Stage 3. Financial instruments that have Objective Evidence of Impairment in the reported period. (Lifetime expected credit losses).
2.5.Operating Expenses
During 3Q23, operating expenses totaled COP 3,242 billion, increasing 2.3% compared to 2Q23 and 19.7% compared to 3Q22.
Personnel expenses (salaries, bonus plan payments and compensation) totaled COP 1,334 billion in 3Q23, down 1.4% from 2Q23 and up 19.8% from 3Q22. General expenses grew 5.0% in the quarter and 19.6% compared to 3Q22.
It is worth highlighting the growth of taxes different from income tax impacted mainly by, first, the tax reform in Colombia and second, the bank´s revenues increase. Additionally, business transformation and migration to the cloud led technology expenses to expand 26% year over year.
As of September 30, 2023, Bancolombia had 34,508 employees, owned 863 branches, 6,164 ATMs, 30,109 banking agents and served more than 30 million customers.
2.6.Taxes
Bancolombia consolidated income tax for 3Q23 was COP 445 billion, mainly driven by higher net income from foreign subsidiaries with lower statutory tax rates when compared to Colombia, tax benefits in Guatemala, El Salvador, and Panama, corresponding to exempt yields on government-issued securities, and finally, tax exempt income in Colombia.
3.BREAK DOWN OF OPERATIONS
The following tables summarize the financial statements of our operations in each country.
BANCOLOMBIA S.A. (STAND ALONE) – COLOMBIA
The portfolio of Bancolombia S.A. decreased 0.1% in the quarter and increased 5.0% in the last 12 months. Consumer loans mostly led the reduction, down 2.0% during 3Q23, reflecting the impact of high interest rates. Commercial loans were flat, whereas mortgages revealed a solid growth of 2.5% and is the only segment expanding across all geographies. In the funding structure, time deposits represent the fastest growing product and consolidate an upward trend in the last twelve months. In regard to demand deposits, saving accounts decreased steadily during the last three quarters, yet checking accounts show a different trend from the first half of the year and rose during 3Q23.
Net result for Bancolombia S.A. in 3Q23 was COP 1.5 trillion, up 8.1% when compared to 2Q23. Investments income improved during the quarter due to higher revenues in debt securities valuation and trading derivatives, mainly in interest rate forwards. Lending interest income decreased, to a greater extent, due to lower yields in commercial loans. Interest expenses rose on the back of a higher amount in time deposits during the quarter. It is worth noting the reduction on provisions, mainly explained by a corporate client releasing balance from previous quarters, considering the cancellation of its contract. Other operating income declined on lower equity method quarterly from Bancolombia Panama and Banistmo. Net interest margin in 3Q23 for Bancolombia S.A. was 7.9% and annualized quarterly ROE was 15.9%.