Good morning. Welcome to the second quarter of 2023 Consolidated Results Conference Call. My name is Juan Pablo, and I will be your operator for today's conference call. At this time, all participants are in a listen-only mode. Afterward, 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 2. When applicable, in this webcast, we refer to trillions as millions of millions and to 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, Juan Pablo. Good morning, everyone, and welcome to Banco de Bogotá's Second Quarter 2023 Earnings Call. Thank you all for joining us today. As you probably know, I was recently appointed by Banco de Bogotá's board of directors as the bank's CEO. Formally, I began last week in this new position after having successfully completed the appointment process before the Financial Superintendence. I would like to begin this call by thanking Mr. Alejandro Figueroa on behalf of all our staff for a lifetime of dedication to this institution. His steadfast leadership has been crucial in leading Banco de Bogotá for the past 35 years as CEO. My part was to lead the bank through the ever-changing and challenging future. We will continue on the pathway of modernization and digitization while preserving our prudent risk approach.
This year has brought on a series of challenges for the banking sector as households and companies have faced economic deceleration, mixed with high inflation and interest rates. Looking forward, central bank interest rates, which rose to 13.25%, are expected to start reducing in the following months. Inflation, although receding from a level of 13.34% in March, remains high at 11.78% in July. Most analysts foresee an upcoming second semester of lower inflation, diminishing rates, and low, yet positive economic growth, while employment remains high. Germán will expand on our economic outlook later in the call. Now, let me summarize the bank's consolidated second quarter results.
Attributable net income for the quarter was COP 277.3 billion, which translates into annualized return on average equity and return on average assets of 7.2% and 0.8%, respectively. Higher net cost of risk and lower equity method income had an effect on profitability. Net interest margin, at 4.6%, remains similar to the first quarter 2023, decreasing 5 basis points quarterly and increasing 21 basis points annually. Lending NIM was 42 basis points higher this quarter, while investment NIM decreased by 3.1 percentage points. Since interbank and investment income was abnormally high in the first quarter of 2023, the income ratio increased by 324 basis points, reaching 27.6% as a result of higher banking and credit card fees.
Efficiency stands at 50.6%, slightly above 2022's average, and cost to assets was 2.7%, a 3 basis point increment versus the first quarter. Gross loans amounted to COP 97.7 trillion, which is a 0.7% quarter-on-quarter increase. Nevertheless, when excluding the effect of the 10.1% peso appreciation, quarterly loan growth stands at 2.6%. Commercial and consumer loans lead the increase in absolute and relative terms. Deposits totaled COP 90.3 trillion this quarter, a 0.8% quarterly increase. When excluding FX movements, deposits show a 2.4% quarterly growth. The ratio of deposits to net loans remains unchanged at 0.98 x. Finally, deposits increase their share of funding, reaching 77.7%, gaining 1.8 percentage points in the quarter.
Conversely, funds from banks and others decreased by 2.8%. Loan quality continued to deteriorate this quarter, although at a slower pace. The 90-day PDL ratio reached 3.9%, increasing by 11 basis points. We believe loan deterioration is showing signs of peaking, though the peak could be during the third quarter. Net cost of risk stands at 2.2%. A quarterly increase of 52 basis points, mainly due to the consumer portfolio in Colombia. Let me summarize our guidance for the year 2023. Loan growth is projected to be between 8% and 10%. Net interest margin target is expected between 4.6% and 4.7%. Net cost of risk is expected to be between 1.8% and 1.9%. Fee income ratio should come in at 25%.
Cost to income ratio should be around 48%. Regarding profitability, return on average assets should be around 1.2%, and return on average equity should be between 9% and 10%. Now, I will turn the presentation over to Germán Salazar, Banco de Bogotá's Executive Vice President.
Thank you, César, and good morning, all. Regarding our digital strategy, please move to a slide 4. During the second quarter of 2023, we kept accelerating digital transformation and started to transfer success to all our products, which has translated into enhanced business results and an agile culture. We sold over 541,000 digital products, reaching a total balance of COP 7.4 trillion, which represents a 10% growth versus Q1 2023. Our digital product share is now above 76%. Let me elaborate on the main results from our digital products. In Q2, we sold over 102,000 digital insurance, thanks to the improvement of the modular life insurance experience and cross-selling results, mainly from credit cards, which in turn represent 52% of total digital products.
We implemented a discount for the acquisition of a 2nd digital insurance policy. In digital mortgage lending, we had a total of 1,500 disbursements, with a growth of over 4 x versus Q1, with a balance increase of COP 82 billion. This success is in line with the reactivation of subsidies for low-income housing. Through our digital product, we offer these customers easier access and experience. Close to 119,000 credit cards were sold digitally, with a balance growth of COP 111 billion, a quarterly increase of 10%. Efforts were focused on the campaign with our co-brand LATAM, selling over 21,600 cards, with a twofold increase in sales compared to the previous quarter. This result reinforces our alliance with LATAM and encourages the use of this new value offer.
During Q2, our digital checking account product reached over 1,300 products sold, with a digital share of 54% of checking account sales. This growth shows how our product fits customer needs and also demonstrates the effectiveness of our sales force support in product engagement. In digital time deposits, despite the interest rate reduction, we sold more than 15,000 products in the quarter, representing a growth of COP 43 billion or 6% versus Q1. For consumer lending, total balance grew COP 176 billion this quarter, with over 97,000 digital loans. Our main focus has been on adjusting approval rates while being responsive to market demand amidst an environment of lower demand and increasing cost of risk.
Our digital savings account product sold over 190,000 accounts, increasing 24% or COP 280 billion over the previous quarter. This milestone is mainly due to campaigns that encourage the use of the product, including the receipt of our customers' year bonus payment in our bank. The bank's digital sales continue to be a main contributor to fee income growth, representing over 30% of net fees, mainly attributable to credit and debit cards and insurance. Another highlight I'd like to share refers to digital transformation in loans for the corporate business segment. We have successfully digitized disbursements through a 100% digital experience, using a link that authenticates the identity of the client's legal representative by using facial recognition. We also implemented the electronic signing of documents, eliminating the need for paperwork and for in-store visits for loan applications.
Now, customers can initiate the process remotely from any location. In Q2, we registered 260 digital disbursements for a total of COP 28 billion, an 87% quarterly increase. Our upcoming actions involve enhancements to collateral electronic signature and its expansion to other products, such as corporate credit cards. Similarly, the digital loan approval process will transition into a new phase that will include not only existing customers, but also new ones. This approach involves engaging new clients with use of a credit limit, which would later be evaluated for potential upgrades and credit expansions. During the last quarters, the digital team has gradually taken on the task of overseeing and supporting both digital and traditional products as a result of organizational transformation.
Our intention is to promote further opportunity for digitization throughout the bank, using agile methodologies and leveraging on lessons learned from a 100% digital product. A clear example of in this digital adoption by the corporate product team, which has resulted in the optimization of revolving credit lines, we relaunched the traditional credit products and the first digital processes for Finagro and sustainable credits. In Q2 2023, we had over 2.5 million users of our digital channels, which represents a 67% digital adoption. Highlights for Q2 include self-to-self functionality, recorded over 74,000 transactions during this quarter, representing a growth of 59% compared to Q1 2023. This transaction growth demonstrates that users are becoming increasingly familiar with the use and experience of our free interbank transaction tools within Aval's ecosystem. Alternative minimum payment for credit cards and virtual banking.
This functionality provides customers with greater flexibility in managing their monthly credit card payments. It allows them to make a payment of less than the total amount of their monthly installment and defer the remaining balance for up to 36 months, providing valuable financial relief. Cardless withdrawals at correspondent. This feature enables customers to withdraw cash at our authorized establishments without the need to use the actual card. By using mobile banking, users can generate an OTP code for secure withdrawals. Secure data update and device registration. This feature empowers our customers to maintain control over their information by securely updating their registered mobile phone number and e-mail, an email address. We launched a pilot program for interbank transfers via QR codes, which already recorded its first transactions during this phase.
This new functionality allows easy, free, and instant payment using QR codes, also includes a quick payments button that offers various options, such as payment of the utility bills, payment of credits, transfers, among others. In this quarter, due to our digital initiatives, we have been awarded by, first, Global Finance as one of the world's best financial innovation labs working with external startups and scale-ups. They have also recognized Banco de Bogotá as best in digital consumer lending and as Best Mobile Banking App in Latin America. Second, we received recognition from Asobancaria in the We Protect Our Users category for our digital authentication system. These recognitions validate our commitment to a continuous digital transformation in all our products. Now, moving on to slide 5. Regarding our commitment to sustainability, I want to share with you some of the recognitions we have recently received.
First, the European Union Delegation and the Low Carbon Business Action Programme recognized our commitment to decarbonization in Colombia. Second, Asobancaria, under the Accessible Financial Education Program, awarded the bank's initiative that provides access to financial workshops for people with hearing disabilities. Third, the Ranking PAR by Equileap highlighted our bank's best market practices, leadership, and initiative generation of gender equality promotion. Fourth, we won the silver medal, the Construverde Award, as we made our branches' energy and water consumption more efficient. Through these recognitions, we continue to position the bank as a referent on sustainability and climate change best practices. Moving on to slide 6, let me summarize the local macroeconomic overview. After a good start of the year for the economy, the context has changed in the second quarter with clearer signs of a slowdown.
The economy returned to negative territory in April, with the biggest drop in two years. Activity picked up in May and June, continued to be weak. Growth in the second quarter was 0.3% annually, the lowest in the end of 2020. The performance by sectors is differentiated. Primary and secondary activities have been the weakest in 2023, while the service sector continues to grow and partially offset the slowdown. Financial, real estate, professional, and other services allow the economy to continue to grow, albeit at a slow pace. Our economic research team reaffirms the forecast of 1.5% growth for 2023. Inflation peaked in the first quarter. In the second, it has shifted down more than expected by analysts and the market, although remaining at high levels. In July, inflation was 11.8%.
The slowdown in inflation was due to foodstuff, which decreased for an annual inflation of 27.8% in December 2022 to 13.2% in July. However, positive news have yet to be seen in the core metrics, which continued to rise, and in July, it stood at 11%. Pushing higher in fresh inflation are the recurring adjustments in the price of gasoline, which elevate regulated goods prices. On the downside, indexation in rates has been lower than usual. The downwards or prices of the last few months have given way to important adjustments in the market and analyst expectations. Our economic research team projects inflation of 8.9% for this year, although with a downward bias in the projection.
Banco de la República ended its interest rate hiking cycle in April with a rate of 13.25%, positioning it as one of the central banks in emerging economies with the largest increases. At its June and July meetings, the market and the consensus have begun to ponder the scenario for possible cuts, following the trend expected for Latin America. In the Colombian case, these movements will occur at the end of the year. Our economic research team expects 2 cuts of 100 basis points each in the October and December meetings to end the year with a rate of 11.25%. The behavior of the Colombian peso has been favorable so far in 2023, positioning itself as one of the best performing emerging market currencies.
The downward trend of the exchange rate was accentuated in the second quarter, trading even below, below the 4,000 Colombian peso barrier, with levels not seen in more than a year. In the second quarter, the trading range for exchange rate was between a low of 4,086 Colombian pesos and a high of 4,736 Colombian pesos. So far in the third quarter, the range has dropped to 3,912 Colombian pesos-4,244 Colombian pesos. As interest rates in advanced economies approach a ceiling, appetite for risky assets has thrived, including the Colombian peso. In addition, as the discussion of the reforms, contract halted, local assets have recovered. The year began with positive news in the external sector. The current account deficit was 4.2% of GDP, the lowest in the last two years.
In the second quarter, the adjustment of the current account would continue as domestic demand slows down. Imports have had double-digit contractions, outpacing the fall in exports. The trade balance deficit has corrected significantly and stands at around $12 billion, moving away from the highs it had the previous year, when it was almost $17 billion. The recovery of the trade balance also supports the FX market in terms of dollar flow. The Ministry of Finance presented its update, updated forecast and fiscal numbers in the Medium-Term Fiscal Framework. A lower oil price and higher fiscal expenditures led to an increase in the fiscal deficit target for 2023 to 4.3% of GDP, before 3.8% of GDP, and for 2024, to a deficit of 4.5% of GDP, before 3.6% of GDP.
The higher deficit, deficit implies a pause in the adjustment path of the government's net debt in 2024, which would stabilize in the following years at around 57% of GDP. In the final part of the first semester, S&P Global Ratings, Moody's and Fitch Ratings reaffirmed the sovereign rating at Baa2 and BB+ , respectively. The three rating agencies reaffirmed the stable outlook and highlighted the strength of the institutional framework of the Colombia, of the country amid macroprudential economic policies. I will hand over the presentation to our Head of Corporate Development, Financial Planning, and Investor Relations, Javier Doig, who will provide details on our financial results for the quarter.
Thank you, Germán. Good morning, everyone. Starting on slide seven, we present our balance sheet evolution during Q2, 2023. Consolidated assets total COP 136.1 trillion at the end of Q2, 2023, presenting annual and quarterly growth of 4.3% and 0.7% when excluding FX fluctuations. In terms of asset structure, the net loan portfolio continues to be our main asset, representing 68.1% of consolidated assets. Other assets follow with 13.8%, while investment portfolios in fixed income and equity investments represent 10.4% and 7.7%, respectively. Gross loan portfolio closed at COP 97.7 trillion in Q2, 2023, increasing 0.7% in the quarter and 11.7% yearly.
When excluding FX fluctuations, the gross loan portfolio grew 2.6% quarterly and 11.5% annually. In terms of loan mix, the commercial portfolio still represents 65% of our consolidated loans, while consumer and mortgage segments represent 22.9% and 11.8%, respectively. The mortgage portfolio reduced its participation by 17 basis points, mostly as a result of the slowdown in housing subsidies. Commercial loans amounted to COP 63.5 trillion, increasing 2.3% in the quarter and 9.5% annually when excluding FX. Including FX fluctuations, this quarter's growth was 0.7%. Consumer loans increased 3.3% in the quarter when excluding FX, reaching COP 22.4 trillion, mostly explained by higher credit demand in Colombia, which increased its consumer portfolio by 3.6% without FX in the quarter.
In Panama, growth in this segment in peso terms was nullified by the peso appreciation. Mortgages increased 2.7% this quarter, excluding FX fluctuation, to COP 11.6 trillion, driven by a 3.8% quarterly increase in the Colombian portfolio. Finally, microcredits remained at approximately the same amount of COP 266 billion, a growth of 0.4% in the quarter. We expect loan growth to be between 8%-10% in 2023, in line with our 8.9% expectation for end-of-year inflation and 1.5% expectation for GDP growth. Moving on to slide 8, we present loan quality ratios. Starting with delinquency ratios, the 30-day PDL ratio increased by 25 basis points quarterly, standing at 5.6%.
The Colombian portfolio deteriorated 32 basis points to a level of 5.8%, while in Panama it improved 20 basis points to 4.5%. On the bottom left, one can observe commercial 30-day PDL ratios improving by 6 basis points quarterly to 4.8%, while the consumer and mortgage 30-day PDL ratios stood at 7.4% and 6%, respectively. On the top right, the 90-day PDL ratio reached 3.9%, showing an 11 basis point deterioration quarterly and 38 basis points yearly, mainly explained by a deterioration in the consumer portfolio. The Colombian portfolio increased 14 basis points quarterly to a level of 4%, while the Panamanian portfolio improved 9 basis points to 3%.
Breaking down 90-day PDLs, the commercial portfolio improved to 4%, decreasing 6 basis points in the quarter, while the consumer and mortgage portfolios deteriorated to 3.6% and 3.2%, respectively. Consumer portfolio increase in 90-day PDLs is led by personal loans and credit cards, as other consumer products show stability. Personal loans and consumer credit cards combined represent only 11.8% of total gross loans. Microcredits, which remain a small component of our loan portfolio, showed a 90-day PDLs ratio of 11.6% in the quarter. We have observed a slowdown in the loan portfolio's environment, which suggests that we are reaching the peak in the deteriorating lead trend. As stated in the previous call, we expect an improvement by the fourth quarter. On slide 9, we present coverage ratios.
On the top left, well, our coverage ratio for 30-day PDLs is at 0.99 x, 5.4% lower than the previous quarter, where the Colombian ratio stands at 1.08 x and the Panamanian at 0.41 x. It is worth noting that Panama's lower coverage is explained by higher collateral levels, which translate in lower expected credit losses. On the top right, we observe consolidated coverage for 90-day PDLs diminishing slightly to 1.43 x. For Colombia, this ratio decreased to 1.55 x. These figures resemble those of 2021 and are within past normal ranges. Allowances over gross loans decreased 4 basis points this quarter to a level of 5.5%. The Colombian figure decreased 17 basis points to 6.2%, while the Panamanian figure increased to 1.8%.
On slide 10, we present our net cost of risk and charge-off ratios. On the top left, net cost of risk increased by 52 basis points this quarter and 91 basis points year-over-year to 2.2%. Net cost of risk increased by 56 basis points in Colombia and 23 basis points in Panama to 2.4% and 1.1%, respectively. In Colombia, net cost of risk in the consumer loan portfolio increased by 211 basis points in the quarter, led by personal loans and credit cards. Others consumer lending products showed higher stability or lower balances, thus contributing to a lesser extent to cost of risk. The commercial and mortgage portfolio's net cost of risk increased 30 and 27 basis points, respectively, this quarter.
In line with our expectation on PDLs, we expect this variable to peak in Q3 at the latest, showing some slight recovery towards the end of the year. For the consolidated portfolio, the ratio of charge-offs over 90-day PDLs stands at 70%. In Colombia, at 78%, increasing 24 percentage points quarterly, and in Panama at 18%, having decreased 5 percentage points quarterly. Charge-off over average loans increased by 69 basis points in the year and 87 basis points quarterly to 2.7%. Colombia's figure increased to 3.1%, while Panama's figure decreased 16 basis points to 0.6% in the quarter. For this year, we expect net cost of risk to be between 1.8% and 1.9%. Moving on to slide 11, we present our liability structure.
Total funding reached COP 116.2 trillion, increasing 4.2% yearly and presenting a reduction of 1.5% in quarterly terms. Excluding the FX effect, growth was 4.1% annually and 0.4% in the quarter, as liabilities denominated in U.S. dollars diminished in peso terms. Deposits continue to be our main source of funds, representing 77.7% of total funding, followed by banks and others with 11.6%, long-term bonds with 8.6%, and interbank borrowings with 2.1%. Deposits total COP 90.3 trillion, growing 0.8% in the quarter and 7% annually. Isolating the FX effect, growth was 2.4% and 6.9%, respectively.
In terms of deposit composition, time deposits remain as the largest component, although they reduced their participation to 49.7%, in line with lower interest rates, while saving accounts increased their share to 33.9%. Checking accounts represent 16.1% of deposits. On the bottom right, we show the evolution of our liquidity coverage ratio, or IRL in Spanish, which closed the quarter at 136.4%, while the net stable funding ratio, NSFR, or CFEN in Spanish, was 103.7%. Deposits to net loans ratio remained at 0.98 x in Q2 2023, close to our target of being fully matched. Let's continue with slide 12, where we present our equity and capital adequacy levels.
Total equity was COP 15.6 trillion in Q2 2023, a 1.4% quarterly increase and a 1% year-on-year decrease. Tangible common equity increased by 1.5% quarterly to COP 14.2 trillion, mostly explained by increased net profits. Consequently, the tangible common equity ratio increased from 10.2%-10.5%. Likewise, leverage measured as equity over assets increased from 11.2%-11.5% this quarter. Total capital adequacy in the quarter was 12.8%, distributed in a Tier 1 of 10.1 and a Tier 2 of 2.7%.
Tier 1 increased COP 398 billion in the quarter, mainly due to positive contributions of COP 277 billion from net income and an improvement in the available-for-sale portfolio's valuation of COP 144 billion. Lower Tier 2 at 2.7% is the result of the peso revaluation during the quarter as our subordinated debt is dollar-denominated. Tier 1 ratio and total solvency ratios are 2.6 and 2.0 percentage points above regulatory minimums. Let's move to our P&L performance ratios, starting with net interest margin on Slide 13. Net interest income in Q2, 2023, was COP 1.3 trillion, showing annual and quarterly growth of 12.5% and 1%, respectively, when excluding FX.
Lending NIM stands at 5.4%, a 42 basis point increase this quarter, mainly explained by an increase of 7.4% in interest income from commercial loans. Investment NIM decreased by 311 basis points to -0.1%. Funding cost increased 26 basis points, while investment yield diminished 277 basis points. As with investment yield, Investment NIM in Q1 2023 was abnormally high. Total NIM decreased 5 basis points and is at 4.6%. The decrease in Investment NIM almost perfectly offset the increase in Lending NIM. Analyzed loan yield for the quarter stood at 13.3%, having increased by 76 basis points this quarter. Both commercial and consumer lending yields grew in a similar fashion. Analyzed investment yield diminished by 2.8 percentage points to 7.9%.
It is worth noting that this yield, albeit lower than in Q1 2023, is historically high. Q1 presented abnormally high interbank and investment interest income. The analyzed cost of funds increased 26 basis points this quarter to 8.4%. We believe to be close to our peak in cost of funds, given that some types of funding are already showing signs of improvement. We expect total NIM to be between 4.6%-4.7% for the entire 2023. On Slide 14, we present the fee structure and other income. Gross fee income in Q2 2023 grew 1% in quarterly terms to COP 485 billion. Banking services and credit and debit card fees explain 82% of total gross fees, while 11% is explained by fiduciary activities.
Credit and debit card fees increased 4.4% this quarter. Banking services increased 2.2%. Fiduciary activities diminished 9.2% after an extraordinary performance in the first quarter. Fee income was 27.6%, 3 percentage points above the Q1 2023 figure, as a result of banking and credit and debit card fees performance. Meanwhile, other operating income stood at COP 157.7 billion, coming from, first, COP 153 billion from other operating income. Second, equity method, and dividend income, which came in at COP 87 billion, primarily from Porvenir, with COP 55 billion, and from Corficolombiana, with COP 17 billion. Third, a partially offset of COP 109 billion from the effect associated with net funding costs from derivatives and foreign exchange hedges.
Fee income ratio should be in the 25% area in 2023. Slide 15 presents efficiency variables measured by cost to income and cost to assets. Total income for the quarter was COP 1.8 trillion, or 7.6% less than the previous quarter. Most of this variation can be explained by lower investment in and lower equity method income. Operating expenses at COP 914 billion increased slightly in the quarter by 0.5% and 18.3% annually. Consequently, cost to income stood at 50.6% for the quarter, slightly above 2022 full year average. Total average assets decreased by COP 876 billion or 0.6%. Therefore, cost to assets ratio remained stable, increasing by only 3 basis points to 2.7%.
We expect cost to income ratio to be around 48% in 2023, in line with previous guidance. Finally, on slide 16, our profitability ratios are shown. Net income attributable to shareholders was COP 277.3 billion this quarter. Annualized profitability metrics were 0.8% for ROAA and 7.2% for ROAE in Q2 2023. I would like to emphasize our commitment to improve the bank's result and get closer to our cost of capital. Before moving on to the Q&A session, I'd like to summarize our general guidance for 2023. Loan growth is expected to be 8% and 10%. Net interest margin target is expected between 4.6% and 4.7%. Net cost of risk is expected to be between 1.8% and 1.9%.
Fee income ratio should come in at 25%. Cost to income ratio around 48%. Regarding profitability, ROAA should be around 1.2%, and ROAE should be between 9% and 10%. Now we are open to your questions.
Thank you. With that, we will begin the question and answer session. You can press the Send Request button inside your stage widget into the platform, then grant the permission over your microphone in your computer and then ask your question. If you are connected by phone, please press the star button and 6 to access the Q&A feature, then press 1 to raise your hand. I repeat, press the star button and 6 to access Q&A, then 1 to raise your hand. If you are using a speakerphone, you may need to pick up your handset first before pressing the numbers. We have now Mr. Julián Ausique from Banco Davivienda on the line with a question by phone. Mr. Julián, your line is open. You may ask your question.
Okay, my question, just to confirm, I'm from Corredores Davivienda. My question is regarding the indicators that you presented about the IRL or CFN as well, 'cause we saw a really big decrease during the quarter. For example, the IRL indicator ratio goes from 225 to 136, the CFN indicator also reduced during the quarter. I would like to understand why was that? Also regarding the liquidity, I would like to know your opinion about the situation that Colombia has right now, about the liquidity that the banking system is having, 'cause the government is not expanding as we were expecting, there has been some pressures in liquidity for the whole system. How are you seeing and how the bank is facing this situation? Thank you.
Hi, Julian, this is Javier, thank you for your questions. Regarding your first, for your first question, in terms of IRL or the liquidity coverage ratio, it was abnormally high at the end of 2022 and the start of 2023 due to the sale of BHI from we got COP 3.2 trillion. We have been using that liquidity gradually, because it was not efficient to keep that as liquidity. That's the reason that our liquidity coverage ratio has been converging to some more normal ratios, around 150, for example. In terms of CFEN, we have been growing in the loan portfolio, and you know that right now, as you already mentioned, the funding is quite expensive.
We, we have been trying to, to make a balance between getting new, new funds, but not tapping too, too much the market or press the market since it's, it's expensive right now. We feel comfortable at, at current CFEN levels, but of course, we know, we know we, we shouldn't get, get lower than that. Regarding your third question about liquidity, there are certain things that are happening right now. For example, the, the government has around 40 trillion Colombian pesos in the central bank, and that liquidity has gone out of the market. Also, the, the spread between financial funding and, and rates against IBR swaps and the, the local.
Very good. We now have Mr. Jaskaran Singh from Goldman Sachs on the line with a question via phone. Mr. Jaskaran, your line is open for your question, please.
Hi, thank you for taking my question. I just wanted to ask 1 basic thing. So, you have given us a loan growth guidance of around 8%-10%. Just wanted to ask, what's the underlying assumption for growth in Colombia and growth in Panama for the loan book?
Mr. Jaskaran, we would like if you could, please kindly repeat your question, as we had a little overlap in the, in the telephone line. We'll listen to you again, please.
Hi, am I audible?
Very well.
Yes.
Go ahead.
Yes, we can, we hear you.
Okay. I just wanted to ask one simple question. You have given us a loan growth guidance of 8%-10% for this year. Just wanted to ask, what is the underlying assumption for loan growth in Colombia and loan growth in Panama separately? Hello?
We are here, Mr. Jaskaran. Apparently, the microphone is closed. Give us one second, please, to reestablish communication.
Got it. Got it. Got you.
Are you, are you listening at this moment? Is it working now? Can you hear us? Can you hear?
Yes, I can.
Hello?
I, I can hear you now.
I, I'm sorry, we're having technical problem with the microphone, and I hope that it's been reestablished, the connection. I, I was mentioning that for Colombia, we expect loan growth of around 13%, and for Panama, 1%-2% in dollar terms.
Got it. Thank you so much.
Well, it seems like we have no further questions, at this time, and we will proceed now with the final remarks from, Mr. César Prado. Mr. Prado, the floor is now yours, please.
Thank you, Juan Pablo. As we have mentioned, although faced with a challenging quarter, we continued obtaining positive results from the financial sector. Looking forward, we believe that customer fees should begin to subside and that a possible environment of rate reduction could open up the possibility for NIM improvement. Thank you for attending today's meeting. I hope you will join us for our next conference call.
Ladies and gentlemen, this concludes today's conference. Thank you very much for participating. You may now disconnect. Have a nice day.