90-day plus PDLs improved as well relative to second quarter. PDL formation reflects an improvement in the 30-day horizon in both commercial and retail loans. Quarter-on-quarter PDL formation for consumer loans decreased 22% and 11% on a 30-day and 90-day basis, respectively, driven by an improvement in personal loans and credit cards. Cost of risk net of recoveries was 2.5%, up from 2.2% a quarter earlier and 1.4% in third quarter 2022. We expect that cost of risk of the current credit cycle has peaked very likely during the quarter we are now reporting. Tighter origination policies have shown positive signs in new vintages. In addition, our mix over weighted in payroll lending and underweighted in personal loans and credit cards, has been protective during this cycle.
Even though milder than our peers, we expect our cost of risk to remain high in the following quarters as the weaker vintages in personal loans and credit cards originated between August 2022 and February 2023 complete their deterioration cycle and are fully impaired and ultimately charged off. Finally, the ratio of charge offs to average 90-day PDLs was temporarily low at 0.5 times. We expect it to increase back to closer to 0.7 times over the following quarters. On Page 10, we present funding and deposit evolution. Funding grew 0.7% during the quarter and 5% over the year. Peso denominated funding increased 1.7% during the quarter and 13.7% over the year. Deposits that account for 72% of our funding remained stable over the quarter and grew 8.3% year on year.
Time deposits reached 49.2% of our deposits. Pressure on cost of funds remained high during the quarter. This resulted from compounding high central bank rates with an unusually high spread between deposits and sovereign rates. The distortion in these spreads resulted from low liquidity in term funding induced by a low government budget execution and a concentration of time deposit maturities in the system during the quarter as an aftershock of the changes to net stable funding ratios. As mentioned by Luis Carlos, pressure on deposit rates subsided toward the second half of September as the Superintendency of Finance made some transitory adjustments to the net stable funding ratio. Our deposit to net loan ratio remained flat at 101%. On Page 11, we present the evolution of our total and attributable equity and the capital adequacy ratio of our banks.
Our total equity remained flat over the quarter while our attributable equity decreased 0.5%. This was driven by lower net income and an unfavorable valuation of fixed income investments held through OCI at fair value. All of our banks remained materially at the same Tier 1 and total solvency levels as a quarter earlier. Although this will only be reflected on our following quarterly report, I would like to mention that Banco Popular strengthened its total solvency during October with the issuance of a COP250 billion [indiscernible] subordinated local instrument. On Page 12, we present our yield on loans, cost of funds spread and NIM for Grupo Aval and for our banking segment. Our quarterly NIM fell 63 basis points quarter-on-quarter to 2.8% despite an improvement in our NIM on loans.
The contraction of our NIM was driven by a negative NIM on investments that resulted from poor capital markets performance that dragged our subsidiaries investment fixed income portfolios at fair value through P&L and Porvenir’s stabilization reserves. NIM on loans continued to improve, increasing 16 basis points to 4.2%. Despite the pressure on cost of funds we have described, the stable central banking intervention rate allowed our yield on loans to increase 35 basis points during the quarter while our cost of funds increased 18 basis points. The pressure on funding continued to delay a deeper improvement in our NIM. The NIM of our banking segment contracted 35 basis points to 3.9% during the quarter with NIM on loans expanding to 5% and NIM on investments falling to negative 1.8%.
The NIM and retail loans of our banking segment continued improving and expanded 25 basis points. The NIM on commercial loans of our banking segment contracted 8 basis points over the quarter as funding costs were temporarily pressed by the liquidity context. We have seen cost of funds come down since mid-October as the concentration of time deposit maturities is mostly over and government budget execution starts to pick up. This has allowed the spreads between both time deposits and savings relative to sovereign risk to start correcting, particularly in instruments with longer maturities. Moving to Page 13, we present net fees and other income. Net fee income increased 15.1% year-on-year and decreased 2.8% quarter-on-quarter. Gross fee income increased 12.1% year-on-year and decreased 1.2% quarter-on-quarter.
