Good morning, welcome to Bankinter full year 2019 earnings call. Our CFO, Jacobo Díaz, will now comment on the figures in more detail. Thank you.
Hello. Good morning, and welcome to this presentation of Bankinter's earnings from the fourth quarter of 2019 and the full year of 2019. The related financial statements were posted on the website of the CNMV a few minutes ago, and before market opens. All related documents can also be found at this time on the Bankinter corporate website. First of all, a few words to emphasize that we had closed one more year with a remarkable performance based on our recurring business in all geographies, Spain, Portugal, Luxembourg, and Ireland, with us for seven months so far. 2019 has been our seventh consecutive year of increased net profits for the group. Among others, our achievements this past year were consistent quarter-on-quarter performance supported by our customer activity, resulting in a return on equity clearly above cost of equity.
A solid growth maintaining net interest income, gross operating income, and pre-provisioning profit, even excluding inorganic growth. Adequate solvency with decreased NPL, and liquidity and capital ratios at expected levels are even improving. All this despite a much more challenging environment, together with negative rates, significant investments in the digital front, and with lower extraordinary earnings in Portugal originated from the acquisition. In this brief comparison of key financial indicators, group total loan book grew by 9% to EUR 60.4 billion, while domestic lending continued to shrink during the year. Gross operating income reached almost EUR 2.1 billion in the year. It shows a growth close to 6% over the previous year. NPL ratio continues its long-term downward trend. The few basis points increase coming from the EVO and Avantcard integration were more than offset by the last quarter sale of NPLs in Bankinter Consumer Finance subsidiary.
Year-on-year, it dropped 39 basis points to 2.51%. Finally, Group's net profit reached EUR 551 million, an increase of 5% from last year. Without the acquisition of EVO and Avantcard and other integration costs, this would show an increase of 2.4% from the previous year profit before taxes, a new record high. At the same time, our CET1 fully loaded capital ratio stands at stable 11.61%, which is comfortably within our guidance for the year, and our return on equity stands at 12.98%, 13.0% if you round it.
We can affirm that after closing the full year 2019 in an increasingly difficult interest rate environment, that we continued growth in our recurrent commercial activity has been the driving force of revenue growth, and that with costs and provisions under control, we have been able to post a new record net profit, the seventh in a row, and with an annual compound rate of growth of 24% in the period. Before we look at all our performance indicators, once again, I would like to highlight a differential story and strong return on equity. The group's return on equity has maintained steady growth in the last five years, as shown in the chart. It now stands at a solid 13%, clearly above cost of capital. We will move on to our income statement performance for the full year.
Our income statement for the full year of 2019 has proved positive trends in almost all line of revenues, interest income, fee income, trading income, bringing operating income growth to close to 6% and meeting our guidance across the year. Here you can see the group's cumulative and comparative P&L accounts as of December 2019 on the left, and a like-for-like comparison without EVO group on the right. You will easily notice that the impact from integration, EVO and Avantcard as of 1st of June, and in the second half of the year, which is an additional EUR 48 million in net interest income and fee income, an increase of EUR 79 million in expenses, including EUR 23.7 million in integration expenses. As an increase of EUR 32.6 million in impairments and other provisions, EUR 22 million of them are non-recurrent.
The total group's net interest income is up by a solid 8.8%. The net fee income finally rose by 6.6%. Other operating income and expenses is slightly down by EUR 27 million or 8% year-over-year, mainly due to increasing regulatory expenses and a forecasted decrease in our Línea Directa insurance income. Our trading income grew by 29%, only EUR 68 million in a year on a better year for debt markets. We prove that group's net interest income remains strong despite a negative interest rate environment, thanks to our solid growth in lending and a positive asset mix. It is up by almost 9% in the year or by 13% since the same last quarter the previous year.
The positive seasonality in the fourth quarter commercial activity like every year, the improved market conviction did help commercial activity and therefore fee income and asset under management volumes in the last quarter. This fee income finishes the year growing at 6.6% with respect to the previous year, and 15% more than in the previous quarter. It is also up 13% from the same quarter last year. Like-for-like fee income ends right in our mid-single digit guidance. It is up by 5% year-on-year owing to our increased commercial activity. Other operating income and expenses show a decrease of EUR 27 million or 8% from a year ago due to different factors. First, regulatory charges increased by 19% or EUR 15 million. Second, the slowdown in the insurance income coming from Línea Directa, with a 4.4% reduction in its technical margin for the year.
We will analyze later in detail Línea Directa in the following specific chapter. Gains on financial transactions were 29% higher than in 2018. Its contribution of EUR 68 million to earnings is still very low, and it continues to represent less than 3.3% of all group revenues. Total gross operating income has reached close to EUR 2.1 billion, up by 5.9% from 2018. At the same time, excluding EVO and Avantcard, income growth was 3.1% and quality remains very high, as the weight from extraordinary revenues coming from Portugal has fallen by EUR 10 million to only EUR 5 million in this year. Group operating costs continue under control despite EVO and Avantcard acquisition and integration expenses. They have grown by 7.2% year-on-year, mainly due to the acquisition of EVO and Avantcard.
On a like-for-like basis, the group's costs are clearly under control, with almost a 1% decrease with respect to the previous year. The positive income and cost performance have caused pre-provision profit to increase by 4.4% with respect to the full year and by 4.5% over the same fourth quarter last year. Like-for-like growth for the year was up by more than 7.4% and by 9.7% over the same quarter last year. Loan loss and other provisions are up by 38% in 2019 or 27% without EVO. After the positive impact of the EUR 62 million of non-recurrent badwill from the acquisition of EVO, our profit before taxes reached EUR 741 million or 2.8% more than in 2018. This will became 2.4% without the EVO and Avantcard integration.
Group's net profit has grown by 4.6% to EUR 551 million in the year with the help from a lower tax rate as you know badwill is not a tax item. Using most of the badwill in the year, group net profit is a true reflection of the real recurrent growth rate in another very good year for Bankinter, an increasing difficult environment. Here you can see the quarterly income statement we were discussing before for each specific line. The fourth quarter is affected by the contribution to the deposit guarantee fund, almost EUR 50 million in 2019. Relative to the same quarter last year, the main impact is on the quarterly cost of risk, last year affected by the NPL asset sale in Portugal and reclassification between impairments and other provisions. Moving on.
The group's loan book has grown by a remarkable 8.9% year-on-year, bringing in over EUR 4.9 billion in new loans, including EUR 1.4 billion of inorganic growth coming from the EVO transaction. In Spain, while the sector continues to contract by 1%, we show EUR 2.7 billion in net new lending, up 5% and not including EVO. In the new mortgages, our market share in new lending jumped to close to 6.4% as of October 2019, which is the last data available. We're moving from 5.8% to 6.4%.
On the other hand, in Portugal, lending up is by 13% or an additional EUR 800 million, somehow ahead of our business plan for Portugal, where our market shares are still smaller than in Spain, and we plan to increase them. I will give you more detail in the Portugal slide. Regarding retail deposits, both geographies continue to grow strongly at over 14% year-on-year.
Without EVO, they are up by 7% in Spain from a year ago, while market is growing by 6%. Together with Portugal and EVO, group's customer deposits have grown by EUR 7.2 billion to almost EUR 58 billion, despite deposit costs being kept under control. Net interest income has shown strong resilience. It grew by more than 8.8% in the year and by 13.3% from the same last quarter a year ago. EVO and Avantcard's balance sheets were integrated last year, and our contribution to our net interest income has been of EUR 41 million for the seven months of the year. Net interest income in Spain alone saw an excellent performance in the quarter. Growth was 6.8% with respect to the same quarter last year and 2.8% or EUR 7 million more than in the previous quarter.
In Portugal, net interest income has also grown by 9.8% with respect to the same quarter in 2018, and a 3% reduction in respect to the previous quarter due to EUR 2.4 million less extraordinary recoveries. For the full year, excluding extraordinary recoveries, recurrent net interest income in Portugal is up by 17% year-on-year. You can see the EVO and Avantcard contribution for each quarter of every year. Customer margin. Customer margin continues to show resilience, and it increased in average by nine basis points from the last year. It is up one basis point from the previous quarter. This is only owing to the variation in asset yields of plus nine basis points and plus one basis point in respective periods, with no variation in deposit costs.
The yearly yield increase is due to a better asset mix that has been able to offset the impact of the negative repricing of our mortgage-backed book. The quarterly two basis points drop on yields were offset in one basis point, thanks to the drop in cost of deposits, now at five basis points at December. We expect our customer margin to remain resilient, even under market pressure in the coming quarters, given the positive delta between our mortgage front and back books. The larger proportion of fixed rate mortgages and the continued improved asset mix in our loan book. Going forward, we expect that asset mix, together with a little help from the cost of deposit, will be able to offset the headwind of the drop in the 12-month EURIBOR.
Based on these trends in margin and in recurrent volume growth in deposits and loans, we hope to be able to grow group net interest income by mid-single digit in 2020. The composition of our ALCO portfolio has changed slightly in the year. Its size increased by EUR 1.7 billion, indicating additional liquidity after the EVO integration. Today, over 50% of the portfolio remains under amortized cost, and over 53% of it is in Spanish government bonds. The entire portfolio's average maturity is 8.8 years. Its average yield stands at 1.8 as of December. Unrealized gains on the total portfolio amounted to approximately EUR 610 million, some EUR 100 million lower than in September. Maturities for the coming years are minimal and well spread out until and after 2026. Moving into fee income.
Fee income in the quarter has performed as expected, with positive seasonality from the previous one and with a better market environment. It continued to be fueled by growth in recurring business and now with increasing assets under management volumes. This indicates an improvement from the first half and nine months rate of growth. As a result, it now accounts for 23% of our gross operating income. The largest contributor continues to be asset management fees, with 32% of total fees, still down by 4% with respect to a year ago. Despite the market's slow recovery in the quarter, it's been a very difficult year in equities and mutual funds volume that still compares with a robust first half of 2018. The second largest contributor to fee income, with 25%, is payment on collections and credit cards with corporates and SMEs.
They continue to grow strongly, having posted a solid 19% increase on the back of our international business, such as the supply chain finance activity. Market recovery from the last quarter helped to offset some of the more volatile sources of fee income, such as brokerage, which ended growing by 4%, or effects business with customers, which is up 1% year- on- year. Life insurance sales, risk-related transactions, basically endorsements fees, commercial credit fees, non-dispersed fees, et cetera, and other fees from the business are also improving. They are up 6%, 12%, and 7% respectively. Fees on structured finance from investment banking are now EUR 24 million, up EUR 274 million from a year ago, and need continued effort to increase their contribution going forward. We will continue to push forward volumes and value-added products that will make fee income to grow by mid-single digit this 2020.
Under, obviously, the assumption that the market environment will remain somewhat stable through the year. In other operating income and expenses, the contribution of LDA's insurance margin ends the year 4.4% lower than a year ago. This is due to greater competition in premiums, like in previous quarters. Some of this pressure was offset by strong cost control over a very flexible costing structure, and as we will see later. Regulatory charges increased by 19%, amount to EUR 95 million in the year. This has a negative effect on other income expenses, which grew by 8% or EUR 27 million year-on-year. Gross operating income for the year stands at a new high of EUR 2,055 million.
I'm sorry, EUR 2.055 billion or EUR 2,055 million, and in the same quarter a year ago, reduced by 5.6% from the previous quarter due to the annual contribution of the guarantee fund. In Portugal, gross operating income grew by 2.6% from last year, considering EUR 10 million less in the contribution from extraordinary income, EUR 5.3 million in 2019 versus EUR 15.3 million in 2018. All in all, groups operating income grew above mid-single digits in 2019. We expect this growth rate to hold for 2020 revenues. The chart on the left shows the contribution to operating income in the last five years. In 2019, net interest income accounted for 58% and fee income at 23% of total operating income.
The contribution from other income and expenses, mainly Línea Directa, fell to 15%, and the contribution from non-customer operation remained at 3%. Looking at the group operating costs, which total over EUR 1 billion, they are up 7% from previous year. You'll see in this pie, the EUR 79 million costs arising from the EVO integration. Recurrent banking costs, including Spain and Portugal, we have increased by only 0.2% over a year ago, while Línea Directa insurance costs were 2.8% down, lower than the previous year. Over this EUR 79 million in EVO transaction extraordinary costs, EUR 24 million only relate to integration expenses. Therefore, non-recurrent and will be not in the next year. Recurrent costs in EVO were EUR 55 million in the last seven months of 2019. We expect these expenses to be under control in 2020, with the objective of improving their efficiency.
Like-for-like, personal expenses remain under control in both the banking business and Línea Directa, with a small 2% growth, and general expenses on a clear reduction in both businesses. By controlling all our operating expense tightly, we expect to be able to finish the year 2020 with a guidance of mid-single-digit growth, mid-single-digit cost growth, in order to keep cost increases always below income growth and maintain our efficiency in overall banking operations. Group's cost-to-income jumped 60 basis points after the acquisition of EVO and Avantcard, in addition to non-recurrent integration expenses. Excluding these two items, the jaws of recurring expenses remained positive, bringing recurrent cost-to-income to 45.3%. Moving into cost of risk. Cost of risk remained low at 23 basis points of total credit risk, although increasing by four basis points from previous year cost of risk or EUR 32 million.
The small increase in cost of risk from last year has to do only with the recent integration of EVO and Avantcard and the growth in the loan book of the banking operations, although mainly due to consumer finance activity. 2019, total impairments went up by EUR 76 million over the last year. EUR 51 million of them has to do with last year reclassification of provisions. The EUR 25 million year-on-year increase is due to the incorporation of EVO group and our growth in consumer lending. Although slightly increased from last year, cost of risk continued to be at all-time lows and in line with asset quality and with no signs of deterioration in the current business. We maintain that total cost of risk, which includes credit-related provisions and cost of selling foreclosed assets, will be slowly growing towards our long-term normalized cost of 30-35 basis points.
I will go over our management of credit risk, liquidity, and solvency. Non-performing loans continued to drop for another consecutive year, although at a lower rate than previous ones due to the already low level. NPLs fell by 5.8% year-on-year across the group to EUR 1.68 billion, a drop of 4.5% in Spain and by 23% in Portugal. The reduction of almost EUR 100 million since last September in Spain is mainly due to the sale of the NPL portfolio from Bankinter Consumer Finance, when they reduced their non-performing levels to close to 5%, as we will see later on. The group's NPL ratio now stands at 2.51% from 2.90% a year ago, a drop of 39 basis points due to the ongoing reduction in NPLs and the sale of the NPL portfolio in the consumer business.
In Spain, it remained below half of the average of the sector, which is at 5.0%, as you see in the slide. Finally, in Portugal, the NPL ratio now stands at a normalized 2.4%, down from 3.5% a year ago. Total NPL provisions at EUR 814 million after asset sales had a small impact in our provisions coverage, now standing at 48%, similar to our peers. Coverage for foreclosed assets also went down after the yearly sales at 44%, but maintained above the average discount on sold assets. The group's foreclosed assets portfolio is 17% smaller than a year ago, having decreased by EUR 58 million year-on-year, a larger reduction than in previous year. This small portfolio now amounts for EUR 291 million. Total sales in the year amount to 34% of the stock from the beginning of 2019.
We continued to sell repossessed assets through our commercial network with an average discount on sale slightly higher of 34%, below our provision coverage. Moving into capital, our fully loaded CET1 ratio stand at 11.61% at the end of the year. Since December 2018, our retained earnings bring an increase of 67 basis points, 10 basis points more than in September. This increase can offset all the negative impacts of risk-weighted assets growth of 33 basis points after the implementation of the new IRB model in corporate, saving over 10 basis points approximately in this quarter. Most of the 28 basis points owing to the EVO acquisition. We've been able to offset half of the impact of EVO. Finally, value adjustments comparing with last year, mainly coming from our ALCO portfolio, brings additional three basis points.
Compared with last quarter, we have a negative 10 basis points impact from this portfolio. Other issues, such as IT amortization, et cetera, detract 22 basis points to the December ratio. Total capital ratio and leverage ratios remain mostly stable at 13.9% and 4.8%, respectively, from previous quarter and within our guidance. Once more, we reiterate our guidance of CET1 ratio in the range of 11.5% for 2020. Volumes. Volume increases in deposits and the incorporation of EVOs and Avantcard since June has helped to close our funding gap in Spain from over EUR 10 billion five years ago. Now the group's funding gap is only EUR 1.3 billion, 66% lower than a year ago, and only coming from Portugal, where it shows a strong growth in lending over deposits.
As a result of all that, loan-to-deposit ratio is at 101.8, the lowest level ever, owing to the continued strong growth in retail deposits over the last few years. The maturity structure of our wholesale funding is well-balanced, with only EUR 800 million in this year and zero next year. We enjoy a very comfortable situation with respect to the coming years, with an estimated EUR 13.4 billion in liquid assets and our current capacity to issue over EUR 6 billion in covered bonds. Just a reminder, in 2019, we issued EUR 500 million in MREL-eligible senior preferred debt, and in July, we issued a benchmark senior non-preferred bond issue for EUR 750 million, also to fulfill yearly MREL requirements. I remind you, MREL requirements, 18.87% of our risk-weighted assets or 8.52 are still off, the lowest of all Spanish banks.
For 2020, issuance plans are similar to last year in terms of size and instruments, more probably senior non-preferred. Let's review the performance of our business lines and our contribution to group income. Contribution from different businesses has improved its size and diversification if we compare with five years ago, as it's shown in the graph. While Línea Directa's contribution decreased to 20%, other new businesses such as Bankinter Consumer Finance, which now represent 13%, and Portugal, now 6% of our incomes became a strong and recurring source of customer businesses. Finally, the new EVO group's contribution with 2% of our incomes. All of this reduced non-customer operations, such as treasury or other corporate operations, to only 6% from 17% in 2014. The corporate and SME banking loan book grew by over 5% year-on-year in Spain, while the sector shrunk by 2.7% as November 2019.
This is our 10th year in a row growing this loan book. This recurrent loan growth is key for the increase in transactional corporate operations and collateral business volume growth. Now a very important source of income and fees for the bank. In Portugal, where we still have a small market share in the corporate sector, new corporate lending is up by 26%, reaching EUR 1.7 billion on a continued effort to increase market share in the mid-corporate market. The breakdown of our corporate loan book in Spain shows no major change. In Spain, the number of active corporate customers grew organically at 4% year- on- year, while our market share in new lending in the year continues to expand.
As we have been following through all this year, the main drivers of income in corporate banking are our corporate international business that continues to lead in loan book growth, now by 14% year-on-year. It has become a very important source of income for the corporate segment. With 29% of its total operating income, international business operating income is up by 7% in the year, and more importantly, half of its revenues have come from fees rather than interest. Transactional business volumes with corporate, including commercial credit balances, are up 14%, as well as the fees generated by very sticky business where we are specialized. In investment banking, new products and services have made each loan book and operating income increase by 19% and 22% respectively from the previous year. Those collected fees increased by 52%.
In private banking, customer wealth grew by EUR 4.8 billion, almost EUR 5 billion in the year, 13%, with a positive market effect of EUR 2.1 billion. Our year-end amount of EUR 40.4 billion resulted in a 7% compound annual growth rate in managed customer wealth from the five years ago, which are EUR 23 billion in 2014. At the same time, the proportion of managed funds moved from 17% in 2014 to 42% at the end of 2019, with a positive implication in fee income for the group. Personal banking assets under management are up by 9% from the last year. This rate of growth increased quarter-on-quarter. Total customer wealth is up by EUR 2.1 million in the year, with a positive market effect of EUR 4.8 billion in the period. Net new money was up by EUR 1.4 billion, a 47% increase from last year.
Our delegated and advised assets, including mutual funds, only represent 29% of total managed assets in this segment, with a clear room for improvement. Commercial banking continues with its strong performance in the main products. Salary account balances are up by 25% to reach EUR 10.4 billion. New mortgage origination set a new record in recent years at almost EUR 3 billion of production in the year, climbing 17% from the previous year, now with 38% being fixed rate. Our market share in new mortgages jumped from 5.8%-6.4% in the last 12 months. As a result, the total mortgage back book grew by EUR 1.7 billion, EUR 900 million organically, and keeps leading the growth in the Spanish and Portuguese market. Loan-to-value of the portfolio maintains a strong 58% ratio. Off-balance sheet funds are growing again after a more difficult first half of the year.
Although the low interest rate, basically negative interest rate, high volatility environment persist. As of December, total off-balance sheet funds amounted to EUR 30.4 billion, up EUR 3.6 billion, 13.7% increase, and 3% more since September. Year-over-year, mutual funds grew by 15%, while pension funds grew by 12%, and other managed assets with private banking customers grew by over 6%. Let's move on on consumer finance. Bankinter Consumer Finance. This slide refers to our consumer finance activity in Spain and Portugal, and do not include Avantcard in Ireland, since it still belongs to EVO Banco. In the period ended December 2019, our loan book continued to grow by EUR 400 million, along with the number of customers, which now sums more than 1.4 million clients.
This pure organic growth brings the total consumer finance loan book to EUR 2.4 billion or up 21% over a year ago, somehow slowing down from previous year rate of growth. Revolving credit card outstandings decreased by 2% to less than EUR 670 million, while standard credit cards, those cards payable only at the end of the month, went up by 5%, while personal loans grew by 44% in the year. After this fine-tuning and an NPL sale of EUR 100 million, approximately in the quarter, credit quality ratio improved and remained under tight control. NPLs stand at below 5.7%. Provisions coverage reached 111%, and cost of risk is at 3.6%.
All of the above brings the risk-adjusted return of the business to 8.4%, which looks good and in line with plans, particularly since over 40% of our business is with current Bankinter customer, with a much better risk profile than the ones in pure consumer finance. Consumer lending in Portugal continues to be relatively small and is included in this figure. It accounts for 7% of the total portfolio or EUR 211 million. I will now go over Bankinter Portugal, where balance sheet continues to grow in line with our expectation. Loan book in Portugal increased by a strong 13% with respect to 2018, mainly in corporate loans, which grew by a remarkable 26% to EUR 1.7 billion, and by 9% in commercial banking, mainly mortgage lending to EUR 4.5 billion.
With respect to customer deposits are also up by a solid 7%, while off-balance sheet funds, mostly unit-linked and mutual funds, have increased by 12% to EUR 3.4 billion. As for the earnings, the 3% increase in net interest income will be EUR 10 million higher, up 17%, not including the impact of the decrease in extraordinary recoveries. EUR 10 million less this year, EUR 15 million in 2018, and EUR 5 million in 2019. This positive performance, adjusted for extraordinaries, together with a 3% increase in fee income, will bring 11% increase in total operating income. As in the previous year, strong cost control and positive cost of risk have led to a 9% increase in profit before taxes to EUR 66 million. The extraordinary contribution from NPLs recoveries of EUR 18 million in 2019 are expected to finish this year.
Those cost of risk in Portugal for 2020 will be nearby zero, and therefore, Portugal is expected to reduce its contribution to the group after eliminating all excess provisions since the 2016 acquisition. Efficiency will continue to improve once again. Recurrent business trends in Portugal continue to improve. Here you can see our quarterly performance in recurring net interest income, up by 27% with respect to the same quarter last year, as well as our recurring total income with a 28% increase with respect to the same quarter last year, since fee income growth continued relevant. In the following slide, we have updated some figures from EVO and Avantcard businesses. EVO Banco's balance sheet amounts to EUR 0.9 billion in net loans, of which EUR 800 million are home mortgages and EUR 85 million granted since September 2019.
EUR 80 million personal loans, of them only EUR 15 million in revolving credit cards. As for the liability side, EVO shows EUR 3.1 billion in retail deposits and EUR 319 million in off-balance sheet, split between mutual funds, pension funds, equity, and unit links. Client acquisition has been over 50,000 clients since June to a total of 481,000 customers at year-end. Strong commercial activity is now on its way. As per management ratio, customer margin stands at 1.62%, NPL ratio at 1.62% as well, with a provision coverage of 60% approximately. For Avantcard business in Ireland, our consumer finance unit in Ireland, it has a loan book of EUR 0.46 billion. It's split into two-thirds in credit cards and one-third in consumer lending to Irish customers, with a 23% growth year-on-year and with a total gross yield of 12.6%. NPL ratio for Avantcard is 1.2%.
Avantcard is a very profitable business with a return on equity over 20%, and its main task will be to be growing its marketplace, always within the limits for the group and without deteriorating the credit quality standards. Let's move into Línea Directa. Línea Directa's contribution in 2019. Total insured risk, this is the all number of policies, continued to increase by 5%, allowing Línea Directa to continue to increase its market share. Now 6.8% in the Spanish motor insurance market, the increase in premiums grew by 4.5%, reflecting a strong price competition, particularly in motor insurance. Nonetheless, Línea Directa's growth in motor premiums continued to almost double the sector growth, and in home insurance growing by 10.6%, which is almost three times the market growth. These are excellent track records. In the new health insurance business, company called Vivaz, it continues to grow in policies, mostly to new customers.
Total policies closed the year at 69,460 within the business plan for the new company. Línea Directa's combined ratio of 87.9% continues to be well below that of the sector. It improved from the first half of the year but continues 230 basis points below that of the previous year, impacted by the increase of the claims ratio to 68.1% from 64.8% a year ago. The baremo adjustments, extraordinary weather issues, and a more difficult start of the year are responsible for this 330 basis point increase. Due to 100 basis point decrease in the cost ratio during the year, they offset one-third of this increase in the combined ratio. A combined ratio of under 90% clearly represent a very strong competitive advantage that will allow Línea Directa to outgrow the industry in the coming years.
If we look at its cumulative income statements, net profit is down by 8% from last year. This is due to the 10% cost increase from net claims due to higher than expected claims and non-recurring provisions which exceeds the 5% increase in net earned premiums. This behavior reduces revenues from businesses by EUR 15 million. Thanks to strong cost control, its technical insurance is down by 12% to EUR 104 million, a 12% decrease from a year ago. This relatively modest earnings performance is still translated into a very high return on equity of 33%, while maintaining the company's solvency ratio at 211%. Let me finish with a brief recap of what we have seen in 2019.
In our opinion, it's been a consistent delivery of results year- after- year in an increasingly more difficult environment, supported by ordinary and recurring income from our customer activity and profitability expressed by a solid return on equity, clearly above cost of equity. We have appropriate solvency levels with a stable asset quality, capital ratio at expected levels, and a solid buffer for regulatory requirements. Integration of EVO and Avantcard with no major impact in our performance, quality of asset, and capital structure. These are the figures that we've shared with you in this session. A very solid balance sheet growth, 9% in lending and 14% in deposits, which we believe it's an outstanding performance. Customer margin, fees, and volumes supported by 5% net interest income and 6% operating income growth, which again, we believe it's an excellent performance.
A strong growth of recurrent core banking business to offset volatile markets. Cost-to-income in our recurrent business continues to show positive growth. Total cost of risk maintained clearly below the normalized, the long-term 30-35 basis points, and capital at 11.6% after the acquisition of EVO, right in our guidance. Also, I would like to summarize what we expect in 2020. Net interest income growth of mid-single digit, fee income growth in mid-single digit, group's operating income, again, in mid-single digit growth, group's cost below gross operating income at mid-single digit. Of course, that's usual. I'll be very happy to take your questions after this long speech.
Thank you, Jacobo, for the effort. Obviously, we have a few questions already here. You have answered, in fact, thank you for the late wrap-up on guidance for 2020. Just could you please confirm that this guidance is based on the reported figures rather than like-for-like, as we did previous years?
Yes. I think I confirmed this on the reported figures.
Okay. Finally, just on the guidance for 2020, can you just go through the loan growth expectations, in both Spain and Portugal, and also touch on the cost of risk that you expect for this year?
Okay. As this year, we have grown EUR 4.5 billion. Out of this EUR 4.9 billion, some of them have been inorganically from the contribution of the new business of EVO and Avantcard. Excluding this inorganic growth, I would say the like-for-like growth has been of EUR 3.5 billion. For 2020, there is no reason why we shouldn't grow again this amount, EUR 3.5 billion or somewhere around those figures. Of course, including some levels of growth from the new businesses. I confirm you that growth should be somewhere between EUR 3 billion-EUR 4 billion, and probably repeating this EUR 3.5 billion that we've seen this year. This, in percentage terms, I think is somewhere between 5%-7% increase even loan book.
Okay, thank you.
I think there was another question.
Cost of risk, could you just repeat for 2020, your guidance?
For 2020, our guidance for 2020, there is an increase because we have the EVO and Avantcard businesses in-house. That means there is an increase in impairments, just because the new business are here. Let me remind you that in Portugal, we've been releasing provisions all these years, we've come into an end. Therefore, in next year, we expect no release of provisions. Basically, a nearby zero release of provisions. In Spain, the increase of the cost of risk will be reaching the normalized 30 basis points reference that we have for our business. It will be correlated with the level of growth of our book that I just mentioned. I believe the asset mix will be pretty similar to what we've seen this year.
Okay. Thank you. Let's start now with the quarter performance. Let's, for example, move to the NII. What would you say about the drivers in the quarter of the growth? Also, you can just break down the main drivers here.
Net interest income in this quarter, I think it has an excellent behavior. Once again, we have the impact of EVO and Avantcard business. I think in the slides where I stated the level of contribution of those business to the NII in this last quarter. We have loan growth, the asset mix, that is still improving the level of NII, and it's compensated the expected decrease in the levels of EURIBOR 12 months. We have also the impacts of the tiering, that is contributing to a better net interest income. There is a little contribution from releases in Portugal that we've been able to offset with loan growth in Portugal as well.
Okay. What's the ALCO contribution going forward onto the NII?
The ALCO contribution for 2020 will be a little bit lower than in 2019. We normally account for 12% of the net interest income, so it should be probably somewhere between 11% and 12% contribution the next year.
Okay. Moving now on to the fee income. Would you highlight any one-offs in the quarter, or again, what are the drivers for the growth quarter on quarter?
Okay, the last quarter has been an outstanding quarter. There is only one one-off, which are success fee on our funds and products related to advisory services, which is a EUR 5 million of, let's say, non-recurrent fees based on successes of our products. Apart from that, everything is recurrent. We have a good quarter on income related to investment banking products, which is something which we don't know exactly when it happens during the quarter or even during the semester, but we know it's recurrent. This type of business, we will see again the following quarters in the next year. We had a very good performance in asset under management and mutual funds fees. This is based, first of all, because last year was very bad, then the comparison is very good.
We have been increasing the volume of our assets under management quarter after quarter. This quarter has been a good quarter of commercial activity. It is true that the market environment has helped to improve the confidence in the market, and the confidence of the clients, in order to increase our position in mutual funds. Of course, the last quarter of the year is also a good quarter of commercial activity. Therefore, the non-market related fees had a very good behavior. Anything related to endorsement, everything related to international commerce activity, everything related to insurance, all this activity have performed very well in the last quarter. Apart from the EUR 5 million of non-recurrent fees that I've just mentioned, the rest is totally recurrent.
Excellent. On the expenses, how much are the non-recurrent expenses that we had booked this year?
I think I've mentioned there's EUR 23 million out of the EUR 79 million, which are new from EVO and Avantcard transactions, EUR 23 million were non-recurrent.
Okay. Moving down on the P&L. Okay. Can you explain on the NPL performance in the quarter and also what happened to the consumer NPL ratio?
Okay. In the last quarter, the fourth quarter, we have sold a portfolio of EUR 100 million of NPLs position from the consumer finance business. This has improved the level of our NPL ratio of the company from 8.8%, I think, or 8.9% to 5.4%. This is the main impact. There is no major impact apart from the growth of the business, apart from the growth in the consumer finance business, which, as you know, accounts for a little more of impairments than the rest of the book, and the integration of EVO and Avantcard.
Okay. Just to confirm, the P&L impact of the sale of the assets was neutral?
Neutral.
Okay, perfect. Moving now to our provisions. Any updates on the litigation charges?
This quarter has been, I think, the best quarter in litigation charges of this year. The overall year has been around 12% less effort compared to the previous year. This quarter, compared to last quarter of 2018, it's been a reduction in the effort of around 20%. Okay? We think that the worst moments have already been passed, and we expect that this reduction will continue over the next quarters.
Thank you. On liquidity, regarding our TLTRO strategy and also issuance plans regarding MREL strategy, you can put any light there?
Okay. Regarding the TLTRO strategies, what we'll do is, we will slowly replace the TLTRO II program with the TLTRO III program. In fact, we have already replaced around EUR 2 billion of it. We will continue to do this in the following quarters. Regarding to MREL requirements, as I mentioned, we have the lowest MREL requirements. We have 18.85% of risk-weighted assets or 8.52% of TLOF. We are meeting MREL requirements and over this first half of the year, we will issue again similar levels than we've done in 2018. These are not very relevant levels overall, and so we feel very comfortable in meeting those requirements.
Thank you. Moving on to the businesses. We have questions on the strategy in Consumer Finance and how is the growth expected there.
Okay. As we've mentioned, the growth in consumer finance this year has been a 21% growth, and now we have operations also in Ireland. The strategy is to continue to grow mainly in loans. As you've seen, the growth in 2019 has been 100% in loans, and our position in credit cards is being very stable, with indeed a different mix, with more standard credit cards and less revolving credit cards. There is no changes in those strategies. We will still grow in loans, in personal growth, in each geography, in Spain, Portugal and Ireland. We will focus on taking care of cost of risk and NPL ratio that, as you know, for Bankinter, is very important.
Thank you. Moving now to Línea Directa topic. First of all, any comments about the performance in the quarter? Moving on to the guidance or the outlook for 2020.
I think Línea Directa is performing from a commercial activity very well. Their growth, the level of growth, honestly, I think is outstanding. In motor, they're more than doubling the industry. In home insurance, they're almost multiplying by three the level of growth of the industry. Of course, in health, which is a new business, they are growing at a very large growth rate. From this business activity, I think they're performing an excellent year, and it's been an excellent quarter as well. Obviously, there are pressures on the market, and the margins are under pressures. I think Línea Directa will continue to be very competitive in this environment, as it has been over the past quarters. The level of efficiency is stable.
I think the level of flexibility of their costs and the level of reduction of costs in this quarter is demonstrating that they can properly manage their efficiency ratio. Return on equity has been, again, very performant with 33%. Level of solvency with 211% is still very good and probably one of the best in class. As you know, this company, Línea Directa, is a company that tends to be very prudent and very conservative. Therefore, the level of provisions tend to be normally a little bit higher or higher than the industry. From the claims perspective, it has been not a very good year. As you remember, the first quarter, we have a couple of non-recurrent and unexpected extraordinary claims. We had in the third quarter another claims due to these climate issues in Spain. Apart from that, the claims quarter, the fourth quarter has been averaging claims.
It's been, I would say, a normal quarter. What is true is that in this fourth quarter, Línea Directa had to increase the level of provisions of about EUR 6 million due to the new health business. The new health business is required to have larger level of provisions due to the still small size. This one-off provision will potentially be partially returned over the next quarters in correlation with the level of growth in the number of policies.
Okay. Moving on to 2020. What's the outlook there in terms of, obviously, premiums business and also combined ratio?
I think in terms of premiums, the guidance is to keep similar levels of growth since we've seen in the last quarters. Level of activity of policies, of number of insured risk, those levels should stand similar in this term of relative performance compared to the industry. That means that motor insurance, we expect that we're still doubling the level of growth of the market, and home insurance probably multiplying by three the level of growth of the industry. From that perspective, we should see still growth. Efficiency or combined ratio levels should stand similar levels that we've seen today. We expect not extraordinary provisions. We just expect that next year, the claims, we don't find any extraordinary claims as you've seen this year. We expect a better year than this year for 2020 in Línea Directa.
Okay. Finally, any updates on the announced transaction on Línea Directa?
Not really. We have our annual general meeting in March 19. Until there. After that, if everything goes as we expect, there will be an approval for the transactions. After that approval, we will put in place all the mechanisms to share with you the process. As I mentioned in my session in December, the objective is to return the premium to our shareholders by the fourth quarter of next year, and therefore to list Línea Directa by the fourth quarter of next year if everything goes as we plan.
Okay, last topic, capital. We're getting questions on the performance of the quarter. How much of the trends that we had seen in the quarter of the performance, it comes from IRB models that we gave some guidance regarding the one-offs there. Also, you can just elaborate on the outlook for 2020, whether you see any one-offs there.
Okay. What we've seen in this quarter is a reduction in the risk-weighted assets, which are mostly due to this corporate model. We have some lower consumption in risk-weighted assets. This accounts for around 10 basis points. We have seen also is in the CET1 amount, a reduction, and this is mainly due to valuation adjustments from the ALCO portfolio, which account negatively around 10 basis points. The outlook for the next following quarters is, again, as I mentioned, to have a guidance around 11.5%. This is the level where we feel comfortable. I'd like to remind you that we have our minimum SREP level at 8.20%, which is one of the lowest or the lowest in Spain. That's why we feel comfortable with this level. We do not foresee any surprise.
As you know, we have already offset half of the 30 basis points of the EVO transactions over this first six months with EVO. There is no reason why we see that we could fully compensate in, again, two quarters this transaction and be, as we are today, in a quite adequate level of CET1 ratio.
Okay, last one. Any updates on our dividend policy payout?
Nothing new in terms of we still have a 50% payout policy, and there is no changes for the time being, neither in the future.
Thank you, Jacobo. Thank you, everyone, for joining us today. Obviously, for any further questions, the investor relations team will be at your disposal. Thank you.
Thank you very much. Just to congratulate Alfonso, today is the Saint Alfonso Day in Spain, San Alfonso. Please join me in congratulating Alfonso for his happy day.
Congrats, mate.
Okay. Thank you, and hope to see you soon. Thank you, and bye-bye.
Thank you.