Good morning. Welcome to Banco de Bogotá's Third 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 our 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 Third Quarter 2024 Conference Call. The Colombian economy has continued to present a similar behavior to past quarters. Economic growth remains slow but has increased during the year to 2%. In general, analysts' forecasts have an expected real GDP growth for this year between 1.6% and 2%.
Inflation has been decreasing gradually from 13.3% in March 2023 to 5.4% in October of this year. Households now face a less daunting situation with regards to the weakening of their purchasing power. October inflation figure was a positive surprise, although it would probably not influence central bank decisions in the near future. Central bank rate cuts have been slower than expected, as we previously anticipated a 75 basis points cut in each of the last two meetings.
We now expect the central bank rate to end 2024 at 9.25%, with a 50 basis points decrease in December. While in 2024 the central bank has taken a relatively conservative approach, we expect the pace of rate cuts to increase next year. An inflation converging to the target and a still relatively low GDP growth suggest an acceleration in the easing of monetary policy in 2025.
Nevertheless, the system's loan quality is beginning to show signs of stabilizing or even improving in some segments. We believe the worst part of credit deterioration has passed. On a different note, there have been some changes to the bank's senior management team in recent months. Some of these changes are due to succession plans where retirement was already planned for. Other changes to senior management positions are due to movements within companies of Grupo Aval.
We don't expect additional changes neither in structure nor in team members. This quarter's NIM contracted more than expected to a 4.2% level due to a combination of factors. First, investment NIM was abnormally high last quarter. This quarter, investment NIM reached a level of 0.3% within normal historical levels. Nevertheless, this was a 137 basis point decrease.
Second, lending yields are lower than anticipated for two reasons. First, usury rate is much lower than expected and is affecting the loan yields of around COP 5 trillion in consumer loans or 25 basis points of NIM. Also, our loan mix has been increasing its share of mortgages, which have lower NIM, pushing the figure downwards. Also, Banco de Bogotá sold its microcredit portfolio, which had a high NIM. We will comment on this sale in more detail during the call.
Third, the cost of funds has not decreased at the previously anticipated pace. Deposit yields did not decrease at the expected rate, and a slight increase in time deposits within the funding mix also explains the higher-than-anticipated cost of funds. We expect to improve our NIM next year, especially when the central bank begins to decrease rates at a faster pace.
We also observe recent usury rates behaving more in accordance with monetary policy, and we hope this trend continues next year. Cost of risk decreased this quarter to 1.9%. The positive results mainly came from the Colombian consumer portfolio, where we observed a 228 basis point improvement. The positive results came especially from personal loans, credit cards, and auto loans, where improvements were of 363, 339, and 147 basis points, respectively.
The improvements in cost of risk offset the contraction in NIM, and actually, risk-adjusted NIM was slightly above the previous quarters. Here is a summary of the bank's third quarter results. Net income attributable to shareholders was COP 377.7 billion, 91% higher than in the previous quarter, resulting in a return on equity of 9.3% and a return on assets of 1%. This quarter's net interest margin decreased to 4.2%, explained by both a lower investment NIM and loan NIM.
As we will explain later, this was partially offset by a decrease in cost of risk. Fee-income ratio was 25.4%, 2.2 percentage points lower than in the second quarter, as both fees decreased and income increased. Efficiency, measured as cost-to-income, decreased to 48.6% as operating expenses decreased and income rose. Cost-to-assets ratio decreased to 2.5%. Consolidated gross loans reached COP 104.4 trillion, having grown by 0.4% in the quarter.
Mortgages and consumer loans increased while commercial loans decreased. Deposits totaled COP 98.6 trillion, a 2% quarterly decrease. Excluding the 0.7% peso depreciation in the quarter, deposits decreased by 2.2%. The ratio of deposits to net loans was one time, exactly on target. Deposits decreased their share of funding to 77.9% of total funding, as savings accounts and time deposits decreased by 7.4% and 0.4% in the quarter.
Loan quality deteriorated slightly this quarter, as 30-day PDLs increased by 11 basis points to 6.4%, while 90-day PDLs increased by 15 basis points to 4.7%. Net cost of risk decreased this quarter by 11 basis points to 1.9%. In Colombia, cost of risk decreased by 25 basis points to 2.1%, while in Panama, cost of risk increased by 64 basis points to 1.2%. 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. In order to remain growing, we were able to optimize our digital channels and expand our transfer and payment solutions, which have taken more relevance on our business, enhancing our customer experience, strengthening security, the use of products, and enabling digital channels for all customer segments.
During this quarter, we reached a total of 257 million transactions, a 4% growth, with a base of 2.5 million digital users, maintaining a digital transactional share of 82%. The following are our most relevant points. The payments and immediate transfer services have registered a 7% growth, with more than 16.8 million transactions in the quarter for our no-cost interbank transfers, PSE, PSE Avanza, QR transfers, remittances to mobile numbers, and TAC Aval services.
We included in our virtual banking the functionality which allows cash into accounts and investment products through PSE, enabling the use of our deposits products with a better customer experience and improving access to financial solutions. Soon, we will launch payment obligations with PSE, enabling alternatives to customers to pay their credits.
In August, we launched Apple Pay with Visa, which gave to our affluent customers an innovative payment option. In the first two months, we observed a solid adoption, consolidating our position thanks to convenience, speed, and frictionless shopping experience. In the consumer portfolio, we reached 370,000 products sold in the quarter, with a total balance of COP 8.270 trillion.
Our strategy has focused on attracting higher-profile customers, achieving significant business advances. In September, we launched our premium savings account, a product designed for a specialized segment of customers.
This strategy strengthens our focus on attracting and retaining affluent customers, boosting the volume of deposits with a differentiated value proposition. In addition, we are simplifying product flows for this segment with self-managed flows. For our digital insurance experience, we have implemented cross-selling strategies by integrating voluntary insurance to new products such as Crédito Conveniente and payroll accounts without agreement, which is called Mi Trabajo.
This extension of the insurance offering aims to increase the bank's fee-income margin and enhance the bank's growth in key segments. In the mortgages, we implemented the embedded finance strategy through integrations with third-party platforms, enabling online approvals and transforming the bank's value offering by integrating the service with external platforms, which allows us to reach new customer profiles.
For our point-of-sale lending business, which allows customers to access financial products and make purchases in physical stores of allies or in e-commerce, we reoriented the strategy toward a lower-risk segment, strengthening our credit assessment drivers, enabling us to reach a historic COP 50 billion disbursement in August for our Crédito Conveniente product, a line of credit that disburses directly to the merchant.
With our CeroPay, our buy-now-pay-later solution, we expanded the offering to new businesses, providing a means of working capital financing for independent construction professionals and for the purchase of tickets in ticket booths, where we continue to leverage our presence in Experiencias Aval. Although the product is still small, we have evidenced great traction this quarter with an exponential growth in product repetition. For our corporate clients, we are developing automated and self-managed end-to-end digital disbursement flows for liquidity products in minutes.
This progress is aligned with our strategy to enhance the digital experience for our corporate segment. Our disbursement flow for companies with digital promissory notes totaled 1,504 disbursements for a total of COP 224 billion. This performance reflects a 48% increase in the number of disbursements and a 68% growth in the amount disbursed compared to the quarter three 2023.
We continue to ensure operational continuity and service efficiency for our corporate clients. Current balance amounts to COP 309 billion, with seven products enabled in this flow. We would also like to highlight that we were awarded by the Global Finance in the Digital Bank Awards 2024 in several categories at both Latin American and national level. We were recognized in the Best Social Media Marketing Strategy and Services, Best in Lending, Best Mobile Banking App, and Best User Experience Design.
On slide five, we show you the quarter's highlights regarding the bank's sustainability efforts. The bank was recognized by Euromoney 2024 Awards for Excellence as the best bank in Colombia regarding ESG, given its robust sustainability strategy and the integration of ESG criteria into its business model. In addition, the implemented actions to promote a low-carbon economy and to contribute to the social welfare of the country were also highlighted.
The Diversity Chamber of Colombia and the National Consulting Center recognized the bank as the most inclusive organization in Latin America, underlining its ongoing commitment to generate inclusive and diverse environments for employees and customers, framed in the diversity, equity, and inclusion strategy. Banco de Bogotá issued its third thematic bond in the local market. This was an ordinary sustainable bond of COP 500 billion. This bond was oversubscribed by 2.9 times the value offer.
The use of the funds of this bond is social and green. The Amazonía Card, the first green card in the country, already has more than 62,000 active customers and has made it possible for more than 92,000 trees and mangroves to be planted in the Amazon in Vaupés and Guainía and in the Colombian Caribbean coast, regenerating more than 1,500 hectares of tropical rainforest.
As part of the Financial Wellness Initiative, we reactivated the Interactive Mobile Classroom Initiative, a transformative program designed to bring financial education and inclusion to communities throughout Colombia. With a mobile unit equipped with interactive technology, it seeks to educate people of all ages on the value of financial management and access to banking services. More than 2.7 thousand people have benefited to date, of which more than 2.6 thousand are children and underage people.
We have a strategic alliance with Visa and Universidad del Rosario to provide financial education to children in Colombia. Through this initiative, we seek to develop their understanding of basic financial concepts. There are over 60 teachers in Boyacá educating over 9,000 children and young adults on financial concepts. The world's largest platform for climate change-specific information disclosure, CDP, requested the bank to participate in the Climate Change Questionnaire since last year.
For this second measurement, the bank's responses are now available to the public. Banco de Bogotá participated in the world's largest biodiversity event, COP16, where our CEO reiterated the bank's goal of having a green loan book of over COP 8 trillion by 2027, thus supporting climate change mitigation.
Finally, we updated the TCFD report, including the 2023 measurement of financial emissions, which are the basis for defending and monitoring the decarbonization targets that the bank has already defined in the power generation and cement sector. Moving on to slide six, let me summarize the local macroeconomic overview.
The Colombian economy registered an annual growth of 1.9% year-to-date up to August, aimed at recovering household consumption, a resilient export sector, and some signs of improving investment. In 2024, Colombia's purchasing power has benefited from lower interest rates, real wage gains due to falling inflation, the resilience of the labor market, and higher income from remittances, government monetary transfers, and financial returns.
The improvement of domestic demand has supported in activities such as entertainment services, commerce, lodging, food services, and transportation. The arrival of more tourists has also helped growth.
Higher agricultural production due to improved weather conditions and lower fertilizer prices has not only met domestic consumption but has also boosted the sales abroad, where coffee has positioned itself as one of the most dynamic exports. In construction, housing sales bottom out, and progress is evident in some infrastructure projects other than roads.
However, the recovery of the sector is still tepid. In this scenario, we have raised the growth projection for 2024 to around 1.6%, with analysts' consensus slightly above this level. For us, the adjustment of public spending to honor the fiscal rule is the main downside risk. It should be remembered that economic growth in the first half of the year was 1.5%, but excluding public administration, it would have been just 0.8%.
This inflation process deepened in the third quarter as the annual increase in the prices went from 7.2% in June to 5.4% in October, the latter being the lowest level since the end of 2021. A key aspect to highlight was that in the three readings during this quarter, the inflation figure was below the consensus of analysts.
While inflation in goods reached a minimum less than 1%, benefiting from a contained exchange rate in the first half of the year, food benefited from a recovery in its supply and low cost of imported inputs. On the contrary, services remained high, with inflation of 7.5% due to the persistence of rents, which have registered an average indexation of 80% so far this year, compared to more usual averages of between 60% and 70%.
For the rest of 2024 and much of 2025, we anticipate an extension of the downward trend in inflation, albeit at a lesser pace than that seen recently, ending 2024 at 5.1% and 2025 at 3.6%. On the external front, the country reached in the second quarter the lowest current account deficit in the last 15 years, standing at 1.6% of GDP.
However, for the second half of 2024, the recovery of domestic demand, especially private consumption, would increase imports and deteriorate the external deficit. In fact, the positive numbers of imports, mainly in consumer goods and raw materials, already confirmed this situation. However, the arrival of dollars from remittances, coffee, and non-traditional exports, as well as from tourism, would partially offset the outflow from imports.
This would give Colombia its second year with low financing needs in dollars, a situation that would be reversed by 2025 with a more dynamic economy. For that year, the current account deficit is expected to exceed 3% of GDP. Moving on to the fiscal outlook, the situation has become more than challenging. On the one hand, tax collection would again surprise the government's estimates on the downside, making a deeper cut in the spending necessary to honor the fiscal rule in 2024.
Congress did not approve the government budget project for the following year. If approved by decree, as it stands, there is a high probability of underfunding, repeating what happened in 2024. Finally, the reform to the General Participation System compromises the sustainability of public finances in the medium term.
In fact, the Autonomous Committee of the Fiscal Rule highlighted that the proposal is not consistent with compliance with the fiscal rule in the coming years. The higher country risk premium partly explains the recent devaluation of the peso, which has fluctuated even above 4,400 pesos per dollar.
From the international front, the good results of the United States economy and the victory of Mr. Trump in the elections generate expectations of higher inflation and a slower pace reduction in the interest rates, supporting a strong dollar. Additionally, the Federal Reserve reduced its pace of cuts from 50 basis points in September to only 25 basis points in November. This macroeconomic balance explains Banco de la República's cautious approach to decreasing interest rates.
In September and October, despite the fact that several analysts expected an acceleration of the pace of cuts, the rate adjustment continued with 50 basis points cuts, bringing it to 9.75%. We project a reference rate for the end of 2024 and 2025 of 9.25% and 5.75%, respectively. Now, I will turn over a presentation to Javier Dorich, Director of Investor Relations and Corporate Development.
Thank you, Sergio, and good morning, everyone. Starting on slide seven, we present the highlights of our balance sheet in the third quarter of 2024. Starting at the top left, we observe the asset breakdown with a similar distribution as in previous quarters. Loans and leases represent 67.1% of assets, decreasing their share by 53 basis points this quarter. Fixed income portfolios represent 12.6% of assets, having increased by 48 basis points.
Equity investments amounted to 7.8% of total assets, increasing their share by 11 basis points. Other assets represent 12.5% of assets at similar levels to in previous quarters. On the top right, we observe the distribution of loans by economic activity. There have not been important changes in this regard, and there is no specific sector which may have an overly large weight. On the bottom, one can observe that gross loans increased by 0.4% this quarter or 0.2% without FX movements.
Commercial loans decreased 356 billion this quarter or 0.5%. On a better note, mortgages increased by 636 billion pesos or 4.8% this quarter, especially loans for social housing. Consumer loans increased by 377 billion pesos or 1.6%, and we will further communicate more positive results in this segment. This quarter, we sold most of our microcredit segment and passed from 0.3%- 0% of total loans.
We will continue to attend SMEs through other channels, mainly retail offices. The breakdown of the loan portfolio remains at similar levels than previous quarters. Mortgages increased in the mix by 57 basis points this quarter, while commercial loans decreased their share by 57 basis points. Likewise, the 28 basis points gain in the mix by consumer loans was offset by a decrease in microcredits.
Therefore, commercial loans lead the mix with 63.8% of the share, followed by consumer loans with 23%, and finally, mortgages with 13.2% of the share. We expect loan growth to be between 6% and 7% for the entire 2024 and around 10% in 2025. Moving on to slide eight, we present our financial liabilities. Starting on the top, one can observe that total funding increased by 6.2% year-on-year and 0.9% this quarter to COP 126.6 trillion.
This quarter, interbank funds increased the most by COP 3.4 trillion or 65.3%. It is noteworthy that these funds are short-term and do not reflect a shift in long-term funding. Bonds increased by COP 565 billion this quarter or 6%. As on July 25th, we issued COP 500 billion in sustainable senior bonds, which we had mentioned in the previous call.
COP 282 billion was issued with a maturity of 2.5 years and a yield of 10.45%, and COP 218 billion was issued with a maturity of 4 years and a yield of 10.38%. Loans from banks and others decreased by COP 823 billion in the quarter or 8.1%. Finally, deposits decreased by COP 1.99 trillion or 2% in the quarter. Excluding FX, deposits decreased by 2.2% in the quarter.
The decrease in deposits was led by savings accounts, where a COP 2.59 trillion decrease in the quarter or 7.4% in relative terms was observed. Current accounts decreased by COP 61 billion or 0.4% this quarter. Time deposits increased by COP 613 billion or 1.2%. Finally, other deposits increased by COP 43 billion, which represents an increase of 31% in the quarter. Overall, deposit mix remains at similar levels. Time deposits comprise 52.6% of deposits, having gained 1.7 percentage points of the mix.
Savings accounts represent 32.8% of deposits, losing 1.9 percentage points of share. Current accounts represent 14.4% of deposits and only gained 0.2 percentage points of the deposit mix. Finally, other deposits represent 0.2% of deposits and gain a small portion of the deposit mix. In the bottom right, one can observe the liquidity coverage ratio and the net stable funding ratio.
With a 30-day IRL of 129.4% and an NSFR of 105.7%, we observe both ratios within comfortable limits. Moving on to slide nine, we present our equity and capital adequacy levels. On the top left, we observe total equity, minority interest, and shareholders' equity.
Shareholders' equity increased by COP 629 billion or 4% in the quarter, explained by a net income attributable to shareholders of COP 378 billion and increases of COP 248 billion in OCI, becoming positive for the first time since Q4 2022, mainly due to the revaluation of fixed income portfolios. Minority interest increased by 5.7% to COP 62 billion. Therefore, total equity increased by 4% and COP 633 billion and stands at COP 16.59 trillion. On the top right, we present leverage measured by equity over assets and the tangible capital ratio.
Equity over assets stands at 11.3% and tangible capital ratio stands at 10.3%, both within normal ranges and close to past figures. Both variables point to a slight decrease in the bank's leverage this quarter. On the bottom, one can observe the consolidated capital adequacy as well as the Tier 1 ratio. Common Equity Tier 1 capital increased by COP 616 billion this quarter or 4.5%, as the quarter's positive results and increase in OCI and less income taxes positively impacted equity.
As Banco de Bogotá has no additional Tier 1 instruments, these CET1 figures apply to Tier 1 figures as well. Tier 2 capital decreased by COP 5.1 billion or 0.2% in the quarter. Even though all the subordinated bonds are in dollars and the peso depreciated 0.7% this quarter, coupon payments of the subordinated bonds decreased the amount due in dollar terms.
Risk-weighted assets amounted to COP 110.8 trillion, a 0.6% increase in the quarter, or a COP 663 billion increase in absolute terms. Market-weighted VaR increased by COP 1.3 trillion and was offset by a decrease in COP 584 billion in credit risk-weighted assets and a decrease of COP 93 billion in operational risk-weighted assets.
Market-weighted VaR increased due to purchases of sovereign bonds in the available for sale portfolio. CET1 and Tier 1 ratios increased by 48 basis points in the quarter, mainly due to the already mentioned increases in Common Equity Tier 1 capital. CET1 and Tier 1 ratios stand at 12.8%, 4.3 percentage points above regulatory minimums, including buffers.
Tier 2 capital over risk-weighted assets decreased only 2 basis points and stands at 2.1%, as additional capital decreased by 0.2%, while, as previously mentioned, risk-weighted assets increased by 0.6%.
Therefore, total capital adequacy was 14.9%, 46 basis points higher than in the second quarter. This figure is 3.4 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 10. This quarter, in both July and September, central bank meetings, monetary policy rates were lowered by 50 basis points each. This affected loan yields, as 60% of the bank's gross loans have variable rates.
Therefore, loan yields decreased by 51 basis points in the quarter and 152 basis points year-on-year and now stand at 12.2%. Loan yields have also been affected by the usury rate, which decreased by 64 basis points during the quarter, where around COP 5 trillion in consumer loans must be repriced. The changes on how usury rates are calculated have had an impact on loan yields we didn't anticipate to this degree.
Commercial loans decreased their loan yield by 60 basis points, as this segment has 83% of its loans under variable rates. Consumer loans decreased their loan yield by 51 basis points, as their shorter-term nature makes the repricing of new loans. Additionally, the decline in usury rates, which particularly impacts personal loans and credit cards, has also contributed to the decrease in loan yields.
Mortgages increased their loan yield by 9 basis points this quarter, explained by the overall effect of new loans versus an older stock before the central bank increased rates. Nevertheless, mortgages have the lowest yield by segment, and their increase of share in the loan mix has impacted loan yields downwards. Investment yield decreased by 178 basis points this quarter to 7.6%. Investment yield is at normal levels, where the average of the past five quarters is 7.9%.
The previous quarter's investment yield was somewhat above historic averages. We aim to have higher yields in the near future due to the recomposition of our available for sale portfolio. Cost of funds decreased by 54 basis points this quarter to a level of 7.7%. Time deposits decreased their cost of funds by 54 basis points, savings accounts by 30 basis points, current accounts by 33 basis points, and most notable, credits from banks and others decreased by 300 basis points.
Overall, the cost of funds decreased, but to a lesser extent than expected. Loan NIM decreased by 9 basis points, having loan yields decreased by 51 basis points and cost of funds decreased by 54 basis points. The impact of usury rate, the relative increase of mortgages in the loan mix, and the sale of microcredits impacted the loan NIM negatively.
Loan NIM stands at 4.9%, slightly below a historic average of 5.2% in the past six quarters. We expect to improve this figure as the effect of usury rates fade away, cost of funds keep decreasing, and the Fed decreases the cost of funds in Panama. Nevertheless, due to low usury rates, it will be harder for the bank to increase the mix of its highest-yielding products, which carry the highest credit risk.
Investment NIM stands at 0.3%, the same level as the previous six-quarter average. The investment NIM does not present noteworthy behavior, even though it tends to be more volatile than loan NIM. Total NIM decreased by 31 basis points this quarter, standing at 4.2%. We have strived to be NIM-neutral or to gain a small advantage in NIM with the central bank rate cuts. However, the lower NIM is a combination of factors.
As lower pace in central bank rate cuts, both in Colombia and the U.S., a higher impact of usury rates on the loan book, a loan mix which is increasing its share of mortgages, and a slower than anticipated decrease in the cost of funds. We will strive to regain the lost NIM and to increase this variable even further. For 2024, our NIM should be between 4.3% and 4.4%, and for 2025, NIM should be between 4.4% and 4.5%. Now, let's move to slide 11.
Starting with 30-day PDLs, these increased from 6.3%-6.4% during the quarter. The Panamanian portfolio presented a 19 basis point decrease, while the Colombian portfolio increased by 17 basis points due to a deterioration in commercial loans. For 90-day PDLs, the Panamanian figure remained relatively stable, increasing by 14 basis points to 3.5%, mainly due to specific pressures in the mortgage segment.
However, the cost of risk in Panama increased from 0.6% to 1.2%, driven by higher provisions in the commercial and consumer segments. In Colombia, the figure increased by 15 basis points from 4.8% to 5%, mainly due to a deterioration in the commercial segment, which was offset by an improvement in consumer loans. Now, let's go to slide number 12. First, on the lower left, we present new PDL formation.
New PDL formation peaked in the first quarter of 2024 for 30-day PDLs and remained stable this quarter, increasing only slightly by COP 837 billion in new 30-day PDLs. For 90-day PDLs, new formation reached COP 865 billion, reflecting a slight increase compared to last quarter. This growth in 90-day PDLs continues to be influenced by the increase in 30-day PDLs seen in previous quarters. On the right, we show the behavior of 30- and 90-day PDLs by segments.
Commercial PDLs deteriorated this quarter. The 30-day figure increased by 37 basis points, reaching 6%, while the 90-day figure increased by 44 basis points to 5.3%. In Colombia, the 30-day PDL ratio increased by 55 basis points to 6%, driven primarily by financial leases and overdrafts. Meanwhile, the 90-day PDLs also deteriorated, increasing by 49 basis points to 5.3%, reflecting similar pressures.
In Panama, the 30-day PDL ratio improved, decreasing by 90 basis points to 6%, while the 90-day PDL ratio increased slightly by 8 basis points, reaching 5.2%, mainly due to pressures to working capital loans. The consumer portfolio continued to show improvement in delinquency this quarter.
30-day PDLs decreased by 61 basis points in Colombia, with a notable improvement of 187 basis points in credit cards. In Panama, however, the 30-day PDL ratio increased slightly by 19 basis points, primarily due to higher delinquencies in personal loans.
Regarding 90-day PDLs, the ratio improved in Colombia, decreasing by 56 basis points to 4.2%, while in Panama, the 90-day PDL ratio remained stable at 0.6%. In Colombia, personal loans and credit cards improved by 90 and 114 basis points, respectively, in 90-day PDLs.
At a consolidated level, mortgages deteriorated this quarter by 13 basis points in 30-day PDLs and by 12 basis points in 90-day PDLs. In Colombia, 30-day PDLs decreased by 24 basis points to 7.8%, while 90-day PDLs remained relatively stable, increasing only by one basis point to 4.6%.
In Panama, there was a more significant deterioration, with 30-day PDLs increasing by 111 basis points to 5.1% and 90-day PDLs increasing by 37 basis points to 2.7%. This increase in Panama is mainly attributed to pressures in housing leases, while in Colombia, the portfolio remains resilient with loan-to-value ratios.
Also, Colombia's portfolio recent growth aids PDL result through a large denominator. Now, let's go to slide number 13. On this slide, we show the credit quality of vintages three months after origination for personal loans and credit cards in Colombia, which continue to reflect improvements in loan delinquency and cost of risk.
Regarding personal loans, the February 2023 vintage reached 8% in 30-day PDLs by May 2023, marking a peak in delinquency. However, this ratio has seen a significant decrease in the past months, with the latest vintage of June 2024 showing only 2.6% 30-day PDLs by September 2024. This is a lower level than seen in early 2022, indicating enhanced credit quality and policy in this segment. For credit cards, we observed a similar positive trend.
The December 2023 vintage had a peak of 13.6% in 30-day PDLs by March 2024, partially influenced by specific fraud issues faced earlier in the year. Nevertheless, there has been a considerable reduction as the June 2024 vintage recorded a 30-day PDL ratio of 3.6% by September 2024. This ratio also reflects an improvement in stronger credit quality than in early 2022.
On slide 14, we present gross loans by stages and segments, as well as coverage ratios by stages. On the graph on the top left, we can observe a slight deterioration in stage one loans, having decreased by 15 basis points and ending in 87.3%. There was a 13 basis point increase in stage two loans and a 2 basis point deterioration into stage three loans. Overall, these changes have been less pronounced than with regard to PDLs.
On the right, commercial loans had a decrease in stage one loans of 57 basis points, having increased by 29 basis points in both stage two and stage three. This deterioration is explained by the Colombian book's 75 basis point deterioration, as in Panama, stage one increased by 103 basis points. The economic slowdown is having an impact on commercial loans, especially the smaller SMEs.
On a positive note, the consumer book keeps on improving. As shown with PDLs and vintages, stage one consumer loans increased their share by 71 basis points this quarter, having decreased by 24 basis points in stage two and by 47 basis points in stage three loans. Mortgages had a slight deterioration. Even though stage one loans increased by 7 basis points to 89.3%, stage three loans increased by 24 basis points. Stage two loans decreased by 31 basis points.
On the bottom left, we observe the coverage ratio by stages and by total gross loans. The overall coverage ratio decreased by seven basis points and ended in 5.6%. Coverage decreased by 135 basis points in stage two loans and by 47 basis points in stage three loans. Coverage remains at 1% for stage one loans. On slide 15, we present coverage ratios by PDLs and gross loans.
As has already been stated, the loan deterioration seems more pronounced when analyzing past due loans than stages this quarter. Therefore, the coverage by PDLs had a slightly higher deterioration than the coverage by stages. On the top left, the 30-day coverage ratio stands at 0.87 times, having deteriorated by 3% this quarter. There was a 1% decrease in allowances this quarter, and the other effect came from the 2.1% increase in 30-day PDLs as an absolute number.
Allowances deteriorated in Colombia by 4%, ending at 0.94 times, while in Panama, coverage improved 3%, ending at 0.36 times. We remind the public that adequate coverage depends on the credit collaterals, of which the Panamanian portfolio has plenty. On the top right, the 90-day coverage ratio ended at 1.18 times, having deteriorated by 5%.
This greater deterioration is due to a 3.5% increase of 90-day PDLs in absolute terms. In Colombia, 90-day coverage deteriorated 6% to 1.27 times, and in Panama, it improved 1% to 0.49 times. On the bottom, we show the amount of allowances over gross loans. As already shown in the previous slide, coverage decreased from 5.7%- 5.6% in the quarter. In Colombia, coverage of gross loans decreased by 8 basis points from 6.4%- 6.3%. In Panama, coverage of gross loans increased by 9 basis points to 1.7%.
On slide 16, we present our net cost of risk and charge-off ratios. On the top left, we present the annualized quarterly net cost of risk by geography. Overall, the net cost of risk decreased from 2.1% last quarter to 1.9% this quarter. In Colombia, this figure improved by 22 basis points, ending at 2.1%. In Panama, this figure deteriorated by 60 basis points and was 1.2%.
The Panamanian figure is equal to a three-year average and is not a cause for alarm. Moving on to the top right, we analyze the cost of risk by segments. First, we highlight the improvement in the consumer cost of risk. The consumer segment has most of the explanatory power when analyzing cost of risk, given the lack of collaterals in this segment.
Consumer cost of risk improved by 178 basis points this quarter, ending at 6.6% and being the third consecutive quarter of improvement. In Colombia, this figure improved by 228 basis points to 7.5%, having improved by more than 300 basis points in credit cards and in personal loans. In Panama, this figure deteriorated 128 basis points to 1.7%, a still relatively low figure for consumer loans in general.
Commercial cost of risk increased by 63 basis points this quarter to a level of 0.6%, a similar level as in the first quarter of the year. Commercial cost of risk was abnormally low in the past quarter and is now at normal levels, slightly above the past three-year average. This figure increased by 62 basis points in Colombia to a level of 0.5%, having been negative the previous quarter.
In Panama, commercial cost of risk increased by 64 basis points to a level of 1.4%. This is in line with a slight deterioration in 90-day PDLs in Panama in the quarter. Mortgages increased their cost of risk by 20 basis points to 1.1%. In Colombia, cost of risk increased by 37 basis points to 1.5%, while in Panama, it decreased by 30 basis points. Overall, risk-adjusted NIM improved, as the effect of a better cost of risk was larger than the quarter's NIM contraction.
On the bottom left, we present the charge-offs over 90-day PDLs. The consolidated figure remained at 57%, having similar levels as in the previous quarter in Colombia. In Panama, charge-offs over 90-day PDLs increased 9 percentage points to 20%. In the bottom right, we present charge-offs over average loans. The consolidated figure increased 14 basis points this quarter, from 2.5%- 2.7%.
In Colombia, this figure increased 12 basis points to 3%, and in Panama, it increased by 39 basis points to 0.7%. We expect net cost of risk to be around 2.3% for 2024 and around 2.2% in 2025. On slide 17, we present fee income structure and details on other income. Total fees in peso terms decreased by 0.9% in the quarter to COP 486 billion.
The decrease is mainly explained by card fees, which decreased by 5.6% this quarter, or COP 11 billion. Other banking fees varied less, and the overall relative change in banking fees in the quarter was minus 2.6%. Fees presented a better performance. Fiduciary fees increased by 8.8% this quarter, reaching COP 55 billion. Other fees, mainly logistical fees from Almaviva, increased by 6.9% this quarter, ending at COP 30 billion. Total income increased by COP 137 billion, or 7.7% this quarter.
Therefore, both through effect in the numerator and denominator, we present a contraction of the fee income ratio. This figure reached at 25.4%, having decreased 220 basis points in the quarter. Nevertheless, this figure is close to past three-year average. Other operating income stood at COP 292 billion this quarter, coming from. First, equity method and dividend income came in at COP 115 billion, a figure 2.2 times that of the previous quarter and 3.7 times the figure in Q3 2023.
This high figure is mainly due to Porvenir's very positive results. Second, income from net investment activities was COP 38 billion, a 61.3% quarterly increase. Third, the derivatives and FX position had a net expense of COP 10 billion, decreasing by 92.6% in the quarter, mainly by an income transfer from OCI to PNL. Finally, COP 149 billion from other income, increasing by 34.1% in the quarter.
We expect fee income ratio between 26% and 27% this year and around 26% in 2025. On slide 18, we present efficiency ratios measured by cost to income and cost to assets. Beginning on the top right, we present the total operating expenses. Total operating expenses decreased by 1.6% or by COP 15 billion this quarter to a total of COP 926 billion. The largest decrease was in general administrative expenses, where the figure decreased by COP 39 billion in the quarter.
Personnel expenses increased during the quarter by 5.2%, other operational expenses increased by 12.7%, and depreciation and amortization increased by 1.9%. On the top left, total income was COP 1.9 trillion, having increased by 8.3% in the quarter or 8.2% year on year. Most of the quarter's increase is due to FX movements affecting assets in U.S. dollars in peso terms.
Another source of increase of total income was equity method income, which increased by COP 62 billion or 118% in the quarter. Therefore, efficiency measured as operating cost over total income decreased by 4.9 percentage points to 48.6%. Efficiency measured as annualized operating cost over average assets declined by 11 basis points to 2.5%.
We expect cost to income ratio to be around 51% for 2024 and around 50% for 2025. Finally, on slide 19, we show the company's overall profitability. In this quarter, Banco de Bogotá experienced different offsetting effects on its profitability. On the one hand, the net cost of risk kept improving, in line with better quality in consumer loans. Other income increased, in part due to derivatives and FX, but also due to a higher equity method income.
Also, efficiency metrics improved, not only because of lower operating expenses, but also because of higher total income and average assets. Finally, the effective tax rate decreased significantly as the bank was able to take advantage of certain tax deductions. On the other hand, the net interest margin contracted to a level of 4.2% as cost of funds decreased less than anticipated, and usury rates and loan mix negatively affected lending yields.
Fees also decreased this quarter, though at historically normal levels. Overall, and on a positive note, this quarter's return on equity was 9.3%, 4.3 percentage points higher than in the previous quarter, and the highest figure since Q1 2023. The bank's return on assets was 1%, increasing by 48 basis points in the quarter. Even though these positive figures are encouraging, we still have a long way to reach our intended profitability above the cost of capital.
We envision a slow and steady recovery towards this goal in the next year, without ruling out choppy seas ahead. Return on equity for 2024 is expected between 6% and 7%, and between 8% and 9% in 2025, approaching a double-digit around the end of the year. Before moving on to the Q&A session, I'd like to summarize our general guidance for 2024 and 2025. Loan growth is expected to be between 6% and 7% in 2024, and around 10% in 2025.
Net interest margin is expected between 4.3% and 4.4% in 2024, and between 4.4% and 4.5% next year. Net cost of risk is expected to be around 2.3% this year and around 2.2% next year. Fee-income ratio should be between 26% and 27% in 2024, and around 26% in 2025. Cost-to-income ratio should be around 51% this year and 50% next year.
And finally, return on average should be between 6% and 7% in 2024, and between 8% and 9% in 2025. And now, we are open to your questions.
Thank you very much. We will now begin our Q&A session. We can take your written questions through the Q&A chat box, live questions, or through our phone line. Please note the following instructions. For the Q&A chat box, please type your question and we'll proceed to read them. After answering the questions received through the Q&A chat box, we'll proceed with 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 are 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 our 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 press your request and we'll open your mic and call your name accordingly.
If you are 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. Our first question comes from onstage by Mr. Julián Ausique from Davivienda Corredores. Mr. Julián Ausique, the floor is yours.
Once again, we have received a question by Mr. Julián Ausique from Davivienda Corredores. Mr. Julián, could you please open your microphone? We're standing by for your question. Mr. Ausique, the floor is yours. Your mic is open.
In the meantime, we'll repeat our instructions for your participation. Once again, if you wish to ask your questions through our chat box, please type your question and we'll proceed to read your question. After answering these questions, we'll p roceed with 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 are connected by phone, please press the start 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. We have received one question through our chat box by Mr. Ausique from Davivienda Corredores. His question is, "I would like to know why the equity method increased that much." Thank you very much.
Hi, Julián, and thank you for your question. This is Javier. So about the equity method, that's correct. We experienced an improvement between the second and the third quarter. First, we had a very good quarter in Porvenir. And in the second quarter, equity method coming from them was around COP 79 billion, and it went up to COP 114 billion.
That was a good quarter for markets, and they seized that. And the other thing is Corficolombiana. We had experienced a negative equity method in the second quarter, and right now, or in the third quarter, the figure was almost break-even. So those are the two main explanations behind the improvement in equity method. Thank you.
Thank you very much. Another question by Mr. Julián Ausique from Davivienda Corredores. His second question is, "Why are you expecting an increase in cost of risk and an increase in ROE?" Thank you.
Hi, Julián. So in terms of our guidance, bear in mind that we said that we expect an improvement in cost of risk going from 2.3% in 2024 to 2.2% in 2025. So that's, in fact, one of the reasons behind the improvement in our expectation of ROE. The other reasons being, for example, an improvement also in NIM going from a range between 4.3% and 4.4% this year to a range between 4.4% and 4.5% next year.
Thank you. Thank you very much. We're standing by for any further questions. But there seems to be no further questions at this time. So we'll proceed with the final remarks from Mr. César Prado. Mr. Prado, the floor is yours.
Thank you, Karen. The results from this quarter presented an improvement in profitability. We will continue working to hopefully improve results in 2025, approaching our cost of capital in the medium term. Thank you for attending today's meeting, and I hope you will join us for our next conference call.