Good afternoon, everyone, and welcome. Thank you for joining us today. In terms of our financial highlights, we recorded a net income, PHP 73.4. Return on equity-wise, that is 15.2%, and we still see that being driven by our core businesses. Next. Our loans were up 9%. If you recall last time we were talking about year-to-date numbers, we had a relatively slow start at the beginning of the year. Starting the third quarter, we saw a pickup in lending, and I think that continued into the fourth. The full year number is 9%. Year-to-date September, we were doing about 4%, so we had roughly about 5% growth just in the last quarter alone. We hope that that is the momentum that we will see going into 2024. Next, please. Asset quality has still maintained the trend. The NPL ratio has been trending down. We are at 1.85%.
Our coverage ratio, because of our continued provisioning, we are up to 185%. Again, that indicates likewise that as far as asset quality is concerned, things seem to be well under control. Our capital position remains robust. Our book value is up 12% year on year. I think it is a trend that we have seen over the last two years, and we are hoping that that is something we can maintain going forward. Lastly, our sustainability initiatives continue, and this is evidenced by the recent bond issuance that we did in January. PHP 63.3 billion, I think it is another record issuance for Philippine bank. I guess that is an indication also of the quantum of the projects that we believe we can finance using this funding source. In terms of the balance sheet, I mentioned earlier, customer loans up 9%. Our securities book is up 29%.
Again, we continue to steadily build up our securities portfolio while the rates are still high. Again, this is a strategy that we believe can be a mitigant to pressures on margins going forward when rates come down. On the funding side, total deposits up 11%, most of it contributed still by time deposits. We are happy to note that our CASA was up 1% year on year. Small, but I think it is a small win for us considering that most of the year we were flattish to slightly under compared to prior years' levels. Again, book value at 12%. On the P&L side, net interest income, coming from higher interest rates and also growth in our balance sheet, we saw a 25% growth. Fee income maintaining its low double-digit pace.
Trading and FX gains, we also saw some contribution from them despite the volatility in the financial markets. PPOP, we still managed to maintain positive operating jaws with a 27% growth. Net income at PHP 29. Return on equity at 15.2%. NIMs, 51 basis points increase year on year. Our cost-to-income ratio, it is a trend that we have seen over the last few years. It is a steady downtrend. It is not the lowest, but again, it is moving in the right direction at 58%. On the asset quality side, I mentioned earlier, 1.85% and 185% over. Our CET1 at the parent level of 13.3%. If you recall, this is lower than the September number, and it is the result of two things. One is the acquisition of the SM Capital shares in December, and also the balance contributed by asset growth.
In terms of loan growth, at 9% for the year, we grew faster than the industry. The main contributors, as you will see in the next slide, would still be corporate and consumer. On the funding side, PHP 2.55 trillion in CASA. Although time deposits still grew in the fourth quarter, our cost of deposits on a full year basis was 135 basis points. In terms of branches, we opened a total of 70, 61 from BDO Network Bank and nine from BDO Unibank proper. Again, we still believe in using the combination of physical and digital channels to be able to grow our market reach and grow our client base. On non-interest income, fee-based continues to be the biggest contributor at about 60%. Insurance premiums at 21%, despite the low single-digit decline in overall levels. Next, please. Good.
As can be seen here, traditional has more or less maintained a mid to high- teens steady growth through the years, despite the performance of the unit-linked side of the business. On the securities portfolio, it's now 21% of the loan book. For OpEx, I mentioned a 58% full year reported number. If we strip out the impact of BDO Network Bank and BDO Life, the core business would be running at about mid-50s. On asset quality, NPL levels about PHP 54 billion, that's equivalent to 185%. Again, steady decline on a quarterly sequential basis in terms of our non-performing loan ratio. Our coverage, again, 185% is much higher compared to the 167% last. Okay. In terms of profitability, PPOP 27% higher. Next, our return equity at 15% as compared to 13% in 2022. In terms of CET1 ratios, we're still very comfortable.
In terms of cash dividends, we did a total of PHP 3 last year. We just announced the dividends for the first quarter of this year, another PHP 0.75. Which is again, in line with the pace that we were doing at in 2020. In terms of our sustainability bonds, we've financed like 59 large-scale renewable energy projects, and this continues to be, again, an area of focus for us. We continue to be on the lookout for building our sustainability portfolio. For the macro and business outlook, gonna ask Dante to give us a short update.
Hello, everyone. Just a brief macro outlook. In terms of economic activity, 2023 GDP came in at 5.6%. I think that's in line with what we were expecting, but it's slightly below what the government was looking for. For 2024, we are expecting GDP growth, at least in our base case scenario, to come in slightly below 6%. We believe that in order for GDP growth to go back to the pre-pandemic trajectory of over 6%, we need to see a broadening of growth drivers beyond just discretionary spending. So far, discretionary spending is holding up really well despite inflation worries. Again, to get GDP growth above 6%, you need to get other GDP components growing at pre-pandemic growth rates once again. The two that we are focusing on in particular would be government consumption and also fixed capital investment.
I think government consumption was flat last year. We expect a slight rebound this year, but we think any rebound would be limited by the government's need to manage the fiscal deficit, especially since there are no new revenue measures that have been enacted. We're a bit more optimistic on the outlook for fixed capital investment. We actually have an optimistic GDP growth scenario for 2024 that is above 6%, that assumes fixed capital investments rebound strongly in a context of slowing inflation and a more stable interest rate environment. With regards to inflation and rates, 2024 represents the first year in three years that we are expecting full year average inflation to come in within the BSP's 2%- 4% target range. Also, it's notable that core inflation has been decelerating. I think it's for 11 straight months.
This is important because it tells us that inflationary pressures are weakening despite the volatility in commodity prices we saw in the second half of last year. From a pure domestic macro point of view, we think the BSP really has scope to lower policy rates, but they will probably have to wait and see as to what the Fed does first. Last but not least, what do we worry about? That last column, the last bullet point there, that's still the top risk in our view. It's really unexpected increases in global oil and rice prices that may reverse the favorable inflation trend we're seeing of late and introduce interest rate and macro uncertainty once again. That's it for me. I'll turn over the presentation back to Chito. Thank you.
Thank you, Dante. In terms of the lending business, we think loan growth can be sustained. We saw an acceleration for the system loan growth in the last quarter. We hope that that will carry over into 2024. As clients become more confident about an eventual shift in the direction of interest rates, we hope that more and more of them will eventually pull the trigger on their CapEx plans or their expansion plans. The other area would be infrastructure investments. The recent award to San Miguel hopefully will be followed by more similar projects being awarded to the private sector. While the benefit may not be immediate, but over time, that could help provide a steady stream of loans into the pipeline of banks. On fee income, we expect that to continue.
We are still working on our strategic initiatives to grow our market coverage and grow our fee income sources. Asset quality remains under control. The digital initiatives are also ongoing, we continue deploying new capabilities for better customer experience. In summary, again, our results last year show that our strategies continue to bear fruit for us. Macroeconomic challenges are easing, and while we remain cautiously optimistic, we believe that we're well-positioned to capitalize on these opportunities. We believe that there are multiple drivers in place for sustained profitability for us. As we roll out more coverage of the underserved areas through BDO Network Bank, we continue to enhance our wealth management capabilities. We also continue to grow our life insurance business. These are all initiatives that are meant to be ROE accretive for us going. Okay. At this point we're-
Hi, this is Richard Tan. I will be moderating the Q&A section. We have on our panel our President and CEO, Nestor Tan. Chito and Dante, please. Let me relay a question from Benjamin Tan of UBS. Two questions. What is the timeline of this 40- 50 basis points CET1 coming back? This is related to the merger of SM Keppel Land.
We hope to see that by the end of this year, which is the time we expect is the length of time needed to secure all the regulatory approvals.
Question from Yong Hong of Citi. Given the uncertain rate cut trajectory, how are corporate clients thinking, and what are their timelines on drawing down loans?
Well, I think generally what we see is people's preference for floating rates with a one-time rate setting in the future. They are hedging.
Okay, another question here from Manik Mahajan of Fremont. Can you please comment on the change in the competitive intensity among banks, both on the loan and deposit sides?
Well, I think it's all now going to volume. As I said, when there is a slowdown in the tailwinds, what you try to do is prepare for that slowing down, and the only way you can do that is to get loan growth. That's one. Second is because we've had a very weak 2022 and 2023, people are driving for market share and doing pricing as a way to get that.
Thank you. [crosstalk] That's the end. Sorry for the delay.