In the double materiality analysis carried out by Grupo Aval, we identified that Climate Change Management and Mitigation is one of the main issues we need to address. In this sense, we have developed a roadmap aligned with the TCFD (Task Force on Climate-Related Financial Disclosure) recommendations on governance, strategy, risk management and metrics and targets, as a mechanism for managing the risks and opportunities associated with climate change. This exercise has been also developed by our entities, which due to the nature of their business generate a direct impact on the environment through their loan portfolios and are responsible for measuring and managing physical and transition risks.
We monitor different environmental aspects such as energy consumption, water consumption and waste generation, to develop actions in favor of the conscious use of these resources and their correct management. In this sense, we will continue to implement actions to encourage our employees to adopt responsible consumption habits. For further information see “Item 4. Information on the company—B. Business overview—ESG Strategy.”
Environmental performance
At Grupo Aval, we recognize that environmental sustainability is vital for long-term economic and social development.
We have embedded environmental management into our corporate strategy, promoting responsible practices and supporting initiatives that contribute to the conservation of natural resources. Our approach includes financing sustainable projects, reducing our environmental footprint, and driving the transition to a low-carbon economy. Through strategic partnerships and alignment with international frameworks, we reaffirm our commitment to protecting biodiversity and supporting the well-being of the communities where we operate.
Grupo Aval Holding conducts greenhouse gas (GHG) inventory assessments using the GHG Protocol methodology for Scopes 1, 2, and 3. As for the subsidiaries, we will continue to improve the measurement of the carbon footprint so that all of them can be included in the consolidated report.
Also in terms of climate change risk management, some of our subsidiaries (Banco de Bogotá, Banco de Occidente, Corficolombiana and Porvenir) have defined their strategy according to the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. In 2025, we implemented Grupo Aval’s Climate Strategy, aligned with the objectives of the Paris Agreement and Colombia’s national climate commitments.
In terms of sustainable financing, the combined sustainable portfolios of Grupo Aval’s banks — Banco de Bogotá, Banco de Occidente, Banco Popular and Banco AV Villas — exceeded Ps 46.9 trillion. These resources supported projects in renewable energy, sustainable mobility, energy efficiency, affordable housing, financial inclusion, small and medium-sized enterprise (SME) financing, and social infrastructure.
We are committed to driving inclusive socio-economic development. This entails prioritizing the allocation of resources and specialized knowledge into initiatives that promote equal opportunities and improve the quality of life of communities. Our focus is on providing access to financial services, supporting sustainable ventures and promoting financial inclusion. Additionally, we collaborate closely with key stakeholders, such as national, regional and local governments, non-profit organizations and other private sector entities, to design and implement innovative solutions that address the most relevant social and economic challenges in their environment, aiming to generate a positive and lasting impact on social wellness and human development. In this way, we contribute to the growth and prosperity of the communities we serve.
As part of our commitment to contribute to Colombia’s progress through actions that promote the reduction of inequality and foster an environment of non-discrimination, we have developed initiatives aiming to provide the population with access to the financial sector and improve their living conditions. Innovation has been fundamental to reach an increasing number of customers, and to engage them in responsible financial habits.
Recognizing that the development of the country goes beyond the economic dimension, we carry out social projects aimed at promoting the well-being of the Colombian population, such as “Misión La Guajira.” La Guajira is Colombia’s most vulnerable region, with the highest neonatal mortality rate, the highest death rate due to malnutrition, the lowest rate of access to potable water, and one of the highest poverty indices in the country. We worked in coordination with several Government agencies and ministries to advance structural solutions to La Guajira’s lack of access to energy, potable water, and food security, while designing initiatives intended to be sustainable over time. In 2025, we reached a significant milestone in this initiative and declared “Misión La Guajira: Mission Accomplished,” marking the successful
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completion of the program’s initial objectives and the delivery of its core infrastructure and social interventions. We remain the only economic group in the country to have partnered in a philanthropic initiative of this scale directly with Colombia’s public sector, demonstrating that, when aligned on objectives, it is possible to collaborate constructively with different administrations. Importantly, we continue promoting the long-term sustainability of the project through economic development initiatives for local communities, ensuring that the impact achieved is durable and self-sustaining. We are hopeful that this experience will encourage other economic groups in Colombia to undertake similar efforts in other underserved regions of the country.
Social performance
At Grupo Aval, we believe that sustainable growth goes hand in hand with social progress. We are committed to generating a positive impact by promoting financial inclusion, supporting community development, and fostering diversity, equity, and inclusion within our organization. Through strategic social investments, educational programs, and initiatives that empower vulnerable populations, we contribute to building more resilient and inclusive communities. Additionally, we prioritize the well-being, growth, and development of our employees, ensuring a safe, diverse, and equitable workplace. Our social commitment is guided by our core values and a deep sense of responsibility to the communities we serve.
In 2025, Grupo Aval Holding and its subsidiaries:
Governance performance
At Grupo Aval, we uphold the highest standards of corporate governance as the foundation of our business integrity and long-term success. Our governance framework is built on transparency, accountability, and ethical conduct, ensuring effective decision-making and protecting the interests of our stakeholders. We are committed to maintaining a robust Board of Directors, promoting diversity, and fostering a culture of compliance and risk management across the organization. Through clear policies, robust internal controls, and alignment with international best practices, we drive sustainable value creation and reinforce trust with our investors, clients, and communities.
The Board of Directors sits on the top of our hierarchy for ESG matters, approving the sustainability strategy and corporate policies related to social and environmental issues, including climate change.
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We strengthened our sustainability governance model, creating an ESG committee within the Board of Directors to ensure strategic oversight, alignment with international best practices, and effective management of environmental, social, and governance risks and opportunities. The ESG committee, is composed of three Board members.
In addition, we created the Grupo Aval’s VP for sustainability and strategic projects, that leads the execution of the ESG strategy, its integration into business decisions and coordinated its deployment in Grupo Aval’s different entities.
As part of our corporate governance developments, in March 2025 the General Shareholders’ Meeting reaffirmed the Board structure, maintaining nine principal members without alternates. The current composition of the Board is as follows:
Grupo Aval's current Board demonstrates the expertise, diversity, and background necessary to effectively lead our group, drive sustainable growth, and address emerging challenges, thereby creating long-term value for all stakeholders.
Our operations
As one of the largest banking groups in Colombia, we offer a comprehensive range of financial services that allow us to have diversified sources of income and enhance our profitability. We operate through a multi-brand strategy that enables us to capitalize on the strengths, particular knowledge and best practices of each of our subsidiaries and our qualified and experienced management teams, see “Item 6. Directors, Senior Management and Employees”. We believe this strategy has led us to be well positioned to take advantage of market opportunities derived from economic cycles.
We manage our business through four main operating segments: Banking services, Pension and severance fund management, Merchant banking and our Holding company, which refers to the combined financial statements of Grupo Aval Acciones y Valores S.A. and Grupo Aval Ltd. (see Note 31 to our audited consolidated financial statements for more information).
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Source: Company data at December 31, 2025. Porvenir is held in Banco de Bogotá as follows: 36.5% through Banco de Bogotá and 10.4% through Fiduciaria Bogotá. Porvenir is held in Banco de Occidente as follows: 24.2% through Banco de Occidente and 8.9% through Fiduciaria de Occidente.
In addition to Mr. Sarmiento Angulo’s beneficial ownership through Grupo Aval, he beneficially owned 8.3% of Banco de Bogotá, 13.3% of Banco de Occidente, 15.5% of Banco AV Villas, 0.8% of Banco Popular and 11.5% of Corficolombiana, at April 10, 2026.
On December 31, 2025, 94.6% of our consolidated assets were recorded in our Colombian entities and 5.4% in Panama through MFH. In terms of businesses, 81.1% of our total consolidated assets were from our banking services segment, 17.6% were from our merchant banking segment, and 1.3% were on-balance sheet consolidated assets of our pension and severance fund management segment. On a consolidated basis, Grupo Aval manages Ps 348.9 trillion of on-balance sheet assets, and Ps 469.5 trillion of off-balance sheet assets (assets under management).
We closely monitor the performance of our subsidiaries and the performance of our competitors, promote best practices and create synergies and efficiencies that can be captured across our subsidiaries. We work to improve our market position organically, launch new products to serve new segments, improve our existing product and service offering and have cost-effective channels.
We seek to expand our product and service offerings and diversify our sources of income by focusing on: (i) improving our market share in profitable segments and products in which we have organic growth potential; (ii) launching new products to serve new customers and segments; (iii) enhancing our product and service offerings through digitalization; and (iv) expanding our cross-selling efforts.
Banking services
We provide commercial banking services in the Colombian market through four commercial banks (Banco de Bogotá, Banco de Occidente, Banco Popular and Banco AV Villas). We also provide the core banking products for enterprises and individuals in Panama through banking branches of Banco de Bogotá and Banco de Occidente. In addition to core banking products, we provide a wide complementary portfolio: bancassurance, insurance, trust and fiduciary services, investment banking, bonded warehousing, real estate escrow services, merchandise and document storage and deposit, customs agency, cargo management, surety bond and merchandise distribution services, payment and collection services, and provide deposit and lending operations in foreign currencies.
Our Red Aval (Grupo Aval network) is one of the largest networks of ATMs and branches in Colombia and has been a key element of our competitive positioning in the Colombian market. Customers of any of our banks in Colombia may access Grupo Aval’s other bank branches
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to carry out basic banking transactions throughout our Red Aval (Grupo Aval network). As of December 2025, our network includes 2,738 ATMs, with presence in all departments across the country.
Under our multi-brand strategy, each of our banks focuses on particular types of customers, geographic regions and products. We believe that this strategy has contributed to our financial performance and allowed us to provide an integrated service network to our customers.
Our differentiated multi-brand business model builds on the individual strengths of our banks and the wide recognition of their brands. Each of our banks has developed a focus over time on particular and, to a degree, overlapping market sectors, geographic regions and services and products in Colombia. As a group, we are present in all banking segments and products in Colombia, as shown in the following chart:
Banco de Bogotá, founded in 1870, is Colombia’s oldest financial institution and the third largest bank measured by gross loans with a 12.6% market share at December 31, 2025. It is a full-service bank with nationwide coverage and a comprehensive portfolio of services and products. Banco de Bogotá serves all market segments. While its historic emphasis is on commercial loans for large corporations, the bank has broadened its segment base and product offering in recent years, especially on consumer loans and mortgages. Banco de Bogotá had a 15.3% market share of commercial loans, 10.4% of consumer loans and 10.5% of mortgages, all at December 31, 2025. In funding, the bank had a 12.6% market share of total deposits. Banco de Bogotá had consolidated total assets of Ps 156.2 trillion at December 31, 2025 and a net income attributable to controlling interest of Ps 1.3 trillion for the year ended December 31 2025.
In 2025, Banco de Bogotá pushed the execution of its 2024–2027 strategic plan, designed to reinforce its relevance in the Colombian market, optimize its funding mix with greater participation from individuals and corporations, generate measurable positive impacts for the country, and deliver profitability aligned with shareholder expectations and prevailing market conditions. On those objectives, Banco de Bogotá made significant progress through 2025 as follows:
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The close of 2025 was marked by significant corporate developments aligned with Grupo Aval’s strategic vision. In November 2025, Banco de Bogotá announced the sale of Multi Financial Group (MFG), its principal asset in Panama, to BAC International Corporation. The, transaction was completed on March 18, 2026, following the receipt of all required regulatory authorizations, at a total price of U.S.$464 million (Ps 1,719.7 billion). Additionally, in December, Banco de Bogotá and Banco de Bogotá Panama announced their intention to acquire the retail banking assets and liabilities of Banco Itaú Colombia and its Panamanian subsidiary. Subject to approval by the Colombian Financial Superintendence, this transaction involves approximately 277,000 clients and will enhance operational scale, broaden the product and service portfolio, and strengthen the Bank’s presence in the affluent segment.
Banco de Occidente is the fifth largest bank in Colombia measured by gross loans, with a market share of 7.0% on December 31, 2025. It focuses on mid-size and small and medium-sized (SME) corporate customers, state-owned entities and high net-worth customers which promotes both objectives, a clear strategic commitment to these segments and a diversified revenue stream. As of December 31, 2025, Banco de Occidente had a market share of 9.0% in commercial loans and 6.4% in consumer loans. On deposits, the bank has built a strong presence in checking accounts, achieving a market share of 8.8%. By the end of 2025, Banco de Occidente had total consolidated assets of Ps 88,163.3 billion and a net income attributable to owners of the parent of Ps 574.8 billion for the year ended December 31, 2025.
In terms of market positioning, Banco de Occidente consolidated its competitive leadership in the segments mentioned above and strengthened its transactional ecosystem. In the SME segment, the Bank achieved first place in share of wallet for loan portfolios and collections; in the medium corporate and business segments, it ranked second; and in government current accounts, it secured first place. Additionally, the Bank expanded its share of wallet in loan portfolios for strategic individual segments and positioned itself as one of the institutions with the largest correspondent banking networks in Colombia. On the transactional front, the Bank successfully implemented the Central Bank’s immediate payments system, Bre-B, across its channels, processing 1.7 million transactions during the year.
With a focus on both sustainability and profitability, the Bank strengthened both the sustainability of its business and its impact on the environment. At the consolidated financial level, it achieved a ROE of 9.5% and a solvency ratio of 12.9%. From an environmental and social perspective, the Bank obtained 66 points in the Dow Jones Sustainability Index (up from 48 points in 2024), maintained its carbon-neutral certification, and its Planeta Azul community recorded more than 184,000 visits.
Driving forward its digital ecosystem, the Bank strengthened innovation through new capabilities in biometrics, analytics, artificial intelligence, and large-scale automation. Mobile Banking consolidated its position as the primary channel, incorporating more than 55 new functionalities, while the transactional offering expanded to include digital savings and checking accounts, international transactions, remittances, and Bre-B immediate payments, now also available via WhatsApp. In security, 14,769 companies adopted the virtual token
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within the application. Leveraging advanced analytics, the Bank operated more than 87 machine learning and AI models, deployed over 10 AI assistants and agents, and enhanced operational efficiency with approximately 180 robots, which accumulated 506,000 automated hours.
By reinforcing its identity as both a preferred employer and a trusted brand, the Bank enhanced employee engagement, learning, and customer experience. The Bank strengthened its position as a preferred employer and brand. It achieved first place in Great Place to Work (GPTW), with 99% equity and an employee Net Promoter Score (eNPS) of 97%, reflecting a high level of internal recommendation. The Soy BdO application was launched, engaging more than 6,522 employees. In learning and development, the La U platform recorded over 58,000 courses completed, with 6,841 employees and 1,300 family members actively participating, earning Gold recognition from Brandon Hall Group in Learning and Development. On customer experience, the Bank achieved a Net Promoter Score (NPS) of 64% and improved three positions in the Financial Superintendence’s PQRS (customer requests, complaints, claims and suggestions) ranking, positioning itself as Grupo Aval’s top-performing entity in this indicator.
Banco Popular is the eighth largest bank in Colombia measured by gross loans, with a market share of 3.1% at December 31 2025. The bank operates primarily in the consumer segment with a particular focus in silver economy (serving the 50+ age group) and in public sector businesses as a premier provider of financial solutions to Government entities nationwide. The bank possesses a particular strength in public sector deposits and loans. As of December 31, 2025, Banco Popular had total consolidated assets of Ps 91,590.5 billion and a market share of 7.7% in consumer loans, 1.6% in commercial loans, 0.7% in mortgage loans and 3.4% in deposits. A significant part of its consumer portfolio is made up of payroll loans for pensioners and public sector employees. As of December 31, 2025, the bank had a market share of 19.1% of payroll loans. As a part of its strategy, Banco Popular is diversifying its presence in different consumer products, by strengthening its value proposition and adapting its service model, thus increasing its participation in the retail segment both in terms of loans and funding.
In 2025, Banco Popular continued the execution of its strategy to strengthen its position as a specialized institution serving individuals over 50 years of age, consolidating its focus on the silver economy. The year was marked by the stabilization of its financial performance, reflected in sustained profitability, as well as by the strengthening of its competitive position in the market.
In line with this strategy, the Bank deepened its understanding of the 50+ segment, consolidating a differentiated value proposition that integrates financial products, service experiences, and relationship spaces designed around the specific needs of this population. Key milestones included the launch and renewal of its brand and purpose under the concept “El Banco para el mejor momento de la vida”, as well as the introduction of Club Plateado, a digital initiative offering content, experiences, benefits, and services aligned with the interests and expectations of the segment, extending beyond traditional financial offerings.
Additionally, as part of its strategic development, the Bank continued to strengthen its service channels, incorporating innovative phygital experiences that combine in-person and digital interactions. This approach aims to provide comprehensive support to clients in the segment and enhance their overall service experience.
On funding strategy, Banco Popular strengthened its deposit base in 2025, positioning itself among the institutions with the highest growth in deposits from individuals. This performance was supported by an attractive Savings proposition, increased customer confidence, and sustained improvements in service experience, contributing to a more stable and efficient funding structure.
Finally, on the digital transformation front, the Bank implemented significant enhancements to the functionality and stability of its channels, resulting in fewer incidents and smoother customer experience. Progress was also made in interoperability and immediate payments through the implementation of Bre-B, strengthening transactional capabilities and aligning with developments in the Colombian financial system.
Banco AV Villas is the eleventh largest bank in Colombia measured by gross loans. The bank focuses on services and products such as payroll loans and credit cards, its traditional line of mortgages and factoring in commercial loans. One of its key strengths is its leading in collection and payment services agreements for residential units, temporary service companies and schools. The bank has a broad service network throughout Colombia, with a concentration in Colombia’s central region, including Bogotá and the southwestern region. Banco AV Villas had a market share of 2.5% of deposits, 2.3% of gross loans, 4.5% of consumer loans and 3.0% of mortgages at December 31, 2025. At December 31 2025, Banco AV Villas had total consolidated assets of Ps 21,932.9 billion. The Bank achieved progressive stabilization of its financial statements, evidenced by a consistent reduction in monthly losses and a return to profitability beginning in October 2025 in its separate financial statements.
In 2025, AV Villas progressed the execution of its corporate strategy focused on a Multi-Segment Banking value proposition, with a strong orientation toward formally employed individuals. These actions contributed to an improved balance mix and optimization of the financial margin. Within this framework, the Bank continued to strengthen and innovate its offering to maintain competitiveness, particularly in digital products and channels.
The business model is built on a client-centric approach, around which a segmented service and channel model is structured, supported by technological capabilities, advanced analytics, and the coordinated work of the Bank’s different areas. As part of this value proposition, the
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year saw the introduction and expansion of services and products such as savings pockets with returns, immediate payment transactions through the Bre-B ecosystem, integration of debit and credit cards with digital wallets such as Apple Pay and Google Pay, and the strengthening of offerings directed at the public and institutional sectors.
From a brand and organizational culture perspective, AV Villas consolidated its position under the concept of Co-Banking, promoting financial education initiatives linked to the new Bre-B ecosystem. Additionally, the Bank launched its Diversity, Equity, and Inclusion (DEI) program, aimed at fostering a more inclusive and diverse organizational culture in which all individuals feel recognized, valued, and respected.
Corporate customers
Our banks provide services and products to public and private sector customers. Our banks segment their corporate customers into separate categories based principally on their annual revenues. We believe that these customer classifications, which are specific to each bank, allow our entities to tailor their services and products to the needs of each customer classification sector. The following table presents the number of corporate customers that our banks served at the dates indicated.
Banco de
Banco
Banco AV
Bogotá(1)
Occidente
Popular
Villas
aggregate(2)
(in thousands)
Total corporate customers, as of:
December 31, 2025
246.0
84.8
7.9
92.9
431.6
December 31, 2024
238.8
86.6
8.5
90.4
424.3
Total active corporate customers, as of:
127.4
42.7
31.8
209.8
123.2
46.4
31.5
209.7
Individual customers
Our banks classify their individual banking customers into separate categories based principally on income. The following table presents the number of individual customers that our banks served at the dates indicated.
Corficolombiana
Total individual customers, as of:
9,301.2
1,182.9
1,569.3
5,578.0
411.7
18,043.2
8,929.4
1,220.3
1,576.4
5,489.6
383.3
17,599.1
Total active individual customers, as of:
4,019.1
880.9
869.4
1,100.9
7,282.0
3,979.2
951.2
855.0
1,168.1
7,336.8
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Lending activities
We classify our banks’ loans into the following categories: commercial, consumer, microcredit and mortgages. The following table presents our total loans, net at December 31, 2025.
At December 31, 2025
Operating segments
Banking
Pension and Severance
Merchant
Services
Fund Management
Holding(1)
consolidated(2)
Commercial
110,489.5
1,389.6
982.6
110,086.5
Commercial loans
108,718.1
1,383.5
108,309.0
Interbank and overnight funds
1,771.4
6.1
1,777.5
Consumer
59,293.2
1,163.0
60,456.2
Mortgages
22,094.2
17.5
22,111.7
Microcredit(3)
1.5
Total gross loans
191,878.4
2,570.1
192,655.9
Loss allowance
(8,333.7)
(96.4)
(1.3)
(8,430.0)
183,544.7
2,473.7
981.3
On December 31, 2025, the aggregate outstanding loans to our banks’ ten largest borrowers, our 11th to 50th largest borrowers and our 51st to 160th largest borrowers, represented 5.2%,7.2% and 8.5%, respectively, of our consolidated total gross loan portfolio.
Commercial loan portfolio: consists of general purpose loans (loans with a maturity of over one year), working capital loans (loans with a maturity of up to one year), leases, loans funded by development banks, corporate credit cards and overdraft loans. Loans funded by development banks are loans granted to customers and focused on specific economic sectors and are funded by national or international government or government-related institutions. Interbank and overnight funds are short-term borrowings mostly entered into between banks. The following table presents our commercial loan portfolio at December 31, 2025.
General purpose loans
82,502.7
80,975.4
Working capital loans
10,886.2
10,884.9
Leases
11,048.7
12,428.2
Loans funded by development banks
3,557.8
3,298.3
Overdrafts
377.9
Credit cards
344.9
344.4
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Consumer loan portfolio: consists of payroll loans, personal loans, automobile and other vehicle loans, credit cards, overdrafts, leases, and general purpose loans. A payroll loan is a type of loan where payments are deducted directly from an employer’s salary. The following table presents our consumer loan portfolio at December 31, 2025.
Holding
consolidated(1)
Payroll loans
33,023.1
Personal loans(2)
14,827.4
15,990.3
6,814.8
Automobile loans and leases
4,361.0
209.4
44.6
13.0
Consumer loans
We provide credit card services to our bank customers mainly through the Visa and MasterCard networks. The following table presents the number of activated issued credit cards of our banks in Colombia at the dates indicated.
Activated Issued Credit Cards
December 31,
Banking subsidiaries in Colombia
Banco de Bogotá
1,122,569
1,229,118
Banco de Occidente
451,703
503,362
Banco Popular
157,991
176,878
Banco AV Villas
417,401
445,620
Total activated issued credit cards
2,149,664
2,354,978
Mortgages portfolio: In Colombia, Banco de Bogotá, Banco de Occidente and Banco AV Villas are our main originators of loans to customers for the purchase of real estate secured by mortgages. We have implemented strict underwriting standards: we do not offer mortgage loans in amounts greater than 70% of the value of the property to be purchased. The weighted average maturity of the Colombian mortgage loan portfolio at December 31, 2025 was 194 months (contractual life at the time of origination). Borrowers must also meet certain minimum income levels, and payments may not exceed 30% of the borrower’s monthly income in compliance with Colombian regulation.
Treasury operations
Our banks’ treasury departments are responsible for managing their proprietary trading activities, liquidity and distribution of treasury services and products to customers. Our banks’ proprietary trading activities include fixed income trading, derivatives and foreign exchange operations. We do not have any proprietary trading activities in equities and each of our banks has implemented trading activities policies. Our banks also take deposits from financial institutions as part of their treasury operations. These deposits are represented by certificates of interbank deposit, or “CDIs”, and earn interest at the interbank deposit rate. Banco de Bogotá and Banco de Occidente have active treasury operations, while Banco Popular and Banco AV Villas have smaller operations.
Deposits
Our banks offer traditional deposit services and products, including checking accounts, savings accounts, time deposits and other deposits. Checking accounts typically bear low or no interest. Checking accounts and savings accounts are payable on demand, although a significant portion of these accounts tend to be stable in amount over time. Moving on to our time deposits, 75.4% have maturities below 12 months and commonly earn interest at a fixed rate. The following table presents our deposits by product type at the dates indicated.
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Checking accounts
23,898.8
23,598.2
Savings accounts
89,324.2
1,404.9
88,238.5
Time deposits
88,082.1
7,598.3
95,105.9
Other deposits
460.1
0.9
462.5
201,765.3
9,004.2
Distribution channels
Our banks provide services and products to their customers through our network. Each of our banks manages its own distribution network. In 1998, we created Red Aval (Grupo Aval network) in Colombia, which allows customers of any of our banks to make transfers, payments and undertake other basic banking functions in the networks of our other banks, through traditional channels and electronic networks, with results posting in real time to the accountholder’s bank with no additional fees. Red Aval (Grupo Aval network) services vary for each channel. In Panama, we serve our customers through a diversified distribution network that includes branches, ATMs, a standardized online banking platform, call centers and mobile phone banking.
The following table describes the main channels of our distribution network.
Distribution Channel
Description
Full-service branches
Full-service branches act as part of our sales network and allow our bank customers to perform check cashing, deposits, savings account withdrawals, loan and credit card payments, transfers and advances. In Colombia, our clients can perform transactions of any of our banks at any of our branches thanks to the integration provided by Red Aval (Grupo Aval network).
ATMs and electronic service points
Through our ATMs, all of our bank customers can, among other services, consult their balances, execute loan and credit card payments, perform transfers and advances, and pay for certain third-party services where we have a payment collection agreement in place (such as utility service companies).
Payment collection centers (centros de pagos)
Payment collection centers allow our customers to pay for certain third-party services where we have a payment collection agreement in place (such as utility service companies).
Banking correspondents (corresponsales bancarios)
Our banks enter into agreements with various third parties, including convenience store owners, to provide all of our bank customers with certain services, which can include checking and savings account withdrawals, account balance consultation, loan and credit card payments, transfers and advances, and payments for certain third-party services where we have a payment collection agreement in place (such as utility service companies).
Automated telephone banking, mobile banking and online banking
Through our banks’ websites, mobile banking services and automated telephone banking, customers may pay loan and credit card balances, make transfers between accounts and make payments for collection agreements originated in any of our banks.
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During 2025, we continued optimizing our footprint by either closing, relocating or adapting branches to increase the effectiveness of our distribution network. The following table presents our total full-service branches in Colombia at December 31, 2025 and 2024.
Change, December 31, 2025 vs.
#
%
404
412
(8)
(1.9)
168
175
(7)
(4.0)
178
(4)
(2.2)
200
231
(31)
(13.4)
996
(50)
(5)
We continued optimizing our ATM footprint by either closing, relocating or adapting ATMs to increase the effectiveness of our distribution network. The following table presents our total ATMs in Colombia at December 31, 2025 and 2024.
1,527
1,555
(28)
(1.8)
269
562
592
(30)
(5.1)
380
417
(37)
(8.9)
ATMs
2,833
(95)
(3)
The following table presents our other points of service in Colombia at December 31, 2025 and 2024.
31,880
27,763
4,117
14.8
82,819
90,003
(7,184)
(8.0)
107
109
(2)
1,788
2,210
(422)
(19.1)
Other points of service(1)
116,594
120,085
(3,491)
In 2025, our transaction mix continued shifting toward digital channels. As such, successful monetary transactions through non-physical channels accounted for 41.8% of total transactions in 2025, 9.3% more than in 2024. Our mobile banking transactions in continue to show increasing signs of adoption, growing by more than 50% in the year. The following tables present volumes for successful monetary transactions processed through our distribution channels and their share of total transactions, in Colombia for Grupo Aval, at the dates indicated.
% of total transactions for the year ended
Branches
51,964
59,540
(7,576)
(12.7)
9.4
11.9
98,333
114,617
(16,284)
(14.2)
17.8
22.9
Banking correspondents and other
171,365
164,368
6,997
4.3
31.0
32.8
Online banking
61,485
52,545
8,941
17.0
11.1
10.5
Mobile banking
169,704
110,465
59,239
53.6
30.7
22.0
Automated telephone banking
(11.6)
0.0
Colombia
552,864
501,549
51,315
10.2
100.0
59
Trust activities and portfolio management services
Grupo Aval had traditionally operated in this business line indirectly through its subsidiaries. However, after a strategic review of Grupo Aval’s non-banking revenue sources, in 2024 we decided to strengthen our asset management service offering. This implied Corficolombiana exited from its financial businesses and focused exclusively on its non-financial businesses. In that sense, on December 2024, Grupo Aval acquired 94.5% of the common shares of Fiduciaria Corficolombiana (currently Aval Fiduciaria) from Corficolombiana. Additionally, Grupo Aval acquired 40.77% of the common shares of Casa de Bolsa (currently Aval Casa de Bolsa) from Corficolombiana and Organización Pajonales. Both Aval Fiduciaria and Aval Casa de Bolsa are reported under the banking services segment. The following table presents the assets under management (AUM) of Grupo Aval’s four trust and fiduciary services companies at the dates indicated.
(in billions)
Aval Fiduciaria
63,136.5
62,799.9
336.6
0.5%
Fiduciaria Bogotá
77,312.5
68,166.1
9,146.3
13.4%
Fiduciaria de Occidente
48,611.2
46,326.2
2,285.0
4.9%
Fiduciaria Popular
9,243.3
8,188.2
1,055.1
12.9%
Grupo Aval aggregate
198,303.5
185,480.5
12,823.0
6.9%
Through our four trust and fiduciary services companies, we participate in all fiduciary activities with a higher concentration in management, warranty, real estate and collective investment, as shown in the table below.
Administration
91,678.6
91,277.0
401.7
0.4%
Private equity
9,001.1
7,591.4
1,409.7
18.6%
Collective investment
26,001.6
22,571.4
3,430.2
15.2%
Voluntary pension
33.1
36.8
(3.7)
(10.0)%
Warranty
27,308.0
26,658.5
649.4
Real estate
26,031.1
25,546.6
484.5
Investment
8,675.8
2,578.0
6,097.8
236.5%
Social security
9,574.2
9,218.4
355.7
Other social security
2.3
(2.3)
(100.0)%
Total
Investment banking
Since 2005, following the merger of Corficolombiana S.A. and Corfivalle S.A., Corficolombiana’s investment banking division was created. This business line played an active role in structuring multiple debt transactions and providing corporate advisory services on restructurings, as well as in the capital markets. In 2020, Corficolombiana’s investment banking division began a process of strategic alliances with our banks, which strengthened its revenue levels and market depth, leading it to participate increasingly in multiple high-impact transactions.
The creation of Aval Banca de Inversión in 2025 was the result of an alliance between Grupo Aval (70%) and Corficolombiana (30%), which made it possible to combine efforts, credentials, technical expertise, and reach. This was driven by the fact that the growth of Corficolombiana’s investment banking division was significant (revenue growth of up to 10x from 2020 to 2025) and it made sense to spin it off into a standalone vehicle. In less than one year of operations, Aval Banca de Inversión achieved Ps 25.1 billion billing levels, consolidating it as one of the leading investment banks in the country by transaction type and revenue.
60
Merchant banking
Corficolombiana is the largest merchant bank in Colombia based on total assets at December 31, 2025. Corficolombiana focuses on two lines of business: (1) equity investments in strategic sectors of the Colombian economy, including infrastructure, energy and gas, agribusiness and hospitality and (2) treasury operations. As mentioned above, Corficolombiana exited the trust activities and portfolio management services and the investment banking businesses. Corficolombiana had consolidated total assets and shareholders’ equity attributable to owners of the parent of Ps 61,508 billion and Ps 13,151 billion, respectively, at December 31, 2025. Net income attributable to owners of the parent was Ps 471,667 billion for the year ended December 31, 2025.
Corficolombiana’s business model is based on the premise of investing in businesses in strategic sectors of the Colombian economy. Corficolombiana’s equity investment strategy is to target acquiring and holding controlling or substantial stakes in strategic businesses. These investments enable Corficolombiana to exert influence or control over these businesses’ operations and to promote revenue growth, operational efficiencies and optimization of the capital structures.
Corficolombiana is regulated as a merchant bank (corporación financiera) by the Superintendency of Finance. Under Colombian law, a merchant bank is permitted to hold equity ownership positions in both financial and non-financial companies, unlike banks, which may only invest in financial companies. See “Item 4. Information on the Company—B. Business overview—Supervision and regulation”.
Corficolombiana’s asset distribution by sectors
Corficolombiana primarily invests in four sectors of the Colombian economy: energy and gas; infrastructure; agribusiness and hotels. It generally seeks to invest in businesses with leading market positions, strong cash flows and growth potential.
The following table provides information regarding Corficolombiana’s consolidated assets distributed by sectors at December 31, 2025.
Financial
Energy and
Services &
Gas
Infrastructure
Others
Hospitality
Agribusiness
Total assets(1)
21,415
27,850
10,182
1,385
676
61,507.9
As a percentage of total assets
34.8%
45.3%
16.6%
1.1%
100.0%
Corficolombiana’s main investments in the energy and gas sector include a 50.9% controlling stake in Promigas S.A. E.S.P., the second largest natural gas pipeline and distribution company in Colombia, and a minority stake in Grupo Energía Bogotá S.A. E.S.P, or “GEB”, an electricity and gas group. Promigas is included in our consolidated financial statements as it is under our “control” as defined in IFRS 10. On July 2025, Corficolombiana, Promi CFC S.A.S., and CFC Gas Holdings S.A.S. entered into the Promigas Shareholders’ Agreement to provide for Corficolombiana to directly control Promigas.
Corficolombiana’s infrastructure investments are concentrated mainly in toll road concession projects, a sector in which it is a leading private investor in Colombia. The main investments of Corficolombiana in the infrastructure sector include Proyectos de Infraestructura S.A.S. (Buga-Tuluá-La Paila), Concesionaria Vial de los Andes S.A.S. (Bogotá-Villavicencio), Concesiones CCFC S.A. (Fontibón-Los Alpes, concesión contract ended March 27, 2024), Concesionaria Panamericana S.A.S. (Los Alpes-Villeta and Chuguacal-Cambao), Concesionaria Vial del Pacífico S.A.S. (Ancón Sur-Bolombolo or “Conexión Pacífico 1”), Concesionaria Nueva Vía al Mar S.A.S. (Mulaló-Loboguerrero), Concesionaria Vial Andina S.A.S. (Bogotá-Villavicencio) and Concesionaria Vial del Oriente S.A.S. (Villavicencio-Yopal).
Corficolombiana also has investments in the hospitality sector, including controlling stakes in Hoteles Estelar de Colombia S.A. and Promotora y Comercializadora Turística Santamar S.A.
Finally, Corficolombiana’s main investments in agribusiness are centered in production of palm oil, rubber, rice and cotton mainly through Unipalma S.A., Valora S.A. and Organización Pajonales S.A.
For information on Corficolombiana’s consolidated lending and deposit taking activities see “Item 4. Information on the Company—B. Business overview—Commercial Banking”.
61
Treasury businesses
Corficolombiana is a relevant participant in Colombian capital markets, both in sovereign and corporate debt securities and foreign currency-denominated securities. It is also an active participant in the derivatives market, and an active market maker for Colombian sovereign debt securities. At December 31, 2025, Corficolombiana had consolidated total fixed income assets of Ps 7,261.6 billion.
Pension and severance fund management
Porvenir is controlled by and consolidated under Grupo Aval. Porvenir is the leading private pension and severance fund management business in Colombia, based on assets under management, with a 45.9% market share of assets under management at December 31, 2025. Pension funds provide individual savings for retirement, while severance funds provide temporary income to employees who become unemployed. Through Aportes en Línea, Porvenir manages social security related information systems designed to provide its clients with efficient payment solutions.
For the year ended December 31, 2025, 45.7% of Porvenir’s revenues were derived from mandatory pension funds, 23.3% from severance funds, and 8.4% from voluntary pension funds. Porvenir derived the remaining 22.6% of its revenues from a combination of the profitability of its own investment portfolio, stabilization reserves and other income.
The following table presents a breakdown of Porvenir’s assets under management at the dates indicated. Favorable capital market conditions throughout 2025 drove the 14.9% increase in the volume of funds managed by Porvenir, which in turn positively affected returns on the stabilization reserve.
Mandatory pension funds
250,716.9
218,233.3
32,483.6
14.9
Severance funds
12,668.3
10,806.3
1,862.0
17.2
Voluntary pension funds
7,770.9
6,757.8
1,013.1
15.0
Third-party sponsored pension funds
3.5
253.0
(249.5)
(98.6)
Total assets under management
271,159.7
236,050.4
35,109.2
The following table presents a breakdown of Porvenir’s clients at the dates indicated.
11,984.3
11,750.1
234.2
2.0
5,928.3
5,687.7
240.6
4.2
162.9
150.4
12.5
Total clients
18,075.5
17,588.2
487.2
2.8
Porvenir’s investments
Porvenir is required to own at least 1.00% of the funds it manages that are subject to a minimum return, known as the stabilization reserve. This stabilization reserve represents 71.0% of Porvenir’s proprietary investments. In addition, Porvenir holds voluntary investments. Revenues related to Porvenir’s stabilization reserve and its proprietary portfolio represented 20.8% and 21.2% of its total revenues for the years ended December 31, 2025 and December 31, 2024, respectively.
Porvenir attracts new individual customers mainly through its direct sales force (569 individuals) with direct report to five regional sales managers located in Bogotá, Antioquia, the Southern Region, the Eastern Region and the Northern Region. At December 31, 2025, Porvenir had 49 offices, 5 service modules and 52 electronic service centers. It maintains a presence in all regions of Colombia through its service agreements with Grupo Aval’s banks.
62
Competition
Commercial banking
We are one of the largest financial banking groups in Colombia. We believe that this result has been achieved due to our banks’ historically strong franchises, results-oriented philosophy and their disciplined risk management approach; all of which has been supported by our multi-brand business model.
The following market share and other data comparing us and our banking subsidiaries to our competitors in the Colombian market is based on information derived from the combined separate financial information reported to the Superintendency of Finance by our 4 commercial banks based on Colombian IFRS. Our main competitors in Colombia are Bancolombia, Davivienda and BBVA Colombia, which are the other three leading banking groups. Average balances are calculated using the 13 end-of-month average balances from December 2025 to December 2024. Grupo Aval figures reflect aggregated amounts of our separate banking subsidiaries in Colombia.
The following table shows ROAA, ROAE, efficiency ratio and Colombian market share information of our Colombian banking subsidiaries, our aggregate operation and our principal competitors in accordance with Colombian IFRS on a separate basis.
At and for the Year ended December 31, 2025
Grupo Aval entities
Rest of the
BBVA
Colombian
Aggregate (1)
Bancolombia
Davivienda
market
(in percentages)
ROAA(2)
1.0
0.7
-0.3
2.5
1.3
0.4
ROAE(3)
7.7
9.5
0.6
-3.4
6.8
21.5
12.3
Cost to income(4)
52.8
82.3
77.8
59.1
47.5
56.6
55.9
56.4
Cost to assets(5)
2.7
4.7
3.0
3.9
2.9
4.9
Market share in Colombia:
Net income
8.9
3.8
0.1
-0.4
44.8
12.9
3.2
26.8
12.6
7.1
3.4
27.3
14.4
21.9
Gross loans
7.0
3.1
25.0
27.8
16.0
20.3
Assets
12.8
25.5
24.8
8.2
4.1
19.3
13.1
9.0
46.0
11.7
2.1
21.0
33.3
5.8
Source: Company calculations based on separate information published by the Superintendency of Finance. Figures relating to branches and ATMs of Grupo Aval’s entities are derived from internal data.
At December 31, 2025, we had the second largest market share of gross loans in Colombia, with a 25.1% market share. We have a strong presence in commercial loans and in consumer loans (particularly in payroll loans, in which we had a 42.2% market share at December 31, 2025).
The following table presents a breakdown of the market share of our gross loans and that of our competitors by category at December 31, 2025.
63
At and for the December 31, 2025
Bogotá
Aggregate
Gross loans:
Corporate
8.1
1.8
1.2
26.1
31.4
13.9
10.0
18.6
Enterprises
17.1
7.2
26.3
28.5
11.4
12.4
SMEs and Microbusiness
21.3
5.2
0.5
27.5
30.5
22.6
Government
4.6
1.1
23.0
46.3
10.4
13.4
6.9
Construction
19.2
14.7
37.0
23.3
4.8
8.7
Factoring
5.6
9.7
-
24.2
32.5
22.1
19.0
Financial and Institutional
1.9
18.0
49.2
8.8
13.3
10.7
Financial Leasing
15.4
0.2
24.6
54.6
12.1
5.4
Local currency commercial loans
14.5
1.7
36.1
13.2
9.6
Foreign currency commercial loans
24.5
35.3
16.1
31.7
6.4
15.3
1.6
27.0
34.5
14.6
Payroll lending
19.1
7.6
42.2
7.4
7.5
20.2
22.8
Credit Cards
17.4
16.6
27.7
Personal loans
5.5
3.3
30.3
23.9
Automobile
24.1
25.3
9.8
33.9
0.3
19.5
15.7
4.5
28.9
20.1
12.0
13.8
25.2
Indexed to UVR
44.2
36.0
9.9
Not indexed to UVR
0.8
19.9
20.4
28.6
Mortgages and housing leases
17.3
24.0
29.7
Microcredit loans
95.5
Source: Company calculations based on separate information published by the Superintendency of Finance.
The following table presents a breakdown of the market share of our gross loans and that of our competitors, broken down by product or segments of clients, within each loan category at December 31, 2025:
At December 31, 2025, consumer loans represented a larger share of our total gross loans than that of most of our principal competitor banks, and we had a higher concentration of payroll loans. The table below presents the total gross loan mix by categories, and the mix of products or segments within each category at December 31, 2025.
64
36.9
43.1
42.6
36.5
34.4
35.8
40.2
48.6
6.0
5.1
9.1
16.2
6.7
3.6
11.8
10.3
18.1
6.3
33.2
15.6
5.3
4.0
20.7
2.2
5.9
19.8
18.3
87.6
91.2
98.0
98.5
89.9
96.4
83.2
94.7
94.4
10.1
16.8
67.2
27.1
56.1
64.7
45.1
37.1
32.0
41.8
96.6
66.6
14.2
57.1
35.1
16.7
2.6
11.0
22.2
45.0
39.9
28.4
19.7
10.9
5.0
11.6
7.3
5.7
68.9
20.8
2.4
92.4
94.1
97.6
72.2
81.7
91.3
91.0
14.3
14.0
For the year ended December 31, 2025, we had similar average yields on gross loans relative to our main peers, particularly in commercial loans. In consumer loans, our average yield is lower than that of our peers, which are less focused on payroll lending, due to the product’s nature. Payrolls reprice slower and have lower average yields relative to other unsecured products (personal loans, credit cards and automobile loans) due to the secured nature of its payments (payroll or pension allowance deduction) and a longer contractual term at disbursement. The table below presents the average yield on gross loans across the Colombian market at December 31, 2025.
Average yield on Commercial loans
10.6
Average yield on Consumer loans
15.1
13.5
13.7
Average yield on Mortgages loans
Average yield on Microcredit loans
11.2
23.4
23.8
Average yield on gross loans
12.2
65
Loan Portfolio Quality
We believe that the credit quality of our gross loans compares favorably against our main competitors. The following table presents credit quality metrics for our gross loans and that of our competitors at the dates indicated.
Loans past due more
Loans rated
Gross provision
Net provision
Allowance / loans
than 30 days / gross
C, D, E
expense / average
past due more
loans
/ gross loans(1)
gross loans(2)
gross loans(3)
than 30 days
Colombian IFRS
For the year ended December 31, 2025
107.0
134.9
169.3
125.2
3.7
120.8
160.8
93.7
BBVA Colombia
131.7
Rest of the Colombian market
6.2
121.6
At December 31, 2025, we had the second largest market share of total deposits in Colombia, with a market share of 25.7%. At the same date our principal competitors—Bancolombia, Davivienda and BBVA Colombia—had market shares of 27.3%, 14.4% and 10.8%, respectively.
66
The following table presents a breakdown of market share of deposits by type of deposit at December 31, 2025.
At and for the December 31, Year Ended
Deposits:
Individuals
Government (non-financial)
57.2
21.4
6.6
Financial Institutions
37.6
Other Legal Entities
23.5
26.5
Legal Entities
27.6
Local currency
1.4
11.3
23.1
Foreign currency
55.3
55.6
32.3
29.1
26.4
21.6
50.3
24.7
39.7
30.4
33.0
11.5
25.1
12.7
52.2
42.3
32.9
9.3
32.1
25.4
36.3
16.3
38.0
21.1
7.8
39.0
21.8
22.7
43.3
67
Other deposits(1)
Total deposits
At December 31, 2025, deposits from legal entities represented a larger share of our total deposits than that of most of our principal competitor banks, and we had a higher concentration of government entities and financial institutions. The table below presents the total deposits mix by categories, and the mix of segments within each category at December 31, 2025.
68
aggregate
4.4
9.2
17.9
24.4
73.5
58.6
98.4
78.0
69.9
87.3
94.2
66.4
93.4
92.7
95.9
95.6
90.8
92.0
79.0
99.7
97.3
82.8
99.9
14.1
27.4
25.9
15.8
49.3
42.4
40.0
33.7
31.2
29.9
23.2
61.3
58.4
85.0
56.9
62.6
82.6
93.0
57.7
80.4
72.6
74.1
84.2
50.7
57.6
60.0
66.3
99.4
99.1
99.8
48.3
50.5
45.3
41.1
41.2
41.4
28.1
18.9
26.0
61.2
25.8
46.5
6.5
30.2
69.2
89.8
73.8
80.6
84.9
60.2
69.4
71.9
81.1
71.5
73.9
74.0
38.8
54.7
74.2
53.5
89.0
93.8
94.8
94.3
47.8
29.6
47.2
40.8
42.0
47.7
40.9
69
At December 31, 2025, checking accounts represented a larger share of our total deposits than that of most of our principal competitor banks, and we had a higher concentration of government entities and financial institutions. The table below presents the total funding mix, deposit mix and average rate paid on total funding across the Colombian market at December 31, 2025
Average rate paid on funding:
Average rate paid on Checking Accounts
Average rate paid on Savings Accounts
Average rate paid on Time Deposits
Average rate paid on deposits
Average rate paid on other funding(1)
8.4
Average rate paid on total funding
Source: Company calculations based on information published by the Superintendency of Finance.
Through our banking subsidiaries, we have the largest branch network in Colombia, with 946 branches and 2,738 ATMs at December 31, 2025. The following table presents the distribution of branches and ATMs across the market at December 31, 2025.
# of branches
Market share %
# of ATMs
19.3%
17.5%
643
13.1%
5,218
33.3%
620
12.6%
2,796
17.8%
443
9.0%
1,392
8.9%
2,262
46.0%
903
5.8%
70
The following market share and other data comparing us and our trust and fiduciary services subsidiaries to our competitors in the Colombian market is based on information derived from the combined separate financial information reported to the Superintendency of Finance by our 4 trust and fiduciary services subsidiaries based on Colombian IFRS. Our main competitors in Colombia are Fiduciaria Bancolombia, Alianza Fiduciaria and Fiduciaria Davivienda.
At December 31, 2025, we had the largest market share of AUM in Colombia, with a 24.3% market share. We have a strong presence in administration fiduciary, collective investment and real estate. The following table presents the market shares of the main market participants in the trust and fiduciary services business with respect to AUM at December 31, 2025.
At and for the year ended December 31, 2025
Fiduciaria Bancolombia
Alianza Fiduciaria
Fiduprevisora
Fiduciaria Davivienda
BBVA Asset Management
Assets under management:
18.2
20.9
17.6
46.1
35.7
23.6
22.3
15.2
65.3
22.5
39.5
34.9
59.8
45.4
27.2
24.3
16.9
For the year ended December 31, 2025, we had the largest market share in terms of fees, with an aggregate 21.2% share of the Colombian fiduciary market. The following table presents the market share of fees in the fiduciary businesses, relative to the system:
71
Fees:
31.9
37.5
Investment Funds
47.0
29.0
50.0
Trusts
21.2
Aval Casa de Bolsa was the seventh largest stockbroker in Colombia in terms of assets at December 31, 2025. Aval Casa de Bolsa faces competition from local and global banks focused on stock brokerage as Credicorp Capital, BTG Pactual, Corredores Davivienda, Acciones y Valores and Valores Bancolombia. The following table presents the market shares of Aval Casa de Bolsa and its principal competitors by assets, liabilities, equity and net income at and for the year ended December 31, 2025.
Liabilities
Equity
Aval Casa de Bolsa
Credicorp Capital Colombia S.A.
40.7
BTG Pactual
Valores Bancolombia S. A.
Corredores Davivienda S.A.
Acciones y Valores S. A.
Corficolombiana was the largest merchant bank (corporación financiera) in Colombia in terms of assets and equity at December 31, 2025. Corficolombiana faces competition from local and global banks focused on merchant and investment banking. Bancolombia, through its subsidiary Banca de Inversión Bancolombia S.A., is Corficolombiana’s largest local competitor. Corficolombiana also faces competition from global banks with local investment banking operations. In addition, as an equity investor, Corficolombiana faces competition from other equity investors such as hedge funds, private equity firms and others.
The following table presents the market shares of Corficolombiana and its principal competitors by assets, liabilities, equity and net income at and for the year ended December 31, 2025.
80.7
97.0
Banca de Inversión Bancolombia S.A.
BNP Paribas Colombia Corporación Financiera S.A.
Corporación Financiera GNB Sudameris S.A.
78.9
Corporación Financiera Davivienda S.A.
(0.6)
72
Source: Information published by the Superintendency of Finance.
Porvenir is the leading private pension fund manager in Colombia in terms of assets under management. Porvenir’s principal private competitors are other pension fund managers, including Protección, Colfondos and Skandia. Based on separate data prepared under Colombian IFRS, at December 31, 2025, Porvenir was the most efficient pension and severance fund manager in Colombia, with an efficiency ratio of 38.2%.
The following table presents the market shares of the main market participants in the private pension and severance fund management business with respect to assets under management and individual customers at December 31, 2025, as well as net income for the year ended December 31, 2025.
Porvenir
Protección
Colfondos
Skandia
Individual customers to pension funds:
Mandatory
61.8
Severance
55.0
35.4
Voluntary
62.7
58.1
8.6
47.6
48.4
20.5
42.8
45.9
35.6
Net income:
52.7
28.3
Source: Information published by the Superintendency of Finance for private pension and severance fund managers. Information does not include data from third-party pension liability funds, which does not comprise a material portion of the market. Net income calculated under Colombian IFRS.
Other corporate information
Technology
The corporate technology vice-presidency of Grupo Aval is responsible for defining, governing, and enabling our technology and digital strategy in alignment with business objectives, regulatory requirements, and long-term value creation.
It establishes the strategic direction, standards, and governance frameworks for technology, data, cybersecurity, and digital capabilities across Grupo Aval, while overseeing the implementation of technology strategies by individual entities and shared service platforms.
The Vice Presidency focuses on strengthening operational resilience, cybersecurity, data governance, and regulatory compliance; enabling scalable and secure digital platforms; and fostering innovation through cloud, architecture modernization, data and artificial intelligence.
Through a centralized governance model and shared capabilities, the Corporate Technology Vice Presidency drives synergies, standardization, efficiency, and cost discipline, while supporting digital transformation, improving customer experience, and ensuring the availability, security, and integrity of critical systems and information assets.
Technological Transformation in 2025:
During 2025, the organization continued upgrading its hardware and software tools, focusing on strengthening resilience and service responsiveness. This effort was accompanied by the sustained evolution of the digital portfolio, optimization of operating costs, and reinforcement of its cybersecurity and information protection posture.
Key Technological Milestones
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Technological capabilities were implemented to support the operation of GOU Payments, including the launch of Bre-B. The necessary infrastructure for certification as a Node of the immediate payments system was also completed, pending official validation by the Central Bank.
The processing model for Aval is being redefined with the introduction of the AVAL Hybrid Cloud concept, with the goal of achieving 99.999% service availability by design and positioning the organization as a regional benchmark .
Card tokenization was completed, enabling the successful integration of services such as Apple Pay, Google Pay, Visa, and MasterCard across our main banks.
The Open Finance strategy was reviewed, surpassing regulatory requirements and generating competitive advantages through a differentiated value proposition. Progress was made in implementing secure architectures and APIs for the safe exchange of financial data.
During 2025, Grupo Aval advanced the structured adoption of artificial intelligence (“AI”) across its operations as part of a broader enterprise transformation agenda. Unlike traditional, function-specific deployments, the Company is pursuing an integrated, enterprise-wide AI strategy, embedding AI capabilities across customer-facing processes, risk management, fraud prevention, and core operational workflows, with a focus on enabling real-time decision-making at scale.
To support this approach, Grupo Aval has established a centralized AI governance framework at the corporate level, designed to ensure consistency, control and scalability across all its financial entities. As part of this framework, the Company created a Data and Analytics Governance Committee, chaired by our Chief Executive Officer, with the mandate to oversee the strategic direction, governance, and responsible adoption of AI and data capabilities across the organization. This framework includes defined policies, oversight bodies, and model risk management practices aligned with internal control standards and applicable regulations, incorporating principles of data governance, model validation, explainability, ethical use, and human-in-the-loop supervision, supported by centralized monitoring and reporting capabilities.
In addition, the Company is developing a unified data and analytics architecture to enable secure data access, real-time insights and cross-entity intelligence, which is expected to enhance the effectiveness of AI models and reduce fragmentation risks typically associated with decentralized implementations.
Grupo Aval performs ongoing risk assessments related to the use of AI technologies, including risks associated with data quality, bias, cybersecurity, privacy, and regulatory compliance. The Company’s approach emphasizes risk-aware innovation, seeking to balance the adoption of advanced technologies with robust control environments and operational resilience.
While AI is expected to drive improvements in efficiency, customer experience and risk management, the implementation of these technologies remains subject to evolving regulatory frameworks, technological limitations and execution risks, and there can be no assurance that the anticipated benefits will be fully realized.
Strategic Alignment and Talent:
A new version of the digital transformation strategy was developed, aligned with the corporate strategy and centered on the customer and value proposition. This approach is supported by emerging technologies, innovation, and the consolidation of world-class talent.
Intellectual property
Grupo Aval actively manages and protects its intellectual property through the strategic registration and monitoring of its brands and trademarks. This approach aligns with Grupo Aval’s marketing and commercial strategies in each operating country. Grupo Aval dedicates ongoing efforts to evaluating the potential for registering and renewing its trademarks in key markets like Colombia, the United States, Mexico, and across South and Central America. These actions directly support Grupo Aval’s overall business strategy. Aval’s vigilance extends to proactively monitoring competitor activity. The Company continuously assesses and, if necessary, objects to third-party registrations in the region that could create confusion or mislead the public due to similarities with its logos and branding. As of today, the Company’s commitment to intellectual property protection is reflected in:
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This robust portfolio lays the foundation for a strong and recognizable brand presence across the region, fostering trust and clarity for our customers and stakeholders.
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Selected statistical data
The following tables present select statistical information in accordance with subpart 229 1400 (1401-1406) of Regulation S-K.
On November 27, 2025, Banco de Bogotá’s subsidiary Multi Financial Holding, Inc. entered into a share purchase agreement with BAC International Corporation, a subsidiary of BAC Holding International Corp., based on the foregoing, as of December 31, 2025, the subsidiary Multi Financial Group is presented in the statement of Financial Position as a non‑current asset held for sale and liabilities directly associated with the assets classified as held for sale, generating a discontinued operation in the statement of Profit or Loss for the years 2025, 2024 and 2023. On March 18, 2026, following the receipt of all required regulatory authorizations, the sale of Multi Financial Group, Inc. to BAC International Corporation was completed.
For the years ended December 31, 2025, 2024 and 2023, the results of discontinued operations are presented separately on the consolidated statement of income; however, following the reclassification of a non‑current asset held for sale and liabilities directly associated with the assets classified as held for sale, no retrospective adjustments are permitted to be made to the prior period consolidated statements of financial position under IFRS. To facilitate meaningful analysis and comparability, average statement of financial position balances prior to the reclassification, including as used to calculate average yields and average rates, excluding balances associated with Multi Financial Holding, Inc. in order to enhance comparability of continuing operations. This approach is applied solely in the calculation of statistical measures (including average balances, yields and rates) and does not modify or represent an adjustment to historical financial position amounts in accordance with Article 11 of Regulation S-X, and all information presented under “Item 4. Information on the Company — Selected statistical data” refers to financial data of continuing operations, unless otherwise specifically noted. For more information about the impact of the sale agreement, please refer to “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Principal factors affecting our financial condition and results of operations—Transactions related to MFG”. note 13.A. “Assets and Liabilities Classified as Held for Sale of Multi Financial Group.” and Note 13.B. “Discontinued Operation Related to Multi Financial Group.” to our audited consolidated financial statements.
Distribution of assets, liabilities and equity, interest rates and interest differential
Average statement of Financial Position
For the years ended December 31, 2025, 2024 and 2023, the following table presents:
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Average statement of financial position and income from interest-earning and non-interest-earning
assets for the years ended December 31,
Interest
Average
income
balance
earned
yield
ASSETS
Interest-earning assets
Fixed Income Investments
Domestic
35,817.3
2,949.8
31,768.2
2,604.7
28,616.8
2,298.2
Interbank and overnight funds (2)
3,285.8
591.5
2,435.4
785.6
2,879.1
1,055.8
36.7
Loans
185,594.4
22,377.8
177,104.7
23,581.6
168,701.1
24,297.7
Loans, interbank and overnight funds
188,880.1
22,969.4
179,540.2
24,367.2
13.6
171,580.2
25,353.5
Total interest-earning assets
224,697.4
211,308.4
200,197.0
Total non-interest-earning assets
92,506.7
83,319.0
76,782.9
Total interest-earning and non interest-earning assets
317,204.1
294,627.4
276,979.9
(1) For comparative purposes only, the amounts presented exclude, where applicable, assets associated with discontinued operations as of December 31, 2025, 2024 and 2023 (Ps. 20,033.0, Ps. 20,005.5 and Ps. 21,509.1, respectively).
(2) Reflects operations involving common short-term interbank funds, repurchase transactions (repos), simultaneous operations and transactions involving the temporary transfer of securities.
Average statement of financial position and expense from interest-bearing and non-interest-bearing liabilities and
equity for the years ended December 31,
expense
paid
interest rate
LIABILITIES AND EQUITY
Interest-bearing liabilities
Interest-bearing checking accounts
5,910.9
226.8
5,287.0
245.2
5,830.2
236.9
82,056.3
4,499.3
74,897.5
5,396.4
68,543.4
5,929.0
77
91,542.7
8,363.4
82,843.1
8,971.7
73,982.9
9,545.8
Total interest bearing deposits
179,509.9
13,089.6
163,027.6
14,613.2
148,356.6
Interbank and overnight funds (1)
19,931.8
1,597.2
16,851.8
1,649.6
12,068.5
1,842.1
Borrowings from banks and other
24,526.7
1,818.6
23,969.7
2,105.0
25,802.7
2,153.3
Long-term debt
22,834.8
1,542.5
22,849.8
1,676.6
24,566.7
2,049.3
Total interest-bearing liabilities
246,803.2
18,047.9
226,698.9
20,044.5
210,794.5
21,756.4
Non-interest-bearing liabilities and equity
72,394.6
69,782.6
68,016.2
Total non-interest-bearing liabilities and equity
319,197.8
296,481.4
278,810.7
(1) For comparative purposes only, the amounts presented exclude, where applicable, liabilities associated with discontinued operations as of December 31, 2025, 2024 and 2023 (Ps. 18,039.3, Ps. 18,151.4 and Ps. 19,678.3, respectively).
Analysis of Changes in Volume and Rate on Interest Income and Interest Expense
The following table shows the changes in our interest income (interest-earning assets) and interest expense (interest-bearing liabilities) between the changes in average volume and changes in average yield (interest-earning assets) and average rates (interest-bearing liabilities) for the year ended December 31, 2025 compared to the year ended December 31, 2024 and the year ended December 31, 2024 compared to the year ended December 31, 2023. Volume and rate variances have been calculated based on variances in average balances over the period and changes in interest rates on average interest-earning assets and average interest-bearing liabilities as follows: (a) changes in volume (change in volume times new rate) and (b) changes in rates (change in rate times old volume). Net changes attributable to changes in both volume and interest rate have been allocated to changes in volume. You should read the following tables and the footnotes thereto in conjunction to our observations noted in “—Average statement of financial position”.
2025 - 2024
2024 - 2023
Increase (decrease)
due to changes in
Volume
Rate
Net change
Interest-earning assets:
333.5
345.1
258.4
48.1
306.5
153.1
(347.2)
(194.1)
(143.1)
(127.0)
(270.2)
Loans - Client portfolio
1,023.6
(2,227.4)
(1,203.8)
1,119.0
(1,835.1)
(716.1)
Total interest-earnings assets
78
1,544.4
(2,597.1)
(1,052.7)
1,418.3
(2,098.1)
(679.8)
(42.3)
(18.4)
(25.2)
33.5
Saving accounts
392.5
(1,289.6)
(897.1)
457.8
(990.4)
(532.6)
794.8
(1,403.0)
(608.2)
959.5
(1,533.7)
(574.1)
246.8
(299.2)
(52.4)
468.2
(660.7)
(192.5)
41.3
(327.7)
(286.4)
(161.0)
112.7
(48.3)
(1.0)
(133.1)
(134.1)
(126.0)
(246.8)
(372.8)
1,470.2
(3,466.8)
(1,996.6)
1,406.3
(3,118.2)
(1,712.0)
(1) Reflects operations involving common short-term interbank funds, repurchase transactions (repos), simultaneous operations and transactions involving the temporary transfer of securities.
Interest-earning assets – net interest margin and spread
The following table presents average balances of interest-earning assets as well as our yields on our average interest-earning assets, net interest earned, net interest margin and interest spread of continuing operations for the years ended December 31, 2025, 2024 and 2023.
For the years ended December 31,
Total average interest-earning assets
Gross interest earned
Net interest income (2)
Average yield on interest-earning assets
Net interest margin (3)
Interest spread on loans (4)
Interest spread on total interest-earning assets (5)
Investment portfolio
The following tables summarizes the weighted average yield for each range of maturities by category of debt securities at fair value through OCI and at amortized cost as of December 31, 2025.
As of December 31, 2025, the assets related to Multi Financial Group are no longer included in the information presented in these tables. Accordingly, the tables are aligned with the presentation in the Consolidated Statements of Financial Position, where such assets are reported in a single line item within “Non-current assets held for sale”. For further information, see note 13.A to the audited consolidated financial statements included elsewhere in this annual report.
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80
Investments in debt securities at fair value through OCI
In one year or less
After one year through five years
After five years through ten years
After ten years
Average Yield % (1)
Peso-denominated
Securities issued or secured by the Colombian government
Securities issued or secured by Colombian government entities
Securities issued or secured by other financial entities
Total weighted average yield, peso-denominated
Foreign currency-denominated
Securities issued or secured by foreign governments
US government and agencies
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Total weighted average yield, foreign currency-denominated
Total Average Yield debt securities at fair value through OCI, net
(1) The weighted-average yield is computed using the internal rate of return, or “IRR”, as of December 31, 2025.
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Investments in debt securities at amortized cost
Average Yield % (1) (2)
Total Average Yield debt securities at amortized cost, net
(2) As of December 31, 2025, the assets related to Multi Financial Group were no longer presented line-by-line on the Consolidated statements of Financial Position and were instead reported in a single line item within “Non-current assets held for sale”. For further information, see note 13.A to our audited consolidated financial statements included elsewhere in this annual report.
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Loan portfolio
Maturity Profile of the Loan Portfolio
The following table presents the maturities of our loan portfolio as of December 31, 2025.
After one
After five
In one
year through
years through
After
year or less
five years
15 years
35,634.4
35,455.7
9,880.9
792.8
1,507.0
998.5
9,129.7
1,583.0
172.2
225.9
118.3
3,117.6
6,890.8
2,371.6
Total commercial
51,055.7
45,554.8
13,423.5
52.5
3,523.3
3,114.1
177.4
4,166.5
10,233.5
1,584.1
9,652.0
21,190.8
Automobile and vehicle loans
1,165.8
2,878.9
316.2
123.9
79.4
Total consumer
11,207.2
25,964.9
23,274.7
920.1
3,119.1
10,086.3
5,132.0
19,257.5
199.7
583.4
1,501.3
569.8
2,854.2
Total Mortgages
1,119.8
3,702.4
11,587.7
5,701.8
Microcredit
Total loan portfolio
63,383.5
75,222.2
48,286.5
5,763.7
The following table presents our loan portfolio due after one year and within one year or less as of December 31, broken down between fixed and variable rates.
Loans with maturity of one year or less
Variable rate:
38,975.6
Fixed rate:
24,408.0
Total loans with maturity of one year or less
Loans with maturity of more than one year
52,455.3
76,817.1
Total loans with maturity of more than one year
129,272.4
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Credit Ratios
The following table presents our credit ratios for the years indicated, adjusted where applicable to exclude the impact of discontinued operations:
Commercial (1)
1.8%
0.6%
Net charge-off during the period
1,917.4
1,171.3
576.5
Average amount outstanding
106,233.2
103,309.2
97,531.0
5.9%
7.2%
3,461.2
4,128.1
3,371.1
58,995.6
56,995.3
56,395.6
100.1%
6.5%
173.5
270.7
0.3%
142.1
71.0
20,362.9
16,626.8
14,503.8
Total domestic
5,523.3
5,381.7
4,014.2
177,104.5
(1) Reflects charge-offs of commercial loans entered into with clients, in the ordinary course of our business charge-offs for interbank and overnight funds are not usual.
For a discussion of Grupo Aval’s net impairment loss on financial assets see “Item 5. Operating and Financial Review and Prospects—A. Operating Results”.
See Note 4.1.5. “Risk Management” to our audited consolidated financial statements for the breakdown of allowance for credit losses by each loan category.
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The following table presents our average interest-bearing and non-interest bearing deposits by category for the periods indicated, adjusted where applicable to exclude the impact of discontinued operations:
Average statement of financial position and expense from interest-bearing and non-interest-bearing liabilities
for the years ended December 31,
Interest-bearing deposits
Non-Interest-bearing deposits
Non-interest-bearing checking accounts
17,385.3
16,699.5
16,756.7
Others deposits
514.0
600.2
Total non-interest bearing deposits
17,899.4
17,044.6
17,357.0
197,409.2
180,072.2
165,713.5
The following table presents the amount of uninsured deposits by geography:
At December 31, 2025 (1)
Barbados…...............................
1,121.4
Colombia…...............................
170,452.3
7,748.9
178,201.2
Panamá....................................
7,206.2
Total....................................................
16,076.5
186,528.8
(1) Includes uninsured: checking accounts, saving accounts, time deposits and other deposits.
The following table presents a maturity profile of our uninsured time deposits by geography:
3 months or less....................................
19,785.0
3,521.5
23,306.5
Over 3 through 6 months..............................
11,148.2
1,286.8
12,435.0
Over 6 through 12 months............................
29,067.5
230.1
29,297.6
Over 12 months...........................
17,748.3
17,755.0
77,749.0
5,045.1
82,794.1
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Barbados
183.4
192.0
334.7
162.3
872.5
Panamá
1,783.5
1,000.5
1,152.5
743.8
4,680.3
Supervision and regulation
Colombian Banking Regulators
Pursuant to the Colombian constitution, the Colombian congress has the power to prescribe the general legal framework within which the Government and other authorities may regulate the financial system. The Colombian constitution also permits the Colombian congress to authorize Government intervention in the economy by statute. The agencies vested with the authority to regulate the financial system are the Board of Directors of the Colombian Central Bank, the Colombian Ministry of Finance, the Superintendency of Finance, the Superintendency of Industry and Commerce and the Securities Market Self-Regulatory Organization.
Central Bank
The Colombian Central Bank exercises the customary functions of a central bank, including price stabilization, legal currency issuance, regulation of currency circulation, credit and exchange rate monitoring and administration of international reserves. Its Board of Directors is the regulatory authority for monetary, currency exchange and credit policies, and is responsible for the direction and execution of the Colombian Central Bank duties. The Colombian Central Bank also acts as a lender of last resort to financial institutions.
Pursuant to the Colombian constitution, the Colombian Central Bank is autonomous and independent from the government in the formulation of monetary policy and currency exchange and credit policies. Specifically, the Constitution provides administrative, technical, budgetary and legal autonomy for the Colombian Central Bank and its board with respect to monetary, credit and foreign exchange matters. The Colombian Central Bank reports to the Colombian congress. Its board has seven members: one member is the Minister of Finance and Public Credit, one member is the General Manager of the Colombian Central Bank, and the other five members, who are full-time employees, are appointed two at a time by the President of Colombia for four-year terms that can be extended. In 2024, the General Manager of the Colombian Central Bank, who has held the position since 2021, was reappointed for another four-year term, set to end in 2028. Additionally, in January 2025, the President of Colombia removed two directors and appointed two new members to the board.
Ministry of Finance
The Ministry of Finance designs, coordinates, regulates and executes economic policy, seeking to create an optimal administration of public finances for the economic and social development of the country. The Ministry of Finance regulates all aspects of finance, securities and insurance activities, pursuant to powers conferred by the Colombian Constitution. As part of its duties, the Ministry of Finance issues decrees mainly related to financial, taxation, customs, public credit and budgetary matters that may affect banking transactions in Colombia. In particular, the Ministry of Finance is responsible for regulations relating to financial institutions’ capital adequacy, risk limitations, authorized transactions, disclosure of information and accounting.
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According to Decree 4172 of 2011, the “Unidad Administrativa Especial, Unidad de Proyección Normativa y Estudios de Regulación Financiera” (“URF”), an independent unit of the Ministry of Finance is responsible for preparing and drafting any new financial, monetary, credit, securities, foreign exchange and insurance regulation to be issued by the Colombian government.
During 2025, the URF remained active in drafting financial sector regulations; however, this regulatory activity resulted in fewer final issuances compared to 2024. Together with the Ministry of Finance, five decrees were issued during the year: (i) Decree 0034 of 2025, which regulates collaborative financing, including project classification, financing modalities and transaction-management mechanisms; (ii) Decree 0573 of 2025, which amends the Greatest Exposures regime by (1) excluding public collateral-provider companies from the regime, (2) permitting banks to deduct from their Greatest Exposures (Grandes Exposiciones) calculation investments in other financial entities belonging to the same financial conglomerate (a possibility previously limited to the consolidating entity), and (3) reducing the Risk-Weighted Assets assigned to payroll loans from 75% to 60%; (iii) Decree 0574 of 2025, which establishes the regulatory framework for the Savings Fund of the Integral Social Protection System for disability and survivor pensions pursuant to Law 2381 of 2024, including rules for governance, investment, transparency and the transition to the new contributory pillar (noting that, because the effects of Law 2381 are suspended, this decree is also suspended); (iv) Decree 0769 of 2025, related to payment orders and fund-transfer services provided by savings-and-loan unions and cooperatives; and (v) Decree 1069 of 2025, which updates Colombia’s regulatory framework for low-value payment systems, payment orders and funds transfers. Decree 1069 seeks to promote financial inclusion by expanding digital payments through the Bre-B public transfer system and strengthening the security, interoperability and operational resilience of the national payments infrastructure. The decree further introduces standardized rules for payment orders and immediate fund transfers, minimum service-availability thresholds based on the number of active deposit products managed by each entity, and requirements regarding reversals, fraud-response procedures and consumer disclosures, including informing senders of the beneficiary’s name before transaction confirmation.
During the same period, on December 31, 2025, the Minister of Finance issued Decree 1485 of 2025 regarding the mechanism for coverage of minimum wage slippage. The Decree updates the actuarial parameter used to calculate the minimum-wage–slippage coverage, establishing that the value of the parameter will now be the higher of: (i) the real productivity growth; or, (ii) a percentage based on the average CPI of the last ten years. “Item 4. Information on the Company—B. Business Overview—Supervision and Regulation—Lending Limits.”
On April 7, 2026, Decree 0369 of 2026 was enacted, significantly modifying the investment regulations governing mandatory pension funds. Previously, foreign investment limits varied by fund type, reflecting each fund's distinct risk profile and investment horizon. Decree 369 now introduces a unified aggregate cap of 30% on foreign investments, applicable across all mandatory pension funds managed by each administrator, with a transition period extending up to five years.
Additionally, Decree 0368 of 2026, issued on the same date, establishes a mandatory open finance framework in Colombia, superseding the former voluntary regime. This regulation obligates supervised financial institutions to serve as data providers and facilitate standardized, secure, and interoperable access to customer-authorized financial information. The framework delineates participant roles, enforces free and non-discriminatory access to data, introduces reciprocity requirements and a centralized participant registry, and sets phased implementation timelines contingent upon the release of relevant regulatory standards.
Except for the positive effects of Decree 0573 of 2025 (which amends the Great Exposures regime) and the operational adjustments required under Decree 1069 of 2025 (which preserves certain closed payment ecosystems for some market participants), none of the regulatory developments described above are expected to have a material impact on the profitability or business lines of our companies. Additionally, Decree 1533 of 2022 (Great Exposures), which entered into force in August 2025, has been in effect for only a limited period. This discussion should be read in conjunction with “Item 4. Information on the Company—B. Business Overview—Supervision and Regulation—Lending Limits.”.
Superintendency of Finance
The Superintendency of Finance is a technical entity affiliated with the Ministry of Finance that performs the inspection, supervision and control authority of persons involved in financial, insurance and securities exchange activities, and any other operations related to the management, use or investment of resources collected from the public. The Superintendency of Finance is responsible for supervising the Colombian financial system with the purpose of preserving its stability and trustworthiness, as well as promoting, organizing and developing the Colombian securities market and protecting the users of financial and insurance services and investors in general.
Financial institutions must obtain the authorization of the Superintendency of Finance before commencing operations. In addition, all public offerings of securities require the prior approval of the Superintendency of Finance.
Violations of the financial system rules and regulations are subject to administrative, and in some cases, criminal sanctions. The Superintendency of Finance may inspect Colombian financial institutions on a discretionary basis and has the authority to impose sanctions including admonitions, fines, removals, or administrative takeovers on such institutions and their directors and officers for violations of Colombian laws or regulations, or such financial institutions’ by-laws.
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The Superintendency of Finance exerts its supervisory powers over the financial sector on a consolidated and comprehensive basis. The consolidated supervision extends to all financial institutions including banks operating in Colombia and their subsidiaries abroad, in the latter case to the extent permitted by the laws of the respective country of incorporation. For these purposes, the Superintendency of Finance has executed several memorandums of understanding with foreign financial sector regulators, including the Superintendency of Banks of Panamá.
According to Decree 2555 of 2010, External Circular 006 of 2025 (“Basic Legal Circular”) and External Circular 100 of 1995 (“Basic Accounting and Financial Circular”) as amended, and to facilitate the Superintendency of Finance’s supervision, financial institutions are required to consolidate the results of operations of all of their subsidiaries in order to present consolidated financial statements of the controlling entity and its subsidiaries, consolidated solvency ratios and capital adequacy requirements.
The Superintendency of Finance may also conduct onsite inspections of Colombian financial institutions, financial holdings and even their subsidiaries located abroad, in the latter case, subject to the applicable laws of the subsidiary’s country of incorporation.
According to Article 2.17.2.4.2.1 of Decree 1068 of 2015, when granting authorizations relating to foreign investment transactions made by direct shareholders of Colombian financial institutions in foreign financial entities, the Superintendency of Finance must take into account the possibility of exercising comprehensive and consolidated supervision. In addition, according to Law 1328 of 2009 and Decree 2555 of 2010: (1) direct capital investments by Colombian financial institutions in foreign financial, brokerage or insurance companies, branches or agencies, require the prior authorization by the Superintendency of Finance, and (2) indirect capital investment (i.e., through a subsidiary) in foreign financial, brokerage or insurance companies, branches or agencies, require the prior authorization by the Superintendency of Finance if: (a) the initial investment equals or exceeds 10% of the investor’s paid-in capital, (b) additional investments equal or exceed 5% of the investor’s paid-in capital or (c) the financial regulatory authority of the country where the investment is to be made has not executed a memorandum of understanding with the Superintendency of Finance. Other indirect investments do not require the approval of the Superintendency of Finance but must be reported to such entity prior to the respective investment.
As a financial holding and an issuer of securities traded on the Colombian Stock Exchange, Grupo Aval is subject to the inspection and surveillance of the Superintendency of Finance. Additionally, Grupo Aval’s financial and stock brokerage subsidiaries located in Colombia (including banks, merchant banks, financing companies, trust companies, managers of pensions and severance payment funds, bonded warehouses and stock brokerage firms) are each subject to the regulatory supervision of the Superintendency of Finance. The level of supervision and regulation is different, though, taking into account that Grupo Aval is not a financial institution. Since February 6, 2019, Grupo Aval became subject to the supervision and regulation of the Superintendency of Finance as the financial holding of the Aval Financial Conglomerate and is required to comply with capital adequacy and additional regulations applicable to financial conglomerates. See “Item 4. Information on the Company—B. Business overview—Supervision and regulation.—Regulatory framework for Colombian Financial Conglomerates”.
In 2025, the Colombian Superintendency of Finance issued 22 External Circulars (“CEs,” for their acronym in Spanish). Among the most significant were: (i) CE 003 of 2025, which provides temporary instructions governing the refinancing of agricultural loans; (ii) CE 004 of 2025, which sets forth guidance on the risk-weighting of payroll-deducted loans for purposes of credit institutions’ solvency ratios and the large exposure regime; (iii) CE 006 of 2025, which reissued the Basic Legal Circular of the Superintendency of Finance, simplifying certain provisions and amending others; (iv) CE 009 of 2025, which establishes a transitional regime for compliance with architecture, security and technology standards within the framework of Voluntary Open Finance; (v) CE 011 of 2025, which amended the rules applicable to recurrent and well-known securities issuers, simplifying the securities issuance regime; (vi) CE 014 of 2025, which introduced measures aimed at improving liquidity in the capital markets; (vii) CE 015 of 2025, which provides instructions on the management of environmental, social and climate-related risks by financial institutions; (viii) CE 017 of 2025, which regulates transactions between credit institutions and their related parties by introducing a new chapter (Chapter XXXVI, “Transactions with Related Parties”) into the Basic Accounting and Financial Circular; and (ix) CE 021 of 2025, which issued guidance on the stress-testing framework and the implementation of the capital self-assessment (PAC) and liquidity self-assessment (PAL) processes. These circulars are among the most relevant regulatory measures issued by the Superintendency of Finance in 2025.
Fondo de Garantías de Instituciones Financieras
The Fondo de Garantías de Instituciones Financieras (“FOGAFIN”) was created pursuant to Law 117 of 1985. The primary function of FOGAFIN is to administer the deposit insurance system, with the objective of guaranteeing the deposits and savings held by the general public in Colombian financial institutions. See “—Troubled Financial Institutions—Deposit Insurance”. The other primary purposes for which FOGAFIN was formed were to support the banking industry, to facilitate the privatization of financial institutions by the Colombian government, and to liquidate financial institutions under receivership.
FOGAFIN has tools and mechanisms that enable it to administer and temporarily take equity stakes in troubled financial institutions in order to allow it to determine whether a financial institution is viable or requires liquidation.
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Securities Market Self-Regulatory Organization
Self-regulation in the capital markets was formally introduced in Colombia by Law 964 of 2005, and the securities market self-regulatory organization (Autoregulador del Mercado de Valores de Colombia), or “SRO”, was created on June 12, 2006.
The SRO is a private entity that has the power to supervise, sanction and regulate the entities subject to self-regulation (i.e., including securities intermediaries and any entity that voluntarily submits itself to self-regulation).
The SRO’s supervisory powers entitle it to review compliance with applicable laws and regulations and impose sanctions in the case of violations. The SRO may also propose regulation aimed at various matters, including conflicts of interest and improving the integrity and quality of the capital markets.
Superintendency of Industry and Commerce
According to Law 1340 of 2009, the Superintendency of Industry and Commerce is the competent national authority for all antitrust, intellectual property and data protection matters in every sector of the economy, including the financial sector.
As such, the Superintendency of Industry and Commerce is responsible for advancing administrative investigations of antitrust violations by financial and non-financial corporations and has the power to impose corresponding sanctions.
The Superintendency of Industry and Commerce is responsible for approving mergers, acquisitions and integrations between and among enterprises, except for mergers, acquisitions or integrations between financial entities. Pursuant to Law 1340 of 2009, the Superintendency of Finance is the authority responsible for approving mergers, acquisitions and integrations between financial institutions. For such approvals, the Superintendency of Finance must obtain a prior written opinion by the Superintendency of Industry and Commerce. Nonetheless, if any of the provisions set forth in numeral 4. of the Resolution 2751 of 2021 of the Superintendency of Industry and Commerce are met, the requirement to obtain such written opinion is not mandatory.
Regulatory framework for Colombian Financial Conglomerates
On September 21, 2017, the Colombian congress enacted Law 1870 to strengthen the regulation and supervision of the financial conglomerates, also known as Law of Financial Conglomerates (Ley de Conglomerados Financieros). This Law sets out the scope of supervision and regulation of financial conglomerates in Colombia with the purpose of ensuring the stability of the financial system and providing the Colombian government (Ministry of Finance) with regulatory powers to obtain complete and timely information that guarantees the transparency of the operations of the conglomerates and facilitates the exercise of consolidated supervision.
This law defines a financial conglomerate as a set of two or more local or foreign financial entities with a common controller (referred to as a holding company) requiring that at least one of these entities conduct financial activities in Colombia. Law 1870 also establishes the criteria for identifying the holding company of each financial conglomerate. Accordingly, any legal person or investment vehicle that exerts the first level of control or significant influence over the members of the financial conglomerate will be identified as the holding company. The Superintendency of Finance is in charge of identifying each financial conglomerate and its respective holding company.
As a result of Law 1870 of 2017, which became effective February 6, 2019, holding companies, such as Grupo Aval, became subject to the supervision of the Superintendency of Finance and are required to comply with this law. Law 1870 also granted the Colombian government (Ministry of Finance) the authority to enact regulations regarding:
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The Law of Financial Conglomerates also provides the Superintendency of Finance with the authority to:
Financial conglomerates that have holding companies incorporated abroad may be exempted from the scope of these regulations if their holding company provides satisfactory evidence that the members of its financial conglomerate are subject to a regime of prudential regulation and comprehensive and consolidated supervision similar to the one established in Colombia. Otherwise, the Superintendency of Finance will have the power to request information that it deems appropriate to exercise a comprehensive and consolidated supervision of the member(s) of the financial conglomerate established in Colombia. If the Superintendency of Finance considers that the information received does not allow the proper exercise of its supervisory functions, it may revoke the operating license of the supervised entity(ies).
Pursuant to Law 1870, the Ministry of Finance enacted the following regulatory decrees:
The technical capital for the Aval Financial Conglomerate complied with the adequate capital required by regulation for each of the reported interim quarterly filings as of December 31, 2025. See “Item 3. Key Information—D. Risk factors—Risks relating to our businesses and industry—Risks relating to our banking business” and “Item 11. Quantitative and Qualitative Disclosures About Market Risk”.
Regulatory framework for Colombian financial institutions
Basic Framework: Decree 663 of 1993
The basic regulatory framework for the operations of the Colombian financial sector is set forth in the Financial System Organic Statute or “EOSF”, as amended by Laws 510 of 1999, 546 of 1999, 795 of 2003, 964 of 2005, 1328 of 2009, 1555 of 2012 and 1735 of 2014, 1870 of 2017, Law Decree 2106 of 2019, 2069 of 2020, 2071 of 2020, 2186 of 2022, 2294 of 2023 and Law Decree 1962 of 2023. Decree 2555 of 2010 (as amended from time to time), as well as in External Resolution 01 of 2018 (exchange control regulation statute) and External Resolution 4 of 2006 issued by the Board of Directors of the Colombian Central Bank.
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The EOSF defines the structure of the Colombian financial system and establishes various business entities, including (1) credit institutions (which are further categorized into banks, merchant banks, financing companies and finance cooperatives), (2) financial services entities, (3) capitalization corporations, (4) insurance companies and (5) insurance intermediaries.
The EOSF also provides that no financial, banking or credit institution may operate in Colombia without the prior approval of the Superintendency of Finance. Subject to prior approval of the Superintendency of Finance, foreign banks may operate in Colombia through their subsidiaries established and incorporated in Colombia. Under Law 1328 of 2009, foreign banks, as of July 15, 2013, are permitted to operate through their “branches” and are not obligated to incorporate a Colombian subsidiary. Operations through these branches will be subject to prior approval by the Superintendency of Finance. Among other legal requirements, branches have to meet the same minimum capital requirements as independent entities do.
The main role of banks, merchant banks and financing companies is to receive deposits. Banks place funds back into circulation by means of loans or any active credit operation; merchant banks place funds into circulation by means of active credit operations or investments, with the purpose of promoting the creation or expansion of enterprises; and financing companies place funds back into circulation by means of active credit operations, with the purpose of fostering the sale of consumer goods and services, including leasing operations.
Each credit institution must be authorized by the Superintendency of Finance before it may develop and provide financial services. Furthermore, the activities of credit institutions are subject to limitations and restrictions, including limitations and restrictions relating to the extension of credit, risk concentration, investments, conditional operations, foreign currency loans and negotiations, and the administration of third-party funds. One of the main restrictions on financial activities is that banks may not acquire or hold products, merchandise, equity shares of corporations operating in non-financial activities, income bonds, or other similar securities, except: (i) when the bank has received those goods or securities as collateral for loans it has made or (ii) with respect to shares, when they are issued by companies where banks are permitted to hold investments (mainly financial affiliates). Banks are also subject to other limitations, including limitations on lending activities.
Modifications to Framework
Laws 510 of 1999, 546 of 1999, 795 of 2003 and 1328 of 2009 have substantially modified the control, regulation and surveillance powers of the Superintendency of Finance. In addition, Law 510 of 1999 and Law 1328 of 2009 streamlined the procedures and powers for FOGAFIN. The main purpose of Law 510 of 1999 was to increase the solvency and stability of Colombia’s financial institutions by establishing rules regarding their incorporation, as well as the permitted investments of credit institutions, insurance companies and investment companies. Law 546 of 1999 was enacted in order to regulate the system of long-term housing loans.
Law 795 of 2003 was enacted with the purpose of broadening the scope of activities to be performed by financial institutions and to update Colombian regulations with the latest principles of the Basel Committee at that time. Law 795 of 2003 also increased the minimum capital requirements needed to incorporate a financial institution and authorized the Superintendency of Finance to take precautionary measures with respect to financial institutions whose capital falls below certain thresholds. For example, in order to avoid a temporary receivership or intervention by the Superintendency of Finance, troubled financial institutions must submit a restructuring program to the Superintendency of Finance.
Law 1328 of 2009, as amended by Law 1748 of 2014, provided a new set of rights and responsibilities for customers of the financial system and a set of obligations for financial institutions, in order to minimize disputes. This law also broadened the scope of permitted business activities by regulated entities: following its adoption, banks were allowed to operate leasing businesses under certain circumstances and to extend loans to third parties so that borrowers may acquire control of other companies.
In order to implement and enforce the provisions related to Colombia’s financial system, the Superintendency of Finance has issued periodic circulars and resolutions. The External Circular 006 of 2025, known as the Basic Legal Circular, as amended, consolidates all of the rules and regulations applicable to financial institutions, including rules and regulations relating to the management, operations, investments, lending activities and money-laundering prevention activities of financial institutions. The External Circular 100 of 1995, known as the Basic Accounting and Financial Circular, consolidates all of the regulations applicable to the accounting and financial rules of financial institutions. Furthermore, the Basic Accounting and Financial Circular regulates the assessment of credit institutions’ investments, risk management, financial statements, information disclosure and inter-banking credits.
Violations of Laws 510 of 1999, 546 of 1999, 795 of 2003 or 1328 of 2009, as well as of specific provisions of Decree 663 of 1993 and their relevant regulations, are subject to administrative sanctions and, in some cases, criminal sanctions.
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Key interest rates
Colombian commercial banks, merchant banks (corporaciones financieras) and financing companies are required to report data to the Colombian Central Bank on a weekly basis regarding the total volume (in pesos) of certificates of deposit issued during the prior week and the average interest rates paid for certificates of deposit with maturities of 90 days. Based on such reports, the Colombian Central Bank calculates the DTF rate, which is published at the beginning of the following week for use in calculating interest rates payable by financial institutions. The DTF rate is the weighted average interest rate paid by commercial banks, merchant banks and financing companies for certificates of deposit with maturities of 90 days.
The Colombian Central Bank also calculates the interbank rate (Interés Bancario de Referencia), or “IBR”, which acts as a reference of overnight, one-month and three-month interbank loans, based on quotations submitted each business day by eight participating banks to the Colombian Central Bank. Using the median of the quotations submitted, the Colombian Central Bank calculates the overnight IBR each business day. The one-month and three-month IBRs are also calculated using the median of the quotations submitted each business day, based on the prices of interest rate swaps for each of these periods. Moreover, the Colombian Central Bank has the authority to establish maximum limits on the interest rates that commercial banks and other financial institutions may charge on loans.
Under Article 884 of the Colombian Commercial Code, there is a limit on the amount of interest that may be charged on any loans granted in Colombia. Exceeding such limit is considered usury (usura), which is a crime pursuant the Colombian Criminal Code. The usury limit is exceeding 1.5 times the current banking interest rate (interés bancario corriente or 'IBC'), certified and calculated by the Superintendency of Finance as the weighted average disbursement rate charged by banks on ordinary commercial loans, consumer loans and credit cards to retail customers during a specified period. The Superintendency of Finance amended the methodology to certify such usury rate, first, in August 2023, and finally, in May 2024. The current methodology increased the weight of ordinary commercial loan disbursements in the calculus, which limits the applicable interest rate as disbursement rates for these loans are considerably lower than those of consumer loans and credit cards to retail customers. According to law, the usury rate applies to any sum charged, there are no limitations for loans granted before changes in the usury rate.
The certification process is carried out for the following credit portfolios: consumer and ordinary; small consumer loans; and productive loans (further divided into the five subcategories set forth below).
On March 29, 2023, a major amendment to this rule was enacted by means of Decree 455 of 2023, which amended Decree 2555 of 2010 with regards to the certification of the IBC. The amended framework expands the scope of such certification by incorporating, in addition to consumer and ordinary credit, subcategories of productive credit, including Rural Popular Productive Credit, Urban Popular Productive Credit, Rural Productive Credit, Urban Productive Credit, Productive Credit and Productive Credit of larger amounts. The certification of these banking interest rates may include any other source of credits (not only regulated banking entities) including lenders, credit originators and natural persons, among others.
Capital Adequacy Requirements
Decree 2555 of 2010 (as modified by Decree 1771 of 2012, Decree 1648 of 2014, Decree 2392 of 2015, Decrees 1477 of 2018 and 1421 of 2019) sets forth capital adequacy requirements for Colombian credit institutions (As part of Colombian IFRS). Regulatory capital (patrimonio técnico) for Colombian credit institutions consists of the sum of total Core Equity Tier I (“CET1” or patrimonio básico ordinario), Additional Tier I capital (“AT1” or patrimonio básico adicional), and Tier II capital (“Tier” II or patrimonio adicional). Tier I capital consist of the sum of CET1 (patrimonio básico ordinario) and AT1 (patrimonio básico adicional). Tier I and Tier II, as defined herein, may differ to the manner in which these terms are used in other jurisdictions.
Pursuant to Decrees 1477 of 2018 and 1421 of 2019, Basel III principles were introduced to estimate adequate capital in credit institutions as follows:
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Banco de Bogotá is considered a systemically important financial institution, according to Carta Circular 68 of November 27, 2025, Carta Circular 74 of November 28, 2024 and Carta Circular 70 of November 23, 2023, issued by the Superintendency of Finance, and therefore had to comply with the systemic buffer (explained above).
Furthermore, according to Carta Circular 68 of November 27, 2025 and Carta Circular 74 of November 28, 2024, issued by the Superintendency of Finance, Banco de Occidente is also considered a systemically important financial institution. At December 31, 2025 the systemic importance buffer applicable to Banco de Occidente was 0.6%, as it was allowed a two-year transition period to comply with the 1.0% systemic buffer, which must be fully implemented by November 2026.
Total solvency ratio for pension and severance fund managers, fiduciary companies and stockbrokers is defined as the value of the regulatory capital (CET1, AT1 and Tier II) calculated under the terms of Decree 175 of 2022, divided by risk-weighted assets by level of credit, market and operational risk, at a minimum of 9%.
In addition to compliance with minimum regulatory capital requirements, Grupo Aval’s entities aim to maintain capital positions that foster investor, creditor, and market confidence and to sustain future growth of their respective businesses. The capital allocation decision guards that there is balance between a more aggressive structure that can deliver higher returns on equity and a more conservative approach that encourages excess capitalization. Capital allocation decisions also considers each subsidiary’s long-term strategic objectives.
As of December 31, 2025, and 2024, all of Grupo Aval´s individually regulated operations have complied with the minimum regulatory capital requirements.
The following tables show the separate and consolidated (where applicable) capitalization information of our main direct and indirect subsidiaries. Consolidated solvency only applies to Banco de Bogotá, Banco de Occidente and Banco Popular. The consolidated solvency for Banco Popular and subsidiaries incorporates Corficolombiana. However, taking into account the materiality of Corficolombiana in Banco Popular’s figures, Corficolombiana is presented separately in the following section.
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Separate basis
Consolidated basis
Reserves and retained earnings
15,488
14,980
15,897
15,427
(150)
246
(21)
244
Net income for the period
1,260
1,129
1,271
1,090
Non-controlling interests
Deductions:
Unconsolidated financial sector investments
Goodwill and other intangibles
(1,461)
(1,388)
(1,507)
(1,710)
Deferred tax assets
(695)
(783)
(347)
(672)
Other
(1)
CET1
14,446
14,187
15,296
14,381
Hybrid instruments recognized as additional primary capital
AT1
Tier I
Subordinated instruments
1,688
2,459
Plus/minus others
132
135
Tier II capital
1,820
2,594
Other deductions from regulatory capital
Regulatory capital
16,266
16,781
16,984
16,840
Risk-weighted assets
80,429
81,153
98,502
97,961
Market risk
154
311
318
Market risk exposure(1)
2,060
1,706
3,460
3,536
Operational risk
684
565
784
664
Operational risk exposure(1)
7,595
6,282
8,711
7,382
Risk-weighted assets including regulatory market risk and operational risk
90,084
89,140
110,673
108,879
CET1 solvency ratio
16.04%
15.92%
13.82%
13.21%
AT1 contribution to solvency ratio
0.00%
Tier 1 capital solvency ratio
Tier II contribution to solvency ratio
2.02%
2.91%
1.53%
2.26%
Total solvency ratio(2)
18.06%
18.83%
15.35%
15.47%
Capital measure
15,294
Exposure measure
138,327
129,645
158,485
154,517
Leverage ratio
10.44%
10.94%
9.65%
9.31%
95
5,243
4,997
5,478
5,253
(53)
534
495
575
474
(761)
(694)
(726)
(652)
(235)
(234)
4,730
4,620
5,500
5,303
1,075
1,358
1,113
1,388
5,843
6,008
6,575
6,661
41,766
40,396
45,511
44,446
110
339
382
1,221
3,771
1,695
4,244
338
283
337
284
3,755
3,144
3,746
3,151
46,742
47,310
50,952
51,841
10.12%
9.77%
10.79%
10.23%
2.38%
2.93%
2.11%
2.62%
12.50%
12.70%
12.90%
12.85%
81,724
75,194
87,702
81,254
5.79%
6.14%
6.27%
6.53%
96
2,310
2,497
2,272
2,546
304
252
(227)
(315)
7,281
6,867
(416)
(391)
(478)
(460)
(96)
2,006
1,945
9,411
8,873
362
319
112
371
335
(24)
(42)
2,377
2,279
9,499
8,900
16,991
17,070
37,421
37,340
291
142
189
3,383
3,235
148
144
359
414
1,646
1,605
3,984
4,605
18,779
18,863
44,788
45,180
10.68%
10.31%
21.01%
19.64%
1.98%
1.77%
0.25%
0.15%
12.66%
12.08%
21.21%
19.70%
31,641
29,037
59,643
55,603
6.34%
6.70%
15.78%
15.96%
97
1,482
1,546
124
(116)
(242)
(195)
(10)
(44)
(117)
1,238
1,253
0
1,254
150
237
1,475
1,435
11,392
10,474
251
121
103
1,346
1,144
12,916
11,869
9.59%
10.56%
1.83%
11.42%
12.09%
22,081
19,171
5.61%
6.54%
98
12,318
12,017
123
(12)
515
328
(100)
(105)
12,857
12,230
12,833
12,188
21,097
20,631
295
320
3,276
3,557
272
2,286
3,022
26,659
27,209
48.23%
44.95%
48.14%
44.80%
29,017
27,239
44.31%
44.90%
99
2,870
2,544
(29)
(20)
702
653
(405)
(381)
(34)
(26)
(54)
Primary capital
3,159
2,825
Secondary capital (Tier II)
Value of the stabilization reserve
(2,607)
(2,269)
552
556
693
672
137
1,526
1,349
2,268
2,064
Solvency ratio(2)
24.34%
26.95%
(1) Regulatory value at risk consists of value at risk multiplied by (100/9) as required by the Superintendency of Finance. Regulatory operational risk consists of operational risk multiplied by (100/9) as required by the Superintendency of Finance.
(2) Solvency ratio is calculated as regulatory capital to risk-weighted assets, including regulatory value at risk and regulatory operational risk.
100
162
143
196
181
16.36%
18.14%
101
117
49.03%
37.32%
Mandatory Investments
Colombian banking institutions are required to invest in agricultural development bonds (Títulos de Desarrollo Agropecuario, or “TDAs”) issued by Finagro, a Government entity, according to External Resolution 3 of 2000 of the Colombian Central Bank, as amended from time to time.
Pursuant to the foregoing, the Colombian Central Bank requires that each bank maintains a total investment in agricultural development bonds (Títulos de Desarrollo Agropecuario, or “TDAs”) equal to 5.61% of its checking and savings deposits minus legal reserves, plus 4.25% of its time deposits minus legal reserves with a maturity of up to 18 months. Finagro may issue two different types of agricultural development bonds:
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If the DTF interest rate falls to 4% or less, the profitability of the Class A TDAs will be 0%, and if the DTF rate falls to 2% or less, the profitability of the Class B TDAs will be 0%. The same applies to IBR rate. Banks are required to invest 50% of the total mandatory investment in Class A TDAs and 50% in Class B TDAs.
Under Government discretion, authorities may extend the scope of current regulations or require additional disbursements on current or new types of mandatory investments.
Minimum Incorporation Capital Requirements
Decree 2555 of 2010 establishes minimum incorporation capital requirements for different financial institutions. When a financial institution fails to comply with the minimum required capital after a cure period granted by law, the Superintendency of Finance may intervene, causing the financial institution to be liquidated, merged with another institution or its corporate form may be converted into another category of financial institution, notwithstanding the fact that the institution may be subject to fines imposed by the Superintendency of Finance.
The minimum incorporation capital requirement for Colombian banks on a separate basis for 2025 was Ps 140,254 million. As of the date of this annual report, all our banks have consistently satisfied this incorporation capital requirement.
Capital Investment Limit
All investments in subsidiaries and other authorized capital investments, other than those carried out in order to fulfill legal provisions, may not exceed 100% of the total aggregate of the capital, equity reserves and the equity reappraisal account of the respective bank, financial corporation or financing company, excluding unadjusted fixed assets and including deductions for accumulated losses.
Foreign Currency Position Requirements
According to External Resolution No. 1 of 2018 and External Regulatory Circular DODM-398 issued by the Board of Directors of the Colombian Central Bank on March 22, 2019, which modified the foreign currency position requirements of Colombian banks, the foreign currency position (defined as the difference between rights and obligations denominated in foreign currencies) based on a three-business-day average, cannot exceed 20% of the bank’s regulatory capital. If the foreign currency position is negative, it cannot exceed 5% of the bank’s regulatory capital.
Currency exchange intermediaries such as Banco de Bogotá, with controlling interest of its overseas investments, are required to exclude those investments and any declared and approved hedging instruments (derivatives or debt) from their foreign currency positions starting on March 26, 2019. At December 31, 2025, Banco de Bogotá, Banco de Occidente, Banco Popular and Banco AV Villas had unconsolidated net foreign currency positions of U.S.$286.73 million, U.S.$11.76 million, U.S.$(0.98) million and U.S.$(0.16) million, respectively, which fell within these regulatory guidelines.
Lending Limits
Decree 2555 of 2010 establishes the rules related to the identification and management of large exposures and concentration of risk of banks and other financial institutions.
On August 4, 2022, the Colombian Government issued Decree 1533. On February 1, 2024, the Superintendency of Finance issued CE 03 of 2024. These rules were partially amended in 2024 and 2025 by Decree 1358 of 2024 – which introduces specific provisions governing transactions with related parties and is scheduled to enter into force in 2026 – and Decree 573 of 2025 (together, the “New Large Exposures Regulation”). These regulations amend the current regime related to large exposures and lending limits. They limit the maximum loss that financial institutions could face in relation to their Tier 1 capital (patrimonio básico), ensuring it does not endanger their solvency, due to the failure of: (i) an individual counterparty; or (ii) a group of related counterparties, considered the same risk consistent with international standards. The New Large Exposures Regulation enforceable on August 4, 2025, and sets forth new or updated rules for:
Decree 2555 of 2010 generally establishes that banking entities, as well as credit institutions (establecimientos de crédito) as a whole, may not maintain exposures to a counterparty or a connected group of counterparties, directly or indirectly, that jointly or separately exceed 25% of their regulatory capital. If a financial institution exceeds these risk concentration limits on either an individual or consolidated basis, the Superintendency of Finance may impose administrative sanctions, additional capital requirements, forced divestment plans, among other measures.
On a consolidated basis, Grupo Aval is not subject to New Large Exposures Regulation, however, since 2020, pursuant to the Law of Financial Conglomerates, and its regulatory decrees, the Board of Directors of Grupo Aval approved policies and limits governing exposure and risk concentration for transactions among entities belonging to the same financial conglomerate and between such entities and their related parties (vinculados). These policies include the identification of material risks, rules for transactions among entities of the financial conglomerate and with their related parties, responsibilities and obligations of administrators and governing bodies, certain quantitative limits, and early-warning scheme and disclosure mechanisms.
As of December 31, 2025, pursuant to Decree 2555 of 2010, our banks were subject to the following lending limits: Banco de Bogotá’s lending limit per borrower (understood as a single risk or group of counterparties) on a separate basis was Ps 3.61 billion, Banco de Occidente’s lending limit per borrower on a separate basis was Ps 1.18 billion, Banco Popular’s lending limit per borrower on a separate basis was Ps 0.50 billion, and Banco AV Villas’ lending limit per borrower on a separate basis was Ps 0.31 billion.
Reserve Requirements
Grupo Aval’s Colombian banking subsidiaries and Corficolombiana maintain as deposits in Colombian Central Bank or cash on hand to comply with the reserve requirements of the Colombian Central Bank and the Superintendency of Finance. Daily averages of these funds are taken into account to determine compliance with reserve requirements. On August 30, 2024, the Board of Directors of the Central Bank of Colombia (Banco de la República) issued External Resolution No. 3, which reduces the reserve requirements as follows:
Credit institutions must maintain these reserves in their accounts at the Colombian Central Bank or in cash.
Foreign Currency Loans
Colombian residents may only obtain foreign currency loans from foreign entities that obtain a code from the Colombian Central Bank. Such code has to be requested from the foreign exchange intermediary by the resident that wishes to obtain a loan from foreign entities or foreign individuals. Foreign currency loans must be either channeled through foreign exchange intermediaries (such as Colombian financial institutions) or deposited in offshore compensation accounts (i.e., specially designated accounts at foreign banks held by Colombian residents and registered before the Colombian Central Bank).
Under regulations issued by the Colombian Central Bank, every Colombian resident and institution borrowing funds in foreign currency is generally required to post with the Colombian Central Bank non-interest-bearing deposits for a specified term; however, the percentage of
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the required deposit is currently zero. No such deposits are required for foreign currency loans aimed at financing Colombian investments abroad or for short-term export loans (provided the loan is disbursed against the funds of Banco de Comercio Exterior—Bancóldex).
In addition, pursuant to Law 9 of 1991, the Board of Directors of the Colombian Central Bank is entitled to impose conditions and limitations on the incurrence of foreign currency indebtedness in order to avoid pressure in the foreign exchange market.
Restrictions on Foreign Investment in Colombia
Colombia’s foreign investment statute regulates the manner in which non-residents are permitted to invest in Colombia and participate in the Colombian securities market. Among other requirements, Colombian law requires foreign investors to register certain foreign exchange transactions with the Colombian Central Bank and obtain authorization for certain types of investments. Certain foreign exchange transactions, including those between residents and non-residents, must be made through authorized foreign exchange intermediaries.
Non-residents are permitted to hold portfolio investments in Colombia, through a registered stock brokerage firm, a trust company or an investment firm. Investors would only be allowed to transfer dividends abroad after the foreign investment registration procedure with the Colombian Central Bank has been completed. The failure of a non-resident investor to report or register foreign exchange transactions with the Colombian Central Bank relating to investments in Colombia on a timely basis may prevent the investor from remitting dividends, or an investigation that may result in a fine may be commenced.
Loss Allowance
In the consolidated financial statements of Colombian credit institutions, the following rules about loan loss allowances apply:
Regarding the entire loan portfolio, in accordance with IFRS 9, financial institutions must evaluate at the end of each accounting period if there is or has been a significant increase in the credit risk (SICR) of a loan measured in accordance with the amortized cost methodology. Impairment indicators include significant economic difficulties faced by the borrower, payment default and the probability that the borrower will seek protection from creditors. If impairment is determined, a loan loss provision charged to income is calculated as follows:
For the calculation of expected losses of loan portfolios analyzed collectively, statistical models are utilized which take into consideration three fundamental factors: exposure, probability of default and loss given default.
The calculation process includes analyses of specific, historical and qualitative components. The methodologies used include the following elements: a) detailed periodical analysis of the loan portfolio, b) credit classification system by risk levels, c) periodic review of the summary of loss allowances, d) identification of loans to be evaluated individually due to impairment, e) consideration of internal factors, such as our size, organizational structure, loan portfolio structure, loan administration process, analysis of overdue portfolio and experiences of historical losses, f) consideration of risks inherent to different types of loans, and g) consideration of external factors, including local, regional and national, as well as economic factors.
As of January 1, 2018, IASB adopted the expected credit loss (“ECL”) model according to IFRS 9. For more information regarding loss allowance calculations see “Item 11. Quantitative and Qualitative Disclosures About Market Risk”.
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Separate financial statements for us and our financial subsidiaries in Colombia are based on Colombian IFRS and pursuant to certain requirements under Colombian regulations. Loss allowances are calculated based on specific rules of the Basic Accounting and Financial Circular.
Requirements for acquiring shares of a financial entity in Colombia.
Pursuant to Article 88 of EOSF, any transaction of national or foreign investors whose purpose is the acquisition of ten percent (10%) or more of the subscribed shares of any kind of entity subject to the supervision of the Superintendency of Finance, whether it is carried out through one or several operations of any nature, simultaneous or successive, or those by means of which said percentage is increased, shall require, under penalty of ineffectiveness, the prior approval of the Superintendency of Finance, who shall examine the suitability and responsibility of the persons interested in acquiring the equity in such entities.
Additionally, the Superintendency of Finance shall ascertain whether the public welfare will be protected during these transactions. Subsequently, the Superintendency of Finance will assure that none of the acquirers of the shares are under any situation that pursuant to the EOSF would not allow such acquirer or acquirers to incorporate a new financial entity, such as AML/TF measures or the breach of Legal Lending Limits, among others. The failure to request the Superintendency of Finance’s prior approval may result in the share transfer transaction being declared ineffective. Therefore, any effects of the transaction would be canceled and nullified as a matter of law, without the need for a judicial declaration.
However, the law provides certain exceptions to the requirement to obtain such prior approval. If an investor has been approved by the Superintendency of Finance for the acquisition of 10% or more of the shares of a financial entity during the last three years, such an investor is allowed to notify the compliance with certain capital relations as provided by law, without the need to request a new approval. This also applies to financial entities, such as Credit Unions, whose capital is not composed of or represented by shares.
Public Tender Offer Rules
Pursuant to Colombian law, the acquisition of the beneficial ownership of 25.0% or more of the outstanding shares with voting rights of a listed company, or the purchase of 5.0% or more of the outstanding shares with voting rights by a shareholder or group shareholders beneficially owning 25.0% or more of such outstanding shares of a listed company, should be made pursuant to the public tender offer rules. The preferred shares are not shares with voting rights for purposes of this requirement.
Under Article 6.15.2.1.1 of Decree 2555 of 2010, any entity or group of entities ultimately representing the same beneficial owner, directly or through one or more intermediaries, may only become the beneficial owner of more than 25.0% of the outstanding shares with voting rights of a company that is publicly traded in Colombia by making a public tender offer directed to all holders of such shares of that company, following the procedures established by the Superintendency of Finance as per the applicable law.
Moreover, any beneficial owner of more than 25.0% of the outstanding shares with voting rights of a company who wants to acquire additional shares of the company representing more than 5.0% of the company’s outstanding shares with voting rights may only do so by making a public tender offer directed to all holders of such company’s shares, following the procedures established by the Colombian Superintendency of Finance as per the applicable.
These requirements do not need to be met in certain circumstances described in Article 6.15.2.1.2 of Decree 2555 of 2010, including: (i) if the purchase is approved by 100% of the holders of the outstanding shares of the company, (ii) if the purchaser acquires the percentages indicated above through an offer in a privatization process, (iii) if the company reacquires its own shares or (iv) if the company issues voting shares, among others.
A draft decree has been published by the URF to amend the public tender offer regime set forth in Decree 2555 of 2010, introducing a revised regulatory framework applicable to tender offers over securities listed in Colombia. The proposed regulation establishes enhanced provisions governing mandatory, voluntary and competing tender offers, including requirements relating to minimum offer thresholds, pricing, disclosure, authorization procedures and offer improvements, as well as restrictions on subsequent offers. It further strengthens the principles of equal treatment, transparency and market integrity, and introduces additional mechanisms aimed at protecting minority shareholders and ensuring orderly and competitive acquisition processes. The aforementioned Decree remains in draft form, as it has not yet been issued and no information is currently available regarding its publication or effective date.
As of the date of this annual report, there have been no public tender offers by third parties with respect to the Company’s shares or by Grupo Aval in respect to another company’s shares.
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Sales of Publicly Traded Stock
Any transaction involving the sale of publicly traded stock of any Colombian company, including any sale of our preferred shares for the peso equivalent of 66,000 UVRs (U.S.$ 6,976.2) or more must be effected through the Colombian Stock Exchange. At December 31, 2025, one UVR equaled Ps 397.1 and 66,000 UVRs equal Ps 26,210,098.2.
Intervention Powers of the Superintendency of Finance – Bankruptcy Considerations
Pursuant to Colombian banking regulations, the Superintendency of Finance has the power to intervene in the operations of a bank in order to prevent it from, or to control and reduce the effects of, a bank failure.
The Superintendency of Finance may intervene in a bank’s business: (i) prior to the liquidation of the bank, by taking precautionary measures in order to take remedial actions and prevent the bank from being taken over by the Superintendency of Finance, or (ii) to take control of the bank to either administer the bank or order its liquidation, depending on the severity of the situation.
The purpose of taking control is to allow the Superintendency of Finance to decide: (i) whether the entity should be liquidated, (ii) whether it is possible to place it in a position to continue doing business in the ordinary course, or (iii) whether other measures may be adopted to secure better conditions so that depositors, creditors and investors may obtain the full or partial payment of their credits.
If the Superintendency of Finance takes control of a bank, FOGAFIN must appoint a special agent (who must be accepted by the Superintendency of Finance) to administer the affairs of the bank during such process and until the bank is ordered to be liquidated or the entity is reestablished to continue doing business in the ordinary course.
During the period of the Superintendency of Finance’s control (which ends when the liquidation process begins), Colombian banking laws prevent any creditor of the bank from (i) initiating any procedure for the collection of any amount owed by the bank, (ii) enforcing any judicial decision rendered against the bank to secure payment of any of its obligations, (iii) placing a lien or attachment on any of the assets of the bank to secure payment of any of its obligations, or (iv) making any payment, advance or compensation or assuming any obligation on behalf of the bank, with the funds or assets that may belong to it and are held by third parties, except for payments that are made by way of set-off between regulated entities of the Colombian financial and insurance systems.
In the event that the bank is liquidated, the Superintendency of Finance must, among other measures, provide that all term obligations of the bank are due and payable at the date when the order to liquidate becomes effective.
During the liquidation process, bank deposits and other types of saving instruments will be excluded from the liquidation process and, claims of creditors, as a general rule, rank as follows: (i) the first class of credits includes the court expenses incurred in the interest of all creditors, wages and other obligations related with employment contracts and tax obligations owed to tax authorities regarding national and local taxes; (ii) the second class of credits comprises the credits secured by a security interest on movable assets; (iii) the third class of credits includes the credits secured by real estate collateral, such as mortgages; (iv) the fourth class of credits contains some other obligations before the tax authorities against the debtor that are not included in the first class of credits and debts owed to suppliers of raw materials and other inputs; and (v) finally, the fifth class of credits includes all other obligations without any priority or privilege; provided however, which among credits of the fifth class, subordinated debt shall be ranked junior to the external liabilities (pasivos externos), senior only to capital stock. Each category of creditors will collect in the order indicated above, whereby distributions in one category will be subject to completing full distribution in the prior category.
Troubled Financial Institutions – Deposit Insurance
Subject to specific limitations, FOGAFIN is authorized to provide equity and/or secured loans to troubled financial institutions and to insure deposits of commercial banks and certain other financial institutions. In 1998 and 1999, to address the adverse effects of the economic crisis, certain regulations were adopted, among others, Law 546 of 1999 (Ley de Vivienda) and Law 550 of 1999 (Ley de Reactivación Económica).
To protect the customers of commercial banks and certain financial institutions, Resolution No. 1 of 1988 of FOGAFIN, as amended from time to time, requires mandatory deposit insurance. Under this resolution, banks must pay an annual premium of 0.3% of total funds received on savings accounts, checking accounts, certificates of deposit, special savings deposits, mortgage bonds, special accounts, bank collection services and electronic deposits. If a bank or financial institution is liquidated, the deposit insurance will cover the funds deposited by an individual or corporation with such bank, up to a maximum of Ps 50 million, regardless of the number of accounts held.
Anti-Money-Laundering Provisions
The regulatory framework to prevent and control money laundering is contained in, among others, the EOSF, Part I, Title IV, Chapter IV of Legal Basic Circular (Circular Básica Jurídica), as amended, issued by the Superintendency of Finance, as well as the Colombian Criminal Code.
Colombian laws adopt the latest guidelines related to anti-money laundering and other terrorist activities established by the Financial Action Task Force on Money Laundering, or “FATF”. Colombia, as a member of the GAFI-SUD (a FATF-style regional body) follows all of FATF’s 40 recommendations and nine special recommendations.
Anti-money laundering provisions have been complemented with provisions aimed at deterring terrorism financing. For that purpose, by means of the Legal Basic Circular, the Superintendency of Finance has issued regulations requiring the implementation by financial institutions of a system of controls for money laundering and terrorism financing.
The requirements include “know your customer” including ultimate beneficial owners identification, rules and procedures to protect financial institutions from being used directly by shareholders and executives in money-laundering activities, for channeling funds for terrorist activities, or for the concealment of assets from such activities; these rules and procedures set forth detailed instructions for monitoring these risks.
Part III, Title I, Chapter VII of Legal Basic Circular, as amended, issued by the Superintendency of Finance and applicable to issuers of securities in the capital markets, provides rules and guidelines regarding the prevention of money laundering and terrorism financing.
Finally, the Colombian Criminal Code includes criminal rules and regulations to prevent, control, detect, eliminate and prosecute all matters related to financing terrorism and money laundering. The criminal rules and regulations cover the omission of reports on cash transactions, mobilization or storage of cash, and the lack of controls.
On January 18, 2022, Colombia enacted Law 2195 (Anti-bribery law), which increases the penalties, fines, crimes and sanctions that may be emplaced to local and branches of foreign companies, on the matter of corruption and the commitment of certain conducts that may result in crimes or felonies against the public administration, environment, economic and social order, terrorism financing and organization of terrorism groups, money laundering, private corruption, unlawful administration, among others. The new penalties include fines, suspensions or bans on contracting with the government, the disclosure of the conducts in media, the prohibition to receive any subsidy from the government, the dismissal of the staff that has been involved with the conduct, and the dismissal of the staff that tolerated or agreed to the conduct resulting in the crimes once determined by a judge.
Insolvency Law
On July 12, 2012, the Colombian congress enacted Law 1564, which provides insolvency protection for non-merchant individuals. Under the new insolvency regulation, which came into effect on October 1, 2012, once a non-merchant individual has ceased paying his or her debts, such individual can initiate a voluntary insolvency proceeding before a notary public or mediator to reach an agreement with his or her creditors. The terms of any agreement reached with two or more creditors that represent more than 50% of the total amount of the claims against such individual will be mandatorily applicable to all relevant creditors. The law also provides for increased debtor protections, including an automatic stay for a maximum of 90 days.
Furthermore, Law 1116 of 2006 and Law 2437 of 2024 regulate insolvency proceedings for companies in Colombia. Law 1116 sets forth the procedures and conditions under which a company may seek admission to a reorganization proceeding to negotiate a debt restructuring agreement with its creditors (acuerdo de reorganización empresarial) or initiate a liquidation proceeding to settle its liabilities and distribute its assets. Building upon this framework, Law 2437 of 2024 enhances insolvency mechanisms by introducing three streamlined procedures for creditors: (i) the Business Recovery Procedure, a three-month mediation-based process before the Chambers of Commerce (Cámaras de Comercio); (ii) the Abbreviated Reorganization, tailored for small companies with assets up to 5,000 minimum wages, offering simplified restructuring; and (iii) the Simplified Judicial Liquidation, providing an expedited asset adjudication process for companies within the same asset threshold.
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Prepayment of Credit Operations without Penalty
On July 9, 2012, the Colombian congress enacted Law 1555, allowing consumers of financial services to prepay obligations denominated in pesos owed to financial institutions, without incurring in any penalty. Law 1555 also requires that financial institutions disclose the possibility of such prepayment to borrowers prior to the extension of any loan.
Law 1555 does not apply to (i) mortgage loans, for which prepayment is always allowed according to Law 546 of 1999, (ii) loans having a balance that exceeds 880 times the legal monthly minimum wages, or (iii) to financial obligations acquired prior to this Law’s effective date (July 9, 2012), and for which prepayments are governed by the relevant contractual provisions, or absent an agreement by the parties, by the laws in force at the time when the relevant agreement was executed.
Data Protection Law
On October 17, 2012, Law 1581 of 2012, as amended by Law 2157 of 2021 and Law 2300 of 2023 a new data protection regime that applies to any person that administers databases in Colombia, and this Law was regulated on June 27, 2013, by Decree 1377 of 2013 and Decree 886 of 2014. Although it does not apply in its solely to financial institutions, it provides a set of principles (legality, freedom, truthfulness, quality, transparency, access, confidentiality, among others) that apply to us in the administration of our databases. Additionally, there is a general prohibition of transferring personal data to other countries that do not provide adequate levels of data protection according to the standards set by the Superintendency of Industry and Commerce. This prohibition does not apply to transfers of data that are inherent to banking and securities activities under the applicable law. The 2021 amendment included a new term of permanence in databases from clients of financial services and notification process to execute the report.
In 2023, Law 2300, also known as the “Stop Bothering Law”, was enacted. This law regulates the communication frequency and channels used by entities when contacting clients regarding debt collection and product offerings. Its framework aims to reduce the number of times clients are contacted through various channels, such as email, SMS, and calls, within the same week and only using one channel. Additionally, it regulates the timeframe during which such activities can occur.
Regulation on Liens over Movable Assets
On August 20, 2013, the Colombian congress enacted Law 1676 with the purpose of increasing the public access to credit by providing a new regulation on liens over movable assets. Law 1676 introduced substantial modifications to Colombian regulation on liens over movable assets, including: (a) the creation of a single unified lien public registry, (b) the ability for creditors to directly foreclose on the secured assets for a value determined in an appraisal conducted by an independent expert appointed by the Superintendency of Companies, (c) the ability for creditors to enforce the security upon insolvency of the debtor, provided that the movable assets are not essential for the continuing of business of the insolvent debtor, and (d) an upgrade of priority upon liquidation.
Regulation on Payroll Loans
On April 27, 2012, the Colombian congress enacted Law 1527, as amended by Law 1607 of 2012 and by Law 1902 of 2018, which consolidated the then existing regulatory framework on payroll deduction loans. Under Law 1527, payroll loans are secured by an irrevocable order or authorization from the clients to their respective employers or to the entity that pays their salary or other financial benefits arising from their employment to directly pay the loan. As opposed to the prior regulatory regime, employees may currently freely determine the financial institution granting the relevant financial product or service. Similarly, Law 1527 provides that the employer is jointly and severally liable for the employee’s payment obligation if the employer fails to effect the deductions required for the debt service of its employee’s obligation.
Regulatory Framework for Non-Financial Subsidiaries
Our Colombian subsidiaries that are not part of the financial sector are governed by the laws and regulations of the Colombian Civil Code and the Colombian Code of Commerce, as well as any regulations issued by the Colombian Superintendency of Industry and Commerce and the Superintendency of Corporations or any other type of special regulations that may be applicable to corporations, and the commercial and industrial activities carried out by these subsidiaries.
Service of Process and Enforcement of Judgments
Grupo Aval is incorporated under the laws of Colombia. All of our directors and officers reside outside the United States. Substantially all of our assets are located outside the United States, primarily in Colombia. As a result, it may not be possible, or it may be difficult, for you to effect service of process upon us or these other persons within the United States or to obtain recognition and enforcement of judgments
obtained in U.S. courts against us or them, including those predicated upon the civil liability provisions of the U.S. federal securities laws or otherwise.
The Colombian Supreme Court will determine whether to recognize a U.S. judgment predicated on the U.S. securities laws through a proceeding known under Colombian law as “exequatur”. Enforcement of U.S. judgments may require a separate court procedure in Colombia. After the exequatur has been granted, if the judicial decision imposes an obligation to pay a sum of money or to comply with certain obligations, an executive judicial proceeding (proceso ejecutivo) before a local court is available. Such proceeding would follow the same rules applicable for the enforcement of local judicial decisions.
The Colombian Supreme Court will recognize a final and conclusive foreign judgment (not subject to appeal), without re-trial or reconsideration of the merits, only if the judgment satisfies the requirements of Articles 605, 606 and 607 of Law 1564 of 2012 (Código General del Proceso), provided that the parties affected by the judgment were summoned in the exequatur proceedings in accordance with applicable rules. Law 1564 of 2012 provides that the foreign judgment will be recognized if:
The United States and Colombia do not have a bilateral treaty providing for automatic reciprocal recognition and enforcement of judgments in civil and commercial matters. The Colombian Supreme Court, which is the only Colombian court that can recognize foreign judgments, has generally accepted that reciprocity exists when it has been proven that either a U.S. court has recognized a Colombian judgment or that a U.S. court would recognize a foreign judgment, including a judgment issued by a Colombian court. However, exequatur decisions are made on a case-by-case basis.
We have appointed Banco de Bogotá S.A., New York Agency as our authorized agent upon whom process may be served in any action instituted in any U.S. federal or state court having subject matter jurisdiction in the Borough of Manhattan in New York, New York, arising out of or based upon the ADSs or the underwriting agreement related to the ADSs.
Notwithstanding the foregoing, we cannot assure that a Colombian court would recognize or enforce a judgment issued by a state or federal court in the United States with respect to the preferred shares or ADSs based on U.S. securities laws. We have been advised by our Colombian counsel that there is no legal basis for a Colombian court to exert jurisdiction over original actions to be brought against us or our directors and executive officers predicated solely upon the provisions of U.S. securities laws. In addition, certain remedies available under U.S. securities laws may not be admitted or enforced by Colombian courts.
Grupo Aval’s articles of incorporation and by-laws contain an arbitration clause that provides for the exclusive jurisdiction of an arbitral tribunal to be seated in Bogotá, D.C., Colombia. 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.
Risk Management Framework
In order to comply with the provisions of Law 1870 of 2018, (Conglomerate Law), and specifically the provisions of External Circular 013 of 2019, now Chapter XXX of the CBCF issued by the Superintendency of Finance, enforceable as of June 21, 2021, Grupo Aval implemented these regulations through the Risk Management Framework (“Marco de Gestión de Riesgos” or “MGR” for its acronym in Spanish) of the Financial Conglomerate, which corresponds to the set of policies, procedures, methodologies, and controls that act in an integrated manner.
These metrics allow the Financial Holding, as the visible head of the financial conglomerate Aval, the management of its own risks, which are: (i) risk of contagion, (ii) risk of concentration; and (iii) strategic risk. through the identification, measurement, control and monitoring of such risks; as well as having a general knowledge of the risks of the entities that make up the Aval financial conglomerate.
Pension and Severance Fund Management
Pension business overview
Pension and Severance Fund Management Pension business overview the Ministry of Finance and Public Credit limits the range of assets in which pension and severance fund managers (“AFP”) can invest and sets concentration limits regarding the funds under administration. In addition, each AFP is required by law to provide a minimum return on investment for each of its mandatory pension and severance funds. This minimum return is determined pursuant to certain formulas established by means of Decree 2555 of 2010, which vary pursuant to the type of fund. Under the current multi-fund scheme, a risk profile system which differentiates conservative, moderate and aggressive risk portfolios for individual clients of mandatory pension funds, the time horizon for the calculation of the minimum return is between 36 to 60 months, depending on the risk profile of each portfolio. For severance funds, the long-term portfolio will have a 24-month time horizon, and the short-term portfolio will have a three-month time horizon.
If a fund’s cumulative return for any month is lower than the minimum return, the AFP must supplement the necessary amount to cover the difference within a period of five days. To do so, the AFP must first apply funds from its “stabilization reserve”, which is a portion of the AFP’s capital invested in the fund administered by the AFP and which must represent at least 1.0% of the value of that fund. If the stabilization reserve is insufficient to cover the difference, the AFP must provide resources from its remaining capital. If the AFP does not have enough resources to cover the difference, the Superintendency of Finance may order the capitalization of the AFP to its shareholders. If, notwithstanding the above, an AFP fails to observe either the minimum return or the stabilization requirements or the order of capitalization, the Superintendency of Finance may take control over the AFP, in which case FOGAFIN, the Colombian deposit insurance fund, is required to supply funds to cover the shortfall. In that event, the AFP may be dissolved and the funds under administration transferred to another AFP. See “Item 3. Key Information—D. Risk Factors—Risks relating to our businesses and industry—Risks relating to our pension and severance fund management business”.
Third party assets under management are held in trusts independent from the assets of the AFP, where the contributions made by each individual customer and its returns are held in an individual account.
Contributions to pension funds are mandatory for all employees in Colombia and are jointly funded by the employer and the employee. In the case of contributing clients, the base contribution rate is 16.0% (up to 18.0% for employees meeting a certain salary threshold) of an employee’s base salary, whereby the employer contributes 3/4 (12%) and the employee 1/4 (4%) of the base contribution rate. Contributions are paid on a monthly basis. Of the 16.0%-18.0% total contribution, 11.5% goes to the individual customer’s account. The current pension system provides that 300 basis points (3.0%) of the contribution are distributed between (i) life and disability insurance and (ii) compensation for the AFP. In 2025, Porvenir’s funds subscribed to life and disability coverage insurance with a 2.53% premium, which resulted in a 0.47% retained as compensation. The remainder is distributed between the National Solidarity Fund (Fondo de Solidaridad Pensional), depending on the employee’s salary (up to 2.0%), and the National Minimum Pension Warranty Fund (Fondo de Garantía de Pensión Mínima) (at 1.5%).
In the case of non-contributing clients, regulations allow private pension funds to charge a performance-based commission considering that these customers have to be served in the same manner as a contributing client through branches, call-centers, billing and managing of their individual customer fund. The established performance-based commission is 4.5% of monthly returns of the clients’ individual customer fund, with a cap at 50% of the last value charged as commission over the clients’ contribution as an active customer.
Employees may freely select their mandatory pension fund, a private pension and severance fund manager of their choice or the Government-sponsored defined public benefit plan, administered by Colpensiones, and can change plans after meeting minimum tenure requirement of five years to switch from the public fund to a private plan and only up to ten years prior to the retirement age, and six months to switch
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between private fund providers with no limitation prior to retirement age. Whenever an employee changes from one AFP to another, his/her entire savings balance at the fund is transferred to the pension fund administered by the new AFP. Mandatory pension funds cannot be withdrawn prematurely, and they generally expand over the individual’s working years.
On July 16, 2024, the Government signed into effect Law 2381 of 2024, which had been previously approved by Congress. This law introduces significant reforms to the current pension system, aiming to extend its coverage to more Colombians. This law is currently suspended pursuant to a judicial decision of the Constitutional Court. However, below you will find a summary of the law.
The reform is based on a "pillar structure". Under this system:
The law includes a transition regime. Its provisions will not apply to women who have contributed to the pension system for more than 750 weeks or men who have contributed for more than 900 weeks. In terms of asset administration and investment, Law 2381 introduces a generational fund structure. This system groups clients of similar ages into the same fund, with investment strategies tailored to each group's stage of life.
Regarding corporate governance, entities authorized to manage the ACCAI pillar must adjust the composition of their boards of directors. They are required to appoint two new members, along with their alternates, who will represent the clients of this pillar.
The Government is tasked with issuing further regulations to implement its provisions. Meanwhile, severance and voluntary pension funds will continue under their existing terms and conditions. The Constitutional Court's review could have the following outcomes:
The law also reforms the fee structure for AFPs, shifting from a contribution-based scheme to one based on assets under management. AFPs may charge a maximum fee of 0.7% on assets managed up to June 30, 2025, and 0.8% on new contributions exceeding 2.3 monthly minimum wages. Further details on these fees are to be defined by the Government.
Severance funds are independent trusts formed by the accumulated severance payment allowance required by Colombian labor law. The severance payment allowance is a social benefit granted to employees for which employers are responsible under an employment agreement. The allowance consists of the payment of one month’s salary per year of service and pro rata amounts for fractions of a year. This amount is deposited directly with the AFP by the employer. Porvenir and all other pension and severance fund managers in Colombia charge a fee (per year for assets under management) of 1.0% for amounts in the mandatory investments short-term portfolio and 3.0% in the long-term portfolio.
Voluntary pension funds are independent trusts formed by contributions from their participants and/or sponsors and their respective yields, for the purpose of complying with one or several voluntary retirement or disability pension plans. Porvenir earns annual management commissions for assets under management that range between 0.6% and 3.0%, depending on the balance of the customer and the selected portfolios (lower commissions for liquidity portfolios and higher commissions for more complex portfolios).
In 2020, the Colombian government, through Decree 1207 issued a new legal framework applicable to voluntary pension funds. This legal framework required AFP to adopt higher standards of corporate governance rules and operating guidelines including a general investment policy. In 2022 Porvenir implemented all the required adjustments and procedures to fulfill the obligations arising from Decree 1207. Currently, Porvenir is implementing the applicable laws for the correct duty of advice (also known as “deber de asesoría”) to its clients at the moment of investing their funds in the voluntary pension fund administered by Porvenir. The regulations applicable to the correct duty of advice can be found on Decree 661 of 2018 and Decree 1239 of 2024.
Third-party sponsored pension liability funds
Third-party sponsored pension liability funds are independent trusts made up of deposits from different institutions (both private and publicly owned) that require a professional institution to manage a fund that is usually created to finance special pension regimes (i.e., pensions that are paid by the employer; before 1994, companies were allowed to establish their own internal pension systems).
Third-party sponsored pension liability funds enable Porvenir to receive performance-based commissions, in few cases these funds have a minimum guaranteed return pursuant to their specific terms. Porvenir retains a percentage of the yearly returns of each third-party sponsored pension liability fund, and in some cases, a portion of assets under management.
Pension fund solvency measures
For information regarding pension and severance fund solvency measures see “Item 4. Information on the Company—B. Business overview—Supervision and regulation—Capital Adequacy Requirements—Porvenir”.
C. Organizational structure
See Note 1 of our consolidated financial statements for information on our organizational structure. 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), a merchant bank (Corficolombiana), a trust and fiduciary services company (Aval Fiduciaria), a stock broker (Aval Casa de Bolsa), and an investment banking company (Aval Banca de Inversión).
D. Property, plant and equipment
We have listed below the carrying amount of property, plant and equipment of each of our operating segments at December 31, 2025.
Buildings and
Bearer
land(1)
Machinery
Equipment
plants
properties
(Ps billions)
523.8
548.9
56.7
1,139.7
Merchant Banking
936.3
4,406.6
59.7
285.1
5,713.6
Consolidation adjustments and eliminations
(0.0)
1,524.6
4,418.0
623.5
84.3
6,935.4
A. Operating results
The following discussion of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements prepared in accordance with IFRS at December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 and the related notes thereto, and with the other financial information included in this annual report. The preparation of our audited consolidated financial statements requires the adoption of assumptions and estimates that affect the amounts recorded as assets, liabilities, revenue and expenses in the years and periods addressed and are subject to certain risks and uncertainties. Our future results may vary substantially from those indicated because of various factors that affect our business, including, among others, those identified under “Forward-Looking Statements” and “Item 3. Key Information—D. Risk factors”, “Item 5. Operating and Financial Review and Prospects—D. Trend information”, and other factors discussed in this annual report. For information regarding the calculation methodology of the main key performance indicators used throughout this section see “Item 3. Key Information—A. Selected Financial Data”.
Volume and rate variances are calculated based on changes in average balances over the period. This includes changes in interest rates on average interest-earning assets and average interest-bearing liabilities. The calculations involve: (a) changes in volume (change in volume times new rate) and (b) changes in rates (change in rate times old volume). Net changes attributable to changes in both volume and interest rate have been allocated to changes in volume. Calculations are done on a line-by-line basis to account for changes in mix when analyzing each group of interest-earning assets (gross loans, total gross loans and total interest-earning assets) and interest-bearing liabilities (customer deposits, other funding and total funding). In Item 5, we refer to “N.A.” as not applicable.
On November 27, 2025, Banco de Bogotá’s subsidiary Multi Financial Holding, Inc. entered into a share purchase agreement with BAC International Corporation, a subsidiary of BAC Holding International Corp., for the disposal of 17,069,875 shares representing 99.569068% of the issued and outstanding shares of MFG, the parent company of Multibank, Inc., at a price of U.S.$26.8611 per share.
Based on the foregoing, as of December 31, 2025, MFG is presented as a non-current asset held for sale, together with liabilities directly associated with the assets classified as held for sale, resulting in a discontinued operation for the years 2025, 2024 and 2023. To facilitate meaningful analysis and comparability, average statement of financial position balances prior to the reclassification of MFG’s operations, including as used to calculate average yields and average rates, have been adjusted to exclude the impact of assets currently classified as non-current asset held for sale, together with liabilities directly associated with the assets classified as held for sale. See “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Transactions related to MFH—Discontinued operations.”
We have not included a discussion of year-over-year comparisons between 2024 and 2023 in this annual report on Form 20-F. This discussion can be located in “Item 5. Operating and Financial Review and Prospects—Results of Operations for the Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023” in our annual report on Form 20-F for the year ended December 31, 2024, filed with the SEC on April 28, 2025
Principal factors affecting our financial condition and results of operations
International context
While there is not final data yet available, current estimated growth for the global economy in 2025 is 3.3%, indicating a small upward revision as trade tensions continue to abate, even though these remained subject to occasional flare-ups. Global inflation is expected to continue its downward trend to 4.1% in 2025. Outlook for the global economy remains tilted to the downside, as productivity growth expectations related to AI if not fulfilled could lead to decline in investment and subsequent financial markets correction.
Related to the American economy, although headline inflation had edged up since Trump’s tariffs began to take effect, long-term inflation remained well-anchored. On the monetary policy side, the FED resumed their rate easing with two 25 basis points cuts to the federal funds target range, closing the year at 3.75-4%.
Colombian economic conditions
In Colombia, GDP growth recovered in 2025 with a 2.6% real GDP growth that compared favorably to the 1.5% GDP growth in 2024, maintaining the recovery trend of the Colombian economy. However, the future GDP outlook requires a sustained increase in investment levels to improve on current growth.
GDP recovery was driven by household consumption, which continues to increase in relevance, growing 3.6% in the year. This performance was mainly explained by the resilience of the labor market and improving consumer confidence. Gross fixed capital formation (investment) grew 1.3% in 2025 and now represents 16.6% of GDP, remaining at historically low levels relative to the 2010 – 2019 period average of 22.1%. The country’s trade balance was negative in 2025, standing at -10.7% of GDP and increasing 18.2% with exports and imports posting 1.8% and 8.4% growth respectively. Finally, the public spending component represents 16.8% of GDP in 2025 and has a relevant contribution to GDP dynamics after posting an annual expansion of 7.1%.
The average unemployment rate in 2025 was 8.9%, 127 basis points lower than 2024 and recording the lowest annual average for the country since the beginning of the century. In 2025, 5 out of the 13 measured sectors of the economy recorded an increase in employment compared to 2024; the sectors with the largest increases in employment rates were industry and public administration, while agricultural had the largest negative impact on employment in 2024.
Fiscal accounts
On the fiscal front, the deficit for 2025 closed at 6.4% of GDP and remains the main challenge of the country’s economy. Although it showed a decrease from the 6.8% recorded in 2024, it was the second highest fiscal deficit in 20 years (excluding 2020 and 2021 due to fiscal pressures derived from the COVID-19 pandemic). This situation is mainly the result of lower tax collections as a proportion of GDP compared to 2024 and a still historically high level of government spending.
Although showing some signs of improvement, the fiscal outlook for the Colombian economy still appears challenging amid the government’s ability to adjust expenditures to new collection levels. Impact from the persistently high fiscal account deficit and large issuances of new debt led to a marked increase in the yield curve of local government debt (TES), as seen on the graph below. The short rate up scenario caused by a 233-basis points deterioration in the two-year TES was mainly attributable to the shifting expectations regarding the Central Bank’s interest rate path and the financing strategy pursued by Public Credit, which focused largely on the issuance of short-term TES (“TCOs”). Impact from the persistently high fiscal account deficit led to an increase in yield of government debt (TES), as seen on the graph below, with 30-year yields increasing by 63 basis points between December 2024 and February 2026.
Source: Bloomberg.
Interest rates and inflation
Inflation in Colombia remained relatively stable in 2025, closing the year at 5.10%, from 5.20% recorded a year earlier, marking the fifth consecutive year in which the year-end inflation exceeded the Central Bank’s target range of 2% to 4%, and ranking above the analysts’ consensus for most of the year. The main contributors to the annual inflation were (i) utilities and accommodation (4.76%),(ii) foods and non-alcoholic beverages (5.07%) and (iii) restaurants and hotels (7.91%). Inflation expectations for 2026 increased significantly in the latter part of 2025, as expectations of a historical increase of the minimum wage in real terms began to show on analysts’ forecasts, which estimated numbers between 11% and 13%. After the government set a 23.7% minimum wage increase (including transportation subsidy) on December 29, 2025, inflation expectations have continued to price-in inflationary pressures.
The Central Bank cut its interest rate by just 25 basis points, from 9.50% to 9.25% in May 2025. The board of the Central Bank debated on the negative effects that ongoing fiscal pressures were going to have on future inflation and decided to halt the easing cycle in place since December 2023. As the year progressed and inflation expectations deteriorated, the year-end 2026 Central Bank rate expectations began to increase in tandem, shifting 5.25 percentage points to 11.75% in 12 months (as seen on the graph below).
115
Source: Analysts’ expectations survey by the Central Bank (BanRep). *Expectations correspond to the median of the values given by the surveyed analysts
The end of period interest rate cap decreased 1.37 percentage points to 25.02% from 26.39% in 2024, while the average rate cap decreased 5.51 percentage points to 25.22% in 2025 from 30.73% in 2024.
Exchange rates
The Colombian Peso showed important signs of recovery, with an annual appreciation of 14.8%, to 3,757.08 per U.S. dollar at December 31, 2025 from 4,409.15 pesos per U.S. dollar at December 31, 2024. Heavy U.S. dollar inflows from remittances and the government liability management strategies, along with external factors led to a weaker U.S. dollar.
Even though MFHs operations will not continue to be part of the group’s operations, Grupo Aval continues to be subject to impacts on our consolidated financial statements derived from fluctuations of the Colombian peso against the U.S. dollar, the currency in which most of our foreign long-term debt is denominated. At December 31, 2025, 8.7% of our loans and 7.8% of our deposits were denominated in foreign currency. On a consolidated basis, we had U.S.$ 3.4 billion (Ps 12.9 trillion) of long-term debt denominated in U.S. dollars as of December 31, 2025.
Banking industry overview
At December 31, 2025, gross loans in the Colombian banking system grew 7.6% annually, while at the previous year-end, growth was 3.54 (7.4% and 3.4% when adjusted for securitized mortgage loans, respectively). As Colombia’s nominal GDP expanded 8.2%, the ratio of bank loans (adjusted for securitized mortgage loans) to GDP decreased to 39.4% from 39.7% in 2024. Commercial loans grew 6.2% compared to 5.8% the previous year, consumer loans grew by 6.9% in 2025 compared to the contraction of 3.4% in 2024, and mortgages grew 12.0% compared to 8.1% the previous year.
Transactions related to MFH – Discontinued operations
On November 27, 2025, Banco de Bogotá’s subsidiary Multi Financial Holding, Inc. entered into a share purchase agreement with BAC International Corporation, a subsidiary of BAC Holding International Corp., for the disposal of 17,069,875 shares representing 99.569068% of the issued and outstanding shares of MFG, the parent company of Multibank, Inc.
The following table illustrates, to facilitate comparability to our previously reported results, the contributions of the discontinued MFH segment to Grupo Aval’s audited consolidated statement of income for the year ended December 31, 2024, prior to our deconsolidation of MFH, as reported in our annual report on Form 20-F for the year ended December 31, 2024, filed with the SEC on April 28, 2025:
116
MFH operating segment relative to Grupo Aval
Year ended December 31, 2024
Grupo Aval 2024 as reported on 2024 20-F
MFH 2024
Grupo Aval 2024 as reported on 2025 20-F
MFH as a percentage of Grupo Aval 2024 as reported on 2024 20-F
28,181.9
1,210.0
4.3%
(20,914.3)
(869.8)
4.2%
7,267.6
340.2
(4,755.1)
(139.5)
(4.2)
(19.8)%
0.0%
(4,185.0)
(138.7)
3,082.6
201.5
3,583.8
107.8
Net trading income
1,404.4
0.2%
890.7
244.5
27.5%
(8,651.8)
(526.3)
6.1%
3,137.9
30.1
(946.4)
(4.4)
Net income for the year from continuing operations
1.2%
Net income for the year from discontinued operations
(25.7)
N.A.
1.7%
(17.7)
Net income attributable to non-controlling interests
The following information presented corresponds to continued operations.
Results of Operations for the Year Ended December 31, 2025 Compared to the Year Ended December 31, 2024
Net income attributable to owners of the parent increased 69.6% to Ps 1,721.9 billion, compared to Ps 1,015.1 billion in 2024. Return on average assets was 1.0% and return on average equity was 9.6%. This improvement was mainly based on a recovery in our net interest margin, which in turn was captured through a decrease in the cost of funding. Cost of funds decreased in line with an improvement in benchmark interest rates. Additionally, the consolidation of a positive evolution in asset quality, in particular that for consumer loans, enabled a decrease in cost of risk metrics.
During 2025, we continued focusing on profitable growth. We focused on local currency commercial loans in segments other than large corporates and on personal loans and credit cards in consumer lending. Our Colombian Peso denominated commercial loans market share remained unchanged at 26.3%. We are selective in large corporate commercial loans, given the aggressive pricing competition present throughout the year, where we lost 204 basis points. However, we gained 131 basis points of market share in local currency denominated commercial loans other than large corporates. We gained market share in products and segments where we were under-weight, such as factoring (where we gained 543 bps to 24.2%) and government loans (where we gained 219 bps to 23.0%). Regarding our U.S. dollar denominated commercial loans in Colombia, where we have historically been overweight, we reduced our market share by 356 bps to 35.3%. In addition, in peso terms, the balances of dollar denominated commercial loans were negatively impacted by the 14.8% appreciation of the Colombian peso over the year. As a result of the above, our market share for commercial loans fell 37 bps.
In consumer loans, we focused on diversifying our portfolio toward higher yielding and shorter-term loans, reducing our concentration in payroll lending. We gained 138 basis points of market share personal loans to 21.5%. To support our credit card business, we also launched the FIFA-VISA alliance, where we gave up 132bps to 17.4%. All of this, while maintaining our leadership position in payroll lending, where we have a 42.2% market share, where we reduced our share by 127 bps. Overall, our market share for consumer loans closed at 28.9%, with a 53 basis points decrease. Moving on to mortgages, we continued gaining market share, with a 117 basis points increase in the year. As a result of the abovementioned, we closed our market share in total loans at 25.0%, 28 basis points lower than in 2024.
Corficolombiana worked throughout the year to lay the foundations for a new growth cycle driven by portfolio rotation and entry into high-potential sectors. Deleveraging efforts and a decline in rates led to a 16% reduction in funding costs, reflected favorable interest rates. Finally, operational efficiencies continued to materialize following the exit from financial services.
Finally, despite weak market results at year end, Porvenir delivered its strongest annual performance to date. Assets under management reached Ps 271.2 trillion and increased 14.9% and a ROAE reached 21.2%.
This context is reflected in the following results:
118
Overview
The following discussion describes the main drivers of Grupo Aval’s results of operations for the year ended December 31, 2025 compared to the year ended December 31, 2024. Further details are provided in the Management Discussion and Analysis of Operating Segments.
Grupo Aval’s net income attributable to owners of the parent for the year ended December 31, 2025 was Ps 1,721.9 billion (Ps 72.5 per share, including common and preferred shares), increasing 69.6% or Ps 706.8 billion compared to the year ended December 31, 2024. Return on average equity for 2025 was 9.6% as compared to 6.0% in 2024.
Grupo Aval Consolidated
Change, 2025 vs. 2024
(3.9)
1,996.6
(10.0)
943.9
347.4
(7.5)
38.9
162.0
28.2
507.4
(12.5)
1,451.3
50.4
184.1
(389.6)
(15.7)
272.2
77.6
769.6
119.1
(774.4)
1,513.4
48.7
(490.7)
52.1
1,023.7
46.7
706.1
70.8
706.8
69.6
316.9
26.9
Net interest income increased 13.6% or Ps 943.9 billion to Ps 7,871.3 billion in 2025. Total interest income decreased 3.9% or Ps 1,052.7 billion driven by a 123 basis points decrease in the average yield of interest-earning assets, offset by a 6.2% or Ps 13,063.5 billion increase in the average balance of interest-earning assets.
Total interest expense decreased 10.0% or Ps 1,996.6 billion, more than total interest income, resulting from a 156-basis points reduction in interest rates paid on interest-bearing liabilities, partially offset by a 9.3% or Ps 20,991.2 billion increase in the average balance of interest-bearing liabilities.
The 156-basis points reduction in the average rate paid on interest-bearing liabilities in 2025 were consistent with a 205 basis points decrease in the average Central Bank rate. Interest-earning assets and interest-bearing liabilities continued pricing-in the accumulated 400 basis points of Central Bank easing cycle executed between the beginning of December, 2023 and April, 2025. In 2025 the Central Bank rate cut its reference rate by 25 basis points in April, from 9.50% to 9.25% and otherwise kept it unchanged throughout the year.
119
The banking segment’s banking book profile drove the expansion of the interest spread between the average yield on gross loans and the average rate paid on interest-bearing liabilities, which expanded by 30 basis points to 4.8%. Our net interest margin increased 23 basis points to 3.5%. The gradual repricing of assets and liabilities reflecting both the pass-through of lower reference rates on variable-rate instruments and the rollover of fixed-rate instruments at current market rates.
During the first half of the year, the banking segment pursued an active funding strategy that sought to capture the benefits of falling rates in the average cost of interest-bearing liabilities. During the second half of the year, the shift focused toward reducing balance sheet sensitivity (see Note 4.1.4 to our consolidated financial statements) as the outlook for lower Central Bank rates became less likely and hawkish pressures began to arise. Our banks focused on (i) increasing the share of deposits from individuals and low-cost transactional deposits to overall deposits, (ii) extending term-deposit tenures, and (iii) deploying hedging instruments to swap variable-rate deposits cashflows to fixed-rate, benefitting from specific market opportunities available during the third quarter of the year.
The merchant banking segment inherently has significantly more interest-bearing liabilities than interest-earning assets, as a result of a substantial portion of funding used to finance both the ordinary course of non-financial businesses and Corficolombiana’s investment portfolio in debt and equity securities. Consolidated non-financial subsidiaries’ net interest margin has been and is expected to continue to be negative in the future as these entities are not financial entities and thus pay interest expenses to fund returns of assets that are mostly not considered interest-earning assets. The income on those assets is primarily registered as gross profit (loss) from sales of goods and services and net income from other financial instruments mandatorily at FVTPL, and to a lesser extent, in other income under share of profit of equity accounted investees, net of tax (equity method). Income and expenses related to financial assets and liabilities, in addition to net interest expense, are recognized under net trading (loss) income and foreign exchange gains (losses), net.
Average balance of interest-earning assets
Net interest margin for
Net interest income for the
for the year ended December 31,
the year ended December 31,
year ended December 31,
222,535.6
209,472.1
13,063.5
The following tables show: (i) the average balance, average yield and interest income on interest-earning assets from continuing operations with an analysis of impacts derived from changes in the average balance and the average yield, per type of interest-earning asset; interbank and overnight funds are shown separate from gross loans due to their characteristics and short-term nature and (ii) the average balance, average rate paid and interest expense on interest-bearing liabilities with an analysis of impacts derived from changes in the average balance and the average rate, per type of interest-bearing liabilities.
(i)
Average balance for the
Average yield for the
Interest income for the
Impact on interest income
Change, 2025
vs. 2024
Balance
Yield
2,924.0
10.8%
11,525.6
12,975.9
317.2
(1,767.5)
(1,450.3)
(11.2)
2,000.3
14.8%
15.4%
8,756.7
8,805.2
296.9
(345.5)
(48.5)
3,736.1
10.3%
2,095.3
1,751.7
384.4
(40.9)
343.6
(170.8)
(98.5)
28.1%
(15.8)
(32.7)
(99.5)
8,489.6
12.1%
13.3%
1,124.0
599.2
524.8
52.6%
131.1%
276.2
(470.3)
(24.7)
186,718.4
177,703.9
9,014.5
12.3%
13.7%
1,108.9
(2,506.8)
(1,397.9)
(5.7)
Investments in debt securities
4,049.0
8.2%
11.6%
1,521.5
(2,574.2)
(ii)
Average rate paid for the
Interest expense for the
Impact on interest expense
120
6,598.6
5,087.8
1,510.9
3.4%
4.8%
(226.8)
(245.2)
(51.9)
70.3
8,699.5
9.1%
(8,363.4)
(8,971.7)
(794.8)
1,403.0
608.2
(6.8)
7,158.8
5.5%
(4,499.3)
(5,396.4)
(392.5)
1,289.6
897.1
(16.6)
Total interest-bearing deposits
180,197.6
162,828.4
17,369.2
7.3%
(13,089.6)
(14,613.2)
(1,261.7)
2,785.4
1,523.7
(10.4)
3,080.0
8.0%
9.8%
(1,597.2)
(1,649.6)
299.2
52.4
(3.2)
557.0
7.4%
(1,818.6)
(2,105.0)
(41.3)
327.7
286.4
(13.6)
(15.0)
(0.1)
6.8%
(1,542.5)
(1,676.6)
133.1
134.1
Other funding
67,293.3
63,671.3
3,622.1
8.5%
(4,958.3)
(5,431.3)
(266.9)
739.8
472.9
(8.7)
247,490.9
226,499.7
20,991.2
(1,530.8)
3,527.4
Grupo Aval’s average balance of gross loans increased 4.8% or Ps 8,489.6 billion in 2025 and the average yield was 12.1%, 126 basis points lower than in 2024. Growth of average balances of 4.8% was higher than that of closing balances of 4.6%, especially driven by mortgages.
Peso-denominated loans grew 6.8% year-over-year on closing balances and 5.4% on average balances. Peso-denominated commercial loans grew 5.5% and 3.6%, consumer loans grew 4.7% and 3.5%, mortgage loans grew 19.6% and 22.5%, and microcredit loans decreased 65.3% and 98.5%, respectively on a closing balance and average balance basis; the latter of which continues to wind down following Banco de Bogotá’s exit from this segment in 2024. As for U.S. dollar denominated loans in U.S. dollar terms, year-over-year growth was 0.5% for closing balances and -0.7% for average balances.
Interest rate dynamics for gross loans were driven by changes in the Central Bank rate in Colombia. The average Central Bank rate decreased by 205 basis points from 11.4% in 2024 to 9.3% in 2025. The end of period Central Bank rate closed at 9.25% on December 31, 2025, down 25 basis points from 9.50% a year earlier. Given that 81.8% of Grupo Aval’s commercial loans are variable rate mostly referenced to the 1-month, 3-month or 6-month inter-bank rate (IBR), average yields on commercial loans decreased 171 basis points to 10.8%, slightly below the 205 basis points decrease in the average Central Bank rate.
Considering that 96.1% of Grupo Aval’s consumer loans are fixed rate, the average yields on these loans priced in only a portion of the reduction in reference rates, decreasing 61 basis points during 2025. Finally, 97.5% of Grupo Aval’s mortgages are fixed rate and their average yield decreased 25 basis points.
The average balance of interest-earning investments in debt securities increased 12.7% or Ps 4,049.0 billion, reflecting continued deployment of liquidity into fixed-income instruments. The Colombian sovereign yield curve (TES) deteriorated as fiscal pressures mounted and macroeconomic projections pointed to a restrictive interest rate cycle. In addition, the banking system remained liquid throughout the year, with deposit growth consistently outpacing that of gross loans, which lead to an expansion in our investments portfolios in debt securities. In this context, our banks positioned their portfolios to capture favorable carry and forward-looking gapping opportunities.. As a result, the average yield for investments in debt securities increased 4 basis points to 8.2%.
Finally, average funding rates continued to decline, in line with the reduction in the average Central Bank policy rate in 2025. In addition, the average rates paid on interest-bearing liabilities improved due to active efforts to optimize the funding mix toward lower-cost retail and transactional deposits. The end of period balance of interest-bearing liabilities increased 9.21% or Ps 21,795.5 billion, driven by a 14.3% or Ps 11,015.9 billion increase in savings accounts, a 10.8% or Ps 9,235.5 billion increase in time deposits and a 28.0% or Ps 4,955.3 billion increase in interbank borrowings and overnight funds. The average balance of interest-bearing liabilities increased 9.3% or Ps 20,991.2 billion, driven by a 10.5% or Ps 8,699.5 billion increase in time deposits and a 9.6% or Ps 7,158.8 billion increase in savings accounts. As a result, the average rate paid for interest bearing liabilities decreased 156 basis points to 7.3%, mainly driven by a 169-basis points reduction in time deposits and a 172-basis points reduction in savings accounts.
Grupo Aval’s impairment loss on loans and other accounts receivable decreased of 7.5% or Ps 347.4 billion to Ps 4,268.2 billion, reflecting a continued improvement in asset quality as the credit cycle normalizes. For more information regarding risk management please see “Item 11. Quantitative and Qualitative Disclosures About Market Risk.”
The following table provides detail by category of impairment loss on loans and other accounts receivable, cost of risk and cost of risk, net. For more information on the calculation methodology please refer to “Item 3. Key Information—A. Selected Financial Data.”
Cost of risk for the
Change,
Cost of risk, net for the
2025 vs. 2024
basis points
(953.2)
(690.8)
(262.4)
0.9%
(3,035.0)
(3,780.1)
745.1
(19.7)
5.1%
(149)
(157)
Mortgage
(175.9)
(133.9)
(42.0)
31.3
0.8%
(10.8)
(99.2)
(3.4)%
(6.3)%
288
(215.8)%
(9.7)%
(20,614)
(4,164.0)
(4,593.9)
430.0
(9.4)
2.2%
(35)
(0.8)
(183.6)
(4,163.3)
(4,594.7)
431.4
Other accounts receivable
(104.9)
(20.9)
(84.0)
402.2
(38)
The evolution of asset quality continues to point to the end of the credit cycle on consumer loans, with formation of loans past due more than 30 days having peaked in the first quarter of 2024. Our product mix, rich in lower risk products and segments, supported the improvement of our cost of risk and asset quality metrics.
Impairment losses for consumer loans decreased 19.7% or Ps 745.1 billion in 2024, driven by lower impairment losses on Stage 2 credit cards and personal loans. This improvement in asset quality enabled credit cards classified as Stage 1 to increase to 88.3% in 2025 from 85.5% in 2024 and personal loans classified as Stage 1 to increase to 85.6% from 80.8%. As a result of better asset quality, the coverage ratio (loss allowance as a percentage of gross loans) for the consumer loan portfolio decreased from 7.1% in 2024 to 6.1% in 2025, given that Stage 1 loans have lower coverage ratios as they have lower probabilities of default. Impairment losses for our commercial portfolio increased 38.0% reflecting a normalization of provisioning levels. Finally, impairment losses for mortgages increased in 2025, given the increase in our balance of the portfolio. As a percentage of loans, loss allowance for mortgages decreased 16 basis points to 2.3%.
For more information on loss allowance calculations, please refer to Note 4 of our audited consolidated financial statements. The following table shows our gross loan classification by Stages in accordance with IFRS 9 (interbank and overnight funds are not included as they tend to be mostly Stage 1 and with low loss allowance due to their characteristics and short-term nature).
Gross
Stage 1
Stage 2
Stage 3
96,612.3
3,917.3
7,779.5
94,536.7
2,903.8
8,886.0
106,326.4
122
54,227.1
3,873.8
2,355.3
50,756.1
4,409.4
2,562.5
57,728.0
(12.1)
(8.1)
20,502.2
870.3
739.2
17,037.9
776.9
680.1
18,494.9
(30.1)
(83.8)
(72.7)
(65.3)
171,342.1
8,661.4
10,875.0
190,878.4
162,331.5
8,090.1
12,132.1
182,553.6
89.2%
88.9%
8.4%
89.7%
6.4%
87.9%
7.6%
92.7%
92.1%
3.7%
35.7%
63.9%
81.3%
89.8%
43.2%
48.2%
2.0%
18.2%
78.8%
2.1%
20.6%
82.5%
7.1%
7.5%
48.5%
7.7%
48.8%
97.3%
63.1%
36.2%
99.6%
82.7%
Loss allowance as a percentage of gross loans per Stage
The following table shows the balance of loans at least 91 days past due, delinquency ratios, charge-offs and charge-offs as a percentage of average gross loans for Grupo Aval (interbank and overnight funds are not included as they tend not to be past due or charged-off due to their characteristics and short-term nature).
Loans at least 91 days past due
Delinquency ratio (1)
at December 31,
3,765.0
4,664.1
(899.1)
(19.3)
(91)
1,683.8
1,971.0
(287.3)
(14.6)
2.8%
(63)
828.7
762.5
(2.6)
(1,750)
6,278.4
7,401.2
(1,122.8)
(15.2)
(77)
Charge-offs
Charge-offs as a percentage
of average gross loans
746.1
63.7
(666.9)
(16.2)
(138)
71.1
100.2
(8.5)
(76.4)
9,363
Total charge-offs
5,523.4
141.7
(6)
Delinquency coverage ratio for gross loans, measured as loss allowance divided by past due gross loans more than 90 days increased to 134.3% in 2025 from 131.2% in 2024. Charge-offs as a percentage of average gross loans slightly decreased by 6 basis points, mainly as a result of lower charge-offs in the consumer portfolio. Recovery of charged-off financial assets increased 28.2% or Ps 162.0 billion, benefiting from the improvement in economic conditions.
Banking and other fees
2,728.6
2,625.3
103.4
Bonded warehouse services
203.8
181.8
569.7
495.9
1,282.1
1,174.6
107.4
Income from commissions and fees
4,784.2
4,477.6
306.6
Expenses from commissions and fees
(1,124.2)
(1,001.6)
(122.6)
Net income from commissions and fees increased 5.3% or Ps 184.1 billion in 2025. Income from commissions and fees increased 6.8% or Ps 306.6 billion, positively impacted by a 9.1% or Ps 107.4 billion increase in pension and severance fund management fees and a 3.9% or Ps 103.4 billion increase in Banking and other fees. Bonded warehouse services increased 12.1% or Ps 22.0 billion, driven by the recovery in demand for services. Fees from trust activities and portfolio management services increased 14.9% or Ps 73.8 billion amidst favorable capital market conditions, resulting in an increase in AUMs and therefore fee income.
The increase in pension and severance fund management is related to (i) higher mandatory pension fund contributions resulting from a 9.5% increase in minimum wage, which drove contribution-based fees, and (ii) strong market returns that drove AUM based fees. For more information see “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Management Discussion and Analysis of Operating Segments—Pension and Severance Fund Management”.
Banking and other fees increased 3.9% or Ps 103.4 billion driven by (i) a positive performance in banking service fees due to higher commercial activity and bancassurance fees, (ii) higher advisory fees related to Aval Banca de Inversion, partially offset by (iii) lower debit and credit card fees reflecting a decrease in the number of outstanding activated credit cards.
The increase in expenses from commissions and fees was mainly driven by higher payment processor expenses and commissions paid to external salesforces.
Income from sales of goods and services
10,396.8
11,048.6
(651.8)
(5.9)
Costs and expenses of sales of goods and services
(8,309.1)
(8,571.2)
262.2
(3.1)
Gross profit from sales of goods and services mainly reflects income and expenses related to non-financial assets and liabilities of Grupo Aval’s non-financial subsidiaries. Results related to financial assets and liabilities of these companies are presented under: i) interest income, ii) interest expense, iii) net income from other financial instruments mandatorily at FVTPL, iv) net trading (loss) income, v) in Other income under foreign exchange gains (losses) and share of profit of equity accounted investees, net of tax (equity method).
Year ended December 31, 2025
Energy & Gas
Hotels
Other Services
2,251.3
6,842.0
732.5
302.8
268.1
Costs from sales of goods and services
(758.7)
(4,568.9)
(218.7)
(255.1)
(66.4)
(5,867.9)
Personnel expenses
(40.7)
(182.6)
(98.9)
(16.9)
(445.3)
(784.4)
Administrative and other expenses
(465.2)
(234.3)
(39.5)
(108.2)
(913.6)
Depreciation and amortization
(103.8)
(440.9)
(16.7)
(8.4)
(25.5)
(595.3)
(14.9)
(7.4)
(0.7)
(28.8)
(54.0)
Allowance for impairment of receivables
(53.9)
(0.2)
(2.9)
(56.5)
(13.9)
(23.4)
(37.3)
Costs and expenses from sales of goods and services
(985.1)
(5,749.8)
(576.2)
(320.8)
(677.2)
1,266.3
1,092.2
156.4
(18.0)
(409.1)
2,950.0
6,908.9
631.2
309.9
248.5
(1,131.0)
(4,590.3)
(225.3)
(210.7)
(47.5)
(6,204.8)
(45.9)
(165.4)
(76.7)
(16.4)
(417.2)
(721.7)
(61.5)
(523.0)
(217.6)
(36.3)
(102.5)
(940.8)
(112.8)
(405.1)
(16.5)
(6.1)
(21.5)
(562.0)
(13.1)
(26.4)
(49.8)
(0.4)
(65.2)
(0.3)
(2.5)
(2.8)
(71.2)
(21.0)
125
(1,355.5)
(5,783.0)
(542.1)
(272.6)
(617.9)
1,594.5
1,125.9
89.1
37.3
(369.4)
Infrastructure companies remained the largest contributor to this line with a Ps 1,266.3 billion gross profit from sales of goods and services in 2025. This sector drove the overall performance in gross profit from sales of goods and services, with a 20.6% or Ps 328.3 billion decrease compared to 2024, mainly explained by a 23.7% or Ps 698.7 billion decrease in income that was partially offset by a 27.3% or Ps 370.5 billion decrease in costs and expenses. The decrease in income was mainly driven by lower construction income from Corficolombiana’s 4G road concessions, particularly in Covipacifico (Ancón Sur – Bolombolo).
Gross profit for energy and gas companies in 2025 was Ps 1,092.2 billion, 3.0% or Ps 33.7 billion lower than in 2024. Income decreased 1.0% or Ps 66.9 billion and costs and expenses decreased 0.6% or Ps 33.2 billion. Results from this sector decreased only slightly, in an environment of normalizing climatic conditions that resulted in lower regassification volumes compared to 2024.
Gross profit for hospitality companies in 2025 was Ps 156.4 billion, a 75.5% Ps 67.3 billion improvement compared to 2024. Income increased 16.1% or Ps 101.3 billion driven by stable occupancy, higher prices on food and rooms, and the PP&E strategy. The latter consists of separating the hotel management business from the real-estate business. By transferring PP&E in exchange for equity in private equity funds specialized in real estate asset management. Costs and expenses increased 6.3% or Ps 34.0 billion, which compares favorably to the 9.5% increase in the minimum wage for 2025.
Gross loss for agribusiness companies in 2025 was Ps 18.0 billion, 148.3% or Ps 55.3 billion less than in 2024. Income decreased 2.3% or Ps 7.1 billion and costs and expenses decreased 17.7% or Ps 48.2 billion. Operational performance varied across crop types. Palm crops delivered solid performance, driven by operational improvements and better prices. In contrast, rubber operations experienced lower production as a result of unusually heavy rainfall and adverse external price conditions. Meanwhile, rice crops recorded higher sales volumes and productivity despite lower prices.
Gross loss for other sectors was Ps 409.1 billion in 2025, mainly reflecting operating costs of other services companies (mainly call-centers) that provide Grupo Aval’s entities and third parties with call center, BPO and external sales-force services, Ps 39.7 billion more than the Ps 369.4 billion gross loss in 2024.
For a detailed analysis of the different sectors see “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Management Discussion and Analysis of Operating Segments—Merchant Banking” and for information related to concession arrangements rights see Note 16 of our audited consolidated financial statements.
Net trading (loss) income
Grupo Aval’s net trading income (refer to Note 29 of our audited consolidated financial statements) was Ps 1,402.0 billion in 2025, Ps 0.3 billion or 0.02% higher than in 2024, resulting from a Ps 673.7 billion increase in income from investment securities at fair value through profit or loss and partially offset by a Ps 673.4 billion decrease in net trading (loss) income from derivatives. It is worth noting that net trading (loss) income from derivatives should be analyzed in conjunction with foreign exchange gains (losses); in this sense, the performance of net trading (loss) income from derivatives was offset by a Ps 1,037.6 billion increase in foreign exchange gains (losses), net, recognized under other income as described below.
Net trading (loss) income from investment securities at fair value through profit or loss consisted of three main drivers: (i) income contributed (net of eliminations) by our banking services segment increased Ps 587.4 billion to a Ps 1,145.1 billion gain in 2025, (ii) income contributed (net of eliminations) by our merchant banking segment increased Ps 66.1 billion to a Ps 226.0 billion gain in 2025, and (iii) income contributed (net of eliminations) by our pension and severance fund management segment increased Ps 22.9 billion to a Ps 291.4 billion gain in 2025. The performance of net trading (loss) income from derivatives figures also result from higher costs of foreign currency hedging strategies compared to 2024, due to the increase in the average interest rate differential between the Colombian Peso and the US Dollar in 2025.
Total income from investment securities
Grupo Aval’s securities portfolio is classified in the following categories: (i) equity and fixed income investments at FVTPL (described in this section as net trading (loss) income in investment securities at FVTPL), (ii) fixed income investments at FVOCI and (iii) fixed income investments at amortized cost or “AC” (results from (ii) and (iii) are included in net interest income as interest income on investments in
126
debt securities). Grupo Aval manages its investment portfolio in a comprehensive and integral manner that considers individual return of each one of these three categories and the total return of the investment securities portfolio.
Total income from investment securities for Grupo Aval (comprised of interest income on investments in debt securities and net trading (loss) income from investment securities at FVTPL) was Ps 4,609.6 billion for 2025, 28.4% or Ps 1,019.8 billion more than in 2024. This was primarily driven by a 22.8% or Ps 10,922.8 billion increase in the average balance of total investment securities to Ps 58,882.1 billion in 2025 and by a 34 basis points increase in the average yield on total investment securities to 7.8% in 2025 up from 7.5% in 2024.
Net income from other financial instruments mandatorily at FVTPL
Net income from other financial instruments mandatorily at FVTPL reflect the fair value of certain concession arrangements entered between Promigas and the Colombian government, that meet the requirements for mandatory recognition at FVTPL and increased by Ps 272.2 billion to Ps 623.2 billion in 2025 as compared to 2024. During the year, the Ballenas - Cartagena contract was measured at fair value and implied a one-time fair value recognition of Ps 303.2 billion. However, the change from a financial asset to PP&E led to a one-time increase in deferred tax liabilities of Ps 358.8 billion. See “Item 5. Operating and Financial Review and Prospects—A. Operating results—Grupo Aval—Tax Expense.”
Other income increased Ps 769.6 billion to Ps 1,415.8 billion, mainly driven by a Ps 1,037.6 billion increase in foreign exchange gains (losses), net, offset by a Ps 168.0 billion decrease in Net gain (loss) on sale of debt and equity securities.
Foreign exchange gains (losses), net
585.0
(452.6)
1,037.6
(229.2)
Share of profit of equity accounted investees, net of tax
378.4
(27.5)
(7.3)
Net gain (loss) on sale of debt and equity securities
149.6
(168.0)
(112.3)
Dividends
126.7
141.9
(10.7)
Gain (loss) on the sale of non-current assets held for sale
(8.2)
Gain on sale of property, plant and equipment
80.9
(28.2)
(34.9)
Net gain (loss) in asset valuation
71.7
27.9
43.8
157.3
235.3
300.0
(64.8)
(21.6)
The Ps 1,037.6 billion increase in foreign exchange gains (losses), net to a Ps 585.0 billion gain should be analyzed in conjunction with net trading (loss) income from derivatives, as described above under net trading income. The net result of both activities (foreign exchange and derivatives) for 2025 was a Ps 327.2 billion gain compared to a Ps 37.0 billion loss in 2024, driven by the annual appreciation of the Colombian Peso and the favorable performance of hedging strategies relating to the non-financial sector, which are registered under foreign exchange gains (losses), net.
The Ps 27.5 billion decrease in share of profit of equity accounted investees, net of tax (equity method) was driven by (i) a Ps 9.5 billion decline in Gases del Caribe due to the appreciation of the average exchange rate in 2025 as compared to 2024, (ii) a Ps 8.5 billion decrease in Aerocali (airport concession in Cali held through Corficolombiana), reflecting the expiration of the concession agreement and the termination of operations in August 2025, after he completion of the 25‑year concession term, and (iii) a Ps 7.5 billion decrease from ACH due to pricing adjustments for certain services.
The Ps 168.0 billion decrease in net gain on sale of debt and equity securities to a Ps 18.4 billion loss was explained by the recognition of losses in the second quarter of the year, given the participation in sovereign debt exchanges extended by the Ministry of Finance’s Public Credit. These exchanges enabled yields to reprice upward, despite the upfront realization of losses, with break-evens shorter than a year.
The Ps 15.2 billion decrease in dividends was driven by lower dividend income from Grupo Energía de Bogotá (GEB), Mineros and Sociedad Aeroportuaria de la Costa.
During 2025, our subsidiaries continued their PP&E structure optimization program, although at a lower volume compared to the previous year, by transferring some non-strategic property, plant and equipment in exchange for equity in private equity funds specialized in real estate asset management (NEXUS Real Estate Capital Funds), some of which were part of sale and lease operations. As such, we recorded a Ps 28.2 billion decrease in gain on the sale of property, plant and equipment to Ps 52.7 billion (as fair value of derecognized PP&E was
127
higher than book value). The Ps 43.8 billion increase in net gain in asset valuation is related to the increase in the fair value of investment properties, reflecting other real estate owned (OREOs) received by Banco de Occidente and Banco Popular.
(3,231.9)
(3,022.2)
(209.8)
(4,697.2)
(4,292.2)
(405.0)
(770.4)
(674.2)
(96.2)
Impairment loss on other assets
(2.7)
(4.9)
(45.3)
Losses from sales of non-current assets held for sale
(2.1)
(0.5)
(195.1)
(129.9)
(65.1)
50.1
In 2025 other expenses increased 9.5% or Ps 774.4 billion, mainly due to a 9.4% or Ps 405.0 billion increase in administrative and other expenses and a 6.9% or Ps 209.8 billion increase in personnel expenses. Growth in personnel expenses resulted from a 6.8% or Ps 198.1 billion increase in salaries and employee benefits, in addition to a 12.0% or Ps 11.6 billion increase in labor severances and bonus plan payments. For reference, the minimum wage in Colombia increased by 9.5% in 2025.
Administrative and other expenses increased 9.4% or Ps 405.0 billion, driven by (i) a 15.4% or Ps 55.2 billion increase in maintenance and repair expenses, (ii) a 20.4% or Ps 53.5 billion increase in marketing expenses relating to brand positioning efforts for our banks, which returned to historical levels after being subdued for years to help mitigate NIM and cost of risk pressures in prior periods,(iii) a 6.9% or Ps 74.5 billion increase in operating taxes, primarily reflecting a normalization relative to 2024, and (iv) a 32.3% or Ps 17.3 billion increase in consulting and legal fees. The remaining expenses increased 8.1% or Ps 200.4 billion driven by higher IT investments and affiliations and contributions expenses.
Depreciation and amortization expenses increased 14.3% or Ps 96.2 billion due to the entry into operations of projects that are accounted under “Other intangible assets” in the consolidated statements of financial position.
The ratio of other expenses as a percentage of average assets reached 2.6% in 2025, same as for 2024. Cost to income efficiency ratio was 52.2% in 2025, 101 basis points lower as compared to 53.2% in 2024, given that Grupo Aval’s other expenses increased by 9.5% and its total income before net impairment losses on financial assets (defined as the sum of net interest income, net income from commissions and fees, gross profit (loss) from sales of goods and services, net trading (loss) income, net income from other financial instruments mandatorily at fair value through profit or loss “FVTPL” and other income) increased by 11.7%.
Tax expense
Income tax expense for Grupo Aval increased by 52.1% or Ps 490.7 billion, to Ps 1432.7 billion in 2025. This was mainly driven the remeasurement of deferred tax liabilities related to the Ballenas - Cartagena gas transportation pipeline had an one-time effect of Ps 359 billion. See Item 5. Operating and Financial Review and Prospects—A. Operating results—Grupo Aval— Net income from other financial instruments mandatorily at FVTPL.
Grupo Aval’s income tax expense divided by net income before income tax expense excluding dividends and share of profit of equity accounted investees, net of tax (as they are non-taxable income), was 34.6% in 2025 and 36.4% in 2024. For more information on income tax expense, please refer to Note 19 of our audited consolidated financial statements.
Net income attributable to non-controlling interest increased 26.9%, or Ps 316.9 billion, to Ps 1,493.3 billion in 2025 compared to 2024. The ratio of net income attributable to non-controlling interest to net income decreased to 46.3% in 2025 from 53.6% in 2024. The decrease in this ratio is mainly attributable to a change in the mix of our segment’s contribution to net income driven by (i) a higher contribution to net income from our banking services segment, and (ii) a higher contribution from our pension and severance fund management segment, of which 24.2% is non-controlling interest.
128
Net income for the period from discontinued operations, net of tax, reflects the reclassification of line items associated with Multifinancial Group (MFG) in anticipation of its disposal in 2026, and grew 3.8% or Ps 0.7 billion in 2025 to Ps. 18.4 billion.
129
Management Discussion and Analysis of Operating Segments
In the following section we will refer to the consolidated results of our main operating segments. Overall, the principal drivers for our operating segments are the same as those discussed under Grupo Aval’s Management Discussion and Analysis. As such, the following section will focus on the drivers affecting each of our operating segments rather than revisiting the general discussion.
The presentation format in the following tables follows the structure of the consolidated statement of income in our audited consolidated financial statements and may differ from the presentation of our operating segments in Note 31 of our audited consolidated financial statements in that the following tables aggregate intersegment and external income.
Banking Services
Net income for the year ended December 31, 2025 was Ps 1,969.7 billion, increasing 74.1% or Ps 838.5 billion compared to the year ended December 31, 2024. Net income from continuing operations was Ps 1,943.1 billion, increasing 75.8% or Ps 837.5 billion compared to 2024.
For the year ended
Change 2025 vs
24,825.7
25,860.6
(1,034.9)
(15,408.3)
(17,097.8)
1,689.5
(9.9)
9,417.4
8,762.8
654.6
(4,206.7)
(4,552.8)
346.1
(7.6)
(10.1)
(5.3)
108.2
730.0
160.2
(3,486.9)
(3,987.9)
501.0
(12.6)
5,930.5
4,774.9
1,155.6
2,505.7
2,404.0
101.8
Gross loss from sales of goods and services
(398.5)
(358.9)
(39.6)
1,051.9
794.9
257.1
1,330.6
1,124.5
206.2
(8,316.8)
(7,658.7)
(658.2)
2,103.5
1,080.6
1,022.9
Income tax (expense) recovery
(160.4)
24.9
(185.4)
(743.1)
1,943.1
1,105.6
837.5
75.8
1,969.7
1,131.2
838.5
Net interest income increased 7.5% or Ps 654.6 billion to Ps 9,417.4 billion in 2025. The net interest margin increased 4 bps to 4.4% in 2025 compared to the 4.3% of 2024, as the reduction in the average yield on interest-earning assets was offset by a corresponding decline in the average rate paid on interest-bearing liabilities, both reflecting the continued transmission of the monetary policy easing cycle throughout 2024; however, the Central Bank’s interest rate and cost of funds remains high compared to historical levels.
Total interest income decreased 4.0% or Ps 1,034.9 billion, driven by a 126-basis points reduction in the average yield of interest-earning assets to 11.5%, that was partially offset by a 6.5% or Ps 13,206.3 billion increase in the average balance of interest-earning assets. Total interest expense decreased 9.9% or Ps 1,689.5 billion, more than total interest income, resulting from a 155-basis points contraction in interest rates paid on interest-bearing liabilities to 7.1%, partially offset by a 9.7% or Ps 19,109.7 billion increase in the average balance of interest-bearing liabilities.
The 126-basis points reduction in the average yield on interest-earning assets and the 155-basis points reduction in the average rate paid on interest-bearing liabilities in 2025 were in line with a 205 basis points decrease in the average Central Bank rate. Interest-earning assets and interest-bearing liabilities continued pricing-in the accumulated 400 basis points of Central Bank easing cycle executed between the beginning of December, 2023 and April, 2025. In 2025 the Central Bank rate cut its reference rate by 25 basis points in April, from 9.50% to 9.25% and kept it unchanged throughout the year.
130
The segment’s banking book profile drove the expansion of the interest spread between the average yield on gross loans and the average rate paid on interest-bearing liabilities, which expanded by 27 basis points to 4.8%. Net interest margin increased 4 basis points to 4.4%. The gradual repricing of assets and liabilities reflecting both the pass-through of lower reference rates on variable-rate instruments and the rollover of fixed-rate instruments at current market rates. The main drivers impacting interest-earning assets and interest-bearing liabilities during 2025, are as described under Grupo Aval’s analysis.
During the first half of the year, the segment pursued an active funding strategy that sought to capture the benefits of falling rate in the average cost of interest-bearing liabilities. During the second half of the year, the shift focused toward reducing balance sheet sensitivity (see Note 4.1.4 to our consolidated financial statements) as the outlook for lower Central Bank rates became less likely and hawkish pressures began to arise. Our banks focused on (i) increasing the share of deposits from individuals and low-cost transactional deposits to overall deposits, (ii) extending term-deposit tenures, and (iii) deploying hedging instruments to swap variable-rate deposits cashflows to fixed-rate, benefitting from specific market opportunities available during the third quarter of the year.
215,733.5
202,527.2
13,206.3
The following tables show: (i) the average balance, average yield and interest income on interest-earning assets with an analysis of impacts derived from changes in the average balance and the average yield, per type of interest-earning asset; interbank and overnight funds are shown separate from gross loans due to their characteristics and short-term nature and (ii) the average balance, average rate paid and interest expense on interest-bearing liabilities with an analysis of impacts derived from changes in the average balance and the average rate, per type of interest-bearing liabilities.
106,157.0
103,003.1
3,153.9
10.7%
12.4%
11,349.8
12,822.5
337.2
(1,809.9)
(1,472.7)
(11.5)
57,881.4
55,962.0
1,919.3
14.7%
15.3%
8,521.3
8,567.2
282.6
(328.5)
20,345.1
16,602.9
3,742.2
2,097.6
1,750.2
385.8
(38.4)
184,386.1
175,741.5
8,644.6
11.9%
13.2%
21,969.0
23,188.7
1,030.0
(2,249.6)
(1,219.6)
1,111.6
338.1
773.5
228.8
42.7%
175.6%
475.0
593.6
330.5
(449.1)
(118.6)
(20.0)
185,497.7
176,079.6
9,418.1
13.5%
22,444.0
23,782.2
1,139.5
(2,477.7)
(1,338.2)
(5.6)
30,235.8
26,447.6
3,788.2
7.9%
2,381.7
2,078.4
298.4
303.3
11.5%
12.8%
1,519.7
(2,554.6)
5,772.4
4,943.6
(239.0)
(261.3)
(34.3)
84,504.6
75,476.1
9,028.5
(7,627.9)
(8,057.5)
(815.0)
1,244.5
429.6
83,772.9
77,039.4
6,733.5
(4,437.7)
(5,346.8)
(356.7)
1,265.7
909.0
(17.0)
131
174,049.9
157,459.2
16,590.7
8.7%
(12,304.7)
(13,665.6)
(1,172.9)
2,533.8
1,360.9
14,923.0
12,059.8
2,863.2
8.1%
(1,205.2)
(1,224.5)
(231.2)
250.6
(1.6)
15,084.0
14,816.3
267.6
(1,005.5)
(1,205.0)
(17.8)
217.3
199.5
12,131.0
12,742.9
(611.8)
(4.8)
(892.9)
(1,002.7)
109.8
(10.9)
42,138.0
39,619.0
2,519.0
(3,103.6)
(3,432.2)
(185.5)
514.1
328.6
(9.6)
216,187.9
197,078.2
19,109.7
(1,362.0)
3,051.5
Average balance of gross loans increased 4.9% or Ps 8,644.6 billion in 2025 and the average yield was 11.9%, 128 basis points lower than in 2024. U.S. dollar denominated loans, which represent 7.6% of our loan portfolio, were negatively affected by an annual 0.5% appreciation in the average exchange rate.
Peso denominated loans grew 6.2% year-over-year on average balances; commercial loans grew 5.6%, consumer loans grew 3.3%, mortgage loans grew 20.3%. Microcredit loans continued to wind down following Banco de Bogotá’s exit from this segment in 2024, with the average balance decreasing 98.2% or Ps 144.8 billion, for further detail see “Item 4. Information on the Company—B. Business overview—Our operations”. As for U.S. dollar denominated loans in U.S. dollar terms, year-over-year decreased 2.3% for average balances, driven by commercial loans.
The average Central Bank rate in Colombia decreased by 205 basis points to 9.3% in 2025 from 11.4% in 2024. Given that 81.8% of the segment’s commercial loans are variable rate, mostly referenced to the 1-month, 3-month or 6-month inter-bank rate (IBR), average yield on commercial loans decreased 176 basis points to 10.7%, slightly below the 205 basis points decrease in the average Central Bank rate. On the other hand, 98.0% of the segment’s consumer loans are fixed rate and 17.6% of outstanding balances at December 31, 2024 were set to contractually mature in 2025, excluding early repayments; consequently, the average yield on consumer loans priced in a small portion of the reduction in reference rates in 2025, decreasing 59 basis points. Regarding the segment’s mortgages, 97.6% of the closing balance is at fixed rate and average yield decreased 23 basis points. For an analysis regarding external factors affecting the average yield on loans see “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Management Discussion and Analysis of Operating Segments—Grupo Aval”.
The average balance of interest-earning investments in debt securities increased 14.3% or Ps 3,788.2 billion reflecting continued deployment of liquidity into fixed-income instruments. The Colombian sovereign yield curve (TES) deteriorated as fiscal pressures mounted, and macroeconomic projections pointed to an easing interest rate cycle. In this context, our banks increased the average yield for interest-earning investments in debt securities 2 basis points. Additionally, the average balance of interbank and overnight funds increased 228.8% or Ps 773.5 billion, reflecting excess liquidity generated by interest-bearing growth exceeding that of gross loans.
Finally, average funding rates continued to decline, in line with the reduction in the average Central Bank policy rate in 2025. In addition, the average rates paid on interest-bearing liabilities improved due active efforts to optimize the funding mix toward lower-cost retail and transactional deposits. The end of period balance of interest-bearing liabilities increased 11.0% or Ps 22,510.1 billion, mainly driven by growth in customer deposits, including a 12.0% increase in time deposits and a 12.3% increase in savings accounts. Similarly, the average balance of interest-bearing liabilities increased 9.7% or Ps 19,109.7 billion, driven by a 8.7% or Ps 6,733.5 billion increase in saving deposits and a 12.0% or Ps 9,028.5 billion increase in time deposits. As a result, the average rate paid on interest-bearing liabilities decreased 155 basis to 7.1%.
Net impairment loss on financial assets decreased 12.6% or Ps 501.0 billion to Ps 3,486.9 billion, resulting from lower impairment losses and higher recoveries of charged-off financial assets.
Impairment loss on loans and other accounts receivable decreased 7.6% or Ps 346.1 billion to Ps 4,206.7 billion, driven by a 19.8% or Ps 737.4 billion reduction in consumer loan impairment losses, reflecting continued improvement in asset quality. For more information regarding risk management please see “Item 11. Quantitative and Qualitative Disclosures About Market Risk”.
In addition, recovery of charged-off financial assets increased 28.1% or Ps 160.2 billion to Ps 730.0 billion, due to the drivers discussed under Grupo Aval’s analysis.
The following table provides detail by category of impairment loss on loans and other accounts receivable, cost of risk and cost of risk, net. For more information on the calculation methodology please refer to “Item 3. Key Information—A. Selected Financial Data”.
(953.1)
(694.8)
(258.3)
37.2
(2,984.8)
(3,722.2)
737.4
(19.8)
5.2%
(158)
(79.8)%
(7.7)%
(7,202)
(4,113.8)
(4,540.0)
426.2
(4,113.1)
(4,539.2)
426.1
(93.6)
(80.0)
588.2
Cost of risk, net decreased 38 basis points to 1.9% in 2025, driven by a 158 basis points decrease in cost of risk, net of consumer loans to 4.2% that was partially offset by a 14 basis points increase in cost of risk, net of commercial loans to 0.7%. The reduction in impairment losses for consumer loans was driven by an improvement in the asset quality across all consumer segments, mainly in personal loans and credit cards, which have higher PDs than other secured products such as payroll loans and automobile loans and leases.
The continued improvement in asset quality is evidenced by the reduction in Stage 2 loans of gross consumer loans to 6.3% from 7.4% and a decrease in Stage 3 of gross consumer loans to 3.8% from 4.4%.This improvement in asset quality enabled credit card classified as Stage 1 to increase to 88.3% in 2025 from 85.5% in 2024, while personal loans classified as Stage 1 increased to 86.2% from 81.3%. As a result of better asset quality, the coverage ratio (loss allowance as a percentage of gross loans) for the consumer loan portfolio decreased to 6.0% in 2025 from 7.1% in 2024, given that Stage 1 loans have lower coverage ratios as they have lower probabilities of default.
For commercial loans, Stage 3 loans decreased to 7.2% from 8.4% of gross commercial loans, while Stage 2 loans increased to 3.6% from 2.7%, reflecting some deterioration within the commercial portfolio, as evidenced by a higher cost of risk, net. Mortgage loans continued to perform well, with Stage 1 loans increasing to 92.7% from 92.1% of gross mortgage loans.
Overall gross loans classified as Stage 1 increased to 89.9% in 2025 from 89.0% in 2024, Stage 2 loans increased modestly to 4.5% from 4.4%, and Stage 3 loans improved to 5.7% from 6.7%, reflecting the overall improvement in portfolio quality. The total loss allowance as a percentage of gross loans decreased to 4.4% in 2025 from 5.3% in 2024.
The following table shows the banking services segment’s gross loan classification by Stages in accordance with IFRS 9 (interbank and overnight funds are not included as they tend to be mostly Stage 1 and with a low loss allowance due to their characteristics and short-term nature).
133
97,007.8
3,930.8
94,065.9
105,855.6
53,328.8
3,712.6
2,251.9
49,953.2
4,197.5
2,505.9
56,656.7
20,484.6
17,011.2
18,468.2
(30.0)
(82.1)
170,821.8
8,513.7
10,771.5
190,107.0
161,031.1
7,878.2
12,075.5
180,984.8
89.9%
6.3%
3.8%
88.2%
17.7%
81.4%
89.0%
18.3%
79.6%
20.9%
2.5%
29.6%
99.7%
11.3%
51.2%
55.3%
For further detail on credit risk model and transitioning between stages, please refer to Grupo Aval’s analysis. For more information on loss allowance calculations and a description of PD risk categories under IFRS 9, please refer to Note 4.1 of our audited consolidated financial statements.
The following table shows the balance of loans at least 91 days past due, delinquency ratios, charge-offs and charge-offs as a percentage of average gross loans for the segment (interbank and overnight funds are not included as they tend not to be past due or charged-off due to their characteristics and short-term nature).
(94)
1,652.8
1,940.7
(287.9)
(14.8)
(64)
(1,752)
134
6,247.4
7,370.8
(1,123.4)
(79)
3,417.1
4,101.3
(684.2)
(143)
5,479.3
5,354.8
124.5
(1) Calculated as loans past due more than 90 days divided by gross loans.
The delinquency ratio for gross loans improved 79 basis points to 3.3% in 2025. Consumer loans improved 64 basis points to 2.8% and commercial loans improved 94 basis points to 3.5%, reflecting a stronger economic growth and the effect of a tighter underwriting policy. Delinquency coverage ratio for gross loans, measured as loss allowance divided by past due gross loans more than 90 days, was 133.4% in 2025 and 130.5% in 2024, in line with an improvement in delinquency metrics. Charge-offs as a percentage of average gross loans decreased 8 basis points to 3.0% in 2025, mainly as a result of lower charge-offs in the consumer portfolio that were partially offset by higher charge-offs in the commercial portfolio.
2,755.5
2,649.5
105.9
204.7
182.9
571.9
496.0
3,532.6
3,329.1
203.6
(1,026.9)
(925.1)
(101.8)
Net income from commissions and fees increased 4.2% or Ps 101.8 billion. Income from commissions and fees grew 6.1% or Ps 203.6 billion, driven by a a 4.0% or Ps 105.9 billion increase in banking and other fees, a 15.3% or Ps 75.8 billion increase in trust activities and portfolio management services, and a 12.0% or Ps 21.9 billion increase in bonded warehouse services. Expenses from commissions and fees increased 11.0% or Ps 101.8 billion, driven by higher payment processor expenses and commissions paid to external salesforces.
Banking and other fees’ performance was driven by a 7.8% or Ps 127.9 billion increase in banking service fees reflecting higher commercial activity and bancassurance fees, an increase in income from merchant acquiring and higher advisory fees related to Aval Banca de Inversión, See Item 4 – Our Operations – Investment Banking, partially offset by lower debit and credit card fees reflecting a decrease in the number of outstanding activated credit cards.
Bonded warehouse services increased 12.0% or Ps 21.9 billion, driven by the recovery in demand for services. Growth in trust activities and portfolio management services was driven by favorable capital market conditions and client acquisition efforts, resulting in an increase in AUMs and therefore fee income.
136.3
132.0
(534.8)
(490.9)
(43.9)
Gross loss from sales of goods and services increased by Ps 39.6 billion to a gross loss of Ps 398.5 billion in 2025. The gross loss from sales of goods and services results from services provided by the non-financial subsidiaries of Banco de Bogotá and Banco de Occidente to the segment’s businesses, for which income is eliminated in the consolidation process. This reflects the non-financial results of Megalinea and Nexa BPO.
Income from sales of goods and services increased 3.3% or Ps 4.3 billion to Ps 136.3 billion in 2025. Costs and expenses of sales of goods and services increased 8.9% or Ps 43.9 billion to Ps 534.8 billion in 2025, this increase resulted from higher personnel and administrative expenses.
Net trading income for 2025 was Ps 1,051.9 billion, Ps 257.1 billion or 32.3% higher than the Ps 794.9 billion recorded in 2024, resulting from a Ps 330.3 billion decrease in income from derivatives and offset by a Ps 587.4 billion increase in net trading income from investment securities. The performance of foreign exchange gains (losses), net, recognized under other income, increased Ps 276.5 billion during the year, and partially offsets the performance of income from derivatives. Net trading income from derivatives should be analyzed in conjunction with foreign exchange gains (losses), recognized under other income as described below. The performance of net trading (loss) income from derivatives figures also result from higher costs of foreign currency hedging strategies compared to 2024, due to the increase in the average interest rate differential between the Colombian Peso and the US dollar in 2025.
The segment’s securities portfolio is classified in the following categories: (i) equity and fixed income investments at FVTPL (described in this section as net trading (loss) income in investment securities at FVTPL), (ii) fixed income investments at FVOCI and (iii) fixed income investments at AC (results from (ii) and (iii) are included in net interest income as interest income on investments in debt securities). The segment’s businesses manage their investment portfolio in a comprehensive and integral manner that considers individual return of each one of these three categories and the total return of the investment securities portfolio.
Total income from investment securities (comprised of interest income on investments in debt securities and net trading (loss) income from investment securities at FVTPL) was Ps 3,526.8 billion for 2025, 33.8% or Ps 890.7 billion more than in 2024. This was mainly driven by an increase of Ps 9,104.3 billion in the average balance of investment securities, resulting in a Ps 706.8 billion growth in income; and by a 51 basis points increase in the average yield on total investment securities, primarily investment securities at FVTPL, which resulted in a Ps 184.0 billion increase in interest income.
173.9
(102.6)
276.5
(269.5)
808.6
679.5
129.1
(17.3)
(102.2)
(120.3)
81.0
(28.3)
(35.0)
142.0
245.5
335.1
(89.6)
(26.7)
Other income increased 18.3% or Ps 206.2 billion, mainly driven by a Ps 276.5 billion increase in foreign exchange gains, a Ps 129.1 billion increase in share of profit of equity accounted investees, net of tax, and a Ps 102.2 billion reduction in net gain (loss) on sale of debt and equity securities. Foreign exchange gains should be analyzed together with net trading results from derivatives. The combined net result
136
from foreign exchange and derivatives activities totaled Ps 80.8 billion in 2025 compared to Ps 134.6 billion in 2024. This performance was supported by the 14.8% appreciation of the Colombian peso during the year.
The Ps 129.1 billion increase in share of profit of equity accounted investees, net of tax (equity method) was driven by the increase in Corficolombiana’s and Porvenir net income. For more information on the performance of the segments under which these companies are reported refer to “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Management Discussion and Analysis of Operating Segments—Pension and Severance Fund Management” and “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Management Discussion and Analysis of Operating Segments—Merchant Banking”.
The Ps 17.3 billion loss on sale of debt and equity securities was explained by the realization of unrealized gains in the second quarter of the year, given the participation in sovereign debt exchanges extended by the Ministry of Finance’s Public Credit. These exchanges enabled yields to reprice upward, despite the upfront realization of losses, with break-evens shorter than a year.
During 2025, our subsidiaries continued their PP&E structure optimization program, although at a lower volume compared to the previous year, by transferring some non-strategic property, plant and equipment in exchange for equity in private equity funds specialized in real estate asset management (NEXUS Real Estate Capital Funds), some of which were part of sale and lease operations. As such, we recorded a Ps 28.3 billion decrease in gain on the sale of property, plant and equipment. The Ps 27.3 billion increase in net gain in asset valuation is related to the increase in the fair value of investment properties, reflecting OREOs received by Banco de Occidente and Banco Popular.
(2,894.8)
(2,706.1)
(188.6)
(4,508.2)
(4,174.6)
(333.5)
(739.0)
(645.2)
(93.8)
(1.7)
(63.9)
(170.6)
(125.8)
(44.8)
Other expenses increased 8.6% or Ps 658.2 billion to Ps 8,316.8 billion. Administrative and other expenses increased 8.0% or Ps 333.5 billion over the year. Operating taxes increased 7.7% or Ps 77.7 billion. Marketing expenses increased 21.9% or Ps 52.1 billion, driven by a recovery to normalized levels of investment in brand positioning and commercial initiatives. The remaining expenses increased 7.0% or Ps 203.7 billion driven by higher operational costs, IT investments and maintenance expenses.
The 7.0% or Ps 188.6 billion increase in personnel expenses resulted from (i) a 7.0% or Ps 182.7 billion increase in salaries and employee benefits and (ii) a 6.7% or Ps 6.0 billion increase in labor severances and bonus plan payments due to increased commercial activity of our banks in 2025.
Depreciation and amortization expenses increased 14.5% or Ps 93.8 billion due to the entry into operations of projects that are accounted under “Other intangible assets” in the consolidated statements of financial position and other expenses increased by 35.6% or Ps 44.8 billion. Given that total income before net impairment losses on financial assets (defined as the sum of net interest income, net income from commissions and fees, gross profit (loss) from sales of goods and services, net trading (loss) income and other income) increased by 9.3%, the cost to income efficiency ratio decreased 37 basis points to 59.8% in 2025 from 60.2% in 2024. The ratio of other expenses as a percentage of average assets, increased 2 basis points an remained stable at 2.9% in 2025 and in 2024.
Tax (expense) recovery
Income tax expense was Ps 160.4 billion in 2025, compared to a tax recovery of Ps 24.9 billion in 2024, a change of 185.4 billion. This was driven by a lower use of deductions from nontaxable income in 2025 compared to 2024 and an increase pre-tax profit from our banking operations. Deferred taxes recovery in 2024 reached Ps 131.8 billion compared with Ps 92.2 billion deferred taxes expense.
Net income for the period from discontinued operations, net of tax, reflects the reclassification of line items associated with Multifinancial Group (MFG) in anticipation of its disposal in 2026, and grew 3.8% or Ps 1.0 billion in 2025 to Ps. 26.6 billion. During 2Q25, the segment
recorded a positive impact of Ps 136.7 billion resulting from the recovery of purchase price adjustments related to arbitration proceedings. In 4Q25 the segment recorded an impairment of MFH’s investment in MFG, to adjust the carrying value of its investment to the agreed sale price, which resulted in a negative impact of Ps 144.0 billion.
138
Net income for the year ended December 31, 2025 was Ps 1,173.7 billion, increasing 34.7% or Ps 302.5 billion compared to the year ended December 31, 2024. The following discussion describes the main drivers of our merchant banking segment’s results of operations for the year ended December 31, 2025 compared to the year ended December 31, 2024.
1,121.3
1,110.3
(2,736.6)
(3,020.3)
283.7
Net interest income (expense)
(1,615.3)
(1,910.0)
294.7
(15.4)
(58.0)
(57.6)
164.0
(1,669.2)
(1,964.0)
294.8
(31.1)
2,506.0
2,851.5
54.5
350.4
(295.9)
(84.4)
889.7
177.2
712.5
402.0
(265.2)
(255.4)
(9.8)
2,129.6
1,532.3
597.2
(955.8)
(661.1)
(294.7)
1,173.7
871.2
302.5
34.7
Net interest expense was Ps 1,615.3 billion and Ps 1,910.0 billion in 2025 and 2024, respectively. Net interest expenses are mainly the result of interest-bearing liabilities surpassing interest-earning assets by Ps 25,070.7 billion and Ps 23,849.6 billion in 2025 and 2024, respectively. The decrease of 15.4% or Ps 294.7 billion in net interest expense is mainly explained by lower funding costs in 2025.
Net interest expense of the segment’s financial businesses decreased to Ps 946.3 billion, 19.5% or Ps 228.6 billion more than in 2024. In addition, net interest expense of the segment’s non-financial businesses decreased to Ps 669.0 billion, 9.0% or Ps 66.2 billion lower than in 2024.
The merchant banking segment inherently has significantly more interest-bearing liabilities than interest-earning assets, as a result of a substantial portion of funding used to finance both the ordinary course of non-financial businesses and Corficolombiana’s investment portfolio in debt and equity securities. Consolidated non-financial subsidiaries’ net interest income has been and is expected to continue to be negative in the future as these entities are not financial entities and thus pay interest expenses to fund returns of assets that are mostly not considered interest-earning assets. The returns on those assets are primarily registered in the gross profit (loss) from sales of goods and services and net income from other financial instruments mandatorily at FVTPL, and to a lesser extent, in Other income under share of profit of equity accounted investees, net of tax (equity method). Income and expenses related to financial assets and liabilities, in addition to net interest expense, are recognized under net trading (loss) income and foreign exchange gains (losses), net.
The segment’s infrastructure business that had been constructing over 11 years and are approaching the operation phase has accumulated debt and this funding volumes reached an all-time high in 2025. Nevertheless, the moderation of inflation and the consequent decrease in average interest rates during the year allowed the reduction in interest expense.
139
6,373.4
6,251.8
(25.3)%
(30.6)%
The following tables show: (i) the average balance, average yield and interest income on interest-earning assets with an analysis of impacts derived from changes in the average balance and the average yield, per type of interest-earning asset; interbank and overnight funds are shown separate from gross loans due to their characteristics and short-term nature and (ii) the average balance, average rate paid and interest expense on interest-bearing liabilities with an analysis of impacts derived from changes in the average balance and the average rate, per type of interest-bearing liabilities..
1,706.7
1,706.3
23.5%
21.3%
400.7
364.2
36.4
1,114.2
1,039.3
74.9
21.1%
22.9%
238.0
(18.5)
(1.1)
8.3%
2,838.8
2,763.5
75.3
22.5%
21.8%
637.5
603.7
261.1
(248.4)
(95.1)
1202.8%
91.0%
152.7
237.5
(2,987.7)
2,902.9
(84.8)
(35.7)
3,024.6
(173.1)
27.7%
27.8%
790.2
841.2
(48.0)
(51.1)
3,522.0
3,227.3
9.4%
331.2
269.1
62.1
17.6%
7,558.5
7,778.2
(219.8)
12.0%
(759.8)
(932.1)
150.3
172.3
1,122.4
839.3
283.0
11.7%
(98.8)
(98.4)
(24.9)
8,680.8
8,617.5
63.3
9.9%
(858.6)
(1,030.5)
(6.3)
178.2
171.9
4,932.8
4,758.8
7.8%
(386.9)
(421.5)
48.2
34.6
11,786.2
11,329.5
456.7
(1,103.1)
(1,190.7)
(42.7)
130.3
6,044.4
5,395.6
648.8
7.0%
(388.0)
(377.6)
(41.6)
22,763.3
21,483.9
1,279.4
9.3%
(1,878.0)
(1,989.8)
(105.6)
111.8
31,444.1
30,101.4
1,342.7
(116.9)
400.6
The segment derives its interest income on total interest-earning assets mainly from the following activities: (i) interests on investment in debt securities and interbank and overnight funds, mainly corresponding to Corficolombiana’s treasury operations, (ii) income on
140
commercial loans from the Sociedad Portuaria del Callao (SPEC) LNG regasification terminal, which is classified as a financial lease in accordance with IFRS 16, and (iii) income on consumer loans from Promigas’ non-banking financing program under the Brilla brand.
The 1.0% or Ps 11.0 billion increase in total interest income in 2025 was mainly the result of a 95.1% or Ps 248.4 billion reduction in the average balance of interbank and overnight funds, which resulted in a Ps 84.8 billion decrease in interest income. This was partially offset by of the performance of investments in debt securities, which contributed Ps 62.1 billion increase in interest income. Interest income from gross loans increased 5.6% or Ps 33.7 billion, driven by a 2.7% or Ps 75.3 billion growth in the average balance of gross loans and a 61-basis points improvement in their average yield to 22.5%. As a result, the average yield on total interest-earning assets decreased 17 basis points to 17.6% in 2025, compared to 17.8% in 2024.
The average yield of interest-earning assets remained relatively stable explained by: (i) higher yields on investments in debt securities due to higher yields in TES, reflecting persistent inflationary pressures and higher sovereign risk premiums, and (ii) an 95.1% or Ps 248.4 billion decrease in average interbank and overnight funds.
Total interest expense decreased 9.4% or Ps 283.7 billion in 2025 mainly because of a 133 basis points decrease in the average rate paid on interest-bearing liabilities to 8.7%. The reduction was driven by (i): a 207 basis points decline in the average rate paid on total interest-bearing deposits to 9.9%, which generated Ps 171.9 billion in savings; (ii) a 101 basis points reduction in the average rate on interbank borrowings and overnight funds to 7.8% contributing Ps 34.6 billion in savings; and (iii) a 115 basis points decline in the average rate on borrowings from banks and other to 9.4%, contributing 87.6 billion in savings. This was slightly offset by a 4.5% or Ps 1,342.7 billion increase in the average balance of interest-bearing liabilities to Ps 31,444.1 billion. The contraction in net interest expense was in line with a 205 basis points reduction in the average Central Bank rate from 11.4% in 2024 to 9.3% in 2025. This positively impacted interest rates paid on interest-bearing liabilities of the segment. The Ps 1,279.4 billion growth in the average balance of other funding was primarily used to fund the segment’s non-financial business, particularly in infrastructure.
The sector’s net impairment loss on financial assets remained stable at Ps 53.9 billion in 2025 compared to 2024. A marginal improvement of Ps 0.1 billion or 0.1%. Impairment loss on loans and other accounts receivable decreased 0.7% to Ps 58.0 billion in 2025 compared to Ps 57.6 billion for 2024, as a result of stable delinquency metrics of consumer loans under the Brilla brand during 2024 and 2025. These loans were impaired and charged-off througgout the year.
(77.5)
(16.3)
(100.0)
32.6
(28.9)
(88.8)
(13.0)
Net income from commissions and fees decreased 143.1% or Ps 31.1 billion in 2025, resulting in a net expense of Ps 9.4 billion compared to a net income of Ps 21.8 billion in 2024. This performance was mainly the result of 77.5% or Ps 12.6 billion lower banking and other fees to Ps 3.6 billion, driven by investment banking fees. At the beginning of 2025, the investment banking activity was transferred to Aval Banca de Inversión. See Item 4 – Our Operations – Investment Banking. Expense from commissions and fees increased 20.5% or Ps 2.2 billion.
10,205.1
10,867.4
(662.4)
(7,699.1)
(8,015.9)
Gross profit from sales of goods and services mainly reflects the result of the segment's non-financial companies. The Ps 345.5 billion decrease to Ps 2,506.0 billion in 2025 was driven primarily by lower income in the infrastructure sector and agribusiness, partially offset by
141
improved performance in energy and gas and hospitality. The following discussion identifies the main drivers contributing to the performance by industry:
Infrastructure companies continued as the largest contributor to this line item with Ps 1,262.9 billion in 2025. This sector drove the overall performance in gross profit from sales of goods and services, decreasing 20.6% or Ps 328.6 billion compared to 2024 mainly explained by a 23.7% or Ps 698.8 billion decrease in income. This was primarily driven by a Ps 596.3 billion decrease in income from concession arrangement rights at amortized cost, which includes a decrease of Ps 321.0 billion in Villavicencio - Yopal and a decrease of Ps 404.3 billion in Pacifico 1. Construction income from the 4G road concessions remains low, consistent with the end of their constructive period. The two 4G concessions under construction, namely Pacifico 1 and Villavicencio – Yopal, reached a cumulative average construction progress of 97% at year-end 2025, compared to 96% at year-end 2024.Costs and expenses of sales of goods and services decreased 27.2% or Ps 370.2 billion, in line with the advanced construction stages of 4G concessions.
Energy and Gas
Gross profit for energy and gas companies was Ps 1,090.6 billion in 2025, 2.9% or Ps 32.3 billion lower than in 2024. Income decreased 1.0% and costs and expenses increased 0.6%. Revenues were maintained in an environment of normalizing climatic conditions, following the El Niño phenomenon of 2024. This implied: (i) a 5.4% reduction in gas transportation volumes from 682 MMscf/d to 645 MMscf/d, driven primarily by lower demand from the thermoelectric sector as hydroelectric generation capacity recovered; (ii) a 20.4% reduction in LNG regasification volumes at Sociedad Portuaria del Callao (SPEC), from 79,569 MMscf/d to 63,355 MMscf/d , reflecting the lower thermal generation requirements relative to the exceptional demand environment of 2024; and (iii) stable gas distribution volumes to the secondary market, that reached 3,598 million cubic meters in 2025. Costs and expenses of sales of goods and services of the energy and gas activity increased 0.6% or Ps 35.1 billion, the increase was primarily driven by: (i) higher labor expenses resulting from annual salary adjustments, and (ii) an increase in fuel gas costs driven by higher gas prices. These effects were partially mitigated by lower gas costs at SPEC, consistent with the reduction in regasification volumes
Other sectors
Gross profit for hospitality companies in 2025 was Ps 156.7 billion, a 79.5% or Ps 69.4 billion improvement relative to Ps 87.3 billion in 2024. Income increased 16.2% or Ps 102.2 billion driven by higher average occupancy rates and higher prices on rooms and food. Results also benefited from the segment’s strategy to strengthen the specialization of its business lines — hotel operations and real estate — through the transfer of real estate assets to a private equity fund, which generated a Ps 87.6 billion one-time income associated with gains on the sale of assets. Costs increased 6.0% or Ps 32.9 billion, which compares favorably with a 9.5% increase in the minimum wage for 2025.
Gross loss for agribusiness companies was Ps 18.1 billion in 2025, representing a Ps 55.3 billion decline compared to the gross profit of Ps 37.2 billion in 2024. This result reflects a 2.2% or Ps 6.9 billion decrease in income and a 17.8% or Ps 48.4 billion increase in costs and expenses. Operational performance varied across crop types. Palm oil crops delivered solid performance, driven by higher yields, new suppliers and improved market prices. In contrast, the rubber plantations experience lower production due to exceptional rainfall and external price pressures. Meanwhile, rice crops posted higher sales and productivity, despite facing lower prices.
Gross profit for other companies, was Ps 13.9 billion, Ps 1.3 billion more than in 2024. Income increased 12.9% or Ps 8.5 billion and costs expanded 13.5% or Ps 7.1 billion.
Corficolombiana’s net trading (loss) income was Ps 54.5 billion in 2025, Ps 295.9 billion less than in 2024, due to (i) a net trading loss from derivatives of Ps 171.5 billion, Ps 362.0 billion less than in 2024, and (ii) a Ps 226.0 billion income from investment securities at fair value through profit or loss, which increased Ps 66.1 billion in 2025.
Net trading (loss) income from this segment’s financial businesses increased Ps 19.3 billion to Ps 303.7 billion, resulting from a Ps 94.9 billion increase in net trading (loss) income from investment securities at fair value through profit or loss and a Ps 75.7 billion decrease in net trading (loss) income from derivatives.
Net trading (loss) income from this segment’s non-financial businesses decreased Ps 315.2 billion to a Ps 249.2 billion loss, resulting from a Ps 28.8 billion contraction in net trading (loss) income from investment securities at fair value through profit or loss and a Ps 285.9 billion decrease in net trading (loss) income from derivative, corresponding to hedging instruments covering the segment’s sales of goods and services.
The segment’s securities portfolio is classified in the following categories: (i) equity and fixed income investments at FVTPL (described in this section as net trading (loss) income in investment securities at FVTPL), (ii) fixed income investments at FVOCI and (iii) fixed income investments at AC (results from (ii) and (iii) are included in net interest income as interest income on investments in debt securities). The investment portfolio is managed in a comprehensive and integral manner that considers individual return of each one of these three categories and the total return of the investment securities portfolio.
Total income from investment securities (comprised of interest income on investments in debt securities and net trading (loss) income from investment securities at FVTPL) was Ps 557.2 billion in 2025, 29.9% or Ps 128.2 billion more than in 2024. This was primarily driven by an increase of 19.8% or Ps 1,428.6 billion in the average balance of total investments securities to Ps 8,633.0 billion in 2025 and a 50 basis points annual increase in the average yield on total investment securities, from 6.0% to 6.5%, resulting in a Ps 128.2 billion increase in interest income, of which Ps 66.1 billion corresponds to investment securities at FVTPL.
Net income from other financial instruments mandatorily at FVTPL reflect the fair value of certain concession arrangements entered between Promigas and the Colombian government, that meet the requirements for mandatory recognition at FVTPL and increased by Ps 272.2 billion to Ps 623.2 billion in 2025 as compared to 2024. In November 2025, the Ballenas - Cartagena gas pipeline reverted back to Promigas due to the termination of the concession contract, in compliance with the contractual and regulatory conditions applicable to the natural gas transportation system. This generated a one-time Ps 303.2 billion income from the remeasurement at fair value of the previously recognized intangible assets, which were subsequently reclassified to PP&E. However, the change from a financial asset to PP&E led to a one-time increase in deferred tax liabilities of Ps 358.8 billion that will be explained under the “Income tax expense” section.
423.5
(375.3)
798.8
(212.8)
309.5
318.1
(8.6)
85.7
(85.8)
(100.1)
121.9
137.5
(11.4)
287.2
96.7
Other income increased Ps 712.5 billion, mainly as a result of an increase of Ps 798.8 billion in foreign exchange gains (losses), net, driven by the effects on foreign currency liabilities of an annual appreciation of 14.8% of the Colombian peso in 2025 and the favorable performance of hedging strategies relating to the infrastructure sector. However, this was partially offset by lower results of net trading income, as mentioned above.
The Ps 8.6 billion decrease in share of profit of equity accounted investees, net of tax (equity method) was mainly driven by a decline in the income from Promigas’ share of profit in Gases del Caribe, due to the appreciation of the average exchange rate in 2025 as compared to 2024. Net gain (loss) on sale of debt and equity securities decreased Ps 85.8 billion compared to 2024, when the reduction in interest rates generated significant profits on debt security sales. The Ps 15.7 billion decrease in dividends was driven by lower dividend income from Grupo Energía de Bogotá (GEB) and Mineros.
(91.6)
(87.9)
(156.5)
(151.2)
(0.9)
(3.5)
(5.8)
Other expenses increased by 3.8% or Ps 9.8 billion, to Ps 265.2 billion in 2025 from Ps 255.4 billion in 2024. Personnel expenses increased 4.2% or Ps 3.7 billion, driven by a 4.6% or Ps 4.0 billion increase in salaries and employee benefits, which compares favorably to a 9.5% increase in the minimum wage for 2025. Administrative and other expenses increased 3.5% or Ps 5.3 billion, primarily due to a Ps 6.7 billion increase in legal advisory fees related to the resolutions with DOJ and SEC.
Income tax expense increased Ps 294.7 billion or 44.6% to Ps 955.8 billion in 2025. The remeasurement of deferred tax liabilities related to the Ballenas - Cartagena gas transportation pipeline had an one-time effect of Ps 358.8 billion. See “Item 5. Operating and Financial Review and Prospects—A. Operating result—Merchant Banking—Net income from other financial instruments mandatorily at FVTPL.” The segment’s income tax expense divided by net income before income tax expense excluding dividends and the equity method (as both are non-taxable income), was 56.3% in 2025 and 61.4% in 2024.
Net income for the year ended December 31, 2025 was Ps 703.1 billion, increasing 7.5% or Ps 49.0 billion compared to the year ended December 31, 2024. The following discussion describes the main drivers of our pension and severance fund management segment’s results of operations for the year ended December 31, 2025 compared to the year ended December 31, 2024.
45.8
51.3
(5.5)
37.7
(55.3)
(338.9)
(3.4)
(49.9)
34.3
38.3
1,165.5
1,074.7
90.7
298.3
256.5
(41.8)
(519.8)
(471.8)
992.1
916.9
(289.1)
(262.8)
(26.3)
703.1
654.1
49.0
Net interest income was Ps 37.7 billion and Ps 45.1 billion in 2025 and 2024, respectively. Net interest income is mainly the result of interest accrued on interest-earning investments in debt securities corresponding to the segment’s proprietary investment portfolio (at fair value through other comprehensive income and at amortized cost) and on interbank and overnight funds.
Interest income decreased 10.7% or Ps 5.5 billion to Ps 45.8 billion in 2025, mainly as a result of a Ps 4.4 billion decrease in interest income on deposits. Deposit rates decreased during the year reflecting the continued normalization of the interest rate environment in Colombia. In addition, interest income on investment securities decreased Ps 1.2 billion. This decrease was mainly driven by a Ps 29.3 billon decline in the average balance of interest-earning investments in debt securities to Ps 419.8 billion in 2025, that resulted in a Ps 2.9 billion decrease in income. This was partially offset by a 38 basis points increase in the average yield of interest-earning investments in debt securities to 10.0%, resulting in a Ps 1.7 billion increase in income. By year-end 2024, a portion of the segment’s proprietary portfolio was rolled over to increase its overall return while taking advantage of market conditions as reflected by the higher yield in 2025. Interest expense increased 29.9% or Ps 1.9 billion to Ps 8.1 billion in 2025.
Net impairment loss on financial assets decreased 49.9% or Ps 3.4 billion to Ps 3.4 billion in 2025, compared to Ps 6.8 billion in 2024.
1,281.4
1,174.0
107.5
1,283.7
1,175.9
(118.3)
(101.2)
Net income from commissions and fees increased 8.4% or Ps 90.7 billion to Ps 1,165.5 billion in 2025. Pension and severance fund management fees grew 9.2% or Ps 107.5 billion, driven by (i) a 15.7% or Ps 52.4 billion increase in fee income from severance fund management driven by a 16% growth of average assets under management (AUMs) and still strong returns, (ii) a 4.9% or Ps 35.1 billion increase in fee income from mandatory pension fund management, (iii) a 18.7% or Ps 21.9 billion increase in revenues received from voluntary pension fund management driven by a 17.0% growth of average AUMs and a 3 basis points increase in the weighted average fee rising to 1.94% in 2025 from 1.91% in 2024, and (iv) a Ps 1.9 billion decrease in fee income from third-party pension fund management.
Fee income from mandatory pension fund management was driven by (i) a 5.3% or Ps 31.5 billion increase in fees charged to contributing clients (contribution-based), explained by a 16.3% increase in total mandatory contributions (driven by a 9.5% increase in the minimum wage) and (ii) a 2.8% or Ps 3.6 billion increase in fees charged to non contributing clients (performance-based) due to favorable returns on AUMs.
Fee expenses increased in connection to the temporary recognition of the 6 pbs increase to 2.53% in life and disability insurance coverage cost on mandatory pension contributions during the first months of 2025 which implied a Ps 11.9 billion increase in expenses from commissions and fees.
104.2
94.0
(97.5)
(87.1)
Gross profit from sales of goods and services mainly reflects the results of Porvenir’s subsidiary Aportes en Línea, the largest information platform and payment provider for the Social Security System in Colombia. Among its business lines, Aportes en Línea provides technical and administrative services to Porvenir and third parties, among which are Grupo Aval and its subsidiaries.
Gross profit from sales of goods and services decreased 2.8% or Ps 0.2 billion to Ps 6.7 billion in 2025. Income from sales of goods and services grew 10.9% or Ps 10.2 billion to Ps 104.2 billion, driven by continued growth in social security contributions consistent with a healthy formal environment. However, costs and expenses of sales of goods and services increased at a slightly faster pace of 11.9% or Ps 10.4 billion to Ps 97.5 billion, reflecting higher operational costs associated with the platform’s expanded activity and ongoing technology investments, which marginally compressed the gross profit margin relative to 2024.
Net trading income was Ps 298.3 billion in 2025, Ps 41.8 billion higher than the Ps 256.5 billion recorded in 2024. This improvement was driven by higher income from investment securities measured at fair value through profit or loss, reflecting more favorable capital market conditions in 2025 compared to 2024.
Income from investment securities measured at fair value through profit or loss mainly reflects the result of the stabilization reserve, a mandatory investment of the pension and severance fund manager’s capital equivalent to a minimum 1.0% of mandatory pension and severance fund AUMs. At December 31, 2025, Porvenir’s stabilization reserve amounted to Ps 2.7 trillion and its income increased Ps 11.8 billion to Ps 266.9 billion in 2025. Income resulting from the proprietary investment portfolio held for trading measured at fair value through
145
profit or loss increased Ps 11.1 billion to Ps 24.5 billion in 2024. Net trading income from derivatives was Ps 6.9 billion, Ps 18.9 billion higher than the Ps 12.0 billion loss recorded in 2024.
(26.5)
(130.0)
(16.1)
(93.2)
98.9
Other income decreased Ps 5.1 billion, mainly as the result of a decrease of Ps 26.5 billion in foreign exchange gains (losses), net. Foreign exchange gains should be analyzed together with net trading results from derivatives. This result was partially offset by a Ps 15.0 billion increase in net loss on sale of debt and equity securities in 2025, to a Ps 1.1 billion loss.
(197.6)
(185.9)
(11.7)
(281.3)
(269.3)
(12.0)
(20.3)
(20.7)
(23.8)
(762.6)
Other expenses increased 10.2% or Ps 48.0 billion, mainly driven by an increase of Ps 23.8 billion in Other. In 2024, Porvenir recovered provisions related to lawsuits seeking to declare affiliations to the fund null and void, which were absent in 2025.
Personnel expenses increased 6.3% or Ps 11.7 billion due to (i) a 7.6% or Ps 13.4 billion increase in salaries and employee benefits, and (ii) a 16.4% or Ps 1.2 billion reduction in labor severances and bonus plan payments.
Administrative and other expenses increased 4.5% or Ps 12.0 billion. This figure was well below the inflation rate of 5.20% in 2024, mainly explained by lower expenses in 2025 associated with projects that were completed in 2024. Depreciation and amortization expenses grew 2.5% or Ps 0.5 billion in 2025.
Income tax expense increased by Ps 26.3 billion or 10.0%, to Ps 289.1 billion in 2025. Income tax expense as a percentage of net income before income tax expense, excluding dividends and the equity method (as both are non-taxable income), was 29.1% in 2025 and 28.7% in 2024.
146
B. Liquidity and capital resource
The following table sets forth our sources of liquidity and capital resources at the dates indicated.
Liabilities and equity:
Capitalization ratios
All of our banking subsidiaries (Banco de Bogotá, Banco de Occidente, Banco Popular and Banco AV Villas), Porvenir, Corficolombiana, Aval Fiduciaria, and Aval Casa de Bolsa are subject to inspection and supervision as financial institutions by the Superintendency of Finance. Grupo Aval is now also subject to the inspection and supervision of the Superintendency of Finance as a result of Law 1870 of 2017, also known as Law of Financial Conglomerates, which came in effect on February 6, 2019. Grupo Aval, as the holding company of its financial conglomerate is responsible for the compliance with capital adequacy requirements, corporate governance standards, risk management and internal control and criteria for identifying, managing and revealing conflicts of interest, applicable to its financial conglomerate. See “Item 4. Information on the Company—B. Business Overview—Supervision and regulation—Capital Adequacy Requirements”.
Funding
Our banking subsidiaries fund most of their loans with customer deposits. Other sources of funding include interbank borrowings and overnight funds, borrowings from banks and others and bonds issued. For more information on funding, refer to Note 21 of our audited consolidated financial statements.
The following table summarizes Grupo Aval’s consolidated funding structure at the dates indicated.
Total funding
276,076.8
273,696.0
Total funding increased by 0.9% between December 31, 2025 and December 31, 2024 mainly as a result of the reclassification of MFG’s liabilities as liabilities directly associated with non-current assets classified as held for sale. Funding of our continuing operations increased
0.9% between December 31, 2025 and December 31, 2024, mainly due to an increase in customer deposits and interbank borrowings and overnight funds. The following analysis will focus on the changes of our continuing operations.
Between December 31, 2025 and December 31, 2024, customer deposits and interbank borrowings as a percentage of total funding increased by 169 basis points and 124 basis points to 75.1% and 8.2%, respectively. Borrowings from banks and others and bonds issued as a percentage of total funding decreased by 100 basis points and 192 basis points to 8.9% and 7.8%, respectively.
Each of our four Colombian banking subsidiaries and each of Corficolombiana and Porvenir, achieved the highest available local credit ratings as assigned by BRC Investor Services S.A., an affiliate of Standard & Poor’s Investors Services LLC, or “S&P”. Banco Popular and Banco AV Villas have also achieved the highest available local credit ratings as assigned by Value and Risk Rating S.A. S.C.V.
The following table presents Grupo Aval’s and its direct subsidiaries international and local ratings as issuers at April 10, 2026. Outlooks for Grupo Aval and Banco de Bogotá’s ratings are in line with the agencies’ outlooks on Colombia’s sovereign rating.
International
Local
Fitch
BRC
Moody's
Fitch Ratings
Standard & Poor's
Ratings
Standard
Rating
Outlook
Nacional
& Poor's
Foreign currency - Long term
Ba2
Stable
BB
Local currency - Long term
AAA
Baa3
BB-
Foreign currency - Short term
P-3
B
Local currency - Short term
BRC1+
F1+
The following tables present our consolidated funding from deposits at the dates indicated.
Interest-bearing customer deposits:
6,427.1
6,199.1
96,329.8
Savings deposits
79,614.9
Total interest-bearing customer deposits
189,771.6
182,143.9
Non-interest-bearing customer deposits:
17,171.1
18,380.4
Other deposits(2)
347.9
Total non-interest-bearing customer deposits
17,633.7
18,728.3
Total customer deposits
Checking accounts. Our consolidated balance of checking accounts was Ps 23,598.2 billion at December 31, 2025 and Ps 24,579.5 billion at December 31, 2024, representing 8.5% and 9.0% of total funding, respectively. Figures at December 31, 2024 include Ps 1,512.2 billion of total checking accounts from MFG. For our continuing operations, the balance of checking accounts was Ps 23,598.2 billion at December 31, 2025 and Ps 23,067.3 billion at December 31, 2024, representing 8.5% and 9.1% of total funding, respectively.
Time deposits. Our consolidated balance of time deposits was Ps 95,105.9 billion at December 31, 2025 and Ps 96,329.8 billion at December 31, 2024, representing 34.4% and 35.2% of total funding, respectively. Figures at December 31, 2024 include Ps 10,459.4 billion of time deposits from MFG. For our continuing operations, the balance of time deposits was Ps 95,105.9 billion at December 31, 2025 and Ps 85,870.5 billion at December 31, 2024, representing 34.4% and 33.8% of total funding, respectively.
The following table presents time deposits held by amount and maturity for deposits at the date indicated.
Peso-
Foreign currency-
denominated
Up to 3 months
18,655.4
6,934.3
25,589.7
From 3 to 6 months
8,627.3
693.5
9,320.8
From 6 to 12 months
18,343.5
1,770.7
20,114.2
More than 12 months
22,178.6
708.7
22,887.3
Time deposits less than U.S.$100,000(1)
16,703.3
490.7
17,193.9
84,508.0
10,597.9
Foreign
Total time deposits
Savings deposits. Our consolidated balance of savings deposits was Ps 88,238.5 billion at December 31, 2025 and Ps 79,614.9 billion at December 31, 2024, representing 32.0% and 29.1% of total funding, respectively. Figures at December 31, 2024 include Ps 2,392.2 billion of total saving deposits from MFG. For our continuing operations, the balance of savings deposits was Ps 88,238.5 billion at December 31, 2025 and Ps 77,222.7 billion at December 31, 2024, representing 32.0% and 30.4% of total funding, respectively.
Other deposits. Our consolidated balance of other deposits, which consist mainly of deposits from correspondent banks, cashier checks and collection services, was Ps 462.5 billion at December 31, 2025 and Ps 347.9 billion at December 31, 2024, representing 0.2% and 0.1%, respectively. Figures at December 31, 2024 include Ps 4.5 billion of other deposits from MFG. For our continuing operations, the balance of other deposits was Ps 462.5 billion at December 31, 2025 and Ps 343.4 billion at December 31, 2024, representing 0.2% and 0.1%, respectively.
Interbank borrowings and overnight funds. Our consolidated balance of interbank borrowings and overnight funds was Ps 22,655.4 billion at December 31, 2025 and Ps 18,509.8 billion at December 31, 2024, representing 8.2% and 6.8% of total funding, respectively. Figures at December 31, 2024 include Ps 809.7 billion of interbank borrowings and overnight funds from MFG. For our continuing operations, consolidated balance of interbank borrowings and overnight funds was Ps 22,655.4 billion at December 31, 2025 and Ps 17,700.1 billion at December 31, 2024, representing 8.2% and 7.0% of total funding, respectively.
149
The following table sets forth our short-term borrowings consisting of interbank borrowings at and for the year ended December 31, 2025.
Nominal
weighted
average
Amount
rate
Short-term borrowings
End of period
Average during period
Maximum amount of borrowing at any month-end
24,923.5
Interest paid during the period
As part of their interbank transactions, our banks maintain a portfolio of Government securities and private sector liquid debt instruments that can be used to obtain overnight funds from other financial institutions or investment funds by selling such securities and simultaneously agreeing to repurchase them. Due to the short-term nature of this source of funding, the balance of these transactions is volatile.
Borrowings from banks and others. Our consolidated balance of borrowings from banks and others was Ps 24,559.2 billion at December 31, 2025 and Ps 28,098.2 billion at December 31, 2024, representing 8.9% and 10.3% of total funding requirements, respectively. Figures at December 31, 2024 include Ps 2,965.5 billion of borrowings from banks and others from MFG. For our continuing operations, consolidated balance of borrowings from banks and others was Ps 24,559.2 billion at December 31, 2025 and Ps 25,132.7 billion at December 31, 2024, representing 8.9% and 9.9% of total funding requirements, respectively.
Bonds issued. Grupo Aval and its subsidiaries issue bonds in the Colombian and international markets. Our consolidated balance of bonds issued outstanding was Ps 21,457.0 billion at December 31, 2025 and Ps 26,215.8 billion at December 31, 2024, representing 7.8% and 9.6% of total funding requirements, respectively. Figures at December 31, 2024 include Ps 1,596.0 billion of bonds issued from MFG. For our continuing operations, consolidated balance of bonds issued outstanding was Ps 21,457.0 billion at December 31, 2025 and Ps 24,619.8 billion at December 31, 2024, representing 7.8% and 9.7% of total funding requirements, respectively.
We and our subsidiaries have also issued bonds in pesos and U.S.$ in the local and international markets. The following bond issuances were placed in the market in 2025:
Issuance
Local currency issuances
date
(in Ps billion)
Expiration date
Interest rate
August 2035
IBR 6.80%
Banco Av. Villas
September 2035
Promigas S.A.E.S.P.
531.9
August 2029 and October 2034
CPI + 6.40% and IBR 3.75%
Amounts referred to in the table above reflect the gross amounts issued by each issuer. These are subject to eliminations in the consolidation process if an entity consolidated by Grupo Aval is a bondholder of the issuance.
Capital expenditures
Grupo Aval incurred in Ps 352.9 billion of net capital expenditures in tangible assets in 2025, as compared to Ps 486.0 billion in 2024.
Off-balance sheet arrangements
In the ordinary course of business, our banking subsidiaries have entered into various types of off-balance sheet arrangements, including credit lines, letters of credit and financial guarantees. Our banking subsidiaries utilize these instruments to meet their customers’ financing needs. The contractual amount of these instruments represents the maximum possible credit risk should the counterparty draw down the entire commitment or our bank fulfills its entire obligation under the guarantees, and the counterparty subsequently fails to perform according to the terms of the contract. Our banking subsidiaries may hold cash or other liquid collateral to support these commitments, and they generally have legal recourse to recover amounts paid but not recovered from customers under these instruments. Most of these commitments and guarantees expire undrawn. As a result, the total contractual amount of these instruments may not represent our banking subsidiaries’
future credit exposure or funding requirements under normal circumstances. In addition, some of these commitments, primarily those related to consumer financing, are cancelable by our banks upon notice.
The following table presents the maximum potential amounts of future payments under these instruments and other contingencies at the dates presented for Grupo Aval on a consolidated basis.
Unused credit card limits
14,847.1
12,933.4
Issued and confirmed letters of credit
400.3
383.0
Unused lines of credit
7,379.3
6,845.0
Bank guarantees
2,199.1
3,082.9
Approved credits not disbursed
6,792.8
5,432.2
Civil demands against our banks
696.0
915.2
131.4
110.3
32,446.0
29,701.9
Contractual obligations
The following tables present our contractual obligations at December 31, 2025.
Payments due by period
Less than
More than
1 year
1 - 3 years
3 - 5 years
5 years
Grupo Aval (in Ps billions)
5,512.1
3,603.9
794.0
11,546.9
71,699.7
19,924.8
1,529.0
1,952.5
9,530.2
4,215.0
4,348.8
6,465.2
522.9
183.6
82.1
199.1
27,990.6
24,703.0
433.0
2,842.8
192,755.9
134,623.3
28,360.4
6,765.7
23,006.6
See Note 21 to our audited consolidated financial statements at December 31, 2025.
(1) Other liabilities include liabilities associated to MFG.
C. Research and development, patents and licenses, etc.
N/A.
D. Trend information
The following discussion reflects our current expectations about future events, and trends that may impact our business. Actual results could differ substantially. For further information related to forward-looking statements, see “Forward-Looking Statements” and for a description of certain factors that could affect the economy and our industry in the future and our own future performance, see “Item 3. Key Information—D. Risk Factors.”
In 2026, on the macroeconomic front, the Central Bank’s shift from a neutral to a contractionary monetary policy sets an environment of higher interest rates for longer. We expect a moderation in economic growth amid softening consumption and investment. We estimate the Central Bank’s interest rate at 11.75% by year-end 2026, which incorporates 50 additional basis points of increases from the current level of 11.25%. Presidential and Congressional elections often lead to volatility in capital markets. Additionally, the government's borrowing strategy, involving the issuance of significant volumes of short-term TES (“TCOs”), has driven up the cost of time deposits across the financial system, more than proportionally relative to the Central Bank rate increases.
The shifting economic environment and expectations, directly translates into our expectations relating to the banking segment. We anticipate a softer loan portfolio growth, reflecting the impact of higher interest rates on credit demand from both corporate and retail clients. The
increase in interest rates is likely to delay the expected improvement in our net interest margins, particularly at those entities with a lower proportion of low-cost operational funding and a higher share of fixed-rate loans. On the funding side, we expect broad upward pressure on deposit costs and increased demand for interest-bearing demand deposits and time deposits. Our banks will continue executing their respective strategies to contain the increase in funding costs by optimizing their funding mix in retail deposits and reducing the pass-through of increases in benchmark rates to wholesale deposits.
In terms of credit risk, we do not anticipate material pressures on portfolio quality or provisions, particularly considering the defensive structure of our loan portfolio.
In 2025, through Aval Valor Compartido (AVC), we began capturing cross-cutting synergies across the group through the migration of seven processes related to administrative and physical channel synergies, driving process standardization to achieve greater productivity. In 2026, we expect to capture the first wave of synergies, which will allow us to partially mitigate the pressures facing the business.
The results of Corficolombiana will be influenced by the performance of its infrastructure and energy and gas operations. In infrastructure, factors such as construction progress, inflation, the exchange rate and the execution of new projects will be key. In energy and gas, performance will depend on potential tariff adjustments, as well as distribution and transportation volumes and prices. The hospitality and agribusiness industries will face pressures stemming from the increase in the minimum wage, given the relevance of the labor cost component within their cost structures and the relatively limited pricing flexibility of their revenues due to international price dynamics.
Finally, the performance of the pension and severance fund management segment will depend on the constitutional review by the Constitutional Court of Law 2381 of 2024. Pending a definitive ruling, the General Pension System will continue to be governed by the provisions of Law 100 of 1993 until the constitutionality of the pension reform is determined. In turn, the results of this segment will depend on factors such as the performance of domestic and international equity markets, labor market conditions, and the flow of commissions earned from contributing and non-contributing affiliates.
E. Critical accounting estimates
Critical accounting estimates are those that require us to exercise judgment or involve a higher degree of complexity in the application of the accounting policies that currently affect our financial condition and results of operations. The accounting estimates we make in these contexts require us to calculate variables and make assumptions about matters that are highly uncertain. In each case, if we had made other estimates, or if changes in the estimates occur from period to period, our financial condition and results of operations could be materially affected.
Significant accounting policies, including those affected by critical accounting estimates and judgements, are described in Note 3 of our audited consolidated financial statements. See Note 3 to our audited consolidated financial statements for a complete list of the critical accounting judgments and estimates. There are many other areas in which we use estimates about uncertain matters, but we believe the reasonably likely effect of changed or different estimates would not be material to our financial statements.
The following are the critical accounting policies that have the most significant effects on the amounts recognized in our audited consolidated financial statements:
Board of Directors
The current members of the Board of Directors were appointed at a shareholders’ meeting held on March 27, 2026. The following table presents the names of the current members of the Board of Directors. The term for the current directors expires on March 31, 2027.
Board member
Luis Carlos Sarmiento Gutiérrez
Mauricio Cárdenas Müller
Fabio Castellanos Ordóñez (1)(2)(3)
Andrés Escobar Arango (2) (3)
Luis Fernando López Roca (1)(2)(3)
Esther América Paz Montoya (1)(2)(3)
Jose Mauricio Salgar Hurtado (2)(3)
Jorge Silva Luján (3)
Álvaro Velásquez Cock
Luis Fernando Pabón Pabón is the secretary of our Board of Directors.
Biographical information of the members of our Board of Directors and the secretary of our board is set forth below. Ages of members of our Board of Directors throughout this annual report are as of April 10, 2026.
Luis Carlos Sarmiento Gutiérrez, age 64, is the President of Grupo Aval’s Board of Directors since March 2024. Mr. Sarmiento served as President of Grupo Aval from 2000 until March 2024. Mr. Sarmiento Gutiérrez acted as President of Cocelco S.A. from 1997 until 2000. Previously he served as Executive Vice President at First Bank of the Americas in New York and as an analyst and financial manager at Procter & Gamble’s corporate headquarters. He served as Chairman of the Board of Directors of Banco de Bogotá from May 2004 to March 2024, and has been a member of the Board of Directors of BAC International Corporation since 2024 and Corficolombiana since 2006, currently acting as a Chairman. He holds a Bachelor of Science degree, magna cum laude, in civil engineering from the University of Miami and a MBA with a concentration in Finance from the Johnson Graduate School of Management at Cornell University. In December 2025, he was awarded a Doctorate Honoris Causa in Innovation and Business by Universidad Sergio Arboleda, in recognition of his business trajectory and leadership in financial innovation. Mr. Sarmiento Gutiérrez’s business address is Carrera 13 No. 26A-47, Bogotá, D.C., Colombia.
Mauricio Cárdenas Müller, age 56, has served as member of the Board of Directors of Grupo Aval since 2014. Previously, when pursuant to the by-laws of the company the Board of Directors was composed by principal and alternate members, Mr. Cárdenas served as a principal member from 2010 until 2014, and as an alternate member since 2002 until 2010. Mr. Cárdenas Müller has acted as chief advisor to Luis Carlos Sarmiento Angulo since 2004. He is a member of the Board of Directors of Seguros Alfa S.A. and of Seguros de Vida Alfa S.A. since 2014, Corficolombiana S.A. since 2024 and previously served from 2002 until 2011. He has also served as a member of the Board of Directors of Fundación para el Futuro de Colombia – Colfuturo since 2007, and of Casa Editorial El Tiempo since 2011. Mr. Cárdenas holds a degree in Electronic Engineering from Universidad Javeriana and a MBA from Escuela de Dirección y Negocios de la Universidad de la Sabana – INALDE. Mr. Cárdenas Müller’s business address is Carrera 13 No. 26A–47, Bogotá, D.C., Colombia.
Fabio Castellanos Ordóñez, age 69, has served as a member of the Board of Directors of Grupo Aval since March 2018 and previously, when pursuant to the by-laws of the company the Board of Directors was composed by principal and alternate members, he served as an alternate member between September 2015 and March 2018. He was, until 2019 the local representative in Colombia of AMF (Ascending Markets Financial Guaranty Corporation) and, between 2002-2010 served as Chief Country Officer and Executive Director of ABN-AMRO Bank (Colombia) S.A., The Royal Bank of Scotland (Colombia) S.A., Scotiabank Colombia S.A . He also worked for 22 years at The Chase Manhattan Bank N.A. in Latin America with posts in Colombia, New York and Argentina as a Corporate Finance Executive and Senior Credit Officer, among other positions. Mr. Castellanos serves as member of the Board of Directors of Ignacio Gómez IHM S.A. He holds a degree in Business Administration from California State Polytechnic University and a Master’s Degree in Management in the Network Economy from Universitá Cattolica del Sacro Cuore. Mr. Castellanos Ordóñez’s business address is Carrera 13 No. 26A-47, Bogotá, D.C., Colombia.
Andres Escobar Arango, age 56, has served as a member on the Board of Directors of Grupo Aval since March 2024. Mr. Escobar is currently the President of EConcept AEI. Previously, he has served as Deputy Director General of the National Planning Department, Deputy Finance Minister and Professor at the Faculty of Economics of Universidad de los Andes and Universidad Nacional. He also serves as an economic and political advisor on Colombia to major international financial institutions through Global Source Partners (a New York-based company that covers 30+ emerging market economies). He holds a degree in Economics from Universidad de los Andes, a master’s degree in economics from Universidad de los Andes, a master’s degree in economics from New York University, and is a Ph.D. candidate in Economics from New York University. Mr. Escobar Arango’s business address is Carrera 13 No. 26A 47, Bogotá, D.C., Colombia.
Luis Fernando López Roca, age 69, has served as member on the Board of Directors of Grupo Aval since March 2018 (as an alternate member when pursuant to the by-laws of the company the Board of Directors was composed by principal and alternate members). Dr. López Roca is a partner of López Montealegre Abogados S.A.S, Director of the Financial Law Department at Universidad Externado de Colombia, Alternate Judge of the Council of State of Colombia (Consejo de Estado) since 2026 and Alternate Judge of the Constitutional Court for the 2018-2021 period and arbitrator. Dr. López Roca has acted as Superintendent of Securities, President of the Colombian Association of Commercial Financing Companies, and Advisor to the Inter-American Development Bank. He also held several positions in the Superintendency of Corporations, the Chamber of Commerce of Bogotá and the Superintendency of Banks (Superintendency of Finance). Dr. López Roca holds a Law Degree and PhD from Universidad Externado de Colombia, with an LLM in International Business Law at Universidad Francisco Vitoria and graduate studies in Economic, Commercial and Financial law at Universidad Externado de Colombia and Universidad de los Andes. Dr. López Roca’s business address is Carrera 13 No. 26A-47, Bogotá, D.C., Colombia.
Esther América Paz Montoya, age 71, has served as a member on the Board of Directors of Grupo Aval since 2010, and previously as an alternate member thereof since 2005, when pursuant to the by-laws of the company the Board of Directors was composed by principal and alternate members. Ms. Paz Montoya is a former President of Banco AV Villas, where she also served as Vice President of Finance and Vice President of Operations, and a former President of Ahorramás Corporación de Ahorro y Vivienda. Ms. Paz Montoya has served as a member of the Board of Directors of Agremiación Cívica Centro Internacional San Diego S.A., Edentainment and Admincentros S.A.S. She holds a degree in Business Administration from the Universidad del Valle and graduate studies in finance from Universidad de Los Andes. Ms. Paz Montoya’s business address is Carrera 13 No. 26A-47, Bogotá, D.C., Colombia.
Jose Mauricio Salgar Hurtado, age 56 has served as member on the Board of Directors of Grupo Aval since March 2024. Mr. Salgar is currently a board member of Holding Hotelera GHL in Colombia and Logistics Properties of the Americas (NYSE: LPA), and a board advisor with Frisa Industrias. He also serves on the Consejo Superior de la Universidad de los Andes. Previously, he served as Managing Director and Head of Andean Region of Advent International in Colombia between 2012 and 2023. As part of his role with Advent, he led various investments in Latin America and served on the board of the following companies: Alianza Fiduciaria, Alianza Valores, Grupo Biotoscana, GTM Holdings, Oleoducto Central (Ocensa), Enjoy S.A., LifeMiles, Canvia and Sophos Solutions. Previously, he was Vice President and member of the executive committee of Grupo Sanford, COO of Ecopetrol S.A., Country manager and co-founder with Despegar.com, and was an associate with Booz & Co. Mr. Salgar holds a BS in Industrial Engineering from the Universidad de los Andes and an MBA from the MIT Sloan School of Management. Mr. Salgar´s business address is Carrera 13 No. 26A 47, Bogotá, D.C., Colombia
Jorge Silva Lujan, age 67, has served as a member of the Board of Directors of Grupo Aval since March, 2024. Mr. Silva is currently the CEO of Plan de Vida SAS and board member of Promigas, Corporación Juego y Niñez – Best Buddies Colombia and Los Nogales School.
Previously, he held various leadership positions, including North of Latam Country Manager and Public Sector Andino Country Manager Andean Region at Amazon Web Services (Public Sector), General Manager of Microsoft Mexico and Colombia, and Public Sector Andino Country Manager Colombia. He has over 35 years of experience in management, primarily in the IT industry. Additionally, he possesses a strong background in the hardware, software, and consulting businesses. Mr. Silva holds an Industrial Engineer degree from the Universidad de los Andes and an MBA from California State University. He has also complemented his education with studies in leadership, marketing, and corporate strategy. Mr. Silva Lujan’s business address is Carrera 13 No. 26A-47, Bogotá, D.C., Colombia
Álvaro Velásquez Cock, age 86, has served as a member of the Board of Directors of Grupo Aval since 2013 and previously as an alternate member thereof since 2008, when pursuant to the by-laws of the company the Board of Directors was composed by principal and alternate members. Mr. Velásquez Cock has served as advisor to Grupo Ethuss since 1994. He has acted as Dean of the Faculty of Economics of the Universidad de Antioquia, Chief of the Departamento Nacional de Estadística—DANE, President of Pedro Gómez & Cía. S.A., Manager of the Corporación Financiera Nacional and as a member of the Advisory Committee of the Superintendence of Finance. He has been a member of the Board of Directors of Unipalma since 1996, Proindesa and of BAC entities since 2011. He holds a degree in Economics from the Universidad de Antioquia. Mr. Velásquez Cock’s business address is Carrera 13 No. 26A-47, Bogotá, D.C., Colombia.
Luis Fernando Pabón Pabón, age 67, has served as Secretary of the Board of Grupo Aval since 2000. Mr. Pabón Pabón formerly served as Legal Vice President of Banco de Colombia and as Legal Counsel to the President of Banco de Bogotá. He has been a member of the Board of Directors of Porvenir since 2003, Organización Luis Carlos Sarmiento Angulo S.A.S. since 2006, Casa Editorial El Tiempo and CEET TV since 2011 and of Corporación Excelencia en la Justicia since 2017. He also serves as legal counsel to Organización Luis Carlos Sarmiento Angulo S.A.S. Mr. Pabón Pabón holds a law degree from Universidad Javeriana and graduate studies in financial law from the Universidad de los Andes. Mr. Pabón Pabón’s business address is Carrera 13 No. 26A-47, Bogotá, D.C., Colombia.
Executive officers
The executive officers of Grupo Aval are responsible for the day-to-day management of our company. The following table lists the names and positions of our executive officers and the presidents of our banking subsidiaries, Corficolombiana and Porvenir. Certain of our executive officers are also members of the boards of directors of our subsidiaries.
Name
Position
Maria Lorena Gutiérrez Botero
President
Diego Fernando Solano Saravia
Chief Financial Officer
Jorge Adrián Rincón Plata
Eduardo Duque Suárez
Chief Risk and Compliance Officer
Vacant – Recruitment in Progress (1)
Chief of Internal Control
Paula Durán Fernández
Chief of Sustainability and Strategic Projects
Jorge Castaño Gutiérrez
Chief of Financial Assets and Efficiency
Ernesto Gutierrez de Piñeres Luna
Chief of Information Technology
María Edith González Flórez
Vice President of Accounting
Juan Carlos Echeverry Garzón (2)
Gerardo Silva Castro
Maria Fernanda Suárez Londoño
Gerardo Hernández Correa
Ana Milena López Rocha
Miguel Largacha Martínez
Biographical information of our executive officers and key employees who are not directors is set forth below. Ages of our executive officers throughout this annual report are as of April 16, 2026.
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María Lorena Gutiérrez Botero, age 57, has served as President of Grupo Aval since April 1, 2024. She previously served as President of Corficolombiana since August, 2018. Ms. Gutiérrez serves as a member on the Board of Directors of Banco de Bogotá, Porvenir, Aval Valor Compartido – AVC, Proindesa, Promigas S.A. and previously served as Minister of Commerce, Industry and Tourism from 2017 to 2018, Ambassador of Colombia in Germany from 2016 to 2017 and Minister to the Presidency from 2010 to 2016. She has also served in the past as Dean of the Business School at Universidad de Los Andes from 2003 to 2010. Ms Gutiérrez served as a member on the Board of Directors of Fiduciaria Corficolombiana, Gas Comprimido del Perú, Gases del Caribe. She holds a degree in Industrial Engineering with a specialization in finance from Universidad de los Andes, a Master of Business Administration (MBA) and a PhD in Finance from the A.B. Freeman School of Business at Tulane University. Her principal business address is Carrera 13 No. 26A-47, Bogotá, D.C., Colombia.
Diego Fernando Solano Saravia, age 60, has served as Chief Financial Officer since 2010, and formerly as Vice President of Corporate Planning, of Grupo Aval since 2006. Mr. Solano serves as a member on the Board of Directors of Banco de Popular and Aval Banca de Inversión S.A.S. He previously served as associate principal at McKinsey & Co. and Corporate Banking Vice President at Banco Santander Colombia. He holds a degree in Systems Engineering from the Universidad de los Andes and a MBA from the Wharton School at the University of Pennsylvania. His business address is Carrera 13 No. 26A-47, Bogotá, D.C., Colombia.
Jorge Adrián Rincón Plata, age 46, has served as our Chief Legal Officer since May 2012. Mr. Rincón previously served as Legal Counsel to Banco de Bogotá. Mr. Rincón serves as a member on the Board of Directors of Banco de Bogotá S.A. and alternate Director in Aval Fiduciaria’s Board and Aval Soluciones Digitales – dale!. He holds a degree in law from the Universidad Autónoma de Bucaramanga and a Masters in International Business Law from Queen Mary University & Westfield College, University of London. Mr. Rincón Plata’s business address is Carrera 13 No. 26A-47, Bogotá, D.C., Colombia.
Eduardo Duque Suárez, age 61, has served as Chief Risk and Compliance Officer since March 2022. He serves as a member on the Board of Directors of Banco de Occidente. Previously, he served as Mexico and Latam Global Functions Independent Compliance Risk Management Head in Citi, Regional ICG Risk Manager Senior Credit officer Level 2 for Colombia, Ecuador and Venezuela, Risk Manager Country Officer Chile, Perú and Bolivia, Deputy Country Credit Risk Manager and Vice-president Emerging Markets Corporate Banking EMCB – Institutional Client Group. He also worked as Director in Waventure S.A. de C.V in Mexico, Director in NM Rothschild & Sons Mexico, Assistant Director in NM Rothschild & Sons Colombia and Assistant Director in Deutsche Morgan Grenfell Group Public Limited Company from 1997 to 2005. He holds a degree in Economics and a MSc in Economics from Universidad de Los Andes. Mr. Duque Suarez’ business address is Carrera 13 No. 26A-47, Bogotá, D.C., Colombia.
Paula Durán Fernández, age 48, has served as Chief of Sustainability and Strategic Projects since 2024. She previously served as Vice – President of Strategy and Sustainability of Corficolombiana from 2023 to 2024. Ms Durán serves as a principal member on the Board of Directors of Banco Popular and alternate member of Aval Valor Compartido – AVC and Ventas y Servicios S.A. She holds a degree in Economy from W. Sydney University and a MBA from Universidad de los Andes. Her principal business address is Carrera 13 No. 26A-47, Bogotá, D.C., Colombia.
Jorge Castaño Gutiérrez, age 50, has served as Chief of Financial Assets and Efficiency since 2024. Previously, he served as Colombian Superintendent of Finance. Mr. Castaño serves as a member on the Board of Directors of Banco de Occidente, Aval Fiduciaria and Aval Casa de Bolsa. He holds a degree in law and post-graduate studies in Capital Markets and Banking Law from the Universidad Externado de Colombia and holds a Master’s in Economic Developments Law from Universidad Carlos III de Madrid. Mr Castaño served as Director of Fondo de Garantías de Instituciones Financieras (Fogafin) and as a tenured professor and Director of the Law and Economics Department at Universidad Externado de Colombia. Mr. Castaños’ business address is Carrera 13 No. 26A-47, Bogotá, D.C., Colombia.
Ernesto Gutierrez de Piñerez Luna, age 52 has served as Chief Technology Officer since 2025. He previously served as Chief Executive Officer at Seynekun and held the position of Vice president of Science, Technology, and Innovation at Ecopetrol, in addition to other leadership and executive roles across companies in multiple sectors. Mr. Gutiérrez de Piñeres holds a degree in Systems Engineering from Universidad del Norte, an MBA from Universidad de los Andes, and has completed various executive education programs in leadership and strategic management at IESE Business School and other academic institutions in Colombia and abroad. His business address is Carrera 13 No. 26A-47, Bogotá, D.C., Colombia.
María Edith González Flórez, age 67, has served as Vice President of Accounting since 2010, and formerly as Financial and Administrative Manager, of Grupo Aval since 2004. Ms. González Flórez previously worked as Financial Manager at Cocelco S.A. and Movistar. She holds a degree in Public Accounting from the Universidad de Santiago de Cali and graduate studies in finance from Universidad ICESI. Ms. González Flórez’s business address is Carrera 13 No. 26A-47, Bogotá, D.C., Colombia.
Juan Carlos Echeverry Garzón, age 63, is set to begin his role as Chief Executive Officer of Banco de Bogotá on May 6, 2026. He holds a degree in Economics from Universidad de los Andes, a specialization in International Economics from the Kiel Institute for the World Economy in Germany, and studied Philosophy at Universidad Complutense de Madrid. He also holds a Ph.D. in Economics from New York University. He previously served as Chief Executive Officer of Ecopetrol, as Colombia’s Minister of Finance, as Director of the National
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Planning Department and as Dean of the Faculty of Economics at Universidad de los Andes. His principal business address is Calle 36 No. 7-47, Bogotá, Colombia.
Gerardo Silva Castro, age 69, has served as Chief Executive Officer of Banco de Occidente since August 2023. He holds a degree in Civil Engineering from Pontificia Universidad Javeriana in Bogotá and a Master of Business Administration from Babson College. He has also completed executive programs at Universidad Icesi in High-Level Municipal Government and at the Centro de Liderazgo y Gestión, focused on Transformative Business Leadership. Mr. Silva has more than 25 years of experience in the financial sector, during which he has held various senior management positions. At Banco de Occidente, he previously served as Vice President of Corporate, Official and Intermediate Banking beginning in 1994, and as Vice President of Corporate Banking beginning in 2014. He currently serves on the Boards of Directors of Porvenir and Asobancaria. His principal business address is Carrera 4 No. 7-61, Cali, Colombia.
María Fernanda Suárez Londoño, age 51, has served as President of Banco Popular since 2023. She holds a degree in business administration from the Colegio de Estudios Superiores de Administración – CESA and holds a master’s degree in public policy management from Georgetown University in Washington D.C., USA. Her extensive experience includes more than 25 years of experience in both the public and private sectors where she has held positions such as CEO of Accenture Colombia, Minister of Mines and Energy of Colombia, Executive Vice President of Strategy and Finance of Ecopetrol, as well as other important positions in the Ministry of Finance and Public Credit, Porvenir, Citibank and Bank of America. She also has been a member of the Board of Directors in many important organizations in the country. Ms Suárez currently serves on the Boards of Directors of Promigas, Corficolombiana, Aval Valor Compartido – AVC and Asobancaria. Her principal business address is Calle 17 No. 7-35, Bogotá, D.C., Colombia.
Gerardo Hernández Correa, age 64, has served as President of Banco AV Villas. He holds a law degree from the University of the Andes, with a specialization in Administrative Law from the Colegio Mayor de Nuestra Señora del Rosario University. In his professional experience, he has served, among other positions, as Advisor to the Executive Director for Colombia and Peru at the IDB, Deputy Minister of Labor and Social Security, Executive Manager and Secretary of the Board of Directors of the Bank of the Republic, Financial Superintendent, Co-Director of the Board of Directors of the Bank of the Republic, and Legal Vice President of Banco de Bogotá. Mr. Hernández currently serves on the Boards of Directors of Aval Fiduciaria S.A. His business address is Carrera 13 No. 26A 47, Bogotá, D.C., Colombia
Ana Milena López Rocha, age 45, has served as President of Corficolombiana since August 2024. She is an Economist from Harvard University and holds an MBA from Columbia Business School. Before joining Corficolombiana Ms. Lopez Rocha was Chief Financial Officer (CFO) of Ecopetrol S.A. and Cenit Transporte y Logística de Hidrocarburos. Previously, she served as Director General of Public Credit and the National Treasury at the Ministry of Finance and Public Credit of the Republic of Colombia. She has also worked at JP Morgan Chase Bank in London and New York where she held various roles including Vice-President of Emerging Markets. She has been a member of the Boards of Directors of Banco Davivienda, TAESA, Cenit, Compañía de Seguros Bolívar, Invercolsa, Ocensa, ISA, CTEEP, Ecopetrol, FDN, and Isagen. Ms. López currently serves on the Boards of Directors of Promigas S.A. Her principal business address is Carrera 13 No. 26-45, Bogotá, D.C., Colombia.
Miguel Largacha Martínez, age 62, has served as President of Porvenir since 2008. Mr. Largacha Martínez previously served as President of Horizonte Sociedad Administradora de Fondos de Pensiones y de Cesantías S.A., and held other positions within BBVA Colombia S.A., including Executive Vice President and Vice President of Banco Ganadero (the predecessor to BBVA Colombia S.A.) and has been a member of the Board of Directors of Fundación Grupo Aval since 2011 and Banco AV Villas since 2026. He holds a law degree from Universidad Javeriana and has further completed graduate studies in Financial Legislation and Executive Management at the Universidad de los Andes. His business address is Carrera 13 No. 26 A- 65, Bogotá, D.C., Colombia.
B. Compensation
Our common shareholders must approve the compensation of our Board of Directors at the shareholders’ ordinary meeting held in March of every calendar year.
Each member of our Board of Directors, receives a fee based on attendance at each Board of Directors’ session. Committee members, including our audit committee, also receive an additional fee for attending audit committee meetings.
For the March 31, 2025, to March 31, 2026, period the Board of Directors and support committees’ session fee per member was Ps 11,572,000 per meeting. For the April 1, 2026, to March 31, 2027 period, the Board of Directors’ session fee per member is Ps 12,162,000 and support committee’s session fee per member is Ps 2,211,000 per meeting.
We are not required under Colombian law to publish information regarding the compensation of our individual executive officers, and we do not make this information public. Our shareholders, however, can request this information prior to our general shareholders’ meetings. The aggregate amount of compensation, inclusive of bonuses, which we and our subsidiaries paid to directors, alternate directors and senior
executive officers was Ps 54.5 billion in 2025. We pay bonuses to our executive officers which vary according to each officer’s performance and the achievement of certain goals, and, therefore, the amounts paid may vary for each officer.
We do not have, and have not had in the past, any share option plans.
C. Board practices
Principal differences between Colombian and U.S. corporate governance practices
Grupo Aval, as a listed company that qualifies as a foreign private issuer under the NYSE listing standards in accordance with the NYSE corporate governance rules, is permitted to follow home-country practice in some circumstances in lieu of the provisions of the corporate governance rules contained in Section 303A of the NYSE Listed Company Manual that are applicable to U.S. companies. We follow corporate governance practices applicable to Colombian companies and those described in our Corporate Governance Code, which in turn follow Colombian corporate governance rules. The Corporate Governance Code is available at Grupo Aval’s website at www.grupoaval.com. Information on our website is not incorporated into this annual report.
The following is a summary of the significant differences between the corporate governance practices followed by Grupo Aval and those applicable to domestic issuers under the NYSE listing standards.
Independence of directors
Under NYSE corporate governance rules, a majority of a U.S. company’s Board of Directors must be composed of independent directors, although as a foreign private issuer, we would not be required to comply with this rule. Law 964 of 2005 requires that our Board of Directors consist of five to ten members and that at least 25% of such members be independent directors, and Decree 3923 of 2006 regulates their election. “Independence” within the meaning of Law 964 of 2005 is primarily concerned with independence from management and the absence of material related-party transactions between the director and the company. See “Item 10. Additional Information—B. Memorandum and articles of association”. In compliance with Colombian law and our by-laws, Grupo Aval’s Board of Directors is composed of nine members, of which five are independent under Colombian rules. In addition, Colombian law mandates that all directors exercise independent judgment under all circumstances.
Non-executive director meetings
Pursuant to the NYSE listing standards, non-executive directors of U.S. listed companies must meet on a regular basis without management being present. Under Colombian regulations, there is no prohibition against officers being members of the Board of Directors.
Committees of the Board of Directors
Under NYSE listing standards, all U.S. companies listed on the NYSE must have an audit committee, a compensation committee and a nominating/corporate governance committee, each with a written charter addressing certain minimum specified duties, and all members of such committees must be independent. In each case, the independence of directors must be established pursuant to highly detailed rules promulgated by the NYSE and, in the case of the audit committee, the NYSE and the SEC. We have established an audit committee, a corporate matters committee, compensation committee, IT committee, ESG committee and risk committee as further described below.
Audit committee
Our audit committee is composed of three principal members and three alternate members, appointed by the Board of Directors, the following members were appointed as principal: Mrs. Esther América Paz Montoya, Mr. Fabio Castellanos Ordónez and Mr. Luis Fernando Lopez Roca. Mr. Fabio Castellanos Ordóñez is the financial expert on the audit committee.
All members of our audit committee are independent under the NYSE and SEC corporate governance rules applicable to us. Company officers are not members of the audit committee; however, the meetings and work product of the audit committee are supported by reports and presentations by company officers. Pursuant to Colombian Securities regulation (Law 964 of 2005), the audit committee has a charter approved by the Board of Directors, which sets forth the main aspects related to the operation of such committee, including, among others, its composition and duties. The audit committee charter addresses various corporate governance subjects. Our external auditor KPMG, as our independent registered public accounting firm, is invited to attend all meetings of the audit committee. Pursuant to Colombian law, the audit committee must meet at least quarterly.
Our audit committee advises the Board of Directors generally on internal control matters, and it specifically undertakes to:
Corporate matters committee
Our corporate matters committee is composed of three members, appointed by the Board of Directors: Mrs. Esther América Paz Montoya, Mr. Fabio Castellanos Ordóñez and Mr. Álvaro Velásquez Cock. The corporate matters committee is responsible for overseeing the activities executed by the internal control of Grupo Aval and its subsidiaries.
Compensation committee
Our compensation committee is composed of two members: Mr. Luis Carlos Sarmiento Angulo and Mr. Mauricio Cárdenas Müller. Our Board of Directors may change the members of the committee at any time. The compensation committee advises the board on remuneration matters and specifically undertakes to (i) review the remuneration of our President and (ii) review the criteria upon which our President will determine the remuneration of our senior management and employees. Colombian law does not require the creation of a compensation committee and the Board of Directors is not required by law to adopt a compensation committee charter.
Risk Committee
Our risk committee is composed of three directors: Mr. Fabio Castellanos Ordóñez, Mr. Jorge Silva Luján and Mr. Andrés Escobar Arango. The committee, which charter is approved by the Board of Directors, assists and advises the board in aspects related to supervision of Grupo Aval’s risk management policies.
Technology and Innovation Committee
Our TI committee is composed of three directors: Mr. Luis Carlos Sarmiento Gutiérrez, Mr. Mauricio Salgar Hurtado and Mr. Jorge Silva Luján. The Committee's charter, which is approved by the Board of Directors, assists and advises the board in aspects related to analyzing management reports on Grupo Aval's and its subsidiaries' strategies for technology systems, digital transformation, and related investments.
ESG Committee
Our ESG committee is composed of three directors: Mr. Luis Fernando López Roca, Mr. Andrés Escobar Arango and Mr. Mauricio Salgar Hurtado. The committee, which charter is approved by the Board of Directors, assists and advises the board in aspects related to strategically integrate ESG factors into the Grupo Aval’s operations and those of its subsidiaries, setting targets and objectives to ensure Grupo Aval remains a responsible and competitive stakeholder.
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D. Employees
At December 31, 2025, on a consolidated basis, we employed 67,585 individuals, with 46,778 direct employees, 4,169 personnel provided by staffing service companies and 16,638 outside contractors.
The following table presents the approximate breakdown of the employees, personnel provided by staffing service companies and outside contractors of our banking subsidiaries, Corficolombiana, Porvenir, Aval Fiduciaria, Aval Casa de Bolsa and Grupo Aval (separate), at December 31, 2025.
Services (1)
Banking (2)
35,267
8,965
2,419
46,778
Personnel provided by staffing service companies
2,290
1,862
4,169
Outside contractors
6,816
9,687
16,638
44,373
20,514
2,565
The direct employees (unconsolidated) of Corficolombiana, Porvenir, Aval Casa de Bolsa, Aval Fiduciaria and Grupo Aval are not represented by unions.
E. Share ownership
Mr. Sarmiento Angulo beneficially owns 97.8% of our outstanding common shares and 45.5% of our preferred shares as determined under SEC rules at April 10, 2026. See “Item 7. Major Shareholders and Related Party Transactions—A. Major shareholders”. The following table provides the names of our other directors and key executive officers who owned shares of Grupo Aval at April 10, 2026.
Percentage of
outstanding
Common
common
Preferred
preferred
Shareholder
shares
Esther América Paz Montoya
251,718
*
423,076
53,191
163,135
Luis Fernando Pabón Pabón
83,924
123,773
40,616
76,923
8,264
11,538
Fabio Castellanos Ordóñez
Luis Fernando López Roca
Andrés Escobar Arango
José Mauricio Salgar Hurtado
Jorge Silva Luján
María Lorena Gutiérrez Botero
Juan Carlos Echeverry Garzón
María Fernanda Suárez Londoño
* less than 0.1%.
F. Disclosure of a registrant’s action to recover erroneously awarded compensation
A. Major shareholders
Mr. Luis Carlos Sarmiento Angulo controls Grupo Aval and was the beneficial owner of 81.2% of our issued and outstanding share capital at April 10, 2026. He retained 97.9% of our voting power by virtue of his beneficial ownership of 97.9% of our outstanding common shares, and beneficially owned 45.4% of our outstanding preferred shares, as determined under SEC rules, at April 10, 2026. Beneficial ownership is defined in Form 20-F and generally includes voting or investment power over securities. Percentage of beneficial ownership is based on 23,743,475,754 of our aggregate equity securities outstanding comprised of 16,177,613,105 common shares outstanding and 7,565,862,649 preferred shares outstanding at April 10, 2026.
The principal shareholder, as a common shareholder and a preferred shareholder, does not have any different or special voting rights in comparison to any other common shareholder or preferred shareholder, respectively.
The following table sets forth information, as of April 10, 2026, regarding the beneficial ownership of our equity securities by:
At April 10, 2026
Principal beneficial owners
Common shares
common shares
Preferred shares
preferred shares
Luis Carlos Sarmiento Angulo
15,844,485,878
97.9%
3,435,043,780
45.4%
Other directors and officers as a group*
437,713
798,445
Other shareholders
332,689,514
4,130,020,424
54.6%
16,177,613,105
7,565,862,649
* Other directors and officers as a group at April 10, 2026 represent less than 0.1%.
As of April 10, 2026, we had 37,861 holders of preferred shares registered in Colombia in addition to JPMorgan Chase Bank, N.A. as depositary of the American Depositary Receipts, or “ADRs”, evidencing ADSs. As of April 1, 2026, there were a total of 7,094 ADR holders of record and as of April 10, 2026 there were 17,051,212 ADRs outstanding, representing 341,024,240 preferred shares or 4.5% of outstanding preferred shares. Since some of these ADRs are held by nominees, the number of record holders may not be representative of the number of beneficial holders.
B. Related party transactions
We currently engage in, and expect from time to time in the future to engage in, financial and commercial transactions with “related parties” (within the meaning of the SEC rules). Unless otherwise indicated below, such transactions are conducted on an arm’s-length basis in the ordinary course of business, on terms that would apply to transactions with third parties.
The following chart presents outstanding amounts of related party transactions involving assets or liabilities between Grupo Aval and its consolidated subsidiaries, and each of the following individuals and entities.
Transactions between Grupo Aval and its subsidiaries, and
Close family
Grupo Aval’s
members of
directors and key
Mr. Sarmiento
management and
Angulo and their
Angulo and his
their affiliates(1)
affiliates
Financial assets in investments(2)
3,789.3
Loans(2)
149.0
20.6
3,309.5
Accounts receivable
2,118.0
Deposits(3)
66.0
1,631.3
Financial obligations (4)
302.2
Accounts payable
350.8
16.4
At December 31, 2024
4,075.3
65.1
3,502.8
1,646.1
76.5
1,802.8
Financial obligations
291.8
For information on related party transactions in accordance with IFRS disclosure rules, see Note 34 to our audited consolidated financial statements. For the purposes of Note 34 to our audited consolidated financial statements, “related parties” includes entities and persons that must be identified as such pursuant to IAS 24. For the purposes of this section, and as required by SEC rules, “related parties” includes enterprises that control, or are under common control with Grupo Aval, associates, individuals owning directly or indirectly an interest in the voting power that gives them significant influence over Grupo Aval, close family members, key management personnel (including directors and senior management) and any enterprises in which a substantial interest in the voting power is owned, directly or indirectly, by any of the persons listed above. We determine beneficial ownership under SEC rules. See “—A. Major shareholders”.
In the past, affiliates of Mr. Sarmiento Angulo, have obtained authorizations of Grupo Aval’s Board of Directors to acquire either common or preferred shares of Grupo Aval. Most recently, on May 11, 2022, Grupo Aval’s Board of Directors authorized companies controlled by
Mr. Sarmiento Angulo to acquire up to 3.0% of common and/or preferred shares of the company in one or multiple operations, during a term of up to two years. Pursuant to such authorizations, Mr. Sarmiento Angulo acquired 62,309,162 preferred shares or Ps 35.2 billion in open market transactions.
Certain members of our Board of Directors and key management own shares of Grupo Aval which, other than in the case of Mr. Sarmiento Angulo, were acquired in the open market or in one of our public offerings and represent less than 0.1% of our total outstanding shares.
Financial assets and liabilities with related parties
In the past, we and some of our subsidiaries have entered into operations with BHI and its subsidiaries in the ordinary course of business. In 2020, through Resolution No. 208-20 of May 14, 2020 issued by the Superintendency of the Securities Market of the Republic of Panama, BAC International Bank, Inc. issued perpetual subordinated corporate bonds convertible into common shares for a nominal value of up to U.S.$700.0 million. The bonds bear an interest rate of 10.0% payable quarterly unless the issuer exercises its right not to pay interest. Grupo Aval Limited, a wholly-owned subsidiary of Grupo Aval, subscribed U.S.$520.0 million and as of December 31, 2025 the full balance remained outstanding.
On October 28, 2022 Grupo Aval’s General Shareholders Meeting approved the credit request submitted by Esadinco S.A. (affiliate company of Mr. Sarmiento Angulo) and authorized its Board of Directors to define the specific terms for the loan. On the same day, and according to the criteria approved by the General Shareholders Meeting, its Board of Directors authorized the company to grant credits to Esadinco S.A., for an amount up to the equivalent in Colombian pesos of U.S.$270 million at a maximum term of 60 months and for an additional amount of up to Ps 200,000 million pesos at a maximum term of 24 months.
Grupo Aval extended a loan operation to Esadinco S.A., subsequently endorsed to Endor Capital Assets S.R.L (affiliate companies of Mr. Sarmiento Angulo) on December 2, 2022. The loan operation consisted of two tranches: (i) a peso denominated loan for the equivalent in Colombian Pesos of U.S.$270.0 million with a 3-year (36 months) tenor at 3-month SOFR + 3.5% and (ii) a Ps 200.0 billion loan with a 2-year (24 months) tenor at 3-month IBR + 4.5%. The second tranche matured on December 2, 2024, and was paid in full. The remaining tranche was extended for two additional years (24 months) on October 16, 2025 for an amount equivalent in Colombian Pesos of U.S.$260 million, in accordance with the authorizations provided by Grupo Aval’s General Shareholders Meeting and its Board of Directors.
Collateral was established at a minimum of 115% of the capital outstanding and the underlying assets deemed acceptable were shares of BHI or any other subsidiary under Grupo Aval’s direct control. The transactions were conducted on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons, and did not involve more than the normal risk of collectability or present other unfavorable features. At December 31, 2025, the outstanding balance at amortized cost of the loan was Ps 982.6 billion.
Business and financial reasons for borrowing from entities affiliated with Mr. Sarmiento Angulo
In the past, we have borrowed from entities beneficially owned by Mr. Sarmiento Angulo. These loans have been entered into on an arm’s-length basis with us, the holding company, at a rate substantially consistent with rates that would have been available to the holding company from other lenders at the time those borrowings were entered into. In addition to the global and local bond markets, companies affiliated with our controlling shareholder are among our funding alternatives. There are no outstanding loans granted to Grupo Aval by shareholders of Grupo Aval and their respective affiliates since December 20, 2013.
Loans granted to related parties by our banking subsidiaries
Key management of Grupo Aval and our banks, and their respective affiliates, who meet our credit eligibility requirements may subscribe to loans in the ordinary course of business on market terms and conditions available to the general public.
All outstanding loans with our related parties are made in the ordinary course of business and on terms and conditions, including interest rates and collateral, not substantially different from those available to the general public and did not involve more than the normal risk of collectability or present other unfavorable features.
Other transactions with Mr. Sarmiento Angulo and his affiliates
Beneficial ownership in our banking subsidiaries (outside of Grupo Aval)
In addition to his beneficial ownership in Grupo Aval, Mr. Sarmiento Angulo beneficially owns at April 10, 2026, 8.3% of Banco de Bogotá, 13.3% of Banco de Occidente, 15.5% of Banco AV Villas, 0.8% of Banco Popular, and 11.5% of Corficolombiana.
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Except as stated above, Mr. Sarmiento Angulo does not have any other beneficial ownership in our banking subsidiaries. For information on the dividend history of our banking subsidiaries, see “Item 10. Additional Information—F. Dividends and paying agents—Dividend history of our banking subsidiaries”.
Insurance services
Seguros de Vida Alfa S.A., or “Vida Alfa”, a life insurance affiliate of Mr. Sarmiento Angulo, provides insurance required by law, as well as annuities, relating to the mandatory pension funds managed by Porvenir. The insurance provider is selected by Porvenir through a competitive bidding process once every four years. Premiums under this insurance policy are deducted by Porvenir from the individual customers’ account and transferred to Vida Alfa on behalf of the individual customer.
The table below presents the insurance premiums for life and disability insurance paid for the periods indicated.
Period
For the year ended December 31,
3,142.2
2,773.3
2,520.7
Vida Alfa also provides:
Seguros Alfa S.A., or “Alfa”, a property and casualty insurance affiliate of Mr. Sarmiento Angulo, provides fire and earthquake insurance for mortgage loans granted by certain banks of ours. In addition, Alfa provides surety bonds and property insurance for our subsidiaries. Our banking subsidiaries also sell bancassurance products affiliated with Vida Alfa and Alfa. These transactions are conducted on an arm’s-length basis in the ordinary course of business.
The following companies are beneficially owned by Mr. Sarmiento Angulo at December 31, 2025, and may continue to provide services to us and our subsidiaries for amounts that are immaterial: Construcciones Planificadas S.A. (office renovations) and Vigía S.A. (security services). At December 31, 2025 we had significant influence with a 34.0% equity interest in ADL Digital Lab S.A.S. (digital development), a company beneficially owned by Mr. Sarmiento Angulo.
C. Interests of experts and counsel
A. Consolidated statements and other financial information
See “Item 18. Financial Statements”, which contains our audited consolidated financial statements prepared in accordance with IFRS.
Legal proceedings
We, our banking subsidiaries, Corficolombiana, Porvenir and our other subsidiaries are party to lawsuits and administrative proceedings incidental to the normal course of our business.
We record contingency provisions when the risk of loss is probable, in which case, we would consider settling. In cases where we litigate a claim, we record a provision for our estimate of the probable loss based on historical data for similar claims. As of December 31, 2025 and 2024, we and our banking subsidiaries had recorded consolidated provisions relating to administrative fines, indemnifications and legal proceedings for a total amount of Ps 155.4 billion and Ps 192.5 billion, respectively. These figures are presented before minority interest and thus do not reflect their potential impact on Grupo Aval’s net income attributable to owners of the parent.
Other litigation
We, our banking subsidiaries, Corficolombiana, Porvenir and our other subsidiaries are, from time to time, subject to claims and parties to legal proceedings incidental to the normal course of our business, including in connection with our lending activities, employees, taxation matters and other general commercial matters. Due to the inherent difficulty of predicting the outcome of legal disputes, we cannot predict the eventual outcome of these pending matters, the timing of the ultimate resolution of these matters or the eventual loss, fines or penalties related to each pending matter may be. We believe that we have recorded adequate provisions for the anticipated costs in connection with these claims and legal proceedings and believe that liabilities related to such claims and proceedings should not, taken together, have a material adverse effect on our business, financial conditions, or results of operations. However, considering the uncertainties involved in such claims and proceedings, the ultimate resolution of these matters may exceed the provisions that we have currently recorded. As a result, the outcome of a particular matter could be material to our operating results for a particular period.
B. Significant changes
A. Offering and listing details
B. Plan of distribution
C. Markets
Market price and volume information
Trading history of our ADSs
On September 22, 2014, we completed a SEC-registered initial public offering in the United States. We raised Ps 2.6 trillion (U.S.$1.3 billion) in gross proceeds. Our ADSs began to trade on the New York Stock Exchange, or NYSE, under the symbol “AVAL” on September 23, 2014. Each ADS represents 20 preferred shares.
Trading history of our common and preferred shares
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. 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.
Our preferred shares have been listed since February 1, 2011 on the Colombian Stock Exchange under the symbol “PFAVAL”. We registered our preferred shares with the SEC and 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. On January 17, 2014, we completed our third public offering of common shares pursuant to a preemptive rights offering, or the “Common Share Rights Offering”, raising Ps 2.4 trillion (U.S.$1.3 billion). In September 2014, we completed our second public offering of preferred shares pursuant to an initial public offering in the United States, as stated above in “—Trading history of our ADSs”.
Trading on the Colombian Stock Exchange
The Colombian Stock Exchange is the sole trading market for our common and preferred shares. The aggregate equity market capitalization of the 62 issuers listed on the Colombian Stock Exchange at April 10, 2025 was Ps 556.1 trillion.
Regulation of Colombian Securities Markets
Colombian securities markets are subject to the supervision and regulation of the Superintendency of Finance, which was created in 2005 following the merger of the Superintendency of Banking and the Superintendency of Securities. The Superintendency of Finance is an independent regulatory entity ascribed to the Ministry of Finance. The Superintendency of Finance has the authority to inspect, supervise and control the financial, insurance and securities exchange sectors and any other activities related to the investment or management of public savings. Accordingly, we are subject to the control of the Superintendency of Finance as an issuer of securities, and our subsidiaries are subject to its control, supervision and regulation as financial institutions and issuers of securities. See “Item 4. Information on the Company—B. Business Overview—Supervision and regulation—Colombian banking regulators—Ministry of Finance” and “—Superintendency of Finance”.
Registration of the ADR Program and Investment in Our ADSs by Non-Residents of Colombia
The International Investment Statute of Colombia as provided by Decree 1068 of 2015, as amended, regulates the manner in which foreign investors may participate in the Colombian securities markets and undertake other types of investment, prescribes registration with the Colombian Central Bank of certain foreign exchange transactions and specifies procedures under which certain types of foreign investments are to be authorized and administered.
The International Investment Statute provides specific procedures for the registration of ADR programs as a form of foreign portfolio investment, which is required for the acquisition of the preferred shares to be offered in the form of ADSs. In addition, a holder of our ADSs or preferred shares may under certain circumstances be required to comply directly with certain registration and other requirements under the foreign investment regulations. Under these regulations, the failure of a non-resident investor to report or register foreign exchange transactions relating to investments in Colombia with the Colombian Central Bank on a timely basis may prevent the investor from obtaining remittance payments, including for the payment of dividends, and constitute an exchange control violation and/or result in a fine.
Each individual investor who deposits preferred shares into the ADR facility in exchange for our ADSs will be required, as a condition to acceptance by Fiduciaria Bogotá S.A., now Aval Fiduciaria, as custodian of such deposit, to provide or cause to be provided certain information to Aval Fiduciaria and/or the Depositary to enable it to comply with the registration requirements under the foreign investment regulations relating to foreign exchange. On January 2, 2026, the fiduciary business of Fidubogotá was spun-off and merged with Aval Fiduciaria, which absorbed its contractual obligations with clients and is now the custodian to Grupo Aval’s ADSs. A holder of ADSs who withdraws preferred shares from the ADS deposit facility under certain circumstances may be required to comply directly with certain registration and other requirements under the foreign investment regulations. Under these regulations, the failure of a non-resident investor to report or register foreign exchange transactions relating to investments in Colombia with the Central Bank on a timely basis may prevent the investor from obtaining remittance payments, including for the payment of dividends, constitute an exchange control violation and/or result in a fine.
Under Colombian law, foreign investors receive the same treatment as Colombian citizens with respect to the ownership and voting of our ADSs and preferred shares. See “Item 3. Key Information—D. Risk factors—Risks relating to our businesses and industry—Risks relating to our preferred shares and ADSs” and “Item 4. Information on the Company—B. Business overview—Supervision and regulation—Restrictions on foreign investment in Colombia”.
D. Selling shareholders
E. Dilution
F. Expenses of the issue
A. Share capital
B. Memorandum and articles of association
The following is a summary of certain significant provisions of our by-laws, Colombian corporate law, the rules and regulations of the Superintendency of Finance and the Listing Rules of the Colombian Stock Exchange that pertain to our capital, management, periodical and occasional disclosures, as well as other corporate issues applicable to us. The description below includes the material provisions of our by-laws and Colombian corporate law. In Colombia, by-laws are the principal governing document of a corporation.
Our by-laws provide for an authorized share capital of 120,000,000,000 shares of par value of Ps 1.00 each, which may be either of two classes: common shares or shares with a preferred dividend, liquidation preference and no voting. At April 10, 2026, we had 16,177,613,105 common shares outstanding, and 7,565,862,649 preferred shares outstanding.
Our shareholders’ meeting held on December 7, 2010, determined that outstanding common shares may be converted into preferred shares on a 1-to-1 basis. Conversion of common shares into preferred shares may only be made once a month, provided that, as required by Colombian law and in accordance with our by-laws, our preferred shares shall not exceed 50% of our subscribed capital.
Our by-laws also provide for the conversion of common shares into preferred shares only when such conversion is approved or authorized at a general shareholders’ meeting. A shareholders’ meeting must define, in each case, the procedure to be followed for such conversion and must determine, among other matters, the maximum number or percentage of shares that may be converted. The shareholders’ meeting may also authorize the Board of Directors or the President of our Company to approve the agreements, forms and other documents to be executed in order to give effect to a conversion.
For a description of offerings of our shares see “Item 4. Information on the Company—A. History and development of the company—Our history”.
Voting Rights
Common Shares
The holders of common shares are entitled to vote on the basis of one vote per share on any matter subject to approval at a general shareholders’ meeting according to articles 14 through 19 of the by-laws, as amended from time to time. These general meetings may be ordinary meetings or extraordinary meetings. Ordinary general shareholders’ meetings occur once a year, no later than the last business day of March, for the following purposes:
Pursuant to Law 964 of 2005, at least 25% of the members of our Board of Directors must be independent within the meaning of Colombian rules. A person who is an “independent director” is understood to mean a director who is not:
Pursuant to Decree 3923 of 2006, the election of independent directors must be in a ballot separate from the ballot to elect the rest of the directors, unless the reaching of the minimum number of independent directors required by law or by the by-laws is assured, or when there is only one list that includes the minimum number of independent directors required by law or by the by-laws.
Both elections are made under a proportional representation voting system named electoral quotient “cociente electoral” (except for the elections unanimously approved by the general shareholders’ meeting). Under that system:
There is no maximum age limit requirement for the election or retirement of directors. No minimum number of shares is required for a director’s qualification. Directors may be removed in a general shareholders’ meeting prior to the expiration of their term.
Extraordinary general shareholders’ meetings may take place when duly called for a specified purpose or purposes, or, without prior notice, when holders representing all outstanding shares entitled to vote on the issues presented are present at the meeting. Extraordinary meetings of shareholders may be called by our president, our Board of Directors or Auditor, directly or by request of a plural number of shareholders representing no less than 25.0% of the company’s common voting shares, in which case an announcement must be made by the Board of Directors, the legal representative or Auditor. In addition, meetings may be called by the Superintendency of Finance, directly or by request of shareholders holding at least 15.0% of the common voting shares. Notice of extraordinary meetings should be given at least five calendar days in advance.
Quorum for ordinary and extraordinary general shareholders’ meetings to be convened at first call requires the presence of multiple shareholders who represent at least 50.0% plus one of the outstanding shares entitled to vote at the relevant meeting. If no quorum is present
for a general shareholders’ meeting, a subsequent meeting may be called within 10 to 30 business days at which the presence of two or more shareholders entitled to vote at the relevant meeting constitutes quorum, regardless of the number of shares represented.
Notice of ordinary general meetings must be published in one newspaper of wide circulation, at least 15 business days prior to the proposed date of a general shareholders’ meeting. Notice of extraordinary general meetings, listing the matters to be addressed at such meetings, must be published in one newspaper of wide circulation, at least five calendar days prior to the proposed date of an extraordinary general shareholders’ meeting.
Except where Colombian law requires a supermajority, decisions made at a shareholders’ meeting must be approved by a majority of the shares present. Pursuant to Colombian law and/or our by-laws, special-majorities are required in the following cases:
The adoption by a shareholders’ meeting of certain corporate actions such as mergers, spin-offs, and share conversions are also subject to authorization by the Superintendency of Finance.
Preferred Shares
The holders of preferred shares are not entitled to receive notice of, attend or vote at any general shareholders’ meeting of holders of common shares, except as described below.
The holders of preferred shares will be entitled to vote on the basis of one vote per share at any shareholders’ meeting, whenever a shareholder vote is required on the following matters:
We must issue a notice of any meeting at which holders of preferred shares are entitled to vote. The notice must be published in a newspaper of wide circulation. Depending on the matters to be subjects of the shareholders meeting, notice to preferred shareholders must be delivered at least 15 business days prior to the ordinary meeting or 5 calendar days before the extraordinary meetings. Each notice must contain the following:
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Redemption
All shareholders (whether holders of common or preferred shares) have, at their option, a redemption right if, as a result of a merger, transformation or spin-off of the Company, (a) the shareholders must assume a higher level of liability (i.e., by transforming a corporation into a partnership), or (b) the economic rights of the shareholders are impaired. In these events, the shareholders that were not present at the meeting in which the decision was taken or that voted against it, may exercise the redemption right.
Pursuant to Colombian Law (Article 12 of Law 222 of 1995), the economic rights of shareholders are deemed to be impaired if:
The exercise of this right is regulated by Articles 15 and 16 of Law 222 of 1995. According to Article 15, within five days following notice of the exercise of this right by a shareholder, the Company must offer to the other shareholders the shares owned by the exercising shareholder. Within the following 15 days, the other shareholders may acquire the shares on a pro rata basis. If all or a part of the shares are not acquired by the other shareholders, then the Company must reacquire them to the extent there are profits or reserves built up by the Company for those purposes. If neither the shareholders nor the Company acquires all of the shares owned by the exercising shareholder, then pursuant to Article 16 of Law 222 of 1995, such exercising shareholder is entitled to the reimbursement of the capital contributions made to the Company.
In both cases, the redemption price of the shares will be established by the agreement of seller and buyer. In the absence of such agreement, the redemption price will be determined by an expert appraiser. Notwithstanding the above, the by-laws may establish other methods for determining the redemption price to be paid in the foregoing circumstances. Our current by-laws do not contemplate such other methods.
Following the approval of the financial statements at a general shareholders’ meeting, shareholders may determine the allocation of distributable profits, if any, of the preceding accounting period by a resolution approved by the majority of the holders of common shares present at the ordinary general shareholders’ meeting, pursuant to the recommendation of the Board of Directors and Management.
Under the Colombian Code of Commerce, a company must, after payment of income taxes and appropriation of legal reserves, and after off-setting losses from prior periods distribute at least 50.0% of net profits to all shareholders, payable in cash, or as determined by the shareholders, within a period of one year following the date on which the shareholders determine the payment of dividends. If the total amount segregated in the legal, statutory and occasional reserves of a company exceeds its outstanding capital, this percentage is increased to 70.0%. The minimum common shares dividend payment requirement of 50.0% or 70.0%, as the case may be, may be waived by a favorable vote of the holders of 78.0% of a company’s common shares present at the meeting, in which case the shareholders may distribute any percentage of the net profits. The dividends may be paid in shares if such proposal is approved by representatives of eighty (80%) of the shares present at the meeting.
Under Colombian law and our by-laws, net profits obtained in each accounting period are to be allocated as follows:
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Under Colombian law, the dividends payable to the holders of common shares, for each common share, cannot exceed the dividends per share payable to holders of the preferred shares, for each preferred share. All common shares that are fully paid-in and outstanding at the time a dividend or other distribution is declared are entitled to share equally in that dividend or other distribution. Common shares that are only partially paid-in participate in a dividend or distribution in the same proportion as the shares have been paid in at the time of the dividend or distribution.
The general shareholders’ meeting may allocate a portion of the profits to, among others, welfare, education or civic services.
Holders of preferred shares are entitled to receive a minimum dividend after deducting losses and deducting any amounts set aside for legal reserve, but before creating or accruing for any other reserve and before any declared dividends are paid to holders of common shares, so long as dividends have been approved by the shareholders’ meeting of Grupo Aval. Dividends to holders of common and preferred shares must be approved by the shareholders. If no dividends are declared, no holder of Grupo Aval’s preferred or common shares will be entitled to payment. Pursuant to the offering memorandum of the preferred shares, the minimum dividend will be equal to Ps 1.00 in each calendar semester, so long as this value is higher than the dividend paid to the holders of common shares. If the minimum preferred dividend is not equal or higher than the per share dividend on the common shares, the minimum dividend will be equal to the dividend paid to the holders of common shares, if any. So long as the dividend declared is equal to or in excess of the aforementioned minimum, the same dividend must be paid on both the common and the preferred shares.
Payment of the preferred dividend shall be made at the time and in the manner established in the general shareholders’ meeting and with the priority indicated by Colombian law.
Grupo Aval is “under control” (whereby the decision-making power is subject to the will of a person or group of persons). As a result, the Company may only pay stock dividends to the shareholders that so accept it. Those shareholders that do not accept to receive a stock dividend, are entitled to receive their dividend in cash.
For additional information regarding dividends, see “—F. Dividends and paying agents—Dividend policy of Grupo Aval”.
General Aspects Involving Dividends
The dividend periods may be different from the periods covered by the balance sheet. In the general shareholders’ meeting, shareholders will determine such dividend periods, the effective date, and the method and the place for payment of dividends.
Dividends declared on the common shares and the preferred shares will be payable to the record holders of those shares, as they are recorded on our share registry, on the appropriate dates as determined in the general shareholders’ meeting. However, in accordance with Decree 4766 of December 14, 2011 (which amended articles 2.23.1.1.4 and 2.23.1.1.5 of Decree 2555 of 2010), issued by the Ministry of Finance:
Liquidation Rights
We will be dissolved if certain events take place, including the following:
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Upon dissolution, a liquidator must be appointed by a general meeting of the shareholders to wind up the affairs of our company.
Upon liquidation, and out of the surplus assets available for distribution to shareholders, holders of fully paid preferred shares are entitled to a preference in the reimbursement of the portion of their contribution (“aporte” as provided by Article 63 of Law 222 of 1995) to Grupo Aval attributable to the nominal value of the outstanding preferred shares (i.e., Ps 1.00 per share). 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 are insufficient to pay in full their respective liquidation preferences, such assets will be distributed among those holders pro rata.
Subject to the preferential liquidation rights of holders of preferred shares, and provided there are still sufficient assets remaining, all fully paid common shares will be entitled to participate in any distribution upon liquidation. Partially paid common shares must participate in a distribution upon liquidation in the same proportion that those shares have been paid at the time of the distribution.
To the extent there are surplus assets available for distribution after full payment to the holders of preferred and common shares of their contribution to Grupo Aval, the surplus assets will be distributed among all holders of shares of share capital (common or preferred), pro rata, in accordance with their respective holdings of shares.
Preemptive Rights and Other Anti-Dilution Provisions
Pursuant to the Colombian Code of Commerce, we are allowed to have an outstanding amount of share capital that is less than the authorized share capital set out in our by-laws. Under our by-laws, the holders of common shares determine the amount of authorized share capital, and our Board of Directors has the power to (1) order the issuance and regulate the terms of subscription of common shares up to the total amount of authorized share capital, and (2) regulate the issuance of preferred shares, when expressly delegated at the general shareholders’ meeting. The issuance of preferred shares must be approved by the general shareholders’ meeting, which shall determine the nature and extent of any rights, according to our by-laws and Colombian law.
At the time of incorporation of a Colombian company, its outstanding share capital must represent at least 50% of the authorized capital. Any increases in the authorized share capital or decreases in the outstanding share capital must be approved by the majority of shareholders required to approve a general amendment to the by-laws.
Colombian law requires that, whenever we issue new common shares, we must offer to the holders of common shares the right to subscribe a number of common shares sufficient to maintain their existing ownership percentage of the aggregate share capital. These rights are preemptive rights. On the other hand, holders of preferred shares are entitled to preemptive rights only in the specific situations that the shareholders’ meeting so decides. See “Item 3. Key Information—D. Risk factors—Risks relating to our businesses and industry—Risks relating to our preferred shares and ADSs.”
Common shareholders at a general shareholders’ meeting may waive preemptive rights of common shares with respect to a particular capital increase by the favorable vote of at least 70.0% of the shares represented at the meeting. Preemptive rights must be exercised within the period stated in the share placement terms of the increase, which cannot be less than 15 business days following the publication of the notice of the public offer of that capital increase. From the date of the notice of the share placement terms, preemptive rights may be transferred separately from the corresponding shares.
The Superintendency of Finance will authorize a decrease in the outstanding share capital approved by the holders of common shares only if:
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Restrictions on Purchases and Sales of Share Capital by Related Parties
Pursuant to the Colombian Code of Commerce, the members of our Board of Directors and certain of our principal executive officers may not, directly or indirectly, buy or sell shares of our share capital, unless they obtain the prior approval of the Board of Directors passed with the vote of two-thirds of its members (excluding, in the case of transactions by a director, such director’s vote). Furthermore, pursuant to Article 262 of the Colombian Code of Commerce, Grupo Aval’s subsidiaries are prohibited from owning (directly or indirectly) shares of Grupo Aval.
In addition, as our shares are publicly traded on the Colombian Stock Exchange, the transfer of the shares is subject to the applicable securities regulation and the rules of the Colombian Stock Exchange.
Pursuant to Article 23 of Law 222 of 1995, the members of our Board of Directors and our legal representatives generally must perform their duties according to the principles of good faith, due diligence and loyalty. In particular, the directors and legal representatives must refrain from entering into any transaction (including any sale and purchase of shares) which may imply competition with the Company or a conflict of interest, unless they obtain the prior approval of the General Shareholders Meeting, which, in any case, shall only be granted if the respective transaction does not harm the Company’s interests. The Company, in the ordinary course of its business, may enter into transactions with its directors.
Under the Company’s by-laws, directors have no power to vote on compensation to themselves or any members of the Board of Directors. This task is specifically assigned to the shareholders entitled to vote.
Transfer and Registration of Shares
Grupo Aval’s common and preferred shares are listed on the Colombian Stock Exchange. According to Colombian regulations, shares listed on a Stock Exchange must be sold and transferred only through such exchange, unless such shares were issued outside Colombia and are transferred outside Colombia, or unless the share purchase transaction amounts to a value that is lower than the regulatory threshold of 66,000 UVRs, as required by Article 6.15.1.1.2 of Decree 2555 of 2010. In addition, among others, the following transactions are not required to be undertaken through the relevant Stock Exchange:
Under Colombian law, shares may be traded either in physical form or electronic form. Transfers of shares are subject to a registry system which differs depending on whether the shares are evidenced in electronic form or physical form. Transfers of shares evidenced by electronic certificates must first be registered with a securities central depositary through a stockbroker. The main purpose of the securities central depositary is to receive, safe keep and manage securities certificates issued by corporations in order to keep a record of the transactions undertaken over such securities, including transfers, pledges and withdrawals. Accordingly, they are not allowed to hold, invest or otherwise use the securities held under their custody.
Transfer of shares evidenced by electronic or physical certificates, as the case may be, must be registered on the company’s share ledger. Only those holders registered on the share ledger are recognized as shareholders. Registration requires endorsement of the certificates or a written instruction from the holder. In the case of electronic certificates, the securities central depositary notifies us regarding the transfer of shares after registering it in its system.
All of our shares are currently deposited with the securities central depositary (Deceval).
C. Material contracts
On February 4, 2020, we entered into an indenture in connection with our issuance of U.S.$1.0 billion (Ps 3,401.6 billion at the date of the issuance) of 4.375% Senior Notes due 2030. The indenture was among us, as guarantor, Grupo Aval Limited, as Issuer, Deutsche Bank Trust
Company Americas, as Trustee, Registrar, Paying Agent and Transfer Agent. Such Indenture was supplemented and amended on February 23, 2022 in connection with the spin-off of BHI.
D. Exchange controls
Colombia’s foreign investment statute regulates the way in which non-residents are permitted to invest in Colombia and participate in the Colombian securities market. Among other requirements, Colombian law requires foreign investors to register certain foreign exchange transactions with the Colombian Central Bank and obtain authorization for certain types of investments. Certain foreign exchange transactions, including those between residents and non-residents, must be made through authorized foreign exchange intermediaries.
Non-residents are permitted to hold portfolio investments in Colombia, through a registered stock brokerage firm, a trust company or an investment firm. Investors would only be allowed to transfer dividends abroad after the foreign investment registration procedure with the Colombian Central Bank has been completed. The failure of a non-resident investor to report or register foreign exchange transactions with the Colombian Central Bank relating to investments in Colombia on a timely basis may prevent the investor from remitting dividends, or an investigation, that may result in a fine, may be commenced.
E. Taxation
The following summary contains a description of certain Colombian and U.S. federal income tax considerations in connection with ownership and disposition of ADSs and preferred shares, but it does not purport to be a comprehensive description of all of the Colombian and United States tax considerations. The summary is based upon the tax laws of Colombia and regulations thereunder and on the tax laws of the United States and regulations thereunder as of date hereof, which are subject to change. A change in such laws and regulations could apply retroactively and could affect the validity of this summary.
Colombian Tax Considerations
For Colombian tax purposes, the tax residence status is triggered depending on the type of individual as follows:
Foreign individuals
Residence is established by the continuous or discontinuous presence in the country for more than 183 days including entry and exit days, within any period of 365 consecutive calendar days taking into account the day of the arrival and the day of departure of the individual. For this purpose, when the continuous or discontinuous presence in the country takes place in more than one taxable year, the person would be considered as a Colombian resident for the second taxable year.
Diplomatic employees of the Colombian state and their companions
These individuals are totally or partially exempted from income tax or capital gains tax in the country in which they are performing their work, according to the Vienna Conventions on Diplomatic and Consular Relations.
Colombian nationals
Individuals:
An individual is considered a tax resident under different circumstances, one of which is the permanence in Colombian territory either continuously or discontinuously (considering days between arrival and departure) for 183 days in any given 365-day period. If the 365-day period covers more than one taxable year, the individual will be deemed as a taxpayer for the second year as mentioned above.
Additionally, Domestic tax law considers individuals who hold the Colombian nationality and meet at least one of the following criteria in the relevant corresponding taxable year: (i) the individual’s spouse or permanent companion or dependent children are Colombian tax residents in the corresponding tax year; or, (ii) 50% or more of the individual’s income is considered to be generated in Colombia; or, (iii) 50% or more of the individual’s assets are managed within Colombia; or, (iv) 50% or more of the individual’s assets are deemed to be possessed in Colombia; or, (v) if once required by the Tax Authorities, the Colombian national fails to demonstrate that the tax residence is held abroad or, (vi) the tax residence is held in non-cooperative jurisdictions as defined by the Colombian government.
As an exception to the previous rule, a Colombian National will not be considered resident for tax purposes if during the relevant taxable year such individual: (i) perceives 50% or more of their income in the country of domicile, or (ii) has 50% or more of their assets possessed in that country.
Legal entities:
For Colombian tax purposes, a legal entity is considered a tax resident generally when its effective place of management is located in Colombia during the relevant taxable year. The effective place of management is understood as the location where the material and substantive commercial and management decisions necessary for the day-to-day conduct of the business are made. In determining this place, all relevant facts and circumstances must be evaluated, with particular emphasis on where the company’s directors or managers habitually exercise their functions and where the entity’s daily activities are carried out. Additionally, a Legal Entity incorporated under the laws of Colombia or whose principal place of business is located in Colombia, is also considered a Colombian resident.
Pursuant to the Colombian Tax Code, resident individuals and Colombian entities are subject to tax over their worldwide income, while non-resident individuals and foreign entities are taxed only on their Colombian-source income.
Foreign entities with permanent establishments
Foreign entities with permanent establishments (e.g. branches in Colombia) are subject to tax on the worldwide income attributable to the permanent establishment. Colombian tax law includes a definition of permanent establishment (“PE”) for foreign entities or individuals which applies when the entity or individual trigger the events described below in Article 20-1 of the Colombian Tax Code. In this case, as stated above, the PE is considered a Colombian taxpayer with respect to its attributable worldwide income. According to Colombian Tax Code, a PE can be created as follows:
A fixed place of business PE:
When a foreign entity carries out its business activities in Colombia through a fixed place of business located in the country, through which it carries on its business wholly or partially. The fixed place of business PE concept includes, among others, branches and offices that the foreign entity may have at its disposal, irrespective of whether it is used exclusively or not to carry on all or part of the business, and without regard of the legal title to use or hold such space.
Agency PE:
Applies for (i) Colombian dependent agents which have and usually exercises the ability to conclude legally binding agreements for entities from abroad; and for (ii) Colombian independent agents when all or the majority of their activities are undertaken on behalf of such company, and the same have agreed on or imposed financial or commercial conditions that differ to the ones that have been agreed with a third party, since those are deemed dependent agents.
No PE would be triggered whenever there is an actual fixed place of business or a dependent agent, if the activities carried on in Colombia correspond to preparatory or auxiliary activities.
Taxation of Dividends
As a general rule, dividends distributed out of profits that have not been taxed at the level of a Colombian entity (e.g., because of the application of the tax benefit, a difference in treatment between the accounting books and the Colombian tax framework, the amortization of Net Operating Losses –NOLs– amortization, etc.), are subject to the corresponding income tax rate applicable in the year in which the dividends are paid or become payable to the shareholder. In this case, the Colombian entity should apply a withholding which may be credited by the shareholder against its income tax liability. The applicable withholding tax rate is the same as the general income tax, 35% for 2025.
Financial institutions, insurance and reinsurance companies, stockbrokers, among others, will be subject to a 5% corporate tax surcharge until 2027 (bringing the total corporate income tax rate of 40%) if their taxable income exceeds 120,000 UVT (Ps. 5,975.9 billion for 2025).
This Colombian dividend tax will be levied by the entity paying the dividend. In the case of a distribution to foreign legal entities or non-resident individuals, a withholding tax of 20% relative to the payment or book entry will be applied.
Regarding tax resident individuals, dividends paid after January 1, 2023, must be taxed under the progressive rate under Section 241 of the Colombian Tax Code (capped at a rate of 39%). Under specific situations, the national dividend paying entity should apply a withholding tax of 15%.
Before applying the previously mentioned tax rate, the following scenarios must be considered:
Dividends that were taxed at a corporate level
In accordance with current regulations, dividends which have been taxed at a corporate level will be subject to:
Dividends that have not been taxed at a corporate level
In cases where the dividends subject to distribution have not been taxed at a corporate level, they should first be taxed at the current general income tax rate in the period of distribution (hereinafter “recapture tax”); and subsequently, the rules mentioned above must be applied.
Dividends distributed within a corporate group / under a situation of control / Colombian Holding Companies Regime (“Compañía Holding Colombiana” or CHC):
when the first dividend distribution payment is executed by a national entity to another national entity and both pertain to: (i) an enterprise group, (ii) are under situation of control, or (iii) are duly registered under CHC Regime, the dividend withholding tax does not apply.
Transition regime for tax on dividends:
If the profits were generated prior to December 31, 2016 (“pre-2017") and appropriated to be distributed in the future, dividends are not subject to the provisions of the current regulations in the case of profits that were taxed at the corporate income tax rate. For profits that were not taxed at the corporate income tax rate, the recapture tax (35% for 2026) will be applicable.
Based on the above, the following table summarizes the tax treatment of dividends in the absence of a tax treaty:
Dividend
Dividend distribution made out of pre-2017 profits that were subject to tax at the Colombian corporate level distributed to Tax Resident Individuals, Colombian entities and Non-Colombian Tax Residents.
Non taxed or no applicable withholding taxNon taxed or no applicable recapture tax of 35%
Dividend distribution to Colombian Tax Residents Individuals made out of pre-2017 profits that did NOT pay tax at the Colombian corporate level
Non taxed or no applicable dividends withholding tax, but must apply recapture tax of 35% if the dividend was non taxed at a corporate level
Dividend distribution to Colombian entities made out of pre-2017 profits that did NOT pay tax at the Colombian corporate level
Dividend distribution to Non-Colombian Tax Residents made out of pre-2017 profits that did NOT pay tax at the Colombian corporate level
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Portfolio Investments: Dividend distribution to Non-Colombian Tax Residents made out of pre-2017 profits that did NOT pay tax at the Colombian corporate level
25%
WTH on Dividend distributions paid to Tax Resident Individuals out of post-2016 profits that did pay tax at the Colombian corporate level
1. The individual must include the dividend profit in its income tax return (taxed at a maximum of 39%).2. The national entity that grant the dividend could have to apply a withholding tax of 15% (if the dividend amount is equal or superior of 1.090 UVTs)
WTH on Dividend distributions paid to Colombian entities out of post-2016 profits that did pay tax at the Colombian corporate level
10% since January 1, 2023
WTH on Dividend distributions paid to Non-Colombian Tax Residents (including dividend distributions made to permanent establishments) out of post-2016 profits that did pay tax at the Colombian corporate level
20% since January 1, 2023
Dividend distribution paid to tax residents individuals out of post-2016 profits that did NOT pay tax at the Colombian corporate level
1. Recapture tax of 35% if the dividend was non taxed at a corporate level.2. The individual must include the dividend profit in its income tax return (taxed at a maximum of 39%).3. The national entity that grants the dividend could have to apply a withholding tax of 15% (if the dividend amount is equal to or more than 1,090 UVTs)
Dividend distribution paid to Colombian entities out of post-2016 profits that did NOT pay tax at the Colombian corporate level. The rates shown consist of a combined rate (i.e. Income Tax withholding of 35% -taxable period 2025- and dividends withholding tax rate of 10% result in a combined rate of 41.5% for FY 2025).
41.50% as of 2025
Dividend distribution paid to Non-Tax Residents (including dividend distributions made to permanent establishments) out of post-2016 profits that did NOT pay tax at the Colombian corporate level. The rates shown consist of a combined rate (i.e. recapture tax of 35%, plus the dividends withholding tax rate of 20% result in a combined rate of 48% for FY 2025)
48% as of 2025
Portfolio Investments: Dividend distribution paid to Non-Tax Residents (including dividend distributions made to permanent establishments) out of post-2016 profits that did NOT pay tax at the Colombian corporate level
40.00%
The dividend payment approved by Grupo Aval’s General Meeting of Shareholders held on March 27, 2026, will be distributed from the profits of years 2019 and 2020, subject to be distributed with benefit for the shareholders. The tax on dividend tax from profits generated by the company depends on the recipient (Colombian tax resident individuals, Colombian entities, Non-Colombian tax residents or Non-Colombian tax residents complying with the portfolio investment definitions under the Colombian Tax Code).
Dividends paid to Non-Colombian tax residents complying with the portfolio investment definitions under the Colombian Tax Code who hold ADSs through the depositary will be subject to income taxes and withholding in Colombia as mentioned in the previous chart.
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As a general rule, foreign companies, foreign investment funds, and Non- Colombian tax residents are not required by law to file an income tax return in Colombia. However, they are subject to the withholding tax, which can be considered as the dividend tax for the foreign entity or Non-resident individual (in accordance with Section 592 of the Colombian Tax Code).
“UVT” or “Unidad de Valor Tributario” refers to a tax unit established each year by the Colombian Tax Authority (“DIAN”) for the calculation of tax returns. UVT was established at an equivalent to Ps 47,065 for 2024 and Ps 49,799 for 2025.
Taxation of Capital Gains Derived from the Sales of ADSs
Pursuant to Article 24 of the Colombian Tax Code, gains derived by non-resident entities or non-resident individuals of Colombia from the sale of the ADSs are not subject to income, withholding, remittance or other taxes in Colombia. If the holder is a resident in Colombia, this capital gain will be taxed in Colombia according to the general tax rules.
Taxation of Capital Gains Derived from the Sales of Shares in Colombia
Since 2023, according to Article 36-1 of the Colombian Tax Code, capital gains from the 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 3% of the issued and outstanding shares of the listed company. ADSs are not subject to the same tax framework as equity investments in Colombia. Although ADSs represent our preferred shares, they are subject to a different tax regulatory regime.
Tax on Foreign Portfolio Investment Income in Colombia
The 2012 Tax Reform (see “Item 4. Information on the Company-B. Business Overview-Supervision and regulation-Regulation on Payroll Loans”) established a new tax regime for foreign capital portfolio investments. Investors will be required to pay income tax for the profits obtained in the development of their activities, regardless of the vehicle used to carry them out, pursuant to Article 18-1 of the Colombian Tax Code.
The withholding rate of such tax is generally 14%; however, a 5% rate will apply for investments in fixed income securities or in derivatives whose underlying assets is a fixed income security, and a 25% rate will apply to investors domiciled in non-cooperative tax jurisdictions. Article 260-7 of Colombian Tax Code was modified by Law 1819 of 2016 which establishes a new legal framework and provides criteria pursuant to which certain jurisdictions may be classified as non-cooperative jurisdictions with low or no taxation or as jurisdictions with preferential tax regimes.
Payment of this tax will be accomplished through withholding that is performed on a monthly basis by the administrator of such investment portfolio, based on the profits earned by the investor during the corresponding month. When the income corresponds to dividends, the withholding will be made by the company paying the dividend at the time of payment. Generally, the withholding, performed according to the rules established in the Colombian Tax Code, shall constitute a final tax and investors will not be required to file an income tax return.
Other Colombian Taxes
Law 2277 of 2022 allows a Double Tax Treaty to prevail over Colombian domestic law. In case Colombia has subscribed to international agreements forbidding this form of taxation, this does not apply to fiscal periods following the effective date of the international agreement.
Significant Economic Presence is triggered when the following criteria are met:
If the activities in Colombia are developed by different related parties, the above criteria will consider the aggregate transactions of all related entities. This rule came into force on January 1, 2024.
As of the date of this annual report, there was no income tax treaty and no inheritance or gift tax treaty in effect between Colombia and the United States. Pursuant to Articles 24 and 36-1 of the Colombian Tax Code, transfers of ADSs from non-residents or residents to non-residents of Colombia by gift or inheritance are not subject to Colombian income tax. Transfers of ADSs by gift or inheritance from residents to residents or from non-residents to residents will be subject to Colombian income tax at the income tax rate applicable for capital gains obtained by residents of Colombia. There is no Colombian stamp, issue, registration, transfer or similar taxes or duties payable by holders of shares or ADSs.
United States Federal Income Taxation Considerations for U.S. Holders
The following is a description of the material U.S. federal income tax consequences to the U.S. Holders described below of owning and disposing of our ADSs or preferred shares, but it does not purport to be a comprehensive description of all tax considerations that may be relevant to a particular person’s decision to hold the securities. This discussion applies only to a U.S. Holder that holds our ADSs or preferred shares as capital assets for U.S. federal income tax purposes. In addition, it does not describe all of the tax consequences that may be relevant in light of the U.S. Holder’s particular circumstances, including any minimum tax consequences, the potential application of certain provisions of the Internal Revenue Code of 1986, as amended (the “Code”) known as the Medicare contribution tax, and tax consequences applicable to U.S. Holders subject to special rules, such as:
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If an entity that is classified as a partnership for U.S. federal income tax purposes holds our ADSs or preferred shares, the U.S. federal income tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership. Partnerships holding our ADSs or preferred shares and partners in such partnerships should consult their tax advisers as to the particular U.S. federal income tax consequences of holding and disposing of the ADSs or preferred shares.
This discussion is based on the Code, administrative pronouncements, judicial decisions, and final, temporary and proposed Treasury regulations, all as of the date hereof, any of which is subject to change, possibly with retroactive effect. It is also based in part on representations by the depositary and assumes that each obligation under the deposit agreement and any related agreement will be performed in accordance with its terms.
A “U.S. Holder” is a beneficial owner of our ADSs or preferred shares that is for U.S. federal income tax purposes:
In general, a U.S. Holder who owns ADSs will be treated as the owner of the underlying preferred shares represented by those ADSs for U.S. federal income tax purposes. Accordingly, no gain or loss will be recognized if a U.S. Holder exchanges ADSs for the underlying shares represented by those ADSs.
U.S. Holders should consult their tax advisers concerning the U.S. federal, state, local and non-U.S. tax consequences of owning and disposing of our ADSs or preferred shares in their particular circumstances.
Except as described in “─Passive Foreign Investment Company Rules” below, this discussion assumes that we have not been, and will not become, a passive foreign investment company, or “PFIC”, for any taxable year.
Taxation of Distributions
The preferred shares constitute equity of our company for U.S. federal income tax purposes. Distributions paid on our ADSs or preferred shares will be treated as dividends to the extent paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). Because we do not maintain calculations of our earnings and profits under U.S. federal income tax principles, it is expected that distributions generally will be reported to U.S. Holders as dividends. Subject to applicable limitations (including a minimum holding period requirement), dividends paid to certain non-corporate U.S. Holders that constitute “qualified dividend income” will be taxable at rates applicable to long-term capital gains. Dividends paid on our ADSs will generally constitute qualified dividend income, provided the ADSs are readily tradable on an established securities market in the United States (such as the NYSE, where our ADSs are traded). It is unclear whether these reduced rates will apply to dividends paid with respect to our preferred shares that are not backed by ADSs. U.S. Holders should consult their tax advisers regarding the availability of the reduced tax rate on dividends in their particular circumstances.
The amount of a dividend generally will include any amounts withheld by our company in respect of Colombian taxes. The amount of the dividend will generally be treated as foreign-source dividend income to U.S. Holders and will not be eligible for the dividends-received deduction generally available to U.S. corporations under the Code. Dividends will be included in a U.S. Holder’s income on the date of the depositary’s receipt of the dividend, in the case of ADSs, or on the date actually or constructively received by the U.S. Holder, in the case of the preferred shares. The amount of any dividend income paid in Colombian pesos will be the U.S. dollar amount calculated by reference to the exchange rate in effect on the applicable date of receipt, regardless of whether the payment is in fact converted into U.S. dollars. If the dividend is converted into U.S. dollars on the applicable date of receipt, a U.S. Holder should not be required to recognize foreign currency gain or loss in respect of the dividend income. A U.S. Holder may have foreign currency gain or loss if the dividend is converted into U.S. dollars after the date of receipt.
The rules governing foreign tax credits are complex. For example, Treasury regulations impose additional requirements for foreign taxes to be eligible for credit. We have not determined whether these requirements have been met with respect to any withholding tax imposed on dividends on ADSs or preferred shares. However, recent notices from the IRS indicate that the Treasury and the IRS are considering proposing amendments to such regulations and allow taxpayers, subject to certain conditions, to defer the application of many aspects of such regulations until the date when a notice or other guidance withdrawing or modifying this temporary relief is issued (or any later date
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specified in such notice or other guidance). U.S. Holders should consult their tax advisers regarding the availability of foreign tax credits for any amounts withheld with respect to distributions on ADSs or preferred shares. In lieu of claiming a foreign tax credit, U.S. Holders may, at their election, deduct foreign taxes, including the Colombian tax, in computing their taxable income, subject to generally applicable limitations under U.S. law. An election to deduct foreign taxes instead of claiming foreign tax credits applies to all foreign taxes paid or accrued in the taxable year.
Sale, Redemption or Other Taxable Disposition of ADSs or Preferred Shares
Subject to the PFIC rules described below, for U.S. federal income tax purposes, gain or loss realized on the sale, redemption or other taxable disposition of our ADSs or preferred shares will be capital gain or loss, and will be long-term capital gain or loss if the U.S. Holder held the ADSs or preferred shares for more than one year, provided that in the case of redemption, (i) the U.S. Holder does not actually or constructively own any of our voting stock after giving effect to such redemption or (ii) the redemption is not otherwise treated as essentially equivalent to a dividend under the Code. The amount of the gain or loss will equal the difference between the U.S. Holder’s tax basis in the ADSs or preferred shares disposed of and the amount realized on the disposition, in each case as determined in U.S. dollars. This gain or loss will generally be U.S.-source gain or loss for foreign tax credit purposes.
Passive Foreign Investment Company Rules
Based on proposed Treasury regulations, including those which are proposed to be effective for taxable years beginning after December 31, 1994, we believe we were not a PFIC for U.S. federal income tax purposes for the 2025 taxable year. However, because the proposed Treasury regulations may not be finalized in their current form, because the application of the proposed regulations is not entirely clear and because the composition of our income and assets will vary over time, there can be no assurance that we were not or will not be a PFIC for any taxable year. The determination of whether we are a PFIC is made annually and is based upon the composition of our income and assets (including the income and assets of, among others, entities in which we hold at least a 25% interest) and the nature of our activities. In general, we will be a PFIC for any taxable year in which at least 75% of our gross income is passive income, or at least 50% of the value (determined on a quarterly basis) of our assets is attributable to assets that produce or are held for the production of passive income.
If we were a PFIC for any taxable year during which a U.S. Holder held our ADSs or preferred shares, any gain recognized by a U.S. Holder on a sale or other disposition of ADSs or preferred shares (including certain pledges) would be allocated ratably over the U.S. Holder’s holding period for the ADSs or preferred shares. The amounts allocated to the taxable year of the sale or other disposition and to any year before we became a PFIC would be taxed as ordinary income. The amount allocated to each other taxable year within the holding period would be subject to tax at the highest rate in effect for individuals or corporations, as appropriate, for that taxable year, and an interest charge would be imposed on the tax on such amount. Further, any distribution in respect of ADSs or preferred shares in excess of 125% of the average of the annual distributions on ADSs or preferred shares received by the U.S. Holder during the preceding three years or the U.S. Holder’s holding period, whichever is shorter, would be subject to taxation in the same manner as described immediately above with respect to gains. Certain elections may be available that would result in alternative treatments (such as mark-to-market treatment) of the ADSs or preferred shares. U.S. Holders should consult their tax advisers to determine whether any of these elections would be available and, if so, what the consequences of the alternative treatments would be in their particular circumstances.
If we were a PFIC or, with respect to a particular U.S. Holder, were treated as a PFIC for the taxable year in which we paid a dividend or for the prior taxable year, the favorable dividend rates discussed above with respect to qualified dividend income paid to non-corporate holders would not apply. In addition, if we are a PFIC for any taxable year during which a U.S. Holder owned our ADSs or preferred shares, the U.S. Holder will generally be required to file IRS Form 8621 (or any successor form) with their annual U.S. federal income tax returns, subject to certain exceptions.
Information Reporting and Backup Withholding
Payments of dividends and sales proceeds that are made within the United States or through certain U.S.- related financial intermediaries generally are subject to information reporting, and may be subject to backup withholding, unless (i) the U.S. Holder is an exempt recipient or (ii) in the case of backup withholding, the U.S. Holder provides a correct taxpayer identification number and certifies that it is not subject to backup withholding. The amount of any backup withholding from a payment to a U.S. Holder will be allowed as a credit against the U.S. Holder’s U.S. federal income tax liability and may entitle it to a refund, provided that the required information is timely furnished to the Internal Revenue Service.
Certain U.S. Holders who are individuals (and certain specified entities) may be required to report information relating to their ownership of shares of a non-U.S. entity or non-U.S. accounts through which such shares are held. U.S. Holders are urged to consult their tax advisers regarding any reporting obligation with respect to our ADSs or preferred shares.
F. Dividends and paying agents
Dividend policy of Grupo Aval
The amount of dividends, if any, that we pay are influenced by the amount of dividends received from our subsidiaries. Our subsidiaries declared Ps 788.3 billion and Ps 686.6 billion of dividends payable to us based on the net income reported for the years ended December 31, 2025 and 2024, respectively. We declared an aggregate of Ps 755.0 billion and Ps 655.3 billion of dividends to our shareholders with respect to net income for the years ended December 31, 2025 and 2024, respectively.
Unless noted otherwise, the following table presents the net profits of, and dividends (cash and stock) declared by us and each of our direct subsidiaries, and the amount of dividends that we would be entitled to receive from each of them with respect to net income for the periods indicated.
Dividends declared with respect to net income for the year ended December 31,
Direct ownership interest held by Grupo Aval
Separate net profits
Dividends declared
Dividends contributed to Grupo Aval
Dividends declared by Grupo Aval
68.9%
1,260.0
1,128.5
758.8
622.4
523.0
429.0
72.3%
533.7
495.0
266.8
248.8
192.8
179.8
91.8%
93.7%
(226.7)
Banco Av Villas
79.9%
(52.6)
(116.3)
514.7
20.0%
701.9
652.6
250.1
326.3
94.5%
40.8%
Aval Banca de Inversión
70.0%
3,009.4
2,274.6
1,328.8
1,234.2
788.3
686.6
755.0
655.3
The allocation of our distributable profits, if any, is determined by our common shareholders following approval of our annual financial statements. Our general shareholders’ meetings generally take place during March.
In the past we have usually paid and received most of our dividends on a monthly basis. We have not, however, adopted a specific dividend policy with respect to future dividends. The amount of any distributions will depend on many factors, such as the results of operations and financial condition of our company and our subsidiaries, their cash requirements and other factors deemed relevant by our Board of Directors and shareholders.
Our company pays dividends based on our net income as reported in our separate audited financial statements prepared under Colombian IFRS. For the year ended December 31, 2025 separate net income as reported in our Colombian IFRS financial statements was Ps 1,735.4 billion. For the year ended December 31, 2024 separate net income as reported in our Colombian IFRS financial statements was Ps 999.9 billion.
We expect that differences between Colombian IFRS and IFRS financial statements will continue to occur in future periods. The amount of dividends expected from our subsidiaries will also depend on the future share ownership in our subsidiaries.
Dividend history of Grupo Aval
The following table presents the annual cash dividends paid by Grupo Aval on each share during the periods indicated.
Total dividends
Dividends declared with respect to net income
per share
(Ps)
(U.S.$)
Year ended:
24.00
0.006
27.60
0.007
31.80
0.008
Given that Grupo Aval’s dividends have been to some extent dependent on the dividends received from its direct stakes in each of its equity investments, we detail below the cash and stock dividends per share paid by each of Grupo Aval’s direct equity investments for the periods indicated.
1,452.00
0.386
1,752.00
0.466
2,136.00
0.569
Cash dividends
1,380.00
0.367
1,596.00
0.425
1,711.15
0.455
2,568.00
0.684
2,988.00
0.795
2,290.00
0.610
Banco de Bogotá, Fiduciaria Bogotá, Banco de Occidente and Fiduciaria de Occidente received dividend payments from Porvenir in their respective ownership of the company (see Item 4—B. Business overview—Our operations).
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1,135.00
0.302
1,194.00
0.318
1,255.00
0.334
Banco de Bogotá, Banco de Occidente and Banco Popular received dividend payments from Corficolombiana in their respective ownership of the company (see Item 4—B. Business overview—Our operations).
Stock dividends
per share(1)
557.87
0.148
411.87
0.110
382.45
0.102
Prior to December, 2024, Grupo Aval did not hold any direct holdings in Aval Fiduciaria.
114.86
0.031
47.90
0.013
318.18
0.085
Prior to December, 2024, Grupo Aval did not hold any direct holdings in Aval Casa de Bolsa.
600.42
0.160
General aspects involving dividends
The dividend periods may differ from the periods covered by our financial statements. Shareholders will determine, in the general shareholders’ meeting, such dividend periods and the effective date.
Dividends declared on the shares of common and preferred shares will be payable to the record holders of those shares, as they are recorded on our stock registry, on the appropriate record dates. However, pursuant to External Circular 13 of 1998 issued by the former Superintendency of Securities (currently, the Superintendency of Finance), if a shareholder sells shares during the ten business days immediately preceding the payment date, dividends corresponding to those shares will be paid by us to the seller.
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The vote of at least 80.0% of the shares present and entitled to vote is required to approve the payment of dividends in shares; however, according to Law 222 of 1995, if the company is in a situation “under control”, whereby the decision-making power is subject to the will of another person or group of persons, a company may only pay dividends by issuing shares, to the shareholders that so accept.
G. Statement by experts
H. Documents on display
We are subject to the informational requirements of the Exchange Act. Accordingly, we are required to file reports and other information with the SEC, including annual reports on Form 20-F and reports on Form 6-K. The SEC maintains an internet website that contains reports and other information about issuers, like us, that file electronically with the SEC. The address of that website, where you can inspect those reports and other information filed with the SEC, is www.sec.gov.
I. Subsidiary information
J. Annual Report to Security Holders
Not applicable
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT RISK
Risk Management
Grupo Aval and its subsidiaries in the financial sector including, among others, Banco de Bogotá, Banco de Occidente, Banco AV Villas, Banco Popular, Corficolombiana and Porvenir, manage risk pursuant to the applicable regulations in each country where they operate and according to Grupo Aval’s policies.
Our Board of Directors leads the process of establishing a sound risk management culture, that supports and provides appropriate standards for responsible behavior. The risk framework fully approved by our Board of Directors requires risk management practices to be integrated into key processes across Grupo Aval, ensuring risks are appropriately identified, assessed, monitored, and mitigated in a timely manner, depending on a range of factors, including the nature, size, complexity, and risk profile.
The risk management team should ensure the identification and assessment of the inherent risks of material activities, processes and systems pertaining to the holding nature of Grupo Aval to make sure those inherent risks are properly controlled and mitigated in alignment with the approved risk appetite.
The following sections outline the key risks that are inherent to the business activities of our subsidiaries, as well as the way in which those are managed:
Control Environment and Risk Culture
Our risk management system (“Sistema de Gestión de Riesgos” or SGR) seeks to comply not only with local regulation but also to align with best practices and international standards as many jurisdictions move to adopt Basel Committee principles. Accordingly, the SGR model adopts commonly accepted risk taxonomy and provides oversight and guidance to our subsidiaries who operate under a similarly guided regulatory defined relevant risks, related to the business model and characterization of each subsidiary.
At the holding level, our risk control environment is governed independently, and is based on 14 principles, focusing on concentration, contagion and strategic risk. The holding level risk control principles align with the applicable local holding regulations, which have been introduced and developed particularly since 2017 under Law 1870 of September 2017. Based on a general risk appetite framework established and approved by the Board of Directors and the limits and thresholds thereby approved, we ensure effective risk identification and assessment, monitoring and reporting, and control and mitigation. Furthermore, our risk management team implements processes and procedures to regularly report to the Board, senior management, and business line levels. These and other procedures allow us to assure a strong risk management based fundamentally on:
Grupo Aval promotes a culture of risk management that reaches all the entities, whether they are financial or non-financial, under a strict, permanent and cohesive “tone from the top”.
The risk culture is conveyed to all our entities and units, relying on the following elements:
Risk Governance in Grupo Aval
As part of Grupo Aval’s risk management and control architecture, the following corporate structure has been established:
Grupo Aval Board of Directors
The Board of Directors is responsible for establishing the risk appetite and for the approval of the general scope of the risk management function. It also sets and oversees risk management corporate policies applicable at the Grupo Aval level.
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Boards of Directors of the Financial Subsidiaries
The responsibilities of the boards of directors of Grupo Aval’s financial subsidiaries regarding risk management include:
Audit Committee of Grupo Aval and Audit Committees of our Financial Subsidiaries:
The Audit Committees’ principal objective is to evaluate and monitor the Internal Control System.
The Audit Committee is responsible for:
Corporate Risk Unit
The corporate risk unit is led by Grupo Aval’s Chief Risk and Compliance Officer, whose responsibilities include:
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Risk Management Committees of the financial subsidiaries
Grupo Aval´s financial subsidiaries have Risk Management Committees which periodically and proactively are engaged in anticipating, identifying and are also being constantly informed by the risk management units of each of the subsidiaries. Activities, procedures and systems allow them to identify early and in advance, measure, control and analyze the integral risk management system (SIAR in Spanish) that includes credit risk, market risk, operating risk and business continuity plan management (PCN for its initials in Spanish).
Additionally, our financial subsidiaries have established asset-liability committees (ALCOs), that decide on matters related to asset liability management and evaluate the effectiveness of the interest rate risk of banking book (RTILB for its initials in Spanish) and liquidity risk (SARL for its initials in Spanish) management systems. The ALCOs set each bank’s policies for balance sheet management and evaluate the potential impact on revenue under various scenarios.
These policies establish general guidelines on the type and extent of risk exposure the bank can undertake, including setting limits by product type, desk, geographic area, and across the maturity spectrum. The ALCO actively measures interest-rate risk exposure at regular intervals, reports to senior management on risk management practices, exposure levels, and limit breaches, and ensures that risk management policies and procedures are monitored by an independent middle office function.
The risk management approach adopted by banks varies according to their specific circumstances and risk appetite. Legal risk is monitored by general counsel in each subsidiary of the financial sector. These different committees are constantly developing and assessing processes that allow them to anticipate and proactively manage the risks they face. In the same way, they follow up on the activities to handle, mitigate, hedge and/or reduce risks to levels agreed upon through risk appetite thresholds defined and approved by the higher levels of each of the subsidiaries through the risk appetite limits they permanently have to comply with. They are also actively engaged in the follow up of remedial actions defined. Core activities of all risk management units is to make sure they anticipate as early as possible potential risks and mitigate them also as soon as feasible.
The main functions of the Risk Management Committees include among others:
Risk Management Unit and its equivalent in our financial subsidiaries
The Risk Management Unit and their equivalents, have the following functions:
Internal Audit and Internal Control Unit
The internal audit units at each financial subsidiary have independent criteria and carry out periodic independent compliance assessments of risk management policies and procedures, regarding risk management and control environment. Reports are submitted directly to the audit committees responsible for monitoring risks and proposing corrective measures, if necessary.
In addition to the internal audit units at the financial subsidiaries, there is a Corporate Internal Control unit that ensures the compliance of our subsidiaries with corporate policies. The Chief of Internal Control participates in the audit committees of significant subsidiaries. The
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corporate internal control unit performs periodic independent audits of Grupo Aval’s subsidiaries to monitor their compliance with corporate risk management policies. Its reports are presented directly to senior management at each of the subsidiaries and to the corresponding audit committees, including the corporate matters committee of Grupo Aval.
Non-financial Subsidiaries
Corficolombiana consolidates most of our interests in non-financial subsidiaries. As such, its Government, Risk and Compliance (GRC) Vice Presidency provides oversight through these subsidiaries’ risk management and internal controls. This monitoring activity covers subsidiaries in the infrastructure and the energy and gas sectors, where most of Corficolombiana’s investment portfolio is concentrated, and is currently being expanded to the remaining sectors. Corficolombiana ensures that its non-financial sector subsidiaries follow guidelines in relation to risk management set forth by Corficolombiana and Grupo Aval’s policies and best practices established by law.
For all other non-financial subsidiaries of Grupo Aval, the Board of Directors of each consolidating financial entity has the faculty to establish guidelines in terms of risk policies and risk monitoring processes, which must be implemented at each of such subsidiaries.
Financial Conglomerate Risk
On February 6, 2019, the Colombian national government, through Law 1870 of 2017, defined the regulatory framework applicable to financial conglomerates in Colombia and the scope of supervision of the Superintendency of Finance, aimed to ensure the stability of the financial system and aligning the regulatory framework to international standards. This law created the category of financial holding and financial conglomerates. Whilst developing this law, the Superintendency of Finance identified Grupo Aval as a financial conglomerate and determined the entities belonging to the Aval Financial Conglomerate.
For more information, see “Item 4. Information on the Company — B. Business overview—Supervision and regulation—Regulatory framework for Colombian Financial Conglomerates”.
Risk Management Systems
Financial Risk
Credit Risk Management
The credit risk management processes of our banks take into consideration the requirements of the Superintendency of Finance, local regulators, Grupo Aval’s credit-risk management guidelines and the composition of each of our bank’s loan portfolio. See Note 4 to our audited consolidated financial statements.
The guiding principles of risk management at Grupo Aval and our banks are the following:
For more information, see Note 4 of our audited consolidated financial statements.
Commercial Lending
At December 31, 2025, 57.14% of our total gross consolidated loan portfolio was commercial loans to corporate, small, and medium sized enterprises. However, the share of commercial loans varies across of our banks. As of December 31, 2025, the percentage of commercial loans was 63.44%, 69.77%, 29.29%, 24.05% and 54.07% for Banco de Bogotá, Banco de Occidente, Banco Popular, Banco AV Villas and Corficolombiana, respectively.
The credit approval process for commercial loans at each of our banks in Colombia follows the policies and lending authorities established by each banking subsidiary. The highest lending authority in all banks, other than the Board of Directors, is the national credit committee (Comité Nacional de Crédito at Banco de Bogotá and Banco AV Villas, Comité de Crédito Dirección General at Banco de Occidente and Comité de Presidencia at Banco Popular). These have approval authority of lending limits that range between Ps 12.9 billion at Banco AV Villas and Ps 50.0 billion at Banco de Bogotá.
Following the approval of an application by the national credit committee of any of our banks, information regarding the approval is sent to the Grupo Aval Credit Projects unit if it could result in aggregate exposure to the borrower exceeding Ps 5.0 billion. The credit approval process includes the presentation to Grupo Aval’s credit committee of all potential credit exposures per client (or client’s economic group) that, across all our banks, represent an exposure in excess of Ps 32.0 billion, or if it is considered to be part of a sector under special watch.
The committee consolidates requests for loans across all banks and evaluates our total exposure to potential borrowers. In each case, the committee evaluates the relevant bank’s application of its credit analysis policy and it may make recommendations according to the structure of the loan.
Grupo Aval evaluates, when applicable based on concentration thresholds, credit applications submitted to it by Grupo Aval’s banks and makes recommendations with respect to such loans. The Boards of Directors of the banks make the final decisions with respect to such applications. To facilitate the analysis of commercial loan applications which meet the threshold and are thus reviewed by Grupo Aval, we have developed certain tools, including a standardized “Proyecto de crédito”.
We seek to achieve a profitable, high-quality commercial loan portfolio and an efficient procedure for analyzing potential loans across our banks. For that purpose, we have established policies and procedures for the analysis and approval of potential commercial credit transactions that seek to focus lending on:
As part of our commercial banking activity, we make loans to public sector entities. For purposes of evaluating the extension of credit to public sector entities, our banks follow two criteria: (i) the loan must be used to finance an investment that has been approved by local authorities; and (ii) a source of repayment, primarily tax revenues, must be clearly identified.
Consumer Lending
Consumer lending represented 31.38% of the total gross consolidated loan portfolio as of December 31, 2025. However, our share of consumer lending and specialization by product varies across of our banks. As of December 31, 2025, Banco Popular’s consumer lending represented 66.97% of its total gross loan portfolio and is concentrated mainly in payroll loans (libranzas), a product in which it is one of the leaders in Colombia. Consumer lending represented 53.50% at Banco AV Villas, 22.43% at Banco de Bogotá and 23.42% at Banco de Occidente. At Corficolombiana, 45.25% of total gross loans were consumer loans granted primarily by Promigas and its subsidiaries to its residential gas utility users.
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The credit approval process for consumer loans at each of our banks follows the policies and lending authorities established by each bank. The highest consumer lending authority at all banks, other than the Board of Directors, is the Consumer Management Committee or National Consumer Credit Committee.
For consumer banking, each bank has developed statistical risk models for the origination and evaluation of customer behavior using descriptive and predictive analytical tools, which allow the mitigation of consumer risk.
Mortgage Lending
Mortgage lending represented 11.48% of our total gross consolidated loan portfolio as of December 31, 2025, with Banco de Bogotá and Banco AV Villas being the highest share. Mortgage lending represented 14.13% and 22.44% of Banco de Bogotá’s and Banco AV Villas’ total gross loan portfolios, respectively, as of December 31, 2025.
Microcredit Lending
Microcredit loans represented 0.001% of the total gross loan portfolio as of December 31, 2025.
Credit Classification and Provisioning
Our banks are continually engaged in the determination of risk factors associated with their credit-related assets, through their duration, including restructurings. For such purposes, they have designed and adopted the credit risk administration system in accordance with Superintendency of Finance guidelines. The SARC (Sistema de Administración de Riesgo de Crédito) has integrated credit policies and procedures for the administration of credit risks, models of reference for the determination and calculation of anticipated losses, allowances for coverage of credit risks and internal control procedures.
Our banks are required to classify the loan portfolio in accordance with the rules of the Superintendency of Finance, which established the following loan classification categories: “AA”, “A”, “BB”, “B”, “CC” and “Default”, depending on the strength of the credit and its past due status.
Each bank reviews the outstanding loan portfolio components under the above-mentioned criteria and classifies individual loans under the risk-rating categories below, based on minimum objective criteria, such as balance sheet strength, profitability, and cash generation capacity. The classification of new commercial loans is made based on these objective criteria. The criteria are also evaluated on an ongoing basis, together with loan performance, in reviewing the classification of existing commercial loans.
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Category
Approval
Commercial loan portfolio
Consumer loan portfolio
“AA”
New loans with risk rating at approval of “A”
Outstanding loans and financial leases with past due payments not exceeding 29 days (i.e., between 0 and 29 days past due). The debtor’s financial statements or its projected cash flows, as well as all other credit information available to the financial subsidiaries, reflect excellent paying capacity.
Loans whose risk rating is “AA” according to the methodology of the Consumer Reference Model (MRCO), as established by the Superintendency of Finance
“A”
New loans with risk rating at approval of “B”
Outstanding loans and financial leases with delayed payments in excess of 30 days but not exceeding 59 days (i.e., between 30 and 59 days past due). The debtor’s financial statements or its projected cash flows, as well as all other credit information available to the financial subsidiaries, reflect appropriate paying capacity.
Loans whose risk rating is “A” according to the methodology of the MRCO as established by the Superintendency of Finance
“BB”
Outstanding loans and financial leases past due more than 60 days but less than 90 days (i.e., between 60 and 89 days past due). Loans in this category are acceptably serviced and collateralized, but there are weaknesses which may potentially affect, on a transitory or permanent basis, the debtor’s ability to pay or its projected cash flows, to the extent that, if not timely corrected, would affect the normal collection of credit or contracts.
Loans whose risk rating is “BB” according to the methodology of the MRCO as established by the Superintendency of Finance
“B”
New loans with risk rating at approval of “C”
Outstanding loans and financial leases past due over 90 days but less than 120 days (i.e., between 90 and 119 days past due). The debtor shows insufficient paying capacity of its obligations.
Loans whose risk rating is “B” according to the methodology of the MRCO as established by the Superintendency of Finance
“CC”
New loans with risk rating approval of “C”
Outstanding loans and financial lessees past due more than 120 days but less than 150 days (i.e., between 120 and 149 days past due). Loans in this category represent grave insufficiencies in the debtors’ paying capacity or in the project’s cash flow, which may compromise the normal collection of the obligations.
Loans whose risk rating is “CC” according to the methodology of the MRCO as established by the Superintendency of Finance
“Default”
–
Outstanding loans and financial leases past due for 150 days or more, or that, being restructured, reach days past due greater than or equal to 60 days This category is deemed uncollectible. These loans are considered in default.
Consumer loan portfolio past due over 90 days or more, or that, being restructured, reach days past due greater than or equal to 60 days
For new consumer loans, our banks use their internal statistical origination models to develop an initial classification category (“AA”, “A”, “BB”, “B” and “CC”). Once the loan is disbursed, the banks use formulas provided by the Superintendency of Finance, which incorporate payment performance of the borrower to calculate a score which in turn is used to determine the loan classification.
For financial leases the risk categories are established in the same manner as commercial or consumer loans.
For separate financial statement reporting purposes under Colombian IFRS, the Superintendency of Finance requires that loans and leases be given a risk category on the scale of “A”, “B”, “C”, “D” and “E”. As a result, the risk classifications are aligned to the risk categories as follows.
Risk classification – Banks
Risk category – Superintendency of Finance
“A” – between 0 and 30 days past due
“A” – more than 30 days past due
“C”
“D”
“Default” – all past due loans not classified in “E”
“E”
“Default” – past due loans with a Loss given default (LGD) of 100%(1)
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For our mortgage and microcredit loan portfolios the risk categories, based on past due status, are as follows.
C
“A” Normal Risk
In compliance or up to date and up to 30 days past due
In compliance or up to 60 days past due
“B” Acceptable Risk
Past due between 31 and 60 days
Past due between 61 and 150 days
“C” Appreciable Risk
Past due between 61 and 90 days
Past due between 151 and 360 days
“D” Significant Risk
Past due between 91 and 120 days
Past due between 361 and 540 days
“E” Uncollectable
Past due over 120 days
Past due over 540 days
Grupo Aval’s banks regularly review their loan portfolio to evaluate for impairment; while determining if an impairment should be recorded with a charge to results of the year, management performs judgments for determining if there is observable data indicating a decrease in the estimated cash flow of the loan portfolio before the decrease in such flow may be identified for a particular loan of the portfolio.
The loan loss allowance calculation process includes analysis of specific, historical and subjective components. The methodologies used by our banking subsidiaries include the following elements:
For credits individually considered as significant and impaired, the amount of the loan loss allowance is calculated using the discounted cash flow method. Management of each financial entity makes assumptions regarding the amount to be recovered for each client and the time in which such amount will be recovered. During the calculation of allowances for credits considered individually as significant and impaired, based on their guarantee, management performs estimates of the fair value of such guarantees with the support of independent expert appraisers.
For loans not considered individually significant, or for those credits individually significant but not impaired, loan loss allowances are calculated collectively using elements such as the historical loss rate, periodically updated data reflecting current economic conditions, performance trends of the industry, geographic concentrations of debtors within each portfolio of the segment and any other relevant information that may affect the payment. Grupo Aval’s banking subsidiaries also determine whether the credit risk (i.e., risk of default) of a financial instrument has increased significantly since initial recognition. They consider reasonable and supportable information that is relevant and available without undue cost or effort, including both quantitative and qualitative information and analysis based on their historical experience, expert credit assessment and forward-looking information.
To quantify expected credit losses in portfolios evaluated collectively the banking subsidiaries of Grupo Aval have calculation methodologies that consider three fundamental factors: exposure, probability of default and loss given default.
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For more information, see Note 4.1 Credit Risk.
Liquidity Risk Management
In each of our financial subsidiaries, the asset and liability management (ALM) team is responsible for managing the bank´s balance sheet and ensuring that the bank can meet its financial obligations. This includes managing the bank´s liquidity, interest rate risk, and other financial risks. The ALM team works closely with other teams within the bank, such as the treasury, risk management, and investment teams, to ensure that the bank´s overall risk profile is consistent with the risk appetite and regulatory requirement. The financing and liquidity models are decentralized and based on the autonomous management of each subsidiary. However, liquidity risk policies at the financial subsidiaries are compliant with guidelines established by the Superintendency of Finance and local regulators.
These guidelines require Grupo Aval’s Colombian financial subsidiaries to establish a liquidity risk management system (Sistema de Administración de Riesgo de Liquidez), which includes the identification, measurement, control and monitoring functions to ensure the management of day-to-day liquidity needs, adjust minimum liquidity buffers and establish liquidity contingency plans to deal with unexpected situations. Grupo Aval, as a holding company, is not required to maintain minimum liquidity positions.
During 2025, Grupo Aval’s financial subsidiaries in Colombia maintained adequate levels of high-quality liquid assets to meet the 30-day liquidity requirements, according to the methodology of the Superintendency of Finance. There is no evidence of any upcoming liquidity risk threat. Notwithstanding the foregoing, the liquidity units of the financial subsidiaries have worked to measure the future impacts on the index considering the economic and commercial environment.
See Note 4.3. of our audited consolidated financial statements for liquidity risk management, the regulatory methodology and results.
The Net stable Funding Ratio (CFEN for its initials in Spanish) based on the Basel standard aimed to limit excessive dependence on unstable funding resources for strategic assets that are often illiquid and at the same time, allows entities to maintain a stable funding profile in relation to their assets.
The CFEN ratio is defined as a ratio of the available amount of stable funding (ASF) to a required amount of stable funding (RSF). “stable funding” is defined as those types and amounts of equity and liability financing, expected to be reliable sources of funds over a one-year time horizon under conditions of long-term stress.
Available stable funding (ASF) is defined as the sum of: (i) capital; (ii) preferred stock with maturity of equal to or greater than one year; (iii) liabilities with effective maturities of one year or greater multiplied by an ASF factor of 100%; and (iv) the portion of “ stable” non-maturity deposits and/or term deposits with maturities of less than one year that would be expected to stay with the institution for an extended period in a stress scenario multiplied by an ASF factor between 0% and 90%.
The required amount of stable funding is calculated as the sum of the value of the assets held and funded by the institution, multiplied by a specific required stable funding (RSF) factor assigned to each particular asset type, multiplied by its associated RSF factor. The total RSF is the sum of the corresponding weighted amounts. RSF factors are intended to approximate the amount of a specific asset that would have to be financed, either because it will be renewed, it could not be liquidated through its sale, or it is engaged in a money market operation, during a year without incurring in significant losses. That amount must be financed with ASF.
Since the CFEN ratio was introduced into liquidity risk regulation in 2019, the Superintendencia Financiera de Colombia (SFC) has progressively enhanced this framework by incorporating additional requirements, including new segments and risk factors. As stipulated in Circular Externa 013, issued in 2023, entities are required to develop a qualitative and quantitative methodology to classify deposits from supervised financial entities (currently its factor is 25%), collective investment funds without permanency agreements (currently its factor is 25%), and the real sector (currently its factor is 90%), into operating and non-operating categories based on their stability. This methodology must be submitted to the SFC for approval by November 30, 2026, with the objective of applying differentiated risk factors according to their stability levels: supervised financial entities (operating 50%, non-operating 0%), collective investment funds without permanency agreements (operating 50%, non-operating 0%) and the real sector (operating 90%, non-operating 50%).
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The required threshold of CFEN is 100% for Group 1 banks and 80% for Group 2 banks, and merchant banks are not subject to this limit. At December 31, 2025, Banco de Bogotá, Banco de Occidente and Banco Popular were deemed to be Group 1 banks. Banco AV Villas was classified as Group 2, and in 2026 it has been classified as Group 1.
The following tables show the consolidated CFEN ratio for each of our banks in Colombia as well as for Corficolombiana, expressed as a percentage as of December 31, 2025, and 2024 as follows:
Banco de Bogotá S.A.
Banco de Occidente S.A.
Banco Popular S.A.
Banco AV Villas S.A.
Corficolombiana S.A.
(in Percentage)
CFEN
109.5
107.9
113.1
111.1
98.8
105.6
112.5
107.2
97.2
Market Risk Management
Market risk management focuses on the probability of changes in the value of the investment’s portfolios due to fluctuations in financial instruments’ prices.
The holding company of Grupo Aval does not have material market risk on its own. However, it monitors and oversees market risk at a consolidated entities level through reports received from its financial subsidiaries, which have the primary responsibility of managing their market risk. The financial subsidiaries present market risk, primarily derived from the banks’ lending, trading and investment activities. The main sources of market risks to which financial subsidiaries are exposed to are interest rate risk, foreign exchange rate risk, variations in stock price risk and investment fund risk.
Grupo Aval and its financial subsidiaries’ respective Boards of Directors, through their Risk Management Committees, are responsible for establishing policies, procedures, and risk limits regarding market risk (banking and trading book). Additionally, these committees monitor overall performance considering the risks assumed. These policies and procedures describe the control framework used by Grupo Aval and its financial subsidiaries to identify, measure, and manage market risk exposures inherent in financials activities. The main purpose of these policies and procedures is to set risk limits.
See Note 4.2. of our audited consolidated financial statements for the regulatory value-at-risk methodology and results, structural foreign exchange risk, interest rate risk in the banking book and sensitivity of Grupo Aval’s consolidated balance sheet.
Interest Rate Risk in the Banking Book (IRRBB)
Financial subsidiaries are exposed to Interest Rate Risk in the Banking Book (IRRBB) when interest rates change, as the present value and timing of future cash flows may be affected. This, in turn, impacts the underlying value of the entity’s assets, liabilities, and off-balance
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sheet items, and consequently, the Economic Value of Equity (EVE). Changes in interest rates also affect the entity’s earnings by altering interest-sensitive income and expenses, thereby impacting its Net Interest Margin (NIM).
The measurement of IRRBB is conducted using two main metrics: the Economic Value of Equity (EVE), which assesses the fluctuation of equity in response to changes in interest rates using a liquidation balance sheet, and the Net Interest Margin (NIM), which calculates the impact on interest income due to movements in interest rates using a constant balance sheet and a 12-month window.
The results for the Aval Banks at December 31, 2025 were primarily determined by the adverse behavior of reference market rates during the fourth quarter of the year. In particular, the sharp increase observed in the IBR swap curve had a significant impact on the discounting rates of asset and liability cash flows, which deteriorated the Delta VEP/CET1+AT1 indicator at year-end.
See Note 4.2.4 of our audited consolidated financial statements for the Interest Rate Risk in the Banking Book methodology and results, structural foreign exchange risk, interest rate risk in the banking book and sensitivity of Grupo Aval’s consolidated balance sheet
Interest rate benchmark reform
Law 2294 of 2023 requires the Central Bank of Colombia to publish the DTF benchmark rate until December 31, 2026, and establishes that, as of January 1, 2027, references indexed to the DTF shall be deemed to refer to the 3-month IBR, expressed in effective annual terms. In this context, Grupo Aval and its subsidiaries are implementing measures to migrate financial positions to alternative benchmarks, avoiding new exposures and renewing transactions under the 3-month IBR or the benchmark agreed with clients.
As of December 31, 2025, Grupo Aval reported Ps 2,706,118 million in non-derivative financial assets and loan commitments, and Ps 36,230 million in non-derivative financial liabilities linked to the DTF, mainly related to rediscount operations with Finagro, mandatory investments, and agreements with governmental entities, with no derivative positions outstanding. Contracts indexed to the DTF with maturities beyond December 31, 2026 amounted to Ps 1,833,218 million in non-derivative financial assets and loan commitments, and Ps 33,686 million in non-derivative financial liabilities.
Although the remaining value indexed to the DTF is not material relative to total assets, Grupo Aval will continue monitoring these positions to mitigate potential adverse effects on business, operating results, financial condition, and prospects arising from the transition to alternative benchmark rates.
The amounts of the contracts that Grupo Aval and its subsidiaries have indexed to DTF as of December 31, 2025, and the amounts of the assets and liabilities that will mature after December 31, 2026, are shown below:
Total amount of contracts
Total amount of contracts expiring after December, 2026
Debt securities held for trading
Ps.
Debt securities mandatorily FVTPL
Debt securities FVOCI
Debt securities at amortized cost
156,483
Loans Commercial
2,330,607
1,622,411
Loans Consumer
219,008
210,808
Loans Mortgage
Loans Microcredit
Total financial assets indexed to DTF
2,706,118
1,833,218
793
Saving deposits
24,673
Leases contracts
Borrowing from banks and others
Borrowing from development entities
36,230
33,686
Total financial liabilities indexed to DTF
61,695
33,844
Grupo Aval’s subsidiaries have neither trading derivatives nor risk management hedges indexed to DTF.
Operational Risk Management
Grupo Aval defines operational risk as "the risk of incurring losses due to deficiencies, failures or inadequate functioning of our processes, technology, infrastructure or human resources, as well as the occurrence of external events associated with them, including legal risk". Operational risk is inherent to all services, products, activities, processes and systems, and affects all business and support areas, so all employees are responsible for managing and controlling the risks that arise in the development of their activities.
The operational risk policies in Grupo Aval and financial subsidiaries are approved by the Board of Directors of each of subsidiary and are aimed at complying with the guidelines established by Superintendency of Finance. These guidelines require that we establish a system of operational risk management (SARO) that includes identification, measurement, control and monitoring of functions required to ensure adequate risk management.
As part of the processes carried out in the management of operational risk, Grupo Aval executes its core, strategic, and support processes, implementing the necessary controls to fulfill its obligations to clients, shareholders, and other stakeholders. The management of SARO is further strengthened through the definition, implementation, testing, and maintenance of the Business Continuity Plan, which reinforces the operational risk control framework.
To comply with the implementation of SARO, each of our financial subsidiaries established within its organizational structure an Operational Risk Unit independent of the operational and control areas of each financial subsidiary. The responsibilities of these units are the establishment and definition of policies, methodologies and procedures for communicating within each organization all information related to operational risk. In addition to the staff of each Operational Risk Unit, the financial subsidiaries have established the role of operational risk leaders, which are employees in key areas who, in addition to their functional responsibilities, are required to report events or situations
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which may result in eventual operational losses. Additionally, each financial subsidiary has an operational risk management committee which meets on a periodical basis to review operational risks policies and follow up on the execution of action plans.
The Operational Risk Unit (URO) maintains its monitoring process to the risk profile of the entity, reports to senior management, and validated that risks levels are adequate and accepted.
Grupo Aval and its subsidiaries participate in the corporate operational risk management committee, made up of the heads of the Operational Risk Units of each financial subsidiary and Grupo Aval's risk management personnel. The main activities of this committee are as follows:
•reviewing, studying and updating corporate policies and guidelines for operational risk management;
•coordinate the analysis of regulation and the impact in Grupo Aval's financial subsidiaries;
•identify and apply operational risk management best practices;
•Supervise the operational risk management systems of the financial subsidiaries, including corporate indicators and their results;
•coordinate the standardization of operational risk methodologies; and
•identify and implement operational risk management tools.
Grupo Aval and its subsidiaries comply with the minimum capital requirements for operational risk in their solvency calculation, in accordance with the instructions established in the Basic Accounting and Financial Circular (CBCF). The credit institutions base their calculation on the standard method to determine the exposure to operational risk; currently the subordinates have operational risk event bases certified by the regulator, so the internal loss indicator (IPI) is determined based on this element.
In the case of the pension and severance fund management, the Superintendency of Finance has established a different methodology in the same circular.
According to the standard model, the operational risk for Grupo Aval´s financial subsidiaries consolidated at their level and their respective value in basis points of regulatory capital of December 31, 2025 and 2024 was as follows:
Entity
Value
Basis Points of Regulatory Capital
(in Ps millions)
Banco de Bogotá and subsidiaries
Banco de Occidente and subsidiaries
Banco Popular and subsidiaries
224
Corficolombiana and subsidiaries
452
560
Porvenir S.A.
5,011
5,089
7,801
7,117
1,746
1,452
1 The information about Banco Popular and subsidiaries includes the operational risk of Corficolombiana and subsidiaries. However, taking into account the materiality of operational risk in Corficolombiana and subsidiaries it is also presented separately in this table.
Business Continuity Management
The maturity of the Business Continuity Management system represents our commitment to a strong and resilient culture, providing all stakeholders with contingency solutions that enable them to increase their confidence in managing events that disrupt the normal operation of our business. The execution of business continuity testing has been developed to identify strengths and opportunities for improvement in the entities' operation scheme. As a result, the strategies and preparation of the functional teams and technological processes proved to be effective in facing disruption scenarios.
The guidelines established by Grupo Aval's Corporate Business Continuity Committee aim to support compliance with business continuity requirements based on knowledge of the policies and activities developed by each entity. The main activities of this committee are as follows:
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•Best practices in relation to business impact analysis (BIA), risk assessment, evaluation of critical suppliers, among others.
•Follow-up of compliance with corporate policy and guidelines.
•Monitoring of corporate indicators and follow-up of reports to Grupo Aval.
•Crisis management for each of the subsidiaries.
Furthermore, recovery and restoration strategies have been strengthened, increasing the levels of business resilience, and strengthening the continuity plans of the subsidiaries. The review of critical suppliers and cloud services continue to be pillars of improvement in the business continuity strategies of Grupo Aval and its subsidiaries.
Risk of external transactional fraud
In order to strengthen the external transactional fraud prevention practices adopted by the subsidiaries and achieve a corporate approach, during 2023 a system for the management of External Transactional Fraud Risks was implemented, which seeks to collect the best practices for the mitigation of this type of risk. A Corporate Policy for the management of External Transactional Fraud Risk was established through which the guidelines on the matter were given, the corresponding Corporate Committee was created, in which the main cases identified in the entities are studied and the corporate indicators for the corresponding follow-up were established.
In 2025 Grupo Aval and its subsidiaries, maintained its analysis of external transactional fraud events, identifying their modalities and causes in order to generate mitigating actions that protect the service offered by our entities. Identifying the vulnerabilities of products and services allows executing action plans that look to improve the service to customers and users.
The articulation with the operation of other risks such as cybersecurity, operational risk and conduct risk, allow creating synergies for the definition and implementation of controls that seek to mitigate the risk of transactional external fraud.
Non-Financial Risk Review
Grupo Aval and its subsidiaries are committed to the preservation of integrity through compliance with applicable laws, regulations, and ethical standards in each of the markets in which we operate. All employees are expected to adhere to these laws, regulations and ethical standards and management of each subsidiary is responsible for ensuring such compliance. Compliance is an essential ingredient of good corporate governance.
The compliance function covers all matters relating to regulatory compliance, the prevention of money laundering and terrorist financing, consumer protection, antibribery and anticorruption, as well as compliance with the standards of the U.S. Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley) in some subsidiaries including the most significant from a quantitative perspective.
The compliance function is independent of the business areas in all our subsidiaries and promotes adherence to the rules, oversight requirements, principles, and values of good conduct through all our companies. The corporate governance structure at Grupo Aval establishes standards, policies and best practices that apply to each company to enforce the standard requirements, that business units should follow. The compliance or risk units in each subsidiary enforce the application of the corporate and internal policies providing advice and information in the interest of employees, customers, shareholders, and supervisors.
The compliance function in our financial subsidiaries is incorporated into the risk areas with access to the Board of Directors and its committees through the Chief Risk Officer or its equivalent. In addition, the legal departments of each financial subsidiary, have access to these bodies on a regular basis. This structure is aligned with banking regulatory requirements and supervisory expectations.
The compliance unit assists Senior Management at the entity level in identifying and assessing potential compliance issues as well as providing guidance to staff on compliance laws, rules, and standards, and performs a monitoring and reporting role. The legal departments or its equivalent in our subsidiaries have the primary responsibility for identifying and interpreting compliance laws, rules, and standards, and for aiding in drafting related policies and procedures. The internal audit units review the adequacy of controls established to ensure compliance with policies, plans, procedures, and business objectives, in accordance with the annual internal audit plan and legal requirements, as well as COSO 2013 as internal control framework.
Anti-money laundering and terrorist financing
Grupo Aval and its financial subsidiaries must comply with the guidelines established by local authorities and the Superintendency of Finance of Colombia (which, in turn, follows international standards). These guidelines require that Colombian financial entities establish a risk management system for risks related to money laundering and terrorist financing (Sistema de Administración de Riesgo de Lavado de Activos y Financiación del Terrorismo - SARLAFT) which includes the identification, measurement, control, and monitoring functions to prevent and mitigate the materialization of risks related to money laundering and terrorist financing.
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In compliance with the regulations of the Superintendency of Corporations, our non-financial sector entities that are regulated by this superintendency, have implemented the control system for the prevention of the money laundering and financing of terrorism called SAGRILAFT (Sistema de Autogestión de Riesgo Integral de Lavado de Activos y Financiación del Terrorismo). A methodology for measuring the maturity level of the system to prevent money laundering and terrorist financing was defined, consisting of an annual self-evaluation that includes qualitative factors of the compliance program ranging from the control environment to monitoring the effectiveness of the controls.
Bimonthly Corporate Committees are held with the participation of the Compliance Officers of the principal entities. Through these instances, Grupo Aval ensures that best practices are adopted by the entities, and undertakes a periodic review of the methodology, risk factors and risks materializations. Depending on their impact an assessment is made in these committees to determine if there are gaps in the factors considered (ranging from policies, organization, knowledge of the client, identification of unusual operations, status of communications, acquisition, development and maintenance of systems, incident management, degree of compliance, strategy, government, and control architecture, among others) or improvement opportunities. Compliance Officers in each subsidiary are required to report periodically the main findings and assessment of the anti-money laundering risk to the Board of Directors.
All local financial subsidiaries and those in the non-financial sector that are required to implement the control system for the prevention of money laundering and financing of terrorism – SAGRILAFT, in compliance with local regulations, must report suspicious transactions to the UIAF (Unidad de Información y Análisis Financiero) of the Ministry of Finance.
Annually, each subsidiary must certify to Grupo Aval holding the degree of compliance with corporate policies and procedures for the calendar year that ends, based on program maturity goals. According to this, each of our subsidiaries must comply the standards defined by Grupo Aval, in addition to those set by applicable regulation.
Anti-bribery and anti-corruption
Grupo Aval has designed controls to safeguard that its employees act with integrity in all their dealings and strictly prohibits bribery and corruption in any form. Grupo Aval is committed to a policy of zero tolerance against corruption. Anti-corruption principles are stated in the Corporate Anti-Corruption Policy and are summarized below, based on the fundamental principle of zero tolerance:
In accordance with the above, Grupo Aval monitors that the accounting records of transactions with high exposure to anti-corruption and anti-bribery laws accurately reflect such transactions and their proper accountancy.
A corporate methodology has been established to identify, assess, document and manage corruption risks. It includes semi-annually updating of the risk – controls matrix, applying the approved methodology and annual evaluation of the risk of corruption at the level of each entity.
We have designed a process of self-assessment and annual certification applicable to all the Grupo Aval subordinates which consists of evaluating the environment of control and the way in which each subordinate is mitigating the anti-corruption risks identified, with a special emphasis on donations, gifts, invitations, sponsorships, and TPI (third parties intermediaries) administration. The policies also apply to acquisitions and joint ventures.
Legal Risk
Each subsidiary’s legal department supports operational risk management in its area of expertise. These areas define and establish the necessary procedures to adequately control the legal risks inherent in financial subsidiaries’ operations, making sure legal risks are well mitigated and that the controls meet legal standards. It also analyzes and drafts contracts for operations carried out by the different business units.
With respect to the legal situation of each subsidiary, each legal department ensures that the allowances for contingencies have been appropriately created whenever required. Grupo Aval has assessed the relevant claims filed against it, based on the analysis and criteria of the lawyers in charge.
Regarding copyrights, Grupo Aval and each of its subsidiaries exclusively use software or licenses that have been legally acquired.
Details of the litigation filed against Grupo Aval are disclosed in Note 22 and 27 to our audited consolidated financial statements.
Conglomerate Risk
As of December 31, 2025, Aval Financial Conglomerate includes 27 Colombian and foreign entities that undertake activities under the supervision of the Superintendency of Finance (SFC).
Grupo Aval S.A., as holding company defined by the Superintendency of Finance, approved the Risk Management Framework (MGR) in its Board of Directors, and through the Risk Committee, studied and approved the MGR and the Early Warning System methodology and procedure for the implementation.
To develop the guidelines established in the Risk Management Framework Policy of the Aval Financial Conglomerate, through MGR’s methodology, the aspects that the Financial Holding must consider for risks management of Financial Conglomerate’s risks are:
To assess this risk, Grupo Aval’s risk management unit, considers the relationships and exposures between entities of the conglomerate, and between these and their related entities or affiliates. Once those relationships are considered, through subject matter expert criteria and correlation analysis, it considers if also due to market perception and/or the potential materialization of reputational risk, those related entities can be affected by potential contagion. Reputational risk is defined broadly as: “risk arising from negative perception on the part of customers, counterparties, shareholders, investors, debt-holders, market analysts, other relevant parties or regulators that can adversely affect a bank’s ability to maintain existing, or establish new, business relationships and continued access to sources of funding”-Basel definition. This risk is understood by local regulators as the possibility of loss incurred by a financial conglomerate’s entity due to dispute, bad image, negative publicity, true or not, with respect to the same institution or its business practices, which causes loss of customers or decrease in income.
The materiality of the risk will depend, among other factors, on the amount, type, and frequency of interconnections that entities of the financial conglomerate have and those with which they relate.
This risk can also arise when the Financial Conglomerate ventures into new markets.
Grupo Aval as the Financial Holding of the Aval Financial Conglomerate, if required, will establish additional corporate governance policies that allow to identify circumstances that lead to materialization of this risk and mechanisms that allow its mitigation.
As part of the management of concentration risk in the financial conglomerate, Grupo Aval analyzes risk factors such as lines of business, geographical location, economic sector, and counterparties. Additionally, the concentration of service providers, shared service centers and the eventual occurrence of natural disasters are analyzed.
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The Financial Holding has an organizational structure that promotes and facilitates the risk management of the financial conglomerate, while recognizing the organizational structure and the legal and governance autonomy of the entities that belong to the financial conglomerate.
Grupo Aval, with the support of Risk Committee, monitors Risk Management Framework, Risk Appetite Framework of the Financial Holding, and the Financial Conglomerate’s Risk Profile to communicate in a timely manner to the Board of Directors about possible deviations from risk levels established and issue recommendations to take corrective actions and/or to modify policies when it is necessary.
Throughout 2025, financial conglomerate's risks management function was carried out in accordance with the defined policies, procedures, and methodologies.
A. Debt securities
B. Warrants and rights
C. Other securities
D. American depositary shares
Fees and Expenses
The depositary may charge each person to whom ADSs are issued, including, without limitation, issuances against deposits of preferred shares, issuances in respect of preferred share distributions, rights and other distributions, issuances pursuant to a share dividend or share split declared by us or issuances pursuant to a merger, exchange of securities or any other transaction or event affecting the ADSs or deposited securities, and each person surrendering ADSs for withdrawal of deposited securities in any manner permitted by the deposit agreement or whose ADRs are cancelled or reduced for any other reason, up to U.S.$5.00 for each 100 ADSs (or any portion thereof) issued, delivered, reduced, cancelled or surrendered, as the case may be. The depositary may sell (by public or private sale) sufficient securities and property received in respect of a preferred share distribution, rights and/or other distribution prior to such deposit to pay such charge.
The following additional charges will be incurred by the ADR holders, by any party depositing or withdrawing preferred shares or by any party surrendering ADSs or to whom ADSs are issued (including, without limitation, issuances pursuant to a share dividend or share split declared by our company or an exchange of securities regarding the ADRs or the deposited securities or a distribution of ADSs), whichever is applicable:
We will pay all other charges and expenses of the depositary and any agent of the depositary (except the custodian) pursuant to agreements from time to time between us and the depositary. The charges described above may be amended from time to time.
Direct and indirect payments
Our depositary has agreed to reimburse us for certain expenses we incur that are related to the establishment and maintenance of the ADR program upon such terms and conditions as we and the depositary may agree from time to time. The depositary may make available to us a set amount or a portion of the depositary fees charged in respect of the ADR program or otherwise upon such terms and conditions as we and the depositary may agree from time to time.
The depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The depositary may collect its annual fee for depositary services by deduction from cash distributions, by directly billing investors or by charging the book-entry system accounts of participants acting for them. The depositary will generally set off the amounts owing from distributions made to holders of ADSs. If, however, no distribution exists and payment owing is not timely received by the depositary, the depositary may refuse to provide any further services to holders that have not paid those fees and expenses owing until such fees and expenses have been paid. At the discretion of the depositary, all fees and charges owing under the deposit agreement are due in advance and/or when declared owing by the depositary. The depositary may generally refuse to provide services to any holder until the fees and expenses owing by such holder for those services or otherwise are paid.
For the year ended December 31, 2025, we received U.S. $58,429.91 in payments from J.P. Morgan Chase Bank, N.A. as depositary of the ADR program, which were remitted in 2026.
A. Defaults
No matters to report.
B. Arrears and delinquencies
A. Material modifications to instruments
B. Material modifications to rights
C. Withdrawal or substitution of assets
D. Change in trustees or paying agents
E. Use of proceeds
A. Disclosure controls and procedures
As of December 31, 2025, under the supervision and with the participation of our management, including our President and Chief Financial Officer, we performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). There are inherent limitations to the effectiveness of our disclosure controls and procedures system, including the possibility of human error and circumventing or overriding them. Even if effective, disclosure controls and procedures can provide only reasonable assurance of achieving their control objectives.
Based on such evaluation, our President and Chief Financial Officer concluded that our disclosure controls and procedures are effective to provide reasonable assurance that the information we are required to disclose in the reports we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management to allow timely decisions regarding required disclosures.
B. Management’s annual report on internal control over financial reporting
Our management is responsible for establishing and maintaining an adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act.
Our internal control over financial reporting is a process designed by, or under the supervision of, our principal executive and principal financial officers, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external reporting purposes, in accordance with generally accepted accounting principles. These include those policies and procedures that:
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, effective control over financial reporting cannot, and does not, provide absolute assurance of achieving our control objectives. Also, projections of and any evaluation of effectiveness of the internal controls in future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
We have adapted our internal control over financial reporting based on the guidelines set by the Internal Control – Integrated Framework of the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
Under the supervision and with the participation of our management, including our President, our Chief Financial Officer, our Chief Risk Officer and our Chief of Internal Control, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2025, based on the guidelines set forth by the COSO 2013.
Based on this assessment, management believes that, as of December 31, 2025, its internal control over financial reporting was effective.
C. Attestation report of the registered public accounting firm
The effectiveness of the internal control over financial reporting, as of December 31, 2025, has been audited by KPMG, an independent registered public accounting firm. KPMG’s Report of Independent Registered Public Accountant Firm appears on page F-2.
D. Changes in internal control over financial reporting
There was no significant change in our internal control over financial reporting that occurred during the period covered by this annual report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
The Board of Directors has determined that Fabio Castellanos Ordóñez is an audit committee financial expert. All members of our audit committee, including Esther América Paz Montoya, Luis Fernando López Roca, Fabio Castellanos Ordóñez, and the alternates Andrés Escobar Arango, Jorge Silva Lujan and José Mauricio Salgar are independent audit committee members under the standards of the New York Stock Exchange, which applies the audit committee independence requirements of the Securities and Exchange Commission.
New York Stock Exchange rules for U.S. companies require that listed companies adopt and disclose a code of business conduct and ethics for directors, officers and employees, and promptly disclose any waivers of the code for directors or executive officers. We have in place a code of ethics that applies to the Company’s officers and employees, which is available on Grupo Aval’s website (www.grupoaval.com).
Amounts billed by KPMG for audit and other services were as follows:
(In Ps millions)
Audit fees
38,081
33,800
Audit-related fees
Tax fees
All other fees paid
The aggregate fees billed under the caption audit fees for professional services rendered to Grupo Aval for the audit of its financial statements and for services that are normally provided to Grupo Aval, in connection with statutory or regulatory filings or engagements totaled Ps 38,081 million and Ps 33,800 million for the years 2025 and 2024, respectively.
Additionally, other fees paid, which include other consultancy fees different from audit and audit-related fees, totaled Ps 63 million and Ps 54 million for the years ended 2025 and 2024, respectively.
The services commissioned from our auditors meet the independence requirements stipulated by the Board of Accountants (Junta Central de Contadores) and by SEC rules and regulations, and they did not involve the performance of any work that is incompatible with the audit function.
If we are required to engage an auditing firm for audit and audit-related services, those services have to be pre-approved by the Audit Committee.
The Audit Committee is regularly informed of all fees paid to the auditing firms by our company.
All the members of our audit committee satisfy the independence requirements of the NYSE applicable to foreign private issuers.
Grupo Aval may repurchase its shares only with retained earnings. On the other hand, Colombian law prohibits the repurchase of shares of entities under the comprehensive supervision of and subject to inspection and surveillance as financial institutions by, the Superintendency of Finance. As such, Banco de Bogotá, Banco de Occidente, Banco Popular, Banco AV Villas, Corficolombiana and Porvenir and their respective financial subsidiaries are not permitted to repurchase their shares or Grupo Aval’s shares.
Grupo Aval, as a listed company that qualifies as a foreign private issuer under the NYSE listing standards in accordance with the NYSE corporate governance rules is permitted to follow home-country practice in some circumstances in lieu of the provisions of the corporate governance rules contained in Section 303A of the NYSE Listed Company Manual that are applicable to U.S. companies. We follow corporate governance practices applicable to Colombian companies and those described in our Corporate Governance Code, which in turn follow Colombian corporate governance rules. The Corporate Governance Code is available at Grupo Aval’s website at www.grupoaval.com. Information on our website is not incorporated into this annual report.
See “Item 6. Directors, Senior Management and Employees—C. Board practices— Principal differences between Colombian and U.S. corporate governance practices—Independence of directors”.
See “Item 6. Directors, senior management and employees—C. Board practices— Principal differences between Colombian and U.S. corporate governance practices—Non-executive director meetings”.
See “Item 6. Directors, senior management and employees—C. Board practices— Principal differences between Colombian and U.S. corporate governance practices—Committees of the Board of Directors”.
Shareholder approval of equity compensation plans
Under NYSE listing standards, shareholders of U.S. companies must be given the opportunity to vote on all equity compensation plans and to approve material revisions to those plans, with limited exceptions set forth in the NYSE rules. Grupo Aval and its subsidiaries currently have no equity compensation plans. Under Colombian law, shareholder approval is required for the compensation of members of the Board of Directors.
Shareholder approval of dividends
While NYSE corporate governance standards for U.S. companies do not require listed companies to have shareholders approve or declare dividends, in accordance with the Colombian Code of Commerce, all dividends must be approved by Grupo Aval’s shareholders.
Corporate governance guidelines
NYSE rules for U.S. companies require that listed companies adopt and disclose corporate governance guidelines. The Superintendency of Finance recommends, but does not require, that listed companies adopt corporate governance guidelines; instead, it requires an annual corporate governance survey that compares a company’s corporate governance practices to those recommended by the Superintendency of Finance, and mandates periodic disclosure thereof to the Colombian securities market information system. The annual corporate governance survey is available at Grupo Aval’s website at www.grupoaval.com.
Code of business conduct and ethics
See “Item 16B. Code of Ethics.”
Compliance with corporate governance rules
NYSE rules require the chief executive officer to certify annually that such officer is not aware of any non-compliance with NYSE corporate governance rules, and executive officers are required to promptly notify the NYSE of any material non-compliance. Companies must also submit a written affirmation annually or promptly upon the occurrence of certain changes in corporate governance. No similar requirements exist under Colombian law.
Internal audit function
NYSE rules for U.S. companies require that listed companies maintain an internal audit function to provide management and the audit committee with ongoing assessments of the company’s risk management processes and system of internal control. Grupo Aval maintains an internal auditor, and a Chief of Internal Control to coordinate this function at the corporate level.
ITEM 16I. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections
Not Applicable.
ITEM 16J. Insider Trading Policies
We have adopted a Securities Trading Policy that governs the trading in our securities by our directors, officers and certain other covered
persons, and which is reasonably designed to promote compliance with applicable insider trading laws, rules and regulations, and any
listing standards applicable to the Company. A copy of the Securities Trading Policy is included as an exhibit to this annual report. Since its effective date, we have not waived compliance with our statement of trading policies.
In an increasingly digital and regulated environment, at Grupo Aval and its subsidiaries, cybersecurity risk management is an integral part of our enterprise risk management program. We establish policies, methodologies, and procedures aligned with local regulations, international standards, and industry best practices. In recent years, we have significantly expanded our capabilities to counteract the increasing number of attempts to breach our security barriers, the growing use of the Internet and automated processes, and the diversification of financial transaction channels. Our cybersecurity risk management framework provides a structured approach for handling threats and incidents, including those linked to third-party service providers. It includes steps for assessing the severity of threats, identifying their sources, implementing mitigation strategies, and informing management and the Board of Directors of material cybersecurity risks. We and our financial subsidiaries engage third-party security experts for risk assessment and system enhancements. Additionally, our cybersecurity team provides annual training to all employees. One of the greatest cybersecurity risks in 2025 was the increasing sophistication of AI-based attacks, which are growing exponentially in speed and success rate. Quantum computing also presents a significant risk, as it threatens to render current cryptographic protocols obsolete, posing substantial security challenges for data and communication systems. Grupo Aval actively monitors and mitigates these risks through a robust control environment based on industry best practices, specialized security frameworks, and proactive measures.
To mitigate the risks associated with the growing use of digital channels and prevent cyber-fraud, in 2025, we launched initiatives that included strengthening Digital Banking Security Innovation by defining new authentication and authorization models. As part of this effort, more than 25 leading market technologies were reviewed together with the Grupo Aval entities. These advances will enable us to enhance
the usability of digital products and improve our customers’ experience. We began the Security Architecture Diagnostic initiative using a Security-by-Design approach to reinforce our assurance strategy for the cloud environments used by Grupo Aval and its subsidiaries. We also conducted the first cyber risk quantification exercises for seven entities within the Grupo Aval, allowing us to prioritize and support decision-making in cybersecurity risk management. Additionally, we initiated strengthening the governance model, methodology, and assessment criteria used to classify more than 230 critical suppliers that form part of our value chain. Furthermore, we continued the process of centralizing the cybersecurity capabilities of the entities into our Security Operations Center (“SOC”), together with the CSIRT (“Computer Security Incident Response Team”) functions. This effort enables us to leverage operational synergies and advance toward a more efficient economic model, generating comprehensive benefits for the Grupo Aval.
On another front, and to mitigate cybersecurity risks associated with our strategic projects, we supported the definition of security guidelines and directives for business services such as Open Banking, the Immediate Payments System (“SPI”) of the Central Bank of Colombia, Aval Secure and Resilient, the corporate online banking security strategy, physical asset management, and the balance-sheet financial risk platform, among others.
Throughout 2025, the Board of Directors of our financial subsidiaries has overall oversight of cybersecurity risk management. This responsibility is delegated to the Cybersecurity and Information Security Committee and its equivalents at the Board level. These committees ensure that management has processes in place to identify and evaluate cybersecurity risks, implement mitigation strategies, and report material cybersecurity threats to the Board and the Corporate Vice-Presidency of Risk and Compliance. Grupo Aval’s Board of Directors has designated a member to oversee cybersecurity risk management at a corporate level. Management is responsible for continuously assessing material cybersecurity risks, monitoring potential exposures, implementing mitigation measures, and maintaining cybersecurity programs. Our cybersecurity programs are directed by the Corporate Vice-Presidency of Risk and Compliance and the Corporate Vice-Presidency of Cybersecurity. These teams consist of certified and experienced professionals in information systems security and cybersecurity risk management.
Grupo Aval’s management, including the Vice Presidency of Risk and Compliance and cybersecurity teams, regularly update their Boards of Directors and Cybersecurity and Information Security Committees on the company’s cybersecurity programs, risks, and mitigation strategies. Reports are provided semi-annually or quarterly in some subsidiaries, covering third-party assessments, developments in cybersecurity, and updates to mitigation strategies. In 2025, we did not identify any cybersecurity threats that materially affected or are likely to materially affect our business strategy, operations, or financial condition. However, despite our efforts, we acknowledge that cybersecurity risks cannot be entirely eliminated, and we cannot guarantee that we have not experienced an undetected cybersecurity incident. For more information on these risks, please refer to: “Item 3. Key Information—Risk Factors—Other Risks Relating to Our Businesses—We Are Subject to Cybersecurity Threats” and “Item 3. Key Information—Risk Factors—Other Risks Relating to Our Businesses—Failure of Our Information Systems Could Materially and Adversely Affect Our Risk Management, Internal Controls, and Financial Condition”.
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ITEM 17. Financial Statements
We have responded to Item 18 in lieu of this item.
ITEM 18. Financial Statements
Financial statements are filed as part of this annual report, see page F-1.
English translation of By-laws of Grupo Aval. (incorporated by reference Exhibit 1.1 to our Annual Report on Form 20 – F for the year ended December 31, 2024, filed with the SEC on April 28, 2025).
Form of Deposit Agreement among Grupo Aval, JPMorgan Chase Bank, N.A., as depositary, and the holders from time to time of American depositary shares issued thereunder, including the form of American depositary receipts (incorporated by reference to Exhibit 99(a) to our Registration Statement on Form F-6 (File No. 333-198614) filed with the SEC on September 8, 2014).
Indenture among Grupo Aval Limited, as Issuer, Grupo Aval Acciones y Valores S.A., as Guarantor, Deustche Bank Trust Company Americas, as Trustee, Registrar, Paying Agent and Transfer Agent, dated as of February 4, 2020. (incorporated by reference Exhibit 2.3 to our Annual Report on Form 20 – F for the year ended December 31, 2020, filed with the SEC on April 12, 2021)
Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934.
Supplemental Indenture to the Indenture dated as of February 4, 2020 among Grupo Aval Limited, as Issuer, Grupo Aval Acciones y Valores S.A., as guarantor and Deutsche Bank Trust Company Americas, as Trustee, Registrar, Paying Agent and Transfer Agent, dated as of February 23, 2022. (incorporated by reference Exhibit 2.6 to our Annual Report on Form 20 – F for the year ended December 31, 2021, filed with the SEC on April 21, 2022).
Subsidiaries of the registrant.
Securities Trading Policy (incorporated by reference to Exhibit 11.1 to our Annual Report on Form 20–F for the year
ended December 31, 2023, filed with the SEC on April 17, 2024).
Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002.
Certification pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
97.1
Grupo Aval Clawback Policy (incorporated by reference to Exhibit 97.1 to our Annual Report on Form 20–F for the year ended December 31, 2023, filed with the SEC on April 17, 2024).
101.INS
Inline XBRL Instance Document
101.SCH
Inline XBRL Taxonomy Extension Schema Document
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
Inline XBRL Cover Page Interactive Data File (embedded within the Inline XBRL document).
104.
We will furnish to the SEC, upon request, copies of any unfiled instruments that define the rights of holders of long-term debt of Grupo Aval.
210
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Audited consolidated financial statements of Grupo Aval Acciones y Valores S.A. and its subsidiaries as of December 31, 2025, and 2024 and for each of the years ended December 31, 2025, 2024 and 2023
Report of independent registered public accounting firm (PCAOB ID 5070)
F-2
Consolidated statements of financial position as of December 31, 2025, and 2024
F-5
Consolidated statements of income for the years ended December 31, 2025, 2024 and 2023
F-7
Consolidated statements of other comprehensive income for the years ended December 31, 2025, 2024 and 2023
F-8
Consolidated statements of changes in equity for the years ended December 31, 2025, 2024 and 2023
F-9
Consolidated statements of cash flow for the years ended December 31, 2025, 2024 and 2023
F-10
Notes to the consolidated financial statements of Grupo Aval Acciones y Valores S.A. and its subsidiaries
F-12
F-1
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of DirectorsGrupo Aval Acciones y Valores S.A.:
Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting
We have audited the accompanying consolidated statements of financial position of Grupo Aval Acciones y Valores S.A. and subsidiaries (Grupo Aval) as of December 31, 2025 and 2024, the related consolidated statements of income, other comprehensive income, changes in equity, and cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes (collectively, the consolidated financial statements). We also have audited Grupo Aval’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Grupo Aval as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2025, in conformity with International Financial Reporting Standards Accounting Standards (IFRS) as issued by the International Accounting Standards Board. Also in our opinion, Grupo Aval maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Basis for Opinions
Grupo Aval’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Management’s annual report on internal control over financial reporting”. Our responsibility is to express an opinion on Grupo Aval’s consolidated financial statements and an opinion on Grupo Aval’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to Grupo Aval in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
As discussed in Notes 4.1.5 and 11 to the consolidated financial statements, Grupo Aval’s loss allowance for its loan portfolio was 8,429,970 million of Colombian pesos as of December 31, 2025. The Group measures the loss allowance for its loan portfolio at an amount equal to lifetime Expected Credit Losses (ECL), except for those loans that have not experienced a Significant Increase in Credit Risk (SICR) since their initial recognition for which Grupo Aval calculates a twelve-month ECL. The loss allowance for the loan portfolio reflects a probability weighted outcome that considers multiple economic scenarios based on forecasts of future economic conditions and is determined as a function of Grupo Aval’s estimate of the Probability of Default (PD), Loss Given Default (LGD) and Exposure at Default (EAD) of each loan. Grupo Aval uses complex models which incorporate inputs and assumptions that require knowledge of the market and experience in the industry. Grupo Aval also estimates provisions based on qualitative and quantitative variables, which are defined through an individual evaluation of the counterparty (credit impaired) and involve professional judgment.
We identified the assessment of the loss allowance for the loan portfolio as a critical audit matter. Significant auditor judgment was required because there is a high degree of measurement uncertainty due to significant judgments inherent to the methodology, including judgments on forward-looking information and credit impaired clients or exposures. Assessment of the loss allowance on the loan portfolio required significant auditor attention and complex auditor judgment as well as specialized skills and industry knowledge.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to Grupo Aval’s process for calculating the loss allowance on the loan portfolio. This included controls related to: (i) the models and assumptions used; (ii) the economic forecasting information; (iii) the completeness and accuracy of data; and (iv) the review of the overall allowance for impairment losses, including the application of judgment applied by Grupo Aval. We evaluated Grupo Aval’s process to develop the loss allowance for its loan portfolio by testing certain key inputs used in determining PD, LGD, and EAD, and for a sample of individually significant loans, assessed the credit risk rating assigned by Grupo Aval and analyzed the values of the guarantees. In addition, we involved credit risk professionals with specialized skills and knowledge who assisted in: (i) evaluating Grupo Aval’s impairment methodologies for compliance with IFRS 9; (ii) evaluating the forecasts of macroeconomic variables and the probability of scenarios, and (iii) checking the accuracy of the impairment calculation.
F-3
As discussed in Notes 2.20, 5 and 16 to the consolidated financial statements Grupo Aval has 2,635,437 million of Colombian pesos of financial assets arising from concession contracts which are measured at fair value and classified as level 3 as of December 31, 2025. Grupo Aval is party to concession arrangements with the Colombian Government for the construction and subsequent maintenance of infrastructure, for a given period of time. In exchange Grupo Aval is entitled to receive direct payments from the government and / or fees charged to the end users of the infrastructure. During the construction phase Grupo Aval recognizes revenue and a financial asset for payments that are unconditionally guaranteed, and / or an intangible asset for payments which are linked to the use of the infrastructure. Performance obligations related to the construction services are satisfied over time and the amount of revenue recognized is dependent on the stage of completion of the construction services and the fair value of the asset being recognized. Grupo Aval has designated some of the financial assets related to concession arrangements to be measured at fair value through profit or loss subsequent to initial recognition.
We identified the fair value of financial assets related to concession arrangements as a critical audit matter. It involved significant auditor judgment and audit effort, including the involvement of valuation professionals with specialized skills and knowledge. For financial assets related to concession arrangements subsequently measured at fair value through profit or loss, auditor judgment was required to evaluate the models developed by Grupo Aval to estimate their fair value as well as the significant unobservable inputs and assumptions to these models. The significant unobservable inputs and assumptions to the models include the weighted average cost of capital (WACC) and the future inflation rates.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to Grupo Aval’s process to determine the fair value of financial assets related to concession contracts. This included controls related to: (i) the review of the inputs and assumptions used; and (ii) the review and approval of the fair value of the assets. We involved valuation professionals with specialized skills and knowledge who assisted in: (i) assessing whether the internally developed models are consistent with valuation practices generally used for that purpose and IFRS; (ii) comparing the WACC to a range determined using market-verified macroeconomic assumptions and (iii) evaluating the future inflation rates by comparing to available market data.
/s/ KPMG S.A.S.
KPMG S.A.S
We have served as Grupo Aval’s auditor since 1985.
Bogotá, Colombia
April 16, 2026
F-4
Consolidated Statements of Financial Position
As of December 31, 2025 and 2024
(Amounts expressed in millions of Colombian pesos)
Notes
6, 7
19,354,710
16,998,859
6, 8
29,097,591
20,163,214
6, 9
39,252,615
39,162,618
6, 10
236,558
54,019
4.1, 6, 11
108,308,984
115,414,643
1,777,516
705,055
Commercial, interbank and overnight funds
110,086,500
116,119,698
60,456,213
61,976,325
22,111,710
22,035,727
1,520
4,375
192,655,943
200,136,125
4.1.5
(8,429,970)
(10,006,639)
184,225,973
190,129,486
Other accounts receivable, net
6, 12
24,458,906
27,958,402
18,256,613
105,214
1,314,429
1,430,596
Property, plant and equipment for own-use and given in operating lease, net
7,007,876
4,680,543
Right-of-use assets
1,482,036
1,351,624
Investment properties
882,979
972,935
Biological assets
235,409
238,339
9,608,300
7,243,441
Intangibles
13,495,108
14,314,560
2,057,116
2,223,608
2,954,167
2,758,318
18,506,391
19,296,486
Current
2,871,411
3,149,902
Deferred
1,366,820
1,628,201
4,238,231
4,778,103
386,360
538,945
348,936,677
327,859,383
(1) As of December 2025, the assets related to Multi Financial Group (MFG) were no longer presented line-by-line on the Consolidated Statements of Financial Position and were instead reported in a single line item within “Non-current assets held for sale”, see note 13.A.
The accompanying notes are an integral part of these Consolidated Financial Statements
Consolidated Statements of Financial Position, continued
Liabilities and equity
1,951,439
1,011,934
Hedging derivative liabilities
34,842
21,658
23,598,235
24,579,536
88,238,541
79,614,904
95,105,917
96,329,827
462,545
347,910
207,405,238
200,872,177
22,655,425
18,509,769
24,559,175
28,098,159
21,456,986
26,215,847
68,671,586
72,823,775
Legal related
155,378
192,526
Non legal related
834,219
910,145
989,597
1,102,671
203,908
247,502
5,958,848
5,616,464
6,162,756
5,863,966
987,752
1,003,303
13.A.
16,459,367
11,531,259
11,996,981
314,193,836
294,696,465
23,744
9,502,957
9,508,062
9,241,357
8,163,434
(322,153)
(243,983)
18,445,905
17,451,257
16,296,936
15,711,661
34,742,841
33,162,918
(1) As of December 2025, the liabilities related to Multi Financial Group (MFG) were no longer presented line-by-line on the Consolidated Statements of Financial Position and were instead reported in a single line item within “Liabilities directly associated with non-current assets held for sale”, see note 13.A.
F-6
Consolidated Statements of Income
For the years ended December 31, 2025, 2024 and 2023
Continuing operations
Interest income calculated using the effective interest method
22,463,395
23,740,386
24,427,394
Cash and cash equivalents and other accounts receivable
505,965
626,827
926,083
2,949,838
2,604,689
2,298,222
25,919,198
26,971,902
27,651,699
Interest expense
(13,089,554)
(14,613,237)
(15,711,661)
(4,958,313)
(5,431,254)
(6,044,788)
(18,047,867)
(20,044,491)
(21,756,449)
7,871,331
6,927,411
5,895,250
Impairment losses net of recoveries
Loans and other accounts receivable
(4,268,227)
(4,615,595)
(4,596,012)
Other financial assets
(6,928)
(4,988)
10,759
736,255
574,260
555,774
(3,538,900)
(4,046,323)
(4,029,479)
4,332,431
2,881,088
1,865,771
4,784,225
4,477,604
4,215,764
(1,124,180)
(1,001,625)
(974,250)
3,660,045
3,475,979
3,241,514
10,396,794
11,048,600
11,223,556
Costs and expenses of sales goods and services
(8,309,074)
(8,571,245)
(8,005,597)
2,087,720
2,477,355
3,217,959
Net trading income (loss)
1,402,013
1,401,734
(919,165)
623,163
350,919
323,685
1,415,753
646,177
3,568,825
(8,899,891)
(8,125,461)
(7,875,408)
4,621,234
3,107,791
3,423,181
(1,432,708)
(941,978)
(1,309,073)
3,188,526
2,165,813
2,114,108
13.B.
26,646
25,664
63,008
3,215,172
2,191,477
2,177,116
1,703,506
997,398
695,574
Net income for the period from discontinued operations,
18,366
17,689
43,429
1,721,872
1,015,087
739,003
1,485,020
1,168,415
1,418,534
Net income for the period from discontinued operations
8,280
7,975
19,579
1,493,300
1,176,390
1,438,113
Net income per share basic and diluted (in Colombian pesos) see note 25
72.52
42.75
31.12
(1) The information was modified based on Multi Financial Group (MFG) discontinued operation, see note 13.B.
Consolidated Statements of Other Comprehensive Income
2024(1)
2023(1)
Items that will be reclassified to profit or loss
Net (loss) gain on hedges of investments in foreign operations:
Hedged items
(630,465)
514,713
(797,514)
Hedging non-derivative instrument
613,587
(500,007)
760,997
Cash flow hedges
177,002
55,081
(35,923)
Foreign currency translation differences from unhedged foreign operations
25.6
(372,722)
247,019
(409,671)
Unrealized (losses) gains on securities at FVOCI
(301,599)
(163,387)
1,681,726
Investments in associates
(56,424)
15,329
(35,892)
Income tax
(169,147)
238,675
(818,733)
Discontinued operation
171,542
50,695
113,940
Total items that may be reclassified to profit or loss
(568,226)
458,118
458,930
Items that will not be reclassified to profit or loss
Transfer from owner-occupied property to investment property
(1,095)
16,741
(1,963)
Unrealized gains on equity securities at FVOCI
260,051
301,497
156,383
Actuarial gains (losses) from defined benefit pension plans
13,271
(12,346)
(54,630)
(13,832)
5,078
(597)
(4,045)
(1,271)
Total items that will not be reclassified to profit or loss
271,691
288,015
103,597
Total other comprehensive income during the period net of taxes
(296,535)
746,133
562,527
Total comprehensive income
2,918,637
2,937,610
2,739,643
Total comprehensive income for the year attributable to owners of the parents:
Comprehensive income for the period from continuing operations
1,508,023
1,265,621
1,220,603
Comprehensive income for the period from discontinued operations
135,679
49,702
120,746
1,643,702
1,315,323
1,341,349
Total comprehensive income for the year attributable to non-controlling interests:
1,213,023
1,599,675
1,343,363
61,912
22,612
54,931
1,274,935
1,622,287
1,398,294
Total comprehensive income for the year
Consolidated Statements of Changes in Equity
Subscribed
Additional
Appropriated
attributable to
Non-
and paid-in
paid – in
retained
comprehensive
owners of the
controlling
capital
earnings
income (OCI)
parent
interest (NCI)
Balance at January 1, 2023
9,571,374
8,018,417
(1,146,565)
16,466,970
14,354,689
30,821,659
Dividends declared (1)
(1,025,718)
(1,014,789)
(2,040,507)
Effect of realization
1,423
317
1,740
602,346
(39,819)
Deconsolidation of entities
(1,041)
(914)
(1,955)
Withholding tax over dividends
(311)
(164)
Balance at December 31, 2023
7,731,773
(544,219)
16,782,672
14,737,744
31,520,416
(569,843)
(618,579)
(1,188,422)
(9,573)
(4,405)
(13,978)
300,236
445,897
Non-controlling equity transactions (2)
(63,312)
(13,511)
(76,823)
(4,010)
(11,875)
(15,885)
Balance at December 31, 2024
(655,320)
(689,168)
(1,344,488)
Effect on retained earnings (3)
15,848
27,672
43,520
(78,170)
(218,365)
(5,105)
(17,857)
(22,962)
(4,477)
(10,307)
(14,784)
Balance at December 31, 2025
Consolidated Statements of Cash Flows
Cash flows from operating activities:
Net income before income tax of continuing operations
Reconciliation of net income before taxes and net cash provided by operating activities
Depreciation of tangible assets and right-of-use assets
28, 30
597,897
561,845
531,401
Amortization of intangible assets
767,850
674,335
579,967
Impairment losses on loans and other accounts receivable
4,324,724
4,686,752
4,647,047
(7,871,331)
(6,927,411)
(5,895,250)
Accrued dividends
(126,700)
(141,867)
(119,988)
Net gains on sales of non-current assets held for sale
(9,945)
(18,107)
(45,624)
Gain on sale of property plant and equipment for own-use and operating lease
(131,863)
(75,275)
(345,330)
Loss on sale of investment property
28,392
14,398
22,177
Gain on sale biological assets
(5,152)
(9,377)
(10,467)
Valuations and interest from concession agreements
(2,807,293)
(2,850,244)
(3,916,465)
Foreign exchange (gains) losses
(584,990)
452,635
(2,253,880)
Profit of equity accounted on investments in associates and joint ventures
(350,935)
(378,396)
(371,397)
Net (gains) or losses on fair value adjustments:
Derivatives
257,762
(415,640)
2,581,265
1,622
4,662
(68,306)
(36,705)
(92,607)
(3,396)
(7,589)
(18,601)
Changes in operating assets and liabilities
(6,792,442)
(5,570,819)
(2,778,438)
(892,411)
(792,468)
(1,152,043)
(550,854)
238,494
(2,091,188)
(6,697)
(137,978)
(101,390)
Other liabilities and provisions
2,732,480
1,096,914
1,477,567
(12,865)
51,048
(19,461)
(17,695,997)
(13,161,784)
(7,710,154)
24,820,228
14,344,651
14,085,593
4,927,947
2,766,952
6,221,968
931,791
(1,019,921)
(799,439)
Interest received
23,419,517
26,797,798
24,853,524
Interest paid
(17,720,295)
(20,488,941)
(20,636,834)
Interest paid on leases
(237,774)
(236,451)
(198,436)
Income tax paid
(2,163,430)
(1,998,655)
(1,967,389)
(2,013,798)
251,642
(1,893,878)
Net cash provided by operating activities
7,384,970
782,289
6,005,501
The accompanying notes are an integral part of these Consolidated Financial Statements
For the years ended December 31, 2025, 2024 and 2023, continued
Cash flows from investing activities:
Acquisition of property, plant and equipment for own use and operating lease
(602,321)
(623,876)
(579,583)
Acquisition of investment property
(8,263)
(793)
(163)
Additions of cost of biological assets
(27,222)
(26,572)
(26,118)
Concession contracts
158,772
305,686
853,778
Additions of others intangibles assets
(660,286)
(652,681)
(676,765)
Acquisition of investments at FVOCI
(17,451,317)
(14,655,069)
(23,754,394)
Proceeds from sale of investments at FVOCI
13,675,934
11,643,956
24,824,898
Proceeds from sale of own-use property and equipment and operating lease
152,445
76,963
68,523
Proceeds from sale of investment properties
207,927
66,358
111,542
Proceeds from sale of biological assets
38,700
35,871
37,144
Proceeds from sale of non-current assets held for sale
75,178
37,856
49,369
Purchases of financial assets at amortized cost
(7,015,566)
(7,801,052)
(8,009,518)
Redemptions of financial assets at amortized cost
8,685,569
8,217,845
8,144,359
Dividends received from investments
444,386
439,017
471,282
Acquisition of investments in associates
(2,486)
(2,433)
Capitalized leasing cost
(282)
(335)
(132)
(2,290)
895,588
(202,561)
331,148
Net cash (used in) provided by investing activities
(1,430,758)
(3,141,873)
1,840,647
Cash flows from financing activities:
Dividends paid to shareholders
(625,826)
(728,181)
(766,537)
Dividends paid to non-controlling interest
(662,266)
(667,330)
(915,933)
Issuance of debt securities
528,863
2,224,164
1,111,819
Payment of outstanding debt securities
(1,513,644)
(1,725,323)
(3,934,469)
Payment of obligations under financial lease
(429,493)
(409,118)
(384,499)
Equity transaction
(55,000)
37,780
(2,223)
1,352,734
Net cash used in financing activities
(2,664,592)
(1,363,011)
(3,536,885)
Effect of foreign currency changes on cash and cash equivalents
(1,334,867)
2,123,593
(2,744,460)
Cash and cash equivalents from non-current assets classified as held for sale
401,098
Increase (decrease) in cash and cash equivalents from continuing operations
2,355,851
(1,599,002)
1,565,004
Cash and cash equivalents at beginning of year
18,597,861
17,032,857
Cash and cash equivalents at end of year
F-11
Notes to the Consolidated Financial Statements
NOTE 1 – REPORTING ENTITY
Grupo Aval Acciones y Valores S.A. (hereinafter the “Company”, “The Group” or “Grupo Aval”) was established under Colombian law in January 7, 1994, with its main offices and business address registered in Bogotá, D.C., Colombia. The corporate purpose of Grupo Aval is the purchase and sale of securities issued by financial and commercial entities. Grupo Aval is the majority shareholder of Banco de Bogotá S.A., Banco de Occidente S.A., Banco Popular S.A. and Banco Comercial AV Villas S.A., entities whose main purpose is to perform all transactions, operations and services inherent to the banking business, pursuant to applicable laws and regulations. Furthermore, through its direct and indirect investments in Corporación Financiera Colombiana S.A. (“Corficolombiana”), in Sociedad Administradora de Fondos de Pensiones, Cesantías y del Componente Complementario de Ahorro Individual “CCAI“ Porvenir S.A. (“Porvenir”), in Aval Fiduciaria S.A. in Aval Casa de Bolsa S.A. – Sociedad Comisionista de Bolsa and in Aval Banca de Inversión S.A.S. Grupo Aval also engages in investment banking activities, trust services and investment management of trust funds, securities brokerage activities, investments in the non-financial sector and manages pensions and severance funds in Colombia.
In performing its activities and pursuant to the corporate bylaws, Grupo Aval may (i) promote the creation of all types of companies relating to its corporate purpose; (ii) represent individuals and companies involved in similar or complementary activities; (iii) grant or receive loans with or without interest; (iv) submit its properties as collateral; (v) issue, endorse, acquire, protest, cancel, or pay bills of exchange, checks, promissory notes or any other type of financial instruments, accept or submit them as payment; (vi) acquire, sell, tax, lease or manage any kind of assets; (vii) subscribe or acquire any kind of investments and sell or otherwise dispose of them; (viii) acquire and sell shares in companies that pursue similar or complementary corporate interests ; (ix) render services in areas relating to its activities, experience and knowledge; and (x) carry out or participate, in acts and contracts relating to the aforementioned activities, enabling the exercise of rights and compliance of the obligations of The Group.
The duration of Grupo Aval set forth under the bylaws is until May 24, 2044, but the Company may be dissolved before such term expires, or it may be extended by free decision of Grupo Aval shareholders meeting.
When preparing its Consolidated Financial Statements, Grupo Aval Acciones y Valores S.A., directly consolidates the following entities:
Banco de Bogotá S.A., in which Grupo Aval holds 68.93% of the voting rights and 68.93% of the ownership interest as of December 31, 2025; was established as a bank on November 15, 1870. It was authorized to operate under the terms of the renewal resolution No. 3140 dated September 24, 1993 issued by the Superintendency of Finance. The commercial purpose of Banco de Bogotá is to participate and perform all operations and contracts legally authorized to commercial banking, subject to the limitations and requirements set forth under Colombian laws and regulations.
The following table presents details of Banco de Bogotá’s most significant subsidiaries which are indirectly consolidated by Grupo Aval as of December 31, 2025:
Total voting
ownership
rights held by
interest held
Subsidiary
Core business
Location
by Grupo Aval
Main local direct subsidiaries
Fiduciaria Bogotá S.A.
Management of trust funds.
94.99%
65.47%
Almaviva S.A. y Subsidiaries
Logistics services.
95.81%
66.04%
Megalínea S.A.
Technical and administrative services
94.90%
65.41%
Main international direct subsidiaries
Banco de Bogotá Panamá S.A.
Commercial banking services.
Panamá, Republic of Panamá
100%
68.93%
Multi Financial Holding
Holding company of Multi Financial Group Inc. (MFG) (1)
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(1) Discontinued operation of Multi Financial Group (MFG), see Note 13.B
Banco de Occidente S.A., in which Grupo Aval holds 72.27% of the voting rights and 72.27% of the ownership interest as of December 31, 2025; was established as a banking entity on April 30, 1965. It was authorized to operate under the terms of the renewal resolution No. 3140 dated September 24, 1993 issued by the Superintendency of Finance. The commercial purpose of Banco de Occidente is to participate and perform all operations and contracts legally authorized to commercial banks, subject to the limitations and requirements set forth under Colombian laws and regulations.
The following table presents the details of Banco de Occidente’s most significant subsidiaries, which are indirectly consolidated by Grupo Aval, as of December 31, 2025:
Fiduciaria de Occidente S.A.
99.99%
70.86%
Banco de Occidente (Panamá), S.A.
95.00%
68.66%
Occidental Bank Barbados Ltd.
72.27%
Banco Popular S.A., in which Grupo Aval holds 93.74% of the voting rights and 93.87% of the ownership interest as of December 31, 2025; was established as a banking entity on July 5, 1950. It was authorized to operate under the terms of the renewal resolution No. 3140 dated September 24, 1993 issued by the Superintendency of Finance. Its commercial purpose is to participate in and perform all operations and contracts legally authorized to commercial banks, subject to the limitations and requirements set forth under Colombian laws and regulations.
On November 22, 2023, Grupo Aval, Banco de Bogotá S.A., Banco de Occidente S.A. and Banco Popular S.A., entered into a shareholders’ agreement pursuant to which Banco Popular S.A. will act as the controlling entity of Corporación Financiera Colombiana S.A. ("Corficolombiana") according to the terms of articles 260 and 261 of the Colombian Code of Commerce, as well as the requirements established in IFRS 10. The execution of the aforementioned agreement does not entail any change in the share ownership of Corficolombiana currently held by the parties to the agreement, nor any modification of the beneficial owner of Corficolombiana.
The following table presents the details of Banco Popular’s most significant subsidiaries which are indirectly consolidated by Grupo Aval, as of December 31, 2025:
Alpopular S.A.
Deposit, conservation, custody and transportation of products at national and international levels.
71.10%
66.74%
Fiduciaria Popular S.A.
94.85%
89.03%
Corporación Financiera Colombiana – Corficolombiana S.A.
Active management of a diversified equity portfolio through controlled and uncontrolled investments in strategic sectors including infrastructure, energy and gas, agribusiness and hotels.
55.73%
40.53%
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Corficolombiana is a merchant bank authorized to operate by the Superintendency of Finance by the resolution of October 18, 1961. Corficolombiana´s core business is the active management of an equity portfolio through controlling and non-controlling investments in key strategic sectors that include infrastructure, energy and gas, agribusiness and hotels.
The following table presents the details of Corficolombiana´s most significant subsidiaries which are indirectly consolidated by Grupo Aval, as of December 31, 2025:
Main Indirect Subsidiaries
Promigas S.A. E.S.P.
Transportation and distribution of natural gas.
Barranquilla, Colombia
50.88%
20.62%
Proyectos y Desarrollos Viales del Pacífico S.A.S.
Infrastructure projects.
Estudios, Proyectos e Inversiones de los Andes S.A.S. y Subsidiarias
40.52%
Hoteles Estelar S.A. y Subsidiarias
Hotel services
Cali, Colombia
89.81%
36.40%
Colombiana de Licitaciones y Concesiones S.A.S.
Estudios y Proyectos del Sol S.A.S.
Concesionaria Vial Del Oriente S.A.S.
Concesionaria Vial Del Pacifico S.A.S.
Sabaneta Antioquia
CFC Gas Holding S.A.S.
Investment Company
Banco Comercial AV Villas S.A.
Banco Comercial AV Villas S.A., in which Grupo Aval holds 80.39% of the voting rights and 79.87% of the ownership interest as of December 31, 2025; was incorporated as a banking entity on October 24, 1972. It was authorized to operate under the terms of the renewal resolution No. 3352 dated August 21, 1992 issued by the Superintendency of Finance. The commercial purpose of Banco AV Villas is to participate and perform all operations and contracts legally authorized to commercial banks, subject to the limitations and requirements imposed by Colombian laws and regulations.
Sociedad Administradora de Fondos de Pensiones, Cesantías y del CCAI Porvenir S.A.
Porvenir S.A., in which Grupo Aval and its Subsidiaries own 100% of the aggregate voting rights and Grupo Aval has an economic interest of 75.76% as of December 31, 2025, was established by Public Deed No. 5307 of Notary 23 of Bogotá on October 23 of 1991, it has an operating permit granted by the Superintendency of Finance through Resolution number 3970 of October 30, 1991; Porvenir is an administrator of pension and severance funds authorized by law.
The following table presents the details of Porvenir’s subsidiary which is indirectly consolidated by Grupo Aval, as of December 31, 2025:
Aportes en Línea S.A.
Technical and administrative services.
75.18%
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Grupo Aval Limited
Grupo Aval Limited is a 100% owned subsidiary of Grupo Aval in Cayman Islands. It was established on December 29, 2011. Grupo Aval Limited is a limited liability company registered with the Assistant of the Registrar of Companies of Cayman Islands under registry number MC-265169, with its Main Office located in Ugland House, South Church Street, George Town, Grand Cayman KY1-1104. It was constituted as a special purpose vehicle for issuing foreign debt. Likewise, this company may, as part of its corporate purpose, develop any business activity within the framework of the law.
Aval Fiduciaria S.A.
Aval Fiduciaria S.A. (the Fiduciary), in which Grupo Aval holds 100% of the voting rights and 98.47% of the ownership interest as of December 31, 2025; is a private corporation subject to the control and supervision by the Superintendency of Finance. The exclusive purpose of Aval Fiduciaria is to carry out all fiduciary businesses regulated by law involving all types of movable and immovable property, whether tangible or intangible. Its principal place of business is in the city of Cali, and it operates through agencies in Bogotá, Medellín, Barranquilla, and Bucaramanga.
Aval Casa de Bolsa S.A. – Sociedad Comisionista de Bolsa
Aval Casa de Bolsa S.A. – Sociedad Comisionista de Bolsa, in which Grupo Aval holds 98.80% of the voting rights and 87.84% of the ownership interest as of December 31, 2025; is a private entity whose corporate purpose is to carry out commission‑based transactions for the purchase and sale of securities registered in the Colombian Stock Exchange and the National Registry of Shares and Issuers (RNVE), the administration of collective investment funds, the administration of securities, the performance of operations on its own account, securities brokerage and the provision of advisory services regarding the capital markets, among others.
Aval Banca de Inversión S.A.S.
Aval Banca de Inversión S.A.S, in which Grupo Aval holds 100% of the voting rights and 82.16% of the ownership interest as of December 31, 2025; is a private entity whose corporate purpose is the structuring of financial transactions, providing client support in obtaining funding, advising on mergers and acquisitions, and providing financial consulting services.
Legal and regulatory restrictions
Grupo Aval and its Colombian Subsidiaries are subject to the following restrictions to transfer profits or perform transactions, in accordance with the legal requirements in Colombia:
Foreign subsidiaries of Grupo Aval do not have any restriction to transfer dividends to the parent company. Lending operations in general have restrictions similar to those of banks in Colombia, as described above.
Grupo Aval and its Subsidiaries do not have significant restrictions on their ability to access or use their assets and settle their liabilities other than those resulting from the supervisory frameworks within which subsidiaries of the financial sector operate. The supervisory frameworks require subsidiaries of the financial sector to keep certain levels of regulatory capital (see note 4.4) and liquid assets (see note 4.3), limit their exposure to other parts of Grupo Aval and its Subsidiaries and comply with other ratios.
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NOTE 2 – BASIS OF PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF MATERIAL ACCOUNTING POLICIES
The Consolidated Financial Statements of Grupo Aval have been prepared in accordance with International Financial Reporting Standards – Accounting Standards (IFRS Accounting Standards) as issued by the International Accounting Standards Board (IASB).
The Consolidated Financial Statements have been prepared on the basis of historical cost, except for financial assets at Fair Value Through Profit or Loss (“FVTPL”), at Fair Value Through Other Comprehensive Income (“FVOCI”), derivative financial instruments, investment properties, non-current assets held for sale and biological assets which are measured at fair value. Additionally, non-current assets held for sale are measured at the lower value of their carrying value at the time of transfer and fair value, minus estimated costs of disposal and employee benefits which are measured at the present value of the defined benefit obligation (see note 2.22).
The Consolidated Financial Statements were authorized for issuance by the Audit Committee on April 16, 2026.
The following are the main accounting policies applied in preparing the Consolidated Financial Statements of Grupo Aval as of December 31, 2025, 2024 and 2023.
2.1 Basis of preparation of Consolidated Financial Statements
a)Presentation of Consolidated Financial Statements
The Consolidated Financial Statements are prepared as follows:
b)Consolidated Financial Statements
Grupo Aval prepares its Consolidated Financial Statements by incorporating its controlled entities. Grupo Aval controls an investee if and only if it complies with the following elements:
Grupo Aval carries out an annual assessment of all its contractual relationships in order to identify new controlled entities or entities where control has been lost. For the year 2025 and 2024, no new entities were identified which had to be consolidated.
The financial statements for Grupo Aval´s subsidiaries are included in the consolidated financial statements since the date on which Grupo Aval acquires control or following control until the date on which control is lost.
During the consolidation process, Grupo Aval combines the assets, liabilities and profits or losses of those entities under control, previously aligning the accounting policies in all the subsidiaries and translating its financial statements to Colombian Pesos. This process includes eliminating intra-group balances and transactions and any unrealized and realized income and expense except for foreign currency translation gains or losses and those taxes which are not subject to elimination arising
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from intra-group transactions. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.
Non-controlling interests are presented under total equity in the Consolidated Statement of Financial Position of Grupo Aval separately from equity attributable to owners of the parent company.
For consolidation purposes, the Consolidated Statements of Financial Position and Income of entities with a functional currency different form Grupo Aval are translated to Colombian pesos as follows:
When Grupo Aval ceases to consolidate or equity account for an investment because of a loss of control, joint control or significant influence, any retained interest in the entity is remeasured to its fair value, with the change in carrying amount recognized in profit or loss. This fair value becomes the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognized in other comprehensive income in respect of that entity are accounted for as if the group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognized in other comprehensive income are reclassified to profit or loss.
c)Investments in associates
Associates are companies in which Grupo Aval has significant influence but not control and are accounted for under the equity method. They are presented in the Consolidated Statement of Financial Position as “Investments in associates and joint ventures” (see Note 2.1.(d) “Joint arrangements”). Grupo Aval exercises significant influence over another entity if it owns, directly or indirectly, 20% or more of the voting power of the investee, unless it is clearly evidenced that such influence does not exist. They are initially recognized at cost, which includes transaction costs. Subsequent to initial recognition, the Consolidated Financial Statements include the Grupo Aval’s share of the profit or loss and OCI of equity accounted investees, until the date on which significant influence or joint control ceases.
Dividends received from associates and joint ventures are recognized as a reduction in the carrying amount of the investment.
In the case that Grupo Aval´s share of losses in an equity-accounted investment equals or exceeds its interest in the entity, including any other unsecured long-term receivables, Grupo Aval does not recognize further losses, unless it has incurred obligations or made payments on behalf of the other entity.
Unrealized gains on transactions between Grupo Aval and its associates are eliminated to the extent of Grupo Aval’s interest in these entities. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by Grupo Aval.
The Group assesses whether there are indications of impairment in its investments in associates and recognizes the corresponding impairment loss in profit or loss when applicable.
d)Joint arrangements
A joint arrangement is one in which two or more parties have joint control of the arrangement. Joint arrangements are divided into joint operations or joint ventures, the classification depends on the contractual rights and obligations of each investor, rather than the legal structure of the joint arrangement. Under joint operations the parties having joint control of the agreement
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have rights to the assets and obligations to the liabilities relating to the agreement. Under joint ventures, the parties having joint control, are entitled to the net assets of the agreement.
Grupo Aval recognizes joint operations in the Consolidated Financial Statements based on their proportional and contractual participation in each of the assets, liabilities and profit or loss of the contract or entity wherein the agreement is held. Grupo Aval recognizes joint ventures through the equity method, in the same manner as investments in associates.
2.2 Functional and presentation currency
Considering that the majority of the Group´s business activities as well as the generation and use of cash is in Colombian pesos, the Colombian peso is the currency that most accurately represents the economic environment of Grupo Aval’s operations, both for the Consolidated Financial Statements and for the parent company. Foreign entities have functional currencies different from the Colombian peso, which are translated to Colombian pesos for presentation purposes. The main functional currency of these foreign entities is the US dollar.
2.3 Transactions in foreign currencies
Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency using the prevailing exchange rate at the reporting date. Non-monetary assets and liabilities denominated in foreign currencies in terms of historical costs are measured using the exchange rate at the transaction date. Financial instruments measured at fair value are converted using the exchange rate at the date the fair value was determined. Profits or losses resulting from the translation process are recognized in profit or loss, except for financial instruments designated as hedging instruments.
As of December 31, 2025 and 2024, the representative market rates reported by the official price provider (for the U.S. dollar which is the most representative foreign currency for Grupo Aval´s transactions) were Ps. 3,757.08 and Ps 4,409.15 per U.S. $1, respectively.
2.4 Operating segments
An operating segment is a component of an entity which:
Segment results that are reported to the CODM (Chief Operating Decision Maker) include items that are directly attributable to a segment as well as those that can be allocated on a reasonable basis.
Management regularly evaluates the performance for each segment; Grupo Aval discloses information separately for each identified operating segment, meeting any of the following quantitative thresholds:
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2.5 Financial assets and financial liabilities
i. Recognition and initial measurement
Grupo Aval initially recognizes loans and advances, deposits, debt securities issued and subordinated liabilities on the date on which they are originated. All other financial instruments (including regular-purchases and sales of financial assets) are recognized on the trade date, which is the date in which Grupo Aval becomes a party to the contractual provisions of the instrument.
A financial asset or financial liability is initially measured at fair value. Additionally, for instruments measured at amortized cost or FVOCI, transaction costs are added if directly attributable to its acquisition or issuance.
ii. Classification
Financial assets
On initial recognition, a financial asset is classified as: amortized cost, fair value through other comprehensive income (FVOCI) or fair value through profit or loss (FVTPL).
A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:
A debt instrument is measured at FVOCI only if it meets both of the following conditions and is not designated as at FVTPL:
On initial recognition of an equity investment that is not held for trading, Grupo Aval may irrevocably elect to present subsequent changes in fair value in Other Comprehensive Income OCI. This election is made on an investment-by-investment basis.
All other financial assets are classified and measured at FVTPL.
Business model assessment
Grupo Aval makes an assessment of the objective of a business model in which an asset is held at a portfolio level because this best reflects the way the business is managed, and information is provided to management. The information considered includes:
Financial assets that are held for trading, for which performance is evaluated on a fair value basis are measured at FVTPL because their objective is neither to collect contractual cash flows nor to collect contractual cash flows and sell the financial assets.
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Assessment whether contractual cash flows are solely payments of principal and interest (SPPI)
For the purposes of this assessment, “principal” is defined as the fair value of the financial asset on initial recognition. “Interest” is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks (e.g. liquidity risk and administrative costs), as well as profit margin.
In assessing whether the contractual cash flows are solely payments of principal and interest (SPPI), Grupo Aval considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. Upon assessment Group Aval considers:
Interest rates on certain commercial and consumer loans originated by Grupo Aval are pegged to standard variable rates, generally used in each country where Grupo Aval operates and includes a spread. In Colombia, the standard variable rates are based on the DTF (rate interest calculated as the average for time deposits) or the interbank rate (in Spanish Interés Bancario de Referencia), or IBR rates, both of which are calculated weekly by the Central Bank based on information collected from the Colombian financial system, plus a spread. In the case of loans in foreign currency issued in Colombian entities and in other countries Grupo Aval uses SORF interest rates (Secured Overnight Funding Rate) plus a spread.
In these cases, Grupo Aval assesses whether the discretionary feature is consistent with the SPPI criteria by considering a number of factors, including whether:
A prepayment feature is consistent with the SPPI criterion if the prepayment amount substantially represents unpaid amounts of principal and interest on the principal amount outstanding, which may include reasonable compensation for early termination of the contract.
In addition, a prepayment feature is considered consistent with this criterion if a financial asset is acquired or originated at a premium or discount to its contractual nominal amount, and the amount prepaid substantially represents the contractual nominal amount plus accrued (but unpaid) interest (which may also include reasonable compensation for early termination), and the fair value of the prepayment feature is not significant at initial recognition.
Financial liabilities
Grupo Aval classifies its financial liabilities, other than derivatives, financial guarantees and loan commitments, as measured at amortized cost.
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iii. Reclassifications
Financial assets are not reclassified subsequent to their initial recognition, except in the period after Grupo Aval’s entities changes their business model for managing financial assets.
iv. Derecognition
Grupo Aval derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire (see also (v)), or when it transfers the rights to receive the contractual cash flows in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred, or in which the Group neither transfers nor retains substantially all the risks and rewards of ownership and does not retain control of the financial asset
At derecognition of a financial asset, the difference between the carrying amount of the asset (or the carrying amount allocated to the portion of the asset derecognized) and the sum of (i) the consideration received (including any new asset obtained less any new liability assumed) and (ii) any cumulative gain or loss that had been recognized in OCI is recognized in profit or loss.
Any cumulative gain/loss recognized in OCI in respect of equity investment securities designated as at FVOCI is not recognized in profit or loss on derecognition of such securities, as explained in (2.10). Any interest in transferred financial assets that qualify for derecognition that is created or retained by Group Aval is recognized as a separate asset or liability.
Grupo Aval enters into transactions whereby it transfers assets recognized on its Consolidated Statement of Financial Position but retains either all or substantially all of the risks and rewards of the transferred assets or a portion of them. In such cases, the transferred assets are not derecognized. Examples of such transactions are securities lending and sale-and-repurchase transactions.
When assets are sold to a third party with a concurrent total rate of return swap on the transferred assets, the transaction is accounted for as a secured financing transaction similar to sale-and repurchase transactions, given that Grupo Aval retains all or substantially all of the risks and rewards of ownership of such assets.
In transactions in which it neither retains nor transfers substantially all of the risks and rewards of ownership of a financial asset and it retains control over the asset, Grupo Aval continues to recognize the asset to the extent of its continuing involvement, determined by the extent to which it is exposed to changes in the value of the transferred asset.
Grupo Aval derecognizes a financial liability when its contractual obligations are discharged or cancelled or expire.
v. Modifications of financial assets and financial liabilities
If the terms of a financial asset are modified, then Grupo Aval assesses whether the cash flows of the modified asset are substantially different.
If the cash flows are substantially different, the contractual rights to cash flows from the original financial asset are deemed to have expired. In that case, the original financial asset is derecognized (see (iv)) and a new financial asset is recognized at fair value plus any eligible transaction costs. Any fees received as part of the modification are accounted for as follows:
If cash flows are modified when the borrower is in financial distress, the objective of the modification is usually to maximize recovery of the original contractual terms rather than to originate a new asset with substantially different terms. If Group Aval plans to modify
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a financial asset in a way that would result in foregoing of cash flows, it considers whether a portion of the asset should be written off before the modification takes place (see below for write‑off policy). This approach impacts the result of the quantitative evaluation and means that the derecognition criteria are not usually met in such cases.
If the modification of a financial asset measured at amortized cost or FVOCI does not result in derecognition of the financial asset, then Grupo Aval recalculates the gross carrying amount of the financial asset using the original effective interest rate of the asset and recognizes the resulting adjustment as a recovery or impairment in the Consolidated Statement of Income. For variable-rate financial assets, the original effective interest rate used to calculate the modification gain or loss is adjusted to reflect current market terms at the time of the modification. Any costs or fees incurred, and fees received as part of the modification are incorporated into the gross carrying amount of the modified financial asset and are amortized over the remaining term of the modified financial asset.
Grupo Aval derecognizes a financial liability when its terms are modified, and the cash flows of the modified liability are substantially different. In this case, a new financial liability based on the modified terms is recognized at fair value. The difference between the carrying amount of the financial liability extinguished and the new financial liability with modified terms is recognized in the Consolidated Statement of Income.
If the modification of a financial liability measured at amortized cost does not result in derecognition of the financial liability, then Grupo Aval first recalculates the gross carrying amount of the financial liability using the original effective interest rate of the liability and recognizes the resulting adjustment as interest expense in the Consolidated Statement of Income. For variable-rate financial liabilities, the original effective interest rate used to calculate the modification gain or loss is adjusted to reflect current market terms at the time of the modification. Any costs or fees incurred, and fees received as part of the modification are incorporated into the gross carrying amount of the modified financial liability and are amortized over the remaining term of the modified financial liability.
vi. Offsetting of financial assets and liabilities
Financial assets and liabilities are offset, and the net amount is recognized in the Consolidated Statement of Financial Position, when there is a legally enforceable right to offset recognized amounts and management intends to settle them on a net basis or to realize the asset and settle the liability simultaneously.
Income and expenses are presented on a net basis only when permitted under IFRS, or for gains and losses arising from a group of similar transactions such as Grupo Aval’s trading activity.
vii. Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which Grupo Aval has access at that date.
Grupo Aval measures the fair value of an instrument using the quoted price in an active market for that instrument. A market is regarded as active if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.
If there is no quoted price in an active market, Grupo Aval uses valuation techniques that maximize the use of relevant observable inputs and minimize the use of unobservable inputs. The chosen valuation technique incorporates all of the factors that market participants would take into consideration in pricing a transaction.
The best evidence of the fair value of a financial instrument on initial recognition is normally the transaction price – i.e. the fair value of the consideration given or received. If Grupo Aval determines that the fair value on initial recognition differs from the transaction price and the fair value is evidenced neither by a quoted price in an active market for an identical asset or liability nor based on a valuation technique for which any unobservable inputs are deemed to be insignificant in relation to the measurement, then the financial instrument is initially measured at fair value, adjusted to defer the difference between the fair value on initial recognition and the transaction price. Subsequently, that difference is recognized in the Consolidated Statement of Income on an appropriate basis over the life of the instrument but no later than when the valuation is wholly supported by observable market data or the transaction is closed out.
Portfolios of financial assets and financial liabilities that are exposed to market risk and credit risk, managed by Grupo Aval on the basis of the net exposure to either market or credit risk are measured on the basis of a price that would be received to sell a net long
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position (or paid to transfer a net short position) for the particular risk exposure. Portfolio-level adjustments – e.g. bid-ask adjustment or credit risk adjustments that reflect the measurement on the basis of the net exposure – are allocated to the individual assets and liabilities on the basis of the relative risk adjustment of each of the individual instruments in the portfolio.
The fair value of a financial liability with a demand feature (e.g. a demand deposit) is no less than the amount payable on demand, discounted from the first date on which the amount could be required to be paid.
Grupo Aval recognizes transfers between levels of the fair value hierarchy as of the end of the reporting period during which the change has occurred. See Note 5.
viii. Repurchase agreements and reverse repurchase agreements
Purchases of financial instruments under a non-optional resale agreement are measured at fair value and recognized as financial assets in the Consolidated Statement of Financial Position under interbank and overnight funds.
The excess of the purchase prices over the resale prices is recognized as interest income over the contractual term.
Sales of financial instruments under a non‑optional repurchase agreement are measured at fair value and recognized as liabilities in the Consolidated Statement of Financial Position under Central Bank Deposits - Repurchase Agreements, Deposits from Credit Institutions - Repurchase Agreements, or Customer Deposits - Repurchase Agreements
The excess of the sales prices over the repurchase prices is recognized as interest expense over the contractual term.
Retained interests (i.e. the assets that collateralize the repurchase agreements) are primarily classified as fair value through OCI and measured at fair value.
ix. Impairment of financial assets
Grupo Aval recognizes loss allowances for Expected Credit Losses (“ECL”) on the following financial instruments that are not measured at FVTPL:
No credit impairment loss is recognized on equity investments.
Grupo Aval measures loss allowances at an amount equal to lifetime ECL (Stage 2 and stage 3), except the following cases, for which they are measured as 12-month ECL (Stage 1):
Grupo Aval considers a debt security to have low credit risk when its credit rating is equivalent to the global definition of ‘investment grade.’
12-month ECL is the portion of ECL that results from default events on a financial instrument that are possible within the 12 months after the reporting date.
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Measurement of ECL
Measurement of ECL is described in Note 4(4.1.5 Amounts arising from Expected Credit Loss (ECL)).
Modified Financial Assets
If the terms of a financial asset are renegotiated or modified or an existing financial asset is replaced with a new one due to financial distress of the borrower, an assessment is made of whether the financial asset should be derecognized (see (iv)) and ECL are measured as follows:
Credit-impaired financial assets
At each reporting date, Grupo Aval assesses whether financial assets carried at amortized cost and at FVOCI are credit-impaired. A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.
Evidence that a financial asset is credit-impaired includes the following observable data:
A loan that has been renegotiated due to a deterioration in the borrower’s condition is usually considered to be credit-impaired unless there is evidence that the risk of not receiving contractual cash flows has decreased significantly and there are no other indicators of impairment. In addition, a loan different to a mortgage that is overdue for 90 days or more is considered impaired.
In making an assessment of whether an investment in sovereign debt is credit-impaired, Grupo Aval considers the following factors.
x. Presentation of allowance for ECL in the Consolidated Statement of Financial Position
Loss allowances for ECL are presented in the Consolidated Statement of Financial Position and the impact is showed in the Consolidated Statement of Income line “Impairment (losses) recoveries on financial assets” as follows:
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xi. Write-offs
Loans and debt securities are written off (either partially or in full) when there is no prospect of recovery. This is generally the case when Grupo Aval determines that the borrower does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to be written-off.
Recoveries of amounts previously written off are included in “recovery of charged off financial assets” in the Consolidated Statement of Income.
Financial assets that are written off could still be subject to enforcement activities in order to comply with Grupo Aval’s procedures for recovery of amounts due. The contractual amount outstanding on the financial assets that were written off during the reporting period are disclosed in note 4.1.5 Amounts arising from ECL; Loss Allowance reconciliation tables.
2.6 Cash and cash equivalents
Cash and cash equivalents include cash, bank deposits, and other short-term investments with original maturities of three months or less from the date of their acquisition that are subject to an insignificant risk of changes in their fair value and are used by Grupo Aval in the management of its short-term commitments.
2.7 Trading assets and liabilities
‘Trading assets and liabilities’ are those assets and liabilities that Grupo Aval mainly acquires or incurs for the purpose of selling or repurchasing in the near term or holds as part of a portfolio that is managed comprehensively for short-term profit or position taking. Trading assets and liabilities are initially recognized and subsequently measured at fair value in the Consolidated Statement of Financial Position, with transaction costs recognized in Consolidated Statement of Income. All changes in fair value are recognized as part of net trading income (loss) in Consolidated Statement of Income.
2.8 Derivatives
a) Derivatives and hedge accounting
A derivative is a financial instrument for which value changes respond to changes in one or more variables denominated as “underlying” (e.g. a specific interest rate, the price of a financial instrument, a listed commodity, a foreign currency exchange rate, etc.). A derivative requires no initial net investment or an initial net investment that is smaller than would be required for other types of contracts that would be expected to have a similar response to changes in market factors.
Grupo Aval and its subsidiaries trade in financial markets, forward contracts, future contracts, swaps and options that fulfil the definition of a derivative.
Financial assets and liabilities arising from transactions with derivatives are generally not offset in the Consolidated Statement of Financial Position. However, when there is a legal and exercisable right to offset the recognized values and Grupo Aval intends to settle them on a net basis or to realize the assets and settle the liability simultaneously, derivatives are presented as net values in the Consolidated Statement of Financial Position.
Derivative transactions are initially recognized at fair value. Subsequent changes in the fair value are recognized in profit or loss, unless the derivative instrument is designated as a hedging instrument and, in this case, the accounting criteria will depend on the nature of the hedged item, as described below.
At the beginning of the hedging transaction, Grupo Aval formally documents the existing relationship between the hedging instrument and the hedged item, including the risk management objective and strategy in undertaking the hedging relationship. It also documents
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its assessment, both initially as well as on a recurring basis, of whether the hedging relationship is highly effective in offsetting the changes in fair value or cash flows of the hedged items.
The applicable policy for hedging and embedded derivatives is described below:
The values accumulated in other comprehensive income are transferred to profit or loss in the same period in which the hedged item is recognized in profit or loss; and
b) Embedded derivatives
Derivatives may be embedded in another contractual arrangement (a host contract). Grupo Aval accounts for an embedded derivative separately from the host contract when:
Separated embedded derivatives are measured at fair value, with all changes in fair value recognized in profit or loss unless they form part of a qualifying cash flow or net investment hedging relationship. Separated embedded derivatives are presented in the Consolidated Statement of Financial Position together with the host contract.
2.9 Loans
The ‘Loans’ line in the Consolidated Statement of Financial Position includes:
When Grupo Aval purchases a financial asset and simultaneously enters into an agreement to resell the asset (or a substantially similar asset) at a fixed price on a future date (reverse repo or stock borrowing), the arrangement is accounted for as a loan, and the underlying asset is not recognized in Grupo Aval’s Consolidated Financial Statements.
The effective interest rate method calculates the amortized cost of a financial asset and allocating the interest income or expense over the relevant period. The effective interest rate is the rate that discounts future cash payments or receipts (without consideration of future credit losses, over the expected life of the financial instrument) to the net carrying amount of the financial asset at initial recognition. In the process of calculating the effective interest rate, Grupo Aval estimates the cash flows considering the contractual terms including prepayment expectations of the financial instrument for portfolios with high prepayment levels, except for future credit losses and considering the initial fair value plus transaction costs and premiums granted, minus commissions and discounts received which form integral part of the effective rate.
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2.10 Investment securities
The ‘investment securities’ line in the Consolidated Statement of Financial Position includes:
For debt investment securities measured at FVOCI, gains and losses are recognized in OCI, except for the following, which are recognized in profit or loss in the same manner as for financial assets measured at amortized cost:
When a debt security measured at FVOCI is derecognized, the cumulative gain or loss previously recognized in OCI is reclassified from equity and recognized as profit or loss in the Consolidated Statement of Income under “Other income” under line “net gain (loss) on sale of debt securities”.
Grupo Aval elects to present changes in the fair value of certain investments in equity instruments that are not held for trading in OCI. The election is made on an instrument-by-instrument basis on initial recognition and is irrevocable.
Gains and losses on such equity instruments are never reclassified to profit or loss and no impairment is recognized in profit or loss. Cumulative gains and losses recognized in OCI are transferred to retained earnings upon disposal of an investment. Dividends are recognized in profit or loss unless they clearly represent a recovery of part of the cost of the investment, in which case they are recognized in OCI.
After initial recognition, net gains and losses resulting from changes in fair value for financial assets classified and measured at fair value, are presented either (i) in the Consolidated Statement of Income in the account “net trading income - trading investment securities” for financial assets at FVTPL or (ii) in OCI for financial instruments at FVOCI, in accordance with note 2.5 ii) above.
In turn, after their initial recognition, financial assets classified at amortized cost are adjusted to reflect interest accrued at the effective interest rate method, less payments received from borrowers.
See detail of effective interest rate method in note 2.9 Loans.
Income from dividends from financial assets in equity instruments at FVOCI is recognized in income in the account of “other income dividends” when the right to receive payment is established, regardless of the decision that has been made to record the variations in fair value in results or OCI.
2.11 Financial liabilities
A financial liability is any contractual liability in which Grupo Aval commits to deliver cash or other financial asset to another entity or person, or to exchange financial assets or financial liabilities under potentially unfavorable conditions for Grupo Aval, or a contract which will be terminated or could be settled using equity instruments owned by the entity. Financial liabilities are initially recognized based on their fair value, which is usually equal to the transaction value adjusted by directly attributable costs. Subsequently, such financial liabilities are measured at their amortized cost according to the effective interest rate method determined at initial recognition and recognized in profit or loss.
Financial liabilities are only derecognized from the Consolidated Statement of Financial Position when the obligations are extinguished, that is, when the obligations are discharged, cancelled, or expire.
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2.12 Financial guarantees
Financial guarantees are those contracts requiring that the issuer carries out specific payments to reimburse the creditor for losses incurred when a specific debtor defaults in its payment obligation, in accordance with the original or modified conditions, of a debt instrument; regardless of its legal form.
Financial guarantees issued or commitments to provide a loan at a below-market interest rate are initially measured at fair value. Subsequently, they are measured:
Credit risk impairment losses established over financial guarantee contracts under IFRS 9, are recognized as liabilities under “Provisions – other provisions” and recognized in profit or loss under “other expenses”, (see note 2.5 (x)) “Presentation of allowance for ECL in the Consolidated Statement of Financial Position”.
2.13 Non-current assets held for sale and discontinued operations
Foreclosed assets and non-current assets held for sale, which Grupo Aval intends to sell in a period of less than one year, are recognized as "non-current assets held for sale". These assets are measured at the lower of their carrying value at the time of transfer and fair value, less estimated disposal costs.
A discontinued operation is a component of the entity that has been disposed or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately in the Consolidated Statement of Income.
2.14 Property, plant and equipment for own use
Property, plant and equipment include the assets, owned or under financial leases held by Grupo Aval for current or future use for more than one period.
They are recognized in the Consolidated Statement of Financial Position at their acquisition or construction cost, less the corresponding accumulated depreciation and, if applicable, the estimated impairment losses resulting from comparing the carrying amount of each asset with its recoverable value.
Depreciation is calculated by applying the straight-line method over the acquisition cost of the assets (except for the bearer plants, which are depreciated based on production units), less any residual value; land is not depreciated.
Depreciation is calculated on a straight-line basis over the estimated useful life of the asset.
Asset
Useful Life
Own use buildings
According to appraisals
Equipment, furniture and accessories
From 3 to 25 years
Machinery and equipment (*)
From 5 to 25 years
Computer equipment
From 2 to 12 years
Vehicles
From 5 to 10 years
Bearer plants
From 25 to 35 years
(*) Except for the gas pipelines, these are depreciated according to appraisals (70 years).
Conservation and maintenance expense is recognized when incurred as “Administrative Expense”.
At each reporting date, the Group analyzes whether there are signs, that an asset may be impaired for such purposes, develops what is established in policy 2.21 "Impairment of non-financial assets".
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Biological assets that meet the concept of bearer plant are accounted for as property, plant and equipment.
A bearer plant is a live plant that meets the following requirements:
Bearer plants under the set-up and growing phase are subject to a biological transformation which is reflected through cost accumulation until they reach their maturity level. In the case of the African oil palm, maturity is reached in the second year, while maturity for rubber plants is reached in the seventh year. After reaching their maturity, bearer plants are considered developed and the future economic benefits arise from the sale of the fruit produced during the useful life of the plant.
Bearer plants are measured at their cost less accumulated depreciation and any impairment losses. The useful life is equal to the plants´ production periods. The useful life of the rubber plant is thirty-five years while the useful life of the African oil palm is twenty-five years. The depreciation method used is the estimated production units as it most accurately reflects the usage of the assets If the bearer plant is sold for timber at the end of the useful life the value received is considered the residual value of the asset.
2.15 Investment properties
Land and buildings, considered in whole or in part, that are held to earn rental income or for capital appreciation, rather than for own use or sale in the ordinary course of business. Investment properties are recognized initially at cost, including all costs associated with the transaction, and subsequently measured at fair value, with changes in fair value recognized in profit or loss.
2.16 Leases
Lessee accounting
At inception of a contract, Grupo Aval assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group uses the definition of a lease in IFRS 16.
Grupo Aval recognizes a right-of-use asset and a lease liability at the lease commencement date.
The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove any improvements made.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.
Grupo Aval determines its incremental borrowing rate by analyzing its borrowings from various external sources and makes certain adjustments to reflect the terms of the lease and type of asset leased.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset; or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
Grupo Aval presents right-of-use assets in ‘Tangible assets’ and lease liabilities in ‘Borrowings from banks and others’ in the Consolidated Statement of Financial Position.
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Short-term leases and leases of low-value assets
Grupo Aval has elected not to recognize right-of-use assets and lease liabilities for leases of low-value assets (five thousand dollars or less) and short-term leases (maximum term 12 months or less). The Grupo Aval recognizes the lease payments associated with these leases as an expense in profit or loss on a straight-line basis over the lease term.
Lessor accounting
When Grupo Aval acts as a lessor, it determines at lease inception whether the lease is a finance lease or an operating lease. To classify each lease, the Group makes an overall assessment of whether the lease transfers substantially all of the risks and rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an operating lease. As part of this assessment, the Group considers certain indicators such as whether the lease is for a major part of the economic life of the asset. Lease contracts classified as financial leases are included in the Consolidated Statement of Financial position as “Loans” and are recognized in the same way as other loans, as explained in note 2.9.
2.17 Biological assets
Biological assets are measured at fair value less disposal cost, both at the time of initial recognition and at the end of reporting period, except for biological assets for which fair value cannot be measured reliably; in which case they are measured at cost less accumulated depreciation and impairment loss. Gains and losses arising from the initial and subsequent fair value measurement of the agricultural products are included in the Consolidated Statement of Income. Costs incurred in the agricultural production process are also recognized directly in the Consolidated Statement of Income.
The fair value of biological assets is determined using valuations performed by experienced internal professionals, using discounted cash flow models. The expected cash flows of the crop’s total life are determined by using the market price of the agricultural product currently in effect and the estimated productive life of plants, net of maintenance and harvest costs and of any other costs required for plant maintenance during the production period. The productive life of plants is estimated considering the age, location and type of product. The fair value of the biological assets is dependent on current market prices for each product.
2.18 Business combinations and goodwill
Business combinations are accounted for using the “acquisition method”, when control is transferred to the controlling entity. The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired.
Goodwill is measured as the excess of the aggregate of consideration transferred, over the amount of any interest previously acquired and the net of identifiable assets acquired and liabilities assumed at acquisition date. Goodwill acquired in a business combination is assigned to each of the groups of cash-generating units from which benefit are expected as a result of the acquisition. Goodwill is not subsequently amortized; however, it is subject to an annual impairment assessment in relation to the cash-generating unit to which it has been assigned and, from which benefits are expected deriving from the synergies of business combinations. A loss due to impairment recognized on Goodwill cannot be reversed in subsequent periods.
2.19 Other intangible assets
Other intangible assets mainly comprise software and licenses, which are initially measured at the cost of acquisition or cost of development. Costs incurred during the research phase are expensed as incurred.
Development expenses which are directly attributable to design and performance tests of software and identifiable, unique and controlled by Grupo Aval are recognized as intangible assets, if following conditions are met:
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Costs that are directly attributable and capitalized as part of intangible assets include personnel expense directly related to developing such intangibles and overhead expenses that can be capitalized.
Expenses that do not satisfy these criteria are recognized as incurred expenses. Disbursements over intangible assets are initially recognized as expenses of the period and they are not subsequently recognized as intangible assets.
After initial recognition, an intangible asset shall be carried at its cost less any accumulated amortization and any accumulated impairment losses. The annual amortization rates estimate for each type of assets are:
Intangible Asset
Software and computer applications
From 1 to 20 years
Licenses
From 1 to 15 years
Trademarks
Indefinite
Customer-related assets
From 1 to 10 years
Intellectual property rights
Models, formulas, designs and prototypes
10 years
Easements
From 20 to 50 years
At the end of each period, the Group will test whether an intangible asset with an indefinite useful life has experienced an impairment loss by comparing its recoverable amount with its carrying amount on an annual basis and not only when there are indications of impairment. Likewise, that the useful life of an intangible asset that is not being amortized will be reviewed every period to determine if there are facts and circumstances that allow continuing to maintain an indefinite useful life for that asset. Any impairment loss or subsequent reversal is recognized in the Consolidated Statement of Income; such impairment is determined by the excess of the book value over the recoverable value.
2.20 Concession arrangements rights
Concession contracts, are those in virtue of which certain subsidiaries of Grupo Aval make a commitment with the Governments in the countries in where they operate for the construction or maintenance of infrastructure, for a period of time during which, said entities receive the revenue derived from the contract, either through direct payments from the Government, through tolls or other types of fees charged to the end users of the project, which, are recognized as financial assets or intangible assets.
A financial asset is recognized when pursuant to the contractual conditions, there is an entitlement to an unconditional contractual right of receiving cash or other financial assets from the grantor or from the Government, due to construction services or when the Government guarantees minimum income from tolls or fees charged to the users of the concession work during the term of the concession agreement.
An intangible asset is recognized if the concession contract does not include an unconditional right for the concessionaire to receive cash and, on the contrary, its revenue depends on the right it has for the use of the infrastructure under concession. In some cases, contracts can contain both financial and intangible assets.
Concession arrangements are recognized as follows:
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2.21 Impairment of non-financial assets
At each reporting date, Grupo Aval reviews the carrying amounts of its non-financial assets (other than investment properties and deferred tax assets) to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.
Goodwill is tested annually for impairment. For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that is largely independent of the cash inflows of other assets or Cash Generating Units “CGU”. Goodwill arising from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the combination.
The “recoverable amount” of an asset or CGU is the greater of its value in use and its fair value less costs to sell. “Value in use” is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or cash generating units “CGU”.
An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount.
Impairment losses are recognized in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.
An impairment loss of goodwill cannot be reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.
2.22 Employee Benefits
Grupo Aval´s entities provide the following benefits to employees in exchange of services rendered to the Group:
Pursuant to Colombian and other countries labor rules, such benefits are comprised of salaries, premiums, vacations, severance payments and payroll tax contributions to the local Government designated agencies which are paid within 12 months following the end of the reporting period. Such benefits are accumulated on an accrual basis and recognized in profit or loss.
Grupo Aval pays to its employees certain benefits when they retire or upon completion of their employment period, other than indemnities. These benefits include retirement pensions which are directly assumed by Grupo Aval’s entities, pending severance payments to employees belonging to the labor regime prior to Law 50 1990 in Colombia, and certain extra-legal benefits or benefits agreed in collective bargaining agreements.
Post-employment benefits liabilities are determined based on the present value of estimated future payments, calculated based on actuarial assessments using the projected unit of credit method, and applying actuarial assumptions about mortality rate, increase of salaries and personnel turnover, and interest rates determined with reference to bond market returns of local Government’ bonds or high-quality business liabilities in effect at the reporting date. Under the projected unit of credit method, future benefits to be paid to employees are assigned to each accounting period in which the employee renders the service. Therefore, the corresponding expense due to these benefits recognized in profit or loss of Grupo Aval includes the present service cost assigned in the actuarial calculation plus the financial cost of calculated liabilities. Changes in liabilities due to changes in actuarial assumptions are recognized in Other Comprehensive Income.
Changes in actuarial liabilities due to changes in employment benefits granted to employees that have a retroactive effect are recognized as an expense in the earlier of the following dates:
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Long term benefits are different from employee short-term benefits, post-employment benefits and termination benefits. In accordance with the collective bargaining agreements and regulations of each company of Grupo Aval, such benefits are mainly related to seniority bonuses.
Long-term liabilities for employee benefits are determined in the same manner as post-employment benefits described in item (b) above; the only difference is that the changes in the actuarial liability due to changes in the actuarial assumptions are recognized in the Consolidated Statement of Income.
These benefits are payments which must be made by Grupo Aval´s entities derived from their taking the unilateral decision of terminating and employee´s labor contract or from and employee´s decision to accept benefits offered by an entity in exchange for terminating the employment contract, such payments correspond to severances for dismissal or redundancy and other benefits that entities unilaterally decide to grant to their employees under such circumstances.
Termination benefits are recognized as a liability and in profit or loss at the earlier of the following dates:
2.23 Income taxes
Income tax expense includes both current and deferred tax. Tax expense is recognized in the Consolidated Statement of Income except for items recognized in Other Comprehensive Income or directly in equity.
Current income tax expense is calculated based on the tax laws in force (enacted or substantively enacted) in each of the countries in which we operate as of the reporting date of the Consolidated Financial Statements is subject to the income tax. Management of each subsidiary of Grupo Aval periodically assesses tax return positions with respect to situations where the applicable tax regulation is subject to interpretation and establishes provisions, when appropriate, on the basis of amounts expected to be paid to tax authorities.
Deferred taxes are recognized with respect to temporary differences arising between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes. Deferred taxes are not recognized for: (i) temporary differences on the initial recognition of goodwill; (ii) temporary differences on the initial recognition of an asset or liability in a transaction that is not a business combination and that affects neither the accounting nor the taxable profit or loss and (iii) temporary differences related to investments in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable future. Deferred taxes are measured using the tax rates that are expected to be applied to the temporary differences upon reversal, using enacted tax rates or substantively enacted at the reporting date.
Deferred taxes assets are only recognized to the extent it is probable that future taxable income is expected to be available to offset temporary differences.
Deferred tax liabilities arise from taxable temporary differences, except for the deferred tax liabilities on investments in subsidiaries, when the opportunity of reversal of temporary differences is controlled by Grupo Aval and it is not expected to be reversed in the near future. Generally, Grupo Aval has the ability to control the temporary differences of investments in associates.
Current taxes are offset only when the entity has a legally enforceable right to offset and the entity intends to either settle on a net basis or to realize the asset and settle the liability simultaneously. Deferred taxes are offset when the entity has a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred tax assets and liabilities are related to income taxes levied by the same tax authority over the same taxable entity or over different entities but these entities have an intention to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously, for each period in which these differences reverse.
In determining the amount of current and deferred taxes, Grupo Aval considers the impact of uncertain tax exposures on current tax liabilities, including whether additional taxes and interest may be due. This assessment relies on estimates and assumptions and may involve a series of judgments about future events. New information may become available that causes Grupo Aval to change its judgment regarding the adequacy of existing tax liabilities; such changes to tax liabilities would impact tax expense in the period in which such a determination is made.
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2.24 Capitalization of borrowing costs
Borrowing costs which are directly attributable to the acquisition, construction or production of a qualifying asset which requires a substantial period of time to get ready for its intended use are part of the cost of the asset. Other borrowing costs are recognized as expenses.
Grupo Aval begins capitalizing borrowing costs as part of the cost of a qualifying asset on the commencement date. This is the date when the entity first meets all of the following conditions:
(a) it incurs expenditures for the asset;
(b) it incurs borrowing costs; and
(c) it undertakes activities that are necessary to prepare the asset for its intended use or sale.
2.25 Provisions
Provisions for environmental dismantling and recovery, restructuring costs and legal claims are recognized when Grupo Aval has a present legal or assumed obligation as a result of past events, and it is probable that an outflow of economic benefits will be required to settle the obligation. Restructuring provisions include penalties due to cancelation of leases.
Provisions are measured at the present value of outflows expected to be necessary to settle the obligation, using a discount rate before taxes, reflecting the assessments of the time value of money of the current market as well as the specific risks of the obligation. The subsequent increase of the provision due to the unwinding of the discount rate is recognized as “financial expense”.
2.26 Non-voting rights of preferred shares
Preferred shares represent partial ownership and do not provide shareholders with any of the voting rights of common shares. Grupo Aval has classified as an equity instrument all the non-voting preferred shares. See note 25 equity attributable to owners of the parent.
2.27 Revenues
(i) Effective interest rate
Interest income and expense are recognized in the Consolidated Statement of Income using the effective interest method. The “effective interest rate” is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to:
When calculating the effective interest rate for financial instruments other than credit-impaired assets, Grupo Aval estimates future cash flows considering all contractual terms of the financial instrument, but not expected credit losses. For credit-impaired financial assets, a credit-adjusted effective interest rate is calculated using estimated future cash flows including expected credit losses.
The calculation of the effective interest rate includes transaction costs and fees and points paid or received that are an integral part of the effective interest rate. Transaction costs include incremental costs that are directly attributable to the acquisition or issue of a financial asset or financial liability.
(ii) Amortized cost and gross carrying amount
The ‘amortized cost’ of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured on initial recognition minus the principal repayments, plus or minus the cumulative amortization using the effective interest method of any difference between that initial amount and the maturity amount and, for financial assets, adjusted for any expected credit loss allowance.
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The ‘gross carrying amount’ of a financial asset is the amortized cost of a financial asset before adjusting for any expected credit loss allowance.
(iii) Calculation of interest income and expense
In calculating interest income and expense, the effective interest rate is applied to the gross carrying amount of the asset (when the asset is not credit-impaired) or to the amortized cost of the liability to calculate the interest income and expenses.
However, for financial assets that have become credit-impaired subsequent to initial recognition, interest income is calculated by applying the effective interest rate to the amortized cost of the financial asset. If the asset is no longer credit-impaired, then the calculation of interest income reverts to the gross basis.
For financial assets that were credit-impaired on initial recognition, interest income is calculated by applying the credit-adjusted effective interest rate to the amortized cost of the asset. The calculation of interest income does not revert to a gross basis, even if the credit risk of the asset improves.
For information on when financial assets are credit-impaired, see note 2(2.5) (ix).
(iv) Presentation
Interest income and expense presented in the Consolidated Statement of Income include interest calculated on an effective interest basis:
Interest income and expense on all trading assets and liabilities are considered to be incidental to Grupo Aval’s trading operations and are presented together with all other changes in the fair value of trading assets and liabilities in net trading income.
Interest income and expense on other financial assets and financial liabilities mandatory at FVTPL are presented in “Net trading income” and financial assets in concessions arrangements rights at FVTPL under “Net income from other financial instruments mandatorily at fair value through profit or loss”.
‘Net trading income’ comprises net gains or losses related to held for trading assets and liabilities, and includes all realized and unrealized fair value changes, interest, dividends and foreign exchange differences.
Revenue from contracts with customers (other than interest income).
Contract assets
A contract asset is Grupo Aval’s right to consideration in exchange for goods or services that Grupo Aval has transferred to a customer when that right is conditional on something other than the passage of time (for example, invoicing or delivery of other elements of the contracts).
Contract costs eligible for capitalization as incremental costs of obtaining a contract are recognized as a contract asset. Contract costs are capitalized when are incurred if Grupo Aval expects to recover those costs. Contract costs are amortized on a systematic basis consistent with the transfer of the services to the customer and the related revenues are recognized. Contract costs capitalized are impaired if the customer retires or if the asset’s carrying amount exceeds projected discounted cash flows relating to the contract.
Contract liabilities
Contract liabilities comprise Grupo Aval’s obligation to transfer goods or services to a customer for which Grupo Aval has received consideration from the end customer or the amount is due. Additionally, it includes deferred income relating to goods or services that will be delivered in the future, which are charged to a customer in advance but not yet due.
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Steps for revenue recognition
Grupo Aval recognizes revenue from contracts with customers based on a five-step model as set out in IFRS 15:
Grupo Aval satisfies a performance obligation and recognizes revenue over time, if one of the following criteria is met:
For performance obligations where one of the above conditions are not met, revenue is recognized at the point in time at which the performance obligation is satisfied.
When Grupo Aval satisfies a performance obligation by delivering the promised goods or services it creates a contract asset on the amount of consideration earned by the performance. Where the amount of consideration received from a customer exceeds the amount of revenue recognized this gives rise to a contract liability.
Revenue is measured based on consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. Grupo Aval recognizes revenue when it transfers control over a good or service to a customer. Revenue is presented net of value added tax (VAT), rebates and discounts and after eliminating intra-group sales.
Grupo Aval assesses its revenue arrangements to determine if it is acting as principal or agent.
Revenue is recognized to the extent it is probable that the economic benefits will flow to Grupo Aval and the revenue and costs, if applicable, can be measured reliably.
The following is a description of principal activities from which Grupo Aval generates revenue from contracts with customers:
(i) Banking (Financial Services)
Grupo Aval often enter into contracts that cover a number of different services. Such contracts might contain components within, and components outside, the scope of IFRS 15. Therefore, Grupo Aval only applies the IFRS 15 guidance where it has contracts that are all or partly outside the scope of IFRS 9.
The main revenue streams earned by the banks from contracts with customers are the following:
Banks receive bancassurance commissions for introducing new clients to third party insurers, where the bank does not underwrite the insurance policy itself. These commissions are usually paid periodically (for example, monthly) to banks based on the volume of new policies (and/or renewal of existing policies) originating from clients introduced by the bank. The transaction price might include an element of consideration that is variable or contingent on the outcome of future events, such as policy cancellations, which is estimated
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and included in the transaction price based on the most likely amount only when it is highly probable that the resolution of the uncertainty will not result in a significant reversal of revenue.
Performance obligations are fulfilled over time, taking into consideration that customers (insurers) receive benefits as time progresses. Where the commission calculation is made on a monthly basis or in a shorter period, the total amount of the commission is recognized in the results when its determination is made. If the settlement of commissions is defined in periods longer than a monthly basis, the expected income to recognize revenues is estimated as time progresses.
Loan commitment fees are within the scope of IFRS 15 when it is unlikely that a specific lending arrangement will be entered into and the loan commitment is not measured at FVTPL. Loan syndication fees received by a bank that arranges a loan and retains no part of the loan package for itself (or retains a part at the same Effective Interest Rate “EIR” for comparable risk as other participants) are within the scope of IFRS 15.
Income from performance obligations to provide such services, which are met at a point in time, are recognized when the particular event defined in the contracts occurs (e.g., approval of the syndicated loan). The obligations met over time are recognized during the period of the commitment; If income is received in advance, it is deferred over the period of the commitment. If income is received upon expiration, it is estimated periodically.
There are contracts that create enforceable rights and obligations between the Bank and the cardholders or merchants under which the bank will provide services, sometimes in exchange for annual and other fees. The following are some of the services that might exist in a contract with a cardholder:
The transaction price is allocated to each performance obligation based on the relative stand-alone selling prices of the goods or services being provided to the customer. The allocation of the transaction price to each of the separate performance obligations will not necessarily be required where there is more than one performance obligation and the performance obligations all satisfied at the same time or evenly over the period.
Performance obligations are fulfilled over time, taking into consideration that customers receive benefits as time goes on. Given that the entity's efforts or resources are expended evenly throughout the performance period, income is recognized on a linear basis during the period defined under the credit card conditions. The costs of plastic or security elements are capitalized as contract signing costs.
In relation to commissions on purchases made with Grupo Aval credit and debit cards, customers receive benefits each time they make a purchase. Income from these commissions is recognized periodically (daily or monthly), based on the amounts traded. The portion of revenue that must be deferred due to the valuation of loyalty points awarded to cardholders under customer loyalty programs is deducted from the total fees recognized periodically. See section (vi) “Customer Loyalty Program.”
Savings and checking accounts contracts usually allow customers access to a variety of services, including wire transfer processing, ATM use for cash withdrawals, issuance of debit cards, and account statements; they might also include other benefits. Fees are charged on a periodic basis and give the customer access to banking services and additional benefits. Performance obligations are fulfilled over time, taking into consideration that customers receive benefits as time progresses. As a result, banks recognize fees from providing services in the accounting period in which the services are rendered.
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Advisory contracts with customers are not standardized. These contracts might differ between customers, and they often include variable consideration, including contingent fees, that are only payable upon meeting agreed milestones.
Income from performance obligations to provide such services, which are met at a point in time, are recognized when the particular event defined in the contracts occurs. The obligations met over time are recognized considering method of milestones achieved (when only one milestone that considers the delivery of results, income is recognized at a single moment when the final delivery is made).
(ii) Asset management
Revenues of asset portfolios management correspond to fees which arise from the rendering of management and advisory services and usually are measured based on performance and profit of asset portfolios of asset portfolios, which are recognized based on amounts calculated under the formulas established by the contracts when such amount is no longer subject to adjustments resulting from future events.
If the fee expected is variable, the variable consideration included in the transaction price is limited to the amount for which it is highly probable that a significant reversal of the amount of cumulative revenue recognized will not occur when the uncertainty is resolved. In the estimation, Grupo Aval considers both the likelihood and the magnitude of the revenue reversal. Factors that could increase the likelihood or the magnitude of a revenue reversal include, but are not limited to, (i) the amount of consideration is highly susceptible to factors outside the entity’s influence, (ii) the uncertainty about the amount of consideration is not expected to be resolved for a long period of time, and (iii) the contract has a large number and broad range of possible consideration amounts.
Fees are often based on net assets under management or returns generated by the underlying investments held by the funds subject to certain thresholds.
The contractual measurement period for performance fees of fund managers is often a month, quarter or year, and in some rare cases longer. In some cases, the fees will be constrained until the contractual measurement period is completed. The Group assess if there is a portion (a minimum amount) of the variable consideration that should be recognized prior to the end of the contractual measurement period. The full amount of the fee will likely be recognized as of the end of the contractual measurement period when the asset manager becomes certain of the amount. In certain cases, the full amount of the fee will be recognized upon redemption when is no longer subject to reversal.
(iii) Construction and operation services (Concessions)
In concession arrangements, Grupo Aval determines that its performance obligations (construction, operation and maintenance) are satisfied over time and measures progress toward completion to determine the timing of revenue recognition using a method that depicts the transfer of the goods or services to the customer.
Grupo Aval considers the nature of the product or services provided and the terms of the contract, such as termination rights, the rights to demand or retain payments, and the legal title to work in process in determining the best input or output method for measuring progress toward satisfaction of the performance obligation.
Grupo Aval applies a single method to measure progress for each performance obligation within a contract. The method can be either an input method (cost incurred, labor hours) or output method (units produced, milestones reached).
Estimations of revenues, costs or progress toward completion are revised if circumstances change. Any resulting increases or decreases in estimated revenues or costs are reflected in profit or loss in the period in which the circumstances that give rise to the revision become known by management.
(iv) Power and utilities
Contracts between a customer and a public utility company establish the rates and terms of service for the purchase, delivery, and sale of electricity or gas. Grupo Aval determines that its obligation is represented in a single performance obligation which is to sell electricity or gas, and it is satisfied over time (over the term of the agreement) through a series of distinct goods or services that are substantially the same and have the same pattern of transfer to the customer.
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Some contracts include multiple deliverables, such as the installation of fixtures or repairs, which are accounted as separate performance obligations. The transaction price is allocated to each performance obligation based on the stand-alone selling prices (regulated rates). If contracts include the installation of fixtures, the associated revenue is recognized at the point in time when goods are installed, the ownership has been transferred and the customer has accepted the property.
(v) Logistic activities
Grupo Aval´s transport and logistics companies offer multiple products or services to their customers as part of a single agreement. Separate performance obligations are identified in an agreement based on the terms of the contract and Grupo Aval's usual business practices.
Revenue recognition criteria generally applies separately to each performance obligation. In certain circumstances, it may be necessary to separate a transaction into identifiable components to reflect the content of the transaction. It may be necessary to group two or more transactions when they are linked in such a way that the commercial effect cannot be understood without reference to the series of transactions as a whole.
The transaction price is assigned to performance obligations separately in a contract based on the relative independent selling price of each separate performance obligation.
(vi) Customer loyalty program
Financial entities and hotels of Grupo Aval manage loyalty programs in which the customers accumulate points for their purchases, entitling them to redeem such points for prizes in accordance with the policies and the prize plan in force as of the redemption date. Reward points are recognized as an identifiable component separate from income for the service rendered, at their fair value. Income from loyalty programs is deferred and recognized in the Consolidated Statement of Income until the entity has fulfilled its obligations to supply the products under the terms of the program or when it is no longer probable that the points under the program will be redeemed.
Grupo Aval acts as the principal in a customer loyalty program if it obtains control of the goods or services of another party in advance of transferring control of those goods or services to a customer. Grupo Aval is an agent if its performance obligation is to arrange for another party to provide the goods or services.
(vii) Hotel services
Revenue is derived from the following sources:
Revenue is recognized at the point when the goods are sold or services are rendered.
(viii) Agriculture products
Grupo Aval grows and sells agricultural products through companies owned by Corficolombiana. Sales are recognized when control of the products has been transferred, meaning when the products are delivered to the wholesaler, the wholesaler has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the wholesaler, and either the wholesaler has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or Grupo Aval has objective evidence that all criteria for acceptance have been satisfied.
Revenue from these sales is recognized based on the price specified in the contract, net of discounts. Accumulated experience is used to estimate and provide for the discounts, using the most likely amount, and revenue is only recognized to the extent that it is highly
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probable that a significant reversal will not occur. A receivable is recognized when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.
(ix) Financing components.
Grupo Aval adjusts transaction prices for the time value of money for contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year.
2.28 Earnings per share
Earnings per share is calculated as net income for the period attributable to Grupo Aval’s shareholders divided by the weighted average number of common and preferred shares outstanding during the period. Preferred shares are included in the calculation of earnings per share because they participate in the earnings of the Group on an equivalent basis to common shares.
Diluted earnings per share are determined in the same way, on the basis of net income, but the weighted average number of shares outstanding is adjusted to account for the potential dilutive effect of stock options or other financial instruments. Grupo Aval does not have financial instruments with potential dilutive effects. As a consequence, diluted earnings per share are equal to basic earnings per share, and only basic earnings per share are disclosed in these financial statements.
2.29 New and amended IFRS
New standards and amendments to standards are effective for annual periods beginning after January 1, 2025 and earlier application is permitted; however, Grupo Aval has not early adopted them in preparing these Consolidated Financial Statements.
Effective for
Annual Periods
New or Amended Standard
Title of the Standard
Beginning on or After
New currently requirements
Lack of Exchangeability
IAS 21
January 1,2025
Forthcoming requirements.
Classification and Measurement of Financial Instruments
Amendments to IFRS 7 and IFRS 9
January 1,2026
Presentation and Disclosure in Financial Statements
IFRS 18
January 1,2027
Subsidiaries without Public Accountability. Disclosure
IFRS 19
Translation to a Hyperinflationary Presentation Currency
Sale or Contribution of Assets between an Investor and its Associate or Join Venture
Amendments to IFRS 10 and IAS 28
Available for optional adoption/ effective date deferred indefinitely
The Group is in the process of assessing the impact of the new amendments.
Presentation and Disclosure to Financial Statements. IFRS 18 will replace IAS 1 Presentation of Financial Statements and applies for annual reporting periods beginning on or after January 1, 2027. The new standards introduce the following key new requirements:
In addition, all entities are required to use the operating profit subtotal as the starting point for the statement of cash flows when presenting operating cash flows under the indirect method.
The Group is still in the process of assessing the impact of the new standard. The amendment to IAS 21 regarding non-exchangeability, which came into effect on January 1, 2025, had no impact on Grupo Aval's Financial Statements.
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NOTE 3 – JUDGMENTS AND CRITICAL ACCOUNTING ESTIMATES IN APPLYING ACCOUNTING POLICIES
Grupo Aval’s management makes estimates and assumptions that affect the amounts recognized in the consolidated financial statements and the carrying value of the assets and liabilities within the fiscal year. The judgments and estimates are continuously evaluated and are based on the experience of management and other factors, including the occurrence of future events that are believed to be reasonable under the current circumstances. Management also makes certain judgments besides those which involve estimates during the process of applying accounting policies. The judgments that have the most significant effects on the amounts recognized in the Consolidated Financial Statements and the estimates that may cause an important adjustment to the book value of assets and liabilities in the following year include the following:
A. Judgments
Information about judgments made in applying accounting policies that have the most significant effects on the amounts recognized in the consolidated financial statements is included in the following notes.
– Note 2 (2.1) – determination of control over investees.
– Note 2 (2.5) (ii) – classification of financial assets: assessment of the business model within which the assets are held and assessment of whether the contractual terms of the financial asset are solely payments of principal and interest on the principal amount outstanding.
– Note 4 (4.1.5) – establishing the criteria for determining whether credit risk on the financial asset has increased significantly since initial recognition, determining the methodology for incorporating forward-looking information into the measurement of ECL and selection and approval of models used to measure ECL.
B. Assumptions and estimation uncertainties
Information about assumptions and estimation uncertainties that have a risk of resulting in a material adjustment in the year ended is included in the following notes.
– Note 4 (4.1.5) – impairment of financial instruments: assessment of whether credit risk on the financial asset has increased significantly since initial recognition and incorporation of forward-looking information in the measurement of ECL.
– Note 4 (4.1.5) – impairment of financial instruments: key assumptions used in estimating recoverable cash flows.
– Note 5 – determination of the fair value of financial instruments with significant unobservable inputs.
– Note 16 – measurement and revenue recognition of concession arrangements.
– Note 17 – impairment testing for CGUs containing goodwill: key assumptions underlying recoverable amounts.
– Note 19 – recognition of deferred tax assets: availability of future taxable profit against which carry-forward tax losses can be used.
– Note 22 – recognition and measurement of provisions and contingencies: key assumptions about the likelihood and magnitude of an outflow of resources.
– Note 23 – measurement of defined benefit obligations: key actuarial assumptions.
NOTE 4 – RISK MANAGEMENT
Grupo Aval and its subsidiaries in the financial sector, Banco de Bogotá, Banco de Occidente, Banco AV Villas, Banco Popular, Corficolombiana, Porvenir, Aval Fiduciaria and Aval Casa de Bolsa manage risk pursuant to the applicable regulations in each country where they operate and according to Grupo Aval’s policies.
The risk framework requires that strong risk management practices are integrated in the key processes across Grupo Aval with a goal of ensuring risks are appropriately considered, evaluated and responded to in a timely manner. Grupo Aval employs a risk management process that aims to identify, measure, monitor and control, as part of the daily activities, all the risks that Grupo Aval is exposed to.
Three lines model: in addition to the roles of Executive Officers in managing risk, management has ownership and accountability across the three lines of defense: (1) First Line: Business Units, (2) Second Line: mainly concentrated in the Independent Risk Management units and (3) Third line: Corporate Audit.
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The following sections outline the key financial risks that are inherent to the business activities of the subsidiaries:
Financial risks
Additionally, the risk areas are responsible for supporting capital management by determining risk levels of the calculation of capital adequacy requirements, impact assessment of the risk materialization on compliance with capital levels and determining the levels of risk appetite.
Objective and general guidelines of financial risk management
Grupo Aval’s and its subsidiaries of the financial sector objective is to maximize returns for its investors through strong risk management. The guiding principles of risk management at Grupo Aval are as follows:
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Main premises for risk management
Grupo Aval´s risk culture is based on the principles indicated in the section above, which are transmitted to all subsidiaries of the financial sector and business units. The strategy related to risk management is supported by the following guidelines:
Financial Risk Review
4.1 Credit Risk
4.1.1 Consolidated Credit Risk Exposure
Grupo Aval´s subsidiaries are exposed to credit risk, consisting of the risk of financial loss as a result of a failure of a debtor to meet their contractual obligations in financial transactions on a timely and complete manner. Exposure to credit risk for Grupo Aval and its subsidiaries is a result of credit activities and transactions with counterparties.
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The maximum exposure to credit risk of Grupo Aval, at a consolidated level is reflected in the carrying value of financial assets in the Consolidated Statement of Financial position of Grupo Aval as of December 31, 2025, and 2024 as follows:
December 31, 2025 (1)
Cash and cash equivalents (2)
15,685,267
13,256,505
Trading investments in debt securities
17,582,844
11,937,414
Investments in debt securities mandatorily at FVTPL
1,425
Investments in debt securities at FVOCI (3)
28,455,957
27,050,198
9,205,457
10,708,367
Derivatives instruments (4)
2,217,021
969,294
Hedging derivatives (4)
Other accounts receivable FVTPL(5)
2,635,437
4,181,835
Other accounts receivable at amortized cost
22,216,161
24,138,538
Total financial assets with credit risk
290,890,645
292,433,720
Financial instruments with credit risk outside of the statement of financial position at its nominal value
Financial guarantees and letters of credit
2,199,093
3,082,949
Credit commitments
29,419,499
25,593,472
Total exposure to credit risk outside of the statement of financial position (6)
31,618,592
28,676,421
Total maximum exposure to credit risk
322,509,237
321,110,141
(2) Not including funds in the entity’s custody (cash, tellers, vaults), because there is no credit risk regarding Grupo Aval entities. See Note 4.1.3 h.
(3) See details in note 4.1.3.
(4) See details in note 4.1.3 g.
(5) See Note 12.1 “Financial assets in concession arrangements”.
(6) See details in note 4.1.9.
With regard to guarantees and commitments to extend credit amounts, the maximum credit risk exposure is the amount of a commitment. Credit risk is mitigated by guarantees and collaterals as described in note 4.1.4 Mitigation of Credit Risk, Collateral and Other Credit Risk Enhancements.
Each of Grupo Aval´s financial subsidiaries assume the credit risk for both the credit activities, which includes commercial, consumer, mortgage and microcredit credit lending, and treasury activities including interbank loans, investment portfolio management, derivatives and foreign currency trading activities among others. Despite being independent businesses, the nature of insolvency risk of a borrower or counterparty is similar and therefore the criteria in which they are evaluated is similar.
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4.1.1.A. Loan portfolio disclosure
Loans are recorded at amortized cost in the Consolidated Statement of Financial Position, and are classified as commercial, consumer, residential mortgage, microcredit, interbank and overnight funds. The following table presents the portfolio balances, provision balances and net value portfolio by line of business:
Total loan
Portfolio segment
Loan Portfolio
Portfolio, net
4,261,931
104,047,053
1,777,368
4,262,079
105,824,421
3,664,776
56,791,437
502,155
21,609,555
960
Total portfolio (1)
8,429,970
5,362,893
110,051,750
795
704,260
5,363,688
110,756,010
4,166,018
57,810,307
473,315
21,562,412
3,618
757
Total portfolio
10,006,639
4.1.1.B Loan portfolio given as collateral
As of December 31, 2025 and 2024, there were no portfolio operations delivered as collateral in resource auction operations with Banco República.
4.1.2 Loan and Counterparty Approval Process for subsidiaries in the financial sector
The principles and rules for credit management and credit risk for each financial subsidiary are contained in the corresponding manuals, both for commercial banking activities and treasury activities. Evaluation criteria to measure credit risk follows the principal instructions set forth by the Treasury and Credit Risk Committees.
The maximum authority regarding lending is the Board of Directors for each bank, which approves the general policy and has the capacity to approve large size transactions. In the normal banking operation, authorizations for approval of loans and lines of credit depend on the amounts, credit quality, tenor and security collateral or guarantees offered by the client. The Board of Directors of each subsidiary has delegated part of its lending authorities to different committees and executives who process the credit requests and are responsible for the analysis and credit review.
Additionally, for the approval of credits, certain considerations are considered including but not limited to the probability of default, the recovery percentage of guarantees received, current customer exposure and tenor & concentration by economic sector.
Regarding treasury operations, the Boards of Directors approve lines of credit for counterparties. Risk control is essentially carried out through three mechanisms: periodic approval of lines of credit, evaluation of the conditions of the issuers at least annually and a report on concentrations for each client or economic group.
Although each financial subsidiary is responsible for its credit decisions and risk management, Grupo Aval as the holding entity, oversees the implementation of appropriate risk management controls at the financial subsidiaries through the Corporate Risk Unit.
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The holding’s risk management staff meets on a periodically basis to discuss Grupo Aval subsidiaries’ loan portfolio, developments in industry, risks and opportunities. Additionally, Grupo Aval through the Credit Projects Unit reviews credit exposures approved by the Group's financial entities, in accordance with guidelines established based on financial indicators, group exposure limits, economic sectors and other relevant criteria. This process was designed to effectively leverage the combined equity of its Banks and support the proper identification and management of potential risk issues.
Each subsidiary of the financial sector has a Credit Risk Management System, which is managed by the risk vice-presidency or its equivalent, and includes, among others, the design, implementation and evaluation of policies and risk mechanisms defined by the Risk Committee and the Board of Directors of each entity. The operation of the Credit Risk Management System has resulted in the integration of risk measurement tools into the credit approval process in each of the financial subsidiaries.
Each subsidiary of the financial sector in Colombia primarily uses two models for evaluating credit risk for the approval of commercial loans. The first is the financial ratings model, which consists of statistical models based on the client´s financial information, which are used in the approval process and for portfolio management and monitoring. The second model is based on the client´s financial ratings and their historical payment behavior with the bank, used in the customer credit risk grade.
For retail loans (including mortgage loans and auto loans) models are based on product line characteristic, sociodemographic variables and the historical payment behavior of the clients with the bank and the financial sector, among others.
As a result of the changes caused by the national and international economic and political situation, periodically review and analyze whether it is necessary to adjust origination strategies, along with approved debt limits in accordance with individual risk analysis, especially for customers identified in high-risk sectors, segments, credit lines and among others.
4.1.3 Credit quality analysis
The Credit-risk Monitoring Process and Credit rating of the loan portfolio
The monitoring process and credit risk review of each financial subsidiary is carried out in several steps including portfolio analysis by vintages, risk level rating, permanent high-risk clients’ review, restructuring processes of operations and the receipt of foreclosed assets as payment.
Periodically the financial subsidiaries classify each client in one of these risk categories: Category Normal, Acceptable, Appreciable, Significant and Non - recoverability, based on the statistical models that each subsidiary has.
In addition, each bank evaluates the commercial portfolio by economic sectors, where macro-sectors are evaluated with the purpose of monitoring the concentration per economic sector and the risk level of each one.
At least once a year, each financial subsidiary carries out an individual analysis of credit risk based on updated financial information of the client, payment record, collateral security/guarantees received, credit bureau reports and other qualitative information available; based on the information, clients are classified by risk level as mentioned above.
Each risk category is explained as follows:
PD*
Risk
0%- 7.5%
Normal
Appropriately serviced. The debtor’s financial statements or their projected cash flows, as well as all other credit information available to us, reflect adequate paying capacity
7.5% - 15%
Acceptable above normal
Adequately serviced and protected, but there are weaknesses which may potentially affect, on a temporary or permanent basis, the debtor’s paying capacity or their projected cash flows to the extent that, if not timely corrected, would affect the collection of the credits as contracted
15% - 22.5%
22.5% - 30%
Appreciable
Have debtors with insufficient paying capacity or relate to projects with insufficient cash flow, which may compromise the normal collection of the obligations
30% - 45%
45% - 60%
Significant
Have the same deficiencies as loans in category 4-5, but to a larger extent; consequently, the probability of collection is highly doubtful
60% - 90%
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> 90%
Non-recoverability
Deemed uncollectible.
(*) Probability of default – “PD” is the probability that the counterpart defaults in their payment obligations of capital and/or interest.
For mortgage loans and microcredits, the previous classification by risk levels is carried out monthly considering the number of days past due.
In addition, the credit risk exposure is managed through a periodic analysis of the borrowers (or potential borrowers) to determine the repayment capacity of capital and interest. The credit risk exposure is also mitigated partly by obtaining collateral security, corporate and personal guarantees.
The following table sets out information about the credit quality of financial assets measured at amortized cost. Unless specifically indicated, for financial assets, the amounts in the table represent gross carrying amounts. For loan commitments and financial guarantee contracts, the amounts in the table represent the amounts committed or guaranteed, respectively. Based on the foregoing classifications, each financial subsidiary establishes and executes collection strategies directed at maximizing the collection of the loan portfolio.
As of December 31, 2025, and 2024, the following is a summary of the most representative credit portfolio by probability of default. Explanation of the terms: Stage 1, Stage 2 and Stage 3 are included in Note 2 (2.5) (ix) and explained in detail in Note 4.1.5 (Measurement of Expected Credit Loss).
Total Portfolio
Total Exposure
PD Range
165,440,008
3,450,456
45,850
168,936,314
6,670,078
828,542
4,860
7,503,480
640,933
580,074
12,169
1,233,176
122,067
258,569
432
381,068
184,363
1,746,377
71,536
2,002,276
55,985
611,877
667,917
5,616
1,127,578
13,724
1,146,918
545
57,902
10,726,347
10,784,794
TOTAL
173,119,595
8,661,375
10,874,973
165,325,376
2,733,552
74,867
168,133,795
10,731,075
1,379,780
614
12,111,469
535,897
447,250
983,244
344,972
556,641
901,859
185,460
1,570,202
1,795
1,757,457
62,448
948,971
1,011,567
9,205
1,818,316
105,882
1,933,403
2,098
63,862
13,237,371
13,303,331
177,196,531
9,518,574
13,421,020
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94,590,767
2,072,599
45,625
96,708,991
1,820,441
381,875
4,790
2,207,106
94,162
38,927
12,158
145,247
33,513
77,083
315
110,911
44,839
1,111,043
71,456
1,227,338
26,155
163,632
189,787
2,380
70,348
7,486
80,214
1,751
7,637,635
7,639,390
96,612,261
3,917,258
7,779,465
95,690,974
1,061,196
74,525
96,826,695
5,926,757
789,697
603
6,717,057
91,248
147,840
239,096
113,165
213,759
225
327,149
69,485
950,652
1,711
1,021,848
33,092
223,917
257,047
2,895
76,708
97,492
177,095
289
481
9,847,886
9,848,656
101,927,905
3,464,250
10,022,488
48,569,942
1,240,167
49,810,334
4,848,792
343,976
5,192,831
546,704
455,732
1,002,444
88,554
166,718
255,387
139,524
271,471
411,070
29,830
377,910
407,793
3,236
961,948
6,228
971,412
541
55,852
2,348,549
2,404,942
54,227,123
3,873,774
2,355,316
49,327,615
1,473,359
50,801,313
4,600,920
439,437
5,040,368
377,855
148,417
526,361
230,075
231,107
461,203
115,355
342,328
457,767
29,356
511,606
541,072
6,280
1,478,181
8,389
1,492,850
1,809
62,817
2,590,765
2,655,391
54,689,265
4,687,252
2,599,808
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20,501,276
137,690
20,638,966
809
102,691
103,507
85,415
85,485
14,768
14,770
363,857
363,862
70,335
70,337
95,282
95,292
299
739,192
739,491
20,502,152
870,337
739,221
19,602,506
198,997
19,801,506
201,894
150,646
352,540
66,794
150,993
217,787
1,718
111,771
113,489
617
277,207
277,824
213,437
263,418
263,419
564
795,161
795,725
19,873,529
1,367,033
795,165
703,863
1,192
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Loan commitments and financial guarantee contracts
29,737,149
79,137
29,817,306
626,507
564,672
1,191,378
49,011
135,096
184,228
17,503
13,908
31,476
5,137
136,229
141,526
1,066
56,557
57,818
235
1,943
675
431
191,562
192,007
30,436,622
987,973
193,997
25,001,252
65,537
666
25,067,455
460,057
437,341
897,444
79,091
2,207,502
2,286,632
22,053
6,514
28,596
12,330
133,364
145,873
539
74,023
74,614
2,867
334
3,445
2,370
169,987
172,362
25,575,571
2,929,518
171,332
Credit quality of financial assets (excluding loan portfolio)
The following is the breakdown of the different financial assets excluding loan portfolio, by credit risk level and type of issuer based on the rating issued by the independent credit ratings agency. A financial asset is considered investment grade if its credit rating is BBB- or higher by Standard & Poor's or Fitch Ratings scale, Baa3 or higher by Moody's scale, F3 or higher by Fitch Ratings Colombia S.A or BRC3 or higher by BRC of Colombia. Otherwise, the financial asset is considered speculative.
Investment grade
Sovereign (2)(4)
492,675
10,699,113
Other public entities (3)
107,722
12,450
3,781
3,996
Financial entities
126,993
161,465
Total investment grade
731,171
10,877,024
Speculative grade
15,817,843
17,824
105,357
171,310
22,896
30,527
905,577
840,729
Total Speculative grade
16,851,673
1,060,390
F-50
(2) A sovereign credit rating considers the risk of Treasury issuer or similar agency (government debt portfolio).
(3) Corresponds to operations with government entities, including public administration in general (including regional and local governments).
(4) During 2025, S&P Global Ratings downgraded the Government of Colombia’s rating from BBB- to BB+, which meant that the risk level shifted from investment grade to speculative.
Corporate(1)
(1) Corresponds to the BOCEA issued by Titularizadora Colombiana, in which Banco AV Villas held a position. At maturity, on December 16, 2025, the entity exercised its right to convert the instrument into shares
December 31, 2025(1)
1,306,564
91,016
38,230
915,762
Multilateral
51,853
2,403,425
24,622,925
415,235
159,981
774,550
Multilaterals
8,712
Total speculative grade
25,981,403
Without Grade or Not available
Financial Entities
63,234
Sovereign(2)
7,895
Total Without Grade or Not available
71,129
(2) Sovereign credit rating is considered as the risk of the Treasury issuer or a similar agency (government debt portfolio).
(3) Corresponds to operations with government entities; including public administrations in general (includes regional and local governments).
Sovereign (1)
19,577,886
Other public entities (2)
33,584
Central banks
204,855
66,347
1,447,702
333,279
21,663,653
3,192,832
429,161
367,087
F-51
1,134,852
4,274
5,128,206
214,110
44,229
258,339
(1) Sovereign credit rating is considered as the risk of the Treasury issuer or a similar agency (government debt portfolio).
(2) Corresponds to operations with government entities; including public administrations in general (includes regional and local governments).
30,540
1,963,450
1,993,990
5,351,209
1,860,258
7,211,467
2,584,348
2,321,902
4,906,250
5,563,208
64,709
6,647
5,634,564
76,915
68,638
145,553
22,000
98,915
167,553
10,639,729
Sovereign (1)(2)(4)
Sovereign (1)(2)(3)(4)
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(2) Sovereign corresponds to the financial assets in concession arrangements rights at fair value.
(3) During 2025, S&P Global Ratings downgraded the Government of Colombia’s rating from BBB- to BB+, which meant that the risk level shifted from investment grade to speculative.
(4) See Note 12.1 “Financial assets in concession arrangements”.
Simplified Approach
Other receivables using general approach
Other accounts receivable and contract assets for government and corporate customers
15,180,937
Other accounts receivable related to gas, energy services, contributions and others
1,343,088
144,086
173,848
1,661,022
Other receivables using simplified approach
Other accounts receivable from individual customers
5,374,202
Total other receivables
16,524,025
(1) As of December 2025, the assets related to Multi Financial Group (MFG) were no longer presented line by line on the Consolidated Statements of Financial Position and were instead reported in a single line item within “Non current assets held for sale”, see note 13.A.
15,962,982
1,298
15,964,280
1,497,946
130,745
144,634
1,773,325
6,400,933
17,460,928
145,932
Evaluated using general approach
The following table provides information about the exposure to credit risk for other accounts receivable and contract assets for corporate customers as of December 31, 2025 and 2024. The credit quality of these financial assets follows the methodology of the probability of default of debt securities and other liquid financial assets (See note 4.1.5).
Sovereign (1)(2)
(2) During 2025, S&P Global Ratings downgraded the Government of Colombia’s rating from BBB- to BB+, which meant that the risk level shifted from investment grade to speculative.
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The following table provides information about the exposure to credit risk by segment for accounts receivable related to gas and energy services, the methodology used to estimate the ECLs is the same used for Loan and Receivable (See note 4.1.5).
Segmentation
Contributions
322,655
796,782
129,623
111,538
1,037,943
Energy
118,477
14,463
62,310
195,250
105,174
Total segmentation
308,014
843,852
119,622
90,587
1,054,061
110,794
11,123
54,047
175,964
235,286
Evaluated using simplified approach
Grupo Aval uses a probability matrix to measure the ECL for other receivables from individual customers, which have small balances.
The weighted-average loss rate is calculated using a “rolling rate” method based on the probability that a receivable will progress through successive stages of default until write off. The rolling rate is calculated for exposures in different segments and separately in accordance with the following common features of credit risk.
The following table provides information about the exposure to credit risk and ECLs for trade receivables and contract assets from individual customers as of December 31, 2025 and 2024.
Weighted-
(average loss
carrying
Loss
Credit-
rate )
amount
allowance
impaired
0–30 days past due
0.88
3,808,294
33,380
31–60 days past due
0.82
113,701
927
61–90 days past due
0.22
456,361
1,022
More than 90 days past due
18.67
995,846
185,930
221,259
0.54
5,021,674
26,971
1.11
128,404
1,428
0.94
179,719
1,682
13.88
1,071,136
148,658
178,739
The loss rates are based on the experience of real credit loss during a year and the balance of accounts receivable at the cut-off date for previously defined homogeneous segments. It takes into consideration elements such as: segmentation by type of receivable account, date of analysis, definition of loss, among others. Based on the characteristics of the short-term receivable accounts, these portfolios result from operations where there are no non-linear impacts, therefore, the application of macroeconomic scenarios is not considered.
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The details of credit rating determined by independent credit rating agents of counterparties in trading derivatives and hedge derivatives in active position are as follows:
Credit worthiness
1,550,274
622,273
Speculative
265
774
Without grade or not available
903,040
400,266
2,453,579
1,023,313
The following table shows an analysis of counterparty credit exposures that arise from derivative transactions. Transactions derived from Grupo Aval are generally fully guaranteed with cash:
Trading derivatives
Central counterparties
Notional
Fair
value
Derivative assets
91,807,958
2,770,287
25,614
Derivative liabilities
73,825,664
3,682,966
36,037
104,988,291
14,317,598
10,246
64,053,439
10,715,432
6,646
Hedging derivatives
6,262,723
6,581,577
7,330,349
2,355,232
Derivative transactions of Grupo Aval are collateralized by cash of Ps. (378,080) as of December 31, 2025, and of Ps. (246,003) as of December 31, 2024, see note 4.1.10 “Offset of financial assets and liabilities”.
Grupo Aval held cash and cash equivalents of Ps. 19,354,710 as of December 31, 2025 (2024: Ps. 16,998,859). The cash and cash equivalents are held in central banks and financial institution counterparties. The following table shows an analysis of counterparty credit exposures:
10,978,851
13,256,226
Central bank
4,166,796
Financial entities (3)
9,089,430
4,705,916
Central bank (2)
500
279
Checks in Clearing
Cash and cash equivalent with third parties
Cash held by entity (1)
3,669,443
3,742,354
(1) Cash held by each Grupo Aval’s bank in custody in vaults, ATMs and cash.
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(3) As of December 2025, the assets related to Multi Financial Group (MFG) were no longer presented line-by-line on the Consolidated Statements of Financial Position and were instead reported in a single line item within “Non-current assets held for sale”, see note 13.A.
4.1.4 Mitigation of Credit Risk and Collateral
The exposure to credit risk for each of Grupo Aval´s financial subsidiaries is reduced by collateral and other credit enhancements. The existence of collateral security or guarantees can be a requirement but not a determining factor in approval of a credit. Credit risk policies of Grupo Aval require an evaluation of the debtor’s payment capacity based on the debtor´s ability to generate the resources needed for the timely and complete payment of their obligations.
Credit risk management includes the following activities:
The methods used for the evaluation of collateral security / guarantees are aligned with the market practices and include the use of independent real estate appraisers or the market value of securities. All collateral security / guarantees must be legally evaluated and drafted following the parameters of applicable legal regulations.
Mortgage lending
The following tables classify credit exposures for mortgage loans and advances to retail customers by ranges of loan-to-value (LTV) ratio. LTV is calculated as the ratio of the gross amount of the loan – or the amount of the loan commitments – to the value of the collateral. The value of the collateral for mortgage loans is based on the collateral value at origination updated based on changes in housing price indices.
LTV ratio
Less than 50%
10,559,114
9,427,666
51 – 70%
8,779,050
7,820,690
71 – 90%
2,382,447
3,964,073
91 – 100%
206,889
556,783
More than 100%
184,210
266,515
Credit-impaired mortgage loans
For credit-impaired loans the value of collateral is based on the most recent appraisals.
240,489
205,345
360,955
320,667
More than 70%
137,777
269,153
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As of December 31, 2025, and 2024, the following chart shows the detail of the credit portfolio per type of guarantees received:
Interbank and
overnight funds
Unsecured credits
61,243,730
55,974,691
1,786
1,114
1,757,987
118,979,308
Loans secured by other banks
87,323
87,374
Collateralized credits:
1,946,394
156,255
19,587,117
21,689,798
Other real estate
8,088,980
81,630
374
8,171,094
Investments in equity instruments
554,447
Deposits in cash or cash equivalents
203,654
590
204,244
Leased machineries and vehicles
9,906,607
12,663
2,516,519
12,435,789
Fiduciary agreements, standby letters and guarantee funds
10,773,682
20,279
6,178
10,800,139
Pledged income
4,178,321
Pledges
3,414,726
4,181,387
7,596,113
7,911,120
28,667
19,529
7,959,316
Total gross loan portfolio
66,304,089
55,712,783
804
3,601
477,144
122,498,421
95,043
247
95,290
1,558,240
136,137
19,694,826
21,389,245
13,157,554
255,098
862
13,413,995
358,719
1,117,748
202,268
1,320,016
F-57
8,923,078
18,212
2,320,866
11,262,156
10,201,495
20,411
245
10,240,517
3,681,176
3,345,798
5,554,335
8,900,136
6,671,703
76,834
227,911
6,976,454
As of December 31, 2025, and 2024, the following chart sets out the carrying amount and the value of identifiable collateral (mainly commercial property) for commercial loans held by Grupo Aval at a consolidated level:
Carrying Amount
Collateral
Stages 1 and 2
31,416,687
23,001,651
34,004,844
25,569,949
2,506,258
2,172,552
3,404,067
2,840,416
33,922,945
25,174,203
37,408,911
28,410,365
4.1.5 Amounts arising from Expected Credit Loss (ECL)
Definition of Default
Grupo Aval considers a financial asset to be in default when:
In assessing whether a borrower is in default, Grupo Aval considers indicators as follows:
Inputs used in the assessment of whether a financial instrument is in default may vary over time to reflect changes in circumstances.
Inputs, assumptions and techniques used to estimate expected credit loss allowance
Credit risk models measure the exposure for individual counterparties, based on the following parameters: probability of default (PD), loss given default (LGD) and exposure at default (EAD). For a specific credit facility (loans, debt securities, other liquid financial
F-58
assets, other accounts receivable, loan commitments and financial guarantee contracts) the product of these three parameters results in the expected credit loss. See accounting policy in Note 2 (2.5 ix).
The measurement of expected credit losses is a calculation that involves an important number of interrelated inputs and assumptions, such as the financial asset’s probability of default, loss given default and exposure at default, which are modelled based on macroeconomic variables. Furthermore, the determination of the ECL requires the application of expert credit judgment to assess the current situation.
As mentioned above, the key inputs for the measurement of ECLs are usually the following variables:
The estimation of these parameters depends on the credit facility. Loans and receivables methodology uses information derived from internally developed statistical models, comprising both quantitative and qualitative factors, and other historical data. On the other hand, debt securities methodology incorporates relevant external market information or international credit ratings.
PD is the probability that a counterparty defaults in its payment obligations of capital and/or interest. Credit risk grades are the primary input in the determination of the term structure of PD for exposures. Grupo Aval collects performance and default information about its credit risk exposures analyzed by jurisdiction or region, by type of product and borrower, and by credit risk grade. For some portfolios, information purchased from external credit bureaus may also be used.
Grupo Aval employs statistical models to analyze the data collected and generates estimates of the remaining lifetime PD of exposures and how these are expected to change as a result of the passage of time.
LGD is an estimate of the loss arising at default, which is computed as a percentage of exposure that the entity ultimately expects to lose in the event of a default in a financial instrument.
Grupo Aval estimates LGD parameters based on the history of recovery rates of claims against defaulted counterparties. The LGD models considers the collateral structure, seniority of the claim, counterparty industry and recovery costs of any collateral that is integral to the financial asset. For loans secured/ guaranteed by real estate, loan-to-value (LTV) ratios will be a key parameter in determining LGD. Estimates are calibrated for different economic scenarios and, for real estate lending, to reflect possible changes in property prices.
The EAD represents the expected exposure in the event of default. Grupo Aval derives the EAD from the current exposure to the counterparty and potential changes to the current amount allowed under the contract, including amortization and prepayments. The EAD of a financial asset is the gross carrying amount at default. For lending commitments and financial guarantees, the EAD considers the amount drawn, as well as potential future amounts that may be drawn or repaid under the contract, which are estimated based on historical observations and forward-looking forecasts.
Subject to using the Lifetime PD for financial assets for which credit risk has significantly increased, Grupo Aval measures ECLs considering the risk of default over the maximum contractual period (including any borrower’s extension options) over which there is exposure to credit risk, even if for risk management purposes, Grupo Aval considers a longer period. The maximum contractual period extends to the date at which Grupo Aval has the right to require repayment of an advance or terminate a loan commitment or guarantee.
For retail overdrafts, credit cards, and certain corporate revolving facilities that include both a loan and an undrawn commitment component, Grupo Aval measures ECLs over a period longer than the maximum contractual period if Grupo Aval’s contractual ability to demand repayment and cancel the undrawn commitment does not limit Grupo Aval’s exposure to credit losses to the contractual notice period. These facilities do not have a fixed term or repayment structure and are managed on a collective basis. Grupo Aval can cancel them with immediate effect, but the contractual right is not enforced in the normal day-to-day management, but rather when Grupo Aval becomes aware of an increase in credit risk of a particular facility. This period is estimated considering the credit risk management actions that Grupo Aval expects to mitigate ECLs. These include a reduction in the limits and the cancellation of the credit.
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Where modelling of a parameter is carried out on a collective basis, the financial instruments are grouped based on shared risk characteristics that include:
The groups are subject to regular review to ensure that exposures within a particular group remain appropriately homogeneous.
In addition, for significant impaired loans, allowance estimates are made through individual evaluation based on quantitative criteria, such as the methods contemplated in IFRS 9 of discounted cash flow and fair value of the guarantee, and qualitative criteria that involve knowledge of the customer's current situation, the environment in which it carries out its activities, legal or bankruptcy proceedings and expert judgment, among other aspects.
Credit Risk Model: Loans and receivables
I. Transitions between stages
Significant Increase in Credit Risk
When determining whether the credit risk (i.e. risk of default) of a financial instrument has increased significantly since initial recognition, Grupo Aval considers reasonable and supportable information that is relevant and available without undue cost or effort, including both quantitative and qualitative information and analysis based on Grupo Aval’s historical experience, expert credit assessment and forward-looking information.
The following criteria are used to determine if a significant increase in credit risk has occurred:
The criteria for determining whether credit risk has increased significantly will vary by portfolio and will include a backstop based on delinquency.
Grupo Aval will monitor the effectiveness of the criteria used in identifying significant increases in credit risk through regular reviews to confirm that:
II. PD – Probability of Default
Term structure of PD
Credit risk grades are the primary input in the determination of the term structure of PD for exposures. Grupo Aval collects performance and default information about its credit risk exposures by type of product and borrower, and by credit risk grade. For some portfolios, information purchased from external credit bureaus may also be used.
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This analysis includes the identification and calibration of the relation between changes in default rates and changes in key macro-economic factors, as well as an in-depth analysis of the impact of certain other factors (e.g. cancellations) on the risk of default. For exposures to specific industries and/or regions, the analysis may extend to relevant commodity and/ or real estate prices.
For stage 1 the PD estimates the probability that the credit will default in the next 12 months, while the PD in stage 2 is the result of the probabilities for the remaining life of the credit. The probability in Stage 3 is defined as 100%.
Grupo Aval’s approach to incorporating forward-looking information into this assessment is discussed below.
Forward-Looking Information
Grupo Aval incorporates forward-looking information into both its assessment of whether the credit risk of an instrument has increased significantly since initial recognition and its measurement of ECLs. Grupo Aval formulates a ‘base case’ view of the future direction of relevant economic variables and a representative range of other possible forecast scenarios based on forecasts provided by economic experts and considering a forecast of multiple variables. This process involves developing two or more additional economic scenarios and considering the relative probabilities of each outcome.
The B scenario (base case) represents a most-likely outcome. It is aligned with information used by Grupo Aval for other purposes, such as budgeting. The other scenarios represent more optimistic (C) and more pessimistic (A) outcomes with their respective probability of occurrence.
Grupo Aval has identified and documented key drivers of credit risk and credit losses for each portfolio of financial instruments and, using an analysis of historical data, has estimated relationships between macro-economic variables and risks and credit losses.
Changes in economic conditions will be monitored by Grupo Aval´s Entities and subsidiaries to be incorporated into the macroeconomic parameters used to prepare stress scenarios and financial projections. Forward looking information was adjusted, recognizing macroeconomic impacts based on the available information about past events, current conditions and forecasts of economic conditions.
The following table presents one-year projections for Colombia made in December 2024, compared to the official data for December 2025.
Expected for 2025 in 2024
Real Scenario
Scenario A
Scenario B
Scenario C
Inflation
5.10%
3.90%
3.67%
DTF Interest rate
8.95%
4.97%
6.03%
5.82%
GDP Growth
2.60%
0.55%
2.68%
3.75%
Unemployment rate
8.00%
11.46%
10.46%
9.99%
The economic scenarios used as of December 31, 2025, and 2024 (one-year projections) include the following expected scenarios of key indicators (among others) for Colombia.
One year projection in 2025
One year projection in 2024
4.43%
4.62%
4.63%
8.17%
9.26%
8.51%
1.46%
2.75%
3.23%
9.83%
8.72%
7.83%
The following additional variable was relevant to the models used by our banks in 2024.
8.50%
9.25%
5.25%
6.25%
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The following table presents one-year projections for Panama made in December 2024, compared to the official data for December 2025, for nominal interest rate variation with the data for November 2025:
(0.21%)
2.33%
2.15%
1.51%
Nominal interest rate variation
0.23%
0.14%
0.10%
(0.02%)
IMAE (1)
4.03%
2.79%
3.03%
3.42%
The economic scenarios used as of December 31, 2025, and 2024 (one-year projections) include the following expected scenarios of key indicators (among others) for Panama.
One year projection in 2025 (2)
2.51%
1.57%
1.21%
0.49%
(0.30%)
(0.42%)
3.69%
4.12%
4.46%
(1) Monthly Indicator of Economic Activity.
(2) The Panama key indicators refer to Multi Financial Group. See note 13.B., "Discontinued operation related to Multi Financial Group”.
The scenario probability weightings applied as of December 31, 2025, and 2024 in measuring ECL are as follows:
Scenario probabilityweighting
27%
56%
17%
Panama
Scenario probability weighting (1)
10%
60%
30%
15%
75%
(1) The Panama key indicators refer to Multi Financial Group. See note 13.B., "Discontinued operation related to Multi Financial Group”.
The table below shows the loss allowance on loans assuming each forward-looking scenario (e.g. scenario A, B and C) were weighted 100% instead of applying scenario probability weights across the three scenarios.
Gross Exposure
Total gross exposure
Loss Allowance for each scenario
4,218,378
4,241,331
4,286,802
5,309,528
5,336,949
5,430,691
3,619,488
3,651,503
3,720,068
4,118,656
4,168,736
4,239,720
499,989
500,866
506,196
468,275
471,634
480,073
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958
959
961
3,611
3,610
3,613
8,030
8,293
8,854
2,505
2,619
3,029
Total Loss Allowance
8,346,843
8,402,952
8,522,881
9,902,575
9,983,548
10,157,126
The table below shows the loan portfolio in Stage 2 for each scenario.
Proportion of Assets in Stage 2
Credit Risk Rating
Grupo Aval allocates each exposure to a credit risk grade based on a variety of data intended to be predictive of the probability of default and applying experienced credit judgment. Grupo Aval uses these grades with the purpose identifying significant increases in credit risk. Credit risk grades are defined using qualitative and quantitative factors that are indicative of the risk of default. These factors may vary depending on the nature of the exposure and the type of borrower.
Each exposure is allocated to a credit risk grade at initial recognition based on available information about the borrower. Exposures are subject to ongoing monitoring, which may result in an exposure being moved to a different credit risk grade. The monitoring typically involves using of the following data.
-Information from the audited financial statements obtained during periodic reviews.
-Information collected internally about the behavior of customers.
-Data from credit reference agencies.
- Data from credit reference agencies.
-Information of the different sectors.
-Information from the different economics sectors.
III. LGD – Loss Given Default
LGD is a measure of the likely loss in the event of a default. To estimate LGD, Grupo Aval uses information of the collateral security / guarantee which covers each individual credit, when available. In any case, Grupo Aval uses historical and forward-looking information (the same information described above in II. PD – Probability of Default - Forward-Looking Information) to estimate the expected potential recovery in case of a default. The LGD is estimated in groups by type of credit, collateral security / guarantee or maturity.
IV. EAD – Exposure at Default
EAD represents the expected exposure from a counterparty at the time of a possible default. For stage 2 Grupo Aval incorporates in the analysis of the exposure at default the probability of payments and increase in exposure during the lifetime of the credit.
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These probabilities are estimated using the historical information collected by the financial subsidiaries and are grouped by type of product. The probabilities are constantly reviewed in order to accurately estimate them and calibrate them.
Credit Risk Model: Debt securities and other liquid financial assets
This model estimates the impairment of credit risk in debt securities. In general, at the moment of inception, all financial assets originate ECLs for the next 12 months. If credit risk increases significantly and there is enough objective evidence of increase of probability of default, then the reserve is adjusted for the remaining life of the financial asset.
I. Transition between stages
A financial asset is classified as a low credit risk asset if the issuer is related to an investment grade credit rating.
Financial assets different than low credit risk must be evaluated individually. The first step in the methodology consist in evaluating a significant increase in credit risk by comparing the current status against the status at initial recognition of the security.
External elements related to a significant increase in credit risk are detailed below:
If the financial asset loses its low credit risk condition or if changes in external environment results in a review of the condition, then this probably shows a significant increase in credit risk. Consequently, the financial asset will be analyzed to determine if there is a significant increase of credit risk (stage 2) or if the asset should be classified as stage 3.
Objective evidence of impairment is the second step in making changes between stages. It is concluded that there is objective evidence of impairment if one the following situations is met:
II. PD – Probability of default
PD depends on the external credit rating of the issuance, issuer or counterparty. Credit rating information is published by international credit rating corporations, such as Standard & Poor’s, Moody’s and Fitch Ratings, or national credit rating corporations, such as Fitch Ratings Colombia S.A. or BRC. In any case, international ratings have priority over national ratings.
Credit ratings from S&P have priority over the other rating corporations. If the issuance, issuer or counterparty is not rated by S&P, credit ratings from Moody’s or Fitch Ratings can be used but they must be translated to the S&P rating scale. The order of priority in credit rating corporations is as follows: S&P in first place, Moody’s in second place and Fitch Ratings in the third one. The reason for choosing this hierarchy is to avoid discretion at the time of assigning a rating. National credit ratings can be used only if international credit ratings are not available, and the translation condition to the S&P rating scale must be followed as well.
For financial assets classified as stage 1, PD correspond to the probability of default for the next 12 months established in accordance to “Cumulative Default Rates by Rating Modifiers” for both sovereign and corporate issuers, expressed at an annual basis. If the remaining life of the assets is less than 12 months, the resulting PD will correspond to the weighted 12 months-PD with the remaining life of the financial asset.
For financial assets classified as stage 2, lifetime PD must be used and computed using the “Cumulative Default Rates by Rating Modifiers” for both sovereign and corporate issuers, expressed at an annual basis and according to the term of each flow.
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For financial assets classified as stage 3, lifetime PD will equal 100% for any issuance, issuer or counterparty.
The PD value tables are made available and published annually by S&P Global Ratings in the reports “2024 Annual Global Sovereign Default and Rating Transition Study” and “2024 Annual Global Corporate Default and Rating Transition Study”, as of December 31, 2025, as well as in the reports “2023 Annual Global Sovereign Default and Rating Transition Study” and “2023 Annual Global Corporate Default and Rating Transition Study” as of December 31,2024.
Grupo Aval incorporates forward-looking information into its assessment of whether the credit risk of an instrument has increased significantly since initial recognition and its measurement of ECL. This information will directly affect the PD and the stage classification.
When rating the sovereign and corporate issuers, credit ratings agencies incorporate prospective information, as well as forecasting of macroeconomic variables and the influence of these factors over the business conditions. Grupo Aval’s methodology includes external credit ratings which, under the previous argument, have already considered prospective information.
Furthermore, credit ratings are also subject to rating outlooks which can modify the current credit ratings. Details are provided below. Rating outlooks are published by credit rating corporations and reflect the perspective of the potential long-term credit rating over the next 6 to 24 months.
III. LGD – Loss given default
LGD is a measure of the potential loss if a default scenario occurs. To establish the LGD, Grupo Aval’s methodology uses information published by Moody’s credit rating corporation. LGD is based on relevant external default data, such as the historical recovery rates, which is defined as the complement of LGD calculation.
Moody’s computes Recovery Rates as the ratio between market prices after 30 days of the default or the debt swap price at the closing date, and the market price of the issuance at the beginning of the default. In the case of unavailable market prices, recovery rates will be the resulting ratio between present value of expected cash flows of the new instruments received with the debt swap and the present value of the initial instruments.
Grupo Aval´s methodology assigns weights for recovery rates for Sovereigns Debt and Corporates Debt. Sovereign Debt recovery rates remained at 53% in 2025, also Corporate Debt recovery rates increased moderately from 46.9% in 2024 to 47% in 2025.
Additional information is available and published annually by Moody’s in the reports “Sovereign Default and Recovery Rates, 1983–2024” and “Annual Default Study: Corporate Default Rate to Fall Below Its Long-Term Average in 2025” as of December 31, 2025, and in the reports “Annual Default Study: Corporate Default Rate to Moderate in 2024 but Remain Near Its Long-Term Average” and “Sovereign Default and Recovery Rates, 1983–2023” as of December 31, 2024.
IV. EAD – Exposure at default
EAD represents the amount owed from a counterparty at the time of a possible default and only for securities classified at amortized cost or FVOCI. See accounting policy in Note 2 (2.5 ix).
For stage 1 and stage 3 financial assets, EAD will correspond to the full valuation of the assets at amortized cost.
For stage 2 financial assets, EAD will consider the financial asset amortized scheme assuming no default in the previous years.
In the case that financial assets present a guarantees or security collateral, these could reduce total EAD. This is a typical case of collateralized interbank loans.
F-65
Credit Risk Model: Other accounts receivable
Grupo Aval uses two approaches to estimate ECL of financial assets classified as other accounts receivables.
The first one is the simplified approach where Grupo Aval uses an allowance matrix to measure the ECLs of trade receivables from individual customers, which comprise a very large number of small amounts.
Loss rates are calculated using a ‘roll rate’ method based on the probability of a receivable progressing through successive stages of delinquency to write-off. Roll rates are calculated separately for exposures in different segments based on the following common credit risk characteristics like type of product purchased.
Loss rates are based on the experience of real credit loss during a year and the balance of accounts receivable at the cut-off date for previously defined homogeneous segments. It takes into consideration elements such as: segmentation by type of receivable account, date of analysis, definition of loss, among others. Based on the characteristics of the short-term receivable accounts, these portfolios result from operations where there are no non-linear impacts, therefore, the application of macroeconomic scenarios is not considered.
The second one is the general approach, it considers the methodologies explained above for loans and debt securities. For non-financial companies in the oil and gas sector, the loans methodology is considered, while the debt securities methodology is considered for government and other government related entities.
The table below shows the loss allowance balances as of December 31, 2025, and 2024:
Lifetime
ECL not
ECL
12-month
credit-
Simplified
approach
Loan commercial portfolio
683,890
220,828
3,357,213
Loan consumer portfolio
1,104,503
703,634
1,856,639
Loan mortgage portfolio
78,738
64,868
358,549
Loan microcredit portfolio
945
Loan interbank and overnight funds portfolio
1,867,294
989,330
5,573,346
8,278
31,161
25,223
102,494
233,814
392,692
Total loss allowance financial assets at amortized cost
1,906,733
1,014,553
5,675,840
8,830,940
Investments in debt securities at FVOCI
26,558
26,602
69,308
6,906
1,611
77,825
Total loss allowance
2,002,599
1,021,503
5,677,451
8,935,367
(1) As of December 2025, the assets related to Multi Financial Group (MFG) were no longer presented line-by-line on the Consolidated Statements of Financial Position and were instead reported in a single line item within “Non-current assets held for sale”,, see note 13.A
724,075
217,588
4,421,230
1,105,918
927,310
2,132,790
60,088
71,839
341,388
3,545
F-66
794
1,890,934
1,216,752
6,898,953
14,329
4,346
18,675
31,226
22,196
117,508
191,041
361,971
1,936,489
1,243,294
7,016,461
10,387,285
18,310
62,509
7,671
2,234
72,414
2,017,308
1,250,965
7,018,695
10,478,009
The following table presents the impairment losses/recoveries per portfolio for the years ended December 31, 2025, 2024 and 2023:
As of December 31, 2025
As of December 31, 2024 (1)
As of December 31, 2023 (1)
953,167
690,828
137,906
3,034,991
3,780,124
4,342,925
175,898
133,885
59,250
(89)
(10,902)
31,901
(647)
773
(1,422)
4,163,320
4,594,708
4,570,560
Other receivables(2)
161,404
92,044
76,487
Net portfolio provision impact on income statement
(1) The information was modified based on MFG's discontinued operation; see note 13.B.
(2) Includes net of loss allowance presented as part of “Costs and expenses of sales goods and services” as of December 2025 Ps. (56,497) as of December 2024 Ps. (71,157) and as of December 2023 Ps. (51,035).
The table below shows for loans stage 3 individually assessed for ECL the gross amount and loss allowance balances as of December 31, 2025, and 2024.
Gross Amount Registered
Collateral Guarantees
Allowance Recognized
Without recognized provision
Subtotal
With recognized provision
6,090,515
300,598
2,100,718
13,117
1,841
4,755
11,435
2,889
6,115,067
302,439
2,108,362
Totals
6,090,583
6,115,135
F-67
262,667
262,373
7,775,982
1,348,148
2,950,023
6,512
4,332
3,868
19,828
1,970
11,541
7,802,322
1,354,450
2,965,432
8,038,649
1,610,521
8,064,989
1,616,823
The difference between the value of the loan and the guarantees disclosed in the table above corresponds to unsecured loans valued under the discounted cash flow method. When using this method, it is implied that it is possible for the customer to make future payments.
The loss allowance recognized in the period is impacted by a variety of factors, as described below:
The following tables show the reconciliations from the opening to the closing balance of the loss allowance by class of financial instrument.
Total Loan portfolio
ECL credit-
Loss allowance as of January 1, 2023
1,494,887
1,425,922
6,276,705
9,197,514
Transfers:
Transfer from stage 1 to stage 2
(332,307)
332,307
Transfer from stage 1 to stage 3
(450,063)
450,063
Transfer from stage 2 to stage 3
(1,180,705)
1,180,705
Transfer from stage 3 to stage 2
309,622
(309,622)
Transfer from stage 2 to stage 1
479,360
(479,360)
Transfer from stage 3 to stage 1
113,974
(113,974)
Net remeasurement of loss allowance (6)
328,184
1,261,116
2,678,727
4,268,027
New financial assets originated or purchased
746,460
285,746
617,291
1,649,497
Financial assets that have been derecognized
(407,483)
(129,426)
(810,055)
(1,346,964)
Sales of portfolio (7)
(2,369)
(1,809)
(357,202)
(361,380)
Unwind of discount (3)
724,674
724,748
FX and other movements
(13,879)
(16,567)
(43,683)
(74,129)
Discontinued operations (1)
(31,149)
18,163
167,887
154,901
Write-offs
(114,019)
(540,280)
(3,522,200)
(4,176,499)
F-68
Loss allowance as of December 31, 2023
1,811,608
1,284,791
6,939,316
10,035,715
(332,518)
332,518
(422,672)
422,672
(1,229,034)
1,229,034
174,006
(174,006)
339,075
(339,075)
112,495
(112,495)
Net remeasurement of loss allowance (5)
408,965
1,324,473
2,884,586
4,618,024
553,975
171,018
560,083
1,285,076
(494,729)
(122,114)
(691,549)
(1,308,392)
(3,063)
(130,799)
(134,655)
816,010
816,088
9,650
7,608
25,775
43,033
(23,538)
25,642
136,410
138,514
(68,315)
(412,365)
(5,006,084)
(5,486,764)
Loss allowance as of December 31, 2024
(275,855)
275,855
(316,862)
316,862
(1,026,370)
1,026,370
130,594
(130,594)
282,164
(282,164)
126,870
(126,870)
Net remeasurement of loss allowance (4)
13,558
992,532
2,655,809
3,661,899
886,998
184,597
561,200
1,632,795
(547,374)
(121,062)
(462,938)
(1,131,374)
(357)
(301,939)
(302,306)
388,182
(11,629)
(11,924)
(26,521)
(50,074)
(23,788)
60,721
122,298
159,231
Reclassification MFG operation (2)
(70,728)
(64,506)
(126,777)
(262,011)
(86,984)
(365,338)
(5,220,689)
(5,673,011)
Loss allowance as of December 31, 2025
(1) See note 13.B., “Discontinued operation related to Multi Financial Group”.
(2) Corresponds to the reclassification to Non-Current Assets Held for Sale of Multi Financial Group operation as of December 31, 2025, see note 13.A.
The unwind of discount on Stage 3 financial assets is reported within "interest income" so that interest income is recognized on the amortized cost (after deducting the ECL allowance)
This amount includes impact of the measurement of ECL due to changes made in PDs/LGDs/EADs and changes made to model assumptions and methodologies from the opening to the closing balance. The following table shows the impact by stage estimated using all parameters as of December 31, 2025 versus parameters as of 2024 and the loan portfolio as of 2025.
Lifetime ECL not
Lifetime ECL
12-month ECL
credit-impaired
171,714
110,005
8,053
289,772
(5) This amount includes impact of the measurement of ECL due to changes made in PDs/LGDs/EADs and changes made to model assumptions and methodologies from the opening to the closing balance. The following table shows the impact by stage estimated using all parameters as of December 31, 2024 versus parameters as of December 31,2023 and the loan portfolio as of December 31, 2024.
(221,533)
(1,913)
42,208
(181,238)
F-69
(6) This amount includes impact of the measurement of ECL due to changes made in PDs/LGDs/EADs and changes made to model assumptions and methodologies from the opening to the closing balance. The following table shows the impact by stage estimated using all parameters as of December 31, 2023 versus parameters as of December 31,2022 and the loan portfolio as of December 31, 2023.
December 31, 2023
66,298
35,139
(6,894)
94,543
(7) Sale of loan portfolio corresponds mainly to sale of microcredit portfolio, and impaired portfolio and/ or with an increase in credit risk.
The following table further explains changes in the gross carrying amount of the loan portfolio to help explain their significance to the changes in the allowance for the same portfolio as discussed above.
Total portfolio as of January 1, 2023
164,906,023
11,774,908
11,632,430
188,313,361
(10,951,993)
10,951,993
(2,059,976)
2,059,976
(3,372,104)
3,372,104
9,137,025
(9,137,025)
876,973
(876,973)
509,414
(509,414)
111,919,244
2,583,927
8,250,075
122,753,246
Financial assets that have been paid
(103,065,373)
(3,798,676)
(7,734,476)
(114,598,525)
Net remeasurement of amortized cost and other receivables
1,032,328
(507,018)
97,065
622,375
Sale of loan portfolio-loss allowance (4)
Sale of loan portfolio-cash (4)
(112,766)
(113,460)
Gain or loss on sale portfolio (4)
(59)
3,390
3,331
FX and other movements (3)
(6,594,417)
(388,080)
(424,255)
(7,406,752)
(191,326)
671,991
687,408
1,168,073
Total portfolio as of December 31, 2023
164,524,561
9,114,047
12,565,162
186,203,770
(9,506,321)
9,506,321
(2,324,339)
2,324,339
(3,841,435)
3,841,435
4,633,197
(4,633,197)
717,343
(717,343)
488,967
(488,967)
114,075,744
2,713,752
6,287,303
123,076,799
(98,949,746)
(3,690,211)
(6,354,777)
(108,994,734)
476,767
(811,893)
229,242
(105,884)
(218,936)
(12,540)
(51,151)
(282,627)
(558)
4,287,130
210,057
248,171
4,745,358
(219,095)
660,046
673,825
1,114,776
Total portfolio as of December 31, 2024
(9,972,848)
9,972,848
(1,904,212)
1,904,212
(3,460,367)
3,460,367
4,099,867
(4,099,867)
598,857
(598,857)
F-70
472,961
(472,961)
133,064,325
11,519,514
5,209,376
149,793,215
(112,932,038)
(12,751,684)
(6,173,815)
(131,857,537)
(973,288)
(463,725)
992,302
(444,711)
(33)
(124,977)
(125,012)
(41)
12,181
12,139
(4,700,309)
(248,985)
(228,152)
(5,177,446)
922,799
112,276
75,139
1,110,214
(12,067,196)
(1,670,297)
(1,078,234)
(14,815,727)
Total portfolio as of December 31, 2025
(3) Corresponds to the variation in the TRM between January and December: Ps. (652.07) per U.S. dollar in 2025, Ps. 587.1 in 2024, and Ps. (988.15) in 2023.
(4) Sale of loan portfolio corresponds mainly to sale of microcredit portfolio, and impaired portfolio and/ or with an increase in credit risk.
The total loan portfolio is composed of commercial loans, consumer loans, mortgage loans, microcredit loans and interbank and overnight funds loan. The following tables show the movement in provisions and gross amounts of these portfolios separately:
598,538
515,202
4,379,006
5,492,746
(44,743)
44,743
(18,381)
18,381
(130,514)
130,514
40,868
(40,868)
150,216
(150,216)
31,836
(31,836)
(143,952)
(109,495)
602,866
349,419
285,466
57,006
125,454
467,926
(211,534)
(35,105)
(432,800)
(679,439)
Sales of portfolio
(194,305)
517,513
517,529
(11,012)
(9,657)
(35,821)
(56,490)
(20,690)
(1,893)
87,790
65,207
(3,303)
(2,131)
(662,559)
(667,993)
612,441
218,824
4,463,335
5,294,600
(55,649)
55,649
(18,703)
18,703
(141,584)
141,584
42,213
(42,213)
69,270
(69,270)
25,801
(25,801)
89,091
102,262
712,382
903,735
276,958
39,096
116,280
432,334
(266,644)
(37,026)
(341,571)
(645,241)
(94,960)
593,517
593,569
5,749
3,974
21,427
31,150
F-71
(9,701)
7,179
70,058
67,536
(4,539)
(3,780)
(1,211,511)
(1,219,830)
(55,003)
55,003
(15,271)
15,271
(143,316)
143,316
29,470
(29,470)
54,778
(54,778)
18,925
(18,925)
(89,531)
110,018
776,530
797,017
397,081
58,317
296,127
751,525
(293,004)
(41,751)
(260,620)
(595,375)
(186,840)
(186,846)
261,596
(6,900)
(5,869)
(22,105)
(34,874)
(7,562)
36,640
19,124
48,202
(34,399)
(35,413)
(90,776)
(160,588)
(9,296)
(5,078)
(1,967,245)
(1,981,619)
138,799
48,659
7,689
195,147
(72,973)
(25,391)
4,822
(93,542)
3,952
(20,629)
2,916
(13,761)
The following table further explains changes in the gross carrying amount of the commercial portfolio to help explain their significance to the changes in the allowance for the same portfolio as discussed above.
F-72
89,958,234
5,672,094
9,144,771
104,775,099
(3,831,869)
3,831,869
(979,725)
979,725
(986,422)
986,422
4,428,540
(4,428,540)
327,479
(327,479)
216,849
(216,849)
75,428,992
924,475
1,156,101
77,509,568
(66,409,339)
(1,587,486)
(3,472,586)
(71,469,411)
526,100
(679,777)
1,585,087
1,431,410
Sale of loan portfolio-loss allowance
Sale of loan portfolio-cash
(78,613)
Gain or loss on sale portfolio
(7,415)
(5,261,913)
(239,697)
(403,935)
(5,905,545)
255,734
698,670
700,618
1,655,022
94,328,300
3,530,534
9,188,983
107,047,817
(3,045,688)
3,045,688
(1,417,659)
1,417,659
(1,317,836)
1,317,836
1,717,607
(1,717,607)
327,186
(327,186)
193,628
(193,628)
78,072,651
1,151,665
2,338,796
81,563,112
(71,077,046)
(1,565,432)
(3,236,784)
(75,879,262)
(385,444)
(828,388)
(84,314)
(1,298,146)
(22,804)
5,633
3,309,663
136,089
237,033
3,682,785
236,432
706,131
687,735
1,630,298
(3,898,207)
3,898,207
(1,069,896)
1,069,896
(1,161,965)
1,161,965
1,220,996
(1,220,996)
278,400
(278,400)
184,074
(184,074)
85,047,055
10,307,334
2,317,075
97,671,464
(77,680,078)
(10,557,970)
(2,988,923)
(91,226,971)
(51,136)
(194,087)
(57,597)
(302,820)
(114,772)
(114,774)
24,901
(3,487,842)
(128,876)
(217,402)
(3,834,120)
468,912
49,220
57,533
575,665
(6,040,222)
(811,177)
(879,140)
(7,730,539)
F-73
839,904
853,159
1,618,849
3,311,912
(276,858)
276,858
(429,739)
429,739
(1,004,192)
1,004,192
257,854
(257,854)
300,775
(300,775)
71,599
(71,599)
477,231
1,301,174
2,091,820
3,870,225
445,354
226,345
445,140
1,116,839
(184,933)
(90,591)
(368,615)
(644,139)
(162,897)
(167,075)
183,157
183,203
(3,199)
(4,785)
(5,379)
(13,363)
6,177
13,305
63,606
83,088
(101,945)
(533,321)
(2,797,978)
(3,433,244)
1,141,997
993,268
2,172,181
4,307,446
(265,008)
265,008
(378,612)
378,612
(1,030,039)
1,030,039
117,468
(117,468)
238,008
(238,008)
77,112
(77,112)
293,405
1,147,503
2,113,393
3,554,301
264,533
130,124
439,828
834,485
(216,409)
(78,281)
(313,972)
(608,662)
(602)
(9,441)
(10,064)
199,790
199,816
3,660
2,364
3,018
9,042
(10,791)
14,058
56,074
59,341
(41,956)
(395,579)
(3,742,152)
(4,179,687)
(209,643)
209,643
(300,847)
300,847
(843,865)
843,865
86,684
(86,684)
193,461
(193,461)
97,074
(97,074)
88,526
816,337
1,785,608
2,690,471
465,115
123,255
260,679
849,049
(244,305)
(76,434)
(183,790)
(504,529)
(354)
(115,099)
(115,460)
107,651
(4,743)
(4,356)
(2,776)
(8,535)
24,002
92,845
108,312
(34,017)
(22,132)
(26,921)
(83,070)
(43,494)
(342,995)
(3,155,302)
(3,541,791)
F-74
28,546
52,023
(39)
80,530
(147,090)
20,156
37,244
(89,690)
57,239
51,135
(13,718)
94,656
The following table further explains changes in the gross carrying amount of the consumer portfolio to help explain their significance to the changes in the allowance for the same portfolio as discussed above.
52,529,128
4,928,963
1,961,353
59,419,444
(5,701,009)
5,701,009
(1,029,073)
1,029,073
(2,089,300)
2,089,300
3,616,500
(3,616,500)
480,525
(480,525)
212,519
(212,519)
32,474,640
1,586,440
4,957,874
39,018,954
(28,331,264)
(2,095,326)
(2,091,623)
(32,518,213)
296,415
140,719
(1,523,793)
(1,086,659)
(34,153)
(34,847)
10,805
10,746
(832,014)
(77,989)
(5,218)
(915,221)
(275,419)
(13,883)
(4,972)
(294,274)
52,856,109
4,408,775
2,734,727
59,999,611
(4,910,035)
4,910,035
(855,865)
855,865
(2,127,198)
2,127,198
1,875,510
(1,875,510)
291,914
(291,914)
204,521
(204,521)
29,868,948
1,482,560
3,834,567
35,186,075
F-75
(25,133,605)
(1,989,366)
(2,953,030)
(30,076,001)
601,994
(26,806)
260,780
835,968
(1,510)
(1,658)
(4,969)
(5,547)
523,841
25,899
479
550,219
(300,151)
(16,169)
(6,271)
(322,591)
(4,500,953)
4,500,953
(777,987)
777,987
(1,909,116)
1,909,116
1,737,149
(1,737,149)
216,466
(216,466)
189,616
(189,616)
38,775,713
1,038,560
2,732,577
42,546,850
(31,372,070)
(2,079,908)
(2,991,735)
(36,443,713)
(678,545)
(128,026)
1,063,142
256,571
(32)
(10,205)
(10,238)
(12,720)
(12,762)
(670,881)
(35,340)
1,410
(704,811)
306,917
26,258
8,186
341,361
(3,427,598)
(362,754)
(45,767)
(3,836,119)
Mortgage loan portfolio
48,763
52,639
251,039
352,441
(7,295)
7,295
(635)
635
(35,387)
35,387
9,526
(9,526)
26,638
(26,638)
10,329
(10,329)
(11,295)
59,040
(28,775)
18,970
9,206
2,298
46,643
58,147
(5,974)
(3,465)
(8,428)
(17,867)
16,988
17,000
332
(2,125)
(2,483)
(4,276)
(16,636)
6,751
16,491
6,606
(8,365)
(3,601)
(39,068)
(51,034)
45,080
66,333
268,574
379,987
(9,481)
9,481
(414)
(48,596)
48,596
F-76
13,789
(13,789)
30,885
(30,885)
9,525
(9,525)
5,282
68,567
62,110
135,959
9,758
1,729
3,956
15,443
(5,924)
(1,684)
(9,909)
(17,517)
21,019
241
1,270
1,330
2,841
(3,046)
4,405
10,278
11,637
(21,818)
(12,570)
(41,666)
(76,054)
(11,209)
11,209
(741)
741
(39,189)
39,189
14,440
(14,440)
33,923
(33,923)
10,871
(10,871)
14,574
66,186
93,698
174,458
21,999
3,025
4,394
29,418
(6,589)
(2,873)
(18,516)
(27,978)
18,859
(1,699)
(1,640)
(3,325)
(7,691)
2,717
(2,312)
(6,961)
(9,080)
(18,353)
(34,189)
(17,265)
(95,502)
(146,956)
4,349
9,330
403
14,082
(1,468)
3,316
1,990
F-77
5,207
4,604
3,914
13,725
The following table further explains changes in the gross carrying amount of the mortgage portfolio to help explain their significance to the changes in the allowance for the same portfolio as discussed above.
16,226,428
1,159,795
497,132
17,883,355
(1,382,946)
1,382,946
(40,569)
40,569
(271,352)
271,352
1,082,759
(1,082,759)
66,023
(66,023)
79,530
(79,530)
3,594,678
71,625
2,094,419
5,760,722
(2,142,766)
(109,535)
(2,147,384)
(4,399,685)
207,149
30,833
56,297
294,279
(723,260)
(70,394)
(15,102)
(808,756)
(171,641)
(12,796)
(8,238)
(192,675)
16,720,997
1,160,785
604,424
18,486,206
(1,532,164)
1,532,164
(45,518)
45,518
(381,561)
381,561
1,036,878
(1,036,878)
96,914
(96,914)
90,665
(90,665)
5,389,137
63,254
55,457
5,507,848
(2,280,712)
(116,394)
(127,047)
(2,524,153)
254,106
43,166
61,477
358,749
417,334
48,069
10,659
476,062
(155,376)
(29,916)
(7,639)
(192,931)
(1,573,688)
1,573,688
(56,288)
56,288
(389,286)
389,286
1,141,698
(1,141,698)
103,954
(103,954)
99,271
(99,271)
6,990,303
173,598
157,440
7,321,341
(2,938,553)
(113,749)
(185,270)
(3,237,572)
(240,808)
(141,601)
(18,894)
(401,303)
(447,513)
(84,769)
(12,160)
(544,442)
148,874
36,798
9,420
195,092
(2,460,484)
(496,366)
(153,327)
(3,110,177)
F-78
Microcredit loan portfolio
6,238
4,922
27,811
38,971
(3,411)
3,411
(1,308)
1,308
(10,612)
10,612
1,374
(1,374)
(1,729)
(210)
6,322
10,395
12,816
29,533
4,647
4,798
(1,953)
(265)
(212)
(2,430)
Unwind of discount (1)
7,016
(406)
(1,227)
(22,595)
(24,228)
12,068
6,366
35,226
53,660
(2,380)
(24,943)
24,943
(8,815)
8,815
536
(536)
912
(912)
(57)
Net remeasurement of loss allowance (3)
20,456
6,140
(3,299)
23,297
2,627
2,715
(5,694)
(5,123)
(26,097)
(36,914)
(3,042)
(191)
(26,398)
(29,631)
1,684
(436)
(10,755)
(11,193)
Net remeasurement of loss allowance (2)
(13)
(27)
(48)
(25)
(2,640)
(2,645)
This amount includes impact of the measurement of ECL due to changes made in PDs/LGDs/EADs and changes made to model assumptions and methodologies from the opening to the closing balance. The following table shows the impact by stage estimated using all parameters as of December 31, 2025 versus parameters as of December 31,2024 and the loan portfolio as of December 31, 2025.
(3) This amount includes impact of the measurement of ECL due to changes made in PDs/LGDs/EADs and changes made to model assumptions and methodologies from the opening to the closing balance. The following table shows the impact by stage estimated using all parameters as of December 31, 2024 versus parameters as of December 31,2023 and the loan portfolio as of December 31, 2024.
F-79
(4) This amount includes impact of the measurement of ECL due to changes made in PDs/LGDs/EADs and changes made to model assumptions and methodologies from the opening to the closing balance. The following table shows the impact by stage estimated using all parameters as of December 31, 2023 versus parameters as of December 31,2022 and the loan portfolio as of December 31, 2023.
(73)
The following table further explains changes in the gross carrying amount of the microcredit portfolio to help explain their significance to the changes in the allowance for the same portfolio as discussed above:
F-80
224,491
14,056
29,173
267,720
(36,169)
36,169
(10,609)
10,609
(25,030)
25,030
9,226
(9,226)
2,946
(2,946)
516
(516)
214,273
1,387
41,681
257,341
(178,828)
(6,329)
(22,883)
(208,040)
4,054
1,207
(20,525)
(15,264)
226,548
13,953
37,028
277,529
(18,434)
18,434
(5,297)
5,297
(14,840)
14,840
3,202
(3,202)
1,329
(1,329)
(153)
329,590
16,273
58,483
404,346
(317,251)
(19,019)
(37,916)
(374,186)
4,241
(8,701)
(4,325)
(218,931)
(12,397)
(26,837)
(258,165)
777
3,559
2,284
2,461
(380)
(7,887)
(8,324)
(11)
5,651
5,653
543
971
1,444
(122)
(120)
1,787
(3,089)
731
732
(58)
F-81
Net remeasurement of loss allowance (1)
2,803
(3,451)
(2) This amount includes impact of the measurement of ECL due to changes made in PDs/LGDs/EADs and changes made to model assumptions and methodologies from the opening to the closing balance. The following table shows the impact by stage estimated using all parameters as of December 31, 2024 versus parameters as of December 31,2023 and the loan portfolio as of December 31, 2024.
(3) This amount includes impact of the measurement of ECL due to changes made in PDs/LGDs/EADs and changes made to model assumptions and methodologies from the opening to the closing balance. The following table shows the impact by stage estimated using all parameters as of December 31, 2023 versus parameters as of December 31,2022 and the loan portfolio as of December 31, 2023.
The following table further explains changes in the gross carrying amount of the interbank and overnight funds portfolio to help explain their significance to the changes in the allowance for the same portfolio as discussed above:
5,967,742
5,967,743
206,661
(6,003,176)
(1,390)
(1,391)
222,770
392,607
415,418
(141,132)
1,870
36,292
2,251,099
(940,957)
F-82
(2,812)
(94,073)
(1,904)
(138,892)
The following table further explains changes in the movements in the allowance for the of investments in debt securities at FVOCI portfolio:
Loss allowance balance as of January 1, 2023
12,686
(892)
6,470
(4,342)
(950)
Loss allowance balance as of December 31, 2023
12,972
9,029
(4,895)
752
Loss allowance balance as of December 31, 2024
5,751
5,799
13,400
(8,050)
Effect of discontinued operations (1)
(2,727)
(126)
(130)
Loss allowance balance as of December 31, 2025
(2) This amount includes impact of the measurement of ECL due to changes made in PDs/LGDs/EADs and changes made to model assumptions and methodologies from the opening to the closing balance. The following table shows the impact by stage estimated using all parameters as of December 31, 2025 versus parameters as of December 31, 2024 and the investments portfolio as of December 31, 2025.
1,554
1,610
(3) This amount includes impact of the measurement of ECL due to changes made in PDs/LGDs/EADs and changes made to model assumptions and methodologies from the opening to the closing balance. The following table shows the impact by stage estimated using all parameters as of December 31, 2024 versus parameters as of December 31, 2023 and the investments portfolio as of December 31, 2024.
F-83
(90)
F-84
(4) This amount includes impact of the measurement of ECL due to changes made in PDs/LGDs/EADs and changes made to model assumptions and methodologies from the opening to the closing balance. The following table shows the impact by stage estimated using all parameters as of December 31, 2023 versus parameters as of December 31, 2022 and the investments portfolio as of December 31, 2023.
(359)
The following table further explains changes in the movements in the allowance for investments in debt securities at amortized cost portfolio:
28,563
8,367
36,930
1,485
(1,485)
(14,315)
(996)
(15,311)
2,669
(1,466)
(4,323)
(1,617)
(5,940)
12,613
4,269
16,882
(1,774)
(562)
(2,336)
3,279
(1,366)
1,577
639
2,216
(4,346)
(6,960)
4,268
(1,531)
(3,722)
(901)
(1,551)
(3) This amount includes impact of the measurement of ECL due to changes made in PDs/LGDs/EADs and changes made to model assumptions and methodologies
from the opening to the closing balance. The following table shows the impact by stage estimated using all parameters as of December 31, 2025 versus parameters as of December 31, 2024 and the investments portfolio as of December 31, 2025.
262
(4) This amount includes impact of the measurement of ECL due to changes made in PDs/LGDs/EADs and changes made to model assumptions and methodologies from the opening to the closing balance. The following table shows the impact by stage estimated using all parameters as of December 31, 2024 versus parameters as of December 31, 2023 and the investments portfolio as of December 31, 2024.
F-85
(404)
(5) This amount includes impact of the measurement of ECL due to changes made in PDs/LGDs/EADs and changes made to model assumptions and methodologies from the opening to the closing balance. The following table shows the impact by stage estimated using all parameters as of December 31, 2023 versus parameters as of December 31, 2022 and the investments portfolio as of December 31, 2023.
9,632
General approach
24,977
20,201
140,123
185,301
Net remeasurement of loss allowance
4,389
257
46,867
51,513
(1,789)
(1,270)
(2,464)
(5,523)
(1,612)
(43,397)
(45,009)
25,965
19,188
141,129
186,282
4,932
2,779
58,789
66,500
860
229
3,212
4,301
(531)
(85,622)
(86,153)
170,930
2,442
3,633
46,158
52,233
(1,305)
(606)
(2,624)
(4,535)
(1,202)
(58,548)
(59,750)
158,878
Simplified approach
197,115
Entity deconsolidation
(3,245)
Provision charged to profit or loss
39,555
Recovery for partial payments from the clients
(14,581)
Exchange gains (losses) in foreign currency
(1,123)
199,382
1,025
55,271
(29,727)
(35,436)
526
(4,225)
(456)
121,395
(12,224)
(61,006)
(711)
F-86
58,160
6,461
64,910
(1,690)
1,690
(218)
218
(329)
329
1,105
(1,105)
(14,124)
(769)
211
(14,682)
New loan commitments and financial guarantees issued
18,604
1,732
(65)
20,271
(318)
(320)
61,637
7,682
949
70,268
(1,233)
1,233
(503)
503
(167)
2,998
(2,998)
(17,928)
(14)
544
(17,398)
18,204
1,934
20,230
220
(906)
(1,094)
1,094
(226)
226
(219)
219
1,954
(1,954)
(56)
(17,120)
(1,671)
(1,070)
(19,861)
23,891
1,981
25,995
(111)
(118)
(46)
(760)
(772)
(1) See note 13.B., “ Discontinued operation related to Multi Financial Group”.
F-87
4.1.6 Concentrations of credit risk
Policies to prevent excessive credit-risk concentration
In order to prevent excessive concentrations of credit risk at an individual, economic group, country or economic sectors level, each financial subsidiary of Grupo Aval maintains updated exposure thresholds to limit concentration. The exposure limit by a financial subsidiary of Grupo Aval to an individual client or economic group depends on the risk profile of the client (or economic group), the nature of the risk of the debtor and the experience of each financial subsidiary in a specific market or sector.
Concentration risk control is key to the risk management process. Grupo Aval´s financial subsidiaries monitor the degree of credit risk concentration by sector and individual or group customer.
In order to avoid credit risk concentration at Grupo Aval level, management relies on the financial subsidiaries Credit Risk Unit or its equivalent, which consolidates, and monitors the credit risk exposures of all financial subsidiaries, to determine the maximum levels of concentration.
Pursuant to Colombian regulations, in 2024 financial subsidiaries in Colombia cannot grant unsecured loans to borrowers, which on a combined basis exceed 10% of the financial subsidiary´s regulatory capital (patrimonio técnico, by its name in Spanish language) calculated according to the definitions of the Ministry of Finance. Loans maybe more than 10% of the regulatory capital (patrimonio técnico) of the financial subsidiary when they are secured by acceptable collateral and/or certain guarantees. In 2025, a new regulation went into effect modifying the regime relating to large exposures and legal credit limits, so banks in Colombia generally cannot have exposures with a counterparty or connected group of counterparties that exceed 25% of the bank's regulatory capital Tier 1 (patrimonio básico ordinario, by its name in Spanish language + patrimonio básico adicional, by its name in Spanish language) calculated in accordance with the definitions of the Ministry of Finance.
Concentration by sector
Below is the credit portfolio distribution of Grupo Aval by economic sector as of December 31, 2025, and 2024:
Sector
Consumer services
87,550,262
89,687,446
Commercial services
41,868,516
43,792,710
14,015,379
15,046,109
Public services
10,088,667
9,218,309
7,392,815
5,471,013
Transportation and communications
6,579,198
6,499,070
Food, beverage and tobacco
6,294,320
7,577,678
Other industrial and manufacturing products
5,316,713
6,857,011
Chemical production
4,890,011
5,539,036
Agricultural
3,266,907
4,538,856
Mining products and oil
2,415,758
2,754,170
Trade and tourism
1,495,870
1,724,337
1,481,527
1,430,380
Total of each economic sector
F-88
Concentration by country
The detail of credit risk at the level of Grupo Aval in the different geographic areas determined according to the domicile of the debtor, without taking into consideration loan loss provisions as of December 31, 2025, and 2024 is as follows:
98,000,384
60,447,939
1,075,072
181,636,625
United States
6,393,092
8,153
6,401,245
Panamá (1)
773,506
702,444
1,476,043
Guatemala
310,287
Costa Rica
176,154
El Salvador
123,951
Honduras
64,863
Other countries
2,466,747
2,466,775
(1) The decrease corresponds to the reclassification to Non-Current Assets Held for Sale of Multi Financial Group operation as of December 31, 2025, see note 13.A.
95,610,708
57,719,813
18,494,856
395,382
172,225,134
9,455,147
4,248,452
3,540,871
214,187
17,458,657
6,685,567
7,984
93,474
6,787,025
432,151
125,689
2,012
127,701
392,236
13,919
Nicaragua
2,698,814
2,698,890
Concentration by currency
The classification of loan portfolio by type of currency is as follows:
Colombian Pesos
Foreign currency (1)
91,723,007
16,585,977
60,344,158
112,055
Residential mortgage
22,111,659
817,691
959,825
174,998,035
17,657,908
86,935,650
28,478,993
57,615,997
4,360,328
18,494,740
3,540,987
272,307
432,748
163,323,069
36,813,056
F-89
As of December 31, 2025, the loan portfolio in foreign currency represents 9.2% of the total portfolio, equivalent to US$ 4,699 million. As of December 31, 2024, the loan portfolio in foreign currency represents 18.4%, equivalent to US$ 8,349 million.
Investment debt securities
Grupo Aval entities monitor concentrations of credit risk by sector and by geographic location. An analysis of concentrations of credit risk from investment securities is shown below.
Trading debt securities (see note 8.1)
The balance of financial assets in investments in trading debt securities includes the following as of December 31, 2025, and 2024:
2025(1)
In Colombian Pesos
Securities issued or secured by Colombian Government
15,704,043
10,623,734
Securities issued or secured by other Colombian Government entities
205,855
183,760
691,834
864,036
Securities issued or secured by non-financial sector entities
1,939
7,749
12,508
15,768
Total In Colombian Pesos
16,616,179
11,695,047
In foreign currency
113,801
7,224
Securities issued or secured by foreign Governments
75,379
340,735
138,158
1,064
9,942
Total In foreign currency
966,665
242,367
Total trading debt securities
Investments in debt securities mandatorily at FVTPL (see note 9.1)
The balance of financial assets in investments in debt securities mandatorily at FVTPL includes the following as of December 31, 2025, and 2024:
Others(1)
Total debt securities mandatorily at FVTPL
(1)Corresponds to the BOCEA issued by Titularizadora Colombiana, in which Banco AV Villas held a position. At maturity, on December 16, 2025, the entity exercised its right to convert the instrument into shares
The balance of financial assets in investments in debt securities at FVOCI includes the following as of December 31, 2025, and 2024:
F-90
22,233,814
15,207,640
257,482
173,682
658,535
813,342
3,003
3,968
87,176
202,264
23,240,010
16,400,896
2,368,885
3,060,268
248,770
289,063
Securities issued or secured by foreign Governments(1)
1,334,686
4,502,810
Securities issued or secured by central banks(1)
1,095,010
1,813,441
Securities issued or secured by non-financial sector entities(1)
19,615
245,692
148,981
533,173
5,215,947
10,649,302
Total debt securities at FVOCI
The balance of financial assets in investments in debt securities at amortized cost includes the following as of December 31, 2025, and 2024:
2,553,693
32,759
8,149,660
30,655
2,350,549
31,950
2,558,707
Total investments in debt securities at amortized cost
Concentration of investments in debt securities by location
50,054,384
39,769,376
Panama(1)
3,385,573
6,114,059
United States Of America(1)
567,849
1,543,389
Brazil
188,017
128,970
Mexico
343,116
583,979
Costa Rica(1)
110,714
Chile
372,114
524,430
Peru
231,408
443,698
Paraguay(1)
102,473
Japan
25,795
22,957
Germany
15,437
15,806
Total by country
55,183,693
49,359,851
Bladex (Foreign Trade Bank of Latin America)
216,218
Andean Development Corporation (Corporación Andina de Fomento)
117,061
Inter-American Corporation for the Financing of Infrastructure
F-91
60,565
337,553
Total investments in debt securities
55,244,258
49,697,404
Concentration by Sovereign Debt
As a general rule, Grupo Aval considers sovereign risk to be the risk assumed in deposits with Central Banks (including the mandatory deposits), investments in debt issues of a Colombian Government. In addition, the risk arising from transactions with public sector entities that have the following features: their funds are obtained only from fiscal income, they are legally recognized as entities directly included in the government sector, and their activities are of a non-commercial nature.
Sovereign risk exposure arises mainly from Grupo Aval’s banking subsidiaries obligations to maintain certain mandatory deposits in Central Banks and from the fixed-income portfolios held as part of the on-balance-sheet structural interest rate risk management strategy and in the trading books of the treasury department. Most of these exposures are denominated in pesos and are financed through peso denominated repurchase agreements or customer deposits.
As of December 31, 2025, and 2024, the investment portfolio of financial assets in debt instruments is comprised mainly of securities issued or secured by entities of the Republic of Colombia, which represent 79.90% and 72.58%, respectively of the total portfolio.
Below is the detail of Grupo Aval’s sovereign debt portfolio issued by Central Governments per country:
Investment grade (1)
Colombia (5)
28,361,534
78.64
973,505
2.21
2,724,276
7.55
182,837
0.41
238,765
0.66
32,414
0.07
37,023
0.10
15,436
0.03
0.04
107,177
0.24
17,987
0.05
United States of America
518,409
1.17
1,465,956
4.06
Total Investment grade
1,829,778
4.15
32,861,347
91.10
Speculative (2)
28,122
30,266
0.08
Colombia(5)
42,280,800
3,101,625
8.60
78,765
Total Speculative
42,308,922
95.85
3,210,656
8.90
44,138,700
100.00
36,072,003
Below is the detail of Grupo Aval’s debt portfolio issued by Central Banks:
Investment Grade (1)
Panama (4)(3)
Total sovereign risk
36,276,858
(1) Investment grade includes Fitch Ratings Colombia S.A. risk ratings from F1+ to F3, BRC de Colombia ratings from BRC 1+ to BRC 3, and Standard & Poor’s ratings from AAA to BBB–.(2) Speculative grade includes Fitch Ratings Colombia S.A. risk ratings from B to E, BRC de Colombia ratings from BRC 4 to BRC 6, and Standard & Poor’s ratings from BB+ to D.(3) The decrease corresponds to the reclassification to non-current assets held for sale related to the Multi Financial Group operation as of December 31, 2025; see Note 13.A.(4) These investments correspond to Banco Nacional de Panamá, which is the official bank and performs central bank functions; however, it does not have the authority to issue currency or establish reserve requirements.(5) During 2025, S&P Global Ratings downgraded the Government of Colombia’s rating from BBB– to BB+, which resulted in its risk level moving from investment grade to speculative.
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4.1.7 Modified Financial Assets - troubled debt restructuring business process.
Each financial subsidiary of Grupo Aval periodically carries out, at the request of the client, restructurings of obligations. Such restructurings generally consist of extensions of tenors, decrease of interest rates, partial write-off of indebtedness or payment with assets of the debtor or guarantor.
Our banking subsidiaries follow highly rigorous definitions and policies in this management process, so that it is performed in accordance with the best practices and in strict compliance with regulatory requirements. In connection to this, Grupo Aval´s banking subsidiaries have a detailed policy with regard to the aforementioned transactions.
The objective of granting such restructurings is to provide the client with a viable alternative to meet its obligations to the bank and to adapt to changing conditions.
When a loan is restructured due to a debtor´s financial difficulties, the debt is flagged within the records of each bank as a restructured credit in accordance with the regulations of the Superintendency of Finance. The restructuring process has a negative impact on the debtor’s rating, which can only be improved when the client has complied during a prudent period with the terms of the restructurings, its financial condition has improved or when sufficient additional guarantees have been obtained.
Restructured loans are included for impairment evaluation and determination of provisions. However, the marking of a credit as restructured does not necessarily imply its rating is impaired, because in some cases new guarantees are obtained supporting the obligation.
The following is the balance of restructured loans as of December 31, 2025, and 2024:
Restructured loans
5,089,268
5,495,475
33,430
1,955,612
Total restructured
5,122,698
7,451,087
4.1.8 Foreclosed assets business process
When persuasive collection processes or credit restructurings are not effective, a legal proceeding is carried out or an agreement is reached with the client for the receipt of assets as payment. Each subsidiary of the financial sector has clearly established policies for receiving assets and has a separate department specialized in the management of these cases and in charge of their eventual sale or liquidation.
During the years ended December 31, 2025, and 2024, the following is the total of foreclosed assets received and sold during such periods:
Foreclosed assets received
189,624
116,299
Foreclosed assets sold
130,716
43,731
4.1.9 Loan commitments and financial guarantee contracts
As part of our operations, Grupo Aval´s financial subsidiaries grants guarantees and letters of credit to its customers wherein Grupo Aval financial subsidiaries are irrevocably committed to make payments to third parties when customers do not comply with their obligations with such third parties. These products have the same policies for approval of disbursements of loans regarding client’s credit risk and guarantees required according to the circumstances of each client.
The commitments for credit extension represent unused portions of authorizations to grant loans, use of credit cards, overdraft limits and letters of credit. With respect to credit risk over commitments to extend credit lines, Grupo Aval is potentially exposed to credit
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risk in an amount equal to the total amount of unused commitments, if the unused amount were to be withdrawn in whole. However, the amount of the loss is less that the total amount of commitments unused, since most commitments to extend credits are contingent on the customer maintaining specific credit risk standards.
Pending unused credit lines and guarantees do not necessarily represent future cash-out flows, because such facilities may expire and not be used whole or in part.
Following is the detail of the guarantees, letters of credit and credit commitments on non-used credit lines as of December 31, 2025, and 2024.
Notional amount
14,847,091
12,933,383
6,792,792
5,432,167
Credit arrangements
5,108,039
4,583,513
Guarantees
Unused limits of overdrafts
2,271,247
2,261,456
Unused letters of credit
400,330
382,953
The following is the detail of the credit commitments by type of currency:
30,392,045
25,916,587
U.S. dollars (1)
1,206,958
2,741,438
Euro
14,873
14,517
4,716
3,879
4.1.10 Offset of financial assets and financial liabilities
The disclosures set out in the following tables include financial assets and liabilities that:
The ‘similar agreements’ include derivative clearing agreements; global master repurchase agreements and global master securities lending agreements. Similar financial instruments include derivatives, sale-and-repurchase agreements, reverse sale-and-repurchase agreements, and securities borrowing and lending agreements. Financial instruments such as loans and deposits are not disclosed in the following tables unless they are offset in the statement of financial position.
The ISDA (International Swaps and Derivatives Association) and similar master netting arrangements do not meet the criteria for offsetting in the statement of financial position. This is because they create for the parties to the agreement a right of set-off of recognized amounts that is enforceable only following an event of default, insolvency or bankruptcy of Grupo Aval or of the counterparties or following other predetermined events. In addition, Grupo Aval and its counterparties do not intend to settle on a net basis or to realize the assets and settle the liabilities simultaneously.
Grupo Aval receives and gives collateral in the form of cash and marketable securities in respect of the following transactions:
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This collateral is subject to standard industry terms including, when appropriate, an ISDA credit support annex. This means that securities received/given as collateral can be pledged or sold during the term of the transaction but have to be returned on maturity of the transaction. The terms also give each party the right to terminate the related transactions on the counterparty’s failure to post collateral.
The gross amounts of financial assets and liabilities and their net amounts disclosed in the tables below have been measured in the statement of financial position on the following basis:
The following is the detail of the financial instruments subject to offset contractually required as of December 31, 2025, and 2024:
Gross Amounts
Net Amounts of
Gross Amounts Not
Amounts of
Offset in the
Assets Presented in
Offset in the Consolidated Balance Sheet
Recognized
Consolidated
the Consolidated
Cash collateral
Net
Balance Sheet
Instruments
Received
Exposure
Offsetting assets
(2,039,389)
(75,563)
338,627
Repurchase agreements
2,233,729
(98,164)
2,135,565
4,687,308
(2,137,553)
2,474,192
Liabilities Presented in
Delivered
Offsetting liabilities
1,986,281
(335,732)
(269,536)
1,381,013
21,784,346
(22,357,129)
(184,107)
(756,890)
23,770,627
(22,692,861)
(453,643)
624,123
(1,951,440)
(162,729)
(1,090,856)
1,940,488
(667)
1,939,821
2,963,801
(1,952,107)
848,965
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1,033,592
(208,181)
(71,745)
753,666
17,686,789
(20,719,224)
(336,987)
(3,369,422)
18,720,381
(20,927,405)
(408,732)
(2,615,756)
4.2 Market Risk
Market risk refers to the risk that a change in the level of one or more market prices, rates, indices, volatilities, correlations or other market factors, such as liquidity, will result in losses in a position or in the portfolio.
Grupo Aval´s financial subsidiaries (namely Banco de Bogotá, Banco de Occidente, Banco Popular, Banco AV Villas, the trust companies of the financial subsidiaries, Corficolombiana y Porvenir) actively participate in money markets, foreign exchange markets and capital markets, for both of their books (for balance sheet risk management and trading book) and to provide financial services to their customers. This is subject to established policies and risk limits. In that regard, they hold financial asset portfolios within the allowed limits and risk levels.
Market risk arises from the positions of Grupo Aval´s financial subsidiaries in debt securities investment portfolios, derivatives and equity instruments. These risks are created by changes in factors such as interest rates, inflation, foreign currency exchange rates, share prices, credit margins of instruments and their volatility, as well as the liquidity in the markets where Grupo Aval operates.
Our business units and trading desks are responsible for ensuring that market risk exposures are well-managed and prudent. The risk management groups and our business unit management ensure that these risks are measured and closely monitored. A variety of limits and controls are designed to manage price and liquidity risk. Market risk is monitored through various mechanisms such as: statistic analysis (using Value-at-Risk models and related analytical measures), risk factor sensitivity analysis, and routine stress testing, conducted in collaboration with the business units by the Market Risk Unit. The material risks identified by these processes are summarized in reports produced by the Market Risk Unit that are circulated to and discussed with senior management.
4.2.1 Trading Book Risk
Grupo Aval´s financial subsidiaries trade financial instruments for various reasons, mainly:
In carrying out these operations, Grupo Aval´s financial subsidiaries take risks, within predetermined limits. These risks are mitigated with the use of derivative products and other financial instruments within limits that are permanently monitored by risk.
The following is a breakdown of Grupo Aval’s financial assets and liabilities exposed to trading risk held at December 31, 2025 and 2024:
Financial assets at fair value
Debt financial assets
Total debt securities
46,038,801
38,989,037
Derivative assets instruments
Hedging derivatives assets
Total derivative
Total financial assets
48,492,380
40,012,350
Derivative liabilities instruments
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Total financial liabilities
Net position
46,506,099
38,978,758
4.2.2 Description of Objectives, Policies and Processes to Manage Trading Risk
Our financial subsidiaries participate in money markets, foreign exchange markets and capital markets to meet their needs and those of their customers, subject to established policies and risk levels. In this respect, they manage different portfolios of financial assets within the limits and risk levels allowed.
The risks assumed by Grupo Aval´s financial subsidiaries in transactions related to the trading or treasury book are consistent with the overall trading strategy, considering the market depth for each instrument, its impact on risk-weighted assets and regulatory capital, the profit budget established for each business unit, and the balance sheet structure.
Trading strategies are established on the basis of approved limits, in an effort to balance the risk / return relationship. Moreover, there is a structure of limits consistent with Grupo Aval’s general philosophy and is based on capital levels, earnings performance and risk appetite.
The Integral Risk Management System (SIAR in Spanish) allows Grupo Aval´s financial subsidiaries to identify, measure, control and monitor the market risk they are exposed to in carrying out their operations.
There are several scenarios in which Grupo Aval´s financial subsidiaries are exposed to trading risks.
Grupo Aval’s financial subsidiaries are exposed to interest rate risk as a result of its market-making activities and proprietary trading in interest rate sensitive financial instruments (e.g., risk arising from changes in the level or implied volatility of interest rates, the timing of mortgage prepayments, the shape of the yield curve and credit spreads for credit sensitive instruments). Additionally, as part of the interest rate risk management, asset and liability management committees have been established to monitor the execution of these strategies.
Grupo Aval’s financial subsidiary’s portfolios are exposed to foreign exchange rate and implied volatility risk as a result of market making negotiation in foreign currencies and from maintaining foreign exchange positions.
Grupo Aval´s financial subsidiaries are exposed to equity price risk in specific investments and are exposed to mutual fund risk.
4.2.2.1 Risk Management
Grupo Aval financial subsidiaries manage their trading positions by employing a variety of risk mitigation strategies. These strategies include diversification of risk exposures and hedging through the purchase or sale of positions in related securities and financial instruments, including a variety of derivative products (e.g., futures, forwards, swaps and options). The financial subsidiaries manage their market risk associated with its trading activities on a decentralized basis. Our corporate risk unit supervises the level of risk taken in order to ensure that its global exposure limits are observed.
Senior management and the Boards of Directors of our banks and their financial subsidiaries play an active role in managing and controlling market risk. They do so by analyzing established reports and through committees that comprehensively monitor - both technically and fundamentally - the different variables that influence domestic and foreign markets. This process is intended to support strategic trading and portfolio decisions.
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Analyzing and monitoring the market risks that Grupo Aval´s financial subsidiaries take in their operations is essential for decision making and to assess potential effects on their financial position. An ongoing analysis of macroeconomic conditions is necessary in order to achieve an ideal combination of market risk, return and liquidity.
The risks assumed in financial operations are reflected in a limit structure that includes different types of instruments, specific trading strategies, the market depth in which Grupo Aval´s financial subsidiaries operate, the impact on risk-weighted assets and regulatory capital, as well as the balance sheet structure. These limits are monitored daily and reported regularly to the Board of Directors of Grupo Aval´s financial subsidiaries.
In order to minimize interest rate and exchange rate risks in specific positions and transactions, Grupo Aval´s financial subsidiaries manage hedging strategies by taking positions in derivative instruments such as non-deliverable forwards (NDF) related to securities, money market transactions and foreign exchange forwards.
4.2.2.2 Methods Used to Measure Market Risk
The Market Risk areas independently review the Company’s trading portfolios on a regular basis from a market risk perspective utilizing Value at Risk (VaR) internal and regulatory models, and other quantitative and qualitative risk measures and analyses. Each trading business and the market risk areas also use, as appropriate, measures such as sensitivity to changes in interest rates, prices, and implied volatilities to monitor and report market risk exposures. Stress testing, which measures the impact on the value of existing portfolios of specified changes in market factors for certain products, is performed periodically and reviewed by our risk and trading areas. Reports summarizing material risk exposures are produced by the market risk areas and are provided to senior management for their review and challenge.
The Boards of Directors and the Risk Committees of Grupo Aval´s financial subsidiaries approve a framework of limits based on the value-at-risk related to the annual budget.
Regulatory VaR (regulatory calculation)
The Regulatory VaR calculation is primarily used for the Superintendency of Finance’s solvency ratio calculations. Each bank has standard models for capital purposes; however, they also maintain internal models in order to manage their day-to- day risk and profit decisions.
The Superintendency of Finance methodology is based on the Basel II model. This model applies only to the financial subsidiaries’ investment portfolio and excludes investments not classified as trading. Total market risk is calculated on a daily basis by aggregating the VaR for each risk exposure category on a ten-day horizon, based on risk factors calculated under extreme market stress scenarios. VaR at month-end is part of the capital adequacy ratio calculation (as set forth in Decree 2555 of 2010). The Superintendency of Finance’s rules require the financial subsidiaries to calculate VaR for the following risk factors: interest rate risk, foreign exchange rate risk, equity price risk and fund risk. Correlations between risk factors are not considered. The fluctuations in the portfolio’s VaR depend on sensitivity factors determined by the Superintendency of Finance, modified duration and changes in balances outstanding. The ten-day horizon is defined as the average time in which an entity could sell a trading position in the market.
The VaR calculation includes all the portfolios of the entities and their financial subsidiaries and is estimated under the methodology defined by the Superintendency of Finance of Colombia.
These VaR calculation models are used to determine the occurrence of potential losses among the different business units. The methods also allow comparisons of activities in different markets and identification of the riskiest positions in treasury activities. These tools are also used to determine limits on traders’ positions and to promptly review positions and trading strategies in response to changes in market conditions. VaR models have inherent limitations, partially because they rely on historical data, which may not be an indicative of future market conditions. VaR models could overestimate or underestimate the value at risk if market conditions vary significantly and they do not calculate the greatest possible loss. That’s why each company uses additional measurement tools in order to compensate for the VaR limitations. Expected Shortfall analysis, stress test and back tests are part of the risk measurement tools in the financial subsidiaries. The methods used to measure VaR are assessed regularly and back tested to check their efficiency.
Grupo Aval´s financial subsidiaries have tools to carry out portfolio stress and/or sensitivity tests, using extreme scenario simulations. Additionally, there are limits according to the "risk type" associated with each of the instruments comprising the different portfolios. These limits are related to sensitivity or impact on the value of the portfolio as a result of fluctuations of specific risk factors such as: interest rate (Rho), exchange rate (Delta) and volatility (Vega).
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Grupo Aval´s financial subsidiaries have counterparty and trading limits for each trader in the trading platforms for the markets where they operate. Trading limits are controlled daily by the back and middle offices of each entity. Trading limits for individual traders are assigned based upon the individual´s level in the organization, market and trading experience and product and portfolio management knowledge.
There is also a process to monitor the prices of fixed-income securities traded in foreign markets published by investment price providers for those jurisdictions.
In addition, fixed income securities are subject to a qualitative liquidity analysis to determine the market depth for those instruments.
Finally, the daily transaction monitoring process includes controlling different aspects of trading, such as terms of negotiation, non-conventional or off-market transactions, and related party transactions.
According to the standard model, the market value-at-risk (VaR) for Grupo Aval´s financial subsidiaries consolidated at their level of December 31, 2025 and 2024 was as follows:
Basis points of
Value at Risk
regulatory capital
Banco Bogotá S.A.
311,408
318,203
152,515
381,972
15,658
22,567
Banco Popular S.A. (1)
304,481
291,145
Corficolombiana S.A. (1)
294,820
674
320,096
4,352
3,832
(1) The market value at risk information corresponds to Banco Popular's consolidated information. Corficolombiana's information is presented separately, due to its materiality.
The following tables show the VaR calculation relating to each of the risk factors described above and based on the Superintendency of Finance Methodology (Regulatory VaR) for the years ended December 31, 2025 and 2024, for a ten-day horizon for each of our Colombian banking subsidiaries. The minimum, maximum and average levels are determined based on end-of-quarter calculations, using consolidated results from the last four quarters..
Banco de Bogotá S.A
Maximum, Minimum and Average VaR Values
Minimum
Maximum
Period end
53,274
122,866
156,064
Exchange rate
146,593
194,097
255,463
Shares
1,240
1,799
2,083
Mutual funds
423
913
1,431
160,445
427,563
552,647
91,087
141,196
166,334
155,113
1,947
10,929
37,644
2,077
411
1,549
2,788
568
The market risk-weighted assets of Banco de Bogotá, as of December 31, 2025, accounted for 3.13% of the total risk-weighted assets. As of December 31, 2024, market risk-weighted assets represented 3.25% of the total risk-weighted assets.
Banco de Occidente S.A
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148,047
189,910
238,845
837
7,838
16,567
3,273
1,195
1,344
1,441
264,941
322,068
379,009
1,078
3,402
9,151
1,971
934
991
1,031
992
The market risk-weighted assets of Banco de Occidente, as of December 31, 2025, accounted for 3.3% of the total risk-weighted assets. As of December 31, 2024, market risk-weighted assets represented 8.2% of the total risk-weighted assets.
Banco Comercial AV Villas S.A
12,001
15,501
21,498
15,601
281
22,193
29,979
43,936
472
447
The market risk-weighted assets of Banco AV Villas, as of December 31, 2025, accounted for 1.3% of the total risk-weighted assets. As of December 31, 2024, market risk-weighted assets represented 2.1% of the total risk-weighted assets.
Banco Popular S.A
220,418
253,696
296,841
251,328
32,932
44,440
58,254
12,995
26,680
18,364
19,547
20,286
20,045
At December 31, 2024 (1)
205,759
328,266
410,228
19,869
39,424
59,084
51,982
6,884
11,331
15,090
18,201
19,668
23,969
18,314
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The market risk-weighted assets of Banco Popular, as of December 31, 2025, accounted for 7.55% of the total risk-weighted assets. As of December 31, 2024, market risk-weighted assets represented 5.61% of the total risk-weighted assets.
Corficolombiana S.A
204,636
240,097
280,691
261,509
32,284
43,485
56,181
21,975
26,505
1,021
1,139
1,341
1,027
(1) The market value at risk information at December 31, 2025 corresponds to Corficolombiana's separate information.
220,886
271,679
341,730
252,417
19,172
38,723
55,653
51,653
6,731
11,457
14,918
983
1,200
1,424
1,108
(1) The market value at risk information at December 31, 2024 corresponds to Corficolombiana's separate information.
The market risk-weighted assets of Corficolombiana, as of December 31, 2025, accounted for 12.3% of the total risk-weighted assets. As of December 31, 2024, market risk-weighted assets represented 13.31% of the total risk-weighted assets..
As Corficolombiana does not have a relevant number of loans or other significant risk weighted assets, the ratio of the market risk weighted assets to total risk weighted assets is higher than in the banks.
Porvenir S.A
As a pension fund, Porvenir has a value-at-risk measurement methodology that differs from credit establishments and is established by the Superintendency of Finance. The following tables show the VaR calculation relating to each of the risk factors described above and based on that Methodology (Regulatory VaR) for the years ended December 31, 2025, and 2024, for a ten-day horizon.
5,892
7,093
8,508
342
1,143
1,948
2,740
4,488
591
1,293
2,183
7,623
14,368
16,520
233
419
275
1,624
2,090
2,654
1,790
782
2,365
6,478
1,074
The market risk-weighted assets of Porvenir, as of December 31, 2025, accounted for 2.13% of the total risk-weighted assets. As of December 31, 2024, market risk-weighted assets represented 2.1% of the total risk-weighted assets.
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Investment Price Risk in Equity Instruments
Equity Investments
The variations in equity price risk measured according to the regulatory VaR methodology consider investments in equity securities included in the treasury book, including investments in shares issued abroad and listed in Colombia, and exclude, in the case of credit institutions, investments that have been deducted from the Entity's core capital. In 2024, Corficolombiana held investments subject to regulatory VaR. As of December 31, 2025, however, none of the subsidiaries maintain investments that meet these characteristics.
4.2.3 Structural foreign exchange risk
Grupo Aval´s financial subsidiaries have agencies and subsidiaries offshore and have assets and liabilities in foreign currencies and are thus exposed to changes in the exchange rates, primarily the United States Dollar. Foreign exchange risk is present when there are assets and liabilities denominated in foreign currency, when investments are made in foreign subsidiaries and branches and when we extend loans or take funds in foreign currency. Foreign exchange risk is also present in foreign currency off- balance sheet transactions.
Subsidiaries of the financial sector in Colombia are authorized by the country’s central bank (Banco de la República) to trade currencies and maintain balances in foreign currency in accounts abroad. Colombian law allows banks to maintain a net daily asset or liability position in foreign currency, determined as the difference in foreign currency denominated rights and foreign currency denominated obligations, including both on and off-balance sheet positions. On an entity individual basis, the average of this difference over three business days cannot exceed twenty percent (20%) of the entity’s regulatory capital. On a consolidated basis, the average of this difference over three business days (positive or negative) cannot exceed forty percent (40%) of the consolidated entity´s regulatory capital.
The maximum and minimum total foreign currency position and the spot foreign currency position are determined according to the regulatory capital of each entity. The regulatory capital used (individual or consolidated) is that of the last business day two months prior. The exchange rate used in the calculation is the average of the exchange rate established by the Superintendency of Finance for the previous month or the last calculation on a consolidated basis.
A substantial amount of Grupo Aval’s foreign currency assets and liabilities are in U.S. dollars. Details of the assets and liabilities in foreign currency held by Grupo Aval as of December 31, 2025 and 2024 are shown below:
December 31,2025
Other currencies
Total in
U.S. dollars
converted to U.S.
Colombian pesos
Account
(Millions)
dollars (Millions)
Financial assets (1)
2,075
8,054,803
965,570
1,384
5,215,235
30,057
Loan portfolio financial assets at amortized cost
4,695
Derivative financial assets held for trading
296
1,114,961
Derivative financial assets held for hedging
637
Trade receivable
688
2,585,220
9,403
35,624,391
Financial liabilities (2)
Derivative financial liabilities held for trading
1,053,795
Derivative financial liabilities held for hedging
9,741
4,283
16,107,271
7,369
27,716,615
11,934
44,887,422
Net financial asset (liability) position
(2,531)
(9,263,031)
(2) As of December 2025, the liabilities related to Multi Financial Group (MFG) were no longer presented line-by-line on the Consolidated Statements of Financial Position and were instead reported in a single line item within “Liabilities directly associated with non-current assets held for sale”, see note 13.A.
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December 31,2024
1,338
5,913,128
267,836
2,412
10,649,301
580
8,347
341,310
43,377
714
3,164,035
13,661
59,750,750
243
236,242
16,408
7,246
32,100,339
8,258
36,432,897
15,748
68,785,886
(2,087)
(9,035,136)
Grupo Aval’s financial subsidiaries hedge their foreign exchange exposure using derivatives instruments, especially forwards. The net foreign currency position of each subsidiary is monitored on a daily basis.
Grupo Aval has several investments in foreign subsidiaries and branches whose net assets are exposed to foreign exchange risk because of the translation of gains or losses for the purpose of consolidating their financial statements. The exposure arising from net assets in foreign operations is hedged primarily with financial obligations, bonds and foreign exchange derivative instruments.
The following table presents sensitivities of profit or loss before taxes and equity (OCI) to reasonably possible changes in exchange rates applied at the end of the reporting period relative to the functional currency of the respective Group entities, with all other variables held constant:
Increase
Decrease
Ps.100 per U.S.
dollar
Equity (mainly OCI) (1)
1,591
(1,591)
Profit and loss before taxes
(71,717)
71,717
1,801
(1,801)
(53,818)
53,818
(1) The sensitivity in equity considers mainly assets and liabilities of entities with functional currencies different from the Group’s presentation currency compensated with derivatives and financial labilities designated to hedge net investments in foreign operations.
The sensitivity in profit or loss was calculated for monetary assets and liabilities denominated in currencies other than the functional currency of the respective entities of the Group, including intercompany balances which are not hedged. The sensitivity takes into consideration the variations that could occur in the spot exchange rate, excluding from this calculation any changes that may arise in the forward curve. The Group’s exposure to currency risk at the end of the reporting period is not representative of the typical exposure during the year.
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4.2.4 Interest Rate Risk in the Banking Book
In Colombia, the Superintendency of Finance, in line with the best practices of the Basel Committee on Banking Supervision, issued External Circular 025 on November 17, 2022. This circular introduced guideline applicable to the management of Interest Rate Risk in the Banking Book (IRRBB) and the Credit Risk Spread in the Banking Book (CRSBB) within the financial system. The afore mentioned circular establishes that supervised entities must adopt specific strategies, policies, and procedures for the adequate management of IRRBB. Additionally, it introduces two indicators to recognize the level of exposure of entities to balance sheet risks: Economic Value of Equity (EVE) and Net Interest Margin (NIM).
External Circular 025 of 2022, effective as of December 1, 2024, required supervised entities that, as of December 31, maintained a banking book to report balance sheet risk exposure indicators on an individual basis. In addition, the circular established the obligation to report consolidated balance sheet risk exposure indicators for entities with consolidated financial statements that include institutions holding a banking book. This requirement applies for the first time with financial information as of December 31, 2025.
The following section outlines the general considerations of the standard measurement methodology established under the applicable regulations, which must be applied to the assets and liabilities recorded in the Banking Book of Banco de Bogotá, Banco de Occidente, Banco Popular, and Banco AV Villas. Furthermore, in the case of Banco de Bogotá and Banco de Occidente, this methodology must also be applied to the financial assets and liabilities consolidated with subsidiaries that maintain banking books. Corficolombiana, however, was exempted by the supervisory authority from applying this regulation, as it does not maintain an accounting book for measurement purposes.
Financial subsidiaries are exposed to Interest Rate Risk in the Banking Book (IRRBB) when interest rates change, as the present value and timing of future cash flows may be affected. This, in turn, impacts the underlying value of the entity's assets, liabilities, and off-balance sheet items, and consequently, the Economic Value of Equity (EVE). Changes in interest rates also affect the entity's earnings by altering interest-sensitive income and expenses, thereby impacting its Net Interest Margin (NIM).
This risk includes (i) gap risk, which arises from the mismatch (the difference between assets and liabilities on the entity's balance sheet for a given date and time band) in the maturity structure of instruments exposed to interest rate risk; (ii) basis risk, which corresponds to the impact of relative changes in interest rates for financial instruments with similar maturities but whose prices are determined using different interest rate indices; and (iii) option risk, which refers to the probability that the entity will incur losses due to the exercise of options embedded implicitly or explicitly in assets, liabilities, and off-balance sheet items that are contractually and legally exposed, such as loan prepayments.
To manage IRRBB, the banks within Grupo Aval have established in their policies that this risk is only applicable to Banking Book operations that do not consume capital for market risk, including asset, liability, and off-balance sheet operations with such exposure.
The regulation establishes, for both individual and consolidated information, the application of the outlier test. This test compares the maximum Delta VEP calculated by the entity under interest rate shock scenarios against 15% of the sum of Ordinary Core Capital (CET1 – Patrimonio Básico Ordinario in spanish language) and Additional Core Capital (ATI1 – Patrimonio Básico Adicional in spanish language) in effect at the reporting date. As of the reporting date, this reference established in the regulation remains solely a monitoring threshold and, for the time being, does not impose restrictions on the operation of our Banks. For entities that exceed this level in the outlier test, the regulation requires the submission of an adjustment plan that includes one or more of the following measures to mitigate the impact of increased exposure to IRRBB: (i) reduce exposures to IRRBB, (ii) impose restrictions on internal risk parameters, (iii) enhance the risk management framework, (iv) evaluate increasing capital resources, or (v) adopt other measures that allow mitigating the level of exposure to IRRBB.
In accordance with the regulation, Delta EVE corresponds to the maximum difference in the Economic Value of Equity (EVE) observed between the baseline scenario and six scenarios simulating adverse movements in interest rate curves, as follows:
F-104
F-105
Individual results:
Below are the results of the Delta EVE and Delta NIM measurements as of December 31, 2025 and 2024:
Maximum Delta NIM
Maximum Delta EVE
Delta EVE / CET1+AT1
(in Ps)
(704,381)
(1,598,433)
11.01
(632,679)
(341,331)
7.22
(351,902)
(362,219)
18.06
(197,711)
(155,061)
12.52
(634,544)
(1,216,132)
8.57
(555,733)
(173,433)
5.95
(328,276)
(408,513)
21.00
(139,938)
(118,104)
9.42
As of December 31, 2025, Banco de Bogotá, Banco de Occidente and Banco AV Villas maintained their Delta EVE percentages below the threshold established for outlier tests. As of December 31, 2025, Banco Popular exceeded the 15% reference established in the regulation and, in compliance with regulatory requirements, submitted the corresponding adjustment plan to the Superintendency of Finance.
Consolidated results:
Below are the results of the Delta EVE and Delta NIM measurements as of December 31, 2025:
(707,641)
(1,654,667)
10.82
(662,769)
(361,923)
6.58
As of December 31, 2025, Banco de Bogotá and Banco de Occidente maintained their Delta EVE percentages below the threshold established for outlier tests. In the case of Banco Popular and Banco AV Villas, since they do not have subsidiaries with a banking book, they are exempt from reporting consolidated information.
The management of interest rate risk in Grupo Aval's banks is structured with strong governance, led by the Board of Directors, which approves policies and limits, and supported by the Risk Committee and the ALCO Committee, which oversee the risk profile and strategies. The risk area develops methodologies and models to measure, monitor, and evaluate risk, while the treasury analyzes and projects interest rate risk and proposes hedging measures. Internal audit conducts independent evaluations of the risk system.
Grupo Aval's banks identify positions affected by interest rate risk, including assets, liabilities, and derivatives, and analyze their impact. For measurement, they calculate the impact on Net Interest Margin (NIM) and Economic Value of Equity (EVE) under regulatory scenarios and perform sensitivity analyses. Stress tests are conducted based on interest rate movements, and limits and alerts are established to control risk. Monitoring is carried out through periodic reports to the Board of Directors and other committees, ensuring effective risk management.
Results of NIM and EVE Shocks
The following section presents the results of the shocks applied to the EVE and NIM metrics as of December 31, 2025, and December 31, 2024, for individual results. Regarding the consolidated information, the results are presented only as of December 31, 2025:
F-106
Individual Results
Parallel up
Parallel down
Steepener
Flattener
Short rate up
Short rate down
640,311
(92,600)
(749,886)
(1,005,023)
244,956
(95,121)
109,053
(259,220)
(255,114)
3,285
183,092
96,296
(145,824)
(266,231)
169,429
(155,062)
13,969
38,056
(110,853)
(114,476)
38,071
311,377
133,630
(657,975)
(692,773)
135,650
(268,506)
130,669
(274,802)
(135,435)
67,438
126,470
64,031
(199,153)
(255,127)
83,960
(73,388)
(44,814)
53,457
(51,821)
9,886
Consolidated Results
Consolidated results are presented only for Banco de Bogotá and Banco de Occidente, as they are the only financial institutions with subsidiaries that have a defined Banking Book, in accordance with regulatory provisions.
704,940
(93,334)
(761,522)
(1,037,879)
275,954
(48,693)
93,238
(240,949)
(252,959)
(3,693)
In the case of Banco Popular and Banco AV Villas, since they do not have subsidiaries with a banking book, they are exempt from reporting consolidated information.
4.2.5 Interest Rate Risk – Sensitivity of Grupo Aval’s Consolidated Balance Sheet
Non-trading instruments consist primarily of loans and deposits. The net interest margin of our financial subsidiaries may be affected by changes in interest rates. Losses can result from unexpected movements in interest rates. For this reason, our financial subsidiaries monitor the interest rate risk daily and set limits on asset and liability mismatches.
Grupo Aval´s financial subsidiaries monitor their interest rate risk daily and set limits to repricing mismatches between assets and liabilities. They analyze their interest rate exposure in a dynamic way. Scenario modelling considers renewal of existing positions, financing alternatives, and hedges. Considering these scenarios, the financial subsidiaries calculate the profit and loss impact of changes in interest rates.
The following table shows interest rates exposure of non-interest-bearing and interest-bearing for financial assets and liabilities by maturity bucket for our financial subsidiaries at December 31, 2025 and 2024. In this table, fixed rate instruments are classified according to their maturity date and floating rate instruments are classified according to their repricing date:
F-107
From one to
From six to
More than a
Assets (1)
one month
six months
twelve months
year
interest
6,947,229
12,407,481
313,342
857,713
917,811
15,493,978
422,683
1,947,537
2,422,508
23,663,229
941,587
2,523,556
3,776,864
Trade receivable at FVTPL
1,275,910
88,802,542
2,343,572
15,886,960
231,208
2,875,339
1,510,240
55,839,426
Mortgages loans
278,631
286,563
11,248
21,535,268
891
605
1,767,275
10,241
24,683
787
1,926,393
20,264,116
Total Assets
12,203,439
97,304,302
10,982,425
138,944,746
32,671,597
292,106,509
From six to
Liabilities (2)
6,384,604
17,213,631
10,784,108
45,291,746
20,894,887
18,135,176
14,699
27,924
419,922
22,444,060
208,589
2,776
2,609,903
6,823,584
6,898,316
8,227,372
5,346,412
1,085,204
15,025,370
Total Liabilities
130,475,915
57,698,255
28,881,183
41,387,918
17,633,553
276,076,824
6,669,978
10,328,881
64,537
143,911
313,373
11,415,593
373,026
1,495,003
2,726,862
22,455,307
1,120,442
3,339,892
3,707,096
2,540,937
15,313,556
66,132,059
6,400,419
27,568,609
4,821,574
3,357,049
2,743,970
51,053,732
3,837,007
184,710
123,247
17,890,763
2,199
457
704,516
14,665
6,589
2,230,108
21,886,987
32,921,500
74,660,209
16,016,876
139,338,308
32,215,868
295,152,761
6,064,076
18,515,460
6,739,476
50,866,874
23,336,940
15,386,537
13,359
108,392
226,159
17,651,017
527,638
331,114
3,377,387
10,628,700
3,790,469
10,301,603
157,427
4,855,835
286,286
20,916,299
113,617,646
66,987,439
27,744,809
46,604,439
18,741,619
273,695,952
F-108
As part of their interest rate risk management process, our financial subsidiaries analyze the interest rate mismatches between their interest-earning assets and their interest-earning liabilities. This sensitivity analysis, based on hypothetical changes, assumes that the composition of Grupo Aval´s statement of financial position remains constant over the period being measured.
Based on the financial statement as of December 31, 2025, a linear accounting sensitivity exercise to interest rate variations is carried out, assuming a constant market situation, without incorporating the existing effects on financial assets and liabilities resulting from discretionary decisions of clients and changes that may occur in macroeconomic fundamentals. Thus, if market interest rates were to increase by 100 basis points, without considering the maturity of the instruments or the repricing periods but only the balance as of the cut-off date, and assuming there is no asymmetric movement in the yield curves, the profit for the year would have been Ps. 83,572, which represents 1.10% of total net interest income as of December 31, 2025, and Ps. 33,715, which represented 0.46% of total net interest income as of December 31, 2024, mainly higher as a result of higher interest income on variable interest assets offset by higher interest expenses on variable interest liabilities and lower fair values of investments at fair value through profit or loss, due to the proportion of assets indexed to variable rates being higher than liabilities indexed to variable rates. Other comprehensive income in equity would have been Ps. 835,812 as of December 31, 2025, and Ps. 868,462 as of December 31, 2024, mainly lower because of a decrease in the fair values of fixed-rate financial assets classified as fair value through OCI.
The following is a breakdown of non-interest-bearing and interest-bearing assets and liabilities by interest rate type and by maturity, as at December 31, 2025 and 2024.
Under one year
Over one year
Variable
Fixed
2,843,399
4,103,830
169,009
1,919,857
131,985
15,361,993
231,040
4,561,688
831,844
22,831,385
1,890,797
1,963,451
38,255,304
11,022,924
50,293,877
8,736,879
683,307
10,523,849
1,648,975
47,600,082
36,143
1,083,682
512,333
20,479,552
802
604
25,652
401,057
1,525,336
47,595,865
36,884,143
56,455,622
118,499,282
392,631
5,991,973
11,243,338
76,995,203
23,127,676
54,048,625
5,740,557
12,189,059
13,082
29,541
255,945
22,399,480
10,323,838
5,459,051
3,518,694
5,257,592
2,151,022
4,280,592
5,638,943
9,386,429
47,507,532
169,204,465
14,898,194
26,833,080
F-109
767,956
5,902,022
39,959
481,862
267,185
11,148,408
18,733
4,576,159
949,667
21,505,639
2,604,222
94,850
2,446,087
47,408,803
12,085,311
46,834,101
9,086,428
828,680
10,058,687
5,666,008
45,422,950
58,686
931,590
4,022,386
17,023,065
1,342
2,059
823
15,598
5,845
356,931
1,873,177
54,702,965
37,354,237
62,373,114
108,506,577
642,651
5,421,425
9,509,067
70,105,837
11,243,745
67,994,677
4,210,357
12,881,048
11,728
110,023
336,770
18,172,999
8,349,490
5,952,723
8,188,874
5,607,072
810,630
905,693
7,368,553
17,130,971
30,904,081
168,663,377
19,767,784
35,619,091
4.3 Liquidity Risk
Liquidity risk management has always been a basic element of Grupo Aval’s business strategy and a fundamental cornerstone, together with capital, on which the strength of its balance sheet rests. Liquidity risk is related to the inability of Grupo Aval´s subsidiaries to fulfill their obligations with customers, financial market counterparties, lenders, suppliers, authorities or other stakeholders at any given moment, in any currency and in any location.
Structural liquidity management aims to finance the recurring nature of a company’s activities under optimal terms of time and cost, avoiding taking unwanted liquidity risks. At Grupo Aval, the financing and liquidity model is decentralized and based on autonomous subsidiaries that are responsible for covering their own liquidity needs. Therefore, each entity reviews its available resources on a daily basis in order to control its liquidity risk.
The financial subsidiaries of Grupo Aval are responsible for complying with the regulatory liquidity requirements, as well as meeting the obligations arising from their current and future activity. In consequence, they will either take deposits from their customers, or by resorting to the wholesale markets where they operate. Grupo Aval’s financial subsidiaries have a strong capacity as well as to raise funds in the wholesale markets.
Financial subsidiaries comply with the requirements for liquidity risk management of the jurisdictions in which they operate. They define policies that govern the functions of identification, measurement, control and monitoring required to manage daily liquidity requirements, comply with minimum liquidity buffers and establish liquidity contingency plans to deal with any unexpected situation.
Financial subsidiaries controlled by Grupo Aval, in Colombia, are required to maintain adequate liquidity positions based on the Superintendency of Finance’s liquidity parameters, using a short-term liquidity index (Indicador de Riesgo de Liquidez in Spanish
F-110
language), or “IRL,” that measures liquidity for different time horizons from 1 to 90 days. This index is defined as the difference between adjusted liquid assets and net liquidity requirements.
During 2020, as part of its convergence towards Basel III standards, the Superintendency of Finance incorporates the segmentation by type of deposits in the calculation of non-contractual liability cash flows. The methodology segments saving deposits in eight categories, according with their balance and the type of customer, then calculates the run-off rate for each category and finally multiplies both to determine the non-contractual reserve.
Grupo Aval´s financial subsidiaries assess the volatility of deposits, debt levels, the asset and liability structure, the liquidity of different asset types, the availability of lines of credit and the effectiveness of asset and liability management. The objective is to have adequate liquidity to manage possible stress scenarios.
The quantification of appropriate money market funding levels is an integral part of the liquidity measurement carried out by each entity. Based on statistical analysis, primary and secondary sources of liquidity are identified in order to ensure funding stability and diversification, and to minimize concentration.
Financial subsidiaries in Colombia must maintain cash on hand and in Central Banks deposits in order to comply with reserve requirements. The calculation of the reserve requirement is based on the daily average of the different types of deposits every two weeks.
On August 30, 2024, the Board of Directors of the Central Bank of Colombia (Banco de la República) issued External Resolution No. 3, which reduces the reserve requirements as follows:
There are no reserve requirements for our subsidiaries located in Panamá because there is no Central Bank to regulate such requirements.
The following table presents liquid assets as of the cut-off date and their depletion for each of the time horizons established in the regulatory liquidity risk methodology (1 to 7 days, 1 to 30 days and 31 to 90 days), based on separate figures of our financial subsidiaries in Colombia at December 31, 2025 and 2024:
Liquid assets
available at the end
From 31 to 90
Bank
of the year (1)
From 1 to 7 days (2)
From 1 to 30 days (2)
days (2)
16,766,645
14,103,526
5,290,233
(17,219,591)
11,509,695
7,654,716
4,681,592
(10,698,827)
3,058,631
2,656,389
1,314,672
(3,211,668)
5,572,720
4,994,515
1,573,415
(6,216,132)
2,567,533
1,608,683
809,740
(472,992)
13,469,768
10,953,748
2,928,936
(16,891,633)
9,284,616
6,461,637
2,946,224
(11,199,262)
4,030,595
3,580,936
893,612
(5,667,658)
F-111
2,145,763
1,665,301
687,963
(2,909,334)
1,908,014
902,572
560,871
(649,409)
The following tables show the individual IRL Ratio as of December 31, 2025, and 2024 for each of our banks in Colombia and Corficolombiana, expressed in Colombian pesos and as a percentage:
IRL – 7 days
14,104
10,954
6,122
5,028
4,995
3,581
2,656
1,665
1,609
IRL – 30 days
5,290
2,929
3,375
1,814
1,573
894
1,315
810
561
630
535
964
896
760
268
Supervised entities are required to calculate and report to the SFC on a weekly basis an indicator of short-term liquidity risk. The IRL is calculated in periods of 7 and 30 days and must be at least 100 percent. During 2025, Grupo Aval's Colombian banks met the minimum regulatory requirement.
The liquidity calculations described above assume normal liquidity conditions, according to the contractual flows and historical experience of each of the financial subsidiaries. For extreme liquidity events caused by unusual deposit withdrawals, the financial subsidiaries have contingency plans that include available credit lines with other financial institutions and access to special lines of credit with Colombia´s Central Bank, in accordance with current regulations. These lines of credit are granted when required, and are collateralized by Colombian government securities or by a portfolio of high-quality loans, as specified in the Central Bank regulations. Grupo Aval´s financial subsidiaries did not access the Central Bank special lines of credit during the years ended at December 31, 2025 and 2024.
The banks in each country are responsible for their liquidity position on a stand-alone basis. They have access to funding mechanisms with their central banks (which allow them to use their portfolios of marketable securities as collateral in money market schemes, as well as loan portfolio rediscounting mechanisms), funding through short-term credit lines offered by correspondent banks, and financing provided by multilateral organizations.
The following breakdown shows the contractual undiscounted cash flows of the financial assets and liabilities including contractual interest receivable and payable at December 31, 2025 and 2024.
From one to six
From six to twelve
months
a year
2,137,023
1,778,618
3,413,469
10,291,572
17,620,682
452,819
1,799,620
2,192,120
28,678,618
33,123,177
1,246,317
2,298,604
4,657,753
10,166,124
10,257,908
30,969,302
16,646,031
72,688,388
130,561,629
2,034,248
8,046,766
8,544,496
68,901,971
87,527,481
544,230
1,244,414
1,390,669
39,963,613
43,142,926
529
956
1,880
1,773,392
4,125
1,777,517
742,356
800,086
267,223
727,255
2,536,920
F-112
2,903
27,728
44,577
207,077
282,285
2,014,113
328,378
19,339
22,489,768
24,851,598
40,560,245
47,298,170
37,175,846
245,912,668
370,946,929
Time Deposits
12,207,927
44,796,477
23,537,597
21,155,408
101,697,409
432,549
29,996
22,456,432
22,667,854
1,197,304
6,658,939
7,630,961
13,470,640
28,957,844
4,692,748
1,191,133
18,543,581
24,427,462
582,011
835,227
438,932
776,212
2,632,382
107,001
21,434
6,246
134,715
148,713,033
57,328,977
32,822,890
53,952,087
292,816,987
Less than one
Commitments Loans
month
252,734
372,873
1,598,026
33,874
2,257,507
Standby letters of credit
7,416
87,122
294,149
12,200
400,887
Overdraft facility
Standby credit card facility
6,745,525
327,468
857,444
6,916,653
14,847,090
Undrawn approved loans
516,842
309,576
3,177,938
57,481
4,061,837
Total Commitments Loans
9,793,764
1,097,039
5,927,557
7,020,208
23,838,568
300,292
305,488
435,694
8,422,819
9,464,293
401,816
1,811,929
3,252,189
24,381,983
29,847,917
940,289
2,456,711
3,203,905
2,662,693
9,263,598
14,582,605
31,222,986
18,300,276
71,697,670
135,803,537
2,374,330
8,120,876
8,394,853
69,138,663
88,028,722
372,088
1,150,098
1,292,659
39,222,723
42,037,568
1,226
625
2,051
4,167
703,330
705,129
376,454
325,466
144,525
170,457
1,016,902
3,054
53,560
21,102
8,476
86,192
2,864,204
318,938
4,548
25,143,889
28,331,579
39,918,547
45,768,476
35,050,016
240,851,424
361,588,463
9,186,183
49,090,487
25,405,518
18,863,479
102,545,667
235,111
111,456
1,343
17,666,654
538,143
332,010
18,536,807
1,995,053
10,510,170
4,796,438
13,359,839
30,661,500
395,469
1,156,876
886,593
26,947,429
29,386,367
308,653
380,271
95,804
240,701
1,025,429
1,369
3,220
4,180
8,777
133,982,932
61,787,411
31,519,583
59,416,971
286,706,897
48,394
360,652
1,064,744
1,629,771
3,103,561
26,546
145,194
195,627
16,905
384,272
1,861,943
26,281
32,113
341,120
2,261,457
6,192,403
355,995
660,752
5,724,232
12,933,382
394,475
113,970
2,611,051
201,208
3,320,704
8,523,761
1,002,092
4,564,287
7,913,236
22,003,376
F-113
4.4 Regulatory capital management
Decree 2555 of 2010 (as modified by Decree 1771 of 2012, Decree 1648 of 2014, Decree 2392 of 2015, Decrees 1477 of 2018 and 1421 of 2019) sets forth capital adequacy requirements for Colombian credit institutions. Technical capital for Colombian credit institutions consists of the sum of total Core Equity Tier I (CET1 or patrimonio básico ordinario), Additional Tier I capital (AT1 or patrimonio básico adicional), and Tier II capital (Tier II or patrimonio adicional). Tier I capital consist of the sum of CET1 (patrimonio básico ordinario) and AT1 (patrimonio básico adicional). Tier I and Tier II, as defined herein, may differ to the manner in which these terms are used in other jurisdictions.
Pursuant to Decrees 1477 of 2018 and 1421 of 2019 Basel III principles were introduced to estimate adequate capital in credit institutions as follows:
F-114
3,553
15,488,196
14,980,050
15,896,788
15,426,827
(150,051)
246,238
(21,063)
244,407
1,259,998
1,128,549
1,270,587
1,090,178
(1,460,905)
(1,388,211)
(1,506,967)
(1,709,972)
(694,849)
(783,110)
(347,120)
(672,462)
(1,431)
14,445,943
14,187,069
15,294,347
14,381,099
1,687,813
2,459,094
132,000
134,586
1,819,813
2,593,680
Other deductions from technical capital
Technical capital
16,265,756
16,780,749
16,982,160
16,840,193
80,428,512
81,152,552
98,501,784
97,961,017
185,383
153,522
Market risk exposure (1)
2,059,807
1,705,799
3,460,094
3,535,594
683,524
565,377
784,011
664,410
Operational risk exposure (1)
7,594,709
6,281,962
8,711,230
7,382,337
90,083,028
89,140,313
110,673,108
108,878,948
Total solvency ratio (2)
15.34%
138,326,503
129,644,773
158,485,219
154,516,917
(2) Solvency ratio is calculated as technical capital to risk-weighted assets, including regulatory value at risk and regulatory operational risk.
F-115
4,677
5,242,618
4,996,740
5,477,955
5,253,452
(52,984)
53,594
152,485
209,136
533,656
494,992
574,590
473,554
19,155
16,902
(761,334)
(693,741)
(726,124)
(651,630)
(235,063)
(233,646)
(2,747)
(2,743)
4,728,823
4,619,873
5,499,991
5,303,348
1,075,171
1,357,700
38,417
30,716
1,113,588
1,388,416
5,842,411
6,008,289
6,575,163
6,661,048
41,765,590
40,395,605
45,511,052
44,446,464
109,891
339,369
152,513
381,971
1,221,006
3,770,764
1,694,594
4,244,121
337,993
282,931
337,127
283,565
3,755,476
3,143,676
3,745,856
3,150,726
46,742,072
47,310,045
50,951,502
51,841,311
5,499,992
81,723,618
75,193,855
87,702,312
81,253,921
F-116
22,297
1,482,139
1,545,974
74,778
123,694
(52,600)
(116,277)
(241,826)
(194,924)
(1,817)
(10,420)
(44,359)
(116,928)
1,238,612
1,253,416
1,238,788
1,253,592
200,000
150,000
37,373
31,568
237,373
181,568
1,476,161
1,435,160
11,391,828
10,473,834
173,975
250,741
121,116
102,999
1,345,735
1,144,438
12,911,538
11,869,013
1.84%
11.43%
22,081,029
19,170,558
F-117
78,861
77,253
2,310,223
2,496,783
2,272,386
2,546,400
113,637
82,992
303,895
251,899
15,078
(226,699)
49,174
(314,876)
7,280,592
6,866,755
(416,309)
(390,836)
(477,807)
(460,169)
(96,364)
(94,690)
(96,372)
2,005,126
1,944,803
9,410,730
8,872,572
362,384
319,316
112,384
69,316
9,421
15,349
371,805
334,665
(24,232)
(41,551)
2,376,931
2,279,467
9,498,882
8,900,337
16,991,036
17,069,637
37,420,685
37,339,994
12,786
16,967
142,064
188,523
3,383,123
3,234,940
148,169
144,415
358,587
414,441
1,646,317
1,604,616
3,984,300
4,604,901
18,779,417
18,862,775
44,788,108
45,179,835
31,641,203
29,036,941
59,643,311
55,602,943
F-118
3,464
12,318,266
12,016,888
122,538
(12,237)
514,748
327,654
(100,348)
(104,519)
(1,611)
(1,512)
12,857,057
12,229,738
12,857,249
12,229,930
12,833,017
12,188,379
21,097,041
20,630,956
3,275,783
3,556,617
205,781
271,948
2,286,453
3,021,644
26,659,277
27,209,217
12,857,250
29,017,318
27,239,441
F-119
109,211
2,870,070
2,543,792
(29,084)
(19,698)
701,905
652,600
(405,131)
(381,208)
(33,661)
(25,646)
(53,826)
3,159,484
2,825,225
Unrealized gains/losses on securities available for sale
(2,607,155)
(2,269,084)
552,328
556,140
693,323
671,894
48,361
42,577
137,330
121,454
1,525,884
1,349,490
2,267,568
2,063,961
Solvency ratio (2)
24.36%
F-120
31,384
19,951
(7,471)
(7,381)
16,367
12,926
(24,256)
(20,156)
(3,895)
(3,844)
32,080
32,880
Unrealized gains/losses on securities available for sale(1)
28,679
30,098
478
717
5,315
7,967
14,591
12,889
162,123
143,206
196,117
181,271
F-121
15,580
36,277
36,227
(2,909)
(2,944)
10,915
829
(2,565)
(3,513)
57,298
46,179
22,752
13,638
5,709
6,790
63,428
75,444
2,761
3,120
30,682
34,667
116,862
123,749
NOTE 5 – ESTIMATION OF FAIR VALUE
The fair value of the financial assets and liabilities traded in active markets (such as financial assets in debt securities, equity securities and derivatives actively listed in stock exchanges or interbank markets) is based on dirty prices supplied by a price vendor. A dirty price includes accrued unpaid interest on the security, from the date of issuance or last payment of interest, up to the date at which the security is valued.
An active market is a market where transactions for assets or liabilities are carried out with sufficient frequency and volume in order to provide price information on an ongoing basis. A “dirty” price is one that includes accrued and outstanding interest on the security, from the date of issue or last interest payment to the date of completion of the sale. The fair value of financial assets and liabilities that are not traded in an active market is determined through appraisal techniques determined by the price supplier or by the management of Grupo Aval’s entities. Appraisal techniques used for non-standardized financial instruments such as options, foreign exchange swaps and derivatives of the over-the-counter market, which include the use of interest rate or currency assessment curves built by providers and extrapolated to the specific conditions of the instrument being appraised, discounted cash flow analysis, options pricing models and other valuation techniques commonly used by market participants who rely mostly on market data and the least possible on specific data of entities.
Grupo Aval may use models developed internally for financial instruments with no active markets. These models are usually based on valuation techniques and methods generally standardized in the financial sector. The valuation models are mainly used for appraising financial equity instruments not listed on the stock exchange, debt certificates and other debt instruments for which the markets were
F-122
or have been inactive during the financial period. Some inputs of these models may not be observable in the market and are therefore estimated based on assumptions.
The output of a model is always an estimate or approximation of a value that cannot be determined with certainty, and the valuation techniques used may not fully reflect all the factors relevant to the positions of Grupo Aval. Therefore, the appraisals are adjusted, if necessary, to allow for additional factors, including country risk, liquidity risks and counterparty risks.
The fair value hierarchy has the following levels:
The level in the fair value hierarchy within which fair value measurement is classified in whole is determined based on the input of the lowest level that is most significant for measuring its total fair value. For such purpose, the relevance of an input is assessed in connection with the measurement of the total fair value. Financial instruments that are listed in markets that are not deemed active, but which are valued based in accordance with quoted market prices, quotes from price vendors or alternative price sources supported by observable inputs, are classified in Level 2.
If a fair value measurement uses observable inputs that require significant adjustments based on unobservable inputs, this measurement is classified as Level 3. The assessment of the importance of a particular input to the measurement of fair value in whole requires judgment, taking into consideration specific factors of the asset or liability.
Determining what is deemed as ‘observable’ requires a significant judgment by Grupo Aval. Grupo Aval considers as observable data the market data which is already available, distributed or updated by the price suppliers, and it is reliable and verifiable, with no property rights, and provided by independent sources which are actively involved in the reference market.
5.1 Measurements of Fair Value on a Recurring Basis
Measurements of fair value on a recurring basis are those required or allowed in statement of financial position at the end of each accounting period.
The following table presents an analysis, within the hierarchy of fair value, of Grupo Aval´s assets and liabilities (by class), measured at fair value as of December 31, 2025 and 2024, on a recurring basis.
F-123
Level 1
Level 2
Level 3
Total
Trading investments
14,958,413
859,429
15,817,842
213,079
245,439
247,237
492,676
862,772
169,798
1,032,570
24,738
Total trading investments
15,203,852
2,209,194
Investments in debt securities at fair value through profit or loss
Total investments in debt securities at fair value through profit or loss
18,992,124
5,610,575
24,602,699
46,411
459,840
506,251
72,711
1,261,975
1,753,545
22,617
236,158
Total investments in debt securities at fair value through OCI
19,111,246
9,344,710
28,455,956
34,315,098
11,553,904
46,038,800
Equity securities
Trading equity securities
15,284
5,177,030
4,105,412
9,297,726
Investments in equity through OCI
1,458,576
140,795
1,599,479
Total equity securities
1,473,860
5,177,138
4,246,207
10,897,205
Held for trading derivatives
Currency forward
1,047,383
Debt securities forward
310,987
Interest rate swap
26,628
754,819
781,447
Currency swap
25,468
Currency options
51,736
Total held for trading derivatives
2,190,393
23,472
212,449
235,921
Total hedging derivatives
213,086
Other account receivables
Financial assets in concession contracts (2)
Total other account receivables designated at fair value
Non- financial assets
703,818
179,161
Total non- financial assets
414,570
1,118,388
Total assets at fair value on recurring basis
35,839,058
19,838,339
7,466,012
63,143,409
991,647
38,858
35,179
797,291
832,470
36,441
Total trading derivatives
1,916,260
F-124
25,101
Total liabilities at fair value on recurring basis
1,951,102
(2) See Note 12.1 “Financial assets in concession arrangements”.
10,580,049
61,509
10,641,558
26,107
49,272
1,002,194
8,813
25,710
10,606,156
1,331,258
11,938,839
13,391,650
4,876,258
18,267,908
52,253
410,492
462,745
1,195,495
3,307,315
Securities issued or secured by central banks
2,626,783
249,660
733,697
735,437
14,641,138
12,409,060
25,247,294
13,740,318
12,711
4,049,509
3,194,286
7,256,506
1,302,512
118,691
1,421,303
1,315,223
4,049,609
3,312,977
8,677,809
530,625
117,053
4,515
218,314
222,829
58,475
40,312
964,779
10,642
Financial assets in concession contracts
1,211,274
26,567,032
18,808,725
8,707,511
54,083,268
F-125
672,690
15,978
2,469
219,353
221,822
52,455
48,989
1,009,465
5,250
1,031,123
5.1.1. Trading assets in debt securities pledged as collateral
The following is a list of held-for-trading financial assets that are being used as collateral in repo operations, pledged as collateral for transactions with financial instruments, or pledged to third parties as collateral to secure financial obligations with other banks.
December 31, 2025
Level 1
Level 2
Level 3
Pledged as collateral in money market operations
7,127,460
3,076
7,130,536
Pledged as collateral to special entities such as CRCC, BR and BVC (1)
1,570,315
1,745
1,572,060
8,697,775
4,821
8,702,596
(1) Cámara de Riesgo Central de Contraparte (“CRCC”), Banco de la República (“BR”) and Bolsa de Valores de Colombia (“BVC”)
December 31, 2024
5,270,000
2,055
5,272,055
1,179,027
Pledged as collateral in operations with derivative instruments
1,193
6,450,220
6,452,275
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5.1.2 Investment in debt at FVOCI securities pledged as collateral
The following is a list of debt securities at FVOCI that are being used as collateral in repo operations, pledged as collateral for transactions with financial instruments, or pledged to third parties as collateral to secure financial obligations with other banks.
6,942,359
921,396
7,863,755
15,470
6,987
22,457
122,040
6,957,829
1,050,423
8,008,252
9,331
2,386,077
71,398
2,457,475
9,343,906
1,131,152
10,475,058
7,353,270
760,242
8,113,512
17,418
6,842
24,260
37,767
862,930
332,741
1,195,671
18,670
164,308
8,233,618
1,320,570
9,554,188
423,117
213,290
636,407
8,656,735
1,533,860
10,190,595
5.2 Items Measured at Fair Value on a Non-Recurring Basis
Grupo Aval is required on a nonrecurring basis to adjust the carrying value of certain assets and liabilities or provide valuation allowances. These assets or liabilities primarily include impaired collateralized loans and non-current assets held for sale. The fair value of these assets which are classified as Level 3 are determined using pricing models, discounted cash flow methodologies, current replacement cost or similar techniques, using internal models or external experts with sufficient experience and knowledge of the real estate market or of assets being appraised. Generally, these appraisals are carried out by references to market data or based on the replacement cost when sufficient market data is not available.
The following table presents Grupo Aval’s assets and liabilities, classified within the fair value hierarchy, which are measured on a nonrecurring basis as of December 31, 2025 and 2024 at fair value less cost of sale:
F-127
Impaired collateralized loans
416,065
Assets of disposal group held for sale (1)
18,199,621
Non- current assets held for sale
56,992
18,672,678
1,795,616
1,900,830
Liabilities of disposal group held for sale (1)
(1) See note 13.A., "Assets and liabilities classified as held for sale of Multi Financial Group".
5.3 Fair Value determination
The following tables provide information about valuation techniques and significant inputs when measuring fair value on a recurring basis for assets and liabilities, with fair value hierarchy classification of level 2 or level 3.
Level 2 instruments are those which are valued using inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly.
The following table provides information about valuation techniques and significant inputs when measuring fair value on a recurring basis for assets and liabilities classified as level 2.
ASSETS AND LIABILITIES
Valuation technique Level 2
Significant inputs
Investments in debt securities at fair value
Securities issued or secured by the Colombian Government
Income approachMarket approach
Theoretical price / estimated price(1)Average price / market price(2)
Securities issued or secured by other Colombian Government entities Securities issued or secured by other financial entities Securities issued or secured by non-financial sector entities Others
Income approach
Theoretical price / estimated price(1)Yield and margin
In Foreign Currency
Securities issued or secured by the Colombian Government Securities issued or secured by non-financial sector entitiesOthers
Market approach
Average price / market price(2)
Market price(2)
Securities issued or secured by other financial entities
Theoretical price / estimated price(1)Market price(2)
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Corporate stock
Estimated prices(1)
Investment funds (2)
Market value of underlying assets, less management and administrative fees
Foreign currency forward
Discounted cash flowFWD points, discount rates of different currencies and Spot exchange rates FWD points, discount rates of different currencies and Spot exchange rates Representative Market Rate (RMR) and Curves
Discounted cash flow Representative Market Rate (RMR) and Curves
Interest rate swap Cross currency swap
Discounted cash flow Discounted cash flow and discount rates of different currenciesRepresentative Market Rate (RMR) and Curves
Discounted cash flowBlack&Sholes&Merton modelRepresentative Market Rate (RMR) and Curves
Discounted cash flow
Income approachMarket approach
Discounted cash flowFWD points, discount rates of different currencies and Spot exchange ratesDiscounted cash flow and discount rates of different currenciesRepresentative Market Rate (RMR) and Curves
The following table provides information about valuation techniques and significant unobservable inputs when measuring Level 3 assets and liabilities at recurring fair value.
Valuation technique Level 3
Significant unobservable inputs
Income approach
Theoretical price / estimated price
Investments in equity securities(1.1)
Discount Rate Adjusted Present ValueComparable Multiples
- Income- Discount interest rates- Gradient- Perpetuity Gradient- Multiple of EBITDA
Investments in equity instruments through profit or loss - Nexus and Pactia (1.2)
Market Value (square meter) Initial capitalization ratio
F-129
Market Income Cash Flow Discount Rate
Assets under concession contracts
Discounted cash flow
- Free-cash flow from concession contracts- Concession contract’s maturity period- Perpetuity value of the year “n” free-cash flow- Present value of the discounted residual value at Weighted Average Cost of Capital ("WACC").The detail of valuation process for financial assets in concession arrangements are outlined in (2)
Non-financial assets
The processes used to collect data and determine the fair value of biological assets are described in (3)
Market Value Market Income Cost approach
- Market Value- Market Income- Cost approach (4)
(1.1) Valuation of equity securities and investment funds Level 3
Investments with fair value hierarchy level 3 have significant unobservable inputs. Level 3 instruments include investments in equity instruments, which are not quoted on any stock exchange. Given that observable prices are not available for these securities, Grupo Aval hires suppliers who are experts in valuation techniques to obtain fair value.
The following table includes a sensitivity analysis of main equity securities amounting to Ps. 80,053 as of December 31, 2025 classified at FVOCI level 3.
Favorable
Unfavorable
Methods and Variables
Variation
impact
Comparable multiples / Recent transaction price
EBITDA Number of times
+/-1%
583
(583)
Adjusted discounted cash flow
Perpetuity gradient
+/- 100pb
2,008
(1,488)
Income
322
(286)
Discount interest rates
(70)
+/- 50pb
3,056
The following table includes a sensitivity analysis of main equity securities amounting to Ps. 61,197 as of December 31, 2024 classified at FVOCI level 3
434
(434)
+/- 50 pb
336
(330)
1,128
(1,046)
(1.2) Valuation of equity instruments through profit or loss
The fair value of real state capital funds investments classified in level 3 have significant unobservable inputs. These Level 3 instruments include primarily investments in equity instruments, which are not publicly traded. In other cases, such as the Nexus and Pactia, the investments are valued using their unit value (Commercial appraisal). Given that observable prices are not available for these investments, the Contract Manager uses valuation techniques to obtain the fair value.
F-130
The following table presents the variables of the model used to calculate the sensitivity analysis, which is calculated taking as a reference the market value resulting from the valuation of the Group's properties, the Group's takes the calculation of two impacts cataloged as scenarios:
Scenario 1 (1)
Scenario 2 (2)
Sensitivity calculation variables:
Market value (square meter)
+10%
-10%
Market income
Initial capitalization rate
+50 bp
-50 bp
Cash flow discount rate
(1) Contemplates the calculation taking the increase of the variables.
(2) Contemplates the calculation taking the decrease of the variables.
The following table includes a sensitivity analysis of main equity securities amounting Ps. 4,086,202 in:
Nexus Real Estate Capital Funds (Nexus)
Includes investments in the Nexus Real Estate Capital Funds as of December 31, 2025, Ps.3,717,262 classified at FVTPL level 3:
Scenario 2 (1)
Sensitivity impacts
47,056
(76,273)
(1) For the year 2025, there are some appraisal reports whose input is level 2, while the total compartment for the Nexus private real estate fund is classified by Grupo
Aval as level 3; therefore, the analysis corresponds solely to the sensitivity of the underlying assets with level 3 valuation.
Includes investments in the Nexus Real Estate Capital Funds as of December 31, 2024, Ps.2,772,165 classified at FVTPL level 3:
Scenario 1
Scenario 2
65,955
(97,147)
Private Equity Fund Pactia Inmobiliario (Pactia)
The following table includes a sensitivity analysis for the Private Equity Fund Pactia Inmobiliario as of December 31, 2025, for Ps. 368,940, classified at FVTPL level 3:
145,958
(130,982)
(1) The impact of the scenarios corresponds to 100% of the valuation sample in which each entity of the Group has a percentage of participation of: Banco Bogotá
6.29%, Banco Popular 4.53%, Banco de Occidente 2.48% and Banco AV Villas 0.66%.
The following table includes a sensitivity analysis for the Private Equity Fund Pactia Inmobiliario as of December 31, 2024, for Ps. 327,688 (1), classified at FVTPL level 3:
Scenario 1 (2)
3,816
(6,294)
(1) Includes opening balance as of October 29, 2024, of Ps. 324,220 and valued of Ps. 3,468.
(2) The impact of the scenarios corresponds to 100% of the valuation sample in which each entity of the Group has a percentage of participation of: Banco Bogotá
6.24%, Banco Popular 4.49%, Banco de Occidente 2.46% and Banco AV Villas 0.65%.
F-131
(2) Valuation of financial assets under Gas and Energy concession arrangement rights
Promigas and subsidiaries, designated the financial assets under concession contracts at fair value, the method used to estimate it is discounted cash flows.
The assumptions and inputs used in the calculation of the financial asset estimate were:
The components of the calculations are the following:
(*) Nominal WACC calculated under the Capital Asset Pricing Model (CAPM) methodology for each entity, updated annually. The following variables were used for determining the WACC:
Sensitivity analysis
The following table includes a sensitivity analysis of the assumptions used by Promigas and its subsidiaries in the calculation of fair value of unconditional transfer rights of gas pipelines to Government entities at the expiration date of the contracts. The value of the financial asset at December 31, 2025 is Ps. 2,635,437 and Ps. 4,181,835 at 2024, the sensitivity analysis shows their increase or decrease.
+100 bps
-100 bps
WACC
(688,849)
1,057,443
(927,375)
1,416,415
Perpetuity growth rate (1)
598,455
(417,801)
888,065
(617,439)
(1) Perpetuity growth rate in the case of concessions with renewal clauses that are highly likely to be exercised.
(3) Biological Assets
Fair value of Grupo Aval subsidiaries “biological assets”, which correspond to agricultural activities related to biological assets (animals or plants), is estimated based on internal reports prepared by the companies who own such assets. Fair value of biological assets is determined using valuations performed by experienced internal professionals, using discounted cash flow models. Since no comparable market exist for the biological assets, given their nature, their fair value is determined using discounted cash flows models for each biological asset, based on estimated future quantities of crops, prices, harvesting costs, and maintenance and crop yields, among others, discounted using a risk-free rate adjusted by an appropriate risk premium. See note 15.
The main assumptions used for determining the fair value of the principal biological assets are as follows:
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1. Biological assets growing in rubber crops:
The price of natural rubber used to calculate the 2026-2028 cash flows was forecasted based on the average of the last 3 years of the Technically Specified Rubber (TSR20) per ton January 2023 Ps.0.46 (US$ 1,730/Ton), in order to reflect the behavior of the commodity for an entire economic cycle. Forecasted prices are adjusted annually based on the expected US inflation rate.
2. Biological assets growing in African palm crops:
The price of African palm oil (US$ per ton) used to calculate the 2026-2027 cash flows was forecasted based on the average price of palm oil since January 2024 Ps. 0.30 (US$ 1,141.0/Ton), in order to reflect the behavior of the commodity for an entire economic cycle. Forecasted prices are adjusted annually with the expected US inflation rate.
(4) Investment properties
Investment properties are recognized at fair value, based on a valuation made at each year-end period using, as a basis, independent appraisal expert whose report is obtained and reviewed by management. While in the countries in which we operate, the frequency of transactions in the real state sector is low compared to other more developed markets, management believes there are enough references to assess the fair value of investment properties owned by Grupo Aval and its subsidiaries based on comparable market transactions (See note 15.3).
Fire-sales are excluded from the comparable transactions used to estimate the fair-value of investment properties. Management has reviewed the main assumptions used by the independent external appraisers (such as inflation, interest rates, etc.) and believes they are consistent with market conditions at each end of period. However, management believes that the estimation of the fair value of investment properties depends on significant judgment from the independent expert appraisers, and as such, there could be a significant probability that the actual price of sale of a property differs from its fair value.
The following table includes a sensitivity analysis for the investment properties as of December 31, 2025, for Ps. 179,161, classified at FVTPL level 3:
8,950
(9,177)
5.4 Transfers between level 1, level 2 and level 3 of the fair value hierarchy
The following table summarizes the transfer between fair value levels 1, 2 and 3 as of December 31, 2025. In general, transfers between Levels in the investment portfolios are due, fundamentally, to changes in the liquidity levels of the securities in the markets.
Investments in debt
securities at FVTPL
securities at FVOCI
Transfers between:
Level 2 to 1
Level 1 to 2
Level 3 to 2
161,788
The following table summarizes the transfer between fair value levels 1, 2 and 3 as of December 31, 2024. In general, transfers between Levels in the investment portfolios are due, fundamentally, to changes in the liquidity levels of the securities in the markets.
F-133
1,318,769
The following table summarizes the transfer between levels 1, 2, and 3 of fair value as of December 31, 2025. In general, transfers between levels are due to observable data in appraisals, which allowed FVTPL to be classified in level 2.
at FVTPL
696,084
5.5 Reconciliation Level 3 of the fair value hierarchy
The reconciliation from the opening balances to the closing balances for the fair value measurements categorized within Level 3 is shown in the following table:
Financial assets in
in debt
concession
Biological
securities
instruments
arrangements
assets
January 1, 2023
1,383
2,302,280
3,507,231
212,630
880,963
Changes in fair value recognized in profit or loss (1)
506
221,926
18,601
92,607
Changes in fair value recognized in OCI
39,566
557
Transfers to/from non-current assets held for sale
95,593
Reclassifications
(4,160)
Effect of movements in exchange rates
(7,079)
Additions
830,718
26,118
56,307
Sales / redemptions
(606,614)
(26,677)
(200,670)
Discontinued operations (2)
(17,650)
(7,649)
1,889
2,770,226
3,830,916
230,672
906,469
(464)
211,414
7,589
36,705
(6,819)
16,935
22,370
32,470
6,966
(3)
326,096
26,572
37,859
(4)
(1,199)
(26,494)
(85,975)
13,259
(864)
729
429,160
3,396
4,905
22,076
(1,915)
Execution of the conversion option of the BOCEA into shares (5)
(1,425)
Net effect from concession termination (6)
(2,169,561)
6,675
19,388
(5,946)
169,069
569,789
27,222
4,721
(33,548)
(129,377)
Transfer from level 2 to level 3
F-134
Transfers from level 3 to level 2 (7)
(696,084)
3,908
Reclassification MFG operation (8)
(87,823)
(49)
(1) Included in a) debt and equity securities in “Net trading income” – “Trading investment income” line; b) financial assets in concession arrangements in “Net income from other financial instruments mandatorily at fair value through profit or loss” line; c) Biological assets in “Income from sales of goods and services” line, and d) Investment properties mainly in “Other income” line.
(2) See note 13B., "Discontinued operation related to Multi Financial Group".
(3) In 2024, the increase is mainly due to the transfer of assets to the Pactia Real Estate Private Equity Fund. For 2025, it is mainly due to increases in the Nexus Private Real Estate Fund by Hoteles Estelar S.A and the investment of Banco de Occidente in the Credicorp PAF private equity fund.
(4) Corresponds to the sale of the shareholding of Grupo Zona Franca Bogotá of Banco de Bogotá for Ps. 1,199.
(5) Corresponds to the BOCEA issued by Titularizadora Colombiana, in which Banco Av Villas held a position. Upon maturity, on December 16, 2025, the entity exercised its right to convert the instrument into shares
(6) See Note 12.1 “Financial assets in concession arrangements”.
(7) As of December 31, 2025, the appraisals incorporated observable data for the estimation of fair value, allowing them to be categorized at level 2.
(8) Corresponds to the reclassification to Non-Current Assets Held for Sale of Multi Financial Group operation as of December 31, 2025, see note 13.A.
5.6 Fair Value of Financial Assets and Liabilities recognized at Amortized Cost
The following table shows a summary of financial assets and liabilities accounted at amortized cost and valued at fair value as of December 31, 2025 and 2024, only for disclosure purposes.
Carrying
Fair Value
Estimate
Investments in debt securities at amortized cost (2)
9,197,179
9,239,039
10,689,692
10,715,384
Net credit portfolio at amortized cost (3)
185,831,654
189,257,222
193,423,152
195,070,693
200,819,178
199,972,606
Liabilities (4)
Customer deposits (5)
207,699,875
201,762,276
Financial obligations (6)
67,290,749
71,364,572
274,990,624
273,126,848
The following is a breakdown of how financial assets and liabilities accounted at amortized cost and are measured at fair value for disclosure purposes only.
(2) Debt securities at amortized cost
Fair value of fixed income investments at amortized cost was determined using the dirty price given by the price supplier, securities in an active market and with a market price for the day of the valuation are classified as level 1; securities with no active market and/or with an estimated price (present value of the flows of a security, discounted with the reference rate and the corresponding margin) given by the supplier are classified as level 2 and level 3.
(3) Credit portfolio at amortized cost
For credit portfolio at amortized cost, the fair value was determined using discounted cash flows models at zero coupon bond, taking into consideration the credit risk and its maturity; the process of valuation is deemed as level 3.
Accounts receivable and payable are classified as short-term assets and liabilities; in consequence, their fair value is similar to their book value.
(4) As of December 2025, the liabilities related to Multi Financial Group (MFG) were no longer presented line-by-line on the Consolidated Statements of Financial Position and were instead reported in a single line item within “Liabilities directly associated with non-current assets held for sale”, see note 13.A.
F-135
(5) Customer deposits
The fair value of demand deposits is equal to their carrying value. For fixed-term deposits with maturities of less than 180 days, their fair value is deemed equal to their carrying value. For fixed-term deposits with maturities of more than 180 days, their fair value was estimated using the carrying discounted cash flow models and the interest rates offered by banks in accordance with their maturity. This is considered as a level 2 valuation.
(6) Financial obligations and other liabilities
For financial liabilities and other short-term liabilities, the carrying value was considered to be similar to its fair value. The fair value of long-term financial liabilities was determined using the discounted cash flow model at interest rates free of risk adjusted by risk premiums of each entity. The fair value of outstanding bonds is determined according to quoted prices or estimated prices supplied by the price vendor. It is considered that this is a level 2 valuation.
NOTE 6 – ASSETS AND FINANCIAL LIABILITIES
6.1 Classification of financial assets and financial liabilities
See definitions in accounting policies in Notes 2 (2.5).
The following table provides a reconciliation of gross amounts between line items in the consolidated statement of financial position and categories of financial instruments as of December 31, 2025, and 2024:
Mandatorily
FVOCI –
at
debt
equity
Amortized
gross carrying
Note
FVTPL
Cost
39,260,893
Measured at fair value
30,055,436
Measured at amortized cost
Measured at fair value (2)
31,969,586
243,432,271
305,457,293
Liabilities (3)
278,063,105
(3) As of December 2025, the liabilities related to Multi Financial Group (MFG) were no longer presented line-by-line on the Consolidated Statements of Financial Position and were instead reported in a single line item within “Liabilities directly associated with non-current assets held for sale”, see note 13.A.
F-136
39,181,293
28,472,926
28,320,373
24,400,493
251,981,889
304,853,883
274,729,544
As of December 31, 2025, and 2024 there are not any reclassifications of financial assets and liabilities.
6.2 Interest income calculated using the effective interest method
The interest income information as of December 31, 2025, 2024 and 2023 corresponds to:
For the years ended
11,525,606
12,975,916
13,849,612
8,756,681
8,805,226
8,899,807
2,095,287
1,751,721
1,476,903
48,710
71,352
85,577
158,813
129,720
Total interest income of loan portfolio
351,742
406,380
748,431
154,223
220,447
177,652
Total interest income cash and cash equivalents and other accounts receivable
F-137
6.3 Interest expense
The interest expense information as of December 31, 2025, 2024 and 2023 corresponds to:
(226,810)
(245,215)
(236,918)
(4,493,611)
(5,396,372)
(5,928,961)
Interest of the derivative designated as the hedging instrument in savings accounts (2)
(5,707)
(8,357,587)
(8,921,856)
(9,482,449)
Interest of the derivative designated as the hedging instrument in time deposits (2)
(5,839)
(49,794)
(63,333)
Total Deposits
(1,598,036)
(1,649,638)
(1,842,126)
Interest of the derivative designated as the hedging instrument in interbank borrowings and overnight funds (2)
805
Borrowings from banks and similar
(1,216,271)
(1,373,146)
(1,357,299)
(240,218)
(241,343)
(204,730)
(1,542,457)
(1,676,593)
(2,049,348)
(362,136)
(490,534)
(591,285)
Total Financial obligations
(2) Corresponds to the coverage of interest expense for savings accounts, time deposits and interbank borrowings and overnight funds. See note 10.4 Impact on Interest Income and Expense Line Item from interest rate hedging.
NOTE 7 – CASH AND CASH EQUIVALENTS
Balances of cash and cash equivalents comprise the following as of December 31, 2025 and 2024:
December 31, 2025 (2)
Cash
3,660,126
3,653,565
Deposits in the Colombian central bank
4,162,015
Demand deposits in banks and other financial entities
250,950
201,906
Clearing houses
1,017
Liquidity management
2,228,070
1,599,125
Cash held for specific purposes (1)
453,828
1,468,832
11,299,907
11,085,731
9,317
88,792
8,045,486
5,484,628
339,708
Total cash and cash equivalents
(1) Includes cash reserved for specific purposes within the concession agreements, primarily allocated to the acquisition of land, utility network works, and deposits to the National Infrastructure Agency (ANI), as well as the management of toll collections, supervision activities, and other operational obligations of the projects. The main variation corresponds to the use of these funds for land acquisition, and the execution of network works for Ps. 414,660.
(2) As of December 2025, the assets related to Multi Financial Group (MFG) were no longer presented line-by-line on the Consolidated Statements of Financial Position and were instead reported in a single line item within “Non-current assets held for sale”, see note 13.A.
F-138
As of December 31, 2025, and 2024, the reserves available to cover the required legal reserve (see note 4.3) for both deposit certificates and current and savings accounts amount to Ps. 5,235,643 and Ps. 8,251,154, respectively.
NOTE 8 – TRADING ASSETS AND LIABILITIES
Balances of trading asset and liabilities comprise the following as of December 31, 2025 and 2024:
Total trading assets and liabilities net
27,146,152
19,151,280
_____________________________
8.1 Trading investments in debt securities
The following is the balance as of December 31, 2025 and 2024:
Securities issued or secured by the Colombian Government
15,817,844
1,032,569
8.2 Trading investments in equity securities
13,453
Fiduciary assignments (1)
11,529
Investment funds (2)(3)
6,600,357
4,757,848
Stabilization reserves (4)
2,669,785
2,380,868
9,296,955
7,152,169
Corporate stock (5)
4,813
Investment funds (5)
771
99,524
104,337
(1) Corresponds to a new investment by Banco de Occidente in the Credicorp PAF private equity fund.
(2) Grupo Aval has restricted collective investment funds related to Concesionaria Nueva Vía al Mar of Ps. 1,060,638, Concesionaria Vial del Pacífico of Ps. 1,768 and
Concesionaria Vial del Oriente of Ps. 209,664.
F-139
(3) Includes investments in the private real estate fund Nexus as of December 31, 2025 of Ps. 3,717,262 and as of December 31, 2024 of Ps. 2,772,165.
(4) Pursuant to Colombian rules, Porvenir S. A. is required to directly invest 1% of the total assets of these funds in mandatory severance and pension funds managed
by Porvenir.
(5) As of December 2025, the assets related to Multi Financial Group (MFG) were no longer presented line-by-line on the Consolidated Statements of Financial Position
and were instead reported in a single line item within “Non-current assets held for sale”, see note 13.A.
8.3 Trading derivatives assets and liabilities
Trading derivative assets and liabilities comprise the following as of December 31, 2025 and 2024:
Forward contracts
Foreign currency to buy
49,705
940,232
429,919
62,051
Foreign currency to sell
997,678
51,415
100,705
610,639
Debt securities to buy
38,193
15,350
Debt securities to sell
310,782
665
116,711
628
1,358,370
1,030,505
647,677
688,668
Swap
Cross currency
222,830
806,915
868,911
281,305
274,277
Options contracts
Total derivative assets and liabilities trading
Derivative instruments contracted by Grupo Aval and its Subsidiaries are generally traded in either domestic financial markets or in over-the-counter international markets. Derivative instruments have a net favorable position (asset) or a net unfavorable position (liability) as a result of fluctuations in exchange rates, in interest rates or other variables relating to market conditions. As a result, the aggregate amount of fair values of the assets and liabilities in derivative instruments may vary significantly from time to time.
NOTE 9 – INVESTMENT SECURITIES
Balances of investment securities comprise the following as of December 31, 2025 and 2024:
Investments in equity securities at FVOCI
Loss impairment
(8,278)
(18,675)
Total investment securities net
F-140
9.1 Investments in debt securities mandatorily at FVTPL
The following table includes investments on asset-backed securities mandatorily at FVTPL because the contractual cash flows of these securities are not SPPI on the principal outstanding:
Total investments in debt securities mandatorily at FVTPL
(1) See details in Note 4.1.3.b
9.2 Investments in debt securities at FVOCI
The following table includes investments in debt securities at FVOCI as of December 31, 2025 and 2024:
Unrealized Gain
Unrealized Losses
25,992,996
39,800
(1,430,096)
24,602,700
22,342
517,983
3,927
(15,658)
506,252
1,319,487
19,762
(4,563)
360
1,746,690
14,660
(7,806)
1,753,544
2,215
22,478
(113)
245,816
(10,070)
312
29,845,450
78,813
(1,468,306)
19,278,224
36,588
(1,046,904)
11,761
484,874
(22,465)
803
4,682,807
18,439
1,135
251,079
(46,256)
2,640,204
9,270
(22,691)
249,748
(753)
859
771,824
715
(37,102)
915
28,358,760
66,045
(1,374,607)
The following table shows amounts reclassified to profit or loss from OCI before taxes, related to fixed income investments debt securities measured at FVOCI:
Redemptions or sales
44,415
(130,219)
ECL allowance
10,407
4,616
Total reclassified to profit or loss
54,822
(125,603)
F-141
9.3 Investments in debt securities at amortized cost
The following table includes investments in debt securities at amortized cost as of December 31, 2025 and 2024:
Total debt securities at amortized cost
The following is a summary of investments in debt securities at amortized cost by maturity dates:
Up to 1 month
1,120,443
More than 1 month and no more than 3 months
More than 3 months and no more than 1 year
6,269,880
7,016,333
More than 1 year and no more than 5 years(2)
136,318
More than 5 years and no more than 10 years(3)
68,447
More than 10 years
2,336,171
(2) This corresponds to a security issued by the Aburrá Oriente S.A. Concession trust. Its maturity date was originally set for 2029; however, it was prepaid by the issuer on September 25, 2025(3) See Note 13.2, ‘Multi Financial Group Transaction
9.3.1 Investment in debt at amortized cost securities pledged as collateral
The following is a list of debt securities at amortized cost that are being used as collateral in repo operations, pledged as collateral for transactions with financial instruments, or pledged to third parties as collateral to secure financial obligations with other banks (See note 33).
1,295,485
685,394
1,528,723
2,214,117
Pledged as collateral to special entities such as CRCC, BR and BVC (2)
856,494
1,173,348
789,531
688,891
1,646,025
1,862,239
2,941,510
4,076,356
(2) Cámara de Riesgo Central de Contraparte (“CRCC”), Banco de la República (“BR”) and Bolsa de Valores de Colombia (“BVC”)
F-142
9.4 Investments in equity securities at fair value through OCI
The following is the balance at December 31, 2025 and 2024:
462,233
1,091,504
(4,769)
1,548,968
52,927
1,355
(3,771)
50,511
515,160
1,092,859
(8,540)
546,822
832,222
(2,799)
1,376,245
50,213
4,423
(9,578)
45,058
597,035
836,645
(12,377)
Variations in fair values fundamentally reflect variations in the performance of companies and market conditions mainly due to changes in interest rates and other economic trends in the country where the investment is held. At December 31, 2025 and 2024 Grupo Aval considers that there is no indication of impairment.
The details of equity instruments through OCI as of December 31, 2025 and 2024 are as follows:
Entity (1)
Grupo Energía Bogotá S.A. E.S.P.
1,411,637
1,159,729
Port operating companies
62,315
45,396
Holding Bursátil Regional S.A.
46,496
40,942
Titularizadora Colombiana S.A.
32,486
31,451
46,545
42,302
Mineros S.A.(2)
101,483
(1) These investments in equity securities have been designated as FVOCI considering that they are not held for trading and correspond to long-term strategic investments.
(2) On July 14, 2025, Corficolombiana completed the sale of its investment in Mineros SA., as a strategic decision by the portfolio management.
For the years ended December 31, 2025, and 2024, dividends are recognized for these equity investments in the amount of Ps. 126,700 and Ps. 141,867 respectively, were recognized in profit or loss in the “Other Income” line (see note 30).
NOTE 10 – HEDGE ACCOUNTING
In accordance with its risk management policies, Grupo Aval uses hedge accounting to manage foreign exchange risk relating to investments in foreign operations and in forecasted transactions; and manage interest risk relating to time deposits issued, as follows:
10.1 Hedges of net investment in foreign operations
Banco de Bogotá, Banco de Occidente and Promigas are exposed to foreign exchange risk related to their investments in foreign subsidiaries, that have the US Dollar as functional currency.
The purpose of hedge accounting is to mitigate and offset any adverse changes resulting from the fluctuation in exchange rate of the Colombian Peso and the functional currency of such investments. The impacts of those movements are reflected in the cumulative translation adjustment in other comprehensive income of the consolidated financial statements.
To cover this risk, Grupo Aval hedges its exposure through foreign currency financial liabilities expressed in U.S. dollars and forward contracts for the sale of U.S. dollars.
F-143
Changes in the Colombian peso against the U.S. dollar have been as follows:
Date
Value of US$ 1
Variation in pesos
3,822.05
(988.15)
4,409.15
587.10
3,757.08
(652.07)
According to the information described above, the following table shows movements of OCI gross of taxes, related to hedges of net investment in foreign operations:
Total OCI Movements Related to Hedges of Net Investment in Foreign Operations from January 1 to December 31, 2025
Hedging
Hedged
non-derivative
derivative
Net OCI
Item
instrument
account
(306,047)
299,545
(6,502)
Other subsidiaries and branches Banco de Bogotá (1)
(111,614)
107,115
(4,499)
(29,882)
29,882
Banco de Occidente (Panamá) S.A.
(54,605)
54,605
Sociedad Portuaria El Cayao S.A. E.S.P.
(16,652)
16,652
Gases del Pacífico S.A.C.
(21,212)
15,335
(5,877)
Gas Natural de Lima y Callao S.A.C. – Calidda
(71,648)
71,648
Promigas Perú S.A.C.
(3,143)
3,143
Gases del Norte del Perú S.A.C.
(15,654)
15,654
Promigas Panamá Corporation
Promigas USA INC
(16,878)
(1) Includes Banco de Bogotá Panamá, Ficentro, and contributions of foreign branches in Miami and New York.
Total OCI Movements Related to Hedges of Net Investment in Foreign Operations from January 1 to December 31, 2024
248,173
(244,040)
4,133
93,700
(88,419)
5,281
23,613
(23,613)
39,893
(39,893)
15,975
(15,974)
18,181
(12,890)
5,291
58,205
(58,205)
2,830
(2,830)
14,139
(14,139)
14,706
(1) Includes Banco de Bogotá Panamá, Banco Bogotá Finance, Ficentro, and contributions of foreign branches in Miami and New York.
F-144
According to the information described above, the following table contains details of hedging operations carried out to cover foreign denominated equity investments. The analysis shows current amount of OCI gross of taxes:
Thousands of US$
Ps. millions
Hedge
amount in
foreign
currency in
investment
financial
forward
liabilities
contracts
459,514
(450,000)
(50,900)
101,526
(435)
50,191
181,057
(170,000)
184,605
133,803
(230,412)
87,996
49,966
(49,966)
37,357
(37,357)
96,872
(96,872)
42,625
(42,625)
26,365
(26,365)
25,733
(25,732)
31,888
(31,888)
3,037
(18,886)
(15,849)
115,385
(115,385)
53,607
(53,607)
4,820
(4,820)
428
(428)
24,007
(24,007)
(5,093)
5,093
989,882
(969,311)
291,397
61,789
(230,847)
122,339
(1) Includes Banco de Bogotá Panamá, Ficentro and contributions of foreign branches in Miami and New York.
425,506
(425,000)
255,147
(198,019)
56,693
164,562
(160,000)
296,219
26,688
92,495
41,635
(41,635)
67,239
(67,239)
72,835
(72,835)
97,230
(97,230)
42,385
(42,384)
24,249
(34,221)
(9,972)
108,974
(108,974)
125,255
(125,255)
3,571
(3,571)
10,561
(10,561)
(0)
900,600
(895,532)
921,862
(551,798)
139,217
(1) Includes Banco de Bogotá Panamá, Banco Bogotá Finance, Ficentro and contributions of foreign branches in Miami and New York.
Hedging with Debt in Foreign Currency in U.S. dollars
Debt financial instruments that are not derivatives can be designated as hedging instruments for changes in foreign currency exchange rates. According to this rule, Banco de Bogotá, Banco de Occidente and Promigas designed debt denominated in U.S. dollar as hedging instruments of their foreign subsidiaries as follows:
F-145
10.2 Hedging Cash Flow
The movement of the accumulated OCI account related to cash flow hedges in Colombian pesos during the years ended on December 31, 2025, 2024 and 2023 is as follows:
Balance at the beginning of the year
24,700
(30,381)
5,542
Changes in the fair value FwD - Future transactions
6,635
6,365
(26,203)
Changes in the fair value FwD - financial obligations
74,420
43,724
(32,672)
Changes in the fair value Swaps - CDTs
104,220
7,752
Changes in the fair value bonds
211,534
(184,902)
270,064
Changes in the fair value other accounts receivable
184,902
(258,982)
Reclassified to profit or loss
(8,273)
(2,760)
11,870
Balance at the end of the year
201,702
During the years ended December 31, 2025, 2024 and 2023, an exchange difference recognized under “Other Comprehensive Income” as a result of cash flow hedge accounting of income (loss) from these highly probable transactions, was reclassified to profit or loss in the amounts of Ps. (8,273), Ps. (2,760), and Ps. 11,870 respectively.
In the ordinary course of its operations Promigas S.A. and its subsidiaries receive income in U.S. Dollars derived from the transportation of gas. Promigas and its subsidiaries hedge the exchange risk arising in future transactions of highly probable gas transportation income, entering into forward contracts for the sale of U.S. dollars with financial entities different from the ones consolidated into Grupo Aval.
The following is the summary of Promigas and its subsidiaries open cash flow hedges:
Income in Thousands of U.S. dollar forecasted
68,086
49,131
Notional amount contracts FWD Thousands of U.S. dollar
% hedged
Fair value in Colombian pesos
(178)
(1,140)
# of contracts
Banco de Bogotá during the year ended December 31, 2025 and 2024 hedged of the foreign currency risk of the account receivable in dollars accounted for as a cash flow hedge.
Nominal amount Hedged Item Thousands of U.S. dollar
330,921
320,195
Notional amount bond Thousands of U.S. dollar
1,243,297
1,411,786
During the year ended December 31, 2025 and 2024, Corficolombiana hedged the exchange risk arising in other accounts receivable:
4,416
5,373
# of contracts FWD
F-146
During the year ended December 31, 2025 and 2024, Banco de Bogotá hedged the exchange risk arising in financial obligations:
1,320,970
896,761
1,323,000
897,700
4,872,318
3,884,510
During 2024, Banco Popular established an interest rate risk management strategy to hedge the variability in expected cash flows arising from the Time Deposit portfolio, whose repricing characteristics are economically aligned with movements in the quarterly IBR rate.
Nominal amount Hedged Item Colombian pesos
769,732
788,614
Notional amount contracts interest rate Swaps (IRS) Colombian pesos
328,250
298,250
37.8
13,838
# of contracts IRS
During 2025, Banco Popular established an interest rate risk management strategy to hedge the variability in expected cash flows arising from the Saving Accounts portfolio, whose repricing characteristics are economically aligned with movements to the overnight IBR rate.
5,600,394
1,547,000
74,663
During 2025, Corficolombiana established an interest rate risk management strategy to hedge the variability in expected cash flows arising from the money market transactions, whose repricing characteristics are economically aligned with movements to the overnight IBR rate.
809,000
10.3 Fair value hedges
As of December 31, 2025 and 2024, Banco de Bogotá uses interest rate swaps to reduce the risk of interest rates on financial liabilities.
Fair value hedges
Changesin fairvalue
Hedging instruments
Interest rate Swap
2,813,929
(34,899)
Items designated hedged
Time Deposits issued
31,309
F-147
4,644,189
68,840
(66,064)
As of December 31, 2025 and 2024 Banco de Occidente uses interest rate swaps to reduce the risk of interest rates on loan portfolio.
1,048,000
18,209
(18,076)
411,000
7,333
(7,250)
As of December 31, 2025 Corficolombiana uses interest rate swaps to reduce the risk of interest rates on debt security OCI portfolio.
1,075,000
72,494
(71,734)
10.4 Impact on Interest Income and Expense Line Item from interest rate hedging
Below, the total changes in fair value and the impact on interest expense are detailed by Subsidiary for the fair value and cash flow hedges of interest rate risk:
Change
in fair
expense (1)
(3,590)
(810)
83,820
(10,736)
Total impact from hedging
152,724
(10,741)
(1) See note 6.3 “Interest expense”.
F-148
5,960
(46,406)
(1,183)
(7,332)
(2,205)
(1,372)
The table below shows the changes in fair value and the impact on interest income for the loan portfolio’s fair value hedge of interest rate risk.
(83)
595
10.5 Testing of Hedge Effectiveness
Grupo Aval’s subsidiaries consider hedging as highly effective if at the beginning and in subsequent periods, the hedging instrument highly offsets changes in fair value or in cash flows attributable to the risk hedged during the period for which the hedging has been designated. The hedging is considered as such if the effectiveness of the hedging is in a range between 80% and 125%. Such effectiveness is assessed by Grupo Aval’s entities at least quarterly and at the end of each accounting period. During the year 2025, 2024 and 2023 each hedging relationship has been effective.
Grupo Aval’s subsidiaries have documented the hedging effectiveness at the beginning of the hedging relationship. Grupo Aval’s subsidiaries evaluate the hedging relationship on a periodic basis as well as the result of the testing of hedge effectiveness.
10.6 Derivative Financial Instruments for hedging purposes comprise the following:
According to the information described above, the following table contains the fair value of derivative financial instruments used for hedging:
10,623
5,185
Foreign currency to sale
559
Total hedge derivatives
F-149
NOTE 11 – LOANS
11.1 Loan Portfolio by Product
The distribution of the loan portfolio of Grupo Aval´s by product is shown as follows:
80,975,412
82,145,280
3,298,256
3,517,386
10,884,896
16,624,543
344,409
338,168
377,851
648,130
12,428,160
12,141,136
Interbank loans and overnight funds
6,814,762
7,266,716
15,990,343
14,442,142
4,360,959
5,834,498
44,616
79,347
209,448
152,803
12,973
18,808
33,023,112
34,182,011
19,257,512
19,714,057
2,854,198
2,321,670
Total mortgages
Gross balance of loan portfolio
Loss allowance loan portfolio (2)
Net balance of loan portfolio
(2) See loss allowance reconciliations from the opening to the closing balance in note 4.1.5.
11.2 Loan portfolio by maturity
The distribution of Grupo Aval´s loan portfolio by contractual maturity period is as follows:
Up to 1
From 1 to
From 3 to
3 years
49,278,231
29,694,500
15,860,292
13,475,961
11,207,153
14,398,577
11,566,323
23,284,160
1,119,825
1,739,368
1,963,065
17,289,452
596
Total gross loan portfolio (1)
63,383,527
45,832,545
29,389,702
54,050,169
(1) As of December 2025, the assets related to Multi Financial Group (MFG) were no longer presented line by line on the Consolidated Statements of Financial Position and were instead reported in a single line item within “Non-current assets held for sale”, see note 13.A.
F-150
59,494,116
30,333,667
13,675,325
11,911,535
10,887,363
14,549,074
11,342,281
25,197,607
990,277
1,427,865
1,605,095
18,012,490
236
528
72,080,213
46,310,815
26,622,937
55,122,160
11.3 Financial Leasing portfolio
As of December 31, 2025, and 2024 the following table shows the reconciliation between gross investment in financial leasing and the present value of minimum payments to be received in these dates:
Total gross rent payments receivable
24,711,683
23,631,711
Less amounts representing running costs (such as taxes, maintenance, insurances, etc.,)
(395)
(341)
Plus, estimated residual amount of assets given for rental (without guarantee)
34,858
41,170
Gross investment in contracts of financial leasing
24,746,146
23,672,540
Less unrealized financial income
(9,450,815)
(9,190,926)
Net investment in contracts of financial leasing
15,295,331
14,481,614
Loss allowance of net investment in financial leasing
(468,623)
(483,965)
The detailed information of gross investment and net investment in financial leasing contracts receivable as of December 31, 2025 and 2024 in each period is as follows:
Gross investment
Net investment
Up to 1 year
4,012,082
2,714,800
From 1 to 5 years
10,105,384
6,267,950
More than 5 years
10,628,680
6,312,581
3,718,951
2,280,167
9,735,614
5,831,107
10,217,975
6,370,340
The banks of Grupo Aval and subsidiaries grant loans through financial leasing mainly for acquisition of vehicles and computer equipment, generally with terms between 36 and 60 months, with a purchase option at price below the market price for the buyer at the end of the contract, for acquisition machinery and equipment with terms between 60 to 120 months, with a purchase option at price below the market price or for the time close to the economic life of the asset, and for housing leasing with terms between 120 to 240 months, transferring the asset at the end of the contract. These leasing contracts are granted at current market interest rates at inception.
F-151
NOTE 12 – OTHER ACCOUNTS RECEIVABLE, NET
Balances of other accounts receivable, net of impairment losses, comprise the following as of December 31, 2025 and 2024:
Contract assets (1)
17,075,157
19,269,344
Other accounts receivable (2)
7,776,441
9,051,029
Total other accounts receivable
Impairment allowance contract assets
(8,455)
(9,103)
(384,237)
(352,868)
Total other accounts receivable, net
(1) See Note 12.1 “Financial assets in concession arrangements”.
12.1 Financial assets in concession arrangements
The following table provides information about assets from contracts with customers as of December 31, 2025 and 2024:
Financial assets in concession arrangements rights at fair value (1)(3)
Financial assets in concession arrangements rights at amortized cost (1)
14,439,720
15,087,509
Gross balance of other accounts receivable
Loss allowance (2)
Total contract assets
17,066,702
19,260,241
12.2 Other accounts receivable
The detailed information of other accounts receivable measured at amortized cost, as of December 31, 2025 and 2024 is as follows:
Debtors
1,921,640
2,135,285
Accounts receivable for goods and services sales in Non-financial sector companies
1,908,758
1,893,203
Credit card compensations and network compensation
504,715
1,101,495
741,217
875,473
Payment in advance
836,799
871,648
Conditional contributions
653,347
684,801
Taxes
55,376
51,592
1,154,589
1,437,532
Allowance for impairment of other accounts receivable
7,392,204
8,698,161
F-152
NOTE 13 – NON-CURRENT ASSETS HELD FOR SALE
The movement of the non-current assets held for sale during the years ended December 31, 2025, 2024 and 2023 is as follows:
101,184
92,830
58,993
102,486
72,466
Assets sold, net
(51,651)
(57,229)
(121,178)
Increase / decrease due to changes in fair value
(867)
(4,662)
Reclassifications (1)
(40,708)
(44,457)
62,058
4,501
(7,094)
Assets of disposal group classified as held for sale (2)
Discontinued operation (3)
(13,989)
3,391
2,172
Balance at year end
The following is the detail of the non-current assets held for sale:
Foreclosed assets
6,464
8,144
Other movable property
1,093
Residential real estate
4,403
24,361
21,939
40,930
32,806
74,528
Assets received from leasing agreements
10,988
3,666
11,235
Other non-current assets held for sale
Land
5,158
5,893
14,889
7,058
6,973
Assets of disposal group classified as held for sale (1)
18,212,572
27,020
The following is the detail of the associated liabilities to assets held for sale:
Other accounts payable
2,372
3,544
Liabilities of disposal group classified as held for sale (1)
16,461,739
Non-current assets held for sale are primarily assets received through foreclosure of assets pledged as loan collateral. Accordingly, the entities of Grupo Aval have the intention to sell them immediately, our subsidiaries have departments, processes and special sales programs for this purpose. Foreclosed assets are either sold for cash or financing for their sale is provided to potential buyers under normal market conditions. These are expected to be sold within a period of 12 months subsequent to their classification as assets held for sale. There are option contracts in place for some of these assets. Note (4.1.8) on credit risk contains information on assets received through foreclosure and sold during the period.
F-153
13.A. – ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALE OF MULTI FINANCIAL GROUP.
On November 27, 2025, Banco de Bogotá’s subsidiary Multi Financial Holding, Inc. entered into a share purchase agreement with BAC International Corporation (BIC), a subsidiary of BAC Holding International Corp., for the disposal of 17,069,875 shares representing 99.569068% of the issued and outstanding shares of Multi Financial Group Inc. (“MFG”), the parent company of Multibank, Inc., at a price of US$26.8611 per share.
Based on the foregoing, as of December 31, 2025, the subsidiary Multi Financial Group is presented in the Statement of Financial Position as a non‑current asset held for sale and liabilities directly associated with the assets classified as held for sale, generating a discontinued operation in the Statement of Income for the years 2025, 2024 and 2023.
At the time of classification, the assets and liabilities were measured at the lower of their carrying amount and their fair value less costs to sell. As a result of this analysis, an impairment loss of Ps.143,984 was recognized and presented within the results of the discontinued operation. The following table presents the detail of the impairment estimate recognized in balance sheet accounts:
Values
Net carrying amount of assets recognized as non‑current assets held for sale
1,884,238
Fair value less costs to sell of assets recognized as non‑current assets held for sale
1,740,254
Impairment to recognize
143,984
Allocation of impairment for recognized assets
136,858
7,126
The following assets and liabilities were reclassified as held for sale in connection with the discontinued operation as of December 31, 2025:
351,881
118,664
2,856,396
Loans:
7,730,539
3,836,119
3,110,177
138,892
14,815,727
14,553,716
383,898
27,201
197,768
33,076
10,026
240,870
93,650
Income tax assets:
54,618
107,283
161,901
164,423
18,952,600
Effects arising from intra-group transactions
(752,979)
Total assets of disposal group held for sale
F-154
Customer deposits:
2,066,299
2,128,587
8,630,875
3,770
12,829,531
Financial obligations:
94,089
2,446,554
1,407,405
3,948,048
Income tax liabilities:
1,495
2,970
14,468
416,369
17,212,346
Total liabilities of disposal group held for sale
Net of assets and liabilities as non-current held for sale
13.B. – DISCONTINUED OPERATION RELATED TO MULTI FINANCIAL GROUP.
The following details the Consolidated Statement of Income for the discontinued operation, along with the restatement required for the years ended December 31, 2025, 2024 and 2023, in accordance with IFRS 5:
Discontinued operations
1,114,791
558
22,452
25,471
(17,547)
(38,874)
(12,906)
117,024
111,661
87,067
1,210,249
1,210,030
1,267,705
(567,311)
(580,792)
(502,565)
(271,068)
(289,050)
(373,416)
(838,379)
(869,842)
(875,981)
371,870
340,188
391,724
Impairment (losses) recoveries on financial assets
(158,774)
(139,539)
(155,027)
825
2,112
(154,505)
(138,714)
(152,915)
217,365
201,474
238,809
179,544
138,540
140,572
(58,265)
(30,725)
(29,563)
121,279
107,815
111,009
4,302
2,670
3,116
383,849
244,491
182,481
(668,923)
(526,337)
(471,046)
Income before income tax
57,872
30,113
64,369
F-155
(31,226)
(4,449)
(1,361)
Net income per share attributable to controlling interests (in Colombian pesos)
0.77
0.75
1.83
The following are the Other Comprehensive Income details from the discontinued operation for the years ended December 31, 2025, 2024 and 2023:
Net foreign investment coverage
Unrealized net gain on fixed-income investments
Actuarial losses in employee retirement plans
(796)
(5,393)
(1,694)
1,348
Other comprehensive income, net of taxes
170,945
46,650
112,669
Total comprehensive income, net of taxes
197,591
72,314
175,677
Total comprehensive income for the year attributable to:
120,747
54,930
The following details the Consolidated Statement of Cash Flows for the discontinued operation, along with the restatement required for prior periods in accordance with IFRS 5:
Cash flows from discontinued operations MFG
Net income before income tax
Net cash (used) provided operating activities
(1,260,819)
Net cash provided (used in) investing activities
Net cash provided (used) financing activities
(73,843)
99,854
(166,676)
(Decrease) increase in cash and cash equivalents
(401,294)
146,712
(376,672)
753,175
606,463
983,135
F-156
NOTE 14 – INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
The detail of the investments in associates and joint ventures for the years ended December 31, 2025, and 2024 is as follows:
Associates
1,312,746
1,429,186
Joint ventures
1,683
As of the reporting date, no indications of impairment have been identified with respect to the investments.
The following table shows the balances of each investment in associates and joint ventures as of December 31, 2025 and 2024:
Ownership
Book
Gas Natural de Lima y Callao S.A. - Cálidda
573,723
699,910
Gases del Caribe S.A. E.S.P.
357,602
348,946
Credibanco S.A.
221,955
216,185
Redeban Multicolor S.A.
44,266
47,967
A.C.H Colombia S.A.
51,253
39,182
Aerocali S.A.
28,140
35,507
ADL Digital Lab S.A.S.
17,756
Colombiana de Extrusión S.A. - Extrucol
13,395
14,484
Metrex S.A.
2,253
2,089
Energía Eficiente S.A.
1,189
2,249
Servicios de Identidad Digital S.A.S. (1)
4,911
(1) As of September 30, 2025, the Servicios de Identidad Digital S.A.S. associates was liquidated. There are no recorded liabilities or obligations associated with it.
Rentek S.A.S
465
Renting Automayor S.A.S. (1)
(1) As of June 30, 2025, the Renting Automayor joint venture was liquidated. There are no recorded liabilities or obligations associated with it.
Most of our associates and joint ventures are domiciled in Colombia, with the exception of Gas Natural de Lima y Callao S.A. – Cálidda which resides in Perú.
The main corporate purpose of Grupo Aval´s associates is described as follows:
Associate
Corporate purpose
Gas distribution
Payment processing
Automated clearing house
Projects in airport infrastructure
Networks and infrastructure
Tecnology or digital services
Manufacturing and commercialization of industrial equipment
Servicios de Identidad Digital S.A.S.
Digital services
F-157
As of December 31, 2025, and 2024, Grupo Aval did not have contingent assets as income receivable, that arose from any contractual difference with the gas distribution concession, other than a tariff recognition. There were also no contingent liabilities for fines or sanctions imposed by the Government in the development of these concession contracts for possible contractual breaches.
A roll-forward of investments in associates and joint ventures accounts is shown below for the years ended December 31, 2025, 2024 and 2023:
1,288,641
1,419,296
Acquisitions
2,486
2,433
Participation in the profit or loss of the period
350,662
379,028
373,402
Participation in Other Comprehensive Income
(339,018)
(314,504)
(363,466)
Liquidated entity
Effect of movements in exchange rates (1)
(71,660)
58,206
(106,850)
(1) Corresponds to the variation in the TRM during 2025 of Ps. (652.07) per dollar and for 2024 Ps. 587.10 per dollar.
2,042
4,047
Participation in the period profit or loss
273
(632)
(2,005)
The condensed financial information of the associates and joint ventures accounted for under the equity method is as follows:
At the time calculating the equity method, the year-end financial information of some associates was not available. Therefore, the financial information of immediately preceding month for the years 2025 and 2024 was used.
Expenses
Net income LTM
Gas Natural del Lima y Callao S.A. - Cálidda
6,204,218
4,803,759
1,400,459
3,734,932
3,291,043
443,889
4,817,617
3,625,934
1,191,684
3,520,991
3,174,260
346,731
1,045,699
159,027
886,672
607,405
570,946
36,459
1,586,493
1,367,392
219,101
618,712
598,855
19,858
201,087
49,488
151,599
348,505
243,264
105,241
77,925
21,645
56,280
201,140
165,874
35,266
98,554
42,760
55,794
101,926
98,358
3,568
Colombiana de Extrusión S.A. Extrucol
126,511
81,864
44,646
154,728
147,213
7,515
51,127
38,607
12,520
75,916
72,468
3,448
123,107
105,497
17,610
380,634
379,815
818
Servicios de Identidad Digital S.A.S.(1)
F-158
6,979,152
5,251,752
1,727,400
3,647,158
3,223,946
423,212
4,578,075
3,417,111
1,160,964
3,590,647
3,213,198
377,449
9,622,497
9,405,167
217,330
565,481
534,150
31,331
443,908
165,954
277,954
410,808
377,354
33,454
999,582
870,224
129,358
371,014
251,664
119,350
125,470
54,456
71,014
259,537
207,302
52,235
89,275
37,050
52,225
100,662
84,412
16,250
115,757
67,478
48,279
161,882
146,334
15,548
44,452
32,841
11,611
67,163
64,669
2,494
112,296
91,629
20,667
256,529
256,235
294
31,639
17,367
14,272
4,478
(4,333)
Joint Ventures
At the time calculating the equity method, the year-end financial information of joint ventures was not available. Therefore, the information of immediately preceding month for the years 2025 and 2024 was used.
26,525
23,158
3,367
16,119
13,682
2,437
Renting Automayor S.A. (1)
29,131
28,202
929
15,453
14,524
Renting Automayor S.A.
102,899
101,008
1,891
29,928
32,121
(2,193)
NOTE 15 – TANGIBLE ASSETS
The movement of the carrying value amounts of tangible assets for the period ended on December 31, 2025, 2024 and 2023 is as follows:
Given in
Right-of-use
operating
For own use (1)
properties (2)
leases
assets (3)
Balance as of January 1, 2022
7,456,503
2,095,839
100,800
10,746,735
Increase / (decrease) due to changes in the lease variables
636,227
Purchases or capitalized expenses (4)
561,009
236,652
30,587
910,673
Withdrawals / Sales (5)
(544,069)
(174,060)
(16)
(945,492)
Changes in fair value
111,208
Revaluation of investment properties
(189,295)
(93,702)
Loss of control in subsidiary
(565)
Discontinued operations (6)
(795)
(8,444)
(151,520)
(39,001)
(197,600)
(17,712)
(504,889)
(529,051)
Balance as of December 31, 2023
7,113,556
2,250,768
129,081
10,630,546
177,314
631,313
185,779
9,835
891,358
(417,570)
(145,986)
(676,142)
44,294
22,556
F-159
(4,343)
(5,207)
97,963
27,212
132,141
(52,930)
(47,325)
(8,468)
(76,253)
Balance as of December 31, 2024
7,368,175
2,447,762
130,331
11,157,542
146,733
585,117
360,573
165,271
16,888
1,155,071
(598,233)
(110,398)
(344,236)
(3,213)
(1,089,628)
68,306
71,702
(17,297)
26,604
9,307
Transfers from other accounts receivable for concession contracts and intangible assets (7)
2,816,300
(65,829)
2,734
(63,095)
(247,186)
(87,040)
(10,026)
(344,252)
(120,183)
(26,421)
(7,868)
(154,472)
(18,278)
(1,754)
8,855
(13,473)
(24,650)
Balance as of December 31, 2025
9,702,586
2,729,455
130,533
13,680,962
Accumulated Depreciation:
(2,720,889)
(766,245)
(18,413)
(3,505,547)
Depreciation of the year charged against profit or loss
(275,312)
(237,514)
(18,575)
(531,401)
246,714
90,904
337,634
476
(14,607)
(10,974)
(25,581)
29,602
41,213
Reclassification
(3,694)
(1,593)
(2,997)
(2,680,412)
(913,811)
(34,682)
(3,628,905)
(273,582)
(265,586)
(22,677)
(561,845)
226,338
99,664
326,024
1,007
(11,787)
(10,485)
(22,272)
(20,173)
(10,006)
(30,179)
(2,171)
4,086
7,498
9,413
(2,760,780)
(1,096,138)
(49,839)
(3,906,757)
(294,386)
(281,007)
(22,504)
(597,897)
237,052
73,101
1,280
311,433
3,309
(9,269)
(10,799)
(20,068)
49,418
53,964
103,382
22,079
12,998
35,077
(11,807)
462
13,031
1,686
(2,764,384)
(1,247,419)
(58,032)
(4,069,835)
Impairment losses:
(5,372)
(375)
(5,747)
Year impairment charge
(5,341)
(410)
(5,751)
(3,988)
356
(3,632)
(22)
2,061
(7,290)
(7,344)
327
4,087
(2,765)
(62)
(2,827)
Tangible assets, net:
4,427,803
1,336,957
93,989
6,995,890
4,600,105
80,438
Balance as of December 31, 2025 (9)
6,935,437
72,439
F-160
15.1. Property, plant and equipment for own use
The following is the detail of the balance as of December 31,2025 and 2024, for each type of property, plant and equipment for own use:
Accumulated
Impairment
Cost (1)
depreciation
loss
508,911
(1,866)
507,045
Buildings
1,073,721
(347,660)
(703)
725,358
Office equipment and accessories
640,006
(498,112)
(47)
141,847
Information technology equipment
1,503,419
(1,021,605)
(147)
481,667
98,071
(78,092)
19,979
Equipment and machinery (2)
5,057,435
(639,478)
4,417,955
Warehouses
11,096
(3,564)
7,532
Improvements in leaseholds properties
185,840
(129,081)
56,759
Construction in progress
292,211
331,876
(46,792)
285,084
Balance as of December 31, 2025 (3)
758,682
(1,865)
756,817
1,624,279
(406,255)
(812)
1,217,212
645,546
(499,752)
145,764
1,521,882
(1,002,890)
(175)
518,817
98,918
(79,629)
19,289
Equipment and machinery
1,957,838
(592,451)
(4,408)
1,360,979
11,037
(3,391)
7,646
226,588
(133,298)
93,290
208,234
315,171
(43,114)
272,057
(1) The cost of the tangible assets for own use includes borrowing costs capitalized for Ps. 20,057, at December 31, 2025 and for Ps. 12,666, at December 31, 2024 with a capitalized interest rate (weighted average) of 18.16% and 14.87% respectively.
(2) It includes the reclassification due to the termination of the Ballena-Cartagena concession contract with Promigas, in compliance with the contractual and regulatory conditions applicable to the natural gas transportation system. See note 15 “Tangible Assets”.
F-161
15.2 Right-of-use assets:
The following tables show the balance as of December 31, 2025 and 2024, by type of right-of-use asset recognized as part of tangible assets:
41,578
(7,082)
34,496
2,016,220
(846,610)
1,169,610
12,451
(6,334)
6,117
163,048
(123,149)
39,899
62,774
(42,514)
20,260
250,319
(123,480)
126,839
183,065
(98,250)
84,815
Balance as of December 31, 2025 (1)
45,789
(8,544)
37,245
1,792,794
(747,684)
1,045,110
4,887
(4,441)
446
152,662
(104,341)
48,321
62,700
(39,107)
23,593
226,216
(110,288)
115,928
162,714
(81,733)
80,981
15.3 Investment properties
The following is the detail of the existing investment properties, for the periods ended December 31,2025 and 2024:
adjustments
to fair value
282,748
302,379
585,127
227,547
70,305
297,852
510,295
372,684
278,186
275,084
553,270
349,249
70,416
419,665
627,435
345,500
The following amounts have been recognized in the Consolidated Statement of Income during the years ended on December 31, 2025, 2024 and 2023 in relation to investments properties:
Income from rents
8,716
9,863
9,618
Direct operating expenses deriving from property investments which create income from rent
(7,732)
(1,045)
(1,294)
Direct operating expenses deriving from property investments which do not create income from rent
(5,857)
(11,274)
(13,733)
(4,873)
(2,456)
(5,409)
F-162
15.4 Tangible assets given in operating leases:
The following is the detail of the balance as of December 31, 2025 and 2024, by type of property, plant and equipment given in operating lease:
Computing equipment
42,358
(29,647)
64,933
(18,720)
46,213
Mobilization equipment and machinery
23,242
(9,665)
13,515
42,980
(26,431)
16,549
63,243
(15,408)
47,835
24,108
(8,000)
16,054
15.5 Non-cash transactions:
The following details are the tangible asset related non-cash items associated with investing activities in our statement of cash flows
Non-cash investing activities:
Additions of properties by right of use
462,313
185,218
284,793
Additions of goods received in payment
248,792
139,535
103,886
Leaseback transactions
642,981
152,497
628,700
Reclassification of financial assets to owner-occupied properties
2,816,301
Total non-cash
4,170,387
477,250
1,017,379
NOTE 16 – CONCESSION ARRANGEMENTS RIGHTS
The following is the balance of the assets in concession arrangements registered in the Group as of December 31, 2025 and 2024:
Financial assets at fair value (1)
Financial asset at amortized cost net (2)
14,431,265
15,078,406
Total financial assets in concession arrangements rights (3)
Intangible assets (1)
Total assets in concession arrangements rights
Ps
30,561,810
33,574,801
F-163
16.1 Financial Assets in Concession Arrangements
The following table shows the changes in financial assets in concession arrangements registered in Grupo Aval’s subsidiaries for the years ended on December 31, 2025, 2024 and 2023:
At fair value
At amortized cost
Balance as of January 1, 2023
4,824
3,512,055
12,640,961
16,153,016
Additions or new concession arrangements
118,109
877,884
995,993
Collections during the year
(1,144,396)
Adjustment to fair value
Accrued interest
1,493,115
(223)
(8,370)
114,563
3,945,479
13,867,341
17,812,820
76,572
1,100,702
1,177,274
(74,231)
(897,403)
(971,634)
861,175
(709)
30,396
147,300
4,329,135
14,931,106
19,451
543,610
563,061
Net effect from concession termination (1)
Collections during the year (2)
(155,978)
(1,947,215)
(2,103,193)
879,130
648
13,213
23,986
2,659,423
14,407,279
16.2 Intangible Assets in Concession Arrangements
The following table shows the movements of the main concession arrangements in Grupo Aval’s subsidiaries under intangible assets during years ended at December 31, 2025, 2024 and 2023:
7,238,835
7,521,341
14,760,176
Additions (1)
588,454
714,489
1,302,943
Transfers to PPE
4,041
4,270
Withdrawals
(6,489)
Effect of movements in exchange rates (2)
(712,856)
7,108,173
8,239,871
15,348,044
741,423
708
742,131
Transfer to non-current assets held for sale
(33,400)
(21,794)
472,522
8,267,168
8,240,579
16,507,747
726,404
Transfers to Other Intangible Assets (3)
(31,347)
Transfers to / from PPE (3)
(722,070)
Transfers to / from other accounts receivable for concession contracts (3)(4)
(639,347)
62,940
(576,407)
(9,760)
(571,471)
7,019,577
8,303,519
15,323,096
F-164
Accumulated Amortization
(1,339,183)
(165,863)
(1,505,046)
Amortization of the year
(277,702)
(39,385)
(317,087)
(2,184)
41,062
(1,575,534)
(207,432)
(1,782,966)
(303,951)
(93,095)
(397,046)
26,426
(37,931)
(1,883,975)
(300,527)
(2,184,502)
(319,923)
(86,002)
(405,925)
3,609
551,313
Transfers to other accounts receivable for concession contracts (3)
160,830
3,136
44,576
(1,440,434)
(386,529)
(1,826,963)
Impairment loss
(7,811)
(4,613)
(12,424)
Period impairment charge
4,613
(874)
(8,685)
2,535
5,125
(1,025)
Total Intangible Assets
5,891,841
7,350,865
13,242,706
(130,662)
718,530
587,868
Amortization
(236,351)
(41,569)
(277,920)
Balance as of December 31, 2023 (5)
5,524,828
8,032,439
13,557,267
1,158,995
1,159,703
(308,441)
(401,536)
Balance as of December 31, 2024 (5)
6,374,508
7,940,052
(1,247,591)
(1,184,651)
443,541
357,539
7,660
Balance as of December 31, 2025 (3)(5)
5,578,118
7,916,990
The following is a summary of the main concession contracts granted to Grupo Aval’s subsidiaries as of December 31, 2025:
F-165
Year of
Concession
Contract
construction
% Work
Owner
Recognition
Business and country
Objective
Current stage
start
Progress
end date
Gas and Energy
Surtigas S.A. E.S.P.
Fair value / Intangible assets
Energy and Gas Colombia
Purchase, storage, packaging and distribution of gases derived from hydrocarbons.
Operation
03/1984 to 04/1994
1984
2034 to 2045
Transmetano E.S.P. S.A.
Construction, operation and maintenance of gas transportation systems.
08/1994
1996
2044
Purchase, sale, transportation, distribution, exploitation and exploration of natural gas, oil and hydrocarbons in general.
05/1976 to 11/1994
1976
2026 to 2044
Promioriente S.A. E.S.P.
Construction, operation and maintenance of gas pipelines.
09/1995
1995
2045
Gases de Occidente S.A. E.S.P.
Transportation and distribution of liquefied petroleum gas and natural gas.
08/1998
1998
2047
Compañía Energética de Occidente S.A. E.S.P. (1)
Intangible assets
Administrative, operational, technical and commercial management for the provision of electrical energy.
Operation and construction
01/2010
2010
2035
Construction, maintenance and administration of ports.
07/2015
2015
Amortized cost / Intangible assets
Energy and Gas Perú
Purchase, sale, production, commercialization of energy in any of its forms.
10/2013
2034
Construction and distribution service of natural gas.
11/2019
2020
2051
Proyectos de Infraestructura S.A.
Infrastructure Colombia
Design, construction, equipment, conservation, operation and maintenance of road infrastructure.
12/1993
1994
2033
Concesionaria Panamericana S.A.S.
Operation and maintenance
12/1997
2009
Concesionaria Vial del Pacífico S.A.S.
Amortized cost
09/2014
2018
2043
Concesionaria Nueva Vía del Mar S.A.S.
Preconstruction
01/2015
2027
4.11
Concesionaria Vial Andina S.A.S.
06/2015
2016
2054
98.32
(1) The concession has an investment commitment for the expansion, replacement and improvement of the infrastructure which as of December 2025 has an advance of 62.34%.
F-166
NOTE 17 – GOODWILL
The detail of the balance for goodwill as of December 31, 2025, and 2024 is as follows:
2,202,222
Impairment charge (1)
(5,880)
(136,858)
Effect of movements in exchange rates (3)
(23,754)
21,386
(1) Corresponds to the recognition of impairment over Concesionaria Panamericana S.A.S.
(2) See note 13.A., "Assets and liabilities classified as held for sale of Multi Financial Group"
(3) The foreign exchange adjustment is attributable to Multifinancial Group Inc.
The following is the detail of goodwill assigned per Cash Generating Units (CGU), representing the smallest identifiable levels which are monitored by Grupo Aval’s management and which are not greater than the business’ segments:
Goodwill carrying amount
CGU
538,231
Banco de Bogotá S.A. over Megabanco (1)
465,905
358,401
301,222
Promigas S.A. and Subsidiaries
169,687
Banco de Bogotá S.A. over Multi Financial Group Inc. (2)
160,612
127,571
Concesionaria Panamericana S.A.S. (3)
66,714
72,594
Banco de Occidente S.A. over Banco Unión (1)
22,724
Hoteles Estelar S.A.
Total goodwill
(1) Goodwill recognized as a result of mergers between Banco de Bogotá and Megabanco, Banco de Occidente and Banco Unión.
(3) The variation presented corresponds to the recognition of impairment on the CGU.
The recoverable amount of each cash generating unit was determined based on a valuation carried out by an appropriate expert. Such calculations used cash flow projections, covering periods from 5 to 11 years. Cash flows subsequent to these periods were extrapolated using estimated growth rates for such flows, not exceeding the average of the economic sector where the cash generating unit operates.
Below is the detail of the most significant values that comprise Goodwill:
A. Sociedad Administradora de Fondos de Pensiones, Cesantías y del CCAI Porvenir S.A.
Porvenir absorbed AFP Horizonte Pensiones y Cesantías S.A. and the goodwill in question was allocated to the groups of cash-generating units that together made up Porvenir later that same year.
The latest valuation update for the business lines of the groups of cash-generating units to which this goodwill was allocated, was done by an external adviser who issued his report in January, 2026, based on financial statements of Porvenir on September 30, 2025, and which was reviewed by management. The conclusion was that there are no situations that imply a possible impairment, given that the value in use of the groups of cash generating units associated with goodwill was Ps. 11,514,603, exceeding the book value by Ps. 7,734,572.
The following are the main assumptions used in the impairment test impairment testing on the dates listed, even though the valuation exercise includes a 11-years projection, the table shows five years because from year six onwards the projection rates do not show significant variations:
F-167
2026
2028
2029
2030
Interest rate on investments
Borrowing rate
Growth in income from commissions
Growth in expenses
Discount interest rate after taxes
Growth rate after eleven years
A 11-years projection was made to estimate goodwill based on macroeconomic assumptions and those related to the business, as indicated in the foregoing tables, which were determined as follows:
The after-tax discount interest rate that was used to discount dividend flows reflects the specific risks relative to each cash-generating unit. If the estimated discount rate had been 0.5% higher than the estimated rate in the valuation done by external experts, there would be no need to reduce the book value of goodwill, since the value in use of the groups of cash-generating units assigned with goodwill would be Ps. 13,637,155 higher than this book value as of December, 2025 of Ps. 3,780,031.
B. Cash-generating units inside Banco de Bogotá
Goodwill was generated in 2006 with the acquisition of 94.99% of the shares of Banco de Crédito y Desarrollo Social – MEGABANCO S.A. and later merged with Banco de Bogotá. This operation was authorized by the Office of the Superintendency of Finance in Resolution No. 917 dated June 2, 2006.
The latest valuation update for the business lines of the groups of cash-generating units to which this goodwill was allocated, was done by an external adviser who issued his report in January, 2026, based on Banco de Bogotá´s financial statements as of September 30, 2025, and which was reviewed by management. Given the merger with the acquired company, it was concluded that there are no situations that imply a possible impairment, given that the value in use of the groups of cash generating units associated with goodwill was Ps. 14,631,671 exceeds the book value by Ps. 7,652,115.
The following table shows the main assumptions used in the latest impairment tests of the groups of cash-generating units with allocated goodwill.
F-168
Lending rate on the loan portfolio and investments
Discount rate after taxes
Growth rate after five years
A 5-years projection was made to estimate goodwill, based on macroeconomic assumptions and those related to the businesses listed in the foregoing tables. The following is a description of that process:
The after-tax discount rate that was used to discount dividend flows reflects the specific risks relative to each cash-generating unit. If the estimated discount rate had been 0.5% higher than the estimated rate in the valuation done by external experts, there would be no need to reduce the book value of goodwill, since the value in use of the groups of cash-generating units assigned with goodwill would be Ps. 13,317,581, higher than this book value as of December, 2025 of Ps. 6,979,556.
C. Banco Popular S.A.
The acquisition process of Grupo Aval's stake in Banco Popular S.A. began in December 2006 and ended in September 2011, where Grupo Aval closed with a direct participation of 93.74%.
The latest valuation update for the business lines of the groups of cash-generating units to which this goodwill was allocated, was done by an external adviser who issued his report in February, 2026, based on Banco Popular´s financial statements as of December 31, 2025 and which was reviewed by management. It was concluded that there are no situations that imply a possible impairment, given that the value in use of the groups of cash generating units associated with goodwill was Ps. 3,153,850 exceeds the book value by Ps. 375,722.
F-169
29.5
37.4
30.9
18.5
The after-tax discount interest rate that was used to discount dividend flows reflects the specific risks relative to each cash-generating unit. If the estimated discount rate had been 0.5% higher than the estimated rate in the valuation done by external experts, there would be no need to reduce the book value of goodwill, since the value in use of the groups of cash-generating units assigned with goodwill would be Ps. 2,867,575, still exceeding book value as of December, 2025 of Ps. 2,778,128.
D. Banco de Bogotá S.A.
The latest valuation update for the business lines of the groups of cash-generating units to which this goodwill was allocated, was done by an external adviser who issued his report in February, 2026, based on Banco de Bogotá´s financial statements as of December 31, 2025 and which was reviewed by management. It was concluded that there are no situations that imply a possible impairment, given that the value in use of the groups of cash generating units associated with goodwill was Ps. 17,625,648 exceeds the book value by Ps. 7,622,954.
F-170
15.9
The after-tax discount rate that was used to discount dividend flows reflects the specific risks relative to each cash-generating unit. If the estimated discount rate had been 0.5% higher than the estimated rate in the valuation done by external experts, there would be no need to reduce the book value of goodwill, since the value in use of the groups of cash-generating units assigned with goodwill would be Ps. 15,973,992, still exceeding book value as of December, 2025 of Ps. 10,002,694.
NOTE 18 – OTHER INTANGIBLE ASSETS
The following table shows the movements of the other intangible assets during years ended on December 31, 2025, 2024 and 2023:
Internally generated
Separate
Developing
In use
Acquisition (5)
789,686
463,960
786,512
2,040,158
Capitalizations / Acquisitions / Purchases
629,807
52,889
682,696
(89,949)
(172,931)
(262,880)
Transfers
(191,381)
111,365
80,016
(11,244)
(1,258)
(12,502)
Arrangement of entities (1)
(14,333)
(459)
(14,792)
(14,846)
(1,092)
(34,315)
(35,407)
1,201,443
485,376
695,608
2,382,427
609,682
45,168
654,850
(112,936)
(164,352)
(277,288)
(665,019)
431,499
233,520
F-171
(1,494)
(3,232)
(4,487)
(9,213)
(12,562)
1,002
19,102
20,104
1,145,614
800,707
811,997
601,350
5,039
75,343
681,732
(174,754)
(187,171)
(361,925)
(831,840)
608,886
222,954
(7,021)
(8,694)
(15,873)
Transfer from concessions (3)
27,738
Reclassification MFG operation (4)
(3,432)
(90,218)
(93,650)
(19,148)
(1,321)
(21,704)
(23,025)
903,350
1,231,184
819,633
NOTE 19 – INCOME TAX
19.1 Components of the income tax expense
The income tax expense for the years ended on December 31, 2025, 2024 and 2023 comprises the following:
Current period income tax
918,835
988,151
1,009,392
Income tax surcharge
41,787
40,792
27,627
Prior years adjustments
102,745
(12,630)
(20,491)
Subtotal current period taxes
1,063,367
1,016,313
1,016,528
Adjustment due to settlement of uncertain tax positions from prior years
(3,535)
Deferred taxes
Deferred taxes current period
475,300
(80,353)
293,482
Deferred taxes - Prior years adjustments
(105,959)
9,553
(165)
Subtotal deferred taxes
369,341
(70,800)
293,317
Total continued operations
1,432,708
941,978
1,309,073
4,449
1,361
1,463,934
946,427
1,310,434
(1) See note 13.B., "Discontinued operation related to Multi Financial Group".
19.2 Reconciliation of the Nominal Tax Rate and the Effective tax Rate
The tax rules in relation to the income tax applicable during the years 2025, 2024 and 2023, among other things, establish the following:
In Colombia
F-172
In other countries
Grupo Aval international presence through its subsidiaries includes participation in jurisdictions such as Panama, Peru and Barbados. The Subsidiaries with a local license in Panama are taxed at the rate of 25%, while companies liable for income tax in Peru are taxed at the rate of 29.5% as of 2017. In Barbados they are taxed at the rate of 9% starting in 2025.
Below is the detailed reconciliation between total expenses of the income tax of Grupo Aval calculated at the applicable enacted tax rate and the tax expense recognized in the statement of income for the years ended on December 31, 2025, 2024 and 2023:
F-173
Profit before income tax
Enacted tax rate in Colombia
Theoretical income tax expense
1,848,494
1,243,116
1,369,272
Nondeductible expenses
456,190
633,879
774,386
Generation (offset) of tax losses considered non recoverable for income tax purpose (2)
114,337
(140,284)
71,741
(Offset) of presumptive income considered non recoverable for income tax purpose
(518)
(23)
Nontaxable dividends
(50,680)
(59,381)
(47,242)
Nontaxable income under equity method in associates
(140,374)
(151,358)
(150,626)
Profit on disposal of investment
7,700
(19,997)
(5,009)
Nontaxable interest income and other income
(115,888)
(70,282)
(224,025)
Other nontaxable income
(313,556)
(265,218)
(136,377)
Non-accountable tax revenues in sale of BHI
114,201
Revenues taxable at different tax rate
6,164
47,139
Tax benefits in the acquisition of property and equipment
(71,464)
(45,247)
(32,493)
Tax Discounts
(27,083)
(8,466)
(25,086)
Profits (losses) in Subsidiaries in tax free countries or with different tax rate (3)
(272,958)
(197,909)
(229,792)
Effect on the deferred income tax due to changes in tax rates (4)
(10,765)
59,802
(176,764)
Prior year adjustments
Adjustments due to uncertain tax positions in previous year
With holding tax
10,934
11,957
13,465
(5,166)
(65,097)
(32,266)
Total tax expense of the year
Effective income tax rate
31.00
30.31
38.24
(2) In 2025 Corficolombiana and its subsidiaries recorded new tax losses for Ps. 114,337, in 2024 used tax losses on which no deferred tax asset was recorded for Ps. (140,284) and in 2023 recorded new tax losses for Ps. 71,741. These tax loss carryforwards are not deferred tax assets because there is no certainty of their recoverability in the future.
(3) The variation is explained because Corficolombiana consolidates companies of the real sector that are taxed at the 35% rate (no income surtax is applied), companies that have stabilized the income rate at 33% due to the validity of a legal stability contract, companies resident in Peru that are taxed at 29.5% and companies that apply special regimes such as free trade zones and hotel income. The variation is also explained by the fact that Banco Occidente consolidates its subsidiaries Nexa and Barbados at different tax rates.
(4) In 2023 corresponds to the effect of the difference between the rate applied in the calculation of the deferred tax and the statutory rate for the period. The greatest impact is mainly recorded by Corficolombiana with Ps. (87,085), explained by the recalculation of the deferred tax liability of the concessions, Banco Popular for Ps. (57,700), explained by the calculation of the deferred tax at the 35% rate, Banco Occidente for Ps. (36,523), explained by the differences in rates of its subsidiaries Nexa and Barbados and other entities for Ps 4,544.
19.3 Tax Losses and excess of Presumptive Income
The following table shows the detail of the tax loss carry forward and excess of presumptive income over taxable income of the entities of Grupo Aval that have not been utilized, and which are not recognized as deferred tax assets, as of December 31, 2025, and 2024.
Tax loss carry forwards expiring on:
December 31, 2026
5,715
December 31, 2027
1,290
December 31, 2028
December 31, 2029
168,873
66,673
December 31, 2030
120,465
274,281
December 31, 2031
311,234
213,111
December 31, 2032
55,750
December 31, 2033
9,911
9,962
December 31, 2034
230,904
236,661
December 31, 2035
196,748
343,339
December 31, 2036
206,656
27,314
December 31, 2037
301,344
Without expiration date
419,211
427,839
2,021,205
1,609,326
Excess of presumptive income expiring on:
484
1,609,810
(1) Excluded are tax losses of entities that are part of the “Discontinued Operation on Multi Financial Group.”
F-174
19.4 Deferred Taxes from Investments in Subsidiaries
According with IAS 12, Grupo Aval did not record deferred income tax liabilities related to temporary differences of investments in subsidiaries because: i) Grupo Aval has control over the subsidiaries and the dividend policy of its subsidiaries and it can decide about the reversal of such temporary differences; and ii) Grupo Aval does not expect their realization in the short term; therefore, it is probable that such temporary differences will not be reversed in the foreseeable future. As of December 31, 2025 and 2024, Grupo Aval did not record deferred tax liabilities related to taxable temporary differences of investments in subsidiaries of Ps. 7,833,687 and Ps. 7,653,035, respectively.
19.5 Deferred taxes by Type of Temporary Difference
The differences between the carrying value of the assets and liabilities and their tax bases give rise to the following temporary differences which result in deferred taxes, calculated and recorded in the years ended on December 31, 2025, 2024 and 2023, based on current tax regulations as references for the years wherein such temporary differences will be reverted.
Year ended on December 31, 2025
Balance as of
Credited
January 1,
Discontinued
(charged) to
exchange
operations (1)
profit or loss
OCI
Debt securities at fair value
377,090
(108)
182,547
146,499
706,006
1,882
(78)
(789)
Derivative instruments
665,556
141,061
(19,454)
787,163
36,913
(31,343)
5,570
Allowance for accounts receivable
19,703
2,943
(201)
22,445
Loans and receivables
117,587
(117,617)
Allowance for impairment on loans and receivables
255,704
(173,938)
(1,120)
(18,403)
62,243
Allowance for foreclosed assets
4,763
(3,983)
(620)
Property, plant and equipment costs
529,257
(20,327)
508,916
Depreciation of property, plant and equipment
31,443
9,611
305
41,359
301,911
(168,911)
133,000
Tax losses carry forward
1,241,058
(6,014)
399,716
(2,187)
1,632,573
Surplus of presumptive income
618
(604)
335,854
73,930
409,784
73,444
(1,427)
622
(2,712)
969
70,896
Intangible assets in concession contracts
1,528,690
156,671
1,685,361
287
345
Lease agreements
684,588
(7,074)
103,327
(26,172)
754,669
Foreign currency bonds
905,283
(205,341)
(218,483)
481,459
Foreign currency financial liabilities
48,253
20,956
(35,354)
33,855
368,073
(163,232)
23,379
229,348
7,527,728
(192,544)
382,993
(106,914)
(45,217)
7,566,046
Deferred tax liabilities
(10,626)
(278)
278
(202,009)
24,724
(10,862)
(237)
(188,384)
(661,253)
73,349
(72,503)
(660,407)
(33,485)
24,199
(9,286)
Allowance of investments securities
(488)
(525)
(36,417)
3,774
(32,643)
(640,405)
64,022
(243,029)
(1,860)
(821,272)
(42,943)
4,290
(38,653)
Property plant and equipment costs (2)
(268,208)
5,568
(519,928)
(360)
(782,801)
(574,541)
(139,243)
(713,457)
Investment property
(58,307)
600
20,495
4,459
(32,677)
(701,795)
7,627
(80,103)
38,926
(735,345)
Deferred charges and of intangible assets
(406,954)
11,969
106,188
1,843
(286,954)
(3,522)
1,417
(790)
(2,692)
749
(198)
(326,661)
Deferred Income
(1,616,436)
145,879
(1,470,557)
Financial assets in concession arrangements
(214,739)
(162,866)
(377,605)
Intangible assets in concession arrangements
(5,465,459)
75,357
45,532
(5,344,570)
(61,197)
(10,876)
(72,073)
(5,873)
(2,227)
(8,100)
(34,034)
31,538
(2,496)
F-175
(149,569)
(102,843)
16,776
(4,456)
(240,092)
(11,515,991)
91,952
(752,334)
(62,172)
80,471
(12,158,074)
(3,988,263)
(100,592)
(369,341)
(169,086)
35,254
(4,592,028)
(2) The variation corresponds to the termination of the concession agreement for the Ballena–Cartagena gas pipeline section, operated by Promigas, in compliance with the contractual and regulatory conditions applicable to the natural gas transportation system. As a result, the asset is reclassified as property, plant, and equipment, with Promigas remaining as its operator generating a higher deferred tax liability of Ps. 358,769. See note 12.1, “Assets under concession agreements”. 16.2 “Financial assets in concession arrangements” and See note 15 Tangibles Assets"..
Year ended on December 31, 2024
271,644
(925)
84,822
13,297
8,252
437
1,139,921
(510,077)
33,956
1,756
90,066
(53,153)
9,847
10,002
(313)
4,570
113,017
219,275
11,173
25,256
4,480
(501)
1,060
(276)
470,487
57,088
23,510
7,920
299,433
(1,449)
1,055,380
(3,992)
190,656
(986)
2,306
(1,688)
335,594
260
61,705
2,608
(1,560)
2,184
8,507
1,242,841
285,849
(92)
619,451
(561)
138,040
(72,342)
527,394
194,964
182,925
22,851
25,402
263,357
104,146
344
6,642,821
6,631
649,327
258,025
(29,076)
(14,510)
3,301
4,016
(3,443)
(202,181)
(1,464)
6,176
(4,540)
(655,317)
19,262
(23,441)
(1,757)
(32,329)
(1,156)
(66)
(24,833)
(11,584)
(656,156)
24,028
(8,277)
(49,526)
6,583
Property plant and equipment costs
(226,618)
300
(38,381)
(3,584)
(489,096)
(88,955)
3,510
(46,134)
(5,169)
(6,774)
(81)
(276,424)
1,247
(490,295)
63,677
(417,780)
1,092
16,357
(6,623)
(3,660)
308
(447)
(2,109)
1,351
(1,308,952)
(307,484)
(204,636)
(10,103)
(5,175,297)
(256,684)
(33,478)
(68,751)
7,554
(381,618)
375,745
(267,090)
233,056
(80,111)
(53,393)
(14,585)
(1,480)
(10,908,549)
699
(578,527)
(33,182)
(4,265,728)
7,330
70,800
224,843
(25,508)
F-176
Year ended on December 31, 2023
857,505
(2,035)
(62,804)
(520,770)
(252)
1,245
452,394
674,733
9,793
3,001
1,468
258,765
(168,647)
(52)
80,839
(71,334)
905
3,674
(9)
292,841
(6,104)
(26,999)
(40,463)
8,750
(2,848)
(368)
(1,054)
349,485
121,098
18,018
(39,387)
44,879
31,061
(31,061)
237,436
61,968
272,020
(763)
779,074
5,049
18,350
(16,044)
326,889
23,237
(14,532)
73,732
745
(25,998)
13,963
(737)
1,585,925
(333,025)
(10,059)
(17)
619,032
(2,249)
18,293
(15,625)
1,421,540
(620,538)
(273,608)
365,565
(365,565)
396,367
(71,664)
(89,171)
27,825
7,669,219
(13,254)
(151,597)
(859,793)
(3,568)
(5,686)
(5,346)
(172,559)
5,024
(38,013)
3,542
(663,726)
8,847
(438)
(257,754)
225,450
(2,577)
2,155
(37,469)
12,636
(700,024)
29,937
13,931
(75,396)
25,870
(234,385)
4,933
1,051
1,748
(462,695)
(27,481)
1,080
(97,608)
51,266
(314,062)
3,370
32,143
2,125
(326,052)
11,966
(106,579)
2,885
(3,474)
(771)
433
(24,321)
(321)
23,371
710
(1,027,577)
(281,375)
(197,679)
(6,957)
(5,348,922)
140,818
32,807
(63,378)
(5,373)
(346,541)
(35,077)
(312,319)
45,229
(194,243)
120,485
(6,386)
(10,880,671)
20,335
(141,720)
45,219
48,288
(3,211,452)
7,081
(293,317)
(814,574)
46,534
F-177
Grupo Aval offsets deferred tax assets and liabilities by entity and tax authority, considering the application of the tax provisions in Colombia and other countries where some subsidiaries have residence, in which the legal right to offset tax assets and liabilities and other requirements in IAS 12, according to the following breakdown:
Gross Deferred tax
Balances on Statement
amounts
Offset
of financial position
Deferred tax asset
(6,199,226)
Deferred tax liability
6,199,226
(5,958,848)
(1) As of December 2025, the assets and liabilities related to Multi Financial Group (MFG) were no longer presented line‑by‑line on the Consolidated Statements of Financial Position and were instead reported in a single line item within “Non‑current assets held for sale” and “Liabilities directly associated with non-current assets held for sale”, see note 13.A.
(5,899,527)
5,899,527
(5,616,464)
Grupo Aval estimates to recover its income tax assets and settle its income tax liabilities as shown below:
Deferred tax
Deferred tax asset recoverable before 12 months
1,884,045
1,238,172
Deferred tax asset recoverable after 12 months
5,682,001
6,289,556
Total Deferred tax asset
Deferred tax liability to settle before 12 months
(1,366,046)
(1,082,965)
Deferred tax liability to settle after 12 months
(10,792,028)
(10,433,026)
Total Deferred tax liability
Total Deferred tax Net
Grupo Aval estimates to recover current tax assets and current tax liabilities as follows:
Current tax
Current tax asset recoverable before 12 months
2,581,653
2,362,257
Current tax asset recoverable after 12 months
289,758
787,645
Total Current tax asset
Current tax liability to settle before 12 months
(203,908)
(247,502)
Current tax liability to settle after 12 months
Total Current tax liability
F-178
19.6 Effect of the current and deferred taxes in each component of other comprehensive income in equity
The effects of the current and deferred taxes in each component of other comprehensive income are detailed below:
Amount before taxes
Deferred tax (expense) income
OCI Net (1)
Hedged Items (2)
2,447
(628,018)
(218,090)
395,497
Cash Flow hedging (3)
(138,554)
38,448
Foreign currency translation differences for foreign operations
37,687
(335,035)
Debt financial instruments
145,414
(156,185)
Investment in associates and join ventures
1,949
(54,475)
Subtotal Items that will be reclassified to profit or loss
(570,621)
(739,768)
4,098
Unrealized gains (losses) on equity securities
(1,365)
258,686
(2,672)
10,599
Subtotal Items that will not be reclassified to profit or loss
272,227
272,288
Total “other comprehensive income” during the period
(298,394)
(467,480)
Discontinued operation (4)
Total “other comprehensive income” during the period of discontinued operations
170,746
(1) See Note 25.5 "Consolidated Other Comprehensive Income (OCI)"
(2) The tax effect only includes deferred tax on those investments where there is no control of the reversal of the temporary difference
(3) See note 10.2 "Cash flow hedges". The effect of changes in the fair value of the account receivable of Ps. (211,534) which is part of the tax basis is not deferred tax.
(4) See note 13.B., "Discontinued operation related to Multi Financial Group".
(1,988)
512,725
176,097
(323,910)
45,697
100,778
(17,298)
229,721
36,715
(126,672)
(548)
14,781
168,748
407,423
(6,699)
10,042
(10,668)
290,829
3,535
(8,811)
305,892
292,060
474,640
699,483
45,302
F-179
(3) See note 10.2 "Cash flow hedges". The effect of changes in the fair value of the account receivable of Ps. 184,902 which is part of the tax basis is not deferred tax.
Current tax (expense) income
3,972
(793,542)
919
(2,930)
(2,011)
Hedging financial liabilities in foreign currency
(266,321)
494,676
(83,357)
(119,280)
44,884
(364,787)
(517,560)
1,164,166
1,660
(34,232)
1,163,723
(819,652)
344,990
(10,646)
145,737
14,673
(39,957)
99,790
104,868
1,263,513
449,858
112,246
(3) See note 10.2 "Cash flow hedges". The effect of changes in the fair value of the account receivable of Ps. (258,982) which is part of the tax basis is not deferred tax.
19.7 Uncertainties in Open Tax Positions
As of December 31, 2025 and 2024, Grupo Aval evaluated its open tax positions and concluded that there were no uncertainties that required the recognition of liabilities. The uncertain tax positions corresponding to expenses, considered deductible, and which, according to decisions of the tax authorities, could be considered as non-deductible.
F-180
19.8 Withholdings tax on dividends paid between entities
Decree 1457 of November 12, 2020, regulates the articles 242, 242-1, 245, 246-1 and 895 of Colombian Tax Code. This Decree specifies the rules for the application of the special rate for dividends and participations, together with the procedures for the application of withholding tax (¨WHT"). This WHT is paid by the withholding agent in the period in which it is applied. The WHT on distributions made to entities, which is treated as a tax credit when a subsequent distribution is made by the entity to an individual. In essence, the tax credit resulting from the WHT is awarded to the ultimate beneficiary (which will not be a Colombian corporation), not to the entity receiving the dividend in the first place. When the entity first receives the distribution, it accounts for the WHT in equity, as a reduction in dividends payable to individuals in accordance with paragraph 65A of IAS 12. Grupo Aval recorded WHT for Ps. (14,784) and Ps. (15,885) during years 2025 and 2024, respectively. The figure of transferable withholdings applies to Colombian companies.
19.9 Minimum Tax Rate
The Government of Colombia create a minimum tax rate of 15% since 2023 for income tax taxpayers in Colombia, called the Minimum Tax Rate. To determine the rate, taxpayers must: (i) Determine the adjusted tax of the Colombian taxpayer, or the adjusted tax of the group if it becomes part of a business group. (ii) Determine the adjusted profit of the Colombian taxpayer or the group in case it becomes part of a business group, and (iii) Determine the adjusted tax rate of the Colombian taxpayer or the group in case it becomes part of a business group. If the effective rate calculated (adjusted tax/adjusted profit) is less than 15%, the tax to be added to the income tax by the taxpayer or the business group must be calculated.
Grupo Aval is a company whose financial statements are subject to consolidation in Colombia. The paragraph 6 of article 240 of the Tax Statute of Colombia incorporate the calculation of the Group Minimum Tax Rate (TTDG – as its acronym in Spanish) whose result for the year 2025 is higher than the 15% established by Law as the minimum tax base, therefore, it does not give rise to the calculation and recognition of the tax to be added to the Group's income tax.
NOTE 20 – CUSTOMER DEPOSITS
20.1 Detail of the composition of the deposits
The following provides details of the balances of deposits received from customers by Grupo Aval and its subsidiaries in the course of their deposit-taking operations as of December 31, 2025 and 2024:
Detail
Demand
112,299,321
104,542,350
Term deposits
Fixed term deposit certificates (2)
Per currency
191,297,967
168,771,838
Total per currency
F-181
20.2 Detail of the effective interest rates
The following is a summary of the effective interest rates which are accrued on customer deposits is as follows:
0.01
9.00
4.08
13.89
3.62
Fixed term deposit certificates
23.52
0.30
8.05
0.17
9.35
5.60
13.78
5.00
20.3 Detail of the concentration of deposits received from customers per economic sector
42,261,563
36,117,236
Government and Colombian Government entities
30,256,676
26,875,424
29,269,112
31,559,768
Financial and insurance activities
23,078,620
19,700,240
14,665,982
19,280,845
Insurance
13,112,460
14,226,539
Commerce
11,865,618
12,680,110
Real Estate
4,676,630
3,418,132
Manufacturing
4,022,403
3,056,218
Transport
2,421,100
287,384
Agriculture and livestock
2,250,173
1,556,711
Education
1,927,121
1,793,395
Colombian Municipalities
610,621
604,265
Artistic, entertainment and recreation activities
424,886
454,909
Exploitation of mines and quarries
418,288
1,226,516
Foreign Governments
270,985
867,311
Telecommunications
130,018
217,656
Tourism
83,289
25,742,981
26,866,229
F-182
NOTE 21 – FINANCIAL OBLIGATIONS
21.1 Financial obligations other than issued bonds
The following is the detail of the financial obligations obtained by Grupo Aval and subsidiaries as of December 31, 2025 and 2024 to finance their operations:
December
31, 2025 (1)
31, 2024
Local Currency
Overnight funds
35,882
41,570
Interbank funds purchased
832,452
781,409
Commitments to transfer open and closed repo operations
8,354,523
9,898,971
Commitments to transfer simultaneous operations
10,819,356
5,648,747
Commitments originated in short positions simultaneous operations
2,401,845
1,093,006
Temporary securities transfer operations
Total interbank borrowings and overnight funds
22,444,090
17,463,705
Foreign currency (2)
2,746
1,046,064
211,335
The amount of obligations under money market transactions, associated with simultaneous and repo operations as of December 31, 2025 is Ps. 10,819,356; which are guaranteed by investments of Ps. 16,652,805; and as of December 31, 2024 is Ps. 5,648,747; which are guaranteed by investments of Ps. 17,040,358.
F-183
The following is the detail of the borrowings obtained by Grupo Aval and subsidiaries as of December 31, 2025 and 2024:
Borrowings
4,016,302
3,619,457
Leases contracts (2)
2,037,039
1,794,416
Financiera de Desarrollo Territorial “FINDETER” (3)
2,526,376
2,518,426
Fondo para el Financiamiento del Sector Agropecuario - “FINAGRO” (3)
1,096,171
984,179
Banco de Comercio Exterior - “BANCOLDEX” (3)
297,858
528,363
Other financial obligations
6,118
9,762
Total borrowings from banks and others
9,979,864
9,454,603
Foreign currency (4)
9,069,212
14,014,948
793,405
1,071,851
307,014
532,140
147,071
6,333
Letters of credit
2,470,163
1,566,346
Bankers acceptances
1,792,446
1,451,938
14,579,311
18,643,556
The amount of financial obligations with development entities as of December 31, 2025 is Ps. 4,067,476 and as of December 31, 2024 is Ps. 4,037,301.
The amount of borrowings from banks and others due over 12 months as of December 31, 2025 is Ps. 11,569,367 and as of December 31, 2024 is Ps. 13,649,999.
The amount of borrowings from development entities due over 12 months as of December 31, 2025 is Ps. 3,766,557; and as of December 31, 2024 is Ps. 3,829,301.
21.2 Financial obligations from issued bonds
Grupo Aval and some of its subsidiaries have been authorized by the Superintendency of Finance and by the applicable regulatory entities in other jurisdictions to issue either bonds or general guarantee bonds. The bonds issued by Grupo Aval and subsidiaries are non-guaranteed and represent exclusively the obligations of each of the issuers.
F-184
The detail of issued bonds as of December 31, 2025 and 2024, by issuance date and maturity date is as follows:
Issuer
Issue Date (1)
31, 2025 (2)
Maturity Date (1)
Interest Rate (1)
Banco Av. Villas S.A.
23/02/2021
88,105
87,020
23/02/2026
CPI + 1.36%
Banco de Bogotá S.A. (3)
Between 10/02/2021 and 25/07/2024
902,401
1,088,630
Between 10/02/2026 and 25/07/2028
CPI + 1.16%; and Fix Between 10.38% and 10.45%
Banco de Occidente S.A. (4)
Between 09/08/2012 and 20/08/2020
1,419,919
1,876,405
Between 10/06/2026 and 14/12/2032
CPI + 2.37% to 4.65%
Corporación Financiera Colombiana S.A. (5)
Between 11/12/2012 and 15/08/2025
4,126,514
3,871,660
Between 08/09/2026 and 19/11/2045
CPI + 2.90% to 6.40%; IBR + 3.75% and Fix 3.77%
Banco Popular S.A. (6)
Between 12/10/2016 and 10/03/2022
816,093
1,370,950
Between 15/07/2026 and 10/03/2027
CPI + 2.58% to 4.13% and Fix Between 6.29% and 6.78%
Between 24/11/2016 and 12/12/2024
1,177,984
1,177,903
Between 24/11/2026 and 28/06/2042
CPI + 3.69% to 6.16% and Fix 10.08%
Peso denominated Total
8,531,016
9,472,568
Foreign Currency
Banco de Bogotá S.A. Under rule 144A.
Between 12/05/2016 and 24/03/2023
6,587,469
7,720,126
Between 12/05/2026 and 24/03/2033
Fix Between 4.38% to 6.25% and SOFR6 3.75%
MFH
1,596,005
Banco Bogotá and MFH Total
9,316,131
Grupo Aval Limited (7)
4/02/2020
3,777,033
4,428,224
4/02/2030
Fix 4.38%
Promigas S.A. and Gases del Pacífico S.A.C. Under rule 144A. (7)
Between 16/10/2019 and 22/10/2020
1,883,947
2,207,133
Between 16/10/2029 and 22/10/2029
Fix 3.75%
Banco de Occidente S.A. (8)
13/05/2024
677,521
791,791
13/08/2034
Fix 10.88%
Foreign Currency Total
12,925,970
16,743,279
Total of Bonds (9)
In addition, a bond issuance is presented on February 13, 2025 for Ps.133,100; on May 15, 2025 for Ps.48,800 and on August 15, 2025 for Ps.350,000. Finally, the bonds valued at Ps.60,761 is presented.
The amount of issued bonds due over 12 months as of December 31, 2025 is Ps. 15,653,080 and as of December 31, 2024 is Ps.24,634,287.
Grupo Aval had no defaults on principal or interest payments or other breaches with respect to its liabilities during the years ended December 31, 2025 and 2024, and Grupo Aval is complying with the related covenants agreed with investors and debtors.
F-185
21.3 Analysis of changes in the movements of financing activities
Reconciliation of movements of liabilities to cash flows arising from financing activities:
Dividends payable
Appropriated retained earnings
220,815
28,362,221
2,335,944
62,887,204
1,359,902
(7,168)
(1,682,470)
(1,462,748)
(391,667)
Liabilities - related to other changes:
2,212,345
210,041
2,422,386
(2,171,231)
(202,551)
(2,373,782)
Effects of changes in foreign exchange rates
(3,525,280)
(172,766)
(3,698,046)
2,040,507
Other Changes
(50,868)
12,519
1,012,747
42,850
8,068
1,025,316
Total liabilities related to other changes
1,989,639
(3,471,647)
847,471
(982,868)
(1,006,721)
(2,624,126)
Total equity related to other changes
696,224
1,389,776
2,086,000
527,984
23,427,826
2,791,748
58,812,193
(4,904)
(50,096)
5,299
(7,522)
(1,395,511)
504,140
(416,640)
1,831,715
245,366
2,077,081
(1,764,802)
(239,988)
(2,004,790)
2,200,477
142,677
2,343,154
1,188,422
(27,394)
343,104
(58,408)
9,755
283,548
1,161,028
2,283,881
491,159
(608,824)
2,698,993
21,823
1,001,504
1,632,837
2,656,164
315,324
2,866,267
62,804,339
870
(876)
46,577
(8,797)
(1,288,092)
(938,204)
(438,290)
1,598,510
240,625
1,839,135
(1,669,331)
(240,591)
(1,909,922)
(1,294,172)
(29,585)
(1,323,757)
(2,476,554)
(150,875)
(2,627,429)
1,344,488
(39,721)
20,890
582,893
6,653
570,715
1,304,767
(3,820,657)
402,467
(682,515)
(3,451,258)
22,778
(5,975)
1,733,243
1,268,666
3,018,712
354,777
2,830,444
59,707,201
F-186
NOTE 22 –PROVISIONS
The movement and balances of legal and non-legal related provisions during the periods ended on December 31, 2025, 2024 and 2023 are described below:
For legal
Non-legal
Total provisions
229,193
997,978
1,227,171
Provisions made during the year
298,719
334,974
633,693
Provisions used during the year
(51,160)
(338,536)
(389,696)
Provisions reversed during the year
(258,421)
(110,419)
(368,840)
(642)
(19,045)
217,689
865,594
1,083,283
202,964
291,234
494,198
(38,897)
(135,145)
(174,042)
Provisions reversed during the year (1)
(189,486)
(121,466)
(310,952)
256
9,928
10,184
120,242
304,455
424,697
(33,754)
(195,241)
(228,995)
(123,333)
(175,917)
(299,250)
(303)
(8,429)
(8,732)
(960)
The estimated period for the settled of the provisions recorded as of December 31,2025 and 2024 is a follows.
Estimated period to be settled
Within twelve months
12,956
168,411
181,367
After twelve months
142,422
665,808
808,230
12,209
226,460
238,669
180,317
683,685
864,002
Legal related:
Administrative proceedings
As of December 31, 2025 and 2024, the outstanding balance of provisions recorded for administrative proceedings were Ps. 11,031 and Ps. 15,532 respectively, by way of claims for administrative or judicial processes of a tax nature other than income tax and other processes, initiated by national and local authorities that establish, in some cases sanctions in which the subsidiaries of Grupo Aval would incur.
Labor proceedings
As of December 31, 2025 and 2024, the outstanding balance of provisions recorded for labor proceedings were Ps.25,554 and Ps. 27,125 respectively. Labor proceedings include labor pursuits, indemnities for former employees against some subsidiaries of Grupo Aval. The time expected for resolution is uncertain since each proceeding is based on different instances.
F-187
Other proceedings
As of December 31, 2025 and 2024, the outstanding balance of provisions for legal proceedings resulting from requests civil and other proceedings such as constitutional actions of a heritage nature recorded were Ps. 118,793 and Ps. 149,869, respectively, being the most representative provisions made to cover claims for cancellation of affiliations and transfer of regime, old-age pensions, requests to Porvenir, old age disability and survival pensions which amounted to Ps. 110,676 and Ps. 131,962, respectively.
Non-legal related:
As of December 31, 2025 and 2024 the outstanding balance of non-legal related provisions recorded amounting were Ps. 834,219 and Ps. 910,145, respectively, are comprised by:
NOTE 23 – EMPLOYEE BENEFITS
In accordance with labor legislation in the countries in which Grupo Aval operates, and based on labor conventions and collective bargaining agreements signed between Grupo Aval’s subsidiaries and their employees, employees have short term benefits (including but not limited to salaries, holidays, legal and extralegal premiums, interests on severances and defined contribution plans such as severances), long-term benefits (including but not limited to seniority bonuses), post-employment benefits (including but not limited to medical aids) and retirement benefits (including but not limited to severance payments to employees in Colombia who continue with labor regime before Law 50 of 1990 and legal and extralegal retirement pensions). Compensation of key management personnel includes salaries (see note 34).
Through personnel benefits plans, Grupo Aval and its subsidiaries is exposed to several risks (interest rates), which are intended to be minimized by applying the risk management policies and procedures defined under Note 4.
The detail of the balance of liabilities for employee benefits as of December 31, 2025, and 2024 is as follows:
Short term
445,826
441,644
Post-employment
362,588
405,240
Long term
181,082
180,545
989,496
1,027,429
Plan Asset
(1,744)
(24,126)
Net employee benefits
F-188
23.1 Post-employment benefits
In Colombia, when employees retire after completing the age requirements and weeks of contribution to the social security system, retirement pensions are assumed by public or private pension funds based on defined contribution plans. Entities and employees contribute monthly defined amounts by law to gain entitlement to a pension at the time of retirement.
Unlike in Central America, in Colombia according to prior labor regimes, post-employment benefits for employees hired before the year (i) 1968 require pensions to be directly assumed the company for those employees that have fulfilled the requirements of age and years of service and (ii) 1990 entitle employees to receive a compensation equivalent to the last month of salary multiplied by each year of service.
Some subsidiaries have labor conventions or pay extra-legal premiums to employees retiring in compliance with the required age and time of service, when they start enjoying the pension granted by the pension funds.
Some retirees of Grupo Aval and its subsidiaries receive benefits including coverage of medical treatments.
As of December 31, 2025 and 2024, the post-employment benefit expense is composed of:
Defined contribution plan
125,838
116,145
Defined benefit plan
38,643
42,907
164,481
159,052
23.2 Long Term Employee Benefits
Some Grupo Aval subsidiaries grant their employees extra-legal long-term premiums during their working lives per every five years of service that they complete, calculated as days of salary per year of work.
Grupo Aval has recognized the liabilities corresponding to these benefits, based on the same actuarial calculations and using the same parameters as in retirement benefits.
The following table shows the Post-employment and long-term benefits movements during the years ended on December 31, 2025, 2024 and 2023 are as follows:
Post-employment benefits
Long-term benefits
380,207
349,587
159,329
133,085
Service costs
2,278
1,494
17,676
15,905
14,765
Interests cost
36,365
39,008
41,076
16,318
15,439
16,699
Past Service Costs
(2,079)
4,795
10,063
443,883
420,475
390,078
214,539
195,468
174,612
Actuarial Loss (Gain) arising from changes in demographic assumptions
1,010
(7,342)
Actuarial (Gain) Loss arising from changes in financial assumptions
(18,314)
2,309
26,832
(7,932)
2,036
473
Actuarial Loss arising from changes in the experience
8,294
40,293
27,472
5,105
9,812
17,313
(10,020)
42,697
53,551
12,858
10,444
Payments to employees
(54,308)
(63,202)
(61,589)
(30,630)
(27,781)
(25,727)
Reclassification MFG operation (1)
(15,909)
2,558
2,640
1,856
(3,616)
2,630
(3,689)
Liability balance at the end of the year
Plan Assets
Balance at the beginning of the year plan assets
(17,024)
(18,176)
Interests income
(72)
(68)
Remeasurements on plan assets
3,773
(3,385)
(1,788)
15,909
F-189
(843)
(984)
(736)
3,615
(2,665)
3,734
Balance at the end of the year plan assets
Net Balance at the end of the year
360,844
381,114
363,183
(1) This corresponds to the reclassification to liabilities directly associated with non-current assets classified as held for sale of Multi Financial Group operation as of December 31, 2025, see note 13.A.
(2) See note 13.B., "Discontinued operation related to Multi Financial Group".
The assumptions used to calculate the obligation projected for different post-employment and long-term benefits employees are as follows:
Post-employment benefits (1)
Discount interest rate
11.24
9.95
Inflation rate
3.13
2.95
Salary growth rate
4.38
3.73
Pension growth rate
2.98
3.00
(1) Entities in Colombia and subsidiaries abroad participate.
Long-term benefits (1)
10.91
4.26
4.27
(1) Only entities from Colombia participate.
Employee turnover is calculated based on the experience of each entity. For those entities where a sufficiently long statistic history is not yet available to support the actuarial bases, the SoA2003 table is used as a reference. With this table, the probability of permanence of personnel in the entity is established, modified according to the population factor of each benefit. Employee´s life expectancy is calculated based on the mortality tables RV08 (Colombia) and GA83 (Central America).
The sensitivity analysis for post-employment and long-term benefits liabilities due to defined benefits plans to different actuarial and financial variables is shown below, maintaining other variables at constant values (increase or decrease 50 basis points):
-0.50 basic points
+0.50 basic points
10,207
3,683
(9,676)
(3,534)
Salaries growth rate
(1,323)
(4,497)
4,661
Retirement growth rate
(12,903)
N/A
8,082
12,270
3,815
(11,583)
(3,642)
(2,568)
(4,483)
2,693
4,759
(11,323)
11,923
The following table discloses the undiscounted future cash flows for the payment of post‑employment and long‑term obligations:
F-190
Payments for post-
Payments for long-
Year
Employment benefits
term benefits
54,384
28,832
55,865
30,627
55,288
27,637
53,362
27,671
53,698
25,911
Years 2031 - 2035
234,209
92,563
506,806
233,241
As of December 31, 2025, the average duration of post-employment benefit plans is 5.48 years (5.89 years for 2024) and for the long-term it is 4.02 years (4.17 years for 2024).
NOTE 24 – OTHER LIABILITIES
As December 31, 2025 and 2024 the other liabilities comprise the following:
Income received for third parties (2)
3,401,968
4,289,835
Suppliers and services payable
3,518,847
3,253,637
Cashier checks
870,091
763,285
Withholdings taxes and labor contributions
720,627
649,277
Contract liability related to concessions (3)
693,960
522,189
Commissions and fees
536,365
518,132
Transactions digital payment platform
411,578
458,498
Dividends payable (4)
Collection on behalf of third parties
157,241
183,596
Collection service
106,296
100,119
Value added tax - VAT
79,986
78,731
Insurance payables
63,155
162,293
Financial transactions tax
19,898
Canceled accounts
36,378
35,693
Checks drawn and not paid
22,119
44,710
Customer loyalty programs
16,529
12,276
Anticipated income
13,882
36,455
Cash surplus
10,644
187,603
479,443
365,430
Total other liabilities
Other Liabilities
Liabilities to be settled within twelve months
8,224,535
7,962,137
Liabilities to be settled after twelve months
3,306,724
4,034,844
Total Other Liabilities
F-191
NOTE 25 – EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT
Authorized, issued and outstanding shares as of December 31, 2025 and 2024 consisted of the following:
Authorized shares
120,000,000,000
Subscribed fully paid shares
23,743,475,754
Total outstanding shares
The outstanding shares are as follows:
Common voting shares (1)
16,178,324,920
16,201,212,499
Preferred non-voting shares (2)
7,565,150,834
7,542,263,255
(1) Common Voting shares with a nominal value of Ps. 1 Colombian peso.
(2) Since 2011, Grupo Aval allows its shareholders to convert their common shares into preferred shares. For the years ended December 31, 2025 and 2024, 22,887,579 and 500,000 common shares were converted into preferred shares, respectively. Preferred shares have the right to receive a preferential minimum dividend of one Colombian peso (Ps. 1) per semester per share. This preferential minimum dividend is only applicable when dividends declared for common shares are less than one Colombian peso (Ps. 1). Preferential minimum dividends are not cumulative.
25.1 Appropriated retained earnings
As of December 31, 2025 and 2024 the appropriation of retained earnings is as follows:
1,553,067
807,629
Accumulated withholding tax over dividends
(34,622)
(30,145)
Legal reserve
11,872
Statutory and voluntary reserves
7,711,040
7,374,078
25.1.1 Legal Reserve
In accordance with current legal regulations, Grupo Aval and its subsidiaries in Colombia shall create a legal reserve through the appropriation of (10%) of the net profits of each year up to an amount equal to (50%) of the subscribed capital stock. This reserve may be reduced below (50%) of the subscribed capital stock to stem losses in excess of retained earnings. The legal reserve cannot be less than the percentage aforementioned except to cover losses in excess of retained earnings.
25.1.2 Statutory and Voluntary Reserves
The statutory and voluntary reserves are determined during the Shareholders Meetings.
F-192
25.2 Declared Dividends
The dividends are declared and paid to shareholders based on unconsolidated net income under Colombian IFRS (NCIF), the dividends declared were as follows:
December 31, 2022
Net income for the periods ended in
999,886
723,038
2,541,179
Declared dividends
In the general assembly held in March 2025, a cash profit of Ps. 2.30 per share per month during the months of April 2025 to March 2026, both months included over 23,743,475,754 shares subscribed and paid as of the date of this meeting.
In the general assembly held in March 2024, a cash profit of Ps. 2.00 per share per month during the months of April 2024 to March 2025, both months included over 23,743,475,754 shares subscribed and paid as of the date of this meeting.
In the general assembly held in March 2023, a cash profit of Ps. 3.60 per share per month during the months of April 2023 to March 2024, both months included over 23,743,475,754 shares subscribed and paid as of the date of this meeting.
Total declared dividends (1)
655,320
569,843
1,025,718
(1) See Consolidated Statement of Changes in Equity for dividends distribution.
25.3 Earnings per share
Grupo Aval calculates basic earnings per share by dividing net income for the year attributable to controlling interest of Grupo Aval parent company by the weighted average number of shares outstanding during the year (including common and preferred shares).
The following table summarizes the earnings per share for the year ended as of December 31, 2025, 2024 and 2023:
Less: participation of non- controlling interests
(1,493,300)
(1,176,390)
(1,438,113)
Less: preferred dividends declared
Less: Allocation of undistributed earnings to preferred stockholders (1)(2)
(548,004)
(322,436)
(234,713)
Net Income allocated to common shareholders for basic and diluted EPS
1,173,868
692,651
504,290
Weighted average number of common shares outstanding used in basic EPS calculation (2)
16,186,869,620
16,201,502,910
16,202,376,163
Basic and Diluted earnings per share to common shareholders (in Colombian pesos)
Basic and Diluted earnings per ADS (3) (in Colombian pesos)
1,450.40
855.04
622.49
Weighted average of the common and preferred shares used in the calculation of earnings per basic share (common and preferred)
Basic earnings of the owners of the parent per share in Colombian pesos
(1) Based on a weighted average of preferred shares.
(2) Averages based on an end of month number of preferred or common shares.
(3) Each ADS represents 20 preferred shares.
F-193
The following table summarizes earnings per share over net income from continuing operations for the years ended December 31, 2025, 2024 and 2023.
(1,485,020)
(1,168,415)
(1,418,534)
(542,158)
(316,818)
(220,919)
1,161,348
680,580
474,655
71.75
42.01
29.30
1,434.93
840.14
585.91
The following table summarizes earnings per share over net income from discontinued operations for the years ended December 31, 2025, 2024 and 2023.
Net income from discontinuing operations
(8,280)
(7,975)
(19,579)
(5,845)
(5,619)
(13,793)
12,521
12,070
29,636
15.47
14.90
36.58
At December 31, 2025, 2024 and 2023, Grupo Aval did not have any dilutive instruments.
F-194
25.4 Non-controlling equity transactions
The following is a detail of transactions with minority shareholders:
Transaction
Payment of dividends on the preferred shares
(9,303)
(13,653)
(22,956)
Grupo Aval S.A.
Purchase in equity interest of Banco Popular S.A.
3,329
(3,329)
Others subsidiaries
Sale / purchase controlling and non-controlling interest
869
(875)
Total equity transaction
(8,845)
(12,978)
(21,823)
Valora S.A.
Purchase of equity interest in Hoteles Estelar S.A.
(4,903)
(50,097)
Purchase of direct equity interest in Aval Fiduciaria S.A y Aval Casa de Bolsa S.A
(49,564)
49,564
25.5 Effect on retained earnings
The following is a detail of effects on retained earnings:
Investment Mineros S.A (1)
19,182
28,142
47,324
Effect realizations of OCI
(3,334)
(470)
(3,804)
Total effect in retained earnings
(1) In July 2025, Corficolombiana S.A. sold an equity instrument classified at fair value through OCI related to Mineros S.A., resulting in an OCI reclassification of Ps. 90,106 and a loss on sale of Ps. (42,782).
F-195
25.6 Consolidated Other Comprehensive Income (OCI):
Components of accumulated Other Comprehensive Income for the years ended December 31, 2025, 2024 and 2023 are as follows:
Movements continuing operation
Movements discontinued operation
Movements period
Realization of OCI
Hedging derivative instrument
177,520
125,975
(246,747)
34,259
(1,498)
33,164
Unrealized (losses) on securities at FVOCI
(1,290,252)
(357,958)
56,359
173,079
(1,537)
(1,420,309)
824,268
310,647
(50,596)
1,084,319
175,665
119,241
(101,733)
6,521
6,750
(273)
(523)
(89,258)
387,636
(168,956)
218,749
319,735
(477,847)
10,367
172,875
(1,930)
23,200
407,149
(51,791)
57,474
(2,393)
(121,044)
17,518
(194)
(1,177,560)
(37,756)
(125,631)
50,667
522,771
302,346
(849)
160,336
(83,994)
(34,208)
21,862
(5,104)
(289)
161,445
231,474
(6,631)
(426,398)
813,319
(113,836)
46,911
(261)
1,204,663
(812,788)
(47,793)
288,627
19,481
(2,520)
(2,973,226)
1,758,911
(77,185)
139,530
(25,590)
366,388
151,517
4,866
196,228
(27,670)
(50,069)
(4,561)
974,677
(814,131)
(813,655)
(988,925)
516,912
(67,054)
138,259
Non -controlling interest
157,640
Movements period continuing operation
558,834
(41,922)
Realization of OCI continuing operation
(33,804)
(33,250)
Movements period discontinued operation
102,784
35,475
Realization of OCI discontinued operation
(25,468)
117,821
332,608
480,711
(64,384)
(49,452)
32,271
14,640
(259)
563,718
(218,507)
(259,340)
23,028
(12,661)
119,226
53,649
(1,917)
345,353
F-196
.
NOTE 26 - NON- CONTROLLING INTEREST
The following table includes information regarding the non-controlling interest of each direct and indirect subsidiary of Grupo Aval at December 31, 2025 and 2024:
Non-controlling
Dividends paid to non-
Interest share of
interest share of
controlling interest in
Country
net income
the year
Corporación Financiera Colombiana S.A. (1)
59.47%
10,953,814
979,300
(491,683)
31.07%
2,532,890
246,907
(135,915)
27.73%
1,317,614
97,696
(34,463)
24.24%
1,007,901
167,091
20.13%
318,202
3,903
(45)
6.13%
153,628
(4,840)
Aval Casa de Bolsa S.A.
13.60%
9,448
1,324
1,770
250
17.84%
1,669
(1) Main indirect subsidiary.
10,522,067
776,960
(495,436)
2,560,159
230,718
(142,352)
1,307,098
72,105
(28,379)
843,566
155,710
311,730
(26,171)
(135)
6.26%
158,425
(32,932)
(1,026)
6,757
3.27%
1,859
The following table includes information regarding each direct and indirect subsidiary of Grupo Aval that has significant non-controlling interests to December 31, 2025, and 2024 (before eliminations):
Cash Flow from
Net Income
OCI - Controlling
operating activities
Corporación Financiera Colombiana S.A.
61,507,860
44,486,345
1,173,732
970,481
(455,422)
156,164,359
138,870,595
1,275,624
(174,736)
5,020,131
88,163,285
81,904,685
582,138
(93,803)
1,421,590
Sociedad Administradora de Fondos de Pensiones y Cesantías y del CCAI Porvenir S.A.
4,525,469
920,640
703,010
(30,075)
295,678
21,932,939
20,216,035
19,016
131,291
233,295
91,590,495
72,572,874
1,190,999
110,148
797,343
194,559
134,697
10,893
(2,841)
(3,803)
171,791
98,656
16,354
(7,422)
(64,799)
25,121
7,766
9,355
15,770
F-197
60,633,378
44,307,226
865,830
843,617
(521,510)
150,719,626
133,877,249
1,098,248
22,520
2,288,431
78,400,182
72,414,391
481,048
(47,342)
22,940
3,913,208
672,796
654,117
(18,642)
295,257
19,167,670
17,477,831
(134,365)
117,164
(822,967)
88,381,205
70,152,858
534,340
66,216
(925,651)
188,911
139,218
807
(2,898)
30,100
281,792
224,934
12,924
(7,346)
35,671
NOTE 27 – COMMITMENTS AND CONTINGENCIES
27.1 Capital expenses commitments
As of December 31, 2025 and 2024 Grupo Aval and its Subsidiaries had contractual disbursement commitments of capital expenditures, for tangible assets for Ps. 76,985 and Ps. 31,225 respectively; and for intangible assets for Ps. 54,407 and Ps. 79,105 respectively.
27.2 Contingencies
As of December 31, 2025, and 2024, Grupo Aval and its Subsidiaries attended administrative and legal proceedings as defendants; whose expected resolution time is uncertain due to the fact that each process is at different stages. The claims of proceedings were assessed based on analyses and opinions of experience lawyers for Ps. 696,024 and Ps. 915,155 respectively in the following legal contingencies were determined:
27.2.1 Labor Proceedings
As of December 31, 2025, and 2024, the labor complaints amounted to Ps. 161,337 and Ps. 136,692 respectively. Historically, many of these proceedings have been resolved in favor of Grupo Aval and its Subsidiaries.
27.2.2 Civil Proceedings
As of December 31, 2025, and 2024, the result of the assessment of claims for civil suits, amounted to Ps. 253,108 and
Ps. 316,314 respectively.
27.2.3 Administrative, Tax Proceedings and Other Proceedings
Claims derived from administrative and judicial processes include those of fiscal responsibility over concession contracts, tax proceedings different that income tax and others. The tax proceedings filed by national and local tax authorities, and these authorities may establish, in some cases, sanctions in which Grupo Aval and its subsidiaries may incur as a result of: (i) the performance of their duty as a withholder or collector of national and local taxes, and/or (ii) the obligation to pay a higher tax amount in their condition of taxpayers. As of December 31, 2025, the outstanding balances recognized for these claims amounted to Ps.281,579 As of December 31, 2024, these amounted to Ps. 462,149.
F-198
NOTE 28 – NET INCOME FROM CONTRACTS WITH CUSTOMERS
28.1 Net income from commissions and fees:
Below is a detail of the income and expenses for commissions and fees for the periods ended as of December 31, 2025, 2024 and 2023:
Banking service fees
1,733,348
1,614,067
1,545,111
1,282,053
1,174,608
978,504
Credit card fees
935,349
962,774
987,129
569,710
495,929
463,194
203,814
181,804
188,191
Office network services
20,228
16,289
21,638
Commissions on transfers, checks and checkbooks
17,652
20,122
22,941
Other commissions
22,071
12,011
9,056
Total income from commissions and fees
_______________________________________
(626,545)
(586,332)
(588,109)
Commissions for sales and services
(369,614)
(294,145)
(250,460)
Fees paid to pension funds sales force
(73,338)
(66,431)
(70,335)
Information processing services of operators
(36,028)
(33,079)
(29,905)
Offices network services
(6,108)
(9,796)
(20,147)
(12,547)
(11,842)
(15,294)
Total expenses from commissions and fees
________________________________________________
28.2 Gross profit from sales of goods and services
Below is the detail of the income and cost from goods and services for the years ended as of December 31, 2025, 2024 and 2023:
Energy and gas
6,842,019
6,908,922
6,158,616
2,251,323
2,950,048
3,954,197
732,535
631,218
598,895
302,811
309,868
296,804
Other services
268,106
248,544
215,044
Total income from sales of goods and services (*)
(*) See note 31.6, to see income by country.
F-199
Cost of sales from companies from non-financial sector
(5,867,868)
(6,204,773)
(5,799,721)
General and administrative expenses
(913,614)
(940,823)
(989,313)
(763,423)
(698,859)
(607,894)
(443,827)
(432,600)
(353,305)
Depreciation of tangible assets
(104,209)
(87,647)
(90,344)
Allowance for impairment of loans and receivables
(56,497)
(71,157)
(51,035)
Commissions and fees expenses
(54,023)
(49,826)
(39,466)
Depreciation of right of use assets
(47,263)
(41,732)
(37,031)
Donations expenses
(37,328)
(21,034)
(19,858)
Employee bonuses
(17,123)
(15,134)
(14,376)
Labor severances
(3,899)
(7,660)
(3,254)
Total costs and expenses of sales goods and services
NOTE 29 – NET TRADING INCOME (LOSS)
Net trading income includes income from client-driven trading activities primarily conducted in markets, including foreign exchange, credit, rates and equities trading, as follows:
2024 (4)
2023 (4)
Net trading investment income (1)
Fixed income (loss) securities
979,558
408,849
1,029,018
Equities
680,217
577,245
633,082
Total trading investment income
1,659,775
986,094
1,662,100
Net derivatives income (loss)
Net income (loss) on financial derivatives (2)
(35,075)
652,933
(2,438,839)
Other net loss from marketable derivatives (3)
(222,687)
(237,293)
(142,426)
Total net derivatives income (loss)
(257,762)
415,640
(2,581,265)
Total net trading income (loss)
NOTE 30 – OTHER INCOME AND EXPENSE
Below is the detail of the other income and expenses in the years ended on December 31, 2025, 2024 and 2023:
Other Income
Foreign exchange loss, net (2)
584,990
(452,635)
2,253,880
Share of net income from investments in associates and joint ventures
350,935
378,396
371,397
126,700
141,867
119,988
Net gain on asset valuation
71,701
27,863
82,535
Gain on sale of assets properties, plant and equipment
52,710
80,916
360,590
Gain on the sale of non-current assets held for sale
11,888
20,110
45,873
Net (loss) gain on sale of investments
(18,431)
149,612
82,936
235,260
300,048
251,626
Total other income
(2) Corresponds to the variation in the TRM between January and December: Ps. (652.07) per U.S. dollar in 2025, Ps. 587.1 in 2024, and Ps. (988.15) in 2023.
F-200
Other Expense
(3,231,916)
(3,022,161)
(2,856,843)
Taxes and fees
(1,158,819)
(1,084,329)
(1,201,718)
(601,172)
(603,570)
(552,384)
Consultancy, audit and other fees
(558,448)
(514,704)
(515,116)
Maintenance and repairs
(413,492)
(358,325)
(367,532)
(324,023)
(241,735)
(226,662)
Marketing
(316,053)
(262,535)
(223,326)
Depreciation right of use assets
(233,744)
(223,854)
(200,483)
(212,681)
(208,612)
(203,543)
Affiliation contributions and transfers
(191,949)
(169,707)
(152,528)
Leases (Rent)
(168,721)
(147,744)
(139,065)
Warehouse services
(136,547)
(141,585)
(140,202)
Outsourcing services
(111,702)
(76,231)
(72,720)
Transportation services
(102,898)
(102,740)
(93,216)
Losses due to claims
(94,475)
(87,912)
(83,294)
Cleaning and security services
(78,514)
(75,627)
(76,226)
Temporary services
(72,520)
(64,805)
(59,599)
Data processing
(71,725)
(75,941)
(73,519)
(41,094)
(34,714)
(31,244)
Loss from sale of property, plant and equipment
(40,620)
(22,620)
(43,673)
Supplies and stationary
(33,638)
(37,649)
(50,425)
Adaptation and installation
(25,943)
(24,551)
(27,193)
Travel expenses
(24,139)
(20,029)
(18,383)
Derecognition of assets
(15,423)
(5,486)
(1,567)
Impairment losses other assets
(2,690)
(4,916)
(1,330)
Loss from sale of non-current assets held for sale
(2,537)
(2,064)
(250)
(634,408)
(511,315)
(463,367)
Total other expense
________________________________
NOTE 31 – ANALYSIS OF OPERATING SEGMENTS
Operating segments are components of Grupo Aval responsible for developing commercial activities that can generate revenue or incur expenses and whose operating profit or loss are regularly reviewed by the “CODM” (Chief Operating Decision Maker) of Grupo Aval, and for which financial information is available. Operating segment information is consistent with the internal reports provided to the CODM.
31.1 Description of products and services from which each reportable segment derives its income
Grupo Aval is organized into four operating segments, which comprise the types of business detailed below:
Following organizational changes at the end of 2024, from 2025 Aval Casa de Bolsa and Aval Fiduciaria are no longer part of the Corficolombiana segment but instead form part of the banking services segment.
F-201
For comparative purposes, information from previous periods has been presented to include this modification, in accordance with the requirements of IFRS 8 Operating Segments.
31.2 Factors used by management to identify reportable segments
Operating segments identified above are based on the relevance of the nature of the products and services provided. The information on the performance of the operating segments is reviewed by the CODM on a quarterly basis.
31.3 Measurement of net income, assets and liabilities of operating segments
Grupo Aval’s CODM reviews the financial information of each of its operating segments and assesses the performance of each segment based on Statements of Financial Position and the Statement of Income of each of them, and on certain credit risk indicators, as described in note 2.4.
31.4 Information on net income, assets and liabilities of reportable operating segments
The following is the detail of the reportable financial information summarized for each segment as of December 31, 2025, 2024 and 2023:
Statement of Financial Position as of December 31, 2025
Banking Services (1)
MerchantBanking
Pension andSeveranceFundManagement
Holding (2)
Eliminations
19,875,670
6,023,430
3,248,790
538
(50,837)
31,681,473
5,658,909
480,555
2,729,203
(1,297,525)
139,954
96,604
Loans, net
183,544,710
2,473,729
981,276
(2,773,742)
12,964,567
992,652
20,193,741
(32,836,531)
Other assets (3)
31,303,224
46,262,536
796,123
242,326
(1,994,319)
76,609,890
Non-current assets held for sale (4)
297,709,219
4,525,468
24,147,084
(38,952,954)
201,765,281
9,004,158
1,540
(3,365,741)
43,469,748
23,016,910
257,322
5,417,571
(3,489,965)
Other liabilities (5)
8,445,439
12,465,276
661,778
244,918
(159,766)
21,657,645
Liabilities directly associated with non-current assets classified as held for sale (6)
270,139,835
44,486,344
5,662,489
(7,015,472)
(1) As of December 2025, the assets and liabilities related to Multi Financial Group were no longer presented line by line on the Consolidated Statements of Financial Position and were instead reported in a single line item within “Non current assets held for sale” and “Liabilities directly associated with non-current assets held for sale” respectively, see note 13.A.
(2) Includes Grupo Aval (Separate Financial Statement) and Grupo Aval Limited.
(3) Includes cash and cash equivalents for Ps. 19,354,710; intangible assets Ps. 18,506,391; other accounts receivable, net Ps. 24,458,906, tangible assets Ps. 9,608,300; income tax assets Ps. 4,238,231; non-current assets held for sale Ps. 56,992 mainly on Banking Services segment and other assets Ps. 386,360.
(4) This corresponds to the reclassification to non-current assets held for sale of Multi Financial Group operation as of December 31, 2025, see note 13.A.
(5) Includes trading liabilities Ps. 1,951,439; hedging derivative liabilities Ps. 34,842; income tax liabilities Ps. 6,162,756; employee benefits Ps. 987,752; provisions Ps. 989,597 and other liabilities Ps. 11,531,259.
(6) This corresponds to the reclassification to liabilities directly associated with non-current assets classified as held for sale of Multi Financial Group operation as of December 31, 2025, see note 13.A.
F-202
Statement of income as of December 31, 2025
BankingServices
Holding (1)
External income
Interest income
24,511,891
1,059,341
45,429
302,537
Income from commissions and fees (2)
3,500,744
1,283,107
Income from sales of goods and services (2)
102,612
10,202,155
92,027
1,052,840
50,778
298,131
264
Net income from other financial instruments mandatory at fair value through profit or loss
43,922
305,800
1,213
8,136
118,564
173,937
423,484
(6,117)
(6,314)
Other income (3)
314,974
27,315
10,839
353,128
Total external income
29,709,056
12,810,935
1,723,416
297,739
44,541,146
Intersegment income
313,798
61,995
416
38,975
(415,184)
31,904
3,311
616
253,803
(289,634)
33,723
2,901
12,148
(48,772)
(911)
3,719
(2,995)
764,710
3,679
1,578,885
(2,347,274)
633
3,305
(3,938)
24,326
7,558
2,402
(34,345)
Total intersegment income
1,168,183
86,468
15,769
1,871,722
(3,142,142)
Total income
30,877,239
12,897,403
1,739,185
2,169,461
(15,408,294)
(2,736,632)
(8,123)
(332,059)
437,241
(3,486,883)
(53,881)
(3,440)
5,131
(1,026,904)
(13,019)
(118,263)
34,484
(534,802)
(7,699,096)
(97,484)
22,308
(739,030)
(12,611)
(20,267)
(1,455)
2,915
(770,448)
(2,894,761)
(91,631)
(197,553)
(48,022)
Administrative expenses
(4,508,170)
(156,494)
(281,305)
(42,388)
291,128
(4,697,229)
(160,432)
(955,843)
(289,076)
(27,338)
(19)
Other expense (4)
(174,886)
(4,462)
(20,664)
(123)
(200,298)
Total expenses
(28,934,162)
(11,723,669)
(1,036,175)
(446,772)
788,158
(41,352,620)
1,943,077
1,173,734
1,722,689
(2,353,984)
Includes Grupo Aval (Separate Financial Statement) and Grupo Aval Limited.
See note 28, net income from contracts with customers.
Includes Net gain on sale of debt securities for Ps. (18,431); Gain on the sale of non-current assets held for sale Ps. 11,888; net gain in asset valuation Ps. 71,701 and other operating income Ps. 287,970.
Includes loss from sale of non-current assets held for sale Ps. (2,537) and other operating expenses Ps. (197,761).
Revenue from contracts with customers as of December 31, 2025
Timing of revenue recognition
At a point in time
239,936
992,511
91,914
253,842
(268,890)
1,309,313
Over time
3,429,047
9,216,191
1,295,984
(69,516)
13,871,706
Total (2)
3,668,983
10,208,702
1,387,898
(338,406)
15,181,019
F-203
Statement of Financial Position as of December 31, 2024
13,555,942
4,090,787
2,595,230
(79,197)
32,530,703
4,515,967
359,677
2,890,407
(1,134,136)
52,717
1,302
12,423,684
1,113,455
19,365,473
(31,472,016)
188,660,193
2,915,873
1,196,398
(2,642,978)
Other assets (2)
30,269,203
47,993,518
958,301
282,024
(2,583,596)
76,919,450
277,492,442
60,630,902
23,734,754
(37,911,923)
196,217,644
8,581,604
(3,928,414)
47,474,153
22,580,320
35,037
6,021,671
(3,287,406)
Other liabilities (3)
7,150,306
13,135,589
636,416
217,203
(139,001)
21,000,513
250,842,103
44,297,513
6,238,874
(7,354,821)
Statement of Income as of December 31, 2024
25,526,815
1,054,990
50,185
339,912
3,292,932
10,028
1,174,644
100,418
10,865,477
82,705
794,807
349,599
257,153
55,273
317,598
5,525
6,590
135,277
(102,610)
(375,292)
20,423
4,844
511,354
76,663
(10,439)
578,549
30,185,579
12,785,259
1,574,671
351,427
44,896,936
333,763
55,312
1,158
37,181
(427,414)
36,138
22,527
1,295
284,991
(344,951)
31,575
1,929
11,270
(44,774)
765
(634)
624,213
504
837,685
(1,462,402)
698
2,246
28,954
20,224
2,261
(51,589)
1,055,401
1,160,007
(2,334,265)
31,240,980
12,888,766
1,590,021
1,511,434
F-204
(17,097,807)
(3,020,339)
(6,253)
(371,581)
451,489
(3,987,888)
(53,943)
(6,725)
(925,106)
(10,801)
(101,226)
(465)
35,973
(490,891)
(8,015,947)
(87,090)
22,683
(645,214)
(10,364)
(19,778)
(674,201)
(2,706,135)
(87,926)
(185,876)
(42,295)
(4,174,647)
(151,186)
(269,299)
(37,046)
339,989
(4,292,189)
24,948
(661,147)
(262,774)
(42,586)
(419)
(132,685)
(5,928)
3,119
(152)
(1,264)
(136,910)
(30,135,425)
(12,017,581)
(935,902)
(495,094)
852,879
(42,731,123)
1,105,555
871,185
654,119
1,016,340
(1,481,386)
Revenue from contracts with customers as of December 31, 2024
178,640
507,425
84,808
(304,843)
751,021
3,282,423
10,392,536
1,185,106
(84,882)
14,775,183
3,461,063
10,899,961
1,269,914
(389,725)
15,526,204
Statement of Income as of December 31, 2023
26,046,419
1,128,299
117,076
359,905
3,227,104
10,316
978,344
107,864
11,069,075
46,617
(1,223,704)
9,659
294,784
41,277
326,328
3,792
6,287
1,581,029
686,103
(11,757)
(1,495)
647,202
147,672
28,419
267
823,560
30,433,478
13,814,838
1,453,483
362,565
46,064,364
375,235
159,617
3,588
31,624
(570,064)
27,160
20,231
254
292,641
(340,286)
2,324
1,844
38,373
(42,541)
2,201
(7,596)
830,683
642,720
(1,473,062)
453
1,449
(1,902)
F-205
53,102
(446)
(24,025)
835
(29,466)
1,289,037
184,555
23,505
967,820
(2,464,917)
31,722,515
13,999,393
1,476,988
1,330,385
(18,422,681)
(3,434,024)
(56,927)
(519,869)
677,052
(4,019,404)
(25,904)
1,965
12,578
1,286
(890,342)
(8,116)
(104,773)
(430)
29,411
(443,840)
(7,498,858)
(79,794)
16,895
(605,861)
(9,093)
(16,786)
(1,736)
(630,688)
(2,536,809)
(84,897)
(195,469)
(39,779)
(4,069,433)
(138,700)
(259,331)
(67,494)
335,282
(4,199,676)
177,641
(1,259,607)
(172,943)
(56,966)
2,802
(147,685)
(10,813)
(32,721)
82,111
(79,093)
(188,201)
(30,958,414)
(12,470,012)
(916,779)
(591,585)
986,534
(43,950,256)
764,101
1,529,381
560,209
738,800
(1,478,383)
Revenue from contracts with customers as of December 31, 2023
152,012
398,543
75,527
(315,340)
603,383
3,212,440
10,702,923
988,061
(67,487)
14,835,937
3,364,452
11,101,466
1,063,588
(382,827)
15,439,320
Reconciliation of net income, assets and liabilities of the reportable operating segments
Main eliminations of total income, expenses, assets and liabilities between segments with the corresponding consolidated entries at the level of Grupo Aval are:
31.5 Analysis of Revenues by Products and Services
Grupo Aval’s revenues are analyzed in each segment by products and services, in the statement of income.
F-206
31.6 Income by Country
Grupo Aval’s revenues for each individual country for which revenues are significant, are the following during the years ended December 31, 2025, 2024 and 2023:
Perú
25,193,352
612,961
75,175
37,709
4,765,239
16,471
2,515
1,715,266
15,567
934,968
381
Commissions on drafts, checks and checkbooks
17,129
523
126,218
321
9,440,607
956,187
5,912,997
929,022
705,370
27,165
2,916,127
19,605
3,011
24,551
2,963,294
42,792,478
649,198
81,022
1,018,447
Other countries (1)
26,169,433
684,979
74,752
42,731
4,459,083
15,956
1,596,470
15,032
962,397
377
19,575
547
10,009,174
1,039,426
5,893,834
1,015,088
606,880
24,338
1,846,367
15,842
286
16,072
1,878,567
43,004,320
716,777
77,603
1,098,229
(1) Costa Rica and Cayman Islands.
26,970,768
568,515
62,818
49,582
4,196,458
17,071
2,116
1,526,772
16,104
986,721
408
F-207
22,382
10,305,957
917,599
5,263,794
894,822
576,118
22,777
2,487,761
(11,091)
(294)
5,584
2,481,960
44,452,329
574,495
64,640
972,884
During the years ended December 31, 2025, 2024 and 2023, Grupo Aval reported no concentration of revenue in customers with more than a 10% share of revenue from ordinary activities.
The foregoing analysis is based on the customer's domicile. Income from off- shore entities of Colombian customers are reported as income from Colombia. The revenues include income from interest, fees, commissions and other operating income.
31.7 Non-current assets by Country
The main non-current assets are detailed below according to the presentation based on the degree of liquidity for each country for the periods ending December 31, 2025 and 2024:
Own – use Property, plant and equipment, net (1)
Intangible assets (2)
6,683,911
15,416,562
219,778
3,081,888
31,603
7,063
878
Total (3)
4,053,729
15,707,679
187,063
3,296,377
359,176
291,221
1,209
(1) see note 15.1
(2) see notes 16 to 18.
F-208
NOTE 32 – UNCONSOLIDATED STRUCTURED ENTITIES
The term "unconsolidated structured entities" refers to all structured entities that are not controlled by Grupo Aval. Grupo Aval enters into transactions with unconsolidated structured entities in the normal course of business to facilitate customer transactions and for specific investment opportunities.
The table below shows the total assets of unconsolidated structured entities in which Grupo Aval had an interest at the reporting date and its maximum exposure to loss in relation to those interests:
Nature and risks associated with Grupo Aval’s interests in unconsolidated structured entities
Grupo
funds
Aval’s managed
managed by
other entities (Nexus and Pactia)
Grupo Aval’s interest-assets
Investments at fair value through profit or loss
5,196,240
4,086,202
9,282,442
46,899
Total assets in relation to Grupo Aval’s interests in the unconsolidated structured entities
5,243,139
9,329,341
Grupo Aval’s maximum exposure (1)
(1) Represent 2.67%, respectively of the Grupo Aval’s managed funds total assets.
other entities (Nexus and Pactia)(1)
4,138,387
3,099,853
7,238,240
36,578
36,685
4,174,965
3,099,960
7,274,925
Grupo Aval’s maximum exposure (2)
(1) Includes the Private Equity Fund Pactia Inmobiliario, as of October 29, 2024, for a value of Ps. 324,220.
(2) Represent 2.22%, respectively of the Grupo Aval’s managed funds total assets.
In the normal course of operations, Grupo Aval has trust companies that manage collective investment funds and assets of third parties where the managing trustees receive commissions. Additionally, Grupo Aval’s subsidiary Fondo de Pensiones y Cesantias Porvenir manages mandatory pension funds and defined contribution plans. For management services provided by Porvenir, commissions received vary according to the performance of each fund or asset managed.
The obligations of these entities in the administration of these assets are obligations of means and do not guarantee the results. The maximum exposure risk of loss is determined by the possible failures in the administration of the funds by the amount of the returns that manages and the return of the results of assets the clients.
F-209
NOTE 33 - TRANSFERS OF FINANCIAL ASSETS
Grupo Aval and its Subsidiaries enters into transactions in its normal course of business by which it transfers financial assets to third parties. Depending on the circumstances, these transfers may either result in these financial assets being derecognized or continuing to be recognized in Grupo Aval´s financial statements.
Transferred financial assets not qualifying for full derecognition
Sales and repurchase agreements are transactions in which Grupo Aval sells securities and simultaneously agrees to repurchase them (or assets that are substantially the same) at a fixed price on a future date. Grupo Aval continues to recognize the securities in their entirety in the statement of financial position because it retains substantially all of the risks and rewards of ownership. The cash consideration received is recognized as a financial asset and a financial liability is recognized for the obligation to pay the repurchase price. Because Grupo Aval and its Subsidiaries sells the contractual rights to the cash flows of the securities, it does not have the ability to use the transferred assets during the term of the arrangement. As of December 31, 2025, the financial assets held for trading that are being used as collateral under repurchase agreements amounted to Ps. 8,702,596 and as of December 31, 2024 Ps. 6,452,275 (see note 5.1.1 only pledged as collateral in money market operations and pledged as collateral to special entities such as CRCC, BR and BVC), the financial investments debt securities at amortized cost that are being used as collateral under repurchase agreements as of December 2025 amounted to Ps. 2,941,510 and as of December 31, 2024 Ps. 4,076,356 (see note 9.3.1) and the financial investments debt securities FVOCI that are being used as collateral under repurchase agreements as of December 2025 amounted to Ps. 10,475,058 and as of December 31, 2024 Ps. 10,190,595 (see note 5.1.2 only pledged as collateral in money market operations and pledged as collateral to special entities such as CRCC, BR and BVC).Securities lending
ii. Securities lending
As of December 31, 2025, and 2024 Grupo Aval has not recorded securities lending.
Transfer of financial assets that are derecognized in their entirety.
i. Securitizations
As of December 31, 2025, and 2024 Grupo Aval has not recorded securitizations.
NOTE 34 – RELATED PARTIES
To verify the correct identification of relationships and transaction with related parties, Grupo Aval has established a specific formal Procedure for the Identification and Disclosure of Balances and Transactions with Related Parties.
In application of this procedure, our members of the Board of Directors and our key management personnel are periodically required to identify close family members and entities over which such persons have significant influence. This procedure was carried out through a written request containing the criteria that such person must consider in order to provide information on close family members and entities that must be disclosed as their related parties.
In addition, Grupo Aval Vice-Presidency of Accounting Consolidation periodically performs an evaluation of its controlling and non-controlling investments in other entities to identify if such entities should be treated as a related entity.
The following are some of the guidelines included in the above-mentioned corporate framework:
F-210
Balances as of the year ended December 31, 2025 and 2024, with related parties, are detailed in the following tables:
Entities
with
significant
control
Key
controlled
influence
over Grupo
management
and joint
by
Aval (*)
personnel (*)
ventures
individuals
Cash and equivalents
4,409
Financial assets in investments
1,814,536
1,974,721
Financial assets in credit operations
20,582
7,624
696,239
(**)
2,748,562
6,083
43,423
2,074,649
10,033
4,566
239,610
35,305
122,354
1,320,671
5,295
398
389
33,379
317,642
302,194
16,001
(*) Include family members
(**) Include one loan for Ps. 981,276 at 36 months with SOFR rate 3M + 3.5%
(1) This amount represents MFG balances resulting from transactions with BAC entities, which are classified as liabilities related to non-current assets held for sale.
1,489
1,757,813
2,317,449
22,120
6,821
702,904
2,854,618
3,584
21,281
1,625,006
16,301
60,860
206,174
30,417
166,009
1,467,708
6,986
333
26,934
265,585
1,472
15,900
9,634
(**) Includes one loan for Ps. 1,196,398 at 36 months with SOFR rate 3M + 3.5% with respect to the loan corresponding to the IBR rate 3M + 4.5%, it was cancelled until December 2024
F-211
Transactions during the years ended as of December 31, 2025, 2024 and 2023, with related parties are as follows:
Individuals with
Entities with
controlled by
influence by
471
576
72,825
516,465
Fees income and commissions
134,113
218,623
1,900
485,421
11,234
Financial expenses
(6,248)
(2,399)
(9,901)
(147,592)
(204)
Fees expenses and commissions
(5,685)
(163,517)
(6,760)
(87)
Operating expenses
(590)
(13,448)
(987)
(5,403)
(313,292)
(48,116)
(187)
492
101,632
558,438
65,007
155,392
458,918
8,879
(2,539)
(1,311)
(10,639)
(73,476)
(490)
(3,939)
(132,153)
(2,524)
(579)
(9,348)
(1,147)
(5,139)
(170,952)
(96,707)
550
611
92,029
618,120
24,009
28,853
157,205
1,574
480,565
30,809
(4,412)
(3,581)
(10,337)
(80,165)
(281)
(2,801)
(91,646)
(4,044)
(171)
(706)
(15,735)
(408)
(5,517)
(173,899)
(100,632)
F-212
The compensation received by the key personnel of the management comprises the following:
Year ended as of
Items
Salaries
41,462
38,904
36,222
Short term benefits for employees
6,768
4,731
6,741
Termination benefits
8,754
Long term benefits for employees
458
Fees
5,798
3,939
2,418
54,486
48,115
54,135
Transactions with our related parties correspond primarily to the normal course of banking business activities carried out under market conditions. Such transactions include demand and saving deposits, time deposits, commercial, consumer and mortgage loans, financial leases, payment of dividends and or interest.
NOTE 35 – SIGNIFICANT EVENTS
Zelestra Corporación S.A.U.
On December 5, 2025, Promigas S.A. E.S.P., a subsidiary of Corficolombiana, entered into an agreement with Zelestra Corporación S.A.U. to acquire 100% of the shares of the companies that own a regional renewable energy generation platform with a presence in Colombia, Chile, and Peru.
The platform includes a portfolio of projects with a contracted capacity of 1.4 gigawatts, as well as an additional portfolio of projects in various stages of development exceeding 2.1 gigawatts of potential installed capacity.
The closing of this transaction is subject to completing the required procedures before the competition authorities of Colombia and Peru, and to the fulfillment of customary conditions precedent for this type of transaction, which are expected to be obtained in the coming months.
Banco Itaú Colombia S.A. and Banco Itaú Panamá
On December 22, 2025, Banco de Bogotá S.A. and Banco de Bogotá (Panamá) S.A. entered into a commercial offer with Banco Itaú Colombia S.A. and Banco Itaú Panamá, with the purpose of executing the transfer of certain assets, liabilities, and contracts of the offering entities. With the acquisition of Itaú’s retail banking business, approximately 277,000 clients would be transferred. The consummation and closing of this transaction are subject to prior approval by the Colombian Superintendency of Finance and to the fulfillment of other customary conditions precedent for this type of transaction.
NOTE 36 – SUBSEQUENT EVENTS
Concesionario Sencia S.A.S.
On January 6, 2026, Corficolombiana S.A., through Corfiinvest S.A.S. (an investment vehicle), entered into an agreement to acquire 51% of the shares of Sencia S.A.S. (“Sencia”) for Ps. 85,949. Sencia is the concessionaire of the Public Private Partnership for the renovation, construction, operation, and maintenance of the sports complex at the “El Campín” Stadium, one of the country’s most significant urban and entertainment infrastructure projects. The concession has an estimated term of 29 years, an approximate investment of Ps. 2,407,343, and a construction period of approximately 4.5 years.
The acquisition was completed on January 15, 2026, once the conditions established in the referred agreement had been fulfilled - obtained control of Sencia, whereby Corfiinvest came to hold 51% of the share capital and thus obtained control of Sencia.
F-213
As of the date of issuance of these consolidated financial statements, the purchase price allocation is preliminary. The Company is evaluating the fair values of the identifiable assets and liabilities assumed, including intangible assets related to the concession and any resulting goodwill.
The accounting will be finalized within the measurement period established by IFRS 3 (up to one year from the acquisition date), during which the provisional amounts may be revised to reflect information about conditions existing at that date.
The preliminary values related to the acquisition process are detailed below:
104,211
(13,156)
Net of assets acquired and liabilities assumed from Sencia
91,055
Percentage acquired
51%
Book value of the percentage acquired
46,438
Payment amount
85,949
On September 23, 2025, through Resolution 1777 of 2025, the Colombian Superintendency of Finance approved the partial spin-off of Fiduciaria Occidente S.A., Fiduciaria Popular S.A., and Fiduciaria Bogotá S.A., in favor of Aval Fiduciaria S.A.
The transaction involves the transfer of all fiduciary activities—comprising assets, liabilities, contracts, and other associated operational elements—as well as the contractual position of the fiduciary businesses, in order to integrate them into a unified corporate model.
The General Shareholders’ Meeting of the companies involved ratified the spin‑off, which was formally completed on January 1, 2026, through public deeds No. 2625 and No. 2647. As a result, control of the assets, liabilities, and businesses subject to the spin‑off was recognized as of the date on which those deeds became effective.
As part of the consideration agreed in the corporate reorganization process, Aval Fiduciaria will issue ordinary shares for an estimated amount of Ps. 91,085. As a result, Grupo Aval’s direct and indirect ownership interest in Aval Fiduciaria decreased from 98.47% to 77.25%.
Wealth tax 2026
In the context of the State of Economic, Social and Ecological Emergency declared through Legislative Decree No. 0150 of February 11, 2026, the Colombian National Government enacted Legislative Decree No. 0173 of February 24, 2026, which introduced temporary tax measures related to the wealth tax, aimed at financing extraordinary expenditures of the General Budget of the Nation arising from such emergency. Pursuant to this decree, an exceptional wealth tax was established for a single fiscal year (fiscal year 2026), applicable to legal entities. This measure temporarily expands the scope of taxpayers subject to the net wealth tax, as regulated in the Colombian Tax Code. The taxable event is the holding of net assets with a value equal to or greater than 200,000 Tax Value Units (UVT) as of March 1, 2026, applicable to Colombian entities subject to corporate income tax. The established tax rate is 1.6% for financial and extractive entities and 0.5% for all other entities. The tax is non-recurring and applies exclusively to the 2026 fiscal year. The estimated tax liability for Grupo Aval and its subsidiaries is Ps. 312,801.
F-214
Multi Financial Group Inc.
On March 18, 2026, Banco de Bogotá S.A. after obtaining the required regulatory authorizations and fulfilling the agreed precedent conditions, the transaction related to the purchase and sale of 99.569068% of the shares of Multi Financial Group Inc. between BAC International Corporation (BIC), as buyer, and Multi Financial Holding, Inc., as seller, had been completed. The transaction price was set at U.S.$ 464 million (Ps. 1,719,674).
General Meeting of Shareholders
The General Meeting of Shareholders that took place on March 27, 2026, approved the following:
Net income for period ended December 31, 2025 included in the unconsolidated financial statements of Grupo Aval
1,735,360
Occasional reserve release at the disposal of the General Meeting of Shareholders
7,711,039
Total Income available for disposal of the General Meeting of Shareholders
9,446,399
To distribute a cash profit of Ps. 2.65 per share per month during the months of April 2026 to March 2027, both months included over 23,743,475,754 shares subscribed and paid as of the date of this meeting.
Total dividends declared
755,043
Total shares outstanding
To Occasional reserve at the disposal of General Meeting of Shareholders
8,691,356
F-215
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
By:
/s/ María Lorena Gutiérrez Botero
Name:
Title:
Date: April 16, 2026