Good morning, everyone, and welcome to Bankinter First Quarter Earnings Call. Our CFO, Jacob O'Diet, will now explain in detail the results of this quarter. Thank you.
Good morning, everybody, and welcome to this presentation of Banciente's earnings for the Q1 of 20 21. The related financial statements were posted on the website of the CNMV a few minutes ago quarter. All related documents can also be found at this time on the Banquinter corporate website. Call. First, I want to emphasize that we have started 2021 with a very strong commercial performance.
This is reflected in main balance sheet volumes growth and subsequently in pre provisioning profit growth. We see this as a remarkable performance considering the continued special circumstances of the beginning of the year We have been able to maintain continued growth in the bank's balance sheet, in our loan portfolio, in retail deposits and particularly in this quarter in assets under management. Call. Therefore, our net interest and fee income were able to post growth despite the current environment. We continue to show a solid asset quality and solvency with flat NPLs year to date, increased coverage of provisions This is a brief comparison year on year in our key financial indicators.
Group's total loan book grew by almost 6% to €65,000,000,000 quarter. Thanks to the strong corporate demand in 2020 and the mortgage loan book growth, particularly in this quarter, while consumer finance continued to show some contraction. Gross operating income at €465,000,000 grew by close to 7% with respect to last year, showing a strong resilience in incomes coming from the business and the positive trading income contribution quarter. After our quarterly seasonal cost reduction that makes easy to keep costs under control, the pre provisioning profit post an improved growth rate over 6% in still difficult environment. NPL ratio shows no change in line with all our asset quality indicator quarter.
Despite the difficult economic situation at 2.37%, same as December 2020, it just dropped 21 basis points from a year ago. Coverage ratio after the recorded extraordinary provisions of last year now stands at 62%, quarter. 13 points increase over the previous year. Group's net profit stand at €148,000,000 a 14% increase from a year ago. Our CET1 fully loaded capital ratio remained flat at 12.3% despite a 50% approx reserve on dividends.
It stands comfortably 88 basis points above last year and our long term guidance of quarter. Our return on equity reflects this improved performance as shows 11.3%, clearly ahead of that of our domestic competitors and above our cost of capital. Call. We will follow the usual agenda for quarterly presentations. First, our quarterly results, then risk management to end with a review of the business in the period.
Here are the group's P and L accounts for the Q1 2021. Our income statement continued to show positive trends in the two main lines of revenue, net interest income and fee income. Group. Group's net interest income maintains a positive trend despite the negative seasonality and adjusted by a lower number of days in the quarter. Year.
Year on year growth is a reflection of our lending growth and client margin resilience. It's up 1.3% from 2020. Better market environment and increased commercial activity did support our fee income. Fee income grew by 5.6 percent with respect to the previous year. Other operating income and expenses at €23,300,000 were much higher than a year ago quarter due to a better trading income in the quarter and the exceptional bad quarter in 2020 from the trading activity.
Quarter. Total gross operating income at €465,000,000 went up by 6.6% from 2020. Evo and Avan Money contribution to group's income was €20,000,000 It grew by 34% from last quarter. The quality of income growth remains very high with a lower contribution from Portugal Extraordinary Income. Group.
Group operating costs continue to be under control in Spain and Portugal. Thus, the group continued to improve its efficiency. Costs from Evo and Avan money operations are now fully comparable. In total, they grew only by €1,000,000 year on year or only 4.7%. The group's total cost grew by 7% with respect to previous year, mainly due to personnel expenses that went up by over 12%, quarter, only due to a EUR17 1,000,000 regularization in Q1 2020 but went down by more than 9% over the previous quarter.
Quarter. General and administrative expenses are under control with the less than 1% increase in respect to a year ago and the previous quarter. Quarter. This positive income and cost performance through the year allowed pre provisioning profit to increase by 6.4% from a year ago. Loan loans and other provisions are down 4.6% from 2020.
After the small decrease in provisions, Pretax profits for the banking activity stands at €161,000,000 or 14.7 percent above that of 2020. Pretax profits coming from Linea Directa LDA brings an additional €39,000,000 to the group in the quarter quarter or an increase of 2.2% from 2020. This shows a steady performance of insurance business in a more difficult environment that we will analyze, quarter, most probably for the last time later on this presentation. After taxes, the group posted a net profit of €148,000,000 quarter, an increase of 13.8% from a year ago. All in all, the banking business, after closing the Q1, has been in line with our plan for the year In almost all incomes, volumes, cost and the recurrent cost of risk, group's pre provisioning profit growing at 6 point 4% clearly indicates the resilient growth in all of our customer activities and geographies.
However, The necessary caution of the future evolution of credit risk models under this slow recovery scenario had made us to fine tune the guidance of cost of risk for the full year to range it in 50 to 60 basis points, comparing to the 60 basis points that we provide in previous quarter as guidance for the year. Here, we present the quarterly P and L, which shows the usual 4th quarter positive seasonality in incomes and the offset of the fund of the guarantee fund charges booked on the same quarter. Those Q1 comparison of different years gives a better view. This is why we bring Q1 of 2020 and Q1 on 2019 for comparison. Thus, we can see a very positive operating income growth pattern, up 6.6% and 15.3% respectively, quarter.
While operating costs increased by 6.7% and 12.7% in the same period, those pre provisioning profit increased by 6 point 4% and 17.3%, respectively. After the very different credit risk provision, 2021 provisions doubled those of 2019. Profit before taxes of banking activity has been up by 14.7% in respect to Q1 of 2020 and quarter, only 5% in respect to Q1 2019. Finally, group's net profit came to EUR148,000,000 in 'twenty one versus 130 in 'twenty and 145 in 2019 prior to the COVID-nineteen crisis. Call.
The pre provisioning profit increased by 41.7% from last quarter after provisioning quarterly comparison of profit before taxes of the banking activities over 2x that of 2020. Comparison with the previous quarter is not relevant due to the impact of the regulatory charges. Let's move to the balance sheet. The group's loan book grew by 5.8% from a year ago, Bringing 3,500,000,000 in new loans in the new year to reach €64,600,000,000 growth in the quarter of €258,000,000 comes from mostly from our mortgage business, including Evo, Banco in Spain and also in Portugal and Ireland during this period. At the same time and as expected, demand in corporates and SMEs shows negative impact quarter after the end of the government programs for providing liquidity to the economy.
1st quarter always see a drop in lending from the high activity in the last quarter of the year in corporate loans. This year, mortgage lending to individuals maintained the high level of the 4th quarter, as we will see later in the presentation. On the other hand, consumer loan book continued to fall with weak demand and stricter requirements in the new production. In net terms, this 4th quarter loan book grew by €8,000,000 including other geographies, mainly in mortgages, personal loans and loans to corporate basically in Portugal. Quarter.
In Spain, lending growth maintained a pattern from the previous quarter. It grew by 5% year on year, well over 2.6% of the sector as of February 21, bringing market share increases in both household and corporate loan book. For corporates, loan growth has been 9.2 percent year on year or €2,200,000,000 This growth was different by segment but very well balanced: large corporates quarter, adding €700,000,000 mid corporates €900,000,000 and SMEs €600,000,000 mainly with the eco guarantee credit lines. In Portugal, lending is up by 7% from a year ago with an additional €574,000,000 or up 4% from last December, slightly ahead of our business plan. Retail deposits continued to perform strongly in all geographies at 11.2% year on year and €6,600,000,000 to €65,900,000,000 They were up by 11.4% in Spain from a year ago, while market grew by 9.2%, bringing quarter.
Bankinter market share on domestic deposits to 3.9 with the last available data of February 21. In Portugal, deposits grew by 5% in the quarter Our €238,000,000 also grew by 10% year on year to reach €5,000,000,000 Moving on. Net interest income continued to show a good resilience. It grew by 1.3% over the same quarter quarter a year ago and reduced only by 2.6% from last quarter. This is mainly due to being able to reduce by over 4% the year interest expenses, cost of deposits and debt, while keeping almost flat the interest earned, thanks to volume and asset yield resilience.
The contribution of EVO and AVAN money to our net interest income continued to be small. They contributed with 18,500,000 euros to the group's net interest income this quarter versus €19,600,000 the same quarter last year. In Portugal, net interest income also grew by 5.7% and by just 0.8% with respect to the previous quarter, with a small impact quarter from extraordinary recoveries in the quarter. The proven resilience in the net interest income is mainly driven by loan book growth, together with keeping stable customer margin as we will see it. Customer margin improved by 1 basis point from last quarter, thanks to the flat credit yield and 1 basis point reduction in the cost of deposit.
The 15 basis points decrease year on year is mainly due to the reduction in consumer finance yields, Together with important reduction in the U. S. Dollar LIBOR reference rate in our international business, cost of deposits helped with an additional 3 basis points improvement in the year. After the year, with the cost of deposits at all time lows, We believe that stable credit yields are the key to our customer margin to remain resilient in the coming quarters. We continue with a positive Prepricing of yields of the mortgage loan book, front versus back book yields and also some asset mix improvement in corporate lending with more weight in working capital.
Group's ALCO portfolio showed a small change in the quarter after a more volatile bonds market But with a lower fair value portfolio, unrealized gains of the portfolio now amount to approximately EUR630,000,000 slightly down from year end. Out of this, capital gains 81% sits on the amortized portfolio with no impact in the capital ratio, and the remaining 19% correspond to the portfolio at fair value with a small impact in capital, as we will see later. Quarter. Moving to the fee income. Fee income performed in line with our guidance for the full year after the Q1 with the usual seasonal lower activity levels.
Quarter. Those quarterly fee income was €8,000,000 below the previous quarter, and it continued to show growth of 6% over the same quarter last year. Fee income from our recurrent customer business continued to grow except payment and collection as in previous quarter due to the slowdown in the activity. On the other hand, assets under management volumes enjoyed a very good quarter, and this is reflected in the strong 15% improvement from last year fees. Quarter.
Total net fees account for 28% of our gross operating income. The largest contributor to our fees with €44,000,000 in the quarter continues to be asset management fees. 26% of total fees charged and up by 15%. A strong commercial activity brings our assets under management to record level at the end of the quarter. The 2nd larger contributor to fees, €27,000,000 is payments and collection from corporates and individuals.
Performance has been clearly impacted by the slowdown in the economy quarter. In consumption, despite this environment, it has been limited to a 10% decrease and improving from last year drops. Quarter. After 1 year of very positive trend in fees from bond and equity trading in our broker online, quarter. It's still growing at 9% to €24,000,000 in the quarter.
Other relevant fees, our FX business with customers, It went up by 15% from a year ago on the back of international trading and third party mutual fund subscription. Then a very stable life insurance and pension fund sales brings fees up 2%. And finally, risk related transactions and other fees result. Moving on in other operating income and expenses. Here, you can see the main components of these lines.
The €30,000,000 Of trading income plus dividends this year increased by almost 24% from last year to higher trading volumes And the 80% increase in regulatory charges, or €6,000,000, weighted on the other expenses for the quarter, totaling €13,000,000 of euros quarter or almost 2x the charge for a year ago. Gross operating income quarter. For the quarter, it stood at €465,000,000 an increase of almost 7% from a year ago. Quarterly comparison also grew by quarter, 13% from the previous quarter and by 15% from Q1 2019. In Portugal, gross operating income grew by 9.8% from last year and quarterly grew by 3.6% from December, following the improved trend of recurrent business in our Portugal Portuguese franchise.
The chart on the right shows the breakdown of the contribution to incomes without Linea Directa. Net interest income represents 67% and fees reached 28%. Group operating costs in the quarter totaled €202,000,000 They are quarter, up 7% from the previous year but down by €25,000,000 or 11% from last quarter. Operating costs from Evo and Avan money was EUR 46,000,000 growing by only EUR 1,000,000 from a year ago. Without them, costs would have been growing at quarter.
8.6% in Spain. Portugal costs are down by 2% over the last year. Personal expenses are up quarter, mainly to the one off adjustment of the incentives recorded in the Q1 of 2020. General and administrative expenses plus amortizations are under control, only growing by 1% over last year. Our recurrent banking efficiency continued to improve in the quarter.
The group's cost to income dropped 117 percentage points quarter. From December 2020 to 43.4% and remained flat from March 2020 at levels close to 43%. We plan to keep the long term banking cost to income below 45%, always trying to improve efficiency in all our businesses. We continue to do so in Portugal, now with efficiency at 55% and in Avon Money at 62%. Evo still in negative efficiency.
However, our Spanish business stand alone runs at 38% efficiency ratio. One. With all this, the pre provisioning profit show a quarterly record at £263,000,000 6% up from 2020 and more relevant, more than 17% ahead of that in 2019 prior to the COVID-nineteen crisis and part of the record full year of banking during net profit, €551,000,000 in 2019. Quarter. Now let's look at the cost of risk.
Total recurrent cost of risk in the quarter finished at 35 basis points of total credit exposure with an increase of 5 basis points from December and only 1 basis points from the Q1 last year, market, still in a very contained trend. It's remained almost flat year on year due to NPL ratio evolution. The increase came only from our consumer finance loan book and the rest remained almost stable In personal lending, mortgages and large and mid corporates, the small growth in SMEs is still not significant. It is probably affected by the extension of the government's support programs. We expect this good behavior in the Q1 to be extended to the 2nd quarter at his heartbeat in April.
However, we have been anticipating some Stage 2 migration for the second half of the year, more difficult in consumer finance as well in the smallmedium side enterprises. The increase in the quarter of 5 basis points was only in Spain And again, related to the consumer finance activity, therefore, the SME's loan book, the commercial banking loan book as well as the large and mid corporate loan book quarter. It is probably too early to anticipate what will be the impact The beginning of maturities in the mortgage moratorium and the equal liquidity lines for SMEs and corporates, both in Spain and Portugal. But just a reminder, the use of the public and private moratoriums for individual in our Spanish portfolio was limited to less than 2% of the total portfolio and up to 15% in Portugal or €1,100,000,000 including SMEs. Quarter.
As we see these things today, 2021 will show an increase of recurring cost of risk in the second half call that will bring our cost of risk for the full year somewhere between 50 60 basis points, down from last year. After provisions, group net income stood at €148,000,000 up 14% quarter. And 2% up from that of the Q1 of 2019, the record year so far in profits. As we have made public recently, we expect the group 2019 level of net profits to be matched at year end 2023 once the expected recovery in the economy provoked asset quality to normalize as well as the growth of our recurrent business. At the end of the quarter, group's return on equity stands at 11.3%, still with high provisioning.
Once we exclude LDA contribution from May 2021, we group's return on equity to improve at year end the levels of last year excluding extraordinary provision. Quarter. In this chart, we see the evolution of our tangible book value per share at €5.33 With a solid growth of 1.7% in the quarter, probably again best in class in our domestic banking sector. Quarter. And now I will move into our management credit risk, liquidity and solvency section.
Call. Nonperforming loans continued their downward trend. And despite a difficult start of the year in an economic cycle, we have been able to show a stable number. Total NPLs went down by 3.4% from March 'twenty, mainly due to the last year annual NPL sales in consumer finance. Year.
Year to date, NPLs remained flat at €1,690,000,000 Total group NPLs grew by only €7,000,000 in the quarter. Of this growth, 27% came from our consumer finance business and other business in Spain, came down as a reduction. Portugal NPLs Portuguese NPLs came also down €6,000,000 Ava money in Ireland brings only EUR 0.9000000 and Evo only EUR 0.2000000. Therefore, the growth in consumer finance NPLs in Spain was mainly offset by reduction in the rest of the business segments. The group's NPL ratio remained at 2.37%, €2,000,000 sale of NPLs in consumer finance.
In Spain, NPL stands at 2.44%, quarter, 19 basis points below last year and 2 up from December 2020. This ratio continues to be way down from the sector average at 4.54 last data of January 21. In Portugal, NPL ratio declined to 2.03 or only 144,000,000 of NPLs. Quarter. And as shown in the chart on the right, the group's NPL ratio went down to 2.2% for households, Same level as in December, a decrease is to 2.8% for corporates and SMEs.
Total provisions for nonperforming assets increased consequently after the extra provisioning of 2020 to €1,200,000,000 quarter, an 18% increase from last year and 2% since December. All this had a relevant impact on provisions coverage, which now quarter. The increase in the quarter stands at 62% from 49% a year ago. Coverage for foreclosed assets were also improved to 50%, 11.5 points more than sorry, an 11.5% increase and clearly above the average discount of our sold assets. The group's foreclosed asset portfolio in the following slide It's 21% smaller than a year ago.
It decreased by €58,000,000 This small portfolio now amounts to €216,000,000 coming from 2/27 last year end. Total sales in the quarter amount to 20,000,000 or 9% of the stock at the beginning of the year. We sell most of our repossessed assets through our commercial network with an average discount on sale stables of 38% below their provision coverage. Let's move into capital. Our fully loaded CET1 ratio finished the quarter flat at 12.3%, a small decrease of 1 basis point from last quarter and 82 basis point from a year ago.
Since December 20, our retained earnings bring an increase of 19 basis points, taking into consideration the accrual of dividends are approximately 50% of earnings. Capital consumption of risk weighted assets has been limited to 7 quarter. Basis points due to the flattish loan book. Valuation adjustments bring a small negative three basis points due to market volatility in our ALCO portfolio And insurance decreases by 10% points due to the deduction of the accumulated profits of Linea Directa before the dividend distribution to be recorded in April. Also, the new default definition with a negative 6 basis contribution together with the anticipated implementation of new IRB parameters in our internal rated base models with another quarter.
8 basis points negative brings a total of 14 basis points negative impact in the quarter. Quarter. Total capital ratio remained at 15%, very comfortable level and the leverage ratio at 5%. Quarter. Finally, the ratio the 21.6% ratio of risk weighted assets for the MREL We remain well ahead the 18.7% requirement for 2022.
In the next slide. We got continued increases in our customer deposit have brought our funding gap to negative since the end of 2020. Those the relevant negative gap in Spain more than offset the gap coming from Portugal and Ireland. [SPEAKER IGNACIO CUENCA ARAMBARRI:] As a result, loan to deposit ratio reached record level of 95.9%. As of the Telcos and after the last auction in late March, with a new take of €1,300,000,000 total stake now stands at €14,200,000,000 Now let's move and let's review the performance of our business line in their respective contribution to the P and L.
Call. I will skip directly to the banking activity. Over the last few years, we have been working and investing to improve the diversification of income sources. We have reached a well balance between the main contributors. Corporate and commercial banking together represent over 60%, with now 13% coming from our consumer finance subsidiary despite the recent loan contraction, together with 8% that represent Portugal income, 6% of investment banking, 3% of Ireland business and 1% of the NIEVO.
Okay. Moving on. The corporate and SME loan book in Spain and Portugal grew by 8% over the year or over €2,000,000,000 in the year. It increased by almost 8% in Spain, while the sector grew at 8.8 year on year, but only this data is as of February 21, which is the last data available. All this growth started during the Q2 of quarter.
With the government guarantee Ecolines, after the summer, there has been a slowdown in corporate loan demand, only improved by the December pickup and followed by the seasonal reduction of 1st quarters. In Spain, during the Q1 of 'twenty one, like every year, loan book declined by €500,000,000 quarter. 1.7%. Despite this seasonal decline, we have increased our market share to 5.2%. Quarter.
Net loan growth over March last year by business segment has been as follows: EUR 60 sorry, EUR 683,000,000 From large corporates, 913 in mid and 5 72 in S and Es. Quarter. Portugal, where we have been growing our market share in corporate lending, it now extends at 2.13% or 15 basis points, up from a year ago. Let's do a quick review of the 3 most important sources of income of the corporate segment. International Trade and Supply Chain Finance continued to strengthen loan book in short term international working capital finance.
Balance remained almost flat from the end of last year. Transactional business turnover with corporate customers continued down in the period due to the lower economic activity. Still, it generates €28,000,000 in incomes in the quarter. Quarter. And finally, Investment Banking has started once more this year with a very good performance in revenues for Corporate Banking.
In the quarter, it generated €20,000,000 22% more than a year ago. The loan book stands €3,700,000,000 has grown by 25 quarter. And the reproduction in the quarter was almost €300,000,000 In this slide, We show bank inter participation in the government guaranteed ECO lines for corporate and SMEs. Total ECO loans with the state guaranteed disburse were €6,300,000,000 All these loans have been greater mainly in medium and small corporates. Total of €8,700,000,000 of eco loans have been signed with Bank quarter.
Our moratoriums for mortgages and consumer finance to individuals amount are Still very small in Spain and represents only 1.8% of the total loan book. NPLs on amortized ones has been €4,700,000 or €25,000,000 And for the current ones, NPL stands at €0.39. Moratoriums in consumer finance are negligible in both Spain and Ireland, only €3,000,000 In Portugal, where moratoriums were more relevant and include corporate loans as well, they represent 14% of total portfolio. Our asset management business maintained its growth trend in the 3 categories: mutual funds, year. 26% up pension funds 21% and CCAPs 29%.
In mutual funds, net new money in the Q1 has been a strong and record €1,100,000,000 that, together with the positive market effect, brings the total to €25,500,000,000 a new record. All this commercial activity in Spain is based on a strong customer acquisition, growing 34% year on year quarter, 8% in number of active clients. In Wealth Management, in the next slide, customer assets increased strongly from last quarter due again to the strong commercial activity together with a positive market effect. Adding both business, Private and Personal Banking, Assets under management increased by almost €14,000,000,000 in Petro Money this year. Quarter.
The strong commercial activity measured by net new money in the quarter shows a total of €3,700,000,000 increase, 2.4 percent in Private Banking and 1.3 percent in Personal Banking. Moving into our activity in the commercial Retail Banking during the quarter, again, very strong. Salary account balances continued to grow. They are up by 25% from a year ago. Quarter.
And since December, they grew by €800,000,000 Mortgage origination in the quarter of €932,000,000 outperformed that of last quarter and represent quarter. 44% from the Q1 of 2020 and even more than 2020 sorry, than 2019. So our market share in new mortgages is now around 6.5% as of January 21. The total mortgage back book keep growing and reached almost €28,000,000,000 an increase of 3.2% while the rest of the market continues to shrink. The loan to value of the total bank book stands at a comfortable 54%.
Now let's move to Portugal. Loan book grew by 7% to €6,700,000,000 and retail funds at €5,000,000,000 up growth. 10% from a year ago. So growth in loan book was in both corporates, up 13% as well as in retail lending, 5%. Off balance sheet reached EUR 3,800,000,000 and 21% increase from last year, again, a very, very strong figure.
Call. The balance sheet growth is due to the record growth of new customers in Retail Banking. As the income statement, quarter. Operating income from the business grew by 10%. Costs show a 2% reduction efficiency ratio of 55% and has become the 5th region in operating income contribution to the group.
Moving to Banquinter Consumer Finance. Quarter. At the other quarter, loan book was €2,900,000,000 almost flat from a year ago. The geographical breakdown of the total loan book includes quarter. €525,000,000 from Ireland from Avan Money, growing €31,000,000 in the quarter and €262,000,000 from EUR 2,000,000 from Argentina and Portugal growing by EUR 12,000,000 in the quarter.
And the rest is EUR 2,100,000,000 in Spain, where the loan book contracted just EUR 8,000,000. So let's see the breakdown by type of financing and the different behavior. Personal loans represent 59% of total, growing by 3%. Quarter. Zagtor credit cards outstanding represents 38% of total and €600,000,000 with flat growth and revolving credit cards at 17% quarter.
Of total are less than €500,000,000 and went down by 16%. New home mortgage production from Ireland With €76,000,000 since September represents only 2.6% of the total book. Quarter. The total new credit origination, mainly in personal loans, represent only €283,000,000 and total number of customers grew by 2% to €1,760,000 In Spain, credit card business represents 40% of the €2,100,000,000 of total loan book and revolving credit cards, only 24% of total. The rest of the cards are payable at the end of the month with a much better risk profile debt financed customers.
We continue to feel very comfortable with the asset quality of this riskier business. NPL ratio As of March 20, it stands at 7% from 8.6% in the Q1 of 2019, 2 years ago. Provision coverage is close to 100%, cost of risk at 3.5%, still below 2019 when our loan book was quarter. 40% smaller. And when the risk adjusted return was 18% higher due to the yields over 20% in revolving credit cards, we anymore in our books.
Also to be mentioned regarding risk adjusted return is that at the end of September last year, we have started to lend mortgages under the new name of Avant Money in Ireland. Plans are to increase production in 2021. Call. We have reached €56,000,000 during the Q1 of the year. This new activity has been able to increase the loan book by 10% and at the same time, maintain and even improve their very good asset quality ratios: NPLs at year.
0.98, coverage, 353,000 and cost of risk, 1.76%. Moving into Evo. New mortgages granted from December 20 were €179,000,000 This is 2.3x The origination of last year Q1 making mortgage loan book to jump since March 20 by over €400,000,000 to €1,400,000,000 quarter, up 43% from a year ago. Subsequently, net interest margin from customer activity jumped by 17%. Evo has €3,500,000,000 in retail deposits, up 11% and €270,000,000 of off balance sheet funds, quarter, up 16%.
Customer margin stood at 1.1%, NPL at 1.22% with only €17,000,000 in LPL and cost of risk just at 16 basis points. Quarter. Finally, let's look at Linea Directa. In the last quarter this is the last quarter within the group. As usual, we continue to perform strongly despite pressures on premiums in the new year.
Total insured risk, The old number of policies increased by 2.8% year on year, increasing linear direct adds market share in Spain. Issued premiums grew only by 0.4%, which suggest continued price competition and weak demand, particularly in the car insurance. Nonetheless, quarter. Lida Directa's growth in motor premiums continues to outperform the industry's average, with a reduction of 1.9%, while the sector reduces by 2.3%. And in home insurance, it grew by 8.1%, while the sector grew by only 3.8%.
In health insurance, The VIBAT, our VIBAT company, total policies reached 92,026 percent increase from a year ago. Call. Linea Directa's combined ratio improved year on year to 85.4%. Quarter. As predicted, it will start to deteriorate from the stunning 83.4% from December.
In this new year, an increase in frequencies, mobility and worse weather condition pushed the claim cost in the quarter to 65.9% quarter or 430 basis points more than last December. At the same time and thanks to the cost flexibility, the cost ratio went down to 19 0.5% from 21.8% in December 2020. Linea Directa's combined ratio of 85% is expected to grow from this level but maintain below 87% for this year, having one of the lowest combined ratio in the industry. And keeping the gap represents a strong competitive advantage for Linea Directa to outgrow its competitors in the future despite the new more difficult market conditions. If we look now at its income statement, net profit went up by 2% from last year.
This is due to the minus 3% claim cost reduction combined with a small 0.4% increase in premiums. These revenue trends, together with a tight cost control in their operation, resulted in a technical insurance result of 32,000,000 9 percent increase. Quarter. This earnings performance keeps the already high return on equity at 32%. In due of the absence Of the dividend distribution until March 21, company's solvency ratio continues to be well above industry standards At 266 percent, after the €120,000,000 dividend distribution prior to its coming spin off.
The pro form a solvency ratio will stand at 208% with March data. Call. As always, I will finish with a brief recap of what we consider our main achievements in the quarter. A very strong commercial activity despite a difficult economic scenario with increased pre provisioning profit. Call.
We'll continue with our effort in recurrent costs to remain almost flat to be able to support pre provisioning profit growth going forward. Also, a clear effort in increasing the coverage for potential risk to try to anticipate the impact of the credit quality deterioration in Stage II balances, for example, quarter, mainly in consumers and small knit corporates and improved solvency and coverage levels with record liquidity levels and keeping a strong buffer from regulatory requirements. And finally, let me come back to our guidance quarter. And that we will maintain basically similar to what we shared with you in the previous quarter. We expect growth in all geographies, in Portugal, both in commercial and corporate banking.
In Ireland, more in corporates than in consumer finance that Probably at the second half of the year, we will see the increase. Evobanko in mortgage production and customer acquisition is made. Call. We also expect in 2021 that corporate loans will be impacted by less activity and lower corporate demand after EcoFinance to be offset by a better loan growth in mortgage lending and in other non mortgage retail lending. Obviously, waiting for the next generation EU funds that are expected to come in the second half of the year.
Therefore, net interest income for the group should post a low single digit growth despite the negative interest rate environment that will impact mostly in the 1st 2 quarters. We expect an increase in activity in more stable markets, and that will make fee income to post growth in the range of mid single digit. The group's operating income, quarter. We expect to move or to stay or to post in a mid single digit as well, like in 2020. The group's cost, We expect to remain flattish, and pre provisioning profit should remain resilient and improve the growth of 2020.
Quarter. And finally, the total cost of risk will show a double digit trend down, thanks to the absence of additional provisions for macro scenarios. And as I mentioned at the beginning, we expect to range somewhere between 50 60 basis points with the information that we have today, moving from a 60 basis points guidance that we provide at the end of last year and based on the reality that we have shared with you in this Q1. Call. Thank you very much.
And then I am open to take your questions. Thank you.
Thank you, Jacob. Let's kick off with the Q and A session. Probably the first few questions on the loan book growth expectations for the rest of this year.
Okay. Thank you. I think it's very similar to the guidance that I just shared. Quarter. Just talking about geographies.
In Portugal, we do expect an increase in retail and in the Corporate Banking Group. Quarter. In Ireland, we do expect growth, mainly in the mortgage book that has started the year with a very strong momentum, But also in the consumer finance that we will expect a correlation with the macroeconomic recovery. And therefore, we do expect some slight increase in the second half of the year. Of course, talking about Evo.
Evo, as you see, we are delivering a very good set of growth in the mortgage world, and we will see in the second half of the year an increase in the other activities like mutual funds, for example. And at the end, in Banquintres Spain, call. We are delivering a very good set of growth in the mortgage world. As you have seen, We have reported a record Q1 in mortgages, and this is something that we do expect to keep following quarters. And in the corporate banking world, as we mentioned, the strong demand in Ecolines in 2020 has made a very stable demand or no demand at the beginning of the year.
However, we do expect reaction once the next generation EU funds come to the country that we expected to happen in the second half of the year. So overall, we do expect a mid single digit growth in the loan book at the end of the year.
Call. Now that you mentioned about the mortgages and the strong momentum there, how does front book versus back book compare
in terms of spreads. So the spreads compare much better. Bear in mind that the new production of mortgages are around 75% fixed rate mortgages and the book, the back book It's around 20% of the portfolio in fixed rate mortgages. So that means that the front book is definitely better than the back book. And just bear in mind also that the new production of variable rate mortgages have always the 1st year of fixed rate.
Therefore, we do expect, as it has been in the last year, Better front book spreads than the back book.
Thank you. Now moving on to the P and L. Probably just a one off question. Can you reconfirm? We already did on the presentation, but can you reconfirm guidance on the main items on the P and L.
Yes, sure. We provide a guidance of net interest income To be a low single digit growth, so positive, low single digit. In fees, group. We posted a mid single digit positive growth mid single digit positive growth in group's operating income, a mid single digit growth. Group costs remain flattish.
When we mean flattish, that means somewhere around 0, But more or less, we don't know if it's minus 0.5% or plus 0.5%, but somewhere around 0%. Pre provisioning profit to be resilient and similar to the one that we saw in the previous year. And we mentioned also the cost of risk that in this session, we update or we do some fine tuning and we share with you a range of 50, five-0 to 60, six-0 basis points range. And this compares to the 60 basis point that I mentioned and I shared with you in the last results presentation. And the fine tuning is just due to the reality of the Q1 of recurrent cost of reach, which is still Much lower than expected.
Okay. Just to make it totally clear, this is the guidance for the credit cost of risk.
Yes. Credit cost of risk.
Excellent. Thank you. Okay. We're going back to the P and L items. Can you just give a brief explanation on the NII of the quarter, the moving part?
Yes. So the NII, as you saw, was 1.3% better than a year ago. So that means that we have a positive contribution from different all the different items. Basically, the first large item is the volume of the portfolio of the corporate banking due to the eco loans that were granted in the Q2 of last year. So that provides a very good increase related to the net interest income.
Also, the mortgage book in terms of volume is much is higher than a year ago. We do have the Telstra contribution from a year ago as well. And I would say these are the main of course, the cost of the deposits is lower than a year ago, and this is another good potential distribution. And comparing to the Q4 of December of 2020, which is slightly low, This is basically due to the number of days of the quarter and to the seasonality of the loan book growth.
Okay. Just to confirm, we have increased our intake in the TLTRO program this quarter. And how are we are we accruing for it?
Yes. At the end of March, we have increased the Telstra book by €1,300,000,000 quarter. And that total amount of Telstra is now at €14,200,000,000 And we are currently accruing for the entire life of the program at 85 basis points.
Quarter. Thank you. Moving on to the fees now. Given the strong start to the year, quarter. How do you see payments which are negative in the Q1?
And how do you see brokerage and FX trending evolving through the year, which are the other way around. Okay. So payments and collection, as
you know, are very correlated to the consumption activity and macro environment. So now we are expecting a slight or slow recovery quarter after quarter to become, at the end of this year, flattish or even positive because we expect positive recovery. So this has been the unique of the only item that has been negative has been providing a negative growth over the past quarters, so very correlated with the macro environment. Call. You mentioned also the brokerage activities.
So the brokerage has provided very positive growth in the previous quarters since, I would say, March last year. Quarter. And we have been able to maintain this positive growth in the Q1. The level of growth has been lower than the previous quarter. We have posted a 9 Growth in brokerage income, if I'm not right and if I'm not wrong.
We will see the brokerage fee to reach a more stable. And let's put it in a way or a flattish comparison in the following quarters because the level are very high and they will be very difficult 2 bit the figures that we had last year. And the FX, the FX should be again positive and stable. They are [SPEAKER JACQUES VADEATILLON:] Strongly related to what the activity in the brokerage or in the assets under management, but also there's a lot of correlation between the International Banking business. So as far as we have a recovery in the macro scenario on imports export, we will see this figure quarter.
Just providing good results in the following quarters.
Moving further down on the P and L. Quarter. Are we expecting any similar trading gains in the coming quarters?
I think what What happened last year is that we had a very bad quarter. That's why the comparison seems like it's been extraordinary results. But in fact, what we had last year is what it was a very poor result in March, and that makes the comparison probably More attractive to see. The results of the traded income should be similar to ones that we've seen In the Q1, at least until the first half of the year. As you can imagine, trading is a very volatile activity, and it's very difficult to provide a good guidance of that specific line.
I would say that we have a first good quarter of trading activity that could be repeated in the following ones. Although we always Prefer to be more conservative in this line because, as you know, this is not a core business line.
Okay. Can you explain the decrease on the other income losses line?
The decrease on the other income line, this is due to the regulatory charges? Yes, this is basically due to the growth of our resources, our balance sheet. And as you know, the provisioning that we need to do for taxes on deposits is related to the growth of our balance sheet. Therefore, There's nothing special. It's basically BAU business on regulatory charges.
Very small amount, by the way.
On the credit risk.
A couple of specific questions really. How what explains the growth in Stage 2 this quarter. Okay. So the growth in Stage 2 in this quarter is basically explained to a criteria of being more prudent Because the level of as you've seen, the level of NPS, the level of delinquency is still very low. So the reality tell us That nothing is happening, although we all know that there is a potential impact in the coming quarters that we need to take into consideration.
So for conservative purposes, we have decided internally to increase the level of H2. Call. Basically, in the SMEs portfolio, in consumer and also in some type of mortgages, but very, let's say, decided internally by criteria because objective criteria We'll not move this amount.
Okay. Regarding NPLs, when do you think did they might start to grow? One by how much.
This is I don't have the crystal ball, but I think we all know that there is negative impact in the economy that has not been brought into the reality. [SPEAKER JACQUES VADEATILLA:] And basically, this is due to probably moratorium programs or ECO programs, etcetera. So Some time in point, we will see a deterioration. We don't know exactly when this is going to happen. In fact, as I mentioned, We were expecting a 60 basis points cost of risk guidance for the year.
And in this session, I have to bring the range from 50 to 60 because the reality is that The Q1 has been much better than expected. Obviously, we do expect bad news to come, But we don't know exactly when. If it has not happened in this Q1, that means that probably the bad impact will be delayed Even to subsequent quarters of 2021 or even to 2022. But as of today, our reality is what we have shared today, which is the cost of risk still at 35 basis points.
Quarter. Okay. Regarding moratorium, have we seen any changes there? And what is the split between Spain and Portugal.
Okay. In terms of moratoria, we have shared with you the moratoria in the mortgage world, quarter, which is 1.8% of our book, around 511,000,000 of Spanish moratoria. In Portugal, As you know, the moratoria is different. Moratoria is at €980,000,000 which is around 14% of the portfolio. There are some moratoria that have already due in March, around €50,000,000 So we stand today in Portugal with €580,000,000 of mortgage moratoria €400,000,000 in corporate banking moratoria that they will do in the following quarters during this year.
Okay. Moving now on to non credit other provisions. What are we seeing there? And what is the guidance for the rest
of the year? Okay. In other provisions, what we see is, as you know, we have litigation risk regarding the FX mortgages. As we shared with you during The different quarters of 2020, we are still appreciating a reduction in the FX litigation risk quarter after quarter. However, there is always small new items that arise.
In this case, in the FX litigation. So we do expect quarter after quarter to have an optimistic view and a reduction quarter after quarter because this is the reality that we are perceiving today.
Moving now into capital. Given that we are above our targets there, how are we planning to deploy capital? Quarter. And also, if we can be more specific or just rephrase on the deductions, mainly insurance and regulatory deductions that we apply in the quarter.
Call. Okay. Regarding capital, we are with 12.3% CET1 ratio, which is quite above our long term guidance. [SPEAKER IGNACIO CUENCA ARAMBADEA:] As you can imagine, we have plans to grow, and this is the application of our capital will be dedicated to the growth and will be dedicated to dividends. So that's what we accrue, our normal dividend policy of 50% payout, and this is something which is quarter in our figures.
Although, as you know, until September, the ECB will not release the new recommendations of dividend distribution. But for the time being, we will accrue at 50%. Regarding the new topics of capital, call. I've gone through 2 main regulations. The first one is the new definition of default that I did mention that represent around 6 basis points of negative impact.
And then I've mentioned the new guidelines from the EBA regarding IRB parameters, which is a regulation that will be put in place formally in January 2022, but we have preferred to anticipate the impact as soon as possible. And We have shared with you the total impact in the RRP deficit with these new parameters that have post 14 basis points negative impact.
Great. Any further regulatory charges expected this year?
No. Basically no.
Quarter. Okay. Moving now into the subsidiaries. Any words on the performance of Evobanko or the strategy we had in Ireland?
Quarter. Nothing different from what we've shared today. Evobanko is performing an excellent year, growing more than 2x the level of mortgages and applying Strong commercial activity relating to the growth of assets under management and consumer finance businesses. So very positive trends in Evobanko. In Ireland, again, we share with you the good initial of the business of mortgages where we have recorded EUR 56,000,000 of mortgages in this first quarter.
So there is plenty of room dedicated to this business. As you know, 2 of the main financial institutions in Ireland have recently published that they will leave the country. That gives us a good opportunity to keep capturing new market share in that business.
Okay. Regarding Linea's vector, can you update us on the impact on capital? And also, if you had any words on the performance of the quarter? Okay. In terms of capital,
I'm not sure if you're talking about the deductions as they have not distributed dividends quarter. In the Q1, the deductions from the Z1 have been increasing again in this quarter. So that is the negative impact that you've seen in the slide. But if the question is related to the spin off impact, it remains at 8 basis points positive once it happened.
Quarter. Okay. And regarding the performance in the quarter, any words there? No.
I mean, good quarter of Linea Directa. Quarter. I hope you will be able to attend to the Investor Day of Linea Directa, where they dedicated a full day to the entire business. The Q1 has been good. I just remind you that for 2021, they do expect year.
A year somewhere between 2019 2020 because 2020 was extraordinarily good. So they do expect a reduction comparing to the 2020, but a definitely better year than a pre COVID situation.
And very last question. We have an analyst asking about you can put some color on the 2023 targets, the main figures there. Okay.
So our color is green. Quarter. We think that we have performed a very good Q1, very strong commercial activity, good client acquisition, all geographies growing and all the elements and in the right direction to meet the internal commitment to achieve the same net income levels that we had in 2019 pre COVID and without Linea Directa by 2023. So We think that we are in a good way in terms of growth of recurring activity. Quarter.
And as you know, the way we manage risk, again, we think that our credit risk portfolio It's very resilient. And of course, once macroeconomic environment is normalized or recovered, we will come back to our usual levels of cost risk by 2023.
Excellent. Thank you, Jacobo.
Thank you so much.
Thank you.
Keep safe.
Thank you, everyone. That's all for now. Please contact Investor Relations team for any further questions. Many thanks and goodbye. Goodbye.
See you soon. Bye.