Good morning. Welcome to Bankinter First Quarter Call Results Presentation. We hope this call finds you all well. As usual, our CFO, Jacobo Dietz will now go through the presentation. Thank you.
Good morning, and welcome to this very special presentation of Banquinta's earnings for the Q1 of 2020. Let me start by saying a few words to wish you all of you watching this webcast, your families and your colleagues, a Safe and early return to normality after this extraordinary sanitary circumstances is over. I would like to point out that we ended the Q1 with a solid performance considering these special circumstances. Nevertheless, As we are here to present our Q1 results, let me share some comments about COVID and its impact on banking. First, we have implemented our contingency plans, and all our services have been operating normally, providing teleworking for all services as well possible, including contact centers, relationship managers, etcetera, without any single IT disruption or contingency.
We have put in place a crisis committee since beginning of March that meets every morning and is chaired by our CEO, where all the bank's executive members report on continuity and action plans for close contact with clients and commercial activity. As banking is considered an essential service according to law, we have been providing services through our branch network, Accommodating opening hours as necessary. All our ATMs have been working without any single disruption at all. In parallel with government measures, Banquinta has put in place additional private moratoriums and offer products and services to ensure that our clients and suppliers can get through this period of uncertainty with enough liquidity. Our NPL position at the end of 2019 is actually key to identify customers eligible for government and private assistance.
Therefore, we believe we are in a good position to provide better alternatives to our customers, mitigate future risks and implement regulatory accounting flexibility. The risk and financial profile of our retail and corporate customers We'll be a key factor to ensure a better outcome once this nightmare is over. In this matter, we believe we have a relevant Differentiation in the market. We at Bancinto are committed to ensuring that the Spanish, Portuguese and Irish economies recover as soon as possible. We are reemphasizing our commitment to preserving jobs during this crisis as one of our main targets.
Having said that, I will review our achievements during this quarter, and we'll try to provide some guidance about potential risk in the future. Even if focused on the remaining of the year, our main achievements this quarter were resilient quarter on quarter performance supported by our customer activity resulting in a double digits ROE, which is still differential in our country. Continued growth in the net interest and fee income, the main contributor to gross operating income as a strong cost control has allowed pre provisioning profit to grow, keeping adequate solvency and liquidity We've reduced NPLs, improved liquidity and capital ratios at expected levels, all despite a much more challenging environment with increased provisioning in addition to digitalization investment and a much lower contribution from extraordinary earnings in Portugal coming from the acquisition. Let's start, as always, with a brief comparison of Q1 key financial indicators. Group's total loan book grew by 9% to €61,100,000,000 while domestic lending continued to shrink, showing almost no impact after the lockdown on 14th March.
Gross operating income reached €436,000,000 in the quarter. It grew by around 8% with respect to the Q1 last year. NPL ratio jumped to 2.58%. NPLs performed as expected. They dropped by 29 basis points from 2.87 a year ago.
Group's net profit reached €130,000,000 a 10% decrease from a year ago Without the acquisition of Evo and Avant Garde in the Q2 of 2019, this would have decreased by 8% from last year. Our CET1 fully loaded capital ratio is 11.5. Despite the recent market Turmoil, it still stands comfortably within our guidance. Our return on equity stands at 10.2% with the normal evolution of every Q1 plus our intense provisioning in the quarter. After And in the Q1 of 2020, in an unprecedented difficult environment, we should keep pre provisioning profit ahead of last year by year end, Thanks to our continued commercial activity that was driving that was a driving force of this quarter's revenue growth, together with the new and deep exercise of cost control that will last for the rest of the year.
The future evolution of provisions For non performers after the lockdown, depending on its severity and length and how the government's measures to try to contain the economic slowdown Will impact the economy. We'll have the key in order to post a reasonable net profit for the full year, which, As you will understand, it's now very difficult to anticipate. The group's differential return on equity in the last 5 years remain in the double digit. It now stands at 10.2% after this Q1. The group's return on equity always decreases the Q1 of every year due to the capitalization of last year's earnings, when combined with increasing provisioning efforts and the full integration of EVO and Avancar, We'll reach a lower figure, although still above cost of equity.
The group's return on tangible equity stands at 10.9%, down from last year following the deconsolidation of LDA from our balance sheet and the extraordinary provision in the first Moving on to our income statement. It should be noted first that due to shareholders' recent Annual General Meeting approval of the spin off of 82% of Linea Directa still pending of regulatory authorization, The contribution of LDA to the group's consolidated income statement should be recorded as discontinued operations in according with IFRS accounting standards. Therefore, income and cost should be deducted from the consolidated P and L lines, and the net contribution from LDA should be recorded at the bottom of the income statement. For comparison purposes, we have been restated 2019 income statement using this accounting rule. In the Q1 of 2020, our income statement revealed Positive trend in core lines of revenue, interest income and fee income.
Other income, now without Linea Directa contribution, Showed a small decrease due to a bad quarter in trading income. All that brings total operating income growth to close to 8% within our guidance for the year despite the difficult environment in the last weeks of the quarter. Here are the group's comparative P and L accounts for March 2020 on the left and restated 2019 comparison On the right, with the new ADL accounting. This is not an exact like for like comparison since we did not Have Evo and Avancard last year on the Q1 only after the integration of Evo and Avancard on June 1. Thus, we provide in the far right Q1 2020 without Evonavancar to be a like for like comparison, numbers will be fully comparable for the following quarters.
For this one, Evonavancar account for an additional €23,000,000 in net interest and fee income as well as increases of €23,000,000 in expenses And finally, an increase of €4,000,000 in impairments and other provisions. The total group's net interest income is up By a solid 14%, net fee income rose by 7.5%. Other operating income and expenses only accounted for €5,500,000 after detracting the contribution from Eredea from both years. It is down by €14,000,000 or 71% year on year, mainly due to lower trading income in the quarter as a consequence of the very high market volatility in the markets. As we will see later, trading income Should be considered net of dividends received in the quarter since over €10,000,000 of the €14,000,000 of dividend paid actually correspond to trading gains but must be recorded as dividends.
The specific charge will explain this later on the presentation. Group net interest income remained strong despite the negative environment, thanks to our solid growth in lending and a positive asset mix. It is up by 14% in the year or a seasonal 0.5% decrease since last quarter, only €1,500,000 left. This would be close to 7% and minus 1%, respectively, without the €20,000,000 coming from Evonavancar. Fee income finishes the quarter growing at 7.5 percent with respect to the previous year.
It is also up by 5% from the same quarter last year with Adebanavanca. Other operating income and expenses decreased by €14,000,000 or 71 from a year ago due To one manufacturer, trading income amounted to only €2,000,000 in the quarter due to high market volatility. It compares poorly with an average of €15,000,000, €16,000,000 per in a normalized environment. Total gross operating income reached €436,000,000 up by 8.2% from 2019. Without even Avant card income grew by 2.4%, and quality remains very high as the weight from extraordinary Bad quarter in trading income fell by more than €10,000,000, €12,000,000 versus a normalized one.
Group Operating costs were under extraordinary control despite costs from the new Evo Navankar operations, €23,000,000 in operating expenses in the quarter. In total, they grew by 5.6% year on year and decreased by €29,000,000 or 13% from the previous quarter. On a like for like basis, The group's Q1 cost clearly fell by almost 8% with respect to the previous year due to extraordinary cost control plans implemented. This positive income and cost performance allowed pre provisioning profit to increase by 10.3% from a year ago and by 29 percent from last quarter. Like for like growth is up by an extraordinary 10.4% so far this year and by 22% from last quarter.
Loan loss and other provisions are up by 95% From Q1 2019, our 87% with Alevo, there are a few major contributors to this increase. One is Portugal. Due to the anticipated normalization of cost of risk from the finishing of extraordinary recoveries of previously provisioned loans acquired from Barclays. 2nd are the new operations of Evora Vanguard. The last one It's also the expected rise in cost of risk from the consumer business under a stricter NPL accounting criteria for 2020.
The other and most important one is €17,000,000 in NPL provisions anticipated for future evolution of NPLs this year. Provisions for oil contingencies stayed at the normal run rate. After all these, profit before taxes for the banking activity Stands at 140,000,000, 17% below that in 2019. This would be minus 15% without the integration of Avanavancard. As I mentioned earlier, after shareholders approved at the last AGM, the future spin off of 82% of Lina Directa, new accounting standards put the net contribution for LDA on one single line, bringing an additional €29,100,000 to the group in the Q1 or 9% more In the Q1 of 2019, this shows a very good performance of insurance business as we will see later.
The group posted a net profit €130,000,000, so a decrease of 10% from a year ago, like for like, this decrease will be only 8%. Despite this difficult situation, this quarter carried out almost in line with our plans at the beginning of the year. However, in the last 2 weeks, The impact to each of March, the impact particularly from the provisioning dragged down net profit. In our view, Pre provisioning profit clearly indicates recurrent growth in all our activities despite an increasingly difficult environment, which you are nonetheless prepared to face. The group's loan book grew by 9.4% from a year ago, bringing over €5,300,000,000 in new loans in 12 months, with no significant impact from the shutdown after 14th March to the end of the quarter.
In Spain, lending continued Previous trend this quarter grew about 6% while the sector continues to contract. Our growth was limited to €529,000,000 mainly because some large corporate credit lines were drawn after 14th March but left on liquidity. As consumer and mortgage lending remained almost flat in the quarter. Since then, the new ECO, COVID lines with government guarantees, have been put in place. In Portugal, lending is up by 12% from a year ago with an additional €67,000,000 in the quarter, slightly short of our business plan for this year.
Retail deposits continue to perform strongly in both geographies at close to 15% year on year growth. Without the €3,100,000,000 coming from the acquisition of Evo, they were still up by 9% in Spain from a year ago, While the market grew 4, together with Portugal and Evelo Group's customers' deposit grew by €7,700,000,000 to almost €59,300,000,000 with deposit costs under control. Net interest income continued to show strong resilience. It grew by more than 14 Over a year ago, bars stayed almost flat from last quarter. Like for like growth amounted to 7% from last year.
Since the integration of Evo and Avancard last June, their contribution to our net interest income has been growing every quarter. They contributed €20,000,000 to the group's NNI this quarter. Net interest income in Spain ex Evo continues to perform strongly. Growth was 6.8% with respect to the same quarter last year and only 1% or €3,000,000 less than the previous quarter. In Portugal, net interest income also grew by 14% with respect to the same quarter in 2019 and almost 5% in respect to the previous quarter with no more impact from extraordinary recoveries in the quarter.
Net interest income evolution is driven by the loan book resilience and our solid customer margin management, shown in the chart on the right. It increased by 1 basis point from last year and remained flat from last quarter. This stability is because Asset yields rose by 2 basis points and 1 basis point, respectively, in each period, while deposit cost only rose by 1 basis point in both periods. The yearly yield increase is due to a better asset mix, which offset the negative impact from repricing our mortgage back book. The quarterly one basis point hike on yields was offset by the 1 basis point jump in the cost of deposit, now at 6 basis points as of March 2020.
After many quarters, with the cost of deposit at all time lows, We believe our customer margin will remain resilient in the coming quarters if we continue to reprice asset yields positively given the trend between our mortgage front and back book yields and the continued improved asset mix in our total loan book. Based on margin and volume growth trends in deposits and loans, together with a stable contribution from the carry trade of ALCO portfolio expected for the rest of the year. And after the 1st few weeks of the economic shutdown, We still expect to increase the group's net interest income by lowtomidsingledigit by the end of this very difficult 2020. The composition of our ARCO portfolio changed slightly in this quarter. Its size remained at €7,900,000,000 after the €2,000,000,000 approx increase due to integration of Evo.
Today, 50% of the portfolio remains under amortized cost, 52% of it is in Spanish government bonds. The entire portfolio's average maturity is at 8.7 years with an average of life of 4.5 years. Its average yields Stands at 1.74, probably above those of our peers. After a very difficult quarter in bond and equity markets, What have changed since December 2019 are the unrealized gains of the total portfolio. They now amount to approximately euros 200,000,000 some €400,000,000 less than in December.
Half of them correspond to a fair value portfolio and impact The capital ratio. As we will see later, this temporary valuation detracts 51 basis points from the CET1 ratio in the quarter. More importantly, most of the unrealized gain of the ALCO portfolio as of today, Close to €200,000,000 are in the amortized cost portfolio. Therefore, they were not included into our capital ratio. Despite this unexpected situation that will certainly impact future fee income, the €123,000,000 of fees Posted in the Q1 continued to show growth.
Fee income from our recurring business continued to grow in addition to assets under management. This reflects an improvement from the Q1 last year of 7.5% and 5% on a like for like basis. And in respect to the previous quarter, a drop of 7% or €10,000,000 less is a reasonable seasonality difference. As a result, it now accounts for 28% of gross operating income, a new record. The largest contributor to Fee income continues to be asset management fees at 31% of total fees, still up by 8% with respect to a year ago.
The new market situation will have an impact on these fees going forward. However, it is probably too early to forecast what they will be at the end of the year. We can confirm that commercial activities somehow recovered after the end of March and that our private and personal banking teams will do their best to be close to our customers in this very difficult year, giving them the best advice and information they can offer about their investments. Some operations saw strong positive impact from recent market condition. On the one hand, brokerage And custody ended the quarter growing by 20%.
And on the other hand, FX business with customers is up 34% from a year We believe the effects of the economic slowdown will be noticed in fee income in the Q2, although we don't know to what extent We will continue to drive business volume and value added progress for the rest of the year. And assuming the recovery is quick, We will try to make fee income grow, probably not in mid single digits as we anticipated at the beginning of the year. As of today, we see a low single digit growth by the end of the year. In other operating income and expenses, here you can see the various lines broken down by their contribution to other operating income without Lidna Direct has insurance margin in both years. The €5,500,000 this year is lower trading income in respect to previous quarter, a €13,700,000 reduction from a recovering €12,000,000, €15,000,000 quarterly run rate in this activity.
You can also see 2 effects on trading income: a positive €10,000,000 in dividends paid out of the total €14,000,000 in dividend And a negative €8,000,000 in trading losses as dividends in the trading book need to be recorded on this specific line. This is most likely a one off occurrence and will not be repeated in future quarters. Gross operating income for the quarter stood at €436,000,000 an increase of over 8% from a year ago and 2.4% on a like for like basis. Quarterly operating income grew close to 7% from the last quarter due to the contribution made to the deposit Guarantee fund, but with almost no contribution from trading. All in all, the group's operating income grew well above Our mid single digit guidance in the Q1, assuming economic recovery will start after the 2nd quarter, We believe revenues will continue to grow throughout 2020.
The chart on the right shows the new contribution to operating income in the quarter, With the net interest income at 71% and fees at 28%. Other income only accounts for 1%, but will account for 3%, 4% when trading income gets back to normal. The group operating cost Totaled €189,000,000 in the quarter. They are up 5.6% from previous year. Without the €23,000,000 coming from Evonavancar and from now also LDA's expenses, recurrent costs would have decreased by 7.6% from last year, 7% in Spain and 6% in Portugal.
Total operating costs are remarkably down from the previous quarter by more than 13% with Evo and by more than 10% without Evo. Like for like personal expenses fell by about 15% or minus 8% with Evo from last quarter. And last year, due to the lower than expected variable incentives and other HR related expenses, General and administrative expenses dropped by over 7% 5%, respectively. This cost reduction more than offset The increased amortization expenses from investing in banking business platforms and in product and services development in recent years. By keeping all operating expenses and investment programs under tight control, we expect to finish the year within a new guidance of Low single digit cost growth.
Thanks to this effort and the end of the year on Avancar integration expenses, Our recurring banking efficiency improved once more. The group's cost to income dropped 980 basis From December, 110 basis points from a year ago to 43.3 percent even with the integration of Evonavancard. We aim to keep the long term banking cost to income ratio within 42% to 45% range as we improve efficiency in all our acquired businesses as we continue to do so in Portugal. Thus, we can see a very resilient pre provisioning profit for the group over the last quarters with the usual quarterly volatility only due to regulatory annual payments, single resolution fund and guarantee deposit fund. Let's move on, and let's talk about the cost of risk.
Cost of risk start its way up, mainly due to the provisioning in Spain to anticipate future NPLs of around €17,000,000 approximately in provisions in the quarter because as expected, NPLs were not significantly affected by the initiation of borrowers before March 30. With this in mind, cost of risk grew to 43 basis points of total credit risk, Increasing by 20 basis points from the previous quarter, this new run rate for cost of risk and the impact From the economic shutdown and governance stimulus measure make cost of risk for the year very difficult to forecast. Today, we are anticipating between 5070 basis points by the end of the year, depending on how long and how severe The crisis is. In the chart on the right, we provide the 3 main components of the group's Q1 cost of risk. You can see how Portugal Felt an important impact with an anticipated much lower contribution from extraordinary recoveries in NPLs of over €12,000,000 in the quarter and without any additional increase in cost of risk this year.
Next, the consumer finance activity. Consumer finance cost of risk increased by £10,600,000 in 1 quarter due to the new and restricted accounting standards for NPLs, the most significant impact of €22,000,000 came from Spain, where recurrent cost Our risk only grew by €5,000,000 The rest accounts for generic provisions for the rest of the year. This small increase in cost of risk in recurrent banking activity in Spain was related only to corporate banking since, as of March 30, There had been no impact in the commercial banking loan book on mortgages and personal loans. We expect This trend worsened during the Q2. And although it's probably too early to anticipate the impact of the liquidity lines guaranteed by the state Amounting to €100,000,000,000 for SMEs and corporates, in addition to the public and private moratorium in place, We are recognizing additional provision of €17,000,000 for future impacts.
Although in an unprecedented global situation, We strongly believe that in the quality of our loan book and in our credit policies and procedures in all our different business lines and geographies. In 2012, all this prevented Our cost of risk from going over an all time high of 95 basis points or 67 basis points excluding Real Estate Back Book Provision. Therefore, with all covenants and reserves, we firmly believe that total cost of risk, which includes credit related provision and cost of selling foreclosed assets, will remain between 5070 basis points by the end of 2020. On the other hand, the year's provisions for litigation, some overall FX mortgages portfolio And other miscellaneous provisions should fall slightly owing to the economic shutdown and their impact in recognizing customer demand. As always, I will now go over our management of credit risk, liquidity and solvency.
Here we go. Last month, Nonperforming loans changed the long standing downward trend and started to rise, although at a very low rate. They rose by less than €70,000,000 from last quarter mainly because NPLs grew in Corporate Banking by €40,000,000 They grew by €22,000,000 in SMEs, €12,000,000 for mid corporates and €7,000,000 for large corporates. Also, consumer finance NPLs grew by €26,000,000 as expected. The group's NPL ratio now 8% from 2.51% at year end, a 7 basis point decline due to the small increase in NPLs and total loan book growth in the period.
In Spain, it is still at half the sector average at 4.8% as of January Prior to the COVID-nineteen first impact, in Portugal, the NPL ratio stood at the normal 2.43%, down from 3.3 percent a year ago. As shown in the chart on the right, as of March 30, the group's NPL ratio was 2.24 percent for households, including consumer finance at 6.5% and stays at 3.03 for corporates and SMEs. Total NPL provisions at €855,000,000 increased from December 2019. This had almost no impact on our provisions coverage, which stood at 49% at similar level to that of our peers. Coverage for foreclosed assets went slightly down after last year's sales at 45% but maintained clearly above the average discount on sold The group's foreclosed assets portfolio is 17% smaller than a year ago.
It decreased by 55,000,000 As in the previous year, this small portfolio now amounts for €274,000,000 Let's move into capital. Our fully loaded CET1 ratio stood at 11.47 percent at the end of the quarter. Since December 2019, our return Earnings bring an increase of 39 basis points, underpinned by the retention of the Full result of the Q1. This increase almost offset all the negative impacts in the quarter. The small negative impact of risk weighted assets in a flat quarter of 1 basis point supported by recent and already mentioned implementation of new IRB models in the corporate banking world.
And one basis point resulted from other small items. The largest negative impact in the quarter correspond to value adjustments only coming from the Fair value ALCO portfolio reduction of unrealized gains. This bring additional 51 basis points reduction from The December ratio. As of April 20, that means some days ago, 10 basis points have already been recovered in this portfolio. Total capital ratio and leverage ratio remained most Table at 13.8% and 4.6% from previous quarter and within our guidance.
After the Q1 and in view of the current situation, we'd reiterate our guidance of a SAID ratio in a range of 11.5% for 2020. In terms of liquidity, the loan to deposit ratio is now at Record low of 100.5 percent owing to consistently strong growth in retail deposit in the last few years and the integration of Evo Group. On the wholesale funding maturities, all our Wholesale funding maturities are well balanced with only €800,000,000 due this year and 0 next year. This does not include The €200,000,000 from the €81,000,000 issued due in May 2021. Thus, we are still very comfortably positioned for the coming years with an estimated €13,600,000,000 in liquid assets and the capacity to issue over €6,200,000,000 in covered bonds.
Just as A reminder, so far in 2020, we've had issued €750,000,000 in MREL eligible senior and nonpreferred debt at a cost below 100 basis points. Now let's review the performance of our business Lines and their contribution to the group's operating income. As we plan to deconsolidate Linea Directa from the group this year, we are slightly changing how we present our different business and segments in the Bantinter groups. First, we are going to look at our core banking business in Spain and Portugal together as a new Iberian Banking with its on corporate SME, private personal and retail banking segments. 2nd, we will present the consumer finance business of our wholly owned subsidiary, BANKINTER Consumer Finance, which includes Spain, Portugal and the iron operation of Avancar.
And third, we will present the new Evobanca, a digital bank that only operates in Spain with a single branch. And 4th, we will present performance of our insurance company, Lina Directa. Okay. Let's start with Bankinter. The corporate and SME Banking loan book in Spain and Portugal grew by over 8% from last year.
It increased by 7% in Spain, while the sector has shrunk by 1.8% as of February 'twenty, And it climbed by 12% in Portugal. This recurrent corporate lending growth is key in order for collateral and transactional business with corporates to grow now a very important source of fee income for the bank. The breakdown of our corporate loan book in Spain Shows no major change. Thus, we continue to improve the asset mix of our loan book without major changes in asset quality standards and preserving yields despite greater competition. The 3 drivers of income in our Corporate Banking are international trade Corporates.
International Trade and Supply Chain Finance continues to lead corporate loan book growth. It grew by 14% from last year to €5,600,000,000 It has become the most important source of income for our large corporate segment Where it accounts for over 30% of total income, international business operating income grew by 15% from a year ago to €45,000,000 More importantly, 52% of its revenues came from fees rather than interest. Transactional business turnover with corporate customers, including commercial credit, tax and social security payments, etcetera, Generated €33,000,000 in operating income in the quarter, up by 12% from a year ago. Only the fees generated by this very sticky business Grew by 13% from last year. Investment Banking brought additional revenues to corporate operating income.
Since last year, new loan origination increased by 13% and the total loan book by 24%. In Private and Personal Banking, customer wealth suffered from the negative market effect in the last weeks of the quarter. It decreased by a total of €6,800,000,000 €5,100,000,000 correspond to Private Banking and €1,700,000,000 to Personal Banking customers by end of the quarter. Total wealth from customers in both segments amounted to €58,500,000,000 down from €60,000,000,000 a year ago Or 4%. The commercial activity measured by net new money in the quarter ended with a €1,000,000,000 increase Split between Private and Personal Banking.
Our Luxembourg unit has been playing a very important role in our advisory and product offering for our customers looking to further diversify their wealth in the future. Our overall performance in Commercial Banking during the quarter was Strong in terms of our main retail products. Salary account balances continued to grow. They are up 23% from 2 years ago, Totaling €10,700,000,000 new mortgage originations set a new record in recent quarters At €647,000,000 in the quarter, climbing from 13% from the Q1 2 years ago, Of the new origination, 60% of mortgages were fixed rate. Our market share in new mortgages jumped to 6.7% in the last 12 months from January 2020, which is last sector data available.
As a result, the total mortgage back book maintained its growth to €27,000,000,000 including the Spanish and Portuguese markets. The loan to value of the total portfolio stands at a strong 56 percent. Off balance sheet funds were the weakest part of the business in this volatile environment. They decreased to €27,200,000,000 from €30,400,000,000 at December 2019, which is almost the same amount in total of balance sheet funds a year ago. Year on year, mutual funds grew by a mere €100,000,000 While pension funds declined by €200,000,000 and other managed assets with private banking customers also declined by over 600,000, All impacted by the market valuation of portfolios.
As for our differential mix of funds, 60% Are managed by third parties with better behavior in the quarter and 40% are own managed. Average fees on own funds Managed stood at 68 basis points, only down 3 basis points from December. Now let's move to Consumer Finance. This chapter, consumer finance activity, now include our consumer finance business in Spain, Portugal and Ireland under the Avancard brand. At the end of March 2020, our total loan book of €2,900,000,000 Remain almost flat in the year, including the €476,000,000 from Avanca.
New credit origination in Spain, mainly in personal loans, was Offset by the reduction in revolving cards balance current balance of under €600,000,000 or 12% less than a year ago. Total number of customers grew by 9% to 1,700,000. Yearly new lending slowed down from above 20% last year 9%. And this includes €400,000 in inorganic growth from Avanca. The consumer finance loan book totaled €2,900,000,000 And now for the rest of the year, it is expected to shrink by a double digit by year end.
Total credit card business represents 44% or €1,200,000,000 of total consumer credit cards. Cards payable only at the end of the month account for 15% sorry, 50%, five-zero percent of total. They are mainly granted to existing bank inter customers, which with a much better risk profile than pure consumer finance customers. Already anticipated stricter accounting standards in 2020 for NPLs, accelerating full provision, improved Credit quality ratios and increased cost of risk for the year. As of March, NPLs stood at 5.6%, provision coverage reached 111 percent and cost of risk climbed to 4.1%.
All this brought The risk adjusted return of the business to 7.7 percent. A quick look at our stand alone business in Portugal In the next slide, here we are. A quick look to Portugal. Balance sheet grew by 12% in loans And 6% in retail funds over a year ago. Growth in loan book was mainly in mid corporates, up 27% as well as in retail mortgages growing at 8% year on year.
Off balance sheet declined due to market effect in the Q1. As of the income statement, operating income from the business grew by over 13% with no extraordinaries at all in the quarter. Costs show a 6% reduction in line with cost control plans ahead of the 2nd part of the year, bringing pre provisioning profit up by a very healthy 65% of €5,000,000 more than the Q1 of 2019. However, after the loan losses and provisions now normalized without any impact for extraordinary recoveries, As was the case last year, the profit before taxes of €11,000,000 was half of last year's Q1. We expect this decrease This should slow down over the next quarter once the recoveries from NPLs were reduced also last year quarter after quarter.
Let's talk about quickly about Evo. This quarter, Evobanko performed in line with business line, Basically around more €3,000,000 better, with a small impact in the last 2 weeks of March on mortgage origination and credit card activity. Evobanko's balance sheet has €963,000,000 in net loans, up 5.7% in the quarter €893,000,000 correspond to Home mortgage growing at a net 7.3% in the quarter or €77,000,000 in new mortgages granted from December 2019. Client acquisition has been over 50,000 new customers in the period for a total of 4 194,000 customers as of March 2020, an 11% increase. As for management ratios, customer margin stood at 1.49, NPL 1.57 with €15,000,000 in NPL and provision coverage of 63%.
After it was restructured, Evobanko's new customer and lending growth has been robust even though it has not yet turned a profit. Its business plan is to Finally, let's move to Lina Directa. Lina Directa continued to perform strongly for another quarter Despite pressures continued on premiums, despite this, total insured risk, the old number of policies, Increased by 3%. Increasing linear direct and market share. Issued premiums grew by 2%, which suggests strong price competition And some lagging demand at the end of the quarter, particularly in motor insurance.
Nonetheless, LDA's growth in motor premiums almost doubled industry's average. In home insurance, it grew by 10%, which is twice the market growth rate. In health insurance, BIVAD sold more new policies. Total policies closed at 73,000, a 74% increase from a year ago. This is fully in line with the bad business plan for 2020.
Via Directa's combined ratio improved by 120 basis points to 86 0.7%. It is still well below that of the sector despite lagging premium growth, improved in the quarter due to the reduction in claim cost and in the cost ratio after being adjusted in view to the lockdown on 14th March. Its claims ratio went down to 67.2 percent from 68.1 percent from last quarter. The cost ratio fell because of decreasing acquisition cost at the end of the quarter. Lina Directa's combined ratio of less than 87% is expected to be close to 85% by year end, and being one of the lowest in the industry represents a strong competitive advantage that will allow Linea Directa to outgrow its competitors in the coming years.
If we now look at its income statement, net profit went up by 9% from last year. This was due to 2% cost increase clearly below the 4% increase in net earned premiums. These revenue trends from operation and strong cost control resulted in a technical insurance result of €29,000,000 in the quarter, a 12% increase. This better earnings performance sustained a very high return on equity of 33%, while increasing the company's solvency Ratio at 2 20%. Once the net profit is consolidated in the group, there was an impact Last year, €4,400,000 from amortizing intangibles stemming from when Linea Directa was acquired in 2,009.
This brought Linea Data's total net contribution to the group to 22,600,000 last year. Last, Here, we have included a list of specific actions and products put in together by the commercial management of the bank for families and individuals as well as mid corporates and SMEs to help them to offset the impact of the lockdown in their jobs and in their businesses. So far, The response of our customers has been very positive from reputation point of view, but still small in numbers of individuals Growing in the SME segment, probably the most impacted by exceptional situation. Obviously, we expect this to increase over the following days weeks. Okay.
Let me just finish with a brief recap of what we've saw during this little bit longer than usual conversation. So we've shared with you a consistent delivery of recurring income from our customer Activity since the impact of the lockdown was limited to the last 2 weeks. We have shared in an increasingly more difficult environment, we have made a strong effort in cost management to support pre provisioning profit going forward. An increase in cost of risk apart from the accounting effects in Portugal to anticipate potential impact on consumer behavior and loss of smallmidcorporate businesses and profitability expressed by a still solid double digit return on equity. Appropriate solvency levels with stable asset quality, Improved liquidity, strong capital ratios and solid buffer for its regulatory requirements and Evo and Avancar integrated with no major impact on our P and L performance, Okay.
So here are some figures. In sum, with this very difficult scenario in front of us, we can anticipate that the net until the end of the year. Group operating income in the lowtomidsingledigits range. Group cost well below gross operating income growth, and cost of risk increased in the range of 5070 basis As I mentioned in my introduction, we at Banquinter 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 as we have done in the past with a higher level of differentiation versus our competitors.
And let me end with a few words of recognition. I want to thank all Banquinta staff in every country of subsidiary, and especially those at the forefront at the branch network for their commitment and energy in this crucial moment. Of course, as well, all the people working in Technology, operations, human resources, etcetera, etcetera, etcetera. Our talented people Are the main asset of the bank and rest assured that the level of dedication and commitment these days is extremely high and well above expectations. Now I will happy to take any questions you may have, of course, with a huge disclaimer about the uncertainty of the environment.
Thank you, Jacob. We appreciate it. The first question is probably a more generic outlook on our loan book for 2020. What do we expect
there? Yes. Thank you. Loan growth, In the corporate banking, we expect to maintain some strong level of loan growth because we are very active in those eco COVID-nineteen lines with government guarantees. So we expect that the corporate banking world will still have a strong growth over those probably The Q2 will be very intense of growth.
We expect the mortgage and consumer business to Clearly, slowdown over this Q2. Mortgages, we hope that maybe the second half of the year, we'll see some sort of recovery. By the overall year, we definitely expect a positive growth. Thank you.
And now more specifically, can you update us on EcoFunds request that we have received already and also moratorium request so far?
Okay. Regarding the ECO funds, so we have been allocated with around 1 in the first tranche, around €1,000,000,000 of guarantees from the ECO, and We will approx €1,000,000,000 that's around €1,200,000,000 in terms of funding. And there is a second line that we will also apply for and that we have already got the authorization, And it will be around €1,200,000,000 of guarantees, that is around €1,500,000,000 of funding, okay? So overall, We will need those most €2,700,000,000 of eco COVID-nineteen lines to provide to our clients. In terms of moratorium, so we have as you know, we have Public moratorium and we have private moratorium.
Due to the profile of our clients, the public moratorium is quite Small. There are not too many people that meet the requirements set for this government moratorium. However, We have our Bantinter moratorium program in futures. In that case, we have Some demand for this moratoria. Overall, amount of clients is not to look too high.
It's around 1500 clients applying for this moratorium, and the overall volume, as you can imagine, is not very high.
Thank you. Also on the loan book, Have you seen any undrawn credit lines in for corporates in the last few weeks? Have you seen any pattern change there?
Okay. Basically, what we've noticed in the last 2 weeks of March, we definitely noticed some demand in the lines in the large corporations world. And the use of those lines were 100% left on cash balance positions. So it was more like a caution or a prevention that credit risk situation.
We move now to the P and L. Any updates on the guidance for NII in the year?
Okay. As I mentioned, we expect net interest income to end the year in the range of a mid to low single digit, okay? So we expect resilience in the client margin. We expect growth in the loan book. As you may notice, the Euribor 12 months is behaving better than expected.
Of course, we do have ALCO portfolio contribution. We do have tiering programs. So we have a front book of mortgages with a better yield than the back book. So I think we still have A strong momentum on net interest margin that I'm sure that we can keep across the year.
Okay. Can you more specifically comment on any impact that you see or foresee for the NII this year, such as a consumer loan book, as you mentioned earlier?
Okay. As I did mention earlier, the only negative impact that we may see in the future is the contribution of consumer Finance net interest income. As you know, we have repriced all the pricing of the revolving cards, and that is one situation where the yield of that business is a little bit lower than it used to be. And apart from that, obviously, there is we do not expect any growth in this activity. In fact, we do expect a sort of decrease in the activity in consumer finance.
But as I mentioned, I think this effect will be most compensated by the other topics that I just mentioned. The overall expectation is to finish in a positive net interest income. And despite this small reduction in the consumer finance contribution to NII.
Great. Do we expect any tailwinds coming from the new TLTRO3s or any changes on the ALCO book strategy?
Okay. Yes, we will what we are doing and what we continue to do is we'll substitute the The TELTRO II positions will be amortized and will be replaced by the new TELTRO III Conditions that, as you know, are more beneficial than they used to be. So we will at least match the current amortization that we have in place. And we do not yet if we will use More capabilities or more volumes in Telstra 3, there is an opportunity to do so. And of course, we are considering it, but there is no decision made yet.
We now move on the are some questions on the trading income and dividends lines in the quarter. You can just rephrase there. Yes.
I think at the end of the day, there it is more than more an accounting Issue than a trading issue. Basically, these are trading activities that need to play with some with the stocks to make some hedge positions. And once you have that stock, if it's a dividend announced, you need to record That dividend in a different line in the P and L, in the dividend line, okay? So it's more an accounting issue, more than a trading issue. I mean, those figures reported in the dividend line are basically trading activity, But obviously, we cannot merge both lines.
Okay. To finish off with the income lines. Are we seeing any pressures on GL. So anything different in the Q2 as of April, obviously?
Nothing apart from what I've mentioned of the reduction of the contribution of the [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] The contribution of the consumer finance business because in fact, as I mentioned, the second quarter, you will see Much more activity in the corporate banking book from the ECO COVID lines.
Thank you. We move now to expenses. Can you just explain the performance in the quarter and also what shall we expect going forward from these lines?
Okay. In the expenses line, as I mentioned, we have the contribution of Evo and Avancar, which was not in the previous year, so that there is a positive contribution. When we do the like for like comparison of both quarters, you will notice there is a reduction in cost. This is basically because we are putting in place some plans to rationalize cost. Obviously, when Everybody is at home.
You can imagine that there's many, many costs that are not needed, so we have a possibility to reduce cost. And this is what we are trying to put in place. We need to be more efficient. We are more efficient right now, and we will continue to do so. There is no specific magic on this.
It's basically we review every single cost in the bank, and we're trying to make an extraordinary effort to reduce Any single topic that we can reduce and which might not be or which might not have a potential return on an income. If there is no return on income, there is no expense.
Moving further down, Other provisions, are we taking all these provisions in the quarter because of the multi currency loans? Any outlook there? Any new litigation that we are seeing? Okay.
In the other provisions lines, I must mention that there is no Not only litigation provision in that line, there is also credit risk provisions for guarantees and for undisposed lines, okay? So the comparison, I think, and I'm talking by heart of €7,000,000 comparison in that line year versus year, Most than half of it come from Portugal because Portugal released around €3,000,000 to €4,000,000 of credit risk last year from those guarantees or disposable lines, okay? The remaining effort, I must say, that the FX effort has been 10% lower than the Q1 of last year, and the remaining effort in litigation risk is more due to BAU, business as usual litigation cost, Which I remind you, there might be legal and there might be tax, etcetera, but just BAU. Okay. We're also getting questions.
Are we seeing any litigation on credit cards? No, no, no. On credit cards, for the time being, there is no litigation at all. In fact, as you know and due to the lockdown of the economy, it might be a period of of a reduction of the expected number of demands that we might receive in any type of litigation.
Okay. We move now to asset quality. What are the expected impacts from the COVID-nineteen for the year? What is your outlook for this year?
Okay. As I mentioned before, we end up the quarter with 43 basis points cost of risk, And there is an increase in this first quarter due to an extra provisioning of EUR 17,000,000. We expect the cost of risk to keep growing over the following quarters, and we expect at the end of the year to be somewhere between 5070 basis Okay. This is with the information that we have today. As you can imagine, it is very Difficult to provide you an accurate figure on this because the number of predictions that we Here, every day, it's quite dispersed.
And please bear in mind that in terms of Recording cost of risk, we need to consider all this accounting flexibility provided by the authorities in terms of all this moratoria And also the flexibility in terms of the forward looking of the models, we Do not focus on what's going to happen in 2020. We need to focus also in what happened in 2021 or even 2022 in order to be accurate with those models. So I hope you understand that this is not an easy exercise, and we are providing you the best estimate that we can share with you as of today. It might change in the future. We don't know yet.
But as I mentioned, it is not clear yet what will be the economic or the macro circumstances in 2 months' time or 3 months' time. And of course, the implementation of the accounting flexibility, even if moratoria, even in the stage 1 or stage 2 or Even in the implementation of the impacts in the models, it is not clear yet. Thank
you. Specifically on the quarter, did we anticipate any provisions? Can you work that through?
In the Q1? Yes, in this quarter. We did anticipate €17,000,000
Moving into capital now. What impact did you see there? And you can update us on your guidance for CET1. Okay. Our guidance Still at 11.1%,
and this is a figure where we will stay in the future. Yes. I just want to clarify that in the results of the Q1 and the results of the 2nd quarter We'll be not distributed. So all these results of the first half of the year will be retained in capital for capital purposes. After that, we will see as it's recommended, we will wait until October, and There will be a new review of this dividend policy, and we will see.
But at least for the first half of the year, All the income will be retained. And in fact, in terms of guidance, I think we will Should be somewhere between 11.5% and probably more. Just a quick reminder. If we expect to grow in ECO COVID lines, These are, in average, with a 70% guarantee from the government. So the consumption of these lines will be much lower than other types of funding.
So we might expect a lower consumption in the future. Okay. Last on capital. Can we expect Any further benefits on model updates this year? On model updates, we do not expect any short term Benefits from new model updates.
Okay. Lastly, on Linea Directa. Any updates on the spin off calendar and the plans there and also what shall we expect about the business and the combined ratio of evolution.
In the trying to transfer in the to answer the As I mentioned, I think the combined ratio would be quite strong, I mean, positive in the following quarters. We I think it may be somewhere around 85% at the end of the year. Results of Lina Directa are being very strong in this quarter, and there is no reason why We should think that anything will change in the following quarters, respecting the mandate of the calendar. So I just want to make sure that we receive the mandate from our Board and our shareholders to proceed with the spin off of Lina Directa. And this is something that we will go ahead and it is something that it will happen.
In terms of the calendar, as you can imagine, we were targeting or we are targeting the last quarter of this year. Obviously, due to the circumstances, these dates may be delayed, not we don't know exactly how long, but it could be the Q1 of the following year. But rest assured that we are fully dedicated to this transaction, and we will try to execute it as soon as it's possible.
Thank you, Jacob. That was it for us. Thank you, everyone, for your questions. And obviously, for any further questions or doubts, you can contact our Investor Relations team. Take care, and goodbye.
Thank you very much, and keep safe.