| | | | | | | | | | | | | | | | | |
| | 1Q23 | | 2Q23 | | 2Q23 / 1Q23 | |
| | Loans | | Allowances | | % | | Loans | | Allowances | | % | | Loans | | Allowances | |
Stage 1 | | 232,912,748 | | 2,873,428 | | 1.2 | % | 227,421,364 | | 2,952,997 | | 1.3 | % | (2.4) | % | 2.8 | % |
Stage 2 | | 19,211,879 | | 3,541,002 | | 18.4 | % | 17,532,705 | | 3,400,503 | | 19.4 | % | (8.7) | % | (4.0) | % |
Stage 3 | | 15,144,488 | | 10,098,508 | | 66.7 | % | 16,026,819 | | 10,609,371 | | 66.2 | % | 5.8 | % | 5.1 | % |
Total | | 267,269,115 | | 16,512,938 | | 6.2 | % | 260,980,888 | | 16,962,871 | | 6.5 | % | (2.4) | % | 2.7 | % |
Stage 1. Financial instruments that do not deteriorate since their initial recognition or that have low credit risk at the end of the reporting period. (12-month expected credit losses).
Stage 2. Financial instruments that have significantly increased their risk since their initial recognition. (Lifetime expected credit losses).
Stage 3. Financial instruments that have Objective Evidence of Impairment in the reported period. (Lifetime expected credit losses).
2.5.Operating Expenses
During 2Q23, operating expenses totaled COP 3,171 billion, increasing by 3.2% compared to 1Q23 and by 25.8% compared to 2Q22.
Personnel expenses (salaries, bonus plan payments and compensation) totaled COP 1,354 billion in 2Q23, up 2.4% from 1Q23 and up 28.9% from 2Q22.
General expenses decreased 3.9% in the quarter and increased 23.7% compared to 2Q22. Firstly, investments in technology and digital transformation have had a continuous impact in Bancolombia on a consolidated basis. Secondly, the Renting business has demanded important expenses following the growing activity in this division. Finally, the higher taxes derived from the Colombian tax reform, as well as inflation rates and depreciation of the local currency in annual terms, have had altogether an important impact as external factors on the incurred incremental volume of general and personnel expenses.
As of June 30, 2023, Bancolombia had 34,442 employees, owned 865 branches, 6,151 ATMs, 29,580 banking agents and served more than 29 million customers.
2.6.Taxes
Bancolombia's consolidated income tax for 2Q23 presented an expense of COP 426 billion, which results in an effective rate lower than the statutory rate at the different geographies due to the application of tax benefits, mainly related to untaxed dividends, exempt revenue from interests on social housing loans and yields on government-issued securities, investment in productive real fixed assets and finally the stabilized rate of the Leasing business unit 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. presented an increase of 1.7% in the quarter and 9.6% in the last 12 months. The quarterly change reflects a different performance after the contraction experienced in 1Q23, despite the environment of high interest rates and was led by commercial loans that increased 2.6% in the period. The consumer portfolio, in contrast, presented a contraction of 1.0% impacted by lower originations in personal loans.
Net result for Bancolombia S.A. in 2Q23 it was COP 1.4 trillion, which represents a reduction of 20.9% when compared to the result of 1Q23. Investments income displayed a significant decrease in the quarter, explained by lower income from valuation of debt securities, mainly in foreign currency securities. On the contrary, loan interest income reported a favorable performance because of the increase in the commercial portfolio and higher yields. On the other hand, interest expenses grew due to the higher average balance in term deposits and a higher deposit rate. It is worth noting the growth in provision expenses originated in the deterioration of segments such as individuals and small independent businesses. Other operating income showed a significant decrease mainly due to the equity method, impacted by foreign subsidiaries and the subjacent exchange effect in the quarter. The net interest margin for 2Q23 for Bancolombia S.A. was 7.5% and annualized quarterly ROE was 14.5%.