Good morning and welcome to the fourth quarter 2024 Gentera conference call. Now, I would like to turn the call to Mr. Enrique Barrera, Investor Relations Officer of the company. Sir, you may begin.
Good morning. Thank you all for joining us and for your continued interest in Gentera. I'm Enrique Barrera, the company's Investor Relations Officer. I'm very pleased to introduce our management team. With us today are Mr. Enrique Majós, Gentera's Chief Executive Officer, Mario Langarica, Gentera's Chief Financial Officer. Enrique Majós and Mario Langarica will present Gentera's results for the fourth quarter period and the full year 2024, as per the report that was issued yesterday, and we'll actively participate in the Q&A session of this conference call. As a reminder, now that we are holding our conference call via Zoom, it is important to highlight that if you want to ask questions during this Q&A session, these will only be taken if you are connected via this platform. Now, please note that during this presentation, Gentera may make forward-looking statements.
These do not account for future economic circumstances, industry conditions, company performance, or financial results. Additional information on forward-looking statements can be found in the disclaimer located in our earnings release. If you did not receive a copy of the release or if you have any questions, please do not hesitate to contact our Investor Relations Department in Mexico City. If you are a member of the media, we ask you to contact us directly. I would now like to turn the call over to Mr. Enrique Majós for his presentation. Enrique, please go ahead.
Thank you, Enrique. Good morning, good afternoon to everyone. We are always happy to have you here in our conference call. Welcome to our fourth quarter 2024 report. Please note that we are changing or improving our format, and now we are doing the call via Zoom. This way, we will be able to add and highlight the information we consider more relevant to communicate to you. Feel free to help us improve this experience through your comments and suggestions. By the way, if you're connected through a phone line, know that you have the option of connecting by Zoom and seeing our information on screen. The information to connect is in the invitation you received for this call. Now let's get started. We are very excited about the results we had in 2024.
On one hand, we have a big market and a big demand in the two countries that we operate, Mexico and Peru. We have also the loyalty of our customers, and we have a very experienced team that is operating remarkably. And about our perspective of 2025, we also feel very excited, and we will talk about this. Once again, this quarter, we are delivering business results above expectations. On one hand, we accomplished a historic record in the size of our customer base. At the end of 2024, we reached 5.7 million people, which represents an 11.9% compared to the fourth quarter 2023. As you can see, by reaching more people every year, we continue increasing the social, the economic, and the human value that we are aimed to create in Gentera.
On the other hand, Gentera's portfolio reached MXN 82.7 billion, which means a 27% growth compared with 2023. As you remember, our guidance for the year was between 18% and 20% in portfolio. With these results, we are above expectations, and we continue increasing the share of our addressable market. Net income reached MXN 6,462 million. This is also a historic maximum number and represents 27.9% in a yearly growth. And the NPLs closed at 3.93%, which remains within the 3.4% healthy range that we have defined. ROE closed in 21.4%, which is above the 20.5% that we expected at the end of 2024. And finally, EPS reached MXN 3.8, which is 6% above the higher end of our 2024 guidance. And now let me provide to you a quick overview of each of our subsidiaries. Banco Compartamos portfolio grew 29%.
While group lending methodology and products contributed with a 21% growth, our individual lending product showed an impressive 48% growth. Both products mainly maintain a very healthy operation and a good portfolio quality. Our business in Peru faced a difficult year in 2024. As we reported last year, during the first semester, we slowed down our growth in order to control the quality of the portfolio in Peru. By December 2024, we ended slightly above the 2023 figures with a 3.6% growth in clients and 1.5% growth in portfolio in local currency. At this point, we can be confident that our operation in Peru is starting to grow with good quality again. We are also happy to communicate that last month we received the banking license for our operation in Peru. So now we can proudly refer to the former Compartamos Financiera as Banco Compartamos Perú.
In ConCrédito, we reached a maximum portfolio of MXN 5.1 billion, a 22.6% growth versus last year. Net income grew 29%, while the quality of the portfolio remains within a very healthy range at 2.6%. These figures are solid and in line with our projections and our business expectations for ConCrédito. In line with the good results of ConCrédito, it is important to mention that we are already in the process of analyzing the acquisition to our partners of the remaining 25% of the ownership of ConCrédito. At this point, we do not have further details, but this transaction could take place within the present year, and we'll keep you posted in future calls about the advance of these conversations. Our insurance business is also growing solid. By the end of 2024, we reached 17.3 million active insurance policies, which represent an impressive 43% annual growth.
This is a very relevant growth, and actually, a couple of years ago, we started reporting how the income for the insurance business was increasing. The first figure that we announced was that the insurance income represented around 6% of the Gentera's total income. And a couple of quarters later, if you remember, that figure increased to 8%. Today, we can proudly say that the insurance business income stands in 10% of Gentera's income. This trend shows the growth in the potential that this product has and the relevance that the product has for our customers. And with 5,200 points of transaction, Yastás continues moving forward its strategy of being the most convenient transactional point for Compartamos and ConCrédito's customer base. By focusing on this, we are aimed to improve our customer transaction experience, and at the same time, Yastás builds a more efficient operation.
Talking about Gentera's modernization plan, which contains a set of transformative initiatives towards the use of digital platforms and use of data, as well as other transformative projects, I wanted to show you the solid results that we have accomplished recently. Let me show you the following chart. Here we can see the growth of net income for Gentera since 2010 and until 2024. Our first formal version of our modernization plan took place and was defined in 2019. As you recall, a few months later, we faced challenges, the very big challenges related with the global pandemic that we all experience around the world. At this point, some initiatives of the modernization plans were put in standby. But however, some other initiatives speed up since the technology was a great solution to solve the constraints of not being able to operate in a traditional way.
Here is the interesting thing, and let me show you this. While between 2010 and 2019, we grew 6.5% in an average year, as soon as we started with our modernization plan, we have been growing more than twice as fast with a 14.3% in average each year, even when we faced the pandemic in between. These numbers and the work behind them proves that the strategy, the plan, and the implementation of our modernization initiatives are showing the expected results and more. As you can see, we are really transforming Gentera, transforming our customer experience, transforming our capabilities, and transforming our results. Having shown that, we are certain that we will keep on implementing a set of initiatives that we believe that will continue to provide Gentera a never-ending improvement process.
After the evidence that we have of good results, we are convinced that the use of data and digital tools will remain being part of our core strategy. Finally, let me provide you some additional information, which I am sure is relevant for you. 2025 looks like another promising year for Gentera. In our last call, we already mentioned that we are looking forward to a double-digit growth for this year. As you can read in our press release, our guidance for 2025 is between 13% and 16% in portfolio and between 20% and 24% growth in our EPS. Mario will provide more detail on this. However, just let me tell you that we feel comfortable with our projections, which, by the way, are above the industry average.
Regarding our 2024 dividend payout, I just want to confirm to you that we will maintain our 40% dividend policy, and the payout will take place in two events along the year. The first one in May and the second one in November. Now, Mario Langarica will take you through more specific financial information. And after him, Enrique Barrera, Mario, and myself will be happy to take any questions you may have.
Thank you, Enrique, and good day to everyone. As always, we appreciate your interest in Gentera. As Enrique mentioned in his remarks, we are very excited with the historic and solid results that Gentera is presenting for 2024, and we're very enthusiastic with the positive dynamics and opportunities that we are seeing for 2025 and going forward.
In 2024, we reached a new record of 5.7 million people using 6,607,000 people in a year, with an 11.9% growth compared to 2023. As Enrique described, the strategic decisions made in 2024 and previous years allowed Gentera to end the year with a historic loan portfolio of MXN 82.7 billion, growing 27% compared to 2023. It is important to highlight that our great subsidiaries, Banco Compartamos and ConCrédito, closed the year with double-digit growth in their specific loan portfolios, while Compartamos Financiera, now Banco Compartamos Perú, finalized the year with a smaller growth, but improving on consistent dynamics and two consecutive growing quarters. For 2025, we expect double-digit growth in the portfolio of our three credit subsidiaries to achieve Gentera's guidance loan growth of 13%-16%. Now, let me jump to talk about the evolution of different lines of our income statement.
As anticipated in previous conferences, Gentera's 2024 interest income grew 23.8% versus 2023, reaching 40.2 billion MXN. And net interest income grew 22.6% to amount 32.9 billion MXN, following. NIM amounted to 39.8% in 2024, in line with our expectations for the year, similar levels compared to 2023. For 2025, we expect to have our NIM moving around 39%. Cost of risk for 2024 amounted to 12.9%, mainly driven by the strong year growth, the mix of our portfolio, and the challenges that we faced in Peru in early 2024. We feel comfortable with the observed level of cost of risk, and we expect to maintain it around 13% for 2025. Gentera's 2024 provisions for loan losses amounted to 9.2 billion MXN, a 42% growth, and we finished the year with a 209.5% coverage ratio that we feel very comfortable about.
NIM after provisions for 2024 amounted to 28.7% compared to 30.1% in 2023, and for 2025, we expect to have NIMs after provisions around 28%. Net fees amounted to MXN 4.65 billion in 2024 compared to MXN 2.88 billion in 2023, representing a 61.8% growth. These fees have been mostly driven by better-than-expected results of our insurance business that represents around 90% of the collected commissions and also two extraordinary non-recurring benefits. It's also important to keep signaling the incremental and important contribution of Yastás and our Banco Compartamos branches to have in the business model that allows Gentera to depend less on third-party channels, therefore reducing fee expenses in relative terms. Operational expenses for 2024 amounted to MXN 19.8 billion, representing a 16.4% increase compared to 2023, in line with the growth provided at the beginning of the year.
Most of this growth comes aligned with the growth of our business, including a larger sales force and upgraded infrastructure, and with our strategic investment and initiatives and investment to make our operation more productive, efficient, and modern in the years to come. What highlighting is in the OPEX line for Q2 2024 is that we decided to make an anticipated amortization of MXN 200 million of an intangible asset related to the original client base of ConCrédito at the moment of the acquisition. The original client mix and the network has changed; therefore, our decision to anticipate this expense. For 2025, we expect to grow operating expenses around 13%. Net income in 2024 was a historic record amounting to MXN 6.462 billion, growing 27.9% compared to 2023.
Gentera's controlling participation of net income in 2024 amounted to MXN 6.05 billion, representing an EPS of MXN 3.8 for the year, above our original guidance, as explained by Enrique before, and 27.1% above 2023 EPS of MXN 2.99 per share. Gentera's ROE for 2024 stood at 21.5%, also above our original 20.5% expectation for the year. And for 2025, we expect controlling ROE to move at or above 21.5%. All of this maintaining solid and healthy liquidity levels, strong and diverse access to funding sources, and robust capitalization. Before finalizing my remarks, I would like to make some additional comments regarding ConCrédito.
Gentera would like to inform you that due to the solid business dynamic that we have observed in ConCrédito during 2024 and in the past years, we expect that in 2025, as Enrique explained, we will be analyzing the possibility of acquiring the remaining shares that are not under Gentera's control, and as we advance in the negotiations, we will keep informing you. Now, to conclude my remarks, as you could see from the 2025 guidance provided, we expect to continue delivering double-digit growth in Gentera's loan portfolio, generating solid growth in total revenues with a healthy cost of risk and operational expenses under control, generating positive jaws that would allow us to keep delivering stronger levels of profitability.
Finally, we at Gentera are strongly motivated with the fact that we have finalized an extraordinary year for the company, which is in line with the plan that we defined years ago and the one that we have explained in previous calls to our different stakeholders. We are very enthusiastic and committed to continue working hard in servicing millions of clients in Mexico and Peru, aiming to support them with their different financial needs and generating shared value for all. That's all for my remarks. Thank you for your attention, and now we can move forward to the Q&A session.
Thank you. We'll now be conducting a question-and-answer session. If you would like to ask a question, please use the raise-your-hand button of your Zoom tool. Our first question comes from Olavo Artuso of UBS. Please, sir, go ahead.
Hi, Mario, Enrique. Thank you very much for the opportunity for making questions. I have two. And the first one, it's related to the loan portfolio because you guided it should grow between 13%-16%. And I basically just wanted to understand the breakdown of your portfolio for this year. So basically, how should we think about the performance of each of your segments, like the credit in Mexico, Peru, and also in terms of group lending and individuals for this year? And my second question, it's related to the operating expenses. If you could comment more about that.
Yes, yes.
On the operating expenses, if you could comment more about that amortization that amounted to MXN 200 million you just mentioned in your opening remarks, just for us to understand the earnings power of this quarter in case we consider this as a one-off event or not. A follow-up on this, on the operating expenses, could you please just share your thoughts about the outlook for expenses this year, like additional focus on sales forces and which products to focus? If you could also repeat, Mario, the expected growth in OpEx for this year that you mentioned in your opening remarks, it will be great. Thank you very much, guys.
Yeah, thank you very much. Yeah, well, the dynamics of the loan portfolio, basically what we expect, we will keep growing in all the different product lines. In Mexico, we will be growing faster in individual lending than in group lending, but both products have healthy growth plans. In Peru, we're going to be growing both lines, but group lending is going to be growing more.
Group lending was the product that we slowed down a little bit more in 2024, but now we have the infrastructure ready, and as I mentioned, we already have two quarters of growth, so we expect to keep growing, so in Mexico, individual growing faster. In Peru, the portfolio in group lending growing faster, and ConCrédito will keep growing both products, the Vale Dinero in the portfolio line, and you will also see the growth of the revenues of CrediTienda in other income. For the amortization, I mean, as you know, every time you do an acquisition of a company, you calculate different tangible assets. This specific tangible asset is related to the original mix of clients that existed at the acquisition. In the review that we did, this has changed for a very good reason because we have had a much better penetration in clients than originally expected.
We realized that this specific tangible asset, we could take an anticipated amortization. And basically, that's what we did. And regarding expenses, obviously, for 2025, it's a combination of the sales force where we need it, of the strategic initiatives where we need it, and the support in the service areas that we need. And the expectation for the year is 13%, 13%.
Well, that's great, Mario. Thank you very much.
Our next question comes from Tito Labarta of Goldman Sachs. Please, sir, go ahead.
Hi, good morning, everyone. Thank you for the call and taking my question. A couple of questions also following up on just on the loan growth, right? Because you ended the year very strong, better than expected, and then the guidance does imply a bit of a deceleration for this year, although coming off a higher base for sure.
But just how do you factor in maybe just some of the uncertainty? And I know you're less tied to sort of the macroeconomy to some extent, but still just uncertainty from the U.S. with potentially higher tariffs and maybe impact on that could have on remittances and how that could impact your loan growth guidance, I think, I guess, particularly for Mexico. Is that sort of factoring in that some of the uncertainty? Could there be any downside risks related to that at all? And then the second question, somewhat related, just in terms of asset quality, you did say on your cost of risk, you expect it to be around 13%, although we did see NPLs pick up a little bit in the quarter. But just how are you thinking about asset quality, particularly as the mix sort of evolves?
What do you think would be the outlook for this year? Thank you.
Okay. Thank you very much, Tito. Yeah, well, obviously, we're taking into consideration the macro expectations for the year, specifically the GDP growth expectations. But as you know, our plans, our business plans, we made them more on the demand that we observed. And we still observe that there is a lot of demand that it's underserved. So we believe that this 13%-16%, it's a good number. We feel very comfortable about it. And it looks a little bit like a deceleration because we had an amazing closing of the year. But the expectation for year-end is basically the same that we had at the beginning, well, last year. So we feel comfortable there.
And regarding cost of risk, if we had not had the impact of the slowdown in Peru, the cost of risk for 2024 would have been a little lower. The 13% that we're proposing is more related to the mix of the portfolio, as previously explained in the previous answer. The growth of the different components may have this 13% in the plan that we also feel very comfortable with.
Okay, that's very clear. Thank you, Mario.
Our next question comes from Brian Flores of Citi. Please, sir, go ahead.
Hi, team. Thank you for the opportunity and congratulations on the results. I wanted to ask you on Peru, Mario, and team. We know it's improving. We have seen other maybe players that serve a similar type of population already recovering too. So it seems like it's a structural recovery.
I just wanted to hear your thoughts on where we should see the structural ROE in Peru. How do you envision this? And also, if you think that Mexico's levels of ROE are also sustainable, should we see maybe a bit more of a normalization towards, I don't know, mid-20s, something like this? Thank you.
Yes. Well, yeah, as probably I don't know if you remember the general rule that we have that we want all of our subsidiaries to have an ROE above 20%. Obviously, Peru is in the trend to recovery. We're going to have this year the objective to bring it to mid-teens levels. So we have already been observing that trend. And as you said, we think that it's more an economic recovery, but I think that we're going to be recovering faster and stronger.
Thank you, Mario. And then in Mexico, I mean, the ROE level is very high. I mean, obviously, that's a positive. But do you think it's extraordinarily high, or do you think you can keep with these levels of ROE?
Let me start saying at Gentera level. At Gentera level, as you have seen, we are improving profitability. And with all the initiatives that we're doing this year, and as Enrique explained, we would expect that for 2025, 2026, and 2027, we would have better productivity, efficiency, and profitability opportunities. We believe that once we have achieved these results in the final process of the modernization in Mexico, and when we have Peru back in levels of 20%, we will start thinking on the best way to share this value with our clients.
We think that we would like to have, if you want, sustainable ROE in the long term of something between 20% and 23%. And the remainder, we would like to share it with our clients. But we need first to finish achieving these pillars.
Super clear. Thank you and congrats.
Our next question comes from Ernesto Gabilondo of Bank of America. Please, sir, go ahead.
Hi, good morning, Enrique, Mario, and Enrique. Thanks for the opportunity to ask questions and congrats in your results and in your guidance. My first question will be on your NII growth expectation. Can we assume that NII growth should be above loan growth under lower rates? And what would be the level of interest rates that you're assuming for your guidance? My second question is a follow-up on Peru.
We saw Peru represented 6% of consolidated earnings, but it used to represent around 12%, 13% in the past. And the loan book is still 35% of total Gentera's loans. So how much do you expect Peru to represent of your total earnings in 2025? And can you give us some color on whether you're seeing in Peru? Are you still already seeing a recovery? You don't need to create more provisions there. Any color will be helpful. And for my last question is on fintech competition. I believe recently, Nubank did an agreement with Arcus and also with your correspondent network, Yastás. So far, how have you seen new presence in your segment? How do you think? Is it easy to make the low-income segment to shift from cash to a digital platform? Thank you.
Thank you, Ernesto. This is Enrique Barrera. Regarding NII, yes, the objective is to grow faster. The expectation is to grow faster compared to the portfolio growth, so slightly above the high end of the range guided. And this is because of the expectations that we have in the central banks of Mexico and Peru reducing the reference interest rates. What we are expecting for Mexico is that the reference rate will end the year moving around 8.75%. And in the case of Peru, we are expecting 4.75%, which by the fact is currently moving in that position now. And as we have said in the past, any reduction moving, considering the liabilities that we have now, any reduction around 100 basis points is a benefit moving around MXN 580 million before taxes in the interest expense line for a full year. So that's a benefit.
Regarding the participation of Peru in net income, yes, the number that you have is 6%. It's more than what we are. And we expect, obviously, with the recovery of Peru to come back to levels of around 8%. We don't have a target of how much each subsidiary needs to contribute. What we want is that each subsidiary and each product keeps contributing and growing at healthy rates. But more or less, we would expect that for 2025 at year-end, Peru would represent something around 8%.
Hi, Ernesto. And regarding your last question, this is Enrique Majós. Let me start by saying that if we talk about fintech, we have to be more specific. And I will be specific on the fintechs that are working on the credit side and the credit process and the fintechs that are focused on digital transactions.
I believe you referred to the second one, but anyway, in the first group, the fintechs that are focused on credit processes, I can tell you that we believe that the path that we have been working on for some years now is the right path in which we are building hybrid models. And what do I mean by hybrid? We believe that the process, the credit process, not only the selling process, the assessment process, but also the collection process has to be hybrid. And we in Gentera, we are very strong having all the capabilities to make more robust this process, basically because the harder part in our business is the collection part. So yeah, we have been competing with some fintechs for a while now.
We believe that the platforms that we are creating are having very good results and are very strong to compete in this environment. On the other hand, we have the digital transaction fintechs. On that part, yes, as you mentioned, Nu is doing a very good job there. This is not the only player that is doing good things out there and remarkable things. We can see also other players like Mercado Pago that are doing also very good things. Of course, we have our Yastás platform, our Yastás network, that it is also focused on this challenge that we have of converting the cash into digital money and this cash in and cash out that we all need to make our processes, our businesses, and the customer experience more efficient.
We are all moving to there. I think that we believe that Yastás has to be an open platform for other companies also or other banks to use. And that's the strategy that we have in Yastás. So if you put together what other players are doing, like NU, like Mercado Pago, with Arcus, with what Yastás is doing, we believe we are creating a more robust and open ecosystem for digital transactions that is going to benefit all of us.
Excellent. Now, thank you very much to both Enrique and Mario. Super helpful.
Thank you.
Thank you.
Once again, if you'd like to ask a question, please use the raise your hand button of your Zoom tool. Our next question comes from Carlos Gomez of HSBC. Please, sir, go ahead.
Hello, and congratulations on the results. I had two questions. The first one is about the integration of the sales force that you did last year into a single group methodology. Have you brought, first, is that complete? That is already done. And what have you learned from there? And what do you think can be the consequences for you going forward? And the second is regarding the NIM sensitivity. If you could repeat that, you said MXN 580 million per year. So if we apply a 30% tax rate, that would be about 6% of earnings. Is that the correct calculation?
I'll answer the first. The second is yes already, but Enrique was like, well, the sales force, well, as you probably remember, Carlos, last year was very important. 2023 was very important with the objective to give our sales force a much flexible and productive and profitable product. That has been a success.
We have been growing, as you know, our sales force. And the way we take the decisions of allowing for additional loan officers in all the subsidiaries, it's based on productivity, one, and profitability of each office, of each unit. Our economic unit is the office. So if we see that in an office, we have opportunity to keep expanding and penetrating more that specific micro-community, we allow our offices to hire more people. So it's very well aligned with the modernization that we have of the product and the individual P&L that we follow in each unit and each product. So we will keep hiring people as we see the opportunity to expand in each product or location.
Yeah. And Carlos, let me add something there because it's a very interesting and very powerful initiative that we had. As you mentioned, we already finished to deploy it. The first thing that we were willing to see is that with this putting together these two sales forces and two products into one, we could keep the same level of quality of the portfolio, the same level of customer experience.
I believe the connection has been lost.
Can you hear us, Carlos?
Now I can, but I think your line went mute for a minute.
Sorry. Yes, we had here a little.
Can you hear us, Carlos?
Yeah, yeah, we can hear you very well now. You were telling us about the different. So with a single sales force, you could have the quality of the portfolio and the customer experience.
Okay, yeah. So now that we are there and that we feel comfortable with this, what we are going to be able to do in a more efficient way is to transform this process into a process that is enabled by digital technology. And doing this with one single platform is going to be more efficient than if we would have done this with two different products, two different sales forces. So there's a synergy there, and there's an efficiency there that we will continue being, that we will capture it for the future initiatives that we build into this.
Okay. So you think, again, if I understand correctly, you think that you have not completely extracted all the benefits from this change at this stage?
Yeah, this is a never-ending improvement process, or yeah. So that's the magic of putting our traditional process into digital process, that then you have the foundation and the baseline to continue improving and putting in there more things, new things, new products, new cross-selling, and better ways to assess the risk and to have a better cost of risk in the future.
Very clear. Thank you.
And Carlos, regarding the MXN 580 million, yes, it's before taxes. That would be the savings for a full year for a reduction of 100 basis points in one year. And after taxes would be like MXN 410 million.
And the applicable tax rate is 30%, 3-0?
Yes, correct.
Okay. And again, when you are doing your budget, when you're calculating, you are expecting interest rates to finish at 875, right? So if they finish, let's say, at 775, so that would be an additional 6% or at least 3% of earnings occurring during the year.
Correct. That would be an additional benefit if interest rates move downwards more rapidly.
Very clear. Thank you so much.
Our next question comes from Rodrigo Ortega of BBVA. Please, sir, go ahead.
Rodrigo, are you listening to us? We do not hear the question.
Can you hear me now?
Yeah.
Yes.
Yeah.
Great. Thank you. Thanks for the call and congratulations on the results. I just wanted to check with you guys about origination costs. Obviously, you will benefit from lowering rates, but origination costs have increased, especially with faster growth in individual products. A quick calculation renders that origination costs are about 2.4-2.5% of total loans during 2024. How should we think about this going forward? I ask this because, obviously, with your assumptions for what I think is relatively higher closing rates for 2025, it appears that having an NII growth just slightly above total loan growth could seem a little bit conservative. Is there something going around on origination costs?
Very good question. As you know, almost 75% of our expenses are related to the sales process. As we keep growing, obviously, an important part would be variable expenses. As long as we keep growing, that probably will have also a high growth. The very important thing and the rule that we follow is that we need to have positive jaws. The income needs to grow at a faster rate than expenses.
Now, having said that, with all the changes that we have done in the past, the technological changes that we have done in the past, as Enrique showed in those graphs at the beginning, we are doing a lot of things that are improving the productivity and the efficiency of that sales costs. In particular, this year, we are launching the final part of the digitalization and the modernization of the bank, bringing the front tool, the front application to the loan officers that will bring additional productivity and efficiency. So we expect that going forward, we will be able to improve the efficiency as we have done in the last years based on these new tools that we are incorporating. So even though we're saying that for this year, the objective for expenses growth is 13%, we will be reviewing this going forward.
Thanks. Thanks a lot for the clarification, Mario. And what about the origination costs that are put as interest expense?
Yeah, Rodrigo, this is Enrique. Origination costs grew rapidly in 2024 because of the strong growth that we had in that year, in 2024. As for 2025, we are going to present a growth between 13%-16%. Origination costs will move more in line with that. And as I was saying previously, the NII should be moving above that level, above the 16% that we guided in terms of the portfolio. So you should expect to see a more normal kind of growth in origination costs for 2025 compared to what we saw in 2024.
Okay. Great. Thanks a lot, guys. And thanks.
Thank you, Rodrigo.
Our next question comes from Isabel Aris of Barings. Please go ahead.
Isabel, I think you're in mute.
Hello. Hello. Hi. Thank you for the question. I was hoping you could go into a bit more detail on the asset quality in Mexico. We noticed the NPLs increased quite a bit. Can you tell me what you're seeing and whether you expect that to continue? Thank you very much.
As we mentioned, the asset quality, specifically in Mexico, in the bank, is a mix of individual lending and group lending. So we feel very comfortable with the levels that we are seeing and the mix of the portfolio.
Exactly. And what we should be seeing for 2025 is an NPL moving around 4%. We are currently moving at 3.9%, but moving 4% now that different methodologies are taking a larger share, like individual lending, which has a different risk profile. I mean, it should be moving around 4% now going forward.
Okay. Great. For Mexico, yes.
Thank you, Isabel.
Yeah, it's fine.
Thank you.
Yes.
Thank you. There are no further questions at this time. I would like to hand the floor back over to management for closing comments.
Thank you all for your interest and for being with us every quarter. As I told you, we are very excited about what we are looking forward to in 2025. We are very proud of what our team has accomplished last year. Those are our results for 2024. These are our expectations for the year we are working now. We hope you have a nice day and see you next time.
With this concludes the conference of today. You may now disconnect.