Good morning. Welcome to Banco de Bogotá's fourth quarter 2025 consolidated results. My name is Karen, and I'll be your operator for today's 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 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. Ms. María Lorena Gutiérrez, Chairwoman of Banco de Bogotá, will be the host today. Mr. Sergio Sandoval, CFO, as well as Mr. Javier Dorich, Head of Investor Relations or Corporate Development of Banco de Bogotá, will join us as well. Mr. Sandoval, the floor is yours.
Thank you, Karen. Good morning, and welcome to Banco de Bogotá's 2025 fourth quarter conference call. We recently had congress elections in Colombia, where results show that neither the left or the right have a majority. Independent parties, mainly from the center, hold around 40% of votes. Presidential elections are coming soon, and the next president will have to work with Congress and create consensus to be able to pass reforms. The three leading candidates are from the left, the center right, and the right, and there is high uncertainty as to final results at this point. The decision to increase the minimum wage in Colombia by 23.7% in a year with an inflation of 5.1% will dictate the macroeconomic context for some time. The judicial branch has temporarily suspended effects, but its collateral consequences will most likely linger for years.
An increase in inflation, which was 5.3% in February, is being anticipated by the Central Bank, which increased rates to 10.25% in January. In fact, our economic research team expects rates to go as high as 12% by year-end. The next president will inherit an alarming fiscal situation where the primary deficit is especially high, and there is little confidence in the government's tax collection target. In 2025, the country's credit rating was lower by one notch by Moody's, S&P, and Fitch. The introduction of an equity-based tax to enterprises in Colombia, which has a rate of 1.6% annually for banks and other financial companies, is in place due to exceptional emergencies due to floods. We believe this will impact our 2026 results in around COP 140 billion.
This tax, unseen elsewhere, will not only hinder the banking sector's growth, but will ultimately slow down the economy and may have considerable consequences going forward. We will have to wait and see if this equity-based tax will be challenged by the judicial system. At Banco de Bogotá, we have been preparing for the macroeconomic and fiscal updates mentioned above. We are fairly neutral to interest rate policy from the Central Bank and don't expect a large impact on the net interest margin. Our workforce was not affected by the minimum wage increase, so this event will not have a material impact on the bank. We do expect increases in costs from companies that provide services to the bank and some deterioration in consumer loans, given the higher inflation and interest rates. 2025 was a year in which the bank achieved several milestones.
Following our strategy to acquire a more ample base for funding, we had a record year regarding retail funding, where the bank managed to increase funding from retail clients by around 21%, excluding Multibank. In 2025, the sustainable loan portfolio increased by more than 11% and continues to gain a larger share of the bank's total loan portfolio. 2025 was a year where the bank implemented Bre-B and was among the first institutions of the country to enter this instant payment system. We believe that Bre-B will bring more people and small businesses into the banking system and will ultimately benefit banks, offsetting losses in fees from money transfers.
At Banco de Bogotá, we continue to advance in the implementation of our strategy, consolidating the spin-off of Fidubogotá's assets into Aval Fiduciaria, the sale of Multi Financial Group, and the acquisition of Itaú's retail banking business in Colombia and Panama. Fidubogotá's fiduciary business was spun off to Aval Fiduciaria, and as of the 1st of January, the bank now possesses a stake in Aval Fiduciaria in compensation. The near-term consequences of this transaction are small, but in the mid to long term, we expect higher efficiency. As of 2026, we will not be consolidating the fees from Fidubogotá's fiduciary activities, but will rather receive equity method income. The transaction to sell Multi Financial Group was completed this week after the approval of Panamanian authorities.
This transaction provides the bank with funding that will be invested in growing locally, both through the acquisition of loans and through the bank's organic growth. Javier will further comment on the transaction. Regarding the purchase of Itaú's retail business, we can say that this transaction is still subject to approval by local authorities. We will acquire gross retail loans of around COP 6.5 trillion and receive deposits of around COP 4.1 trillion from retail clients. The final consideration will be disclosed once the transaction is fully completed, and Javier will also comment on this transaction. This transaction reflect our conviction to further strengthen our presence in Colombia based on our confidence in the country's growth potential and in the role that Banco de Bogotá can play in its development, even in this challenging environment. Here is a summary of the bank's 2025 results.
Figures from 2024 and up to the third quarter of 2025 are pro forma, as they reclassify Multi Financial Group as non-current assets and liabilities held for sale and profits through discontinued operations. Net income attributable to shareholders was COP 1.3 trillion, resulting in a return on assets of 0.8% and a return on equity of 7.5%. The year's NIM was 4.6%, in similar levels as in 2024. Fee income ratio was 24.3%, 2.8 percentage points lower than in 2024. Efficiency measured as cost to income was 50.7%, improving 111 basis points compared to the previous year. Cost to assets was 2.4%. Loans reached COP 95.5 trillion, and growth was 5.5%, excluding MFG.
Deposits reached COP 98.1 trillion, a 9.1% increase during 2025. Excluding the 14.8% peso revaluation during the year, deposits increased by 12.4%. The ratio of deposits to net loans was 1.08 x by year-end. Deposits continued increasing their share of funding, reaching 82.4% of total funding as savings accounts and time deposits increased by 7.9% and 11.9% respectively. In 2025, loan quality improved as 30-day PDLs ratio decreased by 117 basis points to 4.9%, while 90-day PDLs decreased by 85 basis points to 3.7%. Net cost of risk decreased by 33 basis points this year to 2%. Let's move on to slide four.
During the fourth quarter of 2025, we continued strengthening digitalization as a structural pillar of Banco de Bogotá's strategy. A key milestone was the consolidation of the Bre-B immediate payment system across our digital channels, enabling faster, safer, and more seamless transactions for our clients. Digital channels were further fostered as a structural enabler of Banco de Bogotá's strategy, improving efficiency through self-service processes. These advances generated tangible impacts on the bank's performance. In line with this strategy, we highlight the key achievements of the quarter. We closed the quarter with more than 2.5 million active digital customers, reflecting sustained improvements in service quality. We closed the year with more than 4.8 million active keys. Digital transactions came in around 500 million, growing 25% quarter-over-quarter.
In 2025, digital transactions amounted to 1.6 billion, a 60% growth over 2024. Bre-B transactions surpassed 23 million, representing 52% of total monetary transactions, demonstrating strong customer adoption. During the period, we enhanced customer experience through key app improvements, including digital credit cards renewals and point redemption, strengthening customer loyalty and engagement. Self-service channels focus on reducing high-friction moments in the customer experience. The collection self-service portal enabled the recovery of around COP 20 billion in provisions during the quarter, a 6% increase compared to the previous quarter. Complementarily, digital petitions, complaints, claims, and suggestions, which incorporate AI models, increased solutions by 30% this quarter, maintaining a user satisfaction rate above 80%. During the fourth quarter of 2025, Banco de Bogotá improved its product portfolio through a disciplined execution.
Digital personal consumer loans had disbursements of over COP 500 billion, representing a 14% increase compared to the previous quarter, driven by the incorporation of pre-approved offers. The user experience flow was optimized to present credit offers more efficiently, improving the customer's time to yes, and contribute to higher conversion rates. Cuenta Fácil was consolidated as a key pillar of the funding strategy, growing more than 230,000 accounts. Digital time deposits for corporate clients were launched during the quarter, resulting in product placement of COP 17.3 billion. The bank improved the insurance portfolio through the launch of flexible and modular products in 2025. More than 70,000 policies were sold. Representing 14% of total voluntary insurance policies. In corporate banking, we continued improving digital process adoption and delivering scalable solutions. Digital origination in overdrafts reduced origination times by 50%.
Digital promissory notes represented disbursements exceeding COP 650 billion. In cash management, collection and factoring APIs doubled quarterly volumes, with collections exceeding COP 16 billion and factoring disbursements around COP 3 billion, contributing directly to improved corporate cash flows efficiency. Moving on to slide five. In 2025, our sustainability strategy continued to consolidate itself. Focus remained on integrating sustainability into the core business and advancing toward a low carbon economy and more inclusive development. This comprehensive effort received both national and international recognition. The bank ranked in the top 3% of the S&P Global Corporate Sustainability Assessment, entering the Sustainability Yearbook for the sixth consecutive year. It was also included in the Carbon Disclosure Project A List and received recognitions from Forbes and Euromoney. These achievements reflect the financial, social, and environmental value of our strategy. The bank strengthened its leadership in sustainable finance.
The green portfolio amounted to COP 6.5 trillion, representing growth of more than 35%. This reflects clients' confidence in financial solution aligned with environmental protection. The social portfolio reached COP 15.2 trillion, including more than COP 3.8 trillion allocated to SMEs led by women, an important step toward promoting equity and expanding access to credit. The sustainable portfolio, comprised of the green and social portfolios, amounted to COP 21.7 trillion by year's end, representing an 11.6% growth in 2025. Among the key projects, the bank financed initiatives such as Azimut and Bogotá's subway project. These projects enhance the country's infrastructure and contribute to emissions reduction by providing more efficient and less polluting mobility alternatives for millions of users.
The bank made progress in reforestation, with around 160,000 trees planted and over 145 hectares recovered. These actions, carried out in partnership with local communities, contributed to the capture of more than 75,000 tons of carbon dioxide. Financial education remained a cornerstone of the sustainability strategy. In 2025, the bank conducted more than 120 workshops across the country, reaching approximately 10,000 individuals, strengthening their capacity to make responsible financial decisions. To date, the bank has reached 50 towns and cities across the 10 regions. The bank's Ecotech program supported more than 50 startups through specialized mentorship, fostering sustainable solutions and promoting the development of a business ecosystem with a long-term vision. We will continue moving forward with a long-term vision to contribute to a more prosperous, inclusive, and resilient future.
Moving on to slide six, let me summarize the local macroeconomic context. The Colombian economy grew by 2.6% in 2025, below the consensus estimate and the technical estimate from the central bank. The surprise came from the investment results, with gross fixed capital formation growing only 1.3%. The weak growth in investment was offset by the dynamism of machinery and equipment, which registered an annual increase of 9% due to the needs faced by businesses to meet higher domestic demand. Meanwhile, investment in housing, infrastructure, and intellectual property contracted annually. As a result, Colombia ended 2025 with an investment rate of 16.6% of GDP, the lowest level so far this century, including the COVID pandemic.
Ultimately, high levels of uncertainty, elevated interest rates due to persistent inflation, and large fiscal deficits have led the country to face a complex investment landscape, with the financial, mining, energy, construction, and communication sectors being the most impacted. Conversely, the economy found support in household and public sector spending. On the household side, higher income from wages, remittances, government transfers, coffee exports, and tourism led to an acceleration in private consumption growth from 1.6% in 2024 to 3.6% in 2025. Growth in goods expenditure surpassed that of services. Meanwhile, sectors such as commerce, food, transportation, recreation, and services in general continued their upward trend. In manufacturing, while growth was observed in line with increased household demand for goods, the appreciation of the peso reduced the competitiveness of local production.
Meanwhile, amid the suspension of the fiscal rule and the higher budget execution, public spending increased from 0.6% growth in 2024 to 7.1% in 2025, the highest rate since 2021. Although public spending boosted local activity, it was financed with increased debt, leading to a widening of the primary fiscal deficit. Thus, the fiscal stimulus appears unsustainable and ultimately displaces the private sector in an example of crowding out. In the external sector, lower national competitiveness, explained by the appreciation of the Colombian peso against the dollar and higher labor hiring costs, led to exports moderating their growth rate from 3.3% in 2024 to 1.8% in 2025.
By 2026, between more adverse financial conditions, weakening private consumption, a more challenging fiscal situation, and high uncertainty surrounding the elections, the Colombian economy is projected to moderate its growth rate to 2.4%. On slide seven, turning to prices, inflation ended 2025 at 5.1%, virtually unchanged from 2024. Here, inflation improvements in rents and regulated prices were offset by increased pressure on food, goods, and services different from rents. At this point, higher labor costs resulting from the significant minimum wage increase, the reduction in working hours, and the approval of labor reform weighed on the inflation of goods and services. Meanwhile, high household and government spending limited the scope of improvement in inflation. By 2026, the minimum wage increase of over 23%, which in real terms was the highest in history, will lead to a resurgence of inflation.
Specifically, we expect inflation to end 2026 at around 6.2%. The impact on inflation is not greater, thanks to the policy of reducing gasoline prices, the lower indexation base for rent, and for the appreciation of the Colombian peso and its effect on the price of imports. On the fiscal front, the government closed 2025 with the highest primary fiscal deficit, which excludes interest payments since the crisis of the 1990s and the pandemic. The government addressed the high spending pressures with active debt issuance using alternative mechanisms such as the direct sale of government bonds and swaps of short for long-term debt. Calculations by our economic research team indicate that the Ministry of Finance issued more than COP 110 trillion pesos in treasury bonds in 2025, when the stipulated limit was COP 96 trillion pesos.
For 2026, no major changes are anticipated on the fiscal front. In fact, the deficit could exceed 7% of GDP, given the absence of the fiscal rule and again considering high spending and weak revenues. With this scenario, where inflation is rebounding and the fiscal situation remains vulnerable, the central bank would consolidate an upward trend in interest rates. Our economic research team expects the benchmark interest rate to rise from 9.25% at the end of 2025 to 12% by mid-2026, a level at which it would remain for at least a year. With a scenario of higher domestic interest rates, a weak dollar globally, and expectations of lower rates from the Federal Reserve, the exchange rate closed 2025 at COP 3,757, 14.8% lower than at the end of 2024.
However, in the second half of the year, the downward trend in the exchange rate intensified due to the government's sale of dollars. In the second half of the year, the government sold $7.2 billion, an amount not seen since the pandemic. In 2026, the Colombian peso is expected to continue finding support from the wider interest rate differential, the international outlook, and the nation's ample dollar availability. However, the election results will be crucial. Currently, the exchange rate is expected to remain below COP 4,000 throughout the year. Regarding the dynamics of dollar flows in the Colombian economy, it is important to note that for the first time in history, remittances surpassed oil exports as the primary source of dollars of the economy. This further consolidates the diversification of the export basket.
Finally, the legislative and presidential elections to be held in the first half of 2026 will define the country's economic future. It is too early to draw conclusions about the election results, but the central scenario is based on the expectation that Colombia will have a more fiscally disciplined government, which will reduce uncertainty and promote investment, and in general, will make public policy decisions based on technical criteria that boost economic growth. Now, I will turn over the presentation to Javier Dorich, Head of Investor Relations and Corporate Development.
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 2025. Total assets reached COP 156.2 trillion, a 3.6% year-on-year increase and a 0.2% growth in the quarter. The loan portfolio continues to be the largest asset category, with 58.2% of assets being net loans, followed by 22.2% of assets, other assets, which includes MFG, as it is now accounted for as available for sale assets and liabilities. 11.9% of assets were fixed income, and 7.7% of assets were equity investments.
Gross loans reached COP 95.5 trillion, which implies a 1.5% quarterly and a 5.5% yearly increase. The loan breakdown is the following: 63.4% are commercial loans, 22.4% consumer loans, and 14.1% mortgage loans. Mortgages are the fastest-growing segment at 21.9% year-over-year and 5.4% on the quarter. Commercial loans showed a slight deceleration, declining 0.1% this quarter, although they grew 0.5% excluding effects. On an annual basis, commercial loans increased 2.2% or 4.7% without the dollar depreciation impact. Consumer loans grew 6.1% year-over-year and 3.6% quarter-over-quarter, driven mainly by personal loans.
We expect loan growth to be around 14% this year, with 6%-8% being inorganic. In slide nine, we present the bank's funding. Total funding reached COP 119 trillion this quarter, which represents a 7.8% year-over-year increase and a 0.7% quarterly increase. Deposits make up 82.4% of funding, followed by banks and others with 7.5%, bonds with 6.4%, and interbank loans with 3.7%. Deposits increased this quarter by COP 4.3 trillion or 4.6%. Deposits reached COP 98.1 trillion and are comprised of time deposits with 48.7%, savings accounts at 37%, checking accounts at 14%, and other deposits with 0.4%.
The deposits to net loans ratio stands at 1.08 x, close to target. Savings accounts stand at COP 36.3 trillion, having increased this quarter by 12.5%. This growth shows the bank's efforts to acquire more retail clients on a more stable funding base. Checking accounts increased 4.9% to a level of COP 13.7 trillion, while time deposits decreased by 0.4% to a level of COP 47.7 trillion. Year-over-year, savings, checking, and time deposits grew 7.9%, 1.8%, and 11.9% respectively. On the top right, we show the 30-day liquidity coverage ratio and the NSFR ratio.
As you can see, the 30-day liquidity ratio has increased 19.3 percentage points, while the NSFR ratio increased 0.5 percentage points, closing at 109.5%. Let's move on to slide 10, where we present equity and capital adequacy levels. Shareholders' equity reached COP 17.2 trillion, increasing by 2.7% year-on-year and decreasing 1% this quarter. The decrease in equity is mainly due to lower other comprehensive income. Minority interest amounted to COP 63 billion, a 1.2% quarter increase. Therefore, total equity amounted to COP 17.3 trillion. On the right, we observe leverage measures for the bank. The equity over assets ratio and the tangible capital ratio decreased by 13 and 15 basis points this quarter to levels of 11.1% and 10.2% respectively.
Both of these figures are within normal past ranges. On the bottom, we observe the consolidated capital adequacy by components. CET1 capital reached COP 15.3 trillion this quarter, a 6.4% year-on-year increase and a 1.4% increase this quarter, mainly due to higher net income for the period, lower deferred tax deductions, and goodwill. Additional capital decreased by 3.3% this quarter to COP 1.7 trillion, which is mostly explained by the peso revaluation. On the denominator side, total risk-weighted assets increased by 2.6% this quarter, mainly explained by the reclassification of MFG as an asset held for sale, which temporarily increases the weight for risk-weighted assets from 71%- 100%.
The CET1 and Tier 1 ratios stood at 13.8%, decreasing 16 basis points this quarter due to higher total risk-weighted assets. This level represents a spread of 5.3 percentage points against the regulatory minimum, including buffers. The Tier 2 ratio stood at 1.5%, decreasing 9 basis points this quarter due to the lower additional capital and higher risk-weighted assets. Finally, total capital adequacy stands at 15.3%, having decreased by 25 basis points this quarter. This figure is 3.8 percentage points above regulatory minimums. We expect capital adequacy to increase after the sale of Multi Financial Group. Now, let's move on to our P&L performance ratios, starting with the net interest margin on slide 11. Loan yields remain at 11.8%. Commercial loan yields rates increased by 6 basis points on average.
Consumer yields decreased by 15 basis points, while mortgage yields decreased by 2 basis points. The loan yield stood at 11.9%, the investment yield at 8.8%, and the funding cost at 6.5%, reflecting a decrease of 128 basis points during the year. Investment NIM reached 1.4%, a decrease of 1.3 percentage points in the quarter and 83 basis points year-over-year. The yield on investments stood at 8% in the quarter, falling by 136 basis points. The cost of funds had a decrease of 9 basis points during the quarter to a level of 6.5%. The cost of funds decreased in time deposits, checking accounts, and savings accounts. Loan NIM increased by 12 basis points to a level of 5.2%.
During the quarter, interest income showed solid performance across all segments of the loan portfolio. Total NIM stood at 4.5%, 13 basis points lower than the previous quarter and 8 basis points more than past year. In this case, loan NIM couldn't offset the decrease in investment NIM. For the full year, we observed a NIM of 4.6%, composed of investment NIM that increased by 155 basis points, reaching 2.1% and a loan NIM of 5.2%, which declined by 20 basis points against 2024. We expect total NIM to be around 4.7% for 2026. On slide 12, we present the loan portfolio quality by segments, as well as PDL formation and coverage.
As can be observed in the graphs to the right, the loan book shows improvements in all portfolios, both in 30-day and 90-day PDLs this quarter and throughout 2025. 30-day PDL ratios for commercial, consumer, and mortgages are 4.2%, 5.8%, and 6.8% respectively, while 90-day PDLs ratios were 3.9%, 3%, and 4.2%. Total 30-day PDLs and 90-day PDLs were 4.9% and 3.7%, improving by 117 and 85 basis points respectively throughout the year. On the bottom left, we can appreciate that the formation of new 30-day PDLs was COP 427 billion, below recent averages. New 90-day PDL formation was COP 640 billion, a normal figure compared with last two years.
The 30-day coverage ratio improved slightly to a level of 0.97 x, while the 90-day coverage ratio decreased slightly to 1.29 x. Finally, allowances over gross loans increased slightly to 4.8%. On slide 13, we present gross loans by stages and segments, as well as their coverage ratios. On the top left, one can observe that consolidated stage three loans increased by 12 basis points this quarter and 94 basis points throughout the year to 6.1% of total loans. Stage two loans remained stable this quarter, and thus stage one loans increased by 12 basis points, their share of total loans this quarter to 90.4%. Improvement was led by consumer loans, where both stage two and three loans decreased their share against stage one loans, which increased by 277 basis points this year.
For commercial loans, the share of stage one loans decreased 32 basis points to 90.2%, having increased mostly in stage two loans. In mortgages, stage two loans decreased their share by 35 basis points, increasing by 30 basis points in stage one loans and 6 basis points in stage three loans. In the bottom left, we can observe the coverage by stages. This quarter, coverage by stages decreased by 17 basis points to a level of 4.8% as stage two and stage three coverage decreased by 148 and 113 basis points respectively. On slide 14, we present the net cost of risk and charge-off ratios. Net cost of risk for the quarter and the entire 2025 was 2%, having improved by 7 basis points this quarter and by 33 basis points against 2024.
Cost of risk improved by 186 basis points during 2025 and 100 basis points this quarter for the consumer segment to a level of 5.6%. Personal loans improved by 364 basis points this quarter. Meanwhile, the cost of risk increased by 30 basis points this quarter in commercial loans, reflecting higher expected inflation, interest rates, and a reduction in the economy's expected growth. Mortgages remained stable with an analyzed net cost of risk of 0.7% in Q4 2025. Charge-offs increased slightly against the previous quarter. Charge-offs over 90-day PDLs increased to a level of 81.5% this quarter, having increased the most in the consumer segment. Charge-offs over average loans increased from 2.7%- 3% for the same reasons.
Charge-offs over average loans for the year stood at 3.4%, 16 basis points higher than in 2024. For 2026, we expect the net cost of risk to be in the 2% area. On slide 15, we present fee income structure and details on other income. Total fees for the quarter amounted to COP 482 billion, representing a 1.4% increase this quarter and a 3.5% increase year-over-year. Most of the increase in fees came from banking fees, which represent 80% of gross fees and increased by 2.2% this quarter. Fiduciary fees from Fidubogotá increased by 0.3% this quarter, and logistical fees from Almaviva decreased by 4.2% this quarter.
In 2026, fees from our trust activities will come through equity method income as the trust business of Fidubogotá was transferred to Aval Fiduciaria as of January 2026, an entity where the bank now holds 41.2% and will not be consolidated. Total income came in at COP 2 trillion, decreasing 0.3% this quarter. Therefore, the fee income ratio stood at 24.6%, in line with past figures and expectations. For the full year, the ratio was 24.3% as gross fees grew only 2.1% compared with a 14% increase in total income, with banking fees declining over the year and the growth being primarily driven by fiduciary and other fees.
Other income totaled COP 148 billion this quarter, a decline of 29.6% compared to the previous quarter, driven by lower other income, investment net profits, and lower equity method income. The latter decreased to COP 32.2 billion this quarter, driven mainly by lower results from Corbanil and Corficolombiana. Other income decreased this quarter to COP 39 billion, but remains within normal ranges. The net profits from investment decreased to COP 21 billion. Finally, derivatives and FX net expense was COP 12 billion. Other income for 2025 totaled COP 683 billion, reflecting an 18.6% increase, driven primarily by higher equity method income, gains on net profits from investments, and a lower derivatives and FX deduction.
We expect the fee income ratio to be around 21% in 2026, given Aval Fiduciaria will be held as an associate company and its net income recognized through the equity method. On slide 16, we present efficiency ratios measured by cost to income and cost to assets. Operating expenses for the quarter amounted to COP 999 billion, which represents an 8.3% increase year-on-year and a 13.7% quarter increase. This quarter's increase was led by general and administrative expenses, which increased 24.8% this quarter.
Total income, including adjustments in Q2 2025 from arbitration awards and Q4 2025 adjustments deriving from the reclassification of MFG as non-current assets and liabilities held for sale, was COP 2 trillion during the quarter, a 7.5% increase from the previous quarter, mainly due to other income and extraordinary income. Therefore, cost to income came to 50.4%, in line with expectations. For 2025, cost to income stood at 50.7%, improving 111 basis points against 2024. Cost to assets came in at 2.6% in the quarter, in line with expectations, having increased by 29 basis points against the previous quarter. For 2025, cost to assets stood at 2.4%, having increased by 10 basis points against 2024.
We expect cost to income ratio to be in the 51% area and cost to assets in the 2.5% area for 2026. On slide 17, we present the intended purchase of Itaú's Retail Banking business in Colombia and Panama. This transaction is still subject to approval by local authorities. Therefore, the final consideration will be disclosed once the transaction is fully completed and the presented figures are indicative. With this transaction, the bank would add approximately COP 6.5 trillion in gross loans, of which roughly half are mortgages and half are consumer loans. This could increase market share by roughly 90 basis points. As part of this transaction, the bank would also receive approximately COP 4.1 trillion in deposits, allowing the bank to increase its market share by around 60 basis points.
Additionally, the transaction would add around 200,000 new clients to the bank. This operation is fully aligned with the bank's corporate strategy as it increases scale in Colombia, complements the product portfolio, and fosters stable funding. On slide 18, we show you Multi Financial Group's, or MFG, transaction. Multi Financial Group has had low profitability in past years due to a liability-sensitive balance sheet in an environment where interest rates increased. Also, it lacks the size and market share to make an impact in Panama on its own, where it faces strong competition. The decision to divest from this company is strategic, as these resources will be invested in the growth of the Colombian business, which will most likely yield high returns. The seller is Multi Financial Holdings, MFH, a company fully owned by Banco de Bogotá, which owns 99.57% of Multi Financial Group.
The buyer is BAC International Corporation, a company of BAC Holding International Bank , or BHI. In November 2025, the bank announced the intention to sell its stake in MFG held at MFH, or 17 million shares, at a price per share of $26.86. Accounting rules dictate that these assets no longer be consolidated line by line, but rather classified as non-current assets and liabilities held for sale, and their book value be the expected price of the transaction. This quarter, the transaction triggered a loss in intangibles held at the MFH level of COP 145 billion. At the bottom, you can observe book value before the transaction and the estimated final price, as well as the dividend payments. The transaction was completed this week after the approval of Panamanian authorities. Final figures may vary slightly. On slide 19, we show the bank's profitability.
This year's 33 basis point improvement in net cost of risk and COP 101 billion peso increase in equity method income were offset by a 10 basis-point higher cost to assets figure. Net income attributable to shareholders came in at COP 183 billion pesos for the quarter and COP 1.3 trillion pesos for the entire year. This resulted in an adjusted return on equity of 4.2% for the quarter and 7.5% for the year. This year's return on equity presented a 71 basis point improvement against 2024. In the second quarter of 2025 conference call, we mentioned extraordinary income of COP 90.7 billion pesos from two arbitration awards. This quarter, there was another extraordinary event.
Due to the change in accounting of Multi Financial Group previously explained, it is now held as a non-current asset and liabilities held for sale at prices in accordance to the sale and purchase agreement. This triggered a loss of COP 145.4 billion in intangibles at the Multi Financial Holdings level. Without these extraordinary and one-off events, return on equity for the quarter would be at 7.5%. For 2025, adjusted return on equity is 7.8%, 103 basis points higher than in 2024. MFG's arbitration award in the second quarter of 2025 was countered by the losses from the reclassification of MFG in the fourth quarter of 2025 for a year's adjustment of COP 54.8 billion one-off loss. We expect return on equity in 2026 to be between 7.5% and 8.5%.
Finally, on slide 20, we have the general guidance for 2026 using actual December 2025 balance figure as a reference and pro forma 2025 figures. For 2026, loan growth is expected to be in the 14% area, where inorganic growth could be between 6%-8%. Net interest margin is expected around 4.7%. Net cost of risk is expected to be in the 2% area. Fee income ratio should come in close to 21%. Cost to income ratio is expected around 51%. Cost to assets should come in the 2.5% area. Finally, return on average equity should be between 7.5%-8.5%. 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 by phone. 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 live questions. If you wish to ask questions live, please place your request, and we'll open your microphone 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 the Q&A chat box, please type your question in, and we'll proceed to read it.
If you wish to ask a question live, please place your request, and we'll open your microphone 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. Right now, we're standing by for questions. Right now, we'll start with the Q&A chat box. Our first question comes from Mr. Santiago Villanueva Lizcano from Davivienda Corredores. His comment goes as follows: Congratulations on the new year. I only have two questions. Could you please confirm the amount for which MFG was sold, and also the amount for the acquisition of Itaú's retail banking business? And if there is a surplus, what do you plan to use it for? Thank you.
Hi, Santiago, and thank you for your question. Regarding MFG, the final sale price was $464 million, which is around COP 1.7 trillion pesos. Regarding the acquisition of Itaú's retail banking business, it will depend on final figures later this year. Now, just like a pro forma exercise with last observed figures, the funding need could be around COP 2 trillion pesos, since net loans are close to COP 6 trillion pesos and deposits are close to COP 4 trillion pesos. In balance, there is not a surplus, but a small net funding need of around COP 300 billion pesos, which we could easily fund in the local market. Thank you.
Our second question comes from Mr. Santiago Villanueva Lizcano from Davivienda Corredores as well. His question is as follows: Could you please share the amount of equity tax you will pay under the economic emergency declared by the government? Thank you.
Thanks again, Santiago for your question. Right now, we are estimating that the impact of that tax will be around COP 140 billion.
Thank you very much. Our third question comes from Mr. Daniel Mora Ardila from Credicorp Capital. His question goes as follows: What are the main factors preventing the bank from reaching its target ROAE of 13%? Is it a low NIM, still a high cost of risk, or a high efficiency ratio? When do you expect to reach the 13% ROAE amid the new macroeconomic scenario? Thank you very much.
Hi, Daniel, and thank you for your question. You're right. We would love to have a higher ROAE, at least a double figure in the very short term, and to reach our cost of capital, namely between 13% and 14% in the medium to long term. We still have some challenges ahead, for example, to improve our NIM by getting a lower cost of funds through improving the funding mix. In 2026, the guidance for ROAE is between 7.5% and 8.5%, a figure that is affected as much as 1 percentage point by the new equity tax for companies. Excluding that, our ROAE guidance would have been between 8.5% and 9.5%, improving against 2024 and 2025 results and getting closer to double-digit figures, which is, let's say, our short-term objective.
As for the mid- to long-term expectation, as explained in previous calls, our objective is to reach or surpass the cost of capital between 13% and 14%.
Thank you very much. Our next question comes from Mr. Sebastián Gallego from Ashmore. Hello. Can you please provide more information regarding the CEO change? What is behind this sudden decision? How does the bank expect to regain the leadership in Colombia and revert the trend of recent years relative to the top two peers? Second question, what are the main downside risks to 2026 guidance? Do you expect an additional revision to cost of risk guidance amid a potential macro parameter update? Third question, could you share an update on the competition for cheap funding in Colombia and the bank's strategy? Thank you very much.
Thank you, Sebastián, for the question. I am María Lorena Gutiérrez. Really, I'm going to answer the first part of your questions, and then Javier will answer the other ones. First, we are very grateful for the more than 15 years of service that César provided to the group. As you have noticed in the different conference calls and the news, both Bancolombia and the group, we are in an important phase of strategic projects. We will ensure continuity in the execution of the bank's strategy and to position the bank for the next stage of growth, especially when you mention the competitors.
The succession process is being conducted, and we hope to have news soon, with a clear focus on appointing a leader who can build on the current strategy, maintain execution momentum, and continue delivering long-term value for our stakeholders. Javier.
Thank you, Sebastián. This is Sergio. I'm going to the next questions you are asking us. Regarding the strategy, we have been developing a business strategy for a couple of years now, which is based on customer profitable growth, diversified funding, and sustainability. The answer is we do recognize and realize that the cost of funding for us is challenging, and we are very focused on that task. However, it's a long-term challenge, and we're facing it. Actually, I'm going through your fourth question, which is actually that one. We are working hard in the retail segment.
For example, with transactional banking, for example, with Bre-B, we have been gaining an important relevant market share in the Bre-B transactions, which indicates that we are going by the right way, by the right path. Let's remember that it's not just retail banking, the retail segment funding. In corporate, there is a relevant chunk of funding, and we're working hard on that as well, for example, in government and, for example, with transactional banking as well. Regarding the other questions, the downside risk, as we have mentioned, especially the macroeconomic environment, it could be challenging linked to the to this election year. The figures we are including in the guidance already includes the risks that we are seeing right now.
Any change in the environment could pressure the risk on the other side, but so far, the figures we are showing you in the guidance are aligned with the risk and the context we are seeing in the country.
Very much. Our next question comes from Mr. Sebastián Gallego from Ashmore. His question is: How do you expect ROAE to evolve over the upcoming years beyond 2026, and what is the long-term sustainable level? When should we expect to see those sustainable levels? Thank you.
Hi, Sebastián. As we mentioned before, for this year, our guidance is between 7.5% and 8.5% or, excluding the effect of the equity tax, 8.5%-9.5%. We should be reaching double-digit ROAE by the end of this year. The long-term goal, which is to achieve the cost of capital or the long-term ROE, which we believe it can be between 13% and 14%, that should be achieved in two to three years. Thank you.
Thank you very much. Our next question comes from Mr. Santiago Villanueva Lizcano from Davivienda Corredores. His question is: When you mention the 14% portfolio growth through inorganic growth, does that include anything other than the Itaú transaction? Thank you very much.
Hi again, Santiago. The answer is no. The only transaction involved in that guidance is Itaú's retail banking business.
Wonderful. Thank you very much. Our next question comes from Mr. Nik Dimitrov from Morgan Stanley Investment Management. His question is: Can you remind us the expected capital increase in basis points as a result of the sale of Multibank and the capital burden following the acquisition of Itaú Colombia? Thank you.
Hi, Nik. Regarding the first part of your question, the sale of MFG, of Multi Financial, will increase our solvency ratios between 2.5 and 3 percentage points, and that is the effect of reducing risk-weighted assets. In fact, from the end of 2025 and the start of 2026, the density of those assets went from 70%- 100%, but then with the sale, it will go to zero. That is roughly $5 billion of less risk-weighted assets, and that's the explanation of the increase in our capital metrics. Regarding the second question, remember it's around COP 6 trillion between consumer and mortgage loans. Their density is around 50%, so it's only COP 3 trillion extra.
We estimate that the consumption for capital is around 50 basis points in that case.
Great. Thank you very much. Our next question comes from Mr. Santiago Zárate from Citi. How's the upcoming maturing sub-bond going to be refinanced? Thank you.
Thank you. Thank you, Santiago. First, it is important to remember that at the start of the year, we did a tender offer which was very successful. We repurchased around $500 million, and right now the outstanding of that bond is close to $600 million. To pay this in the month of May, we have the following funding sources. First, we still have liquidity in the form of our bond portfolio, slightly below $200 million. Second, we are working on funding with multilateral entities for another $200 million. And finally, the last $200 million in senior funding with correspondent banks. Thank you.
There seem to be no further questions at this point, so we'll proceed now with our final remarks. Thank you.
Thank you, Karen. The fourth quarter of 2025 was eventful as the group is reorganizing its structure in order to become more efficient and gain economies of scale. The sale of Multi Financial Group, the purchase of Itaú's retail banking division, and Fidubogotá's spin-off into Aval Fiduciaria are all strategic decisions that will improve results going forward. We remain committed to improving profitability and sustainability for many years to come. Thank you very much for attending our call, and we hope you join us next time.
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.