| | | | | | | | | | | | | | | | | |
| | 4Q22 | | 1Q23 | | 1Q23 / 4Q22 | |
| | Loans | | Allowances | | % | | Loans | | Allowances | | % | | Loans | | Allowances | |
Stage 1 | | 236,770,056 | | 2,875,792 | | 1.2 | % | 232,912,748 | | 2,873,428 | | 1.2 | % | (1.6) | % | (0.1) | % |
Stage 2 | | 18,656,439 | | 3,144,829 | | 16.9 | % | 19,211,879 | | 3,541,002 | | 18.4 | % | 3.0 | % | 12.6 | % |
Stage 3 | | 14,497,244 | | 9,459,019 | | 65.2 | % | 15,144,488 | | 10,098,508 | | 66.7 | % | 4.5 | % | 6.8 | % |
Total | | 269,923,739 | | 15,479,640 | | 5.7 | % | 267,269,115 | | 16,512,938 | | 6.2 | % | (1.0) | % | 6.7 | % |
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 1Q23, operating expenses totaled COP 3,072 billion, decreasing by 4.6% compared to 4Q22 and increasing by 26.0% compared to 1Q22.
Personnel expenses (salaries, bonus plan payments and compensation) totaled COP 1,323 billion in 1Q23, up 11.6% from 4Q22 and up 23.9% from 1Q22. The annual variation is mainly explained by salary increases indexed to inflation, as well as variable compensation provisions.
General expenses decreased 14.0% in the quarter and increased 27.6% year-over-year. The variation in annual terms is affected by external factors such as the depreciation of the Colombian peso against the US dollar, inflation rates and higher taxes other than income tax approved in the last tax reform in Colombia. Internally, the main factors that contributed to growth were technology expenses such as hardware modernization and the journey to the cloud project as part of the digital transformation, as well as the customer rental contracts division (Renting) due to the increase in the active fleet of vehicles.
As of March 31, 2023, Bancolombia had 33,923 employees, owned 872 branches, 6,132 ATMs, 29,443 banking agents and served more than 29 million customers.
2.6.Taxes
Bancolombia's consolidated income tax for 1Q23 presented an expense of COP 586 billion, mainly impacted by Colombia due to the application of tax benefits such as untaxed dividends, exempt income and investment in productive real fixed assets. Additionally, due to the tax benefits in Guatemala, El Salvador and Panama, corresponding to exempt revenue from returns on securities issued by their governments. Revenues from foreign sources that are not taxed in Panama also contributed to a lower tax.
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. presents a decrease of 0.4% in the quarter and an increase of 14.7% in the last 12 months. The slowdown seen since the end of 2022 has continued at the beginning of 2023 following a slower growth rate in the economy, a gradual increase in interest rates and its impact on the payment capacity of companies and individuals. The only segment that presented expansion during the quarter was mortgages, growing 1.5%. The commercial portfolio presented the largest contraction (0.7%) to a greater extent associated to Factoring loans. On the other hand, consumer presented a decrease of 0.4% affected by personal loans and credit card balances.
Net result for Bancolombia S.A. in 1Q23 was COP 1.7 trillion, which represents an increase of 5.2% when compared to the result of 4Q22. Net interest shows a reduction due to a greater increase on interest expenses vs interest income, this effect was caused by a greater volume in term deposits and higher deposit rates. Provision expenses show a quarterly growth of 21.1%, influenced by deterioration in consumer, and expenses associated to macroeconomic variables. Net feese decreased in 1Q23 due to lower revenues in transactional products as a seasonal effect of the last quarter of the year