Good morning. Welcome to Banco de Bogotá's Fourth Quarter 2024 Consolidated Results Conference Call. My name is Karen, and I'll be your operator for today's conference call. At this time, all participants are in a listen-only mode. Afterwards, management will be available for a question-and-answer session. Please note that this conference is being recorded. We also advise you to read the disclaimer available on slide number two. When applicable in this webcast, we refer to trillions as millions of millions and billions as thousands of millions. Thank you for your attention. Mr. César Prado, CEO of Banco de Bogotá, will be the host and speaker today. Mr. Prado, the floor is yours.
Thank you, Karen. Good morning and welcome to Banco de Bogotá's Fourth Quarter 2024 Conference Call. Throughout 2024, Colombia has shown a moderate economic recovery, below the economy's long-term potential growth but growing above the 2023 level. Real GDP closed the year at a growth of 1.7%, as higher private consumption offset the lower government spending in the second half of the year. We expect 2025 real GDP growth to be around 2.7%. 2024 inflation landed at 5.2%, a sharp decrease versus 2023, while still missing the target. For this year, inflation risks are focused on indexation, the adjustment of minimum wages, and the potential devaluation of the exchange rate. We expect inflation in 2025 to land at around 4.1%. Banco de la República opted for a restrictive monetary policy, where caution prevailed. Central bank rates began the year at 13% and decreased to 9.5% by year-end.
Pressures on the peso devaluation and its impact on inflation were the decisive factors for the moderation of the rate cut in December and could continue to be so going forward. The threat of rising inflation may keep the central bank at a hawkish stance. We expect the central bank rate to be around 7.75% by the end of 2025. On a positive note, S&P Global maintained its BB+ rating on sovereign long-term debt this January. S&P has had a negative outlook on Colombia's rating since January of 2024 due to fiscal deficit pressures and low growth. This news affects banks directly, as a sovereign downgrade would have affected most banks rated by S&P. We don't rule out a downgrade further in the year, though it is not our base scenario.
In 2024, Banco de Bogotá increased its loans by 7.2% in Colombia, which is 2.5 times the rate of the rest of Colombian banks. The bank gained 44 basis points of market share on loans, ending the year at 12.74%. The bank's net income in its Colombian operation increased by 10.1% compared to 2023. This represents 13.6% of the total banking sector's income. For the bank and the system in general, NIM suffered a slight contraction. One reason was the usury rate, which is placing higher pressure on loan yields due to changes in how it is calculated. NIM also decreased due to a lower growth in consumer loans. The decrease in NIM was partially offset by improvements in cost of risk, where the figure for 2024 was 2.1%, surpassing our previous guidance of 2.3%.
Most of the improvement in cost of risk came from the consumer portfolio, especially personal loans and credit cards, where cost of risk improved by over 350 basis points in 2024. The bank's consolidated cost of risk was one of the lowest amongst peers, in part due to our credit and origination policies. The bank was also recognized by S&P Global in their 2025 Sustainability Yearbook as part of the top 4% of best-ranked financial institutions regarding ESG practices. Here is a summary of the bank's 2024 results. Net income attributable to shareholders was COP 1.09 trillion, 14.3% higher than in 2023, resulting in a return on assets of 0.8% and a return on equity of 6.8%. The year's NIM was 4.4%, having decreased by 13 basis points due to pressures from usury rates and the cost of funds mix, which will be further explained.
The income ratio was 26.5%, 0.6 percentage points lower than in 2023. Efficiency, measured as cost to income, was 52.5%, 1.7 percentage points higher than the previous year. Nevertheless, cost to assets remained stable at 2.7%. Consolidated gross loans reached COP 107.4 trillion, increasing by 8.6%. The Colombian portfolio increased 7% during 2024, while the Panamanian portfolios increased by 16.5% in peso terms and increased by 1% in dollar terms. Deposits reached COP 104.3 trillion, a 14.5% increase during 2024. Excluding the 15.4% peso depreciation during the year, deposits increased by 9.4%. The ratio of deposits to net loans was 1.02 times. Deposits continued increasing their share of funding, reaching 80.1% of total funding, as savings accounts and time deposits increased by 18.7% and 15.5%, respectively.
This quarter, loan quality improved, as 30-day PDLs decreased by 52 basis points to 5.9%, while 90-day PDLs decreased by 34 basis points to 4.4%. Net cost of risk decreased by 20 basis points this year to 2.1%. The Colombian portfolio's net cost of risk decreased by 28 basis points, and the Panamanian portfolio's net cost of risk remained stable. Now, I will turn the presentation over to Sergio Sandoval, Banco de Bogotá CFO.
Thank you, César, and good morning. Let's move on to slide four. The bank's digital channels continue incorporating essential tools for all our customers, with new features and improvements regarding user experience. We reached 294 million transactions, a 17% growth compared to the previous quarter, with 2.5 million users and a digital participation of 84%. We highlight the following results around our digital channels. More than 19.4 million immediate transactions were carried out, with an increase of 15% versus the previous quarter, leveraged by our free interbank transfers, PSE, PSE Avanza, QR transfers, and transfers using cell phone numbers. In October, we implemented transfers through TAC Aval, with an alphanumeric code. Clients can transfer and receive money to all Aval banks free of charge and directly. More than 16,000 successful transactions have already been made since its launch.
We improved the integration with Apple Pay, introducing an exclusive Banco de Bogotá button in the Apple Wallet for Visa credit and debit cards, generating more than 6,300 enrollment actions in the quarter. Apple Pay registered more than 1.1 million transactions. As part of digital transformation and accessibility to banking portals for the SME segment, we are implementing an entirely new mobile banking access, a digital channel that will expand omnichannel access. During the quarter, more than 135,000 transactions were carried out. The bank's approach to personal products focuses on reinforcing its value proposition of financial products and services, consolidating the digital transformation. We placed 320,000 products for disbursements of COP 1.2 trillion, with an increase of 25% compared to the previous quarter. The following results stand out. We have added new terms of 30 days for digital time deposits, giving clients greater flexibility to access investment products.
During the quarter, the bank achieved a historic issuing of 27,000 time deposits. We implemented a digital self-management collection portal that improved efficiency in debt recovery and provided an improved user experience, consolidating itself as a strategic tool to maintain a healthy portfolio by providing payment facilities to users. We launched a new web flow for reactivating savings accounts that eliminates the need for customers to visit a branch. In the business segment, we focus on expanding digital solutions that simplify management and accelerate access to credit. We highlight the following achievements: a solution for managing digital signatures and promissory notes, representing an increase of 118% in the number of operations and 33% in the amount disbursed compared to the previous quarter. The bank carried out two key pilots to transform credit processes for corporate clients.
We implemented digital signatures of documents for users abroad, using an authentication process with AI. We digitalized 100% of the approval flow for companies, eliminating documents and reducing approval times from eight to two minutes, which increases the productivity of advisors. The bank now has its first seven APIs, and as a success story, the API solution for factoring has generated close to COP 1.9 billion in marginal disbursements. We made advances in the application of artificial intelligence and optical character recognition to optimize credit analysis, streamlining decisions, reducing errors, and increasing operational efficiency. We would also like to mention that Fintech Americas awarded the bank the Platinum Award in the AI and Automation category, in recognition of pioneering efforts together with Aval Digital Lab in developing banking services through technological advancement for the Aval Advisory Initiative. On slide five, we show you the quarter's highlights regarding sustainability efforts.
Banco de Bogotá keeps progressing in its sustainability strategy, establishing as a key player in the transition to a low-carbon economy with greater social inclusion. During the last year, the green portfolio grew 87%, from COP 2.5 trillion to COP 4.7 trillion, with 70% of these resources aimed at the country's energy transition. By 2025, the goal is the continued growth of 24%, strengthening the positive environmental impact of our lending. In 2024, the bank issued the third thematic bond, an ordinary sustainable debt instrument aimed at financing activities with sustainable impact for up to COP 500 billion. Demand for this issue exceeded the amount issued by more than two times. This issue finances renewable energy projects, energy efficiency, sustainable transportation, certified production, sustainable infrastructure, green construction, land use, circular economy, and sustainable tourism.
It also supports small and medium-sized enterprises, SMEs, especially those owned and managed by women, as well as low-income housing. In the social field, the bank allocated COP 14.6 trillion in social portfolio, with a special focus on economic empowerment. 24% of these resources have been granted to SMEs led or owned by women, and 13.6% have benefited low-income municipalities. These initiatives reinforce the bank's commitment to sustainable development and equity in access to credit. Strategic funding has been a core driver of the bank's performance. Highlights include the disbursement of COP 250 billion for the first line of the subway in Bogotá, contributing to avoid the emission of more than 625,000 tons of carbon dioxide per year. Finally, financial education has been a priority, reaching more than 249,000 beneficiaries in 28 municipalities and more than 4,000 children and young people, promoting essential knowledge for financial inclusion.
These achievements have led Banco de Bogotá to be recognized by Euromoney as the best ESG bank in Colombia and by S&P Global as leader in ESG, ranking in the top 4% of banks worldwide. This is the fifth consecutive year the bank is included in the Sustainability Yearbook, a journal that highlights the organizations with the best ESG practices worldwide. Moving on to slide six, let me summarize the local macroeconomic overview. Last year, the Colombian economy grew 1.7%, continuing the recovery process after the pandemic and improving when compared with growth of 0.7% in 2023. The better performance was mainly due to a recovery in household consumption and a dynamic export sector. Household consumption grew by more than 1% and partially offset the low dynamics of investment and public spending, thus becoming the basis of economic recovery.
More favorable financial conditions thanks to lower inflation and interest rates, a resilient labor market, improving confidence, and a strong increase in remittances, explaining the above. The export sector growth was explained by higher sales of coffee, coal, bananas, flowers, gold, chemicals, and paper, as well as services, especially tourism. The recovery is expected to extend in 2025 if economic growth performs around the expected 2.7%, still below pre-pandemic levels. Low growth is due to low investment and a challenging fiscal situation. Let's move to slide seven, where we continue addressing the local macroeconomic context. Meanwhile, the disinflationary process deepened in 2024, closing the year with an annual change of 5.2%. Despite the new decline, the economy completed four years with inflation above its target range between 2% and 4%. The moderation in inflation was due to the favorable performance of goods and regulated items.
The lagged effect of the appreciation of the Colombian peso against the dollar between July 2023 and August 2024 allowed goods inflation to end the year below 1%. With regards to regulated prices, the stability of gasoline helped achieving a lower inflation, allowing for a moderation in the aggregate from 17.2% to 7.3%, which we expect to continue in 2025. We foresee higher inflationary risk on the energy rates. On the contrary, services contained the fall in inflation to the extent that indexation was high in rents and in the rest of services, as the high minimum wage adjustment weighed. At the end of 2024, inflation in services was 7%. For 2025, we forecast inflation of 4.1%, explained by a high indexation in rents, but with a lower reference.
Inflationary pressures derived again from the increase in the minimum wage, potential depreciation of the peso, and possible increases in energy and diesel rates. With the economic scenario described, the central bank reduced its interest rate to 9.5% in 2024. In general, the central bank acted cautiously in all meetings of the year, with rate reductions of 50 basis points in six sessions and 25 basis points in the remaining two sessions, given the slow progress in inflation reduction, more adverse global financial conditions, and a challenging fiscal situation. In fact, these three elements will probably continue in 2025 amid a volatile global situation due to the beginning of President Trump's term, local inflation that could end the year once again above the target range, and public finances affected by an underfunded budget. In fact, in January, the central bank left the rate stable, reinstating its cautious approach.
In this uncertain scenario, we expect an end-of-year interest rate around 7.75%. Recording the exchange rate, 2024 was a year of strength for the dollar in global markets, following the upward adjustment in expectations for inflation and the Federal Reserve rate, following President Trump's victory. Likewise, the greater perception of risk in Latin America, especially in Brazil, Mexico, and Colombia, generated volatility in the second half of the year. Thus, while the US dollar appreciated 7% against the G7 currencies, it gained 19% against the currencies of the region. The Colombian peso was the third weakest currency in Latin America, as the exchange rate went from COP 3,822 per dollar to COP 4,409 per dollar between 2023 and 2024.
In addition to external factors, the challenging fiscal situation also impacted expectations, as the country's risk premium measured by the five-year CDS increased from 157 basis points to 212 basis points in the same period. The fiscal deficit experienced in 2024 is expected to continue in 2025. In 2025, we expect the exchange rate to average COP 4,400 against the dollar, given the greater strength of the dollar in the world due to President Trump's policies, a new deterioration of internal public finances, and a marginal widening of the external deficit. Specifically, our economic research team expects the current account deficit to grow from -2% of GDP in 2024 to -2.6% of GDP in 2025, due to a more significant recovery of imports than exports, both of goods and services, and a lower dynamic in the inflow of remittances due to the immigration policies of the United States.
In particular, revenues will most likely surprise the government to the downside, resulting in cash flow complications and spending cuts, which are necessary to comply with the fiscal rule. Going forward, we think the debate will shift towards fiscal sustainability. Although fiscal uncertainty is high, rating agencies such as Fitch Ratings and S&P Global have kept their ratings unchanged, although the latter extended its negative outlook, while Moody's could lean towards a downgrade. Now, I will pass on the presentation to Javier Dorich, Head of Investor Relations and Corporate Development, who will provide details on our financial results for the quarter.
Thank you, Sergio, and good morning, everyone. Starting on slide eight, we present the highlights of the bank's balance sheet in the fourth quarter of 2024. Total assets reached COP 150.7 trillion, having increased by 2.5% this quarter and 9.6% this year.
On the top left, we observe the asset breakdown. Net loans constitute 67.7% of assets, followed by fixed income investments with 13.1% of assets. Equity investments represent 7.7% of assets, and other assets make up 11.4% of the mix. On the top right, we observe the gross portfolio breakdown by industry. Gross loans remain highly diversified, both on industry and on individual clients. Gross loans were COP 107.4 trillion, having increased by 2.9% quarter on quarter and 8.6% year on year. Excluding FX, growth was 1.6% and 4.9%, respectively. Gross loans are comprised of 63.6% commercial loans, 22.8% consumer loans, and 13.6% mortgage loans. Growth was driven by commercial loans, which increased by COP 1.72 trillion this quarter, or 2.6%, followed by mortgages, having increased by COP 838 billion, or 6.1% this quarter. Consumer loans increased by COP 462 billion, or 1.9% in the quarter.
We expect loan growth to be around 10% for 2025. Moving on to slide nine, we present the bank's funding. Total funding amounted to COP 130.1 trillion, which implies a 2.7% growth this quarter, or a 1.1% increase when excluding the effect of FX movements. Throughout the year, funding increased by 11.5%, or 7% excluding the effects of FX movements. Deposits comprised 80.1% of funding, having increased their share by 2.3 percentage points this quarter. Deposits were COP 104.3 trillion at the year's end, having increased by 5.8% this quarter and 14.5% during the year. Time deposits make up 50.9% of deposits, presenting a slight decrease in the mix, but having increased by 2.3% in the quarter. Savings accounts represent 34.5% of deposits, or COP 36 trillion, having increased by 11.3% this quarter and 18.7% through 2024.
Checking accounts represent 14.4% of funding, or COP 15 trillion, having increased by 5.9% this quarter and by 3.7% in the year. Deposits to net loans were 1.02 times, close to the one-time target. In December, the 30-day liquidity coverage ratio was 136.7%, and NSFR was 107%, close to previous quarters and above our risk appetite. Let's continue with slide 10, where we present our equity and capital of equity levels. Total equity was COP 16.84 trillion at the year's end, representing an increase of 1.5% quarter on quarter and 6.8% year on year. Minority interest was COP 64 billion. Therefore, shareholders' equity stood at COP 16.78 trillion, having also increased by 1.5% this quarter and by 6.8% year on year. Equity over assets stands at 11.2%, having decreased by 11 basis points, as equity increased by 1.5% while assets increased by 2.5% during the quarter.
The tangible capital ratio stands at 10.2%, having decreased by 12 basis points during the fourth quarter. Intangible assets increased by 3.4% during the quarter. Common Equity Tier 1 capital increased 1.2% in the quarter, driven by the period's positive results, partially offset by a higher deferred tax asset deduction for reinstatement of bonds and by the foreign exchange adjustment. Tier 2 capital increased COP 149 billion, or 6.5%, given that subordinated bonds are in dollars and the peso depreciated 5.5% during the quarter. The bank's total risk-weighted assets decreased by COP 1.95 trillion, driven by a COP 4.35 trillion reduction in market-weighted RWA due to the new classification in the banking book of the securities corresponding to the available for sale portfolio, excluding this portfolio in the calculation of Banco de Bogotá Colombia's RWA.
The loan risk-weighted assets increased by COP 1.99 trillion, mainly originating from an increase in the loan portfolio, partially offset by a reduction in contingencies of COP 823 billion in overdrafts achieved through a strategic initiative that classified the product as a cancelable product and diminished its credit conversion factor. CET1 and Tier 1 ratios increased by 39 basis points in the quarter and stood at 13.2%, 4.7 percentage points above regulatory minimums, including buffers. The Tier two ratio was 2.3%, increasing 17 basis points in the quarter because of the aforementioned reduction in the risk-weighted assets and peso depreciation. Finally, total capital of equity was 15.5%, 56 basis points higher than in the third quarter and four percentage points above the regulatory minimum, including buffers. Now, let's move to our P&L performance ratios, starting with net interest margin on slide 11.
Loan yield decreased this quarter by 59 basis points to 11.6% due to lower interest market conditions, as central bank rates decreased by 75 basis points in the last quarter. Loan yields have also been affected by the usury rate, which decreased by 246 basis points between September and December, from 28.85% to 26.39%, where around 5% of the loan portfolio in Colombia has been impacted. For the year, loan yield was 12.5%, 90 basis points lower than in 2023. Investment yield reached 8.7% in the quarter, increasing by 102 basis points, partially due to the 5.5% peso devaluation. Given that the bank has an important portion of its fixed income assets in US dollars, the peso depreciation has a positive effect on investment yield. Investment yield was 8.3% in 2024, 14 basis points higher than in 2023. Cost of funds decreased by 49 basis points this quarter to 7.2%.
The largest effect was in savings accounts, where a 106 basis point reduction in cost of funds was achieved. Time deposits decreased their cost of funds by 51 basis points and checking accounts by 5 basis points this quarter. The cost of funds was 8% for 2024, having decreased by 69 basis points against 2023's figure. The cost of funds decreased by a lower than expected amount, as time deposits share in the funding mix did not decrease as expected, with a decrease of only 1.7 percentage points. Loan NIM was 4.8% in Q4 2024, decreasing by seven basis points against the third quarter. Net loan interest income increase was lower than the average gross loans' 1.6% increase. For 2024, loan NIM was 5%, 23 basis points lower than in 2023.
Finally, NIM increased by 17 basis points this quarter to 4.3%, explained by a higher increase in investment NIM than the decrease in loan NIM. For 2024, NIM was 4.4%, 13 basis points lower than in 2023. It is worth noting that NIM is fairly unaffected by the peso depreciation. Nevertheless, with peso depreciation, investment NIM tends to increase and loan NIM tends to decrease. This is due to the fact that proportionally, there's a larger amount of loans in pesos than that of funding. Conversely, there's a higher proportion of investments in US dollars than that of funding. We have adjusted our NIM expectation slightly downwards, placing it around 4.4% for 2025, due to the upward adjustment in the expectation of the central bank interest rate and the effects of the usury rate, which could have a negative impact on personal loans and credit card loan yields.
Moving on to slide 12, we present loan quality ratios by country. 30-day PDLs remained stable in Panama at 4.8% and decreased in Colombia by 61 basis points to a level of 6.1%. Consolidated 30-day PDLs decreased by 52 basis points to 5.9%. 90-day PDLs were also stable in Panama at a level of 3.5%, while decreasing in Colombia by 39 basis points to 4.6%. Consolidated 90-day PDLs decreased by 34 basis points to 4.4%. On slide 13, we present the loan portfolio quality by segments, as well as PDL formation and coverage. Commercial 30-day PDLs decreased by 53 basis points in the quarter to 5.4%, while 90-day PDLs decreased by 43 basis points to 4.9%. Most of the improvement came from general purpose loans, financial leases, and overdrafts in Colombia.
30-day PDLs in Colombia for commercial loans improved by 62 basis points, and 90-day commercial PDLs improved by 46 basis points this quarter. Most of the improvement in quality was in SMEs, which suffered a higher deterioration during this credit cycle. Consumer loan portfolio quality showed notable improvement during the quarter. 30-day PDLs improved by 42 basis points to a level of 6.9%, while 90-day PDLs improved by 23 basis points to a level of 3.4%. In Panama, 30-day PDLs deteriorated by 33 basis points and 90-day PDLs by 18 basis points. Conversely, in Colombia, 30-day PDLs improved by 50 basis points, while 90-day PDLs saw a 27 basis points improvement. This positive trend extended across most of the consumer segment's products, including credit cards and personal loans, which improved by 25 and 48 basis points respectively for 90-day PDLs.
Recovery came from tighter credit policies and better macroeconomic conditions for households. In the case of mortgages, 30-day PDLs improved 67 basis points during the quarter to 6.4%, while 90-day PDLs improved by eight basis points to 4%. Panama's 30-day mortgage PDLs improved by 50 basis points during the quarter, while 90-day mortgage PDLs deteriorated by 43 basis points. In Colombia, 30-day mortgage PDLs improved by 74 basis points, and 90-day mortgage PDLs improved by 25 basis points. Mortgages improved due to better macroeconomic conditions and the bank's efforts to renegotiate and restructure distressed loans. In the lower left, one can observe that new PDL formation was lower than in the previous four quarters, both for 30 and 90-day past due loans. Coverage ratios for 30 and 90-day PDLs were fairly stable, ending the year at 0.87 x and 1.17 x respectively.
Allowances over gross loans decreased to 5.2% as allowances are driven by loan quality. On slide 14, we present gross loans by stages and segments, as well as their coverage ratios. Loan quality improved through all segments when measuring the percentage of stage one loans. Stage one loans for the commercial portfolio improved 115 basis points in the quarter to 88.3%, while decreasing by 52 and 63 basis points in stage two and three respectively. For consumer loans, stage one loans comprise 87.8% of the portfolio, increasing by 99 basis points in relative terms. Stage two and three loans decreased by 76 and 23 basis points during the quarter. Stage one mortgages represent 89.5% of these loans, having increased their share by 25 basis points. Stage two mortgages decreased their share by 28 basis points, and stage three mortgages increased their share by three basis points.
Overall, in the top left, stage one loans increased their share by 99 basis points to 88.3%. Stage two loans decreased by 54 basis points, and stage three loans decreased their share by 45 basis points. On the bottom left, we present coverage by stages. Stage one loan coverage remained stable at 1%. Coverage for stage two loans decreased by 39 basis points during the quarter to 17.2%, and stage three coverage decreased by 164 basis points to 48.5%. On slide 15, we present the net cost of risk and charge-off ratios. On the top left, we present the net cost of risk by country. The Panamanian net cost of risk for Q4 2024 was 1.1% and remained fairly stable, improving by four basis points, as improvements in commercial cost of risk were offset by slight deteriorations in the consumer and mortgage segments.
In Colombia, net cost of risk improved by 25 basis points to 1.8%. The consolidated cost of risk was 1.7% this quarter, having improved by 22 basis points. For the entire 2024, net cost of risk was 2.1%, surpassing our previous guidance of 2.3%. On the top right, we present the cost of risk by segments. The consumer segment increased by seven basis points, remaining at 6.6%. The mortgage and commercial segments improved by 70 and 38 basis points respectively to 0.4% and 0.2% in the quarter. On the bottom left, we present the charge-offs over 90-day PDLs. In consolidated terms, this figure was 78.4%, explained by higher charge-offs of general purpose loans in Colombia. In Panama, charge-offs over 90-day PDLs was 28.4% due to higher charge-offs in the commercial portfolio.
In the bottom right, the charge-offs over average loans was 3.6% in the quarter, increasing 91 basis points, as mentioned above, mainly driven by higher charge-offs in the commercial portfolio. In Colombia, this figure increased to 4.1%, and in Panama, it increased to 1%. In the full year 2024, this figure was 2.8%, slightly above 2023. We have improved our net cost of risk guidance to 2%, taking into account the better performance of loans, especially in Colombia. On slide 16, we present fee income structure and details on other income. Gross fee income increased by 3.5% in the fourth quarter of 2024 to COP 503.1 billion. Banking services explain 44.4% of gross fees, while credit card and debit cards represent another 38.3%. Other fees from Fiduciaria Bogotá and Almaviva explain a further 16.6% of fees from fiduciary activity and storage.
The fee income ratio was 27.7% for the quarter, having increased 2.2 percentage points and having similar levels to those of Q2 2024. Other operating incomes stood at COP 66.9 billion this quarter coming from first equity method and dividend income came in at COP 67.7 billion, a 41.2% quarter-on-quarter decrease, or a 54.9% year-on-year decrease, mainly due to the impact of Colombia's public debt negative valuation in provenance results. Second, income from net investment activities was COP 15.1 billion, a 60.2% quarterly decrease. Third, the derivatives and FX position had an expense of COP 136 billion, increasing to levels close to those of the second quarter. Finally, COP 120.2 billion coming from other income presented a decrease of 19.5%. We expect the fee income ratio in the 25% area for 2025. On slide 17, we present efficiency ratios measured by cost to income and cost to assets.
Operating expenses for the quarter reached COP 1.06 trillion this quarter, a 14.9% quarterly increase and a 5.6% growth in the year. This result is an increase of only 0.4% in real terms against Q4 2023. As we have mentioned in previous years, there is some seasonality in expenses where there is a concentration of them in the last quarter of the year. Operating expenses were COP 3.85 trillion in 2024, a 3.5% increase against 2023. Total income decreased by 5.7% this quarter, reaching COP 1.8 trillion. The decrease is mainly explained by other income, namely equity method and FX and derivatives. Total income reached COP 7.33 trillion in 2024, close to 2023's figure. The cost to income ratio came in at 59.3% for the quarter and 52.5% for the entire year. The cost to assets ratio came in at 2.9% in Q4 2024 and 2.7% for the entire year.
The cost to assets ratio decreased by three basis points against the result of 2023. We expect cost to income ratio to be around 50% and cost to assets around 2.6% for 2025. Finally, on slide 18, we show the company's overall profitability. As previously stated, this quarter's net income attributable to shareholders was COP 308.4 billion, presenting a reduction of 18.3% against the previous quarter. The 17 basis point improvement in NIM, the 22 basis point improvement in net cost of risk, and the 2.2 percentage point increase in fee income ratios were offset by 14.9% higher operating expenses and 41.2% lower equity method income than in the previous quarter. Analyzing the entire 2024, net income attributable to shareholders was COP 1.09 trillion, 14.3% higher than in 2023.
The net cost of risk, as well as the reduction in the effective tax rate, had a larger effect than the reduction in NIM, the increase in the cost to income ratio, and the decrease in equity method income. For Q4 2024, return on assets was 0.8%, and for the entire year was 0.8% as well, increasing 6 basis points on an annual basis. Return on equity was 7.4% in Q4 2024, decreasing 1.9 percentage points this quarter. For 2024, return on equity was 6.8%, having increased by 66 basis points against 2023's figure. On slide 19, and before moving on to the Q&A session, I'd like to summarize the general guidance for 2025. Loan growth is expected to be around 10%. Net interest margin is expected around 4.4%. Net cost of risk is expected to be close to 2%. Fee income ratio should come in around 25%.
Cost to income ratio and cost to asset ratio should be around 50% and 2.6% respectively. Finally, return on average equity should be between 8% and 9%. Now we are open to your questions.
Thank you very much. We will now begin the Q&A session. We can take your written questions through the Q&A chat box, live questions, or through the phone line. Please note the following instructions. For the Q&A chat box, please type your question and we'll proceed to read it. After answering the questions received in the Q&A chat box, we'll proceed with the live questions. If you wish to ask your question live, please place your request and we'll open your mic and call your name accordingly. If you're connected by phone, please press the star button and number five to access the Q&A feature.
If you're using a speakerphone, you may need to pick up your handset before pressing the numbers. Once again, for the Q&A chat box, please type your question in the Q&A chat box and we'll proceed to read it. If you wish to ask your question live, please place your request and we'll open your mic and call your name accordingly. If you're connected by phone, please press the star button and number five to access the Q&A feature. If you're using a speakerphone, you may need to pick up your handset before pressing the numbers. We are now standing by for questions. Once again, for our Q&A chat box, if you have any questions, please remember to type your question and we'll proceed to read it. After answering these questions, we'll receive our questions from our live channel.
As of now, we don't have any questions on our Q&A chat box, so we will move on to our questions live. We're now standing by for questions. Remember, if you have any questions and you wish to ask your question live, please place your request and we'll open your mic and call your name accordingly. Finally, if you are connected by phone and you wish to ask your question by phone, please press the star button and number five to access the Q&A feature. If you're using a speakerphone, you may need to pick up your handset before pressing the numbers. Once again, if you are by phone, remember to press the star button and number five to access the Q&A feature. Our first question comes from Mrs. Natalia Corfield from J.P. Morgan Chase. Mrs. Corfield, the floor is yours.
Hi everybody, thank you for taking my question.
I actually have two questions for you. One is regarding your bond due 2026. This bond is losing regulatory capital treatment, and I'd like to know if you have any thoughts of liability management. The other one is just looking at your results. Your NPL coverage ratio dropped; it's been at one of the lowest levels I've seen. I'm wondering what would be the level that you feel comfortable with NPL coverage, particularly given that your guidance for cost of risk is for a reduction to 2%. Those are my questions. Thank you.
Hi, Natalia, this is Javier. Regarding your first question about the 2026, next year we have the maturity of them. It's around $1.1 billion, and we are preparing for that, for example, increasing our liquidity in US dollars. There may be some capital, some tier two capital as well.
Not market issues, but maybe private issues. It is important to mention that right now we are not thinking or considering liability management after that back lift us. Right now we do not have as many assets in US dollars as before, so we do not need that much amount of funding in US dollars. We think it would be good for us to replace some of that funding into pesos in the future. Regarding your second question about NPL coverage, for us, that coverage is a result of our mix of what the IFRS tells us to do in terms of provisions. We do not have a formal target regarding that, although we do think that this figure will improve in the upcoming quarters as the non-performing loans start to decrease, and we will still be very strict in terms of provision expense. Thank you, Natalia.
Understood. And just to follow up, my understanding is that you probably do not come to the international market this year.
That is right.
All right. Thank you.
Thank you, Natalia.
Thank you very much. We will now move on with some questions from our chat box. Our first question comes from Mr. Juan Camilo Dauder from Bancolombia. His question is, when do you expect to reach double-digit levels in ROE, and what would be the provisions consistent with such levels?
Thank you, Juan Camilo, for your question. We would expect to reach double-digit ROEs, that is, above 10%, in the second half of 2025. The main driver behind that will be an improvement of NIM as the central bank keeps decreasing rates and also having a tight cost of risk.
Right now, our guidance is 2%, but as you saw in the fourth quarter of 2024, it was 1.7%, so that's conservative for us in our guidance. Those two would be the main drivers for 2025. Thank you. Thank you very much. Our second question from our Q&A chat box comes from Mr. David Lefkowitz from Sumitomo Mitsui Banking Corporation. Can you explain more about the increase in expenses in 2024? Thank you.
Yes, of course. As you saw, the increase in expenses was aligned with inflation. In real terms, that figure was pretty close to 0%. Regarding the fourth quarter of 2024, that was a pretty high figure, but the explanation of that is seasonality. There are some expenses that happen only at the end of the year, but that happens every year, so it's not a surprise for us.
As I mentioned, for 2025, our guidance is to have a cost to income ratio of 50% and cost to asset ratio of 2.6%. Thank you.
Thank you very much. Our third question from our Q&A chat box comes from Mrs. Melissa Marcus from Jefferies. Her question is, could you please explain how you are expecting loan growth 10% for 2025 given lower expected Colombia GDP in 2025?
Thank you. Hi, Melissa, and thank you for your question. For example, in terms of nominal GDP, Sergio mentioned that we are expecting 2.7% yield growth, but also an inflation slightly above 4%. That gives you a nominal GDP growth close to 7%. The system loans may grow about that, maybe slightly above that in terms of financial deepening. Our forecast implies also some gain in market share as we have done in the previous two years.
Thank you. Thank you very much. Our fourth question comes from Mr. Juan Camilo Dauder from Bancolombia. His question is, what levels of portfolio growth do you want to reach in 2025? What would be the leading portfolio? Thank you.
Thanks again, Juan Camilo. As I mentioned, we expect loan growth to be around 10%, and that could divide into 8%-9% in commercial loans and around 11% in retail loans. Deepening into retail loans, we think that the mortgage portfolio will be leading that growth. Thank you.
Thank you very much. Our fifth question comes as well from Mr. Juan Camilo Dauder from Bancolombia. His question is, what do you expect in terms of NPLs for the Central America operation? Do you see it to have consequences in portfolio growth? Thank you.
Okay, Juan Camilo, thank you for your question. NPLs in Central America, namely in Panama, are performing well. We saw an increase in NPLs first in the 30-day PDL in the third quarter and then in the 90-day PDL in the fourth quarter, but that has stabilized, and we do not foresee any further deterioration in that portfolio. We feel very comfortable with that loan portfolio in Panama because most of that has collaterals. The loss exposure is very tight. Thank you.
Thank you very much. There seems to be no further questions at this time. We will proceed now with the final remarks from Mr. César Prado. Mr. Prado, please go ahead.
Thank you, Karen. 2024 showed a slight improvement in profitability. Although the quarter's return on equity decreased slightly due to lower equity method income and the usual increase in operating expenses of the last quarter, we observed improvement in key figures.
We especially highlight the improvements in net cost of risk and NIM, as these variables are key drivers of the banking segment's profitability. We will strive to keep improving upon these variables and achieving higher results in the midterm. Thank you for attending today's meeting, and I hope you will join us for the next conference call.
Once again, thank you very much. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect. Have a nice day.