Welcome to Grupo Aval's fourth quarter 2024 consolidated results conference call. My name is Calvin, and I will be your operator for today's call. As a disclaimer, Grupo Aval Acciones y Valores S.A. is an issuer of securities in Colombia and in the United States. As such, it is subject to compliance with securities regulations in Colombia and applicable U.S. securities regulations. Grupo Aval is also subject to the inspection and supervision of the Superintendency of Finance as holding company of the Aval Financial conglomerate. The consolidated financial information included in this document is presented in accordance with the IFRS as granted issued by the IASB. Unconsolidated financial information about our subsidiaries in the Colombian banking system are presented in accordance with the Colombian IFRS as reported in the Superintendency of Finance .
Details of the calculations of non-IFRS measures, such as ROAA and ROAE, among others, are explained when required in this report. This report include forward-looking statement. In some cases, you can identify the forward-looking statements by words such as may, will, should, expect, plans, anticipates, believes, estimates, predicts, potential, or continue, or negative of these, and other comparable words. Actual results and events may differ materially from those anticipated herein and are consequence of the changes in general economic, business conditions, changes in interest and currency rates, and other risks described from time to time in our filings with the Registro Nacional de Valores y Emisores and the SEC. Recipients of these documents are responsible for the assessment and use of the information provided herein.
Matters described in these presentations and our knowledge of them may change extensively and materially over time, but we express disclaimer any obligation to review, update, or correct the information provided in this report, including any forward-looking statements and do not intend to provide any updates for such material developments prior to our next earnings report. The financial statements of Grupo Aval Acciones y Valores S.A., in accordance with Colombian regulations, must be filed within the market and with the Superintendency of Finance , with the opinion of an external auditor. At this time of solicitation, this process is still ongoing. The content of this document and the figures included herein are intended to provide a summary of the subjects discussed rather than a comprehensive description. When applicable in this document, we refer to billions as thousands of millions. At this time, all participants are in listen only mode.
Later, we will conduct a question- and- answer session. With us today are Ms. Maria Lorena Gutiérrez Botero, Chief Executive Officer, Mr. Diego Solano, Chief Financial Officer, Mrs. Paula Duran, Corporate VP of Sustainability and Strategic Projects, and Mr. Camilo Pérez, Banco de Bogotá's Chief Economist. I will now turn the call over to Ms. Maria Lorena Gutierrez Botero, Chief Executive Officer. Please go ahead.
Thank you. Good morning, everyone, and thank you for joining us for our fourth quarter 2024 conference call. I am here with Diego Solano, our CFO, Camilo Pérez, Chief Economist of Banco de Bogotá, and Paula Duran, Corporate VP of Sustainability and Strategic Projects. I would like to start by highlighting these first results. First, positive trends continue to consolidate due to the results shown in some key business metrics. Our risk-adjusted NIM on loans for the quarter was the highest in the last seven quarters. The quarter's return on average equity was somewhat below our initial expectations. It was mainly due to a weaker than expected NIM on investment, resulting from the performance of local and international capital markets. We continue to gain market share in deposits and credit. Porvenir had a weak quarter net income due to negative returns in line with weaker capital markets.
However, I want to mention that our Porvenir had the best year of results in 2024. Fourthly, we recovered from previous quarter and had a positive contribution to net income. Moving to strategic topics, 2024 was a year with multiple challenges, learning experience, and most importantly, great achievements for Grupo Aval. We experienced an intense transformation driven by a demanding social and political context and an increasing competitive financial landscape. This coupled with changes in management and the pace at which innovation and disruption are taking place added further complexity to our results. Despite these challenges, we remained determined in our commitment to progress, adaptation, and delivering value to our stakeholders. Our results improved compared to 2023. Our net income was more than COP 1 trillion, a 38% growth compared to the previous year.
We gained market share in deposits and loans, reaching a 25.3% share in loans and consolidated our position in the Colombian financial system. We are strengthening our corporate governance, enabled better decision-making. This includes a new composition of all board of directors, as well as introducing new leadership across management teams, presidents, and vice presidents. Additionally, we remain committed to the highest standards in governance policies, ensuring transparency, accountability, and long-term value creation. We are strengthening our management model by taking advantage of synergies and efficiencies and changes in our organizational structure and coordination mechanisms. We designed ATH and AVC Aval Valor Compartido, and a structured coordination model using committees and teams to define guidelines, make decisions, share best practices, reach agreements, and above all, generate shared value.
With the acquisition by the holding of Aval Fiduciaria, Aval Casa de Bolsa from Corficolombiana, and the creation of Aval Banca de Inversión, we intend to strengthen our non-banking financial services and take advantage of the scale of Grupo Aval. We have prepared ourselves by taking short-term actions and have a strategic vision that will enable us to achieve leadership in the markets and segments we have defined as strategic. Looking ahead to 2025, our strategy focuses on the following corporate priorities. First, customer experience. We are confident of our value proposition. We have the people, the channels, and the technology to deliver a unique and differential customer experience. We will further enhance our client-centered culture, improve customer satisfaction, and our ability to anticipate the customer needs and expectations. We are seeking principality by enhancing the group's value offered to customers. Second, financial diversification.
We will expand our low-cost stable deposits and optimize our capital structure. We believe the enhancements of the current experience will result in a stronger position with retail deposits and cash management relations. In addition, we will revise our bank's traditionally low usage of AT1 and AT2 instruments to align better the group's capital structure with our strategy. We will also seek high growth in non-linear business. To this end, we are strengthening our services offering and non-banking fee generation by improving our asset management and advisory services. Third, synergies and efficiencies. We will continue to simplify our processes, capturing value in the development of operational and administrative efficiencies, developing transversal initiatives, and enhancing the best practices of our entities. Fourth, digital transformation and innovation.
We will consolidate our culture of innovation and current technology, capitalizing on the benefits of artificial intelligence, guaranteeing technological stability and security, and promoting digital transformation to improve our business and product and service offerings. We will continue to promote digitalization, inclusion and interoperability of services with initiatives such as Tag Aval and our active participation in the Banco de la República, Bre-B, instant payment system that we launched earlier here. Corporate culture. We will strengthen our corporate culture, aligning our talent with our strategy and purpose, aligning incentives with our strategic priorities, developing and improving our goal-setting and performance review processes, and improving mobility of talent across our subsidiaries. Finally, sustainability. Our ESG agenda will continue to be a core principle in the way we conduct our businesses.
We will deepen our social impact, generating employment and growth opportunities for millions of people, developing social programs, focusing on sustainable finance, financial education, climate change management, and high impact environmental projects. I would like to mention that we expect to finish Misión La Guajira in 2025. So we will focus on finish our commitment with Misión La Guajira. Now, I will invite Paula to go over our ESG achievements to relieve this quarter.
Thank you, Maria Lorena, and good morning to you all. Throughout the year, we have reported progress in terms of our ESG impact. Today, I would just like to highlight the main achievements that secured 2024 as a remarkable year in terms of our commitment to sustainability. In the Corporate Sustainability Assessment, CSA evaluation, used to determine constituents of the Dow Jones Sustainability Index, we achieved continuous improvement in all three dimensions, environmental, social, and governance, achieving 65 points, an increase of 16 points compared to the previous year. In the same evaluation, our entities, Banco de Bogotá and Corficolombiana, obtained 78 and 80 points respectively. Banco de Bogotá ranks in the top 15% and was included in the S&P Global Sustainability Yearbook. Corficolombiana had an outstanding result, positioning itself as the leading company in its industry in Colombia and as one of the top three in the world.
Corfi was also included in the S&P Global Sustainability Yearbook in the top 10%. In terms of social impact, we have consolidated our position as one of the largest employers in Colombia, generating over 70,000 jobs among Grupo Aval and its subsidiaries. Women hold more than 52% of these positions, which demonstrates our strong commitment to inclusion and diversity. We actively promote equal opportunities and foster a workplace where everyone can grow, contribute, and drive the organization's sustainable success. This has been ratified by the friendly specifications all of our companies received. In 2024, we dedicated important resources amounting to over COP 70 billion to social programs tailored to communities in need.
An example of this kind of project is Misión La Guajira, which was just mentioned by Maria Lorena, where we ended this year improving the quality of life of more than 21,000 people, 80 communities, with solutions in potable water, sustainable energy, and food security. The sustainability of these solutions was also enhanced with programs for income generation in crafts, financial education, and recycling. During the year, we also undertook additional social programs that benefited more than 15,000 people through financial education, student scholarships, entrepreneurship, productive communities, and initiatives for the protection and care of the environment, among others. Our approach to sustainable finance enabled us to close the year with a sustainable loan portfolio of COP 23 trillion. This includes COP 5.8 trillion in financing for sustainable construction, mobility, agriculture, and the circular economy, as well as COP 17.3 trillion in social loans focused on affordable housing and support for SMEs.
In terms of our environmental impact and climate change risk management, most of Grupo Aval's subsidiaries have aligned their strategy with the recommendations of the Task Force on Climate-Related Financial Disclosures, TCFD. In 2025, we will design and implement Grupo Aval's decarbonization roadmap in line with the Paris Agreement and Colombia's environmental goals. Grupo Aval Holding conducts greenhouse gas inventory assessments following the GHG Protocol methodology for scopes one, two, and three. Direct and indirect emissions for scope one and two are measured from our offices in Bogotá, totaling 4.3 tons of CO2 for scope one and 36 tons of CO2 for scope two. We offset our carbon footprint through certified carbon credits. This year, we also enhanced our scope three measurement by incorporating additional categories. As a result, our scope three emissions amounted to 559 tons of CO2.
Additionally, looking ahead, we will include category 15 investments as finance emissions once the carbon footprint assessment of our entities is complete. In 2024, we also contributed to the preservation and regeneration of ecosystems through the planting of 1 million trees and the protection of more than 2,000 species of fauna and flora in Colombia. In terms of governance, we consolidated our model by establishing the ESG, IT, and Compensation Committees within the Board of Directors, ensuring enhanced oversight, monitoring, and decision-making aligned with best practices. At the executive level, we created the Vice Presidency of Sustainability and Strategic Projects for Grupo Aval, responsible for designing, leading, and coordinating the sustainability strategy for Grupo Aval. We also created the Sustainability Committee of Grupo Aval, where all of the sustainability leaders of our entities define standards, common goals, share best practices, and design transversal cuts.
Furthermore, we strengthened our governance structure by creating, updating, and reviewing essential corporate policies as well as sustainable finance declarations. We affirm our commitment to integrating ESG criteria into investment decisions and the management of our investments. Finally, as we look ahead to 2025, we affirm our rigorous commitment to sustainability as a cornerstone of our business. Beyond policies, initiatives, and results, our ESG efforts reflect a deeper purpose: to create lasting value for our stakeholders, empower communities, and protect the planet for future generations. We believe that the true strength of a financial conglomerate is not only measured in numbers, but in its ability to drive progress, create opportunities, and transform lives.
Thank you, Paula. Now, on the macro side, let me mention some relevant issues during this quarter. Inflation continued to trend down and ended in December at 5.2%. Over the last two months, the Central Bank has been conservative and the market calling rates higher than anticipated. Faster rate cuts are needed to reduce the effect of the higher real interest rate levels on the economy. We expect GDP growth to return to levels exceeding 2.7%. Unemployment figures will remain under control. This will support internal demand dynamics. Now, the main challenges in terms of our economic context will be changes in fiscal and public policy. With the country's fiscal accounts under pressure, we believe the financial plan and fiscal rule for 2025 will be challenged. Low government budget execution. Although investment has recovered slightly, it remains below historical levels.
On the political front, we remain optimistic about the country's institutions. We strongly believe that we, the business community, must focus on planning and executing our long-term strategies. Entering the pre-electoral year might generate short-term uncertainty, but we urge society to remain focused and direct our attention towards our priorities. Camilo will first comment on this and will share our view on the economy. Camilo.
Thank you, Maria Lorena. Good morning to all attendees. Last year, Colombian economy grew 1.7%, continuing the recovery process after the pandemic and improving when compared with growth of 0.7% in 2023. The better performance was mainly due to a recovery in household consumption and a dynamic export sector. Household consumption grew more than 1% and partially offset the low dynamic of investment and public spending, thus becoming the basis of the economic recovery. More favorable financial conditions, thanks to lower inflation and interest rates, a resilient labor market, improving confidence, and a strong increase in remittances explain the above. The export sector growth was explained by higher sales of coffee, coal, bananas, flowers, gold, chemicals, and paper, as well as services, especially tourism.
The recovery will extend into 2025 to such an extent that economic growth will be around 2.7%, still below prepandemic levels because of low investment and a challenging fiscal situation. Meanwhile, the disinflationary process deepened in 2024 to close the year with an annual change of 5.2%. Despite the year's decline, Banco de la República completed four years with inflation above its target range. The moderation in inflation was due to a favorable performance of goods and regulated items. The light effect of the appreciation of the Colombian peso against the dollar between July 2023 and August 2024 allowed goods inflation to end the year below 1%. In regulated prices, the stability of gasoline helped, allowing for a moderation in the aggregate from 17% to 7%, which will continue in 2025. The risk will be on the side of energy rates.
On the contrary, services contained the following inflation to the extent that indexation was high in rents, and in the rest of services, the high minimum wage adjustment weighed. At the end of 2024, inflation in services was 7%. For 2025, we forecast inflation of 4.1%, explained by a high indexation in rents, but with a lower reference. Inflationary pressures derive again from the increase in the minimum wage, potential depreciation of the peso, and possible increases in energy and diesel rates. With the economic scenario described above, Banco de la República reduced its interest rate to 9.50% in 2024, above what was expected by analysts.
In general, the central bank has acted cautiously in all meetings of the year, with rate reductions of 50 basis points in six sessions and 25 basis points in the remaining two, given the slow fall in inflation, more adverse global financial conditions, and a challenging fiscal situation. In fact, these three elements will continue in 2025 amid a volatile global situation due to the beginning of Donald Trump's term as president of the United States, local inflation that could end the year once again above the target range, and public finances affected by another budget law. In fact, in January, the central bank left the rates stable, maintaining its cautious approach. In this difficult forecast scenario, we expect the end of year interest rate around 7.75%.
Regarding the exchange rate, 2024 was a year of strength for the dollar in global markets, following the outward adjustment in expectations for inflation and the federal reserve rate, following Mr. Trump's victory. Likewise, the greater perception of risk in Latin America, especially in Brazil, Mexico, and Colombia, generated volatility in the second half of the year. Thus, when the U.S. dollar appreciated 7% against G7 currencies, it gained 19% against currencies in the region. The Colombian peso was the third weakest Latin American currency, as the exchange rate went from COP 3,874 per dollar to COP 4,405 per dollar between 2023 and 2024. In addition to the external factors, the challenging fiscal situation also had an impact, with the country's premium measured by the five-year CDS going from 157 basis points to 212 basis points in the same period.
In 2025, we expect the exchange rate to average COP 4,400 against the dollar, given the greater strength of the dollar in the world due to Mr. Donald Trump's policies, a new deterioration of the internet public finances, and a marginal widening of the external deficit. Specifically, we expect the current account deficit to go from -2% of GDP in 2024 to -2.6% of GDP in 2025 due to a more significant recovery of imports than exports, both of goods and services, and a lower dynamic in the inflow of remittances due to the immigration policies of the United States. Finally, the situation of public finances experienced in 2024 will be repeated in 2025. In particular, revenues will surprise the government to the downside, resulting in cash flow problems and making spending cuts necessary to comply with the fiscal rule.
Going forward, we think that the debate will shift towards fiscal sustainability. Although fiscal uncertainty is high, rating agencies such as Fitch and Standard & Poor's have kept their ratings unchanged, although the latter extended its negative outlook, while Moody's could lean towards a downgrade. That sums up our economic view. Thank you. Back to you, Maria Lorena.
Thank you, Camilo. Our financial system remains solid while facing the challenges from the current context, as Camilo mentioned. In 2024, 10 banks out of a total of 29 had net loss. The consumer credit cycle continues its recovery trend. However, margins are still under pressure due to the tight action from the central bank and regulatory pressures such as changes in interest rate caps. The Colombian financial system remains committed to the Pacto por el Crédito. This program aims to end COP 253 trillion at competitive rates to clients in six priority sectors. As of January, banks have already disbursed COP 61 trillion as part of this program. Over the year, we increased our market share in gross loans and deposits. As a result, net income to our shareholders was COP 281 billion , and return on average equity was 6.5%.
For the year, net income was north of COP 1 trillion and return on average equity was 6%. Now, I would like to pass the call to Diego, who will give the rest of our results. Diego?
Thank you, Maria Lorena. I will start on pages nine and 10 with a few charts regarding the growth rate and quality of our loan portfolio relative to the rest of the Colombian banking system. For comparability reasons, these are the consolidated figures under Colombian IFRS as published by the Superintendencia of Finance . You might have seen in the past, our banks continue to exhibit better loan portfolio quality and performance than the system in all main categories. On page nine, during 2024, we continued to outgrow our competitors in all loan categories. This yielded as of November, 12 months market share gains of 75 basis points in total loans, 52 basis points in commercial, 150 in consumer, and 152 points in mortgages.
For the 12 months ended last November, commercial loans and mortgages for the system decreased 0.7% and increased 2.4% in real terms, while consumer loans contracted 8.7% in real terms. Over the quarter, loan dynamics for the system picked up as rates continued falling and credit quality improving, even though a modest 0.1% nominal growth. Consumer loans for the system grew for the first time since fourth quarter 2022. Mortgages grew 3.1%, while commercial loans grew 2.2% in nominal terms over the quarter. Organizations stood at 0.6%. On page 10, quality of consumer loans continued improving in the Colombian banking system. Meanwhile, commercial loans and mortgages slightly deteriorated. I will now move to the consolidated results of Grupo Aval under IFRS. Starting on page 11. Assets grew 8.9% during 2024 and 2.3% over the quarter to COP 328 trillion.
Gross loans are main assets, which close to COP 200 trillion, growing 2.5% in the quarter and 7.3% year-on-year. Commercial loans and mortgages continued driving our annual growth, while consumer loans began to recover, delivering a second consecutive quarter of growth. Commercial loans expanded 7.8% year-on-year and 2.3% over the quarter. Consumer loans grew 3.3% year-on-year and 1.4% quarter-on-quarter. Payroll loans grew 4.8% year-on-year and 1.1% during the quarter. Car loans grew 9.4% and 4%. Personal loans grew 1.5% and 1.1%. Credit cards contracted 4.2% year-on-year and 3.6% quarter-on-quarter. Finally, mortgages grew 19.2% and 6.9%. We anticipate loan growth rates to continue recovering during 2025 due to the normalization of monetary policy, stronger GDP growth, and improvements in consumer loan quality. On page 12, we present funding and deposit evolution. Total funding increased 10.6% in 2024 and 2.5% during the quarter.
Deposits grew 10.4% in 2024 and 2.5% quarter-on-quarter, accounting for 73.4% of our funding. Our deposits to net loans closed at 106%. On page 13, we present the evolution of our total capitalization, our attributable shareholders' equity, and the capital equity ratio of our banks. Our total equity grew 5.2% in 2024 and 1.1% over the quarter, while attributable equity increased 4% and 0.4% respectively. As a recent development, last November, Banco de Occidente was classified as a systemic bank by the Superintendencia Finance . This implies 100 basis points increase in Core Equity Tier 1 capital requirements, for which the bank will have a 12-month transition period. Core Equity Tier 1 requirements will increase gradually over six-month periods. On page 14, we present our income and loans, cost of funds, spreads, and NIMs.
Our quarterly NIM performance was driven by poor performance of our NIM on investment that resulted from a shift in expectations on the speed at which the rates and inflation would trend back to normalized levels. This resulted in one of the weakest quarterly NIM on investments over the past couple years. However, it was partially offset by favorable results of hedging strategies recognized under derivatives trading income and foreign currency under other income. Our NIM on loans, even though slightly improving quarter-on-quarter, continues to be depressed. As discussed in the past, this has been the main driver by a still high cost of funds in line with the persistent high central bank rate. Lending rates continued to be depressed by high competition in high credit quality customers and products as a result of a modest loan growth in the system.
Further depressing rates, the Superintendencia of Finance introduced changes to the formula used to set interest rate caps, Tasa de Usura, lowering the rate of some consumer loan categories. This environment resulted in a 29 basis points expansion to 4.3% of our consolidated new loans during 2024, and the new loan investments are close to zero for the year, resulting in a 3.4% total consolidated NIM. Our new loan retail loans expanded 100 basis points to 5.2%, while new loan commercial loans contracted 22 basis points to 3.6%. As mentioned in the past, our consolidated new loan loans and total NIM are affected by our merchant banking segment, which mainly uses funding to generate non-financial income rather than interest income. For our banking segment, clean of the effect of the non-financial segment, annual new loan loans expanded 12 basis points to 5%.
The new loan investment fell 50 basis points to 0.4%, and the total NIM remained materially flat at 4.2%. During the quarter, our consolidated NIM decreased 105 basis points quarter-on-quarter to 2.8%, driven by negative new loan investments at -2.6%. As mentioned before, this was partially offset by better results from financial strategies recognized under other income. Our consolidated quarterly new loan loans was 19 basis points higher quarter-on-quarter, at 4.4%. Regarding our banking segment, quarterly new loan loans increased 6 basis points quarter-on-quarter to 5%, still well below historic levels. This incorporates our new loan retail loans that expanded 30 basis points to 6.3%, and new loan commercial loans that fell 12 basis points to 4%. The total NIM of our banking segment fell 93 basis points quarter-on-quarter to 3.7%.
We expect an improvement in NIM driven by lower average cost of funds during 2025. The starting point of the Central Bank intervention rate for 2025 of 9.5% is already 2.4 percentage points below the 11.9% average for 2024. In addition, the Central Bank is expected to continue lowering its rate throughout the year, as mentioned by Camilo. Pages 15 through 17, we present several loan portfolio quality ratios. Starting on page 15. 30-day PDLs improved 46 basis points quarter-on-quarter to 5.3%, and 90-day PDLs, 39 basis points to 4%. The tighter origination policies that were put in place in 2023 led to an improvement in quality, especially across the consumer portfolio. This quarter saw the lowest PDL formation in seven quarters on a 30-day basis, and in five quarters on a 90-day basis.
The evolution of asset quality continues pointing to the end of the consumer loan credit cycle, with PDL ratios and PDL formation peaks during the first quarter of 2024. Generally, PDL formation for the quarter was the lowest since the last quarter of 2021. Finally, the ratio of charge-offs to average 90-day PDLs was 0.10x for the quarter and 0.69 x for the year. On page 16, the quality of our loan portfolio improved year-on-year measured by stages across all categories. Stage 1 loans reached 88.5% of gross loans, the highest level since the third quarter of 2023. The share of our portfolio classified as stage 1 portfolio showed an improvement of up 61 basis points on the quarter, driven by a better performance in all three main loan categories.
Coverage measured as allowance for stage 2 and 3 as a percentage of stages 2 and 3 slightly fell during the quarter to 35.4%, with coverage for consumer and commercial loans at 42% and 34.4%, respectively. As anticipated, the cost of risk net of recoveries continued to show improvement during the quarter, falling 11 basis points to 1.8%. Cost of risk net for commercial loans improved 52 basis points, resulting in a rate of 0.4% for the quarter, while cost of risk net of consumer loans for the quarter was 4.8%. Cost of risk net of recoveries for the year was 2.2%, down from 2.3% a year earlier. We expect that our product mix favoring lower-risk products and segments will continue to support an improvement in cost of risk during 2025.
We expect that cost of risk evolution for consumer loans will maintain its positive trends in credit cards and unsecured loans, and the cost of risk on commercial loans will be similar to that for 2024. On page 18, we present net fees and other income. Annual gross and net fees improved 6% and 6.9%, respectively. Gross and net fees for the quarter increased 11.5% and 18.5% year-on-year, and 3.8% and 3.1%, respectively, quarter-on-quarter. Annual net pension and severance fees grew 23%, mainly due to higher performance-based fees and for higher collection on mandatory contributions related to the increase in minimum wage at the beginning of the year. Annual gross banking fees grew 1.4%.
This incorporates stronger commissions on banking services growing at 3.9%, offset by a 2.1% annual decrease in credit card and debit card fees, explained by lower transactional volumes and a system-wide decrease in active outstanding credit cards. Income from the non-financial sector decreased 23% in 2024 as anticipated in our previous calls. Our infrastructure sector contributed 34% less than in 2023, driven by some concessions transitioning from the construction to the operation phases. Energy and gas companies increased their contribution 7.1%, related to a 16% increase in gas distribution volumes in Promigas and a stronger gasification volumes at SPEC. Hospitality business had a record high performance as room and food revenues benefited from stronger occupancy rates. Finally, on bottom of page, other income in 2024 was higher than a year earlier.
Profit taken on these income investments valued at fair value through OCI implied a COP 41 billion increase in net gains on sale on investments and OCI realizations. Strong results during the quarter correspond to revenue strategies of trading investments that mitigated the negative NIM on investments as described earlier on this call. On page 19, we present some efficiency ratios. Total OpEx grew 3.7% in 2024, well below the 12% increase in the minimum wage and the prior indication based on 2023 inflation of 9.3%. Personnel depreciation and amortization and general and admin expenses grew year-on-year 5.1%, 6.3%, and 2.4% respectively. Property taxes and deposit insurance account for 37% of total G&A expenses in 2024.
Cost to assets for 2024 was 2.7%, improving from 2.8% in 2023. Cost to income was 54.2%, up from 52.1% in 2023. Total expenses increased 15.2% quarter-on-quarter, driven by operating taxes, marketing expenses, and other seasonal expenses. Finally, on page 20, we present our net income and profitability ratios. Accrued total net income for the quarter was COP 281 billion, or COP 11.8 per share. Return on average assets and return on average equity for the quarter were 0.7% and 6.5% respectively. Our accrued total net income for 2024 was COP 1,015 billion, or COP 42.8 per share, increasing 37.4% relative to 2023.
Before passing it back to Maria Lorena, we will now summarize our general guidance for 2025. We expect loan growth in the 10% area, with commercial loans growing in the 9% and retail loans growing 11% areas. NIM in the 4.15% area, with NIM on loans in the 4.6% area. NIM on our banking segment in the 4.9% area, with NIM on loans in the 5.4% area. Cost of risk net of recovery is in the 2% area, cost to assets in the 2.7% area. Income from the non-financial sector are 80% of that for 2024. The income ratio in the 20% area. Finally, we expect 2025 return on average equity to be in the 11% area.
Okay, thank you, Diego. Before moving into questions and answers, I would like to share some financial Corficolombiana and Grupo Aval in the current year. Economic conditions will remain challenging both locally and globally. However, our recovery trend will continue. In 2025, we expect GDP growth to return to levels exceeding 2.7%. We are viewing a less likely return of inflation within the central bank target range, which implies a higher or lower interest rate environment. We remain constructive on investment prospects as well as businesses and customer confidence, which will support the dynamics in 2025. In this context, we expect to reach double-digit profitability and benefit from stronger growth in real terms of the banking segment, as Diego mentioned.
Our increased profitability compared to last year will continue to be driven by an improvement of risk-adjusted NIM on loans, lower cost of funding of our non-financial business, commercial operational effectiveness, and higher non-banking and banking net fee income mainly related to better origination and transactional activity. We are now open for questions.
We will now begin the question- and- answer session. If you have a question, please press the star button, then the number one on your touch-tone phone. If you wish to be removed from the queue, please press the pound sign or hash key. If you are using a speakerphone, you may need to pick up the handset first before pressing any keys. Once again, if you have a question, please press the star button followed by the number one on your touch-tone phone. One moment please for your first question. Your first question comes from the line of Brian Flores of Citi. Please go ahead.
Hi, team. Thank you very much for the opportunity to ask questions. I have two. The first one is asking your help to think about growth. You are, as you mentioned, outgrowing the market, particularly in consumer. Maybe if you can give us a bird's-eye view of what is helping you have this confidence on the recovery of the segment, and until when can you outgrow the market, right? Because maybe this is particular to you. Maybe conditions are improving for everyone. Just help think about your outgrowing the system. Also you mentioned a very interesting comment on higher Core Equity Tier requirements. If you could remind us how the phasing will work and if this could limit your growth prospects.
Then just finally on growth, if this higher growth, as we saw in the consumer segment, is bringing probably higher provisions, if this could also push cost of risk a bit higher for the segment. I'll ask my second question later. Thank you.
Okay. Great questions. Regarding your first question, I will bring you back. You have it handy to page nine on the document. You can see how Aval behaves not only for the past three years that are presented here, but how it has performed historically. The setup pages nine and 10 basically show you that Aval has a much more predictable growth pattern and a credit quality cycle than the rest of the system.
You can see how in those years of exuberant growth that you saw in Colombia around 2021 and 2022, where there was huge growth in unsecured consumer lending, credit cards, and so on, group quality is not the best as those banks that are basically going through the hangover after you have had that sort of growth are having to adjust down because of higher or more problems on those products and credit grants were able to outgrow them. Throughout the cycle, we basically are able to grow smoother, however consistent in time. Second, and ties with your third question, the kind of market share growth that we are having is sustainable growth. It is not a one-time high magnitude event, but more the kind of growth that you see month after month, gaining share in each one of the products.
That is to explain why we have been able to grow faster, we have been having less quality problems, and we are basically going through a more consistent growth stretch. Then more quantitative answer to what is going to happen moving forward. Most of Maria Lorena's presentation was regarding what we are doing strategically to try to align the sales forces to what our main objectives are, and that will continue to help us to outgrow the system. In addition, there is the macro wave that we are actually riding. You can see that our expectation on GDP is further growth. Our expectation operates even though we are not happy with the speed at which it is happening, we do see that going on. Another point mentioned previously on the call that I would like to emphasize is we are already around 240 basis points below what the average central bank rate was last year.
The starting point for this year is already much better from the cost of funds perspective. Moving to your question on Banco de Occidente, it is 100 basis points over two years, and it is an increase of 30, 20, and 20 basis points happening every six months or each six months period.
Perfect. Super clear. I just wanted a second question to confirm some notions. You mentioned the guidance, right? I think you revised the overall NIM from 4.4% to 4.15%. I just wanted to check if you kept your cost of risk net of recovery the same, just because it was a bit fast and I couldn't hear, but I know you reiterated the ROE in the 11% area. I just wanted to hear your thoughts on if you're having perhaps a lower NIM and the same growth, and perhaps similar cost of risk, does your 11% ROE level have a, let's say, a downward bias vis-à-vis what you have after third Q results? Thank you.
Yeah. You got it right. We're basically ending up in the same guidance of 11% growth with a combination of two things happening. On the positive side, we see a much better performance than expected on the credit quality side. It is data dependent, but there could even be some upside there. We lowered our guidance on cost of risk to 2%. The other thing that is happening, even though numbers are not as large, is we are improving our efficiency expectation, driven by the kind of initiatives we're running with Aval Valor Compartido. So we're bringing our cost to assets to 2.75%, a slight increase. On the negative side, the NIM was affected by a change in our view on how the central bank will behave. However, we've been moving our balance sheets in such a way that we are somehow immunized to some of those changes.
Therefore, that kind of changes in expectations, even though they do affect the way we are seeing our NIM and loans, it hasn't had a massive change compared to what was baked into our previous guidance. So in summary, same guidance on return on equity with a slightly lower NIM, compensated by better performance on the cost of risk and a slighter better performance on the efficiency side.
Super clear. Thank you.
Okay, sure.
Your next question comes from the line of Nicolas Riva of Bank of America. Please go ahead.
Thanks for the chance to ask questions. I got a follow-up on the prior question from Brian about capital requirements for Banco de Occidente. Diego, so I understood Banco de Occidente is going to be considered a systemic bank in Colombia from now onwards, and you explained that means an increase of 100 basis points in the minimum capital requirement, and you said it's going to be phased in over four years. My question is when I look at the capital ratios of Banco de Occidente today, in slide 13, in orange color, the 12.8% total capital compared to the minimum fully loaded 11.5%. How do you look at that buffer? And if you see a need to raise additional capital at Banco de Occidente given these higher capital requirements? Thanks.
Bottom line, naturally, what we're seeing is we have room not only for Banco de Occidente but all in the group to better use the Basel III options that we have with tier 2 and AT1 capitalization. In addition, what we've seen is during this transition period, the bank will be able to generate enough internal capital plus the kind of approach it's following and establishing to be able to cope with this change. Having said so, it has both a negative and a positive side. Negative side, obviously, is higher requirement. The positive side is you are standing with Banco de Occidente in a better position to get sovereign support.
We have two years now.
Yeah, it is a two-year transition period.
Thanks very much to you.
Your next question comes from the line of Carlos Gomez of HSBC. Please go ahead.
Thank you for taking my question. It is actually a repetition of the theme of capital. Can you remind us what the capital requirement is right now for each of your four banks? Is it also in transition or changing to a net income level in the coming years? That would be number one. Number two, can you give any comments about what you expect for dividend? Number three, a request. Could you please publish the guidance? Again, it is very fast in the call, and we are not able to catch any part of the presentation. Thank you so much.
Okay. On your last one, we take note of that, and we will take that into consideration. Regarding capitalization, the requirement moves up from total solvency of 10.5%- 11.5%. Those are the 100 basis points, and starting in November, every six months, there is an increase. The first increase would move from 10.5% - 10.8%, the next one to 11.1%, and so on until 11.5%. Regarding the.
That is a two-year process, right?
Yeah, exactly.
November 2027.
30, 30, 20, 20 basis points. The first happening six months after November last year, the second one November 2025, and it goes on till November 2026.
2026. Okay. Mm-hmm.
On your dividends question, that is still a discussion in progress with shareholders. However, just to remind you, the logic that we follow is our unpaid dividends based on cash dividends received, and our banks tend to pay around 50% of what their net income from the previous period was. Obviously, for those that were profitable during that period. Corficolombiana has projects in which it invests, so frequently it goes below what the 50% standard looks for the rest of the group.
All right. Can you remind us what the current capital requirements are for the other banks in the group?
The only systemic bank that we had was Banco de Bogotá that had 11.5%. Banco de Occidente will join them within two years at that level. The rest of the banks have a 10.5% requirement.
Thank you so much.
Your next question comes from the line of Daniel Mora of Credicorp Capital. Please go ahead.
Hi, good morning, and thanks for the presentation. I have just one question. I would like to understand what will be the profitability path during the year considering the ROE guidance for this year is around 11%. I mean, should we expect a single-digit ROE in the first half of the year and then above two ROE figures even above 11% by the third or fourth quarter of the year? Thank you so much.
Yeah. Perhaps I am answering the obvious, but given that what the drivers will be or the main driver will be is an improvement in our NIM, that will be a process that will happen over time. Yes, the last quarter is expected to be above the year average, so we will be progressing in that direction. Without getting into specifics, if you look at what happened throughout 2024, is except for the last quarter where we had an impact on our investment portfolio and that had seasonally high expenses, we were making progress. I would put my eye on risk-adjusted NIM, and you can see the trend that we are looking into.
Your next question comes from the line of Julián Ausique at Davivienda Corredores. Please go ahead.
Hi, everyone, and thank you for having my question. My third question is regarding the net stable funding ratio. As I am reading, it is my understanding, in August, there is a requirement for all banks to fulfill the legal requirements of 100%. So I would like to understand what will be the impact that you expected in terms of, for example, mean cost of funding due to the requirements to fulfill the NSFRs ratio. The other question is regarding Porvenir. If you have any estimation regarding the legal reserve that can maybe release due to the pension reform that has been approved. So if Porvenir will be able to release some legal reserve and what will the impact in Grupo Aval and Porvenir be. Thank you.
Regarding your question, just to make sure I understood it right, you are referring to the CFEN, the stable funding ratio requirement. What our banks have been doing over time is they have been preparing for the upticks in requirements that we have had. Therefore, the banks have already built in part of the additional cost. Our guidance already builds in, moving progressively not only on the CFEN side, but also on the interest rate risk requirements that we are managing in the Colombia system. I did not really get your Porvenir question. This is very much dependent on how the regulation is finally detailed. At this point, in senior guidance, what we have built in is that if there was no impact from the pension reform. The pension reform does actually, as written now, have a positive effect in the first years that is not included in our guidance.
We are basically at a point where we would be prepared for various scenarios. Regarding releasing the legal reserve and dividends, we have not got into that until we see the regulation.
Okay, thank you.
Once again, ladies and gentlemen, if you have a question, press the star button followed by the number one on your telephone keypad. There are no further questions at this time. With that, I will now turn the call back over to Ms. Maria Lorena Gutiérrez Botero. Please go ahead. Once again, I will turn the call back over to Ms. Maria Lorena Gutiérrez Botero. Please go ahead.
We are checking since the call got disconnected.
Apologies for the delay. With that, ladies and gentlemen, that concludes today's conference. Thank you for participating. You may now disconnect your lines.