Balance Sheets December 31, 2014 with corresponding figures for 2013 (Figures expressed in quetzales)

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5 Balance Sheets, with corresponding figures for (Figures expressed in quetzales) Assets Cash (note 4) 2,888,469,064 2,994,965,899 Investments, net (note 5) 3,971,877,488 2,930,219,538 Loan portfolio, net (note 6) 14,354,095,363 11,304,031,878 Account receivable from accrued financial products (note 7) 74,535,176 70,215,749 Other accounts receivable, net (note 8) 30,390,511 47,214,257 Foreclosed assets, net (note 9) 79,473,214 68,898,330 Equity securities (note 10) 54,452,268 53,219,483 Other investments (note 11) 14,941,275 14,472,141 Property and equipment, net (note 12) 273,137, ,538,831 Deferred charges, net (note 13) 133,763,521 93,156,402 21,875,135,767 17,849,932,508 Liabilities, Other Credit Balances and Shareholders Equity Deposits (note 14) 14,638,409,284 13,016,020,367 Loans with other financial institutions (note 15) 4,423,230,342 2,203,782,291 Financial obligations (note 16) 17,731,000 28,110,000 Accounts payable from accrued financial expenses (note 17) 151,758, ,236,542 Other accounts payable (note 18) 269,044, ,936,595 Provisions (note 19) 132,099, ,103,617 Deferred income (note 20) 1,744,167 1,978,394 Total liabilities 19,634,017,244 15,741,167,806 Other credit balances (note 21) 69,486,518 66,457,623 Total liabilities and other credit balances 19,703,503,762 15,807,625,429 Shareholders equity (notes 22 and 23) 2,171,632,005 2,042,307,079 Commitments and contingencies (note 34) 21,875,135,767 17,849,932,508 Contingencies, commitments, other liabilities and memorandum accounts (note 31) 39,624,082,926 32,582,828,007 See accompanying notes to the financial statements. 3

6 Statement of Income Year ended, with corresponding figures for (Figures expressed in quetzales) Financial income (note 24) 1,559,686,119 1,289,214,293 Financial expenses (note 24) (649,808,266) (435,066,713) Investment margin 909,877, ,147,580 Income and expenses from services, net (note 25) 52,827,223 44,765,088 Service margin 962,705, ,912,668 Other operating income and expenses, net (note 26): Operating income 75,534,200 68,156,375 Loan, accounts receivable and securities loss provisions (note 6) (119,084,743) (88,878,444) Operating expenses (20,965,868) (1,942,792) Other income and operating expenses (64,516,411) (22,664,861) Gross operating margin 898,188, ,247,807 Administrative expenses (note 27) (665,425,018) (636,038,718) Operating margin, net 232,763, ,209,089 Extraordinary income and expenses, net (note 28) 45,037,388 31,696,020 Income and expenses from previous periods, net (note 29) 2,805,665 (2,419,600) Income before tax expense 280,606, ,485,509 Income tax (note 30) (58,997,096) (68,424,040) Net income 221,609, ,061,469 See accompanying notes to the financial statements. 4

7 Statements of Changes in Shareholders Equity Year ended, with corresponding figures for (Figures expressed in quetzales) Shareholder s equity: Paid-in capital (note 22 i): Balance at beginning of year 1,167,585, ,984,640 Issuance of common stock 1, ,601,220 Balance at end of year 1,167,586,940 1,167,585,860 Additional paid-in capital (note 22): Balance at beginning of year 407,012,415 45,731,439 Premiums on common stock ,280,976 Balance at end of year 407,013, ,012,415 Equity reserves (note 23) Legal reserve: Balance at beginning of year 96,503,718 87,521,850 Transfer from retained earnings 10,053,073 8,981,868 Balance at end of year 106,556,791 96,503,718 Reserve for future dividends (note 23 i): Balance at beginning of year 82,455,320 47,203,818 Transfer from retained earnings - 51,487,502 Less: Dividends on preferred shares - (16,236,000) Transfer to retained earnings (82,455,320) - Balance at the end of the year - 82,455,320 Contingencies reserve (note 23 ii): Balance at beginning of year 112,139,412 62,139,412 Transfer from retained earnings (note 23 ii) 50,000, ,000,000 Transfer to allowance for valuation of loan portfolio (note 6) (75,000,000) (50,000,000) Disbursements of the year (note 23 ii) (815,995) - Balance at end of year 86,323, ,139,412 Income reinvestment reserve (note 23 iii): Balance at beginning of year 5,780,835 5,800,089 Depreciation (18,600) (19,254) Balance at the end of the year 5,762,235 5,780,835 (Continues) 5

8 Statements of Changes in Shareholders Equity (continued) Year ended, with corresponding figures for (Figures expressed in quetzales) Assets revaluation reserve (notes 12 and 23): Balance at beginning of year 28,480,154 29,384,140 Increase for revaluation (note 23 iv) 65,126 - Depreciation of the year (note 23 iv) (926,493) (903,986) Balance at end of year 27,618,787 28,480,154 Valuation of doubtful recovery assets (note 23 v): Balance at beginning and end of year (48,446,765) (48,446,767) Gain or loss from changes in market value of investments available for sale (note 23 vi): Balance at beginning of year (10,265,338) 17,787,019 Gains (losses) from changes in the market value of the year 14,491,563 (28,052,357) Balance at end of year 4,226,225 (10,265,338) Retained earnings: Balance at beginning of year 201,061, ,637,354 Net income 221,609, ,061, ,671, ,698,823 Less: Transfer to legal reserve (note 23 i) (10,053,073) (8,981,868) Transfer from (transfer to) reserve for future dividends (note 23 i) 82,455,320 (51,487,502) Transfer to contingencies reserve (note 23 ii) (50,000,000) (100,000,000) Compensation to directors and employees (note 23 viii) (14,263,932) (19,167,983) Preferred shares dividends (note 23 vii) (15,818,292) - Balance at the end of year 414,991, ,061,470 Total shareholder s equity 2,171,632,005 2,042,307,079 See accompanying notes to the financial statements. 6

9 Statements of Cash Flows Year ended, with corresponding figures for (Figures expressed in quetzales) Cash flows from operating activities: Interests income 1,381,504,915 1,206,677,360 Commissions income 134,950,724 92,721,099 Services income 162,010, ,267,093 Interests expense (570,990,544) (380,451,386) Services expense (96,764,258) (88,361,287) Fee expense (3,110,811) (2,056,320) Administrative expenses paid (575,431,189) (539,854,592) Loss for title-securities negotiation (net) 1,141,399 1,798,049 Foreign exchange (net) 67,518,471 64,321,379 Investments in securities: Cash from disposals of investments 41,059,490,273 44,648,287,784 Investment acquisition (41,989,518,877) (45,309,163,129) Loan portfolio: Cash from amortization of loans 14,024,993,103 11,179,795,090 Disbursements for loans (17,264,056,764) (13,003,918,301) Other investments: Cash from disposal of other investments 20,578,400 20,752,447 Acquisitions of other investments (21,047,534) (21,454,025) Deposits: Cash from funds received from depositors 177,888,163, ,614,257,989 Disbursements for deposit withdrawals (176,265,775,025) (161,735,476,704) Loans with other financial institutions: Cash from loans 7,845,280,905 5,189,562,053 Loans paid (5,625,832,854) (4,125,498,226) Financial obligations: Redemption or repurchase (10,379,000) (1,437,000) Cash from sale of foreclosed assets 12,801,463 21,672,875 Income tax paid (56,661,491) (52,865,402) Solidarity tax paid (15,012,305) (13,379,510) Contribution to savings Protection Fund FOPA (27,261,773) (18,710,480) Other income and expenses (net) (88,225,350) (101,257,368) Net cash flows provided by (used in) from operating activities 2,340,934 (213,770,512) (Continues) 7

10 Statements of Cash Flows (continued) Cash flows from investment activities: Investments in equity securities Cash from disposal of investments 128,614 13,528,382 Disbursements for investments (1,361,399) (10,696,401) Dividends received 8,015,729 3,834,996 Cash from sale of property and equipment 46, ,658 Disbursements for purchase of property and equipment (32,835,764) (39,728,793) Net cash used in investment activities (26,006,435) (32,938,158) Cash flows from financing activities: Dividend paid (35,786) (170,213) Dividends paid preferred shares (15,818,292) (16,236,000) Share contributions income - 812,882,196 Net cash (used in) provided by financing activities (15,854,078) 796,475,983 Net (decrease) increase in cash and cash equivalents (39,519,579) 549,767,313 Cash and cash equivalents at the beginning of year 3,341,939,893 2,792,172,580 Cash and cash equivalent at the end of year 3,302,420,314 3,341,939,893 Supplementary information The following is a summary of cash and cash equivalents: Cash (note 4) 2,888,469,064 2,994,965,899 Cash equivalents (a) 413,951, ,973,994 3,302,420,314 3,341,939,893 (a) Includes investments that can be converted into cash and with a maturity within 3 months following the date of the financial statements (see note 5). See accompanying notes to the financial statements. 8

11 , with corresponding figures for 1 Operations Banco Agromercantil de Guatemala, S.A. (the Bank ) was incorporated on October 18, 2000 through Public Deed No. 179, as a result of the merger of Banco del Agro, S.A., Banco Agrícola Mercantil de Guatemala, S.A. and Corporación del Agro, S.A The Bank is in the banking business and its operations are governed by the following Guatemalan laws: Law of Banks and Financial Groups and, as applicable, by the Organic Law of the Guatemalan Central Bank, the Monetary Law, the Financial Supervision Law, the Law Against Money and Other Asset Laundering and the Law to Prevent and Suppress the Financing to Terrorism. The Bank headquarters are located at 7ª avenida 7-30 zona 9, Guatemala City. The Bank s holding company is Grupo Agromercantil Holding incorporated in the Republic of Panama whose shareholders are BAM Financial Corporation with 60% of participation and Bancolombia (Panamá), S.A. with 40% of participation, both entities incorporated in the Republic of Panama. 2 Basis of Preparation a Statement of Compliance The accounting policies used by the Bank in preparing and presenting its financial information are in accordance, in all significant aspects, with the standard banking practice regulated in Guatemala, and with the Accounting Instructions Manual for Entities Subject to the Surveillance and Inspection of the Superintendence of Banks (MIC) approved by a Resolution of the Monetary Board JM and its subsequent amendments. MIC s objective is to standardize the accounting framework of all the financial activities of the entities subject to supervision of the Superintendence of Banks of Guatemala. Additionally, these accounting policies and reports are regulated by the Law of Banks and Financial Groups (note 33), the Monetary Law, the Financial Supervision Law, the Law Against Money and Other Asset Laundering, the Law to Prevent and Suppress and Financing to Terrorism and other laws applicable to its activities as well as by the provisions of the Monetary Board and of the Superintendence of Banks of Guatemala. 9

12 2 Basis of Preparation (continued) b c d Basis of measurement Financial and non-financial assets and liabilities are stated at cost; in the case of some investments available for sale, at fair value. In addition, some nonfinancial assets are stated at its revalued value (see notes 3c and 3e) and in the case of foreclosed assets, at its adjudication value or in conformity with the indication in note 3e. Presentation currency The financial statements are stated in quetzales (), the functional currency of the Bank and legal currency in Guatemala. At, the reference exchange rate provided by the Bank of Guatemala (Central Bank) and the banking market rate was 7.60 = US$1.00 (7. 84 = US$1.00 en ). Use of estimates In the preparation of the financial statements, the Bank s management has made a number of estimates and assumptions related to the accounting policies and the figures reported in assets, liabilities, results of operations and the disclosure of contingent liabilities. Real results might differ from these estimates. The estimates that are particularly susceptible to significant changes are mainly related with the determination of the estimate for loan portfolio, valuation of investment in securities, valuation of foreclosed assets, deferred charges and the recovery of accounts receivable. The current economic environment has increased the degree of uncertainty inherent to such estimates and assumptions. 3 Significant Accounting Policies The information contained in the accompanying financial statements and its notes has been prepared and is responsibility of the management of the Bank. The accounting policies summarized below were applied for the preparation and presentation of these financial statements. These accounting policies differ from International Financial Reporting Standards (IFRS), mainly as summarized in note 39. a Financial Instruments A financial instrument is any contract that gives rise to a financial asset in one entity and at the same time a financial liability or equity instrument in another entity. 10

13 3 Significant accounting policies (continued) Financial instruments include, among others: cash, investments, loan portfolio, financial income receivable, accounts receivable, deposits, loans obtained, financial obligations, other obligations, financial expenses payable and accounts payable. i. Cash equivalents Investments that are easily translated into cash and are due within three months following to the date of the financial statements are considered cash equivalents. ii. Investments The investments portfolio in securities consists of the following: Available for sale securities The initial accounting record is made at acquisition cost, without considering commissions and other similar charges incurred at the acquisition. Acquisition and disposals are recorded on the transaction date. The value of these investments is adjusted on a monthly basis based on their market value in the stock exchange. Where there is no market value, the value is determined based on regulations related to valuation of investment securities. In cases where the securities are issued by the Bank of Guatemala or the Ministry of Public Finance, where no reference market value may be established, valuation is made at acquisition cost. Differences arising from price variances are recorded in equity. When securities are sold, the gain or loss accrued in equity is recognized in the profit or loss of the year. Held-to-maturity securities The initial accounting record is made at acquisition cost, without considering fees and other similar purchase-related charges. The book value of these investments is determined through the cost method. Purchases, amortizations and maturities are recorded in accounting on the transaction date. 11

14 3 Significant Accounting Policies (continued) Securities Under Repurchase / Resell Agreements Investments securities that the Bank holds under resell agreement are recorded at acquisition cost. Investments securities the Bank has granted under repurchase agreement are written off from the investments account recorded in the balance sheet and recorded in memorandum accounts. iii. Estimate for Investments Valuation According to the existing regulations, the Bank should register estimation for valuation as a result of a risk analysis. iv. Loan Portfolio Loans and Others In conformity with the MIC, the loan portfolio represents the amount of loans granted by the Bank in local and foreign currency, plus-minus the exchange rate adjustment for loans in foreign currency. The commissions perceived from and any incremental cost related to the loans granted are recorded directly in the profit or loss of the year. The balances of the accounts receivable for credit cards are divided into cycles, which monthly cut-date are due in different days each month. For monthly accounting closure purposes, the amounts for purchases in establishments are recorded as accounts receivable in the moment in which the transactions are performed by the cardholder. Likewise, in the account extra-financing receivable are recorded the consumptions like interest to be received. As the corresponding quotas are due, they are transferred alongside with interests to the accounts receivable from credit cards. Estimate for Loan Portfolio and Accounts Receivable valuation According to the Credit Risk Management Regulations, Resolution JM dated May 23, 2005 and its amendments according to Resolution JM , the Bank should record against the year s income, an allowance based on the valuation of its portfolio of credit assets. 12

15 3 Significant Accounting Policies (continued) In cases where the legal limit as deductible expense for income tax expense determination purposes is exceeded, this reserve may be recorded directly against capital reserve accounts in shareholders equity. The creation and maintenance of generic reserves or allowances, along with the specific reserves or allowances should cover an amount equal to one hundred percent of the due loan portfolio and shall in no event be less than 1.25% of the total gross credit assets. b Permanent investments Permanent investments in shares are those where management has the intention of maintaining equity in the issuer s capital. These investments are recognized using the cost method, disregarding the share percentage that Bank has in these entities. Income from these investments is recorded only to the extent that retained earnings of the investee (where the investment is held) are distributed after the acquisition date. Permanent investments in foreign currency are accounted for at their equivalent in quetzales, at the exchange rate in effect at the time of purchase and remain recorded at the historical exchange rate, as required by Manual of Accounting Instructions for Entities subject to Surveillance and Inspection of the Superintendence of Banks of Guatemala. c Property and Equipment i. Acquired assets Property and equipment are presented at cost, except for the revaluated fixed assets. ii. Revaluated assets Revaluated property and furniture are recorded at value provided by an independent appraisal. iii. Revaluation surplus The revaluation surplus of property and equipment is included as part of equity in the assets revaluation account. iv. Disbursement subsequent to acquisition Major replacements and improvements are capitalized, whereas minor disbursements for repairs and maintenance not extending the useful life of assets are recognized as expenses in profit or loss of the year. 13

16 3 Significant Accounting Policies (continued) v. Accumulated depreciation Property and equipment recorded at cost (except for land) and revalued assets are depreciated on a straight-line basis, using the rates based on the percentages fiscally established. Depreciation percentages used were as follows: % Buildings at cost 5 Revalued buildings 5 Furniture and equipment 20 Computer equipment 20 Vehicles 20 Other 10 The depreciation expense is charged against profit or loss of the year, except for the depreciation expense of revalued buildings, which is charged to the assets revaluation reserve in equity. Fully depreciated assets and accumulated depreciation are written-off from the respective accounts and are controlled in memorandum accounts. d e Amortization Leasehold improvements are deferred and amortized on a straight-line method at an annual rate of 5%. Foreclosed Assets These correspond to the property foreclosed in payment of loans in favor of the Bank. Initially these assets are recorded at the outstanding capital amount plus interest and expenses incurred in its foreclosure. The value of these assets is updated through an independent appraisal, in a term not exceeding three months after the Bank acquires the property. If the appraisal value is lesser than recorded amount, a reserve for valuation against the profit or loss of the year is created, otherwise a profit pending to be realized is recorded in other credit accounts. 14

17 3 Significant Accounting Policies (continued) Foreclosed assets must be sold in a period no greater than two years from the foreclosure date. If the sale is not made in this period, the assets must be offered in public auction. In the event the assets are not sold in public auction, a new auction is performed every three months; the base price of the subsequent auctions will be reduced each time by 10%. If the base price for the auction of a foreclosed asset is less than the book value, a reserve is immediately constituted for the difference between the two values. If the sale is settled in cash and the selling value is greater than the book value, the difference is directly recorded in profit of the year. If the sale is settled in installments and the selling price is greater than the book value, the difference is recorded as deferred income, and income is recognized as installments are collected. If the selling price is less than the book value, the loss is recorded through profit or loss, disregarding whether the sale is settled in cash or in installments. Income, if any, from the foreclosed assets is recorded on cash basis. f Severance payments In conformity with the Manual of Accounting Instructions for Entities subject to Surveillance and Inspection of the Superintendence of Banks of Guatemala, the Bank makes a monthly provision against the profit or loss, the proportion equivalent to severance payment for labor relation finalization, whether, it is recognized to its employees according to what is established in the Labor Code, in collective bargaining agreements, for policies expressly established within the entity or, when applicable, by individual employment contracts. According to Guatemalan Laws, and as provided for by article 85 section (a) of the Labor Code, employers are required to pay to their employees and workers or to their beneficiaries in case of death or unjustified dismissal, an indemnity equal to one month of salary for each year worked. The Bank performs a periodic review of the provision for employee benefits and performs the corresponding adjustments in order to have the amount of such provision updated. 15

18 3 Significant Accounting Policies (continued) In the case where the provisions created exceed the maximum legal amount allowed as a deductible expense for tax purposes, such excesses are directly recorded against the reserve for future contingencies that forms part of equity. g Income Recognition Revenue earned from items other than those noted in the following sections i, ii and iii is accounted for as income receivable and other credit accounts, as applicable, and recorded as income only when collected. The following income is recorded on accrual basis in profit or loss accounts: i. Interests accrued on bonds or documents issued by the Bank of Guatemala and securities of other issuers whose amortization funds are controlled by the Bank of Guatemala; ii. Interests accrued on securities issued by foreign governments or foreign central banks, having a minimum risk grade of A-3 for short term or BBBfor long term, granted by Standard & Poor s, or equivalent grading granted by an international well-known credit rating agency; and, iii. Interest, commissions, rents and other income on credit card, factoring and financial leasing. Accounting for income earned but not yet collected in other credit accounts is suspended when there is a delay in payment of thirty days for investments in title-securities and ninety calendar days for the rest of the transactions and services, from the day following that on which the agreed-upon payments were due. When such suspension occurs, revenue earned but not collected should be reversed from balance accounts. For credit card operations, the accounting record in profit or loss is suspended when incurring in delinquency of more than ninety calendar days counted as of the following day from when the agreed payments should have been received. When such suspension occurs, revenue earned but not collected should be reversed from the relevant accounts; except for charges capitalized in credit card accounts, which are not reversed. 16

19 3 Significant Accounting Policies (continued) Suspended balances, recorded in balance accounts and profit or loss accounts, as well as those earned as from the suspension date shall be recorded in memorandum accounts. h i Subordinated obligations Subordinated obligations are recorded in liabilities as other obligations. Dividends declared Dividends are declared as authorized by the General Shareholder s Meeting, whereby the capital reserves accounts and retained earnings are reduced and an account payable is recorded. The payment is made in cash during the year in which the dividends are decreed. The Superintendence of Banks, following the proper process, may limit banks, financial companies and offshore entities from distributing dividends of any type or form, when, in the opinion of such body and as a prudential measure, it is required to strengthen the liquidity and/or solvency of such bank, financial company or offshore entity. Such limitation shall not apply to shares with limited voting rights with preferred dividends. j k Remuneration to Directors and Employees In conformity with the Social Deed of the Bank, a remuneration for employees is contemplated (to directors and employees up to ). The amount allocated is written off from results from previous periods and recorded as an account payable. The payment is made during the year in which this allocation is decreed. Legal Reserve In conformity with articles 36 and 37 of the Commerce code of Guatemala, all partnership shall separate annually as minimum 5% of the net profits of each exercise to record the legal reserve. This must not be distributed in any way among the shareholders until the dissolution of the partnership. However, it could be capitalized when exceeding fifteen percent (15%) of the paid in capital the closure of the recently closed period, without detriment of continue reserving the above-mentioned five percent (5%). The Bank records in the current year 5% of the net profit of the previous year. 17

20 3 Significant Accounting Policies (continued) l. Reserve for Future Dividends The amounts which, in conformity with the provisions of the Banks s Stockholders Meeting, are segregated from earnings shall be recorded in order to guarantee funds for paying dividends to stockholders for the invested capital. m n o Contingencies reserve The contingencies reserve comprises the amounts which, in conformity with the provisions of the Bank s Stockholders Meeting, are segregated from earnings for creating or increasing reserves that ensure the coverage of future unspecified or unforeseen events. Assets and liabilities in foreign currency Foreign currency assets and liabilities are stated at their equivalent value in quetzales, using the applicable exchange rate in accordance with the provisions issued by the monetary authorities (see note 2c). Transactions in Foreign Currency Transactions in foreign currency are recorded at their equivalent value in quetzales, using the exchange rate in force on the transaction date. Exchange rate differential, if any, that results between the date on which the transaction is recorded and the date on which it is settled and the reporting date, are recorded in profit or loss of the period. p q r Income Tax Income tax is the tax expected to be paid on the taxable income of the year, at the income tax rates in effect as of the balance sheet date and any other adjustment of the tax payable with respect to previous years. Provisions A provision is recognized in the balance sheet where the Bank has a legal or implied obligation that arises as a consequence of past events and will probably require an economic disbursement to settle such obligation. The provision approximates its settlement value; however, it may differ from the final amount. Foreign Regulatory Aspects Foreign Account Tax Compliance Act - FATCA. The Foreign Account Tax Compliance Act (FATCA) is a law proposed by the Government of the United States of America, aimed at facilitating the monitoring and taxing of U.S. taxpayers with financial accounts abroad. Information is obtained from U.S. citizens residing or not in such country. 18

21 3 Significant Accounting Policies (continued) For its implementation, FATCA requires that foreign financial institutions (FFIs) provide information to the U.S. Internal Revenue Service (IRS) on U.S. persons with investments in accounts outside such country and that nonfinancial foreign entities (NFFEs) provide information of their shareholders or partners. With the purpose of encouraging these entities to provide the information, FATCA requires to withhold 30% of gross payments made to FFIs that do not enter into an agreement with the IRS. This new withholding system is applied, broadly, to U.S. sources of wealth, bank deposits interest and gross capital gains. 4 Cash The summary of this account is as follows: Local currency: Cash 506,402, ,890,564 Central Bank legal deposits 1,104,712,277 1,037,741,957 Central Bank special deposits 65,054,200 62,763,300 Local banks 47,035,757 38,342,381 Checks from other local banks 128,530, ,606,069 1,851,735,808 1,902,344,271 Foreign currency: Cash 74,479,374 80,439,571 Central Bank legal deposits 562,862, ,248,853 Central Bank special deposits 24,316,437 19,357,990 Foreign banks 332,417, ,514,861 Checks and money orders from local and foreign banks 42,657,776 19,060,353 1,036,733,256 1,092,621,628 2,888,469,064 2,994,965,899 19

22 5 Investments, net The summary of this account is as follows: Local currency: Available for sale securities: Bond Certificates of the Treasury of the Republic of Guatemala, with annual interest rate between 6.63% and 10% (6.80% and 10% in ) and maturity between 2015 and 2019 (between and 2026 in ). (c) 1,180,773,778 1,181,390,113 Time deposit certificates issued by Bank of Guatemala with maturity in 2015 (March and December in ) (a and c) 616,200, ,000,000 Time deposit certificates issued by Bank of Guatemala, with annual interest rate of 6.75% and maturity between 2015 and 2020 (a) 265,000,000 - Financial Promissory note issued by Credomatic de Guatemala, S.A. with annual interest rate of 6.5% for both years and maturity between March and December 2015 (between March and December in ). (c) 65,000,000 65,000,000 Total available for sale securities 2,126,973,778 1,812,390,113 Held to maturity securities: FHA mortgage certificates with annual interest rate fluctuating between 5.5% and 19% (5.5% and 21% in ) and maturity between 2015 and 2039 ( and 2036 for ). 713,267, ,042,024 Total held to maturity securities 713,267, ,042,024 Total local currency 2,840,241,229 2,469,432,137 Carried forward 2,840,241,229 2,469,432,137 20

23 5 Investments, net (continued) Brought forward 2,840,241,229 2,469,432,137 Foreign currency: Available for sale securities: Bond certificates of Republic of Guatemala for US$90,298,755 (US$20,000,000 in ) with annual interest rate of 4.25% and 5.88% for both years and maturity between 2017 and 2027 for both years. 685,977, ,827,400 Eurobonds for US$43,375,408 (US$34,153,590 in ) with annual interest rate of 4.38% and 8.13% for both years and 2022 and 2034 for both years. 329,512, ,810,936 Bonds with local financial institutions, with annual interest rate of 5.50% with maturity in November ,013,060 - Bonds with foreign financial institutions, with annual interest rate of 2.95% with maturity in January ,448,004 - Treasury bonds of the United States of America for US$4,847,497 with annual interest rate of 1.25% and 1.75% with maturity between 2018 and ,011,021 Total available for sale securities 1,023,950, ,649,357 Repo operations: Repo bond certificate with annual interest rate of 1% with maturity in January (c) 113,951,250 - Interest paid in purchase of available for sale securities - 34,116 3,978,142,747 2,932,115,610 Allowance on F.H.A. mortgage notes (d) (6,265,259) (1,896,072) 3,971,877,488 2,930,219,538 21

24 5 Investments, net (continued) a) As of,, the Bank has investments in certificates deposit issued by Banco de Guatemala for 616,200,000 (566,000,000 in ), which were acquired with discount on the par value. During the year ended as of, the Bank obtained yields on these investments of 37,985,809 (15,598,245 for ) with are collected upon maturity of each title. b) As of,, investments have maturity fluctuating from 2015 to Maturities in the next six years of these investments are summarized as follows: ,162,839, ,241, ,448, ,309, ,194, on wards 2,313,109,615 3,978,142,747 c) Cash equivalents are detailed as follows: Time deposit certificates issues by Banco de Guatemala with maturity in January and March 2015 (March in ). 275,000, ,000,000 Repo bond certificate with maturity on January ,951,250 - Bond certificates, maturities between January and March 2015 (January and February and ). 20,000, ,973,994 Financial promissory note issued by Credomatic de Guatemala, S.A. with maturity on March 2015 (March for ). 5,000,000 5,000, ,951, ,973,994 22

25 (d) The movement of the allowance of F.H.A. mortgage notes is summarized as follows: For the years ended Balance at the beginning of (1,896,072) (1,896,072) year Plus: Provision of the year charged to profit and loss (4,369,187) - Balance at the end of year (6,265,259) (1,896,072) During the year ended as of, in compliance with what is established in article no.53 of the Law of Banks and Financial Groups and the resolution SIB No.807- a provision on FHA mortgage certificates was constituted, with charge to profit or loss of the year for 4,908,132. After that, with the authorization of the Superintendence of Banks of Guatemala contained in the official note No a part of the reserve for 538,945 was released, totaling a net charge to the profit or loss for 4,369, Loan portfolio, net The summary of the loan portfolio by type of guarantee is as follows: Local currency: Fiduciary 1,602,225,094 1,626,095,845 Pledge-fiduciary 218,825, ,704,212 Pledge 41,872,542 67,619,222 Mortgage-fiduciary 917,106, ,876,516 Mortgage 1,887,793,247 1,753,761,758 Mortgage-pledge- fiduciary 114,036, ,603,411 Mortgage-pledge 2,671,433 2,896,167 Secured by own obligations 109,876,762 46,416,933 Credit cards 1,136,144,844 1,157,627,383 Debtors for sale of foreclosed assets 27,023,778 20,183,846 Credits in monetary deposit accounts 1,274,522,263 1,189,150,168 Total local currency 7,332,099,128 6,936,935,461 Carried forward 7,332,099,128 6,936,935,461 23

26 6 Loan Portfolio, net (continued) Brought forwards 7,332,099,128 6,936,935,461 Foreign currency: Fiduciary 2,844,714,800 1,807,850,036 Pledge-fiduciary 106,029, ,511,805 Pledge 2,388,462 2,658,212 Mortgage-fiduciary 850,230, ,965,358 Mortgage 1,303,623, ,406,277 Mortgage-pledge 670,854,652 1,960,340 Mortgage-pledge-fiduciary 44,780, ,475,404 Secured by own obligations 27,785,968 16,089,200 Documents receivable 924,077, ,246,153 Credit cards 88,096,781 90,638,612 Debtors from sale of foreclosed assets 7,497, ,836 Letters of credit payments 106,106,485 95,414,004 Discounted documents - 1,319,703 Credits in monetary deposit account 297,093, ,098,536 Total foreign currency 7,273,280,016 4,571,502,476 Loan portfolio, gross 14,605,379,144 11,508,437,937 Less: Valuation allowances: Specific (47,352,398) (30,491,526) Generic (203,931,383) (173,914,533) Valuation allowances (251,283,781) (204,406,059) Loan portfolio, net 14,354,095,363 11,304,031,878 Credit operations bear annual interest rates variable fluctuating among the percentages shown below: % % Loans portfolio in local currency Loans portfolio in foreign currency Credit cards in local currency Credit cards in foreign currency

27 6 Loan Portfolio, net (continued) The summary of the loan portfolio by status is as follows: Local currency: Current 7,172,792,846 6,802,399,978 Due: In renewal process 81,435,094 67,148,202 In administrative collection 3,683, ,825 In legal collection 74,187,855 66,989, ,306, ,535,483 Total local currency 7,332,099,128 6,936,935,461 Foreign currency: Current 7,267,290,274 4,569,813,786 Due: In renewal process 1,279, ,682 In administrative collection 124,468 26,427 In legal collection 4,585,950 1,288,581 5,989,742 1,688,690 Total foreign currency 7,273,280,016 4,571,502,476 Total loan portfolio, gross 14,605,379,144 11,508,437,937 The summary of the loan portfolio by category is as follows: Local currency: Major corporate debtors 3,630,171,979 3,625,026,965 Minor corporate debtors 987,915, ,403,622 Microcredit loans 23,600,867 22,393,108 Mortgage loans for housing 934,908, ,929,524 Consumer loans 1,755,502,036 1,637,182,242 Total local currency 7,332,099,128 6,936,935,461 Carried forward 7,332,099,128 6,936,935,461 25

28 6 Loan portfolio, net (continued) Brought forward 7,332,099,128 6,936,935,461 Foreign currency: Major corporate debtors 6,750,328,095 4,116,037,577 Minor corporate debtors 354,074, ,640,359 Microcredit loans 292, ,879 Mortgage loans for housing 55,636,315 52,968,534 Consumer loans 112,948, ,683,127 Total foreign currency 7,273,280,016 4,571,502,476 Total loan portfolio, gross 14,605,379,144 11,508,437,937 The summary of the loan portfolio by economic activity is as follows: Foreign currency: Consumer 2,486,534,133 2,227,447,221 Agriculture, livestock, forestry, hunting and fishing 273,636, ,276,428 Mines and quarry exploitation 47,796,459 19,953,505 Manufacturing industry 537,827, ,928,837 Energy, oil and water 322,452, ,035,100 Construction 502,976, ,198,058 Commerce 1,741,650,964 1,865,581,264 Transportation and storage 118,292, ,023,841 Financial establishments, real states and services rendered to companies 946,479, ,858,946 Community, social and personal services 173,192, ,454,845 Other 181,259, ,177,416 Total local currency 7,332,099,128 6,936,935,461 Carried forwards 7,332,099,128 6,936,935,461 26

29 6 Loan Portfolio, net (continued) Brought forward 7,332,099,128 6,936,935,461 Foreign currency: Consumer 152,123, ,794,994 Agriculture, livestock, forestry, hunting and fishing 1,525,036, ,790,049 Manufacturing industry 1,117,581, ,667,927 Energy, oil and water 1,163,739, ,700,005 Construction 415,984, ,012,431 Commerce 2,219,240,515 1,777,307,668 Transportation and storage 77,574,988 37,612,839 Financial establishments, real states and services rendered to companies 528,973, ,458,294 Community, social and personal services 56,563,671 72,423,734 Other 16,461,381 15,734,535 Total foreign currency 7,273,280,016 4,571,502,476 Total loan portfolio, gross 14,605,379,144 11,508,437,937 The summary of the loan portfolio by geographic area is as follows: Local currency: Guatemala 7,271,986,836 6,866,879,340 Other Central America Countries 60,107,292 70,056,121 Other countries 5,000 - Total local currency 7,332,099,128 6,936,935,461 Foreign currency: Guatemala 6,140,203,479 3,343,050,004 Other Central America Countries 1,111,332,937 1,204,025,036 United States of America - 22,621,974 Other countries 21,743,600 1,805,462 Total foreign currency 7,273,280,016 4,571,502,476 Total loan portfolio, gross 14,605,379,144 11,508,437,937 27

30 6 Loan Portfolio, net (continued) Summary of the loan portfolio by maturity is as follows: Local currency: Up to one year 1,105,343,264 1,181,523,223 From one to three years 1,497,326,448 1,289,323,658 From three to five years 1,903,035, ,316,506 More than five years 2,826,393,493 3,775,772,074 Total local currency 7,332,099,128 6,936,935,461 Foreign currency: Up to one year 2,329,418,730 1,604,126,068 From one to three years 706,601, ,008,541 From three to five years 770,858, ,691,894 More than five years 3,466,401,024 1,864,675,973 Total foreign currency 7,273,280,016 4,571,502,476 Total loan portfolio, gross 14,605,379,144 11,508,437,937 The roll forward of the valuation allowance is summarized as follows: Years ended as of Balance at the beginning of the year 204,406, ,224,677 Add increase due to: Provision of the year charged to profit or loss 102,849,364 83,762,885 Transfer from the contingencies reserve 75,000,000 50,000,000 Exchange rate variation 298, , ,147, ,983,705 Less charges for: Loans applied to the allowance (130,335,396) (126,506,497) Foreign exchange rate variation, net (934,601) (295,825) (131,269,997) (126,802,322) Balance at the end of year 251,283, ,406,059 28

31 6 Loan portfolio, net (continued) Charges to profit or loss of the valuations allowance are summarized below: Years ended as of Valuation allowances: Loan portfolio 102,849,364 83,762,885 Investments in FHA mortgage notes (note 5) 4,369,187 - Accounts receivable (note 8) 127, ,581 Foreclosed assets (note 9) 11,738,332 4,972, ,084,743 88,878,444 7 Accounts receivable from accrued financial products The summary of this account is as follows: Local currency: Investments 46,467,394 54,064,208 Loan portfolio 6,100,048 6,409,200 Accounts receivable 141, ,911 Other investments 41,425 40,438 52,750,210 60,763,757 Foreign currency: Investments 12,270,719 4,865,809 Loan portfolio 9,513,326 4,574,844 Accounts receivable ,339 21,784,966 9,451,992 74,535,176 70,215,749 29

32 8 Other accounts receivable, net The summary of this account is as follows: Local currency: Payments on behalf of third-parties under managements agreements 2,293,413 2,303,971 Prepaid 2,919,829 5,638,846 Remittances 4,331,458 11,772,815 Security and maintenance 356, ,800 Other accounts pending liquidation (a) 340,801 7,317,549 Insurance premiums 1,477,631 1,782,449 Overdrafts in checking accounts 14,716 1,060 Service charges 694, ,119 Taxes, duties and contributions 1,085,905 1,368,791 Cash and securities missing 204, ,928 Other loan portfolio and accounts receivable 5,441,517 4,393,946 FHA awards 1,816,130 2,121,916 Other 4,164,213 2,726,293 Total local currency 25,140,576 40,593,483 Foreign currency: Accounts receivable (a) 1,008,729 8,127,945 Payments on behalf of third-parties 5,268, ,698 Cash and securities missing 1,975 - Other 122, ,476 Total foreign currency 6,401,449 8,604,119 Total accounts receivable 31,542,025 49,197,602 Less: Valuation allowance (1,151,514) (1,983,345) 30,390,511 47,214,257 (a) These accounts mainly include accounts receivable and credit card commissions. 30

33 8 Other accounts receivable, net (continued) The roll forward of the allowance for accounts receivable is summarized below: Years ended as of Balance at beginning of the year 1,983,345 2,877,818 Plus increase due to: Provision of the year charged to profit or loss (note 6) 127, ,581 Net foreign exchange (15,165) (4,623) 2,096,040 3,015,776 Less charges for: Write off against the allowance (906,929) (1,031,223) Operating recovery (35,526) - Settle of reserve from previous years (2,071) (1,208) Balance at the end of the year 1,151,514 1,983,345 9 Foreclosed Assets, net The summary of this account is as follows: Property 107,021,535 87,587,612 Investments securities 2,263,466 8,114,760 Equipment 616, ,522 Capitalized for foreclosed cost 5,525,909 4,986, ,427, ,464,326 Less: Valuation allowance (35,954,559) (32,565,996) 79,473,214 68,898,330 31

34 9 Foreclosed Assets, net (continued) The accounting movement of valuation allowance of foreclosed assets is summarized as follows: Years ended as of Balance at the beginning of the year 32,565,996 27,814,048 Plus: Provision charged to profit or loss (note 6) 11,738,332 4,972,978 Foreign exchange variation 67,151 3,874 11,805,483 4,976,852 Less: Release due to sale of foreclosed assets allowance (6,614,163) (144,467) Write offs against the allowance (1,626,730) (45,054) Foreign exchange variation (176,027) (35,384) (8,416,920) (224,905) Balance at the end of the year 35,954,559 32,565,996 32

35 10 Equity Securities The summary of this account as of, is as follows: Share percentage No. of shares Par value per share Investment cost Shares: In local currency: Seguros Agromercantil, S.A ,800 1,000 20,028,419 Arrendadora Agromercantil, S.A ,262 1,000 10,262,000 Financiera Agromercantil, S.A ,039 1,000 6,039,000 Transferencias, S.A , ,302,974 Imágenes Computarizadas de Guatemala, S.A ,000 1,375,500 Agrovalores, S.A ,810 Transacciones y Transferencias, S.A , ,681 Tarjeta Agromercantil, S.A , ,000 Asociación Bancaria de Guatemala , ,000 Subtotal 42,433,384 In foreign currency: Banco Latinoamericano de Comercio Exterior, S.A. for US$11,484-3,678-89,698 Compañía de Procesamiento de Medios de Pago Guatemala (Bahamas), S.A. US$1,533, ,114-11,929,186 Balance as of 54,452,268 33

36 10 Equity Securities (continued) The summary of this account as of, is as follows: Share percentage No. of shares Par value per share Investment cost Shares: In local currency: Seguros Agromercantil, S.A ,800 1,000 20,028,419 Arrendadora Agromercantil, S.A ,262 1,000 10,262,000 Financiera Agromercantil, S.A ,039 1,000 6,039,000 Transferencias, S.A , ,302,974 Imágenes Computarizadas de Guatemala, S.A ,000 1,375,500 Agrovalores, S.A ,810 Transacciones y Transferencias, S.A , ,681 Tarjeta Agromercantil, S.A , ,000 Asociación Bancaria de Guatemala , ,000 Subtotal 42,433,384 In foreign currency: Banco Latinoamericano de Comercio Exterior, S.A. for US$11, ,698 Compañía de Procesamiento de Medios de Pago Guatemala (Bahamas), S.A. US$1,374, ,696,401 Balance as of, 53,219,483 a) The entities Arrendadora Agromercantil, S.A., Seguros Agromercantil, S.A., Financiera Agromercantil, S.A., Tarjeta Agromerantil, S.A., and Agrovalores, S.A. are entities regulated by Superintendence of Banks of Guatemala and are part of Grupo Financiero Agromercantil (see note 33). 34

37 b) As of, and, permanent investments in foreign currency were translated at the historical exchange rate in conformity with the requirements of the Manual of Accounting Instructions for Entities Subject to Surveillance and Inspection of the Superintendence of Banks of Guatemala. c) The dividends received from the investments in shares are summarized below: Entity Years ended as of Arrendadora Agromercantil, S.A. 2,565,500 1,026,200 Seguros Agromercantil, S.A. 3,840,000 1,280,000 Financiera Agromercantil, S.A. 543, ,950 Almacenadora Guatemalteca, S.A. - 1,177,629 Compañía de Procesamiento de Medios de Pago Guatemala (Bahamas), S.A. 1,026,823 14,593 Banco Latinoamericano de Exportaciones, S.A. 39,896 34,624 Total dividends income (note 26) 8,015,729 3,834, Other Investments This account represents the amortization fund constituted for the service of the debt for the authorized issuance of mortgage and pledge bonds I. Debt service for the authorized issuance of mortgage bonds is constituted according to the corresponding program and regulations authorized by the Monetary Board (note 16). The summary of this account is as follows: Local currency: Cash available from F.H.A. transactions 10,941,275 10,472,141 Bond certificates with annual interest rate of 9% and maturity on May 21, 2015, for both years. 4,000,000 4,000,000 14,941,275 14,472,141 35

38 12 Property and Equipment, net Balances and movements of these accounts as of and for the year ended, is summarized as follows: Initial balance Additions Write-offs Transfers Final balance Cost: Land 49,448, ,448,884 Building 195,079,333 2,837, ,916,693 Furniture and equipment 18,441,441 5,330,457 (5,032,033) - 18,739,865 Computer equipment 100,731,683 27,068,930 (7,659,017) - 120,141,596 Vehicles 2,837,536 - (423,652) 147,559 2,561,443 Communication equipment 1,282, ,206 (530,957) - 1,053,553 Other 1,719, ,055 (6,332) - 1,901,962 Advances for asset acquisition and construction 3,466,834 3,651,071 (2,966,420) (3,324,733) 826, ,007,254 39,379,079 (16,618,411) (3,177,174) 392,590,748 Accumulated depreciation cost (127,948,579) (32,658,968) 13,535,898 - (147,071,649) 245,058,675 6,720,111 (3,082,513) (3,177,174) 245,519,099 Revaluated fixed assets: Land 16,042, ,042,081 Buildings 18,529, ,529,864 Other - 65, ,125 34,571,945 65, ,637,070 Accumulated depreciation revaluated buildings (6,091,789) (926,493) - - (7,018,282) 28,480,156 (861,368) ,618,788 Total 273,538,831 5,858,743 (3,082,513) (3,177,174) 273,137,887 During the year ended as of, 3,324,733 were transferred to improvement to leasehold property (See note 13). 36

39 12 Property and Equipment, net (continued) The balances ad movement of this account as of and for the year ended December is summarized below: Initial balance Additions Write-offs Transfers Final balance Cost: Land 49,448, ,448,884 Building 191,700,878 4,460,473 (751,783) (330,235) 195,079,333 Furniture and equipment 30,607,204 2,203,326 (14,369,089) - 18,441,441 Computer equipment 87,049,889 32,815,052 (19,133,258) - 100,731,683 Vehicles 3,018,246 1,232,264 (1,412,974) - 2,837,536 Communication equipment 3,213, ,735 (2,086,534) - 1,282,304 Other 1,283, ,810 (14,088) - 1,719,239 Advances for asset acquisition and construction 3,685,227 4,026,913 (2,032,751) (2,212,555) 3,466, ,006,948 45,343,573 (39,800,477) (2,542,790) 373,007,254 Accumulated depreciation cost (132,407,292) (32,304,116) 36,744,222 18,607 (127,948,579) 237,599,656 13,039,457 (3,056,255) (2,524,183) 245,058,675 Revaluated fixed asset: Land 16,042, ,042,081 Building 18,529, ,529,864 34,571, ,571,945 Accumulated depreciation (5,187,803) (926,493) 22,507 - (6,091,789) 29,384,142 (926,493) 22,507-28,480,156 Total 266,983,798 12,112,964 (3,033,748) (2,524,183) 273,538,831 During the year ended as of December, 2,542,790 were transferred to improvements to leasehold property (See note 13). 37