Welcome to the Davivienda's third quarter of 2025 earnings conference call. I'm Karen, and I'll be your operator for today's call. Today's presentation is for investors and analysts only. Therefore, questions from the media will not be addressed. Today, Mr. Javier Suárez, Chief Executive Officer, and Mr. Álvaro Cobo, Chief Risk Officer, will join us to discuss the quarterly results that have been released. If you have not yet received a copy of the earnings report and presentation, please visit the Davivienda's Investor Kit or the Financial Information section at ir.davivienda.com. All participants are in a listen-only mode at this time. Please note that this conference is being recorded. Afterward, management will be available for a question-and-answer session. Before proceeding, let me mention that any forward-looking statements are being made under the safe harbor provided by the Securities Litigation Reform Act of 1995.
Actual performance could differ materially from anticipated in any forward-looking statements due to macroeconomic conditions, market risks, and other factors beyond our control. For the Q&A session, please remember the following instructions. If you're on the phone and have a question, please follow these instructions once the management presentation has come to an end. Press the star button and number five to access the Q&A feature. If you use a speakerphone, you may need to pick up your handset before pressing the numbers. For Webcast participants who wish to send questions through chat, click the button with the question mark at the bottom of the Webcast screen. If you have multiple questions, we recommend sending a single message with all your questions. With this, I am now pleased to turn the call over to Mr. Javier Suárez, Chief Executive Officer. Mr. Suárez, the floor is yours.
Welcome, everyone, and thank you for joining us this morning for Banco Davivienda's earnings conference call. Our results for the third quarter of 2025 demonstrate consistent improvements in the core financial performance metrics. We are steadily advancing toward profitable growth despite ongoing macroeconomic challenges such as still high interest rates, the fiscal outlook, and a complex international landscape. Please move on to slide three. During the third quarter, the global economy continued to show mixed signals. Commodity markets, particularly oil, reflected these dynamics with Brent prices averaging slightly above second quarter levels but still below those seen a year ago amid expectations of oversupply and slower global demand. Turning to Colombia, the economy maintained a solid pace of recovery, growing by around 3.2% in July and August, supported by commerce, transportation, and hospitality service sectors.
Inflation, however, resumed an upward trend, rising from 4.8% in June to 5.2% in September, primarily due to higher food prices. Given these dynamics and concerns over fiscal conditions, the central bank maintained the monetary policy rate unchanged at 9.25% in its July, September, and October meetings, adopting a cautious stance on further cuts. The Colombian peso continued to strengthen during the quarter, appreciating by 3.6% quarterly and 6.1% annually. This behavior was supported by strong foreign portfolio inflows alongside lower country risk. For this year, we expect Colombia's GDP to grow around 2.5%, the intervention rate to remain at 9.25%, and inflation to close the year at around 5.3%. Looking ahead, the country's outlook for 2026 will be influenced by a range of domestic and external factors.
Among the domestic ones, key events include the pace of fiscal consolidation, the outcome of minimum wage negotiations, and business confidence levels, all of which will shape investment decisions and local demand. On the external front, the main risks stem from trade tensions, volatility in commodity prices, and the evolution of global interest rates. In this sense, our scenarios for next year range between 2.6%-3.2% GDP growth, an 8.5%-9% monetary policy rate by year-end, and 4.4%-4.7% inflation. Please move on to slide four. At the system level, the total loan portfolio grew 6.3% year-over-year, accelerating from 4.8% in the previous quarter. This expansion was mainly supported by retail demand, particularly of consumer credit, followed by still solid growth in mortgages. Credit quality continued its gradual improvement.
As of August, the system's total 90-day PDL ratio stood at 3.2%, decreasing by 10 basis points during the last two months. Lending rates for consumer and commercial credit showed quarterly and annual decreases. The most significant reduction was observed in consumer loans driven by the lower cap rate, which fell by around 50 basis points during the quarter and by over 380 basis points annually. Meanwhile, mortgage lending rates showed a marginal increase in recent months, consistent with longer-term market behavior. Moving on to slide five, Central America maintained a moderate pace of growth, with inflation generally contained across the region. In Costa Rica, economic activity continued expanding at a solid pace. The economy grew 3.9% year-over-year, led by the free trade zone regime. Inflation deepened into deflationary territory, reaching negative 1.0% in September, driven mainly by lower prices in communications and transportation.
In response, the central bank reduced its policy rate twice during the quarter, from 4% to 3.5%. Rating agencies acknowledged the country's fiscal discipline, with Moody's and S&P upgrading Costa Rica's rating to BA2 and BB, respectively. In El Salvador, growth strengthened to 4.1% year-over-year, supported by construction activity and higher exports. Inflation rose slightly to 0.4% in September, reversing the deflation observed earlier in the year, mainly due to higher food prices. Risk ratings remained unchanged, reflecting steady macroeconomic performance and improving investor perception following the IMF's continued engagement with the country. In Honduras, GDP expanded 4.1% year-over-year, moderating from the previous quarter. Inflation stood at 4.5% in September, within the central bank's target range. The policy rate remained unchanged at 5.75%, and rating agencies maintained the country's credit ratings.
Finally, in Panama, growth moderated to 3.4% compared to 5.2% in the previous one, affected by slow performance in transportation and trade. Inflation turned positive at 0.1% in September after several months of deflation, driven by food prices. Credit ratings remained stable. Overall, our Central American businesses continue to operate in a resilient macroeconomic environment, supported by stable monetary policies, low inflation, and improving sovereign credibility. These conditions provide a solid foundation for growth and improving profitability in the region. Please move on to slide six, where we can see the main financial results for the quarter. During the third quarter, our loan portfolio showed stable performance despite the impact of the peso appreciation and prepayments of commercial loans. Excluding these effects, underlying dynamics remain positive, particularly in the consumer and mortgage portfolios, which continue to grow quarter over quarter.
Pretax income reached COP 517 billion, increasing 17.4% compared to the previous quarter and 163% year-over-year. This reflects the strengthening of our core business, supported by improvements in structural drivers such as funding costs and credit risk rather than extraordinary factors. One of the key initiatives behind this performance is our strategy to help people and businesses move their money, which continues to show tangible results. The strategy focuses on strengthening customer relationships by increasing money flows in the ecosystem, encouraging clients to receive, transfer, and pay through our channels. In this way, we do not only boost engagement and transactional activity but also improve funding mix and fee generation. As a result, collections have grown 7% quarter- over- quarter and 17% year-over-year, paid amounts by 8% and 22%, respectively, and the number of transactions originated and received rose 6% versus the previous quarter and 14% compared to last year.
These dynamics translated into 20% year-over-year growth in low-cost funding and a 19% increase in fee income, confirming the effectiveness of this strategy in generating stable, low-cost funding and diversifying revenue streams. Consequently, our average funding costs have a clear downward trend, as shown in the chart. The second driver of improvement is credit quality. The 12-month cost of risk decreased by around 180 basis points year-over-year to 2.49%, while new PDL formation continued to decline, confirming that delinquency generation remains under control. These two structural drivers, along with our efficiency strategy, allowed us to reach an accumulated net profit of COP 1.1 trillion, representing a COP 1.35 trillion improvement compared to the same period last year, and return on average equities of 9% for the quarter and 7.8% for the last 12 months.
Finally, our capital ratios stand at solid levels with an 11.8% CET1 ratio and 17.5% of total capital ratio. Now, moving on to slide seven, I would like to share with you DaviPlata's updates. In 2011, we launched DaviPlata with a clear objective to provide reliable, friendly, and frictionless financial services to all Colombians. At that time, there was no other fully digital solution in Latin America offering free access to financial services, and DaviPlata played a pioneering role in enabling users to move, save, and manage their money directly from their phones efficiently and without costs. Over these 14 years, DaviPlata has continued to evolve, expanding its reach and capabilities, and consistently leveraging its innovative DNA to develop new features and serve more people.
Some examples include how we made possible to transfer money through social networks in 2017, our alliance with Colombian delivery unicorn Rappi in 2019, enabling users to access DaviPlata services directly within the app, being an early example of embedded finance in the region, our partnership with Medellín's public transport in 2021 to enable digital payments and a smart city ecosystem, the introduction of contactless transfers between phones in 2022, among others. In that sense, in our quest to continue strengthening DaviPlata's position, a few weeks ago, we launched what represents the next step for the platform: to transform into a new bank. This transformation includes three main changes. First, to enhance the user experience through an improved app. Second, to broaden the product offering. And third, to expand DaviPlata's target market.
On the first front, we've improved our user experience through a new app, promoting intuitive usage, improved speed, and overall high-standard performance, aiming to increase engagement and transactional activity. DaviPlata continues to consolidate its position as one of the most trusted digital financial platforms in the region, operating 364.4 days out of the year with an NPS of 75 points, demonstrating its resilience and technological strength. Additionally, DaviPlata became the first financial product in Latin America to receive carbon neutral certification, generating 96% fewer CO2 emissions than cash transactions, reaffirming our commitment to sustainability and future generations. Please move on to slide eight. The second change is related to DaviPlata's product offering. In this new stage, DaviPlata also evolves with a strengthened and more attractive value proposition, one that reflects everything we've learned over these years about how Colombians live, connect, and manage their money.
More specifically, we are complementing our credit, savings, and payment verticals, enhancing our competitive position while providing users with a range of day-to-day services backed by a reliable platform and name, potentiating DaviPlata's scale. The launch of digital debit and credit cards with NFC technology developed in collaboration with Mastercard represents a significant milestone. Both products are compatible with mobile wallets, enabling physical and online purchases domestically and internationally, and together, they complement DaviPlata's nano credit and paycheck advance solutions, strengthening the platform's credit ecosystem and monetization potential. Additionally, we have an interesting roadmap of additional services from entertainment offerings to public transport, among others, aimed at strengthening customer engagement and loyalty, allowing them to find in DaviPlata everything they need. The third change is related to DaviPlata's target market.
Over time, DaviPlata has evolved in its service segments, initially focusing on financial inclusion for bank populations and later expanding to small merchants and social impact ecosystems. Now, with the brand relaunch and a more complete product offering, DaviPlata aims to reach new segments with interesting growth opportunities, including young adults, employees, small businesses, as well as foreign residents in Colombia. Together, these initiatives position DaviPlata to continue increasing its customer base, deepening usage, and generating sustainable revenue growth over time. Now, please move on to slide nine to see DaviPlata's main results. During the third quarter, DaviPlata continued to show strong momentum across its main ratios. Average deposits increased by 2% over the quarter and 16% year-over-year, confirming its role as a reliable and growing source of low-cost funding for the bank.
At the same time, our focus on strengthening the credit portfolio is yielding results. As a matter of fact, the loan book reached COP 69 billion, 1.8 times the second quarter size and almost four times last year's. DaviPlata's credit portfolio is performing in line with our expectations, with monthly disbursements reaching COP 15 billion recently, average tickets of COP 1.7 million, around $400, and a 2.8-year average tenure. Credit quality is performing within our risk appetite for nano credits, with PDLs below 5% and a one-digit cost of risk. Importantly, the portfolio is almost fully backed by collaterals, ensuring resilience and supporting sustainable and profitable growth in this expanding line of business. In transactional activity, DaviPlata continues to show solid performance. Year-to-date monetary transactions and purchases have increased by more than 20%.
In terms of income, DaviPlata generated COP 142 billion year-to-date, 7% higher than the previous year, supported mainly by stronger transactional revenue, which has grown 11% on a cumulative basis and a gradually increasing share of loan income within total revenues. Now, let me turn the call over to Álvaro to continue with the presentation.
Thank you, Javier. Please move on to slide 10, where we will analyze the evolution of assets. Our total assets reached COP 190.5 trillion, increasing 7.5% during the quarter and 4.4% year-over-year. Excluding the Colombian peso appreciation, assets have grown about 2% during the quarter and 7% over the year. Cash has been increasing, supported by high liquidity levels across the system and additional resources from our recent tier two issuance. We have prudently managed liquidity through active strategies that balance short-term positions, with instruments designed to preserve profitability and flexibility for the balance sheet.
The investment portfolio decreased during the quarter, mainly due to our participation in the Colombian government's bond repurchase program, thereby reducing sovereign bond holdings. On an annual basis, investment increased, reflecting portfolio adjustments aligned with our liquidity and market strategies. By operation, Colombia's assets grew 1% in the quarter, while Central America's operations expanded 2.7% in dollars. Overall, asset composition remained stable, with Colombia representing around 74% of total assets and Central America accounting for close to 26%. Let's turn to slide 11, where we will cover the loan portfolio growth. When looking at this quarter performance, it is important to consider a key factor that has influenced growth across all segments: the Colombian peso appreciation, which reached almost 4% in the quarter and 6% year-over-year. The commercial portfolio decreased 2.1% in the quarter and increased 2.6% annually.
In addition to the FX, prepayments amounting to close to COP 2 trillion also played a significant role in the size of the portfolio. Excluding both FX, the commercial book would have grown by 2.1% in the quarter and 7.8% annually. Excluding FX, the consumer portfolio already shows a quarterly growth of 1.3%, supported by higher disbursements and we will see later in the presentation. The mortgage portfolio remains the main driver for growth, reflecting steady performance quarter after quarter and benefiting from sustained demand. As a result, the total loan book decreased by 0.2% quarterly and increased 2.7% annually. When excluding both FX and prepayments, total loan growth would have been 2% during the quarter and 6% during the year, reaching the lower end of our guidance. On slide 12, we will review PDLs and coverage. Total PDLs closed at 4.39%, continuing its improving path.
This positive trend was mainly driven by the consistent improvement of the consumer portfolio, which accounts for most of the reduction both in the quarter and the year, followed by the mortgage book, where we were observing positive results in origination and collections, reflected in the downward trend in delinquency shown on the chart. In the commercial portfolio, the temporary deterioration observed this quarter was primarily related to prepayments and FX. Together, this factor explained around 70% of the increase in the ratio, and the remaining 30% is explained by isolated cases that temporarily affect PDLs during the quarter, which have been managed and have restructuring agreements already in place. The coverage trends were generally positive during the quarter, with the consumer and mortgage segment benefiting from lower PDL formation and a sustained provision-building process. In the commercial book, coverage decreased slightly, given the particular effects previously explained.
In this sense, coverage for total PDLs improved by over 500 basis points over the year, reaching 91.5% in line with our guidance of closing about 90% by year-end. Looking ahead to 2026, we expect to reach levels around 100%, supported by an improving asset quality and continued provisioning efforts. Finally, the coverage-plus collateral ratio reached 144.3%, confirming our risk mitigation position across all portfolios. Now, let's look at slide 13. We continue to observe a sustained growth in consumer disbursements, as seen in the upper-left chart. The portfolio continued to expand healthily, supported by origination capabilities and controlled risk appetite. These positive trends validate the strength of our risk models and the adjustments made in the origination and collection strategies, which continue to enhance the overall quality of the consumer portfolio, as seen in early PDLs, which are well below the reference value observed in 2021 after the pandemic.
However, realized provision expenses for the consumer book exceeded the expected level for the quarter, explained by the reconstitution of coverage and parameter adjustments we made in our provisioning models. These updates are consistent with our conservative stance and reflect a prudential recognition of sustained increase in disbursement, thereby building additional resilience that will allow us to capture growth opportunities in 2026. Please move on to slide 14, where we will present our cost of risk, provision expenses, and loans by stages. The lower level of provision expenses for the quarter aligned with the improvement in asset quality, despite our efforts to reinforce coverage across portfolios. The quarterly cost of risk stood at 2.37%, while the 12-month ratio closed at 2.49%. Both continued their downward trend as expected. On a cumulative basis, provision expenses have decreased by 37% year-over-year, consistent with this stabilization process.
The risk composition of the portfolio continued to improve during the quarter, with decreasing stage two and three. Coverage for stage one and two increased during the quarter. Coverage for stage three stood at 54.4%, mainly explained by the commercial isolated cases. However, since these exposures are backed by adequate collateral levels, the required provisioning is lower. Overall, these results confirm the progress achieved in the credit quality and the disciplined management of provision, supporting sustainable growth. Let's turn to slide 15, where we will present the evolution of our funding sources and liquidity. Total funding sources increased by 0.6% during the quarter and 4.9% year-over-year.
Turning to the funding mix on the lower left, we continue to observe a positive recomposition as a low-cost demand deposit increased its share in Colombia's funding mix by 470 basis points year-over-year, gaining ground over the time and high-cost demand deposits, which in turn lost 310 basis points annually. These results were mainly driven by higher balances from retail customers and SMEs, reflecting our ongoing strategy to strengthen transactional deposits through a moving the money strategy reviewed by Javier earlier, enhancing funding stability and efficiency. Bonds also gained share within the total funding mix due to their $500 million tier two issuance completed in July, in line with our funding diversification mandate. Liquidity ratio remained at solid levels and in line with our internal risk appetite framework. On slide 16, we will review our capital structure.
Our common equity tier one ratio closed at around 11.8%, increasing by 41 basis points quarterly and by 143 basis points year-over-year, mainly driven by a stronger earnings generation, which has allowed us to rebuild our capital base. This weighted assets reduction was primarily explained by the decrease in commercial portfolio exposure due to the prepayments and FX impact. The total capital asset ratio reached 17.5%, also supported by our tier two issuance. Our current capital structure reflects a position of strength to seize growth opportunities in 2026, while comfortably supporting tier two maturities in the coming years. Please move to slide 17, where we present our margins. Our NII net interest income increased by 1% during the quarter and 5.2% on an accumulated basis, supported by a continued improvement in funding costs and a strong treasury income despite lower yields on loans.
Consequently, the NIM, including FX and derivatives, reached 5.72% for the quarter and 5.70% for the last 12 months, in both cases increasing over the previous year, reflecting the bank's disciplined interest rate risk management, coupled with a funding strategy that is gradually materializing into better results. Additionally, the NRI after provision increased 11% in the quarter and by 84% annually. Loan income fell 2.5% quarterly, mainly due to seasonality effects in Colombia, where both commercial and mortgage portfolio were affected by lower UVR indexation during the second half of the year. As we mentioned in previous calls, UVR indexation tends to contribute more strongly during the first half of the year. Investment and interbank income increased during the quarter, maintaining a solid performance throughout the year. In Colombia, results were supported by valuation gains and profit from security sales.
In Central America, higher interbank yields and valuation gains on debt instruments also contributed positively. On the other hand, financial expenses decreased, reflecting the ongoing repricing of liabilities at lower rates and the gradual reduction in funding costs. The contribution from FX and derivatives decreased 66.9%, mainly due to lower gains from hedging position in fixed income instruments and foreign currency derivatives. Please continue to slide number 18. Non-financial income increased 5.5% during the quarter and 4.3% on an accumulated basis. Key income has shown a positive performance, growing by 11% annually, supported by higher transactional and payment activity in Colombia, as well as increased credit card and insurance fees. In Central America, the increase was driven by higher commissions in the remittance and credit card businesses.
Meanwhile, other than net income and expenses grew 39.4% during the quarter, mainly explained by lower operational risk-related expenses, higher results from reinsurance activities, and greater contribution from associated entities. On an accumulated basis, results remained 25.4% below last year since 2024. Figures include non-recurring income from asset receipts as payment. Total expenses increased 2.3% during the quarter and 7.1% on an accumulated basis. The year-to-date variation mainly reflects the combined effect of inflation, average exchange rate depreciation, and last year's salary adjustments. Personal expenses declined 1.1% quarter over quarter and have remained controlled on an accumulated basis. Operating and other expenses increased 4.7%, driven by higher administrative and technology costs, seasonal marketing expenses, and ongoing digital transformation projects. As a result, the cost-to-income ratio stands at around 54%-55%, still impacted by moderate loan growth, but reflecting disciplined cost management despite inflationary pressures.
Let's turn to slide 19 to analyze the bank's net result. Net profit for the quarter totaled COP 374 billion, decreasing 13.9% quarterly, explained by a base effect from the second quarter, when the tax benefit from the first and second quarter was recognized simultaneously. As a result, this quarter's higher tax shares reflect a normalization rather than a structural increase. If we exclude this base effect and consider a normalized income tax, net profit for the third quarter will increase compared to the second quarter. In fact, pre-tax income improved 17.4% compared to the previous quarter, confirming that the underlying core trends of our business are going in the right direction. On an accumulated basis, net profit reached COP 1.1 billion, a strong rebound compared to the result recorded in the same period of 2024, supported by the recovery in margins, lower provision costs, and efficiency efforts.
The return on average equity reached 9% on a three-month basis and 7.8% on a 12-month basis, showing a continued upward path. Please move on to slide 20, where we will share our expectations for 2025 on Banco Davivienda consolidated businesses. We have adjusted our expectations to reflect the most recent operating trends and the macroeconomic context, including a slower pace of loan growth and an improving cost of risk. Loan portfolio growth is now expected between 4% and 6%, down from the previous range of 6% to 8%. This adjustment is mainly explained by the appreciation of the Colombian peso during the year and a more conservative outlook for local credit demand. By the segment, commercial loans are projected to expand between 4% and 6%.
The consumer loan book is expected to stabilize compared to last year's size, remaining relatively neutral, supported by increasing disbursements, improving household confidence, and the gradual posture of lower interest rates. Mortgage loans are anticipated to grow between 6% and 8%, driven by sustained demand. Portfolio quality remains resilient, with past due loans over 90 days expected to decrease to 3.5% and 4%, consistent with current trends and supported by coverage ratio above 90%. The net interest margin, including FX and derivatives, is expected to remain within the 5.6%-5.8% range, supported by disciplined asset and liability management amid a still high interest rate environment. Cost of risk is projected to range between 2.3% and 2.5%, below the previous guidance of 2.4%-2.6%, reflecting lower credit loss expenses and continued improvement in portfolio mix and recoveries.
Non-financial income for the full year is expected to grow between 3% and 5%, supported by fee generation in the insurance business and higher transactionality. Operating expenses are projected to increase between 4% and 5%, consistent with inflationary trends and the execution of the strategic projects, while maintaining cost-to-income ratio in the mid-50% range, showing continued efficiency discipline. In this sense, profitability expectations have improved. ROE is now guided to a range between 8.5% and 9%, up from the previous 7%-8.5% range, reflecting a stronger core performance even amid moderate loan growth. CET1 is expected to close between 11% and 11.5%, and total capital adequacy ratio between 16.5% and 17%. Overall, our updated guidance confirms a positive profitability outlook for 2025, supported by improved risk management and efficient capital allocation. Thank you.
Now I'll pass it back to Javier to provide some updates on our corporate reorganization and Davivienda Group share issuance process.
Please move on to slide 21. Since our last conference call, we've advanced in the implementation of our new corporate structure. As you may recall, Davivienda Group was established in March as the holding company of Banco Davivienda. The structure was designed to bring the bank's shareholders up to the holding level, allowing them to access both the benefits of the new structure and Scotiabank's integration. Last month, Banco Davivienda's common shareholders exchanged their shares for Davivienda Group shares on a one-to-one basis. As a result, Davivienda Group already controls Banco Davivienda by holding a 76% stake in the bank's share capital.
Now, as the next step, Davivienda Group launched its initial public offering on October 28 to allow the remaining Banco Davivienda shareholders to become shareholders of Davivienda Group. Please move on to slide 22, where we review the key details of the offering. As discussed during the marketing call a couple of weeks ago, the recipients of the offering are Banco Davivienda's shareholders who will be able to pay with their current shares to receive Davivienda Group shares on a one-to-one ratio.
To recall, the main benefits for those accepting the offering include: one, to participate in a new holding with greater flexibility, both in terms of corporate structure and capital management; two, subject to receiving the authorizations for the integration with Scotiabank, to perceive an 11% increase in the book value of their shares; three, to perceive a 49% increase in the float of listed shares; four, to participate in a larger, more diversified operation with a strengthened presence, which will benefit from its subsidiaries' synergies. The offering will remain open until Wednesday, November 19, at 1:00 P.M. Colombian time. Those wishing to become shareholders of Davivienda Group must formally accept the offer by contacting their designated broker. Results will be announced on November 20, and settlement will also take place that day.
The first trading day of Davivienda Group's preferred shares on the Colombian stock exchange is scheduled for November 21. This process represents a key milestone in implementing our new corporate structure, which will allow Davivienda Group to consolidate Banco Davivienda's ownership and advance to the next stage of integrating Scotiabank's operations in the region once we receive the final authorizations. Information on Davivienda Group, the public offering notice, prospectus, marketing presentation, among other details, are publicly available at daviviendagroup.com, Davivienda Group's recently launched corporate website. With this, we would like to open the floor to questions.
Thank you very much. With that, we will begin the question and answer session. We will first take the questions from the phone call and then read the webcast questions. If you're over the phone line and have a question, please press the star button and number five to access the Q&A feature. If you use a speakerphone, you may need to pick up your handset before pressing the numbers. Once again, if you have any questions and you are on a phone line, please press the star button and then press number five to access the Q&A feature. For those webcast participants who wish to send their questions through chat, please click the button with the question mark at the bottom of the webcast screen. If you have more than one question, we recommend sending a single message with all your questions and sending questions that have not been previously answered. Right now, we are standing by for questions. Once again, if you are on a phone line and have any questions, please press the star button and number five to access the Q&A feature. If you use a speakerphone, you may need to pick up your handset before pressing the numbers.
If you are a webcast participant and wish to send your questions through chat, please click the button with the question mark at the bottom of the webcast screen. If you have more than one question, we recommend sending a single message with all your questions and sending questions that have not been previously answered. Our first question comes from Mr. Ernesto Gabilondo from Bank of America. Mr. Galeando, the floor is yours.
Yes. I have a couple of questions from my side. The first one is on the share offering. I believe it is ending next week. Can you provide us some color about the percentage of investors that have already accepted the offer? For my second question, it is related to your ROE expectations. As you mentioned, you are expecting this year to be around 8.5%-9%. How should we think about Davivienda's standalone ROE in the next couple of years? Just to compare it against your expected ROE for Davivienda plus Scotia, in which you have already expected an ROE between 14% and 16% by 2029. Thank you.
Ernesto, good morning. Thank you for your questions. Regarding the first one, the share offering, we're very satisfied with the way the process is moving forward. So far, we've had the opportunity to have close contact with most of the institutional investors, all of them, all of the institutional investors and some of the international funds that are part of the book. So far, we've received orders already. Some of them are still waiting until the end of the process, which will be by Wednesday of next week.
We have already verbal intentions that have been expressed of around more than 80% of the shareholders of the shares that are preferred shares of Davivienda that will be swapped into Davivienda Group's shares. That is 80% out of close to 90% that is on the institutional side. The remaining 10%, we are still in the process of contacting some of them. The remaining 10% is on the retail side. On the retail side, the most important brokers in Colombia are already working on contacting their individual customers. We are very confident that we have already commitments, soft commitments, verbal commitments that go above 80% so far. Our expectation is that by the close of the process, we will be higher, significantly higher than that. In terms of ROEs, for next year, we expect Davivienda on a standalone basis to be on double digits. That is our expectation.
Even though we've been adjusting our parameters for loan provisioning, and you can see that in this quarter, in which there's an effect, a significant effect on loan provision, especially in the consumer book, not because we believe that the book is deteriorating. By the contrary, the book is actually improving. We are starting a phase in which we will be starting growing. We want to make sure that we have the provisions for an uncertain cycle down the road. We are not estimating that to happen, but we want to be sure that we have the level of provisions that are consistent with the expectations and growth. On that note, it would be double digits for Davivienda on a standalone basis. On the consolidated basis, it could be lower than that.
It could be high single digits, very close to what we're experiencing this year because of the fact that the operations from Scotiabank will bring both operating expenses on the integration and integration costs. At the same time, we will start capitalizing some of the synergies. Those effects, we are expecting them to somehow cancel each other and bring in the ROE to levels similar to what we're having today for Davivienda on a standalone basis.
No, thank you very much, Javier. I appreciate it.
Thank you, Ernesto, for your question.
Thank you very much. As a reminder, if you're on the phone line and have a question, please press the star button and number five to access the Q&A feature. If you use a speakerphone, you may need to pick up your handset before pressing the numbers.
Once again, if you have any questions and you are on a phone line, please press the star button and then press number five to access the Q&A feature. Right now, we're standing by for questions. If you are a webcast participant who wishes to send your questions through chat, please click the button with the question mark at the bottom of the webcast screen. If you have more than one question, we recommend sending a single message with all your questions. Right now, we're standing by for questions. We have one question from our webcast. This question comes from Mr. Brian Flores from Citibank. His question is, "What are the expectations of ROE and loan growth for 2026? Some of your peers provided soft guidance. Also, what can we expect from the integration of Colpatria in that sense?" Thank you.
Brian, thank you for your question. As of today, we're not providing guidance for next year, but we could give you some soft guidance in terms of the expectations and growth for next year. We're expecting mid to high single digits overall for the whole book. On the mortgage loans, it will be probably lower than what we're experiencing today. On the consumer side, in which we've been actually turning around, and we expect this year to be close to zero growth or actually positive growth after a couple of years in which we've been decreasing the size of the portfolio. This year, 2025, we're expecting that to be flat, maybe a little bit on the positive side. For next year, we're expecting also single digits, probably around 5%-7%, something around that, although this is still a soft guidance. On the commercial side, it will be something around that also.
Overall, we're expecting mid to high single digits. With respect to Colpatria, in the case of the Colombian operations, what we're seeing is they've been actually turning around in terms of growth after a couple of tough years in terms of growth. The last couple of quarters have been good in terms of retaking growth. We expect that to continue for next year. We are also thinking that eventually for next year, it could be higher than what they are having during the last couple of quarters because of limitations on risk appetite that they have as of now. Our expectation is that with new revised risk appetite, they could grow a little faster, getting close to what we are guiding for ourselves. Overall, the combined operations should be around mid to high single digits for the combined operations. Thank you, Brian, for your question.
Thank you very much. Our next webcast question comes from Mr. Andres Soto from Santander. He says, "Good morning and thanks for the presentation. My questions are related to your expectations for 2026. I understand there are still several uncertainties, and you are factoring in a broad range for your macro parameters. However, considering a slightly faster GDP growth and limited rate cuts, can we assume that your main NII driver will be loan growth rather than NIM expansion? If the driver of this loan growth would be arguably the retail segment, would it be fair to assume that COR would also remain around current levels? All in all, would you agree with an ROE at around 10% for 2026?" Thank you.
Andres, thank you for your question and for your understanding. In fact, there are a lot of uncertainties going on with the numbers for next year with the integration of the operations. I'd say that in terms of GDP growth, as I mentioned, we are expecting faster GDP growth, and I agree with you on the limited rate cuts. The NII driver will be loan growth. That will be a main driver. We believe that also there are some structural drivers. We're still working hard on. We expect to continue working hard on the transactional deposits base that transforms into low-cost deposits. That has been something that we've seen during 2025, and we're expecting that to happen for 2026. It will be both growth and improvement in structural drivers. I would say arguably most of the improvement will come from growth.
In terms of growing on the retail segment, as I just mentioned in the previous question, you're right, there would be more growth on the retail segment. I wouldn't agree with the assumption that the cost of risk would remain around current levels because still consumer cost of risk is a mix of the cost of risk associated to vintages that come from a couple of years ago that are dwindling as time goes by. Also, new vintages that we have originated for the last couple of years. New vintages are performing very well. There is a significant difference on the cost of risk for the old ones and the new ones. As time goes by, the old ones are losing weight on the portfolio, and the new ones, of course, are gaining weight.
Just by the dynamics of the maturing of the old vintages, we expect still the cost of risk to keep improving overall on the consumer segment for the portfolio for next year. In terms of ROE, as I mentioned in the previous question on a standalone basis, yes, we are expecting somewhere about 10% of ROE for next year on Davivienda on a standalone basis. Thank you, Andres, for your question and once again for your understanding.
Thank you very much. Our next question from the webcast comes from Mrs. Mariel Abreu Cuello from T. Rowe Price. She says, "2026 will be a noisy election year in Colombia. Can you elaborate on the main regulatory and reform risks for banks? What are the latest developments regarding additional taxes for banks? Can you discuss your rate sensitivity today? You have increased disbursements. What are the main risks to AQ, especially if rates do not come down as expected and remittances in Colombia normalize? Thank you.
Thank you, Mariel, for your questions. In terms of the first part of your question on the election year and regulatory and reform risks, this is a very active front that we have always been having. This is a trend that comes from many years ago that we have always reforms that could affect our business. In terms of what we are seeing today that could have an impact is, as you mentioned, additional taxes for banks. That is part of a reform that the government will pass to Congress. There is still a lot of debate on whether that reform will actually be approved. We have expectations that that will probably not be the case. That is a risk that is open at this time.
In terms of our increase in disbursements and the effect on asset quality, as I mentioned in the previous question, the way we're pricing and the way we're focusing on segments on consumer loans, what we're seeing is a very good quality of the portfolio that we've been generating over the last couple of years. The portfolio that we have now is not being priced on the basis that interest rates will come down. If interest rates remain high, then probably our growth expectations will not be as high as in other environments, but not asset quality. Asset quality has already factored in the fact that we have this interest rate environment. In terms of remittances, we see that as a variable for household income, which our model is already factoring in that variability on remittances. That would pressure payment capacity in certain consumer segments.
Our origination policies do not give full credit to remittances as a source of payment. We believe that we should not have any significant effects if remittances normalize. In general terms, we are not seeing significant risk on asset quality on the portfolio at this time based on the macro environment as well as specifically and especially as well taking into account our underwriting standards at this time that have proven to be very good quality portfolios coming out of these standards. Thank you for your question, Mariel. Very much.
Moving on to our next question from Juan Camilo Cifuentes coming from Citi. He says, "Given recent movements from other banking institutions in Colombia, does Davivienda have the intention to spin off DaviPlata following the new rebranding?" Thank you.
Thank you, Juan Camilo, for your questions. At this time, we do not have any plans to spin off DaviPlata. That's something that we've discussed internally many times, and we've gone forward with the analysis of those processes. Daviplata has already internally a separate technology structure and many other capabilities that would somehow give us the possibility to spin off Daviplata. At this time, we see there are a lot of benefits of Daviplata being part of Davivienda in terms of synergies with the internal operations. With that in mind, we believe that the best route for Daviplata at this time is to continue being part of Davivienda. Of course, internally, it's managed in a way in which Daviplata, as you've seen during the presentation, has the ability to go with a value proposition that is different to the one that we have within the Davivienda platform. We're happy with the way Daviplata is performing within the bank.
At this time, we believe that the best way to create value for DaviPlata is being part of the bank.
Thank you very much. Our next question comes from Mr. Hugo Beltrán from Acciones y Valores. His question is, "The preferred stock of Davivienda Group will replace the preferred stock of Banco Davivienda automatically in equity indexes like HCOLCEL and MSCI COLCAP?"
Thank you, Hugo, for your question. In fact, we've had conversations with the index managers from both index managers, and they've already confirmed to us that these issuance of Davivienda Group shares will be treated as a corporate event in which they will change the name and the ID of the stock and incorporate Davivienda Group as the new stock being part of the index. We would expect, as a consequence of that, that the ETFs that follow those indexes to make the corresponding adjustments in their portfolios. Thank you, Hugo, for your question.
Thank you very much. Our next question comes from Mr. Alonso Aramburu from BTG Pactual. His question is, "Can you share some of the targets you have for DaviPlata as a neobank in the short and medium term?" Thank you.
Alonso, thank you for your questions. As I mentioned during the presentation on DaviPlata, we see a lot of opportunities, the fact that we've moved towards this offering that is a comprehensive offering, banking services offering beyond what a traditional wallet would offer by incorporating the digital debit cards with NFC and digital credit cards with NFC, as well as accounts with interest rates that are competitive in the market going for young adults and small businesses, employees, and foreigners.
We have expectations on growth on the number of customers, of active customers. We're expecting growth on active customers for next year that are around 15%-20% in terms of active customers. Over the last few months, we've already issued close to 700,000 debit credit cards, and we expect that trend to continue. We're just beginning after the launch of the new strategy, the new brand. What we're seeing during the first few weeks after the launch is growth on both active customers as well as new customers. All of those numbers are actually coming in the way we were expecting. In terms of credit, as you've seen, credit is growing in DaviPlata, both on the payroll advance as well as installment loans. That's growing significantly on an 84% basis quarter over quarter. We expect those numbers to continue growing into the future.
What we're seeing is a good trend in DaviPlata. We expect DaviPlata to be at break-even by the end of next year, taking into account the increase on income due to credit, as well as transactional income that comes from the new credit and debit cards. We're thrilled with the expectations on DaviPlata. Thank you, Alonso, for your question.
Thank you very much. There seems to be no further questions at this time. With this, I'd like to turn the floor over to Mr. Javier Suárez for any closing remarks. Mr. Suárez, the floor is yours.
Thank you, everyone, for being part of this call. As you've seen through the presentation, we're making progress with a consistent and structural improvement on the main drivers of value of the bank in terms of margins, cost of risk, efficiency. We expect those trends to continue into the future.
At the same time, we're thrilled with the integration with Scotiabank that will be happening. Our expectation is that we have expectations that before the end of this year, we would be closing this transaction. It could be next year. That depends on the final regulatory approvals that are still pending. We are very excited with all these opportunities that are in front of us. I would like also to comment on the share program because I want to make sure that all the existing shareholders, the existing Davivienda preferred shareholders understand that there will be a massive move towards Davivienda Group shareholdings. We expect liquidity on the existing Davivienda shares to drop significantly due to the fact that there will be this movement towards Davivienda Group. I would encourage everyone that is on the Davivienda preferred shares to move up to benefit.
Especially, the main reason is to benefit from the integration, the one-time increase in the equity value that we explained in a call a few days ago, as well as the synergies that will come from the integration going forward and the flexibility that we get out of the new structure. It is also important to note that we expect the Davivienda shares, the existing Davivienda shares, to lose liquidity as a consequence of the transfer of this liquidity to Davivienda Group. We are very excited on these numbers. We expect probably during the next call to give you guidance for 2026, as well as a lot more information on the integration of the Scotiabank and Davivienda operations. We expect that at that time, we could probably give you a lot more information due to the fact that we have access to detailed information once the regulatory approvals are in.
Thank you very much for being part of this call. Have a good day.
Thank you very much. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect from the call.