Good morning, and welcome to this presentation of Banquinta's earnings for the first half of twenty twenty. Let me start by saying a few words to wish you, all of you, your families and your colleagues, safe and early return to normality. I would like to point out that we ended the first half of the year With a solid commercial performance and provisioning profit considering these special circumstances and the impact our businesses in all geographies, Spain, Portugal, Ireland and Luxembourg. Having said that, I will review our business activities during this first half, and we'll try to provide some guidance about potential risk in the future. Our main achievements were We achieved resilient quarter on quarter performance supported by our customer activity resulting in increasing pre provisioning profit Even excluding EVO and Avant card transaction executed 1st June of last year, we achieved continued growth in the loan portfolio, in retail deposits and in assets under management.
Therefore, net interest And fee income, the main contributors to gross operating income and a very strong cost control has allowed pre provisioning profit to grow by 10%. We achieved a strengthened solvency, NPL coverage and liquidity ratios with limited recurrent NPLs. Indeed, Our CET1 ratio reaches 11.8%, the same fear that we have before the Evo transaction 1 year ago as well as higher capital ratio that will reach 14.5% once considered the AT1 transaction executed the 1st week of July. Please note that in this quarter, we have recorded an extraordinary one off provisioning related to macro scenario potential impact on credit risk that anticipates the full year effort following IFRS 9 indications about provision reconnection when macro scenario changes. Now Offering full transparency in this complex exercise and based on Central Bank's recent macroeconomic estimations, we register upfront this expected impact like we did in 2012.
Therefore, we do not expect additional charges for this topic. I can anticipate that our guidance for COGS will be between 6070 basis points In the higher range of what we anticipated last quarter, approximately 30 bps coming from this extraordinary impact and 40 bps from our current cost of risk. As usual, let's start with a brief comparison on first half key financial Indicators. Group's total loan book grew by 7% to €64,000,000,000 Thanks to the strong corporate and SME demand. Gross operating income reached €863,000,000 in the period.
It grew by 8% with respect to the first half last year, showing strong resilience in difficult times. After a rigorous cost control, pre provisioning profit shows a remarkable growth of 10% In one of the most difficult quarters ever, this is a new record high. And let me share with you that this figure is more than double the one that we obtained in 2010 when we had or we faced the previous crisis. NPL ratio shows improvement in pre carbon assets quality despite the lockdown at record low of 2.50. It dropped by 21 basis points from 2.71 a year ago.
The extraordinary provision recorded for the adjustment of IRB credit risk models to the new macro scenario amounted to €192,000,000 in the period, €177,000,000 of them in this second quarter. After this nonrecurring provision, Group's net profit extends at €209,000,000 a 65% decrease from a year ago. Bear in mind that in June 'nineteen, we recorded the extraordinary income from the bad will of the EVO transaction. Our Z1 fully loaded Z1 capital ratio also improved 25 basis points to 11.8 percent despite the unprecedented sanitary and economic conditions, it stands comfortable above our guidance. Our return on equity reflects the exceptional situation and stands at 7.6%.
Without the extraordinary provision, it will be at 10.5%, well above the cost of capital and once more an outlier in the sector. After ending the first half of twenty twenty in an unprecedented difficult environment, we should keep pre provisioning profit ahead of last year by year. And thanks to our continued commercial activity that is driving force of this revenue growth, together with a deep exercise of cost control that will last at least for the rest of the year. Our guidance, once again, for the year in terms of cost of risk stays below 70 basis points, In the high end of the 60 to 70 basis points range, as already shared with you in the 1st Q results, This is including recurrent cost of risk at normalized levels of 48 bps. Moving on to our income statement.
And as a reminder, the contribution of Linea Directa Segudadora to the group's income statement, it's recorded as discontinued operations at the bottom of the account in accordance with IFRS accounting standards. Here are the group's comparative P and L accounts for the first half of twenty twenty with a new accounting for LDA and the like for like comparison on the right. In the first half of twenty twenty, our income statement continued to reveal positive trends in core lines of revenues, net interest income and fee income. Like in the Q1, other operating income expenses without the Eleedia contribution showed a small contribution of €7,000,000 versus €14,000,000 last Group's net interest income remains resilient despite a more negative environment in 2nd quarter. This is Thanks to our solid growth in lending and positive asset mix, growth in corporate loans higher than mortgage lending.
It is up by over 10%, fifty six €1,000,000 more than 2019. The reduction of commercial activity during the lockdown did not help our fee income but was more than offset by the restoration of assets under management volume and the continued increased activity In our broker online and ordinary buy and sell market activities, therefore, fee income finished the quarter growing at 5.5% with respect to the previous year and almost 4% in a like for like comparison. Other operating income and expenses by €7,500,000 or 52 percent from a year ago due to the main two factors: low trading income in the 1st quarter due to high market volatility and the increased contribution to the single resolution fund in the quarter of around €40,000,000 Adding all of the above, total gross operating income reached €863,000,000 up by 7.6% from 2019. Group operating costs continued under extraordinary control, both in Spain and Portugal, reaching extraordinarily good efficiency levels. Costs from the Evo and Avancar operations were not comparable year on year since they are €45,000,000 in additional operating expenses in the first half versus only €7,000,000 last year.
On a like for like basis, the group's first half cost clearly fell by over 4% with respect to the same period last year. This positive income and cost performance, despite the difficult environment, allowed pre provisioning profit to increase by 9.8%. Like for like growth is up by 9% so far this year and by 7.8% from the same quarter a year loan loss and other provisions are up 54% from first half twenty nineteen. There are few major contributors to this increase. One is Portugal.
Due to the anticipated normalization of cost of risk from the finishing of the extraordinary recoveries of previously provisioned loans acquired from Barclays. Another one is the expected rising cost of risk from the consumer finance business under a more difficult environment. Finally, Provisions for other contingency litigation maintain a normal run on conservative freight. As I mentioned earlier, we have decided to adjust our credit risk IRB models to the current macroeconomic central scenario of Bank of Spain, also Bank of Portugal and Ireland for each country, thus recording a one off provision of €177,000,000 in this quarter. After this year Pretax profits of the banking activity stands at €62,000,000 The pretax profits coming from ELDIA brings an additional €79,000,000 to the group in this first half or 12% more than in the first half of twenty nineteen.
This shows an improved performance of the insurance business, as we will see later on. After taxes, the group posted a net profit of €109,000,000, a decrease of 65 percent from a year ago. Despite this difficult situation in the quarter, covering the full macroeconomic impact in 1 single quarter, It is important to highlight that the banking recurrent business, after closing the first half of the year, continues in line with our plans the beginning of the year in all incomes, volumes, costs and including the slight increase of recurring cost of risk of the business. However, the necessary anticipation of the future economic scenarios had impacted from provisioning and dragged down net profits this quarter. In our view, group's provisioning profit growing at over 10% clearly indicates this recurrent growth in all activities, and we aim to keep this trend to the end of the year.
Here is the quarterly P and L, which also shows a strong improvement from Q2 last year in all the income lines and a 4% increase in cost, Taking into account the Evo and Avancar costs from the additional 5 months over last year. All in all, pre provisioning profit quarterly increased by 9.3% from last year's Q2. After provisioning and first quarter comparison are not relevant due to the impact of the Single Resolution Fund and the extraordinary macro scenario provision in this quarter. The group's loan book grew by 7.4% from a year ago, bringing in over BRL4.4 billion in new loans in the last 12 months. This is growth coming from the new business in Spain, Portugal, Evo and Avancar during this period, with no significant impact from the lockdown during the quarter, Thanks to the government programs for restoring the economy, eco liquidity lines of credit and mortgage and consumer moratoriums for individuals.
In net terms, this 2nd quarter loan book grew by €2,500,000,000 in all the geographies. In Spain, The majority came with state guarantee in the form of ECO credit lines I will see later. Here, lending improved growth, previous trend this quarter, it grew by almost 7% well over the 2.3% of the sector as of May 20. Banking sector loan book has stated to grow this quarter after many years of deleveraging. Loan growth has been €2,400,000,000 with some large corporate new liquidity lines and mainly the eco guarantee lines provided for corporates and SMEs, split in thirds approximately between large companies, mid companies and SMEs with a small with a total of €3,900,000,000 signed as of June 20.
In Portugal, lending is up by 19% from a year ago with an additional €215,000,000 in the quarter, slightly short of our business plan for this year. Retail deposits continue to perform strongly in all geography at over 10% year on year or €5,600,000,000 to €61,500,000,000 Net interest income continued to show resilience. It grew by more than 6% over the same quarter a year ago and stay almost flat from last quarter reduced by 1% or €4,000,000 Like for like growth was 4.3% from last year. Since the integration of Abo and Avankar in June 2019, their contribution to our net interest income has been growing every quarter. They contributed with €38,000,000 to the group's net interest income this first half.
In Portugal, Net interest income also grew about 6% with respect to the same quarter in 2019. Net interest income quarterly evolution is driven mainly by the loan book growth and by our customer margins shown in the chart on the right. The yield decreases in the quarter is mainly due to The important reduction on the U. S. Dollar LIBOR reference rate in our international business and the reduction in consumer finance yields, together with a desired reduction of the loan book in this business in Spain.
After now almost a year, with the cost of deposits at all time lows, we believe our customer margin to remain resilient in the coming quarters. Here, we also showed a net interest margin of 1 point 8% with a drop of 7 basis points from a year ago. Thanks to margin and volume growth trends in deposit and loans, Together with a stable contribution from the carry trade of our ALCO portfolio and after the completion of the first half of the year, We still see an increase in the group net interest income by mid single digit by the end of the year. The composition of our ALCO portfolio changed very little in this quarter. Its size slightly increased to up to €8,700,000,000 After the full integration of Evo, its proportion between different portfolios has also improved.
Today, 8% of the portfolio remains under amortized cost with no impact in capital ratio and 32% in fair value. After a much better quarter in bond and equity markets, we can see the improvement since March of the unrealized gains on the portfolio. Now they amount approximately €410,000,000 some €200,000,000 more than in March. Over the next few years, maturities of the portfolio are well spread out and not relevant in every year as you can see in the right hand side chart. Let's move on.
Fee income performed extremely well in the 2nd quarter even under a reduction in activity levels due to the 3 months lockdown. Last quarter fee income was only €2,000,000 below the €123,000,000 of fees posted in the first quarter and continue to show growth for the 1st half of close to 6% year on year. Fee income from our recurrent business continued to grow, except fees from working capital financing, including the other fees section, is down 32%. On the other hand, assets under management volumes recovered previous levels, and this is reflected in the 2% improvement from the first half last year. Fee income still accounts for 28% of our gross operating income.
The largest contributor to fee income continues to be asset management fees at 24% of total fees, still up by 2% with respect to a year ago. We can confirm that commercial activity recovered after the end of March, And our private and personal banking assets under management recovered level pre COVID-nineteen. The 2nd largest contributor to fee income at 18% is payment and collections, including credit cards from corporates and individuals. Their performance has been impacted by the situation but continues to post a 1% increase on the back of our increasing online banking activity. Some fees continue to show a strong positive impact from market conditions such as brokerage that ended the quarter growing by 35%.
Another example is FX business with customers, which also up 30% from year ago. Going forward, they should continue to improve while markets remain positive for the rest of the year. Life insurance sales, risk related transactions And fees from activities like structured finance are also improving from still small base, are up 5%, 11% and 51%, respectively. We believe the effects of the economic slowdown will continue to be noticed fee income in the second half of the year, although we don't know to what extent. Thus, we will pursue to drive business volumes and value added products to our customers.
And assuming the certain degree of recovery, we can maintain our guidance fee income growth by low single digit growth by the end of the year. In other operating income and expenses, Here, you can see the various components broken down by their contribution without LADI Insurance margin in both years. The BRL6.9 million this year were reduced from the BRL14.4 million last year, mainly due to lower trading income in the 1st quarter, a €12,800,000 reduction from a year ago and also to the recurrent and increased yearly regulatory charges, a 34% increase in the contribution to the single resolution fund in the second quarter. Gross operating income for the first half stood at €863,000,000 an increase of 7.6% from a year ago. Partially operating income of BRL427 1,000,000 grew over to 7% from the same quarter last year and by 4% from the previous ones, all with a very small contribution from non customer business.
All in all, the group's operating income grew clearly above our mid single digit guidance for the year. Assuming some economic recovery in the next two quarters, we believe revenues will continue to grow at the same path throughout 2020. The chart on the right shows the contribution to operating income in the first half, with net interest income at 71% and fees on 28% and other income only accounts for 1%. Group operating costs totaled €205,000,000 in the quarter. They are up 4.7% from previous quarter last year, 8% from Q1 2020.
Total operating cost for the first half are up from the previous year by less than 6%. Like for like or excluding €28,000,000 coming from Evo and €17,000,000 From Avancar, recurring costs would have been reduced by over 3% from last year. General and administrative expenses were under control considering the ones from Herbo and Avant card and grew only 7% over last year and 2% respect previous quarter. Again, keeping all operating expenses and investment programs Under tight control, we expect to finish the year with a guidance of low single digit cost growth. Thanks to all these efforts At the end of the year on Avancar integration expenses, our recurring banking efficiency will continue to improve.
The group's cost free income dropped 5 20 basis points from December 'nineteen and 110 from a year ago to 47.9. We aim to keep the long term banking cost to income ratio within a range of 40% to 45% as we always try to improve efficiency in all our acquired businesses. For example, we continue to do so in Portugal with now an efficiency ratio at 62%. And in Spain, we are at a record low. We have efficiency ratio at 40.5%.
Now we can see in this graph how resilient has been in our group's payer provisioning profit compared with the last year. All in all, and in these very difficult circumstances, we have been able to post a strong 9.8% increase in pre provisioning profit. We think this shows a remarkable operating performance. Let's move on, and now let's look at the recurrent cost of risk. It started its way up last quarter mainly due to the increased provisioning in consumer finance in Spain because as expected, other NPLs coming from mortgages, corporates and even SMEs were not significantly affected by the new situation after March 14.
Somehow, this good behavior has been extended to the 2nd quarter as well. However, the consumer finance cost of risk continues to grow for another quarter. The increase in cost of risk in our recurrent banking activity in Spain was again related to consumer finance loan book and the small SME's loan book. Since as of June 30, there had been No relevant impact in the commercial banking loan book on mortgages and personal loans as well as in the large and mid corporate loan book. We expect these trends to remain unchanged during the second half of the year.
And although it is probably too early to anticipate what will be the impact of the liquidity lines guaranteed by the state for SMEs and corporates, in addition to the public and private moratorium in place, We expect all of this will help the current cost of risk to remain under control for the rest of the year. Despite this unprecedented global situation, we strongly believe in the quality of our loan book and our credit policies and procedures in our different businesses and in all geographies. Thus, we are able to maintain the guidance of 40 basis points for recurrent cost of risk at year end. On the other hand, Provisions for litigations, some over our FX mortgages, portfolio slightly falling and other miscellaneous legal provisions still growing, will remain flat or slightly up during this year. Regarding cost of risk, Today, with a much better view of the consequences from the economic shutdown in different sectors of the economy and a complete knowledge of the government stimulus measures and the new macroeconomic scenarios forecasted by central banks, Spain and Portugal shown in the right hand In the left sorry, in the left hand of your chart, the bank has adopted the Bank of Spain central scenario in all our internal rating based models for credit risk management, which provided for the recording of an extraordinary provision of €177,000,000 booked in full in this Q2 of the year.
This, together with the €15,000,000 that were booked in the Q1, makes total cost of risk at the high end of our guidance of 70 basis points for the full year. Thus, today, we are anticipating some 28, 30 basis points that together with the expected 40 basis point of recurrent cost of risk will bring total cost of risk close to 7 basis points of total exposure within our initial guidance given in the Q1. Pretax profits for the banking activity is as shown in the chart. However, we expect improvement in the coming quarters once excluding extraordinary impacts. All the above has impacted our group's return on equity that now stands at 7.6% after this strong provision in the first half.
Excluding the impact of the extraordinary group's provisions. Return on equity will reach 10.5%, still above our cost of capital and differential from peers. We are fully committed to bring group's return on equity back to double digit levels basing the growth of recurrent business and normalization of NPL provision. I will now go over our management of credit risk, liquidity and solvency. Last quarter, nonperforming loans changed the long standing downward trend and started to show some increase, although at a very low rate.
Total NPLs rose by less than €14,000,000 from last quarter, mainly because NPLs grew in consumer finance. Still, year on year, total NPLs are down by almost 1% or 15,000,000 less to €1,764,000,000 Total group NPLs grew in the semester by €83,000,000 or less than 5%. Of this growth, €27,000,000 came from S and Es, €17,000,000 from mid corporates and €5,000,000 from Portugal and one from Evo. Finally, consumer finance NPLs grew by €68,000,000 or 82% of the total as expected. All of the rest, mortgages, large corporates, affluent banking, etcetera, came with negative growth in the period.
The group's NPL ratio now stands at 2.5% from 2.51 at year end and 2.71 a year ago. It also drops 8 basis points from last year due to the increase in loan book and almost flat NPL net entries in the period after the sale of 50,000,000 NPLs in May. In Spain, at 2.54%. It is almost at half of the sector average at 4.8% as of April, Now after the COVID-nineteen impact. In Portugal, the NPL ratio remained stable at 2.38.
As shown in the chart, as of June 20, the group's NPL ratio was 2.37% for households, including consumer finance at 7.6% and stays at 2.74 percent for corporates, including small SMEs at 7.7. Let me share this chart with you. Here, we bring a breakdown of the bank total credit portfolio as of June 'twenty and the current NPLs and NPLs ratio by business segment, we compare this with January 2018 when IFRS 9 start to be implemented and right after the transparency stress test of the EVA. 41% of the loan book is in residential mortgage and personal loans to bank's individual customers with NPS ratio of 2.37%. It was 2.71 back in 2018, of which customer finance now represents 4% of total, up from 3% in 2018 and with similar NPL ratio of around 7.6%.
Corporate Banking loan book represent 46% of loan book similar to what it was in 2018, but with much better NPL ratio today at 2.74. Of this book, large corporates represent 25% of total with NPLs ratio of 0.64. Medium comp rates that we call large as it is, 11% of total, an NPS ratio of 3.55 percent and finally, small SNEs with 8% of total book and NPS ratio of 7.7% better than the 9.1% back in 2018. Portugal increased the book to 10% of total portfolio, an improved NPL ratio to 2.38 percent from 7% back in 2018. And finally, Evobanca represents only 2% of the total loan book with NPLs ratio of 1.45.
We think that this chart. This table, this distribution shows our strength in the quality of the loan book and also the small Changes over the years. Our overweight in affluent mortgage lending and in large corporate lending continues as in 2018 when Banquinter showed the lowest capital deflation in Spain in the ECB EBA 2018 stress test. Just a reminder, we had 114 capital depletion versus an average of 3 95 basis points from the EBA 48 participant banks. Total NPL provisions increased consequently after the extra provisioning to a comfortable level at €101,034,000 €1,000,000,000 a €198,000,000 increase from last year.
This had a relevant impact on our provisions coverage, which now stands at 59%, 10 points over the previous quarter. Coverage for foreclosed assets when slightly up at 46%, maintained clearly above the average discount on closed assets portfolio is 18% smaller than a year ago. It decreased by €54,000,000 This small portfolio now amounts for €259,000,000 Let's talk about solvency. Our fully load CET1 ratio stood at 11.75% at the end of the first half increased by 28 basis points from last quarter and 25 basis points from a year ago after the Avonavancar transaction that deducted 23 basis points, which is bringing our ratio through pretransaction levels as we committed. Since December 2019, our retained earnings bring an increase of 32 basis points, underpinned by the cancellation of the first two quarters' dividend.
This increase helps to offset some of the negative impacts in the period, such as the value adjustments from our ALCO portfolio, Now at half of the impact of the first quarter are other miscellaneous impacts, such as the increase in insurance equity or intangibles accounting. The impact of risk weighted assets growth of 23 basis points, €800,000,000 approximately from the new ECO financing has been more than offset by the reduction of the IRB shortfall of 27 basis points after the extra provision in the quarter. The other positive impact in the quarter comes from the new regulatory changes, the CRR quick fix, which are mainly or mostly related to the S and E supporting factor that add 23 basis points. Total capital ratio and leverage ratio remained modestly stable at 14.1% and 4.6%, respectively, And taking into consideration our last week €350,000,000 81 issuance to replace the existing one of €200,000,000 Capital ratio will improve to 14.5%, very comfortable level above minimum regulatory requirement. As of June, we have €1,400,000,000 in capital in excess of the new 7.675 percent minimum SREP requirement.
After closing the first half of the year And despite the new, more complex environment, we reiterate our guidance of CET1 ratio above of 11.5% for 2020. The continued increases in customer deposits in all business has helped to narrow our funding gap in Spain to an all time lows from over €10,000,000,000 5 years ago to only €1,000,000,000 now and only coming from Portugal with still having higher growth in lending than in deposits. As a result, Loan to deposit ratio reached record levels of 101 percent from 102.5 percent a year ago, owing to consistent growth in retail deposits in the last few years. Our wholesale funding maturities are well balanced with only 8 €100,000,000 due to this year and 0 next year, excluding the €200,000,000 €81,000,000 due in May 2021 and recently that has been refinanced. Thus, we are very comfortable positioned for the coming years with an increase of €15,900,000,000 in liquid assets and the capacity to issue over €2,600,000,000 in cover bonds.
On the 1st week of July, we have closed the issuance of €350,000,000 perpetual 81 bonds with a 6 year call and a coupon of 6.25 percent quarterly. Now let's review the performance of our business lines and the respective contribution to the group's P and L. The corporate and SME loan book in Spain and Portugal grew by over 18% from last year or €4,400,000,000 It has it increased by 17% in Spain, while the sector has started to grow at 8% year on year since last May. All this growth started in the quarter boosted by the government guaranteed equal lines in place, and the entire sector has made a wide use of them. As of June 20, we have signed €3,900,000,000 of government lines with our customers, mainly with large SMEs, then small SMEs and largely large corporates.
We will review our production in a separate slide. International Trade and Supply Chain Finance continues to lead loan book growth. It grew by 12% from last year to €5,960,000 It has become The most important source of income from our large corporate segment where today accounts for over 30% of total income. International business operation income grew by 9% from a year ago to €90,000,000 More importantly, over 50% of its revenues came from fees rather than interest. Transactional business turnover with corporate customers, including commercial, Credit, tax and social security payments, etcetera, went down in the first half due to the lower activities.
Still, it generate €40,000,000 in fee income in the period, 3% up from a year ago. We expect the fees generated by this business to grow more by the end of the year. Investment Banking brought additional revenues to corporate operating income. In the first half, It generated €35,000,000 in operating income and 11% increase from the same period last year. In these times of uncertainty in how the credit quality will perform in the coming quarters, It seems very relevant to have a deeper look at our corporate loan book in Spain and Portugal.
Almost 50% of the group's total loan book is granted to non financial enterprises. This amounts to €28,300,000,000 at the end of June 20. From this total lending, €11,100,000,000 are granted to large Corporates, those with yearly turnover over €50,000,000 and more than 2 50 employees. Then we have €7,300,000,000 loans granted to medium sized enterprises, those with a turnover of €5,000,000 to €50,000,000 We can call them SMEs Type A. These 2 largest loan books represent over 65% of the total loan book.
Only 16% or €4,600,000,000 of the bank's total corporate loan book are loans to small enterprises with a turnover Between €2,500,000,000 or SMEs Type B, and the rest is split between €2,300,000,000 of property and housing related financing, not including developers, €1,700,000,000 in international trading finance with our corporate customer and €1,400,000,000 lending to public sector corporates. Mankinter has always enjoyed a high quality loan book relative to peers in our country. And today, we continue to feel very comfortable with the asset mix of our loan book. It has shown no significant changes over the last 10 years, preserving the strong asset quality standard for each segment of corporates and always obtaining yields according to our risk required models despite greater competition during all these years in the market. In the following slide, we show Banquinta Spain participation in the government guaranteed Ecolines for corporates and SMEs as of June 20 Total loans granted and disbursed as of June, adds to €3,900,000,000 All these loans have been granted mainly in medium and small corporates and the rest to large corporates.
Thus, the average state guarantee of the total book is over 77%. A total of €6,100,000,000 guarantees have been assigned to Vanquinta by Ico and represent our market share of close to 6% of the total facility with an increase to 7.1% on the last tranche of loan to be signed until the end of September. Our moratoriums for mortgage and consumer finance to individuals amounts are still small, €922,000,000 €922,000,000 €555,000,000 respectively, represent only 4% and 3% of our portfolios. In Private and Personal Banking, customer wealth has recovered from the very difficult behavior and the negative market effect of last quarter. It now shows increases of €2,000,000,000 in net new patrimony split €1,000,000,000 in private banking and €1,000,000,000 in personal banking.
Total wealth from customers in both segments amounted to €60,700,000,000 up from €61,200,000,000 a year ago or 2.5%. The recovery of commercial activity measured by New Money in the quarter ended with BRL4.2 billion, Euro increased BRL3 1,000,000,000 in Private Banking and BRL1.2 billion in Personal Banking. Activity in our commercial banking during the first half has been maintained somehow strong in our 2 mail retail products. Salary account balances continue to grow. They're up 20% from a year ago, totaling €11,400,000,000 New mortgage origination, although logically below last year by 13%, is flat from 2 years ago, showing a very strong resilience In this business, where Banquinter holds larger market share in the front book than in the back book, on the new origination, 55% of mortgages were fixed rate and its loan to value ratio is at 60%.
Our market share in new mortgages is now 6.2% in the 12 months ended in April 'twenty. As a result, the total mortgage back book maintained growth and reached BRL 27,000,000,000 in Spain growing by 3.2% while the rest of the market continues to Rink by 1.2%. The loan to value of the total back book stands at 55%. Now let's look at our standalone business in Portugal. Loan book grew by 10% to €6,400,000,000 and retail funds at €4,600,000,000 reduced by 2% from a year ago.
As of the income statement, operating income from the business grew by over 11% with only €2,000,000 of recoveries in the period. Costs show again a 6% reduction in line with cost control plans ahead of a difficult 2nd part of the year. All of the above BRICS pre provisioning profit up by a very strong 60% over €9,000,000 more. However, after the €5,000,000 normalized loan loss provisions With a very small impact of extraordinary recoveries, he bear in mind here, I remind you that last year, we had EUR 19,000,000 positive cost of risk from this recovery and the €3,000,000 extraordinary provisions from the macro scenario judgment, Portugal profit before taxes at €17,000,000 was half of the last year. Portugal shows an efficiency ratio of 62%.
Banquinta Consumer Finance now includes our consumer finance business in Spain, Portugal and Ireland under Avancard. At the end of June 2020, total loan book was €2,800,000,000 including €445,000,000 from Avancar and BRL225,000,000 for Portugal and is mainly down from the year, still up 8% from a year ago. New credit origination, mainly in personal loans went down by 16%. Also, the reduction in the revolving cards outstanding bring the total under €600,000,000 or 17% less. Total credit card business represents 44 percent or €1,200,000,000 Of total consumer credit, cards and cards payable only at the end of the month account for less than 50% of the total.
They are mainly granted to existing bank inter customers with a much better risk profile than pure consumer finance customers. The new and stricter accounting standards in 2020 for which transfers them to write offs for sale after 12 months with full provision and the new extra macro The new extra provision for macro judgment in IRB models increased cost of risk for the first half of the year. As of June, NPLs Tuts at 7.2%, provision coverage reached 107% and cost of risk climbed to 4.9%. All these brought the risk adjusted return of the business to 6.6%. During the moving into Evo.
During the first half, Evobanca performed slightly above its business plan, EUR 6,500,000 more, despite the impact in the quarter of mortgage origination and credit Evobanko's balance sheet has €1,400,000,000 in net loans, up €7,400,000,000 €957,000,000 correspond to home mortgages growing at 15% in the period or €125,000,000 New mortgages granted from December were €156,000,000 Personal loans and credit cards amounted to €65,000,000 down €13,000,000 As of liabilities, Evo has €3,300,000,000 in retail deposits and €252,000,000 in off balance sheet Funds. Client acquisition has been over 36,000 new customers in the period for a total of 508,000 customer As of June 2020, a 6% increase. As for management ratio, customer margin is 2.1.45 NPL ratio 1.5 with provision coverage at 62%. Finally, let's look at Linea Directa's contribution in the first half. Linea Directa continued to perform strongly for another quarter Despite continued pressures on premiums, total insured risk, the old number of policies, increased by 1.5%, keeping increased Line Directa's market share in Spain.
Issued premiums remained almost flat, grew only about 0.1%, which suggests a strong price competition and lagging demand during the lockdown in the quarter, particularly in motor insurance. Nonetheless, Eredia Growth in monitor premiums continues to double the industry's average. In home insurance, it grew by 8.6%, which is almost 5x the market growth. In health insurance, VWAF sold more new policies. Total policies close to the close quarter in 75,051 percent.
Linea Directa's combined ratio improved by 100 basis points to 85.7% from last quarter. Despite lagging premium growth, it improved in the quarter due to the reduction of 2 70 basis points in claim cost After being adjusted in view, traffic slowed down during the lockdown to 64.5% from 67.2% from 2% from last quarter. The cost ratio increased to 21% because of acquisition cost and marketing of the quarter. Linea Directa's combined ratio of 85% is at its lows for recent years and expect to maintain this 11% by the year end. Having one of the lowest combined ratio in the industry represents a strong competitive advantage that will allow LineDirector to outgrow its competitors in the coming year.
If we look now at income statement, net profit went up by 12%. This is due to the 3% claim cost reduction in addition to the 3% increase in net earned premiums. These revenue trends from operation and some cost control resulted in a technical insurance of 62 million in the first half, 23% more. This better earnings performance sustained a very high return on equity of 34%. And despite the absence of the dividend distribution while increasing the company's solvency ratio to 238.
Okay. Let me finish with a brief recap of what we saw in the first half of twenty twenty. We saw a consistent delivery of recovery income from customer activity despite the impact of the lockdown. In anticipation of a continued difficult environment, we made an effort in pre provisioning profit going forward. An increase in cost of risk apart from the recurrent one and the accounting effects in Portugal to anticipate potential impact of the new macro scenario and appropriate solvency levels with a stable asset quality, improved liquidity, strong capital ratio and a solid buffer regulatory requirements.
Evobanca and Abancal continues its integration plan with a major impact on our P and L performance, quality of assets on capital structure. Finally, here are some figures: solid balance sheet growth, 7% up, 10% in lending and 10% in deposits Growth of recurring core banking businesses with a strong 8% growth of operating income fueled by 10% In net interest income and 6% in fee income, a combination of this strong volume growth and good cost control supports outstanding percent increase in pre provisioning profit. Cost to income improved to 47.9%. Cost of risk increased up to the guidance moving to the guidance of the 7 bps for the whole year and capital improves to 11.8% of the CET1 ratio. In sum, after closing the first half of twenty twenty and with a continued difficult scenario, We can now envision the following guidance: net interest income growth in the range of mid single digit some fee income growth of low single digit.
Group's operating income in the lowtomidsingledigit range. Group's cost below gross operating income growth. Cost of risk increased in the range of 60 to 70 basis points. As I mentioned in my introduction, We at Banquito are putting all our efforts and commitments to ensure that the Spanish economy recovers as soon or as quick as possible. We also maintain a high level of energy and optimism to obtain a positive outcome out of this crisis and we have done in the past with a higher level of differentiation versus our competitors.
As I mentioned in the last presentation, I also want to thank All Banquinta staff, especially those at the forefront of the branch network, for their commitment and energy in this crucial moment. This is the main asset of the bank, and rest assured that the level of dedication is extremely above expectation. Now I'm happy to take Some questions.
Thank you, Hakuba, for the effort. We have a few follow ups. We have already probably explained some of these questions, but probably just You could elaborate a little bit more in some of these topics. Let's start with the cost of risk. We had a few questions there Regarding the rationale of the front loading of provisions that we have seen in the quarter?
The cost of risk of the quarter.
Yes, I think we explained quite clear. We have considered The central scenario of the Bank of Spain forecast impact, macroeconomic impact for the next years, 2020, 2021 and 2022, We decided to make an upfront provision, a one off provision and anticipate the effort for the entire year. This amounts for €177,000,000 in the quarter, and this is approximately 20 to 30 basis points for the entire year. We are not planning to add more provisions due to this concept. We have our recurrent cost of risk of 40 basis points.
That was a similar figure that we had in our plan and is exactly so the addition of both are in within the range of guidance that we provided last quarter. And today, We want to clarify that guidance, and we come up with a 60 to 70 basis points guidance for the entire year. So I hope this clarifies.
Very good, very clear. Any views for 2021 in terms of cost of risk?
I think it's still too early to have any view. Bear in mind that All these moratorium programs and E. Coli lines will still go on at least for the we have a new trend that goes up the 30 September. So I think this year is still maybe still too early to see potential impact, which is clear is that Banquinta as well as the regulators and governments are putting all the efforts to mitigate as much the impact of this pandemia. So what we are currently viewing is that the cost of risk, as I mentioned, is stable at the 40 bps that we are currently considering.
And for the time being, as of today, we have no need to change that guidance because this is what the reality is telling us. In the future, I think it's still a little bit too early.
To finish off with the asset quality topic. What do you expect in terms of nonperforming loans for the next few quarters?
I think nonperforming loans will be very similar to what we've seen in the previous quarter. As I mentioned, I think we have only a focus on the consumer finance business, which is the one that is probably suffering the most. And apart from that, we are in a good shape in everything related to our Our retail customers, anything related to the mortgage lending or the mortgage portfolio, the medium sized corporations, the large corporations, I think from the NPLs, we do not see or not foresee any major change. Let me share with you that the delinquencies levels as of today are even below the 1st January. So we do not perceive any major changes in the coming quarters.
Now we move into volumes. What do you expect in terms of loan book growth For the second half of this year? And more specifically, you can comment on the corporate lending and consumer book.
Okay. So in the corporate lending, as we mentioned, there are new tranches of Ecolines that will mature by that will end up the program on the 30th September. So I would expect that in the corporate world, the Q3, we will still see an additional increase. In fact, if we are able to meet all the expectations in terms of the tranches that we have been assigned or allocated, The total volumes might reach even €8,000,000,000 for the total Ecolines. So as you can imagine, those figures will maybe increase since the 3.9 that we have registered in the first half.
Volumes in consumer Finance, as we're recording in the past quarters, in revolving cars, we still expecting a reduction. Obviously, the impact in consumer in the second quarter has been relevant. And we see that in the credit card world, we expect reduction or stabilization. In the personal loans, we might see an increase in the following quarter due to recovery of consumption in Spain after the lockdown.
Okay. In terms of Torian, what should we expect there going forward? And what is the percentage that you should expect to see on our mortgage and consumer books
As I mentioned, we have around 4% in our mortgage book in moratoriums and 3% in our consumer finance. We do not expect an increase as we see the demand today is not as it was in April. So we do not expect any major change in moratoriums. In fact, we will some royal decree moratoriums will start to redeem soon. And as far as we know, There is a minimum level of renewals or requests for new moratoriums.
So credit bank credit moratoriums We'll start renewing in next month or the end of July, beginning of August because it was a 4 months moratorium. But Because of the type of client that we have here in Banquinta, we honestly, we do not expect a renewal of moratorium. Currently, the demand is very low and renewals, we do expect really low levels.
Okay. Now we move into the P and L. Can you just comment on the outlook for the NII? Okay.
I think NII has behaved extraordinarily well in these first two quarters. We do expect to keep good levels of NII in the following quarters. I think We as we mentioned before, new production of mortgages will start recovering again. Just bear in mind that the front book of the mortgages brings much better returns than the back book, and that's something that will fuel the net interest income. Of course, all this new corporate lending will bring more growth in terms of volume and with a stable margin.
So we'll expect an increase in net interest margin. So we do And obviously, we have all these Telstra III programs, etcetera, that will add more strength the net interest income in the second half of the year. So that I think those reasons will support the growth of the net interest income. And also the cost of deposits, even if there's not too much room, but they're still under a slowly but surely reduction even with the wholesale issues that are Much with a lower cost than in the past.
Okay. Now that you mentioned, how much is the total TLTRO intake, Sorry, the total? The €10,000,000,000 Guidance on fee income, please?
Fee income. Fee income, as you can expect, there are always a strong correlation with what's happening in the markets, but we are able to compensate with transactional activity. So we expect markets to behave similar to what we've seen this at least to stay stable. That means that assets under management fees should remain stable and will provide similar returns. So transactional activity will recover in these following quarters.
So We do expect, as I mentioned, a lowtomidsingledigit growth in fees. Brokerage activity was a good source of revenues in this quarter, and we might see again a good quarter of this type of fees.
Okay. Would you highlight anything extraordinary in the quarter In fee income?
I would say that the behavior of the assets under management and the brokerage activity, I think it's been an impressive quarter in terms of commercial activity in order to recover the assets under management volumes that we had pre COVID. We are currently in similar levels to pre COVID. We have been maintaining the average fee of these investment funds and coupled with an extraordinary boost of the activity in our Broker Online, I think this is a I would highlight those topics. And those topics, both topics have an impact also in the FX fees. And I think honestly, it has been an extraordinary quarter in term of fees.
And I believe it's it might be it will be sustainable in following quarters.
To finish off with the on the P and L litigation. We are getting questions on what's behind the growth in other provisions and also if we are still provisioning for FX mortgages.
Okay. So just a quick the increase, if I'm not wrong, In the first half of the year compared with the past year, it's €5,000,000 up in the other provisions. So the difference It's mainly just bear in mind that in other provisions, there is not only legal provision or tax provisions or litigation provision. We also have provisions related to credit risk of endorsements and these type of things. And therefore, there is a comparison effect from Portugal as well in this side.
So the increase comes from a comparison effect where Portugal did not provision last year, now it has to provision. Regarding the question on the FX mortgage, as we anticipate, the FX mortgage effect is slightly going down. So we manage or we anticipate a slight reduction of 10% by the year, and this is exactly what we are facing. So from that perspective, there are no news.
Thank you. Capital now, can you just Go through the movements in the quarter. And more specifically, what is behind the regulatory changes?
Okay. The regulatory changes. As I mentioned, the CRR quick fix is basically the SME support factor, the one that provides, I would say, almost 100% of this improvement, okay? Things that I think which is relevant as well to share with you, 1st of all, is as I mentioned, is the recovery of the unrealized gains of the ALCO portfolio That has recovered around 25 basis points. I think it's relevant to mention the IRB deduction, which, of course, is related to the extra effort that we've done in this quarter to the one off provisions of €177,000,000 €7,000,000 So therefore, the IRB deficit is much lower, and that has provided 27 additional points.
And another mention is the insurance deduction of 17 basis points. This is due to the nondistribution of dividends from Line Directa. Therefore, the deduction of the participation of Line Directa is higher, and this is due to the retention of dividends of Line Directa in the same way as Bankinter. Okay. Any idea of how much regulatory changes are left for coming quarters?
Yes. The main which is left is the one related to deduction of the software, which It's currently under consultation. And as of today, is it too early to provide you some guidance on this topic because the methodology It's not closed yet. Once we got a better understanding of the final regulation, of course, we will share with you the potential impact that it will be positive, but we don't know how much positive.
Can you confirm the guidance for CET1?
As you know, our guidance for CET1 is 11.5%. We will expect to stay above this 11.5 for the coming quarters. And however, I would like to remind that the minimum requirement of the Z1 is now at 7.675 percent and that we have an excess versus this minimum requirement of €1,400,000,000 in CET1.
Okay. To finish off, any updates on our dividend policy?
No news. As you know, there we are expecting any new recommendation from the ECB, And we hope that there will be some news in the coming weeks. Once we got the new recommendations or from the ECB. Therefore, we could provide you with more guidance about dividends.
Okay. Now moving on to Linea Directa. We have a few questions about the if there is any updates on the spin off and obviously also on the business evolution, combined ratios and so on.
Okay. Regarding the spin off, as you know, we are quite determined to execute this transaction. So we will do the transaction once we have all the authorizations in place. As you can imagine, this pandemic and the lockdown has disturbed all the process all the procedures, But we are pushing the execution of this transaction as much as we can. This is a mandate from the Annual General Meeting and from the Board of Directors.
Therefore, we will execute this transaction in the terms that has been mandate. Regarding the business, I will highlight the combined ratio. The combined ratio is at minimum levels. Is quite differential from other businesses. I think the performance of the Linea Directa's business has been once again very, very good.
Bear in mind that They have Linea Data has an unparalleled operating performance business with a strong diversified position in Spanish non life insurance and with a unique growth prospect. So the growth that we've seen this quarter, I believe it will be similar in coming quarters. Return on equity, 34% and solvency ratio of 238%. I think there are very great references in the industry. The quarter, as you can imagine, has been good for one thing and bad for other things.
It's been extremely good in terms of claims cost, and it has been not so good in terms of new production. However, we maintain excellent levels of return and excellent levels of provisioning. And once again, I think Enerliecta is a best in class company in the industry.
Thank you, Jacob. That's it from us today. Thanks again for joining us, everyone. And obviously, the Investor Relations team is now available to deal with any future further questions. Goodbye.
Thank you very much, and keep safe. Bye bye.
Thank you.