Banco Itau Chile ADR

Ladies and gentlemen, thank you for standing by and welcome to the Banco Itaú Chile 4th Quarter 2024 Financial Results Conference Call. At this time, all participants are in listen-only mode. After the speaker's remarks, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require further assistance, please press star 0. I would now like to turn the conference over to Claudia Lave. Please go ahead.

Thank you. Good morning, everyone. Thank you for joining us for our fourth quarter 2024 conference call. I would like to remind you that our remarks may include forward-looking information. and our actual results could differ materially from what is discussed in this presentation. I would also like to draw your attention to the financial information included in this management discussion and analysis presentation, which is based on our managerial model in which we adjust for non-recurring events and apply managerial criteria to disclose our income statement. Please remember that since the second quarter 2019, we are presenting our income statement in the same manner as we do internally. This managerial financial model reflects how we measure, analyze, and discuss financial results by segregating commercial performance, financial risk management, credit risk management, and cost efficiency. We believe this way of presenting our results will give you a clearer and better view of our performance from these different perspectives, please refer to pages 15 to 18 of our report for further details. I am pleased to welcome Andre Gehli, our CEO, Andres Perez, our chief economist, and Matias Valenzuela, our head of financial planning and analysis and capital, who are here with me today. To comment on the macroeconomic backdrop of the first quarter 2024, and on our expectations for next year for Chile and Colombia, I would like to turn to Andres Perez. Good morning, Andres.

Thank you, Gloria. So, good morning again. So, first off, in this slide, I will provide some very brief remarks on recent macro dynamics in Chile. First off, activity was better than expected during Q4 of 2024, with the quarterly GDP proxy increasing sequentially by 0.4% quarter-to-quarter season adjusted base. This is on the back of a 0.8% expansion in the third quarter. On an annual basis, GDP and QDA rose by 3.7% in the fourth quarter of last year, after increasing by 2.3% in the previous quarter, leading to an overall annual growth during 2024 of 2.5%. Final GDP data will be announced by the central bank on March 18th. Moving on to prices, inflation ended the year at 4.5%, up from 4.1% in September. The increase in the last quarter of the year was mainly driven by another adjustment in electricity prices, the third in the year, and its change rate passed new pressures. During the fourth quarter of 2024, the central bank of Chile cut the monetary policy rate twice, by 25 basis points at each meeting, closing the year at 5.0% in nominal terms. In December, the financial industry's loans totaled 242 billion CLT, essentially flat. The banking industry's demand deposits and time deposits rose on an annual basis by 6.7 and 5.3 percent respectively. Moving on to the next slide, please. Okay. Now, moving on to Colombia. Again, first off on activity. GDP growth came broadly in line with expectations in the fourth quarter of 2024. The Colombian economy increased at 2.3% year-on-year in the fourth quarter, slightly above the 2.1% from the previous quarter. And for the full year, activity rose by 1.7%, up from 0.6% in 2023. On inflation, annual headline inflation ended in 2024 at 5.2%, with the deflation process continuing at a gradual pace. The Central Bank of Colombia slowed the pace of cuts in December to 25 basis points, taking the policy rate to 9.5%. This takes place following a string of 50 basis point cuts throughout previous months, and the decision to slow the pace of cuts took place in the context of above-target inflation expectations, greater-than-expected minimum wage hikes, and the currency depreciation that was in line with . Now, moving forward, I'll briefly discuss for macro alpha for 2025 in Chile and in Colombia. In CMEA, the improved mining quotes in 2024 raises the carryover for this year, while the dynamics of imports of capital goods and record tourism levels will support investment and consumption respectively. We see 2025 GDP growth at 2.3%, with risks tilted to the upside. Expectations that are actually reaffirmed following this morning's January ESA. The forecast equation ending the year at 4.1%, down from 4.5% in December 2024, In this context, we believe the central bank will maintain the policy rate at 5% with year-end, which in its fancy terms has the policy rate already in the neutral range. In Colombia, with an above inflation minimum wage adjustment, the deflation path is likely to be somewhat slower this year, and certainly on the fiscal front, along with a central bank board that may eventually lean more bearish, could see the COP under more pressure. Those risks lead us to believe there is less room for rate cuts in Colombia this year, which we forecast with the policy rate ending at 8.0% in nominal terms. In this scenario, GDP growth is expected to increase to 2.3% in 2025, up from 1.7% in 2024. Inflation is expected to gradually fall to 4.5% this year, from 5.2% last year. Now, our CEO, Andrea Gailey, will continue the presentation. Good morning, Andrea.

Hello. Good morning, everyone. I would like to share a few main messages with you regarding our performance in 2024. Since the last quarter of 2024, we have began to implement new models to originate credit and to manage our loan portfolio, both in terms of risk and in terms of returns. Such models are based on the best practice we brought from Itaú in Brazil. We expect to finish deploying such methodology during 2025. Additionally, during 2024, we have been consistently changing our mix of retail and wholesale participation in our loan portfolio, diversifying our portfolio while sustaining the size of our loan portfolio and our margin was fine. In terms of cost of credit, in 2024, Our APLs have shown a downward trend, finishing the year in 2.0 versus 2.1 at the end of 2022. We have improved our recovery capability and sustained a 163% recovery ratio. Our cost of credit ratio finished 2024 in 1.2, coming from 1.5 at the end of 2022. During 2020-2024, we have been able to improve our principalities with clients. We grew in professional products, achieving the first position in growth in 2003, and second in credit cards. We have grown 16.3% in demand deposits, while the market grew 6.7%. And 56.9% in AUM, while the market grew 36.4%. Achieving 90.5% of deposits in year-over-year, growing 11.35 points year-over-year. Additionally, we have strengthened our financial strategy, growing 4% of deposits to loan, reaching 17.8%. We have increased our season-related services, achieving 15.3% of commissions over operating revenues. In addition to being the daily bank of our clients, we have strengthened our capability as an advisor to our clients, positioning ourselves in several investment banking plans. We have been consistently improving our digital capabilities, increasing the number of transactions made over the Internet and the app, and being the number one act in users' reviews in all app stores for two consecutive years. We have sustained our position as the best base in NPS according to services by Ipsos. We've positioned ourselves in both personal experience and in digital experience. We have sustained our strong internal culture, modern, digital, ethical, performance-driven and open-to-learn with a 85% PMPF. Through our sustainability actions, we have consistently taken care of our clients, our employees, and contributed to the community size. We have decreased our financial margin with clients in the fourth quarter of 2024, mainly due to the valuation of derivatives of the trading debt. Partly upset by the position depositives at U.S. valuation in our banking book. We have also reduced our net U.S. exposure after hedge, consistent with our inflation expectations for 2025. We had a positive trading back to results in the first year of 2024. We were able to view our non-inflated expenses below inflation, and to reach a conformity to one of 10.6% of the end of 2024, with 210 daily points buffered over the minimum capital requirement. Finally, we had no additional capital charge for the second consecutive year. All the above led us to a resilient return on tangible assets of 14.1%. Finally, our colonial operations performed better than its peers and improved its ROE It conceives control of the cost of credit. I would like to thank Claudia to follow with our presentation. Thank you.

Thank you, Andres. So let's move on to slide five. We show our performance and focus in terms of loans during the year. In 2024, the credit activity as a financial industry showed virtually no real expansion. The commercial loan portfolio closed the year with a real reduction of 1.9%, reflecting the low economic growth with decreases in various economic sectors except for mining. Consumer loans grew by 4.5% at the end of the year, reflecting the difficulties of expansion in this sector due to low economic growth and its effect on jobs creation. Similarly, in the housing sector, real growth of 1.7% was observed, maintaining the trend of recent years, affected by high interest rates, rising mortgage prices, and weakening household impact. In this context, despite the low growth in loans in the year, we were able to maintain the loan risk built through our transformational process, which also influenced our growth phase in 2024. In addition to this, to focus on transactional products that strengthen customer relationships have shown positive signs. For example, we have closed the year with leading growth trends in foreign-trained loans, showing the highest growth in the industry in the last 12 months, and increased car loans, showing the second highest growth in 2023 and in 2024, in comparison with our relevant competitors. In terms of our digital offerings, 87% of the credit card advances were contracted via our digital channel, the ATP and the web. In the third quarter, 64% of our foreign transactions were made via digital service. This goes in line with the satisfaction shown by our clients with our app and web service. Moving on to slide six, we can see that our effort to strengthen the relationships with our clients is fair enough. The first pillar of those efforts is the growth in the demand deposit. We grew 15.3% in the last 12 months in demand deposit compared with a banking industry's growth of 6.7%. In terms of ALREC current account balances, while the banking industry grew by 4.4%, we saw a 9.5% growth in 12 months. In funder costs, we grew in line with the industry, and 94.7% of the funds were made through our digital tunnel in fourth quarter 2024. In the last 12 months, our assets under management grew by 56.9%, 1.6 times faster than the industry. We have consistently shown this higher than industry growth in the latest quarter earnings presentation. It put us in the top one position in terms of assets under management growth in relation to peers and top two in market share growth compared to our peers and other asset managers in 2024. In the fourth quarter of 2024, 88.1% of these transactions were made through our digital channels reinforcing the satisfaction of our clients with their experience in this product. We were also granted a summer award during the year for the best performance in two categories, reinforcing the quality of our asset management. The chart at the bottom of the page shows that the growth in the package and assets under management are contributing to strengthen the relationship with our clients, evidenced by the 11% touchpoint growth in the deposits and assets under management to loan rates, while enhancing the bank's self-funding capacity, evidenced by the growth of 430 touchpoints in the deposits to loan rates. Point seven. Here we provide an overview of our growth in our offering of our product of our product of the year. As mentioned before, we were in the top even bank in first month growth in foreign trade loans with a 32.7% growth being recognized by global finance as leader in trade finance. In terms of investing banking, we stood within the top four banks in multi-financial system deals, having participated in six deals totaling $2.96 million in 2023 and 2024. We also run top two in equity capital markets, with two deals amounting to $253 million in 2024. In that topical market transaction, we ran two in terms of local transaction volume with a market share of 23.1% and ran three international transactions with six deals amounting to $2.1 billion. Our reputation with clients and investors has also been enhanced by the quality of our macroeconomic analysis and equity research team, which has been recognized by the institutional investor magazine as one of the best in Chile during 2024. In December 2024, we reported substantial growth in market share for both spot and derivative trading. Specifically, we achieved an increase of 415 basis points in spot trading and 866 basis points in derivative trading compared to December 2013. This year, our broadcast business So a significant growth in secondary market transactions with an 86% increase in securities intermediation compared to the industry's 5% and a 31% rise in fixed income transactions compared to the industry's 14%. Securities transactions with our proprietary portfolio. Now, by choice, we show how the different initiatives across banks add up to our performance in 2034. We had a growth in income generated by clients with a continuous positive trend in our financial margins with clients despite the decrease in direct monetary policy rates during the year, as we can see in the first chart of the top right side of the page, and the steady growth in commissions and fees. In addition to the above, we saw a challenging risk environment during the year with persistent NPR levels in the first half of 2024, starting to improve in the second half of the year, are still in the chart at the top left side of the page. We continue to see non-interest expenses growth below inflation during 2024 in line with the forecast we had for the year. All that said, we achieved a return on fundable equity of 14.1% in our Chilean operations in 2034, in line with our expectations. Now, in the next slide, we show some of our most important distinguishing factors which allow us to achieve results and will allow us to continue leveraging our strategy moving forward. On slide nine, We are proud to share one of our most valuable distinguishing factors. We continue to be in the leadership in terms of MPS according to services conducted by insurers across all segments. In 2034, we achieved the top one position for the third consecutive year in the retail segment. top two positions in the SME segment, and top one position in the company segment, and also in the top one position in the high network individual segment. Among our most important qualities leading these results, we stand out in quality attention given to our customers, website and ad panels, our capacity of giving solutions and response to our client needs, the suitable and adaptability of our services, and the offering of services and products. Placing the client at the center of all our efforts is not only a pillar of our strategy, but also one of our core values as a bank. In terms of achieving our strategic goals, maintaining the top position in client satisfaction within Chilean banking industry for three consecutive years is pivotal for securing our leadership. This significant accomplishment underscores our dedicated efforts toward customer satisfaction and represents a substantial milestone in our journey towards principality. On slide 10, we are also proud to highlight that our brand and our culture are key factors supporting our position. It's always the largest financial institution with one of the most valuable brands in Latin America, which enable us to grow and to enhance our offer to our clients. This year, we have been engage with different initiatives to deepen our brand communication in Chile and be closer to our clients supporting sports tournaments and with dedicated campaigns to enhance our clients' financial education with the Hablemos campaign. Our unique e-commerce culture that challenges and stimulates our employees to excel is also at the center of that enables us to achieve our goals. Being included in recognized rankings among top companies to work, such as The Great Place to Work in several categories, Top of mind index, best intern kid experiences by first job, top employer, mentor talento, equidad chile, employer for youth, shows that our culture is unique. Our internal employee net promoter tool goes in line with those distinctions, having achieved an all-time high level of 85% satisfaction in November. Moving on to slide 11, we can see that sustainability is also a key factor in the core of our business. In 2024, for the sixth consecutive year, we are also part of the Dow Jones Sustainability Index Miller Pacific Alliance. We have also climbed 10 points in the corporate sustainability assessment by S&P Global in 2024, achieving a score of 70 points out of 100. We also formed the Chilean banking industry in business ethics, financial inclusion, human capital management, and in climate strategy and decarbonization strategy. In terms of our net year goals, We have consistently decreased the greenhouse gas emissions in our operation since 2019. Our diversity and inclusion initiatives this year have impacted more than 200 girls and women directly through programs such as policy and post-degree co-financing, incentives and support to women in STEM and in finance, mentoring and others. We also deployed financial inclusion, charitable support, and disaster relief programs, impacting more than 351 women and 3,300 children through several initiatives, generating a positive contribution to society. Now on slide 12, we showcase that our focus on cost controls is also one of our important distinguishing factors. In the chart on the top right side of the page, we can see that our net interest expenses have been consistently growing less than the banking industry's growth and less than the average growth of our peer growth. In the right side of the page, we show the yearly growth of our cost in the last three years as compared to the banking industry, broken down by personnel, administrative costs, and depreciation, amortization, and impairment costs in the chart at the bottom. You can see that the growth in personnel and in administrative costs show a downward trend in 2022, related to the efficiency growth in the period. In terms of depreciation, amortization, and impairment, the growth trend shows the impact in the development of investments made and their execution highlighting the increase associated with technological investment. On slide 13, we showcase another important distinguishing factor that enable our participants As part of ETAUS in the Bank of Europe, capital is in our DNA. We are at the top two banks in Chile with the largest buffer over minimum regulatory requirements in CEC1 with a solid capital management. In the latest regulators assessment process, It was determined for the second consecutive year that no capital charges should be imposed on us, popular two, reflecting our comprehensive and proactive risk management and how it is reflected in student capital management. Moving on to slide 14. On the fourth quarter of the year, consolidated recurring net income reached 90.8 billion trillion pesos, a 4% increase year-on-year. Consolidated ROT shows 49 basis point decrease year-on-year, reaching 10.6%. Consolidated financial margin with clients decreased by 5.5% year-on-year, reaching 335.3 billion trillion pesos. Consolidated commissions and fees reached 56.5 billion trillion pesos, averaging 19.4% growth year-on-year. Consolidated non-interest expenses grew by 1.2%, reaching 204.6 billion trillion pesos. Consolidated trade portfolio reached 27.9 trillion trillion pesos, while the consolidated efficiency ratio improved by 1.3% to 52.8% year-on-year. The consolidated CEP ratio reached 10.6% at 25 basis points increased year-on-year. On slide 15, you can see that financial margin with the client experienced an increase of 0.8% in the first quarter compared to the previous year. This growth is explained by a higher margin loan and an increase in the performance of the reliability portfolio, allowing them to offset the decline in commercial stress and derivatives and excess contractual decline in facilities in comparison to the last quarter. From the first quarter of 2023, the financial margin of decline decreased by 2.7%. This violation is typically raised in the mandatory quarantine law, which has an impact on the self-liability of people, and the principle of self-liability is so hard to understand for all people of color. People from the United States need to be served a national mark in the market. In the first quarter, the financial market decreased by 1.6 billion trillion pesos compared with the previous quarter, leading to negative effects on the valuation of institutions in derivatives managed by the trading debt. However, based on the greater variation in the U.S. with quarters in the quarter, and increase was observed in the results obtained in the management of the bank's net asset mismatch index currency, which partially mitigated the low results of derivatives. It is worth mentioning that the bank's net flow of assets liabilities and derivatives contracted in inflation as of December 2024 shows a reduction compared to that observed at the end of the previous quarter, consistent with the inflation expectations for 2025. Compared to the fourth quarter of 2023, the financial margin with the market decreased by 104%. This reduction is due to negative effects on the ALM management derived from the lower growth of the loan portfolio and the decrease in results due to the U.S. readjustment, which reduced a variation of 1.3% in the first quarter of 2024 compared to 1.6% in the first quarter of 2023. In addition, movement in the rate curves negatively affected the valuation of derivative positions managed by trading in the fourth quarter 2024. Now, on slide 17, we show that in the fourth quarter of the year, commissions and team income reached 47.4 billion trillion pesos, representing an increase of 7.3% compared to the previous quarter. This increase is mainly explained by higher insurance progress income supported by the higher activity in consumer credit originations observed in the last quarter of the year. Additionally, we saw higher results in credit cards related to the commercial strategies and actually carry out in the context of the bank's new value offer in both quarters, on-quarter, on-quarter, and year-on-year compilations. In the first quarter of 2014, the positive trend in investment management performance continued, achieving a growth of 592%. million trillion pesos in asset management commissions quarter over quarter. Compared to the same period in 2023, there was a 32.1% increase in commissions and fees income. This increase is explained by higher income driven by the materialization of higher volume of structuring services provided to South corporate business clients and higher credit score commissions resulting from the decrease in disbursement related to the bank's loyalty program and the strategies carried out in the context of the application of the bank's new value offers in this product. Additionally, compared to four quarters in 2003, 59.9% increase in asset management commissions stood out right from the sustained growth in volume and average assets under management. This movement helped to add a 30% increase in direct growth rate. Affected by the slower growth rate even in the S&P. Moving on to the first quarter of the year, the current term is the 2015 ADHA Act, which includes a cost-in-point rate of 10% for children's sports. This is an action related to the impact of specific events recognized in the first quarter of the year in schools. That was the definition of a burden. Are you trying to make a reversal? Are you trying to make a reversal? I'm trying to make a reversal. I'm trying to make a reversal. I will resume on slide 18.

So in the fourth quarter of the year, the cost of credit total 68 billion trillion pesos, a decrease of 14.8% compared to the previous quarter. This reduction is mainly due to the impact of specific events recognized in the third quarter 2024, such as the completion of an impairment of a title associated with the Itaú corporate business. Additionally, we made a reversal of additional provisions amounting 53.1 billion Chilean pesos which were constituted in previous years to anticipate impact from higher post-pandemic delinquency and the effect of the application of the new standard consumer metrics as those impacts were less significant than expected. Likewise, among the movements recognized in the last quarter, the increase of in-credit recoveries associated with commercial operations of retail banking, a decrease in consumer write-offs, and the recognition of gains derived from the materialization of sale of assets received in payment stood out. Compared to the fourth quarter of 2023, the cost of credit showed a reduction of 18% due to events recorded in the fourth quarter of 2023, such as the recognition of higher consumer write-offs and rating changes applied to Itao corporate clients. Additionally, in the fourth quarter of 2024, there was a decrease in the constitution of credit provisions influenced by the lower growth of the loan portfolio and containment of delinquency carried out throughout the year, which began to have more significant effect during the second half. Complementing the above, in the fourth quarter of 2024, sales of assets receiving payment were completed, positively impacting the recovery results. In the fourth quarter of the year, the net provision for credit losses of the loan portfolio show a decrease of 22 basis points compared to the previous quarter because of the improvement in the cost of credit for the quarter, which also led to a decrease of 29 basis points in this index compared to the same period of the previous year. Considering the above, the net provisions for credit losses on the loan portfolio remain within the target range defined in the forecast 2024, showing a positive downward trend. The total allowance for loan losses, including additional provisions, increased by 1.2% compared to the previous quarter as a result of a reversal of additional provisions observed in the third quarter of 2024. since the average loan portfolio did not represent a significant variation in the last quarter, reaching 23.2 trillion Chilean pesos. Given the above, the ratio of total allowance for loan losses, including additional provisions on the loan portfolio, stood at 3.11%, three basis points lower than the third quarter 2024 indicator, and 21 basis points lower than the recorded on the same date of 2023. The NPL coverage ratio totals 153% in the fourth quarter of the year, showing a growth of 11 percentage points compared to the previous quarter, given the movement of the reduction in the NPL portfolio. of the commercial loan portfolio recorded in recent months. Compared to fourth quarter 2023, there was a three percentage point in the coverage ratio due to the 2% reduction in the NPL portfolio, while the subdivision, including the additional one, saw a decrease of 4.2%. NPL's ratio show a decrease of 18 basis points compared to the previous quarter, reaching 2% because of the lower level of the NPL portfolio mentioned above, while the long portfolio grew by around 2% in nominal terms. Compared to the fourth quarter of 2023, there was a reduction of 8 basis points in the ratio given the positive movement of the NPR portfolio recorded in recent months, which is complemented by a 2.1% growth in the loan portfolio level. Regarding the composition of the non-performing loan portfolio, in the fourth quarter of 2024, a general decline was observed in the commercial and consumer loans portfolio indices explaining the 18 basis point decrease in the total loan ratio. In relation to the composition of the portfolio, the decline observed in the consumer loan stood out, which considers a 5.1% reduction in the NPL portfolio, while the loan portfolio grew by 3.2%. Considering the trend represented by the delinquency indices, it is expected that consumer loans will remain stable having surpassed the period of greatest pressure, partly due to the performance of the refinance portfolio during the pandemic period. On the other hand, the mortgage delinquency index remained stable in the last quarter of the year, showing an increase of 29 basis points compared to the same period of the previous year, reflecting the adjustment of interest rate that has impacted on the performance of the mixed-rate mortgage loan portfolio. Meanwhile, the NPL ratio for commercial loans rose to 2.16%, 26 basis points lower than the index observed in the previous quarter, and 29 basis points lower than the same date in 2023. On slide 19, we observed that personal expenses in the fourth quarter show a slight increase compared to the same quarter in 2023 as a result of a compensation between the effect of adjustability that affects salaries and lower severance expenses recorded in fourth quarter 2024, considering that headcount adjustments were mainly made during 2023. Administrative expenses total 68.9 million Chilean pesos, representing an increase of 19.3% compared to the previous quarter. This variation is explained by an increase in the volume of transactions associated mainly with derivative operations, credit cards, and foreign currency transactions, which resulted in a rise in processing and disbursement expenses related to the commercial management carryout in addition to higher donations made in the last quarter. Compared to fourth quarter 2023, administrative expenses show a decrease of 3.3% supported by improvements derived from services contracted negotiations completed during the year, as well as the recognition of higher expense recoveries for operational losses recorded in the last quarter of 2024. This movement has counteract the effect of the increase in commercial and operational expenses derived from the growth in volume of transactions mentioned earlier. Depreciation, amortization, and impairment expenses totaled 16.8 billion Chilean pesos in the fourth quarter of 2024, showing an increase of 15.9% compared to the previous quarter and 16% compared to the fourth quarter 2023. This is due to the activation of various projects associated with technological improvements that are currently in progress. Our efficiency ratio in Chile in 2024 stood at 42.5 percent. Moving on to slide 20, we showed that we have maintained a solid capital position with a margin with respect to regulatory minimum. Our TET1 ratio fully loaded has increased during the last quarter by 16 basis points, achieving 10.6% and increased by 25 basis points year on year. In addition, we have issued $200 million 81 bond in December, improving our capital base by an additional 65 basis points. In February, we have issued an additional $100 million AT1 bond. The impact on the AT1 in our Tier 1 ratio is of approximately 32 basis points. Our liquidity ratios are also well positioned among peers and significantly above regulatory limits in line with our risk appetite and funding strategy. we have maintained a solid capital position with a margin with respect to regulatory minimum. Finally, as mentioned before in this presentation, for the second consecutive year, we did not receive an additional capital charge for PILA II by the CMS. In this context, we can see on slide 21 that the bank in Colombia showcases stable and better credit ratios despite the environment and low economic activity and still a high deterioration of the consumer portfolio and constructor segments. The ROE of our Colombian operation improved 2.6 times compared to 2024 due to our focus on the comprehensive relationship with our clients and the strategy deployed in the latest years of streamlining our operations and focus on specific segments. Ita Colombia also maintains robust capital and liquidity ratios in comparison to its peers and the banking industry. On slide 22, we outline our guidance for the Chilean operation. We expect a loan growth of around mid-single digit in line with market expectations. As for commissions and fee, we expect a growth of around 5% to 10%. We anticipate our average rate of financial margin with clients to remain stable with the interest rate. For cost of credit, our plan is to maintain a range between one and 1.3%. We expect costs to grow below inflation levels in line with our cost control drive. Finally, we expect an ROT for 2025 to be in the range of 13% to 15%. On slide 23, we recap the key messages of this presentation. Despite the industry's low growth in loans in 2024, we were able to maintain the loan mix which we are pursuing since the deployment of our transformational path. Our distinguishing factors, brand, present, culture, sustainability, cost control, and capital management will allow us to leverage our strategy moving forward and to achieve sustainable results. The strong results we have achieved in growth in transactional products in our focus deepens the relationship with our clients is consistent with our strategy of principality. We are building upon our transformation in order to continuously deliver an enhanced balance structure and capital base, moving towards the sustainable profitability levels we are seeking for the future. With that, we conclude the presentation that we have for you today. Thank you, everyone. So now we will gladly take any questions that you might have.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. At this time, I would like to remind to ask a question, press the star button followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star one again. One moment, please, for your first question. Your first question comes from the line of Alonso Arambro of BTG Patrol. Please go ahead.

Yes, hi, good morning, and thank you for the call. I was wondering if you can give us maybe some guidance as to what to expect in Colombia for this year. You've got a nice improvement, especially this quarter on cost of risk. Do you believe that that's a level that's sustainable? And with that, can you get ROEs maybe closer to the mid to high single digits this year? Thank you.

Hello. Hi, it's Andre Gailey. We believe that our Columbia operation will keep improving this year slightly. We still have a very challenging economic environment and high interest rates, even though we expect a 550 basis points drop over the year. Our cost of credit will keep improving, but we expect some pressures on costs due to more efficiencies we are seeking for the year.

Okay. And when you look at low growth in Colombia, what kind of low growth should we expect or are you expecting?

We're expecting very small low growth.

Okay. Thank you.

Once again, ladies and gentlemen, if you would have a question, please press star one on your telephone keypad. There are no further questions at this time. With that, I will now turn the call back over to Andre Gailey, CEO, for final closing remarks. Please go ahead.

Well, thank you everyone for the questions and have a very good day.

Ladies and gentlemen, that concludes your conference call. We thank you for participating and ask that you please disconnect your lines.