Good morning, and welcome to Banquinta First Half twenty twenty one Earnings Call. Our CFO, Jacob O'Diaz, will now explain in detail the performance of the quarter. Thank
you. Good morning, everybody, and welcome Through this Banquintar's earnings presentation for the Q2 of 2021, the related financial statements We're posted on the website of the CNMV a few minutes ago before market opens. All related documents can also be found at this time On the corporate website. Let me emphasize at the beginning that we have closed our first half with very positive results. A strong commercial performance reflected in volume growth and of and on balance sheet growth and transmitted with a Strong growth rate in our pre provisioning profit.
We consider this a remarkable performance despite A continued challenging environment during most of the first part of the year with lockdowns and restriction of mobility that continued to impact In our main business and geographies, here are some highlights of our achievements in the first half of twenty twenty one. First of all, of course, during this quarter, it needs to be highlighted the successful completion of the Linea Directa spin off from the Banquintaro Group, A very attractive operation for our shareholders and a very positive market welcome to the new coated liquid company. The financial impacts on the transaction Has been reflected in the group's P and L account this quarter. 2nd, we've been successful in keeping positive growth rates in the balance sheet In our loan portfolio, with a strong mortgage production in all geographies as well as in retail deposits and specifically in this year in our asset management activity, showing a strong recovery. As a result of this, both our net interest and fee income were able to post relevant rates of growth.
3rd, the resilient net interest income quarter after quarter is supported by continued volume growth as well as a recovered customer activity With individuals and corporates at the last part of the quarter, that resulted in an increase of our operating income by 6%. 4, the Q2 has also been good with a continued cost control and has allowed pre provisioning profit of the group to grow strongly over 7%. Finally, asset quality that continued to show stable NPLs year to date with an increased Coverage in provisions after last year extraordinaries. And finally, our solvency, merger in terms of Z1 fully loaded ratio that maintains Record levels above 12%. This is a comparison For main financial indicator as of June 2020 2019, we think that these are good comparison to provide a much Better indicator about the performance of our bank.
Group loans total book grew by 5% €67,000,000,000 thanks to the strong corporate demand in 2020 and the mortgage loan book growth in this first half of the year as well As the corporate loan book in this second part of the quarter, while consumer finance continue mostly stagnant, Growth over the first half twenty nineteen is 13%. Gross operating income at €915,000,000 grew by 6% with respect to last year and by 14% from 2019, showing a strong resilience In incomes coming mostly from the recurrent businesses. And despite the seasonal cost increase, we believe operating costs remain under Control builds our pre provisioning profit post an improved growth rate over 7% and Astonishing, 18% since 2019. NPL ratio remained very low, in line with all Our asset quality indicators, NPL at 2.35%, dropped by 16 basis points from a year ago and 37 basis Points from the first half of twenty nineteen. Coverage ratio after the recorded extraordinary provision of last year stands at a comfortable 62%.
Group's net profit after the LDA spin off reached a record of €140,000,000 Like for like, that is excluding this transaction, net profit would be €245,000,000 growing by 124% from a year ago When extraordinary provision took place for all banks and similar, minus 3% to that of 2019 if we exclude The CHF 57 million extraordinary badwill from the Evobanko transaction in that year. Our CET1 fully loaded capital ratio remains almost flat, 12.2, despite the 50% reserve of dividends, Standing at comfortably 44 basis points above last year and well above our long term guidance of 11.5. Return on equity reflects the improved performance from last December and stands at 9.5% maintain ahead of that of our domestic competitors and above our cost of capital. We will not kick off the usual agenda of our presentation. First, our results, Then risk management to end with a brief review of the different businesses in the period.
Here is the group P and L account for the 1st half twenty twenty one. As I mentioned, the accounting for Lidar Directa recurring contribution till the month of April is at the bottom of the P and L, net of taxes, under discontinued operation, and then we include the Extraordinary capital gain of €896,000,000 net of taxes and expenses of the transaction. Those Since May onwards, as they become an independent company, Bankinter will only get dividends Coming from our 17.4% remaining stake accounted in the dividends line. Once more, the group's income statement continued to seasonality and adjusted by the number of days in the quarter, there is a clear reflection of our lending growth and client margin resilience. It is up by over 4% from June 2020.
Positive market environment and a clear pickup in our commercial activities supports our fee income. It grew close to 9% with respect to the previous year, in part due to the seasonality of the Q2 of every year. Other operating income and expenses at €10,400,000 were €4,000,000 higher than a year ago to another good quarter in trading income And despite the annual increase of regulatory charges from resolution fund booked in this second quarter, Total gross operating income of €915,000,000 went up by 6% from 2020. The quality of income growth remains very high with increased contribution from Portugal, Evo and Avant Money as we will see later in this presentation. Group operating costs remain under control in Spain and Portugal.
Thus, the group's total cost grew by over 4% with respect to June 2020, mainly due to the personnel expenses that went up by over 8%. Please bear in mind or I remind you of the EUR17 1,000,000 regularization in first half of twenty twenty. And in the other hand, general and administrative expenses remained controlled with a small decrease. This positive income and cost performance allowed pre provisioning profit to increase by over 7% from June 2020, what we think is a remarkable growth rate. Loan loss and other provisions are down 47% from first half twenty twenty.
Here, let me remind you of the €193,000,000 extraordinary provisions booked in the €3,000,000 extraordinary provisions booked in the first half of twenty twenty. Without this effect, the provisions remain very much stable. After the sharp decrease in provision, pretax profits from the banking activity stands at €288,000,000 or 4.6 times that of 2020. The net results coming from Linea Directa brings an additional €10,000,000 to the group in the mouth of April, Bringing the LDA contribution to the group during the 1st 4 months of 2021 amounted to €40,000,000 And after taxes group net profit from the ordinary activity was €245,000,000 or 2.2x That of June 2020. This is the amount available to be paid out by 50% approximately as dividends for the year 2021.
And in this quarter, we have booked close to €900,000,000 in the revaluation of the bank's 17.4 Percent remained in stake in Line Directa, net of taxes only by 1.5% approx and of 1,600,000 of transaction expenses. And in this, total net group reached a historic record of €140,000,000 All in all, After closing a very positive first half of the year in income volume in incomes, volumes, cost and in recurring cost of risk, we continue to feel Optimistic about full year 2021. Due to the overall uncertainty of the evolution of credit risk, We are now confident to maintain the guidance of cost of risk for the rest of the year within a lower range of 40 to 50 basis points. I will come back Here, we present the P and L the quarterly P and L, which shows the usual second quarter chart Of the resolution fund in other income and expenses. On the Q1 comparison, we can see a very positive growth pattern in net interest income and fee income, Up 5% and 4%, respectively, while operating costs increased only by 3% in the same period.
Pre provisioning profit decreased by 8% only due to the resolution fund charges in the quarter after 11,000,000 Higher credit risk provision, profit before taxes of banking activity has been only 21% down with respect to the Q1 of 2020. From the same quarter last year, net interest income shows a 7.5% increase and 11.7% increase in fees. Adding trading income and the increased regulatory charges bring total income for the period up by 5.3% from the same period a year ago. Thanks to a 2% increase in operating cost, the pre provision profit increased by 8.4% from the same quarter last year. Moving into balance sheet growth.
The group's loan book grew by 5.2% from a year ago, bringing over 3,300,000,000 In new loans in the year to reach almost €67,000,000,000 Growth in this first half of €2,500,000,000 Comes mostly from our overall mortgage business that now includes Evobanko in Spain, also Portugal and of course, Ireland. At the same time and as expected, low demand in corporates and SMEs were negative, impacted by the end of the government programs for providing liquidity to the economy and were able to grow their loan book only at the end of the second quarter. 2nd quarters always see a jump in lending from increased activity in corporates in this 2021 in Secur after the end The lockdown with a good growth in the May June period to reduce the gap from December 'twenty. On the other hand, consumer loan books start A very contained recovery, mainly in personal loans, to existing customers of the bank. In Spain lending growth were able to maintain the pattern from previous year.
It grew by 4% year on year, well over the 1% contraction for the sector with data as of May 21. In Portugal, lending is up by 6% from a year ago with close €600,000,000 from Last December, slightly ahead of our business plan for the year. EVO was also able to grow their loan book by CHF 600,000,000 Year on year, thanks to a strong mortgage production that we will come back later again. And retail deposits continued to perform strongly in all geographies, 11.5% year on year and EUR 7,100,000,000 to EUR 68,600,000,000 up 11% in Spain during the year, Why is the market only grew by 4.9? In Portugal, deposits grew strongly in the year or 7 or 878,000,000 euros since December.
They have grown a remarkable 19% year on year to reach €5,500,000,000 Next slide. Net interest income continued to show resilience as we have anticipated. It grew by 7.5% over the same quarter a year ago and over 5% from last quarter. We also include pre COVID Q2 of 2019 for comparative purposes, showing a 13% increase in bank inter and 3x more in Evo. This is mainly due to being able to grow loan book every year while maintaining customer margin almost flat, as we will see in a minute.
In Portugal, net interest income grew by 7% with respect to the same period in 2020 and by 0.8% in respect to previous This growth trend in Portugal in net interest income is a consequence of our business plan with yearly loan book growth in All of our 3 different loan books: mortgage, corporate and consumer. Group's customer margin improved by 2 basis points from last 1 basis points from same quarter last year. This stable trend is due to an almost flat credit yields, only 1 basis point reduction in the year And still 3 bps reduction in the cost of deposits. After 2 quarters with the cost of deposit at all time lows, we believe stable credit yields Are the key to our customer margin resilience going forward. We continue to suffer from a negative repricing of the mortgage loan book, Although getting to an end by the Q3, probably the Q4, and on the other hand, we are starting to see some asset mix improvement In corporate lending with more weight in working capital facilities than in the long term loan book with higher yields.
Moving into ALCO portfolio. The group's ALCO portfolio remained with almost no change in the quarter. Its size decreased only by €0,300,000,000 to 8 €600,000,000 Its proportion between different portfolio is 75% sits under amortized cost with no impact Capital ratio and the rest in fair volume. Spanish government bonds continue to represent 55% on total and 24% are other sovereigns, mainly Italy and Portugal. The portfolio's metrics improved in the quarter to average maturity 8.7 years, Average duration of €4,700,000 and the average yield remains at 1.6%.
After some volatility in bond markets, unrealized gains Fully amount to approximately €530,000,000 down from last quarter. Only 20% of them fits On the fair value portfolio with a small impact in capital, as we will see later. Over the next few years, maturities of the portfolio are minimal, except €1,000,000,000 in 2023. Fee income. Fee income performed very well in the quarter and is slightly ahead of our guidance for the full year.
Quarterly fees were €5,000,000 over the previous quarter and continued to show growth of 4% 12% over the same quarter last year. This quarter, All fees from our customer business show growth, including payment and collections, recovery from previous slowdown in activity. At the same time, assets under management enjoyed another very good quarter, and this is reflected in the strong performance. The largest contributor to our fees with €92,000,000 is always asset management fees, which are up 23% year on year. A very strong commercial activity brings This topic to record levels at the end of the quarter, fueling these fees.
The The second contributor is fees from the bond and equity trading in our broker online, together with custody fees growing by 18% to €59,000,000 in the period. And now regarding 3rd position payments and collection from corporates and individuals. Performance has been clearly recovered after being impacted by the slowdown in economy. This environment started to change at the end of the quarter and has made fees to grow by 8% from last year. Other relevant fees are FX with customers that went up 5%.
Risk related transactions went up A 17% and more stable life insurance and pension funds that brings fees up by 8%. In other operating income and expenses, in the next slide, you can see the main components of this miscellaneous, €59 €1,000,000 of traded income plus dividends that compares very well from last year due to another quarter with good trading activity, plus €4,000,000 From the new first dividend from Line Directa announced in the quarter. The 14% increase in regulatory charges of €7,000,000 more this year, Together with other small miscellaneous impacts such as lower operating fees from I Colon's production from last year weighed on the other income expenses Negative €9,000,000 in the period. Gross operating income for the 2nd quarter Stood at €450,000,000 an increase of 5% from a year ago and more important 13% from the same quarter In the pre COVID 2019, quarterly comparison is less relevant. It went down by 3% from last year due to the regulatory charges booked in the quarter.
In Portugal, gross operating income grew by 15% in the year and quarterly grew by 3.4 Sorry, 3.8 percent from last quarter and 21% from the same quarter last year, following very positive recurring business in our Portuguese Moving into cost. Group operating costs in the quarter totaled €209,000,000 They are up By only 2% from the same quarter of the previous year and up CHF 6,600,000 or 3% from the Q1. Operating costs from EVO shows a good performance that is expected to continue. They were reduced to €12,000,000 down 14% from a year ago and 20% down from previous quarter. In Portugal, costs are up 4% over last year first half, while incomes grew by 15%, meaning an efficiency improvement to 56% cost to income ratio.
Group personnel expenses are up 4% Over the same quarter last year, remember again, the CHF17 1,000,000 one off adjustment of the variable pay in the Q1 of 2020. General and administrative expenses are under control, decreasing by close to 1% over last year. Efficiency continued to improve in the group. Cost to income dropped 8 70 percentage points from December 2020 to 46.4 percent and 150 percentage points from a year ago. We plan to keep the long term cost to income below 43%.
To do so, we need to improve efficiency in our different new businesses and geographies. In Portugal, now efficiency stands at 56% from 62% a year ago. And in Ireland, Avan money efficiency is at 58%. And EVO, of course, improving but still in negative efficiency. I want to remind you that our Spanish business stand alone runs at a 40.6% efficiency ratio.
With all this, quarterly pre provisioning profit showed €241,000,000 up 8% from 2020 and Almost 18% above the 2019 figure. I guess this is a very remarkable Performance. Cost of risk. We move into the cost of risk session. The quarter finished at 40 basis points of total credit Storoz, with an increase of only 10 basis points from December and a decrease of 3 basis points from the same quarter last year recurring cost of risk.
Since 3Q 'twenty, it follows a campaign upward trend. Although total cost of risk remained almost flat Year on year, there has been some increase from our consumer finance loan book, while the rest remain almost stable in personal lending, Mortgages and large amid corporates. We expect this good behavior in the first two quarters to be slightly worse in the rest of the year as we have seen some stage 2, anticipated migration during the first half of the year, particularly in the small and medium sized enterprises. The increase in the quarter of 5 basis points took place only in Spain and mostly rerated To consumer finance and to, as mentioned, the transition to Stage 2 positions. It is Early to anticipate what will be the impact of the pickup in consumption during the summer season, but we are somehow optimistic After the majority of the mortgage and consumption moratorium book has matured and the equal liquidity lines for SMEs has been extended as well as the government guarantees As we see things today, after a good first half and with the expected increase in cost of risk push to the second half, We have reviewed again our guidance of the cost of risk for the full year, now between 40 50 basis points From the original 60 basis points at the beginning of the year and from the range of 50 to 60 that we shared with you in at the end of the Q1.
After provisions and the LDI spin off, net group's net income stayed At EUR 1140,000,000 a record and unparalleled figure. Without the extraordinary profit from Lilian Directa Net income would be of €245,000,000 still up 124 percent from €109,000,000 a year ago And below €309,000,000 in 2019 first half. If we exclude the €57,000,000 Of the bad will that we have in that year, net income is only down by 2.7%. With all this, At the end of June, group's return on equity stands at 9.5%, still with the 4 month contribution of Line Directa and excluding the extraordinaries from the accounting of the transaction. After closing the first half, we expect by year end 2021 to reach a return on equity between 8% 9%, in line with our target to return to double digit Return on equity without Linea Directa as soon as in 2023.
I will now go over our credit risk, liquidity and solvency management. Nonperforming loans continued our stable trend with total NPLs at €1,730,000,000 down by €30,000,000 from June 'twenty, mainly due to the annual NPL sales in consumer finance. NPLs grew €49,000,000 in the year. Of this growth, €50,000,000 came from our consumer finance business. Other business in Spain like mortgages and corporate just came up by only €9,000,000 Portuguese NPLs, in fact, came down €10,000,000 in the year.
Once more, the growth in consumer finance and SMEs NPLs Was somehow offset by reduction in other business segments like corporates, mortgage and affluent banking. The group's NPL ratio continued to trend down to 2.35 percent, lowest point since 2008, 16 basis points lower from a year ago. It decreases 3 basis points from last year, mainly due to some growth in total risk exposure. In Spain, NPLs at 2.44 percent is 10 basis points below last year and only 2 basis points up from December. This ratio continues to be way down from the sector average at 4.53.
In Portugal, NPL ratio declined to €189,000,000 or only €140,000,000 of total NPLs. As shown in the chart I've provided, the group's NPL ratio went down to 2.3 for households and maintained stable for corporates. Total provision for nonperforming loans after the extra provision built in 2020 is €1,190,000,000 up 5% from last year and 3% in December. All this had a relevant impact on our provisions coverage, which now stands at 62% from 59% last year. And the coverage for foreclosed assets were also improved to 50%, a 9.4% increase and clearly above the average discounts of our sold assets.
The group's foreclosed asset portfolio is 20% smaller than a year ago, decreased by €52,000,000 from the previous year now accounts for €207,000,000 Our fully load CET1 ratio finished the quarter At 12.20 percent, a small decrease of 8 basis points from last quarter and 45 basis points higher from a year ago. Since December, our return Earnings brings an increase of 38 basis points, taking into consideration accrual dividends At 50% of earnings and the positive contribution from the linear direct spin off of 5 basis points. Capital consumption of risk weighted Assets from the business has been very strong, 31 basis points, due to the loan growth book that we mentioned in this second quarter, mainly since the May the month of May. Valuation adjustments brings a negative 7 basis points due to market volatility in our ALCO portfolio and insurance increases by 6 basis points after the impact of Ligna Directa spin off. Also, the implementation of the new IRB parameters in our models Took another 14 basis points negative in the entire year for a total of 9 basis points negative impact in the quarter.
Total capital ratio stands at 15.6%, very comfortable level and leverage ratio at 5.1%. NREL ratio of 22.1%, quite above 18.7% requirement for 2022. Funding gap. Funding gap continues to be negative from €1,000,000,000 a year ago to a negative €2,500,000,000 of commercial GAAP. The increased negative gap in Spain more than offset the one coming from Portugal of Ireland.
And as a result, loan to deposit ratio at record levels of 95.7 percent from 101% a year ago. Now let's review some performance of business lines. Here you can see the diversification of income sources. No major changes. We have a good balance between the main Contributors, corporate and commercial banking, together represent close to 60%, and now 13% is coming from our consumer finance subsidiary.
Then you see Investment Banking with 9% Portugal, 8% Ireland Business Irish Business, 3% and Evobanca with 1%. Moving on. The corporate and SME loan book in Spain and Portugal grew over 2% year on year in a very difficult start Of the year for corporates loan demand, it increased by 1.4% in Spain, while the sector is now again contracting their loan book by 2.3% year on year. This will make corporate loan book for banks in Spain to shrink again this year after an exceptional 2020 with a CHF 100,000,000,000 in government guarantee at Eco On financing. The Q1 loan book reduction, like every year, has recovered was recovered with €900,000,000 or 3 percent growth in the quarter to reach €29,000,000,000 loan book.
Thanks to this seasonal pickup, we have Increased our market share to 5.2% from 5% a year ago. Spain loan growth over June last year by business segment has been €424,000,000 In mid corporates, 217 in SMEs and a reduction of 293 in large corporation due to their extra liquidity position. In Portugal, where we have been growing our market share in corporate lending year after year, it now stands of Over 2%. This trend continues since our corporate loan book went up 7% in the year and 5% in the quarter, reaching €2,000,000,000 at the end of June. Let's move into sources of income of the corporate segment.
International Trade and Supply Chain Finance continued to grow its balance sheet, its loan book mainly in Short term working capital financing grew by 3.5% from last year to DKK6.2 billion with almost no NPLs. Transactional business with corporates finally recovered on the last part of the quarter from a very stagnant situation. Payments and collection end up 1% and 3%, respectively, from last year generating BRL40 1,000,000 in incomes in the first half. And finally, Investment Banking that has closed another first Half of the year with a very good performance in revenues. Investment Banking loan book of €3,900,000,000 has grown 10% in December with a new net production of 8.11.
Here, we see what's the Situation of the ECO financing. We show again Banquintor's participation in the ECO financing for corporate and SME as of June 21, total eco loans with the state guaranteed disburse were BRL 6,600,000,000. All these loans have been granted mainly In medium and small corporates and the rest to large corporates. Total limits of 8,800,000 Avico loans have been signed with bank inter customers. From this, total 38% have been asking for restructuring of the loan in maturities or a grace period, also extending The guarantee and improving rate conditions.
On moratoriums for mortgages and consumer individuals, they have almost come to an end And are at €123,000,000 as of June. Remember that they have never represented more than 2% of the loan book in Spain. And since January, you have Signed 132,000,000 of numeratoriums only related to the terms and transportation sectors. NPLs on the Anmorked Taiz-one has been 2.9%, and for the 255,000,000 current ones, NPL stands at a very low Right. I think it's a remarkable performance compared to industry benchmarks.
Moratoriums in consumer finance are negligible both in Spain and in Portugal. In Portugal, Bamora targets were more relevant and include corporate loans as well. They represent 12% of total portfolio from Larger figures from quarters ago, €512,000,000 in mortgages and €365,000,000 in corporates, all of them maturing in September. In Wealth Management, customer assets continued to grow due to strong commercial activity with a positive market effect, Adding both Business Private and Personal Banking, assets under management increased by circa €12,700,000,000 In patrimony under management in 12 months, euros 8,000,000,000 in private banking and €4,700,000,000 in personal banking. The strong commercial activity measured by net new money in the first half shows a total €6,700,000,000 increase, Split 4.2 percent in private banking and 2.5 percent in personal banking.
Market effect has also been benign in the period, thanks to recovery Activity in our commercial retail banking during the first half has been very strong. In fact, Customer acquisition in Spain grew by 49% from that of a year ago. Salary account balances in Spain continued to grow. They are up 24% from a year ago, totaling over €14,000,000,000 Mortgage origination of the period of 3 €1,000,000,000 outperformed every year first half and represents an increase of 1.7x from the first half of twenty twenty and even more relevant, 1.6x more than the last record in the first half twenty nineteen. Vanquinta holds a good market share in the front And the back in the front and in back book, despite a better quality of loans, where 72% of mortgages were fixed rate And our average loan to value ratio is at 62.
In Spain, our market share in new mortgage during the last 12 months is at 7.5%. Thus, our total mortgage back book keep growing and reached €30,000,000,000 an increase of 7.8% In Spain, while the rest of the market only grew by 0.1, the loan to value of the total bag book stands at a comfortable 54%. Our Asset Management business maintained its growth trend in the 3 categories: mutual funds, 22% up year on year pension funds, 16% And Apache Money Service 21. In mutual funds, net new money in the first half has grown by €4,800,000,000 That, together with the positive market effects, bring the total to €27,700,000,000 a new record. Banquinta Consumer Finance includes, as you know, business in Spain, Portugal and Ireland, And it's including also the recent mortgage production in this country.
At the end of June, total loan book remained slightly up from last December and 9% Up from a year ago to a total of €3,100,000,000 of them, 59% are personal loans and 41% credit card lending. The breakdown of the total loan book by geography includes €600,000,000 coming from Ireland Avon Money, Growing up 39% from last year and €275,000,000 from Banquinta Portugal, which grows 22%. The rest is Spain, where the loan book grew by only 1%, mainly in personal loans to bancinter customers. Despite the reduction of €48,000,000 in revolving credit card outstanding. Here, you see the breakdown of the loan book by product.
Personal loans represent 55%, growing 9%. Transactor credit cards, mainly with bank inter clients, represent 23% of Total of €700,000,000 with 10% growth. Open market revolving credit cards is now 16% of total loan book and less than €500,000,000 In outstanding after a decrease of 19% of last year. Also, the new home mortgages in Ireland reached €145,000,000 and represents now 5% Of the total loan book, total new credit origination, mainly in personal loans and iris mortgage, represents 626,000,000 And total number of customers grew by 3 percent to 1784,000,000. In Spain, credit card business represents 40% Of the €2,100,000,000 60% are revolving, 20% of the total.
The rest of the cards are payable at the end of the month with a much better risk profile That finances customers. We continue to see good prospects for this business and feel very comfortable with the asset quality indicators of this riskier business. NPL ratio stands in June as 7.4% from 72% a year ago Or EUR 227,000,000 in total NPLs and cost of risk at 3.6% lower than the 5.3% in June 2020. This is a pure digital business with efficiency ratios of 21% in Portugal and less than 20% in Spain that we present to improve in the 3 geographies as soon as the economies start to recover. Continuing with Ireland.
They have started the to underwrite mortgages under the commercial name of Abant Money. This new activity has been able to increase the loan book by €125,000,000 year to date and has made possible to maintain a very good asset quality ratio with NPLs very low at 0.7 And cost of risk extremely low at 1.55 percent with a coverage provision of 400%. Portugal loan book grew by 6% to CHF 6,800,000,000 retail funds CHF 5,500,000,000 up 19% up. The loan book was again the growth in the loan book was again in corporate, 7% as well as in retail with a 5%. Off balance sheet Reached €3,900,000,000 a 14% increase.
As the income statement, operating income grew by 15%, Cost stay quite contained with a 4% growth in line with the plant's Efficiency and efficiency ratio, as I mentioned before, at 56% from 62% last year. All the above BRICS pre provisioning profit up very strong 33% sorry, 33% over June 2021. Finally, after €7,000,000 of normalized loan loss provisions, including a positive impact of €2,600,000 of extraordinary recovery, Portugal profit before taxes reached €26,000,000 of remarkable 50% increase from last year. Moving into Evo. Evo has been very much focused towards a significant increase in mortgage lending that has been reflected in a strong commercial activity.
New mortgages granted from December were a record of €376,000,000 This is 2.5x the origination of last year first half, Making the mortgage loan book to jump €1,500,000,000 Subsequently, net interest margin from customer activity jumped also 20% from June 20. Customer margin stands at 1.03, NPL at 1.06, Only €17,000,000 in NPLs with a coverage of 61%. Cost of risk is only 14 basis points. And then we're coming to an end. Just to recap, Our main achievements in the quarter, we believe, are, 1st of all, a very strong commercial activity reflected in volume growth with an increased pre provisioning profit growth In a very complex steel environment, we continue with our efforts in cost to remain under control to be able to support pre provisioning profit growth.
And we think we still have very strong solvency and liquidity levels with record liquidity levels and keeping a comfortable buffer from regulatory requirements ahead of the next EBA stress test. For the future, We also expect growth in all geographies: Portugal in both commercial and corporate banking Ireland to keep growing in mortgages and also recovering the consumer finance as well in Evo, in mortgage production and customer acquisition. We expect for Spain corporate loan book to recover from the impact of eco financing, thanks to increased activity and corporate demand after the summer as well as continued loan growth in mortgage lending and in other non mortgage retail lending. So at the end of the year, net interest income for the group will show at least low single digit growth despite difficult interest rate environment. The increase in activity in more stable markets will make fee income to continue grow in the range of mid single digit.
And we do expect group's operating income to grow in mid single digit. Cost should remain flattish in 2020, meaning more willingness to grow Incomes do the same or slightly higher if the expected performance is better than expected, With the objective of pre provisioning profit to remain resilient and improve the growth of 2020. And finally, Cost of risk after a very benign first half and with a very comfortable loan book with no need of additional provisions ahead of a slow Recovery scenario will range, as I did mention before, between 40 50 basis points at the end of the year. And now I am very happy to take your questions. Thank you very much.
Thank you, Jacobo. We probably had a follow-up some follow-up questions already. We you had just mentioned, you had I'll answer many of those, but nevertheless, let's refrain. Can you do just a very quick recap on the outlook for the main P and L lines for the end of the year and also just Quick confirmation on the changes of the guidance that we have already commented on.
Sorry, I did I have my microphone off. I will come back again. Net interest income for the group will show at least Low single digit growth despite the difficult interest environment interest rate environment. Fee income. We continue to grow or to expect growth in the range of mid single digit.
Group's operating income, We expect in the mid single digit like in 2020. Group's cost, we expect to keep them flattish Or slightly higher if the performance is better than expected. And pre provisioning profit, we Expect to remain resilient and improve the growth that we saw in 2020. And cost of risk at 40 to 50 basis points. And I think that your question is which are the main changes, and I basically will focus on the cost of risk.
Cost of risk guidance has been changing across the year. We started in January sharing with you our expectation of a figure around 60 basis points In the Q1, in April, I'm trying to be some prudent because it's still too early With this current macro scenario, we share with you guidance of a range between 50 60 basis points. Today, in July, we reduced our guidance for the year, again, in a range of 40 to 50 basis And this is only based on the reality that we are seeing today in the institution where the cost of risk is much better than expected. And Even if we do expect a slight deterioration in months ahead due to just prudent activity, This is the reason why we think it will be in 40 somewhere between 40 to 50 basis points.
Thank you. Very clear. Any visibility for 2022? You know I had to make this answer.
I know. It is As far as the impact of the Costa Briestis is delaying or lagging, we should Say that 2022 should be even better than 2021. The most diluted is the impact of this crisis, The better impact we'll have on NPLs. As we share with you, NPLs are not growing as we were They have grown just €50,000,000 in the year. In opposite, what we're trying to be prudent is Increasing the Stage 2 positions that, as you've seen, they have increased by around €500,000,000 end of year, And these are the main catalysts of the cost of risk of this year.
Thank you. Moving now on loan growth. We had a few questions on what are the main drivers of the performance in the quarter.
Okay. So Yes. The loan book has grown in all the geographies and in all the business, Even from an annual comparison, but also from a quarterly comparison. That means that we have grown In this quarter, the book of the group by €2,200,000,000 which is 3.5%. From an annual perspective, we have grown 5%, which is 3,300,000,000 and since December, we have grown 2,500,000,000, which is almost 4%.
We have grown in all geographies. In Spain, this quarter, we've grown almost 1,800,000,000, 3%. We have grown in Portugal, 2% in Ireland, 17% in Evo, 12%, etcetera, etcetera, even in consumer finance. So the perception is that this quarter has been extremely good. There is no reason why we should change our perspective in the future.
The businesses where we've been putting more focus are, as you know, mortgages. Mortgages have Present new production record high in this quarter with very good performance in Spain, In Ireland, in Evo and in Portugal, we have a new production of more than €3,000,000,000 for the first time ever, And the quarter has been a new record. In consumer finance, what we've seen is there is a slight recovery in this business. And I'm sure that in This Q3, especially in Ireland, we will see a much better activity. This is basically because The lockdown has been longer that, for example, that in other countries.
So we do expect positive news in this quarter. And the use of credit cards is also a reality, and this is something that you see just in the fees. The level of fees of payment and collection is clearly increasing. In loans, of course, in consumer finance, loans are growing. And as I did mention, There is a strong focus in bank Indore clients, which have much better risk profile, and this is the reason why the book is growing.
And let me end up with corporates. Corporates, we have perceived in Spain since the end of the lockdown or since the end of The state of Alvaro in Spain in mid May that there is a recovery in transaction activity and in working capital funds. So international business has also improved during the last part of the second quarter. And that also we've seen that these Ecolines have extended their maturity and the grace period and has supported the level of the loan book.
Okay. We had a few follow ups on specifically on the corporate book. What are your expectations in terms of the reaching the target for TLTRO, the benchmark that we have by the end of this year and also your expectations in terms of next generation funds for loan growth in the corporate book.
Okay. In terms of complying with the TELTRO program, as of today, we We are largely compliant, so this is not a concern as of today. So there is a prospect that we, of Of course, we will meet the requirements of this Telstra program without any concern. Related to the next generation EU funds, We know there have been orders very close to release a very small amount of these funds. We are optimistic about a larger release of funds in the 2nd part of the year, Although we think this will happen at the end of the year, so I guess that in the Q4, We will get we will have a much better idea or probably a much better sense of what will be the impact.
We are optimistic because the funds are there, and we know that the funds will come. But in terms of timing, we have more uncertainty, and we do expect Some sign ups probably at the Q4 of this year.
Very clear. To finish off with the corporate book, Can you put some color on the extensions on the eco loans? Yes.
Regarding the eco loans, That you know, we have limits of €8,800,000,000 and disbursed around 75%, which is 6.6 At Lilian, we have extended either the term of the loan or either the grace period For around 38% of those amounted figures, okay? I believe this is not a very high figure. There are benchmarks that we know that the average We might be above 50%, so we feel very comfortable with the level that we have achieved of additional extensions. Let me remind you that the grace period Now comes to a 2 year period, and the first maturities of that we will see in probably the Q2 of next year. And the terms of the loans have been extended up to 8 years as the largest.
Thank you. Moving now on to revenues. We had a few follow ups on the NII performance in the quarter. You can go through the moving parts in the quarter.
Yes. In this quarter, we have several impact. The first of them, which is the contrary of what we said in the Q1, is the number of days. So this quarter has a larger number of days than the first one. So this is the first Contributor.
Then we have a larger production in mortgages that we have shared with you has been a new record high. These mortgages have been largely at a fixed rate, and that provides another additional boost That help us to compensate the repricing or the negative repricing of the variable rate mortgage portfolio. Also, As we did mention, we have a higher level of credit and short term funding to our corporate banking business. That means that we have a much better mix in Corporate Banking than we used to have in previous quarter and a very good rate. In addition, we have we are continuing to recover the cost of deposits from Institutional client, our largest corporations, and again, this is an additional figure.
And due to the extension of the ECOS, we also have new income of the updating of the process of the loans that have been extended. Those elements provides a much better profile of the net interest income in this Teltro from an annual perspective Teltro in an annual perspective is providing probably €20,000,000 more in the Total 21 compared to the total 22. So this is more or less The main topics that are contributing to the growth in this quarter.
Okay. Can you quantify the impact on the NII specifically on the extensions of the eco loans? And also flipping the coin, whether there's any impact also on the fee income.
Yes, of course. The cost of the new extensions have been around €7,000,000 which are in fees payable or payable fees, around €7,000,000 And the exact same figure It's recorded as higher net interest income. Of course, we have updated all these costs, but we have reflected All these cuts in our clients' position, and this has generated impact of a positive €7,000,000 And of course, positions of these Extended ECO transactions have been updated for the future as well as at the cost.
Excellent. Few more questions on revenues here. Can you confirm by how much increase the contribution to the Single Resolution Fund this year.
For the group, it's been around €41,000,000 42,000,000 in this quarter, which is again Around €6,000,000 more than a year ago. Can you confirm if we're already accounting for the dividend of Linea EBITDA in Q2? 2? Yes. We have recorded in the dividends line around €4,600,000 in dividend.
Yesterday, Linea Directa published their first time results and Mentioned that the payout of this dividend has been 90%. So this is good news.
Moving now on to asset quality. We had a couple of questions regarding the do we have any updates on the moratoriums in Portugal?
Yes. I mean, moratoriums in Portugal are improving. We have, as of today, Around CHF200 1,000,000 less than we have at the beginning. Today, only 11% Of the mortgage portfolio is under moratorium, just to be close to €15,000,000 We are today, as I did mention, at €5 €12,000,000 of mortgages under moratorium. And in the corporate loan book, it has €365,000,000 Under moratorium, yes.
The total accounts for below €900,000,000 while the original value was Almost €1,050,000,000 That means that it has been reduced somewhere around €150,000,000 €200,000,000 in this period.
Perfect. Regarding credit provisions, whether you can explain why are they going up in the quarter, quarter on quarter, obviously?
Yes. From NPL point perspective, NPLs are growing due to consumer finance. But from a Stage 2 performance, which is how to be prudent in case things are deteriorating in the future, we are Trying to put more focus on the corporate of the corporate world. Therefore, Around I mean, the majority of the cost of risk, I mean, there is a large proportion of corporates. I would say around, I don't know, 50% are corporate cost of risk and around 40% of consumer finance cost of risk.
But basically, the amount of Stage 2 positions are focused on the corporate world.
Okay. What would be the outlook in terms of peak of NPLs for the end of this year? And also, yes, related to that, the cost of risk trend for the second half.
Again, we are in a various uncertain macro scenario. It's very difficult for us. We want to be we prefer to be prudent. And if we had a €50,000,000 increase in the 1st part of the year, I would believe that the NPS might growth in the 2nd part of the year somewhere between EUR 50,000,000 and EUR 100,000,000. This is our best guess right now, but I think it's still too early to know which is a good figure for that.
That's why we wanted to reduce the cost of risk guidance that we shared with you to 40 to 50 basis points. And that's why We think that the 3rd quarter and the 4th quarter should have a higher cost of risk because the level of uncertainty It's still very high, and we prefer to be prudent.
Thank you. In terms of other provisions and litigation, what can we expect from the next following quarters?
Yes. Litigation costs are known mainly from the FX mortgage book. These provisions are as We do see since 2 years ago, it's a slight decrease, somewhere between 10% 20% year after year. So this mortgage affects litigation risk is slowly reducing, although it is the majority Of the provision and therefore volumes are not I mean they go down very, very slowly. We do have The revolving issue litigation and we do have the mortgage expenses litigations that is still uncertain For the end of the year, we should expect anyway a slight reduction.
In total year, it should be lower than the previous year, somewhere between 10% 20%. But again, the path of reduction will be slow.
Okay. We move to capital now. First question, well, related to the spin off of Linea Erecta, whether you can confirm if we had booked any positive mark to market of the Linea Erecta stake and also the total impact of the spin off.
Yes. The total impact In basis points of the spin off is 5 basis points. And yes, there is a revaluation Of the Linea Directa, since the as you know, the accounting value at the spin off date was around EUR 250,000,000. Today, this value is somewhere around €330,000,000 €340,000,000 and therefore, there is a revaluation That is share under the insurance and others bucket that we have put in our slide. I remind you that also the increase in the valuation of this stake increased the risk weighted assets.
So there is a net effect between The unrealized gains, which have increased and the higher risk weighted assets coming from the consumption of this participation. Okay. We had a question about what are
the main drivers of the risk weighted assets in the quarter and also if any other moving parts that you want to highlight, Capita.
Okay. So in the quarter, Mainly, we have the return on earnings and the 5 basis points Linea Directa contribution spin off. As we did mention, the ALCO portfolio has been deteriorated. And in your bucket, you will see 4 basis points negative impact. The IRB is basically stable the IRB deficits, sorry, and the new regulations.
And we have the insurance and other, we have But positive effect, which is exactly what I did just mention about the revaluation of the stake of Linea Directa, slightly compensated with the higher consumption of this stake. And in the quarter, we have also the consumption, the risk weighted asset consumption of the growth Of the loan book, which has been extremely high. There is, in combination with this higher consumption in this quarter Of the book and now as I did mention also, there is a strong corporate banking growth there with a higher consumption than, for example, the mortgage There is also an increase in the counterparty risk and the market risk, which should be I mean, one off impact due to the new articles in the BRDD, which doesn't really Make huge difference.
Regarding dividends, two questions.
How much dividend accrual are we doing? And also what are your expectations, your views on dividend payments. Dividend accrual is at 50%, five-zero percent. We've been doing this since the Q1, so we have Total accrual of 50% for the half the first half of the year. Regarding the distribution of dividends, I do believe that tomorrow, there will be public information about dividends, and We of course, whatever will be allowed, this is something that we will do and we will respect.
So we will need to wait until tomorrow, although as you can imagine, we are optimistic about the possibility of distributing dividends. Thank you.
Can you remind us of what's our capital target?
We normally provide a guidance, capital CET1 ratio of 11.5. We know that today why we are higher due to the current environment situation. And today, we are we were at 12.3 percent. Today, we have our 12.2 percent. Both figures are extremely high for us due to our risk profile.
We are very comfortable With these levels, we think we will be navigating with figures above 12% for the coming quarters until the environment comes back to a total normalization.
Okay. Two last questions, promise. Private Banking, what are your growth expectations for the second half?
For Private Banking, if markets Volatility, respect us, and there are no major surprises or no major uncertainty regarding markets. We do Still view positive second half of the year. We think with all our growth is based on commercial activity, is on commercial Onboarding of new clients, and there is no reason why this should change in the 2nd part of the year. We have reached a very good performance. We are acquiring a good number of new clients.
We are able to switch a lot of account balances resources into value Products like mutual funds, investment funds, even stocks, Etcetera, our discretionary portfolios, unit links. So we have a good set of products adapted for the private banking activity, which are successful, and there is no reason why we should change sorry, why we should see any change in this perspective.
And last one, any thoughts on the 2023 targets after this first half?
Our only thought is to comply with our commitment Of reaching in 2023 our 2019 net income figure of €550,000,000 We think this is an achievable target. It's not going to be easy, of course, but I think we are Fully committed the entire organization to reach this target. There is The efficiency ratio, I think it's key to reach this target, and I think that we are delivering good results in efficiency ratio That will provide pre provisioning profits growth to be able to reach that figure. We've seen that like Portugal is improving very well efficiency ratio. We've seen Spain, which is performing very, very well.
We see a good trend in Evo, and we see good trends in Ireland. So as far as we meet a good efficiency ratio that we Commit to around 43% by 2023. I'm sure that we will meet that target. And Rest assured that we'll do everything to reach that 2023 public commitment. Excellent.
Thank you, Jacobo. Thank you, everyone, for joining us today. That was all from us. Feel free, obviously, as usual, to contact the Investor Relations teams for any further questions. Many thanks, and goodbye.
Thank you very much, all of you. We are open to any questions since now in our usual Thanks to the IR team of Bankinter, Alfonso and David that have once again performed an outstanding job. Thank you very much, and keep safe. Bye bye. See you in October.