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RISK MANAGEMENT

12 Months Ended

Dec. 31, 2024

Disclosure of risk management [abstract]

Disclosure of risk management [text block]

NOTE 4 – RISK MANAGEMENT

Grupo Aval and its subsidiaries in the financial sector, Banco de Bogotá, Banco de Occidente, Banco AV Villas, Banco Popular, Corficolombiana, Porvenir, Aval Fiduciaria and Aval Casa de Bolsa manage risk pursuant to the applicable regulations in each country where they operate and according to Grupo Aval’s policies.

The risk framework requires that strong risk management practices are integrated in the key processes across Grupo Aval with a goal of ensuring risks are appropriately considered, evaluated and responded to in a timely manner. Grupo Aval employs a risk management process that aims to identify, measure, monitor and control, as part of the daily activities, all the risks that Grupo Aval is exposed to.

Three lines model: in addition to the roles of Executive Officers in managing risk, management has ownership and accountability across the three lines of defense: (1) First Line: Business Units, (2) Second Line: mainly concentrated in the Independent Risk Management units and (3) Third line: Corporate Audit.

●

Business Units: Include the business lines as well as the Technology and Operations areas which are responsible for appropriate assessment and effective management of all risks associated with their processes.

●

Independent Risk Management Units: Risk management areas include risk management and compliance departments. Grupo Aval has other control functions that are not part of these areas but are also key in risk mitigation of non-financial risks, including legal, human resources certain activities within the financial and administrative processes.

●

Corporate Audit: Corporate audit maintains its independence from the first and second lines by reporting directly to the Audit Committee or the Board. Corporate Audit provides independent assessment and validation through testing of key processes and controls across Grupo Aval.

The following sections outline the key financial risks that are inherent to the business activities of the subsidiaries:

Financial risks

Credit risk: the risk of financial loss if a debtor fails to meet their contractual obligations.

ii)

Market risk: the risk of loss arising from potential adverse movements in the value of the subsidiaries in the financial sector assets and liabilities or future results, arising as a result of changes in market variables such as interest rates, foreign exchange rates, equity prices, commodity prices, implied volatilities or credit spreads; this includes the structural interest rate and foreign exchange risks.

iii)

Interest rate risk: it is the current or potential risk to equity and profits that arise from adverse movements in interest rates, which affect the positions of the banking book.

iv)

Liquidity risk: the risk of being unable to meet contractual and contingent obligations or that the subsidiaries in the financial sector do not have the appropriate amount, composition and tenor of funding and liquidity to support the financial assets and liabilities requirements (funding liquidity risk). Also includes the capability to manage its investment portfolio in terms of liquidity, duration and currency (market liquidity risk).

Additionally, the risk areas are responsible for supporting capital management by determining risk levels of the calculation of capital adequacy requirements, impact assessment of the risk materialization on compliance with capital levels and determining the levels of risk appetite.

Objective and general guidelines of financial risk management

Grupo Aval’s and its subsidiaries of the financial sector objective is to maximize returns for its investors through strong risk management. The guiding principles of risk management at Grupo Aval are as follows:

Make risk management a part of every institutional process.

Collective decision making for the approval of commercial lending of significant amounts.

Extensive and in-depth industry and market knowledge, as a result of sound leadership and experienced, stable and seasoned senior management..

Clear risk management policies based on a top-down approach with respect to:

●

Compliance with know-your-customer policies.

●

Commercial loans credit structure based on clear identification of sources of repayment as well as cash flow generation capacity of the borrower.

Use of similar credit analysis tools for analysis across Grupo Aval’s subsidiaries of financial sector.

Diversification of the commercial loan portfolio with respect to industries and economic groups.

Specialization in consumer product niches.

Extensive use of continuously updated scoring models and up-to-date credit ratings to ensure quality growth of loans with high credit quality.

Conservative policies in terms of:

●

Trading portfolio composition with bias towards lower volatility instruments.

●

Proprietary trading position.

●

Variable compensation for the trading staff.

Control the position-level exposures based on market risk sensitivities (such as VaR, DV01, Delta, Rho and Vega) and credit risk exposures by counterparties.

Concentration and diversification limits which are based on market liquidity and volatility, operational capacity, valuation and credit quality of counterparties.

Control and follow up on the funding and liquidity risk with independent oversight. This includes setting limits related to high quality liquid assets and maturity concentration of financial liabilities among others.

Ensuring compliance with regulatory limits and reviewing how the current and projected strategy can affect those limits.

Use of our market experience in the identification and implementation of best practices for risk management.

Main premises for risk management

Grupo Aval´s risk culture is based on the principles indicated in the section above, which are transmitted to all subsidiaries of the financial sector and business units. The strategy related to risk management is supported by the following guidelines:

In the financial sector subsidiaries of Grupo Aval, the risk function is independent of the business units. The segregation of functions between the business areas and the risk areas in charge of risk measurement analysis, control and reporting, provide enough independence and autonomy for proper risk control.

The decision-making process at the subsidiaries of the financial sector requires that transactions of significant amounts are sent to decision centers such as risk committees. The frequency of meetings of these committees ensures a high degree of agility regarding proposal resolution, and continuous participation of senior management in management of various risks.

Grupo Aval has corporate policies for the risks to which it is exposed. The business and risk units of Grupo Aval and its subsidiaries of the financial sector hold orientation meetings based on approaches to risk that are consistent with Grupo Aval´s risk culture.

Grupo Aval has implemented a risk system that is updated on a regular basis to address new conditions in the markets and the risks to which Grupo Aval is exposed.

There are adequate information systems to monitor risk exposure, ensure compliance with the approved policies and implement appropriate corrective actions as and when necessary.

Key risks are analyzed on a regular basis, not only when risks materialize or problems occur during the normal course of business but in a continuous process of risk management.

Grupo Aval and its subsidiaries of the financial sector have training courses on risk culture for all hierarchy levels in the organization.

A risk culture has been integrated throughout the organization, consisting of a series of attitudes, values, skills and guidelines to action.

Disclosure of risk management, credit risk [text block]

Financial Risk Review

4.1 Credit Risk

4.1.1 Consolidated Credit Risk Exposure

Grupo Aval´s subsidiaries are exposed to credit risk, consisting of the risk of financial loss as a result of a failure of a debtor to meet their contractual obligations in financial transactions on a timely and complete manner. Exposure to credit risk for Grupo Aval and its subsidiaries is a result of credit activities and transactions with counterparties.

The maximum exposure to credit risk of Grupo Aval, at a consolidated level is reflected in the carrying value of financial assets in the Consolidated Statement of Financial position of Grupo Aval as of December 31, 2024, and 2023 as follows:


Assets	December 31, 2024		December 31, 2023
Cash and cash equivalents ^(*)	Ps.	13,256,505	Ps.	14,788,750
Trading investments in debt securities		11,937,414		7,113,380
Investments in debt securities mandatorily at FVTPL		1,425		1,889
Investments in debt securities at FVOCI		27,050,198		23,326,776
Investments in debt securities at amortized cost		10,708,367		9,996,561
Derivatives instruments		969,294		2,077,567
Hedging derivatives		54,019		48,662
Loans
Commercial		115,414,643		107,047,817
Consumer		61,976,325		59,999,611
Mortgage		22,035,727		18,486,206
Microcredit		4,375		277,529
Interbank and overnight funds		705,055		392,607
Other accounts receivable FVTPL		4,181,835		3,830,916
Other accounts receivable at amortized cost		24,138,538		22,171,973
Total financial assets with credit risk	Ps.	292,433,720	Ps.	269,560,244
Financial instruments with credit risk outside of the statement of financial position at its nominal value
Financial guarantees and letters of credit		3,082,949		3,052,607
Credit commitments		28,316,543		26,745,937
Total exposure to credit risk outside of the statement of financial position ^(**)	Ps.	31,399,492	Ps.	29,798,544
Total maximum exposure to credit risk	Ps.	323,833,212	Ps.	299,358,788

^(*) Not including funds in the entity’s custody (cash, tellers, vaults), because there is no credit risk regarding Grupo Aval entities. See Note 4.1.3 h)

^(**) See details in note 4.1.9.

With regard to guarantees and commitments to extend credit amounts, the maximum credit risk exposure is the amount of a commitment. Credit risk is mitigated by guarantees and collaterals as described in note 4.1.4 Mitigation of Credit Risk, Collateral and Other Credit Risk Enhancements.

Each of Grupo Aval´s financial subsidiaries assume the credit risk for both the credit activities, which includes commercial, consumer, mortgage and microcredit credit lending, and treasury activities including interbank loans, investment portfolio management, derivatives and foreign currency trading activities among others. Despite being independent businesses, the nature of insolvency risk of a borrower or counterparty is similar and therefore the criteria in which they are evaluated is similar.

4.1.1.A. Loan portfolio disclosure

Loans are recorded at amortized cost in the Consolidated Statement of Financial Position, and are classified as commercial, consumer, residential mortgage, microcredit, interbank and overnight funds. The following table presents the portfolio balances, provision balances and net value portfolio by segment:

December 31, 2024


					Total loan
Portfolio segment	Loan Portfolio		Loss allowance		Portfolio, net
Commercial	Ps.	116,119,698	Ps.	5,363,688	Ps.	110,756,010
Interbank and overnight funds		705,055		795		704,260
Client portfolio		115,414,643		5,362,893		110,051,750
Consumer		61,976,325		4,166,018		57,810,307
Residential mortgage		22,035,727		473,315		21,562,412
Microcredit ⁽¹⁾		4,375		3,618		757
Total portfolio	Ps.	200,136,125	Ps.	10,006,639	Ps.	190,129,486

⁽¹⁾The decrease corresponds to the sale of portfolio by Banco de Bogotá for Ps.236,805

December 31, 2023


					Total loan
Portfolio segment	Loan Portfolio		Loss allowance		Portfolio, net
Commercial	Ps.	107,440,424	Ps.	5,294,622	Ps.	102,145,802
Interbank and overnight funds		392,607		22		392,585
Client portfolio		107,047,817		5,294,600		101,753,217
Consumer		59,999,611		4,307,446		55,692,165
Residential mortgage		18,486,206		379,987		18,106,219
Microcredit		277,529		53,660		223,869
Total portfolio	Ps.	186,203,770	Ps.	10,035,715	Ps.	176,168,055

4.1.1.B Loan portfolio given as collateral

In 2024 and 2023, there were no portfolio operations delivered as collateral in resource auction operations with Banco República.

4.1.2 Loan and Counterparty Approval Process for subsidiaries in the financial sector

The principles and rules for credit management and credit risk for each financial subsidiary are contained in the credit manual, both for commercial banking activities and treasury activities. Evaluation criteria to measure credit risk follows the principal instructions set forth by the Treasury and Credit Risk Committees.

The maximum authority regarding lending is the Board of Directors for each bank, which approves the general policy and has the capacity to approve large size transactions. In the normal banking operation, authorizations for approval of loans and lines of credit depend on the amounts, credit quality, tenor and security collateral or guarantees offered by the client. The Board of Directors of each bank has delegated part of its lending authorities to different committees and executives who process the credit requests and are responsible for the analysis and credit review.

Additionally, for the approval of credits, certain considerations are considered including but not limited to the probability of default, the recovery percentage of guarantees received, current customer exposure and tenor & concentration by economic sector.

Regarding treasury operations, the Boards of Directors of the financial subsidiaries approve lines of credit for counterparties. Risk control is essentially carried out through three mechanisms: periodic approval of lines of credit, evaluation of the conditions of the issuers at least annually and a report on concentrations for each client or economic group.

Although each financial subsidiary is responsible for its credit decisions and risk management, Grupo Aval as the holding entity, oversees the implementation of appropriate risk management controls at the financial subsidiaries through the Corporate Risk Unit. The holding’s risk management staff meets on a periodically basis to discuss Grupo Aval subsidiaries’ loan portfolio, developments in industry, risks and opportunities. Additionally, Grupo Aval through the Credit Projects Unit reviews credit exposures approved by

the Group's financial entities, in accordance with guidelines established based on financial indicators, group exposure, economic sectors, among others. This process was developed to effectively leverage the combined equity of its Banks and manage any risk issues.

Each subsidiary of the financial sector has a Credit Risk Management System, which is managed by the risk vice-presidency or its equivalent, and includes, among others, the design, implementation and evaluation of policies and risk mechanisms defined by the Risk Committee and the Board of Directors of each entity. The operation of the Credit Risk Management System has resulted in the integration of risk measurement tools into the credit approval process in each of the financial subsidiaries.

Each subsidiary of the financial sector in Colombia has two models for evaluating credit risk for the approval of commercial loans. The first is the financial ratings model, which consists of statistical models based on the client´s financial information, which are used in the approval process and for portfolio management and monitoring. The second model is based on the client´s financial ratings and their historical payment behavior with the bank.

For retail loans (including mortgage loans and auto loans) models are based on product line characteristic, sociodemographic variables and the historical payment behavior of the clients with the bank and the financial sector, among others.

As a result of the changes caused by the national and international economic and political situation, periodically review and analyze whether it is necessary to adjust origination strategies, along with approved debt limits in accordance with individual risk analysis, especially for customers identified in high-risk sectors, segments, credit lines and among others.

4.1.3 Credit quality analysis

The Credit-risk Monitoring Process and Credit rating of the loan portfolio

The monitoring process and credit risk review of each financial subsidiary is carried out in several steps including portfolio analysis by vintages, risk level rating, permanent high-risk clients’ review, restructuring processes of operations and the receipt of foreclosed assets as payment.

Periodically the financial subsidiaries classify each client in one of these risk categories: Category Normal, Acceptable, Appreciable, Significant and Non - recoverability, based on the statistical models that each subsidiary has.

In addition, each financial subsidiary evaluates the commercial portfolio by economic sectors, where macro-sectors are evaluated with the purpose of monitoring the concentration per economic sector and the risk level of each one.

At least once a year, each financial subsidiary carries out an individual analysis of credit risk based on updated financial information of the client, payment record, collateral security/guarantees received, credit bureau reports and other qualitative information available; based on the information, clients are classified by risk level as mentioned above.

Each risk category is explained as follows:

Category	PD*	Risk	Description
1	0%- 7.5%	Normal	Appropriately serviced. The debtor’s financial statements or their projected cash flows, as well as all other credit information available to us, reflect adequate paying capacity

2	7.5% - 15%	Acceptable above normal	Adequately serviced and protected, but there are weaknesses which may potentially affect, on a temporary or permanent basis, the debtor’s paying capacity or their projected cash flows to the extent that, if not timely corrected, would affect the collection of the credits as contracted
3	15% - 22.5%	Acceptable above normal

4	22.5% - 30%	Appreciable	Have debtors with insufficient paying capacity or relate to projects with insufficient cash flow, which may compromise the normal collection of the obligations
5	30% - 45%	Appreciable

6	45% - 60%	Significant	Have the same deficiencies as loans in category 4-5, but to a larger extent; consequently, the probability of collection is highly doubtful
7	60% - 90%	Significant

8	> 90%	Non-recoverability	Deemed uncollectible.

^(*) Probability of default – “PD” is the probability that the counterpart defaults in their payment obligations of capital and/or interest.

For mortgage loans and microcredits, the previous classification by risk levels is carried out monthly considering the number of days past due.

In addition, the credit risk exposure is managed through a periodic analysis of the borrowers (or potential borrowers) to determine the repayment capacity of capital and interest. The credit risk exposure is also mitigated partly by obtaining collateral security, corporate and personal guarantees.

The following table sets out information about the credit quality of financial assets measured at amortized cost. Unless specifically indicated, for financial assets, the amounts in the table represent gross carrying amounts. For loan commitments and financial guarantee contracts, the amounts in the table represent the amounts committed or guaranteed, respectively. Based on the foregoing classifications, each financial subsidiary establishes and executes collection strategies directed at maximizing the collection of the loan portfolio.

As of December 31, 2024, and 2023, the following is a summary of the credit portfolio by probability of default. Explanation of the terms: Stage 1, Stage 2 and Stage 3 are included in Note 2 (2.5) (ix) and explained in detail in Note 4.1.5 (Measurement of Expected Credit Loss).

Total Portfolio


	December 31, 2024
	Total Exposure
PD Range	Stage 1		Stage 2		Stage 3		Total
0%- 7.5%	Ps.	165,325,376	Ps.	2,733,552	Ps.	74,867	Ps.	168,133,795
7.5% - 15%		10,731,075		1,379,780		614		12,111,469
15% - 22.5%		535,897		447,250		97		983,244
22.5% - 30%		344,972		556,641		246		901,859
30% - 45%		185,460		1,570,202		1,795		1,757,457
45% - 60%		62,448		948,971		148		1,011,567
60% - 90%		9,205		1,818,316		105,882		1,933,403
> 90%		2,098		63,862		13,237,371		13,303,331
TOTAL	Ps.	177,196,531	Ps.	9,518,574	Ps.	13,421,020	Ps.	200,136,125


	December 31, 2023
	Total Exposure
PD Range	Stage 1		Stage 2		Stage 3		Total
0%- 7.5%	Ps.	155,352,194	Ps.	2,123,462	Ps.	1,662	Ps.	157,477,318
7.5% - 15%		8,001,193		1,491,965		18		9,493,176
15% - 22.5%		635,366		454,652		13		1,090,031
22.5% - 30%		372,476		657,258		17		1,029,751
30% - 45%		122,410		2,115,980		48		2,238,438
45% - 60%		10,436		594,121		382		604,939
60% - 90%		30,479		1,640,781		3,085		1,674,345
> 90%		7		35,828		12,559,937		12,595,772
TOTAL	Ps.	164,524,561	Ps.	9,114,047	Ps.	12,565,162	Ps.	186,203,770

Commercial – Client portfolio


	December 31, 2024
	Total Exposure
PD Range	Stage 1		Stage 2		Stage 3		Total
0%- 7.5%	Ps.	95,690,974	Ps.	1,061,196	Ps.	74,525	Ps.	96,826,695
7.5% - 15%		5,926,757		789,697		603		6,717,057
15% - 22.5%		91,248		147,840		8		239,096
22.5% - 30%		113,165		213,759		225		327,149
30% - 45%		69,485		950,652		1,711		1,021,848
45% - 60%		33,092		223,917		38		257,047
60% - 90%		2,895		76,708		97,492		177,095
> 90%		289		481		9,847,886		9,848,656
TOTAL	Ps.	101,927,905	Ps.	3,464,250	Ps.	10,022,488	Ps.	115,414,643


	December 31, 2023
	Total Exposure
PD Range	Stage 1		Stage 2		Stage 3		Total
0%- 7.5%	Ps.	89,446,752	Ps.	922,338	Ps.	30	Ps.	90,369,120
7.5% - 15%		4,619,984		672,515		14		5,292,513
15% - 22.5%		149,734		141,027		—		290,761
22.5% - 30%		75,014		296,926		—		371,940
30% - 45%		35,159		1,384,320		—		1,419,479
45% - 60%		—		29,600		44		29,644
60% - 90%		1,652		79,911		249		81,812
> 90%		5		3,897		9,188,646		9,192,548
TOTAL	Ps.	94,328,300	Ps.	3,530,534	Ps.	9,188,983	Ps.	107,047,817

Consumer


	December 31, 2024
	Total Exposure
PD Range	Stage 1		Stage 2		Stage 3		Total
0%- 7.5%	Ps.	49,327,615	Ps.	1,473,359	Ps.	339	Ps.	50,801,313
7.5% - 15%		4,600,920		439,437		11		5,040,368
15% - 22.5%		377,855		148,417		89		526,361
22.5% - 30%		230,075		231,107		21		461,203
30% - 45%		115,355		342,328		84		457,767
45% - 60%		29,356		511,606		110		541,072
60% - 90%		6,280		1,478,181		8,389		1,492,850
> 90%		1,809		62,817		2,590,765		2,655,391
TOTAL	Ps.	54,689,265	Ps.	4,687,252	Ps.	2,599,808	Ps.	61,976,325


	December 31, 2023
	Total Exposure
PD Range	Stage 1		Stage 2		Stage 3		Total
0%- 7.5%	Ps.	48,882,951	Ps.	959,967	Ps.	1,624	Ps.	49,844,542
7.5% - 15%		3,162,195		630,148		3		3,792,346
15% - 22.5%		407,118		221,512		13		628,643
22.5% - 30%		287,632		303,389		17		591,038
30% - 45%		83,212		511,700		46		594,958
45% - 60%		5,394		403,500		335		409,229
60% - 90%		27,605		1,347,432		2,836		1,377,873
> 90%		2		31,127		2,729,853		2,760,982
TOTAL	Ps.	52,856,109	Ps.	4,408,775	Ps.	2,734,727	Ps.	59,999,611

Mortgage


	December 31, 2024
	Total Exposure
PD Range	Stage 1		Stage 2		Stage 3		Total
0%- 7.5%	Ps.	19,602,506	Ps.	198,997	Ps.	3	Ps.	19,801,506
7.5% - 15%		201,894		150,646		—		352,540
15% - 22.5%		66,794		150,993		—		217,787
22.5% - 30%		1,718		111,771		—		113,489
30% - 45%		617		277,207		—		277,824
45% - 60%		—		213,437		—		213,437
60% - 90%		—		263,418		1		263,419
> 90%		—		564		795,161		795,725
TOTAL	Ps.	19,873,529	Ps.	1,367,033	Ps.	795,165	Ps.	22,035,727


	December 31, 2023
	Total Exposure
PD Range	Stage 1		Stage 2		Stage 3		Total
0%- 7.5%	Ps.	16,462,013	Ps.	241,157	Ps.	8	Ps.	16,703,178
7.5% - 15%		192,612		189,280		1		381,893
15% - 22.5%		64,124		92,026		—		156,150
22.5% - 30%		1,654		56,932		—		58,586
30% - 45%		594		219,707		2		220,303
45% - 60%		—		160,222		3		160,225
60% - 90%		—		200,657		—		200,657
> 90%		—		804		604,410		605,214
TOTAL	Ps.	16,720,997	Ps.	1,160,785	Ps.	604,424	Ps.	18,486,206

Microcredit


	December 31, 2024
	Total Exposure
PD Range	Stage 1		Stage 2		Stage 3		Total
0%- 7.5%	Ps.	418	Ps.	—	Ps.	—	Ps.	418
7.5% - 15%		312		—		—		312
15% - 22.5%		—		—		—		—
22.5% - 30%		14		4		—		18
30% - 45%		3		15		—		18
45% - 60%		—		11		—		11
60% - 90%		30		9		—		39
> 90%		—		—		3,559		3,559
TOTAL	Ps.	777	Ps.	39	Ps.	3,559	Ps.	4,375


	December 31, 2023
	Total Exposure
PD Range	Stage 1		Stage 2		Stage 3		Total
0%- 7.5%	Ps.	167,871	Ps.	—	Ps.	—	Ps.	167,871
7.5% - 15%		26,402		22		—		26,424
15% - 22.5%		14,390		87		—		14,477
22.5% - 30%		8,176		11		—		8,187
30% - 45%		3,445		253		—		3,698
45% - 60%		5,042		799		—		5,841
60% - 90%		1,222		12,781		—		14,003
> 90%		—		—		37,028		37,028
TOTAL	Ps.	226,548	Ps.	13,953	Ps.	37,028	Ps.	277,529

Interbank and overnight funds


	December 31, 2024
	Total Exposure
PD Range	Stage 1		Stage 2		Stage 3		Total
0%- 7.5%	Ps.	703,863	Ps.	—	Ps.	—	Ps.	703,863
7.5% - 15%		1,192		—		—		1,192
15% - 22.5%		—		—		—		—
22.5% - 30%		—		—		—		—
30% - 45%		—		—		—		—
45% - 60%		—		—		—		—
60% - 90%		—		—		—		—
> 90%		—		—		—		—
TOTAL	Ps.	705,055	Ps.	—	Ps.	—	Ps.	705,055


	December 31, 2023
	Total Exposure
PD Range	Stage 1		Stage 2		Stage 3		Total
0%- 7.5%	Ps.	392,607	Ps.	—	Ps.	—	Ps.	392,607
7.5% - 15%		—		—		—		—
15% - 22.5%		—		—		—		—
22.5% - 30%		—		—		—		—
30% - 45%		—		—		—		—
45% - 60%		—		—		—		—
60% - 90%		—		—		—		—
> 90%		—		—		—		—
TOTAL	Ps.	392,607	Ps.	—	Ps.	—	Ps.	392,607

Loan commitments and financial guarantee contracts


	December 31, 2024
	Total Exposure
PD Range	Stage 1		Stage 2		Stage 3		Total
0%- 7.5%	Ps.	27,724,323	Ps.	65,537	Ps.	666	Ps.	27,790,526
7.5% - 15%		460,057		437,341		46		897,444
15% - 22.5%		79,091		2,207,502		39		2,286,632
22.5% - 30%		22,053		6,514		29		28,596
30% - 45%		12,330		133,364		179		145,873
45% - 60%		539		74,023		52		74,614
60% - 90%		244		2,867		334		3,445
> 90%		5		2,370		169,987		172,362
TOTAL	Ps.	28,298,642	Ps.	2,929,518	Ps.	171,332	Ps.	31,399,492


	December 31, 2023
	Total Exposure
PD Range	Stage 1		Stage 2		Stage 3		Total
0%- 7.5%	Ps.	26,560,070	Ps.	74,846	Ps.	205	Ps.	26,635,121
7.5% - 15%		217,078		901,543		14		1,118,635
15% - 22.5%		30,108		1,684,982		17		1,715,107
22.5% - 30%		8,822		4,715		74		13,611
30% - 45%		1,059		145,865		138		147,062
45% - 60%		2		2,821		252		3,075
60% - 90%		9		1,050		426		1,485
> 90%		1		301		164,146		164,448
TOTAL	Ps.	26,817,149	Ps.	2,816,123	Ps.	165,272	Ps.	29,798,544

Credit quality of financial assets (excluding loan portfolio)

The following is the breakdown of the different financial assets excluding loan portfolio, by credit risk level and type of issuer based on the rating issued by the independent credit ratings agency. A financial asset is considered investment grade if its credit rating is BBB- or higher by Standard & Poor's or Fitch Ratings scale, Baa3 or higher by Moody's scale, F3 or higher by Fitch Ratings Colombia S.A or BRC3 or higher by BRC of Colombia. Otherwise, the financial asset is considered speculative.

Trading investment in debt securities


	December 31, 2024		December 31, 2023
Investment grade
Sovereign ^(*)	Ps.	10,699,113	Ps.	5,764,699
Other public entities ^(**)		12,450		18,886
Corporate		3,996		3,412
Financial entities		161,465		349,273
Total investment grade	Ps.	10,877,024	Ps.	6,136,270
Speculative grade
Sovereign ^(*)	Ps.	17,824	Ps.	62,213
Other public entities ^(**)		171,310		136,851
Corporate		30,527		42,581
Financial entities		840,729		735,187
Total Speculative grade	Ps.	1,060,390	Ps.	976,832
Without grade or not available
Corporate	Ps.	—	Ps.	278
Total without grade or not available	Ps.	—	Ps.	278
	Ps.	11,937,414	Ps.	7,113,380

^(*) A sovereign credit rating considers the risk of Treasury issuer or similar agency (government debt portfolio).

^(**) Corresponds to operations with government entities, including public administrations in general (including regional and local governments).

Investments in debt securities mandatorily at FVTPL


	December 31, 2024		December 31, 2023
Speculative grade
Corporate	Ps.	1,425	Ps.	1,889
Total Speculative grade	Ps.	1,425	Ps.	1,889

Investments in debt securities at FVOCI


	December 31, 2024
	Stage 1		Stage 2		Stage 3		Total
Investment grade
Sovereign ^(*)	Ps.	19,577,886	Ps.	—	Ps.	—	Ps.	19,577,886
Other public entities ^(**)		33,584		—		—		33,584
Central banks		204,855		—		—		204,855
Corporate		66,347		—		—		66,347
Financial entities		1,447,702		—		—		1,447,702
Multilaterals		333,279		—		—		333,279
Total investment grade	Ps.	21,663,653	Ps.	—	Ps.	—	Ps.	21,663,653
Speculative grade
Sovereign ^(*)	Ps.	3,192,832	Ps.	—	Ps.	—	Ps.	3,192,832
Other public entities ^(**)		429,161		—		—		429,161
Corporate		367,087		—		—		367,087
Financial entities		1,134,852		—		—		1,134,852
Multilaterals		4,274		—		—		4,274
Total speculative grade	Ps.	5,128,206	Ps.	—	Ps.	—	Ps.	5,128,206
Without Grade or Not available
Corporate	Ps.	214,110	Ps.	—	Ps.	—	Ps.	214,110
Financial entities		44,229		—		—		44,229
Total Without Grade or Not available	Ps.	258,339	Ps.	—	Ps.	—	Ps.	258,339
	Ps.	27,050,198	Ps.	—	Ps.	—	Ps.	27,050,198

^(*) Sovereign credit rating is considered as the risk of the Treasury issuer or a similar agency (government debt portfolio).

^(**) Corresponds to operations with government entities; including public administrations in general (includes regional and local governments).


	December 31, 2023
		Stage 1		Stage 2		Stage 3		Total
Investment grade
Sovereign ^(*)	Ps.	16,879,453	Ps.	—	Ps.	—	Ps.	16,879,453
Other public entities ^(**)		123,996		—		—		123,996
Central banks		145,489		—		—		145,489
Corporate		93,637		—		—		93,637
Financial entities		1,085,737		—		—		1,085,737
Multilaterals		330,748		—		—		330,748
Total investment grade	Ps.	18,659,060	Ps.	—	Ps.	—	Ps.	18,659,060
Speculative grade
Sovereign ^(*)	Ps.	2,418,378	Ps.	—	Ps.	—	Ps.	2,418,378
Other public entities ^(**)		739,792		—		—		739,792
Corporate		273,144		—		—		273,144
Financial entities		1,056,910		—		—		1,056,910
Multilaterals		3,549		—		—		3,549
Total speculative grade	Ps.	4,491,773	Ps.	—	Ps.	—	Ps.	4,491,773
Without Grade or Not available
Corporate	Ps.	175,943	Ps.	—	Ps.	—		175,943
Total Without Grade or Not available	Ps.	175,943	Ps.	—	Ps.	—	Ps.	175,943
	Ps.	23,326,776	Ps.	—	Ps.	—	Ps.	23,326,776

^(*) Sovereign credit rating is considered as the risk of the Treasury issuer or a similar agency (government debt portfolio).

^(**) Corresponds to operations with government entities; including public administrations in general (includes regional and local governments).

Investments in debt securities at amortized cost

December 31, 2024

Stage 1

Stage 2

Stage 3

Total

Investment grade

Sovereign ^(*)

Ps.

2,584,348

Ps.

—

Ps.

—

Ps.

2,584,348

Financial entities

2,321,902

—

2,321,902

Total investment grade

Ps.

4,906,250

Ps.

—

Ps.

—

Ps.

4,906,250

Speculative grade

Other public entities ^(**)

Ps.

5,563,208

Ps.

—

Ps.

—

Ps.

5,563,208

Corporate

64,709

—

64,709

Financial Entities

6,647

—

6,647

Total speculative grade

Ps.

5,634,564

Ps.

—

Ps.

—

Ps.

5,634,564

Without Grade or Not available

Corporate

Ps.

76,915

Ps.

68,638

Ps.

—

Ps.

145,553

Financial Entities

22,000

—

22,000

Total Without Grade or Not available

Ps.

98,915

Ps.

68,638

Ps.

—

Ps.

167,553

Ps.

10,639,729

Ps.

68,638

Ps.

—

Ps.

10,708,367

^(*) Sovereign credit rating is considered as the risk of the Treasury issuer or a similar agency (government debt portfolio).

^(**) Corresponds to operations with government entities; including public administrations in general (includes regional and local governments).

December 31, 2023

Stage 1

Stage 2

Stage 3

Total

Investment grade

Sovereign ^(*)

Ps.

2,593,978

Ps.

—

Ps.

—

Ps.

2,593,978

Financial entities

2,016,078

—

2,016,078

Total investment grade

Ps.

4,610,056

Ps.

—

Ps.

—

Ps.

4,610,056

Speculative grade

Other public entities (**)

Ps.

5,112,355

Ps.

—

Ps.

—

Ps.

5,112,355

Corporate

63,824

—

63,824

Financial entities

5,761

—

5,761

Total speculative grade

Ps.

5,181,940

Ps.

—

Ps.

—

Ps.

5,181,940

Without Grade or Not available

Corporate

Ps.

83,066

Ps.

60,344

Ps.

—

Ps.

143,410

Financial Entities

61,155

—

61,155

Total Without Grade or Not available

Ps.

144,221

Ps.

60,344

Ps.

—

Ps.

204,565

Ps.

9,936,217

Ps.

60,344

Ps.

—

Ps.

9,996,561

^(*) Sovereign credit rating is considered as the risk of the Treasury issuer or a similar agency (government debt portfolio).

^(**) Corresponds to operations with government entities; including public administrations in general (includes regional and local governments).

Other accounts receivable at FVTPL


	December 31, 2024		December 31, 2023
Investment grade
Sovereign ^()(*)	Ps.	4,181,835	Ps.	3,830,916
Total investment grade	Ps.	4,181,835	Ps.	3,830,916

^(*) Sovereign credit rating is considered as the risk of the Treasury issuer or a similar agency (government debt portfolio).

^(**) Sovereign corresponds to the financial assets in concession arrangements rights at fair value.

Other accounts receivable at amortized cost


		December 31, 2024
		Stage 1		Stage 2		Stage 3		Simplified Approach		Total
Other receivables using general approach
Other accounts receivable and contract assets for government and corporate customers	Ps.	15,962,982	Ps.	—	Ps.	1,298	Ps.	—	Ps.	15,964,280
Other accounts receivable related to gas, energy services, contributions and others		1,497,946		130,745		144,634		—		1,773,325
Other receivables using simplified approach
Other accounts receivable from individual customers		—		—		—		6,400,933		6,400,933
Total other receivables	Ps.	17,460,928	Ps.	130,745	Ps.	145,932	Ps.	6,400,933	Ps.	24,138,538


		December 31, 2023
		Stage 1		Stage 2		Stage 3		Simplified Approach		Total
Other receivables using general approach
Other accounts receivable and contract assets for government and corporate customers	Ps.	14,569,999	Ps.	—	Ps.	1,535	Ps.	—	Ps.	14,571,534
Other accounts receivable related to gas, energy services, contributions and others		1,143,548		119,607		184,829		—		1,447,984
Other receivables using simplified approach
Other accounts receivable from individual customers		—		—		—		6,152,455		6,152,455
Total other receivables	Ps.	15,713,547	Ps.	119,607	Ps.	186,364	Ps.	6,152,455	Ps.	22,171,973

Evaluated using general approach

The following table provides information about the exposure to credit risk for other accounts receivable and contract assets for corporate customers as of December 31, 2024 and 2023. The credit quality of these financial assets follows the methodology of the probability of default of debt securities and other liquid financial assets (See note 4.1.5).

December 31, 2024

Stage 1

Stage 2

Stage 3

Total

Investment grade

Sovereign (*)

Ps.

15,962,982

Ps.

—

Ps.

—

Ps.

15,962,982

Corporate

—

1,298

Total investment grade

Ps.

15,962,982

Ps.

—

Ps.

1,298

Ps.

15,964,280

^(*) Sovereign credit rating is considered as the risk of the Treasury issuer or a similar agency (government debt portfolio).

December 31, 2023

Stage 1

Stage 2

Stage 3

Total

Investment grade

Sovereign (*)

Ps.

14,569,999

Ps.

—

Ps.

—

Ps.

14,569,999

Corporate

—

1,535

Total investment grade

Ps.

14,569,999

Ps.

—

Ps.

1,535

Ps.

14,571,534

^(*) Sovereign credit rating is considered as the risk of the Treasury issuer or a similar agency (government debt portfolio).

The following table provides information about the exposure to credit risk by segment for accounts receivable related to gas and energy services, the methodology used to estimate the ECLs is the same used for Loan and Receivable (See note 4.1.5):


	December 31, 2024
	Stage 1		Stage 2		Stage 3		Total
Segmentation
Contributions	Ps.	308,014	Ps.	—	Ps.	—	Ps.	308,014
Gas		843,852		119,622		90,587		1,054,061
Energy		110,794		11,123		54,047		175,964
Other accounts receivable		235,286		—		—		235,286
Total segmentation	Ps.	1,497,946	Ps.	130,745	Ps.	144,634	Ps.	1,773,325


	December 31, 2023
	Stage 1		Stage 2		Stage 3		Total
Segmentation
Contributions	Ps.	88,148	Ps.	—	Ps.	—	Ps.	88,148
Gas		709,422		111,786		102,077		923,285
Energy		84,960		7,821		82,752		175,533
Other accounts receivable		261,018		—		—		261,018
Total segmentation	Ps.	1,143,548	Ps.	119,607	Ps.	184,829	Ps.	1,447,984

Evaluated using simplified approach

Grupo Aval uses a probability matrix to measure the ECL for other receivables from individual customers, which have small balances.

The weighted-average loss rate is calculated using a “rolling rate” method based on the probability that a receivable will progress through successive stages of default until write off. The rolling rate is calculated for exposures in different segments and separately in accordance with the following common features of credit risk.

The following table provides information about the exposure to credit risk and ECLs for trade receivables and contract assets from individual customers as of December 31, 2024 and 2023.


	Weighted-		Gross
	(average loss		carrying		Loss			Credit-
December 31, 2024	rate )		amount		allowance			impaired
0–30 days past due	0.54	%	Ps.	5,021,674	Ps.	26,971	Ps.	—
31–60 days past due	1.11	%		128,404		1,428		—
61–90 days past due	0.94	%		179,719		1,682		—
More than 90 days past due	13.88	%		1,071,136		148,658		1,071,136
			Ps.	6,400,933	Ps.	178,739	Ps.	1,071,136


	Weighted-		Gross
	(average loss		carrying		Loss			Credit-
December 31, 2023	rate )		amount		allowance			impaired
0–30 days past due	0.18	%	Ps.	4,949,057	Ps.	8,889	Ps.	—
31–60 days past due	0.36	%		173,165		621		—
61–90 days past due	1.89	%		106,196		2,007		—
More than 90 days past due	19.26	%		924,037		177,968		924,037
			Ps.	6,152,455	Ps.	189,485	Ps.	924,037

The loss rates are based on the experience of real credit loss during a year and the balance of accounts receivable at the cut-off date for previously defined homogeneous segments. It takes into consideration elements such as: segmentation by type of receivable account, date of analysis, definition of loss, among others. Based on the characteristics of the short-term receivable accounts, these portfolios result from operations where there are no non-linear impacts, therefore, the application of macroeconomic scenarios is not considered.

Derivative instruments

The details of credit rating determined by independent credit rating agents of counterparties in trading derivatives and hedge derivatives in active position are as follows.


Credit worthiness	December 31, 2024		December 31, 2023
Investment grade	Ps.	622,273	Ps.	1,398,093
Speculative		774		22,274
Without grade or not available		400,266		705,862
Total	Ps.	1,023,313	Ps.	2,126,229

The following table shows an analysis of counterparty credit exposures that arise from derivative transactions. Transactions derived from Grupo Aval are generally fully guaranteed with cash:

Trading derivatives


		Total				Central counterparties
		Notional		Fair		Notional		Fair
		amount		value		amount		value
2024
Derivative assets	Ps.	104,988,291	Ps.	969,294	Ps.	14,317,598	Ps.	10,246
Derivative liabilities		64,053,439		1,011,934		10,715,432		6,646
2023
Derivative assets	Ps.	77,206,096	Ps.	2,077,567	Ps.	30,658,137	Ps.	4,272
Derivative liabilities		64,716,179		2,154,361		15,739,527		10,399

Hedging derivatives



		Total				Central counterparties
		Notional		Fair		Notional		Fair
		Amount		value		amount		value
2024
Derivative assets	Ps.	7,330,349	Ps.	54,019	Ps.	—	Ps.	—
Derivative liabilities		2,355,232		21,658		—		—
2023
Derivative assets	Ps.	3,765,455	Ps.	48,662	Ps.	—	Ps.	—
Derivative liabilities		5,109,351		217,566		—		—

Derivative transactions of Grupo Aval are collateralized by cash of Ps. (246,003) as of December 31, 2024, and of Ps. (1,035,846) as of December 31, 2023, see note 4.1.10 “Offset of financial assets and financial liabilities”.

Cash and cash equivalents

Grupo Aval held cash and cash equivalents of Ps. 16,998,859 as of December 31, 2024 (2023: Ps. 18,597,861). The cash and cash equivalents are held in central banks and financial institution counterparties. The following table shows an analysis of counterparty credit exposures:


	December 31, 2024		December 31, 2023
Investment grade	Ps.	13,256,226	Ps.	14,788,284
Central bank		4,166,796		6,857,510
Financial entities		9,089,430		7,930,774
Speculative grade		279		466
Central bank		279		466
Cash and cash equivalent with third parties	Ps.	13,256,505	Ps.	14,788,750
Cash held by entity ^(*)	Ps.	3,742,354	Ps.	3,809,111
Total	Ps.	16,998,859	Ps.	18,597,861

^(*) Cash held by each Grupo Aval’s bank in custody in vaults, ATMs and cash.

4.1.4 Mitigation of Credit Risk, Collateral and Other Credit Risk Enhancements

The exposure to credit risk for each of Grupo Aval´s financial subsidiaries is reduced by collateral and other credit enhancements. The existence of collateral security or guarantees can be a requirement but not a determining factor in approval of a credit. Credit risk policies of Grupo Aval require an evaluation of the debtor’s payment capacity based on the debtor´s ability to generate the resources needed for the timely and complete payment of their obligations.

Credit risk management includes the following activities:

●

Analysis of credit risk: For commercial lending, tools are used for the individual evaluation of credits based on payment capacity supported on cash generation, credit rating models with inputs from historical and projected financial condition, and on the payment history of the debtor with the financial sector. For interbank and overnight funds, the Camel Model is used to analyze financial institutions according to six factors represented by capital adequacy, assets quality, management, earnings, liquidity, and sensitivity. For consumer lending (including mortgages and auto financing), scoring models are based on characteristics of each credit line and in terms of clients, sociodemographic variables and payment behavior with both then bank and the financial sector.

●

Evaluation of collateral security / guarantees with appropriate debt coverage in accordance with the credit policies of each financial subsidiary. Collateral security includes mortgages on real estate, pledge on assets, cash deposits and investments.

●

Evaluation of the liquidity of the collateral security / guarantees received.

The methods used for the evaluation of collateral security / guarantees are aligned with the market practices and include the use of independent real estate appraisers or the market value of securities. All collateral security / guarantees must be legally evaluated and drafted following the parameters of applicable legal regulations.

Mortgage lending

The following tables classify credit exposures for mortgage loans and advances to retail customers by ranges of loan-to-value (LTV) ratio. LTV is calculated as the ratio of the gross amount of the loan – or the amount of the loan commitments – to the value of the collateral. The value of the collateral for mortgage loans is based on the collateral value at origination updated based on changes in house price indices.


	December 31, 2024		December 31, 2023
LTV ratio
Less than 50%	Ps.	9,427,666	Ps.	7,784,742
51 – 70%		7,820,690		6,379,677
71 – 90%		3,964,073		3,281,508
91 – 100%		556,783		771,664
More than 100%		266,515		268,615
Total	Ps.	22,035,727	Ps.	18,486,206

Credit-impaired mortgage loans

For credit-impaired loans the value of collateral is based on the most recent appraisals.


	December 31, 2024		December 31, 2023
LTV ratio
Less than 50%	Ps.	205,345	Ps.	146,489
51 – 70%		320,667		252,655
More than 70%		269,153		205,280
Total	Ps.	795,165	Ps.	604,424

As of December 31, 2024, and 2023, the following chart shows the detail of the credit portfolio per type of guarantees received.


									Interbank and
December 31, 2024	Commercial		Consumer		Mortgages		Microcredit		overnight funds		Total
Unsecured credits	Ps.	66,304,089	Ps.	55,712,783	Ps.	804	Ps.	3,601	Ps.	477,144	Ps.	122,498,421
Loans secured by other banks		95,043		247		—		—		—		95,290
Collateralized credits:
Mortgages		1,558,240		136,137		19,694,826		42		—		21,389,245
Other real estate		13,157,554		255,098		862		481		—		13,413,995
Investments in equity instruments		358,719		—		—		—		—		358,719
Deposits in cash or cash equivalents		1,117,748		202,268		—		—		—		1,320,016
Leased machineries and vehicles		8,923,078		18,212		2,320,866		—		—		11,262,156
Fiduciary agreements, standby letters and guarantee funds		10,201,495		20,411		18,366		245		—		10,240,517
Pledged income		3,681,176		—		—		—		—		3,681,176
Pledges		3,345,798		5,554,335		3		—		—		8,900,136
Other assets		6,671,703		76,834		—		6		227,911		6,976,454
Total gross loan portfolio	Ps.	115,414,643	Ps.	61,976,325	Ps.	22,035,727	Ps.	4,375	Ps.	705,055	Ps.	200,136,125


									Interbank and
December 31, 2023	Commercial		Consumer		Mortgages		Microcredit		overnight funds		Total
Unsecured credits	Ps.	60,462,815	Ps.	54,320,369	Ps.	1,277	Ps.	257,610	Ps.	88,588	Ps.	115,130,659
Loans secured by other banks		202,667		109		—		—		—		202,776
Collateralized credits:
Mortgages		1,388,044		147,499		16,370,941		497		—		17,906,981
Other real estate		11,949,592		226,614		1,603		112		—		12,177,921
Investments in equity instruments		392,474		—		—		—		—		392,474
Deposits in cash or cash equivalents		1,101,686		145,901		—		—		—		1,247,587
Leased machineries and vehicles		8,715,508		14,947		2,066,476		—		—		10,796,931
Fiduciary agreements, standby letters and guarantee funds		9,654,206		21,705		45,909		18,927		—		9,740,747
Pledged income		3,710,759		—		—		—		—		3,710,759
Pledges		3,498,054		5,064,634		—		27		—		8,562,715
Other assets		5,972,012		57,833		—		356		304,019		6,334,220
Total gross loan portfolio	Ps.	107,047,817	Ps.	59,999,611	Ps.	18,486,206	Ps.	277,529	Ps.	392,607	Ps.	186,203,770

As of December 31, 2024, and 2023, the following chart sets out the carrying amount and the value of identifiable collateral (mainly commercial property) for commercial loans held by Grupo Aval at a consolidated level:

December 31, 2024

December 31, 2023

Carrying Amount

Collateral

Carrying Amount

Collateral

Stages 1 and 2

Ps.

34,004,844

Ps.

25,569,949

Ps.

23,484,250

Ps.

15,996,375

Stage 3

3,404,067

2,840,416

2,952,217

2,429,026

Ps.

37,408,911

Ps.

28,410,365

Ps.

26,436,467

Ps.

18,425,401

4.1.5 Amounts arising from Expected Credit Loss (ECL)

Definition of Default

Grupo Aval considers a financial asset to be in default when:

●

The borrower is unlikely to pay its credit obligations to Grupo Aval in full. Without prejudice, Grupo Aval takes actions such as realizing collateral (if any is held); or

●

The borrower is more than 90 days past due on any material credit obligation other than mortgages to Grupo Aval. Overdrafts are considered past due once the customer has breached the allowed tenor or been advised of the reduction of the limit;

●

For mortgages, when the borrower is more than 180 days past due;

●

The borrower is in a state of restructuring, bankruptcy proceedings or business reorganization.

●

In the case of fixed income financial securities, the following concepts among others apply:

External rating of the issuer or instrument in rating D under Standard & Poor’s and Fitch Ratings scale or rating C under Moody’s scale;

Contractual payments are not made on the due date;

There is a very high probability of suspension of payments;

The issuer likely to go bankrupt or file for bankruptcy or similar action; or

The financial asset no longer has an active market given its financial difficulties.

In assessing whether a borrower is in default, Grupo Aval considers indicators as follows:

●

Qualitative: e.g. breaches of non-financial covenants;

●

Quantitative: e.g. breaches of financial covenants, overdue status and non-payment of another obligation of the same issuer to Grupo Aval; and

●

Based on internally historical or developed data and obtained from external sources.

Inputs used in the assessment of whether a financial instrument is in default may vary over time to reflect changes in circumstances.

Inputs, assumptions and techniques used to estimate expected credit loss allowance

Credit risk models measure the exposure for individual counterparties, based on the following parameters: probability of default (PD), loss given default (LGD) and exposure at default (EAD). For a specific credit facility (loans, debt securities, other liquid financial assets, other accounts receivable, loan commitments and financial guarantee contracts) the product of these three parameters results in the expected credit loss. See accounting policy in Note 2 (2.5 ix).

Measurement of ECL

The measurement of expected credit losses is a calculation that involves an important number of interrelated inputs and assumptions, such as the financial asset’s probability of default, loss given default and exposure at default, which are modelled based on macroeconomic variables. Furthermore, the determination of the ECL requires the application of expert credit judgment to assess the current situation.

As mentioned above, the key inputs for the measurement of ECLs are usually the following variables:

●

Probability of default (PD);

●

Loss given default (LGD); and

●

Exposure at default (EAD).

The estimation of these parameters depends on the credit facility. Loans and receivables methodology uses information derived from internally developed statistical models, comprising both quantitative and qualitative factors, and other historical data. On the other hand, debt securities methodology incorporates relevant external market information or international credit ratings.

PD is the probability that a counterparty defaults in its payment obligations of capital and/or interest. Credit risk grades are the primary input in the determination of the term structure of PD for exposures. Grupo Aval collects performance and default information about its credit risk exposures analyzed by jurisdiction or region, by type of product and borrower, and by credit risk grade. For some portfolios, information purchased from external credit bureaus may also be used.

Grupo Aval employs statistical models to analyze the data collected and generates estimates of the remaining lifetime PD of exposures and how these are expected to change as a result of the passage of time.

LGD is an estimate of the loss arising at default, which is computed as a percentage of exposure that the entity ultimately expects to lose in the event of a default in a financial instrument.

Grupo Aval estimates LGD parameters based on the history of recovery rates of claims against defaulted counterparties. The LGD models considers the collateral structure, seniority of the claim, counterparty industry and recovery costs of any collateral that is integral to the financial asset. For loans secured/ guaranteed by real estate, loan-to-value (LTV) ratios will be a key parameter in determining LGD. Estimates are calibrated for different economic scenarios and, for real estate lending, to reflect possible changes in property prices.

The EAD represents the expected exposure in the event of default. Grupo Aval derives the EAD from the current exposure to the counterparty and potential changes to the current amount allowed under the contract, including amortization and prepayments. The EAD of a financial asset is the gross carrying amount at default. For lending commitments and financial guarantees, the EAD considers the amount drawn, as well as potential future amounts that may be drawn or repaid under the contract, which are estimated based on historical observations and forward-looking forecasts.

Subject to using the Lifetime PD for financial assets for which credit risk has significantly increased, Grupo Aval measures ECLs considering the risk of default over the maximum contractual period (including any borrower’s extension options) over which there is exposure to credit risk, even if for risk management purposes, Grupo Aval considers a longer period. The maximum contractual period extends to the date at which Grupo Aval has the right to require repayment of an advance or terminate a loan commitment or guarantee.

For retail overdrafts, credit cards, and certain corporate revolving facilities that include both a loan and an undrawn commitment component, Grupo Aval measures ECLs over a period longer than the maximum contractual period if Grupo Aval’s contractual ability to demand repayment and cancel the undrawn commitment does not limit Grupo Aval’s exposure to credit losses to the contractual notice period. These facilities do not have a fixed term or repayment structure and are managed on a collective basis. Grupo Aval can cancel them with immediate effect, but the contractual right is not enforced in the normal day-to-day management, but rather when Grupo Aval becomes aware of an increase in credit risk of a particular facility. This period is estimated considering the credit risk management actions that Grupo Aval expects to mitigate ECLs. These include a reduction in the limits and the cancellation of the credit.

Where modelling of a parameter is carried out on a collective basis, the financial instruments are grouped based on shared risk characteristics that include:

●

Instrument type;

●

Credit risk ratings;

●

Collateral type;

●

Date of initial recognition;

●

Remaining term to maturity; and

●

Industry.

The groups are subject to regular review to ensure that exposures within a particular group remain appropriately homogeneous.

In addition , for significant impaired loans, allowance estimates are made through individual evaluation based on quantitative criteria, such as the methods contemplated in IFRS of discounted cash flow and fair value of the guarantee, and qualitative criteria that involve knowledge of the customer's current situation, the environment in which it carries out its activities, legal or bankruptcy proceedings and expert judgment, among other aspects.

Credit Risk Model: Loans and receivables

I. Transitions between stages

Significant Increase in Credit Risk

When determining whether the credit risk (i.e. risk of default) of a financial instrument has increased significantly since initial recognition, Grupo Aval considers reasonable and supportable information that is relevant and available without undue cost or effort, including both quantitative and qualitative information and analysis based on Grupo Aval’s historical experience, expert credit assessment and forward-looking information.

The following criteria are used to determine if a significant increase in credit risk has occurred:

●

Comparison of the remaining lifetime probability of default (PD) at the reporting date with the lifetime PD at initial recognition of the exposure.

●

Quantitative aspects such as credits with 30 days past due.

●

Qualitative criteria from analysts is also considered based on expert and supportable information.

The criteria for determining whether credit risk has increased significantly will vary by portfolio and will include a backstop based on delinquency.

Grupo Aval will monitor the effectiveness of the criteria used in identifying significant increases in credit risk through regular reviews to confirm that:

●

The criteria are useful in identifying significant increases in credit risk before an exposure is in default;

●

The criteria align with the point in time when an asset becomes over 30 days past due;

●

The average time between the identification of a significant increase in credit risk and default appears reasonable;

●

Exposures are not generally transferred directly from 12-month ECL measurement to credit-impaired; and

●

There is unwarranted volatility in loss allowance from transfers between 12-month ECL and lifetime ECL measurements.

II. PD – Probability of Default

Term structure of PD

Credit risk grades are the primary input in the determination of the term structure of PD for exposures. Grupo Aval collects performance and default information about its credit risk exposures by type of product and borrower, and by credit risk grade. For some portfolios, information purchased from external credit bureaus may also be used.

This analysis includes the identification and calibration of the relation between changes in default rates and changes in key macro-economic factors, as well as an in-depth analysis of the impact of certain other factors on the risk of default. For exposures to specific industries and/or regions, the analysis may extend to relevant commodity and/ or real estate prices.

For stage 1 the PD estimates the probability that the credit will default in the next 12 months, while the PD in stage 2 is the result of the probabilities for the remaining life of the credit. The probability in Stage 3 is defined as 100%.

Grupo Aval’s approach to incorporating forward-looking information into this assessment is discussed below.

Forward-Looking Information

Grupo Aval incorporates forward-looking information into both its assessment of whether the credit risk of an instrument has increased significantly since initial recognition and its measurement of ECLs. Grupo Aval formulates a ‘base case’ view of the future direction of relevant economic variables and a representative range of other possible forecast scenarios based on forecasts provided by economic experts and considering a forecast of multiple variables. This process involves developing two or more additional economic scenarios and considering the relative probabilities of each outcome.

The B scenario (base case) represents a most-likely outcome. It is aligned with information used by Grupo Aval for other purposes, such as budgeting. The other scenarios represent more optimistic (C) and more pessimistic (A) outcomes with their respective probability of occurrence.

Grupo Aval has identified and documented key drivers of credit risk and credit losses for each portfolio of financial instruments and, using an analysis of historical data, has estimated relationships between macro-economic variables and credit risk and credit losses.

Changes in economic conditions will be monitored by Grupo Aval´s Entities and subsidiaries to be incorporated into the macroeconomic parameters used to prepare stress scenarios and financial projections. Forward looking information was adjusted, recognizing macroeconomic impacts based on the available information about past events, current conditions and forecasts of economic conditions.

The following table presents one-year projections for Colombia made in December 2023, compared to the official data for December 2024. Specifically, for used home prices, it was compared to actual 2024 data, using most recent data as of September 2024:


	2024	Expected for 2024 in 2023
	Real Scenario	Scenario A	Scenario B	Scenario C
Inflation	5.20%	4.44%	6.05%	8.26%
DTF Interest rate	9.22%	7.10%	9.04%	10.62%
GDP Growth	1.74%	(1.07%)	0.99%	2.70%
Used home prices	0.79%	(3.15%)	(2.11%)	(1.02%)
Unemployment rate	9.10%	11.96%	10.43%	8.77%

The economic scenarios used as of December 31, 2024, and 2023 (one-year projections) include the following expected scenarios of key indicators (among others) for Colombia.


	One year projection in 2024			One year projection in 2023
	Scenario A	Scenario B	Scenario C	Scenario A	Scenario B	Scenario C
Unemployment rate	11.46%	10.46%	9.99%	11.96%	10.43%	8.77%
GDP Growth	0.55%	2.68%	3.75%	(1.07%)	0.99%	2.70%
Inflation	3.90%	3.90%	3.67%	4.44%	6.05%	8.26%
Interest rate	5.25%	6.25%	6.25%	6.25%	8.50%	10.25%

The following additional variables were relevant to the models used by our banks in 2023.


	One year projection in 2024			One year projection in 2023
	Scenario A	Scenario B	Scenario C	Scenario A	Scenario B	Scenario C
DTF Interest rate	4.97%	6.03%	5.82%	7.10%	9.04%	10.62%
Used home prices	1.07%	2.20%	3.10%	(3.15%)	(2.11%)	(1.02%)

The following table presents one-year projections for Panama made in December 2023, compared to the official data for December 2024, for the GDP growth with the data for September 2024:


	2024	Expected for 2024 in 2023
	Real Scenario	Scenario A	Scenario B	Scenario C
Inflation	(0.20%)	2.80%	2.32%	1.83%
Nominal interest rate variation	0.20%	0.57%	0.52%	0.48%
GDP Growth	2.00%	7.03%	7.64%	8.25%

The economic scenarios used as of December 31, 2024, and 2023 (one-year projections) include the following expected scenarios of key indicators (among others) for Panamá.


	One year projection in 2024			One year projection in 2023
	Scenario A	Scenario B	Scenario C	Scenario A	Scenario B	Scenario C
Inflation	2.33%	2.15%	1.51%	2.80%	2.32%	1.83%
Nominal interest rate variation	0.14%	0.10%	(0.02%)	0.57%	0.52%	0.48%
IMAE ⁽¹⁾	2.79%	3.03%	3.42%	—	—	—
GDP Growth	—	—	—	7.03%	7.64%	8.25%

⁽¹⁾ Monthly Indicator of Economic Activity.

The scenario probability weightings applied as of December 31, 2024, and 2023 in measuring ECL are as follows:

Colombia


	2024			2023
	Scenario A	Scenario B	Scenario C	Scenario A	Scenario B	Scenario C
Scenario probability weighting	27%	56%	17%	27%	56%	17%

Panamá


	2024			2023
	Scenario A	Scenario B	Scenario C	Scenario A	Scenario B	Scenario C
Scenario probability weighting	15%	75%	10%	10%	50%	40%

The table below shows the loss allowance on loans assuming each forward-looking scenario (e.g. scenario A, B and C) were weighted 100% instead of applying scenario probability weights across the three scenarios.


		December 31, 2024					December 31, 2023
	Scenario A		Scenario B		Scenario C		Scenario A		Scenario B		Scenario C
Gross Exposure
Commercial	Ps.	115,414,643	Ps.	115,414,643	Ps.	115,414,643	Ps.	107,047,817	Ps.	107,047,817	Ps.	107,047,817
Consumer		61,976,325		61,976,325		61,976,325		59,999,611		59,999,611		59,999,611
Mortgages		22,035,727		22,035,727		22,035,727		18,486,206		18,486,206		18,486,206
Microcredit		4,375		4,375		4,375		277,529		277,529		277,529
Interbank and overnight founds		705,055		705,055		705,055		392,607		392,607		392,607
Total gross exposure	Ps.	200,136,125	Ps.	200,136,125	Ps.	200,136,125	Ps.	186,203,770	Ps.	186,203,770	Ps.	186,203,770

Loss Allowance for each scenario
Commercial	Ps.	5,309,528	Ps.	5,336,949	Ps.	5,430,691	Ps.	5,272,129	Ps.	5,289,159	Ps.	5,341,865
Consumer		4,118,656		4,168,736		4,239,720		4,246,126		4,273,465		4,336,939
Mortgages		468,275		471,634		480,073		372,739		378,986		384,902
Microcredit		3,611		3,610		3,613		53,754		53,618		53,662
Interbank and overnight founds		2,505		2,619		3,029		127		126		136
Total Loss Allowance	Ps.	9,902,575	Ps.	9,983,548	Ps.	10,157,126	Ps.	9,944,875	Ps.	9,995,354	Ps.	10,117,504
The table below shows the loan portfolio in Stage 2 for each scenario.
Proportion of Assets in Stage 2
Commercial		3.2	%	3.2	%	3.8	%	3.6	%	3.6	%	3.9	%
Consumer		7.6	%	8.2	%	8.7	%	6.9	%	7.1	%	7.6	%
Mortgages		6.0	%	8.4	%	8.4	%	5.6	%	5.7	%	5.7	%
Microcredit		0.9	%	0.9	%	0.9	%	5.0	%	5.0	%	5.0	%
Interbank and overnight founds		—	%	—	%	—	%	—	%	—	%	—	%

Credit Risk Rating

Grupo Aval allocates each exposure to a credit risk grade based on a variety of data intended to be predictive of the probability of default and applying experienced credit judgment. Grupo Aval uses these grades with the purpose identifying significant increases in credit risk. Credit risk grades are defined using qualitative and quantitative factors that are indicative of the risk of default. These factors may vary depending on the nature of the exposure and the type of borrower.

Each exposure is allocated to a credit risk grade at initial recognition based on available information about the borrower. Exposures are subject to ongoing monitoring, which may result in an exposure being moved to a different credit risk grade. The monitoring typically involves using of the following data:


Commercial	Consumer	Mortgage	Microcredit
-Information from the audited financial statements obtained during periodic reviews.	-Information collected internally about the behavior of customers.	-Information collected internally about the behavior of customers.	-Information collected internally about the behavior of customers.
-Data from credit reference agencies.	- Data from credit reference agencies.	- Data from credit reference agencies.	- Data from credit reference agencies.
-Information collected internally about the behavior of customers.	-Information of the different sectors.
-Information from the different economics sectors.

III. LGD – Loss Given Default

LGD is a measure of the likely loss in the event of a default. To estimate LGD, Grupo Aval uses information of the collateral security / guarantee which covers each individual credit, when available. In any case, Grupo Aval uses historical and forward-looking information (the same information described above in II. PD – Probability of Default - Forward-Looking Information) to estimate the

expected potential recovery in case of a default. The LGD is estimated in groups by type of credit, collateral security / guarantee or maturity.

IV. EAD – Exposure at Default

EAD represents the expected exposure from a counterparty at the time of a possible default. For stage 2 Grupo Aval incorporates in the analysis of the exposure at default the probability of payments and increase in exposure during the lifetime of the credit.

These probabilities are estimated using the historical information collected by the financial subsidiaries and are grouped by type of product. The probabilities are constantly reviewed in order to accurately estimate them and calibrate them.

Credit Risk Model: Debt securities

This model estimates the impairment of credit risk in debt securities. In general, at the moment of inception, all financial assets originate ECLs for the next 12 months. If credit risk increases significantly and there is enough objective evidence of increase of probability of default, then the reserve is adjusted for the remaining life of the financial asset.

I. Transition between stages

A financial asset is classified as a low credit risk asset if the issuer is related to an investment grade credit rating.

Financial assets different than low credit risk must be evaluated individually. The first step in the methodology consist in evaluating a significant increase in credit risk by comparing the current status against the status at initial recognition of the security.

External elements related to a significant increase in credit risk are detailed below:

●

Negative changes in external credit ratings.

●

Changes in external market variables such as credit spreads, prices of issuer’s CDS and other prices of debt instruments and equities.

●

Changes in business, economic, financial, regulatory or technological environment which can affect the payment capacity of the issuer.

●

Changes in operational results that can compromise the payment capacity of the issuer.

If the financial asset loses its low credit risk condition or if changes in external environment results in a review of the condition, then this probably shows a significant increase in credit risk. Consequently, the financial asset will be analyzed to determine if there is a significant increase of credit risk (stage 2) or if the asset should be classified as stage 3.

Objective evidence of impairment is the second step in making changes between stages. It is concluded that there is objective evidence of impairment if one the following situations is met:

●

The external credit rating of the issuance, issuer or counterparty is reduced to D on the Standard & Poor´s and Fitch Ratings scale or up to C on the Moody´s scale.

●

Contractual payments are not made on the established dates, terms or grace periods.

●

There is a certainty of suspension of payments.

●

There is a probability that the issuer or counterparty will go into a bankruptcy process.

●

Due to financial difficulties there is no market for financial assets.

II. PD – Probability of default

PD depends of the external credit rating of the issuance, issuer or counterparty. Credit rating information is published by international credit rating corporations, such as Standard & Poor’s, Moody’s and Fitch Ratings, or national credit rating corporations, such as Fitch Ratings Colombia S.A. or BRC. In any case, international ratings have priority over national ratings.

Credit ratings from S&P have priority over the other rating corporations. If the issuance, issuer or counterparty is not rated by S&P, credit ratings from Moody’s or Fitch Ratings can be used but they must be translated to the S&P rating scale. The order of priority in credit rating corporations is as follows: S&P in first place, Moody’s in second place and Fitch Ratings in the third one. The reason for

choosing this hierarchy is to avoid discretion at the time of assigning a rating. National credit ratings can be used only if international credit ratings are not available, and the translation condition to the S&P rating scale must be followed as well.

For financial assets classified as stage 1, PD correspond to the probability of default for the next 12 months established in accordance to “Cumulative Default Rates by Rating Modifiers” for both sovereign and corporate issuers, expressed at an annual basis. If the remaining life of the assets is less than 12 months, the resulting PD will correspond to the weighted 12 months-PD with the remaining life of the financial asset.

For financial assets classified as stage 2, lifetime PD must be used and computed using the “Cumulative Default Rates by Rating Modifiers” for both sovereign and corporate issuers, expressed at an annual basis and according to the term of each flow.

For financial assets classified as stage 3, lifetime PD will equal 100% for any issuance, issuer or counterparty.

PD value tables are available in S&P Global Ratings: “2023 Annual Sovereign Default Study and Rating Transitions” and “2023 Annual Global Corporate Default Study and Rating Transitions Study” in 2024.

Forward-Looking Information

Grupo Aval incorporates forward-looking information into its assessment of whether the credit risk of an instrument has increased significantly since initial recognition and its measurement of ECL. This information will directly affect the PD and the stage classification.

When rating the sovereign and corporate issuers, credit ratings agencies incorporate prospective information, as well as forecasting of macroeconomic variables and the influence of these factors over the business conditions. Grupo Aval’s methodology includes external credit ratings which, under the previous argument, have already considered prospective information.

Furthermore, credit ratings are also subject to rating outlooks which can modify the current credit ratings. Details are provided below. Rating outlooks are published by credit rating corporations and reflect the perspective of the potential long-term credit rating over the next 6 to 24 months.

●

If the Rating Outlook is categorized as “STABLE”, no adjustments in credit ratings are needed.

●

If the Rating Outlook is “POSITIVE”, PD will be adjusted as the average between the current PD and the applicable PD in the case credit rating improves one notch. However, this would only take place if the resulting PD is lower than the current PD.

●

If the Rating Outlook is “NEGATIVE”, PD will be adjusted as the average between the current PD and the applicable PD in the case credit rating deteriorates one notch. However, this would only take place if the resulting PD is higher than the current PD.

III. LGD – Loss given default

LGD is a measure of the potential loss if a default scenario occurs. To establish the LGD, Grupo Aval’s methodology uses information published by Moody’s credit rating corporation. LGD is based on relevant external default data, such as the historical recovery rates, which is defined as the complement of LGD calculation.

Moody’s computes Recovery Rates as the ratio between market prices after 30 days of the default or the debt swap price at the closing date, and the market price of the issuance at the beginning of the default. In the case of unavailable market prices, recovery rates will be the resulting ratio between present value of expected cash flows of the new instruments received with the debt swap and the present value of the initial instruments.

Grupo Aval´s methodology assigns weights for recovery rates for Sovereigns Debt and Corporates Debt. Sovereign Debt recovery rates increased from 50% to 53% in 2024, also Corporate Debt recovery rates decreased moderately from 47.1% in 2023 to 46.9% in 2024.

Further information is available and published annually by Moody’s in the “Sovereign default and recovery rates, 1983-2023” and “Annual default study: Corporate default rate to moderate in 2024 but remain near its long-term average” reports.

IV. EAD – Exposure at default

EAD represents the amount owed from a counterparty at the time of a possible default and only for securities classified at amortized cost or FVOCI. See accounting policy in Note 2 (2.5 ix).

For stage 1 and stage 3 financial assets, EAD will correspond to the full valuation of the assets at amortized cost.

For stage 2 financial assets, EAD will consider the financial asset amortized scheme assuming no default in the previous years.

In the case that financial assets present a guarantees or security collateral, these could reduce total EAD. This is a typical case of collateralized interbank loans.

Credit Risk Model: Other accounts receivable

Grupo Aval uses two approaches to estimate ECL of financial assets classified as other accounts receivables.

The first one is the simplified approach where Grupo Aval uses an allowance matrix to measure the ECLs of trade receivables from individual customers, which comprise a very large number of small amounts.

Loss rates are calculated using a ‘roll rate’ method based on the probability of a receivable progressing through successive stages of delinquency to write-off. Roll rates are calculated separately for exposures in different segments based on the following common credit risk characteristics like type of product purchased.

Loss rates are based on the experience of real credit loss during a year and the balance of accounts receivable at the cut-off date for previously defined homogeneous segments. It takes into consideration elements such as: segmentation by type of receivable account, date of analysis, definition of loss, among others. Based on the characteristics of the short-term receivable accounts, these portfolios result from operations where there are no non-linear impacts, therefore, the application of macroeconomic scenarios is not considered.

The second one is the general approach, it considers the methodologies explained above for loans and debt securities. For non-financial companies in the oil and gas sector, the loans methodology is considered, while the debt securities methodology is considered for government and other government related entities.

Loss allowance

The table below shows the loss allowance balances as of December 31, 2024, and 2023:


	December 31, 2024
	Stage 1		Stage 2		Stage 3
			Lifetime		Lifetime
			ECL not		ECL
	12-month		credit-		credit-		Simplified
	ECL		impaired		impaired		approach		Total
Loan portfolio
Loan commercial portfolio	Ps.	724,075	Ps.	217,588	Ps.	4,421,230	Ps.	—	Ps.	5,362,893
Loan consumer portfolio		1,105,918		927,310		2,132,790		—		4,166,018
Loan mortgage portfolio		60,088		71,839		341,388		—		473,315
Loan microcredit portfolio		59		14		3,545		—		3,618
Loan interbank and overnight founds portfolio		794		1		—		—		795
Total loan portfolio	Ps.	1,890,934	Ps.	1,216,752	Ps.	6,898,953	Ps.	—	Ps.	10,006,639
Investments in debt securities at amortized cost		14,329		4,346		—		—		18,675
Other accounts receivable		31,226		22,196		117,508		191,041		361,971
Total loss allowance financial assets at amortized cost	Ps.	1,936,489	Ps.	1,243,294	Ps.	7,016,461	Ps.	191,041	Ps.	10,387,285

Investments in debt securities at FVOCI	Ps.	18,310	Ps.	—	Ps.	—	Ps.	—	Ps.	18,310
Loan commitments and financial guarantee contracts		62,509		7,671		2,234		—		72,414
Total loss allowance	Ps.	2,017,308	Ps.	1,250,965	Ps.	7,018,695	Ps.	191,041	Ps.	10,478,009


	December 31, 2023
	Stage 1		Stage 2		Stage 3
			Lifetime		Lifetime
			ECL not		ECL
	12-month		credit-		credit-		Simplified
	ECL		impaired		impaired		approach		Total
Loan portfolio
Loan commercial portfolio	Ps.	612,441	Ps.	218,824	Ps.	4,463,335	Ps.	—	Ps.	5,294,600
Loan consumer portfolio		1,141,997		993,268		2,172,181		—		4,307,446
Loan mortgage portfolio		45,080		66,333		268,574		—		379,987
Loan microcredit portfolio		12,068		6,366		35,226		—		53,660
Loan interbank and overnight founds portfolio		22		—		—		—		22
Total loan portfolio	Ps.	1,811,608	Ps.	1,284,791	Ps.	6,939,316	Ps.	—	Ps.	10,035,715
Investments in debt securities at amortized cost		12,613		4,269		—		—		16,882
Other accounts receivable		25,965		19,188		141,129		199,382		385,664
Total loss allowance financial assets at amortized cost	Ps.	1,850,186	Ps.	1,308,248	Ps.	7,080,445	Ps.	199,382	Ps.	10,438,261

Investments in debt securities at FVOCI	Ps.	12,972	Ps.	—	Ps.	—	Ps.	—	Ps.	12,972
Loan commitments and financial guarantee contracts		61,637		7,682		949		—		70,268
Total loss allowance	Ps.	1,924,795	Ps.	1,315,930	Ps.	7,081,394	Ps.	199,382	Ps.	10,521,501

The table below presents impairment losses per portfolio:


		As of December 31, 2024		As of December 31, 2023		As of December 31, 2022
Commercial	Ps.	758,365	Ps.	203,061	Ps.	622,783
Consumer		3,839,464		4,426,014		2,498,699
Mortgage		145,522		65,856		(25,202)
Microcredit		(10,902)		31,901		5,497
Interbank and overnight funds		773		(1,422)		(942)
Total loan portfolio	Ps.	4,733,222	Ps.	4,725,410	Ps.	3,100,835
Other receivables⁽¹⁾		93,069		76,664		78,641
Net portfolio provision impact on income statement	Ps.	4,826,291	Ps.	4,802,074	Ps.	3,179,476

⁽¹⁾ Includes net of loss allowance presented as part of “Costs and expenses of sales goods and services” as of December 2024 Ps. (71,157) as of December 2023 Ps. (51,035) and as of December 2022 Ps. (59,073).

The table below shows for loans stage 3 individually assessed for ECL the gross amount and loss allowance balances as of December 31, 2024, and 2023.


	December 31, 2024
	Gross Amount Registered		Collateral Guarantees		Allowance Recognized
Without recognized provision
Commercial	Ps.	262,667	Ps.	262,373	Ps.	—
Repos, interbank loans portfolio		—		—		—
Subtotal	Ps.	262,667	Ps.	262,373	Ps.	—

With recognized provision
Commercial	Ps.	7,775,982	Ps.	1,348,148	Ps.	2,950,023
Consumer		6,512		4,332		3,868
Residential mortgage		19,828		1,970		11,541
Repos, interbank loans portfolio		—		—		—
Subtotal	Ps.	7,802,322	Ps.	1,354,450	Ps.	2,965,432
Totals
Commercial	Ps.	8,038,649	Ps.	1,610,521	Ps.	2,950,023
Consumer		6,512		4,332		3,868
Residential mortgage		19,828		1,970		11,541
Repos, interbank loans portfolio		—		—		—
Total	Ps.	8,064,989	Ps.	1,616,823	Ps.	2,965,432


	December 31, 2023
	Gross Amount Registered		Collateral Guarantees		Allowance Recognized
Without recognized provision
Commercial	Ps.	240,358	Ps.	239,937	Ps.	—
Repos, interbank loans portfolio		—		—		—
Subtotal	Ps.	240,358	Ps.	239,937	Ps.	—

With recognized provision
Commercial	Ps.	7,080,758	Ps.	1,075,446	Ps.	3,196,800
Consumer		3,144		—		1,959
Residential mortgage		12,515		1,970		10,507
Repos, interbank loans portfolio		—		—		—
Subtotal	Ps.	7,096,417	Ps.	1,077,416	Ps.	3,209,266
Totals
Commercial	Ps.	7,321,116	Ps.	1,315,383	Ps.	3,196,800
Consumer		3,144		—		1,959
Residential mortgage		12,515		1,970		10,507
Repos, interbank loans portfolio		—		—		—
Total	Ps.	7,336,775	Ps.	1,317,353	Ps.	3,209,266

The difference between the value of the loan and the guarantees disclosed in the table above corresponds to unsecured loans valued under the discounted cash flow method. When using this method, it is implied that it is possible for the customer to make future payments.

The loss allowance recognized in the period is impacted by a variety of factors, as described below:

●

Transfers between Stage 1 and Stages 2 or 3 due to financial instruments experiencing significant increases (or decreases) in credit risk or becoming credit-impaired in the period, and the consequent "step up" (or "step down") between 12-month and lifetime ECL;

●

Additional allowances for new financial instruments recognized during the period, as well as releases for financial instruments de-recognized in the period;

●

Impact of the measurement of ECL due to changes made to models and assumptions;

●

Decrease within ECL due to the passage of time, as ECL is measured on a present value basis;

●

Foreign exchange retranslations for asset denominated in foreign currencies and other movements; and

●

Financial assets derecognized during the period and write-offs of allowances related to assets than were written off during the period.

The following tables show the reconciliations from the opening to the closing balance of the loss allowance by class of financial instrument.

Total Loan portfolio


			Stage 2
			Lifetime		Stage 3
	Stage 1		ECL not		Lifetime
	12-month		credit-		ECL credit-
	ECL		impaired		impaired		Total
Loss allowance as of January 1, 2022	Ps.	1,824,446	Ps.	2,703,117	Ps.	6,748,049	Ps.	11,275,612
Transfers:
Transfer from stage 1 to stage 2		(183,333)		183,333		—		—
Transfer from stage 1 to stage 3		(105,447)		—		105,447		—
Transfer from stage 2 to stage 3		—		(625,769)		625,769		—
Transfer from stage 3 to stage 2		—		165,584		(165,584)		—
Transfer from stage 2 to stage 1		377,758		(377,758)		—		—
Transfer from stage 3 to stage 1		98,057		—		(98,057)		—
Net remeasurement of loss allowance ⁽⁵⁾		(184,532)		695,126		2,404,266		2,914,860
New financial assets originated or purchased		902,226		316,329		595,011		1,813,566
Financial assets that have been derecognized		(462,600)		(269,020)		(895,971)		(1,627,591)
Unwind of discount⁽²⁾		—		28		550,935		550,963


			Stage 2
			Lifetime		Stage 3
	Stage 1		ECL not		Lifetime
	12-month		credit-		ECL credit-
	ECL		impaired		impaired		Total
FX and other movements		3,449		28,302		26,477		58,228
Discontinued operations ⁽¹⁾		(3,843)		14,798		253,502		264,457
Loss of control in subsidiary ⁽¹⁾		(640,049)		(1,003,291)		(1,197,326)		(2,840,666)
Write-offs		(131,245)		(404,857)		(2,675,813)		(3,211,915)
Loss allowance as of December 31, 2022	Ps.	1,494,887	Ps.	1,425,922	Ps.	6,276,705	Ps.	9,197,514
Transfers:
Transfer from stage 1 to stage 2		(332,307)		332,307		—		—
Transfer from stage 1 to stage 3		(450,063)		—		450,063		—
Transfer from stage 2 to stage 3		—		(1,180,705)		1,180,705		—
Transfer from stage 3 to stage 2		—		309,622		(309,622)		—
Transfer from stage 2 to stage 1		479,360		(479,360)		—		—
Transfer from stage 3 to stage 1		113,974		—		(113,974)		—
Net remeasurement of loss allowance ⁽⁴⁾		327,913		1,284,696		2,815,219		4,427,828
New financial assets originated or purchased		809,886		307,919		693,438		1,811,243
Financial assets that have been derecognized		(501,840)		(157,015)		(854,806)		(1,513,661)
Sales of portfolio ⁽⁶⁾		(2,369)		(1,809)		(357,202)		(361,380)
Unwind of discount⁽²⁾		12		62		724,674		724,748
FX and other movements		(13,826)		(16,568)		(43,684)		(74,078)
Write-offs		(114,019)		(540,280)		(3,522,200)		(4,176,499)
Loss allowance as of December 31, 2023	Ps.	1,811,608	Ps.	1,284,791	Ps.	6,939,316	Ps.	10,035,715
Transfers:
Transfer from stage 1 to stage 2		(332,518)		332,518		—		—
Transfer from stage 1 to stage 3		(422,672)		—		422,672		—
Transfer from stage 2 to stage 3		—		(1,229,034)		1,229,034		—
Transfer from stage 3 to stage 2		—		174,006		(174,006)		—
Transfer from stage 2 to stage 1		339,075		(339,075)		—		—
Transfer from stage 3 to stage 1		112,495		—		(112,495)		—
Net remeasurement of loss allowance ⁽³⁾		391,903		1,357,110		3,014,696		4,763,709
New financial assets originated or purchased		623,901		182,736		597,562		1,404,199
Financial assets that have been derecognized		(571,130)		(140,828)		(722,728)		(1,434,686)
Sales of portfolio ⁽⁶⁾		(3,063)		(793)		(130,799)		(134,655)
Unwind of discount⁽²⁾		1		77		816,010		816,088
FX and other movements		9,649		7,609		25,775		43,033
Write-offs		(68,315)		(412,365)		(5,006,084)		(5,486,764)
Loss allowance as of December 31, 2024	Ps.	1,890,934	Ps.	1,216,752	Ps.	6,898,953	Ps.	10,006,639

⁽¹⁾ See note 1.1 “Discontinued operations of BAC Holding”

⁽²⁾	The unwind of discount on Stage 3 financial assets is reported within "interest income" so that interest income is recognized on the amortized cost (after deducting the ECL allowance)

⁽³⁾

This amount includes impact of the measurement of ECL due to changes made in PDs/LGDs/EADs and changes made to model assumptions and methodologies from the opening to the closing balance. The following table shows the impact by stage estimated using all parameters as of December 31, 2024 versus parameters as of 2023 and the loan portfolio as of 2024.


December 31, 2024
		Stage 2		Stage 3
Stage 1		Lifetime ECL not		Lifetime ECL
12-month ECL		credit-impaired		credit-impaired		Total
Ps.	(221,533)	Ps.	(1,913)	Ps.	42,208	Ps.	(181,238)

⁽⁴⁾ This amount includes impact of the measurement of ECL due to changes made in PDs/LGDs/EADs and changes made to model assumptions and methodologies from the opening to the closing balance. The following table shows the impact by stage estimated using all parameters as of December 31, 2023 versus parameters as of December 31,2022 and the loan portfolio as of December 31, 2023.


December 31, 2023
		Stage 2		Stage 3
Stage 1		Lifetime ECL not		Lifetime ECL
12-month ECL		credit-impaired		credit-impaired		Total
Ps.	66,298	Ps.	35,139	Ps.	(6,894)	Ps.	94,543

⁽⁵⁾ This amount includes impact of the measurement of ECL due to changes made in PDs/LGDs/EADs and changes made to model assumptions and methodologies from the opening to the closing balance. The following table shows the impact by stage estimated using all parameters as of December 31, 2022 versus parameters as of December 31,2021 and the loan portfolio as of December 31, 2022.


December 31, 2022
		Stage 2		Stage 3
Stage 1		Lifetime ECL not		Lifetime ECL
12-month ECL		credit-impaired		credit-impaired		Total
Ps.	(171,007)	Ps.	42	Ps.	73,226	Ps.	(97,739)

⁽⁶⁾Sale of loan portfolio corresponds mainly to sale of microcredit portfolio, and impaired portfolio and/ or with an increase in credit risk.

The following table further explains changes in the gross carrying amount of the loan portfolio to help explain their significance to the changes in the allowance for the same portfolio as discussed above.


			Stage 2
			Lifetime		Stage 3
	Stage 1		ECL not		Lifetime
	12-month		credit-		ECL credit-
	ECL		impaired		impaired		Total
Total portfolio as of January 1, 2022	Ps.	190,819,121	Ps.	26,898,573	Ps.	13,855,743	Ps.	231,573,437
Transfers:
Transfer from stage 1 to stage 2		(8,276,152)		8,276,152		—		—
Transfer from stage 1 to stage 3		(1,659,371)		—		1,659,371		—
Transfer from stage 2 to stage 3		—		(2,939,477)		2,939,477		—
Transfer from stage 2 to stage 1		8,288,205		(8,288,205)		—		—
Transfer from stage 3 to stage 2		—		646,995		(646,995)		—
Transfer from stage 3 to stage 1		367,294		—		(367,294)		—
New financial assets originated or purchased		138,932,725		2,450,770		1,294,360		142,677,855
Financial assets that have been paid		(104,212,015)		(6,284,621)		(4,053,745)		(114,550,381)
Net remeasurement of amortized cost and other receivables		(1,008,007)		213,598		2,341,971		1,547,562
Write-offs		(131,245)		(404,857)		(2,675,813)		(3,211,915)
Discontinued operations ⁽¹⁾		4,985,907		(1,228,725)		(2,082,045)		1,675,137
Loss of control in subsidiary ⁽¹⁾		(68,298,203)		(8,288,834)		(847,564)		(77,434,601)
FX and other movements		5,097,764		723,539		214,964		6,036,267
Total portfolio as of December 31, 2022	Ps.	164,906,023	Ps.	11,774,908	Ps.	11,632,430	Ps.	188,313,361
Transfers:
Transfer from stage 1 to stage 2		(10,951,993)		10,951,993		—		—
Transfer from stage 1 to stage 3		(2,059,976)		—		2,059,976		—
Transfer from stage 2 to stage 3		—		(3,372,104)		3,372,104		—
Transfer from stage 2 to stage 1		9,137,025		(9,137,025)		—		—
Transfer from stage 3 to stage 2		—		865,781		(865,781)		—
Transfer from stage 3 to stage 1		509,414		11,192		(520,606)		—
New financial assets originated or purchased		111,919,244		2,583,927		8,250,075		122,753,246
Financial assets that have been paid		(103,065,373)		(3,798,676)		(7,734,476)		(114,598,525)
Net remeasurement of amortized cost and other receivables		841,002		164,973		784,473		1,790,448
Write-offs		(114,019)		(540,280)		(3,522,200)		(4,176,499)
Sale of loan portfolio-loss allowance ⁽²⁾		(2,369)		(1,809)		(357,202)		(361,380)
Sale of loan portfolio-cash ⁽²⁾		—		(694)		(112,766)		(113,460)
Gain or loss on sale portfolio ⁽²⁾		—		(59)		3,390		3,331
FX and other movements		(6,594,417)		(388,080)		(424,255)		(7,406,752)
Total portfolio as of December 31, 2023	Ps.	164,524,561	Ps.	9,114,047	Ps.	12,565,162	Ps.	186,203,770
Transfers:
Transfer from stage 1 to stage 2		(9,506,321)		9,506,321		—		—
Transfer from stage 1 to stage 3		(2,324,339)		—		2,324,339		—
Transfer from stage 2 to stage 3		—		(3,841,435)		3,841,435		—
Transfer from stage 2 to stage 1		4,633,197		(4,633,197)		—		—
Transfer from stage 3 to stage 2		—		717,343		(717,343)		—
Transfer from stage 3 to stage 1		488,967		—		(488,967)		—
New financial assets originated or purchased		114,075,745		2,713,749		6,287,304		123,076,798
Financial assets that have been paid		(98,949,745)		(3,690,211)		(6,354,775)		(108,994,731)


			Stage 2
			Lifetime		Stage 3
	Stage 1		ECL not		Lifetime
	12-month		credit-		ECL credit-
	ECL		impaired		impaired		Total
Net remeasurement of amortized cost and other receivables		257,686		(151,844)		903,065		1,008,907
Write-offs		(68,315)		(412,365)		(5,006,084)		(5,486,764)
Sale of loan portfolio-loss allowance ⁽²⁾		(3,063)		(793)		(130,799)		(134,655)
Sale of loan portfolio-cash ⁽²⁾		(218,936)		(12,540)		(51,151)		(282,627)
Gain or loss on sale portfolio ⁽²⁾		(20)		(558)		664		86
FX and other movements		4,287,114		210,057		248,170		4,745,341
Total portfolio as of December 31, 2024	Ps.	177,196,531	Ps.	9,518,574	Ps.	13,421,020	Ps.	200,136,125

⁽¹⁾See note 1.1 “Discontinued operations of BAC Holding”

⁽²⁾ Sale of loan portfolio corresponds mainly to sale of microcredit portfolio, and impaired portfolio and/ or with an increase in credit risk.

The total loan portfolio is composed of commercial loans – client portfolio, consumer loans, mortgage loans, microcredit loans and interbank and overnight funds loan. The following tables show the movement in provisions and gross amounts of these portfolios separately:

Commercial – Client portfolio


			Stage 2
			Lifetime		Stage 3
	Stage 1		ECL not		Lifetime
	12-month		credit-		ECL credit-
	ECL		impaired		impaired		Total
Loss allowance as of January 1, 2022	Ps.	655,655	Ps.	1,006,822	Ps.	4,192,268	Ps.	5,854,745
Transfers:
Transfer from stage 1 to stage 2		(33,511)		33,511		—		—
Transfer from stage 1 to stage 3		(33,401)		—		33,401		—
Transfer from stage 2 to stage 3		—		(88,123)		88,123		—
Transfer from stage 3 to stage 2		—		61,402		(61,402)		—
Transfer from stage 2 to stage 1		93,285		(93,285)		—		—
Transfer from stage 3 to stage 1		26,793		—		(26,793)		—
Net remeasurement of loss allowance ⁽⁵⁾		(124,267)		(192,441)		1,129,665		812,957
New financial assets originated or purchased		392,719		137,383		317,361		847,463
Financial assets that have been derecognized		(213,019)		(109,718)		(714,900)		(1,037,637)
Unwind of discount ⁽²⁾		—		14		405,090		405,104
FX and other movements		10,954		9,586		21,774		42,314
Discontinued operations ⁽¹⁾		12,101		(2,612)		3,496		12,985
Loss of control in subsidiary ⁽¹⁾		(185,786)		(244,715)		(268,521)		(699,022)
Write-offs		(2,985)		(2,622)		(740,556)		(746,163)
Loss allowance as of December 31, 2022	Ps.	598,538	Ps.	515,202	Ps.	4,379,006	Ps.	5,492,746
Transfers:
Transfer from stage 1 to stage 2		(44,743)		44,743		—		—
Transfer from stage 1 to stage 3		(18,381)		—		18,381		—
Transfer from stage 2 to stage 3		—		(130,514)		130,514		—
Transfer from stage 3 to stage 2		—		40,868		(40,868)		—
Transfer from stage 2 to stage 1		150,216		(150,216)		—		—
Transfer from stage 3 to stage 1		31,836		—		(31,836)		—
Net remeasurement of loss allowance ⁽⁴⁾		(148,865)		(99,159)		678,828		430,804
New financial assets originated or purchased		320,101		61,148		155,464		536,713
Financial assets that have been derecognized		(262,000)		(51,476)		(450,980)		(764,456)
Sales of portfolio		—		—		(194,305)		(194,305)
Unwind of discount ⁽²⁾		—		16		517,513		517,529
FX and other movements		(10,958)		(9,657)		(35,823)		(56,438)
Write-offs		(3,303)		(2,131)		(662,559)		(667,993)
Loss allowance as of December 31, 2023	Ps.	612,441	Ps.	218,824	Ps.	4,463,335	Ps.	5,294,600
Transfers:
Transfer from stage 1 to stage 2		(55,649)		55,649		—		—
Transfer from stage 1 to stage 3		(18,703)		—		18,703		—
Transfer from stage 2 to stage 3		—		(141,584)		141,584		—
Transfer from stage 3 to stage 2		—		42,213		(42,213)		—
Transfer from stage 2 to stage 1		69,270		(69,270)		—		—
Transfer from stage 3 to stage 1		25,801		—		(25,801)		—
Net remeasurement of loss allowance ⁽³⁾		78,801		116,498		793,560		988,859
New financial assets originated or purchased		314,904		40,087		119,881		474,872
Financial assets that have been derecognized		(304,000)		(45,074)		(356,292)		(705,366)
Sales of portfolio		—		—		(94,960)		(94,960)
Unwind of discount ⁽²⁾		1		51		593,517		593,569
FX and other movements		5,748		3,974		21,427		31,149
Write-offs		(4,539)		(3,780)		(1,211,511)		(1,219,830)
Loss allowance as of December 31, 2024	Ps.	724,075	Ps.	217,588	Ps.	4,421,230	Ps.	5,362,893

⁽¹⁾ See note 1.1 “Discontinued operations of BAC Holding”

⁽²⁾	The unwind of discount on Stage 3 financial assets is reported within "interest income" so that interest income is recognized on the amortized cost (after deducting the ECL allowance)

⁽³⁾


December 31, 2024
		Stage 2		Stage 3
Stage 1		Lifetime ECL not		Lifetime ECL
12-month ECL		credit-impaired		credit-impaired		Total
Ps.	(72,973)	Ps.	(25,391)	Ps.	4,822	Ps.	(93,542)

⁽⁴⁾This amount includes impact of the measurement of ECL due to changes made in PDs/LGDs/EADs and changes made to model assumptions and methodologies from the opening to the closing balance. The following table shows the impact by stage estimated using all parameters as of December 31, 2023 versus parameters as of December 31,2022 and the loan portfolio as of December 31, 2023.


December 31, 2023
		Stage 2		Stage 3
Stage 1		Lifetime ECL not		Lifetime ECL
12-month ECL		credit-impaired		credit-impaired		Total
Ps.	3,952	Ps.	(20,629)	Ps.	2,916	Ps.	(13,761)

⁽⁵⁾This amount includes impact of the measurement of ECL due to changes made in PDs/LGDs/EADs and changes made to model assumptions and methodologies from the opening to the closing balance. The following table shows the impact by stage estimated using all parameters as of December 31, 2022 versus parameters as of December 31,2021 and the loan portfolio as of December 31, 2022.


December 31, 2022
		Stage 2		Stage 3
Stage 1		Lifetime ECL not		Lifetime ECL
12-month ECL		credit-impaired		credit-impaired		Total
Ps.	(51,598)	Ps.	54,452	Ps.	83,149	Ps.	86,003

The following table further explains changes in the gross carrying amount of the commercial portfolio to help explain their significance to the changes in the allowance for the same portfolio as discussed above.


			Stage 2
			Lifetime		Stage 3
	Stage 1		ECL not		Lifetime
	12-month		credit-		ECL credit-
	ECL		impaired		impaired		Total
Total portfolio as of January 1, 2022	Ps.	100,858,380	Ps.	11,747,975	Ps.	9,421,449	Ps.	122,027,804
Transfers:
Transfer from stage 1 to stage 2		(3,412,530)		3,412,530		—		—
Transfer from stage 1 to stage 3		(1,183,677)		—		1,183,677		—
Transfer from stage 2 to stage 3		—		(1,259,406)		1,259,406		—
Transfer from stage 2 to stage 1		3,502,330		(3,502,330)		—		—
Transfer from stage 3 to stage 2		—		311,858		(311,858)		—
Transfer from stage 3 to stage 1		152,800		—		(152,800)		—
New financial assets originated or purchased		76,419,265		1,177,731		723,459		78,320,455
Financial assets that have been paid		(60,407,178)		(3,742,642)		(3,106,059)		(67,255,879)
Net remeasurement of amortized cost and other receivables		(180,790)		102,831		1,566,802		1,488,843
Write-offs		(2,985)		(2,622)		(740,556)		(746,163)
Discontinued operations ⁽¹⁾		3,560,936		71,257		(953,514)		2,678,679
Loss of control in subsidiary ⁽¹⁾		(33,537,080)		(2,931,541)		35,349		(36,433,272)
FX and other movements		4,188,763		286,453		219,416		4,694,632
Total portfolio as of December 31, 2022	Ps.	89,958,234	Ps.	5,672,094	Ps.	9,144,771	Ps.	104,775,099
Transfers:
Transfer from stage 1 to stage 2		(3,831,869)		3,831,869		—		—
Transfer from stage 1 to stage 3		(979,725)		—		979,725		—
Transfer from stage 2 to stage 3		—		(986,422)		986,422		—
Transfer from stage 2 to stage 1		4,428,540		(4,428,540)		—		—
Transfer from stage 3 to stage 2		—		327,479		(327,479)		—
Transfer from stage 3 to stage 1		216,849		—		(216,849)		—
New financial assets originated or purchased		75,428,991		924,475		1,156,101		77,509,567
Financial assets that have been paid		(66,409,339)		(1,587,486)		(3,472,586)		(71,469,411)
Net remeasurement of amortized cost and other receivables		781,835		18,893		2,285,705		3,086,433
Write-offs		(3,303)		(2,131)		(662,559)		(667,993)
Sale of loan portfolio-loss allowance		—		—		(194,305)		(194,305)
Sale of loan portfolio-cash		—		—		(78,613)		(78,613)
Gain or loss on sale portfolio		—		—		(7,415)		(7,415)


			Stage 2
			Lifetime		Stage 3
	Stage 1		ECL not		Lifetime
	12-month		credit-		ECL credit-
	ECL		impaired		impaired		Total
FX and other movements		(5,261,913)		(239,697)		(403,935)		(5,905,545)
Total portfolio as of December 31, 2023	Ps.	94,328,300	Ps.	3,530,534	Ps.	9,188,983	Ps.	107,047,817
Transfers:
Transfer from stage 1 to stage 2		(3,045,688)		3,045,688		—		—
Transfer from stage 1 to stage 3		(1,417,659)		—		1,417,659		—
Transfer from stage 2 to stage 3		—		(1,317,836)		1,317,836		—
Transfer from stage 2 to stage 1		1,717,607		(1,717,607)		—		—
Transfer from stage 3 to stage 2		—		327,186		(327,186)		—
Transfer from stage 3 to stage 1		193,628		—		(193,628)		—
New financial assets originated or purchased		78,072,653		1,151,662		2,338,797		81,563,112
Financial assets that have been paid		(71,077,047)		(1,565,432)		(3,236,783)		(75,879,262)
Net remeasurement of amortized cost and other receivables		(148,997)		(122,254)		603,420		332,169
Write-offs		(4,539)		(3,780)		(1,211,511)		(1,219,830)
Sale of loan portfolio-loss allowance		—		—		(94,960)		(94,960)
Sale of loan portfolio-cash		—		—		(22,804)		(22,804)
Gain or loss on sale portfolio		—		—		5,633		5,633
FX and other movements		3,309,647		136,089		237,032		3,682,768
Total portfolio as of December 31, 2024	Ps.	101,927,905	Ps.	3,464,250	Ps.	10,022,488	Ps.	115,414,643

⁽¹⁾See note 1.1 “Discontinued operations of BAC Holding”

Consumer loan portfolio


			Stage 2
			Lifetime		Stage 3
	Stage 1		ECL not		Lifetime
	12-month		credit-		ECL credit-
	ECL		impaired		impaired		Total
Loss allowance as of January 1, 2022	Ps.	1,066,543	Ps.	1,396,101	Ps.	2,118,360	Ps.	4,581,004
Transfers:
Transfer from stage 1 to stage 2		(142,762)		142,762		—		—
Transfer from stage 1 to stage 3		(70,964)		—		70,964		—
Transfer from stage 2 to stage 3		—		(498,736)		498,736		—
Transfer from stage 3 to stage 2		—		92,189		(92,189)		—
Transfer from stage 2 to stage 1		211,028		(211,028)		—		—
Transfer from stage 3 to stage 1		55,658		—		(55,658)		—
Net remeasurement of loss allowance ⁽⁵⁾		(1,000)		863,809		1,245,918		2,108,727
New financial assets originated or purchased		473,946		174,616		267,651		916,213
Financial assets that have been derecognized		(201,480)		(149,438)		(175,323)		(526,241)
Unwind of discount ⁽²⁾		—		13		119,709		119,722
FX and other movements		(2,575)		9,007		3,555		9,987
Discontinued operations ⁽¹⁾		(9,751)		15,493		240,008		245,750
Loss of control in subsidiary ⁽¹⁾		(412,745)		(585,225)		(802,042)		(1,800,012)
Write-offs		(125,994)		(396,404)		(1,820,840)		(2,343,238)
Loss allowance as of December 31, 2022	Ps.	839,904	Ps.	853,159	Ps.	1,618,849	Ps.	3,311,912
Transfers:
Transfer from stage 1 to stage 2		(276,858)		276,858		—		—
Transfer from stage 1 to stage 3		(429,739)		—		429,739		—
Transfer from stage 2 to stage 3		—		(1,004,192)		1,004,192		—
Transfer from stage 3 to stage 2		—		257,854		(257,854)		—
Transfer from stage 2 to stage 1		300,775		(300,775)		—		—
Transfer from stage 3 to stage 1		71,599		—		(71,599)		—
Net remeasurement of loss allowance ⁽⁴⁾		484,735		1,310,059		2,145,306		3,940,100
New financial assets originated or purchased		473,697		238,963		481,362		1,194,022
Financial assets that have been derecognized		(214,602)		(98,788)		(394,718)		(708,108)
Sales of portfolio		(2,369)		(1,809)		(162,897)		(167,075)
Unwind of discount ⁽²⁾		—		46		183,157		183,203
FX and other movements		(3,200)		(4,786)		(5,378)		(13,364)
Write-offs		(101,945)		(533,321)		(2,797,978)		(3,433,244)
Loss allowance as of December 31, 2023	Ps.	1,141,997	Ps.	993,268	Ps.	2,172,181	Ps.	4,307,446
Transfers:
Transfer from stage 1 to stage 2		(265,008)		265,008		—		—
Transfer from stage 1 to stage 3		(378,612)		—		378,612		—
Transfer from stage 2 to stage 3		—		(1,030,039)		1,030,039		—
Transfer from stage 3 to stage 2		—		117,468		(117,468)		—
Transfer from stage 2 to stage 1		238,008		(238,008)		—		—
Transfer from stage 3 to stage 1		77,112		—		(77,112)		—
Net remeasurement of loss allowance ⁽³⁾		285,228		1,160,328		2,157,929		3,603,485
New financial assets originated or purchased		296,328		137,990		467,654		901,972
Financial assets that have been derecognized		(250,818)		(84,915)		(330,260)		(665,993)
Sales of portfolio		(21)		(602)		(9,441)		(10,064)
Unwind of discount ⁽²⁾		—		26		199,790		199,816
FX and other movements		3,660		2,365		3,018		9,043
Write-offs		(41,956)		(395,579)		(3,742,152)		(4,179,687)
Loss allowance as of December 31, 2024	Ps.	1,105,918	Ps.	927,310	Ps.	2,132,790	Ps.	4,166,018

⁽¹⁾ See note 1.1 “Discontinued operations of BAC Holding”

⁽²⁾	The unwind of discount on Stage 3 financial assets is reported within "interest income" so that interest income is recognized on the amortized cost (after deducting the ECL allowance)

⁽³⁾


December 31, 2024
		Stage 2		Stage 3
Stage 1		Lifetime ECL not		Lifetime ECL
12-month ECL		credit-impaired		credit-impaired		Total
Ps.	(147,090)	Ps.	20,156	Ps.	37,244	Ps.	(89,690)


December 31, 2023
		Stage 2		Stage 3
Stage 1		Lifetime ECL not		Lifetime ECL
12-month ECL		credit-impaired		credit-impaired		Total
Ps.	57,239	Ps.	51,135	Ps.	(13,718)	Ps.	94,656


December 31, 2022
		Stage 2		Stage 3
Stage 1		Lifetime ECL not		Lifetime ECL
12-month ECL		credit-impaired		credit-impaired		Total
Ps.	(54,668)	Ps.	(37,148)	Ps.	(569)	Ps.	(92,385)

The following table further explains changes in the gross carrying amount of the consumer portfolio to help explain their significance to the changes in the allowance for the same portfolio as discussed above.


			Stage 2
			Lifetime		Stage 3
	Stage 1		ECL not		Lifetime
	12-month		credit-		ECL credit-
	ECL		impaired		impaired		Total
Total portfolio as of January 1, 2022	Ps.	63,811,740	Ps.	9,828,726	Ps.	3,248,679	Ps.	76,889,145
Transfers:
Transfer from stage 1 to stage 2		(3,939,985)		3,939,985		—		—
Transfer from stage 1 to stage 3		(456,120)		—		456,120		—
Transfer from stage 2 to stage 3		—		(1,433,947)		1,433,947		—
Transfer from stage 2 to stage 1		2,810,585		(2,810,585)		—		—
Transfer from stage 3 to stage 2		—		258,837		(258,837)		—
Transfer from stage 3 to stage 1		146,229		—		(146,229)		—
New financial assets originated or purchased		34,459,205		1,219,507		564,562		36,243,274
Financial assets that have been paid		(22,753,127)		(2,332,167)		(826,367)		(25,911,661)
Net remeasurement of amortized cost and other receivables		(788,200)		69,133		681,170		(37,897)
Write-offs		(125,994)		(396,404)		(1,820,840)		(2,343,238)
Discontinued operations ⁽¹⁾		1,156,225		(80,679)		(477,697)		597,849
Loss of control in subsidiary ⁽¹⁾		(22,340,862)		(3,498,287)		(882,530)		(26,721,679)
FX and other movements		549,432		164,844		(10,625)		703,651
Total portfolio as of December 31, 2022	Ps.	52,529,128	Ps.	4,928,963	Ps.	1,961,353	Ps.	59,419,444
Transfers:
Transfer from stage 1 to stage 2		(5,701,009)		5,701,009		—		—
Transfer from stage 1 to stage 3		(1,029,073)		—		1,029,073		—
Transfer from stage 2 to stage 3		—		(2,089,300)		2,089,300		—
Transfer from stage 2 to stage 1		3,616,500		(3,616,500)		—		—
Transfer from stage 3 to stage 2		—		469,333		(469,333)		—
Transfer from stage 3 to stage 1		212,519		11,192		(223,711)		—
New financial assets originated or purchased		32,474,641		1,586,439		4,957,874		39,018,954
Financial assets that have been paid		(28,331,264)		(2,095,326)		(2,091,623)		(32,518,213)
Net remeasurement of amortized cost and other receivables		20,995		126,837		(1,528,765)		(1,380,933)
Write-offs		(101,945)		(533,321)		(2,797,978)		(3,433,244)


			Stage 2
			Lifetime		Stage 3
	Stage 1		ECL not		Lifetime
	12-month		credit-		ECL credit-
	ECL		impaired		impaired		Total
Sale of loan portfolio-loss allowance		(2,369)		(1,809)		(162,897)		(167,075)
Sale of loan portfolio-cash		—		(694)		(34,153)		(34,847)
Gain or loss on sale portfolio		—		(59)		10,805		10,746
FX and other movements		(832,014)		(77,989)		(5,218)		(915,221)
Total portfolio as of December 31, 2023	Ps.	52,856,109	Ps.	4,408,775	Ps.	2,734,727	Ps.	59,999,611
Transfers:
Transfer from stage 1 to stage 2		(4,910,035)		4,910,035		—		—
Transfer from stage 1 to stage 3		(855,865)		—		855,865		—
Transfer from stage 2 to stage 3		—		(2,127,198)		2,127,198		—
Transfer from stage 2 to stage 1		1,875,510		(1,875,510)		—		—
Transfer from stage 3 to stage 2		—		291,914		(291,914)		—
Transfer from stage 3 to stage 1		204,521		—		(204,521)		—
New financial assets originated or purchased		29,868,948		1,482,560		3,834,567		35,186,075
Financial assets that have been paid		(25,133,605)		(1,989,366)		(2,953,029)		(30,076,000)
Net remeasurement of amortized cost and other receivables		301,843		(42,975)		254,508		513,376
Write-offs		(41,956)		(395,579)		(3,742,152)		(4,179,687)
Sale of loan portfolio-loss allowance		(21)		(602)		(9,441)		(10,064)
Sale of loan portfolio-cash		(5)		(143)		(1,510)		(1,658)
Gain or loss on sale portfolio		(20)		(558)		(4,969)		(5,547)
FX and other movements		523,841		25,899		479		550,219
Total portfolio as of December 31, 2024	Ps.	54,689,265	Ps.	4,687,252	Ps.	2,599,808	Ps.	61,976,325

⁽¹⁾See note 1.1 “Discontinued operations of BAC Holding”

Mortgage loan portfolio


			Stage 2
			Lifetime		Stage 3
	Stage 1		ECL not		Lifetime
	12-month		credit-		ECL credit-
	ECL		impaired		impaired		Total
Loss allowance as of January 1, 2022	Ps.	93,122	Ps.	286,903	Ps.	352,382	Ps.	732,407
Transfers:
Transfer from stage 1 to stage 2		(4,775)		4,775		—		—
Transfer from stage 1 to stage 3		(266)		—		266		—
Transfer from stage 2 to stage 3		—		(28,228)		28,228		—
Transfer from stage 3 to stage 2		—		10,553		(10,553)		—
Transfer from stage 2 to stage 1		70,544		(70,544)		—		—
Transfer from stage 3 to stage 1		15,267		—		(15,267)		—
Net remeasurement of loss allowance ⁽⁵⁾		(55,643)		19,536		25,930		(10,177)
New financial assets originated or purchased		12,837		4,133		9,982		26,952
Financial assets that have been derecognized		(27,664)		(8,938)		(5,375)		(41,977)
Unwind of discount ⁽²⁾		—		1		17,084		17,085
FX and other movements		(4,930)		9,709		1,148		5,927
Discontinued operations ⁽¹⁾		(6,193)		1,917		9,998		5,722
Loss of control in subsidiary ⁽¹⁾		(41,518)		(173,351)		(126,763)		(341,632)
Write-offs		(2,018)		(3,827)		(36,021)		(41,866)
Loss allowance as of December 31, 2022	Ps.	48,763	Ps.	52,639	Ps.	251,039	Ps.	352,441
Transfers:
Transfer from stage 1 to stage 2		(7,295)		7,295		—		—
Transfer from stage 1 to stage 3		(635)		—		635		—
Transfer from stage 2 to stage 3		—		(35,387)		35,387		—
Transfer from stage 3 to stage 2		—		9,526		(9,526)		—
Transfer from stage 2 to stage 1		26,638		(26,638)		—		—
Transfer from stage 3 to stage 1		10,329		—		(10,329)		—
Net remeasurement of loss allowance ⁽⁴⁾		(14,157)		63,399		(21,731)		27,511
New financial assets originated or purchased		9,654		7,711		56,558		73,923
Financial assets that have been derecognized		(20,196)		(6,486)		(8,896)		(35,578)
Unwind of discount ⁽²⁾		12		—		16,988		17,000
FX and other movements		332		(2,125)		(2,483)		(4,276)
Write-offs		(8,365)		(3,601)		(39,068)		(51,034)
Loss allowance as of December 31, 2023	Ps.	45,080	Ps.	66,333	Ps.	268,574	Ps.	379,987
Transfers:
Transfer from stage 1 to stage 2		(9,481)		9,481		—		—
Transfer from stage 1 to stage 3		(414)		—		414		—
Transfer from stage 2 to stage 3		—		(48,596)		48,596		—
Transfer from stage 3 to stage 2		—		13,789		(13,789)		—
Transfer from stage 2 to stage 1		30,885		(30,885)		—		—
Transfer from stage 3 to stage 1		9,525		—		(9,525)		—
Net remeasurement of loss allowance ⁽³⁾		6,687		74,143		66,506		147,336
New financial assets originated or purchased		9,943		4,590		10,008		24,541
Financial assets that have been derecognized		(10,560)		(5,716)		(10,079)		(26,355)
Unwind of discount ⁽²⁾		—		—		21,019		21,019
FX and other movements		241		1,270		1,330		2,841
Write-offs		(21,818)		(12,570)		(41,666)		(76,054)
Loss allowance as of December 31, 2024	Ps.	60,088	Ps.	71,839	Ps.	341,388	Ps.	473,315

⁽¹⁾ See note 1.1 “Discontinued operations of BAC Holding”

⁽²⁾	The unwind of discount on Stage 3 financial assets is reported within "interest income" so that interest income is recognized on the amortized cost (after deducting the ECL allowance)

⁽³⁾


December 31, 2024
		Stage 2		Stage 3
Stage 1		Lifetime ECL not		Lifetime ECL
12-month ECL		credit-impaired		credit-impaired		Total
Ps.	(1,468)	Ps.	3,316	Ps.	142	Ps.	1,990


December 31, 2023
		Stage 2		Stage 3
Stage 1		Lifetime ECL not		Lifetime ECL
12-month ECL		credit-impaired		credit-impaired		Total
Ps.	5,207	Ps.	4,604	Ps.	3,914	Ps.	13,725


December 31, 2022
		Stage 2		Stage 3
Stage 1		Lifetime ECL not		Lifetime ECL
12-month ECL		credit-impaired		credit-impaired		Total
Ps.	(63,752)	Ps.	(17,595)	Ps.	(9,268)	Ps.	(90,615)

The following table further explains changes in the gross carrying amount of the mortgage portfolio to help explain their significance to the changes in the allowance for the same portfolio as discussed above.


			Stage 2
			Lifetime		Stage 3
	Stage 1		ECL not		Lifetime
	12-month		credit-		ECL credit-
	ECL		impaired		impaired		Total
Total portfolio as of January 1, 2022	Ps.	22,743,149	Ps.	5,278,510	Ps.	1,098,657	Ps.	29,120,316
Transfers:
Transfer from stage 1 to stage 2		(896,435)		896,435		—		—
Transfer from stage 1 to stage 3		(13,682)		—		13,682		—
Transfer from stage 2 to stage 3		—		(219,362)		219,362		—
Transfer from stage 2 to stage 1		1,954,180		(1,954,180)		—		—
Transfer from stage 3 to stage 2		—		72,617		(72,617)		—
Transfer from stage 3 to stage 1		67,285		—		(67,285)		—
New financial assets originated or purchased		4,715,113		53,475		6,304		4,774,892
Financial assets that have been paid		(1,891,256)		(197,058)		(103,664)		(2,191,978)
Net remeasurement of amortized cost and other receivables		(130,620)		39,252		83,758		(7,610)
Write-offs		(2,018)		(3,827)		(36,021)		(41,866)
Discontinued operations ⁽¹⁾		268,497		(1,219,303)		(650,834)		(1,601,640)
Loss of control in subsidiary ⁽¹⁾		(10,977,834)		(1,859,006)		(383)		(12,837,223)
FX and other movements		390,049		272,242		6,173		668,464
Total portfolio as of December 31, 2022	Ps.	16,226,428	Ps.	1,159,795	Ps.	497,132	Ps.	17,883,355
Transfers:
Transfer from stage 1 to stage 2		(1,382,946)		1,382,946		—		—
Transfer from stage 1 to stage 3		(40,569)		—		40,569		—
Transfer from stage 2 to stage 3		—		(271,352)		271,352		—
Transfer from stage 2 to stage 1		1,082,759		(1,082,759)		—		—
Transfer from stage 3 to stage 2		—		66,023		(66,023)		—
Transfer from stage 3 to stage 1		79,530		—		(79,530)		—
New financial assets originated or purchased		3,594,678		71,626		2,094,419		5,760,723
Financial assets that have been paid		(2,142,766)		(109,535)		(2,147,384)		(4,399,685)
Net remeasurement of amortized cost and other receivables		35,508		18,036		48,059		101,603


			Stage 2
			Lifetime		Stage 3
	Stage 1		ECL not		Lifetime
	12-month		credit-		ECL credit-
	ECL		impaired		impaired		Total
Write-offs		(8,365)		(3,601)		(39,068)		(51,034)
FX and other movements		(723,260)		(70,394)		(15,102)		(808,756)
Total portfolio as of December 31, 2023	Ps.	16,720,997	Ps.	1,160,785	Ps.	604,424	Ps.	18,486,206
Transfers:
Transfer from stage 1 to stage 2		(1,532,164)		1,532,164		—		—
Transfer from stage 1 to stage 3		(45,518)		—		45,518		—
Transfer from stage 2 to stage 3		—		(381,561)		381,561		—
Transfer from stage 2 to stage 1		1,036,878		(1,036,878)		—		—
Transfer from stage 3 to stage 2		—		96,914		(96,914)		—
Transfer from stage 3 to stage 1		90,665		—		(90,665)		—
New financial assets originated or purchased		5,389,136		63,254		55,457		5,507,847
Financial assets that have been paid		(2,280,710)		(116,394)		(127,047)		(2,524,151)
Net remeasurement of amortized cost and other receivables		98,729		13,250		53,838		165,817
Write-offs		(21,818)		(12,570)		(41,666)		(76,054)
FX and other movements		417,334		48,069		10,659		476,062
Total portfolio as of December 31, 2024	Ps.	19,873,529	Ps.	1,367,033	Ps.	795,165	Ps.	22,035,727

⁽¹⁾See note 1.1 “Discontinued operations of BAC Holding”

Microcredit loan portfolio


			Stage 2
			Lifetime		Stage 3
	Stage 1		ECL not		Lifetime
	12-month		credit-		ECL credit-
	ECL		impaired		impaired		Total
Loss allowance as of January 1, 2022	Ps.	6,740	Ps.	13,291	Ps.	85,039	Ps.	105,070
Transfers:
Transfer from stage 1 to stage 2		(2,285)		2,285		—		—
Transfer from stage 1 to stage 3		(816)		—		816		—
Transfer from stage 2 to stage 3		—		(10,682)		10,682		—
Transfer from stage 3 to stage 2		—		1,440		(1,440)		—
Transfer from stage 2 to stage 1		2,901		(2,901)		—		—
Transfer from stage 3 to stage 1		339		—		(339)		—
Net remeasurement of loss allowance ⁽⁴⁾		(3,625)		4,222		2,753		3,350
New financial assets originated or purchased		5,480		197		17		5,694
Financial assets that have been derecognized		(2,248)		(926)		(373)		(3,547)
Unwind of discount ⁽¹⁾		—		—		9,052		9,052
Write-offs		(248)		(2,004)		(78,396)		(80,648)
Loss allowance as of December 31, 2022	Ps.	6,238	Ps.	4,922	Ps.	27,811	Ps.	38,971
Transfers:
Transfer from stage 1 to stage 2		(3,411)		3,411		—		—
Transfer from stage 1 to stage 3		(1,308)		—		1,308		—
Transfer from stage 2 to stage 3		—		(10,612)		10,612		—
Transfer from stage 3 to stage 2		—		1,374		(1,374)		—
Transfer from stage 2 to stage 1		1,729		(1,729)		—		—
Transfer from stage 3 to stage 1		210		—		(210)		—
Net remeasurement of loss allowance ⁽³⁾		6,322		10,395		12,816		29,533
New financial assets originated or purchased		4,647		97		54		4,798
Financial assets that have been derecognized		(1,953)		(265)		(212)		(2,430)
Unwind of discount ⁽¹⁾		—		—		7,016		7,016
Write-offs		(406)		(1,227)		(22,595)		(24,228)
Loss allowance as of December 31, 2023	Ps.	12,068	Ps.	6,366	Ps.	35,226	Ps.	53,660
Transfers:
Transfer from stage 1 to stage 2		(2,380)		2,380		—		—
Transfer from stage 1 to stage 3		(24,943)		—		24,943		—
Transfer from stage 2 to stage 3		—		(8,815)		8,815		—
Transfer from stage 3 to stage 2		—		536		(536)		—
Transfer from stage 2 to stage 1		912		(912)		—		—
Transfer from stage 3 to stage 1		57		—		(57)		—
Net remeasurement of loss allowance ⁽²⁾		20,456		6,140		(3,299)		23,297
New financial assets originated or purchased		2,627		69		19		2,715
Financial assets that have been derecognized		(5,694)		(5,123)		(26,097)		(36,914)
Sales of portfolio		(3,042)		(191)		(26,398)		(29,631)
Unwind of discount ⁽¹⁾		—		—		1,684		1,684
Write-offs		(2)		(436)		(10,755)		(11,193)
Loss allowance as of December 31, 2024	Ps.	59	Ps.	14	Ps.	3,545	Ps.	3,618

⁽¹⁾	The unwind of discount on Stage 3 financial assets is reported within "interest income" so that interest income is recognized on the amortized cost (after deducting the ECL allowance)

⁽²⁾


December 31, 2024
		Stage 2		Stage 3
Stage 1		Lifetime ECL not		Lifetime ECL
12-month ECL		credit-impaired		credit-impaired		Total
Ps.	(8)	Ps.	6	Ps.	—	Ps.	(2)

⁽³⁾ This amount includes impact of the measurement of ECL due to changes made in PDs/LGDs/EADs and changes made to model assumptions and methodologies from the opening to the closing balance. The following table shows the impact by stage estimated using all parameters as of December 31, 2023 versus parameters as of December 31,2022 and the loan portfolio as of December 31, 2023.


December 31, 2023
		Stage 2		Stage 3
Stage 1		Lifetime ECL not		Lifetime ECL
12-month ECL		credit-impaired		credit-impaired		Total
Ps.	(96)	Ps.	29	Ps.	(6)	Ps.	(73)

⁽⁴⁾ This amount includes impact of the measurement of ECL due to changes made in PDs/LGDs/EADs and changes made to model assumptions and methodologies from the opening to the closing balance. The following table shows the impact by stage estimated using all parameters as of December 31, 2022 versus parameters as of December 31,2021 and the loan portfolio as of December 31, 2022.


December 31, 2022
		Stage 2		Stage 3
Stage 1		Lifetime ECL not		Lifetime ECL
12-month ECL		credit-impaired		credit-impaired		Total
Ps.	(378)	Ps.	333	Ps.	(86)	Ps.	(131)

The following table further explains changes in the gross carrying amount of the microcredit portfolio to help explain their significance to the changes in the allowance for the same portfolio as discussed above:


			Stage 2
			Lifetime		Stage 3
	Stage 1		ECL not		Lifetime
	12-month		credit-		ECL credit-
	ECL		impaired		impaired		Total
Total portfolio as of January 1, 2022	Ps.	187,419	Ps.	43,362	Ps.	86,958	Ps.	317,739
Transfers:
Transfer from stage 1 to stage 2		(27,202)		27,202		—		—
Transfer from stage 1 to stage 3		(5,892)		—		5,892		—
Transfer from stage 2 to stage 3		—		(26,762)		26,762		—
Transfer from stage 2 to stage 1		21,110		(21,110)		—		—
Transfer from stage 3 to stage 2		—		3,683		(3,683)		—
Transfer from stage 3 to stage 1		980		—		(980)		—
New financial assets originated or purchased		219,226		57		34		219,317
Financial assets that have been paid		(177,589)		(12,754)		(17,655)		(207,998)
Net remeasurement of amortized cost and other receivables		6,687		2,382		10,241		19,310
Write-offs		(248)		(2,004)		(78,396)		(80,648)
Total portfolio as of December 31, 2022	Ps.	224,491	Ps.	14,056	Ps.	29,173	Ps.	267,720
Transfers:
Transfer from stage 1 to stage 2		(36,169)		36,169		—		—
Transfer from stage 1 to stage 3		(10,609)		—		10,609		—
Transfer from stage 2 to stage 3		—		(25,030)		25,030		—
Transfer from stage 2 to stage 1		9,226		(9,226)		—		—
Transfer from stage 3 to stage 2		—		2,946		(2,946)		—
Transfer from stage 3 to stage 1		516		—		(516)		—
New financial assets originated or purchased		214,273		1,387		41,681		257,341
Financial assets that have been paid		(178,828)		(6,329)		(22,883)		(208,040)
Net remeasurement of amortized cost and other receivables		4,054		1,207		(20,525)		(15,264)
Write-offs		(406)		(1,227)		(22,595)		(24,228)
Total portfolio as of December 31, 2023	Ps.	226,548	Ps.	13,953	Ps.	37,028	Ps.	277,529
Transfers:
Transfer from stage 1 to stage 2		(18,434)		18,434		—		—
Transfer from stage 1 to stage 3		(5,297)		—		5,297		—
Transfer from stage 2 to stage 3		—		(14,840)		14,840		—
Transfer from stage 2 to stage 1		3,202		(3,202)		—		—
Transfer from stage 3 to stage 2		—		1,329		(1,329)		—
Transfer from stage 3 to stage 1		153		—		(153)		—
New financial assets originated or purchased		329,590		16,273		58,483		404,346
Financial assets that have been paid		(317,251)		(19,019)		(37,916)		(374,186)
Net remeasurement of amortized cost and other receivables		4,241		135		(8,701)		(4,325)
Write-offs		(2)		(436)		(10,755)		(11,193)
Sale of loan portfolio-loss allowance		(3,042)		(191)		(26,398)		(29,631)
Sale of loan portfolio-cash		(218,931)		(12,397)		(26,837)		(258,165)
Total portfolio as of December 31, 2024	Ps.	777	Ps.	39	Ps.	3,559	Ps.	4,375

Interbank and overnight funds


			Stage 2
			Lifetime		Stage 3
	Stage 1		ECL not		Lifetime
	12-month		credit-		ECL credit-
	ECL		impaired		impaired		Total
Loss allowance as of January 1, 2022	Ps.	2,386	Ps.	-	Ps.	-	Ps.	2,386
Net remeasurement of loss allowance ⁽³⁾		3		—		—		3
New financial assets originated or purchased		17,244		—		—		17,244
Financial assets that have been derecognized		(18,189)		—				(18,189)
Loss allowance as of December 31, 2022	Ps.	1,444	Ps.	—	Ps.	—	Ps.	1,444
Transfers:
Transfer from stage 2 to stage 1		2		(2)		—		—
Net remeasurement of loss allowance ⁽²⁾		(122)		2		—		(120)
New financial assets originated or purchased		1,787		—		—		1,787
Financial assets that have been derecognized		(3,089)		—		—		(3,089)
Loss allowance as of December 31, 2023	Ps.	22	Ps.	—	Ps.	—	Ps.	22
Net remeasurement of loss allowance ⁽¹⁾		731		1		—		732
New financial assets originated or purchased		99		—		—		99
Financial assets that have been derecognized		(58)		—		—		(58)
Loss allowance as of December 31, 2024	Ps.	794	Ps.	1	Ps.	—	Ps.	795

⁽¹⁾


December 31, 2024
		Stage 2		Stage 3
Stage 1		Lifetime ECL not		Lifetime ECL
12-month ECL		credit-impaired		credit-impaired		Total
Ps.	6	Ps.	—	Ps.	—	Ps.	6

⁽²⁾ This amount includes impact of the measurement of ECL due to changes made in PDs/LGDs/EADs and changes made to model assumptions and methodologies from the opening to the closing balance. The following table shows the impact by stage estimated using all parameters as of December 31, 2023 versus parameters as of December 31,2022 and the loan portfolio as of December 31, 2023.


December 31, 2023
		Stage 2		Stage 3
Stage 1		Lifetime ECL not		Lifetime ECL
12-month ECL		credit-impaired		credit-impaired		Total
Ps.	(4)	Ps.	—	Ps.	—	Ps.	(4)

⁽³⁾ This amount includes impact of the measurement of ECL due to changes made in PDs/LGDs/EADs and changes made to model assumptions and methodologies from the opening to the closing balance. The following table shows the impact by stage estimated using all parameters as of December 31, 2022 versus parameters as of December 31,2021 and the loan portfolio as of December 31, 2022.


December 31, 2022
		Stage 2		Stage 3
Stage 1		Lifetime ECL not		Lifetime ECL
12-month ECL		credit-impaired		credit-impaired		Total
Ps.	(611)	Ps.	—	Ps.	—	Ps.	(611)

The following table further explains changes in the gross carrying amount of the interbank and overnight funds portfolio to help explain their significance to the changes in the allowance for the same portfolio as discussed above:


			Stage 2
			Lifetime		Stage 3
	Stage 1		ECL not		Lifetime
	12-month		credit-		ECL credit-
	ECL		impaired		impaired		Total
Total portfolio as of January 1, 2022	Ps.	3,218,433	Ps.	—	Ps.	—	Ps.	3,218,433
New financial assets originated or purchased		23,119,916		—		1		23,119,917
Financial assets that have been paid		(18,982,865)		—		—		(18,982,865)
Net remeasurement of amortized cost and other receivables		84,916		—		—		84,916
Discontinued operations ⁽¹⁾		249		—		—		249
Loss of control in subsidiary ⁽¹⁾		(1,442,427)		—		—		(1,442,427)
FX and other movements		(30,480)		—		—		(30,480)
Total portfolio as of December 31, 2022	Ps.	5,967,742	Ps.	—	Ps.	1	Ps.	5,967,743
New financial assets originated or purchased		206,661		—		—		206,661
Financial assets that have been paid		(6,003,176)		—		—		(6,003,176)
Net remeasurement of amortized cost and other receivables		(1,390)		—		(1)		(1,391)
FX and other movements		222,770		—		—		222,770
Total portfolio as of December 31, 2023	Ps.	392,607	Ps.	—	Ps.	—	Ps.	392,607
New financial assets originated or purchased		415,418		—		—		415,418
Financial assets that have been paid		(141,132)		—		—		(141,132)
Net remeasurement of amortized cost and other receivables		1,870		—		—		1,870
FX and other movements		36,292		—		—		36,292
Total portfolio as of December 31, 2024	Ps.	705,055	Ps.	—	Ps.	—	Ps.	705,055

⁽¹⁾See note 1.1 “Discontinued operations of BAC Holding”

The following table further explains changes in the movements in the allowance for the of investments in debt securities at FVOCI portfolio:

Investments in debt securities at FVOCI


			Stage 2
			Lifetime		Stage 3
	Stage 1		ECL not		Lifetime
	12-month		credit-		ECL credit-
	ECL		impaired		impaired		Total
Loss allowance balance as of January 1, 2022	Ps.	123,978	Ps.	—	Ps.	—	Ps.	123,978
Net remeasurement of loss allowance ⁽⁵⁾		(3,217)		—		—		(3,217)
New financial assets originated or purchased		4,409		—		—		4,409
Financial assets that have been derecognized		(4,870)		—		—		(4,870)
Discontinued operations ⁽¹⁾		2,935		—		—		2,935
Loss of control in subsidiary ⁽²⁾		(111,358)		—		—		(111,358)
FX and other movements		809		—		—		809
Loss allowance balance as of December 31, 2022	Ps.	12,686	Ps.	—	Ps.	—	Ps.	12,686
Net remeasurement of loss allowance ⁽⁴⁾		(892)		—		—		(892)
New financial assets originated or purchased		6,470		—		—		6,470
Financial assets that have been derecognized		(4,342)		—		—		(4,342)
FX and other movements		(950)		—		—		(950)
Loss allowance balance as of December 31, 2023	Ps.	12,972	Ps.	—	Ps.	—	Ps.	12,972
Net remeasurement of loss allowance ⁽³⁾		452		—		—		452
New financial assets originated or purchased		9,029		—		—		9,029
Financial assets that have been derecognized		(4,895)		—		—		(4,895)
FX and other movements		752		—		—		752
Loss allowance balance as of December 31, 2024	Ps.	18,310	Ps.	—	Ps.	—	Ps.	18,310

⁽¹⁾ See note 1.1 “Discontinued operations of BAC Holding”

⁽²⁾ Correspond to reclassification for comparability of the movements of BAC Holding consider the deconsolidation of this entity during year 2022.

⁽³⁾ This amount includes impact of the measurement of ECL due to changes made in PDs/LGDs/EADs and changes made to model assumptions and methodologies from the opening to the closing balance. The following table shows the impact by stage estimated using all parameters as of December 31, 2024 versus parameters as of December 31, 2023 and the investments portfolio as of December 31, 2024.


December 31, 2024
		Stage 2		Stage 3
Stage 1		Lifetime ECL not		Lifetime ECL
12-month ECL		credit-impaired		credit-impaired		Total
Ps.	(90)	Ps.	—	Ps.	—	Ps.	(90)

⁽⁴⁾ This amount includes impact of the measurement of ECL due to changes made in PDs/LGDs/EADs and changes made to model assumptions and methodologies from the opening to the closing balance. The following table shows the impact by stage estimated using all parameters as of December 31, 2023 versus parameters as of December 31, 2022 and the investments portfolio as of December 31, 2023.


December 31, 2023
			Stage 2		Stage 3
	Stage 1		Lifetime ECL not		Lifetime ECL
	12-month ECL		credit-impaired		credit-impaired		Total
Ps.	(359)	Ps.	—	Ps.	—	Ps.	(359)

⁽⁵⁾ This amount includes impact of the measurement of ECL due to changes made in PDs/LGDs/EADs and changes made to model assumptions and methodologies from the opening to the closing balance. The following table shows the impact by stage estimated using all parameters as of December 31, 2022 versus parameters as of December 31, 2021 and the investments portfolio as of December 31, 2022.


December 31, 2022
			Stage 2		Stage 3
	Stage 1		Lifetime ECL not		Lifetime ECL
	12-month ECL		credit-impaired		credit-impaired		Total
Ps.	(1,056)	Ps.	—	Ps.	—	Ps.	(1,056)

The following table further explains changes in the movements in the allowance for investments in debt securities at amortized cost portfolio:

Investments in debt securities at amortized cost


\|
			Stage 2
			Lifetime		Stage 3
	Stage 1		ECL not		Lifetime
	12-month		credit-		ECL credit-
	ECL		impaired		impaired		Total
Loss allowance balance as of January 1, 2022	Ps.	3,297	Ps.	7,401	Ps.	—	Ps.	10,698
Net remeasurement of loss allowance ⁽⁵⁾		19,761		547		—		20,308
New financial assets originated or purchased		2,198		—		—		2,198
Financial assets that have been derecognized		(1,015)		(1,090)		—		(2,105)
Discontinued operations ⁽¹⁾		(85)		—		—		(85)
Loss of control in subsidiary ⁽²⁾		(503)		—		—		(503)
FX and other movements		4,910		1,509		—		6,419
Loss allowance balance as of December 31, 2022	Ps.	28,563	Ps.	8,367	Ps.	—	Ps.	36,930
Transfer from stage 2 to stage 1		1,485		(1,485)		—		—
Net remeasurement of loss allowance ⁽⁴⁾		(14,315)		(996)		—		(15,311)
New financial assets originated or purchased		2,669		—		—		2,669
Financial assets that have been derecognized		(1,466)		—		—		(1,466)
FX and other movements		(4,323)		(1,617)		—		(5,940)
Loss allowance balance as of December 31, 2023	Ps.	12,613	Ps.	4,269	Ps.	—	Ps.	16,882
Net remeasurement of loss allowance ⁽³⁾		(1,774)		(562)		—		(2,336)
New financial assets originated or purchased		3,279		—		—		3,279
Financial assets that have been derecognized		(1,366)		—		—		(1,366)
FX and other movements		1,577		639		—		2,216
Loss allowance balance as of December 31, 2024	Ps.	14,329	Ps.	4,346	Ps.	—	Ps.	18,675

⁽¹⁾ See note 1.1 “Discontinued operations of BAC Holding”

⁽²⁾ Correspond to reclassification for comparability of the movements of BAC Holding consider the deconsolidation of this entity during year 2022.

⁽³⁾ This amount includes impact of the measurement of ECL due to changes made in PDs/LGDs/EADs and changes made to model assumptions and methodologies from the opening to the closing balance. The following table shows the impact by stage estimated using all parameters as of December 31, 2024 versus parameters as of December 31, 2023 and the investments portfolio as of December 31, 2024.


December 31, 2024
		Stage 2		Stage 3
Stage 1		Lifetime ECL not		Lifetime ECL
12-month ECL		credit-impaired		credit-impaired		Total
Ps.	(404)	Ps.	—	Ps.	—	Ps.	(404)

⁽⁴⁾ This amount includes impact of the measurement of ECL due to changes made in PDs/LGDs/EADs and changes made to model assumptions and methodologies from the opening to the closing balance. The following table shows the impact by stage estimated using all parameters as of December 31, 2023 versus parameters as of December 31, 2022 and the investments portfolio as of December 31, 2023.


December 31, 2023
			Stage 2		Stage 3
	Stage 1		Lifetime ECL not		Lifetime ECL
	12-month ECL		credit-impaired		credit-impaired		Total
Ps.	9,632	Ps.	—	Ps.	—	Ps.	9,632

⁽⁵⁾ This amount includes impact of the measurement of ECL due to changes made in PDs/LGDs/EADs and changes made to model assumptions and methodologies from the opening to the closing balance. The following table shows the impact by stage estimated using all parameters as of December 31, 2022 versus parameters as of December 31, 2021 and the investments portfolio as of December 31, 2022.


December 31, 2022
			Stage 2		Stage 3
	Stage 1		Lifetime ECL not		Lifetime ECL
	12-month ECL		credit-impaired		credit-impaired		Total
Ps.	(70)	Ps.	48	Ps.	—	Ps.	(22)

Other accounts receivable

General approach

Stage 2

Lifetime

Stage 3

Stage 1

ECL not

Lifetime

12-month

credit-

ECL credit-

ECL

impaired

Total

Loss allowance as of January 1, 2022

Ps.

18,939

Ps.

16,771

Ps.

129,449

Ps.

165,159

Net remeasurement of loss allowance

7,680

2,190

48,003

57,873

FX and other movements

1,748

1,240

177

3,165

Write-offs

(3,390)

—

(37,506)

(40,896)

Loss allowance as of December 31, 2022

Ps.

24,977

Ps.

20,201

Ps.

140,123

Ps.

185,301

Net remeasurement of loss allowance

4,389

257

46,867

51,513

FX and other movements

(1,789)

(1,270)

(2,464)

(5,523)

Write-offs

(1,612)

—

(43,397)

(45,009)

Loss allowance as of December 31, 2023

Ps.

25,965

Ps.

19,188

Ps.

141,129

Ps.

186,282

Net remeasurement of loss allowance

4,932

2,779

58,789

66,500

FX and other movements

860

229

3,212

4,301

Write-offs

(531)

—

(85,622)

(86,153)

Loss allowance as of December 31, 2024

Ps.

31,226

Ps.

22,196

Ps.

117,508

Ps.

170,930

Simplified approach


	Loss allowance
Loss allowance as of January 1, 2022	Ps.	217,643
Loss of control in subsidiary ⁽¹⁾		(33,024)
Discontinued operations ⁽¹⁾		469
Entity liquidation		(1,592)
Provision charged to profit or loss		27,519
Recovery for partial payments from the clients		(6,751)
Write-offs		(7,948)
Exchange gains (losses) in foreign currency		799
Loss allowance as of December 31, 2022	Ps.	197,115
Entity deconsolidation		(3,245)
Provision charged to profit or loss		39,750
Recovery for partial payments from the clients		(14,599)
Write-offs		(18,516)
Exchange gains (losses) in foreign currency		(1,123)
Loss allowance as of December 31, 2023	Ps.	199,382
Provision charged to profit or loss		56,296
Recovery for partial payments from the clients		(29,727)
Write-offs		(35,436)
Exchange gains (losses) in foreign currency		526
Loss allowance as of December 31, 2024	Ps.	191,041

⁽¹⁾See note 1.1 “Discontinued operations of BAC Holding”

Loan commitments and financial guarantee contracts


			Stage 2
			Lifetime		Stage 3
	Stage 1		ECL not		Lifetime
	12-month		credit-		ECL credit-
	ECL		impaired		impaired		Total
Loss allowance as of January 1, 2022	Ps.	45,916	Ps.	10,097	Ps.	6,028	Ps.	62,041
Transfers:
Transfer from stage 1 to stage 2		(558)		558		—		—
Transfer from stage 1 to stage 3		(57)		—		57		—
Transfer from stage 2 to stage 3		—		(211)		211		—
Transfer from stage 3 to stage 2		—		34		(34)		—
Transfer from stage 2 to stage 1		3,379		(3,379)		—		—
Transfer from stage 3 to stage 1		289		—		(289)		—
Net remeasurement of loss allowance		(7,419)		(2,264)		(1,218)		(10,901)
New loan commitments and financial guarantees issued		17,204		1,826		(41)		18,989
FX and other movements		202		1		—		203
Discontinued operations ⁽¹⁾		(45)		(63)		(133)		(241)
Loss of control in subsidiary ⁽¹⁾		(751)		(138)		(4,292)		(5,181)
Loss allowance as of December 31, 2022	Ps.	58,160	Ps.	6,461	Ps.	289	Ps.	64,910
Transfers:
Transfer from stage 1 to stage 2		(1,690)		1,690		—		—
Transfer from stage 1 to stage 3		(218)		—		218		—
Transfer from stage 2 to stage 3		—		(329)		329		—
Transfer from stage 3 to stage 2		—		4		(4)		—
Transfer from stage 2 to stage 1		1,105		(1,105)		—		—
Transfer from stage 3 to stage 1		29		—		(29)		—
Net remeasurement of loss allowance		(14,124)		(769)		211		(14,682)
New loan commitments and financial guarantees issued		18,693		1,732		(65)		20,360
FX and other movements		(318)		(2)		—		(320)
Loss allowance as of December 31, 2023	Ps.	61,637	Ps.	7,682	Ps.	949	Ps.	70,268
Transfers:
Transfer from stage 1 to stage 2		(1,233)		1,233		—		—
Transfer from stage 1 to stage 3		(503)		—		503		—
Transfer from stage 2 to stage 3		—		(167)		167		—
Transfer from stage 3 to stage 2		—		1		(1)		—
Transfer from stage 2 to stage 1		2,998		(2,998)		—		—
Transfer from stage 3 to stage 1		20		—		(20)		—
Net remeasurement of loss allowance		(18,834)		(14)		544		(18,304)
New loan commitments and financial guarantees issued		18,204		1,934		92		20,230
FX and other movements		220		—		—		220
Loss allowance as of December 31, 2024	Ps.	62,509	Ps.	7,671	Ps.	2,234	Ps.	72,414

⁽¹⁾See note 1.1 “Discontinued operations of BAC Holding”

4.1.6 Concentrations of credit risk

Loan portfolio

Policies to prevent excessive credit-risk concentration

In order to prevent excessive concentrations of credit risk at an individual, economic group, country or economic sectors level, each financial subsidiary of Grupo Aval maintains updated exposure thresholds to limit concentration. The exposure limit by a financial subsidiary of Grupo Aval to an individual client or economic group depends on the risk profile of the client (or economic group), the nature of the risk of the debtor and the experience of each financial subsidiary in a specific market or sector.

Concentration risk control is key to the risk management process. Grupo Aval´s financial subsidiaries monitor the degree of credit risk concentration by sector and individual or group customer.

In order to avoid credit risk concentration at Grupo Aval level, management relies on the financial subsidiaries Credit Risk Unit or its equivalent, which consolidates, and monitors the credit risk exposures of all financial subsidiaries, to determine the maximum levels of concentration.

Pursuant to Colombian regulations, financial subsidiaries in Colombia cannot grant unsecured loans to borrowers, which on a combined basis exceed 10% of the financial subsidiary´s regulatory capital calculated according to the definitions of the Ministry of Finance. Loans maybe more than 10% of the regulatory capital of the financial subsidiary when they are secured by acceptable collateral and/or certain guarantees.

Concentration by sector

Below is the credit portfolio distribution of Grupo Aval by economic sector as of December 31, 2024, and 2023:


Sector	December 31, 2024		%		December 31, 2023		%
Consumer services	Ps.	89,687,446	44.8	%	Ps.	84,358,141	45.3	%
Commercial services		43,792,710	21.9	%		40,341,863	21.7	%
Construction		15,046,109	7.5	%		14,733,390	7.9	%
Public services		9,218,309	4.6	%		7,172,123	3.9	%
Food, beverage and tobacco		7,577,678	3.8	%		7,191,477	3.9	%
Other industrial and manufacturing products		6,857,011	3.4	%		6,410,022	3.4	%
Transportation and communications		6,499,070	3.2	%		6,283,172	3.4	%
Chemical production		5,539,036	2.8	%		5,414,605	2.9	%
Government		5,471,013	2.7	%		5,367,471	2.9	%
Agricultural		4,538,856	2.3	%		4,192,847	2.3	%
Mining products and oil		2,754,170	1.4	%		1,500,686	0.8	%
Trade and tourism		1,724,337	0.9	%		1,622,212	0.8	%
Other		1,430,380	0.7	%		1,615,761	0.8	%
Total of each economic sector	Ps.	200,136,125	100.0	%	Ps.	186,203,770	100.0	%

Concentration by country

The detail of credit risk at the level of Grupo Aval in the different geographic areas determined according to the domicile of the debtor, without taking into consideration loan loss provisions as of December 31, 2024, and 2023 is as follows:


December 31, 2024	Commercial		Consumer		Mortgages		Microcredit		Interbank and overnight funds		Total
Colombia	Ps.	95,610,708	Ps.	57,719,813	Ps.	18,494,856	Ps.	4,375	Ps.	395,382	Ps.	172,225,134
Panama		9,455,147		4,248,452		3,540,871		—		214,187		17,458,657
United States		6,685,567		7,984		—		—		93,474		6,787,025
Guatemala		432,151		—		—		—		—		432,151
Costa Rica		125,689		—		—		—		2,012		127,701
Honduras		392,236		—		—		—		—		392,236
El Salvador		13,919		—		—		—		—		13,919
Nicaragua		412		—		—		—		—		412
Other countries		2,698,814		76		—		—		—		2,698,890
Total gross loan portfolio	Ps.	115,414,643	Ps.	61,976,325	Ps.	22,035,727	Ps.	4,375	Ps.	705,055	Ps.	200,136,125


December 31, 2023	Commercial		Consumer		Mortgages		Microcredit		Interbank and overnight funds		Total
Colombia	Ps.	90,146,557	Ps.	56,659,813	Ps.	15,363,688	Ps.	277,529	Ps.	320,400	Ps.	162,767,987
Panama		7,881,116		3,339,663		3,122,518		—		21,512		14,364,809
United States		5,857,040		—		—		—		50,089		5,907,129
Guatemala		218,838		—		—		—		—		218,838
Costa Rica		115,868		—		—		—		606		116,474
Honduras		298,941		—		—		—		—		298,941
El Salvador		6,704		—		—		—		—		6,704
Nicaragua		605		—		—		—		—		605
Other countries		2,522,148		135		—		—		—		2,522,283
Total gross loan portfolio	Ps.	107,047,817	Ps.	59,999,611	Ps.	18,486,206	Ps.	277,529	Ps.	392,607	Ps.	186,203,770

Concentration by currency

The classification of loan portfolio by type of currency is as follows:


December 31, 2024	Colombian Pesos		Foreign currency		Total
Commercial	Ps.	86,935,650	Ps.	28,478,993	Ps.	115,414,643
Consumer		57,615,997		4,360,328		61,976,325
Residential mortgage		18,494,740		3,540,987		22,035,727
Microcredit		4,375		—		4,375
Interbank and overnight funds		272,307		432,748		705,055
Total gross loan portfolio	Ps.	163,323,069	Ps.	36,813,056	Ps.	200,136,125


December 31, 2023	Colombian Pesos		Foreign currency		Total
Commercial	Ps.	83,083,022	Ps.	23,964,795	Ps.	107,047,817
Consumer		56,580,248		3,419,363		59,999,611
Residential mortgage		15,363,549		3,122,657		18,486,206
Microcredit		277,529		—		277,529
Interbank and overnight funds		159,757		232,850		392,607
Total gross loan portfolio	Ps.	155,464,105	Ps.	30,739,665	Ps.	186,203,770

As of December 31, 2024, the loan portfolio in foreign currency represents 18.4% of the total portfolio, equivalent to US$ 8,349 million. As of December 31, 2023, the loan portfolio in foreign currency represents 16.5%, equivalent to US$ 8,042 million.

Investment debt securities

Grupo Aval entities monitor concentrations of credit risk by sector and by geographic location. An analysis of concentrations of credit risk from investment securities is shown below.

Concentration by sector

Trading debt securities (see note 8.1)

The balance of financial assets in investments in trading debt securities includes the following as of December 31, 2024, and 2023:


	December 31,		December 31,
	2024		2023
In Colombian Pesos
Securities issued or secured by Colombian Government	Ps.	10,623,734	Ps.	5,732,620
Securities issued or secured by other Colombian Government entities		183,760		155,737
Securities issued or secured by other financial entities		864,036		902,652
Securities issued or secured by non-financial sector entities		7,749		2,994
Others		15,768		20,585
Total In Colombian Pesos	Ps.	11,695,047	Ps.	6,814,588

In foreign currency


	December 31,		December 31,
	2024		2023
Securities issued or secured by Colombian Government	Ps.	17,824	Ps.	62,212
Securities issued or secured by foreign Governments		75,379		32,079
Securities issued or secured by other financial entities		138,158		181,809
Securities issued or secured by non-financial sector entities		1,064		3,412
Others		9,942		19,280
Total In foreign currency	Ps.	242,367	Ps.	298,792
Total trading debt securities	Ps.	11,937,414	Ps.	7,113,380

Investments in debt securities mandatorily at FVTPL (see note 9.1)

The balance of financial assets in investments in debt securities mandatorily at FVTPL includes the following as of December 31, 2024, and 2023:


	December 31,		December 31,
	2024		2023
In Colombian Pesos
Others	Ps.	1,425	Ps.	1,889
Total debt securities mandatorily at FVTPL	Ps.	1,425	Ps.	1,889

Investments in debt securities at FVOCI

The balance of financial assets in investments in debt securities at FVOCI includes the following as of December 31, 2024, and 2023:


	December 31,		December 31,
	2024		2023
In Colombian Pesos
Securities issued or secured by Colombian Government	Ps.	15,207,640	Ps.	14,491,881
Securities issued or secured by other Colombian Government entities		173,682		325,588
Securities issued or secured by other financial entities		813,342		918,788
Securities issued or secured by non-financial sector entities		3,968		961
Others		202,264		212,635
Total In Colombian Pesos	Ps.	16,400,896	Ps.	15,949,853
In foreign currency
Securities issued or secured by Colombian Government	Ps.	3,060,268	Ps.	2,298,912
Securities issued or secured by other Colombian Government entities		289,063		538,200
Securities issued or secured by foreign Governments		4,502,810		2,507,038
Securities issued or secured by central banks		204,855		145,489
Securities issued or secured by other financial entities		1,813,441		1,223,859
Securities issued or secured by non-financial sector entities		245,692		213,610
Others		533,173		449,815
Total In foreign currency	Ps.	10,649,302	Ps.	7,376,923
Total debt securities at FVOCI	Ps.	27,050,198	Ps.	23,326,776

Investments in debt securities at amortized cost

The balance of financial assets in investments in debt securities at amortized cost includes the following as of December 31, 2024, and 2023:


		December 31,		December 31,
In Colombian Pesos	2024		2023
Securities issued or secured by Colombian Government	Ps.	2,553,693	Ps.	2,567,463
Securities issued or secured by other Colombian Government entities		5,563,208		5,112,355
Others		32,759		36,635
Total In Colombian Pesos	Ps.	8,149,660	Ps.	7,716,453
In foreign currency
Securities issued or secured by foreign Governments	Ps.	30,655	Ps.	26,515
Securities issued or secured by other financial entities		2,350,549		2,082,993
Securities issued or secured by non-financial sector entities		145,553		143,410
Others		31,950		27,190
Total In foreign currency	Ps.	2,558,707	Ps.	2,280,108
Total investments in debt securities at amortized cost	Ps.	10,708,367	Ps.	9,996,561

Concentration of investments in debt securities by location


		December 31,		December 31,
	2024		2023
Colombia	Ps.	39,769,376	Ps.	33,713,283
Panama		6,114,059		3,952,223
United States of America		1,543,389		1,421,010
Brazil		128,970		114,879
Mexico		583,979		410,599
Costa Rica		110,714		95,643
Chile		524,430		182,398
Peru		443,698		177,096
Paraguay		102,473		37,177
Japan		22,957		—
Germany		15,806		—
Total by country	Ps.	49,359,851	Ps.	40,104,308
Bladex (Foreign Trade Bank of Latin America)		216,218		225,642
Andean Development Corporation (Corporación Andina de Fomento)		117,061		105,107
Inter-American Corporation for the Financing of Infrastructure		4,274		3,549
Multilateral	Ps.	337,553	Ps.	334,298
Total investments in debt securities	Ps.	49,697,404	Ps.	40,438,606

Concentration by Sovereign Debt

As a general rule, Grupo Aval considers sovereign risk to be the risk assumed in deposits with Central Banks (including the mandatory deposits), investments in debt issues of a Colombian Government. In addition, the risk arising from transactions with public sector entities that have the following features: their funds are obtained only from fiscal income, they are legally recognized as entities directly included in the government sector, and their activities are of a non-commercial nature.

Sovereign risk exposure arises mainly from Grupo Aval’s banking subsidiaries obligations to maintain certain mandatory deposits in Central Banks and from the fixed-income portfolios held as part of the on-balance-sheet structural interest rate risk management strategy and in the trading books of the treasury department. Most of these exposures are denominated in pesos and are financed through peso denominated repurchase agreements or customer deposits.

As of December 31, 2024, and 2023, the investment portfolio of financial assets in debt instruments is comprised mainly of securities issued or secured by entities of the Republic of Colombia, which represent 72.58% and 68.55%, respectively of the total portfolio.

Below is the detail of Grupo Aval’s sovereign debt portfolio issued by Central Governments per country:


	December 31, 2024				December 31, 2023
			%				%
Investment grade ⁽¹⁾
Colombia	Ps.	28,361,534	78.64	%	Ps.	22,768,597	82.14	%
Panama		2,724,276	7.55	%		1,077,656	3.89	%
Chile		238,765	0.66	%		3,768	0.01	%
Peru		37,023	0.10	%		—	—	%
Germany		15,806	0.04	%		—	—	%
Mexico		17,987	0.05	%		16,268	0.06	%
United States of America		1,465,956	4.06	%		1,371,842	4.95	%
Total Investment grade	Ps.	32,861,347	91.10	%	Ps.	25,238,131	91.05	%
Speculative ⁽²⁾
Brazil		30,266	0.08	%		27,643	0.10	%
Colombia		3,101,625	8.60	%		2,384,493	8.60	%
Costa Rica		78,765	0.22	%		68,454	0.25	%
Total Speculative	Ps.	3,210,656	8.90	%	Ps.	2,480,590	8.95	%
	Ps.	36,072,003	100.00	%	Ps.	27,718,721	100.00	%

Below is the detail of Grupo Aval’s debt portfolio issued by Central Banks:


	December 31, 2024					December 31, 2023
			%				%
Investment Grade ⁽¹⁾
Panama ^(*)	Ps.	204,855	100.00	%	Ps.	145,489	100.00	%
Total Investment grade	Ps.	204,855	100.00	%	Ps.	145,489	100.00	%

Total sovereign risk	Ps.	36,276,858	100.00	%	Ps.	27,864,210	100.00	%

(1)	Investment grade includes the risk rating of Fitch Ratings Colombia S.A o F1+ to F3, BRC of Colombia from BRC 1+ to BRC 3 and Standard & Poor’s from AAA to BBB-.

(2)	Speculative or non-investment grade level includes the risk rating of Fitch Ratings Colombia S.A. from B to E, BRC de Colombia from BRC 4 to BRC 6 and Standard & Poor’s from BB+ to D.

^(*) These investments correspond to the National Bank of Panama, which is the official Bank and has the functions of a Central Bank, however, it does not have the power to issue banknotes or reserve requirements.

4.1.7 Modified Financial Assets - troubled debt restructuring business process.

Each financial subsidiary of Grupo Aval periodically carries out, at the request of the client, restructurings of obligations. Such restructurings generally consist of extensions of tenors, decrease of interest rates, partial write-off of indebtedness or payment with assets of the debtor or guarantor.

Our banking subsidiaries follow highly rigorous definitions and policies in this management process, so that it is performed in accordance with the best practices and in strict compliance with regulatory requirements. In connection to this, Grupo Aval´s banking subsidiaries have a detailed policy with regard to the aforementioned transactions.

The objective of granting such restructurings is to provide the client with a viable alternative to meet its obligations to the bank and to adapt to changing conditions.

When a loan is restructured due to a debtor´s financial difficulties, the debt is flagged within the records of each bank as a restructured credit in accordance with the regulations of the Superintendency of Finance. The restructuring process has a negative impact on the debtor’s rating, which can only be improved when the client has complied during a prudent period with the terms of the restructurings, its financial condition has improved or when sufficient additional guarantees have been obtained.

Restructured loans are included for impairment evaluation and determination of provisions. However, the marking of a credit as restructured does not necessarily imply its rating is impaired, because in some cases new guarantees are obtained supporting the obligation.

The following is the balance of restructured loans as of December 31, 2024, and 2023:


Restructured loans	December 31, 2024		December 31, 2023
Local currency	Ps.	5,495,475	Ps.	4,346,710
Foreign currency		1,955,612		1,646,876
Total restructured	Ps.	7,451,087	Ps.	5,993,586

4.1.8 Foreclosed assets business process

When persuasive collection processes or credit restructurings are not effective, a legal proceeding is carried out or an agreement is reached with the client for the receipt of assets as payment. Each subsidiary of the financial sector has clearly established policies for receiving assets and has a separate department specialized in the management of these cases and in charge of their eventual sale or liquidation.

During the years ended December 31, 2024, and 2023, the following is the total of foreclosed assets received and sold during such periods:


	December 31, 2024		December 31, 2023
Foreclosed assets received	Ps.	116,299	Ps.	76,116
Foreclosed assets sold		43,731		90,940

4.1.9 Loan commitments and financial guarantee contracts

As part of our operations, Grupo Aval grants guarantees and letters of credit to its customers wherein Grupo Aval financial subsidiaries are irrevocably committed to make payments to third parties when customers do not comply with their obligations with such third parties. These products have the same policies for approval of disbursements of loans regarding client’s credit risk and guarantees required according to the circumstances of each client.

The commitments for credit extension represent unused portions of authorizations to grant loans, use of credit cards, overdraft limits and letters of credit. With respect to credit risk over commitments to extend credit lines, Grupo Aval is potentially exposed to credit risk in an amount equal to the total amount of unused commitments, if the unused amount were to be withdrawn in whole. However, the amount of the loss is less that the total amount of commitments unused, since most commitments to extend credits are contingent on the customer maintaining specific credit risk standards.

Pending unused credit lines and guarantees do not necessarily represent future cash-out flows, because such facilities may expire and not be used whole or in part.

Following is the detail of the guarantees, letters of credit and credit commitments on non-used credit lines as of December 31, 2024, and 2023.

Loan commitments and financial guarantee contracts


	December 31, 2024		December 31, 2023
	Notional amount		Notional amount
Unused credit card limits	Ps.	12,933,383	Ps.	12,449,298
Approved credits not disbursed		5,432,167		4,818,508
Credit arrangements		4,583,513		4,223,426
Guarantees		3,082,949		3,052,607
Unused limits of overdrafts		2,261,456		2,264,226
Unused letters of credit		382,953		735,472
Other		2,723,071		2,255,007
Total	Ps.	31,399,492	Ps.	29,798,544

The following is the detail of the credit commitments by type of currency:


	December 31, 2024		December 31, 2023
Colombian Pesos	Ps.	27,533,438	Ps.	25,821,105
U.S. dollars		3,847,658		3,962,607
Euro		14,517		13,585
Other		3,879		1,247
Total	Ps.	31,399,492	Ps.	29,798,544

4.1.10 Offset of financial assets and financial liabilities

The disclosures set out in the following tables include financial assets and liabilities that:

●

are offset in the Group’s statement of financial position; or

●

are subject to an enforceable master netting arrangement or similar agreement that covers similar financial instruments, irrespective of whether they are offset in the statement of financial position.

The ‘similar agreements’ include derivative clearing agreements; global master repurchase agreements and global master securities lending agreements. Similar financial instruments include derivatives, sale-and-repurchase agreements, reverse sale-and-repurchase agreements, and securities borrowing and lending agreements. Financial instruments such as loans and deposits are not disclosed in the following tables unless they are offset in the statement of financial position.

The ISDA (International Swaps and Derivatives Association) and similar master netting arrangements do not meet the criteria for offsetting in the statement of financial position. This is because they create for the parties to the agreement a right of set-off of recognized amounts that is enforceable only following an event of default, insolvency or bankruptcy of Grupo Aval or of the counterparties or following other predetermined events. In addition, Grupo Aval and its counterparties do not intend to settle on a net basis or to realize the assets and settle the liabilities simultaneously.

Grupo Aval receives and gives collateral in the form of cash and marketable securities in respect of the following transactions:

●

Derivatives; and

●

Sale-and-repurchase, and reverse sale-and-repurchase agreements.

This collateral is subject to standard industry terms including, when appropriate, an ISDA credit support annex. This means that securities received/given as collateral can be pledged or sold during the term of the transaction but have to be returned on maturity of the transaction. The terms also give each party the right to terminate the related transactions on the counterparty’s failure to post collateral.

The gross amounts of financial assets and financial liabilities and their net amounts disclosed in the below tables have been measured in the statement of financial position on the following bases:

●

Derivative assets and liabilities – fair value;

●

Assets and liabilities resulting from sale-and-repurchase agreements, reverse sale-and repurchase agreements and securities lending and borrowing – amortized cost;

The following is the detail of the financial instruments subject to offset contractually required as of December 31, 2024, and 2023:

December 31, 2024

Gross

Gross Amounts

Net Amounts of

Gross Amounts Not

Amounts of

Offset in the

Assets Presented in

Offset in the Consolidated Balance Sheet

Recognized

Consolidated

the Consolidated

Financial

Cash collateral

Net

Assets

Balance Sheet

Instruments

Received

Exposure

Offsetting assets

Derivatives

Ps.

1,023,313

Ps.

—

Ps.

1,023,313

Ps.

(1,951,440)

Ps.

(162,729)

Ps.

(1,090,856)

Repurchase agreements

1,940,488

—

1,940,488

(667)

—

1,939,821

Total

Ps.

2,963,801

Ps.

—

Ps.

2,963,801

Ps.

(1,952,107)

Ps.

(162,729)

Ps.

848,965

Gross

Gross Amounts

Net Amounts of

Gross Amounts Not

Amounts of

Offset in the

Liabilities Presented in

Offset in the Consolidated Balance Sheet

Recognized

Consolidated

the Consolidated

Financial

Cash collateral

Net

Liabilities

Balance Sheet

Instruments

Delivered

Exposure

Offsetting liabilities

Derivatives

Ps.

1,033,592

Ps.

—

Ps.

1,033,592

Ps.

(208,181)

Ps.

(71,745)

Ps.

753,666

Repurchase agreements

17,686,789

—

17,686,789

(20,719,224)

(336,987)

(3,369,422)

Total

Ps.

18,720,381

Ps.

—

Ps.

18,720,381

Ps.

(20,927,405)

Ps.

(408,732)

Ps.

(2,615,756)

December 31, 2023

Gross

Gross Amounts

Net Amounts of

Gross Amounts Not

Amounts of

Offset in the

Assets Presented in

Offset in the Consolidated Balance Sheet

Recognized

Consolidated

the Consolidated

Financial

Cash collateral

Net

Assets

Balance Sheet

Instruments

Received

Exposure

Offsetting assets

Derivatives

Ps.

2,126,229

Ps.

—

Ps.

2,126,229

Ps.

(1,911,903)

Ps.

(235,189)

Ps.

(20,863)

Repurchase agreements

1,708,779

—

1,708,779

(27,803)

—

1,680,976

Total

Ps.

3,835,008

Ps.

—

Ps.

3,835,008

Ps.

(1,939,706)

Ps.

(235,189)

Ps.

1,660,113

Gross

Gross Amounts

Net Amounts of

Gross Amounts Not

Amounts of

Offset in the

Liabilities Presented in

Offset in the Consolidated Balance Sheet

Recognized

Consolidated

the Consolidated

Financial

Cash collateral

Net

Liabilities

Balance Sheet

Instruments

Delivered

Exposure

Offsetting liabilities

Derivatives

Ps.

2,371,927

Ps.

—

Ps.

2,371,927

Ps.

(313,095)

Ps.

(245,344)

Ps.

1,813,488

Repurchase agreements

14,371,597

—

14,371,597

(16,874,942)

(1,025,691)

(3,529,036)

Total

Ps.

16,743,524

Ps.

—

Ps.

16,743,524

Ps.

(17,188,037)

Ps.

(1,271,035)

Ps.

(1,715,548)

Disclosure of risk management, market risk [text block]

4.2 Market Risk

Market risk refers to the risk that a change in the level of one or more market prices, rates, indices, volatilities, correlations or other market factors, such as liquidity, will result in losses in a position or in the portfolio.

Grupo Aval´s financial subsidiaries (namely Banco de Bogotá, Banco de Occidente, Banco Popular, Banco AV Villas, Corficolombiana, Porvenir and the trust companies of the financial subsidiaries) actively participate in money markets, foreign exchange markets and capital markets, for both of their books (for balance sheet risk management and trading book) and to provide financial services to their customers. This is done subject to established policies and risk limits. In that regard, they hold financial asset portfolios within the allowed limits and risk levels.

Market risk arises from the positions of Grupo Aval´s financial subsidiaries in debt securities investment portfolios, derivatives and equity instruments. These risks are created by changes in factors such as interest rates, inflation, foreign currency exchange rates, share prices, credit margins of instruments and their volatility, as well as the liquidity in the markets where Grupo Aval operates.

Our business units and trading desks are responsible for ensuring that market risk exposures are well-managed and prudent. The risk management groups and our business unit management ensure that these risks are measured and closely monitored. A variety of limits and controls are designed to manage price and liquidity risk. Market risk is monitored through various mechanisms such as: statistically

analysis (using Value-at-Risk models and related analytical measures), risk factor sensitivity analysis, and routine stress testing, conducted in collaboration with the business units by the Market Risk Unit. The material risks identified by these processes are summarized in reports produced by the Market Risk Unit that are circulated to, and discussed with senior management.

4.2.1 Trading Book Risk

Grupo Aval´s financial subsidiaries trade financial instruments for various reasons, mainly:

●

To offer products tailored to specific customer needs. Some of these products are designed to hedge the financial risks of customers.

●

To take advantage of arbitrage opportunities among different yield curves, assets and markets, obtaining returns with an adequate use of capital.

●

To hedge asset and liability risk positions on proprietary positions, to act on behalf of customers or to take advantage of arbitrage opportunities mainly in foreign exchange and interest rates in both local and foreign markets.

In carrying out these operations, Grupo Aval´s financial subsidiaries take risks, within predetermined limits. These risks are mitigated with the use of derivative products and other financial instruments within limits that are permanently monitored by risk.

The following is a breakdown of Grupo Aval’s financial assets and liabilities exposed to trading risk held at December 31, 2024 and 2023:


Account	December 31, 2024		December 31, 2023
Financial assets
Debt financial assets
Trading investments in debt securities	Ps.	11,937,414	Ps.	7,113,380
Investments in debt securities mandatorily at FVTPL		1,425		1,889
Investments in debt securities at FVOCI		27,050,198		23,326,776
Total debt securities	Ps.	38,989,037	Ps.	30,442,045
Derivative assets instruments	Ps.	969,294	Ps.	2,077,567
Hedging derivatives assets		54,019		48,662
Total, active derivative instruments	Ps.	1,023,313	Ps.	2,126,229
Total financial assets	Ps.	40,012,350	Ps.	32,568,274
Liabilities
Derivative liabilities instruments	Ps.	1,011,934	Ps.	2,154,361
Hedging derivatives liabilities		21,658		217,566
Total financial liabilities	Ps.	1,033,592	Ps.	2,371,927
Net position	Ps.	38,978,758	Ps.	30,196,347

4.2.2 Description of Objectives, Policies and Processes to Manage Trading Risk

Our financial subsidiaries participate in money markets, foreign exchange markets and capital markets to meet their needs and those of their customers, subject to established policies and risk levels. In this respect, they manage different portfolios of financial assets within the limits and risk levels allowed.

The risks assumed by Grupo Aval´s financial subsidiaries in transactions related to the trading or treasury book are consistent with the overall trading strategy, considering the market depth for each instrument, its impact on risk-weighted assets and regulatory capital, the profit budget established for each business unit, and the balance sheet structure.

Trading strategies are established on the basis of approved limits, in an effort to balance the risk / return relationship. Moreover, there is a structure of limits consistent with Grupo Aval’s general philosophy and is based on capital levels, earnings performance and risk appetite.

The Integral Risk Management System (SIAR in Spanish) allows Grupo Aval´s financial subsidiaries to identify, measure, control and monitor the market risk they are exposed to in carrying out their operations.

There are several scenarios in which Grupo Aval´s financial subsidiaries are exposed to trading risks.

●

Interest Rate Risk

Grupo Aval’s financial subsidiaries are exposed to interest rate risk as a result of its market-making activities and proprietary trading in interest rate sensitive financial instruments (e.g., risk arising from changes in the level or implied volatility of interest rates, the timing of mortgage prepayments, the shape of the yield curve and credit spreads for credit sensitive instruments). Additionally, as part of the interest rate risk management, asset and liability management committees have been established to monitor the execution of these strategies.

●

Foreign Exchange Risk

Grupo Aval’s financial subsidiary’s portfolios are exposed to foreign exchange rate and implied volatility risk as a result of market making negotiation in foreign currencies and from maintaining foreign exchange positions.

●

Equity Price Risk and Mutual Fund Risk

Grupo Aval´s financial subsidiaries are exposed to equity price risk in specific investments and are exposed to mutual fund risk.

4.2.2.1 Risk Management

Grupo Aval financial subsidiaries manage their trading positions by employing a variety of risk mitigation strategies. These strategies include diversification of risk exposures and hedging through the purchase or sale of positions in related securities and financial instruments, including a variety of derivative products (e.g., futures, forwards, swaps and options). The financial subsidiaries manage their market risk associated with its trading activities on a decentralized basis. Our corporate risk unit supervises the level of risk taken in order to ensure that its global exposure limits are observed.

Senior management and the Boards of Directors of our banks and their financial subsidiaries play an active role in managing and controlling market risk. They do so by analyzing established reports and through committees that comprehensively monitor - both technically and fundamentally - the different variables that influence domestic and foreign markets. This process is intended to support strategic trading and portfolio decisions.

Analyzing and monitoring the market risks that Grupo Aval´s financial subsidiaries take in their operations is essential for decision making and to assess potential effects on their financial position. An ongoing analysis of macroeconomic conditions is necessary in order to achieve an ideal combination of market risk, return and liquidity.

The risks assumed in financial operations are reflected in a limit structure that includes different types of instruments, specific trading strategies, the market depth in which Grupo Aval´s financial subsidiaries operate, the impact on risk-weighted assets and regulatory capital, as well as the balance sheet structure. These limits are monitored daily and reported regularly to the Board of Directors of Grupo Aval´s financial subsidiaries.

In order to minimize interest rate and exchange rate risks in specific positions and transactions, Grupo Aval´s financial subsidiaries manage hedging strategies by taking positions in derivative instruments such as non-deliverable forwards (NDF) related to securities, money market transactions and foreign exchange forwards.

4.2.2.2 Methods Used to Measure Market Risk

The Market Risk areas independently review the Company’s trading portfolios on a regular basis from a market risk perspective utilizing Value at Risk (VaR) internal and regulatory models, and other quantitative and qualitative risk measures and analyses. Each trading business and the market risk areas also use, as appropriate, measures such as sensitivity to changes in interest rates, prices, and implied volatilities to monitor and report market risk exposures. Stress testing, which measures the impact on the value of existing portfolios of specified changes in market factors for certain products, is performed periodically and reviewed by our risk and trading areas. Reports summarizing material risk exposures are produced by the market risk areas and are provided to senior management for their review and challenge.

The Boards of Directors and the Risk Committees of Grupo Aval´s financial subsidiaries approve a framework of limits based on the value-at-risk related to the annual budget.

Regulatory VaR (regulatory calculation)

The Regulatory VaR calculation is primarily used for the Superintendency of Finance’s solvency ratio calculations. Each bank has standard models for capital purposes; however, they also maintain internal models in order to manage their day-to- day risk and profit decisions.

The Superintendency of Finance methodology is based on the Basel II model. This model applies only to the financial subsidiaries’ investment portfolio and excludes investments not classified as trading. Total market risk is calculated on a daily basis by aggregating the VaR for each risk exposure category on a ten-day horizon, based on risk factors calculated under extreme market stress scenarios. VaR at month-end is part of the capital adequacy ratio calculation (as set forth in Decree 2555 of 2010). The Superintendency of Finance’s rules require the financial subsidiaries to calculate VaR for the following risk factors: interest rate risk, foreign exchange rate risk, equity price risk and fund risk. Correlations between risk factors are not considered. The fluctuations in the portfolio’s VaR depend on sensitivity factors determined by the Superintendency of Finance, modified duration and changes in balances outstanding. The ten-day horizon is defined as the average time in which an entity could sell a trading position in the market.

The VaR calculation includes all the portfolios of the entities and their financial subsidiaries and is estimated under the methodology defined by the Superintendency of Finance of Colombia.

These VaR calculation models are used to determine the occurrence of potential losses among the different business units. The methods also allow comparisons of activities in different markets and identification of the riskiest positions in treasury activities. These tools are also used to determine limits on traders’ positions and to promptly review positions and trading strategies in response to changes in market conditions. VaR models have inherent limitations, partially because they rely on historical data, which may not be an indicative of future market conditions. VaR models could overestimate or underestimate the value at risk if market conditions vary significantly and they do not calculate the greatest possible loss. That’s why each company uses additional measurement tools in order to compensate for the VaR limitations. Expected Shortfall analysis, stress test and back tests are part of the risk measurement tools in the financial subsidiaries. The methods used to measure VaR are assessed regularly and back tested to check their efficiency.

Grupo Aval´s financial subsidiaries have tools to carry out portfolio stress and/or sensitivity tests, using extreme scenario simulations. Additionally, there are limits according to the "risk type" associated with each of the instruments comprising the different portfolios. These limits are related to sensitivity or impact on the value of the portfolio as a result of fluctuations of specific risk factors such as: interest rate (Rho), exchange rate (Delta) and volatility (Vega).

Grupo Aval´s financial subsidiaries have counterparty and trading limits for each trader in the trading platforms for the markets where they operate. Trading limits are controlled daily by the back and middle offices of each entity. Trading limits for individual traders are assigned based upon the individual´s level in the organization, market and trading experience and product and portfolio management knowledge.

There is also a process to monitor the prices of fixed-income securities traded in foreign markets published by investment price providers for those jurisdictions.

In addition, fixed income securities are subject to a qualitative liquidity analysis to determine the market depth for those instruments.

Finally, the daily transaction monitoring process includes controlling different aspects of trading, such as terms of negotiation, non-conventional or off-market transactions, and related party transactions.

According to the standard model, the market value-at-risk (VaR) for Grupo Aval´s financial subsidiaries consolidated at their level of December 31, 2024 and 2023 was as follows:


		December 31, 2024			December 31, 2023
			Basis points of			Basis points of
Entity		Value at Risk	regulatory capital		Value at Risk	regulatory capital
Banco Bogotá S.A.	Ps.	318,203	52	Ps.	639,228	111
Banco de Occidente S.A.		381,972	113		218,355	67
Banco AV Villas S.A.		22,567	26		47,004	55
Banco Popular S.A. ⁽¹⁾		291,145	152		336,718	185
Corficolombiana S.A. ⁽¹⁾		320,096	674		240,068	519
Porvenir S.A.		3,832	57		10,927	92
Aval Casa de Bolsa S.A.		6,790	58		3,598	48
Aval Fiduciaria S.A.		717	85		865	144

⁽¹⁾ The market value at risk information corresponds to Banco Popular's consolidated information. Corficolombiana's information is presented separately, due to its materiality.

The following tables show the VaR calculation relating to each of the risk factors described above and based on the Superintendency of Finance Methodology (Regulatory VaR) for the years ended December 31, 2024 and 2023, for a ten-day horizon for each of our Colombian banking subsidiaries. The minimum, maximum and average levels are determined based on end-of-month calculations, using 12 data points between January and December.

Banco de Bogotá S.A


Maximum, Minimum and Average VaR Values
December 31, 2024
		Minimum		Average		Maximum		Period end
Interest rate	Ps.	160,445	Ps.	427,563	Ps.	552,647	Ps.	160,445
Exchange rate		91,087		141,196		166,334		155,113
Shares		1,947		10,929		37,644		2,077
Mutual funds		411		1,549		2,788		568


Maximum, Minimum and Average VaR Values
December 31, 2023
		Minimum		Average		Maximum		Period end
Interest rate	Ps.	423,347	Ps.	428,765	Ps.	440,804	Ps.	440,804
Exchange rate		105,390		138,671		175,945		160,165
Shares		3,891		12,573		37,830		37,830
Mutual funds		106		3,860		13,085		429

The market risk-weighted assets of Banco de Bogotá, as of December 31, 2024, accounted for 3.25% of the total risk-weighted assets. As of December 31, 2023, market risk-weighted assets represented 6.7% of the total risk-weighted assets.

Banco de Occidente S.A


Maximum, Minimum and Average VaR Values
December 31, 2024
		Minimum		Average		Maximum		Period end
Interest rate	Ps.	264,941	Ps.	322,068	Ps.	379,009	Ps.	379,009
Exchange rate		1,078		3,402		9,151		1,971
Shares		—		—		—		—
Mutual funds		934		991		1,031		992


Maximum, Minimum and Average VaR Values
December 31, 2023
		Minimum		Average		Maximum		Period end
Interest rate	Ps.	179,858	Ps.	205,998	Ps.	251,416	Ps.	217,031
Exchange rate		717		3,662		11,894		717
Shares		—		—		—		—
Mutual funds		569		15,259		85,455		607

The market risk-weighted assets of Banco de Occidente, as of December 31, 2024, accounted for 8.2% of the total risk-weighted assets. As of December 31, 2023, market risk-weighted assets represented 5.2% of the total risk-weighted assets.

Banco Comercial AV Villas S.A


Maximum, Minimum and Average VaR Values
December 31, 2024
		Minimum		Average		Maximum		Period end
Interest rate	Ps.	22,193	Ps.	29,979	Ps.	43,936	Ps.	22,193
Exchange rate		4		84		472		148
Shares		—		—		—		—
Mutual funds		121		251		447		225


Maximum, Minimum and Average VaR Values
December 31, 2023
		Minimum		Average		Maximum		Period end
Interest rate	Ps.	46,209	Ps.	65,592	Ps.	86,967	Ps.	46,209
Exchange rate		1		46		153		10
Shares		—		—		—		—
Mutual funds		221		6,930		14,175		785

The market risk-weighted assets of Banco AV Villas, as of December 31, 2024, accounted for 2.1% of the total risk-weighted assets. As of December 31, 2023, market risk-weighted assets represented 4.5% of the total risk-weighted assets.

Banco Popular S.A


Maximum, Minimum and Average VaR Values
December 31, 2024 ⁽¹⁾
		Minimum		Average		Maximum		Period end
Interest rate	Ps.	205,759	Ps.	328,266	Ps.	410,228	Ps.	205,759
Exchange rate		19,869		39,424		59,084		51,982
Shares		6,884		11,331		15,090		15,090
Mutual funds		18,201		19,668		23,969		18,314


Maximum, Minimum and Average VaR Values
December 31, 2023 ⁽¹⁾
		Minimum		Average		Maximum		Period end
Interest rate	Ps.	82,783	Ps.	114,642	Ps.	299,985	Ps.	299,985
Exchange rate		5,050		6,783		7,759		7,221
Shares		148		687		6,586		6,586
Mutual funds		7,255		16,714		22,926		22,926

⁽¹⁾ The market value at risk information corresponds to Banco Popular's consolidated information. Corficolombiana's information is presented separately, due to its materiality.

The market risk-weighted assets of Banco Popular, as of December 31, 2024, accounted for 5.61% of the total risk-weighted assets. As of December 31, 2023, market risk-weighted assets represented 8.8% of the total risk-weighted assets.

Corficolombiana S.A


Maximum, Minimum and Average VaR Values
December 31, 2024 ⁽¹⁾
		Minimum		Average		Maximum		Period end
Interest rate	Ps.	220,886	Ps.	271,679	Ps.	341,730	Ps.	252,417
Exchange rate		19,172		38,723		55,653		51,653
Shares		6,731		11,457		14,918		14,918
Mutual funds		983		1,200		1,424		1,108

⁽¹⁾ The market value at risk information at December 31, 2024 corresponds to Corficolombiana's separate information.


Maximum, Minimum and Average VaR Values
December 31, 2023⁽¹⁾
		Minimum		Average		Maximum		Period end
Interest rate	Ps.	190,139	Ps.	209,769	Ps.	227,913	Ps.	221,409
Exchange rate		4,381		16,757		24,799		4,381
Shares		7,086		7,501		8,007		7,221
Mutual funds		7,057		8,187		9,856		7,057

⁽¹⁾ The market value at risk information at December 31, 2023 corresponds to Corficolombiana's consolidated information, including Aval Fiduciaria and Aval Casa de Bolsa.

The market risk-weighted assets of Corficolombiana, as of December 31, 2024, accounted for 13.31% of the total risk-weighted assets. As of December 31, 2023, market risk-weighted assets represented 10.2% of the total risk-weighted assets.

As Corficolombiana does not have a relevant number of loans or other significant risk weighted assets, the ratio of the market risk weighted assets to total risk weighted assets is higher than in the banks.

Porvenir S.A

As a pension fund, Porvenir has a value-at-risk measurement methodology that differs from credit establishments and is established by the Superintendency of Finance. The following tables show the VaR calculation relating to each of the risk factors described above and based on that Methodology (Regulatory VaR) for the years ended December 31, 2024, and 2023, for a ten-day horizon


Maximum, Minimum and Average VaR Values
December 31, 2024
		Minimum		Average		Maximum		Period end
Interest rate	Ps.	7,623	Ps.	14,368	Ps.	16,520	Ps.	7,623
Exchange rate		7		233		419		275
Shares		1,624		2,090		2,654		1,790
Mutual funds		782		2,365		6,478		1,074


Maximum, Minimum and Average VaR Values
December 31, 2023
		Minimum		Average		Maximum		Period end
Interest rate	Ps.	12,190	Ps.	24,500	Ps.	38,914	Ps.	18,822
Exchange rate		115		978		2,900		597
Shares		1,710		2,347		3,091		1,973
Mutual funds		457		2,650		5,829		3,094

The market risk-weighted assets of Porvenir, as of December 31, 2024, accounted for 2.1% of the total risk-weighted assets. As of December 31, 2023, market risk-weighted assets represented 5.1% of the total risk-weighted assets.

Aval Fiduciaria


Maximum, Minimum and Average VaR Values
December 31, 2024 ⁽¹⁾
		Minimum		Average		Maximum		Period end
Interest rate	Ps.	607	Ps.	1,133	Ps.	2,111	Ps.	717
Exchange rate		—		—		—		—
Shares		—		—		—		—
Mutual funds		—		—		—		—

(1) The market value-at-risk information for the year 2024 corresponds to the data from Aval Fiduciaria following the acquisition by Grupo Aval Acciones y Valores S.A.


Maximum, Minimum and Average VaR Values
December 31, 2023
		Minimum		Average		Maximum		Period end
Interest rate	Ps.	786	Ps.	1,139	Ps.	1,610	Ps.	865
Exchange rate		—		—		—		—
Shares		—		—		—		—
Mutual funds		—		—		—		—

The market risk-weighted assets of Aval Fiduciaria, as of December 31, 2024, accounted for 4.43% of the total risk-weighted assets. As of December 31, 2023, market risk-weighted assets represented 5.19% of the total risk-weighted assets.

Aval Casa de Bolsa


Maximum, Minimum and Average VaR Values
December 31, 2024 ⁽¹⁾
		Minimum		Average		Maximum		Period end
Interest rate	Ps.	3,192	Ps.	4,434	Ps.	5,724	Ps.	5,628
Exchange rate		91		319		588		331
Shares		582		1,325		2,042		820
Mutual funds		12		12		12		12

(1) The market value-at-risk information for the year 2024 corresponds to the data from Aval Casa de Bolsa following the acquisition by Grupo Aval Acciones y Valores S.A.


Maximum, Minimum and Average VaR Values
December 31, 2023
		Minimum		Average		Maximum		Period end
Interest rate	Ps.	1,588	Ps.	2,156	Ps.	2,791	Ps.	2,791
Exchange rate		8		301		849		8
Shares		110		722		1,412		787
Mutual funds		12		21		27		12

The market risk-weighted assets of Aval Casa de Bolsa, as of December 31, 2024, accounted for 60.97% of the total risk-weighted assets. As of December 31, 2023, market risk-weighted assets represented 45.90% of the total risk-weighted assets.

Investment Price Risk in Equity Instruments

Equity Investments

The variations in equity price risk measured according to the regulatory VaR methodology consider investments in equity securities included in the treasury book, including investments in shares issued abroad and listed in Colombia, and exclude, in the case of credit institutions, investments that have been deducted from the Entity's core capital.

Holding periods for many of Corficolombiana’s equity investments exceed ten years. Its largest investments have remained in the portfolio for several years and are intended to remain as permanent investments. Therefore, no value at risk is estimated. As of December 31, 2024 and 2023, the investments subject to regulatory VaR were holdings in Mineros S.A..

The following table breaks down our investments subject to regulatory VaR by time since initial investments at December 31, 2024 and 2023:

At December 31,

2024

2023

Investment

subject to

Percentage

subject to

Regulatory

Percentage of

VaR

portfolio

VaR

portfolio

More than 36 months

Ps.

101,483

14,918

100

Ps.

43,765

Ps.

6,433

100

Total

Ps.

101,483

Ps.

14,918

100

Ps.

43,765

Ps.

6,433

100

4.2.3 Structural foreign exchange risk

Grupo Aval´s financial subsidiaries have agencies and subsidiaries offshore and have assets and liabilities in foreign currencies and are thus exposed to changes in the exchange rates, primarily the United States Dollar. Foreign exchange risk is present when there are assets and liabilities denominated in foreign currency, when investments are made in foreign subsidiaries and branches and when we extend loans or take funds in foreign currency. Foreign exchange risk is also present in foreign currency off- balance sheet transactions.

Subsidiaries of the financial sector in Colombia are authorized by the country’s central bank (Banco de la República) to trade currencies and maintain balances in foreign currency in accounts abroad. Colombian law allows banks to maintain a net daily asset or liability position in foreign currency, determined as the difference in foreign currency denominated rights and foreign currency denominated obligations, including both on and off-balance sheet positions. On an entity individual basis, the average of this difference over three business days cannot exceed twenty percent (20%) of the entity’s regulatory capital. On a consolidated basis, the average of this difference over three business days (positive or negative) cannot exceed forty percent (40%) of the consolidated entity´s regulatory capital.

The maximum and minimum total foreign currency position and the spot foreign currency position are determined according to the regulatory capital of each entity. The regulatory capital used (individual or consolidated) is that of the last business day two months prior. The exchange rate used in the calculation is the average of the exchange rate established by the Superintendency of Finance for the previous month or the last calculation on a consolidated basis.

A substantial amount of Grupo Aval’s foreign currency assets and liabilities are in U.S. dollars. Details of the assets and liabilities in foreign currency held by Grupo Aval as of December 31, 2024 and 2023 are shown below:


December 31,2024		Other currencies		Total in
	U.S. dollars	converted to U.S.		Colombian pesos
Account	(Millions)	dollars (Millions)		(Millions)
Financial assets
Cash and cash equivalents	1,338	62	Ps.	5,913,128
Trading investments in debt securities	61	—		267,836
Investments in debt securities at FVOCI	2,412	4		10,649,301
Investments in debt securities at amortized cost	580	—		2,558,707
Loan portfolio financial assets at amortized cost	8,347	2		36,813,056
Derivative financial assets held for trading	207	6		341,310
Derivative financial assets held for hedging	2	—		43,377
Trade receivable	714	—		3,164,035
Total financial assets	13,661	74	Ps.	59,750,750

		Other currencies		Total in
	U.S. dollars	converted to U.S.		Colombian pesos
Account	(Millions)	dollars (Millions)		(Millions)
Financial liabilities
Derivative financial liabilities held for trading	243	4	Ps.	236,242
Derivative financial liabilities held for hedging	1	—		16,408
Customer deposits	7,246	34		32,100,339
Financial obligations	8,258	5		36,432,897
Accounts payable	159	—		701,338
Total financial liabilities	15,907	43		69,487,224
Net financial asset (liability) position	(2,246)	31	Ps.	(9,736,474)


December 31,2023		Other currencies		Total in
	U.S. dollars	converted to U.S.		Colombian pesos
Account	(Millions)	dollars (Millions)		(Millions)
Financial assets
Cash and cash equivalents	1,248	60	Ps.	4,996,706
Trading investments in debt securities	78	—		298,792
Investments in debt securities at FVOCI	1,930	—		7,376,923
Investments in debt securities at amortized cost	597	—		2,280,108
Loan portfolio financial assets at amortized cost	8,043	—		30,739,665
Derivative financial assets held for trading	544	—		2,077,567
Derivative financial assets held for hedging	—	—		687
Trade receivable	719	—		2,748,599
Total financial assets	13,159	60	Ps.	50,519,047

		Other currencies		Total in
	U.S. dollars	converted to U.S.		Colombian pesos
Account	(Millions)	dollars (Millions)		(Millions)
Financial liabilities
Derivative financial liabilities held for trading	564	—	Ps.	2,154,361
Derivative financial liabilities held for hedging	53	—		204,202
Customer deposits	7,048	34		27,070,411
Financial obligations	8,072	1		30,857,352
Accounts payable	242	—		921,552
Total financial liabilities	15,979	35	Ps.	61,207,878
Net financial asset (liability) position	(2,820)	25	Ps.	(10,688,831)

Grupo Aval’s financial subsidiaries hedge their foreign exchange exposure using derivatives instruments, especially forwards. The net foreign currency position of each subsidiary is monitored on a daily basis.

Grupo Aval has several investments in foreign subsidiaries and branches whose net assets are exposed to foreign exchange risk because of the translation of gains or losses for the purpose of consolidating their financial statements. The exposure arising from net assets in foreign operations is hedged primarily with financial obligations, bonds and foreign exchange derivative instruments.

The following table presents sensitivities of profit or loss before taxes and equity (OCI) to reasonably possible changes in exchange rates applied at the end of the reporting period relative to the functional currency of the respective Group entities, with all other variables held constant:


December 31,2024	Increase		Decrease
	Ps.100 per U.S.		Ps.100 per U.S.
	dollar		dollar
Equity (mainly OCI) ⁽¹⁾	Ps.	1,801	Ps.	(1,801)
Profit and loss before taxes		(53,818)		53,818


December 31,2023	Increase		Decrease
	Ps.100 per U.S.		Ps.100 per U.S.
	dollar		dollar
Equity (mainly OCI) ⁽¹⁾	Ps.	2,840	Ps.	(2,840)
Profit and loss before taxes		(174,869)		174,869

⁽¹⁾ The sensitivity in equity considers mainly assets and liabilities of entities with functional currencies different from the Group’s presentation currency compensated with derivatives and financial labilities designated to hedge net investments in foreign operations.

The sensitivity in profit or loss was calculated for monetary assets and liabilities denominated in currencies other than the functional currency of the respective entities of the Group, including intercompany balances which are not hedged. The sensitivity takes into account the variations that could occur in the spot exchange rate, excluding from this calculation any changes that may arise in the forward curve. The Group’s exposure to currency risk at the end of the reporting period is not representative of the typical exposure during the year.

4.2.4 Interest Rate Risk in the Banking Book

In Colombia, the Superintendency of Finance, in line with the best practices of the Basel Committee on Banking Supervision, issued External Circular 025 on November 17, 2022. This circular introduced guideline applicable to the management of Interest Rate Risk

in the Banking Book (IRRBB) and the Credit Risk Spread in the Banking Book (CRSBB) within the financial system. The afore mentioned circular establishes that supervised entities must adopt specific strategies, policies, and procedures for the adequate management of IRRBB. Additionally, it introduces two indicators to recognize the level of exposure of entities to balance sheet risks: Economic Value of Equity (EVE) and Net Interest Margin (NIM).

External Circular 025 of 2022, which came into effect on December 1, 2024, stipulates that supervised entities with a banking book must report their balance sheet risk indicators on an individual basis for the first time, using financial information as of December 31, 2024. Consolidated information must be reported for the first time using financial data as of December 31, 2025. Below, the general considerations of the standard measurement methodology outlined in the circular are described, which are applicable to Banco de Bogotá, Banco de Occidente, Banco Popular, and Banco AV Villas. In the case of Corficolombiana, the supervisory authority exempted the entity from applying this regulation, as it does not have a banking book for measurement purposes.

Financial subsidiaries are exposed to Interest Rate Risk in the Banking Book (IRRBB) when interest rates change, as the present value and timing of future cash flows may be affected. This, in turn, impacts the underlying value of the entity's assets, liabilities, and off-balance sheet items, and consequently, the Economic Value of Equity (EVE). Changes in interest rates also affect the entity's earnings by altering interest-sensitive income and expenses, thereby impacting its Net Interest Margin (NIM).

This risk includes (i) gap risk, which arises from the mismatch (the difference between assets and liabilities on the entity's balance sheet for a given date and time band) in the maturity structure of instruments exposed to interest rate risk; (ii) basis risk, which corresponds to the impact of relative changes in interest rates for financial instruments with similar maturities but whose prices are determined using different interest rate indices; and (iii) option risk, which refers to the probability that the entity will incur losses due to the exercise of options embedded implicitly or explicitly in assets, liabilities, and off-balance sheet items that are contractually and legally exposed, such as loan prepayments.

To manage IRRBB, the banks within Grupo Aval have established in their policies that this risk is only applicable to Banking Book operations that do not consume capital for market risk, including asset, liability, and off-balance sheet operations with such exposure.

The measurement of IRRBB is conducted using two main metrics: the Economic Value of Equity (EVE), which assesses the fluctuation of equity in response to changes in interest rates using a liquidation balance sheet, and the Net Interest Margin (NIM), which calculates the impact on interest income due to movements in interest rates using a constant balance sheet and a 12-month window.

The regulation establishes an outlier test, which compares the maximum Delta EVE calculated by the entity under interest rate shock scenarios against 15% of the sum of Ordinary Basic Equity and Additional Basic Equity as of the reporting date. For entities that exceed the maximum threshold in the outlier test, the regulation requires the submission of an adjustment plan that includes one or more of the following measures to mitigate the impact of increased exposure to IRRBB: (i) reduce exposures to IRRBB, (ii) impose restrictions on internal risk parameters, (iii) enhance the risk management framework, (iv) evaluate increasing capital resources, or (v) adopt other measures that allow mitigating the level of exposure to IRRBB.

Below are the results of the Delta EVE and Delta NIM measurements as of December 31, 2024:


	December 31, 2024
	Maximum Delta MNI	Maximum Delta VEP	Delta VEP / PBO+PBA
	(in Ps)	(in Ps)	(in percentages)
Banco de Bogotá	(692,350)	(1,216,132)	8.57
Banco de Occidente	(538,969)	(331,065)	7.17
Banco Popular	(328,276)	(408,513)	21.00
Banco AV Villas	(141,779)	(136,325)	10.87

As of December 31, 2024, Banco de Bogotá, Banco de Occidente, and Banco AV Villas maintained their Delta EVE percentages below the threshold established for outlier tests. As of December 31, 2024, Banco Popular exceeded this threshold and, in compliance with regulatory requirements, submitted the corresponding adjustment plan to the Superintendency of Finance.

The management of interest rate risk in Grupo Aval's banks is structured with strong governance, led by the Board of Directors, which approves policies and limits, and supported by the Risk Committee and the ALCO Committee, which oversee the risk profile and strategies. The risk area develops methodologies and models to measure, monitor, and evaluate risk, while the treasury analyzes and projects interest rate risk and proposes hedging measures. Internal audit conducts independent evaluations of the risk system.

Grupo Aval's banks identify positions affected by interest rate risk, including assets, liabilities, and derivatives, and analyze their impact. For measurement, they calculate the impact on Net Interest Margin (NIM) and Economic Value of Equity (EVE) under regulatory scenarios and perform sensitivity analyses. Stress tests are conducted based on interest rate movements, and limits and alerts are established to control risk. Monitoring is carried out through periodic reports to the Board of Directors and other committees, ensuring effective risk management.

Results of NIM and EVE Shocks

Below are the results of the shocks applied to the EVE and NIM metrics as of December 31, 2024, as well as the evolution of these metrics over the last four periods. The scenarios are as follows:

Parallel upward shock

Parallel downward shock

Steepening shock (short-term rates down, long-term rates up)

Flattening shock (short-term rates up, long-term rates down)

Short-term upward shock

Short-term downward shock


	December 31, 2024
	Parallel upward shock	Parallel downward shock	Steepening shock (short-term rates down, long-term rates up)	Flattening shock (short-term rates up, long-term rates down)	Short-term upward shock	Short-term downward shock

	(in Ps)
Banco de Bogotá	(1,216,132)	311,377	133,630	(657,975)	(692,773)	135,650
Banco de Occidente	(322,975)	(85,678)	155,760	(331,065)	(269,128)	49,635
Banco Popular	(408,513)	252,939	128,062	(199,153)	(255,127)	167,920
Banco AV Villas	(136,325)	23,948	36,585	(74,329)	(95,345)	22,022

4.2.5 Interest Rate Risk – Sensitivity of Grupo Aval’s Consolidated Balance Sheet

Non-trading instruments consist primarily of loans and deposits. The net interest margin of our financial subsidiaries may be affected by changes in interest rates. Losses can result from unexpected movements in interest rates. For this reason, our financial subsidiaries monitor the interest rate risk daily and set limits on asset and liability mismatches.

Grupo Aval´s financial subsidiaries monitor their interest rate risk daily and set limits to repricing mismatches between assets and liabilities. They analyze their interest rate exposure in a dynamic way. Scenario modelling considers renewal of existing positions, financing alternatives, and hedges. Considering these scenarios, the financial subsidiaries calculate the profit and loss impact of changes in interest rates.

The following table shows interest rates exposure for assets and liabilities at December 31, 2024 and 2023. In this table, fixed rate instruments are classified according to their maturity date and floating rate instruments are classified according to their repricing date. The following analysis includes the interest rate exposure of non-interest-bearing and interest-bearing assets and liabilities by maturity bucket for our financial subsidiaries:


December 31,2024
	Less than		From one to		From six to		More than a		Non-
Assets	one month		six months		twelve months		year		interest		Total
Cash and cash equivalents	Ps.	6,669,978	Ps.	—	Ps.	—	Ps.	—	Ps.	10,328,881	Ps.	16,998,859
Trading investments in debt securities		64,537		143,911		313,373		11,415,593		—		11,937,414
Investments in debt securities mandatorily at FVTPL		—		—		1,425		—		—		1,425
Investments in debt securities at FVOCI		373,026		1,495,003		2,726,862		22,455,307		—		27,050,198
Investments in debt securities at amortized cost		1,120,442		3,339,892		3,707,096		2,540,937		—		10,708,367
Trade receivable at FVTPL		—		—		—		4,181,835		—		4,181,835
Commercial loans		20,631,803		32,557,719		12,808,582		49,416,539		—		115,414,643
Consumer loans		5,272,130		3,108,991		2,709,402		50,885,802		—		61,976,325
Mortgages loans		3,810,727		184,803		122,800		17,917,397		—		22,035,727
Microcredit loans		2,850		274		60		1,191		—		4,375
Interbank and overnight founds		704,516		539		—		—		—		705,055
Trade receivable		14,665		6,589		189		2,230,108		21,886,987		24,138,538
Total Assets	Ps.	38,664,674	Ps.	40,837,721	Ps.	22,389,789	Ps.	161,044,709	Ps.	32,215,868	Ps.	295,152,761


	Less than		From one to		From six to		More than a		Non-
Liabilities	one month		six months		twelve months		year		interest		Total
Checking accounts	Ps.	6,064,076	Ps.	—	Ps.	—	Ps.	—	Ps.	18,515,460	Ps.	24,579,536
Time deposits		6,739,476		50,866,874		23,336,940		15,386,537		—		96,329,827
Saving deposits		79,614,904		—		—		—		—		79,614,904
Other deposits		13,359		108,392		—		—		226,159		347,910
Interbank and overnight funds		17,651,017		527,638		331,114		—		—		18,509,769
Leases contracts		4,688		49,090		78,360		2,734,130		—		2,866,268
Borrowing from banks and similar		1,914,071		9,195,194		3,684,782		6,400,543		—		21,194,590
Long-term debt		157,427		4,855,835		286,286		20,916,299		—		26,215,847
Borrowing from development entities		1,458,628		1,384,416		27,327		1,166,930		—		4,037,301
Total Liabilities	Ps.	113,617,646	Ps.	66,987,439	Ps.	27,744,809	Ps.	46,604,439	Ps.	18,741,619	Ps.	273,695,952


December 31,2023
	Less than		From one to		From six to		More than a		Non-
Assets	one month		six months		twelve months		year		interest		Total
Cash and cash equivalents	Ps.	5,565,042	Ps.	854	Ps.	—	Ps.	—	Ps.	13,031,965	Ps.	18,597,861
Trading investments in debt securities		41,179		251,925		539,012		6,281,264		—		7,113,380
Investments in debt securities mandatorily at FVTPL		—		—		439		1,450		—		1,889
Investments in debt securities at FVOCI		110,939		720,636		3,727,517		18,767,684		—		23,326,776
Investments in debt securities at amortized cost		927,454		3,402,597		3,389,804		2,276,706		—		9,996,561
Trade receivable at FVTPL		—		—		—		3,830,916		—		3,830,916
Commercial loans		12,496,990		48,530,829		11,530,367		34,489,631		—		107,047,817
Consumer loans		4,014,604		3,485,355		1,627,002		50,872,650		—		59,999,611
Mortgages loans		3,369,639		218,540		6,817		14,891,210		—		18,486,206
Microcredit loans		23,946		11,431		33,079		209,073		—		277,529
Interbank and overnight founds		247,668		144,939		—		—		—		392,607
Trade receivable		12,346		4,380		3,207		1,704,180		20,447,860		22,171,973
Total Assets	Ps.	26,809,807	Ps.	56,771,486	Ps.	20,857,244	Ps.	133,324,764	Ps.	33,479,825	Ps.	271,243,126

	Less than		From one to		From six to		More than a		Non-
Liabilities	one month		six months		twelve months		year		interest		Total
Checking accounts	Ps.	4,746,654	Ps.	—		11,904,157		—		7,159,048	Ps.	23,809,859
Time deposits		8,037,475		39,999,744		21,559,845		17,000,396		—		86,597,460
Saving deposits		71,149,883		—		—		—		—		71,149,883
Other deposits		12,379		15,455		—		—		402,360		430,194
Interbank and overnight funds		13,298,927		1,762,116		—		20,877		—		15,081,920
Leases contracts		3,962		55,871		77,762		2,654,153		—		2,791,748
Borrowing from banks and similar		2,001,170		6,011,525		2,710,163		8,703,854		—		19,426,712
Long-term debt		58,142		4,053,694		565,465		18,750,525		—		23,427,826
Borrowing from development entities		2,441,548		1,082,184		165,940		1,123,461		—		4,813,133
Total Liabilities	Ps.	101,750,140	Ps.	52,980,589	Ps.	36,983,332	Ps.	48,253,266	Ps.	7,561,408	Ps.	247,528,735

As part of their interest rate risk management process, our financial subsidiaries analyze the interest rate mismatches between their interest-earning assets and their interest-earning liabilities. This sensitivity analysis, based on hypothetical changes, assumes that the composition of Grupo Aval´s statement of financial position remains constant over the period being measured.

Based on the financial statement as of December 31, 2024, a linear accounting sensitivity exercise to interest rate variations is carried out, assuming a constant market situation, without incorporating the existing effects on financial assets and liabilities resulting from discretionary decisions of clients and changes that may occur in macroeconomic fundamentals. Thus, if market interest rates were to increase by 100 basis points, without considering the maturity of the instruments or the repricing periods but only the balance as of the cut-off date, and assuming there is no asymmetric movement in the yield curves, the profit for the year would have been Ps. 33,715, which represents 0.46% of total net interest income as of December 31, 2024, and Ps. 254,981, which represented 4% of total net interest income as of December 31, 2023, mainly higher as a result of higher interest income on variable interest assets offset by higher interest expenses on variable interest liabilities and lower fair values of investments at fair value through profit or loss, due to the proportion of assets indexed to variable rates being higher than liabilities indexed to variable rates. Other comprehensive income in equity would have been Ps. 868,462 as of December 31, 2024, and Ps. 518,156 as of December 31, 2023, mainly lower as a result of a decrease in the fair values of fixed-rate financial assets classified as fair value through OCI.

The following is a breakdown of non-interest-bearing and interest-bearing assets and liabilities by interest rate type and by maturity, as at December 31, 2024 and 2023.


December 31,2024
	Under one year				Over one year				Non-
Assets	Variable		Fixed		Variable		Fixed		interest		Total
Cash and cash equivalents	Ps.	767,956	Ps.	5,902,022	Ps.	—	Ps.	—	Ps.	10,328,881	Ps.	16,998,859
Trading investments in debt securities		39,959		481,862		267,185		11,148,408		—		11,937,414
Investments in debt securities mandatorily at FVTPL		—		1,425		—		—		—		1,425
Investments in debt securities at FVOCI		18,733		4,576,159		949,667		21,505,639		—		27,050,198
Investments in debt securities at amortized cost		5,563,208		2,604,222		94,850		2,446,087		—		10,708,367
Trade receivable at FVTPL		—		—		4,181,835		—		—		4,181,835
Commercial loans		47,408,803		12,085,311		46,834,101		9,086,428		—		115,414,643
Consumer loans		828,680		10,058,687		5,666,008		45,422,950		—		61,976,325
Mortgages loans		58,686		931,590		4,022,386		17,023,065		—		22,035,727
Microcredit loans		1,342		2,059		151		823		—		4,375
Interbank and overnight founds		—		705,055		—		—		—		705,055
Trade receivable		15,598		5,845		356,931		1,873,177		21,886,987		24,138,538
Total Assets	Ps.	54,702,965	Ps.	37,354,237	Ps.	62,373,114	Ps.	108,506,577	Ps.	32,215,868	Ps.	295,152,761

	Under one year					Over one year			Non-
Liabilities	Variable		Fixed		Variable		Fixed		interest		Total
Checking accounts	Ps.	642,651	Ps.	5,421,425	Ps.	—	Ps.	—	Ps.	18,515,460	Ps.	24,579,536
Time deposits		11,243,745		67,994,677		4,210,357		12,881,048		—		96,329,827
Saving deposits		9,509,067		70,105,837		—		—		—		79,614,904
Other deposits		11,728		110,023		—		—		226,159		347,910
Interbank and overnight funds		336,770		18,172,999		—		—		—		18,509,769
Leases contracts		8,445		121,405		332,080		2,404,338		—		2,866,268
Borrowing from banks and other		8,179,474		5,790,589		5,020,220		2,204,307		—		21,194,590
Long-term debt		810,630		905,693		7,368,553		17,130,971		—		26,215,847
Borrowing from development entities		161,571		40,729		2,836,574		998,427		—		4,037,301
Total Liabilities	Ps.	30,904,081	Ps.	168,663,377	Ps.	19,767,784	Ps.	35,619,091	Ps.	18,741,619	Ps.	273,695,952


December 31,2023
	Under one year				Over one year				Non-
Assets	Variable		Fixed		Variable		Fixed		interest		Total
Cash and cash equivalents	Ps.	2,799,607	Ps.	2,766,289	Ps.	—	Ps.	—	Ps.	13,031,965	Ps.	18,597,861
Trading investments in debt securities		319,900		512,216		109,777		6,171,487		—		7,113,380
Investments in debt securities mandatorily at FVTPL		—		439		—		1,450		—		1,889
Investments in debt securities at FVOCI		132,430		4,426,662		1,016,347		17,751,337		—		23,326,776
Investments in debt securities at amortized cost		5,112,355		2,607,500		133,704		2,143,002		—		9,996,561
Trade receivable at FVTPL		—		—		3,830,916		—		—		3,830,916
Commercial loans		45,221,180		11,797,765		43,030,934		6,997,938		—		107,047,817
Consumer loans		929,574		9,750,154		5,516,791		43,803,092		—		59,999,611
Mortgages loans		53,719		811,497		3,498,709		14,122,281		—		18,486,206
Microcredit loans		1,170		161,497		696		114,166		—		277,529
Interbank and overnight founds		—		392,607		—		—		—		392,607
Trade receivable		18,707		—		325,016		1,380,390		20,447,860		22,171,973

Total Assets	Ps.	54,588,642	Ps.	33,226,626	Ps.	57,462,890	Ps.	92,485,143	Ps.	33,479,825	Ps.	271,243,126

	Under one year				Over one year				Non-
Liabilities	Variable		Fixed		Variable		Fixed		interest		Total
Checking accounts	Ps.	1,857,769	Ps.	14,793,042	Ps.	—	Ps.	—	Ps.	7,159,048	Ps.	23,809,859
Time deposits		13,167,807		53,716,494		5,711,093		14,002,066		—		86,597,460
Saving deposits		8,492,708		62,657,175		—		—		—		71,149,883
Other deposits		12,379		15,455		—		—		402,360		430,194
Interbank and overnight funds		1,023,612		14,037,431		—		20,877		—		15,081,920
Leases contracts		2,989		115,379		356,454		2,316,926		—		2,791,748
Borrowing from banks and other		6,089,836		4,531,168		7,158,457		1,647,251		—		19,426,712
Long-term debt		812,106		771,189		7,133,109		14,711,422		—		23,427,826
Borrowing from development entities		417,219		133,720		3,340,632		921,562		—		4,813,133
Total Liabilities	Ps.	31,876,425	Ps.	150,771,053	Ps.	23,699,745	Ps.	33,620,104	Ps.	7,561,408	Ps.	247,528,735

Disclosure of risk management, liquidity risk [text block]

4.3 Liquidity Risk

Liquidity risk management has always been a basic element of Grupo Aval’s business strategy and a fundamental cornerstone, together with capital, on which the strength of its balance sheet rests. Liquidity risk is related to the inability of Grupo Aval´s subsidiaries to fulfill their obligations with customers, financial market counterparties, lenders, suppliers, authorities or other stakeholders at any given moment, in any currency and in any location.

Structural liquidity management aims to finance the recurring nature of a company’s activities under optimal terms of time and cost, avoiding taking unwanted liquidity risks. At Grupo Aval, the financing and liquidity model is decentralized and based on autonomous subsidiaries that are responsible for covering their own liquidity needs. Therefore, each entity reviews its available resources on a daily basis in order to control its liquidity risk.

The financial subsidiaries of Grupo Aval are responsible for complying with the regulatory liquidity requirements, as well as meeting the obligations arising from their current and future activity. In consequence, they will either take deposits from their customers, or by resorting to the wholesale markets where they operate. Grupo Aval’s financial subsidiaries have a strong capacity as well as to raise funds in the wholesale markets.

Financial subsidiaries comply with the requirements for liquidity risk management of the jurisdictions in which they operate. They define policies that govern the functions of identification, measurement, control and monitoring required to manage daily liquidity requirements, comply with minimum liquidity buffers and establish liquidity contingency plans to deal with any unexpected situation.

Financial subsidiaries controlled by Grupo Aval, in Colombia, are required to maintain adequate liquidity positions based on the Superintendency of Finance’s liquidity parameters, using a short-term liquidity index (Indicador de Riesgo de Liquidez in Spanish language), or “IRL,” that measures liquidity for different time horizons from 1 to 90 days. This index is defined as the difference between adjusted liquid assets and net liquidity requirements.

•

Liquid assets include total debt securities adjusted by market liquidity and exchange rate, excluding investment securities at amortized cost different from mandatory investments, Central Bank deposits and available cash.

•

Net liquidity requirements are the difference between expected contractual asset and contractual and non-contractual liability cash flows. Cash flows from past due loans are not included in this calculation.

During 2020, as part of its convergence towards Basel III standards, the Superintendency of Finance incorporates the segmentation by type of deposits in the calculation of non-contractual liability cash flows. The methodology segments saving deposits in eight

categories, according with their balance and the type of customer, then calculates the run-off rate for each category and finally multiplies both to determine the non-contractual reserve.

Grupo Aval´s financial subsidiaries assess the volatility of deposits, debt levels, the asset and liability structure, the liquidity of different asset types, the availability of lines of credit and the effectiveness of asset and liability management. The objective is to have adequate liquidity to manage possible stress scenarios.

The quantification of appropriate money market funding levels is an integral part of the liquidity measurement carried out by each entity. Based on statistical analysis, primary and secondary sources of liquidity are identified in order to ensure funding stability and diversification, and to minimize concentration.

Financial subsidiaries in Colombia must maintain cash on hand and in Central Banks deposits in order to comply with reserve requirements. The calculation of the reserve requirement is based on the daily average of the different types of deposits every two weeks.

On August 30, 2024, the Board of Directors of the Central Bank of Colombia (Banco de la República) issued External Resolution No. 3, which reduces the reserve requirements as follows:

•

Reduction of one percentage point in the reserve requirement for liabilities currently subject to an 8% reserve ratio (primarily checking accounts and savings accounts). As a result, the reserve requirement for these liabilities will decrease from 8% to 7%.

•

Reduction of one percentage point in the reserve requirement for liabilities currently subject to a 3.5% reserve ratio (primarily time deposits with a term up to 18 months). Consequently, the reserve requirement for these liabilities will decrease from 3.5% to 2.5%.

There are no reserve requirements for our subsidiaries located in Panamá because there is no Central Bank to regulate such requirements.

The following table presents liquid assets as of the cut-off date and their depletion for each of the time horizons established in the regulatory liquidity risk methodology (1 to 7 days, 1 to 30 days and 31 to 90 days), based on separate figures of our financial subsidiaries in Colombia at December 31, 2024 and 2023:

December 31, 2024


		Liquid assets
		available at the end						From 31 to 90
Entity		of the year ⁽¹⁾		From 1 to 7 days ⁽²⁾		From 1 to 30 days ⁽²⁾		days ⁽²⁾
Banco de Bogotá	Ps.	13,469,768	Ps.	10,953,748	Ps.	2,928,936	Ps.	(16,891,633)
Banco Occidente		9,284,616		6,461,637		2,946,224		(11,199,262)
Banco Popular		4,030,595		3,580,936		893,612		(5,667,658)
Banco AV Villas		2,145,763		1,665,301		687,963		(2,909,334)
Corficolombiana		1,908,014		902,572		560,871		(649,409)
Aval Fiduciaria		18,675		11,010		(18,256)		—
Aval Casa de Bolsa		23,450		19,637		—		—

December 31, 2023


		Liquid assets
		available at the end						From 31 to 90
Entity		of the year ⁽¹⁾		From 1 to 7 days ⁽²⁾		From 1 to 30 days ⁽²⁾		days ⁽²⁾
Banco de Bogotá	Ps.	11,924,823	Ps.	9,811,253	Ps.	2,568,828	Ps.	(15,278,208)
Banco Occidente		8,638,565		6,727,345		2,531,186		(8,473,508)
Banco Popular		4,896,134		4,641,802		1,525,529		(5,458,950)
Banco AV Villas		2,328,186		2,027,630		992,892		(2,408,230)
Corficolombiana		2,073,055		1,138,855		222,748		(893,740)
Aval Fiduciaria		30,428		13,512		1,413		—
Aval Casa de Bolsa		28,710		26,796		—		—

(1)

Liquid assets are the sum of assets that are easily convertible into cash. Fixed income investments at amortized cost and financial investments pledged as collateral or subject to any other type of encumbrance, preventive measure or of any nature, that prevent their free assignment or transfer, as well as those that have been transferred under repurchase agreements, simultaneous or temporary transfer of securities are excluded. Liquid assets are measured at fair value (market prices on the evaluation date).

(2)

This amount is the remaining value of liquid assets in the specified time period, or the IRL, which is calculated as the difference between liquid assets and the liquidity requirement. The liquidity requirement is the difference between contractual cash inflows and contractual and non-contractual cash outflows during the period according to the IRL methodology.

The following tables show the individual IRL Ratio as of December 31, 2024, and 2023 for each of our banks in Colombia and Corficolombiana, expressed in Colombian pesos and as a percentage:



	Banco de Bogotá		Banco de Occidente		Banco Popular		Banco AV Villas		Corficolombiana		Aval Casa de Bolsa		Aval Fiduciaria
	2024	2023	2024	2023	2024	2023	2024	2023	2024	2023	2024	2023	2024	2023

	(in Ps billions)
IRL – 7 days	10,954	9,811	5,028	5,610	3,581	4,642	1,665	2,028	903	1,207	20	27	11	14
IRL – 30 days	2,929	2,569	1,814	1,816	894	1,526	688	993	561	661	—	—	(18)	1



	Banco de Bogotá		Banco de Occidente		Banco Popular		Banco AV Villas		Corficolombiana		Aval Casa de Bolsa		Aval Fiduciaria
	2024	2023	2024	2023	2024	2023	2024	2023	2024	2023	2024	2023	2024	2023

	(in percentages)
IRL – 7 days	535	564	289	419	896	1,925	447	775	190	255	6	15	244	180
IRL – 30 days	128	127	131	133	129	145	147	174	142	150	—	—	51	105

Supervised entities are required to calculate and report to the SFC on a weekly basis an indicator of short-term liquidity risk. The IRL is calculated in periods of 7 and 30 days and must be at least 100 percent. During 2024, Grupo Aval's Colombian banks met the minimum regulatory requirement.

The liquidity calculations described above assume normal liquidity conditions, according to the contractual flows and historical experience of each of the financial subsidiaries. For extreme liquidity events caused by unusual deposit withdrawals, the financial subsidiaries have contingency plans that include available credit lines with other financial institutions and access to special lines of credit with Colombia´s Central Bank, in accordance with current regulations. These lines of credit are granted when required, and are collateralized by Colombian government securities or by a portfolio of high-quality loans, as specified in the Central Bank regulations. Grupo Aval´s financial subsidiaries did not access the Central Bank special lines of credit during the years ended at December 31, 2024 and 2023.

The banks in each country are responsible for their liquidity position on a stand-alone basis. They have access to funding mechanisms with their central banks, and to funding through credit lines. Short-term credits are offered by correspondent banks and financing is granted by multilateral organizations.

The following is a breakdown shows the contractual undiscounted cash flows of the financial assets and liabilities including contractual interest receivable and payable at December 31, 2024 and 2023.

December 31, 2024


	Less than		From one to six		From six to twelve		More than
Assets	one month		months		months		a year		Total
Cash and cash equivalents	Ps.	16,998,859	Ps.	—	Ps.	—	Ps.	—	Ps.	16,998,859
Trading investments in debt securities		300,292		305,488		435,694		8,422,819		9,464,293
Investments in debt securities at FVOCI		401,816		1,811,929		3,252,189		24,381,983		29,847,917
Investments in debt securities at amortized cost		940,289		2,456,711		3,203,905		2,662,693		9,263,598
Commercial loans		14,582,605		31,222,986		18,300,276		71,697,670		135,803,537
Consumer loans		2,374,330		8,120,876		8,394,853		69,138,663		88,028,722
Mortgages loans		372,088		1,150,098		1,292,659		39,222,723		42,037,568
Microcredit loans		1,226		625		265		2,051		4,167
Interbank and overnight funds		703,330		1,799		—		—		705,129
Trading derivatives		376,454		325,466		144,525		170,457		1,016,902
Hedging derivatives		3,054		53,560		21,102		8,476		86,192
Trade receivable		2,864,204		318,938		4,548		25,143,889		28,331,579
Other assets		156,961		—		5		720,429		877,395
Total Assets	Ps.	40,075,508	Ps.	45,768,476	Ps.	35,050,021	Ps.	241,571,853	Ps.	362,465,858

	Less than		From one to six		From six to twelve		More than
Liabilities	one month		months		months		a year		Total
Checking accounts	Ps.	24,579,536	Ps.	—	Ps.	—	Ps.	—	Ps.	24,579,536
Time Deposits		9,186,183		49,090,487		25,405,518		18,863,479		102,545,667
Saving deposits		79,614,904		—		—		—		79,614,904
Other deposits		235,111		111,456		—		1,343		347,910
Interbank and overnight funds		17,666,654		538,143		332,010		—		18,536,807
Leases contracts		13,178		105,803		144,018		2,673,140		2,936,139
Borrowing from banks and other		1,912,104		9,177,276		4,258,097		7,336,503		22,683,980
Long-term debt		395,469		1,156,876		886,593		26,947,429		29,386,367
Borrowing from development entities		69,771		1,227,091		394,323		3,350,196		5,041,381
Trading derivatives		308,653		380,271		95,804		240,701		1,025,429
Hedging derivatives		1,369		8		3,220		4,180		8,777
Other liabilities		4,112,180		316,871		83,494		2,206,175		6,718,720
Total Liabilities	Ps.	138,095,112	Ps.	62,104,282	Ps.	31,603,077	Ps.	61,623,146	Ps.	293,425,617

	Less than one		From one to		From six to		More than a
Commitments Loans	month		six months		twelve months		year		Total
Guarantees	Ps.	48,394	Ps.	360,652	Ps.	1,064,744	Ps.	1,629,771	Ps.	3,103,561
Standby letters of credit		26,546		145,194		195,627		16,905		384,272
Overdraft facility		1,861,943		26,281		32,113		341,120		2,261,457
Standby credit card facility		6,192,403		355,995		660,752		5,724,232		12,933,382
Undrawn approved loans		394,475		113,970		2,611,051		201,208		3,320,704
Others		2,017,804		—		—		—		2,017,804
Total Commitments Loans	Ps.	10,541,565	Ps.	1,002,092	Ps.	4,564,287	Ps.	7,913,236	Ps.	24,021,180

December 31, 2023


	Less than one		From one to		From six to		More than a
Assets	month		six months		twelve months		year		Total
Cash and cash equivalents	Ps.	18,604,184	Ps.	857	Ps.	—	Ps.	—	Ps.	18,605,041
Trading investments in debt securities		280,749		291,449		702,337		7,344,266		8,618,801
Investments in debt securities at FVOCI		142,920		1,192,286		3,861,978		20,682,574		25,879,758
Investments in debt securities at amortized cost		693,748		2,693,803		2,947,927		2,434,713		8,770,191
Commercial loans		11,914,475		30,973,505		21,141,485		64,172,735		128,202,200
Consumer loans		2,158,202		7,770,536		8,209,258		63,814,118		81,952,114
Mortgages loans		343,857		978,325		1,013,632		33,229,142		35,564,956
Microcredit loans		38,412		87,318		86,420		146,971		359,121
Interbank and overnight funds		392,679		—		—		—		392,679
Trading derivatives		1,172,036		640,291		111,538		110,978		2,034,843
Hedging derivatives		47,977		—		685		—		48,662
Trade receivable		3,127,198		113,763		29,350		22,733,228		26,003,539
Other assets		156,961		—		5		720,429		877,395
Total Assets	Ps.	39,073,398	Ps.	44,742,133	Ps.	38,104,615	Ps.	215,389,154	Ps.	337,309,300

	Less than one		From one to		From six to		More than a
Liabilities	month		six months		twelve months		year		Total
Checking accounts	Ps.	23,809,859	Ps.	—	Ps.	—	Ps.	—	Ps.	23,809,859
Time Deposits		14,800,170		35,683,285		24,156,548		21,322,829		95,962,832
Saving deposits		71,149,882		—		—		—		71,149,882
Other deposits		374,711		54,195		—		1,287		430,193
Interbank and overnight funds		13,305,891		1,788,786		—		20,877		15,115,554
Leases contracts		13,938		106,429		120,495		3,078,016		3,318,878
Borrowing from banks and other		1,663,276		6,250,680		3,090,588		11,827,108		22,831,652
Long-term debt		121,155		1,272,012		1,344,746		26,135,181		28,873,094
Borrowing from development entities		837,304		657,920		689,454		10,664,762		12,849,440
Trading derivatives		1,263,315		522,915		155,907		176,630		2,118,767
Hedging derivatives		204,251		305		5,252		6,722		216,530
Other liabilities		5,278,275		330,995		189,229		1,951,625		7,750,124
Total Liabilities	Ps.	132,822,027	Ps.	46,667,522	Ps.	29,752,219	Ps.	75,185,037	Ps.	284,426,805

	Less than one		From one to		From six to		More than a
Commitments Loans	month		six months		twelve months		year		Total
Guarantees	Ps.	1,813,970	Ps.	80,012	Ps.	30,320	Ps.	497,844	Ps.	2,422,146
Standby letters of credit		606,747		89,801		925		39,000		736,473
Overdraft facility		2,264,226		—		—		—		2,264,226
Standby credit card facility		11,917,268		112,006		84,005		336,019		12,449,298
Undrawn approved loans		4,002,210		218,112		—		—		4,220,322
Others		2,686,426		70,360		—		—		2,756,786
Total Commitments Loans	Ps.	23,290,847	Ps.	570,291	Ps.	115,250	Ps.	872,863	Ps.	24,849,251

Disclosure of risk management, regulatory capital management [text block]

4.4 Regulatory capital management

Decree 2555 of 2010 (as modified by Decree 1771 of 2012, Decree 1648 of 2014, Decree 2392 of 2015, Decrees 1477 of 2018 and 1421 of 2019) sets forth capital adequacy requirements for Colombian credit institutions. Technical capital for Colombian credit institutions consists of the sum of total Core Equity Tier I (CET1 or patrimonio básico ordinario), Additional Tier I capital (AT1 or patrimonio básico adicional), and Tier II capital (Tier II or patrimonio adicional). Tier I capital consist of the sum of CET1 (patrimonio básico ordinario) and AT1 (patrimonio básico adicional). Tier I and Tier II, as defined herein, may differ to the manner in which these terms are used in other jurisdictions.

Pursuant to Decrees 1477 of 2018 and 1421 of 2019 Basel III principles were introduced to estimate adequate capital in credit institutions as follows:

●

Total solvency ratio is defined as the value of the technical capital (CET1, AT1 and Tier II) calculated under the terms of the Decree 1477 of 2018 and the Decree 1421 of 2019, divided by risk-weighted assets by level of credit, market and operational

risk, at a minimum of 9%. Pursuant to Decree 2555 of 2010 (as amended), the Superintendency of Finance must grant prior approval of the eligibility of a debt, equity or hybrid instrument in order to be classified as AT1;

●

A minimum CET1 of 4.5%;

●

A minimum Tier I of 6%;

●

A capital conservation buffer of 1.5% consisting of CET1;

●

A systemic risk buffer of 1.0% for systemically important financial institutions (SIFIS) consisting of CET1; and

●

In addition, these Decrees established a minimum leverage ratio of 3%.

Banco de Bogotá is considered one of the systemically important financial institutions, according to Carta Circular 74 of November 28, 2024 and Carta Circular 70 of November 23, 2023 issued by the Superintendency of Finance, and therefore had to comply with the systemic buffer (explained above) at December 31, 2024 and 2023. According to Carta Circular 74 of November 28, 2024 issued by the Superintendency of Finance, Banco de Occidente is considered one of the systemically important financial institutions and was allowed a 2-year transition period to comply with the systemic buffer (must be fully implemented by November 2026).

In addition to compliance with minimum regulatory capital requirements, Grupo Aval’s entities aim to maintain capital positions that foster investor, creditor, and market confidence and to sustain future growth of their respective businesses. The capital allocation decision guards that there is balance between a more aggressive structure that can deliver higher returns on equity and a more conservative approach that encourages excess capitalization. Capital allocation decisions also considers each subsidiary’s long-term strategic objectives.

As of December 31 2024, and 2023, all of Grupo Aval´s individually regulated operations have complied with the minimum regulatory capital requirements.

The following tables show the separate and consolidated (where applicable) capitalization information of our main direct and indirect subsidiaries:

Banco de Bogotá S.A.


	Separate basis		Consolidated basis
	At December 31,		At December 31,
	2024	2023	2024	2023

	(in Ps)		(in Ps)
Subscribed and paid-in capital	3,553	3,553	3,553	3,553
Reserves and retained earnings	14,980,050	14,635,826	15,426,827	14,988,657
Other comprehensive income	246,238	8,114	244,407	(122,944)
Net income for the period	1,128,549	1,024,884	1,090,178	954,173
Non-controlling interests	—	—	—	—
Deductions:
Unconsolidated financial sector investments	—	—	—	—
Goodwill and other intangibles	(1,388,211)	(1,220,146)	(1,709,972)	(1,504,225)
Deferred tax assets	(783,110)	(815,194)	(672,462)	(672,813)
Other	—	—	(1,431)	(1,431)
CET1	14,187,069	13,637,037	14,381,100	13,644,970
Hybrid instruments recognized as additional primary capital	—	—	—	—
Other	—	—	—	—
AT1	—	—	—	—
Tier I	14,187,069	13,637,037	14,381,100	13,644,970

Subordinated instruments	2,459,094	2,573,696	2,459,094	2,573,696
Plus/minus others	134,586	160,637	—	—
Tier II capital	2,593,680	2,734,333	2,459,094	2,573,696
Other deductions from technical capital	—	—	—	—
Technical capital	16,780,749	16,371,370	16,840,194	16,218,666
Risk-weighted assets	81,152,551	76,811,668	97,961,017	91,625,712
Market risk	153,522	491,571	318,203	639,228
Market risk exposure ⁽¹⁾	1,705,799	5,461,900	3,535,594	7,102,531
Operational risk	565,377	521,135	664,410	612,546
Operational risk exposure ⁽¹⁾	6,281,962	5,790,384	7,382,337	6,806,068
Risk-weighted assets including regulatory market risk and operational risk	89,140,312	88,063,952	108,878,948	105,534,311
CET1 solvency ratio	15.92%	15.49%	13.21%	12.93%


	Separate basis		Consolidated basis
	At December 31,		At December 31,
	2024	2023	2024	2023
	(in Ps)		(in Ps)
AT1 contribution to solvency ratio	0.00%	0.00%	0.00%	0.00%
Tier 1 capital solvency ratio	15.92%	15.49%	13.21%	12.93%
Tier II contribution to solvency ratio	2.91%	3.10%	2.26%	2.44%
Total solvency ratio ⁽²⁾	18.83%	18.59%	15.47%	15.37%

Capital measure	14,187,069	13,637,037	14,381,099	13,644,969
Exposure measure	129,644,773	120,114,582	154,516,917	141,766,918
Leverage ratio	10.94%	11.35%	9.31%	9.62%

⁽¹⁾ Regulatory value at risk consists of value at risk multiplied by (100/9) as required by the Superintendency of Finance. Regulatory operational risk consists of operational risk multiplied by (100/9) as required by the Superintendency of Finance.

⁽²⁾ Solvency ratio is calculated as technical capital to risk-weighted assets, including regulatory value at risk and regulatory operational risk.

Banco de Occidente S.A.


	Separate basis		Consolidated basis
	At December 31,		At December 31,
	2024	2023	2024	2023

	(in Ps)		(in Ps)
Subscribed and paid-in capital	4,677	4,677	4,677	4,677
Reserves and retained earnings	4,996,740	4,782,349	5,253,452	4,996,111
Other comprehensive income	53,594	28,731	209,136	176,033
Net income for the period	494,992	430,603	473,554	473,554
Non-controlling interests	—	—	16,902	11,843
Deductions:
Unconsolidated financial sector investments	—	—	—	—
Goodwill and other intangibles	(693,741)	(643,350)	(651,630)	(594,581)
Deferred tax assets	(233,646)	(251,878)	—	—
Other	(2,743)	(2,867)	(2,743)	(2,867)
CET1	4,619,873	4,348,265	5,303,348	5,064,770
Hybrid instruments recognized as additional primary capital	—	—	—	—
Other	—	—	—	—
AT1	—	—	—	—
Tier I	4,619,873	4,348,265	5,303,348	5,064,770

Subordinated instruments	1,357,700	649,305	1,357,700	649,305
Plus/minus others	30,716	26,190	—	—
Tier II capital	1,388,416	675,495	1,357,700	649,305
Other deductions from technical capital	—	—	—	—
Technical capital	6,008,289	5,023,760	6,661,048	5,714,075
Risk-weighted assets	40,395,605	38,073,928	44,446,464	41,324,390
Market risk	339,369	184,778	381,971	218,356
Market risk exposure ⁽¹⁾	3,770,764	2,053,092	4,244,121	2,426,174
Operational risk	282,931	235,639	283,565	236,239
Operational risk exposure ⁽¹⁾	3,143,676	2,618,213	3,150,726	2,624,877
Risk-weighted assets including regulatory market risk and operational risk	47,310,045	42,745,233	51,841,311	46,375,441
CET1 solvency ratio	9.77%	10.17%	10.23%	10.92%
AT1 contribution to solvency ratio	0.00%	0.00%	0.00%	0.00%
Tier 1 capital solvency ratio	9.77%	10.17%	10.23%	10.92%
Tier II contribution to solvency ratio	2.93%	1.58%	2.62%	1.40%
Total solvency ratio ⁽²⁾	12.70%	11.75%	12.85%	12.32%

Capital measure	4,619,873	4,348,265	5,303,348	5,064,770
Exposure measure	75,193,855	65,855,871	81,253,921	70,759,147
Leverage ratio	6.14%	6.60%	6.53%	7.16%

⁽²⁾ Solvency ratio is calculated as technical capital to risk-weighted assets, including regulatory value at risk and regulatory operational risk.

Banco Comercial AV Villas S.A.


	Separate basis
	At December 31,
	2024	2023

	(in Ps)
Subscribed and paid-in capital	22,297	22,297
Reserves and retained earnings	1,545,974	1,658,248
Other comprehensive income	123,694	57,285
Net income for the period	(116,277)	(117,126)
Non-controlling interests	—	—
Deductions:
Unconsolidated financial sector investments	—	—
Goodwill and other intangibles	(194,924)	(159,586)
Deferred tax assets	(10,420)	(10,239)
Other	(116,928)	(123,976)
CET1	1,253,416	1,326,903
Hybrid instruments recognized as additional primary capital	—	—
Other	176	176
AT1	176	176
Tier I	1,253,592	1,327,079

Subordinated instruments	150,000	—
Plus/minus others	31,568	24,471
Tier II capital	181,568	24,471
Other deductions from technical capital	—	—
Technical capital	1,435,160	1,351,550
Risk-weighted assets	10,473,834	10,054,415
Market risk	22,567	47,003
Market risk exposure ⁽¹⁾	250,741	522,254
Operational risk	102,999	95,732
Operational risk exposure ⁽¹⁾	1,144,438	1,063,689
Risk-weighted assets including regulatory market risk and operational risk	11,869,013	11,640,358
CET1 solvency ratio	10.56%	11.40%
AT1 contribution to solvency ratio	0.00%	0.00%
Tier 1 capital solvency ratio	10.56%	11.40%
Tier II contribution to solvency ratio	1.53%	0.21%
Total solvency ratio ⁽²⁾	12.09%	11.61%

Capital measure	1,253,592	1,327,079
Exposure measure	19,170,558	18,873,410
Leverage ratio	6.54%	7.03%

⁽²⁾ Solvency ratio is calculated as technical capital to risk-weighted assets, including regulatory value at risk and regulatory operational risk.

Banco Popular S.A.


	Separate basis		Consolidated basis
	At December 31,		At December 31,
	2024	2023	2024	2023

	(in Ps)		(in Ps)
Subscribed and paid-in capital	77,253	77,253	77,253	77,253
Reserves and retained earnings	2,496,783	2,839,567	2,546,400	2,981,939
Other comprehensive income	82,992	79,481	251,899	222,322
Net income for the period	(226,699)	(347,409)	(314,876)	(402,676)
Non-controlling interests	—	—	6,866,755	6,794,087
Deductions:
Unconsolidated financial sector investments	—	—	—	—
Goodwill and other intangibles	(390,836)	(361,170)	(460,169)	(446,032)
Deferred tax assets	—	—	—	—
Other	(94,690)	(87,539)	(94,690)	(89,253)
CET1	1,944,803	2,200,183	8,872,572	9,137,640
Hybrid instruments recognized as additional primary capital	—	—	—	—
Other	—	—	—	—
AT1	—	—	—	—
Tier I	1,944,803	2,200,183	8,872,572	9,137,640

Subordinated instruments	319,316	327,018	69,316	77,018
Plus/minus others	15,349	20,775	—	—
Tier II capital	334,665	347,793	69,316	77,018
Other deductions from technical capital	—	—	(41,551)	(36,876)
Technical capital	2,279,468	2,547,976	8,900,337	9,177,782
Risk-weighted assets	17,069,637	16,670,146	37,339,994	36,166,365
Market risk	16,967	83,118	291,145	336,718
Market risk exposure ⁽¹⁾	188,523	923,539	3,234,940	3,741,309
Operational risk	144,415	136,419	414,441	462,427
Operational risk exposure ⁽¹⁾	1,604,616	1,515,762	4,604,901	5,138,073
Risk-weighted assets including regulatory market risk and operational risk	18,862,776	19,109,447	45,179,835	45,045,747
CET1 solvency ratio	10.31%	11.51%	19.64%	20.29%
AT1 contribution to solvency ratio	0.00%	0.00%	0.00%	0.00%
Tier 1 capital solvency ratio	10.31%	11.51%	19.64%	20.29%
Tier II contribution to solvency ratio	1.77%	1.82%	0.15%	0.17%
Total solvency ratio ⁽²⁾	12.08%	13.33%	19.70%	20.37%

Capital measure	1,944,803	2,200,184	8,872,572	9,137,641
Exposure measure	29,036,941	29,393,566	55,602,943	56,066,107
Leverage ratio	6.70%	7.49%	15.96%	16.30%

⁽²⁾ Solvency ratio is calculated as technical capital to risk-weighted assets, including regulatory value at risk and regulatory operational risk.

Corficolombiana S.A.

Starting November 22, 2023, Corficolombiana is consolidated under Banco Popular as a result of the shareholders’ agreement mentioned above. Notwithstanding the above, Corficolombiana has to comply with minimum capital requirements on a separate and consolidated basis.


	Separate basis		Consolidated basis
	At December 31,		At December 31,
	2024	2023	2024 ⁽³⁾	2023

	(in Ps)		(in Ps)
Subscribed and paid-in capital	3,464	3,464	—	3,464
Reserves and retained earnings	12,016,888	11,233,257	—	10,829,636
Other comprehensive income	(12,237)	(76,643)	—	366,032
Net income for the period	327,654	808,982	—	886,012
Non-controlling interests	—	—	—	1,380
Deductions:
Unconsolidated financial sector investments	—	—	—	—
Goodwill and other intangibles	(104,519)	(99,130)	—	(78,011)
Deferred tax assets	—	—	—	—
Other	(1,512)	(1,480)	—	(5,964)
CET1	12,229,738	11,868,450	—	12,002,549
Hybrid instruments recognized as additional primary capital	—	—	—	—
Other	192	192	—	192
AT1	192	192	—	192
Tier I	12,229,930	11,868,642	—	12,002,741

Subordinated instruments	—	—	—	—
Plus/minus others	—	—	—	—
Tier II capital	—	—	—	—
Other deductions from technical capital	(41,551)	(36,876)	—	(36,876)
Technical capital	12,188,379	11,831,766	—	11,965,865
Risk-weighted assets	20,630,956	19,894,398	—	20,189,704
Market risk	320,096	235,605	—	240,068
Market risk exposure ⁽¹⁾	3,556,617	2,617,835	—	2,667,427
Operational risk	271,948	290,604	—	298,733
Operational risk exposure ⁽¹⁾	3,021,644	3,228,933	—	3,319,258
Risk-weighted assets including regulatory market risk and operational risk	27,209,217	25,741,166	—	26,176,389
CET1 solvency ratio	44.95%	46.11%	0.00%	45.85%
AT1 contribution to solvency ratio	0.00%	0.00%	0.00%	0.00%
Tier 1 capital solvency ratio	44.95%	46.11%	0.00%	45.85%
Tier II contribution to solvency ratio	0.00%	0.00%	0.00%	0.00%
Total solvency ratio ⁽²⁾	44.80%	45.96%	0.00%	45.71%

Capital measure	12,229,930	11,868,643	—	12,002,741
Exposure measure	27,239,441	27,068,698	—	27,699,079
Leverage ratio	44.90%	43.85%	0.00%	43.33%

⁽²⁾ Solvency ratio is calculated as technical capital to risk-weighted assets, including regulatory value at risk and regulatory operational risk.

⁽³⁾ At December 31, 2024 Corficolombiana was not required to comply with consolidated solvency measures as it no longer had investments in financial subsidiaries, following the sale of Fiduciaria Corficolombiana (currently Aval Fiduciaria) and Casa de Bolsa (currently Aval Casa de Bolsa) to Grupo Aval.

Porvenir S.A.

In Colombia, pension and severance fund administrators are subject to specific regulation regarding capital adequacy. On February 3, 2022 the Decree 175, which amended Decree 2555 of 2010, modified technical capital requirements for pension and severance fund administrators, migrating definitions on technical capital and risk-weighted assets closer to the Basel III framework. The Superintendency of Finance published instructions corresponding to the application of this Decree in December 2022. Pension and severance fund managers had a twelve-month transition period starting on January 2023 and were fully compliant with this regulation starting on February 2024.


	Separate basis
	At December 31,
	2024	2023

	(in Ps)
Subscribed and paid-in capital	109,211	109,211
Reserves and retained earnings	2,543,792	2,265,587
Other comprehensive income	(19,698)	—
Net income for the period	652,600	—
Non-controlling interests	—	—
Deductions:
Unconsolidated financial sector investments	—	—
Goodwill and other intangibles	(381,208)	—
Deferred tax assets	(25,646)	—
Others	(53,826)	(50,626)
Primary capital	2,825,225	2,324,172

Unrealized gains/losses on securities available for sale ⁽¹⁾	—	(8,474)
Secondary capital (Tier II)	—	(8,474)

Deductions:
Value of the stabilization reserve	(2,269,084)	(1,911,568)
Technical capital	556,141	404,130
Risk-weighted assets	671,894	886,689
Market risk	3,832	10,927
Market risk exposure ⁽²⁾	42,577	121,408
Operational risk	121,454	122,398
Operational risk exposure ⁽²⁾	1,349,490	1,359,975
Risk-weighted assets including regulatory market risk and operational risk	2,063,961	2,368,072
Solvency ratio⁽³⁾	26.95%	17.07%

⁽¹⁾ Unrealized gains/losses on securities available for sale do not flow through the Statement of Income until such securities are disposed of and the gain or loss is realized.

⁽²⁾ Regulatory value at risk consists of value at risk multiplied by (100/9) as required by the Superintendency of Finance. Regulatory operational risk consists of operational risk multiplied by (100/9) as required by the Superintendency of Finance.

⁽³⁾ Solvency ratio is calculated as technical capital to risk-weighted assets, including regulatory value at risk and regulatory operational risk.